NOCUM V.

LUCIO TAN
ARMAND NOCUM and THE PHILIPPINE DAILY INQUIRER, INC., Petitioners, vs.
LUCIO TAN, Respondent.

(3) where the complaint, if a public official, holds office. Thus, since the original
lcomplaint stated only the business adress of Lucio Tan and not his actual residence
or the place of printing and first publication, the original complaint failed to confer
jurisdiction on the RTC.

Date: Sept. 23, 2005

iSSUE:/ HELD:

Ponente: Chico-Nazario, J

Whether the RTC had jurisdiction over the case on the basis of the original
complaint? YES.

Doctrine: Jurisdiction is conferred by law based on the facts alleged in the complaint
since the latter comprises a concise statement of the ultimate facts constitutin the
plaintiff's cause of action. Objections to venue in civil actions arising from libel may be
waived since they do not involve a question of jurisdiction. The laying of venue is
procedural rather than substantive. Venue relates to trial and not jurisdiction. In
contrast, in criminal actions, it is fundamental that venue is jurisdictional it being an
essential element of jurisdiction.

RATIO:

FACTS:

Jurisdiction is conferred by law based on the facts alleged in the complaint since the
latter comprises a concise statement of the ultimate facts constituting the plaintiff's
causes of action. Here. RTC acquired jurisdiction over the case when the case was
filed before it. Tan's cause of action is for damages arising from libel, jurisdiction of
which is vested with the RTC. Art. 360 of RPC provides that is the CFI that is
specifically designated to try a libel case.

Lucio Tan filed a complaint for damages (moral and exemplary) for alleged malicious
and defamatory imputations against him in 2 articles of the Philippine Daily Inquirer.
Petitioners Inquirer and reporter Nocum , and ALPAP and Capt. Umali, in their
respective joint answers alleged that the complaint stated no cause of action. ALPAP
and Capt. Umali also alleged that the venue was improperly laid. The complaint failed
to state the resdience of complainant Lucio Tan at the time of the alleged commission
of the offense and the place where the libelous article was printed and first published.

Jurisdiction is different from venue. (a) Jurisdiction is the authority to hear and
determine a case while venue is the place where the case is to be heard or tried; (b)
Jurisdiction is a matter of substantive law; venue is a matter of procedural law; (c)
Jurisdiction establishes a relation between the court and the subject matter, venue
establishes a relation between the plaintiff and the defendant, or the petitioner and
the respondent; and (d) Jurisdiction is fixed by law and cannot be conferred by the
parties while venue may be conferred by the act or agreement of the parties.

RTC of Makati: Complaint was dismissed without prejudice on the ground of

improper venue

In this case, the additional allegations in the Amended Complainant as to place of

printing and first publication referred only to the question of venue and not
jurisidiction. They would neither confer jurisdiction on the RTC nor would failure to
include them divest RTC of its jurisdiction over the case. Tan's failure to allege these
allegations gave the court, the power upon motion by a party, to dismiss on the
ground that the venue was not properly laid.

Lucio Tan filed an omnibus motion seeking reconsideration and admission of the
amended complaint now alleging that "This article was printed and first published in
the City of Makati" and that " This caricature was printed and first published in the City
of Makati."
RTC then set aside the previous order of dismissal stating that the defect in the
original complaint has already been cured in the Amended complaint which can still
be properly admitted purusuant to Rule 10 of the 1997 Rules of CivPro since the
Order of Dismissal was not yet final. Also, the amendment was merely formal.
2 petitions for certiorari were then filed (one by Nocum and PDI, one by ALPAP and
Umali) but CA dismissed the petition. The motions for reconsideration were likewise
denied. Thus, the appeal at the SC. After the filing of comment by Tan and the reply
filed by PDI and Nocum, SC resolved to give due course to the petition.
Contention of PDI and Nocum: Art 360 of RPC vests jurisdiction over all civil and
criminal complaints for libel on the RTC of the place (1) where the libelous article was
printed and first published; or (2) where the complainant, if pirivate person, resides; or

The amendment was not intended to vest jurisdiction to the lower court,where
originally it had none. The amendment was merely to establish the proper venue for
the action. Venue has nothing to do with jurisdiction except in criminal actions.
Assuming that the venue was improperly laid, the issue would be procedural, not a
jurisdictional impediment. In civil cases, venue may be waived. By dismissing the
case on the ground of improper venue, RTC had jurisdiction over the case. PDI and
Nocum recognized RTC's jurisdiction by filing their answers to the complaint by
questioning the propriety of venue instead of a motion to dismiss.
Objections to venue in civil actions arising from libel may be waived since they do not
involve a question of jurisdiction. The laying of venue is procedural rather than
substantive. Venue relates to trial and not jurisdiction. In contrast, in criminal actions,
it is fundamental that venue is jurisdictional it being an essential element of
jurisdiction.

Held:
HEIRS OF VALERIANO CONCHA vs. SPOUSES GREGORIO LUMOCSO
G.R. No. 158121
December 12, 2007
450 SCRA 1
PUNO, J.:
Facts:
This is an appeal by certiorari under Rule 45 of the Rules of Court on the
decision and resolution of the Court of Appeals, annulling the resolutions and order of
the Regional Trial Court of Dipolog City, Branch 9, in a civil case wherein petitioners
filed for a complaint for Reconveyance and/or Annulment of Title with Damages
against respondents, seeking to annul Free Patent No. (IX-8)985 and the
corresponding Original Certificate of Title (OCT) No. P-22556 issued in the name of
"Gregorio Lumocso" covering a certain parcel of land.
Respondents moved for the dismissal of the respective cases against them
on the same grounds of: (a) lack of jurisdiction of the RTC over the subject matters of
the complaints; (b) failure to state causes of action for reconveyance; (c) prescription;
and (d) waiver, abandonment, laches and estoppel. On the issue of jurisdiction,
respondents contended that the RTC has no jurisdiction over the complaints pursuant
to Section 19(2) of Batas Pambansa Blg. (B.P.) 129, as amended by R.A. No. 7691,
as in each case, the assessed values of the subject lots are less than P20,000.00.
Petitioners opposed, contending that the instant cases involve actions the subject
matters of which are incapable of pecuniary estimation which, under Section 19(1) of
B.P. 129, as amended by R.A. 7691, fall within the exclusive original jurisdiction of the
RTCs. They also contended that they have two main causes of action: for
reconveyance and for recovery of the value of the trees felled by respondents. Hence,
the totality of the claims must be considered which, if computed, allegedly falls within
the exclusive original jurisdiction of the RTC.

Issue:
Whether or not the RTC has no jurisdiction over the complaints pursuant to
Section 19(2) of Batas Pambansa Blg. (B.P.) 129, as amended by R.A. No. 7691, as
in each case, the assessed values of the subject lots are less than P20,000.00

Jurisdiction over the subject matter is the power to hear and determine
cases of the general class to which the proceedings in question belong. It is conferred
by law and an objection based on this ground cannot be waived by the parties. To
determine whether a court has jurisdiction over the subject matter of a case, it is
important to determine the nature of the cause of action and of the relief sought. The
trial court correctly held that the instant cases involve actions for reconveyance. An
action for reconveyance respects the decree of registration as incontrovertible but
seeks the transfer of property, which has been wrongfully or erroneously registered in
other persons' names, to its rightful and legal owners, or to those who claim to have a
better right. There is no special ground for an action for reconveyance. It is enough
that the aggrieved party has a legal claim on the property superior to that of the
registered owner and that the property has not yet passed to the hands of an innocent
purchaser for value.
Being in the nature of actions for reconveyance or actions to remove cloud
on one's title, the applicable law to determine which court has jurisdiction is Section
19(2) of B.P. 129, as amended by R.A. No. 7691, viz:
Section 19. Jurisdiction in Civil Cases.-- Regional Trial Courts shall
exercise exclusive original jurisdiction:
(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;
In the cases at bar, it is undisputed that the subject lots are situated in
Cogon, Dipolog City and their assessed values are less than P20,000.00. Hence, the
MTC clearly has jurisdiction. Petitioners' contention that this case is one that is
incapable of pecuniary estimation under the exclusive original jurisdiction of the RTC
pursuant to Section 19(1) of B.P. 129 is erroneous.

in the Complaint that petitioners' Transfer Certificate of Title over their alleged
property was spurious. Private respondents then prayed that they be declared the
sole and absolute owners of the subject property; that petitioners be ordered to
surrender possession of subject property to them; that petitioners and Wood Crest
and/or its members be ordered to pay actual and moral damages, and attorney's
fees.
Petitioners, for their part, filed a Motion to Dismiss 3 said complaint on the ground that
the MeTC had no jurisdiction over the subject matter of the action, as the subject of
litigation was incapable of pecuniary estimation.
The MeTC then issued an Order 4 dated July 4, 2002 denying the motion to dismiss,
ruling that, under Batas Pambansa (B.P.) Blg. 129, as amended, the MeTC had
exclusive original jurisdiction over actions involving title to or possession of real
property of small value.
G.R. No. 164560

July 22, 2009

Petitioners' Motion for Reconsideration of said Order dated July 4, 2002 was denied.

ANA DE GUIA SAN PEDRO and ALEJO DOPEO, Petitioners,

vs.
HON. FATIMA G. ASDALA, in her capacity as the Presiding Judge of the
Regional Trial Court of Quezon City, Branch 87; HON. MANUEL TARO, in his
capacity as the Presiding Judge of the Metropolitan Trial Court of Quezon City,
Branch 42; and the HEIRS OF SPOUSES APOLONIO V. DIONISIO and
VALERIANA DIONISIO (namely, ALLAN GEORGE R. DIONISIO and ELEANOR R.
DIONISIO, herein represented by ALLAN GEORGE R. DIONISIO), Respondents.
DECISION

Petitioners assailed the aforementioned Order by filing a petition for certiorari with the
Regional Trial Court (RTC) of Quezon City, Branch 87. However, in its
Decision5 dated March 10, 2003, the RTC dismissed the petition, finding no grave
abuse of discretion on the part of the MeTC Presiding Judge. The RTC sustained the
MeTC ruling, stating that, in accordance with Section 33(3) of Republic Act (R.A.) No.
7691, amending B.P. Blg. 129, the MeTC had jurisdiction over the complaint
for Accion Reivindicatoria, as it involves recovery of ownership and possession of real
property located in Quezon City, with an assessed value not exceeding P50,000.00. A
Motion for Reconsideration6 of the Decision was filed by petitioners, but was denied in
an Order7 dated July 3, 2003.

DEL CASTILLO, J.:

This resolves the petition for certiorari under Rule 65 of the Rules of Court, praying
that the Resolutions1 of the Court of Appeals (CA) dated September 15, 2003 and
June 1, 2004, respectively, in CA-G.R. SP No. 78978, be reversed and set aside.
The antecedent facts are as follows.
Sometime in July 2001, private respondents, heirs of spouses Apolonio and Valeriana
Dionisio, filed with the Metropolitan Trial Court (MeTC) of Quezon City, Branch 42, a
Complaint2 against herein petitioners and Wood Crest Residents Association, Inc.,
for Accion Reivindicatoria, Quieting of Title and Damages, with Prayer for Preliminary
Mandatory Injunction. Private respondents alleged that subject property located in
Batasan Hills, Quezon City, with an assessed value of P32,100.00, was titled in the
name of spouses Apolonio and Valeriana Dionisio; but petitioners, with malice and
evident bad faith, claimed that they were the owners of a parcel of land that
encompasses and covers subject property. Private respondents had allegedly been
prevented from entering, possessing and using subject property. It was further alleged

Petitioners then filed with the Court of Appeals another petition for certiorari, insisting
that both the MeTC and RTC acted with grave abuse of discretion amounting to lack
or excess of jurisdiction by not ordering the dismissal of the complaint for Accion
Reivindicatoria, for lack of jurisdiction over the same. In the assailed CA Resolution
dated September 15, 2003, the CA dismissed the petition outright, holding
that certiorari was not available to petitioners as they should have availed themselves
of the remedy of appeal. Petitioners' motion for reconsideration of the resolution of
dismissal was denied per Resolution8 dated June 1, 2004.
Thus, petitioners filed the instant petition and, in support thereof, they allege that:
THE HONORABLE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR IN (SIC) EXCESS OF JURISDICTION IN
DENYING THE PETITION FOR CERTIORARI AND FOR FAILURE TO RESOLVE
THE ISSUE RAISED IN THE CERTIORARI REGARDING THE JURISDICTION OF
THE METROPOLITAN TRIAL COURT TO TAKE COGNIZANCE OF A CASE
OF ACCION REINVINDICATORIA.

THE HONORABLE PUBLIC RESPONDENT FATIMA GONZALES-ASDALA, AS

PRESIDING JUDGE OF RTC BRANCH 87, QUEZON CITY, ACTED WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF (SIC)
JURISDICTION IN DISMISSING THE PETITION FOR CERTIORARI AND IN
RESOLVING THAT A CASE OF ACCION REINVINDICATORIA IS WITHIN THE
JURISDICTION OF THE METROPOLITAN TRIAL COURT.

have resorted to the remedy of appeal instead ofcertiorari. Verily, the present Petition
for Certiorari should not have been given due course at all.

THE HONORABLE PUBLIC RESPONDENT MANUEL TARO AS PRESIDING

JUDGE MeTC, BRANCH 42, QUEZON CITY, ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR IN (SIC) EXCESS OF JURISDICTION IN
SO
TAKING
COGNIZANCE
OF
THE
COMPLAINT
FORACCION
REINVINDICATORIA IN CIVIL CASE NO. 27434 ENTITLED, "HEIRS OF SPS.
APOLONIO V. DIONISIO AND VALERIANA DIONISIO, ETC. VS. ANA DE GUIA SAN
PEDRO, ET. AL."9

Nevertheless, just to put the matter to rest, the Court reiterates the ruling in Heirs of
Valeriano S. Concha, Sr. v. Spouses Lumocso,12 to wit:

The present Petition for Certiorari is doomed and should not have been entertained
from the very beginning.
The settled rule is that appeals from judgments or final orders or resolutions of the CA
should be by a verified petition for review on certiorari, as provided for under Rule 45
of the Revised Rules of Civil Procedure. Thus, inPasiona, Jr. v. Court of
Appeals,10 the Court expounded as follows:
The aggrieved party is proscribed from assailing a decision or final order of the CA via
Rule 65, because such recourse is proper only if the party has no plain, speedy and
adequate remedy in the course of law. In this case, petitioner had an adequate
remedy, namely, a petition for review on certiorari under Rule 45 of the Rules of
Court. A petition for review on certiorari, not a special civil action for certiorari was,
therefore, the correct remedy.
xxxx
Settled is the rule that where appeal is available to the aggrieved party, the special
civil action for certiorari will not be entertained remedies of appeal and certiorari are
mutually exclusive, not alternative or successive. Hence, certiorari is not and cannot
be a substitute for a lost appeal, especially if one's own negligence or error in one's
choice of remedy occasioned such loss or lapse. One of the requisites of certiorari is
that there be no available appeal or any plain, speedy and adequate remedy. Where
an appeal was available, as in this case, certiorari will not prosper, even if the
ground therefor is grave abuse of discretion. Petitioner's resort to this Court by
Petition for Certiorari was a fatal procedural error, and the instant petition must,
therefore, fail.11
For the very same reason given above, the CA, therefore, acted properly when it
dismissed the petition for certiorari outright, on the ground that petitioners should

Moreover, since the period for petitioners to file a petition for review on certiorari had
lapsed by the time the instant petition was filed, the assailed CA Resolutions have
attained finality.1avvphi1

In a number of cases, we have held that actions for reconveyance of or for

cancellation of title to or to quiet title over real property are actions that fall under the
classification of cases that involve "title to, or possession of, real property, or any
interest therein."
xxxx
x x x Thus, under the old law, there was no substantial effect on jurisdiction whether a
case is one, the subject matter of which was incapable of pecuniary estimation, under
Section 19(1) of B.P. 129, or one involving title to property under Section 19(2). The
distinction between the two classes became crucial with the amendment introduced
by R.A. No. 7691 in 1994, which expanded the exclusive original jurisdiction of the
first level courts to include "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." Thus, under the present law, original jurisdiction
over cases the subject matter of which involves "title to, possession of, real
property or any interest therein" under Section 19(2) of B.P. 129 is divided
between the first and second level courts, with the assessed value of the real
property involved as the benchmark. This amendment was introduced to "unclog
the overloaded dockets of the RTCs which would result in the speedier administration
of justice."13
Clearly, the RTC and the CA ruled correctly that the MeTC had jurisdiction over
private respondents' complaint forAccion Reivindicatoria.
IN VIEW OF THE FOREGOING, the petition is DISMISSED for utter lack of merit.
The Resolutions of the Court of Appeals in CA-G.R. SP No. 78978, dated September
15, 2003 and June 1, 2004, are AFFIRMED.
SO ORDERED.

respondents. Respondents asked petitioner to remove the house as they planned to

construct a commercial building on the property, but petitioner refused, claiming
ownership over the lot.
Petitioner filed a motion to dismiss claiming that the RTC has no jurisdiction over the
case under R.A. No. 7691. He argued that since the 346 sq m lot he owns adjacent to
the contested property has an assessed value of Php1,730.00, the assessed value
would not exceed Php20,000; thus, the MTC has jurisdiction over the case.
The RTC denied petitioners motion to dismiss, ruling that the present action partakes
of the nature of accion publiciana, and jurisdiction over said action lies with the RTC,
regardless of the value of the property. A motion for reconsideration was filed, but it
was denied by the RTC. On appeal, the CA dismissed petitioners action and affirmed
the decision of the RTC. His motion for reconsideration was also denied; hence, this
petition.
ISSUE:
Whether or not the RTC has jurisdiction over all cases of recovery of possession
regardless of the value of the property involved.
HELD:
NO. A distinction must be made between those properties the assessed value of
which is below Php20,000, if outside Metro Manila, and Php50,000, if within. R.A. No.
7691 which amended B.P. 129 was already in effect when respondents filed their
complaint. It provides that the RTC shall exercise exclusive original jurisdiction 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 Php20,000 or, for
civil actions in Metro Manila, where such value exceeds Php50,000. It also provides
that the MTC, MeTC and MCTC shall exercise exclusive original jurisdiction over the
same where the assessed value of the property does not exceed Php20,000 or in
Metro Manila, where such value does not exceed Php50,000.

VICTORINO QUINAGORAN
vs.
COURT OF APPEALS and THE HEIRS OF JUAN DE LA CRUZ
August 24, 2007
AUSTRIA-MARTINEZ, J.
Facts:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, assailing the Decision of the CA dated May 27, 2002 and its Resolution dated
August 28, 2002, which denied Quinagoran's Motion for Reconsideration.
FACTS:
The heirs of Juan dela Cruz, represented by Senen dela Cruz, filed a Complaint for
Recovery of Portion of Registered Land with Compensation and Damages against
petitioner. They alleged that they are the co-owners of a parcel of land located at
Cagayan which they inherited from the late Juan dela Cruz. In the mid-70s, petitioner
started occupying a house on the north-west portion of the property by tolerance of

In the case, no assessed value was alleged in respondents complaint. There is

therefore no showing on the face of the complaint that the RTC has exclusive
jurisdiction over the action of the respondents. Absent any allegation in the complaint
of the assessed value of the property, it cannot be determined whether the RTC or the
MTC has original and exclusive jurisdiction over the petitioners action. Thus, the RTC
seriously erred in denying petitioners motion to dismiss.
PETITION GRANTED.

Jurisdiction over an accion publiciana is vested in a court of general

jurisdiction. Specifically, the RTC exercises exclusive original
jurisdiction in all civil actions which involve x xx possession of real
property. However, if the assessed value of the real property
involved
does
not
exceed P50,000.00 in
Metro Manila,
and P20,000.00 outside of Metro Manila, the municipal trial court
exercises jurisdiction over actions to recover possession of real
property

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. This is because the nature of
the action and which court has original and exclusive jurisdiction over the same is
determined by the material allegations of the complaint, the type of relief prayed for
by the plaintiff and the law in effect when the action is filed, irrespective of whether the
plaintiffs are entitled to some or all of the claims asserted therein. Nowhere in said
complaint was the assessed value of the subject property ever mentioned. There is
therefore no showing on the face of the complaint that the RTC has exclusive
jurisdiction over the action of the respondents.

HEIRS OF TELESFORO JULAO, namely, ANITA VDA. DE ENRIQUEZ, SONIA J.

TOLENTINO and RODERICK JULAO, Petitioners,
v.

FACTS:
In 1960, Telesforo Julao filed before DENR two Townsite
Sales Applications. Upon his death on June 1, 1971, his applications were transferred
to his heirs. On April 30, 1979, Solito Julao (Solito) executed a Deed of Transfer of
Rights, transferring his hereditary share in the property covered by TSA No. V-6667 to
respondent spouses Alejandro and Morenita De Jesus. In 1983, respondent spouses
constructed a house on the property they acquired from Solito. In 1986, Solito went
missing.

On December 21, 1998, Original Certificate of Title (OCT) No. P-2446,

covering a 641-square meter property, was issued in favor of the heirs of Telesforo.

On March 2, 1999, petitioners representing themselves to be the heirs of

Telesforo, filed before the RTC of Baguio City, a Complaint or Recovery of
Possession of Real Property against respondent spouses. Petitioners alleged that
they are the true and lawful owners of a 641-square meter parcel of land located at
Naguilian Road, BaguioCity, covered by OCT No. P-2446; that the subject property
originated from TSA No. V-2132; that respondent spouses house encroached on 70
square meters of the subject property, among others.

RTC ruled in favor of petitioners. CA reversed the decision on two grounds:

(1) failure on the part of petitioners to identify the property sought to be recovered;
and (2) lack of jurisdiction.

ISSUE:

SPOUSES ALEJANDRO and MORENITA DE JESUS, Respondents.

G.R. No. 176020

Whether or not the RTC acquired jurisdiction over the complaint.

September 29, 2014

HELD:
Ponente: Del Castillo

NO. The Court held that in an action for recovery of possession, the
assessed value of the property sought to be recovered determines the courts
jurisdiction.

In this case, for the RTC to exercise jurisdiction, the assessed value of the
subject property must exceed P20,000.00. Since petitioners failed to allege in
their Complaint the assessed value of the subject property, the
CAcorrectly dismissed the Complaint as petitioners failed to establish that the
RTC had jurisdiction over it. In fact, since the assessed value of the property was
not alleged, it cannot be determined which trial court had original and exclusive
jurisdiction over the case.

In an action to recover, the property must be identified.

Moreover, Article 434 of the Civil Code states that in an action to recover,
the property must be identified, and the plaintiff must rely on the strength of his title
and not on the weakness of the defendants claim. The plaintiff, therefore, is dutybound to clearly identify the land sought to be recovered, in accordance with the title
on which he anchors his right of ownership.66 It bears stressing that the failure of the
plaintiff to establish the identity of the property claimed is fatal to his case.

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

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

FALLO:
WHEREFORE, the Petition is hereby DENIED. The Decision dated
December 4, 2006 of the Court of Appeals in CA-G.R. CV No. 72845 is hereby
AFFIRMED.

G.R. No. 147082

January 28, 2008

HEIRS OF MAURA SO, namely, YAN LAM LIM, JIMMY SO LIM, and FERDINAND
SO LIM, petitioners,
vs.
LUCILA JOMOC OBLIOSCA, ELVIRA JOMOC GARDINAB, and HEIRS OF
ABUNDIA JOMOC BALALA, namely, ROSITA BALALA ACENAS, EVANGELINE
BALALA BAACLO, OLIVER JOMOC BALALA, and PERLA BALALA
CONDESA, respondents.
DECISION
NACHURA, J.:
This is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA)
dated October 18, 2000, and Resolution dated January 11, 2001, denying the motion

for reconsideration of the said decision. The assailed decision declared that a petition
for annulment of judgment cannot be availed of when the petitioner had already filed
an appeal under Rule 45 of the Rules of Court.
The antecedents of the case are as follows:
Pantaleon Jomoc was the owner of a parcel of land with an area of 496 square
meters, covered by Transfer Certificate of Title (TCT) No. T-19648, and located at
Cogon District, Cagayan de Oro. Upon his death, the property was inherited by his
wife, brothers, sisters, nephews and nieces (collectively referred to as the Jomoc
heirs). The respondents, Lucila Jomoc Obliosca and Abundia Jomoc Balala, sisters of
the deceased, and Elvira Jomoc, a niece, were among those who inherited the
property.
In February 1979, the Jomoc heirs executed a Deed of Extrajudicial Settlement with
Absolute Sale of Registered Land2 in favor of petitioner, Maura So, over the property
for P300,000.00. However, the three respondents and Maura So failed to affix their
signatures on this document. Moreover, the document was not notarized.
Nonetheless, petitioner made a partial payment of P49,000.00 thereon.
Thereafter, petitioner demanded the execution of a final deed of conveyance but the
Jomoc heirs ignored the demand. On February 24, 1983, petitioner filed a
Complaint3 for specific performance against the Jomoc heirs to compel them to
execute and deliver the proper registerable deed of sale over the lot. The Jomoc
heirs, except for the respondents, were impleaded as defendants. The case was
docketed as Civil Case No. 8983.
On February 28, 1983, the Jomoc heirs executed again a Deed of Extrajudicial
Settlement with Absolute Sale of Registered Land4 in favor of the spouses Lim Liong
Kang and Lim Pue King for P200,000.00. The spouses Lim intervened as defendants
in Civil Case No. 8983.
On February 12, 1988, the trial court decided the case in favor of the petitioner. On
appeal, the CA affirmed the decision with the modification that the award of damages,
attorneys fees and expenses of litigation was deleted. The defendant heirs and the
spouses Lim filed separate petitions for review with the Supreme Court, docketed as
G.R. Nos. 92871 and 92860, which petitions were later consolidated.
On August 2, 1991, the Court rendered a Decision 5 in these consolidated cases
upholding petitioners better right over the property.6 The decision became final and
executory on November 25, 1991.
On February 10, 1992, petitioner filed a motion for execution of the said decision. The
respondents opposed the motion on the ground that they did not participate in the
execution of the Deed of Extrajudicial Settlement with Absolute Sale of Registered
Land and they were not parties to the case. Despite the opposition, the trial court

granted the motion for execution. The respondents filed a motion for reconsideration
but the trial court denied the same.
On July 22, 1992, the trial court issued an Order granting the motion for execution
and divesting all the Jomoc heirs of their titles over the property. 7 Accordingly, the
Register of Deeds cancelled the title of the Jomoc heirs and issued TCT No. T-68370
in the name of the petitioner on July 24, 1992.
All the Jomoc heirs filed a petition for certiorari with the CA, assailing the said order of
the RTC. They alleged that herein respondents were not parties to the case,
therefore, they should not be bound by the decision therein and be deprived of their
right over the property. On December 8, 1992, the CA dismissed the petition, holding
that respondents were bound by the said decision. The CA ratiocinated that
respondents were aware of the pendency of the case, yet they did not intervene, and
that the case is barred by res judicata. Respondents elevated the case to this Court
through a petition for review on certiorari, which was docketed as G.R. No. 110661. In
a Resolution dated December 1, 1993, the Court denied the petition, thus:
In the case of Vda. de Jomoc v. Court of Appeals (200 SCRA [1991]), this
Court concluded that the contract of sale between the heirs of Pantaleon
Jomoc and the private respondent Maura So, even if not complete in form,
so long as the essential requisites of consent of the contracting parties,
object and cause of the obligation concur, and they were clearly established
to be present, is valid and effective between the parties.
The lower court found that petitioners were aware of the pendency of the
specific performance case brought by Maura So and we agree with the
Court of Appeals that their failure to intervene in said suit for the protection of
their rights binds them to the decision rendered therein.
This Court has held that a writ of execution may be issued against a person
not a party to a case where the latters remedy, which he did not avail of,
was to intervene in the case in question involving rights over the same
parcel of land (Lising vs. Plan, 133 SCRA 194 [1984]; Suson vs. Court of
Appeals, 172 SCRA 70 [1989])
It appears that petitioner Elvira Jomoc Gadrinab signed a Special Power of
Attorney in favor of Fellermo Jomoc to represent her in all proceedings
regarding Civil Case No. 8983. It also appears that all the Jomoc heirs
wanted to realize a higher price by selling the same piece of land a second
time to the Lim spouses. Petitioner Lucila, Abundia and Elvira shared the
same goal, and kept quiet while Maura So sought relief before the trial court.
The other heirs sought to capitalize on Lucilas, Abundias and Elviras nonparticipation in the first sale to Maura So. The heirs (all of them) position is
bereft of moral and equitable basis.

As for the issue of res judicata, we believe that the same applies as a bar to
the instant Petition. In G.R. No. 92871 and G.R. No. 92860, this Court had
occasion to rule that herein private respondent had the right to compel the
heirs of Pantaleon Jomoc to execute the proper public instrument so that a
valid contract of sale of registered land can be duly registered and can bind
third persons. In effect, this Court had already determined the right of private
respondent to a proper registerable deed of sale which petitioners seek to
challenge again in this Petition. A party cannot avoid the application of the
principle of bar by prior judgment by simply varying the form of the action or
by adopting a different mode of presenting its case or by adding or dropping
a party (Widows and Orphans Association, Inc. vs. Court of Appeals, 212
SCRA 360 [1992]).
ACCORDINGLY, the Court Resolved to DENY the Petition for Review for
lack of merit.
The resolution became final and executory on June 20, 1994.
It appears that, on March 12, 1992, respondents also filed a complaint for legal
redemption against petitioner with the Regional Trial Court (RTC) of Misamis Oriental.
The case was docketed as Civil Case No. 92-135. Respondents posited therein that,
since they did not sell their shares in the property to petitioner, they remained coowners, who have the right to redeem the shares sold by the other heirs. They prayed
that they be allowed to exercise their right to redeem their co-heirs shares and that
petitioner execute all papers, documents and deeds to effectuate the right of legal
redemption.
On April 27, 1994, the RTC resolved the case in favor of the respondents, thus:
WHEREFORE, judgment is hereby rendered on the pleadings and evidence
of the parties on record, affidavits and other documents submitted, there
being but purely legal issues involve[d], ordering the defendant herein,
MAURA SO, to allow the plaintiffs to exercise their substantive right of
legal redemption of the shares of plaintiffs co- heirs, defendant Maura
So, for the purpose of redemption by the plaintiffs, Lucita Jomoc Obliosca,
Abundia Jomoc Balala (deceased) substituted by her children: Rosita Balala
Acenas, Evangeline Balala Baaclo, Oliver J. Balala, and Perla Balala
Condesa; and Elvira Jomoc Gardinab, is ordered to receive and accept the
amount tendered by the plaintiffs in the amount ofP49,000.00 deposited in
the Office of the Clerk of Court of the Regional Trial Court of Misamis
Oriental at Cagayan de Oro City, and to execute a deed of redemption in
favor of the herein plaintiffs reconveying to the latter the property, and to pay
Plaintiffs for attorneys fees in the reasonable sum of P20,000.00.
Other claims and for counterclaims for monetary damages of the parties are
dismissed, with costs against defendant.

SO ORDERED.8
In a Resolution dated July 14, 1994, the RTC granted petitioners motion for
reconsideration.9 Respondents moved for reconsideration of the said resolution. On
September 7, 1994, the RTC issued an Order 10 granting respondents motion for
reconsideration and reinstating the April 27, 1994 Resolution.
On November 14, 1994, acting jointly on petitioners Motion for Reconsideration and
respondents Compliance/Motion for the Issuance of a Writ of Execution, the RTC
rendered a Resolution,11 denying petitioners motion for reconsideration and granting
respondents motion for execution.
On December 28, 1994, petitioner, later substituted by her heirs, filed with the CA a
petition for annulment of judgment, particularly the September 7, 1994 Order, which
reinstated the RTCs April 27, 1994 and November 14, 1994 Resolutions, which
denied the petitioners motion for reconsideration. On October 18, 2000, the CA
denied the petition, holding that the remedy of a petition for annulment of judgment is
no longer available since petitioner Maura So had already filed a petition for review
with this Court assailing the same orders of the trial court.12
Apparently, on December 19, 1994, prior to the filing of the petition for annulment of
judgment with the CA, petitioner Maura So filed a petition for review
on certiorari13 with this Court assailing the same RTC Order and Resolution. This
case was docketed as G.R. No. 118050. In a Minute Resolution dated March 1, 1995,
the Court denied the petition for failure to sufficiently show that the questioned
judgment is tainted with grave abuse of discretion and for being the wrong
remedy.14 On June 7, 1995, the Court likewise denied petitioners first motion for
reconsideration,15 and on July 27, 1998, the second motion for reconsideration. The
March 1, 1995 Minute Resolution became final and executory on September 1,
1998.16
On January 11, 2001, the CA denied petitioners motion for reconsideration of its
decision denying the petition for annulment of judgment. 17 Petitioners then filed this
petition for review, raising the following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED A REVERSIBLE ERROR IN NOT HOLDING THAT THE TRIAL
COURT ACTED WITHOUT JURISDICTION IN CIVIL CASE NO. 92-135
BECAUSE THE HONORABLE SUPREME COURT HAD PREVIOUSLY
RULED THAT THE LOT IN QUESTION HAD BEEN SOLD TWICE BY ALL
THE HEIRS OF PANTALEON TO MAURA SO AND LATER TO THE LIM
SPOUSES IN G.R. NOS. 92871 AND 98860 AND G.R. NO. 110661 AND
SAID FINAL DECISIONS AND RESOLUTION CANNOT BE REVISED AND
REVERSED BY SAID TRIAL COURT.

II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED A REVERSIBLE ERROR IN HOLDING THAT THE ORIGINAL
PETITION DOCKETED AS CA-G.R. SP NO. 50059 IS BARRED BY RES
JUDICATA BECAUSE THE RESOLUTION IN G.R. NO. 118050 DID NOT
AND CANNOT REPEAL THE FINAL AND EXECUT[ORY] DECISIONS IN
G.R. NO. 92871 AND G.R. NO. 92860, AND THE FINAL AND
EXECUT[ORY] RESOLUTION IN G.R. NO. 110661, AS THE RESOLUTION
IN G.R. NO. 118050 IS NOT ON THE MERITS, OR BY THE SUPREME
COURT EN BANC.18
The Court resolves to grant the petition despite the prevailing procedural restrictions,
considering the peculiar circumstances of the case, in order to avoid causing a grave
injustice to petitioners.
But before we discuss these circumstances which impel us to grant the petition, we
must acknowledge extant procedural principles.
First, annulment of judgment is a recourse equitable in character, allowed only in
exceptional cases as where there is no available or other adequate remedy.19 Thus, it
may not be invoked (1) where the party has availed himself of the remedy of new trial,
appeal, petition for relief, or other appropriate remedy and lost; or (2) where he has
failed to avail himself of those remedies through his own fault or negligence.20 We,
therefore, agree with the CA that the remedy of a petition for annulment of judgment
is no longer available to petitioners since their predecessor-in-interest, Maura So, had
already availed herself of a petition for review on certiorari under Rule 45 of the Rules
of Court.
Further, none of the grounds for annulment of judgment, namely, extrinsic fraud and
lack of jurisdiction, is present in this case.
Petitioners argue that the RTC acted without jurisdiction when it rendered the
Resolution which recognized respondents right to redeem the property because this,
in effect, amended the Decision of the Supreme Court in G.R. Nos. 92871 and 92860,
and the Resolution in G.R. No. 110661, which sustained the sale of the property to
Maura So.
Petitioners clearly confused lack of jurisdiction with error in the exercise of jurisdiction.
Jurisdiction is not the same as the exercise of jurisdiction. As distinguished from the
exercise of jurisdiction, jurisdiction is the authority to decide a case, and not the
decision rendered therein. Where there is jurisdiction over the person and the subject
matter, the decision on all other questions arising in the case is but an exercise of
such jurisdiction. And the errors which the court may commit in the exercise of
jurisdiction are merely errors of judgment which are the proper subject of an
appeal.21 The error raised by petitioners pertains to the trial courts exercise of its

jurisdiction, not its lack of authority to decide the case. In a petition for annulment of
judgment based on lack of jurisdiction, petitioner must show not merely an abuse of
jurisdictional discretion but an absolute lack of authority to hear and decide the case.
On this basis, there would be no valid ground to grant the petition for annulment of
judgment.
Second, well-settled is the principle that a decision that has acquired finality becomes
immutable and unalterable, and may no longer be modified in any respect even if the
modification is meant to correct erroneous conclusions of fact or law and whether it
will be made by the court that rendered it or by the highest court of the land. 22 The
reason for this is that litigation must end and terminate sometime and somewhere,
and it is essential to an effective and efficient administration of justice that, once a
judgment has become final, the winning party, through a mere subterfuge, be not
deprived of the fruits of the verdict.23
The doctrine of finality of judgment is grounded on the fundamental principle of public
policy and sound practice that, at the risk of occasional error, the judgment of courts
and the award of quasi-judicial agencies must become final on some definite date
fixed by law.24 The only exceptions to the general rule are the correction of clerical
errors, the so-called nunc pro tunc entries which cause no prejudice to any party, void
judgments, and whenever circumstances transpire after the finality of the decision
which render its execution unjust and inequitable.25Again, none of these exceptions is
present in this case.
Notwithstanding these principles, however, the higher interests of justice and equity
demand that we brush aside the procedural norms. After all, rules of procedure are
intended to promote rather than defeat substantial justice, and should not be applied
in a very rigid and technical sense. Rules of procedure are merely tools designed to
facilitate the attainment of justice; they are promulgated to aid the court in the
effective dispensation of justice. The Court has the inherent power and discretion to
amend, modify or reconsider a final judgment when it is necessary to accomplish the
ends of justice.26
If the rigid application of the Rules would frustrate rather than promote justice, it is
always within the Courts power to suspend the Rules or except a particular case from
its operation.27 The power to suspend or even disregard rules can be so pervasive
and compelling as to alter even that which this Court itself has already declared to be
final.28
The present case is peculiar in the sense that it involves three final and executory
judgments. The first is this Courts Decision in G.R. Nos. 92871 and 92860 which
upheld the sale of the whole property by the Jomoc heirs, including the herein
respondents, to petitioner Maura So. The second is the Courts Resolution in G.R. No.
110661, which sustained the order of execution of the said decision against the herein
respondents despite the fact that they were not party-defendants in the first case. And
the third is the Courts Minute Resolution in G.R. No. 118050 which denied Maura

Sos petition for review of the RTC Decision granting respondents right to redeem the
property.
It is the third judgment that is apparently in conflict with the two previous judgments. It
rendered final and executory the April 27, 1994 Resolution of the RTC which
recognized the right of respondents, as co-owners, to redeem the disputed land from
Maura So. To recall, the RTC premised its decision on its finding that respondents did
not actually sell their shares in the property to Maura So because they did not sign
the Deed of Extrajudicial Settlement with Absolute Sale of Registered Land in favor of
So; hence, they remained co-owners. This ruling is patently erroneous because this
Court had already pronounced in the first two final and executory judgments (in G.R.
Nos. 92871 and 92860, and G.R. No. 110661) that the whole property had already
been sold to Maura So. The RTC was barred from holding otherwise under the
doctrine of conclusiveness of judgment.
The doctrine of "conclusiveness of judgment" precludes the re-litigation of a particular
fact or issue already passed upon by a court of competent jurisdiction in a former
judgment, in another action between the same parties based on a different claim or
cause of action.29
In Collantes v. Court of Appeals,30 the Court offered three options to solve a case of
conflicting decisions: the firstis for the parties to assert their claims anew,
the second is to determine which judgment came first, and the thirdis to determine
which of the judgments had been rendered by a court of last resort. In that case, the
Court applied the first option and resolved the conflicting issues anew.
Instead of resorting to the first offered solution as in Collantes, which would entail
disregarding all the three final and executory decisions, we find it more equitable to
apply the criteria mentioned in the second and third solutions, and thus, maintain the
finality of one of the conflicting judgments. The principal criterion under the second
option is the time when the decision was rendered and became final and executory,
such that earlier decisions should be sustained over the current ones since final and
executory decisions vest rights in the winning party. The major criterion under the
third solution is a determination of which court or tribunal rendered the decision.
Decisions of this Court should be accorded more respect than those made by the
lower courts.
The application of these criteria points to the preservation of the Decision of this Court
in G.R. Nos. 92871 and 92860 dated August 2, 1991, and its Resolution in G.R. No.
110661 dated December 1, 1993. Both judgments were rendered long before the
Minute Resolution in G.R. No. 118050 was issued on March 1, 1995. In fact, the
August 2, 1991 Decision was executed already respondents were divested of their
title over the property and a new title, TCT No. T-68370, was issued in the name of
Maura So on July 24, 1992. Further, while all three judgments actually reached this
Court, only the two previous judgments extensively discussed the respective cases
on the merits. The third judgment (in G.R. No. 118050) was a Minute Resolution,
dismissing the petition for review on certiorari of the RTC Resolution in the legal

redemption case for failure to sufficiently show that the questioned resolution was
tainted with grave abuse of discretion and for being the wrong remedy. In a manner of
speaking, therefore, the third final and executory judgment was substantially a
decision of the trial court.
Obviously, the complaint for legal redemption was deliberately filed by the
respondents with the RTC to circumvent this Courts previous decisions sustaining the
sale of the whole property to Maura So. The Court cannot condone this ploy, even if it
failed to uncover the same when the case was erroneously elevated to it directly from
the trial court (G.R. No. 118050).
The matter is again before this Court, and this time, it behooves the Court to set
things right in order to prevent a grave injustice from being committed against Maura
So who had, for 15 years since the first decision was executed, already considered
herself to be the owner of the property. The Court is not precluded from rectifying
errors of judgment if blind and stubborn adherence to the doctrine of immutability of
final judgments would involve the sacrifice of justice for technicality.
WHEREFORE, premises considered, the petition is GRANTED. The Decision of the
Court of Appeals dated October 18, 2000, and Resolution dated January 11, 2001,
are REVERSED. The April 27, 1994 Resolution and September 7, 1994 Order of the
RTC are SET ASIDE. The complaint for legal redemption docketed as Civil Case No.
92-135 is DISMISSED.
SO ORDERED.

"WHEREFORE, in view of all the foregoing, the Court hereby affirms the decision of
the Municipal Trial Court in Cities, Branch 2 penned by the Honorable Santos Rod.
Cedro and the Writ of Execution issued on the 24th day of August 1993 upon order of
the Honorable Rosarito F. Dabalos (Record, p. 42, Folio II) can now be served on the
defendant."4
The Facts
The factual antecedents of the case are summarized by the Court of Appeals as
follows:
G.R. No. 141614

August 14, 2002

TERESITA BONGATO, petitioner,

vs.
Spouses SEVERO A. MALVAR and TRINIDAD MALVAR, respondents.
DECISION
PANGANIBAN, J.:
An action for forcible entry is a quieting process that is summary in nature. It is
designed to recover physical possession in speedy proceedings that are restrictive in
nature, scope and time limits. The one-year bar within which to bring the suit is
prescribed to complement its summary nature. Thus, after the one-year period has
lapsed, plaintiffs can no longer avail themselves of the summary proceedings in the
municipal trial court but must litigate, in the normal course, in the regional trial court in
an ordinary action to recover possession, or to recover both ownership and
possession.
Statement of the Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the December 16, 1998 Decision1 and the September 1, 1999 Resolution2 of
the Court of Appeals (CA) in CA-GR SP No. 34204. The decretal portion of the
Decision reads:
"WHEREFORE, the petition is hereby dismissed for lack of merit. Costs against
petitioner."3
The assailed Resolution denied petitioners Motion for Reconsideration.
The CA sustained the Decision of the Regional Trial Court (RTC) of Butuan City
(Branch 4), which had disposed thus:

"The spouses Severo and Trinidad Malvar filed a complaint for forcible entry against
petitioner Teresita Bongato, alleging that petitioner Bongato unlawfully entered a
parcel of land covered by TCT No. RT-16200 belonging to the said spouses and
erected thereon a house of light materials. The petitioner filed a motion for extension
of time to file an answer which the MTCC denied; it being proscribed under the Rule
on Summary Procedure, and likewise containing no notice of hearing. With a new
counsel, Atty. Viador C. Viajar, petitioner filed an answer which the MTCC
disregarded, the same having been filed beyond the ten-day reglementary period.
Later, with still another counsel, Atty. Jesus G. Chavez of the Public Attorneys Office,
petitioner filed a motion to dismiss which the MTCC denied as being contrary to the
Rule on Summary Procedure.
"Thereafter, the MTCC rendered a decision ordering petitioner to vacate the land in
question, and to pay rentals, attorneys fees, and the costs of the suit. The decision
was affirmed by respondent RTC judge. Petitioner filed a motion for reconsideration.
"On March 4, 1994, respondent Judge issued an order granting the motion for
reconsideration only insofar as to determine the location of the houses involved in
this civil case so that the Court will know whether they are located on one and the
same lot or a lot different from that involved in the criminal case for Anti-Squatting. In
the same order, respondent Judge disallowed any extension and warned that if the
survey is not made, the court might consider the same abandoned and the writ of
execution would be issued.
"The criminal case for anti-squatting (Crim. Case No. 4659) was filed by private
respondents Malvar against petitioner Bongato. The case is still pending with the
Regional Trial Court, Branch I, Butuan City.
"On March 28, 1994, petitioner filed a motion for extension of the March 29, 1994
deadline for the submission of the relocation survey and to move the deadline to April
15, 1994, as the engineer concerned, Engr. Lumarda, could not conduct his survey
during the Holy Week, he being a lay minister and parish council member.

"On April 7, 1994, respondent Judge noted that no survey report was submitted and
ordered the record of the case returned to the court of origin for disposal." 5 (Citations
omitted)
Ruling of the Court of Appeals
The CA held that the lot referred to in the present controversy was different from that
involved in the anti-squatting case.6 It further ruled that the Municipal Trial Court in
Cities (MTCC) had jurisdiction, and that it did not err in rejecting petitioners Motion to
Dismiss. The appellate court reasoned that the MTCC had passed upon the issue of
ownership of the property merely to determine possession -- an action that did not
oust the latter of its jurisdiction.7
Unsatisfied with the CA Decision, petitioner lodged this Petition.8
Issues
In her Memorandum, petitioner raises the following issues for this Courts
consideration:
I
"Whether or not the Court of Appeals gravely abused its discretion in not finding that
the trial court lacked jurisdiction since the Complaint was filed beyond the one-year
period from date of alleged entry;
II
"Whether or not the Court of Appeals gravely abused its discretion in ruling that the
Motion to Dismiss was a prohibited pleading."9
This Courts Ruling
The Petition is meritorious.
First Issue:
MTCC Jurisdiction
Petitioner claims that the MTCC had no jurisdiction, because the Complaint for
forcible entry was filed only in 1992 or beyond the one-year period provided under the
Rules of Civil Procedure.10 She avers that in Criminal Case No. 4659 for antisquatting, Respondent Severo Malvar alleged in his Sworn Statement that petitioner
had illegally entered his land "sometime in the first week of January 1987." 11

On the other hand, respondents contend that the subject of the anti-squatting case is
different from the parcel of land involved here.12
Before tackling the issue directly, it is worthwhile to restate three basic legal
principles. First, in forcible entry, one employs force, intimidation, threat, strategy or
stealth to deprive another of physical possession of land or building.13 Thus, the
plaintiff must allege and prove prior physical possession of the property in litigation
until deprived thereof by the defendant.14 This requirement implies that the
possession of the disputed land by the latter was unlawful from the beginning. 15 The
sole question for resolution hinges on the physical or material possession
(possession de facto) of the property. Neither a claim of juridical possession
(possession de jure) nor an averment of ownership16 by the defendant can outrightly
prevent the court from taking cognizance of the case. 17 Ejectment cases proceed
independently of any claim of ownership, and the plaintiff needs merely to prove prior
possession de facto and undue deprivation thereof.18
Second, as a general rule, courts do not take judicial notice of the evidence presented
in other proceedings, even if these have been tried or are pending in the same court
or before the same judge.19 There are exceptions to this rule. Ordinarily, an appellate
court cannot refer to the record in another case to ascertain a fact not shown in the
record of the case before it,20 yet, it has been held that it may consult decisions in
other proceedings, in order to look for the law that is determinative of or applicable to
the case under review.21 In some instances, courts have also taken judicial notice of
proceedings in other cases that are closely connected to the matter in
controversy.22 These cases "may be so closely interwoven, or so clearly
interdependent, as to invoke" a rule of judicial notice.23
Third, factual findings of trial courts, especially when affirmed by the Court of Appeals,
are binding on the Supreme Court. Indeed, the review of such findings is not a
function that this Court normally undertakes.24However, this Rule is not absolute; it
admits of exceptions, such as (1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when a lower courts inference from its
factual findings is manifestly mistaken, absurd or impossible; (3) when there is grave
abuse of discretion in the appreciation of facts; (4) when the findings of the appellate
court go beyond the issues of the case, run contrary to the admissions of the parties
to the case, or fail to notice certain relevant facts which -- if properly considered -- will
justify a different conclusion; (5) when there is a misappreciation of facts; (6) when
the findings of fact are conclusions without mention of the specific evidence on which
they are based, are premised on the absence of evidence, or are contradicted by
evidence on record.25
Respondents in the present Petition filed three cases against petitioner: (1) Criminal
Case No. 4659 for violation of PD No. 772 26 (filed on October 2, 1991), in which
petitioner was acquitted on the ground of good faith; (2) Civil Case No. 5681 for
forcible entry (filed on July 10, 1992) which was resolved by the MTCC on October
26, 1992.27(3) Criminal Case No. 5734 for Violation of PD No. 1096 28 (filed on July 15,
1993), wherein petitioner was again acquitted.

We agree with respondents that Lot 10-A, covered by Transfer Certificate of Title
(TCT) No. RT-1620029 and registered under the name of Severo Malvar, is different
from Lot 1 which is covered by TCT No. RT-15993 30 and registered under the name of
Severo Malvar also. However, we cannot ignore the Decision31 dated April 30, 1996 in
Criminal Case No. 4659 for violation of PD 772; or the Decision 32 dated November 26,
1997 in Criminal Case No. 5734 for violation of PD 1096. The property involved in
these two criminal cases and in the instant case for forcible entry is one and the same
-- petitioners house.
The allegation of petitioner that there is only one house involved in these three cases
has not been controverted by respondents. Neither was there evidence presented to
prove that, indeed, she had constructed one house on Lot 1 and another on Lot 10-A.
On the contrary, she correctly points out that the house involved in these three cases
is found on one and the same location. Verily, in his Sworn Statement 33 submitted in
Criminal Case No. 4659, Respondent Severo Malvar stated that petitioners house
was "located in front of the Museum and just behind the City Hall." On the other hand,
in the Complaint34 for forcible entry, the subject property was said to be "located along
Doongan Road and right in front of the Regional National Museum and not far behind
the City Hall of Butuan City." Lastly, the Decision35 in Criminal Case No. 5734 stated
that the building inspector, Engineer Margarita Burias, had "responded to a verbal
complaint involving a structure built near the Museum in Upper Doongan, Butuan
City."
Based on these factual antecedents, there is cogent basis for petitioners contention
that the MTCC lacked jurisdiction in this case.
First, respondents allege that the subject house was built by petitioner on Lot 10-A
covered by TCT No. 16200. This allegation is belied by the sketch plan 36 dated June
16, 1994, submitted by Engineer Regino A. Lomarda Jr. To recall, in an Order 37 dated
March 4, 1994, the RTC had required petitioner to submit a relocation survey of Lot
10-A to determine the location of the house and to ascertain if it was the same house
involved in Criminal Case No. 4659 for anti-squatting. However, because of the Holy
Week, petitioner failed to submit the relocation survey within the period provided by
the RTC. In the said sketch plan that was offered in evidence as Exhibit "5" in the
anti-squatting case, Engineer Lomarda Jr. certified that "the hut of Teresita Bongato is
not within Lot 10-A as shown in this plan as relocated by the undersigned based [o]n
TCT No. RT-1576 of Benjamin Eva, et al. and [o]n TCT No. RT-16200 of Lot 10-A of
Severo Malvar."
Second, according to the Decision in Criminal Case No. 4659, petitioners house is
actually located on Lot 1, the parcel of land previously covered by TCT No. RT-15993
and subject of the anti-squatting case. The RTC Judge in said case ruled:
"The lot on which accuseds house is standing was formerly covered by Transfer
Certificate of Title No. RT-15993 dated January 24, 1983 in the name of Severo
Malvar, and superseded by Transfer Certificate of Title No. RT-24589 dated
December 3, 1991 in the name of Butuan Land Developers Group, Inc."38

Third, petitioners house had actually been in existence prior to February 1992, the
alleged date of illegal entry. Thus, in Criminal Case No. 5734 for violation of PD 1096,
the RTC Judge opined as follows:
"Firstly, the prosecution has not proven that the accused had constructed or for that
matter was constructing the questioned house in February of 1992, since it was never
stated that when the complaint was lodged with the City Engineers Office, that the
house occupied by the accused was under construction or under renovation. The fact
that Engr. Burias even admitted that she had no knowledge of when the structure was
built implicitly indicates that the same was completely erected or constructed before
Engr. Burias visit, or even for that matter, before the complaint was filed."39
That the house of petitioner had been constructed by her father and that she had
merely continued to reside therein was upheld by the Decision, which we quote:
"Suffice it to state, however, that We are convinced, given the testimonial evidence
offered that the house in question was not built by the accused, but by her father,
Jacinto Bongato sometime in 1935; that accused merely lived in the house as a
member of Jacinto Bongatos family until the death of her parents, whereupon, she
continued to reside in the said house and now claims to be its owner."40
Fourth, Respondent Severo Malvar admitted in Criminal Case No. 4659 that he had
knowledge of petitioners house since January 1987. We quote from his testimony:
"Q Earlier, Judge Malvar, you told this Honorable Court that you discovered sometime
in January 1987, the accused was occupying your property consisting of 348 square
meters. What did you do upon discovering that the accused already occupied a
portion of your property without your knowledge?
A I want to demolish her house. I told her that I am the owner of the land and she is
looking for the hectare that was not sold by her father to me.
"Q And upon being informed by Teresita Bongato that they were looking for the
hectare lot which was not sold to you by her father, what did you say to her?
A I told her to remove her house. Then after that, I was so busy with the squatters
along Satorre Street of the Malvar Village that kept me so busy. It was only last year
that we were able to attend to this."41
It is wise to be reminded that forcible entry is a quieting process, and that the
restrictive time bar is prescribed to complement the summary nature of such
process.42 Indeed, the one-year period within which to bring an action for forcible
entry is generally counted from the date of actual entry to the land. However, when
entry is made through stealth, then the one-year period is counted from the time the
plaintiff learned about it.43 After the lapse of the one-year period, the party
dispossessed of a parcel of land may file either an accion publiciana, which is a

plenary action to recover the right of possession; or an accion reivindicatoria, which is

an action to recover ownership as well as possession.44
On the basis of the foregoing facts, it is clear that the cause of action for forcible entry
filed by respondents had already prescribed when they filed the Complaint for
ejectment on July 10, 1992.45 Hence, even if Severo Malvar may be the owner of the
land, possession thereof cannot be wrested through a summary action for ejectment
of petitioner, who had been occupying it for more than one (1) year.46 Respondents
should have presented their suit before the RTC in an accion publiciana or
an accion reivindicatoria, not before the MTCC in summary proceedings for forcible
entry.47 Their cause of action for forcible entry had prescribed already, and the MTCC
had no more jurisdiction to hear and decide it.48
Second Issue:
Motion to Dismiss

xxx

xxx

x x x"

Further, a courts lack of jurisdiction over the subject matter cannot be waived by the
parties or cured by their silence, acquiescence or even express consent. 60 A party
may assail the jurisdiction of the court over the action at any stage of the proceedings
and even on appeal.61 That the MTCC can take cognizance of a motion to dismiss on
the ground of lack of jurisdiction, even if an answer has been belatedly filed we
likewise held in Bayog v. Natino:62
"The Revised Rule on Summary Procedure, as well as its predecessor, do not provide
that an answer filed after the reglementary period should be expunged from the
records.1wphi1 As a matter of fact, there is no provision for an entry of default if a
defendant fails to answer. It must likewise be pointed out that MAGDATOs defense of
lack of jurisdiction may have even been raised in a motion to dismiss as an exception
to the rule on prohibited pleadings in the Revised Rule on Summary Procedure. Such
a motion is allowed under paragraph (a) thereof, x x x."

Petitioner further argues that a motion to dismiss based on lack of jurisdiction over the
subject matter is not a prohibited pleading, but is allowed under Sec. 19(a) of the
Revised Rule on Summary Procedure.49 We agree.

In the case at bar, the MTCC should have squarely ruled on the issue of jurisdiction,
instead of erroneously holding that it was a prohibited pleading under the Rule on
Summary Procedure.63 Because the Complaint for forcible entry was filed on July 10,
1992, the 1991 Revised Rule on Summary Procedure was applicable.1wphi1

The Rule on Summary Procedure was promulgated specifically to achieve "an

expeditious and inexpensive determination of cases."50 The speedy resolution of
unlawful detainer cases is a matter of public policy,51 and the Rule should equally
apply with full force to forcible entry cases, in which possession of the premises is
already illegal from the start. 52 For this reason, the Rule frowns upon delays and
prohibits altogether the filing of motions for extension of time. Consistently, Section 6
was added to give the trial court the power to render judgment, evenmotu proprio,
upon the failure of a defendant to file an answer within the reglementary
period.53 However, as forcible entry and detainer cases are summary in nature and
involve disturbances of the social order, procedural technicalities should be carefully
avoided54 and should not be allowed to override substantial justice.55

Finally, the MTCC should have taken into account petitioners Answer, 64 in which she
averred that she had been "in constant occupation on said land in question since birth
on March 17, 1941 up to the present, being an heir of the late Emiliana Eva-Bongato,
who inherited said property from her father Raymundo Eva with considerable
improvements thereon." It should have heard and received the evidence adduced by
the parties for the precise purpose of determining whether or not it possessed
jurisdiction over the subject matter.65 And after such hearing, it could have dismissed
the case for lack of jurisdiction. 66 In this way, the long, drawn out proceedings that
took place in this case could have been avoided.67

56

57

Pursuant to Section 36 of BP 129, the Court on June 16, 1983, promulgated the
Rule on Summary Procedure in Special Cases.58 Under this Rule, a motion to dismiss
or quash is a prohibited pleading. Under the 1991 Revised Rule on Summary
Procedure, however,59 a motion to dismiss on the ground of lack of jurisdiction over
the subject matter is an exception to the rule on prohibited pleadings:

WHEREFORE,
the
Petition
is GRANTED and the
assailed
Decision ANNULLED and SET ASIDE. The Complaint for forcible entry
is DISMISSED for lack of jurisdiction. No pronouncement as to costs.
SO ORDERED.

"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;

Bongato vs. Malvar - 387 SCRA 327 Case Digest

the Court of Appeals (CA) in CA-G.R. SP No. 111754; and (2) Decision 3 dated August
31, 2011 and Resolution4 dated June 27, 2012 in CA-G.R. SP No. 114073.

FACTS:
Spouses Severo and Trinidad Malvar filed a complaint in the MTCC for forcible entry
against Teresita Bongato, alleging that Bongato unlawfully entered a parcel of land
belonging to the spouses and erected thereon a house of light materials.
MTCC decided in favor of Malvar and ordered Bongato to vacate the land. RTC
affirmed the decision. CA also held that MTCC had jurisdiction. On appeal, Bongato
raised the issue of MTCC jurisdiction; that the complaint was filed beyond the oneyear
prescriptive
period.
ISSUE:
Wherther or not the MTCC had jurisdiction since the Complaint was filed beyond the
one-year
period
from
date
of
alleged
entry?
HELD:
No, MTCC had no jurisdiction. It is wise to be reminded that forcible entry is a quieting
process, and that the restrictive time bar is prescribed to complement the summary
nature of such process. Indeed, the one-year period within which to bring an action
for forcible entry is generally counted from the date of actual entry to the land.
However, when entry is made through stealth, then the one-year period is counted
from the time the plaintiff learned about it. After the lapse of the one-year period, the
party dispossessed of the parcel of land may file either accion publiciana; or an
accion reivindicatoria, which is an action to recover ownership as well as possession.
One the basis of the facts, it is clear that the cause of action for forcible entry filed by
respondents had already prescribed when they filed the complaint on July 10, 1992
(the house was built as early as 1987), thus the MTCC had no more jurisdiction to
hear and decide the case.

G.R. Nos. 197592 & 20262

November 27, 2013

THE PROVINCE OF AKLAN, Petitioner,

vs.
JODY KING CONSTRUCTION AND DEVELOPMENT CORP., Respondent.
DECISION
VILLARAMA, JR., J.:
These consolidated petitions for review on certiorari seek to reverse and set aside the
following: (1) Decision1dated October 18, 2010 and Resolution2 dated July 5, 2011 of

The Facts
On January 12, 1998, the Province of Aklan (petitioner) and Jody King Construction
and Development Corp. (respondent) entered into a contract for the design and
-construction of the Caticlan Jetty Port and Terminal (Phase I) in Malay, Aklan. The
total project cost is P38,900,000: P 18,700,000 for the design and construction of
passenger terminal, and P20,200,000 for the design and construction of the jetty port
facility.5 In the course of construction, petitioner issued variation/change orders for
additional works. The scope of work under these change orders were agreed upon by
petitioner and respondent.6
On January 5, 2001, petitioner entered into a negotiated contract with respondent for
the construction of Passenger Terminal Building (Phase II) also at Caticlan Jetty Port
in Malay, Aklan. The contract price for Phase II is P2,475,345.54.7
On October 22, 2001, respondent made a demand for the total amount
of P22,419,112.96 covering the following items which petitioner allegedly failed to
settle:
1.
Unpaid
accomplishments
on
additional
works
undertaken - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 12,396,143.09
2.
Refund
of
taxes
levied
despite
it
not
being
covered by original contract- - - - - - - - - - - - - - - - - - - - - - Php 884,098.59
3.
Price
escalation
(Consistent
with
Section
7.5,
Original Contract- - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 1,291,714.98
4.
Additional
Labor
Cost
resulting
[from]
numerous change orders issued sporadically - - - - - - - - Php 3,303,486.60
5.
Additional
Overhead
Cost
resulting
[from]
numerous Orders issued sporadically - - - - - - - - - - - - - Php 1,101,162.60
6.
Interest
resulting
[from]
payment
delays
consistent
with
Section
7.3.b
of
the
Original
Contract - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 3,442,507.50. 8
On July 13, 2006, respondent sued petitioner in the Regional Trial Court (RTC) of
Marikina City (Civil Case No. 06-1122-MK) to collect the aforesaid amounts. 9 On
August 17, 2006, the trial court issued a writ of preliminary attachment.10

Petitioner denied any unpaid balance and interest due to respondent. It asserted that
the sums being claimed by respondent were not indicated in Change Order No. 3 as
approved by the Office of Provincial Governor. Also cited was respondents June 10,
2003 letter absolving petitioner from liability for any cost in connection with the
Caticlan Passenger Terminal Project.11
After trial, the trial court rendered its Decision 12 on August 14, 2009, the dispositive
portion of which reads:
WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor
of plaintiff Jody King Construction And Development Corporation and against
defendant Province of Aklan, as follows:
1. ordering the defendant to pay to the plaintiff the amount of
Php7,396,143.09 representing the unpaid accomplishment on additional
works undertaken by the plaintiff;
2. ordering the defendant to refund to the plaintiff the amount of
Php884,098.59 representing additional 2% tax levied upon against the
plaintiff;
3. ordering the defendant to pay to the plaintiff price escalation in the amount
of Php1,291,714.98 pursuant to Section 7.5 of the original contract;
4. ordering the defendant to pay to the plaintiff the amount of
Php3,303,486.60 representing additional labor cost resulting from change
orders issued by the defendant;
5. ordering the defendant to pay to the plaintiff the sum of Php1,101,162.00
overhead cost resulting from change orders issued by the defendant;
6. ordering the defendant to pay the sum of Php3,442,507.50 representing
interest resulting from payment delays up to October 15, 2001 pursuant to
Section 7.3.b of the original contract;
7. ordering the defendant to pay interest of 3% per month from unpaid
claims as of October 16, 2001 to date of actual payment pursuant to Section
7.3.b[;]
8. ordering the [defendant] to pay to the plaintiff the sum of Php500,000.00
as moral damages;
9. ordering the defendant to pay to the plaintiff the sum of Php300,000.00 as
exemplary damages;

10. ordering the defendant to pay the plaintiff the sum of Php200,000.00, as
and for attorneys fees; and
11. ordering the defendant to pay the cost of suit.
SO ORDERED.13
Petitioner filed its motion for reconsideration 14 on October 9, 2009 stating that it
received a copy of the decision on September 25, 2009. In its Order 15 dated October
27, 2009, the trial court denied the motion for reconsideration upon verification from
the records that as shown by the return card, copy of the decision was actually
received by both Assistant Provincial Prosecutor Ronaldo B. Ingente and Atty. Lee T.
Manares on September 23, 2009. Since petitioner only had until October 8, 2009
within which to file a motion for reconsideration, its motion filed on October 9, 2009
was filed one day after the finality of the decision. The trial court further noted that
there was a deliberate attempt on both Atty. Manares and Prosecutor Ingente to
mislead the court and make it appear that their motion for reconsideration was filed
on time. Petitioner filed a Manifestation16 reiterating the explanation set forth in its
Rejoinder to respondents comment/opposition and motion to dismiss that the wrong
date of receipt of the decision stated in the motion for reconsideration was due to
pure inadvertence attributable to the staff of petitioners counsel. It stressed that there
was no intention to mislead the trial court nor cause undue prejudice to the case, as
in fact its counsel immediately corrected the error upon discovery by explaining the
attendant circumstances in the Rejoinder dated October 29, 2009.
On November 24, 2009, the trial court issued a writ of execution ordering Sheriff IV
Antonio E. Gamboa, Jr. to demand from petitioner the immediate payment
of P67,027,378.34 and tender the same to the respondent. Consequently, Sheriff
Gamboa served notices of garnishment on Land Bank of the Philippines, Philippine
National Bank and Development Bank of the Philippines at their branches in Kalibo,
Aklan for the satisfaction of the judgment debt from the funds deposited under the
account of petitioner. Said banks, however, refused to give due course to the court
order, citing the relevant provisions of statutes, circulars and jurisprudence on the
determination of government monetary liabilities, their enforcement and satisfaction.17
Petitioner filed in the CA a petition for certiorari with application for temporary
restraining order (TRO) and preliminary injunction assailing the Writ of Execution
dated November 24, 2009, docketed as CA-G.R. SP No. 111754.
On December 7, 2009, the trial court denied petitioners notice of appeal filed on
December 1, 2009. Petitioners motion for reconsideration of the December 7, 2009
Order was likewise denied.18 On May 20, 2010, petitioner filed another petition for
certiorari in the CA questioning the aforesaid orders denying due course to its notice
of appeal, docketed as CA-G.R. SP No. 114073.

By Decision dated October 18, 2010, the CAs First Division dismissed the petition in
CA-G.R. SP No. 111754 as it found no grave abuse of discretion in the lower courts
issuance of the writ of execution. Petitioner filed a motion for reconsideration which
was likewise denied by the CA. The CA stressed that even assuming as true the
alleged errors committed by the trial court, these were insufficient for a ruling that
grave abuse of discretion had been committed. On the matter of execution of the trial
courts decision, the appellate court said that it was rendered moot by respondents
filing of a petition before the Commission on Audit (COA).
On August 31, 2011, the CAs Sixteenth Division rendered its Decision dismissing the
petition in CA-G.R. SP No. 114073. The CA said that petitioner failed to provide valid
justification for its failure to file a timely motion for reconsideration; counsels
explanation that he believed in good faith that the August 14, 2009 Decision of the
trial court was received on September 25, 2009 because it was handed to him by his
personnel only on that day is not a justifiable excuse that would warrant the relaxation
of the rule on reglementary period of appeal. The CA also held that petitioner is
estopped from invoking the doctrine of primary jurisdiction as it only raised the issue
of COAs primary jurisdiction after its notice of appeal was denied and a writ of
execution was issued against it.
The Cases

WHETHER OR NOT THE WRIT OF EXECUTION DATED 24 NOVEMBER

2009 WHICH WAS HASTILY ISSUED IN VIOLATION OF SUPREME
COURT ADMINISTRATIVE CIRCULAR NO. 10-2000 SHOULD BE
RENDERED VOID.19
The petition in G.R. No. 202623 sets forth the following arguments:
Petitioner is not estopped in questioning the jurisdiction of the Regional Trial Court,
Branch 273, Marikina City over the subject matter of the case.20
The petition for certiorari filed before the CA due to the RTCs denial of petitioners
Notice of Appeal was in accord with jurisprudence.21
The Issues
The controversy boils down to the following issues: (1) the applicability of the doctrine
of primary jurisdiction to this case; and (2) the propriety of the issuance of the writ of
execution.
Our Ruling

In G.R. No. 197592, petitioner submits the following issues:

I.
WHETHER OR NOT THE DECISION DATED 14 AUGUST 2009
RENDERED BY THE REGIONAL TRIAL COURT, BRANCH 273, MARIKINA
CITY AND THE WRIT OF EXECUTION DATED 24 NOVEMBER 2009
SHOULD BE RENDERED VOID FOR LACK OF JURISDICTION OVER THE
SUBJECT MATTER OF THE CASE.
II.
WHETHER OR NOT THE REGIONAL TRIAL COURT, BRANCH 273,
MARIKINA CITY GRAVELY ABUSED ITS DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF JURISDICTION IN RENDERING THE DECISION
DATED 14 AUGUST 2009 AND ISSUING THE WRIT OF EXECUTION
DATED 24 NOVEMBER 2009 EVEN IT FAILED TO DISPOSE ALL THE
ISSUES OF THE CASE BY NOT RESOLVING PETITIONERS "URGENT
MOTION TO DISCHARGE EX-PARTE WRIT OF PRELIMINARY
ATTACHMENT" DATED 31 AUGUST 2006.
III.

The petitions are meritorious.

COA has primary jurisdiction over private respondents money claims Petitioner is not
estopped from raising the issue of jurisdiction
The doctrine of primary jurisdiction holds that if a case is such that its determination
requires the expertise, specialized training and knowledge of the proper
administrative bodies, relief must first be obtained in an administrative proceeding
before a remedy is supplied by the courts even if the matter may well be within their
proper jurisdiction.22 It applies where a claim is originally cognizable in the courts, and
comes into play whenever enforcement of the claim requires the resolution of issues
which, under a regulatory scheme, have been placed within the special competence
of an administrative agency. In such a case, the court in which the claim is sought to
be enforced may suspend the judicial process pending referral of such issues to the
administrative body for its view or, if the parties would not be unfairly disadvantaged,
dismiss the case without prejudice.23
The objective of the doctrine of primary jurisdiction is to guide the court in determining
whether it should refrain from exercising its jurisdiction until after an administrative

agency has determined some question or some aspect of some question arising in
the proceeding before the court.24

by the parties failure to argue the issue nor active participation in the proceedings.
Thus:

As can be gleaned, respondent seeks to enforce a claim for sums of money allegedly
owed by petitioner, a local government unit.

This case is one over which the doctrine of primary jurisdiction clearly held sway for
although petitioners collection suit for P487,662.80 was within the jurisdiction of the
RTC, the circumstances surrounding petitioners claim brought it clearly within the
ambit of the COAs jurisdiction.

Under Commonwealth Act No. 327, 25 as amended by Section 26 of Presidential

Decree No. 1445,26 it is the COA which has primary jurisdiction over money claims
against government agencies and instrumentalities.
Section 26. General jurisdiction. The authority and powers of the Commission shall
extend to and comprehend all matters relating to auditing procedures, systems and
controls, the keeping of the general accounts of the Government, the preservation of
vouchers pertaining thereto for a period of ten years, the examination and inspection
of the books, records, and papers relating to those accounts; and the audit and
settlement of the accounts of all persons respecting funds or property received or
held by them in an accountable capacity, as well as the examination, audit, and
settlement of all debts and claims of any sort due from or owing to the Government or
any of its subdivisions, agencies and instrumentalities. The said jurisdiction extends
to all government-owned or controlled corporations, including their subsidiaries, and
other self-governing boards, commissions, or agencies of the Government, and as
herein prescribed, including non-governmental entities subsidized by the government,
those funded by donations through the government, those required to pay levies or
government share, and those for which the government has put up a counterpart fund
or those partly funded by the government. (Emphasis supplied.)
Pursuant to its rule-making authority conferred by the 1987 Constitution 27 and existing
laws, the COA promulgated the 2009 Revised Rules of Procedure of the Commission
on Audit. Rule II, Section 1 specifically enumerated those matters falling under COAs
exclusive jurisdiction, which include "money claims due from or owing to any
government agency." Rule VIII, Section 1 further provides:
Section 1. Original Jurisdiction - The Commission Proper shall have original
jurisdiction over:
a) money claim against the Government; b) request for concurrence in the hiring of
legal retainers by government agency; c) write off of unliquidated cash advances and
dormant accounts receivable in amounts exceeding one million pesos
(P1,000,000.00); d) request for relief from accountability for loses due to acts of man,
i.e. theft, robbery, arson, etc, in amounts in excess of Five Million pesos
(P5,000,000.00).
In Euro-Med Laboratories Phil., Inc. v. Province of Batangas, 28 we ruled that it is the
COA and not the RTC which has primary jurisdiction to pass upon petitioners money
claim against respondent local government unit. Such jurisdiction may not be waived

First, petitioner was seeking the enforcement of a claim for a certain amount of
money against a local government unit. This brought the case within the COAs
domain to pass upon money claims against the government or any subdivision
thereof under Section 26 of the Government Auditing Code of the Philippines:
The authority and powers of the Commission [on Audit] shall extend to and
comprehend all matters relating to x x x the examination, audit, and settlement of all
debts and claims of any sort due from or owing to the Government or any of its
subdivisions, agencies, and instrumentalities. x x x.
The scope of the COAs authority to take cognizance of claims is circumscribed,
however, by an unbroken line of cases holding statutes of similar import to mean only
liquidated claims, or those determined or readily determinable from vouchers,
invoices, and such other papers within reach of accounting officers. Petitioners claim
was for a fixed amount and although respondent took issue with the accuracy of
petitioners summation of its accountabilities, the amount thereof was readily
determinable from the receipts, invoices and other documents. Thus, the claim was
well within the COAs jurisdiction under the Government Auditing Code of the
Philippines.
Second, petitioners money claim was founded on a series of purchases for the
medical supplies of respondents public hospitals. Both parties agreed that these
transactions were governed by the Local Government Code provisions on supply and
property management and their implementing rules and regulations promulgated by
the COA pursuant to Section 383 of said Code. Petitioners claim therefore involved
compliance with applicable auditing laws and rules on procurement. Such matters are
not within the usual area of knowledge, experience and expertise of most judges but
within the special competence of COA auditors and accountants. Thus, it was but
proper, out of fidelity to the doctrine of primary jurisdiction, for the RTC to dismiss
petitioners complaint.
Petitioner argues, however, that respondent could no longer question the RTCs
jurisdiction over the matter after it had filed its answer and participated in the
subsequent proceedings. To this, we need only state that the court may raise the
issue of primary jurisdiction sua sponte and its invocation cannot be waived by the
failure of the parties to argue it as the doctrine exists for the proper distribution of
power between judicial and administrative bodies and not for the convenience of the
parties.29 (Emphasis supplied.)

Respondents collection suit being directed against a local government unit, such
money claim should have been first brought to the COA. 30 Hence, the RTC should
have suspended the proceedings and refer the filing of the claim before the COA.
Moreover, petitioner is not estopped from raising the issue of jurisdiction even after
the denial of its notice of appeal and before the CA.
There are established exceptions to the doctrine of primary jurisdiction, such as: (a)
where there is estoppel on the part of the party invoking the doctrine; (b) where the
challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c)
where there is unreasonable delay or official inaction that will irretrievably prejudice
the complainant; (d) where the amount involved is relatively small so as to make the
rule impractical and oppressive; (e) where the question involved is purely legal and
will ultimately have to be decided by the courts of justice; (f) where judicial
intervention is urgent; (g) when its application may cause great and irreparable
damage; (h) where the controverted acts violate due process; (i) when the issue of
non-exhaustion of administrative remedies has been rendered moot; (j) when there is
no other plain, speedy and adequate remedy; (k) when strong public interest is
involved; and, (l) in quo warranto proceedings. 31 However, none of the foregoing
circumstances is applicable in the present case.
The doctrine of primary jurisdiction does not warrant a court to arrogate unto itself
authority to resolve a controversy the jurisdiction over which is initially lodged with an
administrative body of special competence. 32 All the proceedings of the court in
violation of the doctrine and all orders and decisions rendered thereby are null and
void.33
Writ of Execution issued in violation of COAs primary jurisdiction is void
Since a judgment rendered by a body or tribunal that has no jurisdiction over the
subject matter of the case is no judgment at all, it cannot be the source of any right or
the creator of any obligation.34 All acts pursuant to it and all claims emanating from it
have no legal effect and the void judgment can never be final and any writ of
execution based on it is likewise void.35
Clearly, the CA erred in ruling that the RTC committed no grave abuse of discretion
when it ordered the execution of its judgment against petitioner and garnishment of
the latters funds.
In its Supplement to the Motion for Reconsideration, petitioner argued that it is the
COA and not the RTC which has original jurisdiction over money claim against
government agencies and subdivisions.1wphi1 The CA, in denying petitioner's
motion for reconsideration, simply stated that the issue had become moot by
respondent's filing of the proper petition with the COA. However, respondent's belated
compliance with the formal requirements of presenting its money claim before the
COA did not cure the serious errors committed by the RTC in implementing its void

decision. The RTC's orders implementing its judgment rendered without jurisdiction
must be set aside because a void judgment can never be validly executed.
Finally, the RTC should have exercised utmost caution, prudence and judiciousness
in issuing the writ of execution and notices of garnishment against petitioner. The
RTC had no authority to direct the immediate withdrawal of any portion of the
garnished funds from petitioner's depositary banks.36 Such act violated the express
directives of this Court under Administrative Circular No. 10-2000, 37 which was issued
"precisely in order to prevent the circumvention of Presidential Decree No. 1445, as
well as of the rules and procedures of the COA." 38 WHEREFORE, both petitions in
G.R. Nos. 197592 and 202623 are GRANTED. The Decision dated October 18, 2010
and Resolution dated July 5 2011 of the Court of Appeals in CA-G.R. SP No. 111754,
and Decision dated August 31, 2011 and Resolution dated June 27, 2012 in CA- G.R.
SP No. 114073 are hereby REVERSED and SET ASIDE. The Decision dated August
14 2009, Writ of Execution and subsequent issuances implementing the said decision
of the Regional Trial Court of Marikina City in Civil Case No. 06-1122-MK are all SET
ASIDE. No pronouncement as to costs.

SO ORDERED.
G.R. NO. 144322

February 6, 2007

METROPOLITAN BANK and TRUST COMPANY, INC., Petitioner,

vs.
NATIONAL WAGES AND PRODUCTIVITY COMMISSION and REGIONAL
TRIPARTITE WAGES AND PRODUCTIVITY BOARD - REGION II, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised
Rules of Court seeking the reversal of the Decision 1 of the Court of Appeals (CA)
dated July 19, 2000 in CA-G.R. SP No. 42240 which denied the petition for certiorari
and prohibition of Metropolitan Bank and Trust Company, Inc. (petitioner).
The procedural antecedents and factual background of the case are as follows:
On October 17, 1995, the Regional Tripartite Wages and Productivity Board, Region
II, Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No.
6727), otherwise known as the Wage Rationalization Act,2issued Wage Order No.
R02-03 (Wage Order), as follows:

Section 1. Upon effectivity of this Wage Order, all employees/workers in the private
sector throughout Region II, regardless of the status of employment are granted an
across-the-board increase of P15.00 daily.3
The Wage Order was published in a newspaper of general circulation on December 2,
19954 and took effect on January 1, 1996.5 Its Implementing Rules6 were approved on
February 14, 1996.7 Per Section 13 of the Wage Order, any party aggrieved by the
Wage Order may file an appeal with the National Wages and Productivity
Commission (NWPC) through the RTWPB within 10 calendar days from the
publication of the Wage Order.
In a letter-inquiry to the NWPC dated May 7, 1996, the Bankers' Council for
Personnel Management (BCPM), on behalf of its member-banks, requested for a
ruling on the eligibility of establishments with head offices outside Region II to seek
exemption from the coverage of the Wage Order since its member-banks are already
paying more than the prevailing minimum wage rate in the National Capital Region
(NCR), which is their principal place of business.8
In a letter-reply dated July 16, 1996, the NWPC stated that the member-banks of
BCPM are covered by the Wage Order and do not fall under the exemptible
categories listed under the Wage Order.9
In a letter-inquiry to the NWPC dated July 23, 1996, petitioner sought for
interpretation of the applicability of said Wage Order.10 The NWPC referred
petitioner's inquiry to the RTWPB.
In a letter-reply dated August 12, 1996, the RTWPB clarified that the Wage Order
covers all private establishments situated in Region II, regardless of the voluntary
adoption by said establishments of the wage orders established in Metro Manila and
irrespective of the amounts already paid by the petitioner.11
On October 15, 1996, the petitioner filed a Petition for Certiorari and Prohibition with
the CA seeking nullification of the Wage Order on grounds that the RTWPB acted
without authority when it issued the questioned Wage Order; that even assuming that
the RTWPB was vested with the authority to prescribe an increase, it exceeded its
authority when it did so without any ceiling or qualification; that the implementation of
the Wage Order will cause the petitioner, and other similarly situated employers, to
incur huge financial losses and suffer labor unrest.12
On March 24, 1997, the Office of the Solicitor General (OSG) filed a Manifestation
and Motion in lieu of Comment affirming the petitioner's claim that the RTWPB acted
beyond its authority in issuing the Wage Order prescribing an across-the-board
increase to all workers and employees in Region II, effectively granting additional or
other benefits not contemplated by R.A. No. 6727.13

In view of the OSG's manifestation, the CA directed respondents NWPC and RTWPB
to file their comment.14
On September 22, 1997, respondents filed their Comment praying that the petition
should be dismissed outright for petitioner's procedural lapses; that certiorari and
prohibition are unavailing since petitioner failed to avail of the remedy of appeal
prescribed by the Wage Order; that the Wage Order has long been in effect; and that
the issuance of the Wage Order was performed in the exercise of a purely
administrative function.15
On July 19, 2000, the CA rendered its Decision denying the petition. The appellate
court held that a writ of prohibition can no longer be issued since implementation of
the Wage Order had long become fait accompli, the Wage Order having taken effect
on January 1, 1996 and its implementing rules approved on February 14, 1996; that a
writ of certiorari is improper since the Wage Order was issued in the exercise of a
purely administrative function, not judicial or quasi-judicial; that the letter-query did not
present justiciable controversies ripe for consideration by the respondents in the
exercise of their wage-fixing function, since no appeal from the Wage Order was filed;
that petitioner never brought before the said bodies any formal and definite challenge
to the Wage Order and it cannot pass off the letter-queries as actual applications for
relief; that even if petitioner's procedural lapse is disregarded, a regional wage order
prescribing a wage increase across-the-board applies to banks adopting a unified
wage system and a disparity in wages between employees holding similar positions in
different regions is not wage distortion.16
Hence, the present petition anchored on the following grounds:
4.1 THE COURT OF APPEALS ERRED IN REFUSING TO DECLARE
WAGE ORDER NO. R02-03 NULL AND VOID AND OF NO LEGAL EFFECT.
4.1.1 THE BOARD, IN ISSUING WAGE ORDER NO. R02-03,
EXCEEDED THE AUTHORITY DELEGATED TO IT BY
CONGRESS.
4.1.2 WAGE ORDER NO. R02-03 IS AN UNREASONABLE
INTRUSION INTO THE PROPERTY RIGHTS OF PETITIONER.
4.1.3 WAGE ORDER NO. R02-03 UNDERMINES THE VERY
ESSENCE OF COLLECTIVE BARGAINING.
4.1.4 WAGE ORDER NO. R02-03 FAILS TO TAKE INTO
ACCOUNT THE VERY RATIONALE FOR A UNIFIED WAGE
STRUCTURE.
4.2 PETITIONER'S RECOURSE TO A WRIT OF CERTIORARI AND
PROHIBITION WAS PROPER.17

Following the submission of the Comment18 and Reply19 thereto, the Court gave due
course to the petition and required both parties to submit their respective
memoranda.20 In compliance therewith, petitioner and respondents submitted their
respective memoranda.21
Petitioner poses two issues for resolution, to wit: (1) whether Wage Order No. R02-03
is void and of no legal effect; and (2) whether petitioner's recourse to a petition for
certiorari and prohibition with the CA was proper.
Anent the first issue, petitioner maintains that the RTWPB, in issuing said Wage
Order, exceeded the authority delegated to it under R.A. No. 6727, which is limited to
determining and fixing the minimum wage rate within their respective territorial
jurisdiction and with respect only to employees who do not earn the prescribed
minimum wage rate; that the RTWPB is not authorized to grant a general across-theboard wage increase for non-minimum wage earners; that Employers Confederation
of the Philippines v. National Wages and Productivity Commission 22(hereafter referred
to as "ECOP") is not authority to rule that respondents have been empowered to fix
wages other than the minimum wage since said case dealt with an across-the-board
increase with a salary ceiling, where the wage adjustment is applied to employees
receiving a certain denominated salary ceiling; that the Wage Order is an
unreasonable intrusion into its property rights; that the Wage Order undermines the
essence of collective bargaining; that the Wage Order fails to take into account the
rationale for a unified wage structure.
As to the second issue, petitioner submits that ultra vires acts of administrative
agencies are correctible by way of a writ of certiorari and prohibition; that even
assuming that it did not observe the proper remedial procedure in challenging the
Wage Order, the remedy of certiorari and prohibition remains available to it by way of
an exception, on grounds of justice and equity; that its failure to observe procedural
rules could not have validated the manner by which the disputed Wage Order was
issued.
Respondents counter that the present petition is fatally defective from inception since
no appeal from the Wage Order was filed by petitioner; that the letter-query to the
NWPC did not constitute the appeal contemplated by law; that the validity of the
Wage Order was never raised before the respondents; that the implementation of the
Wage Order had long become fait accompli for prohibition to prosper. Respondents
insist that, even if petitioner's procedural lapses are disregarded, the Wage Order was
issued pursuant to the mandate of R.A. No. 6727 and in accordance with the Court's
pronouncements in the ECOP case;23 that the Wage Order is not an intrusion on
property rights since it was issued after the required public hearings; that the Wage
Order does not undermine but in fact recognizes the right to collective bargaining; that
the Wage Order did not result in wage distortion.
The Court shall first dispose of the procedural matter relating to the propriety of
petitioner's recourse to the CA before proceeding with the substantive issue involving
the validity of the Wage Order.

Certiorari as a special civil action is available only if the following essential requisites
concur: (1) it must be directed against a tribunal, board, or officer exercising judicial or
quasi-judicial functions; (2) the tribunal, board, or officer must have acted without or in
excess of jurisdiction or with grave abuse of discretion amounting lack or excess of
jurisdiction; and (3) there is no appeal nor any plain, speedy, and adequate remedy in
the ordinary course of law.24
On the other hand, prohibition as a special civil action is available only if the following
essential requisites concur: (1) it must be directed against a tribunal, corporation,
board, officer, or person exercising functions, judicial, quasi-judicial, or ministerial; (2)
the tribunal, corporation, board or person has acted without or in excess of its
jurisdiction, or with grave abuse of discretion amounting lack or excess of jurisdiction;
and (3) there is no appeal or any other plain, speedy, and adequate remedy in the
ordinary course of law.25
A respondent is said to be exercising judicial function where he has the power to
determine what the law is and what the legal rights of the parties are, and then
undertakes to determine these questions and adjudicate upon the rights of the
parties.26 Quasi-judicial function is a term which applies to the action, discretion, etc.,
of public administrative officers or bodies, who are required to investigate facts or
ascertain the existence of facts, hold hearings, and draw conclusions from them as a
basis for their official action and to exercise discretion of a judicial nature. 27 Ministerial
function is one which an officer or tribunal performs in the context of a given set of
facts, in a prescribed manner and without regard to the exercise of his own judgment
upon the propriety or impropriety of the act done.28
In the issuance of the assailed Wage Order, respondent RTWPB did not act in any
judicial, quasi-judicial capacity, or ministerial capacity. It was in the nature of
subordinate legislation, promulgated by it in the exercise of delegated power under
R.A. No. 6727. It was issued in the exercise of quasi-legislative power. Quasilegislative or rule-making power is exercised by administrative agencies through the
promulgation of rules and regulations within the confines of the granting statute and
the doctrine of non-delegation of certain powers flowing from the separation of the
great branches of the government.29
Moreover, the rule on the special civil actions of certiorari and prohibition equally
mandate that these extra-ordinary remedies are available only when "there is no
appeal or any other plain, speedy, and adequate remedy in the ordinary course of
law." A remedy is considered plain, speedy and adequate if it will promptly relieve the
petitioner from the injurious effects of the judgment or rule, order or resolution of the
lower court or agency.30
Section 13 of the assailed Wage Order explicitly provides that any party aggrieved by
the Wage Order may file an appeal with the NWPC through the RTWPB within 10
days from the publication of the wage order.31 The Wage Order was published in a
newspaper of general circulation on December 2, 1995.32

In this case, petitioner did not avail of the remedy provided by law. No appeal to the
NWPC was filed by the petitioner within 10 calendar days from publication of the
Wage Order on December 2, 1995. Petitioner was silent until seven months later,
when it filed a letter-inquiry on July 24, 1996 with the NWPC seeking a clarification on
the application of the Wage Order. Evidently, the letter-inquiry is not an appeal.
It must also be noted that the NWPC only referred petitioner's letter-inquiry to the
RTWPB. Petitioner did not appeal the letter-reply dated August 12, 1996 of the
RTWPB to the NWPC. No direct action was taken by the NWPC on the issuance or
implementation of the Wage Order. Petitioner failed to invoke the power of the NWPC
to review regional wage levels set by the RTWPB to determine if these are in
accordance with prescribed guidelines. Thus, not only was it improper to implead the
NWPC as party-respondent in the petition before the CA and this Court, but also
petitioner failed to avail of the primary jurisdiction of the NWPC under Article 121 of
the Labor Code, to wit:
ART. 121. Powers and Functions of the Commission. - The Commission shall have
the following powers and functions:
xxxx
(d) To review regional wage levels set by the Regional Tripartite Wages and
Productivity Boards to determine if these are in accordance with prescribed
guidelines and national development plans;
xxxx
(f) To review plans and programs of the Regional Tripartite Wages and
Productivity Boards to determine whether these are consistent with national
development plans;
(g) To exercise technical and administrative supervision over the Regional
Tripartite Wages and Productivity Boards;
xxxx

Nevertheless, the Court will proceed to resolve the substantial issues in the present
petition pursuant to the well-accepted principle that acceptance of a petition
for certiorari or prohibition as well as the grant of due course thereto is addressed to
the sound discretion of the court. 34 It is a well-entrenched principle that rules of
procedure are not inflexible tools designed to hinder or delay, but to facilitate and
promote the administration of justice. Their strict and rigid application, which would
result in technicalities that tend to frustrate, rather than promote substantial justice,
must always be eschewed.35
As to respondents' submission that the implementation of the Wage Order can no
longer be restrained since it has become fait accompli, the Wage Order having taken
effect on January 1, 1996 and its implementing rules approved on February 14, 1996,
suffice it to state that courts will decide a question otherwise moot if it is capable of
repetition yet evading review.36 Besides, a case becomes moot and academic only
when there is no more actual controversy between the parties or no useful purpose
can be served in passing upon the merits. Such circumstances do not obtain in the
present case. The implementation of the Wage Order does not in any way render the
case moot and academic, since the issue of the validity of the wage order subsists
even after its implementation and which has to be determined and passed upon to
resolve petitioner's rights and consequent obligations therein.
It is worthy to quote the Court's pronouncements in Tan v. Commission on
Elections,37 thus:
For this Honorable Court to yield to the respondents' urging that, as there has been
fait accompli, then this Honorable Court should passively accept and accede to the
prevailing situation is an unacceptable suggestion. Dismissal of the instant petition, as
respondents so propose is a proposition fraught with mischief. Respondents'
submission will create a dangerous precedent. Should this Honorable Court decline
now to perform its duty of interpreting and indicating what the law is and should be,
this might tempt again those who strut about in the corridors of power to recklessly
and with ulterior motives commit illegal acts, either brazenly or stealthily, confident
that this Honorable Court will abstain from entertaining future challenges to their acts
if they manage to bring about a fait accompli.38
Having disposed of this procedural issue, the Court now comes to the substance of
the petition.

(Emphasis supplied)
Under the doctrine of primary jurisdiction, courts cannot and will not resolve a
controversy involving a question which is within the jurisdiction of an administrative
tribunal, especially where the question demands the exercise of sound administrative
discretion requiring the special knowledge, experience and services of the
administrative tribunal to determine technical and intricate matters of fact.33

R.A. No. 6727 declared it a policy of the State to rationalize the fixing of minimum
wages and to promote productivity-improvement and gain-sharing measures to
ensure a decent standard of living for the workers and their families; to guarantee the
rights of labor to its just share in the fruits of production; to enhance employment
generation in the countryside through industrial dispersal; and to allow business and
industry reasonable returns on investment, expansion and growth.39

In line with its declared policy, R.A. No. 6727 40 created the NWPC,41 vested with the
power to prescribe rules and guidelines for the determination of appropriate minimum
wage and productivity measures at the regional, provincial or industry levels; 42 and
authorized the RTWPB to determine and fix the minimum wage rates applicable in
their respective regions, provinces, or industries therein and issue the corresponding
wage orders, subject to the guidelines issued by the NWPC. 43 Pursuant to its wage
fixing authority, the RTWPB may issue wage orders which set the daily minimum
wage rates,44 based on the standards or criteria set by Article 124 45 of the Labor
Code.
In ECOP,46 the Court declared that there are two ways of fixing the minimum wage:
the "floor-wage" method and the "salary-ceiling" method. The "floor-wage" method
involves the fixing of a determinate amount to be added to the prevailing statutory
minimum wage rates. On the other hand, in the "salary-ceiling" method, the wage
adjustment was to be applied to employees receiving a certain denominated salary
ceiling. In other words, workers already being paid more than the existing minimum
wage (up to a certain amount stated in the Wage Order) are also to be given a wage
increase.47
To illustrate: under the "floor wage method", it would have been sufficient if the Wage
Order simply set P15.00 as the amount to be added to the prevailing statutory
minimum wage rates, while in the "salary-ceiling method", it would have been
sufficient if the Wage Order states a specific salary, such as P250.00, and only those
earning below it shall be entitled to the salary increase.
In the present case, the RTWPB did not determine or fix the minimum wage rate by
the "floor-wage method" or the "salary-ceiling method" in issuing the Wage Order. The
RTWPB did not set a wage level nor a range to which a wage adjustment or increase
shall be added. Instead, it granted an across-the-board wage increase of P15.00 to all
employees and workers of Region 2. In doing so, the RTWPB exceeded its authority
by extending the coverage of the Wage Order to wage earners receiving more than
the prevailing minimum wage rate, without a denominated salary ceiling. As correctly
pointed out by the OSG, the Wage Order granted additional benefits not
contemplated by R.A. No. 6727.
In no uncertain terms must it be stressed that the function of promulgating rules and
regulations may be legitimately exercised only for the purpose of carrying out the
provisions of a law. The power of administrative agencies is confined to implementing
the law or putting it into effect. Corollary to this guideline is that administrative
regulation cannot extend the law and amend a legislative enactment. 48 It is axiomatic
that the clear letter of the law is controlling and cannot be amended by a mere
administrative rule issued for its implementation.49 Indeed, administrative or executive
acts, orders, and regulations shall be valid only when they are not contrary to the laws
or the Constitution.50
Where the legislature has delegated to an executive or administrative officers and
boards authority to promulgate rules to carry out an express legislative purpose, the

rules of administrative officers and boards, which have the effect of extending, or
which conflict with the authority-granting statute, do not represent a valid exercise of
the rule-making power but constitute an attempt by an administrative body to
legislate.51
It has been said that when the application of an administrative issuance modifies
existing laws or exceeds the intended scope, as in this case, the issuance becomes
void, not only for being ultra vires, but also for being unreasonable.52
Thus, the Court finds that Section 1, Wage Order No. R02-03 is void insofar as it
grants a wage increase to employees earning more than the minimum wage rate; and
pursuant to the separability clause 53 of the Wage Order, Section 1 is declared valid
with respect to employees earning the prevailing minimum wage rate.1awphi1.net
Prior to the passage of the Wage Order, the daily minimum wage rates in Region II
was set at P104.00 for the Province of Isabela, P103.00 for the Province of
Cagayan, P101.00 for the Province of Nueva Vizcaya, andP100.00 for the Provinces
of Quirino and Batanes.54 Only employees earning the above-stated minimum wage
rates are entitled to the P15.00 mandated increase under the Wage Order.
Although the concomitant effect of the nullity of the Wage Order to those employees
who have received the mandated increase was not put in issue, this Court shall make
a definite pronouncement thereon to finally put this case to rest. As ruled by the Court
in Latchme Motoomull v. Dela Paz,55 "the Court will always strive to settle the entire
controversy in a single proceeding leaving no root or branch to bear the seeds of
future litigation."56
Applying by analogy, the Court's recent pronouncement in Philippine Ports Authority v.
Commission on Audit,57thus:
In regard to the refund of the disallowed benefits, this Court holds that petitioners
need not refund the benefits received by them based on our rulings in Blaquera v.
Alcala, De Jesus v. Commission on Audit and Kapisanan ng mga Manggagawa sa
Government Service Insurance System (KMG) v. Commission on Audit.
In Blaquera, the petitioners, who were officials and employees of several government
departments and agencies, were paid incentive benefits pursuant to EO No. 292 and
the Omnibus Rules Implementing Book V of EO No. 292. On January 3, 1993, then
President Fidel V. Ramos issued Administrative Order (AO) No. 29 authorizing the
grant of productivity incentive benefits for the year 1992 in the maximum amount
of P1,000. Section 4 of AO No. 29 directed all departments, offices and agencies
which authorized payment of CY 1992 Productivity Incentive Bonus in excess
of P1,000 to immediately cause the refund of the excess. Respondent heads of the
departments or agencies of the government concerned caused the deduction from
petitioners' salaries or allowances of the amounts needed to cover the overpayments.
Petitioners therein filed a petition for certiorari and prohibition before this Court to

prevent respondents therein from making further deductions from their salaries or
allowances. The Court ruled against the refund, thus:
Considering, however, that all the parties here acted in good faith, we cannot
countenance the refund of subject incentive benefits for the year 1992, which
amounts the petitioners have already received. Indeed, no indicia of bad faith
can be detected under the attendant facts and circumstances. The officials and
chiefs of offices concerned disbursed such incentive benefits in the honest
belief that the amounts given were due to the recipients and the latter accepted
the same with gratitude, confident that they richly deserve such benefits.
The said ruling in Blaquera was applied in De Jesus.
In De Jesus, COA disallowed the payment of allowances and bonuses consisting of
representation and transportation allowance, rice allowance, productivity incentive
bonus, anniversary bonus, year-end bonus and cash gifts to members of
the interim Board of Directors of the Catbalogan Water District. This Court affirmed
the disallowance because petitioners therein were not entitled to other compensation
except for payment of per diemunder PD No. 198. However, the Court ruled against
the refund of the allowances and bonuses received by petitioners, thus:
This ruling in Blaquera applies to the instant case. Petitioners here received the
additional allowances and bonuses in good faith under the honest belief that
LWUA Board Resolution No. 313 authorized such payment. At the time
petitioners received the additional allowances and bonuses, the Court had not
yet decided Baybay Water District. Petitioners had no knowledge that such
payment was without legal basis. Thus, being in good faith, petitioners need
not refund the allowances and bonuses they received but disallowed by the
COA.

In the same vein, the rulings in Blaquera, De Jesus and KMG apply to this case.
Petitioners received the hazard duty pay and birthday cash gift in good faith since the
benefits were authorized by PPA Special Order No. 407-97 issued pursuant to PPA
Memorandum Circular No. 34-95 implementing DBM National Compensation Circular
No. 76, series of 1995, and PPA Memorandum Circular No. 22-97, respectively.
Petitioners at that time had no knowledge that the payment of said benefits lacked
legal basis. Being in good faith, petitioners need not refund the benefits they
received.58 (Emphasis supplied)
employees, other than minimum wage earners, who received the wage increase
mandated by the Wage Order need not refund the wage increase received by them
since they received the wage increase in good faith, in the honest belief that they are
entitled to such wage increase and without any knowledge that there was no legal
basis for the same.
Considering the foregoing, the Court need not delve on the other arguments raised by
the parties.
WHEREFORE, the petition is PARTIALLY GRANTED. The Decision of the Court of
Appeals dated July 19, 2000 in CA-G.R. SP No. 42240 is MODIFIED. Section 1 of
Wage Order No. R02-03 issued on October 17, 1995 by the Regional Tripartite
Wages and Productivity Board for Region II, Tuguegarao, Cagayan is
declared VALID insofar as the mandated increase applies to employees earning the
prevailing minimum wage rate at the time of the passage of the Wage Order
and VOID with respect to its application to employees receiving more than the
prevailing minimum wage rate at the time of the passage of the Wage Order.
No costs.
SO ORDERED.

Further, in KMG, this Court applied the ruling in Blaquera and De Jesus in holding
that the Social Insurance Group (SIG) personnel of the Government Service
Insurance System need not refund the hazard pay received by them although said
benefit was correctly disallowed by COA. The Court ruled:
The Court however finds that the DOH and GSIS officials concerned who
granted hazard pay under R.A. No. 7305 to the SIG personnel acted in good
faith, in the honest belief that there was legal basis for such grant. The SIG
personnel in turn accepted the hazard pay benefits likewise believing that they
were entitled to such benefit. At that time, neither the concerned DOH and GSIS
officials nor the SIG personnel knew that the grant of hazard pay to the latter is
not sanctioned by law. Thus, following the rulings of the Court in De Jesus v.
Commission on Audit, and Blaquera v. Alcala, the SIG personnel who
previously received hazard pay under R.A. No. 7305 need not refund such
benefits.

Respondents

thus

filed

on February

7,

the Regional Trial Court of Tangub City for Reconveyance

1997 a
of

complaint
Possession

before
with

Preliminary Mandatory Injunction and Damages[3] against petitioners.

In their Answer, petitioners claimed that the subject land forms part of a
three-hectare property described in OCT No. P-447 issued on February 10, 1956 in
the name of Andrea Lacson who sold a 2-hectare portion thereof to Eleuterio
Geonzon who, in turn, sold 1.1148 thereof to his sister petitioner Fernanda Geonzon
vda. de Barrera (Fernanda).[4]
FERNANDA GEONZON VDA. DE BARRERA AND
JOHNNY OCO, JR.,
Petitioners,

G.R. No. 174346

Respondents, on the other hand, asserted that the land was occupied,
possessed and cultivated by their predecessor-in-interest Vicente Legaspi and his

Present:

wife Lorenza since 1935;[5] after a subdivision survey was conducted in November 30,
QUISUMBING, J., Chairperson,
CARPIO MORALES,
1976, it was found out that the land formed part of the titled property of Andrea
TINGA,
VELASCO, JR., and
Lacson;[6] and despite this discovery, they never filed any action to recover ownership
BRION, JJ.
thereof since they were left undisturbed in their possession,[7] until October 1,

- versus HEIRS OF VICENTE LEGASPI, REPRESENTED BY

PEDRO LEGASPI,
Respondents.

Promulgated:
September 12, 2008
x--------------------------------------------------x

1996 when petitioners forced their way into it.

Petitioners raised the issue of ownership as a special affirmative defense.
[8]

DECISION

subject matter of the complaint, the assessed value of the land being only P11,160,

CARPIO MORALES, J.:

[9]

Under review before this Court is the July 31, 2006 Decision of the Court of
[1]

Appeals, which

affirmed

that

of

the

Regional

In their Memorandum, however, they questioned the jurisdiction of the RTC over the

Trial

Court,

Branch

16,

as reflected in Tax Declaration No. 7565.[10]

By Decision of November 27, 1998, the trial court found for respondents,

disposing as follows:

of Tangub City in Civil Case No. TC-97-001, ordering the defendants-petitioners

herein, Fernanda Geonzon vda. de Barrera and Johnny Oco. Jr. to return possession
of the subject property to the plaintiffs-herein respondents, Heirs of Vicente Legaspi.
On October 1, 1996, petitioner Johnny Oco Jr. (Oco), said to be a peace
officer connected with the PNP, accompanied by unidentified CAFGU members,
forced his way into respondents 0.9504-hectare irrigated farmland located at Liloan,
Bonifacio, Misamis Occidental. After dispossessing respondents of the property, Oco
and company used a tractor to destroy the planted crops, took possession of the land,
and had since tended it.[2]

WHEREFORE, judgment is hereby rendered in favor of

the plaintiffs [herein respondents] and against the defendants [herein petitioners]:
1. Ordering the latter to return the possession of the land
in question to the plaintiffs and
2. Ordering the latter to desist from further depriving and
disturbing plaintiffs peaceful possession thereof, unless there be
another court judgment to the contrary.
SO ORDERED.

On the issue of jurisdiction over the subject matter, the trial court,
maintaining that it had, held:

For obvious reasons, the issue of lack of jurisdiction over the subject matter
shall be first considered.
Section 33 of Batas Pambansa Bilang 129, (the Judiciary Reorganization Act

The Court is not persuaded by [the defendants]

arguments. What determines the nature of the action as well as the
jurisdiction of the [c]ourt are the facts alleged in the complaint and
not those alleged in the answer of the defendants.
xxxx
In [p]ar. 2 of plaintiffs complaint, the land in question was
described as a riceland situated at Liloan, Bonifacio, Misamis Occ.
and declared under [T]ax [D]eclaration No. 7564 in the name of
Vicente Legaspi and bounded on the north by a creek, on the east
Sec. 12, on the south Lot No. 007 and on the west also by Lot No.
007 which tax declaration cancels former [T]ax [D]eclaration No.
12933 under the name of Lorenza Bacul Legaspi which likewise
cancels [T]ax [D]eclaration No. 5454 covering the bigger portion of
the land under which the land described under [T]ax [D]eclaration
No. 7565 is part and parcel thereof [sic]; the present estimated
value being P50,000.[11] (Emphasis and underscoring supplied)
Petitioners thereupon appealed to the Court of Appeals which affirmed the
trial courts disposition of the issue of jurisdiction over the subject matter.
On the merits, the appellate court affirmed too the trial courts decision,
finding that both testimonial and documentary evidence on record established that
appellees, through their predecessors-in-interest, have been in peaceful, continuous,
public and actual possession of the property in dispute even before the year 1930.[12]
The appellate court emphasized that in an accion publiciana, the only issue
involved is the determination of possession de jure.[13]
Hence, the present petition for review which raises the following issues:

of 1980), as amended by Republic Act No. 7691 provides for the jurisdiction
of metropolitan trial courts, municipal trial courts and municipal circuit trial courts, to
wit:
xxxx
(3) Exclusive original jurisdiction in all civil actions
which involve title to, or possession of, real property, or any
interest therein where the assessed value of the property or
interest therein does not exceed Twenty thousand pesos
(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,
attorneys 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. (Emphasis, italics and underscoring supplied)
Before the amendments introduced by Republic Act No. 7691, the plenary
action of accion publiciana was to be brought before the regional trial court.[15] With
the modifications introduced by R.A. No. 7691 in 1994, the jurisdiction of the first level
courts has been expanded to include jurisdiction over other real actions where the
assessed value does not exceed P20,000, P50,000 where the action is filed in Metro
Manila. The first level courts thus have exclusive original jurisdiction over accion
publiciana andaccion reivindicatoria where the assessed value of the real property
does not exceed the aforestated amounts. Accordingly, the jurisdictional element is
the assessed value of the property.

I. . . . WHETHER OWNERSHIP AND TITLE CANNOT BE

AN ISSUE TO DETERMINE WHO HAS A BETTER RIGHT [TO]
THE PORTION LITIGATED; AND
II. WHETHER . . . THE NATURE OF THE ACTION AS
WELL AS THE JURISDICTION OF THE COURT DEPEND ON THE
FACTS AS ALLEGED IN THE COMPLAINT.[14]

Assessed value is understood to be the worth or value of property

established by taxing authorities on the basis of which the tax rate is
applied. Commonly, however, it does not represent the true or market value of the
property.[16]
The subject land has an assessed value of P11,160 as reflected in Tax
Declaration No. 7565, a common exhibit of the parties. The bare claim of respondents

that it has a value of P50,000 thus fails. The case, therefore, falls within the exclusive
original jurisdiction of the municipal trial court.
It was error then for the RTC to take cognizance of the complaint based on
the allegation that the present estimated value [of the land is] P50,000, which
allegation is, oddly, handwritten on the printed pleading. The estimated value,
commonly referred to as fair market value,[17] is entirely different from the assessed
value of the property.
Lack of jurisdiction is one of those excepted grounds where the court may
dismiss a claim or a case at any time when it appears from the pleadings or the
evidence on record that any of those grounds exists, even if they were not raised in
the answer or in a motion to dismiss.[18] That the issue of lack of jurisdiction was
raised by petitioners only in their Memorandum filed before the trial court did not thus
render them in estoppel.
En passant, the Court notes that respondents cause of action accion
publiciana is a wrong mode. The dispossession took place on October 1, 1996 and
the complaint was filed four months thereafter or on February 7, 1997. Respondents
exclusion from the property had thus not lasted for more than one year to call for the
remedy of accion publiciana.
In fine, since the RTC has no jurisdiction over the complaint filed by
respondents, all the proceedings therein as well as the Decision of November 27,
1998, are null and void. The complaint should perforce be dismissed. This leaves it
unnecessary to still dwell on the first issue.
WHEREFORE, the petition is hereby GRANTED. The challenged July 31,
2006 Decision of the Court of Appeals is SET ASIDE. The decision of Branch 16 of
theRegional Trial Court of Tangub City in Civil Case No. TC-97-001 is declared NULL
and VOID for lack of jurisdiction.
SO ORDERED.

case as it should have been filed in the Municipal Trial Court (MTC) since it was a
summary action for ejectment under Rule 70 of the Rules of Court. The RTC denied
the motion in an order dated November 9, 2001.11
G.R. No. 172217

September 18, 2009

SPOUSES LYDIA FLORES-CRUZ and REYNALDO I. CRUZ, Petitioners,

vs.
SPOUSES LEONARDO and ILUMINADA GOLI-CRUZ, SPOUSES RICO and
FELIZA DE LA CRUZ, SPOUSES BOY and LANI DE LA CRUZ, ZENAIDA A.
JACINTO and ROGELIO DE LOS SANTOS, Respondents.
RESOLUTION
CORONA, J.:
This is a petition for review on certiorari 1 of the August 23, 2005 decision2 and April 5,
2006 resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 81099.
On December 15, 1999,4 petitioner spouses Lydia Flores-Cruz and Reynaldo I. Cruz
purchased a 5,209-sq. m. lot situated in Pulong Yantok, Angat, Bulacan 5 from Lydias
siblings, namely, Teresita, Ramon and Daniel (all surnamed Flores). Their father,
Estanislao Flores, used to own the land as an inheritance from his parents Gregorio
Flores and Ana Mangahas. Estanislao died in 1995. Estanislao and, later, petitioners
paid the realty taxes on the land although neither of them occupied it. Petitioners sold
portions thereof to third parties sometime in September 2000.6
After the death of Estanislao, petitioners found out that respondent spouses Leonardo
and Iluminada Goli-Cruz et al. were occupying a section of the land. Initially, petitioner
Lydia talked to respondents and offered to sell them the portions they were occupying
but the talks failed as they could not agree on the price. On March 2, 2001,
petitioners lawyer sent respondents letters asking them to leave. These demands,
however, were ignored. Efforts at barangay conciliation also failed.7
Respondents countered that their possession of the land ranged from 10 to 20 years.
According to respondents, the property was alienable public land.8 Prior to petitioners
demand, they had no knowledge of petitioners and their predecessors ownership of
the land. They took steps to legitimize their claim and paid the realty tax on their
respective areas for the taxable year 2002. Subsequently, however, the tax
declarations issued to them were cancelled by the Provincial Assessors Office and reissued to petitioners.9
On August 6, 2001, petitioners filed a complaint for recovery of possession of the land
in the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 82.10 Respondents filed
a motion to dismiss claiming, among others, that the RTC had no jurisdiction over the

After trial, the RTC rendered a decision dated October 3, 2003 in favor of petitioners
and ordered respondents to vacate the land, and pay attorneys fees and costs of
suit.121avvphi1
On appeal by respondents to the CA, the latter, in a decision dated August 23, 2005,
ruled that the RTC had no jurisdiction over the action for recovery of possession
because petitioners had been dispossessed of the property for less than a year. It
held that the complaint was one for unlawful detainer which should have been filed in
the MTC. Thus, it ruled that the RTC decision was null and void. Reconsideration was
denied on April 5, 2006.
Hence, this petition.
The issue for our resolution is whether the RTC had jurisdiction over this case.
The petition has no merit.
It is axiomatic that the nature of the action on which depends the question of
whether a suit is within the jurisdiction of the court is determined solely by the
allegations in the complaint13 and the law at the time the action was
commenced.14 Only facts alleged in the complaint can be the basis for determining
the nature of the action and the courts competence to take cognizance of it. 15 One
cannot advert to anything not set forth in the complaint, such as evidence adduced at
the trial, to determine the nature of the action thereby initiated.16
Petitioners complaint contained the following allegations:
xxx

xxx

xxx

3. That, [petitioners] are owners of a piece of land known as Lot 30-part,

Cad. 349 located at Pulong Yantok, Angat, Bulacan as shown by a copy of
Tax Declaration No. 99-01010-01141 made [an] integral [part] hereof as
Annex "A";
4. That, said Lot No. 30-part was acquired through [purchase] on December
15, 1999, as shown by [a] Deed of Absolute Sale of Unsubdivided Land
made [an] integral [part] hereof as Annex "B, B-1 & B-2";
5. That, when [petitioners] inspected subject property, they found it to be
occupied by at least five (5) households under the names of herein

[respondents], who, when asked about their right to stay within the premises
replied that they were allowed to live thereat by the deceased former owner;
6. That, [petitioners] informed the [respondents] that as far as they are
concerned, the latters occupancy was not communicated to them so it
follows that they do not have any right to remain within subject piece of land;
7. That, [respondents] seem to be unimpressed and made no move to leave
the premises or to come to terms with the [petitioners] so much so that [the
latter] asked their lawyer to write demand letters to each and everyone of the
[respondents] as shown by the demand letters dated March 2, 2001 made
integral part hereof as Annex "C, C-1, C-2, C-3, & C-4";
8. That, there is no existing agreement or any document that illustrate
whatever permission, if any were given, that the [respondents] presented to
[petitioners] in order to legitimize the claim;
9. That, it is clear that [respondents] occupy portions of subject property
either by stealth, stratagem, force or any unlawful manner which are just
bases for ejectment;
xxx

xxx

x x x17

According to the CA, considering that petitioners claimed that respondents were
possessors of the property by mere tolerance only and the complaint had been
initiated less than a year from the demand to vacate, the proper remedy was an
action for unlawful detainer which should have been filed in the MTC.
We agree.
The necessary allegations in a complaint for ejectment are set forth in Section 1, Rule
70 of the Rules of Court. 18Petitioners alleged that the former owner (Estanislao, their
predecessor) allowed respondents to live on the land. They also stated that they
purchased the property on December 15, 1999 and then found respondents
occupying the property. Yet they demanded that respondents vacate only on March 2,
2001. It can be gleaned from their allegations that they had in fact permitted or
tolerated respondents occupancy.
Based on the allegations in petitioners complaint, it is apparent that such is a
complaint for unlawful detainer based on possession by tolerance of the owner.19 It is
a settled rule that in order to justify such an action, the owners permission or
tolerance must be present at the beginning of the possession. 20 Such jurisdictional
facts are present here.

There is another reason why petitioners complaint was not a proper action for
recovery of possession cognizable by the RTC. It is no longer true that all cases of
recovery of possession or accion publiciana lie with the RTC regardless of the value
of the property.21
When the case was filed in 2001, Congress had already approved Republic Act No.
769122 which expanded the MTCs jurisdiction to include other actions involving title to
or possession of real property (accion publiciana andreinvindicatoria)23 where the
assessed value of the property does not exceed P20,000 (or P50,000, for actions
filed in Metro Manila).24 Because of this amendment, the test of whether an action
involving possession of real property has been filed in the proper court no longer
depends solely on the type of action filed but also on the assessed value of the
property involved.25 More specifically, since MTCs now have jurisdiction over accion
publiciana and accion reinvindicatoria (depending, of course, on the assessed value
of the property), jurisdiction over such actions has to be determined on the basis of
the assessed value of the property.26a1f
This issue of assessed value as a jurisdictional element in accion publiciana was not
raised by the parties nor threshed out in their pleadings.27 Be that as it may, the Court
can motu proprio consider and resolve this question because jurisdiction is conferred
only by law.28 It cannot be acquired through, or waived by, any act or omission of the
parties.29
To determine which court (RTC or MTC) has jurisdiction over the action, the complaint
must allege the assessed value of the real property subject of the complaint or the
interest thereon.30 The complaint did not contain any such allegation on the assessed
value of the property. There is no showing on the face of the complaint that the RTC
had jurisdiction over the action of petitioners.31 Indeed, absent any allegation in the
complaint of the assessed value of the property, it cannot be determined whether it is
the RTC or the MTC which has original and exclusive jurisdiction over the petitioners
action.32
Moreover, the complaint was filed (August 6, 2001) within one year from the demand
to vacate was made (March 2, 2001). Petitioners dispossession had thus not lasted
for more than one year to justify resort to the remedy ofaccion publiciana.33
Since petitioners complaint made out a case for unlawful detainer which should have
been filed in the MTC and it contained no allegation on the assessed value of the
subject property, the RTC seriously erred in proceeding with the case. The
proceedings before a court without jurisdiction, including its decision, are null and
void.34 It follows that the CA was correct in dismissing the case.
WHEREFORE, the petition is DENIED.
Costs against petitioners.

City, on June 3, 1991, Sp. Proc. No. 3664-P3 for the allowance of the November 18,
1985 holographic will of the decedent. Petitioner alleged that Moises died without
issue and left to her the following properties, namely: (1) a parcel of land situated in
Pasay City and described in Transfer Certificate of Title No. 9741; (2) images of
Oracion del Huerto and Pieta including the crown; and (3) all personal belongings.4

SO ORDERED.

Respondent, a cousin of the petitioner, filed his opposition and counter-petitioned for
the allowance of two other holographic wills of the decedent, one dated September
27, 1989 and another dated September 28, 1989.5
After trial on the merits, the RTC, on September 29, 1995, rendered its
Decision6 declaring the September 27, 1989 holographic will as having revoked the
November 18, 1985 will, allowing the former, and appointing respondent as
administrator of Moisess estate.7
On appeal, the CA, in the assailed June 17, 2005 Decision, 8 modified the decision of
the trial court and ruled that the September 27, 1989 holographic will had only
revoked the November 18, 1985 will insofar as the testamentary disposition of
Moisess real property was concerned.9
With the denial of her motion for reconsideration in the further assailed August 17,
2005 Resolution,10 petitioner elevated the case before us via the instant petition.11

G.R. No. 169700

July 30, 2009

APOLONIA BANAYAD FRIANELA, Petitioner,

vs.
SERVILLANO BANAYAD, JR., Respondent.
DECISION

The Court notes that the trial court focused all of its attention on the merits of the case
without first determining whether it could have validly exercised jurisdiction to hear
and decide Sp. Proc. No. 3664-P. On appeal, the appellate court also overlooked the
issue on the jurisdictional competence of the trial court over the said case. This Court,
after a meticulous review of the records, finds that the RTC of Pasay City had no
jurisdiction over the subject matter in Sp. Proc. No. 3664-P.
The jurisdiction of the court to hear and decide a case is conferred by the law in force
at the time of the institution of the action unless such statute provides for a retroactive
application thereof.12 Jurisdiction is moreover determined by the allegations or
averments in the complaint or petition.13

NACHURA, J.:
Before the court is a petition for review on certiorari under Rule 45 of the Rules of
Court assailing the June 17, 2005 Decision1 of the Court of Appeals (CA) in CA-G.R.
CV No. 53929, and the August 17, 2005 Resolution2denying the motion for partial
reconsideration thereof.

In this case, at the time the petition for the allowance of Moisess holographic will was
instituted, the then Sections 19 and 3314 of Batas Pambansa (B.P.) Blg. 12915 were in
force, thus
SECTION 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise
exclusive original jurisdiction:

Narrated in brief are the antecedent facts and proceedings, to wit:

xxxx
Following the death of her uncle, the testator Moises F. Banayad, petitioner, who was
named as devisee in the will, filed before the Regional Trial Court (RTC) of Pasay

(4) In all matters of probate, both testate and intestate, where the gross value of the
estate exceeds twenty thousand pesos (P20,000.00);

A. A parcel of land described under TCT No. 9741 xerox copy of

which is herewith (sic) attached as Annex "C".

xxxx

B. Imahen ng Oracion del Huerto at Pieta, kasama and korona.

SECTION 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:

C. All personal belongings.

(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate
and intestate, including the grant of provisional remedies in proper cases, where the
demand does not exceed twenty thousand pesos exclusive of interest and costs but
inclusive of damages of whatever kind, the amount of which must be specifically
alleged: 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; and
xxxx

5. That the testator at the time of the execution of the said Will was of sound
and disposing mind.
WHEREFORE, it is most respectfully prayed of the Honorable Court that:
a. Upon proper notice and hearing, the above mentioned Will be admitted to
probate;
b. That letters testamentary or administration be issued to herein petitioner
without bond;
Petitioner prays for such other reliefs just and equitable in (sic) the premises.

The applicable law, therefore, confers jurisdiction on the RTC or the MTCs over
probate proceedings depending on the gross value of the estate, 16 which value must
be alleged in the complaint or petition to be filed.1avvphi1Significantly, in this case,
the original petition docketed before the trial court contains only the following
averments:
xxxx
1. That Petitioner is of legal age, married, Filipino and residing at 2237 P.
Burgos St., Pasay City who is named devisee in the Last Will and Testament
of MOISES BANAYAD, deceased who died in Pasay City General Hospital
on March 27, 1991 xerox copy of his death certificate is herewith attached as
Annex "A" to form integral part hereof;
2. That the said Last Will and Testament is herewith (sic) attached as Annex
"B" and made an integral part of this Petition, the original thereof will be
presented to this Honorable Court at the time of probate;

x x x x17
Nowhere in the petition is there a statement of the gross value of Moisess estate.
Thus, from a reading of the original petition filed, it cannot be determined which court
has original and exclusive jurisdiction over the proceedings.18 The RTC therefore
committed gross error when it had perfunctorily assumed jurisdiction despite the fact
that the initiatory pleading filed before it did not call for the exercise of its jurisdiction.
The RTC should have, at the outset, dismissed the case for lack of jurisdiction. Be it
noted that the dismissal on the said ground may be ordered motu proprio by the
courts.19 Further, the CA, on appeal, should have dismissed the case on the same
ground. Settled is the doctrine that the issue of jurisdiction may be raised by any of
the parties or may be reckoned by the court, at any stage of the proceedings, even on
appeal, and is not lost by waiver or by estoppel.20

3. That the decedent is an inhabitant of the Philippines and residing at 2237

P. Burgos St., Pasay City at the time of his death;

Despite the pendency of this case for around 18 years, the exception laid down in
Tijam v. Sibonghanoy21 and clarified recently in Figueroa v. People22 cannot be
applied. First, because, as a general rule, the principle of estoppel by laches cannot
lie against the government.23 No injustice to the parties or to any third person will be
wrought by the ruling that the trial court has no jurisdiction over the instituted probate
proceedings.

4. That the properties left by the decedent consist of real and personal
properties particularly described herein below, which decedent all
bequeathed to petitioner;

Second and most important, because in Tijam, the delayed invocation of lack of
jurisdiction has been made during the execution stage of a final and executory ruling
of a court. In Figueroa, the Court has emphasized that estoppel by laches only

supervenes in exceptional cases similar to the factual milieu in Tijam. It is well to note
the following factual setting of Tijam:

"I. That the Honorable Court a quo erred in issuing its order dated November
2, 1957, by holding the incident as submitted for resolution, without a
summary hearing and compliance with the other mandatory requirements
provided for in Section 17, Rule 59 of the Rules of Court.

On July 19, 1948 barely one month after the effectivity of Republic Act No. 296
known as the Judiciary Act of 1948 the spouses Serafin Tijam and Felicitas
Tagalog commenced Civil Case No. R-660 in the Court of First Instance of Cebu
against the spouses Magdaleno Sibonghanoy and Lucia Baguio to recover from them
the sum of P1,908.00, with legal interest thereon from the date of the filing of the
complaint until the whole obligation is paid, plus costs. As prayed for in the complaint,
a writ of attachment was issued by the court against defendants' properties, but the
same was soon dissolved upon the filing of a counter-bond by defendants and the
Manila Surety and Fidelity Co., Inc. hereinafter referred to as the Surety, on the 31st
of the same month.
After being duly served with summons the defendants filed their answer in which,
after making some admissions and denials of the material averments of the
complaint, they interposed a counterclaim. This counterclaim was answered by the
plaintiffs.1avvphi1
After trial upon the issues thus joined, the Court rendered judgment in favor of the
plaintiffs and, after the same had become final and executory, upon motion of the
latter, the Court issued a writ of execution against the defendants. The writ having
been returned unsatisfied, the plaintiffs moved for the issuance of a writ of execution
against the Surety's bond (Rec. on Appeal pp. 46-49), against which the Surety filed a
written opposition (Id. pp. 49) upon two grounds, namely, (1) Failure to prosecute and
(2) Absence of a demand upon the Surety for the payment of the amount due under
the judgment. Upon these grounds the Surety prayed the Court not only to deny the
motion for execution against its counter-bond but also the following affirmative relief:
"to relieve the herein bonding company of its liability, if any, under the bond in
question" (Id. p. 54) The Court denied this motion on the ground solely that no
previous demand had been made on the Surety for the satisfaction of the judgment.
Thereafter the necessary demand was made, and upon failure of the Surety to satisfy
the judgment, the plaintiffs filed a second motion for execution against the counterbond. On the date set for the hearing thereon, the Court, upon motion of the Surety's
counsel, granted the latter a period of five days within which to answer the motion.
Upon its failure to file such answer, the Court granted the motion for execution and
the corresponding writ was issued.
Subsequently, the Surety moved to quash the writ on the ground that the same was
issued without the required summary hearing provided for in Section 17 of Rule 59 of
the Rules of Court. As the Court denied the motion, the Surety appealed to the Court
of Appeals from such order of denial and from the one denying its motion for
reconsideration (Id. p. 97). Its record on appeal was then printed as required by the
Rules, and in due time it filed its brief raising therein no other question but the ones
covered by the following assignment of errors:

"II. That the Honorable Court a quo erred in ordering the issuance of
execution against the herein bonding company-appellant.
"III. That the Honorable Court a quo erred in denying the motion to quash the
writ of execution filed by the herein bonding company- appellant as well as
its subsequent motion for reconsideration, and/or in not quashing or setting
aside the writ of execution."
Not one of the assignment of errors it is obvious raises the question of lack of
jurisdiction, neither directly nor indirectly.
Although the appellees failed to file their brief, the Court of Appeals, on December 11,
1962, decided the case affirming the orders appealed from.
On January 8, 1963 five days after the Surety received notice of the decision, it
filed a motion asking for extension of time within which to file a motion for
reconsideration. The Court of Appeals granted the motion in its resolution of January
10 of the same year. Two days later the Surety filed a pleading entitled MOTION TO
DISMISS, alleging substantially that appellees' action was filed in the Court of First
Instance of Cebu on July 19, 1948 for the recovery of the sum of P1,908.00 only; that
a month before that date Republic Act No. 296, otherwise known as the Judiciary Act
of 1948, had already become effective, Section 88 of which placed within the original
exclusive jurisdiction of inferior courts all civil actions where the value of the subjectmatter or the amount of the demand does not exceed P2,000.00, exclusive of interest
and costs; that the Court of First Instance therefore had no jurisdiction to try and
decide the case. Upon these premises the Surety's motion prayed the Court of
Appeals to set aside its decision and to dismiss the case. By resolution of January 16,
1963 the Court of Appeals required the appellees to answer the motion to dismiss, but
they failed to do so. Whereupon, on May 20 of the same year, the Court resolved to
set aside its decision and to certify the case to Us.
x x x x24
Clearly, then, in Tijam, the issue of lack of jurisdiction has only been raised during the
execution stage, specifically when the matter of the trial courts denial of the suretys
motion to quash the writ of execution has been brought to the appellate court for
review. Here, the trial courts assumption of unauthorized jurisdiction over the probate
proceedings has been discovered by the Court during the appeal stage of the main
case, not during the execution stage of a final and executory decision. Thus, the
exceptional rule laid down in Tijam cannot apply.

Since the RTC has no jurisdiction over the action, all the proceedings therein,
including the decision rendered, are null and void. 25 With the above disquisition, the
Court finds it unnecessary to discuss and resolve the other issues raised in the
petition.
IN THE LIGHT OF THE FOREGOING, Sp. Proc. No. 3664-P before the Regional Trial
Court of Pasay City is DISMISSED for lack of jurisdiction.
SO ORDERED.

On December 22, 1999, the parties executed an addendum11 to the contract to sell
whereby AAHI assigned to petitioner the right to the exclusive use of parking slot
P504 covered by CTC No. 54975 for a consideration ofP600,000, which petitioner
paid on even date.

G.R. No. 15929

February 10, 2006

ALLGEMEINE-BAU-CHEMIE PHILS., INC., Petitioner,

vs.
METROPOLITAN BANK & TRUST CO., HONORABLE N. C. PERELLO, Presiding
Judge of the REGIONAL TRIAL COURT-MUNTINLUPA, BRANCH 276 and
SHERIFF FELIX FALCOTELLO, Respondents.
DECISION
CARPIO MORALES, J.:
The appellate courts denial of petitioner Allgemeine-Bau-Chemie Phils., Inc.s petition
to enjoin the implementation of a writ of possession issued by Branch 276, Regional
Trial Court (RTC) of Muntinlupa City in favor of private respondent Metropolitan Bank
and Trust Co. (Metrobank) is the subject of the present petition for review.
Under a loan agreement1 dated November 19, 1996, Asian Appraisal Holdings, Inc.
(AAHI) obtained a loan amounting to P442,500,000 from Solidbank Corporation
(Solidbank) for the construction of Asian Star Building, a 20 storey commercial
condominium built on lots covered by TCT Nos. 205967 and 205969 2 located at the
Filinvest Corporate City, Alabang, Muntinlupa City.
As security for the loan, AAHI executed a security agreement 3 or real estate mortgage
dated November 19, 1996 over its property consisting of the lots covered by TCT
Nos. 205967 and 205969 and the condominium built thereon including all units,
parking slots, common areas and other improvements, machineries and equipment.
The real estate mortgage was registered with the Register of Deeds on November 19,
1996 and duly annotated on the individual Condominium Certificates of Title (CTC) on
even date.
On November 17, 1999, AAHI entered into a contract to sell 4 with petitioner for the
purchase of Units 1004 and 1005 covered by CTC No. 54666 5 and CTC No. 546676 ,
respectively, and the right to the exclusive use of parking slots P515, P516, P517,
and P514 covered by CTC No. 54986, 7 CTC No. 54987,8 CTC No. 54988,9 CTC No.
5498510 (the subject properties), respectively, for a total purchase price
of P23,571,280.

By separate letters12 dated March 23, 2000, AAHI and Solidbank informed petitioner
of the real estate mortgage forged by them and was advised to remit its monthly
amortizations for the units and parking slots it purchased to Solidbank. Petitioner was
also requested to inform Solidbank of the total installments it had paid for these units
and parking slots and the balance still due thereon13
Petitioner which occupied the condominium units as its place of business had, by
October 2001, fully settled its obligation to AAHI in the total amount
of P26,588,409.30.14
On October 21, 2000, as AAHI defaulted on its loan obligation, Metropolitan Bank and
Trust Company (Metrobank), to which the banking operations of Solidbank were
integrated, filed before the Muntinlupa RTC a Petition for Extra-Judicial Foreclosure of
the Real Estate Mortgage.15
AAHI not long after filed on October 30, 2000 also before the Muntinlupa RTC a
complaint16 against Solidbank, for Specific Performance with Preliminary Injunction to
enjoin the foreclosure of the real estate mortgage, docketed as Civil Case No. 00196, and raffled to Branch 256 of the RTC.
On October 31, 2000, the mortgaged properties were sold at public auction to the
highest bidder, Metrobank, to which a Certificate of Sale was issued. 17 The Certificate
of Sale was registered with the Register of Deeds of Muntinlupa City and annotated
on the individual CTCs on April 4, 2001.18
On January 24, 2002, Metrobank filed an Ex-Parte petition for the Issuance of a Writ
of Possession19 of the properties subject of the foreclosed mortgage. The petition was
docketed as LRC Case No. 02-007 and raffled to Branch 276, RTC of Muntinlupa.
The petition was granted and a writ of possession was issued on April 9, 2002.20
Also on April 9, 2002, petitioner filed before Branch 256 of the RTC in Civil Case No.
00-196 (AAHIs complaint against Solidbank for Specific Performance with
Preliminary Injunction) a motion for intervention, 21 to which it attached a complaint-inintervention22 with prayer for the annulment of the extra-judicial foreclosure sale,
delivery of title, and damages and for the issuance of a temporary restraining order
and/or writ of preliminary injunction enjoining Metrobank to consolidate its title and to
take possession of its properties.
The court Sheriff on April 15, 2002 issued a notice to vacate 23 which was served on
May 16, 2002 upon all building occupants who were advised to make the necessary
arrangements with Metrobank regarding their occupancy.24

In the meantime, the Motion for Reconsideration of the April 9, 2002 Order of Branch
276 filed by AAHI was denied by Order25 dated May 13, 2002, prompting it to file
before the appellate court a petition for a writ of preliminary injunction.

The appellate courts jurisdiction to grant a writ of preliminary injunction is limited to

actions or proceedingspending before it, as Section 2 of Rule 58 of the Rules clearly
provides:

Petitioner filed on June 18, 2002 a separate petition for the issuance of a temporary
restraining order and a writ of preliminary injunction with the appellate
court,26 docketed as CA-G.R. SP No. 71217, also to enjoin the implementation of the
writ of possession issued by Branch 276 of the Muntinlupa RTC. In its petition,
petitioner alleged that its complaint-in-intervention in Civil Case No. 00-196 pending in
Branch 256 is its principal action but as the said court could not enjoin Branch 276
from implementing the writ of possession, both courts being of equal jurisdiction, it
had no choice but to file the petition with the appellate court.27

SECTION 2. Who may grant preliminary injunction. A preliminary injunction may be

granted by the court where the action or proceeding is pending. x x x (Emphasis
supplied),

On August 22, 2002, the Tenth Division of the Court of Appeals granted petitioners
prayer for, and issued a temporary restraining order 28 in CA-G.R. SP No. 71217. By
Decision29 of January 22, 2003, the Seventh Division of the Court of Appeals denied,
however, petitioners prayer for the issuance of a writ of preliminary injunction for
failure to establish a clear and unmistakable right to the subject properties.30
The motion for reconsideration of the above-said Resolution of January 22, 2003
having been denied by the appellate court by Resolution 31 dated July 23, 2003,
petitioner now comes before this Court on a petition for review, alleging that the
appellate court committed grave and palpable error in denying its prayer for a writ of
preliminary injunction in flagrant violation of laws and jurisprudence.32

or in a petition for certiorari, prohibition or mandamus under Section 7 of Rule 65,

thus:
SECTION 7. Expediting proceedings; injunctive relief. The court in which the
petition is filed may issue orders expediting the proceedings, and it may also grant a
temporary restraining order or a writ of preliminary injunction for the preservation of
the rights of the parties pending such proceedings. The petition shall not interrupt the
course of the principal case unless a temporary restraining order or a writ of
preliminary injunction has been issued against the public respondent from further
proceeding in the case. (Emphasis supplied)
In the case at bar, petitioners complaint-in-intervention in Civil Case No. 00-196 was
pending before Branch 256 of the Muntinlupa RTC, not with the appellate court.
Petitioners petition before the appellate court does not show, nay allege, that in
issuing the writ of possession, the Muntinlupa RTC acted without or in excess of its
jurisdiction or with grave abuse of discretion for it to be treated as either one for
certiorari36 or prohibition.37

The petition fails.

It is axiomatic that what determines the nature of an action and hence, the jurisdiction
of a court, are the allegations of the complaint and the character of the relief
sought.33 Petitioners only prayer in CA-G.R. No. 71217 is "for the preservation of
the status quo, that is, petitioner, having in possession over the subject properties for
several years, shall retain such possession until the controversy [Civil Case No. 00196 before the said trial court [Branch 276, RTC of Muntinlupa City] has been finally
resolved and respondents be prevented from taking over such possession."34
Clearly, what petitioner filed with the appellate court was an original action for
preliminary injunction which is a provisional and extra-ordinary remedy calculated to
preserve or maintain the status quo of things and is availed of to prevent actual or
threatened acts, until the merits of the case can be heard.
An original action for injunction is outside the jurisdiction of the Court of Appeals,
however. Under B.P. 129, the appellate court has original jurisdiction only over actions
for annulment of judgments of the RTCs and has original jurisdiction to issue writs of
mandamus, prohibition, certiorari, habeas corpus and quo warranto, and auxiliary
writs or processes whether or not they are in aid of its appellate jurisdiction.35

Thus, for want of jurisdiction, the petition before the appellate court should have been
dismissed outright.
At all events, it is well-settled that an order granting or denying a preliminary
injunction is not appealable. 38
WHEREFORE, the petition is, in light of the foregoing discussions, DENIED.
Costs against petitioner.

October 23, 1997

P5,150,000.00

November 10, 1997

P1,575,000.00

Consequently, the old Promissory Notes were deemed cancelled and superseded by
the new ones which provided for an increased interest rate of 20% per annum for the
first two notes, and 30% per annum for the third note.

G.R. No. 147443

February 11, 2008

LPBS COMMERCIAL, INC., petitioner,

vs.
HON. VENANCIO J. AMILA, in his capacity as Presiding Judge of the Regional
Trial Court of Tagbilaran City, Br. 3 and THE FIRST CONSOLIDATED BANK
(FCB) OF BOHOL, INC., respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for certiorari1 assails the January 17, 2001 Order 2 of the Regional Trial
Court of Bohol, Branch 3 denying petitioners Urgent Motion for the Issuance of a
Temporary Restraining Order and/or Writ of Preliminary Injunction. Also assailed is
the February 22, 2001 Order3 denying the Motion for Reconsideration.
In 1991, petitioner obtained several loans from respondent First Consolidated Bank
(FCB) of Bohol Inc. By July 1997, petitioners loan with respondent bank amounted to
P11.5 Million with an average interest rate of 15.5% per annum. The loan was
covered by several Promissory Notes and secured with a Real Estate
Mortgage4 covering five parcels of land.
In October 1997, petitioners loan obligation was restructured and consolidated into
three Promissory Notes5executed as follows:

October 16, 1997

P4,775,000.00

On June 11, 1998, petitioner filed a Complaint 6 for Reformation of Documents,

Recovery of Excessive Interest Payments, Damages, Injunction with Preliminary
Injunction and/or Temporary Restraining Order against respondent bank before the
Regional Trial Court of Bohol (RTC-Bohol) docketed as Civil Case No. 6200. The
RTC-Bohol, through Executive Judge Achilles L. Melicor subsequently issued an
Order directing the special raffle of Civil Case No. 6200 and denying petitioners
application for TRO.7 The case was eventually assigned to RTC-Bohol Branch 3
which was presided by Judge Fernando G. Fuentes III.
In its complaint, petitioner alleged that additional oppressive and excessive charges
were unilaterally imposed by respondent bank in violation of their agreement.
Petitioner claimed that the interest rates applicable to the aggregate loan is only 20%
and not 30% as reflected in the third Promissory Note dated November 10, 1997; and
that the term of the promissory notes was six months and not 30 days.
In its Answer,8 respondent bank alleged that the imposition of the additional charge of
5% per annum based on the outstanding principal and the total amount of the unpaid
interest was in accordance with the provisions of the Promissory Notes. Respondent
bank added that contrary to petitioners claim, the parties did not have any agreement
providing for a maturity period of six months.
Despite being given countless opportunities to settle the matter, the parties were
unable to reach an agreement. In the course of the protracted proceedings, Judge
Fuentes was replaced by Judge Venancio J. Amila. Noting the slow progress of the
case in the hearing held on May 11, 2000, Judge Amila gave the parties a last chance
to settle before finally proceeding to pre-trial.9
Meanwhile, on November 10, 2000, respondent bank filed an "Application for the
Extra-Judicial Foreclosure of the Real Estate Mortgage." On December 11, 2000,
petitioner filed an "Urgent Motion for the Issuance of a Temporary Restraining Order
and/or Writ of Preliminary Injunction" to enjoin foreclosure. When said motion was
heard on December 20, 2000, petitioner asked the trial court to reset the hearing
claiming the possibility of an amicable agreement between the parties. The trial court
reset the hearing to January 15, 2001, but on January 12, 2001, petitioner again filed
an urgent motion for the postponement of the hearing which the trial court denied.
During the January 15, 2001 hearing, respondent bank manifested that there has

been no settlement between the parties and moved for the resolution of petitioners
pending motion for the issuance of a TRO.
On January 17, 2001, the trial court issued an Order denying the motion for issuance
of a TRO, thus:
WHEREFORE, considering that there has been a long default of plaintiff to
pay its loan obligation to defendant bank according to the reconstructed
promissory notes, the foreclosure of the mortgaged properties is therefore
due and proper. However, as the propriety of additional interests allegedly
unilaterally imposed by defendant are being questioned by plaintiff, the
foreclosure should be limited only to the uncontested agreement in fairness
to both, which is the amount of the loan and the interest therein due as
mutually agreed by the parties. The penalties and all other additional
increments thereto shall be the subject of hearing to determine its propriety
or justification.

important reasons therefor, clearly and specifically set out in the petition.
This is [an] established policy. It is a policy necessary to prevent inordinate
demands upon the Courts time and attention which are better devoted to
those matters within its exclusive jurisdiction, and to prevent further overcrowding of the Courts docket.
The propensity of litigants and lawyers to disregard the hierarchy of courts in our
judicial system by seeking relief directly from this Court must be put to a halt for two
reasons: (1) it would be an imposition upon the precious time of this Court; and (2) it
would cause an inevitable and resultant delay, intended or otherwise, in the
adjudication of cases, which in some instances had to be remanded or referred to the
lower court as the proper forum under the rules of procedure, or as better equipped to
resolve the issues because this Court is not a trier of facts. 14
WHEREFORE, the petition is DISMISSED.
SO ORDERED.

SO ORDERED.10
Petitioner moved for reconsideration but was denied by the trial court. Hence, this
petition.
The order denying petitioners motion for issuance of a TRO is an interlocutory order
on an incident which does not touch on the merits of the case or put an end to the
proceedings.11 The remedy against an interlocutory order is not certiorari, but an
appeal in case of an unfavorable decision. Only if there are circumstances that clearly
demonstrate the inadequacy of an appeal that the remedy of certiorari is
allowed,12 none of which is present in the instant case.
Moreover, no special and important reason or exceptional and compelling
circumstance has been adduced by the petitioner why direct recourse to this Court
should be allowed. This Courts original jurisdiction to issue a writ ofcertiorari (as well
as of prohibition, mandamus, quo warranto, habeas corpus and injunction) is not
exclusive, but is concurrent with the Regional Trial Courts and the Court of Appeals in
certain cases.
In Liga ng mga Barangay v. City Mayor of Manila13 we held that
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 of 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

G.R. Nos. 158090

October 4, 2010

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), Petitioner,

vs.
HEIRS OF FERNANDO F. CABALLERO, represented by his daughter, JOCELYN
G. CABALLERO,Respondents.
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking to set aside the Decision 1 and the Resolution,2 dated December 17,
2002 and April 29, 2003, respectively, of the Court of Appeals (CA) in CA-G.R. CV.
No. 49300.
The antecedents are as follows:
Respondent Fernando C. Caballero (Fernando) was the registered owner of a
residential lot designated as Lot No. 3355, Ts-268, covered by TCT No. T-16035 of
the Register of Deeds of Cotabato, containing an area of 800 square meters and
situated at Rizal Street, Mlang, Cotabato. On the said lot, respondent built a
residential/commercial building consisting of two (2) stories.
On March 7, 1968, Fernando and his wife, Sylvia Caballero, secured a loan from
petitioner Government Service Insurance System (GSIS) in the amount
of P20,000.00, as evidenced by a promissory note. Fernando and his wife likewise
executed a real estate mortgage on the same date, mortgaging the afore-stated
property as security.
Fernando defaulted on the payment of his loan with the GSIS. Hence, on January 20,
1973, the mortgage covering the subject property was foreclosed, and on March 26,
1973, the same was sold at a public auction where the petitioner was the only bidder
in the amount of P36,283.00. For failure of Fernando to redeem the said property
within the designated period, petitioner executed an Affidavit of Consolidation of
Ownership on September 5, 1975. Consequently, TCT No. T-16035 was cancelled
and TCT No. T-45874 was issued in the name of petitioner.
On November 26, 1975, petitioner wrote a letter to Fernando, informing him of the
consolidation of title in its favor, and requesting payment of monthly rental in view of
Fernando's continued occupancy of the subject property. In reply, Fernando
requested that he be allowed to repurchase the same through partial payments.
Negotiation as to the repurchase by Fernando of the subject property went on for
several years, but no agreement was reached between the parties.

On January 16, 1989, petitioner scheduled the subject property for public bidding. On
the scheduled date of bidding, Fernando's daughter, Jocelyn Caballero, submitted a
bid in the amount of P350,000.00, while Carmelita Mercantile Trading Corporation
(CMTC) submitted a bid in the amount of P450,000.00. Since CMTC was the highest
bidder, it was awarded the subject property. On May 16, 1989, the Board of Trustees
of the GSIS issued Resolution No. 199 confirming the award of the subject property to
CMTC for a total consideration ofP450,000.00. Thereafter, a Deed of Absolute Sale
was executed between petitioner and CMTC on July 27, 1989, transferring the
subject property to CMTC. Consequently, TCT No. T-45874 in the name of GSIS was
cancelled, and TCT No. T-76183 was issued in the name of CMTC.
Due to the foregoing, Fernando, represented by his daughter and attorney-in-fact,
Jocelyn Caballero, filed with the Regional Trial Court (RTC) of Kabacan, Cotabato a
Complaint3 against CMTC, the GSIS and its responsible officers, and the Register of
Deeds of Kidapawan, Cotabato. Fernando prayed, among others, that judgment be
rendered: declaring GSIS Board of Trustees Resolution No. 199, dated May 16, 1989,
null and void; declaring the Deed of Absolute Sale between petitioner and CMTC null
and void ab initio; declaring TCT No. 76183 of the Register of Deeds of Kidapawan,
Cotabato, likewise, null and void ab initio; declaring the bid made by Fernando in the
amount of P350,000.00 for the repurchase of his property as the winning bid; and
ordering petitioner to execute the corresponding Deed of Sale of the subject property
in favor of Fernando. He also prayed for payment of moral damages, exemplary
damages, attorney's fees and litigation expenses.
In his complaint, Fernando alleged that there were irregularities in the conduct of the
bidding. CMTC misrepresented itself to be wholly owned by Filipino citizens. It
misrepresented its working capital. Its representative Carmelita Ang Hao had no prior
authority from its board of directors in an appropriate board resolution to participate in
the bidding. The corporation is not authorized to acquire real estate or invest its funds
for purposes other than its primary purpose. Fernando further alleged that the GSIS
allowed CMTC to bid despite knowledge that said corporation has no authority to do
so. The GSIS also disregarded Fernando's prior right to buy back his family home and
lot in violation of the laws. The Register of Deeds of Cotabato acted with abuse of
power and authority when it issued the TCT in favor of CMTC without requiring the
CMTC to submit its supporting papers as required by the law.
Petitioner and its officers filed their Answer with Affirmative Defenses and
Counterclaim.4 The GSIS alleged that Fernando lost his right of redemption. He was
given the chance to repurchase the property; however, he did not avail of such option
compelling the GSIS to dispose of the property by public bidding as mandated by law.
There is also no "prior right to buy back" that can be exercised by Fernando. Further,
it averred that the articles of incorporation and other papers of CMTC were all in
order. In its counterclaim, petitioner alleged that Fernando owed petitioner the sum
of P130,365.81, representing back rentals, including additional interests from January
1973 to February 1987, and the additional amount of P249,800.00, excluding
applicable interests, representing rentals Fernando unlawfully collected from
Carmelita Ang Hao from January 1973 to February 1988.

After trial, the RTC, in its Decision5 dated September 27, 1994, ruled in favor of
petitioner and dismissed the complaint. In the same decision, the trial court granted
petitioner's counterclaim and directed Fernando to pay petitioner the rentals paid by
CMTC in the amount of P249,800.00. The foregoing amount was collected by
Fernando from the CMTC and represents payment which was not turned over to
petitioner, which was entitled to receive the rent from the date of the consolidation of
its ownership over the subject property.
Fernando filed a motion for reconsideration, which was denied by the RTC in an
Order dated March 27, 1995.
Aggrieved by the Decision, respondent filed a Notice of Appeal. 6 The CA, in its
Decision dated December 17, 2002, affirmed the decision of the RTC with the
modification that the portion of the judgment ordering Fernando to pay rentals in the
amount of P249,800.00, in favor of petitioner, be deleted. Petitioner filed a motion for
reconsideration, which the CA denied in a Resolution dated April 29, 2003. Hence, the
instant petition.
An Ex Parte Motion for Substitution of Party,7 dated July 18, 2003, was filed by the
surviving heirs of Fernando, who died on February 12, 2002. They prayed that they
be allowed to be substituted for the deceased, as respondents in this case.

In their Memorandum, respondents claim that CMTC cannot purchase real estate or
invest its funds in any purpose other than its primary purpose for which it was
organized in the absence of a corporate board resolution; the bid award, deed of
absolute sale and TCT No. T-76183, issued in favor of the CMTC, should be nullified;
the trial court erred in concluding that GSIS personnel have regularly performed their
official duty when they conducted the public bidding; Fernando, as former owner of
the subject property and former member of the GSIS, has the preemptive right to
repurchase the foreclosed property.
These additional averments cannot be taken cognizance by the Court, because they
were substantially respondents arguments in their petition for review
on certiorari earlier filed before Us and docketed as G.R. No. 156609. Records show
that said petition was denied by the Court in a Resolution 9 dated April 23, 2003, for
petitioners (respondents herein) failure to sufficiently show that the Court of Appeals
committed any reversible error in the challenged decision as to warrant the exercise
by this Court of its discretionary appellate jurisdiction. 10 Said resolution became final
and executory on June 9, 2003.11 Respondents attempt to re-litigate claims already
passed upon and resolved with finality by the Court in G.R. No. 156609 cannot be
allowed.

Going now to the first assigned error, petitioner submits that its counterclaim for the
rentals collected by Fernando from the CMTC is in the nature of a compulsory
counterclaim in the original action of Fernando against petitioner for annulment of bid
award, deed of absolute sale and TCT No. 76183. Respondents, on the other hand,
alleged that petitioner's counterclaim is permissive and its failure to pay the
prescribed docket fees results into the dismissal of its claim.

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF

LAW IN HOLDING THAT GSIS' COUNTERCLAIM, AMONG OTHERS,
OF P249,800.00 REPRESENTING RENTALS COLLECTED BY PRIVATE
RESPONDENT
FROM
CARMELITA
MERCANTILE
TRADING
CORPORATION IS IN THE NATURE OF A PERMISSIVE COUNTERCLAIM
WHICH REQUIRED THE PAYMENT BY GSIS OF DOCKET FEES BEFORE
THE TRIAL COURT CAN ACQUIRE JURISDICTION OVER SAID
COUNTERCLAIM.

To determine whether a counterclaim is compulsory or not, the Court has devised the
following tests: (a) Are the issues of fact and law raised by the claim and by the
counterclaim largely the same? (b) Would res judicata bar a subsequent suit on
defendants claims, absent the compulsory counterclaim rule? (c) Will substantially
the same evidence support or refute plaintiffs claim as well as the defendants
counterclaim? and (d) Is there any logical relation between the claim and the
counterclaim? A positive answer to all four questions would indicate that the
counterclaim is compulsory.12

II

Tested against the above-mentioned criteria, this Court agrees with the CA's view that
petitioner's counterclaim for the recovery of the amount representing rentals collected
by Fernando from the CMTC is permissive. The evidence needed by Fernando to
cause the annulment of the bid award, deed of absolute sale and TCT is different
from that required to establish petitioner's claim for the recovery of rentals.

Petitioner enumerated the following grounds in support of its petition:

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF

LAW IN HOLDING THAT GSIS' DOCUMENTARY EVIDENCE
SUPPORTING
ITS
CLAIM
OF P249,800.00
LACKS
PROPER
IDENTIFICATION.8
The petition of the GSIS seeks the review of the CA's Decision insofar as it deleted
the trial court's award ofP249,800.00 in its favor representing rentals collected by
Fernando from the CMTC.

The issue in the main action, i.e., the nullity or validity of the bid award, deed of
absolute sale and TCT in favor of CMTC, is entirely different from the issue in the
counterclaim, i.e., whether petitioner is entitled to receive the CMTC's rent payments
over the subject property when petitioner became the owner of the subject property
by virtue of the consolidation of ownership of the property in its favor.

The rule in permissive counterclaims is that for the trial court to acquire jurisdiction,
the counterclaimant is bound to pay the prescribed docket fees. 13 This, petitioner did
not do, because it asserted that its claim for the collection of rental payments was a
compulsory counterclaim. Since petitioner failed to pay the docket fees, the RTC did
not acquire jurisdiction over its permissive counterclaim. The judgment rendered by
the RTC, insofar as it ordered Fernando to pay petitioner the rentals which he
collected from CMTC, is considered null and void. Any decision rendered without
jurisdiction is a total nullity and may be struck down at any time, even on appeal
before this Court.14
Petitioner further argues that assuming that its counterclaim is permissive, the trial
court has jurisdiction to try and decide the same, considering petitioner's exemption
from all kinds of fees.
In In Re: Petition for Recognition of the Exemption of the Government Service
Insurance System from Payment of Legal Fees,15 the Court ruled that the provision in
the Charter of the GSIS, i.e., Section 39 of Republic Act No. 8291, which exempts it
from "all taxes, assessments, fees, charges or duties of all kinds," cannot operate to
exempt it from the payment of legal fees. This was because, unlike the 1935 and
1973 Constitutions, which empowered Congress to repeal, alter or supplement the
rules of the Supreme Court concerning pleading, practice and procedure, the 1987
Constitution removed this power from Congress. Hence, the Supreme Court now has
the sole authority to promulgate rules concerning pleading, practice and procedure in
all courts.
In said case, the Court ruled that:
The separation of powers among the three co-equal branches of our government has
erected an impregnable wall that keeps the power to promulgate rules of pleading,
practice and procedure within the sole province of this Court. The other branches
trespass upon this prerogative if they enact laws or issue orders that effectively
repeal, alter or modify any of the procedural rules promulgated by this Court. Viewed
from this perspective, the claim of a legislative grant of exemption from the payment
of legal fees under Section 39 of RA 8291 necessarily fails.
Congress could not have carved out an exemption for the GSIS from the payment of
legal fees without transgressing another equally important institutional safeguard of
the Court's independence fiscal autonomy. Fiscal autonomy recognizes the power
and authority of the Court to levy, assess and collect fees, including legal fees.
Moreover, legal fees under Rule 141 have two basic components, the Judiciary
Development Fund (JDF) and the Special Allowance for the Judiciary Fund (SAJF).
The laws which established the JDF and the SAJF expressly declare the identical
purpose of these funds to "guarantee the independence of the Judiciary as mandated
by the Constitution and public policy." Legal fees therefore do not only constitute a
vital source of the Court's financial resources but also comprise an essential element
of the Court's fiscal independence. Any exemption from the payment of legal fees
granted by Congress to government-owned or controlled corporations and local

government units will necessarily reduce the JDF and the SAJF. Undoubtedly, such
situation is constitutionally infirm for it impairs the Court's guaranteed fiscal autonomy
and erodes its independence.
Petitioner also invoked our ruling in Sun Insurance Office, Ltd. v. Judge
Asuncion,16 where the Court held that:
xxxx
3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but, subsequently, the
judgment awards a claim not specified in the pleading, or if specified the same has
been left for determination by the court, the additional filing fee therefor shall
constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or
his duly authorized deputy to enforce said lien and assess and collect the additional
fee.
In Ayala Corporation v. Madayag,17 the Court, in interpreting the third rule laid down in
Sun Insurance Office, Ltd. v. Judge Asuncion regarding awards of claims not specified
in the pleading, held that the same 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. (Emphasis supplied.)1avvphi1
Petitioner's claim for payment of rentals collected by Fernando from the CMTC did
not arise after the filing of the complaint; hence, the rule laid down in Sun
Insurance finds no application in the present case.
Due to the non-payment of docket fees on petitioner's counterclaim, the trial court
never acquired jurisdiction over it and, thus, there is no need to discuss the second
issue raised by petitioner.
WHEREFORE, the petition is DENIED. The Decision and the Resolution, dated
December 17, 2002 and April 29, 2003, respectively, of the Court of Appeals in CAG.R. CV. No. 49300, are AFFIRMED.

SO ORDERED.

INTERNATIONAL INDUSTRIAL MANAGEMENT AND DEVELOPMENT

CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, HON. SALVADOR TENSUAN and FILIPINAS
CARBON AND MINING CORPORATION, respondents.
REGALADO, J.:
In this special civil action for certiorari, petitioner merely seeks an order, which
respondent Court of Appeals allegedly refused to issue, requiring the clerk of court of
the court a quo to reassess and collect in full the prescribed docket fee in Civil Case
No. 11209.
On July 10, 1985, private respondent Filipinas Carbon and Mining Corporation filed
against herein petitioner and Central Mining Consultants (CMC) an action for
rescission or annulment of contract with damages 1 before the Regional Trial Court of
Manila, Branch 146, docketed as Civil Case No. 11029, praying that:
xxx xxx xxx
2. After due trial, this Court render judgment:
a. On the First and Second Alternative Causes of Action, rescinding
and/or declaring rescinded, cancelled or terminated plaintiff's
Agreement or in the alternative annulling and/or declaring annulled
the aforesaid Agreement, Annex "A", and in either case, ordering
defendants to deliver and surrender the Mining Area together with
all the infrastructure, facilities and equipment found thereon, to
plaintiff and restore plaintiff in possession, operation and
administration of these properties without any obligation on the part
of plaintiff to defendants;
b. On the Third Cause of Action, ordering defendants, jointly and
severally, to pay plaintiff actual damages in the amount of at least
P3,000,000.00;
c. On the Fourth Cause of Action, ordering defendants, jointly and
severally, to pay plaintiff moral damages in the amount of at least
P100,000.00;

G.R. No. 97303 January 27, 1992

d. On the Fifth Cause of Action, ordering defendants, jointly and

severally exemplary damages in the amount of at least
P200,000.00;

e. On the Sixth Cause of Action, ordering defendants, jointly and

severally, to pay plaintiff attorney's fees in the amount of at least
P100,000.00 and other expenses of litigation in the amount of at
least P50,000.00;
f. Ordering defendants, jointly and severally, to pay the cost of suit.
Before petitioner International Industrial Management and Development Corporation
(INIMACO) could file a responsive pleading, private respondent filed an amended
complaint dated October 8, 1988. 2 Thereafter, a second amended complaint dated
January 30, 1989 was filed, 3 praying that:
xxx xxx xxx
2. After due trial, this Honorable Court rendered (sic) judgment:
a. Making the injunction permanent;
b. On the first and second alternative causes of action, rescinding
and/or declaring rescinded, cancelled or terminated plaintiff's
agreement or in the alternative ordering the defendants to comply
with their obligations under the aforesaid agreement, Annex "A" and
in either case, ordering the defendants to deliver and surrender the
Mining Area together with all the infrastructure, facilities, and
equipments found thereon to plaintiff and restore plaintiff in its
possession, operation and administration of these properties
without any obligation on the part of plaintiff to defendants;
c. On the
third cause of
action, to order
the
defendants CMC/INIMACO, jointly and severally, to pay plaintiff
actual damages in the amount of at least P3,000,000.00;

g. Ordering defendants, jointly and severally, to pay the cost of suit.

Thereafter, petitioner filed a motion to dismiss on the ground that the trial court did not
acquire jurisdiction over the case since the complaint does not specifically state the
amount of damages sought therein by private respondent, thereby rendering the
docket fee corresponding thereto undeterminable and, as a matter of course, unpaid.
This was, however, denied by the court below.
Petitioner went to the Court of Appeals on a petition for certiorari seeking to annul the
order of the trial court denying its motion to dismiss. Respondent court denied the
petition for certiorari after finding that the trial court acquired jurisdiction over the case
since the claims for damages of private respondent as qualified by the phrase "at
least," which is equivalent to "not less than," are definite enough, 4 in line with a
similar holding in Ng Soon vs. Hon. Aloysius Alday, et al. 5 In said case, it was
clarified that if what is proved is less than what is claimed, then a refund will be made;
if more, additional fees will be exacted.
In the present petition before us, petitioner does not seek a review of respondent
court's aforesaid decision but prays for the issuance of an order requiring the clerk of
court of the court below to reassess and collect in full the prescribed docket fee in the
original case, as was done in Sun Insurance Office, Ltd., et al. vs. Hon. Maximo
C. Asuncion, et al. 6 It will be recalled that in said case, we ruled that where the
initiatory pleading is not accompanied by payment of the docket fee, the court may
allow payment thereof within a reasonable time but not beyond the applicable
prescriptive or reglementary period.
Petitioner avers that the aggregate of private respondent's claims amounts to
P29,600,000.00, hence the docket fee due is P118,000.00, allegedly pursuant to
Section 5, subsections 7 and 8, Rule 141 of the Rules of Court, as amended on
September 18, 1984. Since only P2,626.00 was paid by herein private respondent,
the former contends that the latter still has to pay the balance of P115,374.00.

e. On the fifth cause of action, ordering defendants, jointly and

severally, to pay plaintiff exemplary damages in the amount of at
least P200,000.00;

The computation submitted by petitioner, however, is partly based upon and includes
what private respondent, under the second alternative cause of action in its second
amended complaint, 7 claims should be paid or performed by petitioner or CMC in the
event that rescission or cancellation is no longer possible by virtue of the expiration of
the agreement entered into by the parties on September 30, 1988 which is the subject
of the present controversy. In other words, these are contingent or alternative reliefs,
the demandability of which arises only if the condition for the principal relief sought
shall have occurred and has been so determined by the trial court.

f. On the sixth cause of action, ordering defendants, jointly and

severally, to pay plaintiff attorney's fees in the amount of at least
P100,000.00 and other expenses of litigation in the amount of at
least P50,000.00;

On the other hand, private respondent contends that considering that its main action
is for specific performance and/or rescission which is not capable of pecuniary
estimation and, therefore, the money claim is purely incidental to or a consequence of
the particular relief sought, the docket fee it has paid is reasonably sufficient.

d. On the fourth cause of action, ordering defendants, jointly and

severally, to pay plaintiff moral damages in the amount of at least
P100,000.00;

The fact that the main action or principal relief sought in the complaint is for specific
performance and/or rescission is only determinative of jurisdiction in the sense that,
regardless of the amount of incidental or additional claims for damages, the case is
within the exclusive original jurisdiction of the Regional Trial Court. This does not
mean, however, that the separate claims for damages therein are exempt from the
payment of docket fees. The prayer in private respondent's second amended
complaint 8 reveals that, in addition to the principal relief of specific performance
and/or rescission, it categorically and unconditionally seeks the payment of actual,
moral and exemplary damages, with attorney's fees and expenses of litigation.
Under paragraph 2(c) to (d) of the petitory portion of said second amended complaint,
the amount of damages being claimed as additional relief by private respondent is
P3,450,000.00, as set out in the third to the sixth causes of action. Pursuant to the
provisions of Rule 141 then in force, the docket fee for such additional claims by
themselves would be P13,400.00, and it is admitted that only P2,626.00 has been
paid by private respondent. We, therefore, find it appropriate to adopt the relevant
paragraph in the dispositive portion of this Court's decision in Sun Insurance, as
prayed for by petitioner, so that this matter may be disposed of with dispatch. 9
WHEREFORE, the petition is GRANTED. 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 claims sought in the
second amended complaint as may be gleaned from the allegations and prayer
thereof, and to require private respondent to pay the deficiency, if any. Without
pronouncement as to costs.
SO ORDERED.

G.R. No. 176858

September 15, 2010

HEIRS OF JUANITA PADILLA, represented by CLAUDIO PADILLA, Petitioners,

vs.
DOMINADOR MAGDUA, Respondent.

DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review on certiorari 1 assailing the Orders dated 8
September 20062 and 13 February 20073 of the Regional Trial Court (RTC) of
Tacloban City, Branch 34, in Civil Case No. 2001-10-161.
The Facts

In an Order dated 20 February 2006,5 the RTC dismissed the case for lack of
jurisdiction. The RTC explained that the assessed value of the land in the amount
of P590.00 was less than the amount cognizable by the RTC to acquire jurisdiction
over the case.6
Petitioners filed a motion for reconsideration. Petitioners argued that the action was
not merely for recovery of ownership and possession, partition and damages but also
for annulment of deed of sale. Since actions to annul contracts are actions beyond
pecuniary estimation, the case was well within the jurisdiction of the RTC.
Dominador filed another motion to dismiss on the ground of prescription.

Juanita Padilla (Juanita), the mother of petitioners, owned a piece of land located in
San Roque, Tanauan, Leyte. After Juanitas death on 23 March 1989, petitioners, as
legal heirs of Juanita, sought to have the land partitioned. Petitioners sent word to
their eldest brother Ricardo Bahia (Ricardo) regarding their plans for the partition of
the land. In a letter dated 5 June 1998 written by Ricardo addressed to them,
petitioners were surprised to find out that Ricardo had declared the land for himself,
prejudicing their rights as co-heirs. It was then discovered that Juanita had allegedly
executed a notarized Affidavit of Transfer of Real Property 4 (Affidavit) in favor of
Ricardo on 4 June 1966 making him the sole owner of the land. The records do not
show that the land was registered under the Torrens system.

In an Order dated 8 September 2006, the RTC reconsidered its previous stand and
took cognizance of the case. Nonetheless, the RTC denied the motion for
reconsideration and dismissed the case on the ground of prescription pursuant to
Section 1, Rule 9 of the Rules of Court. The RTC ruled that the case was filed only in
2001 or more than 30 years since the Affidavit was executed in 1966. The RTC
explained that while the right of an heir to his inheritance is imprescriptible, yet when
one of the co-heirs appropriates the property as his own to the exclusion of all other
heirs, then prescription can set in. The RTC added that since prescription had set in
to question the transfer of the land under the Affidavit, it would seem logical that no
action could also be taken against the deed of sale executed by Ricardos daughters
in favor of Dominador. The dispositive portion of the order states:

On 26 October 2001, petitioners filed an action with the RTC of Tacloban City, Branch
34, for recovery of ownership, possession, partition and damages. Petitioners sought
to declare void the sale of the land by Ricardos daughters, Josephine Bahia and
Virginia Bahia-Abas, to respondent Dominador Magdua (Dominador). The sale was
made during the lifetime of Ricardo.

WHEREFORE, premises considered, the order of the Court is reconsidered in so far

as the pronouncement of the Court that it has no jurisdiction over the nature of the
action. The dismissal of the action, however, is maintained not by reason of lack of
jurisdiction but by reason of prescription.

Petitioners alleged that Ricardo, through misrepresentation, had the land transferred
in his name without the consent and knowledge of his co-heirs. Petitioners also stated
that prior to 1966, Ricardo had a house constructed on the land. However, when
Ricardo and his wife Zosima separated, Ricardo left for Inasuyan, Kawayan, Biliran
and the house was leased to third parties.

SO ORDERED.7
Petitioners filed another motion for reconsideration which the RTC denied in an Order
dated 13 February 2007 since petitioners raised no new issue.
Hence, this petition.

Petitioners further alleged that the signature of Juanita in the Affidavit is highly
questionable because on 15 May 1978 Juanita executed a written instrument stating
that she would be leaving behind to her children the land which she had inherited
from her parents.
Dominador filed a motion to dismiss on the ground of lack of jurisdiction since the
assessed value of the land was within the jurisdiction of the Municipal Trial Court of
Tanauan, Leyte.

The Issue
The main issue is whether the present action is already barred by prescription.
The Courts Ruling
Petitioners submit that the RTC erred in dismissing the complaint on the ground of
prescription. Petitioners insist that the Affidavit executed in 1966 does not conform
with the requirement of sufficient repudiation of co-ownership by Ricardo against his

co-heirs in accordance with Article 494 of the Civil Code. Petitioners assert that the
Affidavit became part of public records only because it was kept by the Provincial
Assessors office for real property tax declaration purposes. However, such cannot be
contemplated by law as a record or registration affecting real properties. Petitioners
insist that the Affidavit is not an act of appropriation sufficient to be deemed as
constructive notice to an adverse claim of ownership absent a clear showing that
petitioners, as co-heirs, were notified or had knowledge of the Affidavit issued by their
mother in Ricardos favor.
Respondent Dominador, on the other hand, maintains that Juanita, during her lifetime,
never renounced her signature on the Affidavit or interposed objections to Ricardos
possession of the land, which was open, absolute and in the concept of an owner.
Dominador contends that the alleged written instrument dated 15 May 1978 executed
by Juanita years before she died was only made known lately and conveys the
possibility of being fabricated. Dominador adds that the alleged highly questionable
signature of Juanita on the Affidavit was only made an issue after 35 years from the
date of the transfer in 1966 until the filing of the case in 2001. As a buyer in good
faith, Dominador invokes the defense of acquisitive prescription against petitioners.
At the outset, only questions of law may be raised in a petition for review on certiorari
under Rule 45 of the Rules of Court. The factual findings of the lower courts are final
and conclusive and may not be reviewed on appeal except under any of the following
circumstances: (1) the conclusion is grounded on speculations, surmises or
conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3) there
is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts;
(5) the findings of fact are conflicting; (6) there is no citation of specific evidence on
which the factual findings are based; (7) the finding of absence of facts is contradicted
by the presence of evidence on record; (8) the findings of the Court of Appeals are
contrary to those of the trial court; (9) the Court of Appeals manifestly overlooked
certain relevant and undisputed facts that, if properly considered, would justify a
different conclusion; (10) the findings of the Court of Appeals are beyond the issues of
the case; and (11) such findings are contrary to the admissions of both parties.8

The RTC explained that prescription had already set in since the Affidavit was
executed on 31 May 1966 and petitioners filed the present case only on 26 October
2001, a lapse of more than 30 years. No action could be taken against the deed of
sale made in favor of Dominador without assailing the Affidavit, and the action to
question the Affidavit had already prescribed.
After a perusal of the records, we find that the RTC incorrectly relied on the Affidavit
alone in order to dismiss the case without considering petitioners evidence. The facts
show that the land was sold to Dominador by Ricardos daughters, namely Josephine
Bahia and Virginia Bahia-Abas, during the lifetime of Ricardo. However, the alleged
deed of sale was not presented as evidence and neither was it shown that Ricardos
daughters had any authority from Ricardo to dispose of the land. No cogent evidence
was ever presented that Ricardo gave his consent to, acquiesced in, or ratified the
sale made by his daughters to Dominador. In its 8 September 2006 Order, the RTC
hastily concluded that Ricardos daughters had legal personality to sell the property:
On the allegation of the plaintiffs (petitioners) that Josephine Bahia and Virginia
Bahia-Abas had no legal personality or right to [sell] the subject property is of no
moment in this case. It should be Ricardo Bahia who has a cause of action against
[his] daughters and not the herein plaintiffs. After all, Ricardo Bahia might have
already consented to or ratified the alleged deed of sale.9
Also, aside from the Affidavit, Dominador did not present any proof to show that
Ricardos possession of the land had been open, continuous and exclusive for more
than 30 years in order to establish extraordinary acquisitive prescription. 10 Dominador
merely assumed that Ricardo had been in possession of the land for 30 years based
on the Affidavit submitted to the RTC. The petitioners, on the other hand, in their
pleading filed with the RTC for recovery of ownership, possession, partition and
damages, alleged that Ricardo left the land after he separated from his wife sometime
after 1966 and moved to another place. The records do not mention, however,
whether Ricardo had any intention to go back to the land or whether Ricardos family
ever lived there.

We find that the conclusion of the RTC in dismissing the case on the ground of
prescription based solely on the Affidavit executed by Juanita in favor of Ricardo, the
alleged seller of the property from whom Dominador asserts his ownership, is
speculative. Thus, a review of the case is necessary.

Further, Dominador failed to show that Ricardo had the land declared in his name for
taxation purposes from 1966 after the Affidavit was executed until 2001 when the
case was filed. Although a tax declaration does not prove ownership, it is evidence of
claim to possession of the land.

Here, the RTC granted the motion to dismiss filed by Dominador based on Section 1,
Rule 9 of the Rules of Court which states:

Moreover, Ricardo and petitioners are co-heirs or co-owners of the land. Co-heirs or
co-owners cannot acquire by acquisitive prescription the share of the other co-heirs or
co-owners absent a clear repudiation of the co-ownership, as expressed in Article 494
of the Civil Code which states:

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 case. (Emphasis supplied)

Art. 494. x x x No prescription shall run in favor of a co-owner or co-heir against his
co-owners or co-heirs as long as he expressly or impliedly recognizes the coownership.

Since possession of co-owners is like that of a trustee, in order that a co-owners

possession may be deemed adverse to the cestui que trust or other co-owners, the
following requisites must concur: (1) that he has performed unequivocal acts of
repudiation amounting to an ouster of the cestui que trust or other co-owners, (2) that
such positive acts of repudiation have been made known to the cestui que trust or
other co-owners, and (3) that the evidence thereon must be clear and convincing.11
In the present case, all three requisites have been met. After Juanitas death in 1989,
petitioners sought for the partition of their mothers land. The heirs, including Ricardo,
were notified about the plan. Ricardo, through a letter dated 5 June 1998, notified
petitioners, as his co-heirs, that he adjudicated the land solely for himself.
Accordingly, Ricardos interest in the land had now become adverse to the claim of
his co-heirs after repudiating their claim of entitlement to the land. In Generosa v.
Prangan-Valera,12 we held that in order that title may prescribe in favor of one of the
co-owners, it must be clearly shown that he had repudiated the claims of the others,
and that they were apprised of his claim of adverse and exclusive ownership, before
the prescriptive period begins to run.
However, in the present case, the prescriptive period began to run only from 5 June
1998, the date petitioners received notice of Ricardos repudiation of their claims to
the land. Since petitioners filed an action for recovery of ownership and possession,
partition and damages with the RTC on 26 October 2001, only a mere three years
had lapsed. This three-year period falls short of the 10-year or 30-year acquisitive
prescription period required by law in order to be entitled to claim legal ownership
over the land. Thus, Dominador cannot invoke acquisitive prescription.
Further, Dominadors argument that prescription began to commence in 1966, after
the Affidavit was executed, is erroneous. Dominador merely relied on the Affidavit
submitted to the RTC that Ricardo had been in possession of the land for more than
30 years. Dominador did not submit any other corroborative evidence to establish
Ricardos alleged possession since 1966. In Heirs of Maningding v. Court of
Appeals,13 we held that the evidence relative to the possession, as a fact, upon which
the alleged prescription is based, must be clear, complete and conclusive in order to
establish the prescription. Here, Dominador failed to present any other competent
evidence to prove the alleged extraordinary acquisitive prescription of Ricardo over
the land. Since the property is an unregistered land, Dominador bought the land at his
own risk, being aware as buyer that no title had been issued over the land. As a
consequence, Dominador is not afforded protection unless he can manifestly prove
his legal entitlement to his claim.
With regard to the issue of the jurisdiction of the RTC, we hold that the RTC did not
err in taking cognizance of the case.
Under Section 1 of Republic Act No. 7691 (RA 7691), 14 amending Batas Pambansa
Blg. 129, the RTC shall exercise exclusive jurisdiction on the following actions:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary
Reorganization Act of 1980", is hereby amended to read as follows:
"Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive
original jurisdiction.
"(1) In all civil actions in which the subject of the litigation is incapable of pecuniary
estimation;
"(2) In all civil actions which involve the title to, or possession of, real property, or any
interest therein, where the assessed value of the property involved exceeds Twenty
Thousand Pesos (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
On the other hand, Section 3 of RA 7691 expanded the jurisdiction of the Metropolitan
Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts over all civil
actions which involve title to or possession of real property, or any interest, outside
Metro Manila where the assessed value does not exceed Twenty thousand pesos
(P20,000.00). The provision states:
Section 3. Section 33 of the same law 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 Trial Circuit Trial Courts shall exercise:
xxx
"(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,
attorneys 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."
In the present case, the records show that the assessed value of the land
was P590.00 according to the Declaration of Property as of 23 March 2000 filed with
the RTC. Based on the value alone, being way belowP20,000.00, the MTC has
jurisdiction over the case. However, petitioners argued that the action was not merely
for recovery of ownership and possession, partition and damages but also for

annulment of deed of sale. Since annulment of contracts are actions incapable of

pecuniary estimation, the RTC has jurisdiction over the case.151avvphi1
Petitioners are correct. In Singson v. Isabela Sawmill,16 we held that:
In determining whether an action is one the subject matter of which is not capable of
pecuniary estimation this Court has adopted the criterion of first ascertaining the
nature of the principal action or remedy sought. If it is primarily for the recovery of a
sum of money, the claim is considered capable of pecuniary estimation, and whether
jurisdiction is in the municipal courts or in the courts of first instance would depend on
the amount of the claim. However, where the basic issue is something other than the
right to recover a sum of money, where the money claim is purely incidental to, or a
consequence of, the principal relief sought, this Court has considered such actions as
cases where the subject of the litigation may not be estimated in terms of money, and
are cognizable by courts of first instance (now Regional Trial Courts).
When petitioners filed the action with the RTC they sought to recover ownership and
possession of the land by questioning (1) the due execution and authenticity of the
Affidavit executed by Juanita in favor of Ricardo which caused Ricardo to be the sole
owner of the land to the exclusion of petitioners who also claim to be legal heirs and
entitled to the land, and (2) the validity of the deed of sale executed between
Ricardos daughters and Dominador. Since the principal action sought here is
something other than the recovery of a sum of money, the action is incapable of
pecuniary estimation and thus cognizable by the RTC. Well-entrenched is the rule
that jurisdiction over the subject matter of a case is conferred by law and is
determined by the allegations in the complaint and the character of the relief sought,
irrespective of whether the party is entitled to all or some of the claims asserted.17
In sum, we find that the Affidavit, as the principal evidence relied upon by the RTC to
dismiss the case on the ground of prescription, insufficiently established Dominadors
rightful claim of ownership to the land. Thus, we direct the RTC to try the case on the
merits to determine who among the parties are legally entitled to the land.
WHEREFORE, we GRANT the petition. We REVERSE AND SET ASIDE the Orders
dated 8 September 2006 and 13 February 2007 of the Regional Trial Court of
Tacloban City, Branch 34 in Civil Case No. 2001-10-161.
SO ORDERED.

G.R. No. 173915

February 22, 2010

IRENE SANTE AND REYNALDO SANTE, Petitioners,

vs.
HON. EDILBERTO T. CLARAVALL, in his capacity as Presiding Judge of Branch
60, Regional Trial Court of Baguio City, and VITA N. KALASHIAN, Respondents.
DECISION
VILLARAMA, JR., J.:
Before this Court is a petition for certiorari 1 under Rule 65 of the 1997 Rules of Civil
Procedure, as amended, filed by petitioners Irene and Reynaldo Sante assailing the
Decision2 dated January 31, 2006 and the Resolution3dated June 23, 2006 of the
Seventeenth Division of the Court of Appeals in CA-G.R. SP No. 87563. The assailed
decision affirmed the orders of the Regional Trial Court (RTC) of Baguio City, Branch
60, denying their motion to dismiss the complaint for damages filed by respondent
Vita Kalashian against them.
The facts, culled from the records, are as follows:
On April 5, 2004, respondent filed before the RTC of Baguio City a complaint for
damages4 against petitioners. In her complaint, docketed as Civil Case No. 5794-R,
respondent alleged that while she was inside the Police Station of Natividad,
Pangasinan, and in the presence of other persons and police officers, petitioner Irene
Sante uttered words, which when translated in English are as follows, "How many
rounds of sex did you have last night with your boss, Bert? You fuckin bitch!" Bert
refers to Albert Gacusan, respondents friend and one (1) of her hired personal
security guards detained at the said station and who is a suspect in the killing of
petitioners close relative. Petitioners also allegedly went around Natividad,
Pangasinan telling people that she is protecting and cuddling the suspects in the
aforesaid killing. Thus, respondent prayed that petitioners be held liable to pay moral
damages
in
the
amount
of P300,000.00; P50,000.00
as
exemplary

damages; P50,000.00 attorneys fees; P20,000.00 litigation expenses; and costs of

suit.
Petitioners filed a Motion to Dismiss5 on the ground that it was the Municipal Trial
Court in Cities (MTCC) and not the RTC of Baguio, that had jurisdiction over the case.
They argued that the amount of the claim for moral damages was not more than the
jurisdictional amount of P300,000.00, because the claim for exemplary damages
should be excluded in computing the total claim.
On June 24, 2004,6 the trial court denied the motion to dismiss citing our ruling
in Movers-Baseco Integrated Port Services, Inc. v. Cyborg Leasing Corporation.7 The
trial court held that the total claim of respondent amounted toP420,000.00 which was
above the jurisdictional amount for MTCCs outside Metro Manila. The trial court also
later issued Orders on July 7, 2004 8 and July 19, 2004,9 respectively reiterating its
denial of the motion to dismiss and denying petitioners motion for reconsideration.
Aggrieved, petitioners filed on August 2, 2004, a Petition for Certiorari and
Prohibition,10 docketed as CA-G.R. SP No. 85465, before the Court of Appeals.
Meanwhile, on July 14, 2004, respondent and her husband filed an Amended
Complaint11 increasing the claim for moral damages from P300,000.00
to P1,000,000.00. Petitioners filed a Motion to Dismiss with Answer Ad Cautelam and
Counterclaim, but the trial court denied their motion in an Order 12 dated September
17, 2004.

because plaintiffs claim for exemplary damages was not a separate and distinct
cause of action from her claim of moral damages, but merely incidental to it. Thus, the
prayer for exemplary damages should be excluded in computing the total amount of
the claim.
On January 31, 2006, the Court of Appeals, this time in CA-G.R. SP No. 87563,
rendered a decision affirming the September 17, 2004 Order of the RTC denying
petitioners Motion to Dismiss Ad Cautelam. In the said decision, the appellate court
held that the total or aggregate amount demanded in the complaint constitutes the
basis of jurisdiction. The Court of Appeals did not find merit in petitioners posture that
the claims for exemplary damages and attorneys fees are merely incidental to the
main cause and should not be included in the computation of the total claim.
The Court of Appeals additionally ruled that respondent can amend her complaint by
increasing the amount of moral damages from P300,000.00 to P1,000,000.00, on the
ground that the trial court has jurisdiction over the original complaint and respondent
is entitled to amend her complaint as a matter of right under the Rules.
Unable to accept the decision, petitioners are now before us raising the following
issues:
I.

Hence, petitioners again filed a Petition for Certiorari and Prohibition 13 before the
Court of Appeals, docketed asCA-G.R. SP No. 87563, claiming that the trial court
committed grave abuse of discretion in allowing the amendment of the complaint to
increase the amount of moral damages from P300,000.00 to P1,000,000.00. The
case was raffled to the Seventeenth Division of the Court of Appeals.

WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION AMOUNTING

TO LACK OR IN EXCESS OF JURISDICTION ON THE PART OF THE (FORMER)
SEVENTEENTH DIVISION OF THE HONORABLE COURT OF APPEALS WHEN IT
RESOLVED THAT THE REGIONAL TRIAL COURT OF BAGUIO CITY BRANCH 60
HAS JURISDICTION OVER THE SUBJECT MATTER OF THE CASE FOR
DAMAGES AMOUNTING TO P300,000.00;

On January 23, 2006, the Court of Appeals, Seventh Division, promulgated a decision
in CA-G.R. SP No. 85465, as follows:

II.

WHEREFORE, finding grave abuse of discretion on the part of [the] Regional Trial
Court of Baguio, Branch 60, in rendering the assailed Orders dated June 24, 2004
and July [19], 2004 in Civil Case No. 5794-R the instant petition for certiorari is
GRANTED. The assailed Orders are hereby ANNULLED and SET ASIDE. Civil Case
No. 5794-R for damages is ordered DISMISSED for lack of jurisdiction.

WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION ON THE PART

OF THE HONORABLE RESPONDENT JUDGE OF THE REGIONAL TRIAL COURT
OF BAGUIO BRANCH 60 FOR ALLOWING THE COMPLAINANT TO AMEND THE
COMPLAINT (INCREASING THE AMOUNT OF DAMAGES TO 1,000,000.00 TO
CONFER JURISDICTION OVER THE SUBJECT MATTER OF THE CASE DESPITE
THE PENDENCY OF A PETITION FOR CERTIORARI FILED AT THE COURT OF
APPEALS, SEVENTH DIVISION, DOCKETED AS CA G.R. NO. 85465. 15

SO ORDERED.14
In essence, the basic issues for our resolution are:
The Court of Appeals held that the case clearly falls under the jurisdiction of the
MTCC as the allegations show that plaintiff was seeking to recover moral damages in
the amount of P300,000.00, which amount was well within the jurisdictional amount of
the MTCC. The Court of Appeals added that the totality of claim rule used for
determining which court had jurisdiction could not be applied to the instant case

1) Did the RTC acquire jurisdiction over the case? and

2) Did the RTC commit grave abuse of discretion in allowing the amendment
of the complaint?
Petitioners insist that the complaint falls under the exclusive jurisdiction of the MTCC.
They maintain that the claim for moral damages, in the amount of P300,000.00 in the
original complaint, is the main action. The exemplary damages being discretionary
should not be included in the computation of the jurisdictional amount. And having no
jurisdiction over the subject matter of the case, the RTC acted with grave abuse of
discretion when it allowed the amendment of the complaint to increase the claim for
moral damages in order to confer jurisdiction.

Relatedly, Supreme Court Circular No. 21-99 was issued declaring that the first
adjustment in jurisdictional amount of first level courts outside of Metro Manila
from P100,000.00 to P200,000.00 took effect on March 20, 1999. Meanwhile, the
second adjustment from P200,000.00 to P300,000.00 became effective on February
22, 2004 in accordance with OCA Circular No. 65-2004 issued by the Office of the
Court Administrator on May 13, 2004.
Based on the foregoing, there is no question that at the time of the filing of the
complaint on April 5, 2004, the MTCCs jurisdictional amount has been adjusted
to P300,000.00.

In her Comment,16 respondent averred that the nature of her complaint is for recovery
of damages. As such, the totality of the claim for damages, including the exemplary
damages as well as the other damages alleged and prayed in the complaint, such as
attorneys fees and litigation expenses, should be included in determining jurisdiction.
The total claim being P420,000.00, the RTC has jurisdiction over the complaint.

But where damages is the main cause of action, should the amount of moral
damages prayed for in the complaint be the sole basis for determining which court
has jurisdiction or should the total amount of all the damages claimed regardless of
kind and nature, such as exemplary damages, nominal damages, and attorneys fees,
etc., be used?

We deny the petition, which although denominated as a petition for certiorari, we treat
as a petition for review on certiorari under Rule 45 in view of the issues raised.

In this regard, Administrative Circular No. 09-9419 is instructive:

xxxx

Section 19(8) of Batas Pambansa Blg. 129,17 as amended by Republic Act No.
7691,18 states:
SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive
original jurisdiction:
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages of whatever
kind, attorneys fees, litigation expenses, and costs or the value of the property in
controversy exceeds One hundred thousand pesos (P100,000.00) or, in such other
cases in Metro Manila, where the demand, exclusive of the abovementioned items
exceeds Two hundred thousand pesos (P200,000.00).
Section 5 of Rep. Act No. 7691 further provides:
SEC. 5. After five (5) years from the effectivity of this Act, the jurisdictional amounts
mentioned in Sec. 19(3), (4), and (8); and Sec. 33(1) of Batas Pambansa Blg. 129 as
amended by this Act, shall be adjusted to Two hundred thousand pesos
(P200,000.00). Five (5) years thereafter, such jurisdictional amounts shall be adjusted
further to Three hundred thousand pesos (P300,000.00): Provided, however, That in
the case of Metro Manila, the abovementioned jurisdictional amounts shall be
adjusted after five (5) years from the effectivity of this Act to Four hundred thousand
pesos (P400,000.00).

2. The exclusion of the term "damages of whatever kind" in determining the

jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as
amended by R.A. No. 7691, applies to cases where the damages are merely
incidental to or a consequence of the main cause of action. However, in cases where
the claim for damages is the main cause of action, or one of the causes of action, the
amount of such claim shall be considered in determining the jurisdiction of the court.
(Emphasis ours.)
In the instant case, the complaint filed in Civil Case No. 5794-R is for the recovery of
damages for the alleged malicious acts of petitioners. The complaint principally
sought an award of moral and exemplary damages, as well as attorneys fees and
litigation expenses, for the alleged shame and injury suffered by respondent by
reason of petitioners utterance while they were at a police station in Pangasinan. It is
settled that jurisdiction is conferred by law based on the facts alleged in the
complaint since the latter comprises a concise statement of the ultimate facts
constituting the plaintiffs causes of action.20 It is clear, based on the allegations of the
complaint, that respondents main action is for damages. Hence, the other forms of
damages being claimed by respondent, e.g., exemplary damages, attorneys fees and
litigation expenses, are not merely incidental to or consequences of the main action
but constitute the primary relief prayed for in the complaint.1avvphi1
In Mendoza v. Soriano,21 it was held that in cases where the claim for damages is the
main cause of action, or one of the causes of action, the amount of such claim shall
be considered in determining the jurisdiction of the court. In the said case, the
respondents claim of P929,000.06 in damages and P25,000 attorneys fees

plus P500 per court appearance was held to represent the monetary equivalent for
compensation of the alleged injury. The Court therein held that the total amount of
monetary claims including the claims for damages was the basis to determine the
jurisdictional amount.
Also, in Iniego v. Purganan,22 the Court has held:
The amount of damages claimed is within the jurisdiction of the RTC, since it is the
claim for all kinds of damages that is the basis of determining the jurisdiction of
courts, whether the claims for damages arise from the same or from different causes
of action.
xxxx
Considering that the total amount of damages claimed was P420,000.00, the Court of
Appeals was correct in ruling that the RTC had jurisdiction over the case.

MENDOZA, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, which seeks to set aside the April 6, 2011 Decision 1 of the Court of Appeals
(CA) in CA-G.R. SP No. 101700, affirming the April 11, 2007 Decision 2 of the Civil
Service Commission (CSC), which ordered the dismissal of petitioner Alberto Pat-og,
Sr. (Pat-og) from the service for grave misconduct.
The Facts
On September 13, 2003, Robert Bang-on (Bang-on), then a 14-year old second year
high school student of the Antadao National High School in Sagada, Mountain
Province, tiled an affidavit-complaint against Pat-og, a third year high school teacher
of the same school, before the Civil Service Commission-Cordillera Administrative
Region (CSC-CAR).

Lastly, we find no error, much less grave abuse of discretion, on the part of the Court
of Appeals in affirming the RTCs order allowing the amendment of the original
complaint from P300,000.00 to P1,000,000.00 despite the pendency of a petition for
certiorari filed before the Court of Appeals. While it is a basic jurisprudential principle
that an amendment cannot be allowed when the court has no jurisdiction over the
original complaint and the purpose of the amendment is to confer jurisdiction on the
court,23 here, the RTC clearly had jurisdiction over the original complaint and
amendment of the complaint was then still a matter of right.24

Bang-on alleged that on the morning of August 26, 2003, he attended his class at the
basketball court of the school, where Pat-og and his third year students were also
holding a separate class; that he and some of his classmates joined Pat-ogs third
year students who were practicing basketball shots; that Pat-og later instructed them
to form two lines; that thinking that three lines were to be formed, he stayed in
between the two lines; that Pat-og then held his right arm and punched his stomach
without warning for failing to follow instructions; and that as a result, he suffered
stomach pain for several days and was confined in a hospital from September 10-12,
2003, as evidenced by a medico-legal certificate, which stated that he sustained a
contusion hematoma in the hypogastric area.

WHEREFORE, the petition is DENIED, for lack of merit. The Decision and Resolution
of the Court of Appeals dated January 31, 2006 and June 23, 2006, respectively, are
AFFIRMED. The Regional Trial Court of Baguio City, Branch 60 is DIRECTED to
continue with the trial proceedings in Civil Case No. 5794-R with deliberate dispatch.

Regarding the same incident, Bang-on filed a criminal case against Pat-og for the
crime of Less Serious Physical Injury with the Regional Trial Court (RTC) of Bontoc,
Mountain Province.

No costs.
SO ORDERED.

G.R. No. 198755

June 5, 2013

ALBERTO PAT-OG, SR., Petitioner,

vs.
CIVIL SERVICE COMMISSION, Respondent.
DECISION

Taking cognizance of the administrative case, the CSC-CAR directed Pat-og to file his
counter-affidavit. He denied the charges hurled against him and claimed that when he
was conducting his Music, Arts, Physical Education and Health (MAPEH) class,
composed of third year students, he instructed the girls to play volleyball and the boys
to play basketball; that he later directed the boys to form two lines; that after the boys
failed to follow his repeated instructions, he scolded them in a loud voice and wrested
the ball from them; that while approaching them, he noticed that there were male
students who were not members of his class who had joined the shooting practice;
that one of those male students was Bang-on, who was supposed to be having his
own MAPEH class under another teacher; that he then glared at them, continued
scolding them and dismissed the class for their failure to follow instructions; and that
he offered the sworn statement of other students to prove that he did not box Bangon.

On June 1, 2004, the CSC-CAR found the existence of a prima faciecase for
misconduct and formally charged Pat-og.
While the proceedings of the administrative case were ongoing, the RTC rendered its
judgment in the criminal case and found Pat-og guilty of the offense of slight physical
injury. He was meted the penalty of imprisonment from eleven (11) to twenty (20)
days. Following his application for probation, the decision became final and executory
and judgment was entered.
Meanwhile, in the administrative case, a pre-hearing conference was conducted after
repeated postponement by Pat-og. With the approval of the CSC-CAR, the
prosecution submitted its position paper in lieu of a formal presentation of evidence
and formally offered its evidence, which included the decision in the criminal case. It
offered the affidavits of Raymund Atuban, a classmate of Bang-on; and James
Domanog, a third year high school student, who both witnessed Pat-og hit Bang-on in
the stomach.
For his defense, Pat-og offered the testimonies of his witnesses - Emiliano
Dontongan (Dontongan), a teacher in another school, who alleged that he was a
member of the Municipal Council for the Protection of Children, and that, in such
capacity, he investigated the incident and came to the conclusion that it did not
happen at all; and Ernest Kimmot, who testified that he was in the basketball court at
the time but did not see such incident. Pat-og also presented the affidavits of thirteen
other witnesses to prove that he did not punch Bang-on.
Ruling of the CSC-CAR
In its Decision,3 dated September 19, 2006, the CSC-CAR found Pat-og guilty and
disposed as follows:
WHEREFORE, all premises told, respondent Alberto Pat-og, Sr., Teacher Antadao
National High School, is hereby found guilty of Simple Misconduct.
Under the Uniform Rules on Administrative Cases in the Civil Service, the imposable
penalty on the first offense of Simple Misconduct is suspension of one (1) month and
one (1) day to six (6) months.
Due to seriousness of the resulting injury to the fragile body of the minor victim, the
CSC-CAR hereby imposed upon respondent the maximum penalty attached to the
offense which is six months suspension without pay.
The CSC-CAR gave greater weight to the version posited by the prosecution, finding
that a blow was indeed inflicted by Pat-og on Bang-on. It found that Pat-og had a
motive for doing so - his students failure to follow his repeated instructions which
angered him. Nevertheless, the CSCCAR ruled that a motive was not necessary to
establish guilt if the perpetrator of the offense was positively identified. The positive

identification of Pat-og was duly proven by the corroborative testimonies of the

prosecution witnesses, who were found to be credible and disinterested. The
testimony of defense witness, Dontongan, was not given credence considering that
the students he interviewed for his investigation claimed that Pat-og was not even
angry at the time of the incident, contrary to the latters own admission.
The CSC-CAR held that the actions of Pat-og clearly transgressed the proper norms
of conduct required of a public official, and the gravity of the offense was further
magnified by the seriousness of the injury of Bang-on which required a healing period
of more than ten (10) days. It pointed out that, being his teacher, Pat-ogs substitute
parental authority did not give him license to physically chastise a misbehaving
student. The CSC-CAR added that the fact that Pat-og applied for probation in the
criminal case, instead of filing an appeal, further convinced it of his guilt.
The CSC-CAR believed that the act committed by Pat-og was sufficient to find him
guilty of Grave Misconduct. It, however, found the corresponding penalty of dismissal
from the service too harsh under the circumstances. Thus, it adjudged petitioner guilty
of Simple Misconduct and imposed the maximum penalty of suspension for six (6)
months.
On December 11, 2006, the motion for reconsideration filed by Pat-og was denied for
lack of merit.4
The Ruling of the CSC
In its Resolution,5 dated April 11, 2007, the CSC dismissed Pat-ogs appeal and
affirmed with modification the decision of the CSC-CAR as follows:
WHEREFORE, foregoing premises considered, the instant appeal is hereby
DISMISSED. The decision of the CSC-CAR is affirmed with the modification that
Alberto Pat-og, Sr., is adjudged guilty of grave misconduct, for which he is meted out
the penalty of dismissal from the service with all its accessory penalties of
cancellation of eligibilities, perpetual disqualification from reemployment in the
government service, and forfeiture of retirement benefits.6
After evaluating the records, the CSC sustained the CSC-CARs conclusion that there
existed substantial evidence to sustain the finding that Pat-og did punch Bang-on in
the stomach. It gave greater weight to the positive statements of Bang-on and his
witnesses over the bare denial of Patog. It also highlighted the fact that Pat-og failed
to adduce evidence of any ill motive on the part of Bang-on in filing the administrative
case against him. It likewise gave credence to the medico-legal certificate showing
that Bang-on suffered a hematoma contusion in his hypogastric area.
The CSC ruled that the affidavits of Bang-ons witnesses were not bereft of
evidentiary value even if Pat-og was not afforded a chance to cross-examine the

witnesses of Bang-on. It is of no moment because the cross- examination of

witnesses is not an indispensable requirement of administrative due process.
The CSC noted that Pat-og did not question but, instead, fully acquiesced in his
conviction in the criminal case for slight physical injury, which was based on the same
set of facts and circumstances, and involved the same parties and issues. It, thus,
considered his prior criminal conviction as evidence against him in the administrative
case.
Finding that his act of punching his student displayed a flagrant and wanton disregard
of the dignity of a person, reminiscent of corporal punishment that had since been
outlawed for being harsh, unjust, and cruel, the CSC upgraded Pat-ogs offense from
Simple Misconduct to Grave Misconduct and ordered his dismissal from the service.
Pat-og filed a motion for reconsideration, questioning for the first time the jurisdiction
of CSC over the case. He contended that administrative charges against a public
school teacher should have been initially heard by a committee to be constituted
pursuant to the Magna Carta for Public School Teachers.
On November 5, 2007, the CSC denied his motion for reconsideration. 7 It ruled that
Pat-og was estopped from challenging its jurisdiction considering that he actively
participated in the administrative proceedings against him, raising the issue of
jurisdiction only after his appeal was dismissed by the CSC.
Ruling of the Court of Appeals
In its assailed April 6, 2011 Decision,8 the CA affirmed the resolutions of the CSC. It
agreed that Pat-og was estopped from questioning the jurisdiction of the CSC as the
records clearly showed that he actively participated in the proceedings. It was of the
view that Pat-og was not denied due process when he failed to cross-examine Bangon and his witnesses because he was given the opportunity to be heard and present
his evidence before the CSC-CAR and the CSC.
The CA also held that the CSC committed no error in taking into account the
conviction of Pat-og in the criminal case. It stated that his conviction was not the sole
basis of the CSC for his dismissal from the service because there was substantial
evidence proving that Pat-og had indeed hit Bang-on.
In its assailed Resolution, 9 dated September 13, 2011, the CA denied the motion for
reconsideration filed by Pat-og.
Hence, the present petition with the following
Assignment of Errors

WHETHER OR NOT RESPONDENT COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION WHEN IT AFFIRMED THE SUPREME PENALTY OF
DISMISSAL FROM SERVICE WITH FORFEITURE OF RETIREMENT BENEFITS
AGAINST THE PETITIONER WITHOUT CONSIDERING PETITIONERS LONG
YEARS OF GOVERNMENT SERVICE?
WHETHER OR NOT RESPONDENT COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION WHEN IT RULED THAT PETITIONER IS ESTOPPED
FROM QUESTIONING THE JURISDICTION OF THE CIVIL SERVICE COMMISSION
TO HEAR AND DECIDE THE ADMINISTRATIVE CASE AGAINST HIM?
WHETHER OR NOT RESPONDENT COURT OF APPEALS SERIOUSLY ERRED
AND COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING THE APPEAL
DESPITE LACK OF SUBSTANTIAL EVIDENCE?
On Jurisdiction
Pat-og contends that Section 9 of Republic Act (R.A.) No. 4670, otherwise known as
the Magna Carta for Public School Teachers, provides that administrative charges
against a public school teacher shall be heard initially by a committee constituted
under said section. As no committee was ever formed, the petitioner posits that he
was denied due process and that the CSC did not have the jurisdiction to hear and
decide his administrative case. He further argues that notwithstanding the fact that
the issue of jurisdiction was raised for the first time on appeal, the rule remains that
estoppel does not confer jurisdiction on a tribunal that has no jurisdiction over the
cause of action or subject matter of the case.
The Court cannot sustain his position.
The petitioners argument that the administrative case against him can only proceed
under R.A. No. 4670 is misplaced.
In Puse v. Santos-Puse,10 it was held that the CSC, the Department of Education
(DepEd) and the Board of Professional Teachers-Professional Regulatory
Commission (PRC) have concurrent jurisdiction over administrative cases against
public school teachers.
Under Article IX-B of the 1987 Constitution, the CSC is the body charged with the
establishment and administration of a career civil service which embraces all
branches and agencies of the government.11 Executive Order (E.O.) No. 292 (the
Administrative Code of 1987)12 and Presidential Decree (P.D.) No. 807 (the Civil
Service Decree of the Philippines)13 expressly provide that the CSC has the power to
hear and decide administrative disciplinary cases instituted with it or brought to it on
appeal. Thus, the CSC, as the central personnel agency of the government, has the
inherent power to supervise and discipline all members of the civil service, including
public school teachers.

Indeed, under Section 9 of R.A. No. 4670, the jurisdiction over administrative cases of
public school teachers is lodged with the investigating committee constituted
therein.14 Also, under Section 23 of R.A. No. 7836 (the Philippine Teachers
Professionalization Act of 1994), the Board of Professional Teachers is given the
power, after due notice and hearing, to suspend or revoke the certificate of
registration of a professional teacher for causes enumerated therein.15
Concurrent jurisdiction is that which is possessed over the same parties or subject
matter at the same time by two or more separate tribunals. When the law bestows
upon a government body the jurisdiction to hear and decide cases involving specific
matters, it is to be presumed that such jurisdiction is exclusive unless it be proved that
another body is likewise vested with the same jurisdiction, in which case, both bodies
have concurrent jurisdiction over the matter.16
Where concurrent jurisdiction exists in several tribunals, the body that first takes
cognizance of the complaint shall exercise jurisdiction to the exclusion of the others.
In this case, it was CSC which first acquired jurisdiction over the case because the
complaint was filed before it. Thus, it had the authority to proceed and decide the
case to the exclusion of the DepEd and the Board of Professional Teachers.17
In CSC v. Alfonso,18 it was held that special laws, such as R.A. No. 4670, do not
divest the CSC of its inherent power to supervise and discipline all members of the
civil service, including public school teachers. Pat-og, as a public school teacher, is
first and foremost, a civil servant accountable to the people and answerable to the
CSC for complaints lodged against him as a public servant. To hold that R.A. No.
4670 divests the CSC of its power to discipline public school teachers would negate
the very purpose for which the CSC was established and would impliedly amend the
Constitution itself.
To further drive home the point, it was ruled in CSC v. Macud 19 that R.A. No. 4670, in
imposing a separate set of procedural requirements in connection with administrative
proceedings against public school teachers, should be construed to refer only to the
specific procedure to be followed in administrative investigations conducted by the
DepEd. By no means, then, did R.A. No. 4670 confer an exclusive disciplinary
authority over public school teachers on the DepEd.
At any rate, granting that the CSC was without jurisdiction, the petitioner is indeed
estopped from raising the issue. Although the rule states that a jurisdictional question
may be raised at any time, such rule admits of the exception where, as in this case,
estoppel has supervened.20 Here, instead of opposing the CSCs exercise of
jurisdiction, the petitioner invoked the same by actively participating in the
proceedings before the CSC-CAR and by even filing his appeal before the CSC itself;
only raising the issue of jurisdiction later in his motion for reconsideration after the
CSC denied his appeal. This Court has time and again frowned upon the undesirable
practice of a party submitting his case for decision and then accepting the judgment
only if favorable, but attacking it for lack of jurisdiction when adverse.21

On Administrative Due Process

On due process, Pat-og asserts that the affidavits of the complainant and his
witnesses are of questionable veracity having been subscribed in Bontoc, which is
nearly 30 kilometers from the residences of the parties. Furthermore, he claimed that
considering that the said affiants never testified, he was never afforded the
opportunity to cross-examine them. Therefore, their affidavits were mere hearsay and
insufficient to prove his guilt.
The petitioner does not persuade.
The essence of due process is simply to be heard, or as applied to administrative
proceedings, a fair and reasonable opportunity to explain ones side, or an
opportunity to seek a reconsideration of the action or ruling complained
of.22 Administrative due process cannot be fully equated with due process in its strict
judicial sense. In administrative proceedings, a formal or trial-type hearing is not
always necessary23 and technical rules of procedure are not strictly applied. Hence,
the right to cross-examine is not an indispensable aspect of administrative due
process.24 The petitioner cannot, therefore, argue that the affidavit of Bang-on and his
witnesses are hearsay and insufficient to prove his guilt.
At any rate, having actively participated in the proceedings before the CSC-CAR, the
CSC, and the CA, the petitioner was apparently afforded every opportunity to explain
his side and seek reconsideration of the ruling against him.1wphi1
As to the issue of the veracity of the affidavits, such is a question of fact which cannot
now be raised before the Court under Rule 45 of the Rules of Court. The CSC-CAR,
the CSC and the CA did not, therefore, err in giving credence to the affidavits of the
complainants and his witnesses, and in consequently ruling that there was substantial
evidence to support the finding of misconduct on the part of the petitioner.
On the Penalty
Assuming that he did box Bang-on, Pat-og argues that there is no substantial
evidence to prove that he did so with a clear intent to violate the law or in flagrant
disregard of the established rule, as required for a finding of grave misconduct. He
insists that he was not motivated by bad faith or ill will because he acted in the belief
that, as a teacher, he was exercising authority over Bang-on in loco parentis, and
was, accordingly, within his rights to discipline his student. Citing his 33 years in the
government service without any adverse record against him and the fact that he is at
the edge of retirement, being already 62 years old, the petitioner prays that, in the
name of substantial and compassionate justice, the CSC-CARs finding of simple
misconduct and the concomitant penalty of suspension should be upheld, instead of
dismissal.
The Court agrees in part.

Misconduct means intentional wrongdoing or deliberate violation of a rule of law or

standard of behavior. To constitute an administrative offense, misconduct should
relate to or be connected with the performance of the official functions and duties of a
public officer. In grave misconduct, as distinguished from simple misconduct, the
elements of corruption, clear intent to violate the law or t1agrant disregard of an
established rule must be manifest.25
Teachers are duly licensed professionals who must not only be competent in the
practice of their noble profession, but must also possess dignity and a reputation with
high moral values. They must strictly adhere to, observe, and practice the set of
ethical and moral principles, standards, and values laid down in the Code of Ethics of
Professional Teachers, which apply to all teachers in schools in the Philippines,
whether public or private, as provided in the preamble of the said Code.26 Section 8 of
Article VIII of the same Code expressly provides that "a teacher shall not inflict
corporal punishment on offending learners."
Clearly then, petitioner cannot argue that in punching Bang-on, he was exercising his
right as a teacher in loco parentis to discipline his student. It is beyond cavil that the
petitioner, as a public school teacher, deliberately violated his Code of Ethics. Such
violation is a flagrant disregard for the established rule contained in the said Code
tantamount to grave misconduct.
Under Section 52(A)(2) of Rule IV of the Uniform Rules on Administrative Cases in
the Civil Service, the penalty for grave misconduct is dismissal from the service,
which carries with it the cancellation of eligibility, forfeiture of retirement benefits and
perpetual disqualification from reemployment in the government service.27 This
penalty must, however, be tempered with compassion as there was sut1icient
provocation on the part of Bang-on. Considering further the mitigating circumstances
that the petitioner has been in the government service for 33 years, that this is his first
offense and that he is at the cusp of retirement, the Court finds the penalty of
suspension for six months as appropriate under the circumstances.
WHEREFORE, the Court PARTIALLY GRANTS the petition and MODIFIES the April
6, 2011 Decision of the Court of Appeals in CA-G.R. SP No. 101700. Accordingly,
Alberto Pat-og, Sr. is found GUlLTY of Grave Misconduct, but the penalty is reduced
from dismissal from the service to SUSPENSION for SIX MONTHS.
SO ORDERED.

G.R. No. 131502

June 8, 2000

WILSON ONG CHING KIAN CHUNG and THE DIRECTOR OF THE NATIONAL
LIBRARY, petitioners,
vs.
CHINA NATIONAL CEREALS OIL AND FOODSTUFFS IMPORT AND EXPORT
CORP., CEROILFOOD SHANDONG CEREAL AND OILS and BENJAMIN IRAO,
JR., respondents.
BUENA, J.:
This is an appeal by way of a petition for review on certiorari under Rule 45 of the
1997 Rules of Civil Procedure of the Decision 1 in Civil Case No. 94-68836 dated
November 20, 1997 of the Regional Trial Court, Branch 33, Manila, which rendered a
judgment on the pleadings against herein petitioners, the dispositive portion of which
reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs, and
against defendant:
1. Decreeing the cancellation or annulment of the Copyrighted Registration
No. 0-93-491 of defendant WILSON ONG;
2. Directing defendant Director of the National Library to effect the
cancellation or annulment of the Copyrighted Registration No. 0-93-491 of
defendant WILSON ONG; and
Damages cannot be awarded to Plaintiffs as no evidence was presented to
substantiate their claims.
With costs against defendant WILSON ONG.

SO ORDERED. 2
The antecedent facts are undisputed.
On September 16, 1993, petitioner Wilson Ong Ching Kian Chuan, doing business
under the firm name of C.K.C. Trading, filed a Complaint for Infringement of Copyright
with prayer for writ of injunction before the Regional Trial Court, Branch 94 of Quezon
City (hereinafter Quezon City Court) against Lorenzo Tan, doing business under the
firm name Mcmaster International Sales, and docketed as Q-93-17628. On the same
day, said court issued a temporary restraining order enjoining the defendant, his
distributors and retailers from selling vermicelli (sotanghon) "using the plaintiffs
copyrighted cellophane wrapper with the two-dragons designed label, and setting the
hearing of the injunctive relief for September 21, 1993".1wphi1.nt
On October 13, 1993, the Quezon City Court issued a Resolution which granted a writ
of preliminary injunction in favor of the petitioner, denied therein defendant's
application for a writ of preliminary injunction and, issues having been joined, set the
case for pre-trial on November 12, 1993. On December 15, 1993, the Quezon City
Court denied defendant's motion for dissolution of the writ off preliminary injunction.
On January 5, 1994, the China National Cereals Oils & Foodstuffs Import and Export
Corporation (CEROILFOOD SHANDONG), and Benjamin Irao, Jr., as representative
and attorney-in-fact of CEROILFOOD SHANDONG, herein respondents, filed a
complaint 3 for Annulment/Cancellation of Copyrighted Certificate No. Q-93-491 and
damages with prayer for restraining order/writ of preliminary injunction before the
Regional Trial Court of Manila, (hereinafter Manila Court) against Wilson Ong Ching
Kian Chuan, doing business under the firm name and style C.K.C. Trading and the
Director of the National Library, docketed as Civil Case No. 94-68836.
On January 7, 1994, judge Rodolfo G. Palattao of the Manila Court issued a
temporary restraining order 4enjoining petitioner from using his copyrighted labels and
selling his vermicelli products which is similar to that of respondents'. On January 14,
1994, petitioner filed a motion to dissolve temporary restraining order 5 praying that
the complaint be dismissed on the following grounds: 1) litis pendentia, 2.) the issue
involved is one of copyright under PD No. 49 and does not involve trademarks under
Republic Act 166, 3.) courts of co-equal and coordinate jurisdiction cannot interfere
with the orders of other courts having the same power and jurisdiction, 4.) plaintiff
CEROILFOOD SHANDONG, being a foreign corporation and with no license to do
business in the Philippines, has no legal capacity to sue, and 5.) courts should not
issue injunctions which would in effect dispose of the main case without trial.
On January 27, 1994, the Manila Court issued an Order 6 granting a writ of
preliminary injunction in favor of respondents and denying petitioner's motion to
dismiss.

On January 31, 1994, petitioner filed before the Court of Appeals a petition
for certiorari docketed as CA - G.R. SP No. 33178, seeking for the annulment of the
January 27, 1994 Order of the Manila Court.
On July 22, 1994, after the parties have expounded their respective positions by way
of their comment, reply and rejoinder, the Court of Appeals rendered its
Decision, 7 the dispositive portion of which reads:
WHEREFORE, the instant petition is hereby GRANTED, and as prayed for
by petitioner, the Order dated January 27, 1994 issued in Civil Case 9468836 by Branch 33, Regional Trial Court, National Capital Judicial Region,
Manila, is hereby ANNULLED and SET ASIDE, although the prayer for
dismissal of the complaint in Manila may be pursued before said court during
the proceedings.
In the same Decision, the Court of Appeals ruled that the case was dismissible on
grounds of litis pendentia, multiplicity of suits, and forum shopping.
On September 5, 1994, the Court of Appeals denied respondents' motion for
reconsideration. 8 The Court of Appeals' Decision became final on October 3, 1994.
Entry of Judgment 9 was made on November 15, 1994.
On November 21, 1994, petitioner filed a motion 10 praying for the dismissal of the
Manila case on the strength of the findings of the Court of Appeals, particularly on
"forum shopping." In an Order 11 dated March 8, 1995, the Manila Court held in
abeyance the resolution of the motion to dismiss until further reception of evidence,
stating therein that the dispositive portion of the Court of Appeals Decision did not
order the dismissal of the case. In the meantime, respondents filed a motion to
declare petitioners in default for failing to file an Answer despite the March 8 Order,
which motion was opposed by petitioners, there being at that time a pending motion
to dismiss which the court a quo refused to resolve on the merits.
In an Order 12 dated July 19, 1996, the Manila court denied the motion to declare
petitioners in default, admittedmotu proprio the motion to dismiss filed by petitioner as
its answer, and directed the parties to submit their respective pre-trial briefs.
On September 17, 1996, petitioner filed a "Motion for the Issuance of a Writ of
Execution" 1 praying that a motion for execution dismissing the Manila case be
issued, and citing Atty. Benjamin Irao, Jr., counsel of CEROILFOOD SHANDONG and
his co-counsel, Atty. Antonio Albano, guilty of forum shopping, pursuant to the
Decision of the Court of Appeals in CA-G.R. SP. No. 33178.
On January 23, 1997, respondents filed before the Manila court a Supplement To
Motion For Judgment On The Pleadings, claiming that petitioner failed to tender an
issue. 14

On November 20, 1997, Judge Rodolfo G. Palattao of the Manila Court rendered a
Judgment on the Pleadings in favor of respondents, and ruled that litis pendentia,
multiplicity of suits, and forum shopping were not present in the case.
Hence, the present appeal on pure questions of law.
Petitioners raise the following issues:
I
Whether or not the legal pronouncements of the Court of Appeals in CA-G.R.
SP No. 33178 that the Manila case is dismissible on grounds of litis
pendentia, multiplicity of suits and forum shopping constitute the "Law of the
Case."
II
Whether or not the Regional Trial Judge of Branch 33, Manila erred in not
applying the law of the case.
III
Whether or not the court a quo can review the legal conclusions of an
appellate court in the same case, on issues squarely submitted to and
passed upon by the appellate court under identical set of facts and
circumstances obtaining in the court a quo.
IV
Whether or not the court a quo erred in motu proprio considering a motion to
dismiss as the answer to the complaint and, thereafter, render a judgment on
the pleadings on the ground that the motion to dismiss did not tender an
issue. 15
In support thereof, petitioners quote the ruling of the Court of Appeals on the issue of
whether there was litis pendentia and multiplicity of suits in the present case, as
follows:
The Manila court should have considered also that Civil Case Q-93-17628
involves practically the same parties, same subject-matter and same relief
as in Civil Case 0-94-68836. Petitioner filed the first case on September 16,
1993, for INFRINGEMENT OF HIS REGISTERED COPYRIGHT, which
covers the cellophane wrapper that he uses in packaging the vermicelli
which he imports from the CHINA NATIONAL CEREALS OILS &
FOODSTUFFS IMPORT AND EXPORT CORPORATION BASED IN

BEIJING, CHINA, the main or the principal of private respondent

CEROILFOOD SHANDONG, the latter being the "branch" of CEROILFOOD
in Quingdao, China, and of which in Civil Case Q-93-17628, LORENZO TAN
avers in his answer he is the "exclusive and sole distributor." In Civil Case
94-68836 subsequently filed in Manila, on January 5, 1994, LORENZO TAN
admitted that he is the "sole distributor" of plaintiff China National Cereals Oil
and Foodstuffs Import and Export Corporation of the latter's PAGODA
BRAND vermicelli products. Atty. Benjamin Irao, Jr., the attorney of private
respondents, also the attorney-in-fact of Ceroilfood Shandong, admitted that
his principal "does not do business in the Philippines," and named
LORENZO TAN as his principal's "exclusive distributor" of said product in the
Philippines. Thus, Lorenzo Tan in both Civil Cases Q-93-17628 and 9468836 appears as principal defendant in the first, and as sole distributor of
Cereal Food Shandong, in the second. Indicatively, he is defending and
complaining substantively the same rights and interests in both cases, and in
effect there is identity of parties representing the same interests. While it is
against TAN with whom the QC RTC issued an injunction, that writ should
also apply to CEROILFOOD SHANDONG, as Tan is its exclusive and sole
distributor in the Philippines, as private respondent corporation does
business in the Philippines through TAN who imports his vermicelli wholly
from said foreign corporation. And most importantly, TAN asserts rights to
the trademark PAGODA, also allegedly owned by CEROILFOOD between
TAN and CEROILFOOD SHANDONG that he is its corporate distributor. Also
in 93-17628, petitioner's prayer for injunction is based on his registered
copyright certificate, while TAN averred in his answer thereon that
petitioner's copyright should be annulled and cancelled, and also prayed for
injunction. In 94-68836, private respondent CEROILFOOD SHANDONG, as
plaintiff, also prayed for "ANNULMENT AND CANCELLATION OF
COPYRIGHT CERTIFICATE No. 0-93-491 WITH DAMAGES AND PRAYER
FOR RESTRAINING ORDER/WRIT OF PRELIMINARY INJUNCTION." As
can well be seen from those pertinent allegations/averments/prayers in both
cases, they are identical with each other. They involved one and the same
CERTIFICATE OF COPYRIGHT REGISTRATION. Though the first case is
for INFRINGEMENT of copyright registration, while the second is for
ANNULMENT AND CANCELLATION of the same copyright, since the first
involves a breach, infraction, transgression, and the second for invalidation,
discontinuance, termination and suppression of the same copyright
certificate, what the first seeks to preserve is the exclusive use of the
copyright, and the second seeks to terminate the very use of the same
copyright by the registrant/owner. Though the quest of petitioner and private
respondents in the two cases are aimed towards different ends the first to
uphold the validity and effectiveness of the same copyright, the second is
merely a consequence of the first, the real matter in controversy can be
fully determined and resolved before the Quezon City court, and would
render the Manila case a surplus age and also constitutes multiplicity of suits
and dismissible on that ground, although such dismissal should be
considered as without prejudice to the continuance of the proceedings

before the Quezon City court. (pp. 8-10, CA Decision, Annex "B" of the
Petition)
On the issue of forum shopping, the Court of Appeals ruled further, thus:
Finally, the Manila court should also have considered forum shopping as a
third drawback to private respondent's cause. It is a term originally used to
denominate a litigant's privilege of choosing the venue of his action where
the law allows him to do so, or of an "election of remedies" of one of two or
more co-existing rights. In either of which situations, the litigant actually
shops for a forum of his action. However, instead of making a choice of the
forum of their actions, litigants through the encouragement of their lawyers,
file their actions on all available courts, or invoke irrelevant remedies
simultaneously, or even file actions one after the other, a practice which had
not only resulted conflicting adjudications among different courts, confusion
inimical to an orderly administration of justice and created extreme
inconvenience to some of the parties to the action. And thus it has been held
in Villanueva vs. Andres, 172 SCRA 876, that forum shopping applies
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 forum. . . .
Observedly, Attys. IRAO and ALBANO, who are TAN's lawyers in Quezon
City, are also private respondents' lawyers in Manila. ATTY. IRAO who
entered his appearance as counsel for private respondents in the Manila
case, is also the "authorized representative and attorney-in-fact" of private
respondent corporation in the Manila case. While Atty. Irao "withdrew" as
counsel of TAN in the Quezon City, that did not remove the case filed in
Manila outside the sphere of the rule on "forum shopping." (pp. 10-11, CA
Decision, Annex "B" of the Petition).
Petitioners contend that the foregoing conclusions of fact and law of the Court of
Appeals are correct and should not be disturbed, especially since the decision of the
Court of Appeals had already become final and entered in the Books of Judgment;
that the parties to the case and the Regional Trial Judge in Branch 33, Manila are
bound by the said conclusions of fact and law and the same should not be reopened
on remand of the case; and that it is not within the Trial Judge's discretion to take
exception to, much less overturn, any factual or legal conclusions laid down by the
Court of Appeals in its verdict and to dispose of the case in a manner diametrically
opposed thereto, citing the case of PNB vs. Noah's Ark Sugar Refinery, 226 SCRA
36, 48.
Petitioners further allege that the acts of the trial judge suffer from procedural
infirmity: and that it makes no sense for the trial judge to refuse to resolve the motion
to dismiss on the merits; to motu proprio consider the motion to dismiss as the
answer to the complaint; and to later rule that the motion to dismiss did not tender an
issue and, therefore, a judgment on the pleadings is in order. Petitioners also aver
that a motion to dismiss is not a responsive pleading (citing Prudence Realty

Development Corporation vs. CA, 231 SCRA 379); that at the time the trial judge
considered the motion to dismiss to be the answer to the complaint, he knew very
well, or at least should have known that the motion to dismiss did not tender an issue
for indeed, it is not within the province of the motion to admit or deny the allegations
of the complaint, and there being no legitimate answer and no real joinder of issues,
the rendition of the subject Judgment on the Pleadings becomes suspect. According
to petitioners, in deviating from the usual procedure, the court a quo gave undue
benefit and advantage to the respondents at the expense of herein petitioners; and
that the explanation given by the trial judge that the dispositive portion of the Court of
Appeals decision did not expressly order him to dismiss the case is flimsy and
untenable.
On the other hand, respondents assert that the doctrine of law of the case is not
applicable to the present case because the Court of Appeals never ordered the
dismissal of the case and that the Order of the Manila Court dated January 27, 1994
was annulled and set aside only insofar as the preliminary injunction is concerned.
Respondents cite the case of Magdalena Estate, Inc. vs. Caluag, 11 SCRA 333 which
ruled that the deficiencies in the dispositive part of the decision cannot be supplied by
any finding or opinion found in the body of the decision. Respondents also allege that
while petitioner Wilson Ong had belatedly faulted the Court below in considering his
motion to dismiss as his answer, he never questioned the correctness of the findings
of the court a quo in the assailed decision.
After a review of the records of the case and an examination of the pleadings filed by
the parties, the Court finds the petition to be meritorious.
Being interrelated, the first, second and third issues shall be discussed jointly.1awphil
Indeed, the court a quo erred in not resolving the petitioner's motion to dismiss in
accordance with the decision of the Court of Appeals which found that "The Manila
court should have considered also that Civil Case Q-93-17628 involves practically the
same parties, same subject-matter and same relief as in Civil Case 94-68836"; that
"the real matter in controversy can be fully determined and resolved before the
Quezon City court and would render the Manila case a surplusage and also
constitutes multiplicity of suits and dismissible on that ground, although such
dismissal should be considered as without prejudice to the continuance of the
proceedings before the Quezon City court"; and that "the Manila court should also
have considered forum shopping as a third drawback to private respondents' cause."
While the Court of Appeals stated in the dispositive portion of its decision that "the
prayer for dismissal of the complaint in Manila may be pursued before said court
during the proceedings," it is clear from the body of the Court of Appeals Decision that
the case before the Manila court should be dismissed on grounds of litis pendentia,
and forum shopping.

While the general rule is that the portion of a decision that becomes the subject of
execution is that ordained or decreed in the dispositive part thereof, there are
exceptions to this rule.
The exceptions where the dispositive part of the judgment does not always prevail
over the body of the opinion are:
(a) where there is ambiguity or uncertainty, the body of the opinion may be
referred to for purposes of construing the judgment because the dispositive
part of a decision must find support from the decision'sratio decidendi; 16
(b) where extensive and explicit discussion and settlement of the issue is
found in the body of the decision.17
Considering the circumstances of the instant case, the Court finds that the exception
to the general rule applies to the instant case. Since the statement of the Court of
Appeals regarding the prayer for the dismissal of the case seemingly gave the Manila
court the discretion to dismiss not to dismiss Civil Case No. 94-68836, the Manila
court should have referred to the body of the decision for purposes of construing the
issue of whether or not the complaint should be dismissed, because the dispositive
part of a decision must find support from the decision'sratio decidendi. Findings of the
court are to be considered in the interpretation of the dispositive portion of the
judgment. 18 Moreover, extensive and explicit discussion and settlement of the issues
are found in the body of the Court of Appeals decision so that it is grave error for the
court a quo to rule again, as it did, on the issues of litis pendentia and forum shopping
in its decision, and to overturn that of the Court of Appeals, thus:
The argument of Defendant Ong in his motion for execution that the case at
bench should now be dismissed on the grounds of forum shopping and litis
pendentia as allegedly ruled by the Court of Appeals, does not impress this
Court. For while the appellate court urged this Court to consider litis
pendentia and forum shopping in the trial resolution of the case at bench,
nowhere in its (CA) decision could it be deduced that this Court is mandated
to dismiss the case on these precise grounds. The dispositive portion of the
decision does not contain such a mandate. 19
In Viva Productions, Inc. vs. Court of Appeals, 20 this Court set aside the decision of
the Makati court and declared null and void all orders of the RTC of Makati after ruling
that:
Thus we find grave abuse of discretion on the part of the Makati court, being
a mere co-equal of the Paraaque court, in not giving due deference to the
latter before which the issue of the alleged violation of the sub-judice rule
had already been raised and submitted. In such instance, the Makati court, if
it was wary of dismissing the action outrightly under administrative Circular
No. 04-94, should have, at least ordered the consolidation of its case with

that of the Paraaque court, which had first acquired 31 of the Revised
Rules of Court. (emphasis ours.)
The Quezon City court and the Manila court have concurrent jurisdiction over the
case. However, when the Quezon City court acquired jurisdiction over the case, it
excluded all other courts of concurrent jurisdiction from acquiring jurisdiction over the
same. The Manila court is, therefore, devoid of jurisdiction over the complaint filed
resulting in the herein assailed decision which must perforce be declared null and
void. To hold otherwise would be to risk instances where courts of concurrent
jurisdiction might have conflicting orders. 21
WHEREFORE, the assailed decision of the Regional Trial Court of Manila, Branch 33
in Civil Case No. 94-68836 is ANNULLED and SET ASIDE. Said case is ordered
dismissed without prejudice to the continuance of the proceedings before the Quezon
City court where Civil Case No. Q-93-17628 is pending.
SO ORDERED.

G.R. No. 196063

December 14, 2011

ORLANDO A. RAYOS, FE A. RAYOS-DELA PAZ, represented by DR. ANTONIO A.

RAYOS, and ENGR. MANUEL A. RAYOS, Petitioners,
vs.
THE CITY OF MANILA, Respondent.
RESOLUTION
CARPIO, J.:
The Case
This petition, captioned as a petition for review on certiorari and declaratory
relief,1 assails the Order of 6 January 20112 of the Regional Trial Court of Manila,
Branch 49, denying reconsideration of the trial courts Order of 11 March 20103 which
denied the motion to dismiss filed by petitioners Orlando A. Rayos, Fe A. Rayos Dela
Paz, and Engr. Manuel A. Rayos.4

Christian School Foundation, Inc. v. Municipality (now City) of Pasig, Metro

Manila8apply squarely to the present case.
On 11 March 2010, the trial court denied the motion to dismiss. The trial court ruled
that the motion to dismiss did not show any compelling reason to convince the court
that the doctrine of stare decisis applies. Petitioners failed to demonstrate how or why
the facts in this case are similar with the cited cases in order that the issue in this
case be resolved in the same manner. The trial court disposed of the motion to
dismiss in this wise:
In view of the foregoing, and after intense evaluation of the records on hand, the
Motion to Dismiss cannot be granted.
In order to prevent further delay to the prejudice of all the proper parties in this case,
continue with the trial for the determination of just compensation on July 7, 2010 at
one oclock in the afternoon.
SO ORDERED.9

The Facts

On 6 January 2011, the trial court denied the motion for reconsideration.

The present case originated from a complaint for eminent domain filed by respondent
City of Manila against Remedios V. De Caronongan, Patria R. Serrano, Laureano M.
Reyes, Paz B. Sison, Teofila B. Sison, Leticia R. Ventanilla, Rosalinda R. Barrozo
(defendants), docketed as Civil Case No. 03108154.

Petitioners filed with this Court the present petition reiterating the arguments in their
motion to dismiss, namely, (1) Ordinance No. 7949 is unconstitutional, and (2) the
cases of Lacgao v. Labra10 and Jesus Is Lord Christian School Foundation, Inc. v.
Municipality (now City) of Pasig, Metro Manila11 apply squarely to this case.

In its Complaint,5 the City of Manila alleged that it passed Ordinance No. 7949
authorizing the City Mayor to acquire "by expropriation, negotiation or by any other
legal means" the parcel of land co-owned by defendants, which is covered by TCT
No. 227512 and with an area of 1,182.20 square meters. The City of Manila offered to
purchase the property at P1,000.00 per square meter.

The Ruling of the Court

In their Answer,6 defendants conveyed their willingness to sell the property to the City
of Manila, but at the price of P50,000.00 per square meter which they claimed was
the fair market value of the land at the time.
In the course of the proceedings, Laureano, one of the defendants, died on 1
December 2003 and was substituted by his son petitioner Manuel A. Rayos.
Meanwhile, petitioner Orlando A. Rayos intervened while petitioner Fe A. Rayos Dela
Paz was added as a defendant.

We deny the petition.

An order denying a motion to dismiss is interlocutory and not appealable. 12 An order
denying a motion to dismiss does not finally dispose of the case, and in effect, allows
the case to proceed until the final adjudication thereof by the court. As such, it is
merely interlocutory in nature and thus, not appealable.13 Section 1(c), Rule 41 of the
Rules of Court provides:
SECTION 1. Subject of appeal. - An appeal may be taken from a judgment or final
order that completely disposes of the case, or of a particular matter therein when
declared by these Rules to be appealable.
No appeal may be taken from:

On 7 December 2009, petitioners Orlando A. Rayos, Fe A. Rayos Dela Paz, and

Engr. Manuel A. Rayos filed a Motion to Dismiss on the grounds that (1) Ordinance
No. 7949 is unconstitutional and (2) the cases of Lagcao v. Labra7 and Jesus Is Lord

xxx
(c) An interlocutory order;

xxx
In all the above instances where the judgment or final order is not appealable, the
aggrieved party may file an appropriate special civil action under Rule 65.
Clearly, no appeal, under Rule 45 of the Rules of Court, may be taken from an
interlocutory order. In case of denial of an interlocutory order, the immediate remedy
available to the aggrieved party is to file a special civil action for certiorari under Rule
65 of the Rules of Court.
In this case, since the trial courts order denying the motion to dismiss is not
appealable, petitioners should have filed a petition for certiorari under Rule 65 to
assail such order, and not a petition for review on certiorari under Rule 45 of the
Rules of Court. For being a wrong remedy, the present petition deserves outright
dismissal.
Even if the Court treats the present petition as a petition for certiorari under Rule 65,
which is the proper remedy to challenge the order denying the motion to dismiss, the
same must be dismissed for violation of the principle of hierarchy of courts. This wellsettled principle dictates that petitioners should file the petition for certiorari with the
Court of Appeals, and not directly with this Court.
Indeed, this Court, the Court of Appeals and the Regional Trial Courts exercise
concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction.14 However, such concurrence in jurisdiction
does not give petitioners unbridled freedom of choice of court forum. 15 In Heirs of
Bertuldo Hinog v. Melicor,16 citing People v. Cuaresma,17 the Court held:

In short, to warrant a direct recourse to this Court, petitioners must show exceptional
and compelling reasons therefor, clearly and specifically set out in the petition. This
petitioners failed to do.
Petitioners merely rehashed the arguments in their motion to dismiss, which consist
mainly of unsubstantiated allegations. Petitioners invoke the cases of Lagcao v.
Labra18 and Jesus Is Lord Christian School Foundation, Inc. v. Municipality (now City)
of Pasig, Metro Manila19 in challenging the constitutionality of Ordinance No. 7949
without, however, showing clearly the applicability and similarity of those cases to the
present controversy. Neither did petitioners explain why Ordinance No. 7949 is
repugnant to the Constitution. Nor did petitioners specifically and sufficiently set forth
any extraordinary and important reason to justify direct recourse to this Court.20
Likewise, assuming the present petition is one for declaratory relief,21 as can be
gleaned from the caption of the petition, this Court has only appellate, not original,
jurisdiction over such a petition. While this Court may treat a petition for declaratory
relief as one for prohibition22 or mandamus, over which this Court exercises original
jurisdiction,23 it must be stressed that this special treatment is undertaken only in
cases with far reaching implications and transcendental issues that need to be
resolved.24
In the present case, there is absolutely nothing which shows that it has far-reaching
implications and involves transcendental questions deserving of this Courts treatment
of the petition as one for prohibition or mandamus.
WHEREFORE, we DENY the petition.
SO ORDERED.

This Courts 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 important
reasons therefor, clearly and specifically set out in the petition. This is [an]
established policy. It is a policy necessary to prevent inordinate demands upon the
Courts time and attention which are better devoted to those matters within its
exclusive jurisdiction, and to prevent further over-crowding of the Courts docket.
(Emphasis supplied.)

G.R. No. 172293

August 28, 2013

ARACELI J. CABRERA and ARNEL CABRERA and in behalf of the heirs of

SEVERINO CABRERA,Petitioners,
vs.
ANGELA G. FRANCISCO, FELIPE C. GELLA, VICTOR C. CELLA, ELENA
LEILANI G. REYES, MA. RIZALINA G.ILIGAN and DIANA ROSE
GELLA, Respondents.
DECISION
DEL CASTILLO, J.:
"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 plaintiffs x x x.
The averments in the Complaint and the character of the relief sought arc the ones to
be consulted. x x x"1
This Petition for Review on Certiorari 2 assails the July 6, 2005 Decision3 of the Court
of Appeals (CA) in CA-G.R. CV No. 75126 which dismissed the appeal filed by
petitioners Arceli J. Cabrera (Arceli) and Arnel Cabrera (Arnel), in their own behalf
and in behalf of the heirs of Severino Cabrera (petitioners), and affirmed the
Order4 dated May 2, 2002 of the Regional Trial Court (RTC), Branch 12, San Jose,
Antique in Civil Case No. 2001-9-3267. The said RTC Order granted the Motion to
Dismiss5 of respondents Angela G. Francisco, Felipe C. Gella, Victor C. Gella, Elena
Leilani G. Reyes, Ma. Rizalina G. Iligan and Diana Rose Gella (respondents) and
dismissed petitioners Complaint6 denominated as Collection of Agents
Compensation, Commission and Damages. Likewise assailed is the CA
Resolution7 dated April 5, 2006 which denied petitioners Motion for Reconsideration.8
Factual Antecedents
On October 25, 1976, respondents father, Atty. Lorenzo C. Gella (Atty. Gella),
executed a private document confirming that he has appointed Severino Cabrera
(Severino), husband of Araceli and father of Arnel as administrator of all his real
properties located in San Jose, Antique 9 consisting of about 24 hectares of land
described as Lot No. 1782-B and covered by Transfer Certificate of Title No. T16987.10
When Severino died in 1991, Araceli and Arnel, with the consent of respondents, took
over the administration of the properties. Respondents likewise instructed them to
look for buyers of the properties, allegedly promising them "a commission of five
percent of the total purchase price of the said properties as compensation for their
long and continued administration"11 thereof.

Accordingly, petitioners introduced real estate broker and President of ESV Marketing
and Development Corporation, Erlinda Veegas (Erlinda), to the respondents who
agreed to have the said properties developed by Erlindas company. However, a
conflict arose when respondents appointed Erlinda as the new administratrix of the
properties and terminated Aracelis and Arnels services.
Petitioners, through counsel, wrote respondents and demanded for their five percent
commission and compensation to no avail. Hence, on September 3, 2001, they filed a
Complaint for Collection of Agents Compensation, Commission and
Damages12 against respondents before the RTC. Attached to their Complaint is a
copy of the tax declaration for Lot No. 1782-B.13
Ruling of the Regional Trial Court
Petitioners prayed that they be paid (1) commission and compensation in the form of
real property equivalent to five percent of the 24-hectare Lot No. 1782-B, (2) moral
damages of P100,000.00, and (3) attorneys fees and litigation expenses
of P100,000.00.
Respondents filed a Motion to Dismiss14 based on the following grounds: (1) lack of
jurisdiction, (2) failure to state a cause of action, and (3) lack of legal capacity of
Araceli and Arnel to sue in behalf of the other heirs of Severino.
Respondents argued that for RTCs outside of Metro Manila to take cognizance of a
civil suit, the jurisdictional amount must exceed P200,000.00 pursuant to Section 5 of
Republic Act (RA) No. 7691 which amended Section 19 of Batas Pambansa Blg. (BP)
129. And since the total market value of Lot No. 1782-B is P3,550,072,15 five percent
thereof is only P177,506.60 or less than the said jurisdictional amount, then the RTC
has no jurisdiction over petitioners Complaint. Respondents also posited that the
Complaint states no cause of action since petitioners supposed right to any
commission remained inchoate as Lot No. 1782-B has not yet been sold; in fact, the
Complaint merely alleged that petitioners introduced a real estate broker to
respondents. Lastly, respondents averred that petitioners have no legal capacity to
sue on behalf of Severinos other heirs and that the verification and certification of
non-forum shopping attached to the Complaint only mentioned Araceli and Arnel as
plaintiffs.
Finding respondents arguments to be well-taken, the RTC, in an Order16 dated May
2, 2002 ruled:
WHEREFORE, premises considered, the respondents Motion to Dismiss is granted.
Consequently, this case is hereby DISMISSED. Costs against the petitioners.
SO ORDERED.17

Petitioners filed a Notice of Appeal,18 hence, the elevation of the records of the case
to the CA.
Ruling of the Court of Appeals
Petitioners averred that their claim is one which is incapable of pecuniary estimation
or one involving interest in real property the assessed value of which
exceeds P200,000.00. Hence, it falls under the exclusive original jurisdiction of the
RTC. Moreover, they asserted that they are not only claiming for commission but also
for compensation for the services rendered by Severino as well as by Araceli and
Arnel for the administration of respondents properties. Citing Section 3, Rule 3 19 of
the Rules of Court, petitioners justified the inclusion of Severinos other heirs as
plaintiffs in the Complaint.
In the Decision20 dated July 6, 2005, the CA concluded that the Complaint is mainly
for collection of sum of money and not one which is incapable of pecuniary estimation
since petitioners are claiming five percent of the total purchase price of Lot No. 1782B. Neither does it involve an interest over a property since petitioners are merely
claiming payment for their services. The appellate court also ruled that the Complaint
did not state a cause of action since it failed to show the existence of petitioners right
that was allegedly violated by respondents. Moreover, it found no evidence of
Aracelis and Arnels authority to file the Complaint for and in behalf of Severinos
other heirs. In sum, the CA found no error on the part of the RTC in granting
respondents Motion to Dismiss. Thus:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us
DISMISSING the appeal filed in this case and AFFIRMING the Order rendered by the
lower court in Civil Case No. 2001-9-3267 with double costs against petitioners.
SO ORDERED.21
Petitioners filed a Motion for Reconsideration 22 questioning solely the CAs affirmance
of the RTCs finding on lack of jurisdiction. This was, however, also denied in a
Resolution23 dated April 5, 2006.
Hence, the present Petition for Review on Certiorari.
Issues
Whether the CA erred in affirming the RTCs findings that it has no jurisdiction over
the subject matter of the case; that the Complaint states no cause of action; and that
petitioners Araceli and Arnel have no legal capacity to sue in behalf of the other heirs
of Severino.
The Parties Arguments

At the outset, petitioners claim that the RTC did not make its own independent
assessment of the merits of respondents Motion to Dismiss but only blindly adopted
the arguments raised therein. This, to them, violates the Courts pronouncement in
Atty. Osumo v. Judge Serrano24 enjoining judges to be faithful to the law and to
maintain professional competence.
As to the substantial issues, petitioners reiterate the arguments they raised before the
CA. They insist that their Complaint is one which is incapable of pecuniary estimation
or involves interest in real property the assessed value of which
exceeds P200,000.00 and falls within the RTCs jurisdiction. At any rate, they
emphasize that they likewise seek to recover damages, the amount of which should
have been considered by the RTC in determining jurisdiction. Moreover, they have a
cause of action against the respondents because an agency under the Civil Code is
presumed to be for a compensation. 25 And what they are claiming in their Complaint
is such compensation for the services rendered not only by Severino but also by
Araceli and Arnel as administrators/agents of respondents properties. Lastly, they
allege that pursuant to Section 3, Rule 3 of the Rules of Court, the joining of
Severinos other heirs as plaintiffs in the Complaint, is proper.
On the other hand, respondents assert that petitioners Complaint, as correctly found
by the CA, is for a specific sum of money seeking to recover the amount
of P177,503.60,26 which is below the jurisdictional amount for RTCs outside of Metro
Manila. As to petitioners claim for damages, the same is only incidental to the
principal claim for agents compensation and therefore should not be included in
computing the total amount of the claim for purposes of determining jurisdiction.
Respondents likewise point out that the CAs affirmance of the RTCs findings that the
Complaint states no cause of action and that Araceli and Arnel have no capacity to
sue in behalf of the other heirs can no longer be questioned before this Court as they
are already final and executory since petitioners failed to assail them in their Motion
for Reconsideration with the CA. Be that as it may, no error can be imputed to the CA
for affirming the said findings as they are in accordance with law.
Our Ruling
The
Contrary
made
merits
Dismiss.

to
an
of

Petition
lacks
petitioners
claim,
the
independent
assessment
of
respondents
Motion

merit.
RTC
the
to

It cannot be gainsaid that "it is the Courts bounden duty to assess independently the
merits of a motion x x x."27In this case, the RTC complied with this duty by making its
own independent assessment of the merits of respondents Motion to Dismiss. A
reading of the RTCs Order will show that in resolving said motion, it judiciously
examined the Complaint and the documents attached thereto as well as the other
pleadings filed in connection with the said motion.28 Based on these, it made an

extensive discussion of its observations and conclusions. This is apparent from the
following portions of the said Order, to wit:
x x x In the instant case, the plaintiffs complaint does not even mention specifically
the amount of their demand outside of their claim for damages and attorneys fees.
They are only demanding the payment of their alleged commission/compensation and
that of the late Severino Cabrera which they fixed at 5% of Lot No. 1782-B allegedly
with an area of 24 hectares. They did not also state the total monetary value of Lot
1782-B neither did they mention the monetary equivalent of 5% of Lot No. 1782-B. In
short, the complaint fails to establish that this Court has jurisdiction over the subject
matter of the claim.
As the tax declaration covering Lot No. 1782-B has been attached to the complaint as
Annex "C" and made an integral part thereof, the court, in its desire to determine
whether it has jurisdiction over the subject matter of plaintiffs claim computed the
total market value of Lot No. 1782-B, including the value of the trees and the plants
standing thereon, as appearing in said Annex "C". The computation shows the
amount of P3,508,370.00. Five percent thereof is P175,418.50. It is way below the
jurisdictional amount for the Regional Trial Court outside Metro Manila which is
pegged at more than P200,000. Clearly, therefore, this Court has no jurisdiction over
the subject matter of the plaintiffs complaint as correctly contended by the
defendants.29
xxxx
A careful scrutiny of the complaint in this case reveals that it is bereft of any allegation
that Lot No. 1782-B or any portion thereof has already been sold thru the plaintiffs
efforts prior to the alleged dismissal as agents or brokers of the defendants. As they
failed to sell Lot No. 1782-B or any portion thereof, then they are not entitled to any
commission, assuming in gratia argumenti that they were promised 5% commission
by defendants should they be able to sell Lot No. 1782-B or any part or parcel of the
said lot.
Besides, the court notices that the appointment of the plaintiffs father (Annex "A"Complaint) does not state in any manner that he is entitled to a compensation or
commission when it is supposed to be the repository of what had been agreed upon
between him and Atty. Lorenzo C. Gella, relative to his designation as administrator of
Atty. Gella. As such, the plaintiffs cannot claim now that Severino Cabrera is entitled
to any compensation or commission as Annex "A" does not so provide.30
xxxx
An examination of the records of this case reveals that there is nothing in plaintiffs
complaint showing that they were empowered by the other heirs of the late Severino
Cabrera to take this action on their behalf. x x x31

Clearly, petitioners claim that the RTC merely adopted the arguments of respondents
in their Motion to Dismiss when it resolved the same is belied by the above-quoted
disquisition of the RTC on the matter and therefore deserves no credence.
Petitioners
which
estimation
property.

Complaint
is
nor

is
incapable
involves
interest

neither
of
in

one
pecuniary
real

Section 19(1) and (2) of BP 12932 as amended by RA 769133 read:

SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive
original jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapable of
pecuniary estimation;
(2) In all civil actions which involve the title to, or possession of, real
property, or any interest therein, where the assessed value of the property
involved exceeds twenty thousand pesos (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;

3. That said Severino Cabrera immediately assumed his duties and

responsibilities faithfully as agent or administrator until his death in 1991 of
the properties of Lorenzo Gella in San Jose, Antique consisting of about 24
hectares x x x which later became Lot No. 1782-B in the name of the
defendants, covered by T.C.T. No. T-16987, Register of Deeds of Antique x x
x.
4. That after the death of said Severino Cabrera in 1991, with the consent of
the defendants, his wife took over his duties and responsibilities as agent or
administratrix of the above-named properties of the defendants in San Jose,
Antique with the help of her son, Arnel Cabrera as encargado and the
plaintiffs were also instructed by the defendants to look for buyers of their
properties and plaintiffs were promised by defendants a commission of five
percent of the total purchase price of the said properties as compensation
for their long and continued administration of all the said properties.
5. That sometime in 1994 plaintiffs approached the real estate broker Erlinda
Veegas to sell the above-described Lot No. 1782-B and the plaintiffs gave
her the addresses of the defendants who at all times live in Metro Manila.
Thereafter defendants agreed to have the said property developed by ESV
Marketing & Development Corporation represented by its President, said
Erlinda Veegas and defendants also designated said Erlinda Veegas as
administratrix of said property and at the same time defendants dismissed
plaintiffs as agents or administrators thereof;

Insisting that the RTC has jurisdiction over their Complaint, petitioners contend that
the same is one which is incapable of pecuniary estimation or involves interest in a
real property the assessed value of which exceedsP200,000.00.

6. That on August 1, 2001 plaintiffs, through counsel wrote defendants

demanding payment of their five percent of twenty four hectares properties
under their administration for twenty five years in the form of real estate in
the subdivision of Lot 1782-B as their compensation or commission, but
defendants refused and failed to pay plaintiffs in cash or in kind of what is
due them;

The Court does not agree. To ascertain the correctness of petitioners contention, the
averments in the Complaint and the character of the relief sought in the said
Complaint must be consulted.34 This is because the jurisdiction of the court is
determined by the nature of the action pleaded as appearing from the allegations in
the Complaint.35 Hence, the pertinent portions of petitioners Complaint are hereunder
reproduced:

7. That in view of the aforesaid failure and refusal of defendants to pay their
compensation or commission and instead they were dismissed and replaced
by the said Erlinda Veegas they themselves recommended to defendants,
the plaintiffs have suffered public humiliation, mental anguish, and serious
anxiety for which plaintiffs should be adjudged and entitled to moral
damages in the sum of not less than Php100,000.00 each.

xxxx

xxxx
2. That on October 25, 1976 the defendants father the late Atty. Lorenzo
Gella, x x x designated x x x Severino Cabrera as agent or administrator of
all his real properties located in San Jose, Antique x x x.

8. That defendants ingratitude and unjustified refusal to pay plaintiffs x x x

their compensation or commission for twenty five years service as
administrators and had successfully found a developer of defendants
property but only to be dismissed, plaintiffs were compelled to institute this
action and incur expenses as well as attorneys fees in the sum of
Php100,000.00.

P RAYE R
WHEREFORE, it is respectfully prayed that after due hearing, judgment be rendered
against defendants jointly and severally in favor of the plaintiffs, as follows:
a. To pay plaintiffs their compensation or commission in the form of real
estate from Lot No. 1782-B subdivision equivalent to five percent of twenty
four hectares properties under their administration;
b. To pay plaintiffs moral damages in the amount of not less than
Php100,000.00 each;
c. Attorneys fee and litigation expenses in the amount of not less than
Php100,000.00 each and pay the costs of suit
x x x x36 (Italics and Emphases supplied)
The Court in Ungria v. Court of Appeals 37 restated the criterion laid down in Singson v.
Isabela Sawmill38 to ascertain if an action is capable or not of pecuniary estimation,
viz:
In determining whether an action is one the subject matter of which is not capable of
pecuniary estimation this Court has adopted the criterion of first ascertaining the
nature of the principal action or remedy sought. If it is primarily for the recovery of a
sum of money, the claim is considered capable of pecuniary estimation, and whether
jurisdiction is in the municipal courts or in the Courts of First Instance would depend
on the amount of the claim. However, where the basic issue is something other than
the right to recover a sum of money, where the money claim is purely incidental to, or
a consequence of, the principal relief sought, this Court has considered such actions
as cases where the subject of the litigation may not be estimated in terms of money,
and are cognizable exclusively by Courts of First Instance (now Regional Trial
Courts).
It can be readily seen from the allegations in the Complaint that petitioners main
purpose in filing the same is to collect the commission allegedly promised them by
respondents should they be able to sell Lot No. 1782-B, as well as the compensation
for the services rendered by Severino, Araceli and Arnel for the administration of
respondents properties. Captioned as a Complaint for Collection of Agents
Compensation, Commission and Damages, it is principally for the collection of a sum
of money representing such compensation and commission. Indeed, the payment of
such money claim is the principal relief sought and not merely incidental to, or a
consequence of another action where the subject of litigation may not be estimated in
terms of money. In fact, petitioners in this case estimated their claim to be equivalent
to five percent of the purchase price of Lot No. 1782-B. Therefore, the CA did not err
when it ruled that petitioners Complaint is not incapable of pecuniary estimation.

The Court cannot also give credence to petitioners contention that their action
involves interest in a real property. The October 25, 1976 letter 39 of Atty. Gella
confirming Severinos appointment as administrator of his properties does not provide
that the latters services would be compensated in the form of real estate or, at the
very least, that it was for a compensation. Neither was it alleged in the Complaint that
the five percent commission promised to Araceli and Arnel would be equivalent to
such portion of Lot No. 1782-B. What is clear from paragraph 4 thereof is that
respondents instructed petitioners to look for buyers of their properties and "were
promised by respondents a commission of five percent of the total purchase price of
the said properties as compensation for their long and continued administration of all
the said properties." Also, petitioners allegation in paragraph 6 that respondents
failed to pay them "in cash or in kind" of what is due them negates any agreement
between the parties that they should be paid in the form of real estate. Clearly, the
allegations in their Complaint failed to sufficiently show that they have interest of
whatever kind over the properties of respondents. Given these, petitioners claim that
their action involves interest over a real property is unavailing. Thus, the Court quotes
with approval the CAs ratiocination with respect to the same:
As to their weak claim of interest over the property, it is apparent that their only
interest is to be compensated for their long-term administration of the properties.
They do not claim an interest in the properties themselves but merely payment for
their services, such payment they compute to be equivalent to five (5%) percent of
the value of the properties. Under Section 1, Rule 4 of the Rules of Court, 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. Plaintiffs-appellants interest is obviously not the one contemplated under
the rules on jurisdiction.40
Petitioners
demand
is
below
jurisdictional
amount
required
for
outside
of
Metro
Manila,
hence,
the
concerned
in
this
case
has
jurisdiction over petitioners Complaint.

the
RTCs
RTC
no

To determine whether the RTC in this case has jurisdiction over petitioners
Complaint, respondents correctly argued that the same be considered vis--vis
Section 19(8) of BP 129, which provides:
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive
original jurisdiction:
xxxx
(8) In all other cases in which the demand, exclusive of interests, damages of
whatever kind, attorneys fees, litigation expenses, and costs or the value of the
property exceeds One hundred thousand pesos (P100,000.00) or, in such other

cases in Metro Manila, where the demand, exclusive of the abovementioned items
exceeds Two hundred thousand pesos (P200,000.00).

amount of such claim shall be considered in determining the jurisdiction of the

court.1wphi1

This jurisdictional amount of exceeding P100,000.00 for RTCs outside of Metro

Manila was adjusted toP200,000.00 effective March 20, 1999 in pursuance to Section
5 of RA 769141 which further provides:

Here, the moral damages being claimed by petitioners are merely the consequence of
respondents alleged non-payment of commission and compensation the collection of
which is petitioners main cause of action. Thus, the said claim for moral damages
cannot be included in determining the jurisdictional amount.

SEC. 5. After five (5) years from the effectivity of this Act, the jurisdictional amounts
mentioned in Sec. 19(3), (4), and (8); and Sec. 33(1) of Batas Pambansa Blg. 129 as
amended by this Act, shall be adjusted to Two hundred thousand pesos
(P200,000.00). Five (5) years thereafter, such jurisdictional amounts shall be adjusted
further to Three hundred thousand pesos (P300,000.00): Provided, however, That in
the case of Metro Manila, the abovementioned jurisdictional amounts shall be
adjusted after five (5) years from the effectivity of this Act to Four hundred thousand
pesos (P400,000.00).
Hence, when petitioners filed their Complaint on September 3, 2001, the said
increased jurisdictional amount was already effective. The demand in their Complaint
must therefore exceed P200,000.00 in order for it to fall under the jurisdiction of the
RTC.
Petitioners prayed that they be paid five percent of the total purchase price of Lot No.
1782-B. However, since the Complaint did not allege that the said property has
already been sold, as in fact it has not yet been sold as respondents contend, there is
no purchase price which can be used as basis for computing the five percent that
petitioners are claiming. Nevertheless and as mentioned, petitioners were able to
attach to their Complaint a copy of the tax declaration for Lot No. 1782-B showing a
total market value of P3,550,072.00.42 And since "the fair market value is the price at
which a property may be sold by a seller, who is not compelled to sell, and bought by
a buyer, who is not compelled to buy," 43 the RTC correctly computed the amount of
petitioners claim based on the propertys market value. And since five percent
of P3,550,072.00 is only P177,503.60 or below the jurisdictional amount of
exceeding P200,000.00 set for RTCs outside of Metro Manila, the RTC in this case
has no jurisdiction over petitioners claim.

In view of the foregoing, the CA did not err in affirming the RTCs conclusion that it
has no jurisdiction over petitioners claim.
The
CAs
affirmance
of
findings
that
the
Complaint
cause
of
action
and
that
Arnel
have
no
authority
to
of
Severinos
other
heirs
raised in this Petition.

the
states
Araceli
sue
in
cannot

RTCs
no
and
behalf
be

As pointed out by respondents, petitioners tailed to question in their Motion for

Reconsideration before the CA its affirmance of the RTC's findings that the Complaint
states no cause of action and that Araceli and Arne! have no authority to sue in behalf
of the other heirs of Severino. Suffice it to say that ''prior to raising these arguments
before this Court, they should have raised the matter in their Motion for
Reconsideration in order to give the appellate court an opportunity to correct its ruling.
For them to raise these issues be tore this Court now would be improper, since they
failed to do so be tore the CA."44
WHEREFORE, the Petition for Review on Certiorari is DENIED and the assailed
Decision dated July 6, 2005 and the Resolution dated April 5, 2006 of the Court of
Appeals in CA-G.R. CV No. 75126 are AFFIRMED.
SO ORDERED.

There is no merit to petitioners averment that their demand for moral damages
should be included in the computation of their total claims. Paragraph 8, Section 19 of
BP 129 expressly speaks of demand which is exclusive of damages of whatever kind.
This exclusion was later explained by the Court in Administrative Circular No. 09-94
dated June 14, 1994 as follows:
G.R. No. 119347 March 17, 1999
2. The exclusion of the term "damages of whatever kind" in determining the
jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as
amended by R.A. No. 7691, applies to cases where the damages are merely
incidental to or a consequence of the main cause of action. However, in cases where
the claim for damages is the main cause of action, or one of the causes of action, the

EULALIA RUSSELL, PUPERTO TAUTHO, FRANCISCO TAUTHO, SUSANA T.

REALES, APITACIO TAUTHO, DANILO TAUTHO, JUDITHA PROS, GREGORIO
TAUTHO, DEODITA T. JUDILLA, AGRIPINO TAUTHO, FELIX TAUTHO, WILLIAM
TAUTHO, AND MARILYN PERALES, petitioners,

vs.
HONORABLE AUGUSTINE A. VESTlL, ADRIANO TAGALOG, MARCELO
TAUTHO, JUANITA MENDOZA, DOMINGO BANTILAN, RAUL BATALUNA AND
ARTEMIO CABATINGAN, respondent.
KAPUNAN, J.:
Before us is a Petition for Certiorari to set aside the Order dated January 12, 1995
issued by respondent Judge Augustine A. Vestil of the Regional Trial Court of
Mandaue City, Branch 56, dismissing the complaint filed by petitioners on ground of
lack of jurisdiction, as well as his Order dated February 13, 1995 denying petitioners'
Motion for Reconsideration of the order of dismissal.

On January 12, 1995, the respondent judge issued an Order granting the Motion to
Dismiss. 8 A Motion for Reconsideration of said order was filed by petitioners on
January 30, 1995 alleging that the same is contrary to law because their action is not
one for recovery of title to or possession of the land but an action to annul a
document or declare it null and void, 9 hence, one incapable of pecuniary estimation
falling within the jurisdiction of the Regional Trial Court. Private respondents did not
oppose the motion for reconsideration.
On February 13, 1995, the respondent judge issued another Order denying the
motion for reconsideration. 10
Hence, this petition wherein the sole issue raised is whether or not the Regional Trial
Court has jurisdiction to entertain Civil Case No. MAN-2275.

The facts of the case are as follows:

We find merit in the petition.
On September 28, 1994, petitioners filed a complaint against private respondents,
denominated "DECLARATION OF NULLITY AND PARTITION," with the Regional
Trial Court of Mandaue City, Branch 56, docketed as Civil Case No. MAN-2275. The
complaint, in substance, alleged that petitioners are co-owners of that parcel of land,
Lot 6149 situated in Liloan, Cebu and containing an area of 56,977.40 square meters,
more or less. The land was previously owned by the spouses Casimero Tautho and
Cesaria Tautho. Upon the death of said spouses, the property was inherited by their
legal heirs, herein petitioners and private respondents. Since then, the lot had
remained undivided until petitioners discovered a public document denominated
"DECLARATION OF HEIRS AND DEED OF CONFIRMATION OF A PREVIOUS
ORAL AGREEMENT OF PARTITION," executed on June 6, 1990. By virtue of this
deed, private respondents divided the property among themselves to the exclusion of
petitioners who are also entitled to the said lot as heirs of the late spouses Casimero
Tautho and Cesaria Tautho. Petitioners claimed that the document was false and
perjurious as the private respondents were not the only heirs and that no oral partition
of the property whatsoever had been made between the heirs. The complaint prayed
that the document be declared null and void and an order be issued to partition the
land among all the heirs. 1
On November 24, 1994, private respondents filed a Motion to Dismiss 2 the complaint
on the ground of lack of jurisdiction over the nature of the case as the total assessed
value of the subject land is P5,000.00 which under section 33 (3) 3 of Batas
Pambansa Blg. 129, as amended by R.A. No. 7691, 4 falls within the exclusive
jurisdiction of the Municipal Circuit Trial Curt of Liloan, Compostela. 5
Petitioners filed an Opposition to the Motion to Dismiss 6 saying that the Regional
Trial Court has jurisdiction over the case since the action is one which is incapable of
pecuniary estimation within the contemplation of Section 19(1) of B.P. 129, as
amended. 7

Petitioners maintain the view that the complaint filed before the Regional Trial Court is
for the annulment of a document denominated as "DECLARATION OF HEIRS AND
DEED OF CONFIRMATION OF PREVIOUS ORAL PARTITION," which is clearly one
incapable of pecuniary estimation, thus, cognizable by the Regional Trial Court.
Private respondents, on the other hand, insists that the action is one for re-partition
and since the assessed value of the property as stated in the complaint is P5,000.00,
then, the case falls within the jurisdiction of the Municipal Circuit Trial Court of Liloan,
Compostela, Cebu.
For better appreciation of the facts, the pertinent portions of the complaint are
reproduced hereunder:
xxx xxx xxx
3. That the plaintiffs and the defendants are the legal heirs of
spouses Casimero Tautho and Cesaria N. Tautho who died long
time ago;
4. That in life the spouses became the owners in fee simple of a
certain parcel of land, which is more particularly described as
follows:
A parcel of land containing 56,97740 square
meters, more or less, located at Cotcot, Liloan,
Cebu.
designated as Lot 6149 per Technical Description and Certification
issued by the Office of the Land Management copy of which are

hereto attached as Annexes "A" and "A-1" and are made part
hereof: total assessed value is P5,000.00;
5. That the passed to the children of the spouses (who are all
deceased except for defendant Marcelo Tautho), namely: Zacarias,
Epifania, Vicenta, Felecisimo, Maria, Lorencia and Marcelo, and
which in turn passed to the plaintiffs and defendants upon their
death they being their descendants and legal heirs;
6. That the subject parcel of land has for year been undivided by
and among the legal heirs of said previous owners;
7. That, very recently, plaintiffs discovered a public document,
which is a declaration of heirs and deed of confirmation of a
previous oral agreement of partition, affecting the land executed by
and among the defendants whereby defendants divided the
property among themselves to the exclusion of plaintiffs who are
entitled thereto; attached hereto as Annex "B" and is made part
hereof is xerox copy of said document;
8. That the instrument (Annex "B") is false and perjurious and is a
complete nullity because the defendants are not the only heirs of
Casimero Tautho; plaintiffs are also heirs and descendants of said
deceased; moreover, there has been no oral partition of the
property;
9. That pursuant to said document (Annex "B"), defendants had
procured tax declarations of the land for their supposed "shares" to
the great damage and prejudice of plaintiffs;
10. That the property in controversy should be divided into seven
(7) equal parts since Casimero Tautho and Cesaria N. Tautho had
seven children;
11. That the parties had failed to settle the controversy amicably at
the barangay level; attached hereto as Annex "C" is Certification to
file Action;
12. That by reason of the foregoing unjust and illegal act of
defendants, plaintiffs were forced to bring instant action and
contract the services of the undersigned counsel with whom they
bind themselves to pay P30,000.00 as attorney's fees.
WHEREFORE, it is most respectfully prayed of this Honorable
Court to declare null and void the document (Annex "B") of
declaration of heirs and confirmation and to order the partition of

the land into seven (7) equal parts; each part shall respectively go
to the seven (7) children of Casimero Tautho and considering six
(6) of them died already the same shall go to their children or
descendants, and to order the defendants to pay plaintiffs
attorney's fees in the amount of P30,000.00.
Plaintiffs further pray for such other reliefs and remedies just and
equitable under the premises. 11
We agree with petitioners.
The complaint filed before the Regional Trial Court is doubtless one
incapable of pecuniary estimation and therefore within the
jurisdiction of said court.
In Singsong vs. Isabela Sawmill, 12 we had the occasion to rule that:
[I]n determining whether an action is one the subject matter of
which is not capable of pecuniary estimation this Court has adopted
the criterion of first ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a sum of money,
the claim is considered capable of pecuniary estimation, and
whether jurisdiction is in the municipal courts or in instance would
depend on the amount of the claim. However, where the basic
issue is something other than the right to recover a sum of money,
where the money claim is purely incidental to, or a consequence of,
the principal relief sought, this Court has considered such where
the subject of the litigation may not be estimated in terms of money,
and are cognizable exclusively by courts of first instance (now
Regional Trial Courts). 13
Examples of actions incapable of pecuniary estimation are those for specific
performance, support, or foreclosure of mortgage or annulment of judgment; 14 also
actions questioning the validity of a mortgage, 15 annulling a deed of sale or
conveyance and to recover the price paid 16 and for rescession, which is a counterpart
of specific performance. 17
While actions under Sec. 33(3) of B.P. 129 are also incapable of pecuniary
estimation, the law specifically mandates that they are cognizable by the MTC,
METC, or MCTC where the assessed value of the real property involved does exceed
P20,000.00 in Metro Manila, or P50,000.00, if located elsewhere. If the value exceeds
P20,000.00 or P50,000.00 as the case may be, it is the Regional Trial Courts which
have jurisdiction under Sec. 19(2). 18 However, the subject matter of the complaint in
this case is annulment of a document denominated as "DECLARATION OF HEIRS
AND DEED OF CONFIRMATION OF PREVIOUS ORAL PARTITION."

The main purpose of petitioners in filing the complaint is to declare null and void the
document in which private respondents declared themselves as the only heirs of the
late spouses Casimero Tautho and Cesaria Tautho and divided his property among
themselves to the exclusion of petitioners who also claim to be legal heirs and entitled
to the property. While the complaint also prays for the partition of the property, this is
just incidental to the main action, which is the declaration of nullity of the document
above-described. It is axiomatic that jurisdiction over the subject matter of a case is
conferred by law and is determined by the allegations in the complaint and the
character of the relief sought, irrespective of whether the plaintiff is entitled to all or
some of the claims asserted therein. 19
WHEREFORE, premises considered, the petition is hereby GRANTED. The Order
dismissing Civil Case No. MAN-2275, as well as the Order denying the motion for
reconsideration of said Order, is SET ASIDE.
The Regional Trial Court, Branch 56, Mandaue City is ORDERED to proceed with
dispatch in resolving Civil Case No. MAN-2275. No costs.
SO ORDERED.

G.R. No. 104209 November 16, 1993

PHILNABANK EMPLOYEES ASSOCIATION (PEMA), DBP EMPLOYEES UNION
(DBPEU), LBP EMPLOYEES ASSOCIATION (LBPEA), ALERT AND CONCERNED
EMPLOYEES FOR BETTER SSS (ACCESS), and KAPATIRAN NG
MANGGAGAWA SA GSIS (KMG), all under the name and style of KAPATIRAN
NG MGA MANGGAGAWA SA GFI, petitioners,
vs.
HON. JESUS P. ESTANISLAO, in his capacity as Secretary of the Department of
Finance and HON. RUBEN D. TORRES, in his capacity as Secretary of the
Department of Labor and Employment, respondents
RESOLUTION
VITUG, J.:
Assailed in this petition for certiorari is a provision of the Supplemental Rules
Implementing Republic Act No. 6971 (Productivity Incentives Act of 1990), jointly
promulgated by the Secretary of the Department of Finance and the Secretary of the
Department of Labor and Employment, excluding from the coverage of said Act the
employees of the Philippine National Bank ("PNB"), Development Bank of the
Philippines ("DBP"), Land Bank of the Philippines ("LBP"), Social Security System
("SSS") and Government Service and Insurance System ("GSIS").
Parenthetically, certain rank and file employees of the Public Estates Authority filed a
motion for intervention to join the petitioners 1 which they later withdrew, nonetheless,
asserting that "any resolution in the instant petition would likewise apply to them. 2
Republic Act No. 6971 was signed into law on 22 November 1990 by then President
Corazon C. Aquino. It took effect on 9 December 1990 (fifteen days after its
publication in two newspapers of general circulation).
Section 3 of the law states:
Sec. 3. Coverage. This Act shall apply to all business enterprises
with or without, existing and duly recognized or certified labor
organizations, including government owned and controlled

corporations performing proprietary functions. It shall cover

employees and workers including casual, regular, supervisory and
managerial employees.
The same Act empowers the Secretary of Labor and Employment and the Secretary
of Finance, "after due notice and hearing" to "jointly promulgate and issue within six
(6) months from the effectivity of (the) Act such rules and regulations as are
necessary to carry out (its) provisions" (Sec. 6, R.A. 6971)
On June 03, 1991, the then Labor Secretary Ruben D. Torres and Finance Secretary
Jesus P. Estanislao promulgated the Rules Implementing Republic Act. No. 6971. The
Rules took effect on 18 June 1991 following the required publication thereof in a
national newspaper of general circulation.

have a choice on granting productivity incentives

under the new law or the traditional PIA
(productivity incentive award), provided the terms
and conditions of either choice are exactly the
same.
3. She has also instructed me to coordinate with
DOLE and the immediate issuance of a possible
clarificatory guideline.
In accordance with this memorandum, PNB Executive Vice-President Domingo A.
Santiago, Jr., sent a letter to petitioner Philnabank Employees Association, through its
President Jerry P. Tan, advising the latter that in view of the Estanislao memorandum,
PNB was "constrained to wait for the issuance of the said clarificatory guidelines". 5

Section 1, Rule II, of the aforesaid Rules provides:

Sec. 1. Coverage. These Rules shall apply to:
(a) All business enterprises wit or without existing duly recognized
or certified labor organizations, including government-owned and
controlled corporations performing proprietary functions.
(b) All employees and workers including casual, regular, rank-andfile, supervisory and managerial employees.
Forthwith, petitioner organizations requested their respective employers to constitute
and convene a Labor-Management Committee (LMC) to discuss and adopt a
Productivity Incentives Program (PIP). In the meantime, productivity bonuses were
distributed by the PNB, DBP, LBP, SSS and GSIS. 3
On 24 December 1991, Secretary Estanislao sent the following memorandum to all
heads of government financial institutions (GFI's):
To
:
From
:
Jesus
On : Productivity Incentive Award

GFI
P.

Heads
Estanislao

1. The President has asked me to remind all the

GFI heads about our agreement to desist from
making any further payments/moves regarding
productivity incentives until such time as
DOLE/DOF can issue clarificatory guidelines.
2. In view of the move of the SSS, the President
has authorized me to indicate that GFI's may

Allegedly without due notice and hearing, Secretary Estanislao and Secretary Torres
subsequently issued the Supplemental Rules Implementing Republic Act No. 6971,
clarifying or amending the previously promulgated rules because "the coverage of the
GOCCs (government owned and controlled corporations) performing proprietary
functions would require harmonization with present definitions, concepts, strategies,
policies and thrusts involving the rationalization of the government corporate sector."
Paragraph (a), Section 1, Rule II, of the Rules was thereby modified to read, as
follows:
Coverage. These Rules shall apply to:
(a) All business enterprises with or without existing duly certified
labor organizations, including government owned and controlled
corporations performing proprietary functions which are established
solely for business or profit or gain and accordingly excluding those
created, maintained or acquired in pursuance of a policy of the
state, enunciated in the Constitution or by law, and those whose
officers and employees are covered by the Civil Service.
Government-owned and controlled corporations meeting the criteria
provided in the immediately preceding paragraph shall be certified
to by the Government Corporate Monitoring and Coordinating
Committee established by E.O. No. 236 of July 22, 1987.
(Emphasis supplied)
On 7 January 1992, under the letterhead, "Kapatiran Ng Manggagawa Sa GFI"
(KAMAGFI), PEMA President Jerry P. Tan sent Secretary Torres and Secretary
Estanislao a letter contesting the amendatory rule and giving them forty-eight (48)
hours within which "to recall and revoke" the same. He also informed the heads of the
two departments that the supplemental rules were creating "serious
demoralization(s)" among the officers and employees of the GFIs and that failure to

revoke the recall the Supplemental Rules "would mean drastic legal actions and
massive concerted activities" on the part of the GFI employees. 6 KAMAGFI also
addressed an open letter, dated 09 January 1992, of similar tenor to the President of
the Philippines, Secretary Estanislao, Secretary Torres, Senate President Neptali
Gonzales, Speaker Ramon Mitra, Jr., Senator Teofisto Guingona, and Congressmen
Felicito Payumo and Alberto Veloso. 7 On January 10, 1992, the matter was referred
by the Office of the President to Secretary Torres. 8
On 09 March 1992, the instant petition for certiorari was filed.
The petitioners contend that by promulgating the Supplemental Rules, the
respondents have "overstepped the bounds of their rule-making authority
by amending the coverage of the Act as provided in Section 3 thereof." Arguing that
Republic Act No. 6971 has been intended by the lawmakers to cover governmentowned and controlled corporations which are performing proprietary functions, without
qualifications, the petitioners assert that the respondents have "arrogated upon
themselves the power not only to make law, but also to unmake it by adopting rules
inconsistent with and contrary to the clear intention and the end sought to be attained
by the Act." 9The petitioners conclude that the respondents have thus gravely based
their discretion, amounting to lack of jurisdiction.

Secondly, although not inflexible, we have repeatedly declined on grounds of

prematurity, as well as in the interest of good order, a hasty recourse to the courts
when administrative avenues are still open. 11
Thirdly, while this case is styled as a petition for certiorari, there is, however, no
denying the fact that, in essence, it seeks the declaration by the court of the
unconstitutionality and illegality of the questioned rule, thus partaking the nature, in
reality, of one for declaratory relief over which this Court has only appellate, not
original, jurisdiction.
Fourthly, even in cases, where this Court is conferred with primary jurisdiction,
starting with the case of Santiago vs. Vasquez et al., 12 we have stressed, thus
. . . We discern in the proceedings in this case a propensity on the
part of the petitioner, and, for that matter, the same may be said of
a number of litigants who initiate recourses before us, to disregard
the hierarchy of courts in our judicial system by seeking relief
directly from this Court despite the fact that the same is available in
the lower courts in the exercise of their original and concurrent
jurisdiction, or is even mandated by law to be sought therein. This
practice must be stopped, not only because of the imposition upon
the precious time of this Court but also because of the inevitable
and resultant delay, intended or otherwise, in the adjudication of the
case which often has to be remanded or referred to the lower court
as the proper forum under the rules of procedure, or as better
equipped to resolve the issues since this Court is not a trier of facts.
We therefore, reiterate the judicial policy that this Court will not
entertain direct resort to it unless the redress desired cannot be
obtained in the appropriate courts or where exceptional and
compelling circumstances justify availment of a remedy within and
calling for the exercise of our primary jurisdiction.

The respondents, through the Solicitor general, contest the herein petition as being
both an improper remedy, considering that the respondents "did not adjudicate the
rights and obligations of the GFI employees," and precipitate, since the petitioners'
recourse should have first been administratively pursued with the Civil Service
Commission." 10
The instant petition for certiorari cannot be granted.
Firstly, the respondent department secretaries, in promulgating the questioned rule
did so in accordance with the mandate of Republic Act No. 6971. Concededly, in the
process, neither did said respondents act in any judicial orquasi-judicial capacity nor
did they arrogate unto themselves any such performance of judicial or quasijudicialprerogative. A petition for certiorari is a special civil action that may be invoked
only against a a tribunal, board, or officer exercising judicial functions. Section 1, Rule
65, of the revised Rules of Court is explicit on this matter; viz:
Sec. 1. Petition for certiorari. When any tribunal, board or officer
exercising judicial functions, has acted without or in excess of its or
his jurisdiction, or with grave abuse of discretion and there is no
appeal, nor any plain, speedy, and adequate remedy in the ordinary
course of the 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, as the law requires, of such tribunal, board or officer.

Finally, the principal issue raised by the petitioners, i.e., whether or not the
government financial institutions herein involved (but which have not even been
impleaded) are embraced by the phrase "government-owned and controlled
corporations performing proprietary functions" in the context of Republic Act 6971, is
itself not necessarily a mere question of law, that, for certain can totally discard a
factual assessment of the respective operations of said institutions and the degree
that such operations interrelate, as the case may be, to their governmental or
proprietary functions. This Court has said, more than once, that it is not an initial
evaluator of facts.
WHEREFORE, the instant petition for certiorari is DISMISSED. No Costs.
SO ORDERED.

G.R. No. 184203

November 26, 2014

CITY OF LAPU-LAPU, Petitioner,

vs.
PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
x-----------------------x
G.R. No. 187583
PROVINCE OF BATAAN, represented by GOVERNOR ENRIQUE T. GARCIA, JR.,
and EMERLINDA S. TALENTO, in her capacity as Provincial Treasurer of
Bataan, Petitioners,
vs.
PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
DECISION
LEONEN, J.:
The Philippine Economic Zone Authority is exempt from payment of real property
taxes.
These are consolidated1 petitions for review on certiorari the City of Lapu-Lapu and
the Province of Bataan separately filed against the Philippine Economic Zone
Authority (PEZA).
In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of Appeals
decision2 dated January 11, 2008 and resolution3 dated August 6, 2008, dismissing

the Citys appeal for being the wrong mode of appeal. The City appealed the Regional
Trial Court,Branch 111, Pasay Citys decision finding the PEZA exempt from payment
of real property taxes.
In G.R. No. 187583, the Province of Bataan (the Province) assails the Court of
Appeals decision4 dated August 27, 2008 and resolution5 dated April 16, 2009,
granting the PEZAs petition for certiorari. The Court of Appeals ruled that the
Regional Trial Court, Branch 115, Pasay City gravely abused its discretion in finding
the PEZA liable for real property taxes to the Province of Bataan.
Facts common to the consolidated petitions
In the exercise of his legislative powers, 6 President Ferdinand E. Marcos issued
Presidential Decree No. 66 in 1972, declaring as government policy the establishment
of export processing zones in strategic locations in the Philippines. Presidential
Decree No. 66 aimed "to encourage and promote foreign commerce as a means of
making the Philippines a center of international trade, of strengthening our export
trade and foreign exchange position, of hastening industrialization,of reducing
domestic unemployment, and of accelerating the development of the country."7
To carry out this policy, the Export Processing Zone Authority (EPZA) was created to
operate, administer, and manage the export processing zones established in the Port
of Mariveles, Bataan8 and such other export processing zones that may be created by
virtue of the decree.9
The decree declared the EPZA non-profit in character 10 with all its revenues devoted
to its development, improvement, and maintenance. 11 To maintain this non-profit
character, the EPZA was declared exempt from all taxes that may be due to the
Republic of the Philippines, its provinces, cities, municipalities, and other government
agencies and instrumentalities.12 Specifically, Section 21 of Presidential Decree No.
66 declared the EPZA exempt from payment of real property taxes:
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The
Authority shall be non-profit and shall devote and use all its returns from its capital
investment, as well as excess revenues from its operations, for the development,
improvement and maintenance and other related expenditures of the Authority to pay
its indebtedness and obligations and in furtherance and effective implementation of
the policy enunciated in Section 1 of this Decree. In consonance therewith, the
Authority is hereby declared exempt:

City of Lapu-Lapuin Mactan, Cebu were reserved to serve as site of the Mactan
Export Processing Zone.
In 1995, the PEZA was created by virtue of Republic Act No. 7916 or "the Special
Economic Zone Act of 1995"13to operate, administer, manage, and develop economic
zones in the country.14 The PEZA was granted the power to register, regulate, and
supervise the enterprises located in the economic zones.15 By virtue of the law, the
export processing zone in Mariveles, Bataan became the Bataan Economic
Zone16 and the Mactan Export Processing Zone the Mactan Economic Zone.17
As for the EPZA, the law required it to "evolve into the PEZA in accordance with the
guidelines and regulations set forth in an executive order issued for [the] purpose."18
On October 30, 1995, President Fidel V. Ramos issued Executive Order No. 282,
directing the PEZA to assume and exercise all of the EPZAs powers, functions, and
responsibilities "as provided in Presidential Decree No. 66, as amended, insofar as
they are not inconsistent with the powers, functions, and responsibilities of the PEZA,
as mandated under [the Special Economic Zone Act of 1995]."19 All of EPZAs
properties, equipment, and assets, among others, were ordered transferred to the
PEZA.20
Facts of G.R. No. 184203
In the letter21 dated March 25, 1998, the City of Lapu-Lapu, through the Office of the
Treasurer, demanded from the PEZA 32,912,350.08 in real property taxes for the
period from 1992 to 1998 on the PEZAs properties located in the Mactan Economic
Zone.
The City reiterated its demand in the letter 22 dated May 21, 1998. It cited Sections 193
and 234 of the Local Government Code of 1991 that withdrew the real property tax
exemptions previously granted to or presently enjoyed by all persons. The City
pointed out that no provision in the Special Economic Zone Act of 1995 specifically
exempted the PEZA from payment of real property taxes, unlike Section 21 of
Presidential Decree No. 66 that explicitly provided for EPZAs exemption. Since no
legal provision explicitly exempted the PEZA from payment of real property taxes, the
City argued that it can tax the PEZA.
The City made subsequent demands23 on the PEZA. In its last reminder24 dated May
13, 2002, the City assessed the PEZA 86,843,503.48 as real property taxes for the
period from 1992 to 2002.

....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes
and licenses to be paid to the National Government, its provinces, cities,
municipalities and other government agenciesand instrumentalities[.]
In 1979, President Marcos issued Proclamation No. 1811, establishing the Mactan
Export Processing Zone. Certain parcels of land of the public domain located in the

On September 11, 2002, the PEZAfiled a petition for declaratory Relief 25 with the
Regional Trial Court of Pasay City, praying that the trial court declare it exempt from
payment ofreal property taxes. The case was raffled to Branch 111.
The City answered26 the petition, maintaining that the PEZA is liable for real property
taxes. To support its argument, the City cited a legal opinion dated September 6,
1999 issued by the Department of Justice,27 which stated that the PEZA is not exempt
from payment of real property taxes. The Department of Justice based its opinion on

Sections 193 and 234 of the Local Government Code that withdrew the tax
exemptions, including real property tax exemptions, previously granted to all persons.

Characterizing the PEZA as an agency of the National Government, the trial court
ruled that the City had no authority to tax the PEZA under Sections 133(o) and 234(a)
of the Local Government Code of 1991.

A reply28 was filed by the PEZA to which the City filed a rejoinder.29
Pursuant to Rule 63, Section 3 of Rules of Court, 30 the Office of the Solicitor General
filed a comment31 on the PEZAs petition for declaratory relief. It agreed that the PEZA
is exempt from payment of real property taxes, citing Sections 24 and 51 of the
Special Economic Zone Act of 1995.
The trial court agreed with the Solicitor General. Section 24 of the Special Economic
Zone Act of 1995 provides:
SEC. 24. Exemption from National and Local Taxes. Except for real property taxes
on land owned by developers, no taxes, local and national, shall be imposed on
business establishments operating within the ECOZONE. In lieu thereof, five percent
(5%) of the gross income earned by all business enterprises within the ECOZONE
shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business
establishments to the treasurers office of the municipality or city where the
enterprise is located.
Section 51 of the law, on the other hand, provides:
SEC. 51. Ipso-Facto Clause. All privileges, benefits, advantages or exemptions
granted to special economic zones under Republic Act No. 7227, shall ipso-facto be
accorded to special economic zones already created or to be created under this Act.
The free port status shall not be vested upon new special economic zones.
Based on Section 51, the trial court held that all privileges, benefits, advantages, or
exemptions granted tospecial economic zones created under the Bases Conversion
and Development Act of 1992 apply to special economic zones created under the
Special Economic ZoneAct of 1995.
Since these benefits include exemption from payment of national or local taxes, these
benefits apply to special economic zones owned by the PEZA.
According to the trial court, the PEZA remained tax-exempt regardless of Section 24
of the Special Economic Zone Act of 1995. It ruled that Section 24, which taxes real
property owned by developers of economic zones, only applies to private developers
of economic zones, not to public developers like the PEZA. The PEZA, therefore, is
not liable for real property taxes on the land it owns.

In the resolution32 dated June 14, 2006, the trial court granted the PEZAs petition for
declaratory relief and declared it exempt from payment of real property taxes.
The City filed a motion for reconsideration, 33 which the trial court denied in its
resolution34 dated September 26, 2006.
The City then appealed35 to the Court of Appeals.
The Court of Appeals noted the following issues the City raised in its appellants brief:
(1) whether the trial court had jurisdiction over the PEZAs petition for declaratory
relief; (2) whether the PEZA is a government agency performing governmental
functions; and (3) whether the PEZA is exempt from payment of real property taxes.
The issues presented by the City, according to the Court of Appeals, are pure
questions of law which should have been raised in a petition for review on certiorari
directly filed before this court. Since the City availed itself of the wrong mode of
appeal, the Court of Appeals dismissed the Citys appeal in the decision 36 dated
January 11, 2008.
The City filed a motion for extension of time to file a motion for
reconsideration,37 which the Court of Appeals denied in the resolution 38 dated April 11,
2008.
Despite the denial of its motion for extension, the City filed a motion for
reconsideration.39 In the resolution40 dated August 6, 2008, the Court of Appeals
denied that motion.
In its petition for review on certiorari with this court, 41 the City argues that the Court of
Appeals "hid under the skirts of technical rules"42 in resolving its appeal. The City
maintains that its appeal involved mixed questions of fact and law. According to the
City, whether the PEZA performed governmental functions "cannot completely be
addressed by law but [by] the factual and actual activities [the PEZA is] carrying
out."43
Even assuming that the petition involves pure questions of law, the City contends that
the subject matter of the case "is of extreme importance with [far-reaching]
consequence that [its magnitude] would surely shape and determine the course ofour
nations future."44 The Court of Appeals, the City argues, should have resolved the
case on the merits.
The City insists that the trial court had no jurisdiction to hear the PEZAs petition for
declaratory relief. According to the City, the case involves real property located in the
City of Lapu-Lapu. The petition for declaratory relief should have been filed before the
Regional Trial Court of the City of Lapu-Lapu.45

Moreover, the Province of Bataan, the City of Baguio, and the Province of Cavite
allegedly demanded real property taxes from the PEZA. The City argues that the
PEZA should have likewise impleaded these local government units as respondents
in its petition for declaratory relief. For its failure to do so, the PEZA violated Rule 63,
Section 2 of the Rules of Court, and the trial court should have dismissed the
petition.46
This court ordered the PEZA to comment on the Citys petition for review on
certiorari.47
At the outset of its comment, the PEZA argues that the Court of Appeals decision
dated January 11, 2008 had become final and executory. After the Court of Appeals
had denied the Citys appeal, the City filed a motion for extension of time to file a
motion for reconsideration. Arguing that the time to file a motion for reconsideration is
not extendible, the PEZA filed its motion for reconsideration out of time. The Cityhas
no more right to appeal to this court.48
The PEZA maintains that the City availed itself of the wrong mode of appeal before
the Court of Appeals. Since the City raised pure questions of law in its appeal, the
PEZA argues that the proper remedy is a petition for review on certiorari with this
court, not an ordinary appeal before the appellate court. The Court of Appeals,
therefore, correctly dismissed outright the Citys appeal under Rule 50, Section 2 of
the Rules of Court.49

In its reply letter56 dated June 18, 2003, the PEZA requested the Province to suspend
the service of the real property tax billing. It cited its petition for declaratory relief
against the City of Lapu-Lapu pending before the Regional Trial Court, Branch 111,
Pasay City as basis.
The Province argued that serving a real property tax billing on the PEZA "would not in
any way affect [its] petition for declaratory relief before [the Regional Trial Court] of
Pasay City."57 Thus, in its letter58 dated June 27, 2003, the Province notified the
PEZAof its real property tax liabilities for June 1, 1995 to December 31, 2002
totallingP110,549,032.55.
After having been served a tax billing, the PEZA again requested the Province to
suspend collecting its alleged real property tax liabilities until the Regional Trial Court
of Pasay Cityresolves its petition for declaratory relief.59
The Province ignored the PEZAs request. On January 20, 2004, the Province served
on the PEZA a statement of unpaid real property tax for the period from June 1995 to
December 2004.60
The PEZA again requested the Province to suspend collecting its alleged real
property taxes.61 The Province denied the request in its letter62 dated January 29,
2004, then servedon the PEZA a warrant of levy 63 covering the PEZAs real properties
located in Mariveles, Bataan.

On the merits, the PEZA argues that it is an agency and instrumentality of the
National Government. It is therefore exempt from payment of real property taxes
under Sections 133(o) and 234(a) of the Local Government Code.50It adds that the
tax privileges under Sections 24 and 51 of the Special Economic Zone Act of 1995
applied to it.51

The PEZAs subsequent requests64 for suspension of collection were all denied by the
Province.65 The Province then served on the PEZA a notice of delinquency in the
payment of real property taxes66 and a notice of sale of real property for unpaid real
property tax.67 The Province finally sent the PEZA a notice of public auction of the
latters properties in Mariveles, Bataan.68

Considering that the site of the Mactan Economic Zoneis a reserved land under
Proclamation No. 1811, the PEZA claims that the properties sought to be taxed are
lands of public dominion exempt from real property taxes.52

On June 14, 2004, the PEZA filed a petition for injunction 69 with prayer for issuance of
a temporary restraining order and/or writ of preliminary injunction before the Regional
Trial Court of Pasay City, arguing that it is exempt from payment ofreal property taxes.
It added that the notice of sale issued by the Province was void because it was not
published in a newspaper ofgeneral circulation asrequired by Section 260 of the Local
Government Code.70

As to the jurisdiction issue, the PEZA counters that the Regional Trial Court of Pasay
had jurisdiction to hear its petition for declaratory relief under Rule 63, Section 1 of
the Rules of Court.[53]] It also argued that it need not implead the Province of Bataan,
the City of Baguio, and the Province of Cavite as respondents considering that their
demands came after the PEZA had already filed the petition in court.54
Facts of G.R. No. 187583
After the City of Lapu-Lapu had demanded payment of real property taxes from the
PEZA, the Province of Bataan followed suit. In its letter 55 dated May 29, 2003, the
Province, through the Office of the Provincial Treasurer, informed the PEZA that it
would be sending a real property tax billing to the PEZA. Arguing that the PEZA is a
developer of economic zones, the Province claimed that the PEZA is liable for real
property taxes under Section 24 of the Special Economic Zone Act of 1995.

The case was raffled to Branch 115.

In its order71 dated June 18, 2004, the trial court issued a temporary restraining order
against the Province. After the PEZA had filed a P100,000.00 bond,72 the trial court
issued a writ of preliminary injunction, 73 enjoining the Province from selling the PEZAs
real properties at public auction.
On March 3, 2006, the PEZA and Province both manifested that each would file a
memorandum after which the case would be deemed submitted for decision. The
parties then filed their respective memoranda.74

In the order75 dated January 31, 2007, the trial court denied the PEZAs petition for
injunction. The trial court ruled that the PEZA is not exempt from payment of real
property taxes. According to the trial court, Sections 193 and 234 of the Local
Government Code had withdrawn the real property tax exemptions previously granted
to all persons, whether natural or juridical. 76 As to the tax exemptions under Section
51 of the Special Economic Zone Act of 1995, the trial court ruled that the provision
only applies to businesses operating within the economic zones, not to the PEZA.77
The PEZA filed before the Court of Appeals a petition for certiorari 78 with prayer for
issuance of a temporary restraining order.
The Court of Appeals issued a temporary restraining order, enjoining the Province
and its Provincial Treasurer from selling PEZA's properties at public auction
scheduled on October 17, 2007.79 It also ordered the Province to comment on the
PEZAs petition.
In its comment,80 the Province alleged that it received a copy of the temporary
restraining order only on October 18, 2007 when it had already sold the PEZAs
properties at public auction. Arguing that the act sought to be enjoined was already
fait accompli, the Province prayed for the dismissal of the petition for certiorari.
The PEZA then filed a supplemental petition for certiorari, prohibition, and
mandamus81 against the Province, arguing that the Provincial Treasurer of Bataan
acted with grave abuse of discretion in issuing the notice of delinquency and notice of
sale. It maintained that it is exempt from payment of real property taxes because it is
a government instrumentality. It added that its lands are property of public dominion
which cannot be sold at public auction.
The PEZA also filed a motion 82 for issuance of an order affirming the temporary
restraining order and a writ of preliminary injunction to enjoin the Province from
consolidating title over the PEZAs properties.
In its resolution83 dated January 16, 2008,the Court of Appeals admitted the
supplemental petition for certiorari, prohibition, and mandamus. It required the
Province to comment on the supplemental petition and to file a memorandum on the
PEZAs prayer for issuance of temporary restraining order.
The Province commented84 on the PEZAs supplemental petition, to which the PEZA
replied.85
The Province then filed a motion 86 for leave to admit attached rejoinder with motion to
dismiss. In the rejoinder with motion to dismiss, 87 the Province argued for the first time
that the Court of Appeals had no jurisdiction over the subject matter of the action.
According to the Province, the PEZA erred in filing a petition for certiorari. Arguing
that the PEZA sought to reverse a Regional Trial Court decision in a local tax case,
the Province claimed that the court with appellate jurisdiction over the action is the
Court of Tax Appeals. The PEZA then prayed that the Court of Appeals dismiss the
petition for certiorari for lack of jurisdiction over the subject matter of the action.

The Court of Appeals held that the issue before it was whether the trial court judge
gravely abused his discretion in dismissing the PEZAs petition for prohibition. This
issue, according to the Court of Appeals, is properly addressed in a petition for
certiorari over which it has jurisdiction to resolve. It, therefore, maintained jurisdiction
to resolve the PEZAs petition for certiorari.88
Although it admitted that appeal, not certiorari, was the PEZAs proper remedy to
reverse the trial courts decision, 89 the Court of Appeals proceeded to decide the
petition for certiorari in "the broader interest of justice."90
The Court of Appeals ruled that the trial court judge gravely abused his discretion in
dismissing the PEZAs petition for prohibition. It held that Section 21 of Presidential
Decree No. 66 and Section 51 of the Special Economic Zone Act of 1995 granted the
PEZA exemption from payment of real property taxes. 91 Based on the criteria set in
Manila International Airport Authority v. Court of Appeals, 92 the Court of Appeals found
that the PEZA is an instrumentality of the national government. No taxes, therefore,
could be levied on it by local government units.93
In the decision94 dated August 27, 2008, the Court of Appeals granted the PEZAs
petition for certiorari. It set aside the trial courts decision and nullified all the
Provinces proceedings with respect to the collection of real property taxes from the
PEZA.
The Province filed a motion for reconsideration,95 which the Court of Appeals denied
in the resolution96 dated April 16, 2009 for lack of merit.
In its petition for review on certiorari with this court, 97 the Province of Bataan insists
that the Court of Appeals had no jurisdiction to take cognizance of the PEZAs petition
for certiorari. The Province maintains that the Court of Tax Appeals had jurisdiction to
hear the PEZAs petition since it involved a local tax case decided by a Regional Trial
Court.98
The Province reiterates that the PEZA is not exempt from payment of real property
taxes. The Province points out that the EPZA, the PEZAs predecessor, had to be
categorically exempted from payment of real property taxes. The EPZA, therefore,
was not inherently exempt from payment of real property taxes and so is the PEZA.
Since Congress omitted from the Special Economic Zone Act of 1995 a provision
specifically exempting the PEZA from payment of real property taxes, the Province
argues that the PEZA is a taxable entity. It cited the rule in statutory construction that
provisions omitted in revised statutes are deemed repealed.99
With respect to Sections 24 and 51 of the Special Economic Zone Act of 1995
granting tax exemptions and benefits, the Province argues that these provisions only
apply to business establishments operating within special economic zones, 100 not to
the PEZA.
This court ordered the PEZA tocomment on the Provinces petition for review on
certiorari.101 In its comment,102the PEZA argues that the Court of Appeals had
jurisdiction to hear its petition for certiorari since the issue was whether the trial court

committed grave abuse of discretion in denying its petition for injunction. The PEZA
maintains thatit is exempt from payment of real property taxes under Section 21 of
Presidential Decree No. 66 and Section 51 of the Special Economic Zone Act of
1995.
The Province filed its reply,103 reiterating its arguments in its petition for review on
certiorari. On the PEZAs motion,104 this court consolidated the petitions filed by the
City of Lapu-Lapu and the Province of Bataan.105
The issues for our resolution are the following:
I. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapus
appeal for raising pure questions of law;
II. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction
to hear, try, and decide the City of Lapu-Lapus petition for declaratory relief;
III. Whether the petition for injunction filed before the Regional Trial Court,
Branch 115, Pasay City, is a local tax case appealable to the Court of Tax
Appeals; and
IV. Whether the PEZA is exempt from payment of real property taxes.
We deny the consolidated petitions.
I.
The
Court
of
Appeals
dismissing
the
City
appeal for raising pure questions of law

did

not
of

err
in
Lapu-Lapus

Under the Rules of Court, there are three modes of appeal from Regional Trial Court
decisions. The first mode is through an ordinary appeal before the Court of Appeals
where the decision assailed was rendered in the exercise of the Regional Trial Courts
original jurisdiction. Ordinary appeals are governed by Rule 41, Sections 3 to 13 of
the Rules of Court. In ordinary appeals, questions of fact or mixed questions of fact
and law may be raised.106
The second mode is through a petition for review before the Court of Appeals where
the decision assailed was rendered by the Regional Trial Court in the exercise of its
appellate jurisdiction. Rule 42 of the Rules of Court governs petitions for review
before the Court of Appeals. In petitions for review under Rule 42, questions of fact, of
law, or mixed questions of fact and law may be raised.107
The third mode is through an appealby certiorari before this court under Rule 45
where only questions of law shall be raised.108

A question of fact exists when there is doubt as to the truth or falsity of the alleged
facts.109 On the other hand, there is a question of law if the appeal raises doubt as to
the applicable law on a certain set of facts.110
Under Rule 50, Section 2, an improper appeal before the Court of Appeals is
dismissed outright and shall not be referred to the proper court:
SEC. 2. Dismissal of improper appeal to the Court of Appeals. An appeal under
Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only
questions of law shall be dismissed, issues purely of law not being reviewable by said
court. Similarly, an appeal by notice of appeal instead of by petition for review from
the appellate judgment of a Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the
appropriate court but shall be dismissed outright.
Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of Court, which
provided that improper appeals to the Court of Appeals shall not be dismissed but
shall be certified to the proper court for resolution:
Sec. 3. Where appealed case erroneously, brought. Where the appealed case has
been erroneously brought to the Court of Appeals, it shall not dismiss the appeal, but
shall certify the case to the proper court, with a specific and clear statement of the
grounds therefor.
With respect to appeals by certiorari directly filed before this court but which raise
questions of fact, paragraph 4(b) of Circular No. 2-90 dated March 9, 1990 states that
this court "retains the option, in the exercise of its sound discretion and considering
the attendant circumstances, either itself to take cognizance of and decide such
issues or to refer them to the Court of Appeals for determination." In Indoyon, Jr. v.
Court of Appeals,111 we said that this court "cannot tolerate ignorance of the law on
appeals."112 It is not this courts task to determine for litigants their proper remedies
under the Rules.113
We agree that the City availed itself of the wrong mode of appeal before the Court of
Appeals. The City raised pure questions of law in its appeal. The issue of whether the
Regional Trial Court of Pasay had jurisdiction over the PEZAs petition for declaratory
relief is a question of law, jurisdiction being a matter of law.114 The issue of whether
the PEZA is a government instrumentality exempt from payment of real property taxes
is likewise a question of law since this question is resolved by examining the
provisions of the PEZAs charter as well as other laws relating to the PEZA.115
The Court of Appeals, therefore, did not err in dismissing the Citys appeal pursuant to
Rule 50, Section 2 of the Rules of Court.
Nevertheless, considering the important questions involved in this case, we take
cognizance of the Citys petition for review on certiorari in the interest of justice.

In Municipality of Pateros v. The Honorable Court of Appeals, 116 the Municipality of

Pateros filed an appeal under Rule 42 before the Court of Appeals, which the Court of
Appeals denied outright for raising pure questions of law. This court agreed that the
Municipality of Pateros "committed a procedural infraction"117 and should have directly
filed a petition for review on certiorari before this court. Nevertheless, "in the interest
of justice and in order to write finisto [the] controversy," 118 this court "opt[ed] to relax
the rules"119 and proceeded to decide the case. This court said:
While it is true that rules of procedure are intended to promote rather than frustrate
the ends of justice, and while the swift unclogging of the dockets of the courts is a
laudable objective, it nevertheless must not be met at the expense of substantial
justice.
The Court has allowed some meritorious cases to proceed despite inherent
procedural defects and lapses. Thisis in keeping with the principle that rules of
procedure are mere tools designed to facilitate the attainment of justice, and that strict
and rigid application ofrules which should result in technicalities that tend to frustrate
rather than promote substantial justice must always be avoided. It is a far better and
more prudent cause of action for the court to excuse a technical lapse and afford the
parties a review of the case to attain the ends of justice, rather than dispose of the
case on technicality and cause grave injustice to the parties, giving a false impression
of speedy disposal of cases while actually resulting in more delay, if not a miscarriage
of justice.120
Similar to Municipality of Pateros, we opt to relax the rules in this case. The PEZA
operates or otherwise administers special economic zones all over the country.
Resolving the substantive issue of whether the PEZA is taxable for real property taxes
will clarify the taxing powers of all local government units where special economic
zones are operated. This case, therefore, should be decided on the merits.
II.
The
Regional
Trial
jurisdiction
to
hear,
PEZAs
petition
against the City of Lapu-Lapu

Court
try,
for

of

Pasay
had
and
decide
declaratory

no
the
relief

Rule 63 of the Rules of Court governs actions for declaratory relief. Section 1 of Rule
63 provides:
SECTION 1. Who may file petition. Any person interested under a deed, will,
contract or other written instrument, or whose rights are affected by a statute,
executive order or regulation, ordinance, or any other governmental regulation may,
before breach or violation, thereof, bring an action in the appropriate Regional Trial
Court to determine any question of construction or validity arising, and for a
declaration of his rights or duties, thereunder.

An action for reformation of an instrument, to quiet title to real property or remove

clouds therefrom, or to consolidate ownership under Article 1607 of the Civil Code,
may be brought under this Rule.
The court with jurisdiction over petitions for declaratory relief is the Regional Trial
Court, the subject matter of litigation in an action for declaratory relief being incapable
of pecuniary estimation.121 Section 19 of the Judiciary Reorganization Act of 1980
provides:
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive
original jurisdiction:
(1) In all civil actions in which the subject of litigation is incapable of pecuniary
estimation[.]
Consistent with the law, the Rules state that a petition for declaratory relief is filed "in
the appropriate Regional Trial Court."122
A special civil action for declaratory relief is filed for a judicial determination of any
question of construction or validity arising from, and for a declaration of rights and
duties, under any of the following subject matters: a deed, will, contract or other
written instrument, statute, executive order or regulation, ordinance, orany other
governmental regulation.123 However, a declaratory judgment may issue only if there
has been "no breach of the documents in question."124 If the contract or statute
subject matter of the action has already been breached, the appropriate ordinary civil
action must be filed.125 If adequate relief is available through another form of action or
proceeding, the other action must be preferred over an action for declaratory relief.126
In Ollada v. Central Bank of the Philippines, 127 the Central Bank issued CB-IED Form
No. 5 requiring certified public accountants to submit an accreditation under oath
before they were allowed to certify financial statements submitted to the bank. Among
those financial statements the Central Bank disallowed were those certified by
accountant Felipe B. Ollada.128 Claiming that the requirement "restrained the
legitimate pursuit of ones trade,"129
Ollada filed a petition for declaratory relief against the Central Bank.
This court ordered the dismissal of Olladas petition "without prejudice to [his] seeking
relief in another appropriate action."130 According to this court, Olladas right had
already been violated when the Central Bank refused to accept the financial
statements he prepared. Since there was already a breach, a petition for declaratory
relief was not proper. Ollada must pursue the "appropriate ordinary civil action or
proceeding."131 This court explained:
Petitioner commenced this action as, and clearly intended it to be one for Declaratory
Relief under the provisions of Rule 66 of the Rules of Court. On the question of when
a special civil action of this nature would prosper, we have already held that the
complaint for declaratory relief will not prosper if filed after a contract, statute or right
has been breached or violated. In the present case such is precisely the situation

arising from the facts alleged in the petition for declaratory relief. As vigorously
claimed by petitioner himself, respondent had already invaded or violated his right
and caused him injury all these giving him a complete cause of action enforceable
in an appropriate ordinary civil action or proceeding. The dismissal of the action was,
therefore, proper in the lightof our ruling in De Borja vs. Villadolid, 47 O.G. (5) p.
2315, and Samson vs. Andal, G.R. No. L-3439, July 31, 1951, where we held that an
action for declaratory relief should be filed before there has been a breach of a
contract, statutes or right, and that it is sufficient tobar such action, that there had
been a breach which would constitute actionable violation. The rule is that an
action for Declaratory Relief is proper only if adequate relief is not available through
the means of other existing forms of action or proceeding (1 C.J.S. 1027-1028).132

controversies involving rights that are legally demandable and enforceable cannot be
exercised when there is no actual or threatened violation of a legal right.

It is also required that the parties to the action for declaratory relief be those whose
rights or interests are affected by the contract or statute in question. 133 "There must be
an actual justiciable controversy or the ripening seeds of one"134 between the parties.
The issue between the parties "must be ripe for judicial determination."135 An action
for declaratory relief based on theoreticalor hypothetical questions cannot be filed for
our courts are not advisory courts.136

[F]irst, the subject matter of the controversy must be a deed, will, contract or other
written instrument, statute, executive order or regulation, or ordinance; second, the
terms of said documents and the validity thereof are doubtful and require judicial
construction; third, there must have been no breach of the documents in question;
fourth, there must be an actual justiciable controversy or the "ripening seeds" of one
between persons whose interests are adverse; fifth, the issue must be ripe for judicial
determination; and sixth, adequate relief is not available through other means or other
forms of action or proceeding.142 (Emphases omitted)

In Republic v. Roque,137 this court dismissed respondents petition for declaratory

relief for lack of justiciable controversy. According to this court, "[the respondents]
fear of prospective prosecution [under the Human Security Act] was solely based on
remarks of certain government officials which were addressed to the general
public."138
In Velarde v. Social Justice Society,139 this court refused to resolve the issue of
"whether or not [a religious leaders endorsement] of a candidate for elective office or
in urging or requiring the members of his flock to vote for a specific candidate is
violative [of the separation clause]."140 According to the court, there was no justiciable
controversy and ordered the dismissal of the Social Justice Societys petition for
declaratory relief. This court explained: Indeed, SJS merely speculated or anticipated
without factual moorings that, as religious leaders, the petitioner and his corespondents below had endorsed or threatened to endorse a candidate or candidates
for elective offices; and that such actual or threatened endorsement "will enable
[them] to elect men to public office who [would] in turn be forever beholden to their
leaders, enabling them to control the government"[;] and "pos[ing] a clear and present
danger ofserious erosion of the peoples faith in the electoral process[;] and
reinforc[ing] their belief that religious leaders determine the ultimate result of
elections," which would then be violative of the separation clause.

All that the 5-page SJS Petition prayed for was "that the question raised in paragraph
9 hereof be resolved." In other words, it merely sought an opinion of the trial court on
whether the speculated acts of religious leaders endorsing elective candidates for
political offices violated the constitutional principle on the separation of church and
state. SJS did not ask for a declaration of its rights and duties; neither did it pray for
the stoppage of any threatened violation of its declared rights. Courts, however, are
proscribed from rendering an advisory opinion.141In sum, a petition for declaratory
relief must satisfy six requisites:

We rule that the PEZA erred in availing itself of a petition for declaratory relief against
the City. The City had already issued demand letters and real property tax
assessment against the PEZA, in violation of the PEZAs alleged tax-exempt status
under its charter. The Special Economic Zone Act of 1995, the subject matter of
PEZAs petition for declaratory relief, had already been breached. The trial court,
therefore, had no jurisdiction over the petition for declaratory relief. There are several
aspects of jurisdiction.143 Jurisdiction over the subject matter is "the power to hear and
determine cases of the general class to which the proceedings in question
belong."144 It is conferred by law, which may either be the Constitution or a
statute.145 Jurisdiction over the subject matter means "the nature of the cause of
action and the relief sought."146 Thus, the cause of action and character of the relief
sought as alleged in the complaint are examinedto determine whether a court had
jurisdiction over the subject matter.147 Any decision rendered by a court without
jurisdiction over the subjectmatter of the action is void.148

Such premise is highly speculative and merely theoretical, to say the least. Clearly, it
does not suffice to constitute a justiciable controversy. The Petition does not even
allege any indication or manifest intent on the part of any of the respondents below to
champion an electoral candidate, or to urge their so-called flock to vote for, or not to
vote for, a particular candidate. It is a time-honored rule that sheer speculation does
not give rise to an actionable right.

Another aspect of jurisdiction is jurisdiction over the person. It is "the power of [a]
court to render a personal judgment or to subject the parties in a particular action to
the judgment and other rulings rendered in the action." 149 A court automatically
acquires jurisdiction over the person of the plaintiff upon the filing of the initiatory
pleading.150 With respect to the defendant, voluntary appearance in court or a valid
service of summons vests the court with jurisdiction over the defendants
person.151 Jurisdiction over the person of the defendant is indispensable in actions in
personamor those actions based on a partys personal liability.152 The proceedings in
an action in personamare void if the court had no jurisdiction over the person of the
defendant.153

Obviously, there is no factual allegation that SJS rights are being subjected to any
threatened, imminent and inevitable violation that should be prevented by the
declaratory relief sought. The judicial power and duty of the courts to settle actual

Jurisdiction over the resor the thing under litigation is acquired either "by the seizure
of the property under legal process, whereby it is brought into actual custody of the
law; or asa result of the institution of legal proceedings, in which the power of the

court is recognized and made effective."154 Jurisdiction over the res is necessary in
actions in remor those actions "directed against the thing or property or status of a
person and seek judgments with respect thereto as against the whole world."155 The
proceedings in an action in rem are void if the court had no jurisdiction over the thing
under litigation.156

of a municipality within Metropolitan Manila Area, who shall decide the protest within
sixty (60) days from receipt.

In the present case, the Regional Trial Court had no jurisdiction over the subject
matter of the action, specifically, over the remedy sought. As this court explained in
Malana v. Tappa:157

(c) In the event that the protest is finally decided in favor of the taxpayer, the
amount or portion of the tax protested shall be refunded to the protestant, or
applied as tax credit against his existing or future tax liability.

. . . an action for declaratory relief presupposes that there has been no actual breach
of the instruments involved or of rights arising thereunder. Since the purpose of an
action for declaratory relief is to secure an authoritative statement of the rights and
obligations of the parties under a statute, deed, or contract for their guidance in the
enforcement thereof, or compliance therewith, and not to settle issues arising from an
alleged breach thereof, it may be entertained only before the breach or violation of the
statute, deed, or contract to which it refers. A petition for declaratory relief gives a
practical remedy for ending controversies that have not reached the state where
another relief is immediately available; and supplies the need for a form of action that
will set controversies at rest before they lead to a repudiation of obligations, an
invasion of rights, and a commission of wrongs.

(d) In the event that the protest is denied or upon the lapse of the sixty day
period prescribed in subparagraph (a), the taxpayer may avail of the
remedies as provided for in Chapter 3, Title II, Book II of this Code.

Where the law or contract has already been contravened prior to the filing of an action
for declaratory relief, the courts can no longer assume jurisdiction over the action. In
other words, a court has no more jurisdiction over an action for declaratory relief if its
subject has already been infringed or transgressed before the institution of the
action.158 (Emphasis supplied)
The trial court should have dismissed the PEZAs petition for declaratory relief for lack
of jurisdiction.
Once an assessment has already been issued by the assessor, the proper remedy of
a taxpayer depends on whether the assessment was erroneous or illegal.
An erroneous assessment "presupposes that the taxpayer is subject to the tax but is
disputing the correctness of the amount assessed."159 With an erroneous assessment,
the taxpayer claims that the local assessor erred in determining any of the items for
computing the real property tax, i.e., the value of the real property or the portion
thereof subject to tax and the proper assessment levels. In case of an erroneous
assessment, the taxpayer must exhaust the administrative remedies provided under
the Local Government Code before resorting to judicial action.
The taxpayer must first pay the realproperty tax under protest. Section 252 of the
Local Government Code provides:
SECTION 252. Payment Under Protest. -(a) No protest shall be entertained unless
the taxpayer first paysthe tax. There shall be annotated on the tax receipts the words
"paid under protest". The protest in writing must be filed within thirty (30) days from
payment of the tax to the provincial, city treasurer or municipal treasurer, in the case

(b) The tax or a portion thereof paidunder protest, shall be held in trust by
the treasurer concerned.

Should the taxpayer find the action on the protest unsatisfactory, the taxpayer may
appeal with the Local Board of Assessment Appeals within 60 days from receipt of the
decision on the protest:
SECTION 226. Local Board of Assessment Appeals. - Any owner or person having
legal interest in the property who is not satisfied with the action of the provincial, city
or municipal assessor in the assessment of his property may, within sixty (60) days
from the date of receipt of the written notice of assessment, appeal to the Board of
Assessment Appeals of the provincial or city by filing a petition under oath in the form
prescribed for the purpose, together with copies of the tax declarations and such
affidavits or documents submitted in support of the appeal.
Payment under protest and appeal to the Local Board of Assessment Appeals are
"successive administrative remedies to a taxpayer who questions the correctness of
an assessment."160 The Local Board Assessment Appeals shall not entertain an
appeal "without the action of the local assessor"161 on the protest.
If the taxpayer is still unsatisfied after appealing with the Local Board of Assessment
Appeals, the taxpayer may appeal with the Central Board of Assessment Appeals
within 30 days from receipt of the Local Boards decision:
SECTION 229. Action by the Local Board of Assessment Appeals. - (a) The Board
shall decide the appeal within one hundred twenty (120) days from the date of receipt
of such appeal. The Board, after hearing, shall render its decision based on
substantial evidence or such relevant evidence on record as a reasonable mind might
accept as adequate to support the conclusion. (b) In the exercise ofits appellate
jurisdiction, the Board shall have the power to summon witnesses, administer oaths,
conduct ocular inspection, take depositions, and issue subpoena and subpoena
duces tecum. The proceedings of the Board shall be conducted solely for the purpose
of ascertaining the facts without necessarily adhering to technical rules applicable in
judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property or the person
having legal interest therein and the provincial or city assessor with a copy of the
decision of the Board. In case the provincial or city assessor concurs in the revision or

the assessment, it shall be his duty to notify the owner of the property or the person
having legal interest therein of such factusing the form prescribed for the purpose.
The owner of the property or the person having legal interest therein or the assessor
who is not satisfied with the decision of the Board, may, within thirty (30) days after
receipt of the decision of said Board, appeal to the Central Board of Assessment
Appeals, as herein provided. The decision of the Central Board shall be final and
executory. (Emphasis supplied)
On the other hand, an assessment is illegal if it was made without authority under the
law.162 In case of an illegal assessment, the taxpayer may directly resort to judicial
action without paying under protest the assessed tax and filing an appeal with the
Local and Central Board of Assessment Appeals.
In Ty v. Trampe,163 the Municipal Assessor of Pasig sent Alejandro B. Ty a notice of
assessment with respect to Tys real properties in Pasig. Without resorting to the
administrative remedies under the Local Government Code, Ty filed before the
Regional Trial Court a petition, praying that the trial court nullify the notice of
assessment. In assessing the real property taxes due, the Municipal Assessor used a
schedule of market values solely prepared by him. This, Ty argued, was void for being
contrary to the Local Government Code requiring that the schedule of market values
be jointly prepared by the provincial, city, and municipal assessors of the
municipalities within the Metropolitan Manila Area.
This court ruled that the assessmentwas illegal for having been issued without
authority of the Municipal Assessor. Reconciling provisions of the Real Property Tax
Code and the Local Government Code, this court held that the schedule of market
valuesmust be jointly prepared by the provincial, city, and municipal assessors of the
municipalities within the Metropolitan Manila Area.
As to the issue of exhaustion of administrative remedies, this court held that Ty did
not err in directly resorting to judicial action. According to this court, payment under
protest is required only "where there is a question as to the reasonableness of the
amount assessed."164 As to appeals before the Local and Central Board of
Assessment Appeals, they are "fruitful only where questions of fact are involved."165
Ty raised the issue of the legality of the notice of assessment, an issue that did not go
into the reasonableness of the amount assessed. Neither did the issue involve a
question of fact. Ty raised a question of law and, therefore, need not resort to the
administrative remedies provided under the Local Government Code.
In the present case, the PEZA did not avail itself of any of the remedies against a
notice of assessment. A petition for declaratory relief is not the proper remedy once a
notice of assessment was already issued.
Instead of a petition for declaratory relief, the PEZA should have directly resorted to a
judicial action. The PEZA should have filed a complaint for injunction, the "appropriate
ordinary civil action"166 to enjoin the City from enforcing its demand and collecting the
assessed taxes from the PEZA. After all, a declaratory judgment as to the PEZAs taxexempt status is useless unless the City isenjoined from enforcing its demand.

Injunction "is a judicial writ, process or proceeding whereby a party is ordered to do or

refrain from doing a certain act." 167 "It may be the main action or merely a provisional
remedy for and as incident in the main action." 168 The essential requisites of a writ of
injunction are: "(1) there must be a right in esseor the existence of a right to be
protected; and (2) the act against which the injunction is directed to constitute a
violation of such right."169
We note, however, that the City confused the concepts of jurisdiction and venue in
contending that the Regional Trial Court of Pasay had no jurisdiction because the real
properties involved in this case are located in the City of Lapu-Lapu.
On the one hand, jurisdiction is "the power to hear and determine cases of the
general class to which the proceedings in question belong." 170 Jurisdiction is a matter
of substantive law.171 Thus, an action may be filed only with the court or tribunal where
the Constitution or a statute says it can be brought. 172 Objections to jurisdiction cannot
be waived and may be brought at any stage of the proceedings, even on
appeal.173 When a case is filed with a court which has no jurisdiction over the action,
the court shall motu propriodismiss the case.174
On the other hand, venue is "the place of trial or geographical location in which an
action or proceeding should be brought." 175 In civil cases, venue is a matter of
procedural law.176 A partys objections to venue must be brought at the earliest
opportunity either in a motion to dismiss or in the answer; otherwise the objection
shall be deemed waived.177 When the venue of a civil action is improperly laid, the
court cannot motu propriodismiss the case.178
The venue of an action depends on whether the action is a real or personal action.
Should the action affect title to or possession of real property, or interest therein, it is a
real action. The action should be filed in the proper court which has jurisdiction over
the area wherein the real property involved, or a portion thereof, is situated.179 If the
action is a personal action, the action shall be filed with the proper court where the
plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the
principal defendants resides, or in the case of a non-resident defendant where he
may be found, at the election of the plaintiff.180
The City was objecting to the venue of the action, not to the jurisdiction of the
Regional Trial Court of Pasay. In essence, the City was contending that the PEZAs
petition is a real action as it affects title to or possession of real property, and,
therefore, the PEZA should have filed the petition with the Regional Trial Court of
Lapu-Lapu City where the real properties are located. However, whatever objections
the City has against the venue of the PEZAs action for declaratory relief are already
deemed waived. Objections to venue must be raised at the earliest possible
opportunity.181 The City did not file a motion to dismiss the petition on the ground that
the venue was improperly laid. Neither did the City raise this objection in its answer.
In any event, the law sought to be judicially interpreted in this case had already been
breached. The Regional Trial Court of Pasay, therefore, had no jurisdiction over the
PEZAs petition for declaratory relief against the City.

III.
jurisdiction
certiorari

Because of the longer period to file a petition for certiorari, some litigants attempt to
file petitions for certiorari as substitutes for lost appeals by certiorari. However, Rule
65 is clear that a petition for certiorari will not prosper if appeal is available. Appealis
the proper remedy even if the error, or one of the errors, raised is grave abuse of
discretion on the part of the court rendering judgment. 197 If appeal is available, a
petition for certiorari cannot be filed.

Appeal is the remedy "to obtain a reversal or modification of a judgment on the

merits."182 A judgment on the merits is one which "determines the rights and liabilities
of the parties based on the disclosed facts, irrespective of the formal, technical or
dilatory objections."183 It is not even necessary that the case proceeded to trial.184 So
long as the "judgment is general"185 and "the parties had a full legal opportunity to be
heard on their respective claims and contentions,"186 the judgment is on the merits.

In this case, the trial courts decision dated January 31, 2007 is a judgment on the
merits. Based on the facts disclosed by the parties, the trial court declared the PEZA
liable to the Province of Bataan for real property taxes. The PEZAs proper remedy
against the trial courts decision, therefore, is appeal.

On the other hand, certiorari is a special civil action filed to annul or modify a
proceeding of a tribunal, board, or officer exercising judicial or quasi-judicial
functions.187 Certiorari, which in Latin means "to be more fully informed," 188 was
originally a remedy in the common law. This court discussed the history of the remedy
of certiorari in Spouses Delos Santos v. Metropolitan Bank and Trust Company:189

Since the PEZA filed a petition for certiorari against the trial courts decision, it availed
itself of the wrong remedy. As the Province of Bataan contended, the trial courts
decision dated January 31, 2007 "is only an error of judgment appealable to the
higher level court and may not be corrected by filing a petition for certiorari." 198 That
the trial court judge allegedly committed grave abuse of discretion does not make the
petition for certiorari the correct remedy. The PEZA should haveraised this ground in
an appeal filed within 15 days from notice of the assailed resolution.

The
Court
of
Appeals
had
over
the
PEZAs
petition
against the Province of Bataan

no
for

In the common law, from which the remedy of certiorari evolved, the writ of certiorari
was issued out of Chancery, or the Kings Bench, commanding agents or officers of
the inferior courts to return the record of a cause pending before them, so as to give
the party more sure and speedy justice, for the writ would enable the superior court to
determine froman inspection of the record whether the inferior courts judgment was
rendered without authority. The errors were of such a nature that, if allowed to stand,
they would result in a substantial injury to the petitioner to whom no other remedy was
available. If the inferior court acted without authority, the record was then revised and
corrected in matters of law. The writ of certiorari was limited to cases in which the
inferior court was said to be exceeding its jurisdiction or was not proceeding
according to essential requirements of law and would lie only to review judicial or
quasi-judicial acts.190
In our jurisdiction, the term "certiorari" is used in two ways. An appeal before this
court raising pure questions of law is commenced by filing a petition for reviewon
certiorari under Rule 45 of the Rules of Court. An appeal by certiorari, which
continues the proceedings commenced before the lower courts,191 is filed to reverse
or modify judgments or final orders.192 Under the Rules, an appeal by certiorarimust
be filed within 15 days from notice of the judgment or final order, or of the denial of
the appellants motion for new trial or reconsideration.193
A petition for certiorari under Rule 65, on the other hand, is an independent and
original action filed to set aside proceedings conducted without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction.194 Under the Rules, a petition for certiorari may only be filed if there is no
appeal or any plain, speedy, or adequate remedy in the ordinary course of law. 195 The
petition must be filed within 60 days from notice of the judgment, order, or
resolution.196

This court, "in the liberal spirit pervading the Rules of Court and in the interest of
substantial justice,"199 has treated petitions for certiorari as an appeal: "(1) if the
petition for certiorari was filed within the reglementary period within which to file a
petition for review on certiorari; (2) when errors of judgment are averred; and (3)
when there is sufficient reason to justify the relaxation of the rules." 200 Considering
that "the nature of an action is determined by the allegationsof the complaint or the
petition and the character of the relief sought," 201 a petition which "actually avers
errors of judgment rather than errors than that of jurisdiction" 202 may be considered a
petition for review.
However, suspending the application of the Rules has its disadvantages. Relaxing
procedural rules may reduce the "effective enforcement of substantive
rights,"203 leading to "arbitrariness, caprice, despotism, or whimsicality in the
settlement of disputes."204 Therefore, for this court to suspend the application of the
Rules, the accomplishment of substantial justice must outweigh the importance of
predictability of court procedures.
The PEZAs petition for certiorari may be treated as an appeal. First, the petition for
certiorari was filed withinthe 15-day reglementary period for filing an appeal. The
PEZA filed its petition for certiorari before the Court of Appeals on October 15,
2007,205 which was 12 days from October 3, 2007206 when the PEZA had notice of the
trial courts order denying the motion for reconsideration.
Second, the petition for certiorari raised errors of judgment. The PEZA argued that the
trial court erred in ruling that it is not exempt from payment of real property taxes
given Section 21 of Presidential Decree No. 66 and Sections 11 and 51 of the Special
Economic Zone Act of 1995.207

Third, there is sufficient reason to relax the rules given the importance of the
substantive issue presented in this case.
However, the PEZAs petition for certiorari was filed before the wrong court. The
PEZA should have filed its petition before the Court of Tax Appeals.
The Court of Tax Appeals has the exclusive appellate jurisdiction over local tax cases
decided by Regional Trial Courts. Section 7, paragraph (a)(3) of Republic Act No.
1125, as amended by Republic Act No. 9282, provides:
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax
cases originally decided or resolved by them in the exercise of their original
or appellate jurisdiction[.]
The local tax cases referred to in Section 7, paragraph (a)(3) of Republic Act No.
1125, as amended, include cases involving real property taxes. Real property taxation
is governed by Book II of the Local Government Code on "Local Taxation and Fiscal
Matters." Real property taxes are collected by the Local Treasurer, 208 not by the
Bureau of Internal Revenue in charge of collecting national internal revenue taxes,
fees, and charges.209
Section 7, paragraph (a)(5) of Republic Act No. 1125, as amended by Republic Act
No. 9282, separately provides for the exclusive appellate jurisdiction of the Court of
Tax Appeals over decisions of the Central Board of Assessment Appeals involving the
assessment or collection of real property taxes:
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
5. Decisions of the Central Board of Assessment Appeals in the exercise of its
appellate jurisdiction over cases involving the assessment and taxation of real
property originally decided by the provincial or city board of assessment appeals[.]
This separate provision, nevertheless, does not bar the Court of Tax Appeals from
taking cognizance of trial court decisions involving the collection of real property tax
cases. Sections 256210 and 266211 of the Local Government Code expressly allow
localgovernment units to file "in any court of competent jurisdiction" civil actions to
collect basic real property taxes. Should the trial court rule against them, local

government units cannot be barred from appealing before the Court of Tax Appeals
the "highly specialized body specifically created for the purpose of reviewing tax
cases."212
We have also ruled that the Court of Tax Appeals, not the Court of Appeals, has the
exclusive original jurisdiction over petitions for certiorari assailing interlocutory orders
issued by Regional Trial Courts in a local tax case. We explained in The City of
Manila v. Hon. Grecia-Cuerdo213 that while the Court of Tax Appeals has no express
grant of power to issue writs of certiorari under Republic Act No. 1125, 214 as amended,
the tax courts judicial power as defined in the Constitution 215 includes the power to
determine "whether or not there has been grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of the [Regional Trial Court] in issuing an
interlocutory order of jurisdiction in cases falling within the exclusive appellate
jurisdiction of the tax court."216 We further elaborated:
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 reasonably be
assumed that the law intended to transfer also such power as is deemed necessary, if
not indispensable, in aid of such appellate jurisdiction. There is no perceivable reason
why the transfer should only be considered as partial, not total.
....
If this Court were to sustain petitioners' contention that jurisdiction over their certiorari
petition lies with the CA, this Court would be confirming the exercise by two judicial
bodies, the CA and the CTA, of jurisdiction over basically the same subject matter
precisely the split-jurisdiction situation which is anathema to the orderly administration
of justice.The Court cannot accept that such was the legislative motive, especially
considering that the law expressly confers on the CTA, the tribunal with the
specialized competence over tax and tariff matters, the role of judicial review over
local tax cases without mention of any other court that may exercise such power.
Thus, the Court agrees with the ruling of the CA that since appellate jurisdiction over
private respondents' complaint for tax refund is vested in the CTA, it follows that a
petition for certiorari seeking nullification of an interlocutory order issued in the said
case should, likewise, be filed with the same court. To rule otherwise would lead to an
absurd situation where one court decides an appeal in the main case while another
court rules on an incident in the very same case.
Stated differently, it would be somewhat incongruent with the pronounced judicial
abhorrence to split jurisdiction to conclude that the intention of the law is to divide the
authority over a local tax case filed with the RTC by giving to the CA or this Court
jurisdiction to issue a writ of certiorari against interlocutory orders of the RTC but
giving to the CTA the jurisdiction over the appeal from the decision of the trial court in
the same case. It is more in consonance with logic and legal soundness to conclude
that the grant of appellate jurisdiction to the CTA over tax cases filed in and decided
by the RTC carries withit the power to issue a writ of certiorari when necessary in aid
of such appellate jurisdiction. The supervisory power or jurisdiction of the CTA to
issue a writ of certiorari in aid of its appellate jurisdiction should co-exist with, and be
a complement to, its appellate jurisdiction to review, by appeal, the final orders and

decisionsof the RTC, in order to have complete supervision over the acts of the
latter.217(Citations omitted)
In this case, the petition for injunction filed before the Regional Trial Court of Pasay
was a local tax case originally decided by the trial court in its original jurisdiction.
Since the PEZA assailed a judgment, not an interlocutory order, of the Regional Trial
Court, the PEZAs proper remedy was an appeal to the Court of Tax Appeals.
Considering that the appellate jurisdiction of the Court of Tax Appeals is to the
exclusion of all other courts, the Court of Appeals had no jurisdiction to take
cognizance of the PEZAs petition. The Court of Appeals acted without jurisdiction in
rendering the decision in CA-G.R. SP No. 100984. Its decision in CA-G.R. SP No.
100984 is void.218
The filing of appeal in the wrong court does not toll the period to appeal.
Consequently, the decision of the Regional Trial Court, Branch 115, Pasay City,
became final and executory after the lapse of the 15th day from the PEZAs receipt of
the trial courts decision.219 The denial of the petition for injunction became final and
executory.
IV.
The
remedy
stage
in
is
enforcing
property taxes

of
which
its

taxpayer
depends
on
the
local
government
authority
to
impose

the
unit
real

The proper remedy of a taxpayer depends on the stage in which the local government
unit is enforcing its authority to collect real property taxes. For the guidance of the
members of the bench and the bar, we reiterate the taxpayers remedies against the
erroneous or illegal assessment of real property taxes.
Exhaustion of administrative remedies under the Local Government Code is
necessary in cases of erroneous assessments where the correctness of the amount
assessed is assailed. The taxpayer must first pay the tax then file a protest with the
Local Treasurer within 30 days from date of payment of tax. 220 If protest is denied or
upon the lapse of the 60-day period to decide the protest, the taxpayer may appeal to
the Local Board of Assessment Appeals within 60 days from the denial of the protest
or the lapse of the 60-day period to decide the protest.221The Local Board of
Assessment Appeals has 120 days to decide the appeal.222
If the taxpayer is unsatisfied withthe Local Boards decision, the taxpayer may appeal
before the Central Board of Assessment Appeals within 30 days from receipt of the
Local Boards decision.223
The decision of the Central Board of Assessment Appeals is appealable before the
Court of Tax Appeals En Banc.224 The appeal before the Court of Tax Appeals shall be
filed following the procedure under Rule 43 of the Rules of Court.225

The Court of Tax Appeals decision may then be appealed before this court through a
petition for review on certiorari under Rule 45 of the Rules of Court raising pure
questions of law.226
In case of an illegal assessment where the assessment was issued without authority,
exhaustion of administrative remedies is not necessary and the taxpayer may directly
resort to judicial action.227 The taxpayer shall file a complaint for injunction before the
Regional Trial Court228 to enjoin the local government unit from collecting real property
taxes.
The party unsatisfied with the decision of the Regional Trial Court shall file an appeal,
not a petition for certiorari, before the Court of Tax Appeals, the complaint being a
local tax case decided by the Regional Trial Court. 229 The appeal shall be filed within
fifteen (15) days from notice of the trial courts decision.
The Court of Tax Appeals decision may then be appealed before this court through a
petition for review on certiorari under Rule 45 of the Rules of Court raising pure
questions of law.230
In case the local government unit has issued a notice of delinquency, the taxpayer
may file a complaint for injunction to enjoin the impending sale of the real property at
public auction. In case the local government unit has already sold the property at
public auction, the taxpayer must first deposit with the court the amount for which the
real property was sold, together with interest of 2% per month from the date ofsale to
the time of the institution of action. The taxpayer may then file a complaint to assail
the validity of the public auction.231 The decisions of the Regional Trial Court in these
cases shall be appealable before the Court of Tax Appeals, 232 and the latters
decisions appealable before this court through a petition for review on certiorari under
Rule 45 of the Rules of Court.233
V.
The
PEZA
real property taxes

is

exempt

from

payment

of

The jurisdictional errors in this case render these consolidated petitions moot. We do
not review void decisions rendered without jurisdiction.
However, the PEZA alleged that several local government units, including the City of
Baguio and the Province of Cavite, have issued their respective real property tax
assessments against the PEZA. Other local government units will likely follow suit,
and either the PEZA or the local government units taxing the PEZA may file their
respective actions against each other.
In the interest of judicial economy234 and avoidance of conflicting decisions involving
the same issues,235 we resolve the substantive issue of whether the PEZA is exempt
from payment of real property taxes.

Real property taxes are annual taxes levied on real property such as lands, buildings,
machinery, and other improvements not otherwise specifically exempted under the
Local Government Code.236 Real property taxes are ad valorem, with the amount
charged based on a fixed proportion of the value of the property.237 Under the law,
provinces, cities, and municipalities within the Metropolitan Manila Area have the
power to levy real property taxes within their respective territories.238
The general rule is that real properties are subject to real property taxes. This is true
especially since the Local Government Code has withdrawn exemptions from real
property taxes of all persons, whether natural or juridical:
SEC. 234. Exemptions from Real Property Tax. The following are exempted from
payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any of its
political subdivisions except when the beneficial use thereof has been
granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant
thereto, mosques, nonprofit or religious cemeteries and all lands, buildings,
and improvements actually, directly, and exclusively used for religious,
charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively
used by local water districts and government-owned or controlled
corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided
under R.A. No. 6938; and
(e) Machinery and equipment usedfor pollution control and environmental
protection.
Except as provided herein, any exemption from payment of real property taxes
previously granted to, or presently enjoyed by, all persons, whether natural or
juridical, including government-owned or -controlled corporations are hereby
withdrawn upon the effectivity of this Code. (Emphasis supplied)
The person liable for real property taxes is the "taxable person who had actual or
beneficial use and possession [of the real property for the taxable period,] whether or
not [the person owned the property for the period he or she is being taxed]."239
The exceptions to the rule are provided in the Local Government Code. Under
Section 133(o), local government units have no power to levy taxes of any kind on the
national government, its agencies and instrumentalities and local government units:

SEC. 133. Common Limitations on the Taxing Powers of Local Government Units.
Unless otherwise provided herein, the exercise of taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the following:
....
(o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities and local government units.
Specifically on real property taxes, Section 234 enumerates the persons and real
property exempt from real property taxes:
SEC. 234. Exemptions from Real Property Tax. The following are exempted from
payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any of its
political subdivisions except when the beneficial use thereof has been
granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant
thereto, mosques, nonprofitor religious cemeteries and all lands, buildings,
and improvements actually, directly, and exclusively used for religious,
charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively
used by local water districts and government-owned or controlled
corporations engaged in the supply and distribution of water and/or
generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided
under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and environmental
protection.
Except as provided herein, any exemption from payment of real property tax
previously granted to, or presently enjoyed by, all persons, whether natural or
juridical, including all government-owned or -controlled corporations are hereby
withdrawn upon the effectivity of this Code. (Emphasis supplied)
For persons granted tax exemptions or incentives before the effectivity of the Local
Government Code, Section 193 withdrew these tax exemption privileges. These
persons consist of both natural and juridical persons, including government-owned or
controlled corporations:
SEC. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in
this code, tax exemptions or incentives granted to or presently enjoyed by all persons,

whether natural or juridical, including government-owned or controlled corporations,

except local water districts, cooperatives duly registered under R.A. 6938, non stock
and non profit hospitals and educational institutions, are hereby withdrawn upon
effectivity of this Code.
As discussed, Section 234 withdrew all tax privileges with respect to real property
taxes. Nevertheless, local government units may grant tax exemptions under such
terms and conditions asthey may deem necessary:
SEC. 192. Authority to Grant Tax Exemption Privileges. Local government units
may, through ordinances duly approved, grant tax exemptions, incentives or reliefs
under such terms and conditions as they may deem necessary.
In Mactan Cebu International Airport Authority v. Hon. Marcos, 240 this court classified
the exemptions from real property taxes into ownership, character, and usage
exemptions. Ownership exemptions are exemptions based on the ownership of the
real property. The exemptions of real property owned by the Republic of the
Philippines, provinces, cities, municipalities, barangays, and registered cooperatives
fall under this classification.241 Character exemptions are exemptions based on the
character of the real property. Thus, no real property taxes may be levied on
charitable institutions, houses and temples of prayer like churches, parsonages, or
convents appurtenant thereto, mosques, and non profitor religious cemeteries.242
Usage exemptions are exemptions based on the use of the real property. Thus, no
real property taxes may be levied on real property such as: (1) lands and buildings
actually, directly, and exclusively used for religious, charitable or educational purpose;
(2) machineries and equipment actually, directly and exclusively used by local water
districts or by government-owned or controlled corporations engaged in the supply
and distribution of water and/or generation and transmission of electric power; and (3)
machinery and equipment used for pollution control and environmental protection.243
Persons may likewise be exempt from payment of real properties if their charters,
which were enacted or reenacted after the effectivity of the Local Government Code,
exempt them payment of real property taxes.244
V.
(A) The PEZA is an instrumentality of the national government
An instrumentality is "any agency of the National Government, not integrated within
the department framework, vested with special functions or jurisdiction by law,
endowed with some if not all corporate powers, administering special funds, and
enjoying operational autonomy, usually through a charter."245
Examples of instrumentalities of the national government are the Manila International
Airport Authority,246 the Philippine Fisheries Development Authority,247 the Government
Service Insurance System,248 and the Philippine Reclamation Authority.249 These
entities are not integrated within the department framework but are nevertheless

vested with special functions to carry out a declared policy of the national
government.
Similarly, the PEZA is an instrumentality of the national government. It is not
integrated within the department framework but is an agency attached to the
Department of Trade and Industry.250 Book IV, Chapter 7, Section 38(3)(a) of the
Administrative Code of 1987 defines "attachment": SEC. 38. Definition of
Administrative Relationship. Unless otherwise expressly stated in the Code or in
other laws defining the special relationships of particular agencies, administrative
relationships shall be categorized and defined as follows:
....
(3) Attachment. (a) This refers to the lateral relationship between the department or
its equivalent and the attached agency or corporation for purposes of policy and
program coordination. The coordination may be accomplished by having the
department represented in the governing board of the attached agency or
corporation, either as chairman or as a member, with or without voting rights, if this is
permitted by the charter; having the attached corporation or agency comply with a
system of periodic reporting which shall reflect the progress of the programs and
projects; and having the department or its equivalent provide general policies through
its representative in the board, which shall serve as the framework for the internal
policies of the attached corporation or agency[.]
Attachment, which enjoys "a larger measure of independence" 251 compared with other
administrative relationships such as supervision and control, is further explained in
Beja, Sr. v. Court of Appeals:252
An attached agency has a larger measure of independence from the Department to
which it is attached than one which is under departmental supervision and control or
administrative supervision. This is borne out by the "lateral relationship" between the
Department and the attached agency. The attachment is merely for "policy and
program coordination." With respect to administrative matters, the independence of
an attached agency from Departmental control and supervision is further reinforced
by the fact that even an agency under a Departments administrative supervision is
free from Departmental interference with respect to appointments and other
personnel actions "in accordance with the decentralization of personnel functions"
under the Administrative Code of 1987. Moreover, the Administrative Code explicitly
provides that Chapter 8 of Book IV on supervision and control shall not apply to
chartered institutions attached to a Department.253
With the PEZA as an attached agency to the Department of Trade and Industry, the
13-person PEZA Board is chaired by the Department Secretary.254 Among the powers
and functions of the PEZA is its ability to coordinate with the Department of Trade and
Industry for policy and program formulation and implementation. 255 In strategizing and
prioritizing the development of special economic zones, the PEZA coordinates with
the Department of Trade and Industry.256

The PEZA also administers its own funds and operates autonomously, with the PEZA
Board formulating and approving the PEZAs annual budget.257 Appointments and
other personnel actions in the PEZA are also free from departmental interference,
with the PEZA Board having the exclusive and final authority to promote, transfer,
assign and reassign officers of the PEZA.258
As an instrumentality of the national government, the PEZA is vested with special
functions or jurisdiction by law. Congress created the PEZA to operate, administer,
manage and develop special economic zones in the Philippines.259 Special economic
zones are areas with highly developed or which have the potential to be developed
into agro-industrial, industrial tourist/recreational, commercial, banking, investment
and financial centers.260 By operating, administering, managing, and developing
special economic zones which attract investments and promote use of domestic
labor, the PEZA carries out the following policy of the Government: SECTION 2.
Declaration of Policy. It is the declared policy of the government to translate into
practical realities the following State policies and mandates in the 1987 Constitution,
namely:
(a) "The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments." (Sec. 20, Art. II)
(b) "The State shall promote the preferential use of Filipino labor, domestic
materials and locally produced goods, and adopt measures that help make
them competitive." (Sec. 12, Art. XII) In pursuance of these policies, the
government shall actively encourage, promote, induce and accelerate a
sound and balanced industrial, economic and social development of the
country in order to provide jobs to the people especially those in the rural
areas, increase their productivity and their individual and family income, and
thereby improve the level and quality of their living condition through the
establishment, among others, of special economic zones in suitable and
strategic locations in the country and through measures that shall effectively
attract legitimate and productive foreign investments.261
Being an instrumentality of the national government, the PEZA cannot be taxed by
local government units.
Although a body corporate vested with some corporate powers, 262 the PEZA is not a
government-owned or controlled corporation taxable for real property taxes.
Section 2(13) of the Introductory Provisions of the Administrative Code of 1987
defines the term "government-owned or controlled corporation":
SEC. 2. General Terms Defined. Unless the specific words of the text, or the context
as a whole, or a particular statute, shall require a different meaning:
....

(13) Government-owned or controlled corporation refers to any agency organized as

a stock or non-stock corporation, vested with functions relating to public needs
whether governmental or proprietary in nature, and owned by the Government directly
or through its instrumentalities either wholly, or, where applicable as in the case of
stock corporations, to the extent of at least fifty-one (51) per cent of its capital stock:
Provided, That government owned or controlled corporations may be further
categorized by the Department of the Budget, the Civil Service Commission, and the
Commission on Audit for purposes of the exercise and discharge of their respective
powers, functions and responsibilities with respect to such corporations.
Government entities are created by law, specifically, by the Constitution or by statute.
In the case of government-owned or controlled corporations, they are incorporated by
virtue of special charters263 to participate in the market for special reasons which may
be related to dysfunctions or inefficiencies of the market structure. This is to adjust
reality as against the concept of full competition where all market players are price
takers. Thus, under the Constitution, government-owned or controlled corporations
are created in the interest of the common good and should satisfy the test of
economic viability.264 Article XII, Section 16 of the Constitution provides:
Section 16. The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Government-owned or controlled
corporations may be created or established by special charters in the interest of the
common good and subject to the test of economic viability.
Economic viability is "the capacity to function efficiently in business." 265 To be
economically viable, the entity "should not go into activities which the private sector
can do better."266
To be considered a government-owned or controlled corporation, the entity must have
been organized as a stock or non-stock corporation.267
Government instrumentalities, on the other hand, are also created by law but partake
of sovereign functions. When a government entity performs sovereign functions, it
need not meet the test of economic viability. In Manila International Airport Authority v.
Court of Appeals,268 this court explained:
In contrast, government instrumentalities vested with corporate powers and
performing governmental orpublic functions need not meet the test of economic
viability. These instrumentalities perform essential public services for the common
good, services that every modern State must provide its citizens. These
instrumentalities need not be economically viable since the government may even
subsidize their entire operations. These instrumentalities are not the "governmentowned or controlled corporations" referred to in Section 16, Article XII of the 1987
Constitution.
Thus, the Constitution imposes no limitation when the legislature creates government
instrumentalities vested with corporate powers but performing essential governmental
or public functions. Congress has plenary authority to create government
instrumentalities vested with corporate powers provided these instrumentalities

perform essential government functions or public services. However, when the

legislature creates through special charters corporations that perform economic or
commercial activities, such entities known as "government-owned or controlled
corporations" must meetthe test of economic viability because they compete in the
market place.
....
Commissioner Blas F. Ople, proponent of the test of economic viability, explained to
the Constitutional Commission the purpose of this test, as follows:
MR. OPLE: Madam President, the reason for this concern is really that when the
government creates a corporation, there is a sense in which this corporation becomes
exempt from the test of economic performance. We know what happened in the past.
If a government corporation loses, then it makes its claim upon the taxpayers' money
through new equity infusions from the government and what is always invoked is the
common good. That is the reason why this year, out of a budget of P115 billion for the
entire government, about P28 billion of this will go into equity infusions to support a
few government financial institutions. And this is all taxpayers' money which could
have been relocated to agrarian reform, to social services like health and education,
to augment the salaries of grossly underpaid public employees. And yet this is all
going down the drain.

divided into shares.272 The PEZA also has no members who shall share in the PEZAs
profits.
The PEZA does not compete with other economic zone authorities in the country. The
government may even subsidize the PEZAs operations. Under Section 47 of the
Special Economic Zone Act of 1995, "any sum necessary to augment [the PEZAs]
capital outlay shall be included in the General Appropriations Act to be treated as an
equity of the national government."273
The PEZA, therefore, need not be economically viable. It is not a government-owned
or controlled corporation liable for real property taxes.
V. (B)
The PEZA assumed the non-profit character, including the tax exempt status, of the
EPZA
The PEZAs predecessor, the EPZA, was declared non-profit in character with all its
revenues devoted for its development, improvement, and maintenance. Consistent
with this non-profit character, the EPZA was explicitly declared exempt from real
property taxes under its charter. Section 21 of Presidential Decree No. 66 provides:

Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the
"common good," this becomes a restraint on future enthusiasts for state capitalism to
excuse themselves from the responsibility of meeting the market test so that they
become viable. And so, Madam President, I reiterate, for the committee's
consideration and I am glad that I am joined in this proposal by Commissioner Foz,
the insertion of the standard of "ECONOMIC VIABILITY OR THE ECONOMIC TEST,"
together with the common good.

Section 21. Non-profit Character of the Authority; Exemption from Taxes. The
Authority shall be non-profit and shall devote and use all its returns from its capital
investment, as well as excess revenues from its operations, for the development,
improvement and maintenance and other related expenditures of the Authority to pay
its indebtedness and obligations and in furtherance and effective implementation of
the policy enunciated in Section 1 of this Decree. In consonance therewith, the
Authority is hereby declared exempt:

....

....

Clearly, the test of economic viability does not apply to government entities vested
with corporate powers and performing essential public services. The State is
obligated to render essential public services regardless of the economic viability of
providing such service. The noneconomic viability of rendering such essential public
service does not excuse the State from withholding such essential services from the
public.269 (Emphases and citations omitted)

(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes
and licenses to be paid to the National Government, its provinces, cities,
municipalities and other government agencies and instrumentalities[.]

The law created the PEZAs charter. Under the Special Economic Zone Act of 1995,
the PEZA was established primarily to perform the governmental function of
operating,administering, managing, and developing special economic zones to attract
investments and provide opportunities for preferential use of Filipino labor.

Nevertheless, we rule that the PEZA is exempt from real property taxes by virtue of its
charter. A provision in the Special Economic Zone Act of 1995 explicitly exempting the
PEZA is unnecessary. The PEZA assumed the real property exemption of the EPZA
under Presidential Decree No. 66.

Under its charter, the PEZA was created a body corporate endowed with some
corporate powers. However, it was not organized as a stock 270 or nonstock271 corporation. Nothing in the PEZAs charter provides that the PEZAs capital is

Section 11 of the Special Economic Zone Act of 1995 mandated the EPZA "to evolve
into the PEZA in accordance with the guidelines and regulations set forth in an
executive order issued for this purpose." President Ramos then issued Executive
Order No. 282 in 1995, ordering the PEZA to assume the EPZAs powers, functions,

The Special Economic Zone Act of 1995, on the other hand, does not specifically
exempt the PEZA from payment of real property taxes.

and responsibilities under Presidential Decree No. 66 not inconsistent with the
Special Economic Zone Act of 1995:

(e) The availability of skilled, semi-skilled and non-skilled trainable labor

force in and around the ECOZONE;

SECTION 1. Assumption of EPZAs Powers and Functions by PEZA. All the powers,
functions and responsibilities of EPZA as provided under its Charter, Presidential
Decree No. 66, as amended, insofar as they are not inconsistent with the
powers,functions and responsibilities of the PEZA, as mandated under Republic Act
No. 7916, shall hereafter be assumed and exercised by the PEZA. Henceforth, the
EPZA shall be referred to as the PEZA.

(f) The area must have a significant incremental advantage over the existing
economic zones and its potential profitability can be established;

The following sections of the Special Economic Zone Act of 1995 provide for the
PEZAs powers,functions, and responsibilities:
SEC. 5. Establishment of ECOZONES. To ensure the viability and geographical
dispersal of ECOZONES through a system of prioritization, the following areas are
initially identified as ECOZONES, subject to the criteria specified in Section 6:
....
The metes and bounds of each ECOZONE are to be delineated and more particularly
described in a proclamation to be issued by the President of the Philippines, upon the
recommendation of the Philippine Economic Zone Authority (PEZA), which shall be
established under this Act, in coordination with the municipal and / or city council,
National Land Use Coordinating Committee and / or the Regional Land Use
Committee.
SEC. 6. Criteria for the Establishment of Other ECOZONES. In addition to the
ECOZONES identified in Section 5 of this Act, other areas may be established as
ECOZONES in a proclamation to be issued by the President of the Philippines
subject to the evaluation and recommendation of the PEZA, based on a detailed
feasibility and engineering study which must conform to the following criteria:
(a) The proposed area must be identified as a regional growth center in the
Medium-Term Philippine Development Plan or by the Regional Development
Council;
(b) The existence of required infrastructure in the proposed ECOZONE, such
as roads, railways, telephones, ports, airports, etc., and the suitability and
capacity of the proposed site to absorb such improvements;
(c) The availability of water source and electric power supply for use of the
ECOZONE;
(d) The extent of vacant lands available for industrial and commercial
development and future expansion of the ECOZONE as well as of lands
adjacent to the ECOZONE available for development of residential areas for
the ECOZONE workers;

(g) The area must be strategically located; and

(h) The area must be situated where controls can easily be established to
curtail smuggling activities.
Other areas which do not meet the foregoing criteria may be established as
ECOZONES: Provided, That the said area shall be developed only through local
government and/or private sector initiative under any of the schemes allowed in
Republic Act No. 6957 (the build-operate-transfer law), and without any financial
exposure on the part of the national government: Provided, further, That the area can
be easily secured to curtail smuggling activities: Provided, finally, That after five (5)
years the area must have attained a substantial degree of development, the
indicators of which shall be formulated by the PEZA.
SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial /
Trading, Tourist, Investment and Financial Community. - Within the framework of the
Constitution, the interest of national sovereignty and territorial integrity of the
Republic, ECOZONE shall be developed, as much as possible, into a decentralized,
self-reliant and self-sustaining industrial, commercial/trading, agro-industrial, tourist,
banking, financial and investment center with minimum government intervention.
Each ECOZONE shall be provided with transportation, telecommunications, and other
facilities needed to generate linkage with industries and employment opportunitiesfor
its own inhabitants and those of nearby towns and cities.
The ECOZONE shall administer itself on economic, financial, industrial, tourism
development and such other matters within the exclusive competence of the national
government.
The ECOZONE may establish mutually beneficial economic relations with other
entities within the country, or, subject to the administrative guidance of the
Department of Foreign Affairs and/or the Department of Trade and Industry, with
foreign entities or enterprises.
Foreign citizens and companies owned by non-Filipinos in whatever proportion may
set up enterprises in the ECOZONE, either by themselves or in joint venture with
Filipinos in any sector of industry, international trade and commerce within the
ECOZONE. Their assets, profits and other legitimate interests shall be protected:
Provided, That the ECOZONE through the PEZA may require a minimum investment
for any ECOZONE enterprises in freely convertible currencies: Provided, further, That
the new investment shall fall under the priorities, thrusts and limits provided for in the
Act.

SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory.

The ECOZONE shall be managed and operated by the PEZA as separate customs
territory.
The PEZA is hereby vested with the authority to issue certificate of origin for products
manufactured or processed in each ECOZONE in accordance with the prevailing
rules or origin, and the pertinent regulations of the Department of Trade and Industry
and/or the Department of Finance.
SEC. 9. Defense and Security. The defense of the ECOZONE and the security of its
perimeter fence shall be the responsibility of the national government in coordination
with the PEZA. Military forces sent by the national government for the purpose of
defense shall not interfere in the internal affairs of any of the ECOZONE and
expenditure for these military forces shall be borne by the national government. The
PEZA may provide and establish the ECOZONES internal security and firefighting
forces.
SEC. 10. Immigration. Any investor within the ECOZONE whose initial investment
shall not be less than One Hundred Fifty Thousand Dollars ($150,000.00), his/her
spouse and dependent children under twenty-one (21) years of age shall be granted
permanent resident status within the ECOZONE. They shall have freedom of ingress
and egress to and from the ECOZONE without any need of special authorization from
the Bureau of Immigration.
The PEZA shall issue working visas renewable every two (2) years to foreign
executives and other aliens, processing highly-technical skills which no Filipino within
the ECOZONE possesses, as certified by the Department of Labor and Employment.
The names of aliens granted permanent resident status and working visas by the
PEZA shall be reported to the Bureau of Immigration within thirty (30) days after
issuance thereof.
SEC. 13. General Powers and Functions of the Authority. The PEZA shall have the
following powers and functions:
(a) To operate, administer, manage and develop the ECOZONE according to
the principles and provisions set forth in this Act;
(b) To register, regulate and supervise the enterprises in the ECOZONE in
an efficient and decentralized manner;
(c) To coordinate with local government units and exercise general
supervision over the development, plans, activities and operations of the
ECOZONES, industrial estates, export processing zones, free trade zones,
and the like;
(d) In coordination with local government units concerned and appropriate
agencies, to construct,acquire, own, lease, operate and maintain on its own
or through contract, franchise, license, bulk purchase from the private sector
and build-operate-transfer scheme or joint venture, adequate facilities and

infrastructure, such as light and power systems, water supply and

distribution systems, telecommunication and transportation, buildings,
structures, warehouses, roads, bridges, ports and other facilities for the
operation and development of the ECOZONE;
(e) To create, operate and/or contractto operate such agencies and
functional units or offices of the authority as it may deem necessary;
(f) To adopt, alter and use a corporate seal; make contracts, lease, own or
otherwise dispose of personal or real property; sue and be sued; and
otherwise carry out its duties and functions as provided for in this Act;
(g) To coordinate the formulation and preparation of the development plans
of the different entities mentioned above;
(h) To coordinate with the National Economic Development Authority
(NEDA), the Department of Trade and Industry (DTI), the Department of
Science and Technology (DOST), and the local government units and
appropriate government agencies for policy and program formulation and
implementation; and
(i) To monitor and evaluate the development and requirements of entities in
subsection (a) and recommend to the local government units or other
appropriate authorities the location, incentives, basic services, utilities and
infrastructure required or to be made available for said entities.
SEC. 17. Investigation and Inquiries. Upon a written formal complaint made under
oath, which on its face provides reasonable basis to believe that some anomaly or
irregularity might have been committed, the PEZA or the administrator of the
ECOZONE concerned, shall have the power to inquire into the conduct of firms or
employees of the ECOZONE and to conduct investigations, and for that purpose may
subpoena witnesses, administer oaths, and compel the production of books, papers,
and other evidences: Provided, That to arrive at the truth, the investigator(s) may
grant immunity from prosecution to any person whose testimony or whose
possessions of documents or other evidence is necessary or convenient to determine
the truth in any investigation conducted by him or under the authority of the PEZA or
the administrator of the ECOZONE concerned.
SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority of
development of each ECOZONE established pursuant to this Act shall be formulated
by the PEZA, in coordination with the Department of Trade and Industry and the
National Economic and Development Authority; Provided, That such development
strategy is consistent with the priorities of the national government as outlined in the
medium-term Philippine development plan. It shall be the policy of the government
and the PEZA to encourage and provide Incentives and facilitate private sector
participation in the construction and operation of public utilities and infrastructure in
the ECOZONE, using any of the schemes allowed in Republic Act No. 6957 (the
build-operate-transfer law).

SEC. 22. Survey of Resources. The PEZA shall, in coordination with appropriate
authorities and neighboring cities and municipalities, immediately conduct a survey of
the physical, natural assets and potentialities of the ECOZONE areas under its
jurisdiction.
SEC. 26. Domestic Sales. Goods manufactured by an ECOZONE enterprise shall
be made available for immediate retail sales in the domestic market, subject to
payment of corresponding taxes on the raw materials and other regulations that may
be adopted by the Board of the PEZA. However, in order to protect the domestic
industry, there shall be a negative list of Industries that willbe drawn up by the PEZA.
Enterprises engaged in the industries included in the negative list shall not be allowed
to sell their products locally. Said negative list shall be regularly updated by the PEZA.
The PEZA, in coordination with the Department of Trade and Industry and the Bureau
of Customs, shall jointly issue the necessary implementing rules and guidelines for
the effective Implementation of this section.
SEC. 29. Eminent Domain. The areas comprising an ECOZONE may be expanded
or reduced when necessary. For this purpose, the government shall have the power
to acquire, either by purchase, negotiation or condemnation proceedings, any private
lands within or adjacent to the ECOZONE for:
a. Consolidation of lands for zone development purposes;
b. Acquisition of right of way to the ECOZONE; and
c. The protection of watershed areas and natural assets valuable to the
prosperity of the ECOZONE.
If in the establishment of a publicly-owned ECOZONE, any person or group of
persons who has been occupying a parcel of land within the Zone has to be evicted,
the PEZA shall provide the person or group of persons concerned with proper
disturbance compensation: Provided, however, That in the case of displaced agrarian
reform beneficiaries, they shall be entitled to the benefits under the Comprehensive
Agrarian Reform Law, including but not limited to Section 36 of Republic Act No.
3844, in addition to a homelot in the relocation site and preferential employment in the
project being undertaken.

Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of the
ECOZONE, subject only to such reasonable requirement as may be prescribed by the
PEZA In coordination with the appropriate agencies of the national government.
SEC. 33. Protection of Environment. - The PEZA, in coordination with the appropriate
agencies, shall take concrete and appropriate steps and enact the proper measure for
the protection of the local environment.
SEC. 34. Termination of Business. - Investors In the ECOZONE who desire to
terminate business or operations shall comply with such requirements and
procedures which the PEZA shall set, particularly those relating to the clearing of
debts. The assets of the closed enterprise can be transferred and the funds con be
remitted out of the ECOZONE subject to the rules, guidelines and procedures
prescribed jointly by the Bangko Sentral ng Pilipinas, the Department of Finance and
the PEZA.
SEC. 35. Registration of Business Enterprises. - Business enterprises within a
designated ECOZONE shall register with the PEZA to avail of all incentives and
benefits provided for in this Act.
SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop center
for the purpose of facilitating the registration of new enterprises in the ECOZONE.
Thus, all appropriate government agencies that are Involved In registering, licensing
or issuing permits to investors shall assign their representatives to the ECOZONE to
attend to Investors requirements.
SEC. 39. Master Employment Contracts. - The PEZA, in coordination with the
Department of Tabor and Employment, shall prescribe a master employment contract
for all ECOZONE enterprise staff members and workers, the terms of which provide
salaries and benefits not less than those provided under this Act, the Philippine Labor
Code, as amended, and other relevant issuances of the national government.
SEC. 41. Migrant Worker. - The PEZA, in coordination with the Department of Labor
and Employment, shall promulgate appropriate measures and programs leading to
the expansion of the services of the ECOZONE to help the local governments of
nearby areas meet the needs of the migrant workers.

SEC. 32. Shipping and Shipping Register. Private shipping and related business
including private container terminals may operate freely in the ECOZONE, subject
only to such minimum reasonable regulations of local application which the PEZA
may prescribe.

SEC. 42. Incentive Scheme. - An additional deduction equivalent to one- half (1/2) of
the value of training expenses incurred in developing skilled or unskilled labor or for
managerial or other management development programs incurred by enterprises in
the ECOZONE can be deducted from the national government's share of three
percent (3%) as provided In Section 24.

The PEZA shall, in coordination with the Department of Transportation and

Communications, maintain a shipping register for each ECOZONE as a business
register of convenience for ocean-going vessels and issue related certification.

The PEZA, the Department of Labor and Employment, and the Department of
Finance shall jointly make a review of the incentive scheme provided In this section
every two (2) years or when circumstances so warrant.
SEC. 43. Relationship with the Regional Development Council. - The PEZA shall
determine the development goals for the ECOZONE within the framework of national

development plans, policies and goals, and the administrator shall, upon approval by
the PEZA Board, submit the ECOZONE plans, programs and projects to the regional
development council for inclusion in and as inputs to the overall regional development
plan.
SEC. 44. Relationship with the Local Government Units. - Except as herein provided,
the local government units comprising the ECOZONE shall retain their basic
autonomy and identity. The cities shall be governed by their respective charters and
the municipalities shall operate and function In accordance with Republic Act No.
7160, otherwise known as the Local Government Code of 1991.

Contrary to the PEZAs claim, however, Section 24 of the Special Economic Zone Act
of 1995 is not a basis for the PEZAs exemption. Section 24 of the Special Economic
Zone Act of 1995 provides:
Sec. 24. Exemption from National and Local Taxes. Except for real property taxes
on land owned by developers, no taxes, local and national, shall be imposed on
business establishments operating within the ECOZONE. In lieu thereof, five percent
(5%) of the gross income earned by all business enterprises within the
ECOZONEshall be paid and remitted as follows:
(a) Three percent (3%) to the National Government;

SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates. Privatelyowned industrial estates shall retain their autonomy and independence and shall be
monitored by the PEZA for the implementation of incentives.
SEC. 46. Transfer of Resources. - The relevant functions of the Board of Investments
over industrial estates and agri-export processing estates shall be transferred to the
PEZA. The resources of government owned Industrial estates and similar bodies
except the Bases Conversion Development Authority and those areas identified under
Republic Act No. 7227, are hereby transferred to the PEZA as the holding agency.
They are hereby detached from their mother agencies and attached to the PEZA for
policy, program and operational supervision.
The Boards of the affected government-owned industrial estates shall be phased out
and only the management level and an appropriate number of personnel shall be
retained.
Government personnel whose services are not retained by the PEZA or any
government office within the ECOZONE shall be entitled to separation pay and such
retirement and other benefits theyare entitled to under the laws then in force at the
time of their separation: Provided, That in no case shall the separation pay be less
than one and one-fourth (1 1/4) month of every year of service.
The non-profit character of the EPZA under Presidential Decree No. 66 is not
inconsistent with any of the powers, functions, and responsibilities of the PEZA. The
EPZAs non-profit character, including the EPZAs exemption from real property taxes,
must be deemed assumed by the PEZA.
In addition, the Local Government Code exempting instrumentalities of the national
government from real property taxes was already in force274 when the PEZAs charter
was enacted in 1995. It would have been redundant to provide for the PEZAs
exemption in its charter considering that the PEZA is already exempt by virtue of
Section 133(o) of the Local Government Code.
As for the EPZA, Commonwealth Act No. 470 or the Assessment Law was in force
when the EPZAs charter was enacted. Unlike the Local Government Code,
Commonwealth Act No. 470 does not contain a provision specifically exempting
instrumentalities of the national government from payment of real property taxes.275 It
was necessary to put an exempting provision in the EPZAs charter.

(b) Two percent (2%) which shall be directly remitted by the business
establishments to the treasurer's office of the municipality or city where the
enterprise is located. (Emphasis supplied)
Tax exemptions provided under Section 24 apply only to business establishments
operating within economic zones. Considering that the PEZA is not a business
establishment but an instrumentality performing governmental functions, Section 24 is
inapplicable to the PEZA. Also, contrary to the PEZAs claim, developers ofeconomic
zones, whether public or private developers, are liable for real property taxes on lands
they own. Section 24 does not distinguish between a public and private developer.
Thus, courts cannot distinguish.276 Unless the public developer is exempt under the
Local Government Code or under its charter enacted after the Local Government
Codes effectivity, the public developer must pay real property taxes on their land.
At any rate, the PEZA cannot be taxed for real property taxes even if it acts as a
developer or operator of special economic zones. The PEZA is an instrumentality of
the national government exempt from payment of real property taxes under Section
133(o) of the Local Government Code. As this court said in Manila International
Airport Authority, "there must be express language in the law empowering local
governments to tax national government instrumentalities. Any doubt whether such
power exists is resolved against local governments."277
V. (C)
Real properties under the PEZAs title are owned by the Republic of the Philippines
Under Section 234(a) of the LocalGovernment Code, real properties owned by the
Republic of the Philippines are exempt from real property taxes:
SEC. 234. Exemptions from Real Property Tax. The following are exempted from
payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political
subdivisions except when the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person[.]

Properties owned by the state are either property of public dominion or patrimonial
property. Article 420 of the Civil Code of the Philippines enumerates property of public
dominion:
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents,
ports and bridges constructed by the State, banks, shores, roadsteads, and
others of similar character;
(2) Those which belong to the State, without belonging for public use, and
are intended for some public service or for the development of the national
wealth.
Properties of public dominion are outside the commerce of man. These properties are
exempt from "levy, encumbrance or disposition through public or private sale." 278 As
this court explained in Manila International Airport Authority:

As for the Bataan Economic Zone, the law consistently characterized the property as
a port. Under Republic Act No. 5490, Congress declared Mariveles, Bataan "a
principal port of entry"285 to serve as site of a foreign trade zone where foreign and
domestic merchandise may be brought in without being subject to customs and
internal revenue laws and regulations of the Philippines.286
Section 4 of Republic Act No. 5490 provided that the foreign trade zone in Mariveles,
Bataan "shall at all times remain to be owned by the Government":
SEC. 4. Powers and Duties. The Foreign Trade Zone Authority shall have the
following powers and duties:
a. To fix and delimit the site of the Zone which at all times remain to be owned by the
Government, and which shall have a contiguous and adequate area with well defined
and policed boundaries, with adequate enclosures to segregate the Zone from the
customs territory for protection of revenues, together with suitable provisions for
ingress and egress of persons, conveyance, vessels and merchandise sufficient for
the purpose of this Act[.] (Emphasis supplied)

Properties of public dominion, being for public use, are not subject to levy,
encumbrance or disposition through public or private sale. Any encumbrance, levy on
execution or auction sale of any property of public dominion is void for being contrary
to public policy. Essential public services will stop if properties of public dominion are
subject to encumbrances, foreclosures and auction sale[.]279

The port in Mariveles, Bataan then became the Bataan Economic Zone under the
Special Economic Zone Act of 1995. 287 Republic Act No. 9728 then converted the
Bataan Economic Zone into the Freeport Area of Bataan.288

On the other hand, all other properties of the state that are not intended for public use
or are not intended for some public service or for the development of the national
wealth are patrimonial properties. Article 421 of the Civil Code of the Philippines
provides:

A port of entry, where imported goods are unloaded then introduced in the market for
public consumption, is considered property for public use. Thus, Article 420 of the
Civil Code classifies a port as property of public dominion. The Freeport Area of
Bataan, where the government allows tax and duty-free importation of goods, 289is
considered property of public dominion. The Freeport Area of Bataan is owned by the
state and cannot be taxed under Section 234(a) of the Local Government Code.

Art. 421. All other property of the State, which is not of the character stated in the
preceding article, is patrimonial property.
Patrimonial properties are also properties of the state, but the state may dispose of its
patrimonial property similar to private persons disposing of their property. Patrimonial
properties are within the commerce of man and are susceptible to prescription, unless
otherwise provided.280
In this case, the properties sought to be taxed are located in publicly owned economic
zones. These economic zones are property of public dominion. The City seeks to tax
properties located within the Mactan Economic Zone,281 the site of which was
reserved by President Marcos under Proclamation No. 1811, Series of 1979.
Reserved lands are lands of the public domain set aside for settlement or public use,
and for specific public purposes by virtue of a presidential proclamation.282 Reserved
lands are inalienable and outside the commerce of man,283 and remain property of the
Republic until withdrawn from publicuse either by law or presidential
proclamation.284 Since no law or presidential proclamation has been issued
withdrawing the site of the Mactan Economic Zone from public use, the property
remains reserved land.

Properties of public dominion, even if titled in the name of an instrumentality as in this

case, remain owned by the Republic of the Philippines. If property registered in the
name of an instrumentality is conveyed to another person,the property is considered
conveyed on behalf of the Republic of the Philippines. Book I, Chapter 12, Section 48
of the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of
the government is authorized by law to be conveyed, the deed of conveyance shall be
executed in behalf of the government by the following:
....
(2) For property belonging to the Republic of the Philippines, but titled in the name of
any political subdivision orof any corporate agency or instrumentality, by the executive
head of the agency or instrumentality. (Emphasis supplied)
In Manila International Airport Authority, this court explained:

[The exemption under Section 234(a) of the Local Government Code] should be read
in relation with Section 133(o) of the same Code, which prohibits local governments
from imposing "[t]axes, fess or charges of any kind on the National Government, its
agencies and instrumentalitiesx x x." The real properties owned by the Republic are
titled either in the name of the Republic itself or in the name of agencies or
instrumentalities of the National Government.The Administrative Code allows real
property owned by the Republic to be titled in the name of agencies or
instrumentalities of the national government. Such real properties remained owned by
the Republic of the Philippines and continue to be exempt from real estate tax.
The Republic may grant the beneficialuse of its real property to an agency or
instrumentality of the national government. This happens when title of the real
property is transferred to an agency or instrumentality even as the Republic remains
the owner of the real property. Such arrangement does not result in the loss of the tax
exemption/ Section 234(a) of the Local Government Code states that real property
owned by the Republic loses its tax exemption only if the "beneficial use thereof has
been granted, for consideration or otherwise, to a taxable person." . . . 290 (Emphasis in
the original; italics supplied)
Even the PEZAs lands and buildings whose beneficial use have been granted to
other persons may not be taxed with real property taxes. The PEZA may only lease
its lands and buildings to PEZA-registered economic zone enterprises and
entities.291 These PEZA-registered enterprises and entities, which operate within
economic zones, are not subject to real property taxes. Under Section 24 of the
Special Economic Zone Act of 1995, no taxes, whether local or national, shall be
imposed on all business establishments operating within the economic zones: SEC.
24. Exemption from National and Local Taxes. Except for real property on land
owned by developers, no taxes, local and national, shall be imposed on business
establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of
the gross income earned by all business enterprises within the ECOZONE shall be
paid and remitted as follows:

b. Two percent (2%) which shall be directly remitted by the business

establishments to the treasurers office of the municipality or city where the
enterprise is located.293 (Emphasis supplied)
For its part, the Province of Bataan collects a fifth of the 5% final tax on gross income
paid by all business establishments operating within the Freeport Area of Bataan:
Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. No taxes, local and national, shall be imposed on business establishments operating
withinthe FAB. In lieu thereof, said business establishments shall pay a five percent
(5%) final tax on their gross income earned in the following percentages:
(a) One per centum (1%) to the National Government;
(b) One per centum (1%) to the Province of Bataan;
(c) One per centum (1%) to the treasurer's office of the Municipality of
Mariveles; and
(d) Two per centum (2%) to the Authority of the Freeport of Area of
Bataan.294 (Emphasis supplied)
Petitioners, therefore, are not deprived of revenues from the operations of economic
zones within their respective territorial jurisdictions.
The national government ensured that loeal government units comprising economic
zones shall retain their basic autonomy and identity.295

a. Three percent (3%) to the National Government;

All
told,
the
PEZA
is
an
instrumentality
of
the
national
government.1wphi1 Furthermore, the lands owned by the PEZA are real properties
owned by the Republic of the Philippines. The City of Lapu-Lapu and the Province of
Bataan cannot collect real property taxes from the PEZA.

b. Two percent (2%) which shall be directly remitted by the business establishments
to the treasurers office of the municipality or city where the enterprise is
located.292 (Emphasis supplied)

WHEREFORE, the consolidated petitions are DENIED.

In lieu of revenues from real property taxes, the City of Lapu-Lapu collects two-fifths
of 5% final tax on gross income paid by all business establishments operating
withinthe Mactan Economic Zone:
SEC. 24. Exemption from National and Local Taxes. Except for real property on
land owned by developers, no taxes, local and national, shall be imposed on business
establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of
the gross income earned by all business enterprises within the ECOZONE shall be
paid and remitted as follows:
a. Three percent (3%) to the National Government;

SO ORDERED.

The facts are:

The property being fought over by the parties is a 10.36-hectare property in Baguio
City called Dominican Hills, formerly registered in the name of Diplomat Hills, Inc. It
appeared that the property was mortgaged to the United Coconut Planters Bank
(UCPB) which eventually foreclosed the mortgage thereon and acquired the same as
highest bidder. On April 11, 1983, it was donated to the Republic of the Philippines by
UCPB through its President, Eduardo Cojuangco. The deed of donation stipulated
that Dominican Hills would be utilized for the "priority programs, projects, activities in
human settlements and economic development and governmental purposes" of the
Ministry of Human Settlements.
On December 12, 1986, the then President Corazon C. Aquino issued Executive
Order No. 85 abolishing the Office of Media Affairs and the Ministry of Human
Settlements. All agencies under the latter's supervision as well as all its assets,
programs and projects, were transferred to the Presidential Management Staff
(PMS).2

G.R. No. 135945

March 7, 2001

THE UNITED RESIDENTS OF DOMINICAN HILL, INC., represented by its

President RODRIGO S. MACARIO, SR., petitioner,
vs.
COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS, represented by its
Commissioner, RUFINO V. MIJARES; MARIO PADILAN, PONCIANO BASILAN,
HIPOLITO ESLAVA, WILLIAM LUMPISA, PACITO MOISES, DIONISIO ANAS, NOLI
DANGLA, NAPOLEON BALESTEROS, ELSIE MOISES, SEBIO LACWASAN, BEN
FLORES, DOMINGO CANUTAB, MARCELINO GABRIANO, TINA TARNATE,
ANDREW ABRAZADO, DANNY LEDDA, FERNANDO DAYAO, JONATHAN DE LA
PENA, JERRY PASSION, PETER AGUINSOD, and LOLITA DURAN, respondents.
DE LEON, JR., J.:
Before us is a petition for prohibition and declaratory relief seeking the annulment of a
status quo order1 dated September 29, 1998 issued by the public respondent
Commission on the Settlement of Land Problems (COSLAP, for brevity) in COSLAP
Case No. 98-253.

On October 18, 1988, the PMS received an application from petitioner UNITED
RESIDENTS OF DOMINICAN HILL, INC. (UNITED, for brevity), a community housing
association composed of non-real property owning residents of Baguio City, to
acquire a portion of the Dominican Hills property. On February 2, 1990, PMS
Secretary Elfren Cruz referred the application to the HOME INSURANCE
GUARANTY CORPORATION (HIGC). HIGC consented to act as originator for
UNITED.3 Accordingly, on May 9, 1990, a Memorandum of Agreement was signed by
and among the PMS, the HIGC, and UNITED. The Memorandum of Agreement called
for the PMS to sell the Dominican Hills property to HIGC which would, in turn, sell the
same to UNITED. The parties agreed on a selling price of P75.00 per square meter.
Thus, on June 12, 1991, HIGC sold 2.48 hectares of the property to UNITED. The
deed of conditional sale provided that ten (10) per cent of the purchase price would
be paid upon signing, with the balance to be amortized within one year from its date
of execution. After UNITED made its final payment on January 31, 1992, HIGC
executed a Deed of Absolute Sale dated July 1, 1992.
Petitioner alleges that sometime in 1993, private respondents entered the Dominican
Hills property allocated to UNITED and constructed houses thereon. Petitioner was
able to secure a demolition order from the city mayor.4
Unable to stop the razing of their houses, private respondents, under the name
DOMINICAN
HILL
BAGUIO
RESIDENTS
HOMELESS
ASSOCIATION
(ASSOCIATION, for brevity) filed an action5 for injunction docketed as Civil Case No.
3316-R, in the Regional Trial Court of Baguio City, Branch 4. Private respondents
were able to obtain a temporary restraining order but their prayer for a writ of
preliminary injunction was later denied in an Order dated March 18, 1996.6

While Civil Case No. 3316-R was pending, the ASSOCIATION, this time represented
by the Land Reform Beneficiaries Association, Inc. (BENEFICIARIES, for brevity),
filed Civil Case No. 3382-R before Branch 61 of the same court. The
complaint7 prayed for damages, injunction and annulment of the said Memorandum of
Agreement between UNITED and HIGC. Upon motion of UNITED, the trial court in an
Order dated May 27, 1996 dismissed Civil Case No. 3382-R. 8 The said Order of
dismissal is currently on appeal with the Court of Appeals.9
Demolition Order No. 1-96 was subsequently implemented by the Office of the City
Mayor and the City Engineer's Office of Baguio City. However, petitioner avers that
private respondents returned and reconstructed the demolished structures.
To forestall the re-implementation of the demolition order, private respondents filed on
September 29, 1998 a petition10 for annulment of contracts with prayer for a
temporary restraining order, docketed as COSLAP Case No. 98-253, in the
Commission on the Settlement of Land Problems (COSLAP) against petitioner, HIGC,
PMS, the City Engineer's Office, the City Mayor, as well as the Register of Deeds of
Baguio City. On the very same day, public respondent COSLAP issued the contested
order requiring the parties to maintain the status quo.
Without filing a motion for reconsideration from the aforesaid status quo order,
petitioner filed the instant petition questioning the jurisdiction of the COSLAP.

without or in excess, of its jurisdiction. In this wise, a recounting of the history of the
COSLAP may provide useful insights into the extent of its powers and functions.
The COSLAP was created by virtue of Executive Order No. 561 dated September 21,
1979. Its forerunner was the Presidential Action Committee on Land Problems
(PACLAP) founded on July 31, 1970 by virtue of Executive Order No. 251. As
originally conceived, the committee was tasked "to expedite and coordinate the
investigation and resolution of land disputes, streamline and shorten administrative
procedures, adopt bold and decisive measures to solve land problems, and/or
recommend other solutions." It was given the power to issue subpoenasduces tecum
and ad testificandum and to call upon any department, office, agency or
instrumentality of the government, including government owned or controlled
corporations and local government units, for assistance in the performance of its
functions. At the time, the PACLAP did not exercise quasi-judicial functions.
On March 19, 1971, Executive Order No. 305 was issued reconstituting the
PACLAP.13 The committee was given exclusive jurisdiction over all cases involving
public lands and other lands of the public domain and accordingly was tasked:
1. To investigate, coordinate, and resolve expeditiously land disputes,
streamline administrative procedures, and in general, to adopt bold and
decisive measures to solve problems involving public lands and lands of the
public domain;

The issues we are called upon to resolve are:

2. To coordinate and integrate the activities of all government agencies
having to do with public lands or lands of the public domain;

1
IS THE COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS
[COSLAP] CREATED UNDER EXECUTIVE ORDER NO. 561 BY THE
OFFICE OF THE PHILIPPINES [sic] EMPOWERED TO HEAR AND TRY A
PETITION FOR ANNULMENT OF CONTRACTS WITH PRAYER FOR A
TEMPORARY RESTRAINING ORDER AND THUS, ARROGATE UNTO
ITSELF THE POWER TO ISSUE STATUS QUO ORDER AND CONDUCT A
HEARING THEREOF [sic]?

3. To study and review present policies as embodied in land laws and

administrative rules and regulations, in relation to the needs for land of the
agro-industrial sector and small farmers, with the end in view to evolving and
recommending new laws and policies and establishing priorities in the grant
of public land, and the simplification of processing of land applications in
order to relieve the small man from the complexities of existing laws, rules
and regulations;
4. To evolve and implement a system for the speedy investigation and
resolution of land disputes;

2
ASSUMING THAT THE COMMISSION ON THE SETTLEMENT OF LAND
PROBLEMS [COSLAP] HAS JURISDICTION ON THE MATTER, IS IT
EXEMPTED FROM OBSERVING A CLEAR CASE OF FORUM SHOPPING
ON THE PART OF THE PRIVATE RESPONDENTS?
To the extent that the instant case is denominated as one for declaratory relief, we
initially clarify that we do not possess original jurisdiction to entertain such
petitions.11 Such is vested in the Regional Trial Courts.12Accordingly, we shall limit our
review to ascertaining if the proceedings before public respondent COSLAP are

5. To receive all complaints of settlers and small farmers, involving public

lands or other lands of the public domain;
6. To look into the conflicts between Christians and non-Christians, between
corporations and small settlers and farmers; cause the speedy settlement of
such conflicts in accordance with priorities or policies established by the
Committee; and

7. To perform such other functions as may be assigned to it by the President.

(a) Between occupants/squatters and pasture lease

agreement holders or timber concessionaires;

Thereafter, the PACLAP was reorganized pursuant to Presidential Decree No. 832
dated November 27, 1975.14Its jurisdiction was revised thus:
xxx

xxx

(b) Between occupants/squatters

reservation grantees;

xxx

government

xxx
(c) Between occupants/squatters
claimants or applicants;

2. Refer for immediate action any land problem or dispute brought to the
attention of the PACLAP, to any member agency having jurisdiction
thereof: Provided, that when the Executive Committee decides to act on a
case, its resolution, order or decision thereon, shall have the force and effect
of a regular administrative resolution, order or decision, and shall be binding
upon the parties therein involved and upon the member agency having
jurisdiction thereof;
xxx

and

xxx

Notably, the said Presidential Decree No. 832 did not contain any provision for judicial
review of the resolutions, orders or decisions of the PACLAP.
On September 21, 1979, the PACLAP was abolished and its functions transferred to
the present Commission on the Settlement of Land Problems by virtue of Executive
Order No. 561. This reorganization, effected in line with Presidential Decree No.
1416, brought the COSLAP directly under the Office of the President. 15 It was only at
this time that a provision for judicial review was made from resolutions, orders or
decisions of the said agency, as embodied in section 3(2) thereof, to wit:
Powers and functions. The Commission shall have the following powers
and functions:
1. Coordinate the activities, particularly the investigation work, of
the various government offices and agencies involved in the
settlement of land problems or disputes, and streamline
administrative procedures to relieve small settlers and landholders
and members of cultural minorities of the expense and timeconsuming delay attendant to the solution of such problems or
disputes;
2. Refer and follow-up for immediate action by the agency having
appropriate jurisdiction any land problem or dispute referred to the
Commission: Provided, that the Commission may, in the following
cases, assume jurisdiction and resolve land problems or disputes
which are critical and explosive in nature considering, for instance,
the large number of the parties involved, the presence or
emergence of social tension or unrest, or other similar critical
situations requiring immediate action:

and

public

land

(d) Petitions for classification, release and/or subdivision

of lands of the public domain; and
(e) Other similar land problems of grave urgency and
magnitude.
The Commission shall promulgate such rules of procedure as will insure
expeditious resolution and action on the above cases. The resolution, order
or decision of the Commission on any of the foregoing cases shall have the
force and effect of a regular administrative resolution, order or decision and
shall be binding upon the parties therein and upon the agency having
jurisdiction over the same. Said resolution, order or decision shall become
final and executory within thirty (30) days from its promulgation and shall be
appealable by certiorari only to the Supreme Court.
xxx

xxx

xxx

In the performance of its functions and discharge of its duties, the

Commission
is
authorized,
through
the
Commission,
to
issue subpoena and subpoena duces tecum for the appearance of
witnesses and the production of records, books and documents before it. It
may also call upon any ministry, office, agency or instrumentality of the
National Government, including government-owned or controlled
corporations, and local governments for assistance. This authority is
likewise, conferred upon the provincial offices as may be established
pursuant to Section 5 of this Executive Order.
In Baaga v. Commission on the Settlement of Land Problems,16 we characterized
the COSLAP's jurisdiction as being general in nature, as follows:
Petitioners also contend in their petition that the COSLAP itself has no
jurisdiction to resolve the protest and counter-protest of the parties because
its power to resolve land problems is confined to those cases "which are
critical and explosive in nature."

This contention is devoid of merit. It is true that Executive Order No. 561
provides that the COSLAP may take cognizance of cases which are "critical
and explosive in nature considering, for instance, the large number of parties
involved, the presence or emergence of social tension or unrest, or other
similar critical situations requiring immediate action." However, the use of the
word "may" does not mean that the COSLAP's jurisdiction is merely confined
to the above mentioned cases. The provisions of the said Executive Order
are clear that the COSLAP was created as a means of providing a more
effective mechanism for the expeditious settlement of land problems in
general, which are frequently the source of conflicts among settlers,
landowners and cultural minorities. Besides, the COSLAP merely took over
from the abolished PACLAP whose functions, including its jurisdiction, power
and authority to act on, decide and resolve land disputes (Sec. 2, P.D. No.
832) were all assumed by it. The said Executive Order No. 561 containing
said provision, being enacted only on September 21, 1979, cannot affect the
exercise of jurisdiction of the PACLAP Provincial Committee of Koronadal on
September 29, 1978. Neither can it affect the decision of the COSLAP which
merely affirmed said exercise of jurisdiction.
Given the facts of the case, it is our view that the COSLAP is not justified in assuming
jurisdiction over the controversy. As matters stand, it is not the judiciary's place to
question the wisdom behind a law;17 our task is to interpret the law. We feel compelled
to observe, though, that by reason of the ambiguous terminology employed in
Executive Order No. 561, the power to assume jurisdiction granted to the COSLAP
provides an ideal breeding ground for forum shopping, as we shall explain
subsequently. Suffice it to state at this stage that the COSLAP may not assume
jurisdiction over cases which are already pending in the regular courts.
The reason is simple. Section 3(2) of Executive Order 561 speaks of any resolution,
order or decision of the COSLAP as having the "force and effect of a regular
administrative resolution, order or decision." The qualification places an unmistakable
emphasis on the administrative character of the COSLAP's determination, amplified
by the statement that such resolutions, orders or decisions "shall be binding upon the
parties therein and upon the agency having jurisdiction over the same." An agency is
defined by statute as "any of the various units of the Government, including a
department, bureau, office, instrumentality, or government-owned or controlled
corporation, or a local government or a distinct unit therein." 18 A department, on the
other hand, "refers to anexecutive department created by law."19 Whereas, a bureau
is understood to refer "to any principal subdivision of any department." 20 In turn, an
office "refers, within the framework of governmental organization, to any major
functional unit of a department or bureau including regional offices. It may also refer
to any position held or occupied by individual persons, whose functions are defined
by law or regulation."21 An instrumentality is deemed to refer "to any agency of the
National Government, not integrated within the department framework, vested with
special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds and enjoying operational autonomy, usually
through a charter. This term includes regulatory agencies, chartered institutions and

government-owned or controlled corporations."22 Applying the principle in statutory

construction of ejusdem generis, i.e., "where general words follow an enumeration or
persons or things, by words of a particular and specific meaning, such general words
are not to be construed in their widest extent, but are to be held as applying only to
persons or things of the same kind or class as those specifically mentioned,"23 section
3(2) of Executive Order 561 patently indicates that the COSLAP's dispositions are
binding on administrative orexecutive agencies. The history of the COSLAP itself
bolsters this view. Prior enactments enumerated its member agencies among which it
was to exercise a coordinating function.
The COSLAP discharges quasi-judicial functions:
"Quasi-judicial function" is a term which applies to the actions, discretion,
etc. of public administrative officers or bodies, who are required to
investigate facts, or ascertain the existence of facts, hold hearings, and draw
conclusions from them, as a basis for their official action and to exercise
discretion of a judicial nature."24
However, it does not depart from its basic nature as an administrative agency, albeit
one that exercises quasi-judicial functions. Still, administrative agencies are not
considered courts; they are neither part of the judicial system nor are they deemed
judicial tribunals.25 The doctrine of separation of powers observed in our system of
government reposes the three (3) great powers into its three (3) branches the
legislative, the executive, and the judiciary each department being co-equal and
coordinate, and supreme in its own sphere. Accordingly, the executive department
may not, by its own fiat, impose the judgment of one of its own agencies, upon the
judiciary. Indeed, under the expanded jurisdiction of the Supreme Court, it is
empowered "to determine whether or not there has been grave abuse of discretion
amounting to lack of or excess of jurisdiction on the part of any branch or
instrumentality of the Government."26
There is an equally persuasive reason to grant the petition. As an additional ground
for the annulment of the assailed status quo order of COSLAP, UNITED accuses
private respondents of engaging in forum shopping. Forum shopping exists when a
party "repetitively avail[s] of several judicial remedies in different courts,
simultaneously or successively, all substantially founded on the same transactions
and the same essential facts and circumstances, and all raising substantially the
same issues either pending in, or already resolved adversely by some other
court."27 In this connection, Supreme Court Administrative Circular No. 04-94 dated
February 8, 1994 provides:
Revised Circular No. 28-91, dated February 8, 1994, applies to and governs
the filing of petitions in the Supreme Court and the Court of Appeals and is
intended to prevent the multiple filing of petitions or complaints involving the
same issues in other tribunals or agencies as a form of forum shopping.

Complementary thereto and for the same purpose, the following

requirements, in addition to those in pertinent provisions of the Rules of
Court and existing circulars, shall be strictly complied with in the filing of
complaints, petitions, applications or other initiatory pleadings in all courts
and agencies other than the Supreme Court and the Court of Appeals and
shall be subject to the sanctions provided hereunder.
1. The plaintiff, petitioner, applicant or principal part seeking relief in
the complaint, petition, application or other initiatory
pleading shall certify under oath in such original pleading, or in a
sworn certification annexed thereto and simultaneously filed
therewith, to the truth of the following facts and undertakings: (a) he
has not theretofore commenced any other action or proceeding
involving the same issues in the Supreme Court, the Court of
Appeals, or any other tribunal or agency; (b) to the best of his
knowledge, no such action or proceedings is pending in the
Supreme Court, the Court of Appeals, or any other tribunal or
agency; (c) if there is any such action or proceeding which is either
pending or may have been terminated, he must state the status
thereof; and (d) if he should thereafter learn that a similar action or
proceeding has been filed or is pending before the Supreme Court,
the Court of Appeals or any other tribunal or agency, he undertakes
to report that fact within five (5) days therefrom to the court or
agency wherein the original pleading and sworn certification
contemplated herein have been filed.
The complaint and other initiatory pleadings referred to and subject
of this Circular are the original civil complaint, counterclaim, crossclaim, third (fourth, etc.) party complaint, or complaint-inintervention, petition, or application wherein a party asserts his
claim for relief.
2. Any violation of this Circular shall be a cause for the dismissal of
the complaint, petition, application or other initiatory pleading, upon
motion and after hearing. However, any clearly willful and
deliberate forum shopping by any other party and his counsel
through the filing of multiple complaints or other initiatory pleadings
to obtain favorable action shall be a ground for the summary
dismissal thereof and shall constitute contempt of court.
Furthermore, the submission of a false certification or noncompliance with the undertakings therein, as provided in Paragraph
1 hereof, shall constitute indirect contempt of court, without
prejudice to disciplinary proceedings against the counsel and the
filing of a criminal action against the part. [emphasis supplied]
xxx

xxx

xxx

The said Administrative Circular's use of the auxiliary verb "shall" imports "an
imperative obligation . . . inconsistent with the idea of discretion." 28 Hence,
compliance therewith is mandatory.29
It bears stressing that there is a material distinction between the requirement of
submission of the certification against forum shopping from the undertakings stated
therein. Accordingly,
x x x [f]ailure to comply with this requirement cannot be excused by the fact
that plaintiff is not guilty of forum shopping. The Court of Appeals, therefore,
erred in concluding that Administrative Circular No. 04-94 did not apply to
private respondent's case merely because her complaint was not based on
petitioner's cause of action. The Circular applies to any complaint, petition,
application, or other initiatory pleading, regardless of whether the party filing
it has actually committed forum shopping. Every party filing a complaint or
any other initiatory pleading is required to swear under oath that he has not
committed nor will he commit forum shopping. Otherwise, we would have an
absurd situation where the parties themselves would be the judge of whether
their actions constitute a violation of said Circular, and compliance therewith
would depend on their belief that they might or might not have violated the
requirement. Such interpretation of the requirement would defeat the very
purpose of Circular 04-94.
Indeed, compliance with the certification against forum shopping is separate
from, and independent of, the avoidance of forum shopping itself. Thus,
there is a difference in the treatment in terms of imposable sanctions
between failure to comply with the certification requirement and violation of
the prohibition against forum shopping. The former is merely a cause for the
dismissal, without prejudice, of the complaint or initiatory pleading, while the
latter is a ground for summary dismissal thereof and constitutes direct
contempt.30
A scrutiny of the pleadings filed before the trial courts and the COSLAP sufficiently
establishes private respondents' propensity for forum shopping. We lay the premise
that the certification against forum shopping must be executed by the plaintiff or
principal party, and not by his counsel.31 Hence, one can deduce that the certification
is a peculiar personal representation on the part of the principal party, an assurance
given to the court or other tribunal that there are no other pending cases involving
basically the same parties, issues and causes of action. In the case at bar, private
respondents' litany of omissions range from failing to submit the required certification
against forum shopping to filing a false certification, and then to forum shopping itself.
First, the petition filed before the COSLAP conspicuously lacked a certification
against forum shopping. Second, it does not appear from the record that the
ASSOCIATION informed Branch 4 of the Regional Trial Court of Baguio City before
which Civil Case No. 3316-R was pending, that another action, Civil Case No. 3382R, was filed before Branch 61 of the same court. Another group of homeless residents
of Dominican Hill, the LAND REFORM BENEFICIARIES ASSOCIATION, INC.

initiated the latter case. The aforesaid plaintiff, however, does not hesitate to admit
that it filed the second case in representation of private respondent, as one of its
affiliates. In the same manner, the certification against forum shopping accompanying
the complaint in Civil Case No. 3382-R does not mention the pendency of Civil Case
No. 3316-R. In fact, the opposite assurance was given, that there was no action
pending before any other tribunal. Another transgression is that both branches of the
trial court do not appear to have been notified of the filing of the subject COSLAP
Case No. 98-253.
It is evident from the foregoing facts that private respondents, in filing multiple
petitions, have mocked our attempts to eradicate forum shopping and have thereby
upset the orderly administration of justice. They sought recourse from three (3)
different tribunals in order to obtain the writ of injunction they so desperately desired.
"The willful attempt by private respondents to obtain a preliminary injunction in
another court after it failed to acquire the same from the original court constitutes
grave abuse of the judicial process."32
In this connection, we expounded on forum shopping in Viva Productions, Inc. v.
Court of Appeals33 that:
Private respondent's intention to engage in forum shopping becomes
manifest with undoubted clarity upon the following considerations. Notably, if
not only to ensure the issuance of an injunctive relief, the significance of the
action for damages before the Makati court would be nil. What damages
against private respondent would there be to speak about if the Paraaque
court already enjoins the performance of the very same act complained of in
the Makati court? Evidently, the action for damages is premature if not for
the preliminary injunctive relief sought. Thus, we find grave abuse of
discretion on the part of the Makati court, being a mere co-equal of
the Paraaque court, in not giving due deference to the latter before which
the issue of the alleged violation of the sub-judice rule had already been
raised and submitted. In such instance, the Makati court, if it was wary of
dismissing the action outrightly under Administrative Circular No. 04-94,
should have, at least, ordered the consolidation of its case with that of
the Paraaque court, which had first acquired jurisdiction over the related
case x x x, or it should have suspended the proceedings until the Paraaque
court may have ruled on the issue x x x.
xxx

xxx

xxx

Thus, while we might admit that the causes of action before the Makati
court and the Paraaque court are distinct, and that private respondent
cannot seek civil indemnity in the contempt proceedings, the same being in
the nature of criminal contempt, we nonetheless cannot ignore private
respondent's intention of seeking exactly identical reliefs when it sought the
preliminary relief of injunction in the Makati court. As earlier indicated, had
private respondent been completely in good faith there would have been no

hindrance in filing the action for damages with the regional trial court of
Paraaque and having it consolidated with the contempt proceedings before
Branch 274, so that the same issue on the alleged violation of the sub
judice rule will not have to be passed upon twice, and there would be no
possibility of having two courts of concurrent jurisdiction making two
conflicting resolutions.
Yet from another angle, it may be said that when the Paraaque
court acquired jurisdiction over the said issue, it excluded all other courts of
concurrent jurisdiction from acquiring jurisdiction over the same. To hold
otherwise would be to risk instances where courts of concurrent jurisdiction
might have conflicting orders. This will create havoc and result in an
extremely disordered administration of justice. Therefore, even on the
assumption that the Makati court may acquire jurisdiction over the subject
matter of the action for damages, without prejudice to the application of
Administrative Circular No. 04-94, it cannot nonetheless acquire jurisdiction
over the issue of whether or not petitioner has violated the sub judice rule. At
best, theMakati court may hear the case only with respect to the alleged
injury suffered by private respondent afterthe Paraaque court shall have
ruled favorably on the said issue.
We also noted several indications of private respondents' bad faith. The complaint
filed in Civil Case No. 3316-R was prepared by the ASSOCIATION's counsel, Atty.
Conrado Villamor Catral, Jr. whereas the complaint filed in Civil Case No. 3382-R was
signed by a different lawyer, Atty. Thomas S. Tayengco. With regard to the petition
filed with the COSLAP, the same was signed by private respondents individually. As to
the latter case, we noted that the petition itself could not have been prepared by
ordinary laymen, inasmuch as it exhibits familiarity with statutory provisions and legal
concepts, and is written in a lawyerly style.
In the same manner, the plaintiffs in the three (3) different cases were made to
appear as dissimilar: in Civil Case No. 3316-R, the plaintiff was ASSOCIATION of
which private respondent Mario Padilan was head, while the plaintiff in Civil Case No.
3382-R was the BENEFICIARIES. Before the COSLAP, private respondents
themselves were the petitioners, led again by Padilan.34 Private respondents also
attempted to vary their causes of action: in Civil Case No. 3382-R and COSLAP Case
No. 98-253, they seek the annulment of the Memorandum of Agreement executed by
and among UNITED, the PMS, and HIGC as well as the transfer certificates of title
accordingly issued to petitioner. All three (3) cases sought to enjoin the demolition of
private respondents' houses.
It has been held that forum shopping is evident where
pendentia or res judicata are present. Private respondents'
naught, for the effects of res judicata or litis pendentia may not
the designation of the parties or changing the form of the
different mode of presenting one's case.35

the elements of litis

subterfuge comes to
be avoided by varying
action or adopting a

In view of the foregoing, all that remains to be done is the imposition of the proper
penalty. A party's willful and deliberate act of forum shopping is punishable by
summary dismissal of the actions filed. 36 The summary dismissal of both COSLAP
Case No. 98-253 and Civil Case No. 3316-R is therefore warranted under the
premises. We shall refrain from making any pronouncement on Civil Case No. 3382R, the dismissal of which was elevated on appeal to the Court of Appeals where it is
still pending.
WHEREFORE, the petition is hereby GRANTED. The status quo order dated
September 29, 1998 issued in COSLAP Case No. 98-253 by respondent Commission
On The Settlement Of Land Problems (COSLAP) is hereby SET ASIDE; and the
petition filed in COSLAP Case No. 98-253 and the complaint in Civil Case No. 3316-R
are hereby DISMISSED for lack of jurisdiction and forum shopping. Costs against
private respondents.
SO ORDERED.

G.R. No. 128448

February 1, 2001

SPOUSES ALEJANDRO MlRASOL and LILIA E. MIRASOL, petitioners,

vs.
THE COURT OF APPEALS, PHILIPPINE NATIONAL and PHILIPPINE EXCHANGE
CO., INC., respondent.
QUISUMBING, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals dated
July 22, 1996, in CA-G.R. CY No. 38607, as well as of its resolution of January 23,
1997, denying petitioners' motion for reconsideration. The challenged decision
reversed the judgment of the Regional Trial Court of Bacolod City, Branch 42 in Civil
Case No. 14725.
The factual background of this case, as gleaned from the records, is as follows:
The Mirasols are sugarland owners and planters. In 1973-1974, they produced
70,501.08 piculs1 of sugar, 25,662.36 of which were assigned for export. The

following crop year, their acreage planted to the same crop was lower, yielding 65,100
piculs of sugar, with 23,696.40 piculs marked for export.
Private respondent Philippine National Bank (PNB) financed the Mirasols' sugar
production venture for crop years, 1973-1974 and 1974-1975 under a crop loan
financing scheme. Under said scheme, the Mirasols signed Credit Agreements, a
Chattel Mortgage on Standing Crops, and a Real Estate Mortgage in favor of PNB.
The Chattel Mortgage empowered PNB as the petitioners' attorney-in-fact to
negotiate and to sell the latter's sugar in both domestic and export markets and to
apply the proceeds to the payment of their obligations to it.
Exercising his law-making powers under Martial Law, then President Ferdinand
Marcos issued Presidential Decree (P.D.) No. 5792 in November, 1974. The decree
authorized private respondent Philippine Exchange Co., Inc. (PHILEX) to purchase
sugar allocated for export to the United States and to other foreign markets. The price
and quantity was determined by the Sugar Quota Administration, PNB, the
Department of Trade and Industry, and finally, by the Office of the President. The
decree further authorized PNB to finance PHILEX's purchases. Finally, the decree
directed that whatever profit PHILEX might realize from sales of sugar abroad was to
be remitted to a special fund of the national government, after commissions,
overhead expenses and liabilities had been deducted. The government offices and
entities tasked by existing laws and administrative regulations to oversee the sugar
export pegged the purchase price of export sugar in crop years 1973-1974 and 19741975 at P180.00 per picul.
PNB continued to finance the sugar production of the Mirasols for crop years 19751976 and 1976-1977. These crop loans and similar obligations were secured by real
estate mortgages over several properties of the Mirasols and chattel mortgages over
standing crops. Believing that the proceeds of their sugar sales to PNB, if properly
accounted for, were more than enough to pay their obligations, petitioners asked PNB
for an accounting of the proceeds of the sale of their export sugar. PNB ignored the
request. Meanwhile, petitioners continued to avail of other loans from PNB and to
make unfunded withdrawals from their current accounts with said bank. PNB then
asked petitioners to settle their due and demandable accounts. As a result of these
demands for payment, petitioners on August 4, 1977, conveyed to PNB real
properties valued at P1,410,466.00 by way of dacion en pago, leaving an unpaid
overdrawn account of P1,513,347.78.
On August 10, 1982, the balance of outstanding sugar crop and other loans owed by
petitioners to PNB stood at P15,964,252.93. Despite demands, the Mirasols failed to
settle said due anti demandable accounts. PNB then proceeded to extrajudicially for
close the mortgaged properties. After applying the proceeds of the auction sale of the
mortgaged realties, PNB still had a deficiency claim of P12,551,252.93.
Petitioners continued to ask PNB to account for the proceeds of the sale of their
export sugar for crop years 1973-1974 and 1974-1975, insisting that said proceeds, if
properly liquidated, could offset their outstanding obligations with the batik. PNB

remained adamant in its stance that under P.D. No. 579, there was nothing to account
since under said law, all earnings from the export sales of sugar pertained to the
National Government and were subject to the disposition of the President of the
Philippines for public purposes.1wphi1.nt
On August 9, 1979, the Mirasols filed a suit for accounting, specific performance, and
damages against PNB with the Regional Trial Court of Bacolod City, docketed as Civil
Case No. 14725.

"The unliquidated amount of money due the plaintiffs but withheld by the
defendants, shall earn the legal rate of interest at 12% per annum computed
from the date this action was instituted until fully paid; and, finally (4) Directing the defendants PNB and PHILEX to pay, jointly and severally,
plaintiffs the sum of P50,000.00 in moral damages and the amount of
P50,000.00 as attorney's fees, plus the costs of this litigation.
"SO ORDERED."4

On June 16, 1987, the complaint was amended to implead PHILEX as partydefendant.

The same was, however, modified by a Resolution of the trial court dated May 14,
1992, which added the following paragraph:

The parties agreed at pre-trial to limit the issues to the following:

"1. The constitutionality and/or legality of Presidential Decrees numbered
338, 579, and 1192;
"2. The determination of the total amount allegedly due the plaintiffs from the
defendants corresponding to the allege(d) unliquidated cost price of export
sugar during crop years 1973-1974 and 1974-1975."3

"This however whatever benefits that may have accrued in favor of the
plaintiffs with the massage and approval of Republic Act. 7202 otherwise
known as the 'Sugar Restitution Law,' authorizing the restitution of losses
suffered by the plaintiffs from Crop year 1974-1975 to Crop year 1984-1985
occasioned by the actuations of government-owned and controlled agencies.
(Underscoring in the original).
"SO ORDERED."5

After trial on the merits, the trial court decided as follows:

"WHEREFORE, the foregoing premises considered, judgment is hereby
rendered in favor of the plaintiffs and against the defendants Philippine
National Bank (PNB) and Philippine Exchange Co., Inc. (PHILEX):
(1) Declaring Presidential Decree 579 enacted on November 12, 1974 and
all circulars, as well as policies, orders and other issuances issued in
furtherance thereof, unconstitutional and therefore, NULL and VOID being in
gross violation of the Bill of Rights;
(2) Ordering defendants PNB and PHILEX to pay, jointly and severally,
plaintiffs the whole amount corresponding to the residue of the unliquidated
actual cost price of 25,662 piculs in export sugar for crop year 1973-1974 at
an average price of P300.00 per picul, deducting therefrom however, the
amount of P180.00 already paid in advance plus the allowable deductions in
service fees and other charges;
(3) And also, for the same defendants to pay, jointly and severally, same
plaintiffs the whole amount corresponding to the unpaid actual price of
14,596 piculs of export sugar for crop year 1974-1975 at an average rate of
P214.14 per picul minus however, the sum of P180.00 per picul already paid
by the defendants in advance and the allowable deducting (sic) in service
fees and other charges.

The Mirasols then filed an appeal with the respondent court, docketed as CA-G.R. CY
No. 38607, faulting the trial court for not nullifying the dacion en pago and the
mortgage contracts, as well as the foreclosure of their mortgaged properties. Also
faulted was the trial court's failure to award them the full money claims and damages
sought from both PNB and PHILEX.
On July 22, 1996, the Court of Appeals reversed the trial court as follows:
"WHEREFORE, this Court renders judgment REVERSING the appealed Decision
and entering the following verdict:
"1. Declaring the dacion en pago and the foreclosure of the mortgaged
properties valid;
"2. Ordering the PNB to render an accounting of the sugar account of the
Mirasol[s] specifically stating the indebtedness of the latter to the former and
the proceeds of Mirasols' 1973-1974 and 1974-1975 sugar production sold
pursuant to and in accordance with P.D. 579 and the issuances therefrom;
"3. Ordering the PNB to recompute in accordance with RA 7202 Mirasols'
indebtedness to it crediting to the latter payments already made as well as
the auction price of their foreclosed real estate and stipulated value of their
properties ceded to PNB in the dacon (sic) en pago;

"4. Whatever the result of the recomputation of Mirasols' account, the

outstanding balance or the excess payment shall be governed by the
pertinent provisions of RA 7202.

"SECTION 19. Jurisdiction in civil cases. - Regional Trial Courts shall

exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigations is incapable of
pecuniary estimation;"

"SO ORDERED."6
On August 28, 1996, petitioners moved for reconsideration, which the appellate court
denied on January 23, 1997.

The pivotal issue, which we must address, is whether it was proper for the trial court
to have exercised judicial review.

Hence, the instant petition, with petitioners submitting the following issues for our
resolution:

Petitioners argue that the Court of Appeals erred in finding that it was improper for the
trial court to have declared P.D. No. 57912 unconstitutional, since petitioners had not
complied with Rule 64, Section 3, of the Rules of Court. Petitioners contend that said
Rule specifically refers only to actions for declaratory relief and not to an ordinary
action for accounting, specific performance, and damages.

"1. Whether the Trial Court has jurisdiction to declare a statute

unconstitutional without notice to the Solicitor General where the parties
have agreed to submit such issue for the resolution of the Trial Court.
7

"2. Whether PD 579 and subsequent issuances thereof are unconstitutional.

"3. Whether the Honorable Court of Appeals committed manifest error in not
applying the doctrine of piercing the corporate veil between respondents
PNB and PHILEX.
"4. Whether the Honorable Court of Appeals committed manifest error in
upholding the validity of the foreclosure on petitioners property and in
upholding the validity of the dacion en pago in this case.
"5. Whether the Honorable Court of Appeals committed manifest error in not
awarding damages to petitioners grounds relied upon the allowance of the
petition. (Underscored in the original)"8
On the first issue. It is settled that Regional Trial Courts have the authority and
jurisdiction to consider the constitutionality of a statute, presidential decree, or
executive order.9 The Constitution vests the power of judicial review or the power to
declare a law, treaty, international or executive agreement, presidential decree, order,
instruction, ordinance, or regulation not. only in this Court, but in all Regional Trial
Courts.10 In J.M. Tuason and Co. v. Court of Appeals, 3 SCRA 696 (1961) we held:
"Plainly, the Constitution contemplates that the inferior courts should have
jurisdiction in cases involving constitutionality of any treaty or law, for it
speaks of appellate review of final judgments of inferior courts in cases
where such constitutionality happens to be in issue."11
Furthermore, B.P. BIg. 129 grants Regional Trial Courts the authority to rule on the
conformity of laws or treaties with the Constitution, thus:

Petitioners' contentions are bereft of merit. Rule 64, Section 3 of the Rules of Court
provides:
"SEC. 3. Notice to Solicitor General. - In any action which involves the
validity of a statute, or executive order or regulation, the Solicitor General
shall be notified by the party attacking the statute, executive order, or
regulation, and shall be entitled to be heard upon such question."
This should be read in relation to Section 1 [c] of P.D. No. 478,13 which states in part:
"SECTION 1. Functions and Organizations - (1) The Office of the Solicitor
General shall...have the following specific powers and functions:
xxx
"[c] Appear in any court in any action involving the validity of any treaty, law,
executive order or proclamation, rule or regulation when in his judgment his
intervention is necessary or when requested by the court."
It is basic legal construction that where words of command such as "shall," "must," or
"ought" are employed, they are generally and ordinarily regarded as
mandatory.14 Thus, where, as in Rule 64, Section 3 of the Rules of Court, the word
"shall" is used, a mandatory duty is imposed, which the courts ought to enforce.
The purpose of the mandatory Notice in Rule 64, Section 3 is to enable the Solicitor
General to decide whether or not his intervention in the action assailing the validity of
a law or treaty is necessary. To deny the Solicitor General such notice would be
tantamount to depriving him of his day in court. We must stress that, contrary to
petitioners' stand, the mandatory notice requirement is not limited to actions involving
declaratory relief and similar remedies. The rule itself provides that such notice is

required in "any action" and not just actions involving declaratory relief. Where there
is no ambiguity in the words used in the true, there is no room for constnlction. 15 In all
actions assailing the validity of a statute, treaty, presidential decree, order, or
proclamation, notice to the Solicitor General is mandatory.
In this case, the Solicitor General was never notified about Civil Case No. 14725. Nor
did the trial court ever require him to appear in person or by a representative or to file
any pleading or memorandum on the constitutionality of the assailed decree. Hence,
the Court of Appeals did not err in holding that lack of the required notice made it
improper for the trial court to pass upon the constitutional validity of the questioned
presidential decrees.
As regards the second issue, petitioners contend that P.D. No. 579 and its
implementing issuances are void for violating the due process clause and the
prohibition against the taking of private property without just compensation.
Petitioners now ask this Court to exercise its power of judicial review.
Jurisprudence has laid down the following requisites for the exercise of this power:
First, there must be before the Court an actual case calling for the exercise of judicial
review. Second, the question before the Court must be ripe for adjudication. Third, the
person challenging the validity of the act must have standing to challenge. Fourth, the
question of constitutionality must have been raised at the earliest opportunity, and
lastly, the issue of constitutionality must be the very lis mota of the case.16
As a rule, the courts will not resolve the constitutionality of a law, if the controversy
can be settled on other grounds. 17 The policy of the courts is to avoid ruling on
constitutional questions and to presume that the acts of the political departments are
valid, absent a clear and unmistakable showing to the contrary. To doubt is to sustain.
This presumption is based on the doctrine of separation of powers. This means that
the measure had first been carefully studied by the legislative and executive
departments and found to be in accord with the Constitution before it was finally
enacted and approved.18
The present case was instituted primarily for accounting and specific performance.
The Court of Appeals correctly ruled that PNB's obligation to render an accounting is
an issue, which can be determined, without having to rule on the constitutionality of
P.D. No. 579. In fact there is nothing in P.D. No. 579, which is applicable to PNB's
intransigence in refusing to give an accounting. The governing law should be the law
on agency, it being undisputed that PNB acted as petitioners' agent. In other words,
the requisite that the constitutionality of the law in question be the very lis mota of the
case is absent. Thus we cannot rule on the constitutionality of P.D. No. 579.
Petitioners further contend that the passage of R.A. No. 720219 rendered P.D. No.
579 unconstitutional, since R.A. No. 7202 affirms that under P.D. 579, the due
process clause of the Constitution and the right of the sugar planters not to be
deprived of their property without just compensation were violated.

A perusal of the text of R.A. No. 7202 shows that the repealing clause of said law
merely reads:
"SEC. 10. All laws, acts, executive orders and circulars in conflict herewith
are hereby repealed or modified accordingly."
The settled rule of statutory construction is that repeals by implication are not
favored.20 R.A. No. 7202 cannot be deemed to have repealed P.D. No. 579. In
addition, the power to declare a law unconstitutional does not lie with the legislature,
but with the courts.21 Assuming arguendo that R.A. No. 7202 did indeed repeal P.D.
No. 579, said repeal is not a legislative declaration finding the earlier law
unconstitutional.
To resolve the third issue, petitioners ask us to apply the doctrine of piercing the veil
of corporate fiction with respect to PNB and PHILEX. Petitioners submit that PHILEX
was a wholly-owned subsidiary of PNB prior to the latter's privatization.
We note, however, that the appellate court made the following finding of fact:
"1. PNB and PHILEX are separate juridical persons and there is no reason
to pierce the veil of corporate personality. Both existed by virtue of separate
organic acts. They had separate operations and different purposes and
powers."22
Findings of fact by the Court of Appeals are conclusive and binding upon this Court
unless said findings are not supported by the evidence.23 Our jurisdiction in a petition
for review under Rule 45 of the Rules of Court is limited only to reviewing questions of
law and factual issues are not within its province. 24 In view of the aforequoted finding
of fact, no manifest error is chargeable to the respondent court for refusing to pierce
the veil of corporate fiction.
On the fourth issue, the appellate court found that there were two sets of accounts
between petitioners and PNB, namely:
"1. The accounts relative to the loan financing scheme entered into by the
Mirasols with PNB (PNB's Brief, p. 16) On the question of haw much the
PNB lent the Mirasols for crop years 1973-1974 and 1974-1975, the
evidence recited by the lower court in its decision was deficient. We are
offered (sic) PNB the amount of FIFTEEN MILLION NINE HUNDRED SIXTY
FOUR THOUSAND TWO HUNDRED FIFTY TWO PESOS and NINETY
THREE Centavos (Ps15,964,252.93) but this is the alleged balance the
Mirasols owe PNB covering the years 1975 to 1982.
"2. The account relative to the Mirasol's current account Numbers 5186 and
5177 involving the amount of THREE MILLION FOUR HUNDRED

THOUSAND Pesos (P3,400,000.00). PNB claims against the Mirasols.

(PNB's Brief, p. 17)
"In regard to the first set of accounts, besides the proceeds from PNB's sale
of sugar (involving the defendant PHILEX in relation to the export portion of
tile stock), the PNB foreclosed the Mirasols' mortgaged properties realizing
therefrom in 1981 THREE MILLION FOUR HUNDRED THIRTEEN
THOUSAND pesos (P3,413,000.00), the PNB itself having acquired the
properties as the highest bidder.
"As to the second set of accounts, PNB proposed, and the Mirasols
accepted, a dacion en pago scheme by which the Mirasols conveyed to PNB
pieces of property valued at ONE MILLION FOUR HUNDRED TEN
THOUSAND FOUR HUNDRED SIXTY-SIX Pesos (Ps1,410,466.00) (PNB's
Brief, pp. 16-17)."25

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor."
In the present case, set-off or compensation cannot take place between the parties
because: First, neither of the parties are mutually creditors and debtors of each other.
Under P.D. No. 579, neither PNB nor PHILEX could retain any difference claimed by
the Mirasols in the price of sugar sold by the two firms. P.D. No. 579 prescribed where
the profits from the sales are to be paid, to wit:
"SECTION 7. x x x After deducting its commission of two and one-half (21/2%) percent of gross sales, the balance of the proceeds of sugar trading
operations for every crop year shall be set aside by the Philippine Exchange
Company, Inc,. as profits which shall be paid to a special fund of the
National Government subject to the disposition of the President for public
purposes."

Petitioners now claim that the dacion en pago and the foreclosure of their mortgaged
properties were void for want of consideration. Petitioners insist that the loans granted
them by PNB from 1975 to 1982 had been fully paid by virtue of legal compensation.
Hence, the foreclosure was invalid and of no effect, since the mortgages were already
fully discharged. It is also averred that they agreed to the dacion only by virtue of a
martial law Arrest, Search, and Seizure Order (ASSO).

Thus, as correctly found by the Court of Appeals, "there was nothing with which PNB
was supposed to have off-set Mirasols' admitted indebtedness."27

We find petitioners' arguments unpersuasive. Both the lower court and the appellate
court found that the Mirasols admitted that they were indebted to PNB in the sum
stated in the latter's counterclaim.26 Petitioners nonetheless insist that the same can
be offset by the unliquidated amounts owed them by PNB for crop years 1973-74 and
1974-75. Petitioners' argument has no basis in law. For legal compensation to take
place, the requirements set forth in Articles 1278 and 1279 of the Civil Code must be
present. Said articles read as follows:

With respect to the duress allegedly employed by PNB, which impugned petitioners'
consent to the dacion en pago, both the trial court and the Court of Appeals found that
there was no evidence to support said claim. Factual findings of the trial court,
affirmed by the appellate court, are conclusive upon this Court.29

"Art. 1278. Compensation shall take place when two persons, in their own
right, are creditors and debtors of each other.
Art. 1279. In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that he be at the
same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are
consumable, they be of the same kind, and also of the same quality if the
latter has been stated;
(3) That the two debts are due;

Second, compensation cannot take place where one claim, as in the instant case, is
still the subject of litigation, as the same cannot be deemed liquidated.28

On the fifth issue, the trial court awarded petitioners P50,000.00 in moral damages
and P50,000.00 in attorney's fees. Petitioners now theorize that it was error for the
Court of Appeals to have deleted these awards, considering that the appellate court
found PNB breached its duty as an agent to render an accounting to petitioners.
An agent's failure to render an accounting to his principal is contrary to Article 1891 of
the Civil Code.30 The erring agent is liable for damages under Article 1170 of the Civil
Code, which states:
"Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor
thereof, are liable for damages."
Article 1170 of the Civil Code, however, must be construed in relation to Article 2217
of said Code which reads:

"Moral damages include physical suffering, mental anguish, fright, serious

anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury .Though incapable of pecuniary computation,
moral damages may be recovered if they are the proximate result of the
defendant's wrongful act or omission."
Moral damages are explicitly authorized in breaches of contract where the defendant
acted fraudulently or in bad faith.31 Good faith, however, is always presumed and any
person who seeks to be awarded damages due to the acts of another has the burden
of proving that the latter acted in bad faith, with malice, or with ill motive. In the instant
case, petitioners have failed to show malice or bad faith 32 on the part of PNB in failing
to render an accounting. Absent such showing, moral damages cannot be awarded.
Nor can we restore the award of attorney's fees and costs of suit in favor of
petitioners. Under Article 2208 (5) of the Civil Code, attorney's fees are allowed in the
absence of stipulation only if "the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff s plainly valid, just, and demandable claim." As earlier
stated, petitioners have not proven bad faith on the part of PNB and
PHILEX. 1wphi1.nt
WHEREFORE, the instant petition is DENIED and the assailed decision of the
respondent court in CA-G.R. CY 38607 AFFIRMED. Costs against petitioners.
SO ORDERED.

G.R. No. 188832

April 23, 2014

VIVENCIO B. VILLAGRACIA, Petitioner,

vs.
FIFTH (5th) SHARI'A DISTRICT COURT and ROLDAN E. MALA, represented by
his father Hadji Kalam T. Mala, Respondents.
DECISION
LEONEN, J.:
Shari' a District Courts have no jurisdiction over real actions where one of the parties
is not a Muslim.
This is a petition for certiorari with application for issuance of temporary restraining
order and/or preliminary injunction to set aside the Fifth (5th) Shari'a District Court's
decision1 dated June 11, 2008 and order2 dated May 29, 2009 in SDC Special
Proceedings Case No. 07-200.
The facts as established from the pleadings of the parties are as follows:
On February 15, 1996, Roldan E. Mala purchased a 300-square-meter parcel of land
located in Poblacion, Parang, Maguindanao, now Shariff Kabunsuan, from one Ceres
Caete. On March 3, 1996, Transfer Certificate of Title No. T-15633 covering the
parcel of land was issued in Roldans name.3 At the time of the purchase, Vivencio B.
Villagracia occupied the parcel of land.4
By 2002, Vivencio secured a Katibayan ng Orihinal na Titulo Blg. P-60192 issued by
the Land Registration Authority allegedly covering the same parcel of land.5
On October 30, 2006, Roldan had the parcel of land surveyed. In a report, Geodetic
Engineer Dennis P. Dacup found that Vivencio occupied the parcel of land covered by
Roldans certificate of title.6
To settle his conflicting claim with Vivencio, Roldan initiated barangay conciliation
proceedings before the Office of the Barangay Chairman of Poblacion II, Parang,
Shariff Kabunsuan. Failing to settle with Vivencio at the barangay level, Roldan filed
an action to recover the possession of the parcel of land with respondent Fifth Sharia
District Court.7
In his petition, Roldan alleged that he is a Filipino Muslim; that he is the registered
owner of the lot covered by Transfer Certificate of Title No. 15633; and that Vivencio
occupied his property, depriving him of the right to use, possess, and enjoy it. He
prayed that respondent Fifth Sharia District Court order Vivencio to vacate his
property.8

Respondent court took cognizance of the case and caused service of summons on
Vivencio. However, despite service of summons, Vivencio failed to file his answer.
Thus, Roldan moved that he be allowed to present evidence ex parte, which motion
respondent Fifth Sharia District Court granted in its order9 dated January 30, 2008.10
In its decision11 dated June 11, 2008, respondent Fifth Sharia District Court ruled that
Roldan, as registered owner, had the better right to possess the parcel of land. It
ordered Vivencio to vacate the property, turn it over to Roldan, and pay P10,000.00
as moderate damages and P5,000.00 as attorneys fees.
On December 15, 2008, respondent Fifth Sharia Distict Court issued the notice of
writ of execution12 to Vivencio, giving him 30 days from receipt of the notice to comply
with the decision. He received a copy of the notice on December 16, 2008.13
On January 13, 2009, Vivencio filed a petition for relief from judgment with prayer for
issuance of writ of preliminary injunction.14 In his petition for relief from judgment,
Vivencio cited Article 155, paragraph (2) of the Code of Muslim Personal Laws of the
Philippines15 and argued that Sharia District Courts may only hear civil actions and
proceedings if both parties are Muslims. Considering that he is a Christian, Vivencio
argued that respondent Fifth Sharia District Court had no jurisdiction to take
cognizance of Roldans action for recovery of possession of a parcel of land. He
prayed that respondent Fifth Sharia District Court set aside the decision dated June
11, 2008 on the ground of mistake.16
Respondent Fifth Sharia District Court ruled that Vivencio "intentionally [waived] his
right to defend himself."17 It noted that he was duly served with summons and had
notice of the following: Roldans motion to present evidence ex parte, respondent
Fifth Sharia District Courts decision dated June 11, 2008, and the writ of execution.
However, Vivencio only went to court "when he lost his right to assail the decision via
certiorari."18
According to respondent Fifth Sharia District Court, Vivencio cited the wrong
provision of law. Article 155, paragraph (2) of the Code of Muslim Personal Laws of
the Philippines refers to the jurisdiction of Sharia Circuit Courts, not of Sharia District
Courts.19 It ruled that it had jurisdiction over Roldans action for recovery of
possession. Regardless of Vivencio being a non-Muslim, his rights were not
prejudiced since respondent Fifth Sharia District Court decided the case applying the
provisions of the Civil Code of the Philippines.20
Thus, in its order21 dated May 29, 2009, respondent Fifth Sharia District Court denied
Vivencios petition for relief from judgment for lack of merit. It reiterated its order
directing the issuance of a writ of execution of the decision dated June 11, 2008.
Vivencio received a copy of the order denying his petition for relief from judgment on
June 17, 2009.22

On August 6, 2009, Vivencio filed the petition for certiorari with prayer for issuance of
temporary restraining order with this court.23

this case is the Civil Code and other related laws, and not the Code on
Muslim Personal Laws[.]31

In his petition for certiorari, Vivencio argued that respondent Fifth Sharia District
Court acted without jurisdiction in rendering the decision dated June 11, 2008. Under
Article 143, paragraph (2)(b) of the Code of Muslim Personal Laws of the
Philippines,24 Sharia District Courts may only take cognizance of real actions where
the parties involved are Muslims. Reiterating that he is not a Muslim, Vivencio argued
that respondent Fifth Sharia District Court had no jurisdiction over the subject matter
of Roldans action. Thus, all the proceedings before respondent Fifth Sharia District
Court, including the decision dated June 11, 2008, are void.25

Since respondent Fifth Sharia District Court had jurisdiction to decide the
action for recovery of possession, Roldan argued that the proceedings
before it were valid. Respondent Fifth Sharia District Court acquired
jurisdiction over the person of Vivencio upon service on him of summons.
When Vivencio failed to file his answer, he "effectively waived his right to
participate in the proceedings [before the Fifth Sharia District Court]" 32 and
he cannot argue that his rights were prejudiced:

In the resolution26 dated August 19, 2009, this court ordered Roldan to comment on
Vivencios petition for certiorari. This court subsequently issued a temporary
restraining order enjoining the implementation of the writ of execution against
Vivencio.27
On September 21, 2011, Roldan filed his comment28 on the petition for certiorari. He
allegedly filed the action for recovery of possession with the Sharia District Court
where "a more speedy disposition of the case would be obtained":29
1. That SDC Spl. Case No. 07-200 (Quieting of Title) was duly filed with
the Fifth (5th) Shariah District Court, Cotabato City at the option of herein
private respondent (petitioner below) who believed that a more speedy
disposition of the case would be obtained when the action is filed with the
Shariah District Court than in the Regional Trial Courts considering the
voluminous pending cases at the Regional Trial Courts[.]30
On Vivencios claim that respondent Fifth Sharia District Court had no
jurisdiction to decide the action for recovery of possession because he is a
non-Muslim, Roldan argued that no provision in the Code of Muslim
Personal Laws of the Philippines prohibited non-Muslims from participating
in Sharia court proceedings, especially in actions where the Sharia court
applied the provisions of the Civil Code of the Philippines. Thus, respondent
Fifth Sharia District Court validly took cognizance of his action:
2. That the Shariah District Court is not a court exclusively for muslim
litigants. No provision in the Code on Muslim Personal Laws which expressly
prohibits non-muslim to participate in the proceedings in the Shariah Courts,
especially in actions which applies the civil code and not the Code on
Muslim Personal Laws;
3. The Shariah District Courts has jurisdiction over action for quieting of title
filed by a muslim litigant since the nature of the action involved mere
removal of cloud of doubt upon ones Certificate of Title. The laws applied in

4. That it is not disputed that herein petitioner (respondent below) was

properly served with summons, notices and other court processes when the
SDC Spl. Case No. 07-200 was filed and heard in the Fifth (5th) Shariah
District Court, Cotabato City, but petitioner (respondent below) intentionally
or without known reason, ignore the proceedings;
5. That the main issue in the instant action for certiorari is whether or not
herein petitioner (respondent below) has effectively waived his right to
participate in the proceedings below and had lost his right to appeal via
Certiorari; and the issue on whether or not the Fifth (5th) Shariah District
Court has jurisdiction over an action where one of the parties is a nonmuslim;
6. That the Fifth (5th) Shariah District Court, Cotabato City acquired
jurisdiction over the case and that the same Court had correctly ruled that
herein petitioner (respondent) intentionally waived his right to defend himself
including his right to appeal via certiorari;
7. That it is humbly submitted that when the Shariah District Court took
cognizance of an action under its concurrent jurisdiction with the Regional
Trial Court, the law rules applied is not the Code on Muslim Personal Laws
but the Civil Code of the Philippines and the Revised Rules of Procedure,
hence the same would not prejudice the right of herein petitioner
(respondent below)[.]33
In the resolution dated November 21, 2011, this court ordered Vivencio to reply to
Roldans comment. On February 3, 2012, Vivencio filed his manifestation, 34 stating
that he would no longer file a reply to the comment as he had "exhaustively discussed
the issue presented for resolution in [his petition for certiorari]."35
The principal issue for our resolution is whether a Sharia District Court has
jurisdiction over a real action where one of the parties is not a Muslim.
We also resolve the following issues:

1. Whether a Sharia District Court may validly hear, try, and decide a real
action where one of the parties is a non-Muslim if the District Court decides
the action applying the provisions of the Civil Code of the Philippines; and
2. Whether a Sharia District Court may validly hear, try, and decide a real
action filed by a Muslim against a non-Muslim if the non-Muslim defendant
was served with summons.
We rule for petitioner Vivencio.
I
Respondent
Fifth
Court
had
no
and
decide
recovery of possession

jurisdiction
Roldans

Sharia
to

hear,
action

District
try,
for

Jurisdiction over the subject matter is "the power to hear and determine cases of the
general class to which the proceedings in question belong." 36 This power is conferred
by law,37 which may either be the Constitution or a statute. Since subject matter
jurisdiction is a matter of law, parties cannot choose, consent to, or agree as to what
court or tribunal should decide their disputes. 38 If a court hears, tries, and decides an
action in which it has no jurisdiction, all its proceedings, including the judgment
rendered, are void.39
To determine whether a court has jurisdiction over the subject matter of the action, the
material allegations of the complaint and the character of the relief sought are
examined.40
The law conferring the jurisdiction of Sharia District Courts is the Code of the Muslim
Personal Laws of the Philippines. Under Article 143 of the Muslim Code, Sharia
District Courts have concurrent original jurisdiction with "existing civil courts" over real
actions not arising from customary contracts 41 wherein the parties involved are
Muslims:
ART 143. Original jurisdiction. x x x x
(2) Concurrently with existing civil courts, the Sharia District Court shall have original
jurisdiction over:
xxxx

(b) All other personal and real actions not mentioned in paragraph 1(d) 42 wherein the
parties involved are Muslims except those for forcible entry and unlawful detainer,
which shall fall under the exclusive original jurisdiction of the Municipal Circuit Court;
and
xxxx
When ownership is acquired over a particular property, the owner has the right to
possess and enjoy it.43 If the owner is dispossessed of his or her property, he or she
has a right of action to recover its possession from the dispossessor.44 When the
property involved is real,45 such as land, the action to recover it is a real
action;46otherwise, the action is a personal action.47 In such actions, the parties
involved must be Muslims for Sharia District Courts to validly take cognizance of
them.
In this case, the allegations in Roldans petition for recovery of possession did not
state that Vivencio is a Muslim. When Vivencio stated in his petition for relief from
judgment that he is not a Muslim, Roldan did not dispute this claim.
When it became apparent that Vivencio is not a Muslim, respondent Fifth Sharia
District Court should have motu proprio dismissed the case. Under Rule 9, Section 1
of the Rules of Court, if it appears that the court has no jurisdiction over the subject
matter of the action based on the pleadings or the evidence on record, the court shall
dismiss the claim:
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.
Respondent Fifth Sharia District Court had no authority under the law to decide
Roldans action because not all of the parties involved in the action are Muslims.
Thus, it had no jurisdiction over Roldans action for recovery of possession. All its
proceedings in SDC Special Proceedings Case No. 07-200 are void.
Roldan chose to file his action with the Sharia District Court, instead of filing the
action with the regular courts, to obtain "a more speedy disposition of the
case."48 This would have been a valid argument had all the parties involved in this
case been Muslims. Under Article 143 of the Muslim Code, the jurisdiction of Sharia
District Courts over real actions not arising from customary contracts is concurrent
with that of existing civil courts. However, this concurrent jurisdiction over real actions
"is applicable solely when both parties are Muslims"49 as this court ruled in Tomawis v.
Hon. Balindong.50 When one of the parties is not a Muslim, the action must be filed
before the regular courts.

The application of the provisions of the Civil Code of the Philippines by respondent
Fifth Sharia District Court does not validate the proceedings before the court. Under
Article 175 of the Muslim Code, customary contracts are construed in accordance
with Muslim law.51 Hence, Sharia District Courts apply Muslim law when resolving
real actions arising from customary contracts.
In real actions not arising from contracts customary to Muslims, there is no reason for
Sharia District Courts to apply Muslim law. In such real actions, Sharia District
Courts will necessarily apply the laws of general application, which in this case is the
Civil Code of the Philippines, regardless of the court taking cognizance of the action.
This is the reason why the original jurisdiction of Sharia District Courts over real
actions not arising from customary contracts is concurrent with that of regular courts.
However, as discussed, this concurrent jurisdiction arises only if the parties involved
are Muslims. Considering that Vivencio is not a Muslim, respondent Fifth Sharia
District Court had no jurisdiction over Roldans action for recovery of possession of
real property. The proceedings before it are void, regardless of the fact that it applied
the provisions of the Civil Code of the Philippines in resolving the action.
True, no provision in the Code of Muslim Personal Laws of the Philippines expressly
prohibits non-Muslims from participating in Sharia court proceedings. In fact, there
are instances when provisions in the Muslim Code apply to non-Muslims. Under
Article 13 of the Muslim Code, 52 provisions of the Code on marriage and divorce apply
to the female party in a marriage solemnized according to Muslim law, even if the
female is non-Muslim.53 Under Article 93, paragraph (c) of the Muslim Code,54 a
person of a different religion is disqualified from inheriting from a Muslim
decedent.55 However, by operation of law and regardless of Muslim law to the
contrary, the decedents parent or spouse who is a non-Muslim "shall be entitled to
one-third of what he or she would have received without such disqualification." 56 In
these instances, non-Muslims may participate in Sharia court proceedings.57
Nonetheless, this case does not involve any of the previously cited instances. This
case involves an action for recovery of possession of real property. As a matter of law,
Sharia District Courts may only take cognizance of a real action "wherein the parties
involved are Muslims."58 Considering that one of the parties involved in this case is
not a Muslim, respondent Fifth Sharia District Court had no jurisdiction to hear, try,
and decide the action for recovery of possession of real property. The judgment
against Vivencio is void for respondent Fifth Sharia District Courts lack of jurisdiction
over the subject matter of the action.
That Vivencio raised the issue of lack of jurisdiction over the subject matter only after
respondent Fifth Sharia District Court had rendered judgment is immaterial. A party
may assail the jurisdiction of a court or tribunal over a subject matter at any stage of
the proceedings, even on appeal.59 The reason is that "jurisdiction is conferred by law,
and lack of it affects the very authority of the court to take cognizance of and to
render judgment on the action."60

In Figueroa v. People of the Philippines,61 Venancio Figueroa was charged with

reckless imprudence resulting in homicide before the Regional Trial Court of Bulacan.
The trial court convicted Figueroa as charged. On appeal with the Court of Appeals,
Figueroa raised for the first time the issue of jurisdiction of the Regional Trial Court to
decide the case. Ruling that the Regional Trial Court had no jurisdiction over the
crime charged, this court dismissed the criminal case despite the fact that Figueroa
objected to the trial courts jurisdiction only on appeal.
In Metromedia Times Corporation v. Pastorin,62 Johnny Pastorin filed a complaint for
constructive dismissal against Metromedia Times Corporation. Metromedia Times
Corporation actively participated in the proceedings before the Labor Arbiter. When
the Labor Arbiter ruled against Metromedia Times, it appealed to the National Labor
Relations Commission, arguing for the first time that the Labor Arbiter had no
jurisdiction over the complaint. According to Metromedia Times, the case involved a
grievance issue "properly cognizable by the voluntary arbitrator." 63 This court set
aside the decision of the Labor Arbiter on the ground of lack of jurisdiction over the
subject matter despite the fact that the issue of jurisdiction was raised only on appeal.
There are exceptional circumstances when a party may be barred from assailing the
jurisdiction of the court to decide a case. In the 1968 case of Tijam v.
Sibonghanoy,64 the Spouses Tijam sued the Spouses Sibonghanoy on July 19, 1948
before the Court of First Instance of Cebu to recover P1,908.00. At that time, the court
with exclusive original jurisdiction to hear civil actions in which the amount demanded
does not exceed P2,000.00 was the court of justices of the peace and municipal
courts in chartered cities under Section 88 of the Judiciary Act of 1948.
As prayed for by the Spouses Tijam in their complaint, the Court of First Instance
issued a writ of attachment against the Spouses Sibonghanoy. However, the latter
filed a counter-bond issued by Manila Surety and Fidelity Co., Inc. Thus, the Court of
First Instance dissolved the writ of attachment.
After trial, the Court of First Instance decided in favor of the Spouses Tijam. When the
writ of execution returned unsatisfied, the Spouses Tijam moved for the issuance of a
writ of execution against Manila Surety and Fidelity Co., Inc.s bond. The Court of
First Instance granted the motion. Manila Surety and Fidelity Co., Inc. moved to
quash the writ of execution, which motion the Court of First Instance denied. Thus,
the surety company appealed to the Court of Appeals.
The Court of Appeals sustained the Court of First Instances decision. Five days after
receiving the Court of Appeals decision, Manila Surety and Fidelity Co., Inc. filed a
motion to dismiss, arguing for the first time that the Court of First Instance had no
jurisdiction over the subject matter of the case. The Court of Appeals forwarded the
case to this court for resolution.
This court ruled that the surety company could no longer assail the jurisdiction of the
Court of First Instance on the ground of estoppel by laches. Parties may be barred

from assailing the jurisdiction of the court over the subject matter of the action if it
took them an unreasonable and unexplained length of time to object to the courts
jurisdiction.65 This is to discourage the deliberate practice of parties in invoking the
jurisdiction of a court to seek affirmative relief, only to repudiate the courts jurisdiction
after failing to obtain the relief sought.66 In such cases, the courts lack of jurisdiction
over the subject matter is overlooked in favor of the public policy of discouraging such
inequitable and unfair conduct.67

x x x estoppel, being in the nature of a forfeiture, is not favored by law. It is to be

applied rarely only from necessity, and only in extraordinary circumstances. The
doctrine must be applied with great care and the equity must be strong in its favor.
When misapplied, the doctrine of estoppel may be a most effective weapon for the
accomplishment of injustice. x x x a judgment rendered without jurisdiction over the
subject matter is void. x x x. No laches will even attach when the judgment is null and
void for want of jurisdiction x x x.78

In Tijam, it took Manila Surety and Fidelity Co., Inc. 15 years before assailing the
jurisdiction of the Court of First Instance. As early as 1948, the surety company
became a party to the case when it issued the counter-bond to the writ of attachment.
During trial, it invoked the jurisdiction of the Court of First Instance by seeking several
affirmative reliefs, including a motion to quash the writ of execution. The surety
company only assailed the jurisdiction of the Court of First Instance in 1963 when the
Court of Appeals affirmed the lower courts decision. This court said:

In this case, the exceptional circumstances similar to Tijam do not exist. Vivencio
never invoked respondent Fifth Sharia District Courts jurisdiction to seek affirmative
relief. He filed the petition for relief from judgment precisely to assail the jurisdiction of
respondent Fifth Sharia District Court over Roldans petition for recovery of
possession.

x x x x Were we to sanction such conduct on [Manila Surety and Fidelity, Co. Inc.s]
part, We would in effect be declaring as useless all the proceedings had in the
present case since it was commenced on July 19, 1948 and compel [the spouses
Tijam] to go up their Calvary once more.
The inequity and unfairness of this is not only patent but revolting.68
After this court had rendered the decision in Tijam, this court observed that the "nonwaivability of objection to jurisdiction"69 has been ignored, and the Tijam doctrine has
become more the general rule than the exception.
In Calimlim v. Ramirez,70 this court said:
A rule that had been settled by unquestioned acceptance and upheld in decisions so
numerous to cite is that the jurisdiction of a court over the subject-matter of the action
is a matter of law and may not be conferred by consent or agreement of the parties.
The lack of jurisdiction of a court may be raised at any stage of the proceedings, even
on appeal. This doctrine has been qualified by recent pronouncements which
stemmed principally from the ruling in the cited case of [Tijam v. Sibonghanoy]. It is to
be regretted, however, that the holding in said case had been applied to situations
which were obviously not contemplated therein. x x x.71
Thus, the court reiterated the "unquestionably accepted"72 rule that objections to a
courts jurisdiction over the subject matter may be raised at any stage of the
proceedings, even on appeal. This is because jurisdiction over the subject matter is a
"matter of law"73 and "may not be conferred by consent or agreement of the parties."74
In Figueroa,75 this court ruled that the Tijam doctrine "must be applied with great
care;"76 otherwise, the doctrine "may be a most effective weapon for the
accomplishment of injustice":77

Thus, the general rule holds. Vivencio validly assailed the jurisdiction of respondent
Fifth Sharia District Court over the action for recovery of possession for lack of
jurisdiction over the subject matter of Roldans action.
II
That
respondent
District
Court
served
petitioner
Vivencio
did
with
jurisdiction
over
petitioner Vivencio

Fifth
summons
not
vest
the
person

Sharia
on
it
of

Roldan argued that the proceedings before respondent Sharia District Court were
valid since the latter acquired jurisdiction over the person of Vivencio. When Vivencio
was served with summons, he failed to file his answer and waived his right to
participate in the proceedings before respondent Fifth Sharia District Court. Since
Vivencio waived his right to participate in the proceedings, he cannot argue that his
rights were prejudiced.
Jurisdiction over the person is "the power of [a] court to render a personal judgment
or to subject the parties in a particular action to the judgment and other rulings
rendered in the action."79 A court acquires jurisdiction over the person of the plaintiff
once he or she files the initiatory pleading.80 As for the defendant, the court acquires
jurisdiction over his or her person either by his or her voluntary appearance in
court81 or a valid service on him or her of summons.82
Jurisdiction over the person is required in actions in personam 83 or actions based on a
partys personal liability.84Since actions in personam "are directed against specific
persons and seek personal judgments,"85 it is necessary that the parties to the action
"are properly impleaded and duly heard or given an opportunity to be heard." 86 With
respect to the defendant, he or she must have been duly served with summons to be

considered properly impleaded; otherwise, the proceedings in personam, including

the judgment rendered, are void.87
On the other hand, jurisdiction over the person is not necessary for a court to validly
try and decide actions in rem.88 Actions in rem are "directed against the thing or
property or status of a person and seek judgments with respect thereto as against the
whole world."89 In actions in rem, the court trying the case must have jurisdiction over
the res, or the thing under litigation, to validly try and decide the case. Jurisdiction
over the res is acquired either "by the seizure of the property under legal process,
whereby it is brought into actual custody of the law; or as a result of the institution of
legal proceedings, in which the power of the court is recognized and made
effective."90 In actions in rem, summons must still be served on the defendant but only
to satisfy due process requirements.91
Unlike objections to jurisdiction over the subject matter which may be raised at any
stage of the proceedings, objections to jurisdiction over the person of the defendant
must be raised at the earliest possible opportunity; otherwise, the objection to the
courts jurisdiction over the person of the defendant is deemed waived. Under Rule 9,
Section 1 of the Rules of Court, "defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived."
In this case, Roldan sought to enforce a personal obligation on Vivencio to vacate his
property, restore to him the possession of his property, and pay damages for the
unauthorized use of his property.92 Thus, Roldans action for recovery of possession is
an action in personam. As this court explained in Ang Lam v. Rosillosa and
Santiago,93an action to recover the title to or possession of a parcel of land "is an
action in personam, for it binds a particular individual only although it concerns the
right to a tangible thing."94 Also, in Muoz v. Yabut, Jr., 95 this court said that "a
judgment directing a party to deliver possession of a property to another is in
personam. It is binding only against the parties and their successors-in-interest by title
subsequent to the commencement of the action."96
This action being in personam, service of summons on Vivencio was necessary for
respondent Fifth Sharia District Court to acquire jurisdiction over Vivencios person.
However, as discussed, respondent Fifth Sharia District Court has no jurisdiction over
the subject matter of the action, with Vivencio not being a Muslim. Therefore, all the
proceedings before respondent Sharia District Court, including the service of
summons on Vivencio, are void.
III

The
Sharia
Appellate
Court
Office
of
the
Jurisconsult
law
must
now
be
effectively
enforce
the
system in the Philippines

and
in
organized
Muslim

the
Islamic
to
legal

We note that Vivencio filed directly with this court his petition for certiorari of
respondent Fifth Sharia District Courts decision. Under the judicial system in
Republic Act No. 9054,97 the Sharia Appellate Court has exclusive original jurisdiction
over petitions for certiorari of decisions of the Sharia District Courts. He should have
filed his petition for certiorari before the Sharia Appellate Court.
However, the Sharia Appellate Court is yet to be organized.1wphi1 Thus, we call for
the organization of the court system created under Republic Act No. 9054 to
effectively enforce the Muslim legal system in our country. After all, the Muslim legal
system a legal system complete with its own civil, criminal, commercial, political,
international, and religious laws98 is part of the law of the land,99 and Sharia courts
are part of the Philippine judicial system.100
Sharia Circuit Courts and Sharia District Courts created under the Code of Muslim
Personal Laws of the Philippines shall continue to discharge their duties.101 All cases
tried in Sharia Circuit Courts shall be appealable to Sharia District Courts.[[102]
The Sharia Appellate Court created under Republic Act No. 9054 shall exercise
appellate jurisdiction over all cases tried in the Sharia District Courts. 103 It shall also
exercise original jurisdiction over petitions for certiorari, prohibition, mandamus,
habeas corpus, and other auxiliary writs and processes in aid of its appellate
jurisdiction.104 The decisions of the Sharia Appellate Court shall be final and
executory, without prejudice to the original and appellate jurisdiction of this court.105
This court held in Tomawis v. Hon. Balindong 106 that "until such time that the Sharia
Appellate Court shall have been organized," 107 decisions of the Sharia District Court
shall be appealable to the Court of Appeals and "shall be referred to a Special
Division to be organized in any of the [Court of Appeals] stations preferably composed
of Muslim [Court of Appeals] Justices."108 However, considering that To m a w i s was
not yet promulgated when Vivencio filed his petition for certiorari on August 6, 2009,
we take cognizance of Vivencios petition for certiorari in the exercise of our original
jurisdiction over petitions for certiorari.109
Moreover, priority should be given in organizing the Office of the Jurisconsult in
Islamic law. A Jurisconsult in Islamic law or "Mufti" is an officer with authority to render
legal opinions or "fatawa"110 on any questions relating to Muslim law.111 These legal
opinions should be based on recognized authorities112 and "must be rendered in
precise accordance with precedent."113 In the Philippines where only Muslim personal
laws are codified, a legal officer learned in the Quran and Hadiths is necessary to

assist this court as well as Sharia court judges in resolving disputes not involving
Muslim personal laws.
All told, Sharia District Courts have jurisdiction over a real action only when the
parties involved are Muslims. Respondent Fifth Sharia District Court acted without
jurisdiction in taking cognizance of Roldan E. Malas action for recovery of possession
considering that Vivencio B. Villagracia is not a Muslim. Accordingly, the proceedings
in SDC Special Proceedings Case No. 07-200, including the judgment rendered, are
void.
WHEREFORE, the petition for certiorari is GRANTED. Respondent Fifth Sharia
District Courts decision dated June 11, 2008 and order dated May 29, 2009 in SDC
Special Proceedings Case No. 07-200 are SET ASIDE without prejudice to the filing
of respondent Roldan E. Mala of an action with the proper court.
SO ORDERED.

G.R. No. 188165

December 11, 2013

PEOPLE OF THE PHILIPPINES, Petitioner,

vs.
HON. SANDIGANBAYAN, FIRST DIVISION & THIRD DIVISION, HERNANDO
BENITO PEREZ, ROSARIO PEREZ, RAMON ARCEO and ERNEST
ESCALER, Respondents.
x-------------------------------------------x
G.R. No. 189063
PEOPLE OF THE PHILIPPINES, Petitioner,
vs.
HON. SANDIGANBAYAN, SECOND DIVISION, HERNANDO BENITO PEREZ,
ROSARIO SALVADOR PEREZ, ERNEST DE LEON ESCALER and RAMON
CASTILLO ARCEO, JR., Respondents.
DECISION
BERSAMIN, J.:
The guarantee of the speedy disposition of cases under Section 16 of Article III of the
Constitution applies to all cases pending before all judicial, quasi-judicial or
administrative bodies. Thus, the fact-finding investigation should not be deemed
separate from the preliminary investigation conducted by the Office of the
Ombudsman if the aggregate time spent for both constitutes inordinate and
oppressive delay in the disposition of any case.
The Case
The Court resolves the petitions for certiorari the State instituted to assail and nullify,
in G.R. No. 188165, the Sandiganbayans dismissal of Criminal Case SB-08-CRM0265 entitled People of the Philippine v. Hernando Benito Perez, Rosario S. Perez,
Ernest Escaler, and Ramon A. Arceo, for violation of Section 3 (b) of Republic Act No.
3019, as amended; and, in G.R. No. 189063, the Sandiganbayans dismissal of SB08-CRM- 0266 entitledPeople of the Philippine v. Hernando Benito Perez, Rosario S.
Perez, Ernest Escaler, and Ramon A. Arceo, for robbery under Article 293, in relation
to Article 294, of the Revised Penal Code.
Common Factual and Procedural Antecedents
On November 12, 2002, Congressman Wilfrido B. Villarama of Bulacan (Cong.
Villarama) delivered a privilege speech in the House of Representatives denouncing
acts of bribery allegedly committed by a high ranking government official whom he
then called the "2 Million Dollar Man."1 In reaction, the Office of the President directed
the Presidential Anti- Graft and Commission (PAGC) to conduct an inquiry on the
expos of Cong. Villarama. PAGC sent written communications to Cong. Villarama,

Cong. Mark Jimenez, Senator Panfilo Lacson and respondent Secretary of Justice
Hernando B. Perez inviting them to provide information and documents on the alleged
bribery subject of the expos. 2 On November 18, 2002, Cong. Villarama responded
by letter to PAGCs invitation by confirming that Secretary Perez was the government
official who "ha[d] knowledge or connection with the bribery subject of his expose."3 In
his own letter of November 18, 2002, however, Secretary Perez denied being the
Million-Dollar Man referred to in Cong. Villaramas privilege speech.4 On November
25, 2002, Cong. Jimenez delivered a privilege speech in the House of
Representatives confirming Cong. Villaramas expos, and accusing Secretary Perez
of extorting US$2 Million from him in February 2001.5
On November 25, 2002, then Ombudsman Simeon Marcelo requested PAGC to
submit documents relevant to the expos. 6 On November 26, 2002, Ombudsman
Marcelo formally requested Cong. Jimenez to submit a sworn statement on his
expos.7 Cong. Jimenez complied on December 23, 2002 by submitting his
complaint-affidavit to the Office of the Ombudsman. The complaint-affidavit was
initially docketed as CPL-C-02-1992. On the same day, the Special Action Team of
the Fact Finding and Intelligence Research Office (FIRO) of the Office of the
Ombudsman referred Cong. Jimenezs complaint-affidavit to the Evaluation and
Preliminary Investigation Bureau and to the Administrative Adjudication Board, both of
the Office of the Ombudsman, for preliminary investigation and administrative
adjudication, respectively.8
The complaint-affidavit of Jimenez was re-docketed as OMB-C-C-02- 0857L, for the
criminal case in which the respondents were Secretary Perez, Ernest L. Escaler and
Ramon C. Arceo, Jr.; and as OMB-C-A-02-0631L, for the administrative case
involving only Secretary Perez as respondent.9
On January 2, 2003, a Special Panel composed of Atty. Evelyn Baliton, Atty. Mary
Susan Guillermo and Atty. Jose de Jesus was created to evaluate and conduct an
investigation of CPL-C-02-1992.
On even date, Secretary Perez, through counsel, requested Ombudsman Marcelo
that the Office of the Ombudsman itself directly verify from the Coutts Bank whether
he (Secretary Perez) had ever held any account in that bank to which the sum of
US$2 Million had been remitted by Cong. Jimenez.10
On January 15, 2003, Ombudsman Marcelo approved the recommendation of the
Special Panel to refer the complaint of Cong. Jimenez to FIRO for a full-blown factfinding investigation.11
On June 4, 2003, the Office of the Ombudsman received the letter dated May 30,
2003 from the counsel of Cong. Jimenez, submitting the supplemental complaintaffidavit dated April 4, 2003 of Cong. Jimenez.
In his letter dated July 3, 2003, Secretary Perez, through counsel, sought the
dismissal of the complaint for lack of probable cause.12

On July 17, 2003, Assistant Ombudsman Pelagio S. Apostol informed Secretary

Perez about the letter from Coutts Bank stating that "Hernando B. Perez" had no
account with it, and assured that the letter would be considered in the final resolution
of the case.13
On August 22, 2005, Ombudsman Marcelo created a new Special Panel to evaluate
CPL-C-02-1992, and, if warranted, to conduct administrative and preliminary
investigations, thereby superseding the creation of the Special Panel formed on
January 2, 2003.14
On November 14, 2005, the Field Investigation Office (FIO) completed its fact-finding
investigation and filed complaints against the following individuals, namely:
A. Former Justice Secretary Hernando B. Perez, Rosario S. Perez, Ernesto
L. Escaler, Ramon C. Arceo and John Does for violation of Section 3(b) of
R.A. No. 3019;
B. Former Justice Secretary Hernando B. Perez for violation of the following:
Section 8 in relation to Section 11 of R.A. No. 6713, Article 183 (Perjury) of
the Revised Penal Code, and Article 171, par. 4 (Falsification) of the RPC;
and
C. Former Justice Secretary Hernando B. Perez, Rosario S. Perez, Ernest L.
Escaler, Ramon C. Arceo and John Does for violation of the provisions of
R.A. 1379.15
On November 23, 2005, the Special Panel directed Secretary Perez (who had
meanwhile resigned from office), his wife Rosario S. Perez (Mrs. Perez), Escaler and
Arceo to submit their counter-affidavits in OMB-C-C-02-0857-L, OMB-C-C-05-0633-K,
OMB-C-C-05-0634-K and OMB-C-C-05-0635-K (criminal cases). In another order of
the same date, the Special Panel directed former Secretary Perez to file his counteraffidavit in OMBC-A-02-0631-L (administrative case).16
On November 29, 2005, the respondents filed an urgent motion for extension of time
to file their counter-affidavits.
On December 2, 2005, the counsel for Escaler entered his appearance and sought
the extension of the time to file Escalers counter-affidavit.17
On December 5, 2005, the Special Panel ordered the respondents to file their
counter-affidavits within ten days from December 4, 2005, or until December 14,
2005.18
On December 7, 2005, Asst. Ombudsman Apostol issued PAMO Office Order No. 22,
Series of 2005, creating a new team of investigators to assist in the preliminary
investigation and administrative adjudication of OMB-C-C-02-0857L, OMB-C-A-020631L (administrative case), OMB-CC-05-0633K to OMB-C-C-0635K (forfeiture

proceedings under Republic Act No. 1379). The office order cancelled and
superseded PAMO Office Order No. 01-2003, Series of 2003.19

After Escaler failed to submit his counter-affidavit despite the lapse of the five day
period given to him, the preliminary investigation was terminated.35

On December 12, 2005, former Secretary Perez, Mrs. Perez and Arceo filed an
urgent motion to be furnished copies of the complaints.20 On December 13, 2005,
they submitted a consolidated joint counter-affidavit dated December 12, 2005.21

On August 23, 2006, Escaler commenced in this Court a special civil action
for certiorari with application for a temporary restraining order (TRO) docketed as
G.R. No. 173967-71.36 On September 4, 2006, the Court required the Office of the
Ombudsman to comment on the petition of Escaler.37

On December 15, 2005, the respondents filed a manifestation to which they attached
the affidavit of Atty. Chona Dimayuga.22
On December 20, 2005, Escaler, instead of filing his counter-affidavit, moved to
disqualify the Office of the Ombudsman from conducting the preliminary investigation,
and to require the Special Panel to turn over the investigation to the Department of
Justice (DOJ).23
On December 22, 2005, the respondents submitted the affidavit of Chief State
Prosecutor Jovencito Zuo.24
On December 29, 2005, the Special Panel denied the motion to disqualify the Office
of the Ombudsman from conducting the preliminary investigation, and ordered
Escaler to submit his counter-affidavit within five days from notice.25

On November 6, 2006, the Special Panel issued a joint resolution, finding probable
cause and recommending that criminal informations be filed against the respondents,
as follows:
1) Former Secretary Hernando B. Perez, Rosario S. Perez, Ernest L.
Escaler and Ramon S. Arceo, Jr. for Extortion (Robbery) under par. 5 of
Article 294 in relation to Article 293 of the Revised Penal Code;
2) Former Secretary Hernando B. Perez, Rosario S. Perez, Ernest L.
Escaler and Ramon S. Arceo, Jr. for violation of Section 3 (b) of Rep. Act.
3019.
3) Former Secretary Hernando B. Perez for Falsification of Public
Documents under Article 171 par. 4 of the Revised Penal Code.

On January 4, 2006, Cong. Jimenez filed an urgent motion for extension of the period
to file his opposition to the motion earlier filed by Escaler, and to be granted a new
period to reply to the consolidated joint counter-affidavit of the Perezes and Arceo.26

4) Former Secretary Hernando B. Perez for violation of Sec. 7, R.A. 3019 in

relation to Section 8 of R.A. 6713.38

Between January 9, 2006 and February 10, 2006, Cong. Jimenez filed urgent motions
for time to file his opposition, the last of them seeking an extension until February 10,
2006.27

On January 5, 2007, Ombudsman Ma. Merceditas Gutierrez (Ombudsman Gutierrez),

who had meanwhile replaced the resigned Ombudsman Marcelo, approved the joint
resolution of the Special Panel.39

On February 21, 2006, the Perezes and Arceo reiterated their urgent motion to be
furnished copies of the complaints.28

On January 11, 2007, the Perezes and Arceo sought the reconsideration of the joint
resolution,40 and supplemented their motion for that purpose with additional
arguments on January 15, 2007.41

On February 22, 2006, Cong. Jimenez opposed Escalers motion to disqualify the
Office of the Ombudsman.29 On the same date, Escaler asked for at least 20 days
from February 17, 2006 (or until March 9, 2006) within which to reply to Cong.
Jimenezs opposition to his motion.30 On March 9, 2006, Escaler replied to Cong.
Jimenezs opposition.31 On March 28, 2006, Cong. Jimenez sought leave to file a
rejoinder to Escalers reply.32
On May 15, 2006, Escaler moved for the reconsideration of the order of December
29, 2005.33
On May 25, 2006, the Special Panel denied Escalers motion for reconsideration;
directed the FIO "to let respondent Escaler examine, compare, copy and obtain any
and all documentary evidence described, attached to and forming part of the
complaints" of the cases; and granted Escaler an extension of five days within which
to submit his counter-affidavit.34

On January 17, 2007, Arceo filed an ex parte motion for leave to admit attached
supplemental motion for reconsideration.42
On January 24, 2007, the Perezes and Arceo filed an urgent motion to suspend
proceedings. On February 6, 2007, Escaler also filed a motion to suspend
proceedings ex abundanti ad cautelam.43
On March 15, 2007, Cong. Jimenez asked for time to comment on the respondents
motion for reconsideration. He filed another motion for extension of the time to
comment on April 27, 2007.44

On September 18, 2007, the Perezes prayed that the proceedings be held in
abeyance to await the ruling on their application for intervention in Escalers action in
the Court. On October 1, 2007, they filed a motion to dismiss.45
On October 2, 2007, Cong. Jimenez submitted his affidavit of desistance. 46 Thus, on
October 4, 2007, the Perezes filed an ex parte motion for resolution on the basis of
the desistance by Cong. Jimenez.47
On January 25, 2008, the Special Panel issued an omnibus resolution denying the
original and supplemental motions for reconsideration of the Perezes and Arceo; their
motion to suspend the proceedings; Escalers motion to suspend proceedings ex
abundanti ad cautelam; and the Perezes motion to dismiss.48

criminally request and demand the amount of US TWO MILLION DOLLARS

($2,000,000.00) for himself and/or other persons from Mark Jimenez a.k.a. Mario B.
Crespo, and thereafter succeeded in receiving from the latter the sum of
US$1,999,965.00 in consideration of accused Hernando S. Perezs desisting from
pressuring Mark Jimenez to execute affidavits implicating target personalities involved
in the plunder case against former President Joseph Erap Estrada and in connection
with the pending application of Mark Jimenez for admission into the Witness
Protection Program of the government, over which transaction accused Hernando S.
Perez had to intervene in his official capacity under the law, to the damage and
prejudice of Mark Jimenez.
CONTRARY TO LAW.53

On April 18, 2008, the Perezes brought a petition for certiorari with an application for
a writ of preliminary injunction in this Court (G.R. No. 182360-63). 49 In due time, the
Court required the respondents in G.R. No. 182360-63 to file their comments on the
petition.50

On May 8, 2008, the Perezes moved to quash the information.54 Escaler presented a
similar motion to quash ex abundanti ad cautelam on May 12, 2008,55 while Arceo
adopted the motions of the Perezes and Escaler on May 13, 2008.56 On June 4, 2008,
the Office of the Ombudsman countered with a consolidated opposition.57

On April 18, 2008, the Office of the Ombudsman filed in the Sandiganbayan four
informations against respondents, namely:

On July 17, 2008, the First Division of the Sandiganbayan promulgated its resolution
denying the motions to quash,58 disposing thusly:

1. for violation of Sec. 3 (b) of Rep. Act 3019, as amended;

2. for Robbery (Art. 293, in relation to Art. 294, Revised Penal Code;
3. for Falsification of Public/Official Document under Art. 171 of the Revised
Penal Code; and
4. for violation of Section 7, Rep. Act 3019, as amended, in relation to
Section 8, Rep. Act 6713.51
Criminal Case No. SB-08-CRM-0265
[Violation of Section 3(b) of Republic Act No. 3019]
The information alleging the violation of Section 3(b) of Republic Act No. 3019, which
was docketed as Criminal Case No. SB-08-CRM-0265 entitled People v. Hernando
Benito Perez, et. al., and was raffled to the First Division of the
Sandiganbayan,52 averred:
That during the month of February, 2001 and sometime prior or subsequent thereto in
the City of Makati, Philippines, and within the jurisdiction of this Honorable Court,
accused Hernando B. Perez, a high ranking public officer, being then the Secretary of
the Department of Justice, while in the performance of his official function, committing
the offense in relation to his office and taking advantage thereof, conspiring,
confabulating and confederating with accused Ernest L. Escaler, Rosario S. Perez
and Ramon C. Arceo, all private individuals, did then and there wilfully, unlawfully and

WHEREFORE, in view of the foregoing, the Motion to Quash of accused Hernando B.

Perez and Rosario S. Perez and the urgent Ex- Abudanti Ad Cautelam Motion to
Quash of accused Ernest Escaler are hereby DENIED for lack of merit.
Accordingly, let the arraignment of the accused herein proceed on July 18, 2008 at
8:30 in the morning as previously set by the Court.
SO ORDERED.
Respondents separately sought the reconsideration of the resolution of denial of their
motions to quash.
On November 13, 2008, the Sandiganbayan First Division granted the motions for
reconsideration,59 rendering the following ratiocination, to wit:
xxxx
After a second hard look on the respective contentions of the parties, the Court is
inclined to grant the Motions for Reconsideration of the accused and perforce grant
their motion to quash the Information filed against them in this case.
It is axiomatic that as a general rule prerequisite, a motion to quash on the ground
that the Information does not constitute the offense charged, or any offense for that
matter, should be resolved on the basis of the factual allegations therein whose truth
and veracity are hypothetically admitted; and on additional facts admitted or not
denied by the prosecution. If the facts in the Information do not constitute an offense,
the complaint or information should be quashed by the court.

xxxx
It is clear that the ambit of Section 3 (b) of RA 3019 is specific. It is limited only to
contracts or transaction involving monetary consideration where the public officer has
authority to intervene under the law. Thus, the requesting or demanding of any gift,
present, share, percentage, or benefit covered by said Section 3(b) must be in
connection with a "contract or transaction" involving "monetary consideration" with the
government wherein the public officer in his official capacity has to intervene under
the law. In this regard, the Supreme Court in Soriano, Jr. vs.
Sandiganbayan construed the term "contract" or "transaction" covered by Section
3(b) of RA 3019, as follows
"It is obvious that the investigation conducted by the petitioner was not a contract.
Neither was it a transactionbecause this term must be construed as analogous to the
terms which precedes it. A transaction like a contract, is one which involves
some consideration as in credit transactions and this element (consideration)
is absent in the investigation conducted by the petitioner." (Emphasis supplied)
Thus, applying the above construction of the Supreme Court in the case at bench, the
Court believes and so holds that the alleged desistance of accused Hernando B.
Perez "from pressuring Mark Jimenez to execute affidavits implicating target
personalities involved in the plunder case against former President Joseph Erap
Estrada and in connection with the pending application of Mark Jimenez for
admission into the WPP of the government", cannot, by any stretch of the
imagination, be considered as"contract" or "transaction" as defined within the ambit of
the fourth element of the offense under Section 3(b) of RA 3019 because
no "monetary consideration" as in credit transaction is involved.
The Court finds untenable the prosecutions contention that the execution by Mark
Jimenez of the affidavits in connection with his pending application for admission in
the WPP (and not the alleged desistance of accused Hernando B. Perez from
pressuring Mark Jimenez to execute affidavits implicating target personalities involved
in the plunder case against President Estrada) is the very contract or transaction
required by the offense charged in this case; and that all the elements of a contract
contemplated therein are present as there is allegedly consent between the
government and Mark Jimenez, object or subject matter which is the execution of
affidavits in connection with his application for admission in the WPP, and a cause or
consideration which consists of security and monetary benefits to be given by the
government to Mark Jimenez in exchange for his participation as a witness under the
WPP.
For even assuming for the sake of argument that the pending application of Mark
Jimenez for admission in the WPP can be considered as a contract or transaction, it
bears stressing that the principal consideration for the said application of Mark
Jimenez is the latters obligation to testify as a witness under the WPP on one hand
and his entitlement to the protection granted to a witness in the WPP on the other
hand and as such, does not entail any money consideration. Certainly, this is not the
(monetary) consideration which is essential or involved in credit transactions. Any
pecuniary or monetary expense that may be incurred by the Government as a result
of the implementation of the program in favour of Mark Jimenez is purely incidental.

Such alleged monetary benefit is definitely not the reason that impelled Mark Jimenez
to allegedly avail of the WPP of the government.
More precisely, however, what appears as the main consideration of the alleged
demand or receipt of accused Hernando B. Perez of the sum of US$2,000,000.00
from Mark Jimenez is the formers alleged desistance from pressuring the latter to
execute affidavits implicating targeted personalities in the plunder case against former
President Estrada. In the light of the ruling of the Supreme Court in Soriano vs.
Sandiganbayan, supra, such alleged desistance of accused Hernando B. Perez (and
even the application of Mark Jimenez for admission into the WPP as argued by the
prosecution) can hardly be considered as a "contract" or "transaction" that is
contemplated in Section 3(b) of RA 3019, as amended.
Moreover, the Court takes note of the admission made by the prosecution in its
Memorandum that the transaction involving Mark Jimenezs execution of affidavits for
his admission to the WPP is not yet a perfected contract between the Government
and Mark Jimenez since it is still in its "negotiation phase" because of the refusal of
Mark Jimenez to execute the affidavits against certain individuals. This admission is
another indication that there is indeed no contract or transaction to speak of that is
covered under the fourth element of the offense of violation of Section 3(b) of RA
3019.
Finally, it may be argued that while the material allegations in the subject information
may not constitute the offense of violation of Section 3(b) of RA 3019, as amended,
the same material/factual allegations nevertheless constitute Direct Bribery or another
felony which is necessarily included in the offense charged herein so that the subject
information in this case should not be quashed. It is believed, however, that the filing
of the Information charging the accused with Robbery in SB-08-CRM-00266 pending
before the Second Division of this Court on the basis of the same acts complained of
in this case, constitutes a bar against the information for said lesser felony as it would
result into two differently charged felonies from a single act and thus, would
unnecessarily or unjustifiably expose the accused to the danger of suffering two
penalties for a single offense if the subject information is not quashed. If a single act
results into two or more offenses, they should not be charged and/or punished
separately unless the other offense with different elements is penalized under a
special law. To do so would violate, if not the principle of double jeopardy, the rule
against splitting a single act into various charges. It is settled that a defendant should
not be harassed with various prosecutions upon the same act by splitting the same
into various charges, all emanating from the same law violated, when the prosecution
could easily and well embody them in a single information because such splitting of
the action would work unnecessary inconvenience to the administration of justice in
general and to the accused in particular, for it would require the presentation of
substantially the same evidence before different courts.
All told, with the absence of the fourth element, the Court finds that the
factual/material allegations in the subject Information do not constitute the offense of
violation of Section 3(b) of RA 3019, as amended, and therefore, It is constrained to
quash the said Information. In this regard, the Court deems it unnecessary to
discuss/resolve the other issues raised in the subject motions for reconsideration of

the herein accused and/or disturb the other findings contained in the Resolution
sought to be reconsidered.
WHEREFORE, the instant Motions for Reconsideration of the herein accused are
resolved accordingly and the subject Information for violation of Section 3(b) of R.A.
3019, as amended, is hereby QUASHED.
SO ORDERED.

The petitioner states:

Assuming in gratia argumenti, petitioners guilt, the facts make out a case of Direct
Bribery defined and penalized under the provision of Article 210 of the Revised Penal
Code and not a violation of Section 3, subparagraph (b) of Rep. Act 3019, as
amended.

On April 21, 2009, the Third Division denied the Ombudsmans motion for
reconsideration,60 holding thusly:

The evidence for the prosecution clearly and undoubtedly support, if at all the offense
of Direct Bribery, which is not the offense charged and is not likewise included in or is
necessarily included in the offense charged, which is for violation of Section 3,
subparagraph (b) of Rep. Act 3019, as amended. The prosecution showed that: the
accused is a public officer; in consideration of P4,000.00 which was allegedly
solicited, P2,000.00 of which was allegedly received, the petitioner undertook or
promised to dismiss a criminal complaint pending preliminary investigation before
him, which may or may not constitute a crime; that the act of dismissing the criminal
complaint pending before petitioner was related to the exercise of the function of his
office. Therefore, it is with pristine clarity that the offense proved, if at all is Direct
Bribery. (Petition, p. 5.)

xxxx

Upon the other hand, the respondents claim:

The core issue raised in the submission of the parties relates to the meaning of the
word "transaction" as it is used in Sec. 3 (b) of RA 3019 to constitute an element of
the offense. More particularly, has the meaning of the term "transaction" as
enunciated in the Soriano case been modified by subsequent rulings of the Supreme
Court?

A reading of the above-quoted provision would show that the term transaction as
used thereof is not limited in its scope or meaning to a commercial or business
transaction but includes all kinds of transaction, whether commercial, civil or
administrative in nature, pending with the government. This must be so, otherwise,
the Act would have so stated in the "Definition of Terms", Section 2 thereof. But it did
not, perforce leaving no other interpretation than that the expressed purpose and
object is to embrace all kinds of transaction between the government and other party
wherein the public officer would intervene under the law. (Comment, p. 8.)

The State moved for the reconsideration of the resolution quashing the information in
Criminal Case No. SB-08-CRM-0265.
During the pendency of the States motion for reconsideration, Criminal Case No. SB08-CRM-0265 was re-raffled to the Third Division of the Sandiganbayan.

The meaning of "transaction" in Sec. 3 (b) of RA 3019 was enunciated in the Soriano
case when the Supreme Court stated:

The afore-mentioned provision reads as follows:

It is obvious that the investigation conducted by the petitioner was not

a contract. Neither was it atransaction because this term must be construed as
analogous to the term which precedes it. A transaction, like a contract, is one
which involves some consideration as in credit transactions and this element
(consideration) is absent in the investigation conducted by the
petitioner. (Emphasis Supplied)

SEC. 3. Corrupt practices of public officers. In addition to acts or omissions of public

officers already penalized by existing law, the following shall constitute corrupt
practices of any public officer and are hereby declared to be unlawful:

The argument of the Prosecution that the interpretation of the term "transaction"
defined in the Soriano case has been modified by the Mejia, Pelegrino and Chang
cases does not persuade.

As stated above, the principal issue is whether or not the investigation conducted by
the petitioner can be regarded as a "contract or transaction" within the purview of
Sec. 3 (b) of R.A. No. 3019. On this issue the petition is highly impressed with merit.

(a)
(b) Directly or indirectly requesting or receiving any gift, present, share,
percentage, or benefit, for himself or for any other person, in connection with
any contract or transaction between the Government and any other party,
wherein the public officer in his official capacity has to intervene under the
law.

A review of the Mejia, Peligrino and Chang cases reveals that the main issue
adjudicated in those cases involved an interpretation of the element of Sec. 3 (b) of
RA 3019, namely: the right to intervene of the public officer in the contract or
transaction and not the element of what is a contract or transaction with the
government.
Thus, in the Mejia case, the Supreme Court ruled:

Under the sixth assigned error petitioner alleges that she does not intervene in the
setting of the hearing of cases and she does not formulate resolutions thereof. The
branch clerk of court is the administrative assistant of the presiding judge whose duty
is to assist in the management of the calendar of the court and in all other matters not
involving the exercise of discretion or judgment of the judge. It is this special relation
of the petitioner with the judge who presumably has reposed confidence in her which
appears to have been taken advantage of by the petitioner in persuading the
complainants to give her money in consideration of a promise to get a favorable
resolution of their cases.
In the Peligrino case, the Supreme Court ruled:
Petitioner is a BIR Examiner assigned to the Special
Project Committee tasked "xxx to undertake verification of tax liabilities of various
professionals particularly doctors within the jurisdiction of Revenue Region 4-A,
Manila xxx" Since the subject transaction involved the reassessment of taxes due
from private complainant, the right of petitioner to intervene in his official
capacity is undisputed. Therefore, elements (1), (4) and (5) of the offense are
present. (Emphasis Supplied)
In the Chang case, the Supreme Court ruled:
San Mateos justification behind such refusal- that he had no authority to accept an
amount less than the assessment amount- is too shallow to merit belief, he being the
Chief Operations, Business Revenue Examination, Audit Division of the Treasurers
Office, who had, on those various meetings, gone out of his way to negotiate the
settlement of the assessed deficiency tax.
In the recent case of Merencillo vs. People, the Supreme Court identified the issues
raised in the Petition as follows: (1) the Sandiganbayans refusal to believe
petitioners evidence over that of the prosecution and (2) the Sandiganbayans failure
to recognize that Petitioner was placed in double jeopardy.
In addressing the second issue, the Supreme Court ruled:
Clearly, the violation of Section 3(b) of RA 3019 is neither identical nor necessarily
inclusive of direct bribery. While they have common elements, not all the essential
elements of one offense are included among or form part of those enumerated in the
other. Whereas the mere request or demand of a gift, present, share, percentage or
benefit is enough to constitute a violation of Section 3(b) of RA 3019, acceptance of a
promise or offer or receipt of a gift or present is required in direct bribery. Moreover,
the ambit of Section 3(b) of RA 3019 is specific. It is limited only to contracts or
transactions involving monetary consideration where the public officer has the
authority to intervene under the law. Direct bribery, on the other hand, has a wider
and more general scope: (a) performance of an act constituting a crime; (b) execution
of an unjust act which does not constitute a crime and (c) agreeing to refrain or
refraining from doing an act which is his official duty to do. Although the two charges
against petitioner stemmed from the same transaction, the same act gave rise to two

separate and distinct offenses. No double jeopardy attached since there was a
variance between the elements of the offenses charged. The constitutional protection
against double jeopardy proceeds from a second prosecution for the same offense,
not for a different one. (Emphasis Supplied)
Prosecutions argument that the statement of the Supreme Court above-quoted is
an obiter dictum is specious.
An obiter dictum is a "judicial comment made while delivering a judicial opinion, but
one that is unnecessary to the decision in the case and therefore not precedential
(although it may be considered persuasive)." In the Merencillo case, one issue raised
by Petitioner was precisely the issue of double jeopardy which the Supreme Court
resolved by distinguishing the elements of violation of Sec. 3 (b) of RA 3019 and
Direct Bribery. As one of the elements of the offense of violation of Sec. 3 (b) of RA
3019, the Court adopted the meaning given to the term "transaction" in the Soriano
case. The above-quoted resolution was not a mere obiter dictum but the ratio
decidendi which is defined as:
"1. the principle or rule of law on which a courts decision is founded; 2. The rule of
law on which a later court thinks that a previous court founded its decision xx"
The Prosecution argued that it is a maxim in statutory construction that a law must be
read in its entirety and no single provision should be interpreted in isolation with
respect to the other provisions of the law. The Prosecution further argued that a close
examination of RA 3019 in its entirety would show that the term "transaction" appears
several times and was never confined to transactions involving monetary
consideration. Suffice it to say that a maxim in statutory construction cannot be
superior to an express interpretation of the law made by the Supreme Court.
Furthermore, the provisions in RA 3019 cited by Prosecution constitute different
offenses with their own different elements, with their own different modalities of
commission.
The reference to the Congressional record by the Prosecution does not disprove the
fact that for violation of Sec. 3 (b) of RA 3019, the transaction must involve monetary
consideration. As pointed out earlier, no less than the Supreme Court has interpreted
the meaning of the term "transaction" as an element of violation of the said section.
Likewise, as admitted by the Prosecution, the reference to the deliberations of
Congress which it cited involved deliberations on Sec. 5 of RA 3019 and not on Sec.
3 (b) of RA 3019. The two sections, i.e. Sec. 5 and Sec. 3 (b) of RA 3019 are different
offenses with their own different elements.
Having resolved the core issue in the Motion For Reconsideration of the Prosecution,
there is no further need to discuss the other arguments of the Prosecution in its
Motion.
WHEREFORE, Prosecutions Motion for Reconsideration of the Resolution of the
First Division dated November 13, 2008 is DENIED.
SO ORDERED.

On June 22, 2009, the Office of the Special Prosecutor (OSP) assailed in this Court
via petition for certiorari the resolution of the Sandiganbayan promulgated on July 17,
2008 quashing the information in Criminal Case No. SB-08-CRM-0265 and the
resolution promulgated on April 21, 2009 denying the States motion for
reconsideration.
On November 18, 2009, the Court denied the Perezes urgent motion for leave to file
a motion to dismiss for being a prohibited pleading, and instead required the
respondents to comment on the petition, among other things.61
Criminal
Case
[Robbery
under
Art.
Art. 294, Revised Penal Code]

293,

in

SB-08-CRM-0266
relation
to

The information charging robbery under Article 293, in relation to Article 294, Revised
Penal Code was raffled to the Second Division (Criminal Case No. SB-08-CRM0266).62
On May 6, 2008, Escaler filed a motion to quash ex abundanti ad cautelam, alleging
that the facts charged did not constitute an offense. 63 On May 2, 2008, the Perezes
filed their own motion to quash the information. 64 On May 6, 2008, Arceo filed an ex
parte motion to adopt the Perezes motion as well as Escalers motion to quash.65
On June 26, 2008, the Second Division of the Sandiganbayan denied the respective
motions to quash of respondents.66
On June 30, 2008, Escaler moved to reconsider the denial. 67 On July 10, 2008, Arceo
also moved to reconsider the denial.68 The Perezes filed their own motion for
reconsideration on July 11, 2008.69
On November 20, 2008, the Second Division of the Sandiganbayan granted the
motions for reconsideration, quashed the information charging respondents with
robbery, and dismissed Criminal Case No. SB-08-CRM-0266,70 holding as follows:
xxxx
The Court after a careful perusal of the issue and the record on hand, is persuaded.
Extant in the record and which the prosecution admits or at least does not deny are
the following:
1. The alleged Robbery (extortion) was committed on February 13, 2001
(Joint Resolution signed by members of the Special Panel composed of
Orlando Ines, Adoracion Agbada, Mary Susan Geronimo, Jose de Jesus Jr.,
signed by Asst. Ombudsman Pelagio Apostol, and approved by Ombudsman
Mr. (sic) Merceditas N. Gutierrez.) (pp. 4-69, Vol. 1, Records; pp. 70-88,
Complaint-Affidavit of Mark Jimenez, Vol. 1, Records)

2. On February 23, 2001 the amount of US $1,999,965.00 was transferred to

Coutts Bank Hongkong in favour of the beneficiary of Account No. HO
13706, from Trade and Commerce Bank, Cayman Island through the Chase
Manhattan Bank in New York. Subsequently from March 6, 2001 to May 23,
2001 funds were transferred from Coutts Bank to other accounts, among
them a $250,000.00 bank draft/cheque issued to Ramon C. Arceo (pp. 10-11
Records).
3. On December 23, 2002 Congressman Mark Jimenez filed his complaint
with the Ombudsman charging Hernando Perez, Ernest Escaler, Ramon
Arceo and several John Does (Mrs. Rosario Perez was not among those
charged) with criminal offenses of Plunder, Extortion, Graft and Corruption,
Obstruction of Justice, Violation of the Penal Provision of the Code of
Conduct and Ethical Standards R.A. 6713, and Administrative Offenses of
Dishonesty, Grave Misconduct, Oppression, Committing acts Punishable
under the Anti-Graft Law, Conduct Prejudicial to the Best Interest of the
service, and Violation of Section 5 (2) of R.A. 6713. It was subscribed and
sworn to on (the ) 23rd day of December 2002 (Complaint-Affidavit of Mario
Mark (MJ) Jimenez B. Crespo pp. 70-88 Records).
4. On December 23, 2002, the FIRO (Fact Finding and Intelligence
Research Office) recommended that the case be referred to the Evaluation
and Preliminary Investigation Bureau and the Administrative Adjudication
Bureau (p. 6 of the Records)
5. The information was filed with this Court only on April 18, 2008.
Having established, or at least as claimed by Complainant Mark Jimenez, that the
Robbery (extortion) took place on February 13, 2001, the Ombudsman should have
demanded a reasonable explanation from the complainant who was then a
Congressman, wealthy and influential and in whose house the alleged intimidation
took place, why he was filing the complaint only on December 23, 2002 a matter of
more than eighteen (18) months. This should have cautioned the Ombudsman as to
the possible motive in filing the complaint.
At any rate, the Field Investigation Office (FIO) of the office of the Ombudsman as
nominal complainant filed a complaint with the Ombudsman on November 14, 2005
charging Hernando Benito Perez, Rosario Salvador Perez, Ernest L. Escaler, Ramon
Antonio C. Arceo Jr. and John Does with Violation of Sec. 3(b) R.A. 3019, Sec. 8 in
relation to Sec. 11 of R.A. 6713, Perjury (Art. 183 RPC) and Art. 171 par. 4
Falsification, RPC and violation of R.A. 1379. (Pp. 132 to 170 of Records) Robbery is
NOT one of the charges.
With the Ombudsmans finding that the extortion (intimidation) was perpetrated on
February 13, 2001 and that there was transfer of Mark Jimenez US $1,999,965.00 to
Coutts Bank Account HO 133706 on February 23, 2001 in favour of the accused,
there is no reason why within a reasonable period from these dates, the complaint
should not be resolved. The act of intimidation was there, the asportation was
complete as of February 23, 2001 why was the information filed only on April 18,
2008. For such a simple charge of Robbery there is nothing more to consider and all

the facts and circumstances upon which to anchor a resolution whether to give due
course to the complaint or to dismiss it are on hand. The case is more than ripe for
resolution. Failure to act on the same is a clear transgression of the constitutional
rights of the accused. A healthy respect for the constitutional prerogative of the
accused should have prodded the Ombudsman to act within a reasonable time.
The long wait of the accused is without valid cause or justifiable motive and has
unnecessarily trampled upon their constitutional prerogatives to a speedy disposition
of the case. This is an impermissible course of action that our fundamental law
loathes.
As Justice Laurel said, the government should be the last to set an example of delay
and oppression in the administration of justice. It is the moral and legal obligation of
the Court to see that criminal proceedings come to an end (People vs. Calamba 63
Phil 496).
The Constitution of the Philippines provides:
Art. 3 Sec. 16: All persons shall have a right to a speedy disposition of their cases
before all judicial(,) quasijudicial or administrative bodies.
Thus under our present fundamental law, all persons are entitled to a speedy
resolution of their cases be it civil, administrative or criminal cases. It is, in criminal
cases however where the need to a speedy disposition of their cases is more
pronounced. It is so, because in criminal cases, it is not only the honor and reputation
but even the liberty of the accused (even life itself before the enactment of R.A. 9346)
is at stake.
The charge is a simple case for Robbery. Certainly it does not involve complicated
and factual issues that would necessitate painstaking and gruelling scrutiny and
perusal on the part of the Ombudsman. It may have its novel, and to it, valid reason
for departing from the established procedure and rules, but virtually in doing so, it has
failed to discharge its duty as mandated by the Constitution to promptly act on
complaints filed in any form or manner against public officers and employees.
The totality of the facts and the surrounding circumstances bears unmistakably the
earmarks of inordinate delay, making the applicability of the doctrine enunciated in
Anchangco Jr. and Duterte cases cited in the parties pleadings irrefragable.
Accordingly, there being a clear violation of the constitutional right of the accused, the
prosecution is ousted of any authority to file the information and we hereby order the
quashing of the information and the consequent dismissal of this case.
While the ground upon which the Court banked and relied this dismissal order was
not invoked in the motions for reconsideration of accused Escaler and Arceo, since
they are similarly situated with their coaccused spouses Perez, this resolution applies
to them with equal force and effect.

On the basis of the foregoing disquisition, We hereby consider the Motion for
Reconsideration of our resolution denying the motion for consolidation moot and
academic; even as, We rule that the said motion lacks persuasiveness considering
that, per Manifestation of accused Escaler he is not in any way a party to all the cases
pending, the accused in each of the cases were charged with different offenses, and
the different cases are already at different stages of the proceedings, and considering
the argument of the prosecution that the different offenses in the four (4) cases
consist of different elements necessitating presentation of different proofs and
evidence for each case.
Accused(s) bonds are ordered cancelled and the Hold-Departure Order issued
against them in this case is lifted and set aside.
So ordered.
The State moved to reconsider the resolution of November 20, 2008, 71 but the
Second Division of the Sandiganbayan denied the motion for reconsideration on June
19, 2009,72 stating thusly:
This resolves the Motion for Reconsideration of the People of the Philippines dated
December 8, 2008 seeking to reconsider the Resolution of this Court promulgated on
November 20, 2008 dismissing the case, as well as accused-spouses Perez
Opposition dated December 22, 2008, accused Arceos Comment/Opposition of even
date, and the Opposition dated January 5, 2009 of accused Ernest L. Escaler.
On record too, are the Plaintiffs Consolidated Reply dated January 19, 2009 to the
three (3) Opposition/Comment of the accused, the three (3) Rejoinders of the
accused of different dates, the plaintiffs sub-rejoinder dated February 9, 2009,
accused Perezes() Manifestation and Plaintiffs Comment dated February 16, 2009 to
Perezes() Manifestation.
All these shall be considered and taken up by the Court in seriatim.
The first issue brought up by the accused is a supposed procedural lapse of the
plaintiffs motion for reconsideration in that the same was filed in violation of Sec. 4
Rule 15 of the Rules of Court which provides in substance that in every written motion
required to be heard, the notice of hearing thereof shall be served in such a manner
as to ensure its receipt by the other party at least three (3) days before the date of
hearing.
Of course, it is not disputed that the accused-spouses received through registered
mail their copy of plaintiffs motion only on December 16, 2008 while it set the date of
hearing on December 12, 2007 thus the motion was set for hearing before the other
party received it. Accused Ramon Arceo received his copy of the motion only on
December 17, 2008 while accused Ernest Escaler received his copy after December
18, 2008 giving the same situation as accused Perezes. It must be taken note of that
the Court set the hearing of the plaintiffs motion on December 18, 2008, as on
December 12, 2008 the date specified on plaintiffs motion, no accused has received
his copy of the said motion.

Considering thus, the situation, there seems plausibility for the accused claim of
transgression of the aforecited provision of the Rules of Court.

the only impediment we can think of, and this definitely is not a legal impediment;
certainly too this is not beyond the control of the Office of the Ombudsman.

Nonetheless, considering the transfer of the date of hearing, and that all the parties
were given ample time to file and submit their respective pleadings which at the time
the issue was to be resolved had grown voluminous, the Court is not inclined to give
due consideration for this procedural impropriety.

But the Court shall keep track of the movants argument about this supposed legal
impediment. Admitting that the asportation was complete on February 23, 2001, the
prosecution reasoned out that the case can not be filed in Court at that time due to
insufficiency of evidence. As averred in the Opposition of accused Ernest Escaler,
"xxx the plaintiffs duty is to determine whether there exists probable cause to hold the
accused for trial for simple robbery", and those documents which the prosecution so
capitalized it exerted so much offer to obtain, are mere evidentiary matters. This is
even admitted in the prosecutions motion for reconsideration.

The Court takes note however that the plaintiffs motion for reconsideration was filed
only on December 8, 2008 beyond the fifteenth day period within which it should be
filed, since it received a copy of the Resolution of this Court on November 21, 2008.
Thus, the fifteenth day fell on December 6, 2008 after which the said Resolution has
become final and executory. The Resolution in question therefore which finally
disposes of the case is not only final but executory as well which is virtually beyond
the reach of the motion for reconsideration belatedly filed.
We will now tackle the merits of the grounds invoked by the People.
The first ground cited in the Peoples motion was that the filing of complaint against
former secretary Hernando B. Perez was not attended by ill motive since it reasoned
out that it was the intimation of the Court when it stated in its Resolution the
Ombudsman xxx "should have demanded a reasonable explanation from the
complainant who was then a congressman, wealthy and influential and in whose
house the alleged intimidation took place, why he was filing the complaint only on
December 23, 2002 a matter of more than eighteen (18) months. This should have
cautioned the Ombudsman as to the possible motive in filing the complaint. xxx "We
take note of the response of the prosecution "Jimenez thought that after the pay-off,
Secretary Perez would stop threatening him and would leave him in peace for good.
This was the reason why Jimenez did not immediately file a complaint against
Secretary Perez and his co-accused."
The first and foremost impression We can gather is that the alleged about two million
dollars which supposedly was the result of accused Perez alleged extortion was
delivered already to the accused. All along therefore, if the claim of the prosecution is
to be believed, Robbery has long been committed that was on or about February
2001 as alleged in the information. With or without ill-motive, the Ombudsman should
have acted within a reasonable time. Certainly eighteen (18) long months from the
filing of the complaint can not be considered within a reasonable time.
The movant then argued that the filing of the information only on April 18, 2008 were
due to legal impediments which were beyond the control of the office of the
Ombudsman.
The Court can not understand those alleged "legal impediments" in the prosecution
for Robbery. Here is the prosecution claiming strongly that the filing of the complaint
was not attended by ill-motive and that after the pay-off even if a crime has been
committed against complaint Congressman Mark Jimenez, the latter delayed his filing
of the complaint because he thought the accused would leave him in peace. This is

Consider these facts all explicitly admitted by the prosecution:

On February 13, 2001 accused former Justice Secretary Hernando Perez
accompanied by accused Ernest Escaler supposedly threatened complainant
Congressman Mark Jimenez to send him to jail where he will die of boil (Putang ina
mo, sinasalsal mo lang ako. Hindot ka. Ipakukulong kita sa Quezon City Jail. Doon
mamamatay ka sa pigsa). On February 23, 2001 the amount of US $1,999,965
owned by Congressman Mark Jimenez was transferred to Coutts Bank, Hongkong in
favour of Account Number 13706 in the name of Ernest Escaler (confirmed by Trade
and Commerce Bank Payment Detail Report dated February 23, 2001)
Congressman Mark Jimenez did not file my complaint against the accused in any
Court or prosecutor office. This, despite his claim in his counter-affidavit that:
"12. Meanwhile, Pres. Estrada stepped down as President after the Armed Forces of
the Philippines withdrew its support to him, and the Arroyo Administration was
installed on January 19, 2001. The new Secretary of Justice, Hernando B. Perez, was
appointed by Pres. Arroyo. Soon after his appointment. Sec. Perez sent feelers that I
am his first target for inclusion in the criminal cases that he will file against Pres.
Estrada. He also threatened and intimidated me and my family with bodily harm and
incarceration in a city jail with hardened criminals and drug addicts unless I execute
damaging affidavits against Pres. Estrada and his cronies and associates. Because of
the intense pressure upon me and my family, I was forced to come across with US
$2.0 Million. (Page 73 of the Records)
It was only on December 23, 2002 as stated in our Resolution that Congressman
Mark Jimenez filed his complaint with the Ombudsman, even if the said offense was
alleged to have been committed on Feb. 13, 2001 and it was only on April 18, 2008
that the Ombudsman presented the information with this Court.
The complainant had hesitated into filing his complaint for about eighteen (18) months
while the Ombudsman with double hesitation dillydallied for about six (6) years. All in
all, the delay from the supposed commission of such a simple offense of Robbery
took more than seven years that is from February 13, 2001 to April 18, 2008. It is
clear the socalled legal impediments are but empty assertion to belatedly justify an
impermissible action.

Taking exception to our ruling that the totality of facts and surrounding circumstances
bear unmistakably the earmarks of inordinate delay, the movant made a comparison
of those cases dismissed by the Supreme Court for violation of the Constitutional right
of the accused to speedy disposition of cases, and this case, and wrongfully conclude
there was no delay in their handling of the case at bar.
We have already resolved and passed upon rather adequately this issue in our
Resolution with the observation that not anyone of the cases cited involved the
charge of Robbery. The movants discussion asserted no new and substantial reason
and argument to persuade us to reverse or modify our considered opinion. We
however pose this question to the prosecution. If Asst. Ombudsman Pelagio Apostol
recommended the filing of the information against the accused on November 7, 2006
why did it take the Ombudsman only on January 5, 2007 to approve the
recommendation. And if, on January 11, 2007 the accused submitted their Motion for
Reconsideration, why did it take the Ombudsman up to April 15, 2008 a matter of
about fifteen (15) months to resolve the same when there was NO OPPOSITION nor
comment from the other party?
The argument that "the authority of the Ombudsman is not divested by the claimed
delay in filing the information as this authority is vested by law" is a reckless
reasoning that only shows that while admitting there was undue delay in the
disposition of the case, it could still proceed with its information to charge the
accused.
The prosecution need not be reminded of the uniform ruling of the Honorable
Supreme Court dismissing the cases of Tatad, Angchangco, Duterte and other cases
for transgressing the constitutional rights of the accused to a speedy disposition of
cases. To argue "that the authority of the Ombudsman is not divested by the claimed
delay in filing the information xxx" is to limit the power of the Court to act on blatant
transgression of the constitution.
As to fact-finding investigation, the Court finds it so baseless for the movant to
capitalize on what it supposedly did in the process of the fact-finding stance; and then
reasoning out as if clutching on straws that the sequences of events should excuse it
from lately filing the information. But it took the movant six (6) years to conduct the
said fact-finding investigation, and then unabashedly it argues that is not part of the
preliminary investigation.
Determining probable cause should usually take no more than ninety (90) days
precisely because it only involves finding out whether there are reasonable grounds
to believe that the persons charged could be held for trial or not. It does not require
sifting through and meticulously examining every piece of evidence to ascertain that
they are enough to convict the persons involved beyond reasonable doubt. That is
already the function of the Courts.
As argued by accused Ramon Arceo, the claim of the movant that the preliminary
investigation of the instant case commenced only on November 14, 2005 when the
Field Investigation Office (FIO) filed its complaint, and not on December 23, 2002
when Mark Jimenez filed his complaint-affidavit, is rather specious and does not hold
water as Robbery was not among the offenses included in the charge of the FIO. As

such, it is not correct to say that the counting of the period for delay should
commence only in November 2005.
The conclusion thus, that the long waiting of six (6) years for the Office of the
Ombudsman to resolve the simple case of Robbery is clearly an inordinate delay,
blatantly intolerable, and grossly prejudicial to the constitutional right of speedy
disposition of cases, easily commands assent. This Court, it must be made clear, is
not making nor indulging in mere mathematical reckoning of the time involved.
In its sixth ground the movant argued that the First, Third and Fourth Divisions all
junked the claimed inordinate delay of the accused and asked that the Second
Division should "xxx co-exist not work on cross-purposes with the other Courts
Division xxx". The argument begs the question! Suppose if and when the incident
reaches the Supreme Court, the highest Court of the land ruled that it is the Second
Division which is correct, and the other Divisions in error, what would happen now to
the argument of the movant that "xxx there is rhyme or reason for the
Sandiganbayan, Second Division to co-exist xxx with the other Courts Division xxx".
Moreover, the information in the first division charges the accused of Violation of Sec.
3 (b) of R.A. 3019, in the third division the accusation was for Falsification of Public
Document under Art. 171 of the Revised Penal Code, while the accused have been
indicted for violating Sec. 7 R.A. 3019 in relation to Sec. 8 of R.A. 6713 before the
Fourth Division. The Court can not say whether there is need for paper trail or
monitoring of documents in those cases, as the Divisions concerned can competently
resolve and pass upon it but certainly in this instant case of Robbery, to indulge in a
prolonged fact-finding process is not a boon but a bane on the part of the prosecution
In a distasteful exhibition of unsavoury language, bordering on derision and contempt,
the prosecution argued that "xxx the assailed resolution is a wanton display of
arrogance, contemptuous and outright illegal for it mooted the same issue of
inordinate delay pending with the Honorable Supreme Court xxx". This only goes to
show that the prosecution is totally ignorant of the hierarchy of Courts in our judicial
system.
xxx It must be remembered that delay in instituting prosecutions is not only productive
of expense to the State, but of peril to public justice in the attenuation and distortion,
even by mere natural lapse of memory, of testimony. It is the policy of the law that
prosecutions should be prompt, and that statutes, enforcing such promptitude should
be vigorously maintained. They are not merely acts of grace, but checks imposed by
the State upon itself, to exact vigilant activity from its subalterns, and to secure for
criminal trials the best evidence that can be obtained.
WHEREFORE, premises considered, the prosecutions Motion for Reconsideration
dated December 8, 2008 is denied for lack of merit.
So ordered.
On August 24, 2009, the State assailed the resolutions of the Second Division of the
Sandiganbayan in this Court (G.R. No. 189063).73

Consolidation of the petitions

On October 26, 2009, the Court directed that G.R. No. 189063 be consolidated with
G.R. No. 182360-63 (entitledHernando B. Perez and Rosario S. Perez v. The
Ombudsman, Field Investigation Officer of the Ombudsman and Mario B. Crespo
a.k.a. Mark Jimenez) and G.R. No. 173967-71 (Ernest B. Escaler v. The Office of the
Ombudsman, et al.).74

WHETHER RESPONDENT COURT ACTED WITH GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
RELYING SOLELY ON THE CASE OF SORIANO, JR. VS.
SANDIGANBAYAN AND DISREGARDED JURISPRUDENCE THAT
SHOWS SECTION 3 (B) OF RA 3019 EXTENDS TO ANY DEALING WITH
THE GOVERNMENT.
III.

On April 7, 2010, the Court consolidated G.R. No. 188165 with G.R. Nos. 173967-71,
G.R. Nos. 182360-63 and G.R. No. 189063 (People of the Philippines v. Hon.
Sandiganbayan, 2nd Division, et al.).75
G.R. No. 173967-71 and G.R. No. 182360-63 were special civil actions
for certiorari to prevent the filing of the criminal informations against the respondents.
Deconsolidation and dismissal of
G.R. No. 173967-71 and G.R. No. 182360-63
on the ground of their intervening mootness
On February 11, 2013, the Court deconsolidated G.R. No. 173967-71 and G.R. No.
182360-63 from G.R. No. 188165 and G.R. No. 189063 on the ground that the
intervening filing of the informations in Criminal Case No. SB-08-CRM-0265 and
Criminal Case No. SB-08-CRM-0266 had rendered the petitions in G.R. No. 17396771 and G.R. No. 182360-63 moot.76
Issues
In G.R. No. 188165, the State raises the following issues:
I.
WHETHER RESPONDENT COURT ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN
QUASHING THE INFORMATION IN CRIMINAL CASE SB-08-CRM-265, BY
CONFINING THE DEFINITION OF THE WORD "TRANSACTION" IN
SECTION 3(B) OF R.A. 3019 AS TRANSACTIONS INVOLVING
MONETARY CONSIDERATION.
II.

WHETHER RESPONDENT COURT ACTED WTH GRAVE ABUSE OF

DISCRETION WHEN IT RESOLVED THE MOTIONS TO QUASH (ON THE
GROUND THAT THE ALLEGATIONS IN THE INFORMATION DO NOT
CONSTITUTE AN OFFENSE) BY GOING BEYOND THE ALLEGATIONS IN
THE INFORMATION AND CONSIDERING SUPPOSED FACTS WITHOUT
ANY BASIS.77
In G.R. No. 189063, the State submits the following issues:
A. WHETHER OR NOT PUBLIC RESPONDENT SANDIGANBAYAN ACTED
WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN QUASHING THE INFORMATION IN
CRIMINAL CASE SB-08-CRM-0266 BY HOLDING THAT "THERE BEING A
CLEAR VIOLATION OF THE CONSTITUTIONAL RIGHT OF THE
ACCUSED, THE PROSECUTION IS OUSTED OF ANY AUTHORITY TO
FILE THE INFORMATION."
B. WHETHER OR NOT PUBLIC RESPONDENT SANDIGANBAYAN ACTED
WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
EXCESS OF JURISDICTION IN FINDING THE TOTALITY OF THE FACTS
AND THE SURROUNDING CIRCUMSTANCES BEARS UNMISTAKABLY
THE EARMARKS OF INORDINATE DELAY, MAKING THE APPLICABILITY
OF THE DOCTRINE ENUNCIATED IN ANGCHONGCO JR. AND DUTERTE
CASES CITED IN THE PARTIES PLEADINGS IRREFRAGABLE.78
The foregoing issues are restated thuswise:
I.
Whether or not it was the Office of the Solicitor General, not the Office of the
Ombudsman, that had the authority to file the petitions to assail the
Sandiganbayan resolutions.
II.
Whether the State, as the petitioner in G.R. No. 188165 and G.R. No. 189063,
resorted to the wrong remedy in assailing the resolutions of the Sandiganbayan
dismissing the criminal charges against the respondents through petitions
for certiorari instead of petitions for review on certiorari.

Specific Issue in G.R. No. 188165

Whether or not the Sandiganbayan committed grave abuse of discretion amounting to
lack or in excess of jurisdiction in quashing the information by applying the definition
of transaction in Soriano, Jr. v Sandiganbayan, 131 SCRA 188.
Specific Issue in G.R. No. 189063

That only the Solicitor General may represent the People on appeal or certiorari in the
Supreme Court and the Court of Appeals in all criminal proceedings is the general
rule,79 but the rule admits the exception concerning "all cases elevated to the
Sandiganbayan and from the Sandiganbayan to the Supreme Court, the Office of the
Ombudsman, through its special prosecutor, shall represent the People of the
Philippines, except in cases filed pursuant to Executive Order Nos. 1, 2, 14 and 14-A,
issued in 1986." More specifically, Section 4(c) of Republic Act No. 8249 authorizes
the exception, viz:

Whether or not the Sandiganabayan committed grave abuse of discretion amounting

to lack or in excess of jurisdiction when it dismissed the criminal case due to the
inordinate delay of the Office of the Ombudsman in bringing the criminal action
against respondents as to violate their constitutional right to the speedy disposition of
cases.

xxxx

Ruling

xxxx

The petitions for certiorari are devoid of merit.

The procedure prescribed in Batas Pambansa Blg. 129, as well as the implementing
rules that the Supreme Court has promulgated and may hereafter promulgate,
relative to appeals/petitions for review to the Court of Appeals, shall apply to appeals
and petitions for review filed with the Sandiganbayan. In all cases elevated to the
Sandiganbayan and from the Sandiganbayan to the Supreme Court, the Office
of the Ombudsman, through its special prosecutor, shall represent the People
of the Philippines, except in cases filed pursuant to Executive Order Nos. 1, 2, 14
and 14-A, issued in 1986. (Bold emphasis provided)

I.
The
Office
of
the
Ombudsman
is
empowered
file
an
appeal
or certiorari from
Sandiganbayan to the Supreme Court.

to
the

c. Civil and criminal cases filed pursuant to and in connection with Executive Order
Nos. 1, 2, 14 and 14-A, issued in 1986.

Respondents contend that the Office of the Ombudsman has no authority to file the
petitions for certioraribecause only the Solicitor General could file the petitions in this
Court pursuant to Section 35, Chapter 12, Title III, Book IV of the Administrative
Code as amended by E.O. No. 292 ,which pertinently states:

xxxx

Section 35. Powers and Functions.The Office of the Solicitor General shall
represent the Government of the Philippines, its agencies and instrumentalities and
its officials and agents in any litigation, proceedings, investigation or matter requiring
the services of a lawyer. When authorized by the President or head of the office
concerned, it shall also represent government-owned or controlled corporations. The
Office of the Solicitor General shall constitute the law office of the Government and,
as such, shall discharge duties requiring the services of a lawyer. It shall have the
following specific powers and functions:

II.

(1) Represent the Government in the Supreme Court and the Court of Appeals in all
criminal proceedings; represent the Government and its officers in the Supreme
Court, the Court of Appeals, and all other courts or tribunals in all civil actions and
special proceedings in which the Government or any officer thereof in his official
capacity is a party.
xxxx
The contention of the respondents is grossly erroneous.

Consequently, the filing of the petitions in these cases by the Office of the
Ombudsman, through the OSP, was authorized by law.

Petitioner did not establish grave abuse of discretion on the part of the
Sandiganbayan
The petitions for certiorari brought by the State must nonetheless be dismissed for
failure to show any grave abuse of discretion on the part of Sandiganbayan in issuing
the assailed resolutions.
A special civil action for certiorari is an independent action based on the specific
grounds provided in Section 1, Rule 65 of the Rules of Court, and can prosper only
the jurisdictional error, or the grave abuse of discretion amounting to lack or excess of
jurisdiction committed by the inferior court or judge is alleged and proved to exist.
In De los Santos v. Metropolitan Bank and Trust Company,80 the Court has
expounded on the nature and reach of the extraordinary remedy of certiorari, to wit:

We remind that the writ of certiorari being a remedy narrow in scope and inflexible
in character, whose purpose is to keep an inferior court within the bounds of its
jurisdiction, or to prevent an inferior court from committing such grave abuse of
discretion amounting to excess of jurisdiction, or to relieve parties from arbitrary acts
of courts (i.e., acts that courts have no power or authority in law to perform) is not a
general utility tool in the legal workshop, and cannot be issued to correct every error
committed by a lower court.
In the common law, from which the remedy of certiorari evolved, the
writ certiorari was issued out of Chancery, or the Kings Bench, commanding agents
or officers of the inferior courts to return the record of a cause pending before them,
so as to give the party more sure and speedy justice, for the writ would enable the
superior court to determine from an inspection of the record whether the inferior
courts judgment was rendered without authority. The errors were of such a nature
that, if allowed to stand, they would result in a substantial injury to the petitioner to
whom no other remedy was available. If the inferior court acted without authority, the
record was then revised and corrected in matters of law. The writ of certiorari was
limited to cases in which the inferior court was said to be exceeding its jurisdiction or
was not proceeding according to essential requirements of law and would lie only to
review judicial or quasi-judicial acts.1wphi1
The concept of the remedy of certiorari in our judicial system remains much the same
as it has been in the common law. In this jurisdiction, however, the exercise of the
power to issue the writ of certiorari is largely regulated by laying down the instances
or situations in the Rules of Court in which a superior court may issue the writ
of certiorari to an inferior court or officer. Section 1, Rule 65 of the Rules of
Court compellingly provides the requirements for that purpose, viz:
Section 1. Petition for certiorari. When any tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and there is no appeal, 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
third paragraph of section 3, Rule 46. (1a)
Pursuant to Section 1, supra, the petitioner must show that, one, the tribunal, board or
officer exercising judicial or quasi-judicial functions acted without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack or excess of
jurisdiction, and, two, there is neither an appeal nor any plain, speedy and adequate
remedy in the ordinary course of law for the purpose of amending or nullifying the
proceeding.

Considering that the requisites must concurrently be attendant, the herein petitioners
stance that a writ ofcertiorari should have been issued even if the CA found no
showing of grave abuse of discretion is absurd. The commission of grave abuse of
discretion was a fundamental requisite for the writ of certiorari to issue against the
RTC. Without their strong showing either of the RTCs lack or excess of jurisdiction, or
of grave abuse of discretion by the RTC amounting to lack or excess of jurisdiction,
the writ of certiorari would not issue for being bereft of legal and factual bases. We
need to emphasize, too, that with certiorari being an extraordinary remedy, they must
strictly observe the rules laid down by law for granting the relief sought.
The sole office of the writ of certiorari is the correction of errors of jurisdiction, which
includes the commission of grave abuse of discretion amounting to lack of jurisdiction.
In this regard, mere abuse of discretion is not enough to warrant the issuance of the
writ. The abuse of discretion must be grave, which means either that the judicial or
quasi-judicial power was exercised in an arbitrary or despotic manner by reason of
passion or personal hostility, or that the respondent judge, tribunal or board evaded a
positive duty, or virtually refused to perform the duty enjoined or to act in
contemplation of law, such as when such judge, tribunal or board exercising judicial or
quasi-judicial powers acted in a capricious or whimsical manner as to be equivalent to
lack of jurisdiction. (citations omitted)
Did the petitioner show grave abuse of discretion that would warrant the issuance of
the writ of certiorari prayed for?
A.
G.R. No. 188165
The
Sandiganbayan
correctly
restrictive
meaning
of
the
used
in
Section
3
(b)
of
Republic
adopted in Soriano, Jr. v. Sandiganbayan

applied
the
term transaction as
Act
No.
3019

In its questioned resolution dismissing Criminal Case No. SB-08-CRM-0265, the

Sandiganbayan relied on the ruling in Soriano, Jr. v. Sandiganbayan,81 in which the
principal issue was whether or not the preliminary investigation of a criminal complaint
conducted by petitioner Soriano, Jr., then a Fiscal, was a "contract or transaction" as
to bring the complaint within the ambit of Section 3 (b) of Republic Act No. 3019,
which punished any public officer for "[d]irectly or indirectly requesting or receiving
any gift, present, share, percentage, or benefit, for himself or for any other person, in
connection with any contract or transaction between the Government and any other
party, wherein the public officer in his official capacity has to intervene under the law."
The Soriano, Jr.Court ruled in the negative, and pronounced:
It is obvious that the investigation conducted by the petitioner was not a
contract. Neither was it a transaction because this term must be construed as
analogous to the term which precedes it. A transaction, like a contract, is one
which involves some consideration as in credit transactions and this element
(consideration) is absent in the investigation conducted by the petitioner.

In the light of the foregoing, We agree with the petitioner that it was error for the
Sandiganbayan to have convicted him of violating Sec. 3 (b) of R.A. No. 3019.
(Emphasis supplied)
The State now argues, however, that the Sandiganbayan thereby committed grave
abuse of discretion resulting to lack or in excess of jurisdiction for applying the
interpretation of the term transaction in Soriano, Jr. considering that the
term transaction should be construed more liberally, and positing that Soriano, Jr. was
already abandoned by the Court, citing for that purpose the rulings in Mejia v.
Pamaran,82 Peligrino v. People,83 andChang v. People.84
We disagree with the petitioner, and find for the respondents.
First of all, the interpretation in Soriano, Jr. of the term transaction as used in Section
3(b) of Republic Act No. 3019 has not been overturned by the Court.
In Mejia v. Pamaran, decided en banc on April 15, 1988, Mejia had demanded and
received money from some persons involved in certain cases in a trial court where
Mejia was then serving as the branch clerk of court in consideration of a promise that
she would help in getting a favorable judgment for them. The issue was whether or
not Mejia could be convicted under the information that alleged that she had
demanded a certain amount, although the Sandiganbayan found that the amount was
different from that charged in the information. The Court dismissed her petition, and
ruled that "[i]n a prosecution under the foregoing provision of the Anti-Graft Law the
value of the gift, money or present, etc. is immaterial xxx [w]hat is penalized is the
receipt of any gift, present, share, percentage, or benefit by a public officer in
connection with a contract or transaction with the Government, wherein the public
officer has to intervene in his official capacity." The Court nowhere ruled on the proper
interpretation of the term transaction.
In Peligrino v. People, decided on August 13, 2001, Peligrino, an examiner of the
Bureau of Internal Revenue, was convicted of violating Section 3(b) of Republic Act
No. 3019 for demanding the amount of P200,000.00 from the complainant in
connection with the latters tax liabilities. Peligrinos defense was that he did not
"demand" the money, but the money was just given to him. He argued that he had
only informed the complainant of his tax deficiencies, and that the complainant had
then requested the reduction of the amount claimed as his tax deficiencies. The Court
found no merit in Peligrinos argument. The ruling had nothing to do with the
interpretation of the term transaction.
Chang v. People, decided on July 21, 2006, was a case in which two persons
Chang and San Mateo were convicted of violating Section 3(b) of Republic Act No.
3019 after being found to have received P125,000.00 in consideration of their
issuance of a Certificate of Examination to the effect that the complainant had "no tax
liability" in favour of the municipality, notwithstanding that it had not settled with them
on their assessed deficiency tax of P494,000.00. Chang and San Mateo contended
that the charge had resulted from an involuntary contact whereby complainant Magat
had simply tossed to them the brown envelope; that there had been no conspiracy
between them; and that what had transpired had been an instigation, not an
entrapment. In affirming their conviction, the Court did not touch on the proper

interpretation of the term transaction as used in Section 3(b) of Republic Act No.
3019.
The three rulings the State has cited here did not overturn the interpretation made
in Soriano, Jr. of the termtransaction as used in Section 3(b) of Republic Act No. 3019
because the proper interpretation of the term was clearly not decisive in those cases.
On the contrary, in the later ruling in Merencillo v. People,85 promulgated in 2007, the
Court reiterated the restrictive interpretation given in Soriano, Jr. to the
term transaction as used in Section 3(b) of Republic Act No. 3019 in connection with
a differentiation between bribery under the Revised Penal Code and the violation of
Section 3(b) of Republic Act No. 3019 by holding that the latter is "limited only to
contracts or transactions involving monetary consideration where the public officer
has the authority to intervene under the law."
And, secondly, it does not help the State any that the term transaction as used in
Section 3(b) of Republic Act No. 3019 is susceptible of being interpreted both
restrictively and liberally, considering that laws creating, defining or punishing crimes
and laws imposing penalties and forfeitures are to be construed strictly against the
State or against the party seeking to enforce them, and liberally against the party
sought to be charged.86
Clearly, the Sandiganbayan did not arbitrarily, or whimsically, or capriciously quash
the information for failing to properly state the fourth element of the violation of
Section 3(b) of Republic Act No. 3019.
B.
G.R. No. 189063
The
Sandiganbayan
did
not
commit
any
grave
abuse
of
discretion
in
finding
that
there
had
been
an
inordinate
delay
in
the
resolution
against
respondents
of
the
charge
in
Criminal Case No. SB-08-CRM-0266
Upon its finding that the Office of the Ombudsman had incurred inordinate delay in
resolving the complaint Cong. Jimenez had brought against the respondents, the
Sandiganbayan dismissed Criminal Case No. SB-08-CRM-0266 mainly to uphold
their constitutional right to the speedy disposition of their case.
But now comes the State contending that the delay in the resolution of the case
against the respondents was neither inordinate nor solely attributable to the Office of
the Ombudsman. Citing Mendoza-Ong v. Sandiganbayan,87 in which the Court held
that speedy disposition of cases was also consistent with reasonable delays, the
State supported its contention by listing the various incidents that had caused the
delay in the investigation, and then laying part of the blame on the respondents
themselves.

The right to the speedy disposition of cases is enshrined in Article III of the
Constitution, which declares:
Section 16. All persons shall have the right to a speedy disposition of their cases
before all judicial, quasi-judicial, or administrative bodies.
The constitutional right to a speedy disposition of cases is not limited to the accused
in criminal proceedings but extends to all parties in all cases, including civil and
administrative cases, and in all proceedings, including judicial and quasi-judicial
hearings.88 While the concept of speedy disposition is relative or flexible, such that a
mere mathematical reckoning of the time involved is not sufficient, 89 the right to the
speedy disposition of a case, like the right to speedy trial, is deemed violated when
the proceedings are attended by vexatious, capricious, and oppressive delays; or
when unjustified postponements of the trial are asked for and secured; or when
without cause or justifiable motive a long period of time is allowed to elapse without
the party having his case tried.90

circumstances of the case an outright violation of the respondents right under the
Constitution to the speedy disposition of their cases. If, in Tatad v.
Sandiganbayan,94 the Court ruled that a delay of almost three years in the conduct of
the preliminary investigation constituted a violation of the constitutional rights of the
accused to due process and to the speedy disposition of his case, taking into account
the following, namely: (a) the complaint had been resurrected only after the accused
had a falling out with former President Marcos, indicating that political motivations had
played a vital role in activating and propelling the prosecutorial process; (b) the
Tanodbayan had blatantly departed from the established procedure prescribed by law
for the conduct of preliminary investigation; and (c) the simple factual and legal issues
involved did not justify the delay, there is a greater reason for us to hold so in the
respondents case.
To emphasize, it is incumbent for the State to prove that the delay was reasonable, or
that the delay was not attributable to it. In both regards, the State miserably failed.

We answer in the affirmative.

For one, the State explains that the criminal cases could not be immediately filed in
court primarily because of the insufficiency of the evidence to establish probable
cause, like not having a document showing that the funds (worth US$1,999,965.00 as
averred in the complaint of Cong. Jimenez) had reached Secretary Perez; 95 and that it
could not obtain the document, and to enable it to obtain the document and other
evidence it needed to await the ratification of the Agreement Concerning Mutual Legal
Assistance in Criminal Matters with the Hongkong Special Administrative Region (RPHKSAR Agreement),96 and the Treaty on Mutual Legal Assistance in Criminal Matters
between the Republic of the Philippines and the Swiss Confederation (RP-Swiss
MLAT).97

The acts of the respondents that the Office of the Ombudsman investigated had
supposedly occurred in the period from February 13, 2001 to February 23, 2001. Yet,
the criminal complaint came to be initiated only on November 25, 2002 when
Ombudsman Marcelo requested PAGC to provide his office with the documents
relevant to the expos of Cong. Villarama. Subsequently, on December 23, 2002,
Cong. Jimenez submitted his complaint-affidavit to the Office of the Ombudsman. It
was only on November 6, 2006, however, when the Special Panel created to
investigate Cong. Jimenezs criminal complaint issued the Joint Resolution
recommending that the criminal informations be filed against the respondents.
Ombudsman Gutierrez approved the Joint Resolution only on January 5, 2007. 93 The
Special Panel issued the second Joint Resolution denying the respondents motion
for reconsideration on January 25, 2008, and Ombudsman Gutierrez approved this
resolution only on April 15, 2008. Ultimately, the informations charging the
respondents with four different crimes based on the complaint of Cong. Jimenez were
all filed on April 15, 2008, thereby leading to the commencement of Criminal Case No.
SB-08- CRM-0265 and Criminal Case No. SB-08-CRM-0266. In sum, the fact-finding
investigation and preliminary investigation by the Office of the Ombudsman lasted
nearly five years and five months.

To us, however, the States dependence on the ratification of the two treaties was not
a sufficient justification for the delay. The fact-finding investigation had extended from
January 15, 2003, when Ombudsman Marcelo approved the recommendation of the
Special Panel and referred the complaint of Cong. Jimenez for fact-finding
investigation, until November 14, 2005, when the FIO completed its fact-finding
investigation. That period accounted for a total of two years and 10 months. In
addition, the FIO submitted its report only on November 14, 2005, which was after the
Department of Justice had received on September 8, 2005 the letter from Wayne
Walsh, the Deputy Government Counsel of the Hongkong Special Administrative
Region in response to the request for assistance dated June 23, 2005,98 and the reply
of the Office of Justice of Switzerland dated February 10, 2005 and a subsequent
letter dated February 21, 2005 from Liza Favre, the Ambassador of Switzerland, to
Atty. Melchor Arthur Carandang, Acting Assistant Ombudsman, FIO, together with
documents pertaining to the bank accounts relevant to the investigation. 99 For the
Office of the Ombudsman to mark time until the HKSAR Agreement and the SwissRP MLAT were ratified by the Senate before it would proceed with the preliminary
investigation was oppressive, capricious and vexatious, because the respondents
were thereby subjected to a long and unfair delay.

It is clear from the foregoing that the Office of the Ombudsman had taken an
unusually long period of time just to investigate the criminal complaint and to
determine whether to criminally charge the respondents in the Sandiganbayan. Such
long delay was inordinate and oppressive, and constituted under the peculiar

We should frown on the reason for the inordinate delay because the State would
thereby deliberately gain an advantage over the respondents during the preliminary
investigation. At no time should the progress and success of the preliminary
investigation of a criminal case be made dependent upon the ratification of a treaty by

According to Angchonco, Jr. v. Ombudsman,91 inordinate delay in resolving a criminal

complaint, being violative of the constitutionally guaranteed right to due process and
to the speedy disposition of cases, warrants the dismissal of the criminal case.92
Was the delay on the part of the Office of the Ombudsman vexatious, capricious, and
oppressive?

the Senate that would provide to the prosecutorial arm of the State, already powerful
and overwhelming in terms of its resources, an undue advantage unavailable at the
time of the investigation. To allow the delay under those terms would definitely violate
fair play and nullify due process of law fair play, because the field of contest
between the accuser and the accused should at all times be level; and due process of
law, because no less that our Constitution guarantees the speedy disposition of the
case.

WHEREFORE, the Court DISMISSES the petitions for certiorari for their lack of merit.
No pronouncement on costs of suit.
SO ORDERED.

The State further argues that the fact-finding investigation should not be considered a
part of the preliminary investigation because the former was only preparatory in
relation to the latter; 100 and that the period spent in the former should not be factored
in the computation of the period devoted to the preliminary investigation.
The argument cannot pass fair scrutiny.
The guarantee of speedy disposition under Section 16 of Article III of the Constitution
applies to all cases pending before all judicial, quasijudicial or administrative bodies.
The guarantee would be defeated or rendered inutile if the hair-splitting distinction by
the State is accepted. Whether or not the fact-finding investigation was separate from
the preliminary investigation conducted by the Office of the Ombudsman should not
matter for purposes of determining if the respondents right to the speedy disposition
of their cases had been violated.
There was really no sufficient justification tendered by the State for the long delay of
more than five years in bringing the charges against the respondents before the
proper court. On the charge of robbery under Article 293 in relation to Article 294 of
the Revised Penal Code, the preliminary investigation would not require more than
five years to ascertain the relevant factual and legal matters. The basic elements of
the offense, that is, the intimidation or pressure allegedly exerted on Cong. Jimenez,
the manner by which the money extorted had been delivered, and the respondents
had been identified as the perpetrators, had been adequately bared before the Office
of the Ombudsman. The obtention of the bank documents was not indispensable to
establish probable cause to charge them with the offense. We thus agree with the
following observation of the Sandiganbayan, viz:
With the Ombudsmans finding that the extortion (intimidation) was perpetrated on
February 13, 2001 and that there was transfer of Mark Jimenez US $1,999,965.00 to
Coutts Bank Account HO 133706 on February 23, 2001 in favor of the accused, there
is no reason why within a reasonable period from these dates, the complaint should
not be resolved. The act of intimidation was there, the asportation was complete as of
February 23, 2001 why was the information filed only on April 18, 2008. For such a
simple charge of Robbery there is nothing more to consider and all the facts and
circumstances upon which to anchor a resolution whether to give due course to the
complaint or dismiss it are on hand. The case is more than ripe for resolution. Failure
to act on the same is a clear transgression of the constitutional rights of the accused.
A healthy respect for the constitutional prerogative of the accused should have
prodded the Ombudsman to act within reasonable time. 101
In fine, the Office of the Ombudsman transgressed the respondents' right to due
process as well as their right to the speedy disposition of their case.

G.R. No. 141426

May 6, 2005

ZENAIDA F. LANTING, petitioner,

vs.
HONORABLE OMBUDSMAN, ANTI-GRAFT INVESTIGATOR OSCAR RAMOS,
MAYOR LITO ATIENZA, EMMANUEL SISON, VIRGILIO FORBES, CHARITO
RUMBO, DIRECTOR ERLINDA MAGALONG and ERNESTO SAW,
JR., respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
For our resolution is the petition for review on certiorari assailing the Resolutions
dated September 9, 19991 and January 6, 2000 of the Court of Appeals dismissing
petitioners petition for certiorari and mandamus in CA-G.R. SP No. 54724.
The facts of the case are as follows:

Zenaida F. Lanting, petitioner, was the Administrative Officer IV of the City Council of
Manila. She filed with the Office of the Ombudsman an affidavit-complaint 2 dated
May 12, 1998, docketed as Case No. OMB-0-98-0965, charging then Manila ViceMayor Jose Atienza, Jr., now City Mayor, Emmanuel Sison, Secretary to the City
Council, and Charito Rumbo, Human Resource Management Officer III, herein
respondents, with violation of Republic Act No. 3019 (the Anti-Graft and Corrupt
Practices Act). She alleged that these city officials unlawfully and feloniously
appointed Ernesto Saw, Jr., a Chinese citizen working in Taiwan, and brother-in-law of
Charito Rumbo, to the position of Researcher in the City Council.
In the same complaint, petitioner further alleged that respondents fraudulently
effected the publication of a vacant position (Administrative Officer V) in the City
Council, in violation of Republic Act No. 7041. 3 Petitioner also questioned the
appointments of Percival Magalong as Utility I; Atty. Flora Aquino-Togonon as
Administrative Officer V; and three relatives of Charito Rumbo, namely: Eduardo
Antolin, Arlyn M. Rumbo and Maricar V. Antolin as Researchers/Consultants.
Petitioner likewise denounced Erlinda Magalong, Civil Service Commission (CSC)
Director II, for "employing" Percival Magalong, her brother, in her office at the Civil
Service Field Office, GSIS Building, Manila.
Petitioner
characterized
respondents acts
as
unlawful,
odious
and
"despicable criminal activities"4 and prayed that the Office of the Ombudsman
proceed with the preliminary investigation with dispatch."5
6

On August 4, 1998, respondents city officials filed their joint counter-affidavit denying
petitioners charges. They averred that Ernesto Saw, Jr. is a Filipino citizen as shown
by his birth certificate and Personnel Data Sheet. Assuming arguendo that he is a
Chinese citizen, such fact alone would not disqualify him from being employed in the
City of Manila, there being no law prohibiting a foreigner from being employed as
researcher or consultant in the government.
For her part, CSC Director Magalong also denied the charge against her, contending
that she was not the one who appointed Percival Magalong.
Ernesto Saw, Jr. did not file his counter-affidavit.
On April 8, 1999, Oscar P. Ramos, Graft Investigator Officer I, issued a Resolution
recommending that petitioners complaint be dismissed. The Resolution7 was
reviewed by Assistant Ombudsman Abelardo L. Aportadera, Jr. and approved by then
Ombudsman Aniano A. Desierto on June 25, 1999. The Resolution partly reads:
xxx
"All told, we are convinced that the evidence does not warrant the filing of
Anti-Graft and Corrupt Practices, among others, charges against
respondents.

The appointment of researcher/consultant is governed

Memorandum Circular No. 27, s. 1993, which states that

by

CSC

1. x x x
(c) The duties enumerated in the consultancy contract are
mainly advisory in nature.
2. Services rendered pursuant to a consultancy contract shall not
be considered government services and, therefore, not covered by
the Civil Service Law, rules and regulations (Folder 1, page 42,
Record, underlining supplied).
The matter of alleged ghost employee Mr. Saw for the charge of Estafa thru
Falsification of Public Documents cannot be pursued. COA and City
Accountants silence and its allowance of the prepared and approved
payrolls of City Council, which include the salaries and benefits of Mr. Saw
and other consultants, breathes with it the presumption of regularity.
Saws employment x x x must not prejudice respondents. His 201 file reflects
Filipino citizenship. x x x.
As to the (charge of) fraud and deception in the publication of a vacant
position allegedly in violation of R.A. 7041, the law reads:
'Sec. 5. Jurisdiction The Civil Service Commission shall
have original and exclusive jurisdiction to investigate and
recommend for prosecution all cases of violation of this Act;
provided, however, that in case the violation is alleged to have been
committed by the Chairman, and/or any of the Commissioners of
the Civil Service Commission, the Ombudsman shall have original
and exclusive jurisdiction over the investigation and prosecution of
said alleged violation. (underlining supplied)
The Office of the Ombudsman, therefore, has no jurisdiction on the issue. It
is the CSC that has exclusive and original jurisdiction.
The issue over Percival Magalongs appointment and detail at CSC Field
Office also stands on weak grounds. Record shows that Percival was not
detailed by Atty. Sison but rather required as part of x x x regular work
assignment to perform messengerial work (Memorandum dated 02 January
1997 of Atty. Sison). The non-entry of said Memorandum to the City Council
Record Book is not illegal per se inasmuch as the matter of recording is not
strictly observed as an internal office regulation.

"There is no evidence on record that CSC Director Magalong appointed her

brother. She was not the one who appointed Percival. It was the Vice-Mayor
who appointed him.
The appointment of Atty. Togonon to the position of Administrative Officer V
has been upheld by the CSC in its Letter dated 14 July 1998. All doubts as
to the legality of actions taken by the appointing authority, therefore, have
been erased. We could do no less than to conform to the ruling of the CSC.
Record is also bereft of any evidence of Usurpation of Official Function. The
charge is a mere allegation.
WHEREFORE, premises considered, it is respectfully recommended that all
the charges against respondents herein be dismissed."
On July 14, 1999, petitioner filed a motion for reconsideration of the above Resolution
on the ground that Investigator Oscar Ramos "conveniently and intentionally skirted
the issue of falsification of public documents which are crystal clear in my
complaint."8 She then prayed for a re-investigation of her complaint by a Special
Prosecutor.9
On July 26, 1999, the Ombudsman denied petitioners motion for lack of merit.
Dissatisfied, petitioner filed with the Court of Appeals a petition for certiorari and
mandamus, docketed as CA-G.R. SP No. 54724.
On September 9, 1999, the Court of Appeals issued a Resolution dismissing the
petition on the ground that it has no jurisdiction over the subject matter of the assailed
Ombudsmans Resolution. The Appellate Court held:
"Considering the mandate of the second paragraph of Section 14 of
Republic Act No. 6770, otherwise known as The Ombudsman Act of 1989,
which provides that No court shall hear any appeal or application for remedy
against the decision or findings of the Ombudsman, except the Supreme
Court on pure question of law, the Court resolved to DISMISS the petition
for lack of jurisdiction. And, even from the standpoint of procedure, the
petition should be dismissed for suffering some procedural errors, to wit:
1. Non-submission of the proof of service (Sec. 13, Rule 13; Sec. 2 (c), Rule
56; Sec. 3, par. 2, Rule 46 x x x, 1997 Rules of Civil Procedure);
2. Failure to state the material dates showing that the petition was filed on
time, i.e., the date when the assailed resolution dated April 8, 1999 was
received (Sec. 4, Rule 65, as amended by Supreme Court Circular No. 3998 in Bar Matter No. 803); and,

3. Insufficient verification of the petition x x x.

SO ORDERED."10
Petitioner seasonably filed a motion for reconsideration but was denied by the Court
of Appeals in its Resolution of January 5, 2000, thus:
"Although petitioner had seasonably corrected the procedural errors the
original petition suffered, as pointed out in the Resolution of September 9,
1999, through the motion for reconsideration, still the petition
for certiorari and mandamus could not be given due course by this court for
lack of concurrent jurisdiction with the Supreme Court over the subject
matter of the petition for the issuance of the writ of certiorari and mandamus
against the Office of the Ombudsman for dismissing petitioners criminal
complaint for anti-graft and falsification of public documents. Except in
administrative cases, as ruled in Fabian vs. Desierto (295 SCRA 470), the
Congress, in Republic Act No. 6770, Section 14, 2 nd par., designated only
the Supreme Court as the appellate authority in Ombudsman decisions
in criminal cases. Under the said law, the jurisdiction of the Supreme Court
is original and exclusive. As further restriction, the law also provides that No
writ of injunction shall be issued by any court to delay an investigation being
conducted by the Ombudsman under this Act, unless there is a prima
facie evidence that the subject matter of the investigation is outside the
jurisdiction of the Office of the Ombudsman (Section 14, 1st par., R.A. No.
6770).
For the jurisdictional reason stated above, the motion for reconsideration
must be, as it is hereby, DENIED.
SO ORDERED."11 (underscoring supplied)
Hence, the instant recourse raising this sole issue:
"WHETHER OR NOT THE COURT OF APPEALS GRIEVOUSLY ERRED IN
DISMISSING
PETITIONERSPETITION
FOR
CERTIORARI
AND
MANDAMUS ON THE GROUND OF LACK OF JURISDICTION BY
INVOKING SECTION 14, PARAGRAPH 2, OF REPUBLIC ACT NO. 6770."
Petitioner contends that her complaint before the Ombudsman was not limited to
violation of the Anti-Graft and Corrupt Practices Act, but likewise includes "acts
constituting ground for administrative complaint under Sec. 1, Rule III of
Administrative Order No. 07 of the Ombudsman."12 Thus, the Court of Appeals should
have taken cognizance of her petition, applying this Courts ruling in Fabian vs.
Desierto.13
The instant petition is bereft of merit.

Petitioners complaint-affidavit before the Office of the Ombudsman is for violation of

the Anti-Graft and Corrupt Practices Acts. It is not an administrative complaint.
Nowhere in her complaint did she allege administrative offenses, such as dishonesty
or misconduct on the part of respondents.
It bears stressing that the allegations in petitioners complaint describe respondents
actuations as "willful, felonious, unlawful, odious and despicable criminal activities."
In her motion for reconsideration of the Ombudsmans Resolution, petitioner claimed
that Graft Investigator Ramos "skirted the issue of falsification of public documents
which is crystal clear in my complaint."14 Likewise, in her petition in CA-G.R. SP
No. 54274, petitioner sought "to nullify the resolution of the Honorable Ombudsman
dated April 8, 1999 dismissing petitioners complaint for anti-graft and falsification
of public documents and to direct respondent Ombudsman to give due course to
the complaint."15

THE HONORABLE COURT OF APPEALS and DOMINADOR

CABACUNGAN, respondents.
DAVIDE, JR., J.:p
From the judgment of the Court of Appeals in C.A.-G.R. CV No. 15036 1 Promulgated
7 January 1991 affirming in toto the decision in Civil Case No. XX-29 of Branch 20
(Cauayan, Isabela) of the Regional Trial Court, Second Judicial Region, dated 28
April 1987, the dispositive portion of which reads.:
xxx xxx xxx

"Sec. 14. Restrictions. x x x.

WHEREFORE, premises considered, judgment is hereby rendered

in favor of the plaintiffs and against the defendant Filinvest Credit
Corporation, ordering said defendant: (1) to pay or return to the
plaintiff Dominador Cabacungan P44,914.00 representing the
amount said plaintiff paid to defendant plus legal interest from
September 12, 1983, up to and until the full amount is fully paid; (2)
to pay to the plaintiff Dominador Cabacungan P15,000.00 moral
damages, P10,000.00 exemplary damages and P10,000.00
attorney's fees.

No court shall hear any appeal or application for remedy against the decision
or findings of the Ombudsman, except the Supreme Court on pure question
of law."

All the other defendants are absolved of any liability for the reason
that they acted for and in behalf of their employer, Filinvest Credit
Corporation.

Considering that petitioners complaint is criminal in nature, this Court has

the sole authority to review the Ombudsmans Resolutions on pure question of law as
expressly mandated in Section 14, 2nd paragraph of R.A. 6770,16 which provides:

In Fabian vs. Desierto,17 we held that only "appeals from the decisions of the Office of
the Ombudsman inadministrative disciplinary cases should be taken to the Court
of Appeals under the provisions of Rule 43 (of the 1997 Revised Rules of Civil
Procedure)." We reiterated this ruling in Namuhe vs. Ombudsman18 and recently
in Barata vs. Abalos, Jr.19 and Coronel vs. Aniano Desierto, as Ombudsman, and
Pedro Sausal, Jr.20
Therefore, the Court of Appeals, in issuing its questioned Resolutions, did not commit
grave abuse of discretion. Clearly, it has no jurisdiction over petitioners criminal
action. As earlier mentioned, jurisdiction lies with this Court.
WHEREFORE, the petition for review on certiorari is hereby DENIED. Costs against
petitioner.
SO ORDERED.
G.R. No. 96755 December 4, 1991
BPI CREDIT CORPORATION (Formerly Filinvest Credit Corporation), petitioner,
vs.

xxx xxx xxx

petitioner Filinvest Credit Corporation (now BPI Credit Corporation, but hereinafter
referred to as Filinvest) filed on 25 February 1991 this petition for review
by certiorari under Rule 45 of the Rules of Court.
The factual and procedural antecedents are summarized in the challenged Decision
of the Court of Appeals, to wit:
xxx xxx xxx
In March, 1982, plaintiff-appellee Dominador Cabacungan
(Cabacungan, hereafter) purchased on installment basis from B.M.
Domingo Motor Sales, Inc. (BMD, Inc.) a brand new Isuzu KBD 26
pick-up vehicle with Plate Number BAH 401 with the purpose in
mind to use i in his furniture business. The price of the sale was
One Hundred Twenty Eight Thousand Seven Hundred Sixty Five
Pesos P128,765.00 (Exh. "E") of which an initial downpayment of
P24,797.00 was paid BMD, Inc. and the balance of P103,968.00
was to be paid in 36 consecutive monthly installments of P2,888.00
beginning April 19, 1982 to end by March 19, 1985. A P75.00
discount is allowed the buyer for every installment paid on or before

its due date but a 2% penalty charge per month shall be added on
each unpaid installment from the date of its maturity.
Aside from the promissory note (Exh. "I"), the buyer executed a
Deed of Chattel Mortgage with the purchased vehicle as security
(Exh. "2"). In a Deed of Assignment, BMD, Inc. assigned to
defendant-appellant Filinvest Credit Corporation (Filinvest, for
brevity) its rights, title and interest in the aforesaid Chattel Mortgage
and Promissory Note.

Sept. 28, 1982

3,000.00

57.76

54.24

Oct. 16, 1982

3,000.00

2,813.00

187

Nov. 19, 1982

3,000.00

2,813.00

Dec. 20, 1982

3,000.00

112

Jan. 15, 1983

2,980.00

2,813.00

167

Feb., 1983

None

March 16, 1983

3,000.00

2,813.00

187

April 15, 1983

3,000.00

2,813.00

187

April 20, 1983

20.00

May 12, 1983

3,000.00

2,813.00

187

June 20, 1983

3,000.00

112

July 15, 1983

3,000.00

2,813.00

187

August 19, 1983

3,400.00

2,813.00

587

187

As the trial court found, from April 19, 1982 to August 19, 1983,
Cabacungan made installment payments as follows:

Date of Payment

Amt. Paid

P75.00 Discount for

Prompt/payment

Surcharge of 2%

Excess pay-

for late payments

Amt. due:

P2,813.00

April 19, 1982

May 19, 1982

June, 1982

July 20, 1982

Aug. 30, 1982

P2,813.00

2,813.00

None

2,288.00

3,000.00

57.76

54.24

TO TAL

P44,914.00

P2,208.48

NOTE: Table based on Exh. A, A-1 to A-18 Surcharge computed as

follows:
P2,888.00 x 02 = 57.76

On September 14, 1983, Cabacungan filed a complaint for replevin

before the court a quo alleging that appellant Filinvest took
possession of the pick-up vehicle through force and intimidation
without either a seizure order from the court or a petition for
foreclosure of the chattel mortgage; that the return of the value of
the said motor vehicle he (sic) made and that he be awarded moral
damages and attorney's fees.

Amount due for late payments: P2,945.76

Cabacungan later amended his complaint to include his wife

Teodora Cabacungan as party plaintiff and some personnel of
Filinvest as defendants and increased the amounts pertaining to his
claim for moral, exemplary and nominal damages and attorney's
fees.

Payments of the installments were made in Land Bank checks

except for one instance when the amount of P20.00 was paid in
cash and Filinvest issued the corresponding receipts per Exhibits A1 to A-14. The payments for the months of April 19 and May 19,
1982 (Exh. A-17 and A-18) were remitted by BMD, Inc. to Filinvest
on April 26, 1982 and May 20, 1982, respectively.

Filinvest in its Answer denied having seized the pick-up vehicle

through force and intimidation and claimed having taken
possession when it was voluntarily surrendered by Dominador
Poduta and Ruben Cabacungan. Filinvest further alleged that
Cabacungan violated the terms of the chattel mortgage deed and
the promissory note he executed.

But Cabacungan failed to pay the installments for June, 1982 and
February, 1983 and he had explained that he purposely withheld
the payments for those months because he wanted a
recomputation of the interests being collected from him considering
that he had made a number of payments in excess of the stipulated
installment. Cabacungan appeared to have been required by
Filinvest to make payments in excess of the stipulated amount to
cover the instances when the amortizations have not been paid. As
the trial court found, Cabacungan had made excess payments
totalling P2,208.48.

As affirmative defense, Filinvest contended that the venue is

improperly laid since the Chattel Mortgage provides that venue of
action shall be in the City of Manila or in Santiago, Isabela and not
in Cauayan, Isabela where the complaint was filed; that
Cabacungan has no cause of action having defaulted in the
payment of two (2) monthly installments and the chattel mortgage
provides that upon (sic) default of one installment will make the
entire remaining amount due and demandable.

On September 13, 1983, after they delivered a piece of furniture to

a customer in San Isidro, Isabela, Dominador Roduta and Ruben
Cabacungan, the driver and helper, respectively, of Cabacungan
were apprehended by the employees of Filinvest who also seized
the pick-up vehicle. In the office of Filinvest at Santiago, Isabela,
Cabacungan's driver and helper were issued a receipt by defendant
Teddy Gaba (Exh. G) showing that the subject pick-up vehicle was
surrendered to Filinvest purportedly pursuant to the Deed of Chattel
Mortgage for Cabacungan's failure to pay overdue amortizations in
the amount of P7,555.84.
When informed of the seizure of the vehicle, Cabacungan issued a
check for P7,555.00 drawn on the Land Bank which he tendered to
defendant Gaba but the latter refused to accept the same.
Cabacungan then deposited the check in the Pilipinas Saving Bank
and brought the receipt of the deposit (Exh. A-16) to defendant
Gaba who also refused to accept the receipt and demanded that
the entire balance of the promissory note be made.

Plaintiff Teodora Cabacungan died in the course of the proceedings

and in an amended complaint, her children were substituted in lieu
of her.
In the pre-trial conference held on March 13, 1985, both parties
agreed to litigate on the following issues: (1) Whether or not taking
of the truck by defendant Filinvest was lawfully made; (2) Whether
or not Cabacungan was in arrears in the payment of his obligations
to the appellant; and (3) Whether or not damages were due from
one to the other. 2
On 28 April 1987, the trial court rendered its decision, the dispositive portion of which
was quoted earlier.
Filinvest appealed from the decision to the respondent Court of Appeals, which
docketed the case as C.A.-G.R. CV No. 15036, and urged it to reverse the decision
because the trial court erred in: (a) granting the reliefs prayed for in the complaint but
remaining silent on the counter-claim, (b) awarding unwarranted damages to plaintiff,
which are not supported by the evidence and applicable laws and jurisprudence, (c)

making conclusions not substantiated by facts as established by evidence, and (d)

rendering a judgment which is not in accord with the law and applicable decisions of
this Court.
In the instant case, Filinvest urges Us to overturn the Court of Appeals' decision
because it is grounded on speculation, surmises and conjectures:
as when it held that the account on the NOTE was not
delinquent even as an admission of delinquency is extant in the
Answer and amply proven by the evidence
as when the Honorable Court of Appeals awarded enormous
actual damages not established by evidence.
as when it ignored the contractual stipulations voluntarily entered
into per the promissory note made out by Cabacungan.
it made mistaken inferences from the documents presented by Cabacungan and
misapprehended the facts. In support thereof, Filinvest argues that Cabacungan's
account was in arrears; written and verbal demands were made upon Cabacungan;
there was no unlawful taking of the mortgaged property; a contract of adhesion is
valid; Cabacungan did not pay the additional docket fees on the claim for damages in
his amended complaint, hence the trial court did not acquire jurisdiction over the
case; the premises for the award of damages are erroneous and Cabacungan is not
entitled to the damages; and that the decision violates Section 9, Rule 60 of the Rules
of Court. 3
In his Comment filed by mail on 4 April 1991 4 in compliance with this Court's
resolution of 6 March 1991, private respondent Cabacungan denies the allegations in
the petition.

Settled is the rule that only questions of law may be raised in a petition for certiorari
under Rule 45 of the Rules of Court. The jurisdiction of this Court in cases brought to
it from the Court of Appeals is limited to reviewing and revising errors of law imputed
to it, its findings of fact being conclusive. It is not the function of this Court to analyze
or weigh such evidence all over again, its jurisdiction being limited to reviewing errors
of law that might have been committed by the lower court. Barring, therefore, a
showing that the findings complained of are totally devoid of support in the record, or
that they are so glaringly erroneous as to constitute serious abuse of discretion, they
must stand. 8
There are, however, exceptions to this rule, namely:
(1) When the conclusion is a finding grounded entirely on speculation, surmises and
conjectures; (2) When the inference made is manifestly mistaken, absurd or
impossible; (3) When there is a grave abuse of discretion; (4) When the judgment is
based on a misapprehension of facts; (5) When the findings of facts are conflicting;
(6) When the Court of Appeals, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellant and appellee; (7)
When the findings of the Court of Appeals are contrary to those of the trial court; (8)
When the findings of fact are conclusions without citation of specific evidence on
which they are based; (9) When the facts set forth in the petition as well as in the
petitioners' main and reply briefs are not disputed by the respondents; and (10) When
the finding of fact of the Court of Appeals is premised on the supposed absence of
evidence and is contradicted by the evidence on record. 9
There is no doubt that Filinvest has carefully crafted its petition in an attempt to bring
it within the exceptions. Unfortunately, We are not persuaded.
The findings of fact of both the trial court and the Court of Appeals on the illegal taking
of the vehicle, the non-delinquency of the account of private respondent, and on
damages, are sufficiently supported by the evidence. As to the first, the Court of
Appeals stated:

We gave due course to the petition and required both parties to submit
simultaneously their respective Memoranda 5 which Filinvest complied with on 17
June 1991 6 and the private respondent on 20 July 1991. 7

xxx xxx xxx

After a careful scrutiny and analysis of the issues and the amplified arguments
adduced by the parties in their Memoranda, this Court finds that the principal issues
raised are unquestionably directed to the findings of facts of respondent Court of
Appeals.

As the lower court correctly held, Filinvest did not have the right to
take possession of the subject pick-up vehicle as it did not make
any demand to Cabacungan to surrender the same prior to the said
seizure. The pertinent provision of the Deed of Chattel Mortgage
(Exhs. 2, 2-A) on this point, reads:

It must be stressed that, as shown in the foregoing summary of facts, the parties
agreed during the pre-trial conference to litigate on three (3) issues only: (1) whether
or not the taking of the truck by Filinvest was lawfully made; (2) whether or not
Cabacungan was in arrears in the payment of his obligations to Filinvest; and, (3)
whether or not damages were due from one to the other. The parties are bound by,
and the issues presented here must be resolved vis-a-vis, such agreement. We
cannot allow the parties to run wild, and confuse the issues for their own benefit.

"The MORTGAGOR further agrees that in default

of payment of any installment or any part thereof
or interest thereon as and when the same shall
become due and payable,the mortgaged
property/ies shall be delivered on demand to the
MORTGAGEE in Manila, or as designated by the
MORTGAGEE at any address stated in the
demand, free of all charges and should the

MORTGAGOR not deliver the said property/ies

the MORTGAGEE shall have the right to get the
said property/ies wherever it / they may be
found and have the same brought to the City of
Manila, and the expenses of locating and
bringing said mortgaged property/ies to the City
of Manila shall be for the account of the
MORTGAGOR and shall form part of the
following
remedies:
(a)
Sale
by
the
MORTGAGOR or his assigns to himself, (b)
Cancellation of the contract of sale with the
MORTGAGOR; (c) Extrajudicial foreclosure; (d)
Judicial foreclosure; and (e) Ordinary civil action
exact fulfillment of the mortgage contract.
Whichever
remedy is
elected by the
MORTGAGEE, the MORTGAGOR expressly
waives any and all amounts on the principal and
interests already paid by him."
Filinvest should first make a demand on Cabacungan to deliver or
surrender the subject vehicle to its branch office in Santiago,
Isabela and only if he shall have failed to comply with such demand
may it seize the vehicle wherever it may be found.
No demand was made whatsoever by Filinvest to Cabacungan for
the return to it of the pick-up vehicle. Instead, employees of
Filinvest, upon seeing the vehicle on the highway at San Isidro,
seized it from the driver Dominador Roduta and helper Ruben
Cabacungan.
Appellant's contention that a verbal demand was made to Ruben
Cabacungan and that the letters Exhs. X and Y were made, did not
constitute the proper demand. Ruben Cabacungan is a mere
employee of the appellee and his having signed the surrender
paper purportedly in behalf of the appellee, without the latter's
authority or consent cannot bind the appellee. The Chattel
Mortgage deed very clearly provides that demand for the surrender
of the vehicle should be made to the mortgagor himself, in this
case, appellee Cabacungan. That Ruben Cabacungan is a nephew
of the appellee cannot by that relationship prove any agency or
authority to represent him.
Exhs. X and Y are mere demands to pay overdue installments for
October and November 1982 (Exh. X) and for May and June, 1983
(Exh. Y). A written demand to deliver the mortgaged property is
required and not a written demand to pay certain overdue
amortizations. Furthermore, what were supposed to be overdue
accounts have been paid for by the appellee as evidenced by Exhs.
A-11, A-10 and A-4, A-3."

xxx xxx xxx

It is not disputed that upon the default by a mortgagor in his obligations, the
mortgagee has the right to the possession of the property mortgaged preparatory to
its selling in a public auction. Section 14 of the Chattel Mortgage
Law 10 provides, inter alia, that the "mortgage, his executor, administrator, or assign,
may, after thirty days from the time of condition broken, cause the mortgaged
property, or any part thereof, to be sold at public auction . . . " In the early case
of Bachrach Motor Co. vs. Summers, 11 this Court held this right to be
unquestionable; however, if "the debtor refuses to yield 'up the property, the creditor
must institute an action, either to effect a judicial foreclosure directly, or to secure
possession as a preliminary to the sale contemplated. ... He cannot lawfully take the
property by force against the will of the debtor. ... In the article on Chattel Mortgages,
in Corpus Juris, the following statement of the law on the same point is made: The
only restriction on the mode by which the mortgagee shall secure possession of the
mortgaged property after breach of condition is that he must act in an orderly manner
and without creating a breach of the peace, subjecting himself to an action for
trespass'." 12
The law does not allow the creditor himself to possess the mortgaged property
through violence and against the will of the debtor because the creditor's light of
possession is conditioned upon the fact of default, and the existence of this fact may
naturally be the subject of controversy. The debtor, for instance, may claim in good
faith, and rightly or wrongly, that the debt is paid, or that for some other reason the
alleged default is nonexistent.13
Besides, the Deed of Chattel Mortgage in this case, which has the force of law
between the contracting parties and which they must comply with in good
faith, 14 clearly provides that the mortgaged property shall be delivered only upon
demand from the mortgagor. Filinvest was bound to comply with it and cannot
substitute demand and voluntary delivery with unilateral illegal seizure. Cabacungan
was not even given the opportunity to contest the taking as the vehicle was seized
from his nephew. That the former did not agree to the taking is borne out by the fact
that he presented a check in the amount of P7,555.00 the day after the seizure, as
payment for missed installments. In short, it is obvious that Filinvest took the law into
its own hands in obtaining possession of the vehicle and made a mockery of the
judicial process when it kept the vehicle away from the reach of the writ of replevin.
We note in the decision of the trial court that the writ of replevin was not implemented
because the vehicle disappeared from Filinvest's stockyard. 15
As to the non-payment of the installments for June 1982 and February 1983, the trial
court found that Cabacungan had an excuse therefor. He requested Filinvest to
recompute the interests. If Filinvest deemed the excuse unfounded, its conduct in
accepting payments for succeeding installments and the absence of a formal written
demand therefor could hardly be reconciled with the former. Besides, such
delinquency is immaterial to the issue of the legality of the taking of the vehicle. While
Filinvest may have all the right in the world to foreclose the mortgage, that right did
not grant it untrammeled license to intercept the property subject of the mortgage and
seize it wherever it may be found, in a manner contrary to the stipulations set forth in
the Chattel Mortgage contract.

Anent the damages granted, We find the award to be supported by the evidence.
Three (3) remaining issues involve questions of law: (a) the validity or propriety of the
order directing Filinvest to return to Cabacungan the sum of P44,194.00, which
represents the installment payments made before the seizure of the vehicle, which
Filinvest claims to be a violation of Section 9, Rule 60 of the Rules of Court, (b) the
non-payment of docket fees on the increased amount of damages claimed in the
amended complaint, and (c) the issue of whether the chattel mortgage is a contract of
adhesion.
There is merit in the first.
The complaint before the trial court is for replevin with a prayer for damages. A writ of
replevin was in fact issued, but unfortunately the vehicle disappeared from the
stockyard of petitioner. The records do not disclose that: (a) the vehicle was
subsequently recovered and its possession restored to Cabacungan because of the
writ, and (b) Filinvest subsequently foreclosed the chattel mortgage. It is, therefore,
reasonable to assume that the writ of replevin was never implemented, Filinvest did
not foreclose the mortgage, and that the latter has the vehicle in its possession and
control.
In a replevin case, the Rules of Court expressly provides that:
After a trial of the issues the court shall find in whom is the right of
possession and the value of the property and shall render judgment
in the alternative for the delivery thereof to the party entitled to the
same, or for the value in case delivery cannot be made, and also
for such damages as either party may prove, and for costs. 16
There can be no question that although he had not yet fully paid its purchase price,
Cabacungan became the owner of the vehicle, otherwise the seller would not have
accepted it in mortgage. He was entitled to its possession and use until appropriate
lawful proceedings would have been taken by Filinvest to obtain possession of the
vehicle preliminary to foreclosure of the mortgage. Absent such proceedings, as in
this case, Cabacungan was entitled to recover its possession. But the writ of replevin
could not be and was not in fact implemented for the reason already adverted to. The
conclusion is thus inescapable that return of the vehicle was rendered impossible by
Filinvest. So, from 12 September 1983 up to at least 28 April 1987, when the trial
court rendered its decision, and even up to the present or for at most a little over
eight (8) years Cabacungan was effectively deprived of the possession and use of
the vehicle. Undoubtedly, whether it is being used or just kept Idle somewhere by
Filinvest, its value has significantly been reduced. It is obvious that Cabacungan had
abandoned any claim for its recovery and for the restoration of its possession to him.
He did not appeal from the decision which was silent on that point. Considering the
lapse of more than eight (8) years since the illegal seizure of the vehicle, its possible
deterioration and diminution in value as a result thereof, equity demands that
Cabacungan should be paid its value, which is the second alternative provided for in
Section 9, Rule 60 of the Rules of Court, and that he should not be held liable for the
remaining unpaid installments on the promissory note.

Cabacungan explicitly admits in paragraph 8 of his Complaint: 17

8. That the value of the said motor vehicle as of September 12,
1983 is P62,255.55.
which Filinvest admits in paragraph 8 of its Answer. 18 The parties are bound by this
valuation.
Accordingly, Filinvest must be ordered to pay this amount of P62,255.55 instead of
the sum of P44,914.00.
And now to the issue concerning the docket fees.
Filinvest claims that Cabacungan should not be allowed to recover damages because
he failed to pay the corresponding docket fees based on the P960,000.00 damages
prayed for in the amended complaint. Respondent court, however, citing Magaspi vs.
Ramolete, 19 maintains that the trial court had jurisdiction over the claim despite the
insufficiency of the docket fees paid.
The respondent court is correct. The decision in Magaspi was promulgated on 20 July
1982 and was the controlling law at the time the original and amended complaints
were filed by Cabacungan; the case was decided by the trial court on 28 April 1987.
Magaspi involved a complaint for recovery of ownership and possession of a parcel of
land, with claims for P500,000.00 as moral damages, P500,000.00 as exemplary
damages and P250,000.00 as attorney's fees. The docket fee paid was based on the
assessed value of the property alone. On motion of two (2) of the defendants to
compel the plaintiffs to pay the correct docket fees on the basis of the sum total of the
value of the property, the rentals claimed and the damages and the attorney's fees
asked, the court, through then Judge Canonoy, dirrected the plaintiffs to pay the
additional docket fee of P3,104.00. The complaint was in the meanwhile amended;
however, in their prayer, plaintiffs did not specify anymore the amounts of the said
damages but left it to the determination of the court and reduced the claim for
attorney's fees to P100,000.00. Judge Canonoy admitted the amended complaint.
Plaintiffs, nevertheless, did not comply with the order for the payment of the additional
docket fee, forcing defendants to file a motion to require the former to pay it within
seven (7) days which plaintiffs in turn opposed in view of the amended complaint.
Acting on this motion, the court, through a new judge, Judge Ramolete, ruled that in
view of the insufficient docket fee paid, the original complaint was not deemed
registered or docketed; it follows then that there being nothing to amend, the
amended complaint cannot be deemed to have been filed and admitted. Plaintiffs
assailed this order and on a petition for certiorari filed with this Court, We held that,
considering the honest difference of opinion as to the correct amount to be paid, the
case below was properly docketed upon the payment of P60.00 although said amount
is insufficient. The trial court had acquired jurisdiction over the case and the
proceedings thereafter were proper and regular. However, the plaintiffs were required
to pay the additional docket fee based on the amended complaint.

The instant case is for replevin and for purposes of determining the jurisdiction of the
court, the value of the personal property involved is controlling; the damages and
attorney's fees claimed are merely incidental. Accordingly, following the rule
in Magaspi, the court had validly acquired jurisdiction on the basis of the original
complaint; the increase in the amount of the damages claimed did not affect it,
although Cabacungan still has to pay the deficiency in docket fees based on the
amended complaint.
It must, however, be stressed here that the subsequent rulingof this Court
in Manchester Development Corp. vs. Court of Appeals, 20 promulgated barely nine
(9) days after the court below decided the instant case, partly modified the Magaspi
ruling Nevertheless, justice and equity would not warrant the application of
Manchester in this case. Besides, Manchester was later modified in Sun Insurance
Office Ltd. vs. Asuncion, 21 wherein We made the following clarificatory rules:
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.
Then in Tacay et al. vs. Regional Trial Court of Tagum,. et al., 22 We made further
clarifications on the matter of the payment of the docket fee.
Finally, on the question of whether the Deed of Chattel Mortgage is a contract of
adhesion, We uphold the respondent court's conclusion that it is such. In Angeles vs.
Calasanz, 23 We said, quoting Sweet Lines vs.Teves, 24 that while generally,
stipulations in a contract come about after deliberate drafting by the parties thereto,
there are certain contracts almost all the provisions of which have been drafted only
by one party, usually a corporation. Such contracts are called contracts of adhesion,
because the only participation of the party is the affixing of his signature or his
"adhesion" thereto. The deed of Chattel Mortgage entered into by the parties easily

falls into this category as it is evident that its preparation was done solely by Filinvest.
This being the case, the terms of such contract are to be construed strictly against the
latter, the party which prepared it. 25
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered modifying the
challenged Decision and that of the trial court's. As modified, the award of P44,914.00
to plaintiff Cabacungan is hereby SET ASIDE and in lieu thereof, Filinvest is hereby
ORDERED to pay the sum of P62,255.55 representing the value of the motor vehicle.
In all other respects the Decision is AFFIRMED.
The Clerk of Court of the trial court is hereby ordered to reassess and determine the
additional docket fees that should be paid by private respondent Cabacungan in Civil
Case No. XX-29, taking into account the total amount sought in the original complaint
and the amended complaint as determined from the allegations and the prayer
thereof, and to require Cabacungan to pay the deficiency, if any, within ten (10) days
following receipt of notice to that effect: provided, however, that should the latter fail to
do so, the deficiency shall be considered a lien on the judgment in this case.
IT IS SO ORDERED.

Before this Court is a Petition for Review on Certiorari under Rule 45 of the revised
Rules of Civil Procedure seeking the reversal of the Decision, 1 dated 20 May 2002,
and the Amended Decision,2 dated 27 November 2003, both rendered by the Court of
Appeals in CA-G.R. SP No. 63405, which declared herein petitioner Dole Philippines,
Inc. as the employer of herein respondents, Medel Esteva and 86 others; found
petitioner guilty of illegal dismissal; and ordered petitioner to reinstate respondents to
their former positions and to pay the latter backwages.
The antecedent facts of the case are recounted as follows:
Petitioner is a corporation duly organized and existing in accordance with Philippine
laws, engaged principally in the production and processing of pineapple for the export
market.3 Its plantation is located in Polomolok, South Cotabato.4
G.R. No. 161115

November 30, 2006

DOLE PHILIPPINES, INC., Petitioner,

vs.
MEDEL ESTEVA, HENRY SILVA, GILBERT CABILAO, LORENZO GAQUIT,
DANIEL PABLO, EDWIN CAMILO, BENJAMIN SAKILAN, RICHARD PENUELA,
ARMANDO PORRAS, EDUARDO FALDAS, NILO DONDOYANO, MIGUEL DIAZ,
ROMEL BAJO, ARTEMIO TENERIFE, EDDIE LINAO, JERRY LIGTAS, SAMUEL
RAVAL, WILFREDO BLANDO, LORENZO MONTERO, JR., JAIME TESIPAO,
GEORGE DERAL, ERNESTO ISRAEL, JR., AGAPITO ESTOLOGA, JOVITO
DAGUIO, ARSENIO LEONCIO, MARLON BLANDO, JOSE OTELO CASPILLO,
ARNOLD LIZADA, JERRY DEYPALUBOS, STEVEN MADULA, ROGELIO
CABULAO, JR., ALVIN COMPOC, EUGENIO BRITANA, RONNIE GUELOS,
EMMANUEL JIMENA, GERMAN JAVA, JESUS MEJICA, JOEL INVENTADO,
DOMINGO JABULGO, RAMIL ENAD, RAYMUNDO YAMON, RITCHIE
MELENDRES, JACQUEL ORGE, RAMON BARCELONA, ERWIN ESPIA, NESTOR
DELIDELI, JR., ALLAN GANE, ROMEO PORRAS, RITCHIE BOCOG, JOSELITO
ACEBES, DANNY TORRES, JIMMY NAVARRO, RALPH PEREZ, SONNY SESE,
RONALD RODRIQUES, ROBERTO ALLANEC, ERNIE GIGANTANA, NELSON
SAMSON, REDANTE DAVILA, EDDIE BUSLIG, ALLAN PINEDA, JESUS
BELGERA, VICENTE LABISTE, CARMENCITA FELISILDA, GEORGE DERLA,
RUBEN TORMON, NEIL TAJALE, ORLANDO ESPENILLA, RITCHEL MANEJAR,
JOEL QUINTANA, ERWIN ALDE, JOEL CATALAN, ELMER TIZON, ALLAN
ESPADA, EUGENE BRETANA, RAMIL ENAD, RENE INGALLA, STEVEN
MADULLA, RANDY REBUTAZO, NEIL BAGATILLA, ARSENIO LEONCIO,
ROLANDO VILLEGAS and JUSLIUS TESIPAO, herein represented by MEDEL
ESTEVA, Authorized Representative, Respondents.
DECISION
CHICO-NAZARIO, J.:

Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO).

CAMPCO was organized in accordance with Republic Act No. 6938, otherwise known
as the Cooperative Code of the Philippines, and duly-registered with the Cooperative
Development Authority (CDA) on 6 January 1993. 5 Members of CAMPCO live in
communities surrounding petitioners plantation and are relatives of petitioners
employees.
On 17 August 1993, petitioner and CAMPCO entered into a Service Contract. 6 The
Service Contract referred to petitioner as "the Company," while CAMPCO was "the
Contractor." Relevant portions thereof read as follows
1. That the amount of this contract shall be or shall not exceed TWO HUNDRED
TWENTY THOUSAND ONLY (P220,000.00) PESOS, terms and conditions of
payment shall be on a per job basis as specified in the attached schedule of rates; the
CONTRACTOR shall perform the following services for the COMPANY;
1.1 Assist the COMPANY in its daily operations;
1.2 Perform odd jobs as may be assigned.
2. That both parties shall observe the following terms and conditions as stipulated, to
wit:
2.1 CONTRACTOR must carry on an independent legitimate business, and
must comply with all the pertinent laws of the government both local and
national;
2.2 CONTRACTOR must provide all hand tools and equipment necessary in
the performance of their work.

However, the COMPANY may allow the use of its fixed equipment as a
casual facility in the performance of the contract;
2.3 CONTRACTOR must comply with the attached scope of work,
specifications, and GMP and safety practices of the company;
2.4 CONTRACTOR must undertake the contract work under the following
manner:
a. on his own account;
b. under his own responsibility;
c. according to his manner and method, free from the control and
direction of the company in all matters connected with the
performance of the work except as to the result thereof;
3. CONTRACTOR must pay the prescribed minimum wage, remit SSS/MEDICARE
premiums to proper government agencies, and submit copies of payroll and proof of
SSS/MEDICARE remittances to the COMPANY;
4. This contract shall be for a specific period of Six (6) months from July 1 to
December 31, 1993; x x x.
Pursuant to the foregoing Service Contract, CAMPCO members rendered services to
petitioner. The number of CAMPCO members that report for work and the type of
service they performed depended on the needs of petitioner at any given time.
Although the Service Contract specifically stated that it shall only be for a period of six
months, i.e., from 1 July to 31 December 1993, the parties had apparently extended
or renewed the same for the succeeding years without executing another written
contract. It was under these circumstances that respondents came to work for
petitioner.
Investigation by DOLE
Concomitantly, the Sangguniang Bayan of Polomolok, South Cotabato, passed
Resolution No. 64, on 5 May 1993, addressed to then Secretary Ma. Nieves R.
Confessor of the Department of Labor and Employment (DOLE), calling her attention
to the worsening working conditions of the petitioners workers and the organization of
contractual workers into several cooperatives to replace the individual labor-only
contractors that used to supply workers to the petitioner. Acting on the said
Resolution, the DOLE Regional Office No. XI in Davao City organized a Task Force
that conducted an investigation into the alleged labor-only contracting activities of the
cooperatives in Polomolok.7

On 24 May 1993, the Senior Legal Officer of petitioner wrote a letter addressed to
Director Henry M. Parel of DOLE Regional Office No. XI, supposedly to correct the
misinformation that petitioner was involved in labor-only contracting, whether with a
cooperative or any private contractor. He further stated in the letter that petitioner was
not hiring cooperative members to replace the regular workers who were separated
from service due to redundancy; that the cooperatives were formed by the immediate
dependents and relatives of the permanent workers of petitioner; that these
cooperatives were registered with the CDA; and that these cooperatives were
authorized by their respective constitutions and by-laws to engage in the job
contracting business.8
The Task Force submitted a report on 3 June 1993 identifying six cooperatives that
were engaged in labor-only contracting, one of which was CAMPCO. The DOLE
Regional Office No. XI held a conference on 18 August 1993 wherein the
representatives of the cooperatives named by the Task Force were given the
opportunity to explain the nature of their activities in relation to petitioner.
Subsequently, the cooperatives were required to submit their position papers and
other supporting documents, which they did on 30 August 1993. Petitioner likewise
submitted its position paper on 15 September 1993.9
On 19 October 1993, Director Parel of DOLE Regional Office No. XI issued an
Order10 in which he made the following findings
Records submitted to this Office show that the six (6) aforementioned cooperatives
are all duly registered with the Cooperative Development Authority (CDA). These
cooperatives were also found engaging in different activities with DOLE
PHILIPPINES, INC. a company engaged in the production of pineapple and export of
pineapple products. Incidentally, some of these cooperatives were also found
engaging in activities which are directly related to the principal business or operations
of the company. This is true in the case of the THREE (3) Cooperatives, namely;
Adventurers Multi Purpose Cooperative, Human Resource Multi Purpose
Cooperative and Cannery Multi Purpose Cooperative.
From the foregoing findings and evaluation of the activities of Adventurers Multi
Purpose Cooperative, Human Resource Multi Purpose Cooperative and Cannery
Multi Purpose Cooperative, this Office finds and so holds that they are engaging in
Labor Only Contracting Activities as defined under Section 9, Rule VIII, Book III of the
rules implementing the Labor Code of the Philippines, as amended which we quote:
"Section 9 Labor Only Contracting a) Any person who undertakes to supply workers
to an employer shall be deemed to be engaged in labor-only contracting where such
person:
1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and

2) The workers recruited and placed by such person are performing activities
which are directly related to the principal business or operation of the
employer to which workers are habitually employed.
b) Labor-only contracting as defined herein is hereby prohibited and the
person acting as contractor shall be considered merely as an agent or
intermediary of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him."
WHEREFORE, premises considered, ADVENTURERS MULTI PURPOSE
COOPERATIVE, HUMAN RESOURCE MULTI PURPOSE COOPERATIVE and
CANNERY MULTI PURPOSE COOPERATIVE are hereby declared to be engaged in
labor only contracting which is a prohibited activity. The same cooperatives are
therefore ordered to cease and desist from further engaging in such activities.
The three (3) other cooperatives, namely Polomolok Skilled Workers Multi Purpose
Cooperative, Unified Engineering and Manpower Service Multi Purpose Cooperative
and Tibud sa Katibawasan Multi Purpose Cooperative whose activities may not be
directly related to the principal business of DOLE Philippines, Inc. are also advised
not to engage in labor only contracting with the company.
All the six cooperatives involved appealed the afore-quoted Order to the Office of the
DOLE Secretary, raising the sole issue that DOLE Regional Director Director Parel
committed serious error of law in directing the cooperatives to cease and desist from
engaging in labor-only contracting. On 15 September 1994, DOLE Undersecretary
Cresencio B. Trajano, by the authority of the DOLE Secretary, issued an
Order11 dismissing the appeal on the basis of the following ratiocination
The appeal is devoid of merit.
The Regional Director has jurisdiction to issue a cease and desist order as provided
by Art. 106 of the Labor Code, as amended, to wit:
"Art. 106. Contractor or subcontractor. x x x
xxxx
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the
contracting out of labor to protect the rights of workers established under this Code. In
so prohibiting or restricting, he may make appropriate distinctions between labor only
contracting and job contracting as well as differentiations within these types of
contracting and determine who among the parties involved shall be considered the
employer for purposes of this Code, to prevent any violation or circumvention of any
provision of this Code (Emphasis supplied)

There is "labor-only" contracting where the person supplying workers to an employer

does not have substantial capital or investment in the forms of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to the principal
business of the employer. In such cases, the person or the intermediary shall be
considered merely as an agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly employed by
him."
in relation to Article 128(b) of the Labor Code, as amended by Republic Act No. 7730,
which reads:
"Art. 128. Visitorial and Enforcement Power.
b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary,
and in cases where the relationship of employer-employee still exists, the Secretary
of Labor and Employment or his duly authorized representatives shall have the power
to issue compliance orders to give effect to the labor standards provisions of this
Code and other labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of inspection.
The Secretary or his duly authorized representatives shall issue writs of execution to
the appropriate authority for the enforcement of their orders, except in cases where
the employer contests the findings of the labor employment and enforcement officer
and raises issues supported by documentary proof which were not considered in the
course of inspection.
An order issued by the duly authorized representative of the Secretary of Labor and
Employment under this article may be appealed to the latter. In case said order
involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash bond issued by a reputable bonding company duly accredited
by the Secretary of Labor and Employment in the amount equivalent to the monetary
award in the order appealed from."
The records reveal that in the course of the inspection of the premises of Dolefil, it
was found out that the activities of the members of the [cooperatives] are necessary
and desirable in the principal business of the former; and that they do not have the
necessary investment in the form of tools and equipments. It is worthy to note that the
cooperatives did not deny that they do not have enough capital in the form of tools
and equipment. Under the circumstances, it could not be denied that the
[cooperatives] are considered as labor-only contractors in relation to the business
operation of DOLEFIL, INC.
Thus, Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor
Code, provides that:

"Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers
to an employer shall be deemed to be engaged in labor-only contracting where such
person:
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such person are performing
activities which are directly related to the principal business or operations of
the employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the
person acting as a contractor shall be considered merely as an agent or
intermediary of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him.
x x x x"
Violation of the afore-quoted provision is considered a labor standards violation and
thus, within the visitorial and enforcement powers of the Secretary of Labor and
Employment (Art. 128).
The Regional Directors authority to issue a cease and desist order emanates from
Rule I, Section 3 of the Rules on Disposition of Labor Standard Cases in the Regional
Offices, to wit:
"Section 3. Authorized representative of the Secretary of Labor and Employment.
The Regional Directors shall be the duly authorized representatives of the Secretary
of Labor and Employment in the administration and enforcement of the labor
standards within their respective territorial jurisdiction."
The power granted under Article 106 of the Labor Code to the Secretary of Labor and
Employment to restrict or prohibit the contracting out of labor to protect the rights of
workers established under the Code is delegated to the Regional Directors by virtue
of the above-quoted provision.
The reason why "labor-only" contracting is prohibited under the Labor Code is that it
encourages circumvention of the provisions of the Labor Code on the workers right to
security of tenure and to self-organization.
WHEREFORE, the respondents Appeal is hereby DISMISSED for lack of merit. The
Order of the Regional Director, Regional Office No. XI, Davao City, is AFFIRMED.
After the motion for reconsideration of the foregoing Order was denied, no further
motion was filed by the parties, and the Order, dated 15 September 1994, of DOLE

Undersecretary Trajano became final and executory. A Writ of Execution 12 was issued
by DOLE Regional Office No. XI only on 27 July 1999, years after the issuance of the
order subject of the writ. The DOLE Regional Office No. XI was informed that
CAMPCO and two other cooperatives "continued to operate at DOLE Philippines, Inc.
despite the cease and desist Order" it had issued. It therefore commanded the Sheriff
to proceed to the premises of CAMPCO and the two other cooperatives and
implement its Order dated 19 October 1993.
Respondents Complaint before the NLRC
Respondents started working for petitioner at various times in the years 1993 and
1994, by virtue of the Service Contract executed between CAMPCO and petitioner. All
of the respondents had already rendered more than one year of service to petitioner.
While some of the respondents were still working for petitioner, others were put on
"stay home status" on varying dates in the years 1994, 1995, and 1996 and were no
longer furnished with work thereafter. Together, respondents filed a Complaint,13 on 19
December 1996, with the National Labor Relations Commission (NLRC), for illegal
dismissal, regularization, wage differentials, damages and attorneys fees.
In their Position Paper,14 respondents reiterated and expounded on the allegations
they previously made in their Complaint
Sometime in 1993 and 1994, [herein petitioner] Dolefil engaged the services of the
[herein respondents] through Cannery Multi-purpose Cooperative. A cooperative
which was organized through the initiative of Dolefil in order to fill in the vacuum
created as a result of the dismissal of the regular employees of Dolefil sometime in
1990 to 1993.
The [respondents] were assigned at the Industrial Department of respondent Dolefil.
All tools, implements and machineries used in performing their task such as: can
processing attendant, feeder of canned pineapple at pineapple processing,
nata de coco processing attendant, fruit cocktail processing attendant, and
etc.were provided by Dolefil. The cooperative does not have substantial capital and
does not provide the [respondents] with the necessary tools to effectively perform
their assigned task as the same are being provided by Dolefil.
The training and instructions received by the [respondents] were provided by Dolefil.
Before any of the [respondents] will be allowed to work, he has to undergo and pass
the training prescribed by Dolefil. As a matter of fact, the trainers are employees of
Dolefil.
The [respondents] perform their assigned task inside the premises of Dolefil. At the
job site, they were given specific task and assignment by Dolefils supervisors
assigned to supervise the works and efficiency of the complainants. Just like the
regular employees of Dolefil, [respondents] were subjected to the same rules and

regulations observe [sic] inside company premises and to some extent the rules
applied to the [respondents] by the company through its officers are even stricter.
The functions performed by the [respondents] are the same functions discharged by
the regular employees of Dolefil. In fact, at the job site, the [respondents] were mixed
with the regular workers of Dolefil. There is no difference in so far as the job
performed by the regular workers of Dolefil and that of the [respondents].
Some of the [respondents] were deprived of their employment under the scheme of
"stay home status" where they were advised to literally stay home and wait for further
instruction to report anew for work. However, they remained in this condition for more
than six months. Hence, they were constructively or illegally dismissed.
Respondents thus argued that they should be considered regular employees of
petitioner given that: (1) they were performing jobs that were usually necessary and
desirable in the usual business of petitioner; (2) petitioner exercised control over
respondents, not only as to the results, but also as to the manner by which they
performed their assigned tasks; and (3) CAMPCO, a labor-only contractor, was
merely a conduit of petitioner. As regular employees of petitioner, respondents
asserted that they were entitled to security of tenure and those placed on "stay home
status" for more than six months had been constructively and illegally dismissed.
Respondents further claimed entitlement to wage differential, moral damages, and
attorneys fees.
In their Supplemental Position Paper,15 respondents presented, in support of their
Complaint, the Orders of DOLE Regional Director Parel, dated 19 October 1993, and
DOLE Undersecretary Trajano, dated 15 September 1994, finding that CAMPCO was
a labor-only contractor and directing CAMPCO to cease and desist from any further
labor-only contracting activities.
Petitioner, in its Position Paper16 filed before the NLRC, denied that respondents were
its employees.
Petitioner explained that it found the need to engage external services to augment its
regular workforce, which was affected by peaks in operation, work backlogs,
absenteeism, and excessive leaves. It used to engage the services of individual
workers for definite periods specified in their employment contracts and never
exceeding one year. However, such an arrangement became the subject of a labor
case,17 in which petitioner was accused of preventing the regularization of such
workers. The Labor Arbiter who heard the case, rendered his Decision18on 24 June
1994 declaring that these workers fell squarely within the concept of seasonal
workers as envisaged by Article 280 of the Labor Code, as amended, who were hired
by petitioner in good faith and in consonance with sound business practice; and
consequently, dismissing the complaint against petitioner. The NLRC, in its
Resolution,19 dated 14 March 1995, affirmed in toto the Labor Arbiters Decision and
further found that the workers were validly and legally engaged by petitioner for "term

employment," wherein the parties agreed to a fixed period of employment, knowingly

and voluntarily, without any force, duress or improper pressure being brought to bear
upon the employees and absent any other circumstance vitiating their consent. The
said NLRC Resolution became final and executory on 18 June 1996. Despite the
favorable ruling of both the Labor Arbiter and the NLRC, petitioner decided to
discontinue such employment arrangement. Yet, the problem of petitioner as to
shortage of workforce due to the peaks in operation, work backlogs, absenteeism,
and excessive leaves, persisted. Petitioner then found a solution in the engagement
of cooperatives such as CAMPCO to provide the necessary additional services.
Petitioner contended that respondents were owners-members of CAMPCO; that
CAMPCO was a duly-organized and registered cooperative which had already grown
into a multi-million enterprise; that CAMPCO was engaged in legitimate jobcontracting with its own owners-members rendering the contract work; that under the
express terms and conditions of the Service Contract executed between petitioner
(the principal) and CAMPCO (the contractor), the latter shall undertake the contract
work on its own account, under its own responsibility, and according to its own
manner and method free from the control and direction of the petitioner in all matters
connected with the performance of the work, except as to the result thereof; and since
CAMPCO held itself out to petitioner as a legitimate job contractor, respondents, as
owners-members of CAMPCO, were estopped from denying or refuting the same.
Petitioner further averred that Department Order No. 10, amending the rules
implementing Books III and VI of the Labor Code, as amended, promulgated by the
DOLE on 30 May 1997, explicitly recognized the arrangement between petitioner and
CAMPCO as permissible contracting and subcontracting, to wit
Section 6. Permissible contracting and subcontracting. Subject to the conditions set
forth in Section 3(d) and (e) and Section 5 hereof, the principal may engage the
services of a contractor or subcontractor for the performance of any of the following;
(a) Works or services temporarily or occasionally needed to meet abnormal
increase in the demand of products or services, provided that the normal
production capacity or regular workforce of the principal cannot reasonably
cope with such demands;
(b) Works or services temporarily or occasionally needed by the principal for
undertakings requiring expert or highly technical personnel to improve the
management or operations of an enterprise;
(c) Services temporarily needed for the introduction or promotion of new
products, only for the duration of the introductory or promotional period;

(d) Works or services not directly related or not integral to the main business
or operation of the principal, including casual work, janitorial, security,
landscaping, and messengerial services, and work not related to
manufacturing processes in manufacturing establishments;
(e) Services involving the public display of manufacturers products which
does not involve the act of selling or issuance of receipts or invoices;
(f) Specialized works involving the use of some particular, unusual, or
peculiar skills, expertise, tools or equipment the performance of which is
beyond the competence of the regular workforce or production capacity of
the principal; and
(g) Unless a reliever system is in place among the regular workforce,
substitute services for absent regular employees, provided that the period of
service shall be coextensive with the period of absence and the same is
made clear to the substitute employee at the time of engagement. The
phrase "absent regular employees" includes those who are serving
suspensions or other disciplinary measures not amounting to termination of
employment meted out by the principal, but excludes those on strike where
all the formal requisites for the legality of the strike have been prima facie
complied with based on the records filed with the National Conciliation and
Mediation Board.
According to petitioner, the services rendered by CAMPCO constituted permissible
job contracting under the afore-quoted paragraphs (a), (c), and (g), Section 6 of
DOLE Department Order No. 10, series of 1997.
After the parties had submitted their respective Position Papers, the Labor Arbiter
promulgated its Decision20 on 11 June 1999, ruling entirely in favor of petitioner,
ratiocinating thus
After judicious review of the facts, narrated and supporting documents adduced by
both parties, the undersigned finds [and] holds that CAMPCO is not engaged in laboronly contracting.
Had it not been for the issuance of Department Order No. 10 that took effect on June
22, 1997 which in the contemplation of Law is much later compared to the Order
promulgated by the Undersecretary Cresencio Trajano of Department of [L]abor and
Employment, the undersigned could safely declared [sic] otherwise. However, owing
to the principle observed and followed in legal practice that the later law or
jurisprudence controls, the reliance to Secretary Trajanos order is overturned.
Labor-only contracting as amended by Department [O]rder No. 10 is defined in this
wise:

"Labor-only contracting is prohibited under this Rule is an arrangement where the

contractor or subcontractor merely recruits, supplied [sic] or places workers to
perform a job, work or service for a principal, and the following elements are present:
i) The contractor or sub-contractor does not have substantial capital or
investment to actually perform the job, work, or service under its own
account & responsibility, and
ii) The employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the main
business of the principal."
Verification of the records reveals that per Annexes "J" and "K" of [herein petitioner
DolePhils] position paper, which are the yearly audited Financial Statement and
Balance Sheet of CAMPCO shows [sic] that it has more than substantial capital or
investment in order to qualify as a legitimate job contractor.
We likewise recognize the validity of the contract entered into and between CAMPCO
and [petitioner] for the former to assists [sic] the latter in its operations and in the
performance of odd jobs such as the augmentation of regular manning particularly
during peaks in operation, work back logs, absenteeism and excessive leave
availment of respondents regular employees. The rule is well-settled that labor laws
discourage interference with an employers judgment in the conduct of his business.
Even as the law is solicitors [sic] of the welfare of the employees, it must also protect
the right of an employer to exercise what are clearly management prerogatives. The
free will of management to conduct its own business affairs to achieve its purpose
cannot be denied (Yuco Chemical Industries vs. Ministry of [L]abor, GR No. 75656,
May 28, 1990).
CAMPCO being engaged in legitimate contracting, cannot therefore declared [sic] as
guilty of labor-only contracting which [herein respondents] want us to believe.
The second issue is likewise answered in the negative. The reason is plain and
simple[,] section 12 of Department [O]rder No. 10 states:
"Section 12. Employee-employer relationship. Except in cases provided for in Section
13, 14, 15 & 17, the contractor or subcontractor shall be considered the employer of
the contractual employee for purposes of enforcing the provisions of the Code."
The Resolution of NLRC 5th division, promulgated on March 14, 1 1995 [sic]
categorically declares:
"Judging from the very nature of the terms and conditions of their hiring, the
Commission finds the complainants to have been engaged to perform work, although
necessary or desirable to the business of respondent company,for a definite period or
what is community called TERM EMPLOYMENT. It is clear from the evidence and

record that the nature of the business and operation of respondent company has its
peaks and valleys and therefore, it is not difficult to discern, inclement weather, or
high availment by regular workers of earned leave credits, additional workers
categorized as casuals, or temporary, are needed to meet the exigencies."
(Underlining in the original)
The validity of fixed-period employment has been consistently upheld by the Supreme
[C]ourt in a long line of cases, the leading case of which is Brent School, Inc. vs.
Zamora & Alegre, GR No. 48494, February 5, 1990. Thus at the end of the contract
the employer-employee relationship is terminated. It behooves upon us to rule that
herein complainants cannot be declared regular rank and file employees of the
[petitioner] company.
Anent the third issue, [respondents] dismally failed to provide us the exact figures
needed for the computation of their wage differentials. To simply alleged [sic] that one
is underpaid of his wages is not enough. No bill of particulars was submitted.
Moreover, the Order of RTWPB Region XI, Davao City dated February 21, 1996
exempts [petitioner] company from complying Wage Order No. 04 [sic] in so far as
such exemption applies only to workers who are not covered by the Collective
Bargaining Agreement, for the period January 1 to December 31, 1995,. [sic] In so far
as [respondents] were not privies to the CBA, they were the workers referred to by
RTWPBs Order. [H]ence, [respondents] claims for wage differentials are hereby
dismissed for lack of factual basis.
We find no further necessity in delving into the issues raised by [respondents]
regarding moral damages and attorneys fees for being moot and academic because
of the findings that CAMPCO does not engaged [sic] in labor-only contracting and that
[respondents] cannot be declared as regular employees of [petitioner].
WHEREFORE, premises considered, judgment is hereby rendered in the aboveentitled case, dismissing the complaint for lack of merit.
Respondents appealed the Labor Arbiters Decision to the NLRC, reiterating their
position that they should be recognized as regular employees of the petitioner since
CAMPCO was a mere labor-only contractor, as already declared in the previous
Orders of DOLE Regional Director Parel, dated 19 October 1993, and DOLE
Undersecretary Trajano, dated 15 September 1994, which already became final and
executory. The NLRC, in its Resolution, 21 dated 29 February 2000, dismissed the
appeal and affirmed the Labor Arbiters Decision, reasoning as follows
We find no merit in the appeal.
The concept of conclusiveness of judgment under the principle of "res judicata"
means that where between the first case wherein judgment is rendered and the
second case wherein such judgment is invoked, there is identity of parties, but there
is no identity of cause of action, the judgment is conclusive in the second case, only

as to those matters actually and directly controverted and determined and not as to
matters merely involved therein (Viray, etc. vs. Marinas, et al., 49 SCRA 44). There
is no denying that the order of the Department of Labor and Employment, Regional
Office No. XI in case No. RI100-9310-RI-355, which the complainants perceive to
have sealed the status of CAMPCO as labor-only contractor, proceeded from the
visitorial and enforcement power of the Department Secretary under Article 128 of the
Labor Code. Acting on reports that the cooperatives, including CAMPCO, that
operated and offered services at [herein petitioner] company were engaging in laboronly contracting activities, that Office conducted a routinary inspection over the
records of said cooperatives and consequently, found the latter to be engaging in
labor-only contracting activities. This being so, [petitioner] company was not a real
party-in-interest in said case, but the cooperatives concerned. Therefore, there is no
identity of parties between said case and the present case which means that the
afore-said ruling of the DOLE is not binding and conclusive upon [petitioner]
company.
It is not correct, however, to say, as the Labor Arbiter did, that the afore-said ruling of
the Department of Labor and Employment has been overturned by Department Order
No. 10. It is a basic principle that "once a judgment becomes final it cannot be
disturbed, except for clerical errors or when supervening events render its execution
impossible or unjust" (Sampaguita Garmens [sic] Corp. vs. NLRC, G. R. No.
102406, June 7, 1994). Verily, the subsequent issuance of Department Order No. 10
cannot be construed as supervening event that would render the execution of said
judgment impossible or unjust. Department Order No. 10 refers to the ramification of
some provisions of the Rules Implementing Articles 106 and 109 of the Labor Code,
without substantially changing the definition of "labor-only" or "job contracting.
Well-settled is the rule that to qualify as an independent job contractor, one has either
substantial capital "or" investment in the form of tools, equipment and machineries
necessary to carry out his business (see Virginia Neri, et al. vs. NLRC, et al., G.R.
Nos. 97008-89, July 23, 1993). CAMPCO has admittedly a paid-up capital of
P4,562,470.25 and this is more than enough to qualify it as an independent job
contractor, as aptly held by the Labor Arbiter.
WHEREFORE, the appeal is DISMISSED for lack of merit and the appealed decision
is AFFIRMED.
Petition for Certiorari with the Court of Appeals
Refusing to concede defeat, respondents filed with the Court of Appeals a Petition
for Certiorari under Rule 65 of the revised Rules of Civil Procedure, asserting that the
NLRC acted without or in excess of its jurisdiction and with grave abuse of discretion
amounting to lack of jurisdiction when, in its Resolution, dated 29 February 2000, it
(1) ruled that CAMPCO was a bona fide independent job contractor with substantial
capital, notwithstanding the fact that at the time of its organization and registration
with CDA, it only had a paid-up capital of P6,600.00; and (2) refused to apply the
doctrine of res judicata against petitioner. The Court of Appeals, in its

Decision,22 dated 20 May 2002, granted due course to respondents Petition, and set
aside the assailed NLRC Decision. Pertinent portions of the Court of Appeals
Decision are reproduced below

engaged in labor only contracting which is a prohibited activity. The same

cooperatives are therefore ordered to cease and desist from further engaging in such
activities.

In the case at bench, it was established during the proceedings before the [NLRC]
that CAMPCO has a substantial capital. However, having a substantial capital does
not per se qualify CAMPCO as a job contractor. In order to be considered an
independent contractor it is not enough to show substantial capitalization or
investment in the form of tools, equipment, machinery and work premises. The
conjunction "and," in defining what a job contractor is, means that aside from having a
substantial capital or investment in the form of tools, equipment, machineries, work
premise, and other materials which are necessary in the conduct of his business, the
contractor must be able to prove that it also carries on an independent business and
undertakes the contract work on his own account under his own responsibility
according to his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the work
except as to the results thereof. [Herein petitioner DolePhil] has failed to prove,
except for the substantial capital requirement, that CAMPCO has met the other
requirements. It was not established that CAMPCO is engaged or carries on an
independent business. In the performance of the respective tasks of workers
deployed by CAMPCO with [petitioner], it was not established that CAMPCO
undertook the contract of work it entered with [petitioner] under its own account and
its own responsibility. It is [petitioner] who provides the procedures to be followed by
the workers in the performance of their assigned work. The workers deployed by
CAMPCO to [petitioner] performed activities which are directly related to the principal
business or operations of the employer in which workers are habitually employed
since [petitioner] admitted that these workers were engaged to perform the job of
other regular employees who cannot report for work.

xxxx

Moreover, [NLRC] likewise gravely erred in not giving weight to the Order dated 19
October 1993 issued by the Office of the Secretary of the Department of Labor and
Employment, through Undersecretary Cresencio Trajano, which affirmed the findings
of the Department of Labor and Employment Regional Office, Region XI, Davao City
that Cannery Multi-Purpose Cooperative is one of the cooperatives engaged in laboronly contracting activities.
In the exercise of the visitorial and enforcement power of the Department of Labor
and Employment, an investigation was conducted among the cooperatives organized
and existing in Polomolok, South Cotabato, relative to labor-only contracting activities.
One of the cooperatives investigated was Cannery Multi-Purpose Cooperative. After
the investigation, the Department of Labor and Employment, Regional Office No. XI,
Davao City, through its Regional Director, issued the Order dated 19 October 1993,
stating:
"WHEREFORE, premises considered, ADVENTURERS MULTI PURPOSE
COOPERATIVE, HUMAN RESOURCE MULTI PURPOSE SKILLED COOPERATIVE
and CANNERY MULTI PURPOSE COOPERATIVE are hereby declared to be

SO ORDERED."
Cannery Multi Purpose Cooperative, together with the other cooperatives declared as
engaged in labor-only contracting activity, appeal the above-findings to the Secretary
of the Department of Labor and Employment. Their appeal was dismissed for lack of
merit as follows:: [sic]
xxxx
[NLRC] held that CAMPCO, being not a real party-in interest in the above-case, the
said ruling is not binding and conclusive upon [petitioner]. This Court, however, finds
the contrary.
CAMPCO was one of the cooperatives investigated by the Department of Labor and
Employment, Regional Office No. XI, Davao City, pursuant to Article 128 of the Labor
Code. It was one of the appellants before the Secretary of the Department of Labor
questioning the decision of the Regional Director of DOLE, Regional Office No. XI,
Davao City. This Court noted that in the proceedings therein, and as mentioned in the
decision rendered by Undersecretary Cresencio B. Trajano of the Department of
Labor and Employment, Manila, regarding the cooperatives appeal thereto, the
parties therein, including Cannery Multi-Purpose Cooperative, submitted to the said
office their position papers and Articles of Cooperatives and Certification of
Registrations [sic] on 30 August 1993. This is a clear indicia that CAMPCO
participated in the proceedings therein. [NLRC], therefore, committed grave abuse of
discretion amounting to lack or excess of jurisdiction when it held that CAMPCO was
never a party to the said case.
[Petitioner] invokes Section 6 of Department Order No. 10, series of 1997, issued by
the Department of Labor and Employment which took effect on 22 June 1997. The
said section identified the circumstances which are permissible job contracting, to wit:
xxxx
[Petitioners] main contention is based on the decisions rendered by the labor arbiter
and [NLRC] which are both anchored on Department Order No. 10 issued by the
Department of Labor and Employment. The said department order provided for
several flexible working relations between a principal, a contractor or subcontractor
and the workers recruited by the latter and deployed to the former. In the case at
bench, [petitioner] posits that the engagement of [petitioner] of the workers deployed
by CAMPCO was pursuant to D.O. No. 10, Series of 1997.

However, on 8 May 2001, the Department of Labor and Employment issued

Department Order No. 3, series of 2001, revoking Department Order No. 10, series of
1997. The said department order took effect on 29 May 2001.

ACCORDINGLY, in view of the foregoing, the instant petition for certiorari is

hereby GRANTED DUE COURSE. The decision dated 29 February 2000 and
Resolution dated 19 December 2000 rendered by [NLRC] are herebySET ASIDE. In
place thereof, it is hereby rendered that:

xxxx
Under Department Order No. 3, series of 2001, some contracting and outsourcing
arrangements are no longer legitimate modes of employment relation. Having
revoked Department Order No. 10, series of 1997, [petitioner] can no longer support
its argument by relying on the revoked department order.
Considering that [CAMPCO] is not a job contractor, but one engaged in labor-only
contracting, CAMPCO serves only as an agent of [petitioner] pursuant to par. (b) of
Sec. 9, Rule VIII, Book III of the Implementing Rules and Regulations of the Labor
Code, stating,
xxxx
However, the Court cannot declare that [herein respondents] are regular employees
of [petitioner]. x x x
xxxx
In the case at bench, although [respondents] were engaged to perform activities
which are usually necessary or desirable in the usual business or trade of private
respondent, it is apparent, however, that their services were engaged by [petitioner]
only for a definite period. [Petitioners] nature of business and operation has its peaks.
In order to meet the demands during peak seasons they necessarily have to engage
the services of workers to work only for a particular season. In the case of
[respondents], when they were deployed by CAMPCO with [petitioner] and were
assigned by the latter at its cannery department, they were aware that they will be
working only for a certain duration, and this was made known to them at the time they
were employed, and they agreed to the same.
xxxx
The non-rehiring of some of the petitioners who were allegedly put on a "floating
status is an indication that their services were no longer needed. They attained their
"floating status" only after they have finished their contract of employment, or after the
duration of the season that they were employed. The decision of [petitioner] in not
rehiring them means that their services were no longer needed due to the end of the
season for which they were hired. And this Court reiterates that at the time they were
deployed to [petitioners] cannery division, they knew that the services they have to
render or the work they will perform are seasonal in nature and consequently their
employment is only for the duration of the season.

1. Cannery Multi-Purpose Cooperative is a labor-only contractor as defined

under the Labor Code of the Philippines and its implementing rules and
regulations; and that
2. DOLE Philippines Incorporated is merely an agent or intermediary of
Cannery Multi-Purpose Cooperative.
All other claims of [respondents] are hereby DENIED for lack of basis.
Both petitioner and respondents filed their respective Motions for Reconsideration of
the foregoing Decision, dated 20 May 2002, prompting the Court of Appeals to
promulgate an Amended Decision on 27 November 2003, in which it ruled in this
wise:
This court examined again the documentary evidence submitted by the [herein
petitioner] and we rule not to disturb our findings in our Decision dated May 20, 2002.
It is our opinion that there was no competent evidence submitted that would show that
CAMPCO is engaged to perform a specific and special job or service which is one of
the strong indicators that an entity is an independent contractor. The articles of
cooperation and by-laws of CAMPCO do not show that it is engaged in performing a
specific and special job or service. What is clear is that it is a multi-purpose
cooperative organized under RA No. 6938, nothing more, nothing less.
As can be gleaned from the contract that CAMPCO entered into with the [petitioner],
the undertaking of CAMPCO is to provide [petitioner] with workforce by assisting the
company in its daily operations and perform odd jobs as may be assigned. It is our
opinion that CAMPCO merely acted as recruitment agency for [petitioner]. CAMPCO
by supplying manpower only, clearly conducted itself as labor-only" contractor. As
can be gleaned from the service contract, the work performed by the [herein
respondents] are directly related to the main business of the [petitioner]. Clearly, the
requisites of "labor-only" contracting are present in the case at bench.
In view of the above ruling, we find it unnecessary to discuss whether the Order of
Undersecretary Trajano finding that CAMPCO is a "labor-only" contractor is a
determining factor or constitutes res judicata in the case at bench. Our findings that
CAMPCO is a "labor-only" contractor is based on the evidence presented vis-vis the rulings of the Supreme Court on the matter.
Since, the argument that the [petitioner] is the real employer of the [respondents], the
next question that must be answered is what is the nature of the employment of the
petitioners?

xxxx

3) The claims for damages and attorneys fees are hereby denied for lack of
merit.

The afore-quoted [Article 280 of the Labor Code, as amended] provides for two kinds
of employment, namely: (1) regular (2) casual. In our Decision, we ruled that the
[respondents] while performing work necessary and desirable to the business of the
[petitioner] are seasonal employees as their services were engaged by the [petitioner]
for a definite period or only during peak season.
In the most recent case of Hacienda Fatima v. National Federation of Sugarcane
Workers Food and General Trade, the Supreme Court ruled that for employees to
be excluded from those classified as regular employees, it is not enough that they
perform work or services that are seasonal in nature. They must have also been
employed only for the duration of one season. It is undisputed that the [respondents]
services were engaged by the [petitioner] since 1993 and 1994. The instant complaint
was filed in 1996 when the [respondents] were placed on floating status. Evidently,
[petitioner] employed the [respondents] for more than one season. Therefore, the
general rule on regular employment is applicable. The herein petitioners who
performed their jobs in the workplace of the [petitioner] every season for several
years, are considered the latters regular employees for having performed works
necessary and desirable to the business of the [petitioner]. The [petitioners] eventual
refusal to use their serviceseven if they were ready, able and willing to perform their
usual duties whenever these were availableand hiring other workers to perform the
tasks originally assigned to [respondents] amounted to illegal dismissal of the latter.
We thus, correct our earlier ruling that the herein petitioners are seasonal workers.
They are regular employees within the contemplation of Article 280 of the Labor Code
and thus cannot be dismissed except for just or authorized cause. The Labor Code
provides that when there is a finding of illegal dismissal, the effect is that the
employee dismissed shall be reinstated to his former position without loss of seniority
rights with backwages from the date of his dismissal up to his actual reinstatement.
This court however, finds no basis for the award of damages and attorneys fees in
favor of the petitioners.
WHEREFORE, the Decision dated May 20, 2002 rendered by this Court is
hereby AMENDED as follows:

No costs.23
The Petition at Bar
Aggrieved by the Decision, dated 20 May 2002, and the Amended Decision, dated 27
November 2003, of the Court of Appeals, petitioner filed the instant Petition for
Review on Certiorari under Rule 45 of the revised Rules of Civil Procedure, in which it
made the following assignment of errors
I.
THE COURT OF APPEALS HAS DEPARTED FROM THE USUAL COURSE
OF JUDCIAL PROCEEDINGS WHEN IT MADE ITS OWN FACTUAL
FINDINGS AND DISREGARDED THE UNIFORM AND CONSISTENT
FACTUAL FINDINGS OF THE LABOR ARBITER AND THE NLRC, WHICH
MUST BE ACCORDED GREAT WEIGHT, RESPECT AND EVEN FINALITY.
IN SO DOING, THE COURT OF APPEALS EXCEEDED ITS AUTHORITY
ON CERTIORARI UNDER RULE 65 OF THE RULES OF COURT.
II.
THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE
IN A WAY NOT IN ACCORD WITH THE CONSTITUTION, LAW,
APPLICABLE RULES AND REGULATIONS AND DECISIONS OF THE
SUPREME COURT IN NOT HOLDING THAT DEPARTMENT ORDER NO.
10, SERIES OF 1997 IS THE APPLICABLE REGULATION IN THIS CASE.
IN GIVING RETROACTIVE APPLICATION TO DEPARTMENT ORDER NO.
3, SERIES OF 2001, THE COURT OF APPEALS VIOLATED THE
CONSTITUTIONAL PROVISION AGAINST IMPAIRMENT OF CONTRACTS
AND DEPRIVED PETITIONER OF THE DUE PROCESS OF THE LAW.
III.

1) [Petitioner] DOLE PHILIPPINES is hereby declared the employer of the

[respondents].
2) [Petitioner] DOLE PHILIPPINES is hereby declared guilty of illegal
dismissal and ordered to immediately reinstate the [respondents] to their
former position without loss of seniority rights and other benefits, and to pay
each of the [respondents] backwages from the date of the filing of illegal
dismissal on December 19, 1996 up to actual reinstatement, the same to be
computed by the labor arbiter.

THE COURT OF APPEALS HAS DETERMINED A QUESTION OF

SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN
GIVING WEIGHT TO THE ORDER DATED 19 OCTOBER 1993 ISSUED BY
THE OFFICE OF SECRETARY OF LABOR, WHICH AFFIRMED THE
FINDINGS OF THE DOLE REGIONAL OFFICE (REGION XI, DAVAO CITY)
THAT CAMPCO IS ONE OF THE COOPERATIVES ENGAGED IN LABORONLY CONTRACTING ACTIVITIES.
IV.

THE COURT OF APPEALS HAS DETERMINED A QUESTION OF

SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE
IN NOT RULING THAT RESPONDENTS, BY ACTIVELY REPRESENTING
THEMSELVES AND WARRANTING THAT THEY ARE ENGAGED IN
LEGITIMATE JOB CONTRACTING, ARE BARRED BY THE EQUITABLE
PRINCIPLE OF ESTOPPEL FROM ASSERTING THAT THEY ARE
REGULAR EMPLOYEES OF PETITIONER.
V.
THE COURT OF APPEALS HAS DETERMINED A QUESTION OF
SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN
RULING THAT CAMPCO IS ENGAGED IN THE PROHIBITED ACT
OF"LABOR-ONLY
CONTRACTING" DESPITE
THERE
BEING
SUBSTANTIAL EVIDENCE TO THE CONTRARY.
VI.
THE COURT OF APPEALS HAS DETERMINED A QUESTION OF
SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN
RULING THAT PETITIONER IS THE EMPLOYER OF RESPONDENTS
AND THAT PETITIONER IS GUILTY OF ILLEGAL DISMISSAL.24
This Courts Ruling
I
Anent the first assignment of error, petitioner argues that judicial review under Rule
65 of the revised Rules of Civil Procedure is limited only to issues concerning want or
excess or jurisdiction or grave abuse of discretion. The special civil action
for certiorari is a remedy designed to correct errors of jurisdiction and not mere errors
of judgment. It is the contention of petitioner that the NLRC properly assumed
jurisdiction over the parties and subject matter of the instant case. The errors
assigned by the respondents in their Petition for Certiorari before the Court of Appeals
do not pertain to the jurisdiction of the NLRC; they are rather errors of judgment
supposedly committed by the the NLRC, in its Resolution, dated 29 February 2000,
and are thus not the proper subject of a petition for certiorari. Petitioner also posits
that the Petition for Certiorari filed by respondents with the Court of Appeals raised
questions of fact that would necessitate a review by the appellate court of the
evidence presented by the parties before the Labor Arbiter and the NLRC, and that
questions of fact are not a fit subject for a special civil action for certiorari.
It has long been settled in the landmark case of St. Martin Funeral Home v.
NLRC,25 that the mode for judicial review over decisions of the NLRC is by a petition
for certiorari under Rule 65 of the revised Rules of Civil Procedure. The different
modes of appeal, namely, writ of error (Rule 41), petition for review (Rules 42 and

43), and petition for review on certiorari (Rule 45), cannot be availed of because there
is no provision on appellate review of NLRC decisions in the Labor Code, as
amended.26 Although the same case recognizes that both the Court of Appeals and
the Supreme Court have original jurisdiction over such petitions, it has chosen to
impose the strict observance of the hierarchy of courts. Hence, a petition
for certiorari of a decision or resolution of the NLRC should first be filed with the Court
of Appeals; direct resort to the Supreme Court shall not be allowed unless the redress
desired cannot be obtained in the appropriate courts or where exceptional and
compelling circumstances justify an availment of a remedy within and calling for the
exercise by the Supreme Court of its primary jurisdiction.
The extent of judicial review by certiorari of decisions or resolutions of the NLRC, as
exercised previously by the Supreme Court and, now, by the Court of Appeals, is
described in Zarate v. Olegario,27 thus
The rule is settled that the original and exclusive jurisdiction of this Court to review a
decision of respondent NLRC (or Executive Labor Arbiter as in this case) in a petition
for certiorari under Rule 65 does not normally include an inquiry into the correctness
of its evaluation of the evidence. Errors of judgment, as distinguished from errors of
jurisdiction, are not within the province of a special civil action for certiorari, which is
merely confined to issues of jurisdiction or grave abuse of discretion. It is thus
incumbent upon petitioner to satisfactorily establish that respondent Commission or
executive labor arbiter acted capriciously and whimsically in total disregard of
evidence material to or even decisive of the controversy, in order that the
extraordinary writ of certiorari will lie. By grave abuse of discretion is meant such
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction,
and it must be shown that the discretion was exercised arbitrarily or despotically.
For certiorari to lie, there must be capricious, arbitrary and whimsical exercise of
power, the very antithesis of the judicial prerogative in accordance with centuries of
both civil law and common law traditions.
The Court of Appeals, therefore, can grant the Petition for Certiorari if it finds that the
NLRC, in its assailed decision or resolution, committed grave abuse of discretion by
capriciously, whimsically, or arbitrarily disregarding evidence which is material or
decisive of the controversy; and the Court of Appeals can not make this determination
without looking into the evidence presented by the parties. Necessarily, the appellate
court can only evaluate the materiality or significance of the evidence, which is
alleged to have been capriciously, whimsically, or arbitrarily disregarded by the NLRC,
in relation to all other evidence on record.
As this Court elucidated in Garcia v. National Labor Relations Commission28 -[I]n Ong v. People, we ruled that certiorari can be properly resorted to where the
factual findings complained of are not supported by the evidence on record. Earlier,
in Gutib v. Court of Appeals, we emphasized thus:

[I]t has been said that a wide breadth of discretion is granted a court of justice in
certiorari proceedings. The cases in which certiorari will issue cannot be defined,
because to do so would be to destroy its comprehensiveness and usefulness. So
wide is the discretion of the court that authority is not wanting to show that certiorari is
more discretionary than either prohibition or mandamus. In the exercise of our
superintending control over inferior courts, we are to be guided by all the
circumstances of each particular case "as the ends of justice may require." So it is
that the writ will be granted where necessary to prevent a substantial wrong or to do
substantial justice.
And in another case of recent vintage, we further held:
In the review of an NLRC decision through a special civil action for certiorari,
resolution is confined only to issues of jurisdiction and grave abuse of discretion on
the part of the labor tribunal. Hence, the Court refrains from reviewing factual
assessments of lower courts and agencies exercising adjudicative functions, such as
the NLRC. Occasionally, however, the Court is constrained to delve into factual
matters where, as in the instant case, the findings of the NLRC contradict those of the
Labor Arbiter.
In this instance, the Court in the exercise of its equity jurisdiction may look into the
records of the case and re-examine the questioned findings. As a corollary, this Court
is clothed with ample authority to review matters, even if they are not assigned as
errors in their appeal, if it finds that their consideration is necessary to arrive at a just
decision of the case. The same principles are now necessarily adhered to and are
applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated
through a petition for certiorari; thus, we see no error on its part when it made anew a
factual determination of the matters and on that basis reversed the ruling of the
NLRC.

Attention is called to the fact that the acts complained of by the respondents occurred
well before the issuance of the two DOLE department orders in 1997 and 2001. The
Service Contract between DOLE and CAMPCO was executed on 17 August 1993.
Respondents started working for petitioner sometime in 1993 and 1994. While some
of them continued to work for petitioner, at least until the filing of the Complaint,
others were put on "stay home status" at various times in 1994, 1995, and 1996.
Respondents filed their Complaint with the NLRC on 19 December 1996.
A basic rule observed in this jurisdiction is that no statute, decree, ordinance, rule or
regulation shall be given retrospective effect unless explicitly stated. 29 Since there is
no provision at all in the DOLE department orders that expressly allowed their
retroactive application, then the general rule should be followed, and the said orders
should be applied only prospectively.
Which now brings this Court to the question as to what was the prevailing rule on
labor-only contracting from 1993 to 1996, the period when the occurrences subject of
the Complaint before the NLRC took place.
Article 106 of the Labor Code, as amended, permits legitimate job contracting, but
prohibits labor-only contracting. The said provision reads
ART. 106. Contractor or subcontractor. Whenever an employer enters into a
contract with another person for the performance of the formers work, the employees
of the contractor and of the latters subcontractor, if any, shall be paid in accordance
with the provisions of this Code.

II

In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and severally
liable with his contractor or subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that he is liable to
employees directly employed by him.

The second assignment of error delves into the significance and application to the
case at bar of the two department orders issued by DOLE. Department Order No. 10,
series of 1997, amended the implementing rules of Books III and VI of the Labor
Code, as amended. Under this particular DOLE department order, the arrangement
between petitioner and CAMPCO would qualify as permissible contracting.
Department Order No. 3, series of 2001, revoked Department Order No. 10, series of
1997, and reiterated the prohibition on labor-only contracting.

The Secretary of Labor may, by appropriate regulations, restrict or prohibit the

contracting out of labor to protect the rights of workers established under this Code. In
so prohibiting or restricting, he may make appropriate distinctions between labor-only
contracting and job contracting as well as differentiations within these types of
contracting and determine who among the parties involved shall be considered the
employer for purposes of this Code, to prevent any violation or circumvention of any
provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by
such persons are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be

considered merely as an agent of the employer who shall be responsible to the

workers in the same manner and extent as if the latter were directly employed by him.
To implement the foregoing provision of the Labor Code, as amended, Sections 8 and
9, Rule VIII, Book III of the implementing rules, in force since 1976 and prior to their
amendment by DOLE Department Order No. 10, series of 1997, provided as follows
Sec. 8. Job contracting. There is job contracting permissible under the Code if the
following conditions are met;
(1) The contractor carries on an independent business and undertakes the
contract work on his own account under his own responsibility according to
his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the
work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are
necessary in the conduct of his business.
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to
an employer shall be deemed to be engaged in labor-only contracting where such
person:
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such persons are performing
activities which are directly related to the principal business or operations of
the employer in which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited
and the person acting as contractor shall be considered merely as
an agent or intermediary of the employer who shall be responsible
to the workers in the same manner and extent as if the latter were
directly employed by him.
(c) For cases not falling under this Article, the Secretary of Labor
shall determine through appropriate orders whether or not the
contracting out of labor is permissible in the light of the
circumstances of each case and after considering the operating
needs of the employer and the rights of the workers involved. In
such case, he may prescribe conditions and restrictions to insure
the protection and welfare of the workers.

Since these statutory and regulatory provisions were the ones in force during the
years in question, then it was in consideration of the same that DOLE Regional
Director Parel and DOLE Undesrsecretary Trajano issued their Orders on 19
September 1993 and 15 September 1994, respectively, both finding that CAMPCO
was engaged in labor-only contracting. Petitioner, in its third assignment of error,
questions the weight that the Court of Appeals gave these orders in its Decision,
dated 20 May 2002, and Amended Decision, dated 27 November 2003.
III
The Orders of DOLE Regional Director Parel, dated 19 September 1993, and of
DOLE Undersecretary Trajano, dated 15 September 1994, were issued pursuant to
the visitorial and enforcement power conferred by the Labor Code, as amended, on
the DOLE Secretary and his duly authorized representatives, to wit
ART. 128. Visitorial and enforcement power. (a) The Secretary of Labor or his duly
authorized representatives, including labor regulation officers, shall have access to
employers records and premises at any time of the day or night whenever work is
being undertaken therein, and the right to copy therefrom, to question any employee
and investigate any fact, condition or matter which may be necessary to determine
violations or which may aid in the enforcement of this Code and of any labor law,
wage order or rules and regulations pursuant thereto.
(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives shall have
the power to issue compliance orders to give effect to the labor standards provisions
of this Code and other labor legislation based on the findings of labor employment
and enforcement officers or industrial safety engineers made in the course of
inspection. The Secretary or his duly authorized representatives shall issue writs of
execution to the appropriate authority for the enforcement of their orders, except in
cases where the employer contests the findings of the labor employment and
enforcement officer and raises issues supported by documentary proofs which were
not considered in the course of inspection.
An order issued by the duly authorized representative of the Secretary of Labor and
Employment under this article may be appealed to the latter. In case said order
involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Secretary of Labor and Employment in the amount equivalent to the
monetary award in the order appealed from. (Emphasis supplied.)
Before Regional Director Parel issued his Order, dated 19 September 1993, a Task
Force investigated the operations of cooperatives in Polomolok, South Cotabato, and
submitted a report identifying six cooperatives that were engaged in labor-only
contracting, one of which was CAMPCO. In a conference before the DOLE Regional

Office, the cooperatives named by the Task Force were given the opportunity to
explain the nature of their activities in relation to petitioner; and, the cooperatives, as
well as petitioner, submitted to the DOLE Regional Office their position papers and
other supporting documents to refute the findings of the Task Force. It was only after
these procedural steps did Regional Director Parel issued his Order finding that three
cooperatives, including CAMPCO, were indeed engaged in labor-only contracting and
were directed to cease and desist from further engaging in such activities. On appeal,
DOLE Undersecretary Trajano, by authority of the DOLE Secretary, affirmed Regional
Director Parels Order. Upon denial of the Motion for Reconsideration filed by the
cooperatives, and no further appeal taken therefrom, the Order of DOLE
Undersecretary Trajano, dated 15 September 1994, became final and executory.
Petitioner avers that the foregoing Orders of the authorized representatives of the
DOLE Secretary do not constitute res judicata in the case filed before the NLRC. This
Court, however, believes otherwise and finds that the final and executory Orders of
the DOLE Secretary or his authorized representatives should bind the NLRC.
It is obvious that the visitorial and enforcement power granted to the DOLE Secretary
is in the nature of a quasi-judicial power. Quasi-judicial power has been described by
this Court in the following manner
Quasi-judicial or administrative adjudicatory power on the other hand is the power of
the administrative agency to adjudicate the rights of persons before it. It is the power
to hear and determine questions of fact to which the legislative policy is to
apply and to decide in accordance with the standards laid down by the law
itself in enforcing and administering the same law. The administrative body
exercises its quasi-judicial power when it performs in a judicial manner an act which is
essentially of an executive or administrative nature, where the power to act in such
manner is incidental to or reasonably necessary for the performance of the
executive or administrative duty entrusted to it. In carrying out their quasi-judicial
functions the administrative officers or bodies are required to investigate facts or
ascertain the existence of facts, hold hearings, weigh evidence, and draw
conclusions from them as basis for their official action and exercise of
discretion in a judicial nature. Since rights of specific persons are affected it is
elementary that in the proper exercise of quasi-judicial power due process must be
observed in the conduct of the proceedings.30 (Emphasis supplied.)
The DOLE Secretary, under Article 106 of the Labor Code, as amended, exercise
quasi-judicial power, at least, to the extent necessary to determine violations of labor
standards provisions of the Code and other labor legislation. He can issue
compliance orders and writs of execution for the enforcement of his orders. As
evidence of the importance and binding effect of the compliance orders of the DOLE
Secretary, Article 128 of the Labor Code, as amended, further provides
ART. 128. Visitorial and enforcement power.

xxxx
(d) It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise
render ineffective the orders of the Secretary of Labor or his duly authorized
representatives issued pursuant to the authority granted under this article, and no
inferior court or entity shall issue temporary or permanent injunction or restraining
order or otherwise assume jurisdiction over any case involving the enforcement
orders issued in accordance with this article.
The Orders of DOLE Regional Director Parel, dated 19 September 1993, and of
DOLE Undersecretary Trajano, dated 15 September 1994, consistently found that
CAMPCO was engaging in labor-only contracting. Such finding constitutes res
judicata in the case filed by the respondents with the NLRC.
It is well-established in this jurisdiction that the decisions and orders of administrative
agencies, rendered pursuant to their quasi-judicial authority, have upon their finality,
the force and binding effect of a final judgment within the purview of the doctrine
of res judicata. The rule of res judicata, which forbids the reopening of a matter once
judicially determined by competent authority, applies as well to the judicial and quasijudicial acts of public, executive or administrative officers and boards acting within
their jurisdiction as to the judgments of courts having general judicial powers. The
orderly administration of justice requires that the judgments or resolutions of a court
or quasi-judicial body must reach a point of finality set by the law, rules and
regulations, so as to write finis to disputes once and for all. This is a fundamental
principle in the Philippine justice system, without which there would be no end to
litigations.31
Res judicata has dual aspects, "bar by prior judgment" and "conclusiveness of
judgment." This Court has previously clarified the difference between the two
Section 49, Rule 39 of the Revised Rules of Court lays down the dual aspects of res
judicata in actions in personam. to wit:
"Effect of judgment. - The effect of a judgment or final order rendered by a court or
judge of the Philippines, having jurisdiction to pronounce the judgment or order, may
be as follows:
xxxx
(b) In other cases the judgment or 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;

(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 which appears upon its
face to have been so adjudged, or which was actually and necessarily included
therein or necessary thereto."
Section 49(b) enunciates the first concept of res judicata known as "bar by prior
judgment," whereas, Section 49(c) is referred to as "conclusiveness of judgment."
There is "bar by former judgment" when, between the first case where the judgment
was rendered, and the second case where such judgment is invoked, there is identity
of parties, subject matter and cause of action. When the three identities are present,
the judgment on the merits rendered in the first constitutes an absolute bar to the
subsequent action. But where between the first case wherein Judgment is rendered
and the second case wherein such judgment is invoked, there is only identity of
parties but there is no identity of cause of action, the judgment is conclusive in the
second case, only as to those matters actually and directly controverted and
determined, and not as to matters merely involved therein. This is what is termed
"conclusiveness of judgment."
The second concept of res judicata, conclusiveness of judgment, is the one
applicable to the case at bar.
The same parties who participated in the proceedings before the DOLE Regional
Office are the same parties involved in the case filed before the NLRC. CAMPCO, on
behalf of its members, attended the conference before the DOLE Regional Office;
submitted its position paper; filed an appeal with the DOLE Secretary of the Order of
DOLE Regional Director Parel; and moved for reconsideration of the subsequent
Order of DOLE Undersecretary Trajano. Petitioner, although not expressly named as
a respondent in the DOLE investigation, was a necessary party thereto, considering
that CAMPCO was rendering services to petitioner solely. Moreover, petitioner
participated in the proceedings before the DOLE Regional Office, intervening in the
matter through a letter sent by its Senior Legal Officer, dated 24 May 1993, and
submitting its own position paper.
While the causes of action in the proceedings before the DOLE and the NLRC differ,
they are, in fact, very closely related. The DOLE Regional Office conducted an
investigation to determine whether CAMPCO was violating labor laws, particularly,
those on labor-only contracting. Subsequently, it ruled that CAMPCO was indeed
engaging in labor-only contracting activities, and thereafter ordered to cease and
desist from doing so. Respondents came before the NLRC alleging illegal dismissal
by the petitioner of those respondents who were put on "stay home status," and
seeking regularization of respondents who were still working for petitioner. The basis
of their claims against petitioner rests on the argument that CAMPCO was a laboronly contractor and, thus, merely an agent or intermediary of petitioner, who should
be considered as respondents real employer. The matter of whether CAMPCO was a
labor-only contractor was already settled and determined in the DOLE proceedings,
which should be conclusive and binding upon the NLRC. What were left for the

determination of the NLRC were the issues on whether there was illegal dismissal
and whether respondents should be regularized.
This Court also notes that CAMPCO and DOLE still continued with their Service
Contract despite the explicit cease and desist orders rendered by authorized DOLE
officials. There is no other way to look at it except that CAMPCO and DOLE acted in
complete defiance and disregard of the visitorial and enforcement power of the DOLE
Secretary and his authorized representatives under Article 128 of the Labor Code, as
amended. For the NLRC to ignore the findings of DOLE Regional Director Parel and
DOLE Undersecretary Trajano is an unmistakable and serious undermining of the
DOLE officials authority.
IV
In petitioners fourth assignment of error, it points out that the Court of Appeals erred
in not holding respondents estopped from asserting that they were regular employees
of petitioner since respondents, as owners-members of CAMPCO, actively
represented themselves and warranted that they were engaged in legitimate job
contracting.
This Court cannot sustain petitioners argument.
It is true that CAMPCO is a cooperative composed of its members, including
respondents. Nonetheless, it cannot be denied that a cooperative, as soon as it is
registered with the CDA, attains a juridical personality of its own,32separate and
distinct from its members; much in the same way that a corporation has a juridical
personality separate and distinct from its stockholders, known as the doctrine of
corporate fiction. The protection afforded by this doctrine is not absolute, but the
exception thereto which necessitates the piercing of the corporate veil can only be
made under specified circumstances. In Traders Royal Bank v. Court of
Appeals,33 this Court ruled that
Petitioner cannot put up the excuse of piercing the veil of corporate entity, as this is
merely an equitable remedy, and maybe awarded only in cases when the corporate
fiction is used to defeat public convenience, justify wrong, protect fraud or defend
crime or where a corporation is a mere alter ego or business conduit of a person.
Piercing the veil of corporate entity requires the court to see through the protective
shroud which exempts its stockholders from liabilities that ordinarily, they could be
subject to, or distinguishes one corporation from a seemingly separate one, were it
not for the existing corporate fiction. But to do this, the court must be sure that the
corporate fiction was misused, to such an extent that injustice, fraud, or crime was
committed upon another, disregarding, thus, his, her, or its rights. It is the corporate
entity which the law aims to protect by this doctrine.

Using the above-mentioned guidelines, is petitioner entitled to a piercing of the

"cooperative identity" of CAMPCO? This Court thinks not.
It bears to emphasize that the piercing of the corporate veil is an equitable remedy,
and among the maxims of equity are: (1) he who seeks equity must do equity, and (2)
he who comes into equity must come with clean hands. Hence, a litigant may be
denied relief by a court of equity on the ground that his conduct has been inequitable,
unfair, dishonest, fraudulent, or deceitful as to the controversy in issue.34
Petitioner does not come before this Court with clean hands. It is not an innocent
party in this controversy.
Petitioner itself admitted that it encouraged and even helped the establishment of
CAMPCO and the other cooperatives in Polomolok, South Cotabato. These
cooperatives were established precisely to render services to petitioner. It is highly
implausible that the petitioner was lured into entering into the Service Contract with
CAMPCO in 1993 on the latters misrepresentation and false warranty that it was an
independent job contractor. Even if it is conceded that petitioner was indeed
defrauded into believing that CAMPCO was an independent contractor, then the
DOLE proceedings should have placed it on guard. Remember that petitioner
participated in the proceedings before the DOLE Regional Office, it cannot now claim
ignorance thereof. Furthermore, even after the issuance of the cease and desist order
on CAMPCO, petitioner still continued with its prohibited service arrangement with the
said cooperative. If petitioner was truly defrauded by CAMPCO and its members into
believing that the cooperative was an independent job contractor, the more logical
recourse of petitioner was to have the Service Contract voided in the light of the
explicit findings of the DOLE officials that CAMPCO was engaging in labor-only
contracting. Instead, petitioner still carried on its Service Contract with CAMPCO for
several more years thereafter.
V
As previously discussed, the finding of the duly authorized representatives of the
DOLE Secretary that CAMPCO was a labor-only contractor is already conclusive.
This Court cannot deviate from said finding.
This Court, though, still notes that even an independent review of the evidence on
record, in consideration of the proper labor statutes and regulations, would result in
the same conclusion: that CAMPCO was engaged in prohibited activities of labor-only
contracting.
The existence of an independent and permissible contractor relationship is generally
established by the following criteria: whether or not the contractor is carrying on an
independent business; the nature and extent of the work; the skill required; the term
and duration of the relationship; the right to assign the performance of a specified
piece of work; the control and supervision of the work to another; the employer's

power with respect to the hiring, firing and payment of the contractor's workers; the
control of the premises; the duty to supply the premises tools, appliances, materials
and labor; and the mode, manner and terms of payment.35
While there is present in the relationship of petitioner and CAMPCO some factors
suggestive of an independent contractor relationship (i.e., CAMPCO chose who
among its members should be sent to work for petitioner; petitioner paid CAMPCO
the wages of the members, plus a percentage thereof as administrative charge;
CAMPCO paid the wages of the members who rendered service to petitioner), many
other factors are present which would indicate a labor-only contracting arrangement
between petitioner and CAMPCO.36
First, although petitioner touts the multi-million pesos assets of CAMPCO, it
does well to remember that such were amassed in the years following its
establishment. In 1993, when CAMPCO was established and the Service
Contract between petitioner and CAMPCO was entered into, CAMPCO only
had P6,600.00 paid-up capital, which could hardly be considered
substantial.37 It only managed to increase its capitalization and assets in the
succeeding years by continually and defiantly engaging in what had been
declared by authorized DOLE officials as labor-only contracting.
Second, CAMPCO did not carry out an independent business from
petitioner. It was precisely established to render services to petitioner to
augment its workforce during peak seasons. Petitioner was its only client.
Even as CAMPCO had its own office and office equipment, these were
mainly used for administrative purposes; the tools, machineries, and
equipment actually used by CAMPCO members when rendering services to
the petitioner belonged to the latter.
Third, petitioner exercised control over the CAMPCO members, including
respondents. Petitioner attempts to refute control by alleging the presence of
a CAMPCO supervisor in the work premises. Yet, the mere presence within
the premises of a supervisor from the cooperative did not necessarily mean
that CAMPCO had control over its members. Section 8(1), Rule VIII, Book III
of the implementing rules of the Labor Code, as amended, required for
permissible job contracting that the contractor undertakes the contract work
on his account, under his own responsibility, according to his own manner
and method, free from the control and direction of his employer or principal
in all matters connected with the performance of the work except as to the
results thereof. As alleged by the respondents, and unrebutted by petitioner,
CAMPCO members, before working for the petitioner, had to undergo
instructions and pass the training provided by petitioners personnel. It was
petitioner who determined and prepared the work assignments of the
CAMPCO members. CAMPCO members worked within petitioners
plantation and processing plants alongside regular employees performing
identical jobs, a circumstance recognized as an indicium of a labor-only
contractorship.38

Fourth, CAMPCO was not engaged to perform a specific and special job or
service. In the Service Contract of 1993, CAMPCO agreed to assist
petitioner in its daily operations, and perform odd jobs as may be assigned.
CAMPCO complied with this venture by assigning members to petitioner.
Apart from that, no other particular job, work or service was required from
CAMPCO, and it is apparent, with such an arrangement, that CAMPCO
merely acted as a recruitment agency for petitioner. Since the undertaking of
CAMPCO did not involve the performance of a specific job, but rather the
supply of manpower only, CAMPCO clearly conducted itself as a labor-only
contractor.39
Lastly, CAMPCO members, including respondents, performed activities
directly related to the principal business of petitioner. They worked as can
processing attendant, feeder of canned pineapple and pineapple processing,
nata de coco processing attendant, fruit cocktail processing attendant, and
etc., functions which were, not only directly related, but were very vital to
petitioners business of production and processing of pineapple products for
export.
The findings enumerated in the preceding paragraphs only support what DOLE
Regional Director Parel and DOLE Undersecretary Trajano had long before
conclusively established, that CAMPCO was a mere labor-only contractor.
VI
The declaration that CAMPCO is indeed engaged in the prohibited activities of laboronly contracting, then consequently, an employer-employee relationship is deemed to
exist between petitioner and respondents, since CAMPCO shall be considered as a
mere agent or intermediary of petitioner.
Since respondents are now recognized as employees of petitioner, this Court is
tasked to determine the nature of their employment. In consideration of all the
attendant circumstances in this case, this Court concludes that respondents are
regular employees of petitioner.
Article 280 of the Labor Code, as amended, reads
ART. 280. Regular and Casual Employment. The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary and desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if its is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists.
This Court expounded on the afore-quoted provision, thus
The primary standard, therefore, of determining a regular employment is the
reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The test is whether the former
is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and
its relation to the scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least one year, even if her performance
is not continuous or merely intermittent, the law deems the repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability
of the activity to the business. Hence, the employment is also considered regular, but
only with respect to such activity and while such activity exists.40
In the instant Petition, petitioner is engaged in the manufacture and production of
pineapple products for export.1wphi1Respondents rendered services as processing
attendant, feeder of canned pineapple and pineapple processing, nata de coco
processing attendant, fruit cocktail processing attendant, and etc., functions they
performed alongside regular employees of the petitioner. There is no doubt that the
activities performed by respondents are necessary or desirable to the usual business
of petitioner.
Petitioner likewise want this Court to believe that respondents employment was
dependent on the peaks in operation, work backlogs, absenteeism, and excessive
leaves. However, bearing in mind that respondents all claimed to have worked for
petitioner for over a year, a claim which petitioner failed to rebut, then respondents
continued employment clearly demonstrates the continuing necessity and
indispensability of respondents employment to the business of petitioner.
Neither can this Court apply herein the ruling of the NLRC in the previous case
involving petitioner and the individual workers they used to hire before the advent of
the cooperatives, to the effect that the employment of these individual workers were
not regular, but rather, were valid "term employments," wherein the employer and
employee knowingly and voluntarily agreed to employment for only a limited or
specified period of time. The difference between that case and the one presently
before this Court is that the members of CAMPCO, including respondents, were not
informed, at the time of their engagement, that their employment shall only be for a
limited or specified period of time. There is absence of proof that the respondents
were aware and had knowingly and voluntarily agreed to such term employment.
Petitioner did not enter into individual contracts with the CAMPCO members, but
executed a Service Contract with CAMPCO alone. Although the Service Contract of

1993 stated that it shall be for a specific period, from 1 July to 31 December 1993,
petitioner and CAMPCO continued the service arrangement beyond 1993. Since
there was no written renewal of the Service Contract, 41 there was no further indication
that the engagement by petitioner of the services of CAMPCO members was for
another definite or specified period only.
Respondents, as regular employees of petitioner, are entitled to security of tenure.
They could only be removed based on just and authorized causes as provided for in
the Labor Code, as amended, and after they are accorded procedural due process.
Therefore, petitioners acts of placing some of the respondents on "stay home status"
and not giving them work assignments for more than six months were already
tantamount to constructive and illegal dismissal.42

A.M. No. 01-9-245-MTC

December 5, 2001

RE: HOLD-DEPARTURE ORDER ISSUED BY JUDGE AGUSTIN T. SARDIDO,

MTC, KORONADAL, SOUTH COTABATO IN CRIMINAL CASE NO. 19418
RESOLUTION

In summary, this Court finds that CAMPCO was a labor-only contractor and, thus,
petitioner is the real employer of the respondents, with CAMPCO acting only as the
agent or intermediary of petitioner. Due to the nature of their work and length of their
service, respondents should be considered as regular employees of petitioner.
Petitioner constructively dismissed a number of the respondents by placing them on
"stay home status" for over six months, and was therefore guilty of illegal dismissal.
Petitioner must accord respondents the status of regular employees, and reinstate the
respondents who it constructively and illegally dismissed, to their previous positions,
without loss of seniority rights and other benefits, and pay these respondents
backwages from the date of filing of the Complaint with the NLRC on 19 December
1996 up to actual reinstatement.
WHEREFORE, in view of the foregoing, the instant Petition is DENIED and the
Amended Decision, dated 27 November 2003, rendered by the Court of Appeals in
CA-G.R. SP No. 63405 is AFFIRMED.
Costs against the petitioner.
SO ORDERED.

KAPUNAN, J.:
This refers to an undated indorsement of Honorable Hernando B. Perez, Secretary of
the Department of Justice, concerning a hold-departure order issued by Judge
Agustin T. Sardido, Municipal Trial Court of Koronadal, South Cotabato in Criminal
Case No. 19418 titled "People of the Philippines v. Jinky A. Besorio" for estafa. The
said judge granted the motion of the private complainants and ordered the Bureau of
Immigration to cause the issuance of a hold-departure order against the accused.
When required to comment on the matter, herein judge explained that at the time he
issued the hold-departure order, he was unaware that he had no authority to do so.
He further explained that he issued the questioned order based on his belief that he
was authorized to do so.
Deputy Court Administrator Jose P. Perez, after finding that MTC Judge Sardido erred
in issuing the subject hold-departure order, recommended that he be (a) reprimanded
with a warning that a repetition of the same or similar acts in the future will be dealt
with more severely, and (b) advised to keep himself abreast with the latest issuances
of the Court. 1wphi1.nt
The recommendation of the Deputy Court Administrator is well-taken.
Circular No. 39-97 provides that hold-departure orders shall be issued only in criminal
cases within the exclusive jurisdiction of the Regional Trial Courts. Clearly then,
Municipal Trial Courts do not have jurisdiction to issue hold-departure orders and it
was an error on the part of MTC Judge Sardido to have issued one in the instant
case.
To ensure the strict implementation of the Circular, the following guidelines. were
promulgated:

In order to avoid the indiscriminate issuance of Hold-Departure Orders

resulting in inconvenience to the parties affected, the same being
tantamount to an infringement on the right and liberty of an individual to
travel and to ensure that the Hold-Departure Orders which are issued
contain complete and accurate information, the following guidelines are
hereby promulgated:
1. Hold-Departure Orders shall be issued only in criminal cases
within the exclusive jurisdiction of the Regional Trial Courts;
2. The Regional Trial Courts issuing the Hold-Departure Order shall
furnish the Department of Foreign Affairs (DFA) and the Bureau of
Immigration (BI) of the Department of Justice with a copy each of
the Hold-Departure Order issued within twenty-hour (24) hours from
the time of issuance and through the fastest available means of
transmittal;
3. The Hold-Departure Order shall contain the following information:
.
a. The complete name (including the middle name), the
date and place of birth and the place of last residence of
the person against whom a Hold-Departure Order has
been issued or whose departure from the country has
been enjoined;
b. The complete title and the docket number of the case in
which the Hold-Departure Order was issued;
c. The specific nature of the case; and
d. The date of the Hold-Departure Order.
If available, a recent photograph of the person against
whom a Hold-Departure Order has been issued or whose
departure from the country has been enjoined should also
be included.
4. Whenever (a) the accused has been acquitted; (b) the case has
been dismissed, the judgment of acquittal or the order of dismissal
shall include therein the cancellation of the Hold-Departure Order
issued. The courts concerned shall furnish the Department of
Foreign Affairs and the Bureau of Immigration with a copy each of
the judgment of acquittal promulgated or the order of dismissal
twenty-four (24) hours from the time of promulgation/issuance and
through the fastest available means of transmittal.

All Regional Trial Courts which have furnished the Department of Foreign
Affairs with their respective lists of active Hold-Departure Orders are hereby
directed to conduct an inventory of the Hold-Departure Orders included in
the said lists and inform the government agencies concerned of the status of
the Orders involved.
Canon 3, Rule 3.01 of the Code of Judicial Conduct exhorts judges to be "faithful to
the law and maintain professional competence." The Court, in exercising
administrative supervision of all lower courts, has time and again reminded the
members of the bench to exert due diligence in keeping abreast with the
developments in law and jurisprudence. Besides, Circular No. 39-97 is not a new
circular. It was circularized in 1997 and has been the subject of numerous cases
before the Court. Herein judge, therefore, cannot be excused for his infraction.
In recent cases1 involving similar violations, this Court imposed the penalty of
reprimand on erring judges. Hence, the same penalty should be imposed on Judge
Sardido.
WHEREFORE, Judge Agustin T. Sardido is hereby REPRIMANDED with the warning
that a repetition of the same or similar acts in the future will be dealt with more
severely.1wphi1.nt
SO ORDERED.

A.M. No. 02-1-27-MCTC

May 7, 2002

HOLD-DEPARTURE ORDER ISSUED BY JUDGE SALVADOR M. OCCIANO,

MCTC-Nabua, Camarines Sur, in Criminal Cases Nos. 7353 and 7363
RESOLUTION
DAVIDE, JR., C.J.:
This administrative matter refers to the Hold-Departure Order issued by JudgeDesignate Salvador M. Occiano of the 9th Municipal Circuit Trial Court of Nabua-Bato,
Camarines Sur, on 3 June 1998 in Criminal Cases Nos. 7353 and 7363 both
entitled People of the Philippines v. Helen S. Zabala, et al.
The material operative facts are not complicated.
On 3 June 1998, 2nd Assistant Provincial Prosecutor Elias Borromeo of Camarines
Sur filed in Criminal Cases Nos. 7353 and 7363 a motion for the issuance of a holddeparture order against Helen S. Zabala. On the same day, respondent judge issued
the hold-departure order and forthwith furnished the Commissioner of the
Commission on Immigration and Deportation (CID) a copy thereof.1wphi1.nt
On 22 June 1998, Commissioner Homobono A. Adaza of the CID referred to
Honorable Serafin V. Cuevas, Secretary of the Department of Justice (DOJ), for
appropriate action the hold-departure order issued by respondent judge. Secretary
Cuevas, in turn, referred for appropriate action to Court Administrator Alfredo L.
Benipayo the said order, considering that pursuant to Supreme Court Circular No. 3997 a hold-departure order may be issued by a Regional Trial Court only.
In his Comment, respondent judge justified his action by claiming that his court had
the inherent power to issue a hold-departure order notwithstanding Supreme Court
Circular No. 39-97, which provides that a hold-departure order may be issued by a
Regional Trial Court and only in criminal cases within its exclusive jurisdiction.
Moreover, in issuing the subject order he had in mind "solely the interest of justice,

fair play and above all, so as not to frustrate the expeditious trial and early termination
of these cases."

departure orders resulting in inconvenience to the parties affected which is

tantamount to an infringement on their right and liberty to travel.

Deputy Court Administrator Jose P. Perez recommends that respondent judge be

reprimanded for having issued the order in violation of Circular No. 39-97, which limits
the authority to issue hold-departure orders to criminal cases falling within the
jurisdiction of the Regional Trial Courts. He also noted that in MTJ-96-1104 entitled
"Francisco Bolitan v. Judge Salvador M. Occiano", respondent judge was meted the
penalty of suspension from office for six months without pay; and in OCA IPI No. 011049-MTJ entitled "Mercedita M. Arenas vs. Judge Salvador Occiano" which is still
pending investigation, respondent is charged with gross ignorance of the law.

We find the penalty of reprimand recommended by Deputy Court Administrator Perez

to be too lenient. In recent cases (Mondejar v. Judge Buban, A.M. No. MTJ-01-1349,
12 July 2001; Office of the Court Administrator v. Judge Mendoza, 340 SCRA 285,
288 [2000]; Hold-Departure Order dated 22 December 1998 issued by Acting Judge
Madronio, Jr., 323 SCRA 345, 348 [2000]; Hold-Departure Order dated 20 November
1998 issued by Judge Abalos, 319 SCRA 131, 134 [1999]; Hold-Departure Order
dated 29 January 1999 issued by Judge Adaoag, 315 SCRA 9, 12 [1999]; HoldDeparture Order dated 10 February 1999 issued by Judge Barot, 313 SCRA 44, 46
[1999]; Hold-Departure Order dated 13 April 1998 issued by Judge Nartatez, 298
SCRA 710, 712 [1998]), which involved similar violations, this Court imposed the
penalty of reprimand. However, the circumstances in the instant case merit more than
a reprimand for the respondent judge. He has not committed a mere error of
judgment; he gravely and deliberately disregarded Circular No. 39-97. This irregularity
amounts to grave misconduct or deliberate violation of a lawful circular of the
Court.1wphi1.nt

Circular No. 39-97 clearly states that hold-departure orders may be issued only in
criminal cases within the exclusive jurisdiction of the Regional Trial Courts. Pertinent
portions thereof read as follows:
In order to avoid the indiscriminate issuance of Hold-Departure Orders
resulting in inconvenience to the parties affected, the same being
tantamount to an infringement on the right and liberty of an individual to
travel and to ensure that the Hold-Departure Orders which are issued
contain complete and accurate information, the following guidelines are
hereby promulgated:
1. Hold-Departure Orders shall be issued only in criminal cases
within the exclusive jurisdiction of the Regional Trial Courts;
The language of the circular is very simple. It is clear that respondent judge had
indeed no authority to issue a hold-departure order in Criminal Cases Nos. 7353 and
7363, since the said cases do not fall within the jurisdiction of the Regional Trial
Court.
Respondent judge fully knows the coverage of the Circular. Yet, he refused to
recognize and follow it. This is evident from his Comment wherein he declared that
notwithstanding Circular No. 39-97, he firmly believe that he had the authority to issue
the hold-departure order. This is not just grave abuse of authority amounting to a
grave misconduct or a conduct prejudicial to the best interest of the service; it is
disrespect for, and a willful violation of, a lawful circular of the highest court of the land
to which he owes fealty.
Judge Occiano cannot take refuge behind his alleged zeal for the early termination of
the criminal cases in question. Against the demands of sheer speed in disposing of
cases, judges should be reminded that their mission above all is to see that justice is
done. (People vs. Aranzado, G.R. Nos. 132442-44, 24 September 2001). In the
instant matter, Judge Occiano issued the hold-departure order without authority. It
was a clear case of a violation of the accused's right and liberty to travel. The very
essence of Circular No. 39-97 is to avoid the indiscriminate issuance of hold-

WHEREFORE, finding respondent Judge Salvador M. Occiano of the 9 th Municipal

Circuit Trial Court, Nabua-Bato, Camarines Sur, guilty of grave misconduct, deliberate
violation of a lawful circular of the Curt and conduct prejudicial to the best interest of
the service, he is hereby ORDERED to pay a FINE of Ten Thousand (P10,000) Pesos
to be paid within ten (10) days from receipt of a copy of this resolution, and is
sternly WARNED that the commission of the same or similar act in the future will be
dealt with more severely.
SO ORDERED.

G.R. No. 178733, September 15, 2014

ELISA ANGELES, Petitioner, v. HON. COURT OF APPEALS, OFFICER-INCHARGE MARILOU C. MARTIN, DEPUTY SHERIFF JOSELITO SP ASTORGA,
MARCO BOCO, AND JOHN DOES, REGIONAL TRIAL COURT OF PASIG,
BRANCH 268, Respondents.
DECISION
DEL CASTILLO, J.:
This Petition for Certiorari1 seeks to set aside the February 22, 2007 Decision2 of the
Court of Appeals (CA) and its June 4, 2007 Resolution3 in CA-G.R. SP No. 93772,
which dismissed the herein petitioners Petition for Contempt4 against the herein
respondent public officers and her Motion for Reconsideration,5 respectively.
Factual Antecedents
A complaint for annulment of real estate mortgage, foreclosure sale, reconveyance
and damages docketed as Civil Case No. 69213 in the Regional Trial Court of Pasig
City, Branch 268 was filed by spouses Juan and Anatalia Coronel (the Coronels)
against herein petitioner Elisa Angeles and several others. After trial, or on April 3,
2005, the trial court rendered a Decision6 containing the following decretal
portion:ChanRoblesVirtualawlibrary

WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor

of the plaintiffs and against defendants:
1.

Declaring Transfer Certificate of Title No. PT-113632 as null and

void;

2.

Ordering the Registry of Deeds for the City of Pasig to cancel TCT
No. PT-113632 in the name of Rosalina Liwag and to issue a new
one in the names of plaintiffs Spouses Juan L. Coronel and
Anatalia Coronel;

3.

Ordering plaintiff to pay defendant Miguel Galicia the amount of

P960,000.00 as reimbursement for his redemption of the property;

4.

No pronouncement as to costs.

SO ORDERED.7cralawred
Petitioner and her co-defendants in Civil Case No. 69213 filed their Notice of Appeal,
while the Coronels filed a motion for execution of the April 3, 2005 judgment pending
appeal, which the trial court denied in an October 19, 2005 Order. On November 15,
2005, the Coronels filed their Motion for Reconsideration.8cralawred
Petitioner and her co-defendants appeal to the CA was docketed as CA-G.R. CV No.
86451.
In a November 15, 2005 Order,9 the trial court directed that the entire record of Civil
Case No. 69213 be transmitted to the CA for appropriate action.
In a February 1, 2006 Order,10 the trial court reconsidered its October 19, 2005 Order
and thus granted the Coronels motion for execution pending appeal. A Writ of
Execution Pending Appeal was thus issued on February 16, 2006.11cralawred
On February 27, 2006, the record of Civil Case No. 69213 was transmitted to the
CA.12cralawred
On March 9, 2006, petitioner was evicted from the subject property as a result of the
enforcement of the Writ of Execution Pending Appeal.
Ruling of the Court of Appeals
On March 24, 2006, petitioner filed a Petition for Contempt13 with the CA against
herein respondents Officer-In-Charge Marilou C. Martin (Martin), Deputy Sheriff
Joselito SP Astorga (Astorga), Clerk III Marco Boco (Boco), and John Does.
Docketed as CA-G.R. SP No. 93772, the Petition alleged that Martin defied the trial
courts November 15, 2005 Order to elevate the records of Civil Case No. 69213 to
the CA and acted in collusion with the Coronels to ensure that the latter obtain
execution pending appeal; that the Writ of Execution Pending Appeal was hastily and
irregularly issued; that Astorga and Boco cleverly contrived and used trickery in

ejecting petitioner from the subject property; that Astorga and Boco favored other
tenants and did not evict them from the property; that Astorga did not have the
authority to enforce the writ of execution inasmuch as the trial court lost jurisdiction
over the case after the records of Civil Case No. 69213 were elevated to the CA on
February 27, 2006; that the respondent public officers actions were abusive, illegal,
and constitute indirect contempt of the appellate court. Petitioner prayed that Martin,
Astorga, Boco and John Does whose identities have yet to be ascertained be
declared in contempt of court and penalized accordingly.
In her Comment,14 Martin sought the dismissal of the Petition, alleging that as a mere
court employee and researcher, she had no authority or control over the proceedings
in Civil Case No. 69213, as well as the issuance or implementation of the courts
orders; that the non-transmittal of the records to the CA was not intentional but came
as a result of the trial courts giving due course to the various motions filed by the
parties; that she had no hand in the enforcement of the writ of execution pending
appeal as she had no power or authority to direct its implementation; and that she did
not commit any irregular or illegal act as to be held liable for contempt of court.
In their Comment,15 Astorga and Boco denied the accusations against them, claiming
that these were already the subject of administrative complaints in the Supreme Court
in MISC No. 2476 filed by petitioner, to which Comments have been submitted as
well; that petitioners accusations were all lies and contrived; that without a stay order,
they were duty-bound to enforce the orders and writs of the trial court; and that they
had no intention to impede or obstruct the administration of justice or embarrass the
court in the implementation of the lawful processes of the court.
On February 22, 2007, the CA issued the assailed Decision containing the following
pronouncement:ChanRoblesVirtualawlibrary
The Supreme Court further explained in Igot v. Court of Appeals, thus:
In whatever context it may arise, contempt of court involves the doing of an act, or the
failure to do an act, in such a manner as to create an affront to the court and the
sovereign dignity with which it is clothed. As a matter of practical judicial
administration, jurisdiction has been felt to properly rest in only one tribunal at a time
with respect to a given controversy. Only the court which rendered the order
commanding the doing of a certain act is vested with the right to determine whether or
not the order has been complied with, or whether a sufficient reason has been given
for noncompliance, and therefore, whether a contempt has been committed. It is a
well-established rule that the power to determine the existence of contempt of court
rests exclusively with the court contemned. No court is authorized to punish a
contempt against another.
This petition should have been filed with the court a quo. It bears stressing that the
power to determine whether x x x the acts alleged by petitioner constitute indirect
contempt, rests exclusively in the court against which the contumacious act was
committed. The reason being that it was the court a quo which issued the subject
orders and is vested with the right to determine whether x x x such orders have been
complied with or have been defied, which acts may constitute contempt of court.
Further, basic is the rule that unless an order/resolution/directive issued by a court of
competent jurisdiction is declared null and void, such orders are presumed to be
valid. But in this case, there is nothing on record to show that petitioner availed

herself of any of the legal remedies under the Rules of Court to assail the validity of
the said order or writ, hence, the same remained valid and enforceable.
It should be stressed that the authority to issue [an] order or writ of execution pertains
to the presiding judge of the court a quo. Respondents do not occupy positions of
discretion, but are subject to the authority or control of the court a quo. Their
functions as officers or employees of the court are purely ministerial or administrative
in character and confined to serving court orders and processes, and carrying the
same into effect. Contrary to petitioners allegations, the records show that
respondents were merely implementing the orders issued by the trial court in Civil
Case No. 69213 and that no stay order was issued against the enforcement of the
subject writ of execution. There is no sufficient showing of acts committed by
respondents which may constitute contempt, such as among others, refusing to obey
[a] lawful order of the court or act of disrespect to the dignity of the court which tends
to hamper the orderly proceedings and lessen its efficiency.

to appreciate these facts, it thus committed grave abuse of discretion in dismissing

the petition in CA-G.R. SP No. 93772. She, therefore, prays that the assailed
dispositions be set aside, and that her Petition for Contempt be reinstated and
consolidated with the appeal in CA-G.R. CV No. 86451, with costs against the
individual respondents.
Respondents Arguments
Praying that the Petition be denied for lack of merit, respondents Astorga and Boco
maintain and profess their innocence; that they acted only in obedience to the
directives, writs and processes of the trial court and have no authority to defy the
same unless a stay order is issued; and that petitioners contempt charge should
have been initiated with the trial court, and not with the CA.
Respondent Martin, on the other hand, failed to file her comment to the Petition.

As a final note, it must be borne in mind that a courts power to punish for contempt,
must be exercised judiciously and sparingly with utmost self-restraint, with the end in
view of utilizing the same for correction and preservation of the dignity of the court,
and not for retaliation or vindication. Strict compliance with the rules and the
guidelines prescribed in contempt proceedings is mandatory. In this case, petitioner
failed to show with convincing evidence sufficient compliance with the foregoing rules
and guidelines.

Our Ruling

WHEREFORE, the petition is DISMISSED for lack of merit.

Further, basic is the rule that unless an order/resolution/directive issued by a court of

competent jurisdiction is declared null and void, such orders are presumed to be
valid. But in this case, there is nothing on record to show that petitioner availed
herself of any of the legal remedies under the Rules of Court to assail the validity of
the said order or writ, hence, the same remained valid and enforceable.

16

SO ORDERED. cralawred
Petitioner filed a Motion for Reconsideration,17 which the appellate court denied in a
June 4, 2007 Resolution. Hence, the instant Petition.
In a December 10, 2008 Resolution,18 this Court resolved to give due course to the
Petition.
Issue
The only issue here is whether the CA committed grave abuse of discretion in
dismissing the Petition in CA-G.R. SP No. 93772 to hold the respondent public
officers in contempt of court for defying the orders and directives of the trial court, and
for disregarding the CAs authority after it acquired jurisdiction over the case through
the appeal interposed by petitioner and her co-defendants in Civil Case No. 69213.

The Court dismisses the Petition.

Petitioners accusations are rooted not in the individual respondents official acts, but
in the directives of the trial court in Civil Case No. 69213. The CA is correct in its
pronouncement that

It should be stressed that the authority to issue [an] order or writ of execution pertains
to the presiding judge of the court a quo. Respondents do not occupy positions of
discretion, but are subject to the authority or control of the court a quo. Their
functions as officers or employees of the court are purely ministerial or administrative
in character and confined to serving court orders and processes, and carrying the
same into effect. Contrary to petitioners allegations, the records show that
respondents were merely implementing the orders issued by the trial court in Civil
Case No. 69213 and that no stay order was issued against the enforcement of the
subject writ of execution. There is no sufficient showing of acts committed by
respondents which may constitute contempt, such as among others, refusing to obey
[a] lawful order of the court or act of disrespect to the dignity of the court which tends
to hamper the orderly proceedings and lessen its efficiency.19

Petitioners Arguments
In her Petition, petitioner insists that respondent public officers should be held in
contempt of court for defying the trial courts order to elevate the records of the case
to the CA, and for enforcing the writ of execution pending appeal even as the CA
obtained jurisdiction over the case through the appeal interposed by her and her codefendants. She contends further that respondents involvement in supposed
irregularities relative to the issuance and implementation of the writ of execution
pending appeal warrants their punishment for indirect contempt. For failure of the CA

Indeed, contrary to petitioners claims, it appears that the respondent public officers
acted faithfully in carrying out the trial courts directives. If petitioner doubted these
directives arguing as she does that the trial court lost jurisdiction over the case
when her appeal was perfected then she should have questioned them by filing the
corresponding appeal or petition in order to set them aside. Punishing the
respondents for contempt will not solve her dilemma; it will not reverse the effects of
the trial courts orders and processes.

And, speaking of contempt, the appellate court is likewise correct in its position that if
respondent public officers should be punished for their perceived defiance or failure to
abide by the trial courts directives and processes, then the contempt charge should
have been initiated in the court a quo, and not in the CA. Sections 4 and 5, Rule 71
of the Rules of Court state, respectively, that [p]roceedings for indirect contempt may
be initiated motu proprio by the court against which the contempt was committed and
[w]here the charge for indirect contempt has been committed against a Regional Trial
Court or a court of equivalent or higher rank, or against an officer appointed by it, the
charge may be filed with such court.
x x x [C]ontempt proceedings are sui generis and are triable only by the court against
whose authority the contempts are charged; the power to punish for contempt exists
for the purpose of enabling a court to compel due decorum and respect in its
presence and due obedience to its judgments, orders and processes and in order that
a court may compel obedience to its orders, it must have the right to inquire whether
there has been any disobedience thereof, for to submit the question of disobedience
to another tribunal would operate to deprive the proceeding of half its efficiency.
Section 4, Rule 71 of the Rules of Court provides, in effect, that a charge for indirect
contempt must be filed with the court contemned. Although this provision is
permissive in nature, in the event of concurrent jurisdiction over cases of contempt of
court, it would be a good practice to acknowledge the preferential right of the court
against which the act of contempt was committed to try and punish the guilty party.20
Besides, it cannot be said that the issuance and implementation by the individual
respondents of the writ of execution pending appeal is a contemptible disregard of the
CAs jurisdiction over CA-G.R. CV No. 86451. Apparently, the trial court had the
authority to grant execution pending appeal on February 1, 2006 and issue the writ on
February 15, 2006. The record of Civil Case No. 69213 was transmitted to the CA
only on February 27, 2006. Prior to the transmittal of the original record, the trial
court may order execution pending appeal.21 The residual jurisdiction of trial courts
is available at a stage in which the court is normally deemed to have lost jurisdiction
over the case or the subject matter involved in the appeal. This stage is reached
upon the perfection of the appeals by the parties or upon the approval of the records
on appeal, but prior to the transmittal of the original records or the records on appeal.
In either instance, the trial court still retains its so-called residual jurisdiction to issue
protective orders, approve compromises, permit appeals of indigent litigants, order
execution pending appeal, and allow the withdrawal of the appeal.22cralawred
Having found no irregularity in the assailed pronouncement, and instead declaring
herein that judgment was rendered correctly, it cannot be said that the appellate court
committed any abuse of its discretion at all as to allow the remedy
of certiorari petitioner prays for.
WHEREFORE, the Petition is DISMISSED.
SO ORDERED.cralawlaw library