Cases CivPro

SECOND DIVISION
BANCO FILIPINO SAVINGS AND MORTGAGE BANK , Petitioner,
- versus -
HON. AMALIK P. ESPINOSA, JR., Presiding Judge, Municipal Trial Court in IloiloCity, Branch 2, and TALA
REALTY SERVICES CORPORATION, Respondents.
G.R. No. 162922
Present:
QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ.
Promulgated:
January 31, 2007

x--------------------------------------------------x
DECISION
CARPIO MORALES, J.:
The present petition for Certiorari stems from one of several complaints of private respondent, Tala Realty
Services Corporation, which sought to evict petitioner, Banco Filipino Savings and Mortgage Bank, from the
premises of its branch offices in nine different locations for non-payment of rent.The properties subject of the
complaints were covered by separate but similarly-worded contracts of lease between petitioner as lessee and
private respondent as lessor.
In a complaint for ejectment, docketed as Civil Case No. 51-95 in the Municipal Trial Court (MTC) IloiloCity,
which reached this Court on appeal as G.R. No. 132051, Tala Realty Services Corp. v. Banco Filipino Savings
& Mortgage Bank, private respondent sought to eject petitioner from its branch site in IloiloCity.By Decision of
June 25, 2001, this Court (Third Division) ordered petitioner to vacate the subject premises and restore
possession thereof to private respondent;and to pay the latter a monthly rental of P21,100 from April 1994 up to
the time it vacated the premises.
This Courts June 25, 2001 Decision, however, was later modified by Resolution of July 24, 2002 which ordered
petitioner to pay additional six percent (6%) interest per annum on the amount of monthly rental of P21,100
corresponding to the period from April 1994 up to the time it vacated the premises.To this Courts Resolution of
July 24, 2002 petitioner seasonably filed a motion for reconsideration.
Pending resolution of petitioners motion for reconsideration of the July 24, 2002 Resolution, the Court En Banc
rendered a decision on November 22, 2002 in G.R. No. 137533, similarly entitled Tala Realty Services Corp. v.
Banco Filipino Savings & Mortgage Bank.In this En Banc case which involved petitioners eviction from its
branch site in Malolos, Bulacan and which was based on the same grounds as those in G.R. No. 132051, this
Court adjudged herein petitioner not to be liable for unpaid rentals, both parties having participated in the
deceptive creation of a trust to circumvent the real estate investment limit under the General Banking Act.[1] As
both parties were in pari delicto, this Court gave no affirmative relief to one against the other.It, however, noted
that as the 20-year lease contract (which had already expired in August 2001) had not been renewed or
extended, Tala ha[d] the right to eject the Bank from the subject Bulacan property on the ground of expiration
of contract.[2]chanroblesvirtuallawlibrary
Petitioners motion for reconsideration of the July 24, 2002 Resolution in G.R. No. 132051 was subsequently
granted by this CourtsThird Division, by September 3, 2003 Resolution which applied the Court En Bancs
pronouncement in G.R. No. 137533that Tala should not be allowed to collect rent from the Bank during the
period in question.
On September 26, 2003, this Courts June 25, 2001 Decision, as well as its July 24, 2002 and September 3, 2003
Resolutions, in G.R. No. 132051 were recorded in the Book of Entries of Judgment as having become final and
executory.
Subsequently, private respondent filed with the trial court, the MTC in IloiloCity, Branch 2, a motion for
execution of this Courts Decision of June 25, 2001 in G.R. No. 132051.Conformably with the disposition of
said decision, private respondent prayed that petitioner be ordered to vacate the Iloilo branch office and to
restore possession thereof to it, to pay the monthly rental of P21,100 computed from April 1994 up to the time
petitioner vacates the premises, and to pay costs.
At the appointed time for the hearing of the Motion for Execution on February 26, 2004, petitioner verbally
opposed the motion principally because this Courts June 25, 2001 Decision had been superseded by its
September 3, 2003 Resolution.Petitioners objection and manifestation for time to file a written opposition
notwithstanding, public respondent, Presiding Judge Espinosa of Branch 2 of the MTC in Iloilo City, granted on
even date private respondents Motion for Execution in accordance with this Courts June 25, 2001 Decision,
stating that there was nothing more for it to do but to have it fully executed.Petitioners motion for
reconsideration was denied by public respondent.
Hence, the present petition for certiorari under Rule 65 of the Rules of Court ascribing lack or excess of
jurisdiction or grave abuse of discretion to public respondent.
The issue then is whether public respondent acted without or in excess of jurisdiction, or with grave abuse of
discretion in ordering the execution of this Courts June 25, 2001 Decision in G.R. No. 132051 and in allegedly
refusing to hear petitioner on private respondents Motion for Execution.
A court, tribunal or administrative agency acts without jurisdiction if it does not have the legal power to
determine the case.[3] Where the respondent is clothed with the power to determine the case, it nevertheless
acts in excess of jurisdiction when it oversteps its authority as determined by law.[4]
Grave abuse of discretion exists if the public respondent acts in a capricious, whimsical, arbitrary or despotic
manner in the exercise of his judgment as to be said to be equivalent to lack of jurisdiction.[5] Mere abuse of
discretion is not enough; it must have been patent and gross as to amount to an evasion of positive duty or a
virtual refusal to perform the duty enjoined or to act at all in contemplation of
aw.[6]chanroblesvirtuallawlibrary
Unquestionably, public respondent has the power to rule on respondents Motion for Execution following
Section 1 of Rule 39 of the Rules of Court which provides:
Sec. 1.Execution upon judgments or final orders. Execution shall issue as a matter of right, on motion, upon a
judgment or order that disposes of the action or proceeding upon the expiration of the period to appeal
therefrom if no appeal has been duly perfected.
If the appeal has been duly perfected and finally resolved, the execution may forthwith be applied for in the
court of origin, on motion of the judgment obligee, submitting therewith certified true copies of the judgment or
judgments or final order or orders sought to be enforced and of the entry thereof, with notice to the adverse
party.
The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of
origin to issue the writ of execution. (Emphasis and underscoring supplied)
Public respondent overstepped his authority, however, when he ordered the execution of this Courts Decision of
June 25, 2001, the same not being the final resolution of petitioners appeal as contemplated in the second
paragraph of above-quoted Rule 39.
On its face, the Entry of Judgment[7] in G.R. No. 132051 showed that two Resolutions subsequent to the June
25, 2001 Decision were also certified as having become final and executory. Clearly apparent from the
chronology of dispositions is the fact that the June 25, 2001 Decision was later modified by the July 24, 2002
Resolution which, in turn, was reconsidered and set aside by the September 3, 2003 Resolution. This matter was
brought to the attention of public respondent by petitioner during the hearing of respondents Motion for
Execution on February 26, 2004.
Additionally, petitioner specifically pointed out in its written opposition to the motion that the pronouncement
of the . . . Resolution of September 3, 2003 that respondent bank is not liable for unpaid rents and Tala should
not be allowed to collect rent from the bank was diametrically inconsistent with the directive in the Decision
dated June 25, 2001, for the . . . Bank to pay Tala the monthly rental of P21,100.00 from April 1994 until the
Bank vacates the premises . . .[8]chanroblesvirtuallawlibrary
Not being the final resolution of petitioners duly perfected appeal, this Courts June 25, 2001 Decision was not a
judgment that private respondent was entitled to execute as a matter of right, hence, it could not have provided
the basis for the grant of the motion for and issuance of the writ of execution.[9]
Parenthetically, this Court notes that even the writ of execution fell short of the requirement under paragraph
(e), Section 8 of Rule 39 of the Rules of Court that it should specifically state the amount of the interest, costs,
damages, rents, or profits due as of the date of the issuance of the writ, aside from the principal obligation under
the judgment. (Emphasis supplied)Its directive to the sheriff concerned merely reiterated the dispositive portion
of this Courts June 25, 2001 Decision without specifying the amount due as of April 6, 2004, the date the writ
was issued, thus:
NOW, THEREFORE, you are hereby commanded to cause the execution of the aforesaid judgment that is, to
oust Banco Filipino Savings and Mortgage Bank Filipino on [sic] the subject premises and to restore possession
thereof to Tala Realty Services Corporation; to levy the goods and chattels of the defendant, except those which
are exempt from execution; and to make the sale thereof in accordance with the procedure outlined by Rule 39,
1997 Revised Rules of Court, in case of failure to pay the accrued monthly rentals from April 1994 up to the
time it vacates the premises, and in such cases made and provided, together with all lawful fees for the service
of the Writ.[10] (Emphasis supplied)
The failure to indicate the amount of rentals due is of course attributable to private respondent which is charged
under Rule 39, Section 8(e)[11] with the duty of specifying the same in its motion for execution.
Public respondent having overstepped his authority in ordering the execution of this Courts June 25, 2001
Decision, passing on the issue of grave abuse of discretion has been rendered unnecessary.Suffice it to state that
given the circumstances surrounding the Motion for Execution of which public respondent was sufficiently
apprised and which he himself acknowledged in his order granting the same,[12] public respondent should have
taken more time and circumspection before granting the same.
On petitioners argument that it was not heard on private respondents Motion for Execution: It has been opined
that Section 1 of Rule 39 of the Rules of Court now requires that the motion for execution must be with notice
to the adverse party, with a hearing when the circumstances so require, to enable him to file any objection
thereto or bring to the attention of said court matters which may have transpired during the pendency of the
appeal and which may have a bearing on the execution sought to enforce the judgment.[13] (Emphasis supplied)
It can not be gainsaid that the circumstances surrounding the Motion for Execution, which cast doubt on the
propriety of executing the June 25, 2001 Decision, called for petitioner to give its side thereon.
Granting, however, that petitioners counsel was brusquely cut off when he started to verbally argue against the
Motion for Execution during the hearing on February 26, 2004 and that public respondent failed to consider its
written opposition,[14] still, petitioner was able to proffer its objections when it filed a motion to reconsider[15]
the order granting the Motion for Execution. In that motion to reconsider, petitioner reiterated the arguments it
raised during the hearing and in its written opposition to the Motion for Execution.[16]These circumstances
were noted in public respondents March 29, 2004 Order denying petitioners motion for reconsideration.
[17]chanroblesvirtuallawlibrary
Petitioners prayer for the issuance of a temporary restraining order or a writ of injunction to perpetually restrain
the enforcement of public respondents order dated February 26, 2004 has been rendered moot and academic.As
it itself manifested in its Supplemental Petition,[18] it has been evicted from the premises of its Iloilo branch as
a consequence of the enforcement on April 27, 2004 of the writ of execution issued by public respondent.
In line with this Courts pronouncement in G.R. No. 132557 that while herein private respondent, Tala Realty
Services Corporation, had no right to eject petitioner based on non-payment of rent, it has the right to do so on
the ground of expiration of the contract, petitioners prayer for its restoration to its former Iloilo branch site may
not lie.
WHEREFORE, the petition is PARTLY GRANTED.Public respondent, Judge Amalik P. Espinosa, Jr., having
exceeded his authority in ordering the execution of this Courts decision dated June 25, 2001 in G.R. No.
132051, his assailed orders dated February 26, 2004 and March 29, 2004 as well as the writ of execution dated
April 6, 2004 are NULLIFIED and SET ASIDE.
SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justicecralaw
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
ANTONIO T. CARPIO
Associate Justice
DANTE O. TINGA
Associate Justice
PRESBITERO J. VELASCO, JR.

Associate Justice
ATTESTATION
cralawI attest that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.
Associate Justice
Chairperson
CERTIFICATION
cralawPursuant to Article VIII, Section 13 of the Constitution, and the Division Chairpersons Attestation, it is
hereby certified that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court.
REYNATO S. PUNO
Chief Justice
Endnotes:
[1]cralawRepublic Act No. 337.
[2]cralawRollo, p. 74.
[3]cralawHonrado v. Court of Appeals, G.R. No. 166333, November 25, 2005, 476 SCRA 280; Punzalan v.
Dela Pea, G.R. No. 158543,July 21, 2004, 434 SCRA 601, 609;Condo Suite Club Travel, Inc. v. NLRC, 380
Phil. 660, 667 (2000);Association of Trade Unions v. Hon. Abella, 380 Phil. 6, 18 (2000).
[4]cralawHonrado v. Court of Appeals, supra;Yu v. Court of Appeals, G.R. No. 154115, November 29, 2005,
476 SCRA 443;Land Bank of the Philippines v. Court of Appeals, G.R. No. 129368, August 25, 2003, 409
SCRA 455, 480.
[5]cralawBedruz v. Sandiganbayan, G.R. No. 161640, December 9, 2005, 477 SCRA 287;Villanueva v. Ople,
G.R. No. 165125, November 18, 2005, 475 SCRA 539, 540;Santos v. COMELEC, 447 Phil. 760, 772 (2003).
[6] cralawBedruz v. Sandiganbayan, supra.
[7] cralawRollo, pp. 80-81.
8] cralawId.at 88;records, p. 34.
[9] cralawId. at 125-126.
[10]cralawIbid.
[11]cralawThe last sentence of Rule 39, Sec. 8(e) reads:
For this purpose, the motion for execution shall specify the amounts of the foregoing reliefs sought by the
movant.
[12]cralawOrder dated February 26, 2004, id. at 31-32.In said Order, respondent stated that[w]hen this case was
called for the hearing of the motion for execution opposing counsels were present and presented their oral
arguments respecting their opposing stand [sic] of the issue at hand.Thereafter this Court, ordered the incident
submitted for resolution, in spite of the prayer of the counsel for the defendant [petitioner herein] to be given
time within which to file an opposition.
[13]F. Regalado, Remedial Law Compendium, Vol. I, 400 (6th rev. ed.).
[14]Rollo, pp. 10-11.
[15]Motion for Reconsideration dated March 8, 2004, records, pp. 93-106.
[16]cralawPetitioners written opposition to the motion for execution was received by the trial court on March 1,
2004, after respondents order granting the motion for execution was issued on February 26, 2004.
[18] cralawId.at 127-132.
Republic of the Philippines

SUPREME COURT
Manila chanroblesvirtuallawlibrary
FIRST DIVISION
G.R. No. 174975 : January 20, 2009
LUISA KHO MONTAER, ALEJANDRO MONTAER, JR., LILLIBETH

MONTAER-BARRIOS, AND RHODORA ELEANOR MONTAER-DALUPAN,
Petitioners, vs. SHARIA DISTRICT COURT, FOURTH SHARIA JUDICIAL
DISTRICT, MARAWI CITY, LILING DISANGCOPAN, AND ALMAHLEEN
LILING S. MONTAER, Respondents.
DECISION
PUNO, C.J.:
This Petition for Certiorari and Prohibition seeks to set aside the Orders of the Sharia District
Court, Fourth Sharia Judicial District, Marawi City, dated August 22, 2006 [1]cralaw and September
21, 2006.[2]cralaw chanroblesvirtuallawlibrary
On August 17, 1956, petitioner Luisa Kho Montaer, a Roman Catholic, married Alejandro
Montaer, Sr. at the Immaculate Conception Parish in Cubao, Quezon City.[3]cralaw Petitioners
Alejandro Montaer, Jr., Lillibeth Montaer-Barrios, and Rhodora Eleanor Montaer-Dalupan are
their children.[4]cralaw On May 26, 1995, Alejandro Montaer, Sr. died.[5]cralaw chanroblesvirtuallawlibrary
On August 19, 2005, private respondents Liling Disangcopan and her daughter, Almahleen Liling
S. Montaer, both Muslims, filed a Complaint for the judicial partition of properties before the
Sharia District Court.[6]cralaw The said complaint was entitled Almahleen Liling S. Montaer and
Liling M. Disangcopan v. the Estates and Properties of Late Alejandro Montaer, Sr., Luisa Kho
Montaer, Lillibeth K. Montaer, Alejandro Kho Montaer, Jr., and Rhodora Eleanor K. Montaer, and
docketed as Special Civil Action No. 7-05.[7]cralaw In the said complaint, private respondents made
the following allegations: (1) in May 1995, Alejandro Montaer, Sr. died; (2) the late Alejandro
Montaer, Sr. is a Muslim; (3) petitioners are the first family of the decedent; (4) Liling
Disangcopan is the widow of the decedent; (5) Almahleen Liling S. Montaer is the daughter of
the decedent; and (6) the estimated value of and a list of the properties comprising the estate of
the decedent.[8]cralaw Private respondents prayed for the Sharia District Court to order, among
others, the following: (1) the partition of the estate of the decedent; and (2) the appointment of
an administrator for the estate of the decedent.[9]cralaw chanroblesvirtuallawlibrary
Petitioners filed an Answer with a Motion to Dismiss mainly on the following grounds: (1) the
Sharia District Court has no jurisdiction over the estate of the late Alejandro Montaer, Sr.,
because he was a Roman Catholic; (2) private respondents failed to pay the correct amount of
docket fees; and (3) private respondents complaint is barred by prescription, as it seeks to
establish filiation between Almahleen Liling S. Montaer and the decedent, pursuant to Article 175
of the Family Code.[10]cralaw chanroblesvirtuallawlibrary
On November 22, 2005, the Sharia District Court dismissed the private respondents complaint.
The district court held that Alejandro Montaer, Sr. was not a Muslim, and its jurisdiction extends
only to the settlement and distribution of the estate of deceased Muslims.[11]cralaw chanroblesvirtuallawlibrary
On December 12, 2005, private respondents filed a Motion for Reconsideration. [12]cralaw On
December 28, 2005, petitioners filed an Opposition to the Motion for Reconsideration, alleging
that the motion for reconsideration lacked a notice of hearing.[13]cralaw On January 17, 2006, the
Sharia District Court denied petitioners opposition.[14]cralaw Despite finding that the said motion for
reconsideration lacked notice of hearing, the district court held that such defect was cured as
petitioners were notified of the existence of the pleading, and it took cognizance of the said
motion.[15]cralaw The Sharia District Court also reset the hearing for the motion for
reconsideration.[16]cralaw chanroblesvirtuallawlibrary
In its first assailed order dated August 22, 2006, the Sharia District Court reconsidered its order
of dismissal dated November 22, 2005.[17]cralaw The district court allowed private respondents to
adduce further evidence.[18]cralaw In its second assailed order dated September 21, 2006, the
Sharia District Court ordered the continuation of trial, trial on the merits, adducement of further
evidence, and pre-trial conference.[19]cralaw chanroblesvirtuallawlibrary
Seeking recourse before this Court, petitioners raise the following issues: chanroblesvirtuallawlibrary
I. chanroblesvirtuallawlibrary
RESPONDENT SHARIA DISTRICT COURT MARAWI CITY LACKS JURISDICTION OVER

PETITIONERS WHO ARE ROMAN CATHOLICS AND NON-MUSLIMS. chanroblesvirtuallawlibrary
II. chanroblesvirtuallawlibrary
/
RESPONDENT SHARIA DISTRICT COURT MARAWI CITY DID NOT ACQUIRE
JURISDICTION OVER THE ESTATES AND PROPERTIES OF THE LATE ALEJANDRO
MONTAER, SR. WHICH IS NOT A NATURAL OR JURIDICAL PERSON WITH CAPACITY
TO BE SUED. chanroblesvirtuallawlibrary
III. chanroblesvirtuallawlibrary
RESPONDENT SHARIA DISTRICT COURT DID NOT ACQUIRE JURISDICTION OVER

THE COMPLAINT OF PRIVATE RESPONDENTS AGAINST PETITIONERS DUE TO NON-
PAYMENT OF THE FILING AND DOCKETING FEES. chanroblesvirtuallawlibrary
IV. chanroblesvirtuallawlibrary
RESPONDENT SHARIA DISTRICT COURTMARAWI CITY COMMITTED GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK oF JURISDICTION WHEN IT DENIED THE
OPPOSITION OF PETITIONERS AND THEN GRANTED THE MOTION FOR
RECONSIDERATION OF RESPONDENTS LILING DISANGCOPAN, ET AL. WHICH WAS
FATALLY DEFECTIVE FOR LACK OF A NOTICE OF HEARING. chanroblesvirtuallawlibrary
V. chanroblesvirtuallawlibrary
RESPONDENT SHARIA DISTRICT COURTMARAWI CITY COMMITTED GRAVE ABUSE

OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT SET SPL. CIVIL
ACTION 7-05 FOR TRIAL EVEN IF THE COMPLAINT PLAINLY REVEALS THAT
RESPONDENT ALMAHLEEN LILING S. MONTAER SEEKS RECOGNITION FROM
ALEJANDRO MONTAER, SR. WHICH CAUSE OF ACTION PRESCRIBED UPON THE
DEATH OF ALEJANDRO MONTAER, SR. ON MAY 26, 1995. chanroblesvirtuallawlibrary
In their Comment to the Petition for Certiorari, private respondents stress that the Sharia
District Court must be given the opportunity to hear and decide the question of whether the
decedent is a Muslim in order to determine whether it has jurisdiction.[20]cralaw chanroblesvirtuallawlibrary
Jurisdiction: Settlement of the Estate of Deceased Muslims
Petitioners first argument, regarding the Sharia District Courts jurisdiction, is dependent on a
question of fact, whether the late Alejandro Montaer, Sr. is a Muslim. Inherent in this argument
is the premise that there has already been a determination resolving such a question of fact. It
bears emphasis, however, that the assailed orders did not determine whether the decedent is a
Muslim. The assailed orders did, however, set a hearing for the purpose of resolving this issue.
Article 143(b) of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal
Laws of the Philippines, provides that the Sharia District Courts have exclusive original
jurisdiction over the settlement of the estate of deceased Muslims: chanroblesvirtuallawlibrary
ARTICLE 143. Original jurisdiction. (1) The Shari'a District Court shall have
exclusive original jurisdiction over: chanroblesvirtuallawlibrary
xxxx chanroblesvirtuallawlibrary
(b) All cases involving disposition, distribution and settlement of the estate of
deceased Muslims, probate of wills, issuance of letters of administration or
appointment of administrators or executors regardless of the nature or the
aggregate value of the property.
The determination of the nature of an action or proceeding is controlled by the averments and
character of the relief sought in the complaint or petition. [21]cralaw The designation given by
parties to their own pleadings does not necessarily bind the courts to treat it according to the
said designation. Rather than rely on a falsa descriptio or defective caption, courts are guided by
the substantive averments of the pleadings.[22]cralaw chanroblesvirtuallawlibrary
Although private respondents designated the pleading filed before the Sharia District Court as a
Complaint for judicial partition of properties, it is a petition for the issuance of letters of
administration, settlement, and distribution of the estate of the decedent. It contains sufficient
jurisdictional facts required for the settlement of the estate of a deceased Muslim,[23]cralaw such as
the fact of Alejandro Montaer, Sr.s death as well as the allegation that he is a Muslim. The said
petition also contains an enumeration of the names of his legal heirs, so far as known to the
private respondents, and a probable list of the properties left by the decedent, which are the
very properties sought to be settled before a probate court. Furthermore, the reliefs prayed for
reveal that it is the intention of the private respondents to seek judicial settlement of the estate
of the decedent.[24]cralaw These include the following: (1) the prayer for the partition of the estate
of the decedent; and (2) the prayer for the appointment of an administrator of the said estate.
We cannot agree with the contention of the petitioners that the district court does not have
jurisdiction over the case because of an allegation in their answer with a motion to dismiss that
Montaer, Sr. is not a Muslim. Jurisdiction of a court over the nature of the action and its subject
matter does not depend upon the defenses set forth in an answer[25]cralaw or a motion to dismiss.
cralaw Otherwise, jurisdiction would depend almost entirely on the defendant cralaw or result in
[26] [27]
having a case either thrown out of court or its proceedings unduly delayed by simple stratagem.
cralaw Indeed, the defense of lack of jurisdiction which is dependent on a question of fact does
[28]
not render the court to lose or be deprived of its jurisdiction.[29]cralaw
The same rationale applies to an answer with a motion to dismiss.[30]cralaw In the case at bar, the
Sharia District Court is not deprived of jurisdiction simply because petitioners raised as a
defense the allegation that the deceased is not a Muslim. The Sharia District Court has the
authority to hear and receive evidence to determine whether it has jurisdiction, which requires
an a priori determination that the deceased is a Muslim. If after hearing, the Sharia District
Court determines that the deceased was not in fact a Muslim, the district court should dismiss
the case for lack of jurisdiction.
Special Proceedings
The underlying assumption in petitioners second argument, that the proceeding before the
Sharia District Court is an ordinary civil action against a deceased person, rests on an erroneous
understanding of the proceeding before the court a quo. Part of the confusion may be attributed
to the proceeding before the Sharia District Court, where the parties were designated either as
plaintiffs or defendants and the case was denominated as a special civil action. We reiterate that
the proceedings before the court a quo are for the issuance of letters of administration,
settlement, and distribution of the estate of the deceased, which is a special proceeding. Section
3(c) of the Rules of Court (Rules) defines a special proceeding as a remedy by which a party
seeks to establish a status, a right, or a particular fact. This Court has applied the Rules,
particularly the rules on special proceedings, for the settlement of the estate of a deceased
Muslim.[31]cralaw In a petition for the issuance of letters of administration, settlement, and
distribution of estate, the applicants seek to establish the fact of death of the decedent and later
to be duly recognized as among the decedents heirs, which would allow them to exercise their
right to participate in the settlement and liquidation of the estate of the decedent.[32]cralaw Here,
the respondents seek to establish the fact of Alejandro Montaer, Sr.s death and, subsequently,
for private respondent Almahleen Liling S. Montaer to be recognized as among his heirs, if such
is the case in fact. chanroblesvirtuallawlibrary
Petitioners argument, that the prohibition against a decedent or his estate from being a party
defendant in a civil action[33]cralaw applies to a special proceeding such as the settlement of the
estate of the deceased, is misplaced. Unlike a civil action which has definite adverse parties, a
special proceeding has no definite adverse party. The definitions of a civil action and a special
proceeding, respectively, in the Rules illustrate this difference. A civil action, in which a party
sues another for the enforcement or protection of a right, or the prevention or redress of a
wrong[34]cralaw necessarily has definite adverse parties, who are either the plaintiff or defendant.
[35]
cralaw On the other hand, a special proceeding, by which a party seeks to establish a status,
right, or a particular fact,[36]cralaw has one definite party, who petitions or applies for a declaration
of a status, right, or particular fact, but no definite adverse party. In the case at bar, it bears
emphasis that the estate of the decedent is not being sued for any cause of action. As a special
proceeding, the purpose of the settlement of the estate of the decedent is to determine all the
assets of the estate,[37]cralaw pay its liabilities,[38]cralaw and to distribute the residual to those
entitled to the same.[39]cralaw
Docket Fees
Petitioners third argument, that jurisdiction was not validly acquired for non-payment of docket
fees, is untenable. Petitioners point to private respondents petition in the proceeding before the
court a quo, which contains an allegation estimating the decedents estate as the basis for the
conclusion that what private respondents paid as docket fees was insufficient. Petitioners
argument essentially involves two aspects: (1) whether the clerk of court correctly assessed the
docket fees; and (2) whether private respondents paid the correct assessment of the docket
fees.
Filing the appropriate initiatory pleading and the payment of the prescribed docket fees vest a
trial court with jurisdiction over the subject matter.[40]cralaw If the party filing the case paid less
than the correct amount for the docket fees because that was the amount assessed by the clerk
of court, the responsibility of making a deficiency assessment lies with the same clerk of court.
cralaw In such a case, the lower court concerned will not automatically lose jurisdiction, because
[41]
of a partys reliance on the clerk of courts insufficient assessment of the docket fees.[42]cralaw As
every citizen has the right to assume and trust that a public officer charged by law with certain
duties knows his duties and performs them in accordance with law, the party filing the case
cannot be penalized with the clerk of courts insufficient assessment.[43]cralaw However, the party
concerned will be required to pay the deficiency.[44]cralaw
In the case at bar, petitioners did not present the clerk of courts assessment of the docket fees.
Moreover, the records do not include this assessment. There can be no determination of whether
private respondents correctly paid the docket fees without the clerk of courts assessment.
Exception to Notice of Hearing

Petitioners fourth argument, that private respondents motion for reconsideration before the
Sharia District Court is defective for lack of a notice of hearing, must fail as the unique
circumstances in the present case constitute an exception to this requirement. The Rules require
every written motion to be set for hearing by the applicant and to address the notice of hearing
to all parties concerned.[45]cralaw The Rules also provide that no written motion set for hearing
shall be acted upon by the court without proof of service thereof.[46]cralaw However, the Rules
allow a liberal construction of its provisions in order to promote [the] objective of securing a
just, speedy, and inexpensive disposition of every action and proceeding.[47]cralaw Moreover, this
Court has upheld a liberal construction specifically of the rules of notice of hearing in cases
where a rigid application will result in a manifest failure or miscarriage of justice especially if a
party successfully shows that the alleged defect in the questioned final and executory judgment
is not apparent on its face or from the recitals contained therein. [48]cralaw In these exceptional
cases, the Court considers that no party can even claim a vested right in technicalities, and for
this reason, cases should, as much as possible, be decided on the merits rather than on
technicalities.[49]cralaw chanroblesvirtuallawlibrary
The case at bar falls under this exception. To deny the Sharia District Court of an opportunity to
determine whether it has jurisdiction over a petition for the settlement of the estate of a
decedent alleged to be a Muslim would also deny its inherent power as a court to control its
process to ensure conformity with the law and justice. To sanction such a situation simply
because of a lapse in fulfilling the notice requirement will result in a miscarriage of justice.
chanroblesvirtuallawlibrary
In addition, the present case calls for a liberal construction of the rules on notice of hearing,
because the rights of the petitioners were not affected. This Court has held that an exception to
the rules on notice of hearing is where it appears that the rights of the adverse party were not
affected.[50]cralaw The purpose for the notice of hearing coincides with procedural due process,
[51]
cralaw for the court to determine whether the adverse party agrees or objects to the motion, as
the Rules do not fix any period within which to file a reply or opposition.[52]cralaw In probate
proceedings, what the law prohibits is not the absence of previous notice, but the absolute
absence thereof and lack of opportunity to be heard.[53]cralaw In the case at bar, as evident from
the Sharia District Courts order dated January 17, 2006, petitioners counsel received a copy of
the motion for reconsideration in question. Petitioners were certainly not denied an opportunity
to study the arguments in the said motion as they filed an opposition to the same. Since the
Sharia District Court reset the hearing for the motion for reconsideration in the same order,
petitioners were not denied the opportunity to object to the said motion in a hearing. Taken
together, these circumstances show that the purpose for the rules of notice of hearing,
procedural process, was duly observed.
Prescription and Filiation
Petitioners fifth argument is premature. Again, the Sharia District Court has not yet determined
whether it has jurisdiction to settle the estate of the decedent. In the event that a special
proceeding for the settlement of the estate of a decedent is pending, questions regarding
heirship, including prescription in relation to recognition and filiation, should be raised and
settled in the said proceeding.[54]cralaw The court, in its capacity as a probate court, has
jurisdiction to declare who are the heirs of the decedent.[55]cralaw In the case at bar, the
determination of the heirs of the decedent depends on an affirmative answer to the question of
whether the Sharia District Court has jurisdiction over the estate of the decedent.
IN VIEW WHEREOF, the petition is DENIED. The Orders of the Sharia District Court, dated
August 22, 2006 and September 21, 2006 respectively, are AFFIRMED. Cost against
petitioners.
SO ORDERED. chanroblesvirtuallawlibrary
REYNATO S. PUNO
Chief Justice chanroblesvirtuallawlibrary

WE CONCUR: chanroblesvirtuallawlibrary
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
ANTONIO T. CARPIO
Associate Justice
RENATO C. CORONA
Associate Justice
ADOLFO S. AZCUNA
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above
decision had been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division. chanroblesvirtuallawlibrary
REYNATO S. PUNO
Chief Justice chanroblesvirtuallawlibrary
Endnotes:
[1]
cralaw Rollo, pp. 110-111.cralaw
[2]
cralaw Id. at 115.cralaw
[3]
[4]
cralaw Id. at 63-65.cralaw
[5]
[6]
[7]
[8]
[9]
[10]
cralaw Id. at 83, 89-96.cralaw
[11]
[12]
[13]
[14]
[15]
cralaw Id.
[16]
cralaw Id.
[17]
[18]
[19]
[20]
cralaw Id. at 191.
[21]
cralaw Vda. de Manalo v. Court of Appeals, 402 Phil. 152, 161 (2001).cralaw
[22]
cralaw Heirs of Celso Amarante v. Court of Appeals, G.R. No. 76386, May 21, 1990, 185 SCRA 585, 594.cralaw
[23]
cralaw Musa v. Moson, G.R. No. 95574, August 16, 1991, 200 SCRA 715, 719.cralaw
[24]
cralaw Vda. de Manalo v. Court of Appeals, supra note 21, at 162.cralaw
[25]
cralaw Salas v. Castro, G.R. No. 100416, December 2, 1992, 216 SCRA 198, 204.cralaw
[26]
cralaw Hilado v. Chavez, G.R. No. 134742, September 22, 2004, 438 SCRA 623, 641.cralaw
[27]
cralaw Salas v. Castro, supra note 25.cralaw
[28]
[29]
cralaw Salas v. Castro, supra note 25.
[30]
cralaw Mamadsual v. Moson, G.R. No. 92557, September 27, 1990, 190 SCRA 82, 87.
In the abovementioned case, the Court held that the Special Rules of Procedure in Sharia Courts, Ijra-at-al-Mahakim al Sharia, proscribe the filing of a motion to
dismiss in lieu of an answer which would stop the running of the period to file an answer and cause undue delay.cralaw
[31]
cralaw Musa v. Moson, supra note 23, at 721-722.cralaw
[32]
[33]
cralaw Ventura v. Hon. Militante, 374 Phil. 562 (1999).
[34]
cralaw RULES OF COURT, Rule 1, Sec. 3, par. (a).cralaw
[35]
cralaw RULES OF COURT, Rule 3, Sec. 1.cralaw
[36]
cralaw RULES OF COURT, Rule 1, Sec. 3, par. (c).cralaw
[37]
cralaw Pacific Banking Corporation Employees Organization v. Court of Appeals, 312 Phil. 578, 593 (1995).cralaw
[38]
cralaw Id.
[39]
[40]
cralaw Sun Insurance Office, Ltd. v. Asuncion, G.R. Nos. 79937-38, February 13, 1989, 170 SCRA 274, 285.cralaw
[41]
cralaw Rivera v. Del Rosario, G.R. No. 144934, January 15, 2004, 419 SCRA 626, 635.cralaw
[42]
cralaw Id.
[43]
cralaw Ayala Land, Inc. v. Spouses Carpo, 399 Phil. 327, 334 (2000), citing Segovia v. Barrios, 75 Phil. 764, 767 (1946).cralaw
[44]
cralaw Fil-Estate Golf and Development, Inc. v. Navarro, G.R. No. 152575, June 29, 2007, 526 SCRA 51, 61.cralaw
[45]
cralaw RULES OF COURT, Rule 15, Secs. 4-5.cralaw
[46]
[47]
[48]
cralaw Vlason Enterprises Corporation v. Court of Appeals, 369 Phil. 269, 299 (1999).cralaw
[49]
cralaw Goldloop Properties, Inc. v. Court of Appeals, G.R. No. 99431, August 11, 1992, 212 SCRA 498, 504.cralaw
[50]
cralaw Victory Liner, Inc. v. Malinias, G.R. No. 151170, May 29, 2007, 523 SCRA 279, 291-292.cralaw
[51]
cralaw Vlason Enterprises Corporation v. Court of Appeals, supra note 48, at 299-300.cralaw
[52]
cralaw Victory Liner, Inc. v. Malinias, supra note 50, at 292.cralaw
[53]
cralaw De Borja, et al. v. Tan, et al., 93 Phil. 167, 171 (1953).
[54]
cralaw Portugal v. Portugal-Beltran, G.R. No. 155555, August 16, 2005, 467 SCRA 184, 198.
[55]
cralaw Uriarte v. Court of First Instance Negros Occidental, et al., 144 Phil. 205, 215-216 (1970).cralaw

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 102636 September 10, 1993
METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO

V. BALINANG, Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and
METROPOLITAN BANK and TRUST COMPANY, Respondents.
VITUG, J.:
In this petition for certiorari, the Metropolitan Bank & Trust Company Employees Union-ALU-TUCP
(MBTCEU) and its president, Antonio V. Balinang, raise the issue of whether or not the implementation by the
Metropolitan Bank and Trust Company of Republic Act No. 6727, mandating an increase in pay of P25 per day
for certain employees in the private sector, created a distortion that would require an adjustment under said law
in the wages of the latter's other various groups of employees. chanroblesvirtualawlibrary chanrobles virtual law library
On 25 May 1989, the bank entered into a collective bargaining agreement with the MBTCEU, granting a
monthly P900 wage increase effective 01 January 1989, P600 wage increase 01 January 1990, and P200 wage
increase effective 01 January 1991. The MBTCEU had also bargained for the inclusion of probationary
employees in the list of employees who would benefit from the first P900 increase but the bank had adamantly
refused to accede thereto. Consequently, only regular employees as of 01 January 1989 were given the increase
to the exclusion of probationary employees. chanroblesvirtualawlibrary chanrobles virtual law library
Barely a month later, or on 01 January 1989, Republic Act 6727, "an act to rationalize wage policy
determination be establishing the mechanism and proper standards thereof, . . . fixing new wage rates, providing
wage incentives for industrial dispersal to the countryside, and for other purposes," took effect. Its provisions,
pertinent to this case, state:
Sec. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of all workers and
employees in the private sector, whether agricultural or non-agricultural, shall be increased by
twenty-five pesos (P25) per day, . . .: Provided, That those already receiving above the minimum
wage rates up to one hundred pesos(P100.00) shall also receive an increase of twenty-five pesos
(P25.00) per day, . . .
xxx xxx xxx chanrobles virtual law library

(d) If expressly provided for and agreed upon in the collective bargaining agreements, all
increase in the daily basic wage rates granted by the employers three (3) months before the
effectivity of this Act shall be credited as compliance with the increases in the wage rates
prescribed herein, provided that, where such increases are less than the prescribed increases in
the wage rates under this Act, the employer shall pay the difference. Such increase shall not
include anniversary wage increases, merit wage increase and those resulting from the
regularization or promotion of employees. chanroblesvirtualawlibrary chanrobles virtual law library
Where the application of the increases in the wage rates under this Section results in distortions
as defined under existing laws in the wage structure within an establishment and gives rise to a
dispute therein, such dispute shall first be settled voluntarily between the parties and in the event
of a deadlock, the same shall be finally resolved through compulsory arbitration by the regional
branches of the National Labor Relations Commission (NLRC) having jurisdiction over the
workplace. chanroblesvirtualawlibrary chanrobles virtual law library
It shall be mandatory for the NLRC to conduct continous hearings and decide any dispute arising
under this Section within twenty (20) calendar days from the time said dispute is formally
submitted to it for arbitration. The pendency of a dispute arising from a wage distortion shall not
in any way delay the applicability of the increase in the wage rates prescribed under this Section.
Pursuant to the above provisions, the bank gave the P25 increase per day, or P750 a month, to its probationary
employees and to those who had been promoted to regular or permanent status before 01 July 1989 but whose
daily rate was P100 and below. The bank refused to give the same increase to its regular employees who were
receiving more than P100 per day and recipients of the P900 CBA increase. chanroblesvirtualawlibrary chanrobles virtual law library
Contending that the bank's implementation of Republic Act 6727 resulted in the categorization of the employees
into (a) the probationary employees as of 30 June 1989 and regular employees receiving P100 or less a day who
had been promoted to permanent or regular status before 01 July 1989, and (b) the regular employees as of 01
July 1989, whose pay was over P100 a day, and that, between the two groups, there emerged a substantially
reduced salary gap, the MBTCEU sought from the bank the correction of the alleged distortion in pay. In order
to avert an impeding strike, the bank petitioned the Secretary of Labor to assume jurisdiction over the case or to
certify the same to the National Labor Relations Commission (NLRC) under Article 263 (g) of the Labor Code.
1
The parties ultimately agreed to refer the issue for compulsory arbitration to the NLRC. chanroblesvirtualawlibrary chanrobles virtual law library
The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05 February 1991, the labor arbiter
disregard with the bank's contention that the increase in its implementation of Republic Act 6727 did not
constitute a distortion because "only 143 employees or 6.8% of the bank's population of a total of 2,108 regular
employees" benefited. He stressed that "it is not necessary that a big number of wage earners within a company
be benefited by the mandatory increase before a wage distortion may be considered to have taken place," it
being enough, he said, that such increase "result(s) in the severe contraction of an intentional quantitative
difference in wage between employee groups." chanrobles virtual law library
The labor arbiter concluded that since the "intentional quantitative difference" in wage or salary rates between
and among groups of employees is not based purely on skills or length of service but also on "other logical
bases of differentiation, a P900.00 wage gap intentionally provided in a collective bargaining agreement as a
quantitative difference in wage between those who WERE regular employees as of January 1, 1989 and those
who WERE NOT as of that date, is definitely a logical basis of differentiation (that) deserves protection from
any distorting statutory wage increase." Otherwise, he added, "a minimum wage statute that seek to uplift the
economic condition of labor would itself destroy the mechanism of collective bargaining which, with perceived
stability, has been labor's constitutional and regular source of wage increase for so long a time now." Thus,
since the "subjective quantitative difference" between wage rates had been reduced from P900.00 to barely
P150.00, correction of the wage distortion pursuant to Section 4(c) of the Rules Implementing Republic Act
6727 should be made. chanroblesvirtualawlibrary chanrobles virtual law library
The labor arbiter disposed of the case, thus:
WHEREFORE, premises considered, the respondent is hereby directed to restore to

complainants and their members the Nine Hundred (P900.00) Pesos CBA wage gap they used to
enjoy over non-regular employees as of January 1, 1989 by granting them a Seven Hundred Fifty
(P750.00) Pesos monthly increase effective July 1, 1989. chanroblesvirtualawlibrary chanrobles virtual law library
SO ORDERED. 2 chanrobles virtual law library
The bank appealed to the NLRC. On 31 May 1991, the NLRC Second Division, by a vote of 2 to 1, reversed the
decision of the Labor Arbiter. Speaking, through Commissioners Rustico L. Diokno and Domingo H. Zapanta,
the NLRC said:
. . . a wage distortion can arise only in a situation where the salary structure is characterized by
intentional quantitative differences among employee groups determined or fixed on the basis of
skills, length of service, or other logical basis of differentiation and such differences or
distinction are obliterated (In Re: Labor Dispute at the Bank of the Philippine Islands, NCMB-
RB-7-11-096-89, Secretary of Labor and Employment, February 18, 1991). chanroblesvirtualawlibrary chanrobles virtual law library
As applied in this case, We noted that in the new wage salary structure, the wage gaps between
Level 6 and 7 levels 5 and 6, and levels 6 and 7 (sic) were maintained. While there is a
noticeable decrease in the wage gap between levels 2 and 3, Levels 3 and 4, and Levels 4 and 5,
the reduction in the wage gaps between said levels is not significant as to obliterate or result in
severe contraction of the intentional quantitative differences in salary rates between the
employees groups. For this reason, the basis requirement for a wage in this case. Moreover, there
is nothing in the law which would justify an across-the-board adjustment of P750.00 as ordered
by the labor Arbiter. chanroblesvirtualawlibrary chanrobles virtual law library
WHEREFORE, premises considered, the appealed decision is hereby set aside and a new
judgment is hereby entered, dismissing the complaint for lack of merit. chanroblesvirtualawlibrary chanrobles virtual law library
SO ORDERED. 3 chanrobles virtual law library
In her dissent, Presiding Commissioner Edna Bonto-Perez opined:
There may not be an obliteration nor elimination of said quantitative distinction/difference

aforecited but clearly there is a contraction. Would such contraction be severe as to warrant the
necessary correction sanctioned by the law in point, RA 6727? It is may considered view that the
quantitative intended distinction in pay between the two groups of workers in respondent
company was contracted by more than fifty (50%) per cent or in particular by more or less
eighty-three (83%) per cent hence, there is no doubt that there is an evident severe contraction
resulting in the complained of wage distortion. chanroblesvirtualawlibrary chanrobles virtual law library
Nonetheless, the award of P750.00 per month to all of herein individual complainants as ordered
by the Labor Arbiter below, to my mind is not the most equitable remedy at bar, for the same
would be an across the board increase which is not the intention of RA 6727. For that matter,
herein complainants cannot by right claim for the whole amount of P750.00 a month or P25.00
per day granted to the workers covered by the said law in the sense that they are not covered by
the said increase mandated by RA 6727. They are only entitled to the relief granted by said law
by way of correction of the pay scale in case of distortion in wages by reason thereof. chanroblesvirtualawlibrary chanrobles virtual law library
Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on 21 May 1991
by the Regional Tripartite Wages and Productivity Commission for correction of pay scale
structures in case of wage distortion as in the case at bar which is:
Minimum Wage = % x Prescribed = Distortion
------ Increased Adjustment

Actual Salary
would be the most equitable and fair under the circumstances obtaining in this case. chanroblesvirtualawlibrary chanrobles virtual law library
For this very reason, I register my dissent from the majority opinion and opt for the modification
of the Labor Arbiter's decision as afore-discussed. 4 chanrobles virtual law library
The MBTCEU filed a motion for reconsideration of the decision of the NLRC; having been denied, the
MBTCEU and its president filed the instant petition for certiorari, charging the NLRC with gave abuse of
discretion by its refusal (a) "to acknowledge the existence of a wage distortion in the wage or salary rates
between and among the employee groups of the respondent bank as a result of the bank's partial
implementation" of Republic Act 6727 and (b) to give due course to its claim for an across-the-board P25
increase under Republic Act No. 6727. 5 chanrobles virtual law library
We agree with the Solicitor General that the petition is impressed with merit. 6 chanrobles virtual law library
The term "wage distortion", under the Rules Implementing Republic Act 6727, is defined, thus:
(p) Wage Distortion means a situation where an increase in prescribed wage rates results in the
elimination or severe contradiction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical
bases of differentiation.
The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain
employees, we agree, is, by and large, a question of fact the determination of which is the statutory function of
the NLRC. 7 Judicial review of labor cases, we may add, does not go beyond the evaluation of the sufficiency of
the evidence upon which the labor official's findings rest. 8 As such, factual findings of the NLRC are generally
accorded not only respect but also finality provided that its decision are supported by substantial evidence and
devoid of any taint of unfairness of arbitrariness. 9 When, however, the members of the same labor tribunal are
not in accord on those aspects of a case, as in this case, this Court is well cautioned not to be as so conscious in
passing upon the sufficiency of the evidence, let alone the conclusions derived therefrom. chanroblesvirtualawlibrary chanrobles virtual law library
In this case, the majority of the members of the NLRC, as well as its dissenting member, agree that there is a
wage distortion arising from the bank's implementation of the P25 wage increase; they do differ, however, on
the extent of the distortion that can warrant the adoption of corrective measures required by law. chanroblesvirtualawlibrary chanrobles virtual law library
The definition of "wage distortion," 10 aforequoted, shows that such distortion can so exist when, as a result of
an increase in the prescribed wage rate, an "elimination or severe contraction of intentional quantitative
differences in wage or salary rates" would occur "between and among employee groups in an establishment as
to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or
other logical bases of differentiation." In mandating an adjustment, the law did not require that there be an
elimination or total abrogation of quantitative wage or salary differences; a severe contraction thereof is enough.
As has been aptly observed by Presiding Commissioner Edna Bonto-Perez in her dissenting opinion, the
contraction between personnel groupings comes close to eighty-three (83%), which cannot, by any stretch of
imagination, be considered less than severe. chanroblesvirtualawlibrary chanrobles virtual law library
The "intentional quantitative differences" in wage among employees of the bank has been set by the CBA to
about P900 per month as of 01 January 1989. It is intentional as it has been arrived at through the collective
bargaining process to which the parties are thereby concluded. 11 The Solicitor General, in recommending the
grant of due course to the petition, has correctly emphasized that the intention of the parties, whether the
benefits under a collective bargaining agreement should be equated with those granted by law or not, unless
there are compelling reasons otherwise, must prevail and be given effect. 12 chanrobles virtual law library
In keeping then with the intendment of the law and the agreement of the parties themselves, along with the often
repeated rule that all doubts in the interpretation and implementation of labor laws should be resolved in favor
of labor, 13 we must approximate an acceptable quantitative difference between and among the CBA agreed
work levels. We, however, do not subscribe to the labor arbiter's exacting prescription in correcting the wage
distortion. Like the majority of the members of the NLRC, we are also of the view that giving the employees an
across-the-board increase of P750 may not be conducive to the policy of encouraging "employers to grant wage
and allowance increases to their employees higher than the minimum rates of increases prescribed by statute or
administrative regulation," particularly in this case where both Republic Act 6727 and the CBA allow a credit
for voluntary compliance. As the Court, through Associate Justice Florentino Feliciano, also pointed out in
Apex Mining Company, Inc. v. NLRC: 14
. . . . (T)o compel employers simply to add on legislated increases in salaries or allowances

without regard to what is already being paid, would be to penalize employers who grant their
workers more than the statutorily prescribed minimum rates of increases. Clearly, this would be
counter-productive so far as securing the interests of labor is concerned. . . .
We find the formula suggested then by Commissioner Bonto-Perez, which has also been the standard
considered by the regional Tripartite Wages and Productivity Commission for the correction of pay scale
structures in cases of wage distortion, 15 to well be the appropriate measure to balance the respective contentions
of the parties in this instance. We also view it as being just and equitable. chanroblesvirtualawlibrary chanrobles virtual law library
WHEREFORE, finding merit in the instant petition for certiorari, the same is GRANTED DUE PROCESS, the
questioned NLRC decision is hereby SET ASIDE and the decision of the labor arbiter is REINSTATED subject
to the MODIFICATION that the wage distortion in question be corrected in accordance with the formula
expressed in the dissenting opinion of Presiding Commissioner Edna Bonto-Perez. This decision is immediately
executory.chanroblesvirtualawlibrary chanrobles virtual law library
SO ORDERED.
Bidin, Romero and Melo, JJ., concur. chanroblesvirtualawlibrary chanrobles virtual law library
Feliciano, J., is on leave.
Endnotes:
1 This provision states:
(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interests, the
Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the
assumption or certification order. . . . chanrobles virtual law library
2 Rollo, p. 35-37. chanrobles virtual law library
3 Ibid., pp. 49-50. chanrobles virtual law library
4 Ibid., pp. 55-56. chanrobles virtual law library
5 Ibid., p. 12. chanrobles virtual law library
6 Manifestation in lieu of Comment, p. 1; Rollo, p. 134. chanrobles virtual law library
7 Cardona v. NLRC, G.R. No. 89007, March 11, 1991, 195 SCRA 92. chanrobles virtual law library
8 Philippine Overseas Drilling and Oil Development Corporation v. Ministry of Labor, G.R. No. 55703, November 27, 1986, 146 SCRA 79, 88. chanrobles virtual law library
9 Artex Development Co., Inc., v. NLRC, G.R. No. 65045, July 20, 1990, 187 SCRA 611, 615; Five J Taxi v. NLRC, G.R. No. 100138, August 5, 1992,
212 SCRA 225. chanrobles virtual law library
10 This is now under Art. 124 of the Labor Code as amended by Rep. Act 6727. chanrobles virtual law library
11 Plastic Town Center Corporation v. NLRC, G.R. No. 81176, April 19, 1989, 172 SCRA 580, 585. chanrobles virtual law library
12 Filipinas Golf & Country Club, Inc. v. NLRC, G.R. No. 61918, August 23, 1989, 176 SCRA 625, 632. chanrobles virtual law library
13 International Pharmaceuticals, Inc. v. Secretary of Labor, G.R. Nos. 92981-83, January 9, 1992, 205 SCRA 59. chanrobles virtual law library
14 G.R. No. 86200, February 25, 1992, 206 SCRA 497, 501. chanrobles virtual law library
15 See: Employers Confederation of the Philippines v. National Wages and Productivity Commission, G.R. No. 96169, September 24, 1991, 201 SCRA
759, 767.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 150986 March 2, 2007
CLARK DEVELOPMENT CORPORATION, Petitioner,

vs.
MONDRAGON LEISURE AND RESORTS CORPORATION, MONDRAGON INTERNATIONAL
PHILIPPINES, INCORPORATED and MONDRAGON SECURITIES CORPORATION, Respondents.
DECISION
VELASCO, JR., J.:
For review before the Court is the September 5, 2001 Decision1 of the Court of Appeals (CA) in CA-G.R. SP
No. 58302, setting aside the Orders dated December 2, 1999 and February 8, 2000 of the Angeles City Regional
Trial Court (RTC), Branch 60, and directing the presiding judge to continue with the proceeding in Civil Case
No. 9596 entitled Mondragon and Leisure and Resorts Corporation, et al. v. Clark Development Corporation.
The Facts
Petitioner Clark Development Corporation (CDC) is a government-owned and controlled corporation existing
under and by virtue of Philippine laws. Through Republic Act No. 7227 or the "Bases Conversion and
Development Act of 1992," petitioner was authorized to develop the Clark Special Economic Zone.2 On
February 28, 1994, petitioner entered into a Lease Agreement with respondents Mondragon Leisure and Resorts
Corporation (MLRC), Mondragon International Philippines, Inc., and Mondragon Securities Corporation
(herein collectively referred to as "Mondragon"), covering the area now known as the Mimosa Leisure Estate.
The parties thereafter executed Supplemental Agreements for additional smaller areas.3 Mondragon put up
Holiday Inn Hotel, Mimosa Golf and Country Club, the North Vista Hotel, Mimosa Regency Casino, and other
facilities and amenities.4
On November 9, 1998, petitioner made a written demand on Mondragon to pay rental arrears amounting to PhP
427 million to be paid within 30 days from receipt of the demand; otherwise, the Lease Agreement would be
terminated. On December 9, 1998, Mondragon filed before the Angeles City RTC, Branch 58 an action for
specific performance with prayer for injunctive reliefs pendente lite against petitioner docketed as Civil Case
No. 9242 entitled Mondragon Leisure and Resorts Corporation, et al. v. Clark Development Corporation (First
Mondragon Case). In said case, Mondragon sought for a judicial writ for the parties’ dispute on the rental
arrearages to be submitted to arbitration. The trial court granted a temporary restraining order and later, a writ of
preliminary injunction restraining petitioner, in the interim, from terminating the Lease Agreement and taking
over the Mimosa Leisure Estate. Petitioner questioned the issuance of the injunctive reliefs pendente lite before
the CA. On March 19, 1999, the CA declared the injunctive reliefs null and void.5
From said adverse Decision, Mondragon appealed to this Court and the case was docketed as G.R. Nos.
137796-97. On June 28, 1999, the parties executed a Compromise Agreement,6 which this Court incorporated
and noted in its July 15, 1999 Resolution.7 The significant stipulations in the Compromise Agreement stated:
1. Rentals in Arrears. MLRC shall pay CDC the amount of THREE HUNDRED TWENTY FIVE
MILLION PESOS (Php325,000,000.00) by way of rentals in arrears as of June 30, 1999. MLRC shall
pay CDC in installments, without need of demand, the amount of THREE HUNDRED TWENTY FIVE
MILLION PESOS (Php325,000,000.00) on or before the following dates as follows:
July 31, 1999 P50,000,000.00

August 31, 1999 P50,000,000.00
September 31, 1999 P50,000,000.00
October 31, 1999 P50,000,000.00
November 31, 1999 P50,000,000.00
December 31, 1999 P50,000,000.00
June 30, 2000 P25,000,000.00
To secure the payment of the foregoing indebtedness of MLRC to CDC, MLRC shall open an
irrevocable domestic letter of credit in favor of CDC from a reputable commercial or universal bank
acceptable to CDC in the amount of THREE HUNDRED TWENTY FIVE MILLION PESOS
(Php325,000,000.00) and shall submit such letter of credit to CDC not later than thirty (30) days from
the signing of this Compromise Agreement at the office of CDC at Building 2127, E. Quirino Avenue
cor. C.P. Garcia Avenue, Clark Field, Pampanga.
2. Minimum Guaranteed Lease Rentals. The Minimum Guaranteed Lease Rentals as provided in the
Master Lease Agreement, the Supplemental Lease Agreements are hereby consolidated and modified as
follows:
1-Jul 1999 to 28-Feb 2000 73,333,333.33
1-Mar 2000 to 28-Feb 2001 121,000,000.008
xxxx
In case of Mondragon’s failure to comply with its obligations, Sections 7 and 8 of the Compromise Agreement
empowered petitioner to cancel and terminate the said agreement after 30 days counted from Mondragon’s
receipt of a demand from petitioner. Mondragon shall leave the leased premises and return to petitioner parcels
B, C, D, and F under the Sketch annexed to the Compromise Agreement, the parcel of land known as Wagner,
and all lands and improvements along the parade grounds, except the lands where the Mimosa Regency Casino
and Chi Restaurant were situated.9
Mondragon failed to pay for the rental arrears and to open the irrevocable domestic letter of credit. In a July 29,
1999 letter to Mondragon, petitioner demanded compliance with all its obligations under the Compromise
Agreement within 30 days from receipt of the letter. In view of Mondragon’s failure to comply, petitioner sent
another letter on August 29, 1999, informing Mondragon of the cancellation and termination of the
Compromise Agreement and demanding it to vacate all the leased premises.10
On September 10, 1999, petitioner filed a Motion for Issuance of a Writ of Execution of Judgment by
Compromise Agreement11 in Civil Case No. 9242. On October 25, 1999, petitioner then filed an Amended
Motion for the Issuance of a Writ of Execution12 for the execution of the Supreme Court’s July 15, 1999
Resolution. Mondragon opposed both motions on the ground that the issuance of a writ of execution in Civil
Case No. 9242 was not proper. Before the trial court could resolve the motion or on November 12, 1999,
Mondragon filed a Petition for Declaratory Relief and Specific Performance before the Angeles City RTC,
Branch 60, which was docketed as Civil Case No. 9596 entitled Mondragon Leisure and Resorts Corporation, et
al. v. Clark Development Corporation (Second Mondragon Case).13 Mondragon alleged in the petition that (1)
CDC’s cancellation/termination of the Compromise Agreement was null and void; (2) Mondragon had already
substantially complied with its obligations under said agreement; and (3) CDC should be ordered to perform
and comply with its obligations under the Compromise Agreement, and to implement in full the Compromise
Agreement in so far as it allowed MLRC to settle the PhP 325 million compromise rentals not later than June
30, 2000, and, for this purpose, to accept any payment tendered by Mondragon as long as such was made not
later than June 30, 2000.
On November 15, 1999, Mondragon filed before the Angeles City RTC, Branch 60 a Motion for
Consolidation,14 praying that the petition in Civil Case No. 9596 be consolidated with Civil Case No. 9242 in
Branch 58 of the said trial court. Petitioner opposed the motion and the presiding judge thereafter denied the
Motion for Consolidation. On November 28, 1999, petitioner filed a Motion to Dismiss the Petition15 (Second
Mondragon Case) alleging that (1) Mondragon was guilty of forum shopping; (2) the petition was barred by
prior judgments; and (3) the petition stated no cause of action. Mondragon reacted by opposing petitioner’s
motion.
Pending resolution of the motion to dismiss in the Second Mondragon Case, the RTC Branch 58 in Civil Case
No. 9242 (First Mondragon Case) granted the Motions for Execution in its December 1, 1999 Order.16 A writ of
execution was then issued on the same day.17 Mondragon subsequently filed a Petition for Certiorari with the
CA questioning the Writ of Execution, which was docketed as CA-G.R. No. 56079. Meanwhile, the RTC
Branch 60 dismissed the Second Mondragon Case (Civil Case No. 9596) because of forum shopping.
Mondragon filed a Motion for Reconsideration of said dismissal, which was likewise denied by the trial court.
Hence, it filed another petition with the CA, which was docketed as CA-G.R. SP No. 58302.18
The Ruling of the Court of Appeals
The CA held that the presiding judge of the Angeles City RTC, Branch 60 abused her discretion in finding
Mondragon guilty of forum shopping. The CA ruled that while there was an identity of parties in both cases,
nevertheless, the nature and causes of the actions and the reliefs prayed for in Civil Case Nos. 9242 (First
Mondragon Case) and 9596 (Second Mondragon Case) were entirely different. The CA further held, thus:
To address the issue frontally, this Court shall compare the two cases as to: (a) nature of action; (b) causes of
action; and (c) reliefs sought. As to nature of action: Civil Case No. 9242 is for Specific Performance while
Civil Case No. 9596 is for Declaratory Relief. As to causes of action: In Civil Case No. 9242, Mondragon’s
cause of action against [petitioner] CDC was the alleged improper or unlawful termination of the Lease
Agreements and its refusal to submit their dispute to arbitration, while in Civil Case No. 9596, Mondragon’s
causes of action are the alleged (a) refusal of CDC to accept that Mondragon’s monetary obligation under the
Compromise Agreement were already substantially extinguished as a consequence of its turning over to CDC
the High School Wagner Site; and (b) CDC’s unlawful insistence that Mondragon’s failure to secure a letter of
credit within the period stipulated (which is a mere technicality) justified the termination of the Compromise
Agreement.
As to reliefs prayed for: In Civil Case No. 9242, Mondragon asked the court to order CDC to submit to the
stipulated Dispute Settlement under Art. XI of the Lease Agreement and if this fails, to submit the case for
arbitration. In Civil Case No. 9596, Mondragon prayed the court (a) to nullify CDC’s cancellation of the
Compromise Agreement and affirms [sic] Mondragon’s substantial compliance of its obligations thereunder; (b)
to direct CDC to allow Mondragon to settle its ₧325 million obligation not later than June 30, 2000; and (c) to
order CDC to pay Mondragon ₧1 million attorney’s fees.
It is too obvious that the nature of the action, the causes of action and reliefs prayed for in Civil Case No. 9242
and Civil Case No. 9596 are entirely different. CDC may believe that Civil Case No. 9596 is utterly
unmeritorious and intended only to impede the execution of the Compromise Agreement as embodied in the
Supreme Court Decision, but that is no reason to charge Mondragon with forum shopping.19
The CA however denied petitioner’s Motion for Reconsideration in its November 28, 2001 Resolution.20 Hence,
we have this petition.
The Issue
WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT RULED THAT THERE WAS NO
FORUM SHOPPING AND ALLOWED CONTINUANCE OF CIVIL CASE NO. [9596] WHEN IN FACT
RES JUDICATA HAD ALREADY SET IN AND ANY MATTER/CASE RAISED/FILED RELATING
THERETO IS FORUM SHOPPING
The Court’s Ruling
The petition is meritorious.
We defined forum shopping as the "institution of two (2) or more actions or proceedings grounded on the same
cause on the supposition that one or the other court would make a favorable disposition" or "the act of a party
against whom an adverse judgment has been rendered in one forum, of seeking another (and possibly favorable)
opinion in another forum other than by appeal or the special civil action of certiorari."21 In First Philippine
International Bank v. Court of Appeals,22 we held that the test to determine whether forum shopping exists is
whether the elements of litis pendencia are present or where a final judgment in one case will amount to res
judicata in the other. Res judicata means a matter or thing adjudged, judicially acted upon or decided, or settled
by judgment. Its requisites are: (1) the former judgment or order must be final; (2) the judgment or order must
be one on the merits; (3) it must have been rendered by a court having jurisdiction over the subject matter and
parties; and (4) between the first and second actions, there must be identity of parties, subject matter, and causes
of action.23 Thus, in First Philippine International Bank, we explained further:
Consequently, where a litigant (or one representing the same interest or person) sues the same party against
whom another action or actions for the alleged violation of the same right and the enforcement of the same
relief is/are still pending, the defense of litis pendencia in one case is a bar to the others; and, a final judgment
in one would constitute res judicata and thus would cause the dismissal of the rest. In either case, forum
shopping could be cited by the other party as a ground to ask for summary dismissal of the two (or more)
complaints or petitions, and for the imposition of the other sanctions, which are direct contempt of court,
criminal prosecution, and disciplinary action against the erring lawyer.24
We further held in First Philippine International Bank that "the filing by a party of two apparently different
actions, but with the same objective, constituted forum shopping."25 The Court discussed this species of forum
shopping as follows:
Very simply stated, the original complaint in the court a quo which gave rise to the instant petition was filed by
the buyer (herein private respondent and his predecessors-in-interest) against the seller (herein petitioners) to
enforce the alleged perfected sale of real estate. On the other hand, the complaint in the Second Case seeks to
declare such purported sale involving the same real property "as unenforceable as against the Bank", which is
the petitioner herein. In other words, in the Second Case, the majority stockholders, in representation of the
Bank, are seeking to accomplish what the Bank itself failed to do in the original case in the trial court. In brief,
the objective or the relief being sought, though worded differently, is the same, namely, to enable the petitioner
Bank to escape from the obligation to sell the property to respondent (emphasis supplied).26
In Danville Maritime, Inc. v. Commission on Audit, one of the bases of First Philippine International Bank, we
ruled as follows:
In the attempt to make the two actions appear to be different, petitioner impleaded different respondents therein
– PNOC in the case before the lower court and the COA in the case before this Court and sought what seems to
be different reliefs. Petitioner asks this Court to set aside the questioned letter-directive of the COA dated
October 10, 1988 and to direct said body to approve the Memorandum of Agreement entered into by and
between the PNOC and petitioner, while in the complaint before the lower court petitioner seeks to enjoin the
PNOC from conducting a rebidding and from selling to other parties the vessel "T/T Andres Bonifacio," and for
an extension of time for it to comply with the paragraph 1 of the memorandum of agreement and damages. One
can see that although the relief prayed for in the two (2) actions are ostensibly different, the ultimate objective
in both actions is the same, that is, the approval of the sale of vessel in favor of petitioner, and to overturn the
letter directive of the COA of October 10, 1988 disapproving the sale (emphasis supplied).27
In the case at bar, there is no question that the first requirement of identity of parties was met. As regards the
rights asserted and reliefs sought, we depart from the findings of the CA and hold that there existed an identity
of causes of action and reliefs based on the "same objective" standard enunciated in the aforecited cases.
Mondragon had only one objective in filing the two cases, that is, the perpetuation of its lease. In Civil Case No.
9242, Mondragon tried to prevent the termination of the Lease Agreement, while in Civil Case No. 9596, it tried
to prevent the termination of the Compromise Agreement. While they differ in nomenclature and specific
provisions, the subject of the two agreements was the same—the lease over the Mimosa Leisure Estate.
Mondragon’s cause of action against petitioner CDC, in essence, was the latter’s alleged premature termination
of the lease over the Mimosa Leisure Estate. The ultimate relief sought by Mondragon from the courts, on the
other hand, is to be allowed to continue the lease. Without doubt, Mondragon’s objectives in filing the two civil
cases were the same, that is, to continue its lease over the Mimosa Leisure Estate.
Mondragon believes that Civil Case No. 9242 (First Mondragon Case) covered a subject matter and cause of
action distinct from Civil Case No. 9596 (Second Mondragon Case).
We disagree.
The Compromise Agreement between petitioner and Mondragon supplanted the Lease Agreement. By entering
into a compromise, the parties decided to set aside the Lease Agreement in favor of terms and conditions more
acceptable to both. They had also waived any issues arising from the Lease Agreement. Thus, in the July 15,
1999 Resolution, the Court incorporated the Compromise Agreement and stated:
[I]t is apparent that the parties have managed to resolve the dispute among themselves, the only thing left being
to put our judicial imprimatur on the compromise agreement, in accordance with Article 2037 of the Civil Code.
ACCORDINGLY, the Compromise Agreement dated June 28, 1999 executed by Mondragon and CDC, not
being contrary to law, morals, good customs, and public order and public policy is hereby NOTED and the
petition is DISMISSED.
SO ORDERED.28
This judgment by compromise already became final and executory and should be complied with any other
judgment, as it stands as the judgment in Civil Case No. 9242. Therefore, Mondragon cannot seriously claim
that Civil Case No. 9242 does not encompass the Compromise Agreement. Furthermore, since any issue
regarding the lease of the Mimosa Leisure Estate was already amicably settled by the parties through the
execution of the Compromise Agreement, Civil Case No. 9596 was already barred by prior judgment, that is,
the judgment by compromise in Civil Case No. 9242.
Mondragon had the opportunity to oppose petitioner’s Motion for Issuance of a Writ of Execution of Judgment
by Compromise Agreement in Civil Case No. 9242 pending before the Angeles City RTC, Branch 58.
However, without waiting for the trial court’s resolution on the motion and opposition, Mondragon filed Civil
Case No. 9596 before the RTC Branch 60. This was clearly an attempt to prevent the RTC Branch 58 in the
First Mondragon Case from ordering the execution of the judgment on the Compromise Agreement by
obtaining a favorable judgment from the RTC Branch 60. Moreover, Mondragon’s Petition for Declaratory
Relief and Specific Performance (Civil Case No. 9596) merely reiterated the grounds cited in its opposition to
CDC’s motion for execution in the First Mondragon Case (Civil Case No. 9242). In filing the second civil case,
Mondragon’s objective was the same as the first civil action—to perpetuate its lease over the Mimosa Leisure
Estate. To achieve this objective, and assuming that Mondragon had meritorious grounds against the execution
filed by petitioner, Mondragon had sufficient remedies in law to question the writ of execution issued by the
RTC Branch 58. Mondragon indeed questioned the writ of execution before the CA which was docketed as CA-
G.R. No. 56079.
In the end, the decisive test in forum shopping is the possible vexation caused to the courts and litigants by the
filing of actions based on the same or related issues in different fora. We held that:
Ultimately, what is truly important to consider in determining whether forum-shopping exists or not is the
vexation caused the courts and parties-litigant by a party who asks different courts and/or administrative
agencies to rule on the same or related causes and/or to grant the same or substantially the same reliefs, in the
process creating the possibility of conflicting decisions being rendered by the different fora upon the same
issue. x x x29
The vexation to the courts in this case is evident. There is a high risk of conflict between the decisions of the
RTC Branches 58 and 60 regarding their respective civil cases. A decision by one branch of court will
constitute res judicata in the other case pending before the other branch of court. Alternatively, if the RTC
Branch 60 exercised its jurisdiction over the petition for declaratory relief, then it would have to restrain the
execution proceedings in the RTC Branch 58. Thus, interference with the proceedings in another court would
ensue. Under the doctrine of non-interference, "a trial court has no authority to interfere with the proceedings of
a court of equal jurisdiction, much less to annul the final judgment of a co-equal court."30 In Paper Industries
Corporation of the Philippines v. Intermediate Appellate Court, we declared that a court has no jurisdiction to
restrain the execution proceedings in another court with concurrent jurisdiction.31
The consolidation of the two civil cases is also not possible in line with the doctrine on non-interference. As
observed by the CA:
In the matter of the consolidation of the two cases, Mondragon should be reminded that the same is addressed to
the sound discretion of the courts. Neither of the judges in the two cases can impose upon the other the
consolidation of the cases. Additionally, consolidation is no longer practicable because Civil Case No. 9242 is
already terminated and is in the execution stage, while in Civil Case No. 9596, the issues have not even been
joined.32
Furthermore, if Civil Case No. 9596 was allowed to continue, the basic purpose of compromise agreements
would be defeated. As defined by the Civil Code:
Art. 2028. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation
or put an end to one already commenced.
Art. 2037. A compromise has upon the parties the effect and authority of res judicata, but there shall be no
execution except in compliance with a judicial compromise.
Thus, in Genova v. De Castro, we held that:
A compromise is an agreement between two or more persons who, for preventing or putting an end to a lawsuit,
adjust their respective positions by mutual consent in the way they feel they can live with. Reciprocal
concessions are the very heart and life of every compromise agreement, where each party approximates and
concedes in the hope of gaining balance by the danger of losing. It is, in essence, a contract.
A compromise is binding and has the force of law between the parties, unless the consent of a party is vitiated—
such as by mistake, fraud, violence, intimidation or undue influence—or when there is forgery, or if the terms of
the settlement are so palpably unconscionable.33
Certainly, a compromise agreement becomes the law between the parties and will not be set aside other than the
grounds mentioned above. In Ramnani v. Court of Appeals, we held that the main purpose of a compromise
agreement is to put an end to litigation because of the uncertainty that may arise from it. Once the compromise
is perfected, the parties are bound to abide by it in good faith.34 Should a party fail or refuse to comply with the
terms of a compromise or amicable settlement, the other party could either enforce the compromise by a writ of
execution or regard it as rescinded and so insist upon his/her original demand.35
Instead of ending litigation, Mondragon had effectively prolonged the legal battle by filing the second civil
case. Considering the investments involved, it is also likely that the parties would unceasingly appeal any
judgment/s from the trial and even appellate courts, as the case now exemplifies. The vexation to the courts is
already apparent, and the delay from litigating two civil cases is inevitable. Indeed, "[p]rolonging a litigation is
anathema to [the purpose of] a compromise agreement."36
Forum shopping is contumacious, as well as an act of malpractice that is proscribed and condemned as trifling
with the courts and abusive of their processes. It warrants prosecution for contempt of court and summary
dismissal of the actions involved, without prejudice to appropriate administrative sanction against the counsel.37
In this case, only Civil Case No. 9596 is left to be dismissed considering that a judgment by compromise was
already rendered in Civil Case No. 9242 through the Court’s July 15, 1999 Resolution. This judgment was
already executory; and the RTC Branch 58 had indeed issued a writ of execution against Mondragon.
WHEREFORE, the September 5, 2001 Decision of the CA is REVERSED and SET ASIDE. Civil Case No.
9596 pending before the Angeles City RTC, Branch 60 is DISMISSED with PREJUDICE. Respondents and
their counsel, Atty. Ernesto B. Francisco, Jr., are ordered to SHOW CAUSE, within ten (10) days from notice
of this judgment, why they should not be held in contempt for violation of the rule against forum shopping.
Costs against the respondents.
SO ORDERED.

Associate Justice
WE CONCUR:
Associate Justice
Chairperson
ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Asscociate Justice
DANTE O. TINGA
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court’s Division.
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify
that the conclusions in the above Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
Footnotes
1
Rollo, pp. 28-37. The Decision was penned by Associate Justice Hilarion L. Aquino and concurred in
by Associate Justices Jose L. Sabio, Jr. and Cancio C. Garcia, who is now a member of this Court.
2
Id. at 11. The pertinent section of R.A. No. 7227 provides:
SEC. 15. Clark and other Special Economic Zones.—Subject to the concurrence by resolution of
the local government units directly affected, the President is hereby authorized to create by
executive proclamation a Special Economic Zone covering the lands occupied by the Clark
military reservations and the contiguous extensions as embraced x x x
3
Id. at 248-265.
4
Id. at 30.
5
Id.
6
Id. at 369-375.
7
Mondragon Leisure and Resorts Corp. v. Court of Appeals, G.R. No. 137796, July 15, 1999, 310
SCRA 367.
8
Id. at 370-371.
9
Id. at 372-373.
10
Rollo, pp. 31-32.
11
Id. at 67-71.
12
Id. at 72-79.
13
Id. at 80-92.
14
Id. at 105-106.
15
Id. at 107-117.
16
Id. at 50-64.
17
Id. at 65-66.
18
Id. at 33.
19
Id. at 35-36.
20
Id. at 39.
21
Gatmaytan v. Court of Appeals, G.R. No. 123332, February 3, 1997, 267 SCRA 487, 500; citing
Ortigas & Company Limited Partnership v. Velasco, G.R. Nos. 109645 & 112564, July 25, 1994, 234
SCRA 455, 500.
22
G.R. No. 115849, January 24, 1996, 252 SCRA 259, 283; citation omitted.
23
Manalo v. Court of Appeals, G.R. No. 124204, April 20, 2001, 357 SCRA 112, 120.
24
Supra note 22, at 284.
25
Id. at 285.
26
Id. at 284-285.
27
G.R. Nos. 85285 & 87150, July 28, 1989, 175 SCRA 701, 716-717.
28
Supra note 7, at 376.
29
Supra note 22, at 289-290.
30
Foster-Gallego v. Galang, G.R. No. 130228, July 27, 2004, 435 SCRA 275, 289; citations omitted.
31
G.R. No. L-71365, June 18, 1987, 151 SCRA 161, 167-169.
32
Supra note 1, at 36-37.
33
G.R. Nos. 132076 & 140989, July 22, 2003, 407 SCRA 165, 172-173; citations omitted.
34
G.R. Nos. 85494, 85496, & 195071, July 10, 2001, 360 SCRA 645, 654.
35
Civil Code, Art. 2041.
36
Supra note 34.
37
Ortigas & Company Limited Partnership v. Velasco, supra note 21.
Republic of the Philipppines

SUPREME COURT
Manila
THIRD DIVISION
[G.R. No. 137796. July 15, 1999]
MONDRAGON LEISURE AND RESORTS CORPORATION, MONDRAGON INTERNATIONAL

PHILIPPINES, INC. AND MONDRAGON SECURITIES, INC. petitioners, vs. COURT OF APPEALS
and CLARK DEVELOPMENT CORPORATION. Respondents.
RESOLUTION
ROMERO, J.: chanroblesvirtualawlibrary
On March 25, 1999, the Mondragon Leisure and Resorts Corporation (hereafter referred to as Mondragon) filed
a petition for review on certiorari under Rule 45 with this Court. Said petition sought the reversal of the
decision of the Court of Appeals dated March 19, 1999 setting aside (1) the temporary restraining orders dated
December 15 and 16, 1998 issued by Judge Yturralde in Civil Case No. 9242; and (2) the restraining orders
dated December 15, December 22, 1998 and January 4, 1999, as well as the order to comment, issued by Judge
Viola in Civil Case 8970. chanroblesvirtualawlibrary
Mondragon is the lessee of a 152.25 has. area in what used to be Clark Air Base, having leased the same from
private respondent Clark Development Corporation (hereafter CDC) for a period of fifty years. Due to alleged
violations by Mondragon of the lease agreement it had with CDC, specifically, over what CDC claims to be
Mondragons non-payment of the proper rent over the leased property, the latter sought to eject the former from
the premises. In the course of the dispute, personnel of the Philippine National Police set up barricades around
the Mimosa Regency Casino, one of the establishments operated by Mondragon in the leased area. chanroblesvirtualawlibrary
In order to prevent its ejectment, Mondragon filed a complaint with the Regional Trial Court of Angeles City,
docketed therein as Civil Case No. 9242. The complaint, which prayed for a temporary restraining order, was
raffled off to the sala of Judge Yturralde. Said judge granted the prayer for a restraining order. chanroblesvirtualawlibrary
In the interim, the Philippine Amusement and Gaming Corporation (hereafter PAGCOR) likewise threatened to
revoke Mondragons authority to operate the Mimosa Regency Casino. Mondragon was, thus, constrained to file
a complaint with the Regional Trial Court of Angeles City to restrain PAGCOR from revoking its license to
operate a casino. The complaint, docketed as Civil Case No. 8970, was raffled off to the sala of Judge Viola,
who issued a restraining order, not only against PAGCOR, but also against CDC. chanroblesvirtualawlibrary
Aggrieved by the issuance of these restraining orders, CDC brought the matter to the Court of Appeals. On
March 19, 1999, the appellate court set aside said restraining orders, prompting Mondragon to appeal to this
Court. Subsequent to Mondragons filing of the present petition, the Court deputized the Philippine National
Police, who were still deployed around the area, to prevent persons from entering or leaving the premises of the
casino. chanroblesvirtualawlibrary
On May 13, 1999, CDC filed a manifestation with the Court stating that they were willing to negotiate with
Mondragon for the possible amicable settlement of the case. On May 17, 1999, Mondragon responded thereto
by filing a manifestation stating their sincere desire to have the case amicably settled. In view of this
development, the Court issued a resolution, dated May 18, 1999, granting the parties a non-extendible period of
twenty days within which to submit an amicable settlement. chanroblesvirtualawlibrary
On June 28, 1999, the parties submitted a joint manifestation and motion to this Court stating that the parties
had reached an amicable settlement, as embodied in a Compromise Agreement executed by the parties on even
date, as follows: chanroblesvirtualawlibrary
COMPROMISE AGREEMENT chanroblesvirtualawlibrary
This Compromise Agreement executed by and between chanroblesvirtualawlibrary
CLARK DEVELOPMENT CORPORATION, and corporation duly organized and existing under Philippine
laws with principal office address at Building 2127, E. Quirino Avenue cor. C.P. Garcia Avenue, Clark Field,
Pampanga, represented herein by its President and Chief Executive Officer, RUFO COLAYCO (hereafter,
CDC); chanroblesvirtualawlibrary
and chanroblesvirtualawlibrary
MONDRAGON LEISURE AND RESORTS CORPORATION, a corporation duly organized and existing
under Philippine laws and with principal office address at Mimosa Leisure Estate, Clark Field, Pampanga,
represented herein by its Chairman of the Board and Chief Executive Officer, JOSE ANTONIO U.
GONZALEZ (hereafter, MLRC); chanroblesvirtualawlibrary
Witnesseth that- chanroblesvirtualawlibrary
WHEREAS, CDC and MLRC are presently involved in judicial disputes which are now pending before the
Regional Trial Court in Angeles City, Branch 58, entitled Mondragon Leisure and Resorts Corporation, et al.
vs. Clark Development Corporation, docketed as Civil Case No. 9242, and the Supreme Court entitled
Mondragon Leisure Resorts Corporation, et al. vs. Clark Development Corporation, docketed as G.R. No.
137796-97; chanroblesvirtualawlibrary
WHEREAS, the Supreme Court, in its Resolution dated May 18, 1999, required MLRC and CDC to submit an
amicable settlement within twenty (20) days from receipt thereof; chanroblesvirtualawlibrary
WHEREAS, on June 24, 1999, the parties entered into an Agreement to submit their disputes to a Board of
Arbitrators;
chanroblesvirtualawlibrary
WHEREAS, in the proceedings before the Board of Arbitrators on June 26, 1999 after the parties had presented
their position papers and fully and freely ventilated their respective submissions and arguments concerning the
issues a Compromise Agreement was eventually reached through the mediation of the Arbitrators, resolving the
disputes to the parties mutual satisfaction. chanroblesvirtualawlibrary
NOW THEREFORE, for and in consideration of the foregoing premises, the parties hereby agree that: chanroblesvirtualawlibrary
1. Rentals in Arrears. MLRC shall pay CDC the amount of THREE HUNDRED TWENTY FIVE MILLION
PESOS (Php 325,000,000.00) by way of rentals in arrears as of June 30, 1999. MLRC shall pay CDC in
installments, without need of demand, the amount of THREE HUNDRED TWENTY FIVE MILLION PESOS
(Php 325,000.000.00) on or before the following dates as follows: chanroblesvirtualawlibrary
July 31, 1999 Php 50,000,000.00 chanroblesvirtualawlibrary
August 31, 1999 Php 50,000,000.00 chanroblesvirtualawlibrary
September 31, 1999 Php 50,000,000.00 chanroblesvirtualawlibrary
October 31, 1999 Php 50,000,000.00 chanroblesvirtualawlibrary
November 31, 1999 Php 50,000,000.00 chanroblesvirtualawlibrary
December 31, 1999 Php 50,000,000.00 chanroblesvirtualawlibrary
June 30, 2000 Php 25,000,000.00 chanroblesvirtualawlibrary
To secure the payment of the foregoing indebtedness of MLRC to CDC, MLRC shall open an irrevocable
domestic letter of credit in favor of CDC from a reputable commercial or universal bank acceptable to CDC in
the amount of THREE HUNDRED TWENTY FIVE MILLION PESOS (Php 325,000,000.00) and shall submit
such letter of credit to CDC not later than thirty (30) days from the signing of this Compromise Agreement at
the office of CDC at Building 2127, E. Quirino Avenue cor. C.P. Garcia Avenue, Clark Field, Pampanga. chanroblesvirtualawlibrary
2. Minimum Guaranteed Lease Rentals. The Minimum guaranteed Lease Rentals as provided in the Master
Lease Agreement, the Supplemental Lease Agreements and other Lease Agreements are hereby consolidated
and modified as follows: chanroblesvirtualawlibrary
1-Jul 1999 to 28-Feb 2000 73,333,333.33 chanroblesvirtualawlibrary
1-Mar 2000 to 28-Feb 2001 121,000,000.00 chanroblesvirtualawlibrary

1-Mar 2015 to 28-Feb 2016 500, 862,498.63 chanroblesvirtualawlibrary
1-Mar 2023 to 28-Feb. 2024 1,035,217,176.17 chanroblesvirtualawlibrary
1-Mar 2024 to 28-Feb 2025 1,133,562,807.91 chanroblesvirtualawlibrary

3. Comparison of MGLR and PGR. The parties shall compare the Percentage of Gross Revenues (PGR)
derived by MLRC from its operations, and the Minimum Guaranteed Lease Rentals (MGLR), to determine
whether such PGR is higher or lower than the MGLR set forth above, as provided for in the Master Lease
Agreement, Supplemental Lease Agreements and other Lease Agreements. The amount of rental due to CDC is
the higher of the MGLR or PGR. The comparison of the PGR and MLGR shall be done on a monthly basis at
MLRCs offices, starting on or before July 31, 1999. For such purpose, MLRC agrees to allow CDC or its
authorized representatives to inspect all records, books of accounts and other accounting papers necessary for
such comparison. Reconciliation of the MGLR and PGR for the purpose of determining which is higher for the
year and making the necessary adjustments, shall be done by accounting representatives of each party not later
than May 31 of the succeeding year using the audited financial statements of MLRC prepared by a reputable
accounting firm acceptable to CDC. chanroblesvirtualawlibrary
4. Computation of PGR. The gross revenues of all business activities within the Leased properties, including
sub-leases and subsidiaries (within the Leased Properties), shall be included in the computation of the PGR;
provided that the gross revenues of the casino operations shall be determined in accordance with the next
succeeding paragraph. chanroblesvirtualawlibrary
5. Revenues from Casino Operations. In the determination of the PGR for the casino operations within the
Mimosa Leisure Estate, the formula being used by the Philippine Amusement and Gaming Corporation
(PAGCOR) in the determination of casino gross revenues as defined under Article I of the existing Agreement
dated July 27, 1995 between MLRC and PAGCOR shall apply. chanroblesvirtualawlibrary
6. Sub-leases. Sub-leases shall be allowed by CDC in the Leased Properties provided that MLRC shall remit to
CDC the amount equivalent to twenty (20%) percent of the excess of the rental income received by MLRC from
sub-leases over the PGR. chanroblesvirtualawlibrary
7. Compliance. The parties agree that upon the failure of MLRC to pay any monthly rental based on either the
MGLR or PGR, or upon MLRCs failure to comply with any of its obligations under this Compromise
Agreement, upon MLRCs receipt of CDCs demand and after the expiration of thirty (30) day period from such
receipt of demand without MLRCs complying with said obligation(s), CDC shall have the right to cancel and
terminate this Compromise Agreement upon which MLRC shall leave, abandon any and all premises leased to
MLRC by CDC under the Master Lease Agreement, the Supplemental Lease Agreements and other Lease
Agreements as modified by this Compromise Agreement. chanroblesvirtualawlibrary
8. Return of Certain Leased Properties. MLRC shall return to CDC the following leased properties under the
Master Lease Agreement, Supplemental Lease Agreements and other Lease Agreements: chanroblesvirtualawlibrary
-The parcels of land identified as B,C,D and F under the map/sketch attached as Annex A hereof and duly
signed by the parties counsels and representatives; chanroblesvirtualawlibrary
-The parcel of land commonly known as Wagner under the Lease Agreement dated August 1, 1996 and the
existing improvements thereon; chanroblesvirtualawlibrary
-All lands and improvements along the parade grounds, except the lands where the Mimosa Regency Casino
and Chi Restaurant are situated, as shown in the shaded/colored portions marked as nos. 2077, 2052, 2054, 2055
and 2056 of the sketch/map attached hereto as Annex B and duly signed by the parties representatives and
counsels; provided that CDC shall allocate the vacant lot next to the Chi Restaurant to the Office of the
President of the Philippines; chanroblesvirtualawlibrary
Any future design, development or improvements on the areas at the back of the Casino and Chi Restaurant
premises facing the parade grounds shall be subject to the approval of CDC. chanroblesvirtualawlibrary
9. Notice to MLRC. CDC shall immediately inform MLRC of any offer involving any and all of the properties
identified as B, C, D and F of Annex A, without having to disclose the nature of the offer. chanroblesvirtualawlibrary
10. Construction of the Water Park. Within six (6) months from the acceptance of the irrevocable domestic
Letter of Credit by CDC, MLRC, without need of demand, shall complete the design and financing of the Water
Park and submit such design to CDC. The actual construction of the Water Park based on such design shall
commence within six (6) months thereafter. The Water Park shall be constructed, completed and operational
within Twenty Four (24) months from the said acceptance of the Letter of Credit, without need of demand. For
purposes of this Agreement, a month shall mean thirty (30) consecutive days. chanroblesvirtualawlibrary
11. Construction of the Additional Hotel. Within Twelve (12) months from the acceptance of the Letter of
Credit, MLRC shall complete the design and financing of one (1) de luxe hotel as provided in Article I, Section
1 of the Master Lease Agreement and submit such design to CDC. The construction of such de luxe hotel shall
be completed and the hotel shall be operational within Thirty-six (36) months from the said acceptance of the
Letter of Credit.
chanroblesvirtualawlibrary
12. Additional Casinos. CDC agrees that MLRC may construct and establish additional casinos within the
Leased Properties, subject to approval by the appropriate government agencies, including CDC, obtained in
writing. Such approval shall not be unreasonably withheld by CDC. chanroblesvirtualawlibrary
13. Water Rights. CDC reserves the right to promulgate such reasonable rules and regulations to govern the
utilization of water inside the Clark Special Economic Zone, including the deep wells already constructed by
MLRC, which may include but shall not be limited to the imposition of such reasonable fees for water
consumption, which rules and regulations shall apply to all locators including MLRC. chanroblesvirtualawlibrary
14. Interpretation. This Compromise Agreement shall modify and amend the Master Lease Agreement,
Supplemental Lease Agreements and other Lease Agreements previously entered into by the parties. All other
provisions of the Master Lease Agreement, Supplemental Lease Agreements and other Lease Agreements are
not otherwise inconsistent with the provisions of this Compromise Agreement, shall remain valid, binding and
enforceable on the parties herein. In the event of any conflict or inconsistency between the provisons of the
Master Lease Agreement, Supplemental Lease Agreements and other Lease Agreements and this compromise
Agreement, the terms and conditions of this Compromise Agreement shall prevail and supersede the provisions
of the Master Lease Agreement, Supplemental Lease Agreements and other Lease Agreements. chanroblesvirtualawlibrary
15. Quitclaim. The parties hereto, including all its directors, officers, and employees hereby waive, remise,
abandon, and forever discharge any and all rights; interest(s), claim(s), demands for damages, or cause(s) of
action whatsoever in law, which directly or indirectly stemmed from any acts or ommissions of the other, its
officers, directors, employees, agents or representatives, including but not limited to (a) the filing of any action
before any court or administrative body in the Philippines, such as Civil Case No. 9242 and the G.R. No. L-
137796-97; (b) the termination/cancellation of any contract or agreement between the parties; (c) the stoppage
of or constraint placed by either party on any business operations or activities of the other party its officers,
directors, employees, agents or representatives; (d) the closure of the Mimosa Regency Casino; (e) any damage
which either party may have incurred as a result of actions taken by any third party including banks and
financial institutions. chanroblesvirtualawlibrary
16. Liabilities to PAGCOR and BIR. MLRC undertakes to settle its liabilities to PAGCOR and the Bureau of
Internal Revenue (BIR) within thirty (30) days from the signing of this Compromise Agreement. chanroblesvirtualawlibrary
17. Privileges and Permits. Immediately upon the signing of this Compromise Agreement, MLRC shall be fully
restored to all its rights and privileges as a locator in the Clark Special Economic Zone, except those related to
the operations of the Mimosa Regency Casino. chanroblesvirtualawlibrary
18. Opening of the Casino. Immediately upon receipt of the irrevocable domestic Letter of Credit by CDC,
MLRC may re-open and resume normal operations of the Mimosa Regency Casino and it (MLRC) shall have
full access to, and disposition of, its premises and facilities consistent with this Compromise Agreement. CDC
shall not interpose any objection to MLRCs plan to reopen and resume normal operations as may be allowed by
the Philippine legal processes. chanroblesvirtualawlibrary
19. Joint Motion for Casino Clean-up and Maintenance. The parties shall jointly move for the Supreme Court
to allow CDC and MLRC personnel, not exceeding twenty-five (25) personnel each, to conduct a general clean-
up and maintenance of the casino premises. For this purpose, CDC and MLRC shall designate their respective
responsible officers to supervise the general clean-up and maintenance activities. chanroblesvirtualawlibrary
20. Withdrawal of Pending Cases. Upon receipt of the irrevocable Letter of Credit by CDC, the parties shall
jointly move for the dismissal of all pending cases, with prejudice. chanroblesvirtualawlibrary
IN WITNESS WHEREOF, the parties, assisted by their respective counsels, together with the members of the
Board of Arbitrators hereby set their hand this 28th day of June 1999 at Malacaang Palace, Manila. chanroblesvirtualawlibrary
From the foregoing, it is apparent that the parties have managed to resolve the dispute among themselves, the
only thing left being to put our judicial imprimatur on the compromise agreement, in accordance with Article
2037[1] of the Civil Code. chanroblesvirtualawlibrary
ACCORDINGLY, the Compromise Agreement dated June 28, 1999 executed by Mondragon and CDC, not
being contrary to law, morals, good customs, and public order and public policy is hereby NOTED and the
petition is DISMISSED. chanroblesvirtualawlibrary
SO ORDERED. chanroblesvirtualawlibrary
Vitug, Panganiban, Purisima, and Gonzaga-Reyes, JJ., concur.

SUPREME COURT
Manila
FIRST DIVISION
THE OMBUDSMAN, FACT-FINDING AND G.R. No. 167828

INTELLIGENCE BUREAU, Office of the
Ombudsman, and PRELIMINARY
INVESTIGATION AND ADMINISTRATIVE
ADJUDICATION BUREAU, Office of the Present:
Ombudsman,
Petitioners,
PUNO, C.J., Chairperson,
SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
- versus -
GARCIA, JJ.
NESTOR S. VALEROSO, Promulgated:
Respondent.
April 2, 2007
x-----------------------------------------------------------------------------------------x
DECISION
GARCIA, J.:
cralawAssailed and sought to be set aside in this petition for review under Rule 45 of the Rules of Court are the following
issuances of the Court of Appeals (CA) in CA-G.R. SP No. 84641,to wit:
1. Decision dated December 16, 2004 annulling and setting aside petitioner
Ombudsman's Order of June 10, 2004, which placed respondent Nestor S. Valeroso under
preventive suspension for six (6) months without pay; and
2. Resolution dated April 13, 2005 denying petitioners' motion for

reconsideration.
cralawThe facts may be briefly stated as follows:

cralawOn 16 January 2004, the Fact-Finding and Intelligence Bureau of the Office of the Ombudsman (OMB) lodged with
OMBs Preliminary Investigation and Administrative Adjudication Bureau-B (PIAAB-B) a complaintwith prayer for
preventive suspension against respondent Nestor S. Valeroso in effect charging him criminally with Perjury and
administratively with Dishonesty, Falsification of Official Documents and Conduct Prejudicial to the Best Interest of the
Service.
cralawIt was alleged in said complaint that respondent, then occupying the position of Director II at the Bureau of Internal
Revenue, failed to disclose his ownership of several properties, as well as certain business interests of his wife, in his
sworn Statements of Assets, Liabilities and Net Worth (SALN) from 1995 to 2002, in violation of Republic Act (R.A.)
No. 6713, otherwise known as the Code of Conduct and Ethical Standards for Public Officials and Employees.
cralawIn an Order dated 19 February 2004, the PIAAB-B, by authority of the Ombudsman, directed Valeroso to submit his
counter-affidavit. He subsequently did so, and followed it with a supplement thereto. Denying the allegations in the
complaint that he had failed to disclose his ownership of the properties listed therein, as well as certain business interests
of his wife, Valeroso prayed for the dismissal of the charges and the denial of the prayer for his preventive suspension.
cralawFinding the existence of a strong indicia of guilt on the part [of Valeroso] for administrative offense of Dishonesty,
and an unexplained increase in his net worth, the Ombudsman, in an Order dated 10 June 2004, placed respondent under
preventive suspension for a period of six (6) months without pay.
cralawOn 17 June 2004, respondent filed with the CA a petition for certiorari and prohibition, with a prayer for preliminary
injunction and/or temporary restraining order, thereat docketed as CA-G.R. SP No. 84641, seeking to nullify the
preventive suspension order against him. Respondent alleged in his petition that the element of strong evidence of guilt
was lacking. He also claimed lack of due process since his right to be informed of the nature of the charges against him
was allegedly denied when the Ombudsman changed the basis of the complaint.
cralawIn its resolution of 02 July 2004, the appellate court initially dismissed CA-G.R. SP No. 84641 on the ground of
prematurity and for being the wrong remedy. The appellate court, however, would later change its mind. Thus, in its
Resolution of 21 July 2004, the CA granted respondent Valeroso's motion for reconsideration and thus reinstated his
certiorari petition and even issued a temporary restraining order enjoining the petitioners from implementing the
preventive suspension order above adverted to.
cralawUltimately, in the herein assailed decision of 16 December 2004, the CA, finding that grave abuse of discretion
tainted the issuance of the preventive suspension orderin question, granted respondents petition and accordingly annulled
and set aside the said order of preventive suspension, to wit:
WHEREFORE, in the light of the foregoing, the extant Petition is GRANTED.
The Order of the Ombudsman, placing the petitioner (now respondent) under preventive
cralaw
suspension for six (6) months without pay, having been issued with grave abuse of discretion is
hereby ANNULLED and SET ASIDE.
cralaw No pronouncement as to costs.
cralaw SO ORDERED.
Explains the CA in its decision:
cralaw
In the present case, it is clear from the recital of the Complaint and the summary thereof as
cralaw
contained in the assailed Order that the charge was only for the alleged failure to disclose certain
properties and not for unexplained wealth or increase in net worth. Consequently, and in view of
the above-mentioned rule, [petitioner] Ombudsman could not just arbitrarily expand the original
charge of Dishonesty for failure to declare certain assets to Dishonesty for unexplained wealth or
unexplainable increase in net worth.
Secondly, We do not agree with the [petitioner] Ombudsman that the [respondent] was well
cralaw
aware that the charge for failure to disclose certain properties in the Statement of Assets and
Liabilities amounted to a charge for ill-gotten wealth. (Words in brackets added.)
cralawIn essence, the CA found Valeroso's claim of denial of due process meritorious since he was being made to answer,
not only the alleged non-disclosure of certain properties, but also for unexplained increase in net worth, a charge about
which, to the CA, Valeroso was denied the opportunity to explain.
cralawTheir motion for reconsideration having been denied by the CA in its equally assailed Resolution of 13 April 2005,
petitioners are now with this Court on the basic issue of whether or not the CA had erred in finding that grave abuse of
discretion attended the issuance of the subject preventive suspension order. It is petitioners'posture that, contrary to the
conclusion of the appellate court, respondent Valeroso was accorded due process of law, and that there was no infirmity in
the issuance of the disputed preventive suspension order.
cralaw
cralawWe GRANT the petition.
cralawWe shall first cut through the procedural technicalities with which each party attempts to trip its opponent, and
ultimately decide the case on its substantial merits.
cralawThere is no dispute as to the power of the Ombudsman to place a public officer charged with an administrative
offense under preventive suspension. That power is clearly confined under Section 24 of R.A. No. 6770, otherwise known
as the Ombudsman Act of 1989, which reads:
Sec. 24. Preventive Suspension. - The Ombudsman or his Deputy may preventively suspend
cralaw
any officer or employee under his authority pending an investigation, if in his judgment the
evidence of guilt is strong, and (a) the charge against such officer or employee involves
dishonesty, oppression or grave misconduct or neglect in the performance of duty; (b) the
charges would warrant removal from the service; or (c) the respondent's continued stay in office
may prejudice the case filed against him.
The preventive suspension shall continue until the case is terminated by the Office of the
cralaw
Ombudsman but not more than six months, without pay, except when the delay in the disposition
of the case by the Office of the Ombudsman is due to the fault, negligence or petition of the
respondent, in which case the period of such delay shall not be counted in computing the period
of suspension herein provided.
cralawClear it is from the above that the law sets forth two conditions that must be satisfied to justify the issuance of an
order of preventive suspension pending an investigation, to wit:
1. The evidence of guilt is strong; and
2. Either of the following circumstances co-exist with the first requirement:
a. cralawThe charge involves dishonesty, oppression or grave misconduct or neglect

in the performance of duty;
b. cralawThe charge would warrant removal from the service; or
c. cralaw The respondent's continued stay in office may prejudice the case filed
against him.
cralawHere, respondent was charged with dishonesty, among other administrative and criminal charges, and the
Ombudsman particularly found strong evidence to support said charge on the specified ground of non-disclosure of assets
and business interests. Questions on the strength of the evidence to support the preventive suspension order are squarely
within the jurisdiction of the Ombudsman. On this score, the following pronouncements of this Court in Yasay, Jr. v.
Desiertoare very much in point:
The rule is that whether the evidence of guilt is strong, as required in Section 24 of R.A. No.
cralaw
6770, is left to the determination of the Ombudsman by taking into account the evidence before
him. In the very words of Section 24, the Ombudsman may preventively suspend a public
official pending investigation if in his judgment the evidence presented before him tends to show
that the official's guilt is strong and if the further requisites enumerated in Section 24 are present.
The Court cannot substitute its own judgment for that of the Ombudsman on this matter, absent
clear showing of grave abuse of discretion on the part of respondent Ombudsman.
cralawMoreover, the charge of dishonesty is a grave offense which, if duly proven, merits the penalty of dismissal from the
service on commission of the first infraction.
cralawIn finding a denial of due process, the CA capitalized on the alleged added ground of unexplained increase in net
worth.At best, however, the supposedly added ground wasa superfluity that should bolster or strengthen the charge of
dishonesty rather than a reason to invalidate the preventive suspension order.
cralawFor sure, even on the said added ground, respondent cannot even rightfully assert denial of due process or deprivation
of the right to be informed of the true nature and cause of the charges against him. This is so becausethe alleged other
ground was brought about by his very own posturing in his counter-affidavit of24 March2004 that his combined income
[with] his wife is more sufficient to cover the cost of acquiring the properties alleged, erroneously, to have been
concealed. Since the issue of sufficiency of income was raised by no less than the respondent himself, he should have
been barred from questioning the authority and jurisdiction of the Ombudsman in resolving said issue, what with the
familiar rule that a party who has invoked the jurisdiction of a court or tribunal is estopped from challenging that
jurisdiction after the court or tribunal had decided the case against him.
cralawClearly, as the non-disclosure in his SALN of his assets and business interest was understood by respondent himself,
such non-disclosure essentially embraced or comprehended concealment of unexplained wealth. No doubt, the provisions
of the Anti-Graft and Corrupt Practices Act (R.A. No. 3019, as amended) recited in paragraph 7.0 of respondents counter-
affidavit refer to no other than the following complementing provisions of Sections 7 and 8 of the same law which
respectively read:
Sec. 7. Statement of Assets and Liabilities. -Every public officer, within thirty days after
cralaw
assuming office, and thereafter, on or before the fifteenth day of April following the close of
every calendar year, as well as upon the expiration of his term of office, or upon his resignation
or separation from office, shall prepare and file with the office of corresponding Department
Head, or in the case of a Head Department or chief of an independent office, with the office of
the President, a true, detailed and sworn statement of the amounts and sources of his income, the
amounts of his personal and family expenses and the amount of income taxes paid for the next
preceding calendar year: Provided, That public officers assuming office less than two months
before the end of the calendar year, may file their first statement on or before the fifteenth day of
April following the close of said calendar year.
Sec. 8. Prima Facie Evidence of and Dismissal Due to Unexplained Wealth. - If in
cralaw
accordance with the provisions of Republic Act Numbered One Thousand Three Hundred
Seventy-Nine, a public official has been found to have acquired during his incumbency, whether
in his name or in the name of other persons, an amount of property and/or money manifestly out
of proportion to his salary and to his other lawful income, that fact shall be ground for dismissal
or removal. Properties in the name of the spouse and dependents of such public official may be
taken into consideration, when their acquisition through legitimate means cannot be satisfactorily
shown. Bank deposits in the name of or manifestly excessive expenditures incurred by the public
official, his spouse or any of their dependents including but not limited to activities in any club
or association or any ostentatious display of wealth including frequent travel abroad of a non-
official character by any public official when such activities entail expenses evidently out of
proportion to legitimate income, shall likewise be taken into consideration in the enforcement of
this Section, notwithstanding any provision of law to the contrary. The circumstances
hereinabove mentioned shall constitute valid ground for the administrative suspension of the
public official concerned for an indefinite period until the investigation of the unexplained
wealth is completed.
cralawSection 8 above, speaks of unlawful acquisition of wealth, the evil sought to be suppressed and avoided, and Section
7, which mandates full disclosure of wealth in the SALN, is a means of preventing said evil and is aimed particularly at
curtailing and minimizing the opportunities for official corruption and maintaining a standard of honesty in the public
service. Unexplained matter normally results from non-disclosure or concealment of vital facts. SALN, which all public
officials and employees are mandated to file, are the means to achieve the policy of accountability of all public officers
and employees in the government. By the SALN, the public are able to monitor movement in the fortune of a public
official; it is a valid check and balance mechanism to verify undisclosed properties and wealth.
cralawRespondent cannot claim any right against, or damage or injury that he is bound to suffer from, the issuance of the
preventive suspension order in question, in the light of the unbending rule that there is no such thing as a vested right or
an estate in an office, or even an absolute right to hold it. Public Office is not property but a public trust or agency. While
due process may be relied upon by public officials to protect their security of tenure which, in a limited sense, is
analogous to property, such fundamental right to security of tenure cannot be invoked against a preventive suspension
order which is a preventive measure, not imposed as a penalty.
cralawThe CA's reliance on Yangco v. Board of Public Utility Commissionersto prop up its finding of denial of due process
is utterly misplaced. The order complained of in Yangco was a final order which disposed of the merits of the complaint
in that case. Here, what is at issue is a preventive suspension order, a mere preventive measure during an ongoing
administrative investigation.
cralawWHEREFORE, the instant petition is GRANTED and the assailed decision and resolution of the CA are
ANNULLED and SET ASIDE.
cralawNo pronouncement as to costs.
cralawSO ORDERED.
CANCIO C. GARCIA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
ANGELINA SANDOVAL-GUTIERREZ RENATO C. CORONA
Associate Justice Associate Justice
ADOLFO S. AZCUNA
Associate Justice
CERTIFICATION
cralawPursuantto Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been
reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
Penned by Associate Justice Jose L. Sabio, with Associate Justices Eubulo G. Verzola (now cralawdeceased) and Noel G. Tijam, concurring; Rollo, pp. 8-28.
Id. at29-31.
Id. at 186-189.
Id. at 210-218.
cralawcralawId. at 27.
G.R. No. 134495, December 28, 1998, 300 SCRA 494, 505-506.
De Guzman v. DelosSantos, A.M. No. 2002-8-SC, December 18, 2002, 394 SCRA 210.
Arreza v. Diaz, Jr., G.R. No. 133113, Augusto 30, 2001, 364 SCRA 664.
cralawNationalLand Titles and Deeds Registration Administration v. Civil Service Commission, G.R. No. 84301, April 7, 1993, 221 SCRA 145.
Cornejo v. Gabriel, 41 Phil. 188, 194 (1920); Section 1, Article 11, 1987 Constitution.
cralawAlonzo v. Capulong, G.R. No. 110590, May 10, 1995, 244 SCRA 80; Yabut v. Ombudsman, G.R. No. 111304, June 17, 1994, 233 SCRA 310; Rios v. Sandiganbayan, G.R.
No. 129913, September 26, 1997, 279 SCRA 581, 588.
36 Phil. 116 (1917).

SUPREME COURT
Manila
SECOND DIVISION
PATRICIO A. VILLENA,
G.R. No. 163021
Petitioner,cralaw
cralaw Present:
cralaw QUISUMBING, J., Chairperson,
cralaw - versus - cralaw CARPIO,
cralaw CARPIO MORALES,
cralaw TINGA, and
cralaw VELASCO, JR., JJ.
PATRICIO S. PAYOYO, cralaw Promulgated:
Respondent. cralaw April 27, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J.:
cralaw This petition for review on certiorari assails the Decision dated November 21, 2003 of the Court of Appeals
in CA-G.R. CV No. 70513 and its Resolution dated March 18, 2004, denying petitioners motion for
reconsideration.The appellate court had affirmed with modification the Decision dated April 26, 2000 of the
Regional Trial Court (RTC) of Quezon City, Branch 78.
The facts are undisputed.
On October 28, 1997, respondent Patricio Payoyo and Novaline, Inc., through its president, petitioner Patricio
Villena, entered into a contract for the delivery and installation of kitchen cabinets in Payoyos residence.The
cabinets were to be delivered within ninety days from downpayment of 50% of the purchase price.On October
29, 1997, Payoyo paid Villena P155,183 as downpayment.
On December 9, 1997, Payoyo entered into another contract with Villena for the delivery of home
appliances.On the same day, Payoyo paid 50% of the purchase price equal to P29,638.50 as downpayment.
However, Villena failed to install the kitchen cabinets and deliver the appliances.Payoyo made several demands
upon Villena but the latter failed to comply.
In a letter dated March 12, 1998, Payoyo demanded the cancellation of the contracts and the refund in full of the
downpayments amounting to P184,821.50.Villena promised to install the kitchen cabinets on or before May 10,
1998 and to deliver the appliances.Despite repeated demands, Villena again failed to do so.
Payoyo sent Villena two demand letters on June 24, 1998 and on July 28, 1998 asking the latter to either deliver
all items or return the downpayments.
On October 26, 1998, Payoyo filed a complaint for recovery of a sum of money and damages against
Villena.Villena moved to dismiss the complaint for failure to state a cause of action.He argued that there was no
ground to cancel the contract; thus, there was no basis for refund.The trial court denied his motion.Villena
thereafter filed an answer with compulsory counterclaim citing as an affirmative defense Payoyos failure to
state a cause of action.
cralaw On June 1, 1999, immediately after the trial court issued a pre-trial order, Villena filed a second motion to
dismiss on the ground of lack of jurisdiction over the subject matter but it was denied.Thereafter, trial ensued.
cralaw The trial court decided in favor of Payoyo, reasoning that the power to rescind is implied in reciprocal
obligations.Considering that Villena repeatedly failed to comply with his obligation, Payoyo had the right to
rescind the contract and demand a refund.The trial court ordered petitioner to pay respondent P184,821.50 as
actual damages plus 12% interest per annum from the date of filing of the complaint and P20,000 as moral
damages plus legal interest from judicial demand until fully paid.
cralaw The Court of Appeals affirmed the RTC decision with the following modifications:
1) [Petitioner Villena is] hereby ordered to pay [respondent Payoyo] actual damages in the amount of P
155,183.00 with 12% interest per annum from the date of the filing of the complaint;
2) [Petitioner is] likewise ordered to deliver the Indesit Multifunction Oven and Indesit Hob in favor of
[respondent] within thirty (30) days from the finality of this decision; and
3) [Respondent] is hereby ordered to pay the purchase price of the Indesit Multifunction Oven and Indesit Hob
in favor of [petitioner] on the day the delivery is made.
cralaw
The appellate court reasoned that while there was delay in the delivery and installation of the kitchen cabinets,
there was none in the delivery of the appliances.The contract for said appliances did not specify the date of
delivery but that delivery should be made upon payment of the 50% balance of the purchase price.Considering
that Payoyo failed to pay the balance, Villena did not incur delay.
cralaw Hence, the instant petition, where petitioner raises the following issues:
I.
WHETHER OR NOT THE TRIAL COURT HAD JURISDICTION OVER THE SUBJECT MATTER
OF THE CASE.
II.
WHETHER OR NOT [THE] DEFENDANTS-APPELLANTS (PETITIONER AND NOVALINE, INC.),

ARE ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE COURT UNDER THE
CIRCUMSTANCES.
Simply, the issue in this case is whether the trial court had jurisdiction over the complaint.
Petitioner maintains that the RTC should have dismissed the complaint for lack of jurisdiction.He posits that the
RTC has no jurisdiction over the complaint since it is mainly for recovery of a sum of money in the amount of
P184,821.50 which is below the jurisdictional amount set for RTCs.Moreover, petitioner contends that the issue
of jurisdiction may be raised at any time, even on appeal, since jurisdiction is conferred only by law and cannot
be acquired through or waived by any act or omission of the parties.chanroblesvirtuallawlibrary
Respondent, on the other hand, contends that the RTC has jurisdiction over the complaint as the allegations
therein show that it is actually a case for rescission of the contracts.The recovery of a sum of money is merely a
necessary consequence of the cancellation of the contracts.chanroblesvirtuallawlibrary
The pertinent portion of Section 19 of Batas Pambansa Bilang 129, as amended by Republic Act No. 7691,
provides:
SEC. 19. Jurisdiction in civil cases.Regional Trial Courts shall exercise exclusive original jurisdiction:
cralaw(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;
cralawx xxx
(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).
In determining the jurisdiction of an action whose subject is incapable of pecuniary estimation, the nature of the
principal action or remedy sought must first be ascertained.If it is primarily for the recovery of a sum of money,
the claim is considered capable of pecuniary estimation and the jurisdiction of the court depends on the amount
of the claim.But, where the primary 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, such are actions whose
subjects are incapable of pecuniary estimation, hence cognizable by the RTCs.chanroblesvirtuallawlibrary
cralaw Verily, what determines the nature of the action and which court has jurisdiction over it are the allegations
of the complaint and the character of the relief sought.chanroblesvirtuallawlibrary
cralaw In our considered view, the complaint, albeit entitled as one for collection of a sum of money with damages,
is one incapable of pecuniary estimation; thus, one within the RTCs jurisdiction.The allegations therein show
that it is actually for breach of contract, thus,
cralawx xxx
7. cralawUndertheir Contracts, prestation and/or delivery of the items will be performed and delivered within
NINETY (90) DAYS from the receipt of downpayment.Plaintiff complied with its prestation but defendants
defaulted with their obligation;
cralawx xxx
10. On 12 March 1998, plaintiff sent letter to defendants requesting the latter for the cancellation of the
purchase contracts and refund in full the (50%) downpayment paid in the total amount of (P 184,
821.50) within five (5) days upon receipt of the letter
cralawx xxx
12. On 24 March 1998, plaintiff and defendant Patricio A. Villena, personally talked [to] each other
regarding the full refund of the (50%) downpayment in the amount of P 184, 821.50.Defendant
informed the plaintiff that it was their fault because the order from their Australian supplier was made
only on 15 December 1997. Defendant promised plaintiff [delivery of] the three (3) Kitchen
Cabinets on or before 10 [M]ay 1998, and the three (3) home appliances were considered fully paid
applying the (50%) downpayment of (P 29,638.50) for home appliances only.But defendant did not
fulfill his promise;
13. Despite all these, repeated demands for the installation of the (3) three kitchen [c]abinets and
complete delivery of home appliances were made, but defendants did nothing;
cralawx x x x (Emphasis added.)
A case for breach of contract is a cause of action either for specific performance or rescission of contracts.An
action for rescission of contract, as a counterpart of an action for specific performance, is incapable of
pecuniary estimation, and therefore falls under the jurisdiction of the RTC.In the present case, the averments in
the complaint show that Payoyo sought the cancellation of the contracts and refund of the downpayments since
Villena failed to comply with the obligation to deliver the appliances and install the kitchen cabinets subject of
the contracts.The court then must examine the facts and the applicable law to determine whether there is in fact
substantial breach that would warrant rescission or cancellation of the contracts and entitle the respondent for a
refund.While the respondent prayed for the refund, this is just incidental to the main action, which is the
rescission or cancellation of the contracts.
WHEREFORE, the petition is DENIED for lack of merit.The Decision dated November 21, 2003 of the Court
of Appeals in CA-G.R. CV No. 70513 and the Resolution dated March 18, 2004 are AFFIRMED.
Costs against petitioner.
SO ORDERED.
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
CONCHITA CARPIO MORALES DANTE O. TINGA
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case was
cralaw
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify
cralaw
that the conclusions in the above Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
cralawRollo, pp. 38-56.
cralawId. at 58-59.
cralawId. at 104-107.
cralawId. at 55.
cralawId. at 233.
cralawId. at 238.
cralawId. at 243.
cralawId. at 257.
cralawAN ACT EXPANDING THE JURISDICTION OF THE METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS, AND MUNICIPAL CIRCUIT TRIAL
COURTS, AMENDING FOR THE PURPOSE BATAS PAMBANSA BLG. 129, OTHERWISE KNOWN AS THE JUDICIARY REORGANIZATION ACT OF 1980.
cralawHuguete v. Embudo, G.R. No. 149554, July 1, 2003, 405 SCRA 273, 278-279, citing Singsong v. Isabela Sawmill, No. L-27343, February 28, 1979, 88 SCRA 623, 637-638.
cralawHuguete v. Embudo,id., citing Caiza v. Court of Appeals,G.R. No. 110427, February 24, 1997, 268 SCRA 640, 647-648.
cralawRadio Communications of the Philippines, Inc. v. Court of Appeals, G.R. No. 136109, August 1, 2002, 386 SCRA 67, 71.
cralawRussell v. Vestil, G.R. No. 119347, March 17, 1999, 304 SCRA 738, 745, citing Lapitan v. Scandia, Inc., No. L-24668, July 31, 1968, 24 SCRA 479, 482.

SUPREME COURT
Manila
THIRD DIVISION
THE HEIRS OF THE LATE PANFILO G.R. No. 155056-57

V. PAJARILLO,
Petitioners,
-versus -
Present:
YNARES-SANTIAGO, J.,
THE HON. COURT OF APPEALS,
Chairperson,
NATIONAL LABOR RELATIONS
COMMISSION and SAMAHAN NG
AUSTRIA-MARTINEZ,
MGA MANGGAGAWA NG PANFILO V.
PAJARILLO, ALFREDO HOYOHOY,
CHICO-NAZARIO,
HERMINIO CASTILLO, BERNARDO
ROCO, RODOLFO TORRES, JULIAN
NACHURA, and
JORVINA, LOURDES ROCO,
FLORITA YAPOC, MARLON ALDANA,
REYES, JJ.
PARALUMAN ULANG, TOLENTINO
SANHI, JOHNNY SORIANO, ANDRES
Promulgated:
CALAQUE, ROBERTO LAVAREZ,
FRANCISCO MORALES, SALVACION
October 19, 2007
PERINA, ANTONIO ABALA, ROMEO
SALONGA, AUGUR M. MANIPOL,
BIENVENIDA TEQUIL, MARIO ELEP,
ALADINO LATIGO, BERNARDINE
BANSAL, PEDRO DE BAGUIO,
RICARDO CALICA, LAURA CO,
VICENTE RECANA, ELENA TOLLEDO,
ALFREDO PLAZA, SR., HERMINIO
BALDONO, FELIPE YAPOC, ARISTON
NIPA, and ALFONSO C. BALDOMAR,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
In this Petition for Review on Certiorari under Rule 45 of the Rules of Court, petitioners, heirs of Panfilo V. Pajarillo,
seek to set aside the Decision, and Resolution, dated 12 March 2002 and 28 August 2002, respectively, of the Court of
Appeals in CA-G.R. SP No. 54330 and CA-G.R. SP No. 54331, reversing the two Per Curiam Orders dated 28 October
1996 and 10 January 1997, of the National Labor Relations Commission (NLRC) in NLRC NCR Cases No. 08-03013-87
and 01-00331-88.
Stripped of the non-essentials, the facts are as follows:
Panfilo V. Pajarillo (Panfilo) was the owner and operator of several buses plying certain routes in Metro Manila. He used
the name PVP Liner in his buses. Private respondents were employed as drivers, conductors and conductresses by
Panfilo.
During their employment with Panfilo, private respondents worked at least four times a week or for an average of fifteen
working days per month. They were required to observe a work schedule starting from 4:00 in the morning up to 10:00 in
the evening on a straight time basis. Private respondent drivers were paid a daily commission of 10%, while private
respondent conductors and conductresses received a daily commission of 7%. In sum, each of the private respondents
earned an average daily commission of about P150.00 a day. They were not given emergency cost of living allowance
(ECOLA), 13th month pay, legal holiday pay and service incentive leave pay.chanroblesvirtuallawlibrary
The following were deducted from the private respondents daily commissions: (a) costs of washing the assigned buses; (b)
terminal fees; (c) fees for sweeping the assigned buses; (d) fees paid to the barangay tanod at bus terminals; and (e) rental
fees for the use of stereo in the assigned buses. Any employee who refused such deductions were either barred from
working or dismissed from work.chanroblesvirtuallawlibrary
Thereafter, private respondents and several co-employees formed a union called SAMAHAN NG MGA MANGGAGAWA
NG PANFILO V. PAJARILLO (respondent union). The Department of Labor and Employment (DOLE) issued a
Certificate of Registration in favor of the respondent union.chanroblesvirtuallawlibrary
Upon learning of the formation of respondent union, Panfilo and his children ordered some of the private respondents to
sign a document affirming their trust and confidence in Panfilo and denying any irregularities on his part. Other private
respondents were directed to sign a blank document which turned out to be a resignation letter. Private respondents
refused to sign the said documents, hence, they were barred from working or were dismissed without hearing and notice.
Panfilo and his children and relatives also formed a company union where they acted as its directors and officers.
On 25 August 1987, respondent union and several employees filed a Complaint for unfair labor practice and illegal
deduction before the Labor Arbiter with Panfilo V. Pajarillo Liner as party-respondent. This was docketed
asNLRC/NCR Case No. 00-08-03013-87. On 28 September 1987, the respondent union filed an Amended Complaint
alleging this time not only unfair labor practice and illegal deduction but also illegal dismissal.chanroblesvirtuallawlibrary
On 20 January 1988, respondent union and several employees filed another Complaint for violation of labor standard laws
claiming non-payment of (1) ECOLA, (2) 13th month pay, (3) overtime pay, (4) legal holiday pay, (5) premium pay, and
(6) service incentive leave. The party-respondents in this complaint were PVP LINER INC. and PANFILO V.
PAJARILLO, as its General Manager/Operator. This was docketed as NLRC Case No. 00-01-00331-
88.chanroblesvirtuallawlibrary
Notifications and summons with respect to NLRC/NCR Case No. 00-08-03013-87 were addressed and sent to PANFILO
V. PAJARILLO, President/Manager, Panfilo V. Pajarillo Liner, Pasig Line St., Sta. Ana, Manila on31 August 1987.
The Registry Return Receipt dated 4 September 1987 was addressed to Panfilo V. Pajarillo, and a signature therein
appears on top of the signature of the name of the addressee. With regard to NLRC Case No. 00-01-00331-88,
notifications and summonses wereaddressed and sent to THE PRESIDENT/MANAGER, PVP Liner Inc. and Panfilo
V. Pajarillo, 2175 Zamora Street, Sta. Ana, Manila on 25 January 1988. The Registry Return Receipt dated 4 February
1988 wasaddressed to PVP Liner Inc. and was signed by a certain Irene G. Pajarillo as the addressees agent.
Panfilo denied the charges in the complaints. He maintained that private respondents were not dismissed from work on
account of their union activities; that private respondents and several of their co-employees either resigned or were
separated from work, or simply abandoned their employment long before the respondent union was organized and
registered with the DOLE; that the private respondents are not entitled to ECOLA and 13th month pay because they
received wages above the minimum provided by law; that the private respondents are not entitled to overtime and legal
holiday pay because these are already included in their daily commissions; that the private respondents are not entitled to
five days incentive leave pay because they work only four days a week; that no deductions were made in the daily
commissions of the private respondents; that the private respondents voluntarily and directly paid certain individuals for
barangay protection and for the cleaning of the assigned buses; that he had no participation in these
activities/arrangements; that the private respondents were not dismissed from work; and that the private respondents either
abandoned their jobs or voluntarily resigned from work.
Upon motion of Panfilo, the complaints in NLRC/NCR Case No. 00-08-03013-87 and NLRC Case No. 00-01-00331-88
were consolidated. On 29 January 1991, Panfilo died.chanroblesvirtuallawlibrary
After hearing and submission by both parties of their respective position papers and memoranda, Labor Arbiter Manuel P.
Asuncion (Arbiter Asuncion) rendered a Decision dated 28 December 1992, dismissing the consolidated complaints for
lack of merit. Thus:
IN THE LIGHT OF ALL THE FOREGOING CONSIDERATIONS, the complaint should be as
it is hereby dismissed for lack of merit.
Respondent union appealed to the NLRC. On 18 June 1996, the NLRC reversed the decision of Arbiter Asuncion and
ordered the reinstatement of, and payment of backwages, ECOLA, 13th month pay, legal holiday pay and service
incentive leave pay to, private respondents. The dispositive portion of the NLRC decision reads:
Wherefore, the appealed decision is hereby set aside.Accordingly, judgment is hereby rendered
directing:
(1)cralawThe respondent, PVP Liner, Inc. to reinstate to their former positions,

without loss of seniority rights and other benefits, the following
complainants:Alfredo [Hoyohoy], Bernardo Roco, Rodolfo Torres, Julian Jorvina,
Florita Yapoc, Marlon Aldana, Paraluman Ulang, Tolentino Sanhi, Johnny
Soriano, Andres Calaque, Roberto Lavarez, Francisco Morales, Salvacion Perina,
Antonio Abala, Alfonso Baldomar, Jr., Romeo Salonga, Augur Manipol,
Bienvenida Tequil, Mario Elep, Aladino Latigo, Bernardine Bansal, Pedro de
Baguio, Ricardo Calica, Laura Co, Vicente Recana, Elena Tolledo, Alfredo Plaza,
Sr., Herminio Baldono, Felioe Yapoc, Ariston Nipa and Herminia Castillo and to
pay them their backwages corresponding to a period of three (3) years without
qualifications and deductions;
(2)cralawThe same respondent PVP Liner, Inc. to pay amounts to be computed in a

hearing called for said purpose by the Arbitration Branch of Origin, the aforesaid
complainants their claims for emergency cost of living allowance (ECOLA), 13th
month pay, legal holiday pay and service incentive leave benefits subject to the
three-year prescriptive period provided under Article 291 of the Labor Code, as
amended;
(3)cralawThe dismissal of the claims on alleged illegal deductions of the

respondents for lack of merits; and
(4)cralawThe dismissal of the case of Lourdes Roco due to prescription.
All other claims of the complainants and the respondents are likewise DISMISSED, for being
without merit.
The Arbitration Branch of Origin is hereby directed to enforce this decision.

Panfilos counsel filed a motion for reconsideration which was partially granted by the NLRC in its Order dated 28
October 1996, to wit:
Dictated, however, by the imperatives of due process, we find it more judicious to just remand
this case for further hearing on key questions of:
1)whether or not PVP Liner Inc. was properly impleaded as party respondent in
the consolidated cases below;
2)whether or not summons was properly served on said corporation below; and
3)whether or not the subject cases can be considered as principally money claims
which have to be litigated in intestate/testate proceedings involving the estate of
the late Panfilo V. Pajarillo.
WHEREFORE, our decision dated June 18, 1996 is hereby set aside. Let this case be
cralaw
remanded to the NCR Arbitration Branch for further hearing on the questions above-mentioned.
Respondent union filed a motion for reconsideration of the above-stated Order, but this was denied by the NLRC in its
Order dated 10 January 1997. Thus, respondent union filed a Petition for Certiorari under Rule 65 before this Court.
Pursuant, however, to our ruling in St. Martin Funeral Home v. National Labor Relations Commission, we remanded the
petition to the Court of Appeals for proper disposition.
On 12 March 2002, the Court of Appeals rendered a Decision granting the respondent unions petition and nullifying the
Orders dated 28 October 1996 and 10 January 1997 of the NLRC. It also reinstated the Decision dated 18 June 1986 of the
NLRC. The appellate court decreed:
WHEREFORE, premises considered, the PETITION FOR CERTIORARI is hereby GRANTED.

Accordingly, the Order dated October 28 1996 and January 10, 1997 of the NLRC are hereby
NULLIFIED and its Decision dated 18 June 1986 be REINSTATED.
Panfilos counsel filed a motion for reconsideration of the said decision but this was denied by the appellate court in its
Resolution dated 28 August 2002.chanroblesvirtuallawlibrary
Herein petitioners, as heirs of Panfilo, filed the instant petition before this Court assigning the following errors:
I.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ARRIVING AT THE
CONCLUSION THAT PVP LINER INC. WAS PROPERLY MISPLEADED, WHICH IS A
NON-EXISTING CORPORATION.
II.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT CONSIDERING

THAT THERE WAS NO PROPER AND EFFECTIVE SERVICE OF SUMMONS.
III.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN PIERCING THE VEIL

OF CORPORATE ENTITY OF PVP PAJARILLO LINER INC.
IV.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REINSTATING THE

ORDER OF THE NLRC DATED JUNE 18, 1996, WHICH DECLARED THAT PRIVATE
RESPONDENTS WERE ILLEGALLY DISMISSED.
Anent the first issue, petitioners alleged that the Decision dated 18 June 1996 of the NLRC, ordered PVP Liner Inc. to
reinstate private respondents and pay their backwages, ECOLA, 13th month pay, legal holiday pay and service incentive
leave pay; that there was no such entity as PVP Liner Inc. organized and existing in the Philippines;that it was not
possible for Arbiter Asuncion and the NLRC to acquire jurisdiction over a non-existing company; that there can never be
a service of summons or notice to a non-existent entity; that the true employer of private respondents was Panfilo as the
sole proprietor/operator of passenger buses doing business under the tradename, PVP Liner,and not PVP Liner Inc.
which was non-existent; that Panfilo never used PVP Liner Inc. as his tradename; that the present operator of PVP Liner
buses is P.V. PAJARILLO LINER, a corporation duly registered with the Securities and Exchange Commission; that at
the time the instant case was filed before Arbiter Asuncion in 1987, the latter did not have jurisdiction over P.V.
PAJARILLO LINER because it was organized and duly registered only on 22 January 1990; that P.V. PAJARILLO
LINER has a separate and distinct personality from Panfilo as the sole operator of PVP Liner buses; that, therefore, P.V.
PAJARILLO LINER cannot be made a party or impleaded in the present case; that the amended complaint in
NLRC/NCR Case No. 00-08-03013-87 impleaded as party-respondent PANFILO V. PAJARILLO LINER and
PANFILO V. PAJARILLO, as operator and responsible officer; that PVP Liner Inc. was not impleaded in the instant
case; and that no summons was ever served on PVP Liner Inc. in NLRC/NCR Case No. 00-08-03013-87.
The contentions are bereft of merit.
In the Complaint dated 20 January 1988, PVP Liner Inc. and Panfilo were impleaded as party-respondents, thus:
That respondent PVP Liner, Inc., is a private business entity, engaged in transportation of
passengers, duly organized and existing pursuant to law and for this purpose maintains its
principal office at 2175, Zamora Street, Sta. Ana, Manila; while individual respondent
[Panfilo] is the General Manager/Operator and may be served with summons, notices and
other processes at the aforementioned principal office.
Panfilo did not question in his position paper or in his motion for consolidation of the complaints the foregoing
allegations. Neither did he assail the inclusion of PVP Liner Inc. as party-respondent in respondent unions position paper
dated 6 June 1988.
In Panfilos position paper as well as in the records of the proceedings before Arbiter Asuncion, there is nothing that shows
that Panfilo challenged the jurisdiction of Arbiter Asuncion over PVP Liner Inc. When Arbiter Asuncion decided in
favor of Panfilo, the latter said nothing about the inclusion of PVP Liner Inc. as party respondent and the lack of
jurisdiction of Arbiter Asuncion over the same. It was only when the NLRC rendered a Decision adverse to Panfilo that
the latter alleged the non-existence of PVP Liner Inc. and the fact that Arbiter Asuncion and the NLRC had no
jurisdiction over it.
Petitioners are now precluded from questioning the inclusion of PVP Liner Inc. as party-respondent as well as the
jurisdiction of Arbiter Asuncion and the NLRC over them under the principle of estoppel. It is settled that the active
participation of a party against whom the action was brought, coupled with his failure to object to the jurisdiction of the
court or quasi-judicial body where the action is pending, is tantamount to an invocation of that jurisdiction and a
willingness to abide by the resolution of the case and will bar said party from later on impugning the court or bodys
jurisdiction. 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, and attacking it for lack of jurisdiction when adverse.
It is apparent that Panfilo V. Pajarillo Liner and PVP Liner Inc. are one and the same entity belonging to one and the
same person, Panfilo. When PVP Liner Inc. and Panfilo V. Pajarillo Liner were impleaded as party-respondents, it was
Panfilo, through counsel, who answered the complaints and filed the position papers, motions for reconsideration and
appeals. It was also Panfilo, through counsel, who participated in the hearings and proceedings. In fact, Abel Pajarillo
(Abel), son of Panfilo, testified before Arbiter Asuncion that he was the operations manager of PVP Liner Inc. Further,
both Panfilo and PVP Liner Inc. were charged jointly and severally in the aforesaid complaints.
Apropos the second issue, petitioners alleged that the notices and summons were received by a certain Irene G. Pajarillo
(Irene) for and in behalf of the PVP Liner Inc.; that Irene was neither and could not have been the President/Manager of
PVP Liner Inc., the latter being non-existent; and that Irene was not an officer of P.V. Pajarillo Liner.chanroblesvirtuallawlibrary
Sections 4 and 5 of Rule IV of the Revised Rules of Procedure of the NLRC provides the rule for the service of
summonses and notices in NLRC cases, viz:
Sec. 4.Service of notices and resolutions. a) Notices or summons and copies of orders,
resolutions or decisions shall be served personally by the bailiff or the duly authorized public
officer or by registered mail on the parties to the case within five (5) days from receipt thereof by
the serving officer.
Sec. 5.Proof and completeness of service. The return is prima facie proof of the facts indicated
therein. Service by registered mail is complete upon receipt by the addressee or his
agent.chanroblesvirtuallawlibrary
Records show that Irene received the summons for NLRC Case No. 00-01-00331-88 on 4 February 1988 in behalf of PVP
Liner Inc. These summonses wereaddressed and sent to THE PRESIDENT/MANAGER, PVP Liner Inc. and Panfilo
V. Pajarillo, 2175 Zamora Street, Sta. Ana, Manila on 25 January 1988.The Registry Return Receipt dated 4 February
1988 wasaddressed to PVP Liner Inc. and was signed by Irene as the addressees agent. Abel, one of the heirs of Panfilo
and the Operations Manager of PVP Liner Inc., testified during the hearing before Arbiter Asuncion that Irene was one of
the secretaries of PVP Liner Inc. Hence, there was a valid service of summons.
Regarding the third issue, petitioners posited that P.V. Pajarillo Liner Inc. is an independent corporation and cannot be
considered as an adjunct or extension of Panfilo as the sole operator of PVP Liner buses; and that at the time P.V.
Pajarillo Liner Inc. was established, it had no liability or obligation which it tried to shield or
circumvent.chanroblesvirtuallawlibrary
It is a fundamental principle of corporation law that a corporation is an entity separate and distinct from its stockholders
and from other corporations to which it may be connected. However, this separate and distinct personality of a corporation
is merely a fiction created by law for convenience and to promote justice. Hence, when the notion of separate juridical
personality is used to defeat public convenience, justify wrong, protect fraud or defend crime, or is used as a device to
defeat labor laws, this separate personality of the corporation may be disregarded or the veil of the corporate fiction
pierced. This is true likewise when the corporation is merely an adjunct, a business conduit or an alter ego of another
corporation. The corporate mask may be lifted and the corporate veil may be pierced when a corporation is but the alter
ego of a person or another corporation.chanroblesvirtuallawlibrary
It is apparent that Panfilo started his transportation business as the sole owner and operator of passenger buses utilizing
the name PVP Liner for his buses. After being charged by respondent union of unfair labor practice, illegal deductions,
illegal dismissal and violation of labor standard laws, Panfilo transformed his transportation business into a family
corporation, namely, P.V. Pajarillo Liner Inc. He and petitioners were the incorporators, stockholders and officers
therein. P.V. Pajarillo Inc. and the sole proprietorship of Panfilo have the same business address. P.V. Pajarillo Inc. also
uses the name PVP Liner in its buses. Further, the license to operate or franchise of the sole proprietorship was merely
transferred to P.V. Pajarillo Liner Inc. The testimony of Abel during the hearing before Arbiter Asuncion is revealing,
thus:
Q:cralawMr. Pajarillo, when did you start assuming the functions of operations manager of PVP
Liner?
A:cralawSeven years from now, sometime in the year 1984 or 1985, sir.
Q:cralawDo you have any written appointment as Operations Manager?
A:cralawNo, sir.
Q:cralawI noticed that your surname is Pajarillo you are one way or another related to Mr. Panfilo
V. Pajarillo, is that correct?
Witness:
A:cralawI am the son of Panfilo Pajarillo, sir.
Q:cralawIn so far as PVP Liner is concerned and being the operations manager, are you aware if it
is a single proprietor or a corporation?
A:cralawAt the start it was a single proprietorship, lately, it has become a family corporation.
Atty. Flores, Jr. (to witness)
Q:cralawWhen you became the Operations Manager of PVP Liner, is it a single proprietor or a
family Corporation?
A:cralawIt was a single proprietorship.
Q:cralawMr. Witness, since PVP Liner is a transportation business it has a license to operate these
buses?
A:cralawYes, there is, sir.
Atty. Flores, Jr. (to witness)
Q:cralawIn whose name was it registered?

A:cralawBefore it was with my father Panfilo V. Pajarillo, sir.
Q:cralawDo I understand that the licensing of this transportation company was transferred to
another person?
A:cralawIt was never transferred to another person, except now, that it has been transferred
to a corporation.
It is clear from the foregoing that P.V. Pajarillo Liner Inc. was a mere continuation and successor of the sole
proprietorship of Panfilo. It is also quite obvious that Panfilo transformed his sole proprietorship into a family corporation
in a surreptitious attempt to evade the charges of respondent union. Given these considerations, Panfilo and P.V. Pajarillo
Liner Inc. should be treated as one and the same person for purposes of liability.chanroblesvirtuallawlibrary
Finally, petitioners averred that no unfair labor practice was committed, and that private respondents were not illegally
dismissed from work.
In its Decision dated 18 June 1996, the NLRC made an exhaustive discussion of the allegations and evidence of both
parties as regards unfair labor practice and illegal dismissal. It concluded that private respondents, officers and members
of respondent union were dismissed by reason of their union activities and that there was no compliance with substantial
and procedural due process in terminating their services. It also held that the private respondents who were not members
of the respondent union were also dismissed without just or valid cause, and that they were denied due process. These
factual findings and conclusions were supported by substantial evidence comprised of affidavits, sworn statements,
testimonies of witnesses during hearings before Arbiter Asuncion, and other documentary evidence. These findings were
sustained by the Court of Appeals.
The rule is that findings of fact of quasi-judicial agencies like the NLRC are accorded by this Court not only respect but
even finality if they are supported by substantial evidence, or that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion. We find no compelling reason to deviate from such findings of the
NLRC as affirmed by the Court of Appeals.
Consequently, the private respondents are entitled to reinstatement, backwages and other privileges and benefits under
Article 279 of the Labor Code. Separation pay may be given in lieu of reinstatement if the employee concerned occupies a
position of trust and confidence. In the case at bar, however, the private respondents, as former bus drivers, conductors
and conductresses of petitioners, do not hold the position of trust and confidence.chanroblesvirtuallawlibrary
Nonetheless, it appears from the records that some of the private respondents, namely, Augur Manipol, Rodolfo Torres,
Ricardo Calica, Paraluman Ulang, Edith Chua, Alfredo Hoyohoy, Johnny Soriano, Bernardo Roco, Tolentino Sanhi,
Salvacion Perina, Pedro L. de Baguio, Ariston Nipa, Felipe Yapoc, Laura Co, Bienvenida Tequil, Roberto Lavarez,
Francisco Morales and Herminio Castillo, had executed a Quitclaim/Release discharging petitioners from any and all
claims by way of unpaid wages, separation pay, overtime pay, differential pay, ECOLA, 13 th month pay, holiday pay,
service incentive leave pay or otherwise.
Generally, deeds of release, waivers, or quitclaims cannot bar employees from demanding benefits to which they are
legally entitled or from contesting the legality of their dismissal, since quitclaims are looked upon with disfavor and are
frowned upon as contrary to public policy. Where, however, the person making the waiver has done so voluntarily, with a
full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be
recognized as being a valid and binding undertaking.chanroblesvirtuallawlibrary
There is no showing that the executions of these quitclaims were tainted with deceit or coercion. On the contrary, each of
the private respondents Sinumpaang Salaysay, which accompanied the quitclaims, evinces voluntariness and full
understanding of the execution and consequence of the quitclaim. In their said Sinumpaang Salaysay, the private
respondents stated that their lawyer had extensively explained to them the computation and the actual amount of
consideration they would receive; that they were not forced or tricked by their lawyer in accepting the same; and that they
already received the amount of consideration.chanroblesvirtuallawlibrary
Further, the considerations received by the private respondents were credible and reasonable because they were not
grossly disproportionate to the computation by the NLRC of the amount of backwages and other money
claims.chanroblesvirtuallawlibrary
Given these circumstances, the quitclaims should be considered as binding on the private respondents who executed them.
It is settled that a legitimate waiver which represents a voluntary and reasonable settlement of a workers claim should be
respected as the law between the parties.Accordingly, the private respondents who made such quitclaims are already
precluded from claiming reinstatement, backwages, ECOLA, 13TH month pay, legal holiday pay, service incentive leave
pay, and other monetary claims.
With regard to the other private respondents who did not execute such quitclaims, they are entitled to reinstatement,
backwages, ECOLA, 13TH month pay, legal holiday pay and service incentive leave pay in accordance with the
computation of the NLRC.
WHEREFORE, the petition is hereby DENIED. The Decision and Resolution dated 12 March 2002 and 28 August
2002, respectively, of the Court of Appeals in CA-G.R. SP No. 54330 and CA-G.R. SP No. 54331, are hereby
AFFIRMED with the following MODIFICATIONS: (1) Private respondents Augur Manipol, Rodolfo M. Torres,
Ricardo Calica, Paraluman Ulang, Edith Chua, Alfredo Hoyohoy, Johnny Soriano, Bernardo Roco, Tolentino Sanhi,
Salvacion Perina, Pedro L. de Baguio, Ariston Nipa, Felipe Yapoc, Laura Co, Bienvenida Tequil, Roberto Lavarez,
Francisco Morales and Herminio Castillo are hereby precluded from claiming reinstatement, backwages, ECOLA, 13TH
month pay, legal holiday pay and service incentive leave pay by reason of their respective quitclaims; (2) Petitioners are
hereby ordered to reinstate private respondents Julian Jorvina, Florita Yapoc, Marlon Aldana, Andres Calaque,
Antonio Abala, Alfonso Baldomar, Romeo Salonga, Mario Elep, Aladino Latigo, Bernardine Bansal, Vicente Recana,
Elena Tolledo and Alfredo Plaza, Sr., and to pay these respondents backwages from the time of their dismissal up to the
finality of this Decision. Petitioners are also ordered to pay the foregoing private respondents ECOLA, 13TH month pay,
legal holiday pay and service incentive leave pay in accordance with the computation of the NLRC. Costs against
petitioners.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
MA. ALICIA AUSTRIA-MARTINEZANTONIO EDUARDO B. NACHURA

Associate JusticeAssociate Justice
RUBEN T. REYES
Associate Justice
ATTESTATION
cralawIattest that the conclusions in the above Decision were reached in consultation before the case was assigned to the
Associate Justice
Chairperson, Third Division

CERTIFICATION
cralawPursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby
certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justicecralaw

SUPREME COURT
Manila
SECOND DIVISION
HEIRS OF FLORENCIO ADOLFO, G.R. No. 164934

Petitioners,
Present:
QUISUMBING, J., Chairperson,
- versus - CARPIO,
CARPIO MORALES,
TINGA,and
VELASCO, JR., JJ.
VICTORIA P. CABRAL, GREGORIA ADOLFO Promulgated:

and GREGORIO LAZARO,
Respondents.
August 14, 2007
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DECISION
QUISUMBING, J.:
For review are the Resolutions, dated May 18, 2004 and August 17, 2004of the Court of Appeals in CA-G.R. SP No. 83438,
affirming the Order dated November 20, 2003 of the Provincial Agrarian Reform Adjudicator (PARAD) of MalolosCity in
DCN R-03-02-024203. The PARAD had denied petitioners motion to dismiss and upheld the jurisdiction of the Department of
Agrarian Reform Adjudication Board (DARAB) to hear and decide the petition for the cancellation of emancipation patents and
torrens titles.
The present controversy involves two parcels of land consisting of 29,759 square meters and 957 square meters,
respectively, situated in Barangay Iba (now Pantok), Meycauayan, Bulacan.
Petitioners are the heirs of the late Florencio Adolfo, Sr. They alleged that the parcels were included in the Operation
Land Transfer program under Presidential Decree (P.D.) No. 27. Thus, their father applied with the Ministry of Agrarian
Reform (now Department of Agrarian Reform) for the purchase of these parcels. On April 25, 1988, he was issued
Emancipation Patents (EPs) Nos. A-117858 and A-117859-H, which became the basis for the issuance of Transfer
Certificates of Titles (TCTs) Nos. EP-003(M) and EP-004(M) on October 24, 1989.chanroblesvirtuallawlibrary
Petitioners added that in 1999, they applied with the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 15, for the
issuance of new owners duplicate copies of TCT Nos. EP-003(M) and EP-004(M) after the same were lost. The trial court
granted their petition and ordered the Register of Deeds of Meycauayan, Bulacan, to issue new owners duplicate copies of
the certificates of titles.chanroblesvirtuallawlibrary
On their part, respondent Victoria P. Cabral alleged that she is the lawful and registered owner of the lands covered by
petitioners emancipation patents and certificates of titles as evidenced by Original Certificate of Title (OCT) No. 0-1670
[now OCT No. 0-220(M)] of the Registry of Deeds of Meycauayan, Bulacan, issued on January 6, 1960. She also averred
that petitioners emancipation patents should be cancelled since (1) these covered non-agricultural lands outside the
coverage of P.D. No. 27; (2) these were issued without due notice and hearing; and (3) no Certificates of Land Transfer
(CLTs) were previously issued.
On August 26, 2003, respondent Cabral filed with the DARAB, Region III, Branch II, Malolos City, Bulacan, a petition
for the cancellation of petitioners emancipation patents and torrens titles and the revival of OCT No. 0-1670 [now OCT
No. 0-220(M)]. Petitioners moved to dismiss the petition due to (1) lack of jurisdiction, (2) lack of legal personality to
sue, and (3) prescription.
On November 20, 2003, the PARAD denied the motion and upheld the DARABs jurisdiction to determine and adjudicate
cases involving the issuance, correction and cancellation of emancipation patents. Petitioners moved for reconsideration
but it was denied.
Petitioners then filed a petition for certiorari and prohibition with the Court of Appeals. On May 18, 2004, the appellate
court dismissed the petition due to petitioners failure to exhaust administrative remedies since the orders of the PARAD
should have been elevated for review to the DARAB. The appellate court also ruled that petitioners erred in availing of
certiorari and prohibition under Rule 65 of the Rules of Court instead of a petition for review under Rule 43. The Court of
Appeals ruled, thus:
WHEREFORE, this petition for certiorari and prohibition, with prayer for the issuance of a
temporary restraining order and/or writ of preliminary injunction, must be as it [is] hereby
DENIED DUE COURSE, and consequently DISMISSED.
SO ORDERED.
Meanwhile, the PARAD rendered a Decision on June 18, 2004, canceling petitioners emancipation patents and ordering the
Registry of Deeds of Meycauayan, Bulacan, to revive respondent Cabrals OCT No. 0-1670 [now OCT No. 0-220(M)]. That
decision is on appeal with the DARAB.
In the instant petition, petitioners raise the following issues:
I.
[WHETHER] THE COURT [A QUO] COMMITTED A SERIOUS MISTAKE OR ERROR IN

[RULING] THAT IN CASE OF DENIAL OF A MOTION TO DISMISS BASED ON LACK OF
JURISDICTION, THE PROPER REMEDY IS RULE 43 AND NOT RULE 65 OF THE 1997 RULES
OF CIVIL PROCEDURE[.]
II.
[WHETHER] THE COURT A QUO FAILED TO DETERMINE THE ISSUE [ON] THE LACK OF
JURISDICTION OF [THE] DARAB, TO HEAR, TRY AND DECIDE CASES INVOLVING
CANCELLATION OF TORRENS TITLE DULY ISSUED BY THE REGISTER OF DEEDS
FOLLOWING P.D. 1529 [SINCE] THE SAME IS WITHIN [THE] EXCLUSIVE JURISDICTION OF
THE REGIONAL TRIAL COURTS.
Simply stated, the issues are: (1) Is Rule 65 the proper remedy in this case where the motion to dismiss on the ground of
lack of jurisdiction is denied? and (2) Does the DARAB have jurisdiction to hear and decide cases for the cancellation of
emancipation patents and certificates of titles?
Petitioners contend that where a party assails the jurisdiction of the lower tribunal, the proper remedy is Rule 65 and not
Rule 43 of the Rules of Court. They also argue that an action for cancellation of a certificate of title falls within the
exclusive jurisdiction of the RTC pursuant to Section 19 of Batas Pambansa Blg. 129. They also contend that the
jurisdiction of the DARAB is limited to agrarian disputes and agrarian reform under Section 50 of Republic Act No. 6657.
They cite the case of Llonillo v. Cruz, where the Court of Appeals ruled that the DARAB has no jurisdiction to cancel a
certificate of title duly issued in accordance with P.D. No. 1529.chanroblesvirtuallawlibrary

Respondent Cabral counters that an order denying a motion to dismiss cannot be the subject of a petition for certiorari
under Rule 65. The proper remedy is to file an answer to the petition, proceed to trial, and await judgment before making
an appeal to the DARAB which has the exclusive appellate jurisdiction to review the orders of the adjudicators. She also
contends that the cancellation of emancipation patents is an agrarian matter over which the DARAB has jurisdiction.
After a thorough consideration of the contentions of the parties, we hold that the petition lacks merit.
An order denying a motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a case, as it
leaves something to be done by the court before the case is finally decided on the merits. Thus, the general rule is that the
denial of a motion to dismiss cannot be questioned in a special civil action for certiorari which is not intended to correct
every controversial interlocutory ruling. It is a remedy designed to correct errors of jurisdiction and not errors of judgment.
Neither can a denial of a motion to dismiss be the subject of an appeal unless and until a final judgment or order is rendered.
In order to justify the grant of the extraordinary remedy of certiorari, the denial of the motion to dismiss must have been
tainted with grave abuse of discretion amounting to lack or excess of jurisdiction.chanroblesvirtuallawlibrary
The petition for certiorari and prohibition filed by petitioners with the Court of Appeals was not the proper remedy to
assail the PARADs denial of their motion to dismiss. The denial was merely an interlocutory order. Even assuming that
certiorari was the proper remedy, the PARAD did not commit grave abuse of discretion in denying petitioners motion. It
is a well settled rule that after the trial court denies a motion to dismiss the complaint, the defendant should file an answer,
proceed to trial and await judgment before interposing an appeal.chanroblesvirtuallawlibrary
On the issue of jurisdiction, basic is the rule that it is conferred by law and determined by the material averments in the
complaint as well as the character of the relief sought. Defenses resorted to in the answer or motion to dismiss are
disregarded, otherwise the question of jurisdiction would depend entirely upon the whim of the
defendant.chanroblesvirtuallawlibrary
Specific and general provisions of Rep. Act No. 6657 and its implementing rules and procedure address the issue of
jurisdiction. Section 50 of Rep. Act No. 6657 confers on the Department of Agrarian Reform (DAR) quasi-judicial
powers to adjudicate agrarian reform matters. In the process of reorganizing the DAR, Executive Order No. 129-Acreated
the DARAB to assume the powers and functions with respect to the adjudication of agrarian reform
matters.chanroblesvirtuallawlibrary
Section 1, Rule II of the DARAB 2003 Rules of Procedure enumerates the cases falling within its primary and exclusive
original jurisdiction, as follows:
SECTION 1.Primary and Exclusive Original Jurisdiction.The Adjudicator shall have primary and
exclusive original jurisdiction to determine and adjudicate the following cases:
1.1cralawThe rights and obligations of persons, whether natural or juridical, engaged in the management,
cultivation, and use of all agricultural lands covered by Republic Act (RA) No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law (CARL), and other related agrarian laws;
xxxx
1.6 cralawThose involving the correction, partition, cancellation, secondary and subsequent issuances
of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs) which
are registered with the Land Registration Authority;
cralawcralawx xxx
1.12 Those cases previously falling under the original and exclusive jurisdiction of the defunct Court of
Agrarian Relations under Section 12 of PD No. 946 except those cases falling under the proper
courts or other quasi-judicial bodies;
1.13 Such other agrarian cases, disputes, matters or concerns referred to it by the Secretary of the DAR.
(Emphasis supplied.)
Subparagraph 1.6 provides that the DARAB has jurisdiction over cases involving the correction, partition, cancellation,
secondary and subsequent issuances of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs)
which are registered with the Land Registration Authority (the Registry of Deeds). Incidentally, under DAR
Memorandum Order No. 02, one of the grounds for the cancellation of registered EPs is that the land is exempt or
excluded from P.D. No. 27.chanroblesvirtuallawlibrary

In respondent Cabrals petition before the DARAB, she sought the cancellation of petitioners emancipation patents and
torrens titles. She impugned the legality of the emancipation patents since (1) these covered non-agricultural lands outside
the coverage of P.D. No. 27, (2) these were issued without due notice and hearing, and (3) no CLTs were previously
issued. Based on these material averments, it is crystal-clear that the action was one for cancellation of emancipation
patents on the ground of exemption or exclusion from the coverage of P.D. No. 27. Indisputably, jurisdiction is properly
vested with the DARAB. Therefore, we find that there is neither persuasive justification nor compelling reason to reverse
the decision reached by the Court of Appeals.
WHEREFORE, the instant petition is DENIED for lack of merit. The Resolutions dated May 18, 2004 and August 17, 2004of
the Court of Appeals in CA-G.R. SP No. 83438, affirming the Order dated November 20, 2003 of the PARAD of Malolos City
in DCN R-03-02-024203, are AFFIRMED.
Costs against petitioners.
SO ORDERED.
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Associate Justice
ATTESTATION
cralawI
attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Courts Division.
Associate Justice
Chairperson
CERTIFICATION
cralawPursuantto Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice

SUPREME COURT
Manila
THIRD DIVISION
PERKIN ELMER SINGAPORE PTE LTD., G.R. No. 172242
cralawPetitioner, Present:
YNARES-SANTIAGO,
J.,Chairperson,
AUSTRIA-MARTINEZ,
-versus-
CHICO-NAZARIO, and
NACHURA, JJ.
Promulgated:
DAKILA TRADING CORPORATION,
Respondent.
August 14, 2007
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DECISION
CHICO-NAZARIO, J.:
The case before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil
Procedure seeking to annul and set aside the Decision, dated 4 April 2006, of the Court of Appeals in CA-G.R. SP No.
78981, which affirmed the Orders, dated 4 November 2002 and 20 June 2003, of the Mandaluyong City Regional Trial
Court (RTC), Branch 212, in Civil Case No. MC99-605, which, in turn, denied the Motion to Dismiss and subsequent
Motion for Reconsideration of herein petitioner Perkin Elmer Singapore Pte Ltd.
Petitioner is a corporation duly organized and existing under the laws of Singapore.It is not considered as a foreign
corporation doing business in the Philippines.Herein respondent Dakila Trading Corporation is a corporation organized
and existing under Philippine laws, and engaged in the business of selling and leasing out laboratory instrumentation and
process control instrumentation, and trading of laboratory chemicals and supplies.
The antecedents of the present case are as follows:
Respondent entered into a Distribution Agreement on 1 June 1990 with Perkin-Elmer Instruments Asia Pte Ltd.
(PEIA), a corporation duly organized and existing under the laws of Singapore and engaged in the business of
manufacturing, producing, selling or distributing various laboratory/analytical instruments.By virtue of the said
agreement, PEIA appointed the respondent as the sole distributor of its products in the Philippines.The respondent was
likewise granted the right to purchase and sell the products of PEIA subject to the terms and conditions set forth in the
Distribution Agreement.PEIA, on the other hand, shall give respondent a commission for the sale of its products in the
Philippines.
Under the same Distribution Agreement, respondent shall order the products of PEIA, which it shall sell in the
Philippines, either from PEIA itself or from Perkin-Elmer Instruments (Philippines) Corporation (PEIP), an affiliate
of PEIA.PEIP is a corporation duly organized and existing under Philippine laws, and involved in the business of
wholesale trading of all kinds of scientific, biotechnological, and analytical instruments and appliances.PEIA allegedly
owned 99% of the shares of PEIP.
On 2 August 1997, however, PEIA unilaterally terminated the Distribution Agreement, prompting respondent to file
before the RTC of Mandaluyong City, Branch 212, a Complaint for Collection of Sum of Money and Damages with
Prayer for Issuance of a Writ of Attachment against PEIA and PEIP, docketed as Civil Case No. MC99-605.
The RTC issued an Order, dated 26 March 1999, denying respondents prayer for the issuance of a writ of attachment.The
respondent moved for the reconsideration of the said Order but it was denied in another Order, dated 11 January 2000.
Respondent then filed Ex-Parte Motions for Issuance of Summons and for Leave of Court to Deputize Respondents
General Manager, Richard A. Tee, to Serve Summons Outside of the Philippines, which the RTC granted in its Order,
dated 27 April 2000.Thus, an Alias Summons, dated 4 September 2000, was issued by the RTC to PEIA.But the said
Alias Summons was served on 28 September 2000 and received by Perkinelmer Asia, a Singaporean based sole
proprietorship, owned by the petitioner and, allegedly, a separate and distinct entity from PEIA.
PEIP moved to dismiss the Complaint filed by respondent on the ground that it states no cause of action.Perkinelmer Asia,
on the other hand, through its counsel, sent letters, dated 12 October 2000 and 15 November 2000, to the respondent and
to the RTC, respectively, to inform them of the wrongful service of summons upon Perkinelmer Asia.
Accordingly, respondent filed an Ex-Parte Motion to Admit Amended Complaint, together with the Amended Complaint
claiming that PEIA had become a sole proprietorship owned by the petitioner, and subsequently changed its name to
Perkinelmer Asia.Being a sole proprietorship of the petitioner, a change in PEIAs name and juridical status did not detract
from the fact that all its due and outstanding obligations to third parties were assumed by the petitioner.Hence, in its
Amended Complaint respondent sought to change the name of PEIA to that of the petitioner.In an Order, dated 24 July
2001, the RTC admitted the Amended Complaint filed by the respondent.Respondent then filed another Motion for the
Issuance of Summons and for Leave of Court to Deputize Respondents General Manager, Richard A. Tee, to Serve
Summons Outside the Philippines.In another Order, dated 4 March 2002, the RTC deputized respondents General
Manager to serve summons on petitioner in Singapore.The RTC thus issued summons to the petitioner.Acting on the said
Order, respondents General Manager went to Singapore and served summons on the petitioner.
Meanwhile, in an Order, dated 10 October 2001, the RTC denied the Motion to Dismiss filed by PEIP, compelling the
latter to file its Answer to the Amended Complaint.
Petitioner subsequently filed with the RTC a Special Appearance and Motion to Dismiss respondents Amended Complaint
on 30 May 2002 based on the following grounds: (1) the RTC did not acquire jurisdiction over the person of the
petitioner; (2) the respondent failed to state a cause of action against the petitioner because it is not the real party-in-
interest; (3) even assuming arguendo that the respondent correctly filed the case against the petitioner, the Distribution
Agreement which was the basis of its claim grants PEIA the right to terminate the contract at any time; and (4) the venue
was improperly laid.The RTC in its Order, dated 4 November 2002, denied petitioners Motion to Dismiss, ratiocinating as
follows:
Prescinding from the above arguments of both parties, the [RTC] is inclined to DENY the
Motion to Dismiss.
A careful scrutiny on (sic) the allegation in the (Amended) Complaint would show that
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[herein respondent] alleges ownership by the [herein petitioner] of shares of stocks in the
[PEIP].Such allegation of ownership of shares of stocks by the [petitioner] would reveal that
there is an allegation of personal property in the Philippines.Shares of stocks represent personal
property of the shareholder.Thus, it follows that even though the Amended Complaint is
primarily for damages, it does relate to a property of the [petitioner], to which the latter has a
claim interest (sic), or an actual or contingent lien, which will make it fall under one of the
requisite (sic) for extraterritorial service under Section 15, Rule 14, of the Rules of Court.Thus, it
could be gainfully said that the summons had been validly served for [RTC] to acquire
jurisdiction over the [petitioner].
The [petitioner] hinges its dismissal on the failure of the [respondent] to state a cause of
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action.The [RTC] would like to emphasize that in a Motion to Dismiss, it hypothetically admits
the truth of the facts alleged in a complaint.
When the ground for dismissal is that the complaint states no cause of action, such fact can
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be determined only from the facts alleged in the complaint x x x and from no other x x x and the
Court cannot consider other matters aliunde x x x.This implies that the issue must be passed
upon on the basis of the allegations and declare them to be false, otherwise it would be a
procedural error and a denial of due process to the [respondent] x x x.
The three (3) essential elements of a cause of action are the following:
a) The plaintiffs legal rights;

b) A correlative obligation of the defendant;
c) The omission of the defendant in violation of the legal rights.
A cursory reading of the Amended Complaint would reveal that all of the essential elements of a
cause of action are attendant in the Amended Complaint.
As for the contention that venue was improperly laid, x x x, the [RTC] in its ultimate desire
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that the ends of justice could be served in its fullest, cannot rule that venue was improperly laid.
cralaw xxxx
The stipulation as to the venue of a prospective action does not preclude the filing of the suit
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in the residence of the [respondent] under Section 2, Rule 4, Rules of Court, especially where the
venue stipulation was imposed by the [petitioner] for its own benefits.
cralaw xxxx
The [RTC] further believes that it is imperative that in order to ferret out the truth, a full-
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blown trial is necessary for parties to be able to prove or disprove their allegations.
Petitioner moved for the reconsideration of the aforesaid Order but, it was denied by the RTC in its Order, dated 20 June
2003.
Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure with
application for temporary restraining order and/or preliminary injunction before the Court of Appeals alleging that the
RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in refusing to dismiss the Amended
Complaint.The Court of Appeals never issued any temporary restraining order or writ of injunction.On 4 April 2006, the
Court of Appeals rendered a Decision affirming the RTC Orders of 4 November 2002 and 20 June 2003.
This brings us to the present Petition before this Court wherein petitioner raised the following issues.
I.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN

NOT RULING THAT THE SERVICE OF SUMMONS ON PETITIONER WAS DEFECTIVE
AND THAT THE TRIAL COURT THUS FAILED TO ACQUIRE JURISDICTION OVER
THE PERSON OF THE PETITIONER.
II.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN

RULING THAT THE SOLE ISSUE IN THE PETITION FOR CERTIORARI FILED BEFORE
IT IS THE QUESTION OF WHETHER THE TRIAL COURT ACQUIRED JURISDICTION
OVER THE PERSON OF THE PETITIONER THROUGH THE EXTRATERRITORIAL
SERVICE OF SUMMONS.
cralaw
A.
WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE

GRANTED THE PETITION FOR CERTIORARI AND REVERSED THE RTC
ORDERS ON THE GROUND THAT THE AMENDED COMPLAINT FAILED
TO STATE A CAUSE OF ACTION AGAINST PETITIONER.
1. BASED ON THE ALLEGATIONS IN THE EX-PARTE MOTION TO

ADMIT AMENDED COMPLAINT, AMENDED COMPLAINT, AND ALL
DOCUMENTS ATTACHED AND/OR RELATED THERETO, PETITIONER IS
NOT THE REAL PARTY-IN-INTEREST DEFENDANT IN THE CASE
BELOW.
2. ASSUMING ARGUENDO THAT RESPONDENT DAKILA FILED

THIS CASE AGAINST THE CORRECT [PARTY], INASMUCH AS THE
DISTRIBUTION AGREEMENT DATED 1 JUNE 1990 GRANTS [PEIA] THE
RIGHT TO TERMINATE THE CONTRACT AT ANY TIME, RESPONDENT
DAKILA FAILS TO STATE A CAUSE OF ACTION IN THE CASE BELOW.
B.
WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE

GRANTED THE PETITION FOR CERTIORARI AND REVERSED THE RTC
ORDERS ON THE GROUND OF IMPROPER VENUE.
III.
WHETHER OR NOT PETITIONER IS ENTITLED TO A TEMPORARY RESTRAINING

ORDER AND/OR WRIT OF INJUNCTION.
The foregoing issues raised by petitioner essentially requires this Court to make a determination of the (1) proper service
of summons and acquisition of jurisdiction by the RTC over the person of the petitioner; (2) existence of a cause of action
against petitioner in respondents Amended Complaint; and (3) proper venue for respondents civil case against petitioner.
Petitioner contends that Civil Case No. MC99-605 involves an action for collection of sum of money and damages arising
from the alleged breach of the Distribution Agreement.The action is one in personam, or an action against a person based
on his personal liability; and for the court a quo to acquire jurisdiction over the person of the petitioner, personal service
of summons, and not extraterritorial service of summons, must be made within the state even if the petitioner is a non-
resident.Petitioner avers that extraterritorial service of summons stated under Section 15, Rule 14 of the 1997 Revised
Rules of Civil Procedure, is only proper in in rem and quasi in rem cases; thus, resort to an extraterritorial service of
summons in the case at bar was erroneous.Petitioner asseverates that the allegations in the respondents Amended
Complaint that the petitioner has personal properties within the Philippines does not make the present case one that relates
to, or the subject of which is, property within the Philippines warranting the extraterritorial service of summons under
Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure.Petitioner states that for an action to be considered as
one that relates to, or the subject of which is, property within the Philippines, the main subject matter of the action must be
the property within the Philippines itself, and such was not the situation in this case.Likewise, the prayer in respondents
Amended Complaint for the issuance of a writ of attachment over the personal property of PEIP, which is 99% owned by
petitioner (as the supposed successor of PEIA), did not convert the action from one in personam to one that is quasi in
rem.Also, the petitioner points out that since the respondents prayer for the issuance of a writ of attachment was denied by
the RTC in its Order, dated 26 March 1999,then the nature of Civil Case No. MC99-605 remains in personam, contrary to
the ruling of the Court of Appeals that by the attachment of the petitioners interest in PEIP the action in personam was
converted to an action quasi in rem.Resultantly, the extraterritorial service of summons on the petitioner was not validly
effected, and did not give the RTC jurisdiction over the petitioner.
Petitioner further argues that the appellate court should have granted its Petition for Certiorari on the ground that the RTC
committed grave abuse of discretion amounting to lack or excess of jurisdiction in refusing to dismiss respondents
Amended Complaint for failure to state a cause of action against petitioner which was not the real party-in-interest in Civil
Case No. MC99-605.Petitioner claims that it had never used the name PEIA as its corporate name, and neither did it
change its name from that of PEIA.Petitioner stresses that PEIA is an entirely different corporate entity that is not
connected in whatever manner to the petitioner.Even assuming arguendo that petitioner is the real party-in-interest in
Civil Case No. MC99-605 or that petitioner and PEIA are one and the same entity, petitioner still avows that the
respondent failed to state a cause of action against it because the Distribution Agreement expressly grants PEIA the right
to terminate the said contract at any time.
Lastly, it is the contention of the petitioner that the appellate court should have granted its Petition for Certiorari because
the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in refusing to dismiss Civil Case
No. MC99-605 for having been filed in an improper venue.Petitioner asserts that in the Distribution Agreement entered
into between the respondent and PEIA, both had mutually agreed to the exclusive jurisdiction of the courts of Singapore
or of the Philippines as elected by PEIA.Absent any waiver by PEIA of its right to choose the venue of the dispute, the
Complaint filed by the respondent before the RTC in the Philippines should have been dismissed on the ground of
improper venue.
The Petition is meritorious.
Jurisdiction is the power with which courts are invested for administering justice; that is, for hearing and deciding cases.
In order for the court to have authority to dispose of the case on the merits, it must acquire jurisdiction over the subject
matter and the parties.
Jurisdiction of the court over the subject matter is conferred only by the Constitution or by law. It is determinable on the
basis of allegations in the complaint.
Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, while jurisdiction over the defendants in a
civil case is acquired either through the service of summons upon them in the manner required by law or through their
voluntary appearance in court and their submission to its authority.If the defendants have not been summoned, unless they
voluntarily appear in court, the court acquires no jurisdiction over their persons and a judgment rendered against them is
null and void.To be bound by a decision, a party should first be subjected to the courts jurisdiction.
Thus, one of the modes of acquiring jurisdiction over the person of the defendant or respondent in a civil case is through
service of summons.It is intended to give notice to the defendant or respondent that a civil action has been commenced
against him. The defendant or respondent is thus put on guard as to the demands of the plaintiff or the petitioner.
The proper service of summons differs depending on the nature of the civil case instituted by the plaintiff or petitioner:
whether it is in personam, in rem, or quasi in rem.Actions in personam, are those actions brought against a person on the
basis of his personal liability; actions in rem are actions against the thing itself instead of against the person; and actions
are quasi in rem, where an individual is named as defendant and the purpose of the proceeding is to subject his or her
interest in a property to the obligation or loan burdening the property.chanroblesvirtuallawlibrary
Under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure, there are only four instances wherein a
defendant who is a non-resident and is not found in the country may be served with summons by extraterritorial service, to
wit:(1) when the action affects the personal status of the plaintiff; (2) when the action relates to, or the subject of which is
property, within the Philippines, in which the defendant claims a lien or an interest, actual or contingent; (3) when the
relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located
in the Philippines; and (4) when the defendant non-residents property has been attached within the Philippines.In these
instances, service of summons may be effected by (a) personal service out of the country, with leave of court; (b)
publication, also with leave of court; or (c) any other manner the court may deem sufficient.chanroblesvirtuallawlibrary
Undoubtedly, extraterritorial service of summons applies only where the action is in rem or quasi in rem, but not if an
action is in personam.
When the case instituted is an action in rem or quasi in rem, Philippine courts already have jurisdiction to hear and decide
the case because, in actions in rem and quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to
confer jurisdiction on the court, provided that the court acquires jurisdiction over the res.Thus, in such instance,
extraterritorial service of summons can be made upon the defendant.The said extraterritorial service of summons is not for
the purpose of vesting the court with jurisdiction, but for complying with the requirements of fair play or due process, so
that the defendant will be informed of the pendency of the action against him and the possibility that property in the
Philippines belonging to him or in which he has an interest may be subjected to a judgment in favor of the plaintiff, and he
can thereby take steps to protect his interest if he is so minded.On the other hand, when the defendant or respondent does
not reside and is not found in the Philippines, and the action involved is in personam, Philippine courts cannot try any
case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in
court.chanroblesvirtuallawlibrary
In the case at bar, this Court sustains the contention of the petitioner that there can never be a valid extraterritorial service
of summons upon it, because the case before the court a quo involving collection of a sum of money and damages is,
indeed, an action in personam, as it deals with the personal liability of the petitioner to the respondent by reason of the
alleged unilateral termination by the former of the Distribution Agreement.Even the Court of Appeals, in its Decision
dated 4 April 2004, upheld the nature of the instant case as an action in personam.In the said Decision the appellate court
ruled that:
In the instant petition, [respondents] cause of action in Civil Case No. MC99-605 is anchored on
the claim that petitioner unilaterally terminated the Distribution Agreement.Thus, [respondent]
prays in its [C]omplaint that Upon the filing of the Complaint, issue an Order fixing the amount
of the bond and issue a writ of attachment requiring the sheriff to attach the properties of
[Perkin-Elmer Philippines], which are not exempt from execution, and as much as may be
sufficient to satisfy [respondents] demands.
The action instituted by [respondent] affects the parties alone, not the whole world.Hence, it is an
action in personam, i.e., any judgment therein is binding only upon the parties properly
impleaded.
xxxx
The objective sought in [respondents] [C]omplaint was to establish a claim against petitioner for
its alleged unilateral termination of [D]istribution [A]greement.Hence, to repeat, Civil Case No.
MC99-605 is an action in personam because it is an action against persons, namely, herein
petitioner, on the basis of its personal liability.As such, personal service of summons upon
the [petitioner] is essential in order for the court to acquire of (sic) jurisdiction over [its
person].(Emphasis supplied.)
Thus, being an action in personam, personal service of summons within the Philippines is necessary in order for the RTC
to validly acquire jurisdiction over the person of the petitioner, and this is not possible in the present case because the
petitioner is a non-resident and is not found within the Philippines.Respondents allegation in its Amended Complaint that
petitioner had personal property within the Philippines in the form of shares of stock in PEIP did not make Civil Case No.
MC99-605 fall under any of the four instances mentioned in Section 15, Rule 14 of the Rules of Court, as to convert the
action in personam to an action in rem or quasi in rem and, subsequently, make the extraterritorial service of summons
upon the petitioner valid.
It is incorrect for the RTC to have ruled that the allegations made by the respondent in its Amended Complaint, which is
primarily for collection of a sum of money and damages, that the petitioner owns shares of stock within the Philippines to
which the petitioner claims interest, or an actual or contingent lien, would make the case fall under one of the aforesaid
instances wherein extraterritorial service of summons under Section 15, Rule 14 of the 1997 Revised Rules of Civil
Procedure, would be valid.The RTC in arriving at such conclusions relied on the second instance, mentioned under
Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure (i.e., when the action relates to, or the subject of which
is property, within the Philippines, in which the defendant claims a lien or interest, actual or contingent), where
extraterritorial service of summons can be properly made.However, the aforesaid second instance has no application in the
case before this Court.Primarily, the Amended Complaint filed by the respondent against the petitioner was for the
collection of sum of money and damages.The said case was neither related nor connected to any property of the petitioner
to which it claims a lien or interest.The action for collection of a sum of money and damages was purely based on the
personal liability of the petitioner towards the respondent.The petitioner is correct in saying that mere allegations of
personal property within the Philippines does not necessarily make the action as one that relates to or the subject of which
is, property within the Philippines as to warrant the extraterritorial service of summons.For the action to be considered one
that relates to, or the subject of which, is the property within the Philippines, the main subject matter of the action must be
the property itself of the petitioner in the Philippines.By analogy, an action involving title to or possession of real or
personal property -- such as the foreclosure of real estate or chattel mortgage where the mortgagor does not reside or is not
found in the Philippines -- can be considered as an action which relates to, or the subject of which is, property within the
Philippines, in which the defendant claims a lien or interest, actual or contingent; and in such instance, judgment will be
limited to the res.
Moreover, the allegations made by the respondent that the petitioner has property within the Philippines were in support
of its application for the issuance of a writ of attachment, which was denied by the RTC.Hence, it is clear from the
foregoing that the Complaint filed by the respondent against the petitioner does not really relate to, or the subject of which
is, property within the Philippines of the petitioner.
This Court also finds error in the Decision of the Court of Appeals.It is provided for in the said Decision, thus:
However, let it be emphasized that in the [C]omplaint filed before the trial court, [respondent]
prayed that Upon the filing of the Complaint, issue an Order fixing the amount of the bond and
issue a writ of attachment requiring the sheriff to attach the properties of [Perkin-Elmer
Philippines], which are not exempt from execution, and as much as may be sufficient to satisfy
[respondents] demands.
In other words, although the [C]omplaint before the trial court does not involve the personal
status of the [respondent], nevertheless, the case involves property within the Philippines in
which the [petitioner] has or claim an interest, or which the [respondent] has attached, which is
one of the instances where extraterritorial service of summons is proper.
xxxx
Hence, it is submitted that one of the instances when exterritorial service of summons under
Section 15, Rule 14 of the Rules of Court is proper may be considered to have been met.This is
because the [C]omplaint for collection of sum of money which is an action in personam was
converted into an action quasi in rem by the attachment of [petitioners] interest in [Perkin-
ElmerPhilippines].(Emphasis supplied.)
Respondents allegation in its Amended Complaint that petitioner had personal property within the Philippines in the form
of shares of stock in PEIP does not convert Civil Case No. MC99-605 from an action in personam to one quasi in rem, so
as to qualify said case under the fourth instance mentioned in Section 15, Rule 14 of the 1997 Revised Rules of Civil
Procedure (i.e., when the non-resident defendants property has been attached within the Philippines), wherein
extraterritorial service of summons upon the petitioner would have been valid.It is worthy to note that what is required
under the aforesaid provision of the Revised Rules of Civil Procedure is not a mere allegation of the existence of personal
property belonging to the non-resident defendant within the Philippines but, more precisely, that the non-resident
defendants personal property located within the Philippines must have been actually attached.This Court in the case of
Venturanza v. Court of Appeals ruled that when the attachment was void from the beginning, the action in personam
which required personal service of summons was never converted into an action in rem where service by publication
would have been valid.Hence, the appellate court erred in declaring that the present case, which is an action in personam,
was converted to an action quasi in rem because of respondents allegations in its Amended Complaint that petitioner had
personal property within the Philippines.
Glaringly, respondents prayer in its Amended Complaint for the issuance of a writ of attachment over petitioners
purported shares of stock in PEIP located within the Philippines was denied by the court a quo in its Order dated 26
March 1999.Respondents Motion for Reconsideration of the said Order was likewise denied by the RTC in its subsequent
Order, dated 11 January 2000.Evidently, petitioners alleged personal property within the Philippines, in the form of shares
of stock in PEIP, had not been attached; hence, Civil Case No. MC99-605, for collection of sum of money and damages,
remains an action in personam.As a result, the extraterritorial service of summons was not validly effected by the RTC
against the petitioner, and the RTC thus failed to acquire jurisdiction over the person of the petitioner.The RTC is
therefore bereft of any authority to act upon the Complaint filed before it by the respondent insofar as the petitioner is
concerned.
If there was no valid summons served upon petitioner, could RTC have acquired jurisdiction over the person of the
petitioner by the latters voluntary appearance?As a rule, even if the service of summons upon the defendant or respondent
in a civil case is defective, the court can still acquire jurisdiction over his person when he voluntary appears in court or
submits himself to its authority.Nonetheless, voluntary appearance, as a mode of acquiring jurisdiction over the person of
the defendant, is likewise inapplicable in this case.
It is settled that a party who makes a special appearance in court for the purpose of challenging the jurisdiction of said
court, based on the invalidity of the service of summons, cannot be considered to have voluntarily submitted himself to
the jurisdiction of the court.In the present case, petitioner has been consistent in all its pleadings in assailing the service of
summons upon it and the jurisdiction of the RTC over its person.Thus, the petitioner cannot be declared in estoppel when
it filed an Answer ad cautelam with compulsory counterclaim before the RTC while the instant Petition was still pending
before this Court.The petitioner was in a situation wherein it had no other choice but to file an Answer; otherwise, the
RTC would have already declared that petitioner had waived its right to file responsive pleadings.Neither can the
compulsory counterclaim contained in petitioners Answer ad cautelam be considered as voluntary appearance of
petitioner before the RTC.Petitioner seeks to recover damages and attorneys fees as a consequence of the unfounded suit
filed by respondent against it.Thus, petitioners compulsory counterclaim is only consistent with its position that the
respondent wrongfully filed a case against it and the RTC erroneously exercised jurisdiction over its person.
Distinction must be made in Civil Case No. MC99-605 as to the jurisdiction of the RTC over respondents complaint and
over petitioners counterclaim -- while it may have no jurisdiction over the former, it may exercise jurisdiction over the
latter.The compulsory counterclaim attached to petitioners Answer ad cautelam can be treated as a separate action,
wherein petitioner is the plaintiff while respondent is the defendant.Petitioner could have instituted a separate action for
the very same claims but, for the sake of expediency and to avoid multiplicity of suits, it chose to demand the same in
Civil Case No. MC99-605.Jurisdiction of the RTC over the subject matter and the parties in the counterclaim must thus be
determined separately and independently from the jurisdiction of the same court in the same case over the subject matter
and the parties in respondents complaint.
Moreover, even though the petitioner raised other grounds in its Motion to Dismiss aside from lack of jurisdiction over its
person, the same is not tantamount to its voluntary appearance or submission to the authority of the court a quo.While in
De Midgely v. Ferandos, it was held that, in a Motion to Dismiss, the allegation of grounds other than lack of jurisdiction
over the person of the defendant, including a prayer "for such other reliefs as" may be deemed "appropriate and proper"
amounted to voluntary appearance, such ruling must be deemed superseded by the declaration of this Court in La Naval
Drug Corporation v. Court of Appeals that estoppel by jurisdiction must be unequivocal and intentional.It would be
absurd to hold that petitioner unequivocally and intentionally submitted itself to the jurisdiction of the court by seeking
other reliefs to which it might be entitled when the only relief that it could properly ask from the trial court is the dismissal
of the complaint against it.Thus, the allegation of grounds other than lack of jurisdiction with a prayer for such other
reliefs as may be deemed appropriate and proper cannot be considered as unequivocal and intentional estoppel.Most
telling is Section 20, Rule 14 of the Rules of Court, which expressly provides:
SEC. 20.Voluntary appearance. - The defendants voluntary appearance in the action shall be
equivalent to service of summons.The inclusion in a motion to dismiss of other grounds aside
from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary
appearance.(Emphasis supplied.)
In sum, this Court finds that the petitioner did not submit itself voluntarily to the authority of the court a quo; and in the
absence of valid service of summons, the RTC utterly failed to acquire jurisdiction over the person of the petitioner.
Anent the existence of a cause of action against petitioner and the proper venue of the case, this Court upholds the
findings of the RTC on these issues.
Dismissal of a Complaint for failure to state a cause of action is provided for by the Rules of Court.When a Motion to
Dismiss is grounded on the failure to state a cause of action, a ruling thereon should be based only on the facts alleged in
the complaint. The court must pass upon this issue based solely on such allegations, assuming them to be true.For it to do
otherwise would be a procedural error and a denial of plaintiffs right to due process.While, truly, there are well-
recognized exceptions to the rule that the allegations are hypothetically admitted as true and inquiry is confined to the face
of the complaint, none of the exceptions apply in this case.Hence, the general rule applies.The defense of the petitioner
that it is not the real party-in-interest is evidentiary in nature which must be proven in trial.The appellate court, then,
cannot be faulted for not granting petitioners Motion to Dismiss on the ground of failure to state a cause of action.
In the same way, the appellate court did not err in denying petitioners Motion to Dismiss Civil Case No. MC99-605 on the
ground of improper venue.In arriving at such conclusion, this Court quotes with approval the following ratiocination of
the RTC:
As for the contention that venue was improperly laid, x x x, the [trial court] in its ultimate desire
that the ends of justice could be served in its fullest, cannot rule that venue was improperly laid.
cralaw xxxx
The stipulation as to the venue of a prospective action does not preclude the filing of
cralaw
the suit in the residence of the [respondent] under Section 2, Rule 4, Rules of Court,
especially where the venue stipulation was imposed by the [petitioner] for its own benefits.
cralaw
cralawDespite the venue stipulation found in the Distribution Agreement stipulating that the exclusive jurisdiction over
disputes arising from the same shall lie in the courts of Singapore or of the Territory (referring to the Philippines),
whichever is elected by PEIA (or petitioner, as PEIAs alleged successor), the RTC of the Philippines cannot be considered
as an improper venue.Truly, the venue stipulation used the word exclusive, however, a closer look on the Distribution
Agreement would reveal that the venue stipulation was really in the alternative i.e., courts of Singapore or of the Territory,
meaning, the Philippines; thus, the court a quo is not an improper venue for the present case.
cralawNonetheless, it bears to emphasize that despite our findings that based on the allegations in respondents Complaint in
Civil Case No. MC99-605, respondent appears to have a cause of action against the petitioner and that the RTC is the
proper venue for the said case, Civil Case No. MC99-605 is still dismissible, for the RTC never acquired jurisdiction
over the person of the petitioner.The extraterritorial service of summons upon the petitioner produces no effect because it
can only be done if the action is in rem or quasi in rem.The case for collection of sum of money and damages filed by the
respondent against the petitioner being an action in personam, then personal service of summons upon the petitioner
within the Philippines is essential for the RTC to validly acquire jurisdiction over the person of the petitioner.Having
failed to do so, the RTC can never subject petitioner to its jurisdiction.The mere allegation made by the respondent that
the petitioner had shares of stock within the Philippines was not enough to convert the action from one in personam to one
that was quasi in rem, for petitioners purported personal property was never attached; thus, the extraterritorial service of
summons upon the petitioner remains invalid.In light of the foregoing findings, this Court concludes that the RTC has no
power to hear and decide the case against the petitioner, because the extraterritorial service of summons was not validly
effected upon the petitioner and the RTC never acquired jurisdiction over its person.
cralawFinally, as regards the petitioners counterclaim, which is purely for damages and attorneys fees by reason of the
unfounded suit filed by the respondent against it, it has long been settled that the same truly falls under the classification
of compulsory counterclaim and it must be pleaded in the same action, otherwise, it is barred.In the case at bar, this
Court orders the dismissal of the Complaint filed by the respondent against the petitioner because the court a quo failed
to acquire jurisdiction over the person of the latter.Since the Complaint of the respondent was dismissed, what will
happen then to the counterclaim of the petitioner?Does the dismissal of the complaint carry with it the dismissal of the
counterclaim?
In the cases of Metal Engineering Resources Corp. v. Court of Appeals, International Container Terminal Services, Inc.
v. Court of Appeals, and BA Finance Corporation v. Co., the Court ruled that if the court does not have jurisdiction to
entertain the main action of the case and dismisses the same, then the compulsory counterclaim, being ancillary to the
principal controversy, must likewise be dismissed since no jurisdiction remained for any grant of relief under the
counterclaim.If we follow the aforesaid pronouncement of the Court in the cases mentioned above, the counterclaim of the
herein petitioner being compulsory in nature must also be dismissed together with the Complaint.However, in the case of
Pinga vs. Heirs of German Santiago, the Court explicitly expressed that:
Similarly, Justice Feria notes that the present rule reaffirms the right of the defendant to move for
the dismissal of the complaint and to prosecute his counterclaim, as stated in the separate opinion
[of Justice Regalado in BA Finance].Retired Court of Appeals Justice Hererra pronounces that
the amendment to Section 3, Rule 17 [of the 1997 Revised Rules of Civil Procedure] settles
that nagging question whether the dismissal of the complaint carries with it the dismissal of
the counterclaim, and opines that by reason of the amendments, the rulings in Metals
Engineering, International Container, and BA Finance may be deemed abandoned.x x x.
x x x, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended
Rule 17, those previous jural doctrines that were inconsistent with the new rules incorporated in
the 1997 Rules of Civil Procedure were implicitly abandoned insofar as incidents arising after
the effectivity of the new procedural rules on 1 July 1997.BA Finance, or even the doctrine that a
counterclaim may be necessarily dismissed along with the complaint, clearly conflicts with the
1997 Rules of Civil Procedure.The abandonment of BA Finance as doctrine extends as far back
as 1997, when the Court adopted the new Rules of Civil Procedure.If, since then, abandonment
has not been affirmed in jurisprudence, it is only because no proper case has arisen that would
warrant express confirmation of the new rule.That opportunity is here and now, and we thus rule
that the dismissal of a complaint due to fault of the plaintiff is without prejudice to the
right of the defendant to prosecute any pending counterclaims of whatever nature in the
same or separate action.We confirm that BA Finance and all previous rulings of the Court
that are inconsistent with this present holding are now abandoned.[Emphasis supplied].
It is true that the aforesaid declaration of the Court refers to instances covered by Section 3, Rule 17 of the 1997 Revised
Rules of Civil Procedure on dismissal of the complaint due to the fault of the plaintiff.Nonetheless, it does not also
preclude the application of the same to the instant case just because the dismissal of respondents Complaint was upon the
instance of the petitioner who correctly argued lack of jurisdiction over its person.
Also in the case of Pinga v. Heirs of German Santiago, the Court discussed the situation wherein the very filing of the
complaint by the plaintiff against the defendant caused the violation of the latters rights.As to whether the dismissal of
such a complaint should also include the dismissal of the counterclaim, the Court acknowledged that said matter is still
debatable, viz:
Whatever the nature of the counterclaim, it bears the same integral characteristics as a complaint;
namely a cause (or causes) of action constituting an act or omission by which a party violates the
right of another.The main difference lies in that the cause of action in the counterclaim is
maintained by the defendant against the plaintiff, while the converse holds true with the
complaint.Yet, as with a complaint, a counterclaim without a cause of action cannot survive.
x x x if the dismissal of the complaint somehow eliminates the cause(s) of the counterclaim, then
the counterclaim cannot survive.Yet that hardly is the case, especially as a general rule.More
often than not, the allegations that form the counterclaim are rooted in an act or omission of the
plaintiff other than the plaintiffs very act of filing the complaint.Moreover, such acts or
omissions imputed to the plaintiff are often claimed to have occurred prior to the filing of the
complaint itself.The only apparent exception to this circumstance is if it is alleged in the
counterclaim that the very act of the plaintiff in filing the complaint precisely causes the
violation of the defendants rights.Yet even in such an instance, it remains debatable
whether the dismissal or withdrawal of the complaint is sufficient to obviate the pending
cause of action maintained by the defendant against the plaintiff.
Based on the aforequoted ruling of the Court, if the dismissal of the complaint somehow eliminates the cause of the
counterclaim, then the counterclaim cannot survive.Conversely, if the counterclaim itself states sufficient cause of action
then itshouldstand independently of andsurvive the dismissal of the complaint.Now, having been directly confronted with
the problem of whether the compulsory counterclaim by reason of the unfounded suit may prosper even if the main
complaint had been dismissed, we rule in the affirmative.
It bears to emphasize that petitioners counterclaim against respondent is for damages and attorneys fees arising from the
unfounded suit.While respondents Complaint against petitioner is already dismissed, petitioner may have very well
already incurred damages and litigation expenses such as attorneys fees since it was forced to engage legal representation
in the Philippines to protect its rights and to assert lack of jurisdiction of the courts over its person by virtue of the
improper service of summons upon it.Hence, the cause of action of petitioners counterclaim is not eliminated by the mere
dismissal of respondents complaint.
It may also do well to remember that it is this Court which mandated that claims for damages and attorneys fees based on
unfounded suit constitute compulsory counterclaimwhich must be pleaded in the same action or, otherwise, it shall be
barred.It will then be iniquitous and the height of injustice to require the petitioner to make the counterclaim in the present
action, under threat of losing his right to claim the same ever again in any other court, yet make his right totally
dependent on the fate of the respondents complaint.
If indeed the Court dismisses petitioners counterclaim solely on the basis of the dismissal of respondents Complaint, then
what remedy is left for the petitioner? It can be said that he can still file a separate action to recover the damages and
attorneys fees based on the unfounded suit for he cannot be barred from doing so since he did file the compulsory
counterclaim in the present action, only that it was dismissed when respondents Complaint was dismissed.However, this
reasoning is highly flawed and irrational considering that petitioner, already burdened by the damages and attorneys fees
it may have incurred in the present case, must again incur more damages and attorneys fees in pursuing a separate action,
when, in the first place, it should not have been involved in any case at all.
Since petitioners counterclaim is compulsory in nature and its cause of action survives that of the dismissal of respondents
complaint, then it should be resolved based on its own merits and evidentiary support.
WHEREFORE, premises considered, the instant Petition is hereby GRANTED.The Decision of the Court of Appeals,
dated 4 April 2006, in CA-G.R. SP No. 78981, affirming the Orders, dated 4 November 2002 and 20 June 2003, of the
RegionalTrialCourtofMandaluyongCity, Branch 212, in Civil Case No. MC99-605, is hereby REVERSED AND SET
ASIDE.Respondents Amended Complaint in Civil Case No. MC99-605 as against the petitioner is hereby ordered
DISMISSED, and all the proceedings against petitioner in the court a quo by virtue thereof are hereby DECLARED
NULL AND VOID.The RegionalTrialCourtofMandaluyongCity, Branch 212, is DIRECTED to proceed without further
delay with the resolution of respondents Complaint in Civil Case No. MC99-605 as to defendant PEIP, as well as
petitioners counterclaim.No costs.
SO ORDERED.
Associate Justice
WE CONCUR:
CONSUELO YNARES SANTIAGO
Associate Justice
Chairperson
MA. ALICIA AUSTRIA-

MARTINEZANTONIO
EDUARDO B. NACHURA
ATTESTATION
cralawIattest that the conclusions in the above Decision were reached in consultation before the case was assigned to the
Associate Justice
CERTIFICATION
cralawPursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby
certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer
of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
cralawPenned by Associate Justice Monina Arevalo-Zenarosa with Associate Justices Andres B. Reyes, Jr. and Rosmari D. Carandang, concurring; id. at 76-90.
cralawPenned by Judge Rizalina T. Capco-Umali; id. at 315-318.
cralawThe reason of the trial court in denying the prayer of the respondent for the issuance of a writ of attachment was:Based on the records, [respondent] is desirous of attaching
the property of [Perkin-Elmer Philippines] by invoking that [petitioner] owns 99% of [Perkin-Elmer Philippines].x x x, let this Court emphasize that a corporation such
as [Perkin-Elmer Philippines] has a personality separate and distinct from shareholder, [the petitioner].Hence, the property belonging to [Perkin-Elmer Philippines]
cannot be attached to pay for the obligation incurred by its shareholder. (Id. at 731-732.)
cralawId. at 733.
cralawId. at 96.
cralawId. at 151.
cralawId. at 152.
cralawA sole proprietorship is neither a natural person nor a juridical person under Article 44 of the Civil Code.The law merely recognizes the existence of a sole proprietorship as
a form of business organization conducted for profit.It does not vest juridical or legal personality in the sole proprietorship or empowers it to file or defend an action in
court. (Yao Ka Sin Trading v. Court of Appeals, G.R. No. 53820, 15 June 1992, 209 SCRA 763, 780.)Likewise, a sole proprietorship does not possess any juridical
personality separate and apart from the personality of the owner of the enterprise and the personality of the persons acting in the name of such proprietorship.Hence,
any case filed against a sole proprietorship must be brought against its owner.
cralawId. at 238.
cralawId. at 155.

cralawParamount Insurance Corp. v. Japzon, G.R. No. 68037, 29 July 1992, 211 SCRA 879, 884-885.
cralawDe Leon v. Court of Appeals, 315 Phil. 140, 150 (1995).
cralawBank of the Philippine Islands v. Evangelista, 441 Phil. 445, 453 (2002).
cralawParamount Insurance Corp. v. Japzon, supra note 22 at 885.
cralawBanco Do Brasil v. Court of Appeals, 389 Phil. 87, 99-100 (2000).
cralawId.
cralawId.
cralawValmonte v. Court of Appeals, 322 Phil. 96, 106 (1996).
cralawRomualdez-Licaros v. Licaros, 449 Phil. 824, 833 (2003).
cralawBanco Do Brasil v. Court of Appeals, supra note 26.
cralawCivil Law Commentaries by Justice Jose Y. Feria, Vol. 1, 2001 Edition, p. 138, citing therein El Banco Espaol-Filipino v. Palanca, 37 Phil. 921, 927 (1918).
cralawG.R. No. L-77760, 11 December 1987, 156 SCRA 305, 312.
Hongkong and Shanghai Banking Corporation Limited v.Catalan, G.R. No. 159590, 18 October 2004, 440 SCRA 498, 516.
cralawId.
cralawCivil Procedure Commentaries by Justice Jose Y. Feria, Vol. 1 (2001 Edition), p. 277, citing the case of Golden Ribbon Lumber Co., Inc. v. Santos, 52 O.G. 1477 (1955);
Civil Procedure Commentaries by Justice Florenz D. Regalado, Vol. 1 (Seventh Revised Edition), p. 128.
cralawSection 6, Rule 6 of the 1997 Revised Rules of Civil Procedure; Reyes v. Court of Appeals, 148 Phil. 135, 149 (1971); Lafarge Cement Philippines, Inc. v. Continental
Cement Corporation, G.R. No. 155173, 23 November 2004, 443 SCRA 522, 533.
cralawG.R. No. L-34314, 13 May 1975, 64 SCRA 23, 31.
cralawG.R. No. 103200, 31 August 1994, 236 SCRA 78, 86.
Millennium Industrial Commercial Corporation v. Tan, 383 Phil. 468, 478 (2000).
cralaw1997 Revised Rules of Civil Procedure.
cralawSection 1(g), Rule 16, 1997 Revised Rules of Civil Procedure.
cralawIndiana Aerospace University v. Commission on Higher Education, G.R. No. 139371, 4 April 2001, 356 SCRA 367, 385.
There is no hypothetical admission of the veracity of allegations if their falsity is subject to judicial notice, or if such allegations are
legally impossible, or if these refer to facts which are inadmissible in evidence, or if by the record or document included in
the pleading these allegations appear unfounded. Also, inquiry is not confined to the complaint if there is evidence which has
been presented to the court by stipulation of the parties, or in the course of hearings related to the case.
cralawDabuco v. Court of Appeals, 379 Phil. 939, 950 (2000).

cralawTiu Po vs. Bautista, G.R. No. L-55514, 17 March 1981, 103 SCRA 388, 391; Alday vs. FGU Insurance Corporation, G.R. No. 138822, 23 January 2001, 350 SCRA 113,
123.
cralawG.R. No. 95631, 28 October 1991, 203 SCRA 273, 282.
cralawG.R. No. 90530, 7 October 1992, 214 SCRA 456.
cralawG.R. No. 105751, 30 June 1993, 224 SCRA 163, 167.
cralawSupra note 50.
cralawG.R. No. 170354, 30 June 2006, 494 SCRA 393, 414-415.
cralawSupra note 54.
cralawSEC. 3.Dismissal due to fault of plaintiff. -If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or
to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the
defendant or upon the courts own motion without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action.This dismissal
shall have the effect of an adjudication upon the merits, unless otherwise declared by the court.
cralawPinga vs. Heirs of German Santiago, id. at 418-419.

SUPREME COURT
Manila
cralaw
FIRST DIVISION
MUNICIPALITY OF STA. FE,G.R. No. 140474
cralawPetitioner,
Present:
- versus -SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.
MUNICIPALITY OF ARITAO,
Respondent.
Promulgated:
September 21, 2007
X -------------------------------------------------------------------------------------- X
DECISION
AZCUNA, J.:
This is an appeal by petition for review on certiorari under Rule 45 of the Rules of Court of the September 30,
1999 Decision[1] of the Court of Appeals (CA) affirming in toto the August 27, 1992 Order[2] of the Regional
Trial Court (RTC) of Bayombong, Nueva Vizcaya, Branch 28, which dismissed Civil Case No. 2821 for lack of
jurisdiction.
On October 16, 1980, petitionerMunicipality of Sta. Fe, in the Province of Nueva Vizcaya, filed before the RTC
of Bayombong, Nueva Vizcaya, Branch 28, Civil Case No. 2821 for the Determination of Boundary Dispute
involving the barangays of Bantinan and Canabuan. As the parties failed to amicably settle during the pre-trial
stage, trial on the merits ensued.
The trial was almost over, with petitioners rebuttal witness already under cross-examination, when the court,
realizing its oversight under existing law, ordered on December 9, 1988, the suspension of the proceedings and
the referral of the case to the Sangguniang Panlalawigan of Nueva Vizcaya.[3] In turn, the Sanggunian
concerned passed on the matter to its Committee on Legal Affairs, Ordinances and Resolutions, which
recommended adopting Resolution No. 64 dated September 14, 1979 of the former members of its Provincial
Board.[4] Said resolution previously resolved to adjudicate the barangays of Bantinan and Canabuan as parts of
respondents territorial jurisdiction and enjoin petitioner from exercising its governmental functions within the
same. Subsequently, as per Resolution No. 357 dated November 13, 1989, the Sangguniang Panlalawigan
approved the Committees recommendation but endorsed the boundary dispute to the RTC for further
proceedings and preservation of the status quo pending finality of the case.
Back in the RTC, respondent moved to consider Resolution No. 64 as final and executory. In its Order dated
February 12, 1991,[5] the trial court, however, resolved to deny the motion ruling that since there was no
amicable settlement reached at the time the Provincial Board had exceeded its authority in issuing a decision
favoring a party. The court held that, under the law in force, the purpose of such referral was only to afford the
parties an opportunity to amicably settle with the intervention and assistance of the Provincial Board and that in
case no such settlement is reached, the court proceedings shall be resumed.
Subsequently, respondent again filed a motion on June 23, 1992,[6] this time praying for the dismissal of the
case for lack of jurisdiction. The ground relied upon was that under the prevailing law at the time of the filing of
the motion, the power to try and decide municipal boundary disputes already belonged to the Sangguniang
Panlalawigan and no longer with the trial court, primarily citing the doctrine laid down by this Court in
Municipality of Sogod v. Rosal.[7]cralaw
On August 27, 1992, the trial court resolved to grant the motion, thus:cralaw
A close study of the decision of the Honorable Supreme Court in the Municipality of Sogod case in relation to
this case palpably shows that, contrary to the claim of respondent Municipality of Sta. Fe, through counsel, it
involves boundary dispute as in this case.
As to the applicable law on the question of which agency of the Government can take cognizance of this case or
whether or not this Court should proceed in exercising jurisdiction over this case, the same [had] been squarely
resolved by the [Honorable] Supreme Court in the Municipality of Sogod case in this wise: It is worthy to note,
however, that up to this time, the controversy between these two Municipalities has not been settled. However,
the dispute has already been overtaken by events, namely, the enactment of the 1987 Constitution and the New
Local Government Code x x x which imposed new mandatory requirements and procedures on the fixing of
boundaries between municipalities. The 1987 Constitution now mandates that []no province, city, municipality
or barangay may be created, divided, merged, abolished or its boundary substantially altered except in
accordance with the criteria established in the local government code and subject to approval by a majority of
the votes cast in a plebiscite in the political units directly affected.[] x x x Hence, any alteration or modification
of the boundaries of the municipalities shall only be by a law to be enacted by Congress subject to the approval
by a majority of the votes cast in a plebiscite in the barrios affected (Section 134, Local Government Code).
Thus, under present laws, the function of the provincial board to fix the municipal boundaries are now strictly
limited to the factual determination of the boundary lines between municipalities, to be specified by natural
boundaries or by metes and bounds in accordance with laws creating said municipalities.
In view of the above ruling, this Court can do no less but to declare that this case has been overtaken by events,
namely, the enactment of the 1987 Constitution and the Local Government Code of 1991. The Constitution
requires a plebiscite, whereas the Local Government Code of 1991 provides, as follows: Sec. 6. Authority to
Create Local Government Units. A local government unit may be created, divided, merged, abolished, or its
boundaries substantially altered either by law enacted by Congress in the case of a province, city, municipality,
or any other political subdivision, or by ordinance passed by the [s]angguniang [p]anlalawigan, or sangguniang
panglungsod concerned in the case of a barangay located within its territorial jurisdiction, subject to such
limitations and requirements prescribed in this Code.[8]
The motion for reconsideration of the aforesaid Order having been denied,[9] an appeal was elevated by
petitioner to the CA. The CA, however, affirmed in toto the assailed Order, holding that:
We are not unmindful of the rule that where a court has already obtained and is exercising jurisdiction over a
controversy, its jurisdiction to proceed to the final determination of the case is not affected by new legislation
placing jurisdiction over such proceedings in another tribunal or body. This rule, however, is not without
exception. It is not applicable when the change in jurisdiction is curative in character. As far as boundary
disputes are concerned, the 1987 Constitution is the latest will of the people, therefore, the same should be
given retroactive effect on cases pending before courts after its ratification. It mandates that no province, city,
municipality or barangay may be created, divided, merged, abolished or its boundary substantially altered
except in accordance with the criteria established in the Local Government Code and subject to approval by a
majority of the votes cast in a plebiscite in the political units directly affected.
On the other hand, the Local Government Code of 1991 provides that [a] local government unit may be created,
divided, merged, abolished, or its boundaries substantially altered either by law enacted by Congress in the case
of a province, city, municipality, or any other political subdivision, or by ordinance passed by the [s]angguniang
[p]anlalawigan or [s]angguniang [p]anglungsod concerned in the case of a barangay located within its territorial
jurisdiction, subject to such limitations and requirements prescribed in this Code (Book I, Title One, Chapter 2,
Section 6, Local Government Code).
Section 118, Title Nine, Book I of the same Code likewise provides:
SEC 118. Jurisdictional Responsibility for Settlement of Boundary Dispute. Boundary disputes between and
among local government units shall, as much as possible, be settled amicably. To this end:
xxx
a.) Boundary disputes involving two (2) or more municipalities within the same province shall be
referred for settlement to the sangguniang panlalawigan concerned;
xxx
Since the Local Government Code of 1991 is the latest will of the people expressed through Congress on how
boundary disputes should be resolved, the same must prevail over previous ones. It must be emphasized that the
laws on the creation of local government units as well as settling boundary disputes are political in character,
hence, can be changed from time to time and the latest will of the people should always prevail. In the instant
case, there is nothing wrong in holding that Regional Trial Courts no longer have jurisdiction over boundary
disputes.[10]
Before this Court, petitioner submits that the CA erred when it affirmed the dismissal of the case for lack of
jurisdiction by upholding the RTCs application of the doctrine enunciated in the Municipality of Sogod,
namely, that being political in character, this case has been overtaken by different laws which should now
prevail.Petitioner also claims that the CA erred in relying on the provisions of the 1987 Constitution and the
Local Government Code (LGC) of 1991 on the creation, division, merger, abolition, and alteration of
boundaries of political units instead of the specific provisions on the settlement of boundary disputes.
The petition fails.
As early as October 1, 1917, the procedure for the settlement of municipal boundary disputes was already set
forth when Act No. 2711 or the Revised Administrative Code (RAC) took into effect.[12] At that time, Section
2167 of the law provided:
SEC. 2167. Municipal boundary disputes How settled. Disputes as to jurisdiction of municipal governments
over places or barrios shall be decided by the provincial boards of the provinces in which such municipalities
are situated, after an investigation at which the municipalities concerned shall be duly heard. From the decision
of the provincial board appeal may be taken by the municipality aggrieved to the Secretary of the Interior,
whose decision shall be final x x x.[13]
On June 17, 1970,[14] Republic Act (R.A.) No. 6128[15] was approved amending the afore-quoted section of
the RAC, Sec. 1 thereof stated:
SECTION 1. Section Two thousand one hundred sixty-seven of the Revised Administrative Code, as amended,
is hereby further amended to read as follows:
"SEC. 2167. Municipal Boundary Disputes. How Settled. Disputes as to jurisdiction of municipal governments
over places, or barrios shall be heard and decided by the Court of First Instance of the Province where the
municipalities concerned are situated x x x: Provided, That after joinder of issues, the Court shall suspend
proceedings and shall refer the dispute to the Provincial Board x x x concerned for the purpose of affording the
parties an opportunity to reach an amicable settlement with the intervention and assistance of the said Provincial
Board x x x; Provided, further, That in case no amicable settlement is reached within sixty days from the date
the dispute was referred to the Provincial Board x x x concerned, the court proceedings shall be resumed. The
case shall be decided by the said Court of First Instance within one year from resumption of the court
proceedings, and appeal may be taken from the said decision within the time and in the manner prescribed in
Rule 41 or Rule 42, as the case may be, of the Rules of Court x x x
Subsequently, however, with the approval of Batas Pambansa (B.P.) Blg. 337 (otherwise known as the Local
Government Code of 1983) on February 10, 1983,[16] Sec. 2167, as amended, was repealed.[17] In particular,
Sec. 79 of the Code read:
SEC. 79. Municipal Boundary Disputes. Disputes as to the jurisdiction of municipal governments over areas or
barangays shall be heard and decided by the sangguniang panlalawigan of the province where the municipalities
concerned are situated x x x in case no settlement is reached within sixty days from the date the dispute was
referred to the sangguniang panlalawigan concerned, said dispute shall be elevated to the Regional Trial Court
of the province which first took cognizance of the dispute. The case shall be decided by the said court within
one year from the start of proceedings and appeal may be taken from the decision within the time and in the
manner prescribed by the Rules of Court.[18]
Almost a decade passed and R.A. No. 7160 or the LGC of 1991 was signed into law on October 10, 1991 and
took effect on January 1, 1992.[19] As the latest law governing jurisdiction over the settlement of boundary
disputes, Sections 118 and 119 of the Code now mandate:
SEC. 118. Jurisdictional Responsibility for Settlement of Boundary Dispute. Boundary disputes between and
among local government units shall, as much as possible, be settled amicably. To this end:
xxx
(b) Boundary disputes involving two (2) or more municipalities within the same province shall be referred for
settlement to the sangguniang panlalawigan concerned.
xxx
(e) In the event the sanggunian fails to effect an amicable settlement within sixty (60) days from the date the
dispute was referred thereto, it shall issue a certification to that effect. Thereafter, the dispute shall be formally
tried by the sanggunian concerned which shall decide the issue within sixty (60) days from the date of the
certification referred to above.
SEC. 119. Appeal. Within the time and manner prescribed by the Rules of Court, any party may elevate the
decision of the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the area in
dispute. The Regional Trial Court shall decide the appeal within one (1) year from the filing thereof. Pending
final resolution of the disputed area prior to the dispute shall be maintained and continued for all legal purposes.
[20]
This Court agrees with petitioners contention that the trial court had jurisdiction to take cognizance of the
complaint when it was filed on October 16, 1980 since the prevailing law then was Section 2167 of the RAC, as
amended by Sec. 1 of R.A. No. 6128, which granted the Court of First Instance (now RTC) the jurisdiction to
hear and decide cases of municipal boundary disputes.The antecedents of the Municipality of Sogod case reveal
that it dealt with the trial courts dismissal of cases filed for lack of jurisdiction because at the time of the
institution of the civil actions, the law in force was the old provision of Sec. 2167 of the RAC, which
empowered the provincial boards, not the trial courts, to hear and resolve such cases.
The main point of inquiry, however, is whether the CA erred in affirming the trial courts dismissal of the instant
case for lack of jurisdiction on the ground that at the time of the filing of the motion to dismiss the original
jurisdiction to hear and decide, the case had been vested on the Sangguniang Panlalawigan and no longer on the
RTC.
The Court rules that the appellate court did not err. The difference in the factual setting notwithstanding,
Municipality of Sogod still applies in the sense that similar thereto the pendency of the present case has also
been overtaken by events the ratification of the 1987 Constitution and the enactment of the LGC of 1991.
As shown above, since the effectivity of R.A. No. 6128, the Sangguniang Panlalawigan has been the primary
tribunal responsible in the amicable settlement of boundary disputes between or among two or more
municipalities located in the same province. With the LGC of 1991, however, a major change has been
introduced that in the event the Sanggunian fails to effect a settlement, it shall not only issue a certification
to that effect but must also formally hear and decide the case within the reglementary period. Rule III of the
Rules and Regulations Implementing the LGC of 1991[21] outlines the procedure for the settlement of
boundary disputes as follows:
ART. 17. Procedures for Settling Boundary Disputes. - The following procedures shall govern the settlement of
boundary disputes:
(a.) Filing of petition The sanggunian concerned may initiate action by filing a petition, in the form of a
resolution, with the sanggunian having jurisdiction over the dispute.
(b.) Contents of petition The petition shall state the grounds, reasons or justifications therefore.
(c.) Documents attached to petition The petition shall be accompanied by:
(1) Duly authenticated copy of the law or statute creating the LGU or any other documents showing
proof of creation of the LGU;
(2) Provincial, city, municipal or barangay map, as the case may be, duly certified by the LMB;
(3) Technical description of the boundaries of the LGUs concerned;
(4) Written certification of the provincial, city, or municipal assessor, as the case may be, as to
territorial jurisdiction over the disputed area according records in custody;
(5) Written declarations or sworn statements of the people residing in the disputed area; and
(6) Such other documents or information as may be required by the sanggunian hearing the dispute.
(d.) Answer of adverse party Upon receipt by the sanggunian concerned of the petition together with the
required documents, the LGU or LGUs complained against shall be furnished copies thereof and shall be given
fifteen (15) working days within which to file their answers.
(e.) Hearing Within five (5) working days after receipt of the answer of the adverse party, the
sanggunian shall hear the case and allow the parties concerned to present their respective evidences.
(f.) Joint hearing When two or more sanggunians jointly hear a case, they may sit en banc or designate
their respective representatives. Where representatives are designated, there shall be an equal number of
representatives from each sanggunian. They shall elect from among themselves a presiding officer and a
secretary. In case of disagreement, selection shall be by drawing lot.
(g.) Failure to settle In the event the sanggunian fails to amicably settle the dispute within sixty (60)
days from the date such dispute was referred thereto, it shall issue a certification to that effect and copies thereof
shall be furnished the parties concerned.
(h.) Decision Within sixty (60) days from the date the certification was issued, the dispute shall be
formally tried and decided by the sanggunian concerned. Copies of the decision shall, within fifteen (15) days
from the promulgation thereof, be furnished the parties concerned, DILG, local assessor, Comelec, NSO, and
other NGAs concerned.
(i.) Appeal Within the time and manner prescribed by the Rules of Court, any party may elevate the
decision of the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the dispute by
filing therewith the appropriate pleading, stating among others, the nature of the dispute, the decision of the
sanggunian concerned and the reasons for appealing therefrom. The Regional Trial Court shall decide the case
within one (1) year from the filing thereof. Decisions on boundary disputes promulgated jointly by two (2) or
more sangguniang panlalawigan shall be heard by the Regional Trial Court of the province which first took
cognizance of the dispute.
ART. 18. Maintenance of Status Quo. Pending final resolution of the dispute, the status of the affected area
prior to the dispute shall be maintained and continued for all purposes.
ART. 19. Official Custodian. The DILG shall be the official custodian of copies of all documents on boundary
disputes of the LGUs.
Notably, unlike R.A. No. 6128 and B.P. 337, the LGC of 1991 grants an expanded role on the Sangguniang
Panlalawigan concerned in resolving cases of municipal boundary disputes. Aside from having the function of
bringing the contending parties together and intervening or assisting in the amicable settlement of the case, the
Sangguniang Panlalawigan is now specifically vested with original jurisdiction to actually hear and decide the
dispute in accordance with the procedures laid down in the law and its implementing rules and regulations. This
situation, in effect, reverts to the old rule under the RAC, prior to its amendment by R.A. No. 6128, under
which the provincial boards were empowered to investigate, hear the parties and eventually decide the case on
the basis thereof. On the other hand, under the LGC of 1991, the trial court loses its power to try, at the first
instance, cases of municipal boundary disputes. Only in the exercise of its appellate jurisdiction can the proper
RTC decide the case, on appeal, should any party aggrieved by the decision of the Sangguniang Panlalawigan
elevate the same.
Considering the foregoing, the RTC correctly dismissed the case for lack of jurisdiction. Under the rules, it was
the responsibility of the court to dismiss an action whenever it appears that [it] has no jurisdiction over the
subject matter.[22] Indeed, the RTC acted accordingly because at the time of the filing of the motion to dismiss
its want of jurisdiction was evident. It was duty-bound to take judicial notice of the parameters of its jurisdiction
as the choice of the proper forum was crucial for the decision of a court or tribunal without jurisdiction is a total
nullity and may be struck down at any time by this Court as it would never become final and executory.[23]
Likewise, the standing rule is that dismissal of a case for lack of jurisdiction may be raised at any stage of the
proceedings since 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;[24] otherwise, the inevitable consequence would make the
courts decision a lawless thing.[25] As correctly pointed out by the RTC:
x x x It will be a futile act for the Court to rule on the case concerning a boundary dispute if its decision will not
after all be followed by the people concerned because the decision is totally unacceptable to them. How then
can the Court enforce its decision? x x x.[26]
Petitioner, however, contends that the provisions of the 1987 Constitution and the LGC of 1991 on the
settlement of municipal boundary disputes should be applied prospectively.The Court is not unmindful of the
rule that where a court has already obtained and is exercising jurisdiction over a controversy, its jurisdiction to
proceed to the final determination of the case is not affected by new legislation placing jurisdiction over such
proceedings in another tribunal.[27] An exception to this rule, however, lies where the statute either expressly
provides or is construed to the effect that it is intended to operate on actions pending before its enactment.[28]
Hence, this Court has held that a law may be given retroactive effect if it so provided expressly or if
retroactivity is necessarily implied therefrom and no vested right or obligation of contract is impaired and it
does not deprive a person of property without due process of law.[29]
It is readily apparent from the provisions of the 1987 Constitution and the LGC of 1991 that their new
provisions and requirements regarding changes in the constitution of political units are intended to apply to all
existing political subsidiaries immediately, i.e., including those with pending cases filed under the previous
regime, since the overarching consideration of these new provisions is the need to empower the local
government units without further delay.
Furthermore, the RTC can still review the decision of the Sanguniang Panlalawigan under the new set-up, in the
exercise of its appellate jurisdiction, so no substantial prejudice is caused by allowing retroactivity.
The Court, therefore, sees no error, much less grave abuse of discretion, on the part of the CA in affirming the
trial courts dismissal of petitioners complaint.
WHEREFORE, the petition is DENIED for lack of merit.
No costs.
SO ORDERED.
ADOLFO S. AZCUNA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
ANGELINA SANDOVAL-GUTIERREZRENATO C. CORONA

CANCIO C. GARCIA
Associate Justice
CERTIFICATION
cralawPursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the
above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the
Courts Division.
REYNATO S. PUNO
Chief Justice
Endnotes:
[1] cralawPenned by Associate Justice Demetrio G. Demetria, with Associate Justices Ramon A. Barcelona and
Mercedes Gozo-Dadole concurring.
[2] cralawPenned by Judge Jose B. Rosales.
[3] cralawRecords, pp. 173-174.

[5] cralawId. at 26.
[6] cralawRecords, pp. 219-220.
[7] cralawG.R. Nos. 38204-5, September 24, 1991, 201 SCRA 632.
[8] cralawRollo, p.27.
[11] cralawId. at 104-105.
[12] cralawSee Province of Camarines Norte v. Province of Quezon, G.R. No. 80796, November 8, 1989, 179
SCRA 233, 235.
[13] cralawEmphasis provided.
[14] cralawSec. 4 of R.A. No. 6128 provides that it shall take effect upon its approval. The Act, however, was
published in the Official Gazette (66 O.G. 34, 7796-7798) on August 24, 1970.
[15] cralawAN ACT PRESCRIBING THE PROCEDURE FOR THE SETTLEMENT OF MUNICIPAL OR
BARRIO BOUNDARY DISPUTES.
[16] cralawSec. 234 of the Code stated that it shall take effect one month after its publication in the Official
Gazette, which was on February 14, 1983 (79 O.G. 7).
[17] cralawSec. 233 of B.P. Blg. 337.
[18] cralawUnderscoring provided.
[19] cralawSec. 536 of the Local Government Code of 1991. See also Mathay v. Court of Appeals, G.R. No.
124374, December 15, 1999, 320 SCRA 703, 710; Angobung v. COMELEC, G.R. No. 126576, March 5, 1997,
269 SCRA 245, 255; Ty v. Trampe, G.R. No. 117577, December 1, 1995, 250 SCRA 500, 510; Garcia v.
COMELEC, G.R. No. 111511, October 5, 1993, 227 SCRA 100, 110; and Evardone v. COMELEC, G.R. No.
94010, December 2, 1991, 204 SCRA 464, 470.
[20] cralawUnderscoring provided.
[21] cralawAdministrative Order No. 270 issued on February 21, 1992.
[22] cralawSec. 2, Rule 9 of the Rules of Court.
[23] cralawBPI v. ALS Management & Development Corp., G.R. No. 151821, April 14, 2004, 427 SCRA 564,
574; AFP Mutual Benefit Association, Inc. v. NLRC, G.R. No. 102199, January 28, 1997, 267 SCRA 47, 63;
and Duero v. Court of Appeals, 424 Phil. 12, 24 (2002).
[24] cralawFrancel Realty Corp. v. Sycip, G.R. No. 154684, September 8, 2005, 469 SCRA 424, 431.
[25] cralawDuero v. Court of Appeals, 424 Phil. 12, 24 (2002).
[26] cralawRollo, p. 29.
[27] cralawPhilippine Long Distance Telephone Company v. Dulay, G.R. No. 53446, April 12, 1989, 172
SCRA 31, 41.
[28] cralawAtlas Fertilizer Corporation v. Navarro, No. L-72074, April 30, 1987, 149 SCRA 432, 436 citing
Bengzon v. Inciong, 91 SCRA 248, 256.
[29] cralawCommissioner of Internal Revenue v. Marubeni Corporation, G.R. No. 137377, December 18, 2001,
372 SCRA 576, 587-588 and Camacho v. Court of Industrial Relations, 80 Phil. 848, 855 (1948).

SUPREME COURT
Manila
Supreme Court
BaguioCity
SECOND DIVISION
RODOLFO HERMOSO, ANTONIO JACOBE, BRIGIDO PORTUGUESE, REGALADO AUSTRIA,

LOLITA ANGELES, PRESINA BERSABE, ANGELITO ROSQUETA, CONSTANCIO PROTUGUESE,
ROGELIO SANTOS, ALIAS FIEL, CATALINA VALENZUELA, JAIME PANGILINAN, ESTELA DE
VERA MACALALAD, LETICIA LOPEZ, NOEMI BAUTISTA, GREGORIO ANTAZO, ELPIDIO
CRIZALDO, OSCAR VICTORIO and ANTONIO ZURITA,
Petitioners,
- versus -
C.L. REALTY CORPORATION,
Respondent.
G.R. No. 140319
Present:
PUNO, J., Chairperson,*
SANDOVAL-GUTIERREZ,**chanroblesvirtuallawlibrary
CORONA,
AZCUNA, and
GARCIA, JJ.
Promulgated:
May 5, 2006
x----------------------------------------------------------------------------------x
DECISION
GARCIA, J.:
cralawAssailed and sought to be set aside in this petition for reviewunder Rule 45 of the Rules of Court are the
following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 43795, to wit:
1. Decision[1] dated March 31, 1999 reversing and setting aside the decision of the Department of
Agrarian Reform Adjudication Board(DARAB) Proper datedAugust 21, 1996;
2. Resolution[2] dated June 17, 1999 denying petitioners' motion for extension of time to file a
motion for reconsideration, thereby also denying their belatedly-filed motion for reconsideration; and
3. Resolution[3] dated October 11, 1999 denying the motion for reconsideration with finality.
cralawRespondent C.L. Realty Corporation (C.L. Realty, for short) is the registered owner of a parcel of land
with an area of 46.1476 hectares located at Brgy. Alas-asin, Mariveles, Bataan, covered by Transfer Certificate
of Title (TCT) No. T-60221.
cralawOn August 28, 1991, C.L. Realty received a Notice of Acquisition of the said parcel of land from
Regional Office No. III of the Department of Agrarian Reform (DAR), followed by a Notice of Valuation under
which the property in question was valued at P273,559.00. C.L. Realty challenged the valuation thus made,
claiming it to be unconscionably low since, under its Sworn Statement on Agricultural Land Holdings dated
February 8, 1988 and filed with the Municipal Assessor's Office, P4,614,760.00 was the amountentered as the
fair value of the land.
cralawOn September 8, 1992, C.L. Realty wrote DAR Regional Director Antonio Nuesa requesting that the
issuance of the Certificates of Land Ownership Award (CLOAs) covering the property in question be held in
abeyance. The following day, Director Nuesa indorsed the request to Bataan Provincial Agrarian Reform
Officer (PARO) Florencio Siman for appropriate action.
cralawBarely a month after, C.L. Realty, without requesting for the lifting of the land coverage, formally
requested and applied with DAR-Region III for conversion of the land from agricultural to
industrial/commercial use which request was also indorsed in due time to the PARO of Bataan for appropriate
action.
cralawEvidently unbeknownst to C.L. Realty when it made its deferment request and filed its application for
conversion, CLOAs were already issued to herein petitioners Rodolfo Hermoso, et al. In fact, pursuant to the
CLOAs thus issued, some of them were able to secure on September 1, 1992, while the others, the following
day, the corresponding certificates of title.Since then, the petitioners appeared to have entered into possession of
said land and planted crops thereon.
cralaw
cralawLater apprised of the CLOA issuance, C.L. Realty filed with the DARAB- Region III office a petition,
later docketed as DARAB Case No. 092-B-93, praying for the cancellation of herein petitioners' CLOAs on the
ground of irregular, premature and anomalous issuance. Specifically, C.L. Realty alleged, inter alia, that the
CLOA recipients do not meet the basic farmer-beneficiary qualification requirement and are not under the order
of priority defined in Section 22 of Republic Act (R.A.) No. 6657[4].
cralawIn their answer, petitioners denied allegations of irregularity and prematurity in the issuance of the
CLOAs in question, adding that all legal requirements for the purpose have been complied with and that they
are all qualified farmer-beneficiaries. They also contend that the petition to cancel was erroneously directed at
them when it should have been addressed to the DAR officials who processed/approved their applications filed
in good faith.
cralawFinding that undue haste attended the processing and issuance of the CLOAs in question, and that the
petitioners were not qualified farmer-beneficiaries under Section 22 of R.A. No. 6657, the DARAB Provincial
Adjudicator rendered, on October 28, 1993, a decision ordering the cancellation of the CLOAs thus issued to
the petitioners.
cralawTherefrom, petitioners appealed to the DARAB Proper at Diliman, Quezon City. In that recourse,
docketed as DARAB Case No. 1999 (Reg. Case No. 092-B-93), petitioners reiterated their position set forth in
their answer to the petition to cancel, and alleged, in addition, that the DARAB provincial adjudicator had no
authority or jurisdiction to cancel or annul the CLOAs, the same having already been registered in their names
with the Register of Deeds.
cralawOn August 21, 1996, the DARAB Proper rendered a decision finding for petitioners, disposing as
follows:
cralawWHEREFORE, premises considered, finding the appeal meritorious, the decision of the Honorable
Adjudicator a quo is hereby REVERSED and SET ASIDE. A new judgment is rendered rejecting any attempt to
nullify the issuance of Certificates of Land Ownership Award (CLOAs) to herein respondents-appellants. The
Board upholds the efficacy of the same.
The DARAB Proper predicated its disposition on the premise that C.L. Realty, failing as it did to substantiate its
allegations respecting the lack of qualification as farmer-beneficiaries of petitioners, had not overturned the
presumption that official duty had been duly performed.
cralawFollowing the denial of its motion for reconsideration, C.L. Realty went to the Court of Appeals (CA) by
way of petition for review, thereat docketed as CA-G.R. SP No. 43795.
cralawAt stated at the outset, CA, in the herein assailed decision[5] dated March 31, 1999, set aside the August
21, 1996 decision of the DARAB Proper and reinstated the ruling of the provincial adjudicator, thus:
cralawWHEREFORE, the premises considered, the appealed decision of the DARAB is hereby REVERSED
and SET ASIDE and the Decision of the Provincial Adjudicator dated 28 October 1993 is HEREBY
REINSTATED.
cralawSubsequently, petitioners, through counsel, filed a motion for extension of time to file a motion for
reconsideration. On May 10, 1999, they filed their motion for reconsideration, followed fourteen (14) days later
by a supplemental motion for reconsideration.
cralawCiting Habaluyas Enterprises, Inc., et. al. vs. Hon. Maximo Japson, et. al.,[6] the CA, in its equally
assailed resolution[7] of June 17, 1999, denied the motion for extension and, consequently, the motion for
reconsideration. On July 1, 1999, petitioners moved for a reconsideration of the resolution dated June 17, 1999,
but their motion was also denied in the resolution of October 11, 1999.[8]chanroblesvirtuallawlibrary
cralawAggrieved, petitioners are now before us via this petition for review under Rule 45 of the Rules of Court.
cralawIn the meanwhile, the Court, upon application of the petitioners, issued, on August 7, 2000, a temporary
restraining order[9]enjoining respondent, thru its agents, from, among other things, entering into the lots
occupied by petitioners and exercising rights of ownership.
cralawThe issues raised, as summarized in petitioners' memorandum[10], turn on the following questions:
1. Whether or not the DARAB provincial adjudicator has jurisdiction to nullify the CLOAs issued to
petitioners, given that the corresponding TCTs have been issued over the lands covered;
2. Whether or not the petition filed by C.L. Realty before the Office of the Provincial Adjudicator
should have been dismissed for non-joinder of indispensable parties;
3. Whether or not the CA failed to take into account facts and circumstances supportive of herein
petitioners' cause, and, on the other hand, accorded undue weight to the findings of the Provincial Adjudicator;
and
4. Whether or not the CA erred in denying herein petitioners' motion for extension of time to file a
motion for reconsideration.
cralawThe jurisdictional and procedural issues raised at the threshold hereof cannot carry the day for the
petitioners.
cralawVis--vis petitioners' jurisdictional challenge, it may be stated that the DAR, through its adjudication arm,
i.e., the DARAB and its regional and provincial adjudication boards, exercises quasi-judicial functions and
jurisdiction on all matters pertaining to agrarian dispute or controversy and the implementation of agrarian
reform laws.[11] In Nuesa vs. Court of Appeals,[12] the Court, citing the Revised Rules of Procedure of the
DARAB, stated that the DARAB has primary, original and appellate jurisdiction 'to determine and adjudicate
all agrarian disputes, cases, controversies, and matters or incidents involving the implementation of all the
Comprehensive Agrarian Reform Program [CARP] under R.A. 6657, E.O. Nos. 228, 229 and 129-A, R.A.
3844, as amended by R.A. 6389, P.D. No. 27 and other agrarian laws and their implementing rules and
regulations. The Court made a similar pronouncement on the jurisdiction of DARAB in Bautista vs. Mag-isa
Vda. De Villa.[13] Under Section 1(f) of the DARAB Rules of Procedure, such jurisdiction of the DARAB
includes cases involving 'the issuance, correction and cancellation of (CLOAs) and Emancipation Patents (EPs)
which are registered with the Land Registration Authority. Surely, such jurisdiction cannot be deemed to
disappear the moment a certificate of title is issued. For, such certificates are not modes of transfer of property
but merely evidence of such transfer. Needless to state, there can be no valid transfer of title should the CLOA
on which it was grounded is void.
cralawAt any rate, the petitioners are in no position to question the jurisdiction of the DAR and its adjudicative
arm at this late junction of the proceedings. They are already estopped at this stage to challenge the competency
of the DARAB and its provincial adjudicator to have taken cognizance of the case. This disposition becomes all
the more pressing considering the petitioners' active participation in the proceedings below, and their having
been the recipients of a favorable decision dated August 21, 1996 of the DARAB Proper. Decisional law frowns
upon a jurisdictional challenge cast against such a milieu.
Petitioners' thesis, under the second ground, that the DAR officials who processed and approved the
applications for issuance of CLOAs and the Register of Deeds are indispensable parties cannot be given
cogency. Surely, a final determination of the petition for cancellation of CLOAs could be had even without
joining in such petition any of the officials adverted to. And as a matter of long and recognized practice, a
public respondent need only to be impleadedin certiorari proceedings under Rule 65 of the Rules of Court, but
even then, the adjudicating judge, officer or tribunal would only be considered a nominal party.[14] In petitions
for review on certiorari as a mode of ordinary appeal under either Rule 43[15] or 45,[16] only the private parties
to the case are to be impleaded.
The foregoing notwithstanding, the Court still rules for petitioners due to compelling reasons ostensibly
overlooked by the appellate court. We start with respondent C.L. Realty's standing to question the qualification
of the petitioners as CARP beneficiaries.As the DARAB Proper aptly observed:
It is the Municipal Agrarian Reform Officer (MARO) or the Provincial Agrarian Reform Officer (PARO)
together with the Barangay Agrarian Reform Committee (BARC) who screen and select the possible agrarian
beneficiaries. If there are farmers who claimed they have a priority over those who have been identified by the
MARO as beneficiaries of the land, said farmers can file a protest with the MARO or the PARO who is
currently processing the Land Distribution Folder (Administrative Order No. 10, Series of 1990).
xxx The landowner, however, does not have the right to select who the beneficiaries should be. Hence, other
farmers who were not selected and claimed they have a priority over those who have been identified as such can
file a written protest with the MARO or the PARO who is currently processing the claim folder.[17] [Emphasis
supplied]
Denying a landowner the right to choose a CARP beneficiary is, in context, only proper. For a covered
landholding does not revert back to the owner even if the beneficiaries thus selected do not meet all necessary
qualifications. Should it be found that the beneficiaries are indeed disqualified, the land acquired by the State
for agrarian reform purposes will not be returned to the landowner but shall go instead to other qualified
beneficiaries.
cralawLest it be overlooked, respondent, upon its receipt of the Notice of Acquisition of the land in question,
never disputed the propriety, let alone asked for the lifting, of such acquisition. Respondent, from its arguments,
does not, therefore, have a claim to retaining ownership of the land. All it did was to except from the valuation
given to its former landholding. And even as to the issue of just compensation, there is no showing that
respondentever brought the matter to the Regional Trial Court (RTC) as even respondent, in its memorandum,
admits it should have done. In this regard, respondent, citing what the Court said in Republic vs. Court of
Appeals,[18] states in its memorandum:
Thus, under the law, the Land Bank of the Philippines is charged with the initial responsibility of determining
the value of lands placed under land reform and the compensation to be paid for their taking. Through notice
sent to the landowner pursuant to 16(a) of R.A. No. 6657, the DAR makes an offer. In case the landowner
rejects the offer, a summary administrative proceeding is held and afterward the provincial (PARAD), the
regional (RARAD) or the central (DARAB) adjudicator as the case may be, depending on the value of the land,
fixes the price to be paid for the land. If the landowner does not agree to the price fixed, he may bring the matter
to the RTC acting as Special Agrarian Court. This in essence is the procedure for the determination of
compensation cases under R.A. No. 6657. x x x In the terminology of Section 57, the RTC, sitting as a Special
Agrarian Court, has 'original and exclusive jurisdiction over all petitions for the determination of just
compensation to landowners. It would subvert this 'original and exclusive jurisdiction of the RTC for the DAR
to vest original jurisdiction in compensation cases in administrative officials and make the RTC an appellate
court for the review of administrative decisions.[19] (Underlining in the original)
Respondent emphasizes in the above-quoted portion of its memorandum that the RTC has jurisdiction over just
compensation disputes. However, nowhere is it shown, even in its own allegations of facts, that respondent
brought this matter to the RTC. Instead, respondent sought a conversion of the land from agricultural to
industrial/commercial use.
Under DAR Administrative Order (AO) No. 1, series of 1990, as amended by AO No. 12, series of 1994,
'[A]fter the DAR has issued a Notice of Acquisition of an agricultural land under the compulsory acquisition
process ' no application for conversion of said land from the landowner or anyone acting on his behalf shall be
given due course. Given this perspective, it cannot plausibly be said that the issuance of CLOAs during the
pendency of the conversion proceedings was anomalous, irregular or premature. As it were, the application for
conversion was improper from the start, the notice of acquisition having previously been issued.
Respondent's ploy for conversion having failed, and the CLOAs having been issued, respondent resorted to
seeking the cancellation of said CLOAs on the basis of the lack of qualifications of the beneficiaries and the
pendency of its application for conversion. Needless to stress, respondent pursued a strange course of action
considering that, originally, its only grievance related to property valuation.
As stated earlier, respondent was without personality to question the selection of beneficiaries. However, even if
it had such personality, its arguments against petitioners' qualifications as farmer-beneficiaries do not bear
sufficient weight to peremptorily justify the cancellation of the issued CLOAs. It may be that the petitioners
were employed or self-employed. This reality, however, even if true, does not per se argue against their
qualifications as CARP beneficiaries at the time the award was made. For all the lawrequires, in the minimum,
is that the prospective beneficiary be a landless resident preferably of the barangay or municipality, as the case
may be, where the landholding is located, provided he has, in the language of Section 22 of RA 6657,the
'willingness, aptitude and ability to cultivate and make the land as productive as possible. A farmer-beneficiary
need not undertake every chore in the cultivation of the farmholding all by his personal self; he may be assisted
in the farm work and the care of plants by his immediate farm household without forfeiting his right to continue
as such beneficiary.[20]chanroblesvirtuallawlibrary
In the case at bench, it appears that the BARC, the MARO and/or PARO have screened and, after investigation,
identified, or at least are presumed to have duly screened and identified, the petitioners as qualified beneficiaries
of the land in question and have found the property to be suitable for agricultural productivity. This
determination has not been overcome by proof to the contrary. To be sure, the provincial adjudicator's posture,
as affirmed by the appellate court, that none of the petitioners meet the qualifications of a farmer beneficiary,
since they are factory workers, private employees or fishermen, cannot be accorded the weight ofoverturning
evidence. For one, the provincial adjudicator did not identify who among the petitioners are self-employed,
factory workers or fishermen, if that be the case. And for another, the provincial adjudicator did not point to any
evidence to establish his simplistic conclusion about petitioners not being qualified as farmer-beneficiaries.
Another argument was that some of the beneficiaries were not even residents of Brgy. Alas-asin where the land
is located. It ought to be pointed out, however, that the petitioners were residents of neighboring barangays,
many of which were within walking distance from Brgy. Alas-asin. While farmers or farm workers already in
the place should be given preferential rights in the distribution of lands, even people living outside of the
barangay where the property is situated may be qualified as CARP beneficiaries. Section 22 of R.A. No. 6657
says so:
Section 22. Qualified Beneficiaries. - The lands covered by the CARP shall be distributed as much as possible
to landless residents of the same barangay, or in the absence thereof, landless residents of the same municipality
in the following order of priority:
a) agricultural lessees and share tenants;
b) regular farmworkers;
c) seasonal farmworkers;
d) other farmworkers;
e) actual tillers or occupants of public land;
f) collective or cooperative of the above beneficiaries; and
g) others directly working on the land.
xxxcralawxxxcralawxxx
As stressed by the DARAB Proper in its decision, the very essence of the CARP is to uplift and help as many
farmers as possible and make them beneficiaries of the program. Thus, a liberal interpretation is preferred.
Section 22 of the CARP law provides merely for an order of priority in the distribution of the land to
beneficiaries. In the case at bar, there appears to be no applicants other than the petitioners. Thus, even if it be
assumed that petitioners fall under the last enumerated order of beneficiaries, namely, 'others directly working
on the land, still they are qualified as beneficiaries since they are all residents of Mariveles, Bataan, where the
land is located, though not necessarily all residents of the same barangay.
It should be stressed, at this juncture, that petitioners have had their CLOAs and certificates of title for over
eight (8) years. Some of them have fully paid the Land Bank for the value of the land awarded them. They have
been paying all these years the real estate taxes on their landholdings, cultivating them in the process.
cralawAs a final consideration, we note that the CA had denied with finality petitioners' motion for
reconsideration of its underlying March 31, 1999 decision[21] owing to the belated filing of such motion for
reconsideration. To be sure, the appellate court acted within its sound discretion in denying petitioners' motion
for time to file a motion for reconsideration and, consequent to such denial, denying the corresponding motion
for reconsideration. But the more paramount consideration to observe in this case is the norm relaxing the rules
of procedure in the broader interest of justice, thus helping litigants secure substantial justice, specially, as here,
when the perceived resulting injustice is not proportionate with the parties' failure to strictly comply with the
prescribed procedure.[22]chanroblesvirtuallawlibrary
WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R. SP
No. 43795 dated March 31, 1999, and its Resolutions dated June 17, 1999 and October 11, 1999 are SET
ASIDE and the decision of the Department of Agrarian Reform Adjudication Board in DARAB Case No. 1999
is hereby REINSTATED.
SO ORDERED.
CANCIO C. GARCIA
Associate Justice
WE CONCUR:
(On Leave)
REYNATO S. PUNO
Associate Justice
Chairperson
(NO PART)
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
RENATO C. CORONA
Associate Justice
ADOLFO S. AZCUNA
Associate Justice
ATTESTATION
cralawI attest that the conclusions in the above decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
Acting Chairperson, Second Division

CERTIFICATION
cralawPursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is
hereby certified that the conclusions in the above decision were reached in consultation beforethe case was
assigned to the writer of the opinion of the Court.
ARTEMIO V. PANGANIBAN
Chief Justice
Endnotes:
* cralawOn leave.cralaw
** cralawActing chairperson.cralaw
[1]Penned by then Associate Justice Romeo A. Brawner (ret.), with Associate Justices Angelina Sandoval-
Gutierrez (now a member of this Court) and Martin S. Villarama, Jr., concurring; Rollo, pp. 45-50; Annex 'D',
Petition.cralaw
[2]cralawId. at 62-63; Annex 'G', Petition.cralaw
[3]cralaw Id. at 70-72; Annex 'I', Petition.cralaw
[4]cralaw The Comprehensive Agrarian Reform Law.cralaw
[5]cralawSee Note #1, supra. cralaw
[6]cralawG.R. No. L-70895, May 30, 1986; 142 SCRA 208.cralaw
[7]See item #2, supra.cralaw
[8]See Note #3, supra.cralaw
[9]Rollo, pp. 99-100. cralaw
[10]cralaw Id. at 199-217.cralaw
[11]cralawMartillano v. Court of Appeals, G.R. No. 148277, June 29, 2004; 433 SCRA 195.cralaw
[12]G.R. No. 132048, March 6, 2002; 378 SCRA 351. cralaw
[13]cralawG.R. No. 152564, Sept. 13, 2004; 438 SCRA 259.cralaw

[14]cralawSection 5, Rule 65,Rules of Court.cralaw
[15]cralawSection 6(a) ibid.cralaw
[16]cralawSection 4(a). ibid. cralaw
[17]cralawRollo, pp. 39-40.cralaw
[18]G.R. No. 122256, Oct. 30, 1966;263 SCRA 758.cralaw
[19]cralawRespondent's Memorandum, p. 10; Rollo p. 252.cralaw
[20] cralawSumatra vs. Vda. De Parinas, G.R. No. 142958, April 24, 2002, 381 SCRA 522. cralaw
[21]See Note #1, supra.cralaw
[22]Balindong vs. CA, G.R. No. 159962, Dec. 16, 2004; 447 SCRA 2004.
www.chanrobles.com
SECOND DIVISION
[G.R. No. 139430. June 20, 2001]
EDI STAFF BUILDERS INTERNATIONAL, INC. and LEOCADIO J. DOMINGUEZ, Petitioners, v.

FERMINA D. MAGSINO, respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision, [1] dated March 11, 1999, and the resolution, [2] dated
July 20, 1999, of the Court of Appeals, affirming the finding of the National Labor Relations Commission that
respondent Fermina D. Magsino had been illegally dismissed and ordering petitioner EDI Staffbuilders
International, Inc. (EDI) and Leocadio J. Dominguez to pay separation pay to respondent at the rate of
P10,000.00 a month for every year of service.
The antecedent facts are as follows:
Petitioner EDI is a duly licensed recruitment agency. Petitioner Leocadio J. Dominguez is its president, while
respondent Fermina D. Magsino was until her dismissal the supervisor of its Processing and Documentation
Group responsible for ensuring that all the documentary and other requirements for the deployment abroad of
contract workers recruited by petitioner were complied with. Among the requirements was the remittance of
premium payments on the repatriation bonds of contract workers. Under Department Order No. 28, series of
1991 of the Department of Labor and Employment, overseas contract workers whose employment contracts
have terms of six months or longer are required to post repatriation bonds to guarantee the reimbursement of the
costs of repatriation, including air fare from the job site and other incidental expenses, in the event of the
termination of their employment.
In compliance with the DOLE order, petitioner EDI required overseas contract workers recruited by it to pay
P400.00 a year as premium depending on the length of their respective employment contracts. The premiums
were remitted to a bonding company accredited by the Philippine Overseas Employment Agency. The bonding
company issues a Certificate of Coverage or COC indicating the name of the covered overseas contract worker,
the duration of the repatriation bond, and the premiums paid. The COCs are submitted together with other
documents to the POEA.
On April 16, 1993, Dan de Guzman, the manager of petitioners Processing and Documentation Group, sent
respondent the following memorandum:
Management has received reports on your withholding of collected premium payments for [the] workers
mandatory repatriation bond.
As you well know, all collections are supposed to be properly documented, accounted for, and subsequently
remitted/reported to accounting, whether these are official service fees of EDI-SBII or payments to government
offices for processing of workers travel documents. When PDG records were reviewed, it was discovered that
our document analyst has been collecting premium payments from workers for a two-year bond coverage in
accordance with their employment contract[s]. However, based on your alleged instructions, collections for
two-year premium payments had been turned over to you. Subsequently, you released to the POEA liaison
officer premium payments only for one year. In effect, you withheld one-year premium payment[s] which
remain unaccounted to this day. It appears that this procedure has been going on since January 1992.
In this connection, you are required to submit to the undersigned within three (3) working days from receipt
hereof your written clarification and/or explanations on the foregoing acts, and to show and justify why no
disciplinary action should be taken against you.[3]
Instead of complying with the memorandum, respondent tendered her resignation effective May 30, 1993. [4]
However, action on her resignation letter was held in abeyance pending the result of the investigation of the
charge against her. [5] On May 20, 1993, respondent was given notice of her termination. [6]
On July 12, 1993, respondent filed a complaint for illegal dismissal, nonpayment of salaries, leave pay, 13th
month pay, profit sharing for 1992, service award for 10 years, and maternity benefits against herein petitioners.
She claimed she had been dismissed without cause and without notices.
As no amicable settlement had been reached, the Labor Arbiter on August 25, 1993 directed both parties to file
their position papers.
Only respondent complied. The Labor Arbiter deemed as unrebutted the allegations in respondents complaint
and position paper. On May 19, 1994, the Labor Arbiter rendered his decision, ordering petitioners to reinstate
respondent to her former position without loss of seniority rights and to pay her P91,492.80 backwages and
P7,624.40 13th month pay. [7]
Petitioners appealed to the NLRC which, in its decision, [8] dated March 22, 1996, affirmed the Labor Arbiters
decision. The NLRC held:
The submission of [petitioners] position paper in the guise of an appeal could not be entertained under the
criteria set forth in Sec. 2 of Rule VI of the Rules of Procedure of the NLRC, to wit:
Section 2. Grounds. The appeal may be entertained only on any of the following grounds:
a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter, Regional Director or
duly authorized Hearing Officer or Administrator of POEA;
b) If the decision, order or award was secured through fraud or coercion, including graft and corruption;
c) If made purely on questions of law; and/or
d) If serious errors in the findings of facts are raised which, if not corrected, would cause grave or irreparable
damage or injury to the appellant.[9]
Through a new counsel, petitioners moved for a reconsideration, alleging that their former lawyer deliberately
did not file a position paper in their behalf before the Labor Arbiter and did not even explain his failure to do so
on appeal to the NLRC. However, the NLRC found petitioners claim not supported by evidence and
consequently denied their motion for lack of merit. [10]
Petitioners then filed a petition for certiorari. Originally filed with this Court, the petition was referred to the
Court of Appeals pursuant to the ruling in St. Martin Funeral Homes v. NLRC. [11] On March 11, 1999, the
appeals court rendered a decision, the dispositive portion of which reads:
WHEREFORE, finding no reversible error on the part of the NLRC, the assailed decision and orders are hereby
AFFIRMED with modification that in lieu of the order of reinstatement, a separation pay shall be awarded to
private respondent to be computed at the rate of Ten Thousand Pesos (P10,000.00) for every month for every
year of service.[12]
The Court of Appeals affirmed the NLRCs holding that petitioners could not present their evidence on appeal
for the first time. It further held that even considering their evidence, petitioners had failed to prove that
respondent was responsible for the discrepancies between the premiums paid and the premiums remitted so as
to justify her termination since no documents were presented by petitioners to substantiate the same. Petitioners
moved for a reconsideration, but their motion was denied on July 20, 1999.
Hence this petition. Petitioners argue that respondent was dismissed for cause, for loss of trust and confidence,
and, therefore, should not have been granted separation pay.
In support of their contention, petitioners cite evidence they presented before the National Labor Relations
Commission in their memorandum on appeal and motion for reconsideration, consisting of the following: (1)
petitioner EDIs April 16, 1993 notice of violation to respondent, (2) respondents letter of resignation, (3) notice
of hearing of April 28, 1993, (4) notice of hearing of April 29, 1993, (5) notice of hearing of May 6, 1993, (6)
May 6, 1993 letter of petitioner EDI notifying respondent that her letter of resignation could not be considered
pending results of the respondents investigation, and (7) May 20, 1993 notice of respondents termination. [13]
The issues in this case are (1) whether the NLRC correctly disregarded the evidence presented by petitioners on
appeal on the ground that they failed to file their position paper before the Labor Arbiter and (2) whether
considering such evidence, respondent was dismissed for cause, specifically, for loss of trust and confidence,
and after due notice to her.
With respect to the first question, the Labor Code provides:

ART. 221. Technical rules not binding and prior resort to amicable settlement. In any proceeding before the
Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor
Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and
without regard to technicalities of law or procedure, all in the interest of due process. . . .
Accordingly, it has been settled that no undue sympathy is to be accorded to any claim of a procedural misstep
in labor cases. Such cases must be decided according to justice and equity and the substantial merits of the
controversy. [14] Thus, in Bristol Laboratories Employees Association v. NLRC, [15] the Court held that the
NLRC did not commit grave abuse of its discretion in considering additional documentary evidence submitted
by the employer on appeal to prove breach of trust and loss of confidence as bases for the dismissal of the
petitioner in that case.
In this case, petitioners not implausibly ascribed to the fault of their counsel their failure to file a position paper
(which would have constituted their evidence) before the Labor Arbiter. Considering that respondent had also
been given the opportunity (in the NLRC, Court of Appeals, and also here in this Court) to rebut petitioners
evidence against her, the Court deems it best to admit such evidence and to decide this case on the merits.
Considering, however, the evidence presented by petitioners on appeal, the Court finds the same to be
insufficient in establishing that respondent was dismissed for loss of trust and confidence.
At the outset, it should be stressed that in an unlawful dismissal case, the employer has the burden of proving
the lawful cause for the employees dismissal. [16] Without sufficient proof of loss of confidence, an employee
cannot be dismissed on this ground. [17] It was, therefore, error for both the NLRC and the Court of Appeals to
disallow evidence on appeal which petitioners tried to present.
In this case, there is no proof either of the amount collected by document analyst Mary Ann Samson and turned
over to respondent or of the amount which respondent turned over to POEA liaison officer Ferdinand De la
Cruz for eventual payment to the bonding company. Proof of these amounts is necessary so that it can be
determined whether respondent was responsible for any defalcation. Petitioners simply alleged that respondent
failed to account for P201,600.00 without showing how this figure was arrived at. According to petitioners,
three individuals, namely, Mary Ann Samson, Ferdinand De la Cruz, and respondent Fermina D. Magsino,
actually handled the money for payment of the premiums of the overseas contract workers bonds. It is,
therefore, necessary for petitioners to show how much was turned over by Mary Ann Samson to respondent and
how much the latter in turn turned over to Ferdinand De la Cruz. As the Court of Appeals aptly stated, if there
are no records to speak of, it follows that the discovered anomalies have no basis too. [18]
Nor can the Court of Appeals be faulted for ordering payment of separation pay in lieu of reinstatement. Indeed,
if any party can complain against this feature of the decision of the Court of Appeals, it should be respondent, as
employee, and not petitioners, who are the employers. The strain in the relationship between the parties, not to
mention the length of time respondent has been out of petitioners employ, make an award of separation pay
appropriate. [19] The grant of separation pay is of course to be understood as separate and in addition to the
payment of backwages which, in accordance with the ruling in Bustamante v. NLRC, [20] should be computed
from the time of respondents dismissal up to the time of finality of this decision and without any deduction and
qualification.
WHEREFORE , the decision and resolution of the Court of Appeals are AFFIRMED with the
MODIFICATION that in addition to the grant of separation pay, respondent Fermina D. Magsino is awarded
backwages, inclusive of allowances, and other benefits, including 13th month pay, which should be computed
from the time of her dismissal up to the time of finality of this decision, without any deduction and
qualification.
SO ORDERED.
Bellosillo, (Chairman), Quisumbing, Buena, and De Leon, Jr., JJ., concur .
Endnotes:
[1] Per Associate Justice Eloy R. Bello and concurred in by Associate Justices Salome A. Montoya and
Ruben T. Reyes. Petition, Annex A; Rollo, pp. 21-27.
[2] Id., Annex B; id., pp. 28-29.
[3] Id., Annex C; id., p. 30.
[4] Id., Annex D; id., p. 31.
[5] Id., Annex E; id., p. 32.
[6] Id., Annex F; id., pp. 33-35.
[7] Id., Annex G; id., pp. 36-39.
[8] Id., Annex H; id., pp. 40-48.
[9] Rollo, p. 44.
[10] Petition, Annex I; Rollo, pp. 47-48.
[11] 295 SCRA 494 (1998).
[12] CA Decision, p. 6; Rollo, p. 27.
[13] Records, pp. 63-70.
[14] Lawin Security Services, Inc. v. NLRC (First Division), 273 SCRA 132 (1997).
[15] 187 SCRA 118 (1990). See also Philippine Telegraph and Telephone Corporation v. NLRC, 183 SCRA
451 (1990); Magna Rubber Manufacturing Corporation v. Drilon, 168 SCRA 727 (1988); Columbia
Development Corporation v. Minister of Labor and Employment, 146 SCRA 421 (1986); Haverton Shipping
Ltd. v. NLRC, 135 SCRA 685 (1985).
[16] Farrol v. Court of Appeals, G.R. No. 133259, Feb. 10, 2000.
[17] Benguet Corporation v. NLRC, 318 SCRA 106 (1999); Cocoland Development Corporation v. NLRC,
259 SCRA 51 (1996).
[18] CA Decision, p. 5; Rollo, p. 26.

[19] Jardine Davies, Inc. v. NLRC, 311 SCRA 289 (1999).
[20] 265 SCRA 61 (1996).

SUPREME COURT
Manila
THIRD DIVISION
ALICE A.I. SANDEJAS,
G.R. No. 155033
ROSITA A.I. CUSI,
PATRICIA A.I. SANDEJAS and
Present:
BENJAMIN A.I. ESPIRITU,

Petitioners,
YNARES-SANTIAGO,
Chairperson,
AUSTRIA-MARTINEZ,
- versus -
CARPIO MORALES,*
CHICO-NAZARIO, and
NACHURA, JJ.
SPS. ARTURO IGNACIO, JR.
and EVELYN IGNACIO,
Promulgated:
Respondents.
December 19, 2007
x------------------------------------------------x
DECISION
AUSTRIA-MARTINEZ, J.:
cralawBefore the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the
Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 62404 promulgated on August 27, 2002, which
affirmed with modification the Decision of the Regional Trial Court (RTC) of Pasig City, Branch 158, in Civil
Case No. 65146 dated December 18, 1998.
cralawThe facts of the case, as summarized by the RTC, are as follows:

cralawIt appears from the plaintiffs' [petitioners] evidence that Arturo [respondent] is the elder brother of Alice
[petitioner] and Rosita [petitioner], Benjamin [petitioner] and Patricia [petitioner] are Arturo's nephew and
niece. Arturo and his wife Evelyn [respondent] are residents of the United States. In October 1993, Arturo
leased from Dr. Borja a condominium unit identified as Unit 28-C Gilmore Townhomes located at Granada St.,
Quezon City.The lease was for the benefit of Benjamin who is the occupant of the unit.The rentals were paid by
Ignacio.The term of the lease is for one (1) year and will expire on October 15, 1994. It appears that Arturo was
intending to renew the lease contract. As he had to leave for the U.S., Arturo drew up a check, UCPB Check
No. GRH-560239 and wrote on it the name of the payee, Dr. Manuel Borja, but left blank the date and
amount.He signed the check.The check was intended as payment for the renewal of the lease.The date and the
amount were left blank because Arturo does not know when it will be renewed and the new rate of the lease.The
check was left with Arturo's sister-in-law, who was instructed to deliver or give it to Benjamin.
cralawThe check later came to the possession of Alice who felt that Arturo cheated their sister in the amount of
three million pesos (P3,000,000.00).She believed that Arturo and Rosita had a joint and/or money market
placement in the amount of P3 million with the UCPB branch at Ortigas Ave., San Juan and that Ignacio
preterminated the placement and ran away with it, which rightfully belonged to Rosita.Alice then inquired from
UCPB Greenhills branch if Arturo still has an account with them.On getting a confirmation, she together with
Rosita drew up a scheme to recover the P3 million from Arturo.Alice filled up the date of the check with March
17, 1995 and the amount with three million only.Alice got her driver, Kudera, to stand as the payee of the
check, Dr. Borja. Alice and Rosita came to SBC[2] Greenhills Branch together with a man (Kudera) who[m]
they introduced as Dr. Borja to the then Assistant Cashier Luis.After introducing the said man as Dr. Borja,
Rosita, Alice and the man who was later identified as Kudera opened a Joint Savings Account No. 271-410554-
7.As initial deposit for the Joint Savings Account, Alice, Rosita and Kudera deposited the check.No ID card
was required of Mr. Kudera because it is an internal policy of the bank that when a valued client opens an
account, an identification card is no longer required (TSN, April 21, 1997, pp. 15-16).SBC also allowed the
check to be deposited without the endorsement of the impostor Kudera.SBC officials stamped on the dorsal
portion of the check endorsement/lack of endorsement guaranteed and sent the check for clearing to the
Philippine Clearing House Corporation.
cralawOn 21 March 1995, after the check had already been cleared by the drawer bank UCPB, Rosita withdrew
P1 million from Joint Savings Account and deposited said amount to the current account of Alice with SBC
Greenhills Branch.On the same date, Alice caused the transfer of P2 million from the Joint Savings Account to
two (2) Investment Savings Account[s] in the names of Alice, Rosita and/or Patricia. ...
cralawOn April 4, 1995, a day after Evelyn and Atty. Sanz inquired about the identity of the persons and the
circumstances surrounding the deposit and withdrawal of the check, the three million pesos in the two
investment savings account[s] and in the current account just opened with SBC were withdrawn by Alice and
Rosita.[3]
cralawOn June 18, 1995, Arturo Ignacio, Jr. and Evelyn Ignacio (respondents) filed a verified complaint for
recovery of a sum of money and damages against Security Bank and Trust Company (SBTC) and its officers,
namely: Rene Colin D. Gray, Manager; and Sonia Ortiz-Luis, Cashier.The complaint also impleaded herein
petitioner Benjamin A.I. Espiritu (Benjamin), a John Doe, representing himself as Manuel N. Borja; and a Jane
Doe.
cralawOn November 7, 1995, the complaint was amended by additionally impleading herein petitioners Alice
A.I. Sandejas (Alice), Rosita A.I. Cusi (Rosita) and Patricia A.I. Sandejas (Patricia) as defendants who filed
their respective answers and counterclaims.
cralawAfter trial, the RTC rendered judgment dated December 18, 1998 with the following dispositive portion:
cralawWHEREFORE, in view of the foregoing, judgment is rendered in favor of plaintiffs as against defendants
Security Bank and Trust Co., Rene Colin Gray, Sonia Ortiz Luis, Alice A.I. Sandejas and Rosita A.I. Cusi,
ordering them to pay jointly and severally the plaintiffs the following amounts:
cralaw(1)cralawP3,000,000.00 plus legal interest on it from March 17, 1995 until the entire amount is fully
paid;
cralaw(2)cralawP500,000.00 as moral damages;
cralaw(3)cralawP200,000.00 as exemplary damages;
cralaw(4)cralawP300,000.00 as attorney's fees; plus
cralaw(5)cralawthe cost of suit.
cralawIn turn, plaintiffs are directed to pay Benjamin A.I. Espiritu the amount of P100,000.00 as moral
damages, P50,000.00 as exemplary damages and another P50,000.00 as attorney's fees.
cralawThe counterclaims of Patricia A.I. Sandejas are dismissed.
cralaw
SO ORDERED.[4]
cralaw
cralawBoth parties appealed the RTC Decision to the CA.
cralawOn August 14, 1999, during the pendency of the appeal with the CA, herein respondent Arturo Ignacio,
Jr. (Arturo) died.[5]chanroblesvirtuallawlibrary
cralawOn August 27, 2002, the CA promulgated the presently assailed Decision, disposing as follows:
cralawWHEREFORE, in view of the foregoing, the assailed decision of the trial court is hereby AFFIRMED
with the MODIFICATION that the judgment shall read as follows:
cralawThe defendants-appellants Security Bank and Trust Company, Rene Colin D. Gray, Sonia Ortiz-Luis,
Alice A.I. Sandejas, and Rosita A.I. Cusi, are hereby ordered to jointly and severally pay the plaintiffs the
following amounts:
cralaw1.cralawP3,000,000.00 plus legal interest computed from March 17,1995 until the entire amount is fully
paid;
cralaw2.cralawP200,000.00 as moral damages;
cralaw3.cralawP100,000.00 as exemplary damages;
cralaw4.cralawP50,000.00 as attorney's fees; plus
cralaw5.cralawthe costs of suit.
cralawThe award of moral damages, exemplary damages, and attorney's fees in favor of Benjamin Espiritu is
DELETED.
cralawSO ORDERED.[6]
cralawPetitioners and SBTC, together with Gray and Ortiz-Luis, filed their respective petitions for review
before this Court.
cralawHowever, the petition filed by SBTC, Gray and Ortiz-Luis, docketed as G.R. No. 155038, was denied in
a Resolution[7] issued by this Court on November 20, 2002, for their failureto properly verify the petition,
submit a valid certification of non-forum shopping, and attach to the petition the duplicate original or certified
true copy of the assailed CA Decision.Said
Resolution became final and executory on April 9, 2003.[8]chanroblesvirtuallawlibrary
cralawOn the other hand, the instant petition was given due course.Petitioners enumerated the following
grounds in support of their petition:
cralawI. THE COURT OF APPEALS HAD DECIDED A QUESTION OF SUBSTANCE NOT

HERETOFORE DECIDED BY THIS COURT AND/OR HAD DECIDED IT IN A WAY PROBABLY NOT
IN ACCORD WITH EQUITY, THE LAW AND THE APPLICABLE DECISIONS OF THIS COURT, SUCH
AS:
cralaw(a) IN NOT HOLDING THAT AS BETWEEN SIBLINGS, THE AGGRIEVED SIBLING HAS THE
RIGHT TO TAKE MEASURES OR STEPS TO PROTECT HIS OWN INTEREST OR PROPERTY RIGHTS
FROM AN ACT OF THE GUILTY SIBLING;
cralaw(b) IN NOT HOLDING THAT THE ACT OF ROSITA AND ALICE IN FILLING OUT THE BLANK
PORTIONS OF THE CHECK TO RECOVER WHAT ARTURO, JR. TOOK FROM AND DUE ROSITA,
DID NOT GIVE RISE TO AN ACTIONABLE TORT;
cralaw(c) IN NOT HOLDING THAT THE CRIMINAL ACT OF ARTURO, JR. IN SUBMITTING AN
AFFIDAVIT OF LOSS OF THE CERTIFICATE OF TIME DEPOSIT FOR P3,000,000 THAT RIGHTFULLY
BELONGED TO ROSITA JUST TO BE ABLE TO PRE-TERMINATE THE TIME DEPOSIT AND GET ITS
FACE VALUE, WHEN HE KNEW IT WAS NOT LOST BUT IN FACT INTACT AND IN THE
POSSESSION OF ROSITA, IS A DISHONEST AND REPREHENSIBLE ACT THAT JUSTIFIED ROSITA
AND ALICE IN TAKING MEANS TO REGAIN THE MONEY AND TO DENY ARTURO, JR. ANY
RIGHT TO RECOVER THE SAID AMOUNT AS WELL AS TO AN AWARD OF DAMAGES;
cralaw(d) IN NOT HOLDING THAT THE CRIMINAL ACT OF ARTURO, JR. IN SUBMITTING AN
AFFIDAVIT OF LOSS OF THE OWNER'S COPY OF THE TITLE IN MORAYTA AND IN TESTIFYING
IN COURT AS TO SUCH, WHEN THAT IS NOT THE TRUTH AS HE KNEW THAT THE ORIGINAL
OWNER'S COPY OF THE TITLE WAS WITH ROSITA, IS ANOTHER DISHONEST AND
REPREHENSIBLE ACT THAT SHOULD NOT HAVE ENTITLED HIM TO ANY AWARD OF
DAMAGES; AND
cralaw(e) IN NOT APPLYING THE RULE ON PARI DELICTO UNDER ART. 1412 OF THE CIVIL CODE.
cralawII. THE COURT OF APPEALS HAD DEPARTED FROM THE USUAL COURSE OF JUDICIAL
PROCEEDINGS WHEN IT FAILED TO RESOLVE IN THE APPEAL THE COUNTERCLAIM OF ROSITA
AGAINST ARTURO, JR. FOR THE RECOVERY OF THE AMOUNTS LEGALLY HERS THAT SHOULD
JUSTIFY ALICE'S BEING ABSOLVED FROM ANY LIABILITY FOR USING THE CHECK IN
RECOVERING THE AMOUNT RIGHTFULLY BELONGING TO ROSITA;
cralawIII. THE COURT OF APPEALS HAD DEPARTED FROM THE USUAL COURSE OF JUDICIAL
PROCEEDINGS WHEN IT REVERSED THE TRIAL COURT'S FINDING THAT RESPONDENT WAS
GUILTY OF BAD FAITH AND MALICE THAT ENTITLED PETITIONER BENJAMIN A.I. ESPIRITU TO
THE AWARD OF DAMAGES NOTWITHSTANDING THAT THERE WAS AMPLE EVIDENCE SHOWN
THAT SUCH BAD FAITH AND MALICE WAS MADE AS A LEVERAGE TO COMPEL ARTURO'S
SIBLINGS TO RETURN TO HIM THE P3,000,000 WHICH WAS NOT HIS; and,
cralawIV. THE COURT OF APPEALS HAD DECIDED THE CASE NOT IN ACCORD WITH LAW WHEN
IT DELETED THE AWARD OF DAMAGES TO PETITIONER ESPIRITU AND IN NOT HAVING RULED
THAT HE WAS ENTITLED TO A HIGHER AWARD OF DAMAGES CONSIDERING THE
CIRCUMSTANCES OF THE CASE AS WELL AS IN NOT HAVING RULED THAT PATRICIA WAS
ENTITLED TO AN AWARD OF DAMAGES.[9]
cralawPetitioners argue that the CA overlooked and ignored vital pieces of evidence showing that the
encashment of the subject check was not fraudulent and, on the contrary, was justified under the circumstances;
and that such encashment did not amount to an actionable tort and that it merely called for the application of the
civil law rule on pari delicto.
cralawIn support of these arguments, petitioners contend that the principal adversaries in the present case are
full blooded siblings; that the law recognizes the solidarity offamily which is why it is made a condition that
earnest efforts towards a compromise be exerted before one family member can institute a suit against the other;
that even if Arturo previously defrauded Rosita and deprived her of her lawful share in the sale of her property,
petitioners Rosita and Alice did not precipitately file suit against him and instead took extra-legal measures to
protect Rosita's property rights and at the same time preserve the solidarity of their family and save it from
public embarrassment.Petitioners also aver that Rosita's and Alice's act of encashing the subject check is not
fraudulent because they did not have any unlawful intent and that they merely took from Arturo what rightfully
belonged to Rosita.Petitioners contend that even granting that the act of Rosita and Alice amounted to an
actionable tort, they could not be adjudged liable to return the amount to respondents or to pay damages in their
favor, because the civil law rule on pari delicto dictates that, when both parties are at fault, neither of them
could expect positive relief from courts of justice and, instead, are left in the state where they were at the time
of the filing of the case.
cralawPetitioners also contend that the CA erred in failing to award damages to Patricia even if the appellate
court sustained the trial court's finding that she was not a party to the fraudulent acts committed by Rosita and
Alice.Petitioners argue that even if Patricia did not bother to know the details of the cases against her and left
everything to her mother, she did not even know the nature of the case against her, or her superiors in the bank
where she worked did not know whether she was the plaintiff or defendant, these were not reasons to deny her
award of damages.The fact remains that she had been maliciously dragged into the case, and that the suit had
adversely affected her work and caused her mental worries and anguish, besmirched reputation, embarrassment
and humiliation.
cralawAs to Benjamin, petitioners aver that the CA also erred in deleting the award of damages and attorney's
fees in his favor.Petitioners assert that the trial court found that Benjamin suffered mental anguish, wounded
feelings and moral shock as a result of the filing of the present case.Citing the credentials and social standing of
Benjamin, petitioners claim that the award of damages and attorney's fees in his favor should be increased.
cralawLastly, petitioners contend that the award of damages and attorney's fees to respondents should be deleted
for their failure to establish malice or bad faith on the part of petitioners Alice and Rosita in recovering the
P3,000,000.00 which Arturo took from Rosita; and that it is Rosita who is entitled to damages and attorney's
fees for Arturo's failure and refusal to give her share in the sale of her property in Morayta.
cralawIn their Memorandum, respondents simply contend that the issues raised by petitioners are factual in
nature and that the settled rule is that questions of fact are not subject to review by the Supreme Court in a
petition for review on certiorari under Rule 45 of the Rules of Court.While there are exceptions to this rule,
respondents assert that petitioners failed to show that the instant case falls under any of these exceptions.
The Courts Ruling

cralawThe Court finds the petition bereft of merit. There is no compelling reason for the Court to disturb the
findings of facts of the lower courts.
cralawThe trial court's findings are as follows: (1) Rosita failed to establish that there is an agreement between
her and Arturo that the latter will give her one-third of the proceeds of the sale of the Morayta property; (2)
petitioners were not able to establish by clear and sufficient evidence that the P3,000,000.00 which they took
from Arturo when they encashed the subject check was part of the proceeds of the sale of the Morayta property;
(3) Rosita's counterclaim is permissive and she failed to pay the full docket and filing fees for her counterclaim.
cralawPetitioners challenge the findings of the RTC and insist that they should not be held liable for encashing
the subject check because Arturo defrauded Rosita and that he committed deceitful acts which deprived her of
her rightful share in the sale of her building in Morayta; that the amount of P3,000,000.00 represented by the
check which they encashed formed part of the proceeds of the said sale; that Alice and Rosita were merely
moved by their desire to recover from Arturo, Rosita's supposed share in the sale of her property.
cralawHowever, the Court agrees with respondents that only questions of law are entertained in petitions for
review on certiorari under Rule 45 of the Rules of Court.[11] The trial courts findings of fact, which the Court
of Appeals affirmed, are generally binding and conclusive upon this court.[12] There are recognized exceptions
to this rule, among which are: (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 facts 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 CA are contrary to the findings of the trial court; (9)
the CA manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a
different conclusion; (10) the findings of the CA are beyond the issues of the case; and (11) such findings are
contrary to the admissions of both parties.[13] In the instant case, petitioners failed to demonstrate that their
petition falls under any one of the above exceptions.
cralawPetitioners' assignments of errors boil down to the basic issue of whether or not Alice and Rosita are
justified in encashing the subject check given the factual circumstances established in the present case.
cralawPetitioners' posture is not sanctioned by law.If they truly believe that Arturo took advantage of and
violated the rights of Rosita, petitioners should have sought redress from the courts and should not have simply
taken the law into their own hands.Our laws are replete with specific remedies designed to provide relief for the
violation of one's rights.In the instant case, Rosita could have immediately filed an action for the nullification of
the sale of the building she owns in light of petitioners' claim that the document bearing her conformity to the
sale of the said building was taken by Arturo from her without her knowledge and consent.Or, in the alternative,
as the CA correctly held, she could have brought a suit for the collection of a sum of money to recover her share
in the sale of her property in Morayta.In a civilized society such as ours, the rule of law should always
prevail.To allow otherwise would be productive of nothing but mischief, chaos and anarchy.As a lawyer, who
has sworn to uphold the rule of law, Rosita should know better.She must go to court for relief.
cralawIt is true that Article 151 of the Family Code requires that earnest efforts towards a compromise be made
before family members can institute suits against each other.However, nothing in the law sanctions or allows
the commission of or resort to any extra-legal or illegal measure or remedy in order for family members to
avoid the filing of suits against another family member for the enforcement or protection of their respective
rights.
cralawPetitioners invoke the rule of pari delicto to support their contention that respondents do not deserve any
relief from the courts.
cralawThe principle of pari delicto provides that when two parties are equally at fault, the law leaves them as
they are and denies recovery by either one of them.[14] Indeed, one who seeks equity and justice must come to
court with clean hands.[15] However, in the present case, petitioners were not able to establish that respondents
are also at fault. Thus, the principle of pari delicto cannot apply.
cralawIn any case, the application of the pari delicto principle is not absolute, as there are exceptions to its
application.[16] One of these exceptions is where the application of the pari delicto rule would violate well-
established public policy.[17] The prevention of lawlessness and the maintenance of peace and order are
established public policies. In the instant case, to deny respondents relief on the ground of pari delicto would
put a premium on the illegal act of petitioners in taking from respondents what the former claim to be rightfully
theirs.
cralawPetitioners also question the trial court's ruling that their counterclaim is permissive.This Court has laid
down the following tests to determine whether a counterclaim is compulsory or not, to wit: (1) Are the issues of
fact or law raised by the claim and the counterclaim largely the same? (2) Would res judicata bar a subsequent
suit on defendants claims, absent the compulsory counterclaim rule? (3) Will substantially the same evidence
support or refute plaintiffs claim as well as the defendants counterclaim? and (4) Is there any logical relation
between the claim and the counterclaim, such that the conduct of separate trials of the respective claims of the
parties would entail a substantial duplication of effort and time by the parties and the court?
cralawTested against the above-mentioned criteria, this Court agrees with the view of the RTC that Rosita's
counterclaim for the recovery of her alleged share in the sale of the Morayta property is permissive in
nature.The evidence needed to prove respondents' claim to recover the amount of P3,000,000.00 from
petitioners is different from that required to establish Rosita's demands for the recovery of her alleged share in
the sale of the subject Morayta property.The recovery of respondents' claim is not contingent or dependent upon
the establishment of Rosita's counterclaim such that conducting separate trials will not result in the substantial
duplication of the time and effort of the court and the parties.
cralawIn Sun Insurance Office, Ltd., (SIOL) v. Asuncion,[19] this Court laid down the rules on the payment of
filing fees, to wit:
1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the
prescribed docket fee, that vests a trial court with jurisdiction over the subject-matter or nature of the action.
Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may
allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or
reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not
be considered filed until and unless the filing fee prescribed therefor is paid. The court may 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.[20]
cralawIn order for the trial court to acquire jurisdiction over her permissive counterclaim, Rosita is bound to pay
the prescribed docket fees.[21] Since it is not disputed that Rosita never paid the docket and filing fees, the RTC
did not acquire jurisdiction over her permissive counterclaim. Nonetheless, the trial court ruled on the merits of
Rosita's permissive counterclaim by dismissing the same on the ground that she failed to establish that there is a
sharing agreement between her and Arturo with respect to the proceeds of the sale of the subject Morayta
property and that the amount of P3,000,000.00 represented by the check which Rosita and Alice encashed
formed part of the proceeds of the said sale.
cralawIt is settled that any decision rendered without jurisdiction is a total nullity and may be struck down at
any time, even on appeal before this Court.[22]
cralawIn the present case, considering that the trial court did not acquire jurisdiction over the permissive
counterclaim of Rosita, any proceeding taken up by the trial court and any ruling or judgment rendered in
relation to such counterclaim is considered null and void.In effect, Rosita may file a separate action against
Arturo for recovery of a sum of money.
cralawHowever, Rosita's claims for damages and attorney's fees are compulsory as they necessarily arise as a
result of the filing by respondents of their complaint.Being compulsory in nature, payment of docket fees is not
required.[23]Nonetheless, since petitioners are found to be liable to return to respondents the amount of
P3,000,000.00 as well as to pay moral and exemplary damages and attorney's fees, it necessarily follows that
Rosita's counterclaim for damages and attorney's fees should be dismissed as correctly done by the RTC and
affirmed by the CA.
cralawAs to Patricia's entitlement to damages, this Court has held that while no proof of pecuniary loss is
necessary in order that moral damages may be awarded, the amount of indemnity being left to the discretion of
the court, it is nevertheless essential that the claimant should satisfactorily show the existence of the factual
basis of damages and its causal connection to defendants acts.[24]This is so because moral damages, though
incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for
actual injury suffered and not to impose a penalty on the wrongdoer.[25]Moreover, additional facts must be
pleaded and proven to warrant the grant of moral damages under the Civil Code, these being, social humiliation,
wounded feelings, grave anxiety, etc. that resulted from the act being complained of.[26]In the present case,
both the RTC and the CA were not convinced that Patricia is entitled to damages. Quoting the RTC, the CA
held thus:
cralawWith respect to Patricia, she did not even bother to know the details of the case against her, she left
everything to the hands of her mother Alice. Her attitude towards the case appears weird, she being a banker
who seems so concerned of her reputation.
cralawAside from the parties to this case, her immediate superiors in the BPI knew that she is involved in a
case. They did not however know whether she is the plaintiff or the defendant in the case. Further, they did not
know the nature of the case that she is involved in. It appears that Patricia has not suffered any of the injuries
enumerated in Article 2217 of the Civil Code, thus, she is not entitled to moral damages and attorney's fees.[27]
This Court finds no cogent reason to depart from the above-quoted findings as Patricia failed to satisfactorily
show the existence of the factual basis for granting her moral damages and the causal connection of such fact to
the act of respondents in filing a complaint against her.
cralawIn addition, and with respect to Benjamin, the Court agrees with the CA that in the absence of a wrongful
act or omission, or of fraud or bad faith, moral damages cannot be awarded.[28]The adverse result of an action
does not per se make the action wrongful, or the party liable for it.[29]One may err, but error alone is not a
ground for granting such damages.[30] In the absence of malice and bad faith, the mental anguish suffered by a
person for having been made a party in a civil case is not the kind of anxiety which would warrant the award of
moral damages.[31]
A resort to judicial processes is not, per se, evidence of ill will upon which a claim for damages may be based.
cralawIn China Banking Corporation v. Court of Appeals,[33] this Court held:
Settled in our jurisprudence is the rule that moral damages cannot be recovered from a person who has filed a
complaint against another in good faith, or without malice or bad faith (Philippine National Bank v. Court of
Appeals, 159 SCRA 433 [1988]; R & B Surety and Insurance v. Intermediate Appellate Court, 129 SCRA 736
[1984]). If damage results from the filing of the complaint, it is damnum absque injuria (Ilocos Norte Electrical
Company v. Court of Appeals, 179 SCRA 5 [1989]).[34]
cralawcralawIn the present case, the Court agrees with the RTC and the CA that petitioners failed to establish
that respondents were moved by bad faith or malice in impleading Patricia and Benjamin. Hence, Patricia and
Benjamin are not entitled to damages.
The Court sustains the award of moral and exemplary damages as well as attorney's fees in favor of
respondents.
cralawAs to moral damages, Article 20 of the Civil Code provides that every person who, contrary to law,
willfully or negligently causes damage to another, shall indemnify the latter for the same. In addition, Article
2219 (10) of the Civil Code provides that moral damages may be recovered in acts or actions referred to in
Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35 of the same Code. More particularly, Article 21 of the said Code
provides that any person who willfully causes loss or injury to another in a manner that is contrary to morals,
good customs, or public policy shall compensate the latter for the damage. In the present case, the act of Alice
and Rosita in fraudulently encashing the subject check to the prejudice of respondents is certainly a violation of
law as well as of the public policy that no one should put the law into his own hands. As to SBTC and its
officers, their negligence is so gross as to amount to a willfull injury to respondents. The banking system has
become an indispensable institution in the modern world and plays a vital role in the economic life of every
civilized society.[35]Whether as mere passive entities for the safe-keeping and saving of money or as active
instruments of business and commerce, banks have attained a ubiquitous presence among the people, who have
come to regard them with respect and even gratitude and most of all, confidence.[36]For this reason, banks
should guard against injury attributable to negligence or bad faith on its part.[37]
cralawThere is no hard-and-fast rule in the determination of what would be a fair amount of moral damages
since each case must be governed by its own peculiar facts.[38]The yardstick should be that it is not palpably
and scandalously excessive.[39] Moreover, the social standing of the aggrieved party is essential to the
determination of the proper amount of the award.[40]Otherwise, the goal of enabling him to obtain means,
diversions, or amusements to restore him to the status quo ante would not be achieved.[41]In the present case,
the Court finds no cogent reason to modify the amount of moral damages granted by the CA.
cralawLikewise, the Court finds no compelling reason to disturb the modifications made by the CA on the
award of exemplary damages and attorney's fees.
cralawcralawUnder Article 2229 of the Civil Code, exemplary or corrective damages are imposed by way of
example or correction for the public good, in addition to moral, temperate, liquidated, or compensatory
damages. In the instant case, the award of exemplary damages in favor of respondents is in order for the
purpose of deterring those who intend to enforce their rights by taking measures or remedies which are not in
accord with law and public policy. On the part of respondent bank, the public relies on a bank's sworn
profession of diligence and meticulousness in giving irreproachable service.[42] Hence, the level of
meticulousness must be maintained at all times by the banking sector.[43] In the present case the award of
exemplary damages is justified by the brazen acts of petitioners Rosita and Alice in violating the law coupled
with the gross negligence committed by respondent bank and its officers in allowing the subject check to be
deposited which later paved the way for its encashment.
cralawcralawAs to attorney's fees, Article 2208 of the same Code provides, among others, that attorney's fees
may be recovered when exemplary damages are awarded or when the defendant's act or omission has compelled
the plaintiff to litigate with third persons or to incur expenses to protect his interest.
cralawWHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals dated August 27,
2002 in CA-G.R. CV No. 62404 is AFFIRMED.
cralawCosts against the petitioners.
cralawcralawSO ORDERED.
cralaw
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice
WE CONCUR:
Associate Justice
Chairperson
Associate Justice
Associate Justice
ANTONIO EDUARDO B. NACHURA
Associate Justice
ATTESTATION
cralawI attest that the conclusions in the above Decision had been reached in consultation before the case was
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby
certified that the conclusions in the above Decision had been reached in consultation before the case was
REYNATO S. PUNO
Chief Justice
Endnotes:
* cralawPer raffle dated December 3, 2007.
[1]cralawPenned by Justice Amelita G. Tolentino with the concurrence of Justices Ruben T. Reyes (now a
member of this Court) and Renato C. Dacudao; rollo, pp. 121-137.
[2]cralawSecurity Bank and Trust Company.
[3]cralawRTC Decision, rollo, pp. 110-111.
[4]cralawRollo, pp. 118-119.
[5]cralawCA rollo, pp. 100-102.
[6]cralawId. at 520.
[8]cralawCA rollo, p. 542.
[9]cralawPetition, rollo, pp. 17-18.
[10]cralawRTC Decision, rollo, pp. 117-118.
[11]cralawIron Bulk Shipping Phil. Co., Ltd. v. Remington Industrial Sales Corp., 462 Phil. 694, 703 (2003).
[12]cralawId. at 703-704.
[14]cralawYu Bun Guan v. Ong, 419 Phil. 845, 856 (2001).
[15]cralawTala Realty Services Corporation v. Banco Filipino Savings and Mortgage Bank, 441 Phil. 1, 45
(2002).
[16]cralawPajuyo v. Court of Appeals, G.R. No. 146364, June 3, 2004, 430 SCRA 492, 515, citing Silagan v.
Intermediate Appellate Court, 274 Phil. 182, 193 (1991).
[17]cralawId.
[18]cralawTan v. Kaakbay Finance Corporation, 452 Phil. 637, 647 (2003), citing Intestate Estateof Dalisay v.
Hon. Marasigan, 327 Phil. 298, 301 (1996) and Quintanilla v. Court of Appeals, 344 Phil. 811, 819(1997).
[19]cralawG.R. Nos. 79937-38, February 13, 1989, 170 SCRA 274.

[21]cralawSuson v. Court of Appeals, 343 Phil. 816, 825 (1997).
[22]cralawLopez v. David, Jr., G.R. No. 152145, March 30, 2004, 426 SCRA 535, 543.
[23]cralawTan v. Kaakbay, supra note 18, at 648.
[24]cralawMahinay v. Velasquez, Jr., 464 Phil. 146, 149 (2004), citing Kierulf v. Court of Appeals, 336 Phil.
414, 431-432 (1997).
[25]cralawMahinay v. Velasquez, Jr., id. at 149-150; Kierulf v. Court of Appeals, id. at 432.
[26]cralawMahinay v. Velasquez, Jr., id. at 150; Kierulf v. Court of Appeals, id.
[28]cralawBank of the Philippine Islands v. Casa Montessori Internationale, G.R. No. 149454, May 28, 2004,
430 SCRA 261, 293-294.
[29]cralawId at 294.
[30]cralawId.
[31]cralawPadillo v. Court of Appeals, 422 Phil. 334, 356 (2001).
[32]cralawCeballos v. Intestate Estate of the Late Emigdio Mercado, G.R. No. 155856, May 28, 2004, 430
SCRA 323, 336.
[33]cralawG.R. No. 94182, March 28, 1994, 231 SCRA 472.
[35]cralawCagungun v. Planters Development Bank, G.R. No. 158674, October 17, 2005, 473 SCRA 259, 273-
274.
[36]cralawId. at 274
[37]cralawId.
[39]cralawId.
[40]cralawSamson, Jr. v. Bank of the Philippine Islands, 453 Phil. 577, 585 (2003).
[42]cralawPrudential Bank v. Court of Appeals, 384 Phil. 817, 826 (2000).
[43]cralawId.

SUPREME COURT
Manila
SECOND DIVISION
CELESTIAL NICKEL MININGcralawG.R. No. 169080
EXPLORATION CORPORATION,
cralawPetitioner,
cralawPresent:
cralaw- versus -
cralawQUISUMBING, J., Chairperson,
cralawcralawCARPIO MORALES,
MACROASIA CORPORATIONcralawTINGA,
(formerly INFANTA MINERAL ANDcralawVELASCO, JR., and
INDUSTRIAL CORPORATION),cralawCHICO-NAZARIO,* JJ.
BLUE RIDGE MINERAL
CORPORATION, and LEBACH
MINING CORPORATION,
Respondents.
x ---------------------------------------------- x
BLUE RIDGE MINERALcralawG.R. No. 172936

CORPORATION,
Petitioner,
- versus -
HON. ANGELO REYES in his
capacity as SECRETARY ofcralaw
the DEPARTMENT OF
ENVIRONMENT AND NATURAL cralawPromulgated:
RESOURCES, HON. GUILLERMOcralaw
ESTABILLO in his capacity as
REGIONAL DIRECTOR of thecralawDecember 19, 2007
MINES AND GEOSCIENCES
BUREAU, REGION IV-B of the
DEPARTMENT OF ENVIRONMENT
AND NATURAL RESOURCES, and
MACROASIA CORPORATION
(formerly INFANTA MINERAL AND
INDUSTRIAL CORPORATION),
cralawRespondents.
x ---------------------------------------------- x
CELESTIAL NICKEL MININGcralawG.R. No. 176226

EXPLORATION CORPORATION,
cralawPetitioner,
cralaw- versus -
BLUE RIDGE MINERAL
CORPORATION and MACROASIA
CORPORATION (formerly INFANTA
MINERAL AND INDUSTRIAL
CORPORATION),
Respondents.
x ---------------------------------------------- x
MACROASIA CORPORATIONcralawG.R. No. 176319
(formerly INFANTA MINERAL AND
INDUSTRIAL CORPORATION),
cralawPetitioner,
cralaw- versus -
BLUE RIDGE MINERAL
CORPORATION and CELESTIAL
NICKEL MINING EXPLORATION
CORPORATION,
Respondents.
x-----------------------------------------------------------------------------------------x
D E C I S I O Ncralaw
VELASCO, JR., J.:
The Case
Before us are four (4) petitions. The first is a Petition for Review on Certiorari[1] under Rule 45 docketed as
G.R. No. 169080, wherein petitioner Celestial Nickel Mining Exploration Corporation (Celestial) seeks to set
aside the April 15, 2005 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 87931. The CA affirmed
the November 26, 2004 Resolution of the Mines Adjudication Board (MAB) in MAB Case Nos. 056-97 and
057-97 (DENR Case Nos. 97-01 and 97-02), upholding the authority of the Department of Environment and
Natural Resources (DENR) Secretary to grant and cancel mineral agreements. Also assailed is the August 3,
2005 Resolution[3] of the CA denying the Motion for Reconsideration of the assailed Decision.
The second is a Petition for Certiorari[4] under Rule 65 docketed as G.R. No. 172936, wherein petitioner Blue
Ridge Mineral Corporation (Blue Ridge) seeks to annul and set aside the action of then Secretary Michael T.
Defensor, in his capacity as DENR Secretary, approving and signing two Mineral Production Sharing
Agreements (MPSAs) in favor of Macroasia Corporation (Macroasia) denominated as MPSA Nos. 220-2005-
IVB and 221-2005-IVB.
And the third and fourth are petitions for review on certiorari[5] under Rule 45 docketed as G.R. No. 176226
and G.R. No. 176319, wherein petitioners Celestial and Macroasia, respectively, seek to set aside the May 18,
2006 Decision[6] of the CA in CA-G.R. SP No. 90828. The CA reversed and set aside the November 26, 2004
and July 12, 2005 Resolutions of the MAB, and reinstated the October 24, 2000 Decision in MAB Case Nos.
056-97 and 057-97, granting Blue Ridge the prior and preferential right to file its application over the mining
claims of Macroasia. These petitions likewise seek to set aside the January 19, 2007 Resolution[7] of the CA
denying petitioners motions for reconsideration of the assailed Decision.
Through our July 5, 2006 Resolution,[8] we consolidated the first two cases. While in our subsequent April 23,
2007[9] and July 11, 2007[10] Resolutions, we consolidated the four cases as they arose from the same facts.
The undisputed facts as found by the CA in CA-G.R. SP No. 87931 are as follows:
On September 24, 1973, the then Secretary of Agriculture and Natural Resources and Infanta Mineral and
Industrial Corporation (Infanta) entered into a Mining Lease Contract (V-1050) for a term of 25 years up to
September 23, 1998 for mining lode claims covering an area of 216 hectares at Sitio Linao, Ipilan, Brookes
Point, Palawan. The mining claims of Infanta covered by lode/lease contracts were as follows:
cralawContract No.cralawcralawArea cralawDate of Issuance
LLC-V-94118 hectaresJanuary 17, 1972
LC-V-1050216 hectaresSeptember 24, 1973
LLC-V-106016 hectaresOctober 30, 1973
LLC-V-1061144 hectaresOctober 30, 1973
LLC-V-1073144 hectaresApril 18, 1973
MLC-MRD-52306 hectaresApril 26, 1978
MLC-MRC-5372 hectaresApril 26, 1978
Infantas corporate name was changed to Cobertson Holdings Corporation on January 26, 1994 and subsequently
to its present name, Macroasia Corporation, on November 6, 1995.
Sometime in 1997, Celestial filed a Petition to Cancel the subject mining lease contracts and other mining
claims of Macroasia including those covered by Mining Lease Contract No. V-1050, before the Panel of
Arbitrators (POA) of the Mines and Geo-Sciences Bureau (MGB) of the DENR.The petition was docketed as
DENR Case No. 97-01.
Blue Ridge, in an earlier letter-petition, also wrote the Director of Mines to seek cancellation of mining lease
contracts and other mining rights of Macroasia and another entity, Lebach Mining Corporation (Lebach), in
mining areas in Brookes Point. The petition was eventually docketed as DENR Case No. 97-02.
Celestial is the assignee of 144 mining claims covering such areas contiguous to Infantas (now Macroasia)
mining lode claims.Said area was involved in protracted administrative disputes with Infanta (now Macroasia),
Lecar & Sons, Inc., and Palawan Nickel Mining Corporation.Celestial also holds an MPSA with the
government which covers 2,835 hectares located at Ipilan/Maasin, Brookes Point, Palawan and two pending
applications covering another 4,040 hectares in Barangay Mainit also in Brookes Point.
Celestial sought the cancellation of Macroasias lease contracts on the following grounds:(1) the nonpayment of
Macroasia of required occupational fees and municipal taxes; (2) the non-filing of Macroasia of Affidavits of
Annual Work Obligations; (3) the failure of Macroasia to provide improvements on subject mining claims; (4)
the concentration of Macroasia on logging; (5) the encroachment, mining, and extraction by Macroasia of nickel
ore from Celestials property; (6) the ability of Celestial to subject the mining areas to commercial production;
and (7) the willingness of Celestial to pay fees and back taxes of Macroasia.
In the later part of the proceedings, Macroasia intervened in the case and submitted its position paper refuting
the grounds for cancellation invoked by Celestial.[11]
The Ruling of the Panel of Arbitrators in
DENR Case Nos. 97-01 and 97-02
Based on the records of the Bureau of Mines and findings of the field investigations, the POA found that
Macroasia and Lebach not only automatically abandoned their areas/mining claims but likewise had lost all
their rights to the mining claims. The POA granted the petition of Celestial to cancel the following Mining
Lease Contracts of Macroasia: LLC-V-941, LLC-V-1050, LLC-V-1060, LLC-V-1061, LLC-V-1073, MLC-
MRD-52, and MLC-MRC-53; and found the claims of the others indubitably meritorious.It gave Celestial the
preferential right to Macroasias mining areas.[12]It upheld Blue Ridges petition regarding DENR Case No. 97-
02, but only as against the Mining Lease Contract areas of Lebach (LLC-V-1153, LLC-V-1154, and LLC-V-
1155), and the said leased areas were declared automatically abandoned.It gave Blue Ridge priority right to the
aforesaid Lebachs areas/mining claims.[13]chanroblesvirtuallawlibrary
Blue Ridge and Macroasia appealed before the MAB, and the cases were docketed as MAB Case Nos. 056-97
and 057-97, respectively.
Lebach did not file any notice of appeal with the required memorandum of appeal; thus, with respect to Lebach,
the above resolution became final and executory.
The Rulings of the Mines Adjudication Board in
MAB Case Nos. 056-97 and 057-97 (DENR Case Nos. 97-01 and 97-02)
The MAB resolved the issues of timeliness and perfection of Macroasias appeal; Macroasias abandonment of its
mining claims; and the preferential right over the abandoned mining claims of Macroasia.
Conformably with Section 51 of Consolidated Mines Administrative Order (CMAO)[14] implementing

Presidential Decree No. (PD) 463[15] and our ruling in Medrana v. Office of the President (OP),[16] the MAB
affirmed the POA findings that Macroasia abandoned its mining claims. The MAB found that Macroasia did not
comply with its work obligations from 1986 to 1991. It based its conclusion on the field verifications conducted
by the MGB, Region IV and validated by the Special Team tasked by the MAB.[17] However, contrary to the
findings of the POA, the MAB found that it was Blue Ridge that had prior and preferential rights over the
mining claims of Macroasia, and not Celestial.
Thus, on October 24, 2000, the MAB promulgated its Decision upholding the Decision of the POA to cancel the
Mining Lode/Lease Contracts of Macroasia; declaring abandoned the subject mining claims; and opening the
mining area with prior and preferential rights to Blue Ridge for mining applications, subject to strict compliance
with the procedure and requirements provided by law. In case Blue Ridge defaults, Celestial could exercise the
secondary priority and preferential rights, and subsequently, in case Celestial also defaults, other qualified
applicants could file.[18]chanroblesvirtuallawlibrary
Both Celestial and Macroasia moved for reconsideration.[19] Celestial asserted that it had better rights than
Blue Ridge over the mining claims of Macroasia as it had correctly filed its petition, and filed its MPSA
application after Macroasias lease contract expired on January 17, 1997 and after the POAs resolution was
issued on September 1, 1997.Moreover, it argued that priority was not an issue when the contested area had not
yet been declared abandoned.Thus, Blue Ridges MPSA application filed on June 17, 1996 had no effect and
should not be considered superior since Macroasias lease contracts were still valid and subsisting and could not
have been canceled by Macroasias mere failure to perform annual work obligations and pay corresponding
royalties/taxes to the government.
Macroasia, in its Motion for Reconsideration, reiterated that it did not abandon its mining claims, and even if
mining was not listed among its purposes in its amended Articles of Incorporation, its mining activities were
acts that were only ultra vires but were ratified as a secondary purpose by its stockholders in subsequent
amendments of its Articles of Incorporation.
Before the MAB could resolve the motions for reconsideration, on March 16, 2001, Macroasia filed its
Supplemental Motion for Reconsideration[20] questioning the jurisdiction of the POA in canceling mining lease
contracts and mining claims.Macroasia averred that the power and authority to grant, cancel, and revoke
mineral agreements is exclusively lodged with the DENR Secretary.Macroasia further pointed out that in
arrogating upon itself such power, the POA whimsically and capriciously discarded the procedure on
conferment of mining rights laid down in Republic Act No. (RA) 7942, The Philippine Mining Act of 1995, and
DENR Administrative Order No. (AO) 96-40,[21] and perfunctorily and improperly awarded its mining rights
to Blue Ridge and Celestial.
Subsequently, on November 26, 2004, the MAB issued a Resolution[22] vacating its October 24, 2000
Decision, holding that neither the POA nor the MAB had the power to revoke a mineral agreement duly entered
into by the DENR Secretary, ratiocinating that there was no provision giving the POA and MAB the concurrent
power to manage or develop mineral resources. The MAB further held that the power to cancel or revoke a
mineral agreement was exclusively lodged with the DENR Secretary; that a petition for cancellation is not a
mining dispute under the exclusive jurisdiction of the POA pursuant to Sec. 77 of RA 7942; and that the POA
could only adjudicate claims or contests during the MPSA application and not when the claims and leases were
already granted and subsisting.
Moreover, the MAB held that there was no abandonment by Macroasia because the DENR Secretary had not
decided to release Macroasia from its obligations. The Secretary may choose not to release a contractor from its
obligations on grounds of public interest.Thus, through its said resolution, the MAB rendered its disposition, as
follows:
cralawWHEREFORE, premises considered, the assailed Decision of October 24, 2000 is hereby
VACATED.The seven (7) mining lease contracts of Macroasia Corporation (formerly Infanta Mineral &
Industrial Corporation) are DECLARED SUBSISTING prior to their expirations without prejudice to any
Decision or Order that the Secretary may render on the same.NO PREFERENTIAL RIGHT over the same
mining claims is accorded to Blue Ridge Mineral Corporation or Celestial Nickel Mining Exploration
Corporation also without prejudice to the determination by the Secretary over the matter at the proper time.
After the issuance of the MAB Resolution, Celestial and Blue Ridge went through divergent paths in their quest
to protect their individual interests.
On January 10, 2005, Celestial assailed the November 26, 2004 MAB Resolution before the CA in a petition for
review[24] under Rule 43 of the Rules of Court. The petition entitled Celestial Nickel Mining Exploration
Corporation v. Macroasia Corporation, et al. was docketed as CA-G.R. SP No. 87931.
On the other hand, Blue Ridge first filed a Motion for Reconsideration[25] which was denied.[26]On August
26, 2005, Blue Ridge questioned the MABs November 26, 2004 and July 12, 2005 Resolutions before the CA in
a petition for review[27] entitled Blue Ridge Mineral Corporation v. Mines Adjudication Board, et al. docketed
as CA-G.R. SP No. 90828.
CA-G.R. SP No. 87931 filed by Celestial was heard by the 12th Division of the CA; while Blue Ridges CA-
G.R. SP No. 90828 was heard by the Special 10th Division. Ironically, the two divisions rendered two (2)
diametrically opposing decisions.
The Ruling of the Court of Appeals Twelfth Division
On April 15, 2005, in CA-G.R. SP No. 87931, the CA 12th Division affirmed the November 26, 2004 MAB
Resolution which declared Macroasias seven mining lease contracts as subsisting; rejected Blue Ridges claim
for preferential right over said mining claims; and upheld the exclusive authority of the DENR Secretary to
approve, cancel, and revoke mineral agreements. The CA also denied Celestials Motion for Reconsideration[28]
of the assailed August 3, 2005 Resolution.[29]chanroblesvirtuallawlibrary
Hence, Celestial filed its Petition for Review on Certiorari[30] docketed as G.R. No. 169080, before this Court.
The Ruling of the Court of Appeals Special Tenth Division

On May 18, 2006, the CA Special 10th Division in CA-G.R. SP No. 90828 granted Blue Ridges petition;
reversed and set aside the November 26, 2004 and July 12, 2005 Resolutions of the MAB; and reinstated the
October 24, 2000 Decision in MAB Case Nos. 056-97 and 057-97.The Special Tenth Division canceled
Macroasias lease contracts; granted Blue Ridge prior and preferential rights; and treated the cancellation of a
mining lease agreement as a mining dispute within the exclusive jurisdiction of the POA under Sec. 77 of RA
7942, explaining that the power to resolve mining disputes, which is the greater power, necessarily includes the
lesser power to cancel mining agreements.
On February 20, 2006, Celestial filed a Most Urgent Motion for Issuance of a Temporary Restraining
Order/Preliminary Prohibitory Injunction/Mandatory Injunction[31] to defer and preclude the issuance of
MPSA to Macroasia by the MGB and the DENR Secretary.We denied this motion in our February 22, 2006
Resolution.[32]chanroblesvirtuallawlibrary
Upon inquiry with the DENR, Blue Ridge discovered that sometime in December 2005 two MPSAs, duly
approved and signed by the DENR Secretary, had been issued in favor of Macroasia.Thus, we have the instant
Petition for Certiorari[33] filed by Blue Ridge docketed as G.R. No. 172936 under Rule 65, seeking to
invalidate the two MPSAs issued to Macroasia.
In the meantime, on June 7, 2006, Celestial filed its Motion for Partial Reconsideration[34] of the May 18, 2006
CA Decision in CA-G.R. SP No. 90828, while Macroasia filed its motion for reconsideration of the same CA
decision on July 7, 2006.The motions were denied in the assailed January 19, 2007 CA Resolution.Hence, on
March 8, 2007, Celestial filed the third petition[35] docketed as G.R. No. 176226, assailing the CAs May 18,
2006 Decision and January 19, 2007 Resolution, insofar as these granted Blue Ridges prior and preferential
rights.While on March 9, 2007, Macroasia filed the fourth petition[36] docketed as G.R. No. 176319, also
assailing the CAs May 18, 2006 Decision and January 19, 2007 Resolution.
The Issues
In G.R. No. 169080, petitioner Celestial raises the following issues for our consideration:
(1)cralawWhether or not Macroasia, for reasons of public policy is estopped from assailing the alleged lack of
jurisdiction of the cralawPanel of Arbitrators and the Mines Adjudication Board only cralawafter receiving an
adverse judgment therefrom? [sic]
(2)cralawWhether or not it is only the Secretary of the DENR who has the jurisdiction to cancel mining
contracts and privileges? [sic]
(3)cralawWhether or not a petition for the cancellation of a mining lease cralawcontract or privilege is a mining
dispute within the meaning of cralawthe law? [sic]
cralaw
(4)cralawWhether or not Infantas (Macroasia) mining lease contract areas were deemed abandoned warranting
the cancellation of the lease contracts and the opening of the areas to other qualified applicants? [sic]
(5)cralawWhether or not Macroasia/Infanta had lost its right to participate cralawin this case after it failed to
seasonably file its appeal and after cralawits lease contracts had been declared abandoned and expired without
having been renewed by the government? [sic]
(6)cralawWhether or not Celestial has the preferential right to apply for cralawthe 23 DE LARA claims which
were included in Infantas cralaw(Macroasia) expired lease contract (LLC-V-941) and the other cralawareas
declared as lapsed or abandoned by MGB-Region 4 and the Panel of Arbitrators?[37] [sic]
In G.R. No. 172936, petitioner Blue Ridge raises the following grounds for the allowance of the petition:
At the outset, the instant petition must be given due course and taken cognizance of by the Honorable Court
considering that exceptional and compelling circumstances justify the availment of the instant petition and the
call for the exercise of the Honorable Courts primary jurisdiction.
A.cralawThe exploration, development and utilization of minerals, cralawpetroleum and other mineral oils are
imbued with public cralawinterest.The action of then Secretary Defensor, maintained and cralawcontinued by
public respondent Secretary Reyes, was tainted cralawwith grave abuse of discretion, has far-reaching
consequences cralawbecause of the magnitude of the effect created thereby.
B.cralawThe issues in the instant petition have already been put to fore cralawby Celestial with the First
Division of the Honorable Court, and hence, this circumstance justifies the cognizance by the cralawHonorable
Court of the instant petition.
II
It was grave abuse of discretion amounting to lack and/or excess of jurisdiction for then Secretary Defensor to
have issued the subject MPSAs in favor of private respondent Macroasia, considering that:
A.cralawNon-compliance of the mandatory requirements by private cralawrespondent Macroasia prior to

approval of the subject MPSAs should have precluded then Secretary Defensor from approving cralawsubject
MPSAs.
B.cralawPetitioner Blue Ridge has the prior and preferential cralawright to file its mining application over the
mining claims covered by the subject MPSAs, pursuant to the Decision dated 24 October 2000 of the Board and
as affirmed by the Decision dated 18 May 2006 of the Court of Appeals in CA-G.R. SP No. 90828.[38]
In G.R. No. 176226, petitioner Celestial ascribes the following errors to the CA for our consideration:
(1)cralawThat in reinstating and adopting as its own the Decision of the Mine Adjudication Board affirming the
abandonment and cancellation of the mining areas/claims of Macroasia (Infanta) but awarding the prior or
preferential rights to Blue Ridge, the Hon. Court of Appeals had decided a question of substance in a way not in
accord with the Law (RA 7942) or with the applicable decisions of the Supreme Court; in other words, errors of
law had been committed by the Hon. Court of Appeals in granting preferential rights to Blue Ridge;
(2)cralawThat the Hon. Court of Appeals has so far departed from the accepted and usual course of judicial
proceedings or so far sanctioned such departure by the Mines Adjudication Board in its Decision of May 18,
2006 and Resolution of January 19, 2007 because:
(A)The findings of fact of the Hon. Court of Appeals are contradictory or inconsistent with the findings of the
Panel of Arbitrators;
(B)There is grave abuse of discretion on the part of the Hon. Court of Appeals in its appreciation of the facts,
the evidence and the law thereby leading it to make the erroneous conclusion that Blue Ridge, not Celestial, is
entitled to the Award of prior/preferential rights over the mining areas declared as abandoned by Macroasia;
(C)There is likewise, a grave abuse of discretion on the part of the Hon. Court of Appeals in that the said Court
did not even consider some of the issues raised by Celestial;
(D)That the findings of the Hon. Court of Appeals are mere conclusions not supported by substantial evidence
and without citation of the specific evidence upon which they are based; they were arrived at arbitrarily or in
disregard of contradiction of the evidence on record and findings of the Panel of Arbitrators in the Resolution of
September 1, 1997;
(E)That the findings of the Hon. Court of Appeals are premised on the absence of evidence but such findings
are contradicted by the evidence on record and are violative of the provisions of RA 7942 and its Implementing
Rules and Regulations.[39]
In G.R. No. 176319, petitioner Macroasia raises the following grounds for the allowance of the petition:
I.
The Court of Appeals (Special Tenth Division) should have dismissed the Petition of Blue Ridge outright since
the issues, facts and matters involved in the said Petition are identical to those which had already been
painstakingly passed upon, reviewed and resolved by the Court of Appeals Twelfth Division in CA-G.R. SP No.
87931
II.
The Court of Appeals (Special Tenth Division) gravely erred in denying Macroasias Motion to Inhibit Associate
Justice Rosmari Carandang from hearing and deciding the Petition
III.
There were no factual nor legal bases for the Court of Appeals to rule that Macroasia had waived its right to
question the jurisdiction of the Mines Adjudication Board
IV.
Republic Act No. 7942 contains provisions which unequivocally indicate that only the Secretary of the
Department of Environment and Natural Resources has the power and authority to cancel mining lease
agreements
V.
The Court of Appeals (Special Tenth Division) gravely erred in perfunctorily transferring Macroasias mining
lease agreements to Blue Ridge without observing the required procedure nor providing any basis
therefor[40]chanroblesvirtuallawlibrary
The Courts Ruling
The petitions under G.R. Nos. 169080, 172936, and 176226 are bereft of merit, while the petition under G.R.
No. 176319 is meritorious.
The pith of the controversy, upon which the other issues are hinged is, who has authority and jurisdiction to
cancel existing mineral agreements under RA 7942 in relation to PD 463 and pertinent rules and regulations.
G.R. Nos. 169080, 176226 and 176319

We will jointly tackle G.R. Nos. 169080, 176266, and 176319 as the issues and arguments of these three are
inextricably intertwined.
Core Issue:Jurisdiction over Cancellation of Mineral Agreements
Petitioner Celestial maintains that while the jurisdiction to approve mining lease contracts or mineral
agreements is conferred on the DENR Secretary, Sec. 77(a) of RA 7942 by implication granted to the POA and
MAB the authority to cancel existing mining lease contracts or mineral agreements.
On the other hand, respondent Macroasia strongly asserts that it is the DENR Secretary who has the exclusive
and primary jurisdiction to grant and cancel existing mining lease contracts; thus, the POA and MAB have no
jurisdiction to cancel much less to grant any preferential rights to other mining firms.
Before we resolve this core issue of jurisdiction over cancellation of mining lease contracts, we first need to
look back at previous mining laws pertinent to this issue.
Under PD 463, The Mineral Resources Development Decree of 1974, which took effect on May 17, 1974,
applications for lease of mining claims were required to be filed with the Director of the Bureau of Mines,
within two (2) days from the date of their recording.[41]Sec. 40 of PD 463 provided that if no adverse claim
was filed within (15) days after the first date of publication, it was conclusively presumed that no adverse claim
existed and thereafter no objection from third parties to the grant of the lease could be heard, except protests
pending at the time of publication. The Secretary would then approve and issue the corresponding mining lease
contract.In case of any protest or adverse claim relating to any mining claim and lease application, Secs. 48 and
50 of PD 463 prescribed the procedure. Under Sec. 48, the protest should be filed with the Bureau of Mines.
Under Sec. 50, any party not satisfied with the decision or order of the Director could, within five (5) days from
receipt of the decision or order, appeal to the Secretary. The decisions of the Secretary were likewise appealable
within five (5) days from receipts by the affected party to the President of the Philippines whose decision shall
be final and executory. PD 463 was, however, silent as to who was authorized to cancel the mineral agreements.
On July 10, 1987, President Corazon C. Aquino issued Executive Order No. (EO) 211. Under Sec. 2 of EO 211,
the processing, evaluation, and approval of all mining applications, declarations of locations, operating
agreements, and service contracts were governed by PD 463, as amended. EO 211 likewise did not contain any
provision on the authority to cancel operating agreements and service contracts.
On July 25, 1987, EO 279 was issued by President Aquino. It authorized the DENR Secretary to negotiate and
enter into, for and in behalf of the Government, joint venture, co-production, or production-sharing agreements
for the exploration, development, and utilization of mineral resources with any Filipino citizen, corporation, or
association, at least 60% of whose capital was owned by Filipino citizens.[42] The contract or agreement was
subject to the approval of the President.[43] With respect to contracts of foreign-owned corporations or foreign
investors involving either technical or financial assistance for large-scale exploration, development, and
utilization of minerals, the DENR Secretary could recommend approval of said contracts to the President.[44]
EO 279 provided that PD 463 and its implementing rules and regulations, which were not inconsistent with EO
279, continued in force and effect.[45] Again, EO 279 was silent on the authority to cancel mineral agreements.
RA 7942, The Philippine Mining Act of 1995 enacted on March 3, 1995, repealed the provisions of PD 463
inconsistent with RA 7942.Unlike PD 463, where the application was filed with the Bureau of Mines Director,
the applications for mineral agreements are now required to be filed with the Regional Director as provided by
Sec. 29 of RA 7942. The proper filing gave the proponent the prior right to be approved by the Secretary and
thereafterto be submitted to the President. The President shall provide a list to Congress of every approved
mineral agreement within 30 days from its approval by the Secretary.Again, RA 7942 is silent on who has
authority to cancel the agreement.
Compared to PD 463 where disputes were decided by the Bureau of Mines Director whose decisions were
appealable to the DENR Secretary and then to the President, RA 7942 now provides for the creation of quasi-
judicial bodies (POA and MAB) that would have jurisdiction over conflicts arising from the applications and
mineral agreements. Secs. 77, 78, and 79 lay down the procedure, thus:
SEC. 77. Panel of Arbitrators.There shall be a panel of arbitrators in the regional office of the Department
composed of three (3) members, two (2) of whom must be members of the Philippine Bar in good standing and
one [1] licensed mining engineer or a professional in a related field, and duly designated by the Secretary as
recommended by the Mines and Geosciences Bureau Director. Those designated as members of the panel shall
serve as such in addition to their work in the Department without receiving any additional compensation. As
much as practicable, said members shall come from the different bureaus of the Department in the region. The
presiding officer thereof shall be selected by the drawing of lots. His tenure as presiding officer shall be on a
yearly basis. The members of the panel shall perform their duties and obligations in hearing and deciding cases
until their designation is withdrawn or revoked by the Secretary. Within thirty (30) working days, after the
submission of the case by the parties for decision, the panel shall have exclusive and original jurisdiction to hear
and decide on the following:
(a)cralawDisputes involving rights to mining areas;
(b) cralawDisputes involving mineral agreements or permits;

(c)cralawDisputes involving surface owners, occupants and cralawclaimholders/concessionaires; and
(d) cralawDisputes pending before the Bureau and the Department at the date of the effectivity of this Act.
SEC. 78. Appellate Jurisdiction.The decision or order of the panel of arbitrators may be appealed by the party
not satisfied thereto to the Mines Adjudication Board within fifteen (15) days from receipt thereof which must
decide the case within thirty (30) days from submission thereof for decision.
SEC. 79. Mines Adjudication Board.The Mines Adjudication Board shall be composed of three (3) members.
The Secretary shall be the chairman with the Director of the Mines and Geosciences Bureau and the
Undersecretary for Operations of the Department as members thereof.
xxxx
A petition for review by certiorari and question of law may be filed by the aggrieved party with the Supreme
Court within thirty (30) days from receipt of the order or decision of the Board.
RA 7942 is also silent as to who is empowered to cancel existing lease contracts and mineral agreements.
Meanwhile, in Southeast Mindanao Gold Mining Corp. v. MAB, we explained that the decision of the MAB
can first be appealed, via a petition for review, to the CA before elevating the case to this Court.
After a scrutiny of the provisions of PD 463, EO 211, EO 279, RA 7942 and its implementing rules and
regulations, executive issuances, and case law, we rule that the DENR Secretary, not the POA, has the
jurisdiction to cancel existing mineral lease contracts or mineral agreements based on the following reasons:
1.cralawThe power of the DENR Secretary to cancel mineral agreements emanates from his administrative
authority, supervision, management, and control over mineral resources under Chapter I, Title XIV of Book IV
of the Revised Administrative Code of 1987, viz:
Chapter 1General Provisions
cralawSection 1.Declaration of Policy.(1) The State shall ensure, for the benefit of the Filipino people, the full
exploration and development as well as the judicious disposition, utilization, management, renewal and
conservation of the countrys forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural
resources x x x
cralawSec. 2.Mandate.(1) The Department of Environment and Natural Resources shall be primarily
responsible for the implementation of the foregoing policy.(2) It shall, subject to law and higher authority, be in
charge of carrying out the States constitutional mandate to control and supervise the exploration, development,
utilization, and conservation of the countrys natural resources.
cralawx x x x
cralawSec. 4.Powers and Functions.The Department shall:
cralawx x x x
cralaw(2)cralawFormulate, implement and supervise the implementation of the governments policies, plans, and
programs pertaining to the management, conservation, development, use and replenishment of the countrys
natural resources;
cralawx x x x
cralaw(4)cralawExercise supervision and control over forest lands, alienable and disposable public lands,
mineral resources x x x
cralawx x x x
cralaw(12)cralawRegulate the development, disposition, extraction, exploration and use of the countrys forest,
land, water and mineral resources;
(13)cralawAssume responsibility for the assessment, development, protection, licensing and regulation as
provided for by law, where applicable, of all energy and natural resources; the regulation and monitoring of
service contractors, licensees, lessees, and permit for the extraction, exploration, development and use of natural
resources products; x x x
cralawx x x x
(15)cralawExercise exclusive jurisdiction on the management and disposition of all lands of the public domain
xxx
Chapter 2The Department Proper
xxxx
Sec. 8.The Secretary.The Secretary shall:
xxxx
(3)cralawPromulgate rules, regulations and other issuances necessary in carrying out the Departments mandate,
objectives, policies, plans, programs and projects.
(4)cralawExercise supervision and control over all functions and activities of the Department;
(5)cralawDelegate authority for the performance of any administrative or substantive function to subordinate
officials of the Department x x x (Emphasis supplied.)
It is the DENR, through the Secretary, that manages, supervises, and regulates the use and development of all
mineral resources of the country.It has exclusive jurisdiction over the management of all lands of public
domain, which covers mineral resources and deposits from said lands.It has the power to oversee, supervise, and
police our natural resources which include mineral resources.Derived from the broad and explicit powers of the
DENR and its Secretary under the Administrative Code of 1987 is the power to approve mineral agreements
and necessarily to cancel or cause to cancel said agreements.
2. cralawRA 7942 confers to the DENR Secretary specific authority over mineral resources.
Secs. 8 and 29 of RA 7942 pertinently provide:
cralaw
cralawSEC. 8. Authority of the Department.The Department shall be the primary government agency
responsible for the conservation, management, development, and proper use of the States mineral resources
including those in reservations, watershed areas, and lands of the public domain. The Secretary shall have the
authority to enter into mineral agreements on behalf of the Government upon the recommendation of the
Director, promulgate such rules and regulations as may be necessary to implement the intent and provisions of
this Act.
cralawSEC. 29. Filing and approval of Mineral Agreements.x x x.
cralawThe filing of a proposal for a mineral agreement shall give the proponent the prior right to areas covered
by the same. The proposed mineral agreement will be approved by the Secretary and copies thereof shall be
submitted to the President. Thereafter, the President shall provide a list to Congress of every approved mineral
agreement within thirty (30) days from its approval by the Secretary.(Emphasis supplied.)
Sec. 29 is a carry over of Sec. 40 of PD 463 which granted jurisdiction to the DENR Secretary to approve
mining lease contracts on behalf of the government, thus:
SEC. 40. Issuance of Mining Lease Contract.If no adverse claim is filed within fifteen (15) days after the first
date of publication, it shall be conclusively presumed that no such adverse claim exists and thereafter no
objection from third parties to the grant of the lease shall be heard, except protest pending at the time of
publication, and the Secretary shall approve and issue the corresponding mining lease x x x.
To enforce PD 463, the CMAO containing the rules and regulations implementing PD 463 was issued.Sec. 44
of the CMAO provides:
SEC. 44.Procedure for Cancellation.Before any mining lease contract is cancelled for any cause enumerated in
Section 43 above, the mining lessee shall first be notified in writing of such cause or causes, and shall be given
an opportunity to be heard, and to show cause why the lease shall not be cancelled.
cralawIf, upon investigation, the Secretary shall find the lessee to be in default, the former may warn the lessee,
suspend his operations or cancel the lease contract (emphasis supplied).
Sec. 4 of EO 279 provided that the provisions of PD 463 and its implementing rules and regulations, not
inconsistent with the executive order, continue in force and effect.
When RA 7942 took effect on March 3, 1995, there was no provision on who could cancel mineral agreements.
However, since the aforequoted Sec. 44 of the CMAO implementing PD 463 was not repealed by RA 7942 and
DENR AO 96-40, not being contrary to any of the provisions in them, then it follows that Sec. 44 serves as
basis for the DENR Secretarys authority to cancel mineral agreements.
Since the DENR Secretary had the power to approve and cancel mineral agreements under PD 463, and the
power to cancel them under the CMAO implementing PD 463, EO 211, and EO 279, then there was no recall of
the power of the DENR Secretary under RA 7942. Historically, the DENR Secretary has the express power to
approve mineral agreements or contracts and the implied power to cancel said agreements.
It is a well-established principle that in the interpretation of an ambiguous provision of law, the history of the
enactment of the law may be used as an extrinsic aid to determine the import of the legal provision or the law.
[47]History of the enactment of the statute constitutes prior laws on the same subject matter. Legislative history
necessitates review of the origin, antecedents and derivation of the law in question to discover the legislative
purpose or intent.[48] It can be assumed that the new legislation has been enacted as continuation of the existing
legislative policy or as a new effort to perpetuate it or further advance it.[49]chanroblesvirtuallawlibrary
We rule, therefore, that based on the grant of implied power to terminate mining or mineral contracts under
previous laws or executive issuances like PD 463, EO 211, and EO 279, RA 7942 should be construed as a
continuation of the legislative intent to authorize the DENR Secretary to cancel mineral agreements on account
of violations of the terms and conditions thereof.
3. cralawUnder RA 7942, the power of control and supervision of the DENR Secretary over the MGB to cancel
or recommend cancellation of mineral rights clearly demonstrates the authority of the DENR Secretary to
cancel or approve the cancellation of mineral agreements.
Under Sec. 9 of RA 7942, the MGB was given the power of direct supervision of mineral lands and resources,
thus:
cralawSec. 9.Authority of the Bureau.The Bureau shall have direct charge in the administration and disposition
of mineral lands and mineral resources and shall undertake geological, mining, metallurgical, chemical, and
other researches as well as geological and mineral exploration surveys.The Director shall recommend to the
Secretary the granting of mineral agreements to duly qualified persons and shall monitor the compliance by the
contractor of the terms and conditions of the mineral agreements.The Bureau may confiscate surety,
performance and guaranty bonds posted through an order to be promulgated by the Director.The Director may
deputize, when necessary, any member or unit of the Philippine National Police, barangay, duly registered
nongovernmental organization (NGO) or any qualified person to police all mining activities.(Emphasis
supplied.)
cralaw
Corollary to the power of the MGB Director to recommend approval of mineral agreements is his power to
cancel or recommend cancellation of mining rights covered by said agreements under Sec. 7 of DENR AO 96-
40, containing the revised Implementing Rules and Regulations of RA 7942.Sec. 7 reads:
Sec. 7.Organization and Authority of the Bureau.
cralawx x x x
cralawThe Bureau shall have the following authority, among others:
cralawa.cralawTo have direct charge in the administration and disposition of mineral land and mineral
resources;
cralawx x x x
cralawd.cralawTo recommend to the Secretary the granting of mineral agreements or to endorse to the Secretary
for action by the President the grant of FTAAs [Financial and Technical Assistance Agreements], in favor of
qualified persons and to monitor compliance by the Contractor with the terms and conditions of the mineral
agreements and FTAAs.
cralawe.cralawTo cancel or to recommend cancellation after due process, mining rights, mining applications
and mining claims for non-compliance with pertinent laws, rules and regulations.
It is explicit from the foregoing provision that the DENR Secretary has the authority to cancel mineral
agreements based on the recommendation of the MGB Director.As a matter of fact, the power to cancel mining
rights can even be delegated by the DENR Secretary to the MGB Director.Clearly, it is the Secretary, not the
POA, that has authority and jurisdiction over cancellation of existing mining contracts or mineral agreements.
4. cralawThe DENR Secretarys power to cancel mining rights or agreements through the MGB can be inferred
from Sec. 230, Chapter XXIV of DENR AO 96-40 on cancellation, revocation, and termination of a
permit/mineral agreement/FTAA.Sec. 230 provides:
Section 230.Grounds
The following grounds for cancellation revocation and termination of a Mining Permit Mineral
Agreement/FTAA.
a. Violation of any of the terms and conditions of the Permits or Agreements;
b. Nonpayment of taxes and fees due the government for two (2) consecutive years; and
c. Falsehood or omission of facts in the application for exploration [or Mining] Permit Mineral
Agreement/FTAA or other permits which may later, change or affect substantially the facts set forth in said
statements.
cralawThough Sec. 230 is silent as to who can order the cancellation, revocation, and termination of a
permit/mineral agreement/FTAA, it has to be correlated with the power of the MGB under Sec. 7 of AO 96-40
to cancel or to recommend cancellation, after due process, mining rights, mining applications and mining claims
for noncompliance with pertinent laws, rules and regulations.As the MGB is under the supervision of the DENR
Secretary, then the logical conclusion is that it is the DENR Secretary who can cancel the mineral agreements
and not the POA nor the MAB.
cralaw5.cralawCelestial and Blue Ridge are not unaware of the stipulations in the Mining Lease Contract Nos.
V-1050 and MRD-52,[50] the cancellation of which they sought from the POA.It is clear from said lease
contracts that the parties are the Republic of the Philippines represented by the Secretary of Agriculture and
Natural Resources (now DENR Secretary) as lessor, and Infanta (Macroasia) as lessee. Paragraph 18 of said
lease contracts provides:
Whenever the LESSEE fails to comply with any provision of [PD 463, and] Commonwealth Acts Nos. 137, 466
and 470, [both as amended,] and/or the rules and regulations promulgated thereunder, or any of the covenants
therein, the LESSOR may declare this lease cancelled and, after having given thirty (30) days notice in writing
to the LESSEE, may enter and take possession of the said premises, and said lessee shall be liable for all unpaid
rentals, royalties and taxes due the Government on the lease up to the time of the forfeiture or cancellation, in
which event, the LESSEE hereby covenants and agrees to give up the possession of the property leased.
cralawThus, the government represented by the then Secretary of Agriculture and Natural Resources (now the
DENR Secretary) has the power to cancel the lease contracts for violations of existing laws, rules and
regulations and the terms and conditions of the contracts. Celestial and Blue Ridge are now estopped from
challenging the power and authority of the DENR Secretary to cancel mineral agreements.
cralawHowever, Celestial and Blue Ridge insist that the power to cancel mineral agreements is also lodged with
the POA under the explicit provisions of Sec. 77 of RA 7942.
This postulation is incorrect.
Sec. 77 of RA 7942 lays down the jurisdiction of POA, to wit:
Within thirty (30) days, after the submission of the case by the parties for the decision, the panel shall have
exclusive and original jurisdiction to hear and decide the following:
(a) Disputes involving rights to mining areas

(b) Disputes involving mineral agreements or permits
The phrase disputes involving rights to mining areas refers to any adverse claim, protest, or opposition to an
application for mineral agreement. The POA therefore has the jurisdiction to resolve any adverse claim, protest,
or opposition to a pending application for a mineral agreement filed with the concerned Regional Office of the
MGB.This is clear from Secs. 38 and 41 of DENR AO 96-40, which provide:
Sec.38.
xxxx
Within thirty (30) calendar days from the last date of publication/posting/radio announcements, the authorized
officer(s) of the concerned office(s) shall issue a certification(s) that the publication/posting/radio
announcement have been complied with.Any adverse claim, protest or opposition shall be filed directly, within
thirty (30) calendar days from the last date of publication/posting/radio announcement, with the concerned
Regional Office or through any concerned PENRO or CENRO for filing in the concerned Regional Office for
purposes of its resolution by the Panel of Arbitrators pursuant to the provisions of this Act and these
implementing rules and regulations.Upon final resolution of any adverse claim, protest or opposition, the Panel
of Arbitrators shall likewise issue a certification to that effect within five (5) working days from the date of
finality of resolution thereof.Where there is no adverse claim, protest or opposition, the Panel of Arbitrators
shall likewise issue a Certification to that effect within five working days therefrom.
xxxx
No Mineral Agreement shall be approved unless the requirements under this Section are fully complied with
and any adverse claim/protest/opposition is finally resolved by the Panel of Arbitrators.
Sec. 41.
cralaw
xxxx
Within fifteen (15) working days from the receipt of the Certification issued by the Panel of Arbitrators as
provided in Section 38 hereof, the concerned Regional Director shall initially evaluate the Mineral Agreement
applications in areas outside Mineral reservations.He/She shall thereafter endorse his/her findings to the Bureau
for further evaluation by the Director within fifteen (15) working days from receipt of forwarded
documents.Thereafter, the Director shall endorse the same to the secretary for consideration/approval within
fifteen working days from receipt of such endorsement.
In case of Mineral Agreement applications in areas with Mineral Reservations, within fifteen (15) working days
from receipt of the Certification issued by the Panel of Arbitrators as provided for in Section 38 hereof, the
same shall be evaluated and endorsed by the Director to the Secretary for consideration/approval within fifteen
days from receipt of such endorsement.(Emphasis supplied.)
It has been made clear from the aforecited provisions that the disputes involving rights to mining areas under
Sec. 77(a) specifically refer only to those disputes relative to the applications for a mineral agreement or
conferment of mining rights.
The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right application is further
elucidated by Secs. 219 and 43 of DENR AO 95-936, which read:
Sec. 219.Filing of Adverse Claims/Conflicts/Oppositions.Notwithstanding the provisions of Sections 28, 43 and

57 above, any adverse claim, protest or opposition specified in said sections may also be filed directly with the
Panel of Arbitrators within the concerned periods for filing such claim, protest or opposition as specified in said
Sections.
Sec. 43. Publication/Posting of Mineral Agreement Application.
cralawx x x x
cralawThe Regional Director or concerned Regional Director shall also cause the posting of the application on
the bulletin boards of the Bureau, concerned Regional office(s) and in the concerned province(s) and
municipality(ies), copy furnished the barangays where the proposed contract area is located once a week for two
(2) consecutive weeks in a language generally understood in the locality.After forty-five (45) days from the last
date of publication/posting has been made and no adverse claim, protest or opposition was filed within the said
forty-five (45) days, the concerned offices shall issue a certification that publication/posting has been made and
that no adverse claim, protest or opposition of whatever nature has been filed.On the other hand, if there be any
adverse claim, protest or opposition, the same shall be filed within forty-five (45) days from the last date of
publication/posting, with the Regional Offices concerned, or through the Departments Community Environment
and Natural Resources Officers (CENRO) or Provincial Environment and Natural Resources Officers
(PENRO), to be filed at the Regional Office for resolution of the Panel of Arbitrators. However previously
published valid and subsisting mining claims are exempted from posted/posting required under this Section.
No mineral agreement shall be approved unless the requirements under this section are fully complied with and
any opposition/adverse claim is dealt with in writing by the Director and resolved by the Panel of Arbitrators.
These provisions lead us to conclude that the power of the POA to resolve any adverse claim, opposition, or
protest relative to mining rights under Sec. 77(a) of RA 7942 is confined only to adverse claims, conflicts and
oppositions relating to applications for the grant of mineral rights.POAs jurisdiction is confined only to
resolutions of such adverse claims, conflicts and oppositions and it has no authority to approve or reject said
applications.Such power is vested in the DENR Secretary upon recommendation of the MGB Director.Clearly,
POAs jurisdiction over disputes involving rights to mining areas has nothing to do with the cancellation of
existing mineral agreements.
On the other hand, Celestial and Blue Ridge contend that POA has jurisdiction over their petitions for the
cancellation of Macroasias lease agreements banking on POAs jurisdiction over disputes involving mineral
agreements or permits under Sec. 77 (b) of RA 7942.
Such position is bereft of merit.
As earlier discussed, the DENR Secretary, by virtue of his powers as administrative head of his department in
charge of the management and supervision of the natural resources of the country under the 1987
Administrative Code, RA 7942, and other laws, rules, and regulations, can cancel a mineral agreement for
violation of its terms, even without a petition or request filed for its cancellation, provided there is compliance
with due process. Since the cancellation of the mineral agreement is approved by the DENR Secretary, then the
recourse of the contractor is to elevate the matter to the OP pursuant to AO 18, Series of 1987 but not with the
POA.
Matched with the legal provisions empowering the DENR Secretary to cancel a mineral agreement is Sec. 77
(b) of RA 7942 which grants POA jurisdiction over disputes involving mineral agreements.
cralawA dispute is defined as a conflict or controversy; a conflict of claims or rights; an assertion of a right,
claim or demand on one side; met by contrary claims or allegations on the other.[51]It is synonymous to a cause
of action which is an act or omission by which a party violates a right of another.
cralawA petition or complaint originating from a dispute can be filed or initiated only by a real party-in-
interest.The rules of court define a real party-in-interest as the party who stands to be benefited or injured by the
judgment in the suit or the party entitled to the avails of the suit.[53]Every action, therefore, can only be
prosecuted in the name of the real party-in-interest.[54]It has been explained that a real party-in-interest plaintiff
is one who has a legal right, while a real party-in-interest-defendant is one who has a correlative legal obligation
whose act or omission violates the legal right of the former.[55]chanroblesvirtuallawlibrary
cralawOn the other hand, interest means material interest, an interest in issue and to be affected by the decree,
as distinguished from mere interest in the question involved, or a mere incidental interest.It is settled in this
jurisdiction that one having no right or interest to protect cannot invoke the jurisdiction of the court as a party-
plaintiff in an action.[56]Real interest is defined as a present substantial interest, as distinguished from a mere
expectancy, or a future, contingent, subordinate or consequential interest.[57]chanroblesvirtuallawlibrary
cralawFrom the foregoing, a petition for the cancellation of an existing mineral agreement covering an area
applied for by an applicant based on the alleged violation of any of the terms thereof, is not a dispute involving
a mineral agreement under Sec. 77 (b) of RA 7942.It does not pertain to a violation by a party of the right of
another.The applicant is not a real party-in-interest as he does not have a material or substantial interest in the
mineral agreement but only a prospective or expectant right or interest in the mining area.He has no legal right
to such mining claim and hence no dispute can arise between the applicant and the parties to the mineral
agreement.The court rules therefore that a petition for cancellation of a mineral agreement anchored on the
breach thereof even if filed by an applicant to a mining claim, like Celestial and Blue Ridge, falls within the
jurisdiction of the DENR Secretary and not POA.Such petition is excluded from the coverage of the POAs
jurisdiction over disputes involving mineral agreements under Sec. 77 (b) of RA 7942.
Macroasia not estopped from raising the issue of jurisdiction on appeal
On the related issue of estoppel, petitioner Celestial argues that Macroasia is estopped from raising and
questioning the issue of the jurisdiction of the POA and MAB over the petition for cancellation of its mining
lease contracts, when Macroasia raised it only in its Supplemental Motion for Reconsideration.
We rule that the principle of estoppel does not apply.
Indeed, Macroasia was not the one that initiated the instant case before the POA, and thus was not the one that
invoked the jurisdiction of the POA.Hence, on appeal, Macroasia is not precluded from raising the issue of
jurisdiction as it may be invoked even on appeal.[58]As a matter of fact, a party can raise the issue of
jurisdiction at any stage of the proceedings.
Petitioner Celestials reliance on Villela v. Gozun[59] to support the contention that the POA has jurisdiction to
hear and decide a petition to cancel existing mining lease contracts, is misplaced.In said case, we dismissed the
petition on the ground of non-exhaustion of administrative remedies and disregarded judicial hierarchy as no
compelling reason was shown to warrant otherwise.While we pointed out the authority of the POA, there was
no categorical pronouncement on the jurisdictional issue.
No valid pronouncement of abandonment due to lack of jurisdiction over petition to cancel
As we are not a trier of facts, we need not make any finding on the various investigations done by the MGB and
MAB on the issue of Macroasias non-compliance with its work obligations and nonpayment of taxes and
fees.Verily, the law does not impose automatic cancellation of an existing mining lease contract, as it is a
question of fact which must be determined by the MGB which can recommend the cancellation of the mineral
or lease agreements to the DENR Secretary.Be that as it may, since the POA and MAB have no jurisdiction
over the petition for cancellation of existing mining lease contracts of Macroasia, they could not have made any
binding pronouncement that Macroasia had indeed abandoned the subject mining claims.Besides, it is the
DENR Secretary who has the authority to cancel Macroasias existing mining lease contracts whether on
grounds of abandonment or any valid grounds for cancellation.
Decision in CA-G.R. SP No. 90828 not in accord with the law
With our resolution of the issue on the lack of jurisdiction of the POA and the MAB over petitions to cancel
existing mining lease contracts or mineral agreements, it is thus clear that the May 18, 2006 Decision in CA-
G.R. SP No. 90828 must be nullified for being not in accord with the law and the April 15, 2005 Decision in
CA-G.R. SP No. 87931 must be upheld.
Notwithstanding the nullification of the May 18, 2006 Decision of the Special Tenth Division in CA-G.R. SP
No. 90828, the rendition of two conflicting decisions of the two CA Divisions over the same challenged
resolutions of the MAB should be avoided in the future as this is anathema to stability of judicial decisions and
orderly administration of justice.
The chronology of events reveals the following:
1.cralawJanuary 10, 2005 petitioner Celestial filed its petition docketed as CA-G.R. SP No. 87931 with the CA.
2.cralawApril 15, 2005 the CA through its TwelfthDivision rendered its Decision in CA-G.R. SP No. 87931
affirming the November 26, 2004 MAB Resolution.
3.cralawJuly 12, 2005 respondent Blue Ridge filed its petition docketed as CA-G.R. SP No. 90828 with the
CA.It is clear that the Blue Ridge petition was filed with the CA threemonths after the decision in CA-G.R. SP
No. 87931 was promulgated.
4.cralawMay 18, 2006 the CA through its Special Tenth Division rendered its Decision setting aside the
November 26, 2004 and July 12, 2005 Resolutions of the MAB and reinstating the October 24, 2000 MAB
Decision.
From these facts, the CA Special Tenth Division should have ordered the consolidation of the petition in CA-
G.R. SP No. 90828 by CA-G.R. SP No. 87931 pursuant to the Internal Rules of the CA, the latter having the
earlier docket number.Had it done so, then the occurrence of the conflicting decisions could have been
prevented.The CA Special Tenth Division should have abided by our ruling in Nacuray v. NLRC, where we
held, Consequently, a division cannot and should not review a case already passed upon by another Division of
this Court.It is only proper, to allow the case to take its rest after having attained finality.
The CA should take the appropriate steps, including the adoption or amendment of the rules, to see to it that
cases or petitions arising from the same questioned decision, order, or resolution are consolidated to steer clear
of contrary or opposing decisions of the different CA Divisions and ensure that incidents of similar nature will
not be replicated.
G.R. No. 172936
No showing that the DENR Secretary gravely abused his discretion
Now, going to the substance of the petition in G.R. No. 172936. A scrutiny of the records shows that the DENR
Secretary did not gravely abuse his discretion in approving and signing MPSA Nos. 220-2005-IVB and 221-
2005-IVB in favor of Macroasia.
Petitioner Blue Ridge anchors its rights on the May 18, 2006 Decision in CA-G.R. SP No. 90828, which we
have unfortunately struck down.Blue Ridges argument in assailing the approval and issuance of the subject
MPSAs that it has been accorded preferential right by the CA has no leg to stand on.
The October 24, 2000 MAB Decision, nullified by the subsequent November 26, 2004 Resolution, is
unequivocal that Blue Ridge was granted only prior and preferential rights to FILE its mining application over
the same mining claims.[61]What was accorded Blue Ridge was only the right to file the mining application but
with no assurance that the application will be recommended for approval by the MGB and finally approved by
the DENR Secretary.
Moreover, a preferential right would at most be an inchoate right to be given priority in the grant of a mining
agreement. It has not yet been transformed into a legal and vested right unless approved by the MGB or DENR
Secretary.Even if Blue Ridge has a preferential right over the subject mining claims, it is still within the
competence and discretion of the DENR Secretary to grant mineral agreements to whomever he deems best to
pursue the mining claims over and above the preferential status given to Blue Ridge. Besides, being simply a
preferential right, it is ineffective to dissolve the pre-existing or subsisting mining lease contracts of Macroasia.
The DENR Secretary has full discretion in the grant of mineral agreements
Blue Ridge also argues that the Secretary gravely abused his discretion in approving the subject MPSAs without
Macroasia complying with the mandatory requirements for mineral agreement applications under Sec. 35 of
DENR AO 96-40.Petitioner specifically cited Sec. 36 of DENR AO 96-40 to the effect that no Mineral
Agreement shall be approved unless the requirements under this section are fully complied with and any
adverse claim/protest/opposition thereto is finally resolved by the Panel of Arbitrators.Moreover, Blue Ridge
contends that the MPSAs were approved even prior to the issuance of the Compliance Certificate[62] by the
National Commission on Indigenous Peoples under the OP, which is a requisite pre-condition for the issuance
of an MPSA.
We are not persuaded.
Blue Ridge cites Sec. 38 (not Sec. 36) of DENR AO 96-40 as basis for claiming that then DENR Secretary
Defensor committed grave abuse of discretion in granting MPSA Nos. 220-2005-IVB and 221-2005-IVB to
Macroasia.Petitioners postulation cannot be entertained for the reason that the issuance of the mining
agreements was not raised before the MGB Director and DENR Secretary, nor was it amply presented before
the CA. There is even a counter-charge that Blue Ridge has not complied with the legal requirements for a
mining application.The rule is established that questions raised for the first time on appeal before this Court are
not proper and have to be rejected.Furthermore, the resolution of these factual issues would relegate the Court
to a trier of facts.The Blue Ridge plea is hindered by the factual issue bar rule where factual questions are
proscribed under Rule 65. Lastly, there was no exhaustion of administrative remedies before the MGB and
DENR.Thus, Blue Ridges petition must fail.
Primary jurisdiction of the DENR Secretary in determining whether to grant or not a mineral agreement
Verily, RA 7942, similar to PD 463, confers exclusive and primary jurisdiction on the DENR Secretary to
approve mineral agreements, which is purely an administrative function within the scope of his powers and
authority.In exercising such exclusive primary jurisdiction, the DENR Secretary, through the MGB, has the best
competence to determine to whom mineral agreements are granted.Settled is the rule that the courts will defer to
the decisions of the administrative offices and agencies by reason of their expertise and experience in the
matters assigned to them pursuant to the doctrine of primary jurisdiction.Administrative decisions on matter
within the jurisdiction of administrative bodies are to be respected and can only be set aside on proof of grave
abuse of discretion, fraud, or error of law.[63]Unless it is shown that the then DENR Secretary has acted in a
wanton, whimsical, or oppressive manner, giving undue advantage to a party or for an illegal consideration and
similar reasons, this Court cannot look into or review the wisdom of the exercise of such discretion. Blue Ridge
failed in this regard.
Delineation of powers and functions is accorded the three branches of government for the smooth functioning of
the different governmental services.We will not disturb nor interfere in the exercise of purely administrative
functions of the executive branch absent a clear showing of grave abuse of discretion.
Without a restraining order or injunction, litigation will not deter the DENR from exercising its functions
While it is true that the subject mining claims are under litigation, this does not preclude the DENR and its
Secretary from carrying out their functions and duties without a restraining order or an injunctive
writ.Otherwise, public interest and public service would unduly suffer by mere litigation of particular issues
where government interests would be unduly affected.In the instant case, it must be borne in mind that the
government has a stake in the subject mining claims.Also, Macroasia had various valid existing mining lease
contracts over the subject mining lode claims issued by the DENR.Thus, Macroasia has an advantage over Blue
Ridge and Celestial insofar as the administrative aspect of pursuing the mineral agreements is concerned.
WHEREFORE, the petitions under G.R. Nos. 169080, 172936, and 176229 are DISMISSED for lack of merit,
while the petition under G.R. No. 176319 is hereby GRANTED. The assailedApril 15, 2005 Decision and
August 3, 2005 Resolution of the CA in CA-G.R. SP No. 87931 are hereby AFFIRMED IN TOTO.And the
May 18, 2006 Decision and January 19, 2007 Resolution of the CA in CA-G.R. SP No. 90828 are hereby
REVERSED and SET ASIDE.In view of the foregoing considerations, we find no grave abuse of discretion on
the part of the then DENR Secretary in the approval and issuance of MPSA Nos.220-2005-IVB and 221-2005-
IVB.Costs against Celestial Nickel Mining Exploration Corporation and Blue Ridge Mineral Corporation.
SO ORDERED.
Associate Justice
WE CONCUR:
Associate Justice
Chairperson
Associate Justice
ATTESTATION
Associate Justice
Chairperson
CERTIFICATION
cralawPursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
Endnotes:
* Per October 24, 2007 raffle.
[1] Rollo (G.R. No. 169080), pp. 9-87.
cralaw[2] Id. at 89-108. Penned by Associate Justice Martin S. Villarama (Chairperson) and concurred in by
Associate Justices Regalado E. Maambong and Lucenito N. Tagle.
[3] Id. at 110-122.
[4] Rollo (G.R. No. 172936), pp. 3-53.
[5] Rollo (G.R. No. 176226), pp. 9-85, and rollo (G.R. No. 176319), pp. 14-77.
cralaw[6] Rollo (G.R. No. 176226), pp. 87-108, and rollo (G.R. No. 176319), pp. 79-100. Penned by Associate
Justice Rosmari D. Carandang and concurred in by Associate Justices Andres B. Reyes, Jr. (Chairperson) and
Aurora Santiago-Lagman.
[7] Rollo (G.R. No. 176226), pp. 110-116, and rollo (G.R. No. 176319), pp. 102-108.
[8] Rollo (G.R. No. 172936), p. 700.
[9] Rollo (G.R. No. 176226), p. 1835.
[10] Rollo (G.R. No. 176319), pp. 1270-1271.
[11] Rollo (G.R. No. 169080), pp. 89-91.
[12] Id. at 208-227.

[13] Id.
[14] Approved on May 17, 1975.
[15] Providing for a Modernized System of Administration and Disposition of Mineral Lands and to Promote
and Encourage the Development and Exploitation Thereof, approved and became effective on May 17, 1974.
[16] G.R. No. 85904, August 21, 1990, 188 SCRA 818.
[17] See September 15, 1999 Memorandum from Task Force Team Leader Rolando Pea to the Chairman of
MAB, rollo (G.R. No. 169080), p. 494, on the Report by Task Force Created to Investigate the Area Subject of
MAB Case Nos. 056-97 and 057-97 at Brookes Point, Palawan, id. at 495-503, pursuant to May 17, 1999
Special Order No. 99-521, id. at 493.
[18]Id. at 229-240.
[19] Id. at 241-258, Celestials November 16, 2000 Motion for Reconsideration; and id. at 259-277,
MacroasiasNovember 13, 2000 Motion for Reconsideration.
[20] Id. at 278-296.
[21] Revised Implementing Rules and Regulations of RA 7942, otherwise known as the Philippine Mining Act
of 1995, vice DENR AO 95-23, series of 1995.
[22] Rollo (G.R. No. 169080), pp. 297-308.
[23] Id. at 307-308.
[24] Id. at 309-371.
[25] Rollo (G.R. No. 172936), pp. 437-447.
[26] Id. at 448-455.
[27] Id. at 456-519.
[28] Rollo (G.R. No. 169080), pp. 372-403.
[29] Supra note 3.
[30] Supra note 1.
[31] Rollo (G.R. No. 169080), pp. 1203-1215.
[32] Id. at 1227.
[33] Supra note 4.

[34] Rollo (G.R. No. 176226), pp. 1687-1737.
[35] Supra note 5.
[36] Supra note 5.
cralaw[37] Supra note 1, at 20-21.
[38] Supra note 4, at 28-29.
cralaw[39] Rollo (G.R. No. 176226), pp. 32-33.
[40] Rollo (G.R. No. 176319), p. 15.
[41] PD 463, Sec. 34.
[42] EO 279, Sec. 1.
[43] EO 279, Sec. 3.
[44] EO 279, Sec. 4.
[45] EO 279, Sec. 7.
[46] G.R. No. 132475, September 11, 2000, Second Division Resolution.
cralaw[47] Commissioner of Customs v. Esso Standard Eastern, Inc., No. L-28329, August 7, 1975, 66 SCRA
113, 119.
[48] L.J. Gonzaga, Statutes and Their Construction 159 (1958).
[49] Crawford, Statutory Construction 374-375 (1940).
[50] Rollo (G.R. No. 169080), pp. 145-153.
cralaw[51] H. Black, Blacks Law Dictionary 472 (6th ed., 1990).
[52] Rules of Court, Rule 2, Sec. 2.
cralaw[53] Rules of Court, Rule 3, Sec. 2.
cralaw[54] Id.
cralaw[55] Ibonilla v. Province of Cebu, G.R. No. 97463, June 26, 1992, 210 SCRA 526.
cralaw[56] Ralla v. Ralla, G.R. No. 78646, July 23, 1991, 199 SCRA 495.
cralaw[57] Ibonilla v. Province of Cebu, supra.

[58] See Duero v. Court of Appeals, G.R. No. 131282, January 4, 2002, 373 SCRA 11.
[59] G.R. No. 158092, April 4, 2005, Resolution of the Second Division.
[60] G.R. Nos. 114924-27, March 18, 1997, 270 SCRA 9, 18.
[61] Rollo (G.R. No. 169080), p. 240.
[62] Rollo (G.R. No. 172936), pp. 87-90.
cralaw[63] Bernardo v. Court of Appeals, G.R. No. 124261, May 27, 2004, 429 SCRA 285, 300.

SUPREME COURT
Manila
SECONDDIVISION
FRANCO ESGUERRA,
Petitioner,
- versus -
G.R. No. 158328
Present:
Quisumbing, J., Chairperson,
Carpio,
Carpio Morales,
Tinga, and
VELASCO, JR., JJ.
ALFONSO MANANTAN,
DANILO MANANTAN, ARIANG ANTONIO, AQUILINO CONCEPCION, and
FORTUNATO MIGUEL,
Respondents.
Promulgated:
February 23, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J.:
cralawBefore us is a petition for review on certiorari assailing the Decision[1] dated October 30, 2002 of the
Court of Appeals in CA-G.R. CV No. 58050 and its Resolution[2] dated May 20, 2003 denying the motion for
reconsideration.The appellate court had affirmed the decision[3] dated February 13, 1997 of the Regional Trial
Court (RTC) of Guimba, Nueva Ecija, Branch 31.
cralawThis case stemmed from the complaint for ejectment filed by petitioner Franco Esguerra against
respondents before the RTC. Franco claims he is the registered owner of a parcel of land surveyed as Lot No.
661, Cad. No. 699, covering an area of 7,786 square meters, and situated in Barangay San Cristobal, Licab,
Nueva Ecija.Franco avers that he inherited it from his father, Pio Esguerra, who had inherited it from his father,
Lorenzo Esguerra.However, Pio allowed Gaudencio Miguel[4] to occupy his property and later mortgaged the
land to Gaudencio as evidenced by a document entitled Deed of Sale with Right to Repurchase dated June 6,
1960.In 1979, Gaudencio executed an instrument denominated as Kasunduan to cancel said deed of sale with
the right to repurchase.
cralawBefore the repurchase of the property, respondents Alfonso Manantan, Danilo Manantan, Ariang
Antonio, Aquilino Concepcion and Fortunato Miguel constructed their houses on the lot without the knowledge
and consent of Pio.
cralawOn April 14, 1992, Franco filed his application for free patent of the subject property. On May 20, 1992,
Free Patent No. 034914-92-1117 was issued in his name.Pursuant to such free patent title, the Register of Deeds
of the Province of Nueva Ecija issued Original Certificate of Title (OCT) No. P-15176 in Francos name.
cralawThereafter, Franco demanded that respondents vacate the premises, but they refused to do so.He then
filed a complaint for ejectment against them before the RTC which was docketed as Civil Case No. 723-G.
cralawPending the ejectment case, respondents filed a case for annulment of OCT No. P-15176 which was
docketed as Civil Case No. 779-G.This case was subsequently consolidated with Civil Case No. 723-G.
cralawOn February 13, 1997, the RTC dismissed the complaint for ejectment and declared null and void OCT
No. P-15176. The dispositive portion of the decision reads:
cralawWHEREFORE, premises considered, judgment is hereby rendered in favor of the defendants Alfonso
Manantan, Danilo Manantan, Ariang Antonio, Aquilino Concepcion and Fortunato Miguel in Civil Case No.
723-G and plaintiffs in Civil Case No. 779-G and against the plaintiff Franco Esguerra in Civil Case No. 723-G
and defendant in Civil Case No. 779-G, to wit:
1. Dismissing the complaint in Civil Case No. 723-G for lack of merit;
2. In Civil Case No. 779-G, the Court hereby declares, as it hereby declared as NULL and VOID AND
WITHOUT FORCE AND EFFECT Original Certificate of Title No. P-15176, issued by Register of Deeds [of]
the Province of Nueva Ecija pursuant to Free Patent No. 034914-92-1117 in the name of Franco F. Esguerra,
and ordering the same Register of Deeds to cancel said OCT No. P-15176, including the owners copy issued to
said Franco F. Esguerra.
IT IS SO ORDERED.[5]
cralawFranco appealed to the Court of Appeals. The appellate court denied the appeal and affirmed the trial
courts decision.Hence, this petition where petitioner assigns the following errors:
I.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE PETITIONER IS ESTOPPED FROM
RAISING THE ISSUE OF LACK OF JURISDICTION.
II.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT RESPONDENTS HAD ACQUIRED A
VESTED RIGHT OVER THE PROPERTY AND THEREFORE HAVE THE RIGHT TO ATTACK THE
TITLE OF PETITIONERS AND SEEK RECONVEYANCE OF TITLE OVER THE SUBJECTLAND.
III.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONER[S] RIGHT TO REDEEM THE
PROPERTY ALREADY EXPIRED.
IV.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS CLAIM FOR MORAL AND
ATTORNEYS FEES ARE WITHOUT BASIS.[6]
cralawSimply stated, the issues before us in this case are: (1) Was petitioner estopped from questioning the
jurisdiction of the RTC? (2) Who has a better right over the contested property?
cralawOn the first issue, petitioner contends that he is not estopped from questioning the trial courts jurisdiction
to decide the complaints for ejectment and annulment of title.He claims that he immediately appealed the
decision to the Court of Appeals and thus, he cannot be guilty of laches since the appeal was the earliest
opportunity to question the validity of the decision.
cralawOn the second issue, petitioner argues that respondents occupied the subject property by mere tolerance
of Gaudencio even without the permission of Pio.He also avers that since respondents possession has not been
open, continuous, exclusive and notorious for 30 years, they have not acquired the property through
prescription.According to him, the subject property was already redeemed on December 24, 1978 as evidenced
by the Kasunduan executed by Gaudencio in 1979.
cralawHe contends that respondents action to annul the title on the ground of fraud has prescribed since they
filed it two years after the issuance of title.He avers that the action should have been filed within one year after
the date of the issuance of the decree of registration.He further claims that the respondents have no personality
to question his title because only the State has the right to do so.
cralawRespondents, for their part, maintain that they had established their open and continuous possession of
the subject property for 30 years and that they had been paying the real estate taxes of the property.They also
stress that Franco neither possessed nor improved the subject property and even admitted that respondents
possessed the property.They maintain that their action for annulment of title has not prescribed since what they
actually filed was an action for reconveyance which prescribes after ten years from registration of title.
cralawThe Court of Appeals, in affirming the RTC decision, reasoned that petitioner was estopped from
questioning the trial courts jurisdiction to hear and decide the case when he had voluntarily submitted himself to
its jurisdiction.It also found that the respondents had acquired title over the same for having been in actual
adverse possession of the subject property for 30 years.On the issue of redemption, the appellate court held that
under Article 1606[7] of the Civil Code of the Philippines, Pios right to redeem the property had already
prescribed.
cralawWe agree with the appellate court that petitioner is estopped from questioning the jurisdiction of the
RTC.Lack of jurisdiction of the court over an action cannot be waived by the parties or be cured by their
silence, acquiescence, or express consent.A party may assail the jurisdiction of the court over the action at any
stage of the proceedings and even on appeal.[8]However, participation in all stages of the proceedings before
the trial court, including invocation of its authority in asking for affirmative relief, effectively bars a party by
estoppel from challenging the courts jurisdiction.[9]chanroblesvirtuallawlibrary
cralawNote that it was petitioner who filed a complaint for ejectment against respondents before the RTC.It was
actually the respondents who moved to dismiss the complaint for lack of jurisdiction. The trial court denied it
since the allegations of the complaint showed that it was in fact one for recovery of possession of real property.
[10]When respondents filed a complaint for annulment of title, petitioner moved to dismiss it, citing the
pendency of the ejectment case, and not lack of jurisdiction, as ground. But it was denied by the
RTC.Thereafter, both parties moved for joint trial of the cases.Considering that these cases involved the same
question of fact, the trial court was correct to jointly try and decide them.Two cases involving the same parties
and affecting closely related subject matters must be ordered consolidated and jointly tried in court, where the
earlier case was filed.[11]
cralawMoreover, petitioner never raised the issue of lack of jurisdiction in his pleadings before the RTC.It was
only in the Court of Appeals where he asserted for the first time that the RTC lacked jurisdiction over the
ejectment case.This Court therefore cannot countenance petitioners adopting inconsistent postures by attacking
the jurisdiction of the regular courts to which he had voluntarily submitted.Estoppel bars him from doing so.
[12]
cralawThere is also no merit in petitioners contention that the action for annulment of title had prescribed.The
one-year prescriptive period does not apply when the person seeking annulment of title is in possession of the
lot. This is because the action partakes of a suit to quiet title which is imprescriptible.[13] In this case, inasmuch
as respondents are in possession of the lot, their action to annul OCT No. P-15176 is not barred by prescription.
cralawWe now come to the crucial issue: Who has a better right over the contested property?
We held in Magistrado v. Esplana[14] that so long as there is a clear showing of open, continuous, exclusive,
and notorious possession, and hence, a registrable possession, by present or previous occupants, by any proof
that would be competent and admissible, the property must be considered to be private.
cralaw
cralawIn the present case, it was established that the subject land is private property since time
immemorial.Records reveal that the property was cultivated as riceland and was first declared for tax purposes
under the name of Graciano Agustin.On June 6, 1960, Pio exercised acts of ownership over the land by entering
into a notarized contract of sale with the right to repurchase with Gaudencio.He declared in the contract that he
had inherited the land from his father and had been in possession of the property for 27 years. Pio likewise
declared the property for tax assessment purposes, as required under Presidential Decree No. 76,[15] on
September 25, 1973.In the Kasunduan executed on April 25, 1979, Gaudencio acknowledged that Pio owned
the land.Pio further disposed of the property in his last will and testament in favor of his heirs which include
petitioner.Although the will is void for not complying with the formal requisites of a notarial will, it may be
used to show the exclusive and adverse character of petitioners possession as a co-heir and co-owner.[16]It also
appears that respondents occupied the property on permission of Gaudencio. While petitioner did not actually
reside and cultivate the land, Gaudencio had agreed to pay buwis or rentals for the houses built thereon by
Fortunato Miguel and Alfonso Manantan.[17]Aquilino Concepcion also agreed to pay the rent.[18]Clearly, the
evidence on record shows that the property belonged to Pio and upon his death, passed on to his heirs.
cralawInasmuch as the subject property is private, a free patent issued over it is null and void, and produces no
legal effect whatsoever.Private ownership of land is not affected by the issuance of a free patent over the same
land, because the Public Land Law applies only to lands of the public domain.The Director of Lands has no
authority to grant free patents to lands that have ceased to be public in character and have passed to private
ownership.Consequently, a certificate of title issued pursuant to a homestead patent partakes of the nature of a
certificate issued in a judicial proceeding only if the land covered by it is really a part of the disposable land of
the public domain.[19]Hence, the free patent covering Lot No. 661, a private land, and the certificate of title
issued pursuant thereto, are null and void.
cralawNotwithstanding, petitioners right to possess and claim of ownership over Lot No. 661 are substantiated,
contrary to the findings of the trial court and Court of Appeals.This Court is not a trier of facts and not duty-
bound to analyze and weigh all over again the evidence already considered in the proceedings below, unless
there is a misapprehension of facts or failure to consider certain relevant facts which, if properly taken into
account, will justify a different conclusion.[20]
cralawIn the present case, the trial court and the Court of Appeals failed to consider that Pio, as owner of the
subject property and petitioners predecessor-in-interest, and Gaudencio, respondents predecessor-in-interest,
entered into a notarized contract of sale with the right to repurchase on June 6, 1960.Such contract is an
equitable mortgage under Article 1602, paragraph 6 of the Civil Code, to wit:
cralawArt. 1602.The contract shall be presumed to be an equitable mortgage, in any of the following cases:
xxxx
cralaw(6) In any other case where it may be fairly inferred that the real intention of the parties is that the
transaction shall secure the payment of a debt or the performance of any other obligation.
xxxx
cralawA proof that the contract was an equitable mortgage is that while the contract was dated June 6, 1960, Pio
had declared, in a sworn statement, the subject property for tax assessment purposes on September 25, 1973.
[21]Further, Gaudencio still recognized Pio as the owner of the property and stated in a notarized document that
the property was mortgaged to him (naisanla sa akin) and that he received Pios payment of the debt, the same
amount under the purported contract of sale.[22] Notably, both documents are considered public documents and
enjoy the presumption of validity as to its authenticity and due execution.This legal presumption was not
overcome by respondents.[23] Other than the objection that the property subject of the documents is public
land, no other proof was presented.Thus, the presumption of validity of these documents prevails.The
transaction being an equitable mortgage, Pios ownership of the property did not cease.Therefore, the period of
redemption under Article 1606 does not apply.
cralawThe appellate court erred in ruling that respondents had acquired the property through prescription.As
borne by the testimonies of Alfonso Manantan,[24] Fortunato Miguel,[25] and Danilo Manantan,[26] they
occupied the property, not as owners but upon permission of Gaudencio.As already established, Gaudencio did
not have open, continuous and adverse possession of the property.Moreover, on November 13, 1979, petitioner
and Gaudencio agreed that the latter shall pay rent on the land where the houses of Fortunato and Alfonso were
built. Thereafter, Aquilino Concepcion and a certain Pedro Antonio also agreed to pay rent. These
circumstances belie respondents claim of acquisitive prescription.
cralawAcquisitive prescription is a mode of acquiring ownership by a possessor through the requisite lapse of
time.In order to ripen into ownership, possession must be in the concept of an owner, public, peaceful and
uninterrupted.Thus, mere possession with a juridical title, such as by a usufructuary, a trustee, a lessee, an agent
or a pledgee, not being in the concept of an owner, cannot ripen into ownership by acquisitive prescription,
unless the juridical relation is first expressly repudiated and such repudiation has been communicated to the
other party. Acts of possessory character executed due to license or by mere tolerance of the owner would
likewise be inadequate. Possession, to constitute the foundation of a prescriptive right, must be en concepto de
dueo, or, to use the common law equivalent of the term, that possession should be adverse, if not, such
possessory acts, no matter how long, do not start the running of the period of prescription.[27]Clearly,
respondents, when they agreed to pay rent, became mere lessees and their possession cannot ripen into
ownership. They also did not present proof of ownership.The tax receipts offered in evidence merely showed
that they paid the taxes due only after petitioner filed a complaint against them.Such payment without adverse
possession does not prove ownership.
cralawHowever, while this Court declares that Lot No. 661 is a private property and not part of the public
domain, the petitioners title as co-owner of the said lot is imperfect and still subject to the rules on confirmation
of title under Section 48 (b)[28] of the Public Land Act.[29] As an applicant for confirmation of title, petitioner
has the burden of proving that he meets the requirements of the law.[30]
cralawWHEREFORE, the petition is PARTIALLY GRANTED.The Decision dated October 30, 2002 of the
Court of Appeals in CA-G.R. CV No. 58050 and its Resolution dated May 20, 2003 denying the motion for
reconsideration are MODIFIED. Petitioner Franco Esguerra is declared a co-owner and holder of imperfect title
over Lot No. 661. Free Patent No. 034914-92-1117 and Original Certificate of Title No. P-15176, both in the
name of Franco Esguerra are declared null and void.No pronouncement as to costs.
cralawSO ORDERED.
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Associate Justice
DANTE O. TINGA
Associate Justice
Associate Justice
ATTESTATION
Associate Justice
Chairperson
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Endnotes:
[1] cralawRollo, pp. 44-50.Penned by Associate Justice Eliezer R. de los Santos, with Associate Justices
Oswaldo D. Agcaoili and Regalado E. Maambong concurring.
[4] cralawAlso known as Dionisio Miguel. See rollo, p. 45; TSN, November 27, 1995, pp. 2-3.
[5] cralawRollo, p. 43.
[7] cralawArt. 1606.The right referred to in Article 1601, in the absence of an express agreement, shall last four
years from the date of the contract.
cralawShould there be an agreement, the period cannot exceed ten years.
xxxx
[8] cralawDuero v. Court of Appeals, G.R. No. 131282, January 4, 2002, 373 SCRA 11, 19-20.
[10] cralawRecords (Civil Case No. 723-G), p. 118.
[11] cralawZulueta v. Asia Brewery, Inc., G.R. No. 138137, March 8, 2001, 354 SCRA 100, 111.
[12] cralawRoxas v. Court of Appeals, G.R. No. 138955, October 29, 2002, 391 SCRA 351, 358.
[13] cralawHeirs of Simplicio Santiago v. Heirs of Mariano E. Santiago, G.R. No. 151440, June 17, 2003, 404
SCRA 193, 203.
[14] cralawG.R. No. 54191, May 8, 1990, 185 SCRA 104, 109.
[15] cralawRequiring All Persons, Natural or Juridical, Owning or Administering Real Property, Including the
Improvements Thereon, To File Sworn Statement of the True Value of Such Property.
[16] cralawSee Calicdan v. Cendaa, G.R. No. 155080, February 5, 2004, 422 SCRA 272, 280-281.
[17] cralawExhibit M (Civil Case No. 723-G), agreement executed by Franco Esguerra and Gaudencio Miguel.
[18] cralawExhibit N (Civil Case No. 723-G), agreement executed by Franco Esguerra and Aquilino
Concepcion.
[19] cralawSupra note 13, at 199.
[20] cralawTwin Towers Condominium Corporation v. Court of Appeals, G.R. No. 123552, February 27, 2003,
398 SCRA 203, 222-223.
[21] cralawExhibit 4 (Civil Case No. 779-G), sworn statement of the current fair market value of real properties.
[22] cralawExhibit J (Civil Case No. 723-G), Kasunduan executed by Gaudencio Miguel.
[24] cralawTSN, September 9, 1996, pp. 8-9.
[25] cralawTSN, September 30, 1996, p. 4.
[27] cralawMarcelo v. Court of Appeals, G.R. No. 131803, April 14, 1999, 305 SCRA 800, 807-808.
[28] cralawSEC. 48.The following-described citizens of the Philippines, occupying lands of the public domain
or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed,
may apply to the Court of First Instance of the province where the land is located for confirmation of their
claims and the issuance of a certificate of title thereafter, under the Land Registration Act, to wit:
xxxx
(b)Those who by themselves or through their predecessors-in-interest have been, in continuous, exclusive, and
notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of
acquisition or ownership, for at least thirty years immediately preceding the filing of the application for
confirmation of title, except when prevented by war or force majeure. Those shall be conclusively presumed to
have performed all the conditions essential to a government grant and shall be entitled to a certificate of title
under the provisions of this chapter.
xxxx
[30] cralawCollado v. Court of Appeals, G.R. No. 107764, October 4, 2002, 390 SCRA 343, 361.

SUPREME COURT
Manila
SECOND DIVISION
MA. TERESA CHAVES BIACO, G.R. No. 161417
Petitioner,
Present:
cralawQUISUMBING, J.,
Chairperson,
cralaw-versus- cralawCARPIO,
cralawCARPIO MORALES,
cralawcralawTINGA, and
cralawVELASCO, JR., JJ.
PHILIPPINE COUNTRYSIDE RURAL
BANK, cralaw
Respondent.Promulgated:
February 8, 2007
x----------------------------------------------------------------------------x
DECISION
Tinga, J.:
cralawPetitioner, Ma. Teresa Chaves Biaco, seeks a review of the Decision[1] of the Court of Appeals in CA-
G.R. No. 67489 dated August 27, 2003, which denied her petition for annulment of judgment, and the
Resolution[2] dated December 15, 2003 which denied her motion for reconsideration.
The facts as succinctly stated by the Court of Appeals are as follows:
Ernesto Biaco is the husband of petitioner Ma. Teresa Chaves Biaco. While employed in the Philippine
Countryside Rural Bank (PCRB) as branch manager, Ernesto obtained several loans from the respondent bank
as evidenced by the following promissory notes:
Feb. 17, 1998Pcralaw65,000.00
Mar. 18, 199830,000.00
May 6, 199860,000.00
May 20, 1998350,000.00
July 30, 1998155,000.00
Sept. 8, 199840,000.00
Sept. 8, 1998120,000.00
As security for the payment of the said loans, Ernesto executed a real estate mortgage in favor of the bank
covering the parcel of land described in Original Certificate of Title (OCT) No. P-14423. The real estate
mortgages bore the signatures of the spouses Biaco.
When Ernesto failed to settle the above-mentioned loans on its due date, respondent bank through counsel sent
him a written demand on September 28, 1999. The amount due as of September 30, 1999 had already reached
ONE MILLION EIGHTY THOUSAND SIX HUNDRED SEVENTY SIX AND FIFTY CENTAVOS
(P1,080,676.50).
The written demand, however, proved futile.
On February 22, 2000, respondent bank filed a complaint for foreclosure of mortgage against the spouses
Ernesto and Teresa Biaco before the RTC of Misamis Oriental. Summons was served to the spouses Biaco
through Ernesto at his office (Export and Industry Bank) located at Jofelmor Bldg., Mortola Street, Cagayan de
Oro City.
Ernesto received the summons but for unknown reasons, he failed to file an answer. Hence, the spouses Biaco
were declared in default upon motion of the respondent bank. The respondent bank was allowed to present its
evidence ex parte before the Branch Clerk of Court who was then appointed by the court as Commissioner.
Arturo Toring, the branch manager of the respondent bank, testified that the spouses Biaco had been obtaining
loans from the bank since 1996 to 1998.The loans for the years 1996-1997 had already been paid by the spouses
Biaco, leaving behind a balance of P1,260,304.33 representing the 1998 loans. The amount being claimed is
inclusive of interests, penalties and service charges as agreed upon by the parties. The appraisal value of the
land subject of the mortgage is only P150,000.00 as reported by the Assessors Office.
Based on the report of the Commissioner, the respondent judge ordered as follows:
WHEREFORE, judgment is hereby rendered ordering defendants spouses ERNESTO R. BIACO and MA.
THERESA [CHAVES] BIACO to pay plaintiff bank within a period of not less than ninety (90) days nor more
than one hundred (100) days from receipt of this decision the loan of ONE MILLION TWO HUNDRED
SIXTY THOUSAND THREE HUNDRED FOUR PESOS and THIRTY THREE CENTAVOS (P1,260,304.33)
plus litigation expenses in the amount of SEVEN THOUSAND SIX HUNDRED FORTY PESOS (P7,640.00)
and attorneys fees in the amount of TWO HUNDRED FIFTY TWO THOUSAND THIRTY PESOS and
FORTY THREE CENTAVOS (P252,030.43) and cost of this suit.
cralawIn case of non-payment within the period, the Sheriff of this Court is ordered to sell at public auction the
mortgaged Lot, a parcel of registered land (Lot 35802, Cad. 237 {Lot No. 12388-B, Csd-10-002342-D}),
located at Gasi, Laguindingan, Misamis Oriental and covered by TCT No. P-14423 to satisfy the mortgage debt,
and the surplus if there be any should be delivered to the defendants spouses ERNESTO and MA. THERESA
[CHAVES] BIACO. In the event however[,] that the proceeds of the auction sale of the mortgage[d] property is
not enough to pay the outstanding obligation, the defendants are ordered to pay any deficiency of the judgment
as their personal liability.
SO ORDERED.
On July 12, 2000, the sheriff personally served the above-mentioned judgment to Ernesto Biaco at his office at
Export and Industry Bank. The spouses Biaco did not appeal from the adverse decision of the trial court. On
October 13, 2000, the respondent bank filed an ex parte motion for execution to direct the sheriff to sell the
mortgaged lot at public auction. The respondent bank alleged that the order of the court requiring the spouses
Biaco to pay within a period of 90 days had passed, thus making it necessary to sell the mortgaged lot at public
auction, as previously mentioned in the order of the court. The motion for execution was granted by the trial
court per Order dated October 20, 2000.
On October 31, 2000, the sheriff served a copy of the writ of execution to the spouses Biaco at their residence in
#92 9th Street, Nazareth, Cagayan de Oro City. The writ of execution was personally received by Ernesto. By
virtue of the writ of execution issued by the trial court, the mortgaged property was sold at public auction in
favor of the respondent bank in the amount of ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00).
The amount of the property sold at public auction being insufficient to cover the full amount of the obligation,
the respondent bank filed an ex parte motion for judgment praying for the issuance of a writ of execution
against the other properties of the spouses Biaco for the full settlement of the remaining obligation. Granting the
motion, the court ordered that a writ of execution be issued against the spouses Biaco to enforce and satisfy the
judgment of the court for the balance of ONE MILLION THREE HUNDRED SIXTY NINE THOUSAND
NINE HUNDRED SEVENTY FOUR PESOS AND SEVENTY CENTAVOS (P1,369,974.70).
The sheriff executed two (2) notices of levy against properties registered under the name of petitioner Ma.
Teresa Chaves Biaco. However, the notices of levy were denied registration because Ma. Teresa had already
sold the two (2) properties to her daughters on April 11, 2001.[3]
Petitioner sought the annulment of the Regional Trial Court decision contending that extrinsic fraud prevented
her from participating in the judicial foreclosure proceedings.According to her, she came to know about the
judgment in the case only after the lapse of more than six (6) months after its finality.She claimed that extrinsic
fraud was perpetrated against her because the bank failed to verify the authenticity of her signature on the real
estate mortgage and did not inquire into the reason for the absence of her signature on the promissory notes.She
moreover asserted that the trial court failed to acquire jurisdiction because summons were served on her through
her husband without any explanation as to why personal service could not be made.
The Court of Appeals considered the two circumstances that kept petitioner in the dark about the judicial
foreclosure proceedings: (1) the failure of the sheriff to personally serve summons on petitioner; and (2)
petitioners husbands concealment of his knowledge of the foreclosure proceedings. On the validity of the
service of summons, the appellate court ruled that judicial foreclosure proceedings are actions quasi in rem. As
such, jurisdiction over the person of the defendant is not essential as long as the court acquires jurisdiction over
the res.Noting that the spouses Biaco were not opposing parties in the case, the Court of Appeals further ruled
that the fraud committed by one against the other cannot be considered extrinsic fraud.
Her motion for reconsideration having been denied, petitioner filed the instant Petition for Review,[4] asserting
that even if the action is quasi in rem, personal service of summons is essential in order to afford her due
process.The substituted service made by the sheriff at her husbands office cannot be deemed proper service
absent any explanation that efforts had been made to personally serve summons upon her but that such efforts
failed.Petitioner contends that extrinsic fraud was perpetrated not so much by her husband, who did not inform
her of the judicial foreclosure proceedings, but by the sheriff who allegedly connived with her husband to just
leave a copy of the summons intended for her at the latters office.
Petitioner further argues that the deficiency judgment is a personal judgment which should be deemed void for
lack of jurisdiction over her person.
Respondent PCRB filed its Comment,[5] essentially reiterating the appellate courts ruling.Respondent avers that
service of summons upon the defendant is not necessary in actions quasi in rem it being sufficient that the court
acquire jurisdiction over the res.As regards the alleged conspiracy between petitioners husband and the sheriff,
respondent counters that this is a new argument which cannot be raised for the first time in the instant petition.
We required the parties to file their respective memoranda in the Resolution[6] dated August 18,
2004.Accordingly, petitioner filed her Memorandum[7] dated October 10, 2004, while respondent filed its
Memorandum for Respondent[8] dated September 9, 2004.
Annulment of judgment is a recourse equitable in character, allowed only in exceptional cases as where there is
no available or other adequate remedy. Jurisprudence and Sec. 2, Rule 47 of the 1997 Rules of Civil Procedure
(Rules of Court) provide that judgments may be annulled only on grounds of extrinsic fraud and lack of
jurisdiction or denial of due process.[9]
Petitioner asserts that extrinsic fraud consisted in her husbands concealment of the loans which he obtained
from respondent PCRB; the filing of the complaint for judicial foreclosure of mortgage; service of summons;
rendition of judgment by default; and all other proceedings which took place until the writ of garnishment was
served.[10]
Extrinsic fraud exists when there is a fraudulent act committed by the prevailing party outside of the trial of the
case, whereby the defeated party was prevented from presenting fully his side of the case by fraud or deception
practiced on him by the prevailing party.[11]Extrinsic fraud is present where the unsuccessful party had been
prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping
him away from court, a false promise of a compromise; or where the defendant never had knowledge of the suit,
being kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently or without authority
assumes to represent a party and connives at his defeat; or where the attorney regularly employed corruptly sells
out his clients interest to the other side.The overriding consideration is that the fraudulent scheme of the
prevailing litigant prevented a party from having his day in court.[12]chanroblesvirtuallawlibrary
With these considerations, the appellate court acted well in ruling that there was no fraud perpetrated by
respondent bank upon petitioner, noting that the spouses Biaco were co-defendants in the case and shared the
same interest.Whatever fact or circumstance concealed by the husband from the wife cannot be attributed to
respondent bank.
Moreover, petitioners allegation that her signature on the promissory notes was forged does not evince extrinsic
fraud.It is well-settled that the use of forged instruments during trial is not extrinsic fraud because such evidence
does not preclude the participation of any party in the proceedings.[13]chanroblesvirtuallawlibrary
The question of whether the trial court has jurisdiction depends on the nature of the action, i.e., whether the
action is in personam, in rem, or quasi in rem.The rules on service of summons under Rule 14 of the Rules of
Court likewise apply according to the nature of the action.
An action in personam is an action against a person on the basis of his personal liability. An action in rem is an
action against the thing itself instead of against the person. An action quasi in rem is one wherein an individual
is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or lien
burdening the property.[14]chanroblesvirtuallawlibrary
In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly try
and decide the case. In a proceeding in rem or quasi in rem, jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the res.
Jurisdiction over the res is acquired either (1) by the seizure of the property under legal process, whereby it is
brought into actual custody of the law; or (2) as a result of the institution of legal proceedings, in which the
power of the court is recognized and made effective.[15]
Nonetheless, summons must be served upon the defendant not for the purpose of vesting the court with
jurisdiction but merely for satisfying the due process requirements.[16]
A resident defendant who does not voluntarily appear in court, such as petitioner in this case, must be
personally served with summons as provided under Sec. 6, Rule 14 of the Rules of Court.If she cannot be
personally served with summons within a reasonable time, substituted service may be effected (1) by leaving
copies of the summons at the defendants residence with some person of suitable age and discretion then residing
therein, or (2) by leaving the copies at defendants office or regular place of business with some competent
person in charge thereof in accordance with Sec. 7, Rule 14 of the Rules of Court.
In this case, the judicial foreclosure proceeding instituted by respondent PCRB undoubtedly vested the trial
court with jurisdiction over the res.A judicial foreclosure proceeding is an action quasi in rem.As such,
jurisdiction over the person of petitioner is not required, it being sufficient that the trial court is vested with
jurisdiction over the subject matter.
There is a dimension to this case though that needs to be delved into.Petitioner avers that she was not personally
served summons.Instead, summons was served to her through her husband at his office without any explanation
as to why the particular surrogate service was resorted to.The Sheriffs Return of Service dated March 21, 2000
states:
xxxx
That on March 16, 2000, the undersigned served the copies of Summons, complaint and its annexes to the
defendants Sps. Ernesto R. & Ma. Teresa Ch. Biaco thru Ernesto R. Biaco[,] defendant of the above-entitled
case at his office EXPORT & INDUSTRY BANK, Jofelmore Bldg.[,] Mortola St., Cagayan de Oro City and he
acknowledged receipt thereof as evidenced with his signature appearing on the original copy of the Summons.
[17] [Emphasis supplied]
Without ruling on petitioners allegation that her husband and the sheriff connived to prevent summons from
being served upon her personally, we can see that petitioner was denied due process and was not able to
participate in the judicial foreclosure proceedings as a consequence.The violation of petitioners constitutional
right to due process arising from want of valid service of summons on her warrants the annulment of the
judgment of the trial court.
There is more, the trial court granted respondent PCRBs ex-parte motion for deficiency judgment and ordered
the issuance of a writ of execution against the spouses Biaco to satisfy the remaining balance of the award.In
short, the trial court went beyond its jurisdiction over the res and rendered a personal judgment against the
spouses Biaco.This cannot be countenanced.
In Sahagun v. Court of Appeals,[18] suit was brought against a non-resident defendant, Abelardo Sahagun, and
a writ of attachment was issued and subsequently levied on a house and lot registered in his name.Claiming
ownership of the house, his wife, Carmelita Sahagun, filed a motion to intervene.For failure of plaintiff to serve
summons extraterritorially upon Abelardo, the complaint was dismissed without prejudice.
Subsequently, plaintiff filed a motion for leave to serve summons by publication upon Abelardo.The trial court
granted the motion.Plaintiff later filed an amended complaint against Abelardo, this time impleading Carmelita
and Rallye as additional defendants.Summons was served on Abelardo through publication in the Manila
Evening Post.Abelardo failed to file an answer and was declared in default.Carmelita went on certiorari to the
Court of Appeals assailing as grave abuse of discretion the declaration of default of Abelardo.The Court of
Appeals dismissed the petition and denied reconsideration.
In her petition with this Court, Carmelita raised the issue of whether the trial court acquired jurisdiction over her
husband, a non-resident defendant, by the publication of summons in a newspaper of general circulation in the
Philippines.The Court sustained the correctness of extrajudicial service of summons by publication in such
newspaper.
The Court explained, citing El Banco Espaol-Filipino v. Palanca,[19] that foreclosure and attachment
proceedings are both actions quasi in rem.As such, jurisdiction over the person of the (non-resident) defendant
is not essential.Service of summons on a non-resident defendant who is not found in the country is required, not
for purposes of physically acquiring jurisdiction over his person but simply in pursuance of the requirements of
fair play, so that he may be informed of the pendency of the action against him and the possibility that property
belonging to him or in which he has an interest may be subjected to a judgment in favor of a resident, and that
he may thereby be accorded an opportunity to defend in the action, should he be so minded.
Significantly, the Court went on to rule, citing De Midgely v. Ferandos, et. al.[20] and Perkins v. Dizon, et al.
[21] that in a proceeding in rem or quasi in rem, the only relief that may be granted by the court against a
defendant over whose person it has not acquired jurisdiction either by valid service of summons or by voluntary
submission to its jurisdiction, is limited to the res.
Similarly, in this case, while the trial court acquired jurisdiction over the res, its jurisdiction is limited to a
rendition of judgment on the res.It cannot extend its jurisdiction beyond the res and issue a judgment enforcing
petitioners personal liability.In doing so without first having acquired jurisdiction over the person of petitioner,
as it did, the trial court violated her constitutional right to due process, warranting the annulment of the
judgment rendered in the case.
WHEREFORE, the instant petition is GRANTED. The Decision dated August 27, 2003 and the Resolution
dated December 15, 2003 of the Court of Appeals in CA-G.R. SP No. 67489 are SET ASIDE.The Judgment
dated July 11, 2000 and Order dated February 9, 2001 of the RegionalTrialCourtofCagayan de OroCity, Branch
20, are likewise SET ASIDE.
SO ORDERED.
DANTE O. TINGA
Associate Justice
WE CONCUR:
Associate Justice
Chairperson
ANTONIO T. CARPIOcralawCONCHITA CARPIO MORALES
Associate Justice
ATTESTATION
Associate Justice
Chairperson, Second Division
CERTIFICATION
cralawPursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is
hereby certified that the conclusions in the above Decision had been reached in consultation before the case was
REYNATO S. PUNO
Chief Justice
Endnotes:
[1]Rollo, pp. 28-35; Penned by Associate Justice Romeo A. Brawner and concurred in by Associate Justices
Josefina Guevara-Salonga and Arturo D. Brion.
[2]Id. at 38.
[3]Id. at 29-31.
[4]Id. at 3-23.
[5]Id. at 125-142.
[6]Id. at 144-145.
[7]Id. at 149-165.
[8]Id. at 167-181.
[9]National Housing Authority v. Evangelista, G.R. No. 140945, May 16, 2005, 458 SCRA 469, 477-478.
[10]CA rollo, p. 6; Petition (for Annulment of Judgment) dated October 29, 2001.
[11]Alba v. Court of Appeals, G.R. No.164041, 29 July 2005, 265 SCRA 495, 508.
[12]Strait Times, Inc. v. Court of Appeals, 356 Phil. 217, 225-226 (1998), 294 SCRA 714, citing Palanca v. The
American Food Manufacturing Co., 24 SCRA 819, August 30, 1968, per Zaldivar, J., citing U.S. v.
Throckmorton, 98 U.S. 93, 95, 25 L. Ed. 93 (1878); See also Alaban v. Court of Appeals, G.R. No. 156021,
September 23, 2005, 470 SCRA 697, 708.
[13]Id.
[14]Asiavest Limited v. Court of Appeals, 357 Phil. 536, 553 (1998).
[15]Alba v. Court of Appeals, G.R. No. 164041, July 29, 2005, 465 SCRA 495, 505.
[16]Id. at 506
[17]CA rollo, p. 32.
[18]G.R. No. 78328, June 3, 1991, 198 SCRA 44.
[19]37 Phil. 921 (1918).
[20]159-A Phil. 314, 326 (1975).
[21]69 Phil. 186, 193 (1939).

SUPREME COURT
Manila
FIRST DIVISION
FELIPE N. MADRIAN,cralawG.R. No. 159374
Petitioner,cralawcralaw
Present:
cralawcralawcralawSANDOVAL-GUTIERREZ,*chanroblesvirtuallawlibrary
-v e r s u s -cralawCORONA,
AZCUNA and
cralawcralawGARCIA,** JJ.
FRANCISCA R. MADRIAN,
Respondent.cralawcralawPromulgated:
July 12, 2007
x------------------------------------------x
DECISION
CORONA, J.:
When a family breaks up, the children are always the victims. The ensuing battle for custody of the minor
children is not only a thorny issue but also a highly sensitive and heart-rending affair. Such is the case here.
Even the usually technical subject of jurisdiction became emotionally charged.
cralawPetitioner Felipe N. Madrian and respondent Francisca R. Madrian were married on July 7, 1993 in
Paraaque City. They resided in San Agustin Village, Brgy. Moonwalk, Paraaque City.
Their union was blessed with three sons and a daughter: Ronnick, born on January 30, 1994; Phillip, born on
November 19, 1996; Francis Angelo, born on May 12, 1998 and Krizia Ann, born on December 12, 2000.
cralawAfter a bitter quarrel on May 18, 2002, petitioner allegedly left their conjugal abode and took their three
sons with him to Ligao City, Albay and subsequently to Sta. Rosa, Laguna. Respondent sought the help of her
parents and parents-in-law to patch things up between her and petitioner to no avail. She then brought the matter
to the Lupong Tagapamayapa in their barangay but this too proved futile.
Thus respondent filed a petition for habeas corpus of Ronnick, Phillip and Francis Angelo in the Court of
Appeals, alleging that petitioners act of leaving the conjugal dwelling and going to Albay and then to Laguna
disrupted the education of their children and deprived them of their mothers care. She prayed that petitioner be
ordered to appear and produce their sons before the court and to explain why they should not be returned to her
custody.
cralawPetitioner and respondent appeared at the hearing on September 17, 2002. They initially agreed that
petitioner would return the custody of their three sons to respondent. Petitioner, however, had a change of
heart[1] and decided to file a memorandum.
cralawOn September 3, 2002, petitioner filed his memorandum[2] alleging that respondent was unfit to take
custody of their three sons because she was habitually drunk, frequently went home late at night or in the wee
hours of the morning, spent much of her time at a beer house and neglected her duties as a mother. He claimed
that, after their squabble on May 18, 2002, it was respondent who left, taking their daughter with her. It was
only then that he went to Sta. Rosa, Laguna where he worked as a tricycle driver. He submitted a certification
from the principal of the Dila Elementary School in Sta. Rosa, Laguna that Ronnick and Phillip were enrolled
there. He also questioned the jurisdiction of the Court of Appeals claiming that under Section 5(b) of RA 8369
(otherwise known as the Family Courts Act of 1997) family courts have exclusive original jurisdiction to hear
and decide the petition for habeas corpus filed by respondent.[3]chanroblesvirtuallawlibrary
For her part, respondent averred that she did not leave their home on May 18, 2002 but was driven out by
petitioner. She alleged that it was petitioner who was an alcoholic, gambler and drug addict. Petitioners
alcoholism and drug addiction impaired his mental faculties, causing him to commit acts of violence against her
and their children. The situation was aggravated by the fact that their home was adjacent to that of her in-laws
who frequently meddled in their personal problems.[4]chanroblesvirtuallawlibrary
On October 21, 2002, the Court of Appeals[5] rendered a decision[6] asserting its authority to take cognizance
of the petition and ruling that, under Article 213 of the Family Code, respondent was entitled to the custody of
Phillip and Francis Angelo who were at that time aged six and four, respectively, subject to the visitation rights
of petitioner. With respect to Ronnick who was then eight years old, the court ruled that his custody should be
determined by the proper family court in a special proceeding on custody of minors under Rule 99 of the Rules
of Court.
Petitioner moved for reconsideration of the Court of Appeals decision but it was denied. Hence, this recourse.
Petitioner challenges the jurisdiction of the Court of Appeals over the petition for habeas corpus and insists that
jurisdiction over the case is lodged in the family courts under RA 8369. He invokes Section 5(b) of RA 8369:
Section 5. Jurisdiction of Family Courts. The Family Courts shall have exclusive original jurisdiction to hear
and decide the following cases:
x x xx x xx x x
b) Petitions for guardianship, custody of children, habeas corpus in relation to the latter;
x x xx x xx x x
Petitioner is wrong.
cralawIn Thornton v. Thornton,[7] this Court resolved the issue of the Court of Appeals jurisdiction to issue
writs of habeas corpus in cases involving custody of minors in the light of the provision in RA 8369 giving
family courts exclusive original jurisdiction over such petitions:
The Court of Appeals should take cognizance of the case since there is nothing in RA 8369 that revoked its
jurisdiction to issue writs of habeas corpus involving the custody of minors.
x x xx x xx x x
We rule therefore that RA 8369 did not divest the Court of Appeals and the Supreme Court of their jurisdiction
over habeas corpus cases involving the custody of minors.
x x xx x xx x x
The provisions of RA 8369 reveal no manifest intent to revoke the jurisdiction of the Court of Appeals and
Supreme Court to issue writs of habeas corpus relating to the custody of minors. Further, it cannot be said that
the provisions of RA 8369, RA 7092 [An Act Expanding the Jurisdiction of the Court of Appeals] and BP 129
[The Judiciary Reorganization Act of 1980] are absolutely incompatible since RA 8369 does not prohibit the
Court of Appeals and the Supreme Court from issuing writs of habeas corpus in cases involving the custody of
minors. Thus, the provisions of RA 8369 must be read in harmony with RA 7029 and BP 129 that family courts
have concurrent jurisdiction with the Court of Appeals and the Supreme Court in petitions for habeas corpus
where the custody of minors is at issue.[8] (emphases supplied)
cralawThe jurisdiction of the Court of Appeals over petitions for habeas corpus was further affirmed by A.M.
No. 03-03-04-SC (April 22, 2004) in Re: Rule on Custody of Minors and Writ of Habeas Corpus in Relation to
Custody of Minors:
cralaw
In any case, whatever uncertainty there was has been settled with the adoption of A.M. No. 03-03-04-SC Re:
Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors. Section 20 of the rule
provides that:
Section 20.Petition for writ of habeas corpus. A verified petition for a writ of habeas corpus involving custody
of minors shall be filed with the Family Court. The writ shall be enforceable within its judicial region to which
the Family Court belongs.
x x xx x xx x x
The petition may likewise be filed with the Supreme Court, Court of Appeals, or with any of its members and, if
so granted, the writ shall be enforceable anywhere in the Philippines. The writ may be made returnable to a
Family Court or to any regular court within the region where the petitioner resides or where the minor may be
found for hearing and decision on the merits.
From the foregoing, there is no doubt that the Court of Appeals and Supreme Court have concurrent jurisdiction
with family courts in habeas corpus cases where the custody of minors is involved.[9] (emphases supplied)
cralawWe note that after petitioner moved out of their Paraaque residence on May 18, 2002, he twice
transferred his sons to provinces covered by different judicial regions. This situation is what the Thornton
interpretation of RA 8369s provision on jurisdiction precisely addressed:
[The reasoning that by giving family courts exclusive jurisdiction over habeas corpus cases, the lawmakers
intended them to be the sole courts which can issue writs of habeas corpus] will result in an iniquitous situation,
leaving individuals like [respondent] without legal recourse in obtaining custody of their children. Individuals
who do not know the whereabouts of minors they are looking for would be helpless since they cannot seek
redress from family courts whose writs are enforceable only in their respective territorial jurisdictions. Thus, if a
minor is being transferred from one place to another, which seems to be the case here, the petitioner in a habeas
corpus case will be left without legal remedy. This lack of recourse could not have been the intention of the
lawmakers when they passed [RA 8369].[10]
Moreover, a careful reading of Section 5(b) of RA 8369 reveals that family courts are vested with original
exclusive jurisdiction in custody cases, not in habeas corpus cases. Writs of habeas corpus which may be issued
exclusively by family courts under Section 5(b) of RA 8369 pertain to the ancillary remedy that may be availed
of in conjunction with a petition for custody of minors under Rule 99 of the Rules of Court. In other words, the
issuance of the writ is merely ancillary to the custody case pending before the family court. The writ must be
issued by the same court to avoid splitting of jurisdiction, conflicting decisions, interference by a co-equal court
and judicial instability.
The rule therefore is: when by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs,
processes and other means necessary to carry it into effect may be employed by such court or officer.[11] Once
a court acquires jurisdiction over the subject matter of a case, it does so to the exclusion of all other courts,
including related incidents and ancillary matters.
cralaw
Accordingly, the petition is hereby DENIED.
cralawSO ORDERED.
RENATO C. CORONA
Associate Justice
WEcralawCONCUR:
REYNATO S. PUNO
Chief Justice
Chairperson
(On leave)
ANGELINA SANDOVAL-GUTIERREZADOLFO S. AZCUNA
(No part)
CANCIO C. GARCIA
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had
been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.
REYNATO S. PUNO
Chief Justice
Endnotes:
* cralawOn leave.
** cralawNo part.
[1]cralawBoth parties accused each others parents of constant meddling in their family life.
[3] cralawId.
[4] cralawId., pp. 37-43.
[5] cralawFirst Division.
[6] cralawPenned by Associate Justice Rebecca de Guia-Salvador with Associate Justices Cancio C. Garcia
(now a member of the Supreme Court) and Bernardo P. Abesamis (retired) concurring. Rollo, pp. 19-26.
[7] cralawG.R. No. 154598, 16 August 2004, 436 SCRA 550.
[8] cralawId.
[9] cralawId.
[10] cralawId.
[11] cralawSection 6, Rule 135, Rules of Court.

SUPREME COURT
Manila
SECOND DIVISION
ESTATE OF THE LATE cralawG.R. No. 168661
JESUS S. YUJUICO, represented
by ADMINISTRATORS
BENEDICTO V. YUJUICO andcralawPresent:
EDILBERTO V. YUJUICO; and
AUGUSTO Y. CARPIO,cralawQUISUMBING, J., Chairperson,
cralawPetitioners,cralawCARPIO MORALES,
cralawTINGA,
VELASCO, JR., and
cralaw- versus -cralawNACHURA,* JJ.
cralaw
REPUBLIC OF THE PHILIPPINEScralawPromulgated:
and the COURT OF APPEALS,
cralawRespondents.cralawOctober 26, 2007
x-----------------------------------------------------------------------------------------x
DECISION
cralaw
VELASCO, JR., J.:

cralawIn 1973, Fermina Castro filed an application for the registration and confirmation of her title over a
parcel of land with an area of 17,343 square meters covered by plan (LRC) Psu-964 located in the Municipality
of Paraaque, Province of Rizal (now Paraaque City), in the Pasig-Rizal Court of First Instance (CFI), Branch
22.The application was docketed LRC Case No. N-8239.The application was opposed by the Office of the
Solicitor General (OSG) on behalf of the Director of Lands, and by Mercedes Dizon, a private party.Both
oppositions were stricken from the records since the opposition of Dizon was filed after the expiration of the
period given by the court, and the opposition of the Director of Lands was filed after the entry of the order of
general default.After considering the evidence, the trial court rendered its April 26, 1974 Decision.The
dispositive portion reads:
____________________________
cralaw* As per September 3, 2007 raffle.
cralawWHEREFORE, the Court hereby declares the applicant, Fermina Castro, of legal age, single, Filipino
and a resident of 1515 F. Agoncillo St., Corner J. Escoda St., Ermita, Manila, the true and absolute owner of the
land applied for situated in the Municipality of Paraaque, Province of Rizal, with an area of 17,343 square
meters and covered by plan (LRC) Psu-964 and orders the registration of said parcel of land in her name with
her aforementioned personal circumstances.
cralawOnce this decision becomes final and executory, let the corresponding order for the issuance of the
decree be issued.
cralawSO ORDERED.[1]
cralaw
cralawThe Director of Lands and Mercedes Dizon did not appeal from the adverse decision of the Pasig-Rizal
CFI.Thus, the order for the issuance of a decree of registration became final, and Decree No. N-150912 was
issued by the Land Registration Commission (LRC).[2]Original Certificate of Title (OCT) No. 10215 was
issued in the name of Fermina Castro by the Register of Deeds for the Province of Rizal on May 29, 1974.[3]
The land was then sold to Jesus S. Yujuico, and OCT No. 10215 was cancelled.On May 31, 1974,[4]Transfer
Certificate of Title (TCT) No. 445863 was issued in Yujuicos name, who subdivided the land into two lots.TCT
No. 446386[5] over Lot 1 was issued in his name, while TCT No. S-29361[6] over Lot 2 was issued in the name
of petitioner Augusto Y. Carpio.
cralaw
cralawAnnotations at the back of TCT No. 446386 show that Yujuico had, at one time or another, mortgaged
the lot to the Philippine Investments System Organization (PISO) and Citibank, N.A.Annotations in the title of
petitioner Carpio reveal the lot was mortgaged in favor of Private Development Corporation (PDC), Rizal
Commercial Banking Corporation (RCBC) and then Philippine Commercial and Industrial Bank (PCIB) and the
Development Bank of the Philippines (DBP) to secure various loans.
cralawSometime in 1977, Presidential Decree No. (PD) 1085 entitled Conveying the Land Reclaimed in the
Foreshore and Offshore of the Manila Bay (The Manila-Cavite Coastal Road Project) as Property of the Public
Estates Authority as well as Rights and Interests with Assumptions of Obligations in the Reclamation Contract
Covering Areas of the Manila Bay between the Republic of the Philippines and the Construction and
Development Corporation of the Philippines (1977) was issued. Land reclaimed in the foreshore and offshore
areas of ManilaBay became the properties of the Public Estates Authority (PEA), a government corporation that
undertook the reclamation of lands or the acquisition of reclaimed lands.On January 13, 1989, OCT No. SP 02
was issued in favor of PEA.The PEA also acquired ownership of other parcels of land along the ManilaBay
coast, some of which were subsequently sold to the Manila Bay Development Corporation (MBDC), which in
turn leased portions to Uniwide Holdings, Inc.[7]chanroblesvirtuallawlibrary
cralawThe PEA undertook the construction of the Manila Coastal Road.As this was being planned, Yujuico and
Carpio discovered that a verification survey they commissioned showed that the road directly overlapped their
property, and that they owned a portion of the land sold by the PEA to the MBDC.
On July 24, 1996, Yujuico and Carpio filed before the Paraaque City Regional Trial Court (RTC), a complaint
for the Removal of Cloud and Annulment of Title with Damages docketed as Civil Case No. 96-0317 against
the PEA. On May 15, 1998 the parties entered into a compromise agreement approved by the trial court in a
Resolution dated May 18, 1998.On June 17, 1998, the parties executed a Deed of Exchange of Real Property,
pursuant to the compromise agreement, where the PEA property with an area of 1.4007 hectares would be
conveyed to Jesus Yujuico and petitioner Carpio in exchange for their property with a combined area of 1.7343
hectares.
cralawOn July 31, 1998, the incumbent PEA General Manager, Carlos P. Doble, informed the OSG that the new
PEA board and management had reviewed the compromise agreement and had decided to defer its
implementation and hold it in abeyance following the view of the former PEA General Manager, Atty. Arsenio
Yulo, Jr., that the compromise agreement did not reflect a condition of the previous PEA Board, requiring the
approval of the Office of the President.The new PEA management then filed a petition for relief from the
resolution approving the compromise agreement on the ground of mistake and excusable negligence.
The petition was dismissed by the trial court on the ground that it was filed out of time and that the allegation of
mistake and excusable negligence lacked basis.
The PEA fared no better in the Court of Appeals (CA), as the petition was dismissed for failure to pay the
required docket fees and for lack of merit.
The matter was raised to the Supreme Court in Public Estates Authority v. Yujuico[8]but PEAs petition was
denied, upholding the trial courts dismissal of the petition for relief for having been filed out of time.The
allegation of fraud in the titling of the subject property in the name of Fermina Castro was not taken up by the
Court.
cralawOn June 8, 2001, in a Complaint for Annulment and Cancellation of Decree No. N-150912 and its
Derivative Titles, entitled Republic of the Philippines v. Fermina Castro, Jesus S. Yujuico, August Y. Carpio
and the Registry of Deeds of Paraaque City docketed as Civil Case No. 01-0222, filed with the Paraaque City
RTC, respondent Republic of the Philippines, through the OSG, alleged that when the land registered to Castro
was surveyed by Engr. H. Obreto on August 3, 1972 and subsequently approved by the LRC on April 23, 1973,
the land was still a portion of Manila Bay as evidenced by Namria Hydrographic Map No. 4243, Surveys to
1980; 1st Ed/. January 9/61: Revised 80-11-2; that Roman Mataverde, the then OIC of the Surveys Division,
Bureau of Lands, informed the OIC of the Legal Division that [w]hen projected on Cadastral Maps CM 14 deg.
13 N-120 deg, 59E, Sec.2-A of Paraaque Cadastre (Cad. 299), (LRC) Psu-964 falls inside ManilaBay, outside
Cad. 299; that then Acting Regional Lands Director Narciso V. Villapando issued a Report dated November 15,
1973 stating that plan (LRC) Psu-964 is a portion of ManilaBay; that then Officer-in-Charge, Assistant Director
of Lands, Ernesto C. Mendiola, submitted his Comment and Recommendation re: Application for Registration
of Title of FERMINA CASTRO, LRC Case No. N-8239, dated Dec. 1, 1977, praying that the instant
registration case be dismissed; and that Fermina Castro had no registrable rights over the property.
cralawMore significantly, respondent Republic argued that, first, since the subject land was still underwater, it
could not be registered in the name of Fermina Castro.Second, the land registration court did not have
jurisdiction to adjudicate inalienable lands, thus the decision adjudicating the subject parcel of land to Fermina
Castro was void.And third, the titles of Yujuico and Carpio, being derived from a void title, were likewise void.
On September 13, 2001, Yujuico and Carpio filed a Motion to Dismiss (With Cancellation of Notice of Lis
Pendens),[10] on the grounds that: (1) the cause of action was barred by prior judgment; (2) the claim had been
waived, abandoned, or otherwise extinguished; (3) a condition precedent for the filing of the complaint was not
complied with; and (4) the complaint was not verified and the certification against forum shopping was not duly
executed by the plaintiff or principal party.
On November 27, 2001, respondent Republic filed an Opposition[11] to the motion to dismiss to which
defendants filed a Reply[12] on January 14, 2002, reiterating the grounds for the motion to dismiss.
In the August 7, 2002 Order of the RTC,[13] Civil Case No. 01-0222 was dismissed.The trial court stated that
the matter had already been decided in LRC Case No. N-8239, and that after 28 years without being contested,
the case had already become final and executory.The trial court also found that the OSG had participated in the
LRC case, and could have questioned the validity of the decision but did not.Civil Case No. 01-0222 was thus
found barred by prior judgment.
On appeal to the CA, in CA-G.R. CV No. 76212, respondent Republic alleged that the trial court erred in
disregarding that appellant had evidence to prove that the subject parcel of land used to be foreshore land of the
Manila Bay and that the trial court erred in dismissing Civil Case No. 01-0222 on the ground of res judicata.
cralawThe CA observed that shores are properties of the public domain intended for public use and, therefore,
not registrable and their inclusion in a certificate of title does not convert the same into properties of private
ownership or confer title upon the registrant.
Further, according to the appellate court res judicata does not apply to lands of public domain, nor does
possession of the land automatically divest the land of its public character.
The appellate court explained that rulings of the Supreme Court have made exceptions in cases where the
findings of the Director of Lands and the Department of Environment and Natural Resources (DENR) were
conflicting as to the true nature of the land in as much as reversion efforts pertaining foreshore lands are
embued with public interest.
The dispositive portion of the CA decision reads,
cralawWHEREFORE, premises considered, the present appeal is hereby GRANTED.The appealed Order dated
August 7, 2002 of the trial court in Civil Case No. 01-0222 is hereby REVERSED and SET ASIDE.The case is
hereby REMANDED to said court for further proceedings and a full-blown trial on the merits with utmost
dispatch.[15]
cralaw
cralawHence, this petition.
cralaw
The Issues
cralawPetitioners now raise the following issues before this Court:
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND DECIDED A QUESTION OF

SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF
THE HONORABLE COURT AND HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF
JUDICIAL PROCEEDINGS NECESSITATING THE HONORABLE COURTS EXERCISE OF ITS POWER
OF SUPERVISION CONSIDERING THAT:
I. THE REVERSAL BY THE COURT OF APPEALS OF THE cralawTRIAL COURTS

APPLICATION OF THE PRINCIPLE OF cralawRES JUDICATA IN THE INSTANT CASE IS BASED ON
ITS cralawERRONEOUS ASSUMPTION THAT THE SUBJECT LAND IS OF PUBLIC DOMAIN,
ALLEGEDLY PART OF MANILA cralawBAY.
A. IN THE FIRESTONE CASE, THE HONORABLE COURT APPLIED THE PRINCIPLE OF RES
JUDICATA NOTWITHSTANDING ALLEGATIONS OF LACK OF JURISDICTION OF A LAND
REGISTRATION COURT, FORECLOSING ANY FURTHER ATTEMPT BY RESPONDENT THEREIN,
AS IN THE INSTANT CASE, TO RESURRECT A LONG-SETTLED JUDICIAL DETERMINATION OF
REGISTRABILITY OF A PARCEL OF LAND BASED ON THE SHEER ALLEGATION THAT THE SAME
IS PART OF THE PUBLIC DOMAIN.
B. THE LAND REGISTRATION COURT HAD JURISDICTION TO DETERMINE WHETHER THE

SUBJECT LAND WAS PART OF THE PUBLIC DOMAIN.
C. RESPONDENTS REVERSION CASE SEEKS TO RETRY THE VERY SAME FACTUAL ISSUES
THAT HAVE ALREADY BEEN JUDICIALLY DETERMINED OVER THIRTY (30) YEARS AGO.
D. THE JURISPRUDENTIAL BASES APPLIED BY THE COURT OF APPEALS IN ITS QUESTIONED
DECISION ARE MISPLACED, CONSIDERING THAT THEY ARE ALL PREDICATED ON THE
ERRONEOUS PREMISE THAT IT IS UNDISPUTED THAT THE SUBJECT LAND IS PART OF THE
PUBLIC DOMAIN.
II. RESPONDENT IS BARRED BY JURISDICTIONAL cralawESTOPPEL AND LACHES FROM

QUESTIONING THE cralawJURISDICTION OF THE LAND REGISTRATION COURT.
III. RELIANCE BY THE COURT OF APPEALS ON THE cralawISOLATED PRONOUNCEMENT OF

THE HONORABLE cralawCOURT IN THE PEA CASE IS UNWARRANTED AND cralawMISLEADING
CONSIDERING THAT THE MATTER OF cralawWHETHER RES JUDICATA APPLIES WITH RESPECT
TO cralawTHE LAND REGISTRATION COURTS DECISION IN 1974 WAS NOT IN ISSUE IN SAID
CASE.
A. THE INSTANT REVERSION CASE IS NOT THE PROPER RECOURSE.
B. THE VALIDITY OF THE COURT-APPROVED COMPROMISE AGREEMENT 15 MAY 1998 HAS

ALREADY BEEN AFFIRMED BY THE HONORABLE COURT IN THE PEA CASE.
IV. EQUITABLE CONSIDERATIONS MANDATE THE cralawAPPLICATION OF THE RULE ON

ORDINARY ESTOPPEL cralawAND LACHES IN THE INSTANT CASE AGAINST cralawRESPONDENT.
V. RESPONDENT CANNOT BE GIVEN SPECIAL CONSIDERATION AND EXCUSED FOR

TRANSGRESSING RULES OF PROCEDURE.[16]
Essentially, the issues boil down to three:(1) Is a reversion suit proper in this case? (2) Is the present petition
estopped by laches? (3) Did the CA erroneously apply the principle of res judicata?
An action for reversion seeks to restore public land fraudulently awarded and disposed of to private individuals
or corporations to the mass of public domain.[17]This remedy is provided under Commonwealth Act (CA) No.
141 (Public Land Act) which became effective on December 1, 1936.Said law recognized the power of the state
to recover lands of public domain.Section 124 of CA No. 141 reads:
SEC. 124.Any acquisition, conveyance, alienation, transfer, or other contract made or executed in violation of
any of the provisions of Sections one hundred and eighteen, one hundred and twenty, one hundred and twenty
one, one hundred and twenty-two, and one hundred twenty-three of this Act shall be unlawful and null and void
from its execution and shall produce the effect of annulling and cancelling the grant, title, patent, or permit
originally issued, recognized or confirmed, actually or presumptively, and cause the reversion of the property
and its improvements to the State.(Emphasis supplied.)
Pursuant to Section 124 of the Public Land Act, reversion suits are proper in the following instances, to wit:
1.cralawAlienations of land acquired under free patent or homestead provisions in violation of Section 118, CA
No. 141;
2.cralawConveyances made by non-Christians in violation of Section 120, CA No. 141; and
3.cralawAlienations of lands acquired under CA No. 141 in favor of persons not qualified under Sections 121,
122, and 123 of CA No. 141.
From the foregoing, an action for reversion to cancel titles derived from homestead patents or free patents based
on transfers and conveyances in violation of CA No. 141 is filed by the OSG pursuant to its authority under the
Administrative Code with the RTC. It is clear therefore that reversion suits were originally utilized to annul
titles or patents administratively issued by the Director of the Land Management Bureau or the Secretary of the
DENR.
While CA No. 141 did not specify whether judicial confirmation of titles by a land registration court can be
subject of a reversion suit, the government availed of such remedy by filing actions with the RTC to cancel
titles and decrees granted in land registration applications.
The situation changed on August 14, 1981 upon effectivity of Batas Pambansa (BP) Blg. 129 which gave the
Intermediate Appellate Court the exclusive original jurisdiction over actions for annulment of judgments of
RTCs.
When the 1997 Rules of Civil Procedure became effective on July 1, 1997, it incorporated Rule 47 on
annulment of judgments or final orders and resolutions of the RTCs.The two grounds for annulment under Sec.
2, Rule 47 are extrinsic fraud and lack of jurisdiction.If based on extrinsic fraud, the action must be filed within
four (4) years from its discovery, and if based on lack of jurisdiction, before it is barred by laches or estoppel as
provided by Section 3, Rule 47.Thus, effective July 1, 1997, any action for reversion of public land instituted by
the Government was already covered by Rule 47.
The instant Civil Case No. 01-0222 for annulment and cancellation of Decree No. N-150912 and its derivative
titles was filed on June 8, 2001 with the Paraaque City RTC.It is clear therefore that the reversion suit was
erroneously instituted in the Paraaque RTC and should have been dismissed for lack of jurisdiction.The proper
court is the CA which is the body mandated by BP Blg. 129 and prescribed by Rule 47 to handle annulment of
judgments of RTCs.
In Collado v. Court of Appeals,[18] the government, represented by the Solicitor General pursuant to Section
9(2) of BP Blg. 129, filed a petition for annulment of judgment with the CA.Similarly in the case of Republic v.
Court of Appeals,[19] the Solicitor General correctly filed the annulment of judgment with the said appellate
court.
This was not done in this case.The Republic misfiled the reversion suit with the Paraaque RTC.It should have
been filed with the CA as required by Rule 47.Evidently, the Paraaque RTC had no jurisdiction over the instant
reversion case.
Assuming that the Paraaque RTC has jurisdiction over the reversion case, still the lapse of almost three decades
in filing the instant case, the inexplicable lack of action of the Republic and the injury this would cause
constrain us to rule for petitioners.While it may be true that estoppel does not operate against the state or its
agents,[20] deviations have been allowed.In Manila Lodge No. 761 v. Court of Appeals,we said:
Estoppels against the public are little favored.They should not be invoked except in rare and unusual
circumstances, and may not be invoked where they would operate to defeat the effective operation of a policy
adopted to protect the public.They must be applied with circumspection and should be applied only in those
special cases where the interests of justice clearly require it.Nevertheless, the government must not be allowed
to deal dishonorably or capriciously with its citizens, and must not play an ignoble part or do a shabby thing;
and subject to limitations x x x, the doctrine of equitable estoppel may be invoked against public authorities as
well as against private individuals.[21](Emphasis supplied.)
Equitable estoppel may be invoked against public authorities when as in this case, the lot was already alienated
to innocent buyers for value and the government did not undertake any act to contest the title for an
unreasonable length of time.
In Republic v. Court of Appeals, where the title of an innocent purchaser for value who relied on the clean
certificates of the title was sought to be cancelled and the excess land to be reverted to the Government, we
ruled that [i]t is only fair and reasonable to apply the equitable principle of estoppel by laches against the
government to avoid an injustice to innocent purchasers for value (emphasis supplied).[22]We explained:
Likewise time-settled is the doctrine that where innocent third persons, relying on the correctness of the
certificate of title, acquire rights over the property, courts cannot disregard such rights and order the
cancellation of the certificate.Such cancellation would impair public confidence in the certificate of title, for
everyone dealing with property registered under the Torrens system would have to inquire in every instance
whether the title has been regularly issued or not.This would be contrary to the very purpose of the law, which
is to stabilize land titles.Verily, all persons dealing with registered land may safely rely on the correctness of the
certificate of title issued therefore, and the law or the courts do not oblige them to go behind the certificate in
order to investigate again the true condition of the property.They are only charged with notice of the liens and
encumbrances on the property that are noted on the certificate.[23]
xxxx
But in the interest of justice and equity, neither may the titleholder be made to bear the unfavorable effect of the
mistake or negligence of the States agents, in the absence of proof of his complicity in a fraud or of manifest
damage to third persons.First, the real purpose of the Torrens system is to quiet title to land to put a stop forever
to any question as to the legality of the title, except claims that were noted in the certificate at the time of the
registration or that may arise subsequent thereto.Second, as we discussed earlier, estoppel by laches now bars
petitioner from questioning private respondents titles to the subdivision lots.Third, it was never proven that
Private Respondent St. Jude was a party to the fraud that led to the increase in the area of the property after its
subdivision.Finally, because petitioner even failed to give sufficient proof of any error that might have been
committed by its agents who had surveyed the property, the presumption of regularity in the performance of
their functions must be respected.Otherwise, the integrity of the Torrens system, which petitioner purportedly
aims to protect by filing this case, shall forever be sullied by the ineptitude and inefficiency of land registration
officials, who are ordinarily presumed to have regularly performed their duties.[24]
Republic v. Court of Appeals is reinforced by our ruling in Republic v. Umali,[25] where, in a reversion case,
we held that even if the original grantee of a patent and title has obtained the same through fraud, reversion will
no longer prosper as the land had become private land and the fraudulent acquisition cannot affect the titles of
innocent purchasers for value.
Considering that innocent purchaser for value Yujuico bought the lot in 1974, and more than 27 years had
elapsed before the action for reversion was filed, then said action is now barred by laches.
While the general rule is that an action to recover lands of public domain is imprescriptible, said right can be
barred by laches or estoppel.Section 32 of PD 1592 recognized the rights of an innocent purchaser for value
over and above the interests of the government.Section 32 provides:
SEC. 32.Review of decree of registration; Innocent purchaser for value.The decree of registration shall not be
reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby,
nor by any proceeding in any court for reversing judgments, subject, however, to the right of any person,
including the government and the branches thereof, deprived of land or of any estate or interest therein by such
adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a
petition for reopening and review of the decree of registration not later than one year from and after the date of
the entry of such decree of registration, but in no case shall such petition be entertained by the court where an
innocent purchaser for value has acquired the land or an interest therein, whose rights may be
prejudiced.Whenever the phrase innocent purchaser for value or an equivalent phrase occurs in this Decree, it
shall be deemed to include an innocent lessee, mortgagee, or other encumbrances for value.(Emphasis
supplied.)
In this petition, the LRC (now LRA), on May 30, 1974, issued Decree No. N-150912 in favor of Fermina Castro
and OCT No. 10215 was issued by the Rizal Registrar of Deeds on May 29, 1974.OCT No. 10215 does not
show any annotation, lien, or encumbrance on its face.Relying on the clean title, Yujuico bought the same in
good faith and for value from her.He was issued TCT No. 445863 on May 31, 1974.There is no allegation that
Yujuico was a buyer in bad faith, nor did he acquire the land fraudulently.He thus had the protection of the
Torrens System that every subsequent purchaser of registered land taking a certificate of title for value and in
good faith shall hold the same free from all encumbrances except those noted on the certificate and any of the x
x x encumbrances which may be subsisting.[26]The same legal shield redounds to his successors-in-interest, the
Yujuicos and Carpio, more particularly the latter since Carpio bought the lot from Jesus Y. Yujuico for value
and in good faith.
Likewise protected are the rights of innocent mortgagees for value, the PISO, Citibank, N.A., PDC, RCBC,
PCIB, and DBP.Even if the mortgagors title was proved fraudulent and the title declared null and void, such
declaration cannot nullify the mortgage rights of a mortgagee in good faith.[27]chanroblesvirtuallawlibrary
All told, a reversion suit will no longer be allowed at this stage.
More on the issue of laches.Laches is the failure or neglect, for an unreasonable and unexplained length of time,
to do that which by exercising due diligence could or should have been done earlier. It is negligence or omission
to assert a right within a reasonable time, warranting a presumption that the party entitled thereto has either
abandoned or declined to assert it.[28]
When respondent government filed the reversion case in 2001, 27 years had already elapsed from the time the
late Jesus Yujuico purchased the land from the original owner Castro. After the issuance of OCT No. 10215 to
Castro, no further action was taken by the government to question the issuance of the title to Castro until the
case of Public Estates Authority, brought up in the oral argument before this Court on September 6, 2000.
[29]We then held that allegation of fraud in the issuance of the title was not proper for consideration and
determination at that stage of the case.
From the undisputed facts of the case, it is easily revealed that respondent Republic took its sweet time to
nullify Castros title, notwithstanding the easy access to ample remedies which were readily available after OCT
No. 10215 was registered in the name of Castro.First, it could have appealed to the CA when the Pasig-Rizal
CFI rendered a decision ordering the registration of title in the name of applicant Castro on April 26, 1974.Had
it done so, it could have elevated the matter to this Court if the appellate court affirms the decision of the land
registration court.Second, when the entry of Decree No. N-150912 was made on May 29, 1974 by the Rizal
Register of Deeds, the Republic had one (1) year from said date or up to May 28, 1975 to file a petition for the
reopening and review of Decree No. N-150912 with the Rizal CFI (now RTC) on the ground of actual fraud
under section 32 of PD 1592.Again, respondent Republic did not avail of such remedy.Third, when Jesus
Yujuico filed a complaint for Removal of Cloud and Annulment of Title with Damages against PEA before the
Paraaque RTC in Civil Case No. 96-0317, respondent could have persevered to question and nullify Castros
title.Instead, PEA undertook a compromise agreement on which the May 18, 1998 Resolution[30] was
issued.PEA in effect admitted that the disputed land was owned by the predecessors-in-interest of petitioners
and their title legal and valid; and impliedly waived its right to contest the validity of said title; respondent
Republic even filed the petition for relief from judgment beyond the time frames allowed by the rules, a fact
even acknowledged by this Court in Public Estates Authority.Lastly, respondent only filed the reversion suit on
June 8, 2001 after the passage of 27 years from the date the decree of registration was issued to Fermina Castro.
Such a Rip Van Winkle, coupled with the signing of the settlement with PEA, understandably misled petitioners
to believe that the government no longer had any right or interest in the disputed lot to the extent that the two
lots were even mortgaged to several banks including a government financing institution.Any nullification of
title at this stage would unsettle and prejudice the rights and obligations of innocent parties.All told, we are
constrained to conclude that laches had set in.
Even granting arguendo thatrespondent Republic is not precluded by laches from challenging the title of
petitioners in the case at bar, still we find that the instant action for reversion is already barred by res judicata.
Petitioners relying on Firestone Ceramics, Inc. v. Court of Appeals[31] as a precedent to the case at bar contend
that the instant reversion suit is now barred by res judicata.
We agree with petitioners.
The doctrine on precedents is expressed in the latin maximStare decisis et non quieta movere. Follow past
precedents and do not disturb what has been settled.[32]In order however that a case can be considered as a
precedent to another case which is pending consideration, the facts of the first case should be similar or
analogous to the second case.
A perusal of the facts of the Firestone case and those of the case at bar reveals that the facts in the two (2) cases
are parallel.First, in Firestone and in this case, the claimants filed land registration applications with the CFI;
both claimants obtained decrees for registration of lots applied for and were issued OCTs.Second, in Firestone,
the Republic filed a reversion case alleging that the land covered by the OCT was still inalienable forest land at
the time of the application and hence the Land Registration Court did not acquire jurisdiction to adjudicate the
property to the claimant.In the instant case, respondent Republic contend that the land applied for by Yujuico
was within ManilaBay at the time of application and therefore the CFI had no jurisdiction over the subject
matter of the complaint.Third, in Firestone, the validity of the title of the claimant was favorably ruled upon by
this Court in G.R. No. 109490 entitled Patrocinio E. Margolles v. CA.In the case at bar, the validity of the
compromise agreement involving the disputed lot was in effect upheld when this Court in Public Estates
Authority v. Yujuico dismissed the petition of PEA seeking to reinstate the petition for relief from the May 18,
1998 Resolution approving said compromise agreement.With the dismissal of the petition, the May 18, 1998
Resolution became final and executory and herein respondent Republic through PEA was deemed to have
recognized Castros title over the disputed land as legal and valid.In Romero v. Tan,[33] we ruled that a judicial
compromise has the effect of res judicata.We also made clear that a judgment based on a compromise
agreement is a judgment on the merits, wherein the parties have validly entered into stipulations and the
evidence was duly considered by the trial court that approved the agreement.In the instant case, the May 18,
1998 Resolution approving the compromise agreement confirmed the favorable decision directing the
registration of the lot to Castros name in LRC Case No. N-8239. Similarly, in Firestone, the Margolles case
confirmed the decision rendered in favor of Gana in Land Registration Case No. 672 ordering the issuance of
the decree to said applicant.Fourth, in Firestone, the Supreme Court relied on the letter of then Solicitor General
Francisco Chavez that the evidence of the Bureau of Lands and the LRC was not sufficient to support an action
for cancellation of OCT No. 4216.In the instant case, both the Solicitor General and the Government Corporate
Counsel opined that the Yujuico land was not under water and that there appears to be no sufficient basis for the
Government to institute the action for annulment.Fifth, in Firestone, we ruled that the Margolles case had long
become final, thus thevalidity of OCT No. 4216 should no longer be disturbed and should be applied in the
instant case (reversion suit) based on the principle of res judicata or, otherwise, the rule on conclusiveness of
judgment.[34]chanroblesvirtuallawlibrary
Clearly from the above, Firestone is a precedent case.The Public Estates Authority had become final and thus
the validity of OCT No. 10215 issued to Castro could no longer be questioned.
While we said in Public Estates Authority that the court does not foreclose the right of the Republic from
pursuing the proper recourse in a separate proceedings as it may deem warranted, the statement was obiter
dictum since the inquiry on whether or not the disputed land was still under water at the time of its registration
was a non-issue in the said case.
Even granting for the sake of argument that Firestone is not squarely applicable, still we find the reversion suit
already barred by res judicata.
For res judicata to serve as an absolute bar to a subsequent action, the following requisites must concur: (1)
there must be a final judgment or order; (2) the court rendering it must have jurisdiction over the subject matter
and the parties; (3) it must be a judgment or order on the merits; and (4) there must be between the two cases,
identity of parties, subject matter and causes of action.[35]chanroblesvirtuallawlibrary
There is no question as to the first, third and last requisites.The threshold question pertains to the second
requisite, whether or not the then Pasig-Rizal CFI, Branch 22 had jurisdiction over the subject matter in LRC
Case No. N-8239. In Civil Case No. 01-0222, the Paraaque City RTC, Branch 257 held that the CFI had
jurisdiction.The CA reversed the decision of the Paraaque City RTC based on the assertion of respondent
Republic that the Pasig-Rizal CFI had no jurisdiction over the subject matter, and that there was a need to
determine the character of the land in question.
The Paraaque City RTC Order dismissing the case for res judicata must be upheld.
The CA, in rejecting the dismissal of the reversion case by the Paraaque RTC, relied on two cases, namely:
Municipality of Antipolo v. Zapanta[36] and Republic v. Vda. De Castillo.[37]chanroblesvirtuallawlibrary
In Municipality of Antipolo, we held that the land registration court had no jurisdiction to entertain any land
registration application if the land was public property, thus:
cralawSince the Land Registration Court had no jurisdiction to entertain the application for registration of
public property of ANTIPOLO, its Decision adjudicating the DISPUTED PROPERTY as of private ownership
is null and void.It never attained finality, and can be attacked at any time.It was not a bar to the action brought
by ANTIPOLO for its annulment by reason of res judicata.
cralaw[x x x] the want of jurisdiction by a court over the subject matter renders the judgment void and a mere
nullity, and considering that a void judgment is in legal effect no judgment, by which no rights are divested,
from which no rights can be obtained, which neither binds nor bars any one, and under which all acts performed
and all claims flowing out of are void, and considering, further, that the decision, for want of jurisdiction of the
court, is not a decision in contemplation of law, and hence, can never become executory, it follows that such a
void judgment cannot constitute a bar to another case by reason of res judicata.
xxxx
cralaw
cralawIt follows that if a person obtains a title under the Public Land Act which includes, by oversight, lands
which cannot be registered under the Torrens System, or when the Director of Lands did not have jurisdiction
over the same because it is a public forest, the grantee does not, by virtue of the said certificate of title alone,
become the owner of the land illegally included (Republic vs. Animas, 56 SCRA 499, 503; Ledesma vs.
Municipality of Iloilo, 49 Phil. 769).
cralaw[x x x x]
cralawUnder these circumstances, the certificate of title may be ordered cancelled (Republic vs. Animas, et al.,
supra), and the cancellation maybe pursued through an ordinary action therefore.This action cannot be barred by
the prior judgment of the land registration court, since the said court had no jurisdiction over the subject
matter.And if there was no such jurisdiction, then the principle of res judicata does not apply. [x x x]Certainly,
one of the essential requisites, i.e., jurisdiction over the subject matter, is absent in this case.(Italics supplied).
[38]
cralawThe plain import of Municipality of Antipolo is that a land registration court, the RTC at present, has no
jurisdiction over the subject matter of the application which respondent Republic claims is public land. This
ruling needs elucidation.
Firmly entrenched is the principle that jurisdiction over the subject matter is conferred by law.
[39]Consequently, the proper CFI (now the RTC) under Section 14 of PD 1529[40] (Property Registration
Decree) has jurisdiction over applications for registration of title to land.
Section 14 of PD 1592 provides:
cralawSEC. 14.Who may apply.The following persons may file in the proper Court of First Instance an
application for registration of title to land, whether personally or through their duly authorized representatives:
cralaw(1) cralawThose who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public
domain under a bona fide claim of ownership since June 12, 1945, or earlier.(Emphasis supplied.)
cralawConformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the subject matter of the land
registration case filed by Fermina Castro, petitioners predecessor-in-interest, since jurisdiction over the subject
matter is determined by the allegations of the initiatory pleadingthe application.[41]Settled is the rule that the
authority to decide a case and not the decision rendered therein is what makes up jurisdiction.When there is
jurisdiction, the decision of all questions arising in the case is but an exercise of jurisdiction.
In our view, it was imprecise to state in Municipality of Antipolo that the Land Registration Court [has] no
jurisdiction to entertain the application for registration of public property x x x for such court precisely has the
jurisdiction to entertain land registration applications since that is conferred by PD 1529.The applicant in a land
registration case usually claims the land subject matter of the application as his/her private property, as in the
case of the application of Castro.Thus, the conclusion of the CA that the Pasig-Rizal CFI has no jurisdiction
over the subject matter of the application of Castro has no legal mooring.The land registration court initially has
jurisdiction over the land applied for at the time of the filing of the application. After trial, the court, in the
exercise of its jurisdiction, can determine whether the title to the land applied for is registrable and can be
confirmed.In the event that the subject matter of the application turns out to be inalienable public land, then it
has no jurisdiction to order the registration of the land and perforce must dismiss the application.
Based on our ruling in Antipolo, the threshold question is whether the land covered by the titles of petitioners is
under water and forms part of ManilaBay at the time of the land registration application in 1974.If the land was
within ManilaBay, then res judicata does not apply.Otherwise, the decision of the land registration court is a bar
to the instant reversion suit.
After a scrutiny of the case records and pleadings of the parties in LRC Case No. N-8239 and in the instant
petition, we rule that the land of Fermina Castro is registrable and not part of Manila Bay at the time of the
filing of the land registration application.
The trial courts Decision in 1974 easily reveals the basis for its conclusion that the subject matter was a dry
land, thus:
On February 1, 1974, the applicant presented her evidence before the Deputy Clerk of this Court and among the
evidence presented by her were certain documents which were marked as Exhibits D to J, inclusive.The
applicant testified in her behalf and substantially declared that: she was 62 years old, single, housekeeper and
residing at 1550 J. Escoda, Ermita, Manila; that she was born on June 3, 1911; that she first came to know of the
land applied for which is situated in the Municipality of Paraaque, province of Rizal, with an area of 17,343
square meters and covered by plan (LRC) Psu-964 while she was still ten (10) years old or sometime in 1921;
that when she first came to know of the land applied for, the person who was in possession and owner of said
land was her father, Catalino Castro; that during that time her father used to plant on said land various crops like
pechay, mustard, eggplant, etc.; that during that time, her father built a house on said land which was used by
her father and the other members of the family, including the applicant, as their residential house; that the land
applied for was inherited by her father from her grandfather Sergio Castro; that Catalino Castro continuously
possessed and owned the land in question from 1921 up to the time of his death in 1952; and that during that
period of time nobody ever disturbed the possession and ownership of her father over the said parcel of land;
that after the death of her father in 1952 she left the place and transferred her place of residence but she had also
occasions to visit said land twice or thrice a week and sometimes once a week; that after she left the land in
question in 1952, she still continued possessing said land, through her caretaker Eliseo Salonga; that her
possession over the land in question from the time she inherited it up to the time of the filing of the application
has been continuous, public, adverse against the whole world and in the concept of an owner; that it was never
encumbered, mortgaged, or disposed of by her father during his lifetime and neither did she ever encumber or
sell the same; that it was declared for taxation purposes by her father when he was still alive and her father also
paid the real estate taxes due to the government although the receipt evidencing the payment of said real estate
taxes for the property applied for have been lost and could no longer be found inspite of diligent effort exerted
to locate the same.
The other witness presented by the applicant was Emiliano de Leon, who declared that he was 70 years old,
married, farmer and residing at San Jose, Baliwag, Bulacan; that he knew Catalino Castro, the father of the
applicant because said Catalino Castro was his neighbor in Tambo, Paraaque, Rizal, he had a house erected on
the land of Catalino Castro; that he was born in 1903 and he first came to know of the land in question when in
1918 when he was about 18 years old; that the area of the land owned and possessed by Catalino Castro where
he constructed a residential house has an area of more than one and one-half (1 ) hectares; that the possession of
Catalino Castro over the land in question was peaceful, continuous, notorious, adverse against the whole world
and in the concept of an owner; that during the time that Catalino Castro was in possession of the land applied
for he planted on said parcel of land mango, coconut and banana, etc.; that Catalino Castro continuously
possessed and owned said parcel of land up to the year 1952 when he died; that during the time that Catalino
Castro was in possession of said land, nobody ever laid claim over the said property; that said land is not within
any military or naval reservation; that upon the death of Catalino Castro, the applicant took possession of the
land applied for and that up to the present the applicant is in possession of said land; that he resided in the land
in question from 1918 up to the time he transferred his place of residence in Baliwag, Bulacan in the year 1958.
On February 11, 1974, the Court, pursuant to the provision of Presidential Decree No. 230 issued by his
Excellency, Ferdinand E. Marcos dated July 9, 1973 held in abeyance the rendition of a decision in this case and
directed the applicant to submit a white print copy of plan (LRC) Psu-964 to the Director of lands who was
directed by the Court to submit his comment and recommendation thereon.
The property in question is declared for taxation purposes under Tax Declaration No. 51842 (Exhibit G) and
real estate taxes due thereon have been paid up to the year 1973 (Exhibit H).
cralawIn compliance with the Order of this Court February 11, 1974, the Director ofLands, thru Special
Attorney Saturnino A. Pacubas, submitted a report to this Court dated April 25, 1974, stating among other
things, that upon ocular inspection conducted by Land Inspector Adelino G. Gorospe and the subsequent joint
ocular inspection conducted by Geodetic Engineer Manuel A. Cervantes and Administrative Assistant Lazaro
G. Berania, it was established that the parcel of land covered by plan (LRC) Psu-964 no longer forms part of the
Manila Bay but is definitely solid and dry land.
In this connection, it should be noted that Administrative Assistant Lazaro G. Berania and Geodetic Engineer
Manuel A. Cervantes, in their report dated March 22, 1974 have also stated that the land applied for cannot be
reached by water even in the highest tide and that the said land is occupied by squatter families who have
erected makeshift shanties and a basketball court which only prove that the same is dry and solid land away
from the shores of Manila Bay.
cralawFurthermore, Land Inspector Adelino G. Gorospe in his letter-report dated November 28, 1973 has also
stated that there is a house of pre-war vintage owned by the applicant on the land in question which in effect
corroborates the testimony of the applicant and her witness that they have lived on the land in question even
prior to the outbreak of the second world war and that the applicant has been in possession of the land in
question long time ago.[43]
To counter the evidence of applicant Castro, and bolster its claim that she has no valid title, respondent
Republic relies on the July 18, 1973 Office Memorandum[44] of Roman Mataverde, OIC, Surveys Division, to
the OIC, Legal Division, of the Bureau of Lands, stating that when projected on cadastral maps CM 14 13N -
120 59 E., Sec. 3-D and CM 14 30N - 120 59E., Sec. 2-A of Paranaque [sic] Cadastre (Cad-299), (LRC) Psu-
964 falls inside Manila Bay, outside Cad-299.[45]
The same conclusion was adopted in a November 15, 1973 letter of Narciso Villapando, Acting Regional Lands
Director to the Chief, Legal Division, Bureau of Lands and in the Comment and Recommendation of Ernesto C.
Mendiola, Assistant Director, also of the Bureau of Lands.
Respondent likewise cites Namria Hydrographic Map No. 4243 Revised 80-11-2 to support its position that
Castros lot is a portion of ManilaBay.
The burden of proving these averments falls to the shoulders of respondent Republic.The difficulty is locating
the witnesses of the government. Roman Mataverde, then OIC of the Surveys Division retired from the
government service in 1982.He should by this time be in his 90s.Moreover, Asst. Regional Director Narciso
Villapando and Asst. Director Ernesto C. Mendiola are no longer connected with the Bureau of Lands since
1986.
Assuming that OIC Roman Mataverde, Asst. Regional Director Narciso Villapando and Assistant Director
Ernesto C. Mendiola are still available as witnesses, the projections made on the cadastral maps of the then
Bureau of Lands cannot prevail over the results of the two ocular inspections by several Bureau of Lands
officials that the disputed lot is definitely dry and solid land and not part of Manila Bay.Special Attorney
Saturnino A. Pacubas, Land Inspector Adelino G. Gorospe, Geodetic Engineer Manuel A. Cervantes and
Administrative Asst. Lazaro A. Berana, all officials of the Bureau of Lands, were positive that the disputed land
is solid and dry land and no longer forms part of ManilaBay.Evidence gathered from the ocular inspection is
considered direct and firsthand information entitled to great weight and credit while the Mataverde and
Villapando reports are evidence weak in probative value, being merely based on theoretical projections in the
cadastral map or table surveys.[46]Said projections must be confirmed by the actual inspection and verification
survey by the land inspectors and geodetic engineers of the Bureau of Lands.Unfortunately for respondent
Republic, the bureau land inspectors attested and affirmed that the disputed land is already dry land and not
within ManilaBay.
On the other hand, the Namria Hydrographic Map No. 4243 does not reveal what portion of ManilaBay was
Castros lot located in 1974.Moreover, a hydrographic map is not the best evidence to show the nature and
location of the lot subject of a land registration application.It is derived from a hydrographic survey which is
mainly used for navigation purposes, thus:
Surveys whose principal purpose is the determination of data relating to bodies of water.A hydrographic survey
may consist of the determination of one or several of the following classes of data:depth water; configuration
and nature of the bottom; directions and force of currents; heights and times of tides and water stages; and
location of fixed objects for survey and navigation purposes.[47]
Juxtaposed with finding of the ocular inspection by Bureau of Lands Special Attorney Pacubas and others that
Castros lot is dry land in 1974, Namria Hydrographic Map No. 4243 is therefore inferior evidence and lacking
in probative force.
Moreover, the reliability and veracity of the July 18, 1973 report of Roman Mataverde based on the alleged
projection on cadastral maps and the Villapando report dated November 15, 1973 are put to serious doubt in the
face of the opinion dated October 13, 1997 of the Government Corporate Counsel, the lawyer of the PEA,
which upheld the validity of the titles of petitioners, thus:
We maintain to agree with the findings of the court that the property of Fermina Castro was registrable land, as
based on the two (2) ocular inspections conducted on March 22, 1974 by Lands Administrative Assistant
Lazaro G. Berania and Lands Geodetic Engr. Manuel Cervantes, finding the same no longer forms part of
Manila Bay but is definitely solid land which cannot be reached by water even in the highest of tides. This
Berania-Cervantes report based on ocular inspections literally overturned the findings and recommendations of
Land Director Narciso V. Villapando dated November 15, 1973, and that of Director Ernesto C. Mendiola dated
December 1, 1977, and the fact that the Villapando-Mendiola reports were merely based on projections in the
cadastral map or table surveys.
xxxx
A. The Legal prognosis of the case is not promising in favor of PEA.
cralaw
4.1cralawLRC Case No. N-8239 has already become final and executory and OCT No. 10215 was already
issued in favor of Fermina Castro. Any and all attempts to question its validity can only be entertained in a quo
warranto proceedings (sic), assuming that there are legal grounds (not factual grounds) to support its
nullification. Subjecting it to a collateral attack is not allowed under the Torrens Title System. In Calalang vs.
Register of Deeds of Quezon City, 208 SCRA 215, the Supreme Court held that the present petition is not the
proper remedy in challenging the validity of certificates of titles since the judicial action required is a direct and
not a collateral attack (refer also to: Toyota Motor Philippine Corporation vs. CA, 216 SCRA 236).
4.2cralawOCT No. 10215 in favor of Fermina Castro was issued pursuant to a cadastral proceeding, hence is a
rem proceedings which is translated as a constructive notice to the whole world, as held in Adez Realty
Incorporated vs. CA, 212 SCRA 623.
4.3cralawFrom the cursory and intent reading of the decision of Judge Sison in LRC Case No. N-8239, we
cannot find any iota of fraud having been committed by the court and the parties. In fact, due process was
observed when the Office of the Solicitor General represented ably the Bureau of Lands. In Balangcad vs.
Justices of the Court of Appeals, 206 SCRA 169, the Supreme Court held that title to registered property
becomes indefeasible after one-year from date of registration except where there is actual fraud in which case it
may be challenged in a direct proceeding within that period. This is also the ruling in Bishop vs. CA, 208 SCRA
636, that to sustain an action for annulment of a torrens certificate for being void ab initio, it must be shown that
the registration court had not acquired jurisdiction over the case and there was actual fraud in securing the title.
4.4cralawAs to priority of torrens title, PEA has no defense, assuming that both PEA and Yujuico titles are
valid, as held in Metropolitan Waterworks and Sewerage System vs. CA, 215 SCRA 783, where two (2)
certificates purport to include the same land, the earlier in date prevails.
4.5cralawThe documents so far submitted by the parties to the court indicate that the mother title of the Yujuico
land when registered in 1974 was not underwater. This was shown in the two (2) ocular inspections conducted
by the officials of the Land Bureau.
4.6cralawThe provision of P.D. 239 that no decree of registration may be issued by the court unless upon
approval and recommendation of the Bureau of Lands was substantially complied with in the Report of Lands
Special Attorney Saturnino Pacubas, submitted to the court.[48]chanroblesvirtuallawlibrary
Even the counsel of respondent Republic, the OSG, arrived at the conclusion that there is no sufficient legal
basis for said respondent to institute action to annul the titles of petitioners, thus:
It may be stated at the outset that a petition for annulment of certificate of title or reconveyance of land may be
based on fraud which attended the issuance of the decree of registration and the corresponding certificate of
title.
Based on the decision in the LRC Case No. N-8239 involving the petition for registration and confirmation of
title filed by Fermina Castro, there is no showing that fraud attended the issuance of OCT No. 10215. it appears
that the evidence presented by Fermina Castro was sufficient for the trial court to grant her petition.
The testimony of Fermina Castro, which was corroborated by Emiliano de Leon, that she and her predecessors-
in-interest had been in possession of the land for more than thirty (30) years sufficiently established her vested
right over the property initially covered by OCT No. 10215. The report dated April 25, 1974 which was
submitted to the trial court by the Director of Lands through Special Attorney Saturnino Pacubas showed that
the parcel of land was solid and dry land when Fermina Castros application for registration of title was filed. It
was based on the ocular inspection conducted by Land Inspector Adelino Gorospe and the joint circular
inspection conducted by Geodetic Engineer Manuel A. Cervantes and Administrative Assistant Lazaro Berania
on November 28, 1973 and March 22, 1974 respectively.
The aforesaid report must be requested unless there is a concrete proof that there was an irregularity in the
issuance thereof. In the absence of evidence to the contrary, the ocular inspection of the parcel of land, which
was made the basis of said report, is presumed to be in order.
Based on the available records, there appears to be no sufficient basis for the Government to institute an action
for the annulment of OCT No. 10215 and its derivative titles. It is opined that a petition for
cancellation/annulment of Decree No. N-150912 and OCT No. 10215 and all its derivative titles will not
prosper unless there is convincing evidence to negate the report of the then Land Management Bureau through
Special Attorney Pacubas. Should the Government pursue the filing of such an action, the possibility of winning
the case is remote.[49]chanroblesvirtuallawlibrary
More so, respondent Government, through its counsel, admits that the land applied by Fermina Castro in 1973
was solid and dry land, negating the nebulous allegation that said land is underwater.The only conclusion that
can be derived from the admissions of the Solicitor General and Government Corporate Counsel is that the land
subject of the titles of petitioners is alienable land beyond the reach of the reversion suit of the state.
Notably, the land in question has been the subject of a compromise agreement upheld by this Court in Public
Estates Authority.[50]In that compromise agreement, among other provisions, it was held that the property
covered by TCT Nos. 446386 and S-29361, the land subject of the instant case, would be exchanged for PEA
property. The fact that PEA signed the May 15, 1998 Compromise Agreement is already a clear admission that
it recognized petitioners as true and legal owners of the land subject of this controversy.
Moreover, PEA has waived its right to contest the legality and validity of Castros title.Such waiver is clearly
within the powers of PEA since it was created by PD 1084 as a body corporate which shall have the attribute of
perpetual succession and possessed of the powers of the corporations, to be exercised in conformity with the
provisions of this Charter [PD 1084].[51]It has the power to enter into, make, perform and carry out contracts of
every class and description, including loan agreements, mortgages and other types of security arrangements,
necessary or incidental to the realization of its purposes with any person, firm or corporation, private or public,
and with any foreign government or entity.[52]It also has the power to sue and be sued in its corporate name.
[53]Thus, the Compromise Agreement and the Deed of Exchange of Real Property signed by PEA with the
petitioners are legal, valid and binding on PEA.In the Compromise Agreement, it is provided that it settles in
full all the claims/counterclaims of the parties against each other.[54]The waiver by PEA of its right to question
petitioners title is fortified by the manifestation by PEA in the Joint Motion for Judgment based on Compromise
Agreement that
4.cralawThe parties herein hereto waive and abandon any and all other claims and counterclaims which they
may have against each other arising from this case or related thereto.[55]
Thus, there was a valid waiver of the right of respondent Republic through PEA to challenge petitioners titles.
The recognition of petitioners legal ownership of the land is further bolstered by the categorical and
unequivocal acknowledgment made by PEA in its September 30, 2003 letter where it stated that: Your
ownership thereof was acknowledged by PEA when it did not object to your membership in the CBP-IA
Association, in which an owner of a piece of land in CBP-IA automatically becomes a member thereof.
[56]Section 26, Rule 130 provides that the act, declaration or omission of a party as to a relevant fact may be
given in evidence against him.The admissions of PEA which is the real party-in-interest in this case on the
nature of the land of Fermina Castro are valid and binding on respondent Republic.Respondents claim that the
disputed land is underwater falls flat in the face of the admissions of PEA against its interests.Hence, res
judicata now effectively precludes the relitigation of the issue of registrability of petitioners lot.
In sum, the Court finds that the reversion case should be dismissed for lack of jurisdiction on the part of the
Paraaque RTC.Even if we treat said case as a petition for annulment of judgment under Rule 47 of the 1997
Rules of Civil Procedure, the dismissal of the case nevertheless has to be upheld because it is already barred by
laches.Even if laches is disregarded, still the suit is already precluded by res judicata in view of the peculiar
facts and circumstances obtaining therein.
WHEREFORE, premises considered, the petition is GRANTED.The Decision of the Court of Appeals in CA-
G.R. CV No. 76212 is REVERSED and SET ASIDE, and the August 7, 2002 Order of the Paraaque City RTC,
Branch 257 in Civil Case No. 01-0222 entitled Republic of the Philippines v. Fermina Castro, et al. dismissing
the complaint is AFFIRMED.
No costs.
SO ORDERED.
cralawPRESBITERO J. VELASCO, JR.
Associate Justice
WE CONCUR:
Associate Justice
Chairperson
ANTONIO EDUARDO B. NACHURA
Associate Justice
ATTESTATION
Associate Justice
Chairperson
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Endnotes:
cralaw[1] Rollo, pp. 390-396, 396.
cralaw[2] Id. at 398-399.
cralaw[4] Id. at 403-404

cralaw[7] Id. at 17.
[8] G.R. No. 140486, February 6, 2001, 351 SCRA 280.
cralaw[9] Rollo, p. 11.
[15] Id. at 35.The Decision was penned by Associate Justice Martin S. Villarama, Jr. and concurred in by
Associate Justices Regalado E. Maambong and Lucenito N. Tagle.
[17] O.D. Agcaoili, Property Registration Decree and Related Laws (Land Titles and Deeds) 352 (2006).
cralaw[18] G.R. No. 107764, October 4, 2002, 390 SCRA 343, 351.
cralaw[19] G.R. No. 126316, June 25, 2004, 432 SCRA 593, 597.
[20] Manila Lodge No. 761 v. Court of Appeals, No. L-41001, September 30, 1976, 73 SCRA 166.
[21] 31 CJS 675-676; cited in Republic v. CA, G.R. No. 116111, January 21, 1999, 301 SCRA 366, 377.
cralaw[22] G.R. No. 116111, January 21, 1999, 301 SCRA 366, 379.
cralaw[23] Id. at 379-380.
[25] G.R. No. 80687, April 10, 1989, 171 SCRA 647, 653.
[26] PD 1529, Sec. 44.
[27] Blanco v. Esquierdo, 110 Phil. 494 (1960); cited in O.D. Agcaoili, supra note 17.
cralaw[28] Felizardo v. Fernandez, G.R. No. 137509, August 15, 2001, 363 SCRA 182, 191.
cralaw[29] Supra note 8, at 292.
[31] G.R. No. 127022, September 2, 1999, 313 SCRA 522.
cralaw[32] J.M. Tuazon and Co., Inc. v. Mariano, No. L-33140, October 23, 1978, 85 SCRA 644.
cralaw[33] G.R. No. 147570, February 27, 2004, 424 SCRA 108, 123.
cralaw[34] Supra note 31, at 540.
cralaw[35] San Pedro v. Binalay, G.R. No. 126207, August 25, 2005, 468 SCRA 47, 57.
cralaw[36] No. L-65334, December 26, 1984, 133 SCRA 820.
cralaw[37] No. L-69002, June 30, 1988, 163 SCRA 286.
[38] Supra note 35, at 825-826.
cralaw[39] I Regalado, Remedial Law Compendium 8 (6th rev. ed.).
[40] Amending and Codifying the Laws Relative to Registration of Property and for Other Purposes (1978).
[41] Ganadin v. Ramos, No. L-23547, September 11, 1980, 99 SCRA 613; Time, Inc. v. Reyes, No. L-28882,
May 31, 1971, 39 SCRA 303.
[42] I Regalado, supra note 39, at 7; citations omitted.
cralaw[43] Supra note 1, at 395-396.
cralaw[44] Records, p. 217.
cralaw[45] Id.
[47] Sec. 01. Surveying, National Mapping and Resource Information Authority (NAMRIA),
<http://www.namria.gov.ph/serv.asp> (visited October 16, 2007).
[48] Rollo, pp. 93-95.
[49] Id. at 95-96.
cralaw[50] Supra note 8.
cralaw[51] PD 1084, Sec. 1.

cralaw[52] PD 1084, Sec. 5, letter m.
cralaw[53] PD 1084, Sec. 5, letter b.
[56] Id. at 105.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-44264 September 19, 1988
HEDY GAN y YU, Petitioner, vs. THE HONORABLE COURT OF APPEALS and the PEOPLE OF THE
PHILIPPINES, Respondents.
FERNAN, C.J.:
Petitioner Hedy Gan was convicted of the crime of Homicide thru Reckless Imprudence in Criminal Case No.
10201 of the then Court of First Instance of Manila, Branch XXII presided by Judge Federico C. Alikpala. She
was sentenced to an indeterminate penalty of four (4) months and one (1) day of arresto mayor as minimum and
two (2) years, four (4) months and one (1) day of prision correccional as maximum and was made to indemnify
the heirs of the victim the sum of P12,000.00 without any subsidiary imprisonment in case of insolvency and to
pay the costs. On appeal, the trial court's decision was modified and petitioner was convicted only of Homicide
thru Simple Imprudence. Still unsatisfied with the decision of the Court of Appeals, 1 petitioner has come to
this Court for a complete reversal of the judgment below.chanroblesvirtualawlibrary chanrobles virtual law
library
The facts of the case as found by the appellate court are as follows:
In the morning of July 4, 1972 at about 8:00 o'clock, the accused Hedy Gan was driving a Toyota car along
North Bay Boulevard, Tondo, Manila. While in front of house no. 694 of North Bay Boulevard, there were two
vehicles, a truck and a jeepney parked on one side of the road, one following the other about two to three meters
from each other. As the car driven by the accused approached the place where the two vehicles were parked,
there was a vehicle coming from the opposite direction, followed by another which tried to overtake and bypass
the one in front of it and thereby encroached the lane of the car driven by the accused. To avoid a head-on
collision with the oncoming vehicle, the defendant swerved to the right and as a consequence, the front bumper
of the Toyota Crown Sedan hit an old man who was about to cross the boulevard from south to north, pinning
him against the rear of the parked jeepney. The force of the impact caused the parked jeepney to move forward
hitting the rear of the parts truck ahead of it. The pedestrian was injured, the Toyota Sedan was damaged on its
front, the jeep suffered damages on its rear and front paints, and the truck sustained scratches at the wooden
portion of its rear. The body of the old man who was later Identified as Isidoro Casino was immediately brought
to the Jose Reyes Memorial Hospital but was (pronounced) dead on arrival. 2 chanrobles virtual law library
An information for Homicide thru Reckless Imprudence was filed against petitioner in view of the above
incident. She entered a plea of not guilty upon arraignment and the case was set for
trial.chanroblesvirtualawlibrary chanrobles virtual law library
Meanwhile, petitioner sought and was granted a re-investigation by the City Fiscal, as a result of which the trial
fiscal moved for the dismissal of the case against petitioner during the resumption of hearing on September 7,
1972. The grounds cited therefor were lack of interest on the part of the complaining witness to prosecute the
case as evidenced by an affidavit of desistance submitted to the trial court and lack of eyewitness to sustain the
charge.chanroblesvirtualawlibrary chanrobles virtual law library
The motion to dismiss filed by the fiscal was never resolved. The Court instead ordered the prosecution to
present its evidence. After the prosecution rested its case, the petitioner filed a motion to dismiss the case on the
ground of insufficiency of evidence.chanroblesvirtualawlibrary chanrobles virtual law library
On December 22, 1972, the trial court rendered judgment finding petitioner guilty beyond reasonable doubt of
the of- offense charged.chanroblesvirtualawlibrary chanrobles virtual law library
Petitioner appealed to the Court of Appeals in CA-G.R. No. 14472-CR. On May 3, 1976, the Court of Appeals
rendered a decision, the dispositive portion of which reads as follows:
Wherefore, as modified, the accused Hedy Gan is guilty beyond reasonable doubt of the crime of homicide thru
simple imprudence and, pursuant to paragraph 2, Article 365 of the Revised Penal Code, she is hereby
sentenced to the indeterminate penalty of three (3) months and eleven (11) days of arresto mayor and to
indemnify the heirs of Isidoro Casino in the sum of Twelve Thousand Pesos (Pl2,000.00) without, however, any
subsidiary imprisonment in case of insolvency, and to pay the costs. 3 chanrobles virtual law library
Petitioner now appeals to this Court on the following assignments of errors:
I chanrobles virtual law library
The Court of Appeals erred in holding that when the petitioner saw a car travelling directly towards her, she
should have stepped on the brakes immediately or in swerving her vehicle to the right should have also stepped
on the brakes or lessened her speed, to avoid the death of a pedestrian.chanroblesvirtualawlibrary chanrobles
virtual law library
II chanrobles virtual law library
The Court of Appeals erred in convicting the petitioner of the crime of Homicide thru Simple
Imprudence.chanroblesvirtualawlibrary chanrobles virtual law library
III chanrobles virtual law library
The Court of Appeals erred in adjudging the petitioner liable to indemnify the deceased in the sum of
P12,000.00. 4 chanrobles virtual law library
We reverse.chanroblesvirtualawlibrary chanrobles virtual law library

The test for determining whether or not a person is negligent in doing an act whereby injury or damage results
to the person or property of another is this: Would a prudent man in the position of the person to whom
negligence is attributed foresee harm to the person injured as a reasonable consequence of the course about to
be pursued? If so, the law imposes the duty oil the doer to take precaution against its mischievous results and
the failure to do so constitutes negligence. 5 chanrobles virtual law library
A corollary rule is what is known in the law as the emergency rule. "Under that rule, one who suddenly finds
himself in a place of danger, and is required to act without time to consider the best means that may be adopted
to avoid the impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon
reflection may appear to have been a better method, unless the emergency in which he finds himself is brought
about by his own negligence." 6 chanrobles virtual law library
Applying the above test to the case at bar, we find the petitioner not guilty of the crime of Simple Imprudence
resulting in Homicide.chanroblesvirtualawlibrary chanrobles virtual law library
The appellate court in finding the petitioner guilty said:
The accused should have stepped on the brakes when she saw the car going in the opposite direction followed
by another which overtook the first by passing towards its left. She should not only have swerved the car she
was driving to the right but should have also tried to stop or lessen her speed so that she would not bump into
the pedestrian who was crossing at the time but also the jeepney which was then parked along the street. 7
chanrobles virtual law library
The course of action suggested by the appellate court would seem reasonable were it not for the fact that such
suggestion did not take into account the amount of time afforded petitioner to react to the situation she was in.
For it is undeniable that the suggested course of action presupposes sufficient time for appellant to analyze the
situation confronting her and to ponder on which of the different courses of action would result in the least
possible harm to herself and to others.chanroblesvirtualawlibrary chanrobles virtual law library
Due to the lack of eyewitnesses, no evidence was presented by the prosecution with respect to the relative
distances of petitioner to the parked jeepney and the oncoming overtaking vehicle that would tend to prove that
petitioner did have sufficient time to reflect on the consequences of her instant decision to swerve her car to the
light without stepping on her brakes. In fact, the evidence presented by the prosecution on this point is the
petitioner's statement to the police 8 stating::
And masasabi ko lang ho umiwas ho ako sa isang sasakyan na biglang nagovertake sa sasakyan na aking
kasalubong kung kaya ay aking kinabig sa kanan ang akin kotse subalit siya naman biglang pagtawid ng tao o
victim at hindi ko na ho naiwasan at ako ay wala ng magawa . Iyan ho ang buong pangyayari nang nasabing
aksidente. 9 (Emphasis supplied)
The prosecution having presented this exhibit as its own evidence, we cannot but deem its veracity to have been
admitted by it. Thus, under the circumstances narrated by petitioner, we find that the appellate court is asking
too much from a mere mortal like the petitioner who in the blink of an eye had to exercise her best judgment to
extricate herself from a difficult and dangerous situation caused by the driver of the overtaking vehicle.
Petitioner certainly could not be expected to act with all the coolness of a person under normal conditions. 10
The danger confronting petitioner was real and imminent, threatening her very existence. She had no
opportunity for rational thinking but only enough time to heed the very powerfull instinct of self-
preservation.chanroblesvirtualawlibrary chanrobles virtual law library
Also, the respondent court itself pronounced that the petitioner was driving her car within the legal limits. We
therefore rule that the "emergency rule" enunciated above applies with full force to the case at bar and
consequently absolve petitioner from any criminal negligence in connection with the incident under
consideration.chanroblesvirtualawlibrary chanrobles virtual law library
We further set aside the award of damages to the heirs of the victim, who by executing a release of the claim
due them, had effectively and clearly waived their right thereto.chanroblesvirtualawlibrary chanrobles virtual
law library
WHEREFORE, judgment is hereby rendered acquitting petitioner HEDY GAN y YU of the crime of Homicide
thru Simple Imprudence. She is no longer liable for the P12,000.00 civil indemnity awarded by the appellate
court to the heirs of the victim.chanroblesvirtualawlibrary chanrobles virtual law library
SO ORDERED.
Feliciano, Bidin and Cortes, JJ., concur.chanroblesvirtualawlibrary chanrobles virtual law library
Gutierrez, Jr., J., is on leave.
Endnotes:
1 Penned by then CA Justice Lorenzo Relova, concurred in by Justices Ramon G. Gaviola, Jr., and Mariano
Serrano.chanrobles virtual law library
2 pp. 33-34, Rollo.chanrobles virtual law library
3 pp. 42-43, Rollo.chanrobles virtual law library
4 p. 15, Rollo.chanrobles virtual law library
5 Picart vs. Smith, 35 Phil. 809.chanrobles virtual law library
6 Siegl vs. Watson, 195 NW 867; Hickman vs. Southern Pacific Transport Co., 262 So. 2d., 385, 262 La. 102;
Robert vs. Travelers Indemnity Co., 196 So. 2d. 657.chanrobles virtual law library
8 Exhibit E.chanrobles virtual law library
10 Smith vs.Tate, 289 So. 2d 189.

SUPREME COURT
Manila
THIRD DIVISION
SPRINGFIELD DEVELOPMENTcralawcralawG.R. NO. 142628
CORPORATION, INC. and
HEIRS OF PETRA CAPISTRANO
PIIT,
Petitioners,
cralawPresent:
YNARES-SANTIAGO, J.,
cralawChairperson,
cralaw- versus -AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.
HONORABLE PRESIDING
JUDGE OF REGIONAL TRIAL
COURT OF MISAMIS ORIENTAL,
BRANCH 40, CAGAYAN DE ORO
CITY, DEPARTMENT OF AGRARIAN
REFORM ADJUDICATION BOARD

(DARAB), DAR REGION X DIRECTOR,
ROSALIO GAMULO, FORTUNATO
TELEN, EMERITA OLANGO, THERESA
MONTUERTO, DOMINGO H. CLAPERO,
JOEL U. LIM, JENEMAIR U. POLLEY,
FIDELA U. POLLEY, JESUS BATUTAY,
NICANOR UCAB, EMERIA U. LIM,
EMILITO CLAPERO, ANTONINA RIAS,
AURILLIO ROMULO, ERWIN P.
CLAPERO, EVELITO CULANGO,
VILMA/CRUISINE ALONG, EFREN
EMATA, GREGORIO CABARIBAN,
and SABINA CANTORANA,cralawcralawcralawPromulgated:
Respondents.February 6, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court.The principal issue
presented for resolution is whether the Regional Trial Court (RTC) has jurisdiction to annul final judgment of
the Department of Agrarian Reform Adjudication Board (DARAB).
The antecedent facts:

Petra Capistrano Piit previously owned Lot No. 2291 located in Cagayan de Oro City which measured 123,408
square meters under Transfer Certificate of Title No. T-62623.Springfield Development Corporation, Inc.
(Springfield) bought Lot No. 2291-C with an area of 68,732 square meters, and Lot No. 2291-D with an area of
49,778 square meters.[1]Springfield developed these properties into a subdivision project called Mega Heights
Subdivision.[2]
cralawOn May 4, 1990, the Department of Agrarian Reform (DAR), through its Municipal Agrarian Reform
Officer, issued a Notice of Coverage,[3] placing the property under the coverage of Republic Act (R.A.) No.
6657 or the Comprehensive Agrarian Reform Law of 1988.There being an opposition from the heirs of Petra
Piit, the case was docketed as DARAB Case No. X-305.On August 27, 1991, DARAB Provincial Adjudicator
Abeto A. Salcedo, Jr. rendered a decision declaring the nature of the property as residential and not suitable for
agriculture.[4]The Regional Director filed a notice of appeal, which the Provincial Adjudicator disallowed for
being pro forma and frivolous.[5]The decision became final and executory[6] and Springfield proceeded to
develop the property.[7]
cralawThe DAR Regional Director then filed a petition for relief from judgment of the DARAB Decision,
docketed as DARAB Case No. 0555.In its Decision dated October 5, 1995, the DARAB granted the petition
and gave due course to the Notice of Coverage.It also directed the Municipal Agrarian Reform Office to
proceed with the documentation, acquisition, and distribution of the property to the true and lawful
beneficiaries.[8]
cralawThe DARAB also issued an Order dated May 22, 1997, ordering the heirs of Piit and Springfield to pay
the farmer-beneficiaries the amount of Twelve Million, Three Hundred Forty Thousand, Eight Hundred Pesos
(P12,340,800.00), corresponding to the value of the property since the property has already been developed into
a subdivision.
cralaw
cralawOn June 13, 1997, Springfield and the heirs of Piit (petitioners) filed with the RTC of Cagayan de Oro
City, Branch 40, a petition for annulment of the DARAB Decision dated October 5, 1995 and all its subsequent
proceedings. Petitioners contend that the DARAB decision was rendered without affording petitioners any
notice and hearing.[9]
cralawOn motion filed by the farmer-beneficiaries, the RTC issued an Order dated June 25, 1997, dismissing
the case for lack of jurisdiction.[10]
cralawOn July 2, 1997, petitioners filed with the Court of Appeals (CA) a special civil action for certiorari,
mandamus, and prohibition with prayer for the issuance of writ of preliminary injunction and/or temporary
restraining order, docketed as CA-G.R. SP No. 44563.[11]Petitioners alleged that the RTC committed grave
abuse of discretion when it ruled that the annulment of judgment filed before it is actually an action for
certiorari in a different color. According to petitioners, what it sought before the RTC is an annulment of the
DARAB Decision and not certiorari, as the DARAB Decision is void ab initio for having been rendered without
due process of law.[12]
cralawIn the assailed Decision[13] dated July 16, 1998, the CA dismissed the petition for lack of merit, ruling
that the RTC does not have jurisdiction to annul the DARAB Decision because it is a co-equal body.[14]
However, on January 12, 1999, the CA ordered the elevation of the DARAB records before it, declaring that it
overlooked the fact that petitioners likewise applied for a writ of prohibition against the enforcement of the
DARAB decision which they claim to be patently void.[15]Forwarded to the CA were the records of the
original case filed with the DARAB-Region X, and it appearing that the petition for relief from judgment and its
pertinent records were forwarded to the DARAB Central Office, the CA issued another Resolution on
December 20, 1999,[16] requiring the DARAB Central Office to forward the records of the case.But after
receipt of the records, the CA simply denied petitioners motion for reconsideration per Resolution[17] dated
February 23, 2000 without specifically resolving the issues raised concerning the prayer for a writ of
prohibition.
cralawHence, the present petition on the following grounds:
THE COURT OF APPEALS COMMITTED A CLEAR ERROR OF LAW IN APPLYING THE PRINCIPLE
OF JUDICIAL STABILITY TO JUSTIFY ITS CONCLUSION DIVESTING THE REGIONAL TRIAL
COURT OF ITS JURISDICTION VESTED BY LAW OVER CASES WHERE THE EXCLUSIVE
JURISDICTION WAS NOT EXPRESSLY GRANTED TO ANY OTHER COURTS [SIC] OR TRIBUNAL,
IN EFFECT, MODIFYING THE APPLICABLE LAW ON THE MATTER.
II
THE COURT OF APPEALS IRREGULARLY DISMISSED PETITIONERS MOTION FOR

RECONSIDERATION AFTER IT HAD RESOLVED TO ENTERTAIN PETITIONERS PETITION FOR
PROHIBITION AND TO REVIEW THE DARAB PROCEEDINGS, THEREBY DEPARTING FROM THE
USUAL COURSE OF JUDICIAL PROCEEDINGS.
III
THE HONORABLE SUPREME COURT, BEING THE HIGHEST TEMPLE OF RIGHTS, AND TO AVOID
SERIOUS MISCARRIAGE OF JUSTICE AND NEEDLESS DELAYS, IS MOST RESPECTFULLY URGED
TO TAKE COGNIZANCE OF THE PETITION FILED IN CA-G.R. SP No. 44563 IN THE EXERCISE OF
ITS CONCURRENT JURISDICTION, AS IF THE PETITION WAS ORIGINALLY LODGED BEFORE IT.
[18]
cralaw
cralawPetitioners argue that under Batas Pambansa (B.P.) Blg. 129, there is no provision that vests with the CA
jurisdiction over actions for annulment of DARAB judgments.Petitioners, however, contend that the RTC may
take cognizance of the annulment case since Section 19 of B.P. Blg. 129 vests the RTC with general jurisdiction
and an action for annulment is covered under such general jurisdiction.According to petitioners, this is but a
logical consequence of the fact that no other courts were expressly given the jurisdiction over such actions.
[19]Petitioners further argue that the CA was in error when it summarily ignored their application for a writ of
prohibition, as it was necessary to restrain the DARAB from enforcing its void decision; and even if the
DARAB decision was valid, the writ of prohibition could have enjoined the execution of the DARAB decision
since there have been changes which will make the execution unjust and inequitable.
cralawIn their Joint-Comments, the farmer-beneficiaries and the DARAB (respondents) refute petitioners
allegation that they were not afforded due process in the DARAB proceedings, stating that petitioners were
impleaded as a party thereto, and in fact, they attended some of the hearings although their counsel was
absent.Respondents also adopt the CAs ruling that the RTC is not vested with any jurisdiction to annul the
DARAB decision.
cralawAs stated at the outset, the main issue in this case is whether the RTC has jurisdiction to annul a final
judgment of the DARAB.
cralawNote must be made that the petition for annulment of the DARAB decision was filed with the RTC on
June 13, 1997, before the advent of the 1997 Rules of Civil Procedure, which took effect on July 1, 1997.Thus,
the applicable law is B.P. Blg. 129 or the Judiciary Reorganization Act of 1980, enacted on August 10, 1981.
It is also worthy of note that before the effectivity of B.P. Blg. 129, a court of first instance has the authority to
annul a final and executory judgment rendered by another court of first instance or by another branch of the
same court.This was the Courts ruling in Dulap v. Court of Appeals.[20]Yet, in subsequent cases,[21] the Court
held that the better policy, as a matter of comity or courteous interaction between courts of first instance and the
branches thereof, is for the annulment cases to be tried by the same court or branch which heard the main
action.
The foregoing doctrines were modified in Ngo Bun Tiong v. Sayo,[22] where the Court expressed that pursuant
to the policy of judicial stability, the doctrine of non-interference between concurrent and coordinate courts
should be regarded as highly important in the administration of justice whereby the judgment of a court of
competent jurisdiction may not be opened, modified or vacated by any court of concurrent jurisdiction.
With the introduction of B.P. Blg. 129,[23] the rule on annulment of judgments was specifically provided in
Section 9(2), which vested in the then Intermediate Appellate Court (now the CA) the exclusive original
jurisdiction over actions for annulment of judgments of RTCs.Sec. 9(3) of B.P. Blg. 129 also vested the CA
with exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of
Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, except those
falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
provisions of this Act, and of sub-paragraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.As provided in paragraph 16 of the Interim Rules and
Guidelines implementing B.P. Blg. 129, the quasi-judicial bodies whose decisions are exclusively appealable to
the CA are those, which under the law, R.A. No. 5434,[24] or its enabling acts, are specifically appealable to the
CA.
Significantly, B.P. Blg. 129 does not specifically provide for any power of the RTC to annul judgments of
quasi-judicial bodies.However, in BF Northwest Homeowners Association, Inc. v. Intermediate Appellate
Court,[25] the Court ruled that the RTCs have jurisdiction over actions for annulment of the decisions of the
National Water Resources Council, which is a quasi-judicial body ranked with inferior courts, pursuant to its
original jurisdiction to issue writs of certiorari, prohibition, and mandamus, under Sec. 21(1) of B.P. Blg. 129,
in relation to acts or omissions of an inferior court.This led to the conclusion that despite the absence of any
provision in B.P. Blg. 129, the RTC had the power to entertain petitions for annulment of judgments of inferior
courts and administrative or quasi-judicial bodies of equal ranking.This is also in harmony with the pre-B.P.
Blg. 129 rulings of the Court recognizing the power of a trial court (court of first instance) to annul final
judgments.[26]Hence, while it is true, as petitioners contend, that the RTC had the authority to annul final
judgments, such authority pertained only to final judgments rendered by inferior courts and quasi-judicial
bodies of equal ranking with such inferior courts.
The foregoing statements beg the next question, i.e., whether the DARAB is a quasi-judicial body with the rank
of an inferior court such that the RTC may take cognizance of an action for the annulments of its judgments.The
answer is no.
The DARAB is a quasi-judicial body created by Executive Order Nos. 229 and 129-A.R.A. No. 6657 delineated
its adjudicatory powers and functions.The DARAB Revised Rules of Procedure adopted on December 26,
1988[27] specifically provides for the manner of judicial review of its decisions, orders, rulings, or awards.Rule
XIV, Section 1 states:
SECTION 1. Certiorari to the Court of Appeals.Any decision, order, award or ruling by the Board or its
Adjudicators on any agrarian dispute or on any matter pertaining to the application, implementation,
enforcement or interpretation of agrarian reform laws or rules and regulations promulgated thereunder, may be
brought within fifteen (15) days from receipt of a copy thereof, to the Court of Appeals by certiorari, except as
provided in the next succeeding section.Notwithstanding an appeal to the Court of Appeals the decision of the
Board or Adjudicator appealed from, shall be immediately executory.
cralaw
Further, the prevailing 1997 Rules of Civil Procedure, as amended, expressly provides for an appeal from the
DARAB decisions to the CA.[28]
The rule is that where legislation provides for an appeal from decisions of certain administrative bodies to the
CA, it means that such bodies are co-equal with the RTC, in terms of rank and stature, and logically, beyond the
control of the latter.[29]
Given that DARAB decisions are appealable to the CA, the inevitable conclusion is that the DARAB is a co-
equal body with the RTC and its decisions are beyond the RTCs control.The CA was therefore correct in
sustaining the RTCs dismissal of the petition for annulment of the DARAB Decision dated October 5, 1995, as
the RTC does not have any jurisdiction to entertain the same.
This brings to fore the issue of whether the petition for annulment of the DARAB judgment could be brought to
the CA.As previously noted, Section 9(2) of B.P. Blg. 129 vested in the CA the exclusive original jurisdiction
over actions for annulment of judgments, but only those rendered by the RTCs.It does not expressly give the
CA the power to annul judgments of quasi-judicial bodies.Thus, in Elcee Farms, Inc. v. Semillano,[30] the
Court affirmed the ruling of the CA that it has no jurisdiction to entertain a petition for annulment of a final and
executory judgment of the NLRC, citing Section 9 of B.P. Blg. 129, as amended, which only vests in the CA
exclusive jurisdiction over actions for annulment of judgments of Regional Trial Courts.This was reiterated in
Galang v. Court of Appeals,[31]where the Court ruled that that the CA is without jurisdiction to entertain a
petition for annulment of judgment of a final decision of the Securities and Exchange Commission.
Recent rulings on similar cases involving annulments of judgments of quasi-judicial bodies are also quite
instructive on this matter.
In Cole v. Court of Appeals,[32] involving an annulment of the judgment of the HLURB Arbiter and the Office
of the President (OP), filed with the CA, the Court stated that, (U)nder Rule 47 of the Rules of Court, the
remedy of annulment of judgment is confined to decisions of the Regional Trial Court on the ground of
extrinsic fraud and lack of jurisdiction xxx.The Court further ruled, viz.:
Although the grounds set forth in the petition for annulment of judgment are fraud and lack of jurisdiction, said
petition cannot prosper for the simple reason that the decision sought to be annulled was not rendered by the
Regional Trial Court but by an administrative agency (HLU Arbiter and Office of the President), hence, not
within the jurisdiction of the Court of Appeals.There is no such remedy as annulment of judgment of the
HLURB or the Office of the President.Assuming arguendo that the annulment petition can be treated as a
petition for review under Rule 43 of the 1997 Rules of Civil Procedure, the same should have been dismissed by
the Court of Appeals, because no error of judgment was imputed to the HLURB and the Office of the
President.Fraud and lack of jurisdiction are beyond the province of petitions under Rule 43 of the Rules of
Court, as it covers only errors of judgment.A petition for annulment of judgment is an initiatory remedy, hence
no error of judgment can be the subject thereof.Besides, the Arbiter and the Office of the President indisputably
have jurisdiction over the cases brought before them in line with our ruling in Francisco Sycip, Jr. vs. Court of
Appeals, promulgated on March 17, 2000, where the aggrieved townhouse buyers may seek protection from the
HLURB under Presidential Decree No. 957, otherwise known as Subdivision and Condominium Buyers
Protective Decree.[33](Emphasis supplied)
In Macalalag v. Ombudsman,[34] the Court ruled that Rule 47 of the 1997 Rules of Civil Procedure on
annulment of judgments or final orders and resolutions covers annulment by the Court of Appeals of judgments
or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new
trial, appeal, petition for relief or other appropriate remedies could no longer be availed of through no fault of
the petitioner. Thus, the Court concluded that judgments or final orders and resolutions of the Ombudsman in
administrative cases cannot be annulled by the CA, more so, since The Ombudsman Act specifically deals with
the remedy of an aggrieved party from orders, directives and decisions of the Ombudsman in administrative
disciplinary cases only, and the right to appeal is not to be considered granted to parties aggrieved by orders and
decisions of the Ombudsman in criminal or non-administrative cases.
While these cases involve annulments of judgments under the 1997 Rules of Civil Procedure, as amended, still,
they still find application in the present case, as the provisions of B.P. Blg. 129 and the 1997 Rules of Civil
Procedure, as amended, on annulment of judgments are identical.
Consequently, the silence of B.P. Blg. 129 on the jurisdiction of the CA to annul judgments or final orders and
resolutions of quasi-judicial bodies like the DARAB indicates its lack of such authority.
Further, petitioners are also asking the Court to take cognizance of their prayer for the issuance of a writ of
prohibition, which they claim was not acted upon by the CA, citing the Courts action in Fortich v. Corona[35]
where the Court took cognizance of the petition previously filed with the CA due to compelling reasons.The
Court is not persuaded to do so.
Fortichinvolved a 144-hectare land located at San Vicente, Sumilao, Bukidnon, owned by the Norberto
Quisumbing, Sr. Management and Development Corporation (NQSRMDC), which was leased as a pineapple
plantation to Del Monte Philippines, Inc. for a period of 10 years.During the existence of the lease, the DAR
placed the entire 144-hectare property under compulsory acquisition and assessed the land value at P2.38
million.When the NQSRMDC/BAIDA (Bukidnon Agro-Industrial Development Association) filed an
application for conversion due to the passage of Resolution No. 6 by the Provincial Development Council of
Bukidnon and Ordinance No. 24 by the Sangguniang Bayan of Sumilao, Bukidnon, reclassifying the area from
agricultural to industrial/institutional, the same was disapproved by the DAR Secretary and instead, the property
was placed under the compulsory coverage of Comprehensive Agrarian Reform Program for distribution to all
qualified beneficiaries.This prompted Governor Carlos O. Fortich of Bukidnon to file an appeal with the OP,
while NQSRMDC filed with the CA a petition for certiorari, and prohibition with preliminary injunction.
The OP then issued a Decision dated March 29, 1996 reversing the DAR Secretarys decision and approving the
application for conversion.Executive Secretary Ruben D. Torres denied the DARs motion for reconsideration
for having been filed beyond the reglementary period of 15 days, and it was also declared that the OP Decision
dated March 29, 1996 had already become final and executory.
Because of this, the farmer-beneficiaries staged a hunger strike on October 9, 1997, protesting the OPs
decision.In order to resolve the strike, the OP issued a so-called Win/Win resolution on November 7, 1997,
modifying the decision in that NQSRMDCs application for conversion is approved only with respect to the
approximately 44-hectare portion of the land adjacent to the highway, as recommended by the Department of
Agriculture, while the remaining approximately 100 hectares traversed by an irrigation canal and found to be
suitable for agriculture shall be distributed to qualified farmer-beneficiaries.
A petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court[36] was then filed with the
Court, which was contested by the Office of the Solicitor General on the ground that the proper remedy should
have been to file a petition for review directly with the CA in accordance with Rule 43 of the Revised Rules of
Court.
In resolving the issue, the Court recognized the rule that the Supreme Court, CA and RTC have original
concurrent jurisdiction to issue a writ of certiorari, prohibition, and mandamus.However, due to compelling
reasons and in the interest of speedy justice, the Court resolved to take primary jurisdiction over the petition in
the interest of speedy justice, after which the Court nullified the act of the OP in re-opening the case and
substantially modifying its March 29, 1996 Decision which had already become final and executory, as it was in
gross disregard of the rules and basic legal precept that accord finality to administrative determinations.
It must be stressed at this point that the Court, as a rule, will not entertain direct resort to it unless the redress
desired cannot be obtained in the appropriate courts, and exceptional and compelling circumstances, such as
cases of national interest and of serious implications, justify the availment of the extraordinary remedy of writ
of certiorari, prohibition, or mandamus calling for the exercise of its primary jurisdiction.[37] The Court finds
no compelling circumstances in this case to warrant a relaxation of the foregoing rule.The Fortich case is not
analogous with the present case such that the Court is not bound to abandon all rules, take primary jurisdiction,
and resolve the merits of petitioners' application for a writ of prohibition.
In the present case, the assailed DARAB Decision dated October 5, 1995 granting the petition for relief from
judgment and giving due course to the Notice of Coverage was made pursuant to a petition for relief from
judgment filed by the DAR, albeit petitioners are contesting the validity of the proceedings held thereon.On the
other hand, in Fortich,the OPs Win/Win resolution dated November 7, 1997 was made motu proprio, as a result
of the hunger strike staged by the farmer-beneficiaries.
Further, the OPs Win/Win Resolution dated November 7, 1997 in the Fortich case is a patently void judgment
since it was evident that there was already an existing final and executory OP Decision dated March 29, 1996.In
this case, the assailed DARAB Decision dated October 5, 1995 appears to be regular on its face, and for its
alleged nullity to be resolved, the Court must delve into the records of the case in order to determine the validity
of petitioners argument of lack of due process, absent notice and hearing.
Moreover, the principle of hierarchy of courts applies generally to cases involving factual questions.As it is not
a trier of facts, the Court cannot entertain cases involving factual issues.[38]The question of whether the
DARAB Decision dated October 5, 1995 is null and void and enforceable against petitioners for having been
rendered without affording petitioners due process is a factual question which requires a review of the records
of this case for it to be judiciously resolved.
The Court notes that the CA, indeed, failed to resolve petitioners prayer for the issuance of the writ of
prohibition, which, significantly, focuses on the alleged nullity of the DARAB Decision dated October 5,
1995.On this score, the CA found that the application for the issuance of the writ of prohibition was actually a
collateral attack on the validity of the DARAB decision.But, a final and executory judgment may be set aside in
three ways;[39] and a collateral attack, whereby in an action to obtain a different relief, an attack on the
judgment is nevertheless made as an incident thereof,[40] is one of these.This tenet is based upon a court's
inherent authority to expunge void acts from its records.[41]Despite recognizing the need to resolve petitioners
application for the writ of prohibition in its Resolution dated January 12, 1999, the CA nonetheless summarily
denied petitioners motion for reconsideration in its Resolution dated February 23, 2000,[42] leaving the matter
hanging and unresolved.
At first, the Court considered resolving the merits of petitioners' motion for reconsideration concerning their
application for a writ of prohibition against enforcing the DARAB Decision dated October 5, 1995.Thus, in a
Resolution dated June 5, 2006, the Court directed the CA to transmit the records of DARAB Case No. 0555,
which was previously required by the CA to be forwarded to it per Resolution dated December 20, 1999.
[43]However, as of even date, the CA has not complied with the Court's Resolution.Withal, upon re-
examination of the issues involved in this case, the Court deems it more judicious to remand this case to the CA
for immediate resolution of petitioners' motion for reconsideration, re: their application for the writ of
prohibition.
Moreover, the radical conflict in the findings of the Provincial Adjudicator and the DARAB as regards the
nature of the subject property necessitates a review of the present case.In this regard, the CA is in a better
position to fully adjudicate the case for it can delve into the records to determine the probative value of the
evidence supporting the findings of the Provincial Adjudicator and of the DARAB.In addition, the CA is
empowered by its internal rules to require parties to submit additional documents, as it may find necessary to
promote the ends of substantial justice, and further order the transmittal of the proper records for it to fully
adjudicate the case.After all, it is an avowed policy of the courts that cases should be determined on the merits,
after full opportunity to all parties for ventilation of their causes and defenses, rather than on technicality or
some procedural imperfections.In that way, the ends of justice would be served better.[44]
WHEREFORE, the petition is PARTLY GRANTED.This case is REMANDED to the Court of Appeals which
is DIRECTED to resolve petitioners prayer for the issuance of the writ of prohibition in their Motion for
Reconsideration.
Upon finality of this Decision, let the records be remanded forthwith to the Court of Appeals.
cralawNo pronouncement as to costs.
cralawSO ORDERED.
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justicechanroblesvirtuallawlibrary
WE CONCUR:
Associate Justice
Chairperson
ROMEO J. CALLEJO, SR.MINITA V. CHICO-NAZARIO
ATTESTATION
Associate Justice
CERTIFICATION
cralawPursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons attestation, it is
hereby certified that the conclusions in the above Decision had been reached in consultation before the case was
REYNATO S. PUNO
Chief Justice
Endnotes:
[1]cralawLeaving out 4,898 square meters.
[2]cralawRollo, pp. 57-58, CA Decision dated July 16, 1998.
[3]cralawRecords, p. 42.
[6]cralawId. at 81.
[13]cralawPenned by Associate Justice Hector L. Hofilea (now retired), with Associate Justices Minerva P.
Gonzaga-Reyes (now retired Member of the Supreme Court) and Oman U. Amin (now retired), concurring.
[17]cralawPenned by Associate Justice Adefuin-dela Cruz (vice retired Justice Hofilea), with Associate Justices
Eubulo G. Verzola (now deceased, vice Justice Gonzaga-Reyes) and Eduardo P. Cruz (new member),
concurring;CA rollo, p. 298.
[20]cralaw149 Phil. 636, 647 (1971).
[21]cralawGianan v. Imperial, 154 Phil. 705, 710 (1974);Francisco v. Aquino,G.R. Nos. L-33235-6, July 29,
1976, 72 SCRA 140, 145.
[22]cralawG.R. No. L-45825, June 30, 1988, 163 SCRA 237, 243; Mercado v. Ubay, G.R. No. 35830, July 24,
1990, 187 SCRA 719, 724.
[23]cralawUnder the repealing clause of B.P. Blg. 129 (Section 47), the inconsistent provisions of: R.A. No.
296 or the Judiciary Act of 1948; R.A. No. 5179, as amended, or the 1964 Rules of Court; and all other statutes
and letters of instructions and general orders, were repealed or accordingly modified.
[24]cralawEntitled An Act to Provide a Uniform Procedure for Appeals from the Court of Agrarian Relations,
the Secretary of Labor under Section 7 of Republic Act Numbered Six Hundred Two, also known as The
Minimum Wage Law, the Department of Labor under Section 23 of Republic Act Numbered Eight Hundred
Seventy-Five, also known as The Industrial Peace Act, the Land Registration Commission, the Securities and
Exchange Commission, the Social Security Commission, the Civil Aeronautics Board, the Patent Office, and
the Agricultural Inventions Board, and for other purposes.
[25]cralawG.R. No. L-72370, May 29, 1987, 150 SCRA 543, 552.
[26]cralawSee Dulap v. Court of Appeals, supra note 20, et seq.

[27]cralawThe DARAB Revised Rules of Procedure took effect on February 6, 1989, fifteen (15) days after its
publication in The Manila Standard and The Philippine Daily Inquirer.
[28]cralawRule 43.
[29]cralawBoard of Commissioners v. Dela Rosa, 274 Phil. 1156, 1191 (1991).
[30]cralawG.R. No. 150286, October 17, 2003, 413 SCRA 669, 676.
[31]cralawG.R. No. 139448, October 11, 2005, 472 SCRA 259, 269.
[32]cralaw401 Phil. 920 (2000).
[33] cralawId. at 931-932.
[34]cralawG.R. No. 147995, March 4, 2004, 424 SCRA 741, 745.
[35]cralaw352 Phil. 461 (1998).
[36]cralawDocketed as G.R. No. 131457.
[37]cralawMangaliag v. Catubig-Pastoral, G.R. No. 143951, October 25, 2005, 474 SCRA 153, 161.
[38]cralawChavez v. Public Estates Authority, 433 Phil. 506, 524 (2002).
[39]cralawFirst, a petition for relief from judgment under Rule 38 of the Rules of Court on grounds of fraud,
accident, mistake and excusable negligence filed within sixty (60) days from the time petitioner learns of the
judgment but not more than six (6) months from the entry thereof; second, a direct action to annul the judgment
on the ground of extrinsic fraud; and third, a direct action for certiorari or collateral attack to annul a judgment
that is void upon its face or void by virtue of its own recitals. Arcelona v. Court of Appeals, 345 Phil. 250, 263
(1997).
[40]cralawMallilin, Jr. v. Castillo, 389 Phil. 153, 165 (2000).
[41]cralawRoces v. House of Representatives Electoral Tribunal, G.R. No. 167499, September 15, 2005, 469
SCRA 681, 695.
[42]cralawSupra note 17.
[43]cralawSupra note 16.
[44]cralawJaro v. Court of Appeals, 427 Phil. 532, 548 (2002).

SUPREME COURT
Manila
SECOND DIVISION
PATRICIO A. VILLENA,
Petitioner,cralaw
G.R. No. 163021
cralaw- versus -
cralawPresent:
cralawQUISUMBING, J., Chairperson,
cralawCARPIO,
cralawCARPIO MORALES,
cralawTINGA, and
cralawVELASCO, JR., JJ.
PATRICIO S. PAYOYO,
Respondent.
cralawPromulgated:
cralawApril 27, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J.:
cralawThis petition for review on certiorari assails the Decision[1] dated November 21, 2003 of the Court of
Appeals in CA-G.R. CV No. 70513 and its Resolution[2] dated March 18, 2004, denying petitioners motion for
reconsideration.The appellate court had affirmed with modification the Decision[3] dated April 26, 2000 of the
Regional Trial Court (RTC) of Quezon City, Branch 78.
The facts are undisputed.
On October 28, 1997, respondent Patricio Payoyo and Novaline, Inc., through its president, petitioner Patricio
Villena, entered into a contract for the delivery and installation of kitchen cabinets in Payoyos residence.The
cabinets were to be delivered within ninety days from downpayment of 50% of the purchase price.On October
29, 1997, Payoyo paid Villena P155,183 as downpayment.
On December 9, 1997, Payoyo entered into another contract with Villena for the delivery of home
appliances.On the same day, Payoyo paid 50% of the purchase price equal to P29,638.50 as downpayment.
However, Villena failed to install the kitchen cabinets and deliver the appliances.Payoyo made several demands
upon Villena but the latter failed to comply.
In a letter dated March 12, 1998, Payoyo demanded the cancellation of the contracts and the refund in full of the
downpayments amounting to P184,821.50.Villena promised to install the kitchen cabinets on or before May 10,
1998 and to deliver the appliances.Despite repeated demands, Villena again failed to do so.
Payoyo sent Villena two demand letters on June 24, 1998 and on July 28, 1998 asking the latter to either deliver
all items or return the downpayments.
On October 26, 1998, Payoyo filed a complaint for recovery of a sum of money and damages against
Villena.Villena moved to dismiss the complaint for failure to state a cause of action.He argued that there was no
ground to cancel the contract; thus, there was no basis for refund.The trial court denied his motion.Villena
thereafter filed an answer with compulsory counterclaim citing as an affirmative defense Payoyos failure to
state a cause of action.
cralawOn June 1, 1999, immediately after the trial court issued a pre-trial order, Villena filed a second motion
to dismiss on the ground of lack of jurisdiction over the subject matter but it was denied.Thereafter, trial ensued.
cralawThe trial court decided in favor of Payoyo, reasoning that the power to rescind is implied in reciprocal
obligations.Considering that Villena repeatedly failed to comply with his obligation, Payoyo had the right to
rescind the contract and demand a refund.The trial court ordered petitioner to pay respondent P184,821.50 as
actual damages plus 12% interest per annum from the date of filing of the complaint and P20,000 as moral
damages plus legal interest from judicial demand until fully paid.
cralawThe Court of Appeals affirmed the RTC decision with the following modifications:
1) [Petitioner Villena is] hereby ordered to pay [respondent Payoyo] actual damages in the amount of P
155,183.00 with 12% interest per annum from the date of the filing of the complaint;
2) [Petitioner is] likewise ordered to deliver the Indesit Multifunction Oven and Indesit Hob in favor of
[respondent] within thirty (30) days from the finality of this decision; and
3) [Respondent] is hereby ordered to pay the purchase price of the Indesit Multifunction Oven and Indesit
Hob in favor of [petitioner] on the day the delivery is made.[4]
cralaw
The appellate court reasoned that while there was delay in the delivery and installation of the kitchen cabinets,
there was none in the delivery of the appliances.The contract for said appliances did not specify the date of
delivery but that delivery should be made upon payment of the 50% balance of the purchase price.Considering
that Payoyo failed to pay the balance, Villena did not incur delay.
cralawHence, the instant petition, where petitioner raises the following issues:
I.
WHETHER OR NOT THE TRIAL COURT HAD JURISDICTION OVER THE SUBJECT MATTER OF
THE CASE.
II.
WHETHER OR NOT [THE] DEFENDANTS-APPELLANTS (PETITIONER AND NOVALINE, INC.), ARE

ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE COURT UNDER THE
CIRCUMSTANCES.[5]
Simply, the issue in this case is whether the trial court had jurisdiction over the complaint.
Petitioner maintains that the RTC should have dismissed the complaint for lack of jurisdiction.He posits that the
RTC has no jurisdiction over the complaint since it is mainly for recovery of a sum of money in the amount of
P184,821.50 which is below the jurisdictional amount set for RTCs.[6]Moreover, petitioner contends that the
issue of jurisdiction may be raised at any time, even on appeal, since jurisdiction is conferred only by law and
cannot be acquired through or waived by any act or omission of the parties.[7]chanroblesvirtuallawlibrary
Respondent, on the other hand, contends that the RTC has jurisdiction over the complaint as the allegations
therein show that it is actually a case for rescission of the contracts.The recovery of a sum of money is merely a
necessary consequence of the cancellation of the contracts.[8]chanroblesvirtuallawlibrary
The pertinent portion of Section 19 of Batas Pambansa Bilang 129, as amended by Republic Act No. 7691,[9]
provides:
SEC. 19. Jurisdiction in civil cases.Regional Trial Courts shall exercise exclusive original jurisdiction:
cralaw(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;
cralawx x x x
(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).
In determining the jurisdiction of an action whose subject is incapable of pecuniary estimation, the nature of the
principal action or remedy sought must first be ascertained.If it is primarily for the recovery of a sum of money,
the claim is considered capable of pecuniary estimation and the jurisdiction of the court depends on the amount
of the claim.But, where the primary 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, such are actions whose
subjects are incapable of pecuniary estimation, hence cognizable by the RTCs.[10]chanroblesvirtuallawlibrary
cralawVerily, what determines the nature of the action and which court has jurisdiction over it are the
allegations of the complaint and the character of the relief sought.[11]chanroblesvirtuallawlibrary
cralawIn our considered view, the complaint, albeit entitled as one for collection of a sum of money with
damages, is one incapable of pecuniary estimation; thus, one within the RTCs jurisdiction.The allegations
therein show that it is actually for breach of contract, thus,
cralawx x x x
7. cralawUnder their Contracts, prestation and/or delivery of the items will be performed and delivered within
NINETY (90) DAYS from the receipt of downpayment.Plaintiff complied with its prestation but defendants
defaulted with their obligation;
cralawx x x x
10. On 12 March 1998, plaintiff sent letter to defendants requesting the latter for the cancellation of the
purchase contracts and refund in full the (50%) downpayment paid in the total amount of (P 184, 821.50) within
five (5) days upon receipt of the letter
cralawx x x x
12. On 24 March 1998, plaintiff and defendant Patricio A. Villena, personally talked [to] each other regarding
the full refund of the (50%) downpayment in the amount of P 184, 821.50.Defendant informed the plaintiff that
it was their fault because the order from their Australian supplier was made only on 15 December 1997.
Defendant promised plaintiff [delivery of] the three (3) Kitchen Cabinets on or before 10 [M]ay 1998, and the
three (3) home appliances were considered fully paid applying the (50%) downpayment of (P 29,638.50) for
home appliances only.But defendant did not fulfill his promise;
13. Despite all these, repeated demands for the installation of the (3) three kitchen [c]abinets and complete
delivery of home appliances were made, but defendants did nothing;
cralawx x x x[12] (Emphasis added.)
A case for breach of contract is a cause of action either for specific performance or rescission of contracts.
[13]An action for rescission of contract, as a counterpart of an action for specific performance, is incapable of
pecuniary estimation, and therefore falls under the jurisdiction of the RTC.[14]In the present case, the
averments in the complaint show that Payoyo sought the cancellation of the contracts and refund of the
downpayments since Villena failed to comply with the obligation to deliver the appliances and install the
kitchen cabinets subject of the contracts.The court then must examine the facts and the applicable law to
determine whether there is in fact substantial breach that would warrant rescission or cancellation of the
contracts and entitle the respondent for a refund.While the respondent prayed for the refund, this is just
incidental to the main action, which is the rescission or cancellation of the contracts.
WHEREFORE, the petition is DENIED for lack of merit.The Decision dated November 21, 2003 of the Court
of Appeals in CA-G.R. CV No. 70513 and the Resolution dated March 18, 2004 are AFFIRMED.
SO ORDERED.
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Associate Justice
DANTE O. TINGA
Associate Justice
Associate Justice
ATTESTATION
Associate Justice
Chairperson
CERTIFICATION
REYNATO S. PUNO
Chief Justice
Endnotes:
[9] cralawAn Act Expanding The Jurisdiction Of The Metropolitan Trial Courts, Municipal Trial Courts, And
Municipal Circuit Trial Courts, Amending For The Purpose Batas Pambansa Blg. 129, Otherwise Known As
The Judiciary Reorganization Act Of 1980.
[10] cralawHuguete v. Embudo, G.R. No. 149554, July 1, 2003, 405 SCRA 273, 278-279, citing Singsong v.
Isabela Sawmill, No. L-27343, February 28, 1979, 88 SCRA 623, 637-638.
[11] cralawHuguete v. Embudo,id., citing Caiza v. Court of Appeals,G.R. No. 110427, February 24, 1997, 268
SCRA 640, 647-648.
[13] cralawRadio Communications of the Philippines, Inc. v. Court of Appeals, G.R. No. 136109, August 1,
2002, 386 SCRA 67, 71.
[14] cralawRussell v. Vestil, G.R. No. 119347, March 17, 1999, 304 SCRA 738, 745, citing Lapitan v. Scandia,
Inc., No. L-24668, July 31, 1968, 24 SCRA 479, 482.

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SECOND DIVISION

BANCO FILIPINO SAVINGS AND MORTGAGE BANK , Petitioner,

G.R. No. 162922

January 31, 2007

CARPIO MORALES, J.:

PRESBITERO J. VELASCO, JR.

Republic of the Philippines

G.R. No. 174975 : January 20, 2009

LUISA KHO MONTAER, ALEJANDRO MONTAER, JR., LILLIBETH

RESPONDENT SHARIA DISTRICT COURT MARAWI CITY LACKS JURISDICTION OVER

RESPONDENT SHARIA DISTRICT COURT DID NOT ACQUIRE JURISDICTION OVER

RESPONDENT SHARIA DISTRICT COURTMARAWI CITY COMMITTED GRAVE ABUSE

RESPONDENT SHARIA DISTRICT COURTMARAWI CITY COMMITTED GRAVE ABUSE

Jurisdiction: Settlement of the Estate of Deceased Muslims

not render the court to lose or be deprived of its jurisdiction.[29]cralaw

Exception to Notice of Hearing

Prescription and Filiation

Chief Justice chanroblesvirtuallawlibrary

TERESITA J. LEONARDO-DE CASTRO

Chief Justice chanroblesvirtuallawlibrary

Republic of the Philippines

G.R. No. 102636 September 10, 1993

METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO

xxx xxx xxx chanrobles virtual law library

The labor arbiter disposed of the case, thus:

WHEREFORE, premises considered, the respondent is hereby directed to restore to

SO ORDERED. 2 chanrobles virtual law library

SO ORDERED. 3 chanrobles virtual law library

In her dissent, Presiding Commissioner Edna Bonto-Perez opined:

There may not be an obliteration nor elimination of said quantitative distinction/difference

Minimum Wage = % x Prescribed = Distortion

------ Increased Adjustment

. . . . (T)o compel employers simply to add on legislated increases in salaries or allowances

Feliciano, J., is on leave.

2 Rollo, p. 35-37. chanrobles virtual law library

3 Ibid., pp. 49-50. chanrobles virtual law library

4 Ibid., pp. 55-56. chanrobles virtual law library

5 Ibid., p. 12. chanrobles virtual law library

6 Manifestation in lieu of Comment, p. 1; Rollo, p. 134. chanrobles virtual law library

Republic of the Philippines

G.R. No. 150986 March 2, 2007

CLARK DEVELOPMENT CORPORATION, Petitioner,

July 31, 1999 P50,000,000.00

1-Jul 1999 to 28-Feb 2000 73,333,333.33

1-Mar 2000 to 28-Feb 2001 121,000,000.008

The Ruling of the Court of Appeals

The Court’s Ruling

The petition is meritorious.

Thus, in Genova v. De Castro, we held that:

PRESBITERO J. VELASCO, JR.

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Republic of the Philipppines

[G.R. No. 137796. July 15, 1999]

MONDRAGON LEISURE AND RESORTS CORPORATION, MONDRAGON INTERNATIONAL

ROMERO, J.: chanroblesvirtualawlibrary

COMPROMISE AGREEMENT chanroblesvirtualawlibrary

This Compromise Agreement executed by and between chanroblesvirtualawlibrary

Witnesseth that- chanroblesvirtualawlibrary

July 31, 1999 Php 50,000,000.00 chanroblesvirtualawlibrary

August 31, 1999 Php 50,000,000.00 chanroblesvirtualawlibrary

September 31, 1999 Php 50,000,000.00 chanroblesvirtualawlibrary

October 31, 1999 Php 50,000,000.00 chanroblesvirtualawlibrary

November 31, 1999 Php 50,000,000.00 chanroblesvirtualawlibrary