RE: IN THE MATTER OF CLARIFICATION OF EXEMPTION FROM PAYMENT OF
5
ALL COURT AND SHERIFF'S FEES OF COOPERATIVES DULY REGISTERED IN
ACCORDANCE WITH REPUBLIC ACT NO. 9520 OTHERWISE KNOWN AS THE
PHILIPPINE COOPERATIVE CODE OF 2008,
PERPETUAL HELP COMMUNITY COOPERATIVE (PHCCI)
In a Petition1 dated 24 October 2011, Perpetual Help Community Cooperative
(PHCCI), through counsel, requests for the issuance of a court order to clarify and
implement the exemption of cooperatives from the payment of court and sheriff’s fees
pursuant to Republic Act No. 6938, as amended by Republic Act No. 9520, otherwise
known as the Philippine Cooperative Act of 2008.
PHCCI contends that as a cooperative it enjoys the exemption provided for under
Section 6, Article 61 of Republic Act No. 9520, which states:
(6) Cooperatives shall be exempt from the payment of all court and sheriff’s fees
payable to the Philippine Government for and in connection with all actions brought
under this Code, or where such actions is brought by the Authority before the court, to
enforce the payment of obligations contracted in favor of the cooperative.
It claims that this was a reiteration of Section 62, paragraph 6 of Republic Act No.
6938, An Act to Ordain a Cooperative Code of the Philippines,2 and was made basis
for the Court’s Resolution in A.M. No. 03-4-01-0, as well as of Office of the Court
Administrator (OCA) Circular No. 44-2007.3
It avers that despite the exemptions granted by the aforesaid laws and issuances,
PHCCI had been continuously assessed and required to pay legal and other fees
whenever it files cases in court.
PHCCI reports that it filed with the Office of the Executive Judge of the Municipal Trial
Court in Cities (MTCC), Dumaguete City, Negros Oriental, a Motion to implement the
exemption of cooperatives from the payment of court and sheriff’s fees in cases filed
before the courts in his jurisdiction, but the Executive Judge ruled that the matter is of
national concern and should be brought to the attention of the Supreme Court for it to
come up with a straight policy and uniform system of collection. In the meantime, the
MTCC has continued the assessment of filing fees against cooperatives.
Records reveal that on 21 September 2011, Executive Judge Antonio Estoconing
(Executive Judge Estoconing), MTCC, Dumaguete City, Negros Oriental, issued an
Order treating the motion filed by PHCCI as a mere consulta considering that no main
action was filed in his court. Executive Judge Estoconing submits that he had second
thoughts in considering the exemption in view of the guidelines laid down in the Rules.
He reported that many cases filed by PHCCI are small claims cases and under Section
8 of the Rule on Small Claims, the plaintiff is required to pay docket fees and other
related costs unless he is allowed to litigate the case as an indigent.
Hence, this Petition.
Before this Court is the issue on whether cooperatives are exempt from the payment of
court and sheriff’s fees. The fees referred to are those provided for under Rule 141
(Legal Fees) of the Rules of Court.
The term "all court fees" under Section 6, Article 61 of Republic Act No. 9520 refers to
the totality of "legal fees" imposed under Rule 141 of the Rules of Court as an incident
of instituting an action in court.4 These fees include filing or docket fees, appeal fees,
fees for issuance of provisional remedies, mediation fees, sheriff’s fees, stenographer’s
fees and commissioner’s fees.
With regard to the term "sheriff’s fees," this Court, in an extended minute Resolution
dated 1 September 2009, held that the exemptions granted to cooperatives under
Section 2, paragraph 6 of Republic Act No. 6938; Section 6, Article 61 of Republic Act
No. 9520; and OCA Circular No. 44-2007 clearly do not cover the amount required "to
defray the actual travel expenses of the sheriff, process server or other court-authorized
person in the service of summons, subpoena and other court processes issued relative
to the trial of the case,"6 which are neither considered as court and sheriff’s fees nor
are amounts payable to the Philippine Government.7
In fine, the 1 September 2009 Resolution exempted the cooperatives from court fees
but not from sheriff’s fees/expenses.
On 11 February 2010, however, the Supreme Court En Banc issued a Resolution in
A.M. No. 08-2-01-0,8 which denied the petition of the Government Service Insurance
System (GSIS) for recognition of its exemption from payment of legal fees imposed
under Section 22 of Rule 141 of the Rules of Court. In the GSIS case, the Court citing
Echegaray v. Secretary of Justice,9 stressed that the 1987 Constitution molded an even
stronger and more independent judiciary; took away the power of Congress to repeal,
alter, or supplement rules concerning pleading, practice and procedure; and held that
the power to promulgate these Rules is no longer shared by the Court with Congress,
more so, with the Executive,10 thus:
Since the payment of legal fees is a vital component of the rules promulgated by this
Court concerning pleading, practice and procedure, it cannot be validly annulled,
changed or modified by Congress. As one of the safeguards of this Court’s institutional
independence, the power to promulgate rules of pleading, practice and procedure is
now the Court’s exclusive domain. That power is no longer shared by this Court with
Congress, much less with the Executive.11
xxxx
The separation of powers among the three co-equal branches of our government has
erected an impregnable wall that keeps the power to promulgate rules of pleading,
practice and procedure within the sole province of this Court. The other branches
trespass upon this prerogative if they enact laws or issue orders that effectively repeal,
alter or modify any of the procedural rules promulgated by this Court. Viewed from this
perspective, the claim of a legislative grant of exemption from the payment of legal fees
under Section 39 of R.A. 8291 necessarily fails.
Congress could not have carved out an exemption for the GSIS from the payment of
legal fees without transgressing another equally important institutional safeguard of the
Court’s independence - fiscal autonomy.12 Fiscal autonomy recognizes the power and
authority of the Court to levy, assess and collect fees,13 including legal fees. Moreover,
legal fees under Rule 141 have two basic components, the Judiciary Development
Fund (JDF) and the Special Allowance for the Judiciary Fund (SAJF).14 The laws which
established the JDF and SAJF15 expressly declare the identical purpose of these funds
to guarantee the independence of the Judiciary as mandated by the Constitution and
public policy.16 Legal fees therefore do not only constitute a vital source of the Court’s
financial resources but also comprise an essential element of the Court’s fiscal
independence. Any exemption from the payment of legal fees granted by Congress to
government-owned or controlled corporations and local government units will
necessarily reduce the JDF and the SAJF. Undoubtedly, such situation is
constitutionally infirm for it impairs the Court’s guaranteed fiscal autonomy and erodes
its independence.17
In a decision dated 26 February 2010 in Baguio Market Vendors Multi-Purpose
Cooperative (BAMARVEMPCO) v. Cabato-Cortes,18 this Court reiterated its ruling in
the GSIS case when it denied the petition of the cooperative to be exempted from the
payment of legal fees under Section 7(c) of Rule 141 of the Rules of Court relative to
fees in petitions for extra-judicial foreclosure.
On 10 March 2010, relying again on the GSIS ruling, the Court En Banc issued a
resolution clarifying that the National Power Corporation is not exempt from the
payment of legal fees.19
With the foregoing categorical pronouncements of the Supreme Court, it is evident that
the exemption of cooperatives from payment of court and sheriff’s fees no longer
stands. Cooperatives can no longer invoke Republic Act No. 6938, as amended by
Republic Act No. 9520, as basis for exemption from the payment of legal fees.
WHEREFORE, in the light of the foregoing premises, the petition of PHCCI requesting
for this Court to issue an order clarifying and implementing the exemption of
cooperatives from the payment of court and sheriff’s fees is hereby DENIED.1âwphi1
The Office of the Court Administrator is DIRECTED to issue a circular clarifying that
cooperatives are not exempt from the payment of the legal fees provided for under
Rule 141 of the Rules of Court.
UNICAPITAL v. CONSING, JR.
Before the Court are consolidated petitions for review on certiorari1 assailing separate
issuances of the Court of Appeals (CA) as follows:
(a) The petitions in G.R. Nos. 175277 and 175285 filed by Unicapital, Inc.,
(Unicapital), Unicapital Realty, Inc. (URI), and Unicapital Director and
Treasurer Jaime J. Martirez (Martirez)assail the CA’s Joint Decision2 dated
October 20, 2005 and Resolution3 dated October 25, 2006 in CA-G.R. SP
Nos. 64019and 64451 which affirmed the Resolution4 dated September
14,1999 and Order5 dated February 15, 2001 of the Regional Trial Court
(RTC) of Pasig City, Branch 68 (RTC-Pasig City) in SCA No. 1759, upholding
the denial of their motion to dismiss; and
(b) The petition in G.R. No. 192073 filed by Rafael Jose Consing, Jr.
(Consing, Jr.) assails the CA’s Decision6 dated September 30, 2009 and
Resolution7 dated April 28, 2010 inCA-G.R. SP No. 101355 which affirmed the
Orders dated July16, 20078 and September 4, 20079 of the RTC of Makati
City, Branch 60 (RTC-Makati City) in Civil Case No. 99-1418,upholding the
denial of his motion for consolidation.
The Facts
In 1997, Consing, Jr., an investment banker, and his mother, Cecilia Dela Cruz (Dela
Cruz), obtained an ₱18,000,000.00 loan from Unicapital,₱12,000,000.00 of which was
acquired on July 24, 1997 and the remaining₱6,000,000.00 on August 1, 1997. The
said loan was secured by Promissory Notes10 and a Real Estate Mortgage11 over a
42,443 square meter-parcel of land located at Imus, Cavite, registered in the name of
Dela Cruz as per Transfer Certificate of Title (TCT) No. T-687599 (subject property).12
Prior to these transactions, Plus Builders, Inc. (PBI), a real estate company, was
already interested to develop the subject property into a residential subdivision.13 In this
regard, PBI entered into a joint venture agreement with Unicapital, through its real
estate development arm, URI. In view of the foregoing, the loan and mortgage over the
subject property was later on modified into an Option to Buy Real Property14 and, after
further negotiations, Dela Cruz decided to sell the same to Unicapital and PBI. For this
purpose, Dela Cruz appointed Consing, Jr. as her attorney-in-fact.15
Eventually, Unicapital, through URI, purchased one-half of the subject property for a
consideration of ₱21,221,500.00 (against which Dela Cruz’s outstanding loan
obligations were first offset), while PBI bought the remaining half for the price of
₱21,047,000.00.16 In this relation, Dela Cruz caused TCT No. T-687599 to be divided
into three separate titles as follows: (a) TCT No. T-851861 for URI;17 (b) TCT No. T-
851862 for PBI;18 and (c)TCT No. T-51863 which was designated as a road lot.19
However, even before URI and PBI were able to have the titles transferred to their
names, Juanito Tan Teng (Teng) and Po Willie Yu (Yu) informed Unicapital that they are
the lawful owners of the subject property as evidenced by TCT No.T-114708;20 that
they did not sell the subject property; and that Dela Cruz’s title, i.e., TCT No. T-687599,
thereto was a mere forgery.21 Prompted by Teng and Yu’s assertions, PBI conducted
further investigations on the subject property which later revealed that Dela Cruz's title
was actually of dubious origin. Based on this finding, PBI and Unicapital sent separate
demand letters22 to Dela Cruz and Consing, Jr., seeking the return of the purchase
price they had paid for the subject property.
From the above-stated incidents stemmed the present controversies as detailed
hereunder.
The Proceedings Antecedent to G.R. Nos. 175277 & 175285
On May 3, 1999, Consing, Jr. filed a complaint, denominated as a Complex Action for
Declaratory Relief23 and later amended to Complex Action for Injunctive Relief24
(Consing, Jr.’s complaint) before the RTC-Pasig City against Unicapital, URI, PBI,
Martirez, PBI General Manager Mariano Martinez (Martinez), Dela Cruz and Does 1-20,
docketed as SCA No. 1759. In his complaint, Consing, Jr. claimed that the incessant
demands/recovery efforts made upon him by Unicapital and PBI to return to them the
purchase price they had paid for the subject property constituted harassment and
oppression which severely affected his personal and professional life.25 He also
averred that he was coerced to commit a violation of Batas Pambansa Blg. 2226 as
Unicapital and PBI, over threats of filing acase against him, kept on forcing him to issue
a post-dated check in the amount sought to be recovered, notwithstanding their
knowledge that he had no funds for the same.27 He further alleged that Unicapital and
URI required him to sign blank deeds of sale and transfers without cancelling the old
one sin violation of the laws on land registration and real estate development.28
Likewise, Consing, Jr. added that Unicapital and PBI’s representatives were" speaking
of him in a manner that was inappropriate and libelous,"29 and that some John Does
"deliberately engaged in a fraudulent scheme to compromise Consing, Jr.’s honor,
integrity and fortune x x x consisting of falsifying or causing to be falsified, or attempting
to present as falsified certain transfers of Land Titles and Deeds for profit,"30 classifying
the foregoing as ultra vires acts which should warrant sanctions under the corporation
law, Revised Securities Act and related laws.31 Accordingly, Consing, Jr. prayed that:
(a) he be declared as a mere agent of Dela Cruz, and as such, devoid of any obligation
to Unicapital, URI, and PBI for the transactions entered into concerning the subject
property; (b) Unicapital, URI, and PBI be enjoined from harassing or coercing him, and
from speaking about him in a derogatory fashion; and (c) Unicapital, URI, and PBI pay
him actual and consequential damages in the amount of ₱2,000,000.00, moral
damages of at least ₱1,000,000.00, exemplary damages of ₱1,000,000.00, all per
month, reckoned from May 1, 1999 and until the controversy is resolved, and
attorney's fees and costs of suit.32
For their part, Unicapital, URI, and Martirez (Unicapital, et al.) filed separate Motions to
Dismiss33 Consing, Jr.’s complaint (Unicapital, et al.’s motion to dismiss) on the ground
of failure to state a cause of action, considering that: (a) no document was attached
against which Consing, Jr. supposedly derived his right and against which his rights
may be as certained; (b) the demands to pay against Consing, Jr. and for him to tender
post-dated checks to cover the amount due were well within the rights of Unicapital as
an unpaid creditor, as Consing, Jr. had already admitted his dealings with them; (c) the
utterances purportedly constituting libel were not set out in the complaint; and (d) the
laws supposedly violated were not properly identified. Moreover, Unicapital, et al.
posited that the RTC-PasigCity did not acquire jurisdiction over the case given that
Consing, Jr. failed to pay the proper amount of docket fees. In the same vein, they
maintained that the RTC-Pasig City had no jurisdiction over their supposed violations
of the Corporation Code and Revised Securities Act, which, discounting its merits,
should have been supposedly lodged with the Securities and Exchange Commission.
Finally, they pointed out that Consing, Jr.’s complaint suffers from a defective
verification and, thus, dismissible.34
Similar to Unicapital et al.’s course of action, PBI and its General Manager, Martinez
(Unicapital and PBI, et al.), sought the dismissal of Consing, Jr.’s complaint on the
ground that it does not state a cause of action. They also denied having singled out
Consing, Jr. because their collection efforts were directed at both Consing, Jr. and Dela
Cruz, which should be deemed as valid and, therefore, should not be restrained.35
On September 14, 1999, the RTC-Pasig City issued a Resolution36 denying the above
mentioned motions to dismiss, holding that Consing, Jr.’s complaint sufficiently stated a
cause of action for tort and damages pursuant to Article 19 of the Civil Code. It ruled
that where there is abusive behavior, a complainant, like Consing, Jr., has the right to
seek refuge from the courts. It also noted that the elements of libel in a criminal case
are not the same as those for a civil action founded on the provisions of the Civil Code,
and therefore, necessitates a different treatment. It equally refused to dismiss the
action on the ground of non-payment of docket fees, despite Consing, Jr.’s escalated
claims for damages therein, as jurisdiction was already vested in it upon the filing of
the original complaint. Moreover, it resolved to apply the liberal construction rule as
regards the subject complaint’s verification and certification, despite its improper
wording, considering further that such defect was not raised at the first opportunity.
Consequently, it ordered Unicapital and PBI, et al. to file their Answer and, in addition,
to submit" any Comment or Reaction within five (5) days from receipt hereof on the
allegations of Consing, Jr. in his rejoinder of September 9, 1999regarding the
supposed filing of an identical case in Makati City,"37 i.e., Civil Case No. 99-1418.
Unperturbed, Unicapital and PBI, et al. moved for reconsideration therefrom which
was, however, denied by the RTC-Pasig City in an Order38 dated February 15, 2001
for lack of merit. Aggrieved, they elevated the denial of their motions to dismiss before
the CA via a petition for certiorari and prohibition,39 docketed as CA-G.R. SP Nos.
64019 and 64451.
On October 20, 2005, the CA rendered a Joint Decision40 holding that no grave abuse
of discretion was committed by the RTC-Pasig City in refusing to dismiss Consing, Jr.'s
complaint.1âwphi1 At the outset, it ruled that while the payment of the prescribed
docket fee is a jurisdictional requirement, its non-payment will not automatically cause
the dismissal of the case. In this regard, it considered that should there be any
deficiency in the payment of such fees, the same shall constitute a lien on the judgment
award.41 It also refused to dismiss the complaint for lack of proper verification upon a
finding that the copy of the amended complaint submitted to the RTC-Pasig City was
properly notarized.42 Moreover, it upheld the order of the RTC-Pasig City for Unicapital
and PBI, et al. to submit their comment due to the alleged existence of a similar case
filed before the RTC-Makati City.43
Anent the substantive issues of the case, the CA concurred with the RTC-Pasig City
that Consing Jr.'s complaint states a cause of action. It found that Unicapital and PBI, et
al.’s purportedly abusive manner in enforcing their claims against Consing, Jr. was
properly constitutive of a cause of action as the same, if sufficiently proven, would have
subjected him to "defamation of his name in business circles, the threats and coercion
against him to reimburse the purchase price, fraud and falsification and breach of
fiduciary obligation." It also found that the fact that Consing Jr.'s complaint contains
"nebulous" allegations will not warrant its dismissal as any vagueness therein can be
clarified through a motion for a bill of particulars."44 Furthermore, it noted that Consing,
Jr. does not seek to recover his claims against any particular provision of the
corporation code or the securities act but against the actions of Unicapital and PBI, et
al.; hence, Consing, Jr.’s complaint was principally one for damages over which the
RTC has jurisdiction, and, in turn, there lies no misjoinder of causes of action.45
Dissatisfied, only Unicapital, et al. sought reconsideration therefrom but the same was
denied by the CA in a Resolution46 dated October 25,2006. Hence, the present
petitions for review on certiorari in G.R. Nos.175277 and 175285.
The Proceedings Antecedent to G.R. No. 192073
On the other hand, on August 4, 1999, Unicapital filed a complaint47 for sum of money
with damages against Consing, Jr. and Dela Cruz before the RTC-Makati City, docketed
as Civil Case No. 99-1418, seeking to recover (a) the amount of ₱42,195,397.16,
representing the value of their indebtedness based on the Promissory Notes (subject
promissory notes) plus interests; (b) ₱5,000,000.00 as exemplary damages; (c)
attorney's fees; and (d) costs of suit.48
PBI also filed a complaint for damages and attachment against Consing, Jr. and Dela
Cruz before the RTC of Manila, Branch 12, docketed as Civil Case No. 99-95381, also
predicated on the same set of facts as above narrated.49 In its complaint, PBI prayed
that it be allowed to recover the following: (a) ₱13,369,641.79, representing the total
amount of installment payments made as actual damages plus interests; (b)
₱200,000.00 as exemplary damages; (c) ₱200,000.00 as moral damages; (d)
attorney's fees; and (e) costs of suit.50 Civil Case No. 99-95381 was subsequently
consolidated with SCA No. 1759 pending before the RTC-Pasig City.51
For his part, Consing, Jr. filed a Motion to Dismiss Civil Case No. 99-1418 which was,
however, denied by the RTC-Makati City in an Order52 dated November 16, 1999.
Thereafter, he filed a Motion for Consolidation53 (motion for consolidation) of Civil Case
No. 99-1418 with his own initiated SCA No. 1759 pending before the RTC-Pasig City.
In an Order54 dated July 16, 2007, the RTC-Makati City dismissed Consing, Jr.’s
motion for consolidation and, in so doing, ruled that the cases sought to be
consolidated had no identity of rights or causes of action and the reliefs sought for by
Consing, Jr. from the RTC-Pasig City will not bar Unicapital from pursuing its money
claims against him. Moreover, the RTC-Makati City noted that Consing, Jr. filed his
motion only as an after thought as it was made after the mediation proceedings
between him and Unicapital failed. Consing, Jr.'s motion for reconsideration therefrom
was denied in an Order55 dated September 4, 2007. Hence, he filed a petition for
certiorari before the CA, docketed as CA-G.R. SP No. 101355, ascribing grave abuse
of discretion on the part of the RTC-Makati City in refusing to consolidate Civil Case
No. 99-1418 with SCA No. 1759 in Pasig City.
On September 30, 2009, the CA rendered a Decision56 sustaining the Orders dated
July 16, 2007 and September 4, 2007 of the RTC-Makati City which denied Consing,
Jr.’s motion for consolidation. It held that consolidation is a matter of sound discretion
on the part of the trial court which could be gleaned from the use of the word "may" in
Section 1, Rule38 of the Rules of Court. Considering that preliminary steps (such as
mediation) have already been undertaken by the parties in Civil Case No.99-1418
pending before the RTC-Makati City, its consolidation with SCA No. 1759 pending
before the RTC-Pasig City "would merely result in complications in the work of the
latter court or squander the resources or remedies already utilized in the Makati
case."57 Moreover, it noted that the records of the consolidated Pasig and Manila
cases, i.e., SCA No. 1759 and Civil Case No. 99-95381, respectively, had already been
elevated to the Court, that joint proceedings have been conducted in those cases and
that the pre-trial therein had been terminated as early as October 23, 2007.Therefore,
due to these reasons, the consolidation prayed for would be impracticable and would
only cause a procedural faux pas. Undaunted, Consing, Jr. filed a motion for
reconsideration therefrom but was denied by the CA in a Resolution58 dated April 28,
2010. Hence, the present petition for review on certiorari in G.R. No. 192073.
The Proceedings Before the Court
After the filing of the foregoing cases, the parties were required to file their respective
comments and replies. Further, considering that G.R. No.192073 (Makati case)
involves the same parties and set of facts with those in G.R. Nos. 175277 & 175285
(Pasig case), these cases were ordered consolidated per the Court's Resolution59
dated November 17, 2010. On March 9, 2011, the Court resolved to give due course to
the instant petitions and required the parties to submit their respective memoranda.60
The Issues Before the Court
The essential issues in these cases are as follows: (a) in G.R. Nos.175277 and
175285, whether or not the CA erred in upholding the RTC-Pasig City’s denial of
Unicapital, et al.’s motion to dismiss; and (b) in G.R. No. 192073, whether or not the
CA erred in upholding the RTC-Makati City’s denial of Consing, Jr.’s motion for
consolidation.
The Court’s Ruling
A. Propriety of the denial of
Unicapital, et al.’s motion to
dismiss and ancillary issues.
A cause of action is defined as the act or omission by which a party violates a right of
another.61 It is well-settled that the existence of a cause of action is determined by the
allegations in the complaint.62 In this relation, a complaint is said to sufficiently assert a
cause of action if, admitting what appears solely on its face to be correct, the plaintiff
would be entitled to the relief prayed for.63 Thus, if the allegations furnish adequate
basis by which the complaint can be maintained, then the same should not be
dismissed, regardless of the defenses that may be averred by the defendants.64 As
edified in the case of Pioneer Concrete Philippines, Inc. v. Todaro,65 citing Hongkong
and Shanghai Banking Corporation, Limited. v. Catalan66 (HSBC):
The elementary test for failure to state a cause of action is whether the complaint
alleges facts which if true would justify the relief demanded. Stated otherwise, may the
court render a valid judgment upon the facts alleged therein? The inquiry is into the
sufficiency, not the veracity of the material allegations. If the allegations in the complaint
furnish sufficient basis on which it can be maintained, it should not be dismissed
regardless of the defense that may be presented by the defendants.67 (Emphasis
supplied)
Stated otherwise, the resolution on this matter should stem from an analysis on whether
or not the complaint is able to convey a cause of action; and not that the complainant
has no cause of action. Lest it be misunderstood, failure to state a cause of action is
properly a ground for a motion to dismiss under Section 1(g), Rule 1668 of the Rules of
Court(Rules), while the latter is not a ground for dismissal under the same rule.
In this case, the Court finds that Consing, Jr.’s complaint in SCA No.1759 properly
states a cause of action since the allegations there insufficiently bear out a case for
damages under Articles 19 and 26 of the Civil Code.
Records disclose that Consing, Jr.’s complaint contains allegations which aim to
demonstrate the abusive manner in which Unicapital and PBI, et al. enforced their
demands against him. Among others, the complaint states that Consing, Jr. "has
constantly been harassed and bothered by Unicapital and PBI, et al.; x x x besieged by
phone calls from them; x x x has had constant meetings with them variously, and on a
continuing basis, such that he is unable to attend to his work as an investment
banker."69 In the same pleading, he also alleged that Unicapital and PBI, et al.’s act of
"demanding a postdated check knowing fully well that he does not have the necessary
funds to cover the same, nor is he expecting to have them is equivalent to asking him to
commit a crime under unlawful coercive force."70 Accordingly, these specific
allegations, if hypothetically admitted, may result into the recovery of damages pursuant
to Article 19 of the Civil Code which states that "every person must, in the exercise of
his rights and in the performance of his duties, act with justice, give everyone his due,
and observe honesty and good faith." As explained in the HSBC case:
When a right is exercised in a manner which does not conform with the norms
enshrined in Article 19 and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must beheld responsible. But a right, though by
itself legal because it is recognized or granted by law as such, may nevertheless
become the source of some illegality. A person should be protected only when he acts
in the legitimate exercise of his right, that is, when he acts with prudence and in good
faith; but not when he acts with negligence or abuse. There is an abuse of right when it
is exercised for the only purpose of prejudicing or injuring another. The exercise of a
right must be in accordance with the purpose for which it was established, and must not
be excessive or unduly harsh; there must be no intention to injure another.71 (Emphasis
supplied)
Likewise, Consing, Jr.’s complaint states a cause of action for damages under Article
26 of the Civil Code which provides that:
Article 26. Every person shall respect the dignity, personality, privacy and peace of
mind of his neighbors and other persons. The following and similar acts, though they
may not constitute a criminal offense, shall produce a cause of action for damages,
prevention and other relief:
(1) Prying into the privacy of another's residence;
(2) Meddling with or disturbing the private life or family relations of another;
(3) Intriguing to cause another to be alienated from his friends;
(4) Vexing or humiliating another on account of his religious beliefs, lowly
station in life, place of birth, physical defect, or other personal condition.
The rationale therefor was explained in the case of Manaloto v. Veloso III,72 citing
Concepcion v. CA,73 to wit:
The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil
law. The Code Commission stressed in no uncertain terms that the human personality
must be exalted. The sacredness of human personality is a concomitant consideration
of every plan for human amelioration. The touchstone of every system of law, of the
culture and civilization of every country, is how far it dignifies man. If the statutes
insufficiently protect a person from being unjustly humiliated, in short, if human
personality is not exalted - then the laws are indeed defective. Thus, under this article,
the rights of persons are amply protected, and damages are provided for violations of a
person's dignity, personality, privacy and peace of mind.74
To add, a violation of Article 26 of the Civil Code may also lead to the payment of moral
damages under Article 2219(10)75 of the Civil Code.
Records reveal that Consing, Jr., in his complaint, alleged that "he has come to
discover that Unicapital and PBI, et al. are speaking of him in a manner that is
inappropriate and libelous; and that they have spread their virulent version of events in
the business and financial community such that he has suffered and continues to suffer
injury upon his good name and reputation which, after all, is the most sacred and
valuable wealth he possesses - especially considering that he is an investment
banker."76 In similar regard, the hypothetical admission of these allegations may result
into the recovery of damages pursuant to Article 26, and even Article2219(10), of the
Civil Code.
Corollary thereto, Unicapital, et al.’s contention77 that the case should be dismissed on
the ground that it failed to set out the actual libelous statements complained about
cannot be given credence. These incidents, as well as the specific circumstances
surrounding the manner in which Unicapital and PBI, et al. pursued their claims against
Consing, Jr. may be better ventilated during trial. It is a standing rule that issues that
require the contravention of the allegations of the complaint, as well as the full
ventilation, in effect, of the main merits of the case, should not be within the province of
a mere motion to dismiss,78 as in this case. Hence, as what is only required is that the
allegations furnish adequate basis by which the complaint can be maintained, the
Court – in view of the above-stated reasons – finds that the RTC-Pasig City’s denial of
Unicapital, et al.’s motion to dismiss on the ground of failure to state a cause of action
was not tainted with grave abuse of discretion which would necessitate the reversal of
the CA’s ruling. Verily, for grave abuse of discretion to exist, the abuse of discretion
must be patent and gross so as to amount to an evasion of a positive duty or a virtual
refusal to perform a duty enjoined by law, or to act at all in contemplation of law.79 This
the Court does not perceive in the case at bar.
Further, so as to obviate any confusion on the matter, the Court equally finds that the
causes of action in SCA No. 1759 were not – as Unicapital, et al. claim – misjoined
even if Consing, Jr. averred that Unicapital and PBI, et al. violated certain provisions of
the Corporation Law and the Revised Securities Act.80
The rule is that a party’s failure to observe the following conditions under Section 5,
Rule 2 of the Rules results in a misjoinder of causes of action:81
SEC. 5. Joinder of causes of action . - A party may in one pleading assert, in the
alternative or otherwise, as many causes of action as he may have against an opposing
party, subject to the following conditions:
(a) The party joining the causes of action shall comply with the rules on joinder
of parties;
(b) The joinder shall not include special civil actions governed by special rules;
(c) Where the causes of action are between the same parties but pertain to
different venues or jurisdictions, the joinder may be allowed in the Regional
Trial Court provided one of the causes of action falls within the jurisdiction of
said court and the venue lies therein; and
(d) Where the claims in all the causes of action are principally for recovery of
money the aggregate amount claimed shall be the test of jurisdiction.
(Emphasis supplied)
A careful perusal of his complaint discloses that Consing, Jr. did not seek to hold
Unicapital and PBI, et al. liable for any specific violation of the Corporation Code or the
Revised Securities Act. Rather, he merely sought damages for Unicapital and PBI, et
al.’s alleged acts of making him sign numerous documents and their use of the same
against him. In this respect, Consing, Jr. actually advances an injunction and damages
case82 which properly falls under the jurisdiction of the RTC-Pasig City.83 Therefore,
there was no violation of Section 5, Rule 2 of the Rules, particularly, paragraph (c)
thereof. Besides, even on the assumption that there was a misjoinder of causes of
action, still, such defect should not result in the dismissal of Consing, Jr.’s complaint.
Section 6, Rule 2 of the Rules explicitly states that a "misjoinder of causes of action is
not a ground for dismissal of an action" and that "a misjoined cause of action may, on
motion of a party or on the initiative of the court, be severed and proceeded with
separately."
Neither should Consing, Jr.’s failure to pay the required docket fees lead to the
dismissal of his complaint.1âwphi1 It has long been settled that while the court acquires
jurisdiction over any case only upon the payment of the prescribed docket fees, its non-
payment at the time of the filing of the complaint does not automatically cause the
dismissal of the complaint provided that the fees are paid within a reasonable period.84
Consequently, Unicapital, et al.’s insistence that the stringent rule on non-payment of
docket fees enunciated in the case of Manchester Development Corporation v. CA85
should be applied in this case cannot be sustained in the absence of proof that
Consing, Jr. intended to defraud the government by his failure to pay the correct
amount of filing fees. As pronounced in the case of Heirs of Bertuldo Hinog v. Hon.
Melicor:86
Plainly, while the payment of the prescribed docket fee is a jurisdictional requirement,
even its
non-payment at the time of filing does not automatically cause the dismissal of the
case, as long as the fee is paid within the applicable prescriptive or reglementary
period, more so when the party involved demonstrates a willingness to abide by the
rules prescribing such payment.
Thus, when insufficient filing fees were initially paid by the plaintiffs and there was no
intention to defraud the government, the Manchester rule does not apply.87 (Emphasis
and italics in the original)
Indeed, while the Court acknowledges Unicapital, et al.'s apprehension that Consing,
Jr.'s "metered" claim for damages to the tune of around ₱2,000,000.00 per month88
may balloon to a rather huge amount by the time that this case is finally disposed of,
still, any amount that may by then fall due shall be subject to assessment and any
additional fees determined shall constitute as a lien against the judgment as explicitly
provided under Section 2,89 Rule 141 of the Rules.
Finally, on the question of whether or not Consing, Jr.'s complaint was properly verified,
suffice it to state that since the copy submitted to the trial court was duly notarized by
one Atty. Allan B. Gepty and that it was only Unicapital, et al.’s copy which lacks the
notarization, then there was sufficient compliance with the requirements of the rules on
pleadings.90
In fine, the Court finds no reversible error on the part of the CA in sustaining the RTC-
Pasig City’s denial of Unicapital et al.’s motion to dismiss. As such, the petitions in G.R.
Nos. 175277 and 175285 must be denied.
B. Propriety of the denial of
Consing, Jr.’s motion for
consolidation.
The crux of G.R. No. 192073 is the propriety of the RTC-Makati City’s denial of
Consing, Jr.’s motion for the consolidation of the Pasig case, i.e., SCA No. 1759, and
the Makati case, i.e., Civil Case No. 99-1418.Records show that the CA upheld the
RTC-Makati City’s denial of the foregoing motion, finding that the consolidation of
these cases was merely discretionary on the part of the trial court. It added that it was
"impracticable and would cause a procedural faux pas
"if it were to "allow the RTC-Pasig City to preside over the Makati case."91
The CA’s ruling is proper.
It is hornbook principle that when or two or more cases involve the same parties and
affect closely related subject matters, the same must be consolidated and jointly tried,
in order to serve the best interest of the parties and to settle the issues between them
promptly, thus, resulting in a speedy and inexpensive determination of cases. In
addition, consolidation serves the purpose of avoiding the possibility of conflicting
decisions rendered by the courts in two or more cases, which otherwise could be
disposed of in a single suit.92 The governing rule is Section 1, Rule 31 of the Rules
which provides:
SEC. 1. Consolidation. - When actions involving a common question of law or fact are
pending before the court, it may order a joint hearing or trial of any or all the matters in
issue in the actions; it may order all the actions consolidated; and it may make such
orders concerning proceedings therein as may tend to avoid unnecessary costs or
delay.
In the present case, the Court observes that the subject cases, i.e., SCA No. 1759 and
Civil Case No. 99-1418, although involving the same parties and proceeding from a
similar factual milieu, should remain unconsolidated since they proceed from different
sources of obligations and, hence, would not yield conflicting dispositions. SCA No.
1759 is an injunction and damages case based on the Civil Code provisions on abuse
of right and defamation, while Civil Case No. 99-1418 is a collection and damages suit
based on actionable documents, i.e., the subject promissory notes. In particular, SCA
No. 1759 deals with whether or not Unicapital and BPI, et al, abused the manner in
which they demanded payment from Consing, Jr., while Civil Case No. 99-1418 deals
with whether or not Unicapital may demand payment from Consing, Jr. based on the
subject promissory notes. Clearly, a resolution in one case would have no practical
effect as the core issues and reliefs sought in each case are separate and distinct from
the other.
Likewise, as the CA correctly pointed out, the RTC-Makati City could not have been
failured in retaining Civil Case No. 99-1418 in its dockets since pre-trial procedures
have already been undertaken therein and, thus, its consolidation with SCA No. 1759
pending before the RTC-Pasig City would merely result in complications on the part of
the latter court or squander the resources or remedies already utilized in Civil Case No.
99-1418.93 In this light, aside from the perceived improbability of having conflicting
decisions, the consolidation of SCA No. 1759 and Civil Case No. 99-1418 would,
contrary to its objective, only delay the proceedings and entail unnecessary costs.
All told, the Court finds the consolidation of SCA No. 1759 and Civil Case No. 99-1418
to be improper, impelling the affirmance of the CA’s ruling. Consequently, the petition in
G.R. No. 192073 must also be denied.
WHEREFORE, the petitions in G.R. Nos. 175277, 175285 and 192073 are DENIED.
Accordingly, the Court of Appeals’ Joint Decision dated October 20, 2005 and
Resolution dated October 25, 2006 in CA-G.R. SP Nos. 64019 and 64451 and the
Decision dated September 30, 2009 and Resolution dated April 28, 2010 in CA-G.R.
No. 101355 are hereby AFFIRMED.
PROTON PILIPINAS CORPORATION v. BANQUE NATIONALE DE PARIS
It appears that sometime in 1995, petitioner Proton Pilipinas Corporation (Proton)
availed of the credit facilities of herein respondent, Banque Nationale de Paris (BNP).
To guarantee the payment of its obligation, its co-petitioners Automotive Corporation
Philippines (Automotive), Asea One Corporation (Asea) and Autocorp Group (Autocorp)
executed a corporate guarantee2 to the extent of US$2,000,000.00. BNP and Proton
subsequently entered into three trust receipt agreements dated June 4, 1996,3 January
14, 1997,4 and April 24, 1997.5
Under the terms of the trust receipt agreements, Proton would receive imported
passenger motor vehicles and hold them in trust for BNP. Proton would be free to sell LEGAL : ₱139,362.00
the vehicles subject to the condition that it would deliver the proceeds of the sale to
BNP, to be applied to its obligations to it. In case the vehicles are not sold, Proton + 209,268.00
would return them to BNP, together with all the accompanying documents of title.
₱348,630.00 x 1% = ₱3,486.30
Allegedly, Proton failed to deliver the proceeds of the sale and return the unsold motor
vehicles. ₱ 139,362.00
Pursuant to the corporate guarantee, BNP demanded from Automotive, Asea and + 209,268.00
Autocorp the payment of the amount of US$1,544,984.406 representing Proton's total
outstanding obligations. These guarantors refused to pay, however. Hence, BNP filed 3,486.00
on September 7, 1998 before the Makati Regional Trial Court (RTC) a complaint ₱ 352,116.30 - Total fees paid by the plaintiff
against petitioners praying that they be ordered to pay (1) US$1,544,984.40 plus
accrued interest and other related charges thereon subsequent to August 15, 1998 To the complaint, the defendants-herein petitioners filed on October 12, 1998 a Motion
until fully paid and (2) an amount equivalent to 5% of all sums due from petitioners as to Dismiss9 on the ground that BNP failed to pay the correct docket fees to thus prevent
attorney's fees. the trial court from acquiring jurisdiction over the case.10 As additional ground,
petitioners raised prematurity of the complaint, BNP not having priorly sent any demand
The Makati RTC Clerk of Court assessed the docket fees which BNP paid at
letter.11
₱352,116.307 which was computed as follows:8
By Order12 of August 3, 1999, Branch 148 of the Makati RTC denied petitioners' Motion
First Cause of Action  $ 844,674.07 to Dismiss, viz:
Second Cause of Action  171,120.53 Resolving the first ground relied upon by the defendant, this court believes and so hold
that the docket fees were properly paid. It is the Office of the Clerk of Court of this
Third Cause of Action  529,189.80 station that computes the correct docket fees, and it is their duty to assess the docket
$1,544,984.40 fees correctly, which they did.1avvphi1.zw+
Even granting arguendo that the docket fees were not properly paid, the court cannot
5% as Attorney's Fees  $ 77,249.22
just dismiss the case. The Court has not yet ordered (and it will not in this case) to pay
TOTAL ………….. $1,622,233.62 the correct docket fees, thus the Motion to dismiss is premature, aside from being
without any legal basis.
Conversion rate to peso x 43_
As held in the case of National Steel Corporation vs. CA, G.R. No. 123215, February 2,
TOTAL ………….. ₱69,756,000.00 1999, the Supreme Court said:
(roundoff)
xxx
Computation based on Rule 141:
Although the payment of the proper docket fees is a jurisdictional requirement, the trial
court may allow the plaintiff in an action to pay the same within a reasonable time within
the expiration of applicable prescription or reglementary period. If the plaintiff fails to
COURT JDF comply with this requirement, the defendant should timely raise the issue of jurisdiction
or else he would be considered in estoppel. In the latter case, the balance between
₱ 69,756,000.00 ₱ 69.606.000.00 appropriate docket fees and the amount actually paid by the plaintiff will be considered
- 150,000.00 x .003 a lien or (sic) any award he may obtain in his favor.
As to the second ground relied upon by the defendants, in that a review of all annexes
69,606,000.00 208,818.00
to the complaint of the plaintiff reveals that there is not a single formal demand letter for
x .002 + 450.00 defendants to fulfill the terms and conditions of the three (3) trust agreements.

139,212.00 ₱ 209,268.00 In this regard, the court cannot sustain the submission of defendant. As correctly
pointed out by the plaintiff, failure to make a formal demand for the debtor to pay the
+ 150.00 plaintiff is not among the legal grounds for the dismissal of the case. Anyway, in the
appreciation of the court, this is simply evidentiary.
₱ 139,362.00
xxx
WHEREFORE, for lack of merit, the Motion to Dismiss interposed by the defendants is
hereby DENIED.13 (Underscoring supplied)
Petitioners filed a motion for reconsideration14 of the denial of their Motion to Dismiss,
but it was denied by the trial court by Order15 of October 3, 2000.
Petitioners thereupon brought the case on certiorari and mandamus16 to the Court of
Appeals which, by Decision17 of July 25, 2001, denied it in this wise:
… Section 7(a) of Rule 141 of the Rules of Court excludes interest accruing from the
principal amount being claimed in the pleading in the computation of the prescribed
filing fees. The complaint was submitted for the computation of the filing fee to the
Office of the Clerk of Court of the Regional Trial Court of Makati City which made an
assessment that respondent paid accordingly. What the Office of the Clerk of Court did
and the ruling of the respondent Judge find support in the decisions of the Supreme
Court in Ng Soon vs. Alday and Tacay vs. RTC of Tagum, Davao del Norte. In the latter
case, the Supreme Court explicitly ruled that "where the action is purely for recovery of
money or damages, the docket fees are assessed on the basis of the aggregate
amount claimed, exclusive only of interests and costs."
Assuming arguendo that the correct filing fees was not made, the rule is that the court
may allow a reasonable time for the payment of the prescribed fees, or the balance
thereof, and upon such payment, the defect is cured and the court may properly take
cognizance of the action unless in the meantime prescription has set in and
consequently barred the right of action. Here respondent Judge did not make any
finding, and rightly so, that the filing fee paid by private respondent was insufficient.
On the issue of the correct dollar-peso rate of exchange, the Office of the Clerk of
Court of the RTC of Makati pegged it at ₱ 43.21 to US$1. In the absence of any office
guide of the rate of exchange which said court functionary was duty bound to follow,
the rate he applied is presumptively correct.
Respondent Judge correctly ruled that the matter of demand letter is evidentiary and
does not form part of the required allegations in a complaint. Section 1, Rule 8 of the
1997 Rules of Civil Procedure pertinently provides:
"Every pleading shall contain in a methodical and logical form, a plain, concise and
direct statement of the ultimate facts on which the party pleading relies for his claim or
defense, as the case may be, omitted the statement of mere evidentiary facts."
Judging from the allegations of the complaint particularly paragraphs 6, 12, 18, and 23
where allegations of imputed demands were made upon the defendants to fulfill their
respective obligations, annexing the demand letters for the purpose of putting up a
sufficient cause of action is not required.
In fine, respondent Judge committed no grave abuse of discretion amounting to lack or
excess of jurisdiction to warrant certiorari and mandamus.18 (Underscoring supplied)
Their Motion for Reconsideration19 having been denied by the Court of Appeals,20
petitioners filed the present petition for review on certiorari21 and pray for the following
reliefs:
WHEREFORE, in view of all the foregoing, it is most respectfully prayed of this
Honorable Court to grant the instant petition by REVERSING and SETTING ASIDE the
questioned Decision of July 25, 2001 and the Resolution of December 18, 2001 for
being contrary to law, to Administrative Circular No. 11-94 and Circular No. 7 and
instead direct the court a quo to require Private Respondent Banque to pay the correct
docket fee pursuant to the correct exchange rate of the dollar to the peso on September
7, 1998 and to quantify its claims for interests on the principal obligations in the first,
second and third causes of actions in its Complaint in Civil Case No. 98-2180.22
(Underscoring supplied)
Citing Administrative Circular No. 11-94,23 petitioners argue that BNP failed to pay the
correct docket fees as the said circular provides that in the assessment thereof, interest
claimed should be included. There being an underpayment of the docket fees,
petitioners conclude, the trial court did not acquire jurisdiction over the case.
Additionally, petitioners point out that the clerk of court, in converting BNP's claims from
US dollars to Philippine pesos, applied the wrong exchange rate of US $1 = ₱43.00, the
exchange rate on September 7, 1998 when the complaint was filed having been
pegged at US $1 = ₱43.21. Thus, by petitioners' computation, BNP's claim as of August
15, 1998 was actually ₱70,096,714.72,24 not ₱69,756,045.66.
Furthermore, petitioners submit that pursuant to Supreme Court Circular No. 7,25 the
complaint should have been dismissed for failure to specify the amount of interest in the
prayer.
Circular No. 7 reads:
TO: JUDGES AND CLERKS OF COURT OF THE COURT OF TAX
APPEALS, REGIONAL TRIAL COURTS, METROPOLITAN TRIAL
COURTS IN CITIES, MUNICIPAL TRIAL COURTS, MUNICIPAL
CIRCUIT TRIAL COURTS, SHARI'A DISTRICT COURTS;AND THE
INTEGRATED BAR OF THE PHILIPPINES
SUBJECT: ALL COMPLAINTS MUST SPECIFY AMOUNT OF
DAMAGES SOUGHT NOT ONLY IN THE BODY OF THE PLEADING,
BUT ALSO IN THE PRAYER IN ORDER TO BE ACCEPTED AND
ADMITTED FOR FILING. THE AMOUNT OF DAMAGES SO SPECIFIED
IN THE COMPLAINT SHALL BE THE BASIS FOR ASSESSING THE
AMOUNT OF THE FILING FEES.
In Manchester Development Corporation vs. Court of Appeals, No. L-
75919, May 7, 1987, 149 SCRA 562, this Court condemned the practice
of counsel who in filing the original complaint omitted from the prayer any
specification of the amount of damages although the amount of over P78
million is alleged in the body of the complaint. This Court observed that
"(T)his is clearly intended for no other purpose than to evade the
payment of the correct filing fees if not to mislead the docket clerk, in the
assessment of the filing fee. This fraudulent practice was compounded
when, even as this Court had taken cognizance of the anomaly and
ordered an investigation, petitioner through another counsel filed an
amended complaint, deleting all mention of the amount of damages
being asked for in the body of the complaint. xxx"
For the guidance of all concerned, the WARNING given by the court in
the afore-cited case is reproduced hereunder:
 "The Court serves warning that it will take drastic action upon a
repetition of this unethical practice.
To put a stop to this irregularity, henceforth all complaints, petitions,
answers and other similar pleadings should specify the amount of
damages being prayed for not only in the body of the pleading but
also in the prayer, and said damages shall be considered in the
assessment of the filing fees in any case. Any pleading that fails to
comply with this requirement shall not be accepted nor admitted, or
shall otherwise be expunged from the record.
The Court acquires jurisdiction over any case only upon the payment of
the prescribed docket fee. An amendment of the complaint or similar
pleading will not thereby vest jurisdiction in the Court, much less the
payment of the docket fee based on the amount sought in the amended
pleading. The ruling in the Magaspi case (115 SCRA 193) in so far as it
is inconsistent with this pronouncement is overturned and reversed."
Strict compliance with this Circular is hereby enjoined.
Let this be circularized to all the courts hereinabove named and to the
President and Board of Governors of the Integrated Bar of the
Philippines, which is hereby directed to disseminate this Circular to all its
members.
March 24, 1988.
(Sgd). CLAUDIO TEEHANKEE
Chief Justice
(Emphasis and underscoring supplied)
On the other hand, respondent maintains that it had paid the filing fee which was
assessed by the clerk of court, and that there was no violation of Supreme Court
Circular No. 7 because the amount of damages was clearly specified in the prayer, to
wit:
2. On the FIRST CAUSE OF ACTION -
(c) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS EIGHT
HUNDRED FORTY FOUR THOUSAND SIX HUNDRED SEVENTY FOUR AND
SEVEN CENTS (US$ 844,674.07), plus accrued interests and other related charges
thereon subsequent to August 15, 1998, until fully paid; and (ii) an amount equivalent
to 5% of all sums due from said Defendant, as and for attorney's fees;
3. On the SECOND CAUSE OF ACTION -
(d) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS ONE
HUNDRED TWENTY AND FIFTY THREE CENTS (US$171,120.53), plus accrued
interests and other related charges thereon subsequent to August 15, 1998 until fully
paid; and (ii) an amount equivalent to 5% of all sums due from said Defendant, as and
for attorney's fees;
4. On the THIRD CAUSE OF ACTION -
(e) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS FIVE
HUNDRED TWENTY NINE THOUSAND ONE HUNDRED EIGHTY NINE AND EIGHTY
CENTS (US$529,189.80), plus accrued interests and other related charges thereon
subsequent to August 15, 1998 until fully paid; and (ii) an amount equivalent to 5% or
all sums due from said Defendant, as and for attorney's fees;
5. On ALL THE CAUSES OF ACTION -
Defendants AUTOMOTIVE CORPORATION PHILIPPINES, ASEA ONE
CORPORATION and AUTOCORP GROUP to be ordered to pay Plaintiff BNP the
aggregate sum of (i) US DOLLARS ONE MILLION FIVE HUNDRED FORTY FOUR
THOUSAND NINE HUNDRED EIGHTY FOUR AND FORTY CENTS
(US$1,544,984.40) (First through Third Causes of Action), plus accrued interest and
other related charges thereon subsequent to August 15, 1998 until fully paid; and (ii) an
amount equivalent to 5% of all sums due from said Defendants, as and for attorney's
fees.26
Moreover, respondent posits that the amount of US$1,544,984.40 represents not only
the principal but also interest and other related charges which had accrued as of August
15, 1998. Respondent goes even further by suggesting that in light of Tacay v. Regional
Trial Court of Tagum, Davao del Norte27 where the Supreme Court held,
Where the action is purely for the recovery of money or damages, the docket fees are
assessed on the basis of the aggregate amount claimed, exclusive only of
interests and costs.28 (Emphasis and underscoring supplied),
it made an overpayment.
When Tacay was decided in 1989, the pertinent rule applicable was Section 5 (a) of
Rule 141 which provided for the following:
SEC. 5. Clerks of Regional Trial Courts. - (a) For filing an action or proceeding, or a
permissive counter-claim or cross-claim not arising out of the same transaction subject
of the complaint, a third-party complaint and a complaint in intervention and for all
services in the same, if the sum claimed, exclusive of interest, of the value of the
property in litigation, or the value of the estate, is:
1. Less than ₱ 5,000.00 ….……………………………… ₱ 32.00
2. ₱ 5,000.00 or more but less than ₱ 10,000.00 ………… 48.00
3. ₱ 10,000.00 or more but less than ₱ 20,000.00 ……….. 64.00
4. ₱ 20,000.00 or more but less than ₱ 40,000.00 ……….. 80.00
5. ₱ 40,000.00 or more but less than ₱ 60,000.00 ……….. 120.00
6. ₱ 60,000.00 or more but less than ₱ 80,000.00 ………. 160.00
7. ₱ 80,000.00 or more but less than ₱ 150,000.00 ……… 200.00
8. And for each ₱ 1,000.00 in excess of ₱ 150,000.00 ..... 4.00
 9. When the value of the case cannot be estimated ……… 400.00 Sec. 8. Clerks of Metropolitan and Municipal Trial Courts

10. When the case does not concern property (a) For each civil action or proceeding, where the value of the
(naturalization, adoption, legal separation, etc.) ..……... 64.00 subject matter involved, or the amount of the demand,
inclusive of interest, damages or whatever kind, attorney's
11. In forcible entry and illegal detainer cases
fees, litigation expenses, and costs, is:
appealed from inferior courts
…………………………………. 40.00
If the case concerns real estate, the assessed value thereof shall be considered in Not more than ₱ 20,000.00
1. ₱ 120.00
computing the fees. …………………………… ...
In case the value of the property or estate or the sum claim is less or more in More than ₱ 20,000.00 but not more than ₱
2. 400.00
accordance with the appraisal of the court, the difference of fees shall be refunded or 100,000.00 ….
paid as the case may be.
More than ₱ 100,000.00 but not more than
When the complaint in this case was filed in 1998, however, as correctly pointed out by 3. 850.00
₱ 200,000.00 …
petitioners, Rule 141 had been amended by Administrative Circular No. 11-9429 which (Emphasis and underscoring supplied)
provides:
BY RESOLUTION OF THE COURT, DATED JUNE 28, 1994, The clerk of court should thus have assessed the filing fee by taking into consideration
PURSUANT TO SECTION 5 (5) OF ARTICLE VIII OF THE "the total sum claimed, inclusive of interest, damages of whatever kind, attorney's fees,
CONSTITUTION, RULE 141, SECTION 7 (a) AND (d), and SECTION 8 litigation expenses, and costs, or the stated value of the property in litigation."
(a) and (b) OF THE RULES OF COURT ARE HEREBY AMENDED TO Respondent's and the Court of Appeals' reliance then on Tacay was not in order.
READ AS FOLLOWS:
Neither was, for the same reason, the Court of Appeals' reliance on the 1989 case of
RULE 141 Ng Soon v. Alday,30 where this Court held:
LEGAL FEES …The failure to state the rate of interest demanded was not fatal not only because
it is the Courts which ultimately fix the same, but also because Rule 141, Section 5(a)
xxx of the Rules of Court, itemizing the filing fees, speaks of "the sum claimed,
exclusive of interest." This clearly implies that the specification of the interest
rate is not that indispensable.
Sec. 7. Clerks of Regional Trial Courts
Factually, therefore, not everything was left to "guesswork" as respondent Judge has
(a) For filing an action or a permissive counterclaim or money claim opined. The sums claimed were ascertainable, sufficient enough to allow a computation
against an estate not based on judgment, or for filing with leave of court pursuant to Rule 141, section 5(a).
a third-party, fourth-party, etc. complaint, or a complaint in intervention, Furthermore, contrary to the position taken by respondent Judge, the amounts
and for all clerical services in the same, if the total sum claimed, claimed need not be initially stated with mathematical precision. The same Rule
inclusive of interest, damages of whatever kind, attorney's fees, 141, section 5(a) (3rd paragraph), allows an appraisal "more or less."31 Thus:
litigation expenses, and costs, or the stated value of the property in
litigation, is: "In case the value of the property or estate or the sum claimed is less or more in
accordance with the appraisal of the court, the difference of fee shall be refunded or
paid as the case may be."
Not more than ₱ 100,000.00
1. ₱ 400.00 In other words, a final determination is still to be made by the Court, and the fees
……………………………
ultimately found to be payable will either be additionally paid by the party concerned or
₱ 100,000.00, or more but not more than ₱ refunded to him, as the case may be. The above provision clearly allows an initial
2. 600.00
150,000.00 … payment of the filing fees corresponding to the estimated amount of the claim subject to
adjustment as to what later may be proved.
For each ₱ 1,000.00 in excess of ₱
3. 5.00
150,000.00 …………. ". . . there is merit in petitioner's claim that the third paragraph of Rule 141, Section 5(a)
xxx clearly contemplates a situation where an amount is alleged or claimed in the complaint
but is less or more than what is later proved. If what is proved is less than what was
claimed, then a refund will be made; if more, additional fees will be exacted. Otherwise
stated, what is subject to adjustment is the difference in the fee and not the whole
amount" (Pilipinas Shell Petroleum Corp., et als., vs. Court of Appeals, et als., G.R. No.
76119, April 10, 1989).32 (Emphasis and underscoring supplied)
Respecting the Court of Appeals' conclusion that the clerk of court did not err when he
applied the exchange rate of US $1 = ₱43.00 "[i]n the absence of any office guide of
the rate of exchange which said court functionary was duty bound to follow,[hence,] the
rate he applied is presumptively correct," the same does not lie. The presumption of
regularity of the clerk of court's application of the exchange rate is not conclusive.33 It
is disputable.34 As such, the presumption may be overturned by the requisite rebutting
evidence.35 In the case at bar, petitioners have adequately proven with documentary
evidence36 that the exchange rate when the complaint was filed on September 7, 1998
was US $1 = ₱43.21.
In fine, the docket fees paid by respondent were insufficient.
With respect to petitioner's argument that the trial court did not acquire jurisdiction over
the case in light of the insufficient docket fees, the same does not lie.
True, in Manchester Development Corporation v. Court of Appeals,37 this Court held
that the court acquires jurisdiction over any case only upon the payment of the
prescribed docket fees,38 hence, it concluded that the trial court did not acquire
jurisdiction over the case.
It bears emphasis, however, that the ruling in Manchester was clarified in Sun
Insurance Office, Ltd. (SIOL) v. Asuncion39 when this Court held that in the former
there was clearly an effort to defraud the government in avoiding to pay the correct
docket fees, whereas in the latter the plaintiff demonstrated his willingness to abide by
paying the additional fees as required.
The principle in Manchester could very well be applied in the present case. The pattern
and the intent to defraud the government of the docket fee due it is obvious not only in
the filing of the original complaint but also in the filing of the second amended
complaint.
However, in Manchester, petitioner did not pay any additional docket fee until the case
was decided by this Court on May 7, 1987. Thus, in Manchester, due to the fraud
committed on the government, this Court held that the court a quo did not
acquire jurisdiction over the case and that the amended complaint could not
have been admitted inasmuch as the original complaint was null and void.
In the present case, a more liberal interpretation of the rules is called for
considering that, unlike Manchester, private respondent demonstrated his
willingness to abide by the rules by paying the additional docket fees as
required. The promulgation of the decision in Manchester must have had that sobering
influence on private respondent who thus paid the additional docket fee as ordered by
the respondent court. It triggered his change of stance by manifesting his willingness to
pay such additional docket fee as may be ordered.
Nevertheless, petitioners contend that the docket fee that was paid is still insufficient
considering the total amount of the claim. This is a matter which the clerk of court of
the lower court and/or his duly authorized docket clerk or clerk in charge should
determine and, thereafter, if any amount is found due, he must require the private
respondent to pay the same.
Thus, the Court rules as follows:
1. It is not simply the filing of the complaint or appropriate initiatory pleading,
but the payment of the prescribed docket fee, that vests a trial court with
jurisdiction over the subject-matter or nature of the action. Where the filing of
the initiatory pleading is not accompanied by payment of the docket fee, the
court may allow payment of the fee within a reasonable time but in no case
beyond the applicable prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims and
similar pleadings, which shall not be considered filed until and unless the filing
fee prescribed therefor is paid. The court may also allow payment of said fee
within a reasonable time but also in no case beyond its applicable prescriptive
or reglementary period.
3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but,
subsequently, the judgment awards a claim not specified in the pleading, or if
specified the same has been left for determination by the court, the additional
filing fee therefor shall constitute a lien on the judgment. It shall be the
responsibility of the Clerk of Court or his duly authorized deputy to enforce
said lien and assess and collect the additional fee.40 (Emphasis and
underscoring supplied)
The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs of Bertuldo
Hinog v. Hon. Achilles Melicor:41
Plainly, while the payment of the prescribed docket fee is a jurisdictional requirement,
even its non-payment at the time of filing does not automatically cause the dismissal of
the case, as long as the fee is paid within the applicable prescriptive or reglementary
period, more so when the party involved demonstrates a willingness to abide by the
rules prescribing such payment. Thus, when insufficient filing fees were initially
paid by the plaintiffs and there was no intention to defraud the government, the
Manchester rule does not apply. (Emphasis and underscoring supplied; citations
omitted)
In the case at bar, respondent merely relied on the assessment made by the clerk of
court which turned out to be incorrect. Under the circumstances, the clerk of court has
the responsibility of reassessing what respondent must pay within the prescriptive
period, failing which the complaint merits dismissal.
Parenthetically, in the complaint, respondent prayed for "accrued interest… subsequent
to August 15, 1998 until fully paid." The complaint having been filed on September 7,
1998, respondent's claim includes the interest from August 16, 1998 until such date of
filing.
Respondent did not, however, pay the filing fee corresponding to its claim for interest
from August 16, 1998 until the filing of the complaint on September 7, 1998. As priorly
discussed, this is required under Rule 141, as amended by Administrative Circular No.
11-94, which was the rule applicable at the time. Thus, as the complaint currently
stands, respondent cannot claim the interest from August 16, 1998 until September 7,
1998, unless respondent is allowed by motion to amend its complaint within a
reasonable time and specify the precise amount of interest petitioners owe from August
16, 1998 to September 7, 199842 and pay the corresponding docket fee therefor.
With respect to the interest accruing after the filing of the complaint, the same can only
be determined after a final judgment has been handed down. Respondent cannot thus
be made to pay the corresponding docket fee therefor. Pursuant, however, to Section
2, Rule 141, as amended by Administrative Circular No. 11-94, respondent should be
made to pay additional fees which shall constitute a lien in the event the trial court
adjudges that it is entitled to interest accruing after the filing of the complaint.
Sec. 2. Fees as lien. - Where the court in its final judgment awards a claim not alleged,
or a relief different or more than that claimed in the pleading, the party concerned shall
pay the additional fees which shall constitute a lien on the judgment in satisfaction of
said lien. The clerk of court shall assess and collect the corresponding fees.
In Ayala Corporation v. Madayag,43 in interpreting the third rule laid down in Sun
Insurance regarding awards of claims not specified in the pleading, this Court held that
the same refers only to damages arising after the filing of the complaint or
similar pleading as to which the additional filing fee therefor shall constitute a
lien on the judgment.
… The amount of any claim for damages, therefore, arising on or before the filing of
the complaint or any pleading should be specified. While it is true that the
determination of certain damages as exemplary or corrective damages is left to the
sound discretion of the court, it is the duty of the parties claiming such damages to
specify the amount sought on the basis of which the court may make a proper
determination, and for the proper assessment of the appropriate docket fees. The
exception contemplated as to claims not specified or to claims although
specified are left for determination of the court is limited only to any damages
that may arise after the filing of the complaint or similar pleading for then it will
not be possible for the claimant to specify nor speculate as to the amount
thereof.44 (Emphasis and underscoring supplied; citation omitted)1avvphi1.zw+
WHEREFORE, the petition is GRANTED in part. The July 25, 2001 Decision and the
December 18, 2001 Resolution of the Court Appeals are hereby MODIFIED. The Clerk
of Court of the Regional Trial Court of Makati City is ordered to reassess and
determine the docket fees that should be paid by respondent, BNP, in accordance with
the Decision of this Court, and direct respondent to pay the same within fifteen (15)
days, provided the applicable prescriptive or reglementary period has not yet expired.
Thereafter, the trial court is ordered to proceed with the case with utmost dispatch.
SO ORDERED.
Bernabe L. Navida et. Al v. Hon. Teodoro A. Dizon
Before the Court are consolidated Petitions for Review on Certiorari under Rule 45 of
the Rules of Court, which arose out of two civil cases that were filed in different courts
but whose factual background and issues are closely intertwined.
The petitions in G.R. Nos. 1250781 and 1255982 both assail the Order3 dated May 20,
1996 of the Regional Trial Court (RTC) of General Santos City, Branch 37, in Civil
Case No. 5617. The said Order decreed the dismissal of the case in view of the
perceived lack of jurisdiction of the RTC over the subject matter of the complaint. The
petition in G.R. No. 125598 also challenges the Orders dated June 4, 19964 and July
9, 1996,5 which held that the RTC of General Santos City no longer had jurisdiction to
proceed with Civil Case No. 5617.
On the other hand, the petitions in G.R. Nos. 126654,6 127856,7 and 1283988 seek the
reversal of the Order9 dated October 1, 1996 of the RTC of Davao City, Branch 16, in
Civil Case No. 24,251-96, which also dismissed the case on the ground of lack of
jurisdiction.
G.R. Nos. 125078, 125598, 126654, 127856, and 128398 were consolidated in the
Resolutions dated February 10, 1997,10 April 28, 199711 and March 10, 1999.12
The factual antecedents of the petitions are as follows:
Proceedings before the Texas Courts
Beginning 1993, a number of personal injury suits were filed in different Texas state
courts by citizens of twelve foreign countries, including the Philippines. The thousands
of plaintiffs sought damages for injuries they allegedly sustained from their exposure to
dibromochloropropane (DBCP), a chemical used to kill nematodes (worms), while
working on farms in 23 foreign countries. The cases were eventually transferred to, and
consolidated in, the Federal District Court for the Southern District of Texas, Houston
Division. The cases therein that involved plaintiffs from the Philippines were "Jorge
Colindres Carcamo, et al. v. Shell Oil Co., et al.," which was docketed as Civil Action
No. H-94-1359, and "Juan Ramon Valdez, et al. v. Shell Oil Co., et al.," which was
docketed as Civil Action No. H-95-1356. The defendants in the consolidated cases
prayed for the dismissal of all the actions under the doctrine of forum non conveniens.
In a Memorandum and Order dated July 11, 1995, the Federal District Court
conditionally granted the defendants’ motion to dismiss. Pertinently, the court ordered
that:
Delgado, Jorge Carcamo, Valdez and Isae Carcamo will be dismissed 90 days after the
entry of this Memorandum and Order provided that defendants and third- and fourth-
party defendants have:
(1) participated in expedited discovery in the United States xxx;
(2) either waived or accepted service of process and waived any other
jurisdictional defense within 40 days after the entry of this Memorandum and
Order in any action commenced by a plaintiff in these actions in his home
country or the country in which his injury occurred. Any plaintiff desiring to
bring such an action will do so within 30 days after the entry of this
Memorandum and Order;
(3) waived within 40 days after the entry of this Memorandum and Order any
limitations-based defense that has matured since the commencement of these
actions in the courts of Texas;
(4) stipulated within 40 days after the entry of this Memorandum and Order
that any discovery conducted during the pendency of these actions may be
used in any foreign proceeding to the same extent as if it had been conducted
in proceedings initiated there; and
(5) submitted within 40 days after the entry of this Memorandum and Order an
agreement binding them to satisfy any final judgment rendered in favor of
plaintiffs by a foreign court.
xxxx
Notwithstanding the dismissals that may result from this Memorandum and Order, in the
event that the highest court of any foreign country finally affirms the dismissal for lack
of jurisdiction of an action commenced by a plaintiff in these actions in his home
country or the country in which he was injured, that plaintiff may return to this court
and, upon proper motion, the court will resume jurisdiction over the action as if the
case had never been dismissed for [forum non conveniens].13
Civil Case No. 5617 before the RTC of General Santos City and G.R. Nos. 125078 and
125598
In accordance with the above Memorandum and Order, a total of 336 plaintiffs from
General Santos City (the petitioners in G.R. No. 125078, hereinafter referred to as
NAVIDA, et al.) filed a Joint Complaint14 in the RTC of General Santos City on August
10, 1995. The case was docketed as Civil Case No. 5617. Named as defendants
therein were: Shell Oil Co. (SHELL); Dow Chemical Co. (DOW); Occidental Chemical
Corp. (OCCIDENTAL); Dole Food Co., Inc., Dole Fresh Fruit Co., Standard Fruit Co.,
Standard Fruit and Steamship Co. (hereinafter collectively referred to as DOLE);
Chiquita Brands, Inc. and Chiquita Brands International, Inc. (CHIQUITA); Del Monte
Fresh Produce N.A. and Del Monte Tropical Fruit Co. (hereinafter collectively referred
to as DEL MONTE); Dead Sea Bromine Co., Ltd.; Ameribrom, Inc.; Bromine
Compounds, Ltd.; and Amvac Chemical Corp. (The aforementioned defendants are
hereinafter collectively referred to as defendant companies.)
Navida, et al., prayed for the payment of damages in view of the illnesses and injuries
to the reproductive systems which they allegedly suffered because of their exposure to
DBCP. They claimed, among others, that they were exposed to this chemical during
the early 1970’s up to the early 1980’s when they used the same in the banana
plantations where they worked at; and/or when they resided within the agricultural area
where such chemical was used. Navida, et al., claimed that their illnesses and injuries
were due to the fault or negligence of each of the defendant companies in that they
produced, sold and/or otherwise put into the stream of commerce DBCP-containing
products. According to NAVIDA, et al., they were allowed to be exposed to the said
products, which the defendant companies knew, or ought to have known, were highly
injurious to the former’s health and well-being.
Instead of answering the complaint, most of the defendant companies respectively filed
their Motions for Bill of Particulars.15 During the pendency of the motions, on March 13,
1996, NAVIDA, et al., filed an Amended Joint Complaint,16 excluding Dead Sea
Bromine Co., Ltd., Ameribrom, Inc., Bromine Compounds, Ltd. and Amvac Chemical
Corp. as party defendants.
Again, the remaining defendant companies filed their various Motions for Bill of
Particulars.17 On May 15, 1996, DOW filed an Answer with Counterclaim.18
On May 20, 1996, without resolving the motions filed by the parties, the RTC of
General Santos City issued an Order dismissing the complaint. First, the trial court
determined that it did not have jurisdiction to hear the case, to wit:
THE COMPLAINT FOR DAMAGES FILED WITH THE REGIONAL TRIAL COURT
SHOULD BE DISMISSED FOR LACK OF JURISDICTION
xxxx
The substance of the cause of action as stated in the complaint against the defendant
foreign companies cites activity on their part which took place abroad and had
occurred outside and beyond the territorial domain of the Philippines. These acts of
defendants cited in the complaint included the manufacture of pesticides, their
packaging in containers, their distribution through sale or other disposition, resulting in
their becoming part of the stream of commerce.
Accordingly, the subject matter stated in the complaint and which is uniquely particular
to the present case, consisted of activity or course of conduct engaged in by foreign
defendants outside Philippine territory, hence, outside and beyond the jurisdiction of
Philippine Courts, including the present Regional Trial Court.19
Second, the RTC of General Santos City declared that the tort alleged by Navida, et al.,
in their complaint is a tort category that is not recognized in Philippine laws. Said the
trial court:
THE TORT ASSERTED IN THE PRESENT COMPLAINT AGAINST DEFENDANT
FOREIGN COMPANIES IS NOT WITHIN THE SUBJECT MATTER JURISDICTION OF
THE REGIONAL TRIAL COURT, BECAUSE IT IS NOT A TORT CATEGORY WITHIN
THE PURVIEW OF THE PHILIPPINE LAW
The specific tort asserted against defendant foreign companies in the present complaint
is product liability tort. When the averments in the present complaint are examined in
terms of the particular categories of tort recognized in the Philippine Civil Code, it
becomes stark clear that such averments describe and identify the category of specific
tort known as product liability tort. This is necessarily so, because it is the product
manufactured by defendant foreign companies, which is asserted to be the proximate
cause of the damages sustained by the plaintiff workers, and the liability of the
defendant foreign companies, is premised on being the manufacturer of the pesticides.
It is clear, therefore, that the Regional Trial Court has jurisdiction over the present case,
if and only if the Civil Code of the Philippines, or a suppletory special law prescribes a
product liability tort, inclusive of and comprehending the specific tort described in the
complaint of the plaintiff workers.20
Third, the RTC of General Santos City adjudged that Navida, et al., were coerced into
submitting their case to the Philippine courts, viz:
FILING OF CASES IN THE PHILIPPINES - COERCED AND ANOMALOUS
The Court views that the plaintiffs did not freely choose to file the instant action, but
rather were coerced to do so, merely to comply with the U.S. District Court’s Order
dated July 11, 1995, and in order to keep open to the plaintiffs the opportunity to return
to the U.S. District Court.21
Fourth, the trial court ascribed little significance to the voluntary appearance of the
defendant companies therein, thus:
THE DEFENDANTS’ SUBMISSION TO JURISDICTION IS CONDITIONAL AS IT IS
ILLUSORY
Defendants have appointed their agents authorized to accept service of
summons/processes in the Philippines pursuant to the agreement in the U.S. court that
defendants will voluntarily submit to the jurisdiction of this court. While it is true that this
court acquires jurisdiction over persons of the defendants through their voluntary
appearance, it appears that such voluntary appearance of the defendants in this case is
conditional. Thus in the "Defendants’ Amended Agreement Regarding Conditions of
Dismissal for Forum Non Conveniens" (Annex to the Complaint) filed with the U.S.
District Court, defendants declared that "(t)he authority of each designated
representative to accept service of process will become effective upon final dismissal
of these actions by the Court". The decision of the U.S. District Court dismissing the
case is not yet final and executory since both the plaintiffs and defendants appealed
therefrom (par. 3(h), 3(i), Amended Complaint). Consequently, since the authority of
the agent of the defendants in the Philippines is conditioned on the final adjudication of
the case pending with the U.S. courts, the acquisition of jurisdiction by this court over
the persons of the defendants is also conditional. x x x.
The appointment of agents by the defendants, being subject to a suspensive condition,
thus produces no legal effect and is ineffective at the moment.22
Fifth, the RTC of General Santos City ruled that the act of NAVIDA, et al., of filing the
case in the Philippine courts violated the rules on forum shopping and litis pendencia.
The trial court expounded:
THE JURISDICTION FROWNS UPON AND PROHIBITS FORUM SHOPPING
This court frowns upon the fact that the parties herein are both vigorously pursuing
their appeal of the decision of the U.S. District court dismissing the case filed thereat.
To allow the parties to litigate in this court when they are actively pursuing the same
cases in another forum, violates the rule on ‘forum shopping’ so abhorred in this
jurisdiction. x x x.
xxxx
THE FILING OF THE CASE IN U.S. DIVESTED THIS COURT OF ITS OWN
JURISDICTION
Moreover, the filing of the case in the U.S. courts divested this court of its own
jurisdiction. This court takes note that the U.S. District Court did not decline jurisdiction
over the cause of action. The case was dismissed on the ground of forum non
conveniens, which is really a matter of venue. By taking cognizance of the case, the
U.S. District Court has, in essence, concurrent jurisdiction with this court over the
subject matter of this case. It is settled that initial acquisition of jurisdiction divests
another of its own jurisdiction. x x x.
xxxx
THIS CASE IS BARRED BY THE RULE OF "LITIS PENDENCIA"
Furthermore, the case filed in the U.S. court involves the same parties, same rights
and interests, as in this case. There exists litis pendencia since there are two cases
involving the same parties and interests. The court would like to emphasize that in
accordance with the rule on litis pendencia x x x; the subsequent case must be
dismissed. Applying the foregoing [precept] to the case-at-bar, this court concludes that
since the case between the parties in the U.S. is still pending, then this case is barred
by the rule on "litis pendencia."23
In fine, the trial court held that:
It behooves this Court, then to dismiss this case. For to continue with these
proceedings, would be violative of the constitutional provision on the Bill of Rights
guaranteeing speedy disposition of cases (Ref. Sec. 16, Article III, Constitution). The
court has no other choice. To insist on further proceedings with this case, as it is now
presented, might accord this court a charming appearance. But the same insistence
would actually thwart the very ends of justice which it seeks to achieve.
This evaluation and action is made not on account of but rather with due consideration
to the fact that the dismissal of this case does not necessarily deprive the parties –
especially the plaintiffs – of their possible remedies. The court is cognizant that the
Federal Court may resume proceedings of that earlier case between the herein parties
involving the same acts or omissions as in this case.
WHEREFORE, in view of the foregoing considerations, this case is now considered
DISMISSED.24
On June 4, 1996, the RTC of General Santos City likewise issued an Order,25
dismissing DOW’s Answer with Counterclaim.
CHIQUITA, DEL MONTE and SHELL each filed a motion for reconsideration26 of the
RTC Order dated May 20, 1996, while DOW filed a motion for reconsideration27 of the
RTC Order dated June 4, 1996. Subsequently, DOW and OCCIDENTAL also filed a
Joint Motion for Reconsideration28 of the RTC Order dated May 20, 1996.
In an Order29 dated July 9, 1996, the RTC of General Santos City declared that it had
already lost its jurisdiction over the case as it took into consideration the Manifestation
of the counsel of NAVIDA, et al., which stated that the latter had already filed a petition
for review on certiorari before this Court.
CHIQUITA and SHELL filed their motions for reconsideration30 of the above order.
On July 11, 1996, NAVIDA, et al., filed a Petition for Review on Certiorari in order to
assail the RTC Order dated May 20, 1996, which was docketed as G.R. No. 125078.
The RTC of General Santos City then issued an Order31 dated August 14, 1996, which
merely noted the incidents still pending in Civil Case No. 5617 and reiterated that it no
longer had any jurisdiction over the case.
On August 30, 1996, DOW and OCCIDENTAL filed their Petition for Review on
Certiorari,32 challenging the orders of the RTC of General Santos City dated May 20,
1996, June 4, 1996 and July 9, 1996. Their petition was docketed as G.R. No. 125598.
In their petition, DOW and OCCIDENTAL aver that the RTC of General Santos City
erred in ruling that it has no jurisdiction over the subject matter of the case as well as
the persons of the defendant companies.
In a Resolution33 dated October 7, 1996, this Court resolved to consolidate G.R. No.
125598 with G.R. No. 125078.
CHIQUITA filed a Petition for Review on Certiorari,34 which sought the reversal of the
RTC Orders dated May 20, 1996, July 9, 1996 and August 14, 1996. The petition was
docketed as G.R. No. 126018. In a Resolution35 dated November 13, 1996, the Court
dismissed the aforesaid petition for failure of CHIQUITA to show that the RTC
committed grave abuse of discretion. CHIQUITA filed a Motion for Reconsideration,36
but the same was denied through a Resolution37 dated January 27, 1997.
Civil Case No. 24,251-96 before the RTC of Davao City and G.R. Nos. 126654,
127856, and 128398
Another joint complaint for damages against SHELL, DOW, OCCIDENTAL, DOLE, DEL
MONTE, and CHIQUITA was filed before Branch 16 of the RTC of Davao City by 155
plaintiffs from Davao City. This case was docketed as Civil Case No. 24,251-96. These
plaintiffs (the petitioners in G.R. No. 126654, hereinafter referred to as ABELLA, et al.)
amended their Joint-Complaint on May 21, 1996.38
Similar to the complaint of NAVIDA, et al., ABELLA, et al., alleged that, as workers in
the banana plantation and/or as residents near the said plantation, they were made to
use and/or were exposed to nematocides, which contained the chemical DBCP.
According to ABELLA, et al., such exposure resulted in "serious and permanent
injuries to their health, including, but not limited to, sterility and severe injuries to their
reproductive capacities."39 ABELLA, et al., claimed that the defendant companies
manufactured, produced, sold, distributed, used, and/or made available in commerce,
DBCP without warning the users of its hazardous effects on health, and without
providing instructions on its proper use and application, which the defendant
companies knew or ought to have known, had they exercised ordinary care and
prudence.
Except for DOW, the other defendant companies filed their respective motions for bill of
particulars to which ABELLA, et al., filed their opposition. DOW and DEL MONTE filed
their respective Answers dated May 17, 1996 and June 24, 1996.
The RTC of Davao City, however, junked Civil Case No. 24,251-96 in its Order dated
October 1, 1996, which, in its entirety, reads:
Upon a thorough review of the Complaint and Amended Complaint For: Damages filed
by the plaintiffs against the defendants Shell Oil Company, DOW Chemicals Company,
Occidental Chemical Corporation, Standard Fruit Company, Standard Fruit and
Steamship, DOLE Food Company, DOLE Fresh Fruit Company, Chiquita Brands, Inc.,
Chiquita Brands International, Del Monte Fresh Produce, N.A. and Del Monte Tropical
Fruits Co., all foreign corporations with Philippine Representatives, the Court, as
correctly pointed out by one of the defendants, is convinced that plaintiffs "would have
this Honorable Court dismiss the case to pave the way for their getting an affirmance
by the Supreme Court" (#10 of Defendants’ Del Monte Fresh Produce, N.A. and Del
Monte Tropical Fruit Co., Reply to Opposition dated July 22, 1996). Consider these:
1) In the original Joint Complaint, plaintiffs state that: defendants have no properties in
the Philippines; they have no agents as well (par. 18); plaintiffs are suing the
defendants for tortuous acts committed by these foreign corporations on their
respective countries, as plaintiffs, after having elected to sue in the place of
defendants’ residence, are now compelled by a decision of a Texas District Court to file
cases under torts in this jurisdiction for causes of actions which occurred abroad (par.
19); a petition was filed by same plaintiffs against same defendants in the Courts of
Texas, USA, plaintiffs seeking for payment of damages based on negligence, strict
liability, conspiracy and international tort theories (par. 27); upon defendants’ Motion to
Dismiss on Forum non [conveniens], said petition was provisionally dismissed on
condition that these cases be filed in the Philippines or before 11 August 1995
(Philippine date; Should the Philippine Courts refuse or deny jurisdiction, the U. S.
Courts will reassume jurisdiction.)
11. In the Amended Joint Complaint, plaintiffs aver that: on 11 July 1995, the Federal
District Court issued a Memorandum and Order conditionally dismissing several of the
consolidated actions including those filed by the Filipino complainants. One of the
conditions imposed was for the plaintiffs to file actions in their home countries or the
countries in which they were injured x x x. Notwithstanding, the Memorandum and
[O]rder further provided that should the highest court of any foreign country affirm the
dismissal for lack of jurisdictions over these actions filed by the plaintiffs in their home
countries [or] the countries where they were injured, the said plaintiffs may return to that
court and, upon proper motion, the Court will resume jurisdiction as if the case had
never been dismissed for forum non conveniens.
The Court however is constrained to dismiss the case at bar not solely on the basis of
the above but because it shares the opinion of legal experts given in the interview made
by the Inquirer in its Special report "Pesticide Cause Mass Sterility," to wit:
1. Former Justice Secretary Demetrio Demetria in a May 1995 opinion said:
The Philippines should be an inconvenient forum to file this kind of damage
suit against foreign companies since the causes of action alleged in the
petition do not exist under Philippine laws. There has been no decided case in
Philippine Jurisprudence awarding to those adversely affected by DBCP. This
means there is no available evidence which will prove and disprove the
relation between sterility and DBCP.
2. Retired Supreme Court Justice Abraham Sarmiento opined that while a
class suit is allowed in the Philippines the device has been employed strictly.
Mass sterility will not qualify as a class suit injury within the contemplation of
Philippine statute.
3. Retired High Court Justice Rodolfo Nocom stated that there is simply an
absence of doctrine here that permits these causes to be heard. No product
liability ever filed or tried here.
Case ordered dismissed.40
Docketed as G.R. No. 126654, the petition for review, filed on November 12, 1996 by
ABELLA, et al., assails before this Court the above-quoted order of the RTC of Davao
City.
ABELLA, et al., claim that the RTC of Davao City erred in dismissing Civil Case No.
24,251-96 on the ground of lack of jurisdiction.
According to ABELLA, et al., the RTC of Davao City has jurisdiction over the subject
matter of the case since Articles 2176 and 2187 of the Civil Code are broad enough to
cover the acts complained of and to support their claims for damages.
ABELLA, et al., further aver that the dismissal of the case, based on the opinions of
legal luminaries reported in a newspaper, by the RTC of Davao City is bereft of basis.
According to them, their cause of action is based on quasi-delict under Article 2176 of
the Civil Code. They also maintain that the absence of jurisprudence regarding the
award of damages in favor of those adversely affected by the DBCP does not preclude
them from presenting evidence to prove their allegations that their exposure to DBCP
caused their sterility and/or infertility.
SHELL, DOW, and CHIQUITA each filed their respective motions for reconsideration of
the Order dated October 1, 1996 of the RTC of Davao City. DEL MONTE also filed its
motion for reconsideration, which contained an additional motion for the inhibition of the
presiding judge.
The presiding judge of Branch 16 then issued an Order41 dated December 2, 1996,
voluntarily inhibiting himself from trying the case. Thus, the case was re-raffled to
Branch 13 of the RTC of Davao City.
In an Order42 dated December 16, 1996, the RTC of Davao City affirmed the Order
dated October 1, 1996, and denied the respective motions for reconsideration filed by
defendant companies.
Thereafter, CHIQUITA filed a Petition for Review dated March 5, 1997, questioning the
Orders dated October 1, 1996 and December 16, 1996 of the RTC of Davao City. This
case was docketed as G.R. No. 128398.
In its petition, CHIQUITA argues that the RTC of Davao City erred in dismissing the
case motu proprio as it acquired jurisdiction over the subject matter of the case as well
as over the persons of the defendant companies which voluntarily appeared before it.
CHIQUITA also claims that the RTC of Davao City cannot dismiss the case simply on
the basis of opinions of alleged legal experts appearing in a newspaper article.
Initially, this Court in its Resolution43 dated July 28, 1997, dismissed the petition filed
by CHIQUITA for submitting a defective certificate against forum shopping. CHIQUITA,
however, filed a motion for reconsideration, which was granted by this Court in the
Resolution44 dated October 8, 1997.
On March 7, 1997, DEL MONTE also filed its petition for review on certiorari before this
Court assailing the above-mentioned orders of the RTC of Davao City. Its petition was
docketed as G.R. No. 127856.
DEL MONTE claims that the RTC of Davao City has jurisdiction over Civil Case No.
24,251-96, as defined under the law and that the said court already obtained
jurisdiction over its person by its voluntary appearance and the filing of a motion for bill
of particulars and, later, an answer to the complaint. According to DEL MONTE, the
RTC of Davao City, therefore, acted beyond its authority when it dismissed the case
motu proprio or without any motion to dismiss from any of the parties to the case.
In the Resolutions dated February 10, 1997, April 28, 1997, and March 10, 1999, this
Court consolidated G.R. Nos. 125078, 125598, 126654, 127856, and 128398.
The Consolidated Motion to Drop DOW, OCCIDENTAL, and SHELL as Party-
Respondents filed by NAVIDA, et al. and ABELLA, et al.
On September 26, 1997, NAVIDA, et al., and ABELLA, et al., filed before this Court a
Consolidated Motion (to Drop Party-Respondents).45 The plaintiff claimants alleged
that they had amicably settled their cases with DOW, OCCIDENTAL, and SHELL
sometime in July 1997. This settlement agreement was evidenced by facsimiles of the
"Compromise Settlement, Indemnity, and Hold Harmless Agreement," which were
attached to the said motion. Pursuant to said agreement, the plaintiff claimants sought
to withdraw their petitions as against DOW, OCCIDENTAL, and SHELL.
DOLE, DEL MONTE and CHIQUITA, however, opposed the motion, as well as the
settlement entered into between the plaintiff claimants and DOW, OCCIDENTAL, and
SHELL.
The Memoranda of the Parties
Considering the allegations, issues, and arguments adduced by the parties, this Court,
in a Resolution dated June 22, 1998,46 required all the parties to submit their
respective memoranda.
CHIQUITA filed its Memorandum on August 28, 1998;47 SHELL asked to be excused
from the filing of a memorandum alleging that it had already executed a compromise
agreement with the plaintiff claimants.48 DOLE filed its Memorandum on October 12,
199849 while DEL MONTE filed on October 13, 1998.50 NAVIDA, et al., and ABELLA, et
al., filed their Consolidated Memorandum on February 3, 1999;51 and DOW and
OCCIDENTAL jointly filed a Memorandum on December 23, 1999.52
The Motion to Withdraw Petition for Review in G.R. No. 125598
On July 13, 2004, DOW and OCCIDENTAL filed a Motion to Withdraw Petition for
Review in G.R. No. 125598, 53 explaining that the said petition "is already moot and
academic and no longer presents a justiciable controversy" since they have already
entered into an amicable settlement with NAVIDA, et al. DOW and OCCIDENTAL
added that they have fully complied with their obligations set forth in the 1997
Compromise Agreements.
DOLE filed its Manifestation dated September 6, 2004,54 interposing no objection to the
withdrawal of the petition, and further stating that they maintain their position that DOW
and OCCIDENTAL, as well as other settling defendant companies, should be retained
as defendants for purposes of prosecuting the cross-claims of DOLE, in the event that
the complaint below is reinstated.
NAVIDA, et al., also filed their Comment dated September 14, 2004,55 stating that they
agree with the view of DOW and OCCIDENTAL that the petition in G.R. No. 125598 has
become moot and academic because Civil Case No. 5617 had already been amicably
settled by the parties in 1997.
On September 27, 2004, DEL MONTE filed its Comment on Motion to Withdraw
Petition for Review Filed by Petitioners in G.R. No. 125598,56 stating that it has no
objections to the withdrawal of the petition filed by DOW and OCCIDENTAL in G.R. No.
125598.
In a Resolution57 dated October 11, 2004, this Court granted, among others, the motion
to withdraw petition for review filed by DOW and OCCIDENTAL.
THE ISSUES
In their Consolidated Memorandum, NAVIDA, et al., and ABELLA, et al., presented the
following issues for our consideration:
IN REFUTATION
I. THE COURT DISMISSED THE CASE DUE TO LACK OF
JURISDICTION.
a) The court did not simply dismiss the case because it was filed
in bad faith with petitioners intending to have the same
dismissed and returned to the Texas court.
b) The court dismissed the case because it was convinced that it
did not have jurisdiction.
IN SUPPORT OF THE PETITION
II. THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT
MATTER OF THE CASE.
 a. The acts complained of occurred within Philippine territory.
b. Art. 2176 of the Civil Code of the Philippines is broad enough
to cover the acts complained of.
c. Assumption of jurisdiction by the U.S. District Court over
petitioner[s’] claims did not divest Philippine [c]ourts of
jurisdiction over the same.
d. The Compromise Agreement and the subsequent
Consolidated Motion to Drop Party Respondents Dow,
Occidental and Shell does not unjustifiably prejudice remaining
respondents Dole, Del Monte and Chiquita.58
DISCUSSION
On the issue of jurisdiction
Essentially, the crux of the controversy in the petitions at bar is whether the RTC of
General Santos City and the RTC of Davao City erred in dismissing Civil Case Nos.
5617 and 24,251-96, respectively, for lack of jurisdiction.
Remarkably, none of the parties to this case claims that the courts a quo are bereft of
jurisdiction to determine and resolve the above-stated cases. All parties contend that
the RTC of General Santos City and the RTC of Davao City have jurisdiction over the
action for damages, specifically for approximately ₱2.7 million for each of the plaintiff
claimants.
NAVIDA, et al., and ABELLA, et al., argue that the allegedly tortious acts and/or
omissions of defendant companies occurred within Philippine territory. Specifically, the
use of and exposure to DBCP that was manufactured, distributed or otherwise put into
the stream of commerce by defendant companies happened in the Philippines. Said
fact allegedly constitutes reasonable basis for our courts to assume jurisdiction over
the case. Furthermore, NAVIDA, et al., and ABELLA, et al., assert that the provisions of
Chapter 2 of the Preliminary Title of the Civil Code, as well as Article 2176 thereof, are
broad enough to cover their claim for damages. Thus, NAVIDA, et al., and ABELLA, et
al., pray that the respective rulings of the RTC of General Santos City and the RTC of
Davao City in Civil Case Nos. 5617 and 24,251-96 be reversed and that the said cases
be remanded to the courts a quo for further proceedings.
DOLE similarly maintains that the acts attributed to defendant companies constitute a
quasi-delict, which falls under Article 2176 of the Civil Code. In addition, DOLE states
that if there were no actionable wrongs committed under Philippine law, the courts a
quo should have dismissed the civil cases on the ground that the Amended Joint-
Complaints of NAVIDA, et al., and ABELLA, et al., stated no cause of action against
the defendant companies. DOLE also argues that if indeed there is no positive law
defining the alleged acts of defendant companies as actionable wrong, Article 9 of the
Civil Code dictates that a judge may not refuse to render a decision on the ground of
insufficiency of the law. The court may still resolve the case, applying the customs of
the place and, in the absence thereof, the general principles of law. DOLE posits that
the Philippines is the situs of the tortious acts allegedly committed by defendant
companies as NAVIDA, et al., and ABELLA, et al., point to their alleged exposure to
DBCP which occurred in the Philippines, as the cause of the sterility and other
reproductive system problems that they allegedly suffered. Finally, DOLE adds that the
RTC of Davao City gravely erred in relying upon newspaper reports in dismissing Civil
Case No. 24,251-96 given that newspaper articles are hearsay and without any
evidentiary value. Likewise, the alleged legal opinions cited in the newspaper reports
were taken judicial notice of, without any notice to the parties. DOLE, however, opines
that the dismissal of Civil Case Nos. 5617 and 24,251-96 was proper, given that plaintiff
claimants merely prosecuted the cases with the sole intent of securing a dismissal of
the actions for the purpose of convincing the U.S. Federal District Court to re-assume
jurisdiction over the cases.
In a similar vein, CHIQUITA argues that the courts a quo had jurisdiction over the
subject matter of the cases filed before them. The Amended Joint-Complaints sought
approximately ₱2.7 million in damages for each plaintiff claimant, which amount falls
within the jurisdiction of the RTC. CHIQUITA avers that the pertinent matter is the place
of the alleged exposure to DBCP, not the place of manufacture, packaging, distribution,
sale, etc., of the said chemical. This is in consonance with the lex loci delicti commisi
theory in determining the situs of a tort, which states that the law of the place where the
alleged wrong was committed will govern the action. CHIQUITA and the other
defendant companies also submitted themselves to the jurisdiction of the RTC by
making voluntary appearances and seeking for affirmative reliefs during the course of
the proceedings. None of the defendant companies ever objected to the exercise of
jurisdiction by the courts a quo over their persons. CHIQUITA, thus, prays for the
remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of General Santos City and
the RTC of Davao City, respectively.
The RTC of General Santos City and the RTC of Davao City have jurisdiction over Civil
Case Nos. 5617 and 24,251-96, respectively
The rule is settled that jurisdiction over the subject matter of a case is conferred by law
and is determined by the allegations in the complaint and the character of the relief
sought, irrespective of whether the plaintiffs are entitled to all or some of the claims
asserted therein.59 Once vested by law, on a particular court or body, the jurisdiction
over the subject matter or nature of the action cannot be dislodged by anybody other
than by the legislature through the enactment of a law.
At the time of the filing of the complaints, the jurisdiction of the RTC in civil cases under
Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, was:
SEC. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive
original jurisdiction:
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages of whatever
kind, attorney’s fees, litigation expenses, and costs or the value of the property in
controversy exceeds One hundred thousand pesos (₱100,000.00) or, in such other
cases in Metro Manila, where the demand, exclusive of the abovementioned items
exceeds Two hundred thousand pesos (₱200,000.00).60
Corollary thereto, Supreme Court Administrative Circular No. 09-94, states:
2. The exclusion of the term "damages of whatever kind" in determining the
jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as
amended by R.A. No. 7691, applies to cases where the damages are merely incidental
to or a consequence of the main cause of action. However, in cases where the claim
for damages is the main cause of action, or one of the causes of action, the amount of
such claim shall be considered in determining the jurisdiction of the court.
Here, NAVIDA, et al., and ABELLA, et al., sought in their similarly-worded Amended
Joint-Complaints filed before the courts a quo, the following prayer:
PRAYER
WHEREFORE, premises considered, it is most respectfully prayed that after hearing,
judgment be rendered in favor of the plaintiffs ordering the defendants:
a) TO PAY EACH PLAINTIFF moral damages in the amount of One Million
Five Hundred Thousand Pesos (₱1,500,00.00);
b) TO PAY EACH PLAINTIFF nominal damages in the amount of Four
Hundred Thousand Pesos (₱400,000.00) each;
c) TO PAY EACH PLAINTIFF exemplary damages in the amount of Six
Hundred Thousand Pesos (₱600,000.00);
d) TO PAY EACH PLAINTIFF attorneys fees of Two Hundred Thousand
Pesos (₱200,000.00); and
e) TO PAY THE COSTS of the suit.61
From the foregoing, it is clear that the claim for damages is the main cause of action
and that the total amount sought in the complaints is approximately ₱2.7 million for
each of the plaintiff claimants. The RTCs unmistakably have jurisdiction over the cases
filed in General Santos City and Davao City, as both claims by NAVIDA, et al., and
ABELLA, et al., fall within the purview of the definition of the jurisdiction of the RTC
under Batas Pambansa Blg. 129.
Moreover, the allegations in both Amended Joint-Complaints narrate that:
THE CAUSES OF ACTION
4. The Defendants manufactured, sold, distributed, used, AND/OR
MADE AVAILABLE IN COMMERCE nematocides containing the
chemical dibromochloropropane, commonly known as DBCP. THE
CHEMICAL WAS USED AGAINST the parasite known as the nematode,
which plagued banana plantations, INCLUDING THOSE in the
Philippines. AS IT TURNED OUT, DBCP not only destroyed nematodes.
IT ALSO CAUSED ILL-EFFECTS ON THE HEALTH OF PERSONS
EXPOSED TO IT AFFECTING the human reproductive system as well.
5. The plaintiffs were exposed to DBCP in the 1970s up to the early
1980s WHILE (a) they used this product in the banana plantations
WHERE they were employed, and/or (b) they resided within the
agricultural area WHERE IT WAS USED. As a result of such exposure,
the plaintiffs suffered serious and permanent injuries TO THEIR
HEALTH, including, but not limited to, STERILITY and severe injuries to
their reproductive capacities.
6. THE DEFENDANTS WERE AT FAULT OR WERE NEGLIGENT IN
THAT THEY MANUFACTURED, produced, sold, and/or USED DBCP
and/or otherwise, PUT THE SAME into the stream of commerce,
WITHOUT INFORMING THE USERS OF ITS HAZARDOUS EFFECTS
ON HEALTH AND/OR WITHOUT INSTRUCTIONS ON ITS PROPER
USE AND APPLICATION. THEY allowed Plaintiffs to be exposed to,
DBCP-containing materials which THEY knew, or in the exercise of
ordinary care and prudence ought to have known, were highly harmful
and injurious to the Plaintiffs’ health and well-being.
7. The Defendants WHO MANUFACTURED, PRODUCED, SOLD,
DISTRIBUTED, MADE AVAILABLE OR PUT DBCP INTO THE STREAM
OF COMMERCE were negligent OR AT FAULT in that they, AMONG
OTHERS:
a. Failed to adequately warn Plaintiffs of the dangerous
characteristics of DBCP, or to cause their subsidiaries or
affiliates to so warn plaintiffs;
b. Failed to provide plaintiffs with information as to what should
be reasonably safe and sufficient clothing and proper protective
equipment and appliances, if any, to protect plaintiffs from the
harmful effects of exposure to DBCP, or to cause their
subsidiaries or affiliates to do so;
c. Failed to place adequate warnings, in a language
understandable to the worker, on containers of DBCP-containing
materials to warn of the dangers to health of coming into contact
with DBCP, or to cause their subsidiaries or affiliates to do so;
d. Failed to take reasonable precaution or to exercise
reasonable care to publish, adopt and enforce a safety plan and
a safe method of handling and applying DBCP, or to cause their
subsidiaries or affiliates to do so;
e. Failed to test DBCP prior to releasing these products for sale,
or to cause their subsidiaries or affiliates to do so; and
f. Failed to reveal the results of tests conducted on DBCP to
each plaintiff, governmental agencies and the public, or to cause
their subsidiaries or affiliate to do so.
8. The illnesses and injuries of each plaintiff are also due to the FAULT or
negligence of defendants Standard Fruit Company, Dole Fresh Fruit
Company, Dole Food Company, Inc., Chiquita Brands, Inc. and Chiquita
Brands International, Inc. in that they failed to exercise reasonable care
to prevent each plaintiff’s harmful exposure to DBCP-containing products
which defendants knew or should have known were hazardous to each
plaintiff in that they, AMONG OTHERS:
 a. Failed to adequately supervise and instruct Plaintiffs in the
safe and proper application of DBCP-containing products;
b. Failed to implement proper methods and techniques of
application of said products, or to cause such to be
implemented;
c. Failed to warn Plaintiffs of the hazards of exposure to said
products or to cause them to be so warned;
d. Failed to test said products for adverse health effects, or to
cause said products to be tested;
e. Concealed from Plaintiffs information concerning the
observed effects of said products on Plaintiffs;
f. Failed to monitor the health of plaintiffs exposed to said
products;
g. Failed to place adequate labels on containers of said
products to warn them of the damages of said products; and
h. Failed to use substitute nematocides for said products or to
cause such substitutes to [be] used.62 (Emphasis supplied and
words in brackets ours.)
Quite evidently, the allegations in the Amended Joint-Complaints of NAVIDA, et al., and
ABELLA, et al., attribute to defendant companies certain acts and/or omissions which
led to their exposure to nematocides containing the chemical DBCP. According to
NAVIDA, et al., and ABELLA, et al., such exposure to the said chemical caused ill
effects, injuries and illnesses, specifically to their reproductive system.
Thus, these allegations in the complaints constitute the cause of action of plaintiff
claimants – a quasi-delict, which under the Civil Code is defined as an act, or omission
which causes damage to another, there being fault or negligence. To be precise, Article
2176 of the Civil Code provides:
Article 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there
is no pre-existing contractual relation between the parties, is called a quasi-delict and
is governed by the provisions of this Chapter.
As specifically enumerated in the amended complaints, NAVIDA, et al., and ABELLA,
et al., point to the acts and/or omissions of the defendant companies in manufacturing,
producing, selling, using, and/or otherwise putting into the stream of commerce,
nematocides which contain DBCP, "without informing the users of its hazardous effects
on health and/or without instructions on its proper use and application." 63
Verily, in Citibank, N.A. v. Court of Appeals,64 this Court has always reminded that
jurisdiction of the court over the subject matter of the action is determined by the
allegations of the complaint, irrespective of whether or not the plaintiffs are entitled to
recover upon all or some of the claims asserted therein. The jurisdiction of the court
cannot be made to depend upon the defenses set up in the answer or upon the motion
to dismiss, for otherwise, the question of jurisdiction would almost entirely depend upon
the defendants. What determines the jurisdiction of the court is the nature of the action
pleaded as appearing from the allegations in the complaint. The averments therein and
the character of the relief sought are the ones to be consulted.
Clearly then, the acts and/or omissions attributed to the defendant companies
constitute a quasi-delict which is the basis for the claim for damages filed by NAVIDA,
et al., and ABELLA, et al., with individual claims of approximately ₱2.7 million for each
plaintiff claimant, which obviously falls within the purview of the civil action jurisdiction of
the RTCs.
Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, et al.,
allegedly suffered resulted from their exposure to DBCP while they were employed in
the banana plantations located in the Philippines or while they were residing within the
agricultural areas also located in the Philippines. The factual allegations in the
Amended Joint-Complaints all point to their cause of action, which undeniably occurred
in the Philippines. The RTC of General Santos City and the RTC of Davao City
obviously have reasonable basis to assume jurisdiction over the cases.
It is, therefore, error on the part of the courts a quo when they dismissed the cases on
the ground of lack of jurisdiction on the mistaken assumption that the cause of action
narrated by NAVIDA, et al., and ABELLA, et al., took place abroad and had occurred
outside and beyond the territorial boundaries of the Philippines, i.e., "the manufacture
of the pesticides, their packaging in containers, their distribution through sale or other
disposition, resulting in their becoming part of the stream of commerce,"65 and, hence,
outside the jurisdiction of the RTCs.
Certainly, the cases below are not criminal cases where territoriality, or the situs of the
act complained of, would be determinative of jurisdiction and venue for trial of cases. In
personal civil actions, such as claims for payment of damages, the Rules of Court allow
the action to be commenced and tried in the appropriate court, where any of the
plaintiffs or defendants resides, or in the case of a non-resident defendant, where he
may be found, at the election of the plaintiff.66
In a very real sense, most of the evidence required to prove the claims of NAVIDA, et
al., and ABELLA, et al., are available only in the Philippines. First, plaintiff claimants are
all residents of the Philippines, either in General Santos City or in Davao City. Second,
the specific areas where they were allegedly exposed to the chemical DBCP are within
the territorial jurisdiction of the courts a quo wherein NAVIDA, et al., and ABELLA, et al.,
initially filed their claims for damages. Third, the testimonial and documentary evidence
from important witnesses, such as doctors, co-workers, family members and other
members of the community, would be easier to gather in the Philippines. Considering
the great number of plaintiff claimants involved in this case, it is not far-fetched to
assume that voluminous records are involved in the presentation of evidence to support
the claim of plaintiff claimants. Thus, these additional factors, coupled with the fact that
the alleged cause of action of NAVIDA, et al., and ABELLA, et al., against the defendant
companies for damages occurred in the Philippines, demonstrate that, apart from the
RTC of General Santos City and the RTC of Davao City having jurisdiction over the
subject matter in the instant civil cases, they are, indeed, the convenient fora for trying
these cases.67
The RTC of General Santos City and the RTC of Davao City validly acquired
jurisdiction over the persons of all the defendant companies
It is well to stress again that none of the parties claims that the courts a quo lack
jurisdiction over the cases filed before them. All parties are one in asserting that the
RTC of General Santos City and the RTC of Davao City have validly acquired
jurisdiction over the persons of the defendant companies in the action below. All parties
voluntarily, unconditionally and knowingly appeared and submitted themselves to the
jurisdiction of the courts a quo.
Rule 14, Section 20 of the 1997 Rules of Civil Procedure provides that "[t]he
defendant’s voluntary appearance in the action shall be equivalent to service of
summons." In this connection, all the defendant companies designated and authorized
representatives to receive summons and to represent them in the proceedings before
the courts a quo. All the defendant companies submitted themselves to the jurisdiction
of the courts a quo by making several voluntary appearances, by praying for various
affirmative reliefs, and by actively participating during the course of the proceedings
below.
In line herewith, this Court, in Meat Packing Corporation of the Philippines v.
Sandiganbayan,68 held that jurisdiction over the person of the defendant in civil cases
is acquired either by his voluntary appearance in court and his submission to its
authority or by service of summons. Furthermore, the active participation of a party in
the proceedings is tantamount to an invocation of the court’s jurisdiction and a
willingness to abide by the resolution of the case, and will bar said party from later on
impugning the court or body’s jurisdiction.69
Thus, the RTC of General Santos City and the RTC of Davao City have validly
acquired jurisdiction over the persons of the defendant companies, as well as over the
subject matter of the instant case. What is more, this jurisdiction, which has been
acquired and has been vested on the courts a quo, continues until the termination of
the proceedings.
It may also be pertinently stressed that "jurisdiction" is different from the "exercise of
jurisdiction." Jurisdiction refers to the authority to decide a case, not the orders or the
decision rendered therein. Accordingly, where a court has jurisdiction over the persons
of the defendants and the subject matter, as in the case of the courts a quo, the
decision on all questions arising therefrom is but an exercise of such jurisdiction. Any
error that the court may commit in the exercise of its jurisdiction is merely an error of
judgment, which does not affect its authority to decide the case, much less divest the
court of the jurisdiction over the case.70
Plaintiffs’ purported bad faith in filing the subject civil cases in Philippine courts
Anent the insinuation by DOLE that the plaintiff claimants filed their cases in bad faith
merely to procure a dismissal of the same and to allow them to return to the forum of
their choice, this Court finds such argument much too speculative to deserve any merit.
It must be remembered that this Court does not rule on allegations that are
unsupported by evidence on record. This Court does not rule on allegations which are
manifestly conjectural, as these may not exist at all. This Court deals with facts, not
fancies; on realities, not appearances. When this Court acts on appearances instead of
realities, justice and law will be short-lived.71 This is especially true with respect to
allegations of bad faith, in line with the basic rule that good faith is always presumed
and bad faith must be proved.72
In sum, considering the fact that the RTC of General Santos City and the RTC of Davao
City have jurisdiction over the subject matter of the amended complaints filed by
NAVIDA, et al., and ABELLA, et al., and that the courts a quo have also acquired
jurisdiction over the persons of all the defendant companies, it therefore, behooves this
Court to order the remand of Civil Case Nos. 5617 and 24,251-96 to the RTC of
General Santos City and the RTC of Davao City, respectively.
On the issue of the dropping of DOW, OCCIDENTAL and SHELL as respondents in
view of their amicable settlement with NAVIDA, et al., and ABELLA, et al.
NAVIDA, et al., and ABELLA, et al., are further praying that DOW, OCCIDENTAL and
SHELL be dropped as respondents in G.R. Nos. 125078 and 126654, as well as in Civil
Case Nos. 5617 and 24,251-96. The non-settling defendants allegedly manifested that
they intended to file their cross-claims against their co-defendants who entered into
compromise agreements. NAVIDA, et al., and ABELLA, et al., argue that the non-
settling defendants did not aver any cross-claim in their answers to the complaint and
that they subsequently sought to amend their answers to plead their cross-claims only
after the settlement between the plaintiff claimants and DOW, OCCIDENTAL, and
SHELL were executed. NAVIDA, et al., and ABELLA, et al., therefore, assert that the
cross-claims are already barred.
In their Memoranda, CHIQUITA and DOLE are opposing the above motion of NAVIDA,
et al., and ABELLA, et al., since the latter’s Amended Complaints cited several
instances of tortious conduct that were allegedly committed jointly and severally by the
defendant companies. This solidary obligation on the part of all the defendants
allegedly gives any co-defendant the statutory right to proceed against the other co-
defendants for the payment of their respective shares. Should the subject motion of
NAVIDA, et al., and ABELLA, et al., be granted, and the Court subsequently orders the
remand of the action to the trial court for continuance, CHIQUITA and DOLE would
allegedly be deprived of their right to prosecute their cross-claims against their other co-
defendants. Moreover, a third party complaint or a separate trial, according to
CHIQUITA, would only unduly delay and complicate the proceedings. CHIQUITA and
DOLE similarly insist that the motion of NAVIDA, et al., and ABELLA, et al., to drop
DOW, SHELL and OCCIDENTAL as respondents in G.R. Nos. 125078 and 126654, as
well as in Civil Case Nos. 5617 and 24,251-96, be denied.
Incidentally, on April 2, 2007, after the parties have submitted their respective
memoranda, DEL MONTE filed a Manifestation and Motion73 before the Court, stating
that similar settlement agreements were allegedly executed by the plaintiff claimants
with DEL MONTE and CHIQUITA sometime in 1999. Purportedly included in the
agreements were Civil Case Nos. 5617 and 24,251-96. Attached to the said
manifestation were copies of the Compromise Settlement, Indemnity, and Hold
Harmless Agreement between DEL MONTE and the settling plaintiffs, as well as the
Release in Full executed by the latter.74 DEL MONTE specified therein that there were
"only four (4) plaintiffs in Civil Case No. 5617 who are claiming against the Del Monte
parties"75 and that the latter have executed amicable settlements which completely
satisfied any claims against DEL MONTE. In accordance with the alleged compromise
agreements with the four plaintiffs in Civil Case No. 5617, DEL MONTE sought the
dismissal of the Amended Joint-Complaint in the said civil case. Furthermore, in view of
the above settlement agreements with ABELLA, et al., in Civil Case No. 24,251-96, DEL
MONTE stated that it no longer wished to pursue its petition in G.R. No. 127856 and
accordingly prayed that it be allowed to withdraw the same.
Having adjudged that Civil Case Nos. 5617 and 24,251-96 should be remanded to the
RTC of General Santos City and the RTC of Davao City, respectively, the Court deems
that the Consolidated Motions (to Drop Party-Respondents) filed by NAVIDA, et al.,
and ABELLA, et al., should likewise be referred to the said trial courts for appropriate
disposition.
Under Article 2028 of the Civil Code, "[a] compromise is a contract whereby the
parties, by making reciprocal concessions, avoid a litigation or put an end to one
already commenced." Like any other contract, an extrajudicial compromise agreement
is not excepted from rules and principles of a contract. It is a consensual contract,
perfected by mere consent, the latter being manifested by the meeting of the offer and
the acceptance upon the thing and the cause which are to constitute the contract.76
Judicial approval is not required for its perfection.77 A compromise has upon the parties
the effect and authority of res judicata78 and this holds true even if the agreement has
not been judicially approved.79 In addition, as a binding contract, a compromise
agreement determines the rights and obligations of only the parties to it.80
In light of the foregoing legal precepts, the RTC of General Santos City and the RTC of
Davao City should first receive in evidence and examine all of the alleged compromise
settlements involved in the cases at bar to determine the propriety of dropping any
party as a defendant therefrom.
The Court notes that the Consolidated Motions (to Drop Party-Respondents) that was
filed by NAVIDA, et al., and ABELLA, et al., only pertained to DOW, OCCIDENTAL and
SHELL in view of the latter companies’ alleged compromise agreements with the
plaintiff claimants. However, in subsequent developments, DEL MONTE and
CHIQUITA supposedly reached their own amicable settlements with the plaintiff
claimants, but DEL MONTE qualified that it entered into a settlement agreement with
only four of the plaintiff claimants in Civil Case No. 5617. These four plaintiff claimants
were allegedly the only ones who were asserting claims against DEL MONTE.
However, the said allegation of DEL MONTE was simply stipulated in their
Compromise Settlement, Indemnity, and Hold Harmless Agreement and its truth could
not be verified with certainty based on the records elevated to this Court. Significantly,
the 336 plaintiff claimants in Civil Case No. 5617 jointly filed a complaint without
individually specifying their claims against DEL MONTE or any of the other defendant
companies. Furthermore, not one plaintiff claimant filed a motion for the removal of
either DEL MONTE or CHIQUITA as defendants in Civil Case Nos. 5617 and 24,251-
96.
There is, thus, a primary need to establish who the specific parties to the alleged
compromise agreements are, as well as their corresponding rights and obligations
therein. For this purpose, the courts a quo may require the presentation of additional
evidence from the parties. Thereafter, on the basis of the records of the cases at bar
and the additional evidence submitted by the parties, if any, the trial courts can then
determine who among the defendants may be dropped from the said cases.
It is true that, under Article 2194 of the Civil Code, the responsibility of two or more
persons who are liable for the same quasi-delict is solidary. A solidary obligation is one
in which each of the debtors is liable for the entire obligation, and each of the creditors
is entitled to demand the satisfaction of the whole obligation from any or all of the
debtors.81
In solidary obligations, the paying debtor’s right of reimbursement is provided for under
Article 1217 of the Civil Code, to wit:
Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If
two or more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. If the payment is
made before the debt is due, no interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his
share to the debtor paying the obligation, such share shall be borne by all his co-
debtors, in proportion to the debt of each.1avvphil
The above right of reimbursement of a paying debtor, and the corresponding liability of
the co-debtors to reimburse, will only arise, however, if a solidary debtor who is made to
answer for an obligation actually delivers payment to the creditor. As succinctly held in
Lapanday Agricultural Development Corporation v. Court of Appeals,82 "[p]ayment,
which means not only the delivery of money but also the performance, in any other
manner, of the obligation, is the operative fact which will entitle either of the solidary
debtors to seek reimbursement for the share which corresponds to each of the [other]
debtors."83
In the cases at bar, there is no right of reimbursement to speak of as yet. A trial on the
merits must necessarily be conducted first in order to establish whether or not
defendant companies are liable for the claims for damages filed by the plaintiff
claimants, which would necessarily give rise to an obligation to pay on the part of the
defendants.
At the point in time where the proceedings below were prematurely halted, no cross-
claims have been interposed by any defendant against another defendant. If and when
such a cross-claim is made by a non-settling defendant against a settling defendant, it
is within the discretion of the trial court to determine the propriety of allowing such a
cross-claim and if the settling defendant must remain a party to the case purely in
relation to the cross claim.
In Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of
Appeals,84 the Court had the occasion to state that "where there are, along with the
parties to the compromise, other persons involved in the litigation who have not taken
part in concluding the compromise agreement but are adversely affected or feel
prejudiced thereby, should not be precluded from invoking in the same proceedings an
adequate relief therefor."85
Relevantly, in Philippine International Surety Co., Inc. v. Gonzales,86 the Court upheld
the ruling of the trial court that, in a joint and solidary obligation, the paying debtor may
file a third-party complaint and/or a cross-claim to enforce his right to seek contribution
from his co-debtors.
Hence, the right of the remaining defendant(s) to seek reimbursement in the above
situation, if proper, is not affected by the compromise agreements allegedly entered into
by NAVIDA, et al., and ABELLA, et al., with some of the defendant compan
MASLAG v. MONZON
"It is incumbent upon x x x appellants to utilize the correct mode of appeal of the
decisions of trial courts to the appellate courts. In the mistaken choice of their remedy,
they can blame no one but themselves."1
This is a Petition for Review on Certiorari2
of the May 31, 2006 Resolution3
of the
Court of Appeals (CA) in CA-G.R. CV No. 83365, which dismissed petitioner Darma
Maslag's (petitioner) ordinary appeal to it for being an improper remedy. The
Resolution disposed of the case as follows:
WHEREFORE, the Motion to Dismiss is GRANTED, and the Appeal is hereby
DISMISSED.
SO ORDERED.4
The Petition also assails the CA’s September 22, 2006 Resolution5 denying petitioner’s
Motion for Reconsideration.6
Factual Antecedents
In 1998, petitioner filed a Complaint 7 for reconveyance of real property with declaration
of nullity of original certificate of title (OCT) against respondents Elizabeth Monzon
(Monzon), William Geston and the Registry of Deeds of La Trinidad, Benguet. The
Complaint was filed before the Municipal Trial Court (MTC) of La Trinidad, Benguet.
After trial, the MTC found respondent Monzon guilty of fraud in obtaining an OCT over
petitioner’s property.8 It ordered her to reconvey the said property to petitioner, and to
pay damages and costs of suit.9
Respondents appealed to the Regional Trial Court (RTC) of La Trinidad, Benguet.
After going over the MTC records and the parties’ respective memoranda, the RTC of
La Trinidad, Benguet, Branch 10, through Acting Presiding Judge Fernando P. Cabato
(Judge Cabato), issued its October 22, 2003 Order,10 declaring the MTC without
jurisdiction over petitioner’s cause of action. It further held that it will take cognizance
of the case pursuant to Section 8, Rule 40 of the Rules of Court, which reads:
SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction. – x x
x appeal, clearly reveals that it took cognizance of the MTC case in the exercise of its
If the case was tried on the merits by the lower court without jurisdiction over the
subject matter, the Regional Trial Court on appeal shall not dismiss the case if it has
original jurisdiction thereof, but shall decide the case in accordance with the preceding
section, without prejudice to the admission of amended pleadings and additional
evidence in the interest of justice. Both parties acknowledged receipt of the October
22, 2003 Order,11 but neither presented additional evidence before the new judge,
Edgardo B. Diaz De Rivera, Jr. (Judge Diaz De Rivera).12
On May 4, 2004, Judge Diaz De Rivera issued a Resolution 13 reversing the MTC
Decision. The fallo reads as follows:
WHEREFORE, the Judgment appealed from the Municipal Trial Court of La Trinidad,
Benguet is set aside. [Petitioner] is ordered to turn over the possession of the 4,415
square meter land she presently occupies to [Monzon]. This case is remanded to the
court a quo for further proceedings to determine whether [Maslag] is entitled to the
remedies afforded by law to a builder in good faith for the improvements she
constructed thereon.
No pronouncement as to damages and costs.
SO ORDERED.14
Petitioner filed a Notice of Appeal15 from the RTC’s May 4, 2004 Resolution.
Petitioner assailed the RTC’s May 4, 2004 Resolution for reversing the MTC’s factual
findings16 and prayed that the MTC Decision be adopted. Her prayer before the CA
reads:
WHEREFORE, premises considered, it is most respectfully prayed that the decision of
the Regional Trial Court, Branch 10 of La Trinidad, Benguet, appealed from be reversed
in toto and that the Honorable Court adopt the decision of the Municipal Trial Court.
Further reliefs just and equitable under the premises are prayed for.17
Respondents moved to dismiss petitioner’s ordinary appeal for being the improper
remedy. They asserted that the proper mode of appeal is a Petition for Review under
Rule 42 because the RTC rendered its May 4, 2004 Resolution in its appellate
jurisdiction.18
Ruling of the Court of Appeals
The CA dismissed petitioner’s appeal. It observed that the RTC’s May 4, 2004
Resolution (the subject matter of the appeal before the CA) set aside an MTC
Judgment; hence, the proper remedy is a Petition for Review under Rule 42, and not an
ordinary appeal.19
Petitioner sought reconsideration.20 She argued, for the first time, that the RTC
rendered its May 4, 2004 Resolution in its original jurisdiction. She cited the earlier
October 22, 2003 Order of the RTC declaring the MTC without jurisdiction over the
case.
The CA denied petitioner’s Motion for Reconsideration in its September 22, 2006
Resolution:21
A perusal of the May 4, 2004 Resolution of the RTC, which is the subject matter of the
appellate jurisdiction. Consequently, as We have previously enunciated, the proper
remedy, is a petition for review under Rule 42 and not an ordinary appeal under Rule
41.
WHEREFORE, premises considered, the instant Motion for Reconsideration is
DENIED. The May 31, 2006 Resolution of this Court is hereby AFFIRMED in toto.
SO ORDERED.22
Hence this Petition wherein petitioner prays that the CA be ordered to take cognizance
of her appeal.23
Issues
Petitioner set forth the following issues in her Petition:
WHETHER X X X THE COURT OF APPEALS WAS CORRECT IN DISMISSING THE
APPEAL FILED BY THE PETITIONER, CONSIDERING THAT THE REGIONAL TRIAL
COURT, BRANCH 10 OF LA TRINIDAD, BENGUET HELD THAT THE ORIGINAL
COMPLAINT AS FILED BEFORE THE MUNICIPAL TRIAL COURT OF LA TRINIDAD,
BENGUET WAS DECIDED BY THE LATTER WITHOUT ANY JURISDICTION AND, IN
ORDERING THAT THE CASE SHALL BE DECIDED PURSUANT TO THE
PROVISION OF SECTION 8 OF RULE 40 OF THE RULES OF COURT, IT DECIDED
THE CASE NOT ON ITS APPELLATE JURISDICTION BUT ON ITS ORIGINAL
JURISDICTION WHAT WILL BE THE EFFECT OF THE DECISION OF THE
REGIONAL TRIAL COURT, BRANCH 10 OF LA TRINIDAD, BENGUET, WHEN IT
DECIDED A CASE APPEALED BEFORE IT UNDER THE PROVISION OF SECTION
8, RULE 40 OF THE RULES OF COURT OF THE PHILIPPINES, AS TO THE
COURSE OF REMEDY THAT MAY BE AVAILED OF BY THE PETITIONER – A
PETITION FOR REVIEWUNDER RULE 42 OR AN ORDINARY APPEAL UNDER
RULE 41.24
Our Ruling
In its October 22, 2003 Order, the RTC declared that the MTC has no jurisdiction over
the subject matter of the case based on the supposition that the same is incapable of
pecuniary estimation. Thus, following Section 8, Rule 40 of the Rules of Court, it took
cognizance of the case and directed the parties to adduce further evidence if they so
desire. The parties bowed to this ruling of the RTC and, eventually, submitted the case
for its decision after they had submitted their respective memoranda.
We cannot, however, gloss over this jurisdictional faux pas of the RTC. Since it
involves a question of jurisdiction, we may motu proprio review and pass upon the
same even at this late stage of the proceedings.25
In her Complaint26 for reconveyance of real property with declaration of nullity of OCT,
petitioner claimed that she and her father had been in open, continuous, notorious and
exclusive possession of the disputed property since the 1940’s. She averred:
7. Sometime in the year 1987, Elizabeth Monzon, the owner of the adjacent
parcel of land being occupied by plaintiff [Maslag], informed the plaintiff that
the respective parcels of land being claimed by them can now be titled. A
suggestion was, thereafter made, that those who were interested to have their
lands titled, will contribute to a common fund for the surveying and
subsequent titling of the land;
8. Since plaintiff had, for so long, yearned for a title to the land she occupies,
she contributed to the amount being requested by Elizabeth Monzon;
9. A subdivision survey was made and in the survey, the respective areas of
the plaintiff and the defendants were defined and delimited – all for purposes
of titling. x x x
10. But alas, despite the assurance of subdivided titles, when the title was
finally issued by the Registry of Deeds, the same was only in the name of
Elizabeth Monzon and WILLIAM GESTON. The name of Darma Maslag was
fraudulently, deliberately and in bad faith omitted. Thus, the title to the
property, to the extent of 18,295 square meters, was titled solely in the name
of ELIZABETH MONZON.
As a relief, petitioner prayed that Monzon be ordered to reconvey the portion of the
property which she claimed was fraudulently included in Monzon’s title. Her primary
relief was to recover ownership of real property. Indubitably, petitioner’s complaint
involves title to real property. An action "involving title to real property," on the other
hand, was defined as an action where "the plaintiff’s cause of action is based on a claim
that she owns such property or that she has the legal rights to have exclusive control,
possession, enjoyment, or disposition of the same."27
Under the present state of the law, in cases involving title to real property, original and
exclusive jurisdiction belongs to either the RTC or the MTC, depending on the
assessed value of the subject property. 28 Pertinent provisions of Batas Pambansa Blg.
(BP) 129,29 as amended by Republic Act (RA) No. 7691,30 provides:
Sec. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive
original jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapable of
pecuniary estimation;
(2) In all civil actions which involve the title to, or possession of, real property,
or any interest therein, where the assessed value of the property involved
exceeds Twenty thousand pesos (₱20,000.00) or for civil actions in Metro
Manila, where x x x the assessed value of the property exceeds Fifty thousand
pesos ([P]50,000.00) except actions for forcible entry into and unlawful
detainer of lands or buildings, original jurisdiction over which is conferred upon
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts;
xxxx
SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in Civil Cases. — Metropolitan Trial Courts, Municipal Trial Courts
and Municipal Circuit Trial Courts shall exercise:
xxxx
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession
of, real property, or any interest therein where the assessed value of the property or
interest therein does not exceed Twenty thousand pesos (₱20,000.00) or, in civil
actions in Metro Manila, where such assessed value does not exceed Fifty thousand
pesos (₱50,000.00) x x x.
In the case at bench, annexed to the Complaint is a Declaration of Real Property 31
dated November 12, 1991, which was later marked as petitioner’s Exhibit "A", 32
showing that the disputed property has an assessed value of ₱12,40033 only. Such
assessed value of the property is well within the jurisdiction of the MTC. In fine, the
RTC, thru Judge Cabato, erred in applying Section 19(1) of BP 129 in determining
which court has jurisdiction over the case and in pronouncing that the MTC is divested
of original and exclusive jurisdiction.
This brings to fore the next issue of whether the CA was correct in dismissing
petitioner’s appeal.
Section 2, Rule 50 of the Rules of Court provides for the dismissal of an improper
appeal:
SECTION 2. Dismissal of improper appeal to the Court of Appeals. – An appeal under
Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only
questions of law shall be dismissed, issues purely of law not being reviewable by said
court. Similarly, an appeal by notice of appeal instead of by petition for review from the
appellate judgment of a Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the
appropriate court but shall be dismissed outright.1âwphi1 (Emphasis supplied)
There are two modes of appealing an RTC decision or resolution on issues of fact and
law.34 The first mode is an ordinary appeal under Rule 41 in cases where the RTC
exercised its original jurisdiction. It is done by filing a Notice of Appeal with the RTC.
The second mode is a petition for review under Rule 42 in cases where the RTC
exercised its appellate jurisdiction over MTC decisions. It is done by filing a Petition for
Review with the CA. Simply put, the distinction between these two modes of appeal
lies in the type of jurisdiction exercised by the RTC in the Order or Decision being
appealed.
As discussed above, the MTC has original and exclusive jurisdiction over the subject
matter of the case; hence, there is no other way the RTC could have taken cognizance
of the case and review the court a quo’s Judgment except in the exercise of its
appellate jurisdiction. Besides, the new RTC Judge who penned the May 4, 2004
Resolution, Judge Diaz de Rivera, actually treated the case as an appeal despite the
October 22, 2003 Order. He started his Resolution by stating, "This is an appeal from
the Judgment rendered by the Municipal Trial Court (MTC) of La Trinidad Benguet" 35
and then proceeded to discuss the merits of the "appeal." In the dispositive portion of
said Resolution, he reversed the MTC’s findings and conclusions and remanded
residual issues for trial with the MTC. Thus, in fact and in law, the RTC Resolution was
a continuation of the proceedings that originated from the MTC. It was a judgment
issued by the RTC in the exercise of its appellate jurisdiction. With regard to the RTC’s
earlier October 22, 2003 Order, the same should be disregarded for it produces no
effect (other than to confuse the parties whether the RTC was invested with original or
appellate jurisdiction). It cannot be overemphasized that jurisdiction over the subject
matter is conferred only by law and it is "not within the courts, let alone the parties, to
themselves determine or conveniently set aside."37 Neither would the active
participation of the parties nor estoppel operate to confer original and exclusive
jurisdiction where the court or tribunal only wields appellate jurisdiction over the
case.38 Thus, the CA is correct in holding that the proper mode of appeal should have
been a Petition for Review under Rule 42 of the Rules of Court, and not an ordinary
appeal under Rule 41.
Seeing the futility of arguing against what the RTC actually did, petitioner resorts to
arguing for what the RTC should have done. She maintains that the RTC should have
issued its May 4, 2004 Resolution in its original jurisdiction because it had earlier ruled
that the MTC had no jurisdiction over the cause of action.
Petitioner’s argument lacks merit. To reiterate, only statutes can confer jurisdiction.
Court issuances cannot seize or appropriate jurisdiction. It has been repeatedly held
that "any judgment, order or resolution issued without jurisdiction is void and cannot be
given any effect."39 By parity of reasoning, an order issued by a court declaring that it
has original and exclusive jurisdiction over the subject matter of the case when under
the law it has none cannot likewise be given effect. It amounts to usurpation of
jurisdiction which cannot be countenanced. Since BP 129 already apportioned the
jurisdiction of the MTC and the RTC in cases involving title to property, neither the
courts nor the petitioner could alter or disregard the same. Besides, in determining the
proper mode of appeal from an RTC Decision or Resolution, the determinative factor is
the type of jurisdiction actually exercised by the RTC in rendering its Decision or
Resolution. Was it rendered by the RTC in the exercise of its original jurisdiction, or in
the exercise of its appellate jurisdiction? In short, we look at what type of jurisdiction
was actually exercised by the RTC. We do not look into what type of jurisdiction the
RTC should have exercised. This is but logical. Inquiring into what the RTC should have
done in disposing of the case is a question which already involves the merits of the
appeal, but we obviously cannot go into that where the mode of appeal was improper to
begin with.
WHEREFORE, premises considered, the Petition for Review is DENIED for lack of
merit. The assailed May 31, 2006 and September 22, 2006 Resolutions of the Court of
Appeals in CA-G.R. CV No. 83365 are AFFIRMED.
SO ORDERED.
This petition for review on certiorari under Rule 45 assails the Decision1 dated
September 27, 2002 and Resolution2 dated January 12, 2004 of the Court of Appeals
(CA) in CA-G.R. SP No. 64166.
BPI v. Hong
On September 16, 1997, the EYCO Group of Companies ("EYCO") filed a petition for
suspension of payments and rehabilitation before the Securities and Exchange
Commission (SEC), docketed as SEC Case No. 09-97-5764. A stay order was issued
on September 19, 1997 enjoining the disposition in any manner except in the ordinary
course of business and payment outside of legitimate business expenses during the
pendency of the proceedings, and suspending all actions, claims and proceedings
against EYCO until further orders from the SEC.3 On December 18, 1998, the hearing
panel approved the proposed rehabilitation plan prepared by EYCO despite the
recommendation of the management committee for the adoption of the rehabilitation
plan prepared and submitted by the steering committee of the Consortium of Creditor
Banks which appealed the order to the Commission.4 On September 14, 1999, the
SEC rendered its decision disapproving the petition for suspension of payments,
terminating EYCO’s proposed rehabilitation plan and ordering the dissolution and
liquidation of the petitioning corporation. The case was remanded to the hearing panel
for liquidation proceedings.5 On appeal by EYCO, (CA-G.R. SP No. 55208) the CA
upheld the SEC ruling. EYCO then filed a petition for certiorari before this Court,
docketed as G.R. No. 145977,which case was eventually dismissed under Resolution
dated May 3, 2005 upon joint manifestation and motion to dismiss filed by the parties.6
Said resolution had become final and executory on June 16, 2005.7
Sometime in November 2000 while the case was still pending with the CA, petitioner
Bank of the Philippine Islands (BPI), filed with the Office of the Clerk of Court, Regional
Trial Court of Valenzuela City, a petition for extra-judicial foreclosure of real properties
mortgaged to it by Eyco Properties, Inc. and Blue Star Mahogany, Inc. Public auction of
the mortgaged properties was scheduled on December 19, 2000.8
Claiming that the foreclosure proceedings initiated by petitioner was illegal, respondent
Eduardo Hong, an unsecured creditor of Nikon Industrial Corporation, one of the
companies of EYCO, filed an action for injunction and damages against the petitioner in
the same court (RTC of Valenzuela City). On its principal cause of action, the complaint
alleged that:
18. The ex-officio sheriff has no authority to sell the mortgaged properties.
Upon his appointment as liquidator, Edgardo Tarriela was empowered by the
SEC to receive and preserve all assets, and cause their valuation (SEC Rules
on Corporate Recovery, Rule VI, Section 6-4). Therefore, the SEC retains
jurisdiction over the mortgaged properties of EYCO Properties, Inc. To allow
the ex-officio sheriff to take possession of the mortgaged properties and sell
the same in a foreclosure sale would be in derogation of said jurisdiction.
19. All the assets of the EYCO Group should thus be surrendered for collation
to the liquidator and all claims against the EYCO Group should be filed with
the liquidator in the liquidation proceedings with the SEC. The SEC, at which
the liquidation is pending, has jurisdiction over the mortgaged properties to
the exclusion of any other court. Consequently, the ex-officio sheriff has
absolutely no jurisdiction to issue the notice of sheriff’s sale and to sell the
mortgaged properties on 19 December 2000.
20. Moreover, the sale of the mortgaged properties on 19 December 2000
would give undue preference to defendant FEBTC to the detriment of other
creditors, particularly plaintiff. This was specifically proscribed by the Supreme
Court stating in the case of Bank of the Philippine Islands v. Court of Appeals
that whenever a distressed corporation asks SEC for rehabilitation and
suspension of payments, preferred creditors may no longer assert such
preference, but shall stand on equal footing with other creditors.
Consequently, foreclosure should be disallowed so as not to prejudice other
creditors or cause discrimination among them.9 (Emphasis supplied.)
After hearing, the trial court issued a temporary restraining order (TRO). Petitioner filed
a motion to dismiss10 arguing that by plaintiff’s own allegations in the complaint,
jurisdiction over the reliefs prayed for belongs to the SEC, and that plaintiff is actually
resorting to forum shopping since he has filed a claim with the SEC and the designated
Liquidator in the ongoing liquidation of the EYCO Group of Companies. In his
Opposition,11 plaintiff (respondent) asserted that the RTC has jurisdiction on the issue
of propriety and validity of the foreclosure by petitioner, in accordance with Section 1,
Rule 4 of the 1997 Rules of Civil Procedure, as amended, the suit being in the nature
of a real action.
On January 17, 2001, the trial court denied the motion to dismiss.12 Petitioner’s
motion for reconsideration was likewise denied.13 Petitioner challenged the validity of
the trial court’s ruling before the CA via a petition for certiorari under Rule 65.
The CA affirmed the trial court’s denial of petitioner’s motion to dismiss. It held that
questions relating to the validity or legality of the foreclosure proceedings, including an
action to enjoin the same, must necessarily be cognizable by the RTC, notwithstanding
that the SEC likewise possesses the power to issue injunction in all cases in which it
has jurisdiction as provided in Sec. 6 (a) of Presidential Decree (P.D.) No. 902-A.
Further, the CA stated that an action for foreclosure of mortgage and all incidents
relative thereto including its validity or invalidity is within the jurisdiction of the RTC and
is not among those cases over which the SEC exercises exclusive and original
jurisdiction under Sec. 5 of P.D. No. 902-A. Consequently, no grave abuse of discretion
was committed by the trial court in issuing the assailed orders.
With the CA’s denial of its motion for reconsideration, petitioner is now before this
Court raising the sole issue of whether the RTC can take cognizance of the injunction
suit despite the pendency of SEC Case No. 09-97-5764.
The petition has no merit.
Jurisdiction is defined as the power and authority of a court to hear and decide a
case.14 A court’s jurisdiction over the subject matter of the action is conferred only by
the Constitution or by statute.15 The nature of an action and the subject matter thereof,
as well as which court or agency of the government has jurisdiction over the same, are
determined by the material allegations of the complaint in relation to the law involved
and the character of the reliefs prayed for, whether or not the complainant/plaintiff is
entitled to any or all of such reliefs.16 And jurisdiction being a matter of substantive law,
the established rule is that the statute in force at the time of the commencement of the
action determines the jurisdiction of the court.17
Perusal of the complaint reveals that respondent does not ask the trial court to rule on
its interest or claim -- as an unsecured creditor of two companies under EYCO --
against the latter’s properties mortgaged to petitioner. The complaint principally seeks
to enjoin the foreclosure proceedings initiated by petitioner over those properties on the
ground that such properties are held in trust and placed under the jurisdiction of the
appointed Liquidator in SEC Case No. 09-97-5764. Thus, Civil Case No. 349-V-00 is
one for injunction with prayer for damages.
An action for injunction is a suit which has for its purpose the enjoinment of the
defendant, perpetually or for a particular time, from the commission or continuance of a
specific act, or his compulsion to continue performance of a particular act. It has an
independent existence, and is distinct from the ancillary remedy of preliminary
injunction which cannot exist except only as a part or an incident of an independent
action or proceeding. In an action for injunction, the auxiliary remedy of preliminary
injunction, prohibitory or mandatory, may issue.18
As a rule, actions for injunction and damages lie within the jurisdiction of the RTC
pursuant to Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary
Reorganization Act of 1980," as amended by Republic Act (R.A.) No. 7691.
Sec. 19. Jurisdiction in civil cases. — Regional Trial Courts shall exercise exclusive
original jurisdiction:
(1) In all civil actions in which the subject of the litigations is incapable of pecuniary
estimation;
xxxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body
exercising x x x judicial or quasi-judicial functions;
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages of whatever
kind, attorney’s fees, litigation expenses, and costs or the value of the property in
controversy exceeds Three hundred thousand pesos (₱300,000.00) or, in such other
cases in Metro Manila, where the demand exclusive of the above-mentioned items
exceeds Four hundred thousand pesos (₱400,000.00). (Italics supplied.)
On the other hand, Sec. 6 (a) of P.D. No. 902-A empowered the SEC to "issue
preliminary or permanent injunctions, whether prohibitory or mandatory, in all cases in
which it has jurisdiction." Such cases in which the SEC exercises original and exclusive
jurisdiction are the following:
 (a) Devices or schemes employed by or any acts, of the board of directors,
business associates, its officers or partnership, amounting to fraud and
misrepresentation which may be detrimental to the interest of the public
and/or of the stockholder, partners, members of associations or organizations
registered with the Commission;
(b) Controversies arising out of intra-corporate or partnership relations,
between and among stockholders, members or associates; between any or all
of them and the corporation, partnership or association of which they are
stockholders, members or associates, respectively; and between such
corporation, partnership or association and the state insofar as it concerns
their individual franchise or right to exist as such entity; and
(c) Controversies in the election or appointments of directors, trustees,
officers or managers of such corporations, partnerships or associations.19
Previously, under the Rules of Procedure on Corporate Recovery, the SEC upon
termination of cases involving petitions for suspension of payments or rehabilitation
may, motu proprio, or on motion by any interested party, or on the basis of the findings
and recommendation of the Management Committee that the continuance in business
of the debtor is no longer feasible or profitable, or no longer works to the best interest
of the stockholders, parties-litigants, creditors, or the general public, order the
dissolution of the debtor and the liquidation of its remaining assets appointing a
Liquidator for the purpose.20 The debtor’s properties are then deemed to have been
conveyed to the Liquidator in trust for the benefit of creditors, stockholders and other
persons in interest. This notwithstanding, any lien or preference to any property shall
be recognized by the Liquidator in favor of the security or lienholder, to the extent
allowed by law, in the implementation of the liquidation plan.21
However, R.A. No. 8799, which took effect on August 8, 2000, transferred to the
appropriate regional trial courts the SEC’s jurisdiction over those cases enumerated in
Sec. 5 of P.D. No. 902-A. Section 5.2 of R.A. No. 8799 provides:
SEC. 5.2 The Commission’s jurisdiction over all cases enumerated under Section 5 of
Presidential Decree No. 902-A is hereby transferred to the Courts of general
jurisdiction or the appropriate Regional Trial Court: Provided, that the Supreme Court in
the exercise of its authority may designate the Regional Trial Court branches that shall
exercise jurisdiction over these cases. The Commission shall retain jurisdiction over
pending cases involving intra-corporate disputes submitted for final resolution which
should be resolved within one (1) year from the enactment of this Code. The
Commission shall retain jurisdiction over pending suspension of
payments/rehabilitation cases filed as of 30 June 2000 until finally disposed.
(Emphasis supplied.)
Upon the effectivity of R.A. No. 8799, SEC Case No. 09-97-5764 was no longer
pending.1âwphi1 The SEC finally disposed of said case when it rendered on
September 14, 1999 the decision disapproving the petition for suspension of
payments, terminating the proposed rehabilitation plan, and ordering the dissolution
and liquidation of the petitioning corporation. With the enactment of the new law,
jurisdiction over the liquidation proceedings ordered in SEC Case No. 09-97-5764 was
transferred to the RTC branch designated by the Supreme Court to exercise
jurisdiction over cases formerly cognizable by the SEC. As this Court held in Consuelo
Metal Corporation v. Planters Development Bank22 :
The SEC assumed jurisdiction over CMC’s petition for suspension of payment and
issued a suspension order on 2 April 1996 after it found CMC’s petition to be sufficient
in form and substance. While CMC’s petition was still pending with the SEC as of 30
June 2000, it was finally disposed of on 29 November 2000 when the SEC issued its
Omnibus Order directing the dissolution of CMC and the transfer of the liquidation
proceedings before the appropriate trial court. The SEC finally disposed of CMC’s
petition for suspension of payment when it determined that CMC could no longer be
successfully rehabilitated.
However, the SEC’s jurisdiction does not extend to the liquidation of a corporation.
While the SEC has jurisdiction to order the dissolution of a corporation, jurisdiction over
the liquidation of the corporation now pertains to the appropriate regional trial courts.
This is the reason why the SEC, in its 29 November 2000 Omnibus Order, directed that
"the proceedings on and implementation of the order of liquidation be commenced at
the Regional Trial Court to which this case shall be transferred." This is the correct
procedure because the liquidation of a corporation requires the settlement of claims for
and against the corporation, which clearly falls under the jurisdiction of the regular
courts. The trial court is in the best position to convene all the creditors of the
corporation, ascertain their claims, and determine their preferences.23 (Emphasis
supplied.)
There is no showing in the records that SEC Case No. 09-97-5764 had been
transferred to the appropriate RTC designated as Special Commercial Court at the time
of the commencement of the injunction suit on December 18, 2000. Given the urgency
of the situation and the proximity of the scheduled public auction of the mortgaged
properties as per the Notice of Sheriff’s Sale, respondent was constrained to seek relief
from the same court having jurisdiction over the foreclosure proceedings – RTC of
Valenzuela City. Respondent thus filed Civil Case No. 349-V-00 in the RTC of
Valenzuela City on December 18, 2000 questioning the validity of and enjoining the
extrajudicial foreclosure initiated by petitioner. Pursuant to its original jurisdiction over
suits for injunction and damages, the RTC of Valenzuela City, Branch 75 properly took
cognizance of the injunction case filed by the respondent. No reversible error was
therefore committed by the CA when it ruled that the RTC of Valenzuela City, Branch 75
had jurisdiction to hear and decide respondent’s complaint for injunction and damages.
Lastly, it may be mentioned that while the Consortium of Creditor Banks had agreed to
end their opposition to the liquidation proceedings upon the execution of the
Agreement24 dated February 10, 2003, on the basis of which the parties moved for the
dismissal of G.R. No. 145977, it is to be noted that petitioner is not a party to the said
agreement. Thus, even assuming that the SEC retained jurisdiction over SEC Case No.
09-97-5764, petitioner was not bound by the terms and conditions of the Agreement
relative to the foreclosure of those mortgaged properties belonging to EYCO and/or
other accommodation mortgagors.
WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated
September 27, 2002 and Resolution dated January 12, 2004 of the Court of Appeals in
CA-G.R. SP No. 64166 are AFFIRMED.
With costs against the petitioner.
SO ORDERED.
HERALD BLACK DACASIN v. SHARON DEL MUNDO DACASIN
The Case
For review1 is a dismissal2 of a suit to enforce a post-foreign divorce child custody
agreement for lack of jurisdiction.
The Facts
Petitioner Herald Dacasin (petitioner), American, and respondent Sharon Del Mundo
Dacasin (respondent), Filipino, were married in Manila in April 1994. They have one
daughter, Stephanie, born on 21 September 1995. In June 1999, respondent sought
and obtained from the Circuit Court, 19th Judicial Circuit, Lake County, Illinois (Illinois
court) a divorce decree against petitioner.3 In its ruling, the Illinois court dissolved the
marriage of petitioner and respondent, awarded to respondent sole custody of
Stephanie and retained jurisdiction over the case for enforcement purposes.
On 28 January 2002, petitioner and respondent executed in Manila a contract
(Agreement4 ) for the joint custody of Stephanie. The parties chose Philippine courts
as exclusive forum to adjudicate disputes arising from the Agreement. Respondent
undertook to obtain from the Illinois court an order "relinquishing" jurisdiction to
Philippine courts.
In 2004, petitioner sued respondent in the Regional Trial Court of Makati City, Branch
60 (trial court) to enforce the Agreement. Petitioner alleged that in violation of the
Agreement, respondent exercised sole custody over Stephanie.
Respondent sought the dismissal of the complaint for, among others, lack of
jurisdiction because of the Illinois court’s retention of jurisdiction to enforce the divorce
decree.
The Ruling of the Trial Court
In its Order dated 1 March 2005, the trial court sustained respondent’s motion and
dismissed the case for lack of jurisdiction. The trial court held that: (1) it is precluded
from taking cognizance over the suit considering the Illinois court’s retention of
jurisdiction to enforce its divorce decree, including its order awarding sole custody of
Stephanie to respondent; (2) the divorce decree is binding on petitioner following the
"nationality rule" prevailing in this jurisdiction;5 and (3) the Agreement is void for
contravening Article 2035, paragraph 5 of the Civil Code6 prohibiting compromise
agreements on jurisdiction.7
Petitioner sought reconsideration, raising the new argument that the divorce decree
obtained by respondent is void. Thus, the divorce decree is no bar to the trial court’s
exercise of jurisdiction over the case.
In its Order dated 23 June 2005, the trial court denied reconsideration, holding that
unlike in the case of respondent, the divorce decree is binding on petitioner under the
laws of his nationality.
Hence, this petition.
Petitioner submits the following alternative theories for the validity of the Agreement to
justify its enforcement by the trial court: (1) the Agreement novated the valid divorce
decree, modifying the terms of child custody from sole (maternal) to joint; 8 or (2) the
Agreement is independent of the divorce decree obtained by respondent.
The Issue
The question is whether the trial court has jurisdiction to take cognizance of petitioner’s
suit and enforce the Agreement on the joint custody of the parties’ child.
The Ruling of the Court
The trial court has jurisdiction to entertain petitioner’s suit but not to enforce the
Agreement which is void. However, factual and equity considerations militate against
the dismissal of petitioner’s suit and call for the remand of the case to settle the
question of Stephanie’s custody.
Regional Trial Courts Vested With Jurisdiction
to Enforce Contracts
Subject matter jurisdiction is conferred by law. At the time petitioner filed his suit in the
trial court, statutory law vests on Regional Trial Courts exclusive original jurisdiction
over civil actions incapable of pecuniary estimation.9 An action for specific performance,
such as petitioner’s suit to enforce the Agreement on joint child custody, belongs to this
species of actions.10 Thus, jurisdiction-wise, petitioner went to the right court.
Indeed, the trial court’s refusal to entertain petitioner’s suit was grounded not on its lack
of power to do so but on its thinking that the Illinois court’s divorce decree stripped it of
jurisdiction. This conclusion is unfounded. What the Illinois court retained was
"jurisdiction x x x for the purpose of enforcing all and sundry the various provisions of
[its] Judgment for Dissolution."11 Petitioner’s suit seeks the enforcement not of the
"various provisions" of the divorce decree but of the post-divorce Agreement on joint
child custody. Thus, the action lies beyond the zone of the Illinois court’s so-called
"retained jurisdiction."
Petitioner’s Suit Lacks Cause of Action
The foregoing notwithstanding, the trial court cannot enforce the Agreement which is
contrary to law.
In this jurisdiction, parties to a contract are free to stipulate the terms of agreement
subject to the minimum ban on stipulations contrary to law, morals, good customs,
public order, or public policy.12 Otherwise, the contract is denied legal existence,
deemed "inexistent and void from the beginning." 13 For lack of relevant stipulation in
the Agreement, these and other ancillary Philippine substantive law serve as default
parameters to test the validity of the Agreement’s joint child custody stipulations.14
At the time the parties executed the Agreement on 28 January 2002, two facts are
undisputed: (1) Stephanie was under seven years old (having been born on 21
September 1995); and (2) petitioner and respondent were no longer married under the
laws of the United States because of the divorce decree. The relevant Philippine law on
child custody for spouses separated in fact or in law 15 (under the second paragraph of
Article 213 of the Family Code) is also undisputed: "no child under seven years of age
shall be separated from the mother x x x." 16 (This statutory awarding of sole parental
custody17 to the mother is mandatory, 18 grounded on sound policy consideration,19
subject only to a narrow exception not alleged to obtain here.20 ) Clearly then, the
Agreement’s object to establish a post-divorce joint custody regime between
respondent and petitioner over their child under seven years old contravenes Philippine
law.
The Agreement is not only void ab initio for being contrary to law, it has also been
repudiated by the mother when she refused to allow joint custody by the father. The
Agreement would be valid if the spouses have not divorced or separated because the
law provides for joint parental authority when spouses live together. 21 However, upon
separation of the spouses, the mother takes sole custody under the law if the child is
below seven years old and any agreement to the contrary is void. Thus, the law
suspends the joint custody regime for (1) children under seven of (2) separated or
divorced spouses. Simply put, for a child within this age bracket (and for
commonsensical reasons), the law decides for the separated or divorced parents how
best to take care of the child and that is to give custody to the separated mother.
Indeed, the separated parents cannot contract away the provision in the Family Code
on the maternal custody of children below seven years anymore than they can
privately agree that a mother who is unemployed, immoral, habitually drunk, drug
addict, insane or afflicted with a communicable disease will have sole custody of a
child under seven as these are reasons deemed compelling to preclude the application
of the exclusive maternal custody regime under the second paragraph of Article 213.22
It will not do to argue that the second paragraph of Article 213 of the Family Code
applies only to judicial custodial agreements based on its text that "No child under
seven years of age shall be separated from the mother, unless the court finds
compelling reasons to order otherwise." To limit this provision’s enforceability to court
sanctioned agreements while placing private agreements beyond its reach is to
sanction a double standard in custody regulation of children under seven years old of
separated parents. This effectively empowers separated parents, by the simple
expedient of avoiding the courts, to subvert a legislative policy vesting to the separated
mother sole custody of her children under seven years of age "to avoid a tragedy
where a mother has seen her baby torn away from her."23 This ignores the legislative
basis that "[n]o man can sound the deep sorrows of a mother who is deprived of her
child of tender age."24
It could very well be that Article 213’s bias favoring one separated parent (mother) over
the other (father) encourages paternal neglect, presumes incapacity for joint parental
custody, robs the parents of custodial options, or hijacks decision-making between the
separated parents.25 However, these are objections which question the law’s wisdom
not its validity or uniform enforceability. The forum to air and remedy these grievances
is the legislature, not this Court. At any rate, the rule’s seeming harshness or
undesirability is tempered by ancillary agreements the separated parents may wish to
enter such as granting the father visitation and other privileges. These arrangements
are not inconsistent with the regime of sole maternal custody under the second
paragraph of Article 213 which merely grants to the mother final authority on the care
and custody of the minor under seven years of age, in case of
disagreements.1avvphi1
Further, the imposed custodial regime under the second paragraph of Article 213 is
limited in duration, lasting only until the child’s seventh year. From the eighth year until
the child’s emancipation, the law gives the separated parents freedom, subject to the
usual contractual limitations, to agree on custody regimes they see fit to adopt. Lastly,
even supposing that petitioner and respondent are not barred from entering into the
Agreement for the joint custody of Stephanie, respondent repudiated the Agreement by
asserting sole custody over Stephanie. Respondent’s act effectively brought the parties
back to ambit of the default custodial regime in the second paragraph of Article 213 of
the Family Code vesting on respondent sole custody of Stephanie.
Nor can petitioner rely on the divorce decree’s alleged invalidity - not because the
Illinois court lacked jurisdiction or that the divorce decree violated Illinois law, but
because the divorce was obtained by his Filipino spouse26 - to support the Agreement’s
enforceability. The argument that foreigners in this jurisdiction are not bound by foreign
divorce decrees is hardly novel. Van Dorn v. Romillo27 settled the matter by holding that
an alien spouse of a Filipino is bound by a divorce decree obtained abroad. 28 There,
we dismissed the alien divorcee’s Philippine suit for accounting of alleged post-divorce
conjugal property and rejected his submission that the foreign divorce (obtained by the
Filipino spouse) is not valid in this jurisdiction in this wise:
There can be no question as to the validity of that Nevada divorce in any of the States
of the United States. The decree is binding on private respondent as an American
citizen. For instance, private respondent cannot sue petitioner, as her husband, in any
State of the Union. What he is contending in this case is that the divorce is not valid and
binding in this jurisdiction, the same being contrary to local law and public policy.
It is true that owing to the nationality principle embodied in Article 15 of the Civil Code,
only Philippine nationals are covered by the policy against absolute divorces the same
being considered contrary to our concept of public policy and morality. However, aliens
may obtain divorces abroad, which may be recognized in the Philippines, provided they
are valid according to their national law. In this case, the divorce in Nevada released
private respondent from the marriage from the standards of American law, under which
divorce dissolves the marriage.
xxxx
Thus, pursuant to his national law, private respondent is no longer the husband of
petitioner. He would have no standing to sue in the case below as petitioner’s husband
entitled to exercise control over conjugal assets. As he is bound by the Decision of his
own country’s Court, which validly exercised jurisdiction over him, and whose decision
he does not repudiate, he is estopped by his own representation before said Court from
asserting his right over the alleged conjugal property. (Emphasis supplied)
We reiterated Van Dorn in Pilapil v. Ibay-Somera 29 to dismiss criminal complaints for
adultery filed by the alien divorcee (who obtained the foreign divorce decree) against
his former Filipino spouse because he no longer qualified as "offended spouse" entitled
to file the complaints under Philippine procedural rules. Thus, it should be clear by now
that a foreign divorce decree carries as much validity against the alien divorcee in this
jurisdiction as it does in the jurisdiction of the alien’s nationality, irrespective of who
obtained the divorce.
The Facts of the Case and Nature of Proceeding
Justify Remand
Instead of ordering the dismissal of petitioner’s suit, the logical end to its lack of cause
of action, we remand the case for the trial court to settle the question of Stephanie’s
custody. Stephanie is now nearly 15 years old, thus removing the case outside of the
ambit of the mandatory maternal custody regime under Article 213 and bringing it within
coverage of the default standard on child custody proceedings – the best interest of the
child.30 As the question of custody is already before the trial court and the child’s
parents, by executing the Agreement, initially showed inclination to share custody, it is
in the interest of swift and efficient rendition of justice to allow the parties to take
advantage of the court’s jurisdiction, submit evidence on the custodial arrangement
best serving Stephanie’s interest, and let the trial court render judgment. This
disposition is consistent with the settled doctrine that in child custody proceedings, 2266-A 3,112 Shemberg Marketing Corp. 19
equity may be invoked to serve the child’s best interest.31
WHEREFORE, we REVERSE the Orders dated 1 March 2005 and 23 June 2005 of 7 1,322 Shemberg Marketing Corp. 26
the Regional Trial Court of Makati City, Branch 60. The case is REMANDED for further
proceedings consistent with this ruling.
4 3,685 Shemberg Marketing Corp. 26
SO ORDERED.

Prior to 1998, respondents entered into several credit transactions with petitioner
FAR EAST BANK AND TRUST COMPANY v. SHEMBERG MARKETING CORP. secured by several real estate mortgages, thus:

Before us is a petition for review on certiorari assailing the Decision2 DATES OF MORTGAGORS SIGNATORIES AMOUNT
MORTGAGE
and Resolution3 of the Court of Appeals dated February 16, 2004 and May 28, 2004 in
CA-G.R. SP No. 67270.
December 6, 1977 Mackie Industries Corp. Mary U. Dacay P3,000,000.00
Far East Bank & Trust Company (FEBTC), petitioner, is a domestic banking
corporation organized and existing under Philippine laws. It is now managed and
operated by the Bank of the Philippine Islands with main office in Makati City. February 21, 1979 Mackie Industries Corp. Ernesto Dakay, Sr., and P500,000.00
Mary U. Dakay
Shemberg Marketing Corporation, Mackie Industries Corporation, Benson Industries
Incorporated, Kamaro Enterprises Corporation, Polysaccharide Corporation, Prime
Crafts Incorporated, Cebu United Polymer Corporation, Shemberg Natures Craft Inc., March 21, 1979 Mackie Industries Corp. Ernesto Dakay, Sr., and P1,000,000.00
respondents herein, are all duly registered domestic corporations based in Pakna-an, Mary U. Dacay
Mandaue City. The individual respondents, all surnamed Dacay, are directors and
corporate officers of the said corporations.
June 25, 1982 Mackie Industries Corp. Mary U. Dacay P292,000.00
Respondents are the registered owners of several realties located in Mandaue City
described as follows:
October 27, 1982 Shemberg Marketing Mary U. Dacay P3,708,000.00
LOT NOS. AREA REGISTERED Corp.
(in square meters) OWNER(S) CERTIFICATES OF
TITLE (TCT) NOS.
August 14, 1984 Shemberg Marketing Ernesto Dacay, Jr., P10,000,000.0
Corporation Benson Dacay, Ramon
2209-A 6,384 Henry Dakay, Benson Dakay, Dacay, Mary Dacay,
Ernesto Dakay, Jr., Ramon Ernesto Dacay, Sr., and
Dakay Henry U, Dacay

2230 6,677 Mackie Industries Corp. May 7, 1990 Shemberg Marketing Benson Dakay P3.976.000.00
Corp,
2231 5,563 Mackie Industries Corp.
May 10, 1990 Shemberg Marketing Henry Dakay, Benson P1,565,000.00
2232 16,139 Mackie Industries Corp. Corp. & Mackie Dakay, Rosemary Tan
Industries Corp. Dakay, Ernesto Dakay,
Jr., and Ramon Dakay
2207 8,847 Mackie Industries Corp.

3 11,224 Shemberg Marketing Corp.

 September 25, Mackie Industries Corp., Henry Dakay, Benson P1,927,500.00 TLC-2-060-985002 January 12, 1998 P13,290,000.00 Mar
1991 Henry Dakay, Benson Dakay, Ernesto Dakay,
Dakay, Ernesto Dakay, and Ramon Dakay,
Ramon Dakay, and TLC-1-060-98512 February 6, 1998 P8,270,000.00 Mar
Mario Dakay
TLC-2-060-98563 February 27, 1998 P9,342,899.00 Mar
July 27, 1992 Mackie Industries Corp. Henry Dakay, Benson P227,313.00
& Shemberg Marketing Dakay, Rosemary Tan
TLC-2-060-985640 March 20, 1998 P6,632,500.00 Mar
Corp. Dakay, Ernesto Dakay,
Hen
Jr., Ramon Dakay, and
Mario Dakay
TLC 2-060-986024 April 27, 1998 P19,450,000.00 Mar
November 23, 1995 Mackie Industries Corp. Henry Dakay, Benson P13,040,000.00
& Shemberg Marketing Dakay, Ernesto Dakay, TLC 2-060-986025 April 27, 1998 P13,968,990.00 Mar
Corp, Henry Dakay, Jr., and Ramon Dakay
Ramon Dakay, and
Mario Dakay TLC 2-060-986026 April 27, 1998 P8,558,000.00 Mar

In their respective mortgage contracts, duly annotated on respondents’ titles, the TLC 2-060-986029 April 28, 1998 P7,216,000.00 Mar
parties stipulated that upon failure or refusal of the mortgagor to pay the obligations
when due, the entire principal, interest, penalties and other charges shall be
immediately demandable and payable without need of notice or demand; and the TLC 2-060-986030 April 28, 1998 P37,600,000.00 Mar
mortgagee shall have the absolute discretion to foreclose the mortgage extrajudicially
pursuant to Act No. 3135, as amended.
TLC 2-060-986031 April 28, 1998 P16,436,000.00 Mar
Pursuant to the parties’ agreements, petitioner released to respondents the principal
amounts of the loans as evidenced by various promissory notes, thus:
TLC 2-060-986032 April 28, 1998 P20,658,860.00 Mar
Note Nos. Dates Amounts

TLC-2-060-986297 July 20, 1998 P13,691,490.00 Mar

TLC-2-060-970509 April 8, 1997 P4,700,000.00

TLC-2-060-986298 July 20, 1998 P14,511,807.04 Mar

TLC-2-060-970518 July 31, 1997 P3,500,000.00

TLC-2-060-986299 July 20, 1998 P74,109,900.00 Mar

TLC-2-060-970115 September 8, 1997 P11,000,000.00

TLC-2-060-986300 July 20, 1998 P98,094,243.30 Mar

TLC-2-060-970153 December 4, 1997 P5,000,000.00

TLC-2-060-970161 December 29, 1998 P5,239,000.00 Erne

TLC-2-060-970155 December 15, 1997 P10,000,000.00 Mar

TLC-2-060-970156 December 15, 1997 P10,000,000.00 However, respondents failed to pay the loans which matured on February 14, 2001.
Thus, petitioner sought to foreclose the mortgages extrajudicially.

TLC-2-060-970157 December 15, 1997 P5,000,000.00 On February 28, 2001, respondents filed with the Regional Trial Court, Branch 56,
Mandaue City, a Complaint4 for Declaratory Relief, Injunction, Damages, Annulment of
Promissory Notes, Documents, and Contracts against petitioner, docketed as Civil
Case No. MAN-4045. The complaint alleges that prior to 1998, respondents obtained
credit accommodations from petitioner. The latter required respondents’
representatives to sign "standard pre-printed bank forms in fine print, such as Credit
Line Agreements (CLA), Promissory Notes (PN), Real Estate Mortgages (REM),
Chattel Mortgages (CM), Trust Receipts (TR), Surety Agreements (JSS) and other
bank forms and documents." Respondents complied since they trusted petitioner.
However, it tuned out that petitioner’s employees filled the blanks with "false and
inaccurate entries." Respondents deny and dispute the genuineness and due
execution of the documents and pray for the following reliefs:
1. Immediately upon filing, to issue ex parte a 72-hour temporary restraining
order and thereafter upon summary hearing, to issue a temporary restraining
order for a maximum period of twenty (20) days restraining and enjoining
defendants, their agents, representatives or any other persons acting on their
behalf from doing or proceeding with the following:
a) proceeding with the auction sale of the properties under the
REMs,
b) execution of Certificate of Sale;
c) registering Certificate of Sale with the Registry of Deeds;
d) execution of the Deed of Final Sale and other consolidation
documents;
e) publication of Notices of Sale;
f) posting of Notices of Sale;
g) using the questioned documents, like the TRs, to seek
administrative, civil, or criminal remedies;
h) disturbing the status quo prior to the litigation.
2. After due notice and hearing, a Preliminary Injunction be issued upon
posting of a bond enjoining defendant, its employees, agents, representatives,
or any other persons acting on its behalf from doing the above acts
complained against;
3. After trial, it is prayed that judgment be rendered in favor of plaintiffs and
against defendant as follows:
a) Declaring null and void the CLA, REMs, CMs, PNs, JSS, TRs, and
other related documents, the notices of sale, the entire foreclosure
proceedings, including the auction sale, the amount claimed by the
bank to be the outstanding account, the amount claimed by the bank
to be the principal, the interest unilaterally imposed by the bank, the
penalties imposed by the bank and the PNs made basis for default
and foreclosure;
b) Declaring the CLA, REMs, CMs, PNs, JSS, TRs, and other related
documents as without consideration, invalid, inoperative, ineffective,
unenforceable, null and void and to cancel the same;
c) To make the injunction permanent;
d) To order the bank to comply with its commitments, assurances and
representations to help in the rehabilitation of the Dacay Group and
the restructuring of its obligations, if any;
e) To award to plaintiffs moral damages of P300,000.00, exemplary
damages of P200,000.00, attorney’s fees of P200,000.00 plus
P1,000.00 per billable hour, and litigation expenses of P300,000.00;
f) Declaring that the defendant cannot validly do, perform or suffer to
be done the acts complained of.
On March 9, 2001, the trial court issued an Order5 granting respondents’ prayer for the
issuance of a temporary restraining order (TRO), thus:
In resolving the petition for the issuance of a TRO the court, without going into
the merits of the case has taken into consideration:
a) the fact that petitioners/plaintiffs are presently in the process of rehabilitating
their business concerns and for which purpose, a consortium of
banks/creditors has been put into existence and that Far East Bank and Trust
Company (FEBTC) even had initially approved and led such effort as indicated
by the participation of one of its Senior Vice Presidents Ricardo G. Lazatin;
b) the admission by respondent/defendant, in open court, that it has already
initiated foreclosure proceedings against petitioners/plaintiffs and that it has in
fact scheduled on March 30, 2001 the auction sale of petitioners’ properties
subject matter of the foreclosure proceedings, as well as the consequent
damage resultant thereto;
c) the purpose of a temporary restraining order (TRO) which is merely to
suspend proceedings until there may be an opportunity to inquire whether any
injunction should be granted.
WHEREFORE, foregoing premises considered and in the interest of
substantial justice, the defendant is hereby ordered to cease and desist and/or
its agents, representatives or any other person acting in its behalf to
immediately stop foreclosure proceedings of plaintiffs’ properties subject
matter of the said foreclosure proceedings, including but not being limited to
publication for foreclosure and subsequent auction sale of the said properties.
SO ORDERED.
Petitioner filed its Answer with Affirmative Defenses, Counterclaim, and Vigorous
Opposition to the Order directing the issuance of a TRO and/or preliminary mandatory
injunction. Likewise, petitioner filed a Motion to Dismiss Based On Affirmative Defenses
alleging that: (1) the venue is improperly laid; (2) the trial court did not acquire
jurisdiction over the case for non-payment of proper docket fees; (3) there is non-
joinder of indispensable parties; and (4) the trial court has no jurisdiction to enjoin the
foreclosure proceedings.
On March 27, 2001, the trial court issued an Order 6 denying petitioner’s motion to
dismiss, thus:
This resolves defendant’s Motion to Dismiss.
Defendant in his motion insists that the case should be dismissed on the
following affirmative defenses: (a) venue is improperly laid; (b) lack of
jurisdiction considering the non-payment of docketing fees; (c) non-joinder of
 indispensable parties and (d) lack of jurisdiction or authority to enjoin
foreclosure proceedings.
VENUE
Records show that the office address of plaintiffs is in Mandaue City. In fact,
defendant’s annexes to its answer (Annex "I" and "L") admit that plaintiffs’
business address and principal place of business are at Pakna-an, Mandaue
City. Likewise similarly situated are the properties sought to be foreclosed.
Apparently, foregoing considered, venue has been properly laid.
JURISDICTION
It is to be noted that the question of jurisdiction has not been raised by
defendant except with the cause of action regarding annulment of mortgages
on defendant’s insistence that the tax declaration attached is not the latest.
Considering however that annulment of mortgage is incapable of pecuniary
estimation the court feels that jurisdiction is proper.
What determines the nature of an action and the court which has
jurisdiction over it are the allegations made by the plaintiff. Sandel v.
Court of Appeals, 262 SCRA 101,
A court’s jurisdiction cannot be made to depend upon defenses set
up in the answer or in a motion to dismiss but upon the allegations of
the complaint. Sandel v. Court of Appeals, 262 SCRA 101,
INDISPENSABLE PARTY
Evidence has not been introduced, to the satisfaction of the court that indeed
Far East Bank and Trust Company (FEBTC) no longer exists and BPI has
taken over its assets and liabilities. Besides, the commercial linkage was
between FEBTC and Shemberg as records show.
AUTHORITY
It is an inherent power of the court concomitant to its very existence to issue
provisional remedies, like injunction, to protect the rights and interest of
parties pending litigation.
Premises considered, the court feels and finds no basis to grant defendant’s
motion. Accordingly, the Motion to Dismiss is, as it is hereby, DENIED.
SO ORDERED.
Likewise on the same day, March 27, 2001, the trial court issued another Order 7
directing the issuance of a writ of preliminary injunction in favor of respondents, thus:
WHEREFORE, let a writ of injunction issue enjoining defendant, its
employees, agents or representatives, and all those who may be acting in
their behalf, from:
(1) Taking further actions to foreclose the real estate and chattel mortgage
collaterals of plaintiffs;
(2) To maintain the status quo during the pendency of the proceedings and to
refrain from performing the acts complained of including but not being limited
to the publication and notice of sale, conducting any foreclosure auction sale
and other similar acts which will violate the status quo.
The Clerk of Court is hereby directed to issue the writ prayed for.
Plaintiffs are ordered to put a bond of One Million Pesos (P1,000,000.00)
SO ORDERED.
Petitioner then filed with the trial court the following: (a) Motion to Resolve the Motion to
Dismiss; (b) Motion to Dissolve Preliminary Mandatory Injunction; (c) Motion for
Reconsideration of the Order Dated March 27, 2001; and (d) Opposition to the
Sufficiency of Bond.
On August 16, 2001, the trial court issued the following Order:8
For consideration by the court are the defendant’s (1) Motion for
Reconsideration of the Denial of the Motion to Dismiss and (2) the Motion for
Reconsideration of the Grant of Preliminary Mandatory Injunction.
After a careful and exhaustive consideration of the arguments adduced in
Movant’s Motion for Reconsideration of the Denial of its Motion to Dismiss, the
court finds that the arguments advanced for consideration had already been
treated and passed upon by this court.
The same finding also holds true with respect to defendant’s Motion for
Reconsideration of the Grant of Preliminary Mandatory Injunction.
Accordingly, both motions are hereby DENIED.
SO ORDERED.
Petitioner then filed with the Court of Appeals a petition for certiorari, prohibition, and
mandamus, docketed as CA-G.R. SP No. 67270, contending that the trial court acted
with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the
following: (1) Order dated March 9, 2001 granting respondents’ prayer for a TRO; (2)
Order dated March 27, 2001 ordering the issuance of a writ of preliminary injunction; (3)
Order also dated March 27, 2001 denying its motion to dismiss; and (4) Order dated
August 16, 2001 denying its motion for reconsideration of the Order denying its motion
to dismiss and motion for reconsideration of the Order granting respondents’ application
for a preliminary injunction.
On February 16, 2004, the Court of Appeals promulgated its Decision dismissing the
petition for certiorari.
The appellate court held that as the trial court has jurisdiction over the case, its orders
or decisions upon all questions therein, cannot be corrected by the extraordinary writ of
certiorari.
Petitioner filed a motion for reconsideration but it was denied by the Court of Appeals in
its Resolution of May 28, 2004.
Hence, the instant petition raising the following issues: (a) whether the trial court has
jurisdiction over Civil Case No. MAN-4045; and (b) whether petitioner bank is entitled to
the writs of certiorari, prohibition, and mandamus.
On the first issue, petitioner contends that in real actions, the assessed value of the
property or if there is none, the estimated value thereof, must be alleged in the
complaint, and shall serve as the basis for computing the fees. Nowhere in the
complaint in Civil Case No. MAN-4045 did respondents allege the assessed values of
their realties. Hence, there is no adequate basis for computing the proper filing fees. It
necessarily follows that the fees paid are deficient. The trial court, therefore, did not
acquire jurisdiction over the case.
Respondents counter that a perusal of the complaint in Civil Case No. MAN-4045
shows that the suit primarily involves cancellation of mortgages, an action incapable of
pecuniary estimation. Consequently, petitioner’s contention that there is a deficiency in
the payment of docket fees is without merit.
A court acquires jurisdiction over a case only upon the payment of the prescribed
fees.9 The importance of filing fees cannot be gainsaid for these are intended to take
care of court expenses in the handling of cases in terms of costs of supplies, use of
equipment, salaries and fringe benefits of personnel, and others, computed as to man-
hours used in the handling of each case. 10 Hence, the non-payment or insufficient
payment of docket fees can entail tremendous losses to the government in general and
to the judiciary in particular.
Is an action for cancellation of mortgage incapable of pecuniary estimation?
Under Section 19 (1) of Batas Pambansa Blg. 180, as amended by Republic Act No.
7691, Regional Trial Courts have sole, exclusive, and original jurisdiction to hear, try,
and decide "all civil actions in which the subject of the litigation is incapable of
pecuniary estimation."
In Singsong v. Isabela Sawmill,11 this Court laid the test for determining whether the
subject matter of an action is incapable of pecuniary estimation, thus: Ascertain the
nature of the principal action or remedy sought. If the action is primarily for recovery of
a sum of money, the claim is considered capable of pecuniary estimation. Whether the
trial court has jurisdiction would depend upon the amount of the claim. However,
where the basic issue is something other than the right to recover a sum of
money, where the money claim is only incidental or a consequence of the
principal relief sought, the action is incapable of pecuniary estimation.
Here, the primary reliefs prayed for by respondents in Civil Case No. MAN-4045 is the
cancellation of the real estate and chattel mortgages for want of consideration. In
Bumayog v. Tumas,12 this Court ruled that where the issue involves the validity of a
mortgage, the action is one incapable of pecuniary estimation. In the more recent case
of Russell v. Vestil,13 this Court, citing Bumayog,14 held that an action questioning the
validity of a mortgage is one incapable of pecuniary estimation. Petitioner has not
shown adequate reasons for this Court to revisit Bumayog and Russell. Hence,
petitioner’s contention can not be sustained. Since respondents paid the docket fees,
as computed by the clerk of court, consequently, the trial court acquired jurisdiction
over Civil Case No. MAN-4045.
Concerning to the second issue, it should be noted that CA-G.R. SP No. 67270 is a
petition for certiorari, prohibition, and mandamus alleging that the trial court acted with
grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the
following Orders: (1) Order dated March 9, 2001 granting respondents’ prayer for a
TRO; (2) Order dated March 27, 2001, directing the issuance of a writ of preliminary
injunction; (3) Order also dated March 27, 2001 denying petitioner’s motion to dismiss;
and (4) Order dated August 16, 2001 denying petitioner’s motion for reconsideration of
the denial of the motion to dismiss and motion for reconsideration of the grant of
preliminary injunction.
This Court holds that the Court of Appeals did not commit grave abuse of discretion in
issuing the questioned Orders.
There is grave abuse of discretion where the acts complained of amount to an evasion
of positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised in an arbitrary and despotic
manner by reasons of passion or personal hostility. 15 It is such whimsical and
capricious exercise of judgment as is equivalent to lack of jurisdiction.
The Court of Appeals found that the trial court acted in fair, reasonable, and expeditious
manner, thus:
Thus, on the 6th of March 2001, His Honor held a hearing on the application
for temporary restraining order. He conducted at least three trial-type hearings
on the 19th, 20th, and 23rd of March 2001, complete with direct examination,
cross-examination, re-direct examination, re-cross examination and marking
and offer of exhibits vis-à-vis the application for the issuance of a writ of
preliminary injunction. Four witnesses testified during the hearings – two for
the Dacay Group and two for the bank. Both parties were even required to
submit memoranda.
Indeed, the records are bereft of any indication that the trial court committed grave
abuse of discretion in issuing the challenged Orders. Verily, the Court of Appeals
correctly held that certiorari will not lie, the sole office of the writ being to correct grave
abuse of discretion. Where a court has jurisdiction over the person and the subject
matter of the action, as in the instant case, its decisions on all questions arising from
the case are but exercises of such jurisdiction. 16 If its findings are not correct, these
would at best be questions of law, not abuse of discretion correctible by the
extraordinary remedy of certiorari.17
WHEREFORE, this Court DENIES the petition. The assailed Decision and Resolution
of the Court of Appeals in CA-G.R. SP No. 67270 are AFFIRMED. Costs against
petitioner, now the Bank of the Philippine Islands.
SO ORDERED.
AIR TRANSPORTATION OFFICE (ATO) v. CA
This petition for certiorari and prohibition of the Air Transportation Office (ATO) seeks
the nullification of the Court of Appeals' Resolution1 dated March 29, 2006 and
Resolution2 dated May 30, 2006 in CA-G.R. CEB-SP No. 01603. The Resolution dated
March 29, 2006 granted the application for temporary restraining order (TRO) of Bernie
G. Miaque, while the Resolution dated May 30, 2006 issued a writ of preliminary
injunction enjoining the implementation of the writ of execution issued by the Regional
Trial Court (RTC) of Iloilo despite Miaque's alleged continued failure and refusal to
make current the supersedeas bond and to pay to the A TO the rental and concession
privilege fees.
The proceedings on the main case of ejectment
MTCC of Iloilo City: Civil Case No. 01 (38)
In May 2001, the ATO filed a complaint for unlawful detainer against Miaque in the
Municipal Trial Court in Cities (MTCC) of Iloilo City, Branch 3. It was docketed as Civil
Case No. 01 (38). The ATO sought the following, among others:
(1) That Miaque be ordered to permanently vacate and peacefully return to
the ATO possession of:
(a) the 800-square meter Refreshment Parlor fronting the New
Terminal Building-Iloilo Airport;
(b) the 310-square meter Restaurant/Gift Shop inside the Iloilo
Airport Terminal; and
(c) all areas occupied or otherwise utilized by Miaque incident to his
operation of the Porterage Service within the Iloilo Airport; and
(2) That Miaque be ordered to immediately pay the ATO the amount of not
less than ₱1,296,103.10, representing unpaid space rental and
concessionaire privilege fees as of October 15, 2000 plus interest and
additional rental and fees which may be proven during the trial.3
The MTCC subsequently rendered a Decision4 dated May 27, 2002 the dispositive
part of which reads:
WHEREFORE, judgment is rendered finding [Miaque] to be unlawfully detaining the
following premises and orders [him], his men and privies to:
a. vacate the 800[-]square meter Refreshment Parlor fronting the New
Terminal Building-Iloilo Airport. [Miaque] is further ordered to pay [the ATO] the
rental and concessionaire privilege fee[s] accruing from November 1986 to
October 2000, totaling ₱460,060.70, plus differential billings from January
1990 to July 1993 for ₱4,652.60 and interest charges from January 2000 to
October 2000 for ₱2,678.38 or a total amount of ₱467,397.68 as of October
2000, less the payments made by [Miaque] under Official Receipt No.
4317842 dated December 1998, and the monthly current lease/concession
privilege fee from November 2000 until [Miaque] shall have vacated the
premises;
(b) vacate the 310[-]square meter Restaurant/Gift Shop inside the Iloilo
Terminal Building which was reduced to a total of 183 square meters in 1998
(51.56 square meters inside the pre-departure area and 126.72 square
meters outside the pre-departure area). [Miaque] is also ordered to pay [the
ATO] rentals/concessionaire’s privilege fee[s] from January 16, 1992 to
October 15, 2000 in the total amount of ₱719,708.43 and from October 16,
2000, to pay the current monthly lease/concessionaire privilege fees until
[Miaque] shall have vacated the premises; and
(c) vacate the area occupied or used by [Miaque] incident to his operation of
the Porterage Service within the Iloilo Airport. [Miaque] is further ordered to
pay Tender Offer Fee due from March 1992 to October 2000 in the total
amount of ₱108,997.07. [Miaque] is further ordered to pay the current monthly
concession privilege fee from October 2000 until such time that [Miaque] shall
have vacated the premises.
Costs against [Miaque].5
RTC of Iloilo City: Civil Case No. 02-27292
Miaque appealed the MTCC Decision to the RTC of Iloilo City, Branch 24. It was
docketed as Civil Case No. 02-27292. The RTC, in its Decision6 dated June 7, 2003,
affirmed the MTCC Decision in its entirety. Miaque’s motion for reconsideration was
denied.7 Court of Appeals: CA-G.R. SP No. 79439 Miaque questioned the RTC
Decision in the Court of Appeals by filing a petition for review, docketed as CA-G.R. SP
No. 79439, on September 25, 2003. In a Decision8 dated April 29, 2005, the Court of
Appeals dismissed the petition and affirmed the RTC Decision. Miaque moved for
reconsideration but it was denied in a Resolution dated January 5, 2006.9
Supreme Court: G.R. No. 171099
Miaque brought the case to this Court in a petition for review, docketed as G.R. No.
171099. In a Resolution10 dated February 22, 2006, the petition was denied as no
reversible error in the Court of Appeals Decision was sufficiently shown. The motion for
reconsideration of Miaque was denied with finality.11
The proceedings on execution
As an incident of CA-G.R. SP No. 79439, the Court of Appeals issued on February 27,
2004 a temporary restraining order (TRO) effective for a period of 60 days and required
Miaque to post a bond in the amount of ₱100,000.00.12 After the lapse of the TRO, the
ATO filed an urgent motion for the execution of the RTC Decision pursuant to Section
21, Rule 70 of the Rules of Court. This was opposed by Miaque.13
In an Order14 dated August 2, 2004, the RTC granted the ATO’s motion:
Wherefore, in view of the above consideration, the court finds merit [i]n the reasons
given in the motion of [the ATO] and hereby Grants the issuance of a Writ of Execution.
Pursuant to Section 21, Rule 70 of the 1997 Rules of Civil Procedure, which mandates
that the judgment of this Court being immediately executory in cases of this nature, let a
writ of execution shall issue, ordering the sheriff of this Court to effect its Decision dated
June 7, 2003, affirming the Decision of the MTCC, Branch 3, Iloilo City.
Furnish copies of this order to the Asst. Solicitor Almira Tomampos of the Office of the
Solicitor General and Atty. Rex Rico, counsel for [Miaque].15
Miaque sought reconsideration of the above Order but the RTC denied the motion in an
Order16 dated August 13, 2004. Thereafter, the RTC issued a Writ of Execution dated
August 16, 2004.17
However, the Court of Appeals issued a Resolution18 dated August 18, 2004 ordering
the issuance of a writ of preliminary injunction and enjoining the ATO and all persons
acting in its behalf from enforcing the respective Decisions of the MTCC and the RTC
while CA-G.R. SP No. 79439 is pending. Thus, after the dismissal of Miaque’s petition
for review in CA-G.R. SP No. 79439, the ATO filed another urgent motion for execution
of the RTC Decision. In its motion, the ATO pointed out that the supersedeas bond filed
by Miaque had lapsed and was not renewed and that the rental and concessionaire
privilege fees have not been paid at all in violation of Section 8, Rule 70 of the Rules of
Court.19 Miaque again opposed the ATO’s urgent motion for execution,20 while the
ATO filed a supplemental urgent motion for execution stating that Miaque’s appeal in
the Court of Appeals had been dismissed.21
In an Order22 dated June 1, 2005, the RTC granted the ATO’s urgent motion for
execution and issued a Writ of Execution23 dated June 2, 2005. On the basis of the
said writ, a notice to vacate was given to Miaque.24 On June 3, 2005, Miaque filed a
motion for reconsideration of the Order dated June 1, 2005, with prayer to set aside the
writ of execution and notice to vacate.25 At the same time, he filed a motion in CA-
G.R. SP No. 79439 praying that the Court of Appeals order the RTC judge and the
concerned sheriffs to desist from implementing the writ of execution.26 Thereafter, the
Court of Appeals issued a Resolution27 dated June 14, 2005 ordering the sheriffs to
desist from executing the Decisions of the MTCC and the RTC while CA-G.R. SP No.
79439 is still pending. However, on June 15, 2005, before the concerned sheriffs
received a copy of the Resolution dated June 14, 2005, the said sheriffs implemented
the writ of execution and delivered the possession of the following premises to the
ATO:
(a) the Restaurant/Gift Shop inside the Iloilo Terminal Building in the reduced
area of 183 square meters; and
(b) the area which Miaque occupied or used incident to his operation of the
Porterage Service within the Iloilo Airport.
The sheriffs who implemented the writ then filed a return of service28 and issued
reports of partial delivery of possession.29 However, Miaque subsequently regained
possession of the said premises on the strength of the Court of Appeals’ Resolution
dated June 14, 2005.30
On February 9, 2006, after the Court of Appeals issued its Resolution dated January 5,
2006 denying Miaque’s motion for reconsideration of the Decision dated April 29, 2005
in CA-G.R. SP No. 79439, the ATO filed with the RTC a motion for the revival of the
writs of execution dated August 16, 2004 and June 2, 2005.31 This was opposed by
Miaque.32 After the RTC heard the parties, it issued an Order33 dated March 20, 2006
granting the ATO’s motion and revived the writs of execution dated August 16, 2004
and June 2, 2005. Miaque filed a motion for reconsideration but the RTC denied it.34
A new case in the Court of Appeals: CA-G.R. CEB-SP No. 01603
On March 28, 2006, Miaque filed a petition35 for certiorari (with prayer for issuance of
TRO and/or writ of preliminary injunction) in the Court of Appeals, docketed as CA-
G.R. CEB-SP No. 01603, where he assailed the RTC’s Order dated March 20, 2006.
He prayed, among others, that the implementation of the writs of execution be
enjoined. It is here where the Court of Appeals issued the Resolutions being
challenged in this case, namely, the Resolution dated March 29, 2006 issuing a TRO
effective for 60 days, and Resolution dated May 30, 2006 issuing a writ of preliminary
injunction enjoining the implementation of the writs of execution dated August 16, 2004
and June2, 2005. In particular, the Resolution dated May 30, 2006 reads: Before us for
resolution is [Miaque]’s application for the issuance of a writ of preliminary injunction
that would restrain the respondent judge, Sheriffs Marcial B. Lambuso, Winston T.
Eguia, Camilo I. Divinagracia, Jr. and Eric George S. Luntao and all other persons
acting for and in their behalves, from enforcing the orders issued by the respondent
judge on March 20, 2006 and March 24, 2006, including the writ[s] of execution issued
pursuant thereto, while the petition in the case at bench is still pending with us.
After examining judiciously the record in this case, together with the submissions and
contentions of the parties, we have come up with a finding and so hold that there is a
sufficient showing by [Miaque] that the grounds for the issuance of a writ of preliminary
injunction enumerated in Section 3 of Rule 58 of the 1997 Revised Rules of Court
exist. We find that [Miaque] has a right in esse to be protected and the acts against
which the injunction is sought to be directed are violative of said right. To our mind,
[Miaque] appears to have a clear legal right to hold on to the premises leased by him
from ATO at least until such time when he shall have been duly ejected therefrom by a
writ of execution of judgment caused to be issued by the MTCC in Iloilo City, which is
the court of origin of the decision promulgated by this Court in CA-G.R. SP No. 79439
on April 29, 2005. Under the attendant circumstances, it appears that the respondent
judge orthe RTC in Iloilo City has no jurisdiction to order the issuance of such writ of
execution because we gave due course to the petition for review filed with us in CA-
G.R. SP No. 79439 and, in fact, rendered a decision on the merit in said case, thereby
divesting the RTC in Iloilo City of jurisdiction over the case as provided for in the third
paragraph of Section 8(a) of Rule 42of the 1997 Revised Rules of Court. In City of
Manila vs. Court of Appeals, 204 SCRA 362, as cited in Mocles vs. Maravilla, 239
SCRA 188, the Supreme Court held as follows:
"The rule is that, if the judgment of the metropolitan trial court is appealed to the RTC
and the decision of the latter itself is elevated to the CA whose decision thereafter
became final, the case should be remanded through the RTC to the metropolitan trial
court for execution."
WHEREFORE, in view of the foregoing premises, a WRIT OF PRELIMINARY
INJUNCTION is hereby ordered or caused to be issued by us enjoining the respondent
judge, Sheriffs Marcial B. Lambuso, Winston T. Eguia, Camilo I. Divinagracia, Jr. and
Eric George S. Luntao and all other persons acting for and in their behalves, from
enforcing the orders issued by the respondent judge on March 20, 2006 and March 24,
2006, including the writ[s] of execution issued pursuant thereto, while the petition in the
case at bench is still pending with us.
This is subject to the petitioner’s putting up of a bond in the sum of ONE HUNDRED
THOUSAND PESOS(₱100,000.00) to the effect that he will pay to the respondent ATO
all damages which said office may sustain by reason of the injunctive writ if we should
finally decide that [Miaque] is not entitled thereto.36
The present petition
The ATO claims that the Court of Appeals acted with grave abuse of discretion
amounting to lack or excess of jurisdiction in issuing the TRO and the subsequent writ
of preliminary injunction through the Order dated March 29, 2006 and the Resolution
dated May 30,2006, respectively. According to the ATO, the Court of Appeals ignored
the government’s right under the law, Rules of Court, jurisprudence and equity to the
possession as well as to the payment of rental and concession privilege fees which, at
the time of the filing of this petition, already amounted to ₱2 Million. Such right had
already been decided with finality by this Court, which affirmed the Decision dated April
29, 2005 of the Court of Appeals in CA-G.R. SP No. 79439, but the Court of Appeals
has repeatedly thwarted it. The RTC acted properly and pursuant to Section 21, Rule
70 of the Rules of Court when it issued the writs of execution.37 Moreover, the ATO
asserts that a TRO cannot restrain an accomplished fact, as the RTC’s writ of execution
dated June 1, 2005 had already been partially implemented.38
The ATO also argues that, by his admission that the issues in CAG.R. SP No. 79439
and CA-G.R. CEB-SP No. 01603 are exactly the same, Miaque has committed forum
shopping. In this connection, the ATO points out that, in his opposition to the ATO’s
motion for additional period of time to file its comment on Miaque’s petition in CA-G.R.
CEB-SP No. 01603, Miaque pointed out the similarity of the core issues in CA-G.R. SP
No. 79439 and CA-G.R. CEB-SP No. 01603, to wit:
b) The legal issues raised by the petition [in CA-G.R. CEBSP No. 01603] are
very simple and not complicated. In fact, the threshold issue, i.e., whether or
not respondent court (RTC) has jurisdiction to issue the writ of execution after
 the appeal over its decision had been perfected and the petition for review [in
CA-G.R. SP No. 79439] given due course, is exactly the same one earlier
raised by [the ATO itself in its] "Motion for Reconsideration" of the Resolution
dated June 14, 2005, in CA G.R. No. 79439, entitled "Bernie G. Miaque vs.
Hon. Danilo P. Galvez and Air Transportation Office (ATO)", (same parties in
this proceeding), then pending before the 20th Division, Court of Appeals,
Cebu City.
Hence, all that [the ATO has] to do is simply to reiterate [its] said arguments, the law
and jurisprudence [it has] earlier invoked and, if [it wishes], add some more arguments,
laws or jurisprudence thereto. Such an exercise would definitely not require a sixty (60)
day period. A ten (10) day period is more than sufficient.39
The ATO further contends that the subject premises form part of a public utility
infrastructure and, pursuant to Presidential Decree No. 1818, the issuance of a TRO
against a public utility infrastructure is prohibited.40
The ATO adds that Miaque’s petition for certiorari in CA-G.R. CEBSP No. 01603
introduces a new matter which is the alleged novation of the MTCC Decision when he
deposited the amount of ₱319,900.00 to the Land Bank of the Philippines account of
the ATO in February 2006. At any rate, the ATO asserts that its tenacity in pursuing the
execution of the judgment against Miaque belies its consent to the alleged novation.41
For his part, Miaque argues that this Court has no jurisdiction to dismiss a petition still
pending with the Court of Appeals. Thus, the ATO cannot properly pray that this Court
dismiss CA-G.R. CEB-SP No. 01603. According to Miaque, the jurisdiction of this Court
is limited only to the determination of whether or not the Court of Appeals gravely
abused its discretion in issuing a TRO and, subsequently, a preliminary injunction in
CA-G.R. CEB-SP No. 01603. In this connection, Miaque insists that the Court of
Appeals acted well within its jurisdiction in the issuance of both the Order dated March
29, 2006 granting a TRO and the Resolution dated May 30, 2006 issuing a writ of
preliminary injunction in CA-G.R. CEB-SP No. 01603. As this Court has effectively
affirmed the MTCC Decision, then it is the MTCC and not the RTC which should have
directed the execution of the MTCC Decision. Moreover, the RTC had no jurisdiction to
issue the writs of execution dated August 16, 2004 and June 1, 2005 because the said
court already lost its jurisdiction when Miaque filed an appeal to the Court of Appeals
on September 25, 2003, which appeal was given due course.42
Miaque also asserts that the ATO’s claim that the RTC’s writ of execution had been
partially implemented is not true and that he is in possession of the entire subject
premises when the Court of Appeals issued the TRO and writ of preliminary injunction
being challenged in this case.
Finally, Miaque alleges that no writ may be issued to enforce the MTCC Decision as
the said decision had already been novated by his deposit of ₱319,000.00 to the ATO’s
account with the Land Bank of the Philippines in February 2006.43
This Court, in a Resolution44 dated August 14, 2006, issued a TRO enjoining the Court
of Appeals, Miaque, and his agents and representatives from implementing the
Resolution dated March 29, 2006 and the Resolution dated May 30, 2006 in CA-G.R.
CEB-SP No. 01603.
The Court’s ruling
The petition is meritorious.
Preliminarily, the Court notes that the challenge to the Order dated March 29, 2006
granting a TRO, effective for 60 days, is moot as its effectivity had already lapsed.
Cutting through the tangled web of issues presented by the contending parties, the
basic question in this petition is whether or not the Court of Appeals committed grave
abuse of discretion amounting to lack or excess of jurisdiction in issuing the Resolution
dated May 30, 2006 which granted petitioner’s application for the issuance of a writ of
preliminary injunction in CA-G.R. CEB-SP No. 01603.
Section 21, Rule 70 of the Rules of Court provides the key to that question: Sec. 21.
Immediate execution on appeal to Court of Appeals or Supreme Court. – The judgment
of the Regional Trial Court against the defendant shall be immediately executory,
without prejudice to a further appeal that may be taken therefrom. (Emphasis supplied.)
This reflects Section 21 of the Revised Rule on Summary Procedure:
Sec. 21. Appeal. - The judgment or final order shall be appealable to the appropriate
Regional Trial Court which shall decide the same in accordance with Section 22 of
Batas Pambansa Blg. 129. The decision of the Regional Trial Court in civil cases
governed by this Rule, including forcible entry and unlawful detainer, shall be
immediately executory, without prejudice to a further appeal that may be taken
therefrom. Section 10 of Rule 70 shall be deemed repealed. (Emphasis and
underscoring supplied.)
The above provisions are supplemented and reinforced by Section 4, Rule 39 and
Section 8(b), Rule 42 of the Rules of Court which respectively provide:
Sec. 4. Judgments not stayed by appeal. – Judgments in actions for injunction,
receivership, accounting and support, and such other judgments as are now or may
hereafter be declared to be immediately executory, shall be enforceable after their
rendition and shall not be stayed by an appeal taken therefrom, unless otherwise
ordered by the trial court. On appeal therefrom, the appellate court in its discretion may
make an order suspending, modifying, restoring or granting the injunction, receivership,
accounting, or award of support.
The stay of execution shall be upon such terms as to bond or otherwise as may be
considered proper for the security or protection of the rights of the adverse party.
xxxx
Sec. 8. Perfection of appeal; effect thereof.–
(a) Upon the timely filing of a petition for review and the payment of the corresponding
docket and other lawful fees, the appeal is deemed perfected as to the petitioner.
The Regional Trial Court loses jurisdiction over the case upon the perfection of the
appeals filed in due time and the expiration of the time to appeal of the other parties.
However, before the Court of Appeals gives due course to the petition, the Regional
Trial Court may issue orders for the protection and preservation of the rights of the
parties which do not involve any matter litigated by the appeal, approve compromises,
permit appeals of indigent litigants, order execution pending appeal in accordance with
Section 2 of Rule 39, and allow withdrawal of the appeal.
(b) Except in civil cases decided under the Rules on Summary Procedure, the appeal
shall stay the judgment or final order unless the Court of Appeals, the law, or these
Rules shall provide otherwise. (Emphases supplied.)
The totality of all the provisions above shows the following significant characteristics of
the RTC judgment in an ejectment case appealed to it:
(1) The judgment of the RTC against the defendant-appellant is immediately
executory, without prejudice to a further appeal that may be taken therefrom;
and
(2) Such judgment of the RTC is not stayed by an appeal taken therefrom,
unless otherwise ordered by the RTC or, in the appellate court’s discretion,
suspended or modified.
The first characteristic -- the judgment of the RTC is immediately executory -- is
emphasized by the fact that no resolutory condition has been imposed that will prevent
or stay the execution of the RTC’s judgment.45 The significance of this may be better
appreciated by comparing Section 21 of Rule 70 with its precursor, Section 10, Rule 70
of the 1964 Rules of Court which provided:
Sec. 10. Stay of execution on appeal to Court of Appeals or Supreme Court. – Where
defendant appeals from a judgment of the Court of First Instance, execution of said
judgment, with respect to the restoration of possession, shall not be stayed unless the
appellant deposits the same amounts and within the periods referred to in section 8 of
this rule to be disposed of in the same manner as therein provided.
Under the old provision, the procedure on appeal from the RTC’s judgment to the
Court of Appeals was, with the exception of the need for a supersedeas bond which
was not applicable, virtually the same as the procedure on appeal of the MTC’s
judgment to the RTC. Thus, in the contemplated recourse to the Court of Appeals, the
defendant, after perfecting his appeal, could also prevent the immediate execution of
the judgment by making the periodic deposit of rentals during the pendency of the
appeal and thereby correspondingly prevent restitution of the premises to the plaintiff
who had already twice vindicated his claim to the property in the two lower courts. On
the other hand, under the amendatory procedure introduced by the present Section 21
of Rule 70, the judgment of the RTC shall be immediately executory and can
accordingly be enforced forthwith. It shall not be stayed by the mere continuing deposit
of monthly rentals by the dispossess or during the pendency of the case in the Court of
Appeals or this Court, although such execution of the judgment shall be without
prejudice to that appeal taking its due course. This reiterates Section 21 of the Revised
Rule on Summary Procedure which replaced the appellate procedure in, and repealed,
the former Section 10, Rule 70 of the 1964 Rules of Court.46 Teresa T. Gonzales La’O
& Co., Inc. v. Sheriff Hatab47 states:
Unlike Rule 70 of the 1964 Revised Rules of Court where the defendant, after
perfecting his appeal, could prevent the immediate execution of the judgment by taking
an appeal and making a periodic deposit of monthly rentals during the pendency of the
appeal thereby preventing the plaintiff from taking possession of the premises in the
meantime, the present wording of Section 21, Rule 70 explicitly provides that the
judgment of the regional trial court in ejectment cases appealed to it shall be
immediately executory and can be enforced despite the perfection of an appeal to a
higher court.48 (Emphasis supplied.)
The RTC’s duty to issue a writ of execution under Section 21 of Rule 70 is ministerial
and may be compelled by mandamus.49 Section 21 of Rule 70 presupposes that the
defendant in a forcible entry or unlawful detainer case is unsatisfied with the RTC’s
judgment and appeals to a higher court. It authorizes the RTC to immediately issue a
writ of execution without prejudice to the appeal taking its due course.50 The rationale
of immediate execution of judgment in an ejectment case is to avoid injustice to a lawful
possessor.51 Nevertheless, it should be stressed that the appellate court may stay the
writ of execution should circumstances so require.52
The second characteristic -- the judgment of the RTC is not stayed by an appeal taken
therefrom – reinforces the first.1âwphi1 The judgment of the RTC in an ejectment case
is enforceable upon its rendition and, upon motion, immediately executory
notwithstanding an appeal taken therefrom. The execution of the RTC’s judgment is not
discretionary execution under Section 2, Rule 39 of the Rules of Court which provides:
Section 2. Discretionary execution. –
(a) Execution of a judgment or a final order pending appeal. – On motion of the
prevailing party with notice to the adverse party filed in the trial court while it has
jurisdiction over the case and is in possession of either the original record or the record
on appeal, as the case may be, at the time of the filing of such motion, said court may,
in its discretion, order execution of a judgment or final order even before the expiration
of the period to appeal.
After the trial court has lost jurisdiction, the motion for execution pending appeal may be
filed in the appellate court.
Discretionary execution may only issue upon good reasons to be stated in a special
order after due hearing.
(b) Execution of several, separate or partial judgments. – A several, separate or partial
judgment may be executed under the same terms and conditions as execution of a
judgment or final order pending appeal.
Discretionary execution is authorized while the trial court, which rendered the judgment
sought to be executed, still has jurisdiction over the case as the period to appeal has
not yet lapsed and is in possession of either the original record or the record on appeal,
as the case may be, at the time of the filing of the motion for execution. It is part of the
trial court’s residual powers, or those powers which it retains after losing jurisdiction
over the case as a result of the perfection of the appeal.53 As a rule, the judgment of
the RTC, rendered in the exercise of its appellate jurisdiction, being sought to be
executed in a discretionary execution is stayed by the appeal to the Court of Appeals
pursuant to Section 8(b), Rule 42 of the Rules of Court. On the other hand, execution of
the RTC’s judgment under Section 21, Rule 70 is not discretionary execution but a
ministerial duty of the RTC.54 It is not governed by Section 2, Rule 39 of the Rules of
Court but by Section 4, Rule 39 of the Rules of Court on judgments not stayed by
appeal. In this connection, it is not covered by the general rule, that the judgment of the
RTC is stayed by appeal to the Court of Appeals under Section 8(b), Rule 42 of the
Rules of Court, but constitutes an exception to the said rule. In connection with the
second characteristic of the RTC judgment in an ejectment case appealed to it, the
consequence of the above distinctions between discretionary execution and the
execution of the RTC’s judgment in an ejectment case on appeal to the Court of
Appeals is that the former may be availed of in the RTC only before the Court of
Appeals gives due course to the appeal while the latter may be availed of in the RTC at
any stage of the appeal to the Court of Appeals. But then again, in the latter case, the
Court of Appeals may stay the writ of execution issued by the RTC should
circumstances so require.55 City of Naga v. Hon. Asuncion56 explains:
This is not to say that the losing defendant in an ejectment case is without recourse to
avoid immediate execution of the RTC decision. The defendant may x x x appeal said
judgment to the Court of Appeals and therein apply for a writ of preliminary injunction.
Thus, as held in Benedicto v. Court of Appeals, even if RTC judgments in unlawful
detainer cases are immediately executory, preliminary injunction may still be granted.
(Citation omitted.)
To reiterate, despite the immediately executory nature of the judgment of the RTC in
ejectment cases, which judgment is not stayed by an appeal taken therefrom, the
Court of Appeals may issue a writ of preliminary injunction that will restrain or enjoin
the execution of the RTC’s judgment. In the exercise of such authority, the Court of
Appeals should constantly be aware that the grant of a preliminary injunction in a case
rests on the sound discretion of the court with the caveat that it should be made with
great caution.57
A writ of preliminary injunction is an extraordinary event which must be granted only in
the face of actual and existing substantial rights. The duty of the court taking
cognizance of a prayer for a writ of preliminary injunction is to determine whether the
requisites necessary for the grant of an injunction are present in the case before it. In
the absence of the same, and where facts are shown to be wanting in bringing the
matter within the conditions for its issuance, the ancillarywrit must be struck down for
having been rendered in grave abuse of discretion.58
In this case, the decisions of the MTCC in Civil Case No. 01 (38), of the RTC in Civil
Case No. 02-27292, and of the Court of Appeals in CAG.R. SP No. 79439 unanimously
recognized the right of the ATO to possession of the property and the corresponding
obligation of Miaque to immediately vacate the subject premises. This means that the
MTCC, the RTC, and the Court of Appeals all ruled that Miaque does not have any
right to continue in possession of the said premises. It is therefore puzzling how the
Court of Appeals justified its issuance of the writ of preliminary injunction with the
sweeping statement that Miaque "appears to have a clear legal right to hold on to the
premises leased by him from ATO at least until such time when he shall have been
duly ejected therefrom by a writ of execution of judgment caused to be issued by the
MTCC in Iloilo City, which is the court of origin of the decision promulgated by this
Court in CA-G.R. SP No. 79439." Unfortunately, in its Resolution dated May 30, 2006
granting a writ of preliminary injunction in Miaque’s favor, the Court of Appeals did not
state the source or basis of Miaque’s "clear legal right to hold on to the [said]
premises." This is fatal.
In Nisce v. Equitable PCI Bank, Inc.,59 this Court stated that, in granting or dismissing
an application for a writ of preliminary injunction, the court must state in its order the
findings and conclusions based on the evidence and the law. This is to enable the
appellate court to determine whether the trial court committed grave abuse of its
discretion amounting to excess or lack of jurisdiction in resolving, one way or the other,
the plea for injunctive relief. In the absence of proof of a legal right and the injury
sustained by one who seeks an injunctive writ, an order for the issuance of a writ of
preliminary injunction will be nullified. Thus, where the right of one who seeks an in
junctive writ is doubtful or disputed, a preliminary injunction is not proper. The
possibility of irreparable damage without proof of an actual existing right is not a
ground for a preliminary injunction.
The sole basis of the Court of Appeals in issuing its Resolution dated May 30, 2006 is
its view that the RTC "has no jurisdiction to order the issuance of [the] writ of
execution" because, when it gave due course to the petition for review in CA-G.R. SP
No. 79439, the RTC was already divested of jurisdiction over the case pursuant to the
third paragraph of Section 8(a), Rule 42 of the Rules of Court. The Court of Appeals is
mistaken. It disregards both (1) the immediately executory nature of the judgment of the
RTC in ejectment cases, and (2) the rule that such judgment of the RTC is not stayed
by an appeal taken there from. It ignores the nature of the RTC’s function to issue a writ
of execution of its judgment in an ejectment case as ministerial and not discretionary.
The RTC was validly exercising its jurisdiction pursuant to Section 21, Rule 70 of the
Rules of Court when it issued the writs of execution dated August 16, 2004 and June
2,2005. While the Court of Appeals in CA-G.R. SP No. 79439 enjoined the execution of
the RTC’s judgment during the pendency of CA-G.R. SP No. 79439, the RTC revived
the writs of execution dated August 16, 2004 and June 1, 2005 in its Order dated March
20, 2006, after the Court of Appeals denied Miaque’s motion for reconsideration of the
dismissal of the petition in CA-G.R. SP No. 79439. Indeed, the said writs of execution
need not even be revived because they continue in effect during the period within which
the judgment may be enforced by motion, that is within five years from entry of
judgment, pursuant to Section 14,60 Rule 39 of the Rules of Court in relation to Section
661 of the same Rule.
There is grave abuse of discretion when an act is (1) done contrary to the Constitution,
the law or jurisprudence, or (2) executed whimsically, capriciously or arbitrarily out of
malice, ill will or personal bias.62 In this case, the Court of Appeals issued the
Resolution dated May 30, 2006 granting Miaque’s prayer for a writ of preliminary
injunction contrary to Section 21, Rule 70 and other relevant provisions of the Rules of
Court, as well as this Court’s pronouncements in Teresa T. Gonzales La’O & Co., Inc.63
and Nisce.64 Thus, the Court of Appeals committed grave abuse of discretion when it
issued the Resolution dated May 30, 2006 in CA-G.R. CEB-SP No. 01603.
This Court notes that the controversy between the parties in this case has been unduly
protracted, considering that the decisions of the MTCC, the RTC, the Court of Appeals,
and this Court in favor of the ATO and against Miaque on the ejectment case are
already final and executory. The Court of Appeals should therefore proceed
expeditiously in resolving CA-G.R. CEBSP No. 01603.
WHEREFORE, the petition is hereby GRANTED. The Resolution dated May 30, 2006
of the Court of Appeals in CA-G.R. CEB-SP No. 01603 is ANNULLED for having been
rendered with grave abuse of discretion. The Court of Appeals is directed to conduct its
proceedings in CA-G.R. CEB-SP No. 01603 expeditiously and without delay.
SO ORDERED.
SPOUSES MANILA v. SPOUSES MANZO
This resolves the petition for review on certiorari under Rule 45 of the 1997 Rules of
Civil Procedure, as amended, assailing the Decision 1 dated February 27, 2004 and
Resolution2 dated May 14, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 49998
which granted the petition for annulment of judgment filed by the respondents.
The controversy stemmed from an action for ejectment 3 filed by the respondents,
spouses Ederlinda Gallardo-Manzo and Daniel Manzo, against the petitioners, spouses
Ramon and Eulogia Manila, before the Metropolitan Trial Court (MeTC) of Las Piñas
City, Branch 79 (Civil Case No. 3537). The facts as summarized by the said court are
as follows:
On June 30, 1982, Ederlinda Gallardo leased two (2) parcels of land situated along
Real St., Manuyo, Las Piñas, Metro Manila, to Eulogia Manila for a period of ten (10)
years at a monthly rental(s) of P2,000.00 for the first two years, and thereafter an
increase of ten (10) percent every after two years. They also agreed that the lessee
shall have the option to buy the property within two (2) years from the date of execution
of the contract of lease at a fair market value of One Hundred and Fifty Thousand
Pesos (P150,000.00)
The contract of lease expired on July 1, 1992 but the lessee continued in possession of
the property despite a formal demand letter dated August 8, 1992, to vacate the same
and pay the rental arrearages. In a letter reply dated August 12, 1992, herein
defendant claimed that no rental fee is due because she allegedly became the owner
of the property at the time she communicated to the plaintiff her desire to exercise the
option to buy the said property.
Their disagreement was later brought to the Barangay for conciliation but the parties
failed to reach a compromise, hence the present action.4
On July 14, 1993, the MeTC rendered its decision,5 the dispositive portion of which
reads:
WHEREFORE, a judgment is rendered in favor of the plaintiffs ordering the
defendants:
1) To vacate the subject parcels of land and surrender possession thereof
upon the payment by the plaintiff of one-half of the value of the building
constructed by the lessee. Should the lessor refuse to reimburse the aforesaid
amount, the lessee shall have the option to exercise her right under Article
1678 of the New Civil Code;
2) To pay rental arrearages up to July 1, 1992 in the amount of Two Hundred
Twenty Eight Thousand and Forty Four 80/100 Pesos (P228,044.80);
3) To pay, as reasonable compensation for their continued withholding of
possession of the subject lots, the sum of Three Thousand Two Hundred and
Twenty One Pesos (P3,221.00) every month, commencing July 2, 1992 up to
such time that they finally yield possession thereof to the plaintiffs, subject to
an increase of ten percent (10%) after every two (2) years from said date; and
4) To pay plaintiffs attorney’s fees in the sum of Five Thousand Pesos
(P5,000.00)
No pronouncement as to costs.
SO ORDERED.6
Petitioners appealed to the Regional Trial Court (RTC) of Makati City, Branch 63 (Civil
Case No. 93-3733) which reversed the MeTC. The RTC found that petitioners have in
fact exercised their option to buy the leased property but the respondents refused to
honor the same. It noted that respondents even informed the petitioners about
foreclosure proceedings on their property, whereupon the petitioners tried to intervene
by tendering rental payments but the respondents advised them to withhold such
payments until the appeal of respondents in the case they filed against the Rural Bank
of Bombon (Camarines Sur), Inc. (Civil Case No. 6062) is resolved. It further noted that
respondents’ intention to sell the lot to petitioners is confirmed by the fact that the
former allowed the latter to construct a building of strong materials on the premises.
The RTC thus decreed:
IN THE LIGHT OF THE FOREGOING, judgment is hereby rendered reversing the
decision of the lower court dated July 14, 1993 and ordering as follows:
1) That plaintiffs execute a deed of absolute sale over that parcel of land
subject of the Contract of Lease dated June 30, 1982 after full payment of
defendants of the purchase price of P150,000.00;
2) That plaintiffs pay the costs of suit.
SO ORDERED.7
Respondents filed a motion for reconsideration on December 23, 1994. In its Order
dated March 24, 1995, the RTC denied the motion for having been filed beyond the
fifteen (15)-day period considering that respondents received a copy of the decision on
December 7, 1994.8 Consequently, the November 18, 1994 decision of the RTC
became final and executory.9
On December 22, 1998, respondents filed a petition for annulment of the RTC decision
in the CA. Respondents assailed the RTC for ordering them to sell their property to
petitioners arguing that said court’s appellate jurisdiction in ejectment cases is limited to
the determination of who is entitled to the physical possession of real property and the
only judgment it can render in favor of the defendant is to recover his costs, which
judgment is conclusive only on the issue of possession and does not affect the
ownership of the land. They contended that the sale of real property by one party to
another may be ordered by the RTC only in a case for specific performance falling
under its original exclusive jurisdiction, not in the exercise of its appellate jurisdiction in
an ejectment case. Respondents also alleged that the petition for annulment is the only
remedy available to them because the ordinary remedies of new trial, appeal, petition
for relief or other appropriate remedies are no longer available through no fault on their
part.
By Decision dated February 27, 2004, the CA granted the petition, annulled the
November 18, 1994 RTC decision and reinstated the July 14, 1993 MeTC decision. On
the issue of lack of jurisdiction raised by the respondents, the CA ruled as follows:
It must be stressed that the main action before the Metropolitan Trial Court is one for
ejectment grounded on the expiration of the parties’ contract of lease. And said court,
finding that petitioners have a valid right to ask for the ejectment of private respondents,
ordered the latter to vacate the premises and to pay their rentals in arrears. To Our
mind, what the respondent court should have done in the exercise of its appellate
jurisdiction, was to confine itself to the issue of whether or not petitioners have a valid
cause of action for ejectment against the private respondents.
Unfortunately, in the decision herein sought to be annulled, the respondent court went
further than what is required of it as an appellate court when it ordered the petitioners to
sell their properties to the private respondents. In a very real sense, the respondent
court materially changed the nature of petitioners’ cause of action by deciding the
question of ownership even as the appealed case involves only the issue of prior
physical possession which, in every ejectment suit, is the only question to be resolved.
As it were, the respondent court converted the issue to one for specific performance
which falls under its original, not appellate jurisdiction. Sad to say, this cannot be done
by the respondent court in an appealed ejectment case because the essential criterion
of appellate jurisdiction is that it revises and corrects the proceedings in a cause
already instituted and does not create that cause (Marbury v. Madison, 1 Cranch (U.S.),
137, 172, 2 L. edition 60, cited in 15 Corpus Juris 727).
It follows that the respondent Regional Trial Court clearly acted without jurisdiction
when it ordered the petitioners to sell their properties to the private respondents. The
order to sell can be made only by the respondent court in an action for specific
performance under its exclusive original jurisdiction, and not in the exercise of its
appellate jurisdiction in an appealed ejectment suit, as in this case. Worse, the relief
granted by the same court was not even prayed for by the private respondents in their
Answer and position paper before the MTC, whereat they only asked for the dismissal
of the complaint filed against them.10 (Emphasis supplied.)
With the denial of their motion for reconsideration, petitioners filed the present petition
raising the following issues:
A he does not complain against the manner his counsel handles the suit.14 The oft-
WHETHER THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN
ANNULLING THE JUDGMENT BY THE REGIONAL TRIAL COURT OF
MAKATI CITY NOTWITHSTANDING THE FINDING THAT THE ORDINARY
REMEDIES OF NEW TRIAL, APPEAL, PETITION FOR RELIEF OR OTHER
APPROPRIATE REMEDIES WERE LOST THROUGH THE FAULT OF THE
RESPONDENTS
B respondents in their answer. They contend that whatever maybe questionable in the
WHETHER THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN
ANNULLING THE JUDGMENT BY THE REGIONAL TRIAL COURT OF
MAKATI CITY ON THE GROUND OF "LACK OF JURISDICTION" WHEN IT
HAS NOT BEEN SHOWN THAT THE REGIONAL TRIAL COURT OF MAKATI
CITY HAD NO JURISDICTION OVER THE PERSON OF THE
RESPONDENTS OR THE SUBJECT MATTER OF THE CLAIM11
The petition is meritorious.
A petition for annulment of judgments or final orders of a Regional Trial Court in civil
actions can only be availed of where "the ordinary remedies of new trial, appeal,
petition for relief or other appropriate remedies are no longer available through no fault
of the petitioner."12 It is a remedy granted only under exceptional circumstances and
such action is never resorted to as a substitute for a party’s own neglect in not
promptly availing of the ordinary or other appropriate remedies. 13 The only grounds
provided in Sec. 2, Rule 47 are extrinsic fraud and lack of jurisdiction.
In this case, respondents alleged that the loss of remedies against the RTC decision
was attributable to their former counsel’s late filing of their motion for reconsideration
and failure to file any proper petition to set aside the said decision. They claimed that
they had been constantly following up the status of the case with their counsel, Atty.
Jose Atienza, who repeatedly assured them he was on top of the situation and would
even get angry if repeatedly asked about the case. Out of their long and close
relationship with Atty. Atienza and due regard for his poor health due to his numerous
and chronic illnesses which required frequent prolonged confinement at the hospital,
respondents likewise desisted from hiring the services of another lawyer to assist Atty.
Atienza, until the latter’s death on September 10, 1998. Thus, it was only on November
1998 that respondents engaged the services of their new counsel who filed the petition
for annulment of judgment in the CA.
We are not persuaded by respondents’ asseveration. They could have directly followed
up the status of their case with the RTC especially during the period of Atty. Atienza’s
hospital confinement. As party litigants, they should have constantly monitored the
progress of their case. Having completely entrusted their case to their former counsel
and believing his word that everything is alright, they have no one to blame but
themselves when it turned out that their opportunity to appeal and other remedies from
the adverse ruling of the RTC could no longer be availed of due to their counsel’s
neglect. That respondents continued to rely on the services of their counsel
notwithstanding his chronic ailments that had him confined for long periods at the
hospital is unthinkable. Such negligence of counsel is binding on the client, especially
when the latter offered no plausible explanation for his own inaction. The Court has
held that when a party retains the services of a lawyer, he is bound by his counsel’s
actions and decisions regarding the conduct of the case. This is true especially where
repeated principle is that an action for annulment of judgment cannot and is not a
substitute for the lost remedy of appeal.15
In any event, the petition for annulment was based not on fraudulent assurances or
negligent acts of their counsel, but on lack of jurisdiction.
Petitioners assail the CA in holding that the RTC decision is void because it granted a
relief inconsistent with the nature of an ejectment suit and not even prayed for by the
decision is a ground for assignment of errors on appeal – or in certain cases, as ground
for a special civil action for certiorari under Rule 65 – and not as ground for its
annulment. On the other hand, respondents assert that the CA, being a higher court,
has the power to adopt, reverse or modify the findings of the RTC in this case. They
point out that the CA in the exercise of its sound discretion found the RTC’s findings
unsupported by the evidence on record which also indicated that the loss of ordinary
remedies of appeal, new trial and petition for review was not due to the fault of the
respondents.
We agree with the petitioners.
Lack of jurisdiction as a ground for annulment of judgment refers to either lack of
jurisdiction over the person of the defending party or over the subject matter of the
claim.16 In a petition for annulment of judgment based on lack of jurisdiction, petitioner
must show not merely an abuse of jurisdictional discretion but an absolute lack of
jurisdiction. Lack of jurisdiction means absence of or no jurisdiction, that is, the court
should not have taken cognizance of the petition because the law does not vest it with
jurisdiction over the subject matter. Jurisdiction over the nature of the action or subject
matter is conferred by law.17
There is no dispute that the RTC is vested with appellate jurisdiction over ejectment
cases decided by the MeTC, MTC or MCTC. We note that petitioners’ attack on the
validity of the RTC decision pertains to a relief erroneously granted on appeal, and
beyond the scope of judgment provided in Section 6 (now Section 17) of Rule 70.18
While the court in an ejectment case may delve on the issue of ownership or
possession de jure solely for the purpose of resolving the issue of possession de facto,
it has no jurisdiction to settle with finality the issue of ownership19 and any
pronouncement made by it on the question of ownership is provisional in nature. 20 A
judgment in a forcible entry or detainer case disposes of no other issue than
possession and establishes only who has the right of possession, but by no means
constitutes a bar to an action for determination of who has the right or title of
ownership.21 We have held that although it was proper for the RTC, on appeal in the unexplained length of time, to do that which by exercising due diligence could or should
ejectment suit, to delve on the issue of ownership and receive evidence on possession have been done earlier—negligence or omission to assert a right within a reasonable
de jure, it cannot adjudicate with semblance of finality the ownership of the property to time, warrants a presumption that the party entitled to assert it has abandoned it or
either party by ordering the cancellation of the TCT.22 declined to assert it.28 There is no absolute rule as to what constitutes laches or
staleness of demand; each case is to be determined according to its particular
In this case, the RTC acted in excess of its jurisdiction in deciding the appeal of circumstances.29
respondents when, instead of simply dismissing the complaint and awarding any
counterclaim for costs due to the defendants (petitioners), it ordered the respondents- Here, respondents’ failure to assail the RTC ruling in a petition for review or certiorari
lessors to execute a deed of absolute sale in favor of the petitioners-lessees, on the before the CA, rendered the same final and executory. Having lost these remedies due
basis of its own interpretation of the Contract of Lease which granted petitioners the to their lethargy for three and a half years, they cannot now be permitted to assail anew
option to buy the leased premises within a certain period (two years from date of the said ruling rendered by the RTC in the exercise of its appellate jurisdiction. Their
execution) and for a fixed price (₱150,000.00). 23 This cannot be done in an ejectment inaction and neglect to pursue available remedies to set aside the RTC decision for
case where the only issue for resolution is who between the parties is entitled to the such length of time, without any acceptable explanation other than the word of a former
physical possession of the property. counsel who already passed away, constitutes unreasonable delay warranting the
presumption that they have declined to assert their right over the leased premises
Such erroneous grant of relief to the defendants on appeal, however, is but an exercise which continued to be in the possession of the petitioners. Clearly, respondents’ petition
of jurisdiction by the RTC. Jurisdiction is not the same as the exercise of jurisdiction. to annul the final RTC decision is barred under the equitable doctrine of laches.
As distinguished from the exercise of jurisdiction, jurisdiction is the authority to decide
a cause, and not the decision rendered therein.24 The ground for annulment of the WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated
decision is absence of, or no, jurisdiction; that is, the court should not have taken February 27, 2004 and Resolution dated May 14, 2004 of the Court of Appeals in CA-
cognizance of the petition because the law does not vest it with jurisdiction over the G.R. SP No. 49998 are SET ASIDE. The petition for annulment of judgment filed by
herein respondents is DISMISSED.
subject matter.25
No costs.
Thus, while respondents assailed the content of the RTC decision, they failed to show
that the RTC did not have the authority to decide the case on appeal. As we held in SO ORDERED.
Ybañez v. Court of Appeals:26
On the first issue, we feel that respondent court acted inadvertently when it set aside
the RTC ruling relative to the validity of the substituted service of summons over the
persons of the petitioners in the MTC level. We must not lose sight of the fact that what
was filed before respondent court is an action to annul the RTC judgment and not a
petition for review. Annulment of judgment may either be based on the ground that a
judgment is void for want of jurisdiction or that the judgment was obtained by extrinsic
fraud. There is nothing in the records that could cogently show that the RTC lacked
jurisdiction. Chiefly, Section 22 of B.P. Blg. 129, otherwise known as the Judiciary
Reorganization Act of 1980, vests upon the RTC the exercise of an "appellate
jurisdiction over all cases decided by the Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts in their respective territorial jurisdictions."
Clearly then, when the RTC took cognizance of petitioners’ appeal from the adverse
decision of the MTC in the ejectment suit, it (RTC) was unquestionably exercising its
appellate jurisdiction as mandated by law. Perforce, its decision may not be annulled
on the basis of lack of jurisdiction as it has, beyond cavil, jurisdiction to decide the
appeal.27 (Emphasis supplied.)
The CA therefore erred in annulling the November 18, 1994 RTC decision on the
ground of lack of jurisdiction as said court had jurisdiction to take cognizance of
petitioners’ appeal.1avvphi1
On the timeliness of the petition for annulment of judgment filed with the CA, Section 3,
Rule 47 of the Rules of Court provides that a petition for annulment of judgment based
on extrinsic fraud must be filed within four years from its discovery; and if based on
lack of jurisdiction, before it is barred by laches or estoppel. The principle of laches or
"stale demands" ordains that the failure or neglect, for an unreasonable and