Cases CivPro

SECOND DIVISION

BANCO FILIPINO SAVINGS AND MORTGAGE BANK , Petitioner,

- versus -

HON. AMALIK P. ESPINOSA, JR., Presiding Judge, Municipal Trial Court in IloiloCity, Branch 2, and TALA REALTY SERVICES CORPORATION, Respondents.

G.R. No. 162922

Present:QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ.

Promulgated:

January 31, 2007x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

CARPIO MORALES, J.:

The present petition for Certiorari stems from one of several complaints of private respondent, Tala Realty Services Corporation, which sought to evict petitioner, Banco Filipino Savings and Mortgage Bank, from the premises of its branch offices in nine different locations for non-payment of rent.The properties subject of the complaints were covered by separate but similarly-worded contracts of lease between petitioner as lessee and private respondent as lessor.

In a complaint for ejectment, docketed as Civil Case No. 51-95 in the Municipal Trial Court (MTC) IloiloCity, which reached this Court on appeal as G.R. No. 132051, Tala Realty Services Corp. v. Banco Filipino Savings & Mortgage Bank, private respondent sought to eject petitioner from its branch site in IloiloCity.By Decision of June 25, 2001, this Court (Third Division) ordered petitioner to vacate the subject premises and restore possession thereof to private respondent;and to pay the latter a monthly rental of P21,100 from April 1994 up to the time it vacated the premises.

This Courts June 25, 2001 Decision, however, was later modified by Resolution of July 24, 2002 which ordered petitioner to pay additional six percent (6%) interest per annum on the amount of monthly rental of P21,100 corresponding to the period from April 1994 up to the time it vacated the premises.To this Courts Resolution of July 24, 2002 petitioner seasonably filed a motion for reconsideration.

Pending resolution of petitioners motion for reconsideration of the July 24, 2002 Resolution, the Court En Banc rendered a decision on November 22, 2002 in G.R. No. 137533, similarly entitled Tala Realty Services Corp. v. Banco Filipino Savings & Mortgage Bank.In this En Banc case which involved petitioners eviction from its

branch site in Malolos, Bulacan and which was based on the same grounds as those in G.R. No. 132051, this Court adjudged herein petitioner not to be liable for unpaid rentals, both parties having participated in the deceptive creation of a trust to circumvent the real estate investment limit under the General Banking Act.[1] As both parties were in pari delicto, this Court gave no affirmative relief to one against the other.It, however, noted that as the 20-year lease contract (which had already expired in August 2001) had not been renewed or extended, Tala ha[d] the right to eject the Bank from the subject Bulacan property on the ground of expiration of contract.[2]chanroblesvirtuallawlibrary

Petitioners motion for reconsideration of the July 24, 2002 Resolution in G.R. No. 132051 was subsequently granted by this CourtsThird Division, by September 3, 2003 Resolution which applied the Court En Bancs pronouncement in G.R. No. 137533that Tala should not be allowed to collect rent from the Bank during the period in question.

On September 26, 2003, this Courts June 25, 2001 Decision, as well as its July 24, 2002 and September 3, 2003 Resolutions, in G.R. No. 132051 were recorded in the Book of Entries of Judgment as having become final and executory.

Subsequently, private respondent filed with the trial court, the MTC in IloiloCity, Branch 2, a motion for execution of this Courts Decision of June 25, 2001 in G.R. No. 132051.Conformably with the disposition of said decision, private respondent prayed that petitioner be ordered to vacate the Iloilo branch office and to restore possession thereof to it, to pay the monthly rental of P21,100 computed from April 1994 up to the time petitioner vacates the premises, and to pay costs.

At the appointed time for the hearing of the Motion for Execution on February 26, 2004, petitioner verbally opposed the motion principally because this Courts June 25, 2001 Decision had been superseded by its September 3, 2003 Resolution.Petitioners objection and manifestation for time to file a written opposition notwithstanding, public respondent, Presiding Judge Espinosa of Branch 2 of the MTC in Iloilo City, granted on even date private respondents Motion for Execution in accordance with this Courts June 25, 2001 Decision, stating that there was nothing more for it to do but to have it fully executed.Petitioners motion for reconsideration was denied by public respondent.

Hence, the present petition for certiorari under Rule 65 of the Rules of Court ascribing lack or excess of jurisdiction or grave abuse of discretion to public respondent.

The issue then is whether public respondent acted without or in excess of jurisdiction, or with grave abuse of discretion in ordering the execution of this Courts June 25, 2001 Decision in G.R. No. 132051 and in allegedly refusing to hear petitioner on private respondents Motion for Execution.

A court, tribunal or administrative agency acts without jurisdiction if it does not have the legal power to determine the case.[3] Where the respondent is clothed with the power to determine the case, it nevertheless acts in excess of jurisdiction when it oversteps its authority as determined by law.[4]

Grave abuse of discretion exists if the public respondent acts in a capricious, whimsical, arbitrary or despotic manner in the exercise of his judgment as to be said to be equivalent to lack of jurisdiction.[5] Mere abuse of discretion is not enough; it must have been patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty enjoined or to act at all in contemplation of aw.[6]chanroblesvirtuallawlibrary

Unquestionably, public respondent has the power to rule on respondents Motion for Execution following Section 1 of Rule 39 of the Rules of Court which provides:Sec. 1.Execution upon judgments or final orders. Execution shall issue as a matter of right, on motion, upon a judgment or order that disposes of the action or proceeding upon the expiration of the period to appeal therefrom if no appeal has been duly perfected.

If the appeal has been duly perfected and finally resolved, the execution may forthwith be applied for in the court of origin, on motion of the judgment obligee, submitting therewith certified true copies of the judgment or judgments or final order or orders sought to be enforced and of the entry thereof, with notice to the adverse party.

The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of origin to issue the writ of execution. (Emphasis and underscoring supplied)

Public respondent overstepped his authority, however, when he ordered the execution of this Courts Decision of June 25, 2001, the same not being the final resolution of petitioners appeal as contemplated in the second paragraph of above-quoted Rule 39.

On its face, the Entry of Judgment[7] in G.R. No. 132051 showed that two Resolutions subsequent to the June 25, 2001 Decision were also certified as having become final and executory. Clearly apparent from the chronology of dispositions is the fact that the June 25, 2001 Decision was later modified by the July 24, 2002 Resolution which, in turn, was reconsidered and set aside by the September 3, 2003 Resolution. This matter was brought to the attention of public respondent by petitioner during the hearing of respondents Motion for Execution on February 26, 2004.

Additionally, petitioner specifically pointed out in its written opposition to the motion that the pronouncement of the . . . Resolution of September 3, 2003 that respondent bank is not liable for unpaid rents and Tala should not be allowed to collect rent from the bank was diametrically inconsistent with the directive in the Decision dated June 25, 2001, for the . . . Bank to pay Tala the monthly rental of P21,100.00 from April 1994 until the Bank vacates the premises . . .[8]chanroblesvirtuallawlibrary

Not being the final resolution of petitioners duly perfected appeal, this Courts June 25, 2001 Decision was not a judgment that private respondent was entitled to execute as a matter of right, hence, it could not have provided the basis for the grant of the motion for and issuance of the writ of execution.[9]

Parenthetically, this Court notes that even the writ of execution fell short of the requirement under paragraph (e), Section 8 of Rule 39 of the Rules of Court that it should specifically state the amount of the interest, costs, damages, rents, or profits due as of the date of the issuance of the writ, aside from the principal obligation under the judgment. (Emphasis supplied)Its directive to the sheriff concerned merely reiterated the dispositive portion of this Courts June 25, 2001 Decision without specifying the amount due as of April 6, 2004, the date the writ was issued, thus:

NOW, THEREFORE, you are hereby commanded to cause the execution of the aforesaid judgment that is, to oust Banco Filipino Savings and Mortgage Bank Filipino on [sic] the subject premises and to restore possession thereof to Tala Realty Services Corporation; to levy the goods and chattels of the defendant, except those which are exempt from execution; and to make the sale thereof in accordance with the procedure outlined by Rule 39, 1997 Revised Rules of Court, in case of failure to pay the accrued monthly rentals from April 1994 up to the time it vacates the premises, and in such cases made and provided, together with all lawful fees for the service of the Writ.[10] (Emphasis supplied)

The failure to indicate the amount of rentals due is of course attributable to private respondent which is charged under Rule 39, Section 8(e)[11] with the duty of specifying the same in its motion for execution.

Public respondent having overstepped his authority in ordering the execution of this Courts June 25, 2001 Decision, passing on the issue of grave abuse of discretion has been rendered unnecessary.Suffice it to state that given the circumstances surrounding the Motion for Execution of which public respondent was sufficiently apprised and which he himself acknowledged in his order granting the same,[12] public respondent should have taken more time and circumspection before granting the same.

On petitioners argument that it was not heard on private respondents Motion for Execution: It has been opined that Section 1 of Rule 39 of the Rules of Court now requires that the motion for execution must be with notice to the adverse party, with a hearing when the circumstances so require, to enable him to file any objection thereto or bring to the attention of said court matters which may have transpired during the pendency of the appeal and which may have a bearing on the execution sought to enforce the judgment.[13] (Emphasis supplied) It can not be gainsaid that the circumstances surrounding the Motion for Execution, which cast doubt on the propriety of executing the June 25, 2001 Decision, called for petitioner to give its side thereon.

Granting, however, that petitioners counsel was brusquely cut off when he started to verbally argue against the Motion for Execution during the hearing on February 26, 2004 and that public respondent failed to consider its written opposition,[14] still, petitioner was able to proffer its objections when it filed a motion to reconsider[15] the order granting the Motion for Execution. In that motion to reconsider, petitioner reiterated the arguments it raised during the hearing and in its written opposition to the Motion for Execution.[16]These circumstances were noted in public respondents March 29, 2004 Order denying petitioners motion for reconsideration.[17]chanroblesvirtuallawlibrary

Petitioners prayer for the issuance of a temporary restraining order or a writ of injunction to perpetually restrain the enforcement of public respondents order dated February 26, 2004 has been rendered moot and academic.As it itself manifested in its Supplemental Petition,[18] it has been evicted from the premises of its Iloilo branch as a consequence of the enforcement on April 27, 2004 of the writ of execution issued by public respondent.

In line with this Courts pronouncement in G.R. No. 132557 that while herein private respondent, Tala Realty Services Corporation, had no right to eject petitioner based on non-payment of rent, it has the right to do so on the ground of expiration of the contract, petitioners prayer for its restoration to its former Iloilo branch site may not lie.

WHEREFORE, the petition is PARTLY GRANTED.Public respondent, Judge Amalik P. Espinosa, Jr., having exceeded his authority in ordering the execution of this Courts decision dated June 25, 2001 in G.R. No. 132051, his assailed orders dated February 26, 2004 and March 29, 2004 as well as the writ of execution dated April 6, 2004 are NULLIFIED and SET ASIDE.

SO ORDERED.

CONCHITA CARPIO MORALESAssociate Justicecralaw

WE CONCUR:

LEONARDO A. QUISUMBINGAssociate JusticeChairperson

ANTONIO T. CARPIOAssociate Justice

DANTE O. TINGAAssociate Justice

PRESBITERO J. VELASCO, JR.Associate Justice

ATTESTATIONcralawI attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.


CERTIFICATIONcralawPursuant to Article VIII, Section 13 of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

REYNATO S. PUNOChief JusticeEndnotes:[1]cralawRepublic Act No. 337.[2]cralawRollo, p. 74.[3]cralawHonrado v. Court of Appeals, G.R. No. 166333, November 25, 2005, 476 SCRA 280; Punzalan v. Dela Pea, G.R. No. 158543,July 21, 2004, 434 SCRA 601, 609;Condo Suite Club Travel, Inc. v. NLRC, 380 Phil. 660, 667 (2000);Association of Trade Unions v. Hon. Abella, 380 Phil. 6, 18 (2000).[4]cralawHonrado v. Court of Appeals, supra;Yu v. Court of Appeals, G.R. No. 154115, November 29, 2005, 476 SCRA 443;Land Bank of the Philippines v. Court of Appeals, G.R. No. 129368, August 25, 2003, 409 SCRA 455, 480.[5]cralawBedruz v. Sandiganbayan, G.R. No. 161640, December 9, 2005, 477 SCRA 287;Villanueva v. Ople, G.R. No. 165125, November 18, 2005, 475 SCRA 539, 540;Santos v. COMELEC, 447 Phil. 760, 772 (2003).[6] cralawBedruz v. Sandiganbayan, supra.[7] cralawRollo, pp. 80-81.8] cralawId.at 88;records, p. 34.

[9] cralawId. at 125-126.[10]cralawIbid.[11]cralawThe last sentence of Rule 39, Sec. 8(e) reads:For this purpose, the motion for execution shall specify the amounts of the foregoing reliefs sought by the movant.[12]cralawOrder dated February 26, 2004, id. at 31-32.In said Order, respondent stated that[w]hen this case was called for the hearing of the motion for execution opposing counsels were present and presented their oral arguments respecting their opposing stand [sic] of the issue at hand.Thereafter this Court, ordered the incident submitted for resolution, in spite of the prayer of the counsel for the defendant [petitioner herein] to be given time within which to file an opposition.[13]F. Regalado, Remedial Law Compendium, Vol. I, 400 (6th rev. ed.).[14]Rollo, pp. 10-11.[15]Motion for Reconsideration dated March 8, 2004, records, pp. 93-106.[16]cralawPetitioners written opposition to the motion for execution was received by the trial court on March 1, 2004, after respondents order granting the motion for execution was issued on February 26, 2004.[17]cralawRollo, p. 33.[18] cralawId.at 127-132.

Republic of the PhilippinesSUPREME COURT

Manila chanroblesvirtuallawlibrary

FIRST DIVISION

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

LUISA KHO MONTAER, ALEJANDRO MONTAER, JR., LILLIBETH MONTAER-BARRIOS, AND RHODORA ELEANOR MONTAER-DALUPAN, Petitioners, vs. SHARIA DISTRICT COURT, FOURTH SHARIA JUDICIAL DISTRICT, MARAWI CITY, LILING DISANGCOPAN, AND ALMAHLEEN

LILING S. MONTAER, Respondents.

D E C I S I O N

PUNO, C.J.:

This Petition for Certiorari and Prohibition seeks to set aside the Orders of the Sharia District

Court, Fourth Sharia Judicial District, Marawi City, dated August 22, 2006 [1]cralaw and September

21, 2006.[2]cralaw chanroblesvirtuallawlibrary

On August 17, 1956, petitioner Luisa Kho Montaer, a Roman Catholic, married Alejandro Montaer,

Sr. at the Immaculate Conception Parish in Cubao, Quezon City.[3]cralaw Petitioners Alejandro

Montaer, Jr., Lillibeth Montaer-Barrios, and Rhodora Eleanor Montaer-Dalupan are their children.[4]cralaw On May 26, 1995, Alejandro Montaer, Sr. died.[5]cralaw chanroblesvirtuallawlibrary

On August 19, 2005, private respondents Liling Disangcopan and her daughter, Almahleen Liling

S. Montaer, both Muslims, filed a Complaint for the judicial partition of properties before the

Sharia District Court.[6]cralaw The said complaint was entitled Almahleen Liling S. Montaer and

Liling M. Disangcopan v. the Estates and Properties of Late Alejandro Montaer, Sr., Luisa Kho

Montaer, Lillibeth K. Montaer, Alejandro Kho Montaer, Jr., and Rhodora Eleanor K. Montaer, and

docketed as Special Civil Action No. 7-05.[7]cralaw In the said complaint, private respondents made

the following allegations: (1) in May 1995, Alejandro Montaer, Sr. died; (2) the late Alejandro

Montaer, Sr. is a Muslim; (3) petitioners are the first family of the decedent; (4) Liling

Disangcopan is the widow of the decedent; (5) Almahleen Liling S. Montaer is the daughter of the

decedent; and (6) the estimated value of and a list of the properties comprising the estate of the

decedent.[8]cralaw Private respondents prayed for the Sharia District Court to order, among others,

the following: (1) the partition of the estate of the decedent; and (2) the appointment of an

administrator for the estate of the decedent.[9]cralaw chanroblesvirtuallawlibrary

Petitioners filed an Answer with a Motion to Dismiss mainly on the following grounds: (1) the

Sharia District Court has no jurisdiction over the estate of the late Alejandro Montaer, Sr.,

because he was a Roman Catholic; (2) private respondents failed to pay the correct amount of

docket fees; and (3) private respondents complaint is barred by prescription, as it seeks to

establish filiation between Almahleen Liling S. Montaer and the decedent, pursuant to Article 175

of the Family Code.[10]cralaw chanroblesvirtuallawlibrary

http://www.chanrobles.com/scdecisions/jurisprudence2009/jan2009/174975.php#_ftn1










On November 22, 2005, the Sharia District Court dismissed the private respondents complaint.

The district court held that Alejandro Montaer, Sr. was not a Muslim, and its jurisdiction extends

only to the settlement and distribution of the estate of deceased Muslims.[11]cralaw chanroblesvirtuallawlibrary

On December 12, 2005, private respondents filed a Motion for Reconsideration. [12]cralaw On

December 28, 2005, petitioners filed an Opposition to the Motion for Reconsideration, alleging

that the motion for reconsideration lacked a notice of hearing. [13]cralaw On January 17, 2006, the

Sharia District Court denied petitioners opposition.[14]cralaw Despite finding that the said motion for

reconsideration lacked notice of hearing, the district court held that such defect was cured as

petitioners were notified of the existence of the pleading, and it took cognizance of the said

motion.[15]cralaw The Sharia District Court also reset the hearing for the motion for reconsideration.[16]cralaw chanroblesvirtuallawlibrary

In its first assailed order dated August 22, 2006, the Sharia District Court reconsidered its order

of dismissal dated November 22, 2005.[17]cralaw The district court allowed private respondents to

adduce further evidence.[18]cralaw In its second assailed order dated September 21, 2006, the

Sharia District Court ordered the continuation of trial, trial on the merits, adducement of further

evidence, and pre-trial conference.[19]cralaw chanroblesvirtuallawlibrary

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

I. chanroblesvirtuallawlibrary

RESPONDENT SHARIA DISTRICT COURT MARAWI CITY LACKS JURISDICTION OVER PETITIONERS WHO ARE ROMAN CATHOLICS AND NON-MUSLIMS. chanroblesvirtuallawlibrary

II. chanroblesvirtuallawlibrary

/RESPONDENT SHARIA DISTRICT COURT MARAWI CITY DID NOT ACQUIRE JURISDICTION OVER THE ESTATES AND PROPERTIES OF THE LATE ALEJANDRO MONTAER, SR. WHICH IS NOT A NATURAL OR JURIDICAL PERSON WITH CAPACITY TO BE SUED. chanroblesvirtuallawlibrary










III. chanroblesvirtuallawlibrary

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

IV. chanroblesvirtuallawlibrary

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

V. chanroblesvirtuallawlibrary

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

In their Comment to the Petition for Certiorari, private respondents stress that the Sharia District

Court must be given the opportunity to hear and decide the question of whether the decedent is

a Muslim in order to determine whether it has jurisdiction.[20]cralaw chanroblesvirtuallawlibrary

Jurisdiction: Settlement of the Estate of Deceased Muslims

Petitioners first argument, regarding the Sharia District Courts jurisdiction, is dependent on a question of fact, whether the late Alejandro Montaer, Sr. is a Muslim. Inherent in this argument is

the premise that there has already been a determination resolving such a question of fact. It bears emphasis, however, that the assailed orders did not determine whether the decedent is a Muslim. The assailed orders did, however, set a hearing for the purpose of resolving this issue.

Article 143(b) of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal Laws of the Philippines, provides that the Sharia District Courts have exclusive original

jurisdiction over the settlement of the estate of deceased Muslims: chanroblesvirtuallawlibrary


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

x x x x chanroblesvirtuallawlibrary

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

The determination of the nature of an action or proceeding is controlled by the averments and

character of the relief sought in the complaint or petition.[21]cralaw The designation given by parties

to their own pleadings does not necessarily bind the courts to treat it according to the said

designation. Rather than rely on a falsa descriptio or defective caption, courts are guided by the

substantive averments of the pleadings.[22]cralaw chanroblesvirtuallawlibrary

Although private respondents designated the pleading filed before the Sharia District Court as a

Complaint for judicial partition of properties, it is a petition for the issuance of letters of

administration, settlement, and distribution of the estate of the decedent. It contains sufficient

jurisdictional facts required for the settlement of the estate of a deceased Muslim, [23]cralaw such as

the fact of Alejandro Montaer, Sr.s death as well as the allegation that he is a Muslim. The said

petition also contains an enumeration of the names of his legal heirs, so far as known to the

private respondents, and a probable list of the properties left by the decedent, which are the

very properties sought to be settled before a probate court. Furthermore, the reliefs prayed for

reveal that it is the intention of the private respondents to seek judicial settlement of the estate

of the decedent.[24]cralaw These include the following: (1) the prayer for the partition of the estate

of the decedent; and (2) the prayer for the appointment of an administrator of the said estate.

We cannot agree with the contention of the petitioners that the district court does not have jurisdiction over the case because of an allegation in their answer with a motion to dismiss that Montaer, Sr. is not a Muslim. Jurisdiction of a court over the nature of the action and its subject matter does not depend upon the defenses set forth in an answer[25]cralaw or a motion to dismiss.[26]cralaw Otherwise, jurisdiction would depend almost entirely on the defendant[27]cralaw or result in having a case either thrown out of court or its proceedings unduly delayed by simple stratagem.

[28]cralaw Indeed, the defense of lack of jurisdiction which is dependent on a question of fact does not render the court to lose or be deprived of its jurisdiction.[29]cralaw

The same rationale applies to an answer with a motion to dismiss.[30]cralaw In the case at bar, the Sharia District Court is not deprived of jurisdiction simply because petitioners raised as a defense











the allegation that the deceased is not a Muslim. The Sharia District Court has the authority to hear and receive evidence to determine whether it has jurisdiction, which requires an a priori

determination that the deceased is a Muslim. If after hearing, the Sharia District Court determines that the deceased was not in fact a Muslim, the district court should dismiss the case

for lack of jurisdiction.

Special Proceedings

The underlying assumption in petitioners second argument, that the proceeding before the

Sharia District Court is an ordinary civil action against a deceased person, rests on an erroneous

understanding of the proceeding before the court a quo. Part of the confusion may be attributed

to the proceeding before the Sharia District Court, where the parties were designated either as

plaintiffs or defendants and the case was denominated as a special civil action. We reiterate that

the proceedings before the court a quo are for the issuance of letters of administration,

settlement, and distribution of the estate of the deceased, which is a special proceeding. Section

3(c) of the Rules of Court (Rules) defines a special proceeding as a remedy by which a party

seeks to establish a status, a right, or a particular fact. This Court has applied the Rules,

particularly the rules on special proceedings, for the settlement of the estate of a deceased

Muslim.[31]cralaw In a petition for the issuance of letters of administration, settlement, and

distribution of estate, the applicants seek to establish the fact of death of the decedent and later

to be duly recognized as among the decedents heirs, which would allow them to exercise their

right to participate in the settlement and liquidation of the estate of the decedent. [32]cralaw Here,

the respondents seek to establish the fact of Alejandro Montaer, Sr.s death and, subsequently,

for private respondent Almahleen Liling S. Montaer to be recognized as among his heirs, if such

is the case in fact. chanroblesvirtuallawlibrary

Petitioners argument, that the prohibition against a decedent or his estate from being a party

defendant in a civil action[33]cralaw applies to a special proceeding such as the settlement of the

estate of the deceased, is misplaced. Unlike a civil action which has definite adverse parties, a

special proceeding has no definite adverse party. The definitions of a civil action and a special

proceeding, respectively, in the Rules illustrate this difference. A civil action, in which a party

sues another for the enforcement or protection of a right, or the prevention or redress of a

wrong[34]cralaw necessarily has definite adverse parties, who are either the plaintiff or defendant.[35]cralaw On the other hand, a special proceeding, by which a party seeks to establish a status,

right, or a particular fact,[36]cralaw has one definite party, who petitions or applies for a declaration

of a status, right, or particular fact, but no definite adverse party. In the case at bar, it bears







emphasis that the estate of the decedent is not being sued for any cause of action. As a special

proceeding, the purpose of the settlement of the estate of the decedent is to determine all the

assets of the estate,[37]cralaw pay its liabilities,[38]cralaw and to distribute the residual to those entitled

to the same.[39]cralaw

Docket Fees

Petitioners third argument, that jurisdiction was not validly acquired for non-payment of docket fees, is untenable. Petitioners point to private respondents petition in the proceeding before the court a quo, which contains an allegation estimating the decedents estate as the basis for the

conclusion that what private respondents paid as docket fees was insufficient. Petitioners argument essentially involves two aspects: (1) whether the clerk of court correctly assessed the

docket fees; and (2) whether private respondents paid the correct assessment of the docket fees.

Filing the appropriate initiatory pleading and the payment of the prescribed docket fees vest a trial court with jurisdiction over the subject matter.[40]cralaw If the party filing the case paid less

than the correct amount for the docket fees because that was the amount assessed by the clerk of court, the responsibility of making a deficiency assessment lies with the same clerk of court.

[41]cralaw In such a case, the lower court concerned will not automatically lose jurisdiction, because of a partys reliance on the clerk of courts insufficient assessment of the docket fees. [42]cralaw As every citizen has the right to assume and trust that a public officer charged by law with certain

duties knows his duties and performs them in accordance with law, the party filing the case cannot be penalized with the clerk of courts insufficient assessment.[43]cralaw However, the party

concerned will be required to pay the deficiency.[44]cralaw

In the case at bar, petitioners did not present the clerk of courts assessment of the docket fees. Moreover, the records do not include this assessment. There can be no determination of whether

private respondents correctly paid the docket fees without the clerk of courts assessment.

Exception to Notice of Hearing

Petitioners fourth argument, that private respondents motion for reconsideration before the

Sharia District Court is defective for lack of a notice of hearing, must fail as the unique

circumstances in the present case constitute an exception to this requirement. The Rules require

every written motion to be set for hearing by the applicant and to address the notice of hearing

to all parties concerned.[45]cralaw The Rules also provide that no written motion set for hearing shall

be acted upon by the court without proof of service thereof. [46]cralaw However, the Rules allow a

liberal construction of its provisions in order to promote [the] objective of securing a just,

speedy, and inexpensive disposition of every action and proceeding. [47]cralaw Moreover, this Court

has upheld a liberal construction specifically of the rules of notice of hearing in cases where a

rigid application will result in a manifest failure or miscarriage of justice especially if a party

successfully shows that the alleged defect in the questioned final and executory judgment is not












apparent on its face or from the recitals contained therein. [48]cralaw In these exceptional cases, the

Court considers that no party can even claim a vested right in technicalities, and for this reason,

cases should, as much as possible, be decided on the merits rather than on technicalities. [49]cralaw

chanroblesvirtuallawlibrary

The case at bar falls under this exception. To deny the Sharia District Court of an opportunity to

determine whether it has jurisdiction over a petition for the settlement of the estate of a

decedent alleged to be a Muslim would also deny its inherent power as a court to control its

process to ensure conformity with the law and justice. To sanction such a situation simply

because of a lapse in fulfilling the notice requirement will result in a miscarriage of justice. chanroblesvirtuallawlibrary

In addition, the present case calls for a liberal construction of the rules on notice of hearing,

because the rights of the petitioners were not affected. This Court has held that an exception to

the rules on notice of hearing is where it appears that the rights of the adverse party were not

affected.[50]cralaw The purpose for the notice of hearing coincides with procedural due process,[51]cralaw for the court to determine whether the adverse party agrees or objects to the motion, as

the Rules do not fix any period within which to file a reply or opposition. [52]cralaw In probate

proceedings, what the law prohibits is not the absence of previous notice, but the absolute

absence thereof and lack of opportunity to be heard. [53]cralaw In the case at bar, as evident from

the Sharia District Courts order dated January 17, 2006, petitioners counsel received a copy of

the motion for reconsideration in question. Petitioners were certainly not denied an opportunity

to study the arguments in the said motion as they filed an opposition to the same. Since the

Sharia District Court reset the hearing for the motion for reconsideration in the same order,

petitioners were not denied the opportunity to object to the said motion in a hearing. Taken

together, these circumstances show that the purpose for the rules of notice of hearing,

procedural process, was duly observed.

Prescription and Filiation

Petitioners fifth argument is premature. Again, the Sharia District Court has not yet determined

whether it has jurisdiction to settle the estate of the decedent. In the event that a special

proceeding for the settlement of the estate of a decedent is pending, questions regarding

heirship, including prescription in relation to recognition and filiation, should be raised and







settled in the said proceeding.[54]cralaw The court, in its capacity as a probate court, has jurisdiction

to declare who are the heirs of the decedent.[55]cralaw In the case at bar, the determination of the

heirs of the decedent depends on an affirmative answer to the question of whether the Sharia

District Court has jurisdiction over the estate of the decedent. chanroblesvirtuallawlibrary

IN VIEW WHEREOF, the petition is DENIED. The Orders of the Sharia District Court, dated

August 22, 2006 and September 21, 2006 respectively, are AFFIRMED. Cost against petitioners.

chanroblesvirtuallawlibrary

SO ORDERED. chanroblesvirtuallawlibrary

REYNATO S. PUNO

Chief Justice chanroblesvirtuallawlibrary

WE CONCUR: chanroblesvirtuallawlibrary

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

ANTONIO T. CARPIO

Associate Justice

RENATO C. CORONA

Associate Justice



ADOLFO S. AZCUNA

Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above

decision had been reached in consultation before the case was assigned to the writer of the

opinion of the Courts Division. chanroblesvirtuallawlibrary

REYNATO S. PUNO

Chief Justice chanroblesvirtuallawlibrary

Endnotes:

[1]cralaw Rollo, pp. 110-111.cralaw

[2]cralaw Id. at 115.cralaw


[4]cralaw Id. at 63-65.cralaw






[10]cralaw Id. at 83, 89-96.cralaw




http://www.chanrobles.com/scdecisions/jurisprudence2009/jan2009/174975.php#_ftnref13














[15]cralaw Id.

[16]cralaw Id.




[20]cralaw Id. at 191.

[21]cralaw Vda. de Manalo v. Court of Appeals, 402 Phil. 152, 161 (2001).cralaw

[22]cralaw Heirs of Celso Amarante v. Court of Appeals, G.R. No. 76386, May 21, 1990, 185 SCRA 585, 594.cralaw

[23]cralaw Musa v. Moson, G.R. No. 95574, August 16, 1991, 200 SCRA 715, 719.cralaw

[24]cralaw Vda. de Manalo v. Court of Appeals, supra note 21, at 162.cralaw

[25]cralaw Salas v. Castro, G.R. No. 100416, December 2, 1992, 216 SCRA 198, 204.cralaw

[26]cralaw Hilado v. Chavez, G.R. No. 134742, September 22, 2004, 438 SCRA 623, 641.cralaw

[27]cralaw Salas v. Castro, supra note 25.cralaw


[29]cralaw Salas v. Castro, supra note 25.

[30]cralaw Mamadsual v. Moson, G.R. No. 92557, September 27, 1990, 190 SCRA 82, 87.

In the abovementioned case, the Court held that the Special Rules of Procedure in Sharia Courts, Ijra-at-al-Mahakim al Sharia, proscribe the filing of a motion to dismiss in lieu of an answer which would stop the running of the period to file an answer and cause undue delay.cralaw

[31]cralaw Musa v. Moson, supra note 23, at 721-722.cralaw


[33]cralaw Ventura v. Hon. Militante, 374 Phil. 562 (1999).

[34]cralaw RULES OF COURT, Rule 1, Sec. 3, par. (a).cralaw

[35]cralaw RULES OF COURT, Rule 3, Sec. 1.cralaw

[36]cralaw RULES OF COURT, Rule 1, Sec. 3, par. (c).cralaw

[37]cralaw Pacific Banking Corporation Employees Organization v. Court of Appeals, 312 Phil. 578, 593 (1995).cralaw

[38]cralaw Id.



























[40]cralaw Sun Insurance Office, Ltd. v. Asuncion, G.R. Nos. 79937-38, February 13, 1989, 170 SCRA 274, 285.cralaw

[41]cralaw Rivera v. Del Rosario, G.R. No. 144934, January 15, 2004, 419 SCRA 626, 635.cralaw

[42]cralaw Id.

[43]cralaw Ayala Land, Inc. v. Spouses Carpo, 399 Phil. 327, 334 (2000), citing Segovia v. Barrios, 75 Phil. 764, 767 (1946).cralaw

[44]cralaw Fil-Estate Golf and Development, Inc. v. Navarro, G.R. No. 152575, June 29, 2007, 526 SCRA 51, 61.cralaw

[45]cralaw RULES OF COURT, Rule 15, Secs. 4-5.cralaw



[48]cralaw Vlason Enterprises Corporation v. Court of Appeals, 369 Phil. 269, 299 (1999).cralaw

[49]cralaw Goldloop Properties, Inc. v. Court of Appeals, G.R. No. 99431, August 11, 1992, 212 SCRA 498, 504.cralaw

[50]cralaw Victory Liner, Inc. v. Malinias, G.R. No. 151170, May 29, 2007, 523 SCRA 279, 291-292.cralaw

[51]cralaw Vlason Enterprises Corporation v. Court of Appeals, supra note 48, at 299-300.cralaw

[52]cralaw Victory Liner, Inc. v. Malinias, supra note 50, at 292.cralaw

[53]cralaw De Borja, et al. v. Tan, et al., 93 Phil. 167, 171 (1953).

[54]cralaw Portugal v. Portugal-Beltran, G.R. No. 155555, August 16, 2005, 467 SCRA 184, 198.

[55]cralaw Uriarte v. Court of First Instance Negros Occidental, et al., 144 Phil. 205, 215-216 (1970).cralaw


Manila

THIRD DIVISION

G.R. No. 102636 September 10, 1993

METROPOLITAN BANK & TRUST COMPANY EMPLOYEES UNION-ALU-TUCP and ANTONIO V. BALINANG, Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (2nd Division) and

METROPOLITAN BANK and TRUST COMPANY, Respondents.

VITUG, J.:


















In this petition for certiorari, the Metropolitan Bank & Trust Company Employees Union-ALU-TUCP (MBTCEU) and its president, Antonio V. Balinang, raise the issue of whether or not the implementation by the Metropolitan Bank and Trust Company of Republic Act No. 6727, mandating an increase in pay of P25 per day for certain employees in the private sector, created a distortion that would require an adjustment under said law in the wages of the latter's other various groups of employees. chanroblesvirtualawlibrary chanrobles virtual law library

On 25 May 1989, the bank entered into a collective bargaining agreement with the MBTCEU, granting a monthly P900 wage increase effective 01 January 1989, P600 wage increase 01 January 1990, and P200 wage increase effective 01 January 1991. The MBTCEU had also bargained for the inclusion of probationary employees in the list of employees who would benefit from the first P900 increase but the bank had adamantly refused to accede thereto. Consequently, only regular employees as of 01 January 1989 were given the increase to the exclusion of probationary employees. chanroblesvirtualawlibrary chanrobles virtual law library

Barely a month later, or on 01 January 1989, Republic Act 6727, "an act to rationalize wage policy determination be establishing the mechanism and proper standards thereof, . . . fixing new wage rates, providing wage incentives for industrial dispersal to the countryside, and for other purposes," took effect. Its provisions, pertinent to this case, state:

Sec. 4. (a) Upon the effectivity of this Act, the statutory minimum wage rates of all workers and employees in the private sector, whether agricultural or non-agricultural, shall be increased by twenty-five pesos (P25) per day, . . .: Provided, That those already receiving above the minimum wage rates up to one hundred pesos(P100.00) shall also receive an increase of twenty-five pesos (P25.00) per day, . . .

xxx xxx xxx chanrobles virtual law library

(d) If expressly provided for and agreed upon in the collective bargaining agreements, all increase in the daily basic wage rates granted by the employers three (3) months before the effectivity of this Act shall be credited as compliance with the increases in the wage rates prescribed herein, provided that, where such increases are less than the prescribed increases in the wage rates under this Act, the employer shall pay the difference. Such increase shall not include anniversary wage increases, merit wage increase and those resulting from the regularization or promotion of employees. chanroblesvirtualawlibrary chanrobles virtual law library

Where the application of the increases in the wage rates under this Section results in distortions as defined under existing laws in the wage structure within an establishment and gives rise to a dispute therein, such dispute shall first be settled voluntarily between the parties and in the event of a deadlock, the same shall be finally resolved through compulsory arbitration by the regional branches of the National Labor Relations Commission (NLRC) having jurisdiction over the workplace.chanroblesvirtualawlibrary chanrobles virtual law library

It shall be mandatory for the NLRC to conduct continous hearings and decide any dispute arising under this Section within twenty (20) calendar days from the time said dispute is formally submitted to it for arbitration. The pendency of a dispute arising from a wage distortion shall not in any way delay the applicability of the increase in the wage rates prescribed under this Section.

Pursuant to the above provisions, the bank gave the P25 increase per day, or P750 a month, to its probationary employees and to those who had been promoted to regular or permanent status before 01 July 1989 but whose

daily rate was P100 and below. The bank refused to give the same increase to its regular employees who were receiving more than P100 per day and recipients of the P900 CBA increase. chanroblesvirtualawlibrary chanrobles virtual law library

Contending that the bank's implementation of Republic Act 6727 resulted in the categorization of the employees into (a) the probationary employees as of 30 June 1989 and regular employees receiving P100 or less a day who had been promoted to permanent or regular status before 01 July 1989, and (b) the regular employees as of 01 July 1989, whose pay was over P100 a day, and that, between the two groups, there emerged a substantially reduced salary gap, the MBTCEU sought from the bank the correction of the alleged distortion in pay. In order to avert an impeding strike, the bank petitioned the Secretary of Labor to assume jurisdiction over the case or to certify the same to the National Labor Relations Commission (NLRC) under Article 263 (g) of the Labor Code.

1 The parties ultimately agreed to refer the issue for compulsory arbitration to the NLRC. chanroblesvirtualawlibrary chanrobles virtual law library

The case was assigned to Labor Arbiter Eduardo J. Carpio. In his decision of 05 February 1991, the labor arbiter disregard with the bank's contention that the increase in its implementation of Republic Act 6727 did not constitute a distortion because "only 143 employees or 6.8% of the bank's population of a total of 2,108 regular employees" benefited. He stressed that "it is not necessary that a big number of wage earners within a company be benefited by the mandatory increase before a wage distortion may be considered to have taken place," it being enough, he said, that such increase "result(s) in the severe contraction of an intentional quantitative difference in wage between employee groups." chanrobles virtual law library

The labor arbiter concluded that since the "intentional quantitative difference" in wage or salary rates between and among groups of employees is not based purely on skills or length of service but also on "other logical bases of differentiation, a P900.00 wage gap intentionally provided in a collective bargaining agreement as a quantitative difference in wage between those who WERE regular employees as of January 1, 1989 and those who WERE NOT as of that date, is definitely a logical basis of differentiation (that) deserves protection from any distorting statutory wage increase." Otherwise, he added, "a minimum wage statute that seek to uplift the economic condition of labor would itself destroy the mechanism of collective bargaining which, with perceived stability, has been labor's constitutional and regular source of wage increase for so long a time now." Thus, since the "subjective quantitative difference" between wage rates had been reduced from P900.00 to barely P150.00, correction of the wage distortion pursuant to Section 4(c) of the Rules Implementing Republic Act 6727 should be made.chanroblesvirtualawlibrary chanrobles virtual law library

The labor arbiter disposed of the case, thus:

WHEREFORE, premises considered, the respondent is hereby directed to restore to complainants and their members the Nine Hundred (P900.00) Pesos CBA wage gap they used to enjoy over non-regular employees as of January 1, 1989 by granting them a Seven Hundred Fifty (P750.00) Pesos monthly increase effective July 1, 1989. chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED. 2 chanrobles virtual law library

The bank appealed to the NLRC. On 31 May 1991, the NLRC Second Division, by a vote of 2 to 1, reversed the decision of the Labor Arbiter. Speaking, through Commissioners Rustico L. Diokno and Domingo H. Zapanta, the NLRC said:

. . . a wage distortion can arise only in a situation where the salary structure is characterized by intentional quantitative differences among employee groups determined or fixed on the basis of skills, length of service, or other logical basis of differentiation and such differences or

distinction are obliterated (In Re: Labor Dispute at the Bank of the Philippine Islands, NCMB-RB-7-11-096-89, Secretary of Labor and Employment, February 18, 1991). chanroblesvirtualawlibrary chanrobles virtual law library

As applied in this case, We noted that in the new wage salary structure, the wage gaps between Level 6 and 7 levels 5 and 6, and levels 6 and 7 (sic) were maintained. While there is a noticeable decrease in the wage gap between levels 2 and 3, Levels 3 and 4, and Levels 4 and 5, the reduction in the wage gaps between said levels is not significant as to obliterate or result in severe contraction of the intentional quantitative differences in salary rates between the employees groups. For this reason, the basis requirement for a wage in this case. Moreover, there is nothing in the law which would justify an across-the-board adjustment of P750.00 as ordered by the labor Arbiter.chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, premises considered, the appealed decision is hereby set aside and a new judgment is hereby entered, dismissing the complaint for lack of merit. chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED. 3 chanrobles virtual law library

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

There may not be an obliteration nor elimination of said quantitative distinction/difference aforecited but clearly there is a contraction. Would such contraction be severe as to warrant the necessary correction sanctioned by the law in point, RA 6727? It is may considered view that the quantitative intended distinction in pay between the two groups of workers in respondent company was contracted by more than fifty (50%) per cent or in particular by more or less eighty-three (83%) per cent hence, there is no doubt that there is an evident severe contraction resulting in the complained of wage distortion. chanroblesvirtualawlibrary chanrobles virtual law library

Nonetheless, the award of P750.00 per month to all of herein individual complainants as ordered by the Labor Arbiter below, to my mind is not the most equitable remedy at bar, for the same would be an across the board increase which is not the intention of RA 6727. For that matter, herein complainants cannot by right claim for the whole amount of P750.00 a month or P25.00 per day granted to the workers covered by the said law in the sense that they are not covered by the said increase mandated by RA 6727. They are only entitled to the relief granted by said law by way of correction of the pay scale in case of distortion in wages by reason thereof. chanroblesvirtualawlibrary chanrobles virtual law library

Hence, the formula offered and incorporated in Wage Order No. IV-02 issued on 21 May 1991 by the Regional Tripartite Wages and Productivity Commission for correction of pay scale structures in case of wage distortion as in the case at bar which is:

Minimum Wage = % x Prescribed = Distortion

------ Increased AdjustmentActual Salary

would be the most equitable and fair under the circumstances obtaining in this case. chanroblesvirtualawlibrary chanrobles virtual law library

For this very reason, I register my dissent from the majority opinion and opt for the modification of the Labor Arbiter's decision as afore-discussed. 4

chanrobles virtual law library

The MBTCEU filed a motion for reconsideration of the decision of the NLRC; having been denied, the MBTCEU and its president filed the instant petition for certiorari, charging the NLRC with gave abuse of discretion by its refusal (a) "to acknowledge the existence of a wage distortion in the wage or salary rates between and among the employee groups of the respondent bank as a result of the bank's partial implementation" of Republic Act 6727 and (b) to give due course to its claim for an across-the-board P25 increase under Republic Act No. 6727. 5


We agree with the Solicitor General that the petition is impressed with merit. 6 chanrobles virtual law library

The term "wage distortion", under the Rules Implementing Republic Act 6727, is defined, thus:

(p) Wage Distortion means a situation where an increase in prescribed wage rates results in the elimination or severe contradiction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation.

The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we agree, is, by and large, a question of fact the determination of which is the statutory function of the NLRC. 7 Judicial review of labor cases, we may add, does not go beyond the evaluation of the sufficiency of the evidence upon which the labor official's findings rest. 8 As such, factual findings of the NLRC are generally accorded not only respect but also finality provided that its decision are supported by substantial evidence and devoid of any taint of unfairness of arbitrariness. 9 When, however, the members of the same labor tribunal are not in accord on those aspects of a case, as in this case, this Court is well cautioned not to be as so conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived therefrom. chanroblesvirtualawlibrary chanrobles virtual law library

In this case, the majority of the members of the NLRC, as well as its dissenting member, agree that there is a wage distortion arising from the bank's implementation of the P25 wage increase; they do differ, however, on the extent of the distortion that can warrant the adoption of corrective measures required by law. chanroblesvirtualawlibrary chanrobles virtual law library

The definition of "wage distortion," 10 aforequoted, shows that such distortion can so exist when, as a result of an increase in the prescribed wage rate, an "elimination or severe contraction of intentional quantitative differences in wage or salary rates" would occur "between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation." In mandating an adjustment, the law did not require that there be an elimination or total abrogation of quantitative wage or salary differences; a severe contraction thereof is enough. As has been aptly observed by Presiding Commissioner Edna Bonto-Perez in her dissenting opinion, the contraction between personnel groupings comes close to eighty-three (83%), which cannot, by any stretch of imagination, be considered less than severe. chanroblesvirtualawlibrary chanrobles virtual law library

The "intentional quantitative differences" in wage among employees of the bank has been set by the CBA to about P900 per month as of 01 January 1989. It is intentional as it has been arrived at through the collective bargaining process to which the parties are thereby concluded. 11 The Solicitor General, in recommending the grant of due course to the petition, has correctly emphasized that the intention of the parties, whether the benefits under a collective bargaining agreement should be equated with those granted by law or not, unless there are compelling reasons otherwise, must prevail and be given effect. 12


In keeping then with the intendment of the law and the agreement of the parties themselves, along with the often repeated rule that all doubts in the interpretation and implementation of labor laws should be resolved in favor

of labor, 13 we must approximate an acceptable quantitative difference between and among the CBA agreed work levels. We, however, do not subscribe to the labor arbiter's exacting prescription in correcting the wage distortion. Like the majority of the members of the NLRC, we are also of the view that giving the employees an across-the-board increase of P750 may not be conducive to the policy of encouraging "employers to grant wage and allowance increases to their employees higher than the minimum rates of increases prescribed by statute or administrative regulation," particularly in this case where both Republic Act 6727 and the CBA allow a credit for voluntary compliance. As the Court, through Associate Justice Florentino Feliciano, also pointed out in Apex Mining Company, Inc. v. NLRC: 14

. . . . (T)o compel employers simply to add on legislated increases in salaries or allowances without regard to what is already being paid, would be to penalize employers who grant their workers more than the statutorily prescribed minimum rates of increases. Clearly, this would be counter-productive so far as securing the interests of labor is concerned. . . .

We find the formula suggested then by Commissioner Bonto-Perez, which has also been the standard considered by the regional Tripartite Wages and Productivity Commission for the correction of pay scale structures in cases of wage distortion, 15 to well be the appropriate measure to balance the respective contentions of the parties in this instance. We also view it as being just and equitable. chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, finding merit in the instant petition for certiorari, the same is GRANTED DUE PROCESS, the questioned NLRC decision is hereby SET ASIDE and the decision of the labor arbiter is REINSTATED subject to the MODIFICATION that the wage distortion in question be corrected in accordance with the formula expressed in the dissenting opinion of Presiding Commissioner Edna Bonto-Perez. This decision is immediately executory.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

Bidin, Romero and Melo, JJ., concur.chanroblesvirtualawlibrary chanrobles virtual law library

Feliciano, J., is on leave.

Endnotes:

1 This provision states:

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interests, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. . . .chanrobles virtual law library

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

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

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

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

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

7 Cardona v. NLRC, G.R. No. 89007, March 11, 1991, 195 SCRA 92.chanrobles virtual law library

8 Philippine Overseas Drilling and Oil Development Corporation v. Ministry of Labor, G.R. No. 55703, November 27, 1986, 146 SCRA 79, 88. chanrobles virtual law library

9 Artex Development Co., Inc., v. NLRC, G.R. No. 65045, July 20, 1990, 187 SCRA 611, 615; Five J Taxi v. NLRC, G.R. No. 100138, August 5, 1992, 212 SCRA 225.chanrobles virtual law library

10 This is now under Art. 124 of the Labor Code as amended by Rep. Act 6727.chanrobles virtual law library

11 Plastic Town Center Corporation v. NLRC, G.R. No. 81176, April 19, 1989, 172 SCRA 580, 585. chanrobles virtual law library

12 Filipinas Golf & Country Club, Inc. v. NLRC, G.R. No. 61918, August 23, 1989, 176 SCRA 625, 632.chanrobles virtual law library

13 International Pharmaceuticals, Inc. v. Secretary of Labor, G.R. Nos. 92981-83, January 9, 1992, 205 SCRA 59. chanrobles virtual law library

14 G.R. No. 86200, February 25, 1992, 206 SCRA 497, 501.chanrobles virtual law library

15 See: Employers Confederation of the Philippines v. National Wages and Productivity Commission, G.R. No. 96169, September 24, 1991, 201 SCRA 759, 767.


Manila

SECOND DIVISION

G.R. No. 150986 March 2, 2007

CLARK DEVELOPMENT CORPORATION, Petitioner, vs.MONDRAGON LEISURE AND RESORTS CORPORATION, MONDRAGON INTERNATIONAL PHILIPPINES, INCORPORATED and MONDRAGON SECURITIES CORPORATION, Respondents.

D E C I S I O N

VELASCO, JR., J.:

For review before the Court is the September 5, 2001 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 58302, setting aside the Orders dated December 2, 1999 and February 8, 2000 of the Angeles City Regional Trial Court (RTC), Branch 60, and directing the presiding judge to continue with the proceeding in Civil Case No. 9596 entitled Mondragon and Leisure and Resorts Corporation, et al. v. Clark Development Corporation.

The Facts

Petitioner Clark Development Corporation (CDC) is a government-owned and controlled corporation existing under and by virtue of Philippine laws. Through Republic Act No. 7227 or the "Bases Conversion and Development Act of 1992," petitioner was authorized to develop the Clark Special Economic Zone.2 On February 28, 1994, petitioner entered into a Lease Agreement with respondents Mondragon Leisure and Resorts Corporation (MLRC), Mondragon International Philippines, Inc., and Mondragon Securities Corporation (herein collectively referred to as "Mondragon"), covering the area now known as the Mimosa Leisure Estate. The parties thereafter executed Supplemental Agreements for additional smaller areas.3 Mondragon put up Holiday Inn Hotel, Mimosa Golf and Country Club, the North Vista Hotel, Mimosa Regency Casino, and other facilities and amenities.4

http://lawphil.net/judjuris/juri2007/mar2007/gr_150986_2007.html#fnt4




On November 9, 1998, petitioner made a written demand on Mondragon to pay rental arrears amounting to PhP 427 million to be paid within 30 days from receipt of the demand; otherwise, the Lease Agreement would be terminated. On December 9, 1998, Mondragon filed before the Angeles City RTC, Branch 58 an action for specific performance with prayer for injunctive reliefs pendente lite against petitioner docketed as Civil Case No. 9242 entitled Mondragon Leisure and Resorts Corporation, et al. v. Clark Development Corporation (First Mondragon Case). In said case, Mondragon sought for a judicial writ for the parties’ dispute on the rental arrearages to be submitted to arbitration. The trial court granted a temporary restraining order and later, a writ of preliminary injunction restraining petitioner, in the interim, from terminating the Lease Agreement and taking over the Mimosa Leisure Estate. Petitioner questioned the issuance of the injunctive reliefs pendente lite before the CA. On March 19, 1999, the CA declared the injunctive reliefs null and void.5

From said adverse Decision, Mondragon appealed to this Court and the case was docketed as G.R. Nos. 137796-97. On June 28, 1999, the parties executed a Compromise Agreement,6 which this Court incorporated and noted in its July 15, 1999 Resolution.7 The significant stipulations in the Compromise Agreement stated:

1. Rentals in Arrears. MLRC shall pay CDC the amount of THREE HUNDRED TWENTY FIVE MILLION PESOS (Php325,000,000.00) by way of rentals in arrears as of June 30, 1999. MLRC shall pay CDC in installments, without need of demand, the amount of THREE HUNDRED TWENTY FIVE MILLION PESOS (Php325,000,000.00) on or before the following dates as follows:

July 31, 1999 P50,000,000.00

August 31, 1999 P50,000,000.00

September 31, 1999 P50,000,000.00

October 31, 1999 P50,000,000.00

November 31, 1999 P50,000,000.00

December 31, 1999 P50,000,000.00

June 30, 2000 P25,000,000.00

To secure the payment of the foregoing indebtedness of MLRC to CDC, MLRC shall open an irrevocable domestic letter of credit in favor of CDC from a reputable commercial or universal bank acceptable to CDC in the amount of THREE HUNDRED TWENTY FIVE MILLION PESOS (Php325,000,000.00) and shall submit such letter of credit to CDC not later than thirty (30) days from the signing of this Compromise Agreement at the office of CDC at Building 2127, E. Quirino Avenue cor. C.P. Garcia Avenue, Clark Field, Pampanga.

2. Minimum Guaranteed Lease Rentals. The Minimum Guaranteed Lease Rentals as provided in the Master Lease Agreement, the Supplemental Lease Agreements are hereby consolidated and modified as follows:

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

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

x x x x





In case of Mondragon’s failure to comply with its obligations, Sections 7 and 8 of the Compromise Agreement empowered petitioner to cancel and terminate the said agreement after 30 days counted from Mondragon’s receipt of a demand from petitioner. Mondragon shall leave the leased premises and return to petitioner parcels B, C, D, and F under the Sketch annexed to the Compromise Agreement, the parcel of land known as Wagner, and all lands and improvements along the parade grounds, except the lands where the Mimosa Regency Casino and Chi Restaurant were situated.9

Mondragon failed to pay for the rental arrears and to open the irrevocable domestic letter of credit. In a July 29, 1999 letter to Mondragon, petitioner demanded compliance with all its obligations under the Compromise Agreement within 30 days from receipt of the letter. In view of Mondragon’s failure to comply, petitioner sent another letter on August 29, 1999, informing Mondragon of the cancellation and termination of the Compromise Agreement and demanding it to vacate all the leased premises.10

On September 10, 1999, petitioner filed a Motion for Issuance of a Writ of Execution of Judgment by Compromise Agreement11 in Civil Case No. 9242. On October 25, 1999, petitioner then filed an Amended Motion for the Issuance of a Writ of Execution12 for the execution of the Supreme Court’s July 15, 1999 Resolution. Mondragon opposed both motions on the ground that the issuance of a writ of execution in Civil Case No. 9242 was not proper. Before the trial court could resolve the motion or on November 12, 1999, Mondragon filed a Petition for Declaratory Relief and Specific Performance before the Angeles City RTC, Branch 60, which was docketed as Civil Case No. 9596 entitled Mondragon Leisure and Resorts Corporation, et al. v. Clark Development Corporation (Second Mondragon Case).13 Mondragon alleged in the petition that (1) CDC’s cancellation/termination of the Compromise Agreement was null and void; (2) Mondragon had already substantially complied with its obligations under said agreement; and (3) CDC should be ordered to perform and comply with its obligations under the Compromise Agreement, and to implement in full the Compromise Agreement in so far as it allowed MLRC to settle the PhP 325 million compromise rentals not later than June 30, 2000, and, for this purpose, to accept any payment tendered by Mondragon as long as such was made not later than June 30, 2000.

On November 15, 1999, Mondragon filed before the Angeles City RTC, Branch 60 a Motion for Consolidation,14 praying that the petition in Civil Case No. 9596 be consolidated with Civil Case No. 9242 in Branch 58 of the said trial court. Petitioner opposed the motion and the presiding judge thereafter denied the Motion for Consolidation. On November 28, 1999, petitioner filed a Motion to Dismiss the Petition15 (Second Mondragon Case) alleging that (1) Mondragon was guilty of forum shopping; (2) the petition was barred by prior judgments; and (3) the petition stated no cause of action. Mondragon reacted by opposing petitioner’s motion.

Pending resolution of the motion to dismiss in the Second Mondragon Case, the RTC Branch 58 in Civil Case No. 9242 (First Mondragon Case) granted the Motions for Execution in its December 1, 1999 Order.16 A writ of execution was then issued on the same day.17 Mondragon subsequently filed a Petition for Certiorari with the CA questioning the Writ of Execution, which was docketed as CA-G.R. No. 56079. Meanwhile, the RTC Branch 60 dismissed the Second Mondragon Case (Civil Case No. 9596) because of forum shopping. Mondragon filed a Motion for Reconsideration of said dismissal, which was likewise denied by the trial court. Hence, it filed another petition with the CA, which was docketed as CA-G.R. SP No. 58302.18

The Ruling of the Court of Appeals

The CA held that the presiding judge of the Angeles City RTC, Branch 60 abused her discretion in finding Mondragon guilty of forum shopping. The CA ruled that while there was an identity of parties in both cases,











nevertheless, the nature and causes of the actions and the reliefs prayed for in Civil Case Nos. 9242 (First Mondragon Case) and 9596 (Second Mondragon Case) were entirely different. The CA further held, thus:

To address the issue frontally, this Court shall compare the two cases as to: (a) nature of action; (b) causes of action; and (c) reliefs sought. As to nature of action: Civil Case No. 9242 is for Specific Performance while Civil Case No. 9596 is for Declaratory Relief. As to causes of action: In Civil Case No. 9242, Mondragon’s cause of action against [petitioner] CDC was the alleged improper or unlawful termination of the Lease Agreements and its refusal to submit their dispute to arbitration, while in Civil Case No. 9596, Mondragon’s causes of action are the alleged (a) refusal of CDC to accept that Mondragon’s monetary obligation under the Compromise Agreement were already substantially extinguished as a consequence of its turning over to CDC the High School Wagner Site; and (b) CDC’s unlawful insistence that Mondragon’s failure to secure a letter of credit within the period stipulated (which is a mere technicality) justified the termination of the Compromise Agreement.

As to reliefs prayed for: In Civil Case No. 9242, Mondragon asked the court to order CDC to submit to the stipulated Dispute Settlement under Art. XI of the Lease Agreement and if this fails, to submit the case for arbitration. In Civil Case No. 9596, Mondragon prayed the court (a) to nullify CDC’s cancellation of the Compromise Agreement and affirms [sic] Mondragon’s substantial compliance of its obligations thereunder; (b) to direct CDC to allow Mondragon to settle its ₧325 million obligation not later than June 30, 2000; and (c) to order CDC to pay Mondragon ₧1 million attorney’s fees.

It is too obvious that the nature of the action, the causes of action and reliefs prayed for in Civil Case No. 9242 and Civil Case No. 9596 are entirely different. CDC may believe that Civil Case No. 9596 is utterly unmeritorious and intended only to impede the execution of the Compromise Agreement as embodied in the Supreme Court Decision, but that is no reason to charge Mondragon with forum shopping.19

The CA however denied petitioner’s Motion for Reconsideration in its November 28, 2001 Resolution.20 Hence, we have this petition.

The Issue

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT RULED THAT THERE WAS NO FORUM SHOPPING AND ALLOWED CONTINUANCE OF CIVIL CASE NO. [9596] WHEN IN FACT RES JUDICATA HAD ALREADY SET IN AND ANY MATTER/CASE RAISED/FILED RELATING THERETO IS FORUM SHOPPING

The Court’s Ruling

The petition is meritorious.

We defined forum shopping as the "institution of two (2) or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition" or "the act of a party against whom an adverse judgment has been rendered in one forum, of seeking another (and possibly favorable) opinion in another forum other than by appeal or the special civil action of certiorari."21 In First Philippine International Bank v. Court of Appeals,22 we held that the test to determine whether forum shopping exists is whether the elements of litis pendencia are present or where a final judgment in one case will amount to res judicata in the other. Res judicata means a matter or thing adjudged, judicially acted upon or decided, or settled by judgment. Its requisites are: (1) the former judgment or order must be final; (2) the judgment or order must be one on the merits; (3) it must have been rendered by a court having jurisdiction over the subject matter and





parties; and (4) between the first and second actions, there must be identity of parties, subject matter, and causes of action.23 Thus, in First Philippine International Bank, we explained further:

Consequently, where a litigant (or one representing the same interest or person) sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending, the defense of litis pendencia in one case is a bar to the others; and, a final judgment in one would constitute res judicata and thus would cause the dismissal of the rest. In either case, forum shopping could be cited by the other party as a ground to ask for summary dismissal of the two (or more) complaints or petitions, and for the imposition of the other sanctions, which are direct contempt of court, criminal prosecution, and disciplinary action against the erring lawyer.24

We further held in First Philippine International Bank that "the filing by a party of two apparently different actions, but with the same objective, constituted forum shopping."25 The Court discussed this species of forum shopping as follows:

Very simply stated, the original complaint in the court a quo which gave rise to the instant petition was filed by the buyer (herein private respondent and his predecessors-in-interest) against the seller (herein petitioners) to enforce the alleged perfected sale of real estate. On the other hand, the complaint in the Second Case seeks to declare such purported sale involving the same real property "as unenforceable as against the Bank", which is the petitioner herein. In other words, in the Second Case, the majority stockholders, in representation of the Bank, are seeking to accomplish what the Bank itself failed to do in the original case in the trial court. In brief, the objective or the relief being sought, though worded differently, is the same, namely, to enable the petitioner Bank to escape from the obligation to sell the property to respondent (emphasis supplied).26

In Danville Maritime, Inc. v. Commission on Audit, one of the bases of First Philippine International Bank, we ruled as follows:

In the attempt to make the two actions appear to be different, petitioner impleaded different respondents therein – PNOC in the case before the lower court and the COA in the case before this Court and sought what seems to be different reliefs. Petitioner asks this Court to set aside the questioned letter-directive of the COA dated October 10, 1988 and to direct said body to approve the Memorandum of Agreement entered into by and between the PNOC and petitioner, while in the complaint before the lower court petitioner seeks to enjoin the PNOC from conducting a rebidding and from selling to other parties the vessel "T/T Andres Bonifacio," and for an extension of time for it to comply with the paragraph 1 of the memorandum of agreement and damages. One can see that although the relief prayed for in the two (2) actions are ostensibly different, the ultimate objective in both actions is the same, that is, the approval of the sale of vessel in favor of petitioner, and to overturn the letter directive of the COA of October 10, 1988 disapproving the sale (emphasis supplied).27

In the case at bar, there is no question that the first requirement of identity of parties was met. As regards the rights asserted and reliefs sought, we depart from the findings of the CA and hold that there existed an identity of causes of action and reliefs based on the "same objective" standard enunciated in the aforecited cases.

Mondragon had only one objective in filing the two cases, that is, the perpetuation of its lease. In Civil Case No. 9242, Mondragon tried to prevent the termination of the Lease Agreement, while in Civil Case No. 9596, it tried to prevent the termination of the Compromise Agreement. While they differ in nomenclature and specific provisions, the subject of the two agreements was the same—the lease over the Mimosa Leisure Estate. Mondragon’s cause of action against petitioner CDC, in essence, was the latter’s alleged premature termination of the lease over the Mimosa Leisure Estate. The ultimate relief sought by Mondragon from the courts, on the






other hand, is to be allowed to continue the lease. Without doubt, Mondragon’s objectives in filing the two civil cases were the same, that is, to continue its lease over the Mimosa Leisure Estate.

Mondragon believes that Civil Case No. 9242 (First Mondragon Case) covered a subject matter and cause of action distinct from Civil Case No. 9596 (Second Mondragon Case).

We disagree.

The Compromise Agreement between petitioner and Mondragon supplanted the Lease Agreement. By entering into a compromise, the parties decided to set aside the Lease Agreement in favor of terms and conditions more acceptable to both. They had also waived any issues arising from the Lease Agreement. Thus, in the July 15, 1999 Resolution, the Court incorporated the Compromise Agreement and stated:

[I]t is apparent that the parties have managed to resolve the dispute among themselves, the only thing left being to put our judicial imprimatur on the compromise agreement, in accordance with Article 2037 of the Civil Code.

ACCORDINGLY, the Compromise Agreement dated June 28, 1999 executed by Mondragon and CDC, not being contrary to law, morals, good customs, and public order and public policy is hereby NOTED and the petition is DISMISSED.

SO ORDERED.28

This judgment by compromise already became final and executory and should be complied with any other judgment, as it stands as the judgment in Civil Case No. 9242. Therefore, Mondragon cannot seriously claim that Civil Case No. 9242 does not encompass the Compromise Agreement. Furthermore, since any issue regarding the lease of the Mimosa Leisure Estate was already amicably settled by the parties through the execution of the Compromise Agreement, Civil Case No. 9596 was already barred by prior judgment, that is, the judgment by compromise in Civil Case No. 9242.

Mondragon had the opportunity to oppose petitioner’s Motion for Issuance of a Writ of Execution of Judgment by Compromise Agreement in Civil Case No. 9242 pending before the Angeles City RTC, Branch 58. However, without waiting for the trial court’s resolution on the motion and opposition, Mondragon filed Civil Case No. 9596 before the RTC Branch 60. This was clearly an attempt to prevent the RTC Branch 58 in the First Mondragon Case from ordering the execution of the judgment on the Compromise Agreement by obtaining a favorable judgment from the RTC Branch 60. Moreover, Mondragon’s Petition for Declaratory Relief and Specific Performance (Civil Case No. 9596) merely reiterated the grounds cited in its opposition to CDC’s motion for execution in the First Mondragon Case (Civil Case No. 9242). In filing the second civil case, Mondragon’s objective was the same as the first civil action—to perpetuate its lease over the Mimosa Leisure Estate. To achieve this objective, and assuming that Mondragon had meritorious grounds against the execution filed by petitioner, Mondragon had sufficient remedies in law to question the writ of execution issued by the RTC Branch 58. Mondragon indeed questioned the writ of execution before the CA which was docketed as CA-G.R. No. 56079.

In the end, the decisive test in forum shopping is the possible vexation caused to the courts and litigants by the filing of actions based on the same or related issues in different fora. We held that:

Ultimately, what is truly important to consider in determining whether forum-shopping exists or not is the vexation caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or to grant the same or substantially the same reliefs, in the


process creating the possibility of conflicting decisions being rendered by the different fora upon the same issue. x x x29

The vexation to the courts in this case is evident. There is a high risk of conflict between the decisions of the RTC Branches 58 and 60 regarding their respective civil cases. A decision by one branch of court will constitute res judicata in the other case pending before the other branch of court. Alternatively, if the RTC Branch 60 exercised its jurisdiction over the petition for declaratory relief, then it would have to restrain the execution proceedings in the RTC Branch 58. Thus, interference with the proceedings in another court would ensue. Under the doctrine of non-interference, "a trial court has no authority to interfere with the proceedings of a court of equal jurisdiction, much less to annul the final judgment of a co-equal court."30 In Paper Industries Corporation of the Philippines v. Intermediate Appellate Court, we declared that a court has no jurisdiction to restrain the execution proceedings in another court with concurrent jurisdiction.31

The consolidation of the two civil cases is also not possible in line with the doctrine on non-interference. As observed by the CA:

In the matter of the consolidation of the two cases, Mondragon should be reminded that the same is addressed to the sound discretion of the courts. Neither of the judges in the two cases can impose upon the other the consolidation of the cases. Additionally, consolidation is no longer practicable because Civil Case No. 9242 is already terminated and is in the execution stage, while in Civil Case No. 9596, the issues have not even been joined.32

Furthermore, if Civil Case No. 9596 was allowed to continue, the basic purpose of compromise agreements would be defeated. As defined by the Civil Code:

Art. 2028. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.

Art. 2037. A compromise has upon the parties the effect and authority of res judicata, but there shall be no execution except in compliance with a judicial compromise.

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

A compromise is an agreement between two or more persons who, for preventing or putting an end to a lawsuit, adjust their respective positions by mutual consent in the way they feel they can live with. Reciprocal concessions are the very heart and life of every compromise agreement, where each party approximates and concedes in the hope of gaining balance by the danger of losing. It is, in essence, a contract.

A compromise is binding and has the force of law between the parties, unless the consent of a party is vitiated—such as by mistake, fraud, violence, intimidation or undue influence—or when there is forgery, or if the terms of the settlement are so palpably unconscionable.33

Certainly, a compromise agreement becomes the law between the parties and will not be set aside other than the grounds mentioned above. In Ramnani v. Court of Appeals, we held that the main purpose of a compromise agreement is to put an end to litigation because of the uncertainty that may arise from it. Once the compromise is perfected, the parties are bound to abide by it in good faith.34 Should a party fail or refuse to comply with the terms of a compromise or amicable settlement, the other party could either enforce the compromise by a writ of execution or regard it as rescinded and so insist upon his/her original demand.35








Instead of ending litigation, Mondragon had effectively prolonged the legal battle by filing the second civil case. Considering the investments involved, it is also likely that the parties would unceasingly appeal any judgment/s from the trial and even appellate courts, as the case now exemplifies. The vexation to the courts is already apparent, and the delay from litigating two civil cases is inevitable. Indeed, "[p]rolonging a litigation is anathema to [the purpose of] a compromise agreement."36

Forum shopping is contumacious, as well as an act of malpractice that is proscribed and condemned as trifling with the courts and abusive of their processes. It warrants prosecution for contempt of court and summary dismissal of the actions involved, without prejudice to appropriate administrative sanction against the counsel.37 In this case, only Civil Case No. 9596 is left to be dismissed considering that a judgment by compromise was already rendered in Civil Case No. 9242 through the Court’s July 15, 1999 Resolution. This judgment was already executory; and the RTC Branch 58 had indeed issued a writ of execution against Mondragon.

WHEREFORE, the September 5, 2001 Decision of the CA is REVERSED and SET ASIDE. Civil Case No. 9596 pending before the Angeles City RTC, Branch 60 is DISMISSED with PREJUDICE. Respondents and their counsel, Atty. Ernesto B. Francisco, Jr., are ordered to SHOW CAUSE, within ten (10) days from notice of this judgment, why they should not be held in contempt for violation of the rule against forum shopping. Costs against the respondents.

SO ORDERED.

PRESBITERO J. VELASCO, JR.Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBINGAssociate Justice

Chairperson

ANTONIO T. CARPIO Associate Justice

CONCHITA CARPIO MORALESAsscociate Justice

DANTE O. TINGAAssociate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.





Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNOChief Justice

Footnotes

1 Rollo, pp. 28-37. The Decision was penned by Associate Justice Hilarion L. Aquino and concurred in by Associate Justices Jose L. Sabio, Jr. and Cancio C. Garcia, who is now a member of this Court.

2 Id. at 11. The pertinent section of R.A. No. 7227 provides:

SEC. 15. Clark and other Special Economic Zones.—Subject to the concurrence by resolution of the local government units directly affected, the President is hereby authorized to create by executive proclamation a Special Economic Zone covering the lands occupied by the Clark military reservations and the contiguous extensions as embraced x x x

3 Id. at 248-265.

4 Id. at 30.

5 Id.

6 Id. at 369-375.

7 Mondragon Leisure and Resorts Corp. v. Court of Appeals, G.R. No. 137796, July 15, 1999, 310 SCRA 367.

8 Id. at 370-371.

9 Id. at 372-373.

10 Rollo, pp. 31-32.

11 Id. at 67-71.

12 Id. at 72-79.

13 Id. at 80-92.

14 Id. at 105-106.

15 Id. at 107-117.

16 Id. at 50-64.

http://lawphil.net/judjuris/juri2007/mar2007/gr_150986_2007.html#rnt16
















17 Id. at 65-66.

18 Id. at 33.

19 Id. at 35-36.

20 Id. at 39.

21 Gatmaytan v. Court of Appeals, G.R. No. 123332, February 3, 1997, 267 SCRA 487, 500; citing Ortigas & Company Limited Partnership v. Velasco, G.R. Nos. 109645 & 112564, July 25, 1994, 234 SCRA 455, 500.

22 G.R. No. 115849, January 24, 1996, 252 SCRA 259, 283; citation omitted.

23 Manalo v. Court of Appeals, G.R. No. 124204, April 20, 2001, 357 SCRA 112, 120.

24 Supra note 22, at 284.

25 Id. at 285.

26 Id. at 284-285.

27 G.R. Nos. 85285 & 87150, July 28, 1989, 175 SCRA 701, 716-717.

28 Supra note 7, at 376.

29 Supra note 22, at 289-290.

30 Foster-Gallego v. Galang, G.R. No. 130228, July 27, 2004, 435 SCRA 275, 289; citations omitted.

31 G.R. No. L-71365, June 18, 1987, 151 SCRA 161, 167-169.

32 Supra note 1, at 36-37.

33 G.R. Nos. 132076 & 140989, July 22, 2003, 407 SCRA 165, 172-173; citations omitted.

34 G.R. Nos. 85494, 85496, & 195071, July 10, 2001, 360 SCRA 645, 654.

35 Civil Code, Art. 2041.

36 Supra note 34.

37 Ortigas & Company Limited Partnership v. Velasco, supra note 21.

Republic of the PhilipppinesSUPREME COURTManila






















THIRD DIVISION

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

MONDRAGON LEISURE AND RESORTS CORPORATION, MONDRAGON INTERNATIONAL PHILIPPINES, INC. AND MONDRAGON SECURITIES, INC. petitioners, vs. COURT OF APPEALS and CLARK DEVELOPMENT CORPORATION. Respondents.

R E S O L U T I O N

ROMERO, J.:chanroblesvirtualawlibrary

On March 25, 1999, the Mondragon Leisure and Resorts Corporation (hereafter referred to as Mondragon) filed a petition for review on certiorari under Rule 45 with this Court. Said petition sought the reversal of the decision of the Court of Appeals dated March 19, 1999 setting aside (1) the temporary restraining orders dated December 15 and 16, 1998 issued by Judge Yturralde in Civil Case No. 9242; and (2) the restraining orders dated December 15, December 22, 1998 and January 4, 1999, as well as the order to comment, issued by Judge Viola in Civil Case 8970. chanroblesvirtualawlibrary

Mondragon is the lessee of a 152.25 has. area in what used to be Clark Air Base, having leased the same from private respondent Clark Development Corporation (hereafter CDC) for a period of fifty years. Due to alleged violations by Mondragon of the lease agreement it had with CDC, specifically, over what CDC claims to be Mondragons non-payment of the proper rent over the leased property, the latter sought to eject the former from the premises. In the course of the dispute, personnel of the Philippine National Police set up barricades around the Mimosa Regency Casino, one of the establishments operated by Mondragon in the leased area. chanroblesvirtualawlibrary

In order to prevent its ejectment, Mondragon filed a complaint with the Regional Trial Court of Angeles City, docketed therein as Civil Case No. 9242. The complaint, which prayed for a temporary restraining order, was raffled off to the sala of Judge Yturralde. Said judge granted the prayer for a restraining order. chanroblesvirtualawlibrary

In the interim, the Philippine Amusement and Gaming Corporation (hereafter PAGCOR) likewise threatened to revoke Mondragons authority to operate the Mimosa Regency Casino. Mondragon was, thus, constrained to file a complaint with the Regional Trial Court of Angeles City to restrain PAGCOR from revoking its license to operate a casino. The complaint, docketed as Civil Case No. 8970, was raffled off to the sala of Judge Viola, who issued a restraining order, not only against PAGCOR, but also against CDC. chanroblesvirtualawlibrary

Aggrieved by the issuance of these restraining orders, CDC brought the matter to the Court of Appeals. On March 19, 1999, the appellate court set aside said restraining orders, prompting Mondragon to appeal to this Court. Subsequent to Mondragons filing of the present petition, the Court deputized the Philippine National Police, who were still deployed around the area, to prevent persons from entering or leaving the premises of the casino. chanroblesvirtualawlibrary

On May 13, 1999, CDC filed a manifestation with the Court stating that they were willing to negotiate with Mondragon for the possible amicable settlement of the case. On May 17, 1999, Mondragon responded thereto by filing a manifestation stating their sincere desire to have the case amicably settled. In view of this development, the Court issued a resolution, dated May 18, 1999, granting the parties a non-extendible period of twenty days within which to submit an amicable settlement. chanroblesvirtualawlibrary

On June 28, 1999, the parties submitted a joint manifestation and motion to this Court stating that the parties had reached an amicable settlement, as embodied in a Compromise Agreement executed by the parties on even date, as follows: chanroblesvirtualawlibrary

COMPROMISE AGREEMENT chanroblesvirtualawlibrary

This Compromise Agreement executed by and between chanroblesvirtualawlibrary

CLARK DEVELOPMENT CORPORATION, and corporation duly organized and existing under Philippine laws with principal office address at Building 2127, E. Quirino Avenue cor. C.P. Garcia Avenue, Clark Field, Pampanga, represented herein by its President and Chief Executive Officer, RUFO COLAYCO (hereafter, CDC);chanroblesvirtualawlibrary

andchanroblesvirtualawlibrary

MONDRAGON LEISURE AND RESORTS CORPORATION, a corporation duly organized and existing under Philippine laws and with principal office address at Mimosa Leisure Estate, Clark Field, Pampanga, represented herein by its Chairman of the Board and Chief Executive Officer, JOSE ANTONIO U. GONZALEZ (hereafter, MLRC);chanroblesvirtualawlibrary

Witnesseth that-chanroblesvirtualawlibrary

WHEREAS, CDC and MLRC are presently involved in judicial disputes which are now pending before the Regional Trial Court in Angeles City, Branch 58, entitled Mondragon Leisure and Resorts Corporation, et al. vs. Clark Development Corporation, docketed as Civil Case No. 9242, and the Supreme Court entitled Mondragon Leisure Resorts Corporation, et al. vs. Clark Development Corporation, docketed as G.R. No. 137796-97;chanroblesvirtualawlibrary

WHEREAS, the Supreme Court, in its Resolution dated May 18, 1999, required MLRC and CDC to submit an amicable settlement within twenty (20) days from receipt thereof; chanroblesvirtualawlibrary

WHEREAS, on June 24, 1999, the parties entered into an Agreement to submit their disputes to a Board of Arbitrators;chanroblesvirtualawlibrary

WHEREAS, in the proceedings before the Board of Arbitrators on June 26, 1999 after the parties had presented their position papers and fully and freely ventilated their respective submissions and arguments concerning the issues a Compromise Agreement was eventually reached through the mediation of the Arbitrators, resolving the disputes to the parties mutual satisfaction. chanroblesvirtualawlibrary

NOW THEREFORE, for and in consideration of the foregoing premises, the parties hereby agree that: chanroblesvirtualawlibrary

1. Rentals in Arrears. MLRC shall pay CDC the amount of THREE HUNDRED TWENTY FIVE MILLION PESOS (Php 325,000,000.00) by way of rentals in arrears as of June 30, 1999. MLRC shall pay CDC in installments, without need of demand, the amount of THREE HUNDRED TWENTY FIVE MILLION PESOS (Php 325,000.000.00) on or before the following dates as follows: chanroblesvirtualawlibrary

July 31, 1999 Php 50,000,000.00chanroblesvirtualawlibrary

August 31, 1999 Php 50,000,000.00chanroblesvirtualawlibrary

September 31, 1999 Php 50,000,000.00chanroblesvirtualawlibrary

October 31, 1999 Php 50,000,000.00chanroblesvirtualawlibrary

November 31, 1999 Php 50,000,000.00chanroblesvirtualawlibrary

December 31, 1999 Php 50,000,000.00chanroblesvirtualawlibrary

June 30, 2000 Php 25,000,000.00chanroblesvirtualawlibrary

To secure the payment of the foregoing indebtedness of MLRC to CDC, MLRC shall open an irrevocable domestic letter of credit in favor of CDC from a reputable commercial or universal bank acceptable to CDC in the amount of THREE HUNDRED TWENTY FIVE MILLION PESOS (Php 325,000,000.00) and shall submit such letter of credit to CDC not later than thirty (30) days from the signing of this Compromise Agreement at the office of CDC at Building 2127, E. Quirino Avenue cor. C.P. Garcia Avenue, Clark Field, Pampanga. chanroblesvirtualawlibrary

2. Minimum Guaranteed Lease Rentals. The Minimum guaranteed Lease Rentals as provided in the Master Lease Agreement, the Supplemental Lease Agreements and other Lease Agreements are hereby consolidated and modified as follows:chanroblesvirtualawlibrary

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

1-Mar 2000 to 28-Feb 2001 121,000,000.00chanroblesvirtualawlibrary















1-Mar 2015 to 28-Feb 2016 500, 862,498.63chanroblesvirtualawlibrary








1-Mar 2023 to 28-Feb. 2024 1,035,217,176.17chanroblesvirtualawlibrary

1-Mar 2024 to 28-Feb 2025 1,133,562,807.91chanroblesvirtualawlibrary




















3. Comparison of MGLR and PGR. The parties shall compare the Percentage of Gross Revenues (PGR) derived by MLRC from its operations, and the Minimum Guaranteed Lease Rentals (MGLR), to determine whether such PGR is higher or lower than the MGLR set forth above, as provided for in the Master Lease Agreement, Supplemental Lease Agreements and other Lease Agreements. The amount of rental due to CDC is the higher of the MGLR or PGR. The comparison of the PGR and MLGR shall be done on a monthly basis at MLRCs offices, starting on or before July 31, 1999. For such purpose, MLRC agrees to allow CDC or its authorized representatives to inspect all records, books of accounts and other accounting papers necessary for such comparison. Reconciliation of the MGLR and PGR for the purpose of determining which is higher for the year and making the necessary adjustments, shall be done by accounting representatives of each party not later than May 31 of the succeeding year using the audited financial statements of MLRC prepared by a reputable accounting firm acceptable to CDC. chanroblesvirtualawlibrary

4. Computation of PGR. The gross revenues of all business activities within the Leased properties, including sub-leases and subsidiaries (within the Leased Properties), shall be included in the computation of the PGR; provided that the gross revenues of the casino operations shall be determined in accordance with the next succeeding paragraph.chanroblesvirtualawlibrary

5. Revenues from Casino Operations. In the determination of the PGR for the casino operations within the Mimosa Leisure Estate, the formula being used by the Philippine Amusement and Gaming Corporation (PAGCOR) in the determination of casino gross revenues as defined under Article I of the existing Agreement dated July 27, 1995 between MLRC and PAGCOR shall apply. chanroblesvirtualawlibrary

6. Sub-leases. Sub-leases shall be allowed by CDC in the Leased Properties provided that MLRC shall remit to CDC the amount equivalent to twenty (20%) percent of the excess of the rental income received by MLRC from sub-leases over the PGR.chanroblesvirtualawlibrary

7. Compliance. The parties agree that upon the failure of MLRC to pay any monthly rental based on either the MGLR or PGR, or upon MLRCs failure to comply with any of its obligations under this Compromise Agreement, upon MLRCs receipt of CDCs demand and after the expiration of thirty (30) day period from such receipt of demand without MLRCs complying with said obligation(s), CDC shall have the right to cancel and terminate this Compromise Agreement upon which MLRC shall leave, abandon any and all premises leased to MLRC by CDC under the Master Lease Agreement, the Supplemental Lease Agreements and other Lease Agreements as modified by this Compromise Agreement. chanroblesvirtualawlibrary

8. Return of Certain Leased Properties. MLRC shall return to CDC the following leased properties under the Master Lease Agreement, Supplemental Lease Agreements and other Lease Agreements: chanroblesvirtualawlibrary

-The parcels of land identified as B,C,D and F under the map/sketch attached as Annex A hereof and duly signed by the parties counsels and representatives; chanroblesvirtualawlibrary

-The parcel of land commonly known as Wagner under the Lease Agreement dated August 1, 1996 and the existing improvements thereon;chanroblesvirtualawlibrary

-All lands and improvements along the parade grounds, except the lands where the Mimosa Regency Casino and Chi Restaurant are situated, as shown in the shaded/colored portions marked as nos. 2077, 2052, 2054, 2055 and 2056 of the sketch/map attached hereto as Annex B and duly signed by the parties representatives and counsels; provided that CDC shall allocate the vacant lot next to the Chi Restaurant to the Office of the President of the Philippines;chanroblesvirtualawlibrary

Any future design, development or improvements on the areas at the back of the Casino and Chi Restaurant premises facing the parade grounds shall be subject to the approval of CDC. chanroblesvirtualawlibrary

9. Notice to MLRC. CDC shall immediately inform MLRC of any offer involving any and all of the properties identified as B, C, D and F of Annex A, without having to disclose the nature of the offer. chanroblesvirtualawlibrary

10. Construction of the Water Park. Within six (6) months from the acceptance of the irrevocable domestic Letter of Credit by CDC, MLRC, without need of demand, shall complete the design and financing of the Water Park and submit such design to CDC. The actual construction of the Water Park based on such design shall commence within six (6) months thereafter. The Water Park shall be constructed, completed and operational within Twenty Four (24) months from the said acceptance of the Letter of Credit, without need of demand. For purposes of this Agreement, a month shall mean thirty (30) consecutive days. chanroblesvirtualawlibrary

11. Construction of the Additional Hotel. Within Twelve (12) months from the acceptance of the Letter of Credit, MLRC shall complete the design and financing of one (1) de luxe hotel as provided in Article I, Section 1 of the Master Lease Agreement and submit such design to CDC. The construction of such de luxe hotel shall be completed and the hotel shall be operational within Thirty-six (36) months from the said acceptance of the Letter of Credit.chanroblesvirtualawlibrary

12. Additional Casinos. CDC agrees that MLRC may construct and establish additional casinos within the Leased Properties, subject to approval by the appropriate government agencies, including CDC, obtained in writing. Such approval shall not be unreasonably withheld by CDC. chanroblesvirtualawlibrary

13. Water Rights. CDC reserves the right to promulgate such reasonable rules and regulations to govern the utilization of water inside the Clark Special Economic Zone, including the deep wells already constructed by MLRC, which may include but shall not be limited to the imposition of such reasonable fees for water consumption, which rules and regulations shall apply to all locators including MLRC. chanroblesvirtualawlibrary

14. Interpretation. This Compromise Agreement shall modify and amend the Master Lease Agreement, Supplemental Lease Agreements and other Lease Agreements previously entered into by the parties. All other provisions of the Master Lease Agreement, Supplemental Lease Agreements and other Lease Agreements are not otherwise inconsistent with the provisions of this Compromise Agreement, shall remain valid, binding and enforceable on the parties herein. In the event of any conflict or inconsistency between the provisons of the Master Lease Agreement, Supplemental Lease Agreements and other Lease Agreements and this compromise Agreement, the terms and conditions of this Compromise Agreement shall prevail and supersede the provisions of the Master Lease Agreement, Supplemental Lease Agreements and other Lease Agreements. chanroblesvirtualawlibrary

15. Quitclaim. The parties hereto, including all its directors, officers, and employees hereby waive, remise, abandon, and forever discharge any and all rights; interest(s), claim(s), demands for damages, or cause(s) of action whatsoever in law, which directly or indirectly stemmed from any acts or ommissions of the other, its

officers, directors, employees, agents or representatives, including but not limited to (a) the filing of any action before any court or administrative body in the Philippines, such as Civil Case No. 9242 and the G.R. No. L-137796-97; (b) the termination/cancellation of any contract or agreement between the parties; (c) the stoppage of or constraint placed by either party on any business operations or activities of the other party its officers, directors, employees, agents or representatives; (d) the closure of the Mimosa Regency Casino; (e) any damage which either party may have incurred as a result of actions taken by any third party including banks and financial institutions.chanroblesvirtualawlibrary

16. Liabilities to PAGCOR and BIR. MLRC undertakes to settle its liabilities to PAGCOR and the Bureau of Internal Revenue (BIR) within thirty (30) days from the signing of this Compromise Agreement. chanroblesvirtualawlibrary

17. Privileges and Permits. Immediately upon the signing of this Compromise Agreement, MLRC shall be fully restored to all its rights and privileges as a locator in the Clark Special Economic Zone, except those related to the operations of the Mimosa Regency Casino. chanroblesvirtualawlibrary

18. Opening of the Casino. Immediately upon receipt of the irrevocable domestic Letter of Credit by CDC, MLRC may re-open and resume normal operations of the Mimosa Regency Casino and it (MLRC) shall have full access to, and disposition of, its premises and facilities consistent with this Compromise Agreement. CDC shall not interpose any objection to MLRCs plan to reopen and resume normal operations as may be allowed by the Philippine legal processes. chanroblesvirtualawlibrary

19. Joint Motion for Casino Clean-up and Maintenance. The parties shall jointly move for the Supreme Court to allow CDC and MLRC personnel, not exceeding twenty-five (25) personnel each, to conduct a general clean-up and maintenance of the casino premises. For this purpose, CDC and MLRC shall designate their respective responsible officers to supervise the general clean-up and maintenance activities. chanroblesvirtualawlibrary

20. Withdrawal of Pending Cases. Upon receipt of the irrevocable Letter of Credit by CDC, the parties shall jointly move for the dismissal of all pending cases, with prejudice. chanroblesvirtualawlibrary

IN WITNESS WHEREOF, the parties, assisted by their respective counsels, together with the members of the Board of Arbitrators hereby set their hand this 28th day of June 1999 at Malacaang Palace, Manila. chanroblesvirtualawlibrary

From the foregoing, it is apparent that the parties have managed to resolve the dispute among themselves, the only thing left being to put our judicial imprimatur on the compromise agreement, in accordance with Article 2037[1] of the Civil Code. chanroblesvirtualawlibrary

ACCORDINGLY, the Compromise Agreement dated June 28, 1999 executed by Mondragon and CDC, not being contrary to law, morals, good customs, and public order and public policy is hereby NOTED and the petition is DISMISSED. chanroblesvirtualawlibrary

SO ORDERED. chanroblesvirtualawlibrary

Vitug, Panganiban, Purisima, and Gonzaga-Reyes, JJ., concur.

Republic of the Philippines SUPREME COURTManila

http://www.chanrobles.com/scdecisions/jurisprudence1999/jul99/137796.php#_edn1

FIRST DIVISION

THE OMBUDSMAN, FACT-FINDING AND INTELLIGENCE BUREAU, Office of the Ombudsman, and PRELIMINARY INVESTIGATION AND ADMINISTRATIVE ADJUDICATION BUREAU, Office of the Ombudsman,

Petitioners,

- versus -

NESTOR S. VALEROSO,

Respondent.

G.R. No. 167828

Present:

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,

CORONA,

AZCUNA, and

GARCIA, JJ.

Promulgated:

April 2, 2007

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

D E C I S I O N

GARCIA, J.:

cralawAssailed and sought to be set aside in this petition for review under Rule 45 of the Rules of Court are the following

issuances of the Court of Appeals (CA) in CA-G.R. SP No. 84641,to wit:

1. Decision dated December 16, 2004 annulling and setting aside petitioner Ombudsman's Order of June 10, 2004, which placed respondent Nestor S. Valeroso under preventive suspension for six (6) months without pay; and 2. Resolution dated April 13, 2005 denying petitioners' motion for reconsideration.

cralawThe facts may be briefly stated as follows:

cralawOn 16 January 2004, the Fact-Finding and Intelligence Bureau of the Office of the Ombudsman (OMB) lodged with

OMBs Preliminary Investigation and Administrative Adjudication Bureau-B (PIAAB-B) a complaintwith prayer for

preventive suspension against respondent Nestor S. Valeroso in effect charging him criminally with Perjury and

administratively with Dishonesty, Falsification of Official Documents and Conduct Prejudicial to the Best Interest of the

Service.

cralawIt was alleged in said complaint that respondent, then occupying the position of Director II at the Bureau of Internal

Revenue, failed to disclose his ownership of several properties, as well as certain business interests of his wife, in his

sworn Statements of Assets, Liabilities and Net Worth (SALN) from 1995 to 2002, in violation of Republic Act (R.A.)

No. 6713, otherwise known as the Code of Conduct and Ethical Standards for Public Officials and Employees.

cralawIn an Order dated 19 February 2004, the PIAAB-B, by authority of the Ombudsman, directed Valeroso to submit his

counter-affidavit. He subsequently did so, and followed it with a supplement thereto. Denying the allegations in the

complaint that he had failed to disclose his ownership of the properties listed therein, as well as certain business interests

of his wife, Valeroso prayed for the dismissal of the charges and the denial of the prayer for his preventive suspension.

cralawFinding the existence of a strong indicia of guilt on the part [of Valeroso] for administrative offense of Dishonesty,

and an unexplained increase in his net worth, the Ombudsman, in an Order dated 10 June 2004, placed respondent under

preventive suspension for a period of six (6) months without pay.

cralawOn 17 June 2004, respondent filed with the CA a petition for certiorari and prohibition, with a prayer for preliminary

injunction and/or temporary restraining order, thereat docketed as CA-G.R. SP No. 84641, seeking to nullify the

preventive suspension order against him. Respondent alleged in his petition that the element of strong evidence of guilt

was lacking. He also claimed lack of due process since his right to be informed of the nature of the charges against him

was allegedly denied when the Ombudsman changed the basis of the complaint.

cralawIn its resolution of 02 July 2004, the appellate court initially dismissed CA-G.R. SP No. 84641 on the ground of

prematurity and for being the wrong remedy. The appellate court, however, would later change its mind. Thus, in its

Resolution of 21 July 2004, the CA granted respondent Valeroso's motion for reconsideration and thus reinstated his

certiorari petition and even issued a temporary restraining order enjoining the petitioners from implementing the

preventive suspension order above adverted to.

cralawUltimately, in the herein assailed decision of 16 December 2004, the CA, finding that grave abuse of discretion

tainted the issuance of the preventive suspension orderin question, granted respondents petition and accordingly annulled

and set aside the said order of preventive suspension, to wit:

WHEREFORE, in the light of the foregoing, the extant Petition is GRANTED. cralawThe Order of the Ombudsman, placing the petitioner (now respondent) under preventive suspension for six (6) months without pay, having been issued with grave abuse of discretion is hereby ANNULLED and SET ASIDE. cralawNo pronouncement as to costs. cralawSO ORDERED.

Explains the CA in its decision:

cralaw

cralawIn the present case, it is clear from the recital of the Complaint and the summary thereof as contained in the assailed Order that the charge was only for the alleged failure to disclose certain properties and not for unexplained wealth or increase in net worth. Consequently, and in view of

the above-mentioned rule, [petitioner] Ombudsman could not just arbitrarily expand the original charge of Dishonesty for failure to declare certain assets to Dishonesty for unexplained wealth or unexplainable increase in net worth. cralawSecondly, We do not agree with the [petitioner] Ombudsman that the [respondent] was well aware that the charge for failure to disclose certain properties in the Statement of Assets and Liabilities amounted to a charge for ill-gotten wealth. (Words in brackets added.)

cralawIn essence, the CA found Valeroso's claim of denial of due process meritorious since he was being made to answer,

not only the alleged non-disclosure of certain properties, but also for unexplained increase in net worth, a charge about

which, to the CA, Valeroso was denied the opportunity to explain.

cralawTheir motion for reconsideration having been denied by the CA in its equally assailed Resolution of 13 April 2005,

petitioners are now with this Court on the basic issue of whether or not the CA had erred in finding that grave abuse of

discretion attended the issuance of the subject preventive suspension order. It is petitioners'posture that, contrary to the

conclusion of the appellate court, respondent Valeroso was accorded due process of law, and that there was no infirmity in

the issuance of the disputed preventive suspension order.

cralaw

cralawWe GRANT the petition.

cralawWe shall first cut through the procedural technicalities with which each party attempts to trip its opponent, and

ultimately decide the case on its substantial merits.

cralawThere is no dispute as to the power of the Ombudsman to place a public officer charged with an administrative

offense under preventive suspension. That power is clearly confined under Section 24 of R.A. No. 6770, otherwise known

as the Ombudsman Act of 1989, which reads:

cralawSec. 24. Preventive Suspension. - The Ombudsman or his Deputy may preventively suspend any officer or employee under his authority pending an investigation, if in his judgment the evidence of guilt is strong, and (a) the charge against such officer or employee involves dishonesty, oppression or grave misconduct or neglect in the performance of duty; (b) the charges would warrant removal from the service; or (c) the respondent's continued stay in office may prejudice the case filed against him. cralawThe preventive suspension shall continue until the case is terminated by the Office of the Ombudsman but not more than six months, without pay, except when the delay in the disposition of the case by the Office of the Ombudsman is due to the fault, negligence or petition of the respondent, in which case the period of such delay shall not be counted in computing the period of suspension herein provided.

cralawClear it is from the above that the law sets forth two conditions that must be satisfied to justify the issuance of an

order of preventive suspension pending an investigation, to wit:

1. The evidence of guilt is strong; and 2. Either of the following circumstances co-exist with the first requirement: a. cralawThe charge involves dishonesty, oppression or grave misconduct or neglect

in the performance of duty;

b. cralawThe charge would warrant removal from the service; or

c. cralawThe respondent's continued stay in office may prejudice the case filed against him.

cralawHere, respondent was charged with dishonesty, among other administrative and criminal charges, and the

Ombudsman particularly found strong evidence to support said charge on the specified ground of non-disclosure of assets

and business interests. Questions on the strength of the evidence to support the preventive suspension order are squarely

within the jurisdiction of the Ombudsman. On this score, the following pronouncements of this Court in Yasay, Jr. v.

Desiertoare very much in point:

cralawThe rule is that whether the evidence of guilt is strong, as required in Section 24 of R.A. No. 6770, is left to the determination of the Ombudsman by taking into account the evidence before him. In the very words of Section 24, the Ombudsman may preventively suspend a public

official pending investigation if in his judgment the evidence presented before him tends to show that the official's guilt is strong and if the further requisites enumerated in Section 24 are present. The Court cannot substitute its own judgment for that of the Ombudsman on this matter, absent clear showing of grave abuse of discretion on the part of respondent Ombudsman.

cralawMoreover, the charge of dishonesty is a grave offense which, if duly proven, merits the penalty of dismissal from the

service on commission of the first infraction.

cralawIn finding a denial of due process, the CA capitalized on the alleged added ground of unexplained increase in net

worth.At best, however, the supposedly added ground wasa superfluity that should bolster or strengthen the charge of

dishonesty rather than a reason to invalidate the preventive suspension order.

cralawFor sure, even on the said added ground, respondent cannot even rightfully assert denial of due process or deprivation

of the right to be informed of the true nature and cause of the charges against him. This is so becausethe alleged other

ground was brought about by his very own posturing in his counter-affidavit of24 March2004 that his combined income

[with] his wife is more sufficient to cover the cost of acquiring the properties alleged, erroneously, to have been

concealed. Since the issue of sufficiency of income was raised by no less than the respondent himself, he should have

been barred from questioning the authority and jurisdiction of the Ombudsman in resolving said issue, what with the

familiar rule that a party who has invoked the jurisdiction of a court or tribunal is estopped from challenging that

jurisdiction after the court or tribunal had decided the case against him.

cralawClearly, as the non-disclosure in his SALN of his assets and business interest was understood by respondent himself,

such non-disclosure essentially embraced or comprehended concealment of unexplained wealth. No doubt, the provisions

of the Anti-Graft and Corrupt Practices Act (R.A. No. 3019, as amended) recited in paragraph 7.0 of respondents counter-

affidavit refer to no other than the following complementing provisions of Sections 7 and 8 of the same law which

respectively read:

cralawSec. 7. Statement of Assets and Liabilities. -Every public officer, within thirty days after assuming office, and thereafter, on or before the fifteenth day of April following the close of every calendar year, as well as upon the expiration of his term of office, or upon his resignation or separation from office, shall prepare and file with the office of corresponding Department

Head, or in the case of a Head Department or chief of an independent office, with the office of the President, a true, detailed and sworn statement of the amounts and sources of his income, the amounts of his personal and family expenses and the amount of income taxes paid for the next preceding calendar year: Provided, That public officers assuming office less than two months before the end of the calendar year, may file their first statement on or before the fifteenth day of April following the close of said calendar year.

cralawSec. 8. Prima Facie Evidence of and Dismissal Due to Unexplained Wealth. - If in accordance with the provisions of Republic Act Numbered One Thousand Three Hundred Seventy-Nine, a public official has been found to have acquired during his incumbency, whether in his name or in the name of other persons, an amount of property and/or money manifestly out of proportion to his salary and to his other lawful income, that fact shall be ground for dismissal or removal. Properties in the name of the spouse and dependents of such public official may be taken into consideration, when their acquisition through legitimate means cannot be satisfactorily shown. Bank deposits in the name of or manifestly excessive expenditures incurred by the public official, his spouse or any of their dependents including but not limited to activities in any club or association or any ostentatious display of wealth including frequent travel abroad of a non-official character by any public official when such activities entail expenses evidently out of proportion to legitimate income, shall likewise be taken into consideration in the enforcement of this Section, notwithstanding any provision of law to the contrary. The circumstances hereinabove mentioned shall constitute valid ground for the administrative suspension of the public official concerned for an indefinite period until the investigation of the unexplained wealth is completed.

cralawSection 8 above, speaks of unlawful acquisition of wealth, the evil sought to be suppressed and avoided, and Section

7, which mandates full disclosure of wealth in the SALN, is a means of preventing said evil and is aimed particularly at

curtailing and minimizing the opportunities for official corruption and maintaining a standard of honesty in the public

service. Unexplained matter normally results from non-disclosure or concealment of vital facts. SALN, which all public

officials and employees are mandated to file, are the means to achieve the policy of accountability of all public officers

and employees in the government. By the SALN, the public are able to monitor movement in the fortune of a public

official; it is a valid check and balance mechanism to verify undisclosed properties and wealth.

cralawRespondent cannot claim any right against, or damage or injury that he is bound to suffer from, the issuance of the

preventive suspension order in question, in the light of the unbending rule that there is no such thing as a vested right or

an estate in an office, or even an absolute right to hold it. Public Office is not property but a public trust or agency. While

due process may be relied upon by public officials to protect their security of tenure which, in a limited sense, is

analogous to property, such fundamental right to security of tenure cannot be invoked against a preventive suspension

order which is a preventive measure, not imposed as a penalty.

cralawThe CA's reliance on Yangco v. Board of Public Utility Commissionersto prop up its finding of denial of due process

is utterly misplaced. The order complained of in Yangco was a final order which disposed of the merits of the complaint

in that case. Here, what is at issue is a preventive suspension order, a mere preventive measure during an ongoing

administrative investigation.

cralawWHEREFORE, the instant petition is GRANTED and the assailed decision and resolution of the CA are

ANNULLED and SET ASIDE.

cralawNo pronouncement as to costs.

cralawSO ORDERED.

CANCIO C. GARCIA

Associate Justice

WE CONCUR:

REYNATO S. PUNO

Chief Justice

Chairperson

ANGELINA SANDOVAL-GUTIERREZAssociate Justice

RENATO C. CORONAAssociate Justice

ADOLFO S. AZCUNA

Associate Justice


cralawPursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

Penned by Associate Justice Jose L. Sabio, with Associate Justices Eubulo G. Verzola (now cralawdeceased) and Noel G. Tijam, concurring; Rollo, pp. 8-28.

Id. at29-31.

Id. at 186-189.

Id. at 210-218.

cralawcralawId. at 27.

G.R. No. 134495, December 28, 1998, 300 SCRA 494, 505-506.

De Guzman v. DelosSantos, A.M. No. 2002-8-SC, December 18, 2002, 394 SCRA 210.

Arreza v. Diaz, Jr., G.R. No. 133113, Augusto 30, 2001, 364 SCRA 664.

cralawNationalLand Titles and Deeds Registration Administration v. Civil Service Commission, G.R. No. 84301, April 7, 1993, 221 SCRA 145.

Cornejo v. Gabriel, 41 Phil. 188, 194 (1920); Section 1, Article 11, 1987 Constitution.

cralawAlonzo v. Capulong, G.R. No. 110590, May 10, 1995, 244 SCRA 80; Yabut v. Ombudsman, G.R. No. 111304, June 17, 1994, 233 SCRA 310; Rios v. Sandiganbayan, G.R. No. 129913, September 26, 1997, 279 SCRA 581, 588.

36 Phil. 116 (1917).


SECOND DIVISION

PATRICIO A. VILLENA,Petitioner,cralaw G.R. No. 163021

cralaw- versus -

cralawPresent:

cralawQUISUMBING, J., Chairperson,

cralawCARPIO,

cralawCARPIO MORALES,

cralawTINGA, and

cralawVELASCO, JR., JJ.

PATRICIO S. PAYOYO,Respondent.

cralawPromulgated:cralawApril 27, 2007

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

DECISION

QUISUMBING, J.:

cralawThis petition for review on certiorari assails the Decision dated November 21, 2003 of the Court of Appeals

in CA-G.R. CV No. 70513 and its Resolution dated March 18, 2004, denying petitioners motion for

reconsideration.The appellate court had affirmed with modification the Decision dated April 26, 2000 of the

Regional Trial Court (RTC) of Quezon City, Branch 78.

The facts are undisputed.

On October 28, 1997, respondent Patricio Payoyo and Novaline, Inc., through its president, petitioner Patricio

Villena, entered into a contract for the delivery and installation of kitchen cabinets in Payoyos residence.The

cabinets were to be delivered within ninety days from downpayment of 50% of the purchase price.On October

29, 1997, Payoyo paid Villena P155,183 as downpayment.

On December 9, 1997, Payoyo entered into another contract with Villena for the delivery of home

appliances.On the same day, Payoyo paid 50% of the purchase price equal to P29,638.50 as downpayment.

However, Villena failed to install the kitchen cabinets and deliver the appliances.Payoyo made several demands

upon Villena but the latter failed to comply.

In a letter dated March 12, 1998, Payoyo demanded the cancellation of the contracts and the refund in full of the

downpayments amounting to P184,821.50.Villena promised to install the kitchen cabinets on or before May 10,

1998 and to deliver the appliances.Despite repeated demands, Villena again failed to do so.

Payoyo sent Villena two demand letters on June 24, 1998 and on July 28, 1998 asking the latter to either deliver

all items or return the downpayments.

On October 26, 1998, Payoyo filed a complaint for recovery of a sum of money and damages against

Villena.Villena moved to dismiss the complaint for failure to state a cause of action.He argued that there was no

ground to cancel the contract; thus, there was no basis for refund.The trial court denied his motion.Villena

thereafter filed an answer with compulsory counterclaim citing as an affirmative defense Payoyos failure to

state a cause of action.

cralawOn June 1, 1999, immediately after the trial court issued a pre-trial order, Villena filed a second motion to

dismiss on the ground of lack of jurisdiction over the subject matter but it was denied.Thereafter, trial ensued.

cralawThe trial court decided in favor of Payoyo, reasoning that the power to rescind is implied in reciprocal

obligations.Considering that Villena repeatedly failed to comply with his obligation, Payoyo had the right to

rescind the contract and demand a refund.The trial court ordered petitioner to pay respondent P184,821.50 as

actual damages plus 12% interest per annum from the date of filing of the complaint and P20,000 as moral

damages plus legal interest from judicial demand until fully paid.

cralawThe Court of Appeals affirmed the RTC decision with the following modifications:

1) [Petitioner Villena is] hereby ordered to pay [respondent Payoyo] actual damages in the amount of P 155,183.00 with 12% interest per annum from the date of the filing of the complaint;

2) [Petitioner is] likewise ordered to deliver the Indesit Multifunction Oven and Indesit Hob in favor of [respondent] within thirty (30) days from the finality of this decision; and

3) [Respondent] is hereby ordered to pay the purchase price of the Indesit Multifunction Oven and Indesit Hob in favor of [petitioner] on the day the delivery is made.

cralaw

The appellate court reasoned that while there was delay in the delivery and installation of the kitchen cabinets,

there was none in the delivery of the appliances.The contract for said appliances did not specify the date of

delivery but that delivery should be made upon payment of the 50% balance of the purchase price.Considering

that Payoyo failed to pay the balance, Villena did not incur delay.

cralawHence, the instant petition, where petitioner raises the following issues:

I.

WHETHER OR NOT THE TRIAL COURT HAD JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.

II.

WHETHER OR NOT [THE] DEFENDANTS-APPELLANTS (PETITIONER AND NOVALINE, INC.), ARE ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE COURT UNDER THE CIRCUMSTANCES.

Simply, the issue in this case is whether the trial court had jurisdiction over the complaint.

Petitioner maintains that the RTC should have dismissed the complaint for lack of jurisdiction.He posits that the

RTC has no jurisdiction over the complaint since it is mainly for recovery of a sum of money in the amount of

P184,821.50 which is below the jurisdictional amount set for RTCs.Moreover, petitioner contends that the issue

of jurisdiction may be raised at any time, even on appeal, since jurisdiction is conferred only by law and cannot

be acquired through or waived by any act or omission of the parties.chanroblesvirtuallawlibrary

Respondent, on the other hand, contends that the RTC has jurisdiction over the complaint as the allegations

therein show that it is actually a case for rescission of the contracts.The recovery of a sum of money is merely a

necessary consequence of the cancellation of the contracts.chanroblesvirtuallawlibrary

The pertinent portion of Section 19 of Batas Pambansa Bilang 129, as amended by Republic Act No. 7691,

provides:

SEC. 19. Jurisdiction in civil cases.Regional Trial Courts shall exercise exclusive original jurisdiction:

cralaw(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;

cralawx x x x

(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses, and costs or the value of the property in controversy exceeds One Hundred Thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the abovementioned items exceeds Two Hundred Thousand pesos (P200,000.00).

In determining the jurisdiction of an action whose subject is incapable of pecuniary estimation, the nature of the

principal action or remedy sought must first be ascertained.If it is primarily for the recovery of a sum of money,

the claim is considered capable of pecuniary estimation and the jurisdiction of the court depends on the amount

of the claim.But, where the primary issue is something other than the right to recover a sum of money, where

the money claim is purely incidental to, or a consequence of, the principal relief sought, such are actions whose

subjects are incapable of pecuniary estimation, hence cognizable by the RTCs.chanroblesvirtuallawlibrary

cralawVerily, what determines the nature of the action and which court has jurisdiction over it are the allegations

of the complaint and the character of the relief sought.chanroblesvirtuallawlibrary

cralawIn our considered view, the complaint, albeit entitled as one for collection of a sum of money with damages,

is one incapable of pecuniary estimation; thus, one within the RTCs jurisdiction.The allegations therein show

that it is actually for breach of contract, thus,

cralawx x x x

7. cralawUnder their Contracts, prestation and/or delivery of the items will be performed and delivered within NINETY (90) DAYS from the receipt of downpayment.Plaintiff complied with its prestation but defendants defaulted with their obligation;

cralawx x x x

10. On 12 March 1998, plaintiff sent letter to defendants requesting the latter for the cancellation of the purchase contracts and refund in full the (50%) downpayment paid in the total amount of (P 184, 821.50) within five (5) days upon receipt of the letter

cralawx x x x

12. On 24 March 1998, plaintiff and defendant Patricio A. Villena, personally talked [to] each other regarding the full refund of the (50%) downpayment in the amount of P 184, 821.50.Defendant informed the plaintiff that it was their fault because the order from their Australian supplier was made only on 15 December 1997. Defendant promised plaintiff [delivery of] the three (3) Kitchen

Cabinets on or before 10 [M]ay 1998, and the three (3) home appliances were considered fully paid applying the (50%) downpayment of (P 29,638.50) for home appliances only.But defendant did not fulfill his promise;

13. Despite all these, repeated demands for the installation of the (3) three kitchen [c]abinets and complete delivery of home appliances were made, but defendants did nothing;

cralawx x x x (Emphasis added.)

A case for breach of contract is a cause of action either for specific performance or rescission of contracts.An

action for rescission of contract, as a counterpart of an action for specific performance, is incapable of

pecuniary estimation, and therefore falls under the jurisdiction of the RTC.In the present case, the averments in

the complaint show that Payoyo sought the cancellation of the contracts and refund of the downpayments since

Villena failed to comply with the obligation to deliver the appliances and install the kitchen cabinets subject of

the contracts.The court then must examine the facts and the applicable law to determine whether there is in fact

substantial breach that would warrant rescission or cancellation of the contracts and entitle the respondent for a

refund.While the respondent prayed for the refund, this is just incidental to the main action, which is the

rescission or cancellation of the contracts.

WHEREFORE, the petition is DENIED for lack of merit.The Decision dated November 21, 2003 of the Court

of Appeals in CA-G.R. CV No. 70513 and the Resolution dated March 18, 2004 are AFFIRMED.

Costs against petitioner.

SO ORDERED.


WE CONCUR:


CONCHITA CARPIO MORALES

Associate Justice

DANTE O. TINGA

Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice


cralawI attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

LEONARDO A. QUISUMBING

Associate Justice

Chairperson


cralawPursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.


cralawRollo, pp. 38-56.

cralawId. at 58-59.

cralawId. at 104-107.

cralawId. at 55.

cralawId. at 233.

cralawId. at 238.

cralawId. at 243.

cralawId. at 257.

cralawAN ACT EXPANDING THE JURISDICTION OF THE METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS, AND MUNICIPAL CIRCUIT TRIAL COURTS, AMENDING FOR THE PURPOSE BATAS PAMBANSA BLG. 129, OTHERWISE KNOWN AS THE JUDICIARY REORGANIZATION ACT OF 1980.

cralawHuguete v. Embudo, G.R. No. 149554, July 1, 2003, 405 SCRA 273, 278-279, citing Singsong v. Isabela Sawmill, No. L-27343, February 28, 1979, 88 SCRA 623, 637-638.

cralawHuguete v. Embudo,id., citing Caiza v. Court of Appeals,G.R. No. 110427, February 24, 1997, 268 SCRA 640, 647-648.


cralawRadio Communications of the Philippines, Inc. v. Court of Appeals, G.R. No. 136109, August 1, 2002, 386 SCRA 67, 71.

cralawRussell v. Vestil, G.R. No. 119347, March 17, 1999, 304 SCRA 738, 745, citing Lapitan v. Scandia, Inc., No. L-24668, July 31, 1968, 24 SCRA 479, 482.


THIRD DIVISION

THE HEIRS OF THE LATE PANFILO V. PAJARILLO,

Petitioners,

-versus -

THE HON. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and SAMAHAN NG MGA MANGGAGAWA NG PANFILO V. PAJARILLO, ALFREDO HOYOHOY, HERMINIO CASTILLO, BERNARDO ROCO, RODOLFO TORRES, JULIAN JORVINA, LOURDES ROCO, FLORITA YAPOC, MARLON ALDANA, PARALUMAN ULANG, TOLENTINO SANHI, JOHNNY SORIANO, ANDRES CALAQUE, ROBERTO LAVAREZ, FRANCISCO MORALES, SALVACION PERINA, ANTONIO ABALA, ROMEO SALONGA, AUGUR M. MANIPOL, BIENVENIDA TEQUIL, MARIO ELEP, ALADINO LATIGO, BERNARDINE BANSAL, PEDRO DE BAGUIO, RICARDO CALICA, LAURA CO, VICENTE RECANA, ELENA TOLLEDO, ALFREDO PLAZA, SR., HERMINIO BALDONO, FELIPE YAPOC, ARISTON NIPA, and ALFONSO C. BALDOMAR,

Respondents.

G.R. No. 155056-57

Present:

YNARES-SANTIAGO, J.,

Chairperson,

AUSTRIA-MARTINEZ,

CHICO-NAZARIO,

NACHURA, and

REYES, JJ.

Promulgated:

October 19, 2007

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

D E C I S I O N

CHICO-NAZARIO, J.:

In this Petition for Review on Certiorari under Rule 45 of the Rules of Court, petitioners, heirs of Panfilo V. Pajarillo,

seek to set aside the Decision, and Resolution, dated 12 March 2002 and 28 August 2002, respectively, of the Court of

Appeals in CA-G.R. SP No. 54330 and CA-G.R. SP No. 54331, reversing the two Per Curiam Orders dated 28 October

1996 and 10 January 1997, of the National Labor Relations Commission (NLRC) in NLRC NCR Cases No. 08-03013-87

and 01-00331-88.

Stripped of the non-essentials, the facts are as follows:

Panfilo V. Pajarillo (Panfilo) was the owner and operator of several buses plying certain routes in Metro Manila. He used

the name PVP Liner in his buses. Private respondents were employed as drivers, conductors and conductresses by

Panfilo.

During their employment with Panfilo, private respondents worked at least four times a week or for an average of fifteen

working days per month. They were required to observe a work schedule starting from 4:00 in the morning up to 10:00 in

the evening on a straight time basis. Private respondent drivers were paid a daily commission of 10%, while private

respondent conductors and conductresses received a daily commission of 7%. In sum, each of the private respondents

earned an average daily commission of about P150.00 a day. They were not given emergency cost of living allowance

(ECOLA), 13th month pay, legal holiday pay and service incentive leave pay.chanroblesvirtuallawlibrary

The following were deducted from the private respondents daily commissions: (a) costs of washing the assigned buses; (b)

terminal fees; (c) fees for sweeping the assigned buses; (d) fees paid to the barangay tanod at bus terminals; and (e) rental

fees for the use of stereo in the assigned buses. Any employee who refused such deductions were either barred from

working or dismissed from work.chanroblesvirtuallawlibrary

Thereafter, private respondents and several co-employees formed a union called SAMAHAN NG MGA MANGGAGAWA

NG PANFILO V. PAJARILLO (respondent union). The Department of Labor and Employment (DOLE) issued a

Certificate of Registration in favor of the respondent union.chanroblesvirtuallawlibrary

Upon learning of the formation of respondent union, Panfilo and his children ordered some of the private respondents to

sign a document affirming their trust and confidence in Panfilo and denying any irregularities on his part. Other private

respondents were directed to sign a blank document which turned out to be a resignation letter. Private respondents

refused to sign the said documents, hence, they were barred from working or were dismissed without hearing and notice.

Panfilo and his children and relatives also formed a company union where they acted as its directors and officers.

On 25 August 1987, respondent union and several employees filed a Complaint for unfair labor practice and illegal

deduction before the Labor Arbiter with Panfilo V. Pajarillo Liner as party-respondent. This was docketed

asNLRC/NCR Case No. 00-08-03013-87. On 28 September 1987, the respondent union filed an Amended Complaint

alleging this time not only unfair labor practice and illegal deduction but also illegal dismissal.chanroblesvirtuallawlibrary

On 20 January 1988, respondent union and several employees filed another Complaint for violation of labor standard laws

claiming non-payment of (1) ECOLA, (2) 13th month pay, (3) overtime pay, (4) legal holiday pay, (5) premium pay, and

(6) service incentive leave. The party-respondents in this complaint were PVP LINER INC. and PANFILO V.

PAJARILLO, as its General Manager/Operator. This was docketed as NLRC Case No. 00-01-00331-

88.chanroblesvirtuallawlibrary

Notifications and summons with respect to NLRC/NCR Case No. 00-08-03013-87 were addressed and sent to PANFILO

V. PAJARILLO, President/Manager, Panfilo V. Pajarillo Liner, Pasig Line St., Sta. Ana, Manila on31 August 1987.

The Registry Return Receipt dated 4 September 1987 was addressed to Panfilo V. Pajarillo, and a signature therein

appears on top of the signature of the name of the addressee. With regard to NLRC Case No . 00-01-00331-88,

notifications and summonses wereaddressed and sent to THE PRESIDENT/MANAGER, PVP Liner Inc. and Panfilo

V. Pajarillo, 2175 Zamora Street, Sta. Ana, Manila on 25 January 1988. The Registry Return Receipt dated 4 February

1988 wasaddressed to PVP Liner Inc. and was signed by a certain Irene G. Pajarillo as the addressees agent.

Panfilo denied the charges in the complaints. He maintained that private respondents were not dismissed from work on

account of their union activities; that private respondents and several of their co-employees either resigned or were

separated from work, or simply abandoned their employment long before the respondent union was organized and

registered with the DOLE; that the private respondents are not entitled to ECOLA and 13 th month pay because they

received wages above the minimum provided by law; that the private respondents are not entitled to overtime and legal

holiday pay because these are already included in their daily commissions; that the private respondents are not entitled to

five days incentive leave pay because they work only four days a week; that no deductions were made in the daily

commissions of the private respondents; that the private respondents voluntarily and directly paid certain individuals for

barangay protection and for the cleaning of the assigned buses; that he had no participation in these

activities/arrangements; that the private respondents were not dismissed from work; and that the private respondents either

abandoned their jobs or voluntarily resigned from work.

Upon motion of Panfilo, the complaints in NLRC/NCR Case No. 00-08-03013-87 and NLRC Case No. 00-01-00331-88

were consolidated. On 29 January 1991, Panfilo died.chanroblesvirtuallawlibrary

After hearing and submission by both parties of their respective position papers and memoranda, Labor Arbiter Manuel P.

Asuncion (Arbiter Asuncion) rendered a Decision dated 28 December 1992, dismissing the consolidated complaints for

lack of merit. Thus:

IN THE LIGHT OF ALL THE FOREGOING CONSIDERATIONS, the complaint should be as it is hereby dismissed for lack of merit.

Respondent union appealed to the NLRC. On 18 June 1996, the NLRC reversed the decision of Arbiter Asuncion and

ordered the reinstatement of, and payment of backwages, ECOLA, 13th month pay, legal holiday pay and service

incentive leave pay to, private respondents. The dispositive portion of the NLRC decision reads:

Wherefore, the appealed decision is hereby set aside.Accordingly, judgment is hereby rendered directing:

(1)cralawThe respondent, PVP Liner, Inc. to reinstate to their former positions, without loss of seniority rights and other benefits, the following complainants:Alfredo [Hoyohoy], Bernardo Roco, Rodolfo Torres, Julian Jorvina, Florita Yapoc, Marlon Aldana, Paraluman Ulang, Tolentino Sanhi, Johnny Soriano, Andres Calaque, Roberto Lavarez, Francisco Morales, Salvacion Perina, Antonio Abala, Alfonso Baldomar, Jr., Romeo Salonga, Augur Manipol, Bienvenida Tequil, Mario Elep, Aladino Latigo, Bernardine Bansal, Pedro de Baguio, Ricardo Calica, Laura Co, Vicente Recana, Elena Tolledo, Alfredo Plaza, Sr., Herminio Baldono, Felioe Yapoc, Ariston Nipa and Herminia Castillo and to pay them their backwages corresponding to a period of three (3) years without qualifications and deductions; (2)cralawThe same respondent PVP Liner, Inc. to pay amounts to be computed in a hearing called for said purpose by the Arbitration Branch of Origin, the aforesaid complainants their claims for emergency cost of living allowance (ECOLA), 13 th

month pay, legal holiday pay and service incentive leave benefits subject to the three-year prescriptive period provided under Article 291 of the Labor Code, as amended; (3)cralawThe dismissal of the claims on alleged illegal deductions of the respondents for lack of merits; and (4)cralawThe dismissal of the case of Lourdes Roco due to prescription.

All other claims of the complainants and the respondents are likewise DISMISSED, for being without merit. The Arbitration Branch of Origin is hereby directed to enforce this decision.

Panfilos counsel filed a motion for reconsideration which was partially granted by the NLRC in its Order dated 28

October 1996, to wit:

Dictated, however, by the imperatives of due process, we find it more judicious to just remand this case for further hearing on key questions of:

1)whether or not PVP Liner Inc. was properly impleaded as party respondent in the consolidated cases below; 2)whether or not summons was properly served on said corporation below; and

3)whether or not the subject cases can be considered as principally money claims which have to be litigated in intestate/testate proceedings involving the estate of the late Panfilo V. Pajarillo.

cralawWHEREFORE, our decision dated June 18, 1996 is hereby set aside. Let this case be remanded to the NCR Arbitration Branch for further hearing on the questions above-mentioned.

Respondent union filed a motion for reconsideration of the above-stated Order, but this was denied by the NLRC in its

Order dated 10 January 1997. Thus, respondent union filed a Petition for Certiorari under Rule 65 before this Court.

Pursuant, however, to our ruling in St. Martin Funeral Home v. National Labor Relations Commission, we remanded the

petition to the Court of Appeals for proper disposition.

On 12 March 2002, the Court of Appeals rendered a Decision granting the respondent unions petition and nullifying the

Orders dated 28 October 1996 and 10 January 1997 of the NLRC. It also reinstated the Decision dated 18 June 1986 of the

NLRC. The appellate court decreed:

WHEREFORE, premises considered, the PETITION FOR CERTIORARI is hereby GRANTED. Accordingly, the Order dated October 28 1996 and January 10, 1997 of the NLRC are hereby NULLIFIED and its Decision dated 18 June 1986 be REINSTATED.

Panfilos counsel filed a motion for reconsideration of the said decision but this was denied by the appellate court in its

Resolution dated 28 August 2002.chanroblesvirtuallawlibrary

Herein petitioners, as heirs of Panfilo, filed the instant petition before this Court assigning the following errors:

I.

THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ARRIVING AT THE CONCLUSION THAT PVP LINER INC. WAS PROPERLY MISPLEADED, WHICH IS A NON-EXISTING CORPORATION.

II. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT CONSIDERING THAT THERE WAS NO PROPER AND EFFECTIVE SERVICE OF SUMMONS. III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN PIERCING THE VEIL OF CORPORATE ENTITY OF PVP PAJARILLO LINER INC. IV. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN REINSTATING THE ORDER OF THE NLRC DATED JUNE 18, 1996, WHICH DECLARED THAT PRIVATE RESPONDENTS WERE ILLEGALLY DISMISSED.

Anent the first issue, petitioners alleged that the Decision dated 18 June 1996 of the NLRC, ordered PVP Liner Inc. to

reinstate private respondents and pay their backwages, ECOLA, 13th month pay, legal holiday pay and service incentive

leave pay; that there was no such entity as PVP Liner Inc. organized and existing in the Philippines;that it was not

possible for Arbiter Asuncion and the NLRC to acquire jurisdiction over a non-existing company; that there can never be

a service of summons or notice to a non-existent entity; that the true employer of private respondents was Panfilo as the

sole proprietor/operator of passenger buses doing business under the tradename, PVP Liner,and not PVP Liner Inc.

which was non-existent; that Panfilo never used PVP Liner Inc . as his tradename; that the present operator of PVP Liner

buses is P.V. PAJARILLO LINER, a corporation duly registered with the Securities and Exchange Commission; that at

the time the instant case was filed before Arbiter Asuncion in 1987, the latter did not have jurisdiction over P.V.

PAJARILLO LINER because it was organized and duly registered only on 22 January 1990; that P.V. PAJARILLO

LINER has a separate and distinct personality from Panfilo as the sole operator of PVP Liner buses; that, therefore, P.V.

PAJARILLO LINER cannot be made a party or impleaded in the present case; that the amended complaint in

NLRC/NCR Case No. 00-08-03013-87 impleaded as party-respondent PANFILO V. PAJARILLO LINER and

PANFILO V. PAJARILLO, as operator and responsible officer; that PVP Liner Inc. was not impleaded in the instant

case; and that no summons was ever served on PVP Liner Inc. in NLRC/NCR Case No. 00-08-03013-87.

The contentions are bereft of merit.

In the Complaint dated 20 January 1988, PVP Liner Inc. and Panfilo were impleaded as party-respondents, thus:

That respondent PVP Liner, Inc., is a private business entity, engaged in transportation of passengers, duly organized and existing pursuant to law and for this purpose maintains its principal office at 2175, Zamora Street, Sta. Ana, Manila; while individual respondent [Panfilo] is the General Manager/Operator and may be served with summons, notices and other processes at the aforementioned principal office.

Panfilo did not question in his position paper or in his motion for consolidation of the complaints the foregoing

allegations. Neither did he assail the inclusion of PVP Liner Inc. as party-respondent in respondent unions position paper

dated 6 June 1988.

In Panfilos position paper as well as in the records of the proceedings before Arbiter Asuncion, there is nothing that shows

that Panfilo challenged the jurisdiction of Arbiter Asuncion over PVP Liner Inc. When Arbiter Asuncion decided in

favor of Panfilo, the latter said nothing about the inclusion of PVP Liner Inc. as party respondent and the lack of

jurisdiction of Arbiter Asuncion over the same. It was only when the NLRC rendered a Decision adverse to Panfilo that

the latter alleged the non-existence of PVP Liner Inc. and the fact that Arbiter Asuncion and the NLRC had no

jurisdiction over it.

Petitioners are now precluded from questioning the inclusion of PVP Liner Inc. as party-respondent as well as the

jurisdiction of Arbiter Asuncion and the NLRC over them under the principle of estoppel. It is settled that the active

participation of a party against whom the action was brought, coupled with his failure to object to the jurisdiction of the

court or quasi-judicial body where the action is pending, is tantamount to an invocation of that jurisdiction and a

willingness to abide by the resolution of the case and will bar said party from later on impugning the court or bodys

jurisdiction. This Court has time and again frowned upon the undesirable practice of a party submitting his case for

decision and then accepting the judgment only if favorable, and attacking it for lack of jurisdiction when adverse.

It is apparent that Panfilo V. Pajarillo Liner and PVP Liner Inc. are one and the same entity belonging to one and the

same person, Panfilo. When PVP Liner Inc. and Panfilo V. Pajarillo Liner were impleaded as party-respondents, it was

Panfilo, through counsel, who answered the complaints and filed the position papers, motions for reconsideration and

appeals. It was also Panfilo, through counsel, who participated in the hearings and proceedings. In fact, Abel Pajarillo

(Abel), son of Panfilo, testified before Arbiter Asuncion that he was the operations manager of PVP Liner Inc. Further,

both Panfilo and PVP Liner Inc. were charged jointly and severally in the aforesaid complaints.

Apropos the second issue, petitioners alleged that the notices and summons were received by a certain Irene G. Pajarillo

(Irene) for and in behalf of the PVP Liner Inc.; that Irene was neither and could not have been the President/Manager of

PVP Liner Inc., the latter being non-existent; and that Irene was not an officer of P.V. Pajarillo Liner.chanroblesvirtuallawlibrary

Sections 4 and 5 of Rule IV of the Revised Rules of Procedure of the NLRC provides the rule for the service of

summonses and notices in NLRC cases, viz:

Sec. 4.Service of notices and resolutions. a) Notices or summons and copies of orders, resolutions or decisions shall be served personally by the bailiff or the duly authorized public officer or by registered mail on the parties to the case within five (5) days from receipt thereof by the serving officer. Sec. 5.Proof and completeness of service. The return is prima facie proof of the facts indicated therein. Service by registered mail is complete upon receipt by the addressee or his agent.chanroblesvirtuallawlibrary

Records show that Irene received the summons for NLRC Case No. 00-01-00331-88 on 4 February 1988 in behalf of PVP

Liner Inc. These summonses wereaddressed and sent to THE PRESIDENT/MANAGER, PVP Liner Inc. and Panfilo

V. Pajarillo, 2175 Zamora Street, Sta. Ana, Manila on 25 January 1988.The Registry Return Receipt dated 4 February

1988 wasaddressed to PVP Liner Inc. and was signed by Irene as the addressees agent. Abel, one of the heirs of Panfilo

and the Operations Manager of PVP Liner Inc., testified during the hearing before Arbiter Asuncion that Irene was one of

the secretaries of PVP Liner Inc. Hence, there was a valid service of summons.

Regarding the third issue, petitioners posited that P.V. Pajarillo Liner Inc. is an independent corporation and cannot be

considered as an adjunct or extension of Panfilo as the sole operator of PVP Liner buses; and that at the time P.V.

Pajarillo Liner Inc. was established, it had no liability or obligation which it tried to shield or

circumvent.chanroblesvirtuallawlibrary

It is a fundamental principle of corporation law that a corporation is an entity separate and distinct from its stockholders

and from other corporations to which it may be connected. However, this separate and distinct personality of a corporation

is merely a fiction created by law for convenience and to promote justice. Hence, when the notion of separate juridical

personality is used to defeat public convenience, justify wrong, protect fraud or defend crime, or is used as a device to

defeat labor laws, this separate personality of the corporation may be disregarded or the veil of the corporate fiction

pierced. This is true likewise when the corporation is merely an adjunct, a business conduit or an alter ego of another

corporation. The corporate mask may be lifted and the corporate veil may be pierced when a corporation is but the alter

ego of a person or another corporation.chanroblesvirtuallawlibrary

It is apparent that Panfilo started his transportation business as the sole owner and operator of passenger buses utilizing

the name PVP Liner for his buses. After being charged by respondent union of unfair labor practice, illegal deductions,

illegal dismissal and violation of labor standard laws, Panfilo transformed his transportation business into a family

corporation, namely, P.V. Pajarillo Liner Inc. He and petitioners were the incorporators, stockholders and officers

therein. P.V. Pajarillo Inc. and the sole proprietorship of Panfilo have the same business address. P.V. Pajarillo Inc. also

uses the name PVP Liner in its buses. Further, the license to operate or franchise of the sole proprietorship was merely

transferred to P.V. Pajarillo Liner Inc. The testimony of Abel during the hearing before Arbiter Asuncion is revealing,

thus:

Q:cralawMr. Pajarillo, when did you start assuming the functions of operations manager of PVP Liner?

A:cralawSeven years from now, sometime in the year 1984 or 1985, sir. Q:cralawDo you have any written appointment as Operations Manager?A:cralawNo, sir. Q:cralawI noticed that your surname is Pajarillo you are one way or another related to Mr. Panfilo

V. Pajarillo, is that correct? Witness: A:cralawI am the son of Panfilo Pajarillo, sir. Q:cralawIn so far as PVP Liner is concerned and being the operations manager, are you aware if it

is a single proprietor or a corporation?A:cralawAt the start it was a single proprietorship, lately, it has become a family corporation.

Atty. Flores, Jr. (to witness) Q:cralawWhen you became the Operations Manager of PVP Liner, is it a single proprietor or a

family Corporation?A:cralawIt was a single proprietorship. Q:cralawMr. Witness, since PVP Liner is a transportation business it has a license to operate these

buses?A:cralawYes, there is, sir. Atty. Flores, Jr. (to witness) Q:cralawIn whose name was it registered?A:cralawBefore it was with my father Panfilo V. Pajarillo, sir. Q:cralawDo I understand that the licensing of this transportation company was transferred to

another person?A:cralawIt was never transferred to another person, except now, that it has been transferred

to a corporation.

It is clear from the foregoing that P.V. Pajarillo Liner Inc. was a mere continuation and successor of the sole

proprietorship of Panfilo. It is also quite obvious that Panfilo transformed his sole proprietorship into a family corporation

in a surreptitious attempt to evade the charges of respondent union. Given these considerations, Panfilo and P.V. Pajarillo

Liner Inc. should be treated as one and the same person for purposes of liability.chanroblesvirtuallawlibrary

Finally, petitioners averred that no unfair labor practice was committed, and that private respondents were not illegally

dismissed from work.

In its Decision dated 18 June 1996, the NLRC made an exhaustive discussion of the allegations and evidence of both

parties as regards unfair labor practice and illegal dismissal. It concluded that private respondents, officers and members

of respondent union were dismissed by reason of their union activities and that there was no compliance with substantial

and procedural due process in terminating their services. It also held that the private respondents who were not members

of the respondent union were also dismissed without just or valid cause, and that they were denied due process. These

factual findings and conclusions were supported by substantial evidence comprised of affidavits, sworn statements,

testimonies of witnesses during hearings before Arbiter Asuncion, and other documentary evidence. These findings were

sustained by the Court of Appeals.

The rule is that findings of fact of quasi-judicial agencies like the NLRC are accorded by this Court not only respect but

even finality if they are supported by substantial evidence, or that amount of relevant evidence which a reasonable mind

might accept as adequate to justify a conclusion. We find no compelling reason to deviate from such findings of the

NLRC as affirmed by the Court of Appeals.

Consequently, the private respondents are entitled to reinstatement, backwages and other privileges and benefits under

Article 279 of the Labor Code. Separation pay may be given in lieu of reinstatement if the employee concerned occupies a

position of trust and confidence. In the case at bar, however, the private respondents, as former bus drivers, conductors

and conductresses of petitioners, do not hold the position of trust and confidence.chanroblesvirtuallawlibrary

Nonetheless, it appears from the records that some of the private respondents, namely, Augur Manipol, Rodolfo Torres,

Ricardo Calica, Paraluman Ulang, Edith Chua, Alfredo Hoyohoy, Johnny Soriano, Bernardo Roco, Tolentino Sanhi,

Salvacion Perina, Pedro L. de Baguio, Ariston Nipa, Felipe Yapoc, Laura Co, Bienvenida Tequil, Roberto Lavarez,

Francisco Morales and Herminio Castillo, had executed a Quitclaim/Release discharging petitioners from any and all

claims by way of unpaid wages, separation pay, overtime pay, differential pay, ECOLA, 13 th month pay, holiday pay,

service incentive leave pay or otherwise.

Generally, deeds of release, waivers, or quitclaims cannot bar employees from demanding benefits to which they are

legally entitled or from contesting the legality of their dismissal, since quitclaims are looked upon with disfavor and are

frowned upon as contrary to public policy. Where, however, the person making the waiver has done so voluntarily, with a

full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be

recognized as being a valid and binding undertaking.chanroblesvirtuallawlibrary

There is no showing that the executions of these quitclaims were tainted with deceit or coercion. On the contrary, each of

the private respondents Sinumpaang Salaysay, which accompanied the quitclaims, evinces voluntariness and full

understanding of the execution and consequence of the quitclaim. In their said Sinumpaang Salaysay, the private

respondents stated that their lawyer had extensively explained to them the computation and the actual amount of

consideration they would receive; that they were not forced or tricked by their lawyer in accepting the same; and that they

already received the amount of consideration.chanroblesvirtuallawlibrary

Further, the considerations received by the private respondents were credible and reasonable because they were not

grossly disproportionate to the computation by the NLRC of the amount of backwages and other money

claims.chanroblesvirtuallawlibrary

Given these circumstances, the quitclaims should be considered as binding on the private respondents who executed them.

It is settled that a legitimate waiver which represents a voluntary and reasonable settlement of a workers claim should be

respected as the law between the parties.Accordingly, the private respondents who made such quitclaims are already

precluded from claiming reinstatement, backwages, ECOLA, 13TH month pay, legal holiday pay, service incentive leave

pay, and other monetary claims.

With regard to the other private respondents who did not execute such quitclaims, they are entitled to reinstatement,

backwages, ECOLA, 13TH month pay, legal holiday pay and service incentive leave pay in accordance with the

computation of the NLRC.

WHEREFORE, the petition is hereby DENIED. The Decision and Resolution dated 12 March 2002 and 28 August

2002, respectively, of the Court of Appeals in CA-G.R. SP No. 54330 and CA-G.R. SP No. 54331, are hereby

AFFIRMED with the following MODIFICATIONS: (1) Private respondents Augur Manipol, Rodolfo M. Torres,

Ricardo Calica, Paraluman Ulang, Edith Chua, Alfredo Hoyohoy, Johnny Soriano, Bernardo Roco, Tolentino Sanhi,

Salvacion Perina, Pedro L. de Baguio, Ariston Nipa, Felipe Yapoc, Laura Co, Bienvenida Tequil, Roberto Lavarez,

Francisco Morales and Herminio Castillo are hereby precluded from claiming reinstatement, backwages, ECOLA, 13TH

month pay, legal holiday pay and service incentive leave pay by reason of their respective quitclaims; (2) Petitioners are

hereby ordered to reinstate private respondents Julian Jorvina, Florita Yapoc, Marlon Aldana, Andres Calaque,

Antonio Abala, Alfonso Baldomar, Romeo Salonga, Mario Elep, Aladino Latigo, Bernardine Bansal, Vicente Recana,

Elena Tolledo and Alfredo Plaza, Sr., and to pay these respondents backwages from the time of their dismissal up to the

finality of this Decision. Petitioners are also ordered to pay the foregoing private respondents ECOLA, 13TH month pay,

legal holiday pay and service incentive leave pay in accordance with the computation of the NLRC. Costs against

petitioners.

SO ORDERED.

MINITA V. CHICO-NAZARIOAssociate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson

MA. ALICIA AUSTRIA-MARTINEZANTONIO EDUARDO B. NACHURA

Associate JusticeAssociate Justice

RUBEN T. REYES

Associate Justice

ATTESTATION

cralawI attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.


Associate Justice

Chairperson, Third Division

CERTIFICATION

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

REYNATO S. PUNO

Chief Justicecralaw


SECOND DIVISION

HEIRS OF FLORENCIO ADOLFO, Petitioners,

G.R. No. 164934

- versus -

Present:

QUISUMBING, J., Chairperson,

CARPIO,

CARPIO MORALES,

TINGA,and

VELASCO, JR., JJ.

VICTORIA P. CABRAL, GREGORIA ADOLFO and GREGORIO LAZARO,Respondents.

Promulgated:

August 14, 2007

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DECISION

QUISUMBING, J.:

For review are the Resolutions, dated May 18, 2004 and August 17, 2004of the Court of Appeals in CA-G.R. SP No. 83438,

affirming the Order dated November 20, 2003 of the Provincial Agrarian Reform Adjudicator (PARAD) of MalolosCity in

DCN R-03-02-024203. The PARAD had denied petitioners motion to dismiss and upheld the jurisdiction of the Department of

Agrarian Reform Adjudication Board (DARAB) to hear and decide the petition for the cancellation of emancipation patents and

torrens titles.

The present controversy involves two parcels of land consisting of 29,759 square meters and 957 square meters,

respectively, situated in Barangay Iba (now Pantok), Meycauayan, Bulacan.

Petitioners are the heirs of the late Florencio Adolfo, Sr. They alleged that the parcels were included in the Operation

Land Transfer program under Presidential Decree (P.D.) No. 27. Thus, their father applied with the Ministry of Agrarian

Reform (now Department of Agrarian Reform) for the purchase of these parcels. On April 25, 1988, he was issued

Emancipation Patents (EPs) Nos. A-117858 and A-117859-H, which became the basis for the issuance of Transfer

Certificates of Titles (TCTs) Nos. EP-003(M) and EP-004(M) on October 24, 1989.chanroblesvirtuallawlibrary

Petitioners added that in 1999, they applied with the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 15, for the

issuance of new owners duplicate copies of TCT Nos. EP-003(M) and EP-004(M) after the same were lost. The trial court

granted their petition and ordered the Register of Deeds of Meycauayan, Bulacan, to issue new owners duplicate copies of

the certificates of titles.chanroblesvirtuallawlibrary

On their part, respondent Victoria P. Cabral alleged that she is the lawful and registered owner of the lands covered by

petitioners emancipation patents and certificates of titles as evidenced by Original Certificate of Title (OCT) No. 0-1670

[now OCT No. 0-220(M)] of the Registry of Deeds of Meycauayan, Bulacan, issued on January 6, 1960. She also averred

that petitioners emancipation patents should be cancelled since (1) these covered non-agricultural lands outside the

coverage of P.D. No. 27; (2) these were issued without due notice and hearing; and (3) no Certificates of Land Transfer

(CLTs) were previously issued.

On August 26, 2003, respondent Cabral filed with the DARAB, Region III, Branch II, Malolos City, Bulacan, a petition

for the cancellation of petitioners emancipation patents and torrens titles and the revival of OCT No. 0-1670 [now OCT

No. 0-220(M)]. Petitioners moved to dismiss the petition due to (1) lack of jurisdiction, (2) lack of legal personality to

sue, and (3) prescription.

On November 20, 2003, the PARAD denied the motion and upheld the DARABs jurisdiction to determine and adjudicate

cases involving the issuance, correction and cancellation of emancipation patents. Petitioners moved for reconsideration

but it was denied.

Petitioners then filed a petition for certiorari and prohibition with the Court of Appeals. On May 18, 2004, the appellate

court dismissed the petition due to petitioners failure to exhaust administrative remedies since the orders of the PARAD

should have been elevated for review to the DARAB. The appellate court also ruled that petitioners erred in availing of

certiorari and prohibition under Rule 65 of the Rules of Court instead of a petition for review under Rule 43. The Court of

Appeals ruled, thus:

WHEREFORE, this petition for certiorari and prohibition, with prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction, must be as it [is] hereby DENIED DUE COURSE, and consequently DISMISSED.

SO ORDERED.

Meanwhile, the PARAD rendered a Decision on June 18, 2004, canceling petitioners emancipation patents and ordering the

Registry of Deeds of Meycauayan, Bulacan, to revive respondent Cabrals OCT No. 0-1670 [now OCT No. 0-220(M)]. That

decision is on appeal with the DARAB.

In the instant petition, petitioners raise the following issues:

I.

[WHETHER] THE COURT [A QUO] COMMITTED A SERIOUS MISTAKE OR ERROR IN [RULING] THAT IN CASE OF DENIAL OF A MOTION TO DISMISS BASED ON LACK OF JURISDICTION, THE PROPER REMEDY IS RULE 43 AND NOT RULE 65 OF THE 1997 RULES OF CIVIL PROCEDURE[.]

II.

[WHETHER] THE COURT A QUO FAILED TO DETERMINE THE ISSUE [ON] THE LACK OF JURISDICTION OF [THE] DARAB, TO HEAR, TRY AND DECIDE CASES INVOLVING CANCELLATION OF TORRENS TITLE DULY ISSUED BY THE REGISTER OF DEEDS FOLLOWING P.D. 1529 [SINCE] THE SAME IS WITHIN [THE] EXCLUSIVE JURISDICTION OF THE REGIONAL TRIAL COURTS.

Simply stated, the issues are: (1) Is Rule 65 the proper remedy in this case where the motion to dismiss on the ground of

lack of jurisdiction is denied? and (2) Does the DARAB have jurisdiction to hear and decide cases for the cancellation of

emancipation patents and certificates of titles?

Petitioners contend that where a party assails the jurisdiction of the lower tribunal, the proper remedy is Rule 65 and not

Rule 43 of the Rules of Court. They also argue that an action for cancellation of a certificate of title falls within the

exclusive jurisdiction of the RTC pursuant to Section 19 of Batas Pambansa Blg. 129. They also contend that the

jurisdiction of the DARAB is limited to agrarian disputes and agrarian reform under Section 50 of Republic Act No. 6657.

They cite the case of Llonillo v. Cruz, where the Court of Appeals ruled that the DARAB has no jurisdiction to cancel a

certificate of title duly issued in accordance with P.D. No. 1529.chanroblesvirtuallawlibrary

Respondent Cabral counters that an order denying a motion to dismiss cannot be the subject of a petition for certiorari

under Rule 65. The proper remedy is to file an answer to the petition, proceed to trial, and await judgment before making

an appeal to the DARAB which has the exclusive appellate jurisdiction to review the orders of the adjudicators. She also

contends that the cancellation of emancipation patents is an agrarian matter over which the DARAB has jurisdiction.

After a thorough consideration of the contentions of the parties, we hold that the petition lacks merit.

An order denying a motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a case, as it

leaves something to be done by the court before the case is finally decided on the merits. Thus, the general rule is that the

denial of a motion to dismiss cannot be questioned in a special civil action for certiorari which is not intended to correct

every controversial interlocutory ruling. It is a remedy designed to correct errors of jurisdiction and not errors of judgment.

Neither can a denial of a motion to dismiss be the subject of an appeal unless and until a final judgment or order is rendered.

In order to justify the grant of the extraordinary remedy of certiorari, the denial of the motion to dismiss must have been

tainted with grave abuse of discretion amounting to lack or excess of jurisdiction.chanroblesvirtuallawlibrary

The petition for certiorari and prohibition filed by petitioners with the Court of Appeals was not the proper remedy to

assail the PARADs denial of their motion to dismiss. The denial was merely an interlocutory order. Even assuming that

certiorari was the proper remedy, the PARAD did not commit grave abuse of discretion in denying petitioners motion. It

is a well settled rule that after the trial court denies a motion to dismiss the complaint, the defendant should file an answer,

proceed to trial and await judgment before interposing an appeal.chanroblesvirtuallawlibrary

On the issue of jurisdiction, basic is the rule that it is conferred by law and determined by the material averments in the

complaint as well as the character of the relief sought. Defenses resorted to in the answer or motion to dismiss are

disregarded, otherwise the question of jurisdiction would depend entirely upon the whim of the

defendant.chanroblesvirtuallawlibrary

Specific and general provisions of Rep. Act No. 6657 and its implementing rules and procedure address the issue of

jurisdiction. Section 50 of Rep. Act No. 6657 confers on the Department of Agrarian Reform (DAR) quasi-judicial

powers to adjudicate agrarian reform matters. In the process of reorganizing the DAR, Executive Order No. 129-Acreated

the DARAB to assume the powers and functions with respect to the adjudication of agrarian reform

matters.chanroblesvirtuallawlibrary

Section 1, Rule II of the DARAB 2003 Rules of Procedure enumerates the cases falling within its primary and exclusive

original jurisdiction, as follows:

SECTION 1.Primary and Exclusive Original Jurisdiction.The Adjudicator shall have primary and exclusive original jurisdiction to determine and adjudicate the following cases:

1.1cralawThe rights and obligations of persons, whether natural or juridical, engaged in the management, cultivation, and use of all agricultural lands covered by Republic Act (RA) No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL), and other related agrarian laws;

x x x x

1.6 cralawThose involving the correction, partition, cancellation, secondary and subsequent issuances of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs) which are registered with the Land Registration Authority;

cralawcralawx x x x

1.12 Those cases previously falling under the original and exclusive jurisdiction of the defunct Court of Agrarian Relations under Section 12 of PD No. 946 except those cases falling under the proper courts or other quasi-judicial bodies;

1.13 Such other agrarian cases, disputes, matters or concerns referred to it by the Secretary of the DAR.(Emphasis supplied.)

Subparagraph 1.6 provides that the DARAB has jurisdiction over cases involving the correction, partition, cancellation,

secondary and subsequent issuances of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs)

which are registered with the Land Registration Authority (the Registry of Deeds). Incidentally, under DAR

Memorandum Order No. 02, one of the grounds for the cancellation of registered EPs is that the land is exempt or

excluded from P.D. No. 27.chanroblesvirtuallawlibrary

In respondent Cabrals petition before the DARAB, she sought the cancellation of petitioners emancipation patents and

torrens titles. She impugned the legality of the emancipation patents since (1) these covered non-agricultural lands outside

the coverage of P.D. No. 27, (2) these were issued without due notice and hearing, and (3) no CLTs were previously

issued. Based on these material averments, it is crystal-clear that the action was one for cancellation of emancipation

patents on the ground of exemption or exclusion from the coverage of P.D. No. 27. Indisputably, jurisdiction is properly

vested with the DARAB. Therefore, we find that there is neither persuasive justification nor compelling reason to reverse

the decision reached by the Court of Appeals.

WHEREFORE, the instant petition is DENIED for lack of merit. The Resolutions dated May 18, 2004 and August 17, 2004of

the Court of Appeals in CA-G.R. SP No. 83438, affirming the Order dated November 20, 2003 of the PARAD of Malolos City

in DCN R-03-02-024203, are AFFIRMED.

Costs against petitioners.

SO ORDERED.


WE CONCUR:



Associate Justice

DANTE O. TINGA

Associate Justice


Associate Justice




Associate Justice

Chairperson





THIRD DIVISION

PERKIN ELMER SINGAPORE PTE LTD.,

cralawPetitioner,

-versus-

DAKILA TRADING CORPORATION,

Respondent.

G.R. No. 172242

Present:

YNARES-SANTIAGO, J.,Chairperson,

AUSTRIA-MARTINEZ,

CHICO-NAZARIO, and

NACHURA, JJ.

Promulgated:

August 14, 2007

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D E C I S I O N

CHICO-NAZARIO, J.:

The case before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil

Procedure seeking to annul and set aside the Decision, dated 4 April 2006, of the Court of Appeals in CA-G.R. SP No.

78981, which affirmed the Orders, dated 4 November 2002 and 20 June 2003, of the Mandaluyong City Regional Trial

Court (RTC), Branch 212, in Civil Case No. MC99-605, which, in turn, denied the Motion to Dismiss and subsequent

Motion for Reconsideration of herein petitioner Perkin Elmer Singapore Pte Ltd.

Petitioner is a corporation duly organized and existing under the laws of Singapore.It is not considered as a foreign

corporation doing business in the Philippines.Herein respondent Dakila Trading Corporation is a corporation organized

and existing under Philippine laws, and engaged in the business of selling and leasing out laboratory instrumentation and

process control instrumentation, and trading of laboratory chemicals and supplies.

The antecedents of the present case are as follows:

Respondent entered into a Distribution Agreement on 1 June 1990 with Perkin-Elmer Instruments Asia Pte Ltd.

(PEIA), a corporation duly organized and existing under the laws of Singapore and engaged in the business of

manufacturing, producing, selling or distributing various laboratory/analytical instruments.By virtue of the said

agreement, PEIA appointed the respondent as the sole distributor of its products in the Philippines.The respondent was

likewise granted the right to purchase and sell the products of PEIA subject to the terms and conditions set forth in the

Distribution Agreement.PEIA, on the other hand, shall give respondent a commission for the sale of its products in the

Philippines.

Under the same Distribution Agreement, respondent shall order the products of PEIA, which it shall sell in the

Philippines, either from PEIA itself or from Perkin-Elmer Instruments (Philippines) Corporation (PEIP), an affiliate

of PEIA.PEIP is a corporation duly organized and existing under Philippine laws, and involved in the business of

wholesale trading of all kinds of scientific, biotechnological, and analytical instruments and appliances.PEIA allegedly

owned 99% of the shares of PEIP.

On 2 August 1997, however, PEIA unilaterally terminated the Distribution Agreement, prompting respondent to file

before the RTC of Mandaluyong City, Branch 212, a Complaint for Collection of Sum of Money and Damages with

Prayer for Issuance of a Writ of Attachment against PEIA and PEIP, docketed as Civil Case No. MC99-605.

The RTC issued an Order, dated 26 March 1999, denying respondents prayer for the issuance of a writ of attachment.The

respondent moved for the reconsideration of the said Order but it was denied in another Order, dated 11 January 2000.

Respondent then filed Ex-Parte Motions for Issuance of Summons and for Leave of Court to Deputize Respondents

General Manager, Richard A. Tee, to Serve Summons Outside of the Philippines, which the RTC granted in its Order,

dated 27 April 2000.Thus, an Alias Summons, dated 4 September 2000, was issued by the RTC to PEIA.But the said

Alias Summons was served on 28 September 2000 and received by Perkinelmer Asia, a Singaporean based sole

proprietorship, owned by the petitioner and, allegedly, a separate and distinct entity from PEIA.

PEIP moved to dismiss the Complaint filed by respondent on the ground that it states no cause of action.Perkinelmer Asia,

on the other hand, through its counsel, sent letters, dated 12 October 2000 and 15 November 2000, to the respondent and

to the RTC, respectively, to inform them of the wrongful service of summons upon Perkinelmer Asia.

Accordingly, respondent filed an Ex-Parte Motion to Admit Amended Complaint, together with the Amended Complaint

claiming that PEIA had become a sole proprietorship owned by the petitioner, and subsequently changed its name to

Perkinelmer Asia.Being a sole proprietorship of the petitioner, a change in PEIAs name and juridical status did not detract

from the fact that all its due and outstanding obligations to third parties were assumed by the petitioner.Hence, in its

Amended Complaint respondent sought to change the name of PEIA to that of the petitioner.In an Order, dated 24 July

2001, the RTC admitted the Amended Complaint filed by the respondent.Respondent then filed another Motion for the

Issuance of Summons and for Leave of Court to Deputize Respondents General Manager, Richard A. Tee, to Serve

Summons Outside the Philippines.In another Order, dated 4 March 2002, the RTC deputized respondents General

Manager to serve summons on petitioner in Singapore.The RTC thus issued summons to the petitioner.Acting on the said

Order, respondents General Manager went to Singapore and served summons on the petitioner.

Meanwhile, in an Order, dated 10 October 2001, the RTC denied the Motion to Dismiss filed by PEIP, compelling the

latter to file its Answer to the Amended Complaint.

Petitioner subsequently filed with the RTC a Special Appearance and Motion to Dismiss respondents Amended Complaint

on 30 May 2002 based on the following grounds: (1) the RTC did not acquire jurisdiction over the person of the

petitioner; (2) the respondent failed to state a cause of action against the petitioner because it is not the real party-in-

interest; (3) even assuming arguendo that the respondent correctly filed the case against the petitioner, the Distribution

Agreement which was the basis of its claim grants PEIA the right to terminate the contract at any time; and (4) the venue

was improperly laid.The RTC in its Order, dated 4 November 2002, denied petitioners Motion to Dismiss, ratiocinating as

follows:

Prescinding from the above arguments of both parties, the [RTC] is inclined to DENY the Motion to Dismiss. cralawA careful scrutiny on (sic) the allegation in the (Amended) Complaint would show that [herein respondent] alleges ownership by the [herein petitioner] of shares of stocks in the [PEIP].Such allegation of ownership of shares of stocks by the [petitioner] would reveal that there is an allegation of personal property in the Philippines.Shares of stocks represent personal property of the shareholder.Thus, it follows that even though the Amended Complaint is primarily for damages, it does relate to a property of the [petitioner], to which the latter has a claim interest (sic), or an actual or contingent lien, which will make it fall under one of the requisite (sic) for extraterritorial service under Section 15, Rule 14, of the Rules of Court.Thus, it could be gainfully said that the summons had been validly served for [RTC] to acquire jurisdiction over the [petitioner]. cralawThe [petitioner] hinges its dismissal on the failure of the [respondent] to state a cause of action.The [RTC] would like to emphasize that in a Motion to Dismiss, it hypothetically admits the truth of the facts alleged in a complaint. cralawWhen the ground for dismissal is that the complaint states no cause of action, such fact can be determined only from the facts alleged in the complaint x x x and from no other x x x and the Court cannot consider other matters aliunde x x x.This implies that the issue must be passed upon on the basis of the allegations and declare them to be false, otherwise it would be a procedural error and a denial of due process to the [respondent] x x x.

The three (3) essential elements of a cause of action are the following:

a) The plaintiffs legal rights;b) A correlative obligation of the defendant;c) The omission of the defendant in violation of the legal rights.

A cursory reading of the Amended Complaint would reveal that all of the essential elements of a cause of action are attendant in the Amended Complaint. cralawAs for the contention that venue was improperly laid, x x x, the [RTC] in its ultimate desire that the ends of justice could be served in its fullest, cannot rule that venue was improperly laid. cralawx x x x cralawThe stipulation as to the venue of a prospective action does not preclude the filing of the suit in the residence of the [respondent] under Section 2, Rule 4, Rules of Court, especially where the venue stipulation was imposed by the [petitioner] for its own benefits. cralawx x x x cralawThe [RTC] further believes that it is imperative that in order to ferret out the truth, a full-blown trial is necessary for parties to be able to prove or disprove their allegations.

Petitioner moved for the reconsideration of the aforesaid Order but, it was denied by the RTC in its Order, dated 20 June

2003.

Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure with

application for temporary restraining order and/or preliminary injunction before the Court of Appeals alleging that the

RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in refusing to dismiss the Amended

Complaint.The Court of Appeals never issued any temporary restraining order or writ of injunction.On 4 April 2006, the

Court of Appeals rendered a Decision affirming the RTC Orders of 4 November 2002 and 20 June 2003.

This brings us to the present Petition before this Court wherein petitioner raised the following issues.

I.

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

II.

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

A.

WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE PETITION FOR CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND THAT THE AMENDED COMPLAINT FAILED TO STATE A CAUSE OF ACTION AGAINST PETITIONER. 1. BASED ON THE ALLEGATIONS IN THE EX-PARTE MOTION TO ADMIT AMENDED COMPLAINT, AMENDED COMPLAINT, AND ALL DOCUMENTS ATTACHED AND/OR RELATED THERETO, PETITIONER IS NOT THE REAL PARTY-IN-INTEREST DEFENDANT IN THE CASE BELOW. 2. ASSUMING ARGUENDO THAT RESPONDENT DAKILA FILED THIS CASE AGAINST THE CORRECT [PARTY], INASMUCH AS THE DISTRIBUTION AGREEMENT DATED 1 JUNE 1990 GRANTS [PEIA] THE RIGHT TO TERMINATE THE CONTRACT AT ANY TIME, RESPONDENT DAKILA FAILS TO STATE A CAUSE OF ACTION IN THE CASE BELOW.

B.

WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE PETITION FOR CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND OF IMPROPER VENUE.

III.

WHETHER OR NOT PETITIONER IS ENTITLED TO A TEMPORARY RESTRAINING ORDER AND/OR WRIT OF INJUNCTION.

The foregoing issues raised by petitioner essentially requires this Court to make a determination of the (1) proper service

of summons and acquisition of jurisdiction by the RTC over the person of the petitioner; (2) existence of a cause of action

against petitioner in respondents Amended Complaint; and (3) proper venue for respondents civil case against petitioner.

Petitioner contends that Civil Case No. MC99-605 involves an action for collection of sum of money and damages arising

from the alleged breach of the Distribution Agreement.The action is one in personam, or an action against a person based

on his personal liability; and for the court a quo to acquire jurisdiction over the person of the petitioner, personal service

of summons, and not extraterritorial service of summons, must be made within the state even if the petitioner is a non-

resident.Petitioner avers that extraterritorial service of summons stated under Section 15, Rule 14 of the 1997 Revised

Rules of Civil Procedure, is only proper in in rem and quasi in rem cases; thus, resort to an extraterritorial service of

summons in the case at bar was erroneous.Petitioner asseverates that the allegations in the respondents Amended

Complaint that the petitioner has personal properties within the Philippines does not make the present case one that relates

to, or the subject of which is, property within the Philippines warranting the extraterritorial service of summons under

Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure.Petitioner states that for an action to be considered as

one that relates to, or the subject of which is, property within the Philippines, the main subject matter of the action must be

the property within the Philippines itself, and such was not the situation in this case.Likewise, the prayer in respondents

Amended Complaint for the issuance of a writ of attachment over the personal property of PEIP, which is 99% owned by

petitioner (as the supposed successor of PEIA), did not convert the action from one in personam to one that is quasi in

rem.Also, the petitioner points out that since the respondents prayer for the issuance of a writ of attachment was denied by

the RTC in its Order, dated 26 March 1999,then the nature of Civil Case No. MC99-605 remains in personam, contrary to

the ruling of the Court of Appeals that by the attachment of the petitioners interest in PEIP the action in personam was

converted to an action quasi in rem.Resultantly, the extraterritorial service of summons on the petitioner was not validly

effected, and did not give the RTC jurisdiction over the petitioner.

Petitioner further argues that the appellate court should have granted its Petition for Certiorari on the ground that the RTC

committed grave abuse of discretion amounting to lack or excess of jurisdiction in refusing to dismiss respondents

Amended Complaint for failure to state a cause of action against petitioner which was not the real party-in-interest in Civil

Case No. MC99-605.Petitioner claims that it had never used the name PEIA as its corporate name, and neither did it

change its name from that of PEIA.Petitioner stresses that PEIA is an entirely different corporate entity that is not

connected in whatever manner to the petitioner.Even assuming arguendo that petitioner is the real party-in-interest in

Civil Case No. MC99-605 or that petitioner and PEIA are one and the same entity, petitioner still avows that the

respondent failed to state a cause of action against it because the Distribution Agreement expressly grants PEIA the right

to terminate the said contract at any time.

Lastly, it is the contention of the petitioner that the appellate court should have granted its Petition for Certiorari because

the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in refusing to dismiss Civil Case

No. MC99-605 for having been filed in an improper venue.Petitioner asserts that in the Distribution Agreement entered

into between the respondent and PEIA, both had mutually agreed to the exclusive jurisdiction of the courts of Singapore

or of the Philippines as elected by PEIA.Absent any waiver by PEIA of its right to choose the venue of the dispute, the

Complaint filed by the respondent before the RTC in the Philippines should have been dismissed on the ground of

improper venue.

The Petition is meritorious.

Jurisdiction is the power with which courts are invested for administering justice; that is, for hearing and deciding cases.

In order for the court to have authority to dispose of the case on the merits, it must acquire jurisdiction over the subject

matter and the parties.

Jurisdiction of the court over the subject matter is conferred only by the Constitution or by law. It is determinable on the

basis of allegations in the complaint.

Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, while jurisdiction over the defendants in a

civil case is acquired either through the service of summons upon them in the manner required by law or through their

voluntary appearance in court and their submission to its authority.If the defendants have not been summoned, unless they

voluntarily appear in court, the court acquires no jurisdiction over their persons and a judgment rendered against them is

null and void.To be bound by a decision, a party should first be subjected to the courts jurisdiction.

Thus, one of the modes of acquiring jurisdiction over the person of the defendant or respondent in a civil case is through

service of summons.It is intended to give notice to the defendant or respondent that a civil action has been commenced

against him. The defendant or respondent is thus put on guard as to the demands of the plaintiff or the petitioner.

The proper service of summons differs depending on the nature of the civil case instituted by the plaintiff or petitioner:

whether it is in personam, in rem, or quasi in rem.Actions in personam, are those actions brought against a person on the

basis of his personal liability; actions in rem are actions against the thing itself instead of against the person; and actions

are quasi in rem, where an individual is named as defendant and the purpose of the proceeding is to subject his or her

interest in a property to the obligation or loan burdening the property.chanroblesvirtuallawlibrary

Under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure, there are only four instances wherein a

defendant who is a non-resident and is not found in the country may be served with summons by extraterritorial service, to

wit:(1) when the action affects the personal status of the plaintiff; (2) when the action relates to, or the subject of which is

property, within the Philippines, in which the defendant claims a lien or an interest, actual or contingent; (3) when the

relief demanded in such action consists, wholly or in part, in excluding the defendant from any interest in property located

in the Philippines; and (4) when the defendant non-residents property has been attached within the Philippines.In these

instances, service of summons may be effected by (a) personal service out of the country, with leave of court; (b)

publication, also with leave of court; or (c) any other manner the court may deem sufficient.chanroblesvirtuallawlibrary

Undoubtedly, extraterritorial service of summons applies only where the action is in rem or quasi in rem, but not if an

action is in personam.

When the case instituted is an action in rem or quasi in rem, Philippine courts already have jurisdiction to hear and decide

the case because, in actions in rem and quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to

confer jurisdiction on the court, provided that the court acquires jurisdiction over the res.Thus, in such instance,

extraterritorial service of summons can be made upon the defendant.The said extraterritorial service of summons is not for

the purpose of vesting the court with jurisdiction, but for complying with the requirements of fair play or due process, so

that the defendant will be informed of the pendency of the action against him and the possibility that property in the

Philippines belonging to him or in which he has an interest may be subjected to a judgment in favor of the plaintiff, and he

can thereby take steps to protect his interest if he is so minded.On the other hand, when the defendant or respondent does

not reside and is not found in the Philippines, and the action involved is in personam, Philippine courts cannot try any

case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in

court.chanroblesvirtuallawlibrary

In the case at bar, this Court sustains the contention of the petitioner that there can never be a valid extraterritorial service

of summons upon it, because the case before the court a quo involving collection of a sum of money and damages is,

indeed, an action in personam, as it deals with the personal liability of the petitioner to the respondent by reason of the

alleged unilateral termination by the former of the Distribution Agreement.Even the Court of Appeals, in its Decision

dated 4 April 2004, upheld the nature of the instant case as an action in personam.In the said Decision the appellate court

ruled that:

In the instant petition, [respondents] cause of action in Civil Case No. MC99-605 is anchored on the claim that petitioner unilaterally terminated the Distribution Agreement.Thus, [respondent] prays in its [C]omplaint that Upon the filing of the Complaint, issue an Order fixing the amount of the bond and issue a writ of attachment requiring the sheriff to attach the properties of [Perkin-Elmer Philippines], which are not exempt from execution, and as much as may be sufficient to satisfy [respondents] demands. The action instituted by [respondent] affects the parties alone, not the whole world.Hence, it is an action in personam, i.e., any judgment therein is binding only upon the parties properly impleaded. x x x x The objective sought in [respondents] [C]omplaint was to establish a claim against petitioner for its alleged unilateral termination of [D]istribution [A]greement.Hence, to repeat, Civil Case No. MC99-605 is an action in personam because it is an action against persons, namely, herein petitioner, on the basis of its personal liability.As such, personal service of summons upon the [petitioner] is essential in order for the court to acquire of (sic) jurisdiction over [its person].(Emphasis supplied.)

Thus, being an action in personam, personal service of summons within the Philippines is necessary in order for the RTC

to validly acquire jurisdiction over the person of the petitioner, and this is not possible in the present case because the

petitioner is a non-resident and is not found within the Philippines.Respondents allegation in its Amended Complaint that

petitioner had personal property within the Philippines in the form of shares of stock in PEIP did not make Civil Case No.

MC99-605 fall under any of the four instances mentioned in Section 15, Rule 14 of the Rules of Court, as to convert the

action in personam to an action in rem or quasi in rem and, subsequently, make the extraterritorial service of summons

upon the petitioner valid.

It is incorrect for the RTC to have ruled that the allegations made by the respondent in its Amended Complaint, which is

primarily for collection of a sum of money and damages, that the petitioner owns shares of stock within the Philippines to

which the petitioner claims interest, or an actual or contingent lien, would make the case fall under one of the aforesaid

instances wherein extraterritorial service of summons under Section 15, Rule 14 of the 1997 Revised Rules of Civil

Procedure, would be valid.The RTC in arriving at such conclusions relied on the second instance, mentioned under

Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure (i.e., when the action relates to, or the subject of which

is property, within the Philippines, in which the defendant claims a lien or interest, actual or contingent), where

extraterritorial service of summons can be properly made.However, the aforesaid second instance has no application in the

case before this Court.Primarily, the Amended Complaint filed by the respondent against the petitioner was for the

collection of sum of money and damages.The said case was neither related nor connected to any property of the petitioner

to which it claims a lien or interest.The action for collection of a sum of money and damages was purely based on the

personal liability of the petitioner towards the respondent.The petitioner is correct in saying that mere allegations of

personal property within the Philippines does not necessarily make the action as one that relates to or the subject of which

is, property within the Philippines as to warrant the extraterritorial service of summons.For the action to be considered one

that relates to, or the subject of which, is the property within the Philippines, the main subject matter of the action must be

the property itself of the petitioner in the Philippines.By analogy, an action involving title to or possession of real or

personal property -- such as the foreclosure of real estate or chattel mortgage where the mortgagor does not reside or is not

found in the Philippines -- can be considered as an action which relates to, or the subject of which is, property within the

Philippines, in which the defendant claims a lien or interest, actual or contingent; and in such instance, judgment will be

limited to the res.

Moreover, the allegations made by the respondent that the petitioner has property within the Philippines were in support

of its application for the issuance of a writ of attachment, which was denied by the RTC.Hence, it is clear from the

foregoing that the Complaint filed by the respondent against the petitioner does not really relate to, or the subject of which

is, property within the Philippines of the petitioner.

This Court also finds error in the Decision of the Court of Appeals.It is provided for in the said Decision, thus:

However, let it be emphasized that in the [C]omplaint filed before the trial court, [respondent] prayed that Upon the filing of the Complaint, issue an Order fixing the amount of the bond and issue a writ of attachment requiring the sheriff to attach the properties of [Perkin-Elmer Philippines], which are not exempt from execution, and as much as may be sufficient to satisfy [respondents] demands.

In other words, although the [C]omplaint before the trial court does not involve the personal status of the [respondent], nevertheless, the case involves property within the Philippines in which the [petitioner] has or claim an interest, or which the [respondent] has attached, which is one of the instances where extraterritorial service of summons is proper. x x x x Hence, it is submitted that one of the instances when exterritorial service of summons under Section 15, Rule 14 of the Rules of Court is proper may be considered to have been met.This is because the [C]omplaint for collection of sum of money which is an action in personam was converted into an action quasi in rem by the attachment of [petitioners] interest in [Perkin-ElmerPhilippines].(Emphasis supplied.)

Respondents allegation in its Amended Complaint that petitioner had personal property within the Philippines in the form

of shares of stock in PEIP does not convert Civil Case No. MC99-605 from an action in personam to one quasi in rem, so

as to qualify said case under the fourth instance mentioned in Section 15, Rule 14 of the 1997 Revised Rules of Civil

Procedure (i.e., when the non-resident defendants property has been attached within the Philippines), wherein

extraterritorial service of summons upon the petitioner would have been valid.It is worthy to note that what is required

under the aforesaid provision of the Revised Rules of Civil Procedure is not a mere allegation of the existence of personal

property belonging to the non-resident defendant within the Philippines but, more precisely, that the non-resident

defendants personal property located within the Philippines must have been actually attached.This Court in the case of

Venturanza v. Court of Appeals ruled that when the attachment was void from the beginning, the action in personam

which required personal service of summons was never converted into an action in rem where service by publication

would have been valid.Hence, the appellate court erred in declaring that the present case, which is an action in personam,

was converted to an action quasi in rem because of respondents allegations in its Amended Complaint that petitioner had

personal property within the Philippines.

Glaringly, respondents prayer in its Amended Complaint for the issuance of a writ of attachment over petitioners

purported shares of stock in PEIP located within the Philippines was denied by the court a quo in its Order dated 26

March 1999.Respondents Motion for Reconsideration of the said Order was likewise denied by the RTC in its subsequent

Order, dated 11 January 2000.Evidently, petitioners alleged personal property within the Philippines, in the form of shares

of stock in PEIP, had not been attached; hence, Civil Case No. MC99-605, for collection of sum of money and damages,

remains an action in personam.As a result, the extraterritorial service of summons was not validly effected by the RTC

against the petitioner, and the RTC thus failed to acquire jurisdiction over the person of the petitioner.The RTC is

therefore bereft of any authority to act upon the Complaint filed before it by the respondent insofar as the petitioner is

concerned.

If there was no valid summons served upon petitioner, could RTC have acquired jurisdiction over the person of the

petitioner by the latters voluntary appearance?As a rule, even if the service of summons upon the defendant or respondent

in a civil case is defective, the court can still acquire jurisdiction over his person when he voluntary appears in court or

submits himself to its authority.Nonetheless, voluntary appearance, as a mode of acquiring jurisdiction over the person of

the defendant, is likewise inapplicable in this case.

It is settled that a party who makes a special appearance in court for the purpose of challenging the jurisdiction of said

court, based on the invalidity of the service of summons, cannot be considered to have voluntarily submitted himself to

the jurisdiction of the court.In the present case, petitioner has been consistent in all its pleadings in assailing the service of

summons upon it and the jurisdiction of the RTC over its person.Thus, the petitioner cannot be declared in estoppel when

it filed an Answer ad cautelam with compulsory counterclaim before the RTC while the instant Petition was still pending

before this Court.The petitioner was in a situation wherein it had no other choice but to file an Answer; otherwise, the

RTC would have already declared that petitioner had waived its right to file responsive pleadings.Neither can the

compulsory counterclaim contained in petitioners Answer ad cautelam be considered as voluntary appearance of

petitioner before the RTC.Petitioner seeks to recover damages and attorneys fees as a consequence of the unfounded suit

filed by respondent against it.Thus, petitioners compulsory counterclaim is only consistent with its position that the

respondent wrongfully filed a case against it and the RTC erroneously exercised jurisdiction over its person.

Distinction must be made in Civil Case No. MC99-605 as to the jurisdiction of the RTC over respondents complaint and

over petitioners counterclaim -- while it may have no jurisdiction over the former, it may exercise jurisdiction over the

latter.The compulsory counterclaim attached to petitioners Answer ad cautelam can be treated as a separate action,

wherein petitioner is the plaintiff while respondent is the defendant.Petitioner could have instituted a separate action for

the very same claims but, for the sake of expediency and to avoid multiplicity of suits, it chose to demand the same in

Civil Case No. MC99-605.Jurisdiction of the RTC over the subject matter and the parties in the counterclaim must thus be

determined separately and independently from the jurisdiction of the same court in the same case over the subject matter

and the parties in respondents complaint.

Moreover, even though the petitioner raised other grounds in its Motion to Dismiss aside from lack of jurisdiction over its

person, the same is not tantamount to its voluntary appearance or submission to the authority of the court a quo.While in

De Midgely v. Ferandos, it was held that, in a Motion to Dismiss, the allegation of grounds other than lack of jurisdiction

over the person of the defendant, including a prayer "for such other reliefs as" may be deemed "appropriate and proper"

amounted to voluntary appearance, such ruling must be deemed superseded by the declaration of this Court in La Naval

Drug Corporation v. Court of Appeals that estoppel by jurisdiction must be unequivocal and intentional.It would be

absurd to hold that petitioner unequivocally and intentionally submitted itself to the jurisdiction of the court by seeking

other reliefs to which it might be entitled when the only relief that it could properly ask from the trial court is the dismissal

of the complaint against it.Thus, the allegation of grounds other than lack of jurisdiction with a prayer for such other

reliefs as may be deemed appropriate and proper cannot be considered as unequivocal and intentional estoppel.Most

telling is Section 20, Rule 14 of the Rules of Court, which expressly provides:

SEC. 20.Voluntary appearance. - The defendants voluntary appearance in the action shall be equivalent to service of summons.The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance.(Emphasis supplied.)

In sum, this Court finds that the petitioner did not submit itself voluntarily to the authority of the court a quo; and in the

absence of valid service of summons, the RTC utterly failed to acquire jurisdiction over the person of the petitioner.

Anent the existence of a cause of action against petitioner and the proper venue of the case, this Court upholds the

findings of the RTC on these issues.

Dismissal of a Complaint for failure to state a cause of action is provided for by the Rules of Court.When a Motion to

Dismiss is grounded on the failure to state a cause of action, a ruling thereon should be based only on the facts alleged in

the complaint. The court must pass upon this issue based solely on such allegations, assuming them to be true.For it to do

otherwise would be a procedural error and a denial of plaintiffs right to due process.While, truly, there are well-

recognized exceptions to the rule that the allegations are hypothetically admitted as true and inquiry is confined to the face

of the complaint, none of the exceptions apply in this case.Hence, the general rule applies.The defense of the petitioner

that it is not the real party-in-interest is evidentiary in nature which must be proven in trial.The appellate court, then,

cannot be faulted for not granting petitioners Motion to Dismiss on the ground of failure to state a cause of action.

In the same way, the appellate court did not err in denying petitioners Motion to Dismiss Civil Case No. MC99-605 on the

ground of improper venue.In arriving at such conclusion, this Court quotes with approval the following ratiocination of

the RTC:

As for the contention that venue was improperly laid, x x x, the [trial court] in its ultimate desire that the ends of justice could be served in its fullest, cannot rule that venue was improperly laid. cralawx x x x cralawThe stipulation as to the venue of a prospective action does not preclude the filing of the suit in the residence of the [respondent] under Section 2, Rule 4, Rules of Court, especially where the venue stipulation was imposed by the [petitioner] for its own benefits.(Emphasis supplied.) cralaw

cralawDespite the venue stipulation found in the Distribution Agreement stipulating that the exclusive jurisdiction over

disputes arising from the same shall lie in the courts of Singapore or of the Territory (referring to the Philippines),

whichever is elected by PEIA (or petitioner, as PEIAs alleged successor), the RTC of the Philippines cannot be considered

as an improper venue.Truly, the venue stipulation used the word exclusive, however, a closer look on the Distribution

Agreement would reveal that the venue stipulation was really in the alternative i.e., courts of Singapore or of the Territory,

meaning, the Philippines; thus, the court a quo is not an improper venue for the present case.

cralawNonetheless, it bears to emphasize that despite our findings that based on the allegations in respondents Complaint in

Civil Case No. MC99-605, respondent appears to have a cause of action against the petitioner and that the RTC is the

proper venue for the said case, Civil Case No. MC99-605 is still dismissible, for the RTC never acquired jurisdiction

over the person of the petitioner.The extraterritorial service of summons upon the petitioner produces no effect because it

can only be done if the action is in rem or quasi in rem.The case for collection of sum of money and damages filed by the

respondent against the petitioner being an action in personam, then personal service of summons upon the petitioner

within the Philippines is essential for the RTC to validly acquire jurisdiction over the person of the petitioner.Having

failed to do so, the RTC can never subject petitioner to its jurisdiction.The mere allegation made by the respondent that

the petitioner had shares of stock within the Philippines was not enough to convert the action from one in personam to one

that was quasi in rem, for petitioners purported personal property was never attached; thus, the extraterritorial service of

summons upon the petitioner remains invalid.In light of the foregoing findings, this Court concludes that the RTC has no

power to hear and decide the case against the petitioner, because the extraterritorial service of summons was not validly

effected upon the petitioner and the RTC never acquired jurisdiction over its person.

cralawFinally, as regards the petitioners counterclaim, which is purely for damages and attorneys fees by reason of the

unfounded suit filed by the respondent against it, it has long been settled that the same truly falls under the classification

of compulsory counterclaim and it must be pleaded in the same action, otherwise, it is barred.In the case at bar, this

Court orders the dismissal of the Complaint filed by the respondent against the petitioner because the court a quo failed

to acquire jurisdiction over the person of the latter.Since the Complaint of the respondent was dismissed, what will

happen then to the counterclaim of the petitioner?Does the dismissal of the complaint carry with it the dismissal of the

counterclaim?

In the cases of Metal Engineering Resources Corp. v. Court of Appeals, International Container Terminal Services, Inc. v.

Court of Appeals, and BA Finance Corporation v. Co., the Court ruled that if the court does not have jurisdiction to

entertain the main action of the case and dismisses the same, then the compulsory counterclaim, being ancillary to the

principal controversy, must likewise be dismissed since no jurisdiction remained for any grant of relief under the

counterclaim.If we follow the aforesaid pronouncement of the Court in the cases mentioned above, the counterclaim of the

herein petitioner being compulsory in nature must also be dismissed together with the Complaint.However, in the case of

Pinga vs. Heirs of German Santiago, the Court explicitly expressed that:

Similarly, Justice Feria notes that the present rule reaffirms the right of the defendant to move for the dismissal of the complaint and to prosecute his counterclaim, as stated in the separate opinion [of Justice Regalado in BA Finance].Retired Court of Appeals Justice Hererra pronounces that the amendment to Section 3, Rule 17 [of the 1997 Revised Rules of Civil Procedure] settles that nagging question whether the dismissal of the complaint carries with it the dismissal of the counterclaim, and opines that by reason of the amendments, the rulings in Metals Engineering, International Container, and BA Finance may be deemed abandoned.x x x. x x x, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule 17, those previous jural doctrines that were inconsistent with the new rules incorporated in the 1997 Rules of Civil Procedure were implicitly abandoned insofar as incidents arising after the effectivity of the new procedural rules on 1 July 1997.BA Finance, or even the doctrine that a counterclaim may be necessarily dismissed along with the complaint, clearly conflicts with the 1997 Rules of Civil Procedure.The abandonment of BA Finance as doctrine extends as far back as 1997, when the Court adopted the new Rules of Civil Procedure.If, since then, abandonment has not been affirmed in jurisprudence, it is only because no proper case has arisen that would warrant express confirmation of the new rule.That opportunity is here and now, and we thus rule that the dismissal of a complaint due to fault of the plaintiff is without prejudice to the right of the defendant to prosecute any pending counterclaims of whatever nature in the same or separate action.We confirm that BA Finance and all previous rulings of the Court that are inconsistent with this present holding are now abandoned.[Emphasis supplied].

It is true that the aforesaid declaration of the Court refers to instances covered by Section 3, Rule 17 of the 1997 Revised

Rules of Civil Procedure on dismissal of the complaint due to the fault of the plaintiff.Nonetheless, it does not also

preclude the application of the same to the instant case just because the dismissal of respondents Complaint was upon the

instance of the petitioner who correctly argued lack of jurisdiction over its person.

Also in the case of Pinga v. Heirs of German Santiago, the Court discussed the situation wherein the very filing of the

complaint by the plaintiff against the defendant caused the violation of the latters rights.As to whether the dismissal of

such a complaint should also include the dismissal of the counterclaim, the Court acknowledged that said matter is still

debatable, viz:

Whatever the nature of the counterclaim, it bears the same integral characteristics as a complaint; namely a cause (or causes) of action constituting an act or omission by which a party violates the right of another.The main difference lies in that the cause of action in the counterclaim is maintained by the defendant against the plaintiff, while the converse holds true with the complaint.Yet, as with a complaint, a counterclaim without a cause of action cannot survive. x x x if the dismissal of the complaint somehow eliminates the cause(s) of the counterclaim, then the counterclaim cannot survive.Yet that hardly is the case, especially as a general rule.More often than not, the allegations that form the counterclaim are rooted in an act or omission of the plaintiff other than the plaintiffs very act of filing the complaint.Moreover, such acts or omissions imputed to the plaintiff are often claimed to have occurred prior to the filing of the complaint itself.The only apparent exception to this circumstance is if it is alleged in the counterclaim that the very act of the plaintiff in filing the complaint precisely causes the violation of the defendants rights.Yet even in such an instance, it remains debatable whether the dismissal or withdrawal of the complaint is sufficient to obviate the pending cause of action maintained by the defendant against the plaintiff.

Based on the aforequoted ruling of the Court, if the dismissal of the complaint somehow eliminates the cause of the

counterclaim, then the counterclaim cannot survive.Conversely, if the counterclaim itself states sufficient cause of action

then itshouldstand independently of andsurvive the dismissal of the complaint.Now, having been directly confronted with

the problem of whether the compulsory counterclaim by reason of the unfounded suit may prosper even if the main

complaint had been dismissed, we rule in the affirmative.

It bears to emphasize that petitioners counterclaim against respondent is for damages and attorneys fees arising from the

unfounded suit.While respondents Complaint against petitioner is already dismissed, petitioner may have very well

already incurred damages and litigation expenses such as attorneys fees since it was forced to engage legal representation

in the Philippines to protect its rights and to assert lack of jurisdiction of the courts over its person by virtue of the

improper service of summons upon it.Hence, the cause of action of petitioners counterclaim is not eliminated by the mere

dismissal of respondents complaint.

It may also do well to remember that it is this Court which mandated that claims for damages and attorneys fees based on

unfounded suit constitute compulsory counterclaimwhich must be pleaded in the same action or, otherwise, it shall be

barred.It will then be iniquitous and the height of injustice to require the petitioner to make the counterclaim in the present

action, under threat of losing his right to claim the same ever again in any other court, yet make his right totally

dependent on the fate of the respondents complaint.

If indeed the Court dismisses petitioners counterclaim solely on the basis of the dismissal of respondents Complaint, then

what remedy is left for the petitioner? It can be said that he can still file a separate action to recover the damages and

attorneys fees based on the unfounded suit for he cannot be barred from doing so since he did file the compulsory

counterclaim in the present action, only that it was dismissed when respondents Complaint was dismissed.However, this

reasoning is highly flawed and irrational considering that petitioner, already burdened by the damages and attorneys fees

it may have incurred in the present case, must again incur more damages and attorneys fees in pursuing a separate action,

when, in the first place, it should not have been involved in any case at all.

Since petitioners counterclaim is compulsory in nature and its cause of action survives that of the dismissal of respondents

complaint, then it should be resolved based on its own merits and evidentiary support.

WHEREFORE, premises considered, the instant Petition is hereby GRANTED.The Decision of the Court of Appeals,

dated 4 April 2006, in CA-G.R. SP No. 78981, affirming the Orders, dated 4 November 2002 and 20 June 2003, of the

RegionalTrialCourtofMandaluyongCity, Branch 212, in Civil Case No. MC99-605, is hereby REVERSED AND SET

ASIDE.Respondents Amended Complaint in Civil Case No. MC99-605 as against the petitioner is hereby ordered

DISMISSED, and all the proceedings against petitioner in the court a quo by virtue thereof are hereby DECLARED

NULL AND VOID.The RegionalTrialCourtofMandaluyongCity, Branch 212, is DIRECTED to proceed without further

delay with the resolution of respondents Complaint in Civil Case No. MC99-605 as to defendant PEIP, as well as

petitioners counterclaim.No costs.

SO ORDERED.

MINITA V. CHICO-NAZARIOAssociate Justice

WE CONCUR:

CONSUELO YNARES SANTIAGO

Associate Justice

Chairperson

MA. ALICIA AUSTRIA-MARTINEZANTONIO EDUARDO B. NACHURA


ATTESTATION

cralawI attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.


Associate Justice


CERTIFICATION

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

REYNATO S. PUNO

Chief Justice


cralawPenned by Associate Justice Monina Arevalo-Zenarosa with Associate Justices Andres B. Reyes, Jr. and Rosmari D. Carandang, concurring; id. at 76-90.

cralawPenned by Judge Rizalina T. Capco-Umali; id. at 315-318.




cralawThe reason of the trial court in denying the prayer of the respondent for the issuance of a writ of attachment was:Based on the records, [respondent] is desirous of attaching the property of [Perkin-Elmer Philippines] by invoking that [petitioner] owns 99% of [Perkin-Elmer Philippines].x x x, let this Court emphasize that a corporation such as [Perkin-Elmer Philippines] has a personality separate and distinct from shareholder, [the petitioner].Hence, the property belonging to [Perkin-Elmer Philippines] cannot be attached to pay for the obligation incurred by its shareholder. (Id. at 731-732.)

cralawId. at 733.


cralawId. at 96.


cralawId. at 151.

cralawId. at 152.

cralawA sole proprietorship is neither a natural person nor a juridical person under Article 44 of the Civil Code.The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit.It does not vest juridical or legal personality in the sole proprietorship or empowers it to file or defend an action in court. (Yao Ka Sin Trading v. Court of Appeals, G.R. No. 53820, 15 June 1992, 209 SCRA 763, 780.)Likewise, a sole proprietorship does not possess any juridical personality separate and apart from the personality of the owner of the enterprise and the personality of the persons acting in the name of such proprietorship.Hence, any case filed against a sole proprietorship must be brought against its owner.




cralawId. at 238.

cralawId. at 155.



cralawParamount Insurance Corp. v. Japzon, G.R. No. 68037, 29 July 1992, 211 SCRA 879, 884-885.

cralawDe Leon v. Court of Appeals, 315 Phil. 140, 150 (1995).

cralawBank of the Philippine Islands v. Evangelista, 441 Phil. 445, 453 (2002).

cralawParamount Insurance Corp. v. Japzon, supra note 22 at 885.

cralawBanco Do Brasil v. Court of Appeals, 389 Phil. 87, 99-100 (2000).

cralawId.

cralawId.

cralawValmonte v. Court of Appeals, 322 Phil. 96, 106 (1996).

cralawRomualdez-Licaros v. Licaros, 449 Phil. 824, 833 (2003).

cralawBanco Do Brasil v. Court of Appeals, supra note 26.


cralawCivil Law Commentaries by Justice Jose Y. Feria, Vol. 1, 2001 Edition, p. 138, citing therein El Banco Espaol-Filipino v. Palanca, 37 Phil. 921, 927 (1918).


cralawG.R. No. L-77760, 11 December 1987, 156 SCRA 305, 312.

Hongkong and Shanghai Banking Corporation Limited v.Catalan, G.R. No. 159590, 18 October 2004, 440 SCRA 498, 516.

cralawId.

cralawCivil Procedure Commentaries by Justice Jose Y. Feria, Vol. 1 (2001 Edition), p. 277, citing the case of Golden Ribbon Lumber Co., Inc. v. Santos, 52 O.G. 1477 (1955); Civil Procedure Commentaries by Justice Florenz D. Regalado, Vol. 1 (Seventh Revised Edition), p. 128.

cralawSection 6, Rule 6 of the 1997 Revised Rules of Civil Procedure; Reyes v. Court of Appeals, 148 Phil. 135, 149 (1971); Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, G.R. No. 155173, 23 November 2004, 443 SCRA 522, 533.

cralawG.R. No. L-34314, 13 May 1975, 64 SCRA 23, 31.

cralawG.R. No. 103200, 31 August 1994, 236 SCRA 78, 86.

Millennium Industrial Commercial Corporation v. Tan, 383 Phil. 468, 478 (2000).

cralaw1997 Revised Rules of Civil Procedure.

cralawSection 1(g), Rule 16, 1997 Revised Rules of Civil Procedure.

cralawIndiana Aerospace University v. Commission on Higher Education, G.R. No. 139371, 4 April 2001, 356 SCRA 367, 385.

There is no hypothetical admission of the veracity of allegations if their falsity is subject to judicial notice, or if such allegations are legally impossible, or if these refer to facts which are inadmissible in evidence, or if by the record or document included in the pleading these allegations appear unfounded. Also, inquiry is not confined to the complaint if there is evidence which has been presented to the court by stipulation of the parties, or in the course of hearings related to the case.

cralawDabuco v. Court of Appeals, 379 Phil. 939, 950 (2000).


cralawTiu Po vs. Bautista, G.R. No. L-55514, 17 March 1981, 103 SCRA 388, 391; Alday vs. FGU Insurance Corporation, G.R. No. 138822, 23 January 2001, 350 SCRA 113, 123.

cralawG.R. No. 95631, 28 October 1991, 203 SCRA 273, 282.

cralawG.R. No. 90530, 7 October 1992, 214 SCRA 456.

cralawG.R. No. 105751, 30 June 1993, 224 SCRA 163, 167.

cralawSupra note 50.

cralawG.R. No. 170354, 30 June 2006, 494 SCRA 393, 414-415.

cralawSupra note 54.

cralawSEC. 3.Dismissal due to fault of plaintiff. -If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon the courts own motion without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action.This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court.

cralawPinga vs. Heirs of German Santiago, id. at 418-419.

Republic of the PhilippinesSUPREME COURTManila

cralaw

FIRST DIVISION

MUNICIPALITY OF STA. FE,G.R. No. 140474

cralawPetitioner,

Present:


- versus -SANDOVAL-GUTIERREZ,

CORONA,

AZCUNA, and

GARCIA, JJ.

MUNICIPALITY OF ARITAO,

Respondent.

Promulgated:

September 21, 2007

X -------------------------------------------------------------------------------------- X

DECISION

AZCUNA, J.:

This is an appeal by petition for review on certiorari under Rule 45 of the Rules of Court of the September 30, 1999 Decision[1] of the Court of Appeals (CA) affirming in toto the August 27, 1992 Order[2] of the Regional Trial Court (RTC) of Bayombong, Nueva Vizcaya, Branch 28, which dismissed Civil Case No. 2821 for lack of jurisdiction.

On October 16, 1980, petitionerMunicipality of Sta. Fe, in the Province of Nueva Vizcaya, filed before the RTC of Bayombong, Nueva Vizcaya, Branch 28, Civil Case No. 2821 for the Determination of Boundary Dispute involving the barangays of Bantinan and Canabuan. As the parties failed to amicably settle during the pre-trial stage, trial on the merits ensued.

The trial was almost over, with petitioners rebuttal witness already under cross-examination, when the court, realizing its oversight under existing law, ordered on December 9, 1988, the suspension of the proceedings and the referral of the case to the Sangguniang Panlalawigan of Nueva Vizcaya.[3] In turn, the Sanggunian concerned passed on the matter to its Committee on Legal Affairs, Ordinances and Resolutions, which recommended adopting Resolution No. 64 dated September 14, 1979 of the former members of its Provincial Board.[4] Said resolution previously resolved to adjudicate the barangays of Bantinan and Canabuan as parts of respondents territorial jurisdiction and enjoin petitioner from exercising its governmental functions within the same. Subsequently, as per Resolution No. 357 dated November 13, 1989, the Sangguniang Panlalawigan approved the Committees recommendation but endorsed the boundary dispute to the RTC for further proceedings and preservation of the status quo pending finality of the case.

Back in the RTC, respondent moved to consider Resolution No. 64 as final and executory. In its Order dated February 12, 1991,[5] the trial court, however, resolved to deny the motion ruling that since there was no amicable settlement reached at the time the Provincial Board had exceeded its authority in issuing a decision favoring a party. The court held that, under the law in force, the purpose of such referral was only to afford the

parties an opportunity to amicably settle with the intervention and assistance of the Provincial Board and that in case no such settlement is reached, the court proceedings shall be resumed.

Subsequently, respondent again filed a motion on June 23, 1992,[6] this time praying for the dismissal of the case for lack of jurisdiction. The ground relied upon was that under the prevailing law at the time of the filing of the motion, the power to try and decide municipal boundary disputes already belonged to the Sangguniang Panlalawigan and no longer with the trial court, primarily citing the doctrine laid down by this Court in Municipality of Sogod v. Rosal.[7]cralaw

On August 27, 1992, the trial court resolved to grant the motion, thus:cralaw

A close study of the decision of the Honorable Supreme Court in the Municipality of Sogod case in relation to this case palpably shows that, contrary to the claim of respondent Municipality of Sta. Fe, through counsel, it involves boundary dispute as in this case.

As to the applicable law on the question of which agency of the Government can take cognizance of this case or whether or not this Court should proceed in exercising jurisdiction over this case, the same [had] been squarely resolved by the [Honorable] Supreme Court in the Municipality of Sogod case in this wise: It is worthy to note, however, that up to this time, the controversy between these two Municipalities has not been settled. However, the dispute has already been overtaken by events, namely, the enactment of the 1987 Constitution and the New Local Government Code x x x which imposed new mandatory requirements and procedures on the fixing of boundaries between municipalities. The 1987 Constitution now mandates that []no province, city, municipality or barangay may be created, divided, merged, abolished or its boundary substantially altered except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected.[] x x x Hence, any alteration or modification of the boundaries of the municipalities shall only be by a law to be enacted by Congress subject to the approval by a majority of the votes cast in a plebiscite in the barrios affected (Section 134, Local Government Code). Thus, under present laws, the function of the provincial board to fix the municipal boundaries are now strictly limited to the factual determination of the boundary lines between municipalities, to be specified by natural boundaries or by metes and bounds in accordance with laws creating said municipalities.

In view of the above ruling, this Court can do no less but to declare that this case has been overtaken by events, namely, the enactment of the 1987 Constitution and the Local Government Code of 1991. The Constitution requires a plebiscite, whereas the Local Government Code of 1991 provides, as follows: Sec. 6. Authority to Create Local Government Units. A local government unit may be created, divided, merged, abolished, or its boundaries substantially altered either by law enacted by Congress in the case of a province, city, municipality, or any other political subdivision, or by ordinance passed by the [s]angguniang [p]anlalawigan, or sangguniang panglungsod concerned in the case of a barangay located within its territorial jurisdiction, subject to such limitations and requirements prescribed in this Code.[8]

The motion for reconsideration of the aforesaid Order having been denied,[9] an appeal was elevated by petitioner to the CA. The CA, however, affirmed in toto the assailed Order, holding that:

We are not unmindful of the rule that where a court has already obtained and is exercising jurisdiction over a controversy, its jurisdiction to proceed to the final determination of the case is not affected by new legislation placing jurisdiction over such proceedings in another tribunal or body. This rule, however, is not without exception. It is not applicable when the change in jurisdiction is curative in character. As far as boundary disputes are concerned, the 1987 Constitution is the latest will of the people, therefore, the same should be given retroactive effect on cases pending before courts after its ratification. It mandates that no province, city, municipality or barangay may be created, divided, merged, abolished or its boundary substantially altered except in accordance with the criteria established in the Local Government Code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected.

On the other hand, the Local Government Code of 1991 provides that [a] local government unit may be created, divided, merged, abolished, or its boundaries substantially altered either by law enacted by Congress in the case of a province, city, municipality, or any other political subdivision, or by ordinance passed by the [s]angguniang [p]anlalawigan or [s]angguniang [p]anglungsod concerned in the case of a barangay located within its territorial jurisdiction, subject to such limitations and requirements prescribed in this Code (Book I, Title One, Chapter 2, Section 6, Local Government Code).

Section 118, Title Nine, Book I of the same Code likewise provides:

SEC 118. Jurisdictional Responsibility for Settlement of Boundary Dispute. Boundary disputes between and among local government units shall, as much as possible, be settled amicably. To this end:

x x x

a.) Boundary disputes involving two (2) or more municipalities within the same province shall be referred for settlement to the sangguniang panlalawigan concerned;

x x x

Since the Local Government Code of 1991 is the latest will of the people expressed through Congress on how boundary disputes should be resolved, the same must prevail over previous ones. It must be emphasized that the laws on the creation of local government units as well as settling boundary disputes are political in character, hence, can be changed from time to time and the latest will of the people should always prevail. In the instant case, there is nothing wrong in holding that Regional Trial Courts no longer have jurisdiction over boundary disputes.[10]

Before this Court, petitioner submits that the CA erred when it affirmed the dismissal of the case for lack of jurisdiction by upholding the RTCs application of the doctrine enunciated in the Municipality of Sogod, namely, that being political in character, this case has been overtaken by different laws which should now prevail.Petitioner also claims that the CA erred in relying on the provisions of the 1987 Constitution and the Local Government Code (LGC) of 1991 on the creation, division, merger, abolition, and alteration of boundaries of political units instead of the specific provisions on the settlement of boundary disputes.[11]chanroblesvirtuallawlibrary

The petition fails.

As early as October 1, 1917, the procedure for the settlement of municipal boundary disputes was already set forth when Act No. 2711 or the Revised Administrative Code (RAC) took into effect.[12] At that time, Section 2167 of the law provided:

SEC. 2167. Municipal boundary disputes How settled. Disputes as to jurisdiction of municipal governments over places or barrios shall be decided by the provincial boards of the provinces in which such municipalities are situated, after an investigation at which the municipalities concerned shall be duly heard. From the decision of the provincial board appeal may be taken by the municipality aggrieved to the Secretary of the Interior, whose decision shall be final x x x.[13]

On June 17, 1970,[14] Republic Act (R.A.) No. 6128[15] was approved amending the afore-quoted section of the RAC, Sec. 1 thereof stated:

SECTION 1. Section Two thousand one hundred sixty-seven of the Revised Administrative Code, as amended, is hereby further amended to read as follows:

"SEC. 2167. Municipal Boundary Disputes. How Settled. Disputes as to jurisdiction of municipal governments over places, or barrios shall be heard and decided by the Court of First Instance of the Province where the municipalities concerned are situated x x x: Provided, That after joinder of issues, the Court shall suspend proceedings and shall refer the dispute to the Provincial Board x x x concerned for the purpose of affording the

parties an opportunity to reach an amicable settlement with the intervention and assistance of the said Provincial Board x x x; Provided, further, That in case no amicable settlement is reached within sixty days from the date the dispute was referred to the Provincial Board x x x concerned, the court proceedings shall be resumed. The case shall be decided by the said Court of First Instance within one year from resumption of the court proceedings, and appeal may be taken from the said decision within the time and in the manner prescribed in Rule 41 or Rule 42, as the case may be, of the Rules of Court x x x

Subsequently, however, with the approval of Batas Pambansa (B.P.) Blg. 337 (otherwise known as the Local Government Code of 1983) on February 10, 1983,[16] Sec. 2167, as amended, was repealed.[17] In particular, Sec. 79 of the Code read:

SEC. 79. Municipal Boundary Disputes. Disputes as to the jurisdiction of municipal governments over areas or barangays shall be heard and decided by the sangguniang panlalawigan of the province where the municipalities concerned are situated x x x in case no settlement is reached within sixty days from the date the dispute was referred to the sangguniang panlalawigan concerned, said dispute shall be elevated to the Regional Trial Court of the province which first took cognizance of the dispute. The case shall be decided by the said court within one year from the start of proceedings and appeal may be taken from the decision within the time and in the manner prescribed by the Rules of Court.[18]

Almost a decade passed and R.A. No. 7160 or the LGC of 1991 was signed into law on October 10, 1991 and took effect on January 1, 1992.[19] As the latest law governing jurisdiction over the settlement of boundary disputes, Sections 118 and 119 of the Code now mandate:

SEC. 118. Jurisdictional Responsibility for Settlement of Boundary Dispute. Boundary disputes between and among local government units shall, as much as possible, be settled amicably. To this end:

x x x

(b) Boundary disputes involving two (2) or more municipalities within the same province shall be referred for settlement to the sangguniang panlalawigan concerned.

x x x

(e) In the event the sanggunian fails to effect an amicable settlement within sixty (60) days from the date the dispute was referred thereto, it shall issue a certification to that effect. Thereafter, the dispute shall be formally tried by the sanggunian concerned which shall decide the issue within sixty (60) days from the date of the certification referred to above.

SEC. 119. Appeal. Within the time and manner prescribed by the Rules of Court, any party may elevate the decision of the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the area in dispute. The Regional Trial Court shall decide the appeal within one (1) year from the filing thereof. Pending final resolution of the disputed area prior to the dispute shall be maintained and continued for all legal purposes.[20]

This Court agrees with petitioners contention that the trial court had jurisdiction to take cognizance of the complaint when it was filed on October 16, 1980 since the prevailing law then was Section 2167 of the RAC, as amended by Sec. 1 of R.A. No. 6128, which granted the Court of First Instance (now RTC) the jurisdiction to hear and decide cases of municipal boundary disputes.The antecedents of the Municipality of Sogod case reveal that it dealt with the trial courts dismissal of cases filed for lack of jurisdiction because at the time of the institution of the civil actions, the law in force was the old provision of Sec. 2167 of the RAC, which empowered the provincial boards, not the trial courts, to hear and resolve such cases.

The main point of inquiry, however, is whether the CA erred in affirming the trial courts dismissal of the instant case for lack of jurisdiction on the ground that at the time of the filing of the motion to dismiss the original jurisdiction to hear and decide, the case had been vested on the Sangguniang Panlalawigan and no longer on the RTC.

The Court rules that the appellate court did not err. The difference in the factual setting notwithstanding, Municipality of Sogod still applies in the sense that similar thereto the pendency of the present case has also been overtaken by events the ratification of the 1987 Constitution and the enactment of the LGC of 1991.

As shown above, since the effectivity of R.A. No. 6128, the Sangguniang Panlalawigan has been the primary tribunal responsible in the amicable settlement of boundary disputes between or among two or more municipalities located in the same province. With the LGC of 1991, however, a major change has been introduced that in the event the Sanggunian fails to effect a settlement, it shall not only issue a certification

to that effect but must also formally hear and decide the case within the reglementary period. Rule III of the Rules and Regulations Implementing the LGC of 1991[21] outlines the procedure for the settlement of boundary disputes as follows:

ART. 17. Procedures for Settling Boundary Disputes. - The following procedures shall govern the settlement of boundary disputes:

(a.) Filing of petition The sanggunian concerned may initiate action by filing a petition, in the form of a resolution, with the sanggunian having jurisdiction over the dispute.

(b.) Contents of petition The petition shall state the grounds, reasons or justifications therefore.

(c.) Documents attached to petition The petition shall be accompanied by:

(1) Duly authenticated copy of the law or statute creating the LGU or any other documents showing proof of creation of the LGU;

(2) Provincial, city, municipal or barangay map, as the case may be, duly certified by the LMB;

(3) Technical description of the boundaries of the LGUs concerned;

(4) Written certification of the provincial, city, or municipal assessor, as the case may be, as to territorial jurisdiction over the disputed area according records in custody;

(5) Written declarations or sworn statements of the people residing in the disputed area; and

(6) Such other documents or information as may be required by the sanggunian hearing the dispute.

(d.) Answer of adverse party Upon receipt by the sanggunian concerned of the petition together with the required documents, the LGU or LGUs complained against shall be furnished copies thereof and shall be given fifteen (15) working days within which to file their answers.

(e.) Hearing Within five (5) working days after receipt of the answer of the adverse party, the sanggunian shall hear the case and allow the parties concerned to present their respective evidences.

(f.) Joint hearing When two or more sanggunians jointly hear a case, they may sit en banc or designate their respective representatives. Where representatives are designated, there shall be an equal number of

representatives from each sanggunian. They shall elect from among themselves a presiding officer and a secretary. In case of disagreement, selection shall be by drawing lot.

(g.) Failure to settle In the event the sanggunian fails to amicably settle the dispute within sixty (60) days from the date such dispute was referred thereto, it shall issue a certification to that effect and copies thereof shall be furnished the parties concerned.

(h.) Decision Within sixty (60) days from the date the certification was issued, the dispute shall be formally tried and decided by the sanggunian concerned. Copies of the decision shall, within fifteen (15) days from the promulgation thereof, be furnished the parties concerned, DILG, local assessor, Comelec, NSO, and other NGAs concerned.

(i.) Appeal Within the time and manner prescribed by the Rules of Court, any party may elevate the decision of the sanggunian concerned to the proper Regional Trial Court having jurisdiction over the dispute by filing therewith the appropriate pleading, stating among others, the nature of the dispute, the decision of the sanggunian concerned and the reasons for appealing therefrom. The Regional Trial Court shall decide the case within one (1) year from the filing thereof. Decisions on boundary disputes promulgated jointly by two (2) or more sangguniang panlalawigan shall be heard by the Regional Trial Court of the province which first took cognizance of the dispute.

ART. 18. Maintenance of Status Quo. Pending final resolution of the dispute, the status of the affected area prior to the dispute shall be maintained and continued for all purposes.

ART. 19. Official Custodian. The DILG shall be the official custodian of copies of all documents on boundary disputes of the LGUs.

Notably, unlike R.A. No. 6128 and B.P. 337, the LGC of 1991 grants an expanded role on the Sangguniang Panlalawigan concerned in resolving cases of municipal boundary disputes. Aside from having the function of bringing the contending parties together and intervening or assisting in the amicable settlement of the case, the Sangguniang Panlalawigan is now specifically vested with original jurisdiction to actually hear and decide the dispute in accordance with the procedures laid down in the law and its implementing rules and regulations. This situation, in effect, reverts to the old rule under the RAC, prior to its amendment by R.A. No. 6128, under which the provincial boards were empowered to investigate, hear the parties and eventually decide the case on the basis thereof. On the other hand, under the LGC of 1991, the trial court loses its power to try, at the first instance, cases of municipal boundary disputes. Only in the exercise of its appellate jurisdiction can the proper RTC decide the case, on appeal, should any party aggrieved by the decision of the Sangguniang Panlalawigan elevate the same.

Considering the foregoing, the RTC correctly dismissed the case for lack of jurisdiction. Under the rules, it was the responsibility of the court to dismiss an action whenever it appears that [it] has no jurisdiction over the subject matter.[22] Indeed, the RTC acted accordingly because at the time of the filing of the motion to dismiss its want of jurisdiction was evident. It was duty-bound to take judicial notice of the parameters of its jurisdiction as the choice of the proper forum was crucial for the decision of a court or tribunal without jurisdiction is a total nullity and may be struck down at any time by this Court as it would never become final and executory.[23] Likewise, the standing rule is that dismissal of a case for lack of jurisdiction may be raised at any stage of the proceedings since jurisdiction is conferred by law and lack of it affects the very authority of the court to take cognizance of and to render judgment on the action;[24] otherwise, the inevitable consequence would make the courts decision a lawless thing.[25] As correctly pointed out by the RTC:

x x x It will be a futile act for the Court to rule on the case concerning a boundary dispute if its decision will not after all be followed by the people concerned because the decision is totally unacceptable to them. How then can the Court enforce its decision? x x x.[26]

Petitioner, however, contends that the provisions of the 1987 Constitution and the LGC of 1991 on the settlement of municipal boundary disputes should be applied prospectively.The Court is not unmindful of the rule that where a court has already obtained and is exercising jurisdiction over a controversy, its jurisdiction to proceed to the final determination of the case is not affected by new legislation placing jurisdiction over such proceedings in another tribunal.[27] An exception to this rule, however, lies where the statute either expressly provides or is construed to the effect that it is intended to operate on actions pending before its enactment.[28] Hence, this Court has held that a law may be given retroactive effect if it so provided expressly or if retroactivity is necessarily implied therefrom and no vested right or obligation of contract is impaired and it does not deprive a person of property without due process of law.[29]

It is readily apparent from the provisions of the 1987 Constitution and the LGC of 1991 that their new provisions and requirements regarding changes in the constitution of political units are intended to apply to all existing political subsidiaries immediately, i.e., including those with pending cases filed under the previous regime, since the overarching consideration of these new provisions is the need to empower the local government units without further delay.

Furthermore, the RTC can still review the decision of the Sanguniang Panlalawigan under the new set-up, in the exercise of its appellate jurisdiction, so no substantial prejudice is caused by allowing retroactivity.

The Court, therefore, sees no error, much less grave abuse of discretion, on the part of the CA in affirming the trial courts dismissal of petitioners complaint.

WHEREFORE, the petition is DENIED for lack of merit.

No costs.

SO ORDERED.

ADOLFO S. AZCUNA

Associate Justice

WE CONCUR:

REYNATO S. PUNO

Chief Justice

Chairperson

ANGELINA SANDOVAL-GUTIERREZRENATO C. CORONA


CANCIO C. GARCIA

Associate Justice

CERTIFICATION

cralawPursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

Endnotes:

[1] cralawPenned by Associate Justice Demetrio G. Demetria, with Associate Justices Ramon A. Barcelona and Mercedes Gozo-Dadole concurring.

[2] cralawPenned by Judge Jose B. Rosales.

[3] cralawRecords, pp. 173-174.

[4] cralawRollo, pp. 140-143.

[5] cralawId. at 26.

[6] cralawRecords, pp. 219-220.

[7] cralawG.R. Nos. 38204-5, September 24, 1991, 201 SCRA 632.

[8] cralawRollo, p.27.

[9] cralawId. at 28-29.


[11] cralawId. at 104-105.

[12] cralawSee Province of Camarines Norte v. Province of Quezon, G.R. No. 80796, November 8, 1989, 179 SCRA 233, 235.

[13] cralawEmphasis provided.

[14] cralawSec. 4 of R.A. No. 6128 provides that it shall take effect upon its approval. The Act, however, was published in the Official Gazette (66 O.G. 34, 7796-7798) on August 24, 1970.

[15] cralawAN ACT PRESCRIBING THE PROCEDURE FOR THE SETTLEMENT OF MUNICIPAL OR BARRIO BOUNDARY DISPUTES.

[16] cralawSec. 234 of the Code stated that it shall take effect one month after its publication in the Official Gazette, which was on February 14, 1983 (79 O.G. 7).

[17] cralawSec. 233 of B.P. Blg. 337.

[18] cralawUnderscoring provided.

[19] cralawSec. 536 of the Local Government Code of 1991. See also Mathay v. Court of Appeals, G.R. No. 124374, December 15, 1999, 320 SCRA 703, 710; Angobung v. COMELEC, G.R. No. 126576, March 5, 1997, 269 SCRA 245, 255; Ty v. Trampe, G.R. No. 117577, December 1, 1995, 250 SCRA 500, 510; Garcia v. COMELEC, G.R. No. 111511, October 5, 1993, 227 SCRA 100, 110; and Evardone v. COMELEC, G.R. No. 94010, December 2, 1991, 204 SCRA 464, 470.

[20] cralawUnderscoring provided.

[21] cralawAdministrative Order No. 270 issued on February 21, 1992.

[22] cralawSec. 2, Rule 9 of the Rules of Court.

[23] cralawBPI v. ALS Management & Development Corp., G.R. No. 151821, April 14, 2004, 427 SCRA 564, 574; AFP Mutual Benefit Association, Inc. v. NLRC, G.R. No. 102199, January 28, 1997, 267 SCRA 47, 63; and Duero v. Court of Appeals, 424 Phil. 12, 24 (2002).

[24] cralawFrancel Realty Corp. v. Sycip, G.R. No. 154684, September 8, 2005, 469 SCRA 424, 431.

[25] cralawDuero v. Court of Appeals, 424 Phil. 12, 24 (2002).

[26] cralawRollo, p. 29.

[27] cralawPhilippine Long Distance Telephone Company v. Dulay, G.R. No. 53446, April 12, 1989, 172 SCRA 31, 41.

[28] cralawAtlas Fertilizer Corporation v. Navarro, No. L-72074, April 30, 1987, 149 SCRA 432, 436 citing Bengzon v. Inciong, 91 SCRA 248, 256.

[29] cralawCommissioner of Internal Revenue v. Marubeni Corporation, G.R. No. 137377, December 18, 2001, 372 SCRA 576, 587-588 and Camacho v. Court of Industrial Relations, 80 Phil. 848, 855 (1948).


Republic of the Philippines

Supreme Court

BaguioCity

SECOND DIVISION

RODOLFO HERMOSO, ANTONIO JACOBE, BRIGIDO PORTUGUESE, REGALADO AUSTRIA, LOLITA ANGELES, PRESINA BERSABE, ANGELITO ROSQUETA, CONSTANCIO PROTUGUESE, ROGELIO SANTOS, ALIAS FIEL, CATALINA VALENZUELA, JAIME PANGILINAN, ESTELA DE VERA MACALALAD, LETICIA LOPEZ, NOEMI BAUTISTA, GREGORIO ANTAZO, ELPIDIO CRIZALDO, OSCAR VICTORIO and ANTONIO ZURITA,

Petitioners,

- versus -

C.L. REALTY CORPORATION,

Respondent.

G.R. No. 140319

Present:

PUNO, J., Chairperson,*

SANDOVAL-GUTIERREZ,**chanroblesvirtuallawlibrary

CORONA,

AZCUNA, and

GARCIA, JJ.

Promulgated:

May 5, 2006

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

D E C I S I O N

GARCIA, J.:

cralawAssailed and sought to be set aside in this petition for reviewunder Rule 45 of the Rules of Court are the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 43795, to wit:

1. Decision[1] dated March 31, 1999 reversing and setting aside the decision of the Department of Agrarian Reform Adjudication Board(DARAB) Proper datedAugust 21, 1996;

2. Resolution[2] dated June 17, 1999 denying petitioners' motion for extension of time to file a motion for reconsideration, thereby also denying their belatedly-filed motion for reconsideration; and

3. Resolution[3] dated October 11, 1999 denying the motion for reconsideration with finality.

cralawRespondent C.L. Realty Corporation (C.L. Realty, for short) is the registered owner of a parcel of land with an area of 46.1476 hectares located at Brgy. Alas-asin, Mariveles, Bataan, covered by Transfer Certificate of Title (TCT) No. T-60221.

cralawOn August 28, 1991, C.L. Realty received a Notice of Acquisition of the said parcel of land from Regional Office No. III of the Department of Agrarian Reform (DAR), followed by a Notice of Valuation under which the property in question was valued at P273,559.00. C.L. Realty challenged the valuation thus made, claiming it to be unconscionably low since, under its Sworn Statement on Agricultural Land Holdings dated February 8, 1988 and filed with the Municipal Assessor's Office, P4,614,760.00 was the amountentered as the fair value of the land.

cralawOn September 8, 1992, C.L. Realty wrote DAR Regional Director Antonio Nuesa requesting that the issuance of the Certificates of Land Ownership Award (CLOAs) covering the property in question be held in abeyance. The following day, Director Nuesa indorsed the request to Bataan Provincial Agrarian Reform Officer (PARO) Florencio Siman for appropriate action.

cralawBarely a month after, C.L. Realty, without requesting for the lifting of the land coverage, formally requested and applied with DAR-Region III for conversion of the land from agricultural to industrial/commercial use which request was also indorsed in due time to the PARO of Bataan for appropriate action.

cralawEvidently unbeknownst to C.L. Realty when it made its deferment request and filed its application for conversion, CLOAs were already issued to herein petitioners Rodolfo Hermoso, et al. In fact, pursuant to the CLOAs thus issued, some of them were able to secure on September 1, 1992, while the others, the following day, the corresponding certificates of title.Since then, the petitioners appeared to have entered into possession of said land and planted crops thereon.

cralaw

cralawLater apprised of the CLOA issuance, C.L. Realty filed with the DARAB- Region III office a petition, later docketed as DARAB Case No. 092-B-93, praying for the cancellation of herein petitioners' CLOAs on the ground of irregular, premature and anomalous issuance. Specifically, C.L. Realty alleged, inter alia, that the CLOA recipients do not meet the basic farmer-beneficiary qualification requirement and are not under the order of priority defined in Section 22 of Republic Act (R.A.) No. 6657[4].

cralawIn their answer, petitioners denied allegations of irregularity and prematurity in the issuance of the CLOAs in question, adding that all legal requirements for the purpose have been complied with and that they are all qualified farmer-beneficiaries. They also contend that the petition to cancel was erroneously directed at them when it should have been addressed to the DAR officials who processed/approved their applications filed in good faith.

cralawFinding that undue haste attended the processing and issuance of the CLOAs in question, and that the petitioners were not qualified farmer-beneficiaries under Section 22 of R.A. No. 6657, the DARAB Provincial Adjudicator rendered, on October 28, 1993, a decision ordering the cancellation of the CLOAs thus issued to the petitioners.

cralawTherefrom, petitioners appealed to the DARAB Proper at Diliman, Quezon City. In that recourse, docketed as DARAB Case No. 1999 (Reg. Case No. 092-B-93), petitioners reiterated their position set forth in their answer to the petition to cancel, and alleged, in addition, that the DARAB provincial adjudicator had no

authority or jurisdiction to cancel or annul the CLOAs, the same having already been registered in their names with the Register of Deeds.

cralawOn August 21, 1996, the DARAB Proper rendered a decision finding for petitioners, disposing as follows:

cralawWHEREFORE, premises considered, finding the appeal meritorious, the decision of the Honorable Adjudicator a quo is hereby REVERSED and SET ASIDE. A new judgment is rendered rejecting any attempt to nullify the issuance of Certificates of Land Ownership Award (CLOAs) to herein respondents-appellants. The Board upholds the efficacy of the same.

The DARAB Proper predicated its disposition on the premise that C.L. Realty, failing as it did to substantiate its allegations respecting the lack of qualification as farmer-beneficiaries of petitioners, had not overturned the presumption that official duty had been duly performed.

cralawFollowing the denial of its motion for reconsideration, C.L. Realty went to the Court of Appeals (CA) by way of petition for review, thereat docketed as CA-G.R. SP No. 43795.

cralawAt stated at the outset, CA, in the herein assailed decision[5] dated March 31, 1999, set aside the August 21, 1996 decision of the DARAB Proper and reinstated the ruling of the provincial adjudicator, thus:

cralawWHEREFORE, the premises considered, the appealed decision of the DARAB is hereby REVERSED and SET ASIDE and the Decision of the Provincial Adjudicator dated 28 October 1993 is HEREBY REINSTATED.

cralawSubsequently, petitioners, through counsel, filed a motion for extension of time to file a motion for reconsideration. On May 10, 1999, they filed their motion for reconsideration, followed fourteen (14) days later by a supplemental motion for reconsideration.

cralawCiting Habaluyas Enterprises, Inc., et. al. vs. Hon. Maximo Japson, et. al.,[6] the CA, in its equally assailed resolution[7] of June 17, 1999, denied the motion for extension and, consequently, the motion for reconsideration. On July 1, 1999, petitioners moved for a reconsideration of the resolution dated June 17, 1999, but their motion was also denied in the resolution of October 11, 1999.[8]chanroblesvirtuallawlibrary

cralawAggrieved, petitioners are now before us via this petition for review under Rule 45 of the Rules of Court.

cralawIn the meanwhile, the Court, upon application of the petitioners, issued, on August 7, 2000, a temporary restraining order[9]enjoining respondent, thru its agents, from, among other things, entering into the lots occupied by petitioners and exercising rights of ownership.

cralawThe issues raised, as summarized in petitioners' memorandum[10], turn on the following questions:

1. Whether or not the DARAB provincial adjudicator has jurisdiction to nullify the CLOAs issued to petitioners, given that the corresponding TCTs have been issued over the lands covered;

2. Whether or not the petition filed by C.L. Realty before the Office of the Provincial Adjudicator should have been dismissed for non-joinder of indispensable parties;

3. Whether or not the CA failed to take into account facts and circumstances supportive of herein petitioners' cause, and, on the other hand, accorded undue weight to the findings of the Provincial Adjudicator; and

4. Whether or not the CA erred in denying herein petitioners' motion for extension of time to file a motion for reconsideration.

cralawThe jurisdictional and procedural issues raised at the threshold hereof cannot carry the day for the petitioners.

cralawVis--vis petitioners' jurisdictional challenge, it may be stated that the DAR, through its adjudication arm, i.e., the DARAB and its regional and provincial adjudication boards, exercises quasi-judicial functions and jurisdiction on all matters pertaining to agrarian dispute or controversy and the implementation of agrarian reform laws.[11] In Nuesa vs. Court of Appeals,[12] the Court, citing the Revised Rules of Procedure of the DARAB, stated that the DARAB has primary, original and appellate jurisdiction 'to determine and adjudicate all agrarian disputes, cases, controversies, and matters or incidents involving the implementation of all the Comprehensive Agrarian Reform Program [CARP] under R.A. 6657, E.O. Nos. 228, 229 and 129-A, R.A. 3844, as amended by R.A. 6389, P.D. No. 27 and other agrarian laws and their implementing rules and regulations. The Court made a similar pronouncement on the jurisdiction of DARAB in Bautista vs. Mag-isa Vda. De Villa.[13] Under Section 1(f) of the DARAB Rules of Procedure, such jurisdiction of the DARAB

includes cases involving 'the issuance, correction and cancellation of (CLOAs) and Emancipation Patents (EPs) which are registered with the Land Registration Authority. Surely, such jurisdiction cannot be deemed to disappear the moment a certificate of title is issued. For, such certificates are not modes of transfer of property but merely evidence of such transfer. Needless to state, there can be no valid transfer of title should the CLOA on which it was grounded is void.

cralawAt any rate, the petitioners are in no position to question the jurisdiction of the DAR and its adjudicative arm at this late junction of the proceedings. They are already estopped at this stage to challenge the competency of the DARAB and its provincial adjudicator to have taken cognizance of the case. This disposition becomes all the more pressing considering the petitioners' active participation in the proceedings below, and their having been the recipients of a favorable decision dated August 21, 1996 of the DARAB Proper. Decisional law frowns upon a jurisdictional challenge cast against such a milieu.

Petitioners' thesis, under the second ground, that the DAR officials who processed and approved the applications for issuance of CLOAs and the Register of Deeds are indispensable parties cannot be given cogency. Surely, a final determination of the petition for cancellation of CLOAs could be had even without joining in such petition any of the officials adverted to. And as a matter of long and recognized practice, a public respondent need only to be impleadedin certiorari proceedings under Rule 65 of the Rules of Court, but even then, the adjudicating judge, officer or tribunal would only be considered a nominal party.[14] In petitions for review on certiorari as a mode of ordinary appeal under either Rule 43[15] or 45,[16] only the private parties to the case are to be impleaded.

The foregoing notwithstanding, the Court still rules for petitioners due to compelling reasons ostensibly overlooked by the appellate court. We start with respondent C.L. Realty's standing to question the qualification of the petitioners as CARP beneficiaries.As the DARAB Proper aptly observed:

It is the Municipal Agrarian Reform Officer (MARO) or the Provincial Agrarian Reform Officer (PARO) together with the Barangay Agrarian Reform Committee (BARC) who screen and select the possible agrarian beneficiaries. If there are farmers who claimed they have a priority over those who have been identified by the MARO as beneficiaries of the land, said farmers can file a protest with the MARO or the PARO who is currently processing the Land Distribution Folder (Administrative Order No. 10, Series of 1990).

xxx The landowner, however, does not have the right to select who the beneficiaries should be. Hence, other farmers who were not selected and claimed they have a priority over those who have been identified as such can file a written protest with the MARO or the PARO who is currently processing the claim folder.[17] [Emphasis supplied]

Denying a landowner the right to choose a CARP beneficiary is, in context, only proper. For a covered landholding does not revert back to the owner even if the beneficiaries thus selected do not meet all necessary qualifications. Should it be found that the beneficiaries are indeed disqualified, the land acquired by the State for agrarian reform purposes will not be returned to the landowner but shall go instead to other qualified beneficiaries.

cralawLest it be overlooked, respondent, upon its receipt of the Notice of Acquisition of the land in question, never disputed the propriety, let alone asked for the lifting, of such acquisition. Respondent, from its arguments, does not, therefore, have a claim to retaining ownership of the land. All it did was to except from the valuation given to its former landholding. And even as to the issue of just compensation, there is no showing that respondentever brought the matter to the Regional Trial Court (RTC) as even respondent, in its memorandum, admits it should have done. In this regard, respondent, citing what the Court said in Republic vs. Court of Appeals,[18] states in its memorandum:

Thus, under the law, the Land Bank of the Philippines is charged with the initial responsibility of determining the value of lands placed under land reform and the compensation to be paid for their taking. Through notice sent to the landowner pursuant to 16(a) of R.A. No. 6657, the DAR makes an offer. In case the landowner rejects the offer, a summary administrative proceeding is held and afterward the provincial (PARAD), the regional (RARAD) or the central (DARAB) adjudicator as the case may be, depending on the value of the land, fixes the price to be paid for the land. If the landowner does not agree to the price fixed, he may bring the matter to the RTC acting as Special Agrarian Court. This in essence is the procedure for the determination of compensation cases under R.A. No. 6657. x x x In the terminology of Section 57, the RTC, sitting as a Special Agrarian Court, has 'original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners. It would subvert this 'original and exclusive jurisdiction of the RTC for the DAR to vest original jurisdiction in compensation cases in administrative officials and make the RTC an appellate court for the review of administrative decisions.[19] (Underlining in the original)

Respondent emphasizes in the above-quoted portion of its memorandum that the RTC has jurisdiction over just compensation disputes. However, nowhere is it shown, even in its own allegations of facts, that respondent brought this matter to the RTC. Instead, respondent sought a conversion of the land from agricultural to industrial/commercial use.

Under DAR Administrative Order (AO) No. 1, series of 1990, as amended by AO No. 12, series of 1994, '[A]fter the DAR has issued a Notice of Acquisition of an agricultural land under the compulsory acquisition process ' no application for conversion of said land from the landowner or anyone acting on his behalf shall be given due course. Given this perspective, it cannot plausibly be said that the issuance of CLOAs during the pendency of the conversion proceedings was anomalous, irregular or premature. As it were, the application for conversion was improper from the start, the notice of acquisition having previously been issued.

Respondent's ploy for conversion having failed, and the CLOAs having been issued, respondent resorted to seeking the cancellation of said CLOAs on the basis of the lack of qualifications of the beneficiaries and the pendency of its application for conversion. Needless to stress, respondent pursued a strange course of action considering that, originally, its only grievance related to property valuation.

As stated earlier, respondent was without personality to question the selection of beneficiaries. However, even if it had such personality, its arguments against petitioners' qualifications as farmer-beneficiaries do not bear sufficient weight to peremptorily justify the cancellation of the issued CLOAs. It may be that the petitioners were employed or self-employed. This reality, however, even if true, does not per se argue against their qualifications as CARP beneficiaries at the time the award was made. For all the lawrequires, in the minimum, is that the prospective beneficiary be a landless resident preferably of the barangay or municipality, as the case may be, where the landholding is located, provided he has, in the language of Section 22 of RA 6657,the 'willingness, aptitude and ability to cultivate and make the land as productive as possible. A farmer-beneficiary need not undertake every chore in the cultivation of the farmholding all by his personal self; he may be assisted in the farm work and the care of plants by his immediate farm household without forfeiting his right to continue as such beneficiary.[20]chanroblesvirtuallawlibrary

In the case at bench, it appears that the BARC, the MARO and/or PARO have screened and, after investigation, identified, or at least are presumed to have duly screened and identified, the petitioners as qualified beneficiaries of the land in question and have found the property to be suitable for agricultural productivity. This determination has not been overcome by proof to the contrary. To be sure, the provincial adjudicator's posture, as affirmed by the appellate court, that none of the petitioners meet the qualifications of a farmer beneficiary, since they are factory workers, private employees or fishermen, cannot be accorded the weight ofoverturning evidence. For one, the provincial adjudicator did not identify who among the petitioners are self-employed, factory workers or fishermen, if that be the case. And for another, the provincial adjudicator did not point to any evidence to establish his simplistic conclusion about petitioners not being qualified as farmer-beneficiaries.

Another argument was that some of the beneficiaries were not even residents of Brgy. Alas-asin where the land is located. It ought to be pointed out, however, that the petitioners were residents of neighboring barangays, many of which were within walking distance from Brgy. Alas-asin. While farmers or farm workers already in the place should be given preferential rights in the distribution of lands, even people living outside of the barangay where the property is situated may be qualified as CARP beneficiaries. Section 22 of R.A. No. 6657 says so:

Section 22. Qualified Beneficiaries. - The lands covered by the CARP shall be distributed as much as possible to landless residents of the same barangay, or in the absence thereof, landless residents of the same municipality in the following order of priority:

a) agricultural lessees and share tenants;

b) regular farmworkers;

c) seasonal farmworkers;

d) other farmworkers;

e) actual tillers or occupants of public land;

f) collective or cooperative of the above beneficiaries; and

g) others directly working on the land.

xxxcralawxxxcralawxxx

As stressed by the DARAB Proper in its decision, the very essence of the CARP is to uplift and help as many farmers as possible and make them beneficiaries of the program. Thus, a liberal interpretation is preferred.

Section 22 of the CARP law provides merely for an order of priority in the distribution of the land to beneficiaries. In the case at bar, there appears to be no applicants other than the petitioners. Thus, even if it be assumed that petitioners fall under the last enumerated order of beneficiaries, namely, 'others directly working on the land, still they are qualified as beneficiaries since they are all residents of Mariveles, Bataan, where the land is located, though not necessarily all residents of the same barangay.

It should be stressed, at this juncture, that petitioners have had their CLOAs and certificates of title for over eight (8) years. Some of them have fully paid the Land Bank for the value of the land awarded them. They have been paying all these years the real estate taxes on their landholdings, cultivating them in the process.

cralawAs a final consideration, we note that the CA had denied with finality petitioners' motion for reconsideration of its underlying March 31, 1999 decision[21] owing to the belated filing of such motion for reconsideration. To be sure, the appellate court acted within its sound discretion in denying petitioners' motion for time to file a motion for reconsideration and, consequent to such denial, denying the corresponding motion for reconsideration. But the more paramount consideration to observe in this case is the norm relaxing the rules of procedure in the broader interest of justice, thus helping litigants secure substantial justice, specially, as here, when the perceived resulting injustice is not proportionate with the parties' failure to strictly comply with the prescribed procedure.[22]chanroblesvirtuallawlibrary

WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 43795 dated March 31, 1999, and its Resolutions dated June 17, 1999 and October 11, 1999 are SET ASIDE and the decision of the Department of Agrarian Reform Adjudication Board in DARAB Case No. 1999 is hereby REINSTATED.

SO ORDERED.

CANCIO C. GARCIA

Associate Justice

WE CONCUR:

(On Leave)

REYNATO S. PUNO

Associate Justice

Chairperson

(NO PART)

ANGELINA SANDOVAL-GUTIERREZ

Associate Justice

RENATO C. CORONA

Associate Justice

ADOLFO S. AZCUNA

Associate Justice


cralawI attest that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

ANGELINA SANDOVAL-GUTIERREZ

Associate Justice

Acting Chairperson, Second Division


cralawPursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above decision were reached in consultation beforethe case was assigned to the writer of the opinion of the Court.

ARTEMIO V. PANGANIBAN

Chief Justice

Endnotes:

* cralawOn leave.cralaw

** cralawActing chairperson.cralaw

[1]Penned by then Associate Justice Romeo A. Brawner (ret.), with Associate Justices Angelina Sandoval-Gutierrez (now a member of this Court) and Martin S. Villarama, Jr., concurring; Rollo, pp. 45-50; Annex 'D', Petition.cralaw

[2]cralawId. at 62-63; Annex 'G', Petition.cralaw

[3]cralaw Id. at 70-72; Annex 'I', Petition.cralaw

[4]cralaw The Comprehensive Agrarian Reform Law.cralaw

[5]cralawSee Note #1, supra. cralaw

[6]cralawG.R. No. L-70895, May 30, 1986; 142 SCRA 208.cralaw

[7]See item #2, supra.cralaw

[8]See Note #3, supra.cralaw

[9]Rollo, pp. 99-100. cralaw


[11]cralawMartillano v. Court of Appeals, G.R. No. 148277, June 29, 2004; 433 SCRA 195.cralaw

[12]G.R. No. 132048, March 6, 2002; 378 SCRA 351. cralaw

[13]cralawG.R. No. 152564, Sept. 13, 2004; 438 SCRA 259.cralaw

[14]cralawSection 5, Rule 65,Rules of Court.cralaw

[15]cralawSection 6(a) ibid.cralaw

[16]cralawSection 4(a). ibid. cralaw

[17]cralawRollo, pp. 39-40.cralaw

[18]G.R. No. 122256, Oct. 30, 1966;263 SCRA 758.cralaw

[19]cralawRespondent's Memorandum, p. 10; Rollo p. 252.cralaw

[20] cralawSumatra vs. Vda. De Parinas, G.R. No. 142958, April 24, 2002, 381 SCRA 522. cralaw

[21]See Note #1, supra.cralaw

[22]Balindong vs. CA, G.R. No. 159962, Dec. 16, 2004; 447 SCRA 2004.

www.chanrobles.com

SECOND DIVISION

[G.R. No. 139430. June 20, 2001]

EDI STAFF BUILDERS INTERNATIONAL, INC. and LEOCADIO J. DOMINGUEZ, Petitioners, v. FERMINA D. MAGSINO, respondent.

D E C I S I O N

MENDOZA, J.:

This is a petition for review on certiorari of the decision, [1] dated March 11, 1999, and the resolution, [2] dated July 20, 1999, of the Court of Appeals, affirming the finding of the National Labor Relations Commission that respondent Fermina D. Magsino had been illegally dismissed and ordering petitioner EDI Staffbuilders International, Inc. (EDI) and Leocadio J. Dominguez to pay separation pay to respondent at the rate of P10,000.00 a month for every year of service.

The antecedent facts are as follows:

Petitioner EDI is a duly licensed recruitment agency. Petitioner Leocadio J. Dominguez is its president, while respondent Fermina D. Magsino was until her dismissal the supervisor of its Processing and Documentation Group responsible for ensuring that all the documentary and other requirements for the deployment abroad of contract workers recruited by petitioner were complied with. Among the requirements was the remittance of premium payments on the repatriation bonds of contract workers. Under Department Order No. 28, series of 1991 of the Department of Labor and Employment, overseas contract workers whose employment contracts have terms of six months or longer are required to post repatriation bonds to guarantee the reimbursement of the costs of repatriation, including air fare from the job site and other incidental expenses, in the event of the termination of their employment.

In compliance with the DOLE order, petitioner EDI required overseas contract workers recruited by it to pay P400.00 a year as premium depending on the length of their respective employment contracts. The premiums were remitted to a bonding company accredited by the Philippine Overseas Employment Agency. The bonding company issues a Certificate of Coverage or COC indicating the name of the covered overseas contract worker, the duration of the repatriation bond, and the premiums paid. The COCs are submitted together with other documents to the POEA.

On April 16, 1993, Dan de Guzman, the manager of petitioners Processing and Documentation Group, sent respondent the following memorandum:

Management has received reports on your withholding of collected premium payments for [the] workers mandatory repatriation bond.

As you well know, all collections are supposed to be properly documented, accounted for, and subsequently remitted/reported to accounting, whether these are official service fees of EDI-SBII or payments to government offices for processing of workers travel documents. When PDG records were reviewed, it was discovered that our document analyst has been collecting premium payments from workers for a two-year bond coverage in accordance with their employment contract[s]. However, based on your alleged instructions, collections for two-year premium payments had been turned over to you. Subsequently, you released to the POEA liaison officer premium payments only for one year. In effect, you withheld one-year premium payment[s] which remain unaccounted to this day. It appears that this procedure has been going on since January 1992.

In this connection, you are required to submit to the undersigned within three (3) working days from receipt hereof your written clarification and/or explanations on the foregoing acts, and to show and justify why no disciplinary action should be taken against you.[3]

Instead of complying with the memorandum, respondent tendered her resignation effective May 30, 1993. [4] However, action on her resignation letter was held in abeyance pending the result of the investigation of the charge against her. [5] On May 20, 1993, respondent was given notice of her termination. [6]

On July 12, 1993, respondent filed a complaint for illegal dismissal, nonpayment of salaries, leave pay, 13th month pay, profit sharing for 1992, service award for 10 years, and maternity benefits against herein petitioners. She claimed she had been dismissed without cause and without notices.

As no amicable settlement had been reached, the Labor Arbiter on August 25, 1993 directed both parties to file their position papers.

Only respondent complied. The Labor Arbiter deemed as unrebutted the allegations in respondents complaint and position paper. On May 19, 1994, the Labor Arbiter rendered his decision, ordering petitioners to reinstate respondent to her former position without loss of seniority rights and to pay her P91,492.80 backwages and P7,624.40 13th month pay. [7]

Petitioners appealed to the NLRC which, in its decision, [8] dated March 22, 1996, affirmed the Labor Arbiters decision. The NLRC held:

The submission of [petitioners] position paper in the guise of an appeal could not be entertained under the criteria set forth in Sec. 2 of Rule VI of the Rules of Procedure of the NLRC, to wit:

Section 2. Grounds. The appeal may be entertained only on any of the following grounds:

a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter, Regional Director or duly authorized Hearing Officer or Administrator of POEA;

b) If the decision, order or award was secured through fraud or coercion, including graft and corruption;

c) If made purely on questions of law; and/or

d) If serious errors in the findings of facts are raised which, if not corrected, would cause grave or irreparable damage or injury to the appellant.[9]

Through a new counsel, petitioners moved for a reconsideration, alleging that their former lawyer deliberately did not file a position paper in their behalf before the Labor Arbiter and did not even explain his failure to do so on appeal to the NLRC. However, the NLRC found petitioners claim not supported by evidence and consequently denied their motion for lack of merit. [10]

Petitioners then filed a petition for certiorari. Originally filed with this Court, the petition was referred to the Court of Appeals pursuant to the ruling in St. Martin Funeral Homes v. NLRC. [11] On March 11, 1999, the appeals court rendered a decision, the dispositive portion of which reads:

WHEREFORE, finding no reversible error on the part of the NLRC, the assailed decision and orders are hereby AFFIRMED with modification that in lieu of the order of reinstatement, a separation pay shall be awarded to private respondent to be computed at the rate of Ten Thousand Pesos (P10,000.00) for every month for every year of service.[12]

The Court of Appeals affirmed the NLRCs holding that petitioners could not present their evidence on appeal for the first time. It further held that even considering their evidence, petitioners had failed to prove that respondent was responsible for the discrepancies between the premiums paid and the premiums remitted so as to justify her termination since no documents were presented by petitioners to substantiate the same. Petitioners moved for a reconsideration, but their motion was denied on July 20, 1999.

Hence this petition. Petitioners argue that respondent was dismissed for cause, for loss of trust and confidence, and, therefore, should not have been granted separation pay.

In support of their contention, petitioners cite evidence they presented before the National Labor Relations Commission in their memorandum on appeal and motion for reconsideration, consisting of the following: (1) petitioner EDIs April 16, 1993 notice of violation to respondent, (2) respondents letter of resignation, (3) notice of hearing of April 28, 1993, (4) notice of hearing of April 29, 1993, (5) notice of hearing of May 6, 1993, (6) May 6, 1993 letter of petitioner EDI notifying respondent that her letter of resignation could not be considered pending results of the respondents investigation, and (7) May 20, 1993 notice of respondents termination. [13]

The issues in this case are (1) whether the NLRC correctly disregarded the evidence presented by petitioners on appeal on the ground that they failed to file their position paper before the Labor Arbiter and (2) whether considering such evidence, respondent was dismissed for cause, specifically, for loss of trust and confidence, and after due notice to her.

With respect to the first question, the Labor Code provides:

ART. 221. Technical rules not binding and prior resort to amicable settlement. In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. . . .

Accordingly, it has been settled that no undue sympathy is to be accorded to any claim of a procedural misstep in labor cases. Such cases must be decided according to justice and equity and the substantial merits of the controversy. [14] Thus, in Bristol Laboratories Employees Association v. NLRC, [15] the Court held that the NLRC did not commit grave abuse of its discretion in considering additional documentary evidence submitted by the employer on appeal to prove breach of trust and loss of confidence as bases for the dismissal of the petitioner in that case.

In this case, petitioners not implausibly ascribed to the fault of their counsel their failure to file a position paper (which would have constituted their evidence) before the Labor Arbiter. Considering that respondent had also been given the opportunity (in the NLRC, Court of Appeals, and also here in this Court) to rebut petitioners evidence against her, the Court deems it best to admit such evidence and to decide this case on the merits.

Considering, however, the evidence presented by petitioners on appeal, the Court finds the same to be insufficient in establishing that respondent was dismissed for loss of trust and confidence.

At the outset, it should be stressed that in an unlawful dismissal case, the employer has the burden of proving the lawful cause for the employees dismissal. [16] Without sufficient proof of loss of confidence, an employee cannot be dismissed on this ground. [17] It was, therefore, error for both the NLRC and the Court of Appeals to disallow evidence on appeal which petitioners tried to present.

In this case, there is no proof either of the amount collected by document analyst Mary Ann Samson and turned over to respondent or of the amount which respondent turned over to POEA liaison officer Ferdinand De la Cruz for eventual payment to the bonding company. Proof of these amounts is necessary so that it can be determined whether respondent was responsible for any defalcation. Petitioners simply alleged that respondent failed to account for P201,600.00 without showing how this figure was arrived at. According to petitioners, three individuals, namely, Mary Ann Samson, Ferdinand De la Cruz, and respondent Fermina D. Magsino, actually handled the money for payment of the premiums of the overseas contract workers bonds. It is, therefore, necessary for petitioners to show how much was turned over by Mary Ann Samson to respondent and how much the latter in turn turned over to Ferdinand De la Cruz. As the Court of Appeals aptly stated, if there are no records to speak of, it follows that the discovered anomalies have no basis too. [18]

Nor can the Court of Appeals be faulted for ordering payment of separation pay in lieu of reinstatement. Indeed, if any party can complain against this feature of the decision of the Court of Appeals, it should be respondent, as employee, and not petitioners, who are the employers. The strain in the relationship between the parties, not to mention the length of time respondent has been out of petitioners employ, make an award of separation pay appropriate. [19] The grant of separation pay is of course to be understood as separate and in addition to the payment of backwages which, in accordance with the ruling in Bustamante v. NLRC, [20] should be computed from the time of respondents dismissal up to the time of finality of this decision and without any deduction and qualification.

WHEREFORE , the decision and resolution of the Court of Appeals are AFFIRMED with the MODIFICATION that in addition to the grant of separation pay, respondent Fermina D. Magsino is awarded backwages, inclusive of allowances, and other benefits, including 13th month pay, which should be computed from the time of her dismissal up to the time of finality of this decision, without any deduction and qualification.

SO ORDERED.

Bellosillo, (Chairman), Quisumbing, Buena, and De Leon, Jr., JJ., concur .

Endnotes:

[1] Per Associate Justice Eloy R. Bello and concurred in by Associate Justices Salome A. Montoya and Ruben T. Reyes. Petition, Annex A; Rollo, pp. 21-27.

[2] Id., Annex B; id., pp. 28-29.

[3] Id., Annex C; id., p. 30.

[4] Id., Annex D; id., p. 31.

[5] Id., Annex E; id., p. 32.

[6] Id., Annex F; id., pp. 33-35.

[7] Id., Annex G; id., pp. 36-39.

[8] Id., Annex H; id., pp. 40-48.

[9] Rollo, p. 44.

[10] Petition, Annex I; Rollo, pp. 47-48.

[11] 295 SCRA 494 (1998).

[12] CA Decision, p. 6; Rollo, p. 27.

[13] Records, pp. 63-70.

[14] Lawin Security Services, Inc. v. NLRC (First Division), 273 SCRA 132 (1997).

[15] 187 SCRA 118 (1990). See also Philippine Telegraph and Telephone Corporation v. NLRC, 183 SCRA 451 (1990); Magna Rubber Manufacturing Corporation v. Drilon, 168 SCRA 727 (1988); Columbia Development Corporation v. Minister of Labor and Employment, 146 SCRA 421 (1986); Haverton Shipping Ltd. v. NLRC, 135 SCRA 685 (1985).

[16] Farrol v. Court of Appeals, G.R. No. 133259, Feb. 10, 2000.

[17] Benguet Corporation v. NLRC, 318 SCRA 106 (1999); Cocoland Development Corporation v. NLRC, 259 SCRA 51 (1996).

[18] CA Decision, p. 5; Rollo, p. 26.

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

[20] 265 SCRA 61 (1996).

Republic of the Philippines

SUPREME COURTManila

THIRD DIVISION

ALICE A.I. SANDEJAS,

G.R. No. 155033

ROSITA A.I. CUSI,

PATRICIA A.I. SANDEJAS and

Present:

BENJAMIN A.I. ESPIRITU,

Petitioners,

YNARES-SANTIAGO,

Chairperson,

AUSTRIA-MARTINEZ,

- versus -

CARPIO MORALES,*

CHICO-NAZARIO, and

NACHURA, JJ.

SPS. ARTURO IGNACIO, JR.

and EVELYN IGNACIO,

Promulgated:

Respondents.

December 19, 2007

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

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

cralawBefore the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 62404 promulgated on August 27, 2002, which affirmed with modification the Decision of the Regional Trial Court (RTC) of Pasig City, Branch 158, in Civil Case No. 65146 dated December 18, 1998.

cralawThe facts of the case, as summarized by the RTC, are as follows:

cralawIt appears from the plaintiffs' [petitioners] evidence that Arturo [respondent] is the elder brother of Alice [petitioner] and Rosita [petitioner], Benjamin [petitioner] and Patricia [petitioner] are Arturo's nephew and niece. Arturo and his wife Evelyn [respondent] are residents of the United States. In October 1993, Arturo leased from Dr. Borja a condominium unit identified as Unit 28-C Gilmore Townhomes located at Granada St.,

Quezon City.The lease was for the benefit of Benjamin who is the occupant of the unit.The rentals were paid by Ignacio.The term of the lease is for one (1) year and will expire on October 15, 1994. It appears that Arturo was intending to renew the lease contract. As he had to leave for the U.S., Arturo drew up a check, UCPB Check No. GRH-560239 and wrote on it the name of the payee, Dr. Manuel Borja, but left blank the date and amount.He signed the check.The check was intended as payment for the renewal of the lease.The date and the amount were left blank because Arturo does not know when it will be renewed and the new rate of the lease.The check was left with Arturo's sister-in-law, who was instructed to deliver or give it to Benjamin.

cralawThe check later came to the possession of Alice who felt that Arturo cheated their sister in the amount of three million pesos (P3,000,000.00).She believed that Arturo and Rosita had a joint and/or money market placement in the amount of P3 million with the UCPB branch at Ortigas Ave., San Juan and that Ignacio preterminated the placement and ran away with it, which rightfully belonged to Rosita.Alice then inquired from UCPB Greenhills branch if Arturo still has an account with them.On getting a confirmation, she together with Rosita drew up a scheme to recover the P3 million from Arturo.Alice filled up the date of the check with March 17, 1995 and the amount with three million only.Alice got her driver, Kudera, to stand as the payee of the check, Dr. Borja. Alice and Rosita came to SBC[2] Greenhills Branch together with a man (Kudera) who[m] they introduced as Dr. Borja to the then Assistant Cashier Luis.After introducing the said man as Dr. Borja, Rosita, Alice and the man who was later identified as Kudera opened a Joint Savings Account No. 271-410554-7.As initial deposit for the Joint Savings Account, Alice, Rosita and Kudera deposited the check.No ID card was required of Mr. Kudera because it is an internal policy of the bank that when a valued client opens an account, an identification card is no longer required (TSN, April 21, 1997, pp. 15-16).SBC also allowed the check to be deposited without the endorsement of the impostor Kudera.SBC officials stamped on the dorsal portion of the check endorsement/lack of endorsement guaranteed and sent the check for clearing to the Philippine Clearing House Corporation.

cralawOn 21 March 1995, after the check had already been cleared by the drawer bank UCPB, Rosita withdrew P1 million from Joint Savings Account and deposited said amount to the current account of Alice with SBC Greenhills Branch.On the same date, Alice caused the transfer of P2 million from the Joint Savings Account to two (2) Investment Savings Account[s] in the names of Alice, Rosita and/or Patricia. ...

cralawOn April 4, 1995, a day after Evelyn and Atty. Sanz inquired about the identity of the persons and the circumstances surrounding the deposit and withdrawal of the check, the three million pesos in the two investment savings account[s] and in the current account just opened with SBC were withdrawn by Alice and Rosita.[3]

cralawOn June 18, 1995, Arturo Ignacio, Jr. and Evelyn Ignacio (respondents) filed a verified complaint for recovery of a sum of money and damages against Security Bank and Trust Company (SBTC) and its officers, namely: Rene Colin D. Gray, Manager; and Sonia Ortiz-Luis, Cashier.The complaint also impleaded herein petitioner Benjamin A.I. Espiritu (Benjamin), a John Doe, representing himself as Manuel N. Borja; and a Jane Doe.

cralawOn November 7, 1995, the complaint was amended by additionally impleading herein petitioners Alice A.I. Sandejas (Alice), Rosita A.I. Cusi (Rosita) and Patricia A.I. Sandejas (Patricia) as defendants who filed their respective answers and counterclaims.

cralawAfter trial, the RTC rendered judgment dated December 18, 1998 with the following dispositive portion:

cralawWHEREFORE, in view of the foregoing, judgment is rendered in favor of plaintiffs as against defendants Security Bank and Trust Co., Rene Colin Gray, Sonia Ortiz Luis, Alice A.I. Sandejas and Rosita A.I. Cusi, ordering them to pay jointly and severally the plaintiffs the following amounts:

cralaw(1)cralawP3,000,000.00 plus legal interest on it from March 17, 1995 until the entire amount is fully paid;

cralaw(2)cralawP500,000.00 as moral damages;

cralaw(3)cralawP200,000.00 as exemplary damages;

cralaw(4)cralawP300,000.00 as attorney's fees; plus

cralaw(5)cralawthe cost of suit.

cralawIn turn, plaintiffs are directed to pay Benjamin A.I. Espiritu the amount of P100,000.00 as moral damages, P50,000.00 as exemplary damages and another P50,000.00 as attorney's fees.

cralawThe counterclaims of Patricia A.I. Sandejas are dismissed.

cralaw

SO ORDERED.[4]

cralaw

cralawBoth parties appealed the RTC Decision to the CA.

cralawOn August 14, 1999, during the pendency of the appeal with the CA, herein respondent Arturo Ignacio, Jr. (Arturo) died.[5]chanroblesvirtuallawlibrary

cralawOn August 27, 2002, the CA promulgated the presently assailed Decision, disposing as follows:

cralawWHEREFORE, in view of the foregoing, the assailed decision of the trial court is hereby AFFIRMED with the MODIFICATION that the judgment shall read as follows:

cralawThe defendants-appellants Security Bank and Trust Company, Rene Colin D. Gray, Sonia Ortiz-Luis, Alice A.I. Sandejas, and Rosita A.I. Cusi, are hereby ordered to jointly and severally pay the plaintiffs the following amounts:

cralaw1.cralawP3,000,000.00 plus legal interest computed from March 17,1995 until the entire amount is fully paid;

cralaw2.cralawP200,000.00 as moral damages;

cralaw3.cralawP100,000.00 as exemplary damages;

cralaw4.cralawP50,000.00 as attorney's fees; plus

cralaw5.cralawthe costs of suit.

cralawThe award of moral damages, exemplary damages, and attorney's fees in favor of Benjamin Espiritu is DELETED.

cralawSO ORDERED.[6]

cralawPetitioners and SBTC, together with Gray and Ortiz-Luis, filed their respective petitions for review before this Court.

cralawHowever, the petition filed by SBTC, Gray and Ortiz-Luis, docketed as G.R. No. 155038, was denied in a Resolution[7] issued by this Court on November 20, 2002, for their failureto properly verify the petition, submit a valid certification of non-forum shopping, and attach to the petition the duplicate original or certified true copy of the assailed CA Decision.Said

Resolution became final and executory on April 9, 2003.[8]chanroblesvirtuallawlibrary

cralawOn the other hand, the instant petition was given due course.Petitioners enumerated the following grounds in support of their petition:

cralawI. THE COURT OF APPEALS HAD DECIDED A QUESTION OF SUBSTANCE NOT HERETOFORE DECIDED BY THIS COURT AND/OR HAD DECIDED IT IN A WAY PROBABLY NOT IN ACCORD WITH EQUITY, THE LAW AND THE APPLICABLE DECISIONS OF THIS COURT, SUCH AS:

cralaw(a) IN NOT HOLDING THAT AS BETWEEN SIBLINGS, THE AGGRIEVED SIBLING HAS THE RIGHT TO TAKE MEASURES OR STEPS TO PROTECT HIS OWN INTEREST OR PROPERTY RIGHTS FROM AN ACT OF THE GUILTY SIBLING;

cralaw(b) IN NOT HOLDING THAT THE ACT OF ROSITA AND ALICE IN FILLING OUT THE BLANK PORTIONS OF THE CHECK TO RECOVER WHAT ARTURO, JR. TOOK FROM AND DUE ROSITA, DID NOT GIVE RISE TO AN ACTIONABLE TORT;

cralaw(c) IN NOT HOLDING THAT THE CRIMINAL ACT OF ARTURO, JR. IN SUBMITTING AN AFFIDAVIT OF LOSS OF THE CERTIFICATE OF TIME DEPOSIT FOR P3,000,000 THAT RIGHTFULLY BELONGED TO ROSITA JUST TO BE ABLE TO PRE-TERMINATE THE TIME DEPOSIT AND GET ITS FACE VALUE, WHEN HE KNEW IT WAS NOT LOST BUT IN FACT INTACT AND IN THE POSSESSION OF ROSITA, IS A DISHONEST AND REPREHENSIBLE ACT THAT JUSTIFIED ROSITA AND ALICE IN TAKING MEANS TO REGAIN THE MONEY AND TO DENY ARTURO, JR. ANY RIGHT TO RECOVER THE SAID AMOUNT AS WELL AS TO AN AWARD OF DAMAGES;

cralaw(d) IN NOT HOLDING THAT THE CRIMINAL ACT OF ARTURO, JR. IN SUBMITTING AN AFFIDAVIT OF LOSS OF THE OWNER'S COPY OF THE TITLE IN MORAYTA AND IN TESTIFYING IN COURT AS TO SUCH, WHEN THAT IS NOT THE TRUTH AS HE KNEW THAT THE ORIGINAL OWNER'S COPY OF THE TITLE WAS WITH ROSITA, IS ANOTHER DISHONEST AND REPREHENSIBLE ACT THAT SHOULD NOT HAVE ENTITLED HIM TO ANY AWARD OF DAMAGES; AND

cralaw(e) IN NOT APPLYING THE RULE ON PARI DELICTO UNDER ART. 1412 OF THE CIVIL CODE.

cralawII. THE COURT OF APPEALS HAD DEPARTED FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS WHEN IT FAILED TO RESOLVE IN THE APPEAL THE COUNTERCLAIM OF ROSITA AGAINST ARTURO, JR. FOR THE RECOVERY OF THE AMOUNTS LEGALLY HERS THAT SHOULD JUSTIFY ALICE'S BEING ABSOLVED FROM ANY LIABILITY FOR USING THE CHECK IN RECOVERING THE AMOUNT RIGHTFULLY BELONGING TO ROSITA;

cralawIII. THE COURT OF APPEALS HAD DEPARTED FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS WHEN IT REVERSED THE TRIAL COURT'S FINDING THAT RESPONDENT WAS GUILTY OF BAD FAITH AND MALICE THAT ENTITLED PETITIONER BENJAMIN A.I. ESPIRITU TO THE AWARD OF DAMAGES NOTWITHSTANDING THAT THERE WAS AMPLE EVIDENCE SHOWN THAT SUCH BAD FAITH AND MALICE WAS MADE AS A LEVERAGE TO COMPEL ARTURO'S SIBLINGS TO RETURN TO HIM THE P3,000,000 WHICH WAS NOT HIS; and,

cralawIV. THE COURT OF APPEALS HAD DECIDED THE CASE NOT IN ACCORD WITH LAW WHEN IT DELETED THE AWARD OF DAMAGES TO PETITIONER ESPIRITU AND IN NOT HAVING RULED THAT HE WAS ENTITLED TO A HIGHER AWARD OF DAMAGES CONSIDERING THE CIRCUMSTANCES OF THE CASE AS WELL AS IN NOT HAVING RULED THAT PATRICIA WAS ENTITLED TO AN AWARD OF DAMAGES.[9]

cralawPetitioners argue that the CA overlooked and ignored vital pieces of evidence showing that the encashment of the subject check was not fraudulent and, on the contrary, was justified under the circumstances; and that such encashment did not amount to an actionable tort and that it merely called for the application of the civil law rule on pari delicto.

cralawIn support of these arguments, petitioners contend that the principal adversaries in the present case are full blooded siblings; that the law recognizes the solidarity offamily which is why it is made a condition that earnest efforts towards a compromise be exerted before one family member can institute a suit against the other; that even if Arturo previously defrauded Rosita and deprived her of her lawful share in the sale of her property, petitioners Rosita and Alice did not precipitately file suit against him and instead took extra-legal measures to protect Rosita's property rights and at the same time preserve the solidarity of their family and save it from public embarrassment.Petitioners also aver that Rosita's and Alice's act of encashing the subject check is not fraudulent because they did not have any unlawful intent and that they merely took from Arturo what rightfully belonged to Rosita.Petitioners contend that even granting that the act of Rosita and Alice amounted to an actionable tort, they could not be adjudged liable to return the amount to respondents or to pay damages in their

favor, because the civil law rule on pari delicto dictates that, when both parties are at fault, neither of them could expect positive relief from courts of justice and, instead, are left in the state where they were at the time of the filing of the case.

cralawPetitioners also contend that the CA erred in failing to award damages to Patricia even if the appellate court sustained the trial court's finding that she was not a party to the fraudulent acts committed by Rosita and Alice.Petitioners argue that even if Patricia did not bother to know the details of the cases against her and left everything to her mother, she did not even know the nature of the case against her, or her superiors in the bank where she worked did not know whether she was the plaintiff or defendant, these were not reasons to deny her award of damages.The fact remains that she had been maliciously dragged into the case, and that the suit had adversely affected her work and caused her mental worries and anguish, besmirched reputation, embarrassment and humiliation.

cralawAs to Benjamin, petitioners aver that the CA also erred in deleting the award of damages and attorney's fees in his favor.Petitioners assert that the trial court found that Benjamin suffered mental anguish, wounded feelings and moral shock as a result of the filing of the present case.Citing the credentials and social standing of Benjamin, petitioners claim that the award of damages and attorney's fees in his favor should be increased.

cralawLastly, petitioners contend that the award of damages and attorney's fees to respondents should be deleted for their failure to establish malice or bad faith on the part of petitioners Alice and Rosita in recovering the P3,000,000.00 which Arturo took from Rosita; and that it is Rosita who is entitled to damages and attorney's fees for Arturo's failure and refusal to give her share in the sale of her property in Morayta.

cralawIn their Memorandum, respondents simply contend that the issues raised by petitioners are factual in nature and that the settled rule is that questions of fact are not subject to review by the Supreme Court in a petition for review on certiorari under Rule 45 of the Rules of Court.While there are exceptions to this rule, respondents assert that petitioners failed to show that the instant case falls under any of these exceptions.

The Courts Ruling

cralawThe Court finds the petition bereft of merit. There is no compelling reason for the Court to disturb the findings of facts of the lower courts.

cralawThe trial court's findings are as follows: (1) Rosita failed to establish that there is an agreement between her and Arturo that the latter will give her one-third of the proceeds of the sale of the Morayta property; (2)

petitioners were not able to establish by clear and sufficient evidence that the P3,000,000.00 which they took from Arturo when they encashed the subject check was part of the proceeds of the sale of the Morayta property; (3) Rosita's counterclaim is permissive and she failed to pay the full docket and filing fees for her counterclaim.[10]chanroblesvirtuallawlibrary

cralawPetitioners challenge the findings of the RTC and insist that they should not be held liable for encashing the subject check because Arturo defrauded Rosita and that he committed deceitful acts which deprived her of her rightful share in the sale of her building in Morayta; that the amount of P3,000,000.00 represented by the check which they encashed formed part of the proceeds of the said sale; that Alice and Rosita were merely moved by their desire to recover from Arturo, Rosita's supposed share in the sale of her property.

cralawHowever, the Court agrees with respondents that only questions of law are entertained in petitions for review on certiorari under Rule 45 of the Rules of Court.[11] The trial courts findings of fact, which the Court of Appeals affirmed, are generally binding and conclusive upon this court.[12] There are recognized exceptions to this rule, among which are: (1) the conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of facts are conflicting; (6) there is no citation of specific evidence on which the factual findings are based; (7) the finding of absence of facts is contradicted by the presence of evidence on record; (8) the findings of the CA are contrary to the findings of the trial court; (9) the CA manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion; (10) the findings of the CA are beyond the issues of the case; and (11) such findings are contrary to the admissions of both parties.[13] In the instant case, petitioners failed to demonstrate that their petition falls under any one of the above exceptions.

cralawPetitioners' assignments of errors boil down to the basic issue of whether or not Alice and Rosita are justified in encashing the subject check given the factual circumstances established in the present case.

cralawPetitioners' posture is not sanctioned by law.If they truly believe that Arturo took advantage of and violated the rights of Rosita, petitioners should have sought redress from the courts and should not have simply taken the law into their own hands.Our laws are replete with specific remedies designed to provide relief for the violation of one's rights.In the instant case, Rosita could have immediately filed an action for the nullification of the sale of the building she owns in light of petitioners' claim that the document bearing her conformity to the sale of the said building was taken by Arturo from her without her knowledge and consent.Or, in the alternative, as the CA correctly held, she could have brought a suit for the collection of a sum of money to recover her share in the sale of her property in Morayta.In a civilized society such as ours, the rule of law should always prevail.To allow otherwise would be productive of nothing but mischief, chaos and anarchy.As a lawyer, who has sworn to uphold the rule of law, Rosita should know better.She must go to court for relief.

cralawIt is true that Article 151 of the Family Code requires that earnest efforts towards a compromise be made before family members can institute suits against each other.However, nothing in the law sanctions or allows the commission of or resort to any extra-legal or illegal measure or remedy in order for family members to avoid the filing of suits against another family member for the enforcement or protection of their respective rights.

cralawPetitioners invoke the rule of pari delicto to support their contention that respondents do not deserve any relief from the courts.

cralawThe principle of pari delicto provides that when two parties are equally at fault, the law leaves them as they are and denies recovery by either one of them.[14] Indeed, one who seeks equity and justice must come to court with clean hands.[15] However, in the present case, petitioners were not able to establish that respondents are also at fault. Thus, the principle of pari delicto cannot apply.

cralawIn any case, the application of the pari delicto principle is not absolute, as there are exceptions to its application.[16] One of these exceptions is where the application of the pari delicto rule would violate well-established public policy.[17] The prevention of lawlessness and the maintenance of peace and order are established public policies. In the instant case, to deny respondents relief on the ground of pari delicto would put a premium on the illegal act of petitioners in taking from respondents what the former claim to be rightfully theirs.

cralawPetitioners also question the trial court's ruling that their counterclaim is permissive.This Court has laid down the following tests to determine whether a counterclaim is compulsory or not, to wit: (1) Are the issues of fact or law raised by the claim and the counterclaim largely the same? (2) Would res judicata bar a subsequent suit on defendants claims, absent the compulsory counterclaim rule? (3) Will substantially the same evidence support or refute plaintiffs claim as well as the defendants counterclaim? and (4) Is there any logical relation between the claim and the counterclaim, such that the conduct of separate trials of the respective claims of the parties would entail a substantial duplication of effort and time by the parties and the court?[18]chanroblesvirtuallawlibrary

cralawTested against the above-mentioned criteria, this Court agrees with the view of the RTC that Rosita's counterclaim for the recovery of her alleged share in the sale of the Morayta property is permissive in nature.The evidence needed to prove respondents' claim to recover the amount of P3,000,000.00 from petitioners is different from that required to establish Rosita's demands for the recovery of her alleged share in the sale of the subject Morayta property.The recovery of respondents' claim is not contingent or dependent upon the establishment of Rosita's counterclaim such that conducting separate trials will not result in the substantial duplication of the time and effort of the court and the parties.

cralawIn Sun Insurance Office, Ltd., (SIOL) v. Asuncion,[19] this Court laid down the rules on the payment of filing fees, to wit:

1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject-matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.

2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period.

3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee.[20]

cralawIn order for the trial court to acquire jurisdiction over her permissive counterclaim, Rosita is bound to pay the prescribed docket fees.[21] Since it is not disputed that Rosita never paid the docket and filing fees, the RTC did not acquire jurisdiction over her permissive counterclaim. Nonetheless, the trial court ruled on the merits of Rosita's permissive counterclaim by dismissing the same on the ground that she failed to establish that there is a sharing agreement between her and Arturo with respect to the proceeds of the sale of the subject Morayta property and that the amount of P3,000,000.00 represented by the check which Rosita and Alice encashed formed part of the proceeds of the said sale.

cralawIt is settled that any decision rendered without jurisdiction is a total nullity and may be struck down at any time, even on appeal before this Court.[22]

cralawIn the present case, considering that the trial court did not acquire jurisdiction over the permissive counterclaim of Rosita, any proceeding taken up by the trial court and any ruling or judgment rendered in relation to such counterclaim is considered null and void.In effect, Rosita may file a separate action against Arturo for recovery of a sum of money.

cralawHowever, Rosita's claims for damages and attorney's fees are compulsory as they necessarily arise as a result of the filing by respondents of their complaint.Being compulsory in nature, payment of docket fees is not required.[23]Nonetheless, since petitioners are found to be liable to return to respondents the amount of P3,000,000.00 as well as to pay moral and exemplary damages and attorney's fees, it necessarily follows that Rosita's counterclaim for damages and attorney's fees should be dismissed as correctly done by the RTC and affirmed by the CA.

cralawAs to Patricia's entitlement to damages, this Court has held that while no proof of pecuniary loss is necessary in order that moral damages may be awarded, the amount of indemnity being left to the discretion of the court, it is nevertheless essential that the claimant should satisfactorily show the existence of the factual basis of damages and its causal connection to defendants acts.[24]This is so because moral damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer.[25]Moreover, additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, these being, social humiliation, wounded feelings, grave anxiety, etc. that resulted from the act being complained of.[26]In the present case, both the RTC and the CA were not convinced that Patricia is entitled to damages. Quoting the RTC, the CA held thus:

cralawWith respect to Patricia, she did not even bother to know the details of the case against her, she left everything to the hands of her mother Alice. Her attitude towards the case appears weird, she being a banker who seems so concerned of her reputation.

cralawAside from the parties to this case, her immediate superiors in the BPI knew that she is involved in a case. They did not however know whether she is the plaintiff or the defendant in the case. Further, they did not know the nature of the case that she is involved in. It appears that Patricia has not suffered any of the injuries enumerated in Article 2217 of the Civil Code, thus, she is not entitled to moral damages and attorney's fees.[27]

This Court finds no cogent reason to depart from the above-quoted findings as Patricia failed to satisfactorily show the existence of the factual basis for granting her moral damages and the causal connection of such fact to the act of respondents in filing a complaint against her.

cralawIn addition, and with respect to Benjamin, the Court agrees with the CA that in the absence of a wrongful act or omission, or of fraud or bad faith, moral damages cannot be awarded.[28]The adverse result of an action does not per se make the action wrongful, or the party liable for it.[29]One may err, but error alone is not a ground for granting such damages.[30] In the absence of malice and bad faith, the mental anguish suffered by a person for having been made a party in a civil case is not the kind of anxiety which would warrant the award of moral damages.[31]

A resort to judicial processes is not, per se, evidence of ill will upon which a claim for damages may be based.[32]chanroblesvirtuallawlibrary

cralawIn China Banking Corporation v. Court of Appeals,[33] this Court held:

Settled in our jurisprudence is the rule that moral damages cannot be recovered from a person who has filed a complaint against another in good faith, or without malice or bad faith (Philippine National Bank v. Court of Appeals, 159 SCRA 433 [1988]; R & B Surety and Insurance v. Intermediate Appellate Court, 129 SCRA 736 [1984]). If damage results from the filing of the complaint, it is damnum absque injuria (Ilocos Norte Electrical Company v. Court of Appeals, 179 SCRA 5 [1989]).[34]

cralawcralawIn the present case, the Court agrees with the RTC and the CA that petitioners failed to establish that respondents were moved by bad faith or malice in impleading Patricia and Benjamin. Hence, Patricia and Benjamin are not entitled to damages.

The Court sustains the award of moral and exemplary damages as well as attorney's fees in favor of respondents.

cralawAs to moral damages, Article 20 of the Civil Code provides that every person who, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same. In addition, Article 2219 (10) of the Civil Code provides that moral damages may be recovered in acts or actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35 of the same Code. More particularly, Article 21 of the said Code provides that any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs, or public policy shall compensate the latter for the damage. In the present case, the act of Alice and Rosita in fraudulently encashing the subject check to the prejudice of respondents is certainly a violation of law as well as of the public policy that no one should put the law into his own hands. As to SBTC and its officers, their negligence is so gross as to amount to a willfull injury to respondents. The banking system has become an indispensable institution in the modern world and plays a vital role in the economic life of every civilized society.[35]Whether as mere passive entities for the safe-keeping and saving of money or as active instruments of business and commerce, banks have attained a ubiquitous presence among the people, who have come to regard them with respect and even gratitude and most of all, confidence.[36]For this reason, banks should guard against injury attributable to negligence or bad faith on its part.[37]

cralawThere is no hard-and-fast rule in the determination of what would be a fair amount of moral damages since each case must be governed by its own peculiar facts.[38]The yardstick should be that it is not palpably

and scandalously excessive.[39] Moreover, the social standing of the aggrieved party is essential to the determination of the proper amount of the award.[40]Otherwise, the goal of enabling him to obtain means, diversions, or amusements to restore him to the status quo ante would not be achieved.[41]In the present case, the Court finds no cogent reason to modify the amount of moral damages granted by the CA.

cralawLikewise, the Court finds no compelling reason to disturb the modifications made by the CA on the award of exemplary damages and attorney's fees.

cralawcralawUnder Article 2229 of the Civil Code, exemplary or corrective damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated, or compensatory damages. In the instant case, the award of exemplary damages in favor of respondents is in order for the purpose of deterring those who intend to enforce their rights by taking measures or remedies which are not in accord with law and public policy. On the part of respondent bank, the public relies on a bank's sworn profession of diligence and meticulousness in giving irreproachable service.[42] Hence, the level of meticulousness must be maintained at all times by the banking sector.[43] In the present case the award of exemplary damages is justified by the brazen acts of petitioners Rosita and Alice in violating the law coupled with the gross negligence committed by respondent bank and its officers in allowing the subject check to be deposited which later paved the way for its encashment.

cralawcralawAs to attorney's fees, Article 2208 of the same Code provides, among others, that attorney's fees may be recovered when exemplary damages are awarded or when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.

cralawWHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals dated August 27, 2002 in CA-G.R. CV No. 62404 is AFFIRMED.

cralawCosts against the petitioners.

cralawcralawSO ORDERED.

cralaw

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

WE CONCUR:


Associate Justice

Chairperson


Associate Justice

MINITA V. CHICO-NAZARIO

Associate Justice

ANTONIO EDUARDO B. NACHURA

Associate Justice

ATTESTATION



Associate Justice



Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

Endnotes:

* cralawPer raffle dated December 3, 2007.

[1]cralawPenned by Justice Amelita G. Tolentino with the concurrence of Justices Ruben T. Reyes (now a member of this Court) and Renato C. Dacudao; rollo, pp. 121-137.

[2]cralawSecurity Bank and Trust Company.

[3]cralawRTC Decision, rollo, pp. 110-111.

[4]cralawRollo, pp. 118-119.

[5]cralawCA rollo, pp. 100-102.

[6]cralawId. at 520.


[8]cralawCA rollo, p. 542.

[9]cralawPetition, rollo, pp. 17-18.

[10]cralawRTC Decision, rollo, pp. 117-118.

[11]cralawIron Bulk Shipping Phil. Co., Ltd. v. Remington Industrial Sales Corp., 462 Phil. 694, 703 (2003).

[12]cralawId. at 703-704.


[14]cralawYu Bun Guan v. Ong, 419 Phil. 845, 856 (2001).

[15]cralawTala Realty Services Corporation v. Banco Filipino Savings and Mortgage Bank, 441 Phil. 1, 45 (2002).

[16]cralawPajuyo v. Court of Appeals, G.R. No. 146364, June 3, 2004, 430 SCRA 492, 515, citing Silagan v. Intermediate Appellate Court, 274 Phil. 182, 193 (1991).

[17]cralawId.

[18]cralawTan v. Kaakbay Finance Corporation, 452 Phil. 637, 647 (2003), citing Intestate Estateof Dalisay v. Hon. Marasigan, 327 Phil. 298, 301 (1996) and Quintanilla v. Court of Appeals, 344 Phil. 811, 819(1997).

[19]cralawG.R. Nos. 79937-38, February 13, 1989, 170 SCRA 274.


[21]cralawSuson v. Court of Appeals, 343 Phil. 816, 825 (1997).

[22]cralawLopez v. David, Jr., G.R. No. 152145, March 30, 2004, 426 SCRA 535, 543.

[23]cralawTan v. Kaakbay, supra note 18, at 648.

[24]cralawMahinay v. Velasquez, Jr., 464 Phil. 146, 149 (2004), citing Kierulf v. Court of Appeals, 336 Phil. 414, 431-432 (1997).

[25]cralawMahinay v. Velasquez, Jr., id. at 149-150; Kierulf v. Court of Appeals, id. at 432.

[26]cralawMahinay v. Velasquez, Jr., id. at 150; Kierulf v. Court of Appeals, id.


[28]cralawBank of the Philippine Islands v. Casa Montessori Internationale, G.R. No. 149454, May 28, 2004, 430 SCRA 261, 293-294.

[29]cralawId at 294.

[30]cralawId.

[31]cralawPadillo v. Court of Appeals, 422 Phil. 334, 356 (2001).

[32]cralawCeballos v. Intestate Estate of the Late Emigdio Mercado, G.R. No. 155856, May 28, 2004, 430 SCRA 323, 336.

[33]cralawG.R. No. 94182, March 28, 1994, 231 SCRA 472.


[35]cralawCagungun v. Planters Development Bank, G.R. No. 158674, October 17, 2005, 473 SCRA 259, 273-274.

[36]cralawId. at 274

[37]cralawId.


[39]cralawId.

[40]cralawSamson, Jr. v. Bank of the Philippine Islands, 453 Phil. 577, 585 (2003).


[42]cralawPrudential Bank v. Court of Appeals, 384 Phil. 817, 826 (2000).

[43]cralawId.


SECOND DIVISION

CELESTIAL NICKEL MININGcralawG.R. No. 169080

EXPLORATION CORPORATION,

cralawPetitioner,

cralawPresent:

cralaw- versus -


cralawcralawCARPIO MORALES,

MACROASIA CORPORATIONcralawTINGA,

(formerly INFANTA MINERAL ANDcralawVELASCO, JR., and

INDUSTRIAL CORPORATION),cralawCHICO-NAZARIO,* JJ.

BLUE RIDGE MINERAL

CORPORATION, and LEBACH

MINING CORPORATION,

Respondents.

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

BLUE RIDGE MINERALcralawG.R. No. 172936

CORPORATION,

Petitioner,

- versus -

HON. ANGELO REYES in his

capacity as SECRETARY ofcralaw

the DEPARTMENT OF

ENVIRONMENT AND NATURAL cralawPromulgated:

RESOURCES, HON. GUILLERMOcralaw

ESTABILLO in his capacity as

REGIONAL DIRECTOR of thecralawDecember 19, 2007

MINES AND GEOSCIENCES

BUREAU, REGION IV-B of the

DEPARTMENT OF ENVIRONMENT

AND NATURAL RESOURCES, and

MACROASIA CORPORATION

(formerly INFANTA MINERAL AND

INDUSTRIAL CORPORATION),

cralawRespondents.

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

CELESTIAL NICKEL MININGcralawG.R. No. 176226

EXPLORATION CORPORATION,

cralawPetitioner,

cralaw- versus -

BLUE RIDGE MINERAL

CORPORATION and MACROASIA

CORPORATION (formerly INFANTA

MINERAL AND INDUSTRIAL

CORPORATION),

Respondents.

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

MACROASIA CORPORATIONcralawG.R. No. 176319

(formerly INFANTA MINERAL AND

INDUSTRIAL CORPORATION),

cralawPetitioner,

cralaw- versus -

BLUE RIDGE MINERAL

CORPORATION and CELESTIAL

NICKEL MINING EXPLORATION

CORPORATION,

Respondents.

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

D E C I S I O Ncralaw

VELASCO, JR., J.:

The Case

Before us are four (4) petitions. The first is a Petition for Review on Certiorari[1] under Rule 45 docketed as G.R. No. 169080, wherein petitioner Celestial Nickel Mining Exploration Corporation (Celestial) seeks to set aside the April 15, 2005 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 87931. The CA affirmed the November 26, 2004 Resolution of the Mines Adjudication Board (MAB) in MAB Case Nos. 056-97 and 057-97 (DENR Case Nos. 97-01 and 97-02), upholding the authority of the Department of Environment and Natural Resources (DENR) Secretary to grant and cancel mineral agreements. Also assailed is the August 3, 2005 Resolution[3] of the CA denying the Motion for Reconsideration of the assailed Decision.

The second is a Petition for Certiorari[4] under Rule 65 docketed as G.R. No. 172936, wherein petitioner Blue Ridge Mineral Corporation (Blue Ridge) seeks to annul and set aside the action of then Secretary Michael T. Defensor, in his capacity as DENR Secretary, approving and signing two Mineral Production Sharing Agreements (MPSAs) in favor of Macroasia Corporation (Macroasia) denominated as MPSA Nos. 220-2005-IVB and 221-2005-IVB.

And the third and fourth are petitions for review on certiorari[5] under Rule 45 docketed as G.R. No. 176226 and G.R. No. 176319, wherein petitioners Celestial and Macroasia, respectively, seek to set aside the May 18, 2006 Decision[6] of the CA in CA-G.R. SP No. 90828. The CA reversed and set aside the November 26, 2004 and July 12, 2005 Resolutions of the MAB, and reinstated the October 24, 2000 Decision in MAB Case Nos. 056-97 and 057-97, granting Blue Ridge the prior and preferential right to file its application over the mining claims of Macroasia. These petitions likewise seek to set aside the January 19, 2007 Resolution[7] of the CA denying petitioners motions for reconsideration of the assailed Decision.

Through our July 5, 2006 Resolution,[8] we consolidated the first two cases. While in our subsequent April 23, 2007[9] and July 11, 2007[10] Resolutions, we consolidated the four cases as they arose from the same facts.

The undisputed facts as found by the CA in CA-G.R. SP No. 87931 are as follows:

On September 24, 1973, the then Secretary of Agriculture and Natural Resources and Infanta Mineral and Industrial Corporation (Infanta) entered into a Mining Lease Contract (V-1050) for a term of 25 years up to

September 23, 1998 for mining lode claims covering an area of 216 hectares at Sitio Linao, Ipilan, Brookes Point, Palawan. The mining claims of Infanta covered by lode/lease contracts were as follows:

cralawContract No.cralawcralawArea cralawDate of Issuance

LLC-V-94118 hectaresJanuary 17, 1972

LC-V-1050216 hectaresSeptember 24, 1973

LLC-V-106016 hectaresOctober 30, 1973

LLC-V-1061144 hectaresOctober 30, 1973

LLC-V-1073144 hectaresApril 18, 1973

MLC-MRD-52306 hectaresApril 26, 1978

MLC-MRC-5372 hectaresApril 26, 1978

Infantas corporate name was changed to Cobertson Holdings Corporation on January 26, 1994 and subsequently to its present name, Macroasia Corporation, on November 6, 1995.

Sometime in 1997, Celestial filed a Petition to Cancel the subject mining lease contracts and other mining claims of Macroasia including those covered by Mining Lease Contract No. V-1050, before the Panel of Arbitrators (POA) of the Mines and Geo-Sciences Bureau (MGB) of the DENR.The petition was docketed as DENR Case No. 97-01.

Blue Ridge, in an earlier letter-petition, also wrote the Director of Mines to seek cancellation of mining lease contracts and other mining rights of Macroasia and another entity, Lebach Mining Corporation (Lebach), in mining areas in Brookes Point. The petition was eventually docketed as DENR Case No. 97-02.

Celestial is the assignee of 144 mining claims covering such areas contiguous to Infantas (now Macroasia) mining lode claims.Said area was involved in protracted administrative disputes with Infanta (now Macroasia), Lecar & Sons, Inc., and Palawan Nickel Mining Corporation.Celestial also holds an MPSA with the government which covers 2,835 hectares located at Ipilan/Maasin, Brookes Point, Palawan and two pending applications covering another 4,040 hectares in Barangay Mainit also in Brookes Point.

Celestial sought the cancellation of Macroasias lease contracts on the following grounds:(1) the nonpayment of Macroasia of required occupational fees and municipal taxes; (2) the non-filing of Macroasia of Affidavits of Annual Work Obligations; (3) the failure of Macroasia to provide improvements on subject mining claims; (4) the concentration of Macroasia on logging; (5) the encroachment, mining, and extraction by Macroasia of nickel ore from Celestials property; (6) the ability of Celestial to subject the mining areas to commercial production; and (7) the willingness of Celestial to pay fees and back taxes of Macroasia.

In the later part of the proceedings, Macroasia intervened in the case and submitted its position paper refuting the grounds for cancellation invoked by Celestial.[11]

The Ruling of the Panel of Arbitrators in

DENR Case Nos. 97-01 and 97-02

Based on the records of the Bureau of Mines and findings of the field investigations, the POA found that Macroasia and Lebach not only automatically abandoned their areas/mining claims but likewise had lost all their rights to the mining claims. The POA granted the petition of Celestial to cancel the following Mining Lease Contracts of Macroasia: LLC-V-941, LLC-V-1050, LLC-V-1060, LLC-V-1061, LLC-V-1073, MLC-MRD-52, and MLC-MRC-53; and found the claims of the others indubitably meritorious.It gave Celestial the preferential right to Macroasias mining areas.[12]It upheld Blue Ridges petition regarding DENR Case No. 97-02, but only as against the Mining Lease Contract areas of Lebach (LLC-V-1153, LLC-V-1154, and LLC-V-1155), and the said leased areas were declared automatically abandoned.It gave Blue Ridge priority right to the aforesaid Lebachs areas/mining claims.[13]chanroblesvirtuallawlibrary

Blue Ridge and Macroasia appealed before the MAB, and the cases were docketed as MAB Case Nos. 056-97 and 057-97, respectively.

Lebach did not file any notice of appeal with the required memorandum of appeal; thus, with respect to Lebach, the above resolution became final and executory.

The Rulings of the Mines Adjudication Board in

MAB Case Nos. 056-97 and 057-97 (DENR Case Nos. 97-01 and 97-02)

The MAB resolved the issues of timeliness and perfection of Macroasias appeal; Macroasias abandonment of its mining claims; and the preferential right over the abandoned mining claims of Macroasia.

Conformably with Section 51 of Consolidated Mines Administrative Order (CMAO)[14] implementing Presidential Decree No. (PD) 463[15] and our ruling in Medrana v. Office of the President (OP),[16] the MAB affirmed the POA findings that Macroasia abandoned its mining claims. The MAB found that Macroasia did not comply with its work obligations from 1986 to 1991. It based its conclusion on the field verifications conducted by the MGB, Region IV and validated by the Special Team tasked by the MAB.[17] However, contrary to the findings of the POA, the MAB found that it was Blue Ridge that had prior and preferential rights over the mining claims of Macroasia, and not Celestial.

Thus, on October 24, 2000, the MAB promulgated its Decision upholding the Decision of the POA to cancel the Mining Lode/Lease Contracts of Macroasia; declaring abandoned the subject mining claims; and opening the mining area with prior and preferential rights to Blue Ridge for mining applications, subject to strict compliance with the procedure and requirements provided by law. In case Blue Ridge defaults, Celestial could exercise the secondary priority and preferential rights, and subsequently, in case Celestial also defaults, other qualified applicants could file.[18]chanroblesvirtuallawlibrary

Both Celestial and Macroasia moved for reconsideration.[19] Celestial asserted that it had better rights than Blue Ridge over the mining claims of Macroasia as it had correctly filed its petition, and filed its MPSA application after Macroasias lease contract expired on January 17, 1997 and after the POAs resolution was issued on September 1, 1997.Moreover, it argued that priority was not an issue when the contested area had not yet been declared abandoned.Thus, Blue Ridges MPSA application filed on June 17, 1996 had no effect and should not be considered superior since Macroasias lease contracts were still valid and subsisting and could not have been canceled by Macroasias mere failure to perform annual work obligations and pay corresponding royalties/taxes to the government.

Macroasia, in its Motion for Reconsideration, reiterated that it did not abandon its mining claims, and even if mining was not listed among its purposes in its amended Articles of Incorporation, its mining activities were acts that were only ultra vires but were ratified as a secondary purpose by its stockholders in subsequent amendments of its Articles of Incorporation.

Before the MAB could resolve the motions for reconsideration, on March 16, 2001, Macroasia filed its Supplemental Motion for Reconsideration[20] questioning the jurisdiction of the POA in canceling mining lease

contracts and mining claims.Macroasia averred that the power and authority to grant, cancel, and revoke mineral agreements is exclusively lodged with the DENR Secretary.Macroasia further pointed out that in arrogating upon itself such power, the POA whimsically and capriciously discarded the procedure on conferment of mining rights laid down in Republic Act No. (RA) 7942, The Philippine Mining Act of 1995, and DENR Administrative Order No. (AO) 96-40,[21] and perfunctorily and improperly awarded its mining rights to Blue Ridge and Celestial.

Subsequently, on November 26, 2004, the MAB issued a Resolution[22] vacating its October 24, 2000 Decision, holding that neither the POA nor the MAB had the power to revoke a mineral agreement duly entered into by the DENR Secretary, ratiocinating that there was no provision giving the POA and MAB the concurrent power to manage or develop mineral resources. The MAB further held that the power to cancel or revoke a mineral agreement was exclusively lodged with the DENR Secretary; that a petition for cancellation is not a mining dispute under the exclusive jurisdiction of the POA pursuant to Sec. 77 of RA 7942; and that the POA could only adjudicate claims or contests during the MPSA application and not when the claims and leases were already granted and subsisting.

Moreover, the MAB held that there was no abandonment by Macroasia because the DENR Secretary had not decided to release Macroasia from its obligations. The Secretary may choose not to release a contractor from its obligations on grounds of public interest.Thus, through its said resolution, the MAB rendered its disposition, as follows:

cralawWHEREFORE, premises considered, the assailed Decision of October 24, 2000 is hereby VACATED.The seven (7) mining lease contracts of Macroasia Corporation (formerly Infanta Mineral & Industrial Corporation) are DECLARED SUBSISTING prior to their expirations without prejudice to any Decision or Order that the Secretary may render on the same.NO PREFERENTIAL RIGHT over the same mining claims is accorded to Blue Ridge Mineral Corporation or Celestial Nickel Mining Exploration Corporation also without prejudice to the determination by the Secretary over the matter at the proper time.[23]chanroblesvirtuallawlibrary

After the issuance of the MAB Resolution, Celestial and Blue Ridge went through divergent paths in their quest to protect their individual interests.

On January 10, 2005, Celestial assailed the November 26, 2004 MAB Resolution before the CA in a petition for review[24] under Rule 43 of the Rules of Court. The petition entitled Celestial Nickel Mining Exploration Corporation v. Macroasia Corporation, et al. was docketed as CA-G.R. SP No. 87931.

On the other hand, Blue Ridge first filed a Motion for Reconsideration[25] which was denied.[26]On August 26, 2005, Blue Ridge questioned the MABs November 26, 2004 and July 12, 2005 Resolutions before the CA in a petition for review[27] entitled Blue Ridge Mineral Corporation v. Mines Adjudication Board, et al. docketed as CA-G.R. SP No. 90828.

CA-G.R. SP No. 87931 filed by Celestial was heard by the 12th Division of the CA; while Blue Ridges CA-G.R. SP No. 90828 was heard by the Special 10th Division. Ironically, the two divisions rendered two (2) diametrically opposing decisions.

The Ruling of the Court of Appeals Twelfth Division

On April 15, 2005, in CA-G.R. SP No. 87931, the CA 12th Division affirmed the November 26, 2004 MAB Resolution which declared Macroasias seven mining lease contracts as subsisting; rejected Blue Ridges claim for preferential right over said mining claims; and upheld the exclusive authority of the DENR Secretary to approve, cancel, and revoke mineral agreements. The CA also denied Celestials Motion for Reconsideration[28] of the assailed August 3, 2005 Resolution.[29]chanroblesvirtuallawlibrary

Hence, Celestial filed its Petition for Review on Certiorari[30] docketed as G.R. No. 169080, before this Court.

The Ruling of the Court of Appeals Special Tenth Division

On May 18, 2006, the CA Special 10th Division in CA-G.R. SP No. 90828 granted Blue Ridges petition; reversed and set aside the November 26, 2004 and July 12, 2005 Resolutions of the MAB; and reinstated the October 24, 2000 Decision in MAB Case Nos. 056-97 and 057-97.The Special Tenth Division canceled Macroasias lease contracts; granted Blue Ridge prior and preferential rights; and treated the cancellation of a mining lease agreement as a mining dispute within the exclusive jurisdiction of the POA under Sec. 77 of RA 7942, explaining that the power to resolve mining disputes, which is the greater power, necessarily includes the lesser power to cancel mining agreements.

On February 20, 2006, Celestial filed a Most Urgent Motion for Issuance of a Temporary Restraining Order/Preliminary Prohibitory Injunction/Mandatory Injunction[31] to defer and preclude the issuance of MPSA to Macroasia by the MGB and the DENR Secretary.We denied this motion in our February 22, 2006 Resolution.[32]chanroblesvirtuallawlibrary

Upon inquiry with the DENR, Blue Ridge discovered that sometime in December 2005 two MPSAs, duly approved and signed by the DENR Secretary, had been issued in favor of Macroasia.Thus, we have the instant Petition for Certiorari[33] filed by Blue Ridge docketed as G.R. No. 172936 under Rule 65, seeking to invalidate the two MPSAs issued to Macroasia.

In the meantime, on June 7, 2006, Celestial filed its Motion for Partial Reconsideration[34] of the May 18, 2006 CA Decision in CA-G.R. SP No. 90828, while Macroasia filed its motion for reconsideration of the same CA decision on July 7, 2006.The motions were denied in the assailed January 19, 2007 CA Resolution.Hence, on March 8, 2007, Celestial filed the third petition[35] docketed as G.R. No. 176226, assailing the CAs May 18, 2006 Decision and January 19, 2007 Resolution, insofar as these granted Blue Ridges prior and preferential rights.While on March 9, 2007, Macroasia filed the fourth petition[36] docketed as G.R. No. 176319, also assailing the CAs May 18, 2006 Decision and January 19, 2007 Resolution.

The Issues

In G.R. No. 169080, petitioner Celestial raises the following issues for our consideration:

(1)cralawWhether or not Macroasia, for reasons of public policy is estopped from assailing the alleged lack of jurisdiction of the cralawPanel of Arbitrators and the Mines Adjudication Board only cralawafter receiving an adverse judgment therefrom? [sic]

(2)cralawWhether or not it is only the Secretary of the DENR who has the jurisdiction to cancel mining contracts and privileges? [sic]

(3)cralawWhether or not a petition for the cancellation of a mining lease cralawcontract or privilege is a mining dispute within the meaning of cralawthe law? [sic]

cralaw

(4)cralawWhether or not Infantas (Macroasia) mining lease contract areas were deemed abandoned warranting the cancellation of the lease contracts and the opening of the areas to other qualified applicants? [sic]

(5)cralawWhether or not Macroasia/Infanta had lost its right to participate cralawin this case after it failed to seasonably file its appeal and after cralawits lease contracts had been declared abandoned and expired without having been renewed by the government? [sic]

(6)cralawWhether or not Celestial has the preferential right to apply for cralawthe 23 DE LARA claims which were included in Infantas cralaw(Macroasia) expired lease contract (LLC-V-941) and the other cralawareas declared as lapsed or abandoned by MGB-Region 4 and the Panel of Arbitrators?[37] [sic]

In G.R. No. 172936, petitioner Blue Ridge raises the following grounds for the allowance of the petition:

I

At the outset, the instant petition must be given due course and taken cognizance of by the Honorable Court considering that exceptional and compelling circumstances justify the availment of the instant petition and the call for the exercise of the Honorable Courts primary jurisdiction.

A.cralawThe exploration, development and utilization of minerals, cralawpetroleum and other mineral oils are imbued with public cralawinterest.The action of then Secretary Defensor, maintained and cralawcontinued by public respondent Secretary Reyes, was tainted cralawwith grave abuse of discretion, has far-reaching consequences cralawbecause of the magnitude of the effect created thereby.

B.cralawThe issues in the instant petition have already been put to fore cralawby Celestial with the First Division of the Honorable Court, and hence, this circumstance justifies the cognizance by the cralawHonorable Court of the instant petition.

II

It was grave abuse of discretion amounting to lack and/or excess of jurisdiction for then Secretary Defensor to have issued the subject MPSAs in favor of private respondent Macroasia, considering that:

A.cralawNon-compliance of the mandatory requirements by private cralawrespondent Macroasia prior to approval of the subject MPSAs should have precluded then Secretary Defensor from approving cralawsubject MPSAs.

B.cralawPetitioner Blue Ridge has the prior and preferential cralawright to file its mining application over the mining claims covered by the subject MPSAs, pursuant to the Decision dated 24 October 2000 of the Board and as affirmed by the Decision dated 18 May 2006 of the Court of Appeals in CA-G.R. SP No. 90828.[38]

In G.R. No. 176226, petitioner Celestial ascribes the following errors to the CA for our consideration:

(1)cralawThat in reinstating and adopting as its own the Decision of the Mine Adjudication Board affirming the abandonment and cancellation of the mining areas/claims of Macroasia (Infanta) but awarding the prior or preferential rights to Blue Ridge, the Hon. Court of Appeals had decided a question of substance in a way not in accord with the Law (RA 7942) or with the applicable decisions of the Supreme Court; in other words, errors of law had been committed by the Hon. Court of Appeals in granting preferential rights to Blue Ridge;

(2)cralawThat the Hon. Court of Appeals has so far departed from the accepted and usual course of judicial proceedings or so far sanctioned such departure by the Mines Adjudication Board in its Decision of May 18, 2006 and Resolution of January 19, 2007 because:

(A)The findings of fact of the Hon. Court of Appeals are contradictory or inconsistent with the findings of the Panel of Arbitrators;

(B)There is grave abuse of discretion on the part of the Hon. Court of Appeals in its appreciation of the facts, the evidence and the law thereby leading it to make the erroneous conclusion that Blue Ridge, not Celestial, is entitled to the Award of prior/preferential rights over the mining areas declared as abandoned by Macroasia;

(C)There is likewise, a grave abuse of discretion on the part of the Hon. Court of Appeals in that the said Court did not even consider some of the issues raised by Celestial;

(D)That the findings of the Hon. Court of Appeals are mere conclusions not supported by substantial evidence and without citation of the specific evidence upon which they are based; they were arrived at arbitrarily or in disregard of contradiction of the evidence on record and findings of the Panel of Arbitrators in the Resolution of September 1, 1997;

(E)That the findings of the Hon. Court of Appeals are premised on the absence of evidence but such findings are contradicted by the evidence on record and are violative of the provisions of RA 7942 and its Implementing Rules and Regulations.[39]

In G.R. No. 176319, petitioner Macroasia raises the following grounds for the allowance of the petition:

I.

The Court of Appeals (Special Tenth Division) should have dismissed the Petition of Blue Ridge outright since the issues, facts and matters involved in the said Petition are identical to those which had already been painstakingly passed upon, reviewed and resolved by the Court of Appeals Twelfth Division in CA-G.R. SP No. 87931

II.

The Court of Appeals (Special Tenth Division) gravely erred in denying Macroasias Motion to Inhibit Associate Justice Rosmari Carandang from hearing and deciding the Petition

III.

There were no factual nor legal bases for the Court of Appeals to rule that Macroasia had waived its right to question the jurisdiction of the Mines Adjudication Board

IV.

Republic Act No. 7942 contains provisions which unequivocally indicate that only the Secretary of the Department of Environment and Natural Resources has the power and authority to cancel mining lease agreements

V.

The Court of Appeals (Special Tenth Division) gravely erred in perfunctorily transferring Macroasias mining lease agreements to Blue Ridge without observing the required procedure nor providing any basis therefor[40]chanroblesvirtuallawlibrary

The Courts Ruling

The petitions under G.R. Nos. 169080, 172936, and 176226 are bereft of merit, while the petition under G.R. No. 176319 is meritorious.

The pith of the controversy, upon which the other issues are hinged is, who has authority and jurisdiction to cancel existing mineral agreements under RA 7942 in relation to PD 463 and pertinent rules and regulations.

G.R. Nos. 169080, 176226 and 176319

We will jointly tackle G.R. Nos. 169080, 176266, and 176319 as the issues and arguments of these three are inextricably intertwined.

Core Issue:Jurisdiction over Cancellation of Mineral Agreements

Petitioner Celestial maintains that while the jurisdiction to approve mining lease contracts or mineral agreements is conferred on the DENR Secretary, Sec. 77(a) of RA 7942 by implication granted to the POA and MAB the authority to cancel existing mining lease contracts or mineral agreements.

On the other hand, respondent Macroasia strongly asserts that it is the DENR Secretary who has the exclusive and primary jurisdiction to grant and cancel existing mining lease contracts; thus, the POA and MAB have no jurisdiction to cancel much less to grant any preferential rights to other mining firms.

Before we resolve this core issue of jurisdiction over cancellation of mining lease contracts, we first need to look back at previous mining laws pertinent to this issue.

Under PD 463, The Mineral Resources Development Decree of 1974, which took effect on May 17, 1974, applications for lease of mining claims were required to be filed with the Director of the Bureau of Mines, within two (2) days from the date of their recording.[41]Sec. 40 of PD 463 provided that if no adverse claim was filed within (15) days after the first date of publication, it was conclusively presumed that no adverse claim existed and thereafter no objection from third parties to the grant of the lease could be heard, except protests pending at the time of publication. The Secretary would then approve and issue the corresponding mining lease contract.In case of any protest or adverse claim relating to any mining claim and lease application, Secs. 48 and 50 of PD 463 prescribed the procedure. Under Sec. 48, the protest should be filed with the Bureau of Mines. Under Sec. 50, any party not satisfied with the decision or order of the Director could, within five (5) days from receipt of the decision or order, appeal to the Secretary. The decisions of the Secretary were likewise appealable within five (5) days from receipts by the affected party to the President of the Philippines whose decision shall be final and executory. PD 463 was, however, silent as to who was authorized to cancel the mineral agreements.

On July 10, 1987, President Corazon C. Aquino issued Executive Order No. (EO) 211. Under Sec. 2 of EO 211, the processing, evaluation, and approval of all mining applications, declarations of locations, operating agreements, and service contracts were governed by PD 463, as amended. EO 211 likewise did not contain any provision on the authority to cancel operating agreements and service contracts.

On July 25, 1987, EO 279 was issued by President Aquino. It authorized the DENR Secretary to negotiate and enter into, for and in behalf of the Government, joint venture, co-production, or production-sharing agreements for the exploration, development, and utilization of mineral resources with any Filipino citizen, corporation, or association, at least 60% of whose capital was owned by Filipino citizens.[42] The contract or agreement was subject to the approval of the President.[43] With respect to contracts of foreign-owned corporations or foreign investors involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, the DENR Secretary could recommend approval of said contracts to the President.[44] EO 279 provided that PD 463 and its implementing rules and regulations, which were not inconsistent with EO 279, continued in force and effect.[45] Again, EO 279 was silent on the authority to cancel mineral agreements.

RA 7942, The Philippine Mining Act of 1995 enacted on March 3, 1995, repealed the provisions of PD 463 inconsistent with RA 7942.Unlike PD 463, where the application was filed with the Bureau of Mines Director, the applications for mineral agreements are now required to be filed with the Regional Director as provided by Sec. 29 of RA 7942. The proper filing gave the proponent the prior right to be approved by the Secretary and thereafterto be submitted to the President. The President shall provide a list to Congress of every approved mineral agreement within 30 days from its approval by the Secretary.Again, RA 7942 is silent on who has authority to cancel the agreement.

Compared to PD 463 where disputes were decided by the Bureau of Mines Director whose decisions were appealable to the DENR Secretary and then to the President, RA 7942 now provides for the creation of quasi-judicial bodies (POA and MAB) that would have jurisdiction over conflicts arising from the applications and mineral agreements. Secs. 77, 78, and 79 lay down the procedure, thus:

SEC. 77. Panel of Arbitrators.There shall be a panel of arbitrators in the regional office of the Department composed of three (3) members, two (2) of whom must be members of the Philippine Bar in good standing and one [1] licensed mining engineer or a professional in a related field, and duly designated by the Secretary as recommended by the Mines and Geosciences Bureau Director. Those designated as members of the panel shall serve as such in addition to their work in the Department without receiving any additional compensation. As much as practicable, said members shall come from the different bureaus of the Department in the region. The presiding officer thereof shall be selected by the drawing of lots. His tenure as presiding officer shall be on a yearly basis. The members of the panel shall perform their duties and obligations in hearing and deciding cases until their designation is withdrawn or revoked by the Secretary. Within thirty (30) working days, after the submission of the case by the parties for decision, the panel shall have exclusive and original jurisdiction to hear and decide on the following:

(a)cralawDisputes involving rights to mining areas;

(b) cralawDisputes involving mineral agreements or permits;

(c)cralawDisputes involving surface owners, occupants and cralawclaimholders/concessionaires; and

(d) cralawDisputes pending before the Bureau and the Department at the date of the effectivity of this Act.

SEC. 78. Appellate Jurisdiction.The decision or order of the panel of arbitrators may be appealed by the party not satisfied thereto to the Mines Adjudication Board within fifteen (15) days from receipt thereof which must decide the case within thirty (30) days from submission thereof for decision.

SEC. 79. Mines Adjudication Board.The Mines Adjudication Board shall be composed of three (3) members. The Secretary shall be the chairman with the Director of the Mines and Geosciences Bureau and the Undersecretary for Operations of the Department as members thereof.

x x x x

A petition for review by certiorari and question of law may be filed by the aggrieved party with the Supreme Court within thirty (30) days from receipt of the order or decision of the Board.

RA 7942 is also silent as to who is empowered to cancel existing lease contracts and mineral agreements.

Meanwhile, in Southeast Mindanao Gold Mining Corp. v. MAB, we explained that the decision of the MAB can first be appealed, via a petition for review, to the CA before elevating the case to this Court.[46]chanroblesvirtuallawlibrary

After a scrutiny of the provisions of PD 463, EO 211, EO 279, RA 7942 and its implementing rules and regulations, executive issuances, and case law, we rule that the DENR Secretary, not the POA, has the jurisdiction to cancel existing mineral lease contracts or mineral agreements based on the following reasons:

1.cralawThe power of the DENR Secretary to cancel mineral agreements emanates from his administrative authority, supervision, management, and control over mineral resources under Chapter I, Title XIV of Book IV of the Revised Administrative Code of 1987, viz:

Chapter 1General Provisions

cralawSection 1.Declaration of Policy.(1) The State shall ensure, for the benefit of the Filipino people, the full exploration and development as well as the judicious disposition, utilization, management, renewal and conservation of the countrys forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural resources x x x

cralawSec. 2.Mandate.(1) The Department of Environment and Natural Resources shall be primarily responsible for the implementation of the foregoing policy.(2) It shall, subject to law and higher authority, be in charge of carrying out the States constitutional mandate to control and supervise the exploration, development, utilization, and conservation of the countrys natural resources.

cralawx x x x

cralawSec. 4.Powers and Functions.The Department shall:

cralawx x x x

cralaw(2)cralawFormulate, implement and supervise the implementation of the governments policies, plans, and programs pertaining to the management, conservation, development, use and replenishment of the countrys natural resources;

cralawx x x x

cralaw(4)cralawExercise supervision and control over forest lands, alienable and disposable public lands, mineral resources x x x

cralawx x x x

cralaw(12)cralawRegulate the development, disposition, extraction, exploration and use of the countrys forest, land, water and mineral resources;

(13)cralawAssume responsibility for the assessment, development, protection, licensing and regulation as provided for by law, where applicable, of all energy and natural resources; the regulation and monitoring of service contractors, licensees, lessees, and permit for the extraction, exploration, development and use of natural resources products; x x x

cralawx x x x

(15)cralawExercise exclusive jurisdiction on the management and disposition of all lands of the public domain x x x

Chapter 2The Department Proper

x x x x

Sec. 8.The Secretary.The Secretary shall:

x x x x

(3)cralawPromulgate rules, regulations and other issuances necessary in carrying out the Departments mandate, objectives, policies, plans, programs and projects.

(4)cralawExercise supervision and control over all functions and activities of the Department;

(5)cralawDelegate authority for the performance of any administrative or substantive function to subordinate officials of the Department x x x (Emphasis supplied.)

It is the DENR, through the Secretary, that manages, supervises, and regulates the use and development of all mineral resources of the country.It has exclusive jurisdiction over the management of all lands of public domain, which covers mineral resources and deposits from said lands.It has the power to oversee, supervise, and police our natural resources which include mineral resources.Derived from the broad and explicit powers of the DENR and its Secretary under the Administrative Code of 1987 is the power to approve mineral agreements and necessarily to cancel or cause to cancel said agreements.

2. cralawRA 7942 confers to the DENR Secretary specific authority over mineral resources.

Secs. 8 and 29 of RA 7942 pertinently provide:

cralaw

cralawSEC. 8. Authority of the Department.The Department shall be the primary government agency responsible for the conservation, management, development, and proper use of the States mineral resources including those in reservations, watershed areas, and lands of the public domain. The Secretary shall have the authority to enter into mineral agreements on behalf of the Government upon the recommendation of the Director, promulgate such rules and regulations as may be necessary to implement the intent and provisions of this Act.

cralawSEC. 29. Filing and approval of Mineral Agreements.x x x.

cralawThe filing of a proposal for a mineral agreement shall give the proponent the prior right to areas covered by the same. The proposed mineral agreement will be approved by the Secretary and copies thereof shall be submitted to the President. Thereafter, the President shall provide a list to Congress of every approved mineral agreement within thirty (30) days from its approval by the Secretary.(Emphasis supplied.)

Sec. 29 is a carry over of Sec. 40 of PD 463 which granted jurisdiction to the DENR Secretary to approve mining lease contracts on behalf of the government, thus:

SEC. 40. Issuance of Mining Lease Contract.If no adverse claim is filed within fifteen (15) days after the first date of publication, it shall be conclusively presumed that no such adverse claim exists and thereafter no objection from third parties to the grant of the lease shall be heard, except protest pending at the time of publication, and the Secretary shall approve and issue the corresponding mining lease x x x.

To enforce PD 463, the CMAO containing the rules and regulations implementing PD 463 was issued.Sec. 44 of the CMAO provides:

SEC. 44.Procedure for Cancellation.Before any mining lease contract is cancelled for any cause enumerated in Section 43 above, the mining lessee shall first be notified in writing of such cause or causes, and shall be given an opportunity to be heard, and to show cause why the lease shall not be cancelled.

cralawIf, upon investigation, the Secretary shall find the lessee to be in default, the former may warn the lessee, suspend his operations or cancel the lease contract (emphasis supplied).

Sec. 4 of EO 279 provided that the provisions of PD 463 and its implementing rules and regulations, not inconsistent with the executive order, continue in force and effect.

When RA 7942 took effect on March 3, 1995, there was no provision on who could cancel mineral agreements. However, since the aforequoted Sec. 44 of the CMAO implementing PD 463 was not repealed by RA 7942 and DENR AO 96-40, not being contrary to any of the provisions in them, then it follows that Sec. 44 serves as basis for the DENR Secretarys authority to cancel mineral agreements.

Since the DENR Secretary had the power to approve and cancel mineral agreements under PD 463, and the power to cancel them under the CMAO implementing PD 463, EO 211, and EO 279, then there was no recall of the power of the DENR Secretary under RA 7942. Historically, the DENR Secretary has the express power to approve mineral agreements or contracts and the implied power to cancel said agreements.

It is a well-established principle that in the interpretation of an ambiguous provision of law, the history of the enactment of the law may be used as an extrinsic aid to determine the import of the legal provision or the law.[47]History of the enactment of the statute constitutes prior laws on the same subject matter. Legislative history necessitates review of the origin, antecedents and derivation of the law in question to discover the legislative

purpose or intent.[48] It can be assumed that the new legislation has been enacted as continuation of the existing legislative policy or as a new effort to perpetuate it or further advance it.[49]chanroblesvirtuallawlibrary

We rule, therefore, that based on the grant of implied power to terminate mining or mineral contracts under previous laws or executive issuances like PD 463, EO 211, and EO 279, RA 7942 should be construed as a continuation of the legislative intent to authorize the DENR Secretary to cancel mineral agreements on account of violations of the terms and conditions thereof.

3. cralawUnder RA 7942, the power of control and supervision of the DENR Secretary over the MGB to cancel or recommend cancellation of mineral rights clearly demonstrates the authority of the DENR Secretary to cancel or approve the cancellation of mineral agreements.

Under Sec. 9 of RA 7942, the MGB was given the power of direct supervision of mineral lands and resources, thus:

cralawSec. 9.Authority of the Bureau.The Bureau shall have direct charge in the administration and disposition of mineral lands and mineral resources and shall undertake geological, mining, metallurgical, chemical, and other researches as well as geological and mineral exploration surveys.The Director shall recommend to the Secretary the granting of mineral agreements to duly qualified persons and shall monitor the compliance by the contractor of the terms and conditions of the mineral agreements.The Bureau may confiscate surety, performance and guaranty bonds posted through an order to be promulgated by the Director.The Director may deputize, when necessary, any member or unit of the Philippine National Police, barangay, duly registered nongovernmental organization (NGO) or any qualified person to police all mining activities.(Emphasis supplied.)

cralaw

Corollary to the power of the MGB Director to recommend approval of mineral agreements is his power to cancel or recommend cancellation of mining rights covered by said agreements under Sec. 7 of DENR AO 96-40, containing the revised Implementing Rules and Regulations of RA 7942.Sec. 7 reads:

Sec. 7.Organization and Authority of the Bureau.

cralawx x x x

cralawThe Bureau shall have the following authority, among others:

cralawa.cralawTo have direct charge in the administration and disposition of mineral land and mineral resources;

cralawx x x x

cralawd.cralawTo recommend to the Secretary the granting of mineral agreements or to endorse to the Secretary for action by the President the grant of FTAAs [Financial and Technical Assistance Agreements], in favor of qualified persons and to monitor compliance by the Contractor with the terms and conditions of the mineral agreements and FTAAs.

cralawe.cralawTo cancel or to recommend cancellation after due process, mining rights, mining applications and mining claims for non-compliance with pertinent laws, rules and regulations.

It is explicit from the foregoing provision that the DENR Secretary has the authority to cancel mineral agreements based on the recommendation of the MGB Director.As a matter of fact, the power to cancel mining rights can even be delegated by the DENR Secretary to the MGB Director.Clearly, it is the Secretary, not the POA, that has authority and jurisdiction over cancellation of existing mining contracts or mineral agreements.

4. cralawThe DENR Secretarys power to cancel mining rights or agreements through the MGB can be inferred from Sec. 230, Chapter XXIV of DENR AO 96-40 on cancellation, revocation, and termination of a permit/mineral agreement/FTAA.Sec. 230 provides:

Section 230.Grounds

The following grounds for cancellation revocation and termination of a Mining Permit Mineral Agreement/FTAA.

a. Violation of any of the terms and conditions of the Permits or Agreements;

b. Nonpayment of taxes and fees due the government for two (2) consecutive years; and

c. Falsehood or omission of facts in the application for exploration [or Mining] Permit Mineral Agreement/FTAA or other permits which may later, change or affect substantially the facts set forth in said statements.

cralawThough Sec. 230 is silent as to who can order the cancellation, revocation, and termination of a permit/mineral agreement/FTAA, it has to be correlated with the power of the MGB under Sec. 7 of AO 96-40 to cancel or to recommend cancellation, after due process, mining rights, mining applications and mining claims for noncompliance with pertinent laws, rules and regulations.As the MGB is under the supervision of the DENR Secretary, then the logical conclusion is that it is the DENR Secretary who can cancel the mineral agreements and not the POA nor the MAB.

cralaw5.cralawCelestial and Blue Ridge are not unaware of the stipulations in the Mining Lease Contract Nos. V-1050 and MRD-52,[50] the cancellation of which they sought from the POA.It is clear from said lease contracts that the parties are the Republic of the Philippines represented by the Secretary of Agriculture and Natural Resources (now DENR Secretary) as lessor, and Infanta (Macroasia) as lessee. Paragraph 18 of said lease contracts provides:

Whenever the LESSEE fails to comply with any provision of [PD 463, and] Commonwealth Acts Nos. 137, 466 and 470, [both as amended,] and/or the rules and regulations promulgated thereunder, or any of the covenants therein, the LESSOR may declare this lease cancelled and, after having given thirty (30) days notice in writing to the LESSEE, may enter and take possession of the said premises, and said lessee shall be liable for all unpaid rentals, royalties and taxes due the Government on the lease up to the time of the forfeiture or cancellation, in

which event, the LESSEE hereby covenants and agrees to give up the possession of the property leased. (Emphasis supplied.)

cralawThus, the government represented by the then Secretary of Agriculture and Natural Resources (now the DENR Secretary) has the power to cancel the lease contracts for violations of existing laws, rules and regulations and the terms and conditions of the contracts. Celestial and Blue Ridge are now estopped from challenging the power and authority of the DENR Secretary to cancel mineral agreements.

cralawHowever, Celestial and Blue Ridge insist that the power to cancel mineral agreements is also lodged with the POA under the explicit provisions of Sec. 77 of RA 7942.

This postulation is incorrect.

Sec. 77 of RA 7942 lays down the jurisdiction of POA, to wit:

Within thirty (30) days, after the submission of the case by the parties for the decision, the panel shall have exclusive and original jurisdiction to hear and decide the following:

(a) Disputes involving rights to mining areas

(b) Disputes involving mineral agreements or permits

The phrase disputes involving rights to mining areas refers to any adverse claim, protest, or opposition to an application for mineral agreement. The POA therefore has the jurisdiction to resolve any adverse claim, protest, or opposition to a pending application for a mineral agreement filed with the concerned Regional Office of the MGB.This is clear from Secs. 38 and 41 of DENR AO 96-40, which provide:

Sec.38.

x x x x

Within thirty (30) calendar days from the last date of publication/posting/radio announcements, the authorized officer(s) of the concerned office(s) shall issue a certification(s) that the publication/posting/radio announcement have been complied with.Any adverse claim, protest or opposition shall be filed directly, within thirty (30) calendar days from the last date of publication/posting/radio announcement, with the concerned Regional Office or through any concerned PENRO or CENRO for filing in the concerned Regional Office for purposes of its resolution by the Panel of Arbitrators pursuant to the provisions of this Act and these implementing rules and regulations.Upon final resolution of any adverse claim, protest or opposition, the Panel of Arbitrators shall likewise issue a certification to that effect within five (5) working days from the date of finality of resolution thereof.Where there is no adverse claim, protest or opposition, the Panel of Arbitrators shall likewise issue a Certification to that effect within five working days therefrom.

x x x x

No Mineral Agreement shall be approved unless the requirements under this Section are fully complied with and any adverse claim/protest/opposition is finally resolved by the Panel of Arbitrators.

Sec. 41.

cralaw

x x x x

Within fifteen (15) working days from the receipt of the Certification issued by the Panel of Arbitrators as provided in Section 38 hereof, the concerned Regional Director shall initially evaluate the Mineral Agreement

applications in areas outside Mineral reservations.He/She shall thereafter endorse his/her findings to the Bureau for further evaluation by the Director within fifteen (15) working days from receipt of forwarded documents.Thereafter, the Director shall endorse the same to the secretary for consideration/approval within fifteen working days from receipt of such endorsement.

In case of Mineral Agreement applications in areas with Mineral Reservations, within fifteen (15) working days from receipt of the Certification issued by the Panel of Arbitrators as provided for in Section 38 hereof, the same shall be evaluated and endorsed by the Director to the Secretary for consideration/approval within fifteen days from receipt of such endorsement.(Emphasis supplied.)

It has been made clear from the aforecited provisions that the disputes involving rights to mining areas under Sec. 77(a) specifically refer only to those disputes relative to the applications for a mineral agreement or conferment of mining rights.

The jurisdiction of the POA over adverse claims, protest, or oppositions to a mining right application is further elucidated by Secs. 219 and 43 of DENR AO 95-936, which read:

Sec. 219.Filing of Adverse Claims/Conflicts/Oppositions.Notwithstanding the provisions of Sections 28, 43 and 57 above, any adverse claim, protest or opposition specified in said sections may also be filed directly with the Panel of Arbitrators within the concerned periods for filing such claim, protest or opposition as specified in said Sections.

Sec. 43. Publication/Posting of Mineral Agreement Application.

cralawx x x x

cralawThe Regional Director or concerned Regional Director shall also cause the posting of the application on the bulletin boards of the Bureau, concerned Regional office(s) and in the concerned province(s) and municipality(ies), copy furnished the barangays where the proposed contract area is located once a week for two (2) consecutive weeks in a language generally understood in the locality.After forty-five (45) days from the last date of publication/posting has been made and no adverse claim, protest or opposition was filed within the said forty-five (45) days, the concerned offices shall issue a certification that publication/posting has been made and that no adverse claim, protest or opposition of whatever nature has been filed.On the other hand, if there be any

adverse claim, protest or opposition, the same shall be filed within forty-five (45) days from the last date of publication/posting, with the Regional Offices concerned, or through the Departments Community Environment and Natural Resources Officers (CENRO) or Provincial Environment and Natural Resources Officers (PENRO), to be filed at the Regional Office for resolution of the Panel of Arbitrators. However previously published valid and subsisting mining claims are exempted from posted/posting required under this Section.

No mineral agreement shall be approved unless the requirements under this section are fully complied with and any opposition/adverse claim is dealt with in writing by the Director and resolved by the Panel of Arbitrators.(Emphasis supplied.)

These provisions lead us to conclude that the power of the POA to resolve any adverse claim, opposition, or protest relative to mining rights under Sec. 77(a) of RA 7942 is confined only to adverse claims, conflicts and oppositions relating to applications for the grant of mineral rights.POAs jurisdiction is confined only to resolutions of such adverse claims, conflicts and oppositions and it has no authority to approve or reject said applications.Such power is vested in the DENR Secretary upon recommendation of the MGB Director.Clearly, POAs jurisdiction over disputes involving rights to mining areas has nothing to do with the cancellation of existing mineral agreements.

On the other hand, Celestial and Blue Ridge contend that POA has jurisdiction over their petitions for the cancellation of Macroasias lease agreements banking on POAs jurisdiction over disputes involving mineral agreements or permits under Sec. 77 (b) of RA 7942.

Such position is bereft of merit.

As earlier discussed, the DENR Secretary, by virtue of his powers as administrative head of his department in charge of the management and supervision of the natural resources of the country under the 1987 Administrative Code, RA 7942, and other laws, rules, and regulations, can cancel a mineral agreement for violation of its terms, even without a petition or request filed for its cancellation, provided there is compliance with due process. Since the cancellation of the mineral agreement is approved by the DENR Secretary, then the recourse of the contractor is to elevate the matter to the OP pursuant to AO 18, Series of 1987 but not with the POA.

Matched with the legal provisions empowering the DENR Secretary to cancel a mineral agreement is Sec. 77 (b) of RA 7942 which grants POA jurisdiction over disputes involving mineral agreements.

cralawA dispute is defined as a conflict or controversy; a conflict of claims or rights; an assertion of a right, claim or demand on one side; met by contrary claims or allegations on the other.[51]It is synonymous to a cause of action which is an act or omission by which a party violates a right of another.[52]chanroblesvirtuallawlibrary

cralawA petition or complaint originating from a dispute can be filed or initiated only by a real party-in-interest.The rules of court define a real party-in-interest as the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit.[53]Every action, therefore, can only be prosecuted in the name of the real party-in-interest.[54]It has been explained that a real party-in-interest plaintiff is one who has a legal right, while a real party-in-interest-defendant is one who has a correlative legal obligation whose act or omission violates the legal right of the former.[55]chanroblesvirtuallawlibrary

cralawOn the other hand, interest means material interest, an interest in issue and to be affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest.It is settled in this jurisdiction that one having no right or interest to protect cannot invoke the jurisdiction of the court as a party-plaintiff in an action.[56]Real interest is defined as a present substantial interest, as distinguished from a mere expectancy, or a future, contingent, subordinate or consequential interest.[57]chanroblesvirtuallawlibrary

cralawFrom the foregoing, a petition for the cancellation of an existing mineral agreement covering an area applied for by an applicant based on the alleged violation of any of the terms thereof, is not a dispute involving a mineral agreement under Sec. 77 (b) of RA 7942.It does not pertain to a violation by a party of the right of another.The applicant is not a real party-in-interest as he does not have a material or substantial interest in the mineral agreement but only a prospective or expectant right or interest in the mining area.He has no legal right to such mining claim and hence no dispute can arise between the applicant and the parties to the mineral agreement.The court rules therefore that a petition for cancellation of a mineral agreement anchored on the breach thereof even if filed by an applicant to a mining claim, like Celestial and Blue Ridge, falls within the jurisdiction of the DENR Secretary and not POA.Such petition is excluded from the coverage of the POAs jurisdiction over disputes involving mineral agreements under Sec. 77 (b) of RA 7942.

Macroasia not estopped from raising the issue of jurisdiction on appeal

On the related issue of estoppel, petitioner Celestial argues that Macroasia is estopped from raising and questioning the issue of the jurisdiction of the POA and MAB over the petition for cancellation of its mining lease contracts, when Macroasia raised it only in its Supplemental Motion for Reconsideration.

We rule that the principle of estoppel does not apply.

Indeed, Macroasia was not the one that initiated the instant case before the POA, and thus was not the one that invoked the jurisdiction of the POA.Hence, on appeal, Macroasia is not precluded from raising the issue of jurisdiction as it may be invoked even on appeal.[58]As a matter of fact, a party can raise the issue of jurisdiction at any stage of the proceedings.

Petitioner Celestials reliance on Villela v. Gozun[59] to support the contention that the POA has jurisdiction to hear and decide a petition to cancel existing mining lease contracts, is misplaced.In said case, we dismissed the petition on the ground of non-exhaustion of administrative remedies and disregarded judicial hierarchy as no compelling reason was shown to warrant otherwise.While we pointed out the authority of the POA, there was no categorical pronouncement on the jurisdictional issue.

No valid pronouncement of abandonment due to lack of jurisdiction over petition to cancel

As we are not a trier of facts, we need not make any finding on the various investigations done by the MGB and MAB on the issue of Macroasias non-compliance with its work obligations and nonpayment of taxes and fees.Verily, the law does not impose automatic cancellation of an existing mining lease contract, as it is a question of fact which must be determined by the MGB which can recommend the cancellation of the mineral or lease agreements to the DENR Secretary.Be that as it may, since the POA and MAB have no jurisdiction over the petition for cancellation of existing mining lease contracts of Macroasia, they could not have made any binding pronouncement that Macroasia had indeed abandoned the subject mining claims.Besides, it is the DENR Secretary who has the authority to cancel Macroasias existing mining lease contracts whether on grounds of abandonment or any valid grounds for cancellation.

Decision in CA-G.R. SP No. 90828 not in accord with the law

With our resolution of the issue on the lack of jurisdiction of the POA and the MAB over petitions to cancel existing mining lease contracts or mineral agreements, it is thus clear that the May 18, 2006 Decision in CA-G.R. SP No. 90828 must be nullified for being not in accord with the law and the April 15, 2005 Decision in CA-G.R. SP No. 87931 must be upheld.

Notwithstanding the nullification of the May 18, 2006 Decision of the Special Tenth Division in CA-G.R. SP No. 90828, the rendition of two conflicting decisions of the two CA Divisions over the same challenged resolutions of the MAB should be avoided in the future as this is anathema to stability of judicial decisions and orderly administration of justice.

The chronology of events reveals the following:

1.cralawJanuary 10, 2005 petitioner Celestial filed its petition docketed as CA-G.R. SP No. 87931 with the CA.

2.cralawApril 15, 2005 the CA through its TwelfthDivision rendered its Decision in CA-G.R. SP No. 87931 affirming the November 26, 2004 MAB Resolution.

3.cralawJuly 12, 2005 respondent Blue Ridge filed its petition docketed as CA-G.R. SP No. 90828 with the CA.It is clear that the Blue Ridge petition was filed with the CA threemonths after the decision in CA-G.R. SP No. 87931 was promulgated.

4.cralawMay 18, 2006 the CA through its Special Tenth Division rendered its Decision setting aside the November 26, 2004 and July 12, 2005 Resolutions of the MAB and reinstating the October 24, 2000 MAB Decision.

From these facts, the CA Special Tenth Division should have ordered the consolidation of the petition in CA-G.R. SP No. 90828 by CA-G.R. SP No. 87931 pursuant to the Internal Rules of the CA, the latter having the earlier docket number.Had it done so, then the occurrence of the conflicting decisions could have been prevented.The CA Special Tenth Division should have abided by our ruling in Nacuray v. NLRC, where we held, Consequently, a division cannot and should not review a case already passed upon by another Division of this Court.It is only proper, to allow the case to take its rest after having attained finality.[60]chanroblesvirtuallawlibrary

The CA should take the appropriate steps, including the adoption or amendment of the rules, to see to it that cases or petitions arising from the same questioned decision, order, or resolution are consolidated to steer clear of contrary or opposing decisions of the different CA Divisions and ensure that incidents of similar nature will not be replicated.

G.R. No. 172936

No showing that the DENR Secretary gravely abused his discretion

Now, going to the substance of the petition in G.R. No. 172936. A scrutiny of the records shows that the DENR Secretary did not gravely abuse his discretion in approving and signing MPSA Nos. 220-2005-IVB and 221-2005-IVB in favor of Macroasia.

Petitioner Blue Ridge anchors its rights on the May 18, 2006 Decision in CA-G.R. SP No. 90828, which we have unfortunately struck down.Blue Ridges argument in assailing the approval and issuance of the subject MPSAs that it has been accorded preferential right by the CA has no leg to stand on.

The October 24, 2000 MAB Decision, nullified by the subsequent November 26, 2004 Resolution, is unequivocal that Blue Ridge was granted only prior and preferential rights to FILE its mining application over the same mining claims.[61]What was accorded Blue Ridge was only the right to file the mining application but with no assurance that the application will be recommended for approval by the MGB and finally approved by the DENR Secretary.

Moreover, a preferential right would at most be an inchoate right to be given priority in the grant of a mining agreement. It has not yet been transformed into a legal and vested right unless approved by the MGB or DENR Secretary.Even if Blue Ridge has a preferential right over the subject mining claims, it is still within the competence and discretion of the DENR Secretary to grant mineral agreements to whomever he deems best to pursue the mining claims over and above the preferential status given to Blue Ridge. Besides, being simply a preferential right, it is ineffective to dissolve the pre-existing or subsisting mining lease contracts of Macroasia.

The DENR Secretary has full discretion in the grant of mineral agreements

Blue Ridge also argues that the Secretary gravely abused his discretion in approving the subject MPSAs without Macroasia complying with the mandatory requirements for mineral agreement applications under Sec. 35 of DENR AO 96-40.Petitioner specifically cited Sec. 36 of DENR AO 96-40 to the effect that no Mineral Agreement shall be approved unless the requirements under this section are fully complied with and any adverse claim/protest/opposition thereto is finally resolved by the Panel of Arbitrators.Moreover, Blue Ridge contends that the MPSAs were approved even prior to the issuance of the Compliance Certificate[62] by the National Commission on Indigenous Peoples under the OP, which is a requisite pre-condition for the issuance of an MPSA.

We are not persuaded.

Blue Ridge cites Sec. 38 (not Sec. 36) of DENR AO 96-40 as basis for claiming that then DENR Secretary Defensor committed grave abuse of discretion in granting MPSA Nos. 220-2005-IVB and 221-2005-IVB to Macroasia.Petitioners postulation cannot be entertained for the reason that the issuance of the mining agreements was not raised before the MGB Director and DENR Secretary, nor was it amply presented before the CA. There is even a counter-charge that Blue Ridge has not complied with the legal requirements for a mining application.The rule is established that questions raised for the first time on appeal before this Court are not proper and have to be rejected.Furthermore, the resolution of these factual issues would relegate the Court to a trier of facts.The Blue Ridge plea is hindered by the factual issue bar rule where factual questions are proscribed under Rule 65. Lastly, there was no exhaustion of administrative remedies before the MGB and DENR.Thus, Blue Ridges petition must fail.

Primary jurisdiction of the DENR Secretary in determining whether to grant or not a mineral agreement

Verily, RA 7942, similar to PD 463, confers exclusive and primary jurisdiction on the DENR Secretary to approve mineral agreements, which is purely an administrative function within the scope of his powers and authority.In exercising such exclusive primary jurisdiction, the DENR Secretary, through the MGB, has the best competence to determine to whom mineral agreements are granted.Settled is the rule that the courts will defer to the decisions of the administrative offices and agencies by reason of their expertise and experience in the matters assigned to them pursuant to the doctrine of primary jurisdiction.Administrative decisions on matter within the jurisdiction of administrative bodies are to be respected and can only be set aside on proof of grave abuse of discretion, fraud, or error of law.[63]Unless it is shown that the then DENR Secretary has acted in a

wanton, whimsical, or oppressive manner, giving undue advantage to a party or for an illegal consideration and similar reasons, this Court cannot look into or review the wisdom of the exercise of such discretion. Blue Ridge failed in this regard.

Delineation of powers and functions is accorded the three branches of government for the smooth functioning of the different governmental services.We will not disturb nor interfere in the exercise of purely administrative functions of the executive branch absent a clear showing of grave abuse of discretion.

Without a restraining order or injunction, litigation will not deter the DENR from exercising its functions

While it is true that the subject mining claims are under litigation, this does not preclude the DENR and its Secretary from carrying out their functions and duties without a restraining order or an injunctive writ.Otherwise, public interest and public service would unduly suffer by mere litigation of particular issues where government interests would be unduly affected.In the instant case, it must be borne in mind that the government has a stake in the subject mining claims.Also, Macroasia had various valid existing mining lease contracts over the subject mining lode claims issued by the DENR.Thus, Macroasia has an advantage over Blue Ridge and Celestial insofar as the administrative aspect of pursuing the mineral agreements is concerned.

WHEREFORE, the petitions under G.R. Nos. 169080, 172936, and 176229 are DISMISSED for lack of merit, while the petition under G.R. No. 176319 is hereby GRANTED. The assailedApril 15, 2005 Decision and August 3, 2005 Resolution of the CA in CA-G.R. SP No. 87931 are hereby AFFIRMED IN TOTO.And the May 18, 2006 Decision and January 19, 2007 Resolution of the CA in CA-G.R. SP No. 90828 are hereby REVERSED and SET ASIDE.In view of the foregoing considerations, we find no grave abuse of discretion on the part of the then DENR Secretary in the approval and issuance of MPSA Nos.220-2005-IVB and 221-2005-IVB.Costs against Celestial Nickel Mining Exploration Corporation and Blue Ridge Mineral Corporation.

SO ORDERED.


Associate Justice

WE CONCUR:


Associate Justice

Chairperson

CONCHITA CARPIO MORALES DANTE O. TINGA

Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO

Associate Justice




Associate Justice

Chairperson



REYNATO S. PUNO

Chief Justice

Endnotes:

* Per October 24, 2007 raffle.

[1] Rollo (G.R. No. 169080), pp. 9-87.

cralaw[2] Id. at 89-108. Penned by Associate Justice Martin S. Villarama (Chairperson) and concurred in by Associate Justices Regalado E. Maambong and Lucenito N. Tagle.

[3] Id. at 110-122.

[4] Rollo (G.R. No. 172936), pp. 3-53.

[5] Rollo (G.R. No. 176226), pp. 9-85, and rollo (G.R. No. 176319), pp. 14-77.

cralaw[6] Rollo (G.R. No. 176226), pp. 87-108, and rollo (G.R. No. 176319), pp. 79-100. Penned by Associate Justice Rosmari D. Carandang and concurred in by Associate Justices Andres B. Reyes, Jr. (Chairperson) and Aurora Santiago-Lagman.

[7] Rollo (G.R. No. 176226), pp. 110-116, and rollo (G.R. No. 176319), pp. 102-108.

[8] Rollo (G.R. No. 172936), p. 700.

[9] Rollo (G.R. No. 176226), p. 1835.

[10] Rollo (G.R. No. 176319), pp. 1270-1271.

[11] Rollo (G.R. No. 169080), pp. 89-91.

[12] Id. at 208-227.

[13] Id.

[14] Approved on May 17, 1975.

[15] Providing for a Modernized System of Administration and Disposition of Mineral Lands and to Promote and Encourage the Development and Exploitation Thereof, approved and became effective on May 17, 1974.

[16] G.R. No. 85904, August 21, 1990, 188 SCRA 818.

[17] See September 15, 1999 Memorandum from Task Force Team Leader Rolando Pea to the Chairman of MAB, rollo (G.R. No. 169080), p. 494, on the Report by Task Force Created to Investigate the Area Subject of MAB Case Nos. 056-97 and 057-97 at Brookes Point, Palawan, id. at 495-503, pursuant to May 17, 1999 Special Order No. 99-521, id. at 493.

[18]Id. at 229-240.

[19] Id. at 241-258, Celestials November 16, 2000 Motion for Reconsideration; and id. at 259-277, MacroasiasNovember 13, 2000 Motion for Reconsideration.

[20] Id. at 278-296.

[21] Revised Implementing Rules and Regulations of RA 7942, otherwise known as the Philippine Mining Act of 1995, vice DENR AO 95-23, series of 1995.

[22] Rollo (G.R. No. 169080), pp. 297-308.

[23] Id. at 307-308.

[24] Id. at 309-371.

[25] Rollo (G.R. No. 172936), pp. 437-447.

[26] Id. at 448-455.

[27] Id. at 456-519.

[28] Rollo (G.R. No. 169080), pp. 372-403.

[29] Supra note 3.

[30] Supra note 1.

[31] Rollo (G.R. No. 169080), pp. 1203-1215.

[32] Id. at 1227.

[33] Supra note 4.

[34] Rollo (G.R. No. 176226), pp. 1687-1737.

[35] Supra note 5.

[36] Supra note 5.

cralaw[37] Supra note 1, at 20-21.

[38] Supra note 4, at 28-29.

cralaw[39] Rollo (G.R. No. 176226), pp. 32-33.

[40] Rollo (G.R. No. 176319), p. 15.

[41] PD 463, Sec. 34.

[42] EO 279, Sec. 1.

[43] EO 279, Sec. 3.

[44] EO 279, Sec. 4.

[45] EO 279, Sec. 7.

[46] G.R. No. 132475, September 11, 2000, Second Division Resolution.

cralaw[47] Commissioner of Customs v. Esso Standard Eastern, Inc., No. L-28329, August 7, 1975, 66 SCRA 113, 119.

[48] L.J. Gonzaga, Statutes and Their Construction 159 (1958).

[49] Crawford, Statutory Construction 374-375 (1940).

[50] Rollo (G.R. No. 169080), pp. 145-153.

cralaw[51] H. Black, Blacks Law Dictionary 472 (6th ed., 1990).

[52] Rules of Court, Rule 2, Sec. 2.

cralaw[53] Rules of Court, Rule 3, Sec. 2.

cralaw[54] Id.

cralaw[55] Ibonilla v. Province of Cebu, G.R. No. 97463, June 26, 1992, 210 SCRA 526.

cralaw[56] Ralla v. Ralla, G.R. No. 78646, July 23, 1991, 199 SCRA 495.

cralaw[57] Ibonilla v. Province of Cebu, supra.

[58] See Duero v. Court of Appeals, G.R. No. 131282, January 4, 2002, 373 SCRA 11.

[59] G.R. No. 158092, April 4, 2005, Resolution of the Second Division.

[60] G.R. Nos. 114924-27, March 18, 1997, 270 SCRA 9, 18.

[61] Rollo (G.R. No. 169080), p. 240.

[62] Rollo (G.R. No. 172936), pp. 87-90.

cralaw[63] Bernardo v. Court of Appeals, G.R. No. 124261, May 27, 2004, 429 SCRA 285, 300.


SECONDDIVISION

FRANCO ESGUERRA,

Petitioner,

- versus -

G.R. No. 158328

Present:

Quisumbing, J., Chairperson,

Carpio,

Carpio Morales,

Tinga, and

VELASCO, JR., JJ.

ALFONSO MANANTAN,

DANILO MANANTAN, ARIANG ANTONIO, AQUILINO CONCEPCION, and

FORTUNATO MIGUEL,

Respondents.

Promulgated:

February 23, 2007

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

DECISION

QUISUMBING, J.:

cralawBefore us is a petition for review on certiorari assailing the Decision[1] dated October 30, 2002 of the Court of Appeals in CA-G.R. CV No. 58050 and its Resolution[2] dated May 20, 2003 denying the motion for reconsideration.The appellate court had affirmed the decision[3] dated February 13, 1997 of the Regional Trial Court (RTC) of Guimba, Nueva Ecija, Branch 31.

cralawThis case stemmed from the complaint for ejectment filed by petitioner Franco Esguerra against respondents before the RTC. Franco claims he is the registered owner of a parcel of land surveyed as Lot No. 661, Cad. No. 699, covering an area of 7,786 square meters, and situated in Barangay San Cristobal, Licab, Nueva Ecija.Franco avers that he inherited it from his father, Pio Esguerra, who had inherited it from his father, Lorenzo Esguerra.However, Pio allowed Gaudencio Miguel[4] to occupy his property and later mortgaged the land to Gaudencio as evidenced by a document entitled Deed of Sale with Right to Repurchase dated June 6, 1960.In 1979, Gaudencio executed an instrument denominated as Kasunduan to cancel said deed of sale with the right to repurchase.

cralawBefore the repurchase of the property, respondents Alfonso Manantan, Danilo Manantan, Ariang Antonio, Aquilino Concepcion and Fortunato Miguel constructed their houses on the lot without the knowledge and consent of Pio.

cralawOn April 14, 1992, Franco filed his application for free patent of the subject property. On May 20, 1992, Free Patent No. 034914-92-1117 was issued in his name.Pursuant to such free patent title, the Register of Deeds of the Province of Nueva Ecija issued Original Certificate of Title (OCT) No. P-15176 in Francos name.

cralawThereafter, Franco demanded that respondents vacate the premises, but they refused to do so.He then filed a complaint for ejectment against them before the RTC which was docketed as Civil Case No. 723-G.

cralawPending the ejectment case, respondents filed a case for annulment of OCT No. P-15176 which was docketed as Civil Case No. 779-G.This case was subsequently consolidated with Civil Case No. 723-G.

cralawOn February 13, 1997, the RTC dismissed the complaint for ejectment and declared null and void OCT No. P-15176. The dispositive portion of the decision reads:

cralawWHEREFORE, premises considered, judgment is hereby rendered in favor of the defendants Alfonso Manantan, Danilo Manantan, Ariang Antonio, Aquilino Concepcion and Fortunato Miguel in Civil Case No. 723-G and plaintiffs in Civil Case No. 779-G and against the plaintiff Franco Esguerra in Civil Case No. 723-G and defendant in Civil Case No. 779-G, to wit:

1. Dismissing the complaint in Civil Case No. 723-G for lack of merit;

2. In Civil Case No. 779-G, the Court hereby declares, as it hereby declared as NULL and VOID AND WITHOUT FORCE AND EFFECT Original Certificate of Title No. P-15176, issued by Register of Deeds [of] the Province of Nueva Ecija pursuant to Free Patent No. 034914-92-1117 in the name of Franco F. Esguerra, and ordering the same Register of Deeds to cancel said OCT No. P-15176, including the owners copy issued to said Franco F. Esguerra.

IT IS SO ORDERED.[5]

cralawFranco appealed to the Court of Appeals. The appellate court denied the appeal and affirmed the trial courts decision.Hence, this petition where petitioner assigns the following errors:

I.

THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE PETITIONER IS ESTOPPED FROM RAISING THE ISSUE OF LACK OF JURISDICTION.

II.

THE COURT OF APPEALS ERRED WHEN IT RULED THAT RESPONDENTS HAD ACQUIRED A VESTED RIGHT OVER THE PROPERTY AND THEREFORE HAVE THE RIGHT TO ATTACK THE TITLE OF PETITIONERS AND SEEK RECONVEYANCE OF TITLE OVER THE SUBJECTLAND.

III.

THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONER[S] RIGHT TO REDEEM THE PROPERTY ALREADY EXPIRED.

IV.

THE COURT OF APPEALS ERRED WHEN IT RULED THAT PETITIONERS CLAIM FOR MORAL AND ATTORNEYS FEES ARE WITHOUT BASIS.[6]

cralawSimply stated, the issues before us in this case are: (1) Was petitioner estopped from questioning the jurisdiction of the RTC? (2) Who has a better right over the contested property?

cralawOn the first issue, petitioner contends that he is not estopped from questioning the trial courts jurisdiction to decide the complaints for ejectment and annulment of title.He claims that he immediately appealed the decision to the Court of Appeals and thus, he cannot be guilty of laches since the appeal was the earliest opportunity to question the validity of the decision.

cralawOn the second issue, petitioner argues that respondents occupied the subject property by mere tolerance of Gaudencio even without the permission of Pio.He also avers that since respondents possession has not been open, continuous, exclusive and notorious for 30 years, they have not acquired the property through prescription.According to him, the subject property was already redeemed on December 24, 1978 as evidenced by the Kasunduan executed by Gaudencio in 1979.

cralawHe contends that respondents action to annul the title on the ground of fraud has prescribed since they filed it two years after the issuance of title.He avers that the action should have been filed within one year after the date of the issuance of the decree of registration.He further claims that the respondents have no personality to question his title because only the State has the right to do so.

cralawRespondents, for their part, maintain that they had established their open and continuous possession of the subject property for 30 years and that they had been paying the real estate taxes of the property.They also stress that Franco neither possessed nor improved the subject property and even admitted that respondents possessed the property.They maintain that their action for annulment of title has not prescribed since what they actually filed was an action for reconveyance which prescribes after ten years from registration of title.

cralawThe Court of Appeals, in affirming the RTC decision, reasoned that petitioner was estopped from questioning the trial courts jurisdiction to hear and decide the case when he had voluntarily submitted himself to its jurisdiction.It also found that the respondents had acquired title over the same for having been in actual adverse possession of the subject property for 30 years.On the issue of redemption, the appellate court held that under Article 1606[7] of the Civil Code of the Philippines, Pios right to redeem the property had already prescribed.

cralawWe agree with the appellate court that petitioner is estopped from questioning the jurisdiction of the RTC.Lack of jurisdiction of the court over an action cannot be waived by the parties or be cured by their silence, acquiescence, or express consent.A party may assail the jurisdiction of the court over the action at any stage of the proceedings and even on appeal.[8]However, participation in all stages of the proceedings before the trial court, including invocation of its authority in asking for affirmative relief, effectively bars a party by estoppel from challenging the courts jurisdiction.[9]chanroblesvirtuallawlibrary

cralawNote that it was petitioner who filed a complaint for ejectment against respondents before the RTC.It was actually the respondents who moved to dismiss the complaint for lack of jurisdiction. The trial court denied it since the allegations of the complaint showed that it was in fact one for recovery of possession of real property.[10]When respondents filed a complaint for annulment of title, petitioner moved to dismiss it, citing the pendency of the ejectment case, and not lack of jurisdiction, as ground. But it was denied by the RTC.Thereafter, both parties moved for joint trial of the cases.Considering that these cases involved the same question of fact, the trial court was correct to jointly try and decide them.Two cases involving the same parties and affecting closely related subject matters must be ordered consolidated and jointly tried in court, where the earlier case was filed.[11]

cralawMoreover, petitioner never raised the issue of lack of jurisdiction in his pleadings before the RTC.It was only in the Court of Appeals where he asserted for the first time that the RTC lacked jurisdiction over the ejectment case.This Court therefore cannot countenance petitioners adopting inconsistent postures by attacking the jurisdiction of the regular courts to which he had voluntarily submitted.Estoppel bars him from doing so.[12]

cralawThere is also no merit in petitioners contention that the action for annulment of title had prescribed.The one-year prescriptive period does not apply when the person seeking annulment of title is in possession of the lot. This is because the action partakes of a suit to quiet title which is imprescriptible.[13] In this case, inasmuch as respondents are in possession of the lot, their action to annul OCT No. P-15176 is not barred by prescription.

cralawWe now come to the crucial issue: Who has a better right over the contested property?

We held in Magistrado v. Esplana[14] that so long as there is a clear showing of open, continuous, exclusive, and notorious possession, and hence, a registrable possession, by present or previous occupants, by any proof that would be competent and admissible, the property must be considered to be private.

cralaw

cralawIn the present case, it was established that the subject land is private property since time immemorial.Records reveal that the property was cultivated as riceland and was first declared for tax purposes under the name of Graciano Agustin.On June 6, 1960, Pio exercised acts of ownership over the land by entering into a notarized contract of sale with the right to repurchase with Gaudencio.He declared in the contract that he had inherited the land from his father and had been in possession of the property for 27 years. Pio likewise declared the property for tax assessment purposes, as required under Presidential Decree No. 76,[15] on September 25, 1973.In the Kasunduan executed on April 25, 1979, Gaudencio acknowledged that Pio owned the land.Pio further disposed of the property in his last will and testament in favor of his heirs which include petitioner.Although the will is void for not complying with the formal requisites of a notarial will, it may be used to show the exclusive and adverse character of petitioners possession as a co-heir and co-owner.[16]It also appears that respondents occupied the property on permission of Gaudencio. While petitioner did not actually reside and cultivate the land, Gaudencio had agreed to pay buwis or rentals for the houses built thereon by Fortunato Miguel and Alfonso Manantan.[17]Aquilino Concepcion also agreed to pay the rent.[18]Clearly, the evidence on record shows that the property belonged to Pio and upon his death, passed on to his heirs.

cralawInasmuch as the subject property is private, a free patent issued over it is null and void, and produces no legal effect whatsoever.Private ownership of land is not affected by the issuance of a free patent over the same land, because the Public Land Law applies only to lands of the public domain.The Director of Lands has no authority to grant free patents to lands that have ceased to be public in character and have passed to private ownership.Consequently, a certificate of title issued pursuant to a homestead patent partakes of the nature of a certificate issued in a judicial proceeding only if the land covered by it is really a part of the disposable land of the public domain.[19]Hence, the free patent covering Lot No. 661, a private land, and the certificate of title issued pursuant thereto, are null and void.

cralawNotwithstanding, petitioners right to possess and claim of ownership over Lot No. 661 are substantiated, contrary to the findings of the trial court and Court of Appeals.This Court is not a trier of facts and not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below, unless there is a misapprehension of facts or failure to consider certain relevant facts which, if properly taken into account, will justify a different conclusion.[20]

cralawIn the present case, the trial court and the Court of Appeals failed to consider that Pio, as owner of the subject property and petitioners predecessor-in-interest, and Gaudencio, respondents predecessor-in-interest, entered into a notarized contract of sale with the right to repurchase on June 6, 1960.Such contract is an equitable mortgage under Article 1602, paragraph 6 of the Civil Code, to wit:

cralawArt. 1602.The contract shall be presumed to be an equitable mortgage, in any of the following cases:

x x x x

cralaw(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.

x x x x

cralawA proof that the contract was an equitable mortgage is that while the contract was dated June 6, 1960, Pio had declared, in a sworn statement, the subject property for tax assessment purposes on September 25, 1973.[21]Further, Gaudencio still recognized Pio as the owner of the property and stated in a notarized document that the property was mortgaged to him (naisanla sa akin) and that he received Pios payment of the debt, the same amount under the purported contract of sale.[22] Notably, both documents are considered public documents and enjoy the presumption of validity as to its authenticity and due execution.This legal presumption was not overcome by respondents.[23] Other than the objection that the property subject of the documents is public land, no other proof was presented.Thus, the presumption of validity of these documents prevails.The transaction being an equitable mortgage, Pios ownership of the property did not cease.Therefore, the period of redemption under Article 1606 does not apply.

cralawThe appellate court erred in ruling that respondents had acquired the property through prescription.As borne by the testimonies of Alfonso Manantan,[24] Fortunato Miguel,[25] and Danilo Manantan,[26] they occupied the property, not as owners but upon permission of Gaudencio.As already established, Gaudencio did not have open, continuous and adverse possession of the property.Moreover, on November 13, 1979, petitioner and Gaudencio agreed that the latter shall pay rent on the land where the houses of Fortunato and Alfonso were built. Thereafter, Aquilino Concepcion and a certain Pedro Antonio also agreed to pay rent. These circumstances belie respondents claim of acquisitive prescription.

cralawAcquisitive prescription is a mode of acquiring ownership by a possessor through the requisite lapse of time.In order to ripen into ownership, possession must be in the concept of an owner, public, peaceful and uninterrupted.Thus, mere possession with a juridical title, such as by a usufructuary, a trustee, a lessee, an agent or a pledgee, not being in the concept of an owner, cannot ripen into ownership by acquisitive prescription, unless the juridical relation is first expressly repudiated and such repudiation has been communicated to the other party. Acts of possessory character executed due to license or by mere tolerance of the owner would likewise be inadequate. Possession, to constitute the foundation of a prescriptive right, must be en concepto de dueo, or, to use the common law equivalent of the term, that possession should be adverse, if not, such possessory acts, no matter how long, do not start the running of the period of prescription.[27]Clearly, respondents, when they agreed to pay rent, became mere lessees and their possession cannot ripen into ownership. They also did not present proof of ownership.The tax receipts offered in evidence merely showed that they paid the taxes due only after petitioner filed a complaint against them.Such payment without adverse possession does not prove ownership.

cralawHowever, while this Court declares that Lot No. 661 is a private property and not part of the public domain, the petitioners title as co-owner of the said lot is imperfect and still subject to the rules on confirmation

of title under Section 48 (b)[28] of the Public Land Act.[29] As an applicant for confirmation of title, petitioner has the burden of proving that he meets the requirements of the law.[30]

cralawWHEREFORE, the petition is PARTIALLY GRANTED.The Decision dated October 30, 2002 of the Court of Appeals in CA-G.R. CV No. 58050 and its Resolution dated May 20, 2003 denying the motion for reconsideration are MODIFIED. Petitioner Franco Esguerra is declared a co-owner and holder of imperfect title over Lot No. 661. Free Patent No. 034914-92-1117 and Original Certificate of Title No. P-15176, both in the name of Franco Esguerra are declared null and void.No pronouncement as to costs.

cralawSO ORDERED.


Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice


Associate Justice

DANTE O. TINGA

Associate Justice


Associate Justice




Associate Justice

Chairperson



REYNATO S. PUNO

Chief Justice

Endnotes:

[1] cralawRollo, pp. 44-50.Penned by Associate Justice Eliezer R. de los Santos, with Associate Justices Oswaldo D. Agcaoili and Regalado E. Maambong concurring.



[4] cralawAlso known as Dionisio Miguel. See rollo, p. 45; TSN, November 27, 1995, pp. 2-3.

[5] cralawRollo, p. 43.


[7] cralawArt. 1606.The right referred to in Article 1601, in the absence of an express agreement, shall last four years from the date of the contract.

cralawShould there be an agreement, the period cannot exceed ten years.

x x x x

[8] cralawDuero v. Court of Appeals, G.R. No. 131282, January 4, 2002, 373 SCRA 11, 19-20.


[10] cralawRecords (Civil Case No. 723-G), p. 118.

[11] cralawZulueta v. Asia Brewery, Inc., G.R. No. 138137, March 8, 2001, 354 SCRA 100, 111.

[12] cralawRoxas v. Court of Appeals, G.R. No. 138955, October 29, 2002, 391 SCRA 351, 358.

[13] cralawHeirs of Simplicio Santiago v. Heirs of Mariano E. Santiago, G.R. No. 151440, June 17, 2003, 404 SCRA 193, 203.

[14] cralawG.R. No. 54191, May 8, 1990, 185 SCRA 104, 109.

[15] cralawRequiring All Persons, Natural or Juridical, Owning or Administering Real Property, Including the Improvements Thereon, To File Sworn Statement of the True Value of Such Property.

[16] cralawSee Calicdan v. Cendaa, G.R. No. 155080, February 5, 2004, 422 SCRA 272, 280-281.

[17] cralawExhibit M (Civil Case No. 723-G), agreement executed by Franco Esguerra and Gaudencio Miguel.

[18] cralawExhibit N (Civil Case No. 723-G), agreement executed by Franco Esguerra and Aquilino Concepcion.

[19] cralawSupra note 13, at 199.

[20] cralawTwin Towers Condominium Corporation v. Court of Appeals, G.R. No. 123552, February 27, 2003, 398 SCRA 203, 222-223.

[21] cralawExhibit 4 (Civil Case No. 779-G), sworn statement of the current fair market value of real properties.

[22] cralawExhibit J (Civil Case No. 723-G), Kasunduan executed by Gaudencio Miguel.


[24] cralawTSN, September 9, 1996, pp. 8-9.

[25] cralawTSN, September 30, 1996, p. 4.


[27] cralawMarcelo v. Court of Appeals, G.R. No. 131803, April 14, 1999, 305 SCRA 800, 807-808.

[28] cralawSEC. 48.The following-described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title thereafter, under the Land Registration Act, to wit:

x x x x

(b)Those who by themselves or through their predecessors-in-interest have been, in continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title, except when prevented by war or force majeure. Those shall be conclusively presumed to have performed all the conditions essential to a government grant and shall be entitled to a certificate of title under the provisions of this chapter.

x x x x


[30] cralawCollado v. Court of Appeals, G.R. No. 107764, October 4, 2002, 390 SCRA 343, 361.

Republic of the PhilippinesSUPREME COURTManila SECOND DIVISION

MA. TERESA CHAVES BIACO, G.R. No. 161417

Petitioner,

Present:

cralawQUISUMBING, J.,

Chairperson,

cralaw-versus- cralawCARPIO,


cralawcralawTINGA, and


PHILIPPINE COUNTRYSIDE RURAL

BANK, cralaw

Respondent.Promulgated:

February 8, 2007

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

D E C I S I O N

Tinga, J.:

cralawPetitioner, Ma. Teresa Chaves Biaco, seeks a review of the Decision[1] of the Court of Appeals in CA-G.R. No. 67489 dated August 27, 2003, which denied her petition for annulment of judgment, and the Resolution[2] dated December 15, 2003 which denied her motion for reconsideration.

The facts as succinctly stated by the Court of Appeals are as follows:

Ernesto Biaco is the husband of petitioner Ma. Teresa Chaves Biaco. While employed in the Philippine Countryside Rural Bank (PCRB) as branch manager, Ernesto obtained several loans from the respondent bank as evidenced by the following promissory notes:

Feb. 17, 1998Pcralaw65,000.00

Mar. 18, 199830,000.00

May 6, 199860,000.00

May 20, 1998350,000.00

July 30, 1998155,000.00

Sept. 8, 199840,000.00

Sept. 8, 1998120,000.00

As security for the payment of the said loans, Ernesto executed a real estate mortgage in favor of the bank covering the parcel of land described in Original Certificate of Title (OCT) No. P-14423. The real estate mortgages bore the signatures of the spouses Biaco.

When Ernesto failed to settle the above-mentioned loans on its due date, respondent bank through counsel sent him a written demand on September 28, 1999. The amount due as of September 30, 1999 had already reached

ONE MILLION EIGHTY THOUSAND SIX HUNDRED SEVENTY SIX AND FIFTY CENTAVOS (P1,080,676.50).

The written demand, however, proved futile.

On February 22, 2000, respondent bank filed a complaint for foreclosure of mortgage against the spouses Ernesto and Teresa Biaco before the RTC of Misamis Oriental. Summons was served to the spouses Biaco through Ernesto at his office (Export and Industry Bank) located at Jofelmor Bldg., Mortola Street, Cagayan de Oro City.

Ernesto received the summons but for unknown reasons, he failed to file an answer. Hence, the spouses Biaco were declared in default upon motion of the respondent bank. The respondent bank was allowed to present its evidence ex parte before the Branch Clerk of Court who was then appointed by the court as Commissioner.

Arturo Toring, the branch manager of the respondent bank, testified that the spouses Biaco had been obtaining loans from the bank since 1996 to 1998.The loans for the years 1996-1997 had already been paid by the spouses Biaco, leaving behind a balance of P1,260,304.33 representing the 1998 loans. The amount being claimed is inclusive of interests, penalties and service charges as agreed upon by the parties. The appraisal value of the land subject of the mortgage is only P150,000.00 as reported by the Assessors Office.

Based on the report of the Commissioner, the respondent judge ordered as follows:

WHEREFORE, judgment is hereby rendered ordering defendants spouses ERNESTO R. BIACO and MA. THERESA [CHAVES] BIACO to pay plaintiff bank within a period of not less than ninety (90) days nor more than one hundred (100) days from receipt of this decision the loan of ONE MILLION TWO HUNDRED SIXTY THOUSAND THREE HUNDRED FOUR PESOS and THIRTY THREE CENTAVOS (P1,260,304.33) plus litigation expenses in the amount of SEVEN THOUSAND SIX HUNDRED FORTY PESOS (P7,640.00) and attorneys fees in the amount of TWO HUNDRED FIFTY TWO THOUSAND THIRTY PESOS and FORTY THREE CENTAVOS (P252,030.43) and cost of this suit.

cralawIn case of non-payment within the period, the Sheriff of this Court is ordered to sell at public auction the mortgaged Lot, a parcel of registered land (Lot 35802, Cad. 237 {Lot No. 12388-B, Csd-10-002342-D}), located at Gasi, Laguindingan, Misamis Oriental and covered by TCT No. P-14423 to satisfy the mortgage debt, and the surplus if there be any should be delivered to the defendants spouses ERNESTO and MA. THERESA [CHAVES] BIACO. In the event however[,] that the proceeds of the auction sale of the mortgage[d] property is not enough to pay the outstanding obligation, the defendants are ordered to pay any deficiency of the judgment as their personal liability.

SO ORDERED.

On July 12, 2000, the sheriff personally served the above-mentioned judgment to Ernesto Biaco at his office at Export and Industry Bank. The spouses Biaco did not appeal from the adverse decision of the trial court. On October 13, 2000, the respondent bank filed an ex parte motion for execution to direct the sheriff to sell the mortgaged lot at public auction. The respondent bank alleged that the order of the court requiring the spouses Biaco to pay within a period of 90 days had passed, thus making it necessary to sell the mortgaged lot at public auction, as previously mentioned in the order of the court. The motion for execution was granted by the trial court per Order dated October 20, 2000.

On October 31, 2000, the sheriff served a copy of the writ of execution to the spouses Biaco at their residence in #92 9th Street, Nazareth, Cagayan de Oro City. The writ of execution was personally received by Ernesto. By virtue of the writ of execution issued by the trial court, the mortgaged property was sold at public auction in favor of the respondent bank in the amount of ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00).

The amount of the property sold at public auction being insufficient to cover the full amount of the obligation, the respondent bank filed an ex parte motion for judgment praying for the issuance of a writ of execution against the other properties of the spouses Biaco for the full settlement of the remaining obligation. Granting the motion, the court ordered that a writ of execution be issued against the spouses Biaco to enforce and satisfy the judgment of the court for the balance of ONE MILLION THREE HUNDRED SIXTY NINE THOUSAND NINE HUNDRED SEVENTY FOUR PESOS AND SEVENTY CENTAVOS (P1,369,974.70).

The sheriff executed two (2) notices of levy against properties registered under the name of petitioner Ma. Teresa Chaves Biaco. However, the notices of levy were denied registration because Ma. Teresa had already sold the two (2) properties to her daughters on April 11, 2001.[3]

Petitioner sought the annulment of the Regional Trial Court decision contending that extrinsic fraud prevented her from participating in the judicial foreclosure proceedings.According to her, she came to know about the judgment in the case only after the lapse of more than six (6) months after its finality.She claimed that extrinsic fraud was perpetrated against her because the bank failed to verify the authenticity of her signature on the real estate mortgage and did not inquire into the reason for the absence of her signature on the promissory notes.She moreover asserted that the trial court failed to acquire jurisdiction because summons were served on her through her husband without any explanation as to why personal service could not be made.

The Court of Appeals considered the two circumstances that kept petitioner in the dark about the judicial foreclosure proceedings: (1) the failure of the sheriff to personally serve summons on petitioner; and (2) petitioners husbands concealment of his knowledge of the foreclosure proceedings. On the validity of the service of summons, the appellate court ruled that judicial foreclosure proceedings are actions quasi in rem. As such, jurisdiction over the person of the defendant is not essential as long as the court acquires jurisdiction over the res.Noting that the spouses Biaco were not opposing parties in the case, the Court of Appeals further ruled that the fraud committed by one against the other cannot be considered extrinsic fraud.

Her motion for reconsideration having been denied, petitioner filed the instant Petition for Review,[4] asserting that even if the action is quasi in rem, personal service of summons is essential in order to afford her due process.The substituted service made by the sheriff at her husbands office cannot be deemed proper service absent any explanation that efforts had been made to personally serve summons upon her but that such efforts failed.Petitioner contends that extrinsic fraud was perpetrated not so much by her husband, who did not inform her of the judicial foreclosure proceedings, but by the sheriff who allegedly connived with her husband to just leave a copy of the summons intended for her at the latters office.

Petitioner further argues that the deficiency judgment is a personal judgment which should be deemed void for lack of jurisdiction over her person.

Respondent PCRB filed its Comment,[5] essentially reiterating the appellate courts ruling.Respondent avers that service of summons upon the defendant is not necessary in actions quasi in rem it being sufficient that the court acquire jurisdiction over the res.As regards the alleged conspiracy between petitioners husband and the sheriff, respondent counters that this is a new argument which cannot be raised for the first time in the instant petition.

We required the parties to file their respective memoranda in the Resolution[6] dated August 18, 2004.Accordingly, petitioner filed her Memorandum[7] dated October 10, 2004, while respondent filed its Memorandum for Respondent[8] dated September 9, 2004.

Annulment of judgment is a recourse equitable in character, allowed only in exceptional cases as where there is no available or other adequate remedy. Jurisprudence and Sec. 2, Rule 47 of the 1997 Rules of Civil Procedure (Rules of Court) provide that judgments may be annulled only on grounds of extrinsic fraud and lack of jurisdiction or denial of due process.[9]

Petitioner asserts that extrinsic fraud consisted in her husbands concealment of the loans which he obtained from respondent PCRB; the filing of the complaint for judicial foreclosure of mortgage; service of summons; rendition of judgment by default; and all other proceedings which took place until the writ of garnishment was served.[10]

Extrinsic fraud exists when there is a fraudulent act committed by the prevailing party outside of the trial of the case, whereby the defeated party was prevented from presenting fully his side of the case by fraud or deception practiced on him by the prevailing party.[11]Extrinsic fraud is present where the unsuccessful party had been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping him away from court, a false promise of a compromise; or where the defendant never had knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently or without authority assumes to represent a party and connives at his defeat; or where the attorney regularly employed corruptly sells out his clients interest to the other side.The overriding consideration is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court.[12]chanroblesvirtuallawlibrary

With these considerations, the appellate court acted well in ruling that there was no fraud perpetrated by respondent bank upon petitioner, noting that the spouses Biaco were co-defendants in the case and shared the same interest.Whatever fact or circumstance concealed by the husband from the wife cannot be attributed to respondent bank.

Moreover, petitioners allegation that her signature on the promissory notes was forged does not evince extrinsic fraud.It is well-settled that the use of forged instruments during trial is not extrinsic fraud because such evidence does not preclude the participation of any party in the proceedings.[13]chanroblesvirtuallawlibrary

The question of whether the trial court has jurisdiction depends on the nature of the action, i.e., whether the action is in personam, in rem, or quasi in rem.The rules on service of summons under Rule 14 of the Rules of Court likewise apply according to the nature of the action.

An action in personam is an action against a person on the basis of his personal liability. An action in rem is an action against the thing itself instead of against the person. An action quasi in rem is one wherein an individual

is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or lien burdening the property.[14]chanroblesvirtuallawlibrary

In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. In a proceeding in rem or quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the res. Jurisdiction over the res is acquired either (1) by the seizure of the property under legal process, whereby it is brought into actual custody of the law; or (2) as a result of the institution of legal proceedings, in which the power of the court is recognized and made effective.[15]

Nonetheless, summons must be served upon the defendant not for the purpose of vesting the court with jurisdiction but merely for satisfying the due process requirements.[16]

A resident defendant who does not voluntarily appear in court, such as petitioner in this case, must be personally served with summons as provided under Sec. 6, Rule 14 of the Rules of Court.If she cannot be personally served with summons within a reasonable time, substituted service may be effected (1) by leaving copies of the summons at the defendants residence with some person of suitable age and discretion then residing therein, or (2) by leaving the copies at defendants office or regular place of business with some competent person in charge thereof in accordance with Sec. 7, Rule 14 of the Rules of Court.

In this case, the judicial foreclosure proceeding instituted by respondent PCRB undoubtedly vested the trial court with jurisdiction over the res.A judicial foreclosure proceeding is an action quasi in rem.As such, jurisdiction over the person of petitioner is not required, it being sufficient that the trial court is vested with jurisdiction over the subject matter.

There is a dimension to this case though that needs to be delved into.Petitioner avers that she was not personally served summons.Instead, summons was served to her through her husband at his office without any explanation as to why the particular surrogate service was resorted to.The Sheriffs Return of Service dated March 21, 2000 states:

x x x x

That on March 16, 2000, the undersigned served the copies of Summons, complaint and its annexes to the defendants Sps. Ernesto R. & Ma. Teresa Ch. Biaco thru Ernesto R. Biaco[,] defendant of the above-entitled case at his office EXPORT & INDUSTRY BANK, Jofelmore Bldg.[,] Mortola St., Cagayan de Oro City and he acknowledged receipt thereof as evidenced with his signature appearing on the original copy of the Summons.[17] [Emphasis supplied]

Without ruling on petitioners allegation that her husband and the sheriff connived to prevent summons from being served upon her personally, we can see that petitioner was denied due process and was not able to participate in the judicial foreclosure proceedings as a consequence.The violation of petitioners constitutional right to due process arising from want of valid service of summons on her warrants the annulment of the judgment of the trial court.

There is more, the trial court granted respondent PCRBs ex-parte motion for deficiency judgment and ordered the issuance of a writ of execution against the spouses Biaco to satisfy the remaining balance of the award.In short, the trial court went beyond its jurisdiction over the res and rendered a personal judgment against the spouses Biaco.This cannot be countenanced.

In Sahagun v. Court of Appeals,[18] suit was brought against a non-resident defendant, Abelardo Sahagun, and a writ of attachment was issued and subsequently levied on a house and lot registered in his name.Claiming ownership of the house, his wife, Carmelita Sahagun, filed a motion to intervene.For failure of plaintiff to serve summons extraterritorially upon Abelardo, the complaint was dismissed without prejudice.

Subsequently, plaintiff filed a motion for leave to serve summons by publication upon Abelardo.The trial court granted the motion.Plaintiff later filed an amended complaint against Abelardo, this time impleading Carmelita and Rallye as additional defendants.Summons was served on Abelardo through publication in the Manila Evening Post.Abelardo failed to file an answer and was declared in default.Carmelita went on certiorari to the Court of Appeals assailing as grave abuse of discretion the declaration of default of Abelardo.The Court of Appeals dismissed the petition and denied reconsideration.

In her petition with this Court, Carmelita raised the issue of whether the trial court acquired jurisdiction over her husband, a non-resident defendant, by the publication of summons in a newspaper of general circulation in the Philippines.The Court sustained the correctness of extrajudicial service of summons by publication in such newspaper.

The Court explained, citing El Banco Espaol-Filipino v. Palanca,[19] that foreclosure and attachment proceedings are both actions quasi in rem.As such, jurisdiction over the person of the (non-resident) defendant is not essential.Service of summons on a non-resident defendant who is not found in the country is required, not for purposes of physically acquiring jurisdiction over his person but simply in pursuance of the requirements of fair play, so that he may be informed of the pendency of the action against him and the possibility that property belonging to him or in which he has an interest may be subjected to a judgment in favor of a resident, and that he may thereby be accorded an opportunity to defend in the action, should he be so minded.

Significantly, the Court went on to rule, citing De Midgely v. Ferandos, et. al.[20] and Perkins v. Dizon, et al.[21] that in a proceeding in rem or quasi in rem, the only relief that may be granted by the court against a defendant over whose person it has not acquired jurisdiction either by valid service of summons or by voluntary submission to its jurisdiction, is limited to the res.

Similarly, in this case, while the trial court acquired jurisdiction over the res, its jurisdiction is limited to a rendition of judgment on the res.It cannot extend its jurisdiction beyond the res and issue a judgment enforcing petitioners personal liability.In doing so without first having acquired jurisdiction over the person of petitioner, as it did, the trial court violated her constitutional right to due process, warranting the annulment of the judgment rendered in the case.

WHEREFORE, the instant petition is GRANTED. The Decision dated August 27, 2003 and the Resolution dated December 15, 2003 of the Court of Appeals in CA-G.R. SP No. 67489 are SET ASIDE.The Judgment dated July 11, 2000 and Order dated February 9, 2001 of the RegionalTrialCourtofCagayan de OroCity, Branch 20, are likewise SET ASIDE.

SO ORDERED.

DANTE O. TINGA

Associate Justice

WE CONCUR:


Associate Justice

Chairperson

ANTONIO T. CARPIOcralawCONCHITA CARPIO MORALES



Associate Justice

ATTESTATION



Associate Justice

Chairperson, Second Division

CERTIFICATION

cralawPursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

Endnotes:

[1]Rollo, pp. 28-35; Penned by Associate Justice Romeo A. Brawner and concurred in by Associate Justices Josefina Guevara-Salonga and Arturo D. Brion.

[2]Id. at 38.

[3]Id. at 29-31.

[4]Id. at 3-23.

[5]Id. at 125-142.

[6]Id. at 144-145.

[7]Id. at 149-165.

[8]Id. at 167-181.

[9]National Housing Authority v. Evangelista, G.R. No. 140945, May 16, 2005, 458 SCRA 469, 477-478.

[10]CA rollo, p. 6; Petition (for Annulment of Judgment) dated October 29, 2001.

[11]Alba v. Court of Appeals, G.R. No.164041, 29 July 2005, 265 SCRA 495, 508.

[12]Strait Times, Inc. v. Court of Appeals, 356 Phil. 217, 225-226 (1998), 294 SCRA 714, citing Palanca v. The American Food Manufacturing Co., 24 SCRA 819, August 30, 1968, per Zaldivar, J., citing U.S. v. Throckmorton, 98 U.S. 93, 95, 25 L. Ed. 93 (1878); See also Alaban v. Court of Appeals, G.R. No. 156021, September 23, 2005, 470 SCRA 697, 708.

[13]Id.

[14]Asiavest Limited v. Court of Appeals, 357 Phil. 536, 553 (1998).

[15]Alba v. Court of Appeals, G.R. No. 164041, July 29, 2005, 465 SCRA 495, 505.

[16]Id. at 506

[17]CA rollo, p. 32.

[18]G.R. No. 78328, June 3, 1991, 198 SCRA 44.

[19]37 Phil. 921 (1918).

[20]159-A Phil. 314, 326 (1975).

[21]69 Phil. 186, 193 (1939).


FIRST DIVISION

FELIPE N. MADRIAN,cralawG.R. No. 159374

Petitioner,cralawcralaw

Present:


cralawcralawcralawSANDOVAL-GUTIERREZ,*chanroblesvirtuallawlibrary

-v e r s u s -cralawCORONA,

AZCUNA and

cralawcralawGARCIA,** JJ.

FRANCISCA R. MADRIAN,

Respondent.cralawcralawPromulgated:

July 12, 2007

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

D E C I S I O N

CORONA, J.:

When a family breaks up, the children are always the victims. The ensuing battle for custody of the minor children is not only a thorny issue but also a highly sensitive and heart-rending affair. Such is the case here. Even the usually technical subject of jurisdiction became emotionally charged.

cralawPetitioner Felipe N. Madrian and respondent Francisca R. Madrian were married on July 7, 1993 in Paraaque City. They resided in San Agustin Village, Brgy. Moonwalk, Paraaque City.

Their union was blessed with three sons and a daughter: Ronnick, born on January 30, 1994; Phillip, born on November 19, 1996; Francis Angelo, born on May 12, 1998 and Krizia Ann, born on December 12, 2000.

cralawAfter a bitter quarrel on May 18, 2002, petitioner allegedly left their conjugal abode and took their three sons with him to Ligao City, Albay and subsequently to Sta. Rosa, Laguna. Respondent sought the help of her parents and parents-in-law to patch things up between her and petitioner to no avail. She then brought the matter to the Lupong Tagapamayapa in their barangay but this too proved futile.

Thus respondent filed a petition for habeas corpus of Ronnick, Phillip and Francis Angelo in the Court of Appeals, alleging that petitioners act of leaving the conjugal dwelling and going to Albay and then to Laguna disrupted the education of their children and deprived them of their mothers care. She prayed that petitioner be ordered to appear and produce their sons before the court and to explain why they should not be returned to her custody.

cralawPetitioner and respondent appeared at the hearing on September 17, 2002. They initially agreed that petitioner would return the custody of their three sons to respondent. Petitioner, however, had a change of heart[1] and decided to file a memorandum.

cralawOn September 3, 2002, petitioner filed his memorandum[2] alleging that respondent was unfit to take custody of their three sons because she was habitually drunk, frequently went home late at night or in the wee hours of the morning, spent much of her time at a beer house and neglected her duties as a mother. He claimed that, after their squabble on May 18, 2002, it was respondent who left, taking their daughter with her. It was only then that he went to Sta. Rosa, Laguna where he worked as a tricycle driver. He submitted a certification from the principal of the Dila Elementary School in Sta. Rosa, Laguna that Ronnick and Phillip were enrolled there. He also questioned the jurisdiction of the Court of Appeals claiming that under Section 5(b) of RA 8369 (otherwise known as the Family Courts Act of 1997) family courts have exclusive original jurisdiction to hear and decide the petition for habeas corpus filed by respondent.[3]chanroblesvirtuallawlibrary

For her part, respondent averred that she did not leave their home on May 18, 2002 but was driven out by petitioner. She alleged that it was petitioner who was an alcoholic, gambler and drug addict. Petitioners alcoholism and drug addiction impaired his mental faculties, causing him to commit acts of violence against her and their children. The situation was aggravated by the fact that their home was adjacent to that of her in-laws who frequently meddled in their personal problems.[4]chanroblesvirtuallawlibrary

On October 21, 2002, the Court of Appeals[5] rendered a decision[6] asserting its authority to take cognizance of the petition and ruling that, under Article 213 of the Family Code, respondent was entitled to the custody of Phillip and Francis Angelo who were at that time aged six and four, respectively, subject to the visitation rights

of petitioner. With respect to Ronnick who was then eight years old, the court ruled that his custody should be determined by the proper family court in a special proceeding on custody of minors under Rule 99 of the Rules of Court.

Petitioner moved for reconsideration of the Court of Appeals decision but it was denied. Hence, this recourse.

Petitioner challenges the jurisdiction of the Court of Appeals over the petition for habeas corpus and insists that jurisdiction over the case is lodged in the family courts under RA 8369. He invokes Section 5(b) of RA 8369:

Section 5. Jurisdiction of Family Courts. The Family Courts shall have exclusive original jurisdiction to hear and decide the following cases:

x x xx x xx x x

b) Petitions for guardianship, custody of children, habeas corpus in relation to the latter;

x x xx x xx x x

Petitioner is wrong.

cralawIn Thornton v. Thornton,[7] this Court resolved the issue of the Court of Appeals jurisdiction to issue writs of habeas corpus in cases involving custody of minors in the light of the provision in RA 8369 giving family courts exclusive original jurisdiction over such petitions:

The Court of Appeals should take cognizance of the case since there is nothing in RA 8369 that revoked its jurisdiction to issue writs of habeas corpus involving the custody of minors.

x x xx x xx x x

We rule therefore that RA 8369 did not divest the Court of Appeals and the Supreme Court of their jurisdiction over habeas corpus cases involving the custody of minors.

x x xx x xx x x

The provisions of RA 8369 reveal no manifest intent to revoke the jurisdiction of the Court of Appeals and Supreme Court to issue writs of habeas corpus relating to the custody of minors. Further, it cannot be said that the provisions of RA 8369, RA 7092 [An Act Expanding the Jurisdiction of the Court of Appeals] and BP 129 [The Judiciary Reorganization Act of 1980] are absolutely incompatible since RA 8369 does not prohibit the Court of Appeals and the Supreme Court from issuing writs of habeas corpus in cases involving the custody of minors. Thus, the provisions of RA 8369 must be read in harmony with RA 7029 and BP 129 that family courts have concurrent jurisdiction with the Court of Appeals and the Supreme Court in petitions for habeas corpus where the custody of minors is at issue.[8] (emphases supplied)

cralawThe jurisdiction of the Court of Appeals over petitions for habeas corpus was further affirmed by A.M. No. 03-03-04-SC (April 22, 2004) in Re: Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors:

cralaw

In any case, whatever uncertainty there was has been settled with the adoption of A.M. No. 03-03-04-SC Re: Rule on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors. Section 20 of the rule provides that:

Section 20.Petition for writ of habeas corpus. A verified petition for a writ of habeas corpus involving custody of minors shall be filed with the Family Court. The writ shall be enforceable within its judicial region to which the Family Court belongs.

x x xx x xx x x

The petition may likewise be filed with the Supreme Court, Court of Appeals, or with any of its members and, if so granted, the writ shall be enforceable anywhere in the Philippines. The writ may be made returnable to a Family Court or to any regular court within the region where the petitioner resides or where the minor may be found for hearing and decision on the merits.

From the foregoing, there is no doubt that the Court of Appeals and Supreme Court have concurrent jurisdiction with family courts in habeas corpus cases where the custody of minors is involved.[9] (emphases supplied)

cralawWe note that after petitioner moved out of their Paraaque residence on May 18, 2002, he twice transferred his sons to provinces covered by different judicial regions. This situation is what the Thornton interpretation of RA 8369s provision on jurisdiction precisely addressed:

[The reasoning that by giving family courts exclusive jurisdiction over habeas corpus cases, the lawmakers intended them to be the sole courts which can issue writs of habeas corpus] will result in an iniquitous situation, leaving individuals like [respondent] without legal recourse in obtaining custody of their children. Individuals who do not know the whereabouts of minors they are looking for would be helpless since they cannot seek redress from family courts whose writs are enforceable only in their respective territorial jurisdictions. Thus, if a minor is being transferred from one place to another, which seems to be the case here, the petitioner in a habeas corpus case will be left without legal remedy. This lack of recourse could not have been the intention of the lawmakers when they passed [RA 8369].[10]

Moreover, a careful reading of Section 5(b) of RA 8369 reveals that family courts are vested with original exclusive jurisdiction in custody cases, not in habeas corpus cases. Writs of habeas corpus which may be issued exclusively by family courts under Section 5(b) of RA 8369 pertain to the ancillary remedy that may be availed of in conjunction with a petition for custody of minors under Rule 99 of the Rules of Court. In other words, the issuance of the writ is merely ancillary to the custody case pending before the family court. The writ must be issued by the same court to avoid splitting of jurisdiction, conflicting decisions, interference by a co-equal court and judicial instability.

The rule therefore is: when by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or officer.[11] Once a court acquires jurisdiction over the subject matter of a case, it does so to the exclusion of all other courts, including related incidents and ancillary matters.

cralaw

Accordingly, the petition is hereby DENIED.


cralawSO ORDERED.

RENATO C. CORONA

Associate Justice

WEcralawCONCUR:

REYNATO S. PUNO

Chief Justice

Chairperson

(On leave)ANGELINA SANDOVAL-GUTIERREZADOLFO S. AZCUNA


(No part)

CANCIO C. GARCIA

Associate Justice C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

Endnotes:

* cralawOn leave.

** cralawNo part.

[1]cralawBoth parties accused each others parents of constant meddling in their family life.


[3] cralawId.

[4] cralawId., pp. 37-43.

[5] cralawFirst Division.

[6] cralawPenned by Associate Justice Rebecca de Guia-Salvador with Associate Justices Cancio C. Garcia (now a member of the Supreme Court) and Bernardo P. Abesamis (retired) concurring. Rollo, pp. 19-26.

[7] cralawG.R. No. 154598, 16 August 2004, 436 SCRA 550.

[8] cralawId.

[9] cralawId.

[10] cralawId.

[11] cralawSection 6, Rule 135, Rules of Court.


SECOND DIVISION

ESTATE OF THE LATE cralawG.R. No. 168661

JESUS S. YUJUICO, represented

by ADMINISTRATORS

BENEDICTO V. YUJUICO andcralawPresent:

EDILBERTO V. YUJUICO; and

AUGUSTO Y. CARPIO,cralawQUISUMBING, J., Chairperson,

cralawPetitioners,cralawCARPIO MORALES,

cralawTINGA,

VELASCO, JR., and

cralaw- versus -cralawNACHURA,* JJ.

cralaw

REPUBLIC OF THE PHILIPPINEScralawPromulgated:

and the COURT OF APPEALS,

cralawRespondents.cralawOctober 26, 2007

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

D E C I S I O N

cralaw

VELASCO, JR., J.:

cralawIn 1973, Fermina Castro filed an application for the registration and confirmation of her title over a parcel of land with an area of 17,343 square meters covered by plan (LRC) Psu-964 located in the Municipality of Paraaque, Province of Rizal (now Paraaque City), in the Pasig-Rizal Court of First Instance (CFI), Branch

22.The application was docketed LRC Case No. N-8239.The application was opposed by the Office of the Solicitor General (OSG) on behalf of the Director of Lands, and by Mercedes Dizon, a private party.Both oppositions were stricken from the records since the opposition of Dizon was filed after the expiration of the period given by the court, and the opposition of the Director of Lands was filed after the entry of the order of general default.After considering the evidence, the trial court rendered its April 26, 1974 Decision.The dispositive portion reads:

____________________________

cralaw* As per September 3, 2007 raffle.

cralawWHEREFORE, the Court hereby declares the applicant, Fermina Castro, of legal age, single, Filipino and a resident of 1515 F. Agoncillo St., Corner J. Escoda St., Ermita, Manila, the true and absolute owner of the land applied for situated in the Municipality of Paraaque, Province of Rizal, with an area of 17,343 square meters and covered by plan (LRC) Psu-964 and orders the registration of said parcel of land in her name with her aforementioned personal circumstances.

cralawOnce this decision becomes final and executory, let the corresponding order for the issuance of the decree be issued.

cralawSO ORDERED.[1]

cralaw

cralawThe Director of Lands and Mercedes Dizon did not appeal from the adverse decision of the Pasig-Rizal CFI.Thus, the order for the issuance of a decree of registration became final, and Decree No. N-150912 was issued by the Land Registration Commission (LRC).[2]Original Certificate of Title (OCT) No. 10215 was issued in the name of Fermina Castro by the Register of Deeds for the Province of Rizal on May 29, 1974.[3]

The land was then sold to Jesus S. Yujuico, and OCT No. 10215 was cancelled.On May 31, 1974,[4]Transfer Certificate of Title (TCT) No. 445863 was issued in Yujuicos name, who subdivided the land into two lots.TCT No. 446386[5] over Lot 1 was issued in his name, while TCT No. S-29361[6] over Lot 2 was issued in the name of petitioner Augusto Y. Carpio.

cralaw

cralawAnnotations at the back of TCT No. 446386 show that Yujuico had, at one time or another, mortgaged the lot to the Philippine Investments System Organization (PISO) and Citibank, N.A.Annotations in the title of petitioner Carpio reveal the lot was mortgaged in favor of Private Development Corporation (PDC), Rizal Commercial Banking Corporation (RCBC) and then Philippine Commercial and Industrial Bank (PCIB) and the Development Bank of the Philippines (DBP) to secure various loans.

cralawSometime in 1977, Presidential Decree No. (PD) 1085 entitled Conveying the Land Reclaimed in the Foreshore and Offshore of the Manila Bay (The Manila-Cavite Coastal Road Project) as Property of the Public Estates Authority as well as Rights and Interests with Assumptions of Obligations in the Reclamation Contract Covering Areas of the Manila Bay between the Republic of the Philippines and the Construction and Development Corporation of the Philippines (1977) was issued. Land reclaimed in the foreshore and offshore areas of ManilaBay became the properties of the Public Estates Authority (PEA), a government corporation that undertook the reclamation of lands or the acquisition of reclaimed lands.On January 13, 1989, OCT No. SP 02 was issued in favor of PEA.The PEA also acquired ownership of other parcels of land along the ManilaBay coast, some of which were subsequently sold to the Manila Bay Development Corporation (MBDC), which in turn leased portions to Uniwide Holdings, Inc.[7]chanroblesvirtuallawlibrary

cralawThe PEA undertook the construction of the Manila Coastal Road.As this was being planned, Yujuico and Carpio discovered that a verification survey they commissioned showed that the road directly overlapped their property, and that they owned a portion of the land sold by the PEA to the MBDC.

On July 24, 1996, Yujuico and Carpio filed before the Paraaque City Regional Trial Court (RTC), a complaint for the Removal of Cloud and Annulment of Title with Damages docketed as Civil Case No. 96-0317 against the PEA. On May 15, 1998 the parties entered into a compromise agreement approved by the trial court in a Resolution dated May 18, 1998.On June 17, 1998, the parties executed a Deed of Exchange of Real Property, pursuant to the compromise agreement, where the PEA property with an area of 1.4007 hectares would be conveyed to Jesus Yujuico and petitioner Carpio in exchange for their property with a combined area of 1.7343 hectares.

cralawOn July 31, 1998, the incumbent PEA General Manager, Carlos P. Doble, informed the OSG that the new PEA board and management had reviewed the compromise agreement and had decided to defer its implementation and hold it in abeyance following the view of the former PEA General Manager, Atty. Arsenio Yulo, Jr., that the compromise agreement did not reflect a condition of the previous PEA Board, requiring the approval of the Office of the President.The new PEA management then filed a petition for relief from the resolution approving the compromise agreement on the ground of mistake and excusable negligence.

The petition was dismissed by the trial court on the ground that it was filed out of time and that the allegation of mistake and excusable negligence lacked basis.

The PEA fared no better in the Court of Appeals (CA), as the petition was dismissed for failure to pay the required docket fees and for lack of merit.

The matter was raised to the Supreme Court in Public Estates Authority v. Yujuico[8]but PEAs petition was denied, upholding the trial courts dismissal of the petition for relief for having been filed out of time.The allegation of fraud in the titling of the subject property in the name of Fermina Castro was not taken up by the Court.

cralawOn June 8, 2001, in a Complaint for Annulment and Cancellation of Decree No. N-150912 and its Derivative Titles, entitled Republic of the Philippines v. Fermina Castro, Jesus S. Yujuico, August Y. Carpio and the Registry of Deeds of Paraaque City docketed as Civil Case No. 01-0222, filed with the Paraaque City RTC, respondent Republic of the Philippines, through the OSG, alleged that when the land registered to Castro was surveyed by Engr. H. Obreto on August 3, 1972 and subsequently approved by the LRC on April 23, 1973, the land was still a portion of Manila Bay as evidenced by Namria Hydrographic Map No. 4243, Surveys to 1980; 1st Ed/. January 9/61: Revised 80-11-2; that Roman Mataverde, the then OIC of the Surveys Division, Bureau of Lands, informed the OIC of the Legal Division that [w]hen projected on Cadastral Maps CM 14 deg. 13 N-120 deg, 59E, Sec.2-A of Paraaque Cadastre (Cad. 299), (LRC) Psu-964 falls inside ManilaBay, outside Cad. 299; that then Acting Regional Lands Director Narciso V. Villapando issued a Report dated November 15, 1973 stating that plan (LRC) Psu-964 is a portion of ManilaBay; that then Officer-in-Charge, Assistant Director of Lands, Ernesto C. Mendiola, submitted his Comment and Recommendation re: Application for Registration of Title of FERMINA CASTRO, LRC Case No. N-8239, dated Dec. 1, 1977, praying that the instant registration case be dismissed; and that Fermina Castro had no registrable rights over the property.

cralawMore significantly, respondent Republic argued that, first, since the subject land was still underwater, it could not be registered in the name of Fermina Castro.Second, the land registration court did not have jurisdiction to adjudicate inalienable lands, thus the decision adjudicating the subject parcel of land to Fermina Castro was void.And third, the titles of Yujuico and Carpio, being derived from a void title, were likewise void.[9]chanroblesvirtuallawlibrary

On September 13, 2001, Yujuico and Carpio filed a Motion to Dismiss (With Cancellation of Notice of Lis Pendens),[10] on the grounds that: (1) the cause of action was barred by prior judgment; (2) the claim had been waived, abandoned, or otherwise extinguished; (3) a condition precedent for the filing of the complaint was not complied with; and (4) the complaint was not verified and the certification against forum shopping was not duly executed by the plaintiff or principal party.

On November 27, 2001, respondent Republic filed an Opposition[11] to the motion to dismiss to which defendants filed a Reply[12] on January 14, 2002, reiterating the grounds for the motion to dismiss.

In the August 7, 2002 Order of the RTC,[13] Civil Case No. 01-0222 was dismissed.The trial court stated that the matter had already been decided in LRC Case No. N-8239, and that after 28 years without being contested, the case had already become final and executory.The trial court also found that the OSG had participated in the

LRC case, and could have questioned the validity of the decision but did not.Civil Case No. 01-0222 was thus found barred by prior judgment.

On appeal to the CA, in CA-G.R. CV No. 76212, respondent Republic alleged that the trial court erred in disregarding that appellant had evidence to prove that the subject parcel of land used to be foreshore land of the Manila Bay and that the trial court erred in dismissing Civil Case No. 01-0222 on the ground of res judicata.[14]chanroblesvirtuallawlibrary

cralawThe CA observed that shores are properties of the public domain intended for public use and, therefore, not registrable and their inclusion in a certificate of title does not convert the same into properties of private ownership or confer title upon the registrant.

Further, according to the appellate court res judicata does not apply to lands of public domain, nor does possession of the land automatically divest the land of its public character.

The appellate court explained that rulings of the Supreme Court have made exceptions in cases where the findings of the Director of Lands and the Department of Environment and Natural Resources (DENR) were conflicting as to the true nature of the land in as much as reversion efforts pertaining foreshore lands are embued with public interest.

The dispositive portion of the CA decision reads,

cralawWHEREFORE, premises considered, the present appeal is hereby GRANTED.The appealed Order dated August 7, 2002 of the trial court in Civil Case No. 01-0222 is hereby REVERSED and SET ASIDE.The case is hereby REMANDED to said court for further proceedings and a full-blown trial on the merits with utmost dispatch.[15]

cralaw

cralawHence, this petition.

cralaw

The Issues

cralawPetitioners now raise the following issues before this Court:

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF THE HONORABLE COURT AND HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS NECESSITATING THE HONORABLE COURTS EXERCISE OF ITS POWER OF SUPERVISION CONSIDERING THAT:

I. THE REVERSAL BY THE COURT OF APPEALS OF THE cralawTRIAL COURTS APPLICATION OF THE PRINCIPLE OF cralawRES JUDICATA IN THE INSTANT CASE IS BASED ON ITS cralawERRONEOUS ASSUMPTION THAT THE SUBJECT LAND IS OF PUBLIC DOMAIN, ALLEGEDLY PART OF MANILA cralawBAY.

A. IN THE FIRESTONE CASE, THE HONORABLE COURT APPLIED THE PRINCIPLE OF RES JUDICATA NOTWITHSTANDING ALLEGATIONS OF LACK OF JURISDICTION OF A LAND REGISTRATION COURT, FORECLOSING ANY FURTHER ATTEMPT BY RESPONDENT THEREIN, AS IN THE INSTANT CASE, TO RESURRECT A LONG-SETTLED JUDICIAL DETERMINATION OF REGISTRABILITY OF A PARCEL OF LAND BASED ON THE SHEER ALLEGATION THAT THE SAME IS PART OF THE PUBLIC DOMAIN.

B. THE LAND REGISTRATION COURT HAD JURISDICTION TO DETERMINE WHETHER THE SUBJECT LAND WAS PART OF THE PUBLIC DOMAIN.

C. RESPONDENTS REVERSION CASE SEEKS TO RETRY THE VERY SAME FACTUAL ISSUES THAT HAVE ALREADY BEEN JUDICIALLY DETERMINED OVER THIRTY (30) YEARS AGO.

D. THE JURISPRUDENTIAL BASES APPLIED BY THE COURT OF APPEALS IN ITS QUESTIONED DECISION ARE MISPLACED, CONSIDERING THAT THEY ARE ALL PREDICATED ON THE

ERRONEOUS PREMISE THAT IT IS UNDISPUTED THAT THE SUBJECT LAND IS PART OF THE PUBLIC DOMAIN.

II. RESPONDENT IS BARRED BY JURISDICTIONAL cralawESTOPPEL AND LACHES FROM QUESTIONING THE cralawJURISDICTION OF THE LAND REGISTRATION COURT.

III. RELIANCE BY THE COURT OF APPEALS ON THE cralawISOLATED PRONOUNCEMENT OF THE HONORABLE cralawCOURT IN THE PEA CASE IS UNWARRANTED AND cralawMISLEADING CONSIDERING THAT THE MATTER OF cralawWHETHER RES JUDICATA APPLIES WITH RESPECT TO cralawTHE LAND REGISTRATION COURTS DECISION IN 1974 WAS NOT IN ISSUE IN SAID CASE.

A. THE INSTANT REVERSION CASE IS NOT THE PROPER RECOURSE.

B. THE VALIDITY OF THE COURT-APPROVED COMPROMISE AGREEMENT 15 MAY 1998 HAS ALREADY BEEN AFFIRMED BY THE HONORABLE COURT IN THE PEA CASE.

IV. EQUITABLE CONSIDERATIONS MANDATE THE cralawAPPLICATION OF THE RULE ON ORDINARY ESTOPPEL cralawAND LACHES IN THE INSTANT CASE AGAINST cralawRESPONDENT.

V. RESPONDENT CANNOT BE GIVEN SPECIAL CONSIDERATION AND EXCUSED FOR TRANSGRESSING RULES OF PROCEDURE.[16]

Essentially, the issues boil down to three:(1) Is a reversion suit proper in this case? (2) Is the present petition estopped by laches? (3) Did the CA erroneously apply the principle of res judicata?

An action for reversion seeks to restore public land fraudulently awarded and disposed of to private individuals or corporations to the mass of public domain.[17]This remedy is provided under Commonwealth Act (CA) No. 141 (Public Land Act) which became effective on December 1, 1936.Said law recognized the power of the state to recover lands of public domain.Section 124 of CA No. 141 reads:

SEC. 124.Any acquisition, conveyance, alienation, transfer, or other contract made or executed in violation of any of the provisions of Sections one hundred and eighteen, one hundred and twenty, one hundred and twenty one, one hundred and twenty-two, and one hundred twenty-three of this Act shall be unlawful and null and void from its execution and shall produce the effect of annulling and cancelling the grant, title, patent, or permit originally issued, recognized or confirmed, actually or presumptively, and cause the reversion of the property and its improvements to the State.(Emphasis supplied.)

Pursuant to Section 124 of the Public Land Act, reversion suits are proper in the following instances, to wit:

1.cralawAlienations of land acquired under free patent or homestead provisions in violation of Section 118, CA No. 141;

2.cralawConveyances made by non-Christians in violation of Section 120, CA No. 141; and

3.cralawAlienations of lands acquired under CA No. 141 in favor of persons not qualified under Sections 121, 122, and 123 of CA No. 141.

From the foregoing, an action for reversion to cancel titles derived from homestead patents or free patents based on transfers and conveyances in violation of CA No. 141 is filed by the OSG pursuant to its authority under the Administrative Code with the RTC. It is clear therefore that reversion suits were originally utilized to annul titles or patents administratively issued by the Director of the Land Management Bureau or the Secretary of the DENR.

While CA No. 141 did not specify whether judicial confirmation of titles by a land registration court can be subject of a reversion suit, the government availed of such remedy by filing actions with the RTC to cancel titles and decrees granted in land registration applications.

The situation changed on August 14, 1981 upon effectivity of Batas Pambansa (BP) Blg. 129 which gave the Intermediate Appellate Court the exclusive original jurisdiction over actions for annulment of judgments of RTCs.

When the 1997 Rules of Civil Procedure became effective on July 1, 1997, it incorporated Rule 47 on annulment of judgments or final orders and resolutions of the RTCs.The two grounds for annulment under Sec. 2, Rule 47 are extrinsic fraud and lack of jurisdiction.If based on extrinsic fraud, the action must be filed within four (4) years from its discovery, and if based on lack of jurisdiction, before it is barred by laches or estoppel as provided by Section 3, Rule 47.Thus, effective July 1, 1997, any action for reversion of public land instituted by the Government was already covered by Rule 47.

The instant Civil Case No. 01-0222 for annulment and cancellation of Decree No. N-150912 and its derivative titles was filed on June 8, 2001 with the Paraaque City RTC.It is clear therefore that the reversion suit was erroneously instituted in the Paraaque RTC and should have been dismissed for lack of jurisdiction.The proper court is the CA which is the body mandated by BP Blg. 129 and prescribed by Rule 47 to handle annulment of judgments of RTCs.

In Collado v. Court of Appeals,[18] the government, represented by the Solicitor General pursuant to Section 9(2) of BP Blg. 129, filed a petition for annulment of judgment with the CA.Similarly in the case of Republic v. Court of Appeals,[19] the Solicitor General correctly filed the annulment of judgment with the said appellate court.

This was not done in this case.The Republic misfiled the reversion suit with the Paraaque RTC.It should have been filed with the CA as required by Rule 47.Evidently, the Paraaque RTC had no jurisdiction over the instant reversion case.

Assuming that the Paraaque RTC has jurisdiction over the reversion case, still the lapse of almost three decades in filing the instant case, the inexplicable lack of action of the Republic and the injury this would cause constrain us to rule for petitioners.While it may be true that estoppel does not operate against the state or its agents,[20] deviations have been allowed.In Manila Lodge No. 761 v. Court of Appeals,we said:

Estoppels against the public are little favored.They should not be invoked except in rare and unusual circumstances, and may not be invoked where they would operate to defeat the effective operation of a policy adopted to protect the public.They must be applied with circumspection and should be applied only in those special cases where the interests of justice clearly require it.Nevertheless, the government must not be allowed to deal dishonorably or capriciously with its citizens, and must not play an ignoble part or do a shabby thing; and subject to limitations x x x, the doctrine of equitable estoppel may be invoked against public authorities as well as against private individuals.[21](Emphasis supplied.)

Equitable estoppel may be invoked against public authorities when as in this case, the lot was already alienated to innocent buyers for value and the government did not undertake any act to contest the title for an unreasonable length of time.

In Republic v. Court of Appeals, where the title of an innocent purchaser for value who relied on the clean certificates of the title was sought to be cancelled and the excess land to be reverted to the Government, we ruled that [i]t is only fair and reasonable to apply the equitable principle of estoppel by laches against the government to avoid an injustice to innocent purchasers for value (emphasis supplied).[22]We explained:

Likewise time-settled is the doctrine that where innocent third persons, relying on the correctness of the certificate of title, acquire rights over the property, courts cannot disregard such rights and order the cancellation of the certificate.Such cancellation would impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly issued or not.This would be contrary to the very purpose of the law, which is to stabilize land titles.Verily, all persons dealing with registered land may safely rely on the correctness of the certificate of title issued therefore, and the law or the courts do not oblige them to go behind the certificate in order to investigate again the true condition of the property.They are only charged with notice of the liens and encumbrances on the property that are noted on the certificate.[23]

x x x x

But in the interest of justice and equity, neither may the titleholder be made to bear the unfavorable effect of the mistake or negligence of the States agents, in the absence of proof of his complicity in a fraud or of manifest damage to third persons.First, the real purpose of the Torrens system is to quiet title to land to put a stop forever to any question as to the legality of the title, except claims that were noted in the certificate at the time of the registration or that may arise subsequent thereto.Second, as we discussed earlier, estoppel by laches now bars petitioner from questioning private respondents titles to the subdivision lots.Third, it was never proven that Private Respondent St. Jude was a party to the fraud that led to the increase in the area of the property after its subdivision.Finally, because petitioner even failed to give sufficient proof of any error that might have been committed by its agents who had surveyed the property, the presumption of regularity in the performance of their functions must be respected.Otherwise, the integrity of the Torrens system, which petitioner purportedly aims to protect by filing this case, shall forever be sullied by the ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have regularly performed their duties.[24]

Republic v. Court of Appeals is reinforced by our ruling in Republic v. Umali,[25] where, in a reversion case, we held that even if the original grantee of a patent and title has obtained the same through fraud, reversion will no longer prosper as the land had become private land and the fraudulent acquisition cannot affect the titles of innocent purchasers for value.

Considering that innocent purchaser for value Yujuico bought the lot in 1974, and more than 27 years had elapsed before the action for reversion was filed, then said action is now barred by laches.

While the general rule is that an action to recover lands of public domain is imprescriptible, said right can be barred by laches or estoppel.Section 32 of PD 1592 recognized the rights of an innocent purchaser for value over and above the interests of the government.Section 32 provides:

SEC. 32.Review of decree of registration; Innocent purchaser for value.The decree of registration shall not be reopened or revised by reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing judgments, subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a petition for reopening and review of the decree of registration not later than one year from and after the date of the entry of such decree of registration, but in no case shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an interest therein, whose rights may be prejudiced.Whenever the phrase innocent purchaser for value or an equivalent phrase occurs in this Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrances for value.(Emphasis supplied.)

In this petition, the LRC (now LRA), on May 30, 1974, issued Decree No. N-150912 in favor of Fermina Castro and OCT No. 10215 was issued by the Rizal Registrar of Deeds on May 29, 1974.OCT No. 10215 does not show any annotation, lien, or encumbrance on its face.Relying on the clean title, Yujuico bought the same in good faith and for value from her.He was issued TCT No. 445863 on May 31, 1974.There is no allegation that Yujuico was a buyer in bad faith, nor did he acquire the land fraudulently.He thus had the protection of the Torrens System that every subsequent purchaser of registered land taking a certificate of title for value and in good faith shall hold the same free from all encumbrances except those noted on the certificate and any of the x x x encumbrances which may be subsisting.[26]The same legal shield redounds to his successors-in-interest, the Yujuicos and Carpio, more particularly the latter since Carpio bought the lot from Jesus Y. Yujuico for value and in good faith.

Likewise protected are the rights of innocent mortgagees for value, the PISO, Citibank, N.A., PDC, RCBC, PCIB, and DBP.Even if the mortgagors title was proved fraudulent and the title declared null and void, such declaration cannot nullify the mortgage rights of a mortgagee in good faith.[27]chanroblesvirtuallawlibrary

All told, a reversion suit will no longer be allowed at this stage.

More on the issue of laches.Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled thereto has either abandoned or declined to assert it.[28]

When respondent government filed the reversion case in 2001, 27 years had already elapsed from the time the late Jesus Yujuico purchased the land from the original owner Castro. After the issuance of OCT No. 10215 to Castro, no further action was taken by the government to question the issuance of the title to Castro until the case of Public Estates Authority, brought up in the oral argument before this Court on September 6, 2000.[29]We then held that allegation of fraud in the issuance of the title was not proper for consideration and determination at that stage of the case.

From the undisputed facts of the case, it is easily revealed that respondent Republic took its sweet time to nullify Castros title, notwithstanding the easy access to ample remedies which were readily available after OCT No. 10215 was registered in the name of Castro.First, it could have appealed to the CA when the Pasig-Rizal CFI rendered a decision ordering the registration of title in the name of applicant Castro on April 26, 1974.Had it done so, it could have elevated the matter to this Court if the appellate court affirms the decision of the land registration court.Second, when the entry of Decree No. N-150912 was made on May 29, 1974 by the Rizal Register of Deeds, the Republic had one (1) year from said date or up to May 28, 1975 to file a petition for the reopening and review of Decree No. N-150912 with the Rizal CFI (now RTC) on the ground of actual fraud under section 32 of PD 1592.Again, respondent Republic did not avail of such remedy.Third, when Jesus Yujuico filed a complaint for Removal of Cloud and Annulment of Title with Damages against PEA before the Paraaque RTC in Civil Case No. 96-0317, respondent could have persevered to question and nullify Castros title.Instead, PEA undertook a compromise agreement on which the May 18, 1998 Resolution[30] was issued.PEA in effect admitted that the disputed land was owned by the predecessors-in-interest of petitioners and their title legal and valid; and impliedly waived its right to contest the validity of said title; respondent Republic even filed the petition for relief from judgment beyond the time frames allowed by the rules, a fact even acknowledged by this Court in Public Estates Authority.Lastly, respondent only filed the reversion suit on June 8, 2001 after the passage of 27 years from the date the decree of registration was issued to Fermina Castro.

Such a Rip Van Winkle, coupled with the signing of the settlement with PEA, understandably misled petitioners to believe that the government no longer had any right or interest in the disputed lot to the extent that the two

lots were even mortgaged to several banks including a government financing institution.Any nullification of title at this stage would unsettle and prejudice the rights and obligations of innocent parties.All told, we are constrained to conclude that laches had set in.

Even granting arguendo thatrespondent Republic is not precluded by laches from challenging the title of petitioners in the case at bar, still we find that the instant action for reversion is already barred by res judicata.

Petitioners relying on Firestone Ceramics, Inc. v. Court of Appeals[31] as a precedent to the case at bar contend that the instant reversion suit is now barred by res judicata.

We agree with petitioners.

The doctrine on precedents is expressed in the latin maximStare decisis et non quieta movere. Follow past precedents and do not disturb what has been settled.[32]In order however that a case can be considered as a precedent to another case which is pending consideration, the facts of the first case should be similar or analogous to the second case.

A perusal of the facts of the Firestone case and those of the case at bar reveals that the facts in the two (2) cases are parallel.First, in Firestone and in this case, the claimants filed land registration applications with the CFI; both claimants obtained decrees for registration of lots applied for and were issued OCTs.Second, in Firestone, the Republic filed a reversion case alleging that the land covered by the OCT was still inalienable forest land at the time of the application and hence the Land Registration Court did not acquire jurisdiction to adjudicate the property to the claimant.In the instant case, respondent Republic contend that the land applied for by Yujuico was within ManilaBay at the time of application and therefore the CFI had no jurisdiction over the subject matter of the complaint.Third, in Firestone, the validity of the title of the claimant was favorably ruled upon by this Court in G.R. No. 109490 entitled Patrocinio E. Margolles v. CA.In the case at bar, the validity of the compromise agreement involving the disputed lot was in effect upheld when this Court in Public Estates Authority v. Yujuico dismissed the petition of PEA seeking to reinstate the petition for relief from the May 18, 1998 Resolution approving said compromise agreement.With the dismissal of the petition, the May 18, 1998 Resolution became final and executory and herein respondent Republic through PEA was deemed to have recognized Castros title over the disputed land as legal and valid.In Romero v. Tan,[33] we ruled that a judicial compromise has the effect of res judicata.We also made clear that a judgment based on a compromise agreement is a judgment on the merits, wherein the parties have validly entered into stipulations and the evidence was duly considered by the trial court that approved the agreement.In the instant case, the May 18, 1998 Resolution approving the compromise agreement confirmed the favorable decision directing the registration of the lot to Castros name in LRC Case No. N-8239. Similarly, in Firestone, the Margolles case confirmed the decision rendered in favor of Gana in Land Registration Case No. 672 ordering the issuance of the decree to said applicant.Fourth, in Firestone, the Supreme Court relied on the letter of then Solicitor General Francisco Chavez that the evidence of the Bureau of Lands and the LRC was not sufficient to support an action

for cancellation of OCT No. 4216.In the instant case, both the Solicitor General and the Government Corporate Counsel opined that the Yujuico land was not under water and that there appears to be no sufficient basis for the Government to institute the action for annulment.Fifth, in Firestone, we ruled that the Margolles case had long become final, thus thevalidity of OCT No. 4216 should no longer be disturbed and should be applied in the instant case (reversion suit) based on the principle of res judicata or, otherwise, the rule on conclusiveness of judgment.[34]chanroblesvirtuallawlibrary

Clearly from the above, Firestone is a precedent case.The Public Estates Authority had become final and thus the validity of OCT No. 10215 issued to Castro could no longer be questioned.

While we said in Public Estates Authority that the court does not foreclose the right of the Republic from pursuing the proper recourse in a separate proceedings as it may deem warranted, the statement was obiter dictum since the inquiry on whether or not the disputed land was still under water at the time of its registration was a non-issue in the said case.

Even granting for the sake of argument that Firestone is not squarely applicable, still we find the reversion suit already barred by res judicata.

For res judicata to serve as an absolute bar to a subsequent action, the following requisites must concur: (1) there must be a final judgment or order; (2) the court rendering it must have jurisdiction over the subject matter and the parties; (3) it must be a judgment or order on the merits; and (4) there must be between the two cases, identity of parties, subject matter and causes of action.[35]chanroblesvirtuallawlibrary

There is no question as to the first, third and last requisites.The threshold question pertains to the second requisite, whether or not the then Pasig-Rizal CFI, Branch 22 had jurisdiction over the subject matter in LRC Case No. N-8239. In Civil Case No. 01-0222, the Paraaque City RTC, Branch 257 held that the CFI had jurisdiction.The CA reversed the decision of the Paraaque City RTC based on the assertion of respondent Republic that the Pasig-Rizal CFI had no jurisdiction over the subject matter, and that there was a need to determine the character of the land in question.

The Paraaque City RTC Order dismissing the case for res judicata must be upheld.

The CA, in rejecting the dismissal of the reversion case by the Paraaque RTC, relied on two cases, namely: Municipality of Antipolo v. Zapanta[36] and Republic v. Vda. De Castillo.[37]chanroblesvirtuallawlibrary

In Municipality of Antipolo, we held that the land registration court had no jurisdiction to entertain any land registration application if the land was public property, thus:

cralawSince the Land Registration Court had no jurisdiction to entertain the application for registration of public property of ANTIPOLO, its Decision adjudicating the DISPUTED PROPERTY as of private ownership is null and void.It never attained finality, and can be attacked at any time.It was not a bar to the action brought by ANTIPOLO for its annulment by reason of res judicata.

cralaw[x x x] the want of jurisdiction by a court over the subject matter renders the judgment void and a mere nullity, and considering that a void judgment is in legal effect no judgment, by which no rights are divested, from which no rights can be obtained, which neither binds nor bars any one, and under which all acts performed and all claims flowing out of are void, and considering, further, that the decision, for want of jurisdiction of the court, is not a decision in contemplation of law, and hence, can never become executory, it follows that such a void judgment cannot constitute a bar to another case by reason of res judicata.

x x x x

cralaw

cralawIt follows that if a person obtains a title under the Public Land Act which includes, by oversight, lands which cannot be registered under the Torrens System, or when the Director of Lands did not have jurisdiction over the same because it is a public forest, the grantee does not, by virtue of the said certificate of title alone, become the owner of the land illegally included (Republic vs. Animas, 56 SCRA 499, 503; Ledesma vs. Municipality of Iloilo, 49 Phil. 769).

cralaw[x x x x]

cralawUnder these circumstances, the certificate of title may be ordered cancelled (Republic vs. Animas, et al., supra), and the cancellation maybe pursued through an ordinary action therefore.This action cannot be barred by the prior judgment of the land registration court, since the said court had no jurisdiction over the subject matter.And if there was no such jurisdiction, then the principle of res judicata does not apply. [x x x]Certainly, one of the essential requisites, i.e., jurisdiction over the subject matter, is absent in this case.(Italics supplied).[38]

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

Firmly entrenched is the principle that jurisdiction over the subject matter is conferred by law.[39]Consequently, the proper CFI (now the RTC) under Section 14 of PD 1529[40] (Property Registration Decree) has jurisdiction over applications for registration of title to land.

Section 14 of PD 1592 provides:

cralawSEC. 14.Who may apply.The following persons may file in the proper Court of First Instance an application for registration of title to land, whether personally or through their duly authorized representatives:

cralaw(1) cralawThose who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.(Emphasis supplied.)

cralawConformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the subject matter of the land registration case filed by Fermina Castro, petitioners predecessor-in-interest, since jurisdiction over the subject matter is determined by the allegations of the initiatory pleadingthe application.[41]Settled is the rule that the authority to decide a case and not the decision rendered therein is what makes up jurisdiction.When there is jurisdiction, the decision of all questions arising in the case is but an exercise of jurisdiction.[42]chanroblesvirtuallawlibrary

In our view, it was imprecise to state in Municipality of Antipolo that the Land Registration Court [has] no jurisdiction to entertain the application for registration of public property x x x for such court precisely has the jurisdiction to entertain land registration applications since that is conferred by PD 1529.The applicant in a land registration case usually claims the land subject matter of the application as his/her private property, as in the case of the application of Castro.Thus, the conclusion of the CA that the Pasig-Rizal CFI has no jurisdiction over the subject matter of the application of Castro has no legal mooring.The land registration court initially has

jurisdiction over the land applied for at the time of the filing of the application. After trial, the court, in the exercise of its jurisdiction, can determine whether the title to the land applied for is registrable and can be confirmed.In the event that the subject matter of the application turns out to be inalienable public land, then it has no jurisdiction to order the registration of the land and perforce must dismiss the application.

Based on our ruling in Antipolo, the threshold question is whether the land covered by the titles of petitioners is under water and forms part of ManilaBay at the time of the land registration application in 1974.If the land was within ManilaBay, then res judicata does not apply.Otherwise, the decision of the land registration court is a bar to the instant reversion suit.

After a scrutiny of the case records and pleadings of the parties in LRC Case No. N-8239 and in the instant petition, we rule that the land of Fermina Castro is registrable and not part of Manila Bay at the time of the filing of the land registration application.

The trial courts Decision in 1974 easily reveals the basis for its conclusion that the subject matter was a dry land, thus:

On February 1, 1974, the applicant presented her evidence before the Deputy Clerk of this Court and among the evidence presented by her were certain documents which were marked as Exhibits D to J, inclusive.The applicant testified in her behalf and substantially declared that: she was 62 years old, single, housekeeper and residing at 1550 J. Escoda, Ermita, Manila; that she was born on June 3, 1911; that she first came to know of the land applied for which is situated in the Municipality of Paraaque, province of Rizal, with an area of 17,343 square meters and covered by plan (LRC) Psu-964 while she was still ten (10) years old or sometime in 1921; that when she first came to know of the land applied for, the person who was in possession and owner of said land was her father, Catalino Castro; that during that time her father used to plant on said land various crops like pechay, mustard, eggplant, etc.; that during that time, her father built a house on said land which was used by her father and the other members of the family, including the applicant, as their residential house; that the land applied for was inherited by her father from her grandfather Sergio Castro; that Catalino Castro continuously possessed and owned the land in question from 1921 up to the time of his death in 1952; and that during that period of time nobody ever disturbed the possession and ownership of her father over the said parcel of land; that after the death of her father in 1952 she left the place and transferred her place of residence but she had also occasions to visit said land twice or thrice a week and sometimes once a week; that after she left the land in question in 1952, she still continued possessing said land, through her caretaker Eliseo Salonga; that her possession over the land in question from the time she inherited it up to the time of the filing of the application has been continuous, public, adverse against the whole world and in the concept of an owner; that it was never encumbered, mortgaged, or disposed of by her father during his lifetime and neither did she ever encumber or sell the same; that it was declared for taxation purposes by her father when he was still alive and her father also paid the real estate taxes due to the government although the receipt evidencing the payment of said real estate taxes for the property applied for have been lost and could no longer be found inspite of diligent effort exerted to locate the same.

The other witness presented by the applicant was Emiliano de Leon, who declared that he was 70 years old, married, farmer and residing at San Jose, Baliwag, Bulacan; that he knew Catalino Castro, the father of the applicant because said Catalino Castro was his neighbor in Tambo, Paraaque, Rizal, he had a house erected on the land of Catalino Castro; that he was born in 1903 and he first came to know of the land in question when in 1918 when he was about 18 years old; that the area of the land owned and possessed by Catalino Castro where he constructed a residential house has an area of more than one and one-half (1 ) hectares; that the possession of Catalino Castro over the land in question was peaceful, continuous, notorious, adverse against the whole world and in the concept of an owner; that during the time that Catalino Castro was in possession of the land applied for he planted on said parcel of land mango, coconut and banana, etc.; that Catalino Castro continuously possessed and owned said parcel of land up to the year 1952 when he died; that during the time that Catalino Castro was in possession of said land, nobody ever laid claim over the said property; that said land is not within any military or naval reservation; that upon the death of Catalino Castro, the applicant took possession of the land applied for and that up to the present the applicant is in possession of said land; that he resided in the land in question from 1918 up to the time he transferred his place of residence in Baliwag, Bulacan in the year 1958.

On February 11, 1974, the Court, pursuant to the provision of Presidential Decree No. 230 issued by his Excellency, Ferdinand E. Marcos dated July 9, 1973 held in abeyance the rendition of a decision in this case and directed the applicant to submit a white print copy of plan (LRC) Psu-964 to the Director of lands who was directed by the Court to submit his comment and recommendation thereon.

The property in question is declared for taxation purposes under Tax Declaration No. 51842 (Exhibit G) and real estate taxes due thereon have been paid up to the year 1973 (Exhibit H).

cralawIn compliance with the Order of this Court February 11, 1974, the Director ofLands, thru Special Attorney Saturnino A. Pacubas, submitted a report to this Court dated April 25, 1974, stating among other things, that upon ocular inspection conducted by Land Inspector Adelino G. Gorospe and the subsequent joint ocular inspection conducted by Geodetic Engineer Manuel A. Cervantes and Administrative Assistant Lazaro G. Berania, it was established that the parcel of land covered by plan (LRC) Psu-964 no longer forms part of the Manila Bay but is definitely solid and dry land.

In this connection, it should be noted that Administrative Assistant Lazaro G. Berania and Geodetic Engineer Manuel A. Cervantes, in their report dated March 22, 1974 have also stated that the land applied for cannot be reached by water even in the highest tide and that the said land is occupied by squatter families who have erected makeshift shanties and a basketball court which only prove that the same is dry and solid land away from the shores of Manila Bay.

cralawFurthermore, Land Inspector Adelino G. Gorospe in his letter-report dated November 28, 1973 has also stated that there is a house of pre-war vintage owned by the applicant on the land in question which in effect corroborates the testimony of the applicant and her witness that they have lived on the land in question even

prior to the outbreak of the second world war and that the applicant has been in possession of the land in question long time ago.[43]

To counter the evidence of applicant Castro, and bolster its claim that she has no valid title, respondent Republic relies on the July 18, 1973 Office Memorandum[44] of Roman Mataverde, OIC, Surveys Division, to the OIC, Legal Division, of the Bureau of Lands, stating that when projected on cadastral maps CM 14 13N - 120 59 E., Sec. 3-D and CM 14 30N - 120 59E., Sec. 2-A of Paranaque [sic] Cadastre (Cad-299), (LRC) Psu-964 falls inside Manila Bay, outside Cad-299.[45]

The same conclusion was adopted in a November 15, 1973 letter of Narciso Villapando, Acting Regional Lands Director to the Chief, Legal Division, Bureau of Lands and in the Comment and Recommendation of Ernesto C. Mendiola, Assistant Director, also of the Bureau of Lands.

Respondent likewise cites Namria Hydrographic Map No. 4243 Revised 80-11-2 to support its position that Castros lot is a portion of ManilaBay.

The burden of proving these averments falls to the shoulders of respondent Republic.The difficulty is locating the witnesses of the government. Roman Mataverde, then OIC of the Surveys Division retired from the government service in 1982.He should by this time be in his 90s.Moreover, Asst. Regional Director Narciso Villapando and Asst. Director Ernesto C. Mendiola are no longer connected with the Bureau of Lands since 1986.

Assuming that OIC Roman Mataverde, Asst. Regional Director Narciso Villapando and Assistant Director Ernesto C. Mendiola are still available as witnesses, the projections made on the cadastral maps of the then Bureau of Lands cannot prevail over the results of the two ocular inspections by several Bureau of Lands officials that the disputed lot is definitely dry and solid land and not part of Manila Bay.Special Attorney Saturnino A. Pacubas, Land Inspector Adelino G. Gorospe, Geodetic Engineer Manuel A. Cervantes and Administrative Asst. Lazaro A. Berana, all officials of the Bureau of Lands, were positive that the disputed land is solid and dry land and no longer forms part of ManilaBay.Evidence gathered from the ocular inspection is considered direct and firsthand information entitled to great weight and credit while the Mataverde and Villapando reports are evidence weak in probative value, being merely based on theoretical projections in the cadastral map or table surveys.[46]Said projections must be confirmed by the actual inspection and verification survey by the land inspectors and geodetic engineers of the Bureau of Lands.Unfortunately for respondent Republic, the bureau land inspectors attested and affirmed that the disputed land is already dry land and not within ManilaBay.

On the other hand, the Namria Hydrographic Map No. 4243 does not reveal what portion of ManilaBay was Castros lot located in 1974.Moreover, a hydrographic map is not the best evidence to show the nature and location of the lot subject of a land registration application.It is derived from a hydrographic survey which is mainly used for navigation purposes, thus:

Surveys whose principal purpose is the determination of data relating to bodies of water.A hydrographic survey may consist of the determination of one or several of the following classes of data:depth water; configuration and nature of the bottom; directions and force of currents; heights and times of tides and water stages; and location of fixed objects for survey and navigation purposes.[47]

Juxtaposed with finding of the ocular inspection by Bureau of Lands Special Attorney Pacubas and others that Castros lot is dry land in 1974, Namria Hydrographic Map No. 4243 is therefore inferior evidence and lacking in probative force.

Moreover, the reliability and veracity of the July 18, 1973 report of Roman Mataverde based on the alleged projection on cadastral maps and the Villapando report dated November 15, 1973 are put to serious doubt in the face of the opinion dated October 13, 1997 of the Government Corporate Counsel, the lawyer of the PEA, which upheld the validity of the titles of petitioners, thus:

We maintain to agree with the findings of the court that the property of Fermina Castro was registrable land, as based on the two (2) ocular inspections conducted on March 22, 1974 by Lands Administrative Assistant Lazaro G. Berania and Lands Geodetic Engr. Manuel Cervantes, finding the same no longer forms part of Manila Bay but is definitely solid land which cannot be reached by water even in the highest of tides. This Berania-Cervantes report based on ocular inspections literally overturned the findings and recommendations of

Land Director Narciso V. Villapando dated November 15, 1973, and that of Director Ernesto C. Mendiola dated December 1, 1977, and the fact that the Villapando-Mendiola reports were merely based on projections in the cadastral map or table surveys.

x x x x

A. The Legal prognosis of the case is not promising in favor of PEA.

cralaw

4.1cralawLRC Case No. N-8239 has already become final and executory and OCT No. 10215 was already issued in favor of Fermina Castro. Any and all attempts to question its validity can only be entertained in a quo warranto proceedings (sic), assuming that there are legal grounds (not factual grounds) to support its nullification. Subjecting it to a collateral attack is not allowed under the Torrens Title System. In Calalang vs. Register of Deeds of Quezon City, 208 SCRA 215, the Supreme Court held that the present petition is not the proper remedy in challenging the validity of certificates of titles since the judicial action required is a direct and not a collateral attack (refer also to: Toyota Motor Philippine Corporation vs. CA, 216 SCRA 236).

4.2cralawOCT No. 10215 in favor of Fermina Castro was issued pursuant to a cadastral proceeding, hence is a rem proceedings which is translated as a constructive notice to the whole world, as held in Adez Realty Incorporated vs. CA, 212 SCRA 623.

4.3cralawFrom the cursory and intent reading of the decision of Judge Sison in LRC Case No. N-8239, we cannot find any iota of fraud having been committed by the court and the parties. In fact, due process was observed when the Office of the Solicitor General represented ably the Bureau of Lands. In Balangcad vs. Justices of the Court of Appeals, 206 SCRA 169, the Supreme Court held that title to registered property becomes indefeasible after one-year from date of registration except where there is actual fraud in which case it may be challenged in a direct proceeding within that period. This is also the ruling in Bishop vs. CA, 208 SCRA 636, that to sustain an action for annulment of a torrens certificate for being void ab initio, it must be shown that the registration court had not acquired jurisdiction over the case and there was actual fraud in securing the title.

4.4cralawAs to priority of torrens title, PEA has no defense, assuming that both PEA and Yujuico titles are valid, as held in Metropolitan Waterworks and Sewerage System vs. CA, 215 SCRA 783, where two (2) certificates purport to include the same land, the earlier in date prevails.

4.5cralawThe documents so far submitted by the parties to the court indicate that the mother title of the Yujuico land when registered in 1974 was not underwater. This was shown in the two (2) ocular inspections conducted by the officials of the Land Bureau.

4.6cralawThe provision of P.D. 239 that no decree of registration may be issued by the court unless upon approval and recommendation of the Bureau of Lands was substantially complied with in the Report of Lands Special Attorney Saturnino Pacubas, submitted to the court.[48]chanroblesvirtuallawlibrary

Even the counsel of respondent Republic, the OSG, arrived at the conclusion that there is no sufficient legal basis for said respondent to institute action to annul the titles of petitioners, thus:

It may be stated at the outset that a petition for annulment of certificate of title or reconveyance of land may be based on fraud which attended the issuance of the decree of registration and the corresponding certificate of title.

Based on the decision in the LRC Case No. N-8239 involving the petition for registration and confirmation of title filed by Fermina Castro, there is no showing that fraud attended the issuance of OCT No. 10215. it appears that the evidence presented by Fermina Castro was sufficient for the trial court to grant her petition.

The testimony of Fermina Castro, which was corroborated by Emiliano de Leon, that she and her predecessors-in-interest had been in possession of the land for more than thirty (30) years sufficiently established her vested right over the property initially covered by OCT No. 10215. The report dated April 25, 1974 which was submitted to the trial court by the Director of Lands through Special Attorney Saturnino Pacubas showed that the parcel of land was solid and dry land when Fermina Castros application for registration of title was filed. It was based on the ocular inspection conducted by Land Inspector Adelino Gorospe and the joint circular inspection conducted by Geodetic Engineer Manuel A. Cervantes and Administrative Assistant Lazaro Berania on November 28, 1973 and March 22, 1974 respectively.

The aforesaid report must be requested unless there is a concrete proof that there was an irregularity in the issuance thereof. In the absence of evidence to the contrary, the ocular inspection of the parcel of land, which was made the basis of said report, is presumed to be in order.

Based on the available records, there appears to be no sufficient basis for the Government to institute an action for the annulment of OCT No. 10215 and its derivative titles. It is opined that a petition for cancellation/annulment of Decree No. N-150912 and OCT No. 10215 and all its derivative titles will not prosper unless there is convincing evidence to negate the report of the then Land Management Bureau through Special Attorney Pacubas. Should the Government pursue the filing of such an action, the possibility of winning the case is remote.[49]chanroblesvirtuallawlibrary

More so, respondent Government, through its counsel, admits that the land applied by Fermina Castro in 1973 was solid and dry land, negating the nebulous allegation that said land is underwater.The only conclusion that can be derived from the admissions of the Solicitor General and Government Corporate Counsel is that the land subject of the titles of petitioners is alienable land beyond the reach of the reversion suit of the state.

Notably, the land in question has been the subject of a compromise agreement upheld by this Court in Public Estates Authority.[50]In that compromise agreement, among other provisions, it was held that the property covered by TCT Nos. 446386 and S-29361, the land subject of the instant case, would be exchanged for PEA property. The fact that PEA signed the May 15, 1998 Compromise Agreement is already a clear admission that it recognized petitioners as true and legal owners of the land subject of this controversy.

Moreover, PEA has waived its right to contest the legality and validity of Castros title.Such waiver is clearly within the powers of PEA since it was created by PD 1084 as a body corporate which shall have the attribute of perpetual succession and possessed of the powers of the corporations, to be exercised in conformity with the provisions of this Charter [PD 1084].[51]It has the power to enter into, make, perform and carry out contracts of every class and description, including loan agreements, mortgages and other types of security arrangements, necessary or incidental to the realization of its purposes with any person, firm or corporation, private or public, and with any foreign government or entity.[52]It also has the power to sue and be sued in its corporate name.[53]Thus, the Compromise Agreement and the Deed of Exchange of Real Property signed by PEA with the petitioners are legal, valid and binding on PEA.In the Compromise Agreement, it is provided that it settles in full all the claims/counterclaims of the parties against each other.[54]The waiver by PEA of its right to question petitioners title is fortified by the manifestation by PEA in the Joint Motion for Judgment based on Compromise Agreement that

4.cralawThe parties herein hereto waive and abandon any and all other claims and counterclaims which they may have against each other arising from this case or related thereto.[55]

Thus, there was a valid waiver of the right of respondent Republic through PEA to challenge petitioners titles.

The recognition of petitioners legal ownership of the land is further bolstered by the categorical and unequivocal acknowledgment made by PEA in its September 30, 2003 letter where it stated that: Your ownership thereof was acknowledged by PEA when it did not object to your membership in the CBP-IA Association, in which an owner of a piece of land in CBP-IA automatically becomes a member thereof.[56]Section 26, Rule 130 provides that the act, declaration or omission of a party as to a relevant fact may be given in evidence against him.The admissions of PEA which is the real party-in-interest in this case on the nature of the land of Fermina Castro are valid and binding on respondent Republic.Respondents claim that the disputed land is underwater falls flat in the face of the admissions of PEA against its interests.Hence, res judicata now effectively precludes the relitigation of the issue of registrability of petitioners lot.

In sum, the Court finds that the reversion case should be dismissed for lack of jurisdiction on the part of the Paraaque RTC.Even if we treat said case as a petition for annulment of judgment under Rule 47 of the 1997 Rules of Civil Procedure, the dismissal of the case nevertheless has to be upheld because it is already barred by laches.Even if laches is disregarded, still the suit is already precluded by res judicata in view of the peculiar facts and circumstances obtaining therein.

WHEREFORE, premises considered, the petition is GRANTED.The Decision of the Court of Appeals in CA-G.R. CV No. 76212 is REVERSED and SET ASIDE, and the August 7, 2002 Order of the Paraaque City RTC, Branch 257 in Civil Case No. 01-0222 entitled Republic of the Philippines v. Fermina Castro, et al. dismissing the complaint is AFFIRMED.

No costs.

SO ORDERED.

cralawPRESBITERO J. VELASCO, JR.

Associate Justice

WE CONCUR:


Associate Justice

Chairperson

CONCHITA CARPIO MORALES DANTE O. TINGA


ANTONIO EDUARDO B. NACHURA

Associate Justice




Associate Justice

Chairperson



REYNATO S. PUNO

Chief Justice

Endnotes:

cralaw[1] Rollo, pp. 390-396, 396.

cralaw[2] Id. at 398-399.


cralaw[4] Id. at 403-404



cralaw[7] Id. at 17.

[8] G.R. No. 140486, February 6, 2001, 351 SCRA 280.

cralaw[9] Rollo, p. 11.






[15] Id. at 35.The Decision was penned by Associate Justice Martin S. Villarama, Jr. and concurred in by Associate Justices Regalado E. Maambong and Lucenito N. Tagle.


[17] O.D. Agcaoili, Property Registration Decree and Related Laws (Land Titles and Deeds) 352 (2006).

cralaw[18] G.R. No. 107764, October 4, 2002, 390 SCRA 343, 351.

cralaw[19] G.R. No. 126316, June 25, 2004, 432 SCRA 593, 597.

[20] Manila Lodge No. 761 v. Court of Appeals, No. L-41001, September 30, 1976, 73 SCRA 166.

[21] 31 CJS 675-676; cited in Republic v. CA, G.R. No. 116111, January 21, 1999, 301 SCRA 366, 377.

cralaw[22] G.R. No. 116111, January 21, 1999, 301 SCRA 366, 379.

cralaw[23] Id. at 379-380.


[25] G.R. No. 80687, April 10, 1989, 171 SCRA 647, 653.

[26] PD 1529, Sec. 44.

[27] Blanco v. Esquierdo, 110 Phil. 494 (1960); cited in O.D. Agcaoili, supra note 17.

cralaw[28] Felizardo v. Fernandez, G.R. No. 137509, August 15, 2001, 363 SCRA 182, 191.

cralaw[29] Supra note 8, at 292.


[31] G.R. No. 127022, September 2, 1999, 313 SCRA 522.

cralaw[32] J.M. Tuazon and Co., Inc. v. Mariano, No. L-33140, October 23, 1978, 85 SCRA 644.

cralaw[33] G.R. No. 147570, February 27, 2004, 424 SCRA 108, 123.

cralaw[34] Supra note 31, at 540.

cralaw[35] San Pedro v. Binalay, G.R. No. 126207, August 25, 2005, 468 SCRA 47, 57.

cralaw[36] No. L-65334, December 26, 1984, 133 SCRA 820.

cralaw[37] No. L-69002, June 30, 1988, 163 SCRA 286.

[38] Supra note 35, at 825-826.

cralaw[39] I Regalado, Remedial Law Compendium 8 (6th rev. ed.).

[40] Amending and Codifying the Laws Relative to Registration of Property and for Other Purposes (1978).

[41] Ganadin v. Ramos, No. L-23547, September 11, 1980, 99 SCRA 613; Time, Inc. v. Reyes, No. L-28882, May 31, 1971, 39 SCRA 303.

[42] I Regalado, supra note 39, at 7; citations omitted.

cralaw[43] Supra note 1, at 395-396.

cralaw[44] Records, p. 217.

cralaw[45] Id.


[47] Sec. 01. Surveying, National Mapping and Resource Information Authority (NAMRIA), <http://www.namria.gov.ph/serv.asp> (visited October 16, 2007).

[48] Rollo, pp. 93-95.

[49] Id. at 95-96.

cralaw[50] Supra note 8.

cralaw[51] PD 1084, Sec. 1.

cralaw[52] PD 1084, Sec. 5, letter m.

cralaw[53] PD 1084, Sec. 5, letter b.



[56] Id. at 105.


THIRD DIVISION

G.R. No. L-44264 September 19, 1988

HEDY GAN y YU, Petitioner, vs. THE HONORABLE COURT OF APPEALS and the PEOPLE OF THE PHILIPPINES, Respondents.

FERNAN, C.J.:

Petitioner Hedy Gan was convicted of the crime of Homicide thru Reckless Imprudence in Criminal Case No. 10201 of the then Court of First Instance of Manila, Branch XXII presided by Judge Federico C. Alikpala. She was sentenced to an indeterminate penalty of four (4) months and one (1) day of arresto mayor as minimum and two (2) years, four (4) months and one (1) day of prision correccional as maximum and was made to indemnify the heirs of the victim the sum of P12,000.00 without any subsidiary imprisonment in case of insolvency and to pay the costs. On appeal, the trial court's decision was modified and petitioner was convicted only of Homicide thru Simple Imprudence. Still unsatisfied with the decision of the Court of Appeals, 1 petitioner has come to this Court for a complete reversal of the judgment below.chanroblesvirtualawlibrary chanrobles virtual law library

The facts of the case as found by the appellate court are as follows:

In the morning of July 4, 1972 at about 8:00 o'clock, the accused Hedy Gan was driving a Toyota car along North Bay Boulevard, Tondo, Manila. While in front of house no. 694 of North Bay Boulevard, there were two vehicles, a truck and a jeepney parked on one side of the road, one following the other about two to three meters from each other. As the car driven by the accused approached the place where the two vehicles were parked, there was a vehicle coming from the opposite direction, followed by another which tried to overtake and bypass the one in front of it and thereby encroached the lane of the car driven by the accused. To avoid a head-on collision with the oncoming vehicle, the defendant swerved to the right and as a consequence, the front bumper of the Toyota Crown Sedan hit an old man who was about to cross the boulevard from south to north, pinning him against the rear of the parked jeepney. The force of the impact caused the parked jeepney to move forward hitting the rear of the parts truck ahead of it. The pedestrian was injured, the Toyota Sedan was damaged on its front, the jeep suffered damages on its rear and front paints, and the truck sustained scratches at the wooden portion of its rear. The body of the old man who was later Identified as Isidoro Casino was immediately brought to the Jose Reyes Memorial Hospital but was (pronounced) dead on arrival. 2 chanrobles virtual law library

An information for Homicide thru Reckless Imprudence was filed against petitioner in view of the above incident. She entered a plea of not guilty upon arraignment and the case was set for trial.chanroblesvirtualawlibrary chanrobles virtual law library

Meanwhile, petitioner sought and was granted a re-investigation by the City Fiscal, as a result of which the trial fiscal moved for the dismissal of the case against petitioner during the resumption of hearing on September 7, 1972. The grounds cited therefor were lack of interest on the part of the complaining witness to prosecute the case as evidenced by an affidavit of desistance submitted to the trial court and lack of eyewitness to sustain the charge.chanroblesvirtualawlibrary chanrobles virtual law library

The motion to dismiss filed by the fiscal was never resolved. The Court instead ordered the prosecution to present its evidence. After the prosecution rested its case, the petitioner filed a motion to dismiss the case on the ground of insufficiency of evidence.chanroblesvirtualawlibrary chanrobles virtual law library

On December 22, 1972, the trial court rendered judgment finding petitioner guilty beyond reasonable doubt of the of- offense charged.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner appealed to the Court of Appeals in CA-G.R. No. 14472-CR. On May 3, 1976, the Court of Appeals rendered a decision, the dispositive portion of which reads as follows:

Wherefore, as modified, the accused Hedy Gan is guilty beyond reasonable doubt of the crime of homicide thru simple imprudence and, pursuant to paragraph 2, Article 365 of the Revised Penal Code, she is hereby sentenced to the indeterminate penalty of three (3) months and eleven (11) days of arresto mayor and to indemnify the heirs of Isidoro Casino in the sum of Twelve Thousand Pesos (Pl2,000.00) without, however, any subsidiary imprisonment in case of insolvency, and to pay the costs. 3 chanrobles virtual law library

Petitioner now appeals to this Court on the following assignments of errors:

I chanrobles virtual law library

The Court of Appeals erred in holding that when the petitioner saw a car travelling directly towards her, she should have stepped on the brakes immediately or in swerving her vehicle to the right should have also stepped on the brakes or lessened her speed, to avoid the death of a pedestrian.chanroblesvirtualawlibrary chanrobles virtual law library

II chanrobles virtual law library

The Court of Appeals erred in convicting the petitioner of the crime of Homicide thru Simple Imprudence.chanroblesvirtualawlibrary chanrobles virtual law library

III chanrobles virtual law library

The Court of Appeals erred in adjudging the petitioner liable to indemnify the deceased in the sum of P12,000.00. 4 chanrobles virtual law library

We reverse.chanroblesvirtualawlibrary chanrobles virtual law library

The test for determining whether or not a person is negligent in doing an act whereby injury or damage results to the person or property of another is this: Would a prudent man in the position of the person to whom

negligence is attributed foresee harm to the person injured as a reasonable consequence of the course about to be pursued? If so, the law imposes the duty oil the doer to take precaution against its mischievous results and the failure to do so constitutes negligence. 5 chanrobles virtual law library

A corollary rule is what is known in the law as the emergency rule. "Under that rule, one who suddenly finds himself in a place of danger, and is required to act without time to consider the best means that may be adopted to avoid the impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon reflection may appear to have been a better method, unless the emergency in which he finds himself is brought about by his own negligence." 6 chanrobles virtual law library

Applying the above test to the case at bar, we find the petitioner not guilty of the crime of Simple Imprudence resulting in Homicide.chanroblesvirtualawlibrary chanrobles virtual law library

The appellate court in finding the petitioner guilty said:

The accused should have stepped on the brakes when she saw the car going in the opposite direction followed by another which overtook the first by passing towards its left. She should not only have swerved the car she was driving to the right but should have also tried to stop or lessen her speed so that she would not bump into the pedestrian who was crossing at the time but also the jeepney which was then parked along the street. 7 chanrobles virtual law library

The course of action suggested by the appellate court would seem reasonable were it not for the fact that such suggestion did not take into account the amount of time afforded petitioner to react to the situation she was in. For it is undeniable that the suggested course of action presupposes sufficient time for appellant to analyze the situation confronting her and to ponder on which of the different courses of action would result in the least possible harm to herself and to others.chanroblesvirtualawlibrary chanrobles virtual law library

Due to the lack of eyewitnesses, no evidence was presented by the prosecution with respect to the relative distances of petitioner to the parked jeepney and the oncoming overtaking vehicle that would tend to prove that petitioner did have sufficient time to reflect on the consequences of her instant decision to swerve her car to the light without stepping on her brakes. In fact, the evidence presented by the prosecution on this point is the petitioner's statement to the police 8 stating::

And masasabi ko lang ho umiwas ho ako sa isang sasakyan na biglang nagovertake sa sasakyan na aking kasalubong kung kaya ay aking kinabig sa kanan ang akin kotse subalit siya naman biglang pagtawid ng tao o victim at hindi ko na ho naiwasan at ako ay wala ng magawa . Iyan ho ang buong pangyayari nang nasabing aksidente. 9 (Emphasis supplied)

The prosecution having presented this exhibit as its own evidence, we cannot but deem its veracity to have been admitted by it. Thus, under the circumstances narrated by petitioner, we find that the appellate court is asking too much from a mere mortal like the petitioner who in the blink of an eye had to exercise her best judgment to extricate herself from a difficult and dangerous situation caused by the driver of the overtaking vehicle. Petitioner certainly could not be expected to act with all the coolness of a person under normal conditions. 10 The danger confronting petitioner was real and imminent, threatening her very existence. She had no opportunity for rational thinking but only enough time to heed the very powerfull instinct of self-preservation.chanroblesvirtualawlibrary chanrobles virtual law library

Also, the respondent court itself pronounced that the petitioner was driving her car within the legal limits. We therefore rule that the "emergency rule" enunciated above applies with full force to the case at bar and

consequently absolve petitioner from any criminal negligence in connection with the incident under consideration.chanroblesvirtualawlibrary chanrobles virtual law library

We further set aside the award of damages to the heirs of the victim, who by executing a release of the claim due them, had effectively and clearly waived their right thereto.chanroblesvirtualawlibrary chanrobles virtual law library

WHEREFORE, judgment is hereby rendered acquitting petitioner HEDY GAN y YU of the crime of Homicide thru Simple Imprudence. She is no longer liable for the P12,000.00 civil indemnity awarded by the appellate court to the heirs of the victim.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

Feliciano, Bidin and Cortes, JJ., concur.chanroblesvirtualawlibrary chanrobles virtual law library

Gutierrez, Jr., J., is on leave.

Endnotes:

1 Penned by then CA Justice Lorenzo Relova, concurred in by Justices Ramon G. Gaviola, Jr., and Mariano Serrano.chanrobles virtual law library

2 pp. 33-34, Rollo.chanrobles virtual law library

3 pp. 42-43, Rollo.chanrobles virtual law library

4 p. 15, Rollo.chanrobles virtual law library

5 Picart vs. Smith, 35 Phil. 809.chanrobles virtual law library

6 Siegl vs. Watson, 195 NW 867; Hickman vs. Southern Pacific Transport Co., 262 So. 2d., 385, 262 La. 102; Robert vs. Travelers Indemnity Co., 196 So. 2d. 657.chanrobles virtual law library


8 Exhibit E.chanrobles virtual law library


10 Smith vs.Tate, 289 So. 2d 189.


THIRD DIVISION

SPRINGFIELD DEVELOPMENTcralawcralawG.R. NO. 142628

CORPORATION, INC. and

HEIRS OF PETRA CAPISTRANO

PIIT,

Petitioners,

cralawPresent:

YNARES-SANTIAGO, J.,

cralawChairperson,

cralaw- versus -AUSTRIA-MARTINEZ,

CALLEJO, SR., and

CHICO-NAZARIO, JJ.

HONORABLE PRESIDING

JUDGE OF REGIONAL TRIAL

COURT OF MISAMIS ORIENTAL,

BRANCH 40, CAGAYAN DE ORO

CITY, DEPARTMENT OF AGRARIAN

REFORM ADJUDICATION BOARD

(DARAB), DAR REGION X DIRECTOR,

ROSALIO GAMULO, FORTUNATO

TELEN, EMERITA OLANGO, THERESA

MONTUERTO, DOMINGO H. CLAPERO,

JOEL U. LIM, JENEMAIR U. POLLEY,

FIDELA U. POLLEY, JESUS BATUTAY,

NICANOR UCAB, EMERIA U. LIM,

EMILITO CLAPERO, ANTONINA RIAS,

AURILLIO ROMULO, ERWIN P.

CLAPERO, EVELITO CULANGO,

VILMA/CRUISINE ALONG, EFREN

EMATA, GREGORIO CABARIBAN,

and SABINA CANTORANA,cralawcralawcralawPromulgated:

Respondents.February 6, 2007

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

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court.The principal issue presented for resolution is whether the Regional Trial Court (RTC) has jurisdiction to annul final judgment of the Department of Agrarian Reform Adjudication Board (DARAB).

The antecedent facts:

Petra Capistrano Piit previously owned Lot No. 2291 located in Cagayan de Oro City which measured 123,408 square meters under Transfer Certificate of Title No. T-62623.Springfield Development Corporation, Inc. (Springfield) bought Lot No. 2291-C with an area of 68,732 square meters, and Lot No. 2291-D with an area of 49,778 square meters.[1]Springfield developed these properties into a subdivision project called Mega Heights Subdivision.[2]

cralawOn May 4, 1990, the Department of Agrarian Reform (DAR), through its Municipal Agrarian Reform Officer, issued a Notice of Coverage,[3] placing the property under the coverage of Republic Act (R.A.) No. 6657 or the Comprehensive Agrarian Reform Law of 1988.There being an opposition from the heirs of Petra Piit, the case was docketed as DARAB Case No. X-305.On August 27, 1991, DARAB Provincial Adjudicator Abeto A. Salcedo, Jr. rendered a decision declaring the nature of the property as residential and not suitable for agriculture.[4]The Regional Director filed a notice of appeal, which the Provincial Adjudicator disallowed for being pro forma and frivolous.[5]The decision became final and executory[6] and Springfield proceeded to develop the property.[7]

cralawThe DAR Regional Director then filed a petition for relief from judgment of the DARAB Decision, docketed as DARAB Case No. 0555.In its Decision dated October 5, 1995, the DARAB granted the petition and gave due course to the Notice of Coverage.It also directed the Municipal Agrarian Reform Office to proceed with the documentation, acquisition, and distribution of the property to the true and lawful beneficiaries.[8]

cralawThe DARAB also issued an Order dated May 22, 1997, ordering the heirs of Piit and Springfield to pay the farmer-beneficiaries the amount of Twelve Million, Three Hundred Forty Thousand, Eight Hundred Pesos (P12,340,800.00), corresponding to the value of the property since the property has already been developed into a subdivision.

cralaw

cralawOn June 13, 1997, Springfield and the heirs of Piit (petitioners) filed with the RTC of Cagayan de Oro City, Branch 40, a petition for annulment of the DARAB Decision dated October 5, 1995 and all its subsequent proceedings. Petitioners contend that the DARAB decision was rendered without affording petitioners any notice and hearing.[9]

cralawOn motion filed by the farmer-beneficiaries, the RTC issued an Order dated June 25, 1997, dismissing the case for lack of jurisdiction.[10]

cralawOn July 2, 1997, petitioners filed with the Court of Appeals (CA) a special civil action for certiorari, mandamus, and prohibition with prayer for the issuance of writ of preliminary injunction and/or temporary restraining order, docketed as CA-G.R. SP No. 44563.[11]Petitioners alleged that the RTC committed grave

abuse of discretion when it ruled that the annulment of judgment filed before it is actually an action for certiorari in a different color. According to petitioners, what it sought before the RTC is an annulment of the DARAB Decision and not certiorari, as the DARAB Decision is void ab initio for having been rendered without due process of law.[12]

cralawIn the assailed Decision[13] dated July 16, 1998, the CA dismissed the petition for lack of merit, ruling that the RTC does not have jurisdiction to annul the DARAB Decision because it is a co-equal body.[14]

However, on January 12, 1999, the CA ordered the elevation of the DARAB records before it, declaring that it overlooked the fact that petitioners likewise applied for a writ of prohibition against the enforcement of the DARAB decision which they claim to be patently void.[15]Forwarded to the CA were the records of the original case filed with the DARAB-Region X, and it appearing that the petition for relief from judgment and its pertinent records were forwarded to the DARAB Central Office, the CA issued another Resolution on December 20, 1999,[16] requiring the DARAB Central Office to forward the records of the case.But after receipt of the records, the CA simply denied petitioners motion for reconsideration per Resolution[17] dated February 23, 2000 without specifically resolving the issues raised concerning the prayer for a writ of prohibition.

cralawHence, the present petition on the following grounds:

I

THE COURT OF APPEALS COMMITTED A CLEAR ERROR OF LAW IN APPLYING THE PRINCIPLE OF JUDICIAL STABILITY TO JUSTIFY ITS CONCLUSION DIVESTING THE REGIONAL TRIAL COURT OF ITS JURISDICTION VESTED BY LAW OVER CASES WHERE THE EXCLUSIVE JURISDICTION WAS NOT EXPRESSLY GRANTED TO ANY OTHER COURTS [SIC] OR TRIBUNAL, IN EFFECT, MODIFYING THE APPLICABLE LAW ON THE MATTER.

II

THE COURT OF APPEALS IRREGULARLY DISMISSED PETITIONERS MOTION FOR RECONSIDERATION AFTER IT HAD RESOLVED TO ENTERTAIN PETITIONERS PETITION FOR PROHIBITION AND TO REVIEW THE DARAB PROCEEDINGS, THEREBY DEPARTING FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS.

III

THE HONORABLE SUPREME COURT, BEING THE HIGHEST TEMPLE OF RIGHTS, AND TO AVOID SERIOUS MISCARRIAGE OF JUSTICE AND NEEDLESS DELAYS, IS MOST RESPECTFULLY URGED TO TAKE COGNIZANCE OF THE PETITION FILED IN CA-G.R. SP No. 44563 IN THE EXERCISE OF ITS CONCURRENT JURISDICTION, AS IF THE PETITION WAS ORIGINALLY LODGED BEFORE IT.[18]

cralaw

cralawPetitioners argue that under Batas Pambansa (B.P.) Blg. 129, there is no provision that vests with the CA jurisdiction over actions for annulment of DARAB judgments.Petitioners, however, contend that the RTC may take cognizance of the annulment case since Section 19 of B.P. Blg. 129 vests the RTC with general jurisdiction and an action for annulment is covered under such general jurisdiction.According to petitioners, this is but a logical consequence of the fact that no other courts were expressly given the jurisdiction over such actions.[19]Petitioners further argue that the CA was in error when it summarily ignored their application for a writ of prohibition, as it was necessary to restrain the DARAB from enforcing its void decision; and even if the DARAB decision was valid, the writ of prohibition could have enjoined the execution of the DARAB decision since there have been changes which will make the execution unjust and inequitable.

cralawIn their Joint-Comments, the farmer-beneficiaries and the DARAB (respondents) refute petitioners allegation that they were not afforded due process in the DARAB proceedings, stating that petitioners were impleaded as a party thereto, and in fact, they attended some of the hearings although their counsel was absent.Respondents also adopt the CAs ruling that the RTC is not vested with any jurisdiction to annul the DARAB decision.

cralawAs stated at the outset, the main issue in this case is whether the RTC has jurisdiction to annul a final judgment of the DARAB.

cralawNote must be made that the petition for annulment of the DARAB decision was filed with the RTC on June 13, 1997, before the advent of the 1997 Rules of Civil Procedure, which took effect on July 1, 1997.Thus, the applicable law is B.P. Blg. 129 or the Judiciary Reorganization Act of 1980, enacted on August 10, 1981.

It is also worthy of note that before the effectivity of B.P. Blg. 129, a court of first instance has the authority to annul a final and executory judgment rendered by another court of first instance or by another branch of the same court.This was the Courts ruling in Dulap v. Court of Appeals.[20]Yet, in subsequent cases,[21] the Court

held that the better policy, as a matter of comity or courteous interaction between courts of first instance and the branches thereof, is for the annulment cases to be tried by the same court or branch which heard the main action.

The foregoing doctrines were modified in Ngo Bun Tiong v. Sayo,[22] where the Court expressed that pursuant to the policy of judicial stability, the doctrine of non-interference between concurrent and coordinate courts should be regarded as highly important in the administration of justice whereby the judgment of a court of competent jurisdiction may not be opened, modified or vacated by any court of concurrent jurisdiction.

With the introduction of B.P. Blg. 129,[23] the rule on annulment of judgments was specifically provided in Section 9(2), which vested in the then Intermediate Appellate Court (now the CA) the exclusive original jurisdiction over actions for annulment of judgments of RTCs.Sec. 9(3) of B.P. Blg. 129 also vested the CA with exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, except those falling within the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the provisions of this Act, and of sub-paragraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.As provided in paragraph 16 of the Interim Rules and Guidelines implementing B.P. Blg. 129, the quasi-judicial bodies whose decisions are exclusively appealable to the CA are those, which under the law, R.A. No. 5434,[24] or its enabling acts, are specifically appealable to the CA.

Significantly, B.P. Blg. 129 does not specifically provide for any power of the RTC to annul judgments of quasi-judicial bodies.However, in BF Northwest Homeowners Association, Inc. v. Intermediate Appellate Court,[25] the Court ruled that the RTCs have jurisdiction over actions for annulment of the decisions of the National Water Resources Council, which is a quasi-judicial body ranked with inferior courts, pursuant to its original jurisdiction to issue writs of certiorari, prohibition, and mandamus, under Sec. 21(1) of B.P. Blg. 129, in relation to acts or omissions of an inferior court.This led to the conclusion that despite the absence of any provision in B.P. Blg. 129, the RTC had the power to entertain petitions for annulment of judgments of inferior courts and administrative or quasi-judicial bodies of equal ranking.This is also in harmony with the pre-B.P. Blg. 129 rulings of the Court recognizing the power of a trial court (court of first instance) to annul final judgments.[26]Hence, while it is true, as petitioners contend, that the RTC had the authority to annul final judgments, such authority pertained only to final judgments rendered by inferior courts and quasi-judicial bodies of equal ranking with such inferior courts.

The foregoing statements beg the next question, i.e., whether the DARAB is a quasi-judicial body with the rank of an inferior court such that the RTC may take cognizance of an action for the annulments of its judgments.The answer is no.

The DARAB is a quasi-judicial body created by Executive Order Nos. 229 and 129-A.R.A. No. 6657 delineated its adjudicatory powers and functions.The DARAB Revised Rules of Procedure adopted on December 26,

1988[27] specifically provides for the manner of judicial review of its decisions, orders, rulings, or awards.Rule XIV, Section 1 states:

SECTION 1. Certiorari to the Court of Appeals.Any decision, order, award or ruling by the Board or its Adjudicators on any agrarian dispute or on any matter pertaining to the application, implementation, enforcement or interpretation of agrarian reform laws or rules and regulations promulgated thereunder, may be brought within fifteen (15) days from receipt of a copy thereof, to the Court of Appeals by certiorari, except as provided in the next succeeding section.Notwithstanding an appeal to the Court of Appeals the decision of the Board or Adjudicator appealed from, shall be immediately executory.

cralaw

Further, the prevailing 1997 Rules of Civil Procedure, as amended, expressly provides for an appeal from the DARAB decisions to the CA.[28]

The rule is that where legislation provides for an appeal from decisions of certain administrative bodies to the CA, it means that such bodies are co-equal with the RTC, in terms of rank and stature, and logically, beyond the control of the latter.[29]

Given that DARAB decisions are appealable to the CA, the inevitable conclusion is that the DARAB is a co-equal body with the RTC and its decisions are beyond the RTCs control.The CA was therefore correct in sustaining the RTCs dismissal of the petition for annulment of the DARAB Decision dated October 5, 1995, as the RTC does not have any jurisdiction to entertain the same.

This brings to fore the issue of whether the petition for annulment of the DARAB judgment could be brought to the CA.As previously noted, Section 9(2) of B.P. Blg. 129 vested in the CA the exclusive original jurisdiction over actions for annulment of judgments, but only those rendered by the RTCs.It does not expressly give the CA the power to annul judgments of quasi-judicial bodies.Thus, in Elcee Farms, Inc. v. Semillano,[30] the Court affirmed the ruling of the CA that it has no jurisdiction to entertain a petition for annulment of a final and executory judgment of the NLRC, citing Section 9 of B.P. Blg. 129, as amended, which only vests in the CA exclusive jurisdiction over actions for annulment of judgments of Regional Trial Courts.This was reiterated in Galang v. Court of Appeals,[31]where the Court ruled that that the CA is without jurisdiction to entertain a petition for annulment of judgment of a final decision of the Securities and Exchange Commission.

Recent rulings on similar cases involving annulments of judgments of quasi-judicial bodies are also quite instructive on this matter.

In Cole v. Court of Appeals,[32] involving an annulment of the judgment of the HLURB Arbiter and the Office of the President (OP), filed with the CA, the Court stated that, (U)nder Rule 47 of the Rules of Court, the remedy of annulment of judgment is confined to decisions of the Regional Trial Court on the ground of extrinsic fraud and lack of jurisdiction xxx.The Court further ruled, viz.:

Although the grounds set forth in the petition for annulment of judgment are fraud and lack of jurisdiction, said petition cannot prosper for the simple reason that the decision sought to be annulled was not rendered by the Regional Trial Court but by an administrative agency (HLU Arbiter and Office of the President), hence, not within the jurisdiction of the Court of Appeals.There is no such remedy as annulment of judgment of the HLURB or the Office of the President.Assuming arguendo that the annulment petition can be treated as a petition for review under Rule 43 of the 1997 Rules of Civil Procedure, the same should have been dismissed by the Court of Appeals, because no error of judgment was imputed to the HLURB and the Office of the President.Fraud and lack of jurisdiction are beyond the province of petitions under Rule 43 of the Rules of Court, as it covers only errors of judgment.A petition for annulment of judgment is an initiatory remedy, hence no error of judgment can be the subject thereof.Besides, the Arbiter and the Office of the President indisputably have jurisdiction over the cases brought before them in line with our ruling in Francisco Sycip, Jr. vs. Court of Appeals, promulgated on March 17, 2000, where the aggrieved townhouse buyers may seek protection from the HLURB under Presidential Decree No. 957, otherwise known as Subdivision and Condominium Buyers Protective Decree.[33](Emphasis supplied)

In Macalalag v. Ombudsman,[34] the Court ruled that Rule 47 of the 1997 Rules of Civil Procedure on annulment of judgments or final orders and resolutions covers annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies could no longer be availed of through no fault of the petitioner. Thus, the Court concluded that judgments or final orders and resolutions of the Ombudsman in administrative cases cannot be annulled by the CA, more so, since The Ombudsman Act specifically deals with the remedy of an aggrieved party from orders, directives and decisions of the Ombudsman in administrative disciplinary cases only, and the right to appeal is not to be considered granted to parties aggrieved by orders and decisions of the Ombudsman in criminal or non-administrative cases.

While these cases involve annulments of judgments under the 1997 Rules of Civil Procedure, as amended, still, they still find application in the present case, as the provisions of B.P. Blg. 129 and the 1997 Rules of Civil Procedure, as amended, on annulment of judgments are identical.

Consequently, the silence of B.P. Blg. 129 on the jurisdiction of the CA to annul judgments or final orders and resolutions of quasi-judicial bodies like the DARAB indicates its lack of such authority.

Further, petitioners are also asking the Court to take cognizance of their prayer for the issuance of a writ of prohibition, which they claim was not acted upon by the CA, citing the Courts action in Fortich v. Corona[35]

where the Court took cognizance of the petition previously filed with the CA due to compelling reasons.The Court is not persuaded to do so.

Fortichinvolved a 144-hectare land located at San Vicente, Sumilao, Bukidnon, owned by the Norberto Quisumbing, Sr. Management and Development Corporation (NQSRMDC), which was leased as a pineapple plantation to Del Monte Philippines, Inc. for a period of 10 years.During the existence of the lease, the DAR placed the entire 144-hectare property under compulsory acquisition and assessed the land value at P2.38 million.When the NQSRMDC/BAIDA (Bukidnon Agro-Industrial Development Association) filed an application for conversion due to the passage of Resolution No. 6 by the Provincial Development Council of Bukidnon and Ordinance No. 24 by the Sangguniang Bayan of Sumilao, Bukidnon, reclassifying the area from agricultural to industrial/institutional, the same was disapproved by the DAR Secretary and instead, the property was placed under the compulsory coverage of Comprehensive Agrarian Reform Program for distribution to all qualified beneficiaries.This prompted Governor Carlos O. Fortich of Bukidnon to file an appeal with the OP, while NQSRMDC filed with the CA a petition for certiorari, and prohibition with preliminary injunction.

The OP then issued a Decision dated March 29, 1996 reversing the DAR Secretarys decision and approving the application for conversion.Executive Secretary Ruben D. Torres denied the DARs motion for reconsideration for having been filed beyond the reglementary period of 15 days, and it was also declared that the OP Decision dated March 29, 1996 had already become final and executory.

Because of this, the farmer-beneficiaries staged a hunger strike on October 9, 1997, protesting the OPs decision.In order to resolve the strike, the OP issued a so-called Win/Win resolution on November 7, 1997, modifying the decision in that NQSRMDCs application for conversion is approved only with respect to the approximately 44-hectare portion of the land adjacent to the highway, as recommended by the Department of Agriculture, while the remaining approximately 100 hectares traversed by an irrigation canal and found to be suitable for agriculture shall be distributed to qualified farmer-beneficiaries.

A petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court[36] was then filed with the Court, which was contested by the Office of the Solicitor General on the ground that the proper remedy should have been to file a petition for review directly with the CA in accordance with Rule 43 of the Revised Rules of Court.

In resolving the issue, the Court recognized the rule that the Supreme Court, CA and RTC have original concurrent jurisdiction to issue a writ of certiorari, prohibition, and mandamus.However, due to compelling reasons and in the interest of speedy justice, the Court resolved to take primary jurisdiction over the petition in the interest of speedy justice, after which the Court nullified the act of the OP in re-opening the case and substantially modifying its March 29, 1996 Decision which had already become final and executory, as it was in gross disregard of the rules and basic legal precept that accord finality to administrative determinations.

It must be stressed at this point that the Court, as a rule, will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts, and exceptional and compelling circumstances, such as cases of national interest and of serious implications, justify the availment of the extraordinary remedy of writ of certiorari, prohibition, or mandamus calling for the exercise of its primary jurisdiction.[37] The Court finds no compelling circumstances in this case to warrant a relaxation of the foregoing rule.The Fortich case is not analogous with the present case such that the Court is not bound to abandon all rules, take primary jurisdiction, and resolve the merits of petitioners' application for a writ of prohibition.

In the present case, the assailed DARAB Decision dated October 5, 1995 granting the petition for relief from judgment and giving due course to the Notice of Coverage was made pursuant to a petition for relief from judgment filed by the DAR, albeit petitioners are contesting the validity of the proceedings held thereon.On the other hand, in Fortich,the OPs Win/Win resolution dated November 7, 1997 was made motu proprio, as a result of the hunger strike staged by the farmer-beneficiaries.

Further, the OPs Win/Win Resolution dated November 7, 1997 in the Fortich case is a patently void judgment since it was evident that there was already an existing final and executory OP Decision dated March 29, 1996.In this case, the assailed DARAB Decision dated October 5, 1995 appears to be regular on its face, and for its alleged nullity to be resolved, the Court must delve into the records of the case in order to determine the validity of petitioners argument of lack of due process, absent notice and hearing.

Moreover, the principle of hierarchy of courts applies generally to cases involving factual questions.As it is not a trier of facts, the Court cannot entertain cases involving factual issues.[38]The question of whether the DARAB Decision dated October 5, 1995 is null and void and enforceable against petitioners for having been rendered without affording petitioners due process is a factual question which requires a review of the records of this case for it to be judiciously resolved.

The Court notes that the CA, indeed, failed to resolve petitioners prayer for the issuance of the writ of prohibition, which, significantly, focuses on the alleged nullity of the DARAB Decision dated October 5, 1995.On this score, the CA found that the application for the issuance of the writ of prohibition was actually a collateral attack on the validity of the DARAB decision.But, a final and executory judgment may be set aside in three ways;[39] and a collateral attack, whereby in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof,[40] is one of these.This tenet is based upon a court's inherent authority to expunge void acts from its records.[41]Despite recognizing the need to resolve petitioners application for the writ of prohibition in its Resolution dated January 12, 1999, the CA nonetheless summarily denied petitioners motion for reconsideration in its Resolution dated February 23, 2000,[42] leaving the matter hanging and unresolved.

At first, the Court considered resolving the merits of petitioners' motion for reconsideration concerning their application for a writ of prohibition against enforcing the DARAB Decision dated October 5, 1995.Thus, in a Resolution dated June 5, 2006, the Court directed the CA to transmit the records of DARAB Case No. 0555, which was previously required by the CA to be forwarded to it per Resolution dated December 20, 1999.[43]However, as of even date, the CA has not complied with the Court's Resolution.Withal, upon re-examination of the issues involved in this case, the Court deems it more judicious to remand this case to the CA for immediate resolution of petitioners' motion for reconsideration, re: their application for the writ of prohibition.

Moreover, the radical conflict in the findings of the Provincial Adjudicator and the DARAB as regards the nature of the subject property necessitates a review of the present case.In this regard, the CA is in a better position to fully adjudicate the case for it can delve into the records to determine the probative value of the evidence supporting the findings of the Provincial Adjudicator and of the DARAB.In addition, the CA is empowered by its internal rules to require parties to submit additional documents, as it may find necessary to promote the ends of substantial justice, and further order the transmittal of the proper records for it to fully adjudicate the case.After all, it is an avowed policy of the courts that cases should be determined on the merits, after full opportunity to all parties for ventilation of their causes and defenses, rather than on technicality or some procedural imperfections.In that way, the ends of justice would be served better.[44]

WHEREFORE, the petition is PARTLY GRANTED.This case is REMANDED to the Court of Appeals which is DIRECTED to resolve petitioners prayer for the issuance of the writ of prohibition in their Motion for Reconsideration.

Upon finality of this Decision, let the records be remanded forthwith to the Court of Appeals.

cralawNo pronouncement as to costs.

cralawSO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justicechanroblesvirtuallawlibrary

WE CONCUR:


Associate Justice

Chairperson

ROMEO J. CALLEJO, SR.MINITA V. CHICO-NAZARIO


ATTESTATION



Associate Justice



cralawPursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

Endnotes:

[1]cralawLeaving out 4,898 square meters.

[2]cralawRollo, pp. 57-58, CA Decision dated July 16, 1998.

[3]cralawRecords, p. 42.



[6]cralawId. at 81.

[7]cralawRollo, p. 58.






[13]cralawPenned by Associate Justice Hector L. Hofilea (now retired), with Associate Justices Minerva P. Gonzaga-Reyes (now retired Member of the Supreme Court) and Oman U. Amin (now retired), concurring.




[17]cralawPenned by Associate Justice Adefuin-dela Cruz (vice retired Justice Hofilea), with Associate Justices Eubulo G. Verzola (now deceased, vice Justice Gonzaga-Reyes) and Eduardo P. Cruz (new member), concurring;CA rollo, p. 298.



[20]cralaw149 Phil. 636, 647 (1971).

[21]cralawGianan v. Imperial, 154 Phil. 705, 710 (1974);Francisco v. Aquino,G.R. Nos. L-33235-6, July 29, 1976, 72 SCRA 140, 145.

[22]cralawG.R. No. L-45825, June 30, 1988, 163 SCRA 237, 243; Mercado v. Ubay, G.R. No. 35830, July 24, 1990, 187 SCRA 719, 724.

[23]cralawUnder the repealing clause of B.P. Blg. 129 (Section 47), the inconsistent provisions of: R.A. No. 296 or the Judiciary Act of 1948; R.A. No. 5179, as amended, or the 1964 Rules of Court; and all other statutes and letters of instructions and general orders, were repealed or accordingly modified.

[24]cralawEntitled An Act to Provide a Uniform Procedure for Appeals from the Court of Agrarian Relations, the Secretary of Labor under Section 7 of Republic Act Numbered Six Hundred Two, also known as The Minimum Wage Law, the Department of Labor under Section 23 of Republic Act Numbered Eight Hundred Seventy-Five, also known as The Industrial Peace Act, the Land Registration Commission, the Securities and Exchange Commission, the Social Security Commission, the Civil Aeronautics Board, the Patent Office, and the Agricultural Inventions Board, and for other purposes.

[25]cralawG.R. No. L-72370, May 29, 1987, 150 SCRA 543, 552.

[26]cralawSee Dulap v. Court of Appeals, supra note 20, et seq.

[27]cralawThe DARAB Revised Rules of Procedure took effect on February 6, 1989, fifteen (15) days after its publication in The Manila Standard and The Philippine Daily Inquirer.

[28]cralawRule 43.

[29]cralawBoard of Commissioners v. Dela Rosa, 274 Phil. 1156, 1191 (1991).

[30]cralawG.R. No. 150286, October 17, 2003, 413 SCRA 669, 676.

[31]cralawG.R. No. 139448, October 11, 2005, 472 SCRA 259, 269.

[32]cralaw401 Phil. 920 (2000).

[33] cralawId. at 931-932.

[34]cralawG.R. No. 147995, March 4, 2004, 424 SCRA 741, 745.

[35]cralaw352 Phil. 461 (1998).

[36]cralawDocketed as G.R. No. 131457.

[37]cralawMangaliag v. Catubig-Pastoral, G.R. No. 143951, October 25, 2005, 474 SCRA 153, 161.

[38]cralawChavez v. Public Estates Authority, 433 Phil. 506, 524 (2002).

[39]cralawFirst, a petition for relief from judgment under Rule 38 of the Rules of Court on grounds of fraud, accident, mistake and excusable negligence filed within sixty (60) days from the time petitioner learns of the judgment but not more than six (6) months from the entry thereof; second, a direct action to annul the judgment on the ground of extrinsic fraud; and third, a direct action for certiorari or collateral attack to annul a judgment that is void upon its face or void by virtue of its own recitals. Arcelona v. Court of Appeals, 345 Phil. 250, 263 (1997).

[40]cralawMallilin, Jr. v. Castillo, 389 Phil. 153, 165 (2000).

[41]cralawRoces v. House of Representatives Electoral Tribunal, G.R. No. 167499, September 15, 2005, 469 SCRA 681, 695.

[42]cralawSupra note 17.

[43]cralawSupra note 16.

[44]cralawJaro v. Court of Appeals, 427 Phil. 532, 548 (2002).


SECOND DIVISION

PATRICIO A. VILLENA,

Petitioner,cralaw

G.R. No. 163021

cralaw- versus -

cralawPresent:


cralawCARPIO,


cralawTINGA, and


PATRICIO S. PAYOYO,

Respondent.

cralawPromulgated:

cralawApril 27, 2007

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

DECISION

QUISUMBING, J.:

cralawThis petition for review on certiorari assails the Decision[1] dated November 21, 2003 of the Court of Appeals in CA-G.R. CV No. 70513 and its Resolution[2] dated March 18, 2004, denying petitioners motion for reconsideration.The appellate court had affirmed with modification the Decision[3] dated April 26, 2000 of the Regional Trial Court (RTC) of Quezon City, Branch 78.

The facts are undisputed.

On October 28, 1997, respondent Patricio Payoyo and Novaline, Inc., through its president, petitioner Patricio Villena, entered into a contract for the delivery and installation of kitchen cabinets in Payoyos residence.The cabinets were to be delivered within ninety days from downpayment of 50% of the purchase price.On October 29, 1997, Payoyo paid Villena P155,183 as downpayment.

On December 9, 1997, Payoyo entered into another contract with Villena for the delivery of home appliances.On the same day, Payoyo paid 50% of the purchase price equal to P29,638.50 as downpayment.

However, Villena failed to install the kitchen cabinets and deliver the appliances.Payoyo made several demands upon Villena but the latter failed to comply.

In a letter dated March 12, 1998, Payoyo demanded the cancellation of the contracts and the refund in full of the downpayments amounting to P184,821.50.Villena promised to install the kitchen cabinets on or before May 10, 1998 and to deliver the appliances.Despite repeated demands, Villena again failed to do so.

Payoyo sent Villena two demand letters on June 24, 1998 and on July 28, 1998 asking the latter to either deliver all items or return the downpayments.

On October 26, 1998, Payoyo filed a complaint for recovery of a sum of money and damages against Villena.Villena moved to dismiss the complaint for failure to state a cause of action.He argued that there was no ground to cancel the contract; thus, there was no basis for refund.The trial court denied his motion.Villena thereafter filed an answer with compulsory counterclaim citing as an affirmative defense Payoyos failure to state a cause of action.

cralawOn June 1, 1999, immediately after the trial court issued a pre-trial order, Villena filed a second motion to dismiss on the ground of lack of jurisdiction over the subject matter but it was denied.Thereafter, trial ensued.

cralawThe trial court decided in favor of Payoyo, reasoning that the power to rescind is implied in reciprocal obligations.Considering that Villena repeatedly failed to comply with his obligation, Payoyo had the right to rescind the contract and demand a refund.The trial court ordered petitioner to pay respondent P184,821.50 as actual damages plus 12% interest per annum from the date of filing of the complaint and P20,000 as moral damages plus legal interest from judicial demand until fully paid.

cralawThe Court of Appeals affirmed the RTC decision with the following modifications:

1) [Petitioner Villena is] hereby ordered to pay [respondent Payoyo] actual damages in the amount of P 155,183.00 with 12% interest per annum from the date of the filing of the complaint;

2) [Petitioner is] likewise ordered to deliver the Indesit Multifunction Oven and Indesit Hob in favor of [respondent] within thirty (30) days from the finality of this decision; and

3) [Respondent] is hereby ordered to pay the purchase price of the Indesit Multifunction Oven and Indesit Hob in favor of [petitioner] on the day the delivery is made.[4]

cralaw

The appellate court reasoned that while there was delay in the delivery and installation of the kitchen cabinets, there was none in the delivery of the appliances.The contract for said appliances did not specify the date of delivery but that delivery should be made upon payment of the 50% balance of the purchase price.Considering that Payoyo failed to pay the balance, Villena did not incur delay.

cralawHence, the instant petition, where petitioner raises the following issues:

I.

WHETHER OR NOT THE TRIAL COURT HAD JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.

II.

WHETHER OR NOT [THE] DEFENDANTS-APPELLANTS (PETITIONER AND NOVALINE, INC.), ARE ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE COURT UNDER THE CIRCUMSTANCES.[5]

Simply, the issue in this case is whether the trial court had jurisdiction over the complaint.

Petitioner maintains that the RTC should have dismissed the complaint for lack of jurisdiction.He posits that the RTC has no jurisdiction over the complaint since it is mainly for recovery of a sum of money in the amount of P184,821.50 which is below the jurisdictional amount set for RTCs.[6]Moreover, petitioner contends that the issue of jurisdiction may be raised at any time, even on appeal, since jurisdiction is conferred only by law and cannot be acquired through or waived by any act or omission of the parties.[7]chanroblesvirtuallawlibrary

Respondent, on the other hand, contends that the RTC has jurisdiction over the complaint as the allegations therein show that it is actually a case for rescission of the contracts.The recovery of a sum of money is merely a necessary consequence of the cancellation of the contracts.[8]chanroblesvirtuallawlibrary

The pertinent portion of Section 19 of Batas Pambansa Bilang 129, as amended by Republic Act No. 7691,[9] provides:

SEC. 19. Jurisdiction in civil cases.Regional Trial Courts shall exercise exclusive original jurisdiction:

cralaw(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;

cralawx x x x

(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses, and costs or the value of the property in controversy exceeds One Hundred Thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the abovementioned items exceeds Two Hundred Thousand pesos (P200,000.00).

In determining the jurisdiction of an action whose subject is incapable of pecuniary estimation, the nature of the principal action or remedy sought must first be ascertained.If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation and the jurisdiction of the court depends on the amount of the claim.But, where the primary issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, such are actions whose subjects are incapable of pecuniary estimation, hence cognizable by the RTCs.[10]chanroblesvirtuallawlibrary

cralawVerily, what determines the nature of the action and which court has jurisdiction over it are the allegations of the complaint and the character of the relief sought.[11]chanroblesvirtuallawlibrary

cralawIn our considered view, the complaint, albeit entitled as one for collection of a sum of money with damages, is one incapable of pecuniary estimation; thus, one within the RTCs jurisdiction.The allegations therein show that it is actually for breach of contract, thus,

cralawx x x x

7. cralawUnder their Contracts, prestation and/or delivery of the items will be performed and delivered within NINETY (90) DAYS from the receipt of downpayment.Plaintiff complied with its prestation but defendants defaulted with their obligation;

cralawx x x x

10. On 12 March 1998, plaintiff sent letter to defendants requesting the latter for the cancellation of the purchase contracts and refund in full the (50%) downpayment paid in the total amount of (P 184, 821.50) within five (5) days upon receipt of the letter

cralawx x x x

12. On 24 March 1998, plaintiff and defendant Patricio A. Villena, personally talked [to] each other regarding the full refund of the (50%) downpayment in the amount of P 184, 821.50.Defendant informed the plaintiff that it was their fault because the order from their Australian supplier was made only on 15 December 1997. Defendant promised plaintiff [delivery of] the three (3) Kitchen Cabinets on or before 10 [M]ay 1998, and the three (3) home appliances were considered fully paid applying the (50%) downpayment of (P 29,638.50) for home appliances only.But defendant did not fulfill his promise;

13. Despite all these, repeated demands for the installation of the (3) three kitchen [c]abinets and complete delivery of home appliances were made, but defendants did nothing;

cralawx x x x[12] (Emphasis added.)

A case for breach of contract is a cause of action either for specific performance or rescission of contracts.[13]An action for rescission of contract, as a counterpart of an action for specific performance, is incapable of pecuniary estimation, and therefore falls under the jurisdiction of the RTC.[14]In the present case, the averments in the complaint show that Payoyo sought the cancellation of the contracts and refund of the downpayments since Villena failed to comply with the obligation to deliver the appliances and install the kitchen cabinets subject of the contracts.The court then must examine the facts and the applicable law to determine whether there is in fact substantial breach that would warrant rescission or cancellation of the contracts and entitle the respondent for a refund.While the respondent prayed for the refund, this is just incidental to the main action, which is the rescission or cancellation of the contracts.

WHEREFORE, the petition is DENIED for lack of merit.The Decision dated November 21, 2003 of the Court of Appeals in CA-G.R. CV No. 70513 and the Resolution dated March 18, 2004 are AFFIRMED.


SO ORDERED.


Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice


Associate Justice

DANTE O. TINGA

Associate Justice


Associate Justice




Associate Justice

Chairperson



REYNATO S. PUNO

Chief Justice

Endnotes:









[9] cralawAn Act Expanding The Jurisdiction Of The Metropolitan Trial Courts, Municipal Trial Courts, And Municipal Circuit Trial Courts, Amending For The Purpose Batas Pambansa Blg. 129, Otherwise Known As The Judiciary Reorganization Act Of 1980.

[10] cralawHuguete v. Embudo, G.R. No. 149554, July 1, 2003, 405 SCRA 273, 278-279, citing Singsong v. Isabela Sawmill, No. L-27343, February 28, 1979, 88 SCRA 623, 637-638.

[11] cralawHuguete v. Embudo,id., citing Caiza v. Court of Appeals,G.R. No. 110427, February 24, 1997, 268 SCRA 640, 647-648.


[13] cralawRadio Communications of the Philippines, Inc. v. Court of Appeals, G.R. No. 136109, August 1, 2002, 386 SCRA 67, 71.

[14] cralawRussell v. Vestil, G.R. No. 119347, March 17, 1999, 304 SCRA 738, 745, citing Lapitan v. Scandia, Inc., No. L-24668, July 31, 1968, 24 SCRA 479, 482.

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