G.R. No. 173379 December 1, 2010

ABUBAKAR A. AFDAL and FATIMA A. AFDAL, Petitioners, vs.ROMEO CARLOS, Respondent.

D E C I S I O N

CARPIO, J.:

The Case

This is a petition for review1 of the 3 January 20052 and 16 June 20063 Orders of the Regional Trial Court, Branch 25, Biñan, Laguna (RTC) in Civil Case No. B-6721. In its 3 January 2005 Order, the RTC ordered the dismissal of petitioners Abubakar A. Afdal and Fatima A. Afdal’s (petitioners) petition for relief from judgment. In its 16 June 2006 Order, the RTC denied petitioners’ motion for reconsideration.

The Facts

On 18 December 2003, respondent Romeo Carlos (respondent) filed a complaint for unlawful detainer and damages against petitioners, Zenaida Guijabar (Guijabar), John Doe, Peter Doe, Juana Doe, and all persons claimingrights under them docketed as Civil Case No. 3719 before the Municipal Trial Court, Biñan, Laguna (MTC). Respondent alleged that petitioners, Guijabar, and all other persons claiming rights under them were occupying, by mere tolerance, a parcel of land in respondent’s name covered by Transfer Certificate of Title No. T-5301394 in the Registry of Deeds Calamba, Laguna. Respondent claimed that petitioner Abubakar Afdal (petitioner Abubakar) sold the property to him but that he allowed petitioners to stay in the property. On 25 August 2003, respondent demanded that petitioners, Guijabar, and all persons claiming rights under them turn over the property to him because he needed the property for his personal use.5 Respondent further alleged that petitioners refused to heed his demand and he was constrained to file a complaint before the Lupon ng Tagapamayapa (Lupon). According to respondent, petitioners ignored the notices and the Lupon issued a "certificate to file action."6 Then, respondent filed the complaint before the MTC.

According to the records, there were three attempts to serve the summons and complaint on petitioners – 14 January, 3 and 18 February 2004.7 However, petitioners failed to file an answer.

On 2 June 2004, respondent filed an ex-parte motion and compliance with position paper submitting the case for decision based on the pleadings on record.8

In its 23 August 2004 Decision,9 the MTC ruled in favor of respondent. The dispositive portion of the 23 August 2004 Decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants as follows:

1. Ordering defendants Abubakar Afdal, Zenaida Guijabar and all persons claiming rights under them to vacate the subject property and peacefully turn-over possession of the same to plaintiff;

2. Ordering defendants to pay plaintiff the amount of TEN THOUSAND PESOS (P10,000.00) as rental arrears from August 25, 2003 up to the date of decision;

3. Ordering defendants to pay plaintiff the amount of TEN THOUSAND PESOS (P10,000.00) a month thereafter, as reasonable compensation for the use of the subject premises until they finally vacate the same;

4. Ordering defendants to pay plaintiff the amount of FIFTY THOUSAND PESOS (P50,000.00) as and for attorney’s fees plus ONE THOUSAND FIVE HUNDRED PESOS (P1,500.00) appearance fee;

5. Ordering defendants to pay the costs of suit.

SO ORDERED.10

On 1 October 2004, the MTC issued a writ of execution.11

On 30 October 2004, petitioners filed a petition for relief from judgment with the MTC.12 Respondent filed a motion to dismiss or strike out the petition for relief.13 Subsequently, petitioners manifested their intention to withdraw the petition for relief after realizing that it was a prohibited pleading under the Revised Rule on Summary Procedure. On 10 November 2004, the MTC granted petitioners’ request to withdraw the petition for relief.14

On 6 December 2004, petitioners filed the petition for relief before the RTC.15 Petitioners alleged that they are the lawful owners of the property which they purchased from spouses Martha D.G. Ubaldo and Francisco D. Ubaldo. Petitioners denied that they sold the property to respondent. Petitioners added that on 15 December 2003, petitioner Abubakar filed with

the Commission on Elections his certificate of candidacy as mayor in the municipality of Labangan, Zamboanga del Sur, for the 10 May 2004 elections. Petitioners said they only learned of the MTC’s 23 August 2004 Decision on 27 October 2004. Petitioners also pointed out that they never received respondent’s demand letter nor were they informed of, much less participated in, the proceedings before theLupon. Moreover, petitioners said they were not served a copy of the summons and the complaint.

On 3 January 2005, the RTC issued the assailed Order dismissing the petition for relief. The RTC said it had no jurisdiction over the petition because the petition should have been filed before the MTC in accordance with Section 1 of Rule 38 of the Rules of Court which provides that a petition for relief should be filed "in such court and in the same case praying that the judgment, order or proceeding be set aside."

Petitioners filed a motion for reconsideration. In its 16 June 2006 Order, the RTC denied petitioners’ motion.

Hence, this petition.

The Issue

Petitioners raise the sole issue of whether the RTC erred in dismissing their petition for relief from judgment.

The Ruling of the Court

Petitioners maintain that the RTC erred in dismissing their petition for relief. Petitioners argue that they have no other recourse but to file the petition for relief with the RTC. Petitioners allege the need to reconcile the apparent inconsistencies with respect to the filing of a petition for relief from judgmentunder Rule 38 of the Rules of Court and the prohibition under the Revised Rule on Summary Procedure. Petitioners suggest that petitions for relief from judgment in forcible entry and unlawful detainer cases can be filed with the RTC provided that petitioners have complied with all the legal requirements to entitle him to avail of such legal remedy.

Section 13(4) of Rule 70 of the Rules of Court provides:

SEC. 13. Prohibited pleadings and motions. - The following petitions, motions,or pleadings shall not be allowed: x x x

4. Petition for relief from judgment; x x x

Section 19(d) of the Revised Rule on Summary Procedure also provides:

SEC. 19. Prohibited pleadings and motions. - The following pleadings, motions, or petitions shall not be allowed in the cases covered by this Rule: xx x

(d) Petition for relief from judgment; x x x

Clearly, a petition for relief from judgment in forcible entry and unlawful detainer cases, as in the present case, is a prohibited pleading. The reason for this is to achieve an expeditious and inexpensive determination of the cases subject of summary procedure.16

Moreover, Section 1, Rule 38 of the Rules of Court provides:

SEC. 1. Petition for relief from judgment, order or other proceedings. - When a judgment or final order is entered, or any other proceeding is thereafter taken against a party in any court through fraud, accident, mistake or excusable negligence, he may file a petition in such court and in the same case praying that the judgment, order or proceeding be set aside. (Emphasis supplied)

A petition for relief from judgment, if allowed by the Rules and not a prohibited pleading, should be filed with and resolved by the court in the same case from which the petition arose.171avvphi1

In the present case, petitioners cannot file the petition for relief with the MTCbecause it is a prohibited pleading in an unlawful detainer case. Petitioners cannot also file the petition for relief with the RTC because the RTC has no jurisdiction to entertain petitions for relief from judgments of the MTC. Therefore, the RTC did not err in dismissing the petition for relief from judgment of the MTC.

The remedy of petitioners in such a situation is to file a petition for certiorari with the RTC under Rule 6518 of the Rules of Court on the ground of lack of jurisdiction of the MTC over the person of petitioners in view of the absence of summons to petitioners. Here, we shall treat petitioners’ petition for relief from judgment as a petition for certiorari before the RTC.

An action for unlawful detainer or forcible entry is a real action and in personam because the plaintiff seeks to enforce a personal obligation on the defendant for the latter to vacate the property subject of the action, restore physical possession thereof to the plaintiff, and pay actual damages by way

of reasonable compensation for his use or occupation of the property.19 In an action in personam, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case.20 Jurisdiction over the defendant is acquired either upon a valid service of summons or the defendant’s voluntary appearance in court.21 If the defendant does not voluntarily appear in court, jurisdiction can be acquired by personal or substituted service of summons as laid out under Sections 6 and 7 of Rule 14of the Rules of Court, which state:

Sec. 6. Service in person on defendant. - Whenever practicable, the summons shall be served by handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him.

Sec. 7. Substituted Service. - If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant’s residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendant’s office or regular place of business with some competent person in charge thereof.

Any judgment of the court which has no jurisdiction over the person of the defendant is null and void.22

The 23 August 2004 Decision of the MTC states:

Record shows that there were three attempts to serve the summons to the defendants. The first was on January 14, 2004 where the same was unserved. The second was on February 3, 2004 where the same was served to one Gary Akob and the last was on February 18, 2004 where the return was duly served but refused to sign.23

A closer look at the records of the case also reveals that the first indorsement dated 14 January 2004 carried the annotation that it was "unsatisfied/given address cannot be located."24 The second indorsement dated 3 February 2004 stated that the summons was "duly served as evidenced by his signature of one Gary Acob25(relative)."26 While the last indorsement dated 18 February 2004 carried the annotation that it was "dulyserved but refused to sign" without specifying to whom it was served.27

Service of summons upon the defendant shall be by personal service first and only when the defendant cannot be promptly served in person will substituted service be availed of.28 In Samartino v. Raon,29 we said:

We have long held that the impossibility of personal service justifying availment of substituted service should be explained in the proof of service; why efforts exerted towards personal service failed. The pertinent facts and circumstances attendant to the service of summons must be stated in the proof of service or Officer’s Return; otherwise, the substituted service cannotbe upheld.30

In this case, the indorsements failed to state that prompt and personal service on petitioners was rendered impossible. It failed to show the reason why personal service could not be made. It was also not shown that efforts were made to find petitioners personally and that said efforts failed. These requirements are indispensable because substituted service is in derogation of the usual method of service. It is an extraordinary method since it seeks tobind the defendant to the consequences of a suit even though notice of such action is served not upon him but upon another whom the law could only presume would notify him of the pending proceedings. Failure to faithfully, strictly, and fully comply with the statutory requirements of substituted service renders such service ineffective.31

Likewise, nowhere in the return of summons or in the records of the case wasit shown that Gary Acob, the person on whom substituted service of summons was effected, was a person of suitable age and discretion residing in petitioners’ residence. In Manotoc v. Court of Appeals,32 we said:

If the substituted service will be effected at defendant’s house or residence, it should be left with a person of "suitable age and discretion then residing therein." A person of suitable age and discretion is one who has attained the age of full legal capacity (18 years old) and is considered to have enough discernment to understand the importance of a summons. "Discretion" is defined as "the ability to make decisions which represent a responsible choice and for which an understanding of what is lawful, right or wise may bepresupposed." Thus, to be of sufficient discretion, such person must know how to read and understand English to comprehend the import of the summons, and fully realize the need to deliver the summons and complaint to the defendant at the earliest possible time for the person to take appropriate action. Thus, the person must have the "relation of confidence" to the defendant, ensuring that the latter would receive or at least be notified of the receipt of the summons. The sheriff must therefore determine if the person found in the alleged dwelling or residence of defendant is of legal age, what the recipient’s relationship with the defendant is, and whether said person comprehends the

significance of the receipt of the summons and his duty to immediately deliver it to the defendant or at least notify the defendant of said receipt of summons. These matters must be clearly and specifically described in the Return of Summons.33 (Emphasis supplied)

In this case, the process server failed to specify Gary Acob’s age, his relationship to petitioners and to ascertain whether he comprehends the significance of the receipt of the summons and his duty to deliver it to petitioners or at least notify them of said receipt of summons.

In sum, petitioners were not validly served with summons and the complaint in Civil Case No. 3719 by substituted service. Hence, the MTC failed to acquire jurisdiction over the person of the petitioners and, thus, the MTC’s 23August 2004 Decision is void.34 Since the MTC’s 23 August 2004 Decision is void, it also never became final.35

WHEREFORE, we GRANT the petition. We SET ASIDE the 3 January 2005 and 16 June 2006 Orders of the Regional Trial Court, Branch 25, Biñan, Laguna. The 23 August 2004 Decision and the 1 October 2004 Writ of Execution, as well as all acts and deeds incidental to the judgment in Civil Case No. 3719, are declared VOID. WeREMAND the case to the Municipal Trial Court, Biñan, Laguna, for consolidation with the unlawful detainer case in Civil Case No. 3719 and for the said Municipal Trial Court to continue proceedings thereon by affording petitioners Abubakar A. Afdal and Fatima A.Afdal a chance to file their answer and present evidence in their defense, andthereafter to hear and decide the case.

SO ORDERED.

G.R. No. 184197 February 11, 2010

RAPID CITY REALTY AND DEVELOPMENT CORPORATION, Petitioner, vs.ORLANDO VILLA and LOURDES PAEZ-VILLA,1 Respondents.

D E C I S I O N

CARPIO MORALES, J.:

Sometime in 2004, Rapid City Realty and Development Corporation (petitioner) filed a complaint for declaration of nullity of subdivision plans . . .mandamus and damages against several defendants including Spouses

Orlando and Lourdes Villa (respondents). The complaint, which was docketed at the Regional Trial Court of Antipolo City as Civil Case No. 04-7350, was lodged at Branch 71 thereof.

After one failed attempt at personal service of summons, Gregorio Zapanta (Zapanta), court process server, resorted to substituted service by serving summons upon respondents’ househelp who did not acknowledge receipt thereof and refused to divulge their names. Thus Zapanta stated in the Return of Summons:

THIS IS TO CERTIFY that on September 24, 2004, the undersigned caused theservice of summons together with a copy of the complaint with its annexes to defendant Spouses Lourdes Estudillo Paez-Cline and Orlando Villa at their given address at 905 Padre Faura Street, Ermita Manila, as per information given by two lady househelps who are also residing at the said address, the defendant spouses are not around at that time. On the 27th of September, 2004, I returned to the same place to serve the summons. I served the summons and the copy of the complaint with its annexes to the two ladies (The same lady househelp I met on Sept. 24, 2004) but they refused to sign to acknowledge receipt and they refused to tell their name as per instruction of the defendants. With me who can attest to the said incident is Mr. Jun Llanes, who was with me at that time.2 x x x (emphasis and underscoring supplied)

Despite substituted service, respondents failed to file their Answer, prompting petitioner to file a "Motion to Declare Defendants[-herein respondents] in Default" which the trial court granted by Order of May 3, 2005.

More than eight months thereafter or on January 30, 2006, respondents filed a Motion to Lift Order of Default,3claiming that on January 27, 2006 they "officially received all pertinent papers such as Complaint and Annexes. Motion to Dismiss of the Solicitor General and the ORDER dated May 3, 2005 granting the Motion to Declare [them] in Default." And they denied the existence of two women helpers who allegedly refused to sign and acknowledge receipt of the summons. In any event, they contended that assuming that the allegation were true, the helpers had no authority to receive the documents.4

By Order of July 17, 2006, the trial court set aside the Order of Default and gave herein respondents five days to file their Answer. Respondents just the same did not file an Answer, drawing petitioner to again file a Motion to

declare them in default, which the trial court again granted by Order of February 21, 2007.

On April 18, 2007, respondents filed an Omnibus Motion for reconsideration of the second order declaring them in default and to vacate proceedings, thistime claiming that the trial court did not acquire jurisdiction over their persons due to invalid service of summons.

The trial court denied respondents’ Omnibus Motion by Order of May 22, 2007 and proceeded to receive ex-parteevidence for petitioner.

Respondents, via certiorari, challenged the trial court’s February 21, 2007 and April 18, 2007 Orders before the Court of Appeals.

In the meantime, the trial court, by Decision of September 4, 2007, rendered judgment in favor of petitioner.

By Decision of April 29, 2008,5 the appellate court annulled the trial court’s Orders declaring respondents in default for the second time in this wise:

In assailing the orders of the trial court through their Motion to Lift… and later their Omnibus Motion… the petitioners [herein-respondents] never raised any other defense in avoidance of the respondents’ [herein petitioners] claim, and instead focused all their energies on questioning the said court’s jurisdiction. The latter motion clearly stated prefatorily their counsel’s reservation or "special appearance to question jurisdiction" over the persons of the petitioners. "A party who makes a special appearance in court challenging the jurisdiction of said court based on the ground of invalid service of summons is not deemed to have submitted himself to the jurisdiction of the court."6 (citation omitted; italics, emphasis and underscoring supplied)

Petitioner’s motion for reconsideration having been denied by the appellate court by Resolution of August 12, 2008, it comes to the Court via petition for review on certiorari, arguing in the main that respondents, in filing the first Motion to Lift the Order of Default, voluntarily submitted themselves to the jurisdiction of the court.

The petition is impressed with merit.

It is settled that if there is no valid service of summons, the court can still acquire jurisdiction over the person of the defendant by virtue of the latter’s

voluntary appearance. Thus Section 20 of Rule 14 of the Rules of Court provides:

Sec. 20. Voluntary appearance. – The defendant’s 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 shall not be deemed a voluntary appearance.

And Philippine Commercial International Bank v. Spouses Wilson Dy Hong Pi and Lolita Dy, et al. enlightens:

Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the coercive power of legal processes exerted over his person, or his voluntary appearance in court. As a general proposition, one who seeks an affirmative relief is deemed to have submitted to the jurisdiction of the court.It is by reason of this rule that we have had occasion to declare that the filingof motions to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motionfor reconsideration, is considered voluntary submission to the court’s jurisdiction. This, however, is tempered by the concept of conditional appearance, such that a party who makes a special appearance to challenge,among others, the court’s jurisdiction over his person cannot be considered to have submitted to its authority.

Prescinding from the foregoing, it is thus clear that:

(1) Special appearance operates as an exception to the general rule on voluntary appearance;

(2) Accordingly, objections to the jurisdiction of the court over the person of the defendant must be explicitly made, i.e., set forth in an unequivocal manner; and

(3) Failure to do so constitutes voluntary submission to the jurisdiction of the court, especially in instances where a pleading or motion seeking affirmative relief is filed and submitted to the court for resolution.7(italics and underscoring supplied)

In their first Motion to Lift the Order of Default8 dated January 30, 2006, respondents alleged:

x x x x

4. In the case of respondents, there is no reason why they should not receivethe Orders of this Honorable Court since the subject of the case is their multi-million real estate property and naturally they would not want to be declaredin default or lose the same outright without the benefit of a trial on the merits;

5. It would be the height of injustice if the respondents is [sic] denied the equal protection of the laws[;]

6. Respondents must be afforded "Due process of Law" as enshrined in the New Constitution, which is a basic right of every Filipino, since they were not furnished copies of pleadings by the plaintiff and the Order dated May 3, 2005;

x x x x9

and accordingly prayed as follows:

WHEREFORE, . . . it is most respectfully prayed . . . that the Order dated May 5, 2005 declaring [them] in default be LIFTED.10

Respondents did not, in said motion, allege that their filing thereof was a special appearance for the purpose only to question the jurisdiction over their persons. Clearly, they had acquiesced to the jurisdiction of the court.

WHEREFORE, the petition is GRANTED. The assailed Court of Appeals Decision of April 29, 2008 is REVERSEDand SET ASIDE.

Let the original records of Civil Case No. 04-7350 be remanded to the court of origin, Regional Trial Court of Antipolo City, Branch 71.

SO ORDERED.

G.R. No. 82971 September 15, 1989

PHILIPPINE NATIONAL BANK, petitioner, vs.THE HONORABLE COURT OF APPEALS, THE REGIONAL TRIAL COURT, JUDICIAL REGION V, BRANCH 43, EPIFANIO MATIENZO, AND FLORENCIA MATIENZO, respondents.

The Chief Legal Counsel for petitioner.

Delfin G. Posada for private respondents.

GRIÑO-AQUINO, J.:

In this petition for certiorari and prohibition with prayer for preliminary injunction, herein petitioner, Philippine National Bank (or PNB for brevity), seeks the reversal of the decision of the Court of Appeals in AC-G.R. No. CV-02959-R, entitled "Epifanio Matienzo and Florencia Matienzo, Plaintiffs-Appellants vs. Domingo Molina, Orlando Molina and Ireneo Molina, Defendants-Appellees," reversing the judgment appealed from and ordering petitioner to reconvey one-half of the mortgaged land in favor of herein private respondents, the Matienzo spouses.

Epifanio Matienzo and Florencia Matienzo were the original owners of a 4,161sq. meter-lot registered under OCT No. 5253, Free Patent No. 27945 (pp. 3-4, Rollo) situated at Cabinitan, Virac, Catanduanes.

In May, 1977, the business partners, Domingo, Orlando and Ireneo, all surnamed Molina, were looking for a lot in Virac where they could put up a furniture shop and a 'chicharon' factory. Respondents Matienzos offered to sell their lot in Cabinitan, Virac, for the price of Pl0 per square meter.

The Molinas wanted to buy only one-half of the property. An affidavit (Exh. C)was executed by the parties containing the following memorandum of their agreement:

That the true intention of the parties in the Deed of Sale (Exh. A) to be executed by them was for the transfer of ownership over one-half only (2,080sq. meters) of Matienzo's property, but the other half (2,081 sq. meters) would be included in the sale for the purpose of facilitating the defendant-partners' loan and to use it as additional collateral to enable them to secure a bigger loan from PNB. Likewise, they agreed that after five (5) or ten (10) years, Orlando Molina would, at his own expense, cause the other half portion of the land to be surveyed and titled in the name of Epifanio Matienzo.

Orlando Molina issued a promissory note (Exh. B) for P20,800, payable in installments as the price of the 2,080-sq.-meter portion of Matienzo's land. Both the affidavit (Exh. C) and the promissory note (Exh. B) were signed by Orlando Molina.

However, when the Deed of Absolute Sale (Exh. A) was presented to Matienzo for signing on November 9, 1977, Domingo Molina appeared as

vendee, instead of Orlando. The spouses wondered why that was so, but they were assured that there would be no problem because Domingo Molina was one of the partners to the proposed business venture. Convinced of the group's sincerity, the respondent spouses signed the Deed of Absolute Sale.

On March 14, 1978, Domingo Molina sold the whole parcel of land to Orlando Molina for the same price of P20,800. Whereupon, Transfer Certificate of Title1332 was issued in the name of Orlando Molina (p. 3, Rollo).

On October 8, 1979, Orlando Molina mortgaged the entire lot to the PNB branch in Virac for P l5, 000.

The defendants were able to pay Matienzo only P3,350 out of the P20,000 price of the sale of one-half of their property. Despite repeated demands for payment, the Molinas defaulted.

They also defaulted in paying the PNB loan. PNB foreclosed the real estate mortgage and purchased the mortgaged property as the highest bidder at the public auction sale which was conducted on March 10, 1981.

On March 31, 1981, the Matienzos filed an action for Reconveyance of Title, Recovery of Ownership and Possession, Annulment of the Document and Damages (Civil Case No. 1105), against defendants Domingo Molina, OrlandoMolina and the Manager of PNB Virac Branch. Later, the complaint was amended to include another defendant, Ireneo Molina.

On June 15, 1983, the Regional Trial Court, Fifth Judicial Region, Branch 43, dismissed the case insofar as the defendant Manager of PNB Virac Branch was concerned (p. 14, Rollo). The order reads as follows:

A perusal of the complaint will readily show that even if all the allegations in the complaint are admitted, there is no liability on the part of defendant PNB Manager. This case therefore as against the defendant PNB Manager is hereby dismissed.

The counterclaim contained in the answer of defendant PNB Manager is also hereby dismissed as he could have prayed for the dismissal of the complaint as against him right after receipt of the copy thereof. . . .

Meanwhile, PNB consolidated its ownership over the mortgaged land.

In August 1983, Orlando Molina deposited with PNB Virac Branch the amount of P15,000 as earnest money for the redemption of the foreclosed property.

After the trial, the lower court on February 9, 1984, dismissed Civil Case No. 1105. It found "that no actionable wrong amounting to fraud were (sic) committed by defendants to entitle plaintiffs to the relief prayed for" (p. 26, Rollo).

Upon appeal by the Matienzos to the Court of Appeals (AC G.R. No. CV-02959-R), the appellate court reversed the appealed judgment. The dispositive part of its decision promulgated on October 31, 1985 (Annex C, pp. 27-41, Rollo) reads thus:

WHEREFORE, PREMISES CONSIDERED, the decision appealed from is hereby REVERSED and another one is hereby entered:

1. Ordering the defendants-appellees Domingo Molina and Orlando Molina to pay jointly and severally the plaintiffs-appellants the remaining balance of the consideration of the Deed of Sale, Exh. A, in the amount of Pl7,450, with 12 % interest from the time of the filing of the complaint until the amount is fully paid;

2. Ordering the court of origin to cause the partition of the property into two equal parts, for the PNB Virac Branch, which is hereby ordered and declared a party in this appeal, to recovery (sic) the ownership and peaceful possession over 1/2 portion thereof to the plaintiffs-appellants; and ordering the Register of Deeds of Virac, Catanduanes to issue the corresponding title over said half portion in the names of plaintiffs-appellants; and

3. Ordering the defendants-appellees Domingo Molina and Orlando Molina to pay jointly and severally the plaintiffs-appellants the amount of P10,000 as attorney's fees and litigation expenses, plus costs.

Upon remand of the case to the trial court for execution, the court issued, on motion of the plaintiffs, an order placing in custodia legis the P15,000 earnest money deposited by Orlando Molina in the PNB (p. 5, Rollo).

On January 12, 1987, the court issued an alias writ of execution ordering the PNB Virac Branch to turn over to the sheriff the amount of P15,000 as partial execution of the appellate court's judgment. An urgent motion for reconsideration of the order was filed by PNB on January 26, 1987.

On February 12, 1988, the trial court issued an order of execution against Domingo and Orlando Molina to pay the unpaid balance of P7,450 of the price of the 2,080 square meters sold to them by Matienzo, and —

Furthermore, to completely enforce the judgment of the Intermediate Appellate Court, the parties concerned, under paragraph 2 of the dispositive portion of the decision, are hereby directed to submit their proposed project of partition of the property involved, within a period of fifteen (15) days from receipt of this order, in order that separate titles may be issued to PNB, ViracBranch, and the plaintiffs-appellants. (Annex D, P. 42, Rollo.)

On May 3,1988, PNB filed a petition for certiorari under Rule 65 of the Rules of Court, alleging mainly:

1. That the Court of Appeals had no jurisdiction to render the judgment against it; and

2. That the decision of the Court of Appeals deprives it of its property withoutdue process.

Upon receipt of the petition for certiorari, we issued a temporary restraining order to stop the implementation of the writ of execution issued pursuant to the order of February 12, 1988 and the decision dated October 31, 1985 of the Court of Appeals in case AC-G.R. CV No. 02959-R (p. 44, Rollo).

During the pendency of the case, Florencia Matienzo died and she was substituted by her heirs (p. 79, Rollo).

The petition is meritorious.

The Court of Appeals was aware of the dismissal of the complaint against thePNB manager for that fact was mentioned in the appealed decision of the trial court (Annex B, p. 15, Rollo) and in its own decision as follows:

On June 18,1983, the then Acting Presiding Judge in this Court, Hon. SilvestreS. Felix, dismissed the case insofar as defendant Manager PNB Virac Agency is concerned. To which dismissal no opposition nor appeal was interposed by the plaintiffs. (p. 28, Rollo.)

Since the PNB was not a party in the suit (only its manager was sued and then dropped from the complaint) both the trial court and the Court of Appeals did not acquire jurisdiction over said Bank. The Court of Appeals' decision ordering the Bank to reconvey to Matienzo one-half of the land which it had purchased at the foreclosure sale, was therefore null and void for lack of jurisdiction (Paramount Insurance Corporation vs. Luna, 148 SCRA 564; Hyopsung Maritime Co., Ltd. vs. Court of Appeals, G.R. No. 77369, August 31, 1988).

. . . For the respondent court, in the instant case, to have rendered a decisionagainst petitioners who were neither appellants nor appellees in the appeal brought before said court, is to act entirely without jurisdiction. As a corollary, petitioners would also be denied due process, never having been put on notice that they were involved in the appeal so that they would have tried to prevent the appellate court from rendering an adverse decision against them in the ordinary course of law. (Fernando Go, et al. vs. Court of Appeals, et al., G.R. No. L-25393, October 30, 1980, p. 74, Rollo.)

The decision of the Court of Appeals ordering the PNB to reconvey one-half ofthe lot in question to Matienzo without giving PNB a chance to defend its owntitle to the property, furthermore constitutes a deprivation of property without due process, hence, null and void for that cause.

Mere service of the appellants' brief on PNB did not operate to bring the Bank into the case. Jurisdiction over a person is acquired by service of summons and copy of the complaint on him (Rule 14, Rules of Court). PNB could not be expected to answer the appellants' brief not only because it wasnot a party in the appeal (nor in the trial court) but also because the dismissal of the complaint against the PNB manager in Virac was not one of the errors argued in the appellants' brief.

The trial court and the Court of Appeals found as a fact that, as stated in the affidavit of Orlando Molina (Exh. C) -

Epifanio Matienzo allowed Orlando Molina to use the other half of the property as additional collateral of a loan to be made with the DBP (sic).

The trial court found that when plaintiffs entered into the contract of sale of the lot in question, they knew the purpose for which the property was being purchased by the defendants Domingo Molina and Orlando Molina. As stated by Pio Tiu, the reduction of the consideration in the Deed of Sale was explained to the plaintiffs, without them interposing any objection. The plan of the defendants Orlando Molina and Ireneo Molina to mortgage the property in question to the PNB or other banking institution to obtain capital for the business they intended to put up, was likewise explained to plaintiff spouses, as borne out by the testimony of plaintiff Florencia Matienzo (pp. 31-32, Rollo). For that reason, Matienzo signed the Deed of Sale for the wholeof his land, although the true agreement with Molina was to sell to him only one-half of it.

Under the circumstances, the trial court correctly found no fraud or deceit both in the execution of the deed of sale by Matienzo and in the mortgage of the whole lot to the PNB by Molina.

PNB was an innocent mortgagee (and purchaser) of the property for value. It had no notice of the adverse claim of Matienzo to one-half of the mortgaged property. The title in the name of Orlando Molina was clean. The filing of CivilCase No. 1105, after the property had been sold to the Bank at the foreclosure sale, did not invalidate the sale nor the title of the Bank.

The Court of Appeals' finding that the order dismissing the complaint against the Bank's manager in Virac "has never become final" (p. 40, Rollo) has no basis. While it is true, as observed by the Court, that the PNB was an indispensable party in Civil Case No. 1105 without whom no complete relief could be accorded to the plaintiffs (p. 40, Rollo), the fact is it was never actually joined as a defendant in the case. The Bank manager in Virac (who was sued but later dropped from the complaint) is not the PNB. He is only an employee of the bank. Upon noticing that an indispensable party had not been impleaded, the Court of Appeals should have sent back the case to the trial court for it to order the plaintiffs to amend their complaint, bring in the PNB as an additional defendant, and for the Bank to answer the amended complaint and present its evidence in the case (Banco Español-Filipino vs. Palanca, 37 Phil. 921; Infante vs. Toledo, 44 Phil. 834; Nilo vs. Romero, L-15195, March 29,1961).

Sending a copy of the appellants' brief to a lawyer of the Bank in the Virac agency was not the proper way to implead the bank. Neither could it be doneby a peremptory declaration in the dispositive portion of the Court's decision that the PNB "is hereby ordered and declared a party in this appeal" even if itnever was (p. 41, Rollo).

WHEREFORE, the petition for certiorari is granted. Paragraph 2 of the dispositive portion of the decision of the Court of Appeals:

2. Ordering the court of origin to cause the partition of the property into two equal parts, for the PNB Virac Branch, which is hereby ordered and declared a party in this appeal, to recover the ownership and peaceful possession over1/2 portion thereof to the plaintiffs-appellants; and ordering the Register of Deeds of Virac, Catanduanes to issue the corresponding title over said half portion in the names of plaintiffs-appellants. (p. 41, Rollo.)

is annulled and set aside. The temporary restraining order which we issued ishereby made permanent with regard to said paragraph 2, but it is lifted with regard to paragraphs 1 and 3 of the dispositive portion of the same decision which are affirmed. Costs against the private respondents.

SO ORDERED.

G.R. No. 72827 July 18, 1989

LUCIA EUROPA (Mother of Deceased Lucrecia Europa), petitioner, vs.HUNTER GARMENTS MFG. (PHIL.) INC. and INTERMEDIATE APPELLATE COURT, respondents.

PARAS, J.:

This is a petition for certiorari to annul the Court of Appeals decision which set aside the order of default and judgment by default rendered by the Court of First Instance of Rizal Branch XIII in Civil Case No. 37848 for Damages.

The facts of the case are briefly as follows:

In 1973, the petitioner's daughter, Lucrecia Europa, was employed as samplemaker by the private respondent Hunter Garments Manufacturing (Philippines) Incorporated. Sometime during the course of her employment, or on March 9, 1978, Lucrecia got electrocuted by the high speed sewing machine which had been assigned to her by the private respondent.

Thus, on July 18, 1980, the petitioner filed an action for damages against private respondent based on quasi-delict.

Summons, together with a copy of the complaint, was served on its production manager, Mr. Simplicio A. Garcia.

No answer to the complaint was ever filed. Thus, private respondent was declared in default and the petitioner was allowed to present evidence ex parte.

On April 8, 1981, the trial court rendered judgment, the dispositive portion ofwhich reads;

WHEREFORE, the plaintiff having established her cause of action, judgment isrendered against the defendant corporation ordering the latter to pay the plaintiff the following:

a) for the death of Lucrecia, the sum of P12,000.00;

b) for actual expenses for the wake, the funeral and burial expenses and other miscellaneous expenses, the sum of P5,580.00;

c) for loss of income, the sum of P30,000.00;

d) for moral damages, the sum of P10,000.00;

e) for attorney's fees, the sum of P5,000.00; and pay the costs. (p. 39, Rollo)

Private respondent filed a motion for reconsideration of the aforesaid decision and a motion to admit answer, alleging its failure to seasonably file an answer was due to the excusable negligence of Ms. Lilia Jimenez, the production manager's secretary, who failed to forward the summons and the copy of the complaint to the company president, despite instructions to do soby her superior. The trial court denied both motions.

Thus, private respondent appealed to the Court of Appeals, assigning the following errors:

The Honorable Court, a quo, erred in not ruling that defendant-appellant's failure to seasonably file its Answer was due to excusable negligence;

The Honorable Court, a quo, erred in declaring defendant-appellant in defaultand in allowing plaintiff-appellee to present her evidence ex parte despite the fact that summons had not been properly served; and

Assuming, arguendo, that the Honorable Court, a quo, had validly acquired jurisdiction over the person of defendant-appellant, it erred in rendering a decision which is not supported by law and the facts of the case. (p. 42, Rollo)

Finding that the trial court never acquired jurisdiction over the person of private respondent as summons was improperly served (the production manager not being the same "manager" referred to in Section 13 Rule 14 of the Revised Rules of Court for purposes of service of summons upon a domestic private corporation), the Court of Appeals set aside the default order and judgment by default and directed the trial court to conduct further proceedings for the adjudication of the case. (p. 22, Rollo)

The petitioner filed a motion for reconsideration of the aforesaid decision but the same was denied.

Hence, the instant petition for certiorari.

There is merit in this petition. Assuming arguendo that the court below originally did not acquire jurisdiction over the private respondent, the latter certainly submitted to it when private respondent filed a motion for reconsideration of the judgment by default and a motion to admit answer on the ground of excusable negligence. Therefore, the lower court's denial of both motions is binding on private respondent. (Soriano vs. Palacio, 12 SCRA 449).

Private respondent likewise appealed from the judgment by default, thus, Weshall proceed to review the evidence presented and the propriety of damages awarded by the lower court.

The evidence on record discloses that on March 9, 1978, Lucrecia Europa waselectrocuted by the sewing machine owned by private respondent. The autopsy conducted by Dr. Nieto M. Salvador confirmed that Lucrecia died from "shock probably secondary to electrocution" (Annex "A" of the complaint).

The facts and circumstances of the case point to the reasonableness of the damages awarded. There is an express finding of gross negligence on the part of private respondent in the judgment of the lower court, thus:

... There are at least two incidents, according to De la Cruz, where high speed sewing machines of the defendant corporation were grounded. These incidents were brought to the attention of the management of the defendant corporation. Apparently, nothing was done by way of checking these grounded machines.

At one time, Fornoza claimed that when her machine was grounded and she complained about it, she was told by the management to get out of there.' The defendant corporation does not employ a duly-licensed electrical engineer but only has three (3) electricians whose services clearly proved inadequate for maintaining the safety of the machines in the factory.

There is no indication that the management had ever shown any serious concern for the safety of those operating said machines. As it was, the defendant corporation even tended to be apathetic to the plight of its employees manning the factory sewing machines....

If the machines were frequently and regularly checked or properly maintained, the death of Lucrecia by electrocution would surely not have come to pass, ... (p. 2, Decision).

In actions based on quasi-delict as in this case, all damages for the natural and probable consequences of the act or omission complained of are recoverable. (Article 2202 of the New Civil Code).

WHEREFORE, the decision of the Court of Appeals is hereby set aside and thedecision of the lower court is hereby reinstated except that the indemnity forthe death itself is increased to Thirty Thousand (P30,000.00) Pesos.

SO ORDERED.

G.R. No. L-17029 September 30, 1964

SAMUEL S. SHARRUF, petitioner, vs.FRANK BUBLA, ARSENIO SOLIDUM, Presiding Judge, Court of First Instance of Manila, Branch XVII,respondents.

Ernesto T. Zshornack for petitioner.William H. Quasha & Associates for respondents.

DIZON, J.:

This is a verified petition for certiorari, with a prayer for a preliminary injunction filed by Samuel S. Sharruf against Frank Bubla and the Hon. Arsenio Solidum, Judge of the Court of First Instance of Manila, Branch XVII, to set aside the latter's orders of March 14 and April 11, 1960 in Civil Case No. 33461 denying petitioner's motion for new trial, for lack of merit, and his motion for reconsideration thereof, respectively, and his order of June 3, 1960 disallowing petitioner's appeal from the order of denial of March 14, 1960 on the ground that the order aforesaid was already final and executory,and ordering its execution.

On August 15, 1957 respondent Bubla, a non-resident alien, through his counsel and legal representative, William Quasha & Associates, filed a complaint with the respondent court to compel petitioner to render an accounting in connection with a written contract entered into between them (Civil Case No. 33461). Petitioner filed an answer denying the material allegations of the complaint and setting forth therein a counterclaim for damages, but on September 17, 1958 his counsel filed a motion to withdraw

his appearance for the reason that he had been unable to get in touch with him. The court granted the motion.

When the case called for pre-trial on September 27, 1958, petitioner failed toappear, and the court set the case for trial on the judgments an December 1,1958. Notice thereof was sent to petitioner at his address of record. After several postponements, the hearing of the case was reset for March 6, 1959, but petitioner again failed to appear either personally or thru counsel, despite notice sent to him at his address of record. Instead of proceeding with the trial of the case — as His Honor could have done — he directed respondent Bubla's counsel to exert efforts to notify petitioner of the trial of the case on April 23, 1959. Upon petitioner's failure to appear when the case was finally called for trial on that date, the court received Bubla's evidence which consisted of Bubla's deposition taken before the Philippine Consul, Philippine Embassy at Sydney, Australia, and documentary evidence relative to their contract, management and operation of the theatrical venture and stipulation as to accounting. On the basis thereof, the respondent court found that the following facts had been established:

From the evidence in the record, it appears that the plaintiff, Frank Bubla, is aresident of 11 Shipley Street, South Yarra Melbourne, State of Victoria, Commonwealth of Australia, and was an entrepreneur managing a theatrical troupe under the name of "Bubla Continental Revue" in 1954, while the defendant, Samuel S. Sharruf was then the operator and manager of the "Riviera Night Club" at Dewey Boulevard, Manila. Exhibits "A" to "K" of plaintiff's deposition show that plaintiff and defendant entered into a series of agreement by correspondence whereby the former undertook to provide the latter with the so-called "Bubla Continental Revue" for the purpose of presenting two nightly floor shows in said night club for a consideration of P2,500.00 monthly, "net and free income tax", as well as three daily stage shows at the Manila Grand Opera House (Exhibits "E", "A-3", and "A-46"), for another P2,500.00 a month. Subsequently, plaintiff and defendant reduced the terms of their agreement to a formal contract (Exhibit "P").

The "Bubla Continental Revue", comprising of six members excluding the plaintiff, who was unable to enter this country because his visa was not approved, arrived in Manila sometime in September, 1954, and from September 29, 1954 to January 15, 1955, it performed floor shows at the "Riviera Night Club" twice nightly, and three or four stage shows daily at the Manila Grand Opera House under the management and sponsorship of herein defendant (Exhibits "A-28", "A-36", "A-42", "A-43" and "A-46"). In the

meantime plaintiff authorized defendant to pay the salaries of the members of said theatrical troupe and requested an accounting of the expenditures incurred as well as payment of whatever amount was due plaintiff by virtue of their contract (Exhibit "P"). However, despite such demands (Annex "A", Exhibits "II", "III", "IV" and "V"), defendant failed to render any accounting and to pay to plaintiff such amount as was due him, thereby compelling the latter to engage the services of his lawyers for P5,000.00 for the purpose of instituting this action.

and on June 9, 1959, it rendered judgment as follows:

WHEREFORE, judgment is hereby rendered ordering the defendant, Samuel S. Sharuff as follows:

a) To render to the plaintiff, Frank Bubla, an accounting of the gross receipts from the Theatrical performances of the "Bubla Continental Revue" at the "Riviera Night Club", Manila Grand Opera House and in other places in the Philippines covering the period of four (4) months under defendant's management, less authorized expenditures and advances;

b) To pay such sum as may be due the plaintiff as a result of such accounting, with interest thereon at the legal rate from January 31, 1955, until fully paid;

c) To pay to plaintiff the amount of P2,000.00 by way of attorney's fees; and

d) The costs of suit.

On February 5, 1960, copy of the above-quoted decision was served upon petitioner. On March 7, 1960, he filed a motion for new trial on the ground of mistake and/or excusable negligence which motion was denied by the court in its order of March 14, 1960, as follows:

Inasmuch as the Motion for New Trial and to set aside the decision in this case is not supported by affidavits of merit, as required by the Rules, the same is hereby DENIED. Moreover, it appears from the record that the decision was rendered on June 9, 1959, whereas the Motion for New Trial wasfiled on March 7, 1960, more than six months after the condition of such judgment, as provided in Section 3, Rule 38 of the Rules of Court ... .

On March 18, 1960, petitioner filed an urgent motion for reconsideration which was denied by the court on March 19, 1960. Four days later, petitioner filed another motion for reconsideration raising as additional grounds

therefor that the decision rendered in said case was null and void for want of notice to him of the hearing thereof and that respondent Bubla had no legal capacity to sue before our courts. Said motion was denied on April 11, 1960. In another order of June 3, 1960, the respondent court disallowed petitioner'sappeal from its order of March 14th, on the ground that it was not filed withinthe reglementary period for appeal, and ordered the issuance of a writ of execution.

Upon the facts before Us, we find no sufficient reason to grant the writ prayed for.1awphîl.nèt

The granting or denial of a motion for new trial is a matter addressed to the sound discretion of the trial court. In this case where petitioner's motion was based on mistake and/or excusable negligence, the lower court found that the same was not supported by any affidavit of merit. Even if we were to agree with petitioner that, in this connection, his answer to the complaint may be taken into account, the allegations made therein do not appear to satisfy the rule as to proof of mistake or excusable negligence. Consequently,the respondent court committed no error in denying said motion.

Petitioner insists that the respondent court acquired no jurisdiction over the person of respondent Bubla. We find this to be without merit. It is settled law in this jurisdiction that a court may acquire jurisdiction over the person of a party either by his voluntary appearance in court demanding affirmative relief or by having him served. With summons within the territorial jurisdiction of the Philippines. Bubla was the plaintiff in Civil Case No. 33461 filed against the herein petitioner. By filing his complaint, therefore, Bubla submitted voluntarily to the jurisdiction of the respondent court and the latter acquired such jurisdiction even if, as a matter of fact, Bubla had never been able to enter the Philippines.

Petitioner's claim that the decision of the respondent court in Civil Case No. 33461 is void because of lack of notice of trial served on him is likewise untenable. The record shows that petitioner had a registered address in the record of said case at which repeated notices of trial were addressed to him. Aside from this, it also appears that the respondent court, instead of proceeding to receive the evidence of the plaintiff on March 6, went out of itsway and deemed it wise to reset the trial for April 23 of the same year, directing Bubla's counsel to exert efforts to notify petitioner. But this notwithstanding, the latter failed to appear on the aforesaid date, for which

reason the respondent court received Bubla's evidence and subsequently rendered judgment in his favor.

WHEREFORE, the petition for certiorari under consideration is dismissed, withcosts.

G.R. No. L-30666 February 25, 1983

ANDRES ABAN and DOLORES GALOPE, petitioners, vs.HONORABLE MANUEL L. ENAGE, as District Judge of the Court of First Instance of Agusan, Branch II, HEIRS OF ELEUTERIO CUENCA, and ATTY. TIMOTEO D. NALDOZA, Attorney-in-Fact and Counsel,respondents.

MAKASIAR, J.:

This is a petition for certiorari and prohibition with preliminary injunction filedby petitioners against private respondents and Honorable Judge Manuel L. Enage, District Judge of the Court of First Instance of Agusan, to declare null and void the order of the court dated July 29, 1968, issued in Civil Case No. 1005, ordering the cancellation of TCT No. RT 1693 in the names of herein petitioners covering Lot No. 427 C-I (Subdivision Plan LRC-Psd-40107), on theground that the same was issued without or in excess of jurisdiction.

The antecedent facts are as follows:

On August 21, 1964, a complaint was filed in the Court of First Instance of Agusan, Branch 11, then presided by the late Judge Montano Ortiz, docketed as Civil Case No. 1005, entitled "Maria Balaga Severo Malvar, Ariston Blanco, Domingo Macuno plaintiffs, versus Pedro Cuenca, Moises Burdeos, Nestor Burdeos, Deodoro Burdeos, Leonila Burdeos, Remedios Burdeos, Leonardo Campana, Aprodito Campana, Cleofe Campana, Lilia Campana, Alberto Banjao, for himself and on behalf of the Minors- Luzminda, Clemencia, and Isabel, all surnamed Banjao, Felix Arriola Sr., Leonardo Villafuerte, Lope C. Jonco, Butuan City Rural Bank, Register of Deeds of Butuan City, Land Registration Commissioner, Sixto Martinez, Aurora C. Martinez, Celestino Udarbe and Andres Aban, defendants," for Nullification and Cancellation of Subdivision Plan LRC- Psd 37270 on Lot No. 427 Cad. 84, Butuan City, TCT-RT 1584, TCT-RT 1585 and Various Documents and for Damages with Injunction (pp. 12- 17, rec.).

The complaint states that Celestino Udarbe and Andres Aban are sued as parties-defendants "since their consent to have them joined as parties- plaintiffs could not be secured. "

Andres Aban, as a defendant in the above-entitled case, through counsel, filed a motion dated September 1, 1964 to drop him from the complaint as a misjoined party and, at the same time, moved for the dismissal of the complaint (pp. 57-58, rec.).

On September 17, 1964, the CFI of Butuan City issued an order (p. 59, rec.) dropping Andres Aban as party- defendant and dismissing the complaint against him.

On May 26, 1965, an amended complaint was filed wherein the names of Severo Malvar as plaintiff and petitioner herein Andres Aban and Celestino Udarbe as defendants in Civil Case No. 1005 were dropped as parties therein.

Meanwhile, the heirs of Eleuterio Cuenca filed a petition for correction, etc. dated November 1, 1965 and docketed as Civil Case No. 1126, this time before the CFI of Agusan, Branch 1, presided by Judge Simeon Ferrer, praying, inter alia, for the cancellation of TCT No. RT- 1693 issued to herein petitioner Andre Aban. This case, however, was dismissed at the instance of the heirs in an order of the court dated June 4, 1968 (pp. 68-69, rec.).

On April 15, 1968, defendants-heirs of Eleuterio Cuenca in Civil Case No. 1005, through Atty. Timoteo D. Naldoza, counsel and attorney-in-fact of the Cuenca heirs, filed a motion in the aforesaid case for the cancellation of TCT No. RT-1693 issued in the name of Andres Aban, as well as all the annotations at the back thereof, alleging that herein petitioner Aban's claim over a portion of Lot No. 427, particularly Lot No. 427-C-1 is "now abandoned, waived or relinquished" (pp. 12-17, rec.).

Subsequently, herein petitioner Andres Aban filed an opposition to the motion to cancel TCT No. RT-1693 filed by the heirs of Eleuterio Cuenca.

On July 29, 1968, respondent Judge Manuel L. Enage issued an order hereby quoted as follows:

ORDER

RESOLVING: On a pending motion filed by Atty. Timoteo D. Naldoza, counsel for defendants-movants, dated April 15, 1968 (See: pp. 667-672, Records), the manifestation with motion of same counsel dated May 25, 1968 (See: pp.

710-71 1, Records), all praying that TCT-RT 1693 issued to respondent AndresAban and all the annotations at the back of said title (See: pp. 687-689, Records), be cancelled based on the grounds therein stated;

CONSIDERING: That, except for respondent Andres Aban who filed an opposition to the foregoing thru his counsel, Atty. Jose L. Lachica, and plaintiff Domingo Mactino who. thru his counsel, Atty. Lydio J. Cataluna argued orally in behalf of his aforesaid client, none of the parties filed any formal opposition to the defendants-movants' aforesaid motion despite due notice given them, including the City of Butuan thru the City Fiscal, and neither did anyone of them even cared to appear in Court when defendant movants' motion was heard for oral argument;

CONSIDERING: That the land in question known as Lot No. 427 of the Butuan Cadastre was by the Court setting as a Cadastral Court in Cadastral Case No.321, Cadastre No. 84 decreed to be the absolute property of the late Eleuterio Cuenca, predecessor-in-interest of herein defendants -movants;

CONSIDERlNG: That pursuant thereto, Original Certificate of Title No. RO-156 (360) was issued in the name of said Eleuterio Cuenca which title was later cancelled by TCT-RT-589 (See: pp. 683 and 783, Records)

CONSIDERING: That the aforesaid TCT-RT-589 was later cancelled by TCT-RT 1584 and TCT-RT 1589;

CONSIDERING: That, under the Subdivision plan LRC-Psd 37270 (See. pp. 249, 673 and 796, Records), said Lot No. 427 was subdivided into

Lot No. 427-ALot No. 427-B; and Lot No. 427-C;

and that sometime on November 5, 1964 said Lot No. 427-C was further subdivided into

Lot No. 427-C-1 Lot No. 427-C-2; and Lot No. 427-C-3

under subdvision plan LRC Psd 40107 (See: p. 674; Records);

CONSIDERING: That TCT RT-1585 was later cancelled after said Lot No. 427-C was subdivided into three lots as aforestated by

TCT-RT 1693 for Lot No. 427-C-1; TCT-RT 1694 for Lot No. 427-C-2; and TCT-RT 1695 for Lot No. 427-C-3;

CONSIDERING: That defendants-movants are now asking the Court that TCT-RT 1693 above-referred to and issued to respondent Andres Aban and all the annotations at the back thereof be declared as null and void and, as consequence thereof to revive TCT-RT 1585 insofar as Lot No. 427-C-1 is concerned, declaring Entry No. 7125 at the back thereof as cancelled, and that a new transfer certificate of title be issued in the names of herein defendants-movants, after complying with the publication and other requisites for the issuance of title;

CONSIDERING: That TCT-RT 1693 issued in the name of respondent Andres Aban under Entry No. 7125 at the back of TCT-RT 1585 (See: p. 802, Records)was so issued without any registered document of sale or conformity required as a prerequisite, on the approval of said subdivision plan LRC-Psd 40107 as shown on the face of said plan under the said annotation entry;

CONSIDERING: That without such registered document of sale or conformity the Register of Deeds cannot validly issue TCT-RT 1693 in the name of respondent Andres Aban without a Court order to that effect and registered with the said plan under Entry No. 7125;

CONSIDERING: That this case has not been tried yet by the Court, and, therefore, no order or decision has ever been entered yet declarant, respondent Andres Aban the true owner of said Lot No. 42's'-C-1 which is a portion of Lot 427, the entire property in question;

CONSIDERING: That respondent Andres Aban, upon his own motion that his counsel, was declared by the Court on September 17, 1964 to be not an indispensable party in this case, thereby binding him to all its legal effects, there being no motion for reconsideration nor appeal having been seasonably brought by said respondent Andres Aban up to the present (See: p. 68, Records);

CONSIDERING: That the Land Registration Commission admitted in writing that subdivision plan Psd-40107 was approved by said office with a condition that the giving of Lot No. 427-C-1 to respondent Andres Aban under the said plan was subject to the conformity of defendants-movants as owners of the said lot, which conformity is herein found wanting (See: pp. 772-813; 703-740, 736; and 740, Records), so much so that for so issuing respondent

Andres Aban TCT-RT 1585 in his name the Register of Deeds was forced to admit 'clerical mistake' (See: pp. 738- 739, Records);

CONSIDERING: That it is now settled in this jurisdiction that if the co- owners of a property subdivided cannot agree as to how the property is going to be apportioned among themselves, the Court shall, before title shall be issued by the Register of Deeds, duly authorized or, as in the instant case, approve the issuance thereof, which is found wanting again in this instance (See: Section 44, Act 496, as amended by Republic Act 440; Patingo vs. Pelayo, 63 O.G. 4818; and Lagula vs. Casimero, 53 O.G. 196);

IN VIEW WHEREOF, TCT-RT 1693 issued in the name of respondent Andres Aban and all the annotations at the back thereof is hereby declared, for having been issued without authority of the Court, NULL and VOID ab initio, and as a consequence thereof, TCT-RT 1685 is hereby ordered, insofar as Lot No. 427-C-1 is concerned, REVIVED, Entry No. 7126 being NULL and VOID.

The Register of Deeds of the City of Butuan is hereby ordered to issue a new transfer certificate of title over Lot No. 427-C-1 in the names of defendants-movants after complying with the publication and other requisites for the due issuance of the title above-said.

SO ORDERED (pp. 20-25, rec.).

On August 20, 1968, herein petitioner Andres Aban filed a motion for reconsideration, but the same was denied in an order (p. 26, rec.) of the court dated January 11, 1969.

A second motion for reconsideration dated January 22, 1969 was filed but was denied in an order (pp. 27-30, rec.) dated May 10,1969.

A third motion for reconsideration dated May 15, 1969 was filed but was again denied in an order (p. 31, rec.) dated June 6, 1969.

Hence, the instant appeal.

Acting on the petition for certiorari, this Court, on July 9, 1969, issued a resolution requiring the respondents herein to file an answer to the petition for certiorari and, at the same time, issued a temporary restraining order restraining the enforcement of the Order "cancelling Title TCT-RT-1693 of petitioners herein, and from taking further proceedings or action in Civil CaseNo. 1005 of the Court of First Instance of Agusan, entitled 'Maria Balaga et al.vs. Pedro Cuenca, et al.' (p. 72, rec.).

On August 1, 1969, Atty. Timoteo D. Naldoza filed a telegraphic motion (p. 73, rec.) for extension of time within which to file an answer to the petition for certiorari, which was granted by this Court in a resolution dated August 5,1969 (p. 79, rec.).

On September 6, 1969, Atty. Timoteo D. Naldoza as one of the respondents in the instant case, filed an "Answer with Affirmative and Special Defenses" (pp. 85-127, rec.).

In the same answer, Atty. Timoteo D. Naldoza also entered his "special appearance" as counsel for and in behalf of the respondent heirs of EleciterioCuenca (pp. 121-122, rec.).

On September 13, 1969, counsel Timoteo D. Naldoza filed a "Supplemental Answer with Additional Affirmative & Special Defenses" (pp. 222-227, rec.).

In a resolution dated September 22, 1969 (p. 229, rec.), this Court set the hearing of the instant case on October 20, 1969.

At the hearing of the instant case on October 20, 1969, Atty. Jose Lachica appeared for the petitioners and were given 30 days to submit a memorandum in lieu of oral argument; the Court likewise granted the respondents 30 days to reply upon receipt of petitioners' memorandum (p. 241, rec.).

On October 30, 1969, Atty. Timoteo D. Naldoza filed an "Urgent Motion and Manifestations" (pp. 242-244, rec.) praying that the petition for certiorari be dismissed on jurisdictional grounds.

In a resolution (p. 253, rec.) dated November 4, 1969, this Court denied the motion and manifestation of the respondents for the dismissal of the petition on jurisdictional grounds.

In a resolution (p. 253, rec.) dated November 4, 1969, this Court denied the motion and manifestation of the respondents for the dismissal of the petition on jurisdictional grounds.

On November 12, 1969, Atty. Timoteo D. Naldoza filed the following: "APPEARANCE FOR RESPONDENT HEIRS OF ELEUTERIO CUENCA WITH URGENT MOTION TO SET ASIDE PROCEEDINGS TAKEN IF ANY AND/OR TO SUSPEND RESOLUTION OF TELEGRAPHIC MOTION AND/OR WRITTEN MANIFESTATION WITH MOTION TO FILE MEMORANDUM IN LIEU OF ORAL ARGUMENT OR OF THE HEARING SET FOR OCTOBER 20, 1969 TO ENABLE

SAID HEIRS FIRST TO FILE THEIR ANSWER OR ADDITIONAL ANSWER TO THE PETITION IN ADDITION TO THE ANSWER AS FILED IN THIS CASE BEFORE SETTING THIS CASE FOR ITS HEARING" (pp. 255-256, rec.).

In a resolution (p. 258, rec.) dated November 17, 1969, this Court resolved to"require Atty. Naldoza to secure respondents Heirs of Eleuterio Cuenca's conformity to his appearance herein, within 10 days from notice hereof."

Thereafter, the heirs of Eleuterio Cuenca filed a certificate of conformity to the appearance of Atty. Timoteo D. Naldoza (p. 285, rec.) as their counsel in the instant case.

On December 5, 1969, the Court issued a resolution (p. 289, rec.). requiring the heirs of Eleuterio Cuenca to comment on the conformity of said heirs to the appearance of Atty. Timoteo D. Naldoza as their counsel in the instant case.

On January 28, 1970, the heirs of Eleuterio Cuenca filed before this Court their comment (p. 312, rec.) reiterating their conformity to the appearance ofAtty. Naldoza as their counsel of record.

Meanwhile, petitioners, thru counsel, filed their memorandum (pp. 291- 297, rec.) on December 16, 1969, in compliance with the resolution of this Court dated October 20, 1969.

On December 20, 1969, the respondents, thru counsel, filed their memorandum (pp. 298-3 1 0, rec.).

On March 16, 1970, the respondents filed a supplemental memorandum (pp. 319-324, rec.) to their memorandum dated November 30,1969, which was filed on December 20,1969.

While the instant case was pending before this Court, a certain Antonio K. Cañon came into the picture by entering his appearance (p. 327, rec.) on May 29, 1973 as counsel for the respondents and, at the same time, filing a motion for resolution (pp. 328-329, rec.).

In his motion for resolution, counsel Antonio K. Cañon stated that he is appearing in collaboration with 'the original counsel of record, Atty. Timoteo D. Naldoza. "

In a resolution dated June 5, 1973 (p. 333, rec.), this Court "resolved to require the respondents themselves to COMMENT on the said appearance, and in conformity therewith, to INFORM this Court, who between Attys.

Timoteo D. Naldoza and Antonio K. Cañon shall be exclusively served with copies of all pleadings and court processes in this case, both within ten (10) days from notice hereof. This Court resolved further to NOTE the motion of respondents heirs of the late Eleuterio Cuenca praying that this case be resolved and dismissed,"

On June 19, 1973, the petitioners, thru counsel, filed a manifestation to motion for resolution (pp. 334-335, rec.) filed by Atty. Antonio K. Cañon in behalf of herein respondents, joining said Atty. Cañon in his prayer for the resolution of the instant case.

On July 6, 1973, the respondent heirs of Eleuterio Cuenca filed their comment in compliance with the resolution of this Court dated June 5, 1973.

In their comment (p. 336, rec.), the respondents heirs of the late Eleuterio Cuenca stated:

xxx xxx xxx

2. That we contracted the services of Atty.AntonioK.Cañon after we lost our faith and confidence on our counsel Atty. Timoteo D. Naldoza, who sold someportions of our property, subject matter of this case;

3. That our counsel of record Atty. Timoteo D. Naldoza neglected us after we stopped him in his acts of disposing some portions of our property under litigation and abused our ignorance which we discovered only after we contracted the services of our new counsel who informed as that the acts of Atty. Timoteo D. Naldoza in disposing some portions of our property is illegal before the case is finally terminated by this Court.

WHEREFORE, premises considered, co-respondents, Heirs of the late Eleuterio Cuenca through the undersigned representatives respectfully INFORM this honorable Court that copies of all pleadings and court processesbe exclusively served on Atty. Antonio K. Cañon at his address at Sto. Niño San Agustin, Surigao del Sur, Philippines. "

On July 31, 1973, the respondents, thru counsel, Atty. Antonio K. Cañon, filed an answer to manifestation to motion for resolution (pp. 343-345, rec.) filed by herein petitioners.

On August 19, 1974, the respondents, thru Atty. Timoteo D. Naldoza, filed a motion captioned as "MOTION TO GIVE EFFECT TO SECTION 11 (1) and (2) OFART. X OF THE NEW PHILIPPINE CONSTITUTION" (pp, 354-354a).

On September 9, 1974, the petitioners herein filed an opposition to motion togive effect to section 11 -1 and 2 of Article X of the New Philippine Constitution (pp. 356-357, rec.), in compliance with the resolution of the Court to comment on said motion of respondents.

On December 23, 1974, the law firm of Zarate, Artes and Vega entered their appearance as counsels of the petitioners in collaboration with Atty. Jose L. Lachica (p. 360, rec.).

Herein petitioner Andres Aban likewise affirmed the appearance of the aforestated law firm in a letter (p. 362, rec.) sent to the Clerk of Court of this Court.

On December 23, 1974, the petitioners, thru their new counsel, filed a motion to admit supplemental memorandum (pp. 363-364, rec.).

In a resolution dated January 14, 1975, this Court granted the motion of the petitioners to admit supplemental memorandum in support of their petition for certiorari and prohibition and noted the aforesaid memorandum as well as the appearance of the law firm Zarate, Artes and Vega; and the letter of petitioner Andres Aban to the Clerk of this Court confirm the appearance of the aforesaid law firm as his new counsel in collaboration with his original counsel of record (p. 367, rec.).

One of the annexes attached to the supplemental memorandum filed by the new counsel of herein petitioners was an affidavit (Annex 'F', pp. 105-107, Supplemental Memorandum, p. 366, rec.) executed by Atty. Timoteo D. Naldoza which declares the following:

First, to rectify my legal impression and mistakes committed in the course of various judicial proceedings conducted in the Court of First Instance of Agusan del Norte as well as one pending before the Supreme Court by way ofa certiorari proceedings, and, after a perusal of all points of law involved in these cases, I hereby state, that TRANSFER CERTIFICATE OF TITLE NO. RT-1693 issued in the name of ANDRES ABAN is free from all fatal defects, intrinsic or extrinsic in nature, valid and indefeasible against the whole world,and his corresponding right as owner thereof is beyond question, consequently, I will undertake to repair all damages and prejudice caused to him directly or impliedly by the proceeding in court, to the extent of my and/or our opposition filed in the Supreme Court under G.R. No. L-30666 filedsometime on or about 1969; and, thus, I acknowledged as erroneous and nulland void my acquisition of one half (1/2) of the undivided portion of Lot No.

427-C-1 from the Heirs of Eleuterio Cuenca (Pedro Cuenca et al.) in the document entitled 'Deed of Transfer' ratified before Notary Public Noli G. Cortel of Butuan City, as Doc. No. 1657, Page No. 33, Book, No. XIV Series of 1966 on December 17,1965;

Second, to fulfill my undertakings as above narrated, I will work to secure theconformity of my client within the period of two months from the date of this instrument, and, thereafter, as soon as I received the conformity thereof, then, I will submit the same to Mr. Andres Aban and his counsel, with respect to the opposition filed in the Supreme Court.

Third, That the undertaking as above described is subject to the concomitantaction to be taken by Andres Aban to the withdrawal of the administrative case against me.

IN TRUTH OF THE FOREGOING, I have hereunto set my hand on this 27th dayof September, 1974 at Manila.

(SGD.) TIMOTEO D. NALDOZA

On May 14, 1975, Atty. Timoteo D. Naldoza filed an opposition to supplemental memorandum filed by the petitioners and denied the truth andgenuiness of the affidavit marked as Annex 'F' (pp. 372-380, rec.).

In a letter (p. 398, rec.) dated May 23, 1975, which. was addressed to the Clerk of Court of this Court, Atty. Timoteo D. Naldoza stated that by virtue of the written authority given by respondents heirs of Eleuterio Cuenca, duly entered into the records of the instant case, he is the principal counsel hereinfor all said respondents and that Atty. Antonio K. Cañon is only collaborating with him and requesting that henceforth he be considered as counsel of record for respondents and that all notices and other court processes be sentto him.

On August 20, 1975, the respondents and Atty. Antonio K. Cañon filed their comment (pp. 404-405, rec.) on the letter-request of Atty. Timoteo D. Naldoza in compliance with the resolution of the Court (p. 402, rec.) dated June 5, 1975.

Likewise, the heirs of Eleuterio Cuenca executed a joint affidavit (pp. 406- 408, rec.) dated August 2, 1975 relative to the letter- request of Atty. Naldoza.

Attached to the comment filed by Atty. Antonio K. Cañon are Annexes '1', '2', '3', '4', '5' and '6', all xerox copies of alleged Deeds of Sale executed by Atty. Timoteo D., Naldoza in favor of several persons over some portions of the land subject matter of this litigation (pp. 409-416, rec.).

In a resolution dated August 26, 1975, this Court resolved to require Atty. Naldoza to file a reply to the comment of Atty. Cañon (p. 418, rec.).

On October 10, 1975, the respondents, thru Atty. Antonio K, Cañon filed a "MANIFESTATION AND/OR OBJECTIONS TO THE AFFIDAVIT OF ATTY. TIMOTEO NALDOZA (pp. 424-425, rec.).

In his manifestation and objection, Atty. Antonio K. Cañon stressed:

1. That the above-mentioned affidavit is unauthorized, unethical, and withoutany basis in fact and in law and was procured by the petitioner Andres Aban after the petitioners commenced a Disbarment Proceedings with the Office ofthe Solicitor General, Manila, against Atty. Timoteo Naldoza;

xxx xxx xxx

4. That said statements are unauthorized, baseless, and illegal on the groundthat it constitutes conflicting interest prejudicial to his clients during the pendency of the above-entitled case before this Honorable Court, which are contrary to the evidence on the records of this case, showing his ignorance of the law and total disregard of the trust and confidence imposed on him by his clients. The last time Atty. Naldoza had contract with his clients was in themonth of September, 1972.

5. That what he (Atty. Naldoza) stated in said affidavit is binding on him personally and cannot legally bind his clients, said statement was executed without authority from them.

6. That said statement of the affiant Atty. Naldoza is an act of betrayal of the trust and confidence imposed on him by his clients and respondents through the undersigned course', humbly ask this Honorable SUPREME COURT that a disciplinary action be imposed on Atty. Timoteo Naldoza,

WHEREFORE, premises considered, Respondents through the undersigned counsel respectfully pray the Honorable SUPREME COURT to disregard the above-mentioned affidavit annexed to the Supplemental Memorandum of Petitioners; to impose a disciplinary action on Atty. Timoteo D. Naldoza, and

such other remedy which this Honorable Court deem just, equitable and proper on the premises.

In a resolution dated October 14, 1975 (p. 427, rec.). this Court noted the foregoing manifestation and objection of Atty. Antonio K. Cañon to the affidavit marked as Annex 'F' allegedly executed by Atty. Timoteo D. Naldoza and attached to the supplemental memorandum filed by petitioners herein.

On December 12, 1975, Atty. Timoteo D. Naldoza filed a reply (p. 433, rec.) to manifestation and objection filed by Atty. Antonio K. Cañon asserting that said affidavit attached to petitioners' supplemental memorandum was procured through "deceit and misrepresentation."

On December 24, 1975, Atty. Timoteo D. Naldoza filed a "REPLY TO COMMENT WITH PETITION TO RECORD ATTORNEY'S LIEN" (pp. 436-440, rec.) praying, among others, that his aforesaid contingent claim for attorney's fees"be entered into the records of this case and that the same be duly registered at the back of the certificate of title that may be issued to the heirs of Eleuterio Cuenca in the event of a favorable decision in this case,"

On April 27, 1977. the petitioners, thru counsel, filed a motion for early resolution of the instant case (pp. 446-449, rec.).

In a letter dated September-22, 1977, a certain Atty. Cesar T. Palana of Tolosa, Leyte, informed this Court that his legal services were engaged to represent respondents Cuencas in this case by their attorney-in-fact Alvin Domingo and praying that his name be entered in the records of this case and that he be furnished with all notices, pleadings and other court processes (p. 453, rec.).

Attached to the letter of Atty. Cesar T. Palana is a xerox copy of the special power of attorney executed by the respondents heirs of Eleuterio Cuenca in favor of Mr. Alvin Domingo (pp. 454-455, rec.).

In a resolution dated November 10, 1977, this Court resolved to require the respondent Cuencas to comment on said letter (p. 457, rec.).

On January 27, 1978, the respondent heirs of Eleuterio Cuenca filed a manifestation (p. 459, rec.). before this Court affirming the appearance of Atty. Cesar T. Palana as their new counsel of record.

On February 22, 1978, Atty. Timoteo D. Naldoza filed an opposition to appearance of Atty. Cesar T. Palana (p. 464, rec.).

In a resolution dated March 16, 1978, this Court resolved to require the respondent heirs and Atty. Cesar T. Palana to comment on the opposition filed by Atty. Timoteo D. Naldoza (p. 466, rec.).

On May 2, 1978, the respondent heirs of the late Eleuterio Cuenca filed their comment before this Court reiterating that they have lost their trust and confidence in Atty. Naldoza as their counsel of record (pp. 468-470, rec.).

On May 10, 1978, Atty. Cesar T. Palana filed his comment (p. 476, rec.) on theopposition filed by Atty. Timoteo D. Naldoza.

On June 19,1978, a letter-appeal (p. 479, rec.) signed by Alvin Domingo, attorney-in-fact of the heirs of Eleuterio Cuenca, asking for the early resolution of this case, was endorsed to this Court by the Office of the President through a memorandum (p. 478, rec.) dated June, 5, 1978 of SeniorPresidential Staff Officer Francisco A. Robles.

On August 4,1978, Atty. Timoteo D. Naldoza filed a motion to strike out comments of Atty. Palana and the heirs of Eleuterio Cuenca (pp. 481-482).

In a resolution dated August 15, 1978, the Court resolved to require Atty. Palana and the respondent heirs to comment on the aforesaid motion of Atty.Naldoza.

On September 25, 1978, Atty. Cesar T. Palana filed his comment (pp. 486- 487, rec.) on the motion filed by Atty. Naldoza.

On October 3, 1978, the respondent heirs of Eleuterio Cuenca submitted their comment (pp. 489-490, rec.) to this Court.

On October 6, 1978, Atty. Naldoza filed a reply to the comment of Atty. Palana (pp. 493-495).

On October 20, 1978, Atty. Naldoza filed a supplemental reply to comment ofprivate respondents (pp. 499-501, rec.).

On December 22, 1978, Atty. Cesar T. Palana filed a rejoinder (p. 511, rec.) tothe reply of Atty. Naldoza in compliance with the resolution of the Court dated October 19, 1978 (p. 497, rec.).

In a letter dated June 25, 1980, the heirs of Eleuterio Cuenca represented by Nestor Cuenca Burdeos and Nemecio Cuenca, wrote a letter to the Chief Justice asking for the early resolution of this case (p. 532, rec.).

In a resolution dated August 7, 1980, the Court noted the letter of Nestor Cuenca Burdeos and Nemecio Cuenca, heirs of Eleuterio Cuenca, and henceforth reassign this case to the First Division of this Court (p. 534, rec.).

In a letter (pp. 540-542, rec.) dated January 14, 1982, which was addressed to the Clerk of Court, the heirs of Eleuterio Cuenca pray for the change of their counsel of record Atty. Timoteo D. Naldoza with Atty. Francisco T. Concon.

In a resolution (p. 544, rec.) dated February 8, 1982, the Court resolved to require Atty. Naldoza to comment on the letter- request of the Cuenca heirs.

On April 15, 1982, Atty. Timoteo D. Naldoza filed an "URGENT/VEHEMENT OPPOSITION" (pp. 550-553, rec.) to the letter- request of the Cuenca heirs, asserting that his services as counsel of said heirs is covered by a "contingent fee agreement" duly executed between him and the said heirs ofEleuterio Cuenca.

In a resolution dated May 31, 1982, the Court resolved to require the petitioners to file a reply to the urgent vehement opposition (p. 564, rec.).

The records of this case do not show any reply filed by herein petitioners to the urgent vehement opposition filed by Atty. Naldoza; however, Atty. Francisco T. Concon, in behalf of the Cuenca heirs, filed a reply to said opposition (pp. 567-569, rec.).

On August 12,1982, Atty. Naldoza filed his comment on the reply filed by Atty. Francisco T. Concon.

I

Going back to the main case, herein petitioners alleged that the order of the court a quo dated July 29, 1968, issued in Civil Case No. 1005, ordering the cancellation of TCT No. RT-1693 issued in the name of herein petitioner Andres Aban over lot No. 127-C-1 (Subdivision Plan LRC-Psd-40107' ), was issued with grave abuse of discretion amounting to lack of jurisdiction and/orwithout jurisdiction because:

(a) The motion [Annex 'A'] filed in the lower Court is improperly filed becausethe Court below had no jurisdiction over the subject matter, the same being a separate, distinct, and independent action by itself;

(b) Your petitioners are not parties in Civil Case No. 1005 [Annex 'F'] and therefore, the Court below was without jurisdiction over them;

(c) There is patently no basis for respondent Judge Enage to give due course to a mere motion to cancel the title of petitioners there being no proper proceedings conducted, petitioners not being parties in Civil Case No. 1005 as amended, and therefore respondent judge had no power, jurisdiction or authority to order the cancellation of said title No. RT 1693 of petitioners herein;

(d) According to records of Civil Case No. 1005 the respondent heirs of Eleuterio Cuenca are represented by their counsel, Atty. Tranquilino O. Calo, Jr., and not respondent Atty. Timoteo Naldoza; said case is still pending before respondent Judge Enage; consequently, respondent, Atty. Naldoza hadno authority or power to file the motion to cancel Title No. RT-1693; such act of respondent Atty. Naldoza constitutes malpractice and a ground for disbarment before this Court;

(e) Respondent Judge Enage acted without jurisdiction and/or with grave abuse of discretion amounting to lack of jurisdiction in issuing the order of cancellation of TCT-R,T-1693 of Andres Aban by an unlawful and improper motion of respondent Atty. Naldoza, Attorney-in-fact for heirs of Eleuterio Cuenca, filed in Civil Case No. 1005 as amended, wherein, petitioners herein are not parties [attached Annex 'F', amended complaint 1005];

(f) Petitioners are without any remedy of appeal nor is there any plain, speedy and adequate remedy under the ordinary course of law against the patently unlawful order of the lower court to cancel Title No. RT 1693 of herein petitioners;

(g) Respondent Judge Enage has set the execution of his order after the lapseof the reglementary period, which order are clearly illegal and unwarranted and will result in irreparable damage and injury to the petitioners herein;

(h) There is therefore an imperative need for the issuance of an ex parte Writof Preliminary Injunction restraining and prohibiting the respondents, their agents, attorneys, representatives, deputies, servants, or any other persons acting in their behalf from enforcing the Order of which purposes petitioners are ready and willing to put up the necessary bond in the minimum amount which the Honorable Court will require" (pp. 8-10, rec.).

In fine, herein petitioners assert that the court a quo could not have acquiredjurisdiction over the subject matter of the motion to cancel TCT-RT-1693 filed by the heirs of Eleuterio Cuenca, private respondents herein, because the aforesaid motion to cancel partakes of a separate, distinct, and independent

action by itself; that since herein petitioners are not parties in Civil Case No. 1005, the Court a quo was without jurisdiction over their persons.

It may be well to state at this point that jurisdiction of the court over the subject or nature of an action, is conferred by law. Jurisdiction over the persons of the parties may be acquired by the voluntary appearance of the plaintiff, and, with respect to the defendant, by the service of summons uponhim or by his voluntary appearance in court.

It may be recalled that when the motion to cancel dated April 15, 1968 was filed by the heirs of Eleuterio Cuenca in the Court of First Instance of Agusan in Civil Case No. 1005, the court served summons to the petitioners herein who subsequently filed their opposition thereto (pp. 18- 19, rec.). When the motion to cancel was set for hearing (pp. 149-167, rec.) on June 17, 1968, Atty. Jose L. Lachica, counsel of herein petitioners, appeared in court. During said hearing, the parties were given ample opportunity to argue their respective stand, present evidence and exhibits, after which the court a quo required the parties to submit their respective memoranda, which the partiesdid.

Against the foregoing backdrop, this Court is not inclined to sustain herein petitioners' contention that the lower court was without jurisdiction or gravely abused its discretion when it ,acted on the motion to cancel filed by private respondents herein by issuing an order dated July 29,1968 cancelling TCT-RT-1693 in the name of Andres Aban, petitioner herein.

For even assuming that the motion to cancel filed by private respondents in the court below is a separate, distinct, and independent action by itself, as argued by the petitioners, nevertheless, by the service of summons upon herein petitioners, and by their act of filing an opposition to the motion as well as their voluntary appearance in court when the motion was set for hearing, together with the submission of their memorandum (pp. 168-177, rec.), the petitioners are deemed to have submitted themselves to the jurisdiction of the court, and, consequently, they are bound by the legal implications of the order of the court a quo.

Moreover, the filing of petitioners' three motions for reconsideration is a further submission on their part to the jurisdiction of the court, and the denial of such motions was binding on petitioners herein (Soriano vs. Palacio,et al., 12 SCRA 447, 449).

It cannot be said that the petitioners were denied their day in court. Neither can it be said that the petitioners' substantial rights were prejudiced thereby.The petitioners have had the fullest opportunity to lay before the court the merits of their claim when they, as stated heretofore, voluntarily submitted themselves to the jurisdiction of the court a quo.

To assert that the court had no jurisdiction because petitioner Andres Aban was not a party in Civil Case No. 1005 would appear therefore to be a mere technicality that would not serve the interest of the administration of justice (Torres vs. Caluag, et al., 17 SCRA 808, 811). Besides, petitioner Andres Aban's not being a party in Civil Case No. 1005 was of his own making. By not joining as party-plaintiff in Civil Case No. 1005, and, at the same time, asking the court to drop him as party-defendant (he was sued as one of the parties-defendants when his consent to have him joined as one of the parties-plaintiffs could not be secured) in the same case' which the court a quogranted in an order dated September 17, 1964, petitioner Andres Aban virtually toyed with his right to enforce and protect his claim over a portion of Lot No. 427 of Butuan Cadastre. There is no plausible reason for petitioner Andres Aban to assume that the lot he claims (Lot No. 427-C-1) is not involved in Civil Case No. 1005 because what is precisely under litigation in said case is ' Lot No. 427 as a whole, of which Lot No. 427-C-1 is part and parcel.

Under the circumstances, petitioner spouses Andres Aban and Dolores Galope are deemed impleaded as party respondents in Civil Case No. 1005.

II

With respect to the petition filed by Atty. Timoteo D. Naldoza to record his attorney's lien and to consider him as the principal counsel of record of herein private respondents, suffice it to state that this Court finds the petition meritorious.

While concededly, private respondents herein have the right to dismiss their attorney with or without cause, however, any change or substitution of attorney must have to follow the procedure prescribed by Rule 138, Section 26 of the Revised Rules of Court.

Unless the formalities required by the Rules of -Court on valid substitution of attorneys are complied with, no substitution will be permitted and the attorney who appeared last in the cause before such application for substitution will be regarded as the attorney of record and entitled to be

notified of all notices and pleadings and responsible for the conduct of the case (Olivares vs. Leola 97 Phil. 352). Specifically, We have ruled in several cases that "no substitution of attorneys will be allowed unless the following requisites concur: (1) there must be filed a written application for substitution; (2) there must be filed the written consent of the client to the substitution; (3) there must be filed the written consent of the attorney to be substituted, if such consent can be obtained; (4) in case such written consentcannot be procured, there must be filed with the application for substitution, proof of the service of notice of such motion in the manner required by the rules, on the attorney to be substituted".

In the case at bar, it is clear that there was no valid substitution of counsel. The records show that from the time this case was filed in the CFI of Agusan until the same reaches this Court, it was Atty. Timoteo D. Naldoza who appeared and filed all the necessary pleadings and motions in court as counsel of record for private respondents herein. The subsequent appearance of Attys. Antonio K. Cañon Cesar T. Palana, and Francisco T. Concon bears no significance because there was practically nothing to be done in the case any more as the same was already submitted to this Court for decision.

WHEREFORE, THE PETITION IS HEREBY DISMISSED, THE ORDER OF THE TRIALCOURT DATED JULY 29,1968 IS HEREBY AFFIRMED, AND THE TEMPORARY RESTRAINING ORDER ISSUED BY THIS COURT ON JULY 9,1969 IS HEREBY LIFTED AND SET ASIDE. NO PRONOUNCEMENT AS TO COSTS. SO ORDERED.

G.R. No. 156759, June 05, 2013

ALLEN A. MACASAET, NICOLAS V. QUIJANO, JR., ISAIAS ALBANO, LILY REYES, JANET BAY, JESUS R. GALANG, AND RANDY HAGOS, Petitioners, v. FRANCISCO R. CO, JR., Respondent.

D E C I S I O N

BERSAMIN, J.:

To warrant the substituted service of the summons and copy of the complaint, the serving officer must first attempt to effect the same upon the defendant in person. Only after the attempt at personal service has become futile or impossible within a reasonable time may the officer resort to substituted service.

The Case

Petitioners – defendants in a suit for libel brought by respondent– appeal the decision promulgated on March 8, 20021 and the resolution promulgated on January 13, 2003,2 whereby the Court of Appeals (CA) respectively dismissed their petition for certiorari, prohibition and mandamus and denied their motion for reconsideration. Thereby, the CAupheld the order the Regional Trial Court (RTC), Branch 51, in Manila had issued on March 12, 2001 denyingtheir motion to dismiss because the substituted service of the summons and copies of the complaint on each of them had been valid and effective.3

Antecedents

On July 3, 2000, respondent, a retired police officer assigned at the Western Police District in Manila, sued Abante Tonite, a daily tabloid of general circulation; its Publisher Allen A. Macasaet; its Managing Director Nicolas V. Quijano; its Circulation Manager Isaias Albano; its Editors Janet Bay, Jesus R. Galang and Randy Hagos; and its Columnist/Reporter Lily Reyes (petitioners),claiming damages because of an allegedly libelous article petitioners published in the June 6, 2000 issue of Abante Tonite. The suit, docketed as Civil Case No. 00-97907, was raffled to Branch 51 of the RTC, which in due course issued summons to be served on each defendant, including Abante Tonite, at their business address at Monica Publishing Corporation, 301-305 3rd Floor, BF Condominium Building, Solana Street corner A. Soriano Street, Intramuros, Manila.4

In the morning of September 18, 2000, RTC Sheriff Raul Medina proceeded tothe stated address to effect the personal service of the summons on the defendants. But his efforts to personally serve each defendant in the addresswere futile because the defendants were then out of the office and unavailable. He returned in the afternoon of that day to make a second attempt at serving the summons, but he was informed that petitioners were still out of the office. He decided to resort to substituted service of the summons,and explained why in his sheriff’s return dated September 22, 2000,5 to wit:cralavvonlinelawlibrary

SHERIFF’S RETURN

This is to certify that on September 18, 2000, I caused the service of summons together with copies of complaint and its annexes attached

thereto, upon the following:cralavvonlinelawlibrary

1. Defendant Allen A. Macasaet, President/Publisher of defendant Abante Tonite, at Monica Publishing Corporation, Rooms 301-305 3rd Floor, BF Condominium Building, Solana corner A. Soriano Streets, Intramuros, Manila, thru his secretary Lu-Ann Quijano, a person of sufficient age and discretion working therein, who signed to acknowledge receipt thereof. That effort (sic) to serve the said summons personally upon said defendant were made, but the same were ineffectual and unavailing on the ground that per information of Ms. Quijano said defendant is always out and not available, thus, substituted service was applied;chanroblesvirtualawlibrary

2. Defendant Nicolas V. Quijano, at the same address, thru his wife Lu-Ann Quijano, who signed to acknowledge receipt thereof. That effort (sic) to servethe said summons personally upon said defendant were made, but the same were ineffectual and unavailing on the ground that per information of (sic) his wife said defendant is always out and not available, thus, substituted service was applied;chanroblesvirtualawlibrary

3. Defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy Hagos and Lily Reyes, at the same address, thru Rene Esleta, Editorial Assistant of defendant Abante Tonite, a person of sufficient age and discretion working therein who signed to acknowledge receipt thereof. That effort (sic) to serve the said summons personally upon said defendants were made, but the same were ineffectual and unavailing on the ground that per information of (sic) Mr. Esleta said defendants is (sic) always roving outside and gathering news, thus, substituted service was applied.

Original copy of summons is therefore, respectfully returned duly served.

Manila, September 22, 2000.

On October 3, 2000, petitioners moved for the dismissal of the complaint through counsel’s special appearance in their behalf,alleging lack of jurisdiction over their persons because of the invalid and ineffectual substituted service of summons. They contended that the sheriff had made no prior attempt to serve the summons personally on each of them in accordance with Section 6 and Section 7, Rule 14 of the Rules of Court. They further moved to drop Abante Tonite as a defendant by virtue of its being neither a natural nor a juridical person that could be impleaded as a party in

a civil action.

At the hearing of petitioners’ motion to dismiss, Medina testified that he had gone to the office address of petitioners in the morning of September 18, 2000 to personally serve the summons on each defendant; that petitioners were out of the office at the time; that he had returned in the afternoon of the same day to again attempt to serve on each defendant personally but hisattempt had still proved futile because all of petitioners were still out of the office; that some competent persons working in petitioners’ office had informed him that Macasaet and Quijano were always out and unavailable, and that Albano, Bay, Galang, Hagos and Reyes were always out roving to gather news; and that he had then resorted to substituted service upon realizing the impossibility of his finding petitioners in person within a reasonable time.

On March 12, 2001, the RTC denied the motion to dismiss, and directed petitioners to file their answers to the complaint within the remaining period allowed by the Rules of Court,6 relevantly stating:cralavvonlinelawlibrary

Records show that the summonses were served upon Allen A. Macasaet, President/Publisher of defendant Abante Tonite, through Lu-Ann Quijano; upon defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy Hagos and Lily Reyes, through Rene Esleta, Editorial Assistant of defendant Abante Tonite (p. 12, records). It is apparent in the Sheriff’s Return that on several occasions, efforts to served (sic) the summons personally upon all the defendants were ineffectual as they were always out and unavailable, so the Sheriff served the summons by substituted service.

Considering that summonses cannot be served within a reasonable time to the persons of all the defendants, hence substituted service of summonses was validly applied. Secretary of the President who is duly authorized to receive such document, the wife of the defendant and the Editorial Assistant of the defendant, were considered competent persons with sufficient discretion to realize the importance of the legal papers served upon them and to relay the same to the defendants named therein (Sec. 7, Rule 14, 1997 Rules of Civil Procedure).

WHEREFORE, in view of the foregoing, the Motion to Dismiss is hereby DENIED for lack of merit..

Accordingly, defendants are directed to file their Answers to the complaint within the period still open to them, pursuant to the rules.

SO ORDERED.

Petitioners filed a motion for reconsideration, asserting that the sheriff had immediately resorted to substituted service of the summons upon being informed that they were not around to personally receive the summons, and that Abante Tonite, being neither a natural nor a juridical person, could not be made a party in the action.

On June 29, 2001, the RTC denied petitioners’ motion for reconsideration.7 It stated in respect of the service of summons, as follows:cralavvonlinelawlibrary

The allegations of the defendants that the Sheriff immediately resorted to substituted service of summons upon them when he was informed that they were not around to personally receive the same is untenable. During the hearing of the herein motion, Sheriff Raul Medina of this Branch of the Court testified that on September 18, 2000 in the morning, he went to the office address of the defendants to personally serve summons upon them but they were out. So he went back to serve said summons upon the defendants in the afternoon of the same day, but then again he was informed that the defendants were out and unavailable, and that they were always out because they were roving around to gather news. Because of that information and because of the nature of the work of the defendants that they are always on field, so the sheriff resorted to substituted service of summons. There was substantial compliance with the rules, considering the difficulty to serve the summons personally to them because of the nature of their job which compels them to be always out and unavailable. Additional matters regarding the service of summons upon defendants were sufficientlydiscussed in the Order of this Court dated March 12, 2001.

Regarding the impleading of Abante Tonite as defendant, the RTC held, viz:cralavvonlinelawlibrary

“Abante Tonite” is a daily tabloid of general circulation. People all over the country could buy a copy of “Abante Tonite” and read it, hence, it is for publicconsumption. The persons who organized said publication obviously derived profit from it. The information written on the said newspaper will affect the person, natural as well as juridical, who was stated or implicated in the news.

All of these facts imply that “Abante Tonite” falls within the provision of Art. 44 (2 or 3), New Civil Code. Assuming arguendo that “Abante Tonite” is not registered with the Securities and Exchange Commission, it is deemed a corporation by estoppels considering that it possesses attributes of a juridicalperson, otherwise it cannot be held liable for damages and injuries it may inflict to other persons.

Undaunted, petitioners brought a petition for certiorari, prohibition, mandamus in the CA to nullify the orders of the RTC dated March 12, 2001 and June 29, 2001.

Ruling of the CA

On March 8, 2002, the CApromulgated its questioned decision,8 dismissing the petition for certiorari, prohibition, mandamus, to wit:cralavvonlinelawlibrary

We find petitioners’ argument without merit. The rule is that certiorari will prosper only if there is a showing of grave abuse of discretion or an act without or in excess of jurisdiction committed by the respondent Judge. A judicious reading of the questioned orders of respondent Judge would show that the same were not issued in a capricious or whimsical exercise of judgment. There are factual bases and legal justification for the assailed orders. From the Return, the sheriff certified that “effort to serve the summons personally xxx were made, but the same were ineffectual and unavailing xxx.

and upholding the trial court’s finding that there was a substantial compliance with the rules that allowed the substituted service.

Furthermore, the CA ruled:cralavvonlinelawlibrary

Anent the issue raised by petitioners that “Abante Tonite is neither a natural or juridical person who may be a party in a civil case,” and therefore the caseagainst it must be dismissed and/or dropped, is untenable.

The respondent Judge, in denying petitioners’ motion for reconsideration, held that:cralavvonlinelawlibrary

xxxx

Abante Tonite’s newspapers are circulated nationwide, showing ostensibly its

being a corporate entity, thus the doctrine of corporation by estoppel may appropriately apply.

An unincorporated association, which represents itself to be a corporation, will be estopped from denying its corporate capacity in a suit against it by a third person who relies in good faith on such representation.

There being no grave abuse of discretion committed by the respondent Judgein the exercise of his jurisdiction, the relief of prohibition is also unavailable.

WHEREFORE, the instant petition is DENIED. The assailed Orders of respondent Judge are AFFIRMED.

SO ORDERED.9

On January 13, 2003, the CA denied petitioners’ motion for reconsideration.10

Issues

Petitioners hereby submit that:cralavvonlinelawlibrary

1. THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT THE TRIAL COURT ACQUIRED JURISDICTION OVER HEREIN PETITIONERS.

2. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR BY SUSTAINING THE INCLUSION OF ABANTE TONITE AS PARTY IN THE INSTANT CASE.11

Ruling

The petition for review lacks merit. Jurisdiction over the person, or jurisdiction in personam – the power of the court to render a personal judgment or to subject the parties in a particular action to the judgment and other rulings rendered in the action – is an element of due process that is essential in all actions, civil as well as criminal, except in actions in rem or quasi in rem. Jurisdiction over the defendant in an action in rem or quasi in rem is not required, and the court acquires jurisdiction over an action as long as it acquires jurisdiction over the res that is the subject matter of the action. The purpose of summons in such action is not the acquisition of jurisdiction over the defendant but mainly to satisfy the

constitutional requirement of due process.12

The distinctions that need to be perceived between an action in personam, on the one hand, and an action in rem or quasi in rem, on the other hand, are aptly delineated in Domagas v. Jensen,13thusly:cralavvonlinelawlibrary

The settled rule is that the aim and object of an action determine its character. Whether a proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights and obligations brought against the person and is based on the jurisdiction ofthe person, although it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary liability on him. An action in personam is said to be one which has for its object a judgment against the person, as distinguished froma judgment against the prop[er]ty to determine its state. It has been held that an action in personam is a proceeding to enforce personal rights or obligations; such action is brought against the person. As far as suits for injunctive relief are concerned, it is well-settled that it is an injunctive act in personam. In Combs v. Combs, the appellate court held that proceedings to enforce personal rights and obligations and in which personal judgments are rendered adjusting the rights and obligations between the affected parties is in personam. Actions for recovery of real property are in personam.

On the other hand, a proceeding quasi in rem is one brought against personsseeking to subject the property of such persons to the discharge of the claims assailed. In an action quasi in rem, an individual is named as defendant and the purpose of the proceeding is to subject his interests therein to the obligation or loan burdening the property. Actions quasi in rem deal with the status, ownership or liability of a particular property but which are intended to operate on these questions only as between the particular parties to the proceedings and not to ascertain or cut off the rightsor interests of all possible claimants. The judgments therein are binding only upon the parties who joined in the action.

As a rule, Philippine courts cannot try any case against a defendant who does not reside and is not found in the Philippines because of the

impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court;but when the case is an action in rem or quasi in rem enumerated in Section 15, Rule 14 of the Rules of Court, Philippine courts have jurisdiction to hear and decide the case because they have jurisdiction over the res, and jurisdiction over the person of the non-resident defendant is not essential. In the latter instance, extraterritorial service of summons can be made upon the defendant, and such extraterritorial service of summons is not for the purpose of vesting the court with jurisdiction, but for the purpose of complying with the requirements of fair play or due process, so that the defendant will be informed of the pendency of the actionagainst 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 in an action in personam does not reside and is not found in the Philippines, our courts cannot try the case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court.14

As the initiating party, the plaintiff in a civil action voluntarily submits himselfto the jurisdiction of the court by the act of filing the initiatory pleading. As tothe defendant, the court acquires jurisdiction over his person either by the proper service of the summons, or by a voluntary appearance in the action.15

Upon the filing of the complaint and the payment of the requisite legal fees, the clerk of court forthwith issues the corresponding summons to the defendant.16 The summons is directed to the defendant and signed by the clerk of court under seal. It contains the name of the court and the names of the parties to the action; a direction that the defendant answers within the time fixed by theRules of Court; and a notice that unless the defendant so answers, the plaintiff will take judgment by default and may be granted the relief applied for.17 To be attached to the original copy of the summons and all copies thereof is a copy of the complaint (and its attachments, if any) and the order, if any, for the appointment of a guardian ad litem.18

The significance of the proper service of the summons on the defendant in an action in personamcannot be overemphasized. The service of the summons fulfills two fundamental objectives, namely: (a) to vest in the court jurisdiction over the person of the defendant;and (b) to afford to the defendant the opportunity to be heard on the claim brought against him.19 Asto the former, when jurisdiction in personam is not acquired in a civil action

through the proper service of the summons or upon a valid waiver of such proper service, the ensuing trial and judgment are void.20 If the defendant knowingly does an act inconsistent with the right to object to the lack of personal jurisdiction as to him, like voluntarily appearing in the action, he is deemed to have submitted himself to the jurisdiction of the court.21 As to the latter, the essence of due process lies in the reasonable opportunity to be heard and to submit any evidence the defendant may have in support of his defense.With the proper service of the summons being intended to afford to him the opportunity to be heard on the claim against him, he may also waivethe process.22 In other words, compliance with the rules regarding the serviceof the summons is as much an issue of due process as it is of jurisdiction.23

Under the Rules of Court, the service of the summons should firstly be effected on the defendant himself whenever practicable. Such personal service consists either in handing a copy of the summons to the defendant inperson, or, if the defendant refuses to receive and sign for it, in tendering it to him.24 The rule on personal service is to be rigidly enforced in order to ensure the realization of the two fundamental objectives earlier mentioned. If, for justifiable reasons, the defendant cannot be served in person within a reasonable time, the service of the summons may then be effected either (a)by leaving a copy of the summons at his residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copy at his office or regular place of business with some competent person in charge thereof.25 The latter mode of service is known as substituted service because the service of the summons on the defendant is made through his substitute.

It is no longer debatable that the statutory requirements of substituted service must be followed strictly, faithfully and fully, and any substituted service other than that authorized by statute is considered ineffective.26 This is because substituted service, being in derogation of the usual method of service, is extraordinary in character and may be used only as prescribed and in the circumstances authorized by statute.27 Only when the defendant cannot be served personally within a reasonable time may substituted service be resorted to. Hence, the impossibility of prompt personal service should be shown by stating the efforts made to find the defendant himself and the fact that such efforts failed, which statement should be found in the proof of service or sheriff’s return.28Nonetheless, the requisite showing of theimpossibility of prompt personal service as basis for resorting to substituted service may be waived by the defendant either expressly or impliedly.29

There is no question that Sheriff Medina twice attempted to serve the summons upon each of petitioners in person at their office address, the first in the morning of September 18, 2000 and the second in the afternoon of thesame date. Each attempt failed because Macasaet and Quijano were “alwaysout and not available” and the other petitioners were “always roving outside and gathering news.” After Medina learned from those present in the office address on his second attempt that there was no likelihood of any of petitioners going to the office during the business hours of that or any other day, he concluded that further attempts to serve them in person within a reasonable timewould be futile. The circumstances fully warranted his conclusion. He was not expected or required as the serving officer to effect personal service by all means and at all times, considering that he was expressly authorized to resort to substituted service should he be unable to effect the personal service within a reasonable time. In that regard, what wasa reasonable time was dependent on the circumstances obtaining. While we are strict in insisting on personal service on the defendant, we do not cling tosuch strictness should the circumstances already justify substituted service instead. It is the spirit of the procedural rules, not their letter, that governs.30

In reality, petitioners’ insistence on personal service by the serving officer was demonstrably superfluous. They had actually received the summonses served through their substitutes, as borne out by their filing of several pleadings in the RTC, including an answer with compulsory counterclaimad cautelam and a pre-trial brief ad cautelam. They had also availed themselvesof the modes of discovery available under the Rules of Court. Such acts evinced their voluntary appearance in the action.

Nor can we sustain petitioners’ contention that Abante Tonite could not be sued as a defendant due to its not being either a natural or a juridical person. In rejecting their contention, the CA categorized Abante Tonite as a corporation by estoppel as the result of its having represented itself to the reading public as a corporation despite its not being incorporated. Thereby, the CA concluded that the RTC did not gravely abuse its discretion in holding that the non-incorporation of Abante Tonite with the Securities and ExchangeCommission was of no consequence, for, otherwise, whoever of the public who would suffer any damage from the publication of articles in the pages of its tabloids would be left without recourse. We cannot disagree with the CA, considering that the editorial box of the daily tabloid disclosed that although Monica Publishing Corporation had published the tabloid on a daily basis,

nothing in the box indicated that Monica Publishing Corporation had owned Abante Tonite.WHEREFORE, the Court AFFIRMS the decision promulgated on March 8, 2002; and ORDERSpetitioners to pay the costs of suit.SO ORDERED.

G.R. No. 174077 November 21, 2012

ELLICE AGRO-INDUSTRIAL CORPORATION, represented by its Chairman of the Board of Directors and President, RAUL E. GALA, Petitioner, vs.RODEL T. YOUNG, DELFIN CHAN, JIM WEE, and GUIA G. DOMINGO, *** Respondents.

D E C I S I O N

MENDOZA, J.:

Assailed in this Petition for Review on Certiorari under Rule 45 of the Rules of Court are the July 1, 2003 Decision1 and the August 8, 2006 Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 64421, dismissing the petition and upholding the November 11, 1999 Decision of the Regional Trial Court of Lucena City, Branch 60 (RTC), in Civil Case No. 96-177, entitled "Rodel T. Young, Delfin Chan and Jim Wee v. Ellice Agro Industrial Corporation, represented by Guia G. Domingo."

The Facts

On July 24, 1995, Rodel T. Young, Delfin Chan and Jim Wee (respondents) and Ellice Agro-Industrial Corporation (EAIC), represented by its alleged corporatesecretary and attorney-in-fact, Guia G. Domingo (Domingo), entered into a Contract to Sell, under certain terms and conditions, wherein EAIC agreed to sell to the respondents a 30,000 square-meter portion of a parcel of land located in Lutucan, Sariaya, Quezon and registered under EAIC’s name and covered by Transfer Certificate of Title (TCT) No. T-157038 in consideration ofOne Million and Fifty Thousand (P1,050,000.00) Pesos.

Pursuant to the Contract to Sell,3 respondents paid EAIC, through Domingo, the aggregate amount of Five Hundred Forty Five Thousand (P545,000.00) Pesos as partial payment for the acquisition of the subject property. Despite such payment, EAIC failed to deliver to respondents the owner’s duplicate

certificate of title of the subject property and the corresponding deed of sale as required under the Contract to Sell.

On November 8, 1996, prompted by the failure of EAIC to comply with its obligation, respondents had their Affidavit of Adverse Claim annotated in TCTNo. T-157038.4

On November 14, 1996, respondents filed a Complaint5 for specific performance, docketed as Civil Case No. 96-177, against EAIC and Domingo before the RTC.

Consequently, on November 18, 1996, respondents caused the annotation ofa Notice of Lis Pendens involving Civil Case No. 96-177 in TCT No. T-157038.6

The initial attempt to serve the summons and a copy of the complaint and itsannexes on EAIC, through Domingo, on Rizal Street, Sariaya, Quezon, was unsuccessful as EAIC could not be located in the said address.

Another attempt was made to serve the alias summons on EAIC at 996 Maligaya Street, Singalong, Manila, the residence of Domingo. The second attempt to serve the alias summons to Domingo was, this time, successful.

On March 21, 1997, EAIC, represented by Domingo, filed its Answer with Counterclaim.7

Meanwhile, respondent Jim Wee (Wee) sent Raul E. Gala (Gala), EAIC’s Chairman and President, a letter,8 dated July 9, 1997, seeking a conference with the latter relating to the execution of an absolute deed of sale pursuant to the Contract to Sell entered into between EAIC and respondents.

In response, the Robles Ricafrente Aguirre Sanvicente & Cacho Law Firm, introducing itself to be the counsel of EAIC, sent Wee a letter,9 dated July 18, 1997, informing him of Domingo’s lack of authority to represent EAIC.

On the scheduled pre-trial conference on January 27, 1998, neither Domingo nor her counsel appeared. As a result of EAIC’s failure to appear in the pre-trial conference, respondents were allowed to present their evidence ex parte, pursuant to Section 5, Rule 1810 of the Rules of Court.

Following the presentation of evidence ex parte, the RTC rendered its November 11, 1999 Decision ordering EAIC to deliver the owner’s duplicate copy of TCT No. T-157038 and to execute a final deed of sale in favor of respondents.

No motion for reconsideration or notice of appeal was filed by EAIC, hence, the said RTC decision became final and executory on December 8, 1999.11

On July 10, 2000 (roughly seven months after the finality of the RTC Decision), EAIC, represented by Gala, filed its Petition for Relief from Judgment12 under Rule 38 of the Rules of Court of the November 11, 1999 RTC Decision before the same court. The petition for relief from judgment was premised on the alleged fraud committed by Domingo in concealing the existence of both the Contract to Sell and Civil Case No. 96-177 from EAIC.

In its July 12, 2000 Order,13 the RTC denied the petition for relief from judgment for being clearly filed out of time under Section 3, Rule 38 of the Rules of Court.14

On April 24, 2001, EAIC, represented by Gala, initiated the Petition for Annulment of Judgment15 under Rule 47 of the Rules of Court of the November 11, 1999 RTC Decision before the CA. The petition was grounded on the RTC’s lack of jurisdiction over EAIC and the extrinsic fraud committed by Domingo. EAIC discarded any knowledge of the said sale and the suit filedby respondents against it. According to EAIC, it could not be bound by the assailed RTC Decision pursuant to Section 13, Rule 1416 of the 1964 Rules of Court which was, the applicable rule then. Domingo was not its President, Manager, Secretary, Cashier, Agent or Director, as evidenced by the General Information Sheets17 (GIS) it filed with the Securities and Exchange Commission (SEC), at the time the summons was served upon her and she did not possess the requisite authorization to represent EAIC in the subject transaction. Furthermore, her misrepresentation that she was EAIC’s corporate secretary who was properly authorized to sell and receive paymentfor the subject property, defrauded EAIC of the potential gains it should have realized from the proceeds of the sale.

In their Answer with Counterclaim18 filed before the CA, respondents countered that considering EAIC’s petition for relief from judgment under Rule 38 grounded on extrinsic fraud, had already been rejected with finality, EAIC could not be permitted to invoke the same ground in a petition for annulment of judgment under Rule 47. Further, EAIC could not feign ignorance of Civil Case No. 96-177 because of the November 8, 1996 Adverse Claim and the November 18, 1996 Notice of Lis Pendens annotated at the back of TCT No. T-157038. Respondents insisted that the mentioned annotations in TCT No. T-157038 should be deemed constructive notices to the world of the pending litigation referred to therein and, therefore, bound

EAIC to Civil Case No. 96-177. Moreover, with the exchange of letters, dated July 9, 199719 and July 18, 1997,20 between Wee and EAIC, through Gala, EAICwas informed of the pending civil case against it.

In its Reply21 filed before the CA, EAIC explained that the RTC did not touch upon the issue of fraud in the petition for relief from judgment as it was dismissed for being filed out of time. In addition, EAIC claimed that the exchange of letters between Wee and EAIC never stated anything whatsoever of any pending suit between them.

In its July 1, 2003 Decision, the CA dismissed the petition for annulment of judgment. In its decision, the CA ratiocinated:

x x x x.

The corporation, at the inception of Civil Case No. 96-177 on November 14, 1996, already had constructive notice of the three (3) businessmen’s herein respondents adverse claim to a 30,000

square-meter portion of the land covered by TCT No. T-157038 because this claim was duly registered and annotated on the said title even before this date. Moreover, four (4) days after the inception of the civil case, room was provided for on the same title for the annotation of a notice of lis pendens.

These constructive notices ought to have spurred the corporation into action by filing an answer in Civil Case No. 96-177 through proper or legitimate representations, for instance. But the corporation chose to keep quiet, thus, making the trial court and everyone else concerned with said civil case believe that Guia G. Domingo is its proper or legitimate representative. It even appears that she was, after all, a proper or legitimate representative of the corporation because in the decision, dated November 3, 1998, rendered in SEC Cases Nos. 3747 and 4027, the corporation’s board headed by Raul E.Gala since August 24, 1990 was held to be illegitimate.

Even without the constructive notices, the businessmen herein respondents, through a letter signed by one of them, apprised the corporation, through Raul E. Gala, of their contract to sell. This was in July, 1997. The letter was duly acknowledged and the parties thereafter even tried to settle among themselves the consideration and conveyance of the 30,000 square-meter portion.

When this failed, there was no reason why the corporation could not have proceeded with the pre-trial in Civil Case No. 96-177. It did not.

The corporation’s reticence in view of the constructive notices and its then incumbent board’s personal knowledge of the case had, in effect, amounted to a waiver of its right to actively participate in the proper disposition of Civil Case No. 96-177, to move for a new trial therein and to appeal from the decision rendered therein. Certainly, these remedies no longer are available, but only the corporation should be faulted for this.

Be that as it may, the corporation had availed of the remedy of relief from the judgment in Civil Case No. 96-177. The fact that it was not able to prove that it was entitled thereto does not mean that it can now avail of the instantremedy.

It would serve no useful purpose then to delve into the issues of jurisdiction and fraud raised in the petition as the petition itself is unavailing under the circumstances.

x x x x.

EAIC’s motion for reconsideration was denied by the CA in its Resolution, dated August 8, 2006.

Hence, this petition for review.

The Issues

Not in conformity with the ruling of the CA, EAIC seeks relief from this Court raising the following errors:

THE COURT OF APPEALS ERRED IN RULING THAT THERE WAS VALID SERVICE OF SUMMONS UPON PETITIONER CORPORATION.

THE COURT OF APPEALS ERRED IN RULING THAT GUIA G. DOMINGO WAS A DIRECTOR OF PETITIONER CORPORATION AT THE TIME SUMMONS WAS SERVED UPON HER AND IN DENYING PETITIONER’S MOTION FOR RECONSIDERATION.

THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER CAN NO LONGER AVAIL OF THE PRESENT PETITION HAVING EARLIER FILED A PETITIONFOR RELIEF FROM JUDGMENT.22

The main issue for the Court’s consideration is whether the RTC validly acquired jurisdiction over the person of EAIC, defendant in Civil Case No. 96-177.

In their Memorandum,23 respondents argue that at the time the summons was served upon Domingo, she was acting for and in behalf of EAIC. They further point out that, at any rate, EAIC’s filing of its Answer with Counterclaim and the petition for relief from judgment before the trial court constitutes voluntary appearance thereby submitting itself to the jurisdiction of the RTC. Respondents stress that the extrinsic fraud claimed by EAIC is nota valid ground for a petition for annulment of judgment because the latter had already availed of the said ground in a petition from relief from judgmentin contravention to Section 2, Rule 47.24

In her Memorandum,25 Domingo argues that EAIC, in filing its Answer with Counterclaim and Petition for Relief from Judgment, had invoked the jurisdiction of the same trial court that it now denies. Further, she claims thatshe acted in utmost good faith in receiving the summons and filing the Answer in Civil Case No. 96-177 for EAIC since she truly believed that she was authorized to do so.

On the other hand, EAIC, in its Memorandum,26 contends that there was no valid service of summons because Domingo, at the time summons was served, was not its president, manager, secretary, cashier, agent, or director.The GIS filed with the SEC consistently showed that she never held any position with EAIC which could have authorized her to receive summons in behalf of EAIC. The CA erred in considering the Adverse Claim and Notice of Lis Pendens annotated in TCT No. T-157038 as constructive notice to EAIC of the pendency of Civil Case No. 96-177 and, therefore, clothed the RTC with jurisdiction over the person of EAIC. Those annotations in the TCT merely serve to apprise third persons of the controversy or pending litigation relating to the subject property but do not place a party under the jurisdiction of the court. Moreover, respondents’ duty to prosecute their case diligently includes ensuring that the proper parties are impleaded and properly served with summonses.

The Court’s Ruling

The Court finds merit in the petition.

It is a settled rule that jurisdiction over the defendant is acquired either upona valid service of summons or the defendant’s voluntary appearance in court. When the defendant does not voluntarily submit to the court’s jurisdiction or when there is no valid service of summons, any judgment of the court which has no jurisdiction over the person of the defendant is null and void.27 The purpose of summons is not only to acquire jurisdiction over

the person of the defendant, but also to give notice to the defendant that an action has been commenced against it and to afford it an opportunity to be heard on the claim made against it. The requirements of the rule on summons must be strictly followed, otherwise, the trial court will not acquire jurisdiction over the defendant.28

Section 13, Rule 14 of the 1964 Rules of Civil Procedure, the applicable rule on service of summons upon a private domestic corporation then, provides:

Sec. 13. Service upon private domestic corporation or partnership.— If the defendant is a corporation organized under the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary, cashier, agent, or any of its directors. [Underscoring supplied]

Based on the above-quoted provision, for service of summons upon a privatedomestic corporation, to be effective and valid, should be made on the persons enumerated in the rule. Conversely, service of summons on anyone other than the president, manager, secretary, cashier, agent, or director, is not valid. The purpose is to render it reasonably certain that the corporation will receive prompt and proper notice in an action against it or to insure that the summons be served on a representative so integrated with the corporation that such person will know what to do with the legal papers served on him.29

In the present case, the 1996 GIS30 of EAIC, the pertinent document showing EAIC’s composition at the time the summons was served upon it, through Domingo, will readily reveal that she was not its president, manager, secretary, cashier, agent or director. Due to this fact, the Court is of the view that her honest belief that she was the authorized corporate secretary was clearly mistaken because she was evidently not the corporate secretary she claimed to be. In view of Domingo’s lack of authority to properly represent EAIC, the Court is constrained to rule that there was no valid service of summons binding on it.

Granting arguendo that EAIC had actual knowledge of the existence of Civil Case No. 96-177 lodged against it, the RTC still failed to validly acquire jurisdiction over EAIC. In Cesar v. Ricafort-Bautista,31 it was held that "x x x jurisdiction of the court over the person of the defendant or respondent cannot be acquired notwithstanding his knowledge of the pendency of a caseagainst him unless he was validly served with summons. Such is the important role a valid service of summons plays in court actions."

The Court cannot likewise subscribe to respondents argument that by filing its answer with counterclaim, through Domingo, with the RTC, EAIC is deemed to have voluntarily submitted itself to the jurisdiction of the RTC. In Salenga v. Court of Appeals,32 the Court stated:

A corporation can only exercise its powers and transact its business through its board of directors and through its officers and agents when authorized by a board resolution or its bylaws. The power of a corporation to sue and be sued is exercised by the board of directors. The physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate bylaws or by a specific act of the board.

In this case, at the time she filed the Answer with Counterclaim, Domingo was clearly not an officer of EAIC, much less duly authorized by any board resolution or secretary’s certificate from EAIC to file the said Answer with Counterclaim in behalf of EAIC. Undoubtedly, Domingo lacked the necessary authority to bind EAIC to Civil Case No. 96-177 before the RTC despite the filing of an Answer with Counterclaim. EAIC cannot be bound or deemed to have voluntarily appeared before the RTC by the act of an unauthorized stranger.

Incidentally, Domingo alleged in her Answer with Counterclaim that "Alicia E. Gala is the real owner and possessor of all the real properties registered in the business name and style Ellice-Agro Industrial Corporation x x x."33 In the same pleading, Domingo claimed that she was authorized by Alicia E. Gala, the purported beneficial owner of the subject property, to represent her in Civil Case No. 96-177 by virtue of a General Power of Attorney. In advancing the said allegations, among others, Domingo evidently acted in representation of Alicia E. Gala, not EAIC. Hence, her conduct in the filing of the Answer with Counterclaim cannot and should not be binding to EAIC.

In view of the fact that EAIC was not validly served with summons and did not voluntarily appear in Civil Case No. 96-177, the RTC did not validly acquire jurisdiction over the person of EAIC. Consequently, the proceedings had before the RTC and ultimately its November 11, 1999 Decision were null and void.1âwphi1

Pursuant to Section 7, Rule 4734 of the Rules of Court, a judgment of annulment shall set aside the questioned judgment or final order or resolution and render the same null and void.

WHEREFORE, the petition is GRANTED. The July 1, 2003 Decision and August 8, 2006 Resolution of the Court of Appeals, in CA-G.R. SP No. 64421, are hereby REVERSED. The November 11, 1999 Decision of the Regional Trial Court of Lucena City, Branch 60, in Civil Case No. 96-177, is hereby declared VACATED and SET ASIDE.

The records of the case is hereby ordered remanded to the Regional Trial Court of Lucena City, Branch 60, for the proper service of summons to the petitioner and other parties, if any, and for other appropriate proceedings.

SO ORDERED.

A.M. No. RTJ-12-2321 October 3, 2012

SPOUSES JESUS G. CRISOLOGO and NANNETTE B. CRISOLOGO, Complainants, vs.JUDGE GEORGE E. OMELIO, Regional Trial Court, Branch 14, Davao City, Respondent.

D E C I S I O N

CARPIO, J.:

The Case

This is an administrative complaint tiled by Spouses Jesus G. Crisologo and Nannette B. Crisologo (Sps. Crisologo) against Judge George E. Omelio (JudgeOmelio) of the Regional Trial Court, Branch 14, Davao City. In their Complaint-Affidavit, Sps. Crisologo charged Judge Omelio with the following: (a) gross ignorance of the law and interference with the proceedings of a co-equal andcoordinate court in issuing a writ of preliminary injunction which frustrates the execution of a final and executory decision of RTC, Branch 15; (b) gross ignorance of the law and grave abuse of discretion for issuing a writ of preliminary injunction without an evidentiary hearing and in the absence of aclear and positive ground; and

(c) gross ignorance of the law, grave abuse of discretion, gross dereliction of duty and manifest bias for refusing to recognize them as indispensable parties, and giving due course to an action where the plaintiff merely impleads the indispensable parties as John Does and Jane Does despite full knowledge of their identities.1

In the Supplement to the Affidavit-Complaint and Reply, Sps. Crisologo charged Judge Omelio with gross ignorance of the law for granting the contentious Motion to Render Judgment Granting Plaintiff the Relief Prayed for with Memorandum Attached, which was filed on 6 December 2010, but set for hearing on 8 December 2010, in violation of the three-day notice requirement under Section 4, Rule 15 of the Rules of Court.2 In their Memorandum, Sps. Crisologo likewise charged Judge Omelio with manifest bias for: (a) proceeding with the case despite non-compliance with the rules on summons; (b) cancelling the registration of sale where Sps. Crisologo are buyers in another case without due process; and (c) issuing two conflicting orders, with one showing prejudgment.3

In response, Judge Omelio filed his Comment and Counter-complaint, claiming that the present administrative complaint was intended to harass him for unfavorable rulings he made against the Sps. Crisologo.4 Judge Omelio prayed that the case be dismissed and Sps. Crisologo and their counsel be administratively punished.5

The Facts

The Report of the Investigating Justice of the Court of Appeals of Cagayan de Oro provides the factual antecedents of this case:

The case involves the following properties:

Transfer Certificate of Title (TCT) No. T-325675

i. A parcel of land (lot 650-B-2-A-2, Psd-11-058939 being portion of lot 650-B-2-A, Psd-11-021976), situated in the Barrio of Bud-Bud, City of Davao, Island of Mindanao. Bounded on the NE., along line 2-3 by lot 3465-A-1, Psd-11-021976; on SE., along line 2-3 by lot 650-B-2-B, Psd-11-021976; the SW., along line 4-1 by lot 650-A, (LRC) Psd-123024; on the NW., along the line 1-2 by lot 650-B-2-A-1 of the subd. plan. xxx xxx

Transfer Certificate of Title (TCT) No. T-325676

ii. A parcel of land (lot 3465-A-1-B, Psd-11-058938 being portion of lot 3465-A-1, Psd-11-021976), situated in the Barrio of Bud-Bud, City of Davao, Island of Mindanao. Bounded on the NE., along line 2-3-4 by lot 3254-B, (LRC) Psd-104282; on the SE., along line 4-5 by lot 3465-A-2, Psd-11-021976; on the SW., along line 5-1 by lot 650-B-2-A, Psd-11-021976; on the NW., along the line 1-2 by lot 3465-A-1-A of the subd. plan. xxx xxx

Both aforesaid properties were originally owned by So Keng Koc under TCT Nos. T-292597 and T-292600, respectively. So Keng Koc was the defendant [in] a number of cases, to wit:

(a) Civil Case No. 26,513-98 entitled SY SEN BEN vs. SO KENG KOC;

(b) Civil Case No. 26,534-98 entitled EMMA SENG and ESTHER SY vs. SO KENG KOC;

(c) Civil Case Nos. 26,810-98 and 26,811-98 entitled NANNETE B. CRISOLOGO and JESUS CRISOLOGO vs. SO KENG KOC, et al.;

(d) Civil Case No. 26,792-98 entitled RENE ALVAREZ LIM vs. SO KENG KOC, etal.;

(e) Civil Case No. 26,857-98 entitled LERLIN AGABIN vs. SO KENG KOC, et al.;

(f) Civil Case No. 27,029-98 entitled EVANGELINE JUSAY vs. SO KENG KOC, et al.

Accordingly, notices of levy on attachment were issued in the aforesaid cases. The levies were annotated at the back of the TCT Nos. T-292597 and T-292600, in the following order:

"Annotations on TCT No. T-292597:

1. Entry Nos. 1121176 and 1121177 for Civil Case No. 26,513-98 on September 8, 1998;

2. Entry Nos. 1121178 and 1121179 for Civil Case No. 26,534-98 on September 8, 1998;

3. Entry Nos. 1127625 and 1127626 for Civil Case No. 26,810-98 on October 7, 1998;

4. Entry Nos. 1127627 and 1127629 for Civil Case No. 26,811-98 on October 7, 1998;

5. Entry No. 1169654 for Civil Case No. 26,792-98 on July 12, 1999;

6. Entry No. 1169655 for Civil Case No. 27,029-99 on July 12, 1999;

7. Entry No. 1169656 for Civil Case No. 26,857-98 on July 12, 1999.

"Annotations on TCT No. T-292600:

i. Entry Nos. 1121176 and 1121177 for Civil Case No. 26,513-98 on September 8, 1998;

ii. Entry Nos. 1121178 and 1121179 for Civil Case No. 26,534-98 on September 8, 1998;

iii. Entry Nos. 1127625 and 1127626 for Civil Case No. 26,810-98 on October7, 1998;

iv. Entry Nos. 1127627 and 1127629 for Civil Case No. 26,811-98 on October 7, 1998;

v. Entry No. 1169654 for Civil Case No. 26,792-98 on July 12, 1999;

vi. Entry No. 1169655 for Civil Case No. 27,029-99 on July 12, 1999;

vii. Entry No. 1169656 for Civil Case No. 26,857-98 on July 12, 1999."

Sy Ben and So Keng Koc, parties in Civil Case No. 26,513-98, entered into a Compromise Agreement which the RTC, Br. 8 approved and made the basis ofits Decision dated October 19, 1998. The pertinent portion of the Decision states:

"The parties filed a Compromise Agreement on October 15, 1998 which is quoted as follows:

1. xxx xxx xxx

3. As settlement of the aforecited claim of the plaintiff, defendants bind themselves to convey the properties of defendant So Keng Koc in favor of the plaintiff and/or his authorized representative;

4. Upon execution of this Compromise Agreement, So Keng Koc shall executethe requisite deeds of transfer in favor of the plaintiff or his authorized representative, the following properties of the defendant, So Keng Koc as follows:

TITLE NO. SQUARE METER MARKET VALUE

T-206276 156 square meter(s) 624,000.00

T-59197 5,292 square meter(s) 1,111,320.00

T-195366 600 square meters 960,000.00

T-292597 13,078 square meters 1,617,390.00

T-80758 542 square meters 325,200.00

T-80757 600 square meters 297,020.00

T-292600 9,654 square meters 1,333,980.00

as FULL and FINAL settlement of the obligations of the defendants in instant case in favor of the herein plaintiff;

5. xxx xxx xxx.

WHEREFORE, finding the aforequoted Compromise Agreement to be in order and not otherwise contrary to law, morals and public policy, the same is hereby approved and judgment is hereby rendered in accordance with its terms and conditions, without pronouncement as to costs.

Parties are hereby directed to comply with the terms and conditions of the aforequoted agreement failure of which execution shall issue upon motion seasonably filed."

Consequently, the subject properties were sold to one Nilda T. Lam on August26, 1999. New titles were subsequently issued – TCT Nos. T-316182 and T-316181. Eventually, these properties were sold to JEWM Agro-Industrial Corporation, thus, the TCT Nos. T-325675 and T-325676 were issued in JEWM’s name. Entry Nos. 1127625 and 1127626 for Civil Case No. 26,810-98 and Entry Nos. 1127629 and 1127627 for Civil Case No. 26,811-98, all inscribed on October 7, 1998, were carried over to TCT Nos. T-325675 and T-325676.

Meanwhile, the complainant-spouses Crisologo obtained a favorable judgment in Civil Case Nos. 26,810-98 and 26,811-98. The same became final and executory on March 3, 2010. Pursuant thereto and upon the instance of the complainant-spouses, a Writ of Execution was issued by RTC, Branch 15 on June 15, 2010. The Writ reads:

"x x x x x x x x x

WHEREAS, on appeal, the Honorable Court of Appeals modified this court’s decision as follows:

WHEREFORE, in view of the foregoing, the instant appeal is partially GRANTED. Accordingly, the assailed Decision of the Regional Trial Court, 11th

Judicial Region, Branch 15, Davao City dated July 1, 1999 is hereby MODIFIEDin the sense that appellant’s loan obligations are subject to an interest of twelve percent (12%) per annum, to be computed from December 16, 1997 (for Case No. 26,810-98) and September 23, 1998 (for case No. 26,811-98) until fully paid, and that the award for exemplary damages is hereby DELETED.

x x x x x x x x x

WHEREAS, on July 6, 2010, defendants-appellants filed a Petition for Review oncertiorari to the Supreme Court which was DENIED by the Honorable Supreme Court per its Resolution dated August 17, 2009 and an Entry of Judgment dated March 3, 2010 was issued declaring the said resolution to befinal, unappealable and executory;

WHEREAS, on June 9, 2010, the court issued an Order granting the Motion forIssuance of Writ of Execution;

THEREFORE, you are commanded to implement the writ for the satisfaction of the judgment in the decision in accordance with the Rules of Court xxx xxxxxx."

Subsequently, a Notice of Sale was issued by Sheriff Robert M. Medialdea, Sheriff IV, Regional Trial Court on the subject properties: (1) Lot 650-B-2-A-2 covered by TCT No. T-325675, a derivative of TCT No. T-292597; and (2) Lot 3465-A-1-B covered by TCT No. T-325676, a derivative of TCT No. T-292600.

As the foregoing properties are already in JEWM’s name, JEWM, through its representative, filed an Affidavit of Third-Party Claim and an Urgent Motion Ad Cautelam before RTC, Branch 15. These were denied by the said court in its Order dated August 26, 2010 stating in part that it cannot issue a restraining order directing the sheriff to exclude the subject properties on thebasis of AD CAUTELAM motions and affidavits of third party claim as these were not the proper mode of action prescribed by the Rules of Court to seek injunctive relief from the court.

Aggrieved, JEWM filed a complaint for Cancellation of Lien, with Application for Writ of Preliminary Injunction against the Register of Deeds, Davao City, Sheriff Robert Medialdea, JOHN and JANE DOES, and all persons acting under their directions on September 16, 2010. The case was docketed as Civil CaseNo. 33,557-2010; and was subsequently raffled to RTC-Branch 14, Davao City.

On September 22, 2010, Atty. Rene Andrei Q. Saguisag, Jr., representing herein complainant-spouses, entered his appearance and manifested that spouses Crisologo are parties in interest in Civil Case No. 33,557-2010. He argued that the issuance of the writ of injunction would interfere with the proceedings of a co-equal court, RTC, Branch 15, which ordered the execution of the decision in Civil Case Nos. 26,810-98 and 26,811-98. He alsoposited that there exists no cause for the issuance of the writ as the bond they posted in Civil Case Nos. 26,810-98 and 26,811-98 is substantial enough to cover any damage JEWM might sustain by reason of the implementation of the Writ of Execution.

Atty. Saguisag also filed in open court a Very Urgent Manifestation (ad cautelam) and he signified his clients’ intention to file a proper motion to intervene. Thus, on September 27, 2010, herein complainant-spouses filed an Omnibus Motion reiterating their positions manifested during the hearing on the issuance of a preliminary writ of injunction.

In addition, complainant-spouses posited that JEWM failed to present evidence of damage it would suffer or the amount of damage it would sustain. They stressed that the subject properties are still encumbered, and whoever buys encumbered property purchases the same subject to the attachment thereon. They also argued that they are the John and Jane Does referred to in Civil Case No. 33,557-2010, because the annotations JEWM sought to cancel include their liens. They insisted that they are indispensableparties, being John and Jane Does of Civil Case No. 33-557-2016, hence, intervention is no longer necessary.

The RTC, Branch 14, issued an Order dated September 27, 2010 directing theissuance of a preliminary writ of injunction enjoining the Register of Deeds, Davao City, Sheriff Robert Medialdea, John and Jane Does and all persons acting in their respective stead from enforcing the first and second notices ofauction sale in so far as TCT Nos. T-325675 and T-325676 are concerned. After JEWM posted the required bond of Php500,000.00, a Writ of Preliminary Injunction was issued on October 5, 2010, to quote:

"After a careful scrutiny and analysis on the evidence thus far shown by the plaintiff-applicant, the court is of its considered view and so hold to grant theancillary relief for preliminary writ of injunction applied for.

WHEREFORE, let the preliminary writ of injunction issue xxx xxx xxx during the pendency or until final adjudication on the merit of this case, or until finalorder from this Court."

Dissatisfied, herein complainant-spouses filed a Motion for Reconsideration and a Very Urgent Omnibus Motion on October 4, 2010 asking the RTC, Branch 14 to resolve the Omnibus Motion filed on September 27, 2010, the Very Urgent Omnibus Motion, and for the reconsideration of the Order dated September 27, 2010. The same was denied and ordered stricken off the records by RTC, Branch 14 in its Order dated November 9, 2010.

On October 15, 2010, complainant-spouses filed this present case before the Office of the Court Administrator.

Complainant-spouses Crisologo principally aver the following:

1. They are plaintiffs in a collection suit docketed as Civil Case Nos. 26,810-98 and 26-811-98 raffled to RTC, Branch 15, Davao City. They obtained a favorable judgment which had become final and executory on March 3, 2010.Accordingly, a Writ of Execution dated June 15, 2010 was issued for the satisfaction of said final judgment. Notice of Sale and publication requirements were allegedly complied with. The Notice included two (2) properties covered by Transfer Certificates of Title (TCTs) Nos. 325675 and 325676, which contained annotations, to wit:

x x x x x x x x x

2. The subject properties are now in the name of JEWM but were formerly owned by SO KENG KOC and attached by order of the RTC, Branch 15, Davao City as early as 1998 in Civil Case Nos. 26,810-98 and 26,811-98;

3. JEWM filed an Affidavit of Third Party Claim and a Motion to Exclude the Subject Properties from the Auction Sale, but were all denied by RTC, Branch 15 in its Order dated August 25, 2010. Instead, the court directed the sheriff to proceed with the sale on August 26, 2010;

4. The auction sale was, however, rescheduled to October 7, 2010 because the sheriff, accordingly, orally demanded the posting of a bond in accordancewith Section 16, Rule 39 of the Rules of Court;

5. JEWM filed an action for cancellation of liens with prayer for the issuance of a preliminary injunction on September 16, 2010 involving two (2) aforesaidproperties covered by Transfer Certificates of Title (TCTs) Nos. 325675 and 325676;

6. The issuance of the Writ of Preliminary Injunction enjoining the execution of a final and executory judgment of RTC Branch 15, a co-equal and coordinate court was without an evidentiary hearing;

7. Respondent Judge’s refusal to recognize complainants as indispensable parties being lien holders of the subject properties was tainted with manifest bias and partiality.

They prayed that respondent Judge be held administratively liable, his actions allegedly constitute gross ignorance of the law, grave abuse of discretion and gross dereliction of duty and manifest bias.

On January 3, 2011, complainant-spouses again filed a Very Urgent Manifestation (ad cautelam) stating that they cannot be declared in default as they were not yet served with summons.

The Office of the Court Administrator in its 1st Indorsement dated January 10, 2010 required respondent Judge to submit his Comment to the instant Affidavit-Complaint. In his Comment dated February 8, 2011, he vehemently denied the material allegations in the affidavit-complaint. He contends that to constitute gross ignorance of the law, he must be moved by bad faith, fraud, dishonesty or corruption which complainant-spouses allegedly failed toadduce.

Furthermore, respondent Judge avers that he did not interfere with the proceedings of a co-equal and coordinate court, RTC, Branch 15, when he issued the Writ of Preliminary Injunction. The subject properties had already been made to satisfy the first annotated levy on attachment – the Entry Nos. 1121176 and 1121177 made on September 8, 1998 for Civil Case No. 26,513-98 filed before RTC, Branch 8, Davao City pursuant to a final judgment in said case.

In addition, JEWM is not a party to Civil Case Nos. 26,810-98 and 26,811-98 both entitled "Nannette B. Crisologo and Jesus Crisologo vs. Robert Allan Limso and So Keng Koc, et al." He asserts that complainant-spouses did not file a proper Motion to Intervene with Pleading-in-Intervention in observance of the requirements laid down in Rule 19 of the Rules of Court. He stresses that while he granted the assailed injunction and denied the appearance of the complainants, the same did not constitute gross ignorance of the law. He likewise points out Supreme Court’s proscription on the filing of an administrative complaint before exhaustion of judicial remedies against questioned errors of a judge in the exercise of its jurisdiction. He also filed a

Counter-Complaint where he emphasized the exhaustion of judicial remedies as pre-requisite to the filing of an administrative case. He prayed that complainant-spouses and their counsel be administratively punished for knowingly and unjustly filing the alleged unfounded administrative complaintagainst him.

In a Resolution dated September 12, 2011, the Second Division of the Supreme Court resolved to refer the instant administrative complaint to a Justice of the Court of Appeals, Cagayan de Oro City for investigation, report and recommendation within sixty (60) days from receipt of the records thereof.6

Report of the Investigating Justiceof the Court of Appeals

After notice and hearing, the Investigating Justice of the Court of Appeals of Cagayan de Oro City recommended the following:

IN VIEW OF THE FOREGOING, it is respectfully recommended that:

a) The charge of interference with proceedings of a co-equal and coordinate court be dismissed for lack of merit;

b) As to the issuance of a Writ of Preliminary Injunction without conducting an evidentiary hearing, respondent Judge George E. Omelio be ordered to pay a FINE in the amount of P 30,000.00 with a STERN WARNING that a repetition of the same or similar acts shall be dealt with more severely; and

c) Anent the charge of refusing to recognize the complainants as indispensable parties, respondent Judge be ADMONISHED to be more careful and diligent in the discharge of his judicial functions.7

On the charge of interference with the proceedings of a co-equal and coordinate court in issuing a writ of preliminary injunction which frustrates the execution of a final and executory decision, the Investigating Justice found that there was no interference. Section 16, Rule 39 of the Rules of Court allows third-party claimants of properties under execution, such as JEWM Agro Industrial Corp. (JEWM) in this case, to vindicate their claims to the property in a separate action with another court, which in the exercise of its own jurisdiction, may issue a temporary restraining order.8

On the charge of issuing a writ of preliminary injunction without evidentiary hearing, the Investigating Justice found Judge Omelio guilty. Judge Omelio

claimed that Sps. Crisologo were not able to adduce evidence to prove that he was moved by corruption in issuing the injunctive relief. The Investigating Justice, however, found no merit in this argument because lack of malicious intent cannot completely free a respondent judge from liability. The Investigating Justice found that Judge Omelio conducted a summary hearing on 22 September 2010 and issued the writ of preliminary injunction on the same day, despite the absence of any testimonial or documentary evidence. For this reason, the Investigating Justice found Judge Omelio grossly ignorantof the law and recommended a fine of thirty thousand pesos (₱30,000.00) as appropriate penalty.9

On the third issue of refusing to recognize Sps. Crisologo as indispensable parties, the Investigating Justice recommended admonishing Judge Omelio for failure to notify the Sps. Crisologo, as well as to order that they be impleaded. Judge Omelio argued that Sps. Crisologo should have filed the proper Motion to Intervene. He further claimed that the Sps.

Crisologo failed to show they are the persons in control of the subject property or under the direct orders of defendants Register of Deeds and Sheriff Medialdea. However, the Investigating Justice, citing Gonzales v. Judge Bersamin,10 ruled that notice was required to be given to parties whoseannotations appear on the back of the certificate of title in an action for cancellation of the annotations.11 For this reason, the Investigating Justice recommended admonishing Judge Omelio for his failure to notify the Sps. Crisologo and to order that they be impleaded in the petition for cancellation of liens annotated on the certificate of title.

The Issues

In contrast to the three issues resolved by the Investigating Justice, Sps. Crisologo raised seven issues in their Affidavit-Complaint, Supplement to Affidavit-Complaint and Reply, and Memorandum enumerating the charges against Judge Omelio, as follows:

1. Gross ignorance of the law and interference with the proceedings of a co-equal and coordinate court in issuing a writ of preliminary injunction which frustrates the execution of a final and executory decision;12

2. Gross ignorance of the law and grave abuse of discretion for issuing a writ of preliminary injunction without an evidentiary hearing and in the absence of a clear and positive ground;13

3. Gross ignorance of the law, grave abuse of discretion, gross dereliction of duty and manifest bias for refusing to recognize Sps. Crisologo as indispensable parties, and giving due course to an action where the plaintiff merely impleads the indispensable parties as John Does and Jane Does despite full knowledge of their identities;14

4. Manifest bias for granting a contentious motion despite violation of the three-day notice rule;15

5. Manifest bias for proceeding with the case despite non-compliance with the rules on summons;16

6. Manifest bias for cancelling the registration of sale where Sps. Crisologo are buyers in another case without due process;17 and

7. Manifest bias in issuing two conflicting orders, with one showing prejudgment.18

The Ruling of this Court

We adopt the recommendation of the Investigating Justice with respect to thecharges on: (a) interference with the proceedings of a co-equal and coordinate court; and (b) refusing to recognize Sps. Crisologo as indispensable parties.

We reverse the recommendation of the Investigating Justice with respect to the charge on issuance of the writ of preliminary injunction without an evidentiary hearing and dismiss this charge for lack of merit. The Rules of Court allow the issuance of the writ of preliminary injunction based on the verified application, for as long as there is notice and hearing.

We find Judge Omelio guilty of gross ignorance of the law for the following acts: (a) granting a contentious motion that was in violation of the three-day notice rule; (b) not complying with the rules on summons; and (c) rendering a decision in an indirect contempt case that cancels an annotation of a certificate of sale without notifying the buyer, in violation of the latter’s right to due process.

We dismiss for lack of merit the charge of issuing conflicting orders.

Non-interference with the proceedingsof a co-equal and coordinate court

As correctly pointed out by the Investigating Justice, Section 16, Rule 39 of the Rules of Court allows for the institution of a separate action by a third-party claimant who seeks to protect his interests in an execution proceeding:

SEC. 16. Proceedings where property claimed by third person. — If the property levied on is claimed by any person other than the judgment obligor or his agent, and such person makes an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title, and serves the same upon the officer making the levy and a copy thereof upon the judgment obligee, the officer shall not be bound to keep the property, unless such judgment obligee, on demand of the officer, files a bond approved by the court to indemnify the third-party claimant in a sum not lessthan the value of the property levied on. In case of disagreement as to such value, the same shall be determined by the court issuing the writ of execution. No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action therefor is filed within one hundred twenty (120) days from the date of the filing of the bond.

The officer shall not be liable for damages for the taking or keeping of the property, to any third-party claimant if such bond is filed. Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property in a separate action, or prevent the judgment obligee from claiming damages in the same or a separate action against a third-party claimant who filed a frivolous or plainly spurious claim.

x x x x (Emphasis supplied)

In Naguit v. Court of Appeals,19 the Court considered Naguit, whose exclusive property was executed for the debts of her husband, a stranger to the case against the husband. Naguit was allowed to institute a separate action to vindicate her right of ownership over her exclusive property, which action was not considered an encroachment upon the jurisdiction of a co-equal and coordinate court:

In the case at bar, petitioner filed an independent action for the annulment of the certificate of sale issued in favor of private respondent, contending that the property levied upon and sold to private respondent by virtue of the writ of execution issued in Criminal Case No. 90-2645 was her exclusive property, not that of the judgment obligor. Pursuant to our ruling in Sy v. Discaya, petitioner is deemed a stranger to the action wherein the writ of execution was issued and is therefore justified in bringing an independent action to vindicate her right of ownership over the subject property.

Contrary to the stand taken by the trial court, the filing of such an independent action cannot be considered an encroachment upon the jurisdiction of a co-equal and coordinate court. The court issuing the writ of execution may enforce its authority only over properties of the judgment debtor; thus, the sheriff acts properly only when he subjects to execution property undeniably belonging to the judgment debtor. If the sheriff levies upon the assets of a third person in which the judgment debtor has no interest, then he is acting beyond the limits of his authority and is amenable to control and correction by a court of competent jurisdiction in a separate and independent action. This is in consonance with the well-established principle that no man shall be affected by any proceeding to which he is a stranger. Execution of a judgment can only be issued against a party to the action, and not against one who has not yet had his day in court.20

Consistent with Naguit v. Court of Appeals,21 JEWM can be considered a third-party claimant and stranger to the case, because, despite not being the judgment obligor, JEWM’s properties are being executed for So Keng Koc’s liabilities. The Rules of Court allow JEWM to vindicate its claim to the properties in a separate action. The court exercising jurisdiction over the separate action, which in this case is RTC, Branch 14, may issue an injunction, enjoining the execution of JEWM’s properties in satisfaction of So Keng Koc’s liabilities. For this reason, we dismiss the Sps. Crisologo’s charge against Judge Omelio for gross ignorance of the law due to interference with the proceedings of a co-equal and coordinate court.

Issuance of a writ of preliminary injunctionwithout an evidentiary hearing

Section 5, Rule 58 of the Rules of Court provides for the procedure in issuing preliminary injunctions:

SEC. 5. Preliminary injunction not granted without notice; exception. — No preliminary injunction shall be granted without hearing and prior notice to the party or person sought to be enjoined. If it shall appear from facts shown by affidavits or by the verified application that great or irreparable injury would result to the applicant before the matter can be heard on notice, the court to which the application for preliminary injunction was made, may issue ex parte a temporary restraining order to be effective only for a period of twenty (20) days from service on the party or person sought to be enjoined, except as herein provided. Within the said twenty-day period, the court must order said party or person to show cause, at a specified time and

place, why the injunction should not be granted, determine within the same period whether or not the preliminary injunction shall be granted, and accordingly issue the corresponding order.

However, and subject to the provisions of the preceding sections, if the matter is of extreme urgency and the applicant will suffer grave injustice andirreparable injury, the executive judge of a multiple-sala court or the presiding judge of a single-sala court may issue ex parte a temporary restraining order effective for only seventy-two (72) hours from issuance but he shall immediately comply with the provisions of the next preceding section as to service of summons and the documents to be served therewith.Thereafter, within the aforesaid seventy-two (72) hours, the judge before whom the case is pending shall conduct a summary hearing to determine whether the temporary restraining order shall be extended until the application for preliminary injunction can be heard. In no case shall the total period of effectivity of the temporary restraining order exceed twenty (20) days, including the original seventy-two hours provided herein.

In the event that the application for preliminary injunction is denied or not resolved within the said period, the temporary restraining order is deemed automatically vacated. The effectivity of a temporary restraining order is not extendible without need of any judicial declaration to that effect and no courtshall have authority to extend or renew the same on the same ground for which it was issued.

However, if issued by the Court of Appeals or a member thereof, the temporary restraining order shall be effective for sixty (60) days from serviceon the party or person sought to be enjoined. A restraining order issued by the Supreme Court or a member thereof shall be effective until further orders. (Emphasis supplied)

This provision provides for the general rule that writs of preliminary injunction shall only be issued with hearing and prior notice to the party or person sought to be enjoined. Should great or irreparable injury result to the applicant based on affidavits or the verified application before the matter can be heard with prior notice to the parties, the court may issue a temporary restraining order effective for a period of 20 days. Within the 20-day period, the court must notify the other party and order him to show cause why injunction should not be granted.

The Investigating Justice found that a summary hearing was conducted on 22September 2010. In the hearing, there was no presentation of witnesses to

substantiate the allegations in the complaint or identification of documentaryexhibits for evidentiary purposes. Without testimonial and documentary evidence, the Investigating Justice deemed the applicant of the injunctive writ to have failed to establish a clear and unmistakable right as pre-condition for the issuance of the writ of injunction. For this reason, the Investigating Justice found Judge Omelio guilty of "gross ignorance of the basic and simple procedure of requiring an evidentiary hearing in application for the issuance of an injunctive writ" and recommended the penalty of a fineof P 30,000.00.22

We disagree. Although the general rule is that a sampling of evidence is required to be submitted during the hearing on the motion for preliminary injunction, there are also instances when the writ of preliminary injunction can be issued based on the verified application, provided there is notice and hearing.

In Humol v. Judge Clapis,23 an administrative case was filed against respondent judge therein for issuing an injunction without the parties presenting or offering their respective evidences during the hearing. In fact, the issuance of the injunctive writ was based merely on testimonies of resource persons invited by the court, with counsels not being given the opportunity to cross-examine the resource persons.24 Despite the absence of the applicant’s offer of evidence in the hearing on the motion for issuance of preliminary injunction, the Court dismissed the charge of impropriety exhibited by the judge because the issue on the propriety of the issuance of the writ of injunction was judicial in nature and cannot be threshed out in an administrative action.25 Errors or irregularities committed by the judge in rendering his decision should be remedied first through a motion for reconsideration, appeal, special civil action for certiorari, prohibition or mandamus, motion for inhibition or petition for change of venue.26

In this case, Sps. Crisologo charge Judge Omelio with gross ignorance of the law for issuing the writ of preliminary injunction without an evidentiary hearing and in the absence of a clear and positive ground. The Rules of Court, however, provide that a temporary restraining order may be issued not only based on affidavit, but also based simply on the verified application and its supporting documents, provided there is notice and hearing. Judge Omelio is given a wide latitude of discretion in issuing the writ of preliminary injunction after the hearing, especially when a clear and unmistakable right to the issuance of the injunctive writ can be gleaned from affidavits or the

verified application and its supporting documents, considering the peculiar circumstances of this case.

This case concerns the cancellation of liens on the transfer certificates of title, involving issues which can be comprehended by the judge based on a cursory examination of the verified application and its supporting documents. During the hearing on 22 September 2010 (which is a requirement in the issuance of a writ of preliminary injunction), both counselswere given the opportunity to argue their case before Judge Omelio.27Neither counsel raised the issue of authenticity of the titles, subject of the case. Bothcounsels were in agreement with regard to the facts: (a) that there were several liens over the properties;28 (b) that the property held by JEWM was a derivative title in satisfaction of the first lien;29 and (c) that the Sps. Crisologowere executing JEWM’s property based on the second lien.30 With no factual issues or disputes, the issues raised by counsels before Judge Omelio were purely legal in nature, which could be resolved from an examination of the verified application and its supporting documents. A clear and unmistakable right to the issuance of the writ of injunction in favor of JEWM could easily be gathered from examining the submitted pleadings and their supporting documents.

For this reason, we find Judge Omelio not guilty of gross ignorance of the law in issuing a writ of preliminary injunction without requiring the parties to present testimonial evidences during the hearing. Judge Omelio already received documentary evidences as supporting documents in the verified application and accorded both counsels the opportunity to be heard in oral arguments before him during the hearing. We find that the hearing conducted by Judge Omelio in the motion for issuance of the writ of preliminary injunction was adequate and compliant with the Rules of Court. For this reason, we reverse the Investigating Justice’s finding of guilt in this charge, including the recommended penalty of fine of P 30,000.00. We dismiss this charge of gross ignorance of the law for issuing a writ of preliminary injunction without evidentiary hearing for lack of merit.

Manifest bias for proceeding with the casedespite non-compliance with the rules on summons

Another indispensable requirement for the issuance of a writ of preliminary injunction is the service of summons upon defendants, in accordance with Section 5, Rule 58 of the Rules of Court. The disputed case is entitled JEWM Agro-Industrial Corporation v. Register of Deeds, Sheriff Medialdea, John &

Jane Does and all persons acting under their directions, which prayed for the cancellation of liens annotated at the back of TCT Nos. T-325675 and T-325676.

The liens annotated at the back of a certificate of title can be cancelled through: (a) a petition with the land registration court, under Section 112 of Act No. 496;31 or (b) an ordinary civil action filed against the parties whose liens are sought to be cancelled.32 In a petition under Section 112 of Act No. 496, notice to the lienholder is a jurisdictional requirement. In an ordinary civil action, service of summons to the lienholder is a jurisdictional requirement. In case the lienholder is unknown, such as what the plaintiff claimed in the disputed case, service of summons for unknown defendants should strictly be complied with. Otherwise, the judgment cannot be considered binding on the unknown defendants.Rule 14 of the Rules of Court provides for the procedure on summons:

SECTION 1. Clerk to issue summons. - Upon the filing of the complaint and the requisite legal fees, the clerk of court shall forthwith issue the corresponding summons to the defendants.

x x x x

SEC. 14. Service upon defendant whose identity or whereabouts are unknown. - In any action where the defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected upon him by publication in a newspaper of general circulation and in such places and for such time as the court may order.

In this case, service of summons was made only upon the Register of Deeds and Sheriff Robert Medialdea.33The notice of hearing for the preliminary injunction was likewise served only upon defendants Register of Deeds and Sheriff Robert Medialdea.34 No procedure for service of summons was observed upon the John and Jane Does impleaded in the complaint. Judge Omelio’s Order dated 19 November 2010 declared only defendants Register of Deeds and Sheriff Robert Medialdea in default. The Order was silent on thedeclaration of default of the John and Jane Does.35

Sps. Crisologo claim that the case should not have proceeded because no summons were made upon the John and Jane Does impleaded in the complaint. Since defendants John and Jane Does are unidentified persons, summons must be made with leave of court and by publication.36 Judge

Omelio, on the other hand, claims that the requirements for service of summons are not applicable where the parties claiming entitlement to summons have already appeared in court during the hearing of the petition.37

As a general rule, jurisdiction cannot be acquired over the defendant without service of summons, even if he knows of the case against him.

Jurisdiction, however, can be acquired without service of summons, if the defendant voluntarily submits to the jurisdiction of the court by appearing through his counsel in filing the appropriate pleadings.38 In this case, Judge Omelio claims that service of summons to unknown defendants can be dispensed with because Sps. Crisologo voluntarily appeared and submitted themselves to the jurisdiction of the court. However, Judge Omelio’s argument on voluntary appearance presents a conflicting position in relation to his actions during the pendency of the case. On 9 November 2010, despitethe Sps. Crisologo’s voluntary appearance, Judge Omelio issued an Order striking the omnibus motion and all pleadings filed by Sps. Crisologo, who claim to be defendants under John and Jane Does, due to lack of legal standing.39 Judge Omelio claims that Sps. Crisologo must file the necessary pleading-in-intervention in order to be recognized in court. Judge Omelio’s stubborn refusal to recognize Sps. Crisologo in the case reflects an appearance of partiality in favor of JEWM.

Judge Omelio’s failure to effect proper service of summons upon the defendants John and Jane Does in the complaint constitutes gross ignorance of the law. The rules and procedures on summons are very elementary, that non-observance and lack of knowledge on them constitute gross ignorance of the law, especially for judges who are supposed to exhibit more than just acursory acquaintance with the procedural rules. For failing to cause the proper service of summons upon defendants John and Jane Does and Sps. Crisologo, we find Judge Omelio guilty of gross ignorance of the law.

Refusal to recognize Sps. Crisologoas indispensable parties

Section 2, Rule 3 of the Rules of Court provides:

SEC. 2. Parties in interest. - A real party in interest is 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. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party ininterest.

In this case, Sps. Crisologo, through their counsel, were pleading before Judge Omelio to recognize their entry of appearance as real parties in interest under defendants John and Jane Does in the hearing for preliminary injunction on 22 September 2010. The case involved the cancellation of several liens carried over in TCT Nos. T-325675 and T-325676, including the liens in favor of Sps. Crisologo.

However, Judge Omelio refused to recognize Sps. Crisologo due to lack of legal standing.40 Judge Omelio bases his refusal to recognize Sps. Crisologo on the ground of lack of the proper Motion to Intervene with Pleading-in-Intervention.41 In addition, Judge Omelio further claims that the complaint identifies the "John & Jane Does" as defendants who may or hereinafter be in control of the property of the subject complaint and/or those persons or agents who may be acting under the direct orders of the Register of Deeds and Sheriff Medialdea.42 Since Sps. Crisologo are not yet in control of the property nor are they acting under the direct orders of the Register of Deeds and Sheriff Medialdea, they should not be considered as the defendants in this case.43 Judge Omelio argues that Sps. Crisologo are not indispensable parties because their participation is not indispensable in the determination of whether or not the subsequent liens annotated on the titles of the subject properties may be properly cancelled.44

We are not persuaded. Parties with liens annotated on the certificate of title are entitled to notice in an action for cancellation of their liens. The Court, in Southwestern University v. Laurente,45 adopted the following reasoning of thelower court:

The Court is in accord with his contention (that if there should be notice, it should be limited to the parties annotated in the certificate of title itself, and should not be extended to subsequent parties who, even granting that they acquired the interests of these persons annotated in the certificate of title, failed to have their rights accordingly annotated in said certificate of title) of petitioner Southwestern University, and maintains that inasmuch as the law specifically provides notice to parties in interest, such notice if any, should be limited to the parties listed or annotated on the certificate of title. x x x.46 (Italicization in the original)

In this case, it is not disputed that Sps. Crisologo’s liens were annotated at the back of JEWM’s certificates of title. The cancellation of Sps. Crisologo’s liens without notice to them is a violation of their right to due process. Consistent with Southwestern University v. Laurente,47 Judge Omelio should

be penalized for failing to recognize Sps. Crisologo as indispensable parties and for requiring them to file a motion to intervene, considering that a simple perusal of the certificates of title would show Sps. Crisologo’s adverserights because their liens are annotated at the back of the titles. For this reason, we find Judge Omelio guilty of gross ignorance of the law for refusingto recognize Sps. Crisologo as indispensable parties in the disputed case.

Manifest bias for granting a contentious motiondespite violation of the three-day notice rule

The Investigating Justice failed to discuss the next four issues raised by Sps. Crisologo in their Supplement to the Affidavit-Complaint and Reply48 and their Memorandum.49

Sps. Crisologo claim that JEWM filed a Motion to Render Judgment Granting Plaintiff the Relief Prayed for with Memorandum Attached on 6 December 2010.50 The motion, however, was heard on 8 December 2010,51 in violation of the three-day notice requirement.

Section 4, Rule 15 of the Rules of Court provides for the procedure in hearingmotions:

SEC. 4. Hearing of motion. - Except for motions which the court may act uponwithout prejudicing the rights of the adverse party, every written motion shall be set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to ensure its receipt by the otherparty at least three (3) days before the date of hearing, unless the court for good cause sets the hearing on shorter notice.

This provision mandates service to the adverse party at least three days before the hearing date of a written motion required to be heard and its notice of hearing.

In Philippine Advertising Counselors v. Revilla,52 the Court held that the motion for reconsideration which contained a defective notice of hearing did not suspend the running of the period to appeal, and the trial court exceededits jurisdiction when it granted the defective motion:

Finally, Section 4, Rule 15 of the Rules of Court provides that notice of a motion shall be served by the applicant to all parties concerned, at least three (3) days before the hearing thereof, together with a copy of the

motion, and of any affidavits and other papers accompanying it; and Section 5 of the same Rule requires the notice to be directed to the parties concerned and to state the time and place for the hearing of the motion. A motion which fails to comply with these requirements is nothing but a useless piece of paper.53

In J. King & Sons Co., Inc. v. Judge Hontanosas, Jr.,54 the Court suspended respondent judge for three months without pay, and declared him guilty, among others, of gross ignorance of the law for granting a motion that was inviolation of the three-day notice rule:

We agree with the Investigating Justice’s finding that respondent is guilty of gross ignorance of the law for not holding a full-blown hearing on the motion to lift attachment and for violating the three-day notice rule.

x x x x

A perusal of the motion to lift attachment shows that a copy of the same wasmailed to plaintiff’s counsel only on July 3, 2002. The court’s receiving stampshowed that said motion was filed in court only at 11:02 in the morning of July 5, 2002, despite the fact that the notice of hearing for said motion statedthat said motion would be set for hearing at 8:30 in the morning of July 5, 2002. The proximity of the date of mailing of the copy of the motion to the other party and the hearing date indicated in the notice of hearing clearly shows that it is impossible for the other party to receive said motion at least three days before the date of hearing. Evidently, the party filing the motion to lift attachment had already violated the three-day notice rule. Such circumstances should have already warned respondent that plaintiff in the subject case had not yet been apprised of the filing of such a motion, much less the holding of a hearing for said motion. Yet, despite said patent defects in the motion, respondent consented to hold a hearing on the motion at 11:20 of the very same morning of July 5, 2002. Although Section 4, Rule 15 of the 1997 Rules of Civil Procedure provides that the court, for good cause, may set the hearing on shorter notice, the rule is explicit that notice of hearing cannot be altogether dispensed with. In this case, common knowledge dictates that it would be impossible for a copy of the motion, mailed only on July 3, 2002, to be delivered by registered mail to counsel for the plaintiff on or before July 5, 2002. Obviously, therefore, the plaintiff had no notice whatsoever of the filing of the motion and the hearing date for the same.

x x x x

It has been oft repeated that judges cannot be held to account or answer criminally, civilly or administratively for an erroneous judgment or decision rendered by him in good faith, or in the absence of fraud, dishonesty or corruption. However, it has also been held that when the law violated is elementary, a judge is subject to disciplinary action. The principles of due notice and hearing are so basic that respondent’s inability to accord a litiganttheir right thereto cannot be excused. In this case, we believe that respondent’s actuations reek of malice and bad faith. Thus, we find respondent guilty of gross ignorance of the law for violating the three-daynotice rule and failing to give herein complainant due notice and the opportunity to be heard on the matter as mandated by Section 12, Rule 57 ofthe 1997 Rules of Civil Procedure.55

In this case, JEWM filed a motion to render judgment based on the pleadings on 6 December 2010.56 The annotations on the copy furnished portion of the motion show that service was made to the Register of Deeds of Davao City and Sheriff Robert Medialdea on 6 December 2010.57 The hearing was conducted on 8 December 2010.58 Judge Omelio granted JEWM’s motion on 13 December 2010.

A motion to render judgment based on the pleadings is a litigious motion because the grant of such motion will eliminate trial and the case will be considered submitted for decision. For this reason, service to the adverse parties of such litigious motion should be made at least three days before thedate of the hearing, as mandated by Section 4, Rule 15 of the Rules of Court.

In this case, Judge Omelio granted a contentious motion which contained a defective notice of hearing. The notice of hearing was defective because it was only served two (2) days before the hearing date, instead of the mandatory three-day notice rule. Such motion should have been considered a mere scrap of paper. Judge Omelio should have denied the motion on the ground that it violated the three-day notice rule, without prejudice to JEWM’s re-filing of said motion in accordance with the Rules.

In Almeron v. Judge Sardido,59 the Court held:

Members of the judiciary are supposed to exhibit more than just a cursory acquaintance with the statutes and procedural rules, more so with legal principles and rules so elementary and basic that not to know them, or to actas if one does not know them, constitutes gross ignorance of the law.60

In this case, Judge Omelio granted a litigious motion, in violation of the elementary three-day notice rule on motions. Applying J. King & Sons Co., Inc. v. Judge Hontanosas, Jr.,61 Judge Omelio is considered guilty of gross ignorance of the law for granting the defective motion. The three-day notice rule on motions is so elementary, that not knowing and observing it, especially in litigious and contentious motions, constitute gross ignorance of the law. For this reason, we find Judge Omelio guilty of gross ignorance of thelaw for granting a contentious motion that was in violation of the three-day notice rule on motions.

Manifest bias for cancelling the registration of salewithout due process where Sps. Crisologo are buyers

Sps. Crisologo claim that Judge Omelio, in a complaint for indirect contempt against Sheriff Medialdea, rendered a Decision,62 not only declaring Sheriff Medialdea guilty of indirect contempt, but also directed the Register of Deedsof Davao City to cancel any registration or annotation of the Sheriff’s Certificate of Sale at the back of TCT Nos. T-325675 and T-325676.63 Such cancellation of Sps. Crisologo’s annotation of the Sheriff’s Certificate of Sale in the titles, in a decision for indirect contempt, without notifying the Sps. Crisologo, constitutes a denial of their right to due process.64 Judge Omelio, on the other hand, claims that no notice was given to the Sps. Crisologo because they are not parties to the complaint for indirect contempt.65

The subject complaint for indirect contempt, Civil Case No. 33,1104-2010, was filed on 14 October 2010 and entitled JEWM Agro-Industrial Corporation v. Sheriff Robert Medialdea and Register of Deeds for the City of Davao.66 JEWM, as plaintiff in the indirect contempt complaint, prayed that: (a) Sheriff Medialdea be found guilty of indirect contempt and be penalized a fine not exceeding ₱30,000.00 and imprisoned for not more than six months,in accordance with Section 7, Rule 71 of the Rules of Court; and (b) the auction sale annotated on TCT Nos. T-325675 and T-325676, stating Sps. Crisologo are buyers, be declared illegal and the Register of Deeds of Davao City be directed to cancel such annotation of sale.67

In his Decision dated 27 January 2011,68 Judge Omelio granted JEWM’s prayers. The dispositive portion of the decision reads as follows:

WHEREFORE, in view of all the foregoing, defendant Sheriff Robert Medialdeais hereby declared GUILTY of indirect contempt and is ordered to pay a fine ofFive Thousand (P 5,000.00) Pesos. Similar offense in the future will be dealt with more severely.

Corollary thereto, for being illegal, the auction sale on October 8, 2010 and the corresponding sheriff’s certificates of sale pertaining to the property of plaintiff covered by TCT No. T-325675 and TCT No. T-325676 are hereby declared null and void and without force and effect of the law.

The Register of Deeds for Davao City is hereby directed to cancel any registration or annotation of the subject Sheriff’s Certificates of Sale at the back of TCT No. T-325675 and TCT No. T-325676.

Let copy of this decision be furnished the Office of the Court Administrator for proper administrative action.

SO ORDERED.69 (Emphasis supplied)

Judge Omelio’s decision in the indirect contempt complaint ordered the cancellation in TCT Nos. T-325675 and T-325676 of the annotation of the Sheriff’s Certificate of Sale in favor of the Sps. Crisologo. Although the case was an indirect contempt complaint, it can still be considered a petition to cancel annotations because of its prayer. As provided in Section 112 of Act No. 496 and Southwestern University v. Laurente,70 notice is required to be given to parties whose annotations appear on the back of the certificate of title in an action for cancellation of annotations on the certificate of title.71 In this case, however, no summons or notices were issued to Sps. Crisologo. Only the Register of Deeds and Sheriff Medialdea were impleaded. Judge Omelio should have notified the Sps. Crisologo of the indirect contempt complaint because it included the prayer for cancellation of the annotation ofsale on the subject titles, where the latter are buyers. Failure to notify the Sps. Crisologo constitutes gross ignorance of the law.

This is not the first time Judge Omelio has rendered a decision affecting third parties’ interests, without even notifying the indispensable parties. In the first disputed case, JEWM Agro-Industrial Corporation v. Register of Deeds, Sheriff Medialdea, John & Jane Does and all persons acting under their directions, Judge Omelio failed to cause the service of proper summons upon the John and Jane Does impleaded in the complaint. Even when Sps. Crisologo voluntarily appeared in court to be recognized as the John and JaneDoes, Judge Omelio refused to acknowledge their appearance and ordered the striking out of Sps. Crisologo’s pleadings. For this reason, the Investigating Justice recommended admonishing Judge Omelio for failing to recognize the Sps. Crisologo as indispensable parties in that case. Here, in the indirect contempt complaint entitled JEWM Agro-Industrial Corporation v. Sheriff Robert Medialdea and Register of Deeds for the City of Davao, which

included a prayer for cancellation of annotations on the titles, Judge Omelio once again failed to notify the Sps.

Crisologo, the lienholders who would be affected by the cancellation of the annotation. Worse, Judge Omelio granted the prayer for cancellation of the annotations of Sps. Crisologo’s Sheriff’s Certificate of Sale without notifying them of the complaint. Clearly, the cancellation of the annotation of the sale without notifying the buyers, Sps. Crisologo, is a violation of the latter’s right to due process. Since this is the second time that Judge Omelio has issued anorder which fails to notify or summon the indispensable parties, we find Judge Omelio guilty of gross ignorance of the law, with a warning that repetition of the same or similar act will merit a stiffer penalty in the future.

Manifest bias in issuing conflicting orders

Sps. Crisologo claim that Judge Omelio exhibited manifest bias when he issued two conflicting orders on the same day, with one already showing prejudgment.72 In Judge Omelio’s Order dated 7 October 2010, he declared:

The Omnibus Motion dated October 1, 2010 filed by Rene Andrei Q. Saguisag, which is submitted without argument, counsel for the plaintiff is directed to file a comment within five (5) days x x x.73

In another Order likewise dated on 7 October 2010, Judge Omelio held:

Atty. R.A.Q. Saguisag, Jr., without first filing a written formal notice of appearance pursuant to the Rules of Court, hence he lacks locus standi in court to participate in the proceeding of the case x x x his very urgent omnibus motion dated October 1, 2010 therefore is denied x x x.74

Sps. Crisologo allege that Judge Omelio exhibited manifest bias in issuing theconflicting orders, but failed to indicate which provision in the Rules of Court or the Code of Judicial Conduct Juge Omelio violated when he issued these orders. For this reason, we dismiss this charge for lack of merit.

Application of Penalties

In this case, Judge Omelio is found guilty of four counts of gross ignorance of the law for the following acts: (a) refusal to recognize Sps. Crisologo as indispensable parties; (b) granting a contentious motion in violation of the three-day notice rule; (c) non-compliance with the rules on summons; and (d)cancelling the annotation of the Sheriff’s Certificate of Sale on the titles without notifying the buyers, in violation of the latter’s right to due process.

Section 8, Rule 140 of the Rules of Court considers gross ignorance of the lawor procedure as a serious charge. Section 11 of Rule 140, on the other hand, provides for the sanctions on respondents guilty of serious charges:

SEC. 11. Sanctions. - A. If the respondent is guilty of a serious charge, any of the following sanctions may be imposed:

1. Dismissal from the service, forfeiture of all or part of the benefits as the Court may determine, and disqualification from reinstatement or appointment to any public office, including government-owned or controlled corporations. Provided, however, That the forfeiture of benefits shall in no case include accrued leave credits;

2. Suspension from office without salary and other benefits for more than three (3) months, but not exceeding six (6) months; or

3. A fine of more than P 20,000 but not exceeding P 40,000.

x x x x

Section 55 of the Revised Uniform Rules on Administrative Cases in the Civil Service (Revised Uniform Rules) provides that if the respondent is found guilty of two or more charges or counts, the penalty to be imposed should bethat corresponding to the most serious charge or count and the rest shall be considered as aggravating circumstances. Section 54(c) of the same Revised Uniform Rules states that the maximum of the penalty shall be imposed where only aggravating and no mitigating circumstances are present.1âwphi1

The Court, in a number of cases, has adopted the Revised Uniform Rules in the discipline of erring court officers and judges.75 In Garcia v. Alejo,76 the Court found Alejo guilty of two offenses: (a) dereliction of duty; and (b) violation of reasonable office rules and regulations. The penalty imposed upon Alejo was the penalty for the more serious charge, dereliction of duty, taking into consideration the fact that he had previously been admonished inan earlier case.

In this case, Judge Omelio is found guilty of four counts of the serious charge of gross ignorance of the law, with no mitigating circumstances. Based on the rules on penalties in administrative cases, the sanction to be imposed is the penalty for the serious charge of gross ignorance of the law in its maximum, due to the presence of aggravating circumstances.

In its Resolution dated 28 July 2008, the Court, in A.M. No. MTJ-08-1701,77 imposed a fine of Ten Thousand Pesos (P 10,000.00) on Judge Omelio for violation of a Supreme Court Circular with a stern warning that repetition of the same or similar act shall be dealt with more severely. Because of this previous violation, we impose the penalty of fine of Forty Thousand Pesos (P 40,000.00) on Judge Omelio for four counts of gross ignorance of the law.

WHEREFORE, we DISMISS the following charges against Judge George E. Omelio for lack of merit: (a) gross ignorance of the law for interfering with the proceedings of a co-equal and coordinate court; (b) gross ignorance of the law for issuing a writ of preliminary injunction without an evidentiary hearing; and (c) manifest bias for issuing conflicting orders. We find Judge George E. Omelio GUILTY of four counts of the serious charge of gross ignorance of the law for the following acts: (a) refusing to recognize Spouses Jesus G. Crisologo and Nannette B. Crisologo as indispensable parties; (b) granting a contentious motion in violation of the three-day notice rule; (c) non-compliance with the rules on summons; and (d) rendering a decision in an indirect contempt case that cancels an annotation of a Sheriff’s Certificateof Sale on two titles without notifying the buyer, in violation of the latter's right to due process. Accordingly, we impose upon Judge George E. Omelio the penalty of fine of Forty Thousand Pesos (P 40,000.00), with a warning that repetition of the same or similar acts will be dealt with more severely.

SO ORDERED.

G.R. No. 194352 January 30, 2013

MAXICARE PCIB CIGNA HEALTHCARE (now MAXICARE HEALTHCARE CORPORATION), ERIC S. NUBLA, JR. M.D. and RUTH A. ASIS, M.D., Petitioners, vs.MARIAN BRIGITTE A. CONTRERAS, M.D., Respondent.

D E C I S I O N

MENDOZA, J.:

Challenged in this petition are the January 28, 2010 Decision1 of the Court of Appeals (CA) and its October 27, 2010 Resolution,2 in CA-G.R. SP No. 101066,which affirmed the March 16, 2007 Decision3 and June 29, 2007 Resolution4 of the National Labor Relations Com;nission (NLRC), reversing thedecision5 of the Labor Arbiter (LA) in this illegal dismissal case, entitled "Marian Brigitte Contreras v. A1axiCare PCJB CJGNA Health Care, et. al."

The Facts

Sometime in March 2003, Maxicare Healthcare Corporation (Maxicare) hired Dr. Marian Brigitte A. Contreras (Dr. Contreras) as a retainer doctor at the Philippine National Bank (PNB) Head Office, Macapagal Avenue, Roxas Boulevard, Manila. Under their verbal agreement, Dr. Contreras would rendermedical services for one year atP250.00 per hour. Her retainer fee would be paid every 15th and 30th of each month based on her work schedule which was every Tuesday, Thursday and Friday from 6:00 o’clock in the morning to 5:00 o’clock in the afternoon.6

The controversy started when, on July 3, 2003, Dr. Ruth A. Asis, Maxicare’s medical specialist on Corporate Accounts, informed Dr. Contreras that she was going to be transferred to another account after a month. On August 4, 2003, the Service Agreement between Dr. Contreras and Dr. Eric S. Nubla, Maxicare’s Vice-President for Medical Services, was executed, effecting the transfer of the former to Maybank Philippines (Maybank) for a period of four (4) months, from August 5, 2003 to November 29, 2003, with a retainer fee of P168.00 per hour.

Dr. Contreras reported to Maybank for one (1) day only. On August 8, 2003, she filed a complaint before the LA claiming that she was constructively dismissed. Maxicare, on the other hand, insisted that there was no constructive dismissal.

Ruling of the Labor Arbiter

On November 29, 2005, the LA rendered a decision dismissing the complaint of Dr. Contreras for lack of merit. The pertinent portions of the LA’s ruling read:

If indeed complainant was forced to sign the contract of August 4, 2003, she could not have reported to that assignment under it in the first place. In reporting so, she not only ratified the contract of service she signed but also waived all her rights under their previous agreement she is supposed to be entitled to enforce. It may be that there present under the circumstance of a breach of contractual obligation under the previous undertaking which partakes the nature of constructive dismissal based on evidence at hand. At that then, complainant should have at such point ventilated the matter before this forum. She did not. Instead, she proceeded to sign or execute the questioned Service Agreement with the respondent under the terms and conditions therein stated. To a professional like her, a Doctor, complainant

should have refused as she is at liberty, in refusing to sign even if what she claimed there appears a threat of dismissal. In this case, she even confirmed what she signed by reporting to duty thereafter. And only after examining what she signed that she realized she thought of initiating the present complaint. In this regard, absent any showing that she was forced to executethe disputed service agreement of August 4, 2003, complainant’s complaint for constructive dismissal can hardly be sustained by a later change of heart.

Finding substantial basis to support the validity of the Service Agreement of August 4, 2003 entered into by the parties, the present complaint for constructive dismissal must necessarily fail. Consequent claim as relief therefor has no basis.7

Ruling of the NLRC

On March 16, 2007, upon appeal, the NLRC rendered a decision8 reversing and setting aside the LA’s decision. It declared that Dr. Contreras was illegally dismissed and ordered her reinstatement to her former or substantially equivalent position and the payment of her backwages.

The NLRC explained that the "execution of a Service Agreement for another retainership with lower salary does not negate constructive dismissal arising from the termination of complainant’s PNB retainership without either just or authorized cause but simply is anchored on alleged complaints which even Dr. Eric Nubla recognize to be fictitious."9 Dr. Contreras signed the Service Agreement on August 4, 2003, and later repudiated it with a notice to Maxicare that she could not go on serving under such a disadvantageous situation. The disadvantage she was referring to was the disparity in remuneration between the PNB retainership with ₱250.00 per hour and that of Maybank with ₱168.00 per hour. The clear economic prejudice validated her claim of having reservation on the Service Agreement prior to her signature. She signed the new agreement because it, being a contract of adhesion, gave her no realistic chance to haggle for her job. Thus, the NLRC disposed:

WHEREFORE, premises considered, the Decision appealed from is hereby REVERSED and SET ASIDE and a new one entered declaring complainant wasillegally dismissed. Accordingly, respondents are hereby ordered to reinstate complainant to her former or substantially equivalent position and to pay herbackwages from the time her PNB retainership was terminated until the finality of this Decision.

SO ORDERED.10

Ruling of the Court of Appeals

On January 28, 2010, the CA affirmed the conclusions reached by the NLRC.

On the issue regarding the existence or non-existence of an employer-employee relationship, the CA ruled that Maxicare could not raise the said issue for the first time on appeal. Nonetheless, the CA ruled that the records showed that there existed an employer-employee relationship between Maxicare and Dr. Contreras for the following reasons: 1] Maxicare exercised significant control in her hiring and the conduct of her work; 2] Maxicare was the one who engaged her services; 3] Maxicare determined and prepared herwork assignments, like attending to PNB members needing medical consultation and performing such other duties as may be assigned by

Maxicare to her from time to time; 4] Maxicare determined her specific work schedules, which was for her to render services from 1:00 to 5:00 o’clock in the afternoon "every Tuesday and Thursday;"11 and 5] Maxicare prescribed the conditions of work for her, which were a) that she had to abide by the company rules and regulations, b) that she would keep inviolate all company records, documents, and properties and from disclosing or reproducing theserecords and documents to anyone without proper authority, c) that she had to surrender upon request for, or upon termination of her services, such records, documents, and properties to Maxicare; d) that Maxicare, through itsCustomer Care coordinator, Ms. Cecile Samonte, would monitor her work; and e) that she was compensated not according to the result of her efforts, but according to the amount of time she spent at the PNB clinic.12

The CA added that Maxicare impliedly admitted that an employer-employee relationship existed between both parties by arguing that she was not constructively dismissed. Hence, Maxicare was estopped from questioning her status as its employee.13

On the issue of whether or not Dr. Contreras was constructively dismissed, the CA ruled that her transfer to Maybank, which resulted in a diminution of her salary, was prejudicial to her interest and amounted to a constructive dismissal. It stated that Maxicare, as employer, had the burden of proving that not only was her transfer made for valid or legitimate grounds, such as genuine business necessity, but also that such transfer was not unreasonable, inconvenient, or prejudicial to her.14

Maxicare filed a motion for reconsideration but it was denied by the CA in its Resolution,15 dated October 27, 2010.

Not in conformity with the adverse decision, Maxicare filed this petition anchored on the following

GROUNDS

I

THE COURT OF APPEALS, IN RENDERING THE ASSAILED DECISION, ERRONEOUSLY SET ASIDE, EVEN CONTRADICTED, A PLETHORA OF JURISPRUDENCE THAT LACK OR ABSENCE OF JURISDICTION MAY BE RAISED FOR THE FIRST TIME EVEN ON APPEAL.

II

THE COURT OF APPEALS MISAPPLIED THE 4-TIERED TEST TO DETERMINE THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP WITHOUT CONCRETE BASIS.16

Maxicare’s position

Maxicare argues that questions on jurisdiction "may be raised at any stage ofthe proceedings, even on appeal, and the right to do so is not lost by waiver or by estoppel." Maxicare likewise asserts that "if the issue on jurisdiction may be resolved by an appellate tribunal motu propio when the same has not been raised in the courts below, with more reason that the same should be allowed to be considered and decided upon by the appellate court when, as in the present petition, the said issue has been raised in the pleadings before the appellate court."17

Considering that Dr. Contreras submitted evidence to support not only her claim of constructive dismissal but also the existence of an employer-employee relationship, its act of raising said issue should be sufficient ground for the CA to consider and rule on the issue of jurisdiction.18

Maxicare claims that there could have been no employer-employee relationship arising from the oral medical retainership agreement between the parties. It contends that it could not have effectively exercised control over the means and method adopted by Dr. Contreras in accomplishing her work as a medical retainer; that it did not determine the manner in which she conducted physical examination, immunized, diagnosed, or treated her patients; that Dr. Contreras confirmed that it paid her retainer fees and

deducted only 10% "withholding tax payable-expanded;" that she was not in the list of Maxicare’s payroll; and that Maxicare did not deduct SSS contributions from the retainer fees that Dr. Contreras received. Hence, the above circumstances disprove the presence of employer-employee relationship. On the contrary, they strongly indicate a case of an independent contractor.19

Maxicare went on further by stating that Dr. Contreras was an independent contractor because she rendered services for a few hours a week, giving her free time to pursue her private practice as a physician and that upon the terms of their agreement, either party could terminate the arrangement upon one month’s advance notice.20

Finally, Maxicare contends that Dr. Contreras is a highly educated person who freely, willingly and voluntarily signed the new Medical Retainership Agreement.21 Therefore, there is no truth to her claim that she was forced to sign said agreement.22

Dr. Contreras’s position

On the other hand, Dr. Contreras basically counters that Maxicare did not raise the issue of the existence of an employer-employee relationship before the LA. It also did not question such point in the NLRC. Maxicare brought up the matter for the first time only in the CA.

The Court’s Ruling

The petition has no merit at all.

As a rule, a party who deliberately adopts a certain theory upon which the case is tried and decided by the lower court, will not be permitted to change theory on appeal. Points of law, theories, issues and arguments not brought to the attention of the lower court need not be, and ordinarily will not be, considered by a reviewing court, as these cannot be raised for the first time at such late stage. It would be unfair to the adverse party who would have noopportunity to present further evidence material to the new theory, which it could have done had it been aware of it at the time of the hearing before the trial court. To permit Maxicare in this case to change its theory on appeal would thus be unfair to Dr. Contreras, and would offend the basic rules of fairplay, justice and due process.

Indeed, Maxicare is already estopped from belatedly raising the issue of lack of jurisdiction considering that it has actively participated in the proceedings

before the LA and the NLRC. The Court has consistently held that "while jurisdiction may be assailed at any stage, a party’s active participation in theproceedings before a court without jurisdiction will estop such party from assailing the lack of it." It is an undesirable practice of a party to participate in the proceedings, submit his case for decision and then accept the judgment, if favorable, but attack it for lack of jurisdiction, when adverse.23

In the case at bench, it may be recalled that Dr. Contreras filed a complaint for illegal dismissal against Maxicare before the LA. Maxicare was given the chance to defend its case before the LA. In fact, the LA decision favored Maxicare when it ruled that there was no illegal dismissal. On appeal, however, the NLRC reversed and set aside the LA’s decision and ordered Dr. Contreras’s reinstatement with payment of backwages. Upon the denial of itsmotion for reconsideration, Maxicare elevated its case to the CA raising the issue of jurisdiction for the first time.

Undeniably, Maxicare never questioned the LA’s jurisdiction from the very beginning and never raised the issue of employer-employee relationship throughout the LA proceedings. Surely, Maxicare is not unaware of Article 217 of the Labor Code which enumerates the cases where the LA has exclusive and original jurisdiction. Maxicare definitely knows the basic rule that the LA can exercise jurisdiction over cases only when there is an employer-employee relationship between the parties in dispute.

If Maxicare was of the position that there was no employer-employee relationship existing between Maxicare and Dr. Contreras, it should have questioned the jurisdiction of the LA right away. Surprisingly, it never did. Instead, it actively participated in the LA proceedings without bringing to the LA’s attention the issue of employer-employee relationship.

On appeal before the NLRC, the subject issue was never raised either. Maxicare only raised the subject issue for the first time when it filed a petition in the CA challenging the adverse decision of the NLRC. It is, therefore, estopped from assailing the jurisdiction of the LA and the NLRC.

It is true that questions of jurisdiction may be raised at any stage. It is also true, however, that in the interest of fairness, questions challenging the jurisdiction of courts will not be tolerated if the party questioning such jurisdiction actively participates in the court proceedings and allows the court to pass judgment on the case, and then questions the propriety of said judgment after getting an unfavorable decision. It must be noted that Maxicare had two (2) chances of raising the issue of jurisdiction: first, in the

LA level and second, in the NLRC level. Unfortunately, it remained silent on the issue of jurisdiction while actively participating in both tribunals. It was definitely too late for Maxicare to open up the issue of jurisdiction in the CA.

The Court cannot tolerate this kind of procedural strategy on Maxicare’s part because it would be unfair to Dr. Contreras who would no longer be able to present further evidence material to the new issue raised on appeal. Maxicare’s lapse in procedure has proved fatal to its cause and therefore, it should suffer the consequences. The Court has been consistent in its ruling in a long line of cases, the latest of which is Duty Free Philippines Services, Inc., v. Manolito Q. Tria,24 where it was written:

It was only in petitioner’s Petition for Certiorari before the CA did it impute liability on DFP as respondent’s direct employer and as the entity who conducted the investigation and initiated respondent’s termination proceedings. Obviously, petitioner changed its theory when it elevated the NLRC decision to the CA. The appellate court, therefore, aptly refused to consider the new theory offered by petitioner in its petition. As the object of the pleadings is to draw the lines of battle, so to speak, between the litigants, and to indicate fairly the nature of the claims or defenses of both parties, a party cannot subsequently take a position contrary to, or inconsistent, with its pleadings. It is a matter of law that when a party adoptsa particular theory and the case is tried and decided upon that theory in the court below, he will not be permitted to change his theory on appeal. The case will be reviewed and decided on that theory and not approached and resolved from a different point of view.

The review of labor cases is confined to questions of jurisdiction or grave abuse of discretion. The alleged absence of employer-employee relationship cannot be raised for the first time on appeal. The resolution of this issue requires the admission and calibration of evidence and the LA and the NLRC did not pass upon it in their decisions. We cannot permit petitioner to changeits theory on appeal. It would be unfair to the adverse party who would have no more opportunity to present further evidence, material to the new theory,which it could have done had it been aware earlier of the new theory before the LA and the NLRC. More so in this case as the supposed employer of respondent which is DFP was not and is not a party to the present case.

In Pamplona Plantation Company v. Acosta, petitioner therein raised for the first time in its appeal to the NLRC that respondents therein were not its

employees but of another company. In brushing aside this defense, the Courtheld:

x x x Petitioner is estopped from denying that respondents worked for it.1âwphi1 In the first place, it never raised this defense in the proceedings before the Labor Arbiter. Notably, the defense it raised pertained to the nature of respondents' employment, i.e., whether they are seasonal employees, contractors, or worked under the pakyaw system. Thus, in its Position Paper, petitioner alleged that some of the respondents are coconut filers and copra hookers or sakadors; some are seasonal employees who worked as scoopers or lugiteros; some are contractors; and some worked under the pakyaw system. In support of these allegations, petitioner even presented the company's payroll which will allegedly prove its allegations.

By setting forth these defenses, petitioner, in effect, admitted that respondents worked for it, albeit in different capacities. Such allegations are negative pregnant - denials pregnant with the admission of the substantial facts in the pleading responded to which are not squarely denied, and amounts to an acknowledgment that respondents were indeed employed by petitioner.

Also in Telephone Engineering & Service Co., Inc. v. WCC, et al., the Court held that the lack of employer-employee relationship is a matter of defense that the employer should properly raise in the proceedings below. The determination of this relationship involves a finding of fact, which is conclusive and binding and not subject to review by this Court.

In this case, petitioner insisted that respondent was dismissed from employment for cause and after the observance of the proper procedure for termination. Consequently, petitioner cannot now deny that respondent is itsemployee. While indeed, jurisdiction cannot be conferred by acts or omissionof the parties, petitioner's belated denial that it is the employer of respondent is obviously an afterthought, a devise to defeat the law and evade its obligations.

It is a fundamental rule of procedure that higher courts are precluded from entertaining matters neither alleged in the pleadings nor raised during the proceedings below, but ventilated for the first time only in a motion for reconsideration or on appeal. Petitioner is bound by its submissions that respondent is its employee and it should not be permitted to change its theory. Such change of theory cannot be tolerated on appeal, not due to the

strict application of procedural rules, but as a matter of fairness. [Emphases supplied]

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. No. 186366 July 3, 2013

HEIRS OF JOSE FERNANDO, PETITIONERS, vs.REYNALDO DE BELEN, RESPONDENT.

D E C I S I O N

PEREZ, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks the reversal of the 11 February 2009 Decision1 of the Court of Appeals in CA-G.R. CV No. 87588, setting aside the 28 October 2005 Decision2 of the Regional Trial Court (RTC), Branch 10 of Malolos City, Bulacan, which rendered a favorable finding for the petitioners in a complaint for recovery ofpossession docketed as Civil Case No. 180-M-98.

The Facts

This case emanated from a complaint for Recovery of Possession3 filed on 6 March 1998 by the petitioners against Reynaldo De Belen, herein respondent, before the RTC, Branch 10 of Malolos, Bulacan, involving a parcelof land covered by Original Certificate of Title (OCT) No. RO-487 (997) registered in the name of the late Jose, married to Lucila Tinio and Apolonia Fernando, wife of Felipe Galvez, consisting of 124,994 square meters, more or less, which is situated in Baliuag, Bulacan.

In the said complaint, it was alleged that petitioners are the children of the late Jose and they are in the process of partitioning their inheritance. However, they could not properly accomplish the partition due to the presence of the respondent who intruded into a portion of their property and conducted quarrying operations in its immediate vicinity for so many years, without their knowledge and permission.4

Petitioners, therefore, wrote a letter5 dated 8 April 1997 to the respondent which was unheeded; thus, a barangay conciliation was resorted to. For failure of the respondent to appear, a Certification6 was issued by the

Barangay Lupon that led to the filing of the complaint before the RTC of Malolos, Bulacan docketed as Civil Case No. 180-M-98 to assert and defend their right over the subject property and for the respondent to vacate the premises and pay rental arrearages in the amount of P24,000.00, attorney’s fees of P10,000.00 and exemplary damages ofP20,000.00

Instead of filing an Answer, respondent Reynaldo De Belen filed a Motion to Dismiss7 dated 22 June 1998, setting forth the following grounds: (1) lack of jurisdiction; (2) lack of cause of action; (3) ambiguity as to the portion of the lot De Belen occupies; and, (4) incomplete statement of material facts, the complaint having failed to state the identity, location and area of the lot sought to be recovered.

The petitioners filed their Opposition8 on 17 July 1998, averring that the complaint states a cause of action and respondent need not be confused because the estate under OCT No. RO-487 (997) is actually known as Psu-39080 with an area of 124,994 square meters divided into Lot 1 (80,760 square meters), Lot 2 (22,000 square meters), and Lot 3 (21,521 square meters). Likewise, petitioners also stated that their father, Jose and the latter’s sister, Antonia A. Fernando, were co-owners pro-indiviso of the subject property and that as indicated in their demand letter, they represent the heirs of Jose and Antonia A. Fernando, both deceased many years ago. Although, a matter of proof to be presented in the course of the trial, petitioners nonetheless advanced that Antonia Fernando predeceased her brother Jose and she died without issue; thus, her undivided share was consolidated with that of her brother.

Finding lack of merit, the motion was denied in an Order9 dated 3 November 1998, with the trial court ordering herein petitioners to amend the complaint by indicating the details desired by the respondent in order for the latter to file a responsive pleading.

On 12 February 1999, the Amended Complaint10 with its attachment was filedto which the respondent moved for a Bill of Particulars,11 specifically questioning the legal basis for the complaint since the entire property appears to be co-owned by Jose and Antonia Fernando and it was not particularized in the complaint as to what specific portion belongs to each of the co-owners.

In addition, the respondent, in his Answer,12 claimed that even the Bill of Particulars13 did not clearly show the exact identity, personal circumstances and relationship of the individual heirs of the decedent, location, area and

size of the subject property. Also, prescription, estoppel and laches had set inas against the petitioners.

The respondent further argued that the Amended Complaint was prematurely filed due to the fact that the Certification to File Action was issued in violation of the prescribed procedure. The respondent likewise insisted on his right of possession over the subject property as evidenced by the successive transfer from Felipe Galvez to Carmen Galvez on 11 March 1955; from Carmen Galvez to Florentino San Luis to Reynaldo De Belen on 4 June 1979, and the receipt for the purchase price of P60,000.00 dated 19 June 1979. He asserted that from the date of his purchase, he has been in exclusive, continuous, open and public possession of said parcel of land.

Trial on the merits ensued which eventually resulted in the 28 October 2005 Decision of the RTC which is favorable to the petitioners. Thus:

IN VIEW OF THE FOREGOING, judgment is hereby RENDERED:

(a)

Declaring as null and void and without legal force and effect the "Kasulatan Ng Pagbibilihang Tuluyan Ng Tumana" dated March 11, 1955 executed by Felipe Galvez in favor of Carmen Galvez; "Kasulatan Ng Pagbibiling Tuluyan Ng Tumana dated July 28, 1958, registered as Doc. No. 945; Page 59, Book XXIV; Series of 1958 of Notary Public Fermin Samson executed by Carme[n] Galvez married to Luis Cruz in favor of Florentino San Luis; and "Kasulatan Ng Bilihang Tuluyan Ng Lupang Tumana" dated June 04, 1979 executed by Florentino R. San Luis married to Agripina Reyes in favor of defendant Reynaldo Santos de Belen, entered as Doc. No. 199; Page No. 41; Book No. 79; Series of 1979 covering 9,838 square meters of a parcel of land designated as Lot 1303-B per approved subdivision plan in Cad. Case No. 17, Record No. 788 submitted before the defunct CFI of Bulacan and granted in aDecision dated December 29, 1929;

(b)

Ordering the reconveyance of the disputed subject property in question including all improvements thereon as above-described by the defendant to the plaintiffs herein;

(c)

Ordering the defendant to pay plaintiffs the amount of P10,000.00 a month from March 06, 1998 with legal interest until the subject property is actually returned to the plaintiffs;

(d)

Ordering the defendant to pay plaintiffs the amount of P10,000.00 as attorney’s fees;

(e)

Ordering the defendant to pay plaintiff’s the costs of suit.14

Aggrieved, respondent appealed to the Court of Appeals raising the issues onjurisdiction for failure of the petitioners to state the assessed value of the subject property, absence of evidence proving the lawful ownership of the petitioners and the grant of affirmative reliefs which were not alleged or prayed for.

On 11 February 2009, the Court of Appeals issued the assailed decision setting aside the decision of the RTC for want of jurisdiction and declaring further that the Amended Complaint must be dismissed.

Hence, the petition at bench seeking the reversal of the aforementioned decision.

The Issue

The core issue for resolution is whether or not the Court of Appeals committed reversible error in holding that the RTC did not acquire jurisdictionfor failure to allege in the complaint the assessed value of the subject property.

Our Ruling

The general rule is that the jurisdiction of a court may be questioned at any stage of the proceedings.15 Lack of jurisdiction is one of those excepted grounds where the court may dismiss a claim or a case at any time when it appears from the pleadings or the evidence on record that any of those grounds exists, even if they were not raised in the answer or in a motion to dismiss.16 So that, whenever it appears that the court has no jurisdiction overthe subject matter, the action shall be dismissed. This defense may be interposed at any time, during appeal or even after final judgment. Such is understandable, as this kind of jurisdiction is conferred by law and not within

the courts, let alone the parties, to themselves determine or conveniently setaside.17

A reading of both the complaint and the amended complaint shows that petitioners failed to state the assessed value of the disputed lot. This fact was highlighted by the Court of Appeals when it ruled:

Instant complaint for Recovery of Possession failed to specify the assessed value of the property subject matter of the action. "What determines the nature of the action as well as which court has jurisdiction over it are the allegations of the complaint and the character of the relief sought." (Bejar, et. al. v. Caluag, G.R. No. 171277, February 12, 2007). The allegations in the complaint and the relief sought by the party determine the nature of the action if the title or designation is not clear. The complaint, in the case at bar, is bereft of any allegation which discloses the assessed value of the property subject matter thereof. The court a quo therefore, did not acquire jurisdiction over instant action. The Amended Complaint does not state a valid cause of action.18

Facially, the above disposition finds support from the provisions of Republic Act 7691 (RA 7691),19 the law in effect when the case was filed. Section 1 of RA 7691, amending Section 19 of Batas Pambansa Bilang 129, pertinently states:

"Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of 1980", is hereby amended to read as follows:

"Section 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original jurisdiction.

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

"(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000,00) or, for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts;

x x x x.

Thereby guided, the Court of Appeals no longer dwelt on the other issues andmatters raised before it.1âwphi1

Jurisprudence has it that in a petition for review on certiorari under Rule 45 ofthe Rules of Court, only questions of law may be raised.20 As held in the case of Solmayor v. Arroyo,21 it is not the function of this Court to analyze and weigh evidence all over again. This is premised on the presumed thorough appreciation of the facts by the lower courts. Such that, when the trial court and the appellate court, as in this case, reached opposite conclusions, a review of the facts may be done. There is a permissible scope of judicial review on the factual findings of the lower courts as crystallized in Treñas v. People of the Philippines,22 where the Court cited contradictory findings of the Court of Appeals and the trial court as one of the instances where the resolution of the petition requires a review of the factual findings of the lowercourts and the evidence upon which they are based.

So too are we reminded that procedural rules are intended to ensure the proper administration of law and justice and the rules of procedure ought notto be applied in a very rigid sense, for they are adopted to secure, not override, substantial justice.23

We, accordingly, review the records of this case and note the facts and evidence ignored by the appellate court. We observe that at the initial stage of this case when the respondent questioned the jurisdiction of the RTC in a Motion to Dismiss, he solely assailed the vagueness of the complaint for failure to allege the specific identity of the subject property and for being prematurely filed. The trial court in its 3 November 1998 Order, settled the issue by declaring that the allegations in the complaint make out for a case of recovery of ownership and that the petitioners need not wait for the lapse of one year from the 8 April 1997 demand letter to maintain the accion reinvidicatoria. The trial court went on to explain that the complaint clearly gives the defendant, herein respondent, notice of their exclusive and absolute claim of ownership over the entire property covered by the OCT No. RO-487 (997).

From the said Order, the respondent never raised any objection and did not even opt to elevate the matter to a higher court via a certiorari case which isa remedy for the correction of errors of jurisdiction. If indeed respondent was not convinced of the trial court’s ruling, he could have availed of such remedy which is an original and independent action that does not proceed from the trial that would lead to the judgment on the merits. As aptly cited in

the case of New Frontier Sugar Corporation v. RTC, Branch 39, Iloilo City,24 when the issue is jurisdiction, an original action for certiorari may be directed against an interlocutory order of the lower court prior to an appeal from the judgment.

On the contrary, the respondent acquiesced to the 3 November 1998 Order of the trial court for him to file his Answer,25 whereby, he asserted ownership over the portion of the subject property which he occupied. He attached the following proof of his ownership, to wit: a) Deed of Absolute Sale by Felipe Galvez in favor of Carmen Galvez dated 11 March 1955;26 b) Deed of Absolute Sale by Carmen Galvez in favor of Florentino San Luis dated 28 July 1958;27 c) Deed of Absolute Sale by Florentino San Luis in favor of Reynaldo Santos De Belen dated 4 June 197928 and the corresponding receipt of the purchase price of P60,000.00 dated 19 June 1979.29

When the pre-trial conference was concluded, the trial court issued several Pre-Trial Orders,30 specifying the identity and coverage of the subject property being claimed by the petitioners as well as that portion occupied bythe respondent, simplification of facts involved, and the issues which primarily centered on the validity of the transfer or disposition made by Felipe Galvez of the paraphernal property of his wife Antonia Fernando from which transfer the respondent succeeded his right over the portion he occupied.

During the trial, the petitioners were able to prove that indeed they are the rightful heirs of Jose and Antonia Fernando and that they have right of ownership over the property covered by OCT No. RO-487 (997) as described in Plan Psu-39080 of Lots 1302-B and 1303 prepared by Geodetic Engineer Alfredo C. Borja on 15 September 1997.31 It was also proved through the admission of the respondent that he has been occupying a portion of Lot 1303 which is the Sapang Bayan, the old river, titled in the name of Jose and Antonia Fernando. Thus, it was ruled that the Deed of Sale in respondent’s favor which was traced from the transfer made by Felix Galvez on 11 March 1955, without any participation of Antonia Fernando was likewise without anysettlement of property between the said husband and wife and the property remained to be the paraphernal property of Antonia. Consequently, the trial court declared that the sale between Felipe Galvez and Carmen Galvez and its subsequent transfers are void ab initio, as Felipe Galvez was neither the owner nor administrator of the subject property.1âwphi1

Further, the trial court went on to state that respondent has not proved his status as a purchaser in good faith and for value taking cue from the facts and circumstances as well as the numerous entries found at the dorsal sides of OCT No. RO-487 (997) which should have put any of the buyers on guard.

After the entire proceedings fully participated in by the respondent, he cannot be allowed to question the result as having been rendered without jurisdiction. This is the teaching in Tijam v. Sibonghanoy, et al.32 as reiteratedin Soliven v. Fastforms Philippines, Inc.,33 where the Court ruled:

"While it is true that jurisdiction may be raised at any time, "this rule presupposes that estoppel has not supervened." In the instant case, respondent actively participated in all stages of the proceedings before the trial court and invoked its authority by asking for an affirmative relief. Clearly, respondent is estopped from challenging the trial court’s jurisdiction,especially when an adverse judgment has been rendered." (Italics ours)

Similarly, as this Court held in Pantranco North Express, Inc. v. Court of Appeals,34 participation in all stages of the case before the trial court, that included invoking its authority in asking for affirmative relief, effectively barred the respondent by estoppel from challenging the court’s jurisdiction. The Court has consistently upheld the doctrine that while jurisdiction may be assailed at any stage, a litigant who participated in the court proceedings by filing pleadings and presenting his evidence cannot later on question the trialcourt’s jurisdiction when judgement unfavorable to him is rendered.

Moreover, and of equal significance, the facts of this case demonstrate the inapplicability of RA 7691. The argument of respondent that the assessed value of the subject property places the case outside the jurisdiction of the Regional Trial Court is belied by respondent’s own Answer which states that:

x x x x

"16. That the defendant’s ownership and possession over the parcel of land ought to be recovered by the plaintiff is valid and legal as evidenced by the following:35

x x x x

(c) Deed of Absolute Sale by Florentino San Luis in favor of Reynaldo Santos de Belen dated June 4, 1979 (Annex "3" hereof)36 and the corresponding receipt of the purchase price of P60,000.00 dated June 19, 1979 (Annex "4" hereof)."37

thereby showing that way back in 1979 or nineteen (19) years before this case was instituted, the value of the property was already well covered by the jurisdictional amount for cases within the jurisdiction of the RTC.

WHEREFORE, we GRANT the petition and REVERSE the assailed Decision of the Court of Appeals. The Regional Trial Court Decision is AFFIRMED. Let the records of this case be remanded to the RTC, Branch 10, Malolos, Bulacan forexecution.

SO ORDERED.

G.R. No. 176838 June 13, 2013

DEPARTMENT OF AGRARIAN REFORM, as represented by Fritzi C. Pantoja, in her capacity as the Provincial Agrarian Reform Officer, DAR-Laguna, Petitioner, vs.PARAMOUNT HOLDINGS EQUITIES, INC., JIMMY CHUA, ROJAS CHUA, BENJAMIN SIM, SANTOS C. TAN, WILLIAM C. LEE and STEWART C. LIM, Respondents.

D E C I S I O N

REYES, J.:

This resolves the Petition for Review1 filed by petitioner Department of Agrarian Reform (DAR) to assail the Decision2 dated Oct8ber 12, 2006 and Resolution3 dated January 10, 2007 of the Court of Appeals (CA) in CA-G.R. SPNo. 89693, which granted Paramount Holdings Equities, Inc., Jimmy Chua, Rojas Chua, Benjamin Sim, Santos C. Tan, William C. Lee and Stewart C. Lim's(respondents) appeal from the rulings of the Department of Agrarian Reform Adjudication Board (DARAB) in DARAB Case No. 12284.

The Antecedents

The case stems from the petition4 docketed as DARAB Case No. R 0403-0009-02, filed with the Office of the Provincial Adjudicator (PARAD) by the DAR through Provincial Agrarian Reform Officer (PARO) Felixberto Q. Kagahastian. The petition sought to nullify the sale to the respondents of several parcels ofland, with details of the sale as follows:

VendeeTitle No.

Area Covered

New Title

Vendor

Jimmy C. Chua and Rojas Chua

T-37140

71,517 squaremeters

T-196706

Golden MountainAgricultural DevelopmentCorporation

ParamountHoldings Equities, Inc.

T-37141

14,634 sq m

T-196705

Golden MountainAgricultural DevelopmentCorporation

ParamountHoldings Equities,Inc.

T-37139

17,203 sq m

T-196704

Golden MountainAgricultural DevelopmentCorporation

William C. Lee andSteward C. Lim

T-37137

68,078 sq m

T-196707

Green MountainAgricultural DevelopmentCorporation

Benjamin Sim andSantos C. Tan

T-37138

66,114 sq m

T-196708

Green MountainAgricultural DevelopmentCorporation

The PARO argued that the properties were agricultural land yet their sale waseffected without DAR Clearance as required under Republic Act No. 6657 (R.A. No. 6657), otherwise known as the Comprehensive Agrarian Reform Law (CARL). Allegedly, the PARO came to know of the transactions only after he had received a directive from the Secretary of Agrarian Reform to investigate the matter, following the latter’s receipt of a letter-request from persons5 who claimed to be the tenant-farmers of the properties’ previous owners.6

The respondents opposed the petition, contending that since the matter involves an administrative implementation of R.A. No. 6657, the case is cognizable by the Secretary of Agrarian Reform, not the DARAB. They also sought the petition’s dismissal on the grounds of prescription, litis pendentia,res judicata and forum shopping.

The Ruling of the PARAD

On October 16, 2002, Provincial Adjudicator Virgilio M. Sorita (PA Sorita) issued a Resolution7 dismissing the petition for lack of jurisdiction. He explained:

Petitioner further argued that the jurisdiction of the Department of Agrarian Reform Adjudication Board includes and is not limited to those involving sale,alienation, mortgage, foreclosure, preemption and redemption of agriculturallands under the coverage of CARP or other agrarian laws. These provisions were originally lifted from Presidential Decree 946. The emphasis is on the phrase under the coverage of CARP or other agrarian laws which definitely refers to land already placed under the Comprehensive Agrarian Reform Program under R.A. 6657, lands already placed under Presidential Decree 27,landed estate acquired by Land Bank of the Philippines and administered by the Department of Agrarian Reform pursuant to the Provision of R.A. 3844 as amended and lands under the Settlement and Resettlement Project also administered by the Department of Agrarian Reform for the simple reason that disputes and controversies arising from these areas are agrarian reform matters. It does not include the sale, disposition or alienation of private landsnot administered by the DAR to private individuals such as in this instant case.

Petitioner also argued that jurisdiction of the Adjudication Board also covers violation of the Rules and Guidelines in the implementation of the Comprehensive Agrarian Reform Program. This is true but such violation is only confined to violations committed by beneficiaries of the program not like in the instant case, otherwise, jurisdiction lies on the Regional Trial Court acting as Special Agrarian Court as clearly provided by law.8 (Underscoring ours)

Furthermore, PA Sorita cited the absence of any showing that the petition was filed with the knowledge and authority of the Solicitor General, as the official counsel of the government being the aggrieved party in the dispute.

The DAR’s motion for reconsideration was denied, prompting the filing of an appeal with the DARAB.

The Ruling of the DARAB

The DARAB granted the appeal via a Decision9 dated August 18, 2004. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, the assailed Decision is hereby REVERSED and/or SET ASIDE. A new judgment is rendered nullifying the

Deeds of Sale in question dated September 5, 1989 and ordering the Register of Deeds of Laguna to cancel the aforesaid Deeds of Sale, as well asthe Transfer Certificates of Title issued to the respective private respondents concerned.

SO ORDERED.10

Contrary to the findings of PA Sorita, the DARAB ruled that: first, the failure ofthe parties to the sale to obtain the required clearance indicates that their transactions were fraudulent;11 second, the PARO had the personality to file the petition even in the absence of the Solicitor General’s assistance, citing Memorandum Circular No. 2, series of 2001 (Circular No. 2), and the policy ofDAR to "acquire and distribute all lands covered by RA 6657, including those subject of illegal transfers x x x";12 and third, the DARAB has the jurisdiction over the case, since its jurisdiction under Circular No. 2 covers the cancellation of deeds of conveyance and corresponding transfer certificates of title over agricultural lands.13

The denial14 of the respondents’ motion for reconsideration led to the filing ofa petition with the CA.

The Ruling of the CA

On October 12, 2006, the CA rendered the assailed Decision,15 the dispositiveportion of which reads:

WHEREFORE, the instant petition is GRANTED. The appealed Decision (dated August 18, 2004) and Resolution (dated March 16, 2005) of the Department of Agrarian Reform Adjudication Board-Central Office, Elliptical Road, Diliman,Quezon City are ANNULLED and SET ASIDE. The Petition in DARAB Case No. R-0403-0009-02 is hereby DISMISSED. No pronouncement as to costs.

SO ORDERED.16

The CA emphasized that the DARAB’s jurisdiction over the dispute should be determined by the allegations made in the petition. Since the action was essentially for the nullification of the subject properties’ sale, it did not involve an agrarian suit that is within the DARAB’s jurisdiction.

DAR’s motion for reconsideration was denied in a Resolution17 dated January 10, 2007. Hence, this petition.

The Present Petition

The Court has issued on June 6, 2007 a Resolution18 denying the petition on the following grounds: (a) DAR’s failure to attach proof of service of the petition upon the CA as required by Section 3, Rule 45 in relation to Section 5(d), Rule 56 of the Rules of Court; (b) the DAR’s failure to accompany the petition with clearly legible duplicate original or certified true copies of the assailed CA decision and resolution, in violation of Sections 4(d) and 5 of Rule45, in relation to Section 5(d) of Rule 56; (c) the petition was prepared by theDAR Region IV-Legal Assistance Division without the concurrence of the Office of the Solicitor General (OSG); and (d) the petition failed to sufficiently show that the appellate court committed any reversible error in the challenged decision and resolution as to warrant the exercise by the Court of its discretionary appellate jurisdiction.

On October 15, 2007,19 the Court resolved to grant DAR’s motion to reconsider the dismissal, after it filed its compliance and the OSG, its appearance and manifestation that it was adopting the petition and motion for reconsideration filed by DAR.

On December 10, 2008, the Court again resolved to deny the petition on the ground of the OSG’s failure to obey a lawful order of the Court, following its failure to file the required reply despite the Court’s grant of its several motions for extension.20 On April 20, 2009, the Court resolved to grant DAR’s motion for reconsideration and accordingly, reinstate the petition.21

The main issue for the Court’s resolution is: Whether or not the DARAB has jurisdiction over the dispute that seeks the nullification of the subject properties’ sale.

This Court’s Ruling

The Court answers in the negative.

The jurisdiction of the DARAB is limited under the law, as it was created under Executive Order (E.O.) No. 129-A specifically to assume powers and functions with respect to the adjudication of agrarian reform cases under E.O. No. 229 and E.O. No. 129-A.22 Significantly, it was organized under the Office of the Secretary of Agrarian Reform. The limitation on the authority of it to mere agrarian reform matters is only consistent with the extent of DAR’squasi-judicial powers under R.A. No. 6657 and E.O. No. 229, which read:

SECTION 50 [of R.A. No. 6657]. Quasi-Judicial Powers of the DAR.—The DAR ishereby vested with the primary jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive original jurisdiction over all

matters involving the implementation of agrarian reform except those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the Department of Environment and Natural Resources (DENR).

SECTION 17 [of E.O. No. 229]. Quasi-Judicial Powers of the DAR.—The DAR is hereby vested with quasi-judicial powers to determine and adjudicate agrarian reform matters, and shall have exclusive original jurisdiction over allmatters involving implementation of agrarian reform, except those falling under the exclusive original jurisdiction of the DENR and the Department of Agriculture (DA).

Thus, Sections 1 and 2, Rule II of the DARAB New Rules of Procedure, which was adopted and promulgated on May 30, 1994 and came into effect on June21, 1994, identify the specific extent of the DARAB’s and PARAD’s jurisdiction, as they read:

SECTION 1. Primary and Exclusive Original and Appellate Jurisdiction.—The Board shall have primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program (CARP) under Republic Act No. 6657, Executive Order Nos. 228, 229 and 129-A, Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their implementing rules and regulations. Specifically, such jurisdiction shall include but not be limited to cases involving the following:

a) The rights and obligations of persons, whether natural or juridical, engaged in the management, cultivation and use of all agricultural lands covered by the CARP and other agrarian laws;

b) The valuation of land, and the preliminary determination and payment of just compensation, fixing and collection of lease rentals, disturbance compensation, amortization payments, and similar disputes concerning the functions of the Land Bank of the Philippines (LBP);

c) The annulment or cancellation of lease contracts or deeds of sale or their amendments involving lands under the administration and disposition of the DAR or LBP;

d) Those cases arising from, or connected with membership or representation in compact farms, farmers’ cooperatives and other registered farmers’ associations or organizations, related to lands covered by the CARP and other agrarian laws;

e) Those involving the sale, alienation, mortgage, foreclosure, pre-emption and redemption of agricultural lands under the coverage of the CARP or other agrarian laws;

f) Those involving the issuance, correction and cancellation of Certificates of Land Ownership Award (CLOAs) and Emancipation Patents (EPs) which are registered with the Land Registration Authority;

g) Those cases previously falling under the original and exclusive jurisdiction of the defunct Court of Agrarian Relations under Section 12 of Presidential Decree No. 946, except sub-paragraph (q) thereof and Presidential Decree No. 815.

It is understood that the aforementioned cases, complaints or petitions were filed with the DARAB after August 29, 1987.

Matters involving strictly the administrative implementation of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988 and other agrarian laws as enunciated by pertinent rules shall be the exclusive prerogative of and cognizable by the Secretary of the DAR.

h) And such other agrarian cases, disputes, matters or concerns referred to itby the Secretary of the DAR.

SECTION 2. Jurisdiction of the Regional and Provincial Adjudicator.—The RARAD and the PARAD shall have concurrent original jurisdiction with the Board to hear, determine and adjudicate all agrarian cases and disputes, andincidents in connection therewith, arising within their assigned territorial jurisdiction. (Emphasis supplied)

Consistent with the aforequoted legal provisions, we emphasized in Heirs of Candido Del Rosario v. Del Rosario23that the jurisdiction of the PARAD and theDARAB is only limited to cases involving agrarian disputes, including incidents arising from the implementation of agrarian laws. Section 3(d) of R.A. No. 6657 defines an agrarian dispute in this manner:

(d) Agrarian dispute refers to any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes concerning farmworkers associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements. It includes any controversy relating to compensation of lands

acquired under R.A. 6657 and other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and lessee.

Basic is the rule that the "jurisdiction of a tribunal, including a quasi-judicial office or government agency, over the nature and subject matter of a petition or complaint is determined by the material allegations therein and the character of the relief prayed for irrespective of whether the petitioner orcomplainant is entitled to any or all such reliefs."24 Upon the Court’s perusal of the records, it has determined that the PARO’s petition with the PARAD failed to indicate an agrarian dispute.

Specifically, the PARO’s petition failed to sufficiently allege any tenurial or agrarian relations that affect the subject parcels of land. Although it mentioned a pending petition for coverage filed with DAR by supposed farmers-tillers, there was neither such claim as a fact from DAR, nor a categorical statement or allegation as to a determined tenancy relationship by the PARO or the Secretary of Agrarian Reform. The PARO’s petition merelystates:

3.3 That the Provincial Office only came to know very recently about such transaction when the Office received on two separate occasions a memorandum directive dated 22 October and 25 April 2002 from the Office of the DAR Secretary to investigate and if warranted file a corresponding petition for nullification of such transaction anent the petition for coverage ofthe actual occupants farmers-tillers led by spouses Josie and Lourdes Samson who informed the Office of the DAR Secretary about such transaction. x x x25 (Emphasis ours)

It is also undisputed, that even the petition filed with the PARAD failed to indicate otherwise, that the subject parcels of land had not been the subject of any notice of coverage under the Comprehensive Agrarian Reform Program (CARP). Clearly, the PARO’s cause of action was merely founded on the absence of a clearance to cover the sale and registration of the subject parcels of land, which were claimed in the petition to be agricultural.

Given the foregoing, the CA correctly ruled that the DARAB had no jurisdiction over the PARO’s petition. While the Court recognizes the legal requirement for clearances in the sale and transfer of agricultural lands, the DARAB’s jurisdiction over such disputes is limited by the qualification under

Rule II, Section 1, paragraphs (c) and (e) of the DARAB New Rules of Procedure, which read:

c) The annulment or cancellation of lease contracts or deeds of sale or their amendments involving lands under the administration and disposition of the DAR or LBP;

x x x x

e) Those involving the sale, alienation, mortgage, foreclosure, pre emption and redemption of agricultural lands under the coverage of the CARP or other agrarian laws. (Emphasis ours)

Even Circular No. 2 cited in the Decision26 dated August 18, 2004 on the authority of the PARO to file petitions with the PARAD in case of illegal transfers presupposes the fulfillment of the conditions in the cited Section 1, paragraphs (c) and (e), Rule II of the DARAB Rules and Section 50 of R.A. No. 6657. The pertinent provisions of Circular No. 2 read:

SECTION 4. Operating Procedures.—The procedures for annulment of deeds of conveyance executed in violation of RA 6657 are as follows:

x x x x

b) The Chief, Legal Division, of the Provincial Agrarian Reform Office, shall have the following responsibilities:

x x x x

2. If there was illegal transfer, file a petition for annulment of the deed of conveyance in behalf of the PARO before the Provincial Agrarian Reform Adjudicator (PARAD). The petition shall state the material facts constituting the violation and pray for the issuance of an order from the PARAD directing the ROD to cancel the deed of conveyance and the TCT generated as a resultthereof. As legal basis therefor, the petition shall cite Section 50 of RA 6657 and Rule II, Section 1(c) and (e) of the DARAB New Rules of Procedure;

x x x x

6. In the event of an adverse decision or a denial of the petition, file a Notice of Appeal within the 15-day reglementary period with the DARAB, and, thereafter, transmit the records of the case to the Director, Bureau of Agrarian Legal Assistance (BALA), for prosecution of the appeal.

Clearly, not every sale or transfer of agricultural land would warrant DARAB’sexercise of its jurisdiction. The law is specific that the property must be shown to be under the coverage of agrarian reform laws. As the CA correctly ruled:

It is easily discernable x x x that the cause of action of the DAR sufficiently established a suit for the declaration of the sale of the subject landholdings null and void (in violation of Administrative Order No. 1, Series of 1989). Obviously, it does not involve an agrarian suit, hence, does not fall under thejurisdiction of the DARAB. It must be emphasized that, "(t)here must be a tenancy relationship between the party litigants for the DARAB to validly takecognizance of a controversy." (Suarez vs. Saul, 473 SCRA 628). Also, it is necessary that the controversy must relate to "tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted toagriculture, including disputes concerning farmworkers associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements," (Section 3 (d), Chapter I in relation to Section 50, Chapter XII, R.A. 6657 and Section 1, Rule II, DARAB Rules of [Procedure]). Here, an allegation to declarenull and void a certain sale of a landholding does not ipso facto make the case an agrarian dispute.27 (Emphasis ours)

Our finding on the DARAB’s lack of jurisdiction over the PARO’s petition renders it needless for the Court to discuss the other issues that are raised inthe petition. In any case, the Court finds it worthy to discuss that the original petition remains dismissible on the merits.

Even during the proceedings before the PARAD, the respondents have raised the pendency with the Regional Trial Court of Biñan, Laguna of Civil Case No. B-5862, an appeal from the decision of the Municipal Trial Court of Santa Rosa, Laguna in Civil Case No. 2478. The records indicate that when the matter was elevated to the CA via the petition docketed as CA G.R. SP No. 68110, the appellate court declared the subject properties to have long beenreclassified from "agricultural" to "industrial". Thus, the CA Decision dated September 23, 2002 in CA-G.R. SP No. 68110 reads in part:

As to the nature of the subject lands, the tax declarations of real property, the annual receipts for real estate taxes paid, and zoning ordinance, providing for the Town Comprehensive Land Use Plan of Sta. Rosa, Laguna, have always classified the lands as "industrial". Moreover, as certified by the Municipal Agrarian Reform Office of Sta. Rosa, Laguna, there is no record of

tenancy or written agricultural leasehold contract with respect to the subject lands, nor are the same covered by Operation Land Transfer pursuant to P.D. 27. Thus, for being industrial in nature, the subject lands are outside the ambit of existing agricultural tenancy laws.28 (Citations omitted)

An appeal from the CA’s decision was denied by the Court in a Resolution dated June 18, 2003.29

The Housing Land Use Regulatory Board has affirmed through a Certification30 dated May 22, 1991 that the zoning ordinance referred to was approved on December 2, 1981. Thus, the respondents correctly argued that since the subject properties were already classified as "industrial" long before the effectivity of the CARL, their sale could not have been covered by the CARP and the requirement for a clearance. Significantly, DAR failed to refute said allegation, which the Court finds duly supported by documents that form part of the case records.

WHEREFORE, premises considered, the petition is DISMISSED. The Decision dated October 12, 2006 and Resolution dated January 10, 2007 of the Court of Appeals in CA-G.R. SP No. 89693 are AFFIRMED.

SO ORDERED.

G.R. No. 189874, September 04, 2013

RODULFO VALCURZA AND BEATRIZ LASAGA, SPOUSES RONALDO GADIAN & JULIETA TAGALOG, SPOUSES ALLAN VALCURZA AND GINA LABADO, SPOUSES ROLDAN JUMAWAN AND RUBY VALCURZA, SPOUSES EMPERATREZ VALCURZA AND ENRIQUE VALCURZA, CIRILA PANTUHAN, SPOUSES DANIEL VALCURZA AND JOVETA RODELA, SPOUSES LORETO NAELGA AND REMEDIOS DAROY, SPOUSES VERGILIO VALCURZA AND ROSARIO SINELLO, SPOUSES PATRICIO EBANIT AND OTHELIA CABANDAY, SPOUSES ABNER MEDIO AND MIRIAM TAGALOG, SPOUSES CARMEN MAGTRAYO AND MEDIO MAGTRAYO, SPOUSES MARIO VALCURZA AND EDITHA MARBA, SPOUSES ADELARDO VALCURZA AND PRISCILLA LAGUE, SPOUSES VICTOR VALCURZA AND MERUBELLA BEHAG, AND SPOUSES HENRY MEDIO AND ROSALINDA ALOLHA, Petitioners, v. ATTY. CASIMIRO N. TAMPARONG, JR., Respondent.

D E C I S I O N

SERENO, C.J.:

Before us is a Petition for Review on Certiorari1 of the Decision2 dated 24 September 2009 issued by the Court of Appeals (CA) in CA-G.R. SP No. 01244-MIN. The CA reversed and set aside the Decision3dated 26 April 2005 of the Department of Agrarian Reform and Adjudication Board (DARAB) and reinstated the Decision4 dated 2 January 2002 of the Provincial Agrarian Reform and Adjudication Board (PARAB).

Casimiro N. Tamparong, Jr. (respondent) is the registered owner of a landholding with an area of 412,004 square meters5 and covered by Original Certificate of Title (OCT) No. 0-3636 pursuant to a judicial decree rendered on24 June 1962.7 The Sangguniang Bayan of Villanueva, Misamis Oriental allegedly passed a Comprehensive Zoning Ordinance - Resolution No. 51-98, Series of 1982 - classifying respondent’s land from agricultural to industrial.8cralawlibrary

A Notice of Coverage was issued by the Department of Agrarian Reform (DAR) on 3 November 1992 over 276,411 square meters out of the 412,004 square meters of respondent’s land. The 276,411 square meters of land werecollectively designated as Lot No. 1100.9 The DAR Secretary eventually issued Certificate of Land Ownership Award (CLOA) No. 00102751 over the land in favor of Rodulfo Valcurza, Beatriz Lasaga, Ronaldo Gandian, Julieta Tagalog, Allan Valcurza, Gina Labado, Roldan Jumawan, Ruby Valcurza, Emperatrez Valcurza, Enrique Valcurza, Cirila Pantuhan, Daniel Valcurza, Joveta Rodela, Loreto Naelga, Remedios Daroy, Vergilio Valcurza, Rosario Sinello, Patricio Ebanit, Othelia Cabanday, Abner Medio, Miriam Tagalog, Carmen Magtrayo, Medio Magtrayo, Mario Valcurza, Editha Marba, Adelardo Valcurza, Priscilla Lague, Victor Valcurza, Merubella Behag, Henry Medio, and Rosalinda Alolha (petitioners).10 As a result, OCT No. E-4640 was issued in favor of petitioners on 30 May 1994.11cralawlibrary

Respondent filed a protest against the Comprehensive Agrarian Reform Program (CARP) coverage on the ground that his land was industrial, being found within the industrial estate of PHIVIDEC per Zoning Ordinance No. 123,Series of 1997.12 His protest was resolved in a Resolution13 issued by Regional Director Benjamin R. de Vera on 9 October 2000. The Resolution denied respondent’s protest because Zoning Ordinance No. 123, Series of 1997, never unequivocally stated that all the landholdings within the PHIVIDEC area had been classified as industrial. Furthermore, the Municipal

Planning and Development Council of Villanueva, Misamis Oriental, issued a letter to the Municipal Agrarian Reform Office (MARO) stating that Lot No. 1100 was classified as agricultural per Municipal Ordinance No. 51-98, Seriesof 1982. Also, PHIVIDEC certified that the same lot is located outside the PHIVIDEC Industrial Estate.14cralawlibrary

Aggrieved, respondent filed a Complaint for Annulment of Certificate of Land Ownership Award No. 00102751 and Cancellation of OCT No. E-4640 with Prayer for the Issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order.15 In the Complaint filed with the Provincial Adjudication Reform and Adjudication Board (PARAB) of Misamis Oriental on 6 July 2001, he questioned the issuance of the CLOA on the ground that his land had long been classified by the municipality as industrial. It was also covered by Presidential Proclamation No. 1962, being adjacent to the PHIVIDEC IndustrialEstate, and was thus exempted from CARP coverage.16cralawlibrary

The PARAB declared that Comprehensive Zoning Ordinance No. 51-98, Seriesof 1982 had reclassified Lot No. 2252 from agricultural to industrial land priorto the effectivity of the Comprehensive Agrarian Reform Law. It held that the complaint was not a protest or an application for exemption, but also for annulment and cancellation of title over which DARAB had jurisdiction. As thePARAB exercised delegated authority from the DARAB, it was but proper for the former to rule on the complaint.17 In the exercise of this jurisdiction, the PARAB found the CARP coverage irregular and anomalous because the issuance of the CLOA, as well as its registration with the Register of Deeds, happened before the survey plan was approved by the DENR.18 The dispositive portion of the Decision is as follows:nadcralaw

WHEREFORE, premises considered, Decision is hereby rendered in favor of the plaintiff Casimiro N. Tamparong, Jr. and against the defendants ordering as follows:nadcralaw

1. The immediate annulment and cancellation of CLOA No. 00102751 and OCT No. E-4640, and all other derivative titles that may have been issued pursuant to, in connection with, and by reason of the fraudulent and perjuredcoverage of the disputed land by the DAR;

2. The cancellation of Subdivision Plan Bsd-10-002693 (AR); and

3. The ejectment of the sixteen (16) private-defendants farmer beneficiaries

led by Sps. Rodulfo Valcurza, et al. from the disputed landholding and to surrender their possession thereof to the plaintiff.19

On appeal, the DARAB held that the identification of lands that are subject to CARP and the declaration of exemption therefrom are within the exclusive jurisdiction of the DAR Secretary. As the grounds relied upon by petitioners intheir complaint partook of a protest against the coverage of the subject landholding from CARP and/or exemption therefrom, the DARAB concluded that the DAR Secretary had exclusive jurisdiction over the matter.20 Hence, the DARAB reversed the PARAB, maintained the validity of the CLOA, and dismissed the complaint for lack of merit.21cralawlibrary

Dissatisfied, respondent filed a Petition for Review under Rule 43 with the CA,which ruled that the annulment of duly registered CLOAs with the Land Registration Authority falls within the exclusive jurisdiction of the DARAB and not of the regional director. Furthermore, the subject landholding was considered industrial because of a zoning classification issued by the Municipal Council of Villanueva, Misamis Oriental, prior to 15 June 1988. This ruling is consistent with the power of local governments to reclassify lands through a local ordinance, which is not subject to DAR’s approval.22cralawlibrary

Thus, this Petition.

Petitioners claim that respondent’s complaint before the PARAB concerns the DAR’s implementation of the agrarian law and implementation of CLOA as anincident thereof.23 The PARAB had no jurisdiction, because matters strictly involving the administrative implementation of the CARL and other agrarian laws are the exclusive prerogative of and are cognizable by the DAR Secretary.24 Yet, supposing that PARAB had jurisdiction, its authority to cancelCLOAs is based on the ground that the land was found to be exempted or excluded from CARP coverage by the DAR Secretary or the latter’s authorized representatives, which is not the case here.25 The subject landholding has also been declared as agricultural by various government agencies as evidenced by the Department of Environment and Natural Resources-City Environment and Natural Resources Office Certification declaring the land to be alienable and disposable and not covered by any public land application; by the PHIVIDEC Industrial Authority Certification thatthe land is outside the industrial area of PHIVIDEC; and by the letter of the Deputized Zoning Administrator of Villanueva, Misamis Oriental, saying that

the land is classified as agricultural.26 Moreover, the Resolution and Zoning Ordinance reclassifying the land from agricultural to industrial was not shownto have been approved by the Housing and Land Use Regulatory Board (HLURB) or cleared by the DAR as required by DAR Administrative Order No. 1, Series of 1990.27cralawlibrary

In a Resolution dated 11 January 2010, we required respondent to comment, which he did.28 Upon noting his Comment, we asked petitioners to file their reply, and they complied.29cralawlibrary

The determination of issues brought by petitioners before this Court revolvesaround the sole question of whether the DARAB has jurisdiction over the subject matter of the case.

We rule in the negative.

The jurisdiction of a court or tribunal over the nature and subject matter of an action is conferred by law.30 The court or tribunal must look at the material allegations in the complaint, the issues or questions that are the subject of the controversy, and the character of the relief prayed for in order to determine whether the nature and subject matter of the complaint is within its jurisdiction.31 If the issues between the parties are intertwined with the resolution of an issue within the exclusive jurisdiction of a court or tribunal, the dispute must be addressed and resolved by the said court or tribunal.32cralawlibrary

Section 50 of Executive Order (E.O.) No. 229 vests the DAR with quasi-judicialpowers to determine and adjudicate agrarian reform matters, as well as with exclusive original jurisdiction over all matters involving the implementation of agrarian reform. The jurisdiction of the DAR over the adjudication of agrarian reform cases was later on delegated to the DARAB,33 while the former’s jurisdiction over agrarian reform implementation was assigned to itsregional offices. 34cralawlibrary

The DARAB’s New Rules of Procedure issued in 1994, which were in force at the time of the filing of the complaint, provide, in pertinent part:nadcralaw

Section 1. Primary and Exclusive Original and Appellate Jurisdiction. – The Board shall have primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the

implementation of the Comprehensive Agrarian Reform Program (CARP) under Republic Act No. 6657, Executive Order Nos. 228, 229 and 129-A, Republic Act No. 3844 as amended by Republic Act No. 6389, Presidential Decree No. 27 and other agrarian laws and their implementing rules and regulations. Specifically, such jurisdiction shall include but not be limited to cases involving the following:nadcralaw

x x x x

f) Those involving the issuance, correction and cancellation of Certificatesof Land Ownership Award (CLOAs) and Emancipation Patents (EPs) whichare registered with the Land Registration Authority x x x. (Emphases supplied)

Section 3(d) of Republic Act (R.A.) No. 6657 defines an agrarian dispute as

x x x any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes concerning farmworkers' associations or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of such tenurial arrangements.

It includes any controversy relating to compensation of lands acquired under this Act and other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and lessee. (Emphasis supplied)

A tenurial arrangement exists when the following are established:nadcralaw

1) The parties are the landowner and the tenant or agricultural lessees;

2) The subject matter of the relationship is an agricultural land;

3) There is consent between the parties to the relationship;

4) The purpose of the agricultural relationship is to bring about agricultural production;

5) There is personal cultivation on the part of the tenantor agricultural lessees; and

6) The harvest is shared between the landowner and the tenant or agricultural lessee.35

Thus, the DARAB has jurisdiction over cases involving the cancellation of registered CLOAs relating to an agrarian dispute between landowners and tenants. However, in cases concerning the cancellation of CLOAs that involveparties who are not agricultural tenants or lessees – cases related to the administrative implementation of agrarian reform laws, rules and regulations- the jurisdiction is with the DAR, and not the DARAB.36cralawlibrary

Here, petitioner is correct in alleging that it is the DAR and not the DARAB that has jurisdiction. First, the issue of whether the CLOA issued to petitioners over respondent’s land should be cancelled hinges on that of whether the subject landholding is exempt from CARP coverage by virtue of two zoning ordinances. This question involves the DAR’s determination of whether the subject land is indeed exempt from CARP coverage – a matter involving the administrative implementation of the CARP Law. Second, respondent’s complaint does not allege that the prayer for the cancellation of the CLOA was in connection with an agrarian dispute. The complaint is centered on the fraudulent acts of the MARO, PARO, and the regional directorthat led to the issuance of the CLOA.37cralawlibrary

Also, the elements showing that a tenurial relationship existed between respondent and petitioners were never alleged, much less proven. In reality, respondent only mentioned petitioners twice in his complaint. Although he admitted that they occupied his land, he did not specify the nature of his relationship with them. He only said that their stay on his land was based on mere tolerance.38Furthermore, the only other instance when respondent mentioned petitioners in his complaint was when they informed him that he could no longer harvest the fruits of the land, because they were already the owners thereof. He never stated the circumstances that would have shown

that the harvest of the fruits was in relation to a tenurial arrangement.39cralawlibrary

Nevertheless, assuming arguendo that the DARAB had jurisdiction, the CA was mistaken in upholding the PARAB’s Decision that the land is industrial based on a zoning ordinance, without a prior finding on whether the ordinance had been approved by the HLURB. We ruled in Heirs of Luna v. Afable as follows:40

The meaning of “agricultural lands” covered by the CARL was explained further by the DAR in its AO No. 1, Series of 1990, dated 22 March 1990, entitled “Revised Rules and Regulations Governing Conversion of Private Agricultural Land to Non-Agricultural Uses,” issued pursuant to Section 49 of the CARL. Thus:nadcralaw

Agricultural land refers to those devoted to agricultural activity as defined in RA 6657 and not classified as mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor agencies, and not classified in town plans and zoning ordinances as approved by the Housing and Land Use Regulatory Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for residential, commercial or industrial use. (Emphasis omitted)

It is clear from the last clause of the afore-quoted provision that a land is not agricultural, and therefore, outside the ambit of the CARP if the following conditions concur:nadcralaw

1. the land has been classified in town plans and zoning ordinances as residential, commercial or industrial; and

2. the town plan and zoning ordinance embodying the land classification has been approved by the HLURB or its predecessor agency prior to 15 June 1988. AIDTHC

It is undeniable that local governments have the power to reclassify agricultural into non-agricultural lands. Section 3 of RA No. 2264 (The Local Autonomy Act of 1959) specifically empowers municipal and/or city councils to adopt zoning and subdivision ordinances or regulations in consultation with the National Planning Commission. By virtue of a zoning ordinance, the local legislature may arrange, prescribe, define, and apportion the land within its political jurisdiction into specific uses based not only on the

present, but also on the future projection of needs. It may, therefore, be reasonably presumed that when city and municipal boards and councils approved an ordinance delineating an area or district in their cities or municipalities as residential, commercial, or industrial zone pursuant to the power granted to them under Section 3 of the Local Autonomy Act of 1959, they were, at the same time, reclassifying any agricultural lands within the zone for non-agricultural use; hence, ensuring the implementation of and compliance with their zoning ordinances.

The regulation by local legislatures of land use in their respective territorial jurisdiction through zoning and reclassification is an exercise of police power.The power to establish zones for industrial, commercial and residential uses is derived from the police power itself and is exercised for the protection and benefit of the residents of a locality. Ordinance No. 21 of the Sangguniang Bayan of Calapan was issued pursuant to Section 3 of the Local Autonomy Act of 1959 and is, consequently, a valid exercise of police power by the localgovernment of Calapan.

The second requirement — that a zoning ordinance, in order to validly reclassify land, must have been approved by the HLURB prior to 15 June 1988 — is the result of Letter of Instructions No. 729, dated 9 August 1978. According to this issuance, local governments are required to submit their existing land use plans, zoning ordinances, enforcement systems and procedures to the Ministry of Human Settlements — one of the precursor agencies of the HLURB — for review and ratification. (Emphasis supplied)

Here, the records of the case show the absence of HLURB Certifications approving Comprehensive Zoning Ordinance Resolution No. 51-98, Series of 1982, and Zoning Ordinance No. 123, Series of 1997. Hence, it cannot be said that the land is industrial and outside the ambit of CARP.

WHEREFORE, in view of the foregoing, the Petition dated 19 November 2009 is hereby GRANTED. The 24 September 2009 Decision of the Court of Appeals in CA-G.R. SP No. 01244-MIN is REVERSEDand SET ASIDE. The 26 April 2005 Decision of the Department of Agrarian Reform and Adjudication Board is REINSTATED.

SO ORDERED.

G.R. No. 184266 November 11, 2013

APPLIED FOOD INGREDIENTS COMPANY, INC., Petitioner, vs.COMMISSIONER OF INTERNAL REVENUE, Respondent.

D E C I S I O N

SERENO, CJ:

This is a Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure filed by Applied Food Ingredients, Company, Inc. (petitioner). The Petition assails the Decision2 dated 4 June 2008 and Resolution3 dated 26August 2008 of the Court of Tax Appeals En Bane (CTA En Bane in C.TA. EB No. 359. The assailed Decision and Resolution affirmed the Decision4 dated 13 June 2007 and Resolution5 dated 16 January 2008 rendered by the CTA First Division in C.TA. Case No. 6513 which denied petitioner's claim for the issuance of a tax credit Decision 2 G.R. No. 184266 certificate representing its alleged excess input taxes attributable to zero-rated sales for the period 1April 2000 to 31 December 2000.

THE FACTS

Considering that there are no factual issues in this case, we adopt the findings of fact of the CTA En Banc, as follows:

Petitioner is registered with the Regional District Office (RDO) No. 43 of the BIR in Pasig City (BIR-Pasig) as, among others, a Value-Added Tax (VAT) taxpayer engaged in the importation and exportation business, as a pure buy-sell trader.

Petitioner alleged that from September 1998 to December 31, 2000, it paid an aggregate sum of input taxes ofP9,528,565.85 for its importation of food ingredients, as reported in its Quarterly Vat Return.

Subsequently, these imported food ingredients were exported between the periods of April 1, 2000 to December 31, 2000, from which the petitioner wasable to generate export sales amounting to P114,577,937.24. The proceeds thereof were inwardly remitted to petitioner's dollar accounts with Equitable Bank Corporation and with Australia New Zealand Bank-Philippine Branch.

Petitioner further claimed that the aforestated export sales which transpired from April 1, 2000 to December 31, 2000 were "zero-rated" sales, pursuant to Section 106(A (2)(a)(1) of the N1RC of 1997.

Petitioner alleged that the accumulated input taxes of P9,528,565.85 for the period of September 1, 1998 to December 31, 2000 have not been applied against any output tax.

On March 26, 2002 and June 28, 2002, petitioner filed two separate applications for the issuance of tax credit certificates in the amounts of P5,385, 208.32 and P4,143,357.53, respectively.

On July 24, 2002, in view of respondent's inaction, petitioner elevated the case before this Court by way of a Petition for Review, docketed as C.T.A. Case No. 6513.

In his Answer filed on August 28, 2002, respondent alleged by way of special and affirmative defenses that the request for tax credit certificate is still under examination by respondent's examiners; that taxes paid and collected are presumed to have been made in accordance with law and regulations, hence not refundable; petitioner's allegation that it erroneously and excessively paid the tax during the year under review does not ipso facto warrant the refund/credit or the issuance of a certificate thereto; petitioner must prove that it has complied with the governing rules with reference to tax recovery or refund, which are found in Sections 204(C) and 229 of the Tax Code, as amended.6

Trial ensued and the CTA First Division rendered a Decision on 13 June 2007. It denied petitioner’s claim for failure to comply with the invoicing requirements prescribed under Section 113 in relation to Section 237 of the National Internal Revenue Code (NIRC) of 1997 and Section 4.108-1 of Revenue Regulations No. 7-95.

On appeal, the CTA En Banc likewise denied the claim of petitioner on the same ground and ruled that the latter’s sales for the subject period could notqualify for VAT zero-rating, as the export sales invoices did not bear the following: 1) the imprinted word "zero-rated;" 2) "TIN-VAT;" and 3) BIR’s permit number, all in violation of the invoicing requirements.

THE ISSUES

Petitioner raises this sole issue for the consideration of this Court:

WHETHER OR NOT THE PETITIONER IS ENTITLED TO THE ISSUANCE OF A TAX CREDIT CERTIFICATE OR REFUND OF THE AMOUNT OF P9,528,565.85 REPRESENTING CREDITABLE INPUT TAXES INCURRED FOR THE PERIOD OF SEPTEMBER 1, 1998 TO DECEMBER 31, 2000 WHICH ARE ATTRIBUTABLE TO

ZERO-RATED SALES FOR THE PERIOD OF APRIL 1, 2000 TO DECEMBER 31, 2000.7

THE COURT’S RULING

The Petition has no merit.

Our VAT Law provides for a mechanism that would allow VAT-registered persons to recover the excess input taxes over the output taxes they had paid in relation to their sales.

In Panasonic Communications Imaging Corporation of the Philippines v. Commissioner of Internal Revenue,8 this Court explained that "the VAT is a tax on consumption, an indirect tax that the provider of goods or services may pass on to his customers. Under the VAT method of taxation, which is invoice-based, an entity can subtract from the VAT charged on its sales or outputs the VAT it paid on its purchases, inputs and imports."

For zero-rated or effectively zero-rated sales, although the sellers in these transactions charge no output tax, they can claim a refund of the VAT that their suppliers charged them.9

At the outset, bearing in mind that tax refunds or credits − just like tax exemptions − are strictly construed against taxpayers,10 the latter have the burden to prove strict compliance with the conditions for the grant of the tax refund or credit.

Section 112 of the NIRC of 1997 laid down the manner in which the refund or credit of input tax may be made, to wit:

SEC. 112. Refunds or Tax Credits of Input Tax. –

(A) Zero-rated or Effectively Zero-rated Sales. - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) yearsafter the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due orpaid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero-rated sales under Section 106(A)(2)(a)(1), (2) and (B) and Section 108(B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-

rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales.

x x x x

(D) Period within which Refund or Tax Credit of Input Taxes shall be Made. - Inproper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsections (A) and (B) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claimwith the Court of Tax Appeals.

This Court finds it appropriate to first determine the timeliness of petitioner’sclaim in accordance with the above provision.

Well-settled is the rule that the issue of jurisdiction over the subject matter may, at any time, be raised by the parties or considered by the Court motu proprio.11 Therefore, the jurisdiction of the CTA over petitioner’s appeal may still be considered and determined by this Court.

Although the ponente in this case expressed a different view on the mandatory application of the 120+30 day period as prescribed in the above provision, with the advent, however, of this Court’s pronouncement on the consolidated tax cases of Commissioner of Internal Revenue v. San Roque Power Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue, and Philex Mining Corporation v. Commissioner of Internal Revenue12 (hereby collectively referred as San Roque), we are constrained to apply the dispositions therein to similar facts as those in the present case.

To begin with, Section 112(A) provides for a two-year prescriptive period after the close of the taxable quarter when the sales were made, within which a VAT-registered person whose sales are zero-rated or effectively zero-rated may apply for the issuance of a tax credit certificate or refund of creditable input tax.

In this case, petitioner claims that from April 2000 to December 2000 it had zero-rated sales to which it attributed the accumulated input taxes it had incurred from September 1998 to December 2000.

Applying Section 112(A), petitioner had until 30 June 2002, 30 September 2002 and 31 December 2002 − or the close of the taxable quarter when the zero-rated sales were made − within which to file its administrative claim for refund. Thus, we find sufficient compliance with the two-year prescriptive period when petitioner filed its claim on 26 March 200213 and 28 June 200214 covering its zero-rated sales for the period April to September 2000 and October to December 2000, respectively.

The Commissioner of Internal Revenue (CIR) had one hundred twenty (120) days from the date of submission of complete documents in support of the application within which to decide on the administrative claim.

In relation thereto, absent any evidence to the contrary and bearing in mind that the burden to prove entitlement to a tax refund is on the taxpayer, it is presumed that in order to discharge its burden, petitioner had attached complete supporting documents necessary to prove its entitlement to a refund in its application filed on 26 March 2002 and 28 June 2002. Therefore, the CIR’s 120-day period to decide on petitioner’s administrative claim commenced to run on 26 March 2002 and 28 June 2002, respectively.

Counting 120 days from 26 March 2002, the CIR had until 24 July 2002 withinwhich to decide on the claim of petitioner for an input VAT refund attributableto the its zero-rated sales for the period April to September 2000.

On the other hand, the CIR had until 26 October 2002 within which to decide on petitioner’s claim for refund filed on 28 June 2002, or for the period covering October to December 2000.

Records, however, show that the judicial claim of petitioner was filed on 24 July 2002.15 Petitioner clearly failed to observe the mandatory 120-day waiting period. Consequently, the premature filing of its claim for refund/credit of input VAT before the CTA warranted a dismissal, inasmuch asno jurisdiction was acquired by the CTA.16

In San Roque, this Court, held thus: "Failure to comply with the 120-day waiting period violates a mandatory provision of law. It violates the doctrine of exhaustion of administrative remedies and renders the petition premature and thus without a cause of action, with the effect that the CTA does not

acquire jurisdiction over the taxpayer’s petition. Philippine jurisprudence is replete with cases upholding and reiterating these doctrinal principles."17

Furthermore, the CTA, being a court of special jurisdiction, can take cognizance only of matters that are clearly within its jurisdiction.18 Section 7 of R.A. 1125,19 as amended by R.A. 9282,20 specifically provides:

SEC. 7. Jurisdiction. — The CTA shall exercise:

(a) Exclusive appellate jurisdiction to review by appeal, as herein provided:

(1) Decisions of the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue;

(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period of action, in which case the inaction shall be deemed a denial;x x x.(Emphases supplied)

"Inaction by the CIR" in cases involving the refund of creditable input tax, arises only after the lapse of 120 days. Thus, prior thereto and without a decision of the CIR, the CTA, as a court of special jurisdiction, has no jurisdiction to entertain claims for the refund or credit of creditable input tax."The charter of the CTA also expressly provides that if the Commissioner failsto decide within "a specific period" required by law, such "inaction shall be deemed a denial" of the application for tax refund or credit. It is the Commissioner’s decision, or inaction "deemed a denial," that the taxpayer can take to the CTA for review. Without a decision or an "inaction x x x deemed a denial" of the Commissioner, the CTA has no jurisdiction over a petition for review."21

Considering further that the 30-day period to appeal to the CTA is dependenton the 120-day period, both periods are hereby rendered jurisdictional. Failure to observe 120 days prior to the filing of a judicial claim is not a mere non-exhaustion of administrative remedies, but is likewise considered jurisdictional. The period of 120 days is a prerequisite for the commencement of the 30-day period to appeal to the CTA. In both instances,

whether the CIR renders a decision (which must be made within 120 days) orthere was inaction, the period of 120 days is material.

This Court further ruled:

The old rule that the taxpayer may file the judicial claim, without waiting for the Commissioner’s decision if the two-year prescriptive period is about to expire, cannot apply because that rule was adopted before the enactment of the 30-day period. The 30-day period was adopted precisely to do away with the old rule, so that under the VAT System the taxpayer will always have 30 days to file the judicial claim even if the Commissioner acts only on the 120th day, or does not act at all during the 120-day period. With the 30-day period always available to the taxpayer, the taxpayer can no longer file a judicial claim for refund or credit of input VAT without waiting for the Commissioner to decide until the expiration of the 120-day period.

To repeat, a claim for tax refund or credit, like a claim for tax exemption, is construed strictly against the taxpayer.1âwphi1 One of the conditions for a judicial claim of refund or credit under the VAT System is with the 120+ 30 day mandatory and jurisdictional periods. Thus, strict compliance with the 120+30 day periods is necessary for such a claim to prosper, whether before, during, or after the effectivity of the Atlas doctrine, except for the period from the issuance of BIR Ruling No DA-489-03 on 10 December 2003 to 6 October 2010 when the Aichi doctrine was adopted, which again reinstated the 120+ 30 day periods as mandatory and jurisdictional.22 (Emphasis supplied)

In accordance with San Roque and considering that petitioner s judicial claim was filed on 24 July 2002, when the 120+30 day mandatory periods were already in the law and BIR Ruling No. DA-489-03 had not yet been issued, petitioner does not have an excuse for not observing the 120+ 30 day period. Failure of petitioner to observe the mandatory 120-day period is fatal to its claim and rendered the CT A devoid of jurisdiction over the judicial claim.

The Court finds, in view of the absence of jurisdiction of the Court of the Tax Appeals over the judicial claim of petitioner, that there is no need to discuss the other issues raised.

WHEREFORE, premises considered, the instant Petition is DENIED.

SO ORDERED.

G.R. Nos. 197592 & 20262 November 27, 2013

THE PROVINCE OF AKLAN, Petitioner, vs.JODY KING CONSTRUCTION AND DEVELOPMENT CORP., Respondent.

D E C I S I O N

VILLARAMA, JR., J.:

These consolidated petitions for review on certiorari seek to reverse and set aside the following: (1) Decision1dated October 18, 2010 and Resolution2 dated July 5, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 111754; and (2) Decision3 dated August 31, 2011 and Resolution4 dated June 27, 2012 in CA-G.R. SP No. 114073.

The Facts

On January 12, 1998, the Province of Aklan (petitioner) and Jody King Construction and Development Corp. (respondent) entered into a contract forthe design and -construction of the Caticlan Jetty Port and Terminal (Phase I) in Malay, Aklan. The total project cost is P38,900,000: P 18,700,000 for the design and construction of passenger terminal, and P20,200,000 for the design and construction of the jetty port facility.5 In the course of construction, petitioner issued variation/change orders for additional works. The scope of work under these change orders were agreed upon by petitioner and respondent.6

On January 5, 2001, petitioner entered into a negotiated contract with respondent for the construction of Passenger Terminal Building (Phase II) alsoat Caticlan Jetty Port in Malay, Aklan. The contract price for Phase II is P2,475,345.54.7

On October 22, 2001, respondent made a demand for the total amount of P22,419,112.96 covering the following items which petitioner allegedly failed to settle:

1. Unpaid accomplishments on additional worksundertaken - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 12,396,143.09

2. Refund of taxes levied despite it not beingcovered by original contract- - - - - - - - - - - - - - - - - - - - - - Php 884,098.59

3. Price escalation (Consistent with Section 7.5,Original Contract- - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 1,291,714.98

4. Additional Labor Cost resulting [from]numerous change orders issued sporadically - - - - - - - - Php 3,303,486.60

5. Additional Overhead Cost resulting [from]numerous Orders issued sporadically - - - - - - - - - - - - - Php 1,101,162.60

6. Interest resulting [from] payment delaysconsistent with Section 7.3.b of the OriginalContract - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Php 3,442,507.50.8

On July 13, 2006, respondent sued petitioner in the Regional Trial Court (RTC)of Marikina City (Civil Case No. 06-1122-MK) to collect the aforesaid amounts.9 On August 17, 2006, the trial court issued a writ of preliminary attachment.10

Petitioner denied any unpaid balance and interest due to respondent. It asserted that the sums being claimed by respondent were not indicated in Change Order No. 3 as approved by the Office of Provincial Governor. Also cited was respondent’s June 10, 2003 letter absolving petitioner from liabilityfor any cost in connection with the Caticlan Passenger Terminal Project.11

After trial, the trial court rendered its Decision12 on August 14, 2009, the dispositive portion of which reads:

WHEREFORE, foregoing premises considered, judgment is hereby rendered infavor of plaintiff Jody King Construction And Development Corporation and against defendant Province of Aklan, as follows:

1. ordering the defendant to pay to the plaintiff the amount of Php7,396,143.09 representing the unpaid accomplishment on additional works undertaken by the plaintiff;

2. ordering the defendant to refund to the plaintiff the amount of Php884,098.59 representing additional 2% tax levied upon against the plaintiff;

3. ordering the defendant to pay to the plaintiff price escalation in the amount of Php1,291,714.98 pursuant to Section 7.5 of the original contract;

4. ordering the defendant to pay to the plaintiff the amount of Php3,303,486.60 representing additional labor cost resulting from change orders issued by the defendant;

5. ordering the defendant to pay to the plaintiff the sum of Php1,101,162.00 overhead cost resulting from change orders issued by the defendant;

6. ordering the defendant to pay the sum of Php3,442,507.50 representing interest resulting from payment delays up to October 15, 2001 pursuant to Section 7.3.b of the original contract;

7. ordering the defendant to pay interest of 3% per month from unpaid claims as of October 16, 2001 to date of actual payment pursuant to Section 7.3.b[;]

8. ordering the [defendant] to pay to the plaintiff the sum of Php500,000.00 as moral damages;

9. ordering the defendant to pay to the plaintiff the sum of Php300,000.00 asexemplary damages;

10. ordering the defendant to pay the plaintiff the sum of Php200,000.00, as and for attorney’s fees; and

11. ordering the defendant to pay the cost of suit.

SO ORDERED.13

Petitioner filed its motion for reconsideration14 on October 9, 2009 stating that it received a copy of the decision on September 25, 2009. In its Order15 dated October 27, 2009, the trial court denied the motion for reconsideration upon verification from the records that as shown by the return card, copy of the decision was actually received by both Assistant Provincial Prosecutor Ronaldo B. Ingente and Atty. Lee T. Manares on September 23, 2009. Since petitioner only had until October 8, 2009 within which to file a motion for reconsideration, its motion filed on October 9, 2009was filed one day after the finality of the decision. The trial court further noted that there was a deliberate attempt on both Atty. Manares and Prosecutor Ingente to mislead the court and make it appear that their motionfor reconsideration was filed on time. Petitioner filed a Manifestation16 reiterating the explanation set forth in its Rejoinder to respondent’s comment/opposition and motion to dismiss that the wrong dateof receipt of the decision stated in the motion for reconsideration was due to

pure inadvertence attributable to the staff of petitioner’s counsel. It stressed that there was no intention to mislead the trial court nor cause undue prejudice to the case, as in fact its counsel immediately corrected the error upon discovery by explaining the attendant circumstances in the Rejoinder dated October 29, 2009.

On November 24, 2009, the trial court issued a writ of execution ordering Sheriff IV Antonio E. Gamboa, Jr. to demand from petitioner the immediate payment of P67,027,378.34 and tender the same to the respondent. Consequently, Sheriff Gamboa served notices of garnishment on Land Bank of the Philippines, Philippine National Bank and Development Bank of the Philippines at their branches in Kalibo, Aklan for the satisfaction of the judgment debt from the funds deposited under the account of petitioner. Said banks, however, refused to give due course to the court order, citing therelevant provisions of statutes, circulars and jurisprudence on the determination of government monetary liabilities, their enforcement and satisfaction.17

Petitioner filed in the CA a petition for certiorari with application for temporary restraining order (TRO) and preliminary injunction assailing the Writ of Execution dated November 24, 2009, docketed as CA-G.R. SP No. 111754.

On December 7, 2009, the trial court denied petitioner’s notice of appeal filed on December 1, 2009. Petitioner’s motion for reconsideration of the December 7, 2009 Order was likewise denied.18 On May 20, 2010, petitioner filed another petition for certiorari in the CA questioning the aforesaid orders denying due course to its notice of appeal, docketed as CA-G.R. SP No. 114073.

By Decision dated October 18, 2010, the CA’s First Division dismissed the petition in CA-G.R. SP No. 111754 as it found no grave abuse of discretion in the lower court’s issuance of the writ of execution. Petitioner filed a motion for reconsideration which was likewise denied by the CA. The CA stressed that even assuming as true the alleged errors committed by the trial court, these were insufficient for a ruling that grave abuse of discretion had been committed. On the matter of execution of the trial court’s decision, the appellate court said that it was rendered moot by respondent’s filing of a petition before the Commission on Audit (COA).

On August 31, 2011, the CA’s Sixteenth Division rendered its Decision dismissing the petition in CA-G.R. SP No. 114073. The CA said that petitioner

failed to provide valid justification for its failure to file a timely motion for reconsideration; counsel’s explanation that he believed in good faith that theAugust 14, 2009 Decision of the trial court was received on September 25, 2009 because it was handed to him by his personnel only on that day is not ajustifiable excuse that would warrant the relaxation of the rule on reglementary period of appeal. The CA also held that petitioner is estopped from invoking the doctrine of primary jurisdiction as it only raised the issue of COA’s primary jurisdiction after its notice of appeal was denied and a writ of execution was issued against it.

The Cases

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

I.

WHETHER OR NOT THE DECISION DATED 14 AUGUST 2009 RENDERED BY THE REGIONAL TRIAL COURT, BRANCH 273, MARIKINA CITY AND THE WRIT OF EXECUTION DATED 24 NOVEMBER 2009 SHOULD BE RENDERED VOID FORLACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.

II.

WHETHER OR NOT THE REGIONAL TRIAL COURT, BRANCH 273, MARIKINA CITY GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RENDERING THE DECISION DATED 14 AUGUST 2009 ANDISSUING THE WRIT OF EXECUTION DATED 24 NOVEMBER 2009 EVEN IT FAILED TO DISPOSE ALL THE ISSUES OF THE CASE BY NOT RESOLVING PETITIONER’S "URGENT MOTION TO DISCHARGE EX-PARTE WRIT OF PRELIMINARY ATTACHMENT" DATED 31 AUGUST 2006.

III.

WHETHER OR NOT THE WRIT OF EXECUTION DATED 24 NOVEMBER 2009 WHICH WAS HASTILY ISSUED IN VIOLATION OF SUPREME COURT ADMINISTRATIVE CIRCULAR NO. 10-2000 SHOULD BE RENDERED VOID.19

The petition in G.R. No. 202623 sets forth the following arguments:

Petitioner is not estopped in questioning the jurisdiction of the Regional Trial Court, Branch 273, Marikina City over the subject matter of the case.20

The petition for certiorari filed before the CA due to the RTC’s denial of petitioner’s Notice of Appeal was in accord with jurisprudence.21

The Issues

The controversy boils down to the following issues: (1) the applicability of thedoctrine of primary jurisdiction to this case; and (2) the propriety of the issuance of the writ of execution.

Our Ruling

The petitions are meritorious.

COA has primary jurisdiction over private respondent’s money claims Petitioner is not estopped from raising the issue of jurisdiction

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

The objective of the doctrine of primary jurisdiction is to guide the court in determining whether it should refrain from exercising its jurisdiction until after an administrative agency has determined some question or some aspect of some question arising in the proceeding before the court.24

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

Under Commonwealth Act No. 327,25 as amended by Section 26 of Presidential Decree No. 1445,26 it is the COA which has primary jurisdiction over money claims against government agencies and instrumentalities.

Section 26. General jurisdiction. The authority and powers of the Commissionshall extend to and comprehend all matters relating to auditing procedures, systems and controls, the keeping of the general accounts of the Government, the preservation of vouchers pertaining thereto for a period of ten years, the examination and inspection of the books, records, and papers

relating to those accounts; and the audit and settlement of the accounts of all persons respecting funds or property received or held by them in an accountable capacity, as well as the examination, audit, and settlement of alldebts and claims of any sort due from or owing to the Government or any of its subdivisions, agencies and instrumentalities. The said jurisdiction extendsto all government-owned or controlled corporations, including their subsidiaries, and other self-governing boards, commissions, or agencies of the Government, and as herein prescribed, including non-governmental entities subsidized by the government, those funded by donations through the government, those required to pay levies or government share, and those for which the government has put up a counterpart fund or those partly funded by the government. (Emphasis supplied.)

Pursuant to its rule-making authority conferred by the 1987 Constitution27 and existing laws, the COA promulgated the 2009 Revised Rules of Procedure of the Commission on Audit. Rule II, Section 1 specifically enumerated those matters falling under COA’s exclusive jurisdiction, which include "money claims due from or owing to any government agency." Rule VIII, Section 1 further provides:

Section 1. Original Jurisdiction - The Commission Proper shall have original jurisdiction over:

a) money claim against the Government; b) request for concurrence in the hiring of legal retainers by government agency; c) write off of unliquidated cash advances and dormant accounts receivable in amounts exceeding one million pesos (P1,000,000.00); d) request for relief from accountability for loses due to acts of man, i.e. theft, robbery, arson, etc, in amounts in excess of Five Million pesos (P5,000,000.00).

In Euro-Med Laboratories Phil., Inc. v. Province of Batangas,28 we ruled that it is the COA and not the RTC which has primary jurisdiction to pass upon petitioner’s money claim against respondent local government unit. Such jurisdiction may not be waived by the parties’ failure to argue the issue nor active participation in the proceedings. Thus:

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

First, petitioner was seeking the enforcement of a claim for a certain amount of money against a local government unit. This brought the case within the COA’s domain to pass upon money claims against the government or any subdivision thereof under Section 26 of the Government Auditing Code of thePhilippines:

The authority and powers of the Commission [on Audit] shall extend to and comprehend all matters relating to x x x the examination, audit, and settlement of all debts and claims of any sort due from or owing to the Government or any of its subdivisions, agencies, and instrumentalities. x x x.

The scope of the COA’s authority to take cognizance of claims is circumscribed, however, by an unbroken line of cases holding statutes of similar import to mean only liquidated claims, or those determined or readily determinable from vouchers, invoices, and such other papers within reach of accounting officers. Petitioner’s claim was for a fixed amount and although respondent took issue with the accuracy of petitioner’s summation of its accountabilities, the amount thereof was readily determinable from the receipts, invoices and other documents. Thus, the claim was well within the COA’s jurisdiction under the Government Auditing Code of the Philippines.

Second, petitioner’s money claim was founded on a series of purchases for the medical supplies of respondent’s public hospitals. Both parties agreed that these transactions were governed by the Local Government Code provisions on supply and property management and their implementing rulesand regulations promulgated by the COA pursuant to Section 383 of said Code. Petitioner’s claim therefore involved compliance with applicable auditing laws and rules on procurement. Such matters are not within the usual area of knowledge, experience and expertise of most judges but within the special competence of COA auditors and accountants. Thus, it was but proper, out of fidelity to the doctrine of primary jurisdiction, for the RTC to dismiss petitioner’s complaint.

Petitioner argues, however, that respondent could no longer question the RTC’s jurisdiction over the matter after it had filed its answer and participated in the subsequent proceedings. To this, we need only state that the court may raise the issue of primary jurisdiction sua sponte and its invocation cannot be waived by the failure of the parties to argue it as the doctrine exists for the proper distribution of power between judicial and administrative bodies and not for the convenience of the parties.29 (Emphasissupplied.)

Respondent’s collection suit being directed against a local government unit, such money claim should have been first brought to the COA.30 Hence, the RTC should have suspended the proceedings and refer the filing of the claim before the COA. Moreover, petitioner is not estopped from raising the issue ofjurisdiction even after the denial of its notice of appeal and before the CA.

There are established exceptions to the doctrine of primary jurisdiction, such as: (a) where there is estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d) where the amount involved is relatively small so as to make the rule impractical and oppressive;(e) where the question involved is purely legal and will ultimately have to be decided by the courts of justice; (f) where judicial intervention is urgent; (g) when its application may cause great and irreparable damage; (h) where the controverted acts violate due process; (i) when the issue of non-exhaustion of administrative remedies has been rendered moot; (j) when there is no other plain, speedy and adequate remedy; (k) when strong public interest is involved; and, (l) in quo warranto proceedings.31 However, none of the foregoing circumstances is applicable in the present case.

The doctrine of primary jurisdiction does not warrant a court to arrogate untoitself authority to resolve a controversy the jurisdiction over which is initially lodged with an administrative body of special competence.32 All the proceedings of the court in violation of the doctrine and all orders and decisions rendered thereby are null and void.33

Writ of Execution issued in violation of COA’s primary jurisdiction is void

Since a judgment rendered by a body or tribunal that has no jurisdiction overthe subject matter of the case is no judgment at all, it cannot be the source of any right or the creator of any obligation.34 All acts pursuant to it and all claims emanating from it have no legal effect and the void judgment can never be final and any writ of execution based on it is likewise void.35

Clearly, the CA erred in ruling that the RTC committed no grave abuse of discretion when it ordered the execution of its judgment against petitioner and garnishment of the latter’s funds.

In its Supplement to the Motion for Reconsideration, petitioner argued that it is the COA and not the RTC which has original jurisdiction over money claim against government agencies and subdivisions.1âwphi1 The CA, in denying

petitioner's motion for reconsideration, simply stated that the issue had become moot by respondent's filing of the proper petition with the COA. However, respondent's belated compliance with the formal requirements of presenting its money claim before the COA did not cure the serious errors committed by the RTC in implementing its void decision. The RTC's orders implementing its judgment rendered without jurisdiction must be set aside because a void judgment can never be validly executed.

Finally, the RTC should have exercised utmost caution, prudence and judiciousness in issuing the writ of execution and notices of garnishment against petitioner. The RTC had no authority to direct the immediate withdrawal of any portion of the garnished funds from petitioner's depositary banks.36 Such act violated the express directives of this Court under Administrative Circular No. 10-2000,37 which was issued "precisely in order toprevent the circumvention of Presidential Decree No. 1445, as well as of the rules and procedures of the COA."38 WHEREFORE, both petitions in G.R. Nos. 197592 and 202623 are GRANTED. The Decision dated October 18, 2010 andResolution dated July 5 2011 of the Court of Appeals in CA-G.R. SP No. 111754, and Decision dated August 31, 2011 and Resolution dated June 27, 2012 in CA- G.R. SP No. 114073 are hereby REVERSED and SET ASIDE. The Decision dated August 14 2009, Writ of Execution and subsequent issuances implementing the said decision of the Regional Trial Court of Marikina City in Civil Case No. 06-1122-MK are all SET ASIDE. No pronouncement as to costs.

SO ORDERED.

G.R. No. 173946 June 19, 2013

BOSTON EQUITY RESOURCES, INC., Petitioner, vs.COURT OF APPEALS AND LOLITA G. TOLEDO, Respondents.

D E C I S I O N

PEREZ, J.:

Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside: (1) the Decision,1 dated 28 February 2006 and (2) the Resolution,2 dated 1 August 2006 of the Court of Appeals in CA-G.R. SP No. 88586. The challenged decision granted herein respondent's petition for certiorari upon a finding that the trial court committed grave abuse of discretion in denying respondent's motion to dismiss the complaint against her.3Based on this finding, the Court of Appeals reversed and set aside the

Orders, dated 8 November 20044 and 22 December 2004,5 respectively, of the Regional Trial Court (RTC) of Manila, Branch 24.

The Facts

On 24 December 1997, petitioner filed a complaint for sum of money with a prayer for the issuance of a writ of preliminary attachment against the spouses Manuel and Lolita Toledo.6 Herein respondent filed an Answer dated 19 March 1998 but on 7 May 1998, she filed a Motion for Leave to Admit Amended Answer7 in which she alleged, among others, that her husband andco-defendant, Manuel Toledo (Manuel), is already dead.8 The death certificate9 of Manuel states "13 July 1995" as the date of death. As a result, petitioner filed a motion, dated 5 August 1999, to require respondent to disclose the heirs of Manuel.10 In compliance with the verbal order of the court during the 11 October 1999 hearing of the case, respondent submitted the required names and addresses of the heirs.11 Petitioner then filed a Motion for Substitution,12 dated 18 January 2000, praying that Manuel be substituted by his children as party-defendants. It appears that this motion was granted by the trial court in an Order dated 9 October 2000.13

Pre-trial thereafter ensued and on 18 July 2001, the trial court issued its pre-trial order containing, among others, the dates of hearing of the case.14

The trial of the case then proceeded. Herein petitioner, as plaintiff, presentedits evidence and its exhibits were thereafter admitted.

On 26 May 2004, the reception of evidence for herein respondent was cancelled upon agreement of the parties. On 24 September 2004, counsel forherein respondent was given a period of fifteen days within which to file a demurrer to evidence.15 However, on 7 October 2004, respondent instead filed a motion to dismiss the complaint, citing the following as grounds: (1) that the complaint failed to implead an indispensable party or a real party in interest; hence, the case must be dismissed for failure to state a cause of action; (2) that the trial court did not acquire jurisdiction over the person of Manuel pursuant to Section 5, Rule 86 of the Revised Rules of Court; (3) that the trial court erred in ordering the substitution of the deceased Manuel by his heirs; and (4) that the court must also dismiss the case against Lolita Toledo in accordance with Section 6, Rule 86 of the Rules of Court.16

The trial court, in an Order dated 8 November 2004, denied the motion to dismiss for having been filed out of time, citing Section 1, Rule 16 of the 1997 Rules of Court which states that: "Within the time for but before filing

the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made x x x."17Respondent’s motion for reconsideration of theorder of denial was likewise denied on the ground that "defendants’ attack on the jurisdiction of this Court is now barred by estoppel by laches" since respondent failed to raise the issue despite several chances to do so.18

Aggrieved, respondent filed a petition for certiorari with the Court of Appeals alleging that the trial court seriously erred and gravely abused its discretion in denying her motion to dismiss despite discovery, during the trial of the case, of evidence that would constitute a ground for dismissal of the case.19

The Court of Appeals granted the petition based on the following grounds:

It is elementary that courts acquire jurisdiction over the person of the defendant x x x only when the latter voluntarily appeared or submitted to the court or by coercive process issued by the court to him, x x x. In this case, it is undisputed that when petitioner Boston filed the complaint on December 24, 1997, defendant Manuel S. Toledo was already dead, x x x. Such being the case, the court a quo could not have acquired jurisdiction over the person of defendant Manuel S. Toledo.

x x x the court a quo’s denial of respondent’s motion to dismiss was based on its finding that respondent’s attack on the jurisdiction of the court was already barred by laches as respondent failed to raise the said ground in its [sic] amended answer and during the pre-trial, despite her active participation in the proceedings.

However, x x x it is well-settled that issue on jurisdiction may be raised at any stage of the proceeding, even for the first time on appeal. By timely raising the issue on jurisdiction in her motion to dismiss x x x respondent is not estopped from raising the question on jurisdiction.

Moreover, when issue on jurisdiction was raised by respondent, the court a quo had not yet decided the case, hence, there is no basis for the court a quo to invoke estoppel to justify its denial of the motion for reconsideration;

It should be stressed that when the complaint was filed, defendant Manuel S.Toledo was already dead. The complaint should have impleaded the estate ofManuel S. Toledo as defendant, not only the wife, considering that the estate of Manuel S. Toledo is an indispensable party, which stands to be benefited or be injured in the outcome of the case. x x x

x x x x

Respondent’s motion to dismiss the complaint should have been granted by public respondent judge as the same was in order. Considering that the obligation of Manuel S. Toledo is solidary with another debtor, x x x, the claimx x x should be filed against the estate of Manuel S. Toledo, in conformity with the provision of Section 6, Rule 86 of the Rules of Court, x x x.20

The Court of Appeals denied petitioner’s motion for reconsideration. Hence, this petition.

The Issues

Petitioner claims that the Court of Appeals erred in not holding that:

1. Respondent is already estopped from questioning the trial court’s jurisdiction;

2. Petitioner never failed to implead an indispensable party as the estate of Manuel is not an indispensable party;

3. The inclusion of Manuel as party-defendant is a mere misjoinder of party not warranting the dismissal of the case before the lower court; and

4. Since the estate of Manuel is not an indispensable party, it is not necessary that petitioner file its claim against the estate of Manuel.

In essence, what is at issue here is the correctness of the trial court’s orders denying respondent’s motion to dismiss.

The Ruling of the Court

We find merit in the petition.

Motion to dismiss filed out of time

To begin with, the Court of Appeals erred in granting the writ of certiorari in favor of respondent. Well settled is the rule that the special civil action for certiorari is not the proper remedy to assail the denial by the trial court of a motion to dismiss. The order of the trial court denying a motion to dismiss is merely interlocutory, as it neither terminates nor finally disposes of a case and still leaves something to be done by the court before a case is finally decided on the merits.21 Therefore, "the proper remedy in such a case is to appeal after a decision has been rendered."22

As the Supreme Court held in Indiana Aerospace University v. Comm. on Higher Education:23

A writ of certiorari is not intended to correct every controversial interlocutoryruling; it is resorted only to correct a grave abuse of discretion or a whimsicalexercise of judgment equivalent to lack of jurisdiction. Its function is limited to keeping an inferior court within its jurisdiction and to relieve persons from arbitrary acts – acts which courts or judges have no power or authority in lawto perform. It is not designed to correct erroneous findings and conclusions made by the courts. (Emphasis supplied)

Even assuming that certiorari is the proper remedy, the trial court did not commit grave abuse of discretion in denying respondent’s motion to dismiss.It, in fact, acted correctly when it issued the questioned orders as respondent’s motion to dismiss was filed SIX YEARS AND FIVE MONTHS AFTER SHE FILED HER AMENDED ANSWER. This circumstance alone already warranted the outright dismissal of the motion for having been filed in clear contravention of the express mandate of Section 1, Rule 16, of the Revised Rules of Court. Under this provision, a motion to dismiss shall be filed within the time for but before the filing of an answer to the complaint or pleading asserting a claim.24

More importantly, respondent’s motion to dismiss was filed after petitioner has completed the presentation of its evidence in the trial court, giving credence to petitioner’s and the trial court’s conclusion that the filing of the motion to dismiss was a mere ploy on the part of respondent to delay the prompt resolution of the case against her.

Also worth mentioning is the fact that respondent’s motion to dismiss under consideration herein is not the first motion to dismiss she filed in the trial court. It appears that she had filed an earlier motion to dismiss26 on the sole ground of the unenforceability of petitioner’s claim under the Statute of Frauds, which motion was denied by the trial court. More telling is the following narration of the trial court in its Order denying respondent’s motionfor reconsideration of the denial of her motion to dismiss:

As can be gleaned from the records, with the admission of plaintiff’s exhibits,reception of defendants’ evidence was set on March 31, and April 23, 2004 x x x . On motion of the defendants, the hearing on March 31, 2004 was cancelled.

On April 14, 2004, defendants sought the issuance of subpoena ad testificandum and duces tecum to one Gina M. Madulid, to appear and testifyfor the defendants on April 23, 2004. Reception of defendants’ evidence was again deferred to May 26, June 2 and June 30, 2004, x x x.

On May 13, 2004, defendants sought again the issuance of a subpoena duces tecum and ad testificandum to the said Gina Madulid. On May 26, 2004, reception of defendants [sic] evidence was cancelled upon the agreement of the parties. On July 28, 2004, in the absence of defendants’ witness, hearing was reset to September 24 and October 8, 2004 x x x.

On September 24, 2004, counsel for defendants was given a period of fifteen(15) days to file a demurrer to evidence. On October 7, 2004, defendants filed instead a Motion to Dismiss x x x.27

Respondent’s act of filing multiple motions, such as the first and earlier motion to dismiss and then the motion to dismiss at issue here, as well as several motions for postponement, lends credibility to the position taken by petitioner, which is shared by the trial court, that respondent is

deliberately impeding the early disposition of this case. The filing of the second motion to dismiss was, therefore, "not only improper but also dilatory."28 Thus, the trial court, "far from deviating or straying off course from established jurisprudence on the matter, x x x had in fact faithfully observed the law and legal precedents in this case."29 The Court of Appeals, therefore, erred not only in entertaining respondent’s petition for certiorari, itlikewise erred in ruling that the trial court committed grave abuse of discretion when it denied respondent’s motion to dismiss.

On whether or not respondent is estopped fromquestioning the jurisdiction of the trial court

At the outset, it must be here stated that, as the succeeding discussions will demonstrate, jurisdiction over the person of Manuel should not be an issue inthis case. A protracted discourse on jurisdiction is, nevertheless, demanded by the fact that jurisdiction has been raised as an issue from the lower court, to the Court of Appeals and, finally, before this Court. For the sake of clarity, and in order to finally settle the controversy and fully dispose of all the issues in this case, it was deemed imperative to resolve the issue of jurisdiction.

1. Aspects of Jurisdiction

Petitioner calls attention to the fact that respondent’s motion to dismiss questioning the trial court’s jurisdiction was filed more than six years after her amended answer was filed. According to petitioner, respondent had several opportunities, at various stages of the proceedings, to assail the trial court’s jurisdiction but never did so for six straight years. Citing the doctrine

laid down in the case of Tijam, et al. v. Sibonghanoy, et al.30 petitioner claimed that respondent’s failure to raise the question of jurisdiction at an earlier stage bars her from later questioning it, especially since she actively participated in the proceedings conducted by the trial court.

Petitioner’s argument is misplaced, in that, it failed to consider that the concept of jurisdiction has several aspects, namely: (1) jurisdiction over the subject matter; (2) jurisdiction over the parties; (3) jurisdiction over the issues of the case; and (4) in cases involving property, jurisdiction over the res or the thing which is the subject of the litigation.31

The aspect of jurisdiction which may be barred from being assailed as a result of estoppel by laches is jurisdiction over the subject matter. Thus, in Tijam, the case relied upon by petitioner, the issue involved was the authority of the then Court of First Instance to hear a case for the collection of a sum of money in the amount of P1,908.00 which amount was, at that time, within the exclusive original jurisdiction of the municipal courts.

In subsequent cases citing the ruling of the Court in Tijam, what was likewise at issue was the jurisdiction of the trial court over the subject matter of the case. Accordingly, in Spouses Gonzaga v. Court of Appeals,32 the issue for consideration was the authority of the regional trial court to hear and decide an action for reformation of contract and damages involving a subdivision lot, it being argued therein that jurisdiction is vested in the Housing and LandUse Regulatory Board pursuant to PD 957 (The Subdivision and Condominium Buyers Protective Decree). In Lee v. Presiding Judge, MTC, Legaspi City,33 petitioners argued that the respondent municipal trial court had no jurisdiction over the complaint for ejectment because the issue of ownership was raised in the pleadings. Finally, in People v. Casuga,34 accused-appellant claimed that the crime of grave slander, of which she was charged, falls within the concurrent jurisdiction of municipal courts or city courts and the then courts of first instance, and that the judgment of the court of first instance, to which she had appealed the municipal court's conviction, should be deemed null and void for want of jurisdiction as her appeal should have been filed with the Court of Appeals orthe Supreme Court.

In all of these cases, the Supreme Court barred the attack on the jurisdiction of the respective courts concerned over the subject matter of the case basedon estoppel by laches, declaring that parties cannot be allowed to belatedly

adopt an inconsistent posture by attacking the jurisdiction of a court to whichthey submitted their cause voluntarily.35

Here, what respondent was questioning in her motion to dismiss before the trial court was that court’s jurisdiction over the person of defendant Manuel. Thus, the principle of estoppel by laches finds no application in this case. Instead, the principles relating to jurisdiction over the person of the parties are pertinent herein.

The Rules of Court provide:

RULE 9EFFECT OF FAILURE TO PLEAD

Section 1. Defenses and objections not pleaded. – Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there isanother action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.

RULE 15MOTIONS

Sec. 8. Omnibus motion. – Subject to the provisions of Section 1 of Rule 9, a motion attacking a pleading, order, judgment, or proceeding shall include all objections then available, and all objections not so included shall be deemed waived.

Based on the foregoing provisions, the "objection on jurisdictional grounds which is not waived even if not alleged in a motion to dismiss or the answer is lack of jurisdiction over the subject matter. x x x Lack of jurisdiction over the subject matter can always be raised anytime, even for the first time on appeal, since jurisdictional issues cannot be waived x x x subject, however, to the principle of estoppel by laches."36

Since the defense of lack of jurisdiction over the person of a party to a case is not one of those defenses which are not deemed waived under Section 1 of Rule 9, such defense must be invoked when an answer or a motion to dismiss is filed in order to prevent a waiver of the defense.37 If the objection is not raised either in a motion to dismiss or in the answer, the objection to the jurisdiction over the person of the plaintiff or the defendant is deemed

waived by virtue of the first sentence of the above-quoted Section 1 of Rule 9of the Rules of Court.38

The Court of Appeals, therefore, erred when it made a sweeping pronouncement in its questioned decision, stating that "issue on jurisdiction may be raised at any stage of the proceeding, even for the first time on appeal" and that, therefore, respondent timely raised the issue in her motion to dismiss and is, consequently, not estopped from raising the question of jurisdiction. As the question of jurisdiction involved here is that over the person of the defendant Manuel, the same is deemed waived if not raised in the answer or a motion to dismiss. In any case, respondent cannot claim the defense since "lack of jurisdiction over the person, being subject to waiver, isa personal defense which can only be asserted by the party who can therebywaive it by silence."39

2. Jurisdiction over the person of a defendant is acquired through a valid service of summons; trial court did not acquire jurisdiction over the person ofManuel Toledo

In the first place, jurisdiction over the person of Manuel was never acquired by the trial court. A defendant is informed of a case against him when he receives summons. "Summons is a writ by which the defendant is notified of the action brought against him. Service of such writ is the means by which the court acquires jurisdiction over his person."40

In the case at bar, the trial court did not acquire jurisdiction over the person of Manuel since there was no valid service of summons upon him, precisely because he was already dead even before the complaint against him and his wife was filed in the trial court. The issues presented in this case are similar to those in the case of Sarsaba v. Vda. de Te.41

In Sarsaba, the NLRC rendered a decision declaring that Patricio Sereno was illegally dismissed from employment and ordering the payment of his monetary claims. To satisfy the claim, a truck in the possession of Sereno’s employer was levied upon by a sheriff of the NLRC, accompanied by Sereno and his lawyer, Rogelio Sarsaba, the petitioner in that case. A complaint for recovery of motor vehicle and damages, with prayer for the delivery of the truck pendente lite was eventually filed against Sarsaba, Sereno, the NLRC sheriff and the NLRC by the registered owner of the truck. After his motion to dismiss was denied by the trial court, petitioner Sarsaba filed his answer. Later on, however, he filed an omnibus motion to dismiss citing, as one of the grounds, lack of jurisdiction over one of the principal defendants, in view

of the fact that Sereno was already dead when the complaint for recovery of possession was filed.

Although the factual milieu of the present case is not exactly similar to that of Sarsaba, one of the issues submitted for resolution in both cases is similar:whether or not a case, where one of the named defendants was already deadat the time of its filing, should be dismissed so that the claim may be pursued instead in the proceedings for the settlement of the estate of the deceased defendant. The petitioner in the Sarsaba Case claimed, as did respondent herein, that since one of the defendants died before summons was served on him, the trial court should have dismissed the complaint against all the defendants and the claim should be filed against the estate of the deceased defendant. The petitioner in Sarsaba, therefore, prayed that the complaint be dismissed, not only against Sereno, but as to all the defendants, considering that the RTC did not acquire jurisdiction over the person of Sereno.42 This is exactly the same prayer made by respondent herein in her motion to dismiss.

The Court, in the Sarsaba Case, resolved the issue in this wise:

x x x We cannot countenance petitioner’s argument that the complaint against the other defendants should have been dismissed, considering that the RTC never acquired jurisdiction over the person of Sereno. The court’s failure to acquire jurisdiction over one’s person is a defense which is personalto the person claiming it. Obviously, it is now impossible for Sereno to invokethe same in view of his death. Neither can petitioner invoke such ground, on behalf of Sereno, so as to reap the benefit of having the case dismissed against all of the defendants. Failure to serve summons on Sereno’s person will not be a cause for the dismissal of the complaint against the other defendants, considering that they have been served with copies of the summons and complaints and have long submitted their respective responsive pleadings. In fact, the other defendants in the complaint were given the chance to raise all possible defenses and objections personal to them in their respective motions to dismiss and their subsequent answers.43 (Emphasis supplied.)

Hence, the Supreme Court affirmed the dismissal by the trial court of the complaint against Sereno only.

Based on the foregoing pronouncements, there is no basis for dismissing the complaint against respondent herein. Thus, as already emphasized above, the trial court correctly denied her motion to dismiss.

On whether or not the estate of Manuel

Toledo is an indispensable party

Rule 3, Section 7 of the 1997 Rules of Court states:

SEC. 7. Compulsory joinder of indispensable parties. – Parties-in-interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.

An indispensable party is one who has such an interest in the controversy or subject matter of a case that a final adjudication cannot be made in his or her absence, without injuring or affecting that interest. He or she is a party who has not only an interest in the subject matter of the controversy, but "aninterest of such nature that a final decree cannot be made without affecting that interest or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience. It has also been considered that an indispensable party is a person in whose absence there cannot be a determination between the parties already beforethe court which is effective, complete or equitable." Further, an indispensable party is one who must be included in an action before it may properly proceed.44

On the other hand, a "person is not an indispensable party if his interest in the controversy or subject matter is separable from the interest of the other parties, so that it will not necessarily be directly or injuriously affected by a decree which does complete justice between them. Also, a person is not an indispensable party if his presence would merely permit complete relief between him or her and those already parties to the action, or if he or she has no interest in the subject matter of the action." It is not a sufficient reason to declare a person to be an indispensable party simply because his or her presence will avoid multiple litigations.45

Applying the foregoing pronouncements to the case at bar, it is clear that theestate of Manuel is not an indispensable party to the collection case, for the simple reason that the obligation of Manuel and his wife, respondent herein, is solidary.

The contract between petitioner, on the one hand and respondent and respondent’s husband, on the other, states:

FOR VALUE RECEIVED, I/We jointly and severally46 (in solemn) promise to pay BOSTON EQUITY RESOURCES, INC. x x x the sum of PESOS: [ONE MILLION FOUR HUNDRED (P1,400,000.00)] x x x.47

The provisions and stipulations of the contract were then followed by the respective signatures of respondent as "MAKER" and her husband as "CO-MAKER."48 Thus, pursuant to Article 1216 of the Civil Code, petitioner may collect the entire amount of the obligation from respondent only. The aforementioned provision states: "The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected."

In other words, the collection case can proceed and the demands of petitioner can be satisfied by respondent only, even without impleading the estate of Manuel. Consequently, the estate of Manuel is not an indispensableparty to petitioner’s complaint for sum of money.

However, the Court of Appeals, agreeing with the contention of respondent, held that the claim of petitioner should have been filed against the estate of Manuel in accordance with Sections 5 and 6 of Rule 86 of the Rules of Court. The aforementioned provisions provide:

SEC. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. All claims for money against the decedent, arising from contract, express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses and judgment for money against the decedent, must be filed within the time limited in the notice; otherwise, they are barredforever, except that they may be set forth as counterclaims in any action that the executor or administrator may bring against the claimants. x x x.

SEC. 6. Solidary obligation of decedent. Where the obligation of the decedentis solidary with another debtor, the claim shall be filed against the decedent as if he were the only debtor, without prejudice to the right of the estate to recover contribution from the other debtor. x x x.

The Court of Appeals erred in its interpretation of the above-quoted provisions.

In construing Section 6, Rule 87 of the old Rules of Court, the precursor of Section 6, Rule 86 of the Revised Rules of Court, which latter provision has been retained in the present Rules of Court without any revisions, the

Supreme Court, in the case of Manila Surety & Fidelity Co., Inc. v. Villarama, et. al.,49 held:50

Construing Section 698 of the Code of Civil Procedure from whence [Section 6, Rule 87] was taken, this Court held that where two persons are bound in solidum for the same debt and one of them dies, the whole indebtedness canbe proved against the estate of the latter, the decedent’s liability being absolute and primary; x x x. It is evident from the foregoing that Section 6 of Rule 87 provides the procedure should the creditor desire to go against the deceased debtor, but there is certainly nothing in the said provision making compliance with such procedure a condition precedent before an ordinary action against the surviving solidary debtors, should the creditor choose to demand payment from the latter, could be entertained to the extent that failure to observe the same would deprive the court jurisdiction to take cognizance of the action against the surviving debtors. Upon the other hand, the Civil Code expressly allows the creditor to proceed against any one of thesolidary debtors or some or all of them simultaneously. There is, therefore, nothing improper in the creditor’s filing of an action against the surviving solidary debtors alone, instead of instituting a proceeding for the settlement of the estate of the deceased debtor wherein his claim could be filed.

The foregoing ruling was reiterated and expounded in the later case of Philippine National Bank v. Asuncion51where the Supreme Court pronounced:

A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals that nothing therein prevents a creditor from proceeding against the surviving solidary debtors. Said provision merely sets up the procedure in enforcing collection in case a creditor chooses to pursue his claim against theestate of the deceased solidary debtor. The rule has been set forth that a creditor (in a solidary obligation) has the option whether to file or not to file aclaim against the estate of the solidary debtor. x x x

x x x x

It is crystal clear that Article 1216 of the New Civil Code is the applicable provision in this matter. Said provision gives the creditor the right to "proceed against anyone of the solidary debtors or some or all of them simultaneously." The choice is undoubtedly left to the solidary creditor to determine against whom he will enforce collection. In case of the death of one of the solidary debtors, he (the creditor) may, if he so chooses, proceed against the surviving solidary debtors without necessity of filing a claim in the estate of the deceased debtors. It is not mandatory for him to have the

case dismissed as against the surviving debtors and file its claim against the estate of the deceased solidary debtor, x x x. For to require the creditor to proceed against the estate, making it a condition precedent for any collection action against the surviving debtors to prosper, would deprive him of his substantive rightsprovided by Article 1216 of the New Civil Code. (Emphasis supplied.)

As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules ofCourt were applied literally, Article 1216 of the New Civil Code would, in effect, be repealed since under the Rules of Court, petitioner has no choice but to proceed against the estate of [the deceased debtor] only. Obviously, this provision diminishes the [creditor’s] right under the New Civil Code to proceed against any one, some or all of the solidary debtors. Such a construction is not sanctioned by principle, which is too well settled to require citation, that a substantive law cannot be amended by a procedural rule. Otherwise stated, Section 6, Rule 86 of the Revised Rules of Court cannot be made to prevail over Article 1216 of the New Civil Code, the former being merely procedural, while the latter, substantive.

Based on the foregoing, the estate of Manuel is not an indispensable party and the case can proceed as against respondent only. That petitioner opted to collect from respondent and not from the estate of Manuel is evidenced byits opposition to respondent’s motion to dismiss asserting that the case, as against her, should be dismissed so that petitioner can proceed against the estate of Manuel.

On whether or not the inclusion of Manuel asparty defendant is a misjoinder of party

Section 11 of Rule 3 of the Rules of Court states that "neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately."

Based on the last sentence of the afore-quoted provision of law, a misjoined party must have the capacity to sue or be sued in the event that the claim by or against the misjoined party is pursued in a separate case. In this case, therefore, the inclusion of Manuel in the complaint cannot be considered a misjoinder, as in fact, the action would have proceeded against him had he been alive at the time the collection case was filed by petitioner. This being the case, the remedy provided by Section 11 of Rule 3 does not obtain here.

The name of Manuel as party-defendant cannot simply be dropped from the case. Instead, the procedure taken by the Court in Sarsaba v. Vda. de Te,52 whose facts, as mentioned earlier, resemble those of this case, should be followed herein. There, the Supreme Court agreed with the trial court when it resolved the issue of jurisdiction over the person of the deceased Sereno in this wise:

As correctly pointed by defendants, the Honorable Court has not acquired jurisdiction over the person of Patricio Sereno since there was indeed no valid service of summons insofar as Patricio Sereno is concerned. Patricio Sereno died before the summons, together with a copy of the complaint and its annexes, could be served upon him.

However, the failure to effect service of summons unto Patricio Sereno, one of the defendants herein, does not render the action DISMISSIBLE, considering that the three (3) other defendants, x x x, were validly served with summons and the case with respect to the answering defendants may still proceed independently. Be it recalled that the three (3) answering defendants have previously filed a Motion to Dismiss the Complaint which was denied by the Court.

Hence, only the case against Patricio Sereno will be DISMISSED and the samemay be filed as a claim against the estate of Patricio Sereno, but the case with respect to the three (3) other accused [sic] will proceed. (Emphasis supplied.)53

As a result, the case, as against Manuel, must be dismissed.

In addition, the dismissal of the case against Manuel is further warranted by Section 1 of Rule 3 of the Rules of Court, which states that: only natural or juridical persons, or entities authorized by law may be parties in a civil action." Applying this provision of law, the Court, in the case of Ventura v. Militante,54 held:

Parties may be either plaintiffs or defendants. x x x. In order to maintain an action in a court of justice, the plaintiff must have an actual legal existence, that is, he, she or it must be a person in law and possessed of a legal entity as either a natural or an artificial person, and no suit can be lawfully prosecuted save in the name of such a person.

The rule is no different as regards party defendants. It is incumbent upon a plaintiff, when he institutes a judicial proceeding, to name the proper party defendant to his cause of action. In a suit or proceeding in personam of an

adversary character, the court can acquire no jurisdiction for the purpose of trial or judgment until a party defendant who actually or legally exists and is legally capable of being sued, is brought before it. It has even been held thatthe question of the legal personality of a party defendant is a question of substance going to the jurisdiction of the court and not one of procedure.

The original complaint of petitioner named the "estate of Carlos Ngo as represented by surviving spouse Ms. Sulpicia Ventura" as the defendant.1âwphi1 Petitioner moved to dismiss the same on the ground that the defendant as named in the complaint had no legal personality. We agree.

x x x. Considering that capacity to be sued is a correlative of the capacity to sue, to the same extent, a decedent does not have the capacity to be sued and may not be named a party defendant in a court action. (Emphases supplied.)

Indeed, where the defendant is neither a natural nor a juridical person or an entity authorized by law, the complaint may be dismissed on the ground thatthe pleading asserting the claim states no cause of action or for failure to state a cause of action pursuant to Section 1(g) of Rule 16 of the Rules of Court, because a complaint cannot possibly state a cause of action against one who cannot be a party to a civil action.55

Since the proper course of action against the wrongful inclusion of Manuel as party-defendant is the dismissal of the case as against him, thus did the trial court err when it ordered the substitution of Manuel by his heirs. Substitutionis proper only where the party to be substituted died during the pendency of the case, as expressly provided for by Section 16, Rule 3 of the Rules of Court, which states:

Death of party;duty of counsel. – Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. x x x

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator x x x.

The court shall forthwith order said legal representative or representatives toappear and be substituted within a period of thirty (30) days from notice. (Emphasis supplied.)

Here, since Manuel was already dead at the time of the filing of the complaint, the court never acquired jurisdiction over his person and, in effect, there was no party to be substituted.

WHEREFORE, the petition is GRANTED. The Decision dated 28 February 2006 and the Resolution dated 1 August 2006 of the Court of Appeals in CA-G.R. SP No. 88586 are REVERSED and SET ASIDE. The Orders of the Regional Trial Court dated 8 November 2004 and 22 December 2004, respectively, in Civil Case No. 97-86672, are REINSTATED. The Regional Trial Court, Branch 24, Manila is hereby DIRECTED to proceed with the trial of Civil Case No. 97-86672 against respondent Lolita G. Toledo only, in accordance with the abovepronouncements of the Court, and to decide the case with dispatch.

SO ORDERED.

G.R. No. 180321 March 20, 2013

EDITHA PADLAN, Petitioner, vs.ELENITA DINGLASAN and FELICISIMO DINGLASAN, Respondents.

D E C I S I O N

PERALTA, J.:

This is a petition for review on certiorari assailing the Decision1 dated June 29, 2007 of the Court of Appeals (CA) in CA-G.R. CV No. 86983, and the Resolution2 dated October 23, 2007 denying petitioner's Motion for Reconsideration.3

The factual and procedural antecedents are as follows:

Elenita Dinglasan (Elenita) was the registered owner of a parcel of land designated as Lot No. 625 of the Limay Cadastre which is covered by Transfer Certificate of Title (TCT) No. T-105602, with an aggregate area of 82,972 square meters. While on board a jeepney, Elenita’s mother, Lilia Baluyot (Lilia), had a conversation with one Maura Passion (Maura) regarding the sale of the said property. Believing that Maura was a real estate agent, Lilia borrowed the owner’s copy of the TCT from Elenita and gave it to Maura.Maura then subdivided the property into several lots from Lot No. 625-A to Lot No. 625-O, under the name of Elenita and her husband Felicisimo Dinglasan (Felicisimo).

Through a falsified deed of sale bearing the forged signature of Elenita and her husband Felicisimo, Maura was able to sell the lots to different buyers. On April 26, 1990, Maura sold Lot No. 625-K to one Lorna Ong (Lorna), who later caused the issuance of TCT No. 134932 for the subject property under her name. A few months later, or sometime in August 1990, Lorna sold the lot to petitioner Editha Padlan for P4,000.00. Thus, TCT No. 134932 was cancelled and TCT No. 137466 was issued in the name of petitioner.

After learning what had happened, respondents demanded petitioner to surrender possession of Lot No. 625-K, but the latter refused. Respondents were then forced to file a case before the Regional Trial Court (RTC) of Balanga, Bataan for the Cancellation of Transfer Certificate of Title No. 137466, docketed as Civil Case No. 438-ML. Summons was, thereafter, served to petitioner through her mother, Anita Padlan.

On December 13, 1999, respondents moved to declare petitioner in default and prayed that they be allowed to present evidence ex parte.4

On January 17, 2000, petitioner, through counsel, filed an Opposition to Declare Defendant in Default with Motion to Dismiss Case for Lack of Jurisdiction Over the Person of Defendant.5 Petitioner claimed that the court did not acquire jurisdiction over her, because the summons was not validly served upon her person, but only by means of substituted service through her mother. Petitioner maintained that she has long been residing in Japan after she married a Japanese national and only comes to the Philippines for abrief vacation once every two years.

On April 5, 2001, Charlie Padlan, the brother of petitioner, testified that his sister is still in Japan and submitted a copy of petitioner’s passport and an envelope of a letter that was allegedly sent by his sister. Nevertheless, on April 5, 2001, the RTC issued an Order6 denying petitioner’s motion to dismiss and declared her in default. Thereafter, trial ensued.

On July 1, 2005, the RTC rendered a Decision7 finding petitioner to be a buyerin good faith and, consequently, dismissed the complaint.

Not satisfied, respondents sought recourse before the CA, docketed as CA-G.R. No. CV No. 86983.

On June 29, 2007, the CA rendered a Decision8 in favor of the respondent. Consequently, the CA reversed and set aside the Decision of the RTC and ordered the cancellation of the TCT issued in the name of Lorna and the petitioner, and the revival of respondents’ own title, to wit:

WHEREFORE, in view of the foregoing, the Decision dated July

1, 2005 of the Regional Trial Court, Third Judicial Region, Branch 4, Mariveles,Bataan (Stationed in Balanga, Bataan) in Civil Case No. 438-ML is hereby REVERSED and SET ASIDE.

The Transfer Certificate of Title No. 134932 issued in the name of Lorna Ong and Transfer Certificate of Title No. 137466 issued in the name of defendant-appellee Editha Padlan are CANCELLED and Transfer Certificate of Title No. 134785 in the name of the plaintiffs-appellants is REVIVED.

SO ORDERED.9

The CA found that petitioner purchased the property in bad faith from Lorna. The CA opined that although a purchaser is not expected to go beyond the title, based on the circumstances surrounding the sale, petitioner should have conducted further inquiry before buying the disputed property. The fact that Lorna bought a 5,000-square-meter property for only P4,000.00 and selling it after four months for the same amount should have put petitioner on guard. With the submission of the Judgment in Criminal Case No. 4326 rendered by the RTC, Branch 2, Balanga, Bataan, entitled People of the Philippines v. Maura Passion10 and the testimonies of respondents, the CA concluded that respondents sufficiently established that TCT No. 134932 issued in the name of Lorna and TCT No. 137466 issued in the name of petitioner were fraudulently issued and, therefore, null and void.

Aggrieved, petitioner filed a Motion for Reconsideration. Petitioner argued that not only did the complaint lacks merit, the lower court failed to acquire jurisdiction over the subject matter of the case and the person of the petitioner.

On October 23, 2007, the CA issued a Resolution11 denying the motion. The CA concluded that the rationale for the exception made in the landmark caseof Tijam v. Sibonghanoy12 was present in the case. It reasoned that when the RTC denied petitioner’s motion to dismiss the case for lack of jurisdiction, petitioner neither moved for a reconsideration of the order nor did she avail of any remedy provided by the Rules. Instead, she kept silent and only became interested in the case again when the CA rendered a decision adverse to her claim.

Hence, the petition assigning the following errors:

I

WHETHER OR NOT THE HONORABLE COURT HAS JURISDICTION OVER THE PERSON OF THE PETITIONER.

II

WHETHER OR NOT THE HONORABLE COURT HAS JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.

III

WHETHER OR NOT PETITIONER IS A BUYER IN GOOD FAITH AND FOR VALUE.13

Petitioner maintains that the case of Tijam v. Sibonghanoy finds no application in the case at bar, since the said case is not on all fours with the present case. Unlike in Tijam, wherein the petitioner therein actively participated in the proceedings, petitioner herein asserts that she did not participate in any proceedings before the RTC because she was declared in default.

Petitioner insists that summons was not validly served upon her, considering that at the time summons was served, she was residing in Japan. Petitioner contends that pursuant to Section 15, Rule 14 of the Rules of Civil Procedure,when the defendant does not reside in the Philippines and the subject of the action is property within the Philippines of the defendant, service may be effected out of the Philippines by personal service or by publication in a newspaper of general circulation. In this case, summons was served only by substituted service to her mother. Hence, the court did not acquire jurisdiction over her person.

Also, petitioner posits that the court lacks jurisdiction of the subject matter, considering that from the complaint, it can be inferred that the value of the property was only P4,000.00, which was the amount alleged by respondents that the property was sold to petitioner by Lorna.

Finally, petitioner stresses that she was a buyer in good faith. It was Maura who defrauded the respondents by selling the property to Lorna without theirauthority.

Respondents, on the other hand, argue that the CA was correct in ruling in their favor.

The petition is meritorious.

Respondents filed the complaint in 1999, at the time Batas Pambansa Blg. (BP) 129, the Judiciary Reorganization Act of 1980, was already amended by Republic Act (RA) No. 7691, An Act Expanding the Jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts, amending for the purpose BP Blg. 129.14

Section 1 of RA 7691, amending BP Blg. 129, provides that the RTC shall exercise exclusive original jurisdiction on the following actions:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of 1980," is hereby amended to read as follows:

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

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

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or for civil actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00), except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts; x x x

Section 3 of RA 7691 expanded the exclusive original jurisdiction of the first level courts, thus:

Section 3. Section 33 of the same law BP Blg. 129 is hereby amended to readas follows:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. – Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

x x x x

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty Thousand Pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty Thousand Pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and

costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots.

Respondents filed their Complaint with the RTC; hence, before proceeding any further with any other issues raised by the petitioner, it is essential to ascertain whether the RTC has jurisdiction over the subject matter of this case based on the above-quoted provisions.

However, in order to determine which court has jurisdiction over the action, an examination of the complaint is essential. Basic as a hornbook principle is that jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in the complaint which comprise a concise statement of the ultimate facts constituting the plaintiff's cause of action. The nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to recover uponall or some of the claims asserted therein. The averments in the complaint and the character of the relief sought are the ones to be consulted. Once vested by the allegations in the complaint, jurisdiction also remains vested irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein.15

What determines the jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments therein and the character of the relief sought are the ones to be consulted.16

Respondents’ Complaint17 narrates that they are the duly registered owners of Lot No. 625 of the Limay Cadastre which was covered by TCT No. T-105602. Without their knowledge and consent, the land was divided into several lots under their names through the fraudulent manipulations of Maura. One of the lots was Lot 625-K, which was covered by TCT No. 134785.On April 26, 1990, Maura sold the subject lot to Lorna. By virtue of the fictitious sale, TCT No. 134785 was cancelled and TCT No. 134932 was issuedin the name of Lorna. Sometime in August 1990, Lorna sold the lot to petitioner for a consideration in the amount of P4,000.00. TCT No. 134932 was later cancelled and TCT No. 137466 was issued in the name of petitioner.Despite demands from the respondents, petitioner refused to surrender possession of the subject property. Respondents were thus constrained to engage the services of a lawyer and incur expenses for litigation. Respondents prayed for the RTC (a) to declare TCT No. 137466 null and to

revive TCT No. T-105602 which was originally issued and registered in the name of the respondents; and (b) to order petitioner to pay attorney’s fees inthe sum of P50,000.00 and litigation expenses ofP20,000.00, plus cost of suit.18

An action "involving title to real property" means that the plaintiff's cause of action is based on a claim that he owns such property or that he has the legal rights to have exclusive control, possession, enjoyment, or disposition of the same. Title is the "legal link between (1) a person who owns property and (2) the property itself." "Title" is different from a "certificate of title" which is the document of ownership under the Torrens system of registration issued by the government through the Register of Deeds. While title is the claim, right or interest in real property, a certificate of title is the evidence of such claim.19

In the present controversy, before the relief prayed for by the respondents in their complaint can be granted, the issue of who between the two contending parties has the valid title to the subject lot must first be determined before a determination of who between them is legally entitled to the certificate of title covering the property in question.1âwphi1

From the Complaint, the case filed by respondent is not simply a case for the cancellation of a particular certificate of title and the revival of another. The determination of such issue merely follows after a court of competent jurisdiction shall have first resolved the matter of who between the conflicting parties is the lawful owner of the subject property and ultimately entitled to its possession and enjoyment. The action is, therefore, about ascertaining which of these parties is the lawful owner of the subject lot, jurisdiction over which is determined by the assessed value of such lot.20

In no uncertain terms, the Court has already held that a complaint must allege the assessed value of the real property subject of the complaint or theinterest thereon to determine which court has jurisdiction over the action.21 In the case at bar, the only basis of valuation of the subject propertyis the value alleged in the complaint that the lot was sold by Lorna to petitioner in the amount of P4,000.00. No tax declaration was even presented that would show the valuation of the subject property. In fact, in one of the hearings, respondents’ counsel informed the court that they will present the tax declaration of the property in the next hearing since they have not yet obtained a copy from the Provincial Assessor’s Office.22 However, they did not present such copy.

To reiterate, where the ultimate objective of the plaintiffs is to obtain title to real property, it should be filed in the proper court having jurisdiction over the assessed value of the property subject thereof.23 Since the amount alleged in the Complaint by respondents for the disputed lot is only P4,000.00, the MTC and not the RTC has jurisdiction over the action. Therefore, all proceedings in the RTC are null and void.24

Consequently, the remaining issues raised by petitioner need not be discussed further.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 86983, dated June 29, 2007, and its Resolution dated October 23, 2007, are REVERSED and SET ASIDE. The Decision of the Regional Trial Court, dated July I, 2005, is declared NULL and VOID. The complaint in Civil Case No. 438-ML is dismissed without prejudice.

SO ORDERED.

G.R. No. 71464 August 4, 1988

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs.ROMEO ESTREBELLA, accused-appellant.

PARAS, J.:

Accused Romeo Estrebella pleaded not guilty to the crime of rape allegedly committed as follows:

That on or about the 25th day of October, 1981, in the Municipality of Mandaluyong, Metro Manila, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, by means of force and intimation upon the person of the undersigned, did, then and there wilfully, unlawfully and feloniously have carnal knowledge of the undersigned againsther will and consent.

Contrary to law.

Mandaluyong, Metro Manila.

March 24, 1982.

(Sgd.) JOY ALCALA Y ADVINCULA

Complainant

(p. 4, Rollo)

After due trial, the court, rendered a decision 1 the dispositive portion readingas follows:

WHEREFORE, premises considered the Court finds accused Romeo Estrebella guilty beyond reasonable doubt of the crime of Rape and hereby sentences him to suffer the penalty of reclusion perpetua, to indemnify the complainingwitness, Joy Alcala y Advincula, in the sum of P30,000.00 and to pay the costs.

SO ORDERED. (P. 24, Rollo)

Accused assails said decision, submitting before Us the following:

ARGUMENTS

I

The trial court erred in convicting the accused-appellant of the crime of rape despite the insufficiency of evidence adduced by the prosecution to prove hisguilt beyond reasonable doubt.

II

The trial court gravely erred in trying the case on ground of lack of jurisdiction. (p. 34, Rollo)

From the testimonies of the witnesses for the prosecution Dr. Erlinda Marfil, Dr. Maximo Reyes, Fernando Alcala and Wilfredo Davan, the following facts are gathered:

As per result of the psychiatric and psychological examination conducted by Dr. Erlinda Marfil of the National Bureau of Investigation (NBI) on the person of complainant Joy Alcala y Advincula, it was established that said complainant is a mental retardate (Exhs. "A", "A-1" and "A-2") whose chronological age is thirteen but her mental age is below that (only six or seven).

When Dr. Maximo Reyes, senior NBI medico-legal officer did a physical and genital examination on the person of the complainant on October 26, 1981, aday after the alleged commission of the offense charged, he found that the outer genitalia (i.e. labia majora and labia minora) showed healing abrasions

on the posterior aspect and the presence of bleeding. An internal examination showed congestion of the posterior of the vestibular mucosa, meaning there was reddening and inflammation of that particular portion. In ordinary parlance, such irritation in the genitalia of the complainant could be caused only by the sex organ of a male in erection. Dr. Reyes concluded that the complainant could have had sexual intercourse with a man on or about the alleged date of commission, however, there was no complete penetrationas the hymen was intact, and elastic. (Exh. "B-3")

Fernando Alcala, brother of the complainant, testified that Romeo Estrebella, is their neighbor. On October 25, 1981 at about 3:00 p.m., as he was about to take a bath, he saw the accused under the house of Crisanto Cuevas sitting on a long bench with the zipper of his pants opened. He also saw the legs of a woman around the waist of the accused with the latter making some movements. He did not readily recognize who the woman was until he went to the faucet and saw accused stand up. Recognizing the female partner of the accused as his mentally retarded sister, witness Fernando immediately went to where accused was and boxed him. His sister who was frightened ran away while the neighbors tried to pacify Fernando and Romeo Estrebella. The latter was able to disengage himself from the former, but another brother of complainant, named Armando, ran after Romeo Estrebellaand was able to catch up with him. The two brothers then brought the accused to the police precinct of Mandaluyong. Fernando's testimony was corroborated by Wilfredo Davan, another witness for the prosecution.

Accused denied that he had sexual intercourse with complainant. Through his testimony as the sole witness for the defense, accused alleged that while he was resting under the house of his godfather on October 25, 1981 at around 3:00 o'clock in the afternoon, Joy Alcala suddenly arrived. He called her and the latter sat on the bench where he was sitting. He told Joy Alcala togo to the house of his sister to get his clothes as he was going home to Bulacan. However, she did not go at once because she was asking money from him. While he and Joy were talking, her brother Fernando Alcala arrived and suddenly hit him. He did not do anything because Fernando was drunk. When he was on his way home, Fernando Alcala and his brother Armando, stopped him and then boxed him until he fell down. He asked them why they hit him but they did not answer. He further averred that he used to see Joy Alcala play with her private part by inserting her two fingers. In fact whenever he saw her playing with herself he usually gave her a spanking.

Appellant's defense is denial of the offense charged. That he did not rape complainant is allegedly supported by the findings of Dr. Maximo Reyes that there was no tear or laceration in her hymen. He further argues that "(g)ranting arguendo but without admitting that rape is committed, there is however, no evidence adduced that complainant was forced or intimidated by the accused", or that the sexual intercourse was against her will and consent but that, it was mutually voluntary, as gleaned from the testimonies of Fernando Alcala and Wilfredo Davan who testified to the effect that they did not hear any word or conversation between the two (accused and complainant) while performing the sexual act.

Appellant's arguments deserve no consideration.

Based on the medical and physical examination of the genital organ of complainant conducted by Dr. Maximo Reyes (Exh. "B"), Joy Alcala had sexual intercourse with a man on October 25, 1981 due to the presence of abrasion and congestion and bleeding in the genitalia, a physical condition consistent with sexual intercourse. Physical evidence is of the highest order and speaks more eloquently than all witnesses put together. (People vs. ardoje 99 SCRA 388). Furthermore, such medical findings confirm the testimonies of Femando Alcala and Wilfredo Davan that they saw accused Romeo Estrebella having carnal knowledge with Joy Alcala on said date underthe house of Crisanto Cuevas. The fact that the hymen was not lacerated does not negate rape. We have held that penetration by entry of the lips of the female organ even without rapture of hymen suffices to warrant conviction for rape (People vs. Conchada, 88 SCRA 683, People v. Ytac 95 SCRA 644).

It is established by the medical and phychological examination that complainant is a mental retardate. Sexual intercourse with a woman who is deprived of reason or one who is weak in intellect to the extent that she is incapable of giving rational consent to the carnal intercourse constitutes rape. In this type of rape the employment of force or intimidation on the part of the man and resistance on the part of the woman are not essential. In the instant case the fact that complainant did not offer any resistance did not mean that she consented, for clearly she could not comprehend the fun implications of the libidinous act. Surely, she deserves the protection of the law.

In his second assignment of error, appellant insists that the trial court did notacquire jurisdiction to try the case because the complaint was filed by

complainant who was a minor and a mental retardate contrary to the provisions of Rule 110, Secs. 4 and 5 of the Revised Rules of Court and Art. 344 of the Revised Penal Code, the pertinent portions reading as follows:

The offended party, even if she were a minor, has the right to institute the prosecution for the above offenses, independently of her parents, grandparents or guardian, unless she is incompetent or incapable of doing soupon grounds other than her minority. (Rule 110, Sec. 4, Rules of Court; Rule 110, Sec. 5, 1985 Rules on Criminal Procedure.)

xxx xxx xxx

The offenses of seduction, abduction, rape or acts of lasciviousness shall not be prosecuted except upon a complaint filed by the offended party or her parents, grandparents, or guardian, nor, in any case, if the offender has beenexpressly pardoned by the abovenamed persons, as the case may be. ...

(Also, Article 344 of the Revised Penal Code)

Again, appellant's argument holds no water.

It is of course well-settled that jurisdiction over the subject matter of an action—in this case the crime of rape—is and may be conferred only by law, and that jurisdiction over a given crime not vested by law upon a particular court, may not be conferred thereon by the parties involved in the offense. (Manila Railroad v. Atty. General, 20 Phil. 523; Perkins v. Roxas, 72 Phil. 514, cited in Valdepenas vs. People, 16 SCRA 871). But the aforementioned provision of Art. 344 does not determine the jurisdiction of our courts over the offenses therein enumerated. It could not affect said jurisdiction, becausethe same with respect to the instant crime is governed by the Judiciary Act of1948, not by the Revised Penal Code, which deals primarily with the definition of crimes and the factors pertinent to the punishment of the culprits. The complaint required in said Art. 344 is merely a condition precedent to the exercise by the proper authorities of the power to prosecute the guilty parties. And such condition has been imposed out of consideration for the offended woman and her family who might prefer to suffer the outrage in silence rather than go through with the scandal of a public trial. (Samilin v. Court of First Instance of Pangasinan, 57 Phil. 298, 304, cited in Valdepenas v. People, supra)

In the case at bar, while the complaint may have been technically in the sense that complainant was incompetent, this defect has been cured when complainant's brother Fernando Alcala took the witness stand for the

prosecution. The brother's testimony shows the consent and willingness of the family of complainant, who can not give her consent obviously, to have the private offense committed against the latter publicly tried. Substantially, this is what is required by the rules. Evidently, by undergoing trial, the familyof complainant chose to denounce the injustice committed against the latter in public and thus agreed to bear the personal effects of said exposure. Undoubtedly, therefore, the trial court had jurisdiction to try the case.

WHEREFORE, premises considered, the guilt of the accused has been proved beyond reasonable doubt. The assailed decision is hereby AFFIRMED.

SO ORDERED.

G.R. No. L-54287 September 28, 1988

REPUBLIC PLANTERS BANK petitioner, vs.HON. CONRADO M. MOLINA, as Presiding Judge, Court of First Instance of Manila, Branch XX, SARMIENTO EXPORT CORPORATION, SARMIENTO SECURITIES CORPORATION and FELICIANO SARMIENTO, JR., respondents.

Paco, Gutierrez, Dorado, Asia & Associates for petitioner.

Benjamin M. Reyes for respondents.

GANCAYCO, J.:

The principal issue raised in this case is whether the trial court committed a grave abuse of discretion when it ordered Civil Case No. 129829 dismissed on the ground of resjudicata it appearing that Civil Case No. 116028 was dismissed on May 21, 1979, for failure of petitioner to prosecute within a reasonable length of time, although in the said case, the trial court never acquired jurisdiction over the persons of private respondents.

It is not disputed that both complaints in Civil Case No. 116028 (Branch XXXVI, Manila, Judge Alfredo C. Florendo) and in Civil Case No. 129829 (Branch XX, Manila, Judge Conrado M. Molina) were filed by petitioner Republic Planters Bank against private respondent, for the collection of a sum of money based on a promissory note dated January 26, 1970, in the amount of P100,000.00.

On May 21, 1979, Judge Alfredo C. Florendo dismissed Civil Case No. 116028 for failure of the petitioner "to prosecute its case within a reasonable length of time. 1 A motion for reconsideration of that order was denied on January 15, 1979. 2

When Civil Case No. 129829 was filed by petitioner, a motion to dismiss was submitted by private respondents on the ground that the cause of action is barred by a prior judgment (res judicata) in Civil Case No. 116028. Private respondents opined that said order was an adjudication upon the merits. Petitioner opposed the motion to dismiss, claiming that res judicata does not apply because the summons and complaint in Civil Case No. 116028 were never served upon private respondents and, as such, the trial court never acquired jurisdiction over private respondents and, consequently, over the case. Petitioner maintains that the order of dismissal in Civil Case No. 11 6028 never became final as against private respondents.

The trial court (Branch XX), in its order dated May 8, 1980, dismissed the complaint in Civil Case No. 129829 on the ground that the orders dated May 21, 1979 and June 15, 1979 issued by Judge Alfredo C. Florendo, dismissing Civil Case No. 116028, had become final. The trial court ruled that the dismissal of Civil Case No. 116028 had the effect of an adjudication upon the merits, that the dismissal was with prejudice since the order was unconditional, and that the lack of jurisdiction over defendants (private respondents) in Civil Case No. 116028 was of no moment. 3

In a motion for reconsideration of the order of May 8, 1980, petitioner reiterated its allegation that in Civil Case No. 116028, the court did not acquire jurisdiction over private respondents and that at the time the court ordered its dismissal, a motion for an alias writ of summons was pending resolution inasmuch as the sheriff had not acted on the same. 4 The motion for reconsideration was denied by the trial court on June 26, 1980 in Civil Case No. 129829. 5

Petitioner appealed to the Court of Appeals both questioned orders of respondent court in Civil Case No. 129829.6 But then, petitioner sought a more speedy remedy in questioning said orders by filing this petition for certiorari before this Court.

Under the foregoing undisputed facts, the Court finds this petition to be impressed with merit.

The questioned orders of the trial court in Civil Case No. 129829 supporting private respondent's motion to dismiss on the ground of res judicata are without cogent basis. We sustain petitioner's claim that respondent trial judge acted without or in excess of jurisdiction when he issued said orders because he thereby traversed the constitutional precept that "no person shall be deprived of property without due process of law" and that jurisdiction is vitally essential for any order or adjudication to be binding. Justice cannot be sacrificed for technicality. Originally, the action for collection of the loan, evidenced by a promissory note, was only for P100,000.00 but petitioner claims that as of March 5, 1981, the obligation was already P429,219.74. It is a cardinal rule that no one must be allowed to enrich himself at the expense of another without just cause.

In the very order of dismissal of Civil Case No. 116028, the trial court admitted that it did not acquire jurisdiction over the persons of private respondents and yet, it held that it was of no moment as to the dismissal of the case. We disagree. 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. If it did not acquire jurisdiction over the private respondents as parties to Civil Case No. 116028, it cannot render any binding decision, favorable or adverse to them, or dismiss the case with prejudice which, in effect, is an adjudication on the merits. 7 The controverted orders in Civil Case No. 116028 disregarded the fundamental principles of remedial law andthe meaning and the effect of jurisdiction. A judgment, to be considered res judicata, must be binding, and must be rendered by a court of competent jurisdiction. Otherwise, the judgment is a nullity.

The order of dismissal in Civil Case No. 116028 does not have the effect of an adjudication on the merits of the case because the court that rendered the same did not have the requisite jurisdiction over the persons of the defendants therein.

This being so, it cannot be the basis of res judicata and it cannot be a bar to a lawful claim. If at all, such a dismissal may be considered as one without prejudice. 8

Trial courts have the duty to dispose of controversies after trial on the merits whenever possible. In this case, there are no indications that petitioner intentionally failed to prosecute the case. The delay could not be attributed to its fault. Petitioner pursued the case with diligence, but jurisdiction could not be acquired over defendants-private respondents. The sheriff had not yet

submitted his return of the alias summons when the action was precipitately dismissed by the trial court. These are proven circumstances that negate theaction of respondent judge that the dismissal of Civil Case No. 116028 has the effect of an adjudication upon the merits and constitutes a bar to the prosecution of Civil Case No. 129829. The court finds that the two questionedorders of the trial court are irregular, improper, and, were issued with grave abuse of discretion amounting to excess of jurisdiction.

Petitioner correctly states that its appeal to the Court of Appeals in CA-G.R. No. 67288 pertaining to the questioned orders of the trial court is not an adequate remedy, because petitioner was not able to present evidence in the trial court. The sole issue involved in this case is one of jurisdiction, which is appropriate for resolution by the instant petition.

WHEREFORE, and by reason of the foregoing, the questioned orders dated May 8, 1980 and June 26, 1980 issued in Civil Case No. 129829 are hereby REVERSED and SET ASIDE. The records of the case are ordered returned to the trial court for trial and disposition on the merits. No costs. This decision isimmediately executory.

SO ORDERED.

G.R. No. 75736 September 29, 1988

ASSOCIATED LABOR UNIONS (ALU-TUCP), (For And In Behalf Of Its Direct Members, Namely, WARREN MAPUTI, RODRIGO CATIPAY, GILBERTO REDOBLADO ROBERTO RONOLO and 134 Others), petitioners, vs.HONORABLE ANTONIO V. BORROMEO AND BELYCA CORPORATION, Represented By BELLO M. CASANOVA, SR., President & General Manager, respondents.

Francisco D. Alas for petitioners.

Soriano-Arafia & Balbiran Law Office for respondents.

SARMIENTO, J.:

The Court issues the writs prayed for in this petition for certiorari and prohibition filed by the petitioner, the Associated Labor Unions.

It appears that on June 24, 1986, as a consequence of a controversy arising from charges of unfair labor practices against the respondent, BELYCA Corporation, a firm engaged in livestock farming, the petitioner filed a notice of strike with the then Ministry of Labor and Employment, Region X, at Cagayan de Oro City. On July 2, 1986, it filed a complaint for various offensesagainst the private respondent ranging from unfair labor practice to non-payment of the minimum wages. On July 24, 1986, it struck.

On the same date, the private respondent commenced suit for injunction with the respondent Regional Trial Court. It alleged that the petitioner had obstructed free ingress to the firm's premises, "preventing workers of Belyca farms from entering the business establishments ... preventing said workers from giving feeds and/or food to the hogs and fowls which would kill all of said hogs and fowls if not attended to this very day ..." 1 (The private respondent maintains "about 7,500 hogs and with 8,000 fowls with a total value of about P10,000.00." 2) On the same day, the respondent judge issueda temporary restraining order (TRO) "commanding herein defendants [the striking workers], their agents and/or representatives to allow plaintiff [the private-respondent) or workers or authorized representatives free passage toand from Belyca Farms, located at Kalasungay Malaybalay, Bukidnon to feed plaintiffs seven thousand five hundred (7,500) hogs and eight thousand (8,000) fowls." 3

On August 4, 1986, the petitioner filed a motion for reconsideration (to lift TRO as well as for the dismissal of the case on the ground of lack of jurisdiction. On August 14, 1986, the respondent judge denied the motion.

Also on August 14, 1986, Belyca Corporation filed an urgent motion "for extension of the life of the restraining order previously issued to another twenty days." The petitioner opposed the motion. On August 19, 1986, however, the respondent judge granted it stating:

WHEREFORE, for the sake of justice and fairness, the temporary mandatory order dated July 24, 1986 which expired on August 13, 1986 is hereby extended to another period of twenty (20) days to be counted from August 13, 1986. It will expire on October 2, 1986 which is the date of the hearing ofthe main petition.

Done this 19th day of August, 1986 at Malaybalay, Bukidnon.

[Please note the erroneous reckoning of the expiration date of the TRO whichshould be September 2, 1 986, after the twenty-day extension (from August

13), and not October 2, 1986 as stated in the Order of August 19, 1986 the decretal portion of which is quoted above. It is self-evident that twenty (20) days from August 13, 1986 would be September 2, 1986 and not October 2, 1 986.]

The petitioner then came to this Court.

As the Court has indicated at the outset, the petition is granted.

The courts of law have no jurisdiction to act on labor cases or various incidents arising therefrom. That is basic and elementary. Jurisdiction to try and adjudicate such cases pertains exclusively to the proper labor officials of the Department of Labor, thus:

ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) The Labor Arbiters shall have the original and exclusive jurisdiction to hear and decide within thirty (30) working days after submission of the case by the parties fordecision, the following cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor practice cases;

2. Those that workers may file involving wages, hours of work and other terms and conditions of employment;

3. All money claims of workers, including those based on non- payment or underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement, except

claims for employees' compensation, social security, medicare and maternitybenefits.

4. Cases involving household services; and

5. Cases arising from any violation of Article 265 of this Code, including questions involving the legality of strikes and lockouts.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. 4

xxx xxx xxx

ART. 128 ...

(b) The Minister of Labor or his duly authorized representatives shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings of the labor regulations officer and raise issues which cannot be resolved without co considering evidentiary matters that are not verifiable in the normal course of inspection. 5

It was only very recently that the Court promulgated Silva Pipe Workers Union NATU v. Filipino Pipe & Foundry Corporation, 6 where it was held:

The contention of the Company that the CFI had jurisdiction over the civil case inasmuch as it was brought principally to prevent the further commission of unlawful acts, is not well-taken. The ruling laid down in National Garments and Textile Workers' Union-PAFLU, etc., vs. Hon. Hermogenes Caluag, et al., L-9104, 99 Phil. 1067 (1956), is in point:

It appearing that the issue involved in the main case is interwoven with the unfair labor case pending before the CIR as to which its jurisdiction is exclusive, it is evident that it does not come under the jurisdiction of the trialcourt even if it involves acts of violence, intimidation and coercion as averredin the complaint. These acts come within the purview of Section 9 (d) of RA 875 which may be enjoined by CIR.

In a long line of decided cases, this Court has also invariably held that the Court of Industrial Relations has exclusive jurisdiction over labor disputes involving unfair labor practice, with the exclusive power to issue a temporaryrestraining order to enjoin acts in connection therewith. Thus:

Cases involving unfair labor practices fall within the exclusive jurisdiction of the CIR, and in the exercise of its jurisdiction said court has the exclusive power to issue a temporary restraining order to enjoin any acts committed inconnection with said labor dispute. (PAFLU, et al., vs. Tan, 99 Phil. 854; Phil. Communications, Electronic and Electricity Workers Federation vs. Nolasco, L-24984, July 29,1968; National Garment and Textile Workers' Union vs. Hon. H.Caluag, No. I,9104, 99 Phil. 1067, and Erlanger and Galinger, Inc. vs. Erlangerand Galinger Employees Association-NATU G.R. No. 1,11907,104 Phil. 17 [19581).

The reason for such exclusive jurisdiction is that since picketing and strikes may be mere incidents or consequences of an unfair labor practice, it is but proper that a Writ of Injunction prayed for in connection with that labor dispute originate from the Court having jurisdiction over the main case inasmuch as it is that Court that has cognizance of all relevant facts (Erlanger & Galinger, Inc. vs. Erlanger & Galinger Employees Association-NATU 104 Phil. 21 [19581).

It is clear then that the Court a quo acted without jurisdiction in the case before it. 7

That the case in question involves a labor dispute is patent from the records. In rendering his ruling, the respondent judge himself was aware that the dispute was the result of an impasse between employer and employees, an impasse cognizable alone by the National Labor Relations:

... This Court agrees in toto with the defendants that it has no jurisdiction to decide on the question of legality or illegality of strikes and lockouts, inasmuch as the power to decide on said legal question properly belongs to the National Labor Relations Commission, Ministry of Labor. There is no shadow of a doubt that defendants are workers or employees of plaintiff Belyca Corporation and likewise it is undisputed that their demands for increase of wages, reinstatement and other demands fall within the exclusiveoriginal jurisdiction of the National Labor Relations Commission or Labor Arbiters of the Ministry of Labor. ... 8

The respondent judge can not enjoin acts carried out as a consequence of the strike without unavoidably ruling on the legality of the strike itself. ("The strike can continue. It does not mean that this Court has ruled on the legalityor illegality of the said strike." 9) To say indeed that the workers had obstructed free passage to the strike-bound firm, is, by necessity, to say thatthe strike was illegal, notwithstanding the judge's own words of caution (that he was not ruling on the legality or illegality of the strike). For under the Labor Code:

(E) No person engaged in picketing shall commit any act of violence, coercion, or intimidation or obstruct the free ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares. 10

This is clear from his very order:

This provision of law is cited in order to guide the defendants that their demands from their employer should be made in lawful, friendly and

diplomatic manner and they should never resort to force, violence and intimidation or they should not apply the law of jungle, and should instead apply the law of the land. Defendants are hereby advised to ventilate their demands for increase of wages, reinstatement and the like, in a lawful and diplomatic manner in the proper forum which is the National Labor Relations Commission, Ministry of Labor. The defendants are likewise advised to have adiplomatic conference with the management of plaintiff- corporation in order that their demands can be ventilated and heard in a lawful, friendly and diplomatic manner. The philosophy of this step is to avoid trouble, disorder, chaos and bloodshed which are unwarranted and unnecessary among educated and civilized people like the defendants and officers of plaintiff-corporation. 11

What is even clearer is the fact that in labor cases, injunction itself stands as an exceptional remedy. It does not lie save in those cases as the Labor Code provides. Thus:

ART. 255. Injunction prohibited.—No temporary or permanent injunction or restraining order in any case involving or growing out of labor disputes shall be issued by any court or other entity, except as otherwise providede in Article 218 and 264 of this Code. 12

The provisions referred to are as follows:

(e) To enjoin or restrain any actual or threatened commission of any or all Prohibited or unlawful acts in any labor dispute which, if not restrained forthwith, may cause grave or irreparable damage to any patty or render ineffectual any decision in favor of such party. Provided, That no temporary injunction against the commission of acts Prohibited under Article 265 of this Code shall be issued by the Commission, except after due notice and hearingand in accordance with its rules: Provided, further, That any ex parte restraining order issued by the Commission, or its Chairman or Vice Chairman when the Commission is not in session and as may be prescribed by its rules, shall be valid for a period not exceeding twenty (20) days Provided, finally, That the receipt of evidence for the application of a writ of injunction may be delegated by the Commission to any of its Labor Arbiters who shall, in cases where the parties are not residents of Metro Manila, conduct such hearings in such places as he may determine to be accessible to the parties and its witnesses and shall submit thereafter his recommendation to the Commission. 13

xxx xxx xxx

(g) When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts adversely affecting the national interest, such as may occur in but not limited to public utilities, companies engaged in the generation or distribution of energy, banks, hospitals, and export-oriented industries, including those within export processing zones, the Minister of Labor and Employment shall assume jurisdiction over the dispute and decideit or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect artifical of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the- strike or lockout. The Minister may seek the assistance of law enforcement agencies to ensure compliance with this provision as wellas with such orders as he may issue to enforce the same.

The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining the industries where in his opinion labor disputes may adversely affect the national interest, and from intervening at any time and assuming jurisdiction over any labor dispute adversely affecting the national interest in order to settle or terminate the same. 14

The fact that the poultry and piggery maintained by the private respondent required close care and attention does not warrant the respondent judge's assumption of jurisdiction. It did not confer on him the competence he did not have. Jurisdiction is vested by law and not by the demands of emergency. 15

This is not, of course, to say that the strike in question was, ergo, legal. As we said, concerted acts of labor are the do of the labor officials, not the judiciary. Assuming, then, that the private respondent had cause for complaint and that the strike was illegal or had become illegal as a result of the strikers' resort to illegal acts the courts are not the proper forum for it.

The gross haste, furthermore, with which the challenged TRO was issued (it was issued on the same day the complaint was filed)—and based on the bareword alone of Belyca (that the strikers had behaved unlawfully in the course of the strike)—has not eluded this Court. This is a grave abuse of discretion. Plainly, it denied the workers due process of law.

It is likewise a serious abuse of discretion on the part of the respondent judgeto extend such a TRO. Under the Rules of Court as amended 16 a TRO has a non-extendible lifetime of twenty days (that is, assuming that the TRO itself was valid) upon the expiration of which, it dies a natural death. (In this case, the respondent judge extended the life of the TRO to fifty (50)—days from August 13, 1986 to October 2, 1986—as stated in the order itself.) If a writ of preliminary injunction is granted, the writ then takes its place. But it cannot substitute for the writ (if one is not granted within the twenty-day period) by the simple expedient of "extending" its life. The issuance of "perpetual" TROswas precisely the motivating factor behind the amendment of the Rules. In Dionisio v. Court of first Instance of South Cotabato, Branch II, 17 we thus said:

The above-quoted amendatory provision (BP 224) was adopted as a reaction against the indiscriminate issuance of ex parte preliminary injunctions which,not infrequently, converted the writ from an instrument in furtherance of justice to a shield for injustice. Thereunder, in no case may a preliminary injunction be issued without notice. The rule is absolute. Nevertheless, if it appears that great or irreparable injury would result to the applicant before his application for preliminary injunction could be heard on notice, the judge could issue a temporary restraining order with a limited life of 20 days from date of issue. If before the expiration of the 20-day period, the application forpreliminary injunction is denied, the temporary restraining order would thereby be deemed automatically vacated. But if no action is taken by the judge on the application for preliminary injunction within the said 20 days, the temporary restraining order would automatically expire on the 20th day by the sheer force of law, no judicial declaration to that effect being necessary. Thus, by the terms of Batas Pambansa Blg. 224, a temporary restraining order can no longer exist indefinitely; it has become truly temporary. 18

Neither can we countenance the respondent judge's resort to military assistance in order to implement his order. It diminishes in no small measure the rights of the workingman enshrined in the Constitution. 19

To permit, furthermore, the issuance of a TRO founded on management's concern for animals (or other properties of the firm) is to open posterns behind the ban (or regulation) of injunction under the Labor Code, and to frustrate the right to strike itself, since a strike is designed precisely to stop the wheels of the factory. In any event, the Code has left the discretion to theSecretary of Labor to determine which strikes are subject to injunction and

State intervention. 20 The courts, to reiterate, have no business interposing their intruding finger.

What has become increasingly apparent is the fact that the respondent judgehad allowed himself to be the private respondent 's intrument, witting or unwitting, in its (the private respondent's) effort to counter the impact of the strike. This is evident from the orders now complained of. Res ipsa loquitur. 21 But let, likewise, the counsels for the respondent firm be reprimanded for what would appear as an attempt on their paret to mainpuate the courts and the court processes.

WHEREFORE, the petition is GRANTED. The orders, dated July 24, 1986, August 14, 1986, and August 19, 1986 are hereby declared NULL AND VOID. Costs against the private responent.

SO ORDERED.

G.R. No. 181416 November 11, 2013

MEDICAL PLAZA MAKATI CONDOMINIUM CORPORATION, Petitioner, vs.ROBERT H. CULLEN, Respondent.

D E C I S I O N

PERALTA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Court of Appeals (CA) Decision1 dated July 10, 2007 and Resolution2 dated January 25, 2008 in CA-G.R. CV No. 86614. The assailed decision reversed and set aside the September 9, 2005 Order3 of the Regional Trial Court (RTC) of Makati, Branch 58 in Civil Case No. 03-1018; while the assailed resolution denied the separate motions for reconsiderationfiled by petitioner Medical Plaza Makati Condominium Corporation (MPMCC) and Meridien Land Holding, Inc. (MLHI).

The factual and procedural antecedents are as follows:

Respondent Robert H. Cullen purchased from MLHI condominium Unit No. 1201 of the Medical Plaza Makati covered by Condominium Certificate of TitleNo. 45808 of the Register of Deeds of Makati. Said title was later cancelled and Condominium Certificate of Title No. 64218 was issued in the name of respondent.

On September 19, 2002, petitioner, through its corporate secretary, Dr. Jose Giovanni E. Dimayuga, demanded from respondent payment for alleged unpaid association dues and assessments amounting to P145,567.42. Respondent disputed this demand claiming that he had been religiously paying his dues shown by the fact that he was previously elected president and director of petitioner.4 Petitioner, on the other hand, claimed that respondent’s obligation was a carry-over of that of MLHI.5 Consequently, respondent was prevented from exercising his right to vote and be voted for during the 2002 election of petitioner’s Board of Directors.6Respondent thus clarified from MLHI the veracity of petitioner’s claim, but MLHI allegedly claimed that the same had already been settled.7 This prompted respondent to demand from petitioner an explanation why he was considered a delinquent payer despite the settlement of the obligation. Petitioner failed to make such explanation. Hence, the Complaint for Damages8 filed by respondent against petitioner and MLHI, the pertinent portions of which read:

x x x x

6. Thereafter, plaintiff occupied the said condominium unit no. 1201 and religiously paid all the corresponding monthly contributions/association dues and other assessments imposed on the same. For the years 2000 and 2001, plaintiff served as President and Director of the Medical Plaza Makati Condominium Corporation;

7. Nonetheless, on September 19, 2002, plaintiff was shocked/surprised to receive a letter from the incumbent Corporate Secretary of the defendant Medical Plaza Makati, demanding payment of alleged unpaid association dues and assessments arising from plaintiff’s condominium unit no. 1201. The said letter further stressed that plaintiff is considered a delinquent member of the defendant Medical Plaza Makati.

x x x;

8. As a consequence, plaintiff was not allowed to file his certificate of candidacy as director. Being considered a delinquent, plaintiff was also barred from exercising his right to vote in the election of new members of the Board of Directors x x x;

9. x x x Again, prior to the said election date, x x x counsel for the defendant [MPMCC] sent a demand letter to plaintiff, anent the said delinquency, explaining that the said unpaid amount is a carry-over from the obligation of defendant Meridien. x x x;

10. Verification with the defendant [MPMCC] resulted to the issuance of a certification stating that Condominium Unit 1201 has an outstanding unpaid obligation in the total amount of P145,567.42 as of November 30, 2002, which again, was attributed by defendant [MPMCC] to defendant Meridien. x x x;

11. Due to the seriousness of the matter, and the feeling that defendant Meridien made false representations considering that it fully warranted to plaintiff that condominium unit 1201 is free and clear from all liens and encumbrances, the matter was referred to counsel, who accordingly sent a letter to defendant Meridien, to demand for the payment of said unpaid association dues and other assessments imposed on the condominium unit and being claimed by defendant [MPMCC]. x x x;

12. x x x defendant Meridien claimed however, that the obligation does not exist considering that the matter was already settled and paid by defendant Meridien to defendant [MPMCC]. x x x;

13. Plaintiff thus caused to be sent a letter to defendant [MPMCC] x x x. The said letter x x x sought an explanation on the fact that, as per the letter of defendant Meridien, the delinquency of unit 1201 was already fully paid and settled, contrary to the claim of defendant [MPMCC]. x x x;

14. Despite receipt of said letter on April 24, 2003, and to date however, no explanation was given by defendant [MPMCC], to the damage and prejudice of plaintiff who is again obviously being barred from voting/participating in the election of members of the board of directors for the year 2003;

15. Clearly, defendant [MPMCC] acted maliciously by insisting that plaintiff is a delinquent member when in fact, defendant Meridien had already paid the said delinquency, if any. The branding of plaintiff as delinquent member was willfully and deceitfully employed so as to prevent plaintiff from exercising his right to vote or be voted as director of the condominium corporation; 16. Defendant [MPMCC]’s ominous silence when confronted with claim of payment made by defendant Meridien is tantamount to admission that indeed, plaintiff is not really a delinquent member;

17. Accordingly, as a direct and proximate result of the said acts of defendant [MPMCC], plaintiff experienced/suffered from mental anguish, moral shock, and serious anxiety. Plaintiff, being a doctor of medicine and respected in the community further suffered from social humiliation and besmirched reputation thereby warranting the grant of moral damages in the

amount of P500,000.00 and for which defendant [MPMCC] should be held liable;

18. By way of example or correction for the public good, and as a stern warning to all similarly situated, defendant [MPMCC] should be ordered to pay plaintiff exemplary damages in the amount of P200,000.00;

19. As a consequence, and so as to protect his rights and interests, plaintiff was constrained to hire the services of counsel, for an acceptance fee of P100,000.00 plus P2,500.00 per every court hearing attended by counsel;

20. In the event that the claim of defendant [MPMCC] turned out to be true, however, the herein defendant Meridien should be held liable instead, by ordering the same to pay the said delinquency of condominium unit 1201 in the amount of P145,567.42 as of November 30, 2002 as well as the above damages, considering that the non-payment thereof would be the proximate cause of the damages suffered by plaintiff;9

Petitioner and MLHI filed their separate motions to dismiss the complaint on the ground of lack of jurisdiction.10MLHI claims that it is the Housing and Land Use Regulatory Board (HLURB) which is vested with the exclusive jurisdiction to hear and decide the case. Petitioner, on the other hand, raises the following specific grounds for the dismissal of the complaint: (1) estoppelas respondent himself approved the assessment when he was the president; (2) lack of jurisdiction as the case involves an intra-corporate controversy; (3) prematurity for failure of respondent to exhaust all intra-corporate remedies; and (4) the case is already moot and academic, the obligation having been settled between petitioner and MLHI.11

On September 9, 2005, the RTC rendered a Decision granting petitioner’s andMLHI’s motions to dismiss and, consequently, dismissing respondent’s complaint.

The trial court agreed with MLHI that the action for specific performance filedby respondent clearly falls within the exclusive jurisdiction of the HLURB.12 Asto petitioner, the court held that the complaint states no cause of action, considering that respondent’s obligation had already been settled by MLHI. It, likewise, ruled that the issues raised are intra-corporate between the corporation and member.13

On appeal, the CA reversed and set aside the trial court’s decision and remanded the case to the RTC for further proceedings. Contrary to the RTC conclusion, the CA held that the controversy is an ordinary civil action for

damages which falls within the jurisdiction of regular courts.14 It explained that the case hinged on petitioner’s refusal to confirm MLHI’s claim that the subject obligation had already been settled as early as 1998 causing damageto respondent.15 Petitioner’s and MLHI’s motions for reconsideration had also been denied.16

Aggrieved, petitioner comes before the Court based on the following grounds:

I.

THE COURT A QUO HAS DECIDED A QUESTION OF SUBSTANCE, NOT THERETOFORE DETERMINED BY THE SUPREME COURT, OR HAS DECIDED IT IN A WAY NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT DECLARED THE INSTANT CASE AN ORDINARY ACTION FOR DAMAGES INSTEAD OF AN INTRA-CORPORATE CONTROVERSY COGNIZABLE BY A SPECIAL COMMERCIAL COURT.

II.

THE COURT A QUO HAS DECIDED THE INSTANT CASE IN A WAY NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT TOOK COGNIZANCE OF THE APPEAL WHILE RAISING ONLY PURE QUESTIONS OF LAW.17

The petition is meritorious.

It is a settled rule that jurisdiction over the subject matter is determined by the allegations in the complaint. It is not affected by the pleas or the theoriesset up by the defendant in an answer or a motion to dismiss. Otherwise, jurisdiction would become dependent almost entirely upon the whims of the defendant.18 Also illuminating is the Court’s pronouncement in Go v. Distinction Properties Development and Construction, Inc.:19

Basic as a hornbook principle is that jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in the complaint which comprise a concise statement of the ultimate facts constituting the plaintiff’s cause of action. The nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein.The averments in the complaint and the character of the relief sought are theones to be consulted. Once vested by the allegations in the complaint,

jurisdiction also remains vested irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. x x x20

Based on the allegations made by respondent in his complaint, does the controversy involve intra-corporate issues as would fall within the jurisdictionof the RTC sitting as a special commercial court or an ordinary action for damages within the jurisdiction of regular courts?

In determining whether a dispute constitutes an intra-corporate controversy, the Court uses two tests, namely, the relationship test and the nature of the controversy test.21

An intra-corporate controversy is one which pertains to any of the following relationships: (1) between the corporation, partnership or association and the public; (2) between the corporation, partnership or association and the State insofar as its franchise, permit or license to operate is concerned; (3) between the corporation, partnership or association and its stockholders, partners, members or officers; and (4) among the stockholders, partners or associates themselves.22 Thus, under the relationship test, the existence of any of the above intra-corporate relations makes the case intra-corporate.23

Under the nature of the controversy test, "the controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties’ correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation."24 In other words, jurisdiction should be determined by considering both the relationship of the parties as well as the nature of the question involved.25

Applying the two tests, we find and so hold that the case involves intra-corporate controversy. It obviously arose from the intra-corporate relations between the parties, and the questions involved pertain to their rights and obligations under the Corporation Code and matters relating to the regulation of the corporation.26

Admittedly, petitioner is a condominium corporation duly organized and existing under Philippine laws, charged with the management of the Medical Plaza Makati. Respondent, on the other hand, is the registered owner of Unit No. 1201 and is thus a stockholder/member of the condominium corporation.Clearly, there is an intra-corporate relationship between the corporation and a stockholder/member.

The nature of the action is determined by the body rather than the title of the complaint.1âwphi1 Though denominated as an action for damages, an examination of the allegations made by respondent in his complaint shows that the case principally dwells on the propriety of the assessment made by petitioner against respondent as well as the validity of petitioner’s act in preventing respondent from participating in the election of the corporation’s Board of Directors. Respondent contested the alleged unpaid dues and assessments demanded by petitioner.

The issue is not novel. The nature of an action involving any dispute as to thevalidity of the assessment of association dues has been settled by the Court in Chateau de Baie Condominium Corporation v. Moreno.27 In that case, respondents therein filed a complaint for intra-corporate dispute against the petitioner therein to question how it calculated the dues assessed against them, and to ask an accounting of association dues. Petitioner, however, moved for the dismissal of the case on the ground of lack of jurisdiction alleging that since the complaint was against the owner/developer of a condominium whose condominium project was registered with and licensed by the HLURB, the latter has the exclusive jurisdiction. In sustaining the denial of the motion to dismiss, the Court held that the dispute as to the validity of the assessments is purely an intra-corporate matter between petitioner and respondent and is thus within the exclusive jurisdiction of the RTC sitting as a special commercial court. More so in this case as respondent repeatedly questioned his characterization as a delinquent member and, consequently, petitioner’s decision to bar him from exercising his rights to vote and be voted for. These issues are clearly corporate and the demand fordamages is just incidental. Being corporate in nature, the issues should be threshed out before the RTC sitting as a special commercial court. The issueson damages can still be resolved in the same special commercial court just like a regular RTC which is still competent to tackle civil law issues incidental to intra-corporate disputes filed before it.28

Moreover, Presidential Decree No. 902-A enumerates the cases over which the Securities and Exchange Commission (SEC) exercises exclusive jurisdiction:

x x x x

b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members or associates; between any or all of them and the corporation, partnership or association of which they are

stockholders, members, or associates, respectively; and between such corporation, partnership or association and the State insofar as it concerns their individual franchise or right to exist as such entity; and

c) Controversies in the election or appointment of directors, trustees, officers, or managers of such corporations, partnerships, or associations.29

To be sure, this action partakes of the nature of an intra-corporate controversy, the jurisdiction over which pertains to the SEC. Pursuant to Section 5.2 of Republic Act No. 8799, otherwise known as the Securities Regulation Code, the jurisdiction of the SEC over all cases enumerated underSection 5 of Presidential Decree No. 902-A has been transferred to RTCs designated by this Court as Special Commercial Courts.30 While the CA may be correct that the RTC has jurisdiction, the case should have been filed not with the regular court but with the branch of the RTC designated as a special commercial court. Considering that the RTC of Makati City, Branch 58 was not designated as a special commercial court, it was not vested with jurisdiction over cases previously cognizable by the SEC.31 The CA, therefore, gravely erred in remanding the case to the RTC for further proceedings.

Indeed, Republic Act (RA) No. 9904, or the Magna Carta for Homeowners and Homeowners’ Associations, approved on January 7, 2010 and became effective on July 10, 2010, empowers the HLURB to hear and decide inter-association and/or intra-association controversies or conflicts concerning homeowners’ associations. However, we cannot apply the same in the present case as it involves a controversy between a condominium unit ownerand a condominium corporation. While the term association as defined in thelaw covers homeowners’ associations of other residential real property whichis broad enough to cover a condominium corporation, it does not seem to be the legislative intent. A thorough review of the deliberations of the bicameralconference committee would show that the lawmakers did not intend to extend the coverage of the law to such kind of association. We quote hereunder the pertinent portion of the Bicameral Conference Committee’s deliberation, to wit:

THE CHAIRMAN (SEN. ZUBIRI). Let’s go back, Mr. Chair, very quickly on homeowners.

THE ACTING CHAIRMAN (REP. ZIALCITA). Ang sa akin lang, I think our views are similar, Your Honor, Senator Zubiri, the entry of the condominium units might just complicate the whole matters. So we’d like to put it on record that we’re very much concerned about the plight of the Condominium Unit

Homeowners’ Association. But this could very well be addressed on a separate bill that I’m willing to co-sponsor with the distinguished Senator Zubiri, to address in the Condominium Act of the Philippines, rather than address it here because it might just create a red herring into the entire thingand it will just complicate matters, hindi ba?

THE CHAIRMAN (SEN. ZUBIRI). I also agree with you although I sympathize with them---although we sympathize with them and we feel that many times their rights have been also violated by abusive condominium corporations. However, there are certain things that we have to reconcile. There are certain issues that we have to reconcile with this version.

In the Condominium Code, for example, they just raised a very peculiar situation under the Condominium Code --- Condominium Corporation Act. It’sfive years the proxy, whereas here, it’s three years. So there would already be violation or there will be already a problem with their version and our version. Sino ang matutupad doon? Will it be our version or their version?

So I agree that has to be studied further. And because they have a law pertaining to the condominium housing units, I personally feel that it would complicate matters if we include them. Although I agree that they should be looked after and their problems be looked into.

Probably we can ask our staff, Your Honor, to come up already with the bill although we have no more time. Hopefully we can tackle this again on the 15th Congress. But I agree with the sentiments and the inputs of the Honorable Chair of the House panel.

May we ask our resource persons to also probably give comments?

Atty. Dayrit.

MR. DAYRIT.

Yes I agree with you. There are many, I think, practices in their provisions in the Condominium Law that may be conflicting with this version of ours.

For instance, in the case of, let’s say, the condominium, the so-called common areas and/or maybe so called open spaces that they may have, especially common areas, they are usually owned by the condominium corporation. Unlike a subdivision where the open spaces and/or the common areas are not necessarily owned by the association. Because sometimes --- generally these are donated to the municipality or to the city. And it is only

when the city or municipality gives the approval or the conformity that this isdonated to the homeowners’ association. But generally, under PD [Presidential Decree] 957, it’s donated. In the Condominium Corporation, hindi. Lahat ng mga open spaces and common areas like corridors, the function rooms and everything, are owned by the corporation. So that’s one main issue that can be conflicting.

THE CHAIRMAN (SEN. ZUBIRI). I’ll just ask for a one-minute suspension so we can talk.

THE ACTING CHAIRMAN (REP. ZIALCITA). Unless you want to put a catchall phrase like what we did in the Senior Citizen’s Act. Something like, to the extent --- paano ba iyon? To the extent that it is practicable and applicable, the rights and benefits of the homeowners, are hereby extended to the --- mayroon kaming ginamit na phrase eh...to the extent that it be practicable and applicable to the unit homeoweners, is hereby extended, something like that. It’s a catchall phrase. But then again, it might create a...

MR. JALANDONI. It will become complicated. There will be a lot of conflict of laws between the two laws.

THE ACTING CHAIRMAN (REP. ZIALCITA). Kaya nga eh. At saka, I don’t know. I think the --- mayroon naman silang protection sa ano eh, di ba? Buyers decree doon sa Condominium Act. I’m sure there are provisions there eh. Huwag na lang, huwag na lang.

MR. JALANDONI. Mr. Chairman, I think it would be best if your previous comments that you’d be supporting an amendment.1âwphi1 I think that would be --- Well, that would be the best course of action with all due respect.

THE ACTING CHAIRMAN (REP. ZIALCITA). Yeah. Okay. Thank you. So iyon na lang final proposal naming ‘yung catchall phrase, "With respect to the..."32

x x x x

THE CHAIRMAN (SEN. ZUBIRI). xxx And so, what is their final decision on the definition of homeowners?

THE ACTING CHAIRMAN (REP. ZIALCITA).

We stick to the original, Mr. Chairman. We’ll just open up a whole can of worms and a whole new ball game will come into play. Besides, I am not

authorized, neither are you, by our counterparts to include the condominium owners.

THE CHAIRMAN (SEN. ZUBIRI).

Basically that is correct. We are not authorized by the Senate nor – because we have discussed this lengthily on the floor, actually, several months on thefloor. And we don’t have the authority as well for other Bicam members to add a provision to include a separate entity that has already their legal or their established Republic Act tackling on that particular issue. But we just like to put on record, we sympathize with the plight of our friends in the condominium associations and we will just guarantee them that we will work on an amendment to the Condominium Corporation Code. So with that – we skipped, that is correct, we have to go back to homeowners’ association definition, Your Honor, because we had skipped it altogether. So just quickly going back to Page 7 because there are amendments to the definition of homeowners. If it is alright with the House Panel, adopt the opening phrase of Subsection 7 of the Senate version as opening phrase of Subsection 10 of the reconciled version.

x x x x33

To be sure, RA 4726 or the Condominium Act was enacted to specifically govern a condominium. Said law sanctions the creation of the condominium corporation which is especially formed for the purpose of holding title to the common area, in which the holders of separate interests shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units.34 The rights and obligations of the condominium unit owners and the condominium corporation are set forthin the above Act.

Clearly, condominium corporations are not covered by the amendment. Thus, the intra-corporate dispute between petitioner and respondent is still within the jurisdiction of the RTC sitting as a special commercial court and not the HLURB. The doctrine laid down by the Court in Chateau de Baie Condominium Corporation v. Moreno35 which in turn cited Wack Wack Condominium Corporation, et al v. CA36 is still a good law.

WHEREFORE, we hereby GRANT the petition and REVERSE the Court of Appeals Decision dated July 10, 2007 and Resolution dated January 25, 2008 in CA-G.R. CV No. 86614. The Complaint before the Regional Trial Court of Makati City, Branch 58, which is not a special commercial court, docketed as

Civil Case No. 03-1018 is ordered DISMISSED for lack of jurisdiction. Let the case be REMANDED to the Executive Judge of the Regional Trial Court of Makati City for re-raffle purposes among the designated special commercial courts.

SO ORDERED.

G.R. No. 174908 June 17, 2013

DARMA MASLAG, Petitioner, vs.ELIZABETH MONZON, WILLIAM GESTON, and REGISTRY OF DEEDS OFBENGUET, Respondents.

D E C I S I O N

DEL CASTILLO, J.:

"It is incumbent upon x x x appellants to utilize the correct mode of appeal ofthe decisions of trial courts to the appellate courts. In the mistaken choice of their remedy, they can blame no one but themselves."1

This is a Petition for Review on Certiorari2 of the May 31, 2006 Resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 83365, which dismissed petitioner Darma Maslag's (petitioner) ordinary appeal to it for being an improper remedy. The Resolution disposed of the case as follows:

WHEREFORE, the Motion to Dismiss is GRANTED, and the Appeal is hereby DISMISSED.

SO ORDERED.4

The Petition also assails the CA’s September 22, 2006 Resolution5 denying petitioner’s Motion for Reconsideration.6

Factual Antecedents

In 1998, petitioner filed a Complaint7 for reconveyance of real property with declaration of nullity of original certificate of title (OCT) against respondents Elizabeth Monzon (Monzon), William Geston and the Registry of Deeds of La Trinidad, Benguet. The Complaint was filed before the Municipal Trial Court (MTC) of La Trinidad, Benguet.

After trial, the MTC found respondent Monzon guilty of fraud in obtaining an OCT over petitioner’s property.8 It ordered her to reconvey the said property to petitioner, and to pay damages and costs of suit.9

Respondents appealed to the Regional Trial Court (RTC) of La Trinidad, Benguet.

After going over the MTC records and the parties’ respective memoranda, theRTC of La Trinidad, Benguet, Branch 10, through Acting Presiding Judge Fernando P. Cabato (Judge Cabato), issued its October 22, 2003 Order,10 declaring the MTC without jurisdiction over petitioner’s cause of action. It further held that it will take cognizance of the case pursuant to Section 8, Rule 40 of the Rules of Court, which reads:

SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction. – x x x

If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case in accordance with the preceding section, without prejudice to the admission of amended pleadings and additional evidence in the interest of justice. Both parties acknowledged receipt of the October 22, 2003 Order,11 but neither presented additional evidence before the new judge, Edgardo B. Diaz De Rivera, Jr. (Judge Diaz De Rivera).12

On May 4, 2004, Judge Diaz De Rivera issued a Resolution13 reversing the MTC Decision. The fallo reads as follows:

WHEREFORE, the Judgment appealed from the Municipal Trial Court of La Trinidad, Benguet is set aside. [Petitioner] is ordered to turn over the possession of the 4,415 square meter land she presently occupies to [Monzon]. This case is remanded to the court a quo for further proceedings to determine whether [Maslag] is entitled to the remedies afforded by law to a builder in good faith for the improvements she constructed thereon.

No pronouncement as to damages and costs.

SO ORDERED.14

Petitioner filed a Notice of Appeal15 from the RTC’s May 4, 2004 Resolution.

Petitioner assailed the RTC’s May 4, 2004 Resolution for reversing the MTC’s factual findings16 and prayed that the MTC Decision be adopted. Her prayer before the CA reads:

WHEREFORE, premises considered, it is most respectfully prayed that the decision of the Regional Trial Court, Branch 10 of La Trinidad, Benguet, appealed from be reversed in toto and that the Honorable Court adopt the decision of the Municipal Trial Court. Further reliefs just and equitable under the premises are prayed for.17

Respondents moved to dismiss petitioner’s ordinary appeal for being the improper remedy. They asserted that the proper mode of appeal is a Petition for Review under Rule 42 because the RTC rendered its May 4, 2004 Resolution in its appellate jurisdiction.18

Ruling of the Court of Appeals

The CA dismissed petitioner’s appeal. It observed that the RTC’s May 4, 2004Resolution (the subject matter of the appeal before the CA) set aside an MTC Judgment; hence, the proper remedy is a Petition for Review under Rule 42, and not an ordinary appeal.19

Petitioner sought reconsideration.20 She argued, for the first time, that the RTC rendered its May 4, 2004 Resolution in its original jurisdiction. She cited the earlier October 22, 2003 Order of the RTC declaring the MTC without jurisdiction over the case.

The CA denied petitioner’s Motion for Reconsideration in its September 22, 2006 Resolution:21

A perusal of the May 4, 2004 Resolution of the RTC, which is the subject matter of the appeal, clearly reveals that it took cognizance of the MTC case in the exercise of its appellate jurisdiction. Consequently, as We have previously enunciated, the proper remedy, is a petition for review under Rule 42 and not an ordinary appeal under Rule 41.

WHEREFORE, premises considered, the instant Motion for Reconsideration is DENIED. The May 31, 2006 Resolution of this Court is hereby AFFIRMED in toto.

SO ORDERED.22

Hence this Petition wherein petitioner prays that the CA be ordered to take cognizance of her appeal.23

Issues

Petitioner set forth the following issues in her Petition:

WHETHER X X X THE COURT OF APPEALS WAS CORRECT IN DISMISSING THE APPEAL FILED BY THE PETITIONER, CONSIDERING THAT THE REGIONAL TRIAL COURT, BRANCH 10 OF LA TRINIDAD, BENGUET HELD THAT THE ORIGINAL COMPLAINT AS FILED BEFORE THE MUNICIPAL TRIAL COURT OF LA TRINIDAD,BENGUET WAS DECIDED BY THE LATTER WITHOUT ANY JURISDICTION AND, IN ORDERING THAT THE CASE SHALL BE DECIDED PURSUANT TO THE PROVISION OF SECTION 8 OF RULE 40 OF THE RULES OF COURT, IT DECIDED THE CASE NOT ON ITS APPELLATE JURISDICTION BUT ON ITS ORIGINAL JURISDICTION WHAT WILL BE THE EFFECT OF THE DECISION OF THE REGIONAL TRIAL COURT, BRANCH 10 OF LA TRINIDAD, BENGUET, WHEN IT DECIDED A CASE APPEALED BEFORE IT UNDER THE PROVISION OF SECTION 8, RULE 40 OF THE RULES OF COURT OF THE PHILIPPINES, AS TO THE COURSE OF REMEDY THAT MAY BE AVAILED OF BY THE PETITIONER – A PETITION FOR REVIEWUNDER RULE 42 OR AN ORDINARY APPEAL UNDER RULE 41.24

Our Ruling

In its October 22, 2003 Order, the RTC declared that the MTC has no jurisdiction over the subject matter of the case based on the supposition thatthe same is incapable of pecuniary estimation. Thus, following Section 8, Rule 40 of the Rules of Court, it took cognizance of the case and directed the parties to adduce further evidence if they so desire. The parties bowed to this ruling of the RTC and, eventually, submitted the case for its decision after they had submitted their respective memoranda.

We cannot, however, gloss over this jurisdictional faux pas of the RTC. Since it involves a question of jurisdiction, we may motu proprio review and pass upon the same even at this late stage of the proceedings.25

In her Complaint26 for reconveyance of real property with declaration of nullity of OCT, petitioner claimed that she and her father had been in open, continuous, notorious and exclusive possession of the disputed property since the 1940’s. She averred:

7. Sometime in the year 1987, Elizabeth Monzon, the owner of the adjacent parcel of land being occupied by plaintiff [Maslag], informed the plaintiff that the respective parcels of land being claimed by them can now be titled. A suggestion was, thereafter made, that those who were interested to have

their lands titled, will contribute to a common fund for the surveying and subsequent titling of the land;

8. Since plaintiff had, for so long, yearned for a title to the land she occupies,she contributed to the amount being requested by Elizabeth Monzon;

9. A subdivision survey was made and in the survey, the respective areas of the plaintiff and the defendants were defined and delimited – all for purposesof titling. x x x

10. But alas, despite the assurance of subdivided titles, when the title was finally issued by the Registry of Deeds, the same was only in the name of Elizabeth Monzon and WILLIAM GESTON. The name of Darma Maslag was fraudulently, deliberately and in bad faith omitted. Thus, the title to the property, to the extent of 18,295 square meters, was titled solely in the name of ELIZABETH MONZON.

As a relief, petitioner prayed that Monzon be ordered to reconvey the portionof the property which she claimed was fraudulently included in Monzon’s title. Her primary relief was to recover ownership of real property. Indubitably, petitioner’s complaint involves title to real property. An action "involving title to real property," on the other hand, was defined as an action where "the plaintiff’s cause of action is based on a claim that she owns such property or that she has the legal rights to have exclusive control, possession, enjoyment, or disposition of the same."27

Under the present state of the law, in cases involving title to real property, original and exclusive jurisdiction belongs to either the RTC or the MTC, depending on the assessed value of the subject property.28 Pertinent provisions of Batas Pambansa Blg. (BP) 129,29 as amended by Republic Act (RA) No. 7691,30 provides:

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

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

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or for civil actions in Metro Manila, where x x x the assessed value of the property exceeds Fifty thousand pesos ([P]50,000.00) except actions for forcible entry into and

unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts;

x x x x

SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. — Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:

x x x x

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) x x x.

In the case at bench, annexed to the Complaint is a Declaration of Real Property31 dated November 12, 1991, which was later marked as petitioner’s Exhibit "A",32 showing that the disputed property has an assessed value ofP12,40033 only. Such assessed value of the property is well within the jurisdiction of the MTC. In fine, the RTC, thru Judge Cabato, erred in applying Section 19(1) of BP 129 in determining which court has jurisdiction over the case and in pronouncing that the MTC is divested of original and exclusive jurisdiction.

This brings to fore the next issue of whether the CA was correct in dismissingpetitioner’s appeal.

Section 2, Rule 50 of the Rules of Court provides for the dismissal of an improper appeal:

SECTION 2. Dismissal of improper appeal to the Court of Appeals. – An appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by said court. Similarly, an appeal by notice of appeal instead of by petition for review from the appellate judgment of a Regional Trial Court shall be dismissed.

An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be dismissed outright.1âwphi1 (Emphasis supplied)

There are two modes of appealing an RTC decision or resolution on issues of fact and law.34 The first mode is an ordinary appeal under Rule 41 in cases where the RTC exercised its original jurisdiction. It is done by filing a Notice ofAppeal with the RTC. The second mode is a petition for review under Rule 42 in cases where the RTC exercised its appellate jurisdiction over MTC decisions. It is done by filing a Petition for Review with the CA. Simply put, the distinction between these two modes of appeal lies in the type of jurisdiction exercised by the RTC in the Order or Decision being appealed.

As discussed above, the MTC has original and exclusive jurisdiction over the subject matter of the case; hence, there is no other way the RTC could have taken cognizance of the case and review the court a quo’s Judgment except in the exercise of its appellate jurisdiction. Besides, the new RTC Judge who penned the May 4, 2004 Resolution, Judge Diaz de Rivera, actually treated the case as an appeal despite the October 22, 2003 Order. He started his Resolution by stating, "This is an appeal from the Judgment rendered by the Municipal Trial Court (MTC) of La Trinidad Benguet"35 and then proceeded to discuss the merits of the "appeal." In the dispositive portion of said Resolution, he reversed the MTC’s findings and conclusions and remanded residual issues for trial with the MTC. Thus, in fact and in law, the RTC Resolution was a continuation of the proceedings that originated from the MTC. It was a judgment issued by the RTC in the exercise of its appellate jurisdiction. With regard to the RTC’s earlier October 22, 2003 Order, the same should be disregarded for it produces no effect (other than to confuse the parties whether the RTC was invested with original or appellate jurisdiction). It cannot be overemphasized that jurisdiction over the subject matter is conferred only by law and it is "not within the courts, let alone the parties, to themselves determine or conveniently set aside."37 Neither would the active participation of the parties nor estoppel operate to confer original and exclusive jurisdiction where the court or tribunal only wields appellate jurisdiction over the case.38 Thus, the CA is correct in holding that the proper mode of appeal should have been a Petition for Review under Rule 42 of the Rules of Court, and not an ordinary appeal under Rule 41.

Seeing the futility of arguing against what the RTC actually did, petitioner resorts to arguing for what the RTC should have done. She maintains that theRTC should have issued its May 4, 2004 Resolution in its original jurisdiction because it had earlier ruled that the MTC had no jurisdiction over the cause of action.

Petitioner’s argument lacks merit. To reiterate, only statutes can confer jurisdiction. Court issuances cannot seize or appropriate jurisdiction. It has been repeatedly held that "any judgment, order or resolution issued without jurisdiction is void and cannot be given any effect."39 By parity of reasoning, an order issued by a court declaring that it has original and exclusive jurisdiction over the subject matter of the case when under the law it has none cannot likewise be given effect. It amounts to usurpation of jurisdiction which cannot be countenanced. Since BP 129 already apportioned the jurisdiction of the MTC and the RTC in cases involving title to property, neither the courts nor the petitioner could alter or disregard the same. Besides, in determining the proper mode of appeal from an RTC Decision or Resolution, the determinative factor is the type of jurisdiction actually exercised by the RTC in rendering its Decision or Resolution. Was it rendered by the RTC in the exercise of its original jurisdiction, or in the exercise of its appellate jurisdiction? In short, we look at what type of jurisdiction was actually exercised by the RTC. We do not look into what type of jurisdiction the RTC should have exercised. This is but logical. Inquiring into what the RTCshould have done in disposing of the case is a question which already involves the merits of the appeal, but we obviously cannot go into that wherethe mode of appeal was improper to begin with.

WHEREFORE, premises considered, the Petition for Review is DENIED for lack of merit. The assailed May 31, 2006 and September 22, 2006 Resolutions of the Court of Appeals in CA-G.R. CV No. 83365 are AFFIRMED.

SO ORDERED.