Civil Procedure Cases

SECOND DIVISION

[G.R. No. 153951.  July 29, 2005]

PHILIPPINE NATIONAL BANK, petitioner, vs. SANAO MARKETING CORPORATION, SPOUSES AMADO A. SANAO and SOLEDAD F. SANAO and SPOUSES WILLIAM (Willy) F. SANAO and HELEN SANAO and the COURT OF APPEALS, respondents.

D E C I S I O N

TINGA, J.:

Before the Court is a Petition for Review[1] under Rule 45 of the Rules of Court, wherein petitioner Philippine National Bank (PNB) seeks the review of the Decision[2] rendered by the Court of Appeals Thirteenth Division in C.A. G.R. SP No. 63162. The assailed  Decision nullified two orders[3] of the Regional Trial Court (RTC) of Pili, Camarines Sur, Branch 32, which respectively granted PNB’s petition for issuance of a writ of possession over seven (7) parcels of land and directed the execution pending appeal of such writ of possession.

The antecedents are as follows:

In July 1997, Sanao Marketing Corporation, the spouses Amado A. Sanao and Soledad F. Sanao and the spouses William (Willy) F. Sanao and Helen Sanao (all respondents herein), as joint and solidary debtors, obtained a loan in the amount of One Hundred Fifty Million Pesos (P150,000,000.00) from PNB secured by a real estate mortgage of several parcels of land situated in the municipalities of Pili, Tigaon and Camaligan, all of Camarines Sur, and Naga City.[4] The contract expressly provided that the mortgage shall be governed by the provisions of Act No. 3135, as amended.[5] The pertinent portions of said contract provide that:

. . . .

F.  FORECLOSURE, POWER OF ATTORNEY, RECEIVERSHIP

If at any time the Mortgagors fail or refuse to pay the obligation herein secured, or any of the amortization of such indebtedness when due, or to comply with any of the conditions and stipulations herein agreed, or shall during the time this mortgage is in force, institute insolvency proceedings or be involuntarily declared insolvent, or shall use the proceeds of this loan for purposes other than those specified herein, or if the mortgage cannot be recorded in or the Mortgagors fail to register the same with the corresponding Registry of Deeds, then all the obligations of the Mortgagors secured by this mortgage and all the amortization thereof shall immediately become due, payable and defaulted and the Mortgagee may immediately foreclose this mortgage judicially in accordance with the Rules of Court, or extrajudicially in accordance with Act No. 3135, as amended, and P.D. 385. For the purpose of extrajudicial foreclosure, the Mortgagors hereby appoint the Mortgagee their Attorney-in-Fact to sell the properties mortgaged under Act No. 3135, as amended, to sign all documents and perform any act requisite and necessary to accomplish said purpose and to appoint its substitute as Attorney-in-Fact with the same powers as above specified. In case of judicial foreclosure, the Mortgagors hereby consent to the appointment of the Mortgagee or of any of its employees as receiver, without any bond, to take charge of the mortgaged properties at once, and to hold possession of the same and the rents, benefits and profits derived from the mortgaged properties before the sale, less costs and expenses of the receivership. . . . [6]

For failure of respondents to fully pay the loan upon its maturity, PNB caused the extrajudicial foreclosure of the mortgage through a certain Atty. Marvel C. Clavecilla (Atty. Clavecilla), a notary public for and in the City of Naga. The Notice of Extra-Judicial Foreclosure Sale announced that the sale of 13 titles consisting of 14 parcels of land located in Camarines Sur and Naga City is scheduled on 22

March 1999 at nine o’clock in the morning or soon thereafter, at the entrance of the Municipal Court of Pili, Camarines Sur. This notice was published in the 7, 14 and 21 February 1999 issues of the Vox Bikol- a weekly tabloid published every Sunday and circulated in the Bicol region and continents with Bicol communities.[7]

Thereafter, Atty. Clavecilla executed a Provisional Certificate of Sale[8] dated 26 April 1999 certifying that on the 22nd day of March 1999, at exactly ten o’clock in the morning, he sold at a public auction at the “lobby/main entrance of the Regional Trial Court, Hall of Justice, Naga City” the mortgaged properties to PNB for Two Hundred Thirteen Million One Hundred Sixty-Two Thousand Seven Hundred Eighty- Seven and Fifty Centavos (P213,162,787.50), which amount the latter considered as payment pro tanto of petitioners’ loan.[9] This Provisional Certificate of Sale was registered with the Registry of Deeds of Camarines Sur on 3 May 1999 and with the Registry of Deeds of Naga City on 16 June 1999 for the properties respectively covered by their registries.[10]

On 26 April 2000, respondents Amado A. Sanao and Sanao Marketing Corporation filed a complaint[11] with the RTC of Naga City, Branch 61, against PNB, the Register of Deeds of the City of Naga and the Province of Camarines Sur, and Atty. Clavecilla, for the court to declare the Provisional Certificate of Sale and the auction and foreclosure proceedings null and void.[12]

On 11 August 2000, PNB filed with the RTC of Pili, Camarines Sur, Branch 32, a petition for the issuance of a writ of possession, docketed therein as Spec. Proc. P-1182, over the properties located in Pili that are covered by Transfer Certificates of Title Nos. 21448, 24221, 14133, 15218, 15489, 13856, 15216.[13]

To the petition, respondents Amado A. Sanao and Sanao Marketing Corporation interposed an answer in opposition, with special and affirmative defenses.[14]

PNB countered with its comments/reply to opposition.[15]

On 24 November 2000, the RTC of Pili issued its first assailed order,[16] granting the writ of possession prayed for by PNB.

Amado A. Sanao and Sanao Marketing Corporation filed a Motion for Reconsideration w/ Opposition to the Motion for Execution Pending Appeal,[17] which was denied per the second assailed order[18] dated 24 January 2001 of the RTC of Pili.[19]

Respondents then filed a Petition[20] for certiorari and prohibition under Rule 65 of the Rules of Court before the Court of Appeals, imputing grave abuse of discretion on the part of the RTC of Pili in the issuance of the two assailed orders. The Petition likewise prayed for the issuance of a temporary restraining order which the Court of Appeals granted on 15 February 2001, enjoining the RTC of Pili and PNB from implementing the challenged orders.

In their Memorandum,[21] respondents pointed out that the PNB had allegedly failed to submit the application for extrajudicial foreclosure of mortgage to the proper clerk of court after payment of the filing fee, in contravention of Supreme Court Administrative Order No. 3 and Administrative Circular No. 3-98. In addition, respondents averred that the foreclosure sale was null and void as it was done at the lobby/main entrance of the RTC Hall of Justice, Naga City and not at the entrance of the Municipal Trial Court of Pili, Camarines Sur as published.[22]

PNB, on the other hand, posited that the invoked administrative order is not applicable as extrajudicial proceedings conducted by a notary public, as in the case at bar, do not fall within the contemplation of the directive.[23]

With regard to the variance of the venues of the auction sale as published in Vox Bikol and as recorded in the Provisional Certificate of Sale, PNB asserted that there was no violation of Act No. 3135[24] or of

the terms of the real estate mortgage contract,[25] as the sale of the mortgaged properties located in Camarines Sur were held in Naga City which is well within the territorial jurisdiction of said province.[26]

The Court of Appeals ruled in favor of herein respondents.[27] The Court of Appeals rendered a litany of lapses that the notary public committed in the conduct of the foreclosure proceedings which in its estimation had effectively undermined the soundness of the foreclosure sale.  Accordingly, the Court of Appeals held that the Provisional Certificate of Sale, upon which the issuance of the writ of possession was based, is fatally infirm, and that consequently, the writ of possession was not validly issued as the procedural requirements for its issuance were not satisfied.[28]

Thus, the Court of Appeals declared null and void the two assailed orders of the RTC of Pili for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.[29]

Aggrieved by the Decision, PNB filed the instant petition, arguing in the main that in nullifying the orders of the RTC of Pili, the Court of Appeals departed from the accepted and usual course of judicial proceedings as the issuance of writs of possession is purely ministerial on the part of the trial court.[30]

In their comment,[31] respondents point out that the instant petition should not be given due course as it is not sufficient in form and substance. Respondents proffered the following grounds, thus: (1) there was no special of attorney or Board Resolution or Secretary’s Certificate attached to the petition which could serve as basis for the petitioners’ signatory Domitila A. Amon to verify or attest to the truth of the allegations contained therein, in violation of existing laws and jurisprudence on the matter; (2) petitioners failed to move for a reconsideration of the assailed Decision of the Court of Appeals; (3) petitioners failed to disclose another similar case involving the same legal issues now pending in the Twelfth Division of the Court of Appeals, docketed as C.A. G.R. CV No. 73718, which is an appeal from an original petition for issuance of writ of possession filed by the same petitioner before the RTC of San Jose, Camarines Sur, Branch 58; (4) petitioner failed to furnish the Twelfth Division of the Court of Appeals a copy of the petition in C.A. G.R. No. 73718 pending therein, in violation of Section 5, Rule 7 of the 1997 Rules of Civil Procedure, which failure could lead to conflicting resolutions, between two divisions of the Court of Appeals and to the giving of inadequate information to the Supreme Court; and (5) the petition was only accompanied by Annexes A, B, C, D and E, which annexes do not satisfy the requirements laid down in Sections 4 and 5 of Rule 45 of the Rules of Court.[32]

Respondents also reiterate that the PNB in the conduct of the extrajudicial foreclosure proceedings did not comply with Administrative Order No. 3 and Administrative Circular No. 3-98, and that the notice of publication was not sufficient to justify the execution of the Provisional Certificate of Sale.[33]

Traversing the alleged procedural errors, PNB in its Reply[34] raise the following arguments:

First, Mrs. Domitila A. Amon had authority to sign and verify its petition under Board Resolution No. 15 dated 8 October 1997,[35] in line with her authority to prosecute and defend cases for and/or against the bank.[36]

Second, there are exceptions to the general rule that a motion for reconsideration must first be filed before elevating a case to a higher court. PNB insists that the Decision of the Court of Appeals is a patent nullity as it runs counter to the provisions of Act No. 3135 and existing jurisprudence stating that Administrative Order No. 3 covers judicial foreclosures.[37] As such, the filing of a motion for reconsideration prior to elevating the case on certiorari may be dispensed with.

Lastly, the case which according to respondents is not mentioned in the certification of non-forum shopping was commenced by respondents themselves, not PNB, and that the issues similar to those in the instant case have yet to be raised in respondents’ appeal to the Court of Appeals. Moreover, the subject matter and the properties involved in the other case are altogether different.[38]

There is merit in the petition.

A writ of possession is “a writ of execution employed to enforce a judgment to recover the possession of land. It commands the sheriff to enter the land and give possession of it to the person entitled under the judgment.”[39]

A writ of possession may be issued under the following instances:[40] (1)in  land registration proceedings under Section 17 of Act 496;[41] (2) in a judicial foreclosure, provided the debtor is in possession of the mortgaged realty and no third person, not a party  to the foreclosure suit, had intervened;  (3) in an extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No. 3135, as amended by Act No. 4118;[42] and (4) in execution sales (last paragraph of Section 33, Rule 39 of the Rules of Court).[43]

The present case falls under the third instance. Under Section 7 of Act No. 3135, as amended by Act No. 4118, a writ of possession may be issued either (1) within the one-year redemption period, upon the filing of a bond, or (2) after the lapse of the redemption period, without need of a bond.[44] Section 7 of Act No. 3135, as amended by Act No. 4118, provides:

SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if  the property is registered, or in special proceedings in case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.

Under the above-quoted provision, the purchaser in a foreclosure sale may apply for a writ of possession during the redemption period by filing an ex parte motion under oath for that purpose in the corresponding registration or cadastral proceeding in the case of property covered by a Torrens title. Upon the filing of such motion and the approval of the corresponding bond, the law also in express terms directs the court to issue the order for a writ of possession.[45]

A writ of possession may also be issued after consolidation of ownership of the property in the name of the purchaser. It is settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not redeemed during the period of one year after the registration of sale. As such, he is entitled to the possession of the property and can demand it any time following the consolidation of ownership in his name and the issuance of a new transfer certificate of title. In such a case, the bond required in Section 7 of Act No. 3135 is no longer necessary. Possession of the land then becomes an absolute right of the purchaser as confirmed owner. Upon proper application and proof of title, the issuance of the writ of possession becomes a ministerial duty of the court.[46] It was held, thus:

As the purchaser of the properties in the extra-judicial foreclosure sale, the PNCB is entitled to a writ of possession therefore. The law on extrajudicial foreclosure of mortgage provides that a purchaser in an extrajudicial foreclosure sale may take possession of the foreclosed property even before the expiration of the redemption period, provided he furnishes the necessary bond. Possession of the property may be obtained by filing an ex parte motion with the regional trial court of the province or place where the property is situated. Upon filing of the motion and the required bond, it becomes a

ministerial duty of the court to order the issuance of a writ of possession in favor of the purchaser. After the expiration of the one-year period without redemption being effected by the property owner, the right of the purchaser to the possession of the foreclosed property becomes absolute. The basis of this right to possession is the purchaser’s ownership of the property. Mere filing of an ex parte motion for the issuance of the writ of possession would suffice, and no bond is required.[47]

Any question regarding the regularity and validity of the sale, as well as the consequent cancellation of the writ, is to be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135, as amended by Act No. 4118. Such question is not to be raised as a justification for opposing the issuance of the writ of possession, since, under the Act, the proceeding is ex parte.[48]

In case it is disputed that there was violation of the mortgage or that the procedural requirements for the foreclosure sale were not followed,  Section 8 of Act No. 3135, as amended by Act No. 4118, provides, to wit:

SECTION 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Number Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the appeal.

The law is clear that the purchaser must first be placed in possession. If the trial court later finds merit in the petition to set aside the writ of possession, it shall dispose the bond furnished by the purchaser in favor of the mortgagor. Thereafter, either party may appeal from the order of the judge. The rationale for the mandate is to allow the purchaser to have possession of the foreclosed property without delay, such possession being founded on his right of ownership.[49]

It has been consistently held that the duty of the trial court to grant a writ of possession is ministerial. Such writ issues as a matter of course upon the filing of the proper motion and the approval of the corresponding bond. The court neither exercises its official discretion nor judgment.[50] The judge issuing the order following these express provisions of law cannot be charged with having acted without jurisdiction or with grave abuse of discretion.[51] If only to stress the writ’s ministerial character, we have, in previous cases, disallowed injunction to prohibit its issuance, just as we have held that the issuance of the same may not be stayed by a pending action for annulment of mortgage or the foreclosure itself.[52]

In the case at bar, PNB has sufficiently established its right to the writ of possession. It presented as documentary exhibits the contract of real estate mortgage[53] and the Provisional Certificate of Sale[54] on the face of which appears proof of its registration with the Registry of Deeds in Camarines Sur on 3 May 1999. There is also no dispute that the lands were not redeemed within one year from the registration of the Provisional Certificate of Sale.  It should follow, therefore, that PNB has acquired an absolute right, as purchaser, to the writ of possession. The RTC of Pili had the ministerial duty to issue that writ, as it did actually, upon mere motion, conformably to Section 7 of Act No. 3135, as amended.[55]

However on certiorari, the Court of Appeals declared null and void the orders of the RTC of Pili granting the writ of possession and denying respondents’ motion for reconsideration.  The Court of Appeals exhaustively discussed the reasons for such a declaration, noting the procedural errors of PNB in the conduct of the foreclosure proceedings which allegedly rendered the foreclosure sale and the Provisional Certificate of Sale of doubtful validity.

The Court of Appeals relied on the case of Cometa v. Intermediate Appellate Court[56] in holding that “for a writ of possession to be validly issued …. in an extrajudicial foreclosure proceeding, all the procedural requirements should be complied with. Any flaw afflicting its stages could affect the validity of its issuance.”[57] The Court of Appeals reproached the RTC of Pili Sur for granting the writ despite the existence of these alleged procedural lapses.

This was erroneous.  The judge to whom an application for writ of possession is filed need not look into the validity of the mortgage or the manner of its foreclosure. In the issuance of a writ of possession, no discretion is left to the trial court. Any question regarding the cancellation of the writ or in respect of the validity and regularity of the public sale should be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135.[58]

In fact, the question of the validity of the foreclosure proceedings can be threshed out in Civil Case No. RTC 2000-00074, pending before the RTC of Naga City, Branch 61, which was filed by respondents before PNB had filed a petition for the issuance of a writ of possession. The Court of Appeals should not have ruled on factual issues on which the RTC of Naga had yet to make any finding. Besides, a review of such factual matters is not proper in a petition for certiorari.

Having noted the foregoing, the Court dispenses with the need to discuss the soundness of the foreclosure proceedings, the authenticity of the Provisional Certificate of Sale, and the applicability of Supreme Court Administrative Order No. 3 and Administrative Circular No. 3-98. A review of the foregoing matters properly lies within the jurisdiction of  the RTC of Naga City, Branch 61.

It is worthy of note that the pendency of the case for annulment of the foreclosure proceedings is not a bar to the issuance of the writ of possession.[59] Pending such proceedings whose subject is the validity of the foreclosure proceedings, the purchaser in a foreclosure sale is entitled to the possession of property. Until such time the foreclosure sale is annulled, the issuance of the writ of possession is ministerial on the part of the RTC of Pili.[60]

In addition, the Court of Appeals’ reliance on the case of Cometa[61] is misplaced. The cited case involved the issuance of a writ of possession following an execution sale. The declaration therein that the issuance of said writ is dependent on the valid execution of the procedural stages preceding it does not contemplate writs of possession available in extrajudicial foreclosures of  real estate mortgages under Section 7 of Act No. 3135, as amended by Act No. 4118.

Considering that the RTC of Pili issued the writ of possession in compliance with the provisions of Act No. 3135, as amended, it cannot be charged with having acted in excess of its jurisdiction or with grave abuse of discretion. Absent grave abuse of discretion, respondents should have filed an ordinary appeal instead of a petition for certiorari. The soundness of the order granting the writ of possession is a matter of judgment with respect to which the remedy is ordinary appeal. An error of judgment committed by a court in the exercise of its legitimate jurisdiction is not the same as “grave abuse of discretion.” Errors of judgment are correctible by appeal, while those of jurisdiction are reviewable by certiorari.[62]

Palpably, the Court of Appeals exceeded its jurisdiction when it granted respondents’ petition for certiorari and set aside the orders dated 24 November 2000 and 24 January 2001 of the RTC of Pili in Spec. Proc No. P-1182, and also when it made a determination as to the validity of the foreclosure proceedings in clear violation of Act No. 3135. The contention, therefore, that the Court should not entertain the instant petition until a motion for reconsideration has been filed may not hold water where the proceeding in which the error occurred is a patent nullity. Thus, we hold that a motion for reconsideration may be dispensed with in the instant case.[63]

Anent the other procedural grounds for the denial of the instant petition, suffice it to say that PNB’s rejoinder has sufficiently refuted respondents’ assertions. We find and so hold that there was substantial compliance with the procedural requirements of the Court.

Although belatedly filed, the Resolution of the PNB Board amply demonstrates Mrs. Domitila A. Amon’s authority to sign and verify the instant petition. PNB likewise was not obligated to disclose the alluded case pending before the Court of Appeals as it was not initiated by the bank and, more importantly, the subject matter and the properties involved therein are altogether different.[64] It is well to remember at this point that rules of procedure are but mere tools designed to facilitate the attainment of justice. Their strict and rigid application which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be avoided.[65] In proper cases, procedural rules may be relaxed or suspended in the interest of substantial justice.[66] And the power of the Court to except a particular case from its rules whenever the purposes of justice require it cannot be questioned.[67]

WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated 11 June 2002 in CA-G.R. S.P. No. 63162 is REVERSED and SET ASIDE. The orders dated 24 November 2000 and 24 January 2001 of the Regional Trial Court of Pili, Camarines Sur, Branch 32 in Spec. Pro. No. P-1182 directing the issuance of a writ of possession in favor of PNB are AFFIRMED.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr.,

THIRD DIVISION

[G.R. No. 138567.  March 04, 2005]

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner vs. SPOUSES WILFREDO GATAL and AZUCENA GATAL, respondents.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

Before us for resolution is the petition for review on certiorari[1] assailing the Decision[2] dated January 18, 1999 of the Court of Appeals and its Resolution[3] dated April 27, 1999 in CA-G.R. SP No. 47736, “Development Bank of the Philippines, petitioner, vs. Hon. Raineldo T. Son, in his capacity as Presiding Judge of Branch 47, Regional Trial Court of Tagbilaran City, and Spouses Wilfredo Gatal and Azucena Gatal, respondents.”

Records show that sometime in 1993, spouses Wilfredo and Azucena Gatal, respondents, obtained a loan of P1,500,000.00 from the Development Bank of the Philippines (DBP), petitioner.  The loan was secured by a real estate mortgage over a commercial lot at No. 3 J.A. Clarin Street, Tagbilaran City, covered by Transfer Certificate of Title No. T-22697 of the Registry of Deeds, same city.  For failure of respondents to pay their loan, petitioner foreclosed the mortgage in December 1994.  In January 1996, the title of the lot was consolidated in the name of petitioner DBP.

On October 29, 1996, the property was offered for sale at public auction, but none of the bidders was able to meet the bid price ceiling.

On November 18, 1996, petitioner offered the property for negotiated sale on condition that the buyer must pay 20% of the selling price as down payment, the balance payable under the terms of the interested buyer.

Respondents then submitted their bid in the amount of P2,160,000.00 and made a deposit equivalent to 10% of the bid price.  However, another buyer, Jimmy Torrefranca, offered a bid of P2,300,000.00, or P140,000.00 higher than respondents’ bid.  Upon learning of Torrefranca’s offer, respondents wrote[4] petitioner requesting that they will match his bid.   But petitioner rejected respondents’ request because Torrefranca was already declared the preferred bidder.[5]

Aggrieved, respondents, filed with the Regional Trial Court (RTC), Branch 4, Tagbilaran City a complaint for injunction with prayer for a temporary restraining order and a preliminary injunction, docketed as Civil Case No. 5996.  The action sought to (a) declare the sale of the property to Torrefranca void and uphold respondents’ right of pre-emption; and (b) maintain the status quo between the parties prior to the filing of the suit.

On February 22, 1997, the RTC issued an Order granting respondents’ application for a preliminary injunction.

Meantime, on August 27, 1997, petitioner filed with the same RTC, Branch 47, a petition for issuance of a writ of possession, docketed as Civil Case No. 6097.  On October 31, 1997, the court issued a writ of possession in favor of petitioner.

On November 12, 1997, respondents filed with Branch 47 a motion to dismiss Civil Case No. 6097 and a motion to quash the writ of possession on the ground that there is another case (Civil Case No. 5996 for injunction) pending before Branch 4 involving the same parties, the same subject matter and the same legal issues.

On December 18, 1997, Branch 47 issued an Order dismissing Civil Case No. 6097 and recalling its earlier Order granting the writ of possession on the ground of litis pendentia.

Petitioner DBP filed a motion for reconsideration but was denied by Branch 47 in an Order dated February 10, 1998.

Thereafter, petitioner filed with the Court of Appeals a petition for certiorari assailing the Orders dated December 18, 1997 and February 10, 1998 of Branch 47, docketed as CA-G.R. SP No. 47736.  On January 18, 1999, the Appellate Court rendered its Decision dismissing the petition, thus upholding the challenged Orders.

Petitioner filed a motion for reconsideration but was denied in a Resolution dated April 27, 1999.

Hence, the instant petition.

The fundamental issue for our resolution is whether the Court of Appeals committed a reversible error in holding that the trial court correctly dismissed Civil Case No. 6097 on the ground of litis pendentia.

The petition is meritorious.

One of the grounds for dismissing an action is when there is litis pendentia as provided under Section 1(e), Rule 16, of the 1997 Rules of Civil Procedure, as amended, thus:

“SECTION 1. Grounds. – Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds:

x x x

(e) That there is another action pending between the same   parties for the same cause;

x x x.”

For litis pendentia to lie as a ground for a motion to dismiss, the following requisites must be present: (1) that the parties to the action are the same; (2) that there is substantial identity in the causes of action and reliefs sought; and (3) that the result of the first action is determinative of the second in any event and regardless of which party is successful.[6]

It is undisputed that both cases involve the same parties and the same property.  Civil Case No. 5996 is an action for injunction filed by respondents against petitioner DBP.  It seeks to declare the sale of the property to Torrefranca void and to order petitioner DBP “to respect respondents’ right of pre-emption;” and maintain the status quo between the parties.

Upon the other hand, Civil Case No. 6097 is a petition for the issuance of a writ of possession filed by petitioner DBP, being the purchaser of the lot at the public auction.

Clearly, the rights asserted and the reliefs sought by the parties in both cases are not identical.  Thus, respondents’ claim of litis pendentia is unavailing.

Section 33, Rule 39 of the same Rules provides:

“SECTION 33. Deed and possession to be given at expiration of redemption period; by whom executed or given. – If no redemption be made within one (1) year from the date of the registration of the certificate of sale, the purchaser is entitled to a conveyance and possession of the property; x x x.

Upon the expiration of the right of redemption, the purchaser or redemptioner shall be substituted to and acquire all the rights, title, interest and claim of the judgment obligor to the property as of the time of the levy.  The possession of the property shall be given to the purchaser or last redemptioner by the same officer unless a third party is actually holding the property adversely to the judgment obligor.”

Corollarily, Section 7 of Act 3135,[7] as amended by Act 4118, reads:

“Sec. 7.  In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without complying with the requirements of this Act.  x x x”

In Tan Soo Huat vs. Ongwico,[8] we ruled that “once a mortgaged estate is extrajudicially sold, and is not redeemed within the reglementary period, no separate and independent action is necessary to obtain possession of the property.  The purchaser at the public auction has only to file a petition for issuance of a writ of possession pursuant to Section 33 of Rule 39 of the Rules of Court.”

To give effect to the right of possession, the purchaser must invoke the aid of the court and ask for a writ or possession[9] without need of bringing a separate independent suit for this purpose.[10]

Records show that title to the property has been consolidated to petitioner DBP.  Thus, its petition for a writ of possession is in order.

Obviously, the RTC (Branch 47) erred when it granted respondents’ motion to dismiss and recalled the writ of possession it earlier issued.  Where, as here, the title is consolidated in the name of the mortgagee, the writ of possession becomes a matter of right on the part of the mortgagee, and it is a ministerial duty on the part of the trial court to issue the same.  The pendency of a separate civil suit questioning the validity of the sale of the mortgaged property cannot bar the issuance of the writ of possession.  The rule equally applies to separate civil suits questioning the validity of the mortgage or its foreclosure and the validity of the public auction sale.[11]

There being no litis pendentia, the Court of Appeals likewise erred in applying the doctrine of non-interference between courts of equal rank.   Under the said doctrine, a trial court has no authority to interfere with the proceedings of a court of equal jurisdiction.[12] When Branch 47 issued the writ of possession, it did not interfere with the jurisdiction of Branch 4 in the injunction case.  It merely exercised its ministerial function of issuing the writ of possession.

Finally, we do not find merit in respondents’ contention that petitioner violated the rule against forum shopping.  Forum shopping exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other.[13] This situation is not present here.

WHEREFORE, the petition is GRANTED.  The Decision of the Court of Appeals dated January 18, 1999 and its Resolution dated April 27, 1999 in CA-G.R. SP No. 47736 are REVERSED.

SO ORDERED.

Panganiban, (Chairman), Corona, and Garcia, JJ., concur.

Carpio-Morales, J., on leave.

Republic of the PhilippinesSUPREME COURT

EN BANC

G.R. No. 141524 September 14, 2005

DOMINGO NEYPES, LUZ FAUSTINO, ROGELIO FAUSTINO, LOLITO VICTORIANO, JACOB OBANIA AND DOMINGO CABACUNGAN, Petitioners, vs.HON. COURT OF APPEALS, HEIRS OF BERNARDO DEL MUNDO, namely: FE, CORAZON, JOSEFA, SALVADOR and CARMEN, all surnamed DEL MUNDO, LAND BANK OF THE PHILIPPINES AND HON. ANTONIO N. ROSALES, Presiding Judge, Branch 43, Regional Trial Court, Roxas, Oriental Mindoro, Respondent.

D E C I S I O N

CORONA, J.:

Petitioners Domingo Neypes, Luz Faustino, Rogelio Faustino, Lolito Victoriano, Jacob Obania and Domingo Cabacungan filed an action for annulment of judgment and titles of land and/or reconveyance and/or reversion with preliminary injunction before the Regional Trial Court, Branch 43, of Roxas, Oriental Mindoro, against the Bureau of Forest Development, Bureau of Lands, Land Bank of the Philippines and the heirs of Bernardo del Mundo, namely, Fe, Corazon, Josefa, Salvador and Carmen.

In the course of the proceedings, the parties (both petitioners and respondents) filed various motions with the trial court. Among these were: (1) the motion filed by petitioners to declare the respondent heirs, the Bureau of Lands and the Bureau of Forest Development in default and (2) the motions to

dismiss filed by the respondent heirs and the Land Bank of the Philippines, respectively.

In an order dated May 16, 1997, the trial court, presided by public respondent Judge Antonio N. Rosales, resolved the foregoing motions as follows: (1) the petitioners’ motion to declare respondents Bureau of Lands and Bureau of Forest Development in default was granted for their failure to file an answer, but denied as against the respondent heirs of del Mundo because the substituted service of summons on them was improper; (2) the Land Bank’s motion to dismiss for lack of cause of action was denied because there were hypothetical admissions and matters that could be determined only after trial, and (3) the motion to dismiss filed by respondent heirs of del Mundo, based on prescription, was also denied because there were factual matters that could be determined only after trial.1

The respondent heirs filed a motion for reconsideration of the order denying their motion to dismiss on the ground that the trial court could very well resolve the issue of prescription from the bare allegations of the complaint itself without waiting for the trial proper.

In an order2 dated February 12, 1998, the trial court dismissed petitioners’ complaint on the ground that the action had already prescribed. Petitioners allegedly received a copy of the order of dismissal on March 3, 1998 and, on the 15th day thereafter or on March 18, 1998, filed a motion for reconsideration. On July 1, 1998, the trial court issued another order dismissing the motion for reconsideration3 which petitioners received on July 22, 1998. Five days later, on July 27, 1998, petitioners filed a notice of appeal4 and paid the appeal fees on August 3, 1998.

On August 4, 1998, the court a quo denied the notice of appeal, holding that it was filed eight days late.5 This was received by petitioners on July 31, 1998. Petitioners filed a motion for reconsideration but this too was denied in an order dated September 3, 1998.6

Via a petition for certiorari and mandamus under Rule 65 of the 1997 Rules of Civil Procedure, petitioners assailed the dismissal of the notice of appeal before the Court of Appeals.

In the appellate court, petitioners claimed that they had seasonably filed their notice of appeal. They argued that the 15-day reglementary period to appeal started to run only on July 22, 1998 since this was the day they received the final order of the trial court denying their motion for reconsideration. When they filed their notice of appeal on July 27, 1998, only five days had elapsed and they were well within the reglementary period for appeal.7

On September 16, 1999, the Court of Appeals (CA) dismissed the petition. It ruled that the 15-day period to appeal should have been reckoned from March 3, 1998 or the day they received the February 12, 1998 order dismissing their complaint. According to the appellate court, the order was the "final order" appealable under the Rules. It held further:

Perforce the petitioners’ tardy appeal was correctly dismissed for the (P)erfection of an appeal within the reglementary period and in the manner prescribed by law is jurisdictional and non-compliance with such legal requirement is fatal and effectively renders the judgment final and executory.8

Petitioners filed a motion for reconsideration of the aforementioned decision. This was denied by the Court of Appeals on January 6, 2000.

In this present petition for review under Rule 45 of the Rules, petitioners ascribe the following errors allegedly committed by the appellate court:

I

THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONERS’ PETITION FOR CERTIORARI AND MANDAMUS AND IN AFFIRMING THE ORDER OF THE HON. JUDGE ANTONIO N. ROSALES WHICH DISMISSED THE PETITIONERS’ APPEAL IN CIVIL CASE NO. C-36 OF THE REGIONAL TRIAL COURT, BRANCH 43, ROXAS, ORIENTAL MINDORO, EVEN AFTER THE PETITIONERS HAD PAID THE

APPEAL DOCKET FEES.

II

THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN RULING AND AFFIRMING THE DECISION OR ORDER OF THE RESPONDENT HON. ANTONIO M. ROSALES THAT PETITIONERS’ APPEAL WAS FILED OUT OF TIME WHEN PETITIONERS RECEIVED THE LAST OR FINAL ORDER OF THE COURT ON JULY 22, 1998 AND FILED THEIR NOTICE OF APPEAL ON JULY 27, 1998 AND PAID THE APPEAL DOCKET FEE ON AUGUST 3, 1998.

III

THE HONORABLE COURT OF APPEALS FURTHER ERRED IN RULING THAT THE WORDS "FINAL ORDER" IN SECTION 3, RULE 41, OF THE 1997 RULES OF CIVIL PROCEDURE WILL REFER TO THE [FIRST] ORDER OF RESPONDENT JUDGE HON. ANTONIO M. MORALES DATED FEBRUARY 12, 1998 INSTEAD OF THE LAST AND FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH WAS RECEIVED BY PETITIONERS THROUGH COUNSEL ON JULY 22, 1998.

IV.

THE HONORABLE COURT OF APPEALS FINALLY ERRED IN FINDING THAT THE DECISION IN THE CASE OF DENSO, INC. V. IAC, 148 SCRA 280, IS APPLICABLE IN THE INSTANT CASE THEREBY IGNORING THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE AND THE FACT THAT THE SAID DECISION WAS RENDERED PRIOR TO THE ENACTMENT OF THE 1997 RULES OF CIVIL PROCEDURE.9

The foregoing issues essentially revolve around the period within which petitioners should have filed their notice of appeal.

First and foremost, the right to appeal is neither a natural right nor a part of due process. It is merely a statutory privilege and may be exercised only in the manner and in accordance with the provisions of law. Thus, one who seeks to avail of the right to appeal must comply with the requirements of the Rules. Failure to do so often leads to the loss of the right to appeal.10 The period to appeal is fixed by both statute and procedural rules. BP 129,11 as amended, provides:

Sec. 39. Appeals. – The period for appeal from final orders, resolutions, awards, judgments, or decisions of any court in all these cases shall be fifteen (15) days counted from the notice of the final order, resolution, award, judgment, or decision appealed from. Provided, however, that in habeas corpus cases, the period for appeal shall be (48) forty-eight hours from the notice of judgment appealed from. x x x

Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:

SEC. 3. Period of ordinary appeal. ― The appeal shall be taken within fifteen (15) days from the notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from the notice of judgment or final order.

The period to appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion for extension of time to file a motion for new trial or reconsideration shall be allowed. (emphasis supplied)

Based on the foregoing, an appeal should be taken within 15 days from the notice of judgment or final order appealed from. A final judgment or order is one that finally disposes of a case, leaving nothing more for the court to do with respect to it. It is an adjudication on the merits which, considering the evidence presented at the trial, declares categorically what the rights and obligations of the parties are; or it may be an order or judgment that dismisses an action.12

As already mentioned, petitioners argue that the order of July 1, 1998 denying their motion for reconsideration should be construed as the "final order," not the February 12, 1998 order which dismissed their complaint. Since they received their copy of the denial of their motion for reconsideration only on July 22, 1998, the 15-day reglementary period to appeal had not yet lapsed when they filed their notice of appeal on July 27, 1998.

What therefore should be deemed as the "final order," receipt of which triggers the start of the 15-day reglementary period to appeal ¾ the February 12, 1998 order dismissing the complaint or the July 1, 1998 order dismissing the MR?

In the recent case of Quelnan v. VHF Philippines, Inc.,13 the trial court declared petitioner Quelnan non-suited and accordingly dismissed his complaint. Upon receipt of the order of dismissal, he filed an omnibus motion to set it aside. When the omnibus motion was filed, 12 days of the 15-day period to appeal the order had lapsed. He later on received another order, this time dismissing his omnibus motion. He then filed his notice of appeal. But this was likewise dismissed ― for having been filed out of time.

The court a quo ruled that petitioner should have appealed within 15 days after the dismissal of his complaint since this was the final order that was appealable under the Rules. We reversed the trial court and declared that it was the denial of the motion for reconsideration of an order of dismissal of a complaint which constituted the final order as it was what ended the issues raised there.

This pronouncement was reiterated in the more recent case of Apuyan v. Haldeman et al.14 where we again considered the order denying petitioner Apuyan’s motion for reconsideration as the final order which finally disposed of the issues involved in the case.

Based on the aforementioned cases, we sustain petitioners’ view that the order dated July 1, 1998 denying their motion for reconsideration was the final order contemplated in the Rules.

We now come to the next question: if July 1, 1998 was the start of the 15-day reglementary period to appeal, did petitioners in fact file their notice of appeal on time?

Under Rule 41, Section 3, petitioners had 15 days from notice of judgment or final order to appeal the decision of the trial court. On the 15th day of the original appeal period (March 18, 1998), petitioners did not file a notice of appeal but instead opted to file a motion for reconsideration. According to the trial court, the MR only interrupted the running of the 15-day appeal period.15 It ruled that petitioners, having filed their MR on the last day of the 15-day reglementary period to appeal, had only one (1) day left to file the notice of appeal upon receipt of the notice of denial of their MR. Petitioners, however, argue that they were entitled under the Rules to a fresh period of 15 days from receipt of the "final order" or the order dismissing their motion for reconsideration.

In Quelnan and Apuyan, both petitioners filed a motion for reconsideration of the decision of the trial court. We ruled there that they only had the remaining time of the 15-day appeal period to file the notice of appeal. We consistently applied this rule in similar cases,16 premised on the long-settled doctrine that the perfection of an appeal in the manner and within the period permitted by law is not only mandatory but also jurisdictional.17 The rule is also founded on deep-seated considerations of public policy and sound practice that, at risk of occasional error, the judgments and awards of courts must become final at some definite time fixed by law.18

Prior to the passage of BP 129, Rule 41, Section 3 of the 1964 Revised Rules of Court read:

Sec. 3. How appeal is taken. — Appeal maybe taken by serving upon the adverse party and filing with the trial court within thirty (30) days from notice of order or judgment, a notice of appeal, an appeal bond, and a record on appeal. The time during which a motion to set aside the judgment or order or for new trial has been pending shall be deducted, unless such motion fails to

satisfy the requirements of Rule 37.

But where such motion has been filed during office hours of the last day of the period herein provided, the appeal must be perfected within the day following that in which the party appealing received notice of the denial of said motion.19 (emphasis supplied)

According to the foregoing provision, the appeal period previously consisted of 30 days. BP 129, however, reduced this appeal period to 15 days. In the deliberations of the Committee on Judicial Reorganization20 that drafted BP 129, the raison d’ etre behind the amendment was to shorten the period of appeal21 and enhance the efficiency and dispensation of justice. We have since required strict observance of this reglementary period of appeal. Seldom have we condoned late filing of notices of appeal,22 and only in very exceptional instances to better serve the ends of justice.

In National Waterworks and Sewerage Authority and Authority v. Municipality of Libmanan,23 however, we declared that appeal is an essential part of our judicial system and the rules of procedure should not be applied rigidly. This Court has on occasion advised the lower courts to be cautious about not depriving a party of the right to appeal and that every party litigant should be afforded the amplest opportunity for the proper and just disposition of his cause, free from the constraint of technicalities.

In de la Rosa v. Court of Appeals,24 we stated that, as a rule, periods which require litigants to do certain acts must be followed unless, under exceptional circumstances, a delay in the filing of an appeal may be excused on grounds of substantial justice. There, we condoned the delay incurred by the appealing party due to strong considerations of fairness and justice.

In setting aside technical infirmities and thereby giving due course to tardy appeals, we have not been oblivious to or unmindful of the extraordinary situations that merit liberal application of the Rules. In those situations where technicalities were dispensed with, our decisions were not meant to undermine the force and effectivity of the periods set by law. But we hasten to add that in those rare cases where procedural rules were not stringently applied, there always existed a clear need to prevent the commission of a grave injustice. Our judicial system and the courts have always tried to maintain a healthy balance between the strict enforcement of procedural laws and the guarantee that every litigant be given the full opportunity for the just and proper disposition of his cause.25

The Supreme Court may promulgate procedural rules in all courts.26 It has the sole prerogative to amend, repeal or even establish new rules for a more simplified and inexpensive process, and the speedy disposition of cases. In the rules governing appeals to it and to the Court of Appeals, particularly Rules 42,27 4328 and 45,29 the Court allows extensions of time, based on justifiable and compelling reasons, for parties to file their appeals. These extensions may consist of 15 days or more.

To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or motion for reconsideration. 30

Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from the Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial agencies31 to the Court of Appeals and Rule 45 governing appeals by certiorari to the Supreme Court.32 The new rule aims to regiment or make the appeal period uniform, to be counted from receipt of the order denying the motion for new trial, motion for reconsideration (whether full or partial) or any final order or resolution.

We thus hold that petitioners seasonably filed their notice of appeal within the fresh period of 15 days, counted from July 22, 1998 (the date of receipt of notice denying their motion for reconsideration). This pronouncement is not inconsistent with Rule 41, Section 3 of the Rules which states that the appeal shall be taken within 15 days from notice of judgment or final order appealed from. The use of the

disjunctive word "or" signifies disassociation and independence of one thing from another. It should, as a rule, be construed in the sense in which it ordinarily implies.33 Hence, the use of "or" in the above provision supposes that the notice of appeal may be filed within 15 days from the notice of judgment or within 15 days from notice of the "final order," which we already determined to refer to the July 1, 1998 order denying the motion for a new trial or reconsideration.

Neither does this new rule run counter to the spirit of Section 39 of BP 129 which shortened the appeal period from 30 days to 15 days to hasten the disposition of cases. The original period of appeal (in this case March 3-18, 1998) remains and the requirement for strict compliance still applies. The fresh period of 15 days becomes significant only when a party opts to file a motion for new trial or motion for reconsideration. In this manner, the trial court which rendered the assailed decision is given another opportunity to review the case and, in the process, minimize and/or rectify any error of judgment. While we aim to resolve cases with dispatch and to have judgments of courts become final at some definite time, we likewise aspire to deliver justice fairly.

In this case, the new period of 15 days eradicates the confusion as to when the 15-day appeal period should be counted – from receipt of notice of judgment (March 3, 1998) or from receipt of notice of "final order" appealed from (July 22, 1998).

To recapitulate, a party litigant may either file his notice of appeal within 15 days from receipt of the Regional Trial Court’s decision or file it within 15 days from receipt of the order (the "final order") denying his motion for new trial or motion for reconsideration. Obviously, the new 15-day period may be availed of only if either motion is filed; otherwise, the decision becomes final and executory after the lapse of the original appeal period provided in Rule 41, Section 3.

Petitioners here filed their notice of appeal on July 27, 1998 or five days from receipt of the order denying their motion for reconsideration on July 22, 1998. Hence, the notice of appeal was well within the fresh appeal period of 15 days, as already discussed.34

We deem it unnecessary to discuss the applicability of Denso (Philippines), Inc. v. IAC35 since the Court of Appeals never even referred to it in its assailed decision.

WHEREFORE, the petition is hereby GRANTED and the assailed decision of the Court of Appeals REVERSED and SET ASIDE. Accordingly, let the records of this case be remanded to the Court of Appeals for further proceedings.

No costs.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 156067             August 11, 2004

MADRIGAL TRANSPORT, INC., petitioner, vs.LAPANDAY HOLDINGS CORPORATION; MACONDRAY AND COMPANY, INC.; and LUIS P. LORENZO JR., respondents.

D E C I S I O N

PANGANIBAN, J.:

The special civil action for certiorari and appeal are two different remedies that are mutually exclusive; they are not alternative or successive. Where appeal is available, certiorari will not prosper, even if the ground therefor is grave abuse of discretion. Basic is the rule that certiorari is not a substitute for the lapsed remedy of appeal.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the February 28, 2002 Decision2 and the November 5, 2002 Resolution3 of the Court of Appeals (CA) in CA-GR SP No. 54861. The challenged Decision disposed as follows:

"WHEREFORE, in consideration of the foregoing premises, private respondents Lapanday and Lorenzo, Jr.’s Motion for Reconsideration dated 10 February 2000 is GRANTED. Accordingly, the Resolution dated 10 January 2000 is RECONSIDERED and SET ASIDE, thereby dismissing the Petition for Certiorari dated 10 September 1999."4

The assailed Resolution denied reconsideration.

The Facts

The pertinent facts are undisputed. On February 9, 1998, Petitioner Madrigal Transport, Inc. ("Madrigal") filed a Petition for Voluntary Insolvency before the Regional Trial Court (RTC) of Manila, Branch 49.5 Subsequently, on February 21, 1998, petitioner filed a Complaint for damages against Respondents Lapanday Holdings Corporation ("Lapanday"), Macondray and Company, Inc. ("Macondray"), and Luis P. Lorenzo Jr. before the RTC of Manila, Branch 36.6

In the latter action, Madrigal alleged (1) that it had entered into a joint venture agreement with Lapanday for the primary purpose of operating vessels to service the shipping requirements of Del Monte Philippines, Inc.;7 (2) that it had done so on the strength of the representations of Lorenzo, in his capacity either as chairman of the board or as president of Del Monte, Lapanday and Macondray; (3) that Macondray had thereafter been appointed -- allegedly upon the insistence of Lapanday -- as broker, for the purpose of securing charter hire contracts from Del Monte; (4) that pursuant to the joint venture agreement, Madrigal had purchased a vessel by obtaining a P10,000,000 bank loan; and (5) that contrary to their representations and guarantees and despite demands, Lapanday and Lorenzo had allegedly been unable to deliver those Del Monte charter hire contracts.8

On February 23, 1998, the insolvency court (RTC Branch 49) declared petitioner insolvent.9 On March 30, 1998 and April 6, 1998, Respondents Lapanday, Lorenzo and Macondray filed their respective Motions to Dismiss the case pending before the RTC Branch 36.10

On December 16, 1998, Branch 36 granted the Motion, for failure of the Complaint to state a cause of action. Applying Sections 32 and 33 of the Insolvency Law,11 the trial court opined that upon the filing by Madrigal of a Petition for Voluntary Insolvency, the latter lost the right to institute the Complaint for Damages. The RTC ruled that the exclusive right to prosecute the actions belonged to the court-appointed assignee.12

On January 26, 1999, petitioner filed a Motion for Reconsideration,13 which was later denied on July 26, 1999.14 Subsequently, petitioner filed a Petition for Certiorari with the Court of Appeals, seeking to set aside the December 16, 1998 and the July 26, 1999 Orders of the trial court.15 On September 29, 1999, the CA issued a Resolution requiring petitioner to explain why its Petition should not be dismissed outright, on the ground that the questioned Orders should have been elevated by ordinary appeal.16

On January 10, 2000, the appellate court ruled that since the main issue in the instant case was purely legal, the Petition could be treated as one for review as an exception to the general rule that certiorari was not proper when appeal was available.17 Respondents Lapanday and Lorenzo challenged this ruling through a Motion for Reconsideration dated February 10, 2000.18 The CA heard the Motion for Reconsideration in oral arguments on April 7, 2000.19

Ruling of the Court of Appeals

On February 28, 2002, the appellate court issued the assailed Decision granting Respondents Lapanday and Lorenzo’s Motion for Reconsideration and dismissing Madrigal’s Petition for Certiorari. The CA opined that an order granting a motion to dismiss was final and thus the proper subject of an appeal, not certiorari.20

Furthermore, even if the Petition could be treated as an appeal, it would still have to be dismissed for lack of jurisdiction, according to the CA.21 The appellate court held that the issues raised by petitioner involved pure questions of law that should be brought to the Supreme Court, pursuant to Section 2 of Rule 50 and Section 2(c) of Rule 41 of the Rules of Court.22

Hence, this Petition.23

The Issues

In its Statement of Issues, petitioner contends:

"I

The Honorable Court of Appeals committed egregious error by ruling that the order of the lower court which granted private respondents’ Motions to Dismiss are not proper subjects of a Petition for Certiorari under Rule 65.

‘A. Section 5, Rule 16 does not apply in the present case since the grounds for dismissal [were] petitioner’s purported lack of capacity to sue and its failure to state a cause of action against private respondents, and not any of the three (3) grounds provided under said provision, namely, res judicata, extinction of the claim, and Statute of Frauds.

‘B. Section 1 of Rule 41, which is the applicable provision in petitioner’s case, expressly proscribes the taking of an appeal from an order denying a motion for reconsideration or one which dismisses an action without prejudice, instead, the proper remedy is a special civil action under Rule 65.

‘C. A petition for certiorari under Rule 65 was correctly resorted to by petitioner from the dismissal order of the lower court, which had clearly acted with grave abuse of discretion amounting to lack of jurisdiction.

"II

The Honorable Court of Appeals committed serious error in ruling that it had no jurisdiction to entertain the Petition for Certiorari filed by petitioner before it.

‘A. Section 2, Rule 50 nor Section 2(c) and Section 2(c), Rule 41 find no application in the present case, since said rule contemplates of a case where an appeal is the proper remedy, and not where the appropriate remedy is a petition for certiorari where questions of facts and laws may be reviewed by the court a quo.

‘B. The court a quo erroneously concluded that it has no jurisdiction over the subject

matter of the petition based on the wrong premise that an appeal from the lower court’s dismissal order is the proper remedy by applying Section 2, Rule 50 and Section 2(c), Rule 41 of the Rules of Court."24

The Court’s Ruling

The Petition is unmeritorious.

First Issue:Remedy Against Dismissal of Complaint

The resolution of this case hinges on the proper remedy: an appeal or a petition for certiorari. Petitioner claims that it correctly questioned the trial court’s Order through its Petition for Certiorari. Respondents insist that an ordinary appeal was the proper remedy. We agree with respondents.

Appeal

Under Rule 41, Rules of Court, an appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by the Rules of Court to be appealable.25 The manner of appealing an RTC judgment or final order is also provided in Rule 41 as follows:

Section 2. Modes of appeal. —

(a) Ordinary appeal. — The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner.

(b) Petition for review. — The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in accordance with Rule 42.

(c) Appeal by certiorari. — In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45.26

An order or a judgment is deemed final when it finally disposes of a pending action, so that nothing more can be done with it in the trial court. In other words, the order or judgment ends the litigation in the lower court. Au contraire, an interlocutory order does not dispose of the case completely, but leaves something to be done as regards the merits of the latter.27

Petition for Certiorari

A petition for certiorari is governed by Rule 65, which reads:

Section 1. Petition for certiorari. — When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of its or his jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum shopping as provided in the third paragraph of Section 3, Rule 46.28

A writ of certiorari may be issued only for the correction of errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. The writ cannot be used for any other purpose, as its function is limited to keeping the inferior court within the bounds of its jurisdiction.29

For certiorari to prosper, the following requisites must concur: (1) the writ is directed against a tribunal, a board or any officer exercising judicial or quasi-judicial functions; (2) such tribunal, board or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law.30

"Without jurisdiction" means that the court acted with absolute lack of authority.31 There is "excess of jurisdiction" when the court transcends its power or acts without any statutory authority.32 "Grave abuse of discretion" implies such capricious and whimsical exercise of judgment as to be equivalent to lack or excess of jurisdiction; in other words, power is exercised in an arbitrary or despotic manner by reason of passion, prejudice, or personal hostility; and such exercise is so patent or so gross as to amount to an evasion of a positive duty or to a virtual refusal either to perform the duty enjoined or to act at all in contemplation of law.33

Appeal and Certiorari Distinguished

Between an appeal and a petition for certiorari, there are substantial distinctions which shall be explained below.

As to the Purpose. Certiorari is a remedy designed for the correction of errors of jurisdiction, not errors of judgment.34 In Pure Foods Corporation v. NLRC, we explained the simple reason for the rule in this light:

"When a court exercises its jurisdiction, an error committed while so engaged does not deprive it of the jurisdiction being exercised when the error is committed. If it did, every error committed by a court would deprive it of its jurisdiction and every erroneous judgment would be a void judgment. This cannot be allowed. The administration of justice would not survive such a rule. Consequently, an error of judgment that the court may commit in the exercise of its jurisdiction is not correct[a]ble through the original civil action of certiorari."35

The supervisory jurisdiction of a court over the issuance of a writ of certiorari cannot be exercised for the purpose of reviewing the intrinsic correctness of a judgment of the lower court -- on the basis either of the law or the facts of the case, or of the wisdom or legal soundness of the decision. 36 Even if the findings of the court are incorrect, as long as it has jurisdiction over the case, such correction is normally beyond the province of certiorari.37 Where the error is not one of jurisdiction, but of an error of law or fact -- a mistake of judgment -- appeal is the remedy. 38

As to the Manner of Filing. Over an appeal, the CA exercises its appellate jurisdiction and power of review. Over a certiorari, the higher court uses its original jurisdiction in accordance with its power of control and supervision over the proceedings of lower courts. 39 An appeal is thus a continuation of the original suit, while a petition for certiorari is an original and independent action that was not part of the trial that had resulted in the rendition of the judgment or order complained of. 40 The parties to an appeal are the original parties to the action. In contrast, the parties to a petition for certiorari are the aggrieved party (who thereby becomes the petitioner) against the lower court or quasi-judicial agency, and the prevailing parties (the public and the private respondents, respectively).41

As to the Subject Matter. Only judgments or final orders and those that the Rules of Court so declare are appealable.42 Since 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; or where there is no appeal or any plain, speedy or adequate remedy.43

As to the Period of Filing. Ordinary appeals should be filed within fifteen days from the notice of judgment or final order appealed from.44 Where a record on appeal is required, the appellant must file a notice of appeal and a record on appeal within thirty days from the said notice of judgment or final order.45 A petition for review should be filed and served within fifteen days from the notice of denial of the decision, or of the petitioner’s timely filed motion for new trial or motion for reconsideration. 46 In an appeal by certiorari, the petition should be filed also within fifteen days from the notice of judgment or final order, or of the denial of the petitioner’s motion for new trial or motion for reconsideration.47

On the other hand, a petition for certiorari should be filed not later than sixty days from the notice of judgment, order, or resolution.48 If a motion for new trial or motion for reconsideration was timely filed, the period shall be counted from the denial of the motion.49

As to the Need for a Motion for Reconsideration. A motion for reconsideration is generally required prior to the filing of a petition for certiorari, in order to afford the tribunal an opportunity to correct the alleged errors. Note also that this motion is a plain and adequate remedy expressly available under the law.50 Such motion is not required before appealing a judgment or final order.51

Certiorari Not the Proper Remedy if Appeal Is Available

Where appeal is available to the aggrieved party, the action for certiorari will not be entertained. Remedies of appeal (including petitions for review) and certiorari are mutually exclusive, not alternative or successive.52 Hence, certiorari is not and cannot be a substitute for an appeal, especially if one’s own negligence or error in one’s choice of remedy occasioned such loss or lapse. 53 One of the requisites of certiorari is that there be no available appeal or any plain, speedy and adequate remedy.54

Where an appeal is available, certiorari will not prosper, even if the ground therefor is grave abuse of discretion.

Second Issue:CA Jurisdiction

Petitioner was ascribing errors of judgment, not jurisdiction, in its Petition for Certiorari filed with the Court of Appeals. The issue raised there was the trial court’s alleged error in dismissing the Complaint for lack of cause of action. Petitioner argues that it could still institute the Complaint, even if it had filed a Petition for Insolvency earlier.55 As petitioner was challenging the trial court’s interpretation of the law -- posing a question of law -- the issue involved an error of judgment, not of jurisdiction. An error of judgment committed by a court in the exercise of its legitimate jurisdiction is not necessarily equivalent to "grave abuse of discretion."56

The instant case falls squarely with Barangay Blue Ridge "A" of QC v. Court of Appeals.57 In that case, the trial court granted the Motion to Dismiss on the ground of failure to state a cause of action. After the Motion for Reconsideration was denied, petitioner filed a Petition for Certiorari with the CA. The appellate court denied the Petition on the ground that the proper remedy was appeal. Holding that an error of judgment should be reviewed through an ordinary appeal, this Court upheld the CA.

The Dismissal -- a Final Order

An order of dismissal, whether correct or not, is a final order.58 It is not interlocutory because the proceedings are terminated; it leaves nothing more to be done by the lower court. Therefore the remedy of the plaintiff is to appeal the order.59

Petitioner avers that Section 5 of Rule 1660 bars the filing of an appeal when the dismissal is based on lack of cause of action. It adds that Section 5 limits the remedy of appeal only to dismissals grounded on prior judgments or on the statute of limitations, or to claims that have been extinguished or are unenforceable. We find this interpretation absurd.

The provision is clear. Dismissals on the aforesaid grounds constitute res judicata. However, such dismissals are still subject to a timely appeal. For those based on other grounds, the complaint can be refiled. Section 5, therefore, confirms that an appeal is the remedy for the dismissal of an action.

Citing Sections 1(a) and 1(h), Rule 41,61 petitioner further claims that it was prohibited from filing an appeal. Section 1(a) of the said Rule prohibits the filing of an appeal from an order denying a motion for reconsideration, because the remedy is to appeal the main decision as petitioner could have done. In fact, under Section 9, Rule 37, the remedy against an order denying a motion for reconsideration is to appeal the judgment or final order. Section 1(h) does not apply, because the trial court’s Order did not dismiss the action without prejudice.62

Exception to the Rule Not Established by Petitioner

We are not unaware of instances when this Court has granted certiorari despite the availability of appeal.63 Where the exigencies of the case are such that the ordinary methods of appeal may not prove adequate -- either in point of promptness or completeness, so that a partial if not a total failure of justice could result -- a writ of certiorari may still be issued.64 Petitioner cites some of these exceptions to justify the remedy it has undertaken with the appellate court,65 but these are not applicable to the present factual milieu.

Even assuming that the Order of the RTC was erroneous, its error did not constitute grave abuse of discretion. Petitioner asserts that the trial court should not have dismissed the Complaint or should have at least allowed the substitution of the assignee in petitioner’s stead.66 These alleged errors of judgment, however, do not constitute a despotic, capricious, or whimsical exercise of power. On the contrary, petitioner availed of certiorari because the 15-day period within which to file an appeal had already lapsed. Basic is the rule that certiorari is not a substitute for the lapsed remedy of appeal.

As previously stressed, appeal -- not certiorari -- was the correct remedy to elevate the RTC’s Order granting the Motion to Dismiss. The appeal, which would have involved a pure question of law, should have been filed with the Supreme Court pursuant to Section 2 (c) of Rule 41 and Section 2 of Rule 50, 67

Rules of Court.

WHEREFORE, this Petition is DENIED, and the challenged Decision and Resolution AFFIRMED.

Costs against petitioner.

SO ORDERED.

Corona and Carpio-Morales, JJ., concur.Sandoval-Gutierrez, J., on leave.

Republic of the PhilippinesSUPREME COURTManila

SECOND DIVISION

G.R. No. 138031             May 27, 2004

ANTONIO NAVARRO and GRAHMMS, INC., petitioners, vs.METROPOLITAN BANK & TRUST COMPANY, THE HON. COURT OF APPEALS, and THE HON. ZEUS C. ABROGAR (Presiding Judge of the Regional Trial Court of Makati City, Branch 150), respondents.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, as amended, assailing the Decision1 of the Court of Appeals, which affirmed the denial by the Regional Trial Court of Makati City, Branch 150, in Civil Case No. 94-2913, of the petitioners' appeal for non-payment of docket fees, as well as the appellate court's March 29, 1999 Resolution which denied the petitioners' motion for reconsideration.

The facts are undisputed:

On November 3, 1994, the private respondent Metropolitan Bank and Trust Company (respondent MBTC) filed with the RTC of Makati City a petition for the judicial foreclosure of the real estate mortgage executed by the petitioners in its favor.2 The case was docketed as Civil Case No. 94-2913 and was raffled to Branch 150 of the same court.

After due proceedings, the RTC rendered judgment on January 16, 1998,3 the dispositive portion of which reads:

WHEREFORE, the court hereby grants the right of the plaintiff bank to foreclose the properties belonging to defendant Antonio Navarro covered by TCT Nos. 155256, 155257, 155258 particularly described as follows:

…

to be sold at public auction the proceeds of which to be applied in payment of the P3,500,000.00 loan, plus interest and penalty charges until fully paid. In case of deficiency on the proceeds of the aforesaid sale, execution on the defendant's property shall be implemented. Likewise, 10% of the total amount due shall be awarded as attorney's fees.4

The petitioners received a copy of the Decision on February 10, 1998 and on February 18, 1998 filed a Motion for Reconsideration of the decision.5 On March 25, 1998, the trial court issued an Order denying the said motion.6 The petitioners received their copy of the order on April 7, 1998.

On April 14, 1998, the last day of the reglementary period, the petitioners filed with the RTC a Notice of Appeal7 from its January 16, 1998 Decision and March 25, 1998 Order. However, the petitioners failed to pay the requisite docket and other lawful fees.

On April 21, 1998, the respondent MBTC filed a Motion to Deny Due Course to Notice of Appeal with Motion for Execution8 on the ground that the notice of appeal was not timely filed. Acting on the motion, the RTC, while ruling in favor of the timeliness of the petitioners' notice of appeal, nevertheless denied the appeal for not being accompanied by the required docket fees. Hence, in its Order dated May 27, 1998,9 the RTC granted the motion of the respondents for the issuance of a writ of execution for the enforcement of the decision. The RTC held that:

… From the sequence of dates and events, it is clear that defendants filed their Notice of Appeal within the reglementary period from the date of their receipt of the denial of their motion for reconsideration since they had still seven days left to file an appeal. However, since Section 4, Rule 41 of the New Rules of Civil Procedure, states that:

"Within the period for taking an appeal, the appellant shall pay to the clerk of court which rendered the judgment or final order appealed from, the full amount of the appellate court docket and other lawful fees. Proof of payment of said fees shall be transmitted to the appellate court together with the original record or the record on appeal."

It is also incumbent upon the appellants to pay the required appeal fee within the reglementary period. Up to the present, the court has not yet received any evidence of payment of the appellate docket fee to be attached to the record of this case, in accordance with the New Rules, to the prejudice of the other party.

Wherefore, from the foregoing, the notice of appeal is hereby DENIED for not being accompanied by the required docket fees, and let a writ of execution be issued for the enforcement of the decision.

On June 2, 1998, the RTC correspondingly issued the Writ of Execution10 prayed for by the respondent MBTC.

On June 11, 1998, the counsel for the petitioners informed the court by letter that on June 9, 1998, he sent his messenger to the court to pay the docket fees on the notice of appeal but was refused by the receiving clerk.11 In a Letter-Response dated June 19, 1998, the trial court instructed the counsel for the petitioners, to wit:

In response to your letter dated June 11, 1998, please be informed that as a matter of policy, courts do not receive payments of docket fees. This should be made to the Office of the Clerk of Court, with only the official receipts and/or proofs of payment filed in court to be attached to the record of the case to be forwarded to the Court of Appeals. Moreover, the court has already resolved all pending incidents before it, the last one in its Order dated May 27, 1998 so that, if the receiving clerk refused receipt of the docket fee on the nature (sic) of appeal, it is only in consonance with the above-mentioned order.12

On June 29, 1998, the petitioner filed with the CA a petition for certiorari assailing the May 27, 1998 Order of the RTC for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.13 In their reply to the comment, the petitioners, for the first time, proffered to the appellate court an explanation for their admitted failure to pay the appellate docket fees within the prescribed reglementary period. The petitioners, thus, averred:

6. Petitioners' failure to pay the appellate docket fee is not without a valid explanation. At the time of the filing of Notice of Appeal, petitioners' counsel's lone secretary, without informing in advance the undersigned, decided to migrate to another country for "greener pasture," leaving the undersigned the responsibility to tend to all the cases in his office. The undersigned's operation was literally disabled and in shambles;

7. Thus, when the undersigned discovered this inadvertence, he immediately tried to remedy the situation and can only hope that this Honorable Court can understand the undersigned's predicament.14

On September 30, 1998, the CA promulgated its Decision dismissing the petitioner's appeal.15 The petitioner's motion for reconsideration16 and its supplement17 thereto was, likewise, denied by the appellate court in its Resolution dated March 29, 1999.18

Hence, the petition at bar.

The petitioners assail the decision of the CA grounded on the following:

A. THE APPEAL OF PETITIONER WAS DULY AND SEASONABLY PERFECTED; HENCE, THE HON. CA ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN RENDERING THE ASSAILED DECISION (ANNEX "M") THAT SUSTAINED THE ORDER OF THE RTC DENYING, DISALLOWING AND DISMISSING THE APPEAL;

B. THE ORDER [OF THE RTC] DIRECTING THE EXECUTION OF ITS JUDGMENT [BEFORE THE EXPIRY OF THE 90-DAY PERIOD FROM RECEIPT THEREOF BY THE PETITIONERS] IS PREMATURE, BECAUSE (1) THE COURT HAD LOST JURISDICTION OVER THE CASE UPON THE FILING OF THE NOTICE OF APPEAL AND (2) RULE 68 PROVIDES FOR THE PROCEDURE HOW TO ENFORCE A JUDGMENT IN A PETITION FOR FORECLOSURE;

C. THE HONORABLE COURT OF APPEALS ERRED IN SUSTAINING THE ORDER OF THE RTC THAT DISMISSED THE THIRD-PARTY COMPLAINT OF PETITIONER NAVARRO AGAINST THE ERRANT AND FRAUDULENT BRANCH MANAGER DANILO MENESES OF RESPONDENT METROBANK;

D. THE JUDGMENT BINDING THE CONJUGAL PROPERTY OF SPOUSES CLARITA PARAGAS AND ANTONIO NAVARRO ON THE ALLEGED DEBT OF THE HUSBAND IS AGAINST THE LAW;19

The petition is denied due course.

The petitioners contend that the appellate court erred in sustaining the RTC's denial of their notice of appeal on the ground of their failure to pay the docket and other legal fees. The petitioners aver that the payment of the said fees is not a prerequisite for the perfection of an appeal. They contend that having seasonably filed their notice of appeal from the RTC's January 16, 1998 Decision and March 25, 1998 Order, the appeal therefrom was deemed perfected; thus, divesting the RTC of jurisdiction over the case. Hence, when the RTC issued its March 25, 1998 Order, it had no jurisdiction to do so. The petitioners cited the rulings of this Court in Santos v. Court of Appeals20 and in Manila Mandarin Employees Union v. NLRC21 to bolster its stance.

We are not convinced. Time and time again, this Court has consistently held that the "payment of docket fees within the prescribed period is mandatory for the perfection of an appeal. Without such payment, the appeal is not perfected. The appellate court does not acquire jurisdiction over the subject matter of the action and the decision sought to be appealed from becomes final and executory."22

It bears stressing that appeal is not a right, but a mere statutory privilege.23 Corollary to this principle is that the appeal must be exercised strictly in accordance with the provisions set by law. Rule 41 of the Rules of Court provides that an appeal to the CA from a case decided by the RTC in the exercise of the latter's original jurisdiction shall be taken within fifteen (15) days from the notice of judgment or final order appealed from. Such appeal is perfected by filing a notice of appeal thereof with the court that rendered the judgment or final order and, by serving a copy of that notice upon the adverse party,24 and by paying within this same period the full amount of the appellate court docket and other lawful fees to the clerk of court.25

The payment of the docket fees within this period is a condition sine qua non to the perfection of the appeal. Contrary to the petitioners' predication, the payment of the appellate docket and other lawful fees is not a mere technicality of law or procedure. It is an essential requirement, without which the decision or final order appealed from would become final and executory as if no appeal was filed at all.

We have consistently ruled that litigation is not a game of technicalities and that every case must be prosecuted in accordance with the prescribed procedure so that issues may be properly presented and justly resolved.26 However, we have also ruled that rules of procedure must be faithfully followed except only when, for persuasive and weighting reasons, they may be relaxed to relieve a litigant of an injustice commensurate with his failure to comply with the prescribed procedure. Concomitant to a liberal interpretation of the rules of procedure should be an effort on the part of the party invoking liberality to adequately explain his failure to abide by the rules.27

Our ruling in this case is not antithetical to our ruling in La Salette College v. Victor Pilotin,28 viz:

Notwithstanding the mandatory nature of the requirement of payment of appellate docket fees, we also recognize that its strict application is qualified by the following: first, failure to pay those fees within the reglementary period allows only discretionary, not automatic, dismissal; second, such power should be used by the court in conjunction with its exercise of sound discretion in accordance with the tenets of justice and fair play, as well as with a great deal of circumspection in consideration of all attendant circumstances.

In Mactan Cebu International Airport Authority v. Mangubat, the payment of the docket fees was delayed by six (6) days, but the late payment was accepted, because the party showed willingness to abide by the Rules by immediately paying those fees. Yambao v. Court of Appeals, saw us again relaxing the Rules when we declared therein that "the appellate court may extend the time for the payment of the docket fees if appellant is able to show that there is a justifiable reason for … the failure to pay the correct amount of docket fees within the prescribed period, like fraud, accident, mistake, excusable negligence, or a similar supervening casualty, without fault on the part of the appellant."

In the present case, the petitioners failed to establish any sufficient and satisfactory reason to warrant a relaxation of the mandatory rule on the payment of appellate docket and other lawful fees. The explanation given by the petitioners' counsel for the non-payment was that his secretary, who migrated to another country, inadvertently failed to pay the docket and other fees when she filed the petitioners' notice of appeal with the court. The said counsel came to know of the inadvertence only when he received a copy of the RTC's May 27, 1998 Order which denied due course to the appeal for failure to pay the required docket fees. The explication deserves scant consideration. We have reviewed the records and find that the petitioners failed to show how and when their counsel's secretary left the country. Neither did the petitioners submit any explanation why their counsel failed to ascertain immediately after April 14, 1998 if the requisite appellate docket and other lawful fees had been paid by the said secretary before her departure.

Thus, putting the blame on the counsel's secretary for her failure to perfect the petitioners' appeal to the CA is unjustified. As aptly declared by the appellate court:

The reason given for movants' failure to pay the docket fees, i.e., that their counsel's employee had left his office has been debunked by the Supreme Court as "a hackneyed and habitual subterfuge employed by litigants who fail to observe the procedural requirements prescribed by the Rules of Court. (Lanting vs. Guevarra, 27 SCRA 974) The Supreme Court has also often repeated that the negligence of clerks which adversely affect the case handled by lawyers, is binding upon the latter." (Negros Stevedoring Co., Inc. vs. Court of Appeals, 162 SCRA 371.)29

Indeed, this Court has admonished law offices to adopt a system of distributing and receiving pleadings and notices, so that the lawyers will be promptly informed of the status of their cases. 30

Hence, the negligence of clerks which adversely affect the cases handled by lawyers is binding upon the latter.

IN LIGHT OF ALL THE FOREGOING, the petition is hereby DENIED. The assailed decision of the Court of Appeals is AFFIRMED. Costs against the petitioners.

SO ORDERED.

Quisumbing, (Acting Chairman), Austria-Martinez, and Tinga, JJ., concur.Puno, (Chairman), J., on official leave.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-31303-04 May 31, 1978

REPUBLIC OF THE PHILIPPINES, petitioner, vs.THE HONORABLE COURT OF APPEALS, ALFREDO V. DE OCAMPO, and OSCAR ANGLO, respondents.

Solicitor General Felix Q. Antonio and Assistant Solicitor General Dominador L. Quiroz for petitioner.

Eusebio V. Navarro, Eugenio G. Gemarino and Eusebio P. Navarro for respondent Alfredo V. de Ocampo.

Vicente F. Delfin and V. del Rosario & Associates for respondent Oscar Anglo.

SANTOS, J.:

An appeal by certiorari filed on December 5, 1969 by petitioner, Republic of the Philippines (Republic, for short), from the resolution of the Court of Appeals dated August 21, 1969 1 dismissing petitioner's appeal in CA-G. R. Nos. 40683-84-R, as well as from the resolution of the said Court dated November 14, 1969 2 denying petitioner's motion for reconsideration thereof

The relevant and essential factual and procedural — antecedents follow. Both Republic and respondents Alfredo V. de Ocampo and Oscar Anglo claim ownership over the same lots, i.e,, Nos. 817 and 2509 of the Sagay-Escalante Cadastre, Negros Occidental, subject matter of this litigation. The basis of Republic's claim is that said lots were bequeathed to the Bureau of Education (now Bureau of Public Schools) on September 21, 1926 by the late Esteban Jalandoni through his will. 3 Republic further alleged that the said parcels of land were already registered under the Torrens System "before 1919 in a cadastral case in the name of Meerkamp and Company" in whose favor Original Certificate of Title (OCT, for short) No. 370 was issued, that said company sold the lots to Esteban Jalandoni who was issued Transfer Certificate of Title (TCT, for short) No. 1251: that TCT No. 6014 was issued to the Bureau of Education when the subject property was bequeathed to it; and that as a matter of fact, a sugar quota (Plantation Audit No. 24-10) was issued for the lots under the name of the Bureau of Education. 4 The lots have a total area of 289.47 hectares. 5

Respondent de Ocampo, upon the other hand, predicates his claim on an application for registration of the same Lots Nos. 817 and 2509 in Land Registration Case No. N-4, LRC Rec. No. N-19196, wherein a decree of registration No. 105538 was issued over the lots, followed by the issuance in his name of OCT No. 576, on October 1, 1965. 6 He averred that the lots were unregistered lands belonging to and possessed by him, by virtue of a donation dated November 10, 1911 from one Luis Mosquera. 7

Respondent Anglo intervened in the case on February 21, 1966, having allegedly bought the same lots from respondent de Ocampo on January 6, 1966. TCT No. 42217 was issued to him (Anglo) on January 12, 1966. 8

Procedurally, the records show that the Bureau of Public Schools, then represented by the Provincial Fiscal of Negros Occidental initiated on December 24, 1958, a forcible entry and detainer case against

de Ocampo over Lots Nos. 817 and 2509. On appeal, the Court of First Instance of Negros Occidental dismissed the complaint (Civil Case No. 5353). 9

Then on June 29, 1960, de Ocampo filed an application for registration of the same two parcels of land in Land Registration Case No. N-4 LRC Rec. No. N-19196, entitled "Alfredo V. de Ocampo, Applicant, v. Republic of the Philippines, Oppositor Republic filed its opposition; in due time. 10

On May 2, 1961, Republic, represented by the Solicitor General, filed a complaint against de Ocampo with the Court of First Instance of Negros Occidental (Branch VII) for the recovery of possession of the subject lots, with prayer for the issuance of a writ of preliminary mandatory injunction, docketed therein as Civil Case No, 264 (6154), entitled "Republic of the Philippines v. Alfredo v. de Ocampo, Defendant, " 11 De Ocampo averred in his answer that the properties alleged to have been donated by Esteban Jalandoni to the then Bureau of Education were different from the properties involved in this case, the former being titled lands (TCT No. 1251) containing two million nine hundred and twelve thousand four hundred and seventy four square meters (2,912,474), while Lots Nos. 817 and 2509 applied for by de Ocampo and which Republic sought to recover were unregistered lands, and that granting, without admitting, that they are the same lands, the court no longer had jurisdiction over the subject matter of the action since the issue of possession over said lots was already decided by the Court of First Instance of Negros Occidental. 12

On May 26, 1961, a preliminary hearing was held before Branch IV of the Court of First Instance of Negros Occidental where the land registration case was pending, but inasmuch as the issues involved in both Civil Case No. 264 (6154) for recovery of possession and the land registration case were Identical, the parties agreed to a joint trial, this time before Branch VI I, Judge Jose D. Divinagracia, presiding, where the civil case was pending. 13

After a joint trial of the above-mentioned two (2) cases, the Court of First Instance rendered judgment on August 3, 1965, dismissing the complaint in Civil Case No. 264 (6154) and adjudging the registration of the subject two lots in the name of the then applicant de Ocampo. On October 1, 1966, OCT No. 576 was issued in his name. 14

It is admitted by Republic that it received a copy of the decision on August 13, 1965 15 but no appeal was taken therefrom. However, Republic later filed with the trial court on December 28, 1965, a "Petition for Relief from Judgment with Preliminary Injunction Pending Proceeding 16 (petition, for short) praying, among other things, that de Ocampo be restrained from enforcing the decision dated 3 August 1965, and that after the hearing, an order be issued declaring the decision to be not yet final add executory, and granting Republic the right to file a motion for reconsideration and/or appeal within the period granted, to commence upon receipt of the order.

The petition alleged inter alia that the Republic's failure to appeal was due to accident, mistake and/or excusable negligence, specifically, stating that its docket clerk, Cesar Salud, merely committed excusable negligence when he inadvertently attached the copy of the decision to the file of another case; that it was only on November 5, 1965, that Cesar Salud found the copy of the same; and that petitioner has a substantial cause of action in Civil Case No. 264 (6154) and a good and substantial defense in Land Registration Case No. N-4 Rec. No. N-19196.

An opposition to the petition was filed by respondent de Ocampo on February 5, 1966 17 on the ground that the same was filed beyond the reglementary period. The petition was, however, given due course on January 11, 1966. 18 On February 21, 1966, respondent Oscar Anglo filed a motion for intervention alleging that he bought the subject two (2) Lots Nos. 817 and 1509 from respondent de Ocampo on January 6, 1966 and that TCT No. 42217 of the Register of Deeds for Negros Occidental was issued to him (Anglo) on January 12, 1966. 19 He also filed an answer in opposition to Republic's petition for relief from judgment 20 on the grounds, among others, that the decree of registration and certificate of title had already been issued and that a writ of preliminary injunction will not lie to restrain enforcement of the decision of the trial court.

On June 6, 1966, after respondents filed their respective memoranda, the trial court dismissed the Republic's petition for lack of competent proof, pursuant to Section 6, Rule 38, of the Rules of Court which the court said required a hearing. 21

On July 25, 1966, petitioner Republic filed a motion for reconsideration of the aforesaid order dismissing its petition; 22 and on August 4, 1966, it filed a manifestation averring additional grounds in support of the motion for reconsideration. 23 Respondent Anglo and de Ocampo opposed the same. 24

On September 28, 1966, Republic filed an "Amended Petition for Relief from Judgment and/or Review of Decree with Preliminary Injunction 25 (Amended Petition, for short). In specific regard to the petition for review of the decree, Republic contended, inter alia, that actual fraud had been perpetrated by respondent de Ocampo in securing the lower court's decision ordering the registration of the lots in his name, as well as the issuance of the decree of registration and the corresponding certificate of title, on the grounds which, briefly restated. advert to respondent de Ocampo's alleged misrepresentations that the two parcels of land applied for by him in the land registration case were "different from the two parcels of land of the same lot numbers, technical descriptions and areas belonging to the Government, knowing such allegations to be false, the truth of the matter being that said parcels of land are the same property owned by the Government"; 26 that there was previous registration of the same parcels of land, Lots Nos. 817 and 2509, under the Torrens System in favor of Meerkamp and Company which later sold the same to Jalandoni who, in turn, gave the lots to the Bureau of Education as a legacy and that the Court of First Instance no longer had jurisdiction to decree again the registration of Lots Nos. 817 and 2509, in favor of respondent de Ocampo, in view of the earlier registration of the same lands in favor of Meerkamp and Company.

Additionally, Republic claimed that its counsel was not given notice of de Ocampo's motion and the corresponding order dated September 16, 1965, for the issuance of the decree of registration and the issuance of the decree itself by the Land Registration Commission, in violation of its constitutional rights to due process", 27 that it has also been "in continuous peaceful, adverse, open and public owner and possessor, in good faith and with just title" of the lots "deriving the fruits and products of said properties and appropriating them to the purpose and purposes they were intended for"; 28 that they were in fact declared for tax purposes; 29 that on April 11, 1927, the lands were leased for ten (10) years but the lease was amended several times to extend the same; 30 that on September 17, 1964, Republic's counsel filed a "Petition for an Order to Produce the Original Documentary Exhibits and Submit Same to the NBI for Examination, 31 Which petition was communicated to de Ocampo's lawyers, Atty. Gemarino and Garingalao, earlier on September 7, 1964; that they did not object or state that the originals were burned or lost; that it was only on September 28, 1964 that de Ocampo's lawyers revealed for the first time in their "Manifestation and Reply" that the purported originals were burned in the house of Atty. Gemarino on May 16, 1963; 32 and that the "supposed originals were fake and their alleged burning was false and these pretenses were intentionally resorted to only to evade the examination of the spurious documents by the NBI and as camouflage to hide their fraudulent character. 33

On October 4, 1966, the trial court set, aside its order of June 6, 1966, dismissing the petition for relief, 34 having found Republic's motion for reconsideration well-founded, and scheduled December 1 and 2, 1966, for Republic's witnesses to testify, and likewise gave respondents, a chance to oppose the amended petition. Respondents and Republic filed their opposition 35 and reply; 36 respectively. Republic alleged in the said reply that "(T)he lands in question and their incomes are used exclusively for a public purpose: public education. 37

In a subsequent hearing on June 6, 1967, the trial court ordered Republic to present its evidence in the absence of respondents, who objected thereto for lack of jurisdiction, the parcels of land having been already registered in the name of respondent de Ocampo and in fact transferred to an alleged buyer in good faith, the other private respondent, Anglo.

On August 30, 1967, the trial court rendered its decision on the Amended Petition 38 against Republic,

upon resolution of what it considered the "decisive" issue, i.e., that the allegations in the said petition did not constitute actual and extrinsic fraud which is the only ground available to review or reopen a decree in cadastral cases pursuant to Section 38 of Act 496. 39

On the other issues, the trial court found that it was through mistake, accident and excusable negligence that the decision of August 3, 1965 was not brought to the attention of Solicitor Emerito Salva "as it was inadvertently clipped to the record of another case". 40 However, while the petition for relief itself another case was filed within the reglementary period prescribed in Section 3, Rule 38, of the Rules of Court 41 the remedy of relief from judgment was no longer available since the decree, and later the title, were already issued in the name of respondent de Ocampo. 42 It also held that the amended petition was still legally available as it was filed within one (1) year after the issuance of the decree, pursuant to Section 38 of Act No. 496, "in case of actual fraud" and that it had jurisdiction to entertain the amended petition and to receive evidence in support thereof, 43 but it had to deny the relief prayed for on grounds already adverted to. In regard to respondent Anglo's claim that the petition for review was no longer tenable as against him because he was a purchaser in good faith, the trial court ruled that competent evidence to that effect should be submitted considering, among other things, that the case was pending when he acquired his interest. 44 Finally, it held that the fact that the Republic was not notified of the motion and the corresponding issuance of the decree and title was immaterial since petitions for issuance of decrees in cadastral cases are analogous to petitions for execution in ordinary cases and parties are not entitled to notice thereof as a matter of right. 45 Thus —

In the light of the decision of this Court dated August 3. 1965, Section 39 of Act No. 496 and the authorities cited ... this court is persuaded to conclude as it hereby holds, that the evidence adduced by the petitioner in this incident does not establish actual and constructive fraud which is the only kind of fraud that is considered a legal ground to review, reopen or set aside the decree which has already been issued in the name of Alfredo V. de Ocampo.

PREMISES CONSIDERED, the petition for Relief from Judgment and/or Review of Decree is hereby dismissed without pronouncement as to costs. 46

From the said decision, Republic appealed to the Court of Appeals, docketed therein as CA-G.R. Nos. 4083-84-R. Private respondents de Ocampo and Anglo moved to dismiss the appeal which was opposed by petitioner, Republic. 47 A supplemental motion to the same effect was later filed by respondent de Ocampo for failure of the record on appeal to show on its face that it was filed on time, 48 followed by an ex parte motion to consider the Solicitor General to have waived his right to oppose the said supplemental motion to dismiss and that the case be submitted for resolution. 49 A new party, Salvacion Marañon, sought to intervene in the case and also filed a motion to dismiss the appeal before respondent appellate court.

In its minute resolution of August 21, 1969, 50 the Court of Appeals resolved —

(1) To DISMISS ... the appeal ... for failure of the record on appeal to show on its face that the record on appeal was filed within the period fixed by the Rules (Secs. 3 & 6, Rule 41, Sec. 1[a] & [b), Rule 50, Rules of Court), it appearing that appellant's motion for extension of 20 days from October 14, 1967 to file the record on appeal was never granted by the lower court (there being no showing to that effect in the record on appeal); and even if there was such an order granting it, the extension asked for would have expired on November 3, 1967 and, therefore, the record on appeal filed on November 9,1967 was filed six days late ...; and

(2) to DENY the motion to intervene of intervenor Salvacion Maranon following the doctrine enunciated in Hant, et al. vs. O'Leary, et al., page 993. At any rate, the purpose of intervening; which is to join the appellees in their motion to dismiss the appeal of the appellant, has already been served by the dismissal of the instant

appeal.

On September 11, 1969, Republic filed a motion for reconsideration 51 but on November 14, 1969, the Court of Appeals —

RESOLVED TO DENY the said motion for reconsideration. Killings in the pertinent cases are equally applicable to the Republic of the Philippines where the latter is the appellant that recourse to 'the original records is immaterial because it is what appears in the record on appeal that is essential. 52

Hence, this appeal by certiorari on the following assignment of errors, i.e., that the Court of Appeals erred in not holding that — (1) prescription, the statute of limitations and laches do not lie against the Republic, as a sovereign state, and that, it is not bound or prejudiced by the faults or mistakes of its officers and employees, (2) the dismissal of Republic's appeal is not in accordance with the liberal construction of the Rules of Court and the promotion of its object to assist the parties in obtaining just, speedy and inexpensive determination of actions and proceedings; (3) the trial court has no jurisdiction to entertain the application for land registration of Alfredo V. de Ocampo on the ground that Lots Nos. 817 and 2509 were already registered under the Torrens System before 1919; (4) the dismissal of Republic's appeal placed technicality over, substance; and (5) the dismissal of Republic's appeal will abet and promote land grabbing. 53

Private respondents in turn stress in their respective briefs, inter alia, (1) that Republic shed its immunity and sovereignty and assumed the garb of an ordinary private litigant when it initiated an action for forcible entry and detainer case over Lots Nos. 817 and 2509 against respondent de Ocampo. filed I s opposition in the land registration case, and instituted Civil Case No. 264 (6154); 54

(2) that Republic should comply with the mandatory and jurisdictional requirements of the rules on perfection of appeals, citing cases; 55 that there cannot be one set of Rules for ordinary private litigants, and another set for the State otherwise the set-up will result in the denial of due process and equal protection of law to private litigants as well as chaos in the administration of justice; 56 and (4) that public policy and sound practice demand that, at the risk of occasional errors, judgments of courts should become final at some definite date fixed by the, law. 57

The threshold and, in the ultimate analysis, the decisive issue raised by this petition is whether the dismissal by respondent. Court of Appeals of Republic's appeal from the decision of the trial court denying its Amended Petition, is not proper and should be set aside as contended by Republic, or correct and should be maintained, as argued by respondents. The issue — framed in the context of the suit's true significance to the parties involved in this protracted proceeding and in the light of the value the protagonists attach to the outcome of the litigation — may be stated thus-Should the government, represented by petitioner Republic not be permitted by respondent Court of Appeals to show that it stands Lo lose thru fraudulent machinations close to three hundred (300) hectares of prime sugar land to the private respondents who have allegedly secured their titles to these holdings long after the same parcels of land were already titled in the name of the original owner, Meerkamp and Company and, therefore, the trial court's action in directing the issuance of the title in the name of respondent de Ocampo is null and void ab initio and of no legal effect, simply because petitioner Republic failed to show in its record on appeal that it was perfected on time and that it actually filed its record on appeal six (6) days late?

Respondent Court of Appeals, in a very simplistic approach, which disregards the substantive merits of the appeal dismissed, the same on the grounds that the record on appeal did not show on its face that it was perfected on time, and, additionally, that even if it were to be assumed that the motion for extension of 20 days to file the record on appeal was indeed granted, the appeal was still not perfected on time because the record on appeal was filed November 9, six (6) days after November 3, 1967, when petitioner's requested extension expired.

If respondents' line of reasoning were to be upheld, the dismissal of the appeal may be sustained. For,

as stated, in its notice of appeal filed on October 12, 1967, petitioner Republic received a copy of the decision of the trial court on September 14, 1967. 58 Therefore, it had until October 14, 1967 within which to file its record on appeal. The record on appeal does not show that the extension prayed for was granted, but the lower court in its order of December 4, 1967 approved the same, as there was no opposition to its approval. There is also no mention in the order approving the record on appeal as to whether or not it was filed on time. The record on appeal is, however, dated November 9,1967. Assuming then that this was also the actual filing date, and on the further assumption that the 20day extension was impliedly granted with its approval, it was still filed six (6) days late, after the requested extension expired on November 3, 1967. 59 And, as to the legal ground for the dismissal on the foregoing bases, this Court has repeatedly construed Section 6, Rule 41, of the Rules of Court 60 as mandatory and jurisdictional in nature, non-compliance with which justifies the dismissal of the appeal. 61

However, a consideration in depth of the unique and peculiar facts attendant to this case and the procedural and substantive implications of the dismissal of the appeal now sought to be reviewed and reconsidered; and a due and proper regard to the merits of the case rather than a fascile reliance on procedural rules, compel this Court to reverse and set aside the dismissal of Republic's appeal by respondent Court of Appeals for the following reasons, viz: (1) Should Republic prove that the subject Lots Nos. 817 and 2509 were registered in favor of Meerkamp and Company before 1919, the trial court's decision decreeing again the same lots in the name of respondent de Ocampo in 1965 is null and void ab initio for lack of jurisdiction and a fatal infirmity necessarily attaches to the said decision; (2) There are strong and substantial allegations of fraudulent misrepresentations and machinations employed by respondent de Ocampo in securing his title Relevant to this is The express finding of the trial court that The Petition for Relief was filed within the reglementary period prescribed in Section 3, Rule 38 of the Rules of Court, and the Amended Petition was filed within one year from issuance of the decree. If the appeal is dismissed without considering its merits, the above periods will resumed to run and will lapse, and the reliefs sought herein will be forever foreclosed to Republic; (3) Assuming that respondents can invoke, the material data rule, and/or the fact that Republic's appeal was filed out of time because the record On appeal was submitted to the Court six (6) days beyond the requested extension of 20 days, it always in the power of this Court to suspend its rules or to except certain cases therefrom whenever courtervailing considerations so warrant; and (4) This Court, is not powerless to prevent gross miscarriage of Justice, which would follow if Republic's appeal is dismissed — since it stands to lose close to 300 hectares of prime sugar land already titled in its name and devoted to educational purposes — if it is true that the land registration court was without jurisdiction to issue a Second decree of registration in favor of respondent de Ocampo and, if it is also true that fraudulent misrepresentations and machinations attended respondent de Ocampo's application for registration and likewise prevented Republic from exposing the fake exhibits, on the basis of which he secured his title. 62

1. Specifically both Republic and respondents claim ownership over the same Lots Nos. 811 and 2509, hence, this controversy. If Republic's contentions are true that the said lots had been registered twice, with OCT No. 370 issued in favor of Meerkamp and Company before 1919 and another, OCT No. 576, issued in the name of respondent de Ocampo in 1965 — or some forty-six (46) years later — then the decision of the trial court, sitting as land registration court, is null and void ab initio and suffers from a fatal infirmity, which is also a ground for the review of a decree of registration. provided no innocent purchaser for value will be prejudiced. 63

It is very significant in this connection that respondent de Ocampo admitted the donation of Jalandoni in favor of the Bureau of Education, but averred that the lots so donated were titled (TCT No. 1251), 64

while Lots Nos. 817 and 2509 applied for by him in the land registration case were "unregistered. 65

Yet, both parties claim to be the owners of the same Lots Nos. 817 and 2509. Respondent de Ocampo also gave the area of the lots covered by TCT No. 1251, in the name of Jalandoni, as two million nine hundred and twelve thousand four hundred and seventy four (2,912,474) square meters, or 291 hectares plus. 66 Coincidentally, Lots Nos. 817 and 2509 claimed by Republic have a total area of

289.47 hectares, 67 or only about two (2) hectares less. These factors, brought to light by respondent de Ocampo himself, cannot simply be ignored in reaching the conclusion that the disputed resolutions of respondent Court of Appeals be reversed.

It is also important to advert to the documentary exhibits adduced by Republic in the hearing of the Amended Petition below, one of which was a certification dated November 8, 1952 signed by the Register of Deeds of Negros Occidental, stating that on May 13, 1919, there was registered a sale executed by Meerkamp and Company in favor of Esteban Jalandoni and as a result OCT No, 370 in the name of the Company was cancelled and TCT No. 1251 was issued to Jalandoni; that TCT No. 1251 was later cancelled by virtue of the will of Jalandoni leaving the parcel of land to the then Bureau of Education; that TCT No. 6014 was correspondingly issued to the Bureau of Education; and that lease contracts were annotated in TCT No. 6014 in favor of Francisco Copper, executed by the Division Superintendent of Schools. 68 However, the above certification does not mention the lot numbers, and no certificates of title were exhibited in court, the incumbent Register of Deeds having declared that the titles could not be found in his office. 69

The trial court also made the express finding that the alleged deed of donation by Luis Mosquera in favor of respondent de Ocampo, dated November 10, 1911, acknowledged before one Notary Public John Boardman does not appear in his notarial book which is on file in the Bureau of Record Management, Manila, from October 16, 191 1 to May, 1913. 70

The Provincial Assessor of Negros Occidental likewise issued a certification, dated November 29, 1966, stating that Lots Nos. 817 and 2509 were never declared in the name of Mosquera. 71 His later certification states that the said lots were assessed in the name of the Bureau of Education, and that the technical descriptions in the Bureau of Lands records show that the same lots were in the name of Meerkamp and Company. 72

Authorities are in agreement that a land registration court is without jurisdiction to decree again the registration of land already registered in an earlier registration case, and that the second decree entered for the same land is null and void. 73 If there is no valid and final judgment by the land registration court to speak of, then the filing of an admittedly late appeal from the decision denying the Amended Petition would be immaterial and of no moment, in so far as these proceedings are concerned in view of the congenitally fatal infirmity that attaches to the main decision. decreeing for the second time the registration of the same Lots Nos. 817 and 2509 in favor of respondent de Ocampo, despite an earlier registration in the name of Meerkamp and Company. Jurisprudence holds that the appellant's failure to perfect an appeal on time, "although ordinarily decisive, carries no persuasive force" and may be completely disregarded if the trial court acted without jurisdiction. 74 As held in United States v. Jayme, 75 lack of jurisdiction. la jurisdiction over the subject matter is fatal and may be raised at any stage of the proceedings. Jurisdiction is conferred by the sovereign authority which organizes the court; it is given only by law, and in the manner prescribed by law and an objection on the lack of such jurisdiction cannot be waived by the parties. The infirmity cannot be cured by silence, acquiescence, or even by express consent, 76 or by win of the parties. 77

In the interest of justice, which is the paramount consideration in all litigations, and especially considering the cloud surrounding the decision of the land registration court, as aforesaid, the more judicious course to follow is for respondent Court of Appeals to entertain Republic's appeal, not to dismiss it, so that if it finds the same to be meritorious, and the decision appealed from is reversed, the correct Identity of the lots that were donated to the then Bureau of Education (admitted by respondent de Ocampo), as well as those parcels of land applied for by said respondent in the land registration case, may already be ascertained once and for all, in the trial court below, and in this same proceeding, without Republic having to resort to relitigation to prove its claim. Further proceedings will not prejudice respondents. On the contrary, the cloud over their titles, OCT No. 576 and TCT No. 42217. issued in favor of respondents de Ocampo and Anglo, respectively, will be removed if Republic's claim is not true.

2. There is a serious charge, which is also crucial to the issue between the parties, that respondent de Ocampo used fraudulent misrepresentations and machinations in securing his title, Firstly, there was the averment in his Answer in Civil case No, 264 (6154) for recovery of possession of the subject lots by Republic, which case was jointly tried with the land registration case,, that the properties alleged to have been donated by Jalandoni to the then Bureau of Education were "different" from Lots Nos. 817 and 2509, applied for by him, the Jalandoni holdings being "titled" lands, while Lots Nos. 817 and 2509 were "unregistered" lands. The then applicant de Ocampo even cited TCT No. 1251 of the Register of Deeds of Negros Occidental as the title covering the lots in the name of Jalandoni, further stating that the lands donated by him to the Bureau of Education had an area of 2,912,474 square meters, 78 or 291 hectares plus. Lots Nos. 817 and 2509 have a total area of 289.47 hectares 79 or a difference of only 2 hectares, more or less. The coincidence in area is highly significant since both claim to be the owners of the same lots. Secondly, certain documents which were presented as exhibits by respondent de Ocampo, on the basis of which he secured OCT 576 in his name, were withdrawn from the files of the trial court, and, thereafter were allegedly lost by fire. As a result, Republic's pending motion to have the said exhibits produced for examination of their genuineness by the NBI could not be made. Unless successfully traversed, the inference is strong that respondents did not want a full disclosure of the true nature of the same by the NBI and that the truth had been suppressed. The inference is also buttressed by the Republic's claim that despite their counsel's knowledge of Republic's intention to file the said motion which was orally communicated to them earlier, the alleged loss was not revealed to Republic's counsel. 80

If the charge is true, there is the element of wilfull intent to deprive Republic of just rights which constitutes the essential characteristics of actual — as distinguished from legal — fraud. 81 As Justice Fernando stressed, "Nicolas v. Director of Lands 82 should erase any doubt as to the extreme judicial displeasure at this species of fraud of an applicant seeking to include as a part of the property to which title is sought land actually in possession of another. 83 This is very relevant in view of the denial of the Amended Petition which was premised on the conclusion that allegations in the said petition did not constitute actual and extrinsic fraud and which, according to the trial court, is "the only ground" available to review or reopen the decree. Of related significance is the express finding of the trial court that the original Petition for Relief was filed within the reglementary period pursuant to Section 3, Rule 38 of the Rules of Court, and the Amended Petition was filed within one year from issuance of the decree. For, if the appeal is dismissed — notwithstanding allegations of fraud which appear to be supported by the evidence adduced during the hearing of the Amended Petition below — the appealed decision will become final and executory, and the aforesaid periods will lapse, foreclosing forever to Republic the reliefs prayed for in the Amended Petition. Although Republic may seek to recover the lots in a different action that may still be legally available to it after the appeal is dismissed, that recourse will involve not only a re- litigation and, therefore. multiplicity of suits, but will also entail the risk that subject lots may be disposed of to innocent purchasers for value to put them beyond recovery. As it is, the other respondent, Anglo, has already intervened. alleging that he bought the same lots from respondent de Ocampo on January 6, 1966, and that TCT No. 42217 was in fact issued to him. 84 A new party, Salvacion Marañon, also sought to intervene in the case and filed in respondent Court of Appeals a motion to dismiss Republic's appeal before the said Court. 85

Finally, We held in Reyes, et al. v. Borbon, et al. 86 "(W)hen the attention of the Court of Land Registration is called to the fact that the same land has been registered in the name of two different persons, it is the duty of said court to order an investigation of that fact and that should be done even without requiring the parties to show that a fraud has been committed in during the double registration. When it is established that the same has been registered in the name of two different person the titile should remain in the name of the person securing the first registration." This Court further held that " (T)he very purpose of the Torrens System would be destroyed if the same land may be subsequently brought under a second action for registration. 87

3. The foregoing overriding considerations then — the alleged lack of jurisdiction and the alleged fraudulent misrepresentations and machinations, which, buttressed by strong evidence, can nullity the

second registration and/or set aside OCT No. 576 issued to respondent de Ocampo — taken in relation with the procedural and substantive implications which could and would arise if the appeal were dismissed, namely, the risk that the holdings may be transacted to third parties and the fact that Republic's action to recover tile holdings would give rise to multiplicity of suits — compel Us to conclude that the only recourse — in the interest of just and expeditious proceedings. considering that these have been pending for close to twenty (20) years now — is to suspend Our rules and/or to except this case from their operation. For when the operation of the Rules of will lead to an injustice We have, in justifiable instances, resorted to this extraordinary remedy to prevent it. 88 The Rules have been drafted with the primary objective of enhancing fair trials and expediting justice. 89 As a corollary, if their application and operation tend to subvert and defeat instead of promote and enhance it, their suspension is justified. In the words of Justice Antonio P. Barredo in his concurring opinion in Estrada v. Sto. Domingo, "(T)his Court, through the revered and eminent Mr. Justice Abad Santos, found occasion in the case of C Viuda de Ordoveza v. Raymundo, to lay down for recognition in this jurisdiction the sound rule in the administration of justice holding that 'it is always in the power of the court (Supreme Court) to suspend its own rules or to except a particular case from its operation, whenever the purposes of justice required it ... 90

Exceptions to the operation of the mandatory and jurisdictional character of the rules on perfection of appeals are to be noted in Sarmiento v. Salud, et al., 91 penned by Justice J.B. Reyes, Dequito v. Lopez 92 and Carillo v. Allied Workers Association of the Philippines 93 both written for the Court by Justice E. M. Fernando, decided years after the Revised Rules of Court took effect in January, 1964. In the Sarmiento case, the late appeal was allowed on the ground of laches on the part of the appellees, the filing of the motion to dismiss having taken place six (6) years after the brief for appellees was filed, and after the case was submitted for decision. This, according to the Court, "constitutes a unique instance of laches without comparable precedent in the records of the Court. 94 The Dequito and Carillo cases, upon the other hand, took into account the fact that labor cases were involved. Justice Fernando expressly noted in the Dequito case that "in the light of the constitutional as well as codal and statutory mandates, there being an explicit command of protection to labor as well as the promotion of social justice," 95 the motion to dismiss the late appeal which was "filed much too late" hardly deserved sympathy or consideration. 96 In the Carillo case, no question whatsoever as to the late appeal was raised, hence, "it would seem that whatever right to contest the jurisdiction could have been availed of is by now no longer in existence. 97 Continuing, Justice Fernando stated that "Social justice would be a meaningless term if in a situation like the present, an element of rigidity would be affixed to procedural precepts and made to recover the matter. Flexibility should not be ruled out. Precisely, what is sought to be accomplished by such a fundamental principle expressly so declared by the Constitution is the effectiveness of the community's effort to assist the economically underprivileged." The responsibility to protect labor is incumbent "not only on the legislative and executive branches but also on the judiciary, to translate this pledge into a living reality. 98

While the above exceptions are predicated on different grounds, they nevertheless support the view that the rigid adherence to the rules on perfection of appeals may and should be relaxed where compelling reasons so warrant. The grounds invoked in this case — not only lack of jurisdiction but gross injustice itself — more than justify the exception — considering further that the delay in the perfection of the appeal involved six (6) days only.

4. Finally, enshrined in our legal and judicial annals is the maximum Chat no person should enrich himself at the expense or prejudice of others. 99 Courts should not be used as instruments Lo disregard this elemental and basic norm — which is the essence of justice and fair play. The whole trust of our laws on civil relations enjoins all those who come before the courts of justice to observe true faith and candor in their dealings with one another — the government included. 100 The commendable and determined efforts on the part of the citizenry to fashion a New Society rid of graft, corruption and the persistent malaise of land grabbing, will be set back, if the subject lots — consisting of close to 300 hectares which are devoted to educational purposes — have indeed been wrongfully titled to respondent de Ocampo, Happily, We can at this stage still prevent this, if true, by setting aside the

dismissal of Republic's appeal and according the parties the opportunity in this proceeding, and without further need to re-litigate, to terminate this litigation, which has been pending for close to twenty (20) long years — in fairness to both parties.

PREMISES CONSIDERED, the resolution of the Court of Appeals, dated August 21, 1969, dismissing the appeal, as well as its resolution of November 14, 1969, denying petitioner Republic's motion for reconsideration in CA G.R. Nos. 40683-84 are hereby SET ASIDE. The case is remanded to the said Court to give due course to and consider on its merits Republic's appeal. No costs.

Castro, C.J., Fernando, Muñoz Palma, Concepcion, Jr., Fernandez and Guerrero, JJ., concur.

Barredo, Makasiar and Antonio, JJ., took no part.

Republic of the PhilippinesSUPREME COURTManila

EN BANC

G.R. No. L-24581             January 31, 1966

MIGUEL PEREZ RUBIO, petitioner, vs.THE HONORABLE SAMUEL REYES, ROBERT O. PHILLIPS and MAGDALENA YSMAEL PHILLIPS, respondents.

Jose V. Diokno for the petitioner.Calapatia, Gaviola and Maclang; Ambrosio Padilla and Associates; Meer, Meer and Meer for the respondents.

R E S O L U T I O N

DIZON, J.:

Upon the facts alleged in the complaint filed in Civil Case No. 8632 of the Court of First Instance of Rizal by Robert O. Phillips and Sons, Inc., et al. vs. Miguel Perez Rubio, said plaintiffs prayed for judgment as follows:

1. — That a temporary restraining order and/or ex parte writ of preliminary injunction be issued against the defendant to prevent and restrain them from further unlawful and willful interference with the transaction between the plaintiff corporation with Alfonso T. Yuchengco on the sale of the shares of stock of Hacienda Benito, Inc., and from enforcing whatever amount he may claim to be due to them from the plaintiffs under the Agreements (Annexes "A", "A-I" and "A-2"), after the approval of the injunction bond;

2. — That, after the hearing, judgment be rendered in favor of the plaintiffs against the defendant:

a) Restraining him from willfully and unlawfully interfering with the transaction of the plaintiffs with Alfonso T. Yuchengco on the sale of the shares of stock of Hacienda

Benito, Inc.;

b) Declaring that the defendant has no right to rescind the Agreements as referred to in Annexes "A", "A-1" and "A-2";

c) Declaring that the defendant has no vendors' lien over the shares of stock of Hacienda Benito, Inc., sold by them to the plaintiff corporation;

d) Restraining the defendant from enforcing any collection action against the plaintiffs until the obligations, if any, mature;

e) Making the writ of preliminary injunction permanent;

f) Sentencing the defendant to pay the plaintiffs;

(1) P2,500,000.00, more or less, as actual damages;

(2) Moral damages which this Honorable Court may deem just and reasonable;

(3) Exemplary damages, which this Honorable Court may deem just and reasonable;

(4) P50,000.00, as attorney's fees; and

(5) Costs of suit; and

2 — That the plaintiffs be granted such further and other reliefs to which they may be entitled in law and in equity.".

Upon an ex-parte petition filed by the plaintiffs, the respondent judge issued on April 1, 1965 a writ of preliminary injunction to be mentioned again later. Subsequently, the respondent judge also denied Perez Rubio's motion to dissolve the preliminary injunction.

It appears that the Perez Rubio spouses owned shares of stock in Hacienda Benito, Inc. registered in their names and in the names of Joaquin Ramirez and Joaquin Ramirez, Jr. On August 13, 1963 the Perez Rubios, with the conformity of the Ramirezes, sold said shares to Robert O. Phillips and Sons, Inc. for P5,500,000.00 payable in installments and other conditions agreed upon as follows:

x x x           x x x           x x x

3. That for and in consideration of the mutual agreements and promises, MIGUEL and MARIA LUISA hereby sell to PHILLIPS all the shares of stock of Hacienda Benito, Inc. registered in their names and in the names of Joaquin Ramirez and Joaquin Ramirez, Jr. for the total price of FIVE MILLION FIVE HUNDRED THOUSAND PESOS (P5,500,000.00), Philippine Currency, payable as follows:

"a. FIFTY THOUSAND PESOS (P50,000.00) upon execution of this agreement.

"b. ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000.00) within sixty (60) days from this date.

"c. ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on April 30, 1964 less the amount of P96,830.56 due the Hacienda Benito, Inc. from MARIA LUISA and the amount of P127,096.09 from MIGUEL; hereby authorized PHILLIPS to deduct said amounts and to pay the same to Hacienda Benito, Inc.

"d. ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on or before April 30, 1965.

"e. ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on or before April 30, 1965.

"f. FIVE HUNDRED THOUSAND PESOS (P500,000.00) on or before April 30, 1967."

4. That should PHILLIPS fail to pay the amount of ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000.00) due sixty (60) days from this date and to execute the letter of credit and/or bond or both to secure the payment of the remaining installments, as agreed upon, then the Sellers shall have the right, at their own discretion, either to rescind this agreement or to enforce the same, provided that any number of days used by the Sellers to consider the acceptability of the bank or bonding company proposed by PHILLIPS shall be added to the period of sixty (60) days herein mentioned;

5. That in case of default, PHILLIPS shall pay interest at the rate of eight percent (8%) per annum on all amounts in arrears until paid in full either by the guaranteeing bank, bonding company or PHILLIPS;

6. That all the installments due during the years 1964, 1965, 1966, and 1967 with all the conditions above mentioned, shall be jointly and severally guaranteed by means of Irrevocable Standby Letter of Credit from a bank in favor of MIGUEL and MARIA LUISA, in the proportion they may agree, which shall be communicated to the bank and to PHILLIPS before final contract is entered into with the bank, or by a bond from a bonding company duly approved by MIGUEL and MARIA LUISA;

7. That the stock certificates corresponding to the shares sold, including those in the names of Joaquin Ramirez and Joaquin Ramirez, Jr. shall not be transferred to PHILLIPS until the installments due within sixty (60) days from this date is paid in full.1äwphï1.ñët

On June 23, 1964 Robert O. Phillips and Sons, Inc., and Robert O. Phillips, himself and his wife, entered into an agreement with the Perez Rubios deferring payment of the April 30, 1964 installments already overdue to August 31, 1964 under the following conditions:

(a) The deferred installment would bear an interest of eight (8%) per cent per annum from April 30, 1964 although partial payments on the principal and on the interest due may be paid during the period granted, in such amounts and at such times as funds are available to Robert C. Phillips & Son, Inc.;

(b) Should Robert O. Phillips & Sons, Inc. fail to pay the particular installment now due on August 31, 1964 or any of the subsequent installments on the exact date due, the whole obligation would become immediately demandable without notice;

(c) In consideration of this extension granted to Robert O. Phillips & Sons, Inc., Robert O. Phillips himself and his wife, Magdalena Ysmael Phillips, jointly and severally guaranteed all the installments and other obligations of Robert O. Phillips & Sons, Inc., under the original contract of sale dated April 13, 1963.

In the meantime, Robert D. Phillips, in his behalf and in that of his wife and Robert O. Phillips and Sons, Inc., entered into negotiations for the sale of their shares of stock in Hacienda Benito, Inc. to Alfonso Yuchengco. Upon being informed of this, the Perez Rubios, through their attorney-in-fact, Joaquin Ramirez, reminded the Phillips spouses and the Phillips corporation in writing of their obligations under the contract of sale of April 13, 1963 and reminded them in particular that the shares subject matter thereof were still subject to the payment of the unpaid balance of the sale price. They gave a similar notice to Alfonso Yuchengco, but expressed no objection to the sale provided the obligations in their favor were satisfied.

On March 26, 1965, the Phillips (individuals and corporation), through their attorney, Juan T. David, sent a letter to the Perez Rubios telling them, in substance, that the only obstacle to the consummation of the Phillips-Yuchengco sale of the shares of stock of Hacienda Benito, Inc. was their letter of November 24, 1964 and warned that unless the same was withdrawn by March 29, they would seek redress elsewhere. On March 27, 1965, the Perez Rubios, for their part, wrote the Phillips that due to the latter's inability to comply with the former's conditions, the negotiations going on between them were cancelled, and should the full amount due to them remained unpaid by noon of March 31, 1965, they would file action in court in the afternoon thereof. However, on March 30, 1965, stealing a march on the Perez Rubios, the Phillips (individuals and corporation) filed Civil Case No. 8632 mentioned heretofore where they obtained, ex-parte, a preliminary injunction to this effect:

IT IS HEREBY ORDERED by the undersigned Judge of the Court of First Instance that, until further orders, you, all your attorneys, representatives, agents, and any other person assisting you, REFRAIN from interfering with the transaction between the plaintiff corporation with Alfonso T. Yuchengco on the sale of the shares of stock of Hacienda Benito, Inc., and from enforcing whatever amount he may claim to be due to them from the plaintiffs under the Agreements (Annexes "A", "A-1", and "A-2") mentioned in the complaint.

On April 8, 1965 the Perez Rubios filed a motion to dissolve the above reproduced writ of preliminary injunction, which the respondent judge denied on May 6, 1964. But even before the motion aforesaid could be acted upon, they also filed their answer to the complaint with a counterclaim of P4,500,000.00 representing the unpaid balance of the sale price of their shares. Because of this the Perez Rubios were charged with contempt.

The original petition for certiorari filed in this case is based principally on the allegation that, in taking cognizance of Civil Case No. 8632 and in issuing the writ of preliminary injunction ex-parte mentioned heretofore, the respondent court committed a grave abuse of discretion and, as a consequence, the petition prayed that the respondent judge be restrained from in any way proceeding with the case, and to restrain the respondent Phillips from proceeding with the sale of the shares of stock of Hacienda Benito, Inc. or any of its assets to Alfonso Yuchengco or to any other person, or from performing any act which will diminish the value of said shares of stock or deplete the assets of the company.

On October 4, 1965, Miguel Perez Rubio, to whom all the Perez Rubio shares had been assigned, filed in this Court a motion for the admission of an amended supplemental petition impleading the following additional parties: Victoria Valley Development Corporation and Manufacturers Bank and Trust Co., who objected to their inclusion as such on different grounds. The supplemental petition also prayed that certain parties be cited and later punished for contempt; for the issuance of a preliminary mandatory injunction and a writ of attachment as follows:

1. The Manufacturer's Bank & Trust Company and/or Victoria Valley Development Corporation be ordered to return the properties it bought from Hacienda Benito, Inc., to Hacienda Benito, Inc.;

2. That a writ of attachment be issued in favor of your petitioner against the properties of the Respondents Phillips including those of Hacienda Benito, Inc., or against the proceeds of their sale in the ordinary course of business and of the other corporations who were defendants in Civil Case No. 8766 for an amount equivalent to your petitioner's counterclaim;

3. Respondents Phillips be held in contempt of this Honorable Court;

4. Alfonso Yuchengco, Antonio de las Alas, Ambrosio Padilla, Leonides S. Virata, Macario Tiu, Romeo Villonco be summoned before this Honorable Court to show cause why they should not be held in contempt of this Honorable Court.

Petitioner likewise prays that:

"1. He be declared to have had a vendor's lien over the shares of stock he sold to Respondents Phillips on installments and which up to now remain unpaid;

"2. He be permitted to sue and collect on the outstanding balance of P4,250,000 due for sale of the shares of Hacienda Benito, Inc., to Respondents Phillips; and, therefore,

"3. The injunction and order of the Respondent Court dated April 1, 1965 (Annex "1") be revoked and be declared null and void."

Petitioner likewise prays for such other relief as may be just and equitable in the premises.

When the original petition was filed, We issued a preliminary injunction to this effect:

NOW, THEREFORE, until further orders from this Court, You, your agents, your representatives and/or any person or persons acting in your behalf, are hereby enjoined: (FIRST) from proceeding with Civil Case No. 8632 (Robert O. Phillips & Sons, Inc. vs. Miguel Perez Rubio); (SECOND) from proceeding with the sale of the shares of stock of Hacienda Benito, Inc., or any of its assets, to Alfonso Yuchengco or to any other person; and (THIRD) from performing any act which will either diminish the value of said Hacienda, subject matter of the above-mentioned case.

Thereafter, respondents filed an ex-parte petition either for the modification of the preliminary injunction issued by Us or for its dissolution upon a counterbond.

The first question to be resolved now is the admission of the amended supplemental petition. In this connection we do not deem it necessary nor advisable at this stage of the proceedings to lengthily discuss the merits of the facts alleged therein. Suffice it to say that we deem them sufficient — if proven — to entitle petitioners to relief against the additional parties therein named. The same is, therefore, admitted.

On the other hand, the petition that the original respondents as well as the new parties be cited for contempt, and the petition for the issuance of a mandatory injunction and a writ of preliminary attachment may best and properly be taken up only after a full hearing of this case on the merits, for to resolve them now one way or the other will necessarily require a consideration of the main issue involved herein.

In connection with the urgent ex-parte petition filed by the respondents (except the respondent judge) for a modification of the preliminary injunction herein granted or for its dissolution upon the filing of a bond, it appears that the Hacienda Benito, Inc. is not a party respondent neither upon the original petition nor upon the amended supplemental petition, although it is plain from the allegations made in both that the shares of stock of said company, and naturally its assets, are the very subject of controversy. However, the injunction issued in this case is directed exclusively to the parties herein and, in connection with the assets of said hacienda, they are the only ones enjoined from performing any act which will either diminish the value of said shares of stock or deplete the assets of said hacienda. The petition for modification this regard is, therefore, not well founded and modification and is denied.

Inasmuch as the petition for the dissolution of the preliminary injunction issued by Us in this case, upon the filing of a bond, is ex-parte, the respondents are hereby ordered to serve a copy thereof upon petitioner, who is hereby required to submit his comments in connection therewith, if he so desires, within ten days from receipt thereof.1äwphï1.ñët

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Regala, Makalintal and Bengzon, J.P., JJ., concur.Barrera and Zaldivar, JJ., took no part.

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 125027            August 12, 2002

ANITA MANGILA, petitioner, vs.COURT OF APPEALS and LORETA GUINA, respondents.

CARPIO, J.:

The Case

This is a petition fore review on certiorari under Rule 45 of the Rules of Court, seeking to set aside the Decision1 of the Court of Appeals affirming the Decision2 of the Regional Trial Court, Branch 108, Pasay City. The trial court upheld the writ of attachment and the declaration of default on petitioner while ordering her to pay private respondent P109,376.95 plus 18 percent interest per annum, 25 percent attorney’s fees and costs of suit.

The Facts

Petitioner Anita Mangila ("petitioner" for brevity) is an exporter of sea foods and doing business under the name and style of Seafoods Products. Private respondent Loreta Guina ("private respondent" for brevity) is the President and General Manager of Air Swift International, a single registered proprietorship engaged in the freight forwarding business.

Sometime in January 1988, petitioner contracted the freight forwarding services of private respondent for shipment of petitioner’s products, such as crabs, prawns and assorted fishes, to Guam (USA) where petitioner maintains an outlet. Petitioner agreed to pay private respondent cash on delivery. Private respondent’s invoice stipulates a charge of 18 percent interest per annum on all overdue accounts. In case of suit, the same invoice stipulates attorney’s fees equivalent to 25 percent of the amount due plus costs of suit.3

On the first shipment, petitioner requested for seven days within which to pay private respondent. However, for the next three shipments, March 17, 24 and 31, 1988, petitioner failed to pay private respondent shipping charges amounting to P109, 376.95.4

Despite several demands, petitioner never paid private respondent. Thus, on June 10, 1988, private respondent filed Civil Case No. 5875 before the Regional Trial Court of Pasay City for collection of sum of money.

On August 1, 1988, the sheriff filed his Sheriff’s Return showing that summons was not served on petitioner. A woman found at petitioner’s house informed the sheriff that petitioner transferred her residence to Sto. Niño, Guagua, Pampanga. The sheriff found out further that petitioner had left the Philippines for Guam.5

Thus, on September 13, 1988, construing petitioner’s departure from the Philippines as done with intent to defraud her creditors, private respondent filed a Motion for Preliminary Attachment. On September 26, 1988, the trial court issued an Order of Preliminary Attachment6 against petitioner. The following day, the trial court issued a Writ of Preliminary Attachment.

The trial court granted the request of its sheriff for assistance from their counterparts in RTC, Pampanga. Thus, on October 28, 1988, Sheriff Alfredo San Miguel of RTC Pampanga served on petitioner’s household help in San Fernando, Pampanga, the Notice of Levy with the Order, Affidavit and Bond.7

On November 7, 1988, petitioner filed an Urgent Motion to Discharge Attachment8 without submitting herself to the jurisdiction of the trial court. She pointed out that up to then, she had not been served a copy of the Complaint and the summons. Hence, petitioner claimed the court had not acquired jurisdiction over her person.9

In the hearing of the Urgent Motion to Discharge Attachment on November 11, 1988, private respondent sought and was granted a re-setting to December 9, 1988. On that date, private respondent’s counsel did not appear, so the Urgent Motion to Discharge Attachment was deemed submitted for resolution.10

The trial court granted the Motion to Discharge Attachment on January 13, 1989 upon filing of petitioner’s counter-bond. The trial court, however, did not rule on the question of jurisdiction and on the validity of the writ of preliminary attachment.

On December 26, 1988, private respondent applied for an alias summons, which the trial court issued on January 19, 1989.11 It was only on January 26, 1989 that summons was finally served on petitioner.12

On February 9, 1989, petitioner filed a Motion to Dismiss the Complaint on the ground of improper venue. Private respondent’s invoice for the freight forwarding service stipulates that "if court litigation becomes necessary to enforce collection xxx the agreed venue for such action is Makati, Metro Manila."13 Private respondent filed an Opposition asserting that although "Makati" appears as the stipulated venue, the same was merely an inadvertence by the printing press whose general manager executed an affidavit14 admitting such inadvertence. Moreover, private respondent claimed that petitioner knew that private respondent was holding office in Pasay City and not in Makati. 15 The lower court, finding credence in private respondent’s assertion, denied the Motion to Dismiss and gave petitioner five days to file her Answer. Petitioner filed a Motion for Reconsideration but this too was denied.

Petitioner filed her Answer16 on June 16, 1989, maintaining her contention that the venue was improperly laid.

On June 26, 1989, the trial court issued an Order setting the pre-trial for July 18, 1989 at 8:30 a.m. and requiring the parties to submit their pre-trial briefs. Meanwhile, private respondent filed a Motion to Sell Attached Properties but the trial court denied the motion.

On motion of petitioner, the trial court issued an Order resetting the pre-trial from July 18, 1989 to August 24, 1989 at 8:30 a.m..

On August 24, 1989, the day of the pre-trial, the trial court issued an Order17 terminating the pre-trial and allowing the private respondent to present evidence ex-parte on September 12, 1989 at 8:30 a.m.. The Order stated that when the case was called for pre-trial at 8:31 a.m., only the counsel for private respondent appeared. Upon the trial court’s second call 20 minutes later, petitioner’s counsel was still nowhere to be found. Thus, upon motion of private respondent, the pre-trial was considered terminated.

On September 12, 1989, petitioner filed her Motion for Reconsideration of the Order terminating the pre-trial. Petitioner explained that her counsel arrived 5 minutes after the second call, as shown by the transcript of stenographic notes, and was late because of heavy traffic. Petitioner claims that the lower court erred in allowing private respondent to present evidence ex-parte since there was no Order considering the petitioner as in default. Petitioner contends that the Order of August 24, 1989 did not state that petitioner was declared as in default but still the court allowed private respondent to present evidence ex-parte.18

On October 6, 1989, the trial court denied the Motion for Reconsideration and scheduled the presentation of private respondent’s evidence ex-parte on October 10, 1989.1âwphi1.nêt

On October 10, 1989, petitioner filed an Omnibus Motion stating that the presentation of evidence ex-parte should be suspended because there was no declaration of petitioner as in default and petitioner’s counsel was not absent, but merely late.

On October 18, 1989, the trial court denied the Omnibus Motion.19

On November 20, 1989, the petitioner received a copy of the Decision of November 10, 1989, ordering petitioner to pay respondent P109,376.95 plus 18 percent interest per annum, 25 percent attorney’s fees and costs of suit. Private respondent filed a Motion for Execution Pending Appeal but the trial court denied the same.

The Ruling of the Court of Appeals

On December 15, 1995, the Court of Appeals rendered a decision affirming the decision of the trial court. The Court of Appeals upheld the validity of the issuance of the writ of attachment and sustained the filing of the action in the RTC of Pasay. The Court of Appeals also affirmed the declaration of default on petitioner and concluded that the trial court did not commit any reversible error.

Petitioner filed a Motion for Reconsideration on January 5, 1996 but the Court of Appeals denied the same in a Resolution dated May 20, 1996.

Hence, this petition.

The Issues

The issues raised by petitioner may be re-stated as follows:

I.

WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF ATTACHMENT WAS IMPROPERLY ISSUED AND SERVED;

II.

WHETHER THERE WAS A VALID DECLARATION OF DEFAULT;

III.

WHETHER THERE WAS IMPROPER VENUE.

IV.

WHETHER RESPONDENT COURT ERRED IN DECLARING THAT PETITIONER IS OBLIGED TO PAY P109, 376.95, PLUS ATTORNEY’S FEES.20

The Ruling of the Court

Improper Issuance and Service of Writ of Attachment

Petitioner ascribes several errors to the issuance and implementation of the writ of attachment. Among petitioner’s arguments are: first, there was no ground for the issuance of the writ since the intent to defraud her creditors had not been established; second, the value of the properties levied exceeded the value of private respondent’s claim. However, the crux of petitioner’s arguments rests on the question of the validity of the writ of attachment. Because of failure to serve summons on her before or simultaneously with the writ’s implementation, petitioner claims that the trial court had not acquired jurisdiction over her person and thus the service of the writ is void.

As a preliminary note, a distinction should be made between issuance and implementation of the writ of attachment. It is necessary to distinguish between the two to determine when jurisdiction over the person of the defendant should be acquired to validly implement the writ. This distinction is crucial in resolving whether there is merit in petitioner’s argument.

This Court has long settled the issue of when jurisdiction over the person of the defendant should be acquired in cases where a party resorts to provisional remedies. A party to a suit may, at any time after filing the complaint, avail of the provisional remedies under the Rules of Court. Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy "at the commencement of the action or at any time thereafter."21 This phrase refers to the date of filing of the complaint which is the moment that marks "the commencement of the action." The reference plainly is to a time before summons is served on the defendant, or even before summons issues.

In Davao Light & Power Co., Inc. v. Court of Appeals,22 this Court clarified the actual time when jurisdiction should be had:

"It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of defendant - issuance of summons, order of attachment and writ of attachment - these do not and cannot bind and affect the defendant until and unless jurisdiction over his person is eventually obtained by the court, either by service on him of summons or other coercive process or his voluntary submission to the court’s authority. Hence, when the sheriff or other proper officer commences implementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the applicant’s affidavit and attachment bond, and of the order of attachment, as explicitly required by Section 5 of Rule 57, but also the summons addressed to said defendant as well as a copy of the complaint xxx." (Emphasis supplied.)

Furthermore, we have held that the grant of the provisional remedy of attachment involves three stages: first, the court issues the order granting the application; second, the writ of attachment issues pursuant to the order granting the writ; and third, the writ is implemented. For the initial two stages, it is not necessary that jurisdiction over the person of the defendant be first obtained. However, once the implementation of the writ commences, the court must have acquired jurisdiction over the defendant for without such jurisdiction, the court has no power and authority to act in any manner against the defendant. Any order issuing from the Court will not bind the defendant.23

In the instant case, the Writ of Preliminary Attachment was issued on September 27, 1988 and implemented on October 28, 1988. However, the alias summons was served only on January 26, 1989 or almost three months after the implementation of the writ of attachment.

The trial court had the authority to issue the Writ of Attachment on September 27 since a motion for its issuance can be filed "at the commencement of the action." However, on the day the writ was implemented, the trial court should have, previously or simultaneously with the implementation of the writ, acquired jurisdiction over the petitioner. Yet, as was shown in the records of the case, the summons was actually served on petitioner several months after the writ had been implemented.

Private respondent, nevertheless, claims that the prior or contemporaneous service of summons contemplated in Section 5 of Rule 57 provides for exceptions. Among such exceptions are "where the summons could not be served personally or by substituted service despite diligent efforts or where the defendant is a resident temporarily absent therefrom x x x." Private respondent asserts that when she commenced this action, she tried to serve summons on petitioner but the latter could not be located at her customary address in Kamuning, Quezon City or at her new address in Guagua, Pampanga.24

Furthermore, respondent claims that petitioner was not even in Pampanga; rather, she was in Guam purportedly on a business trip.

Private respondent never showed that she effected substituted service on petitioner after her personal service failed. Likewise, if it were true that private respondent could not ascertain the whereabouts of petitioner after a diligent inquiry, still she had some other recourse under the Rules of Civil Procedure.

The rules provide for certain remedies in cases where personal service could not be effected on a party. Section 14, Rule 14 of the Rules of Court provides that whenever the defendant’s "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 x x x." Thus, if petitioner’s whereabouts could not be ascertained after the sheriff had served the summons at her given address, then respondent could have immediately asked the court for service of summons by publication on petitioner.25

Moreover, as private respondent also claims that petitioner was abroad at the time of the service of summons, this made petitioner a resident who is temporarily out of the country. This is the exact situation contemplated in Section 16,26 Rule 14 of the Rules of Civil Procedure, providing for service of summons by publication.

In conclusion, we hold that the alias summons belatedly served on petitioner cannot be deemed to have cured the fatal defect in the enforcement of the writ. The trial court cannot enforce such a coercive process on petitioner without first obtaining jurisdiction over her person. The preliminary writ of attachment must be served after or simultaneous with the service of summons on the defendant whether by personal service, substituted service or by publication as warranted by the circumstances of the case.27 The subsequent service of summons does not confer a retroactive acquisition of jurisdiction over her person because the law does not allow for retroactivity of a belated service.

Improper Venue

Petitioner assails the filing of this case in the RTC of Pasay and points to a provision in private respondent’s invoice which contains the following:

"3. If court litigation becomes necessary to enforce collection, an additional equivalent (sic) to 25% of the principal amount will be charged. The agreed venue for such action is Makati, Metro Manila, Philippines."28

Based on this provision, petitioner contends that the action should have been instituted in the RTC of Makati and to do otherwise would be a ground for the dismissal of the case.

We resolve to dismiss the case on the ground of improper venue but not for the reason stated by petitioner.

The Rules of Court provide that parties to an action may agree in writing on the venue on which an action should be brought.29 However, a mere stipulation on the venue of an action is not enough to preclude parties from bringing a case in other venues.30 The parties must be able to show that such stipulation is exclusive. Thus, absent words that show the parties’ intention to restrict the filing of a suit in a particular place, courts will allow the filing of a case in any venue, as long as jurisdictional requirements are followed. Venue stipulations in a contract, while considered valid and enforceable, do

not as a rule supersede the general rule set forth in Rule 4 of the Revised Rules of Court.31 In the absence of qualifying or restrictive words, they should be considered merely as an agreement on additional forum, not as limiting venue to the specified place.32

In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no qualifying or restrictive words in the invoice that would evince the intention of the parties that Makati is the "only or exclusive" venue where the action could be instituted. We therefore agree with private respondent that Makati is not the only venue where this case could be filed.

Nevertheless, we hold that Pasay is not the proper venue for this case.

Under the 1997 Rules of Civil Procedure, the general rule is venue in personal actions is "where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff."33 The exception to this rule is when the parties agree on an exclusive venue other than the places mentioned in the rules. But, as we have discussed, this exception is not applicable in this case. Hence, following the general rule, the instant case may be brought in the place of residence of the plaintiff or defendant, at the election of the plaintiff (private respondent herein).

In the instant case, the residence of private respondent (plaintiff in the lower court) was not alleged in the complaint. Rather, what was alleged was the postal address of her sole proprietorship, Air Swift International. It was only when private respondent testified in court, after petitioner was declared in default, that she mentioned her residence to be in Better Living Subdivision, Parañaque City.

In the earlier case of Sy v. Tyson Enterprises, Inc.,34 the reverse happened. The plaintiff in that case was Tyson Enterprises, Inc., a corporation owned and managed by Dominador Ti. The complaint, however, did not allege the office or place of business of the corporation, which was in Binondo, Manila. What was alleged was the residence of Dominador Ti, who lived in San Juan, Rizal. The case was filed in the Court of First Instance of Rizal, Pasig. The Court there held that the evident purpose of alleging the address of the corporation’s president and manager was to justify the filing of the suit in Rizal, Pasig instead of in Manila. Thus, the Court ruled that there was no question that venue was improperly laid in that case and held that the place of business of Tyson Enterpises, Inc. is considered as its residence for purposes of venue. Furthermore, the Court held that the residence of its president is not the residence of the corporation because a corporation has a personality separate and distinct from that of its officers and stockholders.

In the instant case, it was established in the lower court that petitioner resides in San Fernando, Pampanga35 while private respondent resides in Parañaque City.36 However, this case was brought in Pasay City, where the business of private respondent is found. This would have been permissible had private respondent’s business been a corporation, just like the case in Sy v. Tyson Enterprises, Inc. However, as admitted by private respondent in her Complaint37 in the lower court, her business is a sole proprietorship, and as such, does not have a separate juridical personality that could enable it to file a suit in court.38 In fact, there is no law authorizing sole proprietorships to file a suit in court.39

A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise.40 The law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual and requires its proprietor or owner to secure licenses and permits, register its business name, and pay taxes to the national government.41 The law does not vest a separate legal personality on the sole proprietorship or empower it to file or defend an action in court.42

Thus, not being vested with legal personality to file this case, the sole proprietorship is not the plaintiff in this case but rather Loreta Guina in her personal capacity. In fact, the complaint in the lower court acknowledges in its caption that the plaintiff and defendant are Loreta Guina and Anita Mangila, respectively. The title of the petition before us does not state, and rightly so, Anita Mangila v. Air Swift

International, but rather Anita Mangila v. Loreta Guina. Logically then, it is the residence of private respondent Guina, the proprietor with the juridical personality, which should be considered as one of the proper venues for this case.

All these considered, private respondent should have filed this case either in San Fernando, Pampanga (petitioner’s residence) or Parañaque (private respondent’s residence). Since private respondent (complainant below) filed this case in Pasay, we hold that the case should be dismissed on the ground of improper venue.

Although petitioner filed an Urgent Motion to Discharge Attachment in the lower court, petitioner expressly stated that she was filing the motion without submitting to the jurisdiction of the court. At that time, petitioner had not been served the summons and a copy of the complaint. 43 Thereafter, petitioner timely filed a Motion to Dismiss44 on the ground of improper venue. Rule 16, Section 1 of the Rules of Court provides that a motion to dismiss may be filed "[W]ithin the time for but before filing the answer to the complaint or pleading asserting a claim." Petitioner even raised the issue of improper venue in his Answer45 as a special and affirmative defense. Petitioner also continued to raise the issue of improper venue in her Petition for Review46 before this Court. We thus hold that the dismissal of this case on the ground of improper venue is warranted.

The rules on venue, like other procedural rules, are designed to insure a just and orderly administration of justice or the impartial and evenhanded determination of every action and proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted freedom to choose where to file the complaint or petition.47

We find no reason to rule on the other issues raised by petitioner.1âwphi1.nêt

WHEREFORE, the petition is GRANTED on the grounds of improper venue and invalidity of the service of the writ of attachment. The decision of the Court of Appeals and the order of respondent judge denying the motion to dismiss are REVERSED and SET ASIDE. Civil Case No. 5875 is hereby dismissed without prejudice to refiling it in the proper venue. The attached properties of petitioner are ordered returned to her immediately.

SO ORDERED.

Puno, Panganiban, and JJ., concur.Sandoval-Gutierrez, J., On leave.

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 171124             February 13, 2008

ALEJANDRO NG WEE, petitioner, vs.MANUEL TANKIANSEE, respondent.

D E C I S I O N

NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the September 14, 2005 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 90130 and its January 6, 2006 Resolution2 denying the motion for reconsideration thereof.

The facts are undisputed. Petitioner Alejandro Ng Wee, a valued client of Westmont Bank (now United Overseas Bank), made several money placements totaling P210,595,991.62 with the bank's affiliate, Westmont Investment Corporation (Wincorp), a domestic entity engaged in the business of an investment house with the authority and license to extend credit.3

Sometime in February 2000, petitioner received disturbing news on Wincorp's financial condition prompting him to inquire about and investigate the company's operations and transactions with its borrowers. He then discovered that the company extended a loan equal to his total money placement to a corporation [Power Merge] with a subscribed capital of only P37.5M. This credit facility originated from another loan of about P1.5B extended by Wincorp to another corporation [Hottick Holdings]. When the latter defaulted in its obligation, Wincorp instituted a case against it and its surety. Settlement was, however, reached in which Hottick's president, Luis Juan L. Virata (Virata), assumed the obligation of the surety.4

Under the scheme agreed upon by Wincorp and Hottick's president, petitioner's money placements were transferred without his knowledge and consent to the loan account of Power Merge through an agreement that virtually freed the latter of any liability. Allegedly, through the false representations of Wincorp and its officers and directors, petitioner was enticed to roll over his placements so that Wincorp could loan the same to Virata/Power Merge.5

Finding that Virata purportedly used Power Merge as a conduit and connived with Wincorp's officers and directors to fraudulently obtain for his benefit without any intention of paying the said placements, petitioner instituted, on October 19, 2000, Civil Case No. 00-99006 for damages with the Regional Trial Court (RTC) of Manila.6 One of the defendants impleaded in the complaint is herein respondent Manuel Tankiansee, Vice-Chairman and Director of Wincorp.7

On October 26, 2000, on the basis of the allegations in the complaint and the October 12, 2000 Affidavit8 of petitioner, the trial court ordered the issuance of a writ of preliminary attachment against the properties not exempt from execution of all the defendants in the civil case subject, among others, to petitioner's filing of a P50M-bond.9 The writ was, consequently, issued on November 6, 2000.10

Arguing that the writ was improperly issued and that the bond furnished was grossly insufficient, respondent, on December 22, 2000, moved for the discharge of the attachment.11 The other defendants likewise filed similar motions.12 On October 23, 2001, the RTC, in an Omnibus Order,13

denied all the motions for the discharge of the attachment. The defendants, including respondent herein, filed their respective motions for reconsideration14 but the trial court denied the same on October 14, 2002.15

Incidentally, while respondent opted not to question anymore the said orders, his co-defendants, Virata and UEM-MARA Philippines Corporation (UEM-MARA), assailed the same via certiorari under Rule 65 before the CA [docketed as CA-G.R. SP No. 74610]. The appellate court, however, denied the certiorari petition on August 21, 2003,16 and the motion for reconsideration thereof on March 16, 2004.17 In a petition for review on certiorari before this Court, in G.R. No. 162928, we denied the petition and affirmed the CA rulings on May 19, 2004 for Virata's and UEM-MARA's failure to sufficiently show that the appellate court committed any reversible error.18 We subsequently denied the petition with finality on August 23, 2004.19

On September 30, 2004, respondent filed before the trial court another Motion to Discharge Attachment,20 re-pleading the grounds he raised in his first motion but raising the following additional

grounds: (1) that he was not present in Wincorp's board meetings approving the questionable transactions;21 and (2) that he could not have connived with Wincorp and the other defendants because he and Pearlbank Securities, Inc., in which he is a major stockholder, filed cases against the company as they were also victimized by its fraudulent schemes.22

Ruling that the grounds raised were already passed upon by it in the previous orders affirmed by the CA and this Court, and that the additional grounds were respondent's affirmative defenses that properly pertained to the merits of the case, the trial court denied the motion in its January 6, 2005 Order.23

With the denial of its motion for reconsideration,24 respondent filed a certiorari petition before the CA docketed as CA-G.R. SP No. 90130. On September 14, 2005, the appellate court rendered the assailed Decision25 reversing and setting aside the aforementioned orders of the trial court and lifting the November 6, 2000 Writ of Preliminary Attachment26 to the extent that it concerned respondent's properties. Petitioner moved for the reconsideration of the said ruling, but the CA denied the same in its January 6, 2006 Resolution.27

Thus, petitioner filed the instant petition on the following grounds:

A.

IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS SHOULD NOT HAVE GIVEN DUE COURSE TO THE PETITION FOR CERTIORARI FILED BY RESPONDENT, SINCE IT MERELY RAISED ERRORS IN JUDGMENT, WHICH, UNDER PREVAILING JURISPRUDENCE, ARE NOT THE PROPER SUBJECTS OF A WRIT OF CERTIORARI.

B.

MOREOVER, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS COMMITTED SERIOUS LEGAL ERROR IN RESOLVING FAVORABLY THE GROUNDS ALLEGED BY RESPONDENT IN HIS PETITION AND (SIC) LIFTING THE WRIT OF PRELIMINARY ATTACHMENT, SINCE THESE GROUNDS ALREADY RELATE TO THE MERITS OF CIVIL CASE NO. 00-99006 WHICH, UNDER PREVAILING JURISPRUDENCE, CANNOT BE USED AS BASIS (SIC) FOR DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT.

C.

LIKEWISE, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS ERRED IN SUSTAINING THE ERRORS IN JUDGMENT ALLEGED BY RESPONDENT, NOT ONLY BECAUSE THESE ARE BELIED BY THE VERY DOCUMENTS HE SUBMITTED AS PROOF OF SUCH ERRORS, BUT ALSO BECAUSE THESE HAD EARLIER BEEN RESOLVED WITH FINALITY BY THE LOWER COURT.28

For his part, respondent counters, among others, that the general and sweeping allegation of fraud against respondent in petitioner's affidavit-respondent as an officer and director of Wincorp allegedly connived with the other defendants to defraud petitioner-is not sufficient basis for the trial court to order the attachment of respondent's properties. Nowhere in the said affidavit does petitioner mention the name of respondent and any specific act committed by the latter to defraud the former. A writ of attachment can only be granted on concrete and specific grounds and not on general averments quoting perfunctorily the words of the Rules. Connivance cannot also be based on mere association but must be particularly alleged and established as a fact. Respondent further contends that the trial court, in resolving the Motion to Discharge Attachment, need not actually delve into the merits of the case. All that the court has to examine are the allegations in the complaint and the supporting affidavit. Petitioner cannot also rely on the decisions of the appellate court in CA-G.R. SP No. 74610 and this Court in G.R. No. 162928 to support his claim because respondent is not a party to the said cases.29

We agree with respondent's contentions and deny the petition.

In the case at bench, the basis of petitioner's application for the issuance of the writ of preliminary attachment against the properties of respondent is Section 1(d) of Rule 57 of the Rules of Court which pertinently reads:

Section 1. Grounds upon which attachment may issue.-At the commencement of the action or at any time before entry of judgment, a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases:

x x x x

(d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought, or in the performance thereof.

For a writ of attachment to issue under this rule, the applicant must sufficiently show the factual circumstances of the alleged fraud because fraudulent intent cannot be inferred from the debtor's mere non-payment of the debt or failure to comply with his obligation.30 The applicant must then be able to demonstrate that the debtor has intended to defraud the creditor.31 In Liberty Insurance Corporation v. Court of Appeals,32 we explained as follows:

To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring the obligation intended to defraud the creditor. The fraud must relate to the execution of the agreement and must have been the reason which induced the other party into giving consent which he would not have otherwise given. To constitute a ground for attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued upon. A debt is fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in this case. Fraud is a state of mind and need not be proved by direct evidence but may be inferred from the circumstances attendant in each case.33

In the instant case, petitioner's October 12, 2000 Affidavit34 is bereft of any factual statement that respondent committed a fraud. The affidavit narrated only the alleged fraudulent transaction between Wincorp and Virata and/or Power Merge, which, by the way, explains why this Court, in G.R. No. 162928, affirmed the writ of attachment issued against the latter. As to the participation of respondent in the said transaction, the affidavit merely states that respondent, an officer and director of Wincorp, connived with the other defendants in the civil case to defraud petitioner of his money placements. No other factual averment or circumstance details how respondent committed a fraud or how he connived with the other defendants to commit a fraud in the transaction sued upon. In other words, petitioner has not shown any specific act or deed to support the allegation that respondent is guilty of fraud.

The affidavit, being the foundation of the writ,35 must contain such particulars as to how the fraud imputed to respondent was committed for the court to decide whether or not to issue the writ.36 Absent any statement of other factual circumstances to show that respondent, at the time of contracting the obligation, had a preconceived plan or intention not to pay, or without any showing of how respondent committed the alleged fraud, the general averment in the affidavit that respondent is an officer and director of Wincorp who allegedly connived with the other defendants to commit a fraud, is insufficient to support the issuance of a writ of preliminary attachment.37 In the application for the writ under the said ground, compelling is the need to give a hint about what constituted the fraud and how it was perpetrated38 because established is the rule that fraud is never presumed.39 Verily, the mere fact that respondent is an officer and director of the company does not necessarily give rise to the inference that he committed a fraud or that he connived with the other defendants to commit a fraud. While under certain circumstances, courts may treat a corporation as a mere aggroupment of persons, to whom liability will directly attach, this is only done when the wrongdoing has been clearly and

convincingly established.40

Let it be stressed that the provisional remedy of preliminary attachment is harsh and rigorous for it exposes the debtor to humiliation and annoyance.41 The rules governing its issuance are, therefore, strictly construed against the applicant,42 such that if the requisites for its grant are not shown to be all present, the court shall refrain from issuing it, for, otherwise, the court which issues it acts in excess of its jurisdiction.43 Likewise, the writ should not be abused to cause unnecessary prejudice. If it is wrongfully issued on the basis of false or insufficient allegations, it should at once be corrected.44

Considering, therefore, that, in this case, petitioner has not fully satisfied the legal obligation to show the specific acts constitutive of the alleged fraud committed by respondent, the trial court acted in excess of its jurisdiction when it issued the writ of preliminary attachment against the properties of respondent.

We are not unmindful of the rule enunciated in G.B. Inc., etc. v. Sanchez, et al.,45 that

[t]he merits of the main action are not triable in a motion to discharge an attachment otherwise an applicant for the dissolution could force a trial of the merits of the case on his motion.46

However, the principle finds no application here because petitioner has not yet fulfilled the requirements set by the Rules of Court for the issuance of the writ against the properties of respondent.47 The evil sought to be prevented by the said ruling will not arise, because the propriety or impropriety of the issuance of the writ in this case can be determined by simply reading the complaint and the affidavit in support of the application.

Furthermore, our ruling in G.R. No. 162928, to the effect that the writ of attachment is properly issued insofar as it concerns the properties of Virata and UEM-MARA, does not affect respondent herein, for, as correctly ruled by the CA, respondent is "never a party thereto."48 Also, he is not in the same situation as Virata and UEM-MARA since, as aforesaid, while petitioner's affidavit detailed the alleged fraudulent scheme perpetrated by Virata and/or Power Merge, only a general allegation of fraud was made against respondent.

We state, in closing, that our ruling herein deals only with the writ of preliminary attachment issued against the properties of respondent-it does not concern the other parties in the civil case, nor affect the trial court's resolution on the merits of the aforesaid civil case.

WHEREFORE, premises considered, the petition is DENIED. The September 14, 2005 Decision and the January 6, 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 90130 are AFFIRMED.

SO ORDERED.

r be issued requiring Lee and Tan to interplead and litigate their conflicting claims; and (b) judgment. be rendered, after hearing, declaring who of the two is the lawful owner of membership fee certificate 201, and ordering the surrender and cancellation of membership fee certificate 201-serial no. 1478 issued in the name of Lee.

In separate motions the defendants moved to dismiss the complaint upon the grounds of res judicata, failure of the complaint to state a cause of action, and bar by prescription. 1 These motions were duly opposed by the Corporation. Finding the grounds of bar by prior judgment and failure to state a cause of action well taken, the trial court dismissed the complaint, with costs against the Corporation.

In this appeal, the Corporation contends that the court a quo erred (1) in finding that the allegations in its amended and supplemental complaint do not constitute a valid ground for an action of interpleader, and in holding that "the principal motive for the present action is to reopen the Manila Case and collaterally attack the decision of the said Court"; (2) in finding that the decision in civil case 26044 of

the CFI of Manila constitutes res judicata and bars its present action; and (3) in dismissing its action instead of compelling the appellees to interplead and litigate between themselves their respective claims.

The Corporations position may be stated elsewise as follows: The trial court erred in dismissing the complaint, instead of compelling the appellees to interplead because there actually are conflicting claims between the latter with respect to the ownership of membership fee certificate 201, and, as there is not Identity of parties, of subject-matter, and of cause of action, between civil case 26044 of the CFI of Manila and the present action, the complaint should not have been dismissed upon the ground of res judicata.

On the other hand, the appellees argue that the trial court properly dismissed the complaint, because, having the effect of reopening civil case 26044, the present action is barred by res judicata.

Although res judicata or bar by a prior judgment was the principal ground availed of by the appellees in moving for the dismissal of the complaint and upon which the trial court actually dismissed the complaint, the determinative issue, as can be gleaned from the pleadings of the parties, relates to the propriety and timeliness of the remedy of interpleader.

The action of interpleader, under section 120 of the Code of Civil Procedure, 2 is a remedy whereby a person who has personal property in his possession, or an obligation to render wholly or partially, without claiming any right to either, comes to court and asks that the persons who claim the said personal property or who consider themselves entitled to demand compliance with the obligation, be required to litigate among themselves in order to determine finally who is entitled to tone or the one thing. The remedy is afforded to protect a person not against double liability but against double vexation in respect of one liability. 3 The procedure under the Rules of Court 4 is the same as that under the Code of Civil Procedure, 5 except that under the former the remedy of interpleader is available regardless of the nature of the subject-matter of the controversy, whereas under the latter an interpleader suit is proper only if the subject-matter of the controversy is personal property or relates to the performance of an obligation.

There is no question that the subject matter of the present controversy, i.e., the membership fee certificate 201, is proper for an interpleader suit. What is here disputed is the propriety and timeliness of the remedy in the light of the facts and circumstances obtaining.

A stakeholder 6 should use reasonable diligence to hale the contending claimants to court. 7 He need not await actual institution of independent suits against him before filing a bill of interpleader. 8 He should file an action of interpleader within a reasonable time after a dispute has arisen without waiting to be sued by either of the contending claimants. 9 Otherwise, he may be barred by laches 10 or undue delay. 11 But where he acts with reasonable diligence in view of the environmental circumstances, the remedy is not barred. 12

Has the Corporation in this case acted with diligence, in view of all the circumstances, such that it may properly invoke the remedy of interpleader? We do not think so. It was aware of the conflicting claims of the appellees with respect to the membership fee certificate 201 long before it filed the present interpleader suit. It had been recognizing Tan as the lawful owner thereof. It was sued by Lee who also claimed the same membership fee certificate. Yet it did not interplead Tan. It preferred to proceed with the litigation (civil case 26044) and to defend itself therein. As a matter of fact, final judgment was rendered against it and said judgment has already been executed. It is not therefore too late for it to invoke the remedy of interpleader.

It has been held that a stakeholder's action of interpleader is too late when filed after judgment has been rendered against him in favor of one of the contending claimants, 13 especially where he had notice of the conflicting claims prior to the rendition of the judgment and neglected the opportunity to implead the adverse claimants in the suit where judgment was entered. This must be so, because once

judgment is obtained against him by one claimant he becomes liable to the latter. 14 In once case, 15 it was declared:

The record here discloses that long before the rendition of the judgment in favor of relators against the Hanover Fire Insurance Company the latter had notice of the adverse claim of South to the proceeds of the policy. No reason is shown why the Insurance Company did not implead South in the former suit and have the conflicting claims there determined. The Insurance Company elected not to do so and that suit proceeded to a final judgment in favor of relators. The Company thereby became independently liable to relators. It was then too late for such company to invoke the remedy of interpleader

The Corporation has not shown any justifiable reason why it did not file an application for interpleader in civil case 26044 to compel the appellees herein to litigate between themselves their conflicting claims of ownership. It was only after adverse final judgment was rendered against it that the remedy of interpleader was invoked by it. By then it was too late, because to he entitled to this remedy the applicant must be able to show that lie has not been made independently liable to any of the claimants. And since the Corporation is already liable to Lee under a final judgment, the present interpleader suit is clearly improper and unavailing.

It is the general rule that before a person will be deemed to be in a position to ask for an order of intrepleader, he must be prepared to show, among other prerequisites, that he has not become independently liable to any of the claimants. 25 Tex. Jur. p. 52, Sec. 3; 30 Am. Jur. p. 218, Section 8.

It is also the general rule that a bill of interpleader comes too late when it is filed after judgment has been rendered in favor of one of the claimants of the fund, this being especially true when the holder of the funds had notice of the conflicting claims prior to the rendition of the judgment and had an opportunity to implead the adverse claimants in the suit in which the judgment was rendered. United Procedures Pipe Line Co. v. Britton, Tex. Civ. App. 264 S.W. 176; Nash v. McCullum, Tex. Civ. 74 S.W. 2d 1046; 30 Am. Jur. p. 223, Sec. 11; 25 Tex. Jur. p. 56, Sec. 5; 108 A.L.R., note 5, p. 275. 16

Indeed, if a stakeholder defends a suit filed by one of the adverse claimants and allows said suit to proceed to final judgment against him, he cannot later on have that part of the litigation repeated in an interpleader suit. In the case at hand, the Corporation allowed civil case 26044 to proceed to final judgment. And it offered no satisfactory explanation for its failure to implead Tan in the same litigation. In this factual situation, it is clear that this interpleader suit cannot prosper because it was filed much too late.

If a stakeholder defends a suit by one claimant and allows it to proceed so far as a judgment against him without filing a bill of interpleader, it then becomes too late for him to do so. Union Bank v. Kerr, 2 Md. Ch. 460; Home Life Ins. Co. v. Gaulk, 86 Md. 385, 390, 38 A. 901; Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. It is one o the main offices of a bill of interpleader to restrain a separate proceeding at law by claimant so as to avoid the resulting partial judgment; and if the stakeholder acquiesces in one claimant's trying out his claim and establishing it at law, he cannot then have that part of the litigation repeated in an interpleader suit. 4 Pomeroy's Eq. Juris. No. 162; Mitfor's Eq. Pleading (Tyler's Ed.) 147 and 236; Langdell's Summary of Eq. Pleading, No. 162' De Zouche v. Garrizon, 140 Pa. 430, 21 A/450. 17

It is the general rule that a bill of interpleader comes too late when application therefore is delayed until after judgment has been rendered in favor of one of the claimants of the fund, and that this is especially true where the holder of the fund had notice of the conflicting claims prior to the rendition of such judgment and an

opportunity to implead the adverse claimants in the suit in which such judgment was rendered. (See notes and cases cited 36 Am. Dec. 703, Am. St. Rep. 598, also 5 Pomeroy's Eq. Juris. Sec. 41.)

The evidence in the opinion of the majority shows beyond dispute that the appellant permitted the Parker county suit to proceed to judgment in favor of Britton with full notice of the adverse claims of the defendants in the present suit other than the assignees of the judgment (the bank and Mrs. Pabb) and no excuse is shown why he did not implead them in the suit. 18

To now permit the Corporation to bring Lee to court after the latter's successful establishment of his rights in civil case 26044 to the membership fee certificate 201, is to increase instead of to diminish the number of suits, which is one of the purposes of an action of interpleader, with the possibility that the latter would lose the benefits of the favorable judgment. This cannot be done because having elected to take its chances of success in said civil case 26044, with full knowledge of all the fact, the Corporation must submit to the consequences of defeat.

The act providing for the proceeding has nothing to say touching the right of one, after contesting a claim of one of the claimants to final judgment unsuccessfully, to involve the successful litigant in litigation anew by bringing an interpleader action. The question seems to be one of first impression here, but, in other jurisdictions, from which the substance of the act was apparently taken, the rule prevails that the action cannot be resorted to after an unsuccessful trial against one of the claimants.

It is well settled, both by reasons and authority, that one who asks the interposition of a court of equity to compel others, claiming property in his hands, to interplead, must do so before putting them to the test of trials at law. Yarborough v. Thompson, 3 Smedes & M. 291 (41 Am. Dec. 626); Gornish v. Tanner, 1 You. & Jer. 333; Haseltine v. Brickery, 16 Grat. (Va.) 116. The remedy by interpleader is afforded to protect the party from the annoyance and hazard of two or more actions touching the same property or demand; but one who, with knowledge of all the facts, neglects to avail himself of the relief, or elects to take the chances for success in the actions at law, ought to submit to the consequences of defeat. To permit an unsuccessful defendant to compel the successful plaintiffs to interplead, is to increase instead of to diminish the number of suits; to put upon the shoulders of others the burden which he asks may be taken from his own. ....'

It is urged, however, that the American Surety Company of New York was not in position to file an interpleader until it had tested the claim of relatrix to final judgment, and that, failing to meet with success, it promptly filed the interpleader. The reason why, it urges, it was not in such position until then is that had it succeeded before this court in sustaining its construction of the bond and the law governing the bond, it would not have been called upon to file an interpleader, since there would have been sufficient funds in its hands to have satisfied all lawful claimants. It may be observed, however, that the surety company was acquainted with all of the facts, and hence that it simply took its chances of meeting with success by its own construction of the bond and the law. Having failed to sustain it, it cannot now force relatrix into litigation anew with others, involving most likely a repetition of what has been decided, or force her to accept a pro rata part of a fund, which is far from benefits of the judgment. 19

Besides, a successful litigant cannot later be impleaded by his defeated adversary in an interpleader suit and compelled to prove his claim anew against other adverse claimants, as that would in effect be a collateral attack upon the judgment.

The jurisprudence of this state and the common law states is well-settled that a

claimant who has been put to test of a trial by a surety, and has establish his claim, may not be impleaded later by the surety in an interpleader suit, and compelled to prove his claim again with other adverse claimants. American Surety Company of New York v. Brim, 175 La. 959, 144 So. 727; American Surety Company of New York v. Brim (In Re Lyong Lumber Company), 176 La. 867, 147 So. 18; Dugas v. N.Y. Casualty Co., 181 La. 322, 159 So. 572; 15 Ruling Case Law, 228; 33 Corpus Juris, 477; 4 Pomeroy's Jurisprudence, 1023; Royal Neighbors of America v. Lowary (D.C.) 46 F2d 565; Brackett v. Graves, 30 App. Div. 162, 51 N.Y.S. 895; De Zouche v. Garrison, 140 Pa. 430, 21 A. 450, 451; Manufacturer's Finance Co. v. W.I. Jones Co. 141 Ga., 519, 81 S.E. 1033; Hancock Mutual Life Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383.

There can be no doubt that relator's claim has been finally and definitely established, because that matter was passed upon by three courts in definitive judgments. The only remaining item is the value of the use of the land during the time that relator occupied it. The case was remanded solely and only for the purpose of determining the amount of that credit. In all other aspects the judgment is final. 20

It is generally held by the cases it is the office of interpleader to protect a party, not against double liability, but against double vexation on account of one liability. Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. And so it is said that it is too late for the remedy of interpleader if the party seeking this relef has contested the claim of one of the parties and suffered judgment to be taken.

In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576. 578, it was said: 'It is the general rule that a bill of interpleader comes too late when application therefor is delayed until after judgment has been rendered in favor of one of the claimants of the fund, and this is especially true where the holder of the fund had notice of the conflicting claims prior to the rendition of such judgment and an opportunity to implead the adverse claimants in the suit in which such judgment was rendered. See notes and cases cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5 Pomeroy's Equity Jurisprudence No. 41.'

The principle thus stated has been recognized in many cases in other jurisdictions, among which may be cited American Surety Co. v. O'Brien, 223 Mass. 177, 111 N.E. 787; Phillips v. Taylor, 148 Md. 157, 129 A. 18; Moore v. Hill, 59 Ga. 760, 761; Yearborough v. Thompson, 3 Smedes & M. (11 Miss.) 291, 41 Am. Dec. 626. See, also, 33 C.J. p. 447, No. 30; Nash v. McCullum, (Tex. Civ. App.) 74 S.W. 2d 1042, 1047.

It would seem that this rule should logically follow since, after the recovery of judgment, the interpleading of the judgment creditor is in effect a collateral attack upon the judgment. 21

In fine, the instant interpleader suit cannot prosper because the Corporation had already been made independently liable in civil case 26044 and, therefore, its present application for interpleader would in effect be a collateral attack upon the final judgment in the said civil case; the appellee Lee had already established his rights to membership fee certificate 201 in the aforesaid civil case and, therefore, this interpleader suit would compel him to establish his rights anew, and thereby increase instead of diminish litigations, which is one of the purposes of an interpleader suit, with the possiblity that the benefits of the final judgment in the said civil case might eventually be taken away from him; and because the Corporation allowed itself to be sued to final judgment in the said case, its action of interpleader was filed inexcusably late, for which reason it is barred by laches or unreasonable delay.

ACCORDINGLY, the order of May 28, 1964, dismissing the complaint, is affirmed, at appellant's cost.

Teehankee, Makasiar, Antonio, Esguerra, Muñoz Palma, Aquino and Concepcion, Jr., JJ., concur.

Barredo and Martin, JJ., took no part.

Fernando, J., is on leave.

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 158290             October 23, 2006

HILARION M. HENARES, JR., VICTOR C. AGUSTIN, ALFREDO L. HENARES, DANIEL L. HENARES, ENRIQUE BELO HENARES, and CRISTINA BELO HENARES, petitioners, vs.LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD and DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS, respondents.

R E S O L U T I O N

QUISUMBING, J.:

Petitioners challenge this Court to issue a writ of mandamus commanding respondents Land Transportation Franchising and Regulatory Board (LTFRB) and the Department of Transportation and Communications (DOTC) to require public utility vehicles (PUVs) to use compressed natural gas (CNG) as alternative fuel.

Citing statistics from the Metro Manila Transportation and Traffic Situation Study of 1996,1 the Environmental Management Bureau (EMB) of the National Capital Region,2 a study of the Asian Development Bank,3 the Manila Observatory4 and the Department of Environment and Natural Resources5 (DENR) on the high growth and low turnover in vehicle ownership in the Philippines, including diesel-powered vehicles, two-stroke engine powered motorcycles and their concomitant emission of air pollutants, petitioners attempt to present a compelling case for judicial action against the bane of air pollution and related environmental hazards.

Petitioners allege that the particulate matters (PM) – complex mixtures of dust, dirt, smoke, and liquid droplets, varying in sizes and compositions emitted into the air from various engine combustions – have caused detrimental effects on health, productivity, infrastructure and the overall quality of life. Petitioners particularly cite the effects of certain fuel emissions from engine combustion when these react to other pollutants. For instance, petitioners aver, with hydrocarbons, oxide of nitrogen (NO x) creates smog; with sulfur dioxide, it creates acid rain; and with ammonia, moisture and other compounds, it reacts to form nitric acid and harmful nitrates. Fuel emissions also cause retardation and leaf bleaching in plants. According to petitioner, another emission, carbon monoxide (CO), when not completely burned but emitted into the atmosphere and then inhaled can disrupt the necessary oxygen in blood. With prolonged exposure, CO affects the nervous system and can be lethal to people with weak hearts.6

Petitioners add that although much of the new power generated in the country will use natural gas while a number of oil and coal-fired fuel stations are being phased-out, still with the projected doubling

of power generation over the next 10 years, and with the continuing high demand for motor vehicles, the energy and transport sectors are likely to remain the major sources of harmful emissions. Petitioners refer us to the study of the Philippine Environment Monitor 20027, stating that in four of the country's major cities, Metro Manila, Davao, Cebu and Baguio, the exposure to PM10, a finer PM which can penetrate deep into the lungs causing serious health problems, is estimated at over US$430 million.8 The study also reports that the emissions of PMs have caused the following:

· Over 2,000 people die prematurely. This loss is valued at about US$140 million.

· Over 9,000 people suffer from chronic bronchitis, which is valued at about US$120 million.

· Nearly 51 million cases of respiratory symptom days in Metro Manila (averaging twice a year in Davao and Cebu, and five to six times in Metro Manila and Baguio), costs about US$170 million. This is a 70 percent increase, over a decade, when compared with the findings of a similar study done in 1992 for Metro Manila, which reported 33 million cases.9

Petitioners likewise cite the University of the Philippines' studies in 1990-91 and 1994 showing that vehicular emissions in Metro Manila have resulted to the prevalence of chronic obstructive pulmonary diseases (COPD); that pulmonary tuberculosis is highest among jeepney drivers; and there is a 4.8 to 27.5 percent prevalence of respiratory symptoms among school children and 15.8 to 40.6 percent among child vendors. The studies also revealed that the children in Metro Manila showed more compromised pulmonary function than their rural counterparts. Petitioners infer that these are mostly due to the emissions of PUVs.

To counter the aforementioned detrimental effects of emissions from PUVs, petitioners propose the use of CNG. According to petitioners, CNG is a natural gas comprised mostly of methane which although containing small amounts of propane and butane,10 is colorless and odorless and considered the cleanest fossil fuel because it produces much less pollutants than coal and petroleum; produces up to 90 percent less CO compared to gasoline and diesel fuel; reduces NOx emissions by 50 percent and cuts hydrocarbon emissions by half; emits 60 percent less PMs; and releases virtually no sulfur dioxide. Although, according to petitioners, the only drawback of CNG is that it produces more methane, one of the gases blamed for global warming.11

Asserting their right to clean air, petitioners contend that the bases for their petition for a writ of mandamus to order the LTFRB to require PUVs to use CNG as an alternative fuel, lie in Section 16, 12

Article II of the 1987 Constitution, our ruling in Oposa v. Factoran, Jr.,13 and Section 414 of Republic Act No. 8749 otherwise known as the "Philippine Clean Air Act of 1999."

Meantime, following a subsequent motion, the Court granted petitioners' motion to implead the Department of Transportation and Communications (DOTC) as additional respondent.

In his Comment for respondents LTFRB and DOTC, the Solicitor General, cites Section 3, Rule 65 of the Revised Rules of Court and explains that the writ of mandamus is not the correct remedy since the writ may be issued only to command a tribunal, corporation, board or person to do an act that is required to be done, when he or it unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, there being no other plain, speedy and adequate remedy in the ordinary course of law.15 Further citing existing jurisprudence, the Solicitor General explains that in contrast to a discretionary act, a ministerial act, which a mandamus is, is one in which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to a mandate of legal authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of an act done.

The Solicitor General also notes that nothing in Rep. Act No. 8749 that petitioners invoke, prohibits the use of gasoline and diesel by owners of motor vehicles. Sadly too, according to the Solicitor General,

Rep. Act No. 8749 does not even mention the existence of CNG as alternative fuel and avers that unless this law is amended to provide CNG as alternative fuel for PUVs, the respondents cannot propose that PUVs use CNG as alternative fuel.

The Solicitor General also adds that it is the DENR that is tasked to implement Rep. Act No. 8749 and not the LTFRB nor the DOTC. Moreover, he says, it is the Department of Energy (DOE), under Section 2616 of Rep. Act No. 8749, that is required to set the specifications for all types of fuel and fuel-related products to improve fuel compositions for improved efficiency and reduced emissions. He adds that under Section 2117 of the cited Republic Act, the DOTC is limited to implementing the emission standards for motor vehicles, and the herein respondents cannot alter, change or modify the emission standards. The Solicitor General opines that the Court should declare the instant petition for mandamus without merit.

Petitioners, in their Reply, insist that the respondents possess the administrative and regulatory powers to implement measures in accordance with the policies and principles mandated by Rep. Act No. 8749, specifically Section 218 and Section 21.19 Petitioners state that under these laws and with all the available information provided by the DOE on the benefits of CNG, respondents cannot ignore the existence of CNG, and their failure to recognize CNG and compel its use by PUVs as alternative fuel while air pollution brought about by the emissions of gasoline and diesel endanger the environment and the people, is tantamount to neglect in the performance of a duty which the law enjoins.

Lastly, petitioners aver that other than the writ applied for, they have no other plain, speedy and adequate remedy in the ordinary course of law. Petitioners insist that the writ in fact should be issued pursuant to the very same Section 3, Rule 65 of the Revised Rules of Court that the Solicitor General invokes.

In their Memorandum, petitioners phrase the issues before us as follows:

I. WHETHER OR NOT THE PETITIONERS HAVE THE PERSONALITY TO BRING THE PRESENT ACTION

II. WHETHER OR NOT THE PRESENT ACTION IS SUPPORTED BY LAW

III. WHETHER OR NOT THE RESPONDENT IS THE AGENCY RESPONSIBLE TO IMPLEMENT THE SUGGESTED ALTERNATIVE OF REQUIRING PUBLIC UTILITY VEHICLES TO USE COMPRESSED NATURAL GAS (CNG)

IV. WHETHER OR NOT THE RESPONDENT CAN BE COMPELLED TO REQUIRE PUBLIC UTILITY VEHICLES TO USE COMPRESSED NATURAL GAS THROUGH A WRIT OF MANDAMUS20

Briefly put, the issues are two-fold. First, Do petitioners have legal personality to bring this petition before us? Second, Should mandamus issue against respondents to compel PUVs to use CNG as alternative fuel?

According to petitioners, Section 16,21 Article II of the 1987 Constitution is the policy statement that bestows on the people the right to breathe clean air in a healthy environment. This policy is enunciated in Oposa.22 The implementation of this policy is articulated in Rep. Act No. 8749. These, according to petitioners, are the bases for their standing to file the instant petition. They aver that when there is an omission by the government to safeguard a right, in this case their right to clean air, then, the citizens can resort to and exhaust all remedies to challenge this omission by the government. This, they say, is embodied in Section 423 of Rep. Act No. 8749.

Petitioners insist that since it is the LTFRB and the DOTC that are the government agencies clothed with power to regulate and control motor vehicles, particularly PUVs, and with the same agencies' awareness and knowledge that the PUVs emit dangerous levels of air pollutants, then, the

responsibility to see that these are curbed falls under respondents' functions and a writ of mandamus should issue against them.

The Solicitor General, for his part, reiterates his position that the respondent government agencies, the DOTC and the LTFRB, are not in a position to compel the PUVs to use CNG as alternative fuel. The Solicitor General explains that the function of the DOTC is limited to implementing the emission standards set forth in Rep. Act No. 8749 and the said law only goes as far as setting the maximum limit for the emission of vehicles, but it does not recognize CNG as alternative engine fuel. The Solicitor General avers that the petition should be addressed to Congress for it to come up with a policy that would compel the use of CNG as alternative fuel.

Patently, this Court is being asked to resolve issues that are not only procedural. Petitioners challenge this Court to decide if what petitioners propose could be done through a less circuitous, speedy and unchartered course in an issue that Chief Justice Hilario G. Davide, Jr. in his ponencia in the Oposa case,24 describes as "inter-generational responsibility" and "inter-generational justice."

Now, as to petitioners' standing. There is no dispute that petitioners have standing to bring their case before this Court. Even respondents do not question their standing. This petition focuses on one fundamental legal right of petitioners, their right to clean air. Moreover, as held previously, a party's standing before this Court is a procedural technicality which may, in the exercise of the Court's discretion, be set aside in view of the importance of the issue raised. We brush aside this issue of technicality under the principle of the transcendental importance to the public, especially so if these cases demand that they be settled promptly.

Undeniably, the right to clean air not only is an issue of paramount importance to petitioners for it concerns the air they breathe, but it is also impressed with public interest. The consequences of the counter-productive and retrogressive effects of a neglected environment due to emissions of motor vehicles immeasurably affect the well-being of petitioners. On these considerations, the legal standing of the petitioners deserves recognition.

Our next concern is whether the writ of mandamus is the proper remedy, and if the writ could issue against respondents.

Under Section 3, Rule 65 of the Rules of Court, mandamus lies under any of the following cases: (1) against any tribunal which unlawfully neglects the performance of an act which the law specifically enjoins as a duty; (2) in case any corporation, board or person unlawfully neglects the performance of an act which the law enjoins as a duty resulting from an office, trust, or station; and (3) in case any tribunal, corporation, board or person unlawfully excludes another from the use and enjoyment of a right or office to which such other is legally entitled; and there is no other plain, speedy, and adequate remedy in the ordinary course of law.

In University of San Agustin, Inc. v. Court of Appeals,25 we said,

…It is settled that mandamus is employed to compel the performance, when refused, of a ministerial duty, this being its main objective. It does not lie to require anyone to fulfill contractual obligations or to compel a course of conduct, nor to control or review the exercise of discretion. On the part of the petitioner, it is essential to the issuance of a writ of mandamus that he should have a clear legal right to the thing demanded and it must be the imperative duty of the respondent to perform the act required. It never issues in doubtful cases. While it may not be necessary that the duty be absolutely expressed, it must however, be clear. The writ will not issue to compel an official to do anything which is not his duty to do or which is his duty not to do, or give to the applicant anything to which he is not entitled by law. The writ neither confers powers nor imposes duties. It is simply a command to exercise a power already possessed and to perform a duty already imposed. (Emphasis supplied.)

In this petition the legal right which is sought to be recognized and enforced hinges on a constitutional and a statutory policy already articulated in operational terms, e.g. in Rep. Act No. 8749, the Philippine Clean Air Act of 1999. Paragraph (a), Section 21 of the Act specifically provides that when PUVs are concerned, the responsibility of implementing the policy falls on respondent DOTC. It provides as follows:

SEC 21. Pollution from Motor Vehicles. - a) The DOTC shall implement the emission standards for motor vehicles set pursuant to and as provided in this Act. To further improve the emission standards, the Department [DENR] shall review, revise and publish the standards every two (2) years, or as the need arises. It shall consider the maximum limits for all major pollutants to ensure substantial improvement in air quality for the health, safety and welfare of the general public.

Paragraph (b) states:

b) The Department [DENR] in collaboration with the DOTC, DTI and LGUs, shall develop an action plan for the control and management of air pollution from motor vehicles consistent with the Integrated Air Quality Framework . . . . (Emphasis supplied.)

There is no dispute that under the Clean Air Act it is the DENR that is tasked to set the emission standards for fuel use and the task of developing an action plan. As far as motor vehicles are concerned, it devolves upon the DOTC and the line agency whose mandate is to oversee that motor vehicles prepare an action plan and implement the emission standards for motor vehicles, namely the LTFRB.

In Oposa26 we said, the right to a balanced and healthful ecology carries with it the correlative duty to refrain from impairing the environment. We also said, it is clearly the duty of the responsible government agencies to advance the said right.

Petitioners invoke the provisions of the Constitution and the Clean Air Act in their prayer for issuance of a writ of mandamus commanding the respondents to require PUVs to use CNG as an alternative fuel. Although both are general mandates that do not specifically enjoin the use of any kind of fuel, particularly the use of CNG, there is an executive order implementing a program on the use of CNG by public vehicles. Executive Order No. 290, entitled Implementing the Natural Gas Vehicle Program for Public Transport (NGVPPT), took effect on February 24, 2004. The program recognized, among others, natural gas as a clean burning alternative fuel for vehicle which has the potential to produce substantially lower pollutants; and the Malampaya Gas-to-Power Project as representing the beginning of the natural gas industry of the Philippines. Paragraph 1.2, Section 1 of E.O. No. 290 cites as one of its objectives, the use of CNG as a clean alternative fuel for transport. Furthermore, one of the components of the program is the development of CNG refueling stations and all related facilities in strategic locations in the country to serve the needs of CNG-powered PUVs. Section 3 of E.O. No. 290, consistent with E.O. No. 66, series of 2002, designated the DOE as the lead agency (a) in developing the natural gas industry of the country with the DENR, through the EMB and (b) in formulating emission standards for CNG. Most significantly, par. 4.5, Section 4 tasks the DOTC, working with the DOE, to develop an implementation plan for "a gradual shift to CNG fuel utilization in PUVs and promote NGVs [natural gas vehicles] in Metro Manila and Luzon through the issuance of directives/orders providing preferential franchises in present day major routes and exclusive franchises to NGVs in newly opened routes…" A thorough reading of the executive order assures us that implementation for a cleaner environment is being addressed. To a certain extent, the instant petition had been mooted by the issuance of E.O. No. 290.

Regrettably, however, the plain, speedy and adequate remedy herein sought by petitioners, i.e., a writ of mandamus commanding the respondents to require PUVs to use CNG, is unavailing. Mandamus is available only to compel the doing of an act specifically enjoined by law as a duty. Here, there is no law that mandates the respondents LTFRB and the DOTC to order owners of motor vehicles to use CNG. At

most the LTFRB has been tasked by E.O. No. 290 in par. 4.5 (ii), Section 4 "to grant preferential and exclusive Certificates of Public Convenience (CPC) or franchises to operators of NGVs based on the results of the DOTC surveys."

Further, mandamus will not generally lie from one branch of government to a coordinate branch, for the obvious reason that neither is inferior to the other.27 The need for future changes in both legislation and its implementation cannot be preempted by orders from this Court, especially when what is prayed for is procedurally infirm. Besides, comity with and courtesy to a coequal branch dictate that we give sufficient time and leeway for the coequal branches to address by themselves the environmental problems raised in this petition.

In the same manner that we have associated the fundamental right to a balanced and healthful ecology with the twin concepts of "inter-generational responsibility" and "inter-generational justice" in Oposa,28 where we upheld the right of future Filipinos to prevent the destruction of the rainforests, so do we recognize, in this petition, the right of petitioners and the future generation to clean air. In Oposa we said that if the right to a balanced and healthful ecology is now explicitly found in the Constitution even if the right is "assumed to exist from the inception of humankind,… it is because of the well-founded fear of its framers [of the Constitution] that unless the rights to a balanced and healthful ecology and to health are mandated as state policies by the Constitution itself, thereby highlighting their continuing importance and imposing upon the state a solemn obligation to preserve the first and protect and advance the second, the day would not be too far when all else would be lost not only for the present generation, but also for those to come. . ."29

It is the firm belief of this Court that in this case, it is timely to reaffirm the premium we have placed on the protection of the environment in the landmark case of Oposa. Yet, as serious as the statistics are on air pollution, with the present fuels deemed toxic as they are to the environment, as fatal as these pollutants are to the health of the citizens, and urgently requiring resort to drastic measures to reduce air pollutants emitted by motor vehicles, we must admit in particular that petitioners are unable to pinpoint the law that imposes an indubitable legal duty on respondents that will justify a grant of the writ of mandamus compelling the use of CNG for public utility vehicles. It appears to us that more properly, the legislature should provide first the specific statutory remedy to the complex environmental problems bared by herein petitioners before any judicial recourse by mandamus is taken.

WHEREFORE, the petition for the issuance of a writ of mandamus is DISMISSED for lack of merit.

Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION

G.R. No. 168696             February 28, 2006

MA. LUTGARDA P. CALLEJA, JOAQUIN M. CALLEJA, JR., JADELSON PETER P. CALLEJA, MA. JESSICA T. FLORES, MERCIE C. TIPONES and PERFECTO NIXON C. TABORA, Petitioners, vs.JOSE PIERRE A. PANDAY, AUGUSTO R. PANDAY and MA. THELNA P. MALLARI, Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

This resolves the petition for review on certiorari assailing the Order1 of the Regional Trial Court of San Jose, Camarines Sur, Branch 58 (RTC-Br. 58) issued on July 13, 2005.

The antecedent facts are as follows.

On May 16, 2005, respondents filed a petition with the Regional Trial Court of San Jose, Camarines Sur for quo warranto with Damages and Prayer for Mandatory and Prohibitory Injunction, Damages and Issuance of Temporary Restraining Order against herein petitioners. Respondents alleged that from 1985 up to the filing of the petition with the trial court, they had been members of the board of directors and officers of St. John Hospital, Incorporated, but sometime in May 2005, petitioners, who are also among the incorporators and stockholders of said corporation, forcibly and with the aid of armed men usurped the powers which supposedly belonged to Respondents.

On May 24, 2005, RTC-Br. 58 issued an Order transferring the case to the Regional Trial Court in Naga City. According to RTC-Br. 58, since the verified petition showed petitioners therein (herein respondents) to be residents of Naga City, then pursuant to Section 7, Rule 66 of the 1997 Rules of Civil Procedure, the action for quo warranto should be brought in the Regional Trial Court exercising jurisdiction over the territorial area where the respondents or any of the respondents resides. However, the Executive Judge of RTC, Naga City refused to receive the case folder of the subject case for quo warranto, stating that improper venue is not a ground for transferring a quo warranto case to another administrative jurisdiction.

The RTC-Br. 58 then proceeded to issue and serve summons on herein petitioners (respondents below). Petitioner Tabora filed his Answer dated June 8, 2005, raising therein the affirmative defenses of (1) improper venue, (2) lack of jurisdiction, and (3) wrong remedy of quo warranto. Thereafter, the other petitioners also filed their Answer, also raising the same affirmative defenses. All the parties were then required to submit their respective memoranda.

On July 13, 2005, RTC-Br. 58 issued the assailed Order, the pertinent portions of which read as follows:

It is undisputed that the plaintiffs’ cause of action involves controversies arising out of intra-corporate relations, between and among stockholders, members or associates of the St. John Hospital Inc. which originally under PD 902-A approved on March 11, 1976 is within the original and exclusive jurisdiction of the Securities and Exchange Commission to try and decide in addition to its regulatory and adjudicated functions (Section 5, PD 902-A). Upon the advent of RA 8799 approved on July 19, 2000, otherwise known as the Securities and Regulation Code, the Commission’s jurisdiction over all cases enumerated in Section 5, Presidential Decree 902-A were transferred ["]to the Court of general jurisdiction or the appropriate Regional Trial Court with a proviso that the "Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases." Pursuant to this mandate of RA 8799, the Supreme Court in the exercise of said mandated authority, promulgated on November 21, 2000, A.M. No. 00-11-03-SC which took effect 15 December 2000 designated certain branches of the Regional Trial Court to try and decide Securities and Exchange Commission Cases arising within their respective territorial jurisdiction with respect to the National Capital Region and within the respective provinces in the First to Twelve Judicial Region. Accordingly, in the Province of Camarines Sur, (Naga City) RTC Branch 23 presided by the Hon. Pablo M. Paqueo, Jr. was designated as "special court" (Section 1, A.M. No. 00-11-03-SC).

Subsequently, on January 23, 2001, supplemental Administrative Circular No. 8-01 which took effect on March 1, 2001 was issued by the Supreme Court which directed that "all SEC cases originally assigned or transmitted to the regular Regional Trial Court shall be transferred to branches of the Regional Trial Court specially designated to hear such cases in accordance with A.M. No. 00-11-03-SC.

On March 13, 2001, A.M. No. 01-2-04 SC was promulgated and took effect on April 1, 2001.

From the foregoing discussion and historical background relative to the venue and jurisdiction to try

and decide cases originally enumerated in Section 5 of PD 902-A and later under Section 5.2 of RA 8799, it is evident that the clear intent of the circular is to bestow the juridiction "to try and decide these cases to the "special courts" created under A.M. No. 00-11-03-SC. . . .

Under Section 8, of the Interim Rules, [a] Motion to Dismiss is among the prohibited pleadings. On the otherhand, the Supreme Court under Administrative Order 8-01 has directed the transfer from the regular courts to the branches of the Regional Trial Courts specially designated to try and decide intra-corporate dispute.

In the light of the above-noted observations and discussion, the Motion to Dismiss is DENIED pursuant to the Interim Rules of Procedure for Intra-Corporate Controversies (A.M. No. 01-2-04-SC) which mandates that motion to dismiss is a prohibited pleading (Section 8) and in consonance with Administrative Order 8-01 of the Supreme Court dated March 1, 2001, this case is hereby ordered remanded to the Regional Trial Court Branch 23, Naga City which under A.M. No. 00-11-03-SC has been designated as special court to try and decide intra-corporate controversies under R.A. 8799.

The scheduled hearing on the prayer for temporary restraining order and preliminary injunction set on July 18, 2005 is hereby cancelled.

For reasons of comity the issue of whether Quo Warranto is the proper remedy is better left to the court of competent jurisdiction to rule upon.

SO ORDERED. 2

Petitioners no longer moved for reconsideration of the foregoing Order and, instead, immediately elevated the case to this Court via a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure.

The petition raises the following issues:

I

WHETHER A BRANCH OF THE REGIONAL TRIAL COURT WHICH HAS NO JURISDICTION TO TRY AND DECIDE A CASE HAS AUTHORITY TO REMAND THE SAME TO ANOTHER CO-EQUAL COURT IN ORDER TO CURE THE DEFECTS ON VENUE AND JURISDICTION

II

WHETHER OR NOT ADMINISTRATIVE CIRCULAR NO. 8-01 DATED JANUARY 23, 2001 WHICH TOOK EFFECT ON MARCH 1, 2001 MAY BE APPLIED IN THE PRESENT CASE WHICH WAS FILED ON MAY 16, 2005. 3

In their Comment, respondents argue that the present petition should be denied due course and dismissed on the grounds that (1) an appeal under Rule 45 is inappropriate in this case because the Order dated July 13, 2005 is merely an interlocutory order and not a final order as contemplated under Rule 45 of the 1997 Rules of Civil Procedure; (2) a petition for review on certiorari under Rule 45 is the wrong remedy under A.M. No. 04-9-07-SC, which provides that "all decisions and final orders in cases falling under the Interim Rules of Corporate Rehabilitation and the Interim Rules of Procedure Governing Intra-Corporate Controversies under Republic Act No. 8799 shall be appealable to the Court of Appeals through a petition for review under Rule 43 of the Rules of Court;" and (3) the petition was intended merely to delay the proceedings in the trial court because when the case was transferred to Branch 21 of the Regional Trial Court, said court granted petitioners’ motion to hold the proceedings in view of the present petition pending before this Court.

Subsequently, petitioners also filed an Urgent Motion to Restore Status Quo Ante, alleging that on January 12, 2006, respondent Jose Pierre Panday, with the aid of 14 armed men, assaulted the

premises of St. John Hospital in Naga City, taking away the daily hospital collections estimated at P400,000.00.

The Court notes that, indeed, petitioners chose the wrong remedy to assail the Order of July 13, 2005. It is hornbook principle that Rule 45 of the 1997 Rules of Civil Procedure governs appeals from judgments or final orders.4 The Order dated July 13, 2005 is basically a denial of herein petitioners’ prayer in their Answer for the dismissal of respondents’ case against them. As a consequence of the trial court’s refusal to dismiss the case, it then directed the transfer of the case to another branch of the Regional Trial Court that had been designated as a special court to hear cases formerly cognizable by the SEC. Verily, the order was merely interlocutory as it does not dispose of the case completely, but leaves something more to be done on its merits. Such being the case, the assailed Order cannot ordinarily be reviewed through a petition under Rule 45. As we held in Tolentino v. Natanauan, 5 to wit:

In the case of Bangko Silangan Development Bank vs. Court of Appeals, the Court reiterated the well-settled rule that:

. . . an order denying a motion to dismiss is merely interlocutory and therefore not appealable, nor can it be the subject of a petition for review on certiorari. Such order may only be reviewed in the ordinary course of law by an appeal from the judgment after trial. The ordinary procedure to be followed in that event is to file an answer, go to trial, and if the decision is adverse, reiterate the issue on appeal from the final judgment.6

It appears, however, that the longer this case remains unresolved, the greater chance there is for more violence between the parties to erupt. In Philippine Airlines v. Spouses Kurangking,7 the Court proceeded to give due course to a case despite the wrong remedy resorted to by the petitioner therein, stating thus:

While a petition for review on certiorari under Rule 45 would ordinarily be inappropriate to assail an interlocutory order, in the interest, however, of arresting the perpetuation of an apparent error committed below that could only serve to unnecessarily burden the parties, the Court has resolved to ignore the technical flaw and, also, to treat the petition, there being no other plain, speedy and adequate remedy, as a special civil action for certiorari. Not much, after all, can be gained if the Court were to refrain from now making a pronouncement on an issue so basic as that submitted by the parties.8

In this case, the basic issue of which court has jurisdiction over cases previously cognizable by the SEC under Section 5, Presidential Decree No. 902-A (P.D. No. 902-A), and the propensity of the parties to resort to violence behoove the Court to look beyond petitioners’ technical lapse of filing a petition for review on certiorari instead of filing a petition for certiorari under Rule 65 with the proper court. Thus, the Court shall proceed to resolve the case on its merits.

It should be noted that allegations in a complaint for quo warranto that certain persons usurped the offices, powers and functions of duly elected members of the board, trustees and/or officers make out a case for an intra-corporate controversy.9 Prior to the enactment of R.A. No. 8799, the Court, adopting Justice Jose Y. Feria’s view, declared in Unilongo v. Court of Appeals 10 that Section 1, Rule 66 of the 1997 Rules of Civil Procedure is "limited to actions of quo warranto against persons who usurp a public office, position or franchise; public officers who forfeit their office; and associations which act as corporations without being legally incorporated," while "[a]ctions of quo warranto against corporations, or against persons who usurp an office in a corporation, fall under the jurisdiction of the Securities and Exchange Commission and are governed by its rules. (P.D. No. 902-A as amended)."11

However, R.A. No. 8799 was passed and Section 5.2 thereof provides as follows:

5.2. The Commission’s jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial

Court: Provided, That the Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. xxx

Therefore, actions of quo warranto against persons who usurp an office in a corporation, which were formerly cognizable by the Securities and Exchange Commission under PD 902-A, have been transferred to the courts of general jurisdiction. But, this does not change the fact that Rule 66 of the 1997 Rules of Civil Procedure does not apply to quo warranto cases against persons who usurp an office in a private corporation. Presently, Section 1(a) of Rule 66 reads thus:

Section 1. Action by Government against individuals. – An action for the usurpation of a public office, position or franchise may be commenced by a verified petition brought in the name of the Republic of the Philippines against

(a) A person who usurps, intrudes into, or unlawfully holds or exercises a public office, position or franchise;

x x x x

As explained in the Unilongo12 case, Section 1(a) of Rule 66 of the present Rules no longer contains the phrase "or an office in a corporation created by authority of law" which was found in the old Rules. Clearly, the present Rule 66 only applies to actions of quo warranto against persons who usurp a public office, position or franchise; public officers who forfeit their office; and associations which act as corporations without being legally incorporated despite the passage of R.A. No. 8799. It is, therefore, The Interim Rules of Procedure Governing Intra-Corporate Controversies Under R.A. No. 8799 (hereinafter the Interim Rules) which applies to the petition for quo warranto filed by respondents before the trial court since what is being questioned is the authority of herein petitioners to assume the office and act as the board of directors and officers of St. John Hospital, Incorporated.

The Interim Rules provide thus:

Section 1. (a) Cases covered. – These Rules shall govern the procedure to be observed in civil cases involving the following:

x x x x

(2) Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members, or associates, and between, any or all of them and the corporation, partnership, or association of which they are stockholders, members, or associates, respectively;

(3) Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or associations;

x x x x

SEC. 5. Venue. – All actions covered by these Rules shall be commenced and tried in the Regional Trial Court which has jurisdiction over the principal office of the corporation, partnership, or association concerned. xxx (Emphasis ours)

Pursuant to Section 5.2 of R.A. No. 8799, the Supreme Court promulgated A.M. No. 00-11-03-SC (effective December 15, 2000) designating certain branches of the Regional Trial Courts to try and decide cases formerly cognizable by the Securities and Exchange Commission. For the Fifth Judicial Region, this Court designated the following branches of the Regional Trial Court, to wit:

Camarines Sur (Naga City) Branch 23, Judge Pablo M. Paqueo, Jr.Albay (Legaspi City) Branch 4, Judge Gregorio A. Consulta

Sorsogon (Sorsogon) Branch 52, Judge Honesto A. Villamor

Subsequently, the Court promulgated A.M. No. 03-03-03-SC, effective July 1, 2003, which provides that:

1. The Regional Courts previously designated as SEC Courts through the: (a) Resolutions of this Court dated 21 November 2000, 4 July 2001, 12 November 2002, and 9 July 2002, all issued in A.M. No. 00-11-03-SC, (b) Resolution dated 27 August 2001 in A.M. No. 01-5-298-RTC; and (c) Resolution dated 8 July 2002 in A.M. No. 01-12-656-RTC are hereby DESIGNATED and shall be CALLED as Special Commercial Courts to try and decide cases involving violations of Intellectual Property Rights which fall within their jurisdiction and those cases formerly cognizable by the Securities and Exchange Commission;

x x x x

4. The Special Commercial Courts shall have jurisdiction over cases arising within their respective territorial jurisdiction with respect to the National Capital Judicial Region and within the respective provinces with respect to the First to Twelfth Judicial Regions. Thus, cases shall be filed in the Office of the Clerk of Court in the official station of the designated Special Commercial Court; (Emphasis ours)

The next question then is, which branch of the Regional Trial Court has jurisdiction over the present action for quo warrato? Section 5 of the Interim Rules provides that the petition should be commenced and tried in the Regional Trial Court that has jurisdiction over the principal office of the corporation. It is undisputed that the principal office of the corporation is situated at Goa, Camarines Sur. Thus, pursuant to A.M. No. 00-11-03-SC and A.M. No. 03-03-03-SC, it is the Regional Trial Court designated as Special Commercial Courts in Camarines Sur which shall have jurisdiction over the petition for quo warranto filed by herein Respondents.

Evidently, the RTC-Br. 58 in San Jose, Camarines Sur is bereft of jurisdiction over respondents’ petition for quo warranto. Based on the allegations in the petition, the case was clearly one involving an intra-corporate dispute. The trial court should have been aware that under R.A. No. 8799 and the aforementioned administrative issuances of this Court, RTC-Br. 58 was never designated as a Special Commercial Court; hence, it was never vested with jurisdiction over cases previously cognizable by the SEC.

Such being the case, RTC-Br. 58 did not have the requisite authority or power to order the transfer of the case to another branch of the Regional Trial Court. The only action that RTC-Br. 58 could take on the matter was to dismiss the petition for lack of jurisdiction. In HLC Construction and Development Corp. v. Emily Homes Subdivision Homeowners’ Association,13 the Court held that the trial court, having no jurisdiction over the subject matter of the complaint, should dismiss the same so the issues therein could be expeditiously heard and resolved by the tribunal which was clothed with jurisdiction.

Note, further, that respondents’ petition for quo warranto was filed as late as 2005. A.M. No. 03-03-03-SC took effect as early as July 1, 2003 and it was clearly provided therein that such petitions shall be filed in the Office of the Clerk of Court in the official station of the designated Special Commercial Court. Since the official station of the designated Special Commercial Court for Camarines Sur is the Regional Trial Court in Naga City, respondents should have filed their petition with said court. A.M. No. 00-11-03-SC having been in effect for four years and A.M. No. 03-03-03-SC having been in effect for almost two years by the time respondents filed their petition, there is no cogent reason why respondents were not aware of the appropriate court where their petition should be filed.

The ratiocination of RTC-Br.58 that Administrative Circular No. 08-2001 authorized said trial court to order the transfer of respondents’ petition to the Regional Trial Court of Naga City is specious because as of the time of filing of the petition, A.M. No. 03-03-03-SC, which clearly stated that cases formerly cognizable by the SEC should be filed with the Office of the Clerk of Court in the official station

of the designated Special Commercial Court, had been in effect for almost two years. Thus, the filing of the petition with the Regional Trial Court of San Jose, Camarines Sur, which had no jurisdiction over those kinds of actions, was clearly erroneous.

WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The Order of the Regional Trial Court of San Jose, Camarines Sur dated July 13, 2005 is SET ASIDE for being NULL and VOID. The petition for quo warranto in Civil Case No. T-1007 (now re-docketed as SEC Case No. RTC 2005-0001), entitled "Jose Pierre A. Panday, et al. v. Sps. Joaquin M. Calleja, Jr., et al." is ordered DISMISSED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 141962             January 25, 2006

DANILO DUMO and SUPREMA DUMO, Petitioners, vs.ERLINDA ESPINAS, JHEAN PACIO, PHOL PACIO, MANNY JUBINAL, CARLITO CAMPOS, and SEVERA ESPINAS, Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Decision1 of the Court of Appeals (CA) dated October 14, 1999 in CA-G.R. SP No. 50239, which set aside the Decision of the Regional Trial Court (RTC) of Bauang, La Union, Branch 33, and reinstated with modification the judgment of the Municipal Trial Court (MTC) of the same town and province; and its Resolution2 of February 18, 2000, denying petitioners’ motion for reconsideration.

The present case arose from a complaint for forcible entry with prayer for the issuance of a temporary restraining order and/or preliminary injunction filed by spouses Danilo and Suprema Dumo (petitioners) against Erlinda Espinas, Jhean Pacio, Phol Pacio, Manny Jubinal, Carlito Campos and Severa Espinas (respondents) with the MTC of Bauang, La Union. The case was docketed as Civil Case No. 881. In their complaint, petitioners alleged:

…

2. That plaintiffs are the owners-possessors of a parcel of sandy land with all the improvements standing thereon, located in Paringao, Bauang, La Union, with an area of 1, 514 square meters, covered by Tax Declaration No. 22839, a photocopy of the said tax declaration is hereto attached as Annex "A";

3. That on November 17, 1995, defendant Severa J. Espinas filed a civil complaint before this same court, docketed as civil case no. 857, entitled "Quieting of Title and/or Ownership and Possession against spouses Sandy and Presnida Saldana, subject matter of the case being the

same real property mentioned in paragraph 2 above, for which plaintiffs seeks (sic) that the Honorable Court takes judicial notice of the same;

4. That although a decision has been rendered against the defendants in civil case no. 857, the same was not enforced as per Sheriff’s return dated November 4, 1996, attached to the records of civil case no. 857;

5. That on October 30, 1996, at about 1:45 P.M., all defendants acting for the interest of Severa Espinas, apparently disgruntled with the refusal of the sheriff to put them in possession over the questioned real property, and in open defiance with the official action taken by the sheriff, took it upon themselves, employing force, intimidation, and threat, to enter the said question (sic) real property, and despite protestations made by plaintiffs, who were there then present and visibly outnumbered by defendants and their agents who were armed with sticks, bolos, hammers, and other deadly weapons, successfully drove out plaintiffs, and took over the premises; that arrogantly, the defendants were boasting aloud that they were under instructions by the "judge" to do just that – to forcibly enter and take over the premises; that defendants while inside the premises, demolished and totally tore down all the improvements standing thereon, consisting of, but not limited to shed structures intended for rent to the public;

6. That defendants are still in the premises to date, and have even started putting and continuously putting up structures thereon;

7. That the plaintiff being the rightful owner of the disputed property and not being a party in civil case no. 857, can never be bound by the proceedings thereon; that the acts of defendants in forcibly entering the property of plaintiff, and taking over the same without no lawful basis is patently a violation of her proprietary rights, the commission and the continuance of the unlawful acts aforementioned of defendants verily works injustice to plaintiffs;3

…

Petitioners prayed for the payment of actual damages in the amount of P75,000.00, lost earnings of P5,000.00 per day, moral damages of P100,000.00 and attorney’s fees in the amount of P50,000.00.4

On November 12, 1996, the MTC issued a temporary restraining order directing the defendants to cease and desist from destroying or demolishing the improvements found on the subject land and from putting up structures thereon.5 In its Order of January 15, 1997, the MTC issued a writ of preliminary injunction.6

In their Answer, respondents contended as part of their Special and Affirmative Defenses:

…

1. That Sps. Marcelino and Severa Espinas purchased the questioned parcel of land from Carlos Calica in 1943;

2. That said parcel of land has been declared for taxation purposes under their name and the real estate taxes have [been] religiously paid;

3. That said parcel of land has been surveyed, which Plan Psu-202273 is duly approved by the Director of Land, with an area of 1,065 sq. m. more or less;

4. That to remove and clear all doubts and cloud over the ownership of said parcel of land, Civil Case No. 857 was filed and after hearing, decision was rendered declaring herein defendants the lawful owners of said parcel of land;

5. That under and by virtue of said Decision, defendants entered, occupied and possessed said land, and in the exercise of their right of ownership, cleaned the same of illegally constructed structures which were done without the knowledge and consent of herein defendants;7

…

After trial, the MTC rendered judgment holding that petitioners were able to prove their right of possession over the subject property. The dispositive portion of the MTC Decision reads as follows:

WHEREFORE, in view of the foregoing considerations, judgment is rendered in favor of the plaintiffs spouses Danilo and Suprema Dumo and against all the defendants and therefore, the Court declares the plaintiffs the priority of possession or physical possession de-facto of the land subject matter of the suit. The preliminary mandatory injunction heretofore issued by this Court is hereby made permanent and if the defendants and their agents or any person acting in their behalf are still in the premises are ordered to vacate said property. The defendants are likewise ordered to pay jointly and severally the plaintiffs the amount of P30,000.00 as actual damages plus P500.00 a day as lost earning of the premises from October 30, 1996 up to the time defendants vacate the premises; P30,000.00 as moral damages; P10,000.00 as exemplary damages; and P30,000.00 as attorney’s fee and to pay double cost.

SO ORDERED.8

Aggrieved by the decision of the MTC, respondents appealed the case to the RTC of Bauang, La Union. 9

It was docketed as Civil Case No. 1099-BG.

In a letter filed with this Court dated July 24, 1998, RTC Judge Rose Mary R. Molina-Alim who handles Civil Case No. 1099-BG, requested that she be allowed to inhibit herself from further sitting in said case on the ground that the petitioners have filed an administrative complaint against her for partiality, and by reason of such complaint she honestly feels that she can no longer continue deciding Civil Case No. 1099-BG without bias and unnecessary pressure.10 However, in this Court’s Resolution of September 15, 1998, Judge Molina-Alim’s request was denied on the ground that the mere filing of an administrative complaint does not preclude a judge from deciding a case submitted to him/her for resolution.11 Hence, Judge Molina-Alim proceeded in deciding the case.

In its Decision dated December 18, 1998, the RTC reversed and set aside the Decision of the MTC and dismissed the case filed by the petitioners.12 The RTC ruled:

Prescinding from the above factual antecedents, as between defendant Severa Espinas who acquired the property on October 18, 1943 through purchase (Exhibit "1") and plaintiffs who allegedly possessed it on May 23, 1987 by virtue of the deed of partition with absolute sale (Exhibit "A"), the former had a possession antedating that of the latter. Even if the possession of plaintiffs’ predecessors-in-interest, Sps. Pedro and Bernardo Trinidad since 1951, were to be considered, still, defendant Severa Espinas enjoys the priority of possession long before the filing of the instant case on October 30, 1996. Under these circumstances, priority in time should be the pivotal cog in resolving the issue of possession.

What is more, defendant Severa Espinas was never divested of her possession except in 1987 when the plaintiffs put up the retaining seawall on the western portion and cyclone wire on the southern portion of the property without her (Severa) consent. Despite the latter’s protestations, plaintiffs continued to introduce these improvements and challenged her to file a suit in Court. (Minutes of the ocular inspection, April 23, 1997). And lately, in Civil Case No. 857 (Exhibit "3"), when defendants Saldy and Fresnida Saldaña tried to encroach on the property claiming ownership thereof. What is more, the possession of defendant Severa Espinas since 1943 was bolstered by the decision rendered in the land registration case (Exhibit "U"), as well as in the civil case (Exhibit "E"), wherein she was declared the owner of the property in question.

Hence, the MTC erred in finding plaintiffs to have priority of possession. On the contrary, defendants (sic) evidence is very clear that defendant Severa Espinas and her husband had been in actual, open, continuous, adverse in the concept of owner, possession of the land since 1943. In addition, the evidence of possession presented in the land registration and quieting of title cases (Exhibits "U" and "E") surely dispels any iota of doubt that may exist in regard to the possession of defendant Severa Espinas over the subject property. …

…

As regards the issue on the award of damages:

The rule is settled that in forcible entry or unlawful detainer cases, the only damage that can be recovered is the fair rental value or the reasonable compensation for the use and occupation of the leased property. The reason for this is that in such cases, the only issue raised in ejectment cases is that of rightful possession; hence, the damages which could be recovered are those which the plaintiff could have sustained as a mere possessor, or those caused by the loss of the use and occupation of the property, and not the damages which he may have suffered but which have no direct relation to his loss of material possession (Araos vs. Court of Appeals, 232 SCRA 770).

Then too, under Section 17 of Rule 70 of the 1997 Rules of Civil Procedure, in forcible entry and unlawful detainer, the monetary award is limited to… the sum justly due as arrears of rent or as reasonable compensation for the use and occupation of the premises, attorney’s fees and costs. In this case, the MTC erred in awarding P30,000.00 as actual damages plus P500.00 a day as loss earnings, P30,000.00 as moral damages, P10,000.00 as exemplary damages. These damages are not the reasonable compensation for the use and occupation of the property. Rather, these are damages which may have been suffered by plaintiffs which have no direct relation to the use of material possession, hence, should not have been awarded (Araos vs. C.A., supra).

Besides, the award of P30,000.00 as actual damages plus P500.00 a day as loss earnings has no factual and legal basis, hence, should have been disallowed.

True, the aforecited rule now allows attorney’s fees to be awarded, but the grant of the same must be in accordance with Article 2208 of the Civil Code, thus:

Article 2208. In the absence of stipulation, attorney’s fees … cannot be recovered except …

1) In any other cases (sic) where the court deems it just and equitable …

In all cases … must be reasonable.

The award of attorney’s fees by the MTC lacks basis. The body of the appealed decision indeed does not show justification for the award. Hence, there is no basis for such award, which, consequently, should have been removed. The power of the Court to award attorney’s fees under the above cited article, demands factual, legal and equitable justification. Its basis cannot be left to speculation and gesture (Morales vs. C.A. G.R. No. 117228, June 19, 1997).13

…

Petitioners then filed a petition for review with the CA. On October 14, 1999, the CA promulgated the presently assailed Decision setting aside the judgment of the RTC and reinstating with modification the decision of the MTC, by deleting the awards for actual, moral and exemplary damages.14 The CA held that the MTC correctly found that the petitioners were in possession of the subject land prior to the time when respondents allegedly forcibly entered the property; that it is error for the RTC to reach all the way back to 1943 to determine priority in possession considering that "prior possession" means possession immediately prior to the act of disturbance; that Civil Case No. 857, which was an action to quiet title filed by respondent Severa Espinas against spouses Sandy and Presnida Saldana, is not

binding on petitioners; and, that the alleged difference in the identities of the lands of petitioners and respondents was not raised as a defense in the Answer of respondents. As regards the award of damages, the CA agreed with the ruling of the RTC that in forcible entry and unlawful detainer cases, the only damage that can be recovered is the fair rental value or the reasonable compensation for the use and occupation of the property concerned; nonetheless, it sustained the award of attorney’s fees by the MTC.

Petitioners filed a Motion for Partial Reconsideration but the same was denied by the CA in its Resolution dated February 18, 2000.15

Hence, the present petition with the following assignment of errors:

1. THAT THE COURT OF APPEALS, UNDER THE INSTANT DECISION AND RESOLUTION, ANNEXES ‘A’ AND ‘B’ HEREOF, COMMITTED A REVERSIBLE ERROR IN NOT DECLARING THE DECISION OF RTC JUDGE ROSE MARY MOLINA ALIM AS NULL AND VOID FOR BEING VIOLATIVE OF PETITIONERS’ CONSTITUTIONAL RIGHT TO DUE PROCESS IN VIEW OF HER ADMITTED BIAS IN DECIDING THE CASE.

2. MOREOVER, THE COURT OF APPEALS, UNDER THE SAID DECISION AND RESOLUTION, ANNEXES A AND B HEREOF, COMMITTED A REVERSIBLE ERROR IN DELETING THE AWARDS OF ACTUAL, MORAL AND EXEMPLARY DAMAGES MADE BY THE MUNICIPAL TRIAL COURT, CONSIDERING THAT THE SAID AWARDS ARE ALREADY RES JUDICATA BECAUSE:

(a) THAT, AS AFORESAID, THE DECISION OF JUDGE ALIM WHICH INCLUDED THE DELETION OF THE SAID DAMAGES IS NULL AND VOID, AND DID NOT AFFECT THE MTC DECISION, AND,

(b) THAT, IN ANY EVENT, THE HEREIN RESPONDENTS DID NOT QUESTION THE AMOUNTS OF SAID AWARD IN THEIR APPEAL FROM THE DECISION OF THE MUNICIPAL TRIAL COURT TO THE REGIONAL TRIAL COURT THEREBY RENDERING SAID AWARDS, FINAL AND RES JUDICATA.16

In their first assignment of error, petitioners contend that the Decision rendered by the RTC dated December 18, 1998 is null and void because it violates petitioners’ constitutional right to due process considering that Judge Rose Mary R. Molina-Alim who sat during the trial and penned the questioned RTC decision had previously admitted her bias against petitioners.

We do not agree.

In Gochan vs. Gochan,17 we have sufficiently discussed the matter of a judge’s inhibition from hearing a case vis-à-vis the right of a party to due process, to wit:

A critical component of due process is a hearing before a tribunal that is impartial and disinterested. Every litigant is indeed entitled to nothing less than "the cold neutrality of an impartial judge." All the other elements of due process, like notice and hearing, would be meaningless if the ultimate decision were to come from a biased judge. Section 1 of Rule 137 of the Rules of Court provides:

SECTION 1. Disqualification of judges. - No judge or judicial officer shall sit in any case in which he, or his wife or child, is pecuniarily interested as heir, legatee, creditor or otherwise, or in which he is related to either party within the sixth degree of consanguinity or affinity, or to counsel within the fourth degree, computed according to the rules of the civil law, or in which he has been executor, administrator, guardian, trustee or counsel, or in which he has presided in any inferior court when his ruling or decision is the subject of review, without the written consent of all parties in interest, signed by them and entered upon the record.

A judge may, in the exercise of his sound discretion, disqualify himself from sitting in a case, for just or

valid reasons other than those mentioned above.

The Rules contemplate two kinds of inhibition: compulsory and voluntary. The instances mentioned in the first paragraph of the cited Rule conclusively presume that judges cannot actively and impartially sit in a case. The second paragraph, which embodies voluntary inhibition, leaves to the discretion of the judges concerned whether to sit in a case for other just and valid reasons, with only their conscience as guide.

To be sure, judges may not be legally prohibited from sitting in a litigation. But when circumstances reasonably arouse suspicions, and out of such suspicions a suggestion is made of record that they might be induced to act with prejudice for or against a litigant, they should conduct a careful self-examination. Under the second paragraph of the cited Section of the Rules of Court, parties have the right to seek the inhibition or the disqualification of judges who do not appear to be wholly free, disinterested, impartial or independent in handling a case. Whether judges should inhibit themselves therefrom rests on their own "sound discretion." That discretion is a matter of conscience and is addressed primarily to their sense of fairness and justice.

However, judges are exhorted to exercise their discretion in a way that the people’s faith in the courts of justice would not be impaired. A salutary norm for them to observe is to reflect on the possibility that the losing parties might nurture at the back of their minds the thought that the former have unmeritoriously tilted the scales of justice against them. Of course, the judges’ right must be weighed against their duty to decide cases without fear of repression.

Verily, the second paragraph of Section 1 of Rule 137 does not give judges the unfettered discretion to decide whether to desist from hearing a case. The inhibition must be for just and valid causes. The mere imputation of bias or partiality is not enough ground for them to inhibit, especially when the charge is without basis. This Court has to be shown acts or conduct clearly indicative of arbitrariness or prejudice before it can brand them with the stigma of bias or partiality.

In a string of cases, the Supreme Court has said that bias and prejudice, to be considered valid reasons for the voluntary inhibition of judges, must be proved with clear and convincing evidence. Bare allegations of their partiality will not suffice. It cannot be presumed, especially if weighed against the sacred oaths of office of magistrates, requiring them to administer justice fairly and equitably -- both to the poor and the rich, the weak and the strong, the lonely and the well-connected.

Equally important is the established doctrine that bias and prejudice must be shown to have resulted in an opinion on the merits on the basis of an extrajudicial source, not on what the judge learned from participating in the case. As long as opinions formed in the course of judicial proceedings are based on the evidence presented and the conduct observed by the magistrate, such opinion -- even if later found to be erroneous -- will not prove personal bias or prejudice on the part of the judge. While palpable error may be inferred from the decision or the order itself, extrinsic evidence is required to establish bias, bad faith, malice or corrupt purpose. At bottom, to disqualify a judge, the movant must prove bias and prejudice by clear and convincing evidence.18

(Emphasis ours)

What makes the present case different from the usual cases passed upon by this Court is the fact that, as stated earlier, Judge Molina-Alim herself manifested in her letter-request for inhibition that in view of the administrative case filed by herein petitioners charging her with partiality, she honestly feels that she "can no longer continue deciding the appealed case free from bias and unnecessary pressure." 19

Petitioners contend that Judge Molina-Alim’s manifestation is an admission of bias. Hence, by reason of such admission, there is no longer any need for them to prove the same. However, it must be emphasized that the Court denied Judge Molina-

Alim’s request for inhibition holding that the mere filing of an administrative complaint does not preclude a judge from deciding a case submitted to him/her for resolution for there are judicial remedies available to the parties should there be an adverse decision.20 It is clear from the Resolution that the Court was not persuaded by the reason put forth by Judge Molina-Alim in her request for inhibition. It should be clearly understood from the above-cited Resolution that the Court found no sufficient basis to allow Judge Molina-Alim to inhibit herself from hearing Civil Case No. 1099-BG. The Court ruled that the mere fact that an administrative case for alleged partiality was filed against her by herein petitioners does not justify her recusal. Indeed, a careful reading of the letter-request of Judge Molina-Alim shows that her request for inhibition stems solely from the fact that herein petitioners had filed an administrative case against her for partiality. There is no other statement in said letter-request, categorical or implied, which would show that her purported bias resulted from any other source. Notwithstanding Judge Molina-Alim’s statements in her request for inhibition, we find that petitioners’ allegations of bias and partiality remain unsubstantiated. Indeed, bare allegations of partiality and prejudgment will not suffice in the absence of clear and convincing evidence to overcome the presumption that the judge will undertake his noble role to dispense justice according to law and evidence and without fear or favor.21 There should be adequate evidence to prove the allegations, and there must be showing that the judge had an interest, personal or otherwise, in the prosecution of the case.22

To reiterate, the mere filing of an administrative case against a judge is not a ground for disqualifying him from hearing the case, for if on every occasion the party apparently aggrieved would be allowed to either stop the proceedings in order to await the final decision on the desired disqualification, or demand the immediate inhibition of the judge on the basis alone of his being so charged, many cases would have to be kept pending or perhaps there would not be enough judges to handle all the cases pending in all the courts.23 This Court has to be shown acts or conduct of the judge clearly indicative of arbitrariness or prejudice before the latter can be branded the stigma of being biased or partial. 24

Moreover, while judges are given wide latitude of discretion in determining if it is indeed proper for them to hear or sit in a particular case, it should be emphasized that this choice is not absolute and must be based on a just and valid cause and on a rational and logical assessment of the circumstances prevailing in the case brought before him.25 The option given to a judge to choose whether or not to handle a particular case should be counter-balanced by the judge’s sworn duty to administer justice without fear of repression.

In any case, petitioners’ contention that they have been deprived of due process is denied by the fact that they were able to appeal the questioned RTC Decision to the CA via a petition for review and, subsequently, file a motion for reconsideration of the CA Decision. The essence of due process is found in the reasonable opportunity to be heard and submit any evidence one may have in support of one's defense.26 What the law proscribes is the lack of opportunity to be heard.27 As long as a party is given the opportunity to defend his interests in due course, he would have no reason to complain, for it is this opportunity to be heard that makes up the essence of due process.28

In their second assignment of error, petitioners point out that in their petition for review filed with the CA, they did not raise as an issue the award of damages made by the MTC. Similarly, respondents did not specifically assign as error the award of damages by the MTC when they appealed the case to the RTC; neither did they file an appeal with the CA questioning the award of damages by the MTC. On this basis, petitioners conclude that the award for damages not having been appealed, the same had become final and executory. Hence, the RTC had no authority to reverse the judgment of the MTC respecting the award of damages. In the same way, petitioners contend that the CA did not have jurisdiction to rule on the matter of damages because this issue was not raised in the appeal filed before it.

We are not persuaded.

We have held that an appellate court is clothed with ample authority to review rulings even if they are

not assigned as errors.29 This is especially so if the court finds that their consideration is necessary in arriving at a just decision of the case before it.30 We have consistently held that an unassigned error closely related to an error properly assigned, or upon which a determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as an error.31 Petitioners admit in the present petition that herein respondents, in their appeal with the RTC, raised the question of whether or not the prevailing party may be awarded damages. Since this issue had been seasonably raised, it became open to further evaluation. It was only logical and natural for the RTC to deal with the question of whether petitioners are indeed entitled to the damages awarded by the MTC.

Moreover, even if the issue on damages was not raised by herein respondents in their appeal with the RTC, it is not erroneous on the part of the RTC to delete the award of damages in the MTC decision considering that the RTC judgment reversed the decision of the MTC. It would be the height of inconsistency if the RTC sustained the award of damages in favor of herein petitioners when, in the same decision, it reversed the MTC judgment and dismissed the complaint of petitioners.

Lastly, we agree with the CA and the RTC that there is no basis for the MTC to award actual, moral and exemplary damages in view of the settled rule that in ejectment cases, the only damage that can be recovered is the fair rental value or the reasonable compensation for the use and occupation of the property.32 Considering that the only issue raised in ejectment is that of rightful possession, damages which could be recovered are those which the plaintiff could have sustained as a mere possessor, or those caused by the loss of the use and occupation of the property, and not the damages which he may have suffered but which have no direct relation to his loss of material possession.33 Although the MTC’s order for the reimbursement to petitioners of their alleged lost earnings over the subject premises, which is a beach resort, could have been considered as compensation for their loss of the use and occupation of the property while it was in the possession of the respondents, records do not show any evidence to sustain the same. Thus, we find no error in the ruling of the RTC that the award for lost earnings has no evidentiary or factual basis; and in the decision of the CA affirming the same.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals dated October 14, 1999 and February 18, 2000, respectively, are AFFIRMED.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. NO. 155179               August 24, 2007

VICTORINO QUINAGORAN, Petitioner, vs.COURT OF APPEALS and THE HEIRS OF JUAN DE LA CRUZ, Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision1 of the Court Appeals (CA) in CA-GR SP No. 60443 dated May 27, 2002 and its Resolution 2

dated August 28, 2002, which denied petitioner's Motion for Reconsideration.

The factual antecedents.

The heirs of Juan dela Cruz, represented by Senen dela Cruz (respondents), filed on October 27, 1994 a Complaint for Recovery of Portion of Registered Land with Compensation and Damages against Victorino Quinagoran (petitioner) before the Regional Trial Court (RTC) Branch XI of Tuao, Cagayan, docketed as Civil Case No. 240-T.3 They alleged that they are the co-owners of a a parcel of land containing 13,100 sq m located at Centro, Piat, Cagayan, which they inherited from the late Juan dela Cruz;4 that in the mid-70s, petitioner started occupying a house on the north-west portion of the property, covering 400 sq m, by tolerance of respondents; that in 1993, they asked petitioner to remove the house as they planned to construct a commercial building on the property; that petitioner refused, claiming ownership over the lot; and that they suffered damages for their failure to use the same.5 Respondents prayed for the reconveyance and surrender of the disputed 400 sq m, more or less, and to be paid the amount of P5,000.00 monthly until the property is vacated, attorney's fees in the amount of P20,000.00, costs of suit and other reliefs and remedies just and equitable.6

Petitioner filed a Motion to Dismiss claiming that the RTC has no jurisdiction over the case under Republic Act (R.A.) No. 7691, which expanded the exclusive original jurisdiction of the Municipal Trial Court (MTC) to include all civil actions which involve title to, or possession of, real property, or any interest therein which does not exceed P20,000.00. He argued that since the 346 sq m lot which he owns adjacent to the contested property has an assessed value of P1,730.00, the assessed value of the lot under controversy would not be more than the said amount.7

The RTC denied petitioner's Motion to Dismiss in an Order dated November 11, 1999, thus:

The Court finds the said motion to be without merit. The present action on the basis of the allegation of the complaint partakes of the nature of action publicciana (sic) and jurisdiction over said action lies with the Regional Trial Court, regardless of the value of the property. This is so because in paragraph 8 of the complaint, it is alleged that the plaintiff demanded from the defendant the removal of the house occupied by the defendant and the possession of which is "Only due to Tolerance (sic) of herein plaintiffs".

WHEREFORE, for lack of merit, the motion to dismiss is hereby denied.8

Petitioner's Motion for Reconsideration was also denied by the RTC.9

Petitioner then went to the CA on a Petition for Certiorari and Prohibition seeking the annulment of the Orders of the RTC.10

On May 27, 2002, the CA rendered the herein assailed Decision dismissing petitioner's action and affirming in toto the RTC.11 Pertinent portions of said Decision, read:

At the onset, we find that the complaint filed by the Heirs of Juan dela Cruz, represented by Senen dela Cruz adequately set forth the jurisdictional requirements for a case to be cognizable by the Regional Trial Court. The Complaint is captioned "recovery of portion of registered land" and it contains the following allegations:

7. That since plaintiffs and defendant were neighbors, the latter being the admitted owner of the adjoining lot, the former's occupancy of said house by defendant was only due to the tolerance of herein plaintiffs;

8. That plaintiffs, in the latter period of 1993, then demanded the removal of the subject house for the purpose of constructing a commercial building and which herein defendant refused and

in fact now claims ownership of the portion in which said house stands;

9. That repeated demands relative to the removal of the subject house were hence made but which landed on deaf ears;

10. That a survey of the property as owned by herein plaintiffs clearly establishes that the subject house is occupying Four Hundred (400) square meters thereof at the north-west portion thereof, as per the approved survey plan in the records of the Bureau of Lands.

x x x x

It is settled that when the complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as where it does not state how entry was effected or how and when dispossession started, the remedy should either be an accion publiciana or an accion reinvindicatoria in the proper regional trial court. In the latter instances, jurisdiction pertains to the Regional Trial Court.

As another legal recourse from a simple ejectment case governed by the Revised Rules of Summary Procedure, an accion publiciana is the plenary action to recover the right of possession when dispossession has lasted more than one year or when dispossession was effected by means other than those mentioned in Rule 70 of the Rules of Court. Where there is no allegation that there was denial of possession through any of the methods stated in Section 1, Rule 70 of the Rules of Court, or where there is no lease contract between the parties, the proper remedy is the plenary action of recovery of possession. Necessarily, the action falls within the jurisdiction of the Regional Trial Court. Thus, we find that the private respondents [heirs of dela Cruz] availed of the proper remedy when they filed the action before the court a quo.

Undoubtedly, the respondent court therefore did not act with grave abuse of discretion amounting to or in excess of jurisdiction in denying Quinagoran's Motion to Dismiss and the Motion for Reconsideration, thereof, because it has jurisdiction to hear and decide the instant case.

x x x x

It would not be amiss to point out that the nature of the action and jurisdiction of courts are determined by the allegations in the complaint. As correctly held by the Regional Trial Court, "the present action on the basis of the allegation of the complaint partakes of the nature of action publiciana and jurisdiction over said action lies with the Regional Trial Court regardless of the value of the property. Therefore, we completely agree with the court a quo's conclusion that the complaint filed by the Heirs of Juan dela Cruz, represented by Senen dela Cruz, is in the nature of an accion publiciana and hence it is the Regional Trial Court which has jurisdiction over the action, regardless of the assessed value of the property subject of present controversy.12

Petitioner's Motion for Reconsideration was denied on August 28, 2002 for lack of merit.13

Petitioner now comes before this Court on a petition for review claiming that under R.A. No. 7691 the jurisdiction of the MTC, Metropolitan Trial Court (MeTC), and Municipal Trial Court in Cities (MTCC) was expanded to include exclusive original jurisdiction over civil actions when the assessed value of the property does not exceed P20,000.00 outside Metro Manila and P50,000.00 within Metro Manila.14 He likewise avers that it is an indispensable requirement that the complaint should allege the assessed value of the property involved.15 In this case, the complaint does not allege that the assessed value of the land in question is more than P20,000.00. There was also no tax declaration attached to the complaint to show the assessed value of the property. Respondents therefore failed to allege that the RTC has jurisdiction over the instant case.16 The tax declaration covering Lot No. 1807 owned by respondents and where the herein disputed property is purportedly part -- a copy of which petitioner submitted to the CA -- also shows that the value of the property is only P551.00.17 Petitioner then prays that the CA Decision and Resolution be annulled and set aside and that the complaint of herein

respondents before the trial court be dismissed for lack of jurisdiction.18

Respondents contend that: the petition is without factual and legal bases, and the contested decision of the CA is entirely in accordance with law;19 nowhere in the body of their complaint before the RTC does it state that the assessed value of the property is below P20,000.00;20 the contention of petitioner in his Motion to Dismiss before the RTC that the assessed value of the disputed lot is below P20,000.00 is based on the assessed value of an adjacent property and no documentary proof was shown to support the said allegation;21 the tax declaration which petitioner presented, together with his Supplemental Reply before the CA, and on the basis of which he claims that the disputed property's assessed value is only P551.00, should also not be given credence as the said tax declaration reflects the amount of P56,100.00 for the entire property.22

The question posed in the present petition is not complicated, i.e., does the RTC have jurisdiction over all cases of recovery of possession regardless of the value of the property involved?

The answer is no. The doctrine on which the RTC anchored its denial of petitioner's Motion to Dismiss, as affirmed by the CA -- that all cases of recovery of possession or accion publiciana lies with the regional trial courts regardless of the value of the property -- no longer holds true. As things now stand, a distinction must be made between those properties the assessed value of which is below P20,000.00, if outside Metro Manila; and P50,000.00, if within.

Republic Act No. 769123 which amended Batas Pambansa Blg. 12924 and which was already in effect25

when respondents filed their complaint with the RTC on October 27, 1994,26 expressly provides:

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

x x x x

(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 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

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 or 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.(Emphasis supplied)

The Court has also declared that all cases involving title to or possession of real property with an assessed value of less than P20,000.00 if outside Metro Manila, falls under the original jurisdiction of the municipal trial court.27

In Atuel v. Valdez28 the Court likewise expressly stated that:

Jurisdiction over an accion publiciana is vested in a court of general jurisdiction. Specifically, the regional trial court exercises exclusive original jurisdiction "in all civil actions which involve x x x possession of real property." However, if the assessed value of the real property involved does not exceed P50,000.00 in Metro Manila, and P20,000.00 outside of Metro Manila, the municipal trial court exercises jurisdiction over actions to recover possession of real property.29

That settled, the next point of contention is whether the complaint must allege the assessed value of the property involved. Petitioner maintains that there should be such an allegation, while respondents claim the opposite.

In no uncertain terms, the Court has already held that a complaint must allege the assessed value of the real property subject of the complaint or the interest thereon to determine which court has jurisdiction over the action.30 This is because the nature of the action and which court has original and exclusive jurisdiction over the same is determined by the material allegations of the complaint, the type of relief prayed for by the plaintiff and the law in effect when the action is filed, irrespective of whether the plaintiffs are entitled to some or all of the claims asserted therein.31

In this case, the complaint denominated as "Recovery of Portion of Registered Land with Compensation and Damages," reads:

1. That plaintiffs are the only direct and legitimate heirs of the late Juan dela Cruz, who died intestate on February 3, 1977, and are all residents of Centro, Piat, Cagayan;

x x x x

4. That plaintiffs inherited from x x x Juan dela Cruz x x x a certain parcel of land x x x containing an area of 13,111 square meters.

5. That sometime in the mid-1960's, a house was erected on the north-west portion of the aforedescribed lot x x x.

x x x x

7. That since plaintiffs and defendant were neighbors, the latter being the admitted owner of the adjoining lot, the former's occupancy of said house by defendant was only due to the tolerance of herein plaintiffs;

8. That plaintiffs, in the latter period of 1993, then demanded the removal of the subject house for the purpose of constructing a commercial building and which herein defendant refused and in fact now claims ownership of the portion in which said house stands;

9. That repeated demands relative to the removal of the subject house were hence made but which landed on deaf ears;

10. That a survey of the property as owned by herein plaintiffs clearly establishes that the subject house is occupying Four Hundred (400) square meters thereof at the north-west portion thereof, as per the approved survey plan in the records of the Bureau of Lands.32

Nowhere in said complaint was the assessed value of the subject property ever mentioned. There is therefore no showing on the face of the complaint that the RTC has exclusive jurisdiction over the action of the respondents.33 Indeed, absent any allegation in the complaint of the assessed value of the property, it cannot be determined whether the RTC or the MTC has original and exclusive jurisdiction over the petitioner's action.34 The courts cannot take judicial notice of the assessed or market value of

the land.351avvphi1

Jurisdiction of the court does not depend upon the answer of the defendant or even upon agreement, waiver or acquiescence of the parties.36 Indeed, the jurisdiction of the court over the nature of the action and the subject matter thereof cannot be made to depend upon the defenses set up in the court or upon a motion to dismiss for, otherwise, the question of jurisdiction would depend almost entirely on the defendant.37

Considering that the respondents failed to allege in their complaint the assessed value of the subject property, the RTC seriously erred in denying the motion to dismiss. Consequently, all proceedings in the RTC are null and void,38 and the CA erred in affirming the RTC.39

WHEREFORE, the petition is GRANTED. The Court of Appeals's Decision in CA-GR SP No. 60443 dated May 27, 2002 and its Resolution dated August 28, 2002, are REVERSED and SET ASIDE. The Regional Trial Court’s Orders dated November 11, 1999 and May 11, 2000, and all proceedings therein are declared NULL and VOID. The complaint in Civil Case No. 240-T is dismissed without prejudice.

No costs.

SO ORDERED.

SECOND DIVISION

[G.R. No. 160384.  April 29, 2005]

CESAR T. HILARIO, for himself and as Attorney-in-Fact of IBARRA, NESTOR, LINA and PRESCILLA, all surnamed HILARIO, petitioners, vs. ALLAN T. SALVADOR, respondent.

HEIRS OF SALUSTIANO SALVADOR, namely, REGIDOR M. SALVADOR and VIRGINIA SALVADOR-LIM, respondents-intervenors.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 63737 as well as its Resolution[2] denying the motion for the reconsideration of the said decision.

The Antecedents

On September 3, 1996, petitioners Cesar, Ibarra, Nestor, Lina and Prescilla, all surnamed Hilario, filed a complaint with the Regional Trial Court (RTC) of Romblon, Romblon, Branch 71, against private respondent Allan T. Salvador.  They alleged therein, inter alia, as follows:

2.   That, the plaintiffs are co-owners by inheritance from Concepcion Mazo Salvador of a parcel of land designated as Cad. Lot No. 3113-part, located at Sawang, Romblon, Romblon, which property was [adjudged] as the hereditary share of their father, Brigido M. Hilario, Jr. when their father was still single, and which adjudication was known by the plaintiffs[’] father’s co-heirs;

3.   That, sometime in 1989, defendant constructed his dwelling unit of mixed materials on the

property of the plaintiffs’ father without the knowledge of the herein plaintiffs or their predecessors-in-interest;

4.   That, demands have been made of the defendant to vacate the premises but the latter manifested that he have (sic) asked the prior consent of their grandmother, Concepcion Mazo Salvador;

5.   That, to reach a possible amicable settlement, the plaintiffs brought the matter to the Lupon of Barangay Sawang, to no avail, evidenced by the CERTIFICATE TO FILE ACTION hereto attached as ANNEX B;

6.   That, the unjustified refusal of the defendant to vacate the property has caused the plaintiffs to suffer shame, humiliation, wounded feelings, anxiety and sleepless nights;

7.   That, to protect their rights and interest, plaintiffs were constrained to engage the services of a lawyer.[3]

The petitioners prayed that, after due proceedings, judgment be rendered in their favor, thus:

WHEREFORE, it is prayed of this Honorable Court that after due process (sic), an order be issued for the defendant to vacate and peacefully turn over to the plaintiffs the occupied property and that defendant be made to pay plaintiffs:

a.       actual damages, as follows:

a.1.   transportation expenses in connection with the projected settlement of the case amounting to P1,500.00 and for the subsequent attendance to the hearing of this case at P1,500.00 each schedule;

a.2.   attorney’s fees in the amount of P20,000.00 and P500.00 for every court appearance;

b.   moral and exemplary damages in such amount incumbent upon the Honorable Court to determine; and

c.   such other relief and remedies just and equitable under the premises.[4]

The private respondent filed a motion to dismiss the complaint on the ground of lack of jurisdiction over the nature of the action, citing Section 33 of Batas Pambansa (B.P.) Blg. 129, as amended by Section 3(3) of Republic Act (R.A.) No. 7691.[5] He averred that –

(1)          the complaint failed to state the assessed value of the land in dispute;(2)          the complaint does not sufficiently identify and/or describe the parcel of land referred to as the subject-matter of this action;

both of which are essential requisites for determining the jurisdiction of the Court where the case is filed.  In this case, however, the assessed value of the land in question is totally absent in the allegations of the complaint and there is nothing in the relief prayed for which can be picked-up for determining the Court’s jurisdiction as provided by law.

In the face of this predicament, it can nevertheless be surmised by reading between the lines, that the assessed value of the land in question cannot exceed P20,000.00 and, as such, it falls within the jurisdiction of the Municipal Trial Court of Romblon and should have been filed before said Court rather than before the RTC. …[6]

The petitioners opposed the motion.[7] They contended that the RTC had jurisdiction over the action

since the court can take judicial notice of the market value of the property in question, which was P200.00 per square meter and considering that the property was 14,797 square meters, more or less, the total value thereof is P3,500,000.00.  Besides, according to the petitioners, the motion to dismiss was premature and “the proper time to interpose it is when the [petitioners] introduced evidence that the land is of such value.”

On November 7, 1996, the RTC issued an Order[8] denying the motion to dismiss, holding that the action was incapable of pecuniary estimation, and therefore, cognizable by the RTC as provided in Section 19(1) of B.P. Blg. 129, as amended.

After the denial of the motion to dismiss, the private respondent filed his answer with counterclaim. [9] Traversing the material allegations of the complaint, he contended that the petitioners had no cause of action against him since the property in dispute was the conjugal property of his grandparents, the spouses Salustiano Salvador and Concepcion Mazo-Salvador.

On April 8, 1997, Regidor and Virginia Salvador filed their Answer-in-Intervention[10] making common cause with the private respondent.  On her own motion, however, Virginia Salvador was dropped as intervenor.[11]

During trial, the petitioners adduced in evidence Tax Declaration No. 8590-A showing that in 1991 the property had an assessed value of P5,950.00.[12]

On June 3, 1999, the trial court rendered judgment finding in favor of the petitioners.  The dispositive portion of the decision reads:

WHEREFORE, as prayed for, judgment is rendered:

Ordering the defendant to vacate and peacefully turn over to the plaintiffs the occupied property; and

Dismissing defendant’s counterclaim.

SO ORDERED.[13]

Aggrieved, the private respondent and respondent-intervenor Regidor Salvador appealed the decision to the CA, which rendered judgment on May 23, 2003 reversing the ruling of the RTC and dismissing the complaint for want of jurisdiction.  The fallo of the decision is as follows:

IN VIEW OF THE FOREGOING, the appealed decision is REVERSED, and the case DISMISSED, without prejudice to its refilling in the proper court.

SO ORDERED.[14]

The CA declared that the action of the petitioners was one for the recovery of ownership and possession of real property.  Absent any allegation in the complaint of the assessed value of the property, the Municipal Trial Court (MTC) had exclusive jurisdiction over the action, conformably to Section 33[15] of R.A. No. 7691.

The petitioners filed a motion for reconsideration of the said decision, which the appellate court denied.[16] Hence, they filed the instant petition, with the following assignment of errors:

I

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN HOLDING THAT THE INSTANT CASE, ACCION REINVINDICATORIA, FALLS WITHIN THE EXCLUSIVE ORIGINAL JURISDICTION OF THE MUNICIPAL TRIAL COURT OF ROMBLON, AND NOT WITH THE REGIONAL TRIAL COURT OF ROMBLON.

II

THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN ORDERING THE REFILING OF THE CASE IN THE [PROPER] COURT, INSTEAD OF DECIDING THE CASE ON THE MERITS BASED ON THE COMPLETE RECORDS ELEVATED BEFORE SAID APPELLATE COURT AND IN NOT AFFIRMING IN TOTO THE DECISION OF THE TRIAL COURT.[17]

The Ruling of the Court

The lone issue for our resolution is whether the RTC had jurisdiction over the action of the petitioners, the plaintiffs in the RTC, against the private respondent, who was the defendant therein.

The petitioners maintain that the RTC has jurisdiction since their action is an accion reinvindicatoria, an action incapable of pecuniary estimation; thus, regardless of the assessed value of the subject property, exclusive jurisdiction falls within the said court.  Besides, according to the petitioners, in their opposition to respondent’s motion to dismiss, they made mention of the increase in the assessed value of the land in question in the amount of P3.5 million.  Moreover, the petitioners maintain that their action is also one for damages exceeding P20,000.00, over which the RTC has exclusive jurisdiction under R.A. No. 7691.

The petition has no merit.

It bears stressing that the nature of the action and which court has original and exclusive jurisdiction over the same is determined by the material allegations of the complaint, the type of relief prayed for by the plaintiff and the law in effect when the action is filed, irrespective of whether the plaintiffs are entitled to some or all of the claims asserted therein.[18] The caption of the complaint is not determinative of the nature of the action.  Nor does the jurisdiction of the court depend upon the answer of the defendant or agreement of the parties or to the waiver or acquiescence of the parties.

We do not agree with the contention of the petitioners and the ruling of the CA that the action of the petitioners in the RTC was an accion reinvindicatoria.  We find and so rule that the action of the petitioners was an accion publiciana, or one for the recovery of possession of the real property subject matter thereof.  An accion reinvindicatoria is a suit which has for its object the recovery of possession over the real property as owner.  It involves recovery of ownership and possession based on the said ownership.  On the other hand, an accion publiciana is one for the recovery of possession of the right to possess.  It is also referred to as an ejectment suit filed after the expiration of one year after the occurrence of the cause of action or from the unlawful withholding of possession of the realty.[19]

The action of the petitioners filed on September 3, 1996 does not involve a claim of ownership over the property.  They allege that they are co-owners thereof, and as such, entitled to its possession, and that the private respondent, who was the defendant, constructed his house thereon in 1989 without their knowledge and refused to vacate the property despite demands for him to do so.  They prayed that the private respondent vacate the property and restore possession thereof to them.

When the petitioners filed their complaint on September 3, 1996, R.A. No. 7691 was already in effect.  Section 33(3) of the law provides:

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:

…

(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.

Section 19(2) of the law, likewise, provides that:

Sec. 19.  Jurisdiction in civil cases. – The Regional Trial Court shall exercise exclusive original jurisdiction:

…

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

The jurisdiction of the court over an action involving title to or possession of land is now determined by the assessed value of the said property and not the market value thereof.  The assessed value of real property is the fair market value of the real property multiplied by the assessment level.  It is synonymous to taxable value.[20] The fair market value is the price at which a property may be sold by a seller, who is not compelled to sell, and bought by a buyer, who is not compelled to buy.

Even a cursory reading of the complaint will show that it does not contain an allegation stating the assessed value of the property subject of the complaint.[21]  The court cannot take judicial notice of the assessed or market value of lands.[22]  Absent any allegation in the complaint of the assessed value of the property, it cannot thus be determined whether the RTC or the MTC had original and exclusive jurisdiction over the petitioners’ action.

We note that during the trial, the petitioners adduced in evidence Tax Declaration No. 8590-A, showing that the assessed value of the property in 1991 was P5,950.00.  The petitioners, however, did not bother to adduce in evidence the tax declaration containing the assessed value of the property when they filed their complaint in 1996.  Even assuming that the assessed value of the property in 1991 was the same in 1995 or 1996, the MTC, and not the RTC had jurisdiction over the action of the petitioners since the case involved title to or possession of real property with an assessed value of less than P20,000.00.[23]

We quote with approval, in this connection, the CA’s disquisition:

The determining jurisdictional element for the accion reinvindicatoria is, as RA 7691 discloses, the assessed value of the property in question.  For properties in the provinces, the RTC has jurisdiction if the assessed value exceeds P20,000, and the MTC, if the value is P20,000 or below.  An assessed value can have reference only to the tax rolls in the municipality where the property is located, and is contained in the tax declaration.  In the case at bench, the most recent tax declaration secured and presented by the plaintiffs-appellees is Exhibit B.  The loose remark made by them that the property was worth 3.5 million pesos, not to mention that there is absolutely no evidence for this, is irrelevant in the light of the fact that there is an assessed value.  It is the amount in the tax declaration that should be consulted and no other kind of value, and as appearing in Exhibit B, this is P5,950.  The case, therefore, falls within the exclusive original jurisdiction of the Municipal Trial Court of Romblon which has jurisdiction over the territory where the property is located, and not the court a quo.[24]

It is elementary that the tax declaration indicating the assessed value of the property enjoys the presumption of regularity as it has been issued by the proper government agency.[25]

Unavailing also is the petitioners’ argumentation that since the complaint, likewise, seeks the recovery of damages exceeding P20,000.00, then the RTC had original jurisdiction over their actions.  Section 33(3) of B.P. Blg. 129, as amended, quoted earlier, explicitly excludes from the determination of the jurisdictional amount the demand for “interest, damages of whatever kind, attorney’s fees, litigation expenses, and costs.” This Court issued Administrative Circular No. 09-94 setting the guidelines in the implementation of R.A. No. 7691, and paragraph 2 thereof states that –

2.       The exclusion of the term “damages of whatever kind” in determining the jurisdictional amount under Section 19(8) and Section 33(1) of B.P. Blg. 129, as amended by R.A. 7691, applies to cases where the damages are merely incidental to or a consequence of the main cause of action.  However, in cases where the claim for damages is the main cause of action, or one of the causes of action, the amount of such claim shall be considered in determining the jurisdiction of the court.

Neither may the petitioners find comfort and solace in Section 19(8) of B.P. Blg. 129, as amended,   which states:

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

…

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

The said provision is applicable only to “all other cases” other than an action involving title to, or possession of real property in which the assessed value is the controlling factor in determining the court’s jurisdiction.  The said damages are merely incidental to, or a consequence of, the main cause of action for recovery of possession of real property.[26]

Since the RTC had no jurisdiction over the action of the petitioners, all the proceedings therein, including the decision of the RTC, are null and void.  The complaint should perforce be dismissed.[27]

WHEREFORE, the petition is DENIED.  The assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 63737 are AFFIRMED.  Costs against the petitioners.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Republic of the PhilippinesSUPREME COURTManila

SECOND DIVISION

G.R. No. 140973             November 11, 2004

JUSTINO LARESMA, petitioner, vs.

ANTONIO P. ABELLANA, respondent.

D E C I S I O N

CALLEJO, SR., J.:

On May 24, 1994, respondent Antonio P. Abellana filed a Complaint with the Regional Trial Court (RTC) of Toledo, Cebu, Branch 29, against petitioner Justino Laresma, a farmer, for recovery of possession of Lot 4-E of subdivision plan psd. 271428, a parcel of agricultural land located in Tampa-an, Aloguinsan, Cebu. The lot had an area of 21,223 square meters covered by Transfer Certificate of Title (TCT) No. 47171. He alleged, inter alia, that since 1985, the petitioner had been a lessee of a certain Socorro Chiong, whose agricultural land adjoined his own; and that sometime in 1985, the petitioner, by means of threat, strategy, and stealth, took possession of his property and deprived him of its possession. 1

The respondent prayed that, after due proceedings, judgment be rendered in his favor, ordering the petitioner to vacate the property and pay him actual damages, attorney’s fees, and expenses of litigation.2 Appended to the complaint was a contract of lease3 executed by the petitioner’s wife, Praxedes Seguisabal Laresma, on March 1, 1977, over a parcel of land owned by Socorro Chiong covered by Tax Declaration No. 05561.

To support his complaint, the respondent presented his father, Teotimo Abellana, as witness. Teotimo testified that the petitioner married his maid, Praxedes Seguisabal, after which the couple resided in the property of Socorro Chiong,4 which abutted the property of the petitioner and a portion of the property of the Spouses Vicente and Susana Paras. The petitioner thus became a tenant of Socorro Chiong. Teotimo further narrated that sometime in 1989 and 1990, the petitioner transferred his house to the property of his son, the respondent, in the process destroying coconut trees planted on the property to pave the way for the construction of the barangay hall. According to the witness, he reported the incident to the office of the chief of police and the barangay captain. However, the matter was not acted upon.5

Teotimo also testified that his son, the respondent, purchased the property from his uncle, Mariano Paras, who, in turn, bought the same from his parents, the Spouses Vicente and Susana Paras.6 Based on the said sale, the Register of Deeds issued TCT No. 47171 over the property under the name of the respondent on April 2, 1980.7 The respondent had since then declared the property for taxation purposes,8 and paid the realty taxes therefor.9 Teotimo declared that he requested Geodetic Engineer Lordeck Abella to relocate the property, and the engineer prepared a sketch plan showing that the said lot abutted the property of Socorro Chiong on the northeast and that of Agnes Abellana on the north.10

He admitted that he and the respondent were informed that the property had been placed under the Operation Land Transfer (OLT), and that they refused to acknowledge the information.11

The respondent’s aunt, Socorro Chiong, testified that on October 14, 1972, she and Felicidad Paras Montecillo purchased from her parents, the Spouses Vicente and Susana Paras, a 19-hectare land in Tampa-an, Aloguinsan, Cebu, Lot 4-C of Psd. 271428 Lot 4-E, covered by Tax Declaration No. 009088. 12

Chiong’s parents died in 1977. In an Order dated November 8, 1994, the Department of Agrarian Reform (DAR) affirmed the July 11, 1988 Ruling of the DAR Regional Director that the deed of sale over the property executed by her parents in her favor was valid; that the tenants therein, including Justino Laresma and his wife, were bound by the said sale; and that the tenanted portion of the property, including that portion leased to Praxedes Laresma, was outside the scope of the OLT. 13 She confirmed that the property of the respondent abutted her property on the north.14

In his answer to the complaint, the petitioner averred that the dispute between him and the respondent was agrarian in nature, within the exclusive jurisdiction of the DAR, involving as it did his right of possession covered by Certificate of Land Transfer (CLT) No. 0-031817 issued to his wife Praxedes. He alleged that the property titled in the name of the respondent consisted of a portion of

that property owned by the Spouses Vicente and Susana Paras covered by Original Certificate of Title No. 780 which was placed under OLT under Presidential Decree No. 27. Being a beneficiary of the agrarian reform program of the government, his wife was issued CLT No. 0-031817 on July 13, 1982 over a portion of the property, Lot No. 00013, with an area of 0.1700 hectares. Since then, he and his wife became owners of the property and, as such, were entitled to the possession thereof.

The parties agreed to defer further proceedings for the conduct of an ocular inspection of the property to determine whether Lot No. 00013 covered by CLT No. 0-031817 was, indeed, a part of Lot 4-E covered by TCT No. 47171. On January 13, 1995, the trial court issued an Order allowing the said inspection with Socorro Chiong in attendance.15 The parties were advised to make a report on the same. The court designated its process server, Felix Navarro, as its representative during the inspection.16 The Municipal Agrarian Reform Office, for its part, designated Municipal Agrarian Reform Technologist Alberto Epan as its representative.

On February 16, 1995, Epan inspected the property in the presence of the petitioner. The petitioner pointed to Epan eight of the ten OLT muniments. Epan also noticed that there were coconuts scattered on the property, that corn was planted in the plan area, and that the house of the respondent was in the property titled to the petitioner. On February 17, 1995, the parties’ respective counsels, including Navarro and Epan, inspected the property. Epan, thereafter, submitted his Report dated February 22, 1995,17 with a sketch at the dorsal portion showing the respective locations of the property cultivated by the respondent, his house and the OLT muniments.18 Navarro submitted a separate report on March 7, 1995,19 where it was indicated that the parties had agreed that the house of the petitioner was located at the respondent’s property.

The petitioner denied being the tenant of the respondent. He testified and adduced evidence that he and his wife were married on September 23, 1953,20 and, thereafter, resided in the property of the Spouses Paras21 where he was a tenant.22 He delivered one-half of the produce from the land to Susana Paras and kept the rest as his share. Shortly thereafter, the Spouses Paras sold a portion of the property to the respondent. Sometime in 1976 or 1977, the subject property was placed under the OLT.23 The respondent and Roque Paras protested the inclusion of the property, which was, however, rejected.24 The petitioner also testified that after the death of the Spouses Paras, he gave the share of the produce to the spouses’ daughter, Socorro Chiong.25

The petitioner further testified that on July 13, 1982, his wife was issued CLT No. 0-031817 over Lot No. 00013, the property he was cultivating. The lot had an area of 0.1700 hectares and was located at Tampa-an, Aloguinsan, Cebu. Because of lack of funds, his wife was able to make only partial payments of her amortizations for the property to the Land Bank of the Philippines for which she was issued receipts.26 After CLT No. 0-031817 was issued to his wife, he kept all the produce from the land.

The petitioner also presented Felix Navarro and Alberto Epan who affirmed their respective reports on the conduct of the inspection on the property.

On October 30, 1998, the trial court rendered judgment in favor of the respondent and against the petitioner. The fallo of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff as against defendant declaring:

1 - That plaintiff as the lawful owner in fee simple of the entire real property covered by Transfer Certificate of Title No. 47171 [Exhibit "D"]; and, declaring further that plaintiff is entitled to recover possession thereof from defendant;

2 - That the occupation, use, and possession of defendant under the latter’s claim as bona fide tenant of plaintiff over the latter’s property is null and void ab initio in violation of aforecited provision of the Code of Agrarian Reform, R.A. 3884;

3 - That defendant, his wife, Praxedes Laresma and their children and his agents or representative are hereby ordered to vacate and to surrender the entire possession, use, and occupation of said real property covered by TCT No. 47171 to and in favor of plaintiff;

4 - That defendant is hereby declared liable and ordered to pay plaintiff the sum of P70,000.00 as actual damages, the sum of P10,000.00 as attorney’s fees, and P5,000.00 as costs of suit.

SO ORDERED.27

The court ruled that, as evidenced by the contract of lease executed by Praxedes Laresma and Socorro Chiong, the petitioner was the tenant of Chiong and not of the respondent. Thus, the court had jurisdiction over the case. The court rejected the reports of Epan and Navarro, and considered the same as barren of probative weight, considering that the said reports failed to take into account the technical descriptions of Lot 4-C owned by Chiong, Lot 4-E covered by TCT No. 47171, and Lot 00013 covered by CLT No. 0-031817.

Hence, the present petition for review on certiorari under Rule 45 of the Rules of Court.

The petitioner points out that the property subject of the complaint is covered by a CLT issued by the DAR in the name of his wife. The petitioner avers that although the complaint of the respondent appeared to be one for the recovery of possession of the said property (accion publiciana), by claiming that the petitioner was the tenant of Socorro Chiong, the respondent indirectly attacked the said CLT. Hence, the action is within the exclusive jurisdiction of the Department of Agrarian Reform and Adjudication Board (DARAB) under Republic Act No. 6657. The petitioner asserts that, by declaring that the landholding was not legally possessed by him and that he was not a de jure tenant, the trial court thereby declared him as having forfeited his rights under the CLT. He was, thus, prevented from paying his monthly amortizations over the property to the Land Bank of the Philippines as required by law.

The petitioner further asserts that he was the agricultural tenant of the Spouses Paras, the original owners of the property. His right as a farmer subsisted, notwithstanding the transfer of the property of the deceased prior to October 21, 1972, which transfer was registered with the Register of Deeds only on December 21, 1977. He contends that since the landholding was already placed under the scope of OLT, the respondent merely stepped into the shoes of the Spouses Paras. Moreover, having become owners of the property on October 21, 1972, the petitioner and his wife were not obliged to pay damages to the respondent; as such, there was no factual basis for the award of actual damages in the amount of P70,000 in favor of the latter.

In his comment on the petition, the respondent avers that the threshold issue in this case is factual; hence, the remedy of the petitioner was to appeal the decision of the trial court to the Court of Appeals by a writ of error under Rule 41 of the Rules of Court. He contends that he did not, in his complaint, attack the CLT issued to Praxedes Laresma because the property covered by it is a portion of the property of Socorro Chiong, and not that of his property covered by TCT No. 47171. He also posits that the said title is valid and insists that the petitioner had actual knowledge of the sale of the property to him. The petitioner cites the ruling of this Court in Antonio v. Estrella28 to bolster his claim.

As gleaned from the petition, the comment thereon, and the memoranda of the parties, the issues for resolution are the following: (a) whether the action of the respondent in the trial court is in reality an indirect attack on the validity of CLT No. 0-031817 issued to Praxedes Laresma in the guise of an action for recovery of possession (accion publiciana) of the property covered by TCT No. 47171; (b) whether the RTC had jurisdiction over the action of the respondent; and (c) whether the petitioner is liable for damages in favor of the respondent.

On the first two issues, the petitioner avers that he and his wife Praxedes became owners of Lot No.

00013 by virtue of CLT No. 0-031817 which was awarded in the latter’s favor. As such, they are entitled to the possession of the lot. The petitioner contends that unless and until CLT No. 0-031817 is nullified in a direct action for the said purpose before the DARAB, they cannot be evicted from the said property. He posits that the action of the respondent against him in the RTC for recovery of possession of real property is, in reality, an indirect attack on the CLT issued to his wife which is proscribed by the ruling of this Court in Miranda v. Court of Appeals.29 He asserts that the decision of the trial court declaring him in illegal possession of the property and not a de jure tenant of the respondent operates as an illegal forfeiture or cancellation of the CLT.

For his part, the respondent asserts that his complaint against the petitioner did not indirectly assail the CLT issued to the latter’s wife. He contends that his action was one for the recovery of his possession of a portion of his property Lot 4-E covered by TCT No. 47171, and not that of Lot No. 00013 covered by CLT No. 0-031817 which is a portion of Lot 4-C owned by his aunt Socorro Chiong. He notes that the petitioner himself admits that he has never been his agricultural tenant over his property. Consequently, the respondent concludes, the trial court correctly ruled that the dispute between him and the petitioner is civil in nature and within its exclusive jurisdiction.

We agree with the respondent that the DARAB had no jurisdiction over his action against the petitioner. The bone of contention of the parties and the decisive issue in the trial court was whether or not Lot No. 00013 covered by CLT No. 0-031817 is a portion of Lot 4-E covered by TCT No. 47171 under the name of the respondent. This is the reason why the parties agreed to have Lot No. 00013 resurveyed in relation to Lot 4-C owned by Socorro Chiong and to Lot 4-E titled in the name of the respondent. After a calibration of the evidence on record and the reports of Epan and Navarro, the trial court ruled that Lot No. 00013 formed part of Lot 4-C owned by Socorro Chiong and not of Lot 4-E titled in the name of the respondent:

Plaintiff unabashedly claims that defendant has never been his tenant over the former’s property, Lot No. 4-E, but defendant claims otherwise. The evidence of plaintiff tends to establish that defendant is not his or has never been his tenant over his agricultural land, Lot 4-E, but defendant Justino Laresma is rather the tenant of Socorro Chiong over her property, Lot 4-C. In support of this contention that defendant is not plaintiff’s own tenant but that of Socorro Chiong, plaintiff offered and adduced the contract of lease duly entered by and between Socorro Chiong and defendant [Exhibit "B"] in 1977 wherein it was clearly stipulated [that] Socorro Chiong as the agricultural lessor leased a portion of her land to defendant, in the latter’s capacity as agricultural lessee of Lot 4-C with the obligation to pay Socorro Chiong rentals during the stipulated crop years.

This particular contract of lease [Exhibit "B"] does not show that plaintiff is a privy (sic) to it. It is (sic) goes to show that plaintiff is [not] bound by the terms and conditions thereof.

In the order of DAR under DARRO Adm. Case No. VII-98-88 dated November 8, 1994 [Exhibit "A"] which is actually a decision arising from the tenancy relationship between Socorro Chiong and defendant Justino Laresma, the DAR had expressly ruled that defendant is the tenant of Socorro Chiong of her property but limited to an actual area of 3.7316 hectares and excluding the area of 4.4905 [page 3, Decision] from the scope of the operation of Operation Land Transfer. It was further ruled therein that the landholding of Socorro Chiong was a part of the total landholding owned by her parents, Vicente N. Paras and Susana Paras, both deceased, which was, subsequently, sold by her parents to her as evidenced by a deed of sale dated October 14, 1972 [Exhibit "C"]. This deed of conveyance was affirmed by the DAR as validly executed between Socorro Chiong and defendant Justino Laresma because the latter had actual knowledge and recognition of the said transaction between Socorro and her deceased parents. This actual transfer of ownership of said parcel of land from Socorro Chiong[‘s] deceased parents to her was evidenced by the execution of the contract of lease between her and defendant on March 10, 1977 (sic) [Exhibit "B"].

But in the said ruling of the DFAR (sic), defendant has been expressly declared by DAR as a bona fide tenant of Socorro Chiong but his farmholding inside her property is limited to an actual area of 3.7316 hectares and excluding the area of 4.4905 [page 3, Decision] from the scope of the operation of Operation Land Transfer.

If defendant were (sic) truly a tenant of plaintiff, he would have also asked plaintiff or his predecessor-in-interest to execute that necessary contract of lease like the instrument, which Socorro Chiong executed in favor of defendant as her tenant. In the absence of said instrument to establish his tenancy over plaintiff’s landholding, this Court cannot just presume the existence of an agricultural leasehold relationship between plaintiff and defendant.30

…

However, this Court cannot accept these ocular reports and the accompanying sketches thereof so as to correctly reflect the identity of defendant’s farmholding and to establish its exact location within the land of plaintiff in view of the absence of pertinent technical description of said farmholding in relation to the metes and bounds of plaintiff’s land whose technical description is clearly mentioned in plaintiff’s Transfer Certificate of Title No. 47171 [Exhibit "D"]. The said technical description of the defendant’s farmholding is required to clearly pinpoint its identity with its area and boundaries in relation to the titled property of plaintiff. Without said technical description, it is very difficult to identify defendant’s landholdings to be within plaintiff’s real property.

In view of the absence of the above-mentioned indispensable requisites or any one of them in order to establish the existence of an agricultural leasehold relationship between plaintiff and defendant, as earlier mentioned, does not make defendant a de jure tenant under the Land Reform Program of the government under existing tenancy laws. [Caballes v. DAR, ibid.].31

The petitioner has not assailed the aforequoted findings of the trial court in the petition at bar; hence, he is bound by the said findings.

We agree with the ruling of the RTC that, as gleaned from the material averments of his complaint, the action of the respondent against the petitioner is not an agrarian dispute within the exclusive jurisdiction of the DARAB. The well-entrenched principle is that the jurisdiction of the court over the subject matter of the action is determined by the material allegations of the complaint and the law, irrespective of whether or not the plaintiff is entitled to recover all or some of the claims or reliefs sought therein.32 In Movers-Baseco Integrated Port Services, Inc. v. Cyborg Leasing Corporation,33 we ruled that the jurisdiction of the court over the nature of the action and the subject matter thereof cannot be made to depend upon the defenses set up in the court or upon a motion to dismiss for, otherwise, the question of jurisdiction would depend almost entirely on the defendant.34 Once jurisdiction is vested, the same is retained up to the end of the litigation. We also held in Arcelona v. Court of Appeals35 that, in American jurisprudence, the nullity of a decision arising from lack of jurisdiction may be determined from the record of the case, not necessarily from the face of the judgment only.

It must be stressed that the regular court does not lose its jurisdiction over an ejectment case by the simple expedient of a party raising as a defense therein the alleged existence of a tenancy relationship between the parties.36 But it is the duty of the court to receive evidence to determine the allegations of tenancy.37 If, after hearing, tenancy had, in fact, been shown to be the real issue, the court should dismiss the case for lack of jurisdiction.38

It is axiomatic that the nature of an action and the jurisdiction of a tribunal are determined by the material allegations of the complaint and the law at the time the action was commenced. Jurisdiction of the tribunal over the subject matter or nature of an action is conferred only by law and not by the consent or waiver upon a court which, otherwise, would have no jurisdiction over the subject matter or

nature of an action.39 Lack of jurisdiction of the court over an action or the subject matter of an action cannot be cured by the silence, acquiescence, or even by express consent of the parties.40 If the court has no jurisdiction over the nature of an action, it may dismiss the same ex mero motu or motu proprio. A decision of the court without jurisdiction is null and void; hence, it could never logically become final and executory. Such a judgment may be attacked directly or collaterally.

We agree with the ruling of the trial court that based on the material allegations of the respondent’s complaint and even on the admission of the petitioner, the latter had never been an agricultural tenant of the respondent. In fact, the respondent claimed that based on the CLT issued to his wife, they became the owner of the property covered therein. As such, the DARAB had no jurisdiction over the said action. The dispute between the respondent, as plaintiff, and the petitioner, as defendant, in the RTC involving the de jure possession of Lot 4-E covered by TCT No. 47171 is not an agrarian dispute. Decisive of the issue is our ruling in Heirs of the Late Herman Rey Santos v. Court of Appeals:41

Rule II, Section 1 of the Revised Rules of Procedure of the DARAB, provides:

Section 1. Primary, Original and Appellate Jurisdiction. – The Agrarian Reform Adjudication Board shall have primary jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes, cases, controversies, and matters or incidents involving the implementation of the Comprehensive Agrarian Reform Program under Republic Act No. 6657, Executive Order Nos. 229, 228, and 129-A, Republic Act No. 3844, as amended, by Republic Act No. 6389, P.D. No. 27, and other agrarian laws and their implementing rules and regulations. (Italics supplied)

"Agrarian dispute" is defined under Section 3(d) of Republic Act No. 6657 (CARP Law), as:

(d) Agrarian Dispute refers to any controversy relating to tenurial arrangements, whether leasehold, 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.

Clearly, no agrarian dispute is involved in this case. In fact, both are contending parties for the ownership of the subject property.

In the case of Morta, Sr. v. Occidental, et al., this Court held:

For DARAB to have jurisdiction over a case, there must exist a tenancy relationship between the parties. In order for a tenancy agreement to take hold over a dispute, it would be essential to establish all its indispensable elements to wit: 1) that the parties are the landowner and the tenant or agricultural lessee; 2) that the subject matter of the relationship is an agricultural land; 3) that there is consent between the parties to the relationship; 4) that the purpose of the relationship is to bring about agricultural production; 5) that there is personal cultivation on the part of the tenant or agricultural lessee; and 6) that the harvest is shared between the landowner and the tenant or agricultural lessee. In Vda. de Tangub v. Court of Appeals (191 SCRA 885), we held that the jurisdiction of the Department of Agrarian Reform is limited to the following: a) adjudication of all matters involving implementation of agrarian reform; b) resolution of agrarian conflicts and land tenure-related problems; and c) approval and disapproval of the conversion, restructuring or readjustment of agricultural lands into residential, commercial, industrial, and other non-agricultural uses.

Petitioners and private respondent have no tenurial, leasehold, or any agrarian relations whatsoever that could have brought this controversy under the ambit of the agrarian reform laws. Consequently, the DARAB has no jurisdiction over the controversy and should not have taken cognizance of private respondent’s petition for injunction in the first place.42

However, we find and so hold that the RTC had no jurisdiction over the action of the respondent. In this case, the respondent filed his complaint against the petitioner on May 24, 1994. Hence, the jurisdiction of the regular court over the nature of this action is governed by Republic Act No. 7691, which took effect on April 15, 1994. Section 3 thereof amended Section 33 of Batas Pambansa (B.P.) Blg. 129, and reads:

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:

…

(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.

On the other hand, Section 1 of the Rule amending Section 19 of B.P. Blg. 129 reads:

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

…

(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) ….

The actions envisaged in the aforequoted provisions are accion publiciana and reinvindicatoria. To determine which court has jurisdiction over the action, the complaint must allege the assessed value of the real property subject of the complaint or the interest thereon. In this case, the complaint of the respondent against the petitioner for recovery of possession of real property (accion publiciana) reads:

3. That plaintiff is the owner and possessor of Lot 4-E covered by TCT No. T-47171 of the Registry of Deeds of the Province of Cebu located at Tampa-an, Aloguinsan, Cebu;

4. That defendant is the tenant of the land of Socorro P. Chiong, which adjoins the parcel of land owned by the plaintiff as shown by a leasehold contract hereto attached as Annex "A" and made an integral part hereof;

5. That sometime in 1985, by means of threats, strategy, and stealth, the herein defendant took possession of the parcel of land owned by herein plaintiff, thus effectively depriving plaintiff of the possession thereof;

6. That the defendants, while illegally occupying the land of herein plaintiff, cut trees, and harvested the fruits of said land causing damages to the plaintiff in the amount of P50,000.00;

7. That despite demand, defendant has refused to vacate said land and return the possession thereof to herein plaintiff, thus compelling the plaintiff to file the present action;

8. In filing the present action, the plaintiff engaged the services of counsel for P10,000.00 and expects to incur expenses of litigation in the amount of P5,000.00.43

The complaint does not contain any allegation of the assessed value of Lot 4-E covered by TCT No. 47171. There is, thus, no showing on the face of the complaint that the RTC had exclusive jurisdiction over the action of the respondent. Moreover, as gleaned from the receipt of realty tax payments issued to the respondent, the assessed value of the property in 1993 was P8,300.00.44 Patently then, the Municipal Trial Court of Aloguinsan, Cebu, and not the Regional Trial Court of Toledo City, had exclusive jurisdiction over the action of the respondent.45 Hence, all the proceedings in the RTC, including its decision, are null and void.

In light of the foregoing disquisitions of the court, there is no longer a need to still resolve the third issue.

WHEREFORE, the petition is GRANTED. The assailed decision of the Regional Trial Court of Toledo, Cebu City, Branch 29, in Civil Case No. T-466 is NULLIFIED for lack of jurisdiction of the trial court over the action of the respondent against the petitioner. No costs.

SO ORDERED.

Austria-Martinez, and Chico-Nazario, JJ., concur.Puno, (Chairman), on official leave.Tinga, J., on leave.

THIRD DIVISION

[G.R. No. 137013.  May 6, 2005]

RUBEN SANTOS, petitioner, vs. SPOUSES TONY AYON and MERCY AYON, respondents.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

For our resolution is the petition for review on certiorari assailing the Decision[1] of the Court of Appeals dated October 5, 1998 in CA-G.R. SP No. 4735 and its Resolution[2] dated December 11, 1998 denying the motion for reconsideration.

The petition alleges that on November 6, 1996, Ruben Santos, petitioner, filed with the Municipal Trial Court in Cities (MTCC), Branch 2, Davao City a complaint for illegal detainer against spouses Tony and Mercy Ayon, respondents, docketed as Civil Case No. 3506-B-96.

In his complaint, petitioner averred that he is the registered owner of three lots situated at Lanzona Subdivision, Matina, Davao City, covered by Transfer Certificates of Title (TCT) Nos. 108174, 108175, and 108176.  Respondent spouses are the registered owners of an adjacent parcel of land covered by TCT No. T-247792.  The previous occupant of this property built a building which straddled both the lots of the herein parties.  Respondents have been using the building as a warehouse.

Petitioner further alleged in his complaint that in 1985, when he bought the three lots, he informed respondents that the building occupies a portion of his land.  However, he allowed them to continue using the building.  But in 1996, he needed the entire portion of his lot, hence, he demanded that respondents demolish and remove the part of the building encroaching his property and turn over to him their possession.  But they refused.  Instead, they continued occupying the contested portion and even made improvements on the building.  The dispute was then referred to the barangay lupon, but the parties failed to reach an amicable settlement.  Accordingly, on March 27, 1996, a certification to file action was issued.

In their answer, respondents sought a dismissal of this case on the ground that the court has no jurisdiction over it since there is no lessor-lessee relationship between the parties.  Respondents denied they were occupying petitioner’s property by mere tolerance, claiming they own the contested portion and have been occupying the same long before petitioner acquired his lots in 1985.

On July 31, 1997, the MTCC rendered its Decision in favor of petitioner, thus:

“WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendants ordering the latter, their successors-in-interest and other persons acting in their behalf to vacate the portion of the subject properties and peacefully surrender possession thereof to plaintiff as well as dismantle/remove the structures found thereon.

Defendants are further ordered to pay reasonable value for the use and occupation of the encroached area in the amount of One Thousand Pesos (P1,000.00) a month beginning September 1996 and the subsequent months thereafter until premises are vacated; to pay attorney’s fees of Ten Thousand Pesos (P10,000.00); and to pay the costs of suit.

SO ORDERED.”[3]

On appeal, the Regional Trial Court (RTC), Branch 11, Davao City, in its Decision dated February 12, 1998 in Civil Case No. 25, 654-97, affirmed in toto the MTCC judgment.[4] The RTC upheld the finding of the MTCC that respondents’ occupation of the contested portion was by mere tolerance.  Hence, when petitioner needed the same, he has the right to eject them through court action.

Respondents then elevated the case to the Court of Appeals through a petition for review.  In its Decision dated October 5, 1988 now being challenged by petitioner, the Court of Appeals held that petitioner’s proper remedy should have been an accion publiciana before the RTC, not an action for unlawful detainer, thus:

“In this case, petitioners were already in possession of the premises in question at the time private respondent bought three (3) lots at the Lanzona Subdivision in 1985, a portion of which is occupied by a building being used by the former as a bodega.  Apart from private respondent’s bare claim, no evidence was alluded to show that petitioners’ possession was tolerated by (his) predecessor-in-interest.  The fact that respondent might have tolerated petitioners’ possession is not decisive.  What matters for purposes of determining the proper cause of action is the nature of petitioners’ possession from its inception.  And in this regard, the Court notes that the complaint itself merely alleges that defendants-petitioners have been ‘occupying a portion of the above properties of the plaintiff for the past several years by virtue of the tolerance of the plaintiff.’ Nowhere is it alleged that his predecessor likewise tolerated petitioners’ possession of the premises. x x x.

Consequently, x x x, respondent should present his claim before the Regional Trial Court in an accion publiciana and not before the Municipal Trial Court in a summary proceeding of unlawful detainer.

WHEREFORE, the decision under review is hereby REVERSED and SET ASIDE.  Accordingly, the complaint for unlawful detainer is ordered DISMISSED.”[5]

Petitioner filed a motion for reconsideration, but was denied by the Appellate Court in its Resolution dated December 11, 1998.

Hence, the instant petition for review on certiorari ascribing to the Court of Appeals the following errors:

“I

THE HONORABLE COURT OF APPEALS MISAPPLIED THE LAW IN DISMISSING THE INSTANT CASE ON THE GROUND THAT PETITIONER SHOULD PRESENT HIS CLAIM BEFORE THE REGIONAL TRIAL COURT IN AN ACCION PUBLICIANA.

II

THE FINDINGS OF THE HONORABLE COURT OF APPEALS IS NOT IN CONSONANCE WITH EXISTING LAWS AND JURISPRUDENCE.”

The sole issue here is whether the Court of Appeals committed a reversible error of law in holding that petitioner’s complaint is within the competence of the RTC, not the MTCC.

Petitioner contends that it is not necessary that he has prior physical possession of the questioned property before he could file an action for unlawful detainer.  He stresses that he tolerated respondents’ occupancy of the portion in controversy until he needed it.  After his demand that they vacate, their continued possession became illegal.  Hence, his action for unlawful detainer before the MTCC is proper.

Respondents, in their comment, insisted that they have been in possession of the disputed property even before petitioner purchased the same on April 10, 1985.  Hence, he cannot claim that they were occupying the property by mere tolerance because they were ahead in time in physical possession.

We sustain the petition.

It is an elementary rule that the jurisdiction of a court over the subject matter is determined by the allegations of the complaint and cannot be made to depend upon the defenses set up in the answer or pleadings filed by the defendant.[6] This rule is no different in an action for forcible entry or unlawful detainer.[7] All actions for forcible entry or unlawful detainer shall be filed with the proper Metropolitan Trial Courts, the Municipal Trial Courts and the Municipal Circuit Trial Courts, which actions shall include not only the plea for restoration of possession but also all claims for damages and costs arising therefrom.[8] The said courts are not divested of jurisdiction over such cases even if the defendants therein raises the question of ownership over the litigated property in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership.[9]

Section 1, Rule 70 on forcible entry and unlawful detainer of the 1997 Rules of Civil Procedure, as amended, reads:

“Section 1. Who may institute proceedings, and when. – Subject to the provisions of the next succeeding section, a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee or other person may, at any time within one (1) year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs.”

Under the above provision, there are two entirely distinct and different causes of action, to wit: (1) a case for forcible entry, which is an action to recover possession of a property from the defendant whose occupation thereof is illegal from the beginning as he acquired possession by force, intimidation, threat,

strategy or stealth; and (2) a case for unlawful detainer, which is an action for recovery of possession from defendant whose possession of the property was inceptively lawful by virtue of a contract (express or implied) with the plaintiff, but became illegal when he continued his possession despite the termination of his right thereunder.[10]

Petitioner’s complaint for unlawful detainer in Civil Case No. 3506-B-96 is properly within the competence of the MTCC.  His pertinent allegations in the complaint read:

“4.     That defendants (spouses) have constructed an extension of their residential house as well as other structures and have been occupying a portion of the above PROPERTIES of the plaintiff for the past several years by virtue of the tolerance of the plaintiff since at the time he has no need of the property;

5.       That plaintiff needed the property in the early part of 1996 and made demands to the defendants to vacate and turn over the premises as well as the removal (of) their structures found inside the PROPERTIES of plaintiff; that without any justifiable reasons, defendants refused to vacate the portion of the PROPERTIES occupied by them to the damage and prejudice of the plaintiff.

6.       Hence, plaintiff referred the matter to the Office of the Barangay Captain of Matina Crossing 74-A, Davao City for a possible settlement sometime in the latter part of February 1996.  The barangay case reached the Pangkat but no settlement was had.  Thereafter, a ‘Certification To File Action’ dated March 27, 1996 was issued x x x;

x x x.”[11] (underscoring ours)

Verily, petitioner’s allegations in his complaint clearly make a case for an unlawful detainer.  We find no error in the MTCC assuming jurisdiction over petitioner’s complaint.  A complaint for unlawful detainer is sufficient if it alleges that the withholding of the possession or the refusal to vacate is unlawful without necessarily employing the terminology of the law.[12] Here, there is an allegation in petitioner’s complaint that respondents occupancy on the portion of his property is by virtue of his tolerance.  Petitioner’s cause of action for unlawful detainer springs from respondents’ failure to vacate the questioned premises upon his demand sometime in 1996.  Within one (1) year therefrom, or on November 6, 1996, petitioner filed the instant complaint.

It bears stressing that possession by tolerance is lawful, but such possession becomes unlawful when the possessor by tolerance refuses to vacate upon demand made by the owner.  Our ruling in Roxas vs. Court of Appeals[13] is applicable in this case: “A person who occupies the land of another at the latter’s tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will vacate upon demand, failing which, a summary action for ejectment is the proper remedy against him.”

WHEREFORE, the petition is GRANTED.  The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 47435 are hereby REVERSED and SET ASIDE.  The Decision dated February 12, 1998 of the Regional Trial Court, Branch 11, Davao City in Civil Case No. 25, 654-97, affirming the Decision dated July 31, 1997 of the Municipal Trial Court in Cities, Branch 2, Davao City in Civil Case No. 3506-B-96, is hereby REINSTATED.

SO ORDERED.

Panganiban, (Chairman), Corona, Carpio-Morales, and Garcia, JJ., concur.

Republic of the PhilippinesSUPREME COURTManila

SECOND DIVISION

G.R. No. 148759             June 8, 2006

GERMELINA TORRES RACAZA and BERNALDITA TORRES PARAS, Petitioners, vs.ERNESTO GOZUM,1 Respondent.

D E C I S I O N

AZCUNA, J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioners Germelina Torres Racaza and Bernaldita Torres Paras seek the nullification of the decision2 dated July 12, 2000 as well as the resolution3 dated June 28, 2001 rendered by the Court of Appeals (CA) in CA-G.R. CV No. 61227 which reversed and set aside the decision4 dated September 30, 1998 of the Regional Trial Court (RTC), Branch 158 of Pasig City, consequently dismissing the complaint for accion publiciana filed by petitioners against respondent Ernesto Gozum.

The antecedents of this case are as follows:

The plaintiffs are the registered co-owners of a parcel of land under Transfer Certificate of Title No. PT-92411 situated at Amang Rodriguez Avenue, Santolan, Pasig City. Standing on this lot is a 2-storey, 3-door apartment. The property was formerly owned by the father of the plaintiffs, the late Carlos Torres.

In 1981, defendant Ernesto Gozum occupied the back portion of the property on a P3,500.00 monthly rental and continued to occupy the same even after the death of Carlos Torres on December 26, 1993.

On July 1, 1995, plaintiffs sent Gozum a letter of demand to vacate [the] premises (Annex G, Complaint). After a failed barangay conciliation, on November 24, 1995, plaintiffs commenced an ejectment case [with the Metropolitan Trial Court] against Gozum. The case was, however, dismissed due to [a] technicality.

Almost two (2) years thereafter, on May 27, 1997, plaintiffs sent anew a formal demand letter to vacate on the ground that the verbal contract of lease over the property had already expired sometime in July 1995, and the same has not been renewed and since then, defendant had discontinued paying the monthly rentals of P3,500.00. When this latter demand was not heeded, on June 4, 1997, the present complaint for recovery of possession or accion publiciana was initiated before the Regional Trial Court of Pasig City.

The initial reaction of the defendant was to file a motion to dismiss based on lack of jurisdiction claiming that the cause of action should have been for unlawful detainer falling within the jurisdiction of the municipal trial courts and that the provision of P.D. No. 1508 was not complied with.

In the Order dated September 30, 1997, the court a quo denied the motion to dismiss on the ground that an unlawful detainer must be filed within one (1) year from the notice to vacate [given] as early as July 1, 1995 and since over two (2) years had passed when the case was filed, the proper action is accion publiciana and no longer unlawful detainer.

Defendant thereafter filed his answer asseverating that he has a 10-year contract of lease (Annex 1, Complaint) over the premises executed between him and plaintiffs’ late father on October 1, 1989 to expire on September 30, 1999 and so, the notice to vacate and the present case were all prematurely done. Defendant likewise denied the allegation that he has not been paying rentals. The truth is that it was the plaintiffs who refused to receive payments so that the same were deposited with the bank. In the same answer, defendant asserted that the contract of lease gave him the right of first refusal to buy the property and in violation thereof, plaintiffs have already sold the property to a certain Ernesto Brana.

After due proceedings on September 30, 1998, the appealed decision was promulgated with the following dispositive portion:

"WHEREFORE, in view of the foregoing, judgment is rendered in favor of the plaintiffs and against the defendant, ordering the latter and all persons claiming rights under him to vacate the premises covered by Transfer Certificate of Title No. PT-92411 of the Register of Deeds of Pasig City and turn it over to the plaintiffs. Defendant is also ordered to pay plaintiffs the amount of P3,500.00 effective July 1, 1995 until such time he shall have vacated the premises. In addition, he shall pay attorney’s fees in the amount of P30,000.00 plus P1,500.00 per court appearance and the cost of suit.

SO ORDERED.

Pasig City, September 30, 1998." (pp. 4-5, RTC Decision; pp. 76-77, Rollo).5

Aggrieved, respondent seasonably appealed the decision to the CA, ascribing to the lower court the following errors:

I. THE COURT A QUO ERRED IN HOLDING THAT THE PLAINTIFFS HAVE A LEGAL RIGHT TO RECOVER POSSESSION OF THE SUBJECT PROPERTY FROM THE DEFENDANT.

II. THE LOWER COURT ERRED IN NOT RECOGNIZING THE VALIDITY OF THE CONTRACT OF LEASE DATED OCTOBER 5, 1989, WHICH WAS PREVIOUSLY EXECUTED BY THE PLAINTIFFS’ FATHER, ATTORNEY CARLOS P. TORRES, AND HEREIN DEFENDANT.

III. THE COURT A QUO ERRED IN DECLARING THAT THE ABOVEMENTIONED CONTRACT IS FRAUDULENT, FABRICATED AND FICTITIOUS AND THAT THE SIGNATURE OF ATTY. TORRES AFFIXED THEREON IS NOT GENUINE.

IV. THE TRIAL COURT COMMITTED ERROR IN AWARDING DAMAGES AND ATTORNEY’S FEES IN FAVOR OF PLAINTIFFS.6

After the submission by the parties of their respective briefs but prior to the resolution of the appeal, petitioners filed with the CA a Motion to Dismiss or for Execution Pending Appeal7 dated December 6, 1999 on the ground that the lease contract relied upon by respondent to justify his continued possession of the subject property had, by its own terms and respondent’s own admission, expired on September 30, 1999.

Thereafter, without acting upon petitioners’ motion to dismiss, the CA reversed the decision of the RTC and dismissed the case, holding that the lower court had no jurisdiction over the complaint for accion publiciana considering that it had been filed before the lapse of one (1) year from the date the last letter of demand to respondent had been made. The CA ruled that the proper remedy of petitioners should have been an action for unlawful detainer filed with the first level court, or the municipal or metropolitan trial court.

Their motion for reconsideration having been denied, petitioners filed this present petition arguing that:

1) The Court of Appeals decided a question of substance not in accord with jurisprudence and remedial law authorities when it declared as null and void the entire proceedings in the trial court despite the fact that:

(i) petitioners correctly filed the accion publiciana with the trial court below;

(ii) respondent actively participated in the trial proceeding, testified in person, and submitted to the trial court’s authority to decide the case; and

(iii) respondent did not raise any jurisdictional issue in his appeal where he raised only the substantive portions of the trial court’s decision.

2) The Court of Appeals likewise departed from the accepted and usual course of judicial proceedings amounting to serious abuse of discretion when it chose to ignore the glaring fact that respondent’s appeal had become moot and academic with the expiration of the lease contract upon which his appeal rested.8

In due course, respondent filed his Comment9 dated October 10, 2001, asserting that the CA correctly set aside the decision of the RTC because the lower court had no jurisdiction over the subject matter of the case. In this regard, respondent pointed out that he had previously assailed the jurisdiction of the trial court in the proceedings below via his Motion to Dismiss 10

dated July 8, 1997. Respondent likewise adopted the reasoning of the CA and argued that petitioners ran afoul of Section 1, Rule 7011 of the Rules of Court considering that petitioners’ Complaint12 dated June 4, 1997 for recovery of possession was filed only within months from the date the second demand letter to vacate dated May 27, 1997 was served upon him.

In their Reply13 dated October 20, 2001, petitioners countered that respondent is estopped from raising any jurisdictional issue in connection with the demand letter dated May 27, 1997 considering that respondent never argued during the trial or even in his appeal to the CA that the existence of the second letter divested the trial court of jurisdiction over the complaint.

The petition has merit.

The allegations of a complaint determine the nature of the action as well as which court will have jurisdiction over the case.14 The complaint would be deemed sufficient if, on its face, it shows that the court has jurisdiction without resorting to parol testimony.15 Precisely because ejectment proceedings are summary in nature, the complaint should contain a statement of facts which would bring the party clearly within the class of cases for which the statutes provide a remedy.

In the present case, petitioners made the following allegations in their complaint:

x x x

2. [Petitioners] are the duly registered co-owners of a parcel of land and its improvements, more particularly identified as a 3-door apartment, specifically located between Fumakilla Laboratories, Inc. and the Shell Gasoline Station along Amang Rodriguez, Sr. Avenue, Santolan, Pasig City, Metro Manila x x x.

3. Sometime in 1981, [respondent] entered into a verbal lease contract with the parents of herein [petitioners], who agreed to lease to the [respondent], on a month-to-month basis, the aforementioned property at the rental rate of Php3,500.00 per month.

4. On July 1, 1995, [petitioners] sent [respondent] a Notice to Vacate x x x informing the latter of the termination of the said verbal lease contract and demanding from him to vacate and peacefully surrender to the [petitioners] the aforesaid premises, the possession of which [respondent] has unlawfully withheld from the latter. Notwithstanding these written and oral

demands, [respondent] has repeatedly failed and up to now still refuses to turn over the said premises peacefully to the [petitioners].

Since that time, [respondent] has failed to remit his monthly rentals of Php3,500.00 so that as of May 30, 1997, [respondent] has incurred rental arrears now totaling Php 80,500.00 x x x16

To summarize, petitioners claim that (1) they are the owners of the property, being the successors-in-interest of the original owners; (2) their predecessors-in-interest entered into a verbal lease agreement with respondent on a month-to-month basis; (3) they decided to terminate the verbal lease contract upon the expiration of the last monthly term sometime in 1995; and (4) on July 1, 1995, they demanded that respondent leave the property, but respondent refused to do so.

Undeniably, the foregoing averments constitute a cause of action that is based primarily on unlawful deprivation or withholding of possession. Petitioners seek the recovery of the possession of the leased premises following the lapse of the term of the verbal lease contract entered into by petitioners’ predecessors-in-interest with respondent. The allegation that the contract is on a month-to-month basis becomes material in this sense because it signifies that the lease contract is terminable at the end of every month.17 Thus, petitioners may exercise their right to terminate the contract at the end of any month even if none of the conditions of the contract had been violated, and such right cannot be defeated by the lessee's timely payment of the rent or by his willingness to continue doing so. The lease contract expires at the end of every month unless there is an implied or tacit renewal thereof as when the lessee is allowed to continue enjoying the leased premises for fifteen (15) days after the end of every month with the acquiescence of the lessor. Such exception, however, cannot be invoked when notice to vacate is given to the lessee in which case the contract of lease expires at the end of the month.18

Moreover, even if the month-to-month agreement is only on a verbal basis, if it is shown that the property is needed for the lessor’s own use or for the use of an immediate member of the family or for any of the other statutory grounds to eject, then the lease is considered terminated as of the end of the month, after proper notice or demand to vacate has been given.19 At this juncture, it must be pointed out that notice or demand to vacate had been properly served upon respondent through the letter20 dated July 1, 1995, to wit:

July 1/95

Dear Ernesto Gozom,

I would like to reiterate my verbal demand upon you to vacate the premises you are presently occupying made sixty (60) days ago.

The said premises should be vacated within THIRTY (30)21 DAYS upon receipt hereof for I badly needed it and please take this notice as my final demand after I have verbally given you sixty (60) days already.

Hoping you will give this matter your preferential and utmost attention in order to avoid a costly litigation.

Very truly yours,

(sgd.)GERMELINA T. RACAZA and

(sgd.)BERNALDITA T. PARAS

Verily, respondent’s right to remain in possession of the property subject of the lease was extinguished

upon the expiration of the grace period mentioned in the July 1, 1995 demand letter. It thus becomes respondent’s obligation to turn over the property to petitioners, failing which petitioners would have the right to immediately resort to ejectment action to recover possession. Their complaint could thus fall under two kinds of ejectment suits, the first being for unlawful detainer cognizable by the metropolitan or municipal trial courts under Rule 70 and the second being for accion publiciana cognizable by the regional trial courts.22

An action for unlawful detainer exists when a person unlawfully withholds possession of any land or building against or from a lessor, vendor, vendee or other persons, after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied. 23 This summary action should be filed with the municipal trial courts within one year after the occurrence of the unlawful deprivation or withholding of possession.24 Beyond the one-year period, the real right of possession may be recovered through the filing of an accion publiciana with the regional trial courts. 25

In upholding the propriety of the mode adopted by petitioners to recover possession of their real property, the trial court found that more than one (1) year had lapsed from the time of petitioners’ dispossession, to wit:

x x x

As to the first issue, the [petitioners] have the legal right to recover the property from the [respondent]. [Petitioners] are the absolute owners of the property and the portion of the property which is occupied by the [respondent]. The possession by the [respondent] of the back portion of the property is unlawful and [petitioners] have been unlawfully deprived of the property since July 1, 1995 when they served the notice to vacate to the [respondent]. [Respondent] admits that after the notice to vacate was served upon him, he stopped paying his monthly rentals to the [petitioners]. The present action for recovery of possession was filed more than one year from the time the cause of action of the [petitioners] accrued, which was from the time the [respondent] stopped paying his rental to the [petitioners] or on July 1, 1995. x x x26

Respondent nevertheless insists, for the first time, that the one-year period must be reckoned from the date of the second demand letter to vacate, that is, on May 27, 1997. Considering that petitioners’ complaint was filed within days from this date, respondent contends that the RTC had no jurisdiction to hear the case. Adopting in toto the position of the CA, respondent argues that petitioners should have filed an action for unlawful detainer instead with the metropolitan or municipal trial courts.

The records of the case, however, do not support this view. Demand or notice to vacate is not a jurisdictional requirement when the action is based on the expiration of the lease. Any notice given would only negate any inference that the lessor has agreed to extend the period of the lease. The law requires notice to be served only when the action is due to the lessee’s failure to pay or the failure to comply with the conditions of the lease.27 The one-year period is thus counted from the date of first dispossession. To reiterate, the allegation that the lease was on a month-to-month basis is tantamount to saying that the lease expired every month. Since the lease already expired mid-year in 1995 as communicated in petitioners’ letter dated July 1, 1995, it was at that time that respondent’s occupancy became unlawful.

Even assuming, for the sake of argument, that a demand or notice to vacate was necessary, a reading of the second letter shows that petitioners were merely reiterating their original demand for respondent to vacate on the basis of the expiration of the verbal lease contract mentioned in the first letter. For clarity, the full text of the second letter28 sent by petitioners’ counsel is reproduced below:

Dear Mr. Gozom:

My principals, Germelina Torres Racaza and Bernaldita Torres Paras, have brought to me for legal action the fact of your unjustified and unlawful possession and occupation of the entire back portion of their

apartment building, located between Fumakilla Laboratories Inc. and the Shell Gasoline Station along Amang Rodriguez, Sr. Avenue, Santolan, Pasig City, Metro Manila.

According to my principals, your verbal contract of lease covering the said premises already expired sometime in July 1995 and the same has never been renewed, for which reason you discontinued paying your monthly rentals of Php3,500.00.

Notwithstanding their constant reminders and requests to you, for you to immediately vacate the aforesaid leased premises in view of the expiration of the lease contract, you have up to this time failed and still refuse to vacate the said premises to the prejudice of my clients.

In this regard, please consider this letter our formal demand and notice for you to vacate the said leased premises on or before the 2nd day of June 1997. Should you fail to so vacate and leave the premises and to pay your total monthly rental arrearages, amounting to Php 80,500.00, on or before the said date, we shall be constrained to pursue all available remedies under the law to protect the interests of my clients.

Very truly yours,

(sgd.)ATTY. CELSO P. YLADAN IICounsel for Germelina Torres Racaza and Bernaldita Torres Paras

(Emphases supplied.)

The Court has, in the past, ruled that subsequent demands which are merely in the nature of reminders or reiterations of the original demand do not operate to renew the one-year period within which to commence the ejectment suit considering that the period will still be reckoned from the date of the original demand.29

Besides, the allegations in the complaint and the answer put in issue the existence and validity of the verbal lease contract itself. Respondent contends that the lease term over the property is ten (10) years based on a written lease contract purportedly executed by him and petitioners’ predecessors-in interest. In this situation, it is the RTC which would be in the best position to determine the true nature of the agreement between the parties and to decide which of the two agreements is valid. In fact, it found that the written lease contract was spurious and not binding upon the petitioners.

Moreover, it is too late for respondent to invoke the defense of lack of jurisdiction on the ground that the action was filed before the lapse of one year from the date of last demand. Based on the records, respondent never pursued this line of argument in the proceedings before the trial court and even in his appeal to the CA. While it is true that prior to the filing of his answer, respondent moved to dismiss the complaint on the theory that the allegations therein merely constituted an action for unlawful detainer, the motion did not raise any jurisdictional issue relative to the second demand letter. When his motion to dismiss was denied, respondent no longer challenged the jurisdiction of the trial court in his subsequent pleadings and instead actively participated in the proceedings held before the RTC by relying principally on the strength of the written lease contract allegedly executed between him and petitioners’ predecessors-in-interest. It was only when the CA motu proprio dismissed the complaint that respondent conveniently thought of adopting the novel theory embodied in the assailed decision of the appellate court. Under these circumstances, estoppel has already set in.

In Tijam v. Sibonghanoy,30 this Court held that a party’s active participation in all stages of the case before the trial court, which includes invoking the court’s authority to grant affirmative relief, effectively estops such party from later challenging that same court’s jurisdiction. The CA’s conclusion that the doctrine enunciated in Tijam has been abandoned is erroneous as, in fact, the same has been

upheld and reiterated in many succeeding cases.31 Thus, while an order or decision rendered without jurisdiction is a total nullity and may be assailed at any stage, a party’s active participation in the proceedings in the tribunal which rendered the order or decision will bar such party from attacking its jurisdiction.

In any event, this Court notes that by respondent’s own claim,32 the term of the alleged written lease contract expired on September 30, 1999 or several months before the decision of the appellate court was rendered. The CA should have taken cognizance of this material fact considering that the statement is binding upon respondent and is an admission which renders moot the issue of who has a better right of possession.

WHEREFORE, the petition is GRANTED and the assailed Decision dated July 12, 2000 as well as the Resolution dated June 28, 2001 rendered by the Court of Appeals in CA-G.R. CV No. 61227 are REVERSED and SET ASIDE. Accordingly, the Decision dated September 30, 1998 of the Regional Trial Court, Branch 158, Pasig City in Civil Case No. 66295 is REINSTATED.

No costs.

SO ORDERED.