FIRST DIVISION [G.R. No. 145838. July 20, 2001] NICASIO I. ALCANTARA, petitioner, vs.

COMMISSION ON THE SETTLEMENT OF LAND PROBLEMS, SECRETARY OF DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES ANTONIO CERILLES, THE DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES, ROLANDO PAGLANGAN, ET AL., respondents. HEIRS OF DATU ABDUL S. PENDATUN, REP. BY DATU NASSER B. PENDATUN, AL HAJ., HEIRS OF SABAL MULA, and GAWAN CLAN, REP. BY TRIBAL CHIEFTAIN LORETO GAWAN, intervenors. DECISION KAPUNAN, J.: This is a petition for review on certiorari assailing the Decision of the Court of Appeals dated June 22, 2000 in CA-G.R. SP No. 53159i[1] and its Resolution dated October 16, 2000 denying petitioners motion for reconsideration. The facts of the case are as follows: Sometime in 1993, petitioner Nicasio Alcantara was granted Forest Land Grazing Lease Agreement No. 542 (FLGLA No. 542) by the Department of Environment and Natural Resources (DENR). Under said FLGLA, Alcantara was allowed to lease Nine Hundred Twenty-Three (923) hectares of public forest land at Sitio Lanton, Barrio Apopong, General Santos City for grazing purposes for a period of twenty-five (25) years to expire on 31 December 2018.

As early as 1990, however, private respondent Rolando Paglangan together with Esmael Sabel and Lasid Acop filed a letter-complaint with the Commission on Settlement of Land Problems (COSLAP) seeking the cancellation of FLGLA No. 542 and the reversion of the entire 923 hectares to the Blaan and Maguindanaoan tribes. The case was docketed as COSLAP Case No. 98-052. Petitioner filed his Answer questioning the jurisdiction of the COSLAP over the case, since the dispute involved a claim for recovery of ancestral land. Petitioner claimed that the case should have been filed with the DENR since it is the latter which has jurisdiction to administer and dispose of public lands, including grazing lands. Notwithstanding petitioners objection to the COSLAPs exercise of jurisdiction over the case, said body continued the hearings thereon. Petitioner alleged that COSLAP did not conduct formal hearings on the case, and that he was not notified nor given the opportunity to be present and participate in the field interviews and ocular inspections conducted by COSLAP.ii[2] On August 3, 1998, the COSLAP issued a Decision ordering the cancellation of FLGLA No. 542. Petitioner appealed the same to the Court of Appeals by petition for review on certiorari. The Court of Appeals dismissed the petition in its Decision dated June 22, 2000, and also denied petitioners motion for reconsideration in a Resolution dated October 16, 2000.iii[3] Hence, the present petition. Petitioner contends that the Court of Appeals erred in ruling that he had earlier recognized the jurisdiction of the COSLAP over the case. He stated further that the appellate court should have considered that the COSLAP does not possess the historical, genealogical and anthropological expertise to act on ancestral land claims, and that it is the National Commission on Indigenous Peoples (NCIP), under the

Indigenous Peoples Rights Act of 1997iv[4] which has jurisdiction over such claims. Petitioner thus submits that the COSLAPs decision ordering the cancellation of FLGLA No. 542 and declaring the area being claimed by private respondent as ancestral land is void for having been issued by a body which does not have jurisdiction over said matters.v[5] In his Comment, private respondent Rolando Paglangan argued that the petition should be dismissed since the petition for certiorari filed by petitioner in the Court of Appeals was filed out of time.vi[6] He also contended that the COSLAP has the power to entertain cases involving indigenous cultural communities when the DENR or the NCIP fails or refuses to act on a complaint or grievance brought before them.vii[7] He alleged that the dispute between petitioner and the Blaan tribe antedated the creation of the NCIP, hence, filing of the petition for cancellation of the FLGLA with the COSLAP.viii[8] On April 6, 2001, a Motion for Leave to Intervene and to File Complaint-in-Intervention was filed with this Court by the Heirs of Datu Abdul S. Pendatun, represented by Datu Nasser B. Pendatun, Al Haj; the Heirs of Sabal Mula, represented by Hadji Latip K. Mula; and the Gawan Clan, represented by their Tribal Chieftain Loreto Gawan. Subsequently, on May 24, 2001, they filed an Amended Motion for Leave to Intervene and to File Amended Complaint-in-Intervention. In their Amended Complaint-in-Intervention, they allege that the parcels of land in dispute form part of their ancestral lands, and that they have been in open, continuous, exclusive and notorious possession under claim of ownership of the same. They stated further that private respondent Rolando Paglangan acts only as agent of the Mula clan, and not of the other intervenors.ix[9] The Court finds no reason to disturb the ruling of the Court of Appeals. The Court of Appeals did not commit any reversible error in the assailed decision. The Court agrees with the appellate court that petitioner is

estopped from questioning the jurisdiction of the COSLAP since he participated actively in the proceedings before said body by filing an Answer, a Motion for Reconsideration of the COSLAPs decision and a Supplement to Respondents Motion for Reconsideration. The Court also notes the appellate courts observation that petitioner began to question the jurisdiction of the COSLAP only when he realized that his period to appeal the COSLAPs decision had already lapsed.x[10] It has been repeatedly held by this Court that the active participation of a respondent in the case pending against him before a court or a quasijudicial body is tantamount to a recognition of that courts or bodys recognition and a willingness to abide by the resolution of the case and will bar said party from later on impugning the courts or bodys jurisdiction.xi[11] Moreover, Executive Order No. 561 creating the COSLAP, the law then prevailing when private respondents filed their complaint for cancellation of FLGLA No. 542, provides in Section 3, paragraph 2(a) thereof that said Commission may assume jurisdiction over land disputes involving occupants of the land in question and pasture lease agreement holders: Sec. 3. Powers and Functions. -- The Commission shall have the following powers and functions: xxx 2. Refer and follow-up for immediate action by the agency having appropriate jurisdiction any land problem or dispute referred to the Commission: Provided, That the Commission, may, in the following cases, assume jurisdiction and resolve land problems or disputes which are critical and explosive in nature considering, for instance, the large number of the parties involved, the presence or emergence of social tension or unrest, or other similar critical situations requiring immediate action: (a) Between occupants/squatters and pasture lease agreement holders or timber concessionaires;

(b) Between occupants/squatters and government reservation grantees; (c) Between occupants/squatters and public land claimants or applicants; (d) Petitions for classification, release and/or subdivision of lands of the public domain; and (e) Other similar land problems of grave urgency and magnitude. The Commission shall promulgate such rules of procedure as will insure expeditious resolution and action on the above cases. The resolution, order or decision of the Commission on any of the foregoing cases shall have the force and effect of a regular administrative resolution, order or decision and shall be binding upon the parties therein and upon the agency having jurisdiction over the same. Said resolution, order or decision shall become final and executory within thirty (30) days from its promulgation and shall be appealable by certiorari only to the Supreme Court. (Emphasis supplied.) The Court of Appeals also stated that based on the records, the the land area being claimed by private respondents belongs to the Blaan indigenous cultural community since they have been in possession of, and have been occupying and cultivating the same since time immemorial, a fact has not been disputed by petitioner.xii[12] It was likewise declared by the appellate court that FLGLA No. 542 granted to petitioner violated Section 1 of Presidential Decree No. 410xiii[13] which states that all unappropriated agricultural lands forming part of the public domain are declared part of the ancestral lands of the indigenous cultural groups occupying the same, and these lands are further declared alienable and disposable, to be distributed exclusively among the members of the indigenous cultural group concerned.

The Court finds no reason to depart from such finding by the appellate court, it being a settled rule that findings of fact of the Court of Appeals are binding and conclusive upon the Supreme Court absent any showing that such findings are not supported by the evidence on record.xiv[14] WHEREFORE, the petition is hereby DENIED. SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.

i[1] Nicasio I. Alcantara, Petitioner vs. Commission on the Settlement of Land Problems, Secretary of Department of Environment and Natural Resources Antonio Cerilles, The Department of Environment and Natural Resources, Rolando Paglangan, et al., Respondents. i[2] Petition, Rollo, p. 9. i[3] Rollo, pp. 93-95. i[4] Republic Act No. 8371, An Act to Recognize, Protect and Promote the Rights of Indigenous Cultural Communities/Indigenous Peoples, Creating a National Commission on Indigenous Peoples, Establishing Implementing Mechanisms, Appropriating Funds Therefor, and for Other Purposes (1997). i[5] Petition, Rollo, pp. 20-28. i[6] Comment, Id., at 137-139. i[7] Id., at 146-147. i[8] Id., at 150. i[9] Amended Complaint-in -Intervention, p. 2. i[10] Decision of the Court of Appeals, Id., at 85.

i[11] Spouses Virgilio and Josie Jimenez vs. Patricia, Inc., G.R. No. 134651, September 18, 2000; See also ABS-CBN Supervisors Employees Union Members vs. ABS-CBN Broadcasting Corporation, 304 SCRA 489 (1999); Maneja vs. National Labor Relations Commission, 290 SCRA 603 (1998); i[12] Id., at 89. i[13] Section 1. Ancestral Lands. -- Any provision of law, decree, executive order, rule or regulation to the contrary notwithstanding all unappropriated agricultural lands forming part of the public domain at the date of the approval of this Decree occupied and cultivated by members of the National Cultural Communities for at least ten (10) years before the effectivity of this Decree, particularly in the provinces of Mountain Province, Cagayan, Kalinga-Apayao, Ifugao, Mindoro, Pampanga, Rizal, Palawan, Lanao del Sur, Lanao del Norte, Sultan Kudarat, Maguindanao, North Cotabato, South Cotabato, Sulu, Tawi-Tawi, Zamboanga del Sur, Zamboanga del Norte, Davao del Sur, Davao del Norte, Davao Oriental, Davao City, Agusan, Surigao del Sur, Surigao del norte, Bukidnon, and Basilan are hereby declared part of the ancestral lands of these National Cultural Minorities and as such these lands are further declared alienable and disposable if such lands have not been earlier declared as alienable and disposable by the Director of Forest Development, to be distributed exclusively among the members of the National Cultural Communities concerned, as defined under the Constitution and under Republic Act Numbered Eighteen hundred eighty-eight: Provided, however, That lands of the public domain heretofore reserved for settlement purposes under the administration of the Department of Agrarian Reform and other areas reserved for other public or quasi-public purposes shall not be subject to disposition in accordance with the provisions of this Decree: Provided, further, That the Government in the interest of its development program, may establish agro-industrial projects in these areas for the purpose of creating conditions for employment and thus further enhance the progress of the people. For purposes of this Decree, ancestral lands are lands of the public domain that have been in open, continuous, exclusive and notorious occupation and cultivation by members of the National Cultural Communities by themselves or through their ancestors under a bona fide claim of acquisition of ownership according to their customs and traditions for a period of at least thirty (30) years before the date of approval of this Decree. The interruption of the period of their occupation and cultivation on account of civil disturbance or force majeure shall not militate against their right granted under this Decree i[14] Security Bank and Trust Company vs. Triumph Lumber and Construction Corporation, 301 SCRA 537 (1999), Development Bank of the Philippines vs. Court of Appeals, 302 SCRA 362 (1999).

THIRD DIVISION

THE HEIRS OF THE LATE RUBEN REINOSO, SR., represented by Ruben Reinoso Jr., Petitioners,

G.R. No. 116121 Present: CARPIO, J. VELASCO, JR., Chairperson, PERALTA, ABAD, and MENDOZA, JJ.

Before the Court is a petition for review assailing the May 20, 1994 Decisionxiv[1] and June 30, 1994 Resolutionxiv[2] of the Court of Appeals (CA), in CA-G.R. CV No. 19395, which set aside the March 22, 1988 Decision of the Regional Trial Court, Branch 8, Manila (RTC) for non-payment of docket fees. The dispositive portion of the CA decision reads: IN VIEW OF ALL THE FOREGOING, the decision appealed from is SET ASIDE and REVERSED and the complaint in this case is ordered DISMISSED. No costs pronouncement. SO ORDERED. The complaint for damages arose from the collision of a passenger jeepney and a truck at around 7:00 oclock in the evening of June 14, 1979 along E. Rodriguez Avenue, Quezon City. As a result, a passenger of the jeepney, Ruben Reinoso, Sr. (Reinoso), was killed. The passenger jeepney was owned by Ponciano Tapales (Tapales) and driven by Alejandro Santos (Santos), while the truck was owned by Jose Guballa (Guballa) and driven by Mariano Geronimo (Geronimo). On November 7, 1979, the heirs of Reinoso (petitioners) filed a complaint for damages against Tapales and Guballa. In turn, Guballa filed a third party complaint against Filwriters Guaranty Assurance Corporation (FGAC) under Policy Number OV-09527. On March 22, 1988, the RTC rendered a decision in favor of the petitioners and against Guballa. The decision in part, reads: In favor of herein plaintiffs and against defendant Jose Guballa:

- versus -

COURT OF APPEALS, PONCIANO TAPALES, JOSE GUBALLA, and FILWRITERS GUARANTY ASSURANCE CORPORATION, Respondent. Promulgated: July 18, 2011

x -------------------------------------------------------------------------------------x DECISION

MENDOZA, J.:

1. For the death of Ruben Reinoso, Sr. 2. Loss of earnings (monthly income at the time of death (2,000.00 Court used 1,000.00 only per month (or 12,000.00 only per year) & victim then being 55 at death had ten (10) years life expectancy 3. Mortuary, Medical & funeral expenses and all incidental expenses in the wake in serving those who condoled.. 4. Moral damages .. 5. Exemplary damages 6. Litigation expenses . 7. Attorneys fees Or a total of 250,000.00 For damages to property:

30,000.00 120,000.00

2. Compensatory damages (earnings at 150.00 per day) and for two (2) months jeepney stayed at the repair shop. 3. 4. Moral damages ... Exemplary damages .

9,000.00

10,000.00 10,000.00 15,000.00

5. Attorneys fees 15,000.00 or a total of 44,000.00

50,000.00 25,000.00 15,000.00 25,000.00

Under the 3rd party complaint against 3rd party defendant Filwriters Guaranty Assurance Corporation, the Court hereby renders judgment in favor of said 3rd party plaintiff by way of 3rd party liability under policy No. OV-09527 in the amount of 50,000.00 undertaking plus 10,000.00 as and for attorneys fees. For all the foregoing, it is the well considered view of the Court that plaintiffs, defendant Ponciano Tapales and 3rd Party plaintiff Jose Guballa established their claims as specified above, respectively. Totality of evidence preponderance in their favor. JUDGMENT WHEREFORE, in view of the judgment is hereby rendered as follows: foregoing,

In favor of defendant Ponciano Tapales and against defendant Jose Guballa: 1. Actual damages for repair is already awarded to defendant-cross-claimant Ponciano Tapales by Br. 9, RTC-Malolos, Bulacan (Vide: Exh. 1-G-Tapales); hence, cannot recover twice.

In favor of plaintiffs for the death of Ruben Reinoso, Sr.250,000.00;

In favor of defendant Ponciano Tapales due to damage of his passenger jeepney.44,000.00; In favor of defendant Jose Guballa under Policy No. OV09527....60,000.00; All the specified accounts with 6% legal rate of interest per annum from date of complaint until fully paid (Reformina vs. Tomol, 139 SCRA 260; and finally; Costs of suit. SO ORDERED.xiv[3]

A. The Court of Appeals MISAPPLIED THE RULING of the Supreme Court in the case of Manchester Corporation vs. Court of Appeals to this case. B. The issue on the specification of the damages appearing in the prayer of the Complaint was NEVER PLACED IN ISSUE BY ANY OF THE PARTIES IN THE COURT OF ORIGIN (REGIONAL TRIAL COURT) NOR IN THE COURT OF APPEALS. C. The issues of the case revolve around the more substantial issue as to the negligence of the private respondents and their culpability to petitioners.xiv[7] The petitioners argue that the ruling in Manchester should not have been applied retroactively in this case, since it was filed prior to the promulgation of the Manchester decision in 1987. They plead that though this Court stated that failure to state the correct amount of damages would lead to the dismissal of the complaint, said doctrine should be applied prospectively. Moreover, the petitioners assert that at the time of the filing of the complaint in 1979, they were not certain of the amount of damages they were entitled to, because the amount of the lost income would still be finally determined in the course of the trial of the case. They claim that the jurisdiction of the trial court remains even if there was failure to pay the correct filing fee as long as the correct amount would be paid subsequently. Finally, the petitioners stress that the alleged defect was never put in issue either in the RTC or in the CA. The Court finds merit in the petition.

On appeal, the CA, in its Decision dated May 20, 1994, set aside and reversed the RTC decision and dismissed the complaint on the ground of non-payment of docket fees pursuant to the doctrine laid down in Manchester v. CA.xiv[4] In addition, the CA ruled that since prescription had set in, petitioners could no longer pay the required docket fees.xiv[5] Petitioners filed a motion for reconsideration of the CA decision but it was denied in a resolution dated June 30, 1994.xiv[6] Hence, this appeal, anchored on the following GROUNDS:

The rule is that payment in full of the docket fees within the prescribed period is mandatory.xiv[8] In Manchester v. Court of Appeals,xiv[9] it was held that a court acquires jurisdiction over any case only upon the payment of the prescribed docket fee. The strict application of this rule was, however, relaxed two (2) years after in the case of Sun Insurance Office, Ltd. v. Asuncion,xiv[10] wherein the Court decreed that where the initiatory pleading is not accompanied by the payment of the docket fee, the court may allow payment of the fee within a reasonable period of time, but in no case beyond the applicable prescriptive or reglementary period. This ruling was made on the premise that the plaintiff had demonstrated his willingness to abide by the rules by paying the additional docket fees required.xiv[11] Thus, in the more recent case of United Overseas Bank v. Ros,xiv[12] the Court explained that where the party does not deliberately intend to defraud the court in payment of docket fees, and manifests its willingness to abide by the rules by paying additional docket fees when required by the court, the liberal doctrine enunciated in Sun Insurance Office, Ltd., and not the strict regulations set in Manchester, will apply. It has been on record that the Court, in several instances, allowed the relaxation of the rule on non-payment of docket fees in order to afford the parties the opportunity to fully ventilate their cases on the merits. In the case of La Salette College v. Pilotin,xiv[13] the Court stated: 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.xiv[14]

While there is a crying need to unclog court dockets on the one hand, there is, on the other, a greater demand for resolving genuine disputes fairly and equitably,xiv[15] for it is far better to dispose of a case on the merit which is a primordial end, rather than on a technicality that may result in injustice. In this case, it cannot be denied that the case was litigated before the RTC and said trial court had already rendered a decision. While it was at that level, the matter of non-payment of docket fees was never an issue. It was only the CA which motu propio dismissed the case for said reason. Considering the foregoing, there is a need to suspend the strict application of the rules so that the petitioners would be able to fully and finally prosecute their claim on the merits at the appellate level rather than fail to secure justice on a technicality, for, indeed, the general objective of procedure is to facilitate the application of justice to the rival claims of contending parties, bearing always in mind that procedure is not to hinder but to promote the administration of justice.xiv[16] The Court also takes into account the fact that the case was filed before the Manchester ruling came out. Even if said ruling could be applied retroactively, liberality should be accorded to the petitioners in view of the recency then of the ruling. Leniency because of recency was applied to the cases of Far Eastern Shipping Company v. Court of Appealsxiv[17] and Spouses Jimmy and Patri Chan v. RTC of Zamboanga.xiv[18] In the case of Mactan Cebu International Airport Authority v. Mangubat (Mactan),xiv[19] it was stated that the intent of the Court is clear to afford litigants full opportunity to comply with the

new rules and to temper enforcement of sanctions in view of the recency of the changes introduced by the new rules. In Mactan, the Office of the Solicitor General (OSG) also failed to pay the correct docket fees on time. We held in another case: x x x It bears stressing that the rules of procedure are merely tools designed to facilitate the attainment of justice. They were conceived and promulgated to effectively aid the court in the dispensation of justice. Courts are not slaves to or robots of technical rules, shorn of judicial discretion. In rendering justice, courts have always been, as they ought to be, conscientiously guided by the norm that, on the balance, technicalities take a backseat against substantive rights, and not the other way around. Thus, if the application of the Rules would tend to frustrate rather than promote justice, it is always within the power of the Court to suspend the Rules, or except a particular case from its operation.xiv[20]

judgment in satisfaction of said lien. The clerk of court shall assess and collect the corresponding fees. As the Court has taken the position that it would be grossly unjust if petitioners claim would be dismissed on a strict application of the Manchester doctrine, the appropriate action, under ordinary circumstances, would be for the Court to remand the case to the CA. Considering, however, that the case at bench has been pending for more than 30 years and the records thereof are already before this Court, a remand of the case to the CA would only unnecessarily prolong its resolution. In the higher interest of substantial justice and to spare the parties from further delay, the Court will resolve the case on the merits. The facts are beyond dispute. Reinoso, the jeepney passenger, died as a result of the collision of a jeepney and a truck on June 14, 1979 at around 7:00 oclock in the evening along E. Rodriguez Avenue, Quezon City. It was established that the primary cause of the injury or damage was the negligence of the truck driver who was driving it at a very fast pace. Based on the sketch and spot report of the police authorities and the narration of the jeepney driver and his passengers, the collision was brought about because the truck driver suddenly swerved to, and encroached on, the left side portion of the road in an attempt to avoid a wooden barricade, hitting the passenger jeepney as a consequence. The analysis of the RTC appears in its decision as follows: Perusal and careful analysis of evidence adduced as well as proper consideration of all the circumstances and factors bearing on the issue as to who is responsible for the instant vehicular mishap convince and persuade this Court that preponderance of proof is in favor of plaintiffs and defendant Ponciano

The petitioners, however, are liable for the difference between the actual fees paid and the correct payable docket fees to be assessed by the clerk of court which shall constitute a lien on the judgment pursuant to Section 2 of Rule 141 which provides: SEC. 2. Fees in lien. Where the court in its final judgment awards a claim not alleged, or a relief different from, or more than that claimed in the pleading, the party concerned shall pay the additional fees which shall constitute a lien on the

Tapales. The greater mass of evidence spread on the records and its influence support plaintiffs plaint including that of defendant Tapales. The Land Transportation and Traffic Rule (R.A. No. 4136), reads as follows: Sec. 37. Driving on right side of highway. Unless a different course of action is required in the interest of the safety and the security of life, person or property, or because of unreasonable difficulty of operation in compliance therewith, every person operating a motor vehicle or an animal drawn vehicle on highway shall pass to the right when meeting persons or vehicles coming toward him, and to the left when overtaking persons or vehicles going the same direction, and when turning to the left in going from one highway to another, every vehicle shall be conducted to the right of the center of the intersection of the highway. Having in mind the foregoing provision of law, this Court is convinced of the veracity of the version of the passenger jeepney driver Alejandro Santos, (plaintiffs and Tapales witness) that while running on lane No. 4 westward bound towards Ortigas Avenue at between 30-40 kms. per hour (63-64 tsn, Jan. 6, 1984) the sand & gravel truck from the opposite direction driven by Mariano Geronimo, the headlights of which the former had seen while still at a distance of about 30-40 meters from the wooden barricade astride lanes 1 and 2, upon reaching said wooden block suddenly swerved to the left into lanes 3 and 4 at high speed napakabilis po ng dating ng truck. (29 tsn, Sept. 26, 1985) in the process hitting them (Jeepney passenger)

at the left side up to where the reserve tire was in an oblique manner pahilis (57 tsn, Sept. 26, 1985). The jeepney after it was bumped by the truck due to the strong impact was thrown resting on its right side while the left side was on top of the Bangketa (side walk). The passengers of the jeepney and its driver were injured including two passengers who died. The left side of the jeepney suffered considerable damage as seen in the picture (Exhs. 4 & 5-Tapales, pages 331332, records) taken while at the repair shop. The Court is convinced of the narration of Santos to the effect that the gravel & sand truck was running in high speed on the good portion of E. Rodriguez Avenue (lane 1 & 2) before the wooden barricade and (having in mind that it had just delivered its load at the Corinthian Gardens) so that when suddenly confronted with the wooden obstacle before it had to avoid the same in a manner of a reflex reaction or knee-jerk response by forthwith swerving to his left into the right lanes (lanes 3 & 4). At the time of the bumping, the jeepney was running on its right lane No. 4 and even during the moments before said bumping, moving at moderate speed thereon since lane No. 3 was then somewhat rough because being repaired also according to Mondalia who has no reason to prevaricate being herself one of those seriously injured. The narration of Santos and Mondalia are convincing and consistent in depicting the true facts of the case untainted by vacillation and therefore, worthy to be relied upon. Their story is forfeited and confirmed by the sketch drawn by the investigating officer Pfc. F. Amaba, Traffic Division, NPD, Quezon City who rushed to the scene of the mishap (Vide: Resolution of Asst

fiscal Elizabeth B. Reyes marked as Exhs. 7, 7-A, 7-BTapales, pp. 166-168, records; the Certified Copy found on pages 598-600, ibid, with the attached police sketch of Pfc. Amaba, marked as Exh. 8-Tapales on page 169, ibid; certified copy of which is on page 594, ibid) indicating the fact that the bumping indeed occurred at lane No. 4 and showing how the gavel & sand truck is positioned in relation to the jeepney. The said police sketch having been made right after the accident is a piece of evidence worthy to be relied upon showing the true facts of the bumping-occurrence. The rule that official duty had been performed (Sec.5(m), R-131, and also Sec. 38, R-a30, Rev. Rules of Court) there being no evidence adduced and made of record to the contrary is that said circumstance involving the two vehicles had been the result of an official investigation and must be taken as true by this Court.xiv[21] While ending up on the opposite lane is not conclusive proof of fault in automobile collisions,xiv[22] the position of the two vehicles, as depicted in the sketch of the police officers, clearly shows that it was the truck that hit the jeepney. The evidentiary records disclosed that the truck was speeding along E. Rodriguez, heading towards Santolan Street, while the passenger jeepney was coming from the opposite direction. When the truck reached a certain point near the Meralco Post No. J9-450, the front portion of the truck hit the left middle side portion of the passenger jeepney, causing damage to both vehicles and injuries to the driver and passengers of the jeepney. The truck driver should have been more careful, because, at that time, a portion of E. Rodriguez Avenue was under repair and a wooden barricade was placed in the middle thereof. The Court likewise sustains the finding of the RTC that the truck owner, Guballa, failed to rebut the presumption of negligence in the

hiring and supervision of his employee. Article 2176, in relation to Article 2180 of the Civil Code, provides: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. xxxx Art. 2180. The obligation imposed by Art. 2176 is demandable not only for ones own acts or omissions but also for those of persons for whom one is responsible. xxxx Employers shall be liable for the damage caused by their employees and household helpers acting within the scope of their assigned tasks even though the former are not engaged in any business or industry. xxxx The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. Whenever an employees negligence causes damage or injury to another, there instantly arises a presumption juris tantum that the employer failed to exercise diligentissimi patris families in the selection or supervision of his employee.xiv[23] Thus, in the selection of prospective employees, employers are required to examine them as to their qualification, experience and service record. With respect to the

supervision of employees, employers must formulate standard operating procedures, monitor their implementation, and impose disciplinary measures for breaches thereof. These facts must be shown by concrete proof, including documentary evidence.xiv[24] Thus, the RTC committed no error in finding that the evidence presented by respondent Guballa was wanting. It ruled: x x x. As expected, defendant Jose Guballa, attempted to overthrow this presumption of negligence by showing that he had exercised the due diligence required of him by seeing to it that the driver must check the vital parts of the vehicle he is assigned to before he leaves the compound like the oil, water, brakes, gasoline, horn (9 tsn, July 17, 1986); and that Geronimo had been driving for him sometime in 1976 until the collision in litigation came about (5-6 tsn, ibid); that whenever his trucks gets out of the compound to make deliveries, it is always accompanied with two (2) helpers (16-17 tsn, ibid). This was all which he considered as selection and supervision in compliance with the law to free himself from any responsibility. This Court then cannot consider the foregoing as equivalent to an exercise of all the care of a good father of a family in the selection and supervision of his driver Mariano Geronimo.xiv[25] WHEREFORE, the petition is GRANTED. The May 20, 1994 Decision and June 30, 1994 Resolution of the Court of Appeals are REVERSED and SET ASIDE and the March 22, 1988 Decision of the Regional Trial Court, Branch 8, Manila, is REINSTATED. SO ORDERED.

JOSE MENDOZA

CATRAL Associate Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice

PRESBITERO J. VELASCO, JR. Associate Justice Chairperson

DIOSDADO M. PERALTA Associate Justice

ROBERTO A. ABAD Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

PRESBITERO J. VELASCO, JR. Associate Justice Chairperson, Third Division CERTIFICATION

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

RENATO C. CORONA

Chief Justice

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 149351 March 17, 2004

brevity) which was engaged in the importation and sale of Hankook Brand Korean Tires and the acquisition of real estate. The couple were incorporators and major stockholders of the corporation and were also employed therein. Pastor and the private respondent did not have a child. They decided to "adopt" Leonard Lim and petitioner Lita Lim Marcelo, who were children of their distant poor relatives in Zamboanga City. There was, however, no formal court adoption. Sometime thereafter, marital problems arose, as a result of which the private respondent stopped working at Skyline. As the domestic problems remained unresolved, Pastor and the private respondent jointly filed on August 13, 1968 a Petition before the Juvenile and Domestic Relations Court of Quezon City, for voluntary dissolution of conjugal properties. As their differences worsened, the private respondent filed on January 27, 1971 a petition for legal separation against Pastor on the ground of infidelity before the then Juvenile and Domestic Relations Court of Quezon City. The petition was amended into one for Support with Alimony and the case was docketed as Civil Case No. QE-0030. On February 17, 1972, the court rendered a decision, awarding P3,000 monthly support to the private respondent and the children, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered: 1. Ordering defendant to pay plaintiff monthly support of P3,000.00 effective as of February, 1971; 2. Ordering defendant to pay plaintiff attorneys fees in the sum of P2,000.00, plus the cost of this suit. 4 On June 24, 1975, the private respondent filed a motion for execution. The court issued an order granting the motion and the sheriff levied on the properties of Skyline. The latter filed, on December 19, 1975, a third-

SPEED DISTRIBUTING CORP., LITA MARCELO, IRENEO MARCELO and PEDRO AQUINO, petitioners, vs. COURT OF APPEALS and RUFINA LIM, respondents.

DECISION

CALLEJO, SR., J.: This is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. No. 52214 (CV) reversing the November 21, 1995 Order2 of the Regional Trial Court of Quezon City, Branch 222, dismissing the complaint in Civil Case No. Q-95-24588, and its August 8, 2001 Resolution denying the Motion for Reconsideration of the aforesaid decision. The Antecedents On September 20, 1953, Pastor Y. Lim married private respondent Rufina Luy Lim.3 During the early part of their marriage, Pastor organized some family corporations using their conjugal funds. Among these corporations was Skyline International Corporation (Skyline, for

party claim, alleging that the properties levied were its personal properties and not those of Pastor, who was only one of its stockholders. The private respondent filed a motion to quash Skylines claim, which the court granted. Skyline filed a petition for certiorari with prayer for temporary restraining order before the Court of Appeals for the nullification of the order of the trial court quashing the third-party claim. The case was docketed as CA-G.R. No. 05312 (SP). The appellate court issued a temporary restraining order on April 27, 1976. On June 23, 1976, the Court of Appeals rendered a decision dismissing the petition, thus, lifting the restraining order.5 The appellate court ruled as follows: While it is recognized as "lawful to obtain a corporation charter, even with a single substantial stockholder, to engage in a specific activity, and such activity may co-exist with other private activities of the stockholder" (Liddel & Co., Inc. vs. Collector of Internal Revenue, L-9687, June 30, 1961, 2 SCRA 632), the corporations distinct personality will be disregarded when it is so "controlled and its affairs so conducted as to make it merely an instrumentality, agency or conduit of another" (NAMARCO vs. Associated Finance Company, supra). It is not disputed that petitioner Skyline International, Inc. was a conjugal enterprise (p. 2, Decision) before its incorporation in December 1970 (p. 10, id.), when it was still a proprietorship. Petitioner Skyline International, Inc. is still engaged in the sale of automotive parts and dealership of Firestone Rubber and Tires which business it was already doing when it was still a proprietorship. Respondent Court found that the only assets of petitioner corporation are the conjugal properties. Thus, respondent Court concludes that "it is safe to assume that Skyline International Corporation is another name for Mr. and Mrs. Pastor Y. Lim in person." In fact, Pastor Y. Lim admitted that the

other incorporators are their former employees and their respective shares are nominal (Decision, pp. 14-15). The above facts are more than enough justification for respondent Court to pierce the veil of corporate fiction. Consequently, we find the questioned orders to be in order.6 Skyline, then, filed a petition for review before this Court, but the petition was dismissed in a Resolution dated August 6, 1976.7 On August 21, 1987, the Speed Distributing Corporation (Speed, for brevity), was registered with the Securities and Exchange Commission, with Pastor Lim as one of the incorporators. He owned ten shares, valued at P100.00 per share. The following were the names of the incorporators, the number of shares respectively subscribed to by them and the amount paid up: Shares 11,200 1,000 150 140 10 12,500 Subscribed P 1,120,000.00 100,000.00 15,000.00 14,000.00 1,000.00 P1,250,000.00 Paid P 280,000.00 25,000.00 3,750.00 3,500.00 250.00 P 312,500.008

Lita T. Lim Leonard L. Lim Lina S. Lim Larry S. Lim Pastor Y. Lim

Petitioner Lita Lim-Marcelo was elected treasurer of the corporation. On June 21, 1991, the Leslim Corporation (Leslim, for brevity), was registered with the Securities and Exchange Commission with a capital stock of P12,000,000.00, divided into 120,000 shares at par value of P100.00 per share. Pastor Lim subscribed to 95,700 shares valued at P9,570,000.00. The incorporators, the number of shares they subscribed

to and the amounts paid for were indicated in the articles of incorporation as follows: Name Teresa T. Lim Leonard L. Lim Larry S. Lim Lina L. Lim Pastor Y. Lim No. of Share Amount Subscribed 24,000 P2,400,000.00 100 10,000.00 100 10,000.00 100 10,000.00 95,700 9,570,000.00 120,000 P12,000,000.00 The following persons have paid on the shares of the capital stock for which they have subscribed the amount set after their names respectively: Name Teresa T. Lim Leonard L. Lim Larry S. Lim Lina L. Lim Pastor Y. Lim Amount Paid P600,000.00 2,500.00 2,500.00 2,500.00 P2,392,500.00 P3,000,000.009

On August 26, 1994, Leslim Corporation executed a deed of absolute sale in favor of the Speed, represented by its Vice-President, petitioner Ireneo Marcelo, over the parcel of lot located at Diliman Quezon City, covered by TCT No. 36617 for the price of P3,900,000.00.11 Petitioner Lita Lim-Marcelo, the Vice-President of Leslim12 signed in the deed for and in behalf of the corporation. She was authorized by the Board of Directors in a Resolution August 19, 1994 to sign the said deed and to receive the purchase price for and in behalf of Leslim. The said Resolution was certified by corporate secretary Pedro Aquino on August 22, 1994.13 Consequently, TCT No. 36617 which was in the name of Leslim, was cancelled and a new one, TCT No. T-116716, was issued to and in the name of Speed.14 On June 11, 1994, Pastor Lim died intestate and was survived by his wife, the private respondent. On March 17, 1995, the private respondent, through her nephew and attorney-in-fact George Luy, filed a petition for the administration of the estate of her deceased husband before the Regional Trial Court of Quezon City, docketed as Special Proceedings No. Q-95-23334.15 The case was raffled to Branch 93. The private respondent filed a motion praying for the annotation of a notice of lis pendens at the dorsal portion of all titles over the properties in the name of Pastor. Included in the said properties were those registered in the name of other corporations of which Pastor was a stockholder, including that parcel of land covered by TCT No. T-116717 registered under the name of Speed. The court granted the motion. The affected corporations, including Speed, filed motions to cancel the notices of lis pendens and motions for exclusion of certain properties from Pastors estate. On June 8, 1995, the Court granted the motions and ordered the exclusion of certain properties from the estate of Pastor and the cancellation of the notices of lis pendens on properties registered in the name of the said corporations, including that covered by TCT No. T-116716 under the name of Speed. On June 27, 1995, the private respondent filed a verified amended petition in SP No. Q-95-23334 alleging, among others, that during his

Under the articles of incorporation, Pastor Lim was the treasurer-in-trust of the corporation.10 The Vice-President and Treasurer of the corporation was petitioner Lita Lim-Marcelo, now married to petitioner Ireneo Marcelo.

lifetime, Pastor substantially owned the following business entities: Skyline Sales Corporation, Speed Distributing, Inc., and Leslim Corporation: 5. That the following real properties, although registered in the name of the above entities, were actually acquired by Pastor Y. Lim during his marriage with petitioner, to wit: CORPORATION b. Leslim Corp. TITLE TCT No. 36617 LOCATION Quezon City

6. Plaintiff is the surviving spouse of the late Pastor Y. Lim who died intestate on June 11, 1994, but leaving several properties, real and personal, situated in Quezon City, Makati City, Rizal Province, Las Pias, Valenzuela, Manila, Cavite, Masbate and other parts of the country. 7. During the existence of the marriage of plaintiff and Pastor Y. Lim, the latter formed, among others, Leslim Corporation, and he actually owned the same as in fact he had in his name 95,700 out of the 120,000 shares of the authorized capital stock. The remaining shares of stocks were listed in the name of some persons who were actually his dummies, and were made to appear as stockholders of Leslim Corporation only for purposes of registration with the Securities and Exchange Commission. 8. Leslim Corporation, in turn, is a registered owner of a certain parcel of land located in Diliman, Quezon City, as evidenced by TCT No. 36617, issued by defendant Register of Deeds, copy of which is hereto attached as Annex "C." 9. Plaintiff initiated an intestate proceedings on the estate of her deceased husband in order to lay claim on her conjugal share thereon. She then started to verify the various TCTs of the real property in the name of her deceased husband, including those in the name of Leslim Corporation, and she discovered that TCT No. 36617 had already been canceled and in lieu thereof, TCT No. 116716 was issued by defendant Register of Deeds in the name of defendant Corporation 10. Upon further verification, plaintiff discovered that the basis of the cancellation of TCT No. 36617 in favor of TCT No. 116716 is a Deed of Sale signed and executed by defendant Lita Marcelo who misrepresented herself as Vice President of Leslim Corporation and as such she was purportedly authorized to dispose of the property in question in favor of defendant

but now illegally transferred to and registered in the name of Speed Distributing, Inc. under TCT No. 116716.16 On July 4, 1995, the probate court issued an Order setting aside its June 8, 1995 Order and directed the Register of Deeds to reinstate the notice of lis pendens on TCT No. T-116716. The court denied the motion for the reconsideration of the said order. Speed filed a petition for certiorari with the Court of Appeals for the nullification of the July 4, 1995 and September 12, 1995 Orders of the trial court, docketed as CA-G.R. No. 38617 (SP). Meanwhile, on August 1, 1995, the private respondent filed a complaint against Speed, and the petitioners with the RTC of Quezon City, for the nullification of the Deed of Absolute Sale executed by Leslim in favor of Speed over the property covered by TCT No. T-36617, and the cancellation of TCT No. T-11676, with damages before the RTC of Quezon City. The case was raffled to Branch 222, and was docketed as Q-95-24588. The private respondent alleged, inter alia, that: ...

corporation, which latter corporation was allegedly represented in the transaction by her husband, herein defendant Ireneo Marcelo who claimed himself as the Vice President of defendant corporation. 11. To give a semblance of legality to the feigned transaction of sale, defendant Pedro Aquino, misrepresenting himself as the corporate secretary of Leslim Corporation, executed a simulated/falsified secretarys certificate, wherein he stated that in an alleged special meeting of the Board of Directors of Leslim Corporation held on August 19, 1994 in its office at 1006 Quezon Avenue, Quezon City, defendant Lita Marcelo was allegedly authorized by the Board to enter into the transaction in question. 12. The transfer of the property from Leslim to defendant corporation is imaginary, the deed of sale and the secretarys certificate are simulated, hence, null and void, as shown below: 13. First of all, there was no such special meeting of the board of directors of Leslim Corporation on August 19, 1994, contrary to the allegation in the secretarys certificate. No notices to that effect were ever sent to Pastor Lim, a director and owner of 79.75 per cent of the capital stock of Leslim Corporation. Secondly, there was never a meeting of the stockholders wherein more than two-thirds of the stocks were present in order to approve the sale of all or substantially all of the assets consisting of real properties of Leslim Corporation. Indeed, no such meeting could have been held because Pastor Lim, who owned practically two-thirds of the total capital stock, had already died on June 11, 1994. The last meeting of stockholders of Leslim Corporation was held in January, 1994. Since then up to the present, no other stockholders meeting, special or otherwise, was ever held by Leslim Corporation.

14. Thirdly, the place of the alleged special stockholders meeting could not have occurred in the place where it was purportedly held, namely, 1006 Quezon Avenue, Quezon City. This place is the address of Accurate Distributing, Inc., which had been under the control of the group of Estrelita Cabarles since August 1994 up to the present. On the other hand, defendants Lita Marcelo, Ireneo Marcelo, and Pedro Aquino and their cohorts are the adversaries of Estrelita Cabarles in several cases, civil and criminal, pending before various courts in Metro Manila and suburbs. The control and possession by the group of Cabarles of the premises ineluctably shows that no meeting was ever held thereon by their adversaries. Fourthly, there was never any payment made to Leslim Corporation respecting the alleged purchase price. 15. As a consequence of the above, defendant Lita Marcelo could not have been the Vice President of Leslim Corporation at the time the simulated deed of sale in question was executed, contrary to her claim thereon. Besides, defendant Lita Marcelo has never been a stockholder, much less a director of Leslim Corporation. Hence, it follows that the subject deed of absolute sale and the secretarys certificate are both simulated, and TCT No. 116716 of no force and effect, necessitating as it does its cancellation. The imaginary transaction of sale was clearly resorted to by defendants after the August 19, 1994 special stockholders meeting of Accurate Distributing Inc., where in the ground of Estrelita Cabarles were elected as Board of Directors and corporate officers and in order to deprive plaintiff of her conjugal share and the other heirs of Pastor Y. Lim of their shares in his estate. In fact, all the real property registered in the name of Leslim Corporation and in Nellmart Corporation wherein Pastor Lim is also the majority stockholder had been transferred by defendants and their cohorts to themselves or to entities controlled by them, all at practically the same time. Thus:

a. TCT No. 36617 Deed of Sale dated August 22, 1994 from Leslim to defendant Corporation. Amount P3,400,000.00. b. TCT No. 66001 Deed of Sale dated August 26, 1994 from Leslim to Auto Truck TBA. Amount P10,500,000.00. c. TCT No. 101730 Deed of Sale dated August 26, 1994 from Leslim to Skyline Sales Corporation. Amount P15,500,00.00. d. TCT No. T-48028 in the name of Nellmart but illegally transferred to defendant corporation under TCT No. 116718. e. TCT No. 236236 in the name of Nellmart but illegally transferred to Alliance Marketing, Inc., under TCT No. 285400. f. TCT No. 236237 in the name of Nellmart but illegally transferred to Alliance Marketing, Inc. under TCT No. 285399. 16. The same scheme was resorted to by defendants and their cohorts in divesting other corporations of all real property, where Pastor Lim is the stockholder. Thus, the motives of defendants in conspiracy with each other and with several other persons and entities are one and the same, namely: to monopolize the control, possession, enjoyment and ownership of all the estate of Pastor Lim, thereby depriving plaintiff of her conjugal share as well as her own share in her husbands own estate. 17. By reason of these acts of defendants, plaintiff was constrained to hire the services of counsel for a fee of

P50,000.00 and appearance fee of P1,500.00 per hearing. She likewise suffered sleepless nights and wounded feelings, which if converted into its monetary equivalent would be P100,000.00, more or less. 18. In order to prevent defendants from repeating the unlawful acts, they should be condemned by pay exemplary damages in the amount of P100,000.00.17 The private respondent prayed that, after due proceedings, judgment be rendered in her favor, thus : WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court that after notice and hearing, judgment be rendered: a. declaring the secretarys certificate and the deed of sale under question null and void; b. cancelling TCT No. 116716 issued in the name of defendant Speed Distributing Corporation for being without basis in fact and in law; c. ordering defendants to pay jointly and severally the amount of P100,000.00 exemplary damages; d. ordering defendants to play (sic) plaintiff jointly and severally the amount of P50,000.00 attorneys fees and P1,000.00 appearance fee per hearing. e. Ordering defendants to pay the cost of suit.18 In their answer with compulsory counterclaim, the petitioners specifically denied the material allegations of the complaint, and by way

of special and affirmative defenses, alleged that the private respondent (the plaintiff therein), was not privy to the deed of sale executed by Leslim and Speed. As such, she was not the real party-in-interest and had no cause of action against the defendants. Pursuant to Presidential Decree No. 902-A, the SEC, not the RTC, had jurisdiction over the complaint, as it was evident that the complaint involved an intracorporate controversy.19 In her reply, the private respondent alleged that even if she was not privy to the deed of sale over the subject property, she was entitled to its income, and her right accrued at the time of Pastors death on June 11, 1994. On September 4, 1995, the RTC issued an Order in Special Proceedings No. 95-2334 granting the petition and appointed the private respondent as the co-administrator of Miguel Lim, with Atty. Donald Lee as special administrator.20 The court held a hearing on the special and affirmative defenses of the defendants (the petitioners herein) in Civil Case No. 95-24588. On November 25, 1995, the RTC issued an order dismissing the complaint, real party-in-interest. According to the court, she had no cause of action against the petitioners as she was not privy to the contract of sale between Leslim and Speed. Neither was she a stockholder of the defendant corporation; as such, she could not sue for the corporation. According to the court, the private respondent could not file the complaint in behalf of her deceased husband Pastor as she was unable to show that she was the authorized representative of his estate; even if she was so authorized, her claim was limited to the shares owned by Pastor, which could not extend to the properties of Leslim. The court also ruled that the action involved intra-corporate controversies over which the SEC had original and exclusive jurisdiction. Aggrieved, the private respondent filed a motion for reconsideration of the order which was denied on February 9, 1996.21 Dissatisfied, she

appealed the order to the Court of Appeals,22 docketed as CA-G.R. CV No. 52214. She ascribed the following errors to the court a quo: I THE LOWER COURT ERRED IN RULING THAT THE PLAINTIFF-APPELLANT IS NOT A REAL PARTY-ININTEREST TO FILE THE "COMPLAINT" BEFORE THE COURT A QUO. II THE LOWER COURT ERRED IN RULING THAT IT HAD NO JURISDICTION OVER THE "COMPLAINT" IN CIVIL CASE NO. Q-95-24588. III. THE LOWER COURT ERRED IN DISMISSING THE PLAINTIFF-APPELLANTS "COMPLAINANT" IN CIVIL CASE NO. Q-95-24588.23 On April 18, 1996, the Court of Appeals rendered judgment in CA-G.R. SP No. 38617 nullifying the assailed orders. The CA ruled that the private respondent failed to prove that Pastor Lim, not Speed, owned the property. It also ruled that the finding of the probate court that the property belonged to Pastor Lim was only provisional in nature. The private respondent then filed a petition for review on certiorari with this Court, docketed as G.R. No. 124715. On January 24, 2000, this Court rendered a Decision dismissing the petition. On September 15, 2000, the CA rendered a decision in CA-G.R. CV No. 52214 setting aside the assailed orders and ordering the RTC to hear Civil Case No. Q-95-24588, thus:

WHEREFORE, premises considered, the Regional Trial Court, National Capital Judicial Region, Quezon City, Branch 222 is hereby ORDERED to try Civil Case No. Q-95-24588 without costs to plaintiff-appellant.24 The CA ruled that, as gleaned from the pleadings of the parties, the action involved intra-corporate controversies as defined in Section 5 of Presidential Decree (PD) No. 902-A; as such, the RTC had no jurisdiction over the action. However, in light of Rep. Act No. 8799 which transferred to courts of general jurisdiction or the appropriate RTC cases over which the SEC had jurisdiction, the CA ordered the remand of the case to the RTC, for the determination, among others, of the resolution of the issue of whether or not the private respondent was the real party-in-interest. The Court of Appeals stated, thus: However, viewed in the light of Republic Act No. 8799, otherwise known as the Securities Regulation Code, approved on July 19, 2000 which has effectively divested the Securities and Exchange Commission of its quasi-judicial functions and transferred them to the Regional Trial Court, We rule that the latter may take cognizance of the instant case so as not to roundabout the judicial process, without prejudiced (sic) to its being ventilated as to whether or not appellant The private respondent Lim is a real party in interest to be determined during the trial on the merits before the appropriate court who has now the jurisdiction over the case at bar.25 The motion for reconsideration of the petitioners was denied by the CA, per its Resolution dated August 8, 2001. In their petition at bar, the petitioners argue that THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT CASE BY VIRTUE OF THE

EFFECTIVITY OF RA 8799 KNOWN AS SECURITIES REGULATION CODE.26 The petitioners contend that the RTC had no jurisdiction over the private respondents complaint because the case involved intra-corporate controversies. Since Rep. Act No. 8799 took effect only on August 8, 2000, while the private respondents appeal in the CA was pending, it should not be given retroactive effect. Furthermore, Section 5.2 of RA 8799 proscribes the transfer of cases to the RTC; as such, the CA should have dismissed the private respondents appeal without prejudice to her right to refile her complaint in the RTC. The petitioners argue that the CA cannot order the case remanded to the RTC for the sake of convenience. For her part, the private respondent asserts that the complaint does not involve intra-corporate controversies and the RTC had jurisdiction over the action and the issues raised by the parties in their pleadings. The private respondent, likewise, opines that there is nothing wrong with the CAs ruling directing the RTC to hear the case to avoid any consequent delay. The sole issue in this case is whether or not the CA erred in remanding the case to the RTC and directing it to decide and hear the complaint on its merits, in view of Rep. Act No. 8799 which took effect on August 8, 2000, during the pendency of the case before it, effectively transferring jurisdiction over cases involving intra-corporate controversies from the SEC to the RTC. The Private Respondents Action in the RTC Does Not Involve an Intra- Corporate Dispute. Jurisdiction over the subject matter is conferred by law.27 The nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not plaintiff is entitled to recover

upon all or some of the claims asserted therein.28 It cannot depend on the defenses set forth in the answer, in a motion to dismiss, or in a motion for reconsideration by the defendant.29 Section 5 of P.D. No. 902-A provides that the SEC shall have original and exclusive jurisdiction over complaints, to hear and decide cases involving the following: (a) Devices or schemes employed by or any acts of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or stockholders, partners, members of associations registered with the Commission; (b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association and the State insofar as it concerns their individual franchise or right as such entity; (c) Controversies in the election or appointment of directors, trustees, officers or managers of such corporations, partnership or associations; (d) Petitioners of corporations, partnerships or associations to be declared in the state of suspension of payment in cases where the corporation, partnership or association possesses sufficient property to cover all its debts but foresees the impossibility of meeting them when they fall due or in cases where the corporation, partnership or assciation has no sufficient assets to cover its liabilities but is under the management of a rehabilitation receiver or management committee created pursuant to this Decree.30

However, Section 5.231 of Rep. Act No. 8799, transferred the erstwhile exclusive and original jurisdiction of the SEC over actions involving intra-corporate controversies to the courts of general jurisdiction, or the appropriate RTC. All intra-corporate cases pending in the SEC were to be transferred to the appropriate RTC. Congress thereby recognized the expertise and competence of the RTC to take cognizance of and resolve cases involving intra-corporate controversies. In compliance with the law, the Court issued, on November 21, 2000 a Resolution designating certain branches of the RTC in the National Capital Region to try and decide cases enumerated in Section 5 of P.D. No. 902-A. For Quezon City cases, the Court designated Branches 46 and 93 of the RTC. Branch 222 of the Quezon City RTC, which dismissed the complaint of the private respondent, was not so designated by the Court. On March 13, 2001, the Court approved the Interim Rules of Procedure for IntraCorporate Controversies, which took effect on April 1, 2001. To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the Branches of the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or relationship of the parties; and (2) the nature of the question that is the subject of their controversy.32 The first element requires that the controversy must arise out of intracorporate or partnership relations between any or all of the parties and the corporation, partnership or association of which they are stockholders, members or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the State insofar as it concerns their individual franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation.33 If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intracorporate controversy. The determination of whether a contract is

simulated or not is an issue that could be resolved by applying pertinent provisions of the Civil Code.34 In the present recourse, it is clear that the private respondents complaint in the RTC is not an intra-corporate case. For one thing, the private respondent has never been a stockholder of Leslim, or of Speed for that matter. The complaint is one for the nullification of the deed of absolute sale executed by Leslim in favor of Speed over the property covered by TCT No. T-36617 in the name of Leslim, the cancellation of TCT No. T116716 in the name of Speed, as well as the Secretarys Certificate dated August 22, 1994. The private respondent alleged that since her deceased husband, Pastor Lim, acquired the property during their marriage, the said property is conjugal in nature, although registered under the name of Leslim under TCT No. T-36617. She asserted that the petitioners connived to deprive the estate of Pastor Lim and his heirs of their possession and ownership over the said property using a falsified Secretarys Certificate stating that the Board of Directors of Leslim had a meeting on August 19, 1995, when, in fact, no such meeting was held. Petitioner Lita Lim was never a stockholder of Leslim or a member of its Board of Directors; her husband, petitioner Ireneo Marcelo was the VicePresident of Speed; and, petitioner Pedro Aquino was Leslims corporate secretary. The private respondent further averred that the amount of P3,900,000.00, the purchase price of the property under the deed of absolute sale, was not paid to Leslim, and that petitioners Spouses Marcelo and petitioner Pedro Aquino contrived the said deed to consummate their devious scheme and chicanery. The private respondent concluded that the Deed of Absolute Sale was simulated; hence, null and void. We are convinced that on the basis of the material allegations of the complaint, the court a quo had jurisdiction over the case. The Private Respondent is a Real Party-in-Interest as Plaintiff. Rule 3, Section 2 of the Rules of Court, as amended, provides as follows:

SEC. 2. Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest. The private respondent filed the complaint as one of the heirs of Pastor Lim, who died intestate on June 11, 1994. She was, in fact, the surviving spouse of the deceased, a compulsory heir by operation of law. The general rule under the law on succession is that successional rights are transmitted from the moment of death of the decedent and compulsory heirs are called upon to succeed by operation of law to the inheritance without the need of further proceedings. Under Article 776 of the New Civil Code, inheritance includes all the properties, rights and obligations of a party, not extinguished by his death.35 Although the private respondent was appointed by the probate court as a special administratrix of the estate of Pastor Lim, she had the right, apart from her being a special administratrix, to file the complaint against the petitioners for the nullification of the deed of absolute sale, and TCT Nos. T-36617 and T116716. Indeed, in Emnace vs. Court of Appeals, et al.,36 we held that: On the third issue, petitioner asserts that the surviving spouse of Vicente Tabanao has no legal capacity to sue since she was never appointed as administratrix or executrix of his estate. Petitioners objection in this regard is misplaced. The surviving spouse does not need to be appointed as executrix or administratrix of the estate before she can file the action. She and her children are complainants in their own right as successors of Vicente Tabanao. From the very moment of Vicente Tabanaos death, his rights insofar as the partnership was concerned were transmitted to his heirs, for rights to the succession are transmitted from the moment of death of the decedent. Whatever claims and rights Vicente Tabanao had against the partnership and petitioner were transmitted to respondents by

operation of law, more particularly by succession, which is a mode of acquisition by virtue of which the property, rights and obligations to the extent of the value of the inheritance of a person are transmitted. Moreover, respondents became owners of their respective hereditary shares from the moment Vicente Tabanao died. A prior settlement of the estate, or even the appointment of Salvacion Tabanao as executrix or administratrix, is not necessary for any of the heirs to acquire legal capacity to sue. As successors who stepped into the shoes of their decedent upon his death, they can commence any action originally pertaining to the decedent. From the moment of his death, his rights as a partner and to demand fulfillment of petitioners obligations as outlined in their dissolution agreement were transmitted to respondents. They, therefore, had the capacity to sue and seek the courts intervention to compel petitioner to fulfill his obligations.37 All the Compulsory Heirs of the Decedent and Leslim Corporation are Indispensable Parties. In her complaint, the private respondent sought the nullification of the Deed of Absolute Sale executed by Leslim Corporation in favor of Speed, as well as TCT No. T-36617 under its name. Thus, Leslim Corporation is an indispensable party, and should be impleaded as a party-defendant conformably to Section 7, Rule 3 of the Rules of Court, as amended. SEC. 7. Compulsory joinder of indispensable parties. Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants. As Leslim Corporation was a party to the deed, its interests in the subject of the action and the outcome thereof is such that the trial court could not proceed without its presence. All actuations of the trial court subsequent

to the filing of the complaint are null and void, not only as to Leslim Corporation, but also as to the present parties.38 All the compulsory heirs of the deceased must also be impleaded as plaintiffs, being indispensable parties.39 Thus, the private respondent needs to amend her complaint in the court a quo to include all indispensable parties; otherwise, her claim would be dismissed. IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The records are remanded to the Regional Trial Court of Quezon City, Branch 222, for further proceedings on the merits of the case. SO ORDERED. Quisumbing, (Acting Chairman), Austria-Martinez, and Tinga, JJ., concur. Puno, (Chairman), J., on leave.

Footnotes
1

Penned by Associate Justice Mercedez-Gozo-Dadole, concurred in by Associate Justices Buenaventura L. Guerrero, Eugenio S. Labitoria, Hilarion Aquino and Wenceslao I. Agnir; promulgated on September 15, 2000.

Republic of the Philippines SUPREME COURT SECOND DIVISION G.R. No. 154295. July 29, 2005 METROMEDIA TIMES CORPORATION and/or ROBINA GOKONGWIE-PE, Petitioners, vs. Johnny Pastorin, Respondent. DECISION TINGA, J.: At issue in this Petition for Review1 on certiorari under Rule 45 is whether or not lack of jurisdiction over the subject matter of the case, heard and decided by the labor arbiter, may be raised for the first time before the National Labor Relations Commission (NLRC) by a litigant who had actively participated in the proceedings, which it belatedly questioned. The facts, culled from the records, are as follows: Johnny Pastorin (Respondent) was employed by Metromedia Times Corporation (Petitioner) on 10 December 1990 as a Field Representative/Collector. His task entailed the periodic collection of receivables from dealers of petitioner's newspapers. Prior to the subject incident, respondent claimed to have received a termination letter dated 7 May 1998 from management terminating his services for tardiness effective 16 June 1988. Respondent, member of Metro Media Times

Employees Union, was not dismissed due to the intervention of the labor union, the collective bargaining agent in the company. In May 1998, he obtained a loan from one of the dealers whom he dealt with, Gloria A. de Manuel (De Manuel), amounting to Nine Thousand Pesos (P9,000.00). After paying One Thousand One Hundred Twentyfive Pesos (P1,125.00), respondent reneged on the balance of his loan. De Manuel wrote a letter dated 6 July 1998 to petitioner, and seeking assistance for collection on the remainder of the loan. She claimed that when respondent became remissed on his personal obligation, he stopped collecting periodically the outstanding dues of De Manuel2 On 9 July 1998, petitioner sent a letter addressed to respondent, requiring an explanation for the transaction with De Manuel, as well as for his failure to pay back the loan according to the conditions agreed upon. In his reply letter3 dated 13 July 1998, respondent admitted having incurred the loan, but offered no definitive explanation for his failure to repay the same. Petitioner, through a Memorandum4 dated 24 August 1998, imposed the penalty of suspension on respondent for 4 days, from 27 August to 1 September 1998, for violating Company Policy No. 2.175 and ordered his transfer to the Administration Department. On 2 September 1998, respondent wrote a letter6 to petitioner, stating that he wanted to sign a transfer memo before assuming his new position. On September 7, 1998, he was handed the Payroll Change Advice7 (PCA), indicating his new assignment to the Traffic and Order Department of Metromedia. Nonetheless, respondent stopped reporting for work. On 16 September 1998, he sent a letter8 to petitioner communicating his refusal to accept the transfer. Respondent duly filed a complaint for constructive dismissal, nonpayment of backwages and other money claims with the labor arbiter, a

copy of which petitioner received on 28 September 1998. The complaint was resolved in favor of respondent. In a Decision9 dated 28 May 1999, Labor Arbiter Manuel P. Asuncion concluded that respondent did not commit insubordination or disobedience so as to warrant his transfer, and that petitioner was not aggrieved by respondents failure to settle his obligation with De Manuel. The dispositive portion read: WHEREFORE, the respondents are hereby ordered to reinstate the complainant to his former position, with full backwages from the time his salary was withheld until he is actually reinstated. As of this date, the complainants backwages has reached the sum of P97,324.17. The respondents are further directed to pay the complainant his 13th month pay for 1998 in the sum of P3,611.89. The claims for allowance and unpaid commission are dismissed for lack of sufficient basis to make an award. SO ORDERED.10 Petitioner lodged an appeal with the NLRC, raising as a ground the lack of jurisdiction of the labor arbiter over respondents complaint. Significally, this issue was not raised by petitioner in the proceedings before the Labor Arbiter. In its Decision11 dated 16 March 2001, the NLRC reversed the Labor Arbiter on the ground that thee latter had no jurisdiction over the case, it being a grievance issue properly cognizable by the voluntary arbitrator. The decretal portion of the NLRC Decision reads: WHEREFORE, the decision under review is REVERSED and SET ASIDE, and a new one entered, DISMISSING the complaint for lack of jurisdiction. SO ORDERED.12

The motion for reconsideration having been denied on 18 May 2001, respondent elevated the case before the Court of Appeals (CA) through a petition for certiorari13 under Rule 65. The CA Fifteenth Division reversed the Decision of NLRC, and reinstated the earlier ruling of the Labor Arbiter. Adopting the doctrines by this Court in the cases of Alfredo Marquez v. Sec. of Labor14 and ABSCBN Supervisors Employees Union Members v. ABS-CBN Broadcasting Corporation,15 the CA ruled that the active participation of the party against whom the action was brought, coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending, is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will bar said party from later on impugning the court or bodys jurisdiction. The appellate court then disposed the case in this wise: WHEREFORE, foregoing premises considered, the petition having merit, in fact and in law, is hereby GIVEN DUE COURSE. Accordingly, the challenged resolution/decision and orders of public respondent NLRC are hereby REVERSED and SET ASIDE and the decision of the Labor Arbiter dated May 28, 1999 REINSTATED with a slight modification, that the 13th month pay be in the amount of P7,430.50. No costs. SO ORDERED.16 Petitioner sought reconsideration17 of the above Decision18 but the CA denied the motion in the assailed Resolution19 dated 27 June 2002. Hence, its recourse to this Court, elevating the following issues: I. WHETHER OR NOT METROMEDIA IS ESTOPPED FROM QUESTIONING THE JURISDICTION OF THE LABOR ARBITER

OVER THE SUBJECT MATTER OF THE CASE FOR THE FIRST TIME ONLY IN THEIR APPEAL BEFORE THE NLRC. II. WHETHER OR NOT THE AWARD OF 13TH MONTH PAY BY THE LABOR ARBITER MAY BE MODIFIED, NOTWITHSTANDING THAT THE SAME WAS NEVER ASSIGNED AS AN ERROR. Anent the first assignment of error, there are divergent jurisprudential doctrines touching on this issue. On the one hand are the cases of Martinez v. Merced,20 Marquez v. Secretary of Labor,21 Ducat v. Court of Appeals,22 Bayoca v. Nogales,23 Jimenez v. Patricia,24 Centeno v. Centeno,25 and ABS-CBN Supervisors Employee Union Members v. ABSCBN Broadcasting Corporation,26 all adhering to the doctrine that a partys active participation in the actual proceedings before a court without jurisdiction will estop him from assailing such lack of jurisdiction. Respondent heavily relies on this doctrinal jurisprudence. On the other hand, the cases of Dy v. NLRC,27 La Naval Drug v. CA,28 De Rossi vs. CA29 and Union Motors Corporation v. NLRC30 buttress the position of petitioner that jurisdiction is conferred by law and lack of jurisdiction may be questioned at any time even on appeal. The Court of Appeals adopted the principles in the cases of Martinez, Marquez and ABS-CBN in resolving the jurisdictional issue presented for its resolution, to wit: Indeed, we agree with petitioner that private respondent was estopped from raising the question of jurisdiction before public respondent NLRC and the latter gravely abused its discretion in addressing said question in private respondents favor. As early as Martinez vs. De la Merced, 174 SCRA 182, the Supreme Court has clearly ruled thus: "For it has been consistently held by this Court that while lack of jurisdiction may be assailed at any stage, a partys active participation in the proceedings

before a court without jurisdiction will estop such party from assailing such lack of jurisdiction." .... The same principle was adopted by the Highest Tribunal in the case of Alfredo Marquez vs. Sec. of Labor, 171 SCRA 337 and quoted in the latter case of ABS-CBN Supervisors Employees Union Members vs. ABSCBN Broadcasting Corporation, 304 SCRA 497, where it was ruled that: "The active participation of the party against whom the action was brought, coupled with his failure to object to the jurisdiction of the court or quasi-judicial body where the action is pending, is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will bar said party from later on impugning the court or bodys jurisdiction."31 We rule differently. A cursory glance at these cases will lead one to the conclusion that a party who does not raise the jurisdictional question at the outset will be estopped to raise it on appeal. However, a more circumspect analysis would reveal that the cases cited by respondent do not fall squarely within the issue and factual circumstances of the instant case. We proceed to demonstrate. The notion that the defense of lack of jurisdiction may be waived by estoppel on the party invoking the same most prominently emerged in Tijam v. Sibonghanoy.32 Indeed, the Marquez case relied upon by the CA is in turn grounded on Tijam, where We held that: . . . a party can not invoke the jurisdiction of a court to secure affirmative relief against his opponent and, after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction (Dean vs. Dean, 136 Or. 694, 86 A.L.R. 79). In the case just cited, by way of explaining the rule, it was further said that the question whether the court had jurisdiction either of the subject-matter of the action or of the parties is barred from such conduct not because the judgment or order of the court

is valid and conclusive as an adjudication, but for the reason that such a practice can not be toleratedobviously for reasons of public policy. Furthermore, it has also been held that after voluntarily submitting a cause and encountering an adverse decision on the merits, it is too late for the loser to question the jurisdiction or power of the court . . . And in Littleton vs. Burges, 16 Wyo, 58, the Court said that it is not right for a party who has affirmed and invoked the jurisdiction of a court in a particular matter to secure an affirmative relief, to afterwards deny that same jurisdiction to escape a penalty.33 However, Tijam represented an exceptional case wherein the party invoking lack of jurisdiction did so only after fifteen (15) years, and at a stage when the proceedings had already been elevated to the Court of Appeals. Even Marquez recognizes that Tijam stands as an exception, rather than a general rule.34 The CA perhaps though felt comfortable citing Marquez owing to the pronouncement therein that the Court would not hesitate to apply Tijam even absent the extraordinary circumstances therein: ". . . where the entertainment of the jurisdictional issue at a belated stage of the proceedings will result in a failure of justice and render nugatory the constitutional imperative of protection to labor."35 In this case, jurisdiction of the labor arbiter was questioned as early as during appeal before the NLRC, whereas in Marquez, the question of jurisdiction was raised for the first time only before this Court. The viability of Marquez as controlling doctrine in this case is diminished owing to the radically different circumstances in these two cases. A similar observation can be made as to the Bayoca and Jimenez cases.36 Neither do the other like-minded cases squarely settle the issue in favor of the respondent. In the case of Martinez, the issue is not jurisdiction by estoppel but waiver of preliminary conference. In that case, we said:

As pointed out by petitioners, private respondents had at least three opportunities to raise the question of lack of preliminary conference first, when private respondents filed a motion for extension of time to file their position paper; second, at the time when they actually filed their position paper in which they sought affirmative relief from the Metropolitan Trial Court; and third; when they filed a motion for reconsideration of the order of the Metropolitan Trial Court expunging from the records the position paper of private respondents, in which motion private respondents even urged the court to sustain their position paper. And yet, in none of these instances was the issue of lack of preliminary conference raised or even hinted at by private respondents. In fine, these are acts amounting to a waiver of the irregularity of the proceedings. For it has been consistently held by this Court that while lack of jurisdiction may be assailed at any stage, a party's active participation in the proceedings before a court without jurisdiction will estop such party from assailing such lack of jurisdiction.37 The case of Ducat was categorical in saying that if the parties acquiesced in submitting an issue for determination by the trial court, they are estopped from questioning the jurisdiction of the same court to pass upon the issue. But this should be taken in the context of the "agreement" of the parties. We quote from said case: Petitioners filing of a Manifestion and Urgent Motion to Set Parameters of Computation is indicative of its conformity with the questioned order of the trial court referring the matter of computation of the excess to SGV and simultaneously thereafter, the issuance of a writ of possession. If petitioner thought that subject order was wrong, it could have taken recourse to the Court of Appeals but petitioner did not. Instead he manifested his acquiescence in the said order by seeking parameters before the trial court. It is now too late for petitioner to question subject order of the trial court. Petitioner cannot be allowed to make a mockery of judicial processes, by changing his position from one of the agreement to disagreement, to suit his needs. If the parties acquiesced in submitting an issue for determination by the trial court, they are estopped from

questioning the jurisdiction of the same court to pass upon the issue. Petitioner is consequently estopped from questioning subject order of the trial court.38 Centeno involved the question of jurisdiction of the Department of Agrarian Reform Arbitration Board (DARAB). The Court did rule therein that "participation by certain parties in the administrative proceedings without raising any objection thereto, bars them from any jurisdictional infirmity after an adverse decision is rendered against them."39 Still, the Court did recognize therein that the movants questioning jurisdiction had actually sought and litigated for affirmative reliefs before the DARAB in support of a submitted counterclaim. No similar circumstance obtains in this case concerning the petitioner. Evidently, none of these cited precedents squarely operates as stare decisis on this case, involving as they did different circumstances. The question now lies as to whether the precedents cited by petitioner are more apropos to this case. Petitioner seeks to convince this Court that the instant case falls squarely within the purview of this Courts ruling in the case of Dy. Admittedly, a different factual mileu was present insofar as the questioned jurisdiction was alleged to have been properly lodged in the SEC instead of NLRC. Yet the rationale employed by the Court therein warrants serious consideration. The aforementioned case was ruled in this wise: . . . .More importantly, estoppel cannot be invoked to prevent this Court from taking up the question of jurisdiction, which has been apparent on the face of the pleadings since the start of litigation before the Labor Arbiter. It is well settled that the decision of a tribunal not vested with appropriate jurisdiction is null and void. Thus, in Calimlim vs. Ramirez, this Court held: "A rule that had been settled by unquestioned acceptance and upheld in decisions so numerous to cite is that the jurisdiction of a court over the

subject matter of the action is a matter of law and may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified by recent pronouncements which stemmed principally from the ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to situations which were obviously not contemplated therein. The exceptional circumstances involved in Sibonghanoy which justified the departure from the accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy not as the exception, but rather the general rule, virtually overthrowing altogether the time honored principle that the issue of jurisdiction is not lost by waiver or by estoppel. .... "It is neither fair nor legal to bind a party by the result of a suit or proceeding which was taken cognizance of in a court which lacks jurisdiction over the same irrespective of the attendant circumstances. The equitable defense of estoppel requires knowledge or consciousness of the facts upon which it is based. The same thing is true with estoppel by conduct which may be asserted only when it is shown, among others, that the representation must have been made with knowledge of the facts and that the party to whom it was made is ignorant of the truth of the matter (De Castro vs. Gineta, 27 SCRA 623). The filing of an action or suit in a court that does not possess jurisdiction to entertain the same may not be presumed to be deliberate and intended to secure a ruling which could later be annulled if not favorable to the party who filed such suit or proceeding in a court that lacks jurisdiction to take cognizance of the same, such act may not at once be deemed sufficient basis of estoppel. It could have been te result of an honest mistake or of divergent interpretation of doubtful legal provisions. If any fault is to be imputed to a party taking such course of action, part of the blame should be placed on the court which shall entertain the suit, thereby lulling the parties into

believing that they pursued their remedies in the correct forum. Under the rules, it is the duty of the court to dismiss an action `whenever it appears that court has no jurisdiction over the subject matter.' (Section 2, Rule 9, Rules of Court) Should the Court render a judgment without jurisdiction, such judgment may be impeached or annulled for lack of jurisdiction (Sec. 30, Rule 132, Ibid), within ten (10) years from the finality of the same (Art. 1144, par. 3, Civil Code)."40 The jurisdiction of the Labor Arbiter was assailed in the cases of De Rossi v. NLRC41 and Union Motors Corporation v. NLRC42 during appeal to the NLRC. Since the same circumstance obtains in this case, the rulings therein, favorable as they are to the petitioner, are germane. In De Rossi, this Court elucidated: Petitioner maintains that MICC can not question now the issue of jurisdiction of the NLRC, considering that MICC did not raise this matter until after the case had been brought on appeal to the NLRC. However, it has long been established as a rule, that jurisdiction of a tribunal, agency, or office, is conferred by law, and its lack of jurisdiction may be questioned at any time even on appeal. In La Naval Drug Corporation vs. Court of Appeals, 236 SCRA 78, 90, this Court said: "Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears that the court has no jurisdiction over the subject matter, the action shall be dismissed. This defense may be interposed at any time, during appeal or even after final judgment. Such is understandable, as this kind of jurisdiction is conferred by law and not within the courts, let alone the parties, to themselves determine or conveniently set aside."43 We held in the Union Motors Case: The long-established rule is that jurisdiction over a subject matter is conferred by law. [Ilaw at Buklod ng Manggaggawa v. NLRC, 219

SCRA 536 (1993); Atlas Developer & Steel Industries, Inc. v. Sarmiento Enterprises, Inc., 184 SCRA 153 (1990); Tijam v. Sibonghanoy, 23 SCRA 29, 30 (1968)]. Estoppel does not apply to confer jurisdiction to a tribunal that has none over a cause of action. Where it appears that the court or tribunal has no jurisdiction, then the defense may be interposed at any time, even on appeal or even after final judgment. Moreover, the principle of estoppel cannot be invoked to prevent this court from taking up the question of jurisdiction.44 The rulings in Lozon v. NLRC45 addresses the issue at hand. This Court came up with a clear rule as to when jurisdiction by estoppel applies and when it does not: Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears that the court has no jurisdiction over the subject matter, the action shall be dismissed (Section 2, Rule 9, Rules of Court). This defense may be interposed at any time, during appeal (Roxas vs. Rafferty, 37 Phil. 957) or even after final judgment (Cruzcosa vs. Judge Concepcion, et al., 101 Phil. 146). Such is understandable, as this kind of jurisdiction is conferred by law and not within the courts, let alone the parties, to themselves determine or conveniently set aside. In People vs. Casiano (111 Phil. 73, 93-94), this Court, on the issue of estoppel, held: "The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same 'must exist as a matter of law, and may not be conferred by consent of the parties or by estoppel' (5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent positionthat the

lower court had jurisdiction. Here, the principle of estoppel applies. The rule that jurisdiction is conferred by law, and does not depend upon the will of the parties, has no bearing thereon.46 (Emphasis supplied) Verily, Lozon, Union Motors, Dy and De Rossi aptly resolve the jurisdictional issue obtaining in this case. Applying the guidelines in Lozon, the labor arbiter assumed jurisdiction when he should not. In fact, the NLRC correctly reversed the labor arbiters decision and ratiocinated: What appears at first blush to be an issue which pertains to the propriety of complainants reassignment to another job on account of his having contracted a private loan, is one which may be considered as falling within the jurisdiction of the Office of the Labor Arbiter. Nevertheless, since the complainant is a union member, he should be bound by the covenants provided for in the Collective Bargaining Agreement.47 .... Based on the foregoing considerations, it appears that the issue of validity of complainants reassignment stemmed from the exercise of a management prerogative which is a matter apt for resolution by a Grievance Committee, the parties having opted to consider such as a grievable issue. Further, a review of the records would show that the matter of reassignment is one not directly related to the charge of complainants having committed an act which is inimical to respondents interest, since the latter had already been addressed to by complainants service of a suspension order. The transfer, in effect, is one which properly falls under Section 1, Article IV of the Collective Bargaining Agreement and, as such, questions as to the enforcement thereof is one which falls under the jurisdiction of the labor arbiter."48 In line with the cases cited above and applying the general rule that estoppel does not confer jurisdiction, petitioner is not estopped from assailing the jurisdiction of the labor arbiter before the NLRC on appeal.

Respondent relied solely on estoppel to oppose petitioners claim of lack of jurisdiction on the part of the labor arbiter. He adduced no other legal ground in support of his contention that the Labor Arbiter had jurisdiction over the case. Thus, his claim falls flat in light of our pronouncement, and more so considering the NLRCs correct observation that jurisdiction over grievance issues, such as the propriety of the reassignment of a union member falls under the jurisdiction of the voluntary arbitrator. Since jurisdiction does not lie with the Labor Arbiter, it is futile to discuss about the computation of the 13th month pay. WHEREFORE, the questioned decision of the Labor Arbiter and the Court of Appeals are hereby REVERSED and SET ASIDE, and the decision of the NLRC in dismissing the complaint for lack of jurisdiction REINSTATED. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

Republic of the Philippines SUPREME COURT SECOND DIVISION G.R. No. 140954. April 12, 2005 HEIRS OF BERTULDO1 HINOG: Bertuldo Hinog II, Bertuldo Hinog III, Bertuldo Hinog, Jr., Jocelyn Hinog, Bertoldo Hinog IV, Bertoldo Hinog V, Edgardo Hinog, Milagros H. Pabatao, Lilian H. King, Victoria H. Engracia, Terisita C. Hinog, Paz H. Besana, Roberto C. Hinog, Vicente C. Hinog, Roel C. Hinog, Marilyn C. Hinog, Bebot C. Hinog, lordes C. Hinog, Pablo Chiong, Arlene Lanasang (All respresented by Bertuldo Hinog III), Petitioners, vs. HON. ACHILLES MELICOR, in his capacity as Presiding Judge, RTC, Branch 4, 7th Judicial Region, Tagbiliran City, Bohol, and CUSTODIO BALANE, RUFO BALANE, HONORIO BALANE, and TOMAS BALANE, Respondents. DECISION AUSTRIA-MARTINEZ, J.: Before us is a petition for certiorari and prohibition under Rule 65 of the Rules of Court which assails the Orders dated March 22, 1999, August 13, 1999 and October 15, 1999 of the Regional Trial Court, Branch 4, of Tagbilaran City, Bohol in Civil Case No. 4923. The factual background of the case is as follows: On May 21, 1991, private respondents Custodio, Rufo, Tomas and Honorio, all surnamed Balane, filed a complaint for "Recovery of

Ownership and Possession, Removal of Construction and Damages" against Bertuldo Hinog (Bertuldo for brevity). They alleged that: they own a 1,399- square meter parcel of land situated in Malayo Norte, Cortes, Bohol, designated as Lot No. 1714; sometime in March 1980, they allowed Bertuldo to use a portion of the said property for a period of ten years and construct thereon a small house of light materials at a nominal annual rental of P100.00 only, considering the close relations of the parties; after the expiration of the ten-year period, they demanded the return of the occupied portion and removal of the house constructed thereon but Bertuldo refused and instead claimed ownership of the entire property. Accordingly, private respondents sought to oust Bertuldo from the premises of the subject property and restore upon themselves the ownership and possession thereof, as well as the payment of moral and exemplary damages, attorneys fees and litigation expenses "in amounts justified by the evidence." 2 On July 2, 1991, Bertuldo filed his Answer. He alleged ownership of the disputed property by virtue of a Deed of Absolute Sale dated July 2, 1980, executed by one Tomas Pahac with the knowledge and conformity of private respondents.3 After the pre-trial, trial on the merits ensued. On November 18, 1997, private respondents rested their case. Thereupon, Bertuldo started his direct examination. However, on June 24, 1998, Bertuldo died without completing his evidence. On August 4, 1998, Atty. Sulpicio A. Tinampay withdrew as counsel for Bertuldo as his services were terminated by petitioner Bertuldo Hinog III. Atty. Veronico G. Petalcorin then entered his appearance as new counsel for Bertuldo.4 On September 22, 1998, Atty. Petalcorin filed a motion to expunge the complaint from the record and nullify all court proceedings on the

ground that private respondents failed to specify in the complaint the amount of damages claimed so as to pay the correct docket fees; and that under Manchester Development Corporation vs. Court of Appeals,5 nonpayment of the correct docket fee is jurisdictional.6 In an amended motion, filed on October 2, 1998, Atty. Petalcorin further alleged that the private respondents failed to pay the correct docket fee since the main subject matter of the case cannot be estimated as it is for recovery of ownership, possession and removal of construction.7 Private respondents opposed the motion to expunge on the following grounds: (a) said motion was filed more than seven years from the institution of the case; (b) Atty. Petalcorin has not complied with Section 16, Rule 3 of the Rules of Court which provides that the death of the original defendant requires a substitution of parties before a lawyer can have legal personality to represent a litigant and the motion to expunge does not mention of any specific party whom he is representing; (c) collectible fees due the court can be charged as lien on the judgment; and (d) considering the lapse of time, the motion is merely a dilatory scheme employed by petitioners.8 In their Rejoinder, petitioners manifested that the lapse of time does not vest the court with jurisdiction over the case due to failure to pay the correct docket fees. As to the contention that deficiency in payment of docket fees can be made as a lien on the judgment, petitioners argued that the payment of filing fees cannot be made dependent on the result of the action taken.9 On January 21, 1999, the trial court, while ordering the complaint to be expunged from the records and the nullification of all court proceedings taken for failure to pay the correct docket fees, nonetheless, held: The Court can acquire jurisdiction over this case only upon the payment of the exact prescribed docket/filing fees for the main cause of action, plus additional docket fee for the amount of damages being prayed for in

the complaint, which amount should be specified so that the same can be considered in assessing the amount of the filing fees. Upon the complete payment of such fees, the Court may take appropriate action in the light of the ruling in the case of Manchester Development Corporation vs. Court of Appeals, supra.10 Accordingly, on January 28, 1999, upon payment of deficiency docket fee, private respondents filed a manifestation with prayer to reinstate the case.11 Petitioners opposed the reinstatement12 but on March 22, 1999, the trial court issued the first assailed Order reinstating the case.13 On May 24, 1999, petitioners, upon prior leave of court,14 filed their supplemental pleading, appending therein a Deed of Sale dated November 15, 1982.15 Following the submission of private respondents opposition thereto,16 the trial court, in its Order dated July 7, 1999, denied the supplemental pleading on the ground that the Deed of Absolute Sale is a new matter which was never mentioned in the original answer dated July 2, 1991, prepared by Bertuldos original counsel and which Bertuldo verified; and that such new document is deemed waived in the light of Section 1, Rule 917 of the Rules of Court. The trial court also noted that no formal substitution of the parties was made because of the failure of defendants counsel to give the names and addresses of the legal representatives of Bertuldo, so much so that the supposed heirs of Bertuldo are not specified in any pleading in the case. 18 On July 14, 1999, petitioners manifested that the trial court having expunged the complaint and nullified all court proceedings, there is no valid case and the complaint should not be admitted for failure to pay the correct docket fees; that there should be no case to be reinstated and no case to proceed as there is no complaint filed.19 After the submission of private respondents opposition20 and petitioners rejoinder,21 the trial court issued the second assailed Order on August 13, 1999, essentially denying petitioners manifestation/rejoinder. The trial court held that the issues raised in such manifestation/rejoinder are

practically the same as those raised in the amended motion to expunge which had already been passed upon in the Order dated January 21, 1999. Moreover, the trial court observed that the Order dated March 22, 1999 which reinstated the case was not objected to by petitioners within the reglementary period or even thereafter via a motion for reconsideration despite receipt thereof on March 26, 1999.22 On August 25, 1999, petitioners filed a motion for reconsideration23 but the same was denied by the trial court in its third assailed Order dated October 15, 1999. The trial court held that the Manchester rule was relaxed in Sun Insurance Office, Ltd. vs. Asuncion.24 Noting that there has been no substitution of parties following the death of Bertuldo, the trial court directed Atty. Petalcorin to comply with the provisions of Section 16, Rule 3 of the Rules of Court. The trial court also reiterated that the Order dated March 22, 1999 reinstating the case was not assailed by petitioners within the reglementary period, despite receipt thereof on March 26, 1999.25 On November 19, 1999, Atty. Petalcorin complied with the directive of the trial court to submit the names and addresses of the heirs of Bertuldo.26 On November 24, 1999, petitioners filed before us the present petition for certiorari and prohibition.27 They allege that the public respondent committed grave abuse of discretion in allowing the case to be reinstated after private respondents paid the docket fee deficiency since the trial court had earlier expunged the complaint from the record and nullified all proceedings of the case and such ruling was not contested by the private respondents. Moreover, they argue that the public respondent committed grave abuse of discretion in allowing the case to be filed and denying the manifestation with motion to dismiss, despite the defect in the complaint which prayed for damages without specifying the amounts, in violation of SC Circular No. 7, dated March 24, 1988.

In their Comment, private respondents aver that no grave abuse of discretion was committed by the trial court in reinstating the complaint upon the payment of deficiency docket fees because petitioners did not object thereto within the reglementary period. Besides, Atty. Petalcorin possessed no legal personality to appear as counsel for the heirs of Bertuldo until he complies with Section 16, Rule 3 of the Rules of Court.28 At the outset, we note the procedural error committed by petitioners in directly filing the instant petition before this Court for it violates the established policy of strict observance of the judicial hierarchy of courts. Although the Supreme Court, Court of Appeals and the Regional Trial Courts have concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court forum.29 As we stated in People vs. Cuaresma:30 This Court's original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this Court with Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also serves as a general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Courts original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is [an] established policy. It is a policy necessary to prevent inordinate demands upon the Courts time and attention which are better devoted to

those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Courts docket.31 The rationale for this rule is two-fold: (a) it would be an imposition upon the precious time of this Court; and (b) it would cause an inevitable and resultant delay, intended or otherwise, in the adjudication of cases, which in some instances had to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues because this Court is not a trier of facts.32 Thus, this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the appropriate courts, and exceptional and compelling circumstances, such as cases of national interest and of serious implications, justify the availment of the extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction. Exceptional and compelling circumstances were held present in the following cases: (a) Chavez vs. Romulo33 on citizens right to bear arms; (b) Government of the United States of America vs. Purganan34 on bail in extradition proceedings; (c) Commission on Elections vs. QuijanoPadilla35 on government contract involving modernization and computerization of voters registration list; (d) Buklod ng Kawaning EIIB vs. Zamora36 on status and existence of a public office; and (e) Fortich vs. Corona37 on the so-called "Win-Win Resolution" of the Office of the President which modified the approval of the conversion to agroindustrial area. In this case, no special and important reason or exceptional and compelling circumstance analogous to any of the above cases has been adduced by the petitioners so as to justify direct recourse to this Court. The present petition should have been initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts. Failure to do so is sufficient cause for the dismissal of the petition at bar.

In any event, even if the Court disregards such procedural flaw, the petitioners contentions on the substantive aspect of the case fail to invite judgment in their favor. The unavailability of the writ of certiorari and prohibition in this case is borne out of the fact that petitioners principally assail the Order dated March 22, 1999 which they never sought reconsideration of, in due time, despite receipt thereof on March 26, 1999. Instead, petitioners went through the motion of filing a supplemental pleading and only when the latter was denied, or after more than three months have passed, did they raise the issue that the complaint should not have been reinstated in the first place because the trial court had no jurisdiction to do so, having already ruled that the complaint shall be expunged. After recognizing the jurisdiction of the trial court by seeking affirmative relief in their motion to serve supplemental pleading upon private respondents, petitioners are effectively barred by estoppel from challenging the trial courts jurisdiction.38 If a party invokes the jurisdiction of a court, he cannot thereafter challenge the courts jurisdiction in the same case.39 To rule otherwise would amount to speculating on the fortune of litigation, which is against the policy of the Court.40 Nevertheless, there is a need to correct the erroneous impression of the trial court as well as the private respondents that petitioners are barred from assailing the Order dated March 22, 1999 which reinstated the case because it was not objected to within the reglementary period or even thereafter via a motion for reconsideration despite receipt thereof on March 26, 1999. It must be clarified that the said order is but a resolution on an incidental matter which does not touch on the merits of the case or put an end to the proceedings.41 It is an interlocutory order since there leaves something else to be done by the trial court with respect to the merits of the case.42 As such, it is not subject to a reglementary period. Reglementary period

refers to the period set by the rules for appeal or further review of a final judgment or order, i.e., one that ends the litigation in the trial court. Moreover, the remedy against an interlocutory order is generally not to resort forthwith to certiorari, but to continue with the case in due course and, when an unfavorable verdict is handed down, to take an appeal in the manner authorized by law.43 Only when the court issued such order without or in excess of jurisdiction or with grave abuse of discretion and when the assailed interlocutory order is patently erroneous and the remedy of appeal would not afford adequate and expeditious relief will certiorari be considered an appropriate remedy to assail an interlocutory order.44 Such special circumstances are absolutely wanting in the present case. Time and again, the Court has held that the Manchester rule has been modified in Sun Insurance Office, Ltd. (SIOL) vs. Asuncion45 which defined the following guidelines involving the payment of docket fees: 1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject-matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fees within a reasonable time but in no case beyond the applicable prescriptive or reglementary period. 2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may also allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period. 3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading,

or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee. Plainly, while the payment of the prescribed docket fee is a jurisdictional requirement, even its non-payment at the time of filing does not automatically cause the dismissal of the case, as long as the fee is paid within the applicable prescriptive or reglementary period, more so when the party involved demonstrates a willingness to abide by the rules prescribing such payment.46 Thus, when insufficient filing fees were initially paid by the plaintiffs and there was no intention to defraud the government, the Manchester rule does not apply.47 Under the peculiar circumstances of this case, the reinstatement of the complaint was just and proper considering that the cause of action of private respondents, being a real action, prescribes in thirty years,48 and private respondents did not really intend to evade the payment of the prescribed docket fee but simply contend that they could not be faulted for inadequate assessment because the clerk of court made no notice of demand or reassessment.49 They were in good faith and simply relied on the assessment of the clerk of court. Furthermore, the fact that private respondents prayed for payment of damages "in amounts justified by the evidence" does not call for the dismissal of the complaint for violation of SC Circular No. 7, dated March 24, 1988 which required that all complaints must specify the amount of damages sought not only in the body of the pleadings but also in the prayer in order to be accepted and admitted for filing. Sun Insurance effectively modified SC Circular No. 7 by providing that filing fees for damages and awards that cannot be estimated constitute liens on the awards finally granted by the trial court.50 Thus, while the docket fees were based only on the real property valuation, the trial court acquired jurisdiction over the action, and

judgment awards which were left for determination by the court or as may be proven during trial would still be subject to additional filing fees which shall constitute a lien on the judgment. It would then be the responsibility of the Clerk of Court of the trial court or his duly authorized deputy to enforce said lien and assess and collect the additional fees.51 It is worth noting that when Bertuldo filed his Answer on July 2, 1991, he did not raise the issue of lack of jurisdiction for non-payment of correct docket fees. Instead, he based his defense on a claim of ownership and participated in the proceedings before the trial court. It was only in September 22, 1998 or more than seven years after filing the answer, and under the auspices of a new counsel, that the issue of jurisdiction was raised for the first time in the motion to expunge by Bertuldos heirs. After Bertuldo vigorously participated in all stages of the case before the trial court and even invoked the trial courts authority in order to ask for affirmative relief, petitioners, considering that they merely stepped into the shoes of their predecessor, are effectively barred by estoppel from challenging the trial courts jurisdiction. Although the issue of jurisdiction may be raised at any stage of the proceedings as the same is conferred by law, it is nonetheless settled that a party may be barred from raising it on ground of laches or estoppel.52 Moreover, no formal substitution of the parties was effected within thirty days from date of death of Bertuldo, as required by Section 16, Rule 353 of the Rules of Court. Needless to stress, the purpose behind the rule on substitution is the protection of the right of every party to due process. It is to ensure that the deceased party would continue to be properly represented in the suit through the duly appointed legal representative of his estate.54 Non-compliance with the rule on substitution would render the proceedings and judgment of the trial court infirm because the court acquires no jurisdiction over the persons of the legal representatives or of the heirs on whom the trial and the judgment would be binding.55 Thus,

proper substitution of heirs must be effected for the trial court to acquire jurisdiction over their persons and to obviate any future claim by any heir that he was not apprised of the litigation against Bertuldo or that he did not authorize Atty. Petalcorin to represent him. The list of names and addresses of the heirs was submitted sixteen months after the death of Bertuldo and only when the trial court directed Atty. Petalcorin to comply with the provisions of Section 16, Rule 3 of the Rules of Court. Strictly speaking therefore, before said compliance, Atty. Petalcorin had no standing in the court a quo when he filed his pleadings. Be that as it may, the matter has been duly corrected by the Order of the trial court dated October 15, 1999. To be sure, certiorari under Rule 6556 is a remedy narrow in scope and inflexible in character. It is not a general utility tool in the legal workshop.57 It offers only a limited form of review. Its principal function is to keep an inferior tribunal within its jurisdiction.58 It can be invoked only for an error of jurisdiction, that is, one where the act complained of was issued by the court, officer or a quasi-judicial body without or in excess of jurisdiction, or with grave abuse of discretion which is tantamount to lack or in excess of jurisdiction,59 not to be used for any other purpose,60 such as to cure errors in proceedings or to correct erroneous conclusions of law or fact.61 A contrary rule would lead to confusion, and seriously hamper the administration of justice. Petitioners utterly failed to show that the trial court gravely abused its discretion in issuing the assailed resolutions. On the contrary, it acted prudently, in accordance with law and jurisprudence. WHEREFORE, the instant petition for certiorari is DISMISSED for lack of merit. No costs. SO ORDERED.

Republic of the Philippines SUPREME COURT THIRD DIVISION G.R. No. 136325. July 29, 2005 MANUEL M. SERRANO, Petitioners, vs. EUGENIO C. DELICA, Respondents. DECISION SANDOVAL-GUTIERREZ, J.: At bar is a petition for review on certiorari1 assailing the Decision2 dated September 30, 1998 and Resolution dated November 13, 1998 of the Court of Appeals in CA-G.R. SP No. 46632, entitled "Manuel M. Serrano, petitioner, vs. Hon. Alberto L. Lerma, Presiding Judge, Regional Trial Court, Branch 256, Muntinlupa City, and Eugenio C. Delica, respondents. The petition stemmed from the following facts: On June 30, 1997, Eugenio C. Delica, respondent, filed with the Regional Trial Court, Branch 256, Muntinlupa City, presided by Judge Alberto L. Lerma, a complaint for cancellation of Deeds of Sale, Transfer Certificates of Title, Joint Venture Agreement, and damages, with prayer for the issuance of a writ of preliminary injunction and temporary restraining order, docketed as Civil Case No. 97-120. Impleaded as defendants were Manuel M. Serrano, now petitioner, Manuel P. Blanco, MBJ Land, Inc., and MARILAQUE Land, Inc.

The complaint alleges inter alia that respondent is the registered owner of ten parcels of land situated in Bagbagan, Muntinlupa City, with a total area of 2,062,475 square meters, more or less, covered by ten Transfer Certificates of Title (TCT) Nos. S-12619 to S-12628 of the Registry of Deeds, same city. On August 10, 1995, after having been "promised with financial bonanza" by petitioner and Manuel Blanco, respondent executed in favor of the latter a special power of attorney. Blanco then sold to MBJ Land, Inc. respondents three parcels of land covered by TCT Nos. S-12625, S-12626 and S-12628. Thus, these titles were cancelled and in lieu thereof, TCT Nos. 207282, 207283 and 207284 were issued in the name of MBJ Land, Inc. On December 4, 1996, MBJ Land, Inc. entered into a Joint Venture Agreement with MARILAQUE Land, Inc. involving the three parcels of land. On December 23, 1996, petitioner Serrano again "unduly influenced, coerced and intimidated" respondent into executing an affidavit wherein he confirmed that he sold his remaining seven parcels of land, covered by TCT Nos. S-12619 to S-126124 and S-12627, to petitioners. Later, respondent found that these seven titles were cancelled and new titles (TCT Nos. 209636 to 209642) were issued in petitioners name based on a spurious Deed of Absolute Sale. Respondent thus prayed in his complaint that the special power of attorney, affidavit, the new titles issued in the names of petitioner and MBJ Land, Inc., and contracts of sale be cancelled; and that petitioner and his co-defendants be ordered to pay respondent, jointly and severally, actual, moral and exemplary damages in the amount of P200,000.00, as well as attorneys fee of P200,000.00 and costs of litigation. Respondent likewise prayed that, pending trial on the merits, a temporary restraining order and a writ of preliminary injunction be issued ordering the defendants to immediately restore him to his

possession of the parcels of land in question; and that after trial, the writ of injunction be made permanent. Petitioner then filed his answer with compulsory counterclaim, denying the material allegations of the complaint. Respondent later amended his complaint. On August 5, 1997, the trial court issued a temporary restraining order and on September 8, 1997, a preliminary injunction directing petitioner and his co-defendants to immediately restore respondent to his possession. Petitioner then filed consolidated motions for reconsideration praying that the complaint be dismissed for respondents failure to pay the required docket fee; and that Judge Lerma be directed to inhibit himself from hearing the case. The trial court, in its Order dated January 7, 1998, denied petitioners consolidated motions. Petitioner seasonably filed with the Court of Appeals a petition for certiorari and prohibition with application for a preliminary injunction and temporary restraining order assailing the trial courts twin Orders dated September 8, 1997 ordering the issuance of a writ of preliminary injunction; and denying his consolidated motions dated January 7, 1998. Petitioner raised three issues: (a) whether respondent paid the correct docket fee; (b) whether the trial courts issuance of the writ of preliminary injunction is in order; and (c) whether Judge Lerma should inhibit himself from hearing the case. On September 30, 1998, the Court of Appeals rendered a Decision partially granting the petition by: (1) affirming the trial courts ruling

that the docket fee was correctly paid; (2) setting aside the trial courts Order directing the issuance of a writ of preliminary injunction; and (3) leaving the matter of inhibition to the discretion of Judge Lerma. Petitioner then filed a motion for partial reconsideration of the Court of Appeals ruling that respondent correctly paid the docket fee and that the motion for inhibition should be addressed to Judge Lermas sound discretion. In a Resolution dated November 13, 1998, the Appellate Court denied the motion. Hence the instant petition for review on certiorari. The core issues for our resolution are: 1. Whether respondent paid the correct docket fee when he filed his complaint in Civil Case No. 97-120; and 2. Whether the matter of inhibition should be addressed to Judge Lermas discretion. On the first issue, we cannot overemphasized the importance of paying the correct docket fees. Such fees are intended to take care of court expenses in the handling of cases in terms of cost of supplies, use of equipment, salaries and fringe benefits of personnel, etc., computed as to man-hours used in the handling of each case. The payment of said fees, therefore, cannot be made dependent on the result of the action taken, without entailing tremendous losses to the government and to the judiciary in particular.3 Thus, the rule is that "upon the filing of the pleading or other application which initiates an action or proceeding, the fees prescribed

therefor shall be paid in full."4 However, a litigant who is a pauper is exempt from the payment of the docket fees. But the fees shall be a lien on the judgment rendered in favor of said pauper litigant, unless the court otherwise provides.5 It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fees that vests a trial court with jurisdiction over the subject matter or nature of the action.6 In the case at bar, petitioner impugns the Court of Appeals ruling that respondents complaint in Civil Case No. 97-120 is not capable of pecuniary estimation and that, therefore, the docket fee is fixed at P600.00 pursuant to Section 7(b)(1), Rule 141 of the Revised Rules of Court. We agree with petitioner that the Court of Appeals erred in issuing such ruling. It should have considered the allegations of the complaint and the character of the reliefs sought, the criteria in determining the nature of an action.7 A careful examination of respondents complaint is that it is a real action. In Paderanga vs. Buissan,8 we held that "in a real action, the plaintiff seeks the recovery of real property, or, as stated in Section 2(a), Rule 4 of the Revised Rules of Court,9 a real action is one affecting title to real property or for the recovery of possession of, or for partition or condemnation of, or foreclosure of a mortgage on a real property." Obviously, respondents complaint is a real action involving not only the recovery of real properties, but likewise the cancellation of the titles thereto.

Considering that respondents complaint is a real action, the Rule requires that "the assessed value of the property, or if there is none, the estimated value thereof shall be alleged by the claimant and shall be the basis in computing the fees."10 We note, however, that neither the "assessed value" nor the "estimated value" of the questioned parcels of land were alleged by respondent in both his original and amended complaint. What he stated in his amended complaint is that the disputed realties have a "BIR zonal valuation" of P1,200.00 per square meter. However, the alleged "BIR zonal valuation" is not the kind of valuation required by the Rule. It is the assessed value of the realty.11 Having utterly failed to comply with the requirement of the Rule that he shall allege in his complaint the assessed value of his real properties in controversy, the correct docket fee cannot be computed. As such, his complaint should not have been accepted by the trial court. We thus rule that it has not acquired jurisdiction over the present case for failure of herein respondent to pay the required docket fee. On this ground alone, respondents complaint is vulnerable to dismissal. Since the complaint is dismissible, the second issue on whether Judge Lerma should inhibit himself from hearing the case has become moot and academic. WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 46632 are hereby REVERSED. The complaint in Civil Case No. 97-120 is ordered DISMISSED without prejudice. SO ORDERED. Panganiban, (Chairman), Carpio-Morales, and Garcia, JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 172217 September 18, 2009

After the death of Estanislao, petitioners found out that respondent spouses Leonardo and Iluminada Goli-Cruz et al. were occupying a section of the land. Initially, petitioner Lydia talked to respondents and offered to sell them the portions they were occupying but the talks failed as they could not agree on the price. On March 2, 2001, petitioners lawyer sent respondents letters asking them to leave. These demands, however, were ignored. Efforts at barangay conciliation also failed.7 Respondents countered that their possession of the land ranged from 10 to 20 years. According to respondents, the property was alienable public land.8 Prior to petitioners demand, they had no knowledge of petitioners and their predecessors ownership of the land. They took steps to legitimize their claim and paid the realty tax on their respective areas for the taxable year 2002. Subsequently, however, the tax declarations issued to them were cancelled by the Provincial Assessors Office and re-issued to petitioners.9 On August 6, 2001, petitioners filed a complaint for recovery of possession of the land in the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 82.10 Respondents filed a motion to dismiss claiming, among others, that the RTC had no jurisdiction over the case as it should have been filed in the Municipal Trial Court (MTC) since it was a summary action for ejectment under Rule 70 of the Rules of Court. The RTC denied the motion in an order dated November 9, 2001.11 After trial, the RTC rendered a decision dated October 3, 2003 in favor of petitioners and ordered respondents to vacate the land, and pay attorneys fees and costs of suit.121avvphi1 On appeal by respondents to the CA, the latter, in a decision dated August 23, 2005, ruled that the RTC had no jurisdiction over the action for recovery of possession because petitioners had been dispossessed of the property for less than a year. It held that the complaint was one for unlawful detainer which should have been filed in the MTC. Thus, it

SPOUSES LYDIA FLORES-CRUZ and REYNALDO I. CRUZ, Petitioners, vs. SPOUSES LEONARDO and ILUMINADA GOLI-CRUZ, SPOUSES RICO and FELIZA DE LA CRUZ, SPOUSES BOY and LANI DE LA CRUZ, ZENAIDA A. JACINTO and ROGELIO DE LOS SANTOS, Respondents. RESOLUTION CORONA, J.: This is a petition for review on certiorari1 of the August 23, 2005 decision2 and April 5, 2006 resolution3 of the Court of Appeals (CA) in CA-G.R. CV No. 81099. On December 15, 1999,4 petitioner spouses Lydia Flores-Cruz and Reynaldo I. Cruz purchased a 5,209-sq. m. lot situated in Pulong Yantok, Angat, Bulacan5 from Lydias siblings, namely, Teresita, Ramon and Daniel (all surnamed Flores). Their father, Estanislao Flores, used to own the land as an inheritance from his parents Gregorio Flores and Ana Mangahas. Estanislao died in 1995. Estanislao and, later, petitioners paid the realty taxes on the land although neither of them occupied it. Petitioners sold portions thereof to third parties sometime in September 2000.6

ruled that the RTC decision was null and void. Reconsideration was denied on April 5, 2006. Hence, this petition. The issue for our resolution is whether the RTC had jurisdiction over this case. The petition has no merit. It is axiomatic that the nature of the action on which depends the question of whether a suit is within the jurisdiction of the court is determined solely by the allegations in the complaint13 and the law at the time the action was commenced.14 Only facts alleged in the complaint can be the basis for determining the nature of the action and the courts competence to take cognizance of it. 15 One cannot advert to anything not set forth in the complaint, such as evidence adduced at the trial, to determine the nature of the action thereby initiated.16 Petitioners complaint contained the following allegations: xxx xxx xxx

5. That, when [petitioners] inspected subject property, they found it to be occupied by at least five (5) households under the names of herein [respondents], who, when asked about their right to stay within the premises replied that they were allowed to live thereat by the deceased former owner; 6. That, [petitioners] informed the [respondents] that as far as they are concerned, the latters occupancy was not communicated to them so it follows that they do not have any right to remain within subject piece of land; 7. That, [respondents] seem to be unimpressed and made no move to leave the premises or to come to terms with the [petitioners] so much so that [the latter] asked their lawyer to write demand letters to each and everyone of the [respondents] as shown by the demand letters dated March 2, 2001 made integral part hereof as Annex "C, C-1, C-2, C-3, & C-4"; 8. That, there is no existing agreement or any document that illustrate whatever permission, if any were given, that the [respondents] presented to [petitioners] in order to legitimize the claim; 9. That, it is clear that [respondents] occupy portions of subject property either by stealth, stratagem, force or any unlawful manner which are just bases for ejectment; xxx xxx x x x17

3. That, [petitioners] are owners of a piece of land known as Lot 30-part, Cad. 349 located at Pulong Yantok, Angat, Bulacan as shown by a copy of Tax Declaration No. 99-01010-01141 made [an] integral [part] hereof as Annex "A"; 4. That, said Lot No. 30-part was acquired through [purchase] on December 15, 1999, as shown by [a] Deed of Absolute Sale of Unsubdivided Land made [an] integral [part] hereof as Annex "B, B-1 & B-2";

According to the CA, considering that petitioners claimed that respondents were possessors of the property by mere tolerance only and the complaint had been initiated less than a year from the demand to vacate, the proper remedy was an action for unlawful detainer which should have been filed in the MTC.

We agree. The necessary allegations in a complaint for ejectment are set forth in Section 1, Rule 70 of the Rules of Court.18 Petitioners alleged that the former owner (Estanislao, their predecessor) allowed respondents to live on the land. They also stated that they purchased the property on December 15, 1999 and then found respondents occupying the property. Yet they demanded that respondents vacate only on March 2, 2001. It can be gleaned from their allegations that they had in fact permitted or tolerated respondents occupancy. Based on the allegations in petitioners complaint, it is apparent that such is a complaint for unlawful detainer based on possession by tolerance of the owner.19 It is a settled rule that in order to justify such an action, the owners permission or tolerance must be present at the beginning of the possession.20 Such jurisdictional facts are present here. There is another reason why petitioners complaint was not a proper action for recovery of possession cognizable by the RTC. It is no longer true that all cases of recovery of possession or accion publiciana lie with the RTC regardless of the value of the property.21 When the case was filed in 2001, Congress had already approved Republic Act No. 769122 which expanded the MTCs jurisdiction to include other actions involving title to or possession of real property (accion publiciana and reinvindicatoria)23 where the assessed value of the property does not exceed P20,000 (or P50,000, for actions filed in Metro Manila).24 Because of this amendment, the test of whether an action involving possession of real property has been filed in the proper court no longer depends solely on the type of action filed but also on the assessed value of the property involved.25 More specifically, since MTCs now have jurisdiction over accion publiciana and accion reinvindicatoria (depending, of course, on the assessed value of the property), jurisdiction over such actions has to be determined on the basis of the assessed value of the property.26a1f

This issue of assessed value as a jurisdictional element in accion publiciana was not raised by the parties nor threshed out in their pleadings.27 Be that as it may, the Court can motu proprio consider and resolve this question because jurisdiction is conferred only by law.28 It cannot be acquired through, or waived by, any act or omission of the parties.29 To determine which court (RTC or MTC) has jurisdiction over the action, the complaint must allege the assessed value of the real property subject of the complaint or the interest thereon.30 The complaint did not contain any such allegation on the assessed value of the property. There is no showing on the face of the complaint that the RTC had jurisdiction over the action of petitioners.31 Indeed, absent any allegation in the complaint of the assessed value of the property, it cannot be determined whether it is the RTC or the MTC which has original and exclusive jurisdiction over the petitioners action.32 Moreover, the complaint was filed (August 6, 2001) within one year from the demand to vacate was made (March 2, 2001). Petitioners dispossession had thus not lasted for more than one year to justify resort to the remedy of accion publiciana.33 Since petitioners complaint made out a case for unlawful detainer which should have been filed in the MTC and it contained no allegation on the assessed value of the subject property, the RTC seriously erred in proceeding with the case. The proceedings before a court without jurisdiction, including its decision, are null and void.34 It follows that the CA was correct in dismissing the case. WHEREFORE, the petition is DENIED. Costs against petitioners. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 176339 January 10, 2011

In 1998 the Bank offered to lease the property to the Lims through petitioner Do-All Metals Industries, Inc. (DMI) primarily for business although the Lims were to use part of the property as their residence. DMI and the Bank executed a two-year lease contract from October 1, 1998 to September 30, 2000 but the Bank retained the right to preterminate the lease. The contract also provided that, should the Bank decide to sell the property, DMI shall have the right of first refusal. On December 3, 1999, before the lease was up, the Bank gave notice to DMI that it was pre-terminating the lease on December 31, 1999. Wanting to exercise its right of first refusal, DMI tried to negotiate with the Bank the terms of its purchase. DMI offered to pay the Bank P8 million for the property but the latter rejected the offer, suggesting P15 million instead. DMI made a second offer of P10 million but the Bank declined the same. While the negotiations were on going, the Lims claimed that they continued to use the property in their business. But the Bank posted at the place private security guards from Philippine Industrial Security Agency (PISA). The Lims also claimed that on several occasions in 2000, the guards, on instructions of the Bank representatives Titolaido Payongayong and Evylene Sison, padlocked the entrances to the place and barred the Lims as well as DMIs employees from entering the property. One of the guards even pointed his gun at one employee and shots were fired. Because of this, DMI was unable to close several projects and contracts with prospective clients. Further, the Lims alleged that they were unable to retrieve assorted furniture, equipment, and personal items left at the property. The Lims eventually filed a complaint with the Regional Trial Court (RTC) of Pasig City for damages with prayer for the issuance of a temporary restraining order (TRO) or preliminary injunction against the Bank and its co-defendants Payongayong, Sison, PISA, and Gil Silos.2 Answering the complaint, the Bank pointed out that the lease contract allowed it to sell the property at any time provided only that it gave DMI

DO-ALL METALS INDUSTRIES, INC., SPS. DOMINGO LIM and LELY KUNG LIM, Petitioners, vs. SECURITY BANK CORP., TITOLAIDO E. PAYONGAYONG, EVYLENE C. SISON, PHIL. INDUSTRIAL SECURITY AGENCY CORP. and GIL SILOS, Respondents. DECISION ABAD, J.: This case is about the propriety of awarding damages based on claims embodied in the plaintiffs supplemental complaint filed without prior payment of the corresponding filing fees. The Facts and the Case From 1996 to 1997, Dragon Lady Industries, Inc., owned by petitioner spouses Domingo Lim and Lely Kung Lim (the Lims) took out loans from respondent Security Bank Corporation (the Bank) that totaled P92,454,776.45. Unable to pay the loans on time, the Lims assigned some of their real properties to the Bank to secure the same, including a building and the lot on which it stands (the property), located at M. de Leon St., Santolan, Pasig City.1

the right of first refusal. DMI had seven days from notice to exercise its option. On September 10, 1999 the Bank gave notice to DMI that it intended to sell the property to a third party. DMI asked for an extension of its option to buy and the Bank granted it. But the parties could not agree on a purchase price. The Bank required DMI to vacate and turnover the property but it failed to do so. As a result, the Banks buyer backed-out of the sale. Despite what happened, the Bank and DMI continued negotiations for the purchase of the leased premises but they came to no agreement. The Bank denied, on the other hand, that its guards harassed DMI and the Lims. To protect its property, the Bank began posting guards at the building even before it leased the same to DMI. Indeed, this arrangement benefited both parties. The Bank alleged that in October of 2000, when the parties could not come to an agreement regarding the purchase of the property, DMI vacated the same and peacefully turned over possession to the Bank. The Bank offered no objection to the issuance of a TRO since it claimed that it never prevented DMI or its employees from entering or leaving the building. For this reason, the RTC directed the Bank to allow DMI and the Lims to enter the building and get the things they left there. The latter claimed, however, that on entering the building, they were unable to find the movable properties they left there. In a supplemental complaint, DMI and the Lims alleged that the Bank surreptitiously took such properties, resulting in additional actual damages to them of over P27 million. The RTC set the pre-trial in the case for December 4, 2001. On that date, however, counsel for the Bank moved to reset the proceeding. The court denied the motion and allowed DMI and the Lims to present their evidence ex parte. The court eventually reconsidered its order but only after the plaintiffs had already presented their evidence and were about to rest their case. The RTC declined to recall the plaintiffs witnesses for cross- examination but allowed the Bank to present its evidence.3 This

prompted the Bank to seek relief from the Court of Appeals (CA) and eventually from this Court but to no avail.4 During its turn at the trial, the Bank got to present only defendant Payongayong, a bank officer. For repeatedly canceling the hearings and incurring delays, the RTC declared the Bank to have forfeited its right to present additional evidence and deemed the case submitted for decision. On September 30, 2004 the RTC rendered a decision in favor of DMI and the Lims. It ordered the Bank to pay the plaintiffs P27,974,564.00 as actual damages, P500,000.00 as moral damages, P500,000 as exemplary damages, and P100,000.00 as attorneys fees. But the court absolved defendants Payongayong, Sison, Silos and PISA of any liability. The Bank moved for reconsideration of the decision, questioning among other things the RTCs authority to grant damages considering plaintiffs failure to pay the filing fees on their supplemental complaint. The RTC denied the motion. On appeal to the CA, the latter found for the Bank, reversed the RTC decision, and dismissed the complaint as well as the counterclaims.5 DMI and the Lims filed a motion for reconsideration but the CA denied the same, hence this petition. The Issues Presented The issues presented in this case are: 1. Whether or not the RTC acquired jurisdiction to hear and adjudicate plaintiffs supplemental complaint against the Bank considering their failure to pay the filing fees on the amounts of damages they claim in it; 2. Whether or not the Bank is liable for the intimidation and harassment committed against DMI and its representatives; and

3. Whether or not the Bank is liable to DMI and the Lims for the machineries, equipment, and other properties they allegedly lost after they were barred from the property. The Courts Rulings One. On the issue of jurisdiction, respondent Bank argues that plaintiffs failure to pay the filing fees on their supplemental complaint is fatal to their action. But what the plaintiffs failed to pay was merely the filing fees for their Supplemental Complaint. The RTC acquired jurisdiction over plaintiffs action from the moment they filed their original complaint accompanied by the payment of the filing fees due on the same. The plaintiffs nonpayment of the additional filing fees due on their additional claims did not divest the RTC of the jurisdiction it already had over the case.6 Two. As to the claim that Banks representatives and retained guards harassed and intimidated DMIs employees and the Lims, the RTC found ample proof of such wrongdoings and accordingly awarded damages to the plaintiffs. But the CA disagreed, discounting the testimony of the police officers regarding their investigations of the incidents since such officers were not present when they happened. The CA may be correct in a way but the plaintiffs presented eyewitnesses who testified out of personal knowledge. The police officers testified merely to point out that there had been trouble at the place and their investigations yielded their findings. The Bank belittles the testimonies of the petitioners witnesses for having been presented ex parte before the clerk of court. But the ex parte hearing, having been properly authorized, cannot be assailed as less credible. It was the Banks fault that it was unable to attend the hearing. It cannot profit from its lack of diligence.

Domingo Lim and some employees of DMI testified regarding the Bank guards unmitigated use of their superior strength and firepower. Their testimonies were never refuted. Police Inspector Priscillo dela Paz testified that he responded to several complaints regarding shooting incidents at the leased premises and on one occasion, he found Domingo Lim was locked in the building. When he asked why Lim had been locked in, a Bank representative told him that they had instructions to prevent anyone from taking any property out of the premises. It was only after Dela Paz talked to the Bank representative that they let Lim out.7 Payongayong, the Banks sole witness, denied charges of harassment against the Banks representatives and the guards. But his denial came merely from reports relayed to him. They were not based on personal knowledge.1avvphil While the lease may have already lapsed, the Bank had no business harassing and intimidating the Lims and their employees. The RTC was therefore correct in adjudging moral damages, exemplary damages, and attorneys fees against the Bank for the acts of their representatives and building guards. Three. As to the damages that plaintiffs claim under their supplemental complaint, their stand is that the RTC committed no error in admitting the complaint even if they had not paid the filing fees due on it since such fees constituted a lien anyway on the judgment award. But this after-judgment lien, which implies that payment depends on a successful execution of the judgment, applies to cases where the filing fees were incorrectly assessed or paid or where the court has discretion to fix the amount of the award.8 None of these circumstances obtain in this case. Here, the supplemental complaint specified from the beginning the actual damages that the plaintiffs sought against the Bank. Still plaintiffs paid no filing fees on the same. And, while petitioners claim that they were willing to pay the additional fees, they gave no reason for their omission nor offered to pay the same. They merely said that they did not yet pay

the fees because the RTC had not assessed them for it. But a supplemental complaint is like any complaint and the rule is that the filing fees due on a complaint need to be paid upon its filing.9 The rules do not require the court to make special assessments in cases of supplemental complaints. To aggravate plaintiffs omission, although the Bank brought up the question of their failure to pay additional filing fees in its motion for reconsideration, plaintiffs made no effort to make at least a late payment before the case could be submitted for decision, assuming of course that the prescription of their action had not then set it in. Clearly, plaintiffs have no excuse for their continuous failure to pay the fees they owed the court. Consequently, the trial court should have treated their Supplemental Complaint as not filed. Plaintiffs of course point out that the Bank itself raised the issue of nonpayment of additional filing fees only after the RTC had rendered its decision in the case. The implication is that the Bank should be deemed to have waived its objection to such omission. But it is not for a party to the case or even for the trial court to waive the payment of the additional filing fees due on the supplemental complaint. Only the Supreme Court can grant exemptions to the payment of the fees due the courts and these exemptions are embodied in its rules. Besides, as correctly pointed out by the CA, plaintiffs had the burden of proving that the movable properties in question had remained in the premises and that the bank was responsible for their loss. The only evidence offered to prove the loss was Domingo Lims testimony and some undated and unsigned inventories. These were self-serving and uncorroborated. WHEREFORE, the Court PARTIALLY GRANTS the petition and REINSTATES with modification the decision of the Regional Trial Court of Pasig City in Civil Case 68184. The Court DIRECTS respondent Security Bank Corporation to pay petitioners DMI and

spouses Domingo and Lely Kung Lim damages in the following amounts: P500,000.00 as moral damages, P500,000.00 as exemplary damages, and P100,000.00 for attorneys fees. The Court DELETES the award of actual damages of P27,974,564.00. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 182403 March 9, 2010

On June 19, 1991, Restituto was informed, via letter2 dated June 7, 1991 from the bank, that the property was foreclosed. He thus, by letter3 dated June 25, 1991, informed the bank that he had no participation in the execution of the mortgage and that he never authorized Perfecto for the purpose. In the meantime, Perfecto died in 1990. In 1998, as Perfectos widow petitioner Corazon was being evicted from the property, she and her copetitioner-spouses Restituto and Erlinda filed on August 9, 1999 before the Regional Trial Court (RTC) of Balayan a complaint4 "for quieting of title with damages" against the bank and the Register of Deeds of Nasugbu, docketed as Civil Case No. 3618, assailing the mortgage as being null and void as they did not authorize the encumbrance of the property. In its Answer to the complaint, the bank, maintaining the validity of the mortgage, alleged that it had in fact secured a title in its name, TCT No. T-48405, after Perfecto failed to redeem the mortgage; that the Balayan RTC had no jurisdiction over the case as the bank had been placed under receivership and under liquidation by the Philippine Deposit Insurance Corporation (PDIC); that PDIC filed before the RTC of Nasugbu a petition for assistance in the liquidation of the bank which was docketed as SP No. 576; and that jurisdiction to adjudicate disputed claims against it is lodged with the liquidation court-RTC Nasugbu. By Decision of January 17, 2006,5 Branch 9 of the Balayan RTC rendered judgment, in the complaint for quieting of title, in favor of the plaintiffsherein petitioners. It ordered respondent Register of Deeds of Nasugbu to cancel the encumbrance annotated on TCT No. T-37889, and to cancel TCT No. T-48405 issued in the name of the bank and reinstate the former title. It also directed the bank to return the property to petitioner spouses Restituto and Erlinda and to pay P20,000 to all the petitioners to defray the costs of suit.

ATTY. RESTITUTO G. CUDIAMAT, ERLINDA P. CUDIAMAT1 and CORAZON D. CUDIAMAT, Petitioners, vs. BATANGAS SAVINGS AND LOAN BANK, INC., and THE REGISTER OF DEEDS, NASUGBU, BATANGAS, Respondents. DECISION CARPIO MORALES, J.: Petitioner Atty. Restituto Cudiamat and his brother Perfecto were the registered co-owners of a 320 square meter parcel of land (the property) in Balayan, Batangas, covered by TCT No. T-37889 of the Register of Deeds of Nasugbu, Batangas. Restituto, who resided in Ozamiz City with his wife, entrusted the custody of the title to who was residing in Balayan. In 1979, Perfecto, without the knowledge and consent of Restituto, obtained a loan from respondent Batangas Savings and Loan Bank, Inc. (the bank). To secure the payment of the loan, Perfecto mortgaged the property for the purpose of which he presented a Special Power of Attorney (SPA) purportedly executed by Restituto, with the marital consent of his wife-herein co-petitioner Erlinda Cudiamat.

The bank appealed to the Court of Appeals, contending, inter alia, that the Balayan RTC had no jurisdiction over petitioners complaint for quieting of title. By the assailed Decision of December 21, 2007,6 the appellate court, ruling in favor of the bank, dismissed petitioners complaint for quieting of title, without prejudice to the right of petitioners to take up their claims with the Nasugbu RTC sitting as a liquidation court. To the appellate court, the Balayan RTC, as a court of general jurisdiction, should have deferred to the Nasugbu RTC which sits as a liquidation court, given that the bank was already under receivership when petitioners filed the complaint for quieting of title. Petitioners Motion for Reconsideration having been denied by the appellate court by Resolution of March 27, 2008, they filed the present petition for review on certiorari.1avvphi1 Assailing the appellate courts ruling that the Balayan RTC had no jurisdiction over their complaint, petitioners argue that their complaint was filed earlier than PDICs petition for assistance in the liquidation; and that the bank is now estopped from questioning the jurisdiction of the Balayan RTC because it actively participated in the proceedings thereat. The petition is impressed with merit. Estoppel bars the bank from raising the issue of lack of jurisdiction of the Balayan RTC. In Lozon v. NLRC,7 the Court came up with a clear rule on when jurisdiction by estoppel applies and when it does not:

The operation of estoppel on the question of jurisdiction seemingly depends on whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same "must exist as a matter of law, and may not be conferred by the consent of the parties or by estoppel." However, if the lower court had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent position that the lower court had jurisdiction (underscoring supplied) The ruling was echoed in Metromedia Times Corporation v. Pastorin.8 In the present case, the Balayan RTC, sitting as a court of general jurisdiction, had jurisdiction over the complaint for quieting of title filed by petitioners on August 9, 1999. The Nasugbu RTC, as a liquidation court, assumed jurisdiction over the claims against the bank only on May 25, 2000, when PDICs petition for assistance in the liquidation was raffled thereat and given due course. While it is well-settled that lack of jurisdiction on the subject matter can be raised at any time and is not lost by estoppel by laches, the present case is an exception. To compel petitioners to re-file and relitigate their claims before the Nasugbu RTC when the parties had already been given the opportunity to present their respective evidence in a full-blown trial before the Balayan RTC which had, in fact, decided petitioners complaint (about two years before the appellate court rendered the assailed decision) would be an exercise in futility and would unjustly burden petitioners. The Court, in Valenzuela v. Court of Appeals,9 held that as a general rule, if there is a judicial liquidation of an insolvent bank, all claims against

the bank should be filed in the liquidation proceeding. The Court in Valenzuela, however, after considering the circumstances attendant to the case, held that the general rule should not be applied if to order the aggrieved party to refile or relitigate its case before the litigation court would be "an exercise in futility." Among the circumstances the Court considered in that case is the fact that the claimants were poor and the disputed parcel of land was their only property, and the parties claims and defenses were properly ventilated in and considered by the judicial court. In the present case, the Court finds that analogous considerations exist to warrant the application of Valenzuela. Petitioner Restituto was 78 years old at the time the petition was filed in this Court, and his copetitioner-wife Erlinda died10 during the pendency of the case. And, except for co-petitioner Corazon, Restituto is a resident of Ozamis City. To compel him to appear and relitigate the case in the liquidation courtNasugbu RTC when the issues to be raised before it are the same as those already exhaustively passed upon and decided by the Balayan RTC would be superfluous. WHEREFORE, the petition is GRANTED. The Decision of December 21, 2007 and Resolution dated March 27, 2008 of the Court of Appeals are SET ASIDE. The Decision dated January 17, 2006 of the Regional Trial Court of Balayan, Batangas, Branch 9 is REINSTATED. SO ORDERED.

REYNATO S. PUNO Chief Justice Chairperson TERESITA J. LEONARDO-DE CASTRO Associate Justice LUCAS P. BERSAMIN Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

CONCHITA CARPIO MORALES Associate Justice WE CONCUR:

FIRST DIVISION [G.R. No. 131686. March 18, 2002] ROUEL AD. REYES, petitioner, vs. SPOUSES PEPITO and MARTA TORRES, HON. ELIEZER R. DELOS SANTOS, Executive Judge, RTC, Angeles City, respondents. DECISION YNARES-SANTIAGO, J.: This petition for certiorari originates from a case for ejectment with damages concerning a parcel of landxiv[1] located in Mabalacat, Pampanga. Sometime in 1993, petitioner Rouel AD. Reyes purchased the subject property. At that time, the property was already occupied by several tenants who had constructed their homes and commercial establishments thereon. These residents were informed that petitioner had acquired the property and were asked to vacate the same. Respondent spouses Pepito and Marta Torres and Arcelli T. Manalo refused to vacate and remove their structure. Moreover, they erected one more structure and leased the same to Lolita Ticse for a monthly rental of One Thousand Pesos (P1,000.00). Several written demandsxiv[2] to vacate addressed to the Torres couple and Manalo went unheeded, which prompted petitioner Reyes to file a complaint before the Barangay Lupon for conciliation proceedings. When no settlement was reached, a certificate to file action was issued to petitioner, who filed a case for ejectmentxiv[3] against respondents and Manalo before the Municipal Circuit Trial Court of Mabalacat and Magalang, Pampanga. On May 29, 1997, the MCTC rendered a decision, disposing of the case as follows:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against herein defendants by ordering the latter: 1. To vacate the premises and to surrender the same peacefully to the plaintiff or to any of his authorized representative/s; 2. To remove the structure/s standing on the premises; 3. To pay the plaintiff a rental of P1,000.00 a month commencing from the date of filing of the complaint on July 22, 1996, up to the time defendants finally vacate the premises; 4. To pay the plaintiff the amount of P20,000.00 as attorneys fees and to pay the cost of this suit. Plaintiffs claims for moral damages and defendants counterclaim are hereby denied for lack of proof. SO ORDERED.xiv[4] The Torres couple and co-defendant Manalo appealed to the Regional Trial Court of Angeles City and filed the required supersedeas bond. The case was docketed as Civil Case No. 8746. On September 18, 1997, the RTC dismissed the appeal for failure to pay docket and other legal fees.xiv[5] Respondents filed a motion for reconsideration,xiv[6] averring that they had paid the proper docket fees as early as August 27, 1997, annexing thereto the receipts. They manifested that it was the Clerk of Court of the MCTC of Mabalacat and Magalang who neglected to attach the said receipts to the records of the case. The motion for reconsideration was set for hearing at 2:00 in the afternoon of October 3, 1997.

The day before the hearing, respondents filed a petition for certiorari and prohibitionxiv[7] with Branch 62 of the Regional Trial Court of Angeles City, docketed as Civil Case No. 8794. Respondents assailed the writ of execution issued by the MCTC on September 30, 1997 despite their filing of the supersedeas bond to stay execution of judgment pending appeal. Nevertheless, the sheriff executed the writ and demolished respondents house and other structure on the subject property. Respondents failed to appear at the hearing of their motion for reconsideration before Branch 59 of the RTC. The motion for reconsideration was denied and its earlier order dismissing the appeal was sustained. The following day, respondents filed another motion for reconsiderationxiv[8] of the order denying their first motion for reconsideration. They alleged that their counsel arrived late at the hearing on October 3, 1997; that their counsel was at Branch 62 of the RTC Angeles City awaiting the issuance of a temporary restraining order in Civil Case No. 8794, which was issued only a few minutes before 2:00 oclock; that he thereafter rushed to Branch 59 to attend the hearing but was delayed by heavy traffic due to a vehicular accident. On November 17, 1997, the Regional Trial Court issued an Order,xiv[9] ruling as follows: Without necessarily touching on the issue as to whether the appeal was filed on time and it appearing that indeed there was payment of the appellate docket fees as evidenced by Official Receipt Nos. 5864393 and 6674615, the Branch Clerk of Court of the Municipal Circuit Trial Court, Mabalacat-Magalang, Pampanga, is hereby ORDERED to immediately transmit the entire records of this case to this Court for inclusion in the raffle. SO ORDERED.

Petitioner filed a motion for reconsideration.xiv[10] While his motion for reconsideration remained unresolved, the case was raffled to Branch 57 of the Regional Trial Court of Angeles City.xiv[11] On December 5, 1997, said court issued an Orderxiv[12] directing the parties to submit their respective memoranda, after which the case would be considered submitted for decision. Hence, the instant petition for certiorari. Petitioner argues that respondent court had lost jurisdiction when it dismissed the appeal and returned the records of the case to the Municipal Circuit Trial Court; that respondent court erred in reinstating the appeal without first resolving the motion for reconsideration; that respondent court erred in not citing private respondents in contempt for forum-shopping; and that respondents motion for reconsideration of the dismissal order was bereft of merit. We find no grave abuse of discretion on the part of respondent court. This Court is fully aware that procedural rules are not to be belittled or simply disregarded for these prescribed procedures insure an orderly and speedy administration of justice. However, it is equally true that litigation is not merely a game of technicalities. Time and again, courts have been guided by the principle that the rules of procedure are not to be applied in a very rigid and technical manner, as rules of procedure are used only to help secure and not to override substantial justice.xiv[13] The law and jurisprudence grant to courts the prerogative to relax compliance with procedural rules of even the most mandatory character,xiv[14] mindful of the duty to reconcile both the need to put an end to litigation speedily and the parties right to an opportunity to be heard.xiv[15] A more lenient interpretation is appropriate in this case especially because the dismissal of respondents appeal for failure to pay docket fees was manifestly erroneous. Through no fault of respondents, the clerk of court of the Municipal Circuit Trial Court failed to include and

transmit to respondent Regional Trial Court the receipts of payment. The records show that respondents paid to the Clerk of Court of the Municipal Circuit Trial Court the corresponding amounts well within the five (5) days granted by the respondent court in its order requiring such payment.xiv[16] Contrary to petitioners contention, there was nothing respondents could have done about the situation since they had every right to rely on the presumption that the clerk of court would do her bounden duty. Rule 40, Section 5 of the Rules of Court, as amended, provides: Within the period for taking an appeal, the appellant shall pay to the clerk of the 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 thereof shall be transmitted to the appellate court together with the original record or the record on appeal, as the case may be. (Underscoring ours) Clearly then, it was the responsibility of the clerk of court to attach respondents proof of payment to the original record. Respondent courts error in dismissing the appeal after having been inadvertently misled to believe that respondents had failed to pay the docket fees was rectifiable. Respondents endeavored to set this right through their first motion for reconsideration. It cannot be said that respondents second motion is strictly prohibited by the rules for the matters raised in the first and second motions are not identical, since they challenged two different orders of the respondent court. To our mind, a strict application of the rule prohibiting a second motion for reconsideration in this instance would be unreasonable. Both orders dismissing the appeal were based on technicalities and not on the merits of the case. Recognizing that litigations should, as much as possible, be resolved on the merits and not on technicality, the strict interpretation of

this exclusionary rule in this case would amount to a deprivation of the petitioners statutory right to appeal. The Court has in innumerable instances held that the right of appeal is an essential part of the judicial system; hence, courts should proceed with caution so as not to unduly and hastily divest a party of the right to appeal.xiv[17] In the first place, were it not for the omission or negligence of the Clerk of the Municipal Court, the appeal would not have been dismissed, and the same would have been resolved on the merits. The final resolution of this case has been delayed because of procedural or technical lapses. However, such procedural lapses on the part of respondents was neither intended to delay nor did it result in prejudice to petitioner; hence, denying respondents appeal under the circumstances would be putting a premium on technicalities at the expense of a just resolution of the case.xiv[18] Whenever non-compliance with the rules is not intended to delay the final disposition of the case, nor to cause prejudice to the adverse party, we have repeatedly held that the dismissal of an appeal on mere technicalities may be stayed in the exercise of the courts equity jurisdiction.xiv[19] Thus, when respondent court set aside its earlier dismissal of respondents appeal, it did not do so with grave abuse of discretion amounting to excess or lack of jurisdiction. Litigations should, as much as possible, be decided on the merits and not on technicality.xiv[20] It is the courts policy to encourage hearings of appeals on the meritsxiv[21] so that every party-litigant is afforded the amplest opportunity for the proper and just disposition of his cause, unhampered by the constraints of technicalities.xiv[22] WHEREFORE, in view of all the foregoing, the petition is DISMISSED. The case is REMANDED to the Regional Trial Court of Angeles City, Pampanga, which is directed to resume proceedings in Civil Case No. 8746. SO ORDERED.