Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 153690
February 15, 2011
DAVID LU, Petitioner,
vs.
PATERNO LU YM, SR., PATERNO LU YM, JR., VICTOR LU YM, JOHN LU YM, KELLY
LU YM, and LUDO & LUYM DEVELOPMENT CORPORATION, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 157381
PATERNO LU YM, SR., PATERNO LU YM, JR., VICTOR LU YM, JOHN LU YM, KELLY
LU YM, and LUDO & LUYM DEVELOPMENT CORPORATION, Petitioners,
vs.
DAVID LU, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 170889
JOHN LU YM and LUDO & LUYM DEVELOPMENT CORPORATION, Petitioners,
vs.
THE HONORABLE COURT OF APPEALS OF CEBU CITY (FORMER TWENTIETH
DIVISION), DAVID LU, ROSA GO, SILVANO LUDO & CL
CORPORATION, Respondents.
RESOLUTION
CARPIO MORALES, J.:
1
By Decision of August 26, 2008, the Court unanimously disposed of the three
present petitions as follows:
WHEREFORE, premises considered, the petitions in G.R. Nos. 153690 and 157381
are DENIED for being moot and academic; while the petition in G.R. No. 170889 is
DISMISSED for lack of merit. Consequently, the Status Quo Order dated January 23,
2006 is hereby LIFTED.
The Court of Appeals is DIRECTED to proceed with CA-G.R. CV No. 81163 and to
resolve the same with dispatch.
2
SO ORDERED[,]
3
which Decision was, on motion for reconsideration, the Court voting 4-1, reversed
by Resolution of August 4, 2009, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the Motion for Reconsideration filed by
John Lu Ym and Ludo & LuYm Development Corporation is GRANTED. The Decision
of this Court dated August 26, 2008 is RECONSIDERED and SET ASIDE. The
Complaint in SRC Case No. 021-CEB, now on appeal with the Court of Appeals in
CA-G.R. CV No. 81163, is DISMISSED.
All interlocutory matters challenged in these consolidated petitions are DENIED for
being moot and academic.
4
SO ORDERED.

David Lus Motion for Reconsideration and Motion to Refer Resolution to the
Court En Banc was denied by minute Resolution of September 23, 2009.
Following his receipt on October 19, 2009 of the minute Resolution, David Lu
personally filed on October 30, 2009 a Second Motion for Reconsideration and
Motion to Refer Resolution to the Court En Banc. On even date, he filed through
registered mail an "Amended Second Motion for Reconsideration and Motion to
Refer Resolution to the Court En Banc." And on November 3, 2009, he filed a
"Motion for Leave to File [a] Motion for Clarification[, and the] Second Motion for
Reconsideration and Motion to Refer Resolution to the Court En Banc." He later
also filed a "Supplement to Second Motion for Reconsideration with Motion to
Dismiss" dated January 6, 2010.
John Lu Ym and Ludo & Luym Development Corporation (LLDC), meanwhile, filed
5
with leave a Motion for the Issuance of an Entry of Judgment of February 2, 2010,
which merited an Opposition from David Lu.
In compliance with the Courts Resolution of January 11, 2010, Kelly Lu Ym, Victor
Lu Ym and Paterno Lu Ym, Jr. filed a Comment/Opposition of March 20, 2010,
while John Lu Ym and LLDC filed a Consolidated Comment of March 25, 2010, a
Supplement thereto of April 20, 2010, and a Manifestation of May 24, 2010.
The present cases were later referred to the Court en banc by Resolution of
October 20, 2010.
Brief Statement of the Antecedents
The three consolidated cases stemmed from the complaint for "Declaration of
Nullity of Share Issue, Receivership and Dissolution" filed on August 14, 2000
before the Regional Trial Court (RTC) of Cebu City by David Lu, et al.against Paterno
Lu Ym, Sr. and sons (Lu Ym father and sons) and LLDC.
By Decision of March 1, 2004, Branch 12 of the RTC ruled in favor of David et al. by
annulling the issuance of the shares of stock subscribed and paid by Lu Ym father
and sons at less than par value, and ordering the dissolution and asset liquidation
of LLDC. The appeal of the trial courts Decision remains pending with the appellate
court inCA-G.R. CV No. 81163.
Several incidents arising from the complaint reached the Court through the
present three petitions.
In G.R. No. 153690 wherein David, et al. assailed the appellate courts resolutions
dismissing their complaint for its incomplete signatory in the certificate of nonforum shopping and consequently annulling the placing of the subject corporation
under receivership pendente lite, the Court, by Decision of August 26, 2008, found
the issue to have been mooted by the admission by the trial court of David et al.s
Amended Complaint, filed by them pursuant to the trial courts order to conform
to the requirements of the Interim Rules of Procedure Governing Intra-Corporate
Controversies.
Since an amended pleading supersedes the pleading that it amends, the original
complaint of David, et al. was deemed withdrawn from the records.
The Court noted in G.R. No. 153690 that both parties admitted the mootness of
the issue and that the trial court had already rendered a decision on the merits of

the case. It added that the Amended Complaint stands since Lu Ym father and sons
availed of an improper mode (via an Urgent Motion filed with this Court) to assail
the admission of the Amended Complaint.
In G.R. No. 157381 wherein Lu Ym father and sons challenged the appellate courts
resolution restraining the trial court from proceeding with their motion to lift the
receivership order which was filed during the pendency of G.R. No. 153690, the
Court, by Decision of August 26, 2008 resolved that the issue was mooted by the
amendment of the complaint and by the trial courts decision on the merits. The
motion having been filed ancillary to the main action, which main action was
already decided on the merits by the trial court, the Court held that there was
nothing more to enjoin.
G.R. No. 170889 involved the denial by the appellate court of Lu Ym father and
sons application in CA-G.R. CV No. 81163 for a writ of preliminary injunction. By
August 26, 2008 Decision, the Court dismissed the petition after finding no merit
on their argument which they raised for the first time in their motion for
reconsideration before the appellate court of lack of jurisdiction for nonpayment of the correct RTC docket fees.
As reflected early on, the Court, in a turnaround, by Resolution of August 4, 2009,
reconsidered its position on the matter of docket fees. It ruled that the trial court
did not acquire jurisdiction over the case for David Lu, et al.s failure to pay the
correct docket fees, hence, all interlocutory matters and incidents subject of the
present petitions must consequently be denied.
Taking Cognizance of the Present Incidents
The Internal Rules of the Supreme Court (IRSC) states that the Court en banc shall
act on the following matters and cases:
(a) cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, executive order, presidential decree, proclamation,
order, instruction, ordinance, or regulation is in question;
(b) criminal cases in which the appealed decision imposes the death penalty
or reclusion perpetua;
(c) cases raising novel questions of law;
(d) cases affecting ambassadors, other public ministers, and consuls;
(e) cases involving decisions, resolutions, and orders of the Civil Service
Commission, the Commission on Elections, and the Commission on Audit;
(f) cases where the penalty recommended or imposed is the dismissal of a judge,
the disbarment of a lawyer, the suspension of any of them for a period of more
than one year, or a fine exceeding forty thousand pesos;
(g) cases covered by the preceding paragraph and involving the reinstatement in
the judiciary of a dismissed judge, the reinstatement of a lawyer in the roll of
attorneys, or the lifting of a judges suspension or a lawyers suspension from the
practice of law;
(h) cases involving the discipline of a Member of the Court, or a Presiding Justice,
or any Associate Justice of the collegial appellate court;

(i) cases where a doctrine or principle laid down by the Court en banc or by a
Division my be modified or reversed;
(j) cases involving conflicting decisions of two or more divisions;
(k) cases where three votes in a Division cannot be obtained;
(l) Division cases where the subject matter has a huge financial impact on
businesses or affects the welfare of a community;
(m) Subject to Section 11 (b) of this rule, other division cases that, in the opinion of
at least three Members of the Division who are voting and present, are
appropriate for transfer to the Court en banc;
(n) cases that the Court en banc deems of sufficient importance to merit its
attention; and
(o) all matters involving policy decisions in the administrative supervision of all
6
courts and their personnel. (underscoring supplied)
The enumeration is an amalgamation of SC Circular No. 2-89 (February 7, 1989), as
amended by En Banc Resolution of November 18, 1993, and the amplifications
introduced by Resolution of January 18, 2000 in A.M. No. 99-12-08-SC with respect
to administrative cases and matters.
The present cases fall under at least three types of cases for consideration by the
Court En Banc. At least three members of the Courts Second Division (to which the
7
present cases were transferred, they being assigned to a Member thereof) found,
by Resolution of October 20, 2010, that the cases were appropriate for referral8
transfer to the Court En Banc which subsequently accepted the referral in view of
the sufficiently important reason to resolve all doubts on the validity of the
challenged resolutions as they appear to modify or reverse doctrines or principles
of law.
9
In Firestone Ceramics v. Court of Appeals, the Court treated the consolidated
cases as En Banc cases and set the therein petitioners motion for oral argument,
after finding that the cases were of sufficient importance to merit the Court En
Bancs attention. It ruled that the Courts action is a legitimate and valid exercise of
10
its residual power.
In Limketkai Sons Milling, Inc. v. Court of Appeals, the Court conceded that it is not
infallible. Should any error of judgment be perceived, it does not blindly adhere to
such error, and the parties adversely affected thereby are not precluded from
seeking relief therefrom, by way of a motion for reconsideration. In this
jurisdiction, rectification of an error, more than anything else, is of paramount
importance.
xxxx
It bears stressing that where, as in the present case, the Court En Banc entertains a
case for its resolution and disposition, it does so without implying that the Division
of origin is incapable of rendering objective and fair justice. The action of the Court
simply means that the nature of the cases calls for en banc attention and
consideration. Neither can it be concluded that the Court has taken undue
advantage of sheer voting strength. It was merely guided by the well-studied
finding and sustainable opinion of the majority of its actual membership that,

indeed, subject cases are of sufficient importance meriting the action and decision
of the whole Court. It is, of course, beyond cavil that all the members of this
highest Court of the land are always embued with the noblest of intentions in
interpreting and applying the germane provisions of law, jurisprudence, rules and
Resolutions of the Court to the end that public interest be duly safeguarded and
11
rule of law be observed.
It is argued that the assailed Resolutions in the present cases have already become
12
final, since a second motion for reconsideration is prohibited except for
extraordinarily persuasive reasons and only upon express leave first
13
obtained; and that once a judgment attains finality, it thereby becomes
immutable and unalterable, however unjust the result of error may appear.
The contention, however, misses an important point. The doctrine of immutability
of decisions applies only to final and executory decisions. Since the present cases
may involve a modification or reversal of a Court-ordained doctrine or principle,
the judgment rendered by the Special Third Division may be considered
unconstitutional, hence, it can never become final. It finds mooring in the
deliberations of the framers of the Constitution:
On proposed Section 3(4), Commissioner Natividad asked what the effect would be
of a decision that violates the proviso that "no doctrine or principle of law laid
down by the court in a decision rendered en banc or in division may be modified or
reversed except by the court en banc." The answer given was that such a decision
would be invalid. Following up, Father Bernas asked whether the decision, if not
challenged, could become final and binding at least on the parties. Romulo
answered that, since such a decision would be in excess of jurisdiction, the
14
decision on the case could be reopened anytime. (emphasis and underscoring
supplied)
A decision rendered by a Division of this Court in violation of this constitutional
15
provision would be in excess of jurisdiction and, therefore, invalid. Any entry of
16
judgment may thus be said to be "inefficacious" since the decision is void for
being unconstitutional.
While it is true that the Court en banc exercises no appellate jurisdiction over its
Divisions, Justice Minerva Gonzaga-Reyes opined in Firestone and concededly
recognized that "[t]he only constraint is that any doctrine or principle of law laid
down by the Court, either rendered en banc or in division, may be overturned or
17
reversed only by the Court sitting en banc."
That a judgment must become final at some definite point at the risk of occasional
error cannot be appreciated in a case that embroils not only a general allegation of
"occasional error" but also a serious accusation of a violation of the
Constitution, viz., that doctrines or principles of law were modified or reversed by
the Courts Special Third Division August 4, 2009 Resolution.
The law allows a determination at first impression that a doctrine or principle laid
down by the court en banc or in division may be modified or reversed in a case
which would warrant a referral to the Court En Banc. The use of the word "may"
instead of "shall" connotes probability, not certainty, of modification or reversal of

a doctrine, as may be deemed by the Court. Ultimately, it is the entire Court which
shall decide on the acceptance of the referral and, if so, "to reconcile any
seeming conflict, to reverse or modify an earlier decision, and to declare the
18
Courts doctrine."
The Court has the power and prerogative to suspend its own rules and to exempt a
19
case from their operation if and when justice requires it, as in the present
circumstance where movant filed a motion for leave after the prompt submission
of a second motion for reconsideration but, nonetheless, still within 15 days from
receipt of the last assailed resolution.
Well-entrenched doctrines or principles of law that went astray need to be steered
back to their proper course. Specifically, as David Lu correctly points out, it is
necessary to reconcile and declare the legal doctrines regarding actions that are
incapable of pecuniary estimation, application of estoppel by laches in raising an
objection of lack of jurisdiction, and whether bad faith can be deduced from the
erroneous annotation of lis pendens.
Upon a considered, thorough reexamination, the Court grants David Lus Motion
for Reconsideration. The assailed Resolutions of August 4, 2009 and September
23, 2009, which turn turtle settled doctrines, must be overturned. The Court
thus reinstates the August 26, 2008 Decision wherein a three-tiered approach was
utilized to analyze the issue on docket fees:
In the instant case, however, we cannot grant the dismissal prayed for because of
the following reasons: First, the case instituted before the RTC is one incapable of
pecuniary estimation. Hence, the correct docket fees were paid. Second, John and
LLDC are estopped from questioning the jurisdiction of the trial court because of
their active participation in the proceedings below, and because the issue of
payment of insufficient docket fees had been belatedly raised before the Court of
Appeals, i.e., only in their motion for reconsideration. Lastly, assuming that the
docket fees paid were truly inadequate, the mistake was committed by the Clerk
of Court who assessed the same and not imputable to David; and as to the
deficiency, if any, the same may instead be considered a lien on the
20
judgment that may thereafter be rendered. (italics in the original; emphasis and
underscoring supplied)
The Value of the Subject Matter Cannot be Estimated
On the claim that the complaint had for its objective the nullification of the
issuance of 600,000 shares of stock of LLDC, the real value of which based on
underlying real estate values, as alleged in the complaint, stands atP1,087,055,105,
the Courts assailed August 4, 2009 Resolution found:
Upon deeper reflection, we find that the movants *Lu Ym father & sons+ claim has
merit. The 600,000 shares of stock were, indeed, properties in litigation. They were
the subject matter of the complaint, and the relief prayed for entailed the
nullification of the transfer thereof and their return to LLDC. David, et al., are
minority shareholders of the corporation who claim to have been prejudiced by
the sale of the shares of stock to the Lu Ym father and sons. Thus, to the extent of
the damage or injury they allegedly have suffered from this sale of the shares of

stock, the action they filed can be characterized as one capable of pecuniary
estimation. The shares of stock have a definite value, which was declared by
plaintiffs [David Lu, et al.] themselves in their complaint. Accordingly, the docket
fees should have been computed based on this amount. This is clear from the
following version of Rule 141, Section 7, which was in effect at the time the
21
complaint was filed[.] (emphasis and underscoring supplied)
The said Resolution added that the value of the 600,000 shares of stock, which are
the properties in litigation, should be the basis for the computation of the filing
fees. It bears noting, however, that David, et al. are not claiming to own these
shares. They do not claim to be the owners thereof entitled to be the transferees
of the shares of stock. The mention of the real value of the shares of stock, over
which David, et al. do not, it bears emphasis, interpose a claim of right to
recovery, is merely narrative or descriptive in order to emphasize the inequitable
price at which the transfer was effected.
The assailed August 4, 2009 Resolution also stated that "to the extent of the
damage or injury [David, et al.] allegedly have suffered from this sale," the action
"can be characterized as one capable of pecuniary estimation." The Resolution
does not, however, explore the value of the extent of the damage or injury. Could
it be the pro rata decrease (e.g., from 20% to 15%) of the percentage shareholding
of David, et al. vis--vis to the whole?
Whatever property, real or personal, that would be distributed to the stockholders
would be a mere consequence of the main action. In the end, in the event LLDC is
dissolved, David, et al. would not be getting the value of the 600,000 shares, but
only the value of their minority number of shares, which are theirs to begin with.
The complaint filed by David, et al. is one for declaration of nullity of share
issuance. The main relief prayed for both in the original complaint and the
amended complaint is the same, that is, to declare null and void the issuance of
600,000 unsubscribed and unissued shares to Lu Ym father and sons, et al. for a
price of 1/18 of their real value, for being inequitable, having been done in breach
of directors fiduciarys duty to stockholders, in violation of the minority
stockholders rights, and with unjust enrichment.
As judiciously discussed in the Courts August 26, 2008 Decision, the test in
determining whether the subject matter of an action is incapable of pecuniary
estimation is by ascertaining the nature of the principal action or remedy sought. It
explained:
x x x To be sure, the annulment of the shares, the dissolution of the corporation
and the appointment of receivers/management committee are actions which do
not consist in the recovery of a sum of money. If, in the end, a sum of money or
real property would be recovered, it would simply be the consequence of such
principal action. Therefore, the case before the RTC was incapable of pecuniary
22
estimation. (italics in the original, emphasis and underscoring supplied)
Actions which the Court has recognized as being incapable of pecuniary estimation
include legality of conveyances. In a case involving annulment of contract, the
Court found it to be one which cannot be estimated:

Petitioners argue that an action for annulment or rescission of a contract of sale of

real property is a real action and, therefore, the amount of the docket fees to be
paid by private respondent should be based either on the assessed value of the
property, subject matter of the action, or its estimated value as alleged in the
complaint, pursuant to the last paragraph of 7(b) of Rule 141, as amended by the
Resolution of the Court dated September 12, 1990. Since private respondents
alleged that the land, in which they claimed an interest as heirs, had been sold for
P4,378,000.00 to petitioners, this amount should be considered the estimated
value of the land for the purpose of determining the docket fees.
On the other hand, private respondents counter that an action for annulment or
rescission of a contract of sale of real property is incapable of pecuniary estimation
and, so, the docket fees should be the fixed amount of P400.00 in Rule 141,
7(b)(1). In support of their argument, they cite the cases of Lapitan v. Scandia,
Inc. and Bautista v. Lim. In Lapitan this Court, in an opinion by Justice J.B.L. Reyes,
held:
A review of the jurisprudence of this Court indicates that in determining whether
an action is one the subject matter of which is not capable of pecuniary estimation,
this Court has adopted the criterion of first ascertaining the nature of the principal
action or remedy sought. If it is primarily for the recovery of a sum of money, the
claim is considered capable of pecuniary estimation, and whether jurisdiction is in
the municipal courts or in the courts of first instance would depend on the amount
of the claim. However, where the basic issue is something other than the right to
recover a sum of money, or where the money claim is purely incidental to, or a
consequence of, the principal relief sought, like in suits to have the defendant
perform his part of the contract (specific performance) and in actions for support,
or for annulment of a judgment or to foreclose a mortgage, this Court has
considered such actions as cases where the subject of the litigation may not be
estimated in terms of money, and are cognizable exclusively by courts of first
instance. The rationale of the rule is plainly that the second class cases, besides
the determination of damages, demand an inquiry into other factors which the
law has deemed to be more within the competence of courts of first instance,
which were the lowest courts of record at the time that the first organic laws of
the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine
Commission of June 11, 1901).
Actions for specific performance of contracts have been expressly pronounced to
be exclusively cognizable by courts of first instance: De Jesus vs. Judge Garcia, L26816, February 28, 1967; Manufacturer's Distributors, Inc. vs. Yu Siu Liong, L21285, April 29, 1966. And no cogent reason appears, and none is here advanced
by the parties, why an action for rescission (or resolution) should be differently
treated, a "rescission" being a counterpart, so to speak, of "specific
performance". In both cases, the court would certainly have to undertake an
investigation into facts that would justify one act or the other. No award for
damages may be had in an action for rescission without first conducting an
inquiry into matters which would justify the setting aside of a contract, in the

same manner that courts of first instance would have to make findings of fact and
law in actions not capable of pecuniary estimation expressly held to be so by this
Court, arising from issues like those raised in Arroz v. Alojado, et al., L-22153,
March 31, 1967 (the legality or illegality of the conveyance sought for and the
determination of the validity of the money deposit made); De Ursua v. Pelayo, L13285, April 18, 1950 (validity of a judgment); Bunayog v. Tunas, L-12707,
December 23, 1959 (validity of a mortgage); Baito v. Sarmiento, L-13105, August
25, 1960 (the relations of the parties, the right to support created by the relation,
etc., in actions for support), De Rivera, et al. v. Halili, L-15159, September 30, 1963
(the validity or nullity of documents upon which claims are predicated). Issues of
the same nature may be raised by a party against whom an action for rescission
has been brought, or by the plaintiff himself. It is, therefore, difficult to see why a
prayer for damages in an action for rescission should be taken as the basis for
concluding such action as one capable of pecuniary estimation a prayer which
must be included in the main action if plaintiff is to be compensated for what he
may have suffered as a result of the breach committed by defendant, and not later
on precluded from recovering damages by the rule against splitting a cause of
23
action and discouraging multiplicity of suits. (emphasis and underscoring
supplied)
IN FINE, the Court holds that David Lu, et al.s complaint is one incapable of
pecuniary estimation, hence, the correct docket fees were paid. The Court thus
proceeds to tackle the arguments on estoppel and lien, mindful that the
succeeding discussions rest merely on a contrary assumption, viz., that there was
deficient payment.
Estoppel Has Set In
Assuming arguendo that the docket fees were insufficiently paid, the doctrine of
estoppel already applies.
24
The assailed August 4, 2009 Resolution cited Vargas v. Caminas on the nonapplicability of the Tijam doctrinewhere the issue of jurisdiction was, in fact, raised
before the trial court rendered its decision. Thus the Resolution explained:
Next, the Lu Ym father and sons filed a motion for the lifting of the receivership
order, which the trial court had issued in the interim. David, et al., brought the
matter up to the CA even before the trial court could resolve the motion.
Thereafter, David, at al., filed their Motion to Admit Complaint to Conform to the
Interim Rules Governing Intra-Corporate Controversies. It was at this point that the
Lu Ym father and sons raised the question of the amount of filing fees paid. They
also raised this point again in the CA when they appealed the trial courts decision
in the case below.
We find that, in the circumstances, the Lu Ym father and sons are not estopped
from challenging the jurisdiction of the trial court. They raised the insufficiency of
the docket fees before the trial court rendered judgment and continuously
maintained their position even on appeal to the CA. Although the manner of
challenge waserroneous they should have addressed this issue directly to the
trial court instead of the OCA they should not be deemed to have waived their

25

right to assail the jurisdiction of the trial court. (emphasis and underscoring
supplied)
Lu Ym father and sons did not raise the issue before the trial court. The narration
of facts in the Courts original decision shows that Lu Ym father and sons merely
inquired from the Clerk of Court on the amount of paid docket fees on January 23,
26
2004. They thereafter still "speculat[ed] on the fortune of litigation." Thirty-seven
days later or on March 1, 2004 the trial court rendered its decision adverse to
them.
Meanwhile, Lu Ym father and sons attempted to verify the matter of docket fees
from the Office of the Court Administrator (OCA). In their Application for the
issuance a writ of preliminary injunction filed with the Court of Appeals, they still
failed to question the amount of docket fees paid by David Lu, et al. It was only in
their Motion for Reconsideration of the denial by the appellate court of their
application for injunctive writ that they raised such issue.
Lu Ym father and sons further inquiry from the OCA cannot redeem them. A mere
inquiry from an improper officeat that, could not, by any stretch, be considered as
an act of having raised the jurisdictional question prior to the rendition of the trial
courts decision. In one case, it was held:
Here it is beyond dispute that respondents paid the full amount of docket fees as
assessed by the Clerk of Court of the Regional Trial Court of Malolos, Bulacan,
Branch 17, where they filed the complaint. If petitioners believed that the
assessment was incorrect, they should have questioned it before the trial
court. Instead, petitioners belatedly question the alleged underpayment of docket
fees through this petition, attempting to support their position with the opinion
and certification of the Clerk of Court of another judicial region. Needless to
27
state, such certification has no bearing on the instant case. (italics in the
original; emphasis and underscoring in the original)
The inequity resulting from the abrogation of the whole proceedings at this late
stage when the decision subsequently rendered was adverse to the father and
sons is precisely the evil being avoided by the equitable principle of estoppel.
No Intent to Defraud the Government
Assuming arguendo that the docket fees paid were insufficient, there is no proof of
bad faith to warrant a dismissal of the complaint, hence, the following doctrine
applies:
x x x In Sun Insurance Office, Ltd., (SIOL) v. Asuncion, this Court ruled that the filing
of the complaint or appropriate initiatory pleading and the payment of the
prescribed docket fee vest a trial court with jurisdiction over the subject matter or
nature of the action. If the amount of docket fees paid is insufficient considering
the amount of the claim, the clerk of court of the lower court involved or his duly
authorized deputy has the responsibility of making a deficiency assessment. The
party filing the case will be required to pay the deficiency, but jurisdiction is not
28
automatically lost. (underscoring supplied)
The assailed Resolution of August 4, 2009 held, however, that the above-quoted
doctrine does not apply since there was intent to defraud the government, citing

one attendant circumstance the annotation of notices of lis pendens on real

properties owned by LLDC. It deduced:
From the foregoing, it is clear that a notice of lis pendens is availed of mainly in real
actions. Hence, when David,et al., sought the annotation of notices of lis
pendens on the titles of LLDC, they acknowledged that the complaint they had filed
affected a title to or a right to possession of real properties. At the very least, they
must have been fully aware that the docket fees would be based on the value of
the realties involved. Their silence or inaction to point this out to the Clerk of Court
who computed their docket fees, therefore, becomes highly suspect, and thus,
sufficient for this Court to conclude that they have crossed beyond the threshold
of good faith and into the area of fraud. Clearly, there was an effort to defraud the
government in avoiding to pay the correct docket fees. Consequently, the trial
29
court did not acquire jurisdiction over the case.
All findings of fraud should begin the exposition with the presumption of good
faith. The inquiry is not whether there was good faith on the part of David, et al.,
but whether there was bad faith on their part.
The erroneous annotation of a notice of lis pendens does not negate good faith.
The overzealousness of a party in protecting pendente lite his perceived interest,
inchoate or otherwise, in the corporations properties from depletion or
dissipation, should not be lightly equated to bad faith.
That notices of lis pendens were erroneously annotated on the titles does not have
the effect of changing the nature of the action. The aggrieved party is not left
without a remedy, for they can move to cancel the annotations. The assailed
August 4, 2009 Resolution, however, deemed such act as an acknowledgement
that the case they filed was a real action, concerning as it indirectly does the
corporate realties, the titles of which were allegedly annotated. This conclusion
does not help much in ascertaining the filing fees because the value of these real
properties and the value of the 600,000 shares of stock are different.
Further, good faith can be gathered from the series of amendments on the
provisions on filing fees, that the Court was even prompted to make a
clarification.1avvphi1
When David Lu, et al. filed the Complaint on August 14, 2000 or five days after the
30
effectivity of the Securities Regulation Code or Republic Act No. 8799, the then
Section 7 of Rule 141 was the applicable provision, without any restricted
reference to paragraphs (a) and (b) 1 & 3 or paragraph (a) alone. Said section then
provided:
SEC. 7. Clerks of Regional Trial Courts.
(a) For filing an action or a permissive counterclaim or money claim against an
estate not based on judgment, or for filing with leave of court a third-party, fourthparty, etc. complaint, or a complaint in intervention, and for all clerical services in
the same, if the total sum claimed, exclusive of interest, or thestated value of the
property in litigation, is:
xxxx
(b) For filing:

1. Actions where the value of the subject matter ... x

cannot be estimated
xx
2. Special civil actions except judicial foreclosure
of mortgage which shall be governed by ..... x
paragraph (a) above
xx
3.

All other actions not involving property

. x
xx

In a real action, 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.
31
x x x x (emphasis supplied)
32
The Court, by Resolution of September 4, 2001 in A. M. No. 00-8-10-SC, clarified
the matter of legal fees to be collected in cases formerly cognizable by the
Securities and Exchange Commission following their transfer to the RTC.
Clarification has been sought on the legal fees to be collected and the period of
appeal applicable in cases formerly cognizable by the Securities and Exchange
Commission. It appears that the Interim Rules of Procedure on Corporate
Rehabilitation and the Interim Rules of Procedure for Intra-Corporate
Controversies do not provide the basis for the assessment of filing fees and the
period of appeal in cases transferred from the Securities and Exchange
Commission to particular Regional Trial Courts.
The nature of the above mentioned cases should first be ascertained. Section 3(a),
Rule 1 of the 1997 Rules of Civil Procedure defines civil action as one by which a
party sues another for the enforcement or protection of a right, or the prevention
or redress of a wrong. It further states that a civil action may either be ordinary or
special, both being governed by the rules for ordinary civil actions subject to the
special rules prescribed for special civil actions. Section 3(c) of the same Rule,
defines a special proceeding as a remedy by which a party seeks to establish a
status, a right, or a particular fact.
Applying these definitions, the cases covered by the Interim Rules for IntraCorporate Controversies should be considered as ordinary civil actions. These
cases either seek the recovery of damages/property or specific performance of
an act against a party for the violation or protection of a right. These cases are:
(1) Devices or schemes employed by, or any act of, the board of directors, business
associates, officers or partners, amounting to fraud or misrepresentation which
may be detrimental to the interest of the public and/or of the stockholders,
partners, or members of any corporation, partnership, or association;
(2) Controversies arising out of intra-corporate, partnership, or association
relations, between and among stockholders, members or associates; and between,
any or all of them and the corporation, partnership, or association of which they
are stockholders, members or associates, respectively;

(3) Controversies in the election or appointment of directors, trustees, officers, or

managers of corporations, partnerships, or associations;
(4) Derivative suits; and
(5) Inspection of corporate books.
On the other hand, a petition for rehabilitation, the procedure for which is
provided in the Interim Rules of Procedure on Corporate Recovery, should be
considered as a special proceeding. It is one that seeks to establish the status of a
party or a particular fact. As provided in section 1, Rule 4 of the Interim Rules on
Corporate Recovery, the status or fact sought to be established is the inability of
the corporate debtor to pay its debts when they fall due so that a rehabilitation
plan, containing the formula for the successful recovery of the corporation, may be
approved in the end. It does not seek a relief from an injury caused by another
party.
Section 7 of Rule 141 (Legal Fees) of the Revised Rules of Court lays the amount of
filing fees to be assessed for actions or proceedings filed with the Regional Trial
Court. Section 7(a) and (b) apply to ordinary civil actionswhile 7(d) and (g) apply
to special proceedings.
In fine, the basis for computing the filing fees in intra-corporate cases shall
be section 7(a) and (b) l & 3of Rule 141. For petitions for rehabilitation, section
7(d) shall be applied. (emphasis and underscoring supplied)
The new Section 21(k) of Rule 141 of the Rules of Court, as amended by A.M. No.
33
04-2-04-SC (July 20, 2004), expressly provides that "[f]or petitions for insolvency
or other cases involving intra-corporate controversies, the fees prescribed
under Section 7(a) shall apply." Notatu dignum is that paragraph (b) 1 & 3 of
34
Section 7 thereof was omitted from the reference. Said paragraph refers to
docket fees for filing "[a]ctions where the value of the subject matter cannot be
estimated" and "all other actions not involving property."
By referring the computation of such docket fees to paragraph (a) only, it denotes
that an intra-corporate controversy always involves a property in litigation, the
value of which is always the basis for computing the applicable filing fees. The
latest amendments seem to imply that there can be no case of intra-corporate
controversy where the value of the subject matter cannot be estimated. Even one
for a mere inspection of corporate books.
If the complaint were filed today, one could safely find refuge in the express
phraseology of Section 21 (k) of Rule 141 that paragraph (a) alone applies.
In the present case, however, the original Complaint was filed on August 14, 2000
during which time Section 7, without qualification, was the applicable provision.
Even the Amended Complaint was filed on March 31, 2003 during which time the
applicable rule expressed that paragraphs (a) and (b) l & 3 shall be the basis for
computing the filing fees in intra-corporate cases, recognizing that there could be
an intra-corporate controversy where the value of the subject matter cannot be
estimated, such as an action for inspection of corporate books. The immediate
illustration shows that no mistake can even be attributed to the RTC clerk of court
in the assessment of the docket fees.

Finally, assuming there was deficiency in paying the docket fees and assuming
further that there was a mistake in computation, the deficiency may be considered
a lien on the judgment that may be rendered, there being no established intent to
defraud the government.
WHEREFORE, the assailed Resolutions of August 4, 2009 and September 23, 2009
are REVERSED and SET ASIDE. The Courts Decision of August 26, 2008
is REINSTATED.
The Court of Appeals is DIRECTED to resume the proceedings and resolve the
remaining issues with utmost dispatch in CA-G.R. CV No. 81163.
SO ORDERED.
Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

G.R.
164560

No.

Present:

ANA DE GUIA SAN PEDRO

and ALEJO DOPEO,
Petitioners,

- versus -

YNARESSANTIAGO, J.,
Chairperson,
CHICONAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

HON. FATIMA G. ASDALA, in her capacity as the Presiding

Judge of the Regional Trial Court of Quezon City, Branch 87;
HON. MANUEL TARO, in his capacity as the Presiding Judge of
the Metropolitan Trial Court of Quezon City, Branch 42; and
the HEIRS OF SPOUSES APOLONIO V. DIONISIO and VALERIANA
DIONISIO (namely, ALLAN GEORGE R. DIONISIO and ELEANOR
R. DIONISIO, herein represented by ALLAN GEORGE R.
DIONISIO),
Respondents.

Promulgated:
July 22, 2009
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
PERALTA, J.:
This resolves the petition for certiorari under Rule 65 of the Rules of Court, praying
[1]
that the Resolutions of the Court of Appeals (CA) dated September 15,
2003 andJune 1, 2004, respectively, in CA-G.R. SP No. 78978, be reversed and set
aside.
The antecedent facts are as follows.
Sometime in July 2001, private respondents, heirs of spouses Apolonio and
Valeriana Dionisio, filed with the Metropolitan Trial Court (MeTC) of Quezon City,
[2]
Branch 42, a Complaint against herein petitioners and Wood Crest Residents
Association, Inc., for Accion Reivindicatoria, Quieting of Title and Damages, with
Prayer for Preliminary Mandatory Injunction. Private respondents alleged that

subject property located in Batasan Hills, Quezon City, with an assessed value
of P32,100.00, was titled in the name of spouses Apolonio and Valeriana Dionisio;
but petitioners, with malice and evident bad faith, claimed that they were the
owners of a parcel of land that encompasses and covers subject property. Private
respondents had allegedly been prevented from entering, possessing and using
subject property. It was further alleged in the Complaint that petitioners' Transfer
Certificate of Title over their alleged property was spurious. Private respondents
then prayed that they be declared the sole and absolute owners of the subject
property; that petitioners be ordered to surrender possession of subject property
to them; that petitioners and Wood Crest and/or its members be ordered to pay
actual and moral damages, and attorney's fees.
[3]

Petitioners, for their part, filed a Motion to Dismiss said complaint on the ground
that the MeTC had no jurisdiction over the subject matter of the action, as the
subject of litigation was incapable of pecuniary estimation.
[4]

The MeTC then issued an Order dated July 4, 2002 denying the motion to
dismiss, ruling that, under Batas Pambansa (B.P.) Blg. 129, as amended, the MeTC
had
exclusive
original
jurisdiction
over
actions
involving title to or possession of real property of small value.
Petitioners' Motion for Reconsideration of said Order dated July 4, 2002 was
denied.
Petitioners assailed the aforementioned Order by filing a petition
for certiorari with the Regional Trial Court (RTC) of Quezon City, Branch
[5]
87. However, in its Decision dated March 10, 2003, the RTC dismissed the
petition, finding no grave abuse of discretion on the part of the MeTC Presiding
Judge. The RTC sustained the MeTC ruling, stating that, in accordance with Section
33(3) of Republic Act (R.A.) No. 7691, amending B.P. Blg. 129, the MeTC had
jurisdiction over the complaint for Accion Reivindicatoria, as it involves recovery of
ownership and possession of real property located in Quezon City, with an
[6]
assessed value not exceeding P50,000.00. A Motion for Reconsideration of the
[7]
Decision was filed by petitioners, but was denied in an Order dated July 3, 2003.
Petitioners then filed with the Court of Appeals another petition
for certiorari, insisting that both the MeTC and RTC acted with grave abuse of
discretion amounting to lack or excess of jurisdiction by not ordering the dismissal
of the complaint for Accion Reivindicatoria, for lack of jurisdiction over the
same. In the assailed CA Resolution dated September 15, 2003, the CA dismissed
the petition outright, holding that certiorari was not available to petitioners as they
should have availed themselves of the remedy of appeal. Petitioners' motion for
reconsideration of the resolution of dismissal was denied per
[8]
Resolution dated June 1, 2004.

Thus, petitioners filed the instant petition and, in support thereof, they allege that:

THE HONORABLE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR IN (SIC) EXCESS OF JURISDICTION IN DENYING THE
PETITION FOR CERTIORARI AND FOR FAILURE TO RESOLVE THE ISSUE RAISED IN
THE CERTIORARI REGARDING THE JURISDICTION OF THE METROPOLITAN TRIAL
COURT TO TAKE COGNIZANCE OF A CASE OF ACCION REINVINDICATORIA.
THE HONORABLE PUBLIC RESPONDENT FATIMA GONZALES-ASDALA, AS PRESIDING
JUDGE OF RTC BRANCH 87, QUEZON CITY, ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR IN EXCESS OF (SIC) JURISDICTION IN
DISMISSING THE PETITION FOR CERTIORARI AND IN RESOLVING THAT A CASE
OFACCION REINVINDICATORIA IS WITHIN THE JURISDICTION OF THE
METROPOLITAN TRIAL COURT.
THE HONORABLE PUBLIC RESPONDENT MANUEL TARO AS PRESIDING JUDGE
MeTC, BRANCH 42, QUEZON CITY, ACTED WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN (SIC) EXCESS OF JURISDICTION IN SO TAKING
COGNIZANCE OF THE COMPLAINT FOR ACCION REINVINDICATORIA IN CIVIL CASE
NO. 27434 ENTITLED, HEIRS OF SPS. APOLONIO V. DIONISIO AND VALERIANA
[9]
DIONISIO, ETC. VS. ANA DE GUIA SAN PEDRO, ET. AL.

and certiorari are

mutually
exclusive,
not
alternative
or
successive. Hence, certiorari is not and cannot be a substitute for a lost
appeal, especially if one's own negligence or error in one's choice of remedy
occasioned such loss or lapse. One of the requisites of certiorari is that there be no
available appeal or any plain, speedy and adequate remedy. Where an appeal was
available, as in this case, certiorariwill not prosper, even if the ground therefor is
grave abuse of discretion. Petitioner's resort to this Court by Petition
for Certiorari was a fatal procedural error, and the instant petition must, therefore,
[11]
fail.
For the very same reason given above, the CA, therefore, acted properly when it
dismissed the petition for certiorari outright, on the ground that petitioners should
have resorted to the remedy of appeal instead of certiorari. Verily, the present
Petition for Certiorari should not have been given due course at all.
Moreover, since the period for petitioners to file a petition for review
on certiorari had lapsed by the time the instant petition was filed, the assailed CA
Resolutions have attained finality.
Nevertheless, just to put the matter to rest, the Court reiterates the ruling in Heirs
[12]
of Valeriano S. Concha, Sr. v. Spouses Lumocso,
to wit:
In a number of cases, we have held that actions for reconveyance of or for
cancellation of title to or to quiet title over real property are actions that fall under
the classification of cases that involve title to, or possession of, real property, or
any interest therein.
xxxx

The present Petition for Certiorari is doomed and should not have been
entertained from the very beginning.
The settled rule is that appeals from judgments or final orders or resolutions of the
CA should be by a verified petition for review on certiorari, as provided for under
Rule 45 of the Revised Rules of Civil Procedure. Thus, in Pasiona, Jr. v. Court of
[10]
Appeals, the Court expounded as follows:
The aggrieved party is proscribed from assailing a decision or final order of the CA
via Rule 65, because such recourse is proper only if the party has no plain, speedy
and adequate remedy in the course of law. In this case, petitioner had an
adequate remedy, namely, a petition for review on certiorari under Rule 45 of
the Rules of Court. A petition for review oncertiorari, not a special civil action
for certiorari was, therefore, the correct remedy.
xxxx
Settled is the rule that where appeal is available to the aggrieved party, the special
civil action for certiorari will not be entertained remedies of appeal

x x x Thus, under the old law, there was no substantial effect on jurisdiction
whether a case is one, the subject matter of which was incapable of pecuniary
estimation, under Section 19(1) of B.P. 129, or one involving title to property under
Section 19(2). The distinction between the two classes became crucial with the
amendment introduced by R.A. No. 7691 in 1994, which expanded the exclusive
original jurisdiction of the first level courts to include "all civil actions which involve
title to, or possession of, real property, or any interest therein where the assessed
value of the property or interest therein does not exceed Twenty thousand pesos
(P20,000.00) or, in civil actions in Metro Manila, where such assessed value does
not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses and costs." Thus, under the
present law, original jurisdiction over cases the subject matter of which involves
"title to, possession of, real property or any interest therein" under Section 19(2)
of B.P. 129 is divided between the first and second level courts, with the assessed
value of the real property involved as the benchmark. This amendment was
introduced to "unclog the overloaded dockets of the RTCs which would result in
[13]
the speedier administration of justice."

Clearly, the RTC and the CA ruled correctly that the MeTC had jurisdiction over
private respondents' complaint for Accion Reivindicatoria.
IN VIEW OF THE FOREGOING, the petition is DISMISSED for utter lack of
merit. The Resolutions of the Court of Appeals in CA-G.R. SP No. 78978,
datedSeptember 15, 2003 and June 1, 2004, are AFFIRMED.
SO ORDERED.

SECOND DIVISION
G.R. No. 174908, June 17, 2013
DARMA MASLAG, Petitioner, v. AND ELIZABETH MONZON, WILLIAM GESTON,
REGISTRY
OF
DEEDS
OF
BENGUET, Respondents.
DECISION
DEL CASTILLO, J.:
"It is incumbent upon x x x appellants to utilize the correct mode of appeal of the
decisions of trial courts to the appellate courts. In the mistaken choice of their
1
remedy,
they
can
blame
no
one
but
themselves."
2

This is a Petition for Review on Certiorari of the May 31, 2006 Resolution of the
Court of Appeals (CA) in CA-G.R. CV No. 83365, which dismissed petitioner Darma
Maslags (petitioner) ordinary appeal to it for being an improper remedy. The
Resolution disposed of the case as follows:cralavvonlinelawlibrary
WHEREFORE, the Motion to Dismiss is GRANTED, and the Appeal is
herebyDISMISSED.
4

SO ORDERED. nadcralavvonlinelawlibrary
5

The Petition also assails the CAs September 22, 2006 Resolution denying
6
petitioners
Motion
for
Reconsideration.

SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction.
x
x
x
If the case was tried on the merits by the lower court without jurisdiction over the
subject matter, the Regional Trial Court on appeal shall not dismiss the case if it
has original jurisdiction thereof, but shall decide the case in accordance with the
preceding section, without prejudice to the admission of amended pleadings and
additional evidence in the interest of justice.
11

Both parties acknowledged receipt of the October 22, 2003 Order, but neither
presented additional evidence before the new judge, Edgardo B. Diaz De Rivera, Jr.
12
(Judge
Diaz
De
Rivera).
13

On May 4, 2004, Judge Diaz De Rivera issued a Resolution reversing the MTC
Decision. The falloreads as follows:cralavvonlinelawlibrary
WHEREFORE, the Judgment appealed from the Municipal Trial Court of La
Trinidad, Benguet is set aside. [Petitioner] is ordered to turn over the possession
of the 4,415 square meter land she presently occupies to [Monzon]. This case
is remanded to the court a quo for further proceedings to determine whether
[Maslag] is entitled to the remedies afforded by law to a builder in good faith for
the
improvements
she
constructed
thereon.
No

Factual

pronouncement

Antecedents
7

In 1998, petitioner filed a Complaint for reconveyance of real property with

declaration of nullity of original certificate of title (OCT) against respondents
Elizabeth Monzon (Monzon), William Geston and the Registry of Deeds of La
Trinidad, Benguet. The Complaint was filed before the Municipal Trial Court (MTC)
of
La
Trinidad,
Benguet.
After trial, the MTC found respondent Monzon guilty of fraud in obtaining an OCT
8
over petitioners property. It ordered her to reconvey the said property to
9
petitioner,
and
to
pay
damages
and
costs
of
suit.

SO ORDERED.

as

to

damages

and

costs.

14

15

Petitioner filed a Notice of Appeal from the RTCs May 4, 2004 Resolution.
Petitioner assailed the RTCs May 4, 2004 Resolution for reversing the MTCs
16
factual findings and prayed that the MTC Decision be adopted. Her prayer before
the CA reads:cralavvonlinelawlibrary
WHEREFORE, premises considered, it is most respectfully prayed that the decision
of the Regional Trial Court, Branch 10 of La Trinidad, Benguet, appealed from be
reversedin toto and that the Honorable Court adopt the decision of the Municipal
17
Trial Court. Further reliefs just and equitable under the premises are prayed for.

Respondents appealed to the Regional Trial Court (RTC) of La Trinidad, Benguet.

After going over the MTC records and the parties respective memoranda, the RTC
of La Trinidad, Benguet, Branch 10, through Acting Presiding Judge Fernando P.
10
Cabato (Judge Cabato), issued its October 22, 2003 Order, declaring the MTC
without jurisdiction over petitioners cause of action. It further held that it will
take cognizance of the case pursuant to Section 8, Rule 40 of the Rules of Court,
which reads:cralavvonlinelawlibrary

Respondents moved to dismiss petitioners ordinary appeal for being the improper
remedy. They asserted that the proper mode of appeal is a Petition for Review
under Rule 42 because the RTC rendered its May 4, 2004 Resolution in its appellate
18
jurisdiction.
Ruling

of

the

Court

of

Appeals

The CA dismissed petitioners appeal. It observed that the RTCs May 4, 2004

Resolution (the subject matter of the appeal before the CA) set aside an MTC
Judgment; hence, the proper remedy is a Petition for Review under Rule 42, and
19
not
an
ordinary
appeal.
20

Petitioner sought reconsideration. She argued, for the first time, that the RTC
rendered its May 4, 2004 Resolution in its original jurisdiction. She cited the earlier
October 22, 2003 Order of the RTC declaring the MTC without jurisdiction over the
case.
The CA denied petitioners Motion for Reconsideration in its September 22, 2006
21
Resolution:
A perusal of the May 4, 2004 Resolution of the RTC, which is the subject matter of
the appeal, clearly reveals that it took cognizance of the MTC case in the exercise
of its appellate jurisdiction. Consequently, as We have previously enunciated, the
proper remedy, is a petition for review under Rule 42 and not an ordinary appeal
under
Rule
41.
WHEREFORE, premises considered, the instant Motion for Reconsideration
is DENIED. The May 31, 2006 Resolution of this Court is hereby AFFIRMED in toto.
SO ORDERED.

22

Hence this Petition wherein petitioner prays that the CA be ordered to take
23
cognizance of her appeal.
Issues
Petitioner set forth the following issues in her Petition:cralavvonlinelawlibrary
WHETHER X X X THE COURT OF APPEALS WAS CORRECT IN DISMISSING THE
APPEAL FILED BY THE PETITIONER, CONSIDERING THAT THE REGIONAL TRIAL
COURT, BRANCH 10 OF LA TRINIDAD, BENGUET HELD THAT THE ORIGINAL
COMPLAINT AS FILED BEFORE THE MUNICIPAL TRIAL COURT OF LA TRINIDAD,
BENGUET WAS DECIDED BY THE LATTER WITHOUT ANY JURISDICTION AND, IN
ORDERING THAT THE CASE SHALL BE DECIDED PURSUANT TO THE PROVISION OF
SECTION 8 OF RULE 40 OF THE RULES OF COURT, IT DECIDED THE CASE NOT ON ITS
APPELLATE
JURISDICTION
BUT
ON
ITS
ORIGINAL
JURISDICTION
WHAT WILL BE THE EFFECT OF THE DECISION OF THE REGIONAL TRIAL COURT,
BRANCH 10 OF LA TRINIDAD, BENGUET, WHEN IT DECIDED A CASE APPEALED
BEFORE IT UNDER THE PROVISION OF SECTION 8, RULE 40 OF THE RULES OF
COURT OF THE PHILIPPINES, AS TO THE COURSE OF REMEDY THAT MAY BE
AVAILED OF BY THE PETITIONER A PETITION FOR REVIEW UNDER RULE 42 OR AN
24
ORDINARY APPEAL UNDER RULE 41. nadcralavvonlinelawlibrary
Our Ruling

In its October 22, 2003 Order, the RTC declared that the MTC has no jurisdiction
over the subject matter of the case based on the supposition that the same is
incapable of pecuniary estimation. Thus, following Section 8, Rule 40 of the Rules
of Court, it took cognizance of the case and directed the parties to adduce further
evidence if they so desire. The parties bowed to this ruling of the RTC and,
eventually, submitted the case for its decision after they had submitted their
respective
memoranda.
We cannot, however, gloss over this jurisdictional faux pas of the RTC. Since it
involves a question of jurisdiction, we may motu proprio review and pass upon the
25
same
even
at
this
late
stage
of
the
proceedings.
26

In her Complaint for reconveyance of real property with declaration of nullity of

OCT, petitioner claimed that she and her father had been in open, continuous,
notorious and exclusive possession of the disputed property since the 1940s. She
averred:cralavvonlinelawlibrary
7. Sometime in the year 1987, Elizabeth Monzon, the owner of the adjacent parcel
of land being occupied by plaintiff [Maslag], informed the plaintiff that the
respective parcels of land being claimed by them can now be titled. A suggestion
was, thereafter made, that those who were interested to have their lands titled,
will contribute to a common fund for the surveying and subsequent titling of the
land;chanroblesvirtualawlibrary
8. Since plaintiff had, for so long, yearned for a title to the land she occupies, she
contributed
to
the
amount
being
requested
by
Elizabeth
Monzon;chanroblesvirtualawlibrary
9. A subdivision survey was made and in the survey, the respective areas of the
plaintiff and the defendants were defined and delimited all for purposes of
titling.
x
x
x
10. But alas, despite the assurance of subdivided titles, when the title was finally
issued by the Registry of Deeds, the same was only in the name of Elizabeth
Monzon and WILLIAM GESTON. The name of Darma Maslag was fraudulently,
deliberately and in bad faith omitted. Thus, the title to the property, to the extent
of 18,295 square meters, was titled solely in the name of ELIZABETH MONZON.
As a relief, petitioner prayed that Monzon be ordered to reconvey the portion of
the property which she claimed was fraudulently included in Monzons title. Her
primary relief was to recover ownership of real property. Indubitably, petitioners
complaint involves title to real property. An action "involving title to real
property," on the other hand, was defined as an action where "the plaintiffs cause
of action is based on a claim that [she] owns such property or that [she] has the

legal rights to have exclusive control, possession, enjoyment, or disposition of the

27
same." Under the present state of the law, in cases involving title to real
property, original and exclusive jurisdiction belongs to either the RTC or the MTC,
28
depending on the assessed value of the subject property. Pertinent provisions of
29
Batas Pambansa Blg. (BP) 129, as amended by Republic Act (RA) No.
30
7691, provides:cralavvonlinelawlibrary
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive
original
jurisdiction:cralavvonlinelawlibrary
(1) In all civil actions in which the subject of the litigation is incapable of pecuniary
estimation;chanroblesvirtualawlibrary
(2) In all civil actions which involve the title to, or possession of, real property, or
any interest therein, where the assessed value of the property involved exceeds
Twenty thousand pesos (P20,000.00) or for civil actions in Metro Manila, where x x
x the [assessed] value [of the property] exceeds Fifty thousand pesos
([P]50,000.00) except actions for forcible entry into and unlawful detainer of lands
or buildings, original jurisdiction over which is conferred upon Metropolitan Trial
Courts,
Municipal
Trial
Courts,
and
Municipal
Circuit
Trial
Courts;chanroblesvirtualawlibrary
x

SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in Civil Cases. Metropolitan Trial Courts, Municipal
Trial Courts and Municipal Circuit Trial Courts shall exercise: x x x x
(3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed value of
the property or interest therein does not exceed Twenty thousand pesos
(P20,000.00) or, in civil actions in Metro Manila, where such assessed value does
not exceed Fifty thousand pesos (P50,000.00) x x x.
In the case at bench, annexed to the Complaint is a Declaration of Real
31
Property dated November 12, 1991, which was later marked as petitioners
32
Exhibit "A", showing that the disputed property has an assessed value of
33
P12,400 only. Such assessed value of the property is well within the jurisdiction
of the MTC. In fine, the RTC, thru Judge Cabato, erred in applying Section 19(1) of
BP 129 in determining which court has jurisdiction over the case and in
pronouncing that the MTC is divested of original and exclusive jurisdiction.
This brings to fore the next issue of whether the CA was correct in dismissing
petitioners
appeal.

Section 2, Rule 50 of the Rules of Court provides for the dismissal of an improper
appeal:cralavvonlinelawlibrary
SECTION 2. Dismissal of improper appeal to the Court of Appeals. An appeal
under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising
only questions of law shall be dismissed, issues purely of law not being reviewable
by said court. Similarly, an appeal by notice of appeal instead of by petition for
review from the appellate judgment of a Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the
appropriate court but shall be dismissed outright. (Emphasis supplied)
There are two modes of appealing an RTC decision or resolution on issues of fact
34
and law. The first mode is an ordinary appeal under Rule 41 in cases where the
RTC exercised its original jurisdiction. It is done by filing a Notice of Appeal with
the RTC. The second mode is a petition for review under Rule 42 in cases where
the RTC exercised its appellate jurisdiction over MTC decisions. It is done by filing a
Petition for Review with the CA. Simply put, the distinction between these two
modes of appeal lies in the type of jurisdiction exercised by the RTC in the Order or
Decision
being
appealed.
As discussed above, the MTC has original and exclusive jurisdiction over the subject
matter of the case; hence, there is no other way the RTC could have taken
cognizance of the case and review the court a quos Judgment except in the
exercise of its appellate jurisdiction. Besides, the new RTC Judge who penned the
May 4, 2004 Resolution, Judge Diaz de Rivera, actually treated the case as an
appeal despite the October 22, 2003 Order. He started his Resolution by stating,
"This is an appeal from the Judgment rendered by the Municipal Trial Court (MTC)
35
of La Trinidad Benguet" and then proceeded to discuss the merits of the
"appeal." In the dispositive portion of said Resolution, he reversed the MTCs
findings and conclusions and remanded residual issues for trial with the
36
MTC. Thus, in fact and in law, the RTC Resolution was a continuation of the
proceedings that originated from the MTC. It was a judgment issued by the RTC in
the exercise of its appellate jurisdiction. With regard to the RTCs earlier October
22, 2003 Order, the same should be disregarded for it produces no effect (other
than to confuse the parties whether the RTC was invested with original or
appellate jurisdiction). It cannot be overemphasized that jurisdiction over the
subject matter is conferred only by law and it is "not within the courts, let alone
37
the parties, to themselves determine or coveniently set aside." Neither would
the active participation of the parties nor estoppel operate to confer original and
exclusive jurisdiction where the court or tribunal only wields appellate jurisdiction
38
over the case.
Thus, the CA is correct in holding that the proper mode of appeal
should have been a Petition for Review under Rule 42 of the Rules of Court, and
not
an
ordinary
appeal
under
Rule
41.

Seeing the futility of arguing against what the RTC actually did, petitioner resorts to
arguing for what the RTC should have done. She maintains that the RTC should
have issued its May 4, 2004 Resolution in its original jurisdiction because it had
earlier ruled that the MTC had no jurisdiction over the cause of action.
Petitioners argument lacks merit. To reiterate, only statutes can confer
jurisdiction. Court issuances cannot seize or appropriate jurisdiction. It has been
repeatedly held that "any judgment, order or resolution issued without
39
[jurisdiction] is void and cannot be given any effect." By parity of reasoning, an
order issued by a court declaring that it has original and exclusive jurisdiction over
the subject matter of the case when under the law it has none cannot likewise be
given effect. It amounts to usurpation of jurisdiction which cannot be
countenanced. Since BP 129 already apportioned the jurisdiction of the MTC and
the RTC in cases involving title to property, neither the courts nor the petitioner
could alter or disregard the same. Besides, in determining the proper mode of
appeal from an RTC Decision or Resolution, the determinative factor is the type of
jurisdiction actually exercised by the RTC in rendering its Decision or
Resolution. Was it rendered by the RTC in the exercise of its original jurisdiction,
or in the exercise of its appellate jurisdiction? In short, we look at what type of
jurisdiction was actually exercised by the RTC. We do not look into what type of
jurisdiction the RTC should have exercised. This is but logical. Inquiring into what
the RTC should have done in disposing of the case is a question which already
involves the merits of the appeal, but we obviously cannot go into that where the
mode
of
appeal
was
improper
to
begin
with.
WHEREFORE, premises considered, the Petition for Review is DENIED for lack of
merit. The assailed May 31, 2006 and September 22, 2006 Resolutions of the
Court
of
Appeals
in
CA-G.R.
CV
No.
83365
are AFFIRMED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 72644 December 14, 1987
ALFREDO F. PRIMERO, petitioner,
vs.
INTERMEDIATE APPELLATE COURT and DM TRANSIT, respondents.

NARVASA, J.:
The question on which the petitioner's success in the instant appeal depends, and
to which he would have us give an affirmative answer, is whether or not, having
recovered separation pay by judgment of the Labor Arbiter which held that he
had been fired by respondent DM Transit Corporation without just cause he may
subsequently recover moral damages by action in a regular court, upon the theory
that the manner of his dismissal from employment was tortious and therefore his
cause of action was intrinsically civil in nature.
Petitioner Primero was discharged from his employment as bus driver of DM
Transit Corporation (hereafter, simply DM) in August, 1974 after having been
employed therein for over 6 years. The circumstances attendant upon that
dismissal are recounted by the Court of Appeals 1 as follows:
Undisputably, since August 1, 1974, appellee's bus dispatcher did
not assign any bus to be driven by appellant Primero. No reason
or cause was given by the dispatcher to appellant for not
assigning a bus to the latter for 23 days (pp. 6-14, 21-22, tsn, May
15, 1979).
Also, for 23 days, appellant was given a run-around from one
management official to another, pleading that he be allowed to
work as his family was in dire need of money and at the same
time inquiring (why) he was not allowed to work or drive a bus of
the company. Poor appellant did not only get negative results
but was given cold treatment, oftentimes evaded and given
confusing information, or ridiculed, humiliated, or sometimes

made to wait in the offices of some management personnel of

the appellee (pp. 2-29, tsn, May 15, 1979).
(The) General Manager and (the) Vice-President and Treasurer ...
wilfully and maliciously made said appellant ... seesaw or ... go
back and forth between them for not less than ten (10) times
within a period of 23 days ... but (he) got negative results from
both corporate officials. Worse, on the 23rd day of his ordeal
appellant was suddenly told by General Manager Briones to seek
employment with other bus companies because he was already
dismissed from his job with appellee (without having been) told
of the cause of his hasty and capricious dismissal ... (pp. 8, 11-13,
25, tsn, May 15, 1979).
Impelled to face the harsh necessities of life as a jobless person
and worried by his immediate need for money, appellant
pleaded with Corporate President Demetrio Munoz, Jr. for his
reinstatement and also asked P300.00 as financial assistance, but
the latter told the former that he (Munoz, Jr.) will not give him
even one centavo and that should appellant sue him in court,
then that will be the time President Munoz, Jr. will pay him, if
Munoz, Jr. loses the case x x (pp. 21-22, tsn, May 15, 1979).
Appellant also advised (the) President of the oppressive, antisocial and inhumane acts of subordinate officers ... (but) Munoz,
Jr. did nothing to resolve appellant's predicament and ... just told
the latter to go back ... to ... Briones, who insisted that appellant
seek employment with other bus firms in Metro Manila ... (but)
admitted that the appellant has not violated any company rule or
regulation ... (pp. 23-26, tsn, May 15, 1979).
... In pursuance (of) defendant's determination to oppress
plaintiff and cause further loss, irreparable injury, prejudice and
damage, (D.M. Transit) in bad faith and with malice persuaded
other firms (California Transit, Pascual Lines, De Dios Transit,
Negrita Corporation, and MD Transit) not to employ (appellant)
in any capacity after he was already unjustly dismissed by said
defendant ... (paragraph 8 of plaintiff's complaint).
These companies with whom appellant applied for a job called
up the D.M. Transit Office (which) ... told them ... that they
should not accept (appellant) because (he) was dismissed from
that Office.

Primero instituted proceedings against DM with the Labor Arbiters of the

Department of Labor, for illegal dismissal, and for recovery of back wages and
reinstatement. It is not clear from the record whether these proceedings consisted
of one or two actions separately filed. What is certain is that he withdrew his
claims for back wages and reinstatement, "with the end in view of filing a damage
suit" "in a civil court which has exclusive jurisdiction over his complaint for
damages on causes of action founded on tortious acts, breach of employment
2
contract ... and consequent effects (thereof ).
In any case, after due investigation, the Labor Arbiter rendered judgment dated
January 24, 1977 ordering DM to pay complainant Primero P2,000.00 as separation
3
pay in accordance with the Termination Pay Law. The judgment was affirmed by
the National Labor Relations Commission and later by the Secretary of Labor, the
4
case having been concluded at this level on March 3, 1978.
Under the provisions of the Labor Code in force at that time, Labor Arbiters had
jurisdiction inter alia over
1) claims involving non-payment or underpayment of wages,
overtime compensation, social security and medicare benefits,
and
2) all other cases or matters arising from employer-employee
5
relations, unless otherwise expressly excluded.
And we have since held that under these "broad and comprehensive" terms of the
law, Labor Arbiters possessed original jurisdiction over claims for moral and other
6
forms of damages in labor disputes.
The jurisdiction of Labor Arbiters over such claims was however removed by PD
1367, effective May 1, 1978, which explicitly provided that "Regional Directors
shall not indorse and Labor Arbiters shall not entertain claims for moral or other
7
forms of damages."
Some three months afterwards, Primero brought suit against DM in the Court of
First Instance of Rizal seeking recovery of damages caused not only by the breach
of his employment contract, but also by the oppressive and inhuman, and
consequently tortious, acts of his employer and its officers antecedent and
8
subsequent to his dismissal from employment without just cause.
While this action was pending in the CFI, the law governing the Labor Arbiters'
jurisdiction was once again revised. The amending act was PD 1691, effective May
1, 1980. It eliminated the restrictive clause placed by PD 1367, that Regional

Directors shall not indorse and Labor Arbiters entertain claims for moral or other
forms of damages. And, as we have had occasion to declare in several cases, it
restored the principle that "exclusive and original jurisdiction for damages would
once again be vested in labor arbiters;" eliminated "the rather thorny question as
to where in labor matters the dividing line is to be drawn between the power
lodged in an administrative body and a court;' " and, "in the interest of greater
promptness in the disposition of labor matters, ... spared (courts of) the often
onerous task of determining what essentially is a factual matter, namely, the
damages that may be incurred by either labor or management as a result of
disputes
or
controversies
arising
from
employer-employee
9
relations." Parenthetically, there was still another amendment of the provision in
question which, however, has no application to the case at bar. The amendment
was embodied in B.P. Blg. 227, effective June 1, 1982. 10
On August 11, 1980 the Trial Court rendered judgment dismissing the complaint on
the ground of lack of jurisdiction, for the reason that at the time that the complaint
was filed. on August 17, 1978, the law the Labor Code as amended by PD 1367,
eff. May 1, 1978 conferred exclusive, original jurisdiction over claims for moral
or other damages, not on ordinary courts, but on Labor Arbiters.
This judgment was affirmed by the Intermediate Appellate Court, by Decision
rendered on June 29, 1984. This is the judgment now subject of the present
petition for review on certiorari. The decision was reached by a vote of 3 to 2. The
dissenters, placing reliance on certain of our pronouncements, opined that
Primero's causes of action were cognizable by the courts, that existence of
employment relations was not alone decisive of the issue of jurisdiction, and that
such relations may indeed give rise to "civil" as distinguished from purely labor
disputes, as where an employer's right to dismiss his employee is exercised
tortiously, in a manner oppressive to labor, contrary to morals, good customs or
public policy. 11
Primero has appealed to us from this judgment of the IAC praying that we overturn
the majority view and sustain the dissent.
Going by the literal terms of the law, it would seem clear that at the time that
Primero filed his complaints for illegal dismissal and recovery of backwages, etc.
with the Labor Arbiter, the latter possessed original and exclusive jurisdiction also
over claims for moral and other forms of damages; this, in virtue of Article
265 12 of PD 442, otherwise known as the Labor Code, effective from May 1,
1974. In other words, in the proceedings before the Labor Arbiter, Primero plainly
had the right to plead and prosecute a claim not only for the reliefs specified by the
Labor Code itself for unlawful termination of employment, but also for moral or
other damages under the Civil Code arising from or connected with that

termination of employment. And this was the state of the law when he moved for
the dismissal of his claims before the Labor Arbiter, for reinstatement and recovery
of back wages, so that he might later file a damage suit "in a civil court which has
exclusive jurisdiction over his complaint ... founded on tortious acts, breach of
employment contract ... and consequent effects (thereof)." 13
The legislative intent appears clear to allow recovery in proceedings before Labor
Arbiters of moral and other forms of damages, in all cases or matters arising from
employer-employee relations. This would no doubt include, particularly, instances
where an employee has been unlawfully dismissed. In such a case the Labor
Arbiter has jurisdiction to award to the dismissed employee not only the reliefs
specifically provided by labor laws, but also moral and other forms of damages
governed by the Civil Code. Moral damages would be recoverable, for example,
where the dismissal of the employee was not only effected without authorized
cause and/or due process for which relief is granted by the Labor Code but was
attended by bad faith or fraud, or constituted an act oppressive to labor, or was
done in a manner contrary to morals, good customs or public policy 14 for
which the obtainable relief is determined by the Civil Code 15 (not the Labor Code).
Stated otherwise, if the evidence adduced by the employee before the Labor
Arbiter should establish that the employer did indeed terminate the employee's
services without just cause or without according him due process, the Labor
Arbiter's judgment shall be for the employer to reinstate the employee and pay
him his back wages or, exceptionally, for the employee simply to receive
separation pay. These are reliefs explicitly prescribed by the Labor Code. 16 But
any award of moral damages by the Labor Arbiter obviously cannot be based on
the Labor Code but should be grounded on the Civil Code. Such an award cannot be
justified solely upon the premise (otherwise sufficient for redress under the Labor
Code) that the employer fired his employee without just cause or due process.
Additional facts must be pleaded and proven to warrant the grant of moral
damages under the Civil Code, these being, to repeat, that the act of dismissal was
attended by bad faith or fraud, or was oppressive to labor, or done in a manner
contrary to morals, good customs, or public policy; and, of course, that social
humiliation, wounded feelings, grave anxiety, etc., resulted therefrom. 17
It is clear that the question of the legality of the act of dismissal is intimately
related to the issue of the legality ofthe manner by which that act of dismissal was
performed. But while the Labor Code treats of the nature of, and the remedy
available as regards the first the employee's separation from employment it
does not at all deal with the second the manner of that separation which is
governed exclusively by the Civil Code. In addressing the first issue, the Labor
Arbiter applies the Labor Code; in addressing the second, the Civil Code. And this
appears to be the plain and patent intendment of the law. For apart from the
reliefs expressly set out in the Labor Code flowing from illegal dismissal from

employment, no other damages may be awarded to an illegally dismissed

employee other than those specified by the Civil Code. Hence, the fact that the
issue-of whether or not moral or other damages were suffered by an employee
and in the affirmative, the amount that should properly be awarded to him in the
circumstances-is determined under the provisions of the Civil Code and not the
Labor Code, obviously was not meant to create a cause of action independent of
that for illegal dismissal and thus place the matter beyond the Labor Arbiter's
jurisdiction.
Thus, an employee who has been illegally dismissed (i.e., discharged without just
cause or being accorded due process), in such a manner as to cause him to suffer
moral damages (as determined by the Civil Code), has a cause of action for
reinstatement and recovery of back wages and damages. When he institutes
proceedings before the Labor Arbiter, he should make a claim for all said reliefs. He
cannot, to be sure, be permitted to prosecute his claims piecemeal. He cannot
institute proceedings separately and contemporaneously in a court of justice upon
the same cause of action or a part thereof. He cannot and should not be allowed to
sue in two forums: one, before the Labor Arbiter for reinstatement and recovery of
back wages, or for separation pay, upon the theory that his dismissal was illegal;
and two, before a court of justice for recovery of moral and other damages, upon
the theory that the manner of his dismissal was unduly injurious, or tortious. This is
what in procedural law is known as splitting causes of action, engendering
multiplicity of actions. It is against such mischiefs that the Labor Code amendments
just discussed are evidently directed, and it is such duplicity which the Rules of
Court regard as ground for abatement or dismissal of actions, constituting
either litis pendentia (auter action pendant) or res adjudicata, as the case may
be. 18 But this was precisely what Primero's counsel did. He split Primero's cause
of action; and he made one of the split parts the subject of a cause of action before
a court of justice. Consequently, the judgment of the Labor Arbiter granting
Primero separation pay operated as a bar to his subsequent action for the recovery
of damages before the Court of First Instance under the doctrine of res judicata,
The rule is that the prior "judgment or order is, with respect to the matter directly
adjudged or as to any other matter that could have been raised in relation thereto,
conclusive between the parties and their successors in interest by title subsequent
to the commencement of the action or special proceeding, litigating for the same
thing and under the same title and in the same capacity. 19
We are not unmindful of our previous rulings on the matter cited in the dissent to
the decision of the Court of Appeals subject of the instant
20
petition, notably, Quisaba v. Sta Ines-Melale Veneer & Plywood Inc., where a
distinction was drawn between the right of the employer to dismiss an employee,
which was declared to be within the competence of labor agencies to pass upon,
and the "manner in which the right was exercised and the effects flowing

therefrom," declared to be a matter cognizable only by the regular courts because

21
"intrinsically civil." We opine that it is this very distinction which the law has
22
sought to eradicate as being so tenuous and so difficult to observe, and, of
course, as herein pointed out, as giving rise to split jurisdiction, or to multiplicity of
23
actions, "a situation obnoxious to the orderly administration of justice. Actually
we merely reiterate in this decision the doctrine already laid down in other cases
(Garcia v. Martinez, 84 SCRA 577; Ebon v. de Guzman, 13 SCRA 52; Bengzon v.
Inciong, 91 SCRA 248; Pepsi-Cola Bottling Co. v. Martinez, 112 SCRA 578; Aguda v.
Vallejos, 113 SCRA 69; Getz v. C.A., 116 SCRA 86; Cardinal Industries v. Vallejos,
114 SCRA 471; Sagmit v. Sibulo, 133 SCRA 359) to the effect that the grant of
jurisdiction to the Labor Arbiter by Article 217 of the Labor Code is sufficiently
comprehensive to include claims for moral and exemplary damages sought to be
recovered from an employer by an employee upon the theory of his illegal
dismissal. Rulings to the contrary are deemed abandoned or modified accordingly.
WHEREFORE, the petition is DISMISSED, without pronouncement as to costs.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

Enterprises to reinstate complainants and remunerate them overtime-pay and

emergency allowance.
Private respondents and M.E. Veloso Enterprises filed a motion for reconsideration
(Annex F, Petition, pp. 15-18,Rollo) of the order of October 20, 1976. On December
6, 1976, the Regional Director issued an order (Annex G, Petition, p. 19, Rollo)
setting aside the order of October 20, 1976 and reopening the case for the
reception of additional evidence.

G.R. No. 70174 February 9, 1993

JOSE TIPAIT, SUBSTITUTED BY JOEL S. TIPAIT, MONTANO S. TIPAIT, JOSE S.
TIPAIT, HELEN S. TIPAIT, EVELYN S. TIPAIT and BEATRIZ S. TIPAIT, petitioners,
vs.
HON. JUAN Y. REYES, REGIONAL TRIAL COURT JUDGE, 7th JUDICIAL REGION AND
SPOUSES ANGEL C. VELOSO AND MILAGROS ESCANO VELOSO, respondents.
Virgilio U. Lapinid for petitioners.
Felipe S. Velasquez for private respondents.

MELO, J.:
This refers to a petition for certiorari to annul all orders issued by respondent
judge in Civil Case No. R-20975 of the then Court of First Instance (now Regional
Trial Court) of Cebu. On March 27, 1985, this Court issued a resolution considering
the spouses Angel C. Veloso and Milagros Escano Veloso impleaded as respondents
(p. 45, Rollo).
The record reveals the following antecedent facts:
On October 7, 1976, laborers Faustino Garbo, Certerio Garbo, Arcenio Alum,
Genaro Requizo, Expedito Armenteros, William Campana, and Ramos Faura filed a
complaint (p. 12, Rollo), docketed a TFU Case No. 536 of the Regional Office No. VII
of the Department of Labor, Cebu City, for illegal dismissal or reinstatement with
backwages, living allowance, and overtime pay against M.E. Veloso Enterprises
and/or Milagros Escano Veloso and/or Angel Veloso.
On October 20, 1976, Regional Director Francisco Armado issued an order (Annex
E, Petition, pp. 13-14, Rollo) against private respondents and M.E. Veloso

After the parties had submitted their evidence, the Regional Director issued an
order dated February 3, 1977 (Annex H, Petition, pp. 20-22, Rollo) reiterating his
previous order directing respondents therein to reinstate the complainants and to
pay them overtime pay and emergency allowance. Respondents appealed to the
Minister of Labor. On October 18, 1979, the Minister of Labor rendered a decision
(Annex C, Petition, pp. 9-11, Rollo) dismissing the appeal. Private respondents filed
a motion for reconsideration which was denied by the Minister of Labor in an
order dated July 1, 1981. A second motion for reconsideration was filed by private
respondents and said second motion for reconsideration was denied by the Deputy
Minister, by authority of the Minister, in an order dated January 25, 1985 (Annex 3,
Private Respondents' Comment, p. 71, Rollo). In said order the Deputy Minister
directed the issuance of a writ of execution.
Private respondents appealed to the Office of the President. On August 18, 1985,
Presidential Assistant for Legal Affairs Manuel Lazaro, by authority of the
President, issued an order denying the appeal (p. 108, Rollo).
In the meantime, on August 18, 1981, the Office of the Minister of Labor
remanded the record of the case to the Regional Director for execution and/or
appropriate action (Answer of Regional Director, Annex J of Petition. p. 34,Rollo).
On September 18, 1981, the Regional Director issued a writ of execution (Annex B,
Petition, p. 8, Rollo) and a notice of auction sale was issued by the Provincial Sheriff
involving 4 parcels of land with improvements (Annex 6, Respondents' Comment,
pp. 74-75, Rollo). At the auction sale, the highest bidder was petitioner herein who
paid the amount of P100,000.00 to the Deputy Sheriff and the latter issued a
certificate of sale dated December 19, 1981 (Annex A, Respondents' Comment, pp.
83-84, Rollo).
On September 28, 1981, private respondents filed a complaint docketed as Civil
Case No. R-20975 of the Court of First Instance of Cebu (Annex I of Petition, pp. 2330, Rollo) for prohibition, praying that the Provincial Sheriff or his deputies be
restrained from enforcing or implementing the writ of execution issued in TFU
Case No. 536 and that said writ of execution be annulled. On June 11, 1982,

respondent judge issued an order (Annex A of Petition, pp. 6-7, Rollo) nullifying the
public auction sale and the Certificate of Sale.
Hence, petitioner (now substituted by his heirs, Resolution of March 8, 1989, p.
171, Rollo) filed the present petition, contending that respondent court has no
jurisdiction over Civil Case No. R-20975.

WHEREFORE, respondent court is hereby ordered to DISMISS Civil Case No. R20975 for lack of jurisdiction and all orders previously issued therein are hereby
ANNULLED and SET ASIDE.
Costs against private respondents.
SO ORDERED.

The petition is impressed with merit.

It is readily apparent that respondent court has no jurisdiction over Civil Case No.
R-20975 whose subject-matter is an incident of a labor case. Actually, said civil
case is in the nature of a motion to quash the writ of execution issued in TFU Case
No. 536, a labor case over which the Regional Director of the Department of Labor
has original and exclusive jurisdiction (Article 217, Labor Code of the Philippines, as
amended, Policy Instructions No. 6 of the Minister of Labor). This Court in a similar
case held:
A perusal of the petition for damages and prohibition filed by
Saulog Transit, Inc. in the lower court reveals that basically, what
was being questioned was the legality or propriety of the alias
writ of execution dated March 1, 1985, as well as the acts
performed by the Ministry officials in implementing the same. In
other words, the petition was actually in the nature of a motion
to quash the writ; and with respect to the acts of the Ministry
officials, a case growing out of a labor dispute, as the acts
complained of, were perpetrated during the execution of a
decision of the then Minister of Labor and Employment. However
characterized, jurisdiction over the petition pertains to the Labor
Ministry, now Department and not the regular courts. This
conclusion is evident, not only from the provisions of Article 224
[b] of the Labor Code, but also of Article 218, as amended by
Batas Pambansa Blg. 227 in connection with Article 255 of the
same Code. (Pucan vs. Bengzon, 155 SCRA 692, 699 [1987]).
The proper remedy that private respondents should have taken, instead of
instituting Civil Case No. R-20975, was to file the necessary petition or motion
before the Secretary of Labor who has the power and authority to take any
measure under existing laws to ensure compliance with the decisions, orders and
awards of the Department of Labor. Despite the finality of the decision of the
Regional Director, the Secretary of Labor retains control over its execution and
implementation (Pucan vs. Bengzon, supra).

automatically be owned by the Lessor (petitioners) upon the

4
expiration/termination of the contract; the lease agreement was terminated by
petitioners in November, 1980 due to non-payment of rentals by Inductocast
5
Cebu; thereafter, petitioners took actual possession of and occupied the Tipolo
properties. Petitioners likewise alleged in their Complaint that they became aware
of the labor dispute involving Inductocast only after the impugned public auction
6
sale.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

Atty. Danilo Pilapil, claiming to be the John Doe named in the Complaint, filed a
motion to dismiss on the ground that the trial court had no jurisdiction over the
case. The buyers of the Tipolo properties, as intervenors, also filed a motion to
dismiss on the same ground. Both motions, which were opposed by petitioners,
were denied.

G.R. No. 92598 May 20, 1994

PURIFICACION Y. MANLIGUEZ, ANTONINA Y. LUIS and BENJAMIN C.
YBANEZ, petitioners,
vs.
THE COURT OF APPEALS, ET AL., respondents.

The intervenors, however, moved for reconsideration of the denial. In an Order

dated April 18, 1989, the trial court granted the motion and dismissed Civil Case
No. Ceb-6917. It held that the civil case "is actually in the nature of a quashal of the
levy and the certificate of sale, a case arising out of a dispute that was instituted by
the previous employees of Inductocast before the Department of Labor and
7
Employment, Region 7." Citing Pucan vs.Bengzon, 155 SCRA 692 (1987), it held it
had no jurisdiction over the case since the levy and sale "are connected with the
case within the exclusive jurisdiction of the Department of Labor and
8
Employment."

Rufino L. Remoreras for petitioners.

Danilo L. Pilapil for private respondents.

PUNO, J.:
1

This is an appeal by certiorari from the Decision of the Court of Appeals, dated
November 16, 1989, denying due course to and dismissing the petition in CA-G.R.
2
SP NO. 18017.

Petitioners questioned the dismissal of their Complaint to the respondent Court of

9
Appeals, through a petition forcertiorari and preliminary injunction. The appellate
court, in its impugned Decision, denied the petition as it held:

The case at bench finds its roots in the Decision of the Department of Labor and
Employment (Region VII), ordering Inductocast Cebu, a partnership based in
Mandaue City, to pay its former employees a total of P232,908.00. As a
consequence of the judgment, the labor department's regional sheriff levied the
buildings and improvements standing on Lot 109, Plan 11-5121-Amd., at Tipolo,
Mandaue City. The levied properties (hereinafter referred to as the "Tipolo
properties") were subsequently sold at public auction to said employees.

To Our minds, the issue on what forum the case must be tried or
heard is a settled one. The Department of Labor is the agency
upon which devolves the jurisdiction over disputes emanating
from and in relation with labor controversies to the exclusion of
the regular courts.

On May 25, 1988, petitioners filed with the RTC of Cebu City, 7th Judicial Branch, a
3
Complaint which sought the lifting of the levy over, and annulment of the sale of,
the Tipolo properties. The Complaint was docketed as Civil Case No. Ceb-6917, and
raffled to Branch 8 of the trial court. Petitioners therein alleged that: they are the
owners of the Lot 109; they entered into a lease agreement with Inductocast Cebu
over Lot 109; the lease contract provided that, except for machineries and
equipment, all improvements introduced in the leased premises shall

The issue in the case at bar concerns the levy of a property in

pursuance to a writ of execution, arising out of labor disputes.
There can be no doubt that jurisdiction pertains to the
Department of Labor.
xxx xxx xxx
In the light of the factual antecedents and incidents that
transpired in the hearing of this case at bar, the (trial court)

correctly ruled that indeed the Department of Labor has

jurisdiction over the case. Consequently, WE see no abuse of
discretion let alone a grave one, amounting to lack or in excess of
its jurisdiction correctible with a writ of certiorari.

jurisdiction over which is conferred upon Metropolitan Trial

Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts;

Indeed, the issue of granting or denying a motion to dismiss is

addressed to the sound discretion of the court, and in the
absence of a capricious and whimsical exercise of
power, certiorari will not lie.

The action taken by petitioners before the RTC asserting their ownership over the
levied properties is mandated by Section 17, Rule 39 of the Revised Rules of Court.
Time and again, we have held that:

Thus, this appeal where petitioners contend:

THE RESPONDENT APPELLATE COURT ERRED IN
HOLDING THAT THE DEPARTMENT OF LABOR
HAS JURISDICTION ON THE SUBJECT MATTER
AND NATURE OF THE CASE AS AGAINST THE
CIVIL COURT.
We find merit in the appeal. Firstly, respondent court erred in holding that the trial
court does not have jurisdiction over the case filed by petitioners. It is at once
evident that the Civil Case No. Ceb-6917 is not a labor case. No employeremployee relationship exists between petitioners and the other parties, and no
issue is involved which may be resolved by reference to the Labor Code, other
labor statutes, or any collective bargaining agreement. Neither can we characterize
petitioner's action before the trial court as arising out of a labor dispute. It was not
brought to reverse or modify the judgment of the Department of Labor and
Employment (DOLE). Neither did it question the validity of, or pray for, the quashal
of the writ of execution against Inductocast.
What is to be litigated in Civil Case No. Ceb-6917 is the issue of ownership over the
Tipolo properties. Clearly, it is the RTC and not the labor department which can
take cognizance of the case, as provided by B.P. Blg. 129 ("An Act Reorganizing the
Judiciary, Appropriating Funds Therefor, and For Other Purposes"), thus:
Sec. 19. Jurisdiction in civil case. Regional Trial Courts shall
exercise exclusive original jurisdiction:
xxx xxx xxx
(2) In all civil actions which involve the title to, or possession of
real property, or any interest therein, except actions for forcible
entry into and unlawful detainer of lands or buildings, original

xxx xxx xxx

Under Section 17, Rule 39, a third person who claims property
levied upon on execution may vindicate such claim by action. . . .
The right of a person who claims to be the owner of property
levied upon on execution to file a third-party claim with the
sheriff is not exclusive, and he may file an action to vindicate his
claim even if the judgment creditor files an indemnity bond in
favor of the sheriff to answer for any damages that may be
suffered by the third-party claimant. By "action", as stated in the
10
Rule, what is meant is a separate and independent action.
Secondly, it is incorrect to argue that the trial court cannot take cognizance of Civil
Case No. Ceb-6917 without interfering with the writ of attachment and writ of
execution of a co-equal body. It is settled that the levy and sale of property by
virtue of a writ of attachment is lawful only when the levied property indubitably
belongs to the defendant. If property other than those of the defendant is
attached and sold by the sheriff, he acts beyond the limits of his and the court's
11
authority. In this regard, we held in the case of Uy, Jr. vs. Court of Appeals, 191
SCRA 275 (1991) that:
The main issue in this case is whether or not properties levied
and seized by virtue of a writ of attachment and later by a writ of
execution, were under custodia legis and therefore not subject to
the jurisdiction of another co-equal court where a third party
claimant claimed ownership of the same properties.
The issue has long been laid to rest in the case of Manila Herald
Publishing Co., Inc. v. Ramos (88 Phil. 94 [1951]) where the Court
ruled that while it is true that property in custody of the law may
not be interfered with, without the permission of the proper
court, this rule is confined to cases where the property belongs
to the defendant or one in which the defendant has proprietary
interests. But when the Sheriff, acting beyond the bounds of his
office seizes a stranger's property, the rule does not apply and

interference with his custody is not interference with another

court's order of attachment.

Apparently, Saulog Transit, Inc. was misled by its own prayer for
actual, moral and exemplary damages. It believed that such
additional cause of action could clothe the petition with the
mantle of a regular action cognizable by the regular courts. It
was, of course, mistaken for the fact remains that the acts
complained of are mere incidents of a labor dispute. Such prayer
therefore did not alter the complexion of the case as one arising
from a labor dispute, but was subsumed by the nature of the
main case, over which the regular courts had no jurisdiction,
much less the power to issue a temporary or permanent
12
injunction or restraining order. . . .

Also, in the more recent case of Santos vs. Bayhon, 199 SCRA 525 (1991), we
stated, viz.:
The general rule that no court has the power to interfere by
injunction with the judgments or decrees of another court with
concurrent or coordinate jurisdiction possessing equal power to
grant injunctive relief, applies only when no third-party claimant
is involved. . . . When a third party, or stranger to the action,
asserts a claim over the property levied upon, the claimant may
vindicate his claim by an independent action in the proper civil
court which may stop the execution of the judgment on property
not belonging to the judgment debtor (Citations omitted.)
Finally, it must be noted that the Pucan case relied upon by respondent court is
inapplicable to the case at bench which involves a third-party claim over property
levied on execution. In Pucan, we enjoined the Regional Trial Court from acting on
the petition for damages and prohibition against the enforcement of the writ of
execution issued by the NCR director of the then Ministry of Labor and
Employment in a labor case for the following reason:
A perusal of the petition for damages and prohibition filed by
Saulog Transit, Inc., in the lower court reveals that basically, what
was being questioned was the legality or propriety of the alias
writ of execution dated March 1, 1985, as well as the acts
performed by the Ministry officials in implementing the same. In
other words, the petition was actually in the nature of a motion
to quash the writ; and with respect to the acts of the Ministry
officials, a case growing out of a labor dispute, as the acts
complained of, were perpetrated during the execution of a
decision of the then Minister of Labor and Employment. However
characterized, jurisdiction over the petition pertains to the Labor
Ministry, now Department and not the regular courts. This
conclusion is evident, not only from the provisions of Article
224(b)
of
the
Labor
Code,
but
also
of
Article 218, as amended by Batas Pambansa Blg. 227 in
connection with Article 255 of the same Code.
xxx xxx xxx

In fine, we prohibited the action before the trial court in Pucan because it attacked
the regularity of the issuance of the alias writ of execution in the labor case, which
is but an incident of the labor dispute. This is not so in the case at bench where the
civil case filed by petitioners does not even collaterally attack the validity of the
DOLE's writ of attachment. On the contrary, petitioners in Civil Case No. Ceb-6917
pray for the trial court's ruling that the DOLE's judgment could not be validly
executed on the Tipolo properties, which allegedly do not belong to Inductocast.
IN VIEW WHEREOF, the petition for review is GRANTED. The Decision of the Court
of Appeals in CA-G.R. SP No. 18017, dated November 16, 1989, is REVERSED and
SET ASIDE. The Regional Trial Court of Cebu City, Branch 8 is ordered to try Civil
Case Ceb-6917 on its merit. No costs.
SO ORDERED.

SECOND DIVISION
[G.R. NO. 147874 : July 17, 2006]
DOLORES GAYOSO, DANNY GAYOSO, ELIZABETH G. DONDRIANO, VICTORIANO
GAYOSO, CHRISTOPHER GAYOSO, REMEDIOS GAYOSO and THE HEIRS OF
VICTORIANO GAYOSO, Petitioners, v. TWENTY-TWO REALTY DEVELOPMENT
CORPORATION, Respondent.
DECISION

WHEREFORE, the Court renders judgment:

A. Ordering the defendants
1. and all other persons claiming rights under them to vacate the premises located
at Mariveles corner Calbayog Streets, Mandaluyong City, and to surrender the
possession of the same to the plaintiff;
2. to pay the plaintiff the amount of P4,000.00 representing their unpaid rentals
beginning February 1981 to December 1996 and the amount of P20.00 per month
every month thereafter until the premises shall have been vacated;

SANDOVAL-GUTIERREZ, J.:
For our resolution is the instant Petition for Review on Certiorari assailing the
1
Decision of the Court of Appeals dated April 20, 2001 in CA-G.R. SP No. 48001.

3. to pay the plaintiff the amount of P10,000.00 as and by way of attorney's fees;
andcralawlibrary
4. to pay the costs of suit.

This case stemmed from a Complaint for Ejectment filed by Twenty-Two Realty
Development Corporation (TTRDC), respondent, on December 12, 1996 with the
Metropolitan Trial Court (MeTC), Branch 60, Mandaluyong City against the abovenamed petitioners. The complaint, docketed as Civil Case No. 15340, alleges that
on October 11, 1954, Victoriano Gayoso (now deceased) sold to Prospero Almeda
a lot located on Mariveles corner Calbayog Streets, Mandaluyong City. After the
sale, Almeda allowed Gayoso and his children, herein petitioners, to stay on the
property as lessees, payingP20.00 a month. Later, Almeda's heirs sold the lot to
respondent TTRDC. Thus, on February 19, 1996, the title to the property was
transferred in the name of respondent corporation.
However, petitioners have stopped paying rentals. Respondent then sent letters
dated September 12 and October 17, 1996 to petitioners demanding that they
vacate the premises, but they refused to do so. This prompted respondent to file
with the MeTC a complaint for illegal detainer against them.
In their answer, petitioners denied specifically TTRDC's allegations in its complaint.
They claimed that the MeTC has no jurisdiction over the case since in their answer
they are raising an issue of ownership. They alleged that their father, the late
Victoriano Gayoso, sold the lot (a conjugal property) to Almeda without the
consent of their mother. The sale, being void, Almeda could not have transferred
ownership of the lot to respondent corporation.
On July 21, 1997, the MeTC rendered its Decision, the dispositive portion of which
reads:

B. dismissing the counterclaim.

SO ORDERED.
The MeTC ruled that since petitioners failed to pay rentals for more than three
months, then respondent has the right to evict them from the premises.
On appeal, the Regional Trial Court (RTC), Branch 213, Mandaluyong City, affirmed
the MeTC Decision, holding that the refusal of petitioners to vacate the property
and pay the rents make out a clear case of unlawful detainer over which the MeTC
has jurisdiction.
Petitioners then filed with the Court of Appeals a Petition for Review under Rule 42
of the 1997 Rules of Civil Procedure, as amended.
In its Decision dated April 20, 2001, the Court of Appeals affirmed in toto the RTC
Decision, thus:
WHEREFORE, the petition is hereby DISMISSED. The decision of the Regional Trial
Court affirming the decision of the Metropolitan Trial Court, National Capital
Judicial Region, Mandaluyong City, Branch 60, is hereby AFFIRMED IN TOTO.
SO ORDERED.
Hence, the instant petition.

Petitioners contend that since the issue of ownership of the property in dispute is
inextricably linked with the issue of possession, the MeTC has no jurisdiction over
Civil Case No. 15340.
For its part, respondent maintains that the real issue is who between the parties is
entitled to possession. Hence, the MeTC has jurisdiction to hear and decide the
case.
We find for the respondent.
It is basic that a court's jurisdiction is provided by law. Section 33 of Batas
Pambansa Blg. 129, as amended, provides in part:
SEC. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts, and
Municipal Circuit Trial Courts in Civil Cases. - Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts shall exercise:
xxx
(2) Exclusive original jurisdiction over cases of forcible entry and unlawful
detainer: Provided, That when, in such cases, the defendant raises the question of
ownership in his pleadings and the question of possession cannot be resolved
without deciding the question of ownership, the issue of ownership shall be
resolved only to determine the issue of possession; (Emphasis
supplied)cralawlibrary
Moreover, Section 18, Rule 70 of the 1997 Rules of Civil Procedure, as amended,
states that:
SEC. 18. Judgment conclusive only on possession, not conclusive in actions involving
title or ownership. - The judgment rendered in an action for forcible entry or
detainer shall be conclusive with respect to the possession only and shall in no
wise bind the title or affect the ownership of the land or building. Such judgment
shall not bar an action between the same parties respecting title to the land or
building.
The judgment or final order shall be appealable to the appropriate Regional Trial
Court which shall decide the same on the basis of the entire record of the
proceedings had in the court of origin and such memoranda and/or briefs as may
be submitted by the parties or required by the Regional Trial Court.
2

In Barba v. Court of Appeals, this Court held:

The Court has repeatedly emphasized that municipal trial courts, metropolitan trial
courts, and municipal circuit trial courts now retain jurisdiction over ejectment
cases if the question of possession cannot be resolved without passing upon the
issue of ownership. In forcible entry and unlawful detainer cases, even if the
defendant raises the question of ownership in his pleadings and the question of
possession cannot be resolved without deciding the issue of ownership, inferior
courts, nonetheless, have the undoubted competence to provisionally resolve the
issue of ownership for the sole purpose of determining the issue of possession.
Such decision, however, does not bind the title or affect the ownership of the land
or building, neither shall it bar an action between the same parties respecting title
to the land or building nor be held conclusive of the facts therein found in a case
between the same parties upon a different cause of action involving possession.
Likewise, in Tala Realty Services Corporation v. Banco Filipino Savings and
3
Mortgage Bank, this Court ruled:
All ejectment cases are covered by the Rule on Summary Procedure and are within
the jurisdiction of the inferior courts regardless of whether they involve questions
of ownership. The courts in ejectment cases may determine questions of
ownership whenever necessary to decide the question of possession.
Verily, we hold that the Court of Appeals did not err in holding that the MeTC of
Mandaluyong City has jurisdiction to hear and decide Civil Case No. 15340,
notwithstanding the issue of ownership raised by petitioners in their answer.
WHEREFORE, we DENY the petition. The Decision of the Court of Appeals dated
April 20, 2001 in CA-G.R. SP No. 48001 is AFFIRMED. Costs against petitioners.
SO ORDERED.