1.

THIRD DIVISION
[G.R. NO. 171124 : February 13, 2008]
ALEJANDRO NG WEE, Petitioner, v. MANUEL TANKIANSEE, Respondent.
DECISION
NACHURA, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court assailing the September 14, 2005 Decision 1 of the Court of
Appeals (CA) in CA-G.R. SP No. 90130 and its January 6, 2006
Resolution2 denying the motion for reconsideration thereof.
The facts are undisputed. Petitioner Alejandro Ng Wee, a valued client of
Westmont Bank (now United Overseas Bank), made several money
placements totaling P210,595,991.62 with the bank's affiliate, Westmont
Investment Corporation (Wincorp), a domestic entity engaged in the
business of an investment house with the authority and license to extend
credit.3
Sometime in February 2000, petitioner received disturbing news on
Wincorp's financial condition prompting him to inquire about and investigate
the company's operations and transactions with its borrowers. He then
discovered that the company extended a loan equal to his total money
placement to a corporation [Power Merge] with a subscribed capital of
only P37.5M. This credit facility originated from another loan of about P1.5B
extended by Wincorp to another corporation [Hottick Holdings]. When the
latter defaulted in its obligation, Wincorp instituted a case against it and its
surety. Settlement was, however, reached in which Hottick's president, Luis
Juan L. Virata (Virata), assumed the obligation of the surety.4
Under the scheme agreed upon by Wincorp and Hottick's president,
petitioner's money placements were transferred without his knowledge and
consent to the loan account of Power Merge through an agreement that
virtually freed the latter of any liability. Allegedly, through the false
representations of Wincorp and its officers and directors, petitioner was
enticed to roll over his placements so that Wincorp could loan the same to
Virata/Power Merge.5
1

Finding that Virata purportedly used Power Merge as a conduit and connived
with Wincorp's officers and directors to fraudulently obtain for his benefit
without any intention of paying the said placements, petitioner instituted, on
October 19, 2000, Civil Case No. 00-99006 for damages with the Regional
Trial Court (RTC) of Manila.6 One of the defendants impleaded in the
complaint is herein respondent Manuel Tankiansee, Vice-Chairman and
Director of Wincorp.7
On October 26, 2000, on the basis of the allegations in the complaint and the
October 12, 2000 Affidavit8 of petitioner, the trial court ordered the issuance
of a writ of preliminary attachment against the properties not exempt from
execution of all the defendants in the civil case subject, among others, to
petitioner's filing of a P50M-bond.9 The writ was, consequently, issued on
November 6, 2000.10
Arguing that the writ was improperly issued and that the bond furnished was
grossly insufficient, respondent, on December 22, 2000, moved for the
discharge of the attachment.11 The other defendants likewise filed similar
motions.12 On October 23, 2001, the RTC, in an Omnibus Order, 13 denied all
the motions for the discharge of the attachment. The defendants, including
respondent herein, filed their respective motions for reconsideration 14 but the
trial court denied the same on October 14, 2002.15
Incidentally, while respondent opted not to question anymore the said
orders, his co-defendants, Virata and UEM-MARA Philippines Corporation
(UEM-MARA), assailed the same via certiorari under Rule 65 before the CA
[docketed as CA-G.R. SP No. 74610]. The appellate court, however, denied
the certiorari petition on August 21, 2003,16 and the motion for
reconsideration thereof on March 16, 2004. 17 In a Petition for Review
onCertiorari before this Court, in G.R. No. 162928, we denied the petition
and affirmed the CA rulings on May 19, 2004 for Virata's and UEM-MARA's
failure to sufficiently show that the appellate court committed any reversible
error.18 We subsequently denied the petition with finality on August 23,
2004.19
On September 30, 2004, respondent filed before the trial court another
Motion to Discharge Attachment,20 re-pleading the grounds he raised in his
first motion but raising the following additional grounds: (1) that he was not
present in Wincorp's board meetings approving the questionable
transactions;21 and (2) that he could not have connived with Wincorp and the
2

other defendants because he and Pearlbank Securities, Inc., in which he is a

major stockholder, filed cases against the company as they were also
victimized by its fraudulent schemes.22
Ruling that the grounds raised were already passed upon by it in the previous
orders affirmed by the CA and this Court, and that the additional grounds
were respondent's affirmative defenses that properly pertained to the merits
of the case, the trial court denied the motion in its January 6, 2005 Order.23
With the denial of its motion for reconsideration, 24 respondent filed
a certiorari petition before the CA docketed as CA-G.R. SP No. 90130. On
September 14, 2005, the appellate court rendered the assailed
Decision25 reversing and setting aside the aforementioned orders of the trial
court and lifting the November 6, 2000 Writ of Preliminary Attachment 26to
the extent that it concerned respondent's properties. Petitioner moved for
the reconsideration of the said ruling, but the CA denied the same in its
January 6, 2006 Resolution.27
Thus, petitioner filed the instant petition on the following grounds:
A. IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS SHOULD
NOT HAVE GIVEN DUE COURSE TO THE PETITION FOR CERTIORARI FILED BY
RESPONDENT, SINCE IT MERELY RAISED ERRORS IN JUDGMENT, WHICH,
UNDER PREVAILING JURISPRUDENCE, ARE NOT THE PROPER SUBJECTS OF A
WRIT OF CERTIORARI.
B. MOREOVER, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF
APPEALS COMMITTED SERIOUS LEGAL ERROR IN RESOLVING FAVORABLY THE
GROUNDS ALLEGED BY RESPONDENT IN HIS PETITION AND (SIC) LIFTING THE
WRIT OF PRELIMINARY ATTACHMENT, SINCE THESE GROUNDS ALREADY
RELATE TO THE MERITS OF CIVIL CASE NO. 00-99006 WHICH, UNDER
PREVAILING JURISPRUDENCE, CANNOT BE USED AS BASIS (SIC) FOR
DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT.
C. LIKEWISE, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS
ERRED IN SUSTAINING THE ERRORS IN JUDGMENT ALLEGED BY
RESPONDENT, NOT ONLY BECAUSE THESE ARE BELIED BY THE VERY
DOCUMENTS HE SUBMITTED AS PROOF OF SUCH ERRORS, BUT ALSO
BECAUSE THESE HAD EARLIER BEEN RESOLVED WITH FINALITY BY THE
LOWER COURT.28
3

For his part, respondent counters, among others, that the general and
sweeping allegation of fraud against respondent in petitioner's affidavitrespondent as an officer and director of Wincorp allegedly connived with the
other defendants to defraud petitioner-is not sufficient basis for the trial
court to order the attachment of respondent's properties. Nowhere in the
said affidavit does petitioner mention the name of respondent and any
specific act committed by the latter to defraud the former. A writ of
attachment can only be granted on concrete and specific grounds and not on
general averments quoting perfunctorily the words of the Rules. Connivance
cannot also be based on mere association but must be particularly alleged
and established as a fact. Respondent further contends that the trial court, in
resolving the Motion to Discharge Attachment, need not actually delve into
the merits of the case. All that the court has to examine are the allegations
in the complaint and the supporting affidavit. Petitioner cannot also rely on
the decisions of the appellate court in CA-G.R. SP No. 74610 and this Court in
G.R. No. 162928 to support his claim because respondent is not a party to
the said cases.29
We agree with respondent's contentions and deny the petition.
In the case at bench, the basis of petitioner's application for the issuance of
the writ of preliminary attachment against the properties of respondent is
Section 1(d) of Rule 57 of the Rules of Court which pertinently reads:
Section 1. Grounds upon which attachment may issue. - At the
commencement of the action or at any time before entry of judgment, a
plaintiff or any proper party may have the property of the adverse party
attached as security for the satisfaction of any judgment that may be
recovered in the following cases:
xxx
(d) In an action against a party who has been guilty of a fraud in contracting
the debt or incurring the obligation upon which the action is brought, or in
the performance thereof.
For a writ of attachment to issue under this rule, the applicant must
sufficiently show the factual circumstances of the alleged fraud because
fraudulent intent cannot be inferred from the debtor's mere non-payment of
the debt or failure to comply with his obligation. 30The applicant must then be
able to demonstrate that the debtor has intended to defraud the
4

creditor.31 In Liberty Insurance

explained as follows:

Corporation

v.

Court

of

Appeals,32 we

To sustain an attachment on this ground, it must be shown that the debtor in

contracting the debt or incurring the obligation intended to defraud the
creditor. The fraud must relate to the execution of the agreement and must
have been the reason which induced the other party into giving consent
which he would not have otherwise given. To constitute a ground for
attachment in Section 1 (d), Rule 57 of the Rules of Court, fraud should be
committed upon contracting the obligation sued upon. A debt is fraudulently
contracted if at the time of contracting it the debtor has a preconceived plan
or intention not to pay, as it is in this case. Fraud is a state of mind and need
not be proved by direct evidence but may be inferred from the circumstances
attendant in each case.33
In the instant case, petitioner's October 12, 2000 Affidavit 34 is bereft of any
factual statement that respondent committed a fraud. The affidavit narrated
only the alleged fraudulent transaction between Wincorp and Virata and/or
Power Merge, which, by the way, explains why this Court, in G.R. No. 162928,
affirmed the writ of attachment issued against the latter. As to the
participation of respondent in the said transaction, the affidavit merely states
that respondent, an officer and director of Wincorp, connived with the other
defendants in the civil case to defraud petitioner of his money placements.
No other factual averment or circumstance details how respondent
committed a fraud or how he connived with the other defendants to commit
a fraud in the transaction sued upon. In other words, petitioner has not
shown any specific act or deed to support the allegation that respondent is
guilty of fraud.
The affidavit, being the foundation of the writ, 35 must contain such
particulars as to how the fraud imputed to respondent was committed for the
court to decide whether or not to issue the writ. 36 Absent any statement of
other factual circumstances to show that respondent, at the time of
contracting the obligation, had a preconceived plan or intention not to pay,
or without any showing of how respondent committed the alleged fraud, the
general averment in the affidavit that respondent is an officer and director of
Wincorp who allegedly connived with the other defendants to commit a
fraud, is insufficient to support the issuance of a writ of preliminary
attachment.37 In the application for the writ under the said ground,
compelling is the need to give a hint about what constituted the fraud and
5

how it was perpetrated38 because established is the rule that fraud is never
presumed.39Verily, the mere fact that respondent is an officer and director of
the company does not necessarily give rise to the inference that he
committed a fraud or that he connived with the other defendants to commit
a fraud. While under certain circumstances, courts may treat a corporation
as a mere aggroupment of persons, to whom liability will directly attach, this
is only done when the wrongdoing has been clearly and convincingly
established.40
Let it be stressed that the provisional remedy of preliminary attachment is
harsh and rigorous for it exposes the debtor to humiliation and
annoyance.41 The rules governing its issuance are, therefore, strictly
construed against the applicant,42 such that if the requisites for its grant are
not shown to be all present, the court shall refrain from issuing it, for,
otherwise, the court which issues it acts in excess of its
jurisdiction.43 Likewise, the writ should not be abused to cause unnecessary
prejudice. If it is wrongfully issued on the basis of false or insufficient
allegations, it should at once be corrected.44
Considering, therefore, that, in this case, petitioner has not fully satisfied the
legal obligation to show the specific acts constitutive of the alleged fraud
committed by respondent, the trial court acted in excess of its jurisdiction
when it issued the writ of preliminary attachment against the properties of
respondent.
We are not unmindful of the rule enunciated in G.B. Inc., etc. v. Sanchez, et
al.,45 that
[t]he merits of the main action are not triable in a motion to discharge an
attachment otherwise an applicant for the dissolution could force a trial of
the merits of the case on his motion.46
However, the principle finds no application here because petitioner has not
yet fulfilled the requirements set by the Rules of Court for the issuance of the
writ against the properties of respondent.47 The evil sought to be prevented
by the said ruling will not arise, because the propriety or impropriety of the
issuance of the writ in this case can be determined by simply reading the
complaint and the affidavit in support of the application.
Furthermore, our ruling in G.R. No. 162928, to the effect that the writ of
attachment is properly issued insofar as it concerns the properties of Virata
6

and UEM-MARA, does not affect respondent herein, for, as correctly ruled by
the CA, respondent is "never a party thereto."48 Also, he is not in the same
situation as Virata and UEM-MARA since, as aforesaid, while petitioner's
affidavit detailed the alleged fraudulent scheme perpetrated by Virata and/or
Power Merge, only a general allegation of fraud was made against
respondent.
We state, in closing, that our ruling herein deals only with the writ of
preliminary attachment issued against the properties of respondent-it does
not concern the other parties in the civil case, nor affect the trial court's
resolution on the merits of the aforesaid civil case.
WHEREFORE, premises considered, the petition is DENIED. The September
14, 2005 Decision and the January 6, 2006 Resolution of the Court of Appeals
in CA-G.R. SP No. 90130 are AFFIRMED.
SO ORDERED.

2. THIRD DIVISION
[G.R. No. 125027. August 12, 2002.]
ANITA MANGILA, Petitioner, v. COURT OF APPEALS and LORETA
GUINA, Respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari under Rule 45 of the Rules of Court,
seeking to set aside the Decision 1 of the Court of Appeals affirming the
Decision 2 of the Regional Trial Court, Branch 108, Pasay City. The trial court
upheld the writ of attachment and the declaration of default on petitioner
while ordering her to pay private respondent P109,376.95 plus 18 percent
interest per annum, 25 percent attorneys fees and costs of suit.chanrob1es
virtua1 1aw 1ibrary
The Facts
Petitioner Anita Mangila ("petitioner" for brevity) is an exporter of sea foods
7

and doing business under the name and style of Seafoods Products. Private
respondent Loreta Guina ("private respondent" for brevity) is the President
and General Manager of Air Swift International, a single registered
proprietorship
engaged
in
the
freight
forwarding
business.
Sometime in January 1988, petitioner contracted the freight forwarding
services of private respondent for shipment of petitioners products, such as
crabs, prawns and assorted fishes, to Guam (USA) where petitioner
maintains an outlet. Petitioner agreed to pay private respondent cash on
delivery. Private respondents invoice stipulates a charge of 18 percent
interest per annum on all overdue accounts. In case of suit, the same invoice
stipulates attorneys fees equivalent to 25 percent of the amount due plus
costs
of
suit.
3
On the first shipment, petitioner requested for seven days within which to
pay private Respondent. However, for the next three shipments, March 17,
24 and 31, 1988, petitioner failed to pay private respondent shipping
charges
amounting
to
P109,376.95.
4
Despite several demands, petitioner never paid private Respondent. Thus, on
June 10, 1988, private respondent filed Civil Case No. 5875 before the
Regional Trial Court of Pasay City for collection of sum of money.chanrob1es
virtua1
1aw
1ibrary
On August 1, 1988, the sheriff filed his Sheriffs Return showing that
summons was not served on petitioner. A woman found at petitioners house
informed the sheriff that petitioner transferred her residence to Sto. Nio,
Guagua, Pampanga. The sheriff found out further that petitioner had left the
Philippines
for
Guam.
5
Thus, on September 13, 1988, construing petitioners departure from the
Philippines as done with intent to defraud her creditors, private respondent
filed a Motion for Preliminary Attachment. On September 26, 1988, the trial
court issued an Order of Preliminary Attachment 6 against petitioner. The
following day, the trial court issued a Writ of Preliminary Attachment.
The trial court granted the request of its sheriff for assistance from their
counterparts in RTC, Pampanga. Thus, on October 28, 1988, Sheriff Alfredo
San Miguel of RTC Pampanga served on petitioners household help in San
Fernando, Pampanga, the Notice of Levy with the Order, Affidavit and Bond.
7
On November 7, 1988, petitioner filed an Urgent Motion to Discharge
Attachment 8 without submitting herself to the jurisdiction of the trial court.
She pointed out that up to then, she had not been served a copy of the
Complaint and the summons. Hence, petitioner claimed the court had not
8

acquired

jurisdiction

over

her

person.

In the hearing of the Urgent Motion to Discharge Attachment on November

11, 1988, private respondent sought and was granted a re-setting to
December 9, 1988. On that date, private respondents counsel did not
appear, so the Urgent Motion to Discharge Attachment was deemed
submitted
for
resolution.
10
The trial court granted the Motion to Discharge Attachment on January 13,
1989 upon filing of petitioners counter-bond. The trial court, however, did
not rule on the question of jurisdiction and on the validity of the writ of
preliminary
attachment.
On December 26, 1988, private respondent applied for an alias summons,
which the trial court issued on January 19, 1989. 11 It was only on January
26, 1989 that summons was finally served on petitioner. 12
On February 9, 1989, petitioner filed a Motion to Dismiss the Complaint on
the ground of improper venue. Private respondents invoice for the freight
forwarding service stipulates that "if court litigation becomes necessary to
enforce collection . . . the agreed venue for such action is Makati, Metro
Manila." 13 Private respondent filed an Opposition asserting that although
"Makati" appears as the stipulated venue, the same was merely an
inadvertence by the printing press whose general manager executed an
affidavit 14 admitting such inadvertence. Moreover, private respondent
claimed that petitioner knew that private respondent was holding office in
Pasay City and not in Makati. 15 The lower court, finding credence in private
respondents assertion, denied the Motion to Dismiss and gave petitioner five
days to file her Answer. Petitioner filed a Motion for Reconsideration but this
too
was
denied.chanrob1es
virtua1
1aw
1ibrary
Petitioner filed her Answer 16 on June 16, 1989, maintaining her contention
that
the
venue
was
improperly
laid.
On June 26, 1989, the trial court issued an Order setting the pre-trial for July
18, 1989 at 8:30 a.m. and requiring the parties to submit their pre-trial
briefs. Meanwhile, private respondent filed a Motion to Sell Attached
Properties
but
the
trial
court
denied
the
motion.
On motion of petitioner, the trial court issued an Order resetting the pre-trial
from
July
18,
1989
to
August
24,
1989
at
8:30
a.m..
On August 24, 1989, the day of the pre-trial, the trial court issued an Order
17 terminating the pre-trial and allowing the private respondent to present
evidence ex-parte on September 12, 1989 at 8:30 a.m. The Order stated that
when the case was called for pre-trial at 8:31 a.m., only the counsel for
9

private respondent appeared. Upon the trial courts second call 20 minutes
later, petitioners counsel was still nowhere to be found. Thus, upon motion
of private respondent, the pre-trial was considered terminated.
On September 12, 1989, petitioner filed her Motion for Reconsideration of
the Order terminating the pre-trial. Petitioner explained that her counsel
arrived 5 minutes after the second call, as shown by the transcript of
stenographic notes, and was late because of heavy traffic. Petitioner claims
that the lower court erred in allowing private respondent to present evidence
ex-parte since there was no Order considering the petitioner as in default.
Petitioner contends that the Order of August 24, 1989 did not state that
petitioner was declared as in default but still the court allowed private
respondent
to
present
evidence
ex-parte.
18
On October 6, 1989, the trial court denied the Motion for Reconsideration
and scheduled the presentation of private respondents evidence ex-parte on
October
10,
1989.chanrob1es
virtua1
1aw
1ibrary
On October 10, 1989, petitioner filed an Omnibus Motion stating that the
presentation of evidence ex-parte should be suspended because there was
no declaration of petitioner as in default and petitioners counsel was not
absent,
but
merely
late.
On October 18, 1989, the trial court denied the Omnibus Motion. 19
On November 20, 1989, the petitioner received a copy of the Decision of
November 10, 1989, ordering petitioner to pay respondent P109,376.95 plus
18 percent interest per annum, 25 percent attorneys fees and costs of suit.
Private respondent filed a Motion for Execution Pending Appeal but the trial
court
denied
the
same.
The

Ruling

of

the

Court

of

Appeals

On December 15, 1995, the Court of Appeals rendered a decision affirming

the decision of the trial court. The Court of Appeals upheld the validity of the
issuance of the writ of attachment and sustained the filing of the action in
the RTC of Pasay. The Court of Appeals also affirmed the declaration of
default on petitioner and concluded that the trial court did not commit any
reversible
error.
Petitioner filed a Motion for Reconsideration on January 5, 1996 but the Court
of Appeals denied the same in a Resolution dated May 20, 1996.
Hence, this petition.
The Issues
10

The issues raised by petitioner may be re-stated as follows:chanrob1es

virtual 1aw library
I.

WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF

ATTACHMENT WAS IMPROPERLY-ISSUED AND SERVED;
II. WHETHER THERE WAS A VALID DECLARATION OF DEFAULT;
III. WHETHER THERE WAS IMPROPER VENUE.
IV. WHETHER RESPONDENT COURT ERRED IN DECLARING THAT PETITIONER
IS OBLIGED TO PAY P109,376.95, PLUS ATTORNEYS FEES. 20
The Ruling of the Court
Improper Issuance and Service of Writ of Attachment
Petitioner ascribes several errors to the issuance and implementation of the
writ of attachment. Among petitioners arguments are: first, there was no
ground for the issuance of the writ since the intent to defraud her creditors
had not been established; second, the value of the properties levied
exceeded the value of private respondents claim. However, the crux of
petitioners arguments rests on the question of the validity of the writ of
attachment. Because of failure to serve summons on her before or
simultaneously with the writs implementation, petitioner claims that the trial
court had not acquired jurisdiction over her person and thus the service of
the writ is void.
As a preliminary note, a distinction should be made between issuance and
implementation of the writ of attachment. It is necessary to distinguish
between the two to determine when jurisdiction over the person of the
defendant should be acquired to validly implement the writ. This distinction
is crucial in resolving whether there is merit in petitioners
argument.chanrob1es virtua1 1aw 1ibrary
This Court has long settled the issue of when jurisdiction over the person of
the defendant should be acquired in cases where a party resorts to
provisional remedies. A party to a suit may, at any time after filing the
complaint, avail of the provisional remedies under the Rules of Court.
Specifically, Rule 57 on preliminary attachment speaks of the grant of the
remedy "at the commencement of the action or at anytime thereafter." 21
This phrase refers to the date of filing of the complaint which is the moment
that marks "the commencement of the action." The reference plainly is to a
time before summons is served on the defendant, or even before summons
issues.
11

In Davao Light & Power Co., Inc. v. Court of Appeals, 22 this Court clarified
the actual time when jurisdiction should be had:jgc:chanrobles.com.ph
"It goes without saying that whatever be the acts done by the Court prior to
the acquisition of jurisdiction over the person of defendant issuance of
summons, order of attachment and writ of attachment these do not and
cannot bind and affect the defendant until and unless jurisdiction over his
person is eventually obtained by the court, either by service on him of
summons or other coercive process or his voluntary submission to the
courts authority. Hence, when the sheriff or other proper officer commences
implementation of the writ of attachment, it is essential that he serve on the
defendant not only a copy of the applicants affidavit and attachment bond,
and of the order of attachment, as explicitly required by Section 5 of Rule 57,
but also the summons addressed to said defendant as well as a copy of the
complaint . . ." (Emphasis supplied.)
Furthermore, we have held that the grant of the provisional remedy of
attachment involves three stages: first, the court issues the order granting
the application; second, the writ of attachment issues pursuant to the order
granting the writ; and third, the writ is implemented. For the initial two
stages, it is not necessary that jurisdiction over the person of the defendant
be first obtained. However, once the implementation of the writ commences,
the court must have acquired jurisdiction over the defendant for without
such jurisdiction, the court has no power and authority to act in any manner
against the defendant. Any order issuing from the Court will not bind the
defendant. 23
In the instant case, the Writ of Preliminary Attachment was issued on
September 27, 1988 and implemented on October 28, 1988. However, the
alias summons was served only on January 26, 1989 or almost three months
after the implementation of the writ of attachment.
The trial court had the authority to issue the Writ of Attachment on
September 27 since a motion for its issuance can be filed "at the
commencement of the action." However, on the day the writ was
implemented, the trial court should have, previously or simultaneously with
the implementation of the writ, acquired jurisdiction over the petitioner. Yet,
as was shown in the records of the case, the summons was actually served
on petitioner several months after the writ had been
implemented.chanrob1es virtua1 1aw 1ibrary
Private respondent, nevertheless, claims that the prior or contemporaneous
service of summons contemplated in Section 5 of Rule 57 provides for
exceptions. Among such exceptions are "where the summons could not be
served personally or by substituted service despite diligent efforts or where
the defendant is a resident temporarily absent therefrom . . ." Private
12

respondent asserts that when she commenced this action, she tried to serve
summons on petitioner but the latter could not be located at her customary
address in Kamuning, Quezon City or at her new address in Guagua,
Pampanga. 24 Furthermore, respondent claims that petitioner was not even
in Pampanga; rather, she was in Guam purportedly on a business trip.
Private respondent never showed that she effected substituted service on
petitioner after her personal service failed. Likewise, if it were true that
private respondent could not ascertain the whereabouts of petitioner after a
diligent inquiry, still she had some other recourse under the Rules of Civil
Procedure.
The rules provide for certain remedies in cases where personal service could
not be effected on a party. Section 14, Rule 14 of the Rules of Court provides
that whenever the defendants "whereabouts are unknown and cannot be
ascertained by diligent inquiry, service may, by leave of court, be effected
upon him by publication in a newspaper of general circulation . . ." Thus, if
petitioners whereabouts could not be ascertained after the sheriff had
served the summons at her given address, then respondent could have
immediately asked the court for service of summons by publication on
petitioner.25cralaw:red
Moreover, as private respondent also claims that petitioner was abroad at
the time of the service of summons, this made petitioner a resident who is
temporarily out of the country. This is the exact situation contemplated in
Section 16, 26 Rule 14 of the Rules of Civil Procedure, providing for service of
summons by publication.
In conclusion, we hold that the alias summons belatedly served on petitioner
cannot be deemed to have cured the fatal defect in the enforcement of the
writ. The trial court cannot enforce such a coercive process on petitioner
without first obtaining jurisdiction over her person. The preliminary writ of
attachment must be served after or simultaneous with the service of
summons on the defendant whether by personal service, substituted service
or by publication as warranted by the circumstances of the case. 27 The
subsequent service of summons does not confer a retroactive acquisition of
jurisdiction over her person because the law does not allow for retroactivity
of a belated service.chanrobles.com.ph : red
Improper Venue
Petitioner assails the filing of this case in the RTC of Pasay and points to a
provision in private respondents invoice which contains the
following:jgc:chanrobles.com.ph
"3. If court litigation becomes necessary to enforce collection, an additional
13

equivalent (sic) to 25% of the principal amount will be charged. The agreed
venue for such action is Makati, Metro Manila, Philippines." 28
Based on this provision, petitioner contends that the action should have been
instituted in the RTC of Makati and to do otherwise would be a ground for the
dismissal of the case.
We resolve to dismiss the case on the ground of improper venue but not for
the reason stated by petitioner.
The Rules of Court provide that parties to an action may agree in writing on
the venue on which an action should be brought. 29 However, a mere
stipulation on the venue of an action is not enough to preclude parties from
bringing a case in other venues. 30 The parties must be able to show that
such stipulation is exclusive. Thus, absent words that show the parties
intention to restrict the filing of a suit in a particular place, courts will allow
the filing of a case in any venue, as long as jurisdictional requirements are
followed. Venue stipulations in a contract, while considered valid and
enforceable, do not as a rule supersede the general rule set forth in Rule 4 of
the Revised Rules of Court. 31 In the absence of qualifying or restrictive
words, they should be considered merely as an agreement on additional
forum, not as limiting venue to the specified place. 32
In the instant case, the stipulation does not limit the venue exclusively to
Makati. There are no qualifying or restrictive words in the invoice that would
evince the intention of the parties that Makati is the "only or exclusive"
venue where the action could be instituted. We therefore agree with private
respondent that Makati is not the only venue where this case could be filed.
Nevertheless, we hold that Pasay is not the proper venue for this case.
Under the 1997 Rules of Civil Procedure, the general rule is venue in personal
actions is "where the defendant or any of the defendants resides or may be
found, or where the plaintiff or any of the plaintiffs resides, at the election of
the plaintiff." 33 The exception to this rule is when the parties agree on an
exclusive venue other than the places mentioned in the rules. But, as we
have discussed, this exception is not applicable in this case. Hence, following
the general rule, the instant case may be brought in the place of residence of
the plaintiff or defendant, at the election of the plaintiff (private respondent
herein).chanrob1es virtua1 1aw 1ibrary
In the instant case, the residence of private respondent (plaintiff in the lower
court) was not alleged in the complaint. Rather, what was alleged was the
postal address of her sole proprietorship, Air Swift International. It was only
when private respondent testified in court, after petitioner was declared in
default, that she mentioned her residence to be in Better Living Subdivision,
14

Paraaque City.
In the earlier case of Sy v. Tyson Enterprises, Inc., 34 the reverse happened.
The plaintiff in that case was Tyson Enterprises, Inc., a corporation owned
and managed by Dominador Ti. The complaint, however, did not allege the
office or place of business of the corporation, which was in Binondo, Manila.
What was alleged was the residence of Dominador Ti, who lived in San Juan,
Rizal. The case was filed in the Court of First Instance of Rizal, Pasig. The
Court there held that the evident purpose of alleging the address of the
corporations president and manager was to justify the filing of the suit in
Rizal, Pasig instead of in Manila. Thus, the Court ruled that there was no
question that venue was improperly laid in that case and held that the place
of business of Tyson Enterprises, Inc. is considered as its residence for
purposes of venue. Furthermore, the Court held that the residence of its
president is not the residence of the corporation because a corporation has a
personality separate and distinct from that of its officers and stockholders.
In the instant case, it was established in the lower court that petitioner
resides in San Fernando, Pampanga 35 while private respondent resides in
Paraaque City. 36 However, this case was brought in Pasay City, where the
business of private respondent is found. This would have been permissible
had private respondents business been a corporation, just like the case in Sy
v. Tyson Enterprises, Inc. However, as admitted by private respondent in her
Complaint 37 in the lower court, her business is a sole proprietorship, and as
such, does not have a separate juridical personality that could enable it to
file a suit in court. 38 In fact, there is no law authorizing sole proprietorships
to file a suit in court. 39
A sole proprietorship does not possess a juridical personality separate and
distinct from the personality of the owner of the enterprise. 40 The law
merely recognizes the existence of a sole proprietorship as a form of
business organization conducted for profit by a single individual and requires
its proprietor or owner to secure licenses and permits, register its business
name, and pay taxes to the national government. 41 The law does not vest a
separate legal personality on the sole proprietorship or empower it to file or
defend an action in court. 42
Thus, not being vested with legal personality to file this case, the sole
proprietorship is not the plaintiff in this case but rather Loreta Guina in her
personal capacity. In fact, the complaint in the lower court acknowledges in
its caption that the plaintiff and defendant are Loreta Guina and Anita
Mangila, respectively. The title of the petition before us does not state, and
rightly so, Anita Mangila v. Air Swift International, but rather Anita Mangila v.
Loreta Guina. Logically then, it is the residence of private respondent Guina,
the proprietor with the juridical personality, which should be considered as
one of the proper venues for this case.
15

All these considered, private respondent should have filed this case either in
San Fernando, Pampanga (petitioners residence) or Paraaque (private
respondents residence). Since private respondent (complainant below) filed
this case in Pasay, we hold that the case should be dismissed on the ground
of improper venue.
Although petitioner filed an Urgent Motion to Discharge Attachment in the
lower court, petitioner expressly stated that she was filing the motion
without submitting to the jurisdiction of the court. At that time, petitioner
had not been served the summons and a copy of the complaint. 43
Thereafter, petitioner timely filed a Motion to Dismiss 44 on the ground of
improper venue. Rule 16, Section 1 of the Rules of Court provides that a
motion to dismiss may be filed" [W]ithin the time for but before filing the
answer to the complaint or pleading asserting a claim." Petitioner even
raised the issue of improper venue in his Answer 45 as a special and
affirmative defense. Petitioner also continued to raise the issue of improper
venue in her Petition for Review 46 before this Court. We thus hold that the
dismissal of this case on the ground of improper venue is warranted.
The rules on venue, like other procedural rules, are designed to insure a just
and orderly administration of justice or the impartial and evenhanded
determination of every action and proceeding. Obviously, this objective will
not be attained if the plaintiff is given unrestricted freedom to choose where
to file the complaint or petition. 47
We find no reason to rule on the other issues raised by petitioner.
WHEREFORE, the petition is GRANTED on the grounds of improper venue and
invalidity of the service of the writ of attachment. The decision of the Court
of Appeals and the order of respondent judge denying the motion to dismiss
are REVERSED and SET ASIDE. Civil Case No. 5875 is hereby dismissed
without prejudice to refiling it in the proper venue. The attached properties of
petitioner are ordered returned to her immediately.chanrob1es virtua1 1aw
1ibrary
SO ORDERED.
Puno and Panganiban, JJ., concur.
Sandoval-Gutierrez, J., is on leave.

3. EN BANC
[G.R. No. L-24581. January 31, 1966.]
16

MIGUEL PEREZ RUBIO, Petitioner, v. THE HONORABLE SAMUEL

REYES, ROBERT O. PHILLIPS and MAGDALENA YSMAEL
PHILLIPS, Respondents.
Jose W. Diokno for the petitioner.
Calapatia, Gaviola & Maclang; A. Padilla & Associates; Meer, Meer &
Meer, for the respondents.
SYLLABUS
1. CERTIORARI; AMENDMENT; AMENDED SUPPLEMENTAL PETITION MAY BE
ADMITTED WITHOUT NEED OF DISCUSSING ITS MERITS. An amended
supplemental petition for certiorari to implead additional parties and prays
that certain parties be cited for contempt; that a preliminary injunction with
writ of attachment be issued; that petitioners be declared entitled to a
vendors lien over the shares of stock sold to respondents on installment;
that petitioners be permitted to collect the balance of the purchase price of
the sold shares of Hacienda Benito, Inc.; and that the injunction issued by
respondent court be dissolved, is admissible without first discussing the facts
alleged therein because those facts are deemed sufficient if proven to
entitle petitioners to relief against the additional parties named therein.
2. ID.; INCIDENTAL MOTIONS WHICH REQUIRE INQUIRY INTO THE MAIN ISSUE
BEFORE BEING RESOLVED SHOULD BE TAKEN WITH THE MAIN CASE. The
incidental petitions that the original as well as the new respondents be cited
for contempt and for the issuance of a mandatory injunction with writ of
preliminary attachment should be taken only after a full hearing of the case
on its merits because their resolution will one way or the other necessarily
require the consideration of the main issues involved in the main case.
RESOLUTION
DIZON, J.:
Upon the facts alleged in the complaint filed in Civil Case No. 8632 of the
Court of First Instance of Rizal by Robert O. Phillips and Sons Inc. Et. Al., v.
Miguel Perez Rubio, said plaintiffs prayed for judgment as follows:chanrob1es
virtual 1aw library
1. That a temporary restraining order and/or ex parte writ of preliminary
injunction be issued against the defendant to prevent and restrain them from
further unlawful and willful interference with the transaction between the
plaintiff corporation with Alfonso T. Yuchengco on the sale of the shares of
17

stock of Hacienda Benito, Inc., and from enforcing whatever amount he may
claim to be due to them from the plaintiffs under the Agreements (Annexes
"A", "A-1" and "A-2"), after the approval of the injunction bond;
2. That, after due hearing, judgment be rendered in favor of the plaintiffs
against the defendant:chanrob1es virtual 1aw library
a) Restraining him from willfully and unlawfully interfering with the
transaction of the plaintiffs with Alfonso T. Yuchengco on the sale of the
shares of stock of Hacienda Benito, Inc.;
b) Declaring that the defendant has no right to rescind the Agreements as
referred to in Annexes "A", "A-1" and "A-2" ;
c) Declaring that the defendant has no vendors lien over the shares of stock
of Hacienda Benito, Inc., sold by them to the plaintiff corporation;
d) Restraining the defendant from enforcing any collection action against the
plaintiffs until the obligations, if any, mature;
e) Making the writ of preliminary injunction permanent;
f) Sentencing the defendant to pay the plaintiffs;
(1) P2,500,000.00 more or less, as actual damages;
(2) Moral damages which this Honorable Court may deem just and
reasonable;
(3) Exemplary damages, which this Honorable Court may deem just and
reasonable;
(4) P50,000.00, as attorneys fees; and
(5) Costs of suit; and
2. That the plaintiffs be granted such further and other reliefs to which
they may be entitled in law and in equity."cralaw virtua1aw library
Upon an ex-parte petition filed by the plaintiffs, the respondent judge issued
on April 1, 1965 a writ of preliminary injunction to be mentioned again later.
Subsequently, the respondent judge also denied Perez Rubios motion to
dissolve the preliminary injunction.
It appears that the Perez Rubio spouses owned shares of stock in Hacienda
Benito Inc. registered in their names and in the names of Joaquin Ramirez
18

and Joaquin Ramirez Jr. On April 13, 1963 the Perez Rubios, with the
conformity of the Ramirezes, sold said shares to Robert O. Phillips and Sons
Inc. for P5,500,000.00 payable in installments and other conditions agreed
upon as follows:chanrob1es virtual 1aw library
x

"3. That for and in consideration of the mutual agreements and promises,
MIGUEL and MARIA LUISA hereby sell to PHILLIPS all the shares of stock of
Hacienda Benito, Inc. registered in their names and in the names of Joaquin
Ramirez and Joaquin Ramirez, Jr. for the total price of FIVE MILLION FIVE
HUNDRED THOUSAND PESOS (P5,500,000.00), Philippine Currency, payable
as follows:chanrob1es virtual 1aw library
a. FIFTY THOUSAND PESOS (P50,000.00) upon execution of this agreement.
b. ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000.00) within
sixty (60) days from this date.
c. ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS
(P1,250,000.00) on April 30, 1964 less the amount of P96,830.56 due the
Hacienda Benito, Inc. from MARIA LUISA and the amount of P127,096.09 from
MIGUEL; hereby authorizing PHILLIPS to deduct said amounts and to pay the
same to Hacienda Benito, Inc.
d. ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS
(P1,250,000.00) on or before April 30, 1966.
e. ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS
(P1,250,000.00) on or before April 30, 1966.
f. FIVE HUNDRED THOUSAND PESOS (P500,000.00) on or before April 30,
1967.
"4. That should PHILLIPS fails to pay the amount of ONE MILLION TWO
HUNDRED THOUSAND PESOS (P1,200,000.00) due sixty (60) days from this
date and to execute the letter of credit and/or bond or both to secure the
payment of the remaining installments, as agreed upon, then the Sellers
shall have the right, at their discretion, either to rescind this agreement or to
enforce the same, provided that any number of days used by the SELLERS to
consider the acceptability of the bank or bonding company proposed by
PHILLIPS shall be added to the period of sixty (60) days herein mentioned;
"5. That in case of default, PHILLIPS shall pay interest at the rate of eight
percent (8%) per annum on all amounts in arrears until paid in full either by
19

the guaranteeing bank, bonding company or Phillips;

"6. That all the installments due during the years 1964, 1965, 1966, and
1967 with all the conditions above mentioned, shall be jointly and severally
guaranteed by means of Irrevocable Standby Letter of Credit from a bank in
favor of MIGUEL and MARIA LUISA, in the proportion they may agree, which
shall be communicated to the bank and to PHILLIPS before final contract is
entered into with the bank, or by a bond from a bonding company duly
approved by MIGUEL and MARIA LUISA;
"7. That the stock certificates corresponding to the shares sold, including
those in the names of Joaquin Ramirez and Joaquin Ramirez, Jr. shall not be
transferred to PHILLIPS until the installment due within sixty (60) days from
this date is paid in full;"
On June 23, 1964 Robert O. Phillips and Sons Inc., and Robert O. Phillips,
himself and his wife, entered into an agreement with the Perez Rubios
deferring payment of the April 30, 1964 installment already overdue to
August 31, 1964 under the following conditions:jgc:chanrobles.com.ph
"(a) The deferred installment would bear an interest of eight (8%) per cent
per annum from April 30, 1964 although partial payments on the principal
and on the interest due may be paid during the period granted, in such
amounts and at such times as funds as available to Robert O. Phillips & Sons,
Inc.;
"(b) Should Robert O. Phillips & Sons, Inc. fail to pay the particular
installment now due on August 31, 1964 or any of the subsequent
installments on the exact date due, the whole obligation would become
immediately demandable without notice;
"(c) In consideration of this extension granted to Robert O. Phillips & Sons,
Inc., Robert O. Phillips himself and his wife, Magdalena Ysmael Phillips, jointly
and severally guaranteed all the installments and other obligations of Robert
O. Phillips & Sons, Inc., under the original contract of sale dated April 13,
1963.
In the meantime, Robert O. Phillips, in his behalf and in that of his wife and
Robert O. Phillips and Sons Inc., entered into negotiations for the sale of their
shares of stock in Hacienda Benito Inc. to Alfonso Yuchengco. Upon being
informed of this, the Perez Rubios, through their attorney-in-fact, Joaquin
Ramirez, reminded the Phillips spouses and the Phillips corporation in writing
of their obligations under the contract of sale of April 13, 1963 and reminded
them in particular that the shares subject matter thereof were still subject to
the payment of the unpaid balance of the sale price. They gave a similar
notice to Alfonso Yuchengco, but expressed no objection to the sale provided
20

the obligations in their favor were satisfied.

On March 26, 1965, the Phillips (individuals and corporation), through their
attorney, Juan T. David, sent a letter to the Perez Rubios telling them, in
substance, that the only obstacle to the consummation of the PhillipsYuchengco sale of the shares of stock of Hacienda Benito Inc. was their letter
of November 24, 1964 and warned that unless the same was withdrawn by
March 29, they would seek redress elsewhere. On March 27, 1965, the Perez
Rubios, for their part, wrote the Phillips that due to the latters inability to
comply with the formers conditions, the negotiations going on between
them were cancelled, and should the full amount due to them remained
unpaid by noon of March 31, 1965, they would file action in court in the
afternoon thereof. However, on March 30, 1965, stealing a march on the
Perez Rubios, the Phillips (individuals and corporation) filed Civil Case No.
8632 mentioned heretofore where they obtained, ex-parte, a preliminary
injunction to this effect:jgc:chanrobles.com.ph
"IT IS HEREBY ORDERED by the undersigned Judge of the Court of First
Instance that, until further orders, you, all your attorneys, representatives,
agents, and any other person assisting you, REFRAIN from interfering with
the transaction between the plaintiff corporation with Alfonso T. Yuchengco
on the sale of the shares of stock of Hacienda Benito, Inc., and from
enforcing whatever amount he may claim to be due to them from the
plaintiffs under the Agreements (Annexes A, A-1, and A-2) mentioned in
the complaint."cralaw virtua1aw library
On April 8, 1965 the Perez Rubios filed a motion to dissolve the above
reproduced writ of preliminary injunction, which the respondent judge denied
on May 6, 1964. But even before the motion aforesaid could be acted upon,
they also filed their answer to the complaint with a counterclaim of
P4,500,000.00 representing the unpaid balance of the sale price of their
shares. Because of this the Perez Rubios were charged with contempt.
The original petition for certiorari filed in this case is based principally on the
allegation that, in taking cognizance of Civil Case No. 8632 and in issuing the
writ of preliminary injunction ex-parte mentioned heretofore, the respondent
court committed a grave abuse of discretion and, as a consequence, the
petition prayed that the respondent judge be restrained from in any way
proceeding with the case, and to restrain the respondent Phillips from
proceeding with the sale of the shares of stock of Hacienda Benito, Inc. or
any of its assets to Alfonso Yuchengco or to any other person, or from
performing any act which will diminish the value of said shares of stock or
deplete the assets of the company.
On October 4, 1965, Miguel Perez Rubio, to whom all the Perez Rubio shares
had been assigned, filed in this Court a motion for the admission of an
21

amended supplemental petition impleading the following additional parties:

Victoria Valley Development Corporation and Manufacturers Bank and Trust
Co., who objected to their inclusion as such on different grounds. The
supplemental petition also prayed that certain parties be cited and later
punished for contempt; for the issuance of a preliminary mandatory
injunction and a writ of attachment as follows:jgc:chanrobles.com.ph
"1. The Manufacturers Bank & Trust Company and/or Victoria Valley
Development Corporation be ordered to return the properties it bought from
Hacienda Benito, Inc., to Hacienda Benito, Inc.;
"2. That a writ of attachment be issued in favor of your petitioner against the
properties of the Respondents Phillips including those Hacienda Benito, Inc.,
or against the proceeds of their sale in the ordinary course of business and of
the other corporations who were defendants in Civil Case No. 8766 for an
amount equivalent to your petitioners counterclaim;
"3. Respondents Phillips be held in contempt of this Honorable Court;
"4. Alfonso Yuchengco, Antonio de las Alas, Ambrosio Padilla, Leonides S.
Virata, Macario Tiu, Romeo Villonco be summoned before this Honorable
Court to show cause why they should not be held in contempt of this
Honorable Court.
"Petitioner likewise prays that:chanrob1es virtual 1aw library
1. He be declared to have had a vendors lien over the shares of stock he
sold to Respondents Phillips on installment and which up to now remain
unpaid;
2. He be permitted to sue and collect on the outstanding balance of
P4,250,000 due for sale of the shares of Hacienda Benito, Inc., to
Respondents Phillips; and, therefore,
3. The injunction and order of the Respondent Court dated April 1, 1965
(Annex 1) be revoked and be declared null and void.
"Petitioner likewise prays for such other relief as may be just and equitable in
the premises."cralaw virtua1aw library
When the original petition was filed, We issued a preliminary injunction to
this effect:jgc:chanrobles.com.ph
"NOW, THEREFORE, until further orders from this Court, You, your agents,
your representatives and/or any person or persons acting in your behalf, are
hereby enjoined: (FIRST) from proceeding with Civil Case No. 8632 (Robert O.
22

Phillips & Sons, Inc. v. Miguel Perez Rubio); (SECOND) from proceeding with
the sale of the shares of stock of Hacienda Benito, Inc., or any of its assets to
Alfonso Yuchengco or to any other person; and (THIRD) from performing any
act which will either diminish the value of said shares of stock or deplete the
assets of said Hacienda, subject matter of the above-mentioned case."cralaw
virtua1aw library
Thereafter, respondents filed an ex-parte petition either for the modification
of the preliminary injunction issued by Us or for its dissolution upon a
counter bond.
The first question to be resolved now is the admission of the amended
supplemental petition. In this connection we do not deem it necessary nor
advisable at this stage of the proceedings to lengthily discuss the merits of
the facts alleged therein. Suffice it to say that we deem them sufficient if
proven to entitle petitioners to relief against the additional parties therein
named. The same is, therefore, admitted.
On the other hand, the petition that the original respondents as well as the
new parties be cited for contempt, and the petition for the issuance of a
mandatory injunction and a writ of preliminary attachment may best and
properly be taken up only after a full hearing of this case on the merits, for to
resolve them now one way or the other will necessarily require a
consideration of the main issue involved herein.
In connection with the urgent ex-parte petition filed by the respondents
(except the respondent judge) for a modification of the preliminary injunction
herein granted or for its dissolution upon the filing of a bond, it appears that
the Hacienda Benito, Inc. is not a party respondent neither upon the original
petition nor upon the amended supplemental petition, although it is plain
from the allegations made in both that the shares of stock of said company,
and naturally its assets, are the very subject of controversy. However, the
injunction issued in this case is directed exclusively to the parties herein and,
in connection with the assets of said hacienda, they are the only ones
enjoined from performing any act which will either diminish the value of said
shares of stock or deplete the assets of said hacienda. The petition for
modification in this regard is, therefore, not well founded and is denied.
Inasmuch as the petition for the dissolution of the preliminary injunction
issued by Us in this case, upon the filing of a bond, is ex-parte, the
respondents are hereby ordered to serve a copy thereof upon petitioner, who
is hereby required to submit his comments in connection therewith, if he so
desires, within ten days from receipt thereof.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Regala, Makalintal
and Bengzon, J.P., JJ., concur.
23

Barrera and Zaldivar, JJ., took no part.

4. EN BANC
[G.R. No. L-23851. March 26, 1976.]
WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff appellant, v. LEE
E. WON alias RAMON LEE and BIENVENIDO A. TAN, DefendantsAppellees.
Leonardo Abola, for Plaintiff-Appellant.
B.A. Tan, Jr. for defendant-appellee B.A. Tan.
Alfonso V. Agcaoli and Ramon A. Barcelona for defendant-appellee
Lee E. Won.
SYNOPSIS
Lee E. Won and Bienvenido Tan both claimed ownership over Wack Wack Golf
and Country Clubs membership fee certificate 201, the former, by virtue of
the decision rendered in Civil Case 26044 of the Court of First Instance of
Manila and of membership fee certificate 201-serial No. 1478 issued
pursuant to a court order in said case, and the latter by virtue of
membership fee certificate 201-serial No. 1199 issued to him in July 1950
pursuant to an assignment made in his favor by the original owner and
holder thereof. The corporation filed an action of interpleader in the court a
quo to have defendants litigate among themselves their conflicting claims of
ownership. In separate motions, the defendants moved to dismiss the
complaint upon the grounds of res judicata, failure of the complainant to
state a cause of action, and bar by prescription. Finding the first two grounds
well taken, the trial court dismissed the complain. Hence, this appeal, the
determinative issue of which is the timeless of the remedy of interpleader
availed of by the Corporation.
The Supreme Court held that because the Corporation had allowed itself to
be sued to final judgment and be made independently liable in civil case
26044 and the appellee Lee had already established in said case his rights to
membership fee certificate 201, its action of interpleader is barred by laches.
Order affirmed.
SYLLABUS
1. SPECIAL CIVIL ACTION; INTERPLEADER; A REMEDY TO DETERMINE
CONFLICTING CLAIMS ON PROPERTY. The actions of interpleader under
Section 120 of the Code of Civil Procedure is a remedy whereby a person who
24

has personal property in his posession, or an obligation to render wholly or

partially, without claiming any right to either, comes to court and asks that
the persons who claim the said personal property or who consider
themselves entitled to demand compliance with the obligation, be required
to litigate among themselves in order to determine finally who is entitled to
one or other thing. The remedy is afforded to protect a person not against
double liability but against double vexation in respect of one liability.
2. ID.; ID.; PROCEDURE UNDER THE CODE OF CIVIL PROCEDURE AND NEW
RULES OF COURT DISTINGUISHED. The procedure under Section 1 of Rule
63 of the Revised Rules of Court is the same as that under Section 120 of the
Code of Civil Procedure, except that under the former the remedy of
interpleader is available regardless of the nature of the subject-matter of the
controversy, whereas under the latter an interpleader suit is proper only if
the subject-matter of the controversy is personal property or relates to the
performance
of
an
obligation.
3. ID.; ID.; ACTION TO BE FILED WITHIN A REASONABLE TIME AFTER A
DISPUTE ARISES. A stakeholder, meaning a person entrusted with the
custody of property or money that is subject of ligitation or of contention
between rival claimants in which the holder claims no right or property
interest, should use reasonable diligence to hale the contending claimants to
court. He need not await actual institution of independent suits against him
before filing a bill of interpleader. He should file an action of interpleader
within a reasonable time after a dispute has arisen without waiting to be
sued by either of the contending claimants. Otherwise, he may be barred by
laches or undue delay. But where he acts with reasonable diligence in view of
the
environmental
circumstances,
the
remedy
is
not
barred.
4. ID.; ID.; ACTION BARRED IF NOT TIMELY MADE. When a stakeholders
action is filed after judgment has been rendered against him in favor of one
of the contending claimants, especially where he had notice of the conflicting
claims prior to the rendition of the judgment and neglected the opportunity
to implead the adverse claimants in the suit where judgment was entered,
the interpleader suit is too late and will be barred by laches or undue delay.
5. ID.; ID.; ID.; ID.; INSTANT CASE. The Corporation was aware of the
conflicting claims of the parties with respect to the membership fee
certificate 201 long before it filed its interpleader suit. It had been
recognizing Tan as the lawful owner thereof. It was sued by Lee who also
claimed the same membership fee certificate. Yet it did not interplead Tan. It
preferred to proceed with the litigation (civil case 26004) and to defend itself
therein. Final judgment was rendered against it and said judgment has
already been executed. It is now therefore too late for it to invoke the
remedy
of
interpleader.
25

6. ID.; ID.; ID.; PARTY WHO HAS SUCCESSFULLY ESTABLISHED A RIGHT

CANNOT BE LATTER IMPLEADED. A successful litigant cannot later be
impleaded by his defeated adversary in an interpleader suit and compelled
to prove his claim anew against other adverse claimants, as that would in
effect be a collateral attack upon the judgment.
DECISION
CASTRO, J.:
This is an appeal from the order of the Court of First Instance of Rizal, in civil
case 7656, dismissing the plaintiff-appellants complaint of interpleader upon
the grounds of failure to state a cause of action and res judicata.
In its amended and supplemental complaint of October 23, 1963, the Wack
Wack Golf & Country Club, Inc., a non-stock, civic and athletic corporation
duly organized under the laws of the Philippines, with principal office in
Mandaluyong, Rizal (hereinafter referred to as the Corporation), alleged, for
its first cause of action, that the defendant Lee E. Won claims ownership of
its membership fee certificate 201, by virtue of the decision rendered in civil
case 26044 of the CFI of Manila, entitled "Lee E. Won alias Ramon Lee v.
Wack Wack Golf & Country Club, Inc." and also by virtue of membership fee
certificate 201-serial no. 1478 issued on October 17, 1963 by Ponciano B.
Jacinto, deputy clerk of court of the said CFI of Manila, for and in behalf of the
president and the secretary of the Corporation and of the Peoples Bank &
Trust Company as transfer agent of the said Corporation, pursuant to the
order of September 23, 1963 in the said case; that the defendant Bienvenido
A. Tan, on the other hand, claims to be lawful owner of its aforesaid
membership fee certificate 201 by virtue of membership fee certificate 201serial no. 1199 issued to him on July 24, 1950 pursuant to an assignment
made in his favor by "Swan, Culbertson and Fritz," the original owner and
holder of membership fee certificate 201; that under its articles of
incorporation and by-laws the Corporation is authorized to issue a maximum
of 400 membership fee certificates to persons duly elected or admitted to
proprietary membership, all of which have been issued as early as December
30, 1939; that it claims no interest whatsoever in the said membership fee
certificate 201; that it has no means of determining who of the two
defendants is the lawful owner thereof; that it is without power to issue two
separate certificates for the same membership fee certificate 201, or to issue
another membership fee certificate to the defendant Lee, without violating
its articles of incorporation and by-laws; and that the membership fee
certificate 201-serial no. 1199 held by the defendant Tan and the
membership fee certificate 201-serial no. 1478 issued to the defendant Lee
26

proceed from the same membership fee certificate 201, originally issued in
the name of "Swan, Culbertson and Fritz"
For its second cause of action, it alleged that the membership fee certificate
201-serial no. 1478 issued by the deputy clerk of court of the CFI of Manila in
behalf of the Corporation is null and void because issued in violation of its
by-laws, which require the surrender and cancellation of the outstanding
membership fee certificate 201 before issuance may be made to the
transferee of a new certificate duly signed by its president and secretary,
aside from the fact that the decision of the CFI of Manila in civil case 26044 is
not binding upon the defendant Tan, holder of membership fee certificate
201-serial no. 1199; that Tan is made a party because of his refusal to join it
in this action or bring a separate action to protect his rights despite the fact
that he has a legal and beneficial interest in the subject-matter of this
litigation; and that he is made a party so that complete relief may be
accorded herein.
The Corporation prayed that (a) an order be issued requiring Lee and Tan to
interplead and litigate their conflicting claims; and (b) judgment be rendered,
after hearing, declaring who of the two is the lawful owner of membership
fee certificate 201, and ordering the surrender and cancellation of
membership fee certificate 201-serial no. 1478 issued in the name of Lee.
In separate motions the defendants moved to dismiss the complaint upon
the grounds of res judicata, failure of the complaint to state a cause of
action, and bar by prescription. 1 These motions were duly opposed by the
Corporation. Finding the grounds of bar by prior judgment and failure to state
a cause of action well taken, the trial court dismissed the complaint, with
costs against the Corporation.
In this appeal, the Corporation contends that the court a quo erred (1) in
finding that the allegations in its amended and supplemental complaint do
not constitute a valid ground for an action of interpleader, and in holding that
"the principal motive for the present action is to reopen the Manila Case and
collaterally attack the decision of the said Court" ; (2) in finding that the
decision in civil case 26044 of the CFI of Manila constitutes res judicata and
bars its present action; and (3) in dismissing its action instead of compelling
the appellees to interplead and litigate between themselves their respective
claims.
The Corporations position may be stated elsewise as follows: The trial court
erred in dismissing the complaint, instead of compelling the appellees to
interplead because there actually are conflicting claims between the latter
with respect to the ownership of membership fee certificate 201, and, as
there is no identity of parties, of subject-matter, and of cause of action,
between civil case 26044 of the CFI of Manila and the present action, the
27

complaint should not have been dismissed upon the ground of res judicata.
On the other hand, the appellees argue that the trial court properly
dismissed the complaint, because, having the effect of reopening civil case
26044, the present action is barred by res judicata.
Although res judicata or bar by a prior judgment was the principal ground
availed of by the appellees in moving for the dismissal of the complaint and
upon which the trial court actually dismissed the complaint, the
determinative issue, as can be gleaned from the pleadings of the parties,
relates to the propriety and timeliness of the remedy of the interpleader.
The action of interpleader, under section 120 of the Code of Civil Procedure,
2 is a remedy whereby a person who has personal property in his possession,
or an obligation to render wholly or partially, without claiming any right to
either, comes to court and asks that the persons who claim the said personal
property or who consider themselves entitled to demand compliance with
the obligation, be required to litigate among themselves in order to
determine finally who is entitled to one or the other thing. The remedy is
afforded to protect a person not against double liability but against double
vexation in respect of one liability. 3 The procedure under the Rules of Court
4 is the same as that under the Code of Civil Procedure, 5 except that under
the former the remedy of interpleader is available regardless of the nature of
the subject-matter of the controversy, whereas under the latter an
interpleader suit is proper only if the subject-matter of the controversy is
personal property or relates to the performance of an obligation.
There is no question that the subject-matter of the present controversy, i.e.,
the membership fee certificate 201, is proper for an interpleader suit. What
is here disputed is the propriety and timeliness of the remedy in the light of
the facts and circumstances obtaining.
A stakeholder 6 should use reasonable diligence to hale the contending
claimants to court. 7 He need not await actual institution of independent
suits against him before filing a bill of interpleader. 8 He should file an action
of interpleader within a reasonable time after a dispute has arisen without
waiting to be sued by either of the contending claimants. 9 Otherwise, he
may be barred by laches 10 or undue delay. 11 But where he acts with
reasonable diligence in view of the environmental circumstances, the remedy
is not barred. 12
Has the Corporation in this case acted with diligence, in view of all the
circumstances, such that it may properly invoke the remedy of interpleader?
We do not think so. It was aware of the conflicting claims of the appellees
with respect to the membership fee certificate 201 long before it filed the
present interpleader suit. It had been recognizing Tan as the lawful owner
28

thereof. It was sued by Lee who also claimed the same membership fee
certificate. Yet it did not interplead Tan. It preferred to proceed with the
litigation (civil case 26044) and to defend itself therein. As a matter of fact,
final judgment was rendered against it and said judgment has already been
executed. It is now therefore too late for it to invoke the remedy of
interpleader.
It has been held that a stakeholders action of interpleader is too late when
filed after judgment has been rendered against him in favor of one of the
contending claimants, 13 especially where he had notice of the conflicting
claims prior to the rendition of the judgment and neglected the opportunity
to implead the adverse claimants in the suit where judgment was entered.
This must be so, because once judgment is obtained against him by one
claimant he becomes liable to the latter. 14 In one case, 15 it was
declared:jgc:chanrobles.com.ph
"The record here discloses that long before the rendition of the judgment in
favor of relators against the Hanover Fire Insurance Company the latter had
notice of the adverse claim of South to the proceeds of the policy. No reason
is shown why the Insurance Company did not implead South in the former
suit and have the conflicting claims there determined. The Insurance
Company elected not to do so and that suit proceeded to a final judgment in
favor of relators. The Company thereby became independently liable to
relators. It was then too late for such company to invoke the remedy of
interpleader."cralaw virtua1aw library
The Corporation has not shown any justifiable reason why it did not file an
application for interpleader in civil case 26044 to compel the appellees
herein to litigate between themselves their conflicting claims of ownership. It
was only after adverse final judgment was rendered against it that the
remedy of interpleader was invoked by it. By then it was too late, because to
be entitled to this remedy the applicant must be able to show that he has not
been made independently liable to any of the claimants. And since the
Corporation is already liable to Lee under a final judgment, the present
interpleader suit is clearly improper and unavailing.
"It is the general rule that before a person will be deemed to be in a position
to ask for an order of interpleader, he must be prepared to show, among
other prerequisites, that he has not become independently liable to any of
the claimants. 25 Tex. Jur. p. 52, Sec. 3; 30 Am. Jur. p. 218, Section 8.
"It is also the general rule that a bill of interpleader comes too late when it is
filed after judgment has been rendered in favor of one of the claimants of the
fund, this being especially true when the holder of the funds had notice of
the conflicting claims prior to the rendition of the judgment and had an
opportunity to implead the adverse claimants in the suit in which the
29

judgment was rendered. United Producers Pipe Line Co. v. Britton, Tex. Civ.
App. 264 S.W. 176; Nash v. McCullum, Tex. Civ. 74 S.W. 2d 1046; 30 Am. Jur.
p. 223, Sec. 11; 25 Tex. Jur. p. 56, Sec. 5; 108 A.L.R., note 5, p. 275." 16
Indeed, if a stakeholder defends a suit filed by one of the adverse claimants
and allows said suit to proceed to final judgment against him, he cannot later
on have that part of the litigation repeated in an interpleader suit. In the
case at hand, the Corporation allowed civil case 26044 to proceed to final
judgment. And it offered no satisfactory explanation for its failure to implead
Tan in the same litigation. In this factual situation, it is clear that this
interpleader suit cannot prosper because it was filed much too late.
"If a stakeholder defends a suit by one claimant and allows it to proceed so
far as a judgment against him without filing a bill of interpleader, it then
becomes too late for him to do so. Union Bank v. Kerr, 2 Md. Ch. 460; Home
Life Ins. Co. v. Gaulk, 86 Md. 385, 390, 38 A. 901; Gonia v. OBrien, 223 Mass.
177, 111 N.E. 787. It is one of the main offices of a bill of interpleader to
restrain a separate proceeding at law by claimant so as to avoid the resulting
partial judgment; and if the stakeholder acquiesces in one claimants trying
out his claim and establishing it at law, he cannot then have that part of the
litigation repeated in an interpleader suit. 4 Pomeroys Eq. Juris. # 162;
Mitfors Eq. Pleading (Tylers Ed.) 147 and 236; Langdells Summary of Eq.
Pleading, # 162; De Zouche v. Carrison, 140 Pa. 430, 21 A. 450." 17
"It is the general rule that a bill of interpleader comes too late when
application therefor is delayed until after judgment has been rendered in
favor of one of the claimants of the fund, and that this is especially true
where the holder of the fund had notice of the conflicting claims prior to the
rendition of such judgment and an opportunity to implead the adverse
claimants in the suit in which such judgment was rendered. (See notes and
cases cited 36 Am. Dec. 703, Am. St. Rep. 598; also 5 Pomeroys Eq. Juris.
Sec. 41.).
"The evidence in the opinion of the majority shows beyond dispute that the
appellant permitted the Parker county suit to proceed to judgment in favor of
Britton with full notice of the adverse claims of the defendants in the present
suit other than the assignees of that judgment (the bank and Mrs. Pabb) and
no excuse is shown why he did not implead them in that suit." 18
To now permit the Corporation to bring Lee to court after the latters
successful establishment of his rights in civil case 26044 to the membership
fee certificate 201, is to increase instead of to diminish the number of suits,
which is one of the purposes of an action of interpleader, with the possibility
that the latter would lose the benefits of the favorable judgment. This cannot
be done because having elected to take its chances of success in said civil
case 26044, with full knowledge of all the facts, the Corporation must submit
30

to the consequences of defeat.

"The act providing for the proceeding has nothing to say touching the right of
one, after contesting a claim of one of the claimants to final judgment
unsuccessfully, to involve the successful litigant in litigation anew by
bringing an interpleader action. The question seems to be one of first
impression here, but, in other jurisdictions, from which the substance of the
act was apparently taken, the rule prevails that the action cannot be resorted
to after an unsuccessful trial against one of the claimants.
"It is well settled, both by reasons and authority, that one who asks the
interposition of a court of equity to compel others, claiming property in his
hands, to interplead, must do so before putting them to the test of trials at
law. Yarborough v. Thompson, 3 Smedes & M. 291 (41 Am. Dec. 626); Gornish
v. Tanner, 1 You. & Jer. 333; Haseltine v. Brickery, 16 Grat. (Va.) 116. The
remedy by interpleader is afforded to protect the party from the annoyance
and hazard of two or more actions touching the same property or demand;
but one who, with knowledge of all the facts, neglects to avail himself of the
relief, or elects to take the chances for success in the actions at law, ought to
submit to the consequences of defeat. To permit an unsuccessful defendant
to compel the successful plaintiffs to interplead, is to increase instead of to
diminish the number of suits; to put upon the shoulders of others the burden
which he asks may be taken from his own . . .
"It is urged, however, that the American Surety Company of New York was
not in position to file an interpleader until it had tested the claim of relatrix to
final judgment, and that, failing to meet with success, it promptly filed the
interpleader. The reason why, it urges, it was not in such position until then is
that had it succeeded before this court in sustaining its construction of the
bond and the law governing the bond, it would not have been called upon to
file an interpleader, since there would have been sufficient funds in its hands
to have satisfied all lawful claimants. It may be observed, however, that the
surety company was acquainted with all of the facts, and hence that it simply
took its chances of meeting with success by its own construction of the bond
and the law. Having failed to sustain it, it cannot now force relatrix into
litigation anew with others, involving most likely a repetition of what has
been decided, or force her to accept a pro rata part of a fund, which is far
from benefits of the judgment." 19
Besides, a successful litigant cannot later be impleaded by his defeated
adversary in an interpleader suit and compelled to prove his claim anew
against other adverse claimants, as that would in effect be a collateral attack
upon the judgment.
"The jurisprudence of this state and the common law states is well-settled
that a claimant who has been put to test of a trial by a surety, and has
31

established his claim, may not be impleaded later by the surety in an

interpleader suit, and compelled to prove his claim again with other adverse
claimants. American Surety Company of New York v. Brim, 175 La. 959, 144
So. 727; American Surety Company of New York v. Brim (In Re Lyong Lumber
Company), 176 La. 867, 147 So. 18; Dugas v. N.Y. Casualty Co., 181 La. 322,
159 So. 572, 15 Ruling Case Law, 228; 33 Corpus Juris, 477; 4 Pomeroys
Equity Jurisprudence (4th Ed.) 3172; 2 Lawrence on Equity Jurisprudence,
1023; Royal Neighbors of America v. Lowary (D.C.) 46 F2d 565; Brackett v.
Graves, 30 App. Div. 162, 51 N.Y.S. 895; De Zouche v. Garrison, 140 Pa. 430,
21 A. 450, 451; Manufacturers Finance Co. v. W.I. Jones Co. 141 Ga., 519, 81
S.E. 1033; Hancock Mutual Life Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383.
"There can be no doubt that relators claim has been finally and definitely
established, because that matter was passed upon by three courts in
definitive judgments. The only remaining item is the value of the use of the
land during the time that relator occupied it. The case was remanded solely
and only for the purpose of determining the amount of that credit. In all
other respects the judgment is final." 20
"It is generally held by the cases it is the office of interpleader to protect a
party, not against double liability, but against double vexation on account of
one liability. Gonia v. OBrien, 223 Mass. 177, 111 N.E. 787. And so it is said
that it is too late for the remedy of interpleader if the party seeking this relief
has contested the claim of one of the parties and suffered judgment to be
taken.
"In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576, 578, it was said:
It is the general rule that a bill of interpleader comes too late when
application therefor is delayed until after judgment has been rendered in
favor of one of the claimants of the fund, and this is especially true where
the holder of the fund had notice of the conflicting claims prior to the
rendition of such judgment and an opportunity to implead the adverse
claimants in the suit in which such judgment was rendered. See notes and
cases cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5 Pomeroys Equity
Jurisprudence # 41.
"The principle thus stated has been recognized in many cases in other
jurisdictions, among which may be cited American Surety Co. v. OBrien, 223
Mass. 177, 111 N.E. 787; Phillips v. Taylor, 148 Md. 157, 129 A. 18; Moore v.
Hill, 59 Ga. 760, 761; Yarborough v. Thompson, 3 Smedes & M. (11 Miss.)
291, 41 Am. Dec. 626. See, also 33 C.J. p. 447, # 30; Nash v. McCullum, (Tex.
Civ. App.) 74 S.W. 2d 1042, 1047.
"It would seem that this rule should logically follow since, after the recovery
of judgment, the interpleading of the judgment creditor is in effect a
collateral attack upon the judgment." 21
32

In fine, the instant interpleader suit cannot prosper because the Corporation
had already been made independently liable in civil case 26044 and,
therefore, its present application for interpleader would in effect be a
collateral attack upon the final judgment in the said civil case; the appellee
Lee had already established his rights to membership fee certificate 201 in
the aforesaid civil case and, therefore, this interpleader suit would compel
him to establish his rights anew, and thereby increase instead of diminish
litigations, which is one of the purposes of an interpleader suit, with the
possibility that the benefits of the final judgment in the said civil case might
eventually be taken away from him; and because the Corporation allowed
itself to be sued to final judgment in the said case, its action of interpleader
was filed inexcusably late, for which reason it is barred by laches or
unreasonable delay.
ACCORDINGLY, the order of May 28, 1964, dismissing the complaint, is
affirmed, at appellants costs.
Teehankee, Makasiar, Antonio, Esguerra, Muoz Palma, Aquino and
Concepcion, Jr., JJ., concur.
Barredo and Martin, JJ., took no part.
Fernando, J., is on official leave.
5. THIRD DIVISION
[G.R. NO. 158290 : October 23, 2006]
HILARION M. HENARES, JR., VICTOR C. AGUSTIN, ALFREDO L.
HENARES, DANIEL L. HENARES, ENRIQUE BELO HENARES, and
CRISTINA BELO HENARES, Petitioners, v. LAND TRANSPORTATION
FRANCHISING AND REGULATORY BOARD and DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS, Respondents.
RESOLUTION

QUISUMBING, J.:
Petitioners challenge this Court to issue a writ of mandamus commanding
respondents Land Transportation Franchising and Regulatory Board (LTFRB)
and the Department of Transportation and Communications (DOTC) to
33

require public utility vehicles (PUVs) to use compressed natural gas (CNG) as
alternative fuel.
Citing statistics from the Metro Manila Transportation and Traffic Situation
Study of 1996,1 the Environmental Management Bureau (EMB) of the
National Capital Region,2 a study of the Asian Development Bank,3 the Manila
Observatory4 and the Department of Environment and Natural
Resources5 (DENR) on the high growth and low turnover in vehicle ownership
in the Philippines, including diesel-powered vehicles, two-stroke engine
powered motorcycles and their concomitant emission of air pollutants,
petitioners attempt to present a compelling case for judicial action against
the bane of air pollution and related environmental hazards.
Petitioners allege that the particulate matters (PM) - complex mixtures of
dust, dirt, smoke, and liquid droplets, varying in sizes and compositions
emitted into the air from various engine combustions - have caused
detrimental effects on health, productivity, infrastructure and the overall
quality of life. Petitioners particularly cite the effects of certain fuel emissions
from engine combustion when these react to other pollutants. For instance,
petitioners aver, with hydrocarbons, oxide of nitrogen (NOx) creates smog;
with sulfur dioxide, it creates acid rain; and with ammonia, moisture and
other compounds, it reacts to form nitric acid and harmful nitrates. Fuel
emissions also cause retardation and leaf bleaching in plants. According to
petitioner, another emission, carbon monoxide (CO), when not completely
burned but emitted into the atmosphere and then inhaled can disrupt the
necessary oxygen in blood. With prolonged exposure, CO affects the nervous
system and can be lethal to people with weak hearts.6
Petitioners add that although much of the new power generated in the
country will use natural gas while a number of oil and coal-fired fuel stations
are being phased-out, still with the projected doubling of power generation
over the next 10 years, and with the continuing high demand for motor
vehicles, the energy and transport sectors are likely to remain the major
sources of harmful emissions. Petitioners refer us to the study of the
Philippine Environment Monitor 20027, stating that in four of the country's
major cities, Metro Manila, Davao, Cebu and Baguio, the exposure to PM10,a
finer PM which can penetrate deep into the lungs causing serious health
problems, is estimated at over US$430 million.8 The study also reports that
the emissions of PMs have caused the following:
'Over 2,000 people die prematurely. This loss is valued at about US$140
million.
'Over 9,000 people suffer from chronic bronchitis, which is valued at about
US$120 million.
34

'Nearly 51 million cases of respiratory symptom days in Metro Manila

(averaging twice a year in Davao and Cebu, and five to six times in Metro
Manila and Baguio), costs about US$170 million. This is a 70 percent
increase, over a decade, when compared with the findings of a similar study
done in 1992 for Metro Manila, which reported 33 million cases.9
Petitioners likewise cite the University of the Philippines' studies in 1990-91
and 1994 showing that vehicular emissions in Metro Manila have resulted to
the prevalence of chronic obstructive pulmonary diseases (COPD); that
pulmonary tuberculosis is highest among jeepney drivers; and there is a 4.8
to 27.5 percent prevalence of respiratory symptoms among school children
and 15.8 to 40.6 percent among child vendors. The studies also revealed
that the children in Metro Manila showed more compromised pulmonary
function than their rural counterparts. Petitioners infer that these are mostly
due to the emissions of PUVs.
To counter the aforementioned detrimental effects of emissions from PUVs,
petitioners propose the use of CNG. According to petitioners, CNG is a natural
gas comprised mostly of methane which although containing small amounts
of propane and butane,10 is colorless and odorless and considered the
cleanest fossil fuel because it produces much less pollutants than coal and
petroleum; produces up to 90 percent less CO compared to gasoline and
diesel fuel; reduces NOx emissions by 50 percent and cuts hydrocarbon
emissions by half; emits 60 percent less PMs; and releases virtually no sulfur
dioxide. Although, according to petitioners, the only drawback of CNG is that
it produces more methane, one of the gases blamed for global warming. 11
Asserting their right to clean air, petitioners contend that the bases for their
petition for a writ ofmandamus to order the LTFRB to require PUVs to use
CNG as an alternative fuel, lie in Section 16,12Article II of the 1987
Constitution, our ruling in Oposa v. Factoran, Jr.,13 and Section 414 of Republic
Act No. 8749 otherwise known as the "Philippine Clean Air Act of 1999."
Meantime, following a subsequent motion, the Court granted petitioners'
motion to implead the Department of Transportation and Communications
(DOTC) as additional respondent.
In his Comment for respondents LTFRB and DOTC, the Solicitor General, cites
Section 3, Rule 65 of the Revised Rules of Court and explains that the writ
of mandamus is not the correct remedy since the writ may be issued only to
command a tribunal, corporation, board or person to do an act that is
required to be done, when he or it unlawfully neglects the performance of an
act which the law specifically enjoins as a duty resulting from an office, trust
or station, or unlawfully excludes another from the use and enjoyment of a
right or office to which such other is entitled, there being no other plain,
speedy and adequate remedy in the ordinary course of law.15 Further citing
35

existing jurisprudence, the Solicitor General explains that in contrast to a

discretionary act, a ministerial act, which a mandamus is, is one in which an
officer or tribunal performs in a given state of facts, in a prescribed manner,
in obedience to a mandate of legal authority, without regard to or the
exercise of his own judgment upon the propriety or impropriety of an act
done.
The Solicitor General also notes that nothing in Rep. Act No. 8749 that
petitioners invoke, prohibits the use of gasoline and diesel by owners of
motor vehicles. Sadly too, according to the Solicitor General, Rep. Act No.
8749 does not even mention the existence of CNG as alternative fuel and
avers that unless this law is amended to provide CNG as alternative fuel for
PUVs, the respondents cannot propose that PUVs use CNG as alternative fuel.
The Solicitor General also adds that it is the DENR that is tasked to
implement Rep. Act No. 8749 and not the LTFRB nor the DOTC. Moreover, he
says, it is the Department of Energy (DOE), under Section 2616 of Rep. Act
No. 8749, that is required to set the specifications for all types of fuel and
fuel-related products to improve fuel compositions for improved efficiency
and reduced emissions. He adds that under Section 2117 of the cited Republic
Act, the DOTC is limited to implementing the emission standards for motor
vehicles, and the herein respondents cannot alter, change or modify the
emission standards. The Solicitor General opines that the Court should
declare the instant petition for mandamus without merit.
Petitioners, in their Reply, insist that the respondents possess the
administrative and regulatory powers to implement measures in accordance
with the policies and principles mandated by Rep. Act No. 8749, specifically
Section 218 and Section 21.19 Petitioners state that under these laws and with
all the available information provided by the DOE on the benefits of CNG,
respondents cannot ignore the existence of CNG, and their failure to
recognize CNG and compel its use by PUVs as alternative fuel while air
pollution brought about by the emissions of gasoline and diesel endanger the
environment and the people, is tantamount to neglect in the performance of
a duty which the law enjoins.
Lastly, petitioners aver that other than the writ applied for, they have no
other plain, speedy and adequate remedy in the ordinary course of law.
Petitioners insist that the writ in fact should be issued pursuant to the very
same Section 3, Rule 65 of the Revised Rules of Court that the Solicitor
General invokes.
In their Memorandum, petitioners phrase the issues before us as follows:
I. WHETHER OR NOT THE PETITIONERS HAVE THE PERSONALITY TO BRING
THE PRESENT ACTION
36

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

III. WHETHER OR NOT THE RESPONDENT IS THE AGENCY RESPONSIBLE TO
IMPLEMENT THE SUGGESTED ALTERNATIVE OF REQUIRING PUBLIC UTILITY
VEHICLES TO USE COMPRESSED NATURAL GAS (CNG)
IV. WHETHER OR NOT THE RESPONDENT CAN BE COMPELLED TO REQUIRE
PUBLIC UTILITY VEHICLES TO USE COMPRESSED NATURAL GAS THROUGH A
WRIT OF MANDAMUS20
Briefly put, the issues are two-fold. First, Do petitioners have legal
personality to bring this petition before us? Second, Should mandamus issue
against respondents to compel PUVs to use CNG as alternative fuel?
cralawlibrary
According to petitioners, Section 16,21 Article II of the 1987 Constitution is the
policy statement that bestows on the people the right to breathe clean air in
a healthy environment. This policy is enunciated inOposa.22 The
implementation of this policy is articulated in Rep. Act No. 8749. These,
according to petitioners, are the bases for their standing to file the instant
petition. They aver that when there is an omission by the government to
safeguard a right, in this case their right to clean air, then, the citizens can
resort to and exhaust all remedies to challenge this omission by the
government. This, they say, is embodied in Section 423 of Rep. Act No. 8749.
Petitioners insist that since it is the LTFRB and the DOTC that are the
government agencies clothed with power to regulate and control motor
vehicles, particularly PUVs, and with the same agencies' awareness and
knowledge that the PUVs emit dangerous levels of air pollutants, then, the
responsibility to see that these are curbed falls under respondents' functions
and a writ of mandamus should issue against them.
The Solicitor General, for his part, reiterates his position that the respondent
government agencies, the DOTC and the LTFRB, are not in a position to
compel the PUVs to use CNG as alternative fuel. The Solicitor General
explains that the function of the DOTC is limited to implementing the
emission standards set forth in Rep. Act No. 8749 and the said law only goes
as far as setting the maximum limit for the emission of vehicles, but it does
not recognize CNG as alternative engine fuel. The Solicitor General avers that
the petition should be addressed to Congress for it to come up with a policy
that would compel the use of CNG as alternative fuel.
Patently, this Court is being asked to resolve issues that are not only
procedural. Petitioners challenge this Court to decide if what petitioners
propose could be done through a less circuitous, speedy and unchartered
course in an issue that Chief Justice Hilario G. Davide, Jr. in his ponencia in
37

the Oposa case,24describes as "inter-generational responsibility" and "intergenerational justice."

Now, as to petitioners' standing. There is no dispute that petitioners have
standing to bring their case before this Court. Even respondents do not
question their standing. This petition focuses on one fundamental legal right
of petitioners, their right to clean air. Moreover, as held previously, a party's
standing before this Court is a procedural technicality which may, in the
exercise of the Court's discretion, be set aside in view of the importance of
the issue raised. We brush aside this issue of technicality under the principle
of the transcendental importance to the public, especially so if these cases
demand that they be settled promptly.
Undeniably, the right to clean air not only is an issue of paramount
importance to petitioners for it concerns the air they breathe, but it is also
impressed with public interest. The consequences of the counter-productive
and retrogressive effects of a neglected environment due to emissions of
motor vehicles immeasurably affect the well-being of petitioners. On these
considerations, the legal standing of the petitioners deserves recognition.
Our next concern is whether the writ of mandamus is the proper remedy, and
if the writ could issue against respondents.
Under Section 3, Rule 65 of the Rules of Court, mandamus lies under any of
the following cases: (1) against any tribunal which unlawfully neglects the
performance of an act which the law specifically enjoins as a duty; (2) in case
any corporation, board or person unlawfully neglects the performance of an
act which the law enjoins as a duty resulting from an office, trust, or station;
and (3) in case any tribunal, corporation, board or person unlawfully excludes
another from the use and enjoyment of a right or office to which such other
is legally entitled; and there is no other plain, speedy, and adequate remedy
in the ordinary course of law.
In University of San Agustin, Inc. v. Court of Appeals,25 we said,
'It is settled that mandamus is employed to compel the performance, when
refused, of a ministerial duty, this being its main objective. It does not lie to
require anyone to fulfill contractual obligations or to compel a course of
conduct, nor to control or review the exercise of discretion. On the part of the
petitioner, it is essential to the issuance of a writ of mandamus that he
should have a clear legal right to the thing demanded and it must be the
imperative duty of the respondent to perform the act required. It never
issues in doubtful cases. While it may not be necessary that the duty be
absolutely expressed, it must however, be clear. The writ will not issue to
compel an official to do anything which is not his duty to do or which is his
duty not to do, or give to the applicant anything to which he is not entitled
38

by law. The writ neither confers powers nor imposes duties. It is simply a
command to exercise a power already possessed and to perform a duty
already imposed. (Emphasis supplied.)
In this petition the legal right which is sought to be recognized and enforced
hinges on a constitutional and a statutory policy already articulated in
operational terms, e.g. in Rep. Act No. 8749, the Philippine Clean Air Act of
1999. Paragraph (a), Section 21 of the Act specifically provides that when
PUVs are concerned, the responsibility of implementing the policy falls on
respondent DOTC. It provides as follows:
SEC 21. Pollution from Motor Vehicles. - a) The DOTC shall implement the
emission standards for motor vehicles set pursuant to and as provided in this
Act. To further improve the emission standards, the Department [DENR] shall
review, revise and publish the standards every two (2) years, or as the need
arises. It shall consider the maximum limits for all major pollutants to ensure
substantial improvement in air quality for the health, safety and welfare of
the general public.
Paragraph (b) states:
b) The Department [DENR] in collaboration with the DOTC, DTI and LGUs,
shall develop an action plan for the control and management of air
pollution from motor vehicles consistent with the Integrated Air Quality
Framework . . . . (Emphasis supplied.)
There is no dispute that under the Clean Air Act it is the DENR that is tasked
to set the emission standards for fuel use and the task of developing an
action plan. As far as motor vehicles are concerned, it devolves upon the
DOTC and the line agency whose mandate is to oversee that motor vehicles
prepare an action plan and implement the emission standards for motor
vehicles, namely the LTFRB.
In Oposa26 we said, the right to a balanced and healthful ecology carries with
it the correlative duty to refrain from impairing the environment. We also
said, it is clearly the duty of the responsible government agencies to
advance the said right.
Petitioners invoke the provisions of the Constitution and the Clean Air Act in
their prayer for issuance of a writ of mandamus commanding the
respondents to require PUVs to use CNG as an alternative fuel. Although both
are general mandates that do not specifically enjoin the use of any kind of
fuel, particularly the use of CNG, there is an executive order implementing a
program on the use of CNG by public vehicles. Executive Order No. 290,
entitled Implementing the Natural Gas Vehicle Program for Public Transport
(NGVPPT), took effect on February 24, 2004. The program recognized, among
39

others, natural gas as a clean burning alternative fuel for vehicle which has
the potential to produce substantially lower pollutants; and the Malampaya
Gas-to-Power Project as representing the beginning of the natural gas
industry of the Philippines. Paragraph 1.2, Section 1 of E.O. No. 290 cites as
one of its objectives, the use of CNG as a clean alternative fuel for transport.
Furthermore, one of the components of the program is the development of
CNG refueling stations and all related facilities in strategic locations in the
country to serve the needs of CNG-powered PUVs. Section 3 of E.O. No. 290,
consistent with E.O. No. 66, series of 2002, designated the DOE as the lead
agency (a) in developing the natural gas industry of the country with the
DENR, through the EMB and (b) in formulating emission standards for CNG.
Most significantly, par. 4.5, Section 4 tasks the DOTC, working with the DOE,
to develop an implementation plan for "a gradual shift to CNG fuel utilization
in PUVs and promote NGVs [natural gas vehicles] in Metro Manila and Luzon
through the issuance of directives/orders providing preferential franchises in
present day major routes and exclusive franchises to NGVs in newly opened
routes'" A thorough reading of the executive order assures us that
implementation for a cleaner environment is being addressed. To a certain
extent, the instant petition had been mooted by the issuance of E.O. No. 290.
Regrettably, however, the plain, speedy and adequate remedy herein sought
by petitioners, i.e., a writ ofmandamus commanding the respondents to
require PUVs to use CNG, is unavailing. Mandamus is available only to
compel the doing of an act specifically enjoined by law as a duty. Here, there
is no law that mandates the respondents LTFRB and the DOTC to order
owners of motor vehicles to use CNG. At most the LTFRB has been tasked by
E.O. No. 290 in par. 4.5 (ii), Section 4 "to grant preferential and exclusive
Certificates of Public Convenience (CPC) or franchises to operators of NGVs
based on the results of the DOTC surveys."
Further, mandamus will not generally lie from one branch of government to a
coordinate branch, for the obvious reason that neither is inferior to the
other.27 The need for future changes in both legislation and its
implementation cannot be preempted by orders from this Court, especially
when what is prayed for is procedurally infirm. Besides, comity with and
courtesy to a coequal branch dictate that we give sufficient time and leeway
for the coequal branches to address by themselves the environmental
problems raised in this petition.
In the same manner that we have associated the fundamental right to a
balanced and healthful ecology with the twin concepts of "inter-generational
responsibility" and "inter-generational justice" in Oposa,28where we upheld
the right of future Filipinos to prevent the destruction of the rainforests, so do
we recognize, in this petition, the right of petitioners and the future
generation to clean air. In Oposa we said that if the right to a balanced and
healthful ecology is now explicitly found in the Constitution even if the right
40

is "assumed to exist from the inception of humankind,' it is because of the

well-founded fear of its framers [of the Constitution] that unless the rights to
a balanced and healthful ecology and to health are mandated as state
policies by the Constitution itself, thereby highlighting their continuing
importance and imposing upon the state a solemn obligation to preserve the
first and protect and advance the second, the day would not be too far when
all else would be lost not only for the present generation, but also for those
to come. . ."29
It is the firm belief of this Court that in this case, it is timely to reaffirm the
premium we have placed on the protection of the environment in the
landmark case of Oposa. Yet, as serious as the statistics are on air pollution,
with the present fuels deemed toxic as they are to the environment, as fatal
as these pollutants are to the health of the citizens, and urgently requiring
resort to drastic measures to reduce air pollutants emitted by motor vehicles,
we must admit in particular that petitioners are unable to pinpoint the law
that imposes an indubitable legal duty on respondents that will justify a
grant of the writ ofmandamus compelling the use of CNG for public utility
vehicles. It appears to us that more properly, the legislature should provide
first the specific statutory remedy to the complex environmental problems
bared by herein petitioners before any judicial recourse by mandamus is
taken.
WHEREFORE, the petition for the issuance of a writ
of mandamus is DISMISSED for lack of merit.
SO ORDERED.
6. FIRST DIVISION
[G.R. NO. 168696 : February 28, 2006]
MA. LUTGARDA P. CALLEJA, JOAQUIN M. CALLEJA, JR., JADELSON
PETER P. CALLEJA, MA. JESSICA T. FLORES, MERCIE C. TIPONES and
PERFECTO NIXON C. TABORA, Petitioners, v. JOSE PIERRE A. PANDAY,
AUGUSTO R. PANDAY and MA. THELNA P. MALLARI, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the Petition for Review on Certiorari assailing the Order1 of the
Regional Trial Court of San Jose, Camarines Sur, Branch 58 (RTC-Br. 58)
issued on July 13, 2005.
The antecedent facts are as follows.
41

On May 16, 2005, respondents filed a petition with the Regional Trial Court of
San Jose, Camarines Sur forquo warranto with Damages and Prayer for
Mandatory and Prohibitory Injunction, Damages and Issuance of Temporary
Restraining Order against herein petitioners. Respondents alleged that from
1985 up to the filing of the petition with the trial court, they had been
members of the board of directors and officers of St. John Hospital,
Incorporated, but sometime in May 2005, petitioners, who are also among
the incorporators and stockholders of said corporation, forcibly and with the
aid of armed men usurped the powers which supposedly belonged
to Respondents.
On May 24, 2005, RTC-Br. 58 issued an Order transferring the case to the
Regional Trial Court in Naga City. According to RTC-Br. 58, since the verified
petition showed petitioners therein (herein respondents) to be residents of
Naga City, then pursuant to Section 7, Rule 66 of the 1997 Rules of Civil
Procedure, the action for quo warranto should be brought in the Regional
Trial Court exercising jurisdiction over the territorial area where the
respondents or any of the respondents resides. However, the Executive
Judge of RTC, Naga City refused to receive the case folder of the subject case
for quo warranto, stating that improper venue is not a ground for transferring
a quo warranto case to another administrative jurisdiction.
The RTC-Br. 58 then proceeded to issue and serve summons on herein
petitioners (respondents below). Petitioner Tabora filed his Answer dated June
8, 2005, raising therein the affirmative defenses of (1) improper venue, (2)
lack of jurisdiction, and (3) wrong remedy of quo warranto. Thereafter, the
other petitioners also filed their Answer, also raising the same affirmative
defenses. All the parties were then required to submit their respective
memoranda.
On July 13, 2005, RTC-Br. 58 issued the assailed Order, the pertinent portions
of which read as follows:
It is undisputed that the plaintiffs' cause of action involves controversies
arising out of intra-corporate relations, between and among stockholders,
members or associates of the St. John Hospital Inc. which originally under PD
902-A approved on March 11, 1976 is within the original and exclusive
jurisdiction of the Securities and Exchange Commission to try and decide in
addition to its regulatory and adjudicated functions (Section 5, PD 902-A).
Upon the advent of RA 8799 approved on July 19, 2000, otherwise known as
the Securities and Regulation Code, the Commission's jurisdiction over all
cases enumerated in Section 5, Presidential Decree 902-A were transferred
["]to the Court of general jurisdiction or the appropriate Regional Trial Court
with a proviso that the "Supreme Court in the exercise of its authority may
designate the Regional Trial Court branches that shall exercise jurisdiction
over these cases." Pursuant to this mandate of RA 8799, the Supreme Court
42

in the exercise of said mandated authority, promulgated on November 21,

2000, A.M. No. 00-11-03-SC which took effect 15 December 2000 designated
certain branches of the Regional Trial Court to try and decide Securities and
Exchange Commission Cases arising within their respective territorial
jurisdiction with respect to the National Capital Region and within the
respective provinces in the First to Twelve Judicial Region. Accordingly, in the
Province of Camarines Sur, (Naga City) RTC Branch 23 presided by the Hon.
Pablo M. Paqueo, Jr. was designated as "special court" (Section 1, A.M. No.
00-11-03-SC).
Subsequently, on January 23, 2001, supplemental Administrative Circular No.
8-01 which took effect on March 1, 2001 was issued by the Supreme Court
which directed that "all SEC cases originally assigned or transmitted to the
regular Regional Trial Court shall be transferred to branches of the Regional
Trial Court specially designated to hear such cases in accordance with A.M.
No. 00-11-03-SC.
On March 13, 2001, A.M. No. 01-2-04 SC was promulgated and took effect on
April 1, 2001.
From the foregoing discussion and historical background relative to the
venue and jurisdiction to try and decide cases originally enumerated in
Section 5 of PD 902-A and later under Section 5.2 of RA 8799, it is evident
that the clear intent of the circular is to bestow the juridiction "to try and
decide these cases to the "special courts" created under A.M. No. 00-11-03SC. . . .
Under Section 8, of the Interim Rules, [a] Motion to Dismiss is among the
prohibited pleadings. On the otherhand, the Supreme Court under
Administrative Order 8-01 has directed the transfer from the regular courts
to the branches of the Regional Trial Courts specially designated to try and
decide intra-corporate dispute.
In the light of the above-noted observations and discussion, the Motion to
Dismiss is DENIED pursuant to the Interim Rules of Procedure for IntraCorporate Controversies (A.M. No. 01-2-04-SC) which mandates that motion
to dismiss is a prohibited pleading (Section 8) and in consonance with
Administrative Order 8-01 of the Supreme Court dated March 1, 2001, this
case is hereby ordered remandedto the Regional Trial Court Branch 23,
Naga City which under A.M. No. 00-11-03-SC has been designated as special
court to try and decide intra-corporate controversies under R.A. 8799.
The scheduled hearing on the prayer for temporary restraining order and
preliminary injunction set on July 18, 2005 is hereby cancelled.

43

For reasons of comity the issue of whether Quo Warranto is the proper
remedy is better left to the court of competent jurisdiction to rule upon.
SO ORDERED.2
Petitioners no longer moved for reconsideration of the foregoing Order and,
instead, immediately elevated the case to this Court via a Petition for Review
on Certiorariunder Rule 45 of the 1997 Rules of Civil Procedure.
The petition raises the following issues:
I
WHETHER A BRANCH OF THE REGIONAL TRIAL COURT WHICH HAS NO
JURISDICTION TO TRY AND DECIDE A CASE HAS AUTHORITY TO REMAND THE
SAME TO ANOTHER CO-EQUAL COURT IN ORDER TO CURE THE DEFECTS ON
VENUE AND JURISDICTION
II
WHETHER OR NOT ADMINISTRATIVE CIRCULAR NO. 8-01 DATED JANUARY 23,
2001 WHICH TOOK EFFECT ON MARCH 1, 2001 MAY BE APPLIED IN THE
PRESENT CASE WHICH WAS FILED ON MAY 16, 2005.3
In their Comment, respondents argue that the present petition should be
denied due course and dismissed on the grounds that (1) an appeal under
Rule 45 is inappropriate in this case because the Order dated July 13, 2005 is
merely an interlocutory order and not a final order as contemplated under
Rule 45 of the 1997 Rules of Civil Procedure; (2) a Petition for Review
on Certiorari under Rule 45 is the wrong remedy under A.M. No. 04-9-07-SC,
which provides that "all decisions and final orders in cases falling under the
Interim Rules of Corporate Rehabilitation and the Interim Rules of Procedure
Governing Intra-Corporate Controversies under Republic Act No. 8799 shall
be appealable to the Court of Appeals through a Petition for Review under
Rule 43 of the Rules of Court;" and (3) the petition was intended merely to
delay the proceedings in the trial court because when the case was
transferred to Branch 21 of the Regional Trial Court, said court granted
petitioners' motion to hold the proceedings in view of the present petition
pending before this Court.
Subsequently, petitioners also filed an Urgent Motion to Restore Status Quo
Ante, alleging that on January 12, 2006, respondent Jose Pierre Panday, with
the aid of 14 armed men, assaulted the premises of St. John Hospital in Naga
City, taking away the daily hospital collections estimated at P400,000.00.

44

The Court notes that, indeed, petitioners chose the wrong remedy to assail
the Order of July 13, 2005. It is hornbook principle that Rule 45 of the 1997
Rules of Civil Procedure governs appeals from judgments or final orders.4 The
Order dated July 13, 2005 is basically a denial of herein petitioners' prayer in
their Answer for the dismissal of respondents' case against them. As a
consequence of the trial court's refusal to dismiss the case, it then directed
the transfer of the case to another branch of the Regional Trial Court that had
been designated as a special court to hear cases formerly cognizable by the
SEC. Verily, the order was merely interlocutory as it does not dispose of the
case completely, but leaves something more to be done on its merits. Such
being the case, the assailed Order cannot ordinarily be reviewed through a
petition under Rule 45. As we held in Tolentino v. Natanauan, 5 to wit:
In the case of Bangko Silangan Development Bank v. Court of Appeals, the
Court reiterated the well-settled rule that:
. . . an order denying a motion to dismiss is merely interlocutory and
therefore not appealable, nor can it be the subject of a Petition for Review
on Certiorari . Such order may only be reviewed in the ordinary course of law
by an appeal from the judgment after trial. The ordinary procedure to be
followed in that event is to file an answer, go to trial, and if the decision is
adverse, reiterate the issue on appeal from the final judgment.6
It appears, however, that the longer this case remains unresolved, the
greater chance there is for more violence between the parties to erupt.
In Philippine Airlines v. Spouses Kurangking,7 the Court proceeded to give
due course to a case despite the wrong remedy resorted to by the petitioner
therein, stating thus:
While a Petition for Review on Certiorari under Rule 45 would ordinarily be
inappropriate to assail an interlocutory order, in the interest, however, of
arresting the perpetuation of an apparent error committed below that could
only serve to unnecessarily burden the parties, the Court has resolved to
ignore the technical flaw and, also, to treat the petition, there being no other
plain, speedy and adequate remedy, as a special civil action for certiorari .
Not much, after all, can be gained if the Court were to refrain from now
making a pronouncement on an issue so basic as that submitted by the
parties.8
In this case, the basic issue of which court has jurisdiction over cases
previously cognizable by the SEC under Section 5, Presidential Decree No.
902-A (P.D. No. 902-A), and the propensity of the parties to resort to violence
behoove the Court to look beyond petitioners' technical lapse of filing a
Petition for Review onCertiorari instead of filing a Petition for Certiorari under
Rule 65 with the proper court. Thus, the Court shall proceed to resolve the
case on its merits.
45

It should be noted that allegations in a complaint for quo warranto that

certain persons usurped the offices, powers and functions of duly elected
members of the board, trustees and/or officers make out a case for an intracorporate controversy.9 Prior to the enactment of R.A. No. 8799, the Court,
adopting Justice Jose Y. Feria's view, declared in Unilongo v. Court of
Appeals 10 that Section 1, Rule 66 of the 1997 Rules of Civil Procedure is
"limited to actions of quo warranto against persons who usurp a public office,
position or franchise; public officers who forfeit their office; and associations
which act as corporations without being legally incorporated," while
"[a]ctions of quo warranto against corporations, or against persons who
usurp an office in a corporation, fall under the jurisdiction of the Securities
and Exchange Commission and are governed by its rules. (P.D. No. 902-A as
amended)."11
However, R.A. No. 8799 was passed and Section 5.2 thereof provides as
follows:
5.2. The Commission's jurisdiction over all cases enumerated under Section 5
of Presidential Decree No. 902-A is hereby transferred to the Courts of
general jurisdiction or the appropriate Regional Trial Court: Provided, That the
Supreme Court in the exercise of its authority may designate the Regional
Trial Court branches that shall exercise jurisdiction over these cases. xxx
Therefore, actions of quo warranto against persons who usurp an office in a
corporation, which were formerly cognizable by the Securities and Exchange
Commission under PD 902-A, have been transferred to the courts of general
jurisdiction. But, this does not change the fact that Rule 66 of the 1997 Rules
of Civil Procedure does not apply to quo warranto cases against persons who
usurp an office in a private corporation. Presently, Section 1(a) of Rule 66
reads thus:
Section 1. Action by Government against individuals. - An action for the
usurpation of a public office, position or franchise may be commenced by a
verified petition brought in the name of the Republic of the Philippines
against
(a) A person who usurps, intrudes into, or unlawfully holds or exercises a
public office, position or franchise;
xxx
As explained in the Unilongo12 case, Section 1(a) of Rule 66 of the present
Rules no longer contains the phrase "or an office in a corporation created by
authority of law" which was found in the old Rules. Clearly, the present Rule
66 only applies to actions of quo warranto against persons who usurp a
public office, position or franchise; public officers who forfeit their office; and
46

associations which act as corporations without being legally incorporated

despite the passage of R.A. No. 8799. It is, therefore, The Interim Rules of
Procedure Governing Intra-Corporate Controversies Under R.A. No. 8799
(hereinafter the Interim Rules) which applies to the petition for quo
warranto filed by respondents before the trial court since what is being
questioned is the authority of herein petitioners to assume the office and act
as the board of directors and officers of St. John Hospital, Incorporated.
The Interim Rules provide thus:
Section 1. (a) Cases covered. - These Rules shall govern the procedure to be
observed in civil cases involving the following:
xxx
(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;
xxx
SEC. 5. Venue. - All actions covered by these Rules shall be commenced and
tried in the Regional Trial Court which has jurisdiction over the principal office
of the corporation, partnership, or association concerned. xxx (Emphasis
ours)
Pursuant to Section 5.2 of R.A. No. 8799, the Supreme Court promulgated
A.M. No. 00-11-03-SC (effective December 15, 2000) designating certain
branches of the Regional Trial Courts to try and decide cases formerly
cognizable by the Securities and Exchange Commission. For the Fifth Judicial
Region, this Court designated the following branches of the Regional Trial
Court, to wit:
Camarines Sur (Naga City)
Albay (Legaspi City)
Sorsogon (Sorsogon)

Branch 23, Judge Pablo M. Paqueo, Jr.

Branch 4, Judge Gregorio A. Consulta
Branch 52, Judge Honesto A. Villamor

Subsequently, the Court promulgated A.M. No. 03-03-03-SC, effective July 1,

2003, which provides that:
47

1. The Regional Courts previously designated as SEC Courts through

the: (a) Resolutions of this Court dated 21 November 2000, 4 July 2001, 12
November 2002, and 9 July 2002, all issued in A.M. No. 00-11-03-SC, (b)
Resolution dated 27 August 2001 in A.M. No. 01-5-298-RTC; and (c)
Resolution dated 8 July 2002 in A.M. No. 01-12-656-RTC are
hereby DESIGNATED and shall be CALLED as Special Commercial
Courts to try and decide cases involving violations of Intellectual
Property Rights which fall within their jurisdiction and those cases formerly
cognizable by the Securities and Exchange Commission;
xxx
4. The Special Commercial Courts shall have jurisdiction over cases
arising within their respective territorial jurisdiction with respect to
the National Capital Judicial Region and within the respective provinces with
respect to the First to Twelfth Judicial Regions. Thus, cases shall be filed in
the Office of the Clerk of Court in the official station of the
designated Special Commercial Court; (Emphasis ours)
The next question then is, which branch of the Regional Trial Court has
jurisdiction over the present action for quo warrato? Section 5 of the Interim
Rules provides that the petition should be commenced and tried in the
Regional Trial Court that has jurisdiction over the principal office of the
corporation. It is undisputed that the principal office of the corporation is
situated at Goa, Camarines Sur. Thus, pursuant to A.M. No. 00-11-03-SC
and A.M. No. 03-03-03-SC, it is the Regional Trial Court designated
as Special Commercial Courtsin Camarines Sur which shall have
jurisdiction over the petition for quo warranto filed by hereinRespondents.
Evidently, the RTC-Br. 58 in San Jose, Camarines Sur is bereft of jurisdiction
over respondents' petition forquo warranto. Based on the allegations in the
petition, the case was clearly one involving an intra-corporate dispute. The
trial court should have been aware that under R.A. No. 8799 and the
aforementioned administrative issuances of this Court, RTC-Br. 58 was never
designated as a Special Commercial Court; hence, it was never vested with
jurisdiction over cases previously cognizable by the SEC.
Such being the case, RTC-Br. 58 did not have the requisite authority or power
to order the transfer of the case to another branch of the Regional Trial
Court. The only action that RTC-Br. 58 could take on the matter was to
dismiss the petition for lack of jurisdiction. In HLC Construction and
Development Corp. v. Emily Homes Subdivision Homeowners'
Association,13 the Court held that the trial court, having no jurisdiction over
the subject matter of the complaint, should dismiss the same so the issues
therein could be expeditiously heard and resolved by the tribunal which was
clothed with jurisdiction.
48

Note, further, that respondents' petition for quo warranto was filed as late as
2005. A.M. No. 03-03-03-SC took effect as early as July 1, 2003 and it was
clearly provided therein that such petitions shall be filed in the Office of
the Clerk of Court in the official station of the designated Special
Commercial Court. Since the official station of the designated Special
Commercial Court for Camarines Sur is the Regional Trial Court in Naga City,
respondents should have filed their petition with said court. A.M. No. 00-1103-SC having been in effect for four years and A.M. No. 03-03-03-SC having
been in effect for almost two years by the time respondents filed their
petition, there is no cogent reason why respondents were not aware of the
appropriate court where their petition should be filed.
The ratiocination of RTC-Br.58 that Administrative Circular No. 08-2001
authorized said trial court to order the transfer of respondents' petition to the
Regional Trial Court of Naga City is specious because as of the time of filing
of the petition, A.M. No. 03-03-03-SC, which clearly stated that cases
formerly cognizable by the SEC should be filed with the Office of the Clerk
of Court in the official station of the designated Special Commercial
Court, had been in effect for almost two years. Thus, the filing of the
petition with the Regional Trial Court of San Jose, Camarines Sur, which had
no jurisdiction over those kinds of actions, was clearly erroneous.
WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The
Order of the Regional Trial Court of San Jose, Camarines Sur dated July 13,
2005 is SET ASIDE for being NULL and VOID. The petition for quo
warranto in Civil Case No. T-1007 (now re-docketed as SEC Case No. RTC
2005-0001), entitled "Jose Pierre A. Panday, et al. v. Sps. Joaquin M. Calleja,
Jr., et al." is ordered DISMISSED.
SO ORDERED.
7. SECOND DIVISION
[G.R. NO. 153951. July 29, 2005]
PHILIPPINE NATIONAL BANK, Petitioners, v. SANAO MARKETING
CORPORATION, SPOUSES AMADO A. SANAO and SOLEDAD F. SANAO
and SPOUSES WILLIAM (Willy) F. SANAO and HELEN SANAO and the
COURT OF APPEALS, Respondents.
DECISION
TINGA, J.:

49

Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court,
wherein petitioner Philippine National Bank (PNB) seeks the review of
the Decision2 rendered by the Court of Appeals Thirteenth Division in C.A.
G.R. SP No. 63162. The assailed Decision nullified two orders3 of the Regional
Trial Court (RTC) of Pili, Camarines Sur, Branch 32, which respectively
granted PNB's petition for issuance of a writ of possession over seven (7)
parcels of land and directed the execution pending appeal of such writ of
possession.
The antecedents are as follows:
In July 1997, Sanao Marketing Corporation, the spouses Amado A. Sanao and
Soledad F. Sanao and the spouses William (Willy) F. Sanao and Helen Sanao
(all respondents herein), as joint and solidary debtors, obtained a loan in the
amount of One Hundred Fifty Million Pesos (P150,000,000.00) from PNB
secured by a real estate mortgage of several parcels of land situated in the
municipalities of Pili, Tigaon and Camaligan, all of Camarines Sur, and Naga
City.4 The contract expressly provided that the mortgage shall be governed
by the provisions of Act No. 3135, as amended.5 The pertinent portions of
said contract provide that:
....
F. FORECLOSURE, POWER OF ATTORNEY, RECEIVERSHIP
If at any time the Mortgagors fail or refuse to pay the obligation herein
secured, or any of the amortization of such indebtedness when due, or to
comply with any of the conditions and stipulations herein agreed, or shall
during the time this mortgage is in force, institute insolvency proceedings or
be involuntarily declared insolvent, or shall use the proceeds of this loan for
purposes other than those specified herein, or if the mortgage cannot be
recorded in or the Mortgagors fail to register the same with the
corresponding Registry of Deeds, then all the obligations of the Mortgagors
secured by this mortgage and all the amortization thereof shall immediately
become due, payable and defaulted and the Mortgagee may immediately
foreclose this mortgage judicially in accordance with the Rules of Court, or
extrajudicially in accordance with Act No. 3135, as amended, and P.D. 385.
For the purpose of extrajudicial foreclosure, the Mortgagors hereby appoint
the Mortgagee their Attorney-in-Fact to sell the properties mortgaged under
Act No. 3135, as amended, to sign all documents and perform any act
50

requisite and necessary to accomplish said purpose and to appoint its

substitute as Attorney-in-Fact with the same powers as above specified. In
case of judicial foreclosure, the Mortgagors hereby consent to the
appointment of the Mortgagee or of any of its employees as receiver, without
any bond, to take charge of the mortgaged properties at once, and to hold
possession of the same and the rents, benefits and profits derived from the
mortgaged properties before the sale, less costs and expenses of the
receivership. . . .6
For failure of respondents to fully pay the loan upon its maturity, PNB caused
the extrajudicial foreclosure of the mortgage through a certain Atty. Marvel C.
Clavecilla (Atty. Clavecilla), a notary public for and in the City of Naga. The
Notice of Extra-Judicial Foreclosure Sale announced that the sale of 13 titles
consisting of 14 parcels of land located in Camarines Sur and Naga City is
scheduled on 22 March 1999 at nine o'clock in the morning or soon
thereafter, at the entrance of the Municipal Court of Pili, Camarines Sur. This
notice was published in the 7, 14 and 21 February 1999 issues of the Vox
Bikol - a weekly tabloid published every Sunday and circulated in the Bicol
region and continents with Bicol communities.7
Thereafter, Atty. Clavecilla executed a Provisional Certificate of Sale8 dated
26 April 1999 certifying that on the 22nd day of March 1999, at exactly ten
o'clock in the morning, he sold at a public auction at the "lobby/main
entrance of the Regional Trial Court, Hall of Justice, Naga City" the mortgaged
properties to PNB for Two Hundred Thirteen Million One Hundred Sixty-Two
Thousand Seven Hundred Eighty - Seven and Fifty Centavos
(P213,162,787.50), which amount the latter considered as payment pro
tanto of petitioners' loan.9 This Provisional Certificate of Sale was registered
with the Registry of Deeds of Camarines Sur on 3 May 1999 and with the
Registry of Deeds of Naga City on 16 June 1999 for the properties
respectively covered by their registries.10
On 26 April 2000, respondents Amado A. Sanao and Sanao Marketing
Corporation filed a complaint11 with the RTC of Naga City, Branch 61, against
PNB, the Register of Deeds of the City of Naga and the Province of Camarines
Sur, and Atty. Clavecilla, for the court to declare the Provisional Certificate of
Sale and the auction and foreclosure proceedings null and void.12
On 11 August 2000, PNB filed with the RTC of Pili, Camarines Sur, Branch 32,
a petition for the issuance of a writ of possession, docketed therein as Spec.
51

Proc. P-1182, over the properties located in Pili that are covered by Transfer
Certificates of Title Nos. 21448, 24221, 14133, 15218, 15489, 13856,
15216.13
To the petition, respondents Amado A. Sanao and Sanao Marketing
Corporation interposed an answer in opposition, with special and affirmative
defenses.14
PNB countered with its comments/reply to opposition.15
On 24 November 2000, the RTC of Pili issued its first assailed
order,16 granting the writ of possession prayed for by PNB.
Amado A. Sanao and Sanao Marketing Corporation filed a Motion for
Reconsideration w/ Opposition to the Motion for Execution Pending
Appeal,17 which was denied per the second assailed order18 dated 24 January
2001 of the RTC of Pili.19
Respondents then filed a Petition 20 for certiorari and prohibition under Rule
65 of the Rules of Court before the Court of Appeals, imputing grave abuse of
discretion on the part of the RTC of Pili in the issuance of the two assailed
orders. The Petition likewise prayed for the issuance of a temporary
restraining order which the Court of Appeals granted on 15 February 2001,
enjoining the RTC of Pili and PNB from implementing the challenged orders.
In their Memorandum,21 respondents pointed out that the PNB had allegedly
failed to submit the application for extrajudicial foreclosure of mortgage to
the proper clerk of court after payment of the filing fee, in contravention of
Supreme Court Administrative Order No. 3 and Administrative Circular No. 398. In addition, respondents averred that the foreclosure sale was null and
void as it was done at the lobby/main entrance of the RTC Hall of Justice,
Naga City and not at the entrance of the Municipal Trial Court of Pili,
Camarines Sur as published.22
PNB, on the other hand, posited that the invoked administrative order is not
applicable as extrajudicial proceedings conducted by a notary public, as in
the case at bar, do not fall within the contemplation of the directive.23
With regard to the variance of the venues of the auction sale as published
in Vox Bikol and as recorded in the Provisional Certificate of Sale, PNB
asserted that there was no violation of Act No. 313524 or of the terms of the
52

real estate mortgage contract,25 as the sale of the mortgaged properties

located in Camarines Sur were held in Naga City which is well within the
territorial jurisdiction of said province.26
The Court of Appeals ruled in favor of herein respondents.27 The Court of
Appeals rendered a litany of lapses that the notary public committed in the
conduct of the foreclosure proceedings which in its estimation had effectively
undermined the soundness of the foreclosure sale. Accordingly, the Court of
Appeals held that the Provisional Certificate of Sale, upon which the issuance
of the writ of possession was based, is fatally infirm, and that consequently,
the writ of possession was not validly issued as the procedural requirements
for its issuance were not satisfied.28
Thus, the Court of Appeals declared null and void the two assailed orders of
the RTC of Pili for having been issued with grave abuse of discretion
amounting to lack or excess of jurisdiction.29
Aggrieved by the Decision, PNB filed the instant petition, arguing in the main
that in nullifying the orders of the RTC of Pili, the Court of Appeals departed
from the accepted and usual course of judicial proceedings as the issuance
of writs of possession is purely ministerial on the part of the trial court. 30
In their comment,31 respondents point out that the instant petition should not
be given due course as it is not sufficient in form and substance.
Respondents proffered the following grounds, thus: (1) there was no special
of attorney or Board Resolution or Secretary's Certificate attached to the
petition which could serve as basis for the petitioners' signatory Domitila A.
Amon to verify or attest to the truth of the allegations contained therein, in
violation of existing laws and jurisprudence on the matter; (2) petitioners
failed to move for a reconsideration of the assailed Decision of the Court of
Appeals; (3) petitioners failed to disclose another similar case involving the
same legal issues now pending in the Twelfth Division of the Court of
Appeals, docketed as C.A. G.R. CV No. 73718, which is an appeal from an
original petition for issuance of writ of possession filed by the same
petitioner before the RTC of San Jose, Camarines Sur, Branch 58; (4)
petitioner failed to furnish the Twelfth Division of the Court of Appeals a copy
of the petition in C.A. G.R. No. 73718 pending therein, in violation of Section
5, Rule 7 of the 1997 Rules of Civil Procedure, which failure could lead to
conflicting resolutions, between two divisions of the Court of Appeals and to
the giving of inadequate information to the Supreme Court; and (5) the
53

petition was only accompanied by Annexes A, B, C, D and E, which annexes

do not satisfy the requirements laid down in Sections 4 and 5 of Rule 45 of
the Rules of Court.32
Respondents also reiterate that the PNB in the conduct of the extrajudicial
foreclosure proceedings did not comply with Administrative Order No. 3 and
Administrative Circular No. 3-98, and that the notice of publication was not
sufficient to justify the execution of the Provisional Certificate of Sale.33
Traversing the alleged procedural errors, PNB in its Reply34 raise the following
arguments:
First, Mrs. Domitila A. Amon had authority to sign and verify its petition under
Board Resolution No. 15 dated 8 October 1997,35 in line with her authority to
prosecute and defend cases for and/or against the bank.36
Second, there are exceptions to the general rule that a motion for
reconsideration must first be filed before elevating a case to a higher court.
PNB insists that the Decision of the Court of Appeals is a patent nullity as it
runs counter to the provisions of Act No. 3135 and existing jurisprudence
stating that Administrative Order No. 3 covers judicial foreclosures.37 As such,
the filing of a motion for reconsideration prior to elevating the case
on certiorari may be dispensed with.
Lastly, the case which according to respondents is not mentioned in the
certification of non-forum shopping was commenced by respondents
themselves, not PNB, and that the issues similar to those in the instant case
have yet to be raised in respondents' appeal to the Court of Appeals.
Moreover, the subject matter and the properties involved in the other case
are altogether different.38
There is merit in the petition.
A writ of possession is "a writ of execution employed to enforce a judgment
to recover the possession of land. It commands the sheriff to enter the land
and give possession of it to the person entitled under the judgment."39
A writ of possession may be issued under the following instances:40 (1)in land
registration proceedings under Section 17 of Act 496;41 (2) in a judicial
foreclosure, provided the debtor is in possession of the mortgaged realty and
no third person, not a party to the foreclosure suit, had intervened; (3) in an
54

extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No.

3135, as amended by Act No. 4118;42 and (4) in execution sales (last
paragraph of Section 33, Rule 39 of the Rules of Court).43
The present case falls under the third instance. Under Section 7 of Act No.
3135, as amended by Act No. 4118, a writ of possession may be issued
either (1) within the one-year redemption period, upon the filing of a bond, or
(2) after the lapse of the redemption period, without need of a
bond.44 Section 7 of Act No. 3135, as amended by Act No. 4118, provides:
SECTION 7. In any sale made under the provisions of this Act, the purchaser
may petition the Court of First Instance of the province or place where the
property or any part thereof is situated, to give him possession thereof
during the redemption period, furnishing bond in an amount equivalent to
the use of the property for a period of twelve months, to indemnify the
debtor in case it be shown that the sale was made without violating the
mortgage or without complying with the requirements of this Act. Such
petition shall be made under oath and filed in form of an ex parte motion in
the registration or cadastral proceedings if the property is registered, or in
special proceedings in case of property registered under the Mortgage Law
or under section one hundred and ninety-four of the Administrative Code, or
of any other real property encumbered with a mortgage duly registered in
the office of any register of deeds in accordance with any existing law, and in
each case the clerk of court shall, upon the filing of such petition, collect the
fees specified in paragraph eleven of section one hundred and fourteen of
Act Numbered Four hundred and ninety-six, and the court shall, upon
approval of the bond, order that a writ of possession issue, addressed to the
sheriff of the province in which the property is situated, who shall execute
said order immediately.
Under the above-quoted provision, the purchaser in a foreclosure sale may
apply for a writ of possession during the redemption period by filing an ex
parte motion under oath for that purpose in the corresponding registration or
cadastral proceeding in the case of property covered by a Torrens title. Upon
the filing of such motion and the approval of the corresponding bond, the law
also in express terms directs the court to issue the order for a writ of
possession.45
A writ of possession may also be issued after consolidation of ownership of
the property in the name of the purchaser. It is settled that the buyer in a
55

foreclosure sale becomes the absolute owner of the property purchased if it

is not redeemed during the period of one year after the registration of sale.
As such, he is entitled to the possession of the property and can demand it
any time following the consolidation of ownership in his name and the
issuance of a new transfer certificate of title. In such a case, the bond
required in Section 7 of Act No. 3135 is no longer necessary. Possession of
the land then becomes an absolute right of the purchaser as confirmed
owner. Upon proper application and proof of title, the issuance of the writ of
possession becomes a ministerial duty of the court.46 It was held, thus:
As the purchaser of the properties in the extra-judicial foreclosure sale, the
PNCB is entitled to a writ of possession therefore. The law on extrajudicial
foreclosure of mortgage provides that a purchaser in an extrajudicial
foreclosure sale may take possession of the foreclosed property even before
the expiration of the redemption period, provided he furnishes the necessary
bond. Possession of the property may be obtained by filing an ex
parte motion with the regional trial court of the province or place where the
property is situated. Upon filing of the motion and the required bond, it
becomes a ministerial duty of the court to order the issuance of a writ of
possession in favor of the purchaser. After the expiration of the one-year
period without redemption being effected by the property owner, the right of
the purchaser to the possession of the foreclosed property becomes
absolute. The basis of this right to possession is the purchaser's ownership of
the property. Mere filing of an ex parte motion for the issuance of the writ of
possession would suffice, and no bond is required.47
Any question regarding the regularity and validity of the sale, as well as the
consequent cancellation of the writ, is to be determined in a subsequent
proceeding as outlined in Section 8 of Act No. 3135, as amended by Act No.
4118. Such question is not to be raised as a justification for opposing the
issuance of the writ of possession, since, under the Act, the proceeding is ex
parte.48
In case it is disputed that there was violation of the mortgage or that the
procedural requirements for the foreclosure sale were not followed, Section 8
of Act No. 3135, as amended by Act No. 4118, provides, to wit:
SECTION 8. The debtor may, in the proceedings in which possession was
requested, but not later than thirty days after the purchaser was given
possession, petition that the sale be set aside and the writ of possession
56

cancelled, specifying the damages suffered by him, because the mortgage

was not violated or the sale was not made in accordance with the provisions
hereof, and the court shall take cognizance of this petition in accordance
with the summary procedure provided for in section one hundred and twelve
of Act Number Four hundred and ninety-six; and if it finds the complaint of
the debtor justified, it shall dispose in his favor of all or part of the bond
furnished by the person who obtained possession. Either of the parties may
appeal from the order of the judge in accordance with section fourteen of Act
Numbered Four hundred and ninety-six; but the order of possession shall
continue in effect during the pendency of the appeal.
The law is clear that the purchaser must first be placed in possession. If the
trial court later finds merit in the petition to set aside the writ of possession,
it shall dispose the bond furnished by the purchaser in favor of the
mortgagor. Thereafter, either party may appeal from the order of the judge.
The rationale for the mandate is to allow the purchaser to have possession of
the foreclosed property without delay, such possession being founded on his
right of ownership.49
It has been consistently held that the duty of the trial court to grant a writ of
possession is ministerial. Such writ issues as a matter of course upon the
filing of the proper motion and the approval of the corresponding bond. The
court neither exercises its official discretion nor judgment.50 The judge
issuing the order following these express provisions of law cannot be charged
with having acted without jurisdiction or with grave abuse of discretion.51 If
only to stress the writ's ministerial character, we have, in previous cases,
disallowed injunction to prohibit its issuance, just as we have held that the
issuance of the same may not be stayed by a pending action for annulment
of mortgage or the foreclosure itself.52
In the case at bar, PNB has sufficiently established its right to the writ of
possession. It presented as documentary exhibits the contract of real estate
mortgage53 and the Provisional Certificate of Sale54 on the face of which
appears proof of its registration with the Registry of Deeds in Camarines Sur
on 3 May 1999. There is also no dispute that the lands were not redeemed
within one year from the registration of the Provisional Certificate of Sale. It
should follow, therefore, that PNB has acquired an absolute right, as
purchaser, to the writ of possession. The RTC of Pili had the ministerial duty
to issue that writ, as it did actually, upon mere motion, conformably to
Section 7 of Act No. 3135, as amended.55
57

However on certiorari , the Court of Appeals declared null and void the orders
of the RTC of Pili granting the writ of possession and denying respondents'
motion for reconsideration. The Court of Appeals exhaustively discussed the
reasons for such a declaration, noting the procedural errors of PNB in the
conduct of the foreclosure proceedings which allegedly rendered the
foreclosure sale and the Provisional Certificate of Sale of doubtful validity.
The Court of Appeals relied on the case of Cometa v. Intermediate Appellate
Court56 in holding that "for a writ of possession to be validly issued '. in an
extrajudicial foreclosure proceeding, all the procedural requirements should
be complied with. Any flaw afflicting its stages could affect the validity of its
issuance."57 The Court of Appeals reproached the RTC of Pili Sur for granting
the writ despite the existence of these alleged procedural lapses.
This was erroneous. The judge to whom an application for writ of possession
is filed need not look into the validity of the mortgage or the manner of its
foreclosure. In the issuance of a writ of possession, no discretion is left to the
trial court. Any question regarding the cancellation of the writ or in respect of
the validity and regularity of the public sale should be determined in a
subsequent proceeding as outlined in Section 8 of Act No. 3135.58
In fact, the question of the validity of the foreclosure proceedings can be
threshed out in Civil Case No. RTC 2000-00074, pending before the RTC of
Naga City, Branch 61, which was filed by respondents before PNB had filed a
petition for the issuance of a writ of possession. The Court of Appeals should
not have ruled on factual issues on which the RTC of Naga had yet to make
any finding. Besides, a review of such factual matters is not proper in a
Petition for Certiorari.
Having noted the foregoing, the Court dispenses with the need to discuss the
soundness of the foreclosure proceedings, the authenticity of the Provisional
Certificate of Sale, and the applicability of Supreme Court Administrative
Order No. 3 and Administrative Circular No. 3-98. A review of the foregoing
matters properly lies within the jurisdiction of the RTC of Naga City, Branch
61.
It is worthy of note that the pendency of the case for annulment of the
foreclosure proceedings is not a bar to the issuance of the writ of
possession.59 Pending such proceedings whose subject is the validity of the
foreclosure proceedings, the purchaser in a foreclosure sale is entitled to the
58

possession of property. Until such time the foreclosure sale is annulled, the
issuance of the writ of possession is ministerial on the part of the RTC of Pili. 60
In addition, the Court of Appeals' reliance on the case of Cometa61 is
misplaced. The cited case involved the issuance of a writ of possession
following an execution sale. The declaration therein that the issuance of said
writ is dependent on the valid execution of the procedural stages preceding
it does not contemplate writs of possession available in extrajudicial
foreclosures of real estate mortgages under Section 7 of Act No. 3135, as
amended by Act No. 4118.
Considering that the RTC of Pili issued the writ of possession in compliance
with the provisions of Act No. 3135, as amended, it cannot be charged with
having acted in excess of its jurisdiction or with grave abuse of discretion.
Absent grave abuse of discretion, respondents should have filed an ordinary
appeal instead of a petition for certiorari . The soundness of the order
granting the writ of possession is a matter of judgment with respect to which
the remedy is ordinary appeal. An error of judgment committed by a court in
the exercise of its legitimate jurisdiction is not the same as "grave abuse of
discretion." Errors of judgment are correctible by appeal, while those of
jurisdiction are reviewable by certiorari .62
Palpably, the Court of Appeals exceeded its jurisdiction when it granted
respondents' petition for certiorariand set aside the orders dated 24
November 2000 and 24 January 2001 of the RTC of Pili in Spec. Proc No. P1182, and also when it made a determination as to the validity of the
foreclosure proceedings in clear violation of Act No. 3135. The contention,
therefore, that the Court should not entertain the instant petition until a
motion for reconsideration has been filed may not hold water where the
proceeding in which the error occurred is a patent nullity. Thus, we hold that
a motion for reconsideration may be dispensed with in the instant case.63
Anent the other procedural grounds for the denial of the instant petition,
suffice it to say that PNB's rejoinder has sufficiently refuted respondents'
assertions. We find and so hold that there was substantial compliance with
the procedural requirements of the Court.
Although belatedly filed, the Resolution of the PNB Board amply
demonstrates Mrs. Domitila A. Amon's authority to sign and verify the instant
petition. PNB likewise was not obligated to disclose the alluded case pending
59

before the Court of Appeals as it was not initiated by the bank and, more
importantly, the subject matter and the properties involved therein are
altogether different.64 It is well to remember at this point that rules of
procedure are but mere tools designed to facilitate the attainment of justice.
Their strict and rigid application which would result in technicalities that tend
to frustrate rather than promote substantial justice, must always be
avoided.65 In proper cases, procedural rules may be relaxed or suspended in
the interest of substantial justice.66 And the power of the Court to except a
particular case from its rules whenever the purposes of justice require it
cannot be questioned.67
WHEREFORE, the instant petition is GRANTED. The Decision of the Court of
Appeals dated 11 June 2002 in CA-G.R. S.P. No. 63162 is REVERSED and SET
ASIDE. The orders dated 24 November 2000 and 24 January 2001 of the
Regional Trial Court of Pili, Camarines Sur, Branch 32 in Spec. Pro. No. P-1182
directing the issuance of a writ of possession in favor of PNB are AFFIRMED.
SO ORDERED.
8. THIRD DIVISION
[G.R. NO. 155179 : August 24, 2007]
VICTORINO QUINAGORAN, Petitioner, v. COURT OF APPEALS and THE
HEIRS OF JUAN DE LA CRUZ, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, assailing the Decision1 of the Court Appeals (CA) in CA-GR SP
No. 60443 dated May 27, 2002 and its Resolution2 dated August 28, 2002,
which denied petitioner's Motion for Reconsideration.
The factual antecedents.
The heirs of Juan dela Cruz, represented by Senen dela Cruz (respondents),
filed on October 27, 1994 a Complaint for Recovery of Portion of Registered
Land with Compensation and Damages against Victorino Quinagoran
(petitioner) before the Regional Trial Court (RTC) Branch XI of Tuao, Cagayan,
60

docketed as Civil Case No. 240-T.3 They alleged that they are the co-owners
of a a parcel of land containing 13,100 sq m located at Centro, Piat, Cagayan,
which they inherited from the late Juan dela Cruz;4 that in the mid-70s,
petitioner started occupying a house on the north-west portion of the
property, covering 400 sq m, by tolerance of respondents; that in 1993, they
asked petitioner to remove the house as they planned to construct a
commercial building on the property; that petitioner refused, claiming
ownership over the lot; and that they suffered damages for their failure to
use the same.5 Respondents prayed for the reconveyance and surrender of
the disputed 400 sq m, more or less, and to be paid the amount ofP5,000.00
monthly until the property is vacated, attorney's fees in the amount
of P20,000.00, costs of suit and other reliefs and remedies just and
equitable.6
Petitioner filed a Motion to Dismiss claiming that the RTC has no jurisdiction
over the case under Republic Act (R.A.) No. 7691, which expanded the
exclusive original jurisdiction of the Municipal Trial Court (MTC) to include all
civil actions which involve title to, or possession of, real property, or any
interest therein which does not exceed P20,000.00. He argued that since the
346 sq m lot which he owns adjacent to the contested property has an
assessed value of P1,730.00, the assessed value of the lot under controversy
would not be more than the said amount.7
The RTC denied petitioner's Motion to Dismiss in an Order dated November
11, 1999, thus:
The Court finds the said motion to be without merit. The present action on
the basis of the allegation of the complaint partakes of the nature of action
publicciana (sic) and jurisdiction over said action lies with the Regional Trial
Court, regardless of the value of the property. This is so because in
paragraph 8 of the complaint, it is alleged that the plaintiff demanded from
the defendant the removal of the house occupied by the defendant and the
possession of which is "Only due to Tolerance (sic) of herein plaintiffs".
WHEREFORE, for lack of merit, the motion to dismiss is hereby denied.8
Petitioner's Motion for Reconsideration was also denied by the RTC. 9
Petitioner then went to the CA on a Petition for Certiorari and Prohibition
seeking the annulment of the Orders of the RTC.10
61

On May 27, 2002, the CA rendered the herein assailed Decision dismissing
petitioner's action and affirming in toto the RTC.11 Pertinent portions of said
Decision, read:
At the onset, we find that the complaint filed by the Heirs of Juan dela Cruz,
represented by Senen dela Cruz adequately set forth the jurisdictional
requirements for a case to be cognizable by the Regional Trial Court. The
Complaint is captioned "recovery of portion of registered land" and it
contains the following allegations:
7. That since plaintiffs and defendant were neighbors, the latter being the
admitted owner of the adjoining lot, the former's occupancy of said house by
defendant was only due to the tolerance of herein plaintiffs;
8. That plaintiffs, in the latter period of 1993, then demanded the removal of
the subject house for the purpose of constructing a commercial building and
which herein defendant refused and in fact now claims ownership of the
portion in which said house stands;
9. That repeated demands relative to the removal of the subject house were
hence made but which landed on deaf ears;
10. That a survey of the property as owned by herein plaintiffs clearly
establishes that the subject house is occupying Four Hundred (400) square
meters thereof at the north-west portion thereof, as per the approved survey
plan in the records of the Bureau of Lands.
xxx
It is settled that when the complaint fails to aver facts constitutive of forcible
entry or unlawful detainer, as where it does not state how entry was effected
or how and when dispossession started, the remedy should either be
an accion publiciana or an accion reinvindicatoria in the proper regional trial
court. In the latter instances, jurisdiction pertains to the Regional Trial Court.
As another legal recourse from a simple ejectment case governed by the
Revised Rules of Summary Procedure, an accion publiciana is the plenary
action to recover the right of possession when dispossession has lasted more
than one year or when dispossession was effected by means other than
those mentioned in Rule 70 of the Rules of Court. Where there is no
allegation that there was denial of possession through any of the methods
62

stated in Section 1, Rule 70 of the Rules of Court, or where there is no lease

contract between the parties, the proper remedy is the plenary action of
recovery of possession. Necessarily, the action falls within the jurisdiction of
the Regional Trial Court. Thus, we find that the private respondents [heirs of
dela Cruz] availed of the proper remedy when they filed the action before the
court a quo.
Undoubtedly, the respondent court therefore did not act with grave abuse of
discretion amounting to or in excess of jurisdiction in denying Quinagoran's
Motion to Dismiss and the Motion for Reconsideration, thereof, because it has
jurisdiction to hear and decide the instant case.
xxx
It would not be amiss to point out that the nature of the action and
jurisdiction of courts are determined by the allegations in the complaint. As
correctly held by the Regional Trial Court, "the present action on the basis of
the allegation of the complaint partakes of the nature of action
publiciana and jurisdiction over said action lies with the Regional Trial Court
regardless of the value of the property. Therefore, we completely agree with
the court a quo's conclusion that the complaint filed by the Heirs of Juan dela
Cruz, represented by Senen dela Cruz, is in the nature of an accion
publiciana and hence it is the Regional Trial Court which has jurisdiction over
the action, regardless of the assessed value of the property subject of
present controversy.12
Petitioner's Motion for Reconsideration was denied on August 28, 2002 for
lack of merit.13
Petitioner now comes before this Court on a Petition for Review claiming that
under R.A. No. 7691 the jurisdiction of the MTC, Metropolitan Trial Court
(MeTC), and Municipal Trial Court in Cities (MTCC) was expanded to include
exclusive original jurisdiction over civil actions when the assessed value of
the property does not exceed P20,000.00 outside Metro Manila
and P50,000.00 within Metro Manila.14 He likewise avers that it is an
indispensable requirement that the complaint should allege the assessed
value of the property involved.15 In this case, the complaint does not allege
that the assessed value of the land in question is more than P20,000.00.
There was also no tax declaration attached to the complaint to show the
assessed value of the property. Respondents therefore failed to allege that
63

the RTC has jurisdiction over the instant case.16 The tax declaration covering
Lot No. 1807 owned by respondents and where the herein disputed property
is purportedly part - - a copy of which petitioner submitted to the CA - - also
shows that the value of the property is only P551.00.17 Petitioner then prays
that the CA Decision and Resolution be annulled and set aside and that the
complaint of herein respondents before the trial court be dismissed for lack
of jurisdiction.18
Respondents contend that: the petition is without factual and legal bases,
and the contested decision of the CA is entirely in accordance with
law;19 nowhere in the body of their complaint before the RTC does it state
that the assessed value of the property is below P20,000.00;20 the contention
of petitioner in his Motion to Dismiss before the RTC that the assessed value
of the disputed lot is below P20,000.00 is based on the assessed value of an
adjacent property and no documentary proof was shown to support the said
allegation;21 the tax declaration which petitioner presented, together with his
Supplemental Reply before the CA, and on the basis of which he claims that
the disputed property's assessed value is only P551.00, should also not be
given credence as the said tax declaration reflects the amount of P56,100.00
for the entire property.22
The question posed in the present petition is not complicated, i.e., does the
RTC have jurisdiction over all cases of recovery of possession regardless of
the value of the property involved?cralaw library
The answer is no. The doctrine on which the RTC anchored its denial of
petitioner's Motion to Dismiss, as affirmed by the CA - - that all cases of
recovery of possession or accion publiciana lies with the regional trial courts
regardless of the value of the property - - no longer holds true. As things now
stand, a distinction must be made between those properties the assessed
value of which is below P20,000.00, if outside Metro Manila; and P50,000.00,
if within.
Republic Act No. 769123 which amended Batas Pambansa Blg. 12924 and
which was already in effect25when respondents filed their complaint with the
RTC on October 27, 1994,26 expressly provides:
SEC. 19. Jurisdiction in civil cases - Regional Trial Courts shall exercise
exclusive original jurisdiction:
xxx
64

(2) In all civil actions which involve the title to or possession of, real
property, or any interest therein, where the assessed value of the
property involved exceeds Twenty thousand pesos (P20,000.00) or,
for civil actions in Metro Manila, where such value exceeds Fifty thousand
pesos (P50,000.00) except for forcible entry into and unlawful detainer of
lands or buildings, original jurisdiction over which is conferred upon the
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts.
xxx
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
(3) Exclusive original jurisdiction in all civil actions which involve
title to, or possession of, real property, or any interest therein
where the assessed value of the property or interest therein does
not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in
Metro Manila, where such assessed value does not exceed Fifty thousand
pesos (P50,000.00) exclusive of interest, damages or whatever kind,
attorney's fees, litigation expenses and costs: Provided That in cases of land
not declared for taxation purposes, the value of such property shall be
determined by the assessed value of the adjacent lots.(Emphasis
supplied)cralawlibrary
The Court has also declared that all cases involving title to or possession of
real property with an assessed value of less than P20,000.00 if outside Metro
Manila, falls under the original jurisdiction of the municipal trial court.27
In Atuel v. Valdez28 the Court likewise expressly stated that:
Jurisdiction over an accion publiciana is vested in a court of general
jurisdiction. Specifically, the regional trial court exercises exclusive original
jurisdiction "in all civil actions which involve x x x possession of real
property." However, if the assessed value of the real property involved
does not exceedP50,000.00 in Metro Manila, and P20,000.00 outside
65

of Metro Manila, the municipal trial court exercises jurisdiction over

actions to recover possession of real property.29
That settled, the next point of contention is whether the complaint must
allege the assessed value of the property involved. Petitioner maintains that
there should be such an allegation, while respondents claim the opposite.
In no uncertain terms, the Court has already held that a complaint must
allege the assessed value of the real property subject of the complaint or the
interest thereon to determine which court has jurisdiction over the
action.30 This is because the nature of the action and which court has original
and exclusive jurisdiction over the same is determined by the material
allegations of the complaint, the type of relief prayed for by the plaintiff and
the law in effect when the action is filed, irrespective of whether the plaintiffs
are entitled to some or all of the claims asserted therein.31
In this case, the complaint denominated as "Recovery of Portion of
Registered Land with Compensation and Damages," reads:
1. That plaintiffs are the only direct and legitimate heirs of the late Juan dela
Cruz, who died intestate on February 3, 1977, and are all residents of Centro,
Piat, Cagayan;
xxx
4. That plaintiffs inherited from x x x Juan dela Cruz x x x a certain parcel of
land x x x containing an area of 13,111 square meters.
5. That sometime in the mid-1960's, a house was erected on the north-west
portion of the aforedescribed lot x x x.
xxx
7. That since plaintiffs and defendant were neighbors, the latter being the
admitted owner of the adjoining lot, the former's occupancy of said house by
defendant was only due to the tolerance of herein plaintiffs;
8. That plaintiffs, in the latter period of 1993, then demanded the removal of
the subject house for the purpose of constructing a commercial building and
which herein defendant refused and in fact now claims ownership of the
portion in which said house stands;
66

9. That repeated demands relative to the removal of the subject house were
hence made but which landed on deaf ears;
10. That a survey of the property as owned by herein plaintiffs clearly
establishes that the subject house is occupying Four Hundred (400) square
meters thereof at the north-west portion thereof, as per the approved survey
plan in the records of the Bureau of Lands.32
Nowhere in said complaint was the assessed value of the subject property
ever mentioned. There is therefore no showing on the face of the complaint
that the RTC has exclusive jurisdiction over the action of the
respondents.33 Indeed, absent any allegation in the complaint of the
assessed value of the property, it cannot be determined whether the RTC or
the MTC has original and exclusive jurisdiction over the petitioner's
action.34 The courts cannot take judicial notice of the assessed or market
value of the land.35 chanrobles virtual law library
Jurisdiction of the court does not depend upon the answer of the defendant
or even upon agreement, waiver or acquiescence of the parties.36 Indeed, the
jurisdiction of the court over the nature of the action and the subject matter
thereof cannot be made to depend upon the defenses set up in the court or
upon a motion to dismiss for, otherwise, the question of jurisdiction would
depend almost entirely on the defendant.37
Considering that the respondents failed to allege in their complaint the
assessed value of the subject property, the RTC seriously erred in denying
the motion to dismiss. Consequently, all proceedings in the RTC are null and
void,38 and the CA erred in affirming the RTC.39
WHEREFORE, the petition is GRANTED. The Court of Appeals's Decision in
CA-GR SP No. 60443 dated May 27, 2002 and its Resolution dated August 28,
2002, are REVERSED and SET ASIDE. The Regional Trial Court's Orders
dated November 11, 1999 and May 11, 2000, and all proceedings therein are
declared NULL and VOID. The complaint in Civil Case No. 240-T is dismissed
without prejudice.
No costs.
SO ORDERED.
9. SECOND DIVISION
67

[G.R. NO. 148759 : June 8, 2006]

GERMELINA TORRES RACAZA and BERNALDITA TORRES
PARAS, Petitioners, v. ERNESTO GOZUM,1Respondent.
DECISION
AZCUNA, J.:
In this Petition for Review on Certiorariunder Rule 45 of the Rules of Court,
petitioners Germelina Torres Racaza and Bernaldita Torres Paras seek the
nullification of the decision2 dated July 12, 2000 as well as the
resolution3 dated June 28, 2001 rendered by the Court of Appeals (CA) in CAG.R. CV No. 61227 which reversed and set aside the decision4 dated
September 30, 1998 of the Regional Trial Court (RTC), Branch 158 of Pasig
City, consequently dismissing the complaint for accion publiciana filed by
petitioners against respondent Ernesto Gozum.
The antecedents of this case are as follows:
The plaintiffs are the registered co-owners of a parcel of land under Transfer
Certificate of Title No. PT-92411 situated at Amang Rodriguez Avenue,
Santolan, Pasig City. Standing on this lot is a 2-storey, 3-door apartment. The
property was formerly owned by the father of the plaintiffs, the late Carlos
Torres.
In 1981, defendant Ernesto Gozum occupied the back portion of the property
on a P3,500.00 monthly rental and continued to occupy the same even after
the death of Carlos Torres on December 26, 1993.
On July 1, 1995, plaintiffs sent Gozum a letter of demand to vacate [the]
premises (Annex G, Complaint). After a failed barangay conciliation, on
November 24, 1995, plaintiffs commenced an ejectment case [with the
Metropolitan Trial Court] against Gozum. The case was, however, dismissed
due to [a] technicality.
Almost two (2) years thereafter, on May 27, 1997, plaintiffs sent anew a
formal demand letter to vacate on the ground that the verbal contract of
lease over the property had already expired sometime in July 1995, and the
same has not been renewed and since then, defendant had discontinued
paying the monthly rentals of P3,500.00. When this latter demand was not
68

heeded, on June 4, 1997, the present complaint for recovery of possession

or accion publiciana was initiated before the Regional Trial Court of Pasig City.
The initial reaction of the defendant was to file a motion to dismiss based on
lack of jurisdiction claiming that the cause of action should have been for
unlawful detainer falling within the jurisdiction of the municipal trial courts
and that the provision of P.D. No. 1508 was not complied with.
In the Order dated September 30, 1997, the court a quo denied the motion
to dismiss on the ground that an unlawful detainer must be filed within one
(1) year from the notice to vacate [given] as early as July 1, 1995 and since
over two (2) years had passed when the case was filed, the proper action
is accion publiciana and no longer unlawful detainer.
Defendant thereafter filed his answer asseverating that he has a 10-year
contract of lease (Annex 1, Complaint) over the premises executed between
him and plaintiffs' late father on October 1, 1989 to expire on September 30,
1999 and so, the notice to vacate and the present case were all prematurely
done. Defendant likewise denied the allegation that he has not been paying
rentals. The truth is that it was the plaintiffs who refused to receive
payments so that the same were deposited with the bank. In the same
answer, defendant asserted that the contract of lease gave him the right of
first refusal to buy the property and in violation thereof, plaintiffs have
already sold the property to a certain Ernesto Brana.
After due proceedings on September 30, 1998, the appealed decision was
promulgated with the following dispositive portion:
"WHEREFORE, in view of the foregoing, judgment is rendered in favor of the
plaintiffs and against the defendant, ordering the latter and all persons
claiming rights under him to vacate the premises covered by Transfer
Certificate of Title No. PT-92411 of the Register of Deeds of Pasig City and
turn it over to the plaintiffs. Defendant is also ordered to pay plaintiffs the
amount of P3,500.00 effective July 1, 1995 until such time he shall have
vacated the premises. In addition, he shall pay attorney's fees in the amount
ofP30,000.00 plus P1,500.00 per court appearance and the cost of suit.
SO ORDERED.
Pasig City, September 30, 1998." (pp. 4-5, RTC Decision; pp. 76-77, Rollo).5
69

Aggrieved, respondent seasonably appealed the decision to the CA, ascribing

to the lower court the following errors:
I. THE COURT A QUO ERRED IN HOLDING THAT THE PLAINTIFFS HAVE A
LEGAL RIGHT TO RECOVER POSSESSION OF THE SUBJECT PROPERTY FROM
THE DEFENDANT.
II. THE LOWER COURT ERRED IN NOT RECOGNIZING THE VALIDITY OF THE
CONTRACT OF LEASE DATED OCTOBER 5, 1989, WHICH WAS PREVIOUSLY
EXECUTED BY THE PLAINTIFFS' FATHER, ATTORNEY CARLOS P. TORRES, AND
HEREIN DEFENDANT.
III. THE COURT A QUO ERRED IN DECLARING THAT THE ABOVEMENTIONED
CONTRACT IS FRAUDULENT, FABRICATED AND FICTITIOUS AND THAT THE
SIGNATURE OF ATTY. TORRES AFFIXED THEREON IS NOT GENUINE.
IV. THE TRIAL COURT COMMITTED ERROR IN AWARDING DAMAGES AND
ATTORNEY'S FEES IN FAVOR OF PLAINTIFFS.6
After the submission by the parties of their respective briefs but prior to the
resolution of the appeal, petitioners filed with the CA a Motion to Dismiss or
for Execution Pending Appeal7 dated December 6, 1999 on the ground that
the lease contract relied upon by respondent to justify his continued
possession of the subject property had, by its own terms and respondent's
own admission, expired on September 30, 1999.
Thereafter, without acting upon petitioners' motion to dismiss, the CA
reversed the decision of the RTC and dismissed the case, holding that the
lower court had no jurisdiction over the complaint for accion
publiciana considering that it had been filed before the lapse of one (1) year
from the date the last letter of demand to respondent had been made. The
CA ruled that the proper remedy of petitioners should have been an action
for unlawful detainer filed with the first level court, or the municipal or
metropolitan trial court.
Their motion for reconsideration having been denied, petitioners filed this
present petition arguing that:
1) The Court of Appeals decided a question of substance not in accord with
jurisprudence and remedial law authorities when it declared as null and void
the entire proceedings in the trial court despite the fact that:
70

(i) petitioners correctly filed the accion publiciana with the trial court below;
(ii) respondent actively participated in the trial proceeding, testified in
person, and submitted to the trial court's authority to decide the case;
andcralawlibrary
(iii) respondent did not raise any jurisdictional issue in his appeal where he
raised only the substantive portions of the trial court's decision.
2) The Court of Appeals likewise departed from the accepted and usual
course of judicial proceedings amounting to serious abuse of discretion when
it chose to ignore the glaring fact that respondent's appeal had become moot
and academic with the expiration of the lease contract upon which his appeal
rested.8
In due course, respondent filed his Comment9 dated October 10, 2001,
asserting that the CA correctly set aside the decision of the RTC because the
lower court had no jurisdiction over the subject matter of the case. In this
regard, respondent pointed out that he had previously assailed the
jurisdiction of the trial court in the proceedings below via his Motion to
Dismiss10 dated July 8, 1997. Respondent likewise adopted the reasoning of
the CA and argued that petitioners ran afoul of Section 1, Rule 7011 of the
Rules of Court considering that petitioners' Complaint12 dated June 4, 1997
for recovery of possession was filed only within months from the date the
second demand letter to vacate dated May 27, 1997 was served upon him.
In their Reply13 dated October 20, 2001, petitioners countered that
respondent is estopped from raising any jurisdictional issue in connection
with the demand letter dated May 27, 1997 considering that respondent
never argued during the trial or even in his appeal to the CA that the
existence of the second letter divested the trial court of jurisdiction over the
complaint.
The petition has merit.
The allegations of a complaint determine the nature of the action as well as
which court will have jurisdiction over the case.14 The complaint would be
deemed sufficient if, on its face, it shows that the court has jurisdiction
without resorting to parol testimony.15 Precisely because ejectment
proceedings are summary in nature, the complaint should contain a
71

statement of facts which would bring the party clearly within the class of
cases for which the statutes provide a remedy.
In the present case, petitioners made the following allegations in their
complaint:
xxx
2. [Petitioners] are the duly registered co-owners of a parcel of land and its
improvements, more particularly identified as a 3-door apartment,
specifically located between Fumakilla Laboratories, Inc. and the Shell
Gasoline Station along Amang Rodriguez, Sr. Avenue, Santolan, Pasig City,
Metro Manila x x x.
3. Sometime in 1981, [respondent] entered into a verbal lease contract with
the parents of herein [petitioners], who agreed to lease to the [respondent],
on a month-to-month basis, the aforementioned property at the rental rate of
Php3,500.00 per month.
4. On July 1, 1995, [petitioners] sent [respondent] a Notice to Vacate x x x
informing the latter of the termination of the said verbal lease contract and
demanding from him to vacate and peacefully surrender to the [petitioners]
the aforesaid premises, the possession of which [respondent] has unlawfully
withheld from the latter. Notwithstanding these written and oral demands,
[respondent] has repeatedly failed and up to now still refuses to turn over
the said premises peacefully to the [petitioners].
Since that time, [respondent] has failed to remit his monthly rentals of
Php3,500.00 so that as of May 30, 1997, [respondent] has incurred rental
arrears now totaling Php 80,500.00 x x x16
To summarize, petitioners claim that (1) they are the owners of the property,
being the successors-in-interest of the original owners; (2) their
predecessors-in-interest entered into a verbal lease agreement with
respondent on a month-to-month basis; (3) they decided to terminate the
verbal lease contract upon the expiration of the last monthly term sometime
in 1995; and (4) on July 1, 1995, they demanded that respondent leave the
property, but respondent refused to do so.
Undeniably, the foregoing averments constitute a cause of action that is
based primarily on unlawful deprivation or withholding of possession.
72

Petitioners seek the recovery of the possession of the leased premises

following the lapse of the term of the verbal lease contract entered into by
petitioners' predecessors-in-interest with respondent. The allegation that the
contract is on a month-to-month basis becomes material in this sense
because it signifies that the lease contract is terminable at the end of every
month.17 Thus, petitioners may exercise their right to terminate the contract
at the end of any month even if none of the conditions of the contract had
been violated, and such right cannot be defeated by the lessee's timely
payment of the rent or by his willingness to continue doing so. The lease
contract expires at the end of every month unless there is an implied or tacit
renewal thereof as when the lessee is allowed to continue enjoying the
leased premises for fifteen (15) days after the end of every month with the
acquiescence of the lessor. Such exception, however, cannot be invoked
when notice to vacate is given to the lessee in which case the contract of
lease expires at the end of the month.18
Moreover, even if the month-to-month agreement is only on a verbal basis, if
it is shown that the property is needed for the lessor's own use or for the use
of an immediate member of the family or for any of the other statutory
grounds to eject, then the lease is considered terminated as of the end of the
month, after proper notice or demand to vacate has been given.19 At this
juncture, it must be pointed out that notice or demand to vacate had been
properly served upon respondent through the letter20 dated July 1, 1995, to
wit:
July 1/95
Dear Ernesto Gozom,
I would like to reiterate my verbal demand upon you to vacate the premises
you are presently occupying made sixty (60) days ago.
The said premises should be vacated within THIRTY (30)21 DAYS upon receipt
hereof for I badly needed it and please take this notice as my final demand
after I have verbally given you sixty (60) days already.
Hoping you will give this matter your preferential and utmost attention in
order to avoid a costly litigation.
Very truly yours,
73

(sgd.)
GERMELINA T. RACAZA and
(sgd.)
BERNALDITA T. PARAS
Verily, respondent's right to remain in possession of the property subject of
the lease was extinguished upon the expiration of the grace period
mentioned in the July 1, 1995 demand letter. It thus becomes respondent's
obligation to turn over the property to petitioners, failing which petitioners
would have the right to immediately resort to ejectment action to recover
possession. Their complaint could thus fall under two kinds of ejectment
suits, the first being for unlawful detainer cognizable by the metropolitan or
municipal trial courts under Rule 70 and the second being for accion
publiciana cognizable by the regional trial courts.22
An action for unlawful detainer exists when a person unlawfully withholds
possession of any land or building against or from a lessor, vendor, vendee
or other persons, after the expiration or termination of the right to hold
possession, by virtue of any contract, express or implied.23 This summary
action should be filed with the municipal trial courts within one year after the
occurrence of the unlawful deprivation or withholding of
possession.24 Beyond the one-year period, the real right of possession may
be recovered through the filing of an accion publiciana with the regional trial
courts.25
In upholding the propriety of the mode adopted by petitioners to recover
possession of their real property, the trial court found that more than one (1)
year had lapsed from the time of petitioners' dispossession, to wit:
xxx
As to the first issue, the [petitioners] have the legal right to recover the
property from the [respondent]. [Petitioners] are the absolute owners of the
property and the portion of the property which is occupied by the
[respondent]. The possession by the [respondent] of the back portion of the
property is unlawful and [petitioners] have been unlawfully deprived of the
property since July 1, 1995 when they served the notice to vacate to the
[respondent]. [Respondent] admits that after the notice to vacate was served
upon him, he stopped paying his monthly rentals to the [petitioners]. The
present action for recovery of possession was filed more than one year from
74

the time the cause of action of the [petitioners] accrued, which was from the
time the [respondent] stopped paying his rental to the [petitioners] or on July
1, 1995. x x x26
Respondent nevertheless insists, for the first time, that the one-year period
must be reckoned from the date of the second demand letter to vacate, that
is, on May 27, 1997. Considering that petitioners' complaint was filed within
days from this date, respondent contends that the RTC had no jurisdiction to
hear the case. Adopting in toto the position of the CA, respondent argues
that petitioners should have filed an action for unlawful detainer instead with
the metropolitan or municipal trial courts.
The records of the case, however, do not support this view. Demand or notice
to vacate is not a jurisdictional requirement when the action is based on the
expiration of the lease. Any notice given would only negate any inference
that the lessor has agreed to extend the period of the lease. The law requires
notice to be served only when the action is due to the lessee's failure to pay
or the failure to comply with the conditions of the lease.27 The one-year
period is thus counted from the date of first dispossession. To reiterate, the
allegation that the lease was on a month-to-month basis is tantamount to
saying that the lease expired every month. Since the lease already expired
mid-year in 1995 as communicated in petitioners' letter dated July 1, 1995, it
was at that time that respondent's occupancy became unlawful.
Even assuming, for the sake of argument, that a demand or notice to vacate
was necessary, a reading of the second letter shows that petitioners were
merely reiterating their original demand for respondent to vacate on the
basis of the expiration of the verbal lease contract mentioned in the first
letter. For clarity, the full text of the second letter28 sent by petitioners'
counsel is reproduced below:
Dear Mr. Gozom:
My principals, Germelina Torres Racaza and Bernaldita Torres Paras, have
brought to me for legal action the fact of your unjustified and unlawful
possession and occupation of the entire back portion of their apartment
building, located between Fumakilla Laboratories Inc. and the Shell Gasoline
Station along Amang Rodriguez, Sr. Avenue, Santolan, Pasig City, Metro
Manila.

75

According to my principals, your verbal contract of lease covering

the said premises already expired sometime in July 1995 and the
same has never been renewed, for which reason you discontinued paying
your monthly rentals of Php3,500.00.
Notwithstanding their constant reminders and requests to you, for
you to immediately vacate the aforesaid leased premises in view of
the expiration of the lease contract, you have up to this time failed
and still refuse to vacate the said premises to the prejudice of my
clients.
In this regard, please consider this letter our formal demand and notice for
you to vacate the said leased premises on or before the 2nd day of June
1997. Should you fail to so vacate and leave the premises and to pay your
total monthly rental arrearages, amounting to Php 80,500.00, on or before
the said date, we shall be constrained to pursue all available remedies under
the law to protect the interests of my clients.
Very truly yours,
(sgd.)
ATTY. CELSO P. YLADAN II
Counsel for Germelina Torres Racaza and Bernaldita Torres Paras
(Emphases supplied.)
The Court has, in the past, ruled that subsequent demands which are merely
in the nature of reminders or reiterations of the original demand do not
operate to renew the one-year period within which to commence the
ejectment suit considering that the period will still be reckoned from the date
of the original demand.29
Besides, the allegations in the complaint and the answer put in issue the
existence and validity of the verbal lease contract itself. Respondent
contends that the lease term over the property is ten (10) years based on a
written lease contract purportedly executed by him and petitioners'
predecessors-in interest. In this situation, it is the RTC which would be in the
best position to determine the true nature of the agreement between the
parties and to decide which of the two agreements is valid. In fact, it found
that the written lease contract was spurious and not binding upon the
petitioners.
76

Moreover, it is too late for respondent to invoke the defense of lack of

jurisdiction on the ground that the action was filed before the lapse of one
year from the date of last demand. Based on the records, respondent never
pursued this line of argument in the proceedings before the trial court and
even in his appeal to the CA. While it is true that prior to the filing of his
answer, respondent moved to dismiss the complaint on the theory that the
allegations therein merely constituted an action for unlawful detainer, the
motion did not raise any jurisdictional issue relative to the second demand
letter. When his motion to dismiss was denied, respondent no longer
challenged the jurisdiction of the trial court in his subsequent pleadings and
instead actively participated in the proceedings held before the RTC by
relying principally on the strength of the written lease contract allegedly
executed between him and petitioners' predecessors-in-interest. It was only
when the CA motu proprio dismissed the complaint that respondent
conveniently thought of adopting the novel theory embodied in the assailed
decision of the appellate court. Under these circumstances, estoppel has
already set in.
In Tijam v. Sibonghanoy,30 this Court held that a party's active participation in
all stages of the case before the trial court, which includes invoking the
court's authority to grant affirmative relief, effectively estops such party from
later challenging that same court's jurisdiction. The CA's conclusion that the
doctrine enunciated in Tijam has been abandoned is erroneous as, in fact,
the same has been upheld and reiterated in many succeeding cases.31 Thus,
while an order or decision rendered without jurisdiction is a total nullity and
may be assailed at any stage, a party's active participation in the
proceedings in the tribunal which rendered the order or decision will bar such
party from attacking its jurisdiction.
In any event, this Court notes that by respondent's own claim,32 the term of
the alleged written lease contract expired on September 30, 1999 or several
months before the decision of the appellate court was rendered. The CA
should have taken cognizance of this material fact considering that the
statement is binding upon respondent and is an admission which renders
moot the issue of who has a better right of possession.
WHEREFORE, the petition is GRANTED and the assailed Decision dated July
12, 2000 as well as the Resolution dated June 28, 2001 rendered by the
Court of Appeals in CA-G.R. CV No. 61227 areREVERSED and SET ASIDE.
77

Accordingly, the Decision dated September 30, 1998 of the Regional Trial
Court, Branch 158, Pasig City in Civil Case No. 66295 is REINSTATED.
No costs.
SO ORDERED.

10. SECOND DIVISION

[G.R. NO. 160384. April 29, 2005]
CESAR T. HILARIO, for himself and as Attorney-in-Fact of IBARRA,
NESTOR, LINA and PRESCILLA, all surnamed
HILARIO, Petitioners, v. ALLAN T. SALVADOR, Respondents.
HEIRS OF SALUSTIANO SALVADOR, namely, REGIDOR M. SALVADOR
and VIRGINIA SALVADOR-LIM, Respondents-Intervenors.
DECISION
CALLEJO, SR., J.:
This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules
of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No.
63737 as well as its Resolution2 denying the motion for the reconsideration of
the said decision.
The Antecedents
On September 3, 1996, petitioners Cesar, Ibarra, Nestor, Lina and Prescilla,
all surnamed Hilario, filed a complaint with the Regional Trial Court (RTC) of
Romblon, Romblon, Branch 71, against private respondent Allan T. Salvador.
They alleged therein, inter alia, as follows:
2. That, the plaintiffs are co-owners by inheritance from Concepcion Mazo
Salvador of a parcel of land designated as Cad. Lot No. 3113-part, located at
Sawang, Romblon, Romblon, which property was [adjudged] as the
hereditary share of their father, Brigido M. Hilario, Jr. when their father was
still single, and which adjudication was known by the plaintiffs['] father's coheirs;
78

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

materials on the property of the plaintiffs' father without the knowledge of
the herein plaintiffs or their predecessors-in-interest;
4. That, demands have been made of the defendant to vacate the premises
but the latter manifested that he have (sic) asked the prior consent of their
grandmother, Concepcion Mazo Salvador;
5. That, to reach a possible amicable settlement, the plaintiffs brought the
matter to the Lupon of Barangay Sawang, to no avail, evidenced by the
CERTIFICATE TO FILE ACTION hereto attached as ANNEX B;
6. That, the unjustified refusal of the defendant to vacate the property has
caused the plaintiffs to suffer shame, humiliation, wounded feelings, anxiety
and sleepless nights;
7. That, to protect their rights and interest, plaintiffs were constrained to
engage the services of a lawyer.3
The petitioners prayed that, after due proceedings, judgment be rendered in
their favor, thus:
WHEREFORE, it is prayed of this Honorable Court that after due process (sic),
an order be issued for the defendant to vacate and peacefully turn over to
the plaintiffs the occupied property and that defendant be made to pay
plaintiffs:
A. actual damages, as follows:
a.1. transportation expenses in connection with the projected settlement of
the case amounting toP1,500.00 and for the subsequent attendance to the
hearing of this case at P1,500.00 each schedule;
a.2. attorney's fees in the amount of P20,000.00 and P500.00 for every court
appearance;
b. moral and exemplary damages in such amount incumbent upon the
Honorable Court to determine; andcralawlibrary
c. such other relief and remedies just and equitable under the premises.4
79

The private respondent filed a motion to dismiss the complaint on the ground
of lack of jurisdiction over the nature of the action, citing Section 33 of Batas
Pambansa (B.P.) Blg. 129, as amended by Section 3(3) of Republic Act (R.A.)
No. 7691.5 He averred that (1) the complaint failed to state the assessed value of the land in dispute;
(2) the complaint does not sufficiently identify and/or describe the parcel of
land referred to as the subject-matter of this action;
both of which are essential requisites for determining the jurisdiction of the
Court where the case is filed. In this case, however, the assessed value of
the land in question is totally absent in the allegations of the complaint and
there is nothing in the relief prayed for which can be picked-up for
determining the Court's jurisdiction as provided by law.
In the face of this predicament, it can nevertheless be surmised by reading
between the lines, that the assessed value of the land in question cannot
exceed P20,000.00 and, as such, it falls within the jurisdiction of the
Municipal Trial Court of Romblon and should have been filed before said
Court rather than before the RTC. '6
The petitioners opposed the motion.7 They contended that the RTC had
jurisdiction over the action since the court can take judicial notice of the
market value of the property in question, which was P200.00 per square
meter and considering that the property was 14,797 square meters, more or
less, the total value thereof is P3,500,000.00. Besides, according to the
petitioners, the motion to dismiss was premature and "the proper time to
interpose it is when the [petitioners] introduced evidence that the land is of
such value."
On November 7, 1996, the RTC issued an Order8 denying the motion to
dismiss, holding that the action was incapable of pecuniary estimation, and
therefore, cognizable by the RTC as provided in Section 19(1) of B.P. Blg. 129,
as amended.
After the denial of the motion to dismiss, the private respondent filed his
answer with counterclaim.9Traversing the material allegations of the
complaint, he contended that the petitioners had no cause of action against
him since the property in dispute was the conjugal property of his
80

grandparents, the spouses Salustiano Salvador and Concepcion MazoSalvador.

On April 8, 1997, Regidor and Virginia Salvador filed their Answer-inIntervention10 making common cause with the private respondent. On her
own motion, however, Virginia Salvador was dropped as intervenor.11
During trial, the petitioners adduced in evidence Tax Declaration No. 8590-A
showing that in 1991 the property had an assessed value of P5,950.00.12
On June 3, 1999, the trial court rendered judgment finding in favor of the
petitioners. The dispositive portion of the decision reads:
WHEREFORE, as prayed for, judgment is rendered:
Ordering the defendant to vacate and peacefully turn over to the plaintiffs
the occupied property; andcralawlibrary
Dismissing defendant's counterclaim.
SO ORDERED.13
Aggrieved, the private respondent and respondent-intervenor Regidor
Salvador appealed the decision to the CA, which rendered judgment on May
23, 2003 reversing the ruling of the RTC and dismissing the complaint for
want of jurisdiction. The fallo of the decision is as follows:
IN VIEW OF THE FOREGOING, the appealed decision is REVERSED, and the
case DISMISSED, without prejudice to its refilling in the proper court.
SO ORDERED.14
The CA declared that the action of the petitioners was one for the recovery of
ownership and possession of real property. Absent any allegation in the
complaint of the assessed value of the property, the Municipal Trial Court
(MTC) had exclusive jurisdiction over the action, conformably to Section
3315 of R.A. No. 7691.
The petitioners filed a motion for reconsideration of the said decision, which
the appellate court denied.16Hence, they filed the instant petition, with the
following assignment of errors:
81

I
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE
ERROR IN HOLDING THAT THE INSTANT CASE, ACCION REINVINDICATORIA,
FALLS WITHIN THE EXCLUSIVE ORIGINAL JURISDICTION OF THE MUNICIPAL
TRIAL COURT OF ROMBLON, AND NOT WITH THE REGIONAL TRIAL COURT OF
ROMBLON.
II
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE
ERROR IN ORDERING THE REFILING OF THE CASE IN THE [PROPER] COURT,
INSTEAD OF DECIDING THE CASE ON THE MERITS BASED ON THE COMPLETE
RECORDS ELEVATED BEFORE SAID APPELLATE COURT AND IN NOT
AFFIRMING IN TOTO THE DECISION OF THE TRIAL COURT.17
The Ruling of the Court
The lone issue for our resolution is whether the RTC had jurisdiction over the
action of the petitioners, the plaintiffs in the RTC, against the private
respondent, who was the defendant therein.
The petitioners maintain that the RTC has jurisdiction since their action is
an accion reinvindicatoria, an action incapable of pecuniary estimation; thus,
regardless of the assessed value of the subject property, exclusive
jurisdiction falls within the said court. Besides, according to the petitioners,
in their opposition to respondent's motion to dismiss, they made mention of
the increase in the assessed value of the land in question in the amount
of P3.5 million. Moreover, the petitioners maintain that their action is also
one for damages exceeding P20,000.00, over which the RTC has exclusive
jurisdiction under R.A. No. 7691.
The petition has no merit.
It bears stressing that the nature of the action and which court has original
and exclusive jurisdiction over the same is determined by the material
allegations of the complaint, the type of relief prayed for by the plaintiff and
the law in effect when the action is filed, irrespective of whether the plaintiffs
are entitled to some or all of the claims asserted therein.18 The caption of the
complaint is not determinative of the nature of the action. Nor does the
82

jurisdiction of the court depend upon the answer of the defendant or

agreement of the parties or to the waiver or acquiescence of the parties.
We do not agree with the contention of the petitioners and the ruling of the
CA that the action of the petitioners in the RTC was an accion
reinvindicatoria. We find and so rule that the action of the petitioners was
an accion publiciana, or one for the recovery of possession of the real
property subject matter thereof. An accion reinvindicatoria is a suit which has
for its object the recovery of possession over the real property as owner. It
involves recovery of ownership and possession based on the said ownership.
On the other hand, an accion publiciana is one for the recovery of possession
of the right to possess. It is also referred to as an ejectment suit filed after
the expiration of one year after the occurrence of the cause of action or from
the unlawful withholding of possession of the realty.19
The action of the petitioners filed on September 3, 1996 does not involve a
claim of ownership over the property. They allege that they are co-owners
thereof, and as such, entitled to its possession, and that the private
respondent, who was the defendant, constructed his house thereon in 1989
without their knowledge and refused to vacate the property despite demands
for him to do so. They prayed that the private respondent vacate the
property and restore possession thereof to them.
When the petitioners filed their complaint on September 3, 1996, R.A. No.
7691 was already in effect. Section 33(3) of the law provides:
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in Civil Cases. 'Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts shall exercise:
(3) Exclusive original jurisdiction in all civil actions which involve title to, or
possession of, real property, or any interest therein where the assessed
value of the property or interest therein does not exceed Twenty Thousand
Pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed
value does not exceed Fifty Thousand Pesos (P50,000.00) exclusive of
interest, damages of whatever kind, attorney's fees, litigation expenses and
costs: Provided, That in cases of land not declared for taxation purposes, the
value of such property shall be determined by the assessed value of the
adjacent lots.
Section 19(2) of the law, likewise, provides that:
83

Sec. 19. Jurisdiction in civil cases. - The Regional Trial Court shall exercise
exclusive original jurisdiction:
(2) In all civil actions, which involve the title to, or possession of, real
property, or any interest therein, where the assessed value of the property
involved exceeds Twenty Thousand Pesos (P20,000.00) or, for civil actions in
Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00)
except actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon the Metropolitan
Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.
The jurisdiction of the court over an action involving title to or possession of
land is now determined by the assessed value of the said property and not
the market value thereof. The assessed value of real property is the fair
market value of the real property multiplied by the assessment level. It is
synonymous to taxable value.20 The fair market value is the price at which a
property may be sold by a seller, who is not compelled to sell, and bought by
a buyer, who is not compelled to buy.
Even a cursory reading of the complaint will show that it does not contain an
allegation stating the assessed value of the property subject of the
complaint.21 The court cannot take judicial notice of the assessed or market
value of lands.22 Absent any allegation in the complaint of the assessed value
of the property, it cannot thus be determined whether the RTC or the MTC
had original and exclusive jurisdiction over the petitioners' action.
We note that during the trial, the petitioners adduced in evidence Tax
Declaration No. 8590-A, showing that the assessed value of the property in
1991 was P5,950.00. The petitioners, however, did not bother to adduce in
evidence the tax declaration containing the assessed value of the property
when they filed their complaint in 1996. Even assuming that the assessed
value of the property in 1991 was the same in 1995 or 1996, the MTC, and
not the RTC had jurisdiction over the action of the petitioners since the case
involved title to or possession of real property with an assessed value of less
than P20,000.00.23
We quote with approval, in this connection, the CA's disquisition:
The determining jurisdictional element for the accion reinvindicatoria is, as
RA 7691 discloses, the assessed value of the property in question. For
properties in the provinces, the RTC has jurisdiction if the assessed value
84

exceeds P20,000, and the MTC, if the value is P20,000 or below. An assessed
value can have reference only to the tax rolls in the municipality where the
property is located, and is contained in the tax declaration. In the case at
bench, the most recent tax declaration secured and presented by the
plaintiffs-appellees is Exhibit B. The loose remark made by them that the
property was worth 3.5 million pesos, not to mention that there is absolutely
no evidence for this, is irrelevant in the light of the fact that there is an
assessed value. It is the amount in the tax declaration that should be
consulted and no other kind of value, and as appearing in Exhibit B, this
is P5,950. The case, therefore, falls within the exclusive original jurisdiction
of the Municipal Trial Court of Romblon which has jurisdiction over the
territory where the property is located, and not the court a quo.24
It is elementary that the tax declaration indicating the assessed value of the
property enjoys the presumption of regularity as it has been issued by the
proper government agency.25
Unavailing also is the petitioners' argumentation that since the complaint,
likewise, seeks the recovery of damages exceeding P20,000.00, then the RTC
had original jurisdiction over their actions. Section 33(3) of B.P. Blg. 129, as
amended, quoted earlier, explicitly excludes from the determination of the
jurisdictional amount the demand for "interest, damages of whatever kind,
attorney's fees, litigation expenses, and costs." This Court issued
Administrative Circular No. 09-94 setting the guidelines in the
implementation of R.A. No. 7691, and paragraph 2 thereof states that 2. The exclusion of the term "damages of whatever kind" in determining the
jurisdictional amount under Section 19(8) and Section 33(1) of B.P. Blg. 129,
as amended by R.A. 7691, applies to cases where the damages are merely
incidental to or a consequence of the main cause of action. However, in
cases where the claim for damages is the main cause of action, or one of the
causes of action, the amount of such claim shall be considered in
determining the jurisdiction of the court.
Neither may the petitioners find comfort and solace in Section 19(8) of B.P.
Blg. 129, as amended, which states:
SEC. 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise
exclusive original jurisdiction:

85

(8) In all other cases in which the demand, exclusive of interest, damages of
whatever kind, attorney's fees, litigation expenses, and costs or the value of
the property in controversy exceeds One Hundred Thousand Pesos
(P100,000.00) or, in such other cases in Metro Manila, where the demand,
exclusive of the above-mentioned items exceeds Two Hundred Thousand
Pesos (P200,000.00).
The said provision is applicable only to "all other cases" other than an action
involving title to, or possession of real property in which the assessed value
is the controlling factor in determining the court's jurisdiction. The said
damages are merely incidental to, or a consequence of, the main cause of
action for recovery of possession of real property.26
Since the RTC had no jurisdiction over the action of the petitioners, all the
proceedings therein, including the decision of the RTC, are null and void. The
complaint should perforce be dismissed.27
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution
of the Court of Appeals in CA-G.R. CV No. 63737 are AFFIRMED. Costs against
the petitioners.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ.,
concur.
Endnotes:

11. THIRD DIVISION

[G.R. NO. 137013 : May 6, 2005]
RUBEN SANTOS, Petitioner, v. SPOUSES TONY AYON and MERCY
AYON, Respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
86

For our resolution is the Petition for Review on Certiorari assailing the
Decision1 of the Court of Appeals dated October 5, 1998 in CA-G.R. SP No.
4735 and its Resolution2 dated December 11, 1998 denying the motion for
reconsideration.
The petition alleges that on November 6, 1996, Ruben Santos, petitioner,
filed with the Municipal Trial Court in Cities (MTCC), Branch 2, Davao City a
complaint for illegal detainer against spouses Tony and Mercy Ayon,
respondents, docketed as Civil Case No. 3506-B-96.
In his complaint, petitioner averred that he is the registered owner of three
lots situated at Lanzona Subdivision, Matina, Davao City, covered by Transfer
Certificates of Title (TCT) Nos. 108174, 108175, and 108176. Respondent
spouses are the registered owners of an adjacent parcel of land covered by
TCT No. T-247792. The previous occupant of this property built a building
which straddled both the lots of the herein parties. Respondents have been
using the building as a warehouse.
Petitioner further alleged in his complaint that in 1985, when he bought the
three lots, he informed respondents that the building occupies a portion of
his land. However, he allowed them to continue using the building. But in
1996, he needed the entire portion of his lot, hence, he demanded that
respondents demolish and remove the part of the building encroaching his
property and turn over to him their possession. But they refused. Instead,
they continued occupying the contested portion and even made
improvements on the building. The dispute was then referred to
the barangay lupon, but the parties failed to reach an amicable settlement.
Accordingly, on March 27, 1996, a certification to file action was issued.
In their answer, respondents sought a dismissal of this case on the ground
that the court has no jurisdiction over it since there is no lessor-lessee
relationship between the parties. Respondents denied they were occupying
petitioner's property by mere tolerance, claiming they own the contested
portion and have been occupying the same long before petitioner acquired
his lots in 1985.
On July 31, 1997, the MTCC rendered its Decision in favor of petitioner, thus:

87

"WHEREFORE, judgment is rendered in favor of the plaintiff and against the

defendants ordering the latter, their successors-in-interest and other persons
acting in their behalf to vacate the portion of the subject properties and
peacefully surrender possession thereof to plaintiff as well as
dismantle/remove the structures found thereon.
Defendants are further ordered to pay reasonable value for the use and
occupation of the encroached area in the amount of One Thousand Pesos
(P1,000.00) a month beginning September 1996 and the subsequent months
thereafter until premises are vacated; to pay attorney's fees of Ten Thousand
Pesos (P10,000.00); and to pay the costs of suit.
SO ORDERED."3
On appeal, the Regional Trial Court (RTC), Branch 11, Davao City, in its
Decision dated February 12, 1998 in Civil Case No. 25, 654-97, affirmed in
toto the MTCC judgment.4 The RTC upheld the finding of the MTCC that
respondents' occupation of the contested portion was by mere tolerance.
Hence, when petitioner needed the same, he has the right to eject them
through court action.
Respondents then elevated the case to the Court of Appeals through a
Petition for Review . In its Decision dated October 5, 1988 now being
challenged by petitioner, the Court of Appeals held that petitioner's proper
remedy should have been an accion publiciana before the RTC, not an action
for unlawful detainer, thus:
"In this case, petitioners were already in possession of the premises in
question at the time private respondent bought three (3) lots at the Lanzona
Subdivision in 1985, a portion of which is occupied by a building being used
by the former as a bodega. Apart from private respondent's bare claim, no
evidence was alluded to show that petitioners' possession was tolerated by
(his) predecessor-in-interest. The fact that respondent might have tolerated
petitioners' possession is not decisive. What matters for purposes of
determining the proper cause of action is the nature of petitioners'
possession from its inception. And in this regard, the Court notes that the
complaint itself merely alleges that defendants-petitioners have been
'occupying a portion of the above properties of the plaintiff for the past
several years by virtue of the tolerance of the plaintiff. 'Nowhere is it alleged

88

that his predecessor likewise tolerated petitioners' possession of the

premises. x x x.
Consequently, x x x, respondent should present his claim before the Regional
Trial Court in an accion publiciana and not before the Municipal Trial Court in
a summary proceeding of unlawful detainer.
WHEREFORE, the decision under review is hereby REVERSED and SET ASIDE.
Accordingly, the complaint for unlawful detainer is ordered DISMISSED."5
Petitioner filed a motion for reconsideration, but was denied by the Appellate
Court in its Resolution dated December 11, 1998.
Hence, the instant Petition for Review on Certiorari ascribing to the Court of
Appeals the following errors:
"I
THE HONORABLE COURT OF APPEALS MISAPPLIED THE LAW IN DISMISSING
THE INSTANT CASE ON THE GROUND THAT PETITIONER SHOULD PRESENT
HIS CLAIM BEFORE THE REGIONAL TRIAL COURT IN AN ACCION PUBLICIANA.
II
THE FINDINGS OF THE HONORABLE COURT OF APPEALS IS NOT IN
CONSONANCE WITH EXISTING LAWS AND JURISPRUDENCE."
The sole issue here is whether the Court of Appeals committed a reversible
error of law in holding that petitioner's complaint is within the competence of
the RTC, not the MTCC.
Petitioner contends that it is not necessary that he has prior physical
possession of the questioned property before he could file an action for
unlawful detainer. He stresses that he tolerated respondents' occupancy of
the portion in controversy until he needed it. After his demand that they
vacate, their continued possession became illegal. Hence, his action for
unlawful detainer before the MTCC is proper.
Respondents, in their comment, insisted that they have been in possession
of the disputed property even before petitioner purchased the same on April
89

10, 1985. Hence, he cannot claim that they were occupying the property by
mere tolerance because they were ahead in time in physical possession.
We sustain the petition.
It is an elementary rule that the jurisdiction of a court over the subject
matter is determined by the allegations of the complaint and cannot be
made to depend upon the defenses set up in the answer or pleadings filed by
the defendant.6 This rule is no different in an action for forcible entry or
unlawful detainer.7 All actions for forcible entry or unlawful detainer shall be
filed with the proper Metropolitan Trial Courts, the Municipal Trial Courts and
the Municipal Circuit Trial Courts, which actions shall include not only the
plea for restoration of possession but also all claims for damages and costs
arising therefrom.8The said courts are not divested of jurisdiction over such
cases even if the defendants therein raises the question of ownership over
the litigated property in his pleadings and the question of possession cannot
be resolved without deciding the issue of ownership.9
Section 1, Rule 70 on forcible entry and unlawful detainer of the 1997 Rules
of Civil Procedure, as amended, reads:
"Section 1. Who may institute proceedings, and when. - Subject to the
provisions of the next succeeding section, a person deprived of the
possession of any land or building by force, intimidation, threat, strategy, or
stealth, or a lessor, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration
or termination of the right to hold possession, by virtue of any contract,
express or implied, or the legal representatives or assigns of any such lessor,
vendor, vendee or other person may, at any time within one (1) year after
such unlawful deprivation or withholding of possession, bring an action in the
proper Municipal Trial Court against the person or persons unlawfully
withholding or depriving of possession, or any person or persons claiming
under them, for the restitution of such possession, together with damages
and costs."
Under the above provision, there are two entirely distinct and different
causes of action, to wit: (1) a case for forcible entry, which is an action to
recover possession of a property from the defendant whose occupation
thereof is illegal from the beginning as he acquired possession by force,
intimidation, threat, strategy or stealth; and (2) a case for unlawful detainer,
90

which is an action for recovery of possession from defendant whose

possession of the property was inceptively lawful by virtue of a contract
(express or implied) with the plaintiff, but became illegal when he continued
his possession despite the termination of his right thereunder.10
Petitioner's complaint for unlawful detainer in Civil Case No. 3506-B-96 is
properly within the competence of the MTCC. His pertinent allegations in the
complaint read:
"4. That defendants (spouses) have constructed an extension of their
residential house as well as other structures and have been occupying a
portion of the above PROPERTIES of the plaintiff for the past several years by
virtue of the tolerance of the plaintiff since at the time he has no
need of the property;
5. That plaintiff needed the property in the early part of 1996 and
made demands to the defendants to vacate and turn over the
premises as well as the removal (of) their structures found inside
the PROPERTIES of plaintiff; that without any justifiable reasons,
defendants refused to vacate the portion of the PROPERTIES
occupied by them to the damage and prejudice of the plaintiff.
6. Hence, plaintiff referred the matter to the Office of the Barangay Captain
of Matina Crossing 74-A, Davao City for a possible settlement sometime in
the latter part of February 1996. The barangay case reached the Pangkat but
no settlement was had. Thereafter, a 'Certification To File Action' dated March
27, 1996 was issued x x x;
x x x."11 (Underscoring ours)
Verily, petitioner's allegations in his complaint clearly make a case for an
unlawful detainer. We find no error in the MTCC assuming jurisdiction over
petitioner's complaint. A complaint for unlawful detainer is sufficient if it
alleges that the withholding of the possession or the refusal to vacate is
unlawful without necessarily employing the terminology of the law.12 Here,
there is an allegation in petitioner's complaint that respondents occupancy
on the portion of his property is by virtue of his tolerance. Petitioner's cause
of action for unlawful detainer springs from respondents' failure to vacate the
questioned premises upon his demand sometime in 1996. Within one (1)
year therefrom, or on November 6, 1996, petitioner filed the instant
complaint.
91

It bears stressing that possession by tolerance is lawful, but such possession

becomes unlawful when the possessor by tolerance refuses to vacate upon
demand made by the owner. Our ruling in Roxas v. Court of Appeals13 is
applicable in this case: "A person who occupies the land of another at the
latter's tolerance or permission, without any contract between them, is
necessarily bound by an implied promise that he will vacate upon demand,
failing which, a summary action for ejectment is the proper remedy against
him."
WHEREFORE, the petition is GRANTED. The assailed Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 47435 are hereby
REVERSED and SET ASIDE. The Decision dated February 12, 1998 of the
Regional Trial Court, Branch 11, Davao City in Civil Case No. 25, 654-97,
affirming the Decision dated July 31, 1997 of the Municipal Trial Court in
Cities, Branch 2, Davao City in Civil Case No. 3506-B-96, is hereby
REINSTATED.
SO ORDERED.
12. THIRD DIVISION
[G.R. NO. 166714 : February 9, 2007]
AMELIA S. ROBERTS, Petitioner, v. MARTIN B. PAPIO, Respondent.
DECISION
CALLEJO, SR., J.:
Assailed in this Petition for Review on Certiorari is the Decision1 of the Court
of Appeals (CA), in CA-G.R. CV No. 69034 which reversed and set aside the
Decision2 of the Regional Trial Court (RTC), Branch 150, Makati City, in Civil
Case No. 01-431. The RTC ruling had affirmed with modification the
Decision3 of the Metropolitan Trial Court (MeTC), Branch 64, Makati City in
Civil Case No. 66847. The petition likewise assails the Resolution of the CA
denying the motion for reconsideration of its decision.
The Antecedents
The spouses Martin and Lucina Papio were the owners of a 274-square-meter
residential lot located in Makati (now Makati City) and covered by Transfer
92

Certificate of Title (TCT) No. S-44980.4 In order to secure a P59,000.00 loan

from the Amparo Investments Corporation, they executed a real estate
mortgage on the property. Upon Papio's failure to pay the loan, the
corporation filed a petition for the extrajudicial foreclosure of the mortgage.
Since the couple needed money to redeem the property and to prevent the
foreclosure of the real estate mortgage, they executed a Deed of Absolute
Sale over the property on April 13, 1982 in favor of Martin Papio's cousin,
Amelia Roberts. Of the P85,000.00 purchase price, P59,000.00 was paid to
the Amparo Investments Corporation, while the P26,000.00 difference was
retained by the spouses.5 As soon as the spouses had settled their obligation,
the corporation returned the owner's duplicate of TCT No. S-44980, which
was then delivered to Amelia Roberts.
Thereafter, the parties (Amelia Roberts as lessor and Martin Papio as lessee)
executed a two-year contract of lease dated April 15, 1982, effective May 1,
1982. The contract was subject to renewal or extension for a like period at
the option of the lessor, the lessee waiving thereby the benefits of an implied
new lease. The lessee was obliged to pay monthly rentals of P800.00 to be
deposited in the lessor's account at the Bank of America, Makati City
branch.6
On July 6, 1982, TCT No. S-44980 was cancelled, and TCT No. 114478 was
issued in the name of Amelia Roberts as owner.7
Martin Papio paid the rentals from May 1, 1982 to May 1, 1984, and
thereafter, for another year.8 He then failed to pay rentals, but he and his
family nevertheless remained in possession of the property for a period of
almost thirteen (13) years.
In a letter dated June 3, 1998, Amelia Roberts, through counsel, reminded
Papio that he failed to pay the monthly rental of P2,500.00 from January 1,
1986 to December 31, 1997, and P10,000.00 from January 1, 1998 to May
31, 1998; thus, his total liability was P410,000.00. She demanded that Papio
vacate the property within 15 days from receipt of the letter in case he failed
to settle the amount.9 Because he refused to pay, Papio received another
letter from Roberts on April 22, 1999, demanding, for the last time, that he
and his family vacate the property.10 Again, Papio refused to leave the
premises.

93

On June 28, 1999, Amelia Roberts, through her attorney-in-fact, Matilde

Aguilar, filed a Complaint11 for unlawful detainer and damages against Martin
Papio before the MeTC, Branch 64, Makati City. She alleged the following in
her complaint:
Sometime in 1982 she purchased from defendant a 274-sq-m residential
house and lot situated at No. 1046 Teresa St., Brgy. Valenzuela, Makati
City.12 Upon Papio's pleas to continue staying in the property, they executed
a two-year lease contract13 which commenced on May 1, 1982. The monthly
rental wasP800.00. Thereafter, TCT No. 11447814 was issued in her favor and
she paid all the realty taxes due on the property. When the term of the lease
expired, she still allowed Papio and his family to continue leasing the
property. However, he took advantage of her absence and stopped payment
beginning January 1986, and refused to pay despite repeated demands. In
June 1998, she sent a demand letter15 through counsel requiring Papio to pay
rentals from January 1986 up to May 1998 and to vacate the leased property.
The accumulated arrears in rental are as follows: (a) P360,000.00 from
January 1, 1986 to December 31, 1997 at P2,500.00 per month; and
(b) P50,000.00, from January 1, 1998 to May 31, 1998 at P10,000.00 per
month.16 She came to the Philippines but all efforts at an amicable
settlement proved futile. Thus, in April 1999, she sent the final demand letter
to defendant directing him and his family to pay and immediately vacate the
leased premises.17
Roberts appended to her complaint copies of the April 13, 1982 Deed of
Absolute Sale, the April 15, 1982 Contract of Lease, and TCT No. 114478.
In his Answer with counterclaim, Papio alleged the following:
He executed the April 13, 1982 deed of absolute sale and the contract of
lease. Roberts, his cousin who is a resident of California, United States of
America (USA), arrived in the Philippines and offered to redeem the property.
Believing that she had made the offer for the purpose of retaining his
ownership over the property, he accepted. She then remitted P59,000.00 to
the mortgagor for his account, after which the mortgagee cancelled the real
estate mortgage. However, he was alarmed when the plaintiff had a deed of
absolute sale over the property prepared (for P83,000.00 as consideration)
and asked him to sign the same. She also demanded that the defendant turn
over the owner's duplicate of TCT No. S-44980. The defendant was in a
quandary. He then believed that if he signed the deed of absolute sale,
94

Roberts would acquire ownership over the property. He asked her to allow
him to redeem or reacquire the property at any time for a reasonable
amount.18 When Roberts agreed, Papio signed the deed of absolute sale.
Pursuant to the right to redeem/repurchase given him by Roberts, Papio
purchased the property forP250,000.00. In July 1985, since Roberts was by
then already in the USA, he remitted to her authorized representative, Perlita
Ventura, the amount of P150,000.00 as partial payment for the property.19 On
June 16, 1986, she again remitted P100,000.00, through Ventura. Both
payments were evidenced by receipts signed by Ventura.20 Roberts then
declared that she would execute a deed of absolute sale and surrender the
title to the property. However, Ventura had apparently
misappropriated P39,000.00 out of the P250,000.00 that she had received;
Roberts then demanded that she pay the amount misappropriated before
executing the deed of absolute sale. Thus, the sole reason why Roberts
refused to abide by her promise was the failure of her authorized
representative to remit the full amount ofP250,000.00. Despite Papio's
demands, Roberts refused to execute a deed of absolute sale. Accordingly,
defendant posited that plaintiff had no cause of action to demand payment
of rental and eject him from the property.
Papio appended to his Answer the following: (1) the letter dated July 18,
1986 of Perlita Ventura to the plaintiff wherein the former admitted having
used the money of the plaintiff to defray the plane fares of Perlita's parents
to the USA, and pleaded that she be allowed to repay the amount within one
year; (b) the letter of Eugene Roberts (plaintiff's husband) to Perlita Ventura
dated July 25, 1986 where he accused Ventura of stealing the money of
plaintiff Amelia (thus preventing the latter from paying her loan on her house
and effect the cancellation of the mortgage), and demanded that she deposit
the balance;21and (c) plaintiff's letter to defendant Papio dated July 25, 1986
requesting the latter to convince Ventura to remit the balance of P39,000.00
so that the plaintiff could transfer the title of the property to the defendant.22
Papio asserted that the letters of Roberts and her husband are in themselves
admissions or declarations against interest, hence, admissible to prove that
he had reacquired the property although the title was still in her possession.
In her Affidavit and Position Paper,23 Roberts averred that she had paid the
real estate taxes on the property after she had purchased it; Papio's initial
right to occupy the property was terminated when the original lease period
95

expired; and his continued possession was only by mere tolerance. She
further alleged that the Deed of Sale states on its face that the conveyance
of the property was absolute and unconditional. She also claimed that any
right to repurchase the property must appear in a public document pursuant
to Article 1358, Paragraph 1, of the Civil Code of the Phililppines.24 Since no
such document exists, defendant's supposed real interest over the property
could not be enforced without violating the Statute of Frauds.25 She stressed
that her Torrens title to the property was an "absolute and indefeasible
evidence of her ownership of the property which is binding and conclusive
upon the whole world."
Roberts admitted that she demanded P39,000.00 from the defendant in her
letter dated July 25, 1986. However, she averred that the amount
represented his back rentals on the property.26 She declared that she neither
authorized Ventura to sell the property nor to receive the purchase price
therefor. She merely authorized her to receive the rentals from defendant
and to deposit them in her account. She did not know that Ventura had
received P250,000.00 from Papio in July 1985 and on June 16, 1986, and had
signed receipts therefor. It was only on February 11, 1998 that she became
aware of the receipts when she received defendant Papio's letter to which
were appended the said receipts. She and her husband offered to sell the
property to the defendant in 1984 for US$15,000.00 on a "take it or leave it"
basis when they arrived in the Philippines in May 1984.27 However, defendant
refused to accept the offer. The spouses then offered to sell the property
anew on December 20, 1997, for P670,000.00 inclusive of back
rentals.28 However, defendant offered to settle his account with the
spouses.29 Again, the offer came on January 11, 1998, but it was rejected.
The defendant insisted that he had already purchased the property in July
1985 for P250,000.00.
Roberts insisted that Papio's claim of the right to repurchase the property, as
well as his claim of payment therefor, is belied by his own letter in which he
offered to settle plaintiff's claim for back rentals. Even assuming that the
purchase price of the property had been paid through Ventura, Papio did not
adduce any proof to show that Ventura had been authorized to sell the
property or to accept any payment thereon. Any payment to Ventura could
have no binding effect on her since she was not privy to the transaction; if at
all, such agreement would be binding only on Papio and Ventura.

96

She further alleged that defendant's own inaction belies his claim of
ownership over the property: first, he failed to cause any notice or annotation
to be made on the Register of Deed's copy of TCT No. 114478 in order to
protect his supposed adverse claim; second, he did not institute any action
against Roberts to compel the execution of the necessary deed of transfer of
title in his favor; and third, the defense of ownership over the property was
raised only after Roberts demanded him to vacate the property.
Based solely on the parties' pleadings, the MeTC rendered its January 18,
2001 Decision30 in favor of Roberts. The fallo of the decision reads:
WHEREFORE, premises considered, finding this case for the plaintiff, the
defendant is hereby ordered to:
1. Vacate the leased premises known as 1046 Teresa St., Valenzuela, Makati
City;
2. Pay plaintiff the reasonable rentals accrual for the period January 1, 1996
to December 13, 1997 at the rate equivalent to Php2,500.00 per month and
thereafter, Php10,000.00 from January 1998 until he actually vacates the
premises;
3. Pay the plaintiff attorney's fees as Php20,000.00; andcralawlibrary
4. Pay the costs
SO ORDERED.31
The MeTC held that Roberts merely tolerated the stay of Papio in the
property after the expiration of the contract of lease on May 1, 1984; hence,
she had a cause of action against him since the only elements in an unlawful
detainer action are the fact of lease and the expiration of its term. The
defendant as tenant cannot controvert the title of the plaintiff or assert any
right adverse thereto or set up any inconsistent right to change the existing
relation between them. The plaintiff need not prove her ownership over the
property inasmuch as evidence of ownership can be admitted only for the
purpose of determining the character and extent of possession, and the
amount of damages arising from the detention.
The court further ruled that Papio made no denials as to the existence and
authenticity of Roberts' title to the property. It declared that "the certificate
97

of title is indefeasible in favor of the person whose name appears therein and
incontrovertible upon the expiration of the one-year period from the date of
issue," and that a Torrens title, "which enjoys a strong presumption of
regularity and validity, is generally a conclusive evidence of ownership of the
land referred to therein."
As to Papio's claim that the transfer of the property was one with right of
repurchase, the MeTC held it to be bereft of merit since the Deed of Sale is
termed as "absolute and unconditional." The court ruled that the right to
repurchase is not a right granted to the seller by the buyer in a subsequent
instrument but rather, a right reserved in the same contract of sale. Once the
deed of absolute sale is executed, the seller can no longer reserve the right
to repurchase; any right thereafter granted in a separate document cannot
be a right of repurchase but some other right.
As to the receipts of payment signed by Ventura, the court gave credence to
Roberts's declaration in her Affidavit that she authorized Ventura only to
collect rentals from Papio, and not to receive the repurchase price. Papio's
letter of January 31, 1998, which called her attention to the fact that she had
been sending people without written authority to collect money since 1985,
bolstered the court's finding that the payment, if at all intended for the
supposed repurchase, never redounded to the benefit of the spouses
Roberts.
Papio appealed the decision to the RTC, alleging the following:
I.
THE LOWER COURT GRAVELY ERRED IN NOT DISMISSING THE CASE FOR
EJECTMENT OUTRIGHT ON THE GROUND OF LACK OF CAUSE OF ACTION.
II.
THE LOWER COURT GRAVELY ERRED IN NOT CONSIDERING THE
DOCUMENTARY EVIDENCE ADDUCED BY DEFENDANT-APPELLANT WHICH
ESTABLISHED THAT A REPURCHASE TRANSACTION EXISTED BETWEEN THE
PARTIES ONLY THAT PLAINTIFF-APPELLEE WITHHELD THE EXECUTION OF THE
ABSOLUTE DEED OF SALE AND THE TRANSFER OF TITLE OF THE SAME IN
DEFENDANT-APPELLANT'S NAME.
III.
98

THE LOWER COURT GRAVELY ERRED IN NOT CONSIDERING THAT THE

LETTERS OF PLAINTIFF - [APPELLEE] AND OF HER HUSBAND ADDRESSED TO
DEFENDANT-APPELLANT AND HIS WIFE ARE IN THEMSELVES ADMISSION
AND/OR DECLARATION OF THE FACT THAT DEFENDANT-APPELLANT HAD DULY
PAID PLAINTIFF-APPELLEE OF THE PURCHASE AMOUNT COVERING THE
SUBJECT PROPERTY.
IV.
THE LOWER COURT GRAVELY ERRED IN NOT DISMISSING THE CASE FOR
EJECTMENT OUTRIGHT CONSIDERING THAT PLAINTIFF-APPELLEE WHO IS [AN]
AMERICAN CITIZEN AND RESIDENT THEREIN HAD NOT APPEARED IN COURT
ONCE, NEITHER WAS HER ALLEGED ATTORNEY-IN-FACT, MATILDE AGUILAR
NOR [DID] THE LATTER EVER [FURNISH] THE LOWER COURT A SPECIAL
POWER OF ATTORNEY AUTHORIZING HER TO APPEAR IN COURT IN BEHALF
OF HER PRINCIPAL.32
Papio maintained that Roberts had no cause of action for eviction because
she had already ceded her right thereto when she allowed him to redeem
and reacquire the property upon payment of P250,000.00 to Ventura, her
duly authorized representative. He also contended that Roberts's claim that
the authority of Ventura is limited only to the collection of the rentals and not
of the purchase price was a mere afterthought, since her appended Affidavit
was executed sometime in October 1999 when the proceedings in the MeTC
had already started.
On March 26, 2001, Roberts filed a Motion for Issuance of Writ of
Execution.33 The court granted the motion in an Order34 dated June 19, 2001.
Subsequently, a Writ of Execution35 pending appeal was issued on September
28, 2001. On October 29, 2001, Sheriff Melvin M. Alidon enforced the writ
and placed Roberts in possession of the property.
Meanwhile, Papio filed a complaint with the RTC of Makati City, for specific
performance with damages against Roberts. Papio, as plaintiff, claimed that
he entered into a contract of sale with pacto de retro with Roberts, and
prayed that the latter be ordered to execute a Deed of Sale over `the
property in his favor and transfer the title over the property to and in his
name. The case was docketed as Civil Case No. 01-851.
On October 24, 2001, the RTC rendered judgment affirming the appealed
decision of the MeTC. The fallo of the decision reads:36
99

Being in accordance with law and the circumstances attendant to the instant
case, the court finds merit in plaintiff-appellee's claim. Wherefore, the
challenged decision dated January 18, 2001 is hereby affirmed in toto.
SO ORDERED.37
Both parties filed their respective motions for reconsideration.38 In an
Order39 dated February 26, 2002, the court denied the motion of Papio but
modified its decision declaring that the computation of the accrued rentals
should commence from January 1986, not January 1996. The decretal portion
of the decision reads:
Wherefore, the challenged decision dated January 18, 2001 is hereby
affirmed with modification that defendant pay plaintiff the reasonable rentals
accrued for the period January 1, 1986 to December [31, 1997] per month
and thereafter and P10,000.00 [per month] from January 1998 to October 28,
2001 when defendant-appellant actually vacated the subject leased
premises.
SO ORDERED.40
On February 28, 2002, Papio filed a Petition for Review 41 in the CA, alleging
that the RTC erred in not finding that he had reacquired the property from
Roberts for P250,000.00, but the latter refused to execute a deed of absolute
sale and transfer the title in his favor. He insisted that the MeTC and the RTC
erred in giving credence to petitioner's claim that she did not authorize
Ventura to receive his payments for the purchase price of the property, citing
Roberts' letter dated July 25, 1986 and the letter of Eugene Roberts to
Ventura of even date. He also averred that the MeTC and the RTC erred in not
considering his documentary evidence in deciding the case.
On August 31, 2004, the CA rendered judgment granting the petition. The
appellate court set aside the decision of the RTC and ordered the RTC to
dismiss the complaint. The decretal portion of the Decision42reads:
WHEREFORE, the judgment appealed from is hereby REVERSED and SET
ASIDE and a new one entered: (1) rendering an initial determination that the
"Deed of Absolute Sale" dated April 13, 1982 is in fact an equitable mortgage
under Article 1603 of the New Civil Code; and (2) resolving therefore that
petitioner Martin B. Papio is entitled to possession of the property subject of
this action; (3) But such determination of ownership and equitable mortgage
100

are not clothed with finality and will not constitute a binding and conclusive
adjudication on the merits with respect to the issue of ownership and such
judgment shall not bar an action between the same parties respecting title to
the land, nor shall it be held conclusive of the facts therein found in the case
between the same parties upon a different cause of action not involving
possession. All other counterclaims for damages are hereby dismissed. Cost
against the respondent.
SO ORDERED.43
According to the appellate court, although the MeTC and RTC were correct in
holding that the MeTC had jurisdiction over the complaint for unlawful
detainer, they erred in ignoring Papio's defense of equitable mortgage, and
in not finding that the transaction covered by the deed of absolute sale by
and between the parties was one of equitable mortgage under Article 1602
of the New Civil Code. The appellate court ruled that Papio retained the
ownership of the property and its peaceful possession; hence, the MeTC
should have dismissed the complaint without prejudice to the outcome of
Civil Case No. 01-851 relative to his claim of ownership over the property.
Roberts filed a motion for reconsideration of the decision on the following
grounds:
I. Petitioner did not allege in his Answer the defense of equitable mortgage;
hence, the lower courts [should] not have discussed the same;
II. Even assuming that Petitioner alleged the defense of equitable mortgage,
the MeTC could not have ruled upon the said defense,
III. The M[e]TC and the RTC were not remiss in the exercise of their
jurisdiction.44
The CA denied the motion.
In this Petition for Review, Amelia Salvador-Roberts, as petitioner, avers that:
I. THE HONORABLE COURT OF APPEALS GRIEVEOUSLY (SIC) ERRED IN
DECLARING THAT THE M[e]TC AN(D) THE RTC WERE REMISS IN THE EXERCISE
OF THAT JURISDICTION ACQUIRED BECAUSE IT DID NOT CONSIDER ALL
PETITIONER'S DEFENSE OF EQUITABLE MORTGAGE.
101

II. THE HONORABLE COURT OF APPEALS GRIEVEOUSLY (SIC) ERRED IN

REQUIRING THE M[e]TC AND RTC TO RULE ON A DEFENSE WHICH WAS
NEVER AVAILED OF BY RESPONDENT.45
Petitioner argues that respondent is barred from raising the issue of
equitable mortgage because his defense in the MeTC and RTC was that he
had repurchased the property from the petitioner; by such representation, he
had impliedly admitted the existence and validity of the deed of absolute
sale whereby ownership of the property was transferred to petitioner but
reverted to him upon the exercise of said right. The respondent even filed a
complaint for specific performance with damages, which is now pending in
the RTC of Makati City, docketed as Civil Case No. 01-851 entitled "Martin B.
Papio v. Amelia Salvador-Roberts." In that case, respondent claimed that his
transaction with the petitioner was a sale with pacto de retro. Petitioner
posits that Article 1602 of the Civil Code applies only when the defendant
specifically alleges this defense. Consequently, the appellate court was
proscribed from finding that petitioner and respondent had entered into an
equitable mortgage under the deed of absolute sale.
Petitioner further avers that respondent was ably represented by counsel and
was aware of the difference between a pacto de retro sale and an equitable
mortgage; thus, he could not have been mistaken in declaring that he
repurchased the property from her.
As to whether a sale is in fact an equitable mortgage, petitioner claims that
the issue should be properly addressed and resolved by the RTC in an action
to enforce ownership, not in an ejectment case before the MeTC where the
main issue involved is possession de facto. According to her, the obvious
import of the CA Decision is that, in resolving an ejectment case, the lower
court must pass upon the issue of ownership (in this case, by applying the
presumptions under Art. 1602) which, in effect, would use the same yardstick
as though it is the main action. The procedure will not only promote
multiplicity of suits but also place the new owner in the absurd position of
having to first seek the declaration of ownership before filing an ejectment
suit.
Respondent counters that the defense of equitable mortgage need not be
particularly stated to apprise petitioner of the nature and character of the
repurchase agreement. He contends that he had amply discussed in his
pleadings before the trial and appellate courts all the surrounding
102

circumstances of the case, such as the relative situation of the parties at the
time; their attitude, acts, conduct, and declarations; and the negotiations
between them that led to the repurchase agreement. Thus, he argues that
the CA correctly ruled that the contract was one of equitable mortgage. He
insists that petitioner allowed him to redeem and reacquire the property, and
accepted his full payment of the property through Ventura, the authorized
representative, as shown by the signed receipts.
The threshold issues are the following: (1) whether the MeTC had jurisdiction
in an action for unlawful detainer to resolve the issue of who between
petitioner and respondent is the owner of the property and entitled to the de
facto possession thereof; (2) whether the transaction entered into between
the parties under the Deed of Absolute Sale and the Contract of Lease is an
equitable mortgage over the property; and (3) whether the petitioner is
entitled to the material or de facto possession of the property.
The Ruling of the Court
On the first issue, the CA ruling (which upheld the jurisdiction of the MeTC to
resolve the issue of who between petitioner or respondent is the lawful
owner of the property, and is thus entitled to the material or de facto
possession thereof) is correct. Section 18, Rule 70 of the Rules of Court
provides that when the defendant raises the defense of ownership in his
pleadings and the question of possession cannot be resolved without
deciding the issue of ownership, the issue of ownership shall be resolved
only to determine the issue of possession. The judgment rendered in an
action for unlawful 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 would not bar an action between the
same parties respecting title to the land or building.46
The summary nature of the action is not changed by the claim of ownership
of the property of the defendant.47 The MeTC is not divested of its jurisdiction
over the unlawful detainer action simply because the defendant asserts
ownership over the property.
The sole issue for resolution in an action for unlawful detainer is material or
de facto possession of the property. Even if the defendant claims juridical
possession or ownership over the property based on a claim that his
transaction with the plaintiff relative to the property is merely an equitable
103

mortgage, or that he had repurchased the property from the plaintiff, the
MeTC may still delve into and take cognizance of the case and make an initial
or provisional determination of who between the plaintiff and the defendant
is the owner and, in the process, resolve the issue of who is entitled to the
possession. The MeTC, in unlawful detainer case, decides the question of
ownership only if it is intertwined with and necessary to resolve the issue of
possession.48 The resolution of the MeTC on the ownership of the property is
merely provisional or interlocutory. Any question involving the issue of
ownership should be raised and resolved in a separate action brought
specifically to settle the question with finality, in this case, Civil Case No. 01851 which respondent filed before the RTC.
The ruling of the CA, that the contract between petitioner and respondent
was an equitable mortgage, is incorrect. The fact of the matter is that the
respondent intransigently alleged in his answer, and even in his affidavit and
position paper, that petitioner had granted him the right to redeem or
repurchase the property at any time and for a reasonable amount; and that,
he had, in fact, repurchased the property in July 1985 for P250,000.00 which
he remitted to petitioner through an authorized representative who signed
receipts therefor; he had reacquired ownership and juridical possession of
the property after his repurchase thereof in 1985; and consequently,
petitioner was obliged to execute a deed of absolute sale over the property
in his favor.
Notably, respondent alleged that, as stated in his letter to petitioner, he was
given the right to reacquire the property in 1982 within two years upon the
payment of P53,000.00, plus petitioner's airfare for her trip to the Philippines
from the USA and back; petitioner promised to sign the deed
of absolute sale. He even filed a complaint against the petitioner in the RTC,
docketed as Civil Case No. 01-851, for specific performance with damages to
compel petitioner to execute the said deed of absolute sale over the property
presumably on the strength of Articles 1357 and 1358 of the New Civil Code.
Certainly then, his claim that petitioner had given him the right to
repurchase the property is antithetical to an equitable mortgage.
An equitable mortgage is one that, although lacking in some formality, form
or words, or other requisites demanded by a statute, nevertheless reveals
the intention of the parties to change a real property as security for a debt
and contain nothing impossible or contrary to law.49 A contract between the
parties is an equitable mortgage if the following requisites are present: (a)
104

the parties entered into a contract denominated as a contract of sale; and (b)
the intention was to secure an existing debt by way of mortgage.50 The
decisive factor is the intention of the parties.
In an equitable mortgage, the mortgagor retains ownership over the property
but subject to foreclosure and sale at public auction upon failure of the
mortgagor to pay his obligation.51 In contrast, in a pacto de retro sale,
ownership of the property sold is immediately transferred to the vendee a
retro subject only to the right of the vendor a retro to repurchase the
property upon compliance with legal requirements for the repurchase. The
failure of the vendor a retro to exercise the right to repurchase within the
agreed time vests upon the vendee a retro, by operation of law, absolute title
over the property.52
One repurchases only what one has previously sold. The right to repurchase
presupposes a valid contract of sale between the same parties.53 By insisting
that he had repurchased the property, respondent thereby admitted that the
deed of absolute sale executed by him and petitioner on April 13, 1982 was,
in fact and in law, a deed of absolute sale and not an equitable mortgage;
hence, he had acquired ownership over the property based on said deed.
Respondent is, thus, estopped from asserting that the contract under the
deed of absolute sale is an equitable mortgage unless there is allegation and
evidence of palpable mistake on the part of respondent;54 or a fraud on the
part of petitioner. Respondent made no such allegation in his pleadings and
affidavit. On the contrary, he maintained that petitioner had sold the
property to him in July 1985 and acknowledged receipt of the purchase price
thereof except the amount of P39,000.00 retained by Perlita Ventura.
Respondent is thus bound by his admission of petitioner's ownership of the
property and is barred from claiming otherwise.55
Respondent's admission that petitioner acquired ownership over the property
under the April 13, 1982 deed of absolute sale is buttressed by his admission
in the Contract of Lease dated April 15, 1982 that petitioner was the owner
of the property, and that he had paid the rentals for the duration of the
contract of lease and even until 1985 upon its extension. Respondent was
obliged to prove his defense that petitioner had given him the right to
repurchase, and that petitioner obliged herself to resell the property
for P250,000.00 when they executed the April 13, 1982 deed of absolute
sale.
105

We have carefully reviewed the case and find that respondent failed to
adduce competent and credible evidence to prove his claim.
As gleaned from the April 13, 1982 deed, the right of respondent to
repurchase the property is not incorporated therein. The contract is one of
absolute sale and not one with right to repurchase. The law states that if the
terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall
control.56 When the language of the contract is explicit, leaving no doubt as
to the intention of the drafters, the courts may not read into it any other
intention that would contradict its plain import.57 The clear terms of the
contract should never be the subject matter of interpretation. Neither
abstract justice nor the rule of liberal interpretation justifies the creation of a
contract for the parties which they did not make themselves, or the
imposition upon one party to a contract or obligation to assume simply or
merely to avoid seeming hardships.58 Their true meaning must be enforced,
as it is to be presumed that the contracting parties know their scope and
effects.59 As the Court held in Villarica, et al. v. Court of Appeals:60
The right of repurchase is not a right granted the vendor by the vendee in a
subsequent instrument, but is a right reserved by the vendor in the same
instrument of sale as one of the stipulations of the contract. Once the
instrument of absolute sale is executed, the vendor can no longer reserve
the right to repurchase, and any right thereafter granted the vendor by the
vendee in a separate instrument cannot be a right of repurchase but some
other right like the option to buy in the instant case.61
In Ramos v. Ino,62 we also held that an agreement to repurchase becomes a
promise to sell when made after the sale because when the sale is made
without such agreement the purchaser acquires the thing sold absolutely;
and, if he afterwards grants the vendor the right to repurchase, it is a new
contract entered into by the purchaser as absolute owner. An option to buy
or a promise to sell is different and distinct from the right of repurchase that
must be reserved by means of stipulations to that effect in the contract of
sale.63
There is no evidence on record that, on or before July 1985, petitioner agreed
to sell her property to the respondent for P250,000.00. Neither is there any
documentary evidence showing that Ventura was authorized to offer for sale
or sell the property for and in behalf of petitioner for P250,000.00, or to
106

receive the said amount from respondent as purchase price of the property.
The rule is that when a sale of a piece of land or any interest therein is
through an agent, the authority of the latter shall be in writing; otherwise,
the sale shall be void64 and cannot produce any legal effect as to transfer the
property from its lawful owner.65 Being inexistent and void from the very
beginning, said contract cannot be ratified.66 Any contract entered into by
Ventura for and in behalf of petitioner relative to the sale of the property is
void and cannot be ratified by the latter. A void contract produces no effect
either against or in favor of anyone.67
Respondent also failed to prove that the negotiations between him and
petitioner has culminated in his offer to buy the property for P250,000.00,
and that they later on agreed to the sale of the property for the same
amount. He likewise failed to prove that he purchased and reacquired the
property in July 1985. The evidence on record shows that petitioner had
offered to sell the property for US$15,000 on a "take it or leave it" basis in
May 1984 upon the expiration of the Contract of Lease68 'an offer that was
rejected by respondent which is why on December 30, 1997, petitioner and
her husband offered again to sell the property to respondent for P670,000.00
inclusive of back rentals and the purchase price of the property under the
April 13, 1982 Deed of absolute Sale.69 The offer was again rejected by
respondent. The final offer appears to have been made on January 11,
199870 but again, like the previous negotiations, no contract was perfected
between the parties.
A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some
service.71 Under Article 1318 of the New Civil Code, there is no contract
unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Contracts are perfected by mere consent manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to
constitute the contract.72 Once perfected, they bind the contracting parties
and the obligations arising therefrom have the form of law between the
parties which must be complied with in good faith. The parties are bound not
107

only to the fulfillment of what has been expressly stipulated but also to the
consequences which, according to their nature, may be in keeping with good
faith, usage and law.73
There was no contract of sale entered into by the parties based on the
Receipts dated July 1985 and June 16, 1986, signed by Perlita Ventura and
the letter of petitioner to respondent dated July 25, 1986.
By the contract of sale, one of the contracting parties obligates himself to
transfer the ownership of and deliver a determinate thing and the other, to
pay therefor a price certain in money or its equivalent.74 The absence of any
of the essential elements will negate the existence of a perfected contract of
sale. As the Court ruled in Boston Bank of the Philippines v. Manalo:75
A definite agreement as to the price is an essential element of a binding
agreement to sell personal or real property because it seriously affects the
rights and obligations of the parties. Price is an essential element in the
formation of a binding and enforceable contract of sale. The fixing of the
price can never be left to the decision of one of the contracting parties. But a
price fixed by one of the contracting parties, if accepted by the other, gives
rise to a perfected sale.76
A contract of sale is consensual in nature and is perfected upon mere
meeting of the minds. When there is merely an offer by one party without
acceptance of the other, there is no contract.77 When the contract of sale is
not perfected, it cannot, as an independent source of obligation, serve as a
binding juridical relation between the parties.78
Respondent's reliance on petitioner's letter to him dated July 25, 1986 is
misplaced. The letter reads in full:
7-25-86
Dear Martin & Ising,
Enclosed for your information is the letter written by my husband to Perlita. I
hope that you will be able to convince your cousin that it's to her best
interest to deposit the balance of your payment to me of P39,000.00 in my
bank acct. per our agreement and send me my bank book right away so that
we can transfer the title of the property.
108

Regards,
Amie

79

We have carefully considered the letter of Perlita Ventura, dated July 18,
1986, and the letter of Eugene Roberts, dated July 25, 1986, where Ventura
admitted having used the money of petitioner amounting to P39,000.00
without the latter's knowledge for the plane fare of Ventura's parents.
Ventura promised to refund the amount of P39,000.00, inclusive of interests,
within one year.80 Eugene Roberts berated Ventura and called her a thief for
stealing his and petitioner's money and that of respondent's wife, Ising, who
allegedly told petitioner that she, Ising, loaned the money to her parents for
their plane fare to the USA. Neither Ventura nor Eugene Roberts declared in
their letters that Ventura had used theP250,000.00 which respondent gave to
her.
Petitioner in her letter to respondent did not admit, either expressly or
impliedly, having receivedP211,000.00 from Ventura. Moreover, in her letter
to petitioner, only a week earlier, or on July 18, 1986, Ventura admitted
having spent the P39,000.00 and pleaded that she be allowed to refund the
amount within one (1) year, including interests.
Naririto ang total ng pera mo sa bankbook mo, P55,000.00 pati na yong
deposit na sarili mo at bale ang nagalaw ko diyan ay P39,000.00. Huwag
kang mag-alala ibabalik ko rin sa iyo sa loob ng isang taon pati interest.
Ate Per81 rbl r l l lbrr
It is incredible that Ventura was able to remit to petitioner P211,000.00
before July 25, 1986 when only a week earlier, she was pleading to petitioner
for a period of one year within which to refund theP39,000.00 to petitioner.
It would have bolstered his cause if respondent had submitted an affidavit of
Ventura stating that she had remitted P211,000.00 out of the P250,000.00
she received from respondent in July 1985 and June 20, 1986.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed
Decision of the Court of Appeals in CA-G.R. CV No. 69034 is REVERSED and
SET ASIDE. The Decision of the Metropolitan Trial Court, affirmed with
modification by the Regional Trial Court, is AFFIRMED.
109

SO ORDERED.
13. FIRST DIVISION
[G.R. NO. 141962 - January 25, 2006]
DANILO DUMO and SUPREMA DUMO, Petitioners, v. ERLINDA ESPINAS,
JHEAN PACIO, PHOL PACIO, MANNY JUBINAL, CARLITO CAMPOS, and
SEVERA ESPINAS, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court assailing the Decision1 of the Court of Appeals (CA) dated October 14,
1999 in CA-G.R. SP No. 50239, which set aside the Decision of the Regional
Trial Court (RTC) of Bauang, La Union, Branch 33, and reinstated with
modification the judgment of the Municipal Trial Court (MTC) of the same
town and province; and its Resolution2 of February 18, 2000, denying
petitioners' motion for reconsideration.
The present case arose from a complaint for forcible entry with prayer for the
issuance of a temporary restraining order and/or preliminary injunction filed
by spouses Danilo and Suprema Dumo (petitioners) against Erlinda Espinas,
Jhean Pacio, Phol Pacio, Manny Jubinal, Carlito Campos and Severa Espinas
(respondents) with the MTC of Bauang, La Union. The case was docketed as
Civil Case No. 881. In their complaint, petitioners alleged:
2. That plaintiffs are the owners-possessors of a parcel of sandy land with all
the improvements standing thereon, located in Paringao, Bauang, La Union,
with an area of 1, 514 square meters, covered by Tax Declaration No. 22839,
a photocopy of the said tax declaration is hereto attached as Annex "A";
3. That on November 17, 1995, defendant Severa J. Espinas filed a civil
complaint before this same court, docketed as civil case no. 857, entitled
"Quieting of Title and/or Ownership and Possession against spouses Sandy
and Presnida Saldana, subject matter of the case being the same real
property mentioned in paragraph 2 above, for which plaintiffs seeks (sic) that
the Honorable Court takes judicial notice of the same;
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4. That although a decision has been rendered against the defendants in civil
case no. 857, the same was not enforced as per Sheriff's return dated
November 4, 1996, attached to the records of civil case no. 857;
5. That on October 30, 1996, at about 1:45 P.M., all defendants acting for the
interest of Severa Espinas, apparently disgruntled with the refusal of the
sheriff to put them in possession over the questioned real property, and in
open defiance with the official action taken by the sheriff, took it upon
themselves, employing force, intimidation, and threat, to enter the said
question (sic) real property, and despite protestations made by plaintiffs,
who were there then present and visibly outnumbered by defendants and
their agents who were armed with sticks, bolos, hammers, and other deadly
weapons, successfully drove out plaintiffs, and took over the premises; that
arrogantly, the defendants were boasting aloud that they were under
instructions by the "judge" to do just that - to forcibly enter and take over the
premises; that defendants while inside the premises, demolished and totally
tore down all the improvements standing thereon, consisting of, but not
limited to shed structures intended for rent to the public;
6. That defendants are still in the premises to date, and have even started
putting and continuously putting up structures thereon;
7. That the plaintiff being the rightful owner of the disputed property and not
being a party in civil case no. 857, can never be bound by the proceedings
thereon; that the acts of defendants in forcibly entering the property of
plaintiff, and taking over the same without no lawful basis is patently a
violation of her proprietary rights, the commission and the continuance of
the unlawful acts aforementioned of defendants verily works injustice to
plaintiffs;3
Petitioners prayed for the payment of actual damages in the amount
of P75,000.00, lost earnings ofP5,000.00 per day, moral damages
of P100,000.00 and attorney's fees in the amount of P50,000.00.4
On November 12, 1996, the MTC issued a temporary restraining order
directing the defendants to cease and desist from destroying or demolishing
the improvements found on the subject land and from putting up structures
thereon.5 In its Order of January 15, 1997, the MTC issued a writ of
preliminary injunction.6

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In their Answer, respondents contended as part of their Special and

Affirmative Defenses:
1. That Sps. Marcelino and Severa Espinas purchased the questioned parcel
of land from Carlos Calica in 1943;
2. That said parcel of land has been declared for taxation purposes under
their name and the real estate taxes have [been] religiously paid;
3. That said parcel of land has been surveyed, which Plan Psu-202273 is duly
approved by the Director of Land, with an area of 1,065 sq. m. more or less;
4. That to remove and clear all doubts and cloud over the ownership of said
parcel of land, Civil Case No. 857 was filed and after hearing, decision was
rendered declaring herein defendants the lawful owners of said parcel of
land;
5. That under and by virtue of said Decision, defendants entered, occupied
and possessed said land, and in the exercise of their right of ownership,
cleaned the same of illegally constructed structures which were done without
the knowledge and consent of herein defendants;7
After trial, the MTC rendered judgment holding that petitioners were able to
prove their right of possession over the subject property. The dispositive
portion of the MTC Decision reads as follows:
WHEREFORE, in view of the foregoing considerations, judgment is rendered
in favor of the plaintiffs spouses Danilo and Suprema Dumo and against all
the defendants and therefore, the Court declares the plaintiffs the priority of
possession or physical possession de-facto of the land subject matter of the
suit. The preliminary mandatory injunction heretofore issued by this Court is
hereby made permanent and if the defendants and their agents or any
person acting in their behalf are still in the premises are ordered to vacate
said property. The defendants are likewise ordered to pay jointly and
severally the plaintiffs the amount of P30,000.00 as actual damages
plus P500.00 a day as lost earning of the premises from October 30, 1996 up
to the time defendants vacate the premises; P30,000.00 as moral
damages; P10,000.00 as exemplary damages; and P30,000.00 as attorney's
fee and to pay double cost.
SO ORDERED.8
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Aggrieved by the decision of the MTC, respondents appealed the case to the
RTC of Bauang, La Union.9 It was docketed as Civil Case No. 1099-BG.
In a letter filed with this Court dated July 24, 1998, RTC Judge Rose Mary R.
Molina-Alim who handles Civil Case No. 1099-BG, requested that she be
allowed to inhibit herself from further sitting in said case on the ground that
the petitioners have filed an administrative complaint against her for
partiality, and by reason of such complaint she honestly feels that she can no
longer continue deciding Civil Case No. 1099-BG without bias and
unnecessary pressure.10 However, in this Court's Resolution of September 15,
1998, Judge Molina-Alim's request was denied on the ground that the mere
filing of an administrative complaint does not preclude a judge from deciding
a case submitted to him/her for resolution.11 Hence, Judge Molina-Alim
proceeded in deciding the case.
In its Decision dated December 18, 1998, the RTC reversed and set aside the
Decision of the MTC and dismissed the case filed by the petitioners.12 The
RTC ruled:
Prescinding from the above factual antecedents, as between defendant
Severa Espinas who acquired the property on October 18, 1943 through
purchase (Exhibit "1") and plaintiffs who allegedly possessed it onMay 23,
1987 by virtue of the deed of partition with absolute sale (Exhibit "A"), the
former had a possession antedating that of the latter. Even if the possession
of plaintiffs' predecessors-in-interest, Sps. Pedro and Bernardo Trinidad
since 1951, were to be considered, still, defendant Severa Espinas enjoys the
priority of possession long before the filing of the instant case on October 30,
1996. Under these circumstances, priority in time should be the pivotal cog
in resolving the issue of possession.
What is more, defendant Severa Espinas was never divested of her
possession except in 1987 when the plaintiffs put up the retaining seawall on
the western portion and cyclone wire on the southern portion of the property
without her (Severa) consent. Despite the latter's protestations, plaintiffs
continued to introduce these improvements and challenged her to file a suit
in Court. (Minutes of the ocular inspection, April 23, 1997). And lately, in Civil
Case No. 857 (Exhibit "3"), when defendants Saldy and Fresnida Saldaa
tried to encroach on the property claiming ownership thereof. What is more,
the possession of defendant Severa Espinas since 1943 was bolstered by the
decision rendered in the land registration case (Exhibit "U"), as well as in the
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civil case (Exhibit "E"), wherein she was declared the owner of the property
in question.
Hence, the MTC erred in finding plaintiffs to have priority of possession. On
the contrary, defendants (sic) evidence is very clear that defendant Severa
Espinas and her husband had been in actual, open, continuous, adverse in
the concept of owner, possession of the land since 1943. In addition, the
evidence of possession presented in the land registration and quieting of title
cases (Exhibits "U" and "E") surely dispels any iota of doubt that may exist in
regard to the possession of defendant Severa Espinas over the subject
property.'
As regards the issue on the award of damages:
The rule is settled that in forcible entry or unlawful detainer cases, the only
damage that can be recovered is the fair rental value or the reasonable
compensation for the use and occupation of the leased property. The reason
for this is that in such cases, the only issue raised in ejectment cases is that
of rightful possession; hence, the damages which could be recovered are
those which the plaintiff could have sustained as a mere possessor, or those
caused by the loss of the use and occupation of the property, and not the
damages which he may have suffered but which have no direct relation to
his loss of material possession (Araos v. Court of Appeals, 232 SCRA 770).
Then too, under Section 17 of Rule 70 of the 1997 Rules of Civil Procedure, in
forcible entry and unlawful detainer, the monetary award is limited to' the
sum justly due as arrears of rent or as reasonable compensation for the use
and occupation of the premises, attorney's fees and costs. In this case, the
MTC erred in awarding P30,000.00 as actual damages plus P500.00 a day as
loss earnings, P30,000.00 as moral damages, P10,000.00 as exemplary
damages. These damages are not the reasonable compensation for the use
and occupation of the property. Rather, these are damages which may have
been suffered by plaintiffs which have no direct relation to the use of
material possession, hence, should not have been awarded (Araos v. C.A.,
supra).
Besides, the award of P30,000.00 as actual damages plus P500.00 a day as
loss earnings has no factual and legal basis, hence, should have been
disallowed.

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True, the aforecited rule now allows attorney's fees to be awarded, but the
grant of the same must be in accordance with Article 2208 of the Civil Code,
thus:
Article 2208. In the absence of stipulation, attorney's fees - cannot be
recovered except'
1) In any other cases (sic) where the court deems it just and equitable'
In all cases - must be reasonable.
The award of attorney's fees by the MTC lacks basis. The body of the
appealed decision indeed does not show justification for the award. Hence,
there is no basis for such award, which, consequently, should have been
removed. The power of the Court to award attorney's fees under the above
cited article, demands factual, legal and equitable justification. Its basis
cannot be left to speculation and gesture (Morales v. C.A. G.R. No. 117228,
June 19, 1997).13
Petitioners then filed a Petition for Review with the CA. On October 14, 1999,
the CA promulgated the presently assailed Decision setting aside the
judgment of the RTC and reinstating with modification the decision of the
MTC, by deleting the awards for actual, moral and exemplary damages.14 The
CA held that the MTC correctly found that the petitioners were in possession
of the subject land prior to the time when respondents allegedly forcibly
entered the property; that it is error for the RTC to reach all the way back to
1943 to determine priority in possession considering that "prior possession"
means possession immediately prior to the act of disturbance; that Civil Case
No. 857, which was an action to quiet title filed by respondent Severa
Espinas against spouses Sandy and Presnida Saldana, is not binding on
petitioners; and, that the alleged difference in the identities of the lands of
petitioners and respondents was not raised as a defense in the Answer of
respondents. As regards the award of damages, the CA agreed with the
ruling of the RTC that in forcible entry and unlawful detainer cases, the only
damage that can be recovered is the fair rental value or the reasonable
compensation for the use and occupation of the property concerned;
nonetheless, it sustained the award of attorney's fees by the MTC.
Petitioners filed a Motion for Partial Reconsideration but the same was denied
by the CA in its Resolution dated February 18, 2000.15
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Hence, the present petition with the following assignment of errors:

1. THAT THE COURT OF APPEALS, UNDER THE INSTANT DECISION AND
RESOLUTION, ANNEXES 'A' AND 'B' HEREOF, COMMITTED A REVERSIBLE
ERROR IN NOT DECLARING THE DECISION OF RTC JUDGE ROSE MARY MOLINA
ALIM AS NULL AND VOID FOR BEING VIOLATIVE OF PETITIONERS'
CONSTITUTIONAL RIGHT TO DUE PROCESS IN VIEW OF HER ADMITTED BIAS
IN DECIDING THE CASE.
2. MOREOVER, THE COURT OF APPEALS, UNDER THE SAID DECISION AND
RESOLUTION, ANNEXES A AND B HEREOF, COMMITTED A REVERSIBLE ERROR
IN DELETING THE AWARDS OF ACTUAL, MORAL AND EXEMPLARY DAMAGES
MADE BY THE MUNICIPAL TRIAL COURT, CONSIDERING THAT THE SAID
AWARDS ARE ALREADY RES JUDICATA BECAUSE:
(a) THAT, AS AFORESAID, THE DECISION OF JUDGE ALIM WHICH INCLUDED
THE DELETION OF THE SAID DAMAGES IS NULL AND VOID, AND DID NOT
AFFECT THE MTC DECISION, AND,
(b) THAT, IN ANY EVENT, THE HEREIN RESPONDENTS DID NOT QUESTION THE
AMOUNTS OF SAID AWARD IN THEIR APPEAL FROM THE DECISION OF THE
MUNICIPAL TRIAL COURT TO THE REGIONAL TRIAL COURT THEREBY
RENDERING SAID AWARDS, FINAL AND RES JUDICATA.16
In their first assignment of error, petitioners contend that the Decision
rendered by the RTC dated December 18, 1998 is null and void because it
violates petitioners' constitutional right to due process considering that Judge
Rose Mary R. Molina-Alim who sat during the trial and penned the questioned
RTC decision had previously admitted her bias against petitioners.
We do not agree.
In Gochan v. Gochan,17 we have sufficiently discussed the matter of a judge's
inhibition from hearing a case vis - -vis the right of a party to due process,
to wit:
A critical component of due process is a hearing before a tribunal that is
impartial and disinterested. Every litigant is indeed entitled to nothing less
than "the cold neutrality of an impartial judge." All the other elements of due
process, like notice and hearing, would be meaningless if the ultimate
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decision were to come from a biased judge. Section 1 of Rule 137 of the
Rules of Court provides:
SECTION 1. Disqualification of judges. - No judge or judicial officer shall sit in
any case in which he, or his wife or child, is pecuniarily interested as heir,
legatee, creditor or otherwise, or in which he is related to either party within
the sixth degree of consanguinity or affinity, or to counsel within the fourth
degree, computed according to the rules of the civil law, or in which he has
been executor, administrator, guardian, trustee or counsel, or in which he
has presided in any inferior court when his ruling or decision is the subject of
review, without the written consent of all parties in interest, signed by them
and entered upon the record.
A judge may, in the exercise of his sound discretion, disqualify himself from
sitting in a case, for just or valid reasons other than those mentioned above.
The Rules contemplate two kinds of inhibition: compulsory and voluntary. The
instances mentioned in the first paragraph of the cited Rule conclusively
presume that judges cannot actively and impartially sit in a case. The second
paragraph, which embodies voluntary inhibition, leaves to the discretion of
the judges concerned whether to sit in a case for other just and valid
reasons, with only their conscience as guide.
To be sure, judges may not be legally prohibited from sitting in a litigation.
But when circumstances reasonably arouse suspicions, and out of such
suspicions a suggestion is made of record that they might be induced to act
with prejudice for or against a litigant, they should conduct a careful selfexamination. Under the second paragraph of the cited Section of the Rules of
Court, parties have the right to seek the inhibition or the disqualification of
judges who do not appear to be wholly free, disinterested, impartial or
independent in handling a case. Whether judges should inhibit themselves
therefrom rests on their own "sound discretion." That discretion is a matter of
conscience and is addressed primarily to their sense of fairness and justice.
However, judges are exhorted to exercise their discretion in a way
that the people's faith in the courts of justice would not be
impaired. A salutary norm for them to observe is to reflect on the
possibility that the losing parties might nurture at the back of their
minds the thought that the former have unmeritoriously tilted the
scales of justice against them. Of course, the judges' right must be
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weighed against their duty to decide cases without fear of

repression.
Verily, the second paragraph of Section 1 of Rule 137 does not give
judges the unfettered discretion to decide whether to desist from
hearing a case. The inhibition must be for just and valid causes. The
mere imputation of bias or partiality is not enough ground for them
to inhibit, especially when the charge is without basis. This Court
has to be shown acts or conduct clearly indicative of arbitrariness or
prejudice before it can brand them with the stigma of bias or
partiality.
In a string of cases, the Supreme Court has said that bias and prejudice, to
be considered valid reasons for the voluntary inhibition of judges, must be
proved with clear and convincing evidence. Bare allegations of their partiality
will not suffice. It cannot be presumed, especially if weighed against the
sacred oaths of office of magistrates, requiring them to administer justice
fairly and equitably - - both to the poor and the rich, the weak and the
strong, the lonely and the well-connected.
Equally important is the established doctrine that bias and prejudice
must be shown to have resulted in an opinion on the merits on the
basis of an extrajudicial source, not on what the judge learned from
participating in the case. As long as opinions formed in the course of
judicial proceedings are based on the evidence presented and the conduct
observed by the magistrate, such opinion - - even if later found to be
erroneous - - will not prove personal bias or prejudice on the part of the
judge. While palpable error may be inferred from the decision or the order
itself, extrinsic evidence is required to establish bias, bad faith, malice or
corrupt purpose. At bottom, to disqualify a judge, the movant must prove
bias and prejudice by clear and convincing evidence.18 (Emphasis ours)
What makes the present case different from the usual cases passed upon by
this Court is the fact that, as stated earlier, Judge Molina-Alim herself
manifested in her letter-request for inhibition that in view of the
administrative case filed by herein petitioners charging her with partiality,
she honestly feels that she "can no longer continue deciding the appealed
case free from bias and unnecessary pressure."19 Petitioners contend that
Judge Molina-Alim's manifestation is an admission of bias. Hence, by reason
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of such admission, there is no longer any need for them to prove the same.
However, it must be emphasized that the Court denied Judge Molina Alim's request for inhibition holding that the mere filing of an administrative
complaint does not preclude a judge from deciding a case submitted to
him/her for resolution for there are judicial remedies available to the parties
should there be an adverse decision.20 It is clear from the Resolution that the
Court was not persuaded by the reason put forth by Judge Molina-Alim in her
request for inhibition. It should be clearly understood from the above-cited
Resolution that the Court found no sufficient basis to allow Judge Molina-Alim
to inhibit herself from hearing Civil Case No. 1099-BG. The Court ruled that
the mere fact that an administrative case for alleged partiality was filed
against her by herein petitioners does not justify her recusal. Indeed, a
careful reading of the letter-request of Judge Molina-Alim shows that her
request for inhibition stems solely from the fact that herein petitioners had
filed an administrative case against her for partiality. There is no other
statement in said letter-request, categorical or implied, which would show
that her purported bias resulted from any other source. Notwithstanding
Judge Molina-Alim's statements in her request for inhibition, we find that
petitioners' allegations of bias and partiality remain unsubstantiated. Indeed,
bare allegations of partiality and prejudgment will not suffice in the absence
of clear and convincing evidence to overcome the presumption that the
judge will undertake his noble role to dispense justice according to law and
evidence and without fear or favor.21 There should be adequate evidence to
prove the allegations, and there must be showing that the judge had an
interest, personal or otherwise, in the prosecution of the case.22
To reiterate, the mere filing of an administrative case against a judge is not a
ground for disqualifying him from hearing the case, for if on every occasion
the party apparently aggrieved would be allowed to either stop the
proceedings in order to await the final decision on the desired
disqualification, or demand the immediate inhibition of the judge on the
basis alone of his being so charged, many cases would have to be kept
pending or perhaps there would not be enough judges to handle all the cases
pending in all the courts.23 This Court has to be shown acts or conduct of the
judge clearly indicative of arbitrariness or prejudice before the latter can be
branded the stigma of being biased or partial.24 Moreover, while judges are
given wide latitude of discretion in determining if it is indeed proper for them
to hear or sit in a particular case, it should be emphasized that this choice is
not absolute and must be based on a just and valid cause and on a rational
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and logical assessment of the circumstances prevailing in the case brought

before him.25 The option given to a judge to choose whether or not to handle
a particular case should be counter-balanced by the judge's sworn duty to
administer justice without fear of repression.
In any case, petitioners' contention that they have been deprived of due
process is denied by the fact that they were able to appeal the questioned
RTC Decision to the CA via a Petition for Review and, subsequently, file a
motion for reconsideration of the CA Decision. The essence of due process is
found in the reasonable opportunity to be heard and submit any evidence
one may have in support of one's defense.26 What the law proscribes is the
lack of opportunity to be heard.27 As long as a party is given the opportunity
to defend his interests in due course, he would have no reason to complain,
for it is this opportunity to be heard that makes up the essence of due
process.28
In their second assignment of error, petitioners point out that in their Petition
for Review filed with the CA, they did not raise as an issue the award of
damages made by the MTC. Similarly, respondents did not specifically assign
as error the award of damages by the MTC when they appealed the case to
the RTC; neither did they file an appeal with the CA questioning the award of
damages by the MTC. On this basis, petitioners conclude that the award for
damages not having been appealed, the same had become final and
executory. Hence, the RTC had no authority to reverse the judgment of the
MTC respecting the award of damages. In the same way, petitioners contend
that the CA did not have jurisdiction to rule on the matter of damages
because this issue was not raised in the appeal filed before it.
We are not persuaded.
We have held that an appellate court is clothed with ample authority to
review rulings even if they are not assigned as errors.29 This is especially so if
the court finds that their consideration is necessary in arriving at a just
decision of the case before it.30 We have consistently held that an unassigned
error closely related to an error properly assigned, or upon which a
determination of the question raised by the error properly assigned is
dependent, will be considered by the appellate court notwithstanding the
failure to assign it as an error.31 Petitioners admit in the present petition that
herein respondents, in their appeal with the RTC, raised the question of
whether or not the prevailing party may be awarded damages. Since this
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issue had been seasonably raised, it became open to further evaluation. It

was only logical and natural for the RTC to deal with the question of whether
petitioners are indeed entitled to the damages awarded by the MTC.
Moreover, even if the issue on damages was not raised by herein
respondents in their appeal with the RTC, it is not erroneous on the part of
the RTC to delete the award of damages in the MTC decision considering that
the RTC judgment reversed the decision of the MTC. It would be the height of
inconsistency if the RTC sustained the award of damages in favor of herein
petitioners when, in the same decision, it reversed the MTC judgment and
dismissed the complaint of petitioners.
Lastly, we agree with the CA and the RTC that there is no basis for the MTC to
award actual, moral and exemplary damages in view of the settled rule that
in ejectment cases, the only damage that can be recovered is the fair rental
value or the reasonable compensation for the use and occupation of the
property.32 Considering that the only issue raised in ejectment is that of
rightful possession, damages which could be recovered are those which the
plaintiff could have sustained as a mere possessor, or those caused by the
loss of the use and occupation of the property, and not the damages which
he may have suffered but which have no direct relation to his loss of material
possession.33 Although the MTC's order for the reimbursement to petitioners
of their alleged lost earnings over the subject premises, which is a beach
resort, could have been considered as compensation for their loss of the use
and occupation of the property while it was in the possession of the
respondents, records do not show any evidence to sustain the same. Thus,
we find no error in the ruling of the RTC that the award for lost earnings has
no evidentiary or factual basis; and in the decision of the CA affirming the
same.
WHEREFORE, the instant petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals dated October 14, 1999 and February 18,
2000, respectively, are AFFIRMED.
SO ORDERED.

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