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FIRST DIVISION

IRENE SANTE AND REYNALDO SANTE,


Petitioners,

G.R. No. 173915


Present:

- versus HON. EDILBERTO T. CLARAVALL, in his capacity as


Presiding Judge of Branch 60, Regional Trial Court of
Baguio City, and VITA N. KALASHIAN,
Respondents.

PUNO, C.J., Chairperson,


CARPIO MORALES,
LEONARDO-DE CASTRO,
BERSAMIN, and
VILLARAMA, JR., JJ.
Promulgated:

February 22, 2010


x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J.:
Before this Court is a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, filed by petitioners Irene and
Reynaldo Sante assailing the Decision dated January 31, 2006 and the Resolution dated June 23, 2006 of the Seventeenth Division of
the Court of Appeals in CA-G.R. SP No. 87563. The assailed decision affirmed the orders of the Regional Trial Court (RTC) of Baguio City,
Branch 60, denying their motion to dismiss the complaint for damages filed by respondent Vita Kalashian against them.
[1]

[2]

[3]

The facts, culled from the records, are as follows:


On April 5, 2004, respondent filed before the RTC of Baguio City a complaint for damages against petitioners. In her complaint,
docketed as Civil Case No. 5794-R, respondent alleged that while she was inside the Police Station of Natividad, Pangasinan, and in
the presence of other persons and police officers, petitioner Irene Sante uttered words, which when translated in English are as
follows, How many rounds of sex did you have last night with your boss, Bert? You fuckin bitch! Bert refers to Albert Gacusan,
respondents friend and one (1) of her hired personal security guards detained at the said station and who is a suspect in the killing of
petitioners close relative. Petitioners also allegedly went around Natividad, Pangasinan telling people that she is protecting and
cuddling the suspects in the aforesaid killing. Thus, respondent prayed that petitioners be held liable to pay moral damages in the
amount of P300,000.00; P50,000.00 as exemplary damages; P50,000.00 attorneys fees; P20,000.00 litigation expenses; and costs of
suit.
[4]

Petitioners filed a Motion to Dismiss on the ground that it was the Municipal Trial Court in Cities (MTCC) and not the RTC of Baguio,
that had jurisdiction over the case. They argued that the amount of the claim for moral damages was not more than the jurisdictional
amount of P300,000.00, because the claim for exemplary damages should be excluded in computing the total claim.
[5]

On June 24, 2004, the trial court denied the motion to dismiss citing our ruling in Movers-Baseco Integrated Port Services, Inc. v.
Cyborg Leasing Corporation. The trial court held that the total claim of respondent amounted to P420,000.00 which was above the
jurisdictional amount for MTCCs outside Metro Manila. The trial court also later issued Orders on July 7, 2004 and July 19,
2004, respectively reiterating its denial of the motion to dismiss and denying petitioners motion for reconsideration.
[6]

[7]

[8]

[9]

Aggrieved, petitioners filed on August 2, 2004, a Petition for Certiorari and Prohibition, docketed as CA-G.R. SP No. 85465, before
the Court of Appeals. Meanwhile, on July 14, 2004, respondent and her husband filed an Amended Complaint increasing the claim
for moral damages from P300,000.00 toP1,000,000.00. Petitioners filed a Motion to Dismiss with Answer Ad Cautelam and
Counterclaim, but the trial court denied their motion in an Order dated September 17, 2004.
[10]

[11]

[12]

Hence, petitioners again filed a Petition for Certiorari and Prohibition before the Court of Appeals, docketed as CA-G.R. SP No.
87563, claiming that the trial court committed grave abuse of discretion in allowing the amendment of the complaint to increase the
amount of moral damages from P300,000.00 to P1,000,000.00. The case was raffled to the Seventeenth Division of the Court of
Appeals.
[13]

On January 23, 2006, the Court of Appeals, Seventh Division, promulgated a decision in CA-G.R. SP No. 85465, as follows:
WHEREFORE, finding grave abuse of discretion on the part of [the] Regional Trial Court of Baguio, Branch 60, in
rendering the assailed Orders dated June 24, 2004 and July [19], 2004 in Civil Case No. 5794-R the instant petition

for certiorari is GRANTED. The assailed Orders are hereby ANNULLED and SET ASIDE. Civil Case No. 5794-R for
damages is ordered DISMISSED for lack of jurisdiction.
SO ORDERED.

[14]

The Court of Appeals held that the case clearly falls under the jurisdiction of the MTCC as the allegations show that plaintiff was seeking to
recover moral damages in the amount of P300,000.00, which amount was well within the jurisdictional amount of the MTCC. The Court of
Appeals added that the totality of claim rule used for determining which court had jurisdiction could not be applied to the instant case
because plaintiffs claim for exemplary damages was not a separate and distinct cause of action from her claim of moral damages, but merely
incidental to it. Thus, the prayer for exemplary damages should be excluded in computing the total amount of the claim.
On January 31, 2006, the Court of Appeals, this time in CA-G.R. SP No. 87563, rendered a decision affirming the September 17, 2004
Order of the RTC denying petitioners Motion to Dismiss Ad Cautelam. In the said decision, the appellate court held that the total or
aggregate amount demanded in the complaint constitutes the basis of jurisdiction. The Court of Appeals did not find merit in
petitioners posture that the claims for exemplary damages and attorneys fees are merely incidental to the main cause and should not
be included in the computation of the total claim.
The Court of Appeals additionally ruled that respondent can amend her complaint by increasing the amount of moral damages
from P300,000.00 to P1,000,000.00, on the ground that the trial court has jurisdiction over the original complaint and respondent is
entitled to amend her complaint as a matter of right under the Rules.
Unable to accept the decision, petitioners are now before us raising the following issues:
I.
WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION ON THE PART OF THE (FORMER) SEVENTEENTH DIVISION OF THE HONORABLE COURT OF
APPEALS WHEN IT RESOLVED THAT THE REGIONAL TRIAL COURT OF BAGUIO CITY BRANCH 60 HAS
JURISDICTION OVER THE SUBJECT MATTER OF THE CASE FOR DAMAGES AMOUNTING TO P300,000.00;
II.
WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION ON THE PART OF THE HONORABLE
RESPONDENT JUDGE OF THE REGIONAL TRIAL COURT OF BAGUIO BRANCH 60 FOR ALLOWING THE
COMPLAINANT TO AMEND THE COMPLAINT (INCREASING THE AMOUNT OF DAMAGES TO 1,000,000.00 TO
CONFER JURISDICTION OVER THE SUBJECT MATTER OF THE CASE DESPITE THE PENDENCY OF A PETITION
FOR CERTIORARI FILED AT THE COURT OF APPEALS, SEVENTH DIVISION, DOCKETED AS CA G.R. NO. 85465.
[15]

In essence, the basic issues for our resolution are:


1)

Did the RTC acquire jurisdiction over the case? and

2)

Did the RTC commit grave abuse of discretion in allowing the amendment of the complaint?

Petitioners insist that the complaint falls under the exclusive jurisdiction of the MTCC. They maintain that the claim for moral damages,
in the amount of P300,000.00 in the original complaint, is the main action. The exemplary damages being discretionary should not be
included in the computation of the jurisdictional amount. And having no jurisdiction over the subject matter of the case, the RTC acted
with grave abuse of discretion when it allowed the amendment of the complaint to increase the claim for moral damages in order to
confer jurisdiction.
In her Comment, respondent averred that the nature of her complaint is for recovery of damages. As such, the totality of the claim for
damages, including the exemplary damages as well as the other damages alleged and prayed in the complaint, such as attorneys fees
and litigation expenses, should be included in determining jurisdiction. The total claim being P420,000.00, the RTC has jurisdiction
over the complaint.
[16]

We deny the petition, which although denominated as a petition for certiorari, we treat as a petition for review on certiorari under Rule
45 in view of the issues raised.
Section 19(8) of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, states:
[17]

[18]

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

xxxx
(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorneys 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 abovementioned items
exceeds Two hundred thousand pesos (P200,000.00).

Section 5 of Rep. Act No. 7691 further provides:


SEC. 5. After five (5) years from the effectivity of this Act, the jurisdictional amounts mentioned in Sec. 19(3), (4), and
(8); and Sec. 33(1) of Batas Pambansa Blg. 129 as amended by this Act, shall be adjusted to Two hundred thousand
pesos (P200,000.00). Five (5) years thereafter, such jurisdictional amounts shall be adjusted further to Three hundred
thousand pesos (P300,000.00): Provided, however, That in the case of Metro Manila, the abovementioned
jurisdictional amounts shall be adjusted after five (5) years from the effectivity of this Act to Four hundred thousand
pesos (P400,000.00).

Relatedly, Supreme Court Circular No. 21-99 was issued declaring that the first adjustment in jurisdictional amount of first level courts
outside of Metro Manila fromP100,000.00 to P200,000.00 took effect on March 20, 1999. Meanwhile, the second adjustment
from P200,000.00 to P300,000.00 became effective on February 22, 2004 in accordance with OCA Circular No. 65-2004 issued by the
Office of the Court Administrator on May 13, 2004.
Based on the foregoing, there is no question that at the time of the filing of the complaint on April 5, 2004, the MTCCs jurisdictional
amount has been adjusted toP300,000.00.
But where damages is the main cause of action, should the amount of moral damages prayed for in the complaint be the sole basis
for determining which court has jurisdiction or should the total amount of all the damages claimed regardless of kind and nature, such
as exemplary damages, nominal damages, and attorneys fees,etc., be used?
In this regard, Administrative Circular No. 09-94 is instructive:
[19]

xxxx
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. No. 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. (Emphasis ours.)
In the instant case, the complaint filed in Civil Case No. 5794-R is for the recovery of damages for the alleged malicious acts of petitioners.
The complaint principally sought an award of moral and exemplary damages, as well as attorneys fees and litigation expenses, for the
alleged shame and injury suffered by respondent by reason of petitioners utterance while they were at a police station in Pangasinan. It is
settled that jurisdiction is conferred by law based on the facts alleged in the complaintsince the latter comprises a concise statement of the
ultimate facts constituting the plaintiffs causes of action. It is clear, based on the allegations of the complaint, that respondents main action
is for damages. Hence, the other forms of damages being claimed by respondent, e.g., exemplary damages, attorneys fees and litigation
expenses, are not merely incidental to or consequences of the main action but constitute the primary relief prayed for in the complaint.
[20]

In Mendoza v. Soriano, it was held that 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. In the said case, the respondents
claim of P929,000.06 in damages and P25,000 attorneys fees plusP500 per court appearance was held to represent the monetary
equivalent for compensation of the alleged injury. The Court therein held that the total amount of monetary claims including the claims
for damages was the basis to determine the jurisdictional amount.
[21]

Also, in Iniego v. Purganan, the Court has held:


[22]

The amount of damages claimed is within the jurisdiction of the RTC, since it is the claim for all kinds of damages
that is the basis of determining the jurisdiction of courts, whether the claims for damages arise from the same or
from different causes of action.
xxxx

Considering that the total amount of damages claimed was P420,000.00, the Court of Appeals was correct in ruling that the RTC had
jurisdiction over the case.
Lastly, we find no error, much less grave abuse of discretion, on the part of the Court of Appeals in affirming the RTCs order allowing
the amendment of the original complaint from P300,000.00 to P1,000,000.00 despite the pendency of a petition for certiorari filed
before the Court of Appeals. While it is a basic jurisprudential principle that an amendment cannot be allowed when the court has no
jurisdiction over the original complaint and the purpose of the amendment is to confer jurisdiction on the court, here, the RTC clearly
had jurisdiction over the original complaint and amendment of the complaint was then still a matter of right.
[23]

[24]

WHEREFORE, the petition is DENIED, for lack of merit. The Decision and Resolution of the Court of Appeals dated January
31, 2006 and June 23, 2006, respectively, are AFFIRMED. The Regional Trial Court of Baguio City, Branch 60 is DIRECTED to
continue with the trial proceedings in Civil Case No. 5794-R with deliberate dispatch.
No costs.
SO ORDERED.

G.R. No. 164594, April 22, 2015


MICHAEL SEBASTIAN, Petitioner, v. ANNABEL LAGMAY NG, REPRESENTED BY HER ATTORNEY-IN-FACT, ANGELITA
LAGMAY, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari, filed by petitioner Michael Sebastian (Michael), assailing the March 31, 2004
Decision, and the July 15, 2004 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 65450.
1

The CA decision reversed and set aside the decision of the Regional Trial Court (RTC) of Palayan City, Branch 40, in SP. Proc. Case
No. 0096-P.
Factual Background
Sometime in 1997, Angelita Lagmay (Angelita), acting as representative and attorney-in-fact of her daughter Annabel Lagmay Ng
(Annabel), filed a complaint before the Barangay Justice of Siclong, Laur, Nueva Ecija. She sought to collect from Michael the sum of
P350,000.00 that Annabel sent to Michael. She claimed that Annabel and Michael were once sweethearts, and that they agreed to
jointly invest their financial resources to buy a truck. She alleged that while Annabel was working in Hongkong, Annabel sent Michael
the amount of P350,000.00 to purchase the truck. However, after Annabel and Michael's relationship has ended, Michael allegedly
refused to return the money to Annabel, prompting the latter to bring the matter before the Barangay Justice.
On July 9, 1997, the parties entered into an amicable settlement, evidenced by a document denominated as "kasunduan'' wherein
Michael agreed to pay Annabel the amount of P250,000.00 on specific dates. The kasunduan was signed by Angelita (on behalf of
Annabel), Michael, and the members of the pangkat ng tagapagkasundo. The kasunduan reads:
4

KASUNDUAN
Nagkasundo ang dalawang panig na pagkayari ng labing apat na buwan (14 months) Simula ngayong July 9, 1997 hanggang
September 1998 ay kailangan ng maibigay ni Mr. Sebastian ang pera ni Ms. Anabelle Lagmay.
At napagkasunduan ay dalawang hulog ang halagang P250,000.00 na pera ni Ms.Lagmay at Simula ng pagbibigay ni Mr. Sebastian ay
sa buwan ng September 1998.
At upang may katunayan ang lahat ng napag usapan ay lumagda sa ibaba nito at sa harap ng mga saksi ngayong ika-9 ng Hulyo,
1997
Mrs. Angelita Lagmay - (Lagda)
Mr. Michael Sebastian - (Lagda)
Saksi: Kagawad Rolando Mendizabal - (Lagda)
Hepe Quirino Sapon - (Lagda)
Benjamin Sebastian - (Lagda)
Jun Roxas - (Lagda)
Angelita alleged that the kasunduan was not repudiated within a period of ten (10) days from the settlement, in accordance with
the Katarungang Pambarangay Law embodied in the Local Government Code of 1991 [Republic Act (R.A.) No. 7160], and Section 14
of its Implementing Rules. When Michael failed to honor the kasunduan, Angelita brought the matter back to the Barangay, but
the BarangayCaptain failed to enforce the kasunduan, and instead, issued a Certification to File Action.
After about one and a half years from the date of the execution of the kasunduan or on January 15, 1999, Angelita filed with the
Municipal Circuit Trial Court (MCTC) of Laur and Gabaldon, Nueva Ecija, a Motion for Execution of the kasunduan.
Michael moved for the dismissal of the Motion for Execution, citing as a ground Angelita's alleged violation of Section 15, Rule 13 of
the 1997 Rules of Civil Procedure.
On January 17, 2000, the MCTC rendered a decision in favor of Annabel, the dispositive portion of which reads, as follows:
5

WHEREFORE, the plaintiff through counsel has satisfactorily proven by preponderance of evidence based on Exhibits "A," "B," "C,"
"D," and "F," that defendant has obligation to the plaintiff in the amount ofP250,000.00.
IN VIEW OF THE FOREGOING, the Motion for Execution filed by the plaintiff is hereby granted based on Sec. 2, Rule 7 of the

Implementing Rules and Regulations of Republic Act No. 7160, and therefore, defendant is hereby ordered within 15 days upon
receipt of this decision to pay the plaintiff the amount of P250,000.00 as evidenced by the Kasunduan (Exhibit "C") with legal interests
from July 9, 1997 until said obligation is fully paid, and to pay attorney's fees for the plaintiffs counsel in the amount of P15,000.00
and to pay the cost of the suit.
SO ORDERED.
Michael filed an appeal with the RTC arguing that the MCTC committed grave abuse of discretion in prematurely deciding the case.
Michael also pointed out that a hearing was necessary for the petitioner to establish the genuineness and due execution of
the kasunduan.
The Regional Trial Court's Ruling
In its November 13, 2000 Decision, the RTC, Branch 40 of Palayan City upheld the MCTC decision, finding Michael liable to pay
Annabel the sum of P250,000.00. It held that Michael failed to assail the validity of the kasunduan, or to adduce any evidence to
dispute Annabel's claims or the applicability of the Implementing Rules and Regulations of R.A. No. 7160. The dispositive portion of
the decision reads:
6

WHEREFORE, the assailed Decision and Order of the lower court is hereby MODIFIED in that the appellant is ordered to pay the
appellee the amount of Two hundred Fifty Thousand pesos (P250,000.00) plus twelve percent interest(12%) per annum from
September, 1998 up to the time it is actually paid and fifty Thousand Pesos(P50,000.00) representing attorney's fees.
Michael filed a Motion for Reconsideration arguing that: (i) an amicable settlement or arbitration award can be enforced by
the Lupon within six (6) months from date of settlement or after the lapse of six (6) months, by ordinary civil action in the appropriate
City or Municipal Trial Court and not by a mere Motion for execution; and (ii) the MCTC does not have jurisdiction over the case since
the amount of P250,000.00 (as the subject matter of the kasunduan) is in excess of MCTC's jurisdictional amount of P200,000.00.
7

In its March 13, 2001 Order, the RTC granted Michael's Motion for Reconsideration, and ruled that there is merit in the jurisdictional
issue he raised. It dismissed Angelita's Motion for Execution, and set aside the MCTC Decision. The dispositive portion of the said
Order reads:
WHEREFORE, the Motion for Reconsideration is GRANTED. The Decision of the Court dated November 13, 2000 is hereby SET
ASIDE. The Decision of the Municipal Trial Court of Laur, Nueva Ecija dated January 17, 2000 is likewise SET ASIDE and the Motion
for Execution of Kasunduan is DISMISSED, the said court having had no jurisdiction to hear and decide the matter.
8

Angelita moved for the reconsideration of the March 13, 2001 Order, but the motion was subsequently denied. Aggrieved, she filed a
Petition for Review with the CA.
9

The Court of Appeal's Ruling


On August 2, 2001, the CA initially dismissed the petition for review on a mere technical ground of failure to attach the Affidavit of
Service. Angelita moved for reconsideration, attaching in her motion the Affidavit of Service. The CA granted the motion.
On March 31, 2004, the CA rendered its decision granting the petition, and reversing the RTC's decision. The CA declared that the
"appropriate local trial court" stated in Section 2, Rule VII of the Implementing Rules of R.A. No. 7160 refers to the municipal trial
courts. Thus, contrary to Michael's contention, the MCTC has jurisdiction to enforce any settlement or arbitration award, regardless of
the amount involved.
The CA also ruled that Michael's failure to repudiate the kasunduan in accordance with the procedure prescribed under the
Implementing Rules of R.A. No. 7160, rendered the kasunduan final. Hence, Michael can no longer assail the kasunduan on the ground
of forgery.
Michael moved to reconsider this decision, but the CA denied his motion in its resolution dated July 15, 2004. Hence, this petition.
The Petition
In the present petition for review on certiorari, Michael alleges that the kasunduan cannot be given the force and effect of a final
judgment because it did not conform to the provisions of the Katarungang Pambarangay law embodied in Book III, Title One, Chapter
7 of R.A. No. 7160. He points out the following irregularities in the kasunduan's, execution, and claims that the agreement forged
between him and Angelita was fictitious and simulated:
(1)
(2)
(3)
(4)

there was no record of the complaint in the Barangay;


there was no notice of mediation sent to him;
there was no constitution of the Pangkat Ng Tagapagasundo;
the parties were never called upon to choose the three (3) members from among the Luponmembers;

(5)
(6)
(7)
(8)
(9)
(10)

he had no participation in the execution of the kasunduan;


his signature in the kasunduan was forged;
he did not personally appear before the Barangay;
there was no attestation clause;
the kasunduan was neither reported nor filed before the MCTC; and
Annabel, the real party in interest, did not personally appear before the Barangay as required by the law.

Michael additionally claims that the kasunduan is merely in the nature of a private document. He also reiterates that since the amount
of P250,000.00 - the subject matter of the kasunduan - is in excess of MCTC's jurisdictional amount of P200,000.00, the kasunduan is
beyond the MCTC's jurisdiction to hear and to resolve. Accordingly, the proceedings in the Barangay are all nullity.
The Issues
The issues to be resolved in the present petition are:
1.

Whether or not the MCTC has the authority and jurisdiction to execute the kasunduan regardless of the amount involved;

2.

Whether or not the kasunduan could be given the force and effect of a final judgment; and

3.

Whether or not the kasunduan can be enforced.

The Court's Ruling


We deny the petition.
A perusal of the body of the motion for
execution shows that it is actually in the
nature of an action for execution; hence,
it was a proper remedy;
We note at the outset that Michael raised - in his brief before the C A - the issue of wrong remedy. He alleged that Angelita's recourse
should have been to file a civil action, not a mere motion for execution, in a regular court. However, the CA failed to address this issue
and only ruled on the issues of thekasunduan's irregularities and the MCTC's jurisdiction.
A simple reading of Section 417 of the Local Government Code readily discloses the two-tiered mode of enforcement of an amicable
settlement. The provision reads:
Section 417. Execution. - The amicable settlement or arbitration award may be enforced by execution by the lupon within six (6)
months from the date of the settlement. After the lapse of such time, the settlement may be enforced by action in the appropriate city
or municipal court. [Emphasis ours.]
Under this provision, an amicable settlement or arbitration award that is not repudiated within a period often (10) days from the
settlement may be enforced by: first, execution by the Lupon within six (6) months from the date of the settlement; or second, by
an action in the appropriate city or municipal trial court if more than six (6) months from the date of settlement has already elapsed.
Under the first mode of enforcement, the execution of an amicable settlement could be done on mere motion of the party entitled
thereto before the Punong Barangay. The proceedings in this case are summary in nature and are governed by the Local Government
Code and the Katarungang PambarangayImplementing Rules and Regulations.
10

The second mode of enforcement, on the other hand, is judicial in nature and could only be resorted to through the institution of an
action in a regular form before the proper City/Municipal Trial Court. The proceedings shall be governed by the provisions of the
Rules of Court.
11

Indisputably, Angelita chose to enforce the kasunduan under the second mode and filed a motion for execution, which was docketed
as Special Proceedings No. 45-99. The question for our resolution is:Whether the MCTC, through Angelita's motion for execution, is
expressly authorized to enforce the kasunduan under Section 417 of the Local Government Code?
The Court rules in the affirmative.
It is undisputed that what Angelita filed before the MCTC was captioned "motion for execution," rather than a petition/complaint for
execution.

A perusal of the motion for execution, however, shows that it contains the material requirements of an initiatory action.
First, the motion is sufficient in form and substance. It is complete with allegations of the ultimate facts constituting the cause of
action; the names and residences of the plaintiff and the defendant; it contains the prayer for the MCTC to order the execution of
the kasunduan; and there was also a verification and certification against forum shopping.
12

13

Furthermore, attached to the motion are: 1) the authenticated special power of attorney of Annabel, authorizing Angelita to file the
present action on her behalf; and 2) the copy of the kasunduan whose contents were quoted in the body of the motion for execution.
It is well-settled that what are controlling in determining the nature of the pleading are the allegations in the body and not the caption.

14

Thus, the motion for execution that Angelita filed was intended to be an initiatory pleading or an original action that is
compliant with the requirement under Section 3, Rule 6 of the Rules of Court that the complaint should allege the plaintiffs
cause of action and the names and residences of the plaintiff and the defendant.
Angelita's motion could therefore be treated as an original action, and not merely as a motion/special proceeding. For this
reason, Annabel has filed the proper remedy prescribed under Section 417 of the Local Government Code.
However, Angelita should pay the proper docket fees corresponding to the filing of an action for execution. The docket fees shall be
computed by the Clerk of Court of the MCTC, with due consideration, of course, of what Angelita had already paid when her motion
for execution was docketed as a special proceeding.
The kasunduan has the force and effect of a final judgment.
Under Section 416 of the Local Government Code, the amicable settlement and arbitration award shall have the force and effect of a
final judgment of a court upon the expiration often (10) days from the date of its execution, unless the settlement or award has been
repudiated or a petition to nullify the award has been filed before the proper city or municipal court.
Moreover, Section 14, Rule VI of the Katarungang Pambarangay Implementing Rules states that the party's failure to repudiate the
settlement within the period often (10) days shall be deemed a waiver of the right to challenge the settlement on the ground that
his/her consent was vitiated by fraud, violence or intimidation.
In the present case, the records reveal that Michael never repudiated the kasunduan within the period prescribed by the law. Hence,
the CA correctly ruled that the kasunduan has the force and effect of a final judgment that is ripe for execution.
Furthermore, the irregularities in the kasunduan's execution, and the claim of forgery are deemed waived since Michael never raised
these defenses in accordance with the procedure prescribed under the Local Government Code. Thus, we see no reason to discuss
these issues in the present case.
The MCTC has the authority and jurisdiction
to enforce the kasunduan regardless of the amount involved.
The Court also finds that the CA correctly upheld the MCTC's jurisdiction to enforce any settlement or arbitration .award issued by
the Lupon.
We again draw attention to the provision of Section 417 of the Local Government Code that after the lapse of the six (6) month period
from the date of the settlement, the agreement may be enforced by action in the appropriate city or municipal court.
The law, as written, unequivocally speaks of the "appropriate city or municipal court" as the forum for the execution of the settlement
or arbitration award issued by the Lupon. Notably, in expressly conferring authority over these courts, Section 417 made no distinction
with respect to the amount involved or the nature of the issue involved. Thus, there can be no question that the law's intendment was
to grant jurisdiction over the enforcement of settlement/arbitration awards to the city or municipal courts regardless of the amount. A
basic principle of interpretation is that words must be given their literal meaning and applied without attempted interpretation where
the words of a statute are clear,' plain and free from ambiguity.
15

WHEREFORE, premises considered, we hereby DENY the petitioner's petition for review on certiorari, and AFFIRM the March 31,
2004 Decision of the Court of Appeals in CA-G.R. SP No. 65450.
Angelita Lagmay is ORDERED to pay the proper docket fees to be computed by the Clerk of Court of the Municipal Circuit Trial Court
of Laur and Gabaldon, Nueva Ecija, with due consideration of what she had paid when her motion for execution was docketed as a
special proceeding.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 176492

October 20, 2014

MARIETTA N. BARRIDO, Petitioner,


vs.
LEONARDO V. NONATO, Respondent.
DECISION
PERALTA, J.:
For the Court's resolution is a Petition for Review filed by petitioner Marietta N. Barrido questioning the Decision of the Court of
Appeals (CA), dated November 16, 2006, and its Resolution dated January 24, 2007 in CA-G.R. SP No. 00235. The CA affirmed the
Decision of the Regional Trial Court (RTC) ofBacolod City, Branch 53, dated July 21, 2004, in Civil Case No. 03-12123, which ordered
the partition of the subject property.
1

The facts, as culled from the records, are as follows: In the course of the marriage of respondent Leonardo V. Nonato and petitioner
Marietta N. Barrido,they were able to acquire a property situated in Eroreco, Bacolod City, consisting ofa house and lot, covered by
Transfer Certificate of Title (TCT) No. T-140361. On March 15, 1996, their marriage was declared void on the ground of psychological
incapacity. Since there was no more reason to maintain their co-ownership over the property, Nonato asked Barrido for partition, but
the latter refused. Thus, on January 29, 2003, Nonato filed a Complaint for partition before the Municipal Trial Court in Cities (MTCC)
of Bacolod City, Branch 3.
Barrido claimed, by way of affirmative defense, that the subject property had already been sold to their children, Joseph Raymund
and Joseph Leo. She likewise moved for the dismissal of the complaint because the MTCC lacked jurisdiction, the partition case
being an action incapable of pecuniary estimation.
The Bacolod MTCC rendered a Decision dated September 17, 2003, applying Article 129 of the Family Code. It ruled in this wise:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered, ordering the conjugal property of the former Spouses
Leonardo and Marietta Nonato, a house and lot covered by TCT No. T-140361 located at Eroreco, Bacolod City, which was their
conjugal dwelling, adjudicated to the defendant Marietta Nonato, the spouse with whom the majority of the common children choose
to remain.
Furthermore, defendants counterclaim is hereby granted, ordering plaintiff to pay defendant P10,000.00 as moral damages for the
mental anguish and unnecessary inconvenience brought about by this suit; and an additionalP10,000.00 as exemplary damages to
deter others from following suit; and attorneys fees of P2,000.00 and litigation expenses of P575.00.
SO ORDERED.

Nonato appealed the MTCC Decision before the RTC. On July 21, 2004, the Bacolod RTC reversed the ruling of the MTCC. It found
that even though the MTCC aptly applied Article 129 of the Family Code, it nevertheless made a reversible error in adjudicating the
subject property to Barrido. Its dispositive portion reads:
WHEREFORE, premises considered, the decision dated September 17, 2003 is hereby REVERSED and SET ASIDE and a new
judgment is hereby rendered ordering the parties:
(1) to equitably partition the house and lot covered by TCT No. T-140361;
(2) to reimburse Joseph Raymund and Joseph Leo Nonato of the amount advanced by them in payment of the debts and
obligation of TCT No. T-140361 with Philippine National Bank;
(3) to deliver the presumptive legitimes of Joseph Raymund and Joseph Leo Nonato pursuant to Article 51 of the Family
Code.

SO ORDERED.

Upon appeal, the CA affirmed the RTC Decision on November 16, 2006. It held that since the propertys assessed value was
only P8,080.00, it clearly fell within the MTCCs jurisdiction. Also, although the RTC erred in relying on Article 129 of the FamilyCode,
instead of Article 147, the dispositive portion of its decision still correctly ordered the equitable partition of the property. Barrido filed a
Motion for Reconsideration, which was, however, denied for lack of merit.
Hence, Barrido brought the case to the Court via a Petition for Review. She assigned the following errors in the CA Decision:
I.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE MTCC HAD JURISDICTION TO TRY THE PRESENT CASE.
II.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE LOT COVERED BY TCT NO. T-140361 IS CONJUGAL
AFTER BEING SOLD TO THE CHILDREN, JOSEPH LEO NONATO AND JOSEPH RAYMUND NONATO.
III.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT ARTICLE 129 OF THE FAMILY CODE HAS NO APPLICATION IN
THE PRESENT CASE, ON THE ASSUMPTION
THAT THE TRIAL COURT HAD JURISDICTION OVER THE CASE.

The petition lacks merit.


Contrary to Barridos contention, the MTCC has jurisdiction to take cognizance of real actions or those affecting title to real property,
or for the recovery of possession, or for the partition or condemnation of, or foreclosure of a mortgage on real property. Section 33 of
Batas Pambansa Bilang 129 provides:
7

Section 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:
xxxx
(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 propertyor 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 value of such property shall be determined by the assessed value
of the adjacent lots. (as amended by R.A. No. 7691)
9

Here, the subject propertys assessed value was merely P8,080.00, an amount which certainly does not exceed the required limit
of P20,000.00 for civil actions outside Metro Manila tofall within the jurisdiction of the MTCC. Therefore, the lower court correctly took
cognizance of the instant case.
The records reveal that Nonatoand Barridos marriage had been declared void for psychological incapacity under Article 36 of the
Family Code. During their marriage, however, the conjugal partnership regime governed their property relations. Although Article
129 provides for the
10

11

procedure in case of dissolution of the conjugal partnership regime, Article 147 specifically covers the effects of void marriages on the
spouses property relations. Article 147 reads:
Art. 147. When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife
without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares and the
property acquired by both of them through their work or industry shall be governed by the rules on co-ownership.

In the absence of proof to the contrary, properties acquired while they lived together shall be presumed tohave been obtained by their
joint efforts, work or industry, and shall beowned by them in equal shares. For purposes of this Article, a party who did not participate
in the acquisition by the other party of any property shall be deemed to have contributed jointly in the acquisition thereof if the
former's efforts consisted in the care and maintenance of the family and of the household.
Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned
in common, without the consent of the other, until after the termination of their cohabitation.
When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the co-ownership shall be
forfeited in favor of their common children. In case of default of or waiver by any or all of the common children or their descendants,
each vacant share shall belong to the respective surviving descendants. In the absence of descendants, such share shall belong to
the innocent party.1wphi1 In all cases, the forfeiture shall take place upon termination of the cohabitation.
This particular kind of co-ownership applies when a man and a woman, suffering no illegal impedimentto marry each other, exclusively
live together as husband and wife under a void marriage or without the benefit of marriage. It is clear, therefore, that for Article 147 to
operate, the man and the woman: (1) must be capacitated to marry each other; (2) live exclusively with each other as husband and
wife; and (3) their union is without the benefit of marriage or their marriage is void. Here, all these elements are present. The term
"capacitated" inthe first paragraph of the provision pertains to the legal capacity of a party to contract marriage. Any impediment to
marry has not been shown to have existed on the part of either Nonato or Barrido. They lived exclusively with each other as husband
and wife. However, their marriage was found to be void under Article 36 of the Family Code on the ground of psychological
incapacity.
12

13

14

15

Under this property regime, property acquired by both spouses through their work and industry shall be governed by the rules on
equal coownership. Any property acquired during the union is prima faciepresumed to have been obtained through their joint efforts. A
party who did not participate in the acquisition of the property shall be considered as having contributed to the same jointly if said
party's efforts consisted in the care and maintenance of the family household. Efforts in the care and maintenance of the family and
household are regarded as contributions to the acquisition of common property by one who has no salary or income or work or
industry.
16

17

In the analogous case of Valdez, it was likewise averred that the trial court failed to apply the correct law that should govern the
disposition of a family dwelling in a situation where a marriage is declared void ab initiobecause of psychological incapacity on the
part of either or both parties in the contract of marriage.The Court held that the court a quodid not commit a reversible error in utilizing
Article 147 of the Family Code and in ruling that the former spouses own the family home and all their common property in equal
shares, as well as in concluding that, in the liquidation and partition of the property that they owned in common, the provisions on
coownership under the Civil Code should aptly prevail. The rules which are set up to govern the liquidation of either the absolute
community or the conjugal partnership of gains, the property regimes recognized for valid and voidable marriages, are irrelevant to the
liquidation of the co-ownership that exists between common-law spousesor spouses of void marriages.
18

19

20

Here, the former spouses both agree that they acquired the subject property during the subsistence of their marriage. Thus, it shall be
presumed to have been obtained by their joint efforts, work or industry, and shall be jointly owned by them in equal shares. Barrido,
however, claims that the ownership over the property in question is already vested on their children, by virtue of a Deed of Sale. But
aside from the title to the property still being registered in the names of the former spouses, said document of safe does not bear a
notarization of a notary public. It must be noted that without the notarial seal, a document remains to be private and cannot be
converted into a public document, making it inadmissible in evidence unless properly authenticated. Unfortunately, Barrido failed to
prove its due execution and authenticity. In fact, she merely annexed said Deed of Sale to her position paper. Therefore, the subject
property remains to be owned in common by Nonato and Barrido, which should be divided in accordance with the rules on coownership.
21

22

WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals, dated November 16, 2006, as well
as its Resolution dated January 24, 2007 in CA-G.R. SP No. 00235, are hereby AFFIRMED.
SO ORDERED.
DIOSDADO M. PERALTA*
Associate Justice
Acting Chairperson

THIRD DIVISION

[G.R. No. 138896. June 20, 2000]


BARANGAY SAN ROQUE, TALISAY, CEBU, petitioner, vs. Heirs of FRANCISCO PASTOR, namely: EUGENIO SYLIANCO,
TEODORO SYLIANCO, ISABEL SYLIANCO, EUGENIA S. ONG, LAWRENCE SYLIANCO, LAWSON SYLIANCO, LAWINA S.
NOTARIO, LEONARDO SYLIANCO JR. and LAWFORD SYLIANCO, respondents.
DECISION
PANGANIBAN, J.:
An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the jurisdiction of the regional trial courts,
regardless of the value of the subject property.

The Case
Before us is a Petition for Review on Certiorari assailing the March 29, 1999 Order of the Regional Trial Court (RTC) of Cebu City
(Branch 58) in Civil Case No. CEB-21978, in which it dismissed a Complaint for eminent domain. It ruled as follows:
[1]

"Premises considered, the motion to dismiss is hereby granted on the ground that this Court has no jurisdiction over
the case. Accordingly, the Orders dated February 19, 1999 and February 26, 1999, as well as the Writ of Possession
issued by virtue of the latter Order are hereby recalled for being without force and effect."
[2]

Petitioner also challenges the May 14, 1999 Order of the RTC denying reconsideration.

The Facts
Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu (Branch 1) a Complaint to expropriate a property of the
respondents. In an Order dated April 8, 1997, the MTC dismissed the Complaint on the ground of lack of jurisdiction. It reasoned that
"[e]minent domain is an exercise of the power to take private property for public use after payment of just compensation. In an action
for eminent domain, therefore, the principal cause of action is the exercise of such power or right. The fact that the action also
involves real property is merely incidental. An action for eminent domain is therefore within the exclusive original jurisdiction of the
Regional Trial Court and not with this Court."
[3]

[4]

Assailed RTC Ruling


The RTC also dismissed the Complaint when filed before it, holding that an action for eminent domain affected title to real property;
hence, the value of the property to be expropriated would determine whether the case should be filed before the MTC or the RTC.
Concluding that the action should have been filed before the MTC since the value of the subject property was less than P20,000, the
RTC ratiocinated in this wise:
"The instant action is for eminent domain. It appears from the current Tax Declaration of the land involved that its
assessed value is only One Thousand Seven Hundred Forty Pesos (P1,740.00). Pursuant to Section 3, paragraph (3),
of Republic Act No. 7691, all civil actions involving title to, or possession of, real property with an assessed value of
less than P20,000.00 are within the exclusive original jurisdiction of the Municipal Trial Courts. In the case at bar, it is
within the exclusive original jurisdiction of the Municipal Trial Court of Talisay, Cebu, where the property involved is
located.
"The instant action for eminent domain or condemnation of real property is a real action affecting title to or
possession of real property, hence, it is the assessed value of the property involved which determines the
jurisdiction of the court. That the right of eminent domain or condemnation of real property is included in a real
action affecting title to or possession of real property, is pronounced by retired Justice Jose Y. Feria, thus, Real
actions are those affecting title to or possession of real property. These include partition or condemnation of, or
foreclosures of mortgage on, real property. x x x"
[5]

Aggrieved, petitioner appealed directly to this Court, raising a pure question of law. In a Resolution dated July 28, 1999, the Court
denied the Petition for Review "for being posted out of time on July 2, 1999, the due date being June 2, 1999, as the motion for
extension of time to file petition was denied in the resolution of July 14, 1999." In a subsequent Resolution dated October 6, 1999, the
Court reinstated the Petition.
[6]

[7]

[8]

Respondents, on the other hand, contend that the Complaint for Eminent Domain affects the title to or possession of real property.
Thus, they argue that the case should have been brought before the MTC, pursuant to BP 129 as amended by Section 3 (3) of RA
7691. This law provides that MTCs shall have exclusive original jurisdiction over all civil actions that involve title to or possession of
real property, the assessed value of which does not exceed twenty thousand pesos or, in civil actions in Metro Manila, fifty thousand
pesos exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses and costs.
We agree with the petitioner that an expropriation suit is incapable of pecuniary estimation. The test to determine whether it is so was
laid down by the Court in this wise:
"A review of the jurisprudence of this Court indicates that in determining whether an action is one the subject matter
of which is not capable of pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature
of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered
capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance
would depend on the amount of the claim. However, where the basic issue is something other than the right to
recover a sum of money, or where the money claim is purely incidental to, or a consequence of, the principal relief
sought, like in suits to have the defendant perform his part of the contract (specific performance) and in actions for
support, or for annulment of a judgment or to foreclose a mortgage, this Court has considered such actions as
cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by
courts of first instance. The rationale of the rule is plainly that the second class cases, besides the determination of
damages, demand an inquiry into other factors which the law has deemed to be more within the competence of
courts of first instance, which were the lowest courts of record at the time that the first organic laws of the Judiciary
were enacted allocating jurisdiction (Act 136 of the Philippine Commission of June 11, 1901)."
10

In the present case, an expropriation suit does not involve the recovery of a sum of money. Rather, it deals with the exercise by the
government of its authority and right to take private property for public use. In National Power Corporation v. Jocson, the Court ruled
that expropriation proceedings have two phases:
11

12

"The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent
domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of
dismissal of the action, of condemnation declaring that the plaintiff has a lawful right to take the property sought to
be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to
be determined as of the date of the filing of the complaint. An order of dismissal, if this be ordained, would be a final
one, of course, since it finally disposes of the action and leaves nothing more to be done by the Court on the merits.
So, too, would an order of condemnation be a final one, for thereafter as the Rules expressly state, in the
proceedings before the Trial Court, no objection to the exercise of the right of condemnation (or the propriety
thereof) shall be filed or heard.
"The second phase of the eminent domain action is concerned with the determination by the court of the just
compensation for the property sought to be taken. This is done by the Court with the assistance of not more than
three (3) commissioners. The order fixing the just compensation on the basis of the evidence before, and findings of,
the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing
more to be done by the Court regarding the issue. x x x"
It should be stressed that the primary consideration in an expropriation suit is whether the government or any of its instrumentalities
has complied with the requisites for the taking of private property. Hence, the courts determine the authority of the government entity,
the necessity of the expropriation, and the observance of due process. In the main, the subject of an expropriation suit is the
governments exercise of eminent domain, a matter that is incapable of pecuniary estimation.
13

True, the value of the property to be expropriated is estimated in monetary terms, for the court is duty-bound to determine the just
compensation for it. This, however, is merely incidental to the expropriation suit. Indeed, that amount is determined only after the court
is satisfied with the propriety of the expropriation.
Verily, the Court held in Republic of the Philippines v. Zurbano that "condemnation proceedings are within the jurisdiction of Courts of
First Instance," the forerunners of the regional trial courts. The said case was decided during the effectivity of the Judiciary Act of
1948 which, like BP 129 in respect to RTCs, provided that courts of first instance had original jurisdiction over "all civil actions in
which the subject of the litigation is not capable of pecuniary estimation." The 1997 amendments to the Rules of Court were not
intended to change these jurisprudential precedents.
14

15

We are not persuaded by respondents argument that the present action involves the title to or possession of a parcel of land. They
cite the observation of retired Justice Jose Y. Feria, an eminent authority in remedial law, that condemnation or expropriation
proceedings are examples of real actions that affect the title to or possession of a parcel of land.
16

Their reliance is misplaced. Justice Feria sought merely to distinguish between real and personal actions. His discussion on this point
pertained to the nature of actions, not to the jurisdiction of courts. In fact, in his pre-bar lectures, he emphasizes that jurisdiction over
eminent domain cases is still within the RTCs under the 1997 Rules.
To emphasize, the question in the present suit is whether the government may expropriate private property under the given set of
circumstances. The government does not dispute respondents title to or possession of the same. Indeed, it is not a question of who
has a better title or right, for the government does not even claim that it has a title to the property. It merely asserts its inherent
sovereign power to "appropriate and control individual property for the public benefit, as the public necessity, convenience or welfare
may demand."
17

WHEREFORE, the Petition is hereby GRANTED and the assailed Orders SET ASIDE. The Regional Trial Court is directed to HEAR the
case. No costs.
SO ORDERED.
Melo, (Chairman), Purisima, and Gonzaga-Reyes, JJ., concur.
Vitug, J., on official business abroad.

EN BANC
G.R. No. 202664, November 20, 2015
MANUEL LUIS C. GONZALES AND FRANCIS MARTIN D. GONZALES, Petitioners, v. GJH LAND, INC. (FORMERLY KNOWN AS
S.J. LAND, INC.), CHANG HWAN JANG A.K.A. STEVE JANG, SANG RAK KIM, MARIECHU N. YAP, AND ATTY. ROBERTO P.
MALLARI II, Respondent.
DECISION
PERLAS-BERNABE, J.:
This is a direct recourse to the Court, via a petition for review on certiorari, from the Orders dated April 17, 2012 and July 9, 2012 of
the Regional Trial Court (RTC) of Muntinlupa City, Branch 276 (Branch 276) dismissing Civil Case No. 11-077 for lack of jurisdiction.
1

The Facts
On August 4, 2011, petitioners Manuel Luis C. Gonzales and Francis Martin D. Gonzales (petitioners) filed a Complaint for "Injunction
with prayer for Issuance of Status Quo Order, Three (3) and Twenty (20)-Day Temporary Restraining Orders, and Writ of Preliminary
Injunction with Damages" against respondents GJH Land, Inc. (formerly known as S.J. Land, Inc.), Chang Hwan Jang, Sang Rak Kim,
Mariechu N. Yap, and Atty. Roberto P. Mallari II (respondents) before the RTC of Muntinlupa City seeking to enjoin the sale of S.J.
Land, Inc.'s shares which they purportedly bought from S.J. Global, Inc. on February 1, 2010. Essentially, petitioners alleged that the
subscriptions for the said shares were already paid by them in full in the books of S.J. Land, Inc., but were nonetheless offered for
sale on July 29, 2011 to the corporation's stockholders, hence, their plea for injunction.
4

The case was docketed as Civil Case No. 11-077 and raffled to Branch 276, which is not a Special Commercial Court. On August
9, 2011, said branch issued a temporary restraining order, and later, in an Order dated August 24, 2011, granted the application for a
writ of preliminary injunction.
9

10

After filing their respective answers to the complaint, respondents filed a motion to dismiss on the ground of lack of jurisdiction over
the subject matter, pointing out that the case involves an intra-corporate dispute and should, thus, be heard by the designated
Special Commercial Court of Muntinlupa City.
11

12

13

The RTC Ruling


In an Order dated April 17, 2012, Branch 276 granted the motion to dismiss filed by respondents. It found that the case involves an
intra-corporate dispute that is within the original and exclusive jurisdiction of the RTCs designated as Special Commercial Courts. It
pointed out that the RTC of Muntinlupa City, Branch 256 (Branch 256) was specifically designated by the Court as the Special
Commercial Court, hence, Branch 276 had no jurisdiction over the case and cannot lawfully exercise jurisdiction on the matter,
including the issuance of a Writ of Preliminary Injunction. Accordingly, it dismissed the case.
14

15

Dissatisfied, petitioners filed a motion for reconsideration, arguing that they filed the case with the Office of the Clerk of Court of the
RTC of Muntinlupa City which assigned the same to Branch 276 byraffle. As the raffle was beyond their control, they should not be
made to suffer the consequences of the wrong assignment of the case, especially after paying the filing fees in the amount of
P235,825.00 that would be for naught if the dismissal is upheld. They further maintained that the RTC has jurisdiction over intracorporate disputes under Republic Act No. (RA) 8799, but since the Court selected specific branches to hear and decide such suits,
the case must, at most, be transferred or raffled off to the proper branch.
16

17

18

19

20

In an Order dated July 9, 2012, Branch 276 denied the motion for reconsideration, holding that it has no authority or power to order
the transfer of the case to the proper Special Commercial Court, citingCalleja v. Panday (Calleja); hence, the present petition.
21

22

The Issue Before the Court


The essential issue for the Court's resolution is whether or not Branch 276 of the RTC of Muntinlupa City erred in dismissing the case
for lack of jurisdiction over the subject matter.
The Court's Ruling
The petition is meritorious.
At the outset, the Court finds Branch 276 to have correctly categorized Civil Case No. 11-077 as a commercial case, more particularly,
an intra-corporate dispute, considering that it relates to petitioners' averred rights over the shares of stock offered for sale to other
23

stockholders, having paid the same in full. Applying the relationship test and the nature of the controversy test, the suit between the
parties is clearly rooted in the existence of an intra-corporate relationship and pertains to the enforcement of their correlative rights
and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation, hence, intracorporate, which should be heard by the designated Special Commercial Court as provided under A.M. No. 03-03-03-SC dated June
17, 2003 in relation to Item 5.2, Section 5 of RA 8799.
24

25

The present controversy lies, however, in the procedure to be followed when a commercial case - such as the instant intracorporate dispute -has been properly filed in the official station of the designated Special Commercial Court but is, however,
later wrongly assigned by raffle to a regular branch of that station.
As a basic premise, let it be emphasized that a court's acquisition of jurisdiction over a particular case's subject matter is different
from incidents pertaining to the exercise of its jurisdiction. Jurisdiction over the subject matter of a case is conferred by law, whereas
a court's exercise of jurisdiction, unless provided by the law itself, is governed by the Rules of Court or by the orders issued from
time to time by the Court. In Lozada v. Bracewell, it was recently held that the matter of whether the RTC resolves an issue in the
exercise of its general jurisdiction or of its limited jurisdiction as a special court is only a matter of procedure and has nothing
to do with the question of jurisdiction.
26

27

Pertinent to this case is RA 8799 which took effect on August 8, 2000. By virtue of said law, jurisdiction over cases enumerated in
Section 5 of Presidential Decree No. 902-A was transferred from the Securities and Exchange Commission (SEC) to the RTCs, being
courts of general jurisdiction. Item 5.2, Section 5 of RA 8799 provides:chanRoblesvirtualLawlibrary
28

29

SEC. 5. Powers and Functionsof the Commission. - x x x


xxxx
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 the cases.
The Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final resolution which
should be resolved within one (1) year from the enactment of this Code. The Commission shall retain jurisdiction over pending
suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Emphasis supplied)cralawlawlibrary
The legal attribution of Regional Trial Courts as courts of general jurisdiction stems from Section 19 (6), Chapter II of Batas
Pambansa Bilang (BP) 129, known as "The Judiciary Reorganization Act of 1980":chanRoblesvirtualLawlibrary
30

Section 19. Jurisdiction in civil cases.- Regional Trial Courts shall exercise exclusive original jurisdiction:chanRoblesvirtualLawlibrary
xxxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising jurisdiction or any court, tribunal,
person or body exercising judicial or quasi-judicial functions; x x x x
cralawlawlibrary
As enunciated in Durisol Philippines, Inc. v. CA: chanroblesvirtuallawlibrary
31

The regional trial court, formerly the court of first instance, is a court of general jurisdiction. All cases, the jurisdiction over which is not
specifically provided for by law to be within the jurisdiction of any other court, fall under the jurisdiction of the regional trial
court. ChanRoblesVirtualawlibrary
cralawlawlibrary
32

To clarify, the word "or" in Item 5.2, Section 5 of RA 8799 was intentionally used by the legislature to particularize the fact that the
phrase "the Courts of general jurisdiction" is equivalent to the phrase "the appropriate Regional Trial Court." In other words, the
jurisdiction of the SEC over the cases enumerated under Section 5 of PD 902-A was transferred to the courts of general jurisdiction,
that is to say (or, otherwise known as), the proper Regional Trial Courts. This interpretation is supported by San Miguel Corp. v.
Municipal Council, wherein the Court held that:chanRoblesvirtualLawlibrary
33

[T]he word "or" may be used as the equivalent of "that is to say" and gives that which precedes it the same significance as that which
follows it. It is not always disjunctive and is sometimes interpretative or expository of the preceding word. cralawlawlibrary
34

Further, as may be gleaned from the following excerpt of the Congressional deliberations:chanRoblesvirtualLawlibrary
Senator [Raul S.] Roco: x x x.
xxxx

x x x. The first major departure is as regards the Securities and Exchange Commission. The Securities and Exchange Commission has
been authorized under this proposal to reorganize itself. As an administrative agency, we strengthened it and at the same time we
take away the quasi-judicial functions. The quasi-judicial functions are now given back to the courts of general jurisdiction - the
Regional Trial Court, except for two categories of cases.
In the case of corporate disputes, only those that are now submitted for final determination of the SEC will remain with the SEC. So,
all those cases, both memos of the plaintiff and the defendant, that have been submitted for resolution will continue. At the same time,
cases involving rehabilitation, bankruptcy, suspension of payments and receiverships that were filed before June 30, 2000 will
continue with the SEC. in other words, we are avoiding the possibility, upon approval of this bill, of people filing cases with the SEC, in
manner of speaking, to select their court.
35

x x x x (Emphasis supplied)cralawlawlibrary
Therefore, one must be disabused of the notion that the transfer of jurisdiction was made only in favor of particular RTC branches, and
not the RTCs in general.
Consistent with the foregoing, history depicts that when the transfer of SEC cases to the RTCs was first implemented, they were
transmitted to the Executive Judges of the RTCs for raffle between or among its different branches, unless a specific branch has
been designated as a Special Commercial Court, in which instance, the cases were transmitted to said branch. It was only on
November 21, 2000 that the Court designated certain RTC branches to try and decide said SEC cases without, however, providing
for the transfer of the cases already distributed to or filed with the regular branches thereof. Thus, on January 23, 2001, the Court
issued SC Administrative Circular No. 08-2001 directing the transfer of said cases to the designated courts (commercial SEC courts).
Later, or on June 17, 2003, the Court issued A.M. No. 03-03-03-SC consolidating the commercial SEC courts and the intellectual
property courts in one RTC branch in a particular locality, i.e., the Special Commercial Court, to streamline the court structure
and to promote expediency. Accordingly, the RTC branch so designated was mandated to try and decide SEC cases, as well as
those involving violations of intellectual property rights, which were, thereupon, required to be filed in the Office of the Clerk of Court
in the official station of the designated Special Commercial Courts, to wit:chanRoblesvirtualLawlibrary
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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 andthose cases formerly cognizable by the Securities and Exchange Commission:chanRoblesvirtualLawlibrary
xxxx
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;
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x x x x (Underscoring supplied)cralawlawlibrary
It is important to mention that the Court's designation of Special Commercial Courts was made in line with its constitutional authority
to supervise the administration of all courts as provided under Section 6, Article VIII of the 1987
Constitution:chanRoblesvirtualLawlibrary
Section 6. The Supreme Court shall have administrative supervision over all courts and the personnel thereof.cralawlawlibrary
The objective behind the designation of such specialized courts is to promote expediency and efficiency in the exercise of the
RTCs' jurisdiction over the cases enumerated under Section 5 of PD 902-A. Such designation has nothing to do with the statutory
conferment of jurisdiction to all RTCs under RA 8799 since in the first place, the Court cannot enlarge, diminish, or dictate when
jurisdiction shall be removed, given that the power to define, prescribe, and apportion jurisdiction is, as a general rule, a matter
of legislative prerogative. Section 2, Article VIII of the 1987 Constitution provides:chanRoblesvirtualLawlibrary
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Section 2. The Congress shall have the power to define, prescribe, and apportion the jurisdiction of the various courts but may not
deprive the Supreme Court of its jurisdiction over cases enumerated in Section 5 hereof.
xxxx
cralawlawlibrary
Here, petitioners filed a commercial case, i.e., an intra-corporate dispute, with the Office of the Clerk of Court in the RTC of
Muntinlupa City, which is the official station of the designated Special Commercial Court, in accordance with A.M. No. 03-03-03-SC. It
is, therefore, from the time of such filing that the RTC of Muntinlupa City acquired jurisdiction over the subject matter or the
nature of the action. Unfortunately, the commercial case was wrongly raffled to a regular branch, e.g., Branch 276, instead of
being assigned to the sole Special Commercial Court in the RTC of Muntinlupa City, which is Branch 256. This error may have
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been caused by a reliance on the complaint's caption, i.e., "Civil Case for Injunction with prayer for Status Quo Order, TRO and
Damages," which, however, contradicts and more importantly, cannot prevail over its actual allegations that clearly make out an intracorporate dispute:chanRoblesvirtualLawlibrary
45

16. To the surprise of MLCG and FMDG, however, in two identical letters both dated 13 May 2011, under the letterhead of GJH Land,
Inc., Yap, now acting as its President, Jang and Kim demanded payment of supposed unpaid subscriptions of MLCG and FMDG
amounting to P10,899,854.30 and P2,625,249.41, respectively.
16.1 Copies of the letters dated 13 May 2011 are attached hereto and made integral parts hereof as Annexes "J" and "K", repectively.
17. On 29 July 2011, MLCG and FMDG received an Offer Letter addressed to stockholders of GJH Land, Inc. from Yap informing all
stockholders that GJH Land, Inc. is now offering for sale the unpaid shares of stock of MLCG and FMDG. The same letter states that
the offers to purchase these shares will be opened on 10 August 2011 with payments to be arranged by deposit to the depository
bank of GJH Land, Inc.
17.1 A copy of the undated Offer Letter is attached hereto and made and made an integral part hereof as Annex "L".
18. The letter of GJH Land, Inc. through Yap, is totally without legal and factual basis because as evidenced by the Deeds of
Assignment signed and certified by Yap herself, all the S.J. Land, Inc. shares acquired by MLCG and FMDG have been fully paid in
the books of S.J. Land, Inc.
19. With the impending sale of the alleged unpaid subscriptions on 10 August 2011,there is now a clear danger that MLCG and
FMDG would be deprived of these shares without legal and factual basis.
20. Furthermore, if they are deprived of these shares through the scheduled sale, both MLCG and FMDG would suffer grave and
irreparable damage incapable of pecuniary estimation.
21. For this reason, plaintiffs now come to the Honorable Court for injunctive relief so that after trial on the merits, a permanent
injunction should be issued against the defendants preventing them from selling the shares of the plaintiffs, there being no basis for
such sale. cralawlawlibrary
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According to jurisprudence, "it is not the caption but the allegations in the complaint or other initiatory pleading which give meaning to
the pleading and on the basis of which such pleading may be legally characterized." However, so as to avert any future confusion, the
Court requires henceforth, that all initiatory pleadings state the action's nature both in its caption and the body, which parameters are
defined in the dispositive portion of this Decision.
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Going back to the case at bar, the Court nonetheless deems that the erroneous raffling to a regular branch instead of to a Special
Commercial Court is only a matter of procedure - that is, an incident related to the exercise of jurisdiction - and, thus, should not
negate the jurisdiction which the RTC of Muntinlupa City had already acquired. In such a scenario, the proper course of action was
not for the commercial case to be dismissed; instead, Branch 276 should have first referred the case to the Executive Judge for redocketing as a commercial case; thereafter, the Executive Judge should then assign said case to the only designated Special
Commercial Court in the station,i.e., Branch 256.
Note that the procedure would be different where the RTC acquiring jurisdiction over the case hasmultiple special commercial court
branches; in such a scenario, the Executive Judge, after re-docketing the same as a commercial case, should proceed to order its reraffling among the said special branches.
Meanwhile, if the RTC acquiring jurisdiction has no branch designated as a Special Commercial Court, then it should refer the
case to the nearest RTC with a designated Special Commercial Court branch within the judicial region. Upon referral, the RTC to
which the case was referred to should re-docket the case as a commercial case, and then: (a) if the said RTC has only one branch
designated as a Special Commercial Court, assign the case to the sole special branch; or (b) if the said RTC has multiple branches
designated as Special Commercial Courts, raffle off the case among those special branches.
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In all the above-mentioned scenarios, any difference regarding the applicable docket fees should be duly accounted for. On the other
hand, all docket fees already paid shall be duly credited, and any excess, refunded.
At this juncture, the Court finds it fitting to clarify that the RTC mistakenly relied on the Calleja case to support its ruling. In Calleja, an
intra-corporate dispute among officers of a private corporation with principal address at Goa, Camarines Sur, was filed with the RTC
of San Jose, Camarines Sur, Branch 58 instead of the RTC of Naga City, which is the official station of the designated Special
Commercial Court for Camarines Sur. Consequently, the Court set aside the RTC of San Jose, Camarines Sur's order to transfer the
case to the RTC of Naga City and dismissed the complaint considering that it was filed before a court which, having no internal
branch designated as a Special Commercial Court, had no jurisdiction over those kinds of actions, i.e., intra-corporate
disputes. Calleja involved two different RTCs, i.e., the RTC of San Jose, Camarines Sur and the RTC of Naga City, whereas
the instant case only involves one RTC, i.e., the RTC of Muntinlupa City, albeit involving two different branches of the same
court, i.e., Branches 256 and 276. Hence, owing to the variance in the facts attending, it was then improper for the RTC to rely on the
Calleja ruling.
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Besides, the Court observes that the fine line that distinguishes subject matter jurisdiction and exercise of jurisdiction had been clearly
blurred in Calleja. Harkening back to the statute that had conferred subject matter jurisdiction, two things are apparently clear: (a) that

the SEC's subject matter jurisdiction over intra-corporate cases under Section 5 of Presidential Decree No. 902-A was transferred
to the Courts of general jurisdiction, i.e., the appropriate Regional Trial Courts; and (b) the designated branches of the Regional Trial
Court, as per the rules promulgated by the Supreme Court, shall exercise jurisdiction over such cases. Item 5.2, Section 5 of RA
8799 provides:chanRoblesvirtualLawlibrary
SEC. 5. Powers and Functions of the Commission. - x x x
xxxx
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 the cases, x
x x.cralawlawlibrary
In contrast, the appropriate jurisprudential reference to this case would be Tan v. Bausch & Lomb, Inc., which involves a criminal
complaint for violation of intellectual property rights filed before the RTC of Cebu City but was raffled to a regular branch thereof
(Branch 21), and not to a Special Commercial Court. As it turned out, the regular branch subsequently denied the private
complainant's motion to transfer the case to the designated special court of the same RTC, on the ground of lack of jurisdiction. The
CA reversed the regular branch and, consequently, ordered the transfer of the case to the designated special court at that time
(Branch 9). The Court, affirming the CA, declared that the RTC had acquired jurisdiction over the subject matter. In view, however, of
the designation of another court as the Special Commercial Court in the interim (Branch 11 of the same Cebu City RTC), the Court
accordingly ordered the transfer of the case and the transmittal of the records to said Special Commercial Court instead. Similarly,
the transfer of the present intra-corporate dispute from Branch 276 to Branch 256 of the same RTC of Muntinlupa City,
subject to the parameters above-discussed is proper and will further the purposes stated in A.M. No. 03-03-03-SC of attaining
a speedy and efficient administration of justice.
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For further guidance, the Court finds it apt to point out that the same principles apply to the inverse situation of ordinary civil cases
filed before the proper RTCs but wrongly raffled to its branches designated as Special Commercial Courts. In such a scenario,
the ordinary civil case should then be referred to the Executive Judge for re-docketing as an ordinary civil case; thereafter,
the Executive Judge should then order the raffling of the case to all branches of the same RTC, subject to limitations under
existing internal rules, and the payment of the correct docket fees in case of any difference. Unlike the limited
assignment/raffling of a commercial case only to branches designated as Special Commercial Courts in the scenarios stated above,
the re-raffling of an ordinary civil case in this instance to all courts is permissible due to the fact that a particular branch which has
been designated as a Special Commercial Court does not shed the RTC's general jurisdiction over ordinary civil cases under the
imprimatur of statutory law, i.e., Batas Pambansa Bilang (BP) 129. To restate, the designation of Special Commercial Courts was
merely intended as a procedural tool to expedite the resolution of commercial cases in line with the court's exercise of
jurisdiction. This designation was not made by statute but only by an internal Supreme Court rule under its authority to promulgate
rules governing matters of procedure and its constitutional mandate to supervise the administration of all courts and the personnel
thereof. Certainly, an internal rule promulgated by the Court cannot go beyond the commanding statute. But as a more fundamental
reason, the designation of Special Commercial Courts is, to stress, merely an incident related to the court's exercise of jurisdiction,
which, as first discussed, is distinct from the concept of jurisdiction over the subject matter. The RTC's general jurisdiction over
ordinary civil cases is therefore not abdicated by an internal rule streamlining court procedure.
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In fine, Branch 276's dismissal of Civil Case No. 11-077 is set aside and the transfer of said case to Branch 256, the designated
Special Commercial Court of the same RTC of Muntinlupa City, under the parameters above-explained, is hereby ordered.
WHEREFORE, the petition is GRANTED. The Orders dated April 17, 2012 and July 9, 2012 of the Regional Trial Court (RTC) of
Muntinlupa City, Branch 276 in Civil Case No. 11-077 are herebyREVERSED and SET ASIDE. Civil Case No. 11-077 is REFERRED to
the Executive Judge of the RTC of Muntinlupa City for re-docketing as a commercial case. Thereafter, the Executive Judge
shall ASSIGNsaid case to Branch 256, the sole designated Special Commercial Court in the RTC of Muntinlupa City, which
is ORDERED to resolve the case with reasonable dispatch. In this regard, the Clerk of Court of said RTC shall DETERMINE the
appropriate amount of docket fees and, in so doing, ORDER the payment of any difference or, on the other hand, refund any excess.
Furthermore, the Court hereby RESOLVES that henceforth, the following guidelines shall be observed:
1. If a commercial case filed before the proper RTC is wrongly raffled to its regular branch, the proper courses of action are as follows:
1.1 If the RTC has only one branch designated as a Special Commercial Court, then the case shall be referred to the Executive Judge
for re-docketing as a commercial case, and thereafter, assigned to the sole special branch;
1.2 If the RTC has multiple branches designated as Special Commercial Courts, then the case shall be referred to the Executive Judge
for re-docketing as a commercial case, and thereafter, raffled off among those special branches; and
1.3 If the RTC has no internal branch designated as a Special Commercial Court, then the case shall be referred to the nearest RTC
with a designated Special Commercial Court branch within the judicial region. Upon referral, the RTC to which the case was referred
to should re- docket the case as a commercial case, and then: (a) if the said RTC has only one branch designated as a Special

Commercial Court, assign the case to the sole special branch; or (b) if the said RTC has multiple branches designated as Special
Commercial Courts, raffle off the case among those special branches.
2. If an ordinary civil case filed before the proper RTC is wrongly raffled to its branch designated as a Special Commercial Court, then
the case shall be referred to the Executive Judge for re-docketing as an ordinary civil case. Thereafter, it shall be raffled off to all
courts of the same RTC (including its designated special branches which, by statute, are equally capable of exercising general
jurisdiction same as regular branches), as provided for under existing rules.
3. All transfer/raffle of cases is subject to the payment of the appropriate docket fees in case of any difference. On the other hand, all
docket fees already paid shall be duly credited, and any excess, refunded.
4. Finally, to avert any future confusion, the Court requires that all initiatory pleadings state the action's nature both in its caption and
body. Otherwise, the initiatory pleading may, upon motion or by order of the court motu proprio, be dismissed without prejudice to its
re-filing after due rectification. This last procedural rule is prospective in application.
5. All existing rules inconsistent with the foregoing are deemed superseded.cralawlawlibrary
SO ORDERED.

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