Jurisdiction
ordered to pay P500,000.00 as moral damages,
[G.R. No. 117051. January 22, 1996]
FRANCEL REALTY CORPORATION, petitioner,
vs. COURT OF APPEALS and FRANCISCO T.
SYCIP, respondents.
Mendoza, J.:
Petitioner Francel Realty Corporation filed a
complaint for unlawful detainer against private
respondent Francisco T. Sycip. The case was
filed in the Municipal Trial Court (MTC) of
Bacoor, Cavite.
In its complaint, petitioner alleged that it had
executed a Contract to Sell to private
respondent Lot 16, Building No. 14 of the
Francel Townhomes, at 22 Real Street, Maliksi,
Bacoor, Cavite, for P451,000.00. The Contract to
Sell provides inter alia that in case of default in
the payment of two or more installments, the
whole obligation will become due and
demandable and the seller will then be entitled
to rescind the contract and take possession of
the property; the buyer will vacate the premises
without the necessity of any court action and
the downpayment will be treated as earnest
money or as rental for the use of the premises.
Petitioner alleged that private respondent failed
to pay the monthly amortization of P9,303.00
since October 30, 1990 despite demands to
update his payments and to vacate the
premises, the latest of which was the demand
made in the letter dated September 26, 1992,
and that because of private respondents unjust
refusal to vacate, petitioner was constrained to
engage the services of counsel. Petitioner
prayed that private respondent be ordered to
vacate the premises and pay a monthly rental of
P9,303.00 beginning October 30, 1990 until he
shall have vacated the premises, and
P25,000.00 as attorneys fees plus appearance
fee of P 1,000.00 per hearing and expenses of
litigation.
On November 9, 1992, private respondent
moved to dismiss the complaint but his motion
was denied by the MTC. On January 20, 1993 he
filed his answer,[1] in which he alleged that he
had stopped paying the monthly amortizations
because the townhouse unit sold to him by
petitioner was of defective construction. He
alleged that he had in fact filed a complaint for
unsound real estate business practice in the
Housing and Land Use Regulatory Board (HLURB
Case No. REM-07-9004-80) against petitioner.
Private respondent prayed that petitioner be
P500,000.00 as exemplary damages, P75,000.00
as attorneys fees and that he be given all other
remedies just and equitable.
In its resolution dated February 24, 1993, the
MTC ruled that the answer was filed out of time
on the ground that it was filed more than ten
days after the service of summons.[2] On March
17, 1993, however, it dismissed the complaint
for lack of jurisdiction. The MTC held that the
case was cognizable by the HLURB. But it also
ordered petitioner to pay private respondent
P10,000.00 as moral damages, P10,000.00 as
exemplary damages, P3,000.00 as attorney’s
fees, and to pay costs.
On appeal the Regional Trial Court affirmed the
decision of the MTC. It held that the case was
exclusively cognizable by the HLURB which had
jurisdiction not only over complaints of buyers
against subdivision developers but also over
actions filed by developers for the unpaid price
of the lots or units.
Petitioner filed a petition for review in the Court
of Appeals, alleging that:
(a) The amounts of damages prayed for by the
private respondent in his Answer are enormous
and way beyond the jurisdiction of the inferior
court; and
(b) Since the inferior court and the respondent
court ruled that it has no jurisdiction over this
case, then it has no reason, much more
jurisdiction to award damages in excess of the
P20,000.00 jurisdiction of the inferior Court.
The appellate court dismissed the petition,
holding that the MTC had jurisdiction over cases
of forcible entry and unlawful detainer,
regardless of the amount of damages on unpaid
rentals sought to be recovered in view of 1A(1)
of the Revised Rule on Summary Procedure.
Petitioner moved for reconsideration. It
contended that since the MTC had ruled that it
had no jurisdiction over this case, then it had no
jurisdiction either to grant the counterclaim for
damages in the total sum of P23,000.00. Its
motion was, however, denied for lack of any
cogent reason to reverse the appellate courts
resolution of June 15, 1994.
Hence this petition for review on certiorari.
It is important to first determine whether the
MTC has jurisdiction over petitioners complaint.
For if it has no jurisdiction, then the award of
damages made by it in its decision is indeed
without any basis. It is only if the MTC has
jurisdiction of the subject matter of the action
that it is necessary to determine the correctness
of the award of damages, including attorney’s
fees.
Petitioners complaint is for unlawful detainer.
While generally speaking such action falls within
the original and exclusive jurisdiction of the
MTC, the determination of the ground for
ejectment requires a consideration of the rights
of a buyer on installment basis of real property.
Indeed private respondent claims that he has a
right under P.D. No. 957, 23 to stop paying
monthly amortizations after giving due notice
to the owner or developer of his decision to do
so because of petitioners alleged failure to
develop the subdivision or condominium
project according to the approved plans and
within the time for complying with the same.
The case thus involves a determination of the
rights and obligations of parties in a sale of real
estate under P.D. No. 957. Private respondent
has in fact filed a complaint against petitioner
for unsound real estate business practice with
the HLURB.
This is, therefore, not a simple case for unlawful
detainer arising from the failure of the lessee to
pay the rents, comply with the conditions of a
lease agreement or vacate the premises after
the expiration of the lease. Since the
determinative question is exclusively cognizable
by the HLURB, the question of the right of
petitioner must be determined by the agency.
Petitioners cause of action against private
respondent should instead be filed as a
counterclaim in HLURB Case No. REM-07-9004-
80 in accordance with Rule 6, 6 of the Rules of
Court which is of suppletory application to the
1987 HLURB Rules of Procedure per 3 of the
same. In the case of Estate Developers and
Investors Corporation v. Antonio Sarte and
Erlinda Sarte[6] the developer filed a complaint
to collect the balance of the price of a lot
bought on installment basis, but its complaint
was dismissed by the Regional Trial Court for
lack of jurisdiction. It appealed the order to this
Court. In dismissing the appeal, we held:
The action here is not a simple action to collect
on a promissory note; it is a complaint to collect
amortization payments arising from or in
connection with a sale of a subdivision lot under
PD. Nos. 957 and 1344, and accordingly falls
within the exclusive original jurisdiction of the
HLURB to regulate the real estate trade and
industry, and to hear and decide cases of
unsound real estate business practices.
Although the case involving Antonio Sarte is still
pending resolution before the HLURB Arbiter,
and there is as yet no order from the HLURB
authorizing suspension of payments on account
of the failure of plaintiff developer to make
good its warranties, there is no question to Our
mind that the matter of collecting amortizations
for the sale of the subdivision lot is necessarily
tied up to the complaint against the plaintiff
and it affects the rights and correlative duties of
the buyer of a subdivision lot as regulated by
NHA pursuant to P.D. 957 as amended. It must
accordingly fall within the exclusive original
jurisdiction of the said Board, and We find that
the motion to dismiss was properly granted on
the ground that the regular court has no
jurisdiction to take cognizance of the complaint.
Accordingly, we hold that the MTC correctly
held itself to be without jurisdiction over
petitioners complaint. But it was error for the
MTC to grant private respondents counterclaim
for damages for expenses incurred and
inconveniences allegedly suffered by him as a
result of the filing of the ejectment case.
Pursuant to Rule 6, 8 a party may file a
counterclaim only if the court has jurisdiction to
entertain the claim. Otherwise the counterclaim
cannot be filed.
Even assuming that the MTC had jurisdiction,
however the award of damages to private
respondent must be disallowed for the
following reasons:
(1) The MTC decision itself stated that the
answer with its counterclaim was filed out of
time or more than 10 days from private
respondents receipt of summons. In effect,
therefore, private respondent did not make any
counterclaim.
(2) Moreover, a reading of the MTC decision
showed no justification for the award of moral
and exemplary damages and attorneys fees. As
held in Buan v. Camaganacan, an award of
attorneys fees without justification is a
conclusion without a premise, its basis being
improperly left to speculation and conjecture. It
should accordingly be stricken out. With respect
to the award of moral and exemplary damages,
the record is bereft of any proof that petitioner
acted maliciously or in bad faith in filing the
present action which would warrant such an
award.

WHEREFORE, the decision of the Court of

Appeals is REVERSED and the complaint against
private respondent is DISMISSED. The private
respondents counterclaim is likewise
DISMISSED.

SO ORDERED.
G.R. No. L-21450 April 15, 1968
SERAFIN TIJAM, ET AL., plaintiffs-appellees,
vs.
MAGDALENO SIBONGHANOY alias GAVINO
SIBONGHANOY and LUCIA BAGUIO,
defendants,
MANILA SURETY AND FIDELITY CO., INC. (CEBU
BRANCH) bonding company and defendant-
appellant.
DIZON, J.:
On July 19, 1948 — barely one month after the
effectivity of Republic Act No. 296 known as the
Judiciary Act of 1948 — the spouses Serafin
Tijam and Felicitas Tagalog commenced Civil
Case No. R-660 in the Court of First Instance of
Cebu against the spouses Magdaleno
Sibonghanoy and Lucia Baguio to recover from
them the sum of P1,908.00, with legal interest
thereon from the date of the filing of the
complaint until the whole obligation is paid,
plus costs. As prayed for in the complaint, a writ
of attachment was issued by the court against
defendants' properties, but the same was soon
dissolved upon the filing of a counter-bond by
defendants and the Manila Surety and Fidelity
Co., Inc. hereinafter referred to as the Surety,
on the 31st of the same month.
After being duly served with summons the
defendants filed their answer in which, after
making some admissions and denials of the
material averments of the complaint, they
interposed a counterclaim. This counterclaim
was answered by the plaintiffs.
After trial upon the issues thus joined, the Court
rendered judgment in favor of the plaintiffs
and, after the same had become final and
executory, upon motion of the latter, the Court
issued a writ of execution against the
defendants. The writ having been returned
unsatisfied, the plaintiffs moved for the
issuance of a writ of execution against the
Surety's bond (Rec. on Appeal, pp. 46-49),
against which the Surety filed a written
opposition (Id. pp. 49) upon two grounds,
namely, (1) Failure to prosecute and (2)
Absence of a demand upon the Surety for the
payment of the amount due under the
judgment. Upon these grounds the Surety
prayed the Court not only to deny the motion
for execution against its counter-bond but also
the following affirmative relief : "to relieve the
herein bonding company of its liability, if any,
under the bond in question" (Id. p. 54) The
Court denied this motion on the ground solely
that no previous demand had been made on
the Surety for the satisfaction of the judgment.
Thereafter the necessary demand was made,
and upon failure of the Surety to satisfy the
judgment, the plaintiffs filed a second motion
for execution against the counterbond. On the
date set for the hearing thereon, the Court,
upon motion of the Surety's counsel, granted
the latter a period of five days within which to
answer the motion. Upon its failure to file such
answer, the Court granted the motion for
execution and the corresponding writ was
issued.
Subsequently, the Surety moved to quash the
writ on the ground that the same was issued
without the required summary hearing
provided for in Section 17 of Rule 59 of the
Rules of Court. As the Court denied the motion,
the Surety appealed to the Court of Appeals
from such order of denial and from the one
denying its motion for reconsideration (Id. p.
97). Its record on appeal was then printed as
required by the Rules, and in due time it filed its
brief raising therein no other question but the
ones covered by the following assignment of
errors:
I. That the Honorable Court a quo erred in
issuing its order dated November 2, 1957, by
holding the incident as submitted for
resolution, without a summary hearing and
compliance with the other mandatory
requirements provided for in Section 17, Rule
59 of the Rules of Court.
II. That the Honorable Court a quo erred in
ordering the issuance of execution against the
herein bonding company-appellant.
III. That the Honorable Court a quo erred in
denying the motion to quash the writ of
execution filed by the herein bonding company-
appellant as well as its subsequent motion for
reconsideration, and/or in not quashing or
setting aside the writ of execution.
Not one of the assignment of errors — it is
obvious — raises the question of lack of
jurisdiction, neither directly nor indirectly.
Although the appellees failed to file their brief,
the Court of Appeals, on December 11, 1962,
decided the case affirming the orders appealed
from.
On January 8, 1963 — five days after the Surety
received notice of the decision, it filed a motion
asking for extension of time within which to file
a motion for reconsideration. The Court of
Appeals granted the motion in its resolution of
January 10 of the same year. Two days later the
Surety filed a pleading entitled MOTION TO
DISMISS, alleging substantially that appellees
action was filed in the Court of First Instance of
Cebu on July 19, 1948 for the recovery of the
sum of P1,908.00 only; that a month before
that date Republic Act No. 296, otherwise
known as the Judiciary Act of 1948, had already
become effective, Section 88 of which placed
within the original exclusive jurisdiction of
inferior courts all civil actions where the value
of the subject-matter or the amount of the
demand does not exceed P2,000.00, exclusive
of interest and costs; that the Court of First
Instance therefore had no jurisdiction to try and
decide the case. Upon these premises the
Surety's motion prayed the Court of Appeals to
set aside its decision and to dismiss the case. By
resolution of January 16, 1963 the Court of
Appeals required the appellees to answer the
motion to dismiss, but they failed to do so.
Whereupon, on May 20 of the same year, the
Court resolved to set aside its decision and to
certify the case to Us. The pertinent portions of
its resolution read as follows:
It would indeed appear from the record that the
action at bar, which is a suit for collection of
money in the sum of exactly P1,908.00 exclusive
of interest, was originally instituted in the Court
of First Instance of Cebu on July 19, 1948. But
about a month prior to the filing of the
complaint, more specifically on June 17, 1948,
the Judiciary Act of 1948 took effect, depriving
the Court of First Instance of original jurisdiction
over cases in which the demand, exclusive of
interest, is not more than P2,000.00. (Secs.
44[c] and 86[b], R.A. No. 296.)
We believe, therefore, that the point raised in
appellant's motion is an important one which
merits serious consideration. As stated, the
complaint was filed on July 19, 1948. This case
therefore has been pending now for almost 15
years, and throughout the entire proceeding
appellant never raised the question of
jurisdiction until after receipt of this Court's
adverse decision.
There are three cases decided by the Honorable
Supreme Court which may be worthy of
consideration in connection with this case,
namely: Tyson Tan, et al. vs. Filipinas Compañia
de Seguros, et al., G.R. No. L-10096, March 23,
1956; Pindangan Agricultural Co., Inc. vs. Jose P.
Dans, etc., et al., G.R. No. L-14591, September
26, 1962; and Alfredo Montelibano, et al. vs.
Bacolod-Murcia Milling Co., Inc., G.R. No. L-
15092, September 29, 1962, wherein the
Honorable Supreme Court frowned upon the
'undesirable practice' of appellants submitting
their case for decision and then accepting the
judgment, if favorable, but attacking it for lack
of jurisdiction when adverse.
Considering, however, that the Supreme Court
has the "exclusive" appellate jurisdiction over
"all cases in which the jurisdiction of any
inferior court is in issue" (See. 1, Par. 3[3],
Judiciary Act of 1948, as amended), we have no
choice but to certify, as we hereby do certify,
this case to the Supreme Court.
ACCORDINGLY, pursuant to Section 31 of the
Judiciary Act of 1948 as amended, let the record
of this case be forwarded to the Supreme Court.
It is an undisputed fact that the action
commenced by appellees in the Court of First
Instance of Cebu against the Sibonghanoy
spouses was for the recovery of the sum of
P1,908.00 only — an amount within the original
exclusive jurisdiction of inferior courts in
accordance with the provisions of the Judiciary
Act of 1948 which had taken effect about a
month prior to the date when the action was
commenced. True also is the rule that
jurisdiction over the subject matter is conferred
upon the courts exclusively by law, and as the
lack of it affects the very authority of the court
to take cognizance of the case, the objection
may be raised at any stage of the proceedings.
However, considering the facts and
circumstances of the present case — which
shall forthwith be set forth — We are of the
opinion that the Surety is now barred by laches
from invoking this plea at this late hour for the
purpose of annulling everything done
heretofore in the case with its active
participation.
As already stated, the action was commenced in
the Court of First Instance of Cebu on July 19,
1948, that is, almost fifteen years before the
Surety filed its motion to dismiss on January 12,
1963 raising the question of lack of jurisdiction
for the first time.
It must be remembered that although the
action, originally, was exclusively against the
Sibonghanoy spouses the Surety became a
quasi-party therein since July 31, 1948 when it
filed a counter-bond for the dissolution of the
writ of attachment issued by the court of origin
(Record on Appeal, pp. 15-19). Since then, it
acquired certain rights and assumed specific
obligations in connection with the pending case,
in accordance with sections 12 and 17, Rule 57,
Rules of Court (Bautista vs. Joaquin, 46 Phil.
885; Kimpang & Co. vs. Javier, 65 Phil. 170).
Upon the filing of the first motion for execution
against the counter-bond the Surety not only
filed a written opposition thereto praying for its
denial but also asked for an additional
affirmative relief — that it be relieved of its
liability under the counter-bond upon the
grounds relied upon in support of its opposition
— lack of jurisdiction of the court a quo not
being one of them.
Then, at the hearing on the second motion for
execution against the counter-bond, the Surety
appeared, through counsel, to ask for time
within which to file an answer or opposition
thereto. This motion was granted, but instead
of such answer or opposition, the Surety filed
the motion to dismiss mentioned heretofore.
A party may be estopped or barred from raising
a question in different ways and for different
reasons. Thus we speak of estoppel in pais, or
estoppel by deed or by record, and of estoppel
by laches.
Laches, in a general sense is failure or neglect,
for an unreasonable and unexplained length of
time, to do that which, by exercising due
diligence, could or should have been done
earlier; it is negligence or omission to assert a
right within a reasonable time, warranting a
presumption that the party entitled to assert it
either has abandoned it or declined to assert it.
The doctrine of laches or of "stale demands" is
based upon grounds of public policy which
requires, for the peace of society, the
discouragement of stale claims and, unlike the
statute of limitations, is not a mere question of
time but is principally a question of the inequity
or unfairness of permitting a right or claim to be
enforced or asserted.
It has been held that a party can not invoke the
jurisdiction of a court to sure affirmative relief
against his opponent and, after obtaining or
failing to obtain such relief, repudiate or
question that same jurisdiction (Dean vs. Dean,
136 Or. 694, 86 A.L.R. 79). In the case just cited,
by way of explaining the rule, it was further said
that the question whether the court had
jurisdiction either of the subject-matter of the
action or of the parties was not important in
such cases because the party is barred from
such conduct not because the judgment or
order of the court is valid and conclusive as an
adjudication, but for the reason that such a
practice can not be tolerated — obviously for
reasons of public policy.
Furthermore, it has also been held that after
voluntarily submitting a cause and encountering
an adverse decision on the merits, it is too late
for the loser to question the jurisdiction or
power of the court (Pease vs. Rathbun-Jones
etc., 243 U.S. 273, 61 L. Ed. 715, 37 S. Ct. 283;
St. Louis etc. vs. McBride, 141 U.S. 127, 35 L. Ed.
659). And in Littleton vs. Burgess, 16 Wyo. 58,
the Court said that it is not right for a party who
has affirmed and invoked the jurisdiction of a
court in a particular matter to secure an
affirmative relief, to afterwards deny that same
jurisdiction to escape a penalty.
Upon this same principle is what We said in the
three cases mentioned in the resolution of the
Court of Appeals of May 20, 1963 (supra) — to
the effect that we frown upon the "undesirable
practice" of a party submitting his case for
decision and then accepting the judgment, only
if favorable, and attacking it for lack of
jurisdiction, when adverse — as well as in
Pindañgan etc. vs. Dans, et al., G.R. L-14591,
September 26, 1962; Montelibano, et al., vs.
Bacolod-Murcia Milling Co., Inc., G.R. L-15092;
Young Men Labor Union etc. vs. The Court of
Industrial Relation et al., G.R. L-20307, Feb. 26,
1965, and Mejia vs. Lucas, 100 Phil. p. 277.
The facts of this case show that from the time
the Surety became a quasi-party on July 31,
1948, it could have raised the question of the
lack of jurisdiction of the Court of First Instance
of Cebu to take cognizance of the present
action by reason of the sum of money involved
which, according to the law then in force, was
within the original exclusive jurisdiction of
inferior courts. It failed to do so. Instead, at
several stages of the proceedings in the court a
quo as well as in the Court of Appeals, it
invoked the jurisdiction of said courts to obtain
affirmative relief and submitted its case for a
final adjudication on the merits. It was only
after an adverse decision was rendered by the
Court of Appeals that it finally woke up to raise
the question of jurisdiction. Were we to
sanction such conduct on its part, We would in
effect be declaring as useless all the
proceedings had in the present case since it was
commenced on July 19, 1948 and compel the
judgment creditors to go up their Calvary once
more. The inequity and unfairness of this is not
only patent but revolting.
Coming now to the merits of the appeal: after
going over the entire record, We have become
persuaded that We can do nothing better than
to quote in toto, with approval, the decision
rendered by the Court of Appeals on December
11, 1962 as follows:
In Civil Case No. R-660 of the Court of First
Instance of Cebu, which was a suit for collection
of a sum of money, a writ of attachment was
issued against defendants' properties. The
attachment, however, was subsequently
discharged under Section 12 of Rule 59 upon
the filing by defendants of a bond subscribed by
Manila Surety & Fidelity Co., Inc.
After trial, judgment was rendered in favor of
plaintiffs.
The writ of execution against defendants having
been returned totally unsatisfied, plaintiffs
moved, under Section 17 of Rule 59, for
issuance of writ of execution against Manila
Surety & Fidelity Co., Inc. to enforce the
obligation of the bond. But the motion was,
upon the surety's opposition, denied on the
ground that there was "no showing that a
demand had been made, by the plaintiffs to the
bonding company for payment of the amount
due under the judgment" (Record on Appeal, p.
60).
Hence, plaintiffs made the necessary demand
upon the surety for satisfaction of the
judgment, and upon the latter's failure to pay
the amount due, plaintiffs again filed a motion
dated October 31, 1957, for issuance of writ of
execution against the surety, with notice of
hearing on November 2, 1957. On October 31,
1957, the surety received copy of said motion
and notice of hearing.
It appears that when the motion was called on
November 2, 1957, the surety's counsel asked
that he be given time within which to answer
the motion, and so an order was issued in open
court, as follows:
As prayed for, Atty. Jose P. Soberano, Jr.,
counsel for the Manila Surety & Fidelity Co.,
Inc., Cebu Branch, is given until Wednesday,
November 6, 1957, to file his answer to the
motion for the issuance of a writ of execution
dated October 30, 1957 of the plaintiffs, after
which this incident shall be deemed submitted
for resolution.
SO ORDERED.
Given in open court, this 2nd day of November,
1957, at Cebu City, Philippines.
(Sgd.) JOSE M. MENDOZA
Judge
(Record on Appeal, pp. 64-65, emphasis ours)
Since the surety's counsel failed to file any
answer or objection within the period given
him, the court, on December 7, 1957, issued an
order granting plaintiffs' motion for execution
against the surety; and on December 12, 1957,
the corresponding writ of execution was issued.
On December 24, 1957, the surety filed a
motion to quash the writ of execution on the
ground that the same was "issued without the
requirements of Section 17, Rule 59 of the Rules
of Court having been complied with," more
specifically, that the same was issued without
the required "summary hearing". This motion
was denied by order of February 10, 1958.
On February 25, 1958, the surety filed a motion
for reconsideration of the above-stated order of
denial; which motion was likewise denied by
order of March 26, 1958.
From the above-stated orders of February 10,
1958 and March 26, 1958 — denying the
surety's motion to quash the writ of execution
and motion for reconsideration, respectively —
the surety has interposed the appeal on hand.
The surety insists that the lower court should
have granted its motion to quash the writ of
execution because the same was issued without
the summary hearing required by Section 17 of
Rule 59, which reads;
"Sec. 17. When execution returned unsatisfied,
recovery had upon bond. — If the execution be
returned unsatisfied in whole or in part, the
surety or sureties on any bond given pursuant
to the provisions of this role to secure the
payment of the judgment shall become finally
charged on such bond, and bound to pay to the
plaintiff upon demand the amount due under
the judgment, which amount may be recovered
from such surety or sureties after notice and
summary hearing in the same action."
(Emphasis ours)
Summary hearing is "not intended to be carried
on in the formal manner in which ordinary
actions are prosecuted" (83 C.J.S. 792). It is,
rather, a procedure by which a question is
resolved "with dispatch, with the least possible
delay, and in preference to ordinary legal and
regular judicial proceedings" (Ibid, p. 790).
What is essential is that "the defendant is
notified or summoned to appear and is given an
opportunity to hear what is urged upon him,
and to interpose a defense, after which follows
an adjudication of the rights of the parties"
(Ibid., pp. 793-794); and as to the extent and
latitude of the hearing, the same will naturally
lie upon the discretion of the court, depending
upon the attending circumstances and the
nature of the incident up for consideration.
upon his instance and he interposed no
objection thereto.
It is also urged that although according to
Section 17 of Rule 59, supra, there is no need
for a separate action, there must, however, be a
separate judgment against the surety in order
to hold it liable on the bond (Appellant's Brief,
p. 15). Not so, in our opinion. A bond filed for
discharge of attachment is, per Section 12 of
Rule 59, "to secure the payment to the plaintiff
of any judgment he may recover in the action,"
and stands "in place of the property so
released". Hence, after the judgment for the
plaintiff has become executory and the
execution is "returned unsatisfied" (Sec. 17,
Rule 59), as in this case, the liability of the bond
automatically attaches and, in failure of the
surety to satisfy the judgment against the
defendant despite demand therefor, writ of
execution may issue against the surety to
enforce the obligation of the bond.
UPON ALL THE FOREGOING, the orders
appealed from are hereby affirmed, with costs
against the appellant Manila Surety and Fidelity
Company, Inc.

In the case at bar, the surety had been notified

of the plaintiffs' motion for execution and of the
date when the same would be submitted for
consideration. In fact, the surety's counsel was
present in court when the motion was called,
and it was upon his request that the court a quo
gave him a period of four days within which to
file an answer. Yet he allowed that period to
lapse without filing an answer or objection. The
surety cannot now, therefore, complain that it
was deprived of its day in court.

It is argued that the surety's counsel did not file

an answer to the motion "for the simple reason
that all its defenses can be set up during the
hearing of the motion even if the same are not
reduced to writing" (Appellant's brief, p. 4).
There is obviously no merit in this pretense
because, as stated above, the record will show
that when the motion was called, what the
surety's counsel did was to ask that he be
allowed and given time to file an answer.
Moreover, it was stated in the order given in
open court upon request of the surety's counsel
that after the four-day period within which to
file an answer, "the incident shall be deemed
submitted for resolution"; and counsel
apparently agreed, as the order was issued
G.R. No. 103200 August 31, 1994
LA NAVAL DRUG CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and
WILSON C. YAO, respondents.
VITUG, J.:
In an effort to declog the courts of an increasing
volume of work load and, most importantly, in
order to accord contending parties with
expenditious alternatives for settling disputes,
the law authorities, indeed encourages, out of
court settlements or adjudications.
Compromises and arbitration are widely known
and used as such acceptable methods of
resolving adversarial claims.
Arbitrations, in particular, is governed by a
special law, Republic Act 876, suppletory to
which are laws and rules of general application.
This case before us concerns the jurisdiction of
courts, in relation to the provisions of Section 6
of Republic Act No. 876, and, in that respect,
the applicability of the doctrine of estoppel. The
law (R.A. 876), specifically Section 6 thereof,
provides:
Sec. 6. Hearing by court. — A party aggrieved
by the failure, neglect or refusal of another to
perform under an agreement in writing
providing for arbitration may petition the court
for an order directing that such arbitration
proceed in the manner provided for in such
agreement. Five days notice in writing of the
hearing of such application shall be served
either personally or by registered mail upon the
party in default. The court shall hear the
parties, and upon being satisfied that the
making of the agreement or such failure to
comply therewith is not in issue, shall make an
order directing the parties to proceed to
arbitration in accordance with the terms of the
agreement. If the making of the agreement or
default be in issue the court shall proceed to
summarily hear such issue. If the finding be that
no agreement in writing providing for
arbitration was made, or that there is no default
in the proceeding thereunder, the proceeding
shall be dismissed. If the finding be that a
written provision for arbitration was made and
there is a default in proceeding thereunder, an
order shall be made summarily directing the
parties to proceed with the arbitration in
accordance with the terms thereof.
The court shall decide all motions, petitions or
application filed under the provisions of this
Act, within ten days after such motions,
petitions, or applications have been heard by it.
In chronology, the events that have led to the
case at bench are detailed in the appealed
decision of respondent appellate court, which
we here reproduce in toto.
Original action for Certiorari and Prohibition for
Annulment of the Orders, dated April 26, 1990
and June 22, 1990, respectively, of Branch LXI,
Regional Trial Court, Angeles City, in Special
Case No. 6024 for Enforcement of ARBITRATION
Agreement with Damages. Petitioner assails
that portion of subject Order of April 26, 1990,
stating as follows:
(1) Petitioner's claim for damages
predicated on alleged tortuous acts of
respondents La Naval Drug corporation such as
their alleged interference and dilatory tactics,
etc. in the implementation of the Arbitration
Agreement in the Contract of Lease, thereby
compelling among others the petitioner to go to
Court for redress; and respondent La Naval
Drug Corporation's counterclaim for damages
may be entertained by this Court in a hearing —
not summary — for the purpose, under the
Rules of Court.
(2) A preliminary hearing of the special and
affirmative defense to show that Petitioner has
not cause of action against respondent's claim
for damages is denied; a resolution on this issue
is deferred after the trial of the case on the
merits.
And challenges the Order of June 22, 1990
denying its motion for reconsideration of the
said earlier Order.
From the petition below of respondent Yao, it
appears that he is the present owner of a
commercial building a portion of which is leased
to petitioner under a contract of lease executed
on December 23, 1993 with the former owner
thereof, La Proveedora, Inc., which contract
expired on April 30, 1989. However, petitioner
exercised its option to lease the same building
for another five years. But petitioner and
respondent Yao disagreed on the rental rate,
and to resolve the controversy, the latter, thru
written notices to the former, expressed his
intention to submit their disagreement to
arbitration, in accordance with Republic Act
876, otherwise known as the Arbitration Law,
and paragraph 7 of their lease contract,
providing that:
7. . . . Should the parties fail to agree on
the rate of rentals, the same shall be submitted
to a group of Arbitrators composed of three (3)
members, one to be appointed by LESSOR,
another by LESSEE and the third one to be
agreed upon by the two arbitrators previously
chosen and the parties hereto shall submit to
the decision of the arbitrators.
Thus, on May 6, 1989, respondent Yao
appointed Domingo Alamarez, Jr. as his
arbitrator, while on June 5, 1989, petitioner
chose Atty. Casiano Sabile as its arbitrator. The
confirmation of the appointment of Aurelio
Tupang, as third arbitrator, was held in
abeyance because petitioner instructed Atty.
Sabile to defer the same until its Board of
Directors could convene and approve Tupang's
appointment. Respondent Yao theorizes that
this was petitioner's design to delay the
arbitration proceedings, in violation of the
Arbitration Law, and the governing stipulation
of their contract of lease.
On the basis of the aforesaid allegations,
respondent Yao prayed that after summary
hearing pursuant to Section 6 of the Arbitration
Law, Atty. Casiano Sabile and Domingo
Alamarez be directed to proceed with the
arbitration in accordance with Section 7 of
subject Contract of Lease and the applicable
provisions of the Arbitration law, by appointing
and confirming the appointment of the Third
Arbitrator; and that the Board of Three
Arbitrators be ordered to immediately convene
and resolve the controversy before it, pursuant
to Section 12 and the succeeding sections of the
Arbitration Law. (Annex "A," Petition.)
In its Answer with Counterclaim (Annex "C,"
Petition), petitioner here specifically denied the
averments of the petition below; theorizing that
such petition is premature since respondent
Yao has not yet formally required arbitrators
Alamarez and Sabile to agree on the third
arbitrator, within ten (10) days from notice, and
that the delay in the arbitration was due to
respondent Yao's failure to perform what is
incumbent upon him, of notifying and
thereafter, requiring both arbitrators to appoint
the third member of the Board of Arbitrators.
According to petitioner, it actually gave
arbitrators Sabile and Alamarez a free hand in
choosing the third arbitrator; and, therefore,
respondent Yao has no cause of action against it
(petitioner). By way of Counterclaim, petitioner
alleged that it suffered actual damages of
P100,000.00; and incurred attorney's fees of
P50,000.00, plus P500.00 for every court
appearance of its counsel.
On October 20, 1989, respondent Yao filed an
amended petition for "Enforcement of
Arbitration Agreement with Damages;" praying
that petitioner be ordered to pay interest on
the unpaid rents, at the prevailing rate of
interest in commercial banks, and exemplary
damages of at least P250,000.00.
On October 24, 1989, despite petitioner's
opposition to the motion to admit the amended
petition, the respondent court admitted the
same.
On October 31, 1989, petitioner answered the
amended petition; contending, among others,
that the amended petition should be dismissed
on the ground of non-payment of the requisite
filing fees therefor; and it being in the nature of
an ordinary civil action, a full blown and regular
trial, is necessary; so that respondent Yao's
proposition for a summary hearing of the
arbitration issue and separate trial for his claim
for damages is procedurally untenable and
implausible.
Invoking Section 5, Rule 16 of the Rules of
Court, petitioner presented a "Motion to Set
Case for Preliminary Hearing" of its special and
affirmative defenses, which are grounds fro a
motion to dismiss.
In its Order of November 14, 1989, the
respondent court announced that the two
arbitrators chose Mrs. Eloisa R. Narciso as the
third arbitrator. And on November 21, 1989, it
ordered the parties to submit their position
papers on the issue as to whether or not
respondent Yao's claim for damages may be
litigated upon in the summary proceeding for
enforcement of arbitration agreement. It
likewise informed the parties that petitioner's
Motion to Set Case for Preliminary Hearing" of
Special and Affirmative Defenses would be
resolved together with the question of
damages.
On April 26, 1990, the aforequoted assailed
Order issued. In moving for reconsideration of
the said Order, petitioner argued that in Special
Case No. 6024, the respondent court sits as a
special court exercising limited jurisdiction and
is not competent to act on respondent Yao's
claim for damages, which poses an issue
litigable in an ordinary civil action. But the
respondent court was not persuaded by
petitioner's submission. On June 22, 1990, it
denied the motion for reconsideration. (Rollo,
pp. 89-93).
While the appellate court has agreed with
petitioner that, under Section 6 of Republic Act
No. 876, a court, acting within the limits of its
special jurisdiction, may in this case solely
determine the issue of whether the litigants
should proceed or not to arbitration, it,
however, considered petitioner in estoppel
from questioning the competence of the court
to additionally hear and decide in the summary
proceedings private respondent's claim for
damages, it (petitioner) having itself filed
similarly its own counterclaim with the court a
quo.
It is hardly disputable that when a court is
called upon to exercise limited and special
jurisdiction, that court cannot stray to matters
outside the area of its declared authority or
beyond what has been expressly invested by
law (Elumbaring vs. Elumbaring, 12 Phil. 384,
387), particularly, such as in this instance,
where the proceedings are summary in nature.
Prefatorily, recalling the distinctions, pertinent
to the case, between the court's lack of
jurisdiction over the person of the defendant,
on the one hand, and its lack of jurisdiction over
the subject matter or the nature of the action,
upon the other hand, should be useful.
The lack of jurisdiction over the person of the
defendant may be waived either expressly or
impliedly. When a defendant voluntarily
appears, he is deemed to have submitted
himself to the jurisdiction of the court. If he so
wishes not to waive this defense, he must do so
seasonably by motion for the purpose of
objecting to the jurisdiction of the court;
otherwise, he shall be deemed to have
submitted himself to that jurisdiction. The
decisions promulgated heretofore by this Court
would likewise seemingly apply estoppel to bar
the defendant from pursuing that defense by
alleging in his answer any other issue for
dismissing the action.
A citation of a few of our decisions might be
apropos.
In Wang Laboratories, Inc., vs. Mendoza (156
SCRA 44), this Court has ruled that if the
defendant, besides setting up in a motion to
dismiss his objection to the jurisdiction of the
court, alleges at the same time any other
ground for dismissing the action, he is deemed
to have submitted himself to the jurisdiction of
the court. In the process, it has equated the
matter to a situation where, such as in
Immaculata vs. Judge Navarro, et al. (146 SCRA
5), the defendant invokes an affirmative relief
against his opponent.
In De Midgely vs. Judge Ferandos (64 SCRA 23,
31), the Court elaborated thusly:
We are of the opinion that the lower court has
acquired jurisdiction over the person of Mrs.
Midgely by reason of her voluntary appearance.
The reservation in her motion to dismiss that
she was making a special appearance to contest
the court's jurisdiction over her person may be
disregarded.
It may be disregarded because it was nullified
by the fact that in her motion to dismiss she
relied not only on the ground of lack of
jurisdiction over her person but also on the
ground that there was no showing that earnest
efforts were exerted to compromise the case
and because she prayed "for such other relief
as" may be deemed "appropriate and proper."
xxx xxx xxx
When the appearance is by motion for the
purpose of objecting to the jurisdiction of the
court over the person, it must be for the sole
and separate purpose of objecting to the
jurisdiction of the court. If his motion is for any
other purpose than to object to the jurisdiction
of the court over his person, he thereby submits
himself to the jurisdiction of the court. A special
appearance by motion made for the purpose of
objecting to the jurisdiction of the court over
the person will be held to be a general
appearance, if the party in said motion should,
for example, ask for a dismissal of the action
upon the further ground that the court had no
jurisdiction over the subject matter. (Syllabus,
Flores vs. Zurbito, supra, at page 751. That rule
was followed in Ocampo vs. Mina and Arejola,
41 Phil. 308).
The justification for the rule was expressed in
Republic vs. Ker and Companry, Ltd. (18 SCRA
207, 213-214), in this wise:
We observed that the motion to dismiss filed on
April 14, 1962, aside from disputing the lower
court's jurisdiction over defendant's person,
prayed for dismissal of the complaint on the
ground that plaintiff's cause of action had
prescribed. By interposing such second ground
in its motion to dismiss, Ker & Co., Ltd. availed
of an affirmative defense on the basis of which
it prayed the court to resolve controversy in its
favor. For the court to validly decide the said
plea of defendant Ker & Co., Ltd., it necessarily
had to acquire jurisdiction upon the latter's
person, who, being the proponent of the
affirmative defense, should be deemed to have
abandoned its special appearance and
voluntarily submitted itself to the jurisdiction of
the court.
Voluntary appearance cures defects of
summons, if any, Such defect, if any, was
further cured when defendant filed its answer
to the complaint. A defendant can not be
permitted to speculate upon the judgment of
the court by objecting to the court's jurisdiction
over its person if the judgment is adverse to it,
and acceding to jurisdiction over its person if
and when the judgment sustains its defenses.
The doctrine of estoppel is predicated on, and
has its origin in, equity which, broadly defined,
is justice according to natural law and right. It is
a principle intended to avoid a clear case of
injustice. The term is hardly distinguishable
from a waiver of right. Estoppel, like its said
counterpart, must be unequivocal and
intentional for, when misapplied, it can easily
become a most convenient and effective means
of injustice. Estoppel is not understood to be a
principle that, as a rule, should prevalently
apply but, such as it concededly is, as a mere
exception from the standard legal norms of
general application that can be invoked only in
highly exceptional and justifiable cases.
Tested by the above criteria, the Court sees it
propitious to re-examine specifically the
question of whether or not the submission of
other issues in a motion to dismiss, or of an
affirmative defense (as distinguished from an
affirmative relief) in an answer, would
necessarily foreclose, and have the effect of a
waiver of, the right of a defendant to set up the
court's lack of jurisdiction over the person of
the defendant.
Not inevitably.
Section 1, Rule 16, of the Rules of Court,
provides that a motion to dismiss may be made
on the following grounds:
(a) That the court has no jurisdiction over
the person of the defendant or over the subject
of the action or suit;
(b) That the court has no jurisdiction over
the nature of the action or suit;
(c) The venue is improperly laid;
(d) That the plaintiff has no legal capacity
to sue;
(e) That there is another action pending
between the same parties for the same cause;
(f) That the cause of action is barred by a
prior judgment or by statute of limitations;
(g) That the complaint states no cause of
action;
(h) That the claim or demand set forth in
the plaintiff's pleading has been paid, waived,
abandoned, or otherwise extinguished;
(i) That the claim on which the action or
suit is founded is unenforceable under the
provisions of the statute of frauds;
(j) That the suit is between members of
the same family and no earnest efforts towards
a compromise have been made.
Any ground for dismissal in a motion to dismiss,
except improper venue, may, as further set
forth in Section 5 of the same rule, be pleaded
as an affirmative defense and a preliminary
hearing may be had thereon as if a motion to
dismiss had been filed. An answer itself
contains the negative, as well as affirmative,
defenses upon which the defendant may rely
(Section 4, Rule 6, Rules of Court). A negative
defense denies the material facts averred in the
complaint essential to establish the plaintiff's
cause of action, while an affirmative defense in
an allegation of a new matter which, while
admitting the material allegations of the
complaint, would, nevertheless, prevent or bar
recovery by the plaintiff. Inclusive of these
defenses are those mentioned in Rule 16 of the
Rules of Court which would permit the filing of
a motion to dismiss.
In the same manner that the plaintiff may
assert two or more causes of action in a court
suit, a defendant is likewise expressly allowed,
under Section 2, Rule 8, of the Rules of Court, to
put up his own defenses alternatively or even
hypothetically. Indeed, under Section 2, Rule 9,
of the Rules of Court, defenses and objections
not pleaded either in a motion to dismiss or in
an answer, except for the failure to state a
cause of action, are deemed waived. We take
this to mean that a defendant may, in fact, feel
enjoined to set up, along with his objection to
the court's jurisdiction over his person, all other
possible defenses. It thus appears that it is not
the invocation of any of such defenses, but the
failure to so raise them, that can result in
waiver or estoppel. By defenses, of course, we
refer to the grounds provided for in Rule 16 of
the Rules of Court that must be asserted in a
motion to dismiss or by way of affirmative
defenses in an answer.
Mindful of the foregoing, in Signetics
Corporation vs. Court of Appeals and Freuhauf
Electronics Phils., Inc. (225 SCRA 737, 738), we
lately ruled:
This is not to say, however, that the petitioner's
right to question the jurisdiction of the court
over its person is now to be deemed a
foreclosed matter. If it is true, as Signetics
claims, that its only involvement in the
Philippines was through a passive investment in
Sigfil, which it even later disposed of, and that
TEAM Pacific is not its agent, then it cannot
really be said to be doing business in the
Philippines. It is a defense, however, that
requires the contravention of the allegations of
the complaint, as well as full ventilation, in
effect, of the main merits of the case, which
should not thus be within the province of a
mere motion to dismiss. So, also, the issue
posed by the petitioner as to whether a foreign
corporation which has done business in the
country, but which has ceased to do business at
the time of the filing of a complaint, can still be
made to answer for a cause of action which
accrued while it was doing business, is another
matter that would yet have to await the
reception and admission of evidence. Since
these points have seasonably been raised by
the petitioner, there should be no real cause for
what may understandably be its apprehension,
i.e., that by its participation during the trial on
the merits, it may, absent an invocation of
separate or independent reliefs of its own, be
considered to have voluntarily submitted itself
to the court's jurisdiction.
Lack of jurisdiction over the subject matter of
the suit is yet another matter. Whenever it
appears that the court has no jurisdiction over
the subject matter, the action shall be
dismissed (Section 2, Rule 9, Rules of Court).
This defense may be interposed at any time,
during appeal (Roxas vs. Rafferty, 37 Phil. 957)
or even after final judgment (Cruzcosa vs. Judge
Concepcion, et al., 101 Phil. 146). Such is
understandable, as this kind of jurisdiction is
conferred by law and not within the courts, let
alone the parties, to themselves determine or
conveniently set aside. In People vs. Casiano
(111 Phil. 73 93-94), this Court, on the issue of
estoppel, held:
The operation of the principle of estoppel on
the question of jurisdiction seemingly depends
upon whether the lower court actually had
jurisdiction or not. If it had no jurisdiction, but
the case was tried and decided upon the theory
that it had jurisdiction, the parties are not
barred, on appeal, from assailing such
jurisdiction, for the same "must exist as a
matter of law, and may not be conferred by
consent of the parties or by estoppel" (5 C.J.S.,
861-863). However, if the lower court had
jurisdiction, and the case was heard and
decided upon a given theory, such, for instance,
as that the court had no jurisdiction, the party
who induced it to adopt such theory will not be
permitted, on appeal, to assume an inconsistent
position — that the lower court had jurisdiction.
Here, the principle of estoppel applies. The rule
that jurisdiction is conferred by law, and does
not depend upon the will of the parties, has not
bearing thereon.
The rule was reiterated in Calimlim vs. Ramirez
(118 SCRA 399, 406), and quite recently, in
Southeast Asian Fisheries Development Center-
Aquaculture Department vs. National Labor
Relations Commission (206 SCRA 283).
Jurisdiction over the nature of the action, in
concept, differs from jurisdiction over the
subject matter. Illustrated, lack of jurisdiction
over the nature of the action is the situation
that arises when a court, which ordinarily would
have the authority and competence to take a
case, is rendered without it either because a
special law has limited the exercise of its normal
jurisdiction on a particular matter or because
the type of action has been reposed by law in
certain other courts or quasi-judicial agencies
for determination. Nevertheless, it can hardly
be questioned that the rules relating to the
effects of want of jurisdiction over the subject instant proceedings, is ordered to DESIST from
matter should apply with equal vigor to cases further hearing private respondent's claim, as
where the court is similarly bereft of jurisdiction well as petitioner's counterclaim, for damages.
over the nature of the action. No costs.

In summary, it is our considered view, as we SO ORDERED.

now so hereby express,

that —

(1) Jurisdiction over the person must be

seasonably raised, i.e., that it is pleaded in a
motion to dismiss or by way of an affirmative
defense in an answer. Voluntary appearance
shall be deemed a waiver of this defense. The
assertion, however, of affirmative defenses
shall not be constructed as an estoppel or as a
waiver of such defense.

(2) Where the court itself clearly has no

jurisdiction over the subject matter or the
nature of the action, the invocation of this
defense may be done at any time. It is neither
for the courts nor the parties to violate or
disregard that rule, let alone to confer that
jurisdiction, this matter being legislative in
character. Barring highly meritorious and
exceptional circumstances, such as
hereinbefore exemplified, neither estoppel nor
waiver shall apply.

In the case at bench, the want of jurisdiction by

the court is indisputable, given the nature of
the controversy. The arbitration law explicitly
confines the court's authority only to pass upon
the issue of whether there is or there is no
agreement in writing providing for arbitration.
In the affirmative, the statute ordains that the
court shall issue an order "summarily directing
the parties to proceed with the arbitration in
accordance with the terms thereof." If the
court, upon the other hand, finds that no such
agreement exists, "the proceeding shall be
dismissed." The proceedings are summary in
nature.

All considered, the court a quo must then

refrain from taking up the claims of the
contending parties for damages, which, upon
the other hand, may be ventilated in separate
regular proceedings at an opportune time and
venue. The circumstances obtaining in this case
are far, we hold, from justifying the application
of estoppel against either party.

WHEREFORE, the decision of the Court of

Appeals and the orders of the trial court in
question are SET ASIDE. The court a quo, in the
G.R. No. L-34362 November 19, 1982
MODESTA CALIMLIM AND LAMBERTO MAGALI
IN HIS CAPACITY AS ADMINISTRATOR OF THE
ESTATE OF DOMINGO MAGALI, petitioners,
vs.
HON. PEDRO A. RAMIREZ IN HIS CAPACITY AS
PRESIDING JUDGE OF THE COURT OF FIRST
INSTANCE OF PANGASINAN, BRANCH I, and
FRANCISCO RAMOS, respondents.
VASQUEZ, J.:
The dismissal of Civil Case No. SCC-180 filed by
the herein petitioners in the respondent Court
against the private respondent is sought to be
annulled and set aside by this Petition For
Review On Certiorari.
The antecedent material facts are not disputed.
Sometime in 1961, a judgment for a sum of
money was rendered in favor of Independent
Mercantile Corporation against a certain
Manuel Magali by the Municipal Court of
Manila in Civil Case No. 85136. After said
judgment became final, a writ of execution was
issued on July 31, 1961. The Notice of Levy
made on September 21, 1961 on a parcel of
land covered by Transfer Certificate of Title No.
9138 registered in the name of "Domingo
Magali, married to Modesta Calimlim", specified
that the said levy was only against "all rights,
title, action, interest and participation of the
defendant Manuel Magali over the parcel of
land described in this title. " The Certificate of
Sale executed by the Provincial Sheriff of
Pangasinan on October 17, 1961 in favor of
Independent Mercantile Corporation also
stated that the sale referred only to the rights
and interest of Manuel Magali over the land
described in TCT No. 9138. Manuel Magali is
one of the several children of Domingo Magali
who had died in 1940 and herein petitioner
Modesta Calimlim.
However, when the Sheriff issued the final Deed
of Sale on January 25, 1963, it was erroneously
stated therein that the sale was with respect to
"the parcel of land described in this title"
(referring to TCT No. 9138) and not only over
the rights and interest of Manuel Magali in the
same. The execution of the said final Deed of
Sale was annotated at the back of said title.
On February 23, 1967, Independent Mercantile
Corporation filed a petition in the respondent
Court to compel Manuel Magali to surrender
the owner's duplicate of TCT No. 9138 in order
that the same may be cancelled and a new one
issued in the name of the said corporation. Not
being the registered owner and the title not
being in his possession, Manuel Magali failed to
comply with the order of the Court directing
him to surrender the said title. On June 20,
1967, Independent Mercantile Corporation filed
an ex-parte petition to declare TCT No. 9138 as
cancelled and to issue a new title in its name.
The said petition was granted by the
respondent Court and in its Order dated July 13,
1967, it directed the issuance of a new
certificate of title in the name of the
Independent Mercantile Corporation and the
cancellation of TCT No. 9138. By virtue of said
Order, the Register of Deeds of Pangasinan
issued a new title in the name of the
corporation, Identified as TCT No. 68568.
On November 21, 1967, petitioner Modesta
Calimlim, surviving spouse of Domingo Magali,
upon learning that her husband's title over the
parcel of land had been cancelled, filed a
petition with the respondent Court, sitting as a
cadastral court, praying for the cancellation of
TCT No. 68568. An opposition to the said
petition was filed by Independent Mercantile
Corporation. After the parties submitted their
respective Memoranda, the respondent Court
issued an Order dated June 3, 1968 dismissing
the petition. (Rollo, pp. 31-38.)
The herein petitioners did not appeal the
dismissal of the petition they filed in LRC Record
No. 39492 for the cancellation of TCT No.
68568. Instead, on January 11, 1971, they filed
the complaint in Civil Case No. SCC-180 praying
for the cancellation of the conveyances and
sales that had been made with respect to the
property, covered by TCT No. 9138 previously
registered in the name of Domingo Magali,
married to Modesta Calimlim. Named as
defendant in said civil case was herein private
respondent Francisco Ramos who claimed to
have bought the property from Independent
Mercantile Corporation on July 25, 1967.
Private respondent Francisco Ramos, however,
failed to obtain a title over the property in his
name in view of the existence of an adverse
claim annotated on the title thereof at the
instance of the herein petitioners.
Private respondent Francisco Ramos filed a
Motion To Dismiss Civil Case No. SCC-180 on the
ground that the same is barred by prior
judgement or by statute of limitations (Rollo.
pp. 42-45). Resolving the said Motion, the
respondent Court, in its Order dated April 21,
1971, dismissed Civil Case No. SCC- 180 on the
ground of estoppel by prior judgment. (Ibid., pp,
10-13.) A Motion For Reconsideration filed by
the petitioners was denied by the respondent
Judge in his Order of September 2, 1971. (Ibid.,
pp. 13-15.) A second Motion For
Reconsideration was similarly denied in the
Order dated September 29, 197 1. (Rollo, pp.
16-17.) Hence, this Petition.
We find merit in this appeal.
It is error to consider the dismissal of the
petition filed by the herein petitioner in LRC
Record No. 39492 for the cancellation of TCT
No. 68568 as a bar by prior judgment against
the filing of Civil Case No. SCC-180. In order to
avail of the defense of res judicata, it must be
shown, among others, that the judgment in the
prior action must have been rendered by a
court with the proper jurisdiction to take
cognizance of the proceeding in which the prior
judgment or order was rendered. If there is lack
of jurisdiction over the subject-matter of the
suit or of the parties, the judgment or order
cannot operate as an adjudication of the
controversy. (2 Moran Comments on the Rules
of Court, 1970 Edition, p. 364.) This essential
element of the defense of bar by prior
judgment or res judicata does not exist in the
case presently considered.
The petition filed by the herein petitioners in
LRC Record No. 39492 was an apparent
invocation of the authority of the respondent
Court sitting as a land registration court,
Although the said petition did not so state, that
reliance was apparently placed on Section 112
of the Land Registration Act. It has been settled
by consistent rulings of this Court that a court
of first instance, acting as a land registration
court, is a court of limited and special
jurisdiction. As such, its proceedings are not
adequate for the litigation of issues pertaining
to an ordinary civil action, such as, questions
involving ownership or title to real property.
(Bareng vs. Shintoist Shrine and Japanese
Charity Bureau, 83 SCRA 418; Manalo vs.
Mariano, 69 SCRA 80; In re: Nicanor T Santos,
102 SCRA 747; Santos vs. Aquino, 101 SCRA
377.) In Hu chon Sunpongco vs. Heirs of Nicolas
Ronquillo, L- 27040, December 19, 1970, 36
SCRA 395, we have held that:
Section 112 of Act 496 confers authority upon
the land registration court to order the
cancellation, alteration or amendment of a
certificate of title but withdraws from the Court
the power to pass upon any question
concerning ownership of the registered
property, or any incident where the issues
involved have become controversial.
It may hardly be questioned that the issues
raised by the petitioners in their petition to
cancel TCT No. 68568 refer to the ownership or
title over the property covered thereby. The
said petition presented before the respondent
Court in the exercise of its limited jurisdiction as
a cadastral court, the question of who should
be considered the true and lawful owner of the
parcel of land embraced in said title. The
petitioners alleged therein that they are the
true owners of the property, and that TCT No.
68568 which they sought to cancel was issued
as a result of the errors which were not of their
own making. In short, the petition raised a
highly controversial matter which is beyond the
judicial competence of a cadastral court to pass
upon or to adjudicate.
It may neither be claimed that the parties have
mutually agreed to submit the aforesaid issues
for the determination by the court, it being a
fact that herein private respondent was not a
party in the petition in LRC Record No. 39492.
Incidentally, although the said petition was filed
by the herein petitioners on November 21,
1967, the Opposition filed by Independent
Mercantile Corporation to the said petition
made no mention of the alleged sale of the
property in question in favor of private
respondent Francisco Ramos on July 5, 1967.
This circumstance places in grave doubt the
sincerity of said sale and the claim that the
private respondent was an innocent purchaser
for value of the property in question.
In the order of the respondent Judge dated
September 29, 1971 denying the second motion
for reconsideration, he cited the case of Tijam
vs. Sibonghanoy, 23 SCRA 29, to uphold the
view that the petitioners are deemed estopped
from questioning the jurisdiction of the
respondent Court in having taken cognizance of
the petition for cancellation of TCT No. 68568,
they being the ones who invoked the
jurisdiction of the said Court to grant the
affirmative relief prayed for therein. We are of
the opinion that the ruling laid down in
Sibonghanoy may not be applied herein.
Neither its factual backdrop nor the philosophy
of the doctrine therein expounded fits the case
at bar.
A rule that had been settled by unquestioned
acceptance and upheld in decisions so
numerous to cite is that the jurisdiction of a
court over the subject-matter of the action is a
matter of law and may not be conferred by
consent or agreement of the parties. The lack of
jurisdiction of a court may be raised at any
stage of the proceedings, even on appeal. This
doctrine has been qualified by recent
pronouncements which stemmed principally
from the ruling in the cited case of
Sibonghanoy. It is to be regretted, however,
that the holding in said case had been applied
to situations which were obviously not
contemplated therein. The exceptional
circumstance involved in Sibonghanoy which
justified the departure from the accepted
concept of non-waivability of objection to
jurisdiction has been ignored and, instead a
blanket doctrine had been repeatedly upheld
that rendered the supposed ruling in
Sibonghanoy not as the exception, but rather
the general rule, virtually overthrowing
altogether the time-honored principle that the
issue of jurisdiction is not lost by waiver or by
estoppel.
In Sibonghanoy, the defense of lack of
jurisdiction of the court that rendered the
questioned ruling was held to be barred by
estoppel by laches. It was ruled that the lack of
jurisdiction having been raised for the first time
in a motion to dismiss filed almost fifteen (15)
years after the questioned ruling had been
rendered, such a plea may no longer be raised
for being barred by laches. As defined in said
case, laches is "failure or neglect, for an
unreasonable and unexplained length of time,
to do that which, by exercising due diligence,
could or should have been done earlier; it is
negligence or omission to assert a right within a
reasonable time, warranting a presumption that
the party entitled to assert has abandoned it or
declined to assert it."
The petitioners in the instant case may not be
faulted with laches. When they learned that the
title to the property owned by them had
erroneously and illegally been cancelled and
registered in the name of another entity or
person who had no right to the same, they filed
a petition to cancel the latter's title. It is
unfortunate that in pursuing said remedy, their
counsel had to invoke the authority of the
respondent Court as a cadastral court, instead
of its capacity as a court of general jurisdiction.
Their petition to cancel the title in the name of
Independent Mercantile Corporation was
dismissed upon a finding by the respondent
Court that the same was "without merit." No
explanation was given for such dismissal nor
why the petition lacked merit. There was no
hearing, and the petition was resolved solely on
the basis of memoranda filed by the parties
which do not appear of record. It is even a
possibility that such dismissal was in view of the
realization of the respondent Court that, sitting
as a cadastral court, it lacked the authority to
entertain the petition involving as it does a
highly controversial issue. Upon such petition
being dismissed, the petitioners instituted Civil
Case No. SCC-180 on January 1, 1971, or only
two and one-half years after the dismissal of
their petition in LRC Record No. 39492. Hence,
we see no unreasonable delay in the assertion
by the petitioners of their right to claim the
property which rightfully belongs to them. They
can hardly be presumed to have abandoned or
waived such right by inaction within an
unreasonable length of time or inexcusable
negligence. In short, their filing of Civil Case No.
SCC-180 which in itself is an implied non-
acceptance of the validity of the proceedings
had in LRC Record No. 39492 may not be
deemed barred by estoppel by laches.
It is neither fair nor legal to bind a party by the
result of a suit or proceeding which was taken
cognizance of in a court which lacks jurisdiction
over the same irrespective of the attendant
circumstances. The equitable defense of
estoppel requires knowledge or consciousness
of the facts upon which it is based. The same
thing is true with estoppel by conduct which
may be asserted only when it is shown, among
others, that the representation must have been
made with knowledge of the facts and that the
party to whom it was made is ignorant of the
truth of the matter. (De Castro vs. Gineta, 27
SCRA 623.) The filing of an action or suit in a
court that does not possess jurisdiction to
entertain the same may not be presumed to be
deliberate and intended to secure a ruling
which could later be annulled if not favorable to
the party who filed such suit or proceeding.
Instituting such an action is not a one-sided
affair. It can just as well be prejudicial to the
one who filed the action or suit in the event
that he obtains a favorable judgment therein
which could also be attacked for having been
rendered without jurisdiction. The
determination of the correct jurisdiction of a
court is not a simple matter. It can raise highly
debatable issues of such importance that the
highest tribunal of the land is given the
exclusive appellate jurisdiction to entertain the
same. The point simply is that when a party
commits error in filing his suit or proceeding in
a court that lacks jurisdiction to take cognizance
of the same, such act may not at once be
deemed sufficient basis of estoppel. It could
have been the result of an honest mistake, or of
divergent interpretations of doubtful legal
provisions. If any fault is to be imputed to a
party taking such course of action, part of the
blame should be placed on the court which shall
entertain the suit, thereby lulling the parties
into believing that they pursued their remedies
in the correct forum. Under the rules, it is the
duty of the court to dismiss an action
"whenever it appears that the court has no
jurisdiction over the subject matter." (Sec. 2,
Rule 9, Rules of Court.) Should the court render
a judgment without jurisdiction, such judgment
may be impeached or annulled for lack of
jurisdiction (Sec. 30, Rule 132, Ibid), within ten
(10) years from the finality of the same. (Art.
1144, par. 3, Civil Code.)

The inequity of barring the petitioners from

vindicating their right over their property in Civil
Case No. SCC-180 is rendered more acute in the
face of the undisputed fact that the property in
question admittedly belonged to the
petitioners, and that the title in the name of the
private respondent was the result of an error
committed by the Provincial Sheriff in issuing
the deed of sale in the execution proceeding.
The justness of the relief sought by herein
petitioners may not be ignored or rendered
futile by reason of a doctrine which is of highly
doubtful applicability herein.

WHEREFORE, the Orders appealed from are

hereby REVERSED and SET ASIDE. The Motion
To Dismiss filed by the private respondent in
Civil Case No. SCC-180 shall be deemed denied
and the respondent Court is ordered to conduct
further proceedings in the case. With costs
against the private respondent.

SO ORDERED.