FIRST DIVISION

[G.R. No. 148830. April 13, 2005]

NATIONAL HOUSING AUTHORITY, petitioner, vs. COURT OF APPEALS, BULACAN
GARDEN CORPORATION and MANILA SEEDLING BANK FOUNDATION, INC.,
respondents.
DECISION
CARPIO, J.:
The Case
This is a petition for review[1] seeking to set aside the Decision[2] dated 30
March 2001 of the Court of Appeals (appellate court) in CA-G.R. CV No. 48382, as
well as its Resolution dated 25 June 2001 denying the motion for reconsideration.
The appellate court reversed the Decision[3] of Branch 87 of the Regional Trial
Court of Quezon City (trial court) dated 8 March 1994 in Civil Case No. Q-53464.
The trial court dismissed the complaint for injunction filed by Bulacan Garden
Corporation (BGC) against the National Housing Authority (NHA). BGC wanted to
enjoin the NHA from demolishing BGCs facilities on a lot leased from Manila
Seedling Bank Foundation, Inc. (MSBF). MSBF allegedly has usufructuary rights
over the lot leased to BGC.
Antecedent Facts
On 24 October 1968, Proclamation No. 481 issued by then President Ferdinand
Marcos set aside a 120-hectare portion of land in Quezon City owned by the
NHA[4] as reserved property for the site of the National Government Center
(NGC). On 19 September 1977, President Marcos issued Proclamation No. 1670,
which removed a seven-hectare portion from the coverage of the NGC.
Proclamation No. 1670 gave MSBF usufructuary rights over this segregated
portion, as follows:
Pursuant to the powers vested in me by the Constitution and the laws of the
Philippines, I, FERDINAND E. MARCOS, President of the Republic of the Philippines,
do hereby exclude from the operation of Proclamation No. 481, dated October 24,
1968, which established the National Government Center Site, certain parcels of
land embraced therein and reserving the same for the Manila Seedling Bank
Foundation, Inc., for use in its operation and projects, subject to private rights if
any there be, and to future survey, under the administration of the Foundation.
This parcel of land, which shall embrace 7 hectares, shall be determined by the
future survey based on the technical descriptions found in Proclamation No. 481,

and most particularly on the original survey of the area, dated July 1910 to June
1911, and on the subdivision survey dated April 19-25, 1968. (Emphasis added)
MSBF occupied the area granted by Proclamation No. 1670. Over the years,
MSBFs occupancy exceeded the seven-hectare area subject to its usufructuary
rights. By 1987, MSBF occupied approximately 16 hectares. By then the land
occupied by MSBF was bounded by Epifanio de los Santos Avenue (EDSA) to the
west, Agham Road to the east, Quezon Avenue to the south and a creek to the
north.
On 18 August 1987, MSBF leased a portion of the area it occupied to BGC and
other stallholders. BGC leased the portion facing EDSA, which occupies 4,590
square meters of the 16-hectare area.
On 11 November 1987, President Corazon Aquino issued Memorandum Order No.
127 (MO 127) which revoked the reserved status of the 50 hectares, more or less,
remaining out of the 120 hectares of the NHA property reserved as site of the
National Government Center. MO 127 also authorized the NHA to commercialize
the area and to sell it to the public.
On 15 August 1988, acting on the power granted under MO 127, the NHA gave
BGC ten days to vacate its occupied area. Any structure left behind after the
expiration of the ten-day period will be demolished by NHA.
BGC then filed a complaint for injunction on 21 April 1988 before the trial court.
On 26 May 1988, BGC amended its complaint to include MSBF as its co-plaintiff.
The Trial Courts Ruling
The trial court agreed with BGC and MSBF that Proclamation No. 1670 gave MSBF
the right to conduct the survey, which would establish the seven-hectare area
covered by MSBFs usufructuary rights. However, the trial court held that MSBF
failed to act seasonably on this right to conduct the survey. The trial court ruled
that the previous surveys conducted by MSBF covered 16 hectares, and were
thus inappropriate to determine the seven-hectare area. The trial court concluded
that to allow MSBF to determine the seven-hectare area now would be grossly
unfair to the grantor of the usufruct.
On 8 March 1994, the trial court dismissed BGCs complaint for injunction. Thus:
Premises considered, the complaint praying to enjoin the National Housing
Authority from carrying out the demolition of the plaintiffs structure,
improvements and facilities in the premises in question is hereby DISMISSED, but
the suggestion for the Court to rule that Memorandum Order 127 has repealed
Proclamation No. 1670 is DENIED. No costs.
SO ORDERED.[5]

The NHA demolished BGCs facilities soon thereafter.

The Appellate Courts Ruling
Not content with the trial courts ruling, BGC appealed the trial courts Decision to
the appellate court. Initially, the appellate court agreed with the trial court that
Proclamation No. 1670 granted MSBF the right to determine the location of the
seven-hectare area covered by its usufructuary rights. However, the appellate
court ruled that MSBF did in fact assert this right by conducting two surveys and
erecting its main structures in the area of its choice.
On 30 March 2001, the appellate court reversed the trial courts ruling. Thus:
WHEREFORE, premises considered, the Decision dated March 8, 1994 of the
Regional Trial Court of Quezon City, Branch 87, is hereby REVERSED and SET
ASIDE. The National Housing Authority is enjoined from demolishing the
structures, facilities and improvements of the plaintiff-appellant Bulacan Garden
Corporation at its leased premises located in Quezon City which premises were
covered by Proclamation No. 1670, during the existence of the contract of lease it
(Bulacan Garden) had entered with the plaintiff-appellant Manila Seedling Bank
Foundation, Inc.
No costs.
SO ORDERED.[6]
The NHA filed a motion for reconsideration, which was denied by the appellate
court on 25 June 2001.
Hence, this petition.
The Issues
The following issues are considered by this Court for resolution:
WHETHER THE PETITION IS NOW MOOT BECAUSE OF THE DEMOLITION OF THE
STRUCTURES OF BGC; and
WHETHER THE PREMISES LEASED BY BGC FROM MSBF IS WITHIN THE SEVENHECTARE AREA THAT PROCLAMATION NO. 1670 GRANTED TO MSBF BY WAY OF
USUFRUCT.
The Ruling of the Court

We remand this petition to the trial court for a joint survey to determine finally
the metes and bounds of the seven-hectare area subject to MSBFs usufructuary
rights.
Whether the Petition is Moot because of the
Demolition of BGCs Facilities
BGC claims that the issue is now moot due to NHAs demolition of BGCs facilities
after the trial court dismissed BGCs complaint for injunction. BGC argues that
there is nothing more to enjoin and that there are no longer any rights left for
adjudication.
We disagree.
BGC may have lost interest in this case due to the demolition of its premises, but
its co-plaintiff, MSBF, has not. The issue for resolution has a direct effect on
MSBFs usufructuary rights. There is yet the central question of the exact location
of the seven-hectare area granted by Proclamation No. 1670 to MSBF. This issue
is squarely raised in this petition. There is a need to settle this issue to forestall
future disputes and to put this 20-year litigation to rest.
On the Location of the Seven-Hectare Area Granted by
Proclamation No. 1670 to MSBF as Usufructuary
Rule 45 of the 1997 Rules of Civil Procedure limits the jurisdiction of this Court to
the review of errors of law.[7] Absent any of the established grounds for
exception,[8] this Court will not disturb findings of fact of lower courts. Though
the matter raised in this petition is factual, it deserves resolution because the
findings of the trial court and the appellate court conflict on several points.
The entire area bounded by Agham Road to the east, EDSA to the west, Quezon
Avenue to the south and by a creek to the north measures approximately 16
hectares. Proclamation No. 1670 gave MSBF a usufruct over only a seven-hectare
area. The BGCs leased portion is located along EDSA.
A usufruct may be constituted for a specified term and under such conditions as
the parties may deem convenient subject to the legal provisions on usufruct.[9] A
usufructuary may lease the object held in usufruct.[10] Thus, the NHA may not
evict BGC if the 4,590 square meter portion MSBF leased to BGC is within the
seven-hectare area held in usufruct by MSBF. The owner of the property must
respect the lease entered into by the usufructuary so long as the usufruct exists.
[11] However, the NHA has the right to evict BGC if BGC occupied a portion
outside of the seven-hectare area covered by MSBFs usufructuary rights.

MSBFs survey shows that BGCs stall is within the seven-hectare area. On the
other hand, NHAs survey shows otherwise. The entire controversy revolves on the
question of whose land survey should prevail.
MSBFs survey plots the location of the seven-hectare portion by starting its
measurement from Quezon Avenue going northward along EDSA up until the
creek, which serves as the northern boundary of the land in question. Mr. Ben
Malto (Malto), surveyor for MSBF, based his survey method on the fact that
MSBFs main facilities are located within this area.
On the other hand, NHAs survey determines the seven-hectare portion by
starting its measurement from Quezon Avenue going towards Agham Road. Mr.
Rogelio Inobaya (Inobaya), surveyor for NHA, based his survey method on the
fact that he saw MSBFs gate fronting Agham Road.
BGC presented the testimony of Mr. Lucito M. Bertol (Bertol), General Manager of
MSBF. Bertol presented a map,[12] which detailed the area presently occupied by
MSBF. The map had a yellow-shaded portion, which was supposed to indicate the
seven-hectare area. It was clear from both the map and Bertols testimony that
MSBF knew that it had occupied an area in excess of the seven-hectare area
granted by Proclamation No. 1670.[13] Upon cross-examination, Bertol admitted
that he personally did not know the exact boundaries of the seven-hectare area.
[14] Bertol also admitted that MSBF prepared the map without consulting NHA,
the owner of the property.[15]
BGC also presented the testimony of Malto, a registered forester and the
Assistant Vice-President of Planning, Research and Marketing of MSBF. Malto
testified that he conducted the land survey, which was used to construct the map
presented by Bertol.[16] Bertol clarified that he authorized two surveys, one in
1984 when he first joined MSBF, and the other in 1986.[17] In both instances, Mr.
Malto testified that he was asked to survey a total of 16 hectares, not just seven
hectares. Malto testified that he conducted the second survey in 1986 on the
instruction of MSBFs general manager. According to Malto, it was only in the
second survey that he was told to determine the seven-hectare portion. Malto
further clarified that he based the technical descriptions of both surveys on a
previously existing survey of the property.[18]
The NHA presented the testimony of Inobaya, a geodetic engineer employed by
the NHA. Inobaya testified that as part of the NHAs Survey Division, his duties
included conducting surveys of properties administered by the NHA.[19] Inobaya
conducted his survey in May 1988 to determine whether BGC was occupying an
area outside the seven-hectare area MSBF held in usufruct.[20] Inobaya surveyed
the area occupied by MSBF following the same technical descriptions used by
Malto. Inobaya also came to the same conclusion that the area occupied by
MSBF, as indicated by the boundaries in the technical descriptions, covered a
total of 16 hectares. He further testified that the seven-hectare portion in the
map presented by BGC,[21] which was constructed by Malto, does not tally with
the boundaries BGC and MSBF indicated in their complaint.

Article 565 of the Civil Code states:

ART. 565. The rights and obligations of the usufructuary shall be those provided in
the title constituting the usufruct; in default of such title, or in case it is deficient,
the provisions contained in the two following Chapters shall be observed.
In the present case, Proclamation No. 1670 is the title constituting the usufruct.
Proclamation No. 1670 categorically states that the seven-hectare area shall be
determined by future survey under the administration of the Foundation subject
to private rights if there be any. The appellate court and the trial court agree that
MSBF has the latitude to determine the location of its seven-hectare usufruct
portion within the 16-hectare area. The appellate court and the trial court
disagree, however, whether MSBF seasonably exercised this right.
It is clear that MSBF conducted at least two surveys. Although both surveys
covered a total of 16 hectares, the second survey specifically indicated a sevenhectare area shaded in yellow. MSBF made the first survey in 1984 and the
second in 1986, way before the present controversy started. MSBF conducted the
two surveys before the lease to BGC. The trial court ruled that MSBF did not act
seasonably in exercising its right to conduct the survey. Confronted with evidence
that MSBF did in fact conduct two surveys, the trial court dismissed the two
surveys as self-serving. This is clearly an error on the part of the trial court.
Proclamation No. 1670 authorized MSBF to determine the location of the sevenhectare area. This authority, coupled with the fact that Proclamation No. 1670 did
not state the location of the seven-hectare area, leaves no room for doubt that
Proclamation No. 1670 left it to MSBF to choose the location of the seven-hectare
area under its usufruct.
More evidence supports MSBFs stand on the location of the seven-hectare area.
The main structures of MSBF are found in the area indicated by MSBFs survey.
These structures are the main office, the three green houses, the warehouse and
the composting area. On the other hand, the NHAs delineation of the sevenhectare area would cover only the four hardening bays and the display area. It is
easy to distinguish between these two groups of structures. The first group
covers buildings and facilities that MSBF needs for its operations. MSBF built
these structures before the present controversy started. The second group covers
facilities less essential to MSBFs existence. This distinction is decisive as to which
survey should prevail. It is clear that the MSBF intended to use the yellow-shaded
area primarily because it erected its main structures there.
Inobaya testified that his main consideration in using Agham Road as the starting
point for his survey was the presence of a gate there. The location of the gate is
not a sufficient basis to determine the starting point. MSBFs right as a
usufructuary as granted by Proclamation No. 1670 should rest on something
more substantial than where MSBF chose to place a gate.
To prefer the NHAs survey to MSBFs survey will strip MSBF of most of its main
facilities. Only the main building of MSBF will remain with MSBF since the main

building is near the corner of EDSA and Quezon Avenue. The rest of MSBFs main
facilities will be outside the seven-hectare area.
On the other hand, this Court cannot countenance MSBFs act of exceeding the
seven-hectare portion granted to it by Proclamation No. 1670. A usufruct is not
simply about rights and privileges. A usufructuary has the duty to protect the
owners interests. One such duty is found in Article 601 of the Civil Code which
states:
ART. 601. The usufructuary shall be obliged to notify the owner of any act of a
third person, of which he may have knowledge, that may be prejudicial to the
rights of ownership, and he shall be liable should he not do so, for damages, as if
they had been caused through his own fault.
A usufruct gives a right to enjoy the property of another with the obligation of
preserving its form and substance, unless the title constituting it or the law
otherwise provides.[22] This controversy would not have arisen had MSBF
respected the limit of the beneficial use given to it. MSBFs encroachment of its
benefactors property gave birth to the confusion that attended this case. To put
this matter entirely to rest, it is not enough to remind the NHA to respect MSBFs
choice of the location of its seven-hectare area. MSBF, for its part, must vacate
the area that is not part of its usufruct. MSBFs rights begin and end within the
seven-hectare portion of its usufruct. This Court agrees with the trial court that
MSBF has abused the privilege given it under Proclamation No. 1670. The direct
corollary of enforcing MSBFs rights within the seven-hectare area is the negation
of any of MSBFs acts beyond it.
The seven-hectare portion of MSBF is no longer easily determinable considering
the varied structures erected within and surrounding the area. Both parties
advance different reasons why their own surveys should be preferred. At this
point, the determination of the seven-hectare portion cannot be made to rely on
a choice between the NHAs and MSBFs survey. There is a need for a new survey,
one conducted jointly by the NHA and MSBF, to remove all doubts on the exact
location of the seven-hectare area and thus avoid future controversies. This new
survey should consider existing structures of MSBF. It should as much as possible
include all of the facilities of MSBF within the seven-hectare portion without
sacrificing contiguity.
A final point. Article 605 of the Civil Code states:
ART. 605. Usufruct cannot be constituted in favor of a town, corporation, or
association for more than fifty years. If it has been constituted, and before the
expiration of such period the town is abandoned, or the corporation or
association is dissolved, the usufruct shall be extinguished by reason thereof.
(Emphasis added)
The law clearly limits any usufruct constituted in favor of a corporation or
association to 50 years. A usufruct is meant only as a lifetime grant. Unlike a

natural person, a corporation or associations lifetime may be extended

indefinitely. The usufruct would then be perpetual. This is especially invidious in
cases where the usufruct given to a corporation or association covers public land.
Proclamation No. 1670 was issued 19 September 1977, or 28 years ago. Hence,
under Article 605, the usufruct in favor of MSBF has 22 years left.
MO 127 released approximately 50 hectares of the NHA property as reserved site
for the National Government Center. However, MO 127 does not affect MSBFs
seven-hectare area since under Proclamation No. 1670, MSBFs seven-hectare
area was already exclude[d] from the operation of Proclamation No. 481, dated
October 24, 1968, which established the National Government Center Site.
WHEREFORE, the Decision of the Court of Appeals dated 30 March 2001 and its
Resolution dated 25 June 2001 in CA-G.R. CV No. 48382 are SET ASIDE. This case
is REMANDED to Branch 87 of the Regional Trial Court of Quezon City, which shall
order a joint survey by the National Housing Authority and Manila Seedling Bank
Foundation, Inc. to determine the metes and bounds of the seven-hectare portion
of Manila Seedling Bank Foundation, Inc. under Proclamation No. 1670. The
seven-hectare portion shall be contiguous and shall include as much as possible
all existing major improvements of Manila Seedling Bank Foundation, Inc. The
parties shall submit the joint survey to the Regional Trial Court for its approval
within sixty days from the date ordering the joint survey.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna, JJ.,
concur.
[1] Under Rule 45 of the 1997 Rules on Civil Procedure.
[2] Penned by Justice Bennie Adefuin-Dela Cruz, with Associate Justices Andres B.
Reyes, Jr. and Josefina Guevara-Salonga, concurring.
[3] Penned by Judge Elsie Ligot Telan.
[4] Under TCT No. 309814. Records, p. 286.
[5] Rollo, p. 43.
[6] Ibid., p. 31.
[7] Section 1 of Rule 45 states:
SECTION 1. Filing of petition with Supreme Court. A party desiring to appeal by
certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by
law, may file with the Supreme Court a verified petition for review on certiorari.
The petition shall raise only questions of law which must be distinctly set forth.

[8] As laid out in BPI Credit Corporation v. Court of Appeals, G.R. 96755, 4
December 1991, 204 SCRA 601:
(1) When the conclusion is a finding grounded entirely on speculation, surmises
and conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) When there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of facts [of the trial court and the appellate court] are
conflicting;
(6) When the [appellate court] in making its findings, went beyond the issues of
the case and the same is contary to the admissions of both appellant and
appellee;
(7) When the findings of the [appellate court] are contrary to those of the trial
court;
(8) When the findings of facts are conclusions without citation of specific
evidence on which they are based;
(9) When the facts set forth in the petition as well as in the petitioners main and
reply briefs are not disputed by the respondents; and
(10) When the finding of fact of the [appellate court] is premised on the supposed
absence of evidence and is contradicted by the evidence on record.
[9] Baluran v. Navarro, G.R. No. L-44428, 30 September 1977, 79 SCRA 309.
[10] Civil Code, Art. 572.
[11] Ibid.
[12] Exhibit A, Records p. 117.
[13] TSN, 12 January 1989, pp. 4-10.
[14] Ibid., p. 11.
[15] Ibid., pp. 11-12.
[16] TSN, 19 January 1989, pp. 2-3.
[17] Ibid., p. 3.
[18] Ibid., pp. 4-5.
[19] TSN, 5 April 1989, p. 2.

[20] Ibid., p. 7.
[21] Exhibit A, supra note 12.
[22] Civil Code, Art. 562.

NHA vs. ca (GR No. 128064, March 1, 2004)

SECOND DIVISION
[G.R. No. 128064. March 4, 2004]
R.V. MARZAN FREIGHT, INC., petitioner, vs. COURT OF APPEALS and SHIELAS
MANUFACTURING, INC., respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure of
the Decision[1] of the Court of Appeals in CA-G.R. CV No. 49905 affirming with
modification the Decision[2] of the Regional Trial Court of Rizal, Pasig, Branch
154, in Civil Case No. 61644.
THE FACTS
The petitioner RV Marzan Freight, Inc., owned and operated a customs-bonded
warehouse located at the Bachrach Corporation Building, where it accepted all
forms of goods and merchandise for storage and safekeeping. Private respondent
Shielas Manufacturing, Inc., on the other hand, was a corporation organized and
existing under Philippines laws, and engaged in the garment business.
Philippine Fire and Marine Insurance Corporation (Philfire) issued Insurance Policy
No. F-8952/4358-HO dated December 11, 1989[3] in favor of the petitioner,
covering its warehouse as well as stocks in trade of every kind and description
usual to the warehouse operation of the Assured and/or other interest that may
appear during the currency of this policy whilst contained in the building, known
as BACHRACH CORP.
On April 12, 1989, raw materials consigned to the private respondent covered by
Invoice No. TG-89125[4] arrived in the Philippines from Keelung, Taiwan on board

the vessel SS World Lion V-302W owned by Sea-Land Service, Inc. from its
supplier, Tricon Enterprises Ltd. The materials were valued at US$32,006.93.[5]
The Bureau of Customs treated the raw materials as subject to ordinary import
taxes and were not immediately released to the private respondent. Moreover,
the consignee failed to file the requisite import entry[6] and failed to claim the
cargo.[7]
In a Letter[8] to the Office of the District Collector of the Bureau of Customs
dated July 24, 1989, Sea-Land Service Inc. authorized the petitioner to take
delivery of Container No. SEAU-462597 consigned to the private respondent for
stripping and safekeeping.
In a Letter[9] addressed to Bureau of Customs District Collector Emma M.
Rosqueta dated September 11, 1989, the International Container Terminal
Services, Inc. (ICTSI) requested for authority to clear the storage areas of
cargoes which have been abandoned by their owners or seized by the Bureau of
Customs. Included in the request was the cargo of the private respondent. The
District Collector of Customs initiated Abandonment Proceedings No. 288-89 over
the cargo. On September 29, 1989, the District Collector issued a Notice[10] to
the consignee of various overstaying cargo, including that of the private
respondent, giving them fifteen (15) days from notice thereof to file entry of the
cargoes without prejudice to the right of the consignees to redeem articles
pursuant to Section 1801 of the Tariff and Customs Code within the prescribed
period therein; otherwise, the cargoes would be deemed abandoned and sold at
public auction. As ordered, the Notice of the Abandonment Proceedings was
posted on the Bureaus bulletin board on September 29, 1980.[11] No separate
notice was sent to the private respondent because per the ICTSIs records, the
address of the consignee was unknown.
Earlier, on November 7, 1989, Leonardo S. Doctor, Chief of the Law Division of
the Bureau of Customs, issued a Memorandum[12] informing the Chief for
Auction and Cargo Disposal Division that the declaration of abandonment in the
aforestated proceedings had already become final and executory as of October
30, 1989 and that the cargoes subject matter thereof should be inventoried and
sold at public auction.
However, before the inventory and sale at public auction of the goods could be
accomplished, part of the warehouse containing the shipment was burned on July
26, 1990. The private respondents shipment was, likewise, burned and
destroyed. The Philfire paid to the private respondent the amount of
P12,000,000, for which the latter was issued a receipt.
On March 19, 1991, the private respondent, through counsel, sent a letter to the
petitioner demanding payment of the value of the goods in the amount of

US$32,006.93. However, the petitioner rejected the demands. Meanwhile, on

October 28, 1991, the petitioner executed a Release of Claim and Hold Harmless
Undertaking.[13]
On December 26, 1991, or after the lapse of more than two years from the arrival
of the cargo in the Philippines, the private respondent filed a complaint for
damages before the RTC of Pasig City, Branch 154, against the petitioner. The
private respondent alleged, inter alia, that its goods were stored in the
petitioners bonded warehouse due to the problem it encountered at the Bureau
of Customs; that the goods were gutted by fire on July 26, 1990 while stored in
said bonded warehouse; and, despite demands for the release of the goods, the
petitioner refused to release the same. The private respondent prayed that the
petitioner and Philfire be held jointly and severally liable to pay the following:
a) the sum of US$32,006.93 or its peso equivalent computed based on the rate of
exchange prevailing at the time of payment with interest thereon from the time
of the filing of complaint up to the time of actual payment;
b) the sum of P30,000.00 as and for attorneys fees;
c) the costs of suit;[14]
In its answer, the petitioner interposed special and affirmative defenses. Aside
from alleging that there was no privity of contract between it and the private
respondent, the petitioner also alleged that the private respondent lost the right
of action against it as it was not the real party-in-interest in the case. The
petitioner averred that the goods in question were received not from the private
respondent but from the Bureau of Customs, under Customs Administrative Order
No. 102-88 dated August 30, 1988, covering Forfeited Cargoes (FC), Abandoned
Cargoes (AC) and Cargoes held under Warrant/Seizure and Detention (CWSD).
According to the petitioner, before the subject cargo was destroyed by accidental
fire, the private respondent had violated the Tariff and Customs Code and related
laws, rules and regulations, and failed to pay the corresponding taxes, duties and
penalties for the importation. Furthermore, the private respondent failed to make
the corresponding claim for the release of the said cargo, until the same was
declared as overstaying cargo, and later as abandoned cargo. The petitioner
further asserted that the government, and not the private respondent, was the
owner thereof. As such, the private respondent was not entitled to the insurance
proceeds arising out of the fire policy covering the petitioner as a customs
bonded warehouse. Furthermore, considering that the cause of the loss of the
subject cargo was a fortuitous event, an act of God, and the petitioner, having
exercised the required due care under the circumstances, cannot be held legally
liable for such loss. Finally, the petitioner alleged that its warehouse is legally
considered as an extension of the Bureau of Customs and all goods transferred

therein continue to be in the custody of the Bureau of Customs, with all its legal
implications.[15]
Defendant Philfire, for its part, filed a motion to dismiss[16] on the ground that it
had no contractual obligation to the private respondent; hence, the latter had no
cause of action against it. The trial court deferred the resolution of the said
motion[17] until the grounds appeared to be indubitable. In its answer,[18]
Philfire alleged that there was no privity of contract between it and the private
respondent, considering that the petitioner was the insured party. Furthermore,
the private respondent had no insurable interest in the goods that were burned in
the petitioners warehouse. Finally, Philfire alleged that the obligation sought to
be enforced by the private respondent had already been settled when it paid its
obligation under the insurance policy[19] as shown in the Release of Claim and
Hold Harmless Undertaking dated October 28, 1991, executed and signed for
and in behalf of the petitioner by its Vice- President, Mr. Cesar D. Catalan.
The private respondent filed its pre-trial brief proposing that the following issues
to be litigated by the parties and resolved by the Court:
1. Corporate personality of the plaintiff;
2. Value of plaintiffs goods stored in R.V. Marzans warehouse and which were
destroyed by fire;
3. Whether or not at the time of the fire on July 26, 1990. plaintiffs goods were
already abandoned goods so that the plaintiff, at the time of the fire, was no
longer the owner of the said goods.
4. Attorneys fees and damages;[20]
However, the trial court did not issue a pre-trial order.
During the trial, the petitioner presented Atty. Leonardo S. Doctor, the Law
Division Chief of the Bureau of Customs, as one of its witnesses to prove that the
cargo had already been declared by the District Collector of Customs as
abandoned cargo in Abandonment Proceedings No. 288-89, and that the cargo
was destroyed by fire before it could be sold at public auction.
Thereafter, the private respondent filed its memorandum stating, inter alia, that
it did not abandon the goods because it did not receive the notice of
abandonment of the cargo from the Bureau of Customs. The petitioner insisted

that upon the abandonment of the cargo under Section 1802 of the Tariff and
Customs Code of the Philippines (TCCP), it became, ipso facto, the property of the
government; hence, the private respondent had no right to claim the value of the
shipment.
After trial, the court rendered judgment, the decretal portion of which reads:
WHEREFORE, foregoing premises considered, defendant RV Marzan is held solely
liable for the loss suffered by the plaintiff and is hereby ordered to pay the
plaintiff the following:
1. The sum of US$32,006.93 or its peso equivalent computed on the rate of
exchange prevailing at the time of payment with 6% interest thereon from the
time of filing of complaint up to the time of actual payment;
2. The sum of P30,000.00 as and for attorneys fees; and
3. Costs of suit.
The complaint against Philfire, the counterclaim against Shielas and the crossclaim against R.V. Marzan, are hereby dismissed.[21]
According to the trial court, the Bureau of Customs subsequent declaration that
the subject shipment was abandoned cargo was ineffective, as the private
respondent was not sent a copy of the September 29, 1989 Notice as required by
Sec. 1801 of the Tariff and Customs Code. Under the law, notice of the
proceedings of abandonment should be given to the private respondent as the
consignee or its agent, to enable it to adduce evidence at a public hearing,
conformably to the requirement of due process. Since the private respondent was
never notified of the abandonment proceedings, it cannot, thus, be said that it
impliedly abandoned the shipment and lost its ownership over the same in favor
of the government.
The trial court rejected the petitioners claim that it could not be held liable for
the private respondents loss because the fire that destroyed the subject cargo
was an act of God. According to the trial court, this is precisely one of the
reasons why a bonded warehouse is required by law to insure the goods received
and stored against fire; otherwise, persons dealing with a bonded warehouse
would not be afforded due protection. According to the court, the policy procured
by the petitioner inures equally and proportionately to the benefit of all the
owners of the property insured, even if the owner of the goods did not request or
know of the insurance. Citing Section 1902 of the Tariff and Customs Code, the

trial court pointed out that the petitioners bonded warehouse is considered as an
extension of the Bureau of Customs only insofar as it continues with the storage
and safekeeping of goods transferred to it by the latter.
Finally, the trial court ruled that the private respondent had no cause of action
against the insurer Philfire, as it was not a party to the insurance contract
between the petitioner and Philfire. Since the terms of the insurance contract do
not confer a benefit upon a third person as required by Article 1311 of the Civil
Code, the private respondent had no right to the insurance proceeds.
The petitioner appealed the decision to the Court of Appeals, docketed as CA-G.R.
CV No. 49905, and assigned the following errors:
I THE TRIAL COURT ERRED IN NOT DISMISSING THE COMPLAINT FOR LACK OF A
VALID CAUSE OF ACTION AND IN HOLDING THE DEFENDANT MARZAN LIABLE FOR
THE LOSS SUFFERED BY PLAINTIFF IN SPITE OF THE FACT THAT, LONG BEFORE
THE FIRE OF JULY 26, 1990, WHICH GUTTED DEFENDANTS WAREHOUSE, THE
PLAINTIFFS SHIPMENT HAS ALREADY BEEN DECLARED ABANDONED BY FINAL
ORDER OF THE BUREAU OF CUSTOMS.
II THE TRIAL COURT ERRED IN AWARDING ATTORNEYS FEE[S] OF P30,000.00.
[22]
The petitioner asserted that the private respondent renounced its interests over
the cargo by its continued failure and refusal, despite notice to it, to claim the
cargo and pay the corresponding duties and taxes. It disclaimed liability on the
following grounds:
1. That contrary to the plaintiffs submission, it was not exempt from the payment
of customs duties and taxes and hence, required to file entry within five (5) days
from arrival of the shipment as provided for under 1801 of the Tariff and Customs
Code;
2. The subject shipment was declared abandoned by the Bureau of Customs due
to the failure of the plaintiff-consignee to claim the same within the 15-day
reglementary period from the date of posting of the notice to claim as provided in
Section 1801(b) of Republic Act No. 7651; and,
3. The abandonment of the cargo was already declared final as of October 30,
1989 in the abandonment proceedings conducted by the Bureau of Customs,
and, hence the plaintiffs shipment ipso facto became the property of the
government pursuant to Section 1802 of the same Act.

4. It was only on January 6, 1992, that plaintiff filed the present complaint against
the defendant or more than two years after the declaration of abandonment of
subject shipment became final and executory.[23]
Anent the award of attorneys fees in favor of the private respondent, the
petitioner averred that, as there was no finding of malice or bad faith in its refusal
to pay the private respondent, there was no factual basis for the award.
In its brief, the private respondent contended that, as found by the trial court,
there was no valid and effective abandonment over the subject goods. It was also
pointed out that if the petitioners claim that the subject goods belonging to the
private respondent had been declared abandoned cargo and the same had
become government property, then the government, through the Bureau of
Customs, should have intervened in the case, considering the private
respondents vigorous stance in denying it had ever abandoned its goods.
Despite the fact that the Bureau of Customs was clearly apprised of the case
when the petitioner presented Atty. Doctor as its witness, there was no such
attempt from the government to intervene and claim ownership over the cargo.
The private respondent also pointed out that the petitioners refusal to satisfy a
valid, just and demandable claim had compelled it to litigate and incur expenses
to protect its interest. The petitioners refusal to satisfy the private respondents
claim was in furtherance of an intention to unjustly enrich itself, and was
evidence of the latters gross and evident bad faith.
The Court of Appeals upheld the trial courts ruling in its Decision dated January
31, 1997. The appellate court held that the District Collector of Customs failed to
give due notice of the abandonment proceedings to the private respondent, and
that the same constituted denial of due process of law. Although notice of the
declaration of abandonment was posted on the Bureau of Customs bulletin board,
the same was insufficient; such notice would be proper only in cases where the
owner or importer is unknown, pursuant to Section 2304 of the Tariff and
Customs Code. The appellate court averred that the private respondent is duly
registered with the Garment and Textile Export Board and with the Bureau of
Customs as Garments Manufacturer and Exporter; as such, the Bureau of
Customs knew or should have known the address of the private respondent and
should have sent the required notice to it at said address. For the Collector of
Customs failure to duly notify the private respondent, the goods in question
cannot be considered as impliedly abandoned cargo.
The decretal portion of the decision of the Court of Appeals reads, thus:
WHEREFORE, the appealed decision in Civil Case No. 61644 is hereby AFFIRMED
by this Court, with costs against defendant-appellant.[24]

The petitioner assails the decision of the Court of Appeals contending that:
I
The Court of Appeals erred in failing to consider the fact that the Regional Trial
Court did not have jurisdiction over the central issue of the case.
II
The Court of Appeals erred in not dismissing the Respondents Complaint outright
for lack of cause of action.[25]
The petitioner asserts that the private respondent had a cause of action against it
for the value of the shipment only if the latter was still the owner of the shipment
when it was gutted by fire on July 26, 1990. The ultimate issues were as follows:
whether the private respondent had impliedly abandoned the cargo and whether
the declaration of abandonment made by the Chief of the Law Division of the
Bureau of Customs in the abandonment proceedings had become final and
executory. However, according to the petitioner, the resolution of such issues is
within the exclusive jurisdiction of the District Collector of Customs, and within
the appellate jurisdiction of the Court of Tax Appeals. Thus, the RTC had no
jurisdiction to delve into and resolve the issue of whether or not the private
respondent was duly served with a copy of the notice of the abandonment
proceedings and to pass upon the validity of the abandonment proceedings itself.
The petitioner asserts that the Bureau of Customs has exclusive and original
jurisdiction to hear and decide cases concerning the implementation of Customs
Laws or any other law that the Bureau is charged to implement. Even if there was
a violation of due process in the seizure and forfeiture case, the Bureau retained
jurisdiction over the same, to the exclusion of the regular courts. According to the
petitioner, it behooved the RTC to dismiss the complaint of the private
respondent for lack of jurisdiction, without prejudice to the latters right to appeal
the notice of abandonment to the Commissioner of Customs, and, from an
adverse ruling of the Commissioner of Customs, to the Court of Tax Appeals.
In its Comment, the private respondent avers that the petitioner raised for the
first time only in this Court the issue of the trial courts jurisdiction, as well as the
matter of its failure to appeal from the declaration of abandonment of the District
Collector of Customs with the Commissioner of Customs. The private respondent
never raised the issue in its pleading in the RTC and in the CA. Thus, the
petitioner is barred by laches from raising such issue in this case. The private
respondent asserts that the petitioners motive is clearly to assail the factual
findings of the trial court as affirmed by the CA and introduce new matters in the

case. According to the private respondent, this runs counter to established

jurisprudence that the Supreme Court is not a trier of facts.
The private respondent also asserts that the RTC did not pass upon the validity or
invalidity of the administrative proceedings before the Collector of Customs, but
merely applied the law, particularly the last sentence of Sec. 1801 of the Tariff
and Customs Code. Contrary to the private respondents contention, the trial
court had jurisdiction over its action. As admitted by the petitioners witness,
Atty. Leonardo Doctor, the private respondent was not furnished a notice giving it
fifteen days to file the appropriate import entry documents. Hence, the private
respondent was not deemed to have abandoned the cargo. The private
respondent also posits that considering that actions of the Collector of Customs
are reviewable to the Court of Tax Appeals, which are, in turn, ultimately
reviewable by the Court of Appeals, the latter court, to which the petitioners
appeal had eventually found its way, would therefore be fully competent to pass
upon the validity of the abandonment proceedings. Furthermore, according to the
private respondent, an appeal of the abandonment proceedings before the
District Collector of Customs would be a futile exercise as the goods had already
been burned and destroyed. The private respondent further posits that if, indeed,
the goods had been abandoned by the private respondent and became the
property of the government, as averred by the petitioner, the Bureau of Customs
should have intervened in the case, pursuant to Sec. 1, Rule 19 of the 1997 Rules
of Civil Procedure. The fact that the government did not intervene gives rise to
doubts as to the petitioners claim that the subject goods had been declared
abandoned by the Bureau of Customs and, thus, became the property of the
government. Finally, the private respondent argued, the Bureau of Customs lost
jurisdiction over the cargo when it was gutted by fire before the sale at public
auction.
In its reply, the petitioner insists that the defense of lack of jurisdiction may be
interposed at any time, during appeal or even after final judgment, conformably
to the previous rulings of the Court.
THE ISSUE
The core issue raised by the petitioner for resolution in this case is whether or not
the trial court had jurisdiction to review and declare ineffective the declaration of
the District Collector of Customs in Abandonment Proceedings No. 288-89 that
the subject shipment was abandoned cargo and that, thenceforth, the
government ipso facto became the owner thereof.
We uphold the contention of the petitioner. Irrefragably, the RTC had jurisdiction
over the nature of the private respondents action, which was one for the
collection of the value of the cargo gutted by fire, while under the custody and

control of the petitioner preparatory to its sale at public auction by the Bureau of
Customs. The jurisdiction of the court or other tribunal is determined by the
relevant allegations of the complaint and the character of the relief sought,
irrespective of whether or not the plaintiff is entitled to recover upon all or some
of the claims accorded therein. The jurisdiction of the trial court does not depend
upon the defenses in the answer or in a motion to dismiss.[26] However, the
jurisdiction of the court or tribunal over the issues, as gleaned from the pleadings
of the parties, is determined by the law which is determinative and decisive of
said issue.
As gleaned from the pleadings of the parties in the trial court, the core issue
therein was whether or not the private respondent was the owner of the cargo
when it was gutted by fire, as claimed by the private respondent, or owned by
the government after it was declared by the District Collector of Customs as
abandoned cargo, as claimed by the petitioner. Indeed, the private respondent, in
its pre-trial brief, listed this as one of the issues to be resolved by the Court, thus:

1. Whether or not at the time of the fire on July 26, 1990. plaintiffs goods were
already abandoned goods so that the plaintiff, at the time of the fire, was no
longer the owner of said goods.[27]
If the government owned the cargo before it was gutted by fire, then the private
respondent had no cause of action against the petitioner. But the resolution of
the issue is riveted to and intertwined with the resolution of the issue of whether
the RTC is vested with jurisdiction to review and nullify a declaration made by the
District Collector of Customs that the shipment was abandoned cargo and, thus,
ipso facto belonged to the government. The resolution of both issues involved the
application of Section 1801 and Section 1802 of the Tariff and Customs Code,
which read:
SEC. 1801. Abandonment, Kinds and Effects of. Abandonment is expressed
when it is made direct to the Collector by the interested party in writing, and is
implied when, from the action or omission of the interested party to file the
import entry within five (5) days or an extension thereof from the discharge of
the vessel or aircraft, or having filed such entry, the interested party fails to claim
his importation within five (5) days thereafter or within an extension of not more
than five (5) days shall be deemed an implied abandonment. An implied
abandonment shall not be effective until the article shall be declared by the
Collector to have been abandoned after notice thereof is given to the interested
party as in seizure cases.

Any person who abandons an article or who fails to claim his importation as
provided for in the preceding paragraph shall be deemed to have renounced all
his interests and property rights therein.
SEC. 1802. Abandonment of Imported Articles.- The owner or importer of any
articles may, within ten days after filing of the import entry, abandon to the
Government all or a part of the articles included in an invoice, and, thereupon, he
shall be relieved from the payment of duties, taxes and all other charges and
expenses due thereon: Provided, That the portion so abandoned is not less than
ten per cent of the total invoice and is not less than one package, except in cases
of articles imported for personal or family use. The articles so abandoned shall be
delivered by the owner or importer at such place within the port of arrival as the
Collector shall designate, and upon his failure to so comply, the owner or
importer shall be liable for all expenses that may be incurred in connection with
the disposition of the articles.

Nothing in this section shall be construed as relieving such owner or importer

from any criminal liability which may arise from any violation of law committed in
connection with the importation of the abandoned article.
The resolution of the issue also calls for the application of Section 2601 of the
said Code which provides that the property in customs custody, including
abandoned articles, shall be subject to sale under the conditions provided
therein. Indeed, the trial court resolved the issues under Section 1801 of the Tariff
and Customs Code and found the petitioner liable to the private respondent,
under Section 1902[28] of the said Code.
The trial court held ineffective the declaration made by the District Collector of
Customs that the cargo was abandoned because the notice to the consignee as
mandated by Section 1801 of the Code was not complied with. Thus, according to
the trial court, the private respondent owned the cargo and had a cause of action
against the petitioner:
In trying to avoid liability, RV Marzan admits that the plaintiff was the consignee
of the cargo upon its arrival in the Philippines. However, RV Marzan avers that at
the time of the fire, the goods were already the property of the government.
Before the fire, RV Marzan received the cargo from the Bureau of Customs
pursuant to a Memorandum Order declaring it as abandoned cargo. This
Memorandum Order which is in accordance with Sec. 1801 of the Tariff and
Customs Code, provides as follows:


An examination of the records reveal that the subject shipment was subsequently
declared abandoned by the Bureau of Customs as abandoned cargo for the
plaintiffs failure to file the import entry.
This declaration is found by the Court to be ineffective. Under the law, notice of
the proceedings of abandonment was not given to the consignee or the plaintiff
herein or his agent. The consignee in this case being known, should have been
notified of the abandonment of his property in favor of the government and that
he should have been given a chance at a public hearing to present evidence and
to be heard with respect to the cargo subject of abandonment. This is part of due
process.[29]
Evidently, the resolution of the foregoing issues is within the exclusive
competence of the District Collector of Customs, the Commissioner of Customs
and within the appellate jurisdiction of the Court of Tax Appeals. Indeed, in
Alemars, Inc. v. Court of Appeals,[30] we held that:
Petitioner primarily seeks the annulment of the act of the Collector of Customs
declaring the subject importation abandoned and ordering it sold at public
auction, claiming that the abandonment proceeding held by the Collector of
Customs was irregular since the latter did not give notice to petitioner of the
abandonment before declaring the importation abandoned.
Consequently, the case falls within the jurisdiction of the Commissioner of
Customs and the Court of Tax Appeals vis--vis the averments in the amended
petition, not with the regional trial court.
In Jao v. Court of Appeals,[31] we held that the RTC is devoid of any competence
to pass upon the validity or regularity of seizure and forfeiture proceedings
conducted by the Bureau of Customs, and to enjoin or otherwise interfere with
the said proceedings even if the seizure was illegal. Such act does not deprive
the Bureau of Customs of jurisdiction thereon. Thus, we held:
There is no question that Regional Trial Courts are devoid of any competence to
pass upon the validity or regularity of seizure and forfeiture proceedings
conducted by the Bureau of Customs and to enjoin or otherwise interfere with
these proceedings. The Collector of Customs sitting in seizure and forfeiture
proceedings has exclusive jurisdiction to hear and determine all questions
touching on the seizure and forfeiture of dutiable goods. The Regional Trial Courts

are precluded from assuming cognizance over such matters even through
petitions of certiorari, prohibition or mandamus.
It is likewise well-settled that the provisions of the Tariff and Customs Code and
that of Republic Act No. 1125, as amended, otherwise known as An Act Creating
the Court of Tax Appeals, specify the proper fora and procedure for the
ventilation of any legal objections or issues raised concerning these proceedings.
Thus, actions of the Collector of Customs are appealable to the Commissioner of
Customs, whose decision, in turn, is subject to the exclusive appellate jurisdiction
of the Court of Tax Appeals and from there to the Court of Appeals.
The rule that Regional Trial Courts have no review powers over such proceedings
is anchored upon the policy of placing no unnecessary hindrance on the
governments drive, not only to prevent smuggling and other frauds upon
Customs, but more importantly, to render effective and efficient the collection of
import and export duties due the State, which enables the government to carry
out the functions it has been instituted to perform.
Even if the seizure by the Collector of Customs were illegal, which has yet to be
proven, we have said that such act does not deprive the Bureau of Customs of
jurisdiction thereon.
Respondents assert that respondent Judge could entertain the replevin suit as
the seizure is illegal, allegedly because the warrant issued is invalid and the
seizing officer likewise was devoid of authority. This is to lose sight of the
distinction between the existence of the power and the regularity of the
proceeding taken under it. The governmental agency concerned, the Bureau of
Customs, is vested with exclusive authority. Even if it be assumed that in the
exercise of such exclusive competence a taint of illegality may be correctly
imputed, the most that can be said is that under certain circumstances the grave
abuse of discretion conferred may oust it of such jurisdiction. It does not mean,
however, that correspondingly a court of first instance is vested with competence
when clearly in the light of the decisions the law has not seen fit to do so.
The allegations of petitioners regarding the propriety of the seizure should
properly be ventilated before the Collector of Customs. We have had occasion to
declare:
The Collector of Customs when sitting in forfeiture proceedings constitutes a
tribunal expressly vested by law with jurisdiction to hear and determine the
subject matter of such proceedings without any interference from the Court of
First Instance (Auyong Hian v. Court of Tax Appeals, et al., 19 SCRA 10). The
Collector of Customs of Sual-Dagupan in Seizure Identification No. 14-F-72

constituted itself as a tribunal to hear and determine among other things, the
question of whether or not the M/V Lucky Star I was seized within the territorial
waters of the Philippines. If the private respondents believe that the seizure was
made outside the territorial jurisdiction of the Philippines, it should raise the
same as a defense before the Collector of Customs and if not satisfied, follow the
correct appellate procedures. A separate action before the Court of First Instance
is not the remedy.
The trial court was incompetent to pass upon and nullify (1) the seizure of the
cargo in the abandonment proceedings, and (2) the declaration made by the
District Collector of Customs that the cargo was abandoned and ipso facto owned
by the government. It, likewise, had no jurisdiction to resolve the issue of
whether or not the private respondent was the owner of the cargo before it was
gutted by fire. The trial court should have rendered judgment dismissing the
complaint, without prejudice to the right of the private respondent to ventilate
the issue before the Commissioner of Customs and/or to the Court of Tax Appeals
as provided for in the Tariff and Customs Code.
The District Collector of Customs did not lose jurisdiction over the abandonment
proceedings. The loss of the cargo did not extinguish his incipient jurisdiction in
the said proceedings, nor render functus officio her declaration that the subject
shipment had been abandoned.
The private respondent cannot argue that if its complaint against the petitioner is
dismissed, the latter would be enriching itself at the expense of the private
respondent. In point of fact, the petitioner is liable to the government for the
duties and taxes due for the imported cargo under Section 1902 of the Tariff and
Customs Code, which reads:
SEC. 1902. Responsibility of Operators. The operators of bonded warehouse in
case of loss of the imported articles stored shall be liable for the payment of
duties and taxes due thereon.
The government assumes no legal responsibility in (sic) respect to the
safekeeping of articles stored in any customs warehouses, sheds, yards or
premises.
Neither may the private respondent invoke estoppel, because the parties, in their
pleadings in the trial court and in the Court of Appeals, raised the same issues for
resolution.
It must be stressed that the cargo arrived in the Philippines on April 12, 1989.
The private respondent failed to accomplish the required import entry

declarations, pay the requisite taxes and duties, if any, and take delivery of the
cargo. It was only after the lapse of more than two years, or on December 21,
1991, that the private respondent filed its complaint against the petitioner in the
RTC. By then, the cargo had been gutted by fire. The private respondent has not
made any valid justification for its silence thereon and its inaction. In can be said
then that the private respondent went to court with unclean hands.
The refusal of the Bureau of Customs to intervene in the trial court does not, in
any way, fortify the private respondents claim that it is the owner of the cargo.
The government had no legal obligation to intervene in the trial court considering
that the latter had no jurisdiction over the complaint. It was enough that then
Bureau of Customs Law Division Chief Atty. Doctor testified that the cargo was
duly declared by the District Collector of Customs as abandoned property, that
the said declaration had become final, and that the government became ipso
facto the owner of the cargo. The government had every right to expect that the
trial court would dismiss the complaint for lack of jurisdiction over the issue
raised therein.
IN THE LIGHT OF THE FOREGOING, the petition is GRANTED. The Decisions of the
RTC and of the Court of Appeals are SET ASIDE and REVERSED. The RTC is
ORDERED to dismiss the complaint of the private respondent against the
petitioner, as well as the counterclaim of the latter against the private
respondent.
SO ORDERED.
Quisumbing, (Acting Chairman), Austria-Martinez, and Tinga, JJ., concur.
Puno, (Chairman), J., on leave.