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Jurisdiction

Republic of the Philippines


SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 199133

September 29, 2014

ESPERANZA TUMPAG, substituted by her son, PABLITO TUMPAG BELNAS,


JR., Petitioner,
vs.
SAMUEL TUMPAG, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari1 assailing the November 30,
2010 decision2 and the September 28, 2011 resolution3 of the Court of Appeals
(CA), Cebu City in CA-G.R. CV No. 78155. The CA dismissed, without
prejudice, the complaint for recovery of possession and damages that the
petitioner filed before the Regional Trial Court (RTC) because the complaint
failed to allege the assessed value of the disputed property in the case.
Brief Statement of Facts
On March 13, 1995, Esperanza Tumpag (petitioner) filed a complaint for
recovery of possession with damages (docketed as Civil Case No. 666) against
Samuel Tumpag (respondent) before the RTC, Branch 61, Kabankalan City,
Negros Occidental. The complaint alleged that:
1) Plaintiff (referring to the petitioner) is of legal age, widow, Filipino
citizen and a resident of Barangay Tuyom, Cauayan, Negros Occidental,

while Defendant (referring to the respondent) is also of legal age, married,


Filipino and a residentof Barangay Tuyom, Cauayan, Negros Occidental,
where he maybe served with summons and other processes of this
Honorable Court; 2) Plaintiff is the absolute owner of a parcel of land,
identified as Lot No. 1880-A, Cauayan Cadastre, containing an area of
TWELVE THOUSAND NINE HUNDRED NINETY TWO (12,992) SQUARE
METERS, more or less, situated in Barangay Tuyom, Cauayan, Negros
Occidental, more particularly bounded and described in Transfer
Certificate of Title No. T-70184, dated April 27, 1983, issued by the
Register of Deeds of Negros Occidental in favor of Plaintiff, xerox copy of
which is hereto attached as ANNEX "A" and made an integral part hereof;
3) Defendant has been occupying a portion of not less than ONE
THOUSAND (1,000) SQUARE METERS ofthe above-described parcel of
land of the Plaintiff for more than TEN (10) years, at the tolerance of
Plaintiff;
4) Sometime in 1987, Plaintiff wanted to recover the portion occupied by
Defendant but Defendant refused to return to Plaintiff or vacate said
portion he has occupied inspite of repeated demands from Plaintiff. And,
to prevent Plaintiff from recovering the portion he has occupied,
Defendant instigated his other relatives to file a case against the herein
Plaintiff, and, in1988, herein Defendant Samuel Tumpag, together with
Luz Tagle Vda. De Tumpag and other relatives, filed a civil case, number
400, before this court against herein Plaintiff, Esperanza Tumpag, for
cancellation of her title with damages;
5) Said Civil Case No. 400 was dismissed by this Honorable Court
through its Resolution, dated October 11, 1989, penned by the Presiding
Judge, the late Artemio L. Balinas, prompting the Plaintiffs in said case
to elevate the said resolution of this Honorable Court to the Court of
Appeals, and their appeal is identified as C.A. G.R. No. CV-25699;
6) On June 28, 1991, the Court of Appeals rendered a decision in the
said appealed case, the dispositive portion of which read:

"PREMISES CONSIDERED, the appealed Resolution dated October 11,


1989 is hereby AFFIRMED."
and, that the same has become final on March 11, 1994 and was
entered, on August 26, 1994, in the Book of Entries of Judgment, xerox
copy of said Entry of Judgment of the Court of Appeals is hereto attached
as ANNEX "B" and made part hereof;
7) Herein Plaintiff needs the portion occupied by Defendant and she has
orally demanded from Defendant of the return of the same, but
Defendant refused and still refuses todo so. Hence, Plaintiff brought the
matter before the Office of the Barangay Captain of Barangay Tuyom,
Cauayan, Negros Occidental, for conciliation, on March 3, 1995. But,
unfortunately, Defendant refused to vacate or return the portion he
occupies to Plaintiff. Attached hereto as ANNEX "C," and made part
hereof, is the Certification of the Barangay Captain of Barangay Tuyom,
Cauayan, Negros Occidental, certifying that this matter was brought to
his attention for conciliation;
8) Defendants refusal to return the portion he occupies to Plaintiff has
caused Plaintiff to suffer actual damages in the amount of not less than
TEN THOUSAND PESOS (P10,000.00), per annum;
9) Defendants unjustifiable refusal to return the portion he occupies to
Plaintiff has caused Plaintiff to suffer mental anguish, embarrassment,
untold worries, sleepless nights, fright and similar injuries, entitling her
to moral damages moderately assessed at not less than FIFTY
THOUSAND PESOS (P50,000.00);
10) To serve as deterrent (sic) toother persons similarly inclined and by
way of example for the public good, Defendant should be made to pay
exemplary damages in the amountof not less than TWENTY FIVE
THOUSAND PESOS (P25,000.00);
11) The unjustifiable refusal of Defendant to return the property to the
Plaintiff leaves Plaintiff no other alternative but to file this present action,

forcing her to incur litigation expenses amounting to not less than ONE
THOUSAND PESOS (P1,000.00), attorneys fees in the amount of
TWENTY THOUSAND PESOS (P20,000.00) plus ONE THOUSAND PESOS
(P1,000.00) for every court appearance.4
xxxx
Together with his answer (which was later amended), the respondent moved to
dismiss the complaint on the following grounds: failure to state a cause of
action; that the action was barred by prior judgment; and lack of jurisdiction.5
The RTC, in an order dated January 16, 1996, denied the respondents motion
to dismiss and proceeded with pre-trial and trial.6
During the pendency of the case, the petitioner died and was substituted by
her son Pablito Tumpag Belnas, Jr.7
In a decision8 dated June 3, 2002, the RTC ordered the respondent to return
possession of the subject portion of the property to the petitioner and to pay
the petitioner P10,000.00 as actual damages, P20,000.00 as moral damages,
and P10,000.00 as attorneys fees.
In his appeal to the CA, among the grounds the respondent raised was the
issue of the RTCs lack of jurisdiction over the case.9
In its assailed decision,10 the CA agreed with the respondent and nullified the
RTCs June 3, 2002 decision and all proceedings before the trial court. It held
that the petitioners failure to allege in her complaint the assessed value of the
disputed property warranted the complaints dismissal, although without
prejudice, because the courts jurisdiction over the case should be "determined
by the material allegations of the complaint" 11 and "cannot be made to depend
upon the defenses set up in court or upon a motion to dismiss for, otherwise,
the

question

defendant."

12

of

jurisdiction

would

depend

almost

entirely

on

the

The petitioner moved to reconsider but the CA denied her motion

in its resolution13 dated September 28, 2011. The CAs ruling and denial of the

motion for reconsideration gave rise to the present petition for review on
certiorari filed with this Court.
The petitioner now argues that the respondent, after having actively
participated in all stages of the proceedings in Civil Case No. 666, is now
estopped from assailing the RTCs jurisdiction; that the subject case had been
litigated before the RTC for more than seven (7) years and was pending before
the CA for almost eight (8) years. Further, she argues that the dismissal of her
complaint was not warranted considering that she had a meritorious case as
attached to her complaint was a copy of a Declaration of Real Property
indicating that the assessed value of the disputed property is P20,790.00.
Our Ruling
We find MERIT in the present petition. The CAs dismissal of the petitioners
complaint for recovery of possession is erroneous and unwarranted.
It is well-settled that jurisdiction over a subject matter is conferred by law, not
by the parties action or conduct, 14and is, likewise, determined from the
allegations in the complaint.15 Under Batas Pambansa Blg. 129,16 as amended
by Republic Act No. 7691,17 the jurisdiction of Regional Trial Courts over civil
actions involving title to, or possession of, real property, or any interest therein,
is limited to cases where the assessed value of the property involved exceeds
Twenty thousand pesos (P20,000.00) or, for civil actions in Metro Manila, where
such value exceeds Fifty thousand pesos (P50,000.00), except actions for
forcible entry into and unlawful detainer of lands or buildings.18
Here, the petitioner filed a complaint for recovery of possession of real property
before the RTC but failed to allege in her complaint the propertys assessed
value. Attached, however, to the petitioners complaint was a copy of a
Declaration of Real Property showing that the subject property has a market
value of P51,965.00 and assessed value of P20,790.00. The CA was fully aware
of this attachment but still proceeded to dismiss the petitioners complaint:
Record shows that the complaint was filed with the Regional Trial Court on
December 13, 1995. There is no allegation whatsoever in the complaint for

accion publiciana concerning the assessed value of the property involved.


Attached however to the complaint is a copy of the Declaration of Real Property
of subject land which was signed by the owner stating that its market
valueis P51,965 and its assessed value is P20,790.00.(Emphasis ours)19
Generally, the court should only look into the facts alleged in the complaint to
determine whether a suit is within its jurisdiction. 20 There may be instances,
however, when a rigid application of this rule may result in defeating
substantial justice or in prejudice to a partys substantial right. 21 In Marcopper
Mining Corp. v. Garcia,22 we allowed the RTC to consider, in addition to the
complaint, other pleadings submitted by the parties in deciding whether or not
the complaint should be dismissed for lack of cause of action. In Guaranteed
Homes, Inc. v. Heirs of Valdez, et al.,23 we held that the factual allegations in a
complaint should be considered in tandem with the statements and
inscriptions on the documents attached to it as annexes or integral parts.
In the present case, we find reason not to strictly apply the abovementioned
general rule, and to consider the facts contained in the Declaration of Real
Property attached to the complaint in determining whether the RTC had
jurisdiction over the petitioners case. A mere reference to the attached
document could facially resolve the question on jurisdiction and would have
rendered lengthy litigation on this point unnecessary.
In his comment24 to the present petition, the respondent contends that the
assessed value of the property subject of the case is actually much below than
the value stated in the attached Declaration of Real Property. However, the test
of the sufficiency of the facts alleged in the complaint is whether, admitting the
facts alleged, the court can render a valid judgment upon the complaint in
accordance with the plaintiffs prayer. 25 The defendant, in filing a motion to
dismiss, hypothetically admits the truth of the factual and material allegations
in the complaint,26as well as the documents attached to a complaint whose due
execution and genuineness are not denied under oath by the defendant; these
attachments must be considered as part of the complaint without need of
introducing evidence thereon.27

Lastly, we note that the present petitioner's situation comes close with those of
the respondents in Honorio Bernardo v. Heirs of Eusebio Villegas, 28 where the
Villegas heirs, in filing their complaint for accion publiciana before the RTC,
failed to allege the assessed value of the subject property. On the complaints
omission, the defendant questioned the RTCs jurisdiction in his answer to the
complaint and, again, in his appeal before the CA.
In Bernardo v. Heirs of Villegas,29 we affirmed the CA ruling that upheld the
RTCs jurisdiction over the case despite the complaints failure to allege the
assessed value of the property because the defendant-petitioner was found to
have actively participated in the proceedings before the trial court and was
already estopped from assailing the jurisdiction of the RTC. While we mention
this case and its result, we cannot, however, apply the principle of estoppel (on
the question of jurisdiction to the present respondent.
We rule that the respondent is not estopped from assailing the RTCs
jurisdiction over the subject civil case.1wphi1Records show that the
respondent has consistently brought the issue of the court's lack of jurisdiction
in his motions, pleadings and submissions throughout the proceedings, until
the CA dismissed the petitioner's complaint, not on the basis of a finding of
lack of jurisdiction, but due to the insufficiency of the petitioner's complaint,
i.e. failure to allege the assessed value of the subject property. Even in his
comment filed before this Court, the respondent maintains that the RTC has
no jurisdiction over the subject matter of the case.
Lack of jurisdiction over the subject matter of the case can always be raised
anytime, even for the first time on appeal,30 since jurisdictional issues, as a
rule, cannot be acquired through a waiver or enlarged by the omission of the
parties or conferred by the acquiescence of the court. 31 Thus, the respondent is
not prevented from raising the question on the court's jurisdiction in his
appeal, if any, to the June 3, 2002 decision of the RTC in Civil Case No. 666.
WHEREFORE, premised considered, we GRANT the present petition for review
on certiorari and SET ASIDE the decision dated November 30, 2010 and
resolution dated September 28, 2011 of the Court of Appeals, Cebu City in CAG.R. CV No. 78155.

Accordingly, we REINSTATE the decision dated June 3, 2002 of the Regional


Trial Court, Branch 61, Kabankalan City, Negros Occidental in Civil Case No.
666.
SO ORDERED.

Cause of action
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 178911

September 17, 2014

EDUARDO D. MONSANTO, DECOROSO D. MONSANTO, SR., and REV. FR.


PASCUAL D. MONSANTO, JR.,Petitioners,
vs.
LEONCIO LIM and LORENZO DE GUZMAN, Respondents.

DECISION
DEL CASTILLO, J.:
"Filing the appropriate initiatory pleading and the payment of the prescribed
docket fees vest a trial court with jurisdiction over the subject matter." 1
Assailed in this Petition for Review on Certiorari 2 are the March 12, 2007
Decision3 of the Court of Appeals (CA) which denied the Petition for Certiorari
in CA-G.R. CEB-SP No. 01343 and its July 6, 2007 Resolution 4 denying the
herein petitioners' Motion for Reconsideration.5
Factual Antecedents
In a letter6 dated February 18, 2004, Flordelis B. Menzon, Regional Director of
the Home Development Mutual Fund (Pag-IBIG), requested the intervention of
Executive Judge Sinforiano A. Monsanto (Executive Judge Monsanto) of the
Regional Trial Court (RTC) of Catbalogan, Samar on the alleged anomalous
auction sale conducted by Sheriff IVLorenzo De Guzman (De Guzman).
According to Pag-IBIG, De Guzman previously acceded to its request to move
the date of the auction sale to January 20, 2004; however, to its surprise, the
sale proceeded as originally scheduled on January 15, 2004. Pag-IBIG also
claimed that the winning bid of Leoncio Lim (Leoncio) in the amount
of P500,000.00 was grossly disadvantageous to the government considering
that the outstanding loan obligations of the mortgagor, Eduardo Monsanto
(Eduardo), was more than the bid amount. Pag-IBIG thus manifested that
It is for this reason that we are making this protest. Sheriff de Guzman failed to
comply with our request for deferment despitehis [acquiescence]. We are
requesting for your intervention to nullify the results of the auction sale
conducted last January 15, 2004. This will give our office a chance to be able
to participate and recoup our investment.
We trust that you will give thismatter preferential attention.7

Executive Judge Monsantorefrained from acting on the letter considering that


Eduardo is his relative; instead he re-assigned the same to Judge Sibanah E.
Usman (Judge Usman)8 of Branch 28.
In an Order9 dated May 3, 2004 and captioned "In the Matter of the
Extrajudicial Foreclosure of Mortgage Filed by the Home Development Mutual
Fund (Pag-IBIG Fund)," Judge Usman declared that on even date, RTC-Branch
28 conducted a hearing; that Atty. Cesar Lee argued on behalf of Pag-IBIG; and
that Pascual Monsanto (Pascual) appeared on behalf of Eduardo. However,
Judge Usman noted that no formal petition orcomplaint was actually filed
which presents a judicial issue; moreover, the acts complained of partake of
administrative matter. Consequently, Judge Usman referred the matter to the
Office of the Court Administrator (OCA) for further action.
Subsequently, Pascual filed with the OCA, copy furnished the RTCCatbalogan,
Samar, Branches 27 and 28, a Motion to Lift Writ of Execution and Notice to
Vacate10 dated March 13, 2004. Pascual alleged thaton March 5, 2005, De
Guzman, Sheriff of Branch 27, issueda Notice to Vacate; that the same is being
enforced with grave threats and harassment; thatthe protest of Pag-IBIG
remains pending with and unresolved by OCA; thatthe trial court did not
transmit

the records of the case tothe OCA; that the winning bid

of P500,000.00 submitted by Leoncio is disadvantangeous to the government;


that Eduardos loan with PagIBIG is being proposed for restructuring; and that
the writ of execution and notice to vacate would gravely prejudice their rights.
Pascual thus prayed that:
A. An order be issued lifting the Writ of Execution and the Notice to
Vacate;
B. An order be issued enjoining or restraining the subject Sheriff from
enforcing the said Notice to vacate; and
C. Court officials or personnel above mentioned be made to explain
respecting the handling of the above captioned case as cited above, and if
found negligent be so sanctioned in accordance with the law.11

Acting on the aforesaid Motion to Lift Writ of Execution and Notice to Vacate,
the OCA, in a letter12 dated May 9, 2005 directed Judge Usman to
(1) conduct an investigation on the missing records of Home Development
Mutual Fund (Pag-IBIG) vs. Eduardo Monsanto and to report thereon within
THIRTY (30) days from notice; and (2) take action on (a) Items A and B of the
Motion to Lift Writ ofExecution and Notice to Vacate and (b) the letter of Home
Development Mutual Fund dated 18 February 2004, a copy of which is
annexed to the Motion to Lift Writ of Execution and Notice to Vacate, herewith
attached.13 Pursuant to the above directive, Judge Usman notified Pag-IBIG,
Eduardo, and Leoncio of a hearing scheduled on June 14, 2005. 14 This time,
the case was captioned as "Home Development Mutual Fund (Pag-IBIG Fund),
mortgagee, v. Eduardo Monsanto, mortgagor."
In a Manifestation15 dated June 7, 2005 and filed before Branch 28, PagIBIG
informed the trial court that the loan of Eduardo had been restructured and
that Eduardo had commenced paying monthly amortizations; that as a result
of the restructuring, Pag-IBIG is withdrawing its Petition for Extra-judicial
Foreclosure; and that it is no longer interested in pursuing an administrative
action against De Guzman.
Leoncio opposed Pag-IBIGs manifestation.16
Meanwhile, the record shows that on April 11, 2005, Leoncio filed with Branch
27

Manifestation

Possession

17

with

Ex-Parte

Motion

for

Issuance

of

Writ

of

claiming that the reglementary period had elapsed without

Eduardo redeeming the subject property; as such, he is already entitled to the


issuance of a writ of possession.
On July 15, 2005, Decoroso D. Monsanto and Pascual moved to intervene in
the case.18 Both claimed that they are co-owners and actual possessors of the
subject property.
Ruling of the Regional Trial Court Branch 28

In an Order19 dated July 1, 2005, the RTC-Branch 28, Catbalogan, Samar


resolved two pending motions, i.e., (1) the motion for issuance of writ of
possession filed by Leoncio with Branch 27; and (2) the motion to lift writ of
execution and notice to vacate filed by Pascual with the OCA butcopy furnished
the RTC Catbalogan, Samar, Branches 27 and 2820 viz:
After careful and judicious scrutiny of the records of thiscase, this Court is
highly convinced that the public auction sale conducted by Mr. De Guzman
and Atty. Ma. Luz Lampasa-Pabilona, Clerk of Court whereby Mr. Leoncio Lim
emerged as the highest bidder and purchaser of the subject property in good
faith, and also given a Certificate of Sale issued by the Sheriff and the same
was registered with the Registry of Deeds on March 5, 2004 are in order. The
impugned Sheriff De Guzman had accordingly performed his functions.
Accordingly, there is no showing that hehas abuse[d] his authority during the
conduct of the public auction. Such being the case, this Court is further
convinced that the motion filed by Leoncio Lim through counsel Atty. Labid
being meritorious should be given due course. On the other hand, the motion
to lift writ of execution and notice to vacatefiled by Rev. Fr. Pascual D.
Monsanto, Jr. being devoid of merit should be denied.
Atty. Cesar E. Lee filed a manifestation dated June 7, 2005, praying that an
order be issued directing Lorenzo deGuzman, Sheriff to make the necessary
notice to all concern[ed] of the fact that the mortgagee has restructured his
loan with the mortgagor, and in effect, redeemed his obligation subject matter
of this foreclosure proceeding.
Mr. De Guzman explained that even assuming that there was restructuring of
the [mortgage] loan it is very clear that it was done after the lapse of the one (1)
year redemption period and also there was no notice given to the Office of the
Clerk of Court. Moreover,if there was actual payment the Office of the Clerk of
Court was never x x x informed by Mr. Monsanto. WHEREFORE, premises
considered, this Court finds that the instant motion to lift writ of execution and
notice to vacate the [premises] is devoid of merit, hence denied; likewise the
manifestation of Atty. Cesar Lee dated June 7, 2005 being devoid of merit is
also denied. The motion for issuance of writ of possession filed by Leoncio Lim

through counsel Atty. Labid being meritorious is hereby ordered GRANTED,


hence let a writ of possession be issued immediately in favor of Mr. Leoncio Lim
purchaser in good faith.
Let a copy of this order be furnished the Hon. Presbitero J. Velasco, Jr., Court
Administrator for his information and guidance.
SO ORDERED.21
Eduardo, Pascual,and Pag-IBIG filed motions for reconsideration; however, the
same were denied by the trial court in its August 30, 2005 Order.22
Ruling of the Court of Appeals
Petitioners thus filed a Petition for Certiorari 23 with the CA, which was docketed
as CA-G.R. CEB SP No. 01343. They claimed that the RTC committed grave
abuse of discretion indenying their Motion to Lift Writ of Execution and Notice
to Vacate and in granting Lims Ex ParteMotion for Issuance of Writ of
Possession through its July 1, 2005 Order, arguing that Lims motion was not
made under oath; that there are third parties in possession of the subject
property; that they were not notified of the confirmation of the sale; that the
mere filing of the Certificate of Sale withthe Register of Deeds without
presenting the owners duplicate copy is not tantamount to registration; that
since the Certificate of Sale was not registered, then the period to redeem did
not begin to run; that De Guzmans March 7, 2005 Notice to Vacate was illegal,
since at the time, no writ of possession was yet issued; that De Guzmans
actions in enforcing the writ of possession on July 8 and 15, 2005 while their
motion for reconsideration was pending is inhuman and violated their
constitutional rights; and that out of justice and equity, they should be allowed
to redeem the property. Petitioners prayed for the reversal of the RTCs July 1,
2005 and August 30, 2005 Orders and for the CA to restore the status quo
ante.
On March 12, 2007, the CA issued the assailed Decision finding no grave
abuse of discretion on the part of the RTC and affirming its July 1, 2005 and
August 30, 2005 Orders, viz:

ACCORDINGLY, in line with the foregoing disquisitions, the petition is hereby


DENIED. The assailed Orders dated 1 July 2005 and 30 August 2005 are
AFFIRMED IN TOTO.
SO ORDERED.24
Petitioners filed their Motion for Reconsideration, which the CA denied in its
assailed July 6, 2007 Resolution.
Hence, the present Petition.
Issues
Petitioners raise the following grounds for the Petition:
1. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY
ERRED IN RULING THAT NO GRAVE ABUSE OF DISCRETION WAS
COMMITTED BY THE HONORABLE REGIONAL TRIAL COURT BRANCH
27,

EIGHTH

JUDICIAL

REGION,

CATBALOGAN,

SAMAR

IN

ITS

ISSUANCE OF THE WRIT OF POSSESSION AND ITS ISSUANCE DOES


NOT NEED A MOTION FOR THE CONFIRMATION OF SALE WHICH
REQUIRES A HEARING;
2. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY
ERRED

IN

FINDING

THAT

THE

CERTIFICATE

OF

SALE

WAS

REGISTERED OR THAT THE MEREFILING WITH THE REGISTER OF


DEEDS OF THE SAME IS TANTAMOUNT TO ITS REGISTRATION, THUS
THE REDEMPTION PERIOD HAD STARTED TO RUN, ON THE COURTS
CONJECTURE THAT P.D. 1529 IMPLIEDLY REPEALED ACT NO. 3135,
PARTICULARLY SECTION 6, THEREOF;
3. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY
ERRED IN AFFIRMING THE COURT A QUOS FINDINGS THAT ALL THE
PETITIONERS WERE DULY NOTIFIED BUT FAILED TO APPEAR DURING
THE HEARING ON THE MOTION FOR THE ISSUANCE OF THE WRIT
OFPOSSESSION. IT ERRED IN ALLUDING THAT IN THE COURSE OF

THE PROCEEDINGS OF THIS INSTANT CASE, PETITIONERS WERE NOT


DENIED DUE PROCESS OF LAW; AND
4. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY
ERRED IN RULING THAT PETITIONERS DECOROSO AND FR. PASCUAL,
JR. DO NOT HOLDTHE FORECLOSED PROPERTY ADVERSELY TO
THAT

OF

THE

PETITIONER-MORTGAGOR,

FOR

BEING

MERE

ASSIGNEES, THEYDERIVED THEIR POSSESSORY RIGHTS FROM


PETITIONER-MORTGAGOR.25
Petitioners Arguments
Praying that the assailed CA Decision and Resolution be set aside, petitioners
reiterate intheir Petition and Reply26the points they raised in their CA Petition.
Thus, they argue that the ex partemotion for the issuance of a writ of
possession should be under oath, and requires prior notice and hearing; that
the mere filing of the sheriffs certificate of sale with the Register of Deeds is
not equivalent to registration as required in order for the one-year redemption
period to commence; that Presidential Decree No. 1529 did not repeal Act No.
3135; that the occupants of the subject property hold rights adverse to the
mortgagor Eduardo; and that the extrajudicial foreclosure proceedings was
attended by numerous irregularities.
Respondent Lims Arguments
On the other hand, Leoncio in his Comment27 insists in essence that the mere
filing of the sheriffs Certificate of Sale with the Samar Register of Deeds on
March 5, 2004 was equivalent to the registration thereof; that the Samar
Registrar of Deeds assured him that merereceipt of the Certificate of Sale is
tantamount to registration; that he relied upon this representation and
assurance in good faith; and that petitioners remedy is to file a separate case
for recovery of ownership and possession.
Our Ruling
The Petition is dismissed.

"Filing the appropriate initiatory pleading and the payment of the prescribed
docket

fees

vest

trial

court

with

jurisdiction

over

the

subject

matter."28 Section 5, Rule 1 of the Rules of Court specifically providesthat "[a]


civil action is commenced by the filing of the original complaint in court."
Moreover, "[e]very ordinary civil action must bebased on a cause of action." 29
No proper initiatory pleading was filed before the trial court.
In this case, records show that no formal complaint or petition was filed in
court. The case was supposedly "commenced" through a letter of Pag-IBIG
asking the intervention of Executive Judge Monsanto on the alleged anomalous
foreclosure sale conducted by De Guzman. However, saidletter could not in any
way be considered as a pleading. Section 1, Rule 6 of the Rules of Court defines
pleadings as "written statements of the respective claims and defenses of the
parties submitted to the court for appropriate judgment." To stress, Pag-IBIGs
letter could not be considered as a formal complaint or petition. First, the
parties to the case were not identified pursuant to Section 1, 30 Rule 3 and
Section 1,31 Rule 7. Second, the so-called claim or cause of action was not
properly mentioned or specified. Third, the letter miserably failed to comply
with the requirements of Rule 7, Rules of Court. The letter bore no caption; it
was not even assigned a docket number; the parties were not properly
identified;the allegations were not properly set forth; no particular relief
issought; in fact, only the intervention of Executive Judge Monsanto is
requested; it was notsigned by a counsel; and most of all, there is no
verification orcertification against forum-shopping.
We have also noted that in its July1, 2005 Order, Judge Usman of Branch 28
resolved the following incidents: (1) the motion for issuance of writ of
possession filed by Leoncio; and (2) the motion to lift writ of execution and
notice to vacate. However, the said Manifestation with Ex Parte Motion for
Issuance of Writ of Possession was not even filed before Branch28; in fact, it
was submitted for consideration of Branch 27. Moreover, the Motion to Lift Writ
of Execution and Notice to Vacatewas filed by Pascual before the OCA; the RTC
Branches 27 and 28 of Catbalogan, Samar, were only furnished copies thereof.

In addition, it is quite unfortunate that Judge Usman proceeded to take


cognizance of the case notwithstanding his prior observation as stated in the
May 3, 2004 Order that no formal petition or complaint was actually filed and
which presents a judicial issue.In fact, Judge Usman even opined that the acts
complained of partake of administrative matter and thus referred the same to
the OCA for further action. The May 9, 2005 letter of OCA directing Judge
Usman to take action on the Motion to Lift Writ of Execution and Notice to
Vacatecould not be interpreted as vesting Judge Usman with the authority and
jurisdiction to take cognizance of the matter. Nothing to that effect could be
inferred from the tenor of the May 9, 2005 letter ofOCA. Jurisdiction is vested
by law. When OCA directed Judge Usman to take action on the Motion to Lift
Writ of Execution and Notice to Vacate, it did not deprive the latter ofhis
discretion to dismiss the matter/case for lack of jurisdiction, if the matter/case
so warrants.
In fine, there being no proper initiatory pleading filed, then the RTC Branch 28
did not acquire jurisdiction over the matter/case.
No payment of docket fees.
We have also noted that no docket feeswere paid before the trial court. Section
1, Rule 141 of the Rules of Court mandates that "[u]pon the filing of the
pleading or other application which initiates an action or proceeding, the fees
prescribed therefor shall be paid in full." "It is hornbook law that courts
acquire jurisdiction over a case only upon payment of the prescribed docket
fee."32
In Far East Bank and Trust Company v. Shemberg Marketing Corporation, 33 we
ruled thus: A court acquires jurisdiction over a case only upon the payment of
the prescribed fees. The importance of filing fees cannot be gainsaid for these
are intended to take care of court expenses inthe handling of cases in terms of
costs of supplies, use of equipment, salaries and fringe benefits of personnel,
and others, computed as to man-hours used in the handling of each case.
Hence, the non-payment or insufficient payment of docket fees can entail
tremendous losses to government in general and to the judiciary in particular.

In fine, since no docket or filing feeswere paid, then the RTC Branch 28 did not
acquire jurisdiction over the matter/case.1wphi1 It therefore erred in taking
cognizance of the same. Consequently, all the proceedings undertaken by the
trial court are null and void,and without force and effect. In, particular, the
July 1, 2005 and August 30, 2005 Orders of the RTC are null and void.
It is settled jurisprudence that "[a]ny decision rendered without jurisdiction is
a total nullity and may be struck down at any time, even on appeal before this
Court."34 Prescinding from the foregoing, we hold that the RTC-Branch 28 did
not acquire jurisdiction over the instant matter/case there being no formal
initiatory pleading filed as well asnon-payment of docket fees. Consequently, all
proceedings had before the RTC Branch 28 were null and void for lack of
jurisdiction.
WHEREFORE, the Petition is DENIED. The assailedMarch 12, 2007 Decision
and July 6, 2007 Resolution of the Court of Appeals in CA-G.R. CEBSP No.
01343 are ANNULLED and SET ASIDE. The July 1, 2005 and August 30, 2005
Orders of the Regional Trial Court of Catbalogan, Samar, Branch 28 are
DECLARED NULL and VOID. All proceedings, processes and writs emanating
therefrom are likewise NULLIFIED and VOIDEDfor lack of jurisdiction.
SO ORDERED.

Parties to civil action


Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 176973

February 25, 2015

DAVID M. DAVID, Petitioner,


vs.
FEDERICO M. PARAGAS, JR., Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 seeking to annul and
set aside the July 31, 2006 Decision1and the February 23, 2007 Resolution 2 of
the Court of Appeals (CA) in CA-G.R. SP No. 80942. The said issuances
modified the July 21, 2003 Order 3 of the Regional Trial Court, Branch 200, Las
Pias City (RTC) in Civil Case No. LP-02-0165, a case for Declaratory Relief and
Sum of Money with Damages filed by petitioner David M. David (David) against
Philam Plans Inc. (PPI), Severo Henry G. Lobrin (Lobrin), respondent Federico
M. Paragas, Jr. (Paragas), Rodelio S. Datoy (Datoy), Rizal Commercial Banking
Corporation, Paranaque Branch (RCBC), and Gerald P.S. Agarra (Agarra).
The RTC Order resolved the Motion to Admit Supplemental Complaint filed by
David and the Joint Omnibus Motion4 filed by David, Lobrin and Datoy. In the
said Order, the RTC admitted the attached supplemental complaint and
approved the compromise agreement.5 The questioned CA decision nullified the
approval by the RTC of the compromise agreement.
The Antecedents
Sometime in 1995, David, Paragas and Lobrin agreed to venture into a
business in Hong Kong (HK). They created Olympia International, Ltd.
(Olympia)under HK laws. Olympia had offices in HK and the Philippines. David
handled the marketing aspect of the business while Lobrin and Datoy were in
charge of operations. In late1995, Olympia started with "selling, through
catalogs, consumer products such as appliances, furniture and electronic
equipment to the OFWs in Hong Kong, to be delivered to their addresses in the
Philippines. They coined the name Kayang-Kaya for the venture." 6
In early 1998, Olympia became the exclusive general agent in HK of PPIs preneed plans through the General Agency Agreement. In late 2001, Olympia
launched the Pares-Pares program by which planholders would earn points
with cash equivalents for successfully enlisting new subscribers. The cash
equivalents, in turn, would be used for the payment of monthly premiums of

the planholders. PPI authorized Olympia to accept the premium payments,


including the cash equivalent of the bonus points, and to remit the same, net
of commissions, to PPI in the Philippines. The money from HK was to be
remitted through Olympias account in RCBC. In turn, Olympia was to pay the
planholders bonuses as well as the share of profits for the directors. 7 David
was tasked to personally remit said amounts to PPI as he was the only
signatory authorized to transact on behalf of Olympia regarding the RCBC
accounts.
As Paragas alleged, the amount remitted by Olympia to RCBC from September
2001 to May 25, 2002 reachedP82,978,543.00, representing the total net
earnings from the pre-need plans, 30% of which comprised the bonus points
earned by the subscribers under the Pares-Pares program. The rest was to be
distributed among the four partners.
In 2002, the state of affairs among the partners went sour upon Lobrins
discovery that David failed to remit to PPI the 30% cash equivalent of the bonus
points.
In a meeting held on June 1, 2002 in HK, David tried to explain his side, but
no settlement was reached.
Later,
Lobrin
discovered
that
only P19,302,902.13
remained
of
the P82,978,543.00 remitted from HK to the RCBC account. As the
Chairperson of Olympias Board of Directors (BOD),he demanded the return of
the entireP82,978,543.00.
On June 17, 2002, the BOD stripped David of his position as a director. It then
informed RCBC of his removal. In another letter, it also instructed RCBC to
prohibit any transaction regarding the funds or their withdrawal therefrom
pending the determination of their rightful owner/s. Meanwhile, a Watch-List
Order was issued against David pursuant to the letter sent by Paragas counsel
to the Bureau of Immigration. As a result, he was prevented from boarding a
flight to Singapore on June 29, 2002.
Constrained by these circumstances, David filed a complaint for Declaratory
Relief, Sum of Money and Damages before the RTC. He insisted on his
entitlement to the commissions due under the regular and Pares-Pares
programs in his capacity as Principal Agent under the General Agency
Agreement with PPI; that he be allowed to hold the cash deposits
of P19,302,902.00 to the extent of P18,631,900.00 as a trust fund for the

benefit of the subscribers of the Pares-Pares program; that RCBC be ordered to


recognize no other signatory relative to the said deposits except him; and that
Paragas, Lobrin and Datoy be held liable in an amount not less
thanP20,000,000.00, representing the missing amount and/or unauthorized
disbursements from the funds of Olympia, plus the payment of moral damages,
exemplary damages and attorneys fees.
Paragas
and
Lobrin
filed
their
8
Counterclaims against David, to wit:

answers

with

compulsory

First Counterclaim - to mandate David to render an accounting of the amounts


mentioned;
Second Counterclaim - to require David to turn over such books of accounts
and other documents owned by Olympia as well as all records pertaining to
Olympias business transactions in the Philippines;
Third Counterclaim - to make David pay the amount of P24,893,562.90 to
Philam as cash bonuses of the respective original subscribers;
Fourth Counterclaim - to make David pay Lobrin and Paragas the amount
of P24,521,245.00 each, as and by way of actual damages, representing (1)
Lobrin and Paragas respective shares as co-owners in the net profit of Olympia
from the sale of the Pre-need plan under the pares-pares program in the
amount of P14,521,245.00 and the amount of P10,000,000.00 representing the
cost of plane fares, living allowances and unrealized profit;
Fifth Counterclaim - to hold David liable to pay Lobrin and Paragas the amount
of P20,000,000.00 each, as and by way of moral damages;
Sixth Counterclaim - to make David pay the amount of P10,000,000.00 as and
by way of exemplary damages; and
Seventh Counterclaim - to hold David personally liable to pay Lobrin and
Paragas the amount of P1,000,000.00 as attorneys fees, plus such amount as
may be proved during the trial as litigation expenses and cost of suit.9
On March 5, 2003, David filed the supplemental complaint, with a
manifestation that an amicable settlement was struck with Lobrin and Datoy
whereby they agreed to withdraw the complaint and counterclaims against
each other. On May 6, 2003, Lobrin and Olympia through their counsel,

confirmed that on March 26, 2003, they had arrived at a compromise. 10 The
agreement clearly stated that Lobrin was acting on Olympias behalf, on the
basis of a resolution passed during the board meeting held on March 21, 2003.
The settlement reads:
COMPROMISE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement, entered into by and between:
DAVID M. DAVID, of legal age, married, Filipino and with address at 23 Pablo
Roman Street, BF Homes, Paranaque, hereinafter referred to as DMD;
-andOLYMPIA INTERNATIONAL LIMITED, a corporation organized and existing
under the laws of Hong Kong, with principal office at 13/F Li Dong Building, 711 Li Yuen Street East, Central, Hong Kong, and herein represented by its
Attorney-in-Fact, Henry G. Lobrin, and herein after referred to as Olympia;
WITNESSETH: That
WHEREAS, Olympia has passed a board resolution during the meeting of its
Board of Directors held in Hong Kong on 21 March 2003 constituting and
appointing as such its herein Attorney-in-Fact for the purposes stated in said
resolution, a copy of which is hereto attached as Annex "A"; WHEREAS, there is
a pending case before Branch 200 of the Regional Trial Court of Las Pi[]as
City docketed as Civil Case No. LP-02-0165 ("the Case") and among the
defendants in said Case are Henry G. Lobrin, Federico M. Paragas, Jr. and
Roberto S. Datoy who are presently directors of Olympia;
WHEREAS, the causes of action in the complaint in said Case against aforesaid
Lobrin, Paragas, Jr. and Datoy are in their capacity as shareholders/directors
of Olympia, and likewise concern the relationship and rights between DMD and
Olympia International Ltd., including the status of the latters operations and
financial position;
WHEREAS, another issue in said case is the respective rights of herein parties
DMD and Olympia under and pursuant to the General Agency Agreement
(GAA) with Philam Plans Inc., ("PPI") dated 10 February 1998;

WHEREAS, corollary to the issue of the GAA is the respective obligation of


DMD and Olympia to the planholders of PPI under the regular and pares pares
program, specifically the binhing yaman and pamilyaman benefits due to
approximately 12,000 planholders of Philam Plans Inc. ("PPI") as per the list
attached to the complaint in said Case;
WHEREAS, both DMD and Olympia are desirous of settling the Case amicably
under mutually acceptable terms and conditions:
NOW, THEREFORE, parties hereby agree as follows:
1. Olympia hereby waives its rights and interests to the trust fund
presently in Account Nos. 1-214-25224-0, 07214108903-003 and
0000005292 with the Rizal Commercial Banking Corporation
("RCBC") and Account No. 0301-01334-5 with the Equitable PCI
Bank pertaining to the cash benefits of the approximately 12,000
planholders of Philam Plans, Inc., per the list attached to the
complaint in the Case;
2. Olympia further agrees that the same shall be settled exclusively
by DMD, subject to the requirement that it shall be furnished a
copy of the Statement of Benefits pertaining to each planholder;
3. Olympia likewise no longer interposes any objection/opposition
to the payment of the cash benefits to the planholders from said
trust funds, and shall make of record in the Case the withdrawal of
its opposition;
4. DMD shall drop as party Defendants from the Case Severo
Henry G. Lobrin, Federico M. Paragas, Jr. and Rodelio S. Datoy;
5. Olympia shall withdraw its First Compulsory Counterclaim,
Second Compulsory Counterclaim and Third Compulsory
Counterclaim as stated in the "Answer with Compulsory
Counterclaims" dated 3 October 2002 filed in said Case, because
the subject matters of said compulsory counterclaims are
exclusively the concern of Olympia as a corporation and are now
the subject of this Compromise Agreement;
6. Olympia shall likewise withdraw the Fourth Compulsory
Counterclaim, Fifth Compulsory Counterclaim, Sixth Compulsory

Counterclaim and Seventh Compulsory Counterclaim in so far as


they refer to claims to which the claimants will be entitled in their
capacity as shareholder and/or director of Olympia;
7. The Fourth Compulsory Counterclaim, Fifth Compulsory
Counterclaim, Sixth Compulsory Counterclaim and Compulsory
Counterclaim (sic) will also be withdrawn by Henry G. Lobrin in his
personal capacity;
8. For this purpose, the following motions shall be filed pursuant
to this Agreement;
a. A Joint Motion shall be filed in the case for the dismissal
of the complaint and compulsory counterclaims as above
stated;
b. A Motion to Withdraw Opposition to the Motion to Release
Benefits and Supplemental Motion (to Release Benefits) be
filed by Olympia through its Attorney-in-Fact.
IN WITNESS WHEREOF, parties hereto set their hands this ____ day of
_________ in ____________________.
1wphi1
DAVID M. DAVID

OLYMPIA
INTERNATIONAL
Ltd.
By:
HENRY
G.
Attorney-in Fact

LOBRIN

HENRY
G.
In his personal capacity

LOBRIN

[Emphases supplied]11
On May 15, 2003, David and Lobrin filed the Joint Omnibus Motion to formally
inform the RTC of the compromise agreement. They asserted the following:

2. Said agreement was executed between Plaintiff and Olympia, the latter
being represented by Defendant Lobrin as Olympias Attorney-in-Fact,
pursuant to a resolution passed by a majority vote during the board
meeting held in Hong [Kong] on 21 March 2003 wherein Defendants
Lobrin, Paragas, Jr. and Datoy were all present, authorizing said
Attorney-in-Fact to negotiate a compromise settlement regarding instant
case, the payment of the accrued benefits due the planholders of Philam
Plan, Inc. under the regular and Pares-Pares program as well as the
disposition of the cash and other deposits with Rizal Commercial
Banking Corporation (RCBC) and other accounts in other banks. Said
resolution is appended to the Agreement as its Annex "A";
3. By virtue of said Agreement, Olympia no longer questions and hereby
waives whatever rights and interest it may have to the deposits
constituting the trust fund pertaining to the cash benefits of the
approximately 12,000 planholders of Philam Plans Inc., per the list
attached to the complaint in instant case in Account Nos. 1-214-252240, 07214108903-003 and 0000005292 with RCBC and Account No.
0301-01334-5 with the Equitable-PCI Bank;
4. Olympia further withdraws its objection/opposition to the payment of
the cash benefits to the planholders from said trust funds which shall
remain to be the sole responsibility/accountability of Plaintiff, subject to
the requirement that Olympia through its authorized Attorney-in-Fact
shall be furnished a copy of the Statement of Benefits pertaining to each
planholder;
5. As a consequence of the above, Defendants Severo Henry G. Lobrin,
Federico M. Paragas, Jr. and Rodelio S. Datoy shall be dropped as party
defendants in instant case, to which no objection will be interposed by
Plaintiff, and the motion to declare Defendant Datoy in default for failure
to file his Answer is similarly withdrawn for having been rendered moot
and academic by the Agreement;
6. Olympia hereby withdraw[s] its First, Second and Third Compulsory
Counterclaims against herein Plaintiff considering that the legal and
factual bases thereof are matters which are exclusively the concern of
Olympia as a corporation and have been the subject of the Agreement;
7. Olympia likewise withdraws the Fourth, Fifth, Sixth and Seventh
Compulsory Counterclaim in so far as they refer to the claims pertaining

to Defendants Paragas, Lobrin and Datoy


shareholders and/or directors of Olympia;

in their

capacity as

8. Defendant Lobrin likewise withdraws the Fourth, Fifth, Sixth and


Seventh Compulsory Counterclaim in so far as they refer to claims
pertaining to him in his personal capacity;
9. Plaintiff likewise withdraws his complaint against Defendant Gera[l]d
P.S. Algarra based on the statements contained in the latters Answer,
and said Defendant likewise withdraws his Counterclaims against
plaintiff, however, Plaintiff reserves his right to implead the proper party
Defendant; and
10. This motion is without prejudice to the right of Defendant Paragas to
join and/or avail of the benefits of the Agreement and instant Motion
hereinafter.12
On May 8, 2003, Paragas questioned the existence of the cited BOD resolution
granting Lobrin the authority to settle the case, as well as the validity of the
agreement through an affidavit duly authenticated by the Philippine Consul,
Domingo Lucinario, Jr. He pointed to the fact that Olympia, as an entity, was
never a party in the controversy.
On July 21, 2003, the RTC granted Davids Motion to Admit the Supplemental
Complaint and approved the compromise agreement, to wit:
Further, finding the agreement in the JOINT OMNIBUS MOTION to be welltaken, not contrary to law, public policy and morals, the same is hereby
APPROVED and the motion GRANTED. The resolution is hereby rendered
based thereon, thus, the parties concerned are enjoined to faithfully comply
with all the terms and conditions stated therein. As prayed for by the parties
concerned in the JOINT OMNIBUS MOTION, let Henry G. Lobrin, Rodelio S.
Datoy and Gera[l]d PS Algarra BE DROPPED as party defendants except
defendant Federico Paragas, Jr. who filed an Opposition thereto, and the
compulsory counterclaims between defendants Lobrin, Datoy and Algarra and
plaintiff David against each other DISMISSED. The withdrawal of the motion to
declare defendant Datoy is hereby noted.13
On August 15, 2003, Paragas moved for reconsideration,14 claiming that
although the parties had the prerogative to settle their differences amicably,

the intrinsic and extrinsic validity of the compromise agreement, as well as its
basis, may be questioned if illicit and unlawful.
In its September 30, 2003 Order,15 the RTC denied the motion of Paragas.
Unperturbed, Paragas elevated the issue to the CA via a petition for certiorari
under Rule 65 of the Rules of Court.
In its July 31, 2006 Decision, the CA reversed the RTCs approval of the
compromise agreement. It explained that the agreement entered into by David,
Lobrin and Datoy was invalid for two reasons: First, the agreement was
between David and Olympia, which was not a party in the case; and second,
assuming that Olympia could be considered a party, there was no showing that
the signatory had the authority from Olympia or from the other parties being
sued to enter into a compromise.
David moved for reconsideration. In its February 23, 2007 Resolution, the CA
denied his motion. Hence, this petition.
GROUNDS OF THE PETITION
I.
RESPONDENT
COURT
LACKEDAND/OR
EXCEEDED
ITS
JURISDICTION WHEN IT MODIFIED THE ORDER OF THE TRIAL
COURT DATED JULY21, 2003, DESPITE THE ASSIGNMENT OF ERROR
BEINGSPECIFICALLY LIMITED TO THE ORDER OF THE TRIAL COURT
DATED SEPTEMBER 30, 2003 WHICH DENIED THE MOTION FOR
RECONSIDERATION FILED BY HEREIN PRIVATE RESPONDENT
II. OLYMPIA IS NOT A PARTY TO THE CASE BELOW, HENCE, THE
DISMISSAL OF THE COMPLAINT AND COMPULSORY COUNTERCLAIMS
ARE PERSONAL IN NATURE TO THE PARTIES AND IS WITHIN THE
PURVIEW OF SECTION 2 OF RULE 17
III. THERE IS DENIAL OF DUE PROCESS OF LAW WHEN RESPONDENT
COURT ANNULLED THE COMPROMISE AGREEMENT BASED ON
UNSUBSTANTIATED ALLEGATIONS OF FACT CONTAINED IN THE
PETITION.16
In his reply,17 David limited his "discussion to the issue that still has a practical
bearing on the case below,"18 that is, whether or not the nullification of the

Compromise Agreement similarly nullified the dismissal of both the complaint


as against the defendants xxx.19
In the Resolution, dated February 16,2011, the Court gave due course to the
petition and directed the parties to file their respective memoranda. 20 While
Paragas was able to file his memorandum on May 16, 2011, Davids
memorandum was dispensed with in a resolution, dated June 19, 2013, for his
failure to file one within the extended period granted by the Court. 21 Position of
David
David charges the CA with grave abuse of discretion in dispensing a relief more
than what Paragas prayed for. According to David, the CA exceeded its
jurisdiction when it annulled the compromise agreement despite the fact that
the assignment of error in the petition of Paragas before the CA was limited
only to the review of the correctness of the RTCs September 30, 2003 Order
denying the motion for reconsideration and not the July 21, 2003 Order
approving the compromise agreement. In other words, David is of the view that
because Paragas did not assail the July 21, 2003 Order, the same should not
have been modified by the CA.
He further insists that the CA should not have annulled the compromise
agreement because the July 21, 2003 RTC Order did not refer to the approval
of the compromise agreement, but to the agreement of the parties to dismiss
the claims and counterclaims against each other. In support of this position,
David takes refuge in the RTC statement that the parties had the right to
"amicably settle their issues even if subject compromise agreement had not
been entered into." To him, it was not the "Compromise Agreement" that was
approved, but the "underlying agreement between the parties to withdraw their
claims against each other which are personal to them in nature."
Lastly, David submits that he was denied due process of law when the CA
annulled the compromise agreement based on unsubstantiated allegations of
fact, that is, the allegation that the board meeting granting Lobrin the
authority to enter into compromise with him on behalf of Olympia and on
behalf of the other parties did not take place. He believes that Paragas failed to
prove his allegations and, therefore, the meeting, as supported by the minutes
signed by one Flordeliza Sacapano, must be respected as a matter of fact.
The Courts Ruling
The Court denies the petition.

The
CA
did
jurisdiction
the July 21, 2003 RTC Order

not

exceed

in

its
modifying

In his petition, David claims that the CA exceeded its jurisdiction when it
modified the July 21, 2003 Order of the RTC by admitting Davids
supplemental complaint and approving the earlier mentioned compromise
agreement even though Paragas petition for certiorari before the CA only
questioned the September 30, 2003 Order of the RTC denying his motion for
reconsideration.22
This Court is unmoved by this position advocated by David.
In countless cases, the Court has allowed the consideration of other grounds or
matters not raised or assigned as errors. In the case of Cordero vs. F.S.
Management & Development Corporation,23 the Court wrote:
While a party is required to indicate in his brief an assignment of errors and
only those assigned shall be considered by the appellate court in deciding the
case, appellate courts have ample authority to rule on matters not assigned as
errors in an appeal if these are indispensable or necessary to the just
resolution of the pleaded issues. Thus this Court has allowed the consideration
of other grounds or matters not raised or assigned as errors, to wit: 1) grounds
affecting jurisdiction over the subject matter; 2) matters which are evidently
plain or clerical errors within the contemplation of the law; 3) matters the
consideration of which is necessary in arriving at a just decision and complete
resolution of the case or to serve the interest of justice or to avoid dispensing
piecemeal justice; 4) matters of record which were raised in the trial court and
which have some bearing on the issue submitted which the parties failed to
raise or which the lower court ignored; 5) matters closely related to an error
assigned; and 6) matters upon which the determination of a question properly
assigned is dependent.[Emphases supplied]24
In this case, while it is true that Paragas petition for certiorari before the CA
only assailed the subsequent order of the RTC denying his August 15, 2003
Motion for Reconsideration, he did pray in the said motion for reconsideration
that it set aside and reverse its approval of the Joint Omnibus Motion. The
prayer reads:
WHEREFORE, it is respectfully prayed of this Honorable Court that the Order
dated 21 July 2003 be MODIFIED to SET ASIDE and REVERSE the approval of

the Joint Omnibus Motion dated 15 May 2003 and a new one be issued
DENYING said motion.25
Obviously, the resolution of his motion for reconsideration necessarily involved
the July 21, 2003 Order of the RTC as it was indispensable and inextricably
linked with the September 30, 2003 Order being assailed.
The
CA
did
compromise agreement.

not

err

in

annulling

the

At the outset, David asserts that the CA based the annulment of the
compromise agreement exclusively on the unsubstantiated allegations of
Paragas.
The Court disagrees. A careful reading of the assailed CA decision reveals that
it did not merely rely on the claims of Paragas. What the CA did was to analyze
and appreciate the circumstances behind the compromise agreement. In
revisiting and delving deep into the records, the Court indeed agrees with the
CA that the RTC gravely abused its discretion in approving the agreement for
the following reasons:
First, the subject compromise agreement could not be the basis of the
withdrawal of the respective complaint and counterclaims of the parties for it
was entered into by David with a non-party in the proceedings. Even if the
Court interprets that the RTC approved the underlying agreement to withdraw
the claims and counterclaims between the parties, the terms and conditions of
the subject compromise agreement cannot cover the interests of Olympia, being
a non-party to the suit.
Second, the RTC had no authority to approve the said compromise agreement
because Olympia was not impleaded as a party, although its participation was
indispensable to the resolution of the entire controversy.
A
compromise
the
basis
complaint
and
entered
into
suit.

agreement
could
of
dismissal/withdrawal
counterclaims
if
with
a
non-party

not
of
it
to

be
a
was
the

A compromise agreement is a contract whereby the parties make reciprocal


concessions in order to resolve their differences and, thus, avoid or put an end

to a lawsuit. They adjust their difficulties in the manner they have agreed
upon, disregarding the possible gain in litigation and keeping in mind that
such gain is balanced by the danger of losing. It must not be contrary to law,
morals, good customs and public policy, and must have been freely and
intelligently executed by and between the parties. 26 A compromise agreement
may be executed in and out of court. Once a compromise agreement is given
judicial approval, however, it becomes more than a contract binding upon the
parties. Having been sanctioned by the court, it is entered as a determination
of a controversy and has the force and effect of a judgment.27
Verily, a judicially approved compromise agreement, in order to be binding
upon the litigants with the force and effect of a judgment, must have been
executed by them. In this case, the compromise agreement was signed by David
in his capacity as the complainant in the civil case, and Olympia, through
Lobrin as its agent. The agreement made plain that the terms and conditions
the "parties" were to follow were agreed upon by David and Olympia. Datoy and
Paragas never appeared to have agreed to such terms for it was Olympia,
despite not being a party to the civil case, which was a party to the agreement.
Despite this, David claims that the concessions were made by Olympia on
behalf of the non-signatory parties and such should be binding on them.
David must note that Olympia is a separate being, or at least should be treated
as one distinct from the personalities of its owners, partners or even directors.
Under the doctrine of processual presumption, this Court has to presume that
Hong Kong laws is the same as that of the Philippines particularly with respect
to the legal characterization of Olympias legal status as an artificial person.
Elementary is the rule that under Philippine corporate and partnership laws, a
corporation or a partnership possesses a personality separate from that of its
incorporators or partners. Olympia should, thus, be accorded the status of an
artificial being at least for the purpose of this controversy.
On that basis, Olympias interest should be detached from those of directors
Paragas, Lobrin, Datoy, and even David. Their (individual directors) interest are
merely indirect, contingent and inchoate. Because Olympias involvement in the
compromise was not the same as that of the other parties who were, in the first
place, never part of it, the compromise agreement could not have the force and
effect of a judgment binding upon the litigants, specifically Datoy and Paragas.
Conversely, the judicially approved withdrawal of the claims on the basis of
that compromise could not be given effect for such agreement did not concern
the parties in the civil case.

David, nevertheless, points out that the validity of the dismissal of the claims
and counterclaims must remain on the argument that the compromise
agreement was made in their personal capacities inasmuch as he filed the
complaint against Paragas, Lobrin and Datoy also in their personal capacities.
He draws support from the Answer with Compulsory Counterclaims 28 filed by
Paragas and Lobrin. The counterclaims against him did not involve Olympia,
save for the demand to render an accounting as well as to turn over the books
of account and records pertaining to the latter. David, thus, stated:
It is very clear from the order of July 21, 2003 that the agreement being
referred to as having been approved is not the Compromise Agreement but the
agreement of the parties to dismiss the claims and counterclaims against each
other. This is obvious when the order stated that it is within the right of the
parties to amicably settle the issues even if subject Compromise Agreement
had not been entered into. Clearly, it was not the Compromise Agreement that
was approved, because precisely it involved Olympia, but the underlying
agreement between the parties to withdraw their claims against each other
which are personal to them in nature. As noted by the trial court, even without
the Compromise Agreement, parties could still settle the case amicably and
withdraw the claims against one another which is precisely what the parties
did.29
His contention is devoid of merit.
While David repeatedly claims that his complaint against Paragas, Lobrin and
Datoy was personal in character, a review of the causes of action raised by him
in his complaint shows that it primarily involved Olympia. As defined, a cause
of action is an act or omission by which a party violates a right of another. It
requires the existence of a legal right on the part of the plaintiff, a correlative
obligation of the defendant to respect such right and an act or omission of such
defendant in violation of the plaintffss rights.30
In his complaint, David raised three causes of action. The first one dealt with
the alleged omission on the part of the other venture partners to respect his
right, being Olympias beneficial owner and PPIs principal agent under the
GAA, over the income generated from the sale PPIs pre-need plans. The second
dealt with his right over all amounts that the venture partners disbursed in
excess of those authorized by him, under the premise that he remained
Olympias beneficial owner. The third dealt with the acts of the venture
partners in causing undue humiliation and shame when he was prevented

from boarding his Singapore-bound plane pursuant to the Watch-List Order


issued by the Bureau of Immigration at the behest of a letter sent by the
counsel of Paragas. Accordingly, David prayed that the RTC:
a. Declare him as the one entitled to the commission due under the regular
and Pares-Pares programs net of the agents commission in his capacity as
Principal Agent under the General Agency Agreement with Philam Plans, Inc.;
b. Hold the cash deposits of P19,302,902.00 to the extent of P18,631,900.00 as
a trust fund for the benefit of the subscribers of the Pares-Pares Program and
validly held in trust by [him];
c. Order Defendant RCBC to recognize no other signatory to said deposits
except [him].
x x x x31
Essentially, David was asking for judicial determination of his rights over
Olympias revenues, funds in the RCBC bank accounts and the amounts used
and expended by Olympia through the acts of its directors/defendants. Nothing
therein can be said to be "personal" claims against Paragas, Lobrin and Datoy,
except for his claim for damages resulting from the humiliation he suffered
when he was prevented from boarding his Singapore-bound plane. Obviously,
the argument that they executed the compromise agreement in their personal
capacities does not hold water.
For even if the Court looks closer at the concessions made, many provisions
deal with Olympias interests instead of the personal claims they have against
one another. A review of the Joint Omnibus Motion would also show that the
compromise agreement dealt more with David and Olympia. Given this,
Olympia did not have the standing in court to enter into a compromise
agreement unless impleaded as a party. The RTC did not have the authority
either to determine Olympias rights and obligations. Furthermore, to allow the
compromise agreement to stand is to deprive Olympia of its properties and
interest for it was never shown that the person who signed the agreement on its
behalf had any authority to do so.
More importantly, Lobrin, who signed the compromise agreement, failed to
satisfactorily prove his authority to bind Olympia. The CA observed, and this
Court agrees, that the "board resolution" allegedly granting authority to Lobrin
to enter into a compromise agreement on behalf of Olympia was more of a part

of the "minutes" of a board meeting containing a proposal to settle the case


with David or to negotiate a settlement. It should be noted that the said
document was not prepared or issued by the Corporate Secretary of Olympia
but by a "Secretary to the Meeting." Moreover, the said resolution was neither
acknowledged before a notarial officer in Hong Kong nor authenticated before
the Philippine Consul in Hong Kong. 32 Considering these facts, the RTC should
have denied the Joint Omnibus Motion and disapproved the compromise
agreement. In fine, Olympia was not shown to have properly consented to the
agreement, for the rule is, a corporation can only act through its Board of
Directors or anyone with the authority of the latter. To allow the compromise
agreement to stand is to deprive Olympia of its properties and interest for it
was never shown that Lobrin had the necessary authority to sign the
agreement on Olympias behalf.
Olympia
Party

is

an

indispensable

In Lotte Phil. Co., Inc. v. Dela Cruz,33 the Court reiterated that an indispensable
party is a party-in-interest without whom no final determination can be had of
an action, and who shall be joined either as plaintiffs or defendants. The
joinder of indispensable parties is mandatory. The presence of indispensable
parties is necessary to vest the court with jurisdiction, which is "the authority
to hear and determine a cause, the right to act in a case."34
Considering that David was asking for judicial determination of his rights in
Olympia, it is without a doubt, an indispensable party as it stands to be
injured or benefited by the outcome of the main proceeding. It has such an
interest in the controversy that a final decree would necessarily affect its
rights. Not having been impleaded, Olympia cannot be prejudiced by any
judgment where its interests and properties are adjudicated in favor of another
even if the latter is a beneficial owner. It cannot be said either to have
consented to the judicial approval of the compromise, much less waived
substantial rights, because it was never a party in the proceedings.
Moreover, Olympias absence did not confer upon the RTC the jurisdiction or
authority to hear and resolve the whole controversy.1wphi1 This lack of
authority on the part of the RTC which flows from the absence of Olympia,
being an indispensable party, necessarily negates any binding effect of the
subject judicially-approved compromise agreement.

Time and again, the Court has held that the absence of an indispensable party
renders all subsequent actions of the court null and void for want of authority
to act, not only as to the absent parties but even to those present. The failure
to implead an indispensable party is not a mere procedural matter. Rather, it
brings to fore the right of a disregarded party to its constitutional rights to due
process. Having Olympia's interest being subjected to a judicially-approved
agreement, absent any participation in the proceeding leading to the same, is
procedurally flawed. It is unfair for being violative of its right to due process. In
fine, a holding that is based on a compromise agreement that springs from a
void proceeding for want of jurisdiction over the person of an indispensable
party can never become binding, final nor executory and it may be "ignored
wherever and whenever it exhibits its head."35
Lest it be misunderstood, after the remand of this case to the R TC, the parties
can still enter into a compromise agreement on matters which are personal to
them. That is their absolute right. They can dismiss their claims and
counterclaims against each other, but the dismissal should not be dependent
or contingent on a compromise agreement, one signatory to which is not a
party. It should not also involve or affect the rights of Olympia, the non-party,
unless it is properly impleaded as one. Needless to state, a judicial
determination of the rights of Olympia, when it is not a party, would
necessarily affect the rights of its shareholders or partners, like Paragas,
without due process of law.
WHEREFORE, the petition is DENIED. The July 31, 2006 Decision of the Court
of Appeals and its February 23, 2007 Resolution in CA-G.R. SP No. 80942 are
hereby AFFIRMED.
SO ORDERED.

Venue
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 204444

January 14, 2015

VIRGILIO C. BRIONES, Petitioner,


vs.
COURT OF APPEALS and CASH ASIA CREDIT
CORPORATION, Respondents.
DECISION

PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 are the Decision2 dated March 5, 2012
and the Resolution3 dated October 4, 2012 of the Court of Appeals (CA) in CAG.R. SP No. 117474, which annulled the Orders dated September 20,
20104 and October 22, 20105 of the Regional Trial Court of Manila, Branch 173
(RTC) in Civil Case No. 10-124040, denying private respondent Cash Asia
Credit Corporation's (Cash Asia) motion to dismiss on the ground of improper
venue.
The Facts
The instant case arose from a Complaint 6 dated August 2, 2010 filed by Virgilio
C. Briones (Briones) for Nullity of Mortgage Contract, Promissory Note, Loan
Agreement, Foreclosure of Mortgage, Cancellation of Transfer Certificate of Title
(TCT) No. 290846, and Damages against Cash Asia before the RTC. 7 In his
complaint, Briones alleged that he is the owner of a property covered by TCT
No. 160689 (subject property), and that, on July 15, 2010, his sister informed
him that his property had been foreclosed and a writ of possession had already
been issued in favor of Cash Asia.8 Upon investigation, Briones discovered that:
(a) on December 6, 2007, he purportedly executed a promissory note, 9 loan
agreement,10 and deed of real estate mortgage 11 covering the subject property
(subject contracts) in favor of Cash Asia in order to obtain a loan in the amount
of P3,500,000.00 from the latter;12 and (b) since the said loan was left unpaid,
Cash Asia proceeded to foreclose his property. 13 In this relation, Briones
claimed that he never contracted any loans from Cash Asia as he has been
living and working in Vietnam since October 31, 2007. He further claimed that
he only went back to the Philippines on December 28, 2007 until January 3,
2008 to spend the holidays with his family, and that during his brief stay in the
Philippines, nobody informed him of any loan agreement entered into with
Cash Asia. Essentially, Briones assailed the validity of the foregoing contracts
claiming his signature to be forged.14
For its part, Cash Asia filed a Motion to Dismiss 15 dated August 25, 2010,
praying for the outright dismissal of Brioness complaint on the ground of
improper venue.16 In this regard, Cash Asia pointed out the venue stipulation

in the subject contracts stating that "all legal actions arising out of this notice
in connection with the Real Estate Mortgage subject hereof shall only be
brought in or submitted tothe jurisdiction of the proper court of Makati
City."17 In view thereof, it contended that all actions arising out of the subject
contracts may only be exclusively brought in the courts of Makati City, and as
such, Brioness complaint should be dismissed for having been filed in the City
of Manila.18
In response, Briones filed an opposition, 19 asserting, inter alia, that he should
not be covered by the venue stipulation in the subject contracts as he was
never a party therein. He also reiterated that his signatures on the said
contracts were forgeries.20
The RTC Ruling
In an Order21 dated September 20, 2010, the RTC denied Cash Asias motion to
dismiss for lack of merit. In denying the motion, the RTC opined that the
parties must be afforded the right to be heard in view of the substance of
Brioness cause of action against Cash Asia as stated in the complaint. 22
Cash Asia moved for reconsideration23 which was, however, denied in an
Order24 dated
certiorari

25

October

22,

2010.

Aggrieved,

it

filed

petition

for

before the CA.

The CA Ruling
In a Decision26 dated March 5, 2012, the CA annulled the RTC Orders, and
accordingly, dismissed Brioness complaint without prejudice to the filing of the
same before the proper court in Makati City. 27 It held that the RTC gravely
abused its discretion in denying Cash Asias motion to dismiss, considering
that the subject contracts clearly provide that actions arising therefrom should
be exclusively filed before the courts of Makati City only. 28 As such, the CA
concluded that Brioness complaint should have been dismissed outright on
the ground of improper venue,29 this, notwithstanding Brioness claim of
forgery.

Dissatisfied, Briones moved for reconsideration,30 which was, however, denied


in a Resolution31 dated October 4, 2012, hence, this petition.
The Issue Before the Court
The primordial issue for the Courts resolution is whether or not the CA gravely
abused its discretion in ordering the outright dismissal of Brioness complaint
on the ground of improper venue.
The Courts Ruling
The petition is meritorious.
At the outset, the Court stresses that "[t]o justify the grant of the extraordinary
remedy of certiorari, [the petitioner] must satisfactorily show that the court or
quasi-judicial authority gravely abused the discretion conferred upon it. Grave
abuse of discretion connotes judgment exercised in a capricious and whimsical
manner that is tantamount to lack of jurisdiction. To be considered grave,
discretion must be exercised in a despotic manner by reason of passion or
personal hostility, and must be so patent and gross as to amount to an evasion
of positive duty or to a virtual refusal to perform the duty enjoined by or to act
at all in contemplation of law."32 Guided by the foregoing considerations, the
Court finds that the CA gravely abused its discretion in ordering the outright
dismissal of Brioness complaint against Cash Asia, without prejudice to its refiling before the proper court in Makati City.
Rule 4 of the Rules of Court governs the rules on venue of civil actions, to wit:
Rule

VENUE OF ACTIONS
SECTION 1. Venue of real actions. Actions affecting title to or possession of
real property, or interest therein, shall be commenced and tried in the proper
court which has jurisdiction over the area wherein the real property involved,
or a portion thereof, is situated.

Forcible entry and detainer actions shall be commenced and tried in the
municipal trial court of the municipality or city wherein the real property
involved, or a portion thereof, is situated.
SEC. 2. Venue of personal actions. All other actions may be commenced and
tried where the plaintiff or any of the principal plaintiffs resides, or where the
defendant or any of the principal defendants resides, or in the case of a nonresident defendant where he may be found, at the election of the plaintiff.
SEC. 3. Venue of actions against nonresidents. If any of the defendants does
not resideand is not found in the Philippines, and the action affects the
personal status of the plaintiff, or any property of said defendant located in the
Philippines,the action may be commenced and tried in the court of the place
where the plaintiff resides, or where the property or any portion thereof is
situated or found.
SEC. 4. When Rule not applicable. This Rule shall not apply
(a) In those cases where a specific rule or law provides otherwise; or
(b) Where the parties have validly agreed in writing before the filing of the
action on the exclusive venue thereof.
Based therefrom, the general rule is that the venue of real actions is the court
which has jurisdiction over the area wherein the real property involved, or a
portion thereof, is situated; while the venue of personal actions is the court
which has jurisdiction where the plaintiff or the defendant resides, at the
election of the plaintiff. As an exception, jurisprudence in Legaspi v. Rep. of the
Phils.33 instructs that the parties, thru a written instrument, may either
introduce another venue where actions arising from such instrument may be
filed, or restrict the filing of said actions in a certain exclusive venue, viz.:
The parties, however, are not precluded from agreeing in writing on an
exclusive venue, as qualified by Section 4 of the same rule. Written stipulations
as to venue may be restrictive in the sense that the suit may be filed only in the
place agreed upon, or merely permissive in that the parties may file their

suitnot only in the place agreed upon but also in the places fixed by law. As in
any other agreement, what is essential is the ascertainment of the intention of
the parties respecting the matter.
As regards restrictive stipulations on venue, jurisprudence instructs that it
must be shown thatsuch stipulation is exclusive.1wphi1 In the absence of
qualifying or restrictive words, such as "exclusively," "waiving for this purpose
any other venue," "shall only" preceding the designation of venue, "to the
exclusion of the other courts," or words of similar import, the stipulation
should be deemed as merely an agreement on an additional forum,not as
limiting venue to the specified place.34 (Emphases and underscoring supplied)
In this relation, case law likewise provides that in cases where the complaint
assails only the terms, conditions, and/or coverage of a written instrument and
not its validity, the exclusive venue stipulation contained therein shall still be
binding on the parties, and thus, the complaint may be properly dismissed on
the ground of improper venue. 35 Conversely, therefore, a complaint directly
assailing the validity of the written instrument itself should not be bound by
the exclusive venue stipulation contained therein and should be filed in
accordance with the general rules on venue. To be sure, it would be inherently
consistent for a complaint of this nature to recognize the exclusive venue
stipulation when it, in fact, precisely assails the validity of the instrument in
which such stipulation is contained.
In this case, the venue stipulation found in the subject contracts is indeed
restrictive in nature, considering that it effectively limits the venue of the
actions arising therefrom to the courts of Makati City. However, it must be
emphasized that Briones' s complaint directly assails the validity of the subject
contracts, claiming forgery in their execution. Given this circumstance, Briones
cannot be expected to comply with the aforesaid venue stipulation, as his
compliance therewith would mean an implicit recognition of their validity.
Hence, pursuant to the general rules on venue, Briones properly filed his
complaint before a court in the City of Manila where the subject property is
located.

In conclusion, the CA patently erred and hence committed grave abuse of


discretion in dismissing Briones's complaint on the ground of improper venue.
WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated March
5, 2012 and the Resolution dated October 4, 2012 of the Court of Appeals in
CA-G.R. SP No. 117474 are hereby ANNULLED and SET ASIDE. The Orders
dated September 20, 2010 and October 22, 2010 of the Regional Trial Court of
Manila, Branch 173 in Civil Case No. 10-124040 are REINSTATED.
SO ORDERED.