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Stevenson S. Yu, XU Law, 1 Semester 2017-2018 RemRev 1 Cases (Judge Escobido)


1, Ofilado vs Andal

G.R. No. 192270, January 26, 2015

IRENE D. OFILADA, PETITIONER, VS. SPOUSES RUBEN ANDAL AND MIRAFLOR ANDAL,
RESPONDENTS.

DECISION

DEL CASTILLO, J.:

This Petition for Review on Certiorari[1] assails the July 13, 2009 Decision[2] of the Court of Appeals (CA) in CA-
G.R. CV[3] No. 101603 which: (1) granted the Petition for Review[4] filed therein; (2) reversed and set aside the
August 28, 2007 Decision[5] of the Regional Trial Court (RTC), Lucena City, Branch 56 in SPEC. CIV. ACTION
2007-01-A, affirming in toto the February 27, 2007 Decision[6] of the Municipal Trial Court (MTC) of San Antonio,
Quezon in Civil Case No. 188 which, in turn, ordered the ejectment of respondents spouses Ruben Andal and
Miraflor Andal (spouses Andal) from the properties of petitioner Irene Ofilada (Irene); and, (3) declared the said
MTC Decision null and void for lack of jurisdiction.

Also questioned in this Petition is the CA’s May 6, 2010 Resolution[7] denying Irene’s Motion for Reconsideration
of the assailed CA Decision.

Factual Antecedents

Irene, together with her husband Carlos Ofilada (Carlos), bought from the heirs of Teresita Liwag (Teresita) a
27,974-square meter parcel of land principally planted with rambutan, a number of coconut trees and other fruit-
bearing plants located in Barrio Puri, Tiaong, Quezon. The sale is evidenced by a February 13, 1997 Extra-
Judicial Settlement of Estate with Absolute Sale[8] wherein respondent Miraflor Andal (Miraflor), who brokered the
sale of the property, signed as ‘tenant.’ Apparently, ten days prior to the sale, Miraflor appeared before Anastacio
Lajara (Anastacio), the then Barangay Agrarian Reform Council (BARC) Chairman of Barangay Puri, San
Antonio, and executed a Pagpapatunay[9] stating that:
Sa kinauukulan:

Ito ay pagpapatunay na si Miraflor Andal ay kusang[-]loob na dumulog sa aking tanggapan upang ipagbigay[-
]alam na ang lupa na pag-aari ni TERESITA LIWAG x x x ay walang “tenant” o magtatrabaho at hiniling niya na
ang nasabing lupa ay mapalipat sa pangalan ng mga bumili na walang iba kundi sina Carlos at Irene Ofilada.

Pinagtitibay nya na wala na siyang paghahabol na ano man laban sa may-ari o kahalili nito sa karapatan
sapagkat siya ay tumanggap na ng kaukulang halaga hinggil sa naging pagtatrabaho niya sa nasabing lupa at
gayon din ang kanyang mga magulang.

SA KATUNAYAN NG LAHAT NG ITO ay ako ay nagbibigay ng pahintulot na ang nasabing lupa ay mapagbili na
at mapatala sa bagong may-ari na ligtas sa ano mang pananagutan.[10]

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Two weeks after the sale or on February 27, 1997, Miraflor, with the consent of her husband, respondent Ruben
Andal (Ruben), executed a Sinumpaang Salaysay[11] wherein she acknowledged Irene and Carlos as the new
owners of the property. While it was stated therein that she will continue to take care of the property, she
nevertheless waived any tenancy rights that she and her husband might have over the land, viz.:
NA AKO ang [n]agtatrabaho o “tenant” sa lupang pag-aari ni TERESITA LIWAG at ang nasabing lupa ay
matatagpuan sa Brgy. Puri, San Antonio, Quezon x x x

NA AKO ay kusang loob na nag-alok sa tagapagmana ng may-ari ng lupa na pinangatawanan ni Ginoong JOSE
LIWAG na ipagbili na ang nasabing lupa sa mag-asawang CARLOS OFILADA at IRENE OFILADA sapagkat
magpapatuloy naman ang aking pangangalaga sa nasabing lupa;

NA AKO at ang aking asawa ay kusang loob na sumang[-]ayon na ang Titulo ng [na]sabing lupa ay mapalipat sa
mga bumili at simula sa araw na ito ay matahimik kong isinusulit ang pamomosesyon sa mga bagong may-ari;

NA kami ay kusang[-]loob na tumatalikod na sa karapatan ko bilang “tenant” na kahit kailan [ay] hindi na
maghahabol laban sa dating may-ari o sa kaniyang mga tagapagmana sapagkat wala silang ano mang
pananagutan sa amin at gayon[din] ang bagong may-ari na mag-asawang CARLOS OFILADA at IRENE
OFILADA;[12]
Eventually, the land was registered in the names of Irene and Carlos.[13]

Eight years later or in October 2005, Irene filed against the spouses Andal a Complaint[14] for Ejectment and
Damages before the MTC of San Antonio, Quezon. She averred that aside from the aforementioned property, she
and Carlos also acquired an 8,640-square meter ricefield located in Pulo, San Antonio, Quezon. For humanitarian
reasons, she acceded to the spouses Andal’s request to take care of her two parcels of land, provided that they
would not be considered as tenants. To stress the fact that neither she nor the spouses Andal intended that the
latter be deemed as tenants, Irene pointed to the following: (1) the condition for her purchase of the property in
Tiaong that the same should not have any tenants; and (2) Miraflor’s execution of a Sinumpaang Salaysay
wherein she waived any tenancy rights that she and her husband might have over the said property.

In their Answer,[15] the spouses Andal denied Irene’s allegations and claimed that they were tenants of Irene’s
predecessor-in-interest and continued to be such despite the transfer of ownership of the properties to Irene.
They likewise contended that since the suit is an action to dispossess them as tenants, it is not the MTC which
has jurisdiction over the complaint but the Department of Agrarian Reform Adjudication Board (DARAB).

Rejecting the tenancy claim, Irene averred in her Memorandum[16] that her real properties are not covered by
agrarian reform laws as they are within the retention limit allowed by law. She again stressed that the spouses
Andal had already voluntarily surrendered their rights as tenants way back in 1997 as evidenced by the
Pagpapatunay and the Sinumpaang Salaysay. She added the said spouses voluntarily waived their rights and
received P1.1 million as commission for brokering the sale of the Tiaong property to her. This was after Irene
made clear that the sale would not materialize and, consequently spouses Andal would not get the commission, if
the property has tenants. Irene averred that the spouses Andal’s receipt of the said amount of money, being
advantageous to them, is a valid ground for termination of tenancy relations.

Ruling of the Municipal Trial Court


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Prior to the preliminary conference, the MTC heard the respective sides of the parties for a preliminary
determination of the existence of tenancy.

The spouses Andal, in support of their claim that the controversy should be resolved by the DARAB because of
the issue of tenancy, submitted the following evidence to prove their status as Irene’s tenants: (1) their December
19, 2005 Affidavit[17] attesting that: a) they agreed to act as agents for the sale of the lands on the condition that
they would remain as tenants; b) they personally cultivated Irene’s lands and; c) they have been receiving 1/4
shares of the proceeds of the sales of the coconut, rambutan, and harvested palay; (2) the December 19, 2005
Affidavit[18] of Anastacio corroborating the spouses Andal’s statements in their affidavit of even date; (3) a
receipt[19] dated July 27, 2005 showing that Irene received from the spouses Andal P9,694.00 as her share in the
harvest equivalent to 30 sacks of palay and; 4) a February 27, 1997 Affidavit of Landholding[20] executed by
Irene and Carlos, the second paragraph of which provides:
2. That we hereby testify that said parcel of land containing an area of 27,974 Square Meters is the only parcel of
agricultural land registered in our names; and we hereby agree that the same tenant Miraflor Andal, will continue
as a tenant, over the said parcel of land. (Emphasis supplied)
On the other hand, Irene insisted that the spouses Andal are not tenants but mere caretakers of her lands. She
disputed the documentary evidence of the said spouses as follows: (1) it is the Pagpapatunay issued by
Anastacio in 1997 and furnished the Registry of Deeds of Lucena City and Department of Agrarian Reform (DAR)
which must be considered as more credible evidence over his apparently fabricated affidavit executed at a later
time (2005); (2) the share in the produce of the lands as reflected in the receipt was the only share given to her by
the spouses Andal throughout the eight years that they took care of her properties; and, (3) the copy of the
Affidavit of Landholding presented by the spouses Andal contained in the second paragraph thereof an insertion
made through a manual typewriter. Irene claimed that the said insertion which reads “and we [Irene and Carlos]
hereby agree, that the same tenant Miraflor Andal, will continue as a tenant, over the said parcel of land,” was
made without her knowledge and consent. In fact, her copy[21] of the said document does not contain such
inserted portion.

In its August 14, 2006 Order,[22] the MTC found no prima facie showing of tenancy relations between the parties
and proceeded with the case.

On February 27, 2007, the MTC rendered its Decision[23] holding that spouses Andal failed to adduce proof that
they are tenants. It gave weight to the Pagpapatunay issued by Anastacio in 1997 as against the affidavit he
executed in 2005 which it found ambivalent as to whether spouses Andal are working as tenants on the lands of
Irene. The MTC did not also accord any evidentiary weight to the copy of the Affidavit of Landholding presented
by spouses Andal because of the doubtful insertion. Hence, it concluded that the spouses Andal were in
possession of the properties by mere tolerance of Irene. It ultimately ruled:
WHEREFORE, on the basis of the foregoing findings, the Court hereby renders judgment in favor of the plaintiff
and against the defendants, ordering:

a) Defendants and all other persons living in said premises without permission of the plaintiff, to vacate and
restore to the plaintiff the peaceful possession and occupation of the landholdings in question;

b) Defendants to pay the plaintiff the amount of P30,000.00 as attorney’s and appearance fees[;]
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c) Defendants to pay the plaintiff the amount of P80,000.00 as actual damages.

SO ORDERED.[24]
Ruling of the Regional Trial Court

Resolving the appeal of the spouses Andal, the RTC in its August 28, 2007

Decision[25] affirmed in toto the MTC ruling. The motion for reconsideration thereto was also denied in the RTC
Resolution[26] dated November 22, 2007.

Ruling of the Court of Appeals

The CA, on the other hand, took a different view of the case. In its assailed Decision[27] of July 13, 2009, the CA
ratiocinated that since the existence of tenancy relations between the previous owners of the properties and the
spouses Andal is undisputed, the question of whether the said spouses may be dispossessed therefrom
constitutes an agrarian dispute despite the severance of such relations. This is considering that severance of the
tenurial arrangement does not render the action beyond the ambit of an agrarian dispute and, hence, jurisdiction
over the same remains with the DARAB. In support of its conclusion, the CA cited the cases of Rivera v.
David[28] and Spouses Amurao v. Spouses Villalobos.[29]

The dispositive portion of the CA Decision reads:


WHEREFORE, the instant petition for review is GRANTED. The assailed Decision of the Regional Trial Court of
Lucena City, Branch 56, in Special Civil Case No. 2007-01-A, is hereby REVERSED and SET ASIDE. The
Decision dated 27 February 2007 of the Municipal Trial Court of San Antonio, Quezon in Civil Case No. 188, is
declared NULL and VOID for lack of jurisdiction.

SO ORDERED.[30]
Irene filed a Motion for Reconsideration,[31] which was denied in the CA Resolution[32] dated May 6, 2010.

Hence, this Petition.

The Issue

Forcible entry and unlawful detainer cases fall under the exclusive original jurisdiction of the metropolitan trial
courts, municipal trial courts, and the municipal circuit trial courts.[33] On the other hand, the DAR is vested with
primary jurisdiction to determine and adjudicate agrarian reform matters and has exclusive original jurisdiction
over all matters involving the implementation of agrarian reform.[34] As DAR’s adjudicating arm,[35] it is the
DARAB that has exclusive and original jurisdiction involving all agrarian disputes. Republic Act (RA) No. 6657,
Section 3(d) defines an ‘agrarian dispute’ as follows:
(d) Agrarian Dispute refers to any controversy relating to tenurial arrangements, whether leasehold, tenancy,
stewardship or otherwise, over lands devoted to agriculture, including disputes concerning farmworkers’
associations or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange
terms or conditions of such tenurial arrangements.
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It includes any controversy relating to compensation of lands acquired under this Act and other terms and
conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform
beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner
and tenant, or lessor and lessee.
The term also “refers to any controversy relating to, among others, tenancy over lands devoted to agriculture.”[36]

Significantly, Rule II of the 2009 DARAB Rules of Procedure reads:


SECTION 1. Primary and Exclusive Original and Appellate Jurisdiction. – The Board shall have primary and
exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the
implementation of the Comprehensive Agrarian Reform Program (CARP) under R.A. No. 6657, as amended by
R.A. No. 9700, E.O. Nos. 228, 229, and 129-A, R.A. No. 3844 as amended by R.A. No. 6389, Presidential Decree
No. 27 and other agrarian laws and their Implementing Rules and Regulations. Specifically, such jurisdiction shall
include but not be limited to cases involving the following:

a. The rights and obligations of persons, whether natural or juridical, engaged in the management, cultivation,
and use of all agricultural lands covered by R.A. No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law (CARL), as amended, and other related agrarian laws; x x x

xxxx

d. Those cases involving the ejectment and dispossession of tenants and/or leaseholders;
With the above points on jurisdictions having been laid, the Court now resolves the crucial issue in the case of
whether tenancy relationship between Irene and the spouses Andal exists as to strip off the MTC of its jurisdiction
over Irene’s suit for unlawful detainer.

Our Ruling

We grant the Petition.

The factual circumstances in Rivera and Amurao clearly make out cases involving agrarian dispute.

As the CA relied on Rivera and Amurao, it is wise to revisit the factual milieu of the said cases.

In its assailed Decision, the CA quoted the following pronouncement which was restated[37] in Rivera, viz:
Even if the tenurial arrangement has been severed, the action still involves an incident arising from the landlord
and tenant relationship. Where the case involves the dispossession by a former landlord of a former tenant of the
land claimed to have been given as compensation in consideration of the renunciation of the tenurial rights, there
clearly exists an agrarian dispute. On this point the Court has already ruled:
Indeed, Section 21 of Republic Act No. 1199, provides that ‘all cases involving the dispossession of a tenant by
the landlord or by a third party and/or the settlement and disposition of disputes arising from the relationship of
landlord and tenant … shall be under the original and exclusive jurisdiction of the Court of Agrarian Relations.’
This jurisdiction does not require the continuance of the relationship of landlord and tenant – at the time of the
dispute. The same may have arisen, and oftentimes arises, precisely from the previous termination of such
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relationship. If the same existed immediately, or shortly, before the controversy and the subject matter thereof is
whether or not said relationship has been lawfully terminated, or if the dispute otherwise springs or originates from
the relationship of landlord and tenant, the litigation is (then) cognizable only by the Court of Agrarian
Relations…[38]
In the said case, Agustin Rivera (Agustin) was in possession of a 1.8-hectare portion of the 5-hectare lot owned in
common by the heirs of Cristino and Consolacion David, and these heirs demanded that he vacate the premises.
Thus, Agustin filed a Complaint to Maintain Peaceful Possession before the Provincial Agrarian Reform
Adjudication Board (PARAB). He averred that his possession of the property was, originally, as registered tenant
of the said heirs’ predecessor-in-interest, Cristino, as evidenced by the certification issued by the Municipal
Agrarian Reform Office (MARO). Subsequently in 1957, he became the lot owner because the spouses Cristino
and Consolacion David gave him the 1.8-hectare land as his ‘disturbance compensation,’ in exchange for the
renunciation of his tenurial rights. On the other hand, Nemesio David (Nemesio), one of the heirs, argued that the
DAR has no jurisdiction over the case as the same only involves the issue of ownership of the land.

The DAR (thru the PARAB and the DARAB) assumed jurisdiction over the case and went on to render judgments
in favor of Agustin. The CA, however, ruled that the DAR no longer had any jurisdiction on the ground that the
alleged tenancy, per Agustin’s own admission, had already ended in 1957. Thus, it set aside the respective
decisions of the PARAB and the DARAB. The Court, though, did not agree with the CA on the issue of
jurisdiction. Although it denied Agustin’s appeal because he was not able to sufficiently prove his ownership of the
land, DAR’s jurisdiction over the case was nevertheless upheld. And it was at that point that the above-quoted
pronouncement was restated.

Indeed in Rivera, the severance of the tenancy relations when the suit was filed did not matter because the prior
agricultural tenancy served as the juridical tie which compelled the characterization of the controversy as an
agrarian dispute. This is due to the fact that the land from which Agustin was being dispossessed was claimed to
have been owned by him by way of disturbance compensation given to him as a former tenant by his former
landlord.

On the other hand, in Amurao, the spouses Amurao bought in 1987 from a certain Ruperto Endozo a parcel of
land which was then tenanted by the spouses Villalobos. The spouses Amurao allowed the spouses Villalobos to
continue working on the land until such time that their need for the same arises. In 1994, the therein parties
executed a Kasulatan in which the spouses Villalobos promised to surrender the possession of the lot should the
spouses Amurao need it, while the latter, in return, bound themselves to give the spouses Villalobos a 1,000-sqm.
portion of the land. But because the spouses Villalobos reneged on their promise in accordance with the
Kasulatan, the spouses Amurao filed an ejectment case against them before the Municipal Circuit Trial Court
(MCTC). On the defense that the issue concerns an agrarian dispute, the spouses Villalobos questioned the trial
court’s jurisdiction. Both the MCTC and the RTC upheld their jurisdiction over the case but the CA ruled
otherwise.

Before this Court, the spouses Amurao argued that the tenancy relationship between them and the spouses
Villalobos was terminated upon the execution of the Kasulatan. Hence, there can be no agrarian dispute between
them over which the DAR can take cognizance of. The Court held:
The instant case undeniably involves a controversy involving tenurial arrangements because the Kasulatan will
definitely modify, nay terminate the same. Even assuming that the tenancy relationship between the parties had
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ceased due to the Kasulatan, there still exists an agrarian dispute because the action involves an incident arising
from the landlord and tenant relationship.

xxxx

In the case at bar, petitioners’ claim that the tenancy relationship has been terminated by the Kasulatan is of no
moment. As long as the subject matter of the dispute is the legality of the termination of the relationship, or if the
dispute originates from such relationship, the case is cognizable by the DAR, through the DARAB. The severance
of the tenurial arrangement will not render the action beyond the ambit of an agrarian dispute.[39]
To restate, what brought Rivera under the ambit of an agrarian dispute is the fact that the land from which Agustin
was being dispossessed of by the heirs of his former landlord is claimed to have been given to him by the said
former landlord as consideration for the renunciation of his tenurial rights. While in Amurao, it was the issue of
whether the Kasulatan entered into by the parties terminated the landlord-tenant relationship between them.
Clearly, as the action in both cases involved an incident arising from landlord-tenant relationship, the severance
or alleged severance of such relationship did not take them beyond the ambit of an agrarian dispute and,
consequently, it is DAR which has jurisdiction over the said cases.

Rivera and Amurao are not on all fours with the present case.

Here, Irene claims that there can be no agrarian dispute since there exists no landlord-tenant relationship
between her and the spouses Andal. If ever such a relationship existed, it was between the former owner of the
properties and the spouses Andal and the same had already been renounced by Miraflor prior to Irene’s
acquisition of the properties. The CA, however, ruled that even if the landlord-tenant relationship between the
previous owner and the spouses Andal had already ceased, the action to dispossess the latter from the subject
properties still involves an agrarian dispute, as held in Rivera and Amurao.

Suffice it to say, however, that the present case is not on all fours with Rivera and Amurao.

As already discussed, in Rivera, the land involved is claimed to have been given to the former tenant by the
former landlord by way of disturbance compensation. Hence, even if the landlord-tenant relationship was asserted
to have been severed as early as 1957, the Court considered the action as arising from an agrarian dispute, the
rightful possession of the land being an incident of such previous landlord-tenant relationship. In the present case,
there is no claim that the subject properties were given to the spouses Andal by their former landlord as a form of
disturbance compensation. While the spouses Andal in this case refuse to surrender the properties to Irene on the
ground that they are tenants of the same just like in Amurao, it cannot be gainsaid that in Amurao, the tenancy
relations between the former owners of the property involved therein and the spouses Villalobos, had,
undisputedly, been continued by and between the said spouses and the spouses Amurao when the latter
acquired the property. And it was on that supposition that the Court held that even if the Kasulatan executed by
the spouses Amurao and the spouses Villalobos terminated the tenancy relationship between them, the action of
the former to dispossess the latter from the property tenanted involved an agrarian dispute. However, in this case,
unlike in Amurao the severance of the tenancy relations between the former owners of the properties and the
spouses Andal, as well as the non-existence of a similar relationship between the said spouses and Irene as the
new owner, were sufficiently shown as will be discussed below. Hence, the said pronouncement made in Amurao
finds no application in this case.
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The tenancy relationship between the former owners of the properties and the spouses Andal was clearly severed
prior to Irene’s purchase of the same; no such relationship was subsequently created between Irene and the
spouses Andal.

Certainly telling are the Pagpapatunay and the Sinumpaang Salaysay which were voluntarily executed and never
impugned by the spouses Andal. Both contain express declarations that at the time Irene and her husband bought
the property, the tenancy then existing between the heirs of Teresita as former owners and the spouses Andal as
tenants had already ceased, and that no tenancy relations would continue between the latter and the new owner,
Irene. Notably, the Sinumpaang Salaysay, being a public document, is evidence of the facts in the clear
unequivocal manner therein expressed and has in its favor the presumption of regularity.[40] The spouses Andal
are bound by their admissions against their own interest.

Indeed, while a tenancy relationship cannot be extinguished by the sale, alienation, or transfer of the legal
possession of the landholding,[41] the same may nevertheless be terminated due to circumstances more
advantageous to the tenant and his/her family.[42] Here, records show that Miraflor, who brokered the sale
between the heirs of Teresita and Irene, voluntarily executed, days prior to the Extrajudicial Settlement of Estate
with Absolute Sale, her Pagpapatunay before the BARC Chairman stating that she and her parents have already
received a ‘sufficient consideration’ for her to release her former landlord and the purchaser of the lot from liability.
As later disclosed by Irene during trial, such ‘sufficient consideration’ amounted to P1.1 million by way of
disturbance compensation, a factual allegation which was again never refuted by the spouses Andal before the
lower court and was found to be an uncontroverted fact by the CA. To the Court, the said amount is adequate
enough for the spouses Andal to relinquish their rights as tenants. In fine, it can be reasonably concluded that the
tenancy relationship between the previous owners and the spouses Andal had already been severed.

The next question now is whether a new tenancy relationship between Irene and the spouses Andal was
subsequently formed. This becomes crucial because for the DARAB to have jurisdiction over the case, there must
be a tenancy relationship between the parties.[43]

Evidence is necessary to prove the allegation of tenancy. “The principal factor in determining whether a tenancy
relationship exists is intent. Tenancy is not a purely factual relationship dependent on what the alleged tenant
does upon the land. It is also a legal relationship.”[44]

An allegation of tenancy before the MTC does not automatically deprive the court of its jurisdiction. Basic is the
rule that:
x x x the material averments in the complaint determine the jurisdiction of a court. x x x a court does not lose
jurisdiction over an ejectment suit by the simple expedient of a party raising as a defense therein the alleged
existence of a tenancy relationship between the parties. The court continues to have the authority to hear and
evaluate the evidence, precisely to determine whether or not it has jurisdiction, and, if, after hearing, tenancy is
shown to exist, it shall dismiss the case for lack of jurisdiction.[45]
The Court agrees with the conclusion of both the MTC and the RTC that for dearth of evidence, tenurial
relationship between the parties was not sufficiently shown. Thus, the said courts correctly assumed jurisdiction
over the ejectment case.

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The fact alone of working on another’s landholding does not raise a presumption of the existence of agricultural
tenancy. For tenancy to be proven, all indispensable elements must be established, the absence of one or more
requisites will not make the alleged tenant a de facto one. These are: 1) the parties are the landowner and the
tenant; 2) the subject is agricultural land; 3) there is consent by the landowner; 4) the purpose is agricultural
production; 5) there is personal cultivation; and 6) there is sharing of the harvests.[46]

The Pagpapatunay and the Sinumpaang Salaysay both support Irene’s claim that she purchased the landholdings
only on the condition that there will be no tenants. Her refusal to give her consent to any tenancy relationship is
glaring. On the other hand, the spouses Andal, in their attempt to prove tenancy, submitted their copy of the
February 27, 1997 Affidavit of Landholding, which contains an inserted statement that Irene and Carlos agree
“that the same tenant Miraflor Andal, will continue as tenant, over the said parcel of land.” However, serious doubt
is cast on the authenticity of said inserted statement considering that it does not bear the respective
initials/signatures of Carlos and Irene attesting their conformity thereto. More importantly, Irene’s copy of the said
document does not contain the same insertion.

Anent the proof of sharing of harvest, what the spouses Andal merely presented was a single receipt dated July
27, 2005 representing Irene’s ‘share’ in the harvest. This even militates against the spouses Andal’s claim of
tenancy considering that they did not present the receipts for the alleged sharing system prior to 2005 or from
1997, the year when Irene purchased the land. Notably, the receipt they submitted is dated July 27, 2005 or just a
few months before the filing of the complaint. To the Court’s mind, such act of the spouses Andal to give Irene a
share is a mere afterthought, the same having been done during the time that Irene was already making serious
demands for them to account for the produce of the lands and vacate the properties. Be that as it may, the Court
stresses “that it is not unusual for a landowner to receive the produce of the land from a caretaker who sows
thereon. The fact of receipt, without an agreed system of sharing, does not ipso facto create a tenancy.”[47]

In sum, the Court holds that absent any tenurial relationship between them, the spouses Andal’s possession of
Irene’s properties was by mere tolerance of the latter. The action to dispossess the spouses Andal therefrom is
therefore a clear case of summary action for ejectment cognizable by the regular courts.

WHEREFORE, the Petition is GRANTED. The July 13, 2009 Decision and May 6, 2010 Resolution of the Court of
Appeals in CA-G.R. CV No. 101603 are REVERSED and SET ASIDE. The August 28, 2007 Decision of the
Regional Trial Court, Lucena City, Branch 56 in SPEC CIV. ACTION 2007-01-A affirming in toto the February 27,
2007 Decision of the Municipal Trial Court of San Antonio, Quezon in Civil Case No. 188, is REINSTATED and
AFFIRMED.

SO ORDERED.

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2. Stronghold Insurance vs Stroem

G.R. No. 204689, January 21, 2015

STRONGHOLD INSURANCE COMPANY, INC., PETITIONER, VS. SPOUSES RUNE AND LEA STROEM,
RESPONDENTS.

DECISION

LEONEN, J.:

For resolution is a Petition for Review[1] under Rule 45 of the Rules of Court assailing the Decision[2] dated
November 20, 2012 of the Court of Appeals in CA-G.R. CV No. 96017. The Court of Appeals affirmed the
Decision[3] of the Regional Trial Court of Makati, Branch 133 in Civil Case No. 02-1108 for collection of a sum of
money.

This case involves the proper invocation of the Construction Industry Arbitration Committee’s (CIAC) jurisdiction
through an arbitration clause in a construction contract. The main issue here is whether the dispute — liability of
a surety under a performance bond — is connected to a construction contract and, therefore, falls under the
exclusive jurisdiction of the CIAC.

Spouses Rune and Lea Stroem (Spouses Stroem) entered into an Owners-Contractor Agreement[4] with Asis-
Leif & Company, Inc. (Asis-Leif) for the construction of a two-storey house on the lot owned by Spouses Stroem.
The lot was located at Lot 4A, Block 24, Don Celso Tuason Street, Valley Golf Subdivision, Barangay Mayamot,
Antipolo, Rizal.[5]

On November 15, 1999, pursuant to the agreement, Asis-Leif secured Performance Bond No. LP/G(13)83056 in
the amount of P4,500,000.00 from Stronghold Insurance Company, Inc. (Stronghold).[6] Stronghold and Asis-
Leif, through Ms. Ma. Cynthia Asis-Leif, bound themselves jointly and severally to pay the Spouses Stroem the
agreed amount in the event that the construction project is not completed.[7]

Asis-Leif failed to finish the project on time despite repeated demands of the Spouses Stroem.[8]

Spouses Stroem subsequently rescinded the agreement.[9] They then hired an independent appraiser to
evaluate the progress of the construction project.[10]

Appraiser Asian Appraisal Company, Inc.’s evaluation resulted in the following percentage of completion: 47.53%
of the residential building, 65.62% of the garage, and 13.32% of the swimming pool, fence, gate, and land
development.[11]

On April 5, 2001, Stronghold sent a letter to Asis-Leif requesting that the company settle its obligations with the
Spouses Stroem. No response was received from Asis-Leif.[12]

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On September 12, 2002, the Spouses Stroem filed a Complaint (with Prayer for Preliminary Attachment)[13] for
breach of contract and for sum of money with a claim for damages against Asis-Leif, Ms. Cynthia Asis-Leif, and
Stronghold.[14] Only Stronghold was served summons. Ms. Cynthia Asis-Leif allegedly absconded and moved
out of the country.[15]

On July 13, 2010, the Regional Trial Court rendered a judgment in favor of the Spouses Stroem. The trial court
ordered Stronghold to pay the Spouses Stroem ?4,500,000.00 with 6% legal interest from the time of first
demand.[16] The dispositive portion of the trial court Decision reads:

WHEREFORE, finding plaintiffs’ cause of action to be sufficiently established being supported by evidence on
records, judgement is hereby rendered in favor of the plaintiff spouses Rune and Lea Stroem and against the
defendant Stronghold Insurance Company Incorporated ordering the latter to pay the plaintiff the sums of:

1) Php4,500,000.00 with six (6%) percent legal interest from the time of first demand and interest due shall earn
legal interest from the time of judicial demand until fully paid.

2) Php35,000.00 by way of attorney’s fees and other litigation expenses.

Defendant is further ordered to pay the costs of this suit.

SO ORDERED.[17]

Both Stronghold and the Spouses Stroem appealed to the Court of Appeals.[18]

The Court of Appeals affirmed with modification the trial court’s Decision. It increased the amount of attorney’s
fees to ?50,000.00.[19]

The dispositive portion of the Court of Appeals Decision reads:

WHEREFORE, the appeal of Stronghold Company, Inc[.] is DISMISSED, while the appeal of spouses Rune and
Lea Stroem is PARTLY GRANTED. The November 27, 2009 Decision of the Regional Trial Court of Makati City
is AFFIRMED with MODIFICATION that the award of attorney’s fees is increased to P50,000.00

SO ORDERED.[20]

On March 20, 2013, this court required the Spouses Stroem to submit their Comment on the Petition.[21]

We noted the Spouses Stroem’s Comment on July 31, 2013.[22] We also required Stronghold to file its Reply to
the Comment,[23] which was noted on December 9, 2013.[24]

Stronghold argues that the trial court did not acquire jurisdiction over the case and, therefore, the Court of
Appeals committed reversible error when it upheld the Decision of the Regional Trial Court.[25] The lower courts
should have dismissed the case in view of the arbitration clause in the agreement and considering that “[Republic
Act No. 876] explicitly confines the court’s authority only to pass upon the issue of whether there is [an]
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agreement . . . providing for arbitration. In the affirmative, the statute ordains that the court shall issue an order
‘summarily directing the parties to proceed with the arbitration in accordance with the terms thereof.’”[26]

Moreover, “the stipulations in said Agreement are part and parcel of the conditions in the bond. Were it not for
such stipulations in said agreement, [Stronghold] would not have agreed to issue a bond in favor of the Spouses
Stroem. The parties to the bond are ALB/Ms. Asis-[L]eif, Spouses Stroem and [Stronghold] such that ALB/Ms.
Asis-[L]eif never ceased to be a party to the surety agreement.”[27]

In any case, Stronghold’s liability under the performance bond is limited only to additional costs for the completion
of the project.[28] In addition, the Court of Appeals erred in holding that Stronghold changed its theory with
regard to the notice requirement[29] and in modifying the trial court’s award of attorney’s fees.[30]

On the other hand, the Spouses Stroem argue that Stronghold committed forum shopping warranting dismissal of
the case.[31] According to the Spouses Stroem, Stronghold deliberately committed forum shopping when it filed
the present petition despite the pendency of the Spouses Stroem’s Motion for Partial Reconsideration of the Court
of Appeals Decision dated November 20, 2012.[32]

More importantly, the Owners-Contractor Agreement is “separate and distinct from the Bond. The parties to the
Agreement are ALB/Ms. Asis-Leif and Spouses Stroem, while the parties to the Bond are Spouses Stroem and
Stronghold. The considerations for the two contracts are likewise distinct. Thus, the arbitration clause in the
Agreement is binding only on the parties thereto, specifically ALB/Ms. Asis-Leif and Spouses Stroem[.]”[33]

Contrary to Stronghold’s argument, Spouses Stroem argues that stronghold is liable for the full amount of the
performance bond. The terms of the bond clearly show that Stronghold is liable as surety.[34] Verily, notice to
Stronghold is not required for its liability to attach.[35]

The issues for consideration are:

(1)
Whether the dispute involves a construction contract;
(2)
Whether the CIAC has exclusive jurisdiction over the controversy between the parties;
(3)
Whether the Regional Trial Court should have dismissed the petition outright as required by law and
jurisprudence and referred the matter to the CIAC; and
(4)
Whether petitioner Stronghold Insurance Company, Inc. is liable under Performance Bond No. LP/G(13)83056.
(a)
Whether petitioner Stronghold Insurance Company, Inc. is only liable as to the extent of any additional cost for the
completion of the project due to any increase in prices for labor and materials.
(b)
Whether the case involves ordinary suretyship or corporate suretyship.

After considering the parties’ arguments and the records of this case, this court resolves to deny the Petition.
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On forum-shopping

Respondents argue that petitioner committed forum shopping; hence, the case should have been dismissed
outright.

Records show that petitioner received a copy of the Decision of the Court of Appeals on December 5, 2012.[36]
Petitioner did not file a Motion for Reconsideration of the assailed Decision. It filed before this court a Motion for
Extension of Time To File Petition for Review requesting an additional period of 30 days from December 20, 2012
or until January 19, 2013 to file the Petition.[37]

Respondents filed their Motion for Partial Reconsideration of the Court of Appeals Decision on December 11,
2012.[38] They sought the modification of the Decision as to the amounts of moral damages, exemplary
damages, attorney’s fees, and costs of the suit.[39]

Respondents alleged in their Comment that as early as January 9, 2013, petitioner received a copy of the Court of
Appeals’ Resolution requiring Comment on the Motion for Partial Reconsideration.[40] Still, petitioner did not
disclose in its Verification and Certification Against Forum Shopping the pendency of respondents’ Motion for
Partial Reconsideration.[41]

For its part, petitioner claims that it did not commit forum shopping. It fully disclosed in its Petition that what it
sought to be reviewed was the Decision dated November 20, 2012 of the Court of Appeals. “Petitioner merely
exercised its available remedy with respect to the Decision of the Court of Appeals by filing [the] Petition.”[42]
What the rules mandate to be stated in the Certification Against Forum Shopping is the status of “any other
action.” This other action involves the same issues and parties but is an entirely different case.

Indeed, petitioner is guilty of forum shopping.

There is forum shopping when:

as a result of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal or
certiorari) in another. The principle applies not only with respect to suits filed in the courts but also in connection
with litigations commenced in the courts while an administrative proceeding is pending[.][43] (Citation omitted)

This court has enumerated the elements of forum-shopping: “(a) identity of parties, or at least such parties as
represent the same interests in both actions; (b) identity of rights asserted and reliefs prayed for, the reliefs being
founded on the same facts; and (c) the identity with respect to the two preceding particulars in the two cases is
such that any judgment rendered in the pending cases, regardless of which party is successful, amount to res
judicata in the other case.”[44]

Rule 42, Section 2[45] in relation to Rule 45, Section 4 of the Rules of Court mandates petitioner to submit a
Certification Against Forum Shopping and promptly inform this court about the pendency of any similar action or
proceeding before other courts or tribunals. The rule’s purpose is to deter the unethical practice of pursuing

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simultaneous remedies in different forums, which “wreaks havoc upon orderly judicial procedure.”[46] Failure to
comply with the rule is a sufficient ground for the dismissal of the petition.[47]

Records show that petitioner’s duly authorized officer certified the following on January 21, 2013:

4. I further certify that: (a) I have not commenced any other action or proceeding involving the same issues in the
Supreme Court, Court of Appeals, or any other tribunal or agency; (b) to the best of my knowledge, no such
action or proceeding is pending in the Supreme Court, the Court of Appeals or different Divisions thereof, or any
tribunal or agency; (c) if I should thereafter learn that a similar action or proceeding has been filed or is pending
before the Supreme Court, the Court of Appeals, or different Divisions thereof, or any other tribunal or agency, I
undertake to promptly inform the aforesaid courts and such tribunal or agency of the fact within five (5) days
therefrom.[48]

Petitioner failed to carry out its duty of promptly informing this court of any pending action or proceeding before
this court, the Court of Appeals, or any other tribunal or agency. This court cannot countenance petitioner’s
disregard of the rules.

This court has held before that:

[u]ltimately, what is truly important to consider in determining whether forum-shopping exists or not is the vexation
caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule
on the same or related causes and/or to grant the same or substantially the same reliefs, in the process creating
the possibility of conflicting decisions being rendered by the different fora upon the same issue.[49] (Emphasis
supplied)

On this basis, this case should be dismissed.

On arbitration and the CIAC’s jurisdiction

Petitioner changed the theory of its case since its participation in the trial court proceedings. It raised the issue of
lack of jurisdiction in view of an arbitration agreement for the first time.

Generally, parties may not raise issues for the first time on appeal.[50] Such practice is violative of the rules and
due process and is frowned upon by the courts. However, it is also well-settled that jurisdiction can never be
waived or acquired by estoppel.[51] Jurisdiction is conferred by the Constitution or by law.[52] “Lack of
jurisdiction of the court over an action or the subject matter of an action cannot be cured by the silence, by
acquiescence, or even by express consent of the parties.”[53]

Section 4 of Executive Order No. 1008[54] is clear in defining the exclusive jurisdiction of the CIAC:

SECTION 4. Jurisdiction – The CIAC shall have original and exclusive jurisdiction over disputes arising from, or
connected with, contracts entered into by parties involved in construction in the Philippines, whether the dispute
arises before or after the completion of the contract, or after the abandonment or breach thereof. These disputes

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may involve government or private contracts. For the Board to acquire jurisdiction, the parties to a dispute must
agree to submit the same to voluntary arbitration.

The jurisdiction of the CIAC may include but is not limited to violation of specifications for materials and
workmanship; violation of the terms of agreement; interpretation and/or application of contractual time and delays;
maintenance and defects; payment, default of employer or contractor and changes in contract cost.

Excluded from the coverage of this law are disputes arising from employer-employee relationships which shall
continue to be covered by the Labor Code of the Philippines. (Emphasis supplied)

Similarly, Section 35 of Republic Act No. 9285 or the Alternative Dispute Resolution Act of 2004 states:

SEC. 35. Coverage of the Law. - Construction disputes which fall within the original and exclusive jurisdiction of
the Construction Industry Arbitration Commission (the “Commission”) shall include those between or among
parties to, or who are otherwise bound by, an arbitration agreement, directly or by reference whether such parties
are project owner, contractor, subcontractor, quantity surveyor, bondsman or issuer of an insurance policy in a
construction project.

The Commission shall continue to exercise original and exclusive jurisdiction over construction disputes although
the arbitration is “commercial” pursuant to Section 21 of this Act. (Emphasis supplied)

In Heunghwa Industry Co., Ltd., v. DJ Builders Corporation,[55] this court held that “there are two acts which may
vest the CIAC with jurisdiction over a construction dispute. One is the presence of an arbitration clause in a
construction contract, and the other is the agreement by the parties to submit the dispute to the CIAC.”[56]

This court has ruled that when a dispute arises from a construction contract, the CIAC has exclusive and original
jurisdiction.[57] Construction has been defined as referring to “all on-site works on buildings or altering structures,
from land clearance through completion including excavation, erection and assembly and installation of
components and equipment.”[58]

In this case, there is no dispute as to whether the Owners-Contractor Agreement between Asis-Leif and
respondents is a construction contract. Petitioner and respondents recognize that CIAC has jurisdiction over
disputes arising from the agreement.

What is at issue in this case is the parties’ agreement, or lack thereof, to submit the case to arbitration.
Respondents argue that petitioner is not a party to the arbitration agreement. Petitioner did not consent to
arbitration. It is only respondent and Asis-Leif that may invoke the arbitration clause in the contract.

This court has previously held that a performance bond, which is meant “to guarantee the supply of labor,
materials, tools, equipment, and necessary supervision to complete the project[,]”[59] is significantly and
substantially connected to the construction contract and, therefore, falls under the jurisdiction of the CIAC.[60]

Prudential Guarantee and Assurance Inc. v. Anscor Land, Inc.[61] involved circumstances similar to the present
case. In Prudential, property owner Anscor Land, Inc. (ALI) entered into a contract for the construction of an
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eight-unit townhouse located in Capitol Hills, Quezon City with contractor Kraft Realty and Development
Corporation (KRDC).[62] KRDC secured the completion of the construction project through a surety and
performance bond issued by Prudential Guarantee and Assurance Inc. (PGAI).[63]

The delay in the construction project resulted in ALI’s termination of the contract and claim against the
performance bond.[64] “ALI [subsequently] commenced arbitration proceedings against KRDC and PGAI in the
CIAC.”[65] PGAI, however, argued that it was not a party to the construction contract.[66]

The CIAC ruled that PGAI was not liable under the performance bond.[67] Upon review, the Court of Appeals
held that PGAI was jointly and severally liable with KRDC under the performance bond.[68]

PGAI appealed the Court of Appeals Decision and claimed that CIAC did not have jurisdiction over the
performance bond.[69] This court ruled:

A guarantee or a surety contract under Article 2047 of the Civil Code of the Philippines is an accessory contract
because it is dependent for its existence upon the principal obligation guaranteed by it.

In fact, the primary and only reason behind the acquisition of the performance bond by KRDC was to guarantee to
ALI that the construction project would proceed in accordance with the contract terms and conditions. In effect,
the performance bond becomes liable for the completion of the construction project in the event KRDC fails in its
contractual undertaking.

Because of the performance bond, the construction contract between ALI and KRDC is guaranteed to be
performed even if KRDC fails in its obligation. In practice, a performance bond is usually a condition or a
necessary component of construction contracts. In the case at bar, the performance bond was so connected with
the construction contract that the former was agreed by the parties to be a condition for the latter to push through
and at the same time, the former is reliant on the latter for its existence as an accessory contract.

Although not the construction contract itself, the performance bond is deemed as an associate of the main
construction contract that it cannot be separated or severed from its principal. The Performance Bond is
significantly and substantially connected to the construction contract that there can be no doubt it is the CIAC,
under Section 4 of EO No. 1008, which has jurisdiction over any dispute arising from or connected with it.[70]
(Emphasis supplied, citations omitted)

At first look, the Owners-Contractor Agreement and the performance bond reference each other; the performance
bond was issued pursuant to the construction agreement.

A performance bond is a kind of suretyship agreement. A suretyship agreement is an agreement “whereby a


party, called the surety, guarantees the performance by another party, called the principal or obligor, of an
obligation or undertaking in favor of another party, called the obligee.”[71] In the same vein, a performance bond
is “designed to afford the project owner security that the . . . contractor, will faithfully comply with the requirements
of the contract . . . and make good [on the] damages sustained by the project owner in case of the contractor’s
failure to so perform.”[72]

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It is settled that the surety’s solidary obligation for the performance of the principal debtor’s obligation is indirect
and merely secondary.[73] Nevertheless, the surety’s liability to the “creditor or promisee of the principal is said
to be direct, primary and absolute; in other words, he is directly and equally bound with the principal.”[74]

Verily, “[i]n enforcing a surety contract, the ‘complementary-contracts-construed-together’ doctrine finds


application. According to this principle, an accessory contract must be read in its entirety and together with the
principal agreement.”[75] Article 1374 of the Civil Code provides:

ART. 1374. The various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that
sense which may result from all of them taken jointly.

Applying the “complementary-contracts-construed-together” doctrine, this court in Prudential held that the surety
willingly acceded to the terms of the construction contract despite the silence of the performance bond as to
arbitration:

In the case at bar, the performance bond was silent with regard to arbitration. On the other hand, the construction
contract was clear as to arbitration in the event of disputes. Applying the said doctrine, we rule that the silence of
the accessory contract in this case could only be construed as acquiescence to the main contract. The
construction contract breathes life into the performance bond. We are not ready to assume that the performance
bond contains reservations with regard to some of the terms and conditions in the construction contract where in
fact it is silent. On the other hand, it is more reasonable to assume that the party who issued the performance
bond carefully and meticulously studied the construction contract that it guaranteed, and if it had reservations, it
would have and should have mentioned them in the surety contract.[76] (Emphasis supplied)

This court, however, cannot apply the ruling in Prudential to the present case. Several factors militate against
petitioner’s claim.

The contractual stipulations in this case and in Prudential are different. The relevant provisions of the Owners-
Contractor Agreement in this case state:

ARTICLE 5. THE CONTRACT DOCUMENTS

The following documents prepared by the CONTRACTOR shall constitute an integral part of this contract as fully
as if hereto attached or herein stated, except as otherwise modified by mutual agreement of parties, and attached
to this agreement.

Attachment 5.1
Working Drawings
Attachment 5.2
Outline Specifications
Attachment 5.3
Bill of Quantities
Attachment 5.4
CONTRACTOR Business License
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....

ARTICLE 7. PERFORMANCE (SURETY) BOND

7.1 Within 30 days of the signing of this agreement, CONTRACTOR shall provide to OWNERS a performance
bond, issued by a duly licensed authority acceptable to the OWNERS, and equal to the amount of PHP
4,500,000.00 (Four Million and Five Hundred Thousand Philippine Pesos), with the OWNERS as beneficiary.

7.2 The performance bond will guarantee the satisfactory and faithful performance by the CONTRACTOR of all
provisions stated within this contract.

ARTICLE 8. ARBITRATION

8.1 Any dispute between the parties hereto which cannot be amicably settled shall be finally settled by arbitration
in accordance with the provision of Republic Act 876, of The Philippines, as amended by the Executive Order
1008 dated February 4, 1985.[77] (Emphasis in the original)

In contrast, the provisions of the construction contract in Prudential provide:

Article 1
CONTRACT DOCUMENTS

1.1 The following shall form part of this Contract and together with this Contract, are known as the “Contract
Documents”:

a. Bid Proposal

....

d. Notice to proceed

....

j. Appendices A & B (respectively, Surety Bond for Performance and, Supply of Materials by the Developer)[78]
(Emphasis supplied)

This court in Prudential held that the construction contract expressly incorporated the performance bond into the
contract.[79] In the present case, Article 7 of the Owners-Contractor Agreement merely stated that a performance
bond shall be issued in favor of respondents, in which case petitioner and Asis-Leif Builders and/or Ms. Ma.
Cynthia Asis-Leif shall pay P4,500,000.00 in the event that Asis-Leif fails to perform its duty under the Owners-
Contractor Agreement.[80] Consequently, the performance bond merely referenced the contract entered into by
respondents and Asis-Leif, which pertained to Asis-Leif’s duty to construct a two-storey residence building with
attic, pool, and landscaping over respondents’ property.[81]
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To be clear, it is in the Owners-Contractor Agreement that the arbitration clause is found. The construction
agreement was signed only by respondents and the contractor, Asis-Leif, as represented by Ms. Ma. Cynthia
Asis-Leif. It is basic that “[c]ontracts take effect only between the parties, their assigns and heirs[.]”[82] Not being
a party to the construction agreement, petitioner cannot invoke the arbitration clause. Petitioner, thus, cannot
invoke the jurisdiction of the CIAC.

Moreover, petitioner’s invocation of the arbitration clause defeats the purpose of arbitration in relation to the
construction business. The state has continuously encouraged the use of dispute resolution mechanisms to
promote party autonomy.[83] In LICOMCEN, Incorporated v. Foundation Specialists, Inc.,[84] this court upheld
the CIAC’s jurisdiction in line with the state’s policy to promote arbitration:

The CIAC was created through Executive Order No. 1008 (E.O. 1008), in recognition of the need to establish an
arbitral machinery that would expeditiously settle construction industry disputes. The prompt resolution of
problems arising from or connected with the construction industry was considered of necessary and vital for the
fulfillment of national development goals, as the construction industry provides employment to a large segment of
the national labor force and is a leading contributor to the gross national product.[85] (Citation omitted)

However, where a surety in a construction contract actively participates in a collection suit, it is estopped from
raising jurisdiction later. Assuming that petitioner is privy to the construction agreement, we cannot allow
petitioner to invoke arbitration at this late stage of the proceedings since to do so would go against the law’s goal
of prompt resolution of cases in the construction industry.

WHEREFORE, the petition is DENIED. The case is DISMISSED. Petitioner’s counsel is STERNLY WARNED
that a repetition or similar violation of the rule on Certification Against Forum Shopping will be dealt with more
severely.

SO ORDERED.

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3. Far East Bank vs Chua

G.R. No. 187491, July 08, 2015

FAR EAST BANK AND TRUST COMPANY, PETITIONER, VS. LILIA S. CHUA, RESPONDENT.

DECISION

LEONEN, J.:

Respondent Lilia S. Chua (Chua) was dismissed by petitioner Far East Bank and Trust Co. (Far East Bank) due
to a finding that she engaged in multiple kiting transactions which was a serious violation of Far East Bank's Code
of Conduct. The Labor Arbiter ruled that there was illegal dismissal. This was reversed by the National Labor
Relations Commission. Chua participated in the appeal proceedings before the National Labor Relations
Commission.

The Court of Appeals reversed the National Labor Relations Commission's ruling, stating that Far East Bank's
appeal before the National Labor Relations Commission was not perfected.

We are asked in this Petition to reverse the ruling of the Court of Appeals.

Chua was employed as a bank executive by Far East Bank, rising through the latter's ranks and holding the
position of Assistant Vice President from October 1, 1997 until the termination of her employment.[1]

It is not disputed that on July 1, 1999, Chua's employment was terminated as Far East Bank found Chua to have
engaged in multiple kiting transactions,[2] which are fraudulent transactions "involving the] drawing out [of] money
from a bank account that does not have sufficient funds [in order] to cover [a] check."[3]

Assailing Far East Bank's basis for terminating her employment, Chua filed a Complaint for illegal dismissal and
monetary claims before the Regional Arbitration Branch XII, Cotabato City of the National Labor Relations
Commission.[4]

In the course of the proceedings before the Regional Arbitration Branch, the parties were ordered to submit their
respective Position Papers. Despite an extension having been given to Far East Bank, it failed to timely file its
Position Paper.[5]

On April 25, 2000, Executive Labor Arbiter Quintin B. Cueto III (Executive Labor Arbiter Cueto) rendered a
Decision[6] finding Chua to have been illegally dismissed. The dispositive portion of the Decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered declaring the dismissal of the complainant
Lilia S. Chua by respondent FAR EAST BANK AND TRUST COMPANY (FEBTC) ILLEGAL, thereby entitling her
to reinstatement and full backwages inclusive of allowances and other benefits computed from the time her
compensation was withheld from her up to the time of her actual reinstatement.

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Respondent FEBTC is hereby ordered to pay the backwages of the complainant until April 25, 2000 (date of this
decision) and her other benefit [sic] as above-discussed for the interim total of ONE MILLION ONE HUNDRED
EIGHTY-ONE THOUSAND EIGHT HUNDRED FOUR PESOS & 19/100 (P1,181,804.19).

All other additional claims of the complainant as discussed above are still to be substantiated inorder [sic] for Us
to arrive at an accurate computation.

SO ORDERED.[7]
On the same date, Far East Bank filed a Motion to admit its Position Paper. On May 15, 2000, this Motion was
denied.[8]

On May 25, 2000, Far East Bank directly filed its Notice of Appeal and Memorandum of Appeal before the
National Labor Relations Commission.[9]

On April 30, 2001, the National Labor Relations Commission Fifth Division issued a Resolution[10] reversing and
setting aside the April 25, 2000 Decision of Executive Labor Arbiter Cueto.[11] It held that Far East Bank's delay
of "a few days"[12] in filing its Position Paper was excusable, especially considering that it and its counsel were
based in different cities, Cotabato City and General Santos City, respectively.[13] It added that it was successfully
shown by Far East Bank that Chua "had indeed committed irregular acts in relation to his [sic] position as
Assistant Vice President[,]"[14] "acts that would constitute for [sic] loss of trust and confidence[,]"[15] thereby
justifying the termination of her employment.

Chua then filed a Motion for Reconsideration[16] dated May 25, 2001, relying on the following grounds:
A

ALTHOUGH THE HONORABLE COMMISSION WAS CORRECT IN THE ORDER OF THE PRESENTATION OF
THE ISSUES IN THAT THE 1st WAS "WHETHER OR NOT RESPONDENTS ARE GUILTY OF INEXCUSABLE
DELAY AND NEGLECT FOR FAILURE TO SUBMIT THEIR POSITION PAPER BEFORE THE ARBITRATION
BRANCH OF ORIGIN[,]" BECAUSE IF THE ANSWER IS IN THE NEGATIVE, THEN THE APPEAL SHOULD BE
CONFINED ONLY TO THE APPEALED DECISION OF THE RAB XII, YET, NOT ONLY WAS THIS ISSUE
SKIPPED BY THE HONORABLE COMMISSION, BUT IN RESOLVING THIS ISSUE, THE HONORABLE
COMMISSION DEPENDED ON THE POSITION PAPER OF APPELLANTS, WHICH WAS THE VERY FIRST
ISSUE UNDER CONSIDERATION.[17]

SINCE WHAT IS THE SUBJECT OF THE APPEAL IS THE DECISION OF THE RAB XII, IT OUGHT TO HAVE
BEEN WHAT THE HONORABLE COMMISSION SHOULD HAVE REVIEWED AS AN APPELLATE BODY YET
NOT ONLY WAS THE DECISION OF RAB XII SKIPPED BY THE HONORABLE COMMISSION BUT IN
DETERMINING THE FACT [sic] OF THE CASE THE HONORABLE COMMISSION ENTIRELY DEPENDED ON
THE MATTERS PRESENTED IN THE POSITION PAPER OF RESPONDENTS, THE ADMISSION OR THE
DENIAL OF ADMISSION OF THE SAME WAS NOT ONLY THE FIRST ISSUE BUT THE RESOLUTION OF
WHICH WAS SKIPPED BY THE HONORABLE COMMISSION.[18]

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C

EVERY MATERIAL POINT RAISED BY RESPONDENTS IN ITS POSITION PAPER THE ADMISSION AND
DENIAL OF WHICH HAS NOT BEEN RESOLVED BY THE HONORABLE COMMISSION HAS BEEN TOUCHED
IN THE DECISION OF THE RAB XII, WHICH IS THE CENTERPIECE OF REVIEW, AND THE POSITION
PAPER OF APPELLEE WHICH LEGALLY, FORMS PART OF THE RECORD[S] OF THE CASE, AND THE
LEAST THAT THE HONORABLE COMMISSION COULD HAVE DONE WAS TO REVIEW BOTH THEN
COMPARE IT WITH THE FACTS AS PRESENTED BY THE RESPONDENTS IN THEIR POSITION PAPER
WITH THE DOCUMENTS AVAILABLE ON HAND AS CONFIRMATORY EVIDENCE, AND HAD THIS BEEN
DONE, UNDOUBTEDLY, THE CONCLUSION THAT WOULD HAVE BEEN ARRIVED AT WAS THAT THE CASE
OF APPEALLEE [sic] IS MERITORIOUS.[19]
In the Resolution dated December 21, 2001, the National Labor Relations Commission denied Chua's Motion for
Reconsideration.[20]

Aggrieved, Chua filed a Petition[21] for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure before the
Court of Appeals. Chua averred the following issue in this Petition:
ISSUE

WHETHER OR NOT PUBLIC RESPONDENT ACTED WITHOUT OR IN EXCESS OF JURISDICTION OR WITH


GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN TAKING
COGNIZANCE OF THE DIRECTLY FILED UNPERFECTED APPEAL OF RESPONDENTS[22]
Specifically, Chua claimed that the National Labor Relations Commission should not have entertained Far East
Bank's appeal for the following reasons: first, it failed to "pay the appeal fee of P100.00;"[23] second, it failed to
"post the appeal bond equivalent to the amount of the monetary award;"[24] third, it failed to "attach a certification
of non-forum shopping[;]"[25] and fourth, it "directly filed its appeal with public respondent [National Labor
Relations Commission] contrary to the requirements of Rule VI, Section 3[26] of the New Rules of Procedure of
the National Labor Relations Commission."[27]

In its assailed June 30, 2008 Decision,[28] the Court of Appeals Twenty-third Division declared the April 30, 2001
and December 21, 2001 Resolutions of the National Labor Relations Commission null and void and reinstated
Executive Labor Arbiter Cueto's April 25, 2000 Decision.[29]

Citing Rule VI, Sections 3 and 4[30] of the 1999 Rules of Procedure of the National Labor Relations
Commission[31] which were then in effect, the Court of Appeals stated that it "is clear and unambiguous that the
memorandum on appeal must be filed with the Regional Arbitration Branch which rendered the decision sought to
be appealed."[32] As Far East Bank's Notice of Appeal and Memorandum of Appeal were both directly filed
before the National Labor Relations Commission (rather than being filed before the Regional Arbitration Branch
XII, Cotabato City), the Court of Appeals concluded that "no appeal before public respondent [National Labor
Relations Commission] could have been perfected."[33] Thus, Executive Labor Arbiter Cueto's April 25, 2000
Decision "has attained finality[.]"[34]

In its assailed March 20, 2009 Resolution,[35] the Court of Appeals denied Far East Bank's Motion for
Reconsideration.[36]

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Hence, this Petition[37] was filed.

For resolution is the sole issue of whether Executive Labor Arbiter Quintin B. Cueto Ill's April 25, 2000 Decision
attained finality in light of petitioner Far East Bank and Trust Co.'s direct filing of its appeal before the National
Labor Relations Commission, rather than before the Regional Arbitration Branch XII, Cotabato City.

Petitioner admits to directly filing its Memorandum of Appeal before the National Labor Relations Commission.[38]
However, it banks on what it claims was the National Labor Relations Commission's "discretion to admit appeal[s]
directly filed with it on reasonable and meritorious grounds[.]"[39] It argues thus that "[i]n accepting the appeal
memorandum which petitioner directly filed with it, the [National Labor Relations Commission] was guided by its
own policy that, in line with the jurisprudence set by the Supreme Court, technicalities in labor cases must yield to
substantial justice."[40]

Apart from this, petitioner faults respondent for raising the issue of jurisdiction for the first time in her Rule 65
Petition before the Court of Appeals. It asserts that because of respondent's failure to timely raise this matter
while petitioner's own appeal was still pending before the National Labor Relations Commission, estoppel set in
and respondent could not belatedly repudiate the adverse decision by only then invoking the issue of
jurisdiction.[41]

Petitioner's contentions are well-taken. A mere procedural lapse in the venue where petitioner filed its
Memorandum of Appeal is not fatal to its cause. This is especially so in light of how respondent estopped herself
in failing to raise the issue of jurisdiction while petitioner's appeal was pending before the National Labor
Relations Commission. Respondent is bound by her inaction and cannot belatedly invoke this issue on certiorari
before the Court of Appeals.

II

In a long line of cases, this court has held that "[a]lthough the issue of jurisdiction may be raised at any stage of
the proceedings as the same is conferred by law, it is nonetheless settled that a party may be barred from raising
it on ground of laches or estoppel."[42]

The rule is stated in La'O v. Republic of the Philippines and the Government Service Insurance System:[43]
While it is true that jurisdiction over the subject matter of a case may be raised at any stage of the proceedings
since it is conferred by law, it is nevertheless settled that a party may be barred from raising it on the ground of
estoppel. After voluntarily submitting a cause and encountering an adverse decision on the merits, it is improper
and too late for the losing party to question the jurisdiction of the court. A party who has invoked the jurisdiction of
a court over a particular matter to secure affirmative relief cannot be permitted to afterwards deny that same
jurisdiction to escape liability.[44] (Citations omitted)
The wisdom that underlies this was explained at length in Tijam, et al. v. Sibonghanoy, et al.:[45]
A party may be estopped or barred from raising a question in different ways and for different reasons. Thus we
speak of estoppel in pais, of estoppel by deed or by record, and of estoppel by laches.

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Laches, in a general sense, is failure or neglect, for an unreasonable and unexplained length of time, to do that
which, by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert
a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned
it or declined to assert it.

The doctrine of laches or of "stale demands" is based upon grounds of public policy which requires, for the peace
of society, the discouragement of stale claims and, unlike the statute of limitations, is not a mere question of time
but is principally a question of the inequity or unfairness of permitting a right or claim to be enforced or asserted.

It has been held that a party cannot invoke the jurisdiction of a court to secure affirmative relief against his
opponent and, after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction. In the
case just cited, by way of explaining the rule, it was further said that the question whether the court had
jurisdiction either of the subject matter of the action or of the parties was not important in such cases because the
party is barred from such conduct not because the judgment or order of the court is valid and conclusive as an
adjudication, but for the reason that such a practice cannot be tolerated — obviously for reasons of public policy.

Furthermore, it has also been held that after voluntarily submitting a cause and encountering an adverse decision
on the merits, it is too late for the loser to question the jurisdiction or power of the court. And in Littleton vs.
Burgess, 16 Wyo. 58, the Court said that it is not right for a party who has affirmed and invoked the jurisdiction of
a court in a particular matter to secure an affirmative relief, to afterwards deny that same jurisdiction to escape a
penalty.

Upon this same principle is what We said in the three cases mentioned in the resolution of the Court of Appeals of
May 20, 1963 (supra) — to the effect that we frown upon the "undesirable practice" of a party submitting his case
for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction, when
adverse — as well as in Pindangan etc. vs. Dans et al., G. R. L-14591, September 26, 1962; Montelibano et al.
vs. Bacolod-Murcia Milling Co., Inc., G. R. L-15092; Young Men Labor Union etc. vs. the Court of Industrial
Relations et al., G. R. L-20307, Feb. 26, 1965, and Mejia vs. Lucas, 100 Phil. p. 277.[46] (Citations omitted)
III

The rationale that animates the rule on estoppel vis-a-vis jurisdiction applies with equal force to quasi-judicial
agencies as it does to courts. The public policy consideration that frowns upon the undesirable practice of n
submitting a case for decision only to subsequently decry the supposed lack of jurisdiction is as compelling in
cases concerning the National Labor Relations Commission as it is to courts of law.

In this respect, it is of no consequence that distinctions may be drawn between administrative agencies, on the
one hand, and judicial bodies, on the other.

Courts derive their authority from the Constitution's recognition that they shall be the sole and exclusive investees
of judicial power. This, even as the Constitution leaves to the legislature the authority to establish lower courts, as
well as "to define, prescribe, and apportion the jurisdiction of the various courts[,]"[47] except of this court. Article
VIII, Section 1 of the 1987 Constitution provides that "[t]he judicial power shall be vested in one Supreme Court
and in such lower courts as may be established by law."

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For their part, administrative agencies are statutory constructs. Thus, they are limited by the statutes which
created them and which spelled out their powers and functions. "It is a fundamental rule that an administrative
agency has only such powers as are expressly granted to it by law and those that are necessarily implied in the
exercise thereof[.]"[48] Administrative agencies may exercise quasi-judicial powers, but only to the extent
warranted by administrative action. They may not exercise judicial functions. This is illustrated in Philex Mining
Corporation v. Zaldivia, et al.,[49] which distinguished between judicial questions and "questions of fact."[50] It is
only the latter — questions of fact — which was ruled to be within the competence of the Director of Mines to
resolve:
We see nothing in sections 61 and 73 of the Mining Law that indicates a legislative intent to confer real judicial
power upon the Director of Mines. The very terms of section 73 of the Mining Law, as amended by Republic Act
No. 4388, in requiring that the adverse claim must "state in full detail the nature, boundaries and extent of the
adverse claim" show that the conflicts to be decided by reason such adverse claim refer primarily to questions of
fact. This is made even clearer by the explanatory note to House Bill No. 2522, later to become Republic Act
4388, that "sections 61 and 73 that refer to the overlapping of claims are amended to expedite resolutions of
mining conflicts. . . ." The controversies to be submitted and resolved by the Director of Mines under the sections
refer therefore only to the overlapping of claims, and administrative matters incidental thereto.

As already shown, petitioner's adverse claim is not one grounded on overlapping of claims nor is it a mining
conflict arising out of mining locations (there being only one involved) but one originating from the alleged
fiduciary or contractual relationship between petitioner and locator Scholey and his transferees Yrastorza and
respondent Zaldivia. As such, the adverse claim is not within the executive or administrative authority of the
mining director to resolve, but in that of the courts, as it has been correctly held, on the basis of the doctrine
stated in Espinosa vs. Makalintal, 79 Phil. 134.[51] (Emphasis supplied)
Unlike courts, the National Labor Relations Commission's existence is not borne out of constitutional fiat. It owes
its existence to Article 213 of the Labor Code:
Art. 213. National Labor Relations Commission. There shall be a National Labor Relations Commission which
shall be attached to the Department of Labor and Employment for program and policy coordination only,
composed of a Chairman and fourteen (14) Members. (Emphasis in the original)
So, too, its jurisdiction (as well as those of Labor Arbiters) is spelled out by Article 217 of the Labor Code:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision
without extension, even in the absence of stenographic notes, the following cases involving all workers, whether
agricultural or non-agricultural:

Unfair labor practice cases;

Termination disputes;

If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of employment;

Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations:

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Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes
and lockouts; and

Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims
arising from employer-employee relations, including those of persons in domestic or household service, involving
an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for
reinstatement.

The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

Cases arising from the interpretation or implementation of collective bargaining agreements and those arising
from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements.
(Emphasis in the original)
Nevertheless, there is no basis for distinguishing between courts and quasi-judicial agencies with respect to the
effects of a party's failure to timely assail errors in jurisdiction. These effects have nothing to do with the distinction
between the competencies of courts and quasi-judicial agencies as spelled out by the Constitution and statutes.

In a long line of cases, this court has held the rule on estoppel vis-a--vis jurisdiction, as initially articulated in 1968
in Tijam to be equally applicable to cases involving the National Labor Relations Commission (and its related
agencies).

By way of example, in Philippine Overseas Drilling and Oil Development Corporation v. Hon. Ministry of
Labor,[52] this court stated:
Petitioner is now barred by estoppel from raising the issue of jurisdiction, regardless of its merits. In the case of
Tijam vs. Sibonghanoy, April 15, 1968, 23 SCRA 29, the Court laid down the rule of estoppel to raise the question
of jurisdiction. This rule was reiterated in numerous cases enumerated in the decision in the case of Solicitor
General vs. Coloma promulgated on July 7, 1986. In the case of Akay Printing Press vs. Minister of Labor and
Employment, the Court ruled as follows:
When the illegal dismissal case was pending before the MOLE Regional Director, petitioner did not raise the issue
of jurisdiction either during the hearing or in its subsequent motion for reconsideration. Its defense was a stout
denial of the dismissal of private respondents, who were averred instead to have abandoned their work. After the
adverse decision of the Regional Director and upon the elevation of the case on appeal to the Ministry of Labor
and Employment, still no jurisdictional challenge was made. It was only when petitioner moved to reconsider the
MOLE decision of affirmance that it assailed the jurisdiction of the Regional Director. But then, it was too late.
Estoppel had barred him from raising the issue, regardless of its merits. (December 6, 1985, 140 SCRA 381,
384)[53]
Likewise, as stated in M. Ramirez Industries v. Secretary of Labor and Employment:[54]
Moreover, petitioner is estopped from questioning the jurisdiction of the Regional Director, having previously
invoked it by filing a motion to dismiss. As has been held:
[A] party can not invoke the jurisdiction of a court to secure affirmative relief against his opponent and, after
obtaining or failing to obtain such relief, repudiate or question that same jurisdiction.

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In the case just cited, by way of explaining the rule, it was further said that the question whether the court had
jurisdiction either of the subject-matter of the action or of the parties is barred from such conduct not because the
judgment or order of the court is valid and conclusive as an adjudication, but for the reason that such a practice
can not be tolerated — obviously for reasons of public policy.

Furthermore, it has also been held that after voluntarily submitting a cause and encountering an adverse decision
on the merits, it is too late for the loser to question the jurisdiction or power of the court . . . And in Littleton vs.
Burges, Wyo, 58, the Court said that it is not right for a party who has affirmed and invoked the jurisdiction of a
court in a particular matter to secure an affirmative relief, to afterwards deny that same jurisdiction to escape a
penalty.[55]
IV

Article 218 of the Labor Code vests in the National Labor Relations Commission the authority to adopt procedural
rules:
Art. 218. Powers of the Commission. The Commission shall have the power and authority:
To promulgate rules and regulations governing the hearing and disposition of cases before it and its regional
branches, as well as those pertaining to its internal functions and such rules and regulations as may be necessary
to carry out the purposes of this Code[.]
It is consistent with this power that the National Labor Relations Commission adopted the rules that are at the
core of the present controversy. Rule VI, Section 3 of the 1999 Rules of Procedure of the National Labor
Relations Commission that were in effect when petitioner appealed from Executive Labor Arbiter Cueto's Decision
provides for the requisites that must be satisfied in order that an appeal from a decision of a Labor Arbiter may be
perfected:
Section 3. Requisites for Perfection of Appeal. — (a) The appeal shall be filed within the reglementary period as
provided in Section 1 of this Rule; shall be under oath with proof of payment of the required appeal fee and the
posting of a cash or surety bond as provided in Section 5 of this Rule; shall be accompanied by a memorandum
of appeal which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for;
and a statement of the date when the appellant received the appealed decision, order or award and proof of
service on the other party of such appeal.

A mere notice of appeal without complying with the other requisite aforestated shall not stop the running of the
period for perfecting an appeal.

(b) The appellee may file with the Regional Arbitration Branch, Regional Office or in the POEA where the appeal
was filed, his answer or reply to appellant's memorandum of appeal, not later than ten (10) calendar days from
receipt thereof. Failure on the part of the appellee who was properly furnished with a copy of the appeal to file his
answer or reply within the said period may be construed as a waiver on his part to file the same.

(c) Subject to the provisions of Article 218, once the appeal is perfected in accordance with these rules, the
Commission may limit itself to reviewing and deciding specific issues that were elevated on appeal. (Emphasis in
the original)
Rule VI, Section 4 of the same rules stipulates where appeals must be filed:

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Section 4. Where Filed. — The appeal in five (5) legibly typewritten copies shall be filed with the respective
Regional Arbitration Branch, the Regional Office, or the Philippine Overseas Employment Administration where
the case was heard and decided. (Emphasis in the original)
This venue for filing appeals is unequivocal. The Court of Appeals was thus correct in stating that it "is clear and
unambiguous that the memorandum on appeal must be filed with the Regional Arbitration Branch which rendered
the decision sought to be appealed."[56]

It is not disputed that this rule was violated by petitioner. In the present Petition, petitioner categorically admitted
that it "filed its memorandum of appeal directly with the [National Labor Relations Commission.]"[57]

Thus, there is basis for positing, as respondent and the Court of Appeals did, that "no appeal before [the National
Labor Relations Commission] could have been perfected[.]"[58] The logical consequence of this position,
assuming it is correct, is that Executive Labor Arbiter Cueto's April 25, 2000 Decision "has attained finality[.]"[59]

This conclusion, however, fails to consider that the error committed by petitioner pertains to the place for filing
appeals and not the requisites for perfecting an appeal which Rule VI, Section 3 enumerates. The place where
appeals must be filed is governed by a distinct provision (i.e., Section 4) and is thus a matter that is different from
the requisites for perfecting appeals. Per Section 3, only the following are necessary in order that petitioner may
perfect its appeal:
(1) Filing within the applicable reglementary period as provided by Section 1;[60]

(2) That the appeal was under oath;

(3) That the appeal fee must have been paid;

(4) That the appeal bond must have been posted;

(5) A memorandum of appeal which states:


the grounds relied upon and the arguments in support of the appeal;

the relief sought; and

a statement of the date when the assailed decision was received; and
(6) Proof of service of the appeal on the adverse party.
Likewise, this conclusion presupposes that procedural rules in labor cases must be adhered to with
uncompromising exactitude. This is misguided. The same rules which respondent and the Court of Appeals rely
on allow for the liberal application of procedural rules. In Rule VII, Section 10, it states:
Section 10. Technical rules not binding. — The rules of procedure and evidence prevailing in courts of law and
equity shall not be controlling and the Commission shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively, without regard to technicalities of law procedure, all in the interest of
due process.

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In any proceeding before the Commission, the parties may be represented by legal counsel but it shall be the duty
of the Chairman, any Presiding commissioner or Commissioner to exercise complete control of the proceedings at
all stages.
The need for liberality in this case is underscored by how the National Labor Relations Commission acquiesced to
the filing of an appeal directly before it. As pointed out by petitioner, not only did the National Labor Relations
Commission admit its Memorandum of Appeal, it also "required petitioner to pay the appeal fee and to post the
required bond."[61] As the agency statutorily vested with jurisdiction over petitioner's appeal, petitioner could very
easily have mistaken that the filing of its Memorandum of Appeal was rightly made before the National Labor
Relations Commission. If at all, the provision that filing of a Memorandum of Appeal must be made before the
Regional Arbitration Branch is merely a delegation of a function more appropriately pertaining to the appellate
body itself.

In any case, the National Labor Relations Commission could have very easily advised petitioner if there was
anything irregular with its direct filing of a Memorandum of Appeal. Its silence on this matter would have induced
in petitioner no other reasonable conclusion than that direct filing before the National Labor Relations Commission
was in keeping with the procedural requirements for filing appeals.

Not only did the National Labor Relations Commission acquiesce to the direct filing of an appeal before it, so did
respondent. The matter of the propriety of the National Labor Relations Commission's assumption of jurisdiction
was never raised by respondent before the Commission. Even after petitioner's appeal had been initially decided
against her and she filed her Motion for Reconsideration, respondent totally overlooked this matter. As was
evident from the recital of grounds[62] invoked in her Motion for Reconsideration, respondent's contentions
centered merely on the National Labor Relations Commission's supposedly erroneous reliance on petitioner's
Position Paper.

The Court of Appeals thus failed to account for the crucial fact that the issue of jurisdiction was invoked by
respondent only upon her elevation to it of the case. It failed to recognize that respondent had all the opportunity
to raise this issue before the very tribunal whom she claims to have had no competence to rule on the appeal, but
that it was only after the same tribunal ruled against her twice — first, in its initial Resolution and second, in
denying her reconsideration — that she saw it fit to assail its jurisdiction. The Court of Appeals failed to see
through respondent's own failure to seasonably act and failed to realize that she was guilty of estoppel by laches,
taking "an unreasonable . . . length of time, to do that which, by exercising due diligence, could or should have
been done earlier[.]"[63]

Respondent cannot now profit from her own inaction. She actively participated in the proceedings and vigorously
argued her case before the National Labor Relations Commission without the slightest indication that she found
anything objectionable to the conduct of those proceedings. It is thus but appropriate to consider her as acceding
to and bound by how the National Labor Relations Commission was to resolve and, ultimately did resolve,
petitioner's appeal. Its findings that the requisites of substantive and procedural due process were satisfied in
terminating respondent's employment now stand undisturbed.

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WHEREFORE, the Petition for Review on Certiorari is GRANTED. The June 30, 2008 Decision and the March 20,
2009 Resolution of the Court of Appeals in CA-G.R. SP No. 69361-MIN are REVERSED and SET ASIDE. The
April 30, 2001 Resolution of the National Labor Relations Commission is REINSTATED.

SO ORDERED.

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4. Nation Petroleum Gas Incorporated vs RCBC

G.R. No. 183370, August 17, 2015

NATION PETROLEUM GAS, INCORPORATED, NENA ANG, MARIO ANG, ALISON A. SY, GUILLERMO G.
SY, NELSON ANG, LUISA ANG, RENATO C. ANG, PAULINE T. ANG, RICKY C. ANG,[1] AND MELINDA
ANG, PETITIONERS, VS. RIZAL COMMERCIAL BANKING CORPORATION, SUBSTITUTED BY PHILIPPINE
ASSET GROWTH ONE, INC., RESPONDENT.

DECISION

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure (Rules) seeks to
reverse and set aside the December 12, 2007 Decision[2] and June 17, 2008 Resolution[3] of the Court of
Appeals (CA) in CA-G.R. SP No. 98787, which affirmed the March 29, 2007 Order[4] of the Regional Trial Court
(RTC), Branch 66, Makati City, in Civil Case No. 06-882, denying petitioners' Special Appearance with Motion to
Dismiss for alleged improper service of summons.

On October 16, 2006, respondent Rizal Commercial Banking Corporation filed against petitioner corporation and
its directors/officers a Complaint[5] for civil damages arising from estafa in relation to violations of the Trust
Receipts Law. On October 26, 2006, after an ex parte hearing was conducted, respondent's prayer for a writ of
preliminary attachment was granted and the corresponding writ was issued.[6] Thereafter, Sheriff Leodel N.
Roxas served upon petitioners a copy of the summons, complaint, application for attachment, respondent's
affidavit and bond, and the order and writ of attachment. The Sheriffs Report dated November 13, 2006 narrated:
The undersigned sheriff respectfully submits the following report to wit:

On 26 October 2006, [a] copy of Writ of Attachment dated 26 October 2006, issued by the Court in the above-
entitled case was received by the undersigned for service and implementation.

On even date, the undersigned served the Summons, copy of [the] Complaint, application for attachment, the
plaintiffs affidavit and bond, and the Order and Writ of Attachment, on the defendants Nation Petroleum Gas et
al., at BPI Building, Rizal Street, Candelaria, Quezon. Said summons and all pertinent papers, upon telephone
instruction of defendant Melinda Ang, were received by Claudia Abante, [defendants'] [Liaison] Officer, as
evidenced by her signature at the original copy of Summons and Writ. I also served copies to other defendants at
their given addresses, but they refused to acknowledge receipt thereof.

On the same day, at the instance of the plaintiff's counsel and representative, the undersigned levied the real
properties of the defendants at the Register of Deeds of Lucena City, Makati City, Pasig City, Quezon City and
the Register of Deeds of Manila. I also levied a property (plant equipment) in NPGI plant in Sariaya, Quezon.
Copies of the notices of levy on attachment are hereto attached.

WHEREFORE, the original copies of the Summonses, Order, Writ of Attachment and all pertinent papers are
hereby returned to the Court of origin for record and information.[7]
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Petitioners filed through counsel a Special Appearance with Motion to Dismiss[8] on November 15, 2006. They
asserted that the trial court did not acquire jurisdiction over the corporation since the summons was improperly
served upon Claudia Abante (Abante), who is a mere liaison officer and not one of the corporate officers
specifically enumerated in Section 11, Rule 14 of the Rules. Likewise, the individual petitioners argued that the
sheriff and/or process server did not personally approach them at their respective address as stated in the
Complaint. Neither did he resort to substituted service of summons, and that, even if he did, there was no strict
compliance with Section 7, Rule 14 of the Rules. The Court's pronouncements in Spouses Mason v. Court of
Appeals,[9] E. B. Villarosa & Partner Co., Ltd. v. Judge Benito,[10] Laus v. Court of Appeals,[11] and Samartino v.
Raon[12] were invoked in praying for the dismissal of the complaint and the discharge of the writ of attachment.

Respondent countered in its Opposition with Motion to Declare Defendants in Default[13] that there was valid
service of summons upon petitioners. With respect to the corporation, Abante received the summons upon the
express authority and instruction of the corporate secretary, petitioner Melinda Ang (Ang). As regards the
individual petitioners, the Sheriffs Report reflects that they were served "at their given addresses, but they refused
to acknowledge receipt thereof." Respondent stressed that said Report is prima facie evidence of the facts stated
therein and that the sheriff enjoys the presumption of regularity in the performance of his official functions. In any
case, it averred that, according to Oaminal v. Castillo,[14] petitioners already voluntarily submitted to the court's
jurisdiction when they prayed for the discharge of the writ of attachment, which is an affirmative relief apart from
the dismissal of the case.

A Reply with Comment/Opposition (to the motion to declare defendants in default)[15] was then filed by
petitioners. In support of their contention that the court lacks jurisdiction over their persons, they submitted their
Joint Affidavit[16] and the Affidavit[17] of Abante, claiming, among others, that they neither personally met the
sheriff and/or the process server nor were handed a copy of the court documents; that Ang did not give Abante
telephone instructions to receive the same; and that Abante did not receive any instruction from Ang. Petitioners
further held that Oaminal finds no application in the instant case since they only filed one motion and that the
additional relief prayed for, which is the discharge of the writ, is complementary to and a necessary consequence
of a finding that the court has no jurisdiction over their persons. Instead, Our ruling in Avon Insurance PLC v.
Court of Appeals[18] was relied upon.

In its Rejoinder with Motion to Strike,[19] respondent stood firm in defending the court's jurisdiction. The denials of
Ang and Abante were viewed as self-serving and could not prevail over the presumption of regularity which the
sheriff enjoys as an officer of the court. Even assuming that the Sheriffs Return does not state in detail the fact
that the summons was served upon the individual petitioners through substituted service, respondent asserted
that this does not conclusively prove that such service is invalid because it may still be shown through extraneous
evidence similar to the case of BPI v. Spouses Evangelista.[20]

On March 29, 2007, the RTC denied petitioners' motion to dismiss and respondent's motion to declare them in
default. In upholding the jurisdiction of the court over the persons of petitioners and requiring them to file an
Answer, the Order ratiocinated:
The very essence of service of summons is for the defendants to be aware of an existing suit against them and
for them to file an answer or responsive pleading thereto. When corporate and individual defendants were served
with summons through the [liaison] officer who received the same for and in their behalf as per instruction of
defendant Melinda Ang, and when defendants filed a responsive pleading in the form of a Motion to Dismiss, the
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essence of service of summons was met and defendants are deemed to have ultimately received the summons
despite their protestations. There is no reason for the Court to doubt the regularity of the Sheriffs service of
summons as in fact its regularity is presumed. It bears stressing that defendants did not per se deny having
received summonses. Perforce, they are challenging the manner of service of the same. Having ultimately
received the summonses upon them and considering the rules on service of the same was substantially complied
with, the Court finds no reason to deny the instant Motion to Dismiss.[21]
Petitioners elevated the jurisdictional issue to the CA via petition for certiorari and prohibition.[22] As afore-stated,
the appellate court later dismissed the petition and denied the motion for reconsideration; hence, this petition
raising the following issues for resolution:
I.

WHETHER OR NOT THE TRIAL COURT ACQUIRED JURISDICTION OVER THE PERSON OF THE
DEFENDANT CORPORATION BY SERVICE OF SUMMONS UPON ITS MERE EMPLOYEE.

II.

WHETHER OR NOT THE TRIAL COURT ACQUIRED JURISDICTION OVER THE PERSONS OF THE
INDIVIDUAL DEFENDANTS BY RESORTING TO SUBSTITUTED SERVICE OF SUMMONS DESPITE
ABSENCE OF EARNEST EFFORTS ON THE PART OF THE SERVING OFFICER TO SERVE SUMMONS
PERSONALLY.[23]
We deny.

Summons is a writ by which the defendant is notified of the action brought against him or her.[24] Its purpose is
two-fold: to acquire jurisdiction over the person of the defendant and to notify the defendant that an action has
been commenced so that he may be given an opportunity to be heard on the claim against him.[25] "[C]ompliance
with the rules regarding the service of summons is as much an issue of due process as of jurisdiction. The
essence of due process is to be found in the reasonable opportunity to be heard and submit any evidence one
may have in support of his defense. It is elementary that before a person can be deprived of his property, he
should first be informed of the claim against him and the theory on which such claim is premised."[26]

Service of summons on domestic corporation, partnership or other juridical entity is governed by Section 11, Rule
14 of the Rules, which states:
SECTION 11. Service upon domestic private juridical entity. - When the defendant is a corporation, partnership or
association organized under the laws of the Philippines with a juridical personality, service may be made on the
president, managing partner, general manager, corporate secretary, treasurer, or in-house counsel.
When the defendant is a domestic corporation like herein petitioner, service of summons may be made only upon
the persons enumerated in Section 11, Rule 14 of the Rules.[27] The enumeration of persons to whom summons
may be served is restricted, limited and exclusive following the rule on statutory construction expressio unios est
exclusio alterius.[28] Substantial compliance cannot be invoked.[29] Service of summons upon persons other
than those officers specifically mentioned in Section 11, Rule 14 is void, defective and not binding to said
corporation.[30]
Basic is the rule that a strict compliance with the mode of service is necessary to confer jurisdiction of the court
over a corporation. The officer upon whom service is made must be one who is named in the statute; otherwise,
the service is insufficient. The purpose is to render it reasonably certain that the corporation will receive prompt
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and proper notice in an action against it or to insure that the summons be served on a representative so
integrated with the corporation that such person will know what to do with the legal papers served on him.[31]
As correctly argued by petitioners, Sps. Mason already resolved that substantial compliance on service of
summons upon a domestic corporation is no longer an excuse. Thus:
The question of whether the substantial compliance rule is still applicable under Section 11, Rule 14 of the 1997
Rules of Civil Procedure has been settled in Villarosa which applies squarely to the instant case. In the said case,
petitioner E.B. Villarosa & Partner Co. Ltd. (hereafter Villarosa) with principal office address at 102 Juan Luna St.,
Davao City and with branches at 2492 Bay View Drive, Tambo, Parañaque, Metro Manila and Kolambog,
Lapasan, Cagayan de Oro City, entered into a sale with development agreement with private respondent Imperial
Development Corporation. As Villarosa failed to comply with its contractual obligation, private respondent initiated
a suit for breach of contract and damages at the Regional Trial Court of Makati. Summons, together with the
complaint, was served upon Villarosa through its branch manager at Kolambog, Lapasan, Cagayan de Oro City.
Villarosa filed a Special Appearance with Motion to Dismiss on the ground of improper service of summons and
lack of jurisdiction. The trial court denied the motion and ruled that there was substantial compliance with the rule,
thus, it acquired jurisdiction over Villarosa. The latter questioned the denial before us in its petition for certiorari.
We decided in Villarosa's favor and declared the trial court without jurisdiction to take cognizance of the case. We
held that there was no valid service of summons on Villarosa as service was made through a person not included
in the enumeration in Section 11, Rule 14 of the 1997 Rules of Civil Procedure, which revised the Section 13,
Rule 14 of the 1964 Rules of Court. We discarded the trial court's basis for denying the motion to dismiss, namely,
private respondent's substantial compliance with the rule on service of summons, and fully agreed with
petitioner's assertions that the enumeration under the new rule is restricted, limited and exclusive, following the
rule in statutory construction that expressio unios est exclusio alterius. Had the Rules of Court Revision
Committee intended to liberalize the rule on service of summons, we said, it could have easily done so by clear
and concise language. Absent a manifest intent to liberalize the rule, we stressed strict compliance with Section
11, Rule 14 of the 1997 Rules of Civil Procedure.

Neither can herein petitioners invoke our ruling in Millennium to support their position for said case is not on all
fours with the instant case. We must stress that Millennium was decided when the 1964 Rules of Court were still
in force and effect, unlike the instant case which falls under the new rule. Hence, the cases cited by petitioners
where we upheld the doctrine of substantial compliance must be deemed overturned by Villarosa, which is the
later case.

At this juncture, it is worth emphasizing that notice to enable the other party to be heard and to present evidence
is not a mere technicality or a trivial matter in any administrative or judicial proceedings. The service of summons
is a vital and indispensable ingredient of due process. x x x[32]
The foregoing notwithstanding, We agree with the CA that there was a valid and effective service of summons
upon petitioner corporation through its liaison officer who acted as the agent of the corporate secretary. It ruled:
Petitioner corporation asserts that based on the said rule [Section 11, Rule 14 of the Rules], the service of
summons made by the sheriff upon its liaison officer, Claudia Abante, was defective for the reason that a liaison
officer is not one of the corporate officers enumerated therein upon whom service of summons is authorized to be
made. It contends that there having been no valid service, the trial court consequently did not acquire jurisdiction
to hear the complaint a quo.

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The contention deserves full credence only if it is to be assumed that Claudia Abante received the summons in
her official capacity as petitioner corporation's liaison officer. However, this is not true in the instant case, since
according to the sheriff, Abante proceeded to receive the summons and accompanying documents only after
receiving instructions to do so from Melinda Ang, an individual petitioner herein and the petitioner corporation's
corporate secretary. It is clear, therefore, that Abante, in so receiving the summons, did so in representation of
Ang who, as corporate secretary, is one of the officers competent under the Rules of Court to receive summons
on behalf of a private juridical person. Thus, while it may be true that there was no direct, physical handing of the
summons to Ang, the latter could at least be charged with having constructively received the same, which in Our
view, amounts to a valid service of summons.

Having herself instructed Abante to receive the summons, Ang, and for that matter, petitioner corporation, is thus
now precluded from impugning the jurisdiction of the trial court on the ground of invalid service of summons. In
point in this regard is the principle of estoppel which, under our remedial laws, is an effective bar against any
claim of lack of jurisdiction. Under said doctrine, an admission or representation is rendered conclusive upon the
person making it and cannot be denied or disproved as against the person relying thereon.

Thus, despite the assertions of Ang and Abante that, as between them, no such instruction had been relayed and
received, the sheriffs statement belying the allegations should be accorded weight.

The sheriffs report is further bolstered by the presumption of regularity in the performance of public duty as the
same is provided for in Rule 131 of the Rules of Court. The presumption applies so long as it is shown that the
officer, in performing his duties, is not inspired by any improper motive, a fact that is true with the sheriff in the
case at bar. And, if the presumption may be made to apply to public officers in general, with more reason should
its benefit be accorded to the sheriff, who is an officer of the court.

True, the presumption is disputable, but to overcome the same, more concrete evidence than the affidavit of
Abante is required. As correctly pointed out by the respondent, in line with the ruling of the Supreme Court in R.
Transport Corporation vs. Court of Appeals and Talsan Enterprises, Inc. vs. Baliwag, Abante's affidavit is self-
serving in nature, and being so, is not sufficient to overturn the said presumption.

On this aspect, petitioners score the respondent, asserting that the two above-cited cases are not applicable to
the case at hand inasmuch as these were decided before the advent of the 1997 Revised Rules of Civil
Procedure, adding likewise that the cited cases and the instant case differ in their respective factual milieus. We
are not persuaded. Under either the former or the present rules, it is clear that Abante's denial that she received
instructions from Ang is evidence that would pale in comparison to the declaration of an officer of the court
indisputably performing his duty objectively and free from any malicious and ill motives.[33]
Petitioner corporation cannot conveniently rely on the sworn statements of the individual petitioners and Abante.
Upon examination, Ang's denial of having spoken with any process server to give instruction to serve the
summons and other pertinent papers to Abante[34] is not incompatible with the Sheriffs Report stating that "[s]aid
summons and all pertinent papers, upon telephone instruction of defendant Melinda Ang, were received by
Claudia Abante, [defendants'] [Liaison] Officer, as evidenced by her signature at the original copy of Summons
and Writ." While it may be true that Ang had not talked to the sheriff or process server, it still does not rule out the
possibility that she in fact spoke to Abante and instructed the latter to receive the documents in her behalf. As to
the Affidavit of Abante, her disavowal of having spoken to Ang or receiving telephone instructions from her is truly
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self-serving. Evidence as simple as a telephone billing statement or an affidavit of a disinterested third person,
among others, could have been presented to refute the sheriffs claim, but there was none. Likewise, no
substantial proofs were credibly shown to support Abante's allegation that the sheriff insisted on having the court
processes received and that she was "intimidated by the presence of a court personnel who was quite earnest in
accomplishing his task."[35]

It is well to note that the certificate of service of the process server is prima facie evidence of the facts as set out
therein. This is fortified by the presumption of the regularity of performance of official duty. To overcome the
presumption of regularity of official functions in favor of such sheriffs return, the evidence against it must be clear
and convincing. Sans the requisite quantum of proof to the contrary, the presumption stands deserving of faith
and credit.[36]

The same conclusion, however, could not be said with respect to the service of summons upon the individual
petitioners.

Section 7, in relation to Section 6, Rule 14 of the Rules, provides for substituted service of summons:
Section 6. Service in person on defendant. - Whenever practicable, the summons shall be served by handling a
copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him.

Section 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within a reasonable time
as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the
defendant's residence with some person of suitable age and discretion then residing therein, or (b) by leaving the
copies at defendant's office or regular place of business with some competent person in charge thereof.
Sections 6 and 7 of the Rules cannot be construed to apply simultaneously and do not provide for alternative
modes of service of summons which can either be resorted to on the mere basis of convenience to the parties for,
under our procedural rules, service of summons in the persons of the defendants is generally preferred over
substituted service.[37] Resort to the latter is permitted when the summons cannot be promptly served on the
defendant in person and after stringent formal and substantive requirements have been complied with.[38] The
failure to comply faithfully, strictly and fully with all the requirements of substituted service renders the service of
summons ineffective.[39]

Manotoc v. Court of Appeals[40] painstakingly elucidated the requirements of the Rules as follows:
We can break down this section into the following requirements to effect a valid substituted service:

(1) Impossibility of Prompt Personal Service

The party relying on substituted service or the sheriff must show that defendant cannot be served promptly or
there is impossibility of prompt service. Section 8, Rule 14 provides that the plaintiff or the sheriff is given a
"reasonable time" to serve the summons to the defendant in person, but no specific time frame is mentioned.
"Reasonable time" is defined as "so much time as is necessary under the circumstances for a reasonably prudent
and diligent man to do, conveniently, what the contract or duty requires that should be done, having a regard for
the rights and possibility of loss, if any[,] to the other party." Under the Rules, the service of summons has no set
period. However, when the court, clerk of court, or the plaintiff asks the sheriff to make the return of the summons
and the latter submits the return of summons, then the validity of the summons lapses. The plaintiff may then ask
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for an alias summons if the service of summons has failed. What then is a reasonable time for the sheriff to effect
a personal service in order to demonstrate impossibility of prompt service? To the plaintiff, "reasonable time"
means no more than seven (7) days since an expeditious processing of a complaint is what a plaintiff wants. To
the sheriff, "reasonable time" means 15 to 30 days because at the end of the month, it is a practice for the branch
clerk of court to require the sheriff to submit a return of the summons assigned to the sheriff for service. The
Sheriffs Return provides data to the Clerk of Court, which the clerk uses in the Monthly Report of Cases to be
submitted to the Office of the Court Administrator within the first ten (10) days of the succeeding month. Thus, one
month from the issuance of summons can be considered "reasonable time" with regard to personal service on the
defendant.

Sheriffs are asked to discharge their duties on the service of summons with due care, utmost diligence, and
reasonable promptness and speed so as not to prejudice the expeditious dispensation of justice. Thus, they are
enjoined to try their best efforts to accomplish personal service on defendant. On the other hand, since the
defendant is expected to try to avoid and evade service of summons, the sheriff must be resourceful, persevering,
canny, and diligent in serving the process on the defendant. For substituted service of summons to be available,
there must be several attempts by the sheriff to personally serve the summons within a reasonable period [of one
month] which eventually resulted in failure to prove impossibility of prompt service. "Several attempts" means at
least three (3) tries, preferrably on at least two different dates. In addition, the sheriff must cite why such efforts
were unsuccessful. It is only then that impossibility of service can be confirmed or accepted.

(2) Specific Details in the Return

The sheriff must describe in the Return of Summons the facts and circumstances surrounding the attempted
personal service. The efforts made to find the defendant and the reasons behind the failure must be clearly
narrated in detail in the Return. The date and time of the attempts on personal service, the inquiries made to
locate the defendant, the name/s of the occupants of the alleged residence or house of defendant and all other
acts done, though futile, to serve the summons on defendant must be specified in the Return to justify substituted
service. The form on Sheriffs Return of Summons on Substituted Service prescribed in the Handbook for Sheriffs
published by the Philippine Judicial Academy requires a narration of the efforts made to find the defendant
personally and the fact of failure. Supreme Court Administrative Circular No. 5 dated November 9, 1989 requires
that "impossibility of prompt service should be shown by stating the efforts made to find the defendant personally
and the failure of such efforts," which should be made in the proof of service.

(3) A Person of Suitable Age and Discretion

If the substituted service will be effected at defendant's house or residence, it should be left with a person of
"suitable age and discretion then residing therein." A person of suitable age and discretion is one who has
attained the age of full legal capacity (18 years old) and is considered to have enough discernment to understand
the importance of a summons. "Discretion" is defined as "the ability to make decisions which represent a
responsible choice and for which an understanding of what is lawful, right or wise may be presupposed". Thus, to
be of sufficient discretion, such person must know how to read and understand English to comprehend the import
of the summons, and fully realize the need to deliver the summons and complaint to the defendant at the earliest
possible time for the person to take appropriate action. Thus, the person must have the "relation of confidence" to
the defendant, ensuring that the latter would receive or at least be notified of the receipt of the summons. The
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sheriff must therefore determine if the person found in the alleged dwelling or residence of defendant is of legal
age, what the recipient's relationship with the defendant is, and whether said person comprehends the
significance of the receipt of the summons and his duty to immediately deliver it to the defendant or at least notify
the defendant of said receipt of summons. These matters must be clearly and specifically described in the Return
of Summons.

(4) A Competent Person in Charge

If the substituted service will be done at defendant's office or regular place of business, then it should be served
on a competent person in charge of the place. Thus, the person on whom the substituted service will be made
must be the one managing the office or business of defendant, such as the president or manager; and such
individual must have sufficient knowledge to understand the obligation of the defendant in the summons, its
importance, and the prejudicial effects arising from inaction on the summons. Again, these details must be
contained in the Return.[41]
In resorting to the substituted service, the sheriff in this case pithily declared in his Report that he "also served
copies to other defendants at their given addresses, but they refused to acknowledge receipt thereof." Obviously,
the Sheriffs Report dated November 13, 2006 does not particularize why substituted service was resorted to and
the precise manner by which the summons was served upon the individual petitioners. The disputable
presumption that an official duty has been regularly performed will not apply where it is patent from the sheriffs or
server's return that it is defective.[42]

To avail themselves of substituted service of summons, courts must rely on a detailed enumeration of the sheriffs
actions and a showing that the defendant cannot be served despite diligent and reasonable efforts.[43] The Court
requires that the Sheriffs Return clearly and convincingly show the impracticability or hopelessness of personal
service.[44] The impossibility of personal service justifying availment of substituted service should be explained in
the proof of service; why efforts exerted towards personal service failed. The pertinent facts and circumstances
attendant to the service of summons must be stated in the proof of service or Officer's Return; otherwise, the
substituted service cannot be upheld.[45]

Under exceptional terms, the circumstances warranting substituted service of summons may be proved by
evidence aliunde.[46] Substituted service will still be considered as regular if other evidence of the efforts to serve
summons was presented.[47] BPI v. Spouses Evangelista[48] teaches Us that a defect in the service of
summons, which is apparent on the face of the return, does not necessarily constitute conclusive proof that the
actual service has in fact been improperly made. In the interest of speedy justice, the trial court has to
immediately ascertain whether the patent defect is real and, if so, to fully determine whether prior attempts at
personal service have in fact been done and resort to the substituted service was justified. Should the returns not
show compliance with the Rules on substituted service, actual and correct service may still be proven by evidence
extraneous to it. If substituted service is indeed improper, the trial court must issue new summons and serve it in
accordance with the Rules.

In the present case, while no actual hearing was conducted to verify the validity of the grounds for substituted
service of summons, the parties exchanged pleadings in support of their respective positions. To justify,
respondent contends:

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34. In the instant case, representatives of the undersigned counsel and plaintiff RCBC personally observed the
service of summons on the defendants. Based on their account, the following facts and circumstances transpired:
a. On [October 26, 2006], the Sheriff served summons on defendant NPGI at the G/F BPI Building, Rizal Street,
Candelaria, Quezon, the reported office address of defendant NPGI in the latter's General Information Sheet
submitted with the Securities and Exchange Commission.
a.1. In the said address, the Sheriff met a person who introduced herself as Ms. Claudia Abante, the Liaison
[Officer] of defendant NPGI.

a.2. Upon inquiry, the Sheriff was informed that defendants NPGI Officers were all not around to receive the
summons for defendant NPGI considering that, according to Ms. Abante, the defendant NPGI Directors do not
hold office at said address.

a.3. However, Ms. Abante volunteered to call defendant Melinda Ang on the phone to inform her that summons
was beings served upon defendant NPGI.

a.4. Subsequently, Ms. Abante informed the Sheriff that defendant Melinda Ang authorized her to receive the
summons for defendant NPGI.

a.5. Considering that she claimed to be authorized by defendant Melinda Ang, who is the Corporate Secretary of
defendant NPGI, to receive the summons on behalf of defendant NPGI, the Sheriff entrusted the same to her, as
well as the Complaint and the Writ of Attachment, among others, and Ms. Abante voluntarily signed the receiving
copy thereof.

a.6 the Sheriff did not intimidate Ms. Abante into receiving the summons. In fact, she volunteered to receive the
same.
b. Copies of the Complaint, summons and Writ of Attachment, among others, were likewise served to defendant
NPGI at its office located at 39th Floor, Yuchengco Tower, RCBC Plaza, 6819 Ayala Avenue, corner Sen. Gil
Puyat Avenue, Makati City, Metro Manila ('RCBC Plaza Office').
b.1. The personnel from said office also stated that all the defendant NPGI Directors were not around and were
probably at home. As such, a copy of the Complaint, summons and Writ of Attachment, among others, were left
with said office.
c. Thereafter, summons on the individual defendants were served at the following addresses:
c.1. Renato Ang, Nena Ang, Melinda Ang, Pauline Ang - 1348 Palm Avenue, Dasmarinas Village, Makati City;

c.2. Guillermo Sy and Alison Sy - 1320 Glorioso Streets, Dasmarinas Village, Makati City;

c.3. Nelson Ang, Luisa Ang - 19 Swallow Drive, Greenmeadows, Quezon City;

c.4. Mario Ang - Diamond Furniture, Cabunyag Street, Candelaria, Quezon; and

c.5. Ricky Ang - Rizal Street, Candelaria, Quezon.


d. Upon service of the summons upon them, it became apparent that the individual defendants were evading
service of summons considering that the sheriff was being given a run-around.

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d.1. In their respective residences, their house helpers stated that the individual defendants were not at home but
in the RCBC Plaza Office.

d.2. However, considering that the Sheriff had already been to the RCBC Plaza Office and the personnel at said
office previously stated that all the defendants were not at said office, it became apparent that all the defendants
were trying to evade service of summons.

d.3. Given the obvious attempt of defendants to evade service of summons, it was futile for the Sheriff to go back
to the RCBC Plaza Office.

d.4. Hence, summons were served to the individual defendants through substituted service by entrusting the
same to their house helpers residing at the respective addresses, all of whom are of suitable age and discretion.

xxxx
36. Indeed, in the instant case, contrary to the allegations contained in the Motion to Dismiss, the summons were
properly served to the individual defendants through substituted service considering that there were justifiable
causes existing which prevented personal service upon all the individual defendants within a reasonable time.
36.1. It should be noted that aside from defendant NPGI, there are ten (10) other individual defendants in the
instant case who are residing in addresses which are far apart (i.e., Makati City, Pasig City, City of Manila and
Quezon Province).

36.2. Summons were attempted to be served to all defendant NPGI Directors, Luisa Ang, Guillermo Sy and
Pauline Ang on the following addresses:
Renato Ang, Nena Ang, Melinda Ang, Pauline Ang - 1348 Palm Avenue, Dasmarinas Village, Makati City;

Guillermo Sy and Alison Sy - 1320 Glorioso Streets, Dasmarinas Village, Makati City;

Nelson Ang, Luisa Ang - 19 Swallow Drive, Greenmeadows, Quezon City;

Mario Ang - Diamond Furniture, Cabunyag Street, Candelaria, Quezon; and

Ricky Ang - Rizal Street, Candelaria, Quezon.


36.3. To require the sheriff to return several times at the residences of the ten (10) defendants as suggested by
the defendants, despite the apparent intention of the defendants to evade service of summons, and the
considerable distances between all their residences (i.e., Makati City, Pasig City, City of Manila and Quezon
Province), would clearly be unreasonable.[49]
According to respondent's version, copies of the complaint, summons and writ of attachment, among others, were
served to petitioner corporation at its offices in Candelaria, Quezon and RCBC Plaza. In the Quezon office, the
sheriff was informed that the individual petitioners were all not around to receive the summons for the corporation
considering that they do not hold office at said address. Likewise, a staff from the RCBC Plaza office stated that
all them were not around and were probably at home. Thereafter, summons was served on the individual
petitioners at their respective addresses in Makati City, Quezon City, and Candelaria, Quezon. Their house
helpers told that they were not at home but were in the RCBC Plaza office. Considering that the sheriff already
went there and its personnel said that they were not at said office, it became apparent on the sheriff that the
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individual petitioners were trying to evade service of summons. Thus, given this predicament, it was futile for him
to go back to the RCBC Plaza office.

It is argued that the summons was properly served to the individual petitioners through substituted service
because there were justifiable causes existing which prevented personal service within a reasonable period of
time. Respondent asserts that requiring the sheriff to return several times at the residences of the ten (10)
individual petitioners despite their intention to evade service of summons and the considerable distances of their
residences would clearly be unreasonable.

Respondent's explanations do not suffice.

In the instant case, it appears that the sheriff hastily and capriciously resorted to substituted service of summons
without actually exerting any genuine effort to locate the individual petitioners. The "reasonable time" within which
to personally serve the summons - 7 days for the plaintiff or 15-30 days for the sheriff as stated in Manotoc - has
not yet elapsed at the time the substituted service was opted to. Remarkably, based on the Sheriffs Report and
the narration of petitioners, the personal service of summons upon the corporation and the individual petitioners
as well as the levy of their personal and real properties were all done in just one day. Manotoc stresses that for
substituted service of summons to be available, there must be several attempts by the sheriff to personally serve
the summons within a reasonable period which eventually resulted in failure in order to prove impossibility of
prompt service. To reiterate, "several attempts" means at least three (3) tries, preferrably on at least two different
dates.

Further, except for the Quezon Province, there is, in fact, no considerable distance between the residences of the
individual petitioners since the cities of Makati and Quezon are part of the National Capital Region; hence,
accessible either by private or public modes of transportation. Assuming that there is, the distance would not have
been insurmountable had respondent took its time and not unnecessarily rushed to accomplish personal service
in just a single day.

Finally, respondent alleges that the summons was served to the individual petitioners through substituted service
by entrusting the same to their house helpers, all of whom are of suitable age and discretion. It did not, however,
elaborate that these persons know how to read and understand English to comprehend the import of the
summons, and fully realize the need to deliver the summons and complaint to the individual petitioners at the
earliest possible time for them to take appropriate action. There is no way for Us to conclusively ascertain that the
sheriff ensured, among others, that the persons found in the alleged dwelling or residence comprehend the
significance of the receipt of the summons and the duty to immediately deliver it to the individual petitioners or at
least notify them of said receipt of summons.

The foregoing considered, it can be deduced that since there were no actual efforts exerted and no positive steps
undertaken to earnestly locate the individual petitioners, there is no basis to convincingly say that they evaded the
personal service of summons and merely gave the sheriff a run-around, thus, justifying substituted service upon
them.

Despite improper service of summons upon their persons, the individual petitioners are deemed to have
submitted to the jurisdiction of the court through their voluntary appearance. The second sentence of Section
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20,[50] Rule 14 of the Rules that "[t]he inclusion in a motion to dismiss of other grounds aside from lack of
jurisdiction over the person of the defendant shall not be deemed a voluntary appearance" clearly refers to
affirmative defenses, not affirmative reliefs.[51]

In the present case, the individual petitioners prayed, among others, for the following: (1) discharge of the writ of
attachment on their properties; (2) denial of the motion to declare them in default; (3) admission of the
Comment/Opposition (to the motion to declare them in default) filed on December 19, 2006; and (4) denial of
respondent's motion to strike off from the records (their opposition to the motion to declare them in default). By
seeking affirmative reliefs from the trial court, the individual petitioners are deemed to have voluntarily submitted
to the jurisdiction of said court. A party cannot invoke the jurisdiction of a court to secure affirmative relief against
his opponent and after obtaining or failing to obtain such relief, repudiate or question that same jurisdiction.[52]
Therefore, the CA cannot be considered to have erred in affirming the trial court's denial of the Special
Appearance with Motion to Dismiss for alleged improper service of summons.

WHEREFORE, premises considered, the petition is DENIED. The December 12, 2007 Decision and June 17,
2008 Resolution of the Court of Appeals in CA-G.R. SP No. 98787, which sustained the March 29, 2007 Order of
the Regional Trial Court, Branch 66, Makati City, in Civil Case No. 06-882, are hereby AFFIRMED.

SO ORDERED.

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5. San Miguel Properties vs BF Homes

G.R. No. 169343, August 05, 2015

SAN MIGUEL PROPERTIES, INC., PETITIONER, VS. BF HOMES, INC., RESPONDENT.

DECISION

LEONARDO-DE CASTRO, J.:

Assailed in this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court filed by San Miguel
Properties, Inc. (SMPI) are: 1) the Decision[1] dated January 31, 2005 of the Court of Appeals in CA-G.R. SP No.
83631, which affirmed with modification the Decision dated January 27, 2004 of the Office of the President (OP),
in O.P. Case No. 03-E-203, and remanded the case to the Housing and Land Use Regulatory Board (HLURB) for
further proceedings; and 2) the Resolution[2] dated August 9, 2005 of the appellate court in the same case, which
denied the Motion for Reconsideration of SMPI.

The antecedents of the case are as follows:

BF Homes, Inc. (BF Homes) is the owner of several parcels of land located in the northern portion of BF Homes
Parañaque Subdivision, particularly identified as Italia II lots.

BF Homes, represented by Florencio B. Orendain (Orendain), as rehabilitation receiver appointed by the


Securities and Exchange Commission (SEC); and SMPI, represented by Federico C. Gonzales, President,
entered into three successive Deeds of Absolute Sale whereby the former sold to the latter a total of 130 Italia II
lots with a combined area of 44,345 square meters for the aggregate consideration of P106,247,701.00, broken
down as follows:

Deed of Absolute Sale


Date of Execution
No. of Lots
Total Area
(square meters)
Consideration
First Deed[3]
In 1992
76
22,816
P52,134,560.00
Second Deed[4]

In 1993
13
5,964
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P14,990,514.00
Third Deed[5]
(Third Sale)
April 1993
41

15,565
P39,122,627.00
Total
130
44,345
P106,247,701.00

SMPI completed the payments for the 130 Italia II lots in December 1995.[6] In compliance with Section 3[7] of all
the three Deeds of Absolute Sale, BF Homes delivered the Transfer Certificates of Title (TCTs) to SMPI but only
for 110 of the 130 Italia II lots purchased by SMPI.

SMPI, thru counsel, sent BF Homes a letter on May 20, 1996 demanding the delivery of the remaining 20 TCTs,
specifically:

TCT No.
Area
1. (S-41285) 123526-A
538 sq. m.
2. (S-41261) 123522-A
329 sq. m.
3. (S-41279) 123520-A
384 sq. m.
4. (S-41277) 123518-A
380 sq. m.
5. (S-41275) 123516-A
364 sq. m.
6. (S-41271) 123512-A
364 sq. m.
7. (S-41273) 123514-A
364 sq. m.
8. (S-41269) 123510-A
364 sq. m.
9. (S-41267)123508-A
364 sq. m.
10. (S-41265) 123506-A
429 sq. m.
11. (S-41263) 123505-A
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329 sq. m.
12. (S-41261) 19477-A
329 sq. m.
13.(S-41258)19476-A
280 sq. m.
14. (S-41257) 23504-A
308 sq. m.
15.(S-41256)23503-A
280 sq. m.
16. (S-41255) 23502-A
308 sq. m.
17. (S-41254)23501-A
280 sq. m.
8. (S-41253) 123500-A
308 sq. m.
19. (S-41557)28372-A
502 sq. m.
20. (S-41279) 123520-A
665 sq. m.

Despite receipt of the afore-mentioned letter, BF Homes failed or refused to heed the demand of SMPI.
Consequently, SMPI filed a Complaint[8] for specific performance with damages before the HLURB on August 24,
2000 to compel BF Homes to deliver the remaining 20 TCTs to SMPI. The case was docketed as HLURB Case
No. REM-082400-11183.

In its Answer (With Counterclaim),[9] BF Homes alleged that the Deeds of Absolute Sale executed in 1992 to
1993 were entered into by Orendain in his personal capacity and without authority, as his appointment as
rehabilitation receiver was revoked by the SEC in an Order dated May 17, 1989. In support of its counterclaims,
BF Homes averred that the consideration paid by SMPI for the 130 Italia II lots was grossly inadequate and
disadvantageous to BF Homes; and that the Deeds of Absolute Sale were undated and not notarized. Hence, BF
Homes prayed that the HLURB render judgment: 1) dismissing the complaint of SMPI; 2) declaring the sale of the
130 Italia II lots null and void; 3) ordering SMPI to reconvey to BF Homes the titles for the [110] Italia II lots; and 4)
ordering SMPI to pay BF Homes exemplary damages, attorney's fees, and cost of suit.

SMPI, in its Reply (Answer with Counterclaim dated October 16, 2000),[10] countered that the validity of the three
Deeds of Absolute Sale was already upheld by the SEC in its Omnibus Order dated November 7, 1994, and the
motion for reconsideration of BF Homes of said Omnibus Order was denied by the SEC in its subsequent Order
dated August 22, 1995. Both Orders were deemed final, executory, and unappealable by the SEC in another
Omnibus Order dated July 31, 1996. As a result, the Deeds of Absolute Sale were binding on BF Homes. SMPI
further maintained that Orendain was authorized to sign the Deeds of Absolute Sale for and in behalf of FBO
Networks Management, Inc. - the receiver which the SEC appointed to replace Orendain, upon the latter's motion
to convert his involvement in the receivership from an individual to a corporate capacity. SMPI additionally
asserted that absent substantiation, the allegation of BF Homes of inadequate consideration for the sale of the
Italia II lots was self-serving; and that despite being undated and not notarized, the Deeds of Absolute Sale were
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valid since they contained the essential elements of a contract. And even assuming that the Deeds of Absolute
Sale may be rescinded, SMPI argued that BF Homes did not offer and was not prepared to return the
consideration paid by SMPI, plus interest.

BF Homes filed a Rejoinder (To Complainant's Reply)[11] contending that the SEC Omnibus Order dated July 31,
1996 has not yet become final as BF Homes assailed the said Order in a Petition for Certiorari before the SEC. In
its Decision dated May 8, 1997, the SEC neither confirmed the authority of Orendain nor cleared Orendain/FBO
Networks Management, Inc. from any liability for his/its unauthorized acts, but clarified that the final report of the
rehabilitation receiver was not yet approved and was merely admitted as part of the records. BF Homes also
stated that although the SEC Order dated September 12, 2000 already terminated the rehabilitation proceedings
because of the improvement in the solvency status of BF Homes, BF Homes filed a Motion for Clarification and/or
Partial Reconsideration of said SEC Order and sought a resolution of the issues relating to the receiver's irregular
acts, including the sale of the Italia II lots to SMPI. BiF Homes insisted that the transactions entered into by
Orendain were anomalous as the latter sold the 130 Italia II lots to SMPI at a price that was inadequate and
disadvantageous to BF Homes.

Housing and Land Use Arbiter Rowena C. Balasolla (Arbiter Balasolla) issued an Order dated January 22,
2001[12] directing the parties to submit their respective position papers and supporting evidence, as well as their
draft decisions. Thereafter, the case was deemed submitted for resolution.

In her Decision[13] dated January 25, 2002, Arbiter Balasolla suspended the proceedings in HLURB Case No.
REM-082400-11183 for the following reasons:

What clearly is the issue to be resolved is whether or not [BF Homes] is obligated to deliver the title of the
remaining twenty (20) lots to [SMPI] notwithstanding that the latter had fully paid the same.

Were this is a simple case of non-delivery of title of the lot or unit to the buyer upon full payment, sans the
attendant problems, the answer would readily be in the affirmative. But this is not so in the instant case. This is a
case of non-delivery of titles of a sale of 20 lots between two developers, and the lots sold are from an existing
subdivision, which was under rehabilitation and made by a receiver which authority had been continuously
questioned by the controlling stockholders of a corporation under rehabilitation.

In the light thereof, it becomes imperative to discuss the antecedent facts that would help in arriving at a judicious
resolution of the instant complaint.

Sometime in September 1984, respondent [BF Homes] filed with the SEC a petition for rehabilitation and for
declaration of suspension of payments. In February 1988, the SEC appointed Florencio Orendain as [BF Homes']
rehabilitation receiver. In May 1989, the SEC revoked the appointment of Mr. Orendain and appointed FBO
Networks Management, Inc. (FBO) as receiver of the [BF Homes].

It was during the time 1992-1993 that [SMPI] bought from [BF Homes] the 130 parcels of land located in the
northern portion of BF Homes, Paranaque City.

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In June 1994, Mr. Orendain, on behalf of FBO, submitted to the SEC the Closing Report on [BF Homes] I of the
receivership program covering the period from March 1988 to January 1994. [BF Homes] protested and
questioned the said report by filing the corresponding pleadings with the SEC praying that the receivership of
FBO represented by Mr. Orendain be suspended due to violations of trust and breach of fiduciary obligation and
sought the nullification of the transaction entered into by Mr. Orendain. In November 1994, FBO was relieved of
its duties and responsibilities as rehabilitation receiver and a Committee of Receivers was appointed in lieu
thereof, to undertake and continue the rehabilitation program of [BF Homes].

In July 1996, the SEC issued an Omnibus Order in regard to rehabilitation case. Subsequently, however, [BF
Homes] filed a petition for review for which the SEC rendered a decision in May 1997. In the said decision, the
SEC held that the admission of the Receiver's Closing Report is merely for the purpose of receiving and noting
them for inclusion in the records of the case and not an admittance (sic) and acceptance of the merits and
veracity of the contents thereof.

In September 2000, the SEC issued another Order terminating the rehabilitation proceedings without, however,
deciding on the merits and veracity of the contents of the Receiver's Closing Report. Hence, [BF Homes] filed in
October 2000 a Motion for Clarification and/or Partial Reconsideration of the said Order which remains pending
with the SEC until the present.

Apparently, it is in the context of the foregoing issues that [BF Homes] refused to deliver the remaining twenty
(20) titles of the lots sold to [SMPI] as the former claimed, among others, that Mr. Orendain did not have the
authority to sell the 130 parcels of land in the first place.

As the peculiar background of this case would tell, it is inevitable that the resolution of the issues raised in the
instant complaint would be largely influenced by the outcome of the cases pending in other tribunals which are
directly and ineluctably related to the issues brought before this Board.

This Board is cognizant of the fact that respondent had questioned the action of its rehabilitation receiver before
the SEC, raising several issues against him, including but not limited, to his authority to sell the subject lots to the
complainant the resolution of which is still pending the said body.

Thus, while this Board may have jurisdiction over the instant complaint, the issue on whether or not Mr. Orendain
has overstepped his authority which is pending resolution by the SEC, is to our mind a condition sine qua non, the
final resolution of which by said body is a logical antecedent to the issue involved in the instant complaint and
which only the SEC has exclusive jurisdiction to decide.

Under the circumstances, we are inclined to suspend the proceedings before the Board until the SEC shall have
resolved with finality on the issue of the authority of Mr. Orendain/FBO Networks Management to enter into such
transactions on behalf of [BF Homes].

WHEREFORE, PREMISES CONSIDERED, this Office hereby suspends the proceedings of the instant complaint
until the final resolution of the pending incidents before the Securities and Exchange Commission.[14]

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SMPI filed a Petition for Review (Re: Decision dated January 25, 2002)[15] with the HLURB Board of
Commissioners, asseverating that: 1) the SEC, in its Orders dated November 7, 1994 and August 22, 1995, had
upheld the validity of the Deeds of Absolute Sale and confirmed the authority of the receiver to sell the 130 Italia II
lots to SMPI, and said Orders already became final after BF Homes failed to appeal the same before the Court of
Appeals, as provided for in Section 3,[16] Republic Act No. 5434, the law in force at that time; 2) Orendain and/or
FBO Networks Management, Inc. were immune from suit pursuant to Section 9, Rule 9[17] of the Interim Rules of
Procedure Governing Intra-corporate Controversies and Section 17, Rule 4[18] of the Interim Rules of Procedure
on Corporate Rehabilitation; 3) BF Homes was estopped from refusing to deliver the remaining 20 titles since it
had already received the consideration and benefits from the sale of the Italia II lots to SMPI and delivered 110
out of 130 TCTs to SMPI; 4) the principle of suspending a case due to a prejudicial question only applies to
criminal cases; 5) BF Homes was mandated, under pain of criminal sanction under Section 25,[19] in relation to
Section 39[20] of Presidential Decree No. 957,[21] also known as "The Subdivision and Condominium Buyer's
Protection Decree," to deliver the TCTs of the remaining 20 Italia II lots, which had already been fully paid for by
SMPI; 6) assuming that Orendain exceeded his authority as receiver of BF Homes in selling the 130 Italia II lots to
SMPI, then Orendain could be held liable for damages but the titles to said lots acquired by SMPI by reason of the
sale would be unaffected, absent any action for reconveyance instituted by BF Homes; and 7) the issue regarding
Orendain's authority to undertake the sale of the Italia II lots to SMPI was rendered moot and academic by the
issuance of SEC Order dated September 12, 2000, terminating the receivership of BF Homes.

After a further exchange of pleadings by the parties, the HLURB Board of Commissioners[22] rendered its
Decision[23] dated March 28, 2003, ruling thus:

We find no evidence to support the argument that the SEC had upheld with finality on the sales transaction
entered into by Orendain with [SMPI]. On the contrary the order of the SEC stated that the closing report of the
receiver is being accepted for inclusion of the records and not an admittance (sic) or acceptance of the merits and
veracity of the contents thereof. The issue of whether Orendain had authority to sell the lots is still unresolved.

While this board may have the competence to rule on the validity of the sales transaction entered into by
Orendain ostensibly in behalf of BF Homes, we decline to rule on the said issue in deference to the SEC or its
successor-in-interest, which has first taken cognizance of the issue, applying the doctrine of primary jurisdiction.
Thus, in Vidad vs. RTC of Negros Oriental, it was held:

While no prejudicial question strictly arises where one is a civil case and the other is an administrative
proceeding, in the interest of good order, it behooves the court to suspend its action on the cases before it
pending the final outcome of the administrative proceedings. The doctrine of primary jurisdiction does not warrant
a court to arrogate unto itself the authority to resolve a controversy the jurisdiction over which is initially lodged
with an administrative body [of special competence].

Wherefore, the petition for review is denied and the decision of the office below is affirmed.[24]

SMPI appealed the foregoing Decision of the HLURB Board of Commissioners before the OP. The appeal was
docketed as O.P. Case No. 03-E-203. The OP, in its Decision[25] dated January 27, 2004, adjudged that the
HLURB should have resolved HLURB Case No. REM-082400-11183:

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The basic complaint in this case is one for specific performance under Section 25 of Presidential Decree (PD) 957
- "The Subdivision and Condominium Buyers' Protective", infra.

As early as August 1987, the Supreme Court already recognized the authority of the HLURB, as successor
agency of the National Housing Authority (NHA), to regulate, pursuant to PD 957 in relation to PD 1344, the real
estate trade, with exclusive jurisdiction to hear and decide cases "involving specific performance of contractual
and statutory obligations filed by buyers of subdivision lots . . . against the owner, developer, dealer, broker or
salesman" (Antipolo Realty Corp. vs. National Housing Authority (153 SCRA). Then came the reiterative rulings in
Solid Homes vs. Pavawal (177 SCRA 72 [1989]), United Housing Corp. vs. Dayrit (181 SCRA 295 [1990]), and
Realty Exchange Venture Corp. vs. Sendino, 233 SCRA 665 [1994]. And as stressed in Realty Exchange, citing
C.T. Torres Enterprises, Inc. vs. Hibionada (191 SCRA 268 [1990], the HLURB, in the exercise of its adjudicatory
powers and functions, "must interpret and apply contracts, determine the rights of the parties under these
contracts and award damages whenever appropriate."

Given its clear statutory mandate, the HLURB's decision to await for some other forum to decide - if ever one is
forthcoming - the issue on the authority of Orendain to dispose of subject lots before it peremptorily resolves the
basic complaint is unwarranted, the issues thereon having been joined and the respective position papers and the
evidence of the parties having been submitted. To us, it behooved the HLURB to adjudicate, with usual dispatch,
the right and obligations of the parties in line with its appreciation of the obtaining facts and applicable law. To
borrow from Mabuhay Textile Mills Corp. vs. Ongpin (141 SCRA 437), it does not have to rely on the findings of
others to discharge this adjudicatory functions.[26]

The OP then proceeded to resolve the question of whether or not SMPI was entitled to the delivery of the 20
TCTs:

There can be no quibbling about the following postulates: 1) The existence of a perfected deed of absolute sale
covering the said lots; 2) SMPI appears to be an innocent purchaser for value; 3) Full payment and receipt by [BF
Homes] of the stipulated purchase price; 4) Admission by the SEC of FBO's audited Closing Report; 5).
Termination of the rehabilitation proceedings, and 6) The obligation of the owner or developer under Sec. 25 of
PD 957 to "deliver the title of the lot or units to the buyer upon [full] payment of the lot or unit."

Given the foregoing perspective, the question thus formulated should be answered in the affirmative. [BF Homes']
challenge against the validity of the conveying deed on the ground of inadequacy of the purchase price cannot be
given cogency. As a matter of law, lesion or inadequacy of cause shall not invalidate a contract, save in cases
specified by law or unless there has been fraud, mistake or undue influence (Art. 1355, Civil Code). Thus, [BF
Homes'] allegation about the inadequacy of price for the twenty (20) lots, even if true, cannot invalidate the sale in
question, absent a showing that such sale is a case exempted by law from the operation of said article or that
fraud, mistake or undue influence attended the sale (Auyong Hian vs. CTA, 59 SCRA 110).

[BF Homes'] posture regarding the invalidity of the same sales transaction owing to Orendain's alleged lack of
authority to execute the corresponding deed may be accorded serious consideration were it not for its acceptance
and retention of the purchase price for the covered lots. As aptly argued in this appeal, citing jurisprudence,
estoppel attached to [BF Homes] when it accepted the benefits arising from the performance of SMPI of its
undertaking under the contract of sale. By the doctrine of estoppel, a party is barred from repudiating or canceling
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an otherwise defective or rescissible contract by his receipt of payments due thereunder (Republic v. Acoje
Mining Co., Inc., 7 SCRA 361; Angeles v. Calasanz, 135 SCRA 332); the bar of estoppel also precludes one who,
by his conduct, had induced another to act in a particular manner, from adopting an inconsistent position that
thereby causes prejudice to another (Cruz vs. CA, 293 SCRA 239).

Significantly, Orendain signed the three deeds of sale adverted to covering 130 lots in 1992 and 1993, or during
FBO's watch as receiver. Yet, [BF Homes] opted to fully implement the transactions covered by two of these
deeds and partially implement the third by delivering the titles to 110 lots. In net effect, [BF Homes] did recognize
the authority of Orendain to execute those contracts. But if Orendain was indeed bereft of authority during the
time material, as [BF Homes] would have this Office believe, how explain (sic) its inaction to recover damages
against one it veritably depicts as an impostor?

xxxx

Much has been made about the sale of the 130 lots not having been approved by the SEC. It bears to stress in
this regard that the Closing Report which, doubtless includes the said sale, had been confirmed and admitted by
the SEC Hearing Panel. It may be that the Commission en banc did not specifically confirm and approve the sale.
But neither did it interpose objection thereto, let alone disapprove the same. Be that as it may, the presumptive
validity and enforceability of such sale must be posited.[27]

The OP denied the claims for damages of both parties for insufficiency of evidence but awarded attorney's fees in
the amount of PI00,000.00 to SMPI, which was compelled to litigate. In the end, the OP decreed:

IN VIEW OF ALL THE FOREGOING, judgment is hereby entered ordering BF Homes, Inc., to deliver to San
Miguel Properties, Inc., the corresponding titles to the lots subject of the instant case, free from all liens aind
encumbrances, except to the subdivision restrictions referred to in the conveying deed of sale, and to pay the
latter the sum of P100,000.00 as and. by way of attorneys' fees. All other claims and counterclaims are hereby
DISMISSED. The decision of the HLURB dated 28 March 2003 is accordingly REVERSED and SET ASIDE.[28]

BF Homes filed a Motion for Reconsideration but it was denied by the OP in a Resolution[29] dated March 26,
2004.

Aggrieved, BF Homes sought recourse from the Court of Appeals by way of a Petition for Review[30] under Rule
43 of the Revised Rules of Court, which was docketed as CA-G.R. SP No. 83631. In its Decision[31] dated
January 31, 2005, the Court of Appeals agreed with the OP that the HLURB had the primary and exclusive
jurisdiction to resolve the complaint for specific performance and damages of SMPI and should not have
suspended the proceedings until the SEC had ruled with finality on the issue of Orendain's authority to sell the
130 Italia II lots to SMPI:

Presidential Decree No. 957 was issued on 12 July 1976. It was promulgated to cover questions that relate to
subdivisions and condominiums. Its object is to provide for an appropriate government agency, the HLURB, to
which all parties aggrieved in the enforcement of contractual rights with respect to said category of real estate
may take course.

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In the case of JESUS LIM ARRANZA vs. B.F. HOMES, INC., the Supreme Court said:

Section 3 ofP.D. No. 957 empowered the National Housing Authority (NHA) with the "exclusive jurisdiction to
regulate the real estate trade and business." On 2 April

1978, P.D. No. 1344 was issued to expand the jurisdiction of the NHA to include the following:

SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its
powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive
jurisdiction to hear and decide cases of the following nature:

A. Unsound real estate business practices;

B. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the
project owner, developer, dealer, broker or salesman; and

C. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot
or condominium unit asainst the owner, developer, dealer, broker or salesman. (Emphasis supplied.)

Thereafter, the regulatory and quasi-judicial functions of the NHA were transferred to the Human Settlements
Regulatory Commission (HSRC) by virtue of Executive Order No. 648 dated 7 February 1981. Section 8 thereof
specifies the functions of the NHA that were transferred to the HSRC including the authority to hear and decide
"cases on unsound real estate business practices; claims involving refund filed against project owners,
developers, dealers, brokers or salesmen and cases of specific performance." Executive Order No. 90 dated 17
December 1986 renamed the HSRC as the Housing and Land Use Resulatory Board (HLURB). (Underscoring
supplied.)
Certainly, in the instant case, [SMPI] is a buyer within the contemplation of P.D. 957. Clearly, the acquisition of
the one hundred thirty (130) lots was for a valuable consideration.

The jurisdiction of the SEC, on the other hand, is defined by P.D. No. 902-A, as amended, as follows:
Sec. 5. In addition to the regulatory and adjudicative functions of the Securities and Exchange Commission over
corporations, partnerships and other forms of associations registered with it as expressly granted under existing
laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving.

(a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers or
partnership, amounting to fraud and misrepresentation which may be detrimental to the interest of the public
and/or of the stockholder, partners, members of associations or organizations registered with the Commission;

(b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders,
members, or associates; between any or all of them and the corporation, partnership or association of which they
are stockholders, members or associates, respectively; and between such corporation, partnership or association
and the state insofar as it concerns their individual franchise or right to exist as such entity; and

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(c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations,
partnerships or associations.
In the ARRANZA case, the Supreme Court said that:
For the SEC to acquire jurisdiction over any controversy under these provisions, two elements must be
considered: (1) the status or relationship of the parties; and (2) the nature of the Question that is the subject of
their controversy.

The first element requires that the controversy must arise "out of intra-corporate or partnership relations between
and among stockholders, members or associates; between any or all of them and the corporation, partnership or
association of which they are stockholders, members or associates, respectively; and between such corporation,
partnership or association and the State in so far as it concerns their individual franchises.
In the instant case, [SMPI] is not a stockholder, member or associate of [BF Homes]. It is a lot buyer in the
subdivision developed by [BF Homes.]

The second element requires that the dispute among the parties be intrinsically connected with the regulation or
the internal affairs of the corporation, partnership or association.

In the case at hand, [SMPI's] complaint before the HLURB is for specific performance to enforce its rights as
purchaser of subdivision lots as regards the delivery of twenty (20) TCTs. Certainly, the issue in this case is not
related to the "regulation" of [BF Homes] or to [BF Homes'] "internal affairs."

As a matter of fact, Section 25 of PD 957 provides:


Section 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full
payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of
Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding
at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the
corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or
unit may be secured and delivered to the buyer in accordance herewith, (underscoring supplied.)
In the above-mentioned case of Arranza, the Supreme Court also said:
P.D. No. 902-A, as amended, defines the jurisdiction of the SEC; while P.D. No. 957, as amended, delineates that
of the HLURB. These two quasi-judicial agencies exercise functions that are distinct from each other. The SEC
has authority over the operation of all kinds of corporations, partnerships or associations with the end in view of
protecting the interests of the investing public and creditors. On the other hand, the HLURB has jurisdiction over
matters relating to observance of laws governing corporations engaged in the specific business of development of
subdivisions and condominiums. The HLURB and the SEC being bestowed with distinct powers and functions,
the exercise of those functions by one shall not abate the performance by the other of its own functions. As
respondent puts it, "there is no contradiction between P.D. No. 902-A and P.D. No. 957."
Hence, the powers of the HLURB can not be in derogation of the SEC's authority. P.D. Nos. 902-A and 957 are
laws in pari materia. This is because P.D. No. 902-A relates to all corporations, while P.D. No. 957 pertains to
corporations engaged in the particular business of developing subdivisions and condominiums.

Next, this brings us to the collateral issue of whether or not HLURB properly suspended the proceeding until SEC
shall have resolved with finality the issue of authority of Mr. Orendain.

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Given the foregoing perspective, the collateral issue thus formulated should be answered in the negative.
Furthermore, in several cases decided by the Supreme Court, the High Court has consistently ruled that the NHA
or the HLURB has jurisdiction over complaints arising from contracts between the subdivision developer and the
lot buyer or those aimed at compelling the subdivision developer to comply with its contractual and statutory
obligations.

Hence, the HLURB should take jurisdiction over respondent's complaint because it pertains to matters within the
HLURB's competence and expertise. The proceedings before the HLURB should not be suspended.[32]

The Court of Appeals, however, differed from the OP Decision by ordering the; remand of the case to the HLURB
in recognition of the doctrine of primary jurisdiction. The dispositive portion of the Decision of the appellate court
reads:

WHEREFORE, the questioned Decision of the Office of the President [is] AFFIRMED with modification. The case
is REMANDED to the Housing and Land Use Regulatory Board for continuation of proceedings with dispatch.[33]
SMPI filed a Motion for Partial Reconsideration (Re: Decision dated January 31, 2005)[34] insofar as the Court of
Appeals remanded the case to the HLURB for further proceedings. The appellate court denied said Motion in a
Resolution[35] dated August 9, 2005.

SMPI now comes before this Court,. through the instant Petition, assailing the aforementioned Decision and
Resolution of the Court of Appeals based on the following assignment of errors:

I.

THE COURT OF APPEALS' DECISION DATED 31 JANUARY 2005 REMANDING THE CASE TO THE HLURB
IS CONSTITUTIONALLY FLAWED AND A PATENT NULLITY CONSIDERING THAT:

IT MISERABLY FAILED TO DISCUSS CLEARLY AND DISTINCTLY THE LEGAL BASIS AND/OR
JUSTIFICATION FOR REMANDING THE CASE TO THE HLURB AS MANDATED BY SECTION 14, ARTICLE
VIII, 1987 CONSTITUTION.

WORSE, THE COURT OF APPEALS FAILED TO IDENTIFY THE FACTUAL MATTERS THAT IT CLAIMS NEED
STILL BE TRIED OR DETERMINED BY THE HLURB THAT WOULD HAVE JUSTIFIED THE REMAND OF THE
CASE.

IN ANY EVENT, [BF HOMES] AND THE COURT OF APPEALS' CLAIMED DOCTRINE OF PRIMARY
JURISDICTION IS FOREVER BARRED AS IT COULD NOT BE INVOKED FOR THE FIRST TIME ON APPEAL.

EVEN ASSUMING ARGUENDO THAT THE DOCTRINE OF PRIMARY JURISDICTION IS STILL INVOCABLE,
IT IS NONETHELESS INAPPLICABLE SINCE THE PARTIES HAD DULY AMPLIFIED THEIR RESPECTIVE
CAUSES OF ACTION AND DEFENSES VIA THEIR SUBMISSION OF PLEADINGS AND POSITION PAPERS
BEFORE THE HLURB, AND UPON WHICH THE OFFICE OF THE PRESIDENT DECIDED ON THE MERITS.

II.
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EVEN THEN, THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS AND REVERSIBLE ERROR WHEN
IT REMANDED THE CASE TO THE HLURB FOR FURTHER "PRESENTATION OF EVIDENCE" DESPITE THE
DECISION ON THE MERITS OF THE OFFICE OF THE PRESIDENT IN THAT:

THE ISSUE HERE BEING A SIMPLE QUESTION OF LAW ON WHETHER OR NOT SMPI WAS ENTITLED TO
THE DELIVERY OF THE BALANCE OF 130 FULLY PAID LOTS/TITLES OR EQUIVALENT TO TWENTY (20)
TITLES, THE COURT OF APPEALS SHOULD HAVE AFFIRMED THE DECISION ON THE MERITS OF THE
OFFICE OF THE PRESIDENT.

IN FACT, THE RELEVANT FACTS OF THE CASE, E.G. FULL PAYMENT OF THE PURCHASE PRICE OF THE
SUBJECT LOTS IN FAVOR OF [BF HOMES] AND NON-DELIVERY TO SMPI OF THE TITLES OVER THE
SUBJECT LOTS BY [BF HOMES], WERE UNDISPUTED AND MORE SO ADMITTED BY THE PARTIES IN
THEIR RESPECTIVE HLURB POSITION PAPERS AND OTHER PLEADINGS FOR WHICH NO TRIABLE
EVIDENTIARY MATTER IS LEFT TO BE RESOLVED BY THE HLURB.

INDEED, THE OFFICE OF THE PRESIDENT, PER ITS DECISION DATED 27 JANUARY 2004, CORRECTLY
RESOLVED THIS SIMPLE ISSUE, AND FORTUNATELY IN FAVOR OF SMPI, BASED ON THE PLEADINGS
AND POSITION PAPERS FILED BY THE PARTIES IN ACCORDANCE WITH SECTION 5, RULE VI, HLURB
RULES. THE COURT OF APPEALS OUGHT TO HAVE SIMILARLY ENFORCED THIS HLURB RULE.

FURTHER PROCEEDINGS BEFORE THE HLURB IS DILATORY, UNNECESSARY, SUPERFLUOUS AND


CIRCUITOUS. HIERARCHICALLY (sic), THE HLURB IS PRECLUDED AND BARRED FROM REOPENING,
MUCH LESS REVERSING THE DECISION OF THE OFFICE OF THE PRESIDENT.

THE COURT OF APPEALS' STANCE IS TANTAMOUNT TO A RE-OPENING OF THE OFFICE OF THE


PRESIDENT'S DECISION, HENCE WOULD WREAK HAVOC TO THE DOCTRINE OF SUBSTANTIAL RES
JUDICATA.

IF AT ALL, THE HLURB NEED ONLY BE DIRECTED TO RESOLVE SMPI'S PENDING MOTION FOR
EXECUTION, AND NOT CONDUCT FURTHER PROCEEDINGS FOR RECEPTION OF THE PARTIES'
EVIDENCE THAT ARE UNSPECIFIED.

III.

THE COURT OF APPEALS COMMITTED GRAVE, SERIOUS AND REVERSIBLE ERROR WHEN IT FAILED
AND/OR REFUSED TO AFFIRM THE OFFICE OF THE PRESIDENT'S DECISION DATED 27 JANUARY 2004
IN THAT:

THE SUBJECT SALE TRANSACTIONS, DULY APPROVED AND CONFIRMED BY THE SEC PER ITS
ORDERS DATED 07 NOVEMBER 1994 AND 31 JULY-1996, ARE PRESUMED VALID AND REGULAR SINCE
THESE WERE OFFICIAL ACTS OF SEC-APPOINTED RECEIVER MR. FLORENCIO B. ORENDAIN.

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IN FACT, SEC RECEIVER ORENDAIN'S ACTS CANNOT BE IMPUGNED BY [BF HOMES] SINCE UNDER
SECTION 9, RULE 9, INTERIM RULES OF PROCEDURE GOVERNING INTRA- CORPORATE
CONTROVERSIES AND SECTION 17, RULE 4, INTERIM RULES OF PROCEDURE ON CORPORATE
REHABILITATION, WHICH OPERATES RETROACTIVELY BEING A PROCEDURAL RULE, RECEIVERS
ENJOY IMMUNITY FROM SUITS ARISING FROM THE EXERCISE OF THEIR FUNCTIONS AND DUTIES.

NONETHELESS, [BF HOMES] IS ESTOPPED FROM REFUSING TO DELIVER THE REMAINING 20 TCTs
SINCE IT HAD PREVIOUSLY DELIVERED TO SMPI 110 TCTs OUT OF 130 TCTs FOR WHICH [BF HOMES]
HAD DULY .RECEIVED FULL PAYMENT THEREFOR IN THE TOTAL AMOUNT PHP104,600,402.47.[36]
CONSEQUENTLY, [BF HOMES] IS OBLIGED TO DELIVER THE TITLES TO SMPI PURSUANT TO SECTION
25, P.D. 957.

THE MATTER OF THE PURCHASE PRICE IS IRRELEVANT CONSIDERING THE BIG VOLUME INVOLVED. IN
FACT, THE AVERAGE PURCHASE PRICE OF THE LOTS IN THE AMOUNT OF PHP2,500.00 PER SQ. M. IS
VALID AND REASONABLE SINCE THE SALE INVOLVED A TOTAL OF 130 LOTS AMOUNTING TO PHP
104,600,402.47.

EVEN ASSUMING ARGUENDO THAT THERE MAY BE SUBSTANTIAL DISPARITY BETWEEN THE AVERAGE
PURCHASE PRICE OF PHP2.500/SQ.M. AND THE MARKET VALUE AT PHP3,500/SQ.M. AS [BF HOMES]
CLAIMS, MERE INADEQUACY OF THE PURCHASE PRICE, STANDING ALONE AND WITHOUT PROOF OF
ACTUAL FRAUD, CANNOT INVALIDATE THE PARTIES' SALES CONTRACT PER ARTICLE 1355, NEW CIVIL
CODE.

IF AT ALL, [BF HOMES'] REMEDY IS TO FILE THE APPROPRIATE ACTION FOR RECONVEYANCE WITH
THE REGULAR COURT, ABSENT WHICH, IT IS LEGALLY BOUND TO DELIVER TO SMPI THE SUBJECT
TITLES.

ACCORDINGLY, SINCE SMPI WAS CONSTRAINED TO LITIGATE DUE TO [BF HOMES'] UNJUSTIFIED
REFUSAL TO DELIVER THE SUBJECT TITLES, SMPI IS ENTITLED TO THE PAYMENT OF ATTORNEY'S
FEES.[37]

The Petition is meritorious.

Presidential Decree No. 957[38] dated July 12, 1976 conferred exclusive jurisdiction to regulate the real estate
trade and business upon the National Housing Authority (NHA).[39] Presidential Decree No. 1344[40] dated April
2, 1978 expanded the quasi-judicial powers of NHA by providing as follows:

Section 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its
powers provided for in Presidential Decree No. 957, the National Housing Authority shall have exclusive
jurisdiction to hear and decide cases of the following nature:

Unsound real estate business practices;

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Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project
owner, developer, dealer, broker or salesman; and

Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or
condominium unit against the owner, developer, dealer, broker or salesman." (Emphases ours.)

Per Executive Order No. 648[41] dated February 7, 1981, the powers of the NHA were transferred to the Human
Settlements Regulatory Commission, which, pursuant to Executive Order No. 90 dated December 17, 1986, was
subsequently renamed as HLURB.[42] In Siasoco v. Narvaja,[43] the Court highlighted the exclusive jurisdiction
of the HLURB over complaints for specific performance in certain real estate transactions:

Under the Executive Order creating it, the HLURB has exclusive jurisdiction to "hear and decide cases of unsound
real estate business practices; claims involving refund filed against project owners, developers, dealers, brokers,
or salesmen; and cases of specific performance." Accordingly, in United Housing Corporation v. Dayrit, we ruled
that it is the HLURB, not the trial court, which has jurisdiction over complaints for specific performance filed
against subdivision developers to compel the latter to execute deeds of absolute sale and to deliver the
certificates of title to buyers. (Emphases supplied.)

The Court reiterated in Bank of the Philippines Islands v. ALS Management and Development Corporation[44]
that:

[T]he jurisdiction of the HLURB over cases enumerated in Section 1 of PD No. 1344 is exclusive. Thus, we have
ruled that the board has sole jurisdiction in a complaint of specific performance for the delivery of a certificate of
title to a buyer of a subdivision lot; for claims of refund regardless of whether the sale is perfected or not; and for
determining whether there is a perfected contract of sale. (Emphases supplied.)

It is clear from the plain language of Section 1 of Presidential Decree No. 1344 and aforecited jurisprudence that
the HLURB had exclusive jurisdiction over the complaint for specific performance filed by SMPI against BF
Homes for the delivery of the remaining 20 TCTs.

In fact, in the instant case, the HLURB did exercise jurisdiction over and did take cognizance of the complaint of
SMPI. Arbiter Balasolla received pleadings and evidences from the parties, and after the period for filing position
papers and draft decisions by the parties had lapsed, deemed the case submitted for decision. However, at this
stage, Arbiter Balasolla demurred, and instead of deciding the case, suspended the proceedings until the SEC
ruled on the issue of whether or not Orendain, the receiver of BF Homes, had authority to execute the Deeds of
Absolute Sale over the 130 Italia II lots in favor of SMPI. On appeal, the HLURB Board of Commissioners affirmed
the suspension of proceedings.

When the case was appealed to the OP by SMPI, and then to the Court of Appeals by BF Homes, both the OP
and the Court of Appeals sustained the jurisdiction of HLURB over the complaint for specific performance filed by
SMPI, the only difference being that the OP proceeded to resolve the case on the merits based on the evidence
on record while the appellate court remanded the case to the HLURB for further proceedings.

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The OP and the Court of Appeals are correct that the HLURB, in the exercise of its exclusive jurisdiction, did not
have to suspend the proceedings and should have went ahead to resolve the complaint for specific performance
filed by SMPI given its statutory mandate under Section 1 of Presidential Decree No. 1344 and its technical
competence and expertise over the subject matter. The HLURB was called upon to determine the contractual
obligations of BF Homes and SMPI, as seller and buyer of subdivision lots, respectively, under the terms and
conditions of the Deeds of Absolute Sale in relation to the provisions of Presidential Decree No. 957. In contrast,
the proceedings before the SEC involved the receivership of BF Homes, an intra-corporate matter, as pointed out
by the Court of Appeals. While the HLURB and SEC proceedings may be related (i.e., Orendain executed the
Deeds of Absolute Sale of the 130 Italia II lots as receiver of BF Homes), the two cases could proceed
independently of one another. A ruling by the SEC that Orendain did not have or had exceeded his authority as
receiver in executing the Deeds of Absolute Sale is not absolutely determinative of the fate of the complaint for
specific performance of SMPI before the HLURB. It would not automatically result in the nullification or rescission
of the said Deeds or justify the refusal of BF Homes to deliver the 20 TCTs to SMPI as there would be other
issues which need to be considered, such as the good faith or bad faith of SMPI as buyer, ratification by BF
Homes of the Deeds, etc., and the HLURB is not obliged to suspend its proceedings until all of these issues are
resolved or decided by other courts/tribunals. HLURB could already make a preliminary finding on the validity of
the Deeds of Absolute Sale executed by Orendain for the purpose of ascertaining the right of SMPI to the delivery
of the 20 TCTs. The HLURB is behooved to settle the controversy brought before it with dispatch if only to
achieve the purpose of Presidential Decree No. 957, to wit:

The provisions of P.D No. 957 were intended to encompass all questions regarding subdivisions and
condominiums. The intention was to provide for an appropriate government agency, the HLURB, to which all
parties - buyers and sellers of subdivision and condominium units - may seek remedial recourse. The law
recognized, too, that subdivision and condominium development involves public interest and welfare and should
be brought to a body, like the HLURB, that has technical expertise. In the exercise of its powers, the HLURB, on
the other hand, is empowered to interpret and apply contracts, and determine the rights of private parties under
these contracts. This ancillary power, generally judicial, is now no longer with the regular courts to the extent that
the pertinent HLURB laws provide.[45]

Nonetheless, the Court disagrees with the Court of Appeals and finds no more need to remand the case to the
HLURB.

To recall, the parties were able to file pleadings and submit evidence before Arbiter Balasolla. The case was
already deemed submitted for resolution with Arbiter Balasolla stopping short only of actually rendering a
decision. Taking into account that the necessary pleadings and evidence of the parties are already on record,
returning the instant case to the HLURB for further proceedings will simply be circuitous and inconsistent with the
summary nature of HLURB proceedings.[46] The Court keeps in mind the shared objective of Rule 1, Section 2 of
the 1996 Rules of Procedure of the HLURB, as amended, and Rule 1, Section 6 of the Revised Rules of Court to
promote a just, speedy, and inexpensive disposition/determination of every action.[47]

Pursuant to the doctrine of primary jurisdiction, "the courts cannot or will not determine a controversy involving a
question which is within the jurisdiction of an administrative tribunal, where the question demands the exercise of
sound administrative discretion requiring the special knowledge, experience, and services of the administrative
tribunal to determine technical and intricate matters of fact, and a uniformity of ruling is essential to comply with
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the purposes of the regulatory statute administered."[48] However, said doctrine is not an absolute or inflexible
rule. The Court recognized several exceptions in Republic v. Lacap,[49] viz.:

[T]he doctrine of exhaustion of administrative remedies and the corollary doctrine of primary jurisdiction, which are
based on sound public policy and practical considerations, are not inflexible rules. There are many accepted
exceptions, such as: (a) where there is estoppel on the part of the party invoking the doctrine; (b) where the
challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable
delay or official inaction that will irretrievably prejudice the complainant; (d) where the amount involved is relatively
small so as to make the rule impractical and oppressive; (e) where the question involved is purely legal and will
ultimately have to be decided by the courts of justice; (f) where judicial intervention is urgent; (g) when its
application may cause great and irreparable damage; (h) where the controverted acts violate due process; (i)
when the issue of non-exhaustion of administrative remedies has been rendered moot; (j) when there is no other
plain, speedy and adequate remedy; (k) when strong public interest is involved; and, (1) in quo warranto
proceedings, x x x. (Emphases supplied.)

The contractual relationship between BF Homes as owner and SMPI as buyer of subdivision lots is governed by
Presidential Decree No. 957 and is undeniably imbued with public interest. Hence, it is crucial that the dispute
between them be resolved as swiftly as possible. In Spouses Chua v. Ang,[50] the Court declared that "public
interest and welfare are involved in subdivision and condominium development, as the terms of Presidential
Decree Nos. 957 and 1344 expressly reflect, x x x Shelter is a basic human need whose fulfillment cannot afford
any kind of delay."

Even if the case is no longer remanded, BF Homes cannot claim denial of due process. "The essence of due
process is to be heard, and, as applied to administrative proceedings, this means a fair and reasonable
opportunity to explain one's side, or an opportunity to seek a reconsideration of the action or ruling complained of.
Administrative due process cannot be fully equated with due process in its strict judicial sense, for in the former a
formal or trial-type hearing is not always necessary, and technical rules of procedure are not strictly applied."51 In
the instant case, SMPI and BF Homes were afforded the opportunity to present and address each other's
arguments through an exchange of pleadings, as well as to submit their respective evidence before Arbiter
Balasolla. To recall, the case was already submitted for decision before Arbiter Balasolla, meaning, there is
nothing more left for the parties to submit or do. To remand the case and repeat the entire process once again
before the HLURB Arbiter will not only be impractical, but also unreasonable and oppressive for SMPI.

Relevant herein are the following pronouncements of the Court in Ching v. Court of Appeals[52]:

[T]he Supreme Court may, on certain exceptional instances, resolve the merit:? of a case on the basis of the
records and other evidence before it, most especially when the resolution of these issues would best serve the
ends of justice and promote the speedy disposition of cases.

Thus, considering the peculiar circumstances attendant in the instant case, this Court sees the cogency to
exercise its plenary power:
"It is a rule of procedure for the Supreme Court to strive to settle the entire controversy in a single proceeding
leaving no root or branch to bear the seeds of future litigation. No useful purpose will be served if a case or the
determination of an issue in a case is remanded to the trial court only to have its decision raised again to the
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Court of Appeals and from there to the Supreme Court (citing Board of Commissioners vs. Judge Joselito de la
Rosa and Judge Capulong, G.R. Nos. 95122-23).

"We have laid down the rule that the remand of the case or of an issue to the lower court for further reception of
evidence is not necessary where the Court is in position to resolve the dispute based on the records before it and
particularly where the ends of justice would not be subserved by the remand thereof (Escudem vs. Dulay, 158
SCRA 69). Moreover, the Supreme Court is clothed with ample authority to review matters, even those not raised
on appeal if it finds that their consideration is necessary in arriving at a just disposition of the case."
On many occasions, the Court, in the public interest and for the expeditious administration of justice, has resolved
actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends
of justice would not be subserved by the remand of the case.

Consequently, the Court proceeds to resolve the primary issue in this case: Whether or not SMPI is entitled to the
delivery of the remaining 20 TCTs for the lots it purchased from BF Homes.

The Court answers affirmatively.

Section 25 of Presidential Decree No. 957 explicitly mandates that "[t]he owner or developer shall deliver the title
of the [subdivision] lot or [condominium] unit to the buyer upon full payment of the lot or unit."

Section 3 of all the three Deeds of Absolute Sale also reads:

3. [BF Homes] likewise covenants to deliver to [SMPI] the properties free and clear of tenants, if any, and shall
submit any and all titles, documents and/or papers which may be required to effect the transfer of the properties
to [SMPI][.][53]

In the case at bench, SMPI submitted adequate proof showing full payment to and receipt by BF Homes of the
purchase price for the 130 Italia II lots as fixed in the Deeds of Absolute Sale.[54] BF Homes expressly admitted
receipt of some payments, while it remained silent as to the others without presenting controverting evidence.

Upon full payment by SMPI of the purchase price for the 130 Italia II lots to BF Homes, it became mandatory upon
BF Homes to deliver the TCTs for said lots to SMPI. As the Court held in G.O.A.L., Inc. v. Court of Appeals[55]:

Upon full payment of the agreed price, petitioner is mandated by law to deliver the title of the lot or unit to the
buyer. Both the "Contract to Sell" of petitioner and private respondents, and Sec. 25 of P.D. 957 state -
Sec. III (Contract to Sell). - Title and Ownership of Unit. Upon full payment by the vendees of the full amount of
the purchase price stipulated under Sec. Ill hereof, the assessments and expenses under Sec. IV and otherwise
upon compliance by the VENDEES of all obligations therein, the VENDOR will convey to the VENDEE all rights
and interests of the former and to the Unit, subject hereof together with the interest in the common area and in the
Condominium Corporation appurtenant to such unit x x x."

Sec. 25, P.D. 957 - Issuance of Title. - The owner or developer shall deliver the title of the lot or unit to the buyer
upon full payment of the lot or unit x x x. In the event a mortgage over the lot or unit is outstanding at the time of
the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding
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portion thereof within six months from such issuance in order that the title over any paid lot or unit may be
secured and delivered to the buyer in accordance herewith."
Petitioner also attempts to justify its failure to deliver the certificate of title of private respondent Teng by claiming
that it used the title as part collateral for the additional loan NHA had extended for the construction of the fifth
floor.

The Court observes the frequent allusion of petitioner to its predicament brought about by the abandonment of the
project by the first contractor. But such is irrelevant in light of Sec. 25 of P.D. 957 as well as of the Contract to Sell
of the parties. While we empathize with petitioner in its financial dilemma we cannot make innocent parties suffer
the consequences of the former's lack of business acumen. Upon full payment of a unit, petitioner loses all its
rights and interests to the unit in favor of the buyer, x x x. (Emphases supplied.)

To justify its refusal to deliver the remaining 20 TCTs to SMPI, BF Homes asserts that 1) the Deeds of Absolute
Sale were undated and not notarized; 2) Orendain did not have or exceeded his authority as receiver in entering
into the contracts of sale of the Italia II lots with SMPI; and 3) the consideration for the said Italia II lots were
grossly inadequate and disadvantageous for BF Homes.

The Court is not persuaded.

Article 1358(1) of the Civil Code requires that "[a]cts and contracts which have for their object the creation,
transmission, modification or extinguishment of real rights over immovable property" must appear in a public
document; and sales of real property or of an interest therein shall be governed by Article 1403(2) and 1405 of the
same Code. Pertinent portions of Articles 1403(2) and 1405 of the Civil Code are reproduced below:

Art. 1403. The following contracts are unenforceable, unless they are ratified:

xxxx

(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an
agreement hereafter made shall be unenforceable by action, unless the same, or some note or memorandum,
thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement
cannot be received without the writing, or a secondary evidence of its contents:
xxxx

(e) An agreement of the leasing for a longer period than one year, or for the sale of real property or of an interest
therein;

xxxx
Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of Article 1403, are ratified by the failure
to object to the presentation of oral evidence to prove the same, or by the acceptance of benefit under them.

The contracts of sale of the 130 Italia II lots between BF Homes and SMPI were actually reduced into writing into
the three Deeds of Absolute Sale which were signed by the representatives of the two corporations. The only
defect was that the Deeds were not notarized and, therefore, were not public documents as required by Article
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1358(1) of the Civil Code. Cenido v. Spouses Apacionado[56] involved a closely similar situation and the Court
adjudged therein that:

The sale of real property should be in writing and subscribed by the party charged for it to be enforceable. The
"Pagpapatunay" is in writing and subscribed by Bonifacio Aparato, the vendor; hence, it is enforceable under the
Statute of Frauds. Not having been subscribed and sworn to before a notary public, however, the "Pagpapatunay"
is not a public document, and therefore does not comply with Article 1358, Paragraph 1 of the Civil Code.

The requirement of a public document in Article 1358 is not for the validity of the instrument but for its efficacy.
Although a conveyance of land is not made in a public document, it does not affect the validity of such
conveyance. Article 1358 does not require the accomplishment of the acts or contracts in a public instrument in
order to validate the act or contract but only to insure its efficacy, so that after the existence of said contract has
been admitted, the party bound may be compelled to execute the proper document, x x x.

xxxx

The private conveyance of the house and lot is therefore valid between Bonifacio Aparato and respondent
spouses, x x x For greater efficacy of the contract, convenience of the parties and to bind third persons,
respondent spouses have the right to compel the vendor or his heirs; to execute the necessary document to
properly convey the property.

Also instructive is the following discussion of the Court in Swedish Match v. Court of Appeals,[57] on the Statute
of Frauds:

The Statute of Frauds embodied in Article 1403, paragraph (2), of the Civil Code requires certain contracts
enumerated therein to be evidenced by some note or memorandum in order to be enforceable. The term "Statute
of Frauds" is descriptive of statutes which require certain classes of contracts to be in writing. The Statute does
not deprive the parties of the right to contract with respect to the matters therein involved, but merely regulates
the formalities of the contract necessary to render it enforceable. Evidence of the agreement cannot be received
without the writing or a secondary evidence of its contents.

The Statute, however, simply provides the method by which the contracts enumerated therein may be proved but
does not declare them invalid because they are not reduced to writing. By law, contracts are obligatory in
whatever form they may have been entered into, provided all the essential requisites for their validity are present.
However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or
that a contract be proved in a certain way, that requirement is absolute and indispensable. Consequently, the
effect of non-compliance with the requirement of the Statute is simply that no action can be enforced unless the
requirement is complied with. Clearly, the form required is for evidentiary purposes only. Hence, if the parties
permit a contract to be proved, without any objection, it is then just as binding as if the Statute has been complied
with.

The purpose of the Statute is to prevent fraud and perjury in the enforcement of obligations depending for their
evidence on the unassisted memory of witnesses, by requiring certain enumerated contracts and transactions to
be evidenced by a writing signed by the party to be charged.
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However, for a note or memorandum to satisfy the Statute, it must be complete in itself and cannot rest partly in
writing and partly in parol. The note or memorandum must contain the names of the parties, the terms and
conditions of the contract, and a description of the property sufficient to render it capable of identification. Such
note or memorandum must contain the essential elements of the contract expressed with certainty that may be
ascertained from the note or memorandum itself, or some other writing to which it refers or within which it is
connected, without resorting to parol evidence.

xxxx

The Statute of Frauds is applicable only to contracts which are executory and not to those which have been
consummated either totally or partially. If a contract has been totally or partially performed, the exclusion of parol
evidence would promote fraud or bad faith, for it would enable the defendant to keep the benefits already derived
by him from the transaction in litigation, and at the same time, evade the obligations, responsibilities or liabilities
assumed or contracted by him thereby. This rule, however, is predicated on the fact of ratification of the contract
within the meaning of Article 1405 of the Civil Code either (1) by failure to object to the presentation of oral
evidence to prove the same, or (2) by the acceptance of benefits under them. x x x. (Emphases supplied.)

Based on the afore-quoted jurisprudence, the Deeds of Absolute Sale are enforceable. First, the Deeds are
already in writing and signed by the parties, and only lack notarization, a formality which SMPI could compel BF
Homes to comply with. As private documents, the Deeds are still binding between the parties and the conveyance
of the 130 Italia II lots by BF Homes to SMPI by virtue of said Deeds is valid. And second, the Deeds were
already ratified as BF Homes had accepted the benefits from said contracts when it received full payment from
SMPI of the purchase price for the 130 Italia II lots. The Deeds were also substantially performed considering that
BF Homes had previously delivered to SMPI the TCTs for 110 out of the 130 lots, only refusing to deliver the
TCTs for the remaining 20 lots.

BF Homes cannot insist on the lack of authority of Orendain as receiver to sign the Deeds of Absolute Sale for the
130 Italia II lots. While it is true the SEC revoked the appointment of Orendain as rehabilitation receiver of BF
Homes in 1989, the SEC thereafter immediately appointed FBO Networks Management, Inc., in replacement as
receiver. Orendain was the Chairman of FBO Networks Management, Inc. Hence, when Orendain signed the
Deeds of Absolute Sale for the 130 Italia II lots, he did so as Chairman of FBO Networks Management, Inc., the
appointed receiver of BF Homes.

Under Section 6(d) of Presidential Decree No. 902-A, otherwise known as the SEC Reorganization Act, the
management committee or rehabilitation receiver is empowered to take custody and control of all existing assets
and properties of such corporations under management; to evaluate the existing assets and liabilities, earnings
and operations of such corporations; to determine the best way to salvage and protect the interest of investors
and creditors; to study, review and evaluate the feasibility of continuing operations, and restructure and
rehabilitate such entities if determined to be feasible by the SEC.[58] The acts of the receiver, being an appointed
officer of the SEC,[59] enjoy the presumption of regularity.[60]

In the instant case, the acts of FBO Networks Management, Inc., as receiver of BF Homes, undertaken through
Orendain, including the sale of the 130 Italia II lots to SMPI in 1992 and 1993, are so far presumed to have been
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regularly performed absent evidence to the contrary. While BF Homes questioned the acts of Orendain/FBO
Networks Management, Inc. as receiver before the SEC, the SEC terminated the rehabilitation proceedings
without definitively ruling on the same and recognized the transfer of jurisdiction over such subject matter to the
Regional Trial Courts (RTC) with the passage of Republic Act No. 8799, otherwise known as the Securities
Regulation Code. There is no showing herein whether BF Homes pursued before the RTC any case to nullify or
invalidate the alleged unauthorized or irregular acts of Orendain/FBO Networks Management, Inc. as receiver.

Moreover, even assuming for the sake of argument that Orendain/FBO Networks Management, Inc. did act
without or beyond his/its authority as receiver in entering into the contracts of sale of the 130 Italia II lots with
SMPI, then the said contracts were merely unenforceable and could be ratified, Article 1403(1) of the Civil Code
provides:

ARTICLE 1403. The following contracts are unenforceable, unless they are ratified:

(1) Those entered into in the name of another person by one who has been given no authority or legal
representation, or who has acted beyond his powers[.]

As the OP observed, BF Homes ratified the Deeds of Absolute Sale with SMPI by accepting full payment from
SMPI of the purchase price for the 130 Italia II lots, and fully implementing the transaction covered by the first two
Deeds and partially implementing the third by delivering the TCTs for 110 of the 130 lots.

Receiving full payment for the 130 Italia II lots from SMPI also estops BF Homes from denying the authority of
Orendain/FBO Networks Management, Inc. to enter into the Deeds of Absolute Sale. The Court applies by
analogy its declarations in Bisaya Land Transportation, Inc. v. Sanchez,[61] which involved the acts of a court-
appointed receiver for an estate:

Furthermore, it is clear that BISTRANCO received material benefits from the contracts of agency of Sanchez,
based upon the monthly statements of income of BISTRANCO, upon which the commissions of Sanchez were
based, x x x.

xxxx

[I]n our considered opinion, the doctrine of estoppel precludes BISTRANCO from repudiating an obligation
voluntarily assumed by it, after having accepted benefits therefrom.' To countenance such repudiation would be
contrary to equity and would put a premium on fraud or misrepresentation, which this Court will not sanction.

Furthermore, the averment of BF Homes of inadequacy of the purchase price for the 130 Italia II lots deserves
scant consideration. Section 3(p), Rule 131 of the Revised Rules of Court presumes that private transactions
have been fair and regular. The only evidence submitted by BF Homes in support of its claim is the appraisal
report which valued the lots at P3,500.00 and P3,000.00 per square meter. The appraisal report, however, does
not necessarily prove that the purchase price for the lots agreed upon in the Deeds of Absolute Sale, averaged at
P2,500.00 per square meter, is grossly inadequate and disadvantageous to BF Homes. There are considerations
for which sellers may agree to sell their property for less than the market value, such as the urgent financial need
of the seller, cash or immediate payment, and/or the high number of properties purchased at the same time. In
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this case, SMPI explained that it was granted a lower purchase price because it bought the Italia II lots in volume,
and BF Homes was unable to repudiate said explanation.

Finally, as to the award of attorney's fees, Article 2208 of the Civil Code allows the recovery of attorney's fees and
expenses of litigation, other than judicial costs, even in the absence of stipulation, "[w]here the defendant acted in
gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable claim." SMPI
obviously had a valid and demandable claim against BF Homes, which unjustifiably and inexcusably refused to
comply with the mandate in Presidential Decree No. 957 and undertaking in the Deeds of Absolute Sale to deliver
the titles to the subdivision lots upon complete payment for said properties. The sudden refusal of BF Homes to
deliver the last 20 TCTs, after having previously delivered the other 110 TCTs, constitutes bad faith and justifies
the award of attorney's fees in favor of SMPI, which was forced to litigate to enforce its rights. The amount of
P100,000.00 awarded by the OP as attorney's fees is just and reasonable under the circumstances.

WHEREFORE, premises considered, the Petition for Review on Certiorari of San Miguel Properties, Inc. is
GRANTED. The Decision dated January 31, 2005 and Resolution dated August 9, 2005 of the Court of Appeals in
CA-G.R. SP No. 83631 ordering the remand of the case to the Housing and Land Use Regulatory Board is
REVERSED and SET ASIDE; and the Decision dated January 27, 2004 of the Office of the President in O.P.
Case No. 03-E-203 is REINSTATED.

SO ORDERED.

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6. Supapo vs De Jesus

G.R. No. 198356, April 20, 2015

ESPERANZA SUPAPO AND THE HEIRS OF ROMEO SUPAPO, NAMELY: ESPERANZA, REX EDWARD,
RONALD TROY, ROMEO, JR., SHEILA LORENCE, ALL SURNAMED SUPAPO, AND SHERYL FORTUNE
SUPAPO-SANDIGAN, PETITIONERS, VS. SPOUSES ROBERTO AND SUSAN DE JESUS, MACARIO
BERNARDO, AND THOSE PERSONS CLAIMING RIGHTS UNDER THEM, RESPONDENTS.

DECISION

BRION, J.:

We resolve the petition for review on certiorari[1] filed by petitioners Esperanza Supapo and Romeo Supapo[2]
(Spouses Supapo) to assail the February 25, 2011 decision[3] and August 25, 2011 resolution[4] of the Court of
Appeals (CA) in CA-G.R. SP No. 111674.

Factual Antecedents

The Spouses Supapo filed a complaint[5] for accion publiciana against Roberto and Susan de Jesus (Spouses de
Jesus), Macario Bernardo (Macario), and persons claiming rights under them (collectively, the respondents), with
the Metropolitan Trial Court (MeTC) of Caloocan City.

The complaint sought to compel the respondents to vacate a piece of land located in Novaliches, Quezon City,
described as Lot 40, Block 5 (subject lot). The subject lot is covered by Transfer Certificate of Title (TCT) No. C-
28441[6] registered and titled under the Spouses Supapo's names. The land has an assessed value of thirty-nine
thousand nine hundred eighty pesos (39,980.00) as shown in the Declaration of Real Property Value (tax
declaration) issued by the Office of the City Assessor of Caloocan.[7]

The Spouses Supapo did not reside on the subject lot. They also did not employ an overseer but they made sure
to visit at least twice a year.[8] During one of their visits in 1992, they saw two (2) houses built on the subject lot.
The houses were built without their knowledge and permission. They later learned that the Spouses de Jesus
occupied one house while Macario occupied the other one.[9]

The Spouses Supapo demanded from the respondents the immediate surrender of the subject lot by bringing the
dispute before the appropriate Lupong Tagapamayapa. The Lupon issued a Katibayan Upang Makadulog sa
Hukuman (certificate to file action) for failure of the parties to settle amicably.[10]

The Spouses Supapo then filed a criminal case[11] against the respondents for violation of Presidential Decree
No. 772 or the Anti-Squatting Law.[12] The trial court convicted the respondents. The dispositive portion of the
decision reads:

WHEREFORE, in view of all the foregoing, this Court finds accused ROBERTO DE JESUS, SUSAN DE JESUS
and MACARIO BERNARDO, GUILTY beyond reasonable doubt for Violation of Presidential Decree No. 772, and
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each accused is hereby ordered to pay a fine of ONE THOUSAND PESOS (P1,000.00), and to vacate the subject
premises.

SO ORDERED.[13] (Emphasis supplied.)

The respondents appealed their conviction to the CA.[14] While the appeal was pending, Congress enacted
Republic Act (RA) No. 8368, otherwise known as "An Act Repealing Presidential Decree No. 772," which resulted
to the dismissal of the criminal case.[15]

On April 30, 1999, the CA's dismissal of the criminal case became final.[16]

Notwithstanding the dismissal, the Spouses Supapo moved for the execution of the respondents' civil liability,
praying that the latter vacate the subject lot. The Regional Trial Court (RTC) granted the motion and issued the
writ of execution. The respondents moved for the quashal of the writ but the RTC denied the same. The RTC also
denied the respondents' motion for reconsideration.

The respondents thus filed with the CA a petition for certiorari to challenge the RTC's orders denying the quashal
of the writ and the respondent's motion for reconsideration.[17] The CA granted the petition and held that with the
repeal of the Anti-Squatting Law, the respondents' criminal and civil liabilities were extinguished.[18] The
dispositive portion of the decision reads:

WHEREFORE, premises considered, the petition for certiorari with prayer for injunction is GRANTED. The orders
dated June 5, 2003 and July 24, 2003 of Branch 131 of the Regional Trial Court of Caloocan City in Criminal
Case No. C-45610 are REVERSED and SET ASIDE. Said court is hereby permanently ENJOINED from further
executing or implementing its decision dated March 18, 1996.

SO ORDERED.

The CA, however, underscored that the repeal of the Anti-Squatting Law does not mean that people now have
unbridled license to illegally occupy lands they do not own, and that it was not intended to compromise the
property rights of legitimate landowners.[19] In cases of violation of their property rights, the CA noted that
recourse may be had in court by filing the proper action for recovery of possession.

The Spouses Supapo thus filed the complaint for action publiciana.[20]

After filing their Answer,[21] the respondents moved to set their affirmative defenses for preliminary hearing[22]
and argued that: (1) there is another action pending between the same parties; (2) the complaint for accion
publiciana is barred by statute of limitations; and (3) the Spouses Supapo's cause of action is barred by prior
judgment.

The MeTC Ruling[23]

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The MeTC denied the motion to set the affirmative defenses for preliminary hearing. It ruled that the arguments
advanced by the respondents are evidentiary in nature, which at best can be utilized in the course of the trial. The
MeTC likewise denied the respondents' motion for reconsideration.

From the MeTC's ruling, the respondents filed a petition for certiorari with the RTC.[24]

The RTC Ruling[25]

The RTC granted the petition for certiorari on two grounds, viz.: (i) the action has prescribed; and (ii) accion
publiciana falls within the exclusive jurisdiction of the RTC.

It held that in cases where the only issue involved is possession, the MeTC has jurisdiction if the action for
forcible entry or unlawful detainer is filed within one (1) year from the time to demand to vacate was made.
Otherwise, the complaint for recovery of possession should be filed before the RTC.

The dispositive portion of the RTC decision reads:

WHEREFORE, premises considered, the instant petition is hereby GRANTED.

The Orders dated October 24, 2008 and February 23, 2009 are hereby declared NULL and VOID.

The Public Respondent is hereby directed to DISMISS Civil Case No. 08-29245 for lack of jurisdiction.

SO ORDERED.[26]

In their motion for reconsideration,[27] the Spouses Supapo emphasized that the court's jurisdiction over an
action involving title to or possession of land is determined by its assessed value; that the RTC does not have an
exclusive jurisdiction on all complaints for accion publiciana; and that the assessed value of the subject lot falls
within MeTC's jurisdiction.

The RTC denied the petitioners' motion for reconsideration.

It held that although the MeTC had jurisdiction based on the assessed value of the subject lot, the Spouses
Supapos' cause of action had already prescribed, the action having been filed beyond the ten (l0)-year
prescriptive period under Article 555 of the Civil Code.[28] As it was not proven when the actual demand to vacate
was made, the RTC ruled that the reckoning period by which the ejectment suit should have been filed is counted
from the time the certificate to file action was issued. The certificate to file action was issued on November 25,
1992, while the complaint for accion publiciana was filed only on March 7, 2008, or more than ten (10) years
thereafter.

Dissatisfied with the RTC ruling, the Spouses Supapo appealed to the CA.[29]

The CA Ruling[30]

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The CA dismissed the appeal and held that the complaint for accion publiciana should have been lodged before
the RTC and that the period to file the action had prescribed.

The dispositive portion of the CA decision reads:

WHEREFORE, the appeal is DENIED. The Decision dated June 30, 2009 and Order dated October 19, 2009 are
AFFIRMED.

SO ORDERED

The Spouses Supapo moved[31] but failed[32] to secure a reconsideration of the CA decision; hence, they came
to us through the present petition.

The Petition

In seeking reversal of the CA's ruling, the Spouses Supapo essentially argue that:

(1)
the MeTC exercises exclusive original jurisdiction over accion publiciana where the assessed value of the
property does not exceed P20,000.00, or P50,000.00 if the property is located in Metro Manila; and that
(2)
prescription had not yet set in because their cause of action is imprescriptible under the Torrens system.

The Respondents' Case[33]

The respondents argue that the complaint for accion publiciana was (1) filed in the wrong court; (2) barred by
prescription; and (3) barred by res judicata.

Issues

The issues for resolution are:

Whether the MeTC properly acquired jurisdiction;


Whether the cause of action has prescribed; and
Whether the complaint for accion publiciana is barred by res judicata.

Our Ruling

The petition is meritorious.

We hold that: (1) the MeTC properly acquired jurisdiction; (2) the cause of action has not prescribed; and (3) the
complaint is not barred by res judicata.

Accion Publiciana and


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the Jurisdiction of the
MeTC

Accion publiciana is an ordinary civil proceeding to determine the better right of possession of realty independent
of title. It refers to an ejectment suit filed after the expiration of one year from the accrual of the cause of action or
from the unlawful withholding of possession of the realty.[34]

In the present case, the Spouses Supapo filed an action for the recovery of possession of the subject lot but they
based their better right of possession on a claim of ownership.

This Court has held that the objective of the plaintiffs in accion publiciana is to recover possession only, not
ownership. However, where the parties raise the issue of ownership, the courts may pass upon the issue to
determine who between the parties has the right to possess the property.[35]

This adjudication is not a final determination of the issue of ownership; it is only for the purpose of resolving the
issue of possession, where the issue of ownership is inseparably linked to the issue of possession. The
adjudication of the issue of ownership, being provisional, is not a bar to an action between the same parties
involving title to the property. The adjudication, in short, is not conclusive on the issue of ownership.[36]

Thus, while we will dissect the Spouses Supapo's claim of ownership over the subject property, we will only do so
to determine if they or the respondents should have the right of possession.

Having thus determined that the dispute involves possession over a real property, we now resolve which court
has the jurisdiction to hear the case.

Under Batas Pambansa Bilang 129,[37] the jurisdiction of the RTC over actions involving title to or possession of
real property is plenary.[38]

RA No. 7691,[39] however, divested the RTC of a portion of its jurisdiction and granted the Metropolitan Trial
Courts, Municipal Trial Courts and Municipal Circuit Trial Courts the exclusive and original jurisdiction to hear
actions where the assessed value of the property does not exceed Twenty Thousand Pesos (P20,000.00), or Fifty
Thousand Pesos (P50,000.00), if the property is located in Metro Manila.

Section 1 of RA No. 7691 states:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of
1980," is hereby amended to read as follows:
Section. 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive original jurisdiction:

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the
assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or, for civil actions in
Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) x x x. (Emphasis supplied.)

Section 3 of the same law provides:


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Section. 3. Section 33 of the same law is hereby amended to read as follows:
Section. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in
Civil Cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any
interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand
pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty
thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses
and costs x x x. (Emphasis supplied.)

In view of these amendments, jurisdiction over actions involving title to or possession of real property is now
determined by its assessed value.[40] The assessed value of real property is its fair market value multiplied by the
assessment level. It is synonymous to taxable value.[41]

In Quinagoran v. Court of Appeals,[42] we explained:

[D]oes the RTC have jurisdiction over all cases of recovery of possession regardless of the value of the property
involved?

The answer is no. The doctrine on which the RTC anchored its denial of petitioner's Motion to Dismiss, as
affirmed by the CA — that all cases of recovery of possession or accion publiciana lies with the regional trial
courts regardless of the value of the property — no longer holds true. As tilings now stand, a distinction must be
made between those properties the assessed value of which is below P20,000.00, if outside Metro Manila; and
P50,000.00, if within.[43] (Emphasis supplied.)

In this regard, the complaint must allege the assessed value of the real property subject of the complaint or the
interest thereon to determine which court has jurisdiction over the action. This is required because the nature of
the action and the court with original and exclusive jurisdiction over the same is determined by the material
allegations of the complaint, the type of relief prayed for by the plaintiff, and the law in effect when the action is
filed, irrespective of whether the plaintiffs are entitled to some or all of the claims asserted therein.[44]

In the present case, the Spouses Supapo alleged that the assessed value of the subject lot, located in Metro
Manila, is P39,980.00. This is proven by the tax declaration[45] issued by the Office of the City Assessor of
Caloocan. The respondents do not deny the genuineness and authenticity of this tax declaration.

Given that the Spouses Supapo duly complied with the jurisdictional requirements, we hold that the MeTC of
Caloocan properly acquired jurisdiction over the complaint for accion publiciana.

The cause of action


has not prescribed

The respondents argue that the complaint for accion publiciana is dismissible for being filed out of time.
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They invoke Article 555 of the Civil Code, which states: Art. 555. A possessor may lose his possession:

xxxx

(4) By the possession of another, subject to the provisions of Article 537, if the new possession has lasted longer
than one year. But the real right of possession is not lost till after the lapse of ten years. (Emphasis supplied.)

The respondents point out that the Spouses Supapo filed the complaint for accion publiciana on March 7, 2008 or
more than ten (10) years after the certificate to file action was issued on November 25, 1992. The respondents
contend that the Spouses Supapo may no longer recover possession of the subject property, the complaint
having been filed beyond the period provided by law.

Further, while the respondents concede that the Spouses Supapo hold a TCT over the subject property, and
assuming a Torrens title is imprescriptible and indefeasible, they posit that the latter have lost their right to recover
possession because of laches.

On their part, the Spouses Supapo admit that they filed the complaint for accion publiciana more than ten (10)
years after the certificate to file action was issued. Nonetheless, they argue that their cause of action is
imprescriptible since the subject property is registered and titled under the Torrens system.

We rule that the Spouses Supapo's position is legally correct.

At the core of this controversy is a parcel of land registered under the Torrens system. The Spouses Supapo
acquired the TCT on the subject lot in 1979.[46] Interestingly, the respondents do not challenge the existence,
authenticity and genuineness of the Supapo's TCT.[47]

In defense, the respondents rest their entire case on the fact that they have allegedly been in actual, public,
peaceful and uninterrupted possession of the subject property in the concept of an owner since 1992. The
respondents contend that they built their houses on the subject lot in good faith. Having possessed the subject lot
for more than ten (10) years, they claim that they can no longer be disturbed in their possession.[48]

Under the undisputed facts of this case, we find that the respondents' contentions have no legal basis.

In a long line of cases, we have consistently ruled that lands covered by a title cannot be acquired by prescription
or adverse possession. We have also held that a claim of acquisitive prescription is baseless when the land
involved is a registered land because of Article 1126[49] of the Civil Code in relation to Act 496 [now, Section 47
of Presidential Decree (PD) No. 1529[50]].[51]

The Spouses Supapo (as holders of the TCT) enjoy a panoply of benefits under the Torrens system. The most
essential insofar as the present case is concerned is Section 47 of PD No. 1529 which states:

Section 47. Registered land not subject to prescriptions. No title to registered land in derogation of the title of the
registered owner shall be acquired by prescription or adverse possession.
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In addition to the imprescriptibility, the person who holds a Torrens Title over a land is also entitled to the
possession thereof.[52] The right to possess and occupy the land is an attribute and a logical consequence of
ownership.[53] Corollary to this rule is the right of the holder of the Torrens Title to eject any person illegally
occupying their property. Again, this right is imprescriptible.[54]

In Bishop v. CA,[55] we held that even if it be supposed that the holders of the Torrens Title were aware of the
other persons' occupation of the property, regardless of the length of that possession, the lawful owners have a
right to demand the return of their property at any time as long as the possession was unauthorized or merely
tolerated, if at all.[56]

Even if the defendant attacks the Torrens Title because of a purported sale or transfer of the property, we still rule
in favor of the holder of the Torrens Title if the defendant cannot adduce, in addition to the deed of sale, a duly-
registered certificate of title proving the alleged transfer or sale.

A case in point is Umpoc v. Mercado[57] in which we gave greater probative weight to the plaintiffs TCT vis-a-vis
the contested unregistered deed of sale of the defendants. Unlike the defendants in Umpoc, however, the
respondents did not adduce a single evidence to refute the Spouses Supapo's TCT. With more reason therefore
that we uphold the indefeasibility and imprescriptibility of the Spouses Supapo's title.

By respecting the imprescriptibility and indefeasibility of the Spouses Supapo's TCT, this Court merely recognizes
the value of the Torrens System in ensuring the stability of real estate transactions and integrity of land
registration.

We reiterate for the record the policy behind the Torrens System, viz.:

The Government has adopted the Torrens system due to its being the most effective measure to guarantee the
integrity of land titles and to protect their indefeasibility once the claim of ownership is established and
recognized. If a person purchases a piece of land on the assurance that the seller's title thereto is valid, he should
not run the risk of being told later that his acquisition was ineffectual after all, which will not only be unfair to him
as the purchaser, but will also erode public confidence in the system and will force land transactions to be
attended by complicated and not necessarily conclusive investigations and proof of ownership. The further
consequence will be that land conflicts can be even more abrasive, if not even violent.[58]

With respect to the respondents' defense[59] of laches, suffice it to say that the same is evidentiary in nature and
cannot be established by mere allegations in the pleadings.[60] In other words, the party alleging laches must
adduce in court evidence proving such allegation. This Court not being a trier of facts cannot rule on this issue;
especially so since the lower courts did not pass upon the same.

Thus, without solid evidentiary basis, laches cannot be a valid ground to deny the Spouses Supapo's petition.[61]
On the contrary, the facts as culled from the records show the clear intent of the Spouses Supapo to exercise
their right over and recover possession of the subject lot, viz.: (1) they brought the dispute to the appropriate
Lupon; (2) they initiated the criminal complaint for squatting; and (3) finally, they filed the action publiciana. To our
mind, these acts negate the allegation of laches.
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With these as premises, we cannot but rule that the Spouses Supapo's right to recover possession of the subject
lot is not barred by prescription.

The action is not barred


by prior judgment

As a last-ditch effort to save their case, the respondents invoke res judicata. They contend that the decision of the
CA in CA-G.R. SP No. 78649 barred the filing of the action publiciana.

To recall, CA-G.R. SP No. 78649 is the petition for certiorari filed by the respondents to challenge the RTC's
issuance of the writ enforcing their civil liability (i.e., to vacate the subject property) arising from their conviction
under the Anti-Squatting Law. The CA granted the petition and permanently enjoined the execution of the
respondents' conviction because their criminal liability had been extinguished by the repeal of the law under which
they were tried and convicted. It follows that their civil liability arising from the crime had also been erased.

The respondents' reliance on the principle of res judicata is misplaced.

Res judicata embraces two concepts: (1) bar by prior judgment as enunciated in Rule 39, Section 47(b) of the
Rules of Civil Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47(c).[62]

"Bar by prior judgment" means that when a right or fact had already been judicially tried on the merits and
determined by a court of competent jurisdiction, the final judgment or order shall be conclusive upon the parties
and those in privity with them and constitutes an absolute bar to subsequent actions involving the same claim,
demand or cause of action.[63]

The requisites[64] for res judicata under the concept of bar by prior judgment are:

(1) The former judgment or order must be final;

(2) It must be a judgment on the merits;

(3) It must have been rendered by a court having jurisdiction over the subject matter and the parties; and

(4) There must be between the first and second actions, identity of parties, subject matter, and cause of action.

Res judicata is not present in this case.

While requisites one to three may be present, it is obvious that the there is no identity of subject matter, parties
and causes of action between the criminal case prosecuted under the Anti-Squatting Law and the civil action for
the recovery of the subject property.

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First, there is no identity of parties. The criminal complaint, although initiated by the Spouses Supapo, was
prosecuted in the name of the people of the Philippines. The accion publiciana, on the other hand, was filed by
and in the name of the Spouses Supapo.

Second, there is no identity of subject matter. The criminal case involves the prosecution of a crime under the
Anti-Squatting Law while the accion publiciana is an action to recover possession of the subject property.

And third, there is no identity of causes of action. The people of the Philippines filed the criminal case to protect
and preserve governmental interests by prosecuting persons who violated the statute. The Spouses Supapo filed
the accion publiciana to protect their proprietary interests over the subject property and recover its possession.

Even casting aside the requirement of identity of causes of action, the defense of res judicata has still no basis.

The concept of "conclusiveness of judgment" does not require that there is identity of causes of action provided
that there is identity of issue and identity of parties.[65]

Under this particular concept of res judicata, any right, fact, or matter in issue directly adjudicated or necessarily
involved in the determination of an action before a competent court in which judgment is rendered on the merits is
conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies,
whether or not the claim, demand, purpose, or subject matter of the two actions is the same.[66]

As already explained, there is no identity of parties between the criminal complaint under the Anti-Squatting law
and the civil action for accion publiciana. For this reason alone, "collusiveness of judgment" does not apply.

Even if we assume, for the sake of argument, that there is identity of parties, "conclusiveness of judgment" still
does not apply because there is no identity of issues. The issue in the criminal case is whether the respondents
(accused therein) committed the crime alleged in the information, while the only issue in accion publiciana is
whether the Spouses Supapo have a better right than the respondents to possess and occupy the subject
property.

For all these reasons, the defense of res judicata is baseless.

Final Note

As a final note, we stress that our ruling in this case is limited only to the issue of determining who between the
parties has a better right to possession. This adjudication is not a final and binding determination of the issue of
ownership. As such, this is not a bar for the parties or even third persons to file an action for the determination of
the issue of ownership.

WHEREFORE, premises considered, we GRANT the petition, and consequently REVERSE and SET ASIDE the
February 25, 2011 decision and August 25, 2011 resolution of the Court of Appeals in CA-G.R. SP No. 111674.

SO ORDERED.

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7. Toledo vs CA

G.R. No. 167838, August 05, 2015

JOSE V. TOLEDO, GLENN PADIERNOS AND DANILO PADIERNOS, PETITIONER, VS. COURT OF
APPEALS, LOURDES RAMOS, ENRIQUE RAMOS, ANTONIO RAMOS, MILAGROS RAMOS AND ANGELITA
RAMOS AS HEIRS OF SOCORRO RAMOS, GUILLERMO PABLO, PRIMITIVA CRUZ AND A.R.C.
MARKETING CORPORATION, REPRESENTED BY ITS PRESIDENT, ALBERTO C. DY, RESPONDENTS.

DECISION

JARDELEZA, J.:

The Case

Petitioners Jose V. Toledo, Glenn Padiernos and Danilo Padiernos assail in this Rule 45 Petition the October 22,
2004 Decision[1] and April 13, 2005 Resolution of the Court of Appeals in CA G.R. SP No. 73670. The Court of
Appeals dismissed petitioners’ special civil action for Certiorari (and affirmed the trial court's finding of lack of
jurisdiction in Civil Case No. Q-97-30738), and later petitioners’ motion for reconsideration.

Facts

The facts are as follows:

On May 5, 1958, Del Rosario Realty (represented by Pedro Del Rosario) entered into a Contract to Sell with
spouses Leonardo Faustino and Angelina Lim (“Faustino spouses”). Del Rosario Realty agreed to sell Lot 4,
Block 2, Ilang-Ilang Street, Sunrise Hills Subdivision, Quezon City (“property”), covered by Transfer Certificate of
Title (TCT) No. 44436, for the amount of Thirteen Thousand Five Hundred Seventy-Two Pesos (P13, 572.00),
with an initial payment of P4, 200.00 and the balance to be paid in consecutive quarterly installments.[2]

On January 20, 1959, the Faustino spouses sold their rights over the property to spouses Vicente Padiernos and
Concordia Garcia, and the latter agreed to assume the former's obligations under the May 5, 1958 contract to
sell.[3] This transfer was registered and annotated on the property's TCT as an adverse claim as early as October
20, 1960.[4]

Meanwhile, on May 7, 1959, Pedro Del Rosario executed a deed assigning all of his rights and interests in the
May 5, 1958 contract to sell to Socorro A. Ramos. In the same deed, Socorro Ramos acknowledged and
“approved the transfer or assignment of rights made by spouses Leonardo Faustino and Angelina Lim in favor of
Vicente Padiernos” over the property including “all the incidental rights, interests and obligations inherent
thereto.”[5]

On January 9, 1962, Vicente Padiernos sold one-half of the property to petitioner Jose Toledo and his wife Elisa
Padierno (hereafter, “spouses Toledo”). The deed embodying the Partial Assignment of Rights noted that the
spouses Toledo had already commenced payment of the installments since August 5, 1961. It further provided
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that the spouses Toledo shall “continue payments until fully paid,” with said payments to be made in the name of
Vicente Padiernos as the purchaser on record. After completion of payment, the Toledo spouses shall own one-
half of the property.[6]

On March 21, 1967, Vicente Padiernos sold the remaining half of the property to spouses Virgilio and Leticia
Padiernos.[7] Later on, or on January 17, 1986, Virgilio and Leticia Padiernos assigned their rights over the
property to their children, petitioners Glenn and Danilo Padiernos.[8]

Consequently, spouses Toledo and spouses Virgilio and Leticia Padiernos paid quarterly installments on the
property until full payment sometime in 1971.[9] When petitioners requested for the release of the owner's
duplicate certificate of title, respondent Antonio A. Ramos, representing the heirs of Socorro Ramos, issued a
Certification stating that while the property “has been paid in full by Mr. Vicente Padiernos...Title #44436 could not
be released pending final decision of the Supreme Court.”[10]

In 1974, Virgilio Padiernos and petitioner Jose Toledo constructed their houses on the property, resided therein,
and paid the corresponding real property taxes.

In the meantime, it appears that execution proceedings were taken against the estate of Socorro Ramos. As a
consequence, eighteen (18) parcels of land belonging to the estate, including the property, were sold in auction to
Guillermo N. Pablo and Primitiva C. Cruz, who thereafter sold said properties to ARC Marketing.

On March 14, 1977, Enrique A. Ramos, Antonio A. Ramos, Milagros Ramos Sarno, Angelita Ramos and Lourdes
A. Ramos, all heirs of Socorro A. Ramos, filed a Complaint for Nullity of Execution Sale (docketed as Civil Case
No. Q-22850) against auction sale winners Guillermo N. Pablo and Primitiva C. Cruz, and their transferee ARC
Marketing. Sometime in 1990, Enrique A. Ramos, Antonio A. Ramos, Milagros Ramos Sarno and Angelita
Ramos, by way of a Deed of Assignment, assigned all their rights and interests in the case (and the properties it
covered) to Lourdes A. Ramos.

On January 13, 1993, Civil Case No. Q-22850 was settled, and the parties entered into a Final Compromise
Agreement (“Compromise Agreement”). Under the Compromise Agreement, then sole plaintiff Lourdes A. Ramos
agreed to settle the case for the total compromise amount of Two Million Pesos (P2,000,000.00) to be paid by
ARC Marketing to the former in installments.[11] Upon joint motion by the parties,[12] the Compromise Agreement
was approved by the trial court in a Decision dated January 13, 1993.[13]

On April 8, 1997, petitioners Jose Toledo, Glenn Padiernos and Danilo Padiernos filed a complaint for
reconveyance and damages.[14] This was docketed as Q-97-30738 and raffled to Branch 218 of the Regional
Trial Court of Quezon City.

Enrique Ramos moved to dismiss the case on the ground that petitioners failed to state a cause of action against
him because he has already assigned his interests in Civil Case No. Q-22850 (and consequently, over the
property) to his co-respondent Lourdes Ramos.[15] ARC Marketing, on the other hand, sought the dismissal of
the complaint on the following grounds: (1) the Regional Trial Court had no jurisdiction over the subject matter of
the claim because it is essentially an action to annul the judicially-approved Compromise Agreement in Civil Case
No. Q-22850; (2) petitioners failed to pay the correct docket fees; (3) the action was barred by the statute of
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limitations; (4) the action is barred by a prior judgment; (5) the complaint shows that petitioners failed to comply
with the conditions of the contract to sell and (6) laches, among others.[16]

The Ruling of the RTC

In a Resolution dated December 15, 1997, Regional Trial Court Judge Hilario Laqui denied the Motion to Dismiss
filed by Enrique Ramos.[17] Upon petitioners’ motion, Judge Laqui thereafter inhibited himself from proceeding
with the case and the same was re-raffled to the court of Judge Apolonio Bruselas, Jr. Judge Bruselas, in an
Order dated June 2, 2000, denied respondent ARC Marketing’s motion to dismiss.[18]

On June 19, 2000, ARC Marketing sought for a reconsideration of the Order, reiterating two grounds cited in its
previous motion to dismiss, viz: a) the court has no jurisdiction over the subject matter; and b) the court did not
acquire jurisdiction over the case due to petitioners' failure to pay the proper docket fees.[19]

In an Order dated June 17, 2002, Judge Bruselas granted ARC Marketing's motion. He held that petitioners’
action is really one for annulment of the judgment in Civil Case No. Q-22850 and ordered the dismissal of
petitioners' complaint for lack of jurisdiction.[20] Petitioners' subsequent motion for reconsideration was
denied.[21] Hence, they filed a petition for certiorari before the Court of Appeals.[22]

The Ruling of the Court of Appeals

The Court of Appeals found that Judge Bruselas did not act with grave abuse of discretion in dismissing
petitioners' complaint due to lack of jurisdiction. It stated:

Evidently, petitioners would want respondent Judge to annul the decision of a co-equal court, nay, a branch of the
same Regional Trial Court which approved the compromise agreement. Specifically, they pleaded for the
cancellation of private respondent ARC's Transfer Certificate of Title, the issuance of a new one in their favor, and
asked for the award of damages. xxx

Respondent Judge cannot be faulted for subsequently divesting himself of jurisdiction he earlier recognized. The
issuance of the said Order, in observance of judicial restraint, is felicitous, not capricious, whimsical or despotic. A
judge is presumed to know the constitutional limits of the authority or jurisdiction of his court. Restated,
respondent Judge soundly dismissed petitioners' complaint, on his firm belief that he has no jurisdiction over the
case. Otherwise, he would be retrying and settling once more the issues that had already been litigated and
decided by a competent court, RTC-Branch 77; and, worse, he would only create confusion and costly delays in
the dispensation of justice. As a matter of law, this is not permitted under the rule of stare decisis.[23]

Issue

Petitioners argue that the Court of Appeals erred in affirming Judge Bruselas' dismissal of their complaint for lack
of jurisdiction. They claim that nowhere in their complaint did they allege or pray for the annulment of the
judgment based on compromise. On the contrary, they claim to have sufficiently alleged relevant facts that would
support their action for reconveyance and damages.[24] ARC Marketing, on the other hand, claims that while
petitioners appear to seek the reconveyance of the property, what they ultimately would have the court do is to
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annul the January 13, 1993 decision approving the Compromise Agreement adjudging the property in ARC
Marketing's favor.[25] ARC Marketing thus argue that petitioners' action was correctly dismissed, the Regional
Trial Court having no jurisdiction to annul a compromise judgment approved by a co-equal court.[26]

The crux of the controversy therefore in this case is whether the action filed by petitioners before the RTC is one
for reconveyance or for annulment of judgment.

The Ruling of the Court

We rule for the petitioners.

An action for annulment of judgment is a remedy in equity so exceptional in nature that it may be availed of only
when other remedies are wanting, and only if the judgment, final order or final resolution sought to be annulled
was rendered by a court lacking jurisdiction or through extrinsic fraud.[27] An action for reconveyance, on the
other hand, is a legal and equitable remedy granted to the rightful owner of land which has been wrongfully or
erroneously registered in the name of another for the purpose of compelling the latter to transfer or reconvey the
land to him.[28] The Court of Appeals has exclusive original jurisdiction over actions for annulment of judgments
of Regional Trial Courts[29] whereas actions for reconveyance of real property may be filed before the Regional
Trial Courts or the Municipal Trial Courts, depending on the assessed value of the property involved.[30]

Action filed by petitioners


is one for reconveyance

It is axiomatic that what determines the nature of the action and which court has jurisdiction over it are the
allegations in the complaint and the character of the relief sought.[31]

We find that the action filed by petitioners is one for reconveyance.

For one, and as correctly pointed out by petitioners, the complaint they filed before the Regional Trial Court shows
that they never prayed for the annulment of the compromise judgment in Civil Case No. Q-22850. What
petitioners sought was the cancellation of the title issued in ARC Marketing's name and the issuance of a new one
in their favor.[32] This is characteristic of an action for reconveyance which respects the decree of registration as
incontrovertible but seeks the transfer of property, which has been wrongfully or erroneously registered in other
persons' names, to its rightful and legal owners, or to those who claim to have a better right.[33] There is no
special ground for an action for reconveyance. It is enough that the aggrieved party has a legal claim on the
property superior to that of the registered owner and that the property has not yet passed to the hands of an
innocent purchaser for value.[34]

Second, and more importantly, the following allegations in petitioners' Complaint clearly make out a case for
reconveyance:

xxx

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3. That the plaintiff Jose V. Toledo bought from Vicente Padiernos one half (½) of Lot No. 4, Block 2, at Ilang-
Ilang Street, Sunrise Hills Subdivision, Quezon City, while the other one half of said property which was
purchased by the spouses Virgilio Padiernos and Leticia R. Padiernos was assigned by the same spouses to the
plaintiffs Danilo Padiernos and Glenn Padiernos, the copies of the three deeds are hereto attached xxx

4. That tracing back the property, Vicente Padiernos bought Lot 4, Block 2, Ilang-Ilang Street, Sunrise Hills
Subdivision, Quezon City, covered by TCT No. 44436 from the Spouses Leonardo Faustino and Angelina Lim.

4.1 That said property was previously purchased by the spouses Leonardo Faustino and Angelina Lim from the
original owner, Pedro Del Rosario, proprietor and manager of Del Rosario Realty for the sum of P13,572.00.

xxx

5. That on May 7, 1959, Pedro Del Rosario, proprietor and manager of the Del Rosario Realty, assigned to
Vicente Padiernos, with the approval of Soccoro A. Ramos, Lot 4, Block 2, Ilang-Ilang Street, Sunrise Hills
Subdivision, Quezon City. xxx

6. That before March, 1973, the Plaintiffs requested the Heirs of Socorro A. Ramos to release to them the owner's
duplicate copy of Transfer Certificate Title No. 44436 because they have already fully paid said property. But the
defendants Heirs of Socorro A. Ramos, represented by Antonio A. Ramos issued tot he [sic] Plaintiffs a
Certification...which is self-explanatory.

xxx

8. That in February 1990, the defendants Enrique A. Ramos, Antonio A. Ramos, Milagros Ramos Sarne and
Angelita A. Ramos, signed a Deed of Assignment in favor of Defendant Lourdes A. Ramos assigned Ransfer [sic]
Certificate of Title No. 44436, together with other Titles, in an action for the annulment of execution proceedings
taken as a result of a decision in Civil Case No. 3066-P of the Court of First Instance of Pasay City, Branch VII,
entitled Guillermo N. Pablo and Primotiva [sic] Cruz vs. Estate of the deceased Socorro A. Ramos, which case
was transferred in the Regional Trial Court of Quezon City docketed as Civil Case No. Q-22850, Branch 7. xxx

9. That on January 13, 1993, in Quezon City, the Defendants Lourdes Ramos, in behalf of co-defendants Enrique
A. Ramos, Milagros Ramos, Antonio Ramos and Angelita Ramos; Guillermo N. Pardo, Primitiva Cruz, and ARC
Marketing, represented by its President Alberto C. Dy, assisted by their respective counsels, entered into a Final
Compromise Agreement, including Transfer Certificate of Title No. 44436, superseded by Transfer Certificate of
Title No. 223956, agreed to transfer the aforementioned TCT in favor of ARC Marketing Corporation, together
with other titles. xxx

10. That on January 13, 1993, in Quezon City, the Defendants executed a Joint Motion to the Honorable Court
that the judgment be rendered:
(a) Approving the Final Compromise Agreement...
(b) Dismissing the Complaint as against the ARC Marketing Corporation and Guillermo N. Pablo, Primitiva Cruz
and other Defendants, with prejudice;

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(c) Ordering the Register of Deeds of Quezon City to cancel the notice of lis pendens and/or adverse claim
annotated in connection with the case in Transfer Certificate of Title No. 223956 (formerly TCT No. 44436), and
other titles, all in the name of the Corporation. xxx
11. That on January 13, 1993, the Honorable Judge Ignacio L. Salvador of Branch 77, Regional Trial Court,
Quezon City, in Civil Case No. Q-22850, ordered the approval of the Joint Motion xxx

12. That the Defendants Lourdes A. Ramos and her co-heirs of the Estate of Socorro A. Ramos, Guillermo N.
Pablo, Primitiva Cruz and ARC Marketing Corporation, represented by its President Alberty [sic] Dy, collaborated
with each other to the prejudice of the plaintiffs who bought the property in question for a valuable consideration
and further since 1974 had constructed their residential house and are notoriously and continuously residing l [sic]
the premises up to the present;

13. That the plaintiffs have been paying the taxes on the house since 1975 up to the present. xxx

14. That the Defendants committed fraud, dishonest and grave mistake in including TCT No. 44436, preceded by
TCT No. 223956 and now TCT No. RT-17876 (242918) in the name of ARC Marketing Corporation... in the Final
Compromise Agreement that misled the Honorable Court of Quezon City in approving it and issuing its Decision
xxx[35]

Petitioners allege that: first, they are the owners of the land by virtue of a sale between their and respondents'
predecessors-in-interest; and second, that respondents Ramoses and ARC Marketing illegally dispossessed them
by having the same property registered in respondents' names. Thus, far from establishing a case for annulment
of judgment, the foregoing allegations clearly show a case for reconveyance.

As of the time of the filing of the case, the assessed value of the property, per the Real Property Tax Receipts
attached on the record and undisputed by respondents, exceeds P50,000.00.[36] The case was thus cognizable
by the Regional Trial Court of Quezon City, where the property is located.

In support of their argument for the dismissal of petitioners’ action, ARC Marketing cites our rulings in Rone v.
Claro[37] and Cultura v. Tapucar[38] where we affirmed the lower court’s dismissal of an action for annulment of a
fraudulent deed of sale. There, we held:

It may be that the recovery of title and possession of the lot was the ultimate objective of plaintiffs, but to attain
that goal, they must needs [sic] first travel over the road of relief on the ground of fraud; otherwise even if the
present action were to be regarded as a direct action to recover title and possession, it would, nevertheless, be
futile and could not prosper for the reason that the defendants could always defeat it by merely presenting the
deed of sale, which is good and valid to legalize and justify the transfer of the land to the defendants, until
unnulled [sic] unless the action of [sic] annul had been filed within four years after the discovery of the fraud in
1941. So, from whatever angle we view the case, the claimed [sic] of plaintiffs-appellants must fail.[39]

ARC Marketing’s reliance on Rone and Cultura is misplaced. The facts in Rone and Cultura are markedly different
from the circumstances of the present case.

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ARC Marketing alleges that petitioners’ action is one for annulment of a judgment albeit disguised as an action for
reconveyance; Rone and Cultura, on the other hand, dealt with actions for annulment of fraudulent deeds of sale.
The former type of action concerns only judgments, final orders and resolutions in civil actions of Regional Trial
Courts. It is governed by Rule 47 of the Revised Rules of Court and cognizable only by the Court of Appeals
whereas actions for the cancellation or annulment of contracts (as in the cases of Rone and Cultura) are covered
under Articles 1390 and 1391 of the Civil Code and considered actions beyond pecuniary estimation which fall
within the jurisdiction of Regional Trial Courts. Furthermore, and as correctly argued by petitioners, the actions in
Rone and Cultura were dismissed mainly on the ground of prescription, not for lack of jurisdiction.

That petitioners filed an action for annulment of judgment all the more fails to persuade when one considers that,
not being parties to Civil Case No. Q-22850, petitioners cannot file such action to annul the judgment therein.
Section 1 of Rule 47 extends the remedy of annulment only to a party in whose favor the remedies of new trial,
reconsideration, appeal and petition for relief from judgment are no longer available through no fault of said
party.[40]

Even assuming that petitioners will be allowed to file an action for annulment, it will be for naught as they will not
derive any real benefit from a favorable ruling. Our ruling in Dare Adventure Farm vs. Court of Appeals is
particularly instructive:

The petitioner probably brought the action for annulment upon its honest belief that the action was its remaining
recourse from a perceived commission of extrinsic fraud against it. It is worthwhile for the petitioner to ponder,
however, that permitting it despite its being a non-party in Civil Case No. MAN-2838 to avail itself of the remedy of
annulment of judgment would not help it in any substantial way. Although Rule 47 would initially grant relief to it
from the effects of the annulled judgment, the decision of the CA would not really and finally determine the rights
of the petitioner in the property as against the competing rights of the original parties. To be borne in mind is that
the annulment of judgment is an equitable relief not because a party-litigant thereby gains another opportunity to
reopen the already-final judgment but because a party-litigant is enabled to be discharged from the burden of
being bound by a judgment that was an absolute nullity to begin with.

We agree with the CA's suggestion that the petitioner's proper recourse was either an action for quieting of title or
an action for reconveyance of the property. It is timely for the Court to remind that the petitioner will be better off if
it should go to the courts to obtain relief through the proper recourse; otherwise, it would waste its own time and
effort, aside from thereby unduly burdening the dockets of the courts.[41]

Petitioners’ action being one for reconveyance filed with the proper court, the trial court therefore erred in
dismissing the action on grounds of lack of jurisdiction.

We note that the issues between the parties have been pending for over seventeen years. We further note that
petitioner Jose Toledo died on September 6, 2009 while awaiting final determination of ownership of the land
upon which he has made his residence. Several of the named respondents appear to have died as well.[42] Only
ARC Marketing, in whose name the property is registered, has actively participated in the proceedings.[43]

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Considering that the remaining issues named herein may already be resolved on the basis of the records before
us, and a remand of the case to the RTC would only cause undue hardship on the parties,[44] we shall proceed to
resolve this case on the merits and decide the issue of ownership of the subject property.

Action for reconveyance not barred

ARC Marketing argues that petitioners' action is barred on grounds of res judicata,[45] prescription,[46]and
laches.[47]

It errs.

First. The ruling in Civil Case No. Q-22850 does not serve to bar petitioners from filing an action for
reconveyance.

While a judicially-approved compromise agreement indeed has the effect and authority of res judicata,[48] the
same is conclusive and binding only upon the parties and those who are their successors-in-interest by title after
the commencement of the action in court:[49]

It is basic in law that a compromise agreement, as a contract, is binding only upon the parties to the compromise,
and not upon non-parties. This is the doctrine of relativity of contracts. Consistent with this principle, a judgment
based entirely on a compromise agreement is binding only on the parties to the compromise the court approved,
and not upon the parties who did not take part in the compromise agreement and in the proceedings leading to its
submission and approval by the court. Otherwise stated, a court judgment made solely on the basis of a
compromise agreement binds only the parties to the compromise, and cannot bind a party litigant who did not
take part in the compromise agreement.[50]

Petitioners were never parties to Civil Case No. Q-22850. Petitioners also acquired their title over the property
prior to the institution of said case involving respondents. Thus, petitioners cannot be prejudiced by the
compromise judgment in said case.

Second. ARC Marketing argues that petitioners' action is barred by the statute of limitations:

25. Plaintiffs waited for more than ten (10) years from the issuance of the … certification, more than ten (10) [sic]
after title over the subject property was issued in favor of Guillermo Pablo, more than ten (10) years … after title
over the subject property was issued in favor of ARC and, for more than four (4) years from the rendition of the
Decision dated January 13, 1993, before they instituted the present action.

26. Clearly, plaintiffs’' cause of action, if there was any, prescribed or was barred by the statute of limitation a
long, long time ago. Perforce, this action should be dismissed.[51]

This argument fails to persuade.

Article 1456 of the Civil Code provides that a person acquiring property through fraud becomes, by operation of
law, a trustee of an implied trust for the benefit of the real owner of the property. The presence of fraud in this
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case, as shown by the disposition of the property to ARC Marketing by Lourdes Ramos despite knowledge of
petitioners' title over the same, created an implied trust in favor of petitioners Toledo, et al. This gives petitioners
the right to seek reconveyance of the property from the subsequent buyers.

An action for reconveyance based on an implied trust prescribes in ten years, the reckoning point of which is the
date of registration of the deed or the date of issuance of the certificate of title over the property.[52] However, if
the plaintiff also remains in possession of the same, as in this case, the prescriptive period to recover title and
possession of the property does not run against him. In such a case, an action for reconveyance, if nonetheless
filed, would be in the nature of a suit for quieting of title, an action that is imprescriptible:[53]

Prescription does not run against the plaintiff in actual possession of the disputed land because such plaintiff has
a right to wait until his possession is disturbed or his title is questioned before initiating an action to vindicate his
right. His undisturbed possession gives him the continuing right to seek the aid of a court of equity to determine
the nature of the adverse claim of a third party and its effect on his title.[54]

Here, petitioners' undisturbed possession of the property is uncontroverted. Petitioners have alleged that they
have been in “continued, open and uninterrupted possession of the property for over forty (40) years,” as
evidenced not only by their payment of real property taxes but also the construction of their house thereon.[55]
This was notably never disputed by ARC Marketing. As plaintiffs in possession of the disputed property,
petitioners are not barred from seeking relief from the court via an action for reconveyance.[56]

Neither can petitioners be considered to have slept on their rights for laches to operate against them. Petitioners
have clearly taken steps to protect their interests in the property. While respondents correctly point out that the
sale of the property between the predecessors-in-interest of petitioners and respondents was not registered, the
records show that petitioners (and/or their predecessors-in-interest) have registered their adverse claim over the
property as early as October 20, 1960.[57] Petitioners also previously requested for the release of the owner's
duplicate certificate of title[58] sometime in 1973 but was given a Certification/Acknowledgment of Full Payment
instead as the title then could not be released due to a pending case involving the property.[59]

More importantly, petitioners were not parties to Civil Case No. Q-22850 between respondents Ramos, Cruz and
ARC Marketing. They cannot therefore be presumed to be aware of the January 13, 1993 decision in said case
for their action for reconveyance filed four years after (or in 1997) to be barred by laches.

Petitioners are entitled to


the reconveyance of the
property

Petitioners have alleged a legal right over the property and presented ample documentary evidence to support
their claim. In fact, the complete payment of the purchase price by petitioners (and/or their predecessors-in-
interest) is not disputed. ARC Marketing, however, claims that certain provisions of the original contract to sell in
relation to the disposal of the property were not complied with and so petitioners (and/or their predecessors-in-
interest) did not acquire ownership of the property.[60]

Paragraphs 7 and 8 of the Contract to Sell read:


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xxx

7. The PURCHASER/S agree/s not to sell, cede, incumber, transfer or in any other manner dispose of
his/her/their rights and obligations under this contact without the previous written consent of the OWNER. xxx

8. Should the PURCHASER/S fail/s to pay any installments or payments, when due, of the aforesaid purchase
price within ninety (90) days from the date of the last payment made, or if the PURCHASER/S violate/s any of the
conditions herein set forth, the OWNER shall have the right to cancel this AGREEMENT, without further notice, in
which event, this contract, “Ipso Facto” without the necessity of a notification or judicial action, shall be forfeited
and cancelled, and the OWNER shall be at liberty to dispose of said parcel/s of land to any other person in the
manner as if this contract had never been made or entered into. In the event of such forfeiture, all sums of money
paid under this contract will be considered as rentals and liquidated damages for the use and occupancy of said
parcel/s of land and the PURCHASER/S waive/s all rights and interests on the said property, or to ask or demand
to return the amount thereof, and he/she/they shall vacate the said land within sixty (60) days, and all the
improvements built by him/her/them shall be removed from said property without any prejudice to the OWNER.
[61]

According to ARC Marketing, the subsequent transfers made by the Faustino spouses (from which petitioners
derive their title) were made without the written consent or approval of Del Rosario (and/or his assignees). This
caused the ipso facto cancellation of the contract to sell.

We are not persuaded.

While the contract to sell indeed provided for the ipso facto cancellation of the contract “without need of
notification or judicial action,” jurisprudence requires, for cancellation to be effective, that written notice be sent to
the defaulter informing him of said cancellation/rescission.[62] In Palay, Inc. v. Clave, we held that the
cancellation of the contract to sell was void because of lack of notice, stating thus:

Well-settled is the rule, as held in previous jurisprudence, that judicial action for rescission of a contract is not
necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and
conditions. However, even in the cited cases, there was at least a written notice to the defaulter informing him of
the rescission. As stressed in University of the Philippines v. Walfrido de los Angeles, the act of the party in
treating a contract as cancelled should be made known to the other.[63]

In this case, it does not appear that ARC Marketing (nor its predecessors-in-interest) took any steps to cancel the
contract and/or eject petitioners from the premises (much less notify petitioners about said cancellation) prior to
the latter’s institution of the action for reconveyance. ARC Marketing’s predecessors-in-interest also seemed to
have continued to accept payments for the property without protest or qualification. Respondent Antonio A.
Ramos, representing the heirs of Socorro A. Ramos, even issued a certification[64] acknowledging full payment
for the property on March 20, 1973, long before the same was allegedly adjudged in ARC Marketing’s favor in
1993. ARC Marketing is thus estopped from invoking cancellation of the contract to defeat petitioners’ rights over
the property.[65]

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ARC Marketing is not an
innocent purchaser for value

An action for reconveyance is always available as a remedy for a rightful owner to retrieve his property for as long
as the same has not passed to an innocent purchaser for value.[66] An innocent purchaser for value is one who
buys the property of another without notice that some other person has a right to or interest in it, and who pays a
full and fair price at the time of the purchase or before receiving any notice of another person’s claim.[67]

In Spouses Ching v. Spouses Adolfo and Arsenia Enrile, we held that one who purchases real estate with
knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as
against the true owner of the land or of an interest therein. The same rule must be applied to one who has
knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to
acquaint him with the defects in the title of his vendor.[68]

In this case, Vicente Padiernos (petitioners’ predecessor-in-interest) caused the annotation on the title of his
adverse claim over the property as early as October 20, 1960.[69] Thus, when ARC Marketing agreed, by way of
the judicially-approved Compromise Agreement, to purchase the property on January 13, 1993, it already had
constructive notice of the adverse claim registered earlier. It is also beyond dispute that petitioners have been in
possession of the property even prior to the time of the Compromise Agreement in Civil Case No. Q-22850.
These circumstances should have put ARC Marketing on guard and required it to ascertain whether one of the
properties subject of the Compromise Agreement it is entering into has already been sold to another. ARC
Marketing cannot thus be considered an innocent purchaser for value. It cannot rely on the indefeasibility of its
title as such defense does not extend to a transferee who takes the certificate of title with notice of a flaw in his
title.[70]

WHEREFORE, we GRANT the petition and SET ASIDE the assailed Decision and Resolution of the Court of
Appeals dated October 22, 2004 and April 13, 2005, respectively, in CA G.R. SP No. 73670. Judgment is hereby
rendered declaring petitioners the owners of Lot 4, Block 2, Ilang-Ilang Street, Sunrise Hills Subdivision, Quezon
City presently covered by Transfer Certificate of Title No. TCT No. RT-17876 (242918). The Register of Deeds of
Quezon City is hereby ordered to:

(a) CANCEL TCT No. RT-17876 (242918) in the name of ARC Marketing Corporation; and

(b) ISSUE a Transfer Certificate of Title in the name of petitioners JOSE V. TOLEDO, GLENN PADIERNOS and
DANILO PADIERNOS.

SO ORDERED.

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8. Unduran vs Aberasturi
(check separate opinions online)
G.R. No. 181284, October 20, 2015

LOLOY UNDURAN, BARANGAY CAPTAIN ROMEO PACANA, NESTOR MACAPAYAG, RUPERTO DOGIA,
JIMMY TALINO, ERMELITO ANGEL, PETOY BESTO, VICTORINO ANGEL, RUEL BOLING, JERMY ANGEL,
BERTING SULOD, RIO BESTO, BENDIJO SIMBALAN, AND MARK BRAZIL, PETITIONERS, VS. RAMON
ABERASTURI, CRISTINA C. LOPEZ, CESAR LOPEZ JR., DIONISIO A. LOPEZ, MERCEDES L. GASTON,
AGNES H. LOPEZ, EUSEBIO S. LOPEZ, JOSE MARIA S. LOPEZ, ANTON B. ABERASTURI, MA. RAISSA A.
VELEZ, ZOILO ANTONIO A. VELEZ, CRISTINA ABERASTURI, EDUARDO LOPEZ JR., ROSARIO S. LOPEZ,
JUAN S. LOPEZ, CESAR ANTHONY R. LOPEZ, VENANCIO L. GASTON, ROSEMARIE S. LOPEZ, JAY A.
ASUNCION, NICOLO ABERASTURI, LISA A. ASUNCION, INEZ A. VERAY, HERNAN A. ASUNCION,
ASUNCION LOPEZ, THOMAS A. VELEZ, LUIS ENRIQUE VELEZ, ANTONIO H. LOPEZ, CHARLES H. LOPEZ,
ANA L. ZAYCO, PILAR L. QUIROS, CRISTINA L. PICAZO, RENATO SANTOS, GERALDINE AGUIRRE,
MARIA CARMENCITA T. LOPEZ, and as represented by attorney-in-fact RAMON ABERASTURI,
RESPONDENTS.

DECISION
PERALTA, J.:

This is a petition for review on certiorari[1] assailing the Decision[2] dated August 17, 2006 of the Court of
Appeals (CA) in CA-G.R. SP No. 00204-MIN, and the Resolution[3] dated July 4, 2007, which denied petitioners'
motion for reconsideration.

Petitioners, except for Mark Brazil and Nestor Macapayag, are members of the Miarayon, Lapok, Lirongan,
Talaandig Tribal Association (MILALITTRA), or Talaandig tribe, who claimed to have been living since birth on the
land located at Barangay Miarayon, Talakag, Bukidnon, Mindanao, which they inherited from their forefathers.

On the other hand, respondents, represented by attorney-in-fact Ramon Aberasturi, claimed to be the lawful
owners and possessor of an unregistered parcel of agricultural land (Lot No. 7367 Cad 630-D), with an area of
105.7361 hectares, which appears to be located within the ancestral domain of the Talaandig tribe.

On March 3, 2004, respondents filed a Petition for Accion Reivindicatoria, with Prayer for the Issuance of a
Temporary Restraining Order or Preliminary Prohibitory Injunction with Damages[4] (original complaint for accion
reivindicatoria) against petitioners before the Regional Trial Court of Manolo Fortich, Bukidnon (RTC). Docketed
as Civil Case No. 04-03-01, the petition was raffled off to Branch 11.

On March 20, 2004, petitioners Macapayag and Brazil filed their Answer, alleging that respondents have no cause
of action against them.

On March 23, 2004, the rest of the petitioners filed their Motion to Dismiss, alleging that the RTC had no
jurisdiction over the case. Petitioners alleged that with the advent of Republic Act No. (RA) 8371, otherwise
known as the Indigenous Peoples' Rights Act (IPRA), they, together with the rest of the tribe members, assisted
the National Commission on Indigenous Peoples (NCIP) in the processing, validation, and delineation of their
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Ancestral Domain claim in May 2003. On July 25, 2003, Certificate of Ancestral Domain Title (CADT) No. R-10-
TAL-0703-0010 was issued by virtue of NCIP En Banc Resolution No. 08-02003 to the Talaandig tribe over its
ancestral domain in Talakag, Bukidnon, containing an area of 11,105.5657 hectares. On October 30, 2003,
President Gloria Macapagal Arroyo awarded the said CADT to the Talaandig tribe. As awardees of a CADT,
petitioners argued that NCIP has exclusive and original jurisdiction over the case, as the subject matter concerns
a dispute and controversy over an ancestral land/domain of Indigenous Cultural Communities (ICCs)/Indigenous
Peoples (IPs).

On July 1, 2004, the NCIP through Atty. Melanie Pimentel, filed a Motion to Refer the Case to the Regional
Hearing Office-National Commission on Indigenous Peoples (RHO-NCIP), alleging that the RTC had no
jurisdiction over the subject matter.

On July 5, 2004, respondents filed a Motion to Amend and Supplement Complaint from Accion Reivindicatoria to
one for "Injunction, Damages, and Other Relief," with the attached Amended and Supplemental Complaint[5]
(amended complaint for injunction). On July 30, 2004, petitioners filed an Opposition thereto.

On August 1, 2004, petitioners filed a Motion to Dismiss the Amended and Supplemental Complaint, alleging that
the RTC had no jurisdiction over the subject matter of the case and to issue a writ of injunction therein.

On August 10, 2004, the RTC issued an Order granting the Motion to Amend and Supplement Complaint, and
declared petitioners' Motion to Refer the Case to the RHO-NCIP and Motion to Dismiss moot and academic as a
consequence of the grant of the said motion to amend and supplement complaint.

On August 17, 2004, petitioners filed a Manifestation praying for an ocular inspection of the disputed land to
determine the last, actual, peaceable, uncontested status of the area.

On August 25, 2004, petitioners filed another Motion to Refer the Case to the RHO-NCIP and Motion to Dismiss
the Amended Complaint.

On September 14, 2004, respondents filed their Opposition and Motion for Judgment by Default.

On February 14, 2005, the RTC issued an Order[6] resolving all pending incidents before it, the dispositive portion
of which reads:

WHEREFORE, premises considered, defendant's [herein petitioners'] motion to refer the case to the RHO-NCIP
and its manifestation for an ocular inspection are hereby denied for being bereft of merit. Further, defendants
[petitioners], except Macapayag and Brazil, are hereby declared in default for their failure to file their Answer to
the Amended Complaint. Accordingly, let this case, as against defendants Macapayag and Brazil, be called for
pre-trial and ex-parte presentation of evidence as against the rest of defendants [petitioners] on May 2, 2005 at
9:00 o'clock in the morning. Furthermore, the injunctive writ prayed for by the plaintiffs is hereby GRANTED for
being meritorious. Accordingly, defendants [petitioners], their agents and privies, or any other or all persons acting
for and in their behalves, are hereby ordered to observe, maintain and preserve the status quo subject of the
action and/or the relation between the parties in order to protect the rights of the plaintiffs while the case is
pending in court and to cease and desist from performing any acts that in one way or another contravene the
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tenor of this order, while awaiting final determination of the instant suit or until further orders of this court.
Furthermore, to answer for whatever damage that defendants [petitioners] may sustain by reason of this
injunction order if the court should finally decide that plaintiffs [respondents] are not entitled to the relief it prayed
for, plaintiffs [respondents] are hereby directed to put up a bond in the amount of ONE HUNDRED THOUSAND
PESOS (P100,000.00) executed in favor of the party enjoined.

SO ORDERED.[7]

On April 12, 2005, petitioners filed before the Court of Appeals a Petition for Certiorari and Prohibition with Prayer
for Preliminary Injunction and Issuance of a Temporary Restraining Order.

On August 17, 2006, the CA rendered a Decision affirming the RTC's February 14, 2005 Order, which in turn
denied the referral of the case to the NCIP, the dispositive portion of which states:

WHEREFORE, in view of the foregoing, the petition is hereby partly GRANTED. The assailed Order dated
February 14, 2005 is hereby AFFIRMED with MODIFICATION that the order of default against petitioners, except
Macapayag and Brazil, is hereby LIFTED.

SO ORDERED.[8]

The CA ruled that the RTC correctly granted the amendment of the complaint and properly refused to refer the
case to the RHO-NCIP. Based on the allegations of both original complaint [accion reivindicatoria] and amended
complaint [injunction], the CA found that the subject matter of both complaints is well within the jurisdiction of the
RTC. The CA noted that the only substantial amendment made was with regard to the nature of the action which
originally was one of accion reivindicatoria and then changed to one for damages. And except for some
amendments as to petitioners' alleged violent acts and the prayer for declaration of their title to the subject
property, the rest of the amended complaint was basically the same as the original one, including the reliefs
prayed for by respondents. Anent the writ of preliminary injunction, the CA held that the RTC's assailed February
14, 2005 Order is self-explanatory as to why the issuance of the same was proper considering the circumstances
of the case.

On July 4, 2007, the CA denied petitioners' motion for reconsideration of its August 17, 2006 Decision.

Hence, this appeal on certiorari raising the following issues:

I. THE COURT OF APPEALS ERRED IN AFFIRMING THE JURISDICTION OF THE COURT A QUO OVER A
COMPLAINT FOR INJUNCTION INVOLVING AN ANCESTRAL DOMAIN OF THE TALAANDIGS.

II. THE COURT OF APPEALS ERRED IN AFFIRMING THE RESOLUTION OF THE COURT A QUO ALLOWING
THE AMENDMENT OF THE COMPLAINT, THE SOLE PURPOSE OF WHICH IS TO CONFER JURISDICTION
ON THE LOWER COURT.

III. THE COURT OF APPEALS ERRED IN RESOLVING THAT EVIDENCE MUST BE PRESENTED BEFORE
THE REGIONAL TRIAL COURT WHEN IN THE ORIGINAL ACTION FOR SPECIAL CIVIL ACTION FOR
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CERTIORARI BEFORE IT, THE COURT A QUO HAS ADMITTED THAT A CADT WAS ISSUED IN FAVOR OF
PETITIONERS.[9]

On the first issue, petitioners contend that the RTC has no jurisdiction over Civil Case No. 04-03-0 for Injunction,
Damages and other Relief, because the 105.7361-hectare land claimed by respondents is undisputedly within the
ancestral domain of the Talaandig tribe over which a CADT has already been issued. Petitioners insist that, even
granting that the case is purely a personal action, the NCIP has exclusive and original jurisdiction over it as it
concerns a claim and dispute involving rights of ICCs/IPs over their ancestral domain.

On the second issue, petitioners argue that the amendment of the complaint from accion reivindicatoria to
injunction with damages was clearly meant to oust the NCIP of its jurisdiction over the case and confer it on the
RTC by concealing the real issue in the case, which is the parties' conflicting claims over the 105.7361-hectare
land in Miarayon, Talakag Bukidnon. According to petitioners, the cause of action in the complaint for accion
reivindicatoria is the claim of ownership and recovery of possession of the said land which is undisputedly found
within the Talaandig tribe's ancestral domain covered by CADT No. R10-TAL-0703-0010; hence, a claim within
the exclusive and original jurisdiction of the NCIP. Petitioners contend that respondents amended the complaint to
one for injunction to downplay the real issue which is the dispute over a land that is within the Talaandig tribe's
ancestral domain, and mainly capitalized on the acts complained of, such as harassment, threats, acts of
terrorism, among others, supposedly committed against respondents.

On the third issue, petitioners fault the CA in ruling that whether the complaint is one for Injunction or Accion
Reivindicatoria, the RTC has jurisdiction because nowhere in respondents' original and amended complaints is it
stated that petitioners were members of the ICCs or IPs and that the disputed property was part of their ancestral
domain. Petitioners take exception to the rule that jurisdiction over the subject matter is determined by the
allegations of the complaint, as strict adherence thereto would open the floodgates to the unscrupulous practice of
litigants divesting the NCIP of jurisdiction by crafting their complaints in such a way as would confer jurisdiction on
their court of choice. Petitioners contend that the literal averments of the complaint are not determinative of the
jurisdiction over the subject matter where the actual issues are evidenced by subsequent pleadings; in certain
cases, the real nature and character of the pleadings and issues are not merely found in the complaint, but also in
the subsequent pleadings submitted by both parties. Petitioners stress that although the complaint banners the
subject matter as one for injunction, the pleadings of respondents show that the subject matter is the conflicting
ownership claims over the land. In fact, petitioners point out that the records of the case show that various pieces
of evidence have been presented to prove that the dispute involves conflicting claims over a land covered by a
CADT.

For their part, respondents contend that petitioners do not have legal capacity or standing and locus standi to file
this petition, since they failed to make prima facie showing that they are members of IPs/ICCs, or that they were
authorized to represent the Talaandig tribe. Respondents insist that based on the allegations in their amended
complaint for injunction and damages, the RTC has jurisdiction over the subject matter which is a purely personal
action and incapable of pecuniary estimation. Respondents assert that the real issue is whether or not petitioners
are guilty of wrongful acts of violence, terrorism, destruction, intimidation, harassment, etc., to justify a permanent
injunction and hold the latter liable for damages. Respondents also point out that petitioners cannot invoke
protection under the IPRA 8731, because the conflict does not involve an ancestral domain and they

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(respondents) are not IPs so the condition precedent before bringing a dispute before the NCIP cannot be
satisfied, i.e., exhaustion of remedies under customary laws by the parties.

The petition has no merit.

On the procedural issue raised by respondents, the Court disagrees with their contention that petitioners do not
have legal capacity or standing and locus standi to file the petition, for failure to show that they are members of
IPs/ICCs, or that they are authorized to represent the Talaandig tribe.

Locus standi is defined as a right of appearance in a court of justice on a given question. In private suits, standing
is governed by the "real parties in interest" rule found in Section 2,[10] Rule 3 of the Rules of Court. Such concept
of real party-in-interest is adapted in Section 2,[11] Rule VI of the 2014 Revised Rules of Procedure before the
NCIP. That petitioners are the real parties in interest can be gleaned from the Entry of Appearance with Motion to
Refer the Case to the Regional Hearing Office of the NCIP[12] filed by the NCIP Special Transition Team-Quick
Response Unit (STRAT-QRU). The STRAT-QRU counsels alleged therein that the respondents' complaint for
recovery of ownership (accion reinvidicatoria) sought to recover an unregistered real property situated in
Miarayon, Bukidnon, from petitioners, all of whom are, with the exception of Nestor Macapayag and Mark Brazil,
member-beneficiaries of CADT No. R10-TAL-0703-0010 issued by the NCIP in the name of the Talaandig
Indigenous Peoples, located at Talakag, Province of Bukidnon. In support of their allegation, petitioners presented
a certification[13] that the disputed land is within the area covered by the same CADT, and the NCIP List of
Beneficiaries of Talaandig Ancestral Domain of Miarayon, Lirongan, Lapok, San Miguel, Talakag, Bukidnon.[14] In
contrast, respondents failed to submit any evidence to dispute petitioners' claim that they are members of the
Talaandig Tribe. Hence, respondents' contention that petitioners have no legal standing to file the petition, is
without merit.

In resolving the pivotal issue of which between the RTC and the NCIP has jurisdiction over the respondents'
amended complaint, foremost in the Court's mind is the principle in "that jurisdiction over the subject matter of a
case is conferred by law and determined by the allegations in the complaint which comprise a concise statement
of the ultimate facts constituting the plaintiffs cause of action. The nature of an action, as well as which court or
body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff,
irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein.
The averments in the complaint and the character of the relief sought are the ones to be consulted. Once vested
by the allegations in the complaint, jurisdiction also remains vested irrespective of whether or not the plaintiff is
entitled to recover upon all or some of the claims asserted therein."[15]

Under Section 19 of B.P. 129, as amended (Judiciary Reorganization Act of 1980), the RTC shall exercise
exclusive original jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary
estimation, and in all civil actions which involve title to, possession of, real property or any interest therein where
the assessed value of the property or interest therein exceeds Twenty Thousand Pesos (P20,000.00) or, in civil
actions in Metro Manila, where such assessed value exceeds Fifty Thousand Pesos (P50,000.00).

On the other hand, the NCIP's jurisdiction is defined under Section 66 of the IPRA as follows:

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Sec. 66. Jurisdiction of the NCIP. - The NCIP, through its regional offices, shall have jurisdiction over all claims
and disputes involving rights of ICCs/IPs; Provided, however, That no such dispute shall be brought to the NCIP
unless the parties have exhausted all remedies provided under their customary laws. For this purpose, a
certification shall be issued by the Council of Elders/Leaders who participated in the attempt to settle the dispute
that the same has not been resolved, which certification shall be a condition precedent to the filing of a petition
with the NCIP.[16]

On the matter of NCIP's jurisdiction and of procedures for enforcement of rights, NCIP Administrative Order No. 1,
1998, the Implementing Rules and Regulations (NCIP-IRR) of the IPRA, Rule IX, Section 1 states:

Section 1. Primacy of Customary Law. - All conflicts related to the ancestral domain and lands, involving
ICCs/IPs, such as but not limited to the conflicting claims and boundary disputes, shall be resolved by the
concerned parties through the application of customary laws in the area where the disputed ancestral domain or
land is located.

All conflicts related to the ancestral domain or lands where one of the parties is non-ICC/IP or where the dispute
could not be resolved through customary law shall be heard and adjudicated in accordance with the Rules on
Pleadings, Practice and Procedure before the NCIP to be adopted hereafter.

All decisions of the NCIP may be brought on Appeal by Petition for Review to the Court of Appeals within fifteen
(15) days from receipt of the Order or Decision.[17]

In line with Section 69 of the IPRA on the NCIP's quasi-judicial power to promulgate rules and regulations
governing the hearing and disposition of cases filed before it, the NCIP issued Administrative Circular No. 1-03
dated April 9, 2003, known as the Rules on Pleadings, Practice and Procedure (NCIP Rules), which reiterates its
jurisdiction over claims and disputes involving rights of ICCs/IPs and enumerates the actions that may be brought
before it. Section 5, Rule III, of the NCIP Rules provides for the jurisdiction of the NCIP-RHO:

Sec. 5. Jurisdiction of the NCIP. - The NCIP through its Regional Hearing Offices shall exercise jurisdiction over
all claims and disputes involving rights of ICCs/IPs and all cases pertaining to the implementation, enforcement,
and interpretation of the IPRA 8371, including but not limited to the following:

(1) Original and Exclusive Jurisdiction of the Regional Hearing Officer (RHO):
a. Cases involving disputes, controversies over ancestral lands/domains of ICCs/IPs;
b. Cases involving violations of the requirement of free and prior and informed consent of ICC/IPs;
c. Actions for enforcement of decisions of ICCs/IPs involving violations of customary laws or desecration of
ceremonial sites, sacred places, or rituals;
d. Actions for redemption/reconveyance under Section 8(b) ofR.A. 8371; and
e. Such other cases analogous to the foregoing.
(2) Original jurisdiction of the Regional Hearing Officer:
a. Cases affecting property rights, claims of ownership, hereditary succession, and settlement of land disputes,
between and among ICCs/IPs that have not been settled under customary laws; and
b. Actions for damages arising out of any violation of Republic Act No. 8371;
(3) Exclusive and Original Jurisdiction of the Commission:
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a. Petition for cancellation of Certificate of Ancestral Domain Titles/Certificate of Ancestral Land Titles
(CADTs/CALTs) alleged to have been fraudulently acquired by, and issued to, any person or community as
provided for under Section 54 of R.A. 8371. Provided that such action is filed within one (1) year from the date of
registration.

Anent the condition precedent to the filing of a petition with the NCIP under Section 66 of the IPRA, Sections 13
and 14, Rule IV of the NCIP Rules pertinently provide:

Section 13. Certification to File Action. - Upon the request of the proper party, members of the indigenous dispute
settlement group or council of elders shall likewise issue a certification to file action before the NCIP. In giving due
regard to customary laws, the certification may be in any form so long as it states in substance the failure of
settlement notwithstanding the efforts made under customary law or traditional practices.

Section 14. Exceptions. - The certification shall not be required in the following cases:

a. Where one of the parties is a public or private corporation, partnership, association or juridical person or a
public officer or employee and the dispute is in connection with the performance of his official functions;

b. Where one of the parties is non-IP/ICC or does not belong to the same IP/IC Community, except when he
voluntarily submits to the jurisdiction of the Council of Elders/Leaders;

c. Where the relief sought for in the complaint or petition seeks to prevent any grave, imminent and irreparable
damage or injury that may result if not acted upon immediately; and

d. Where the Council of Elders/Leaders refuse to issue the necessary certification without justifiable reasons.[18]

Having spelled out the jurisdictions conferred by law to the RTC and the NCIP over the subject matters of their
respective cases, the Court now examines the allegations in the original and amended complaints to find out
which tribunal may properly exercise jurisdiction over this case.

In their original complaint for accion reivindicatoria, respondents traced the provenance of their title over said land
to one Mamerto Decano, a Chieftain of Talaandig tribe, by virtue of a Deed of Sale executed on July 27, 1957.
They averred that, together with their predecessor-in-interest, they have religiously paid the real estate taxes
thereon since 1957 and that they have been in physical, actual, open, prior, notorious, continuous, public and
adverse possession of said land in the concept of owners for more than 50 years, even prior to June 12, 1945.
They alleged that said land was declared alienable and disposable since August 3, 1927 per certification of the
Department of Environment and Natural Resources. They claimed that by means of fraud, stealth and
surreptitious means, petitioners entered the said land, without permission and against the consent of the
landowners, caused damages therein and harassed respondents by indiscriminately firing upon their farm
workers. They added that petitioners continue such harassment by means of armed men frequenting the
campsite and firing M-16 rifles at them during nighttime, causing great fear and threat.

Respondents prayed before the RTC for the following reliefs, among others: (1) to cause the preliminary
injunction to be made permanent for the respondents to enjoy possession of their property, free from threats of
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physical harm, harassment and undue obstruction caused by petitioners; (2) to order petitioners to respect and
not to harass, intimidate and cause trouble to the prior possession of respondents as the owners by virtue of right
of title; (3) to order petitioners to pay moral and exemplary damages, attorney's fees, appearance fees and costs
of suit; and (4) to declare respondents' title as having become a vested right, and as such entitled to all right and
incident of an absolute owner.

In their amended complaint for injunction and damages, on the other hand, respondents further alleged that
sometime in November 2003, petitioners harassed, intimidated, threatened, and fired high-powered rifles upon
respondents' farm workers to drive them away from the land, without legal or justifiable reason. They added that,
despite having hired private security guards to secure and protect their property, these violent incidents were
followed by more acts of violence, lawlessness, harassment, terrorism to drive away respondents from the land
which they claim to lawfully own and possess.

Respondents prayed before the RTC for the following reliefs: (1) to order petitioners and their representatives, to
stop and refrain from committing acts of violence, destruction, assault and other forms of lawlessness and
terrorism against respondents, and to maintain the peaceful possession and enjoyment of the 105-hectare land by
respondents as an attribute of ownership; (2) to declare petitioners to have committed acts of violence,
harassment, intimidation, destruction, assault and other forms of lawlessness against respondents, and to
permanently order petitioners to stop and refrain from committing similar acts; and (3) to hold petitioners jointly
and severally liable to pay respondents actual damages, moral damages, exemplary damages, attorney's fees,
litigation expenses and treble costs.

After a perusal of the allegations and prayers in both original and amended complaints, the Court notes that
respondents neither alleged therein that the parties are members of ICCs/IPs nor that the case involves a dispute
or controversy over ancestral lands/domains of ICC/IPs. Rather, the allegations in respondents' original complaint
make up for an accion reivindicatoria, a civil action which involves an interest in a real property with an assessed
value of P683,760.00, while the allegations in their amended complaint make out a case for injunction, a civil
action which is incapable of pecuniary estimation. The Court therefore finds that the CA correctly ruled that the
subject matter of the amended complaint based on allegations therein was within the jurisdiction of the RTC.

Meanwhile, contrary to petitioners' contention, the mere fact that this case involves members of ICCs/IPs and
their ancestral land is not enough to for it to fall under the jurisdiction of the NCIP under Section 66 of the IPRA, to
wit:

Sec. 66. Jurisdiction of the NCIP. ~ The NCIP, through its regional offices, shall have jurisdiction over all claims
and disputes involving rights of ICCs/IPs; Provided, however, That no such dispute shall be brought to the NCIP
unless the parties have exhausted all remedies provided under their customary laws. For this purpose, a
certification shall be issued by the Council of Elders/Leaders who participated in the attempt to settle the dispute
that the same has not been resolved, which certification shall be a condition precedent to the filing of a petition
with the NCIP.

A careful review of Section 66 shows that the NCIP shall have jurisdiction over claims and disputes involving
rights of ICCs/IPs only when they arise between or among parties belonging to the same ICC/IP. This can be
gathered from the qualifying provision that "no such dispute shall be brought to the NCIP unless the parties have
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exhausted all remedies provided under their customary laws. For this purpose, a certification shall be issued by
the Council of Elders/Leaders who participated in the attempt to settle the dispute that the same has not been
resolved, which certification shall be a condition precedent to the filing of a petition with the NCIP."

The qualifying provision requires two conditions before such disputes may be brought before the NCIP, namely:
(1) exhaustion of remedies under customary laws of the parties, and (2) compliance with condition precedent
through the said certification by the Council of Elders/Leaders. This is in recognition of the rights of ICCs/IPs to
use their own commonly accepted justice systems, conflict resolution institutions, peace building processes or
mechanisms and other customary laws and practices within their respective communities, as may be compatible
with the national legal system and with internationally recognized human rights.[19]

Section 3 (f) of the IPRA defines customary laws as a body of written and/or unwritten rules, usages, customs and
practices traditionally and continually recognized, accepted and observed by respective ICCs/IPs. From this
restrictive definition, it can be gleaned that it is only when both parties to a case belong to the same ICC/IP that
the abovesaid two conditions can be complied with. If the parties to a case belong to different ICCs/IPs which are
recognized to have their own separate and distinct customary laws and Council of Elders/Leaders, they will fail to
meet the abovesaid two conditions. The same holds true if one of such parties was a non-ICC/IP member who is
neither bound by customary laws as contemplated by the IPRA nor governed by such council. Indeed, it would be
violative of the principles of fair play and due process for those parties who do not belong to the same ICC/IP to
be subjected to its customary laws and Council of Elders/Leaders.

Therefore, pursuant to Section 66 of the IPRA, the NCIP shall have jurisdiction over claims and disputes involving
rights of ICCs/IPs only when they arise between or among parties belonging to the same ICC/IP. When such
claims and disputes arise between or among parties who do not belong to the same ICC/IP, i.e., parties belonging
to different ICC/IPs or where one of the parties is a non-ICC/IP, the case shall fall under the jurisdiction of the
proper Courts of Justice, instead of the NCIP. In this case, while most of the petitioners belong to Talaandig Tribe,
respondents do not belong to the same ICC/IP. Thus, even if the real issue involves a dispute over land which
appear to be located within the ancestral domain of the Talaandig Tribe, it is not the NCIP but the RTC which
shall have the power to hear, try and decide this case.

There are, however, exceptional cases where the NCIP shall still have jurisdiction over such claims and disputes
even if the parties involved do not belong to the same ICC/IP, viz.:

1. Cases under Sections 52 and 62 of the IPRA which contemplate a situation where a dispute over an ancestral
domain involving parties who do not belong to the same, but to different ICCs/IPs, to wit:

SECTION 52. Delineation Process. — The identification and delineation of ancestral domains shall be done in
accordance with the following procedures:
xxxx
h) Endorsement to NCIP. — Within fifteen (15) days from publication, and of the inspection process, the Ancestral
Domains Office shall prepare a report to the NCIP endorsing a favorable action upon a claim that is deemed to
have sufficient proof. However, if the proof is deemed insufficient, the Ancestral Domains Office shall require the
submission of additional evidence: Provided, That the Ancestral Domains Office shall reject any claim that is
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deemed patently false or fraudulent after inspection and verification: Provided, further, That in case of rejection,
the Ancestral Domains Office shall give the applicant due notice, copy furnished all concerned, containing the
grounds for denial. The denial shall be appealable to the NCIP: Provided, furthermore, That in cases where there
are conflicting claims among ICCs/IPs on the boundaries of ancestral domain claims, the Ancestral Domains
Office shall cause the contending parties to meet and assist them in coming up with a preliminary resolution of the
conflict, without prejudice to its full adjudication according to the section below.
xxxx
SECTION 62. Resolution of Conflicts. — In cases of conflicting interest, where there are adverse claims within the
ancestral domains as delineated in the survey plan, and which can not be resolved, the NCIP shall hear and
decide, after notice to the proper parties, the disputes arising from the delineation of such ancestral domains:
Provided, That if the dispute is between and/or among ICCs/IPs regarding the traditional boundaries of their
respective ancestral domains, customary process shall be followed. The NCIP shall promulgate the necessary
rules and regulations to carry out its adjudicatory functions: Provided, further, That any decision, order, award or
ruling of the NCIP on any ancestral domain dispute or on any matter pertaining to the application, implementation,
enforcement and interpretation of this Act may be brought for Petition for Review to the Court of Appeals within
fifteen (15) days from receipt of a copy thereof.[20]

2. Cases under Section 54 of the IPRA over fraudulent claims by parties who are not members of the same
ICC/IP, to wit:

SECTION 54. Fraudulent Claims. — The Ancestral Domains Office may, upon written request from the ICCs/IPs,
review existing claims which have been fraudulently acquired by any person or community. Any claim found to be
fraudulently acquired by, and issued to, any person or community may be cancelled by the NCIP after due notice
and hearing of all parties concerned.[21]

Considering the general rule that the jurisdiction of the NCIP under Section 66 of the IPRA covers only disputes
and claims between and among members of the same ICCs/IPs involving their rights under the IPRA, as well as
the basic administrative law principle that an administrative rule or regulation must conform, not contradict the
provisions of the enabling law,[22] the Court declares Rule IX, Section 1 of the IPRA-IRR,[23] Rule III, Section
5[24] and Rule IV, Sections 13 and 14 of the NCIP Rules[25] as null and void insofar as they expand the
jurisdiction of the NCIP under Section 66 of the IPRA to include such disputes where the parties do not belong to
the same ICC/IP. As the Court held in Paduran v. DARAB,[26] "[J]urisdiction over a subject matter is conferred by
the Constitution or the law and rules of procedure yield to substantive law. Otherwise stated, jurisdiction must
exist as a matter of law.[27] Only a statute can confer jurisdiction on courts and administrative agencies; rules of
procedure cannot.[28] In the abovesaid exceptional cases where one of the parties is a non-ICC/IP or does not
belong to the same ICC/IP, however, Rule IV, Section 14 of the NCIP Rules validly dispenses with the
requirement of certification issued by the Council of Elders/Leaders who participated in the failed attempt to settle
the dispute according to the customary laws of the concerned ICC/IP.

WHEREFORE, the petition is DENIED and the Court of Appeals Decision dated August 17, 2006, and its
Resolution dated July 4, 2007, in CA-G.R. SP No. 00204-MIN, are AFFIRMED.

SO ORDERED.
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9. CE Casecnan Water and Energy Company vs Province of Nueva Ecija

G.R. No. 196278, June 17, 2015

CE CASECNAN WATER AND ENERGY COMPANY, INC., PETITIONER, VS. THE PROVINCE OF NUEVA
ECIJA, THE OFFICE OF THE PROVINCIAL ASSESSOR OF NUEVA ECIJA, AND THE OFFICE OF THE
PROVINCIAL TREASURER OF NUEVA ECIJA, AS REPRESENTED BY HON. AURELIO UMALI, HON.
FLORANTE FAJARDO AND HON. EDILBERTO PANCHO, RESPECTIVELY, OR THEIR LAWFUL
SUCCESSORS, RESPONDENTS, NATIONAL IRRIGATION ADMINISTRATION AND DEPARTMENT OF
FINANCE, AS NECESSARY PARTIES.

DECISION

DEL CASTILLO, J.:

The Court of Tax Appeals (CTA) has exclusive jurisdiction over a special civil action for certiorari assailing an
interlocutory order issued by the Regional Trial Court (RTC) in a local tax case.

This Petition for Review on Certiorari[1] assails the November 2, 2010 Decision[2] of the Court of Appeals (CA) in
CA-G.R. SP No. 108441 which dismissed for lack of jurisdiction the Petition for Certiorari of petitioner CE
Casecnan Water and Energy Company, Inc. (petitioner) against the Province of Nueva Ecija, the Office of the
Provincial Assessor of Nueva Ecija (Office of the Provincial Assessor) and the Office of the Provincial Treasurer
of Nueva Ecija (Office of the Provincial Treasurer) (respondents). Also assailed is the March 24, 2011
Resolution[3] of the CA denying petitioner's Motion for Reconsideration.[4]

Factual Antecedents

On June 26, 1995, petitioner and the National Irrigation Administration (NIA) entered into a build-operate-transfer
(BOT) contract known as the "Amended and Restated Casecnan Project Agreement"[5] (Casecnan Contract)
relative to the construction and development of the Casecnan Multi-Purpose Irrigation and Power Project
(Casecnan Project) in Pantabangan, Nueva Ecija and Alfonso Castaneda, Nueva Vizcaya. The Casecnan Project
is a combined irrigation and hydroelectric power generation facility using the Pantabangan Dam in Nueva Ecija.

On September 29, 2003, petitioner and NIA executed a Supplemental Agreement[6] amending Article II of the
Casecnan Contract which pertains to payment of taxes. Article 2.2 thereof states that NIA must reimburse
petitioner for real property taxes (RPT) provided the same was paid upon NIA's directive and with the concurrence
of the Department of Finance.

On September 6, 2005, petitioner received from the Office of the Provincial Assessor a Notice of Assessment of
Real Property dated August 2, 2005, which indicates that for the years 2002 to 2005, its RPT due was
P248,676,349.60. Petitioner assailed the assessment with the Nueva Ecija Local Board of Assessment Appeals
(Nueva Ecija LBAA) which dismissed it on January 26, 2006. Undeterred, petitioner filed a Notice of Appeal with
the Nueva Ecija Central Board of Assessment Appeals (Nueva Ecija CBAA). During the pendency thereof,
respondents collected from petitioner the RPT due under the said assessment as well as those pertaining to the
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years 2006 up to the second quarter of 2008, totalling P363,703,606.88. Petitioner paid the assessed RPT under
protest; it also initiated proceedings questioning the validity of the collection with respect to the years 2006 up to
the second quarter of 2008. Thereafter, petitioner received a letter[7] dated July 9, 2008 from the Office of the
Provincial Treasurer stating that it has RPT in arrears for the years 2002 up to the second quarter of 2008
amounting to P1,277,474,342.10. Petitioner received another letter[8] dated August 29, 2008 from the same office
clarifying that its arrearages in RPT actually amounted to P1,279,997,722.70 (2008 RPT Reassessment). Again,
petitioner questioned this assessment through an appeal before the Nueva Ecija LBAA. While the same was
pending, petitioner received from respondents a letter dated September 10, 2008 demanding payment for its
alleged RPT arrearages.

Hence, on September 23, 2008, petitioner filed with the RTC of San Jose City, Nueva Ecija a Complaint[9] for
injunction and damages with application for temporary restraining order (TRO) and preliminary injunction[10]
praying to restrain the collection of the 2008 RPT Reassessment. Petitioner emphasized, among others, that it
was not the one which should pay the taxes but NIA.

Ruling of the Regional Trial Court

On September 24, 2008, the RTC denied petitioner's application for a 72-hour TRO.[11]

Meanwhile, petitioner received from the Office of the Provincial Treasurer a letter dated September 22, 2008
further demanding payment for RPT covering the third quarter of 2008 (2008-3Q Assessment). Thus, petitioner
filed on September 29, 2008 an Amended Complaint[12] asking the RTC to likewise enjoin respondents from
collecting RPT based on the 2008-3 Q Assessment in the amount of P53,346,755.18.

On October 2, 2008, the RTC issued a 20-day TRO[13] enjoining respondents from collecting from petitioner the
RPT covered by the 2008 RPT Reassessment amounting to P1,279,997,722.70, including surcharges and
penalties.

Subsequently, however, the RTC denied petitioner's application for writ of preliminary injunction in its Order[14] of
October 24, 2008. It also denied petitioner's Motion for Reconsideration thereof in an Order[15] dated January 30,
2009.

On April 24, 2009, petitioner filed with the CA a Petition for Certiorari[16] under Rule 65 of the Rules of Court
seeking to annul and set aside the aforementioned October 24, 2008 and January 30,2009 RTC Orders.

Riding of the Court of Appeals

In its November 2, 2010 Decision,[17] the CA observed that the Petition for Certiorari before it was actually an
offshoot of the 2008 RPT Reassessment. And since in resolving the issue of whether the RTC committed grave
abuse of discretion in denying petitioner's application for a writ of preliminary injunction, the issue of the validity of
the assessment and the collection of the RPT against petitioner must also be resolved, thus jurisdiction over the
case lies within the Court of Tax Appeals (CTA). Hence, the CA ruled:
WHEREFORE, premises considered, the Petition for Certiorari is hereby DENIED DUE COURSE and
accordingly, DISMISSED for lack of jurisdiction.
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SO ORDERED.[18]
Petitioner sought reconsideration; however, it was denied in a Resolution[19] dated March 24, 2011.

Undaunted, petitioner filed this Petition imputing upon the CA grave error in:
xxx ruling that it is the Court of Tax Appeals (and not the Court of Appeals) which has jurisdiction over the CA
Injunction Case.[20]
Petitioner's Arguments

In its Petition[21] and Reply[22], petitioner argues that it is the CA, not the CTA, which has jurisdiction over the
subject matter of its Petition for Certiorari. Petitioner maintains that its petition relates to an ordinary civil action for
injunction and not to a local tax case. It insists that in both the RTC injunction case and the Petition for Certiorari
before the CA, petitioner was not protesting respondents' assessment of RPT against it; what it was seeking was
respondents' enjoinment from committing or continuing to commit acts that would probably violate its right. In
particular, petitioner points out that the RTC injunction case was intended to enjoin respondents from collecting
payment during the pendency of the case with the LBAA challenging the validity of the 2008 RPT Reassessment.
Petitioner explains that the said injunction case was filed with the RTC because the LBAA has no injunctive
power.

Respondents' Arguments

In their Comment,[23] respondents argue that in resolving the issue on the propriety of issuing a writ of injunction,
the CA will have to inevitably pass upon the propriety of the assessment of RPT on the Casecnan Project, a local
tax matter which is within the jurisdiction of the CTA. Respondents also echo the CA pronouncement that
petitioner failed to exhaust administrative remedies with respect to the assessment and collection of RPT.

Our Ruling

There is no merit in the Petition.

It is the CTA which has the power to rule on a Petition for Certiorari assailing an interlocutory order of the RTC
relating to a local tax case.

Jurisdiction over the subject matter is required for a court to act on any controversy. It is conferred by law and not
by the consent or waiver upon a court. As such, if a court lacks jurisdiction over an action, it cannot decide the
case on the merits and must dismiss it.[24]

With respect to the CTA, its jurisdiction was expanded and its rank elevated to that of a collegiate court with
special jurisdiction by virtue of Republic Act No. 9282.[25] This expanded jurisdiction of the CTA includes its
exclusive appellate jurisdiction to review by appeal the decisions, orders or resolutions of the RTC in local tax
cases originally decided or resolved by the RTC in the exercise of its original or appellate jurisdiction.[26]

In the recent case of City of Manila v. Grecia-Cuerdo,[27] the Court ruled that the CTA likewise has the jurisdiction
to issue writs of certiorari or to determine whether there has been grave abuse of discretion amounting to lack or
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excess of jurisdiction on the part of the RTC in issuing an interlocutory order in cases falling within the CTA's
exclusive appellate jurisdiction, thus:
The foregoing notwithstanding, while there is no express grant of such power, with respect to the CTA, Section 1,
Article VIII of the 1987 Constitution provides, nonetheless, that judicial power shall be vested in one Supreme
Court and in such lower courts as may be established by law and that judicial power includes the duty of the
courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and
to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the Government.

On the strength of the above constitutional provisions, it can be fairly interpreted that the power of the CTA
includes that of determining whether or not there has been grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of the RTC in issuing an interlocutory order in cases falling within the exclusive appellate
jurisdiction of the tax court. It, thus, follows that the CTA, by constitutional mandate, is vested with jurisdiction to
issue writs of certiorari in these cases.[28] (Citations omitted and emphasis supplied)
Further, the Court in City of Manila, citing J. M. Tuason & Co., Inc. v. Jaramillo,[29] De Jesus v. Court of
Appeals,[30] as well as the more recent cases of Galang, Jr. v. Hon. Judge Geronimo[31] and Bulilis v. Nuez[32]
held that:
Consistent with the above pronouncement, this Court has held as early as the case of J.M. Tuason & Co., Inc. v.
Jaramillo, et al. that 'if a case may be appealed to a particular court or judicial tribunal or body, then said court or
judicial tribunal or body has jurisdiction to issue the extraordinary writ of certiorari, in aid of its appellate
jurisdiction.' This principle was affirmed in De Jesus v. Court of Appeals, where the Court stated that 'a court may
issue a writ of certiorari in aid of its appellate jurisdiction if said court has jurisdiction to review, by appeal or writ of
error, the final orders or decisions of the lower court.' The rulings in J.M. Tuason and De Jesus were reiterated in
the more recent cases of Galang, Jr. v. Geronimo and Bulilis v. Nuez.

Furthermore, Section 6, Rule 135 of the present Rules of Court provides that when by law, jurisdiction is
conferred on a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into
effect may be employed by such court or officer.[33] (Citations omitted)
Anent petitioner's contention that it is the CA which has jurisdiction over a certiorari petition assailing an
interlocutory order issued by the RTC in a local tax case, the Court had this to say:
If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with the CA,
this Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of jurisdiction over
basically the same subject matter - precisely the split-jurisdiction situation which is anathema to the orderly
administration of justice. The Court cannot accept that such was the legislative motive, especially considering that
the law expressly confers on the CTA, the tribunal with the specialized competence over tax and tariff matters, the
role of judicial review over local tax cases without mention of any other court that may exercise such power. Thus,
the Court agrees with the ruling of the CA that since appellate jurisdiction over private respondents' complaint for
tax refund is vested in the CTA, it follows that a petition for certiorari seeking nullification of an interlocutory order
issued in the said case should, likewise, be filed with the same court. To rule otherwise would lead to an absurd
situation where one court decides an appeal in the main case while another court rules on an incident in the very
same case.

xxxx

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A grant of appellate jurisdiction implies that there is included in it the power necessary to exercise it effectively, to
make all orders that will preserve the subject of the action, and to give effect to the final determination of the
appeal. It carries with it the power to protect that jurisdiction and to make the decisions of the court thereunder
effective. The court, in aid of its appellate jurisdiction, has authority to control all auxiliary and incidental matters
necessary to the efficient and proper exercise of that jurisdiction. For this purpose, it may, when necessary,
prohibit or restrain the performance of any act which might interfere with the proper exercise of its rightful
jurisdiction in cases pending before it.[34] (Citations omitted and emphasis supplied)
Given these, it is settled that it is the CTA which has exclusive jurisdiction over a special civil action for certiorari
assailing an interlocutory order issued by the RTC in a local tax case.

The RTC injunction case is a local tax case.

In maintaining that it is the CA that has jurisdiction over petitioner's certiorari petition, the latter argues that the
injunction case it filed with the RTC is not a local tax case but an ordinary civil action. It insists that it is not
protesting the assessment of RPT against it but only prays that respondents be enjoined from collecting the
same.

The Court finds, however, that in praying to restrain the collection of RPT, petitioner also implicitly questions the
propriety of the assessment of such RPT. This is because in ruling as to whether to restrain the collection, the
RTC must first necessarily rule on the propriety of the assessment. In other words, in filing an action for injunction
to restrain collection, petitioner was in effect also challenging the validity of the RPT assessment. As aptly
discussed by the CA:
xxx [T]he original action filed with the RTC is one for Injunction, with an application for Temporary Restraining
Order and a Writ of Preliminary Injunction to enjoin the province of Nueva Ecija from further collecting the alleged
real property tax liability assessed against it. Simply because the action is an application for irvjunctive relief does
not necessarily mean that it may no longer be considered as a local tax case. The subject matter and the issues,
not the name or designation of the remedy, should control. While an ancillary action for injunction may not be a
main case, the court [still has] to determine, even in a preliminary matter, the applicable tax laws, rules and
jurisprudence, x x x[35]
Moreover, in National Power Corporation v. Municipal Government of Navotas,[36] as well as in City of Lapu-Lapu
v. Philippine Economic Zone Authority,[37] this Court already held that local tax cases include RPT.

No doubt, the injunction case before the RTC is a local tax case. And as earlier discussed, a certiorari petition
questioning an interlocutory order issued in a local tax case falls under the jurisdiction of the CTA. Thus, the CA
correctly dismissed the Petition for Certiorari before it for lack of jurisdiction.

WHEREFORE, the Petition is DENIED. The November 2, 2010 Decision and March 24, 2011 Resolution of the
Court of Appeals in CA-G.R. SP No. 108441 are AFFIRMED.

SO ORDERED.

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10. Oribello vs CA

G.R. No. 163504, August 05, 2015

BERLINDA ORIBELLO, PETITIONER, VS. COURT OF APPEALS (SPECIAL FORMER TENTH DIVISION),
AND REMEDIOS ORIBELLO, RESPONDENTS.

DECISION

BERSAMIN, J.:

The surviving spouse of the deceased registered owner of the property subject of this action for partition appeals
the Decision promulgated on July 31, 2003,[1] whereby the Court of Appeals (CA), reviewing the Judgment
rendered by the Regional Trial Court (RTC), Branch 31, in Agoo, La Union on March 30, 1998 in Civil Case No. A-
1757 entitled Remedios Oribello, represented by her Atty.-in-Fact Alfredo Selga v. Berlinda P. Oribello,[2]
disposed as follows:

WHEREFORE, the appealed decision is VACATED and SET ASIDE and the case REMANDED to the lower court
for the second phase of a partition suit without prejudice to the filing, if still available, of either a petition for relief
from the decree of adoption rendered in Sp. Proc. No. R-94 of the then Court of First Instance of Occidental
Mindoro (Branch II) or an action for annulment thereof.

SO ORDERED.[3]
Antecedents

The assailed Decision of the CA summarized the factual and procedural antecedents of the case, as follows:
Before the Regional Trial Court of La Union (Branch 31) was an action for partition and damages involving twelve
parcels of land xxx situated at Sta. Rita, Agoo, La Union. Eight of said parcels are declared for taxation purposes
in the name of Toribio Oribello xxx, two in the names of Toribio and Rosenda Oribello, one in the names of Toribio
and and Berlinda Padilla Oribello xxx, and one in the names of Toribio and Ma. Emilia Oribello x x x.

Toribio was twice married. His first wife was Emilia. On September 10, 1981, Toribio's marriage to Emilia was
dissolved pursuant to the decision of the Superior Court of California, County of Sacramento, U.S.A.

On March 10, 1982, Toribio married appellee before the municipal mayor of Agoo, La Union. He died intestate on
August 18, 1993.

Instituted on May 27, 1997 by Rcmedios Oribello xxx, represented by her natural father Alfredo Selga xxx, against
appellee, the action was anchored on the theory that appellant is an adopted daughter of Toribio per decision
dated March 26, 1974 xxx of the then Court of First Instance x x x of Occidental Mindoro (Branch II) in Sp. Proc.
No. R-94 x x x granting the petition of Toribio and Emilia, who were childless, for adoption of appellant, then eight
years old.

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Denying that appellant is an adopted daughter of Toribio, appellee averred in her answer that the decree of
adoption was fraudulently secured by Alfredo; that the proceedings in the first adoption case and the decree of
adoption are void ab initio; that Toribio could not have filed the first adoption case in Occidental Mindoro because
he was a resident of Agoo, La Union throughout his life; that the Toribio referred to in the first adoption case and
appellee's husband, Toribio, are two different persons; that the birth certificate of appellant was simulated; that
appellant never lived with nor submitted herself to the parental authority and care of Toribio even after appellee's
marriage to him; that Alfredo's fraudulent scheme was shown by his filing of another petition for adoption in 1983
in the Regional Trial Court of Occidental Mindoro (Branch 45), docketed as Sp. Proc. No. R-274 xxx, which was
archived per order of said court dated December 18, 1986.[4]
Judgment of the RTC

On March 30, 1998, the RTC rendered its Judgment after trial, ruling as follows:
WHEREFORE, this case is hereby DISMISSED.

Plaintiff Remedios Selga is not a co-owner of the properties enumerated in paragraph 5 of the Complaint, which
defendant inherited from Toribio Oribello except those described in subparagraphs 8, 11 and 12 of said paragraph
5. Said three (3) parcels of land are unknown to and not in the possession of defendant (see, Par. 4 of the Answer
with Motion to Dismiss).

This Court awards defendant TWENTY-FIVE TFIOUSAND PESOS (P25,000.00) in attorney's fees to be paid by
plaintiff.

SO ORDERED.[5] (Underscoring supplied)


Decision of the CA

On appeal, respondent Remedios Oribello sought the reversal of the judgment of the RTC, insisting that the trial
court erred:
IN DISMISSING THE COMPLAINT BY STATING IN ITS DECISION THAT THE PLAINTIFF-APPELLANT IS NOT
A CO- OWNER OF THE PROPERTIES ENUMERATED IN THE COMPLAINT;

IN FINDING THAT THE DECISION IN SPC. PROC. NO. R-94 WAS OBTAINED THRU FRAUD AND
MACHINATION;

IN NULLIFYING THE DECISION IN SPC. PROC. R-94 WHICH HAS LONG BECOME FINAL AND EXECUTORY;
and

IN AWARDING DEFENDANT-APPELLEE ATTORNEY'S FEES.[6]


On July 31, 2003,[7] the CA promulgated its Decision, viz.:
WHEREFORE, the appealed decision is VACATED and SET ASIDE and the case REMANDED to the lower court
for the second phase of a partition suit without prejudice to the filing, if still available, of either a petition for relief
from the decree of adoption rendered in Sp. Proc. No. R-94 of the then Court of First Instance of Occidental
Mindoro (Branch II) or an action for annulment thereof.

SO ORDERED.[8]
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The CA pointed out that even if the adoption proceedings had suffered from infirmities, the RTC did not have the
authority to annul the adoption decree and to dismiss the complaint for partition for that reason; and that at any
rate the petitioner still had the option either to file a petition for relief or an action for the annulment of the adoption
decree in the appropriate court.

Issue

Hence, this appeal, with the petitioner asserting that:


x x x THERE IS GRAVE ABUSE OF DISCRETION COMMITTED IN THE DECISION AS IT WRONGFULLY
ALLOWED THE ILLEGAL USE OF A SURNAME BY THE RESPONDENT TO PURSUE A FRAUDULENT CLAIM
AGAINST THE SUBSTANTIVE RIGHTS OF THE PETITIONER AND OF AN INDISPENSABLE PARTY WHO
WAS NOT IMPLEADED AS ANY PARTY TO THE COMPLAINT.[9]

x x x THERE IS SERIOUS ERROR IN THE DECISION, AS IT IS PREMISED ON MISAPPREHENSION OF


FACTS WHICH WRONGFULLY SUSTAINED THE MANIFESTLY FRAUDULENT CLAIM BY THE FATHER OF
THE RESPONDENT OF HER FILIATION WITH THE HUSBAND OF THE PETITIONER, WHICH IS NOW BEING
INTERPOSED LONG AFTER HIS DEATH AND THRU A PETITION WHEREIN HE WAS NEVER A PARTY OR
PETITIONER.[10]

x x x THERE IS ERROR OF LAW COMMITTED IN THE DECISION, AS IT TOTALLY DISREGARDED THE


DULY ESTABLISHED RULE AND JURISPRUDENCE THAT THE COUNTERCLAIM IN THE ANSWER OF THE
PETITION IS A DIRECT ATTACK ON THE NULLITY OF THE ALLEGED PETITION AND JUDGMENT OF
ADOPTION, AND THAT THE TRIAL COURT HAS THE AUTHORITY TO SET ASIDE THE SAID NULL AND
VOID JUDGMENT AND TO DISMISS THE COMPLAINT.[11]

x x x THE PETITION HAS TO BE GIVEN DUE COURSE, IN ORDER THAT THE MANDATES OF THE RULES
AGAINST MULTIPLICITY OF SUITS SHALL BE UPHELD, PARTICULARLY THE GRANT OF THE
COUNTERCLAIM OF THE PETITION FOR DECLARATION OF NULLITY OF THE ALLEGED PETITION AND
JUDGMENT OF ADOPTION, AS WELL AS FOR THE FULL APPLICATION OF THE RULES ON INTESTATE
PROCEEDINGS UNDER RULE 90 OF THE REVISED RULES OF COURT, FOR A FINAL RESOLUTION OF
THE SUBSTANTIVE RIGHTS OF THE PARTIES IN ONE AND SINGLE PROCEEDING, THRU THE INSTANT
PETITION.[12]

In her comment,[13] respondent Remedios Oribello insists that she had the right to the partition as the adopted
daughter of the late Toribio Oribello; that the petitioner raised a new issue about her failure to implead Toribio
Oribello, Jr. despite being an indispensable party for being the alleged son of the late Toribio Oribello; that the
misjoinder or non-joinder of parties was not a ground for the dismissal of an action, and could be corrected by a
proper amendment; that the petitioner could not successfully assail the decree of adoption by the Court of First
Instance in Occidental Mindoro; that unless such decree of adoption was properly annulled or set aside by a court
of competent jurisdiction, she could not be barred from enforcing her right as the adopted daughter of the late
Toribio Oribello; and that the petition for review should be denied for its utter lack of merit.

Ruling of the Court

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The appeal is meritorious.

1.

The CA correctly held that the validity of the adoption decree in favor of the respondent should not be assailed in
an action for partition

The petitioner insists that the complaint for partition must be dismissed based on her allegations that the adoption
decree issued by the CFI, Branch II, of Occidental Mindoro was void; and that her attack against the adoption
decree was akin to the counterclaim allowed in Heirs of Simplicio Santiago v. Heirs of Mariano E. Santiago,[14] an
action for the nullification of a certificate of title, because the counterclaim constituted a direct attack on the title.

The petitioner's position is untenable.

In Pinausukan Seafood House, Roxas Boulevard, Inc. v. Far East Bank & Trust Company (now Bank of the
Philippine Island),[15] the Court has traced the evolution of the action to annul the judgment or final order of the
CFI, and, later on, of the RTC, and has indicated the proper court with jurisdiction over the action, as follows:

The remedy of annulment of judgment has been long authorized and sanctioned in the Philippines. In Banco
Español-Filipino v. Palanca, of 1918 vintage, the Court, through Justice Street, recognized that there were only
two remedies available under the rules of procedure in force at the time to a party aggrieved by a decision of the
Court of First Instance (CFI) that had already attained finality, namely: that under Sec. 113, Code of Civil
Procedure, which was akin to the petition for relief from judgment under Rule 38, Rules of Court; and that under
Sec. 513, Code of Civil Procedure, which stipulated that the party aggrieved under a judgment rendered by the
CFI "upon default" and who had been "deprived of a hearing by fraud, accident, mistake or excusable negligence"
and the CFI had "finally adjourned so that no adequate remedy exists in that court" could "present his petition to
the Supreme Court within sixty days after he first learns of the rendition of such judgment, and not thereafter,
setting forth the facts and praying to have judgment set aside." It categorically ruled out a mere motion filed for
that purpose in the same action as a proper remedy.

The jurisdiction over the action for the annulment of judgment had been lodged in the CFI as a court of general
jurisdiction on the basis that the subject matter of the action was not capable of pecuniary estimation. Section 56,
paragraph 1, of Act No. 136 (An Act providing for the Organization of Courts in the Philippine Islands), effective on
June 11, 1901, vested original jurisdiction in the CFI over "all civil actions in which the subject of litigations is not
capable of pecuniary estimation." The CFI retained its jurisdiction under Section 44(a) of Republic Act No. 296
(The Judiciary Act of 1948), effective on June 17, 1948, which contained a similar provision vesting original
jurisdiction in the CFI over "all civil actions in which the subject of the litigation is not capable of pecuniary
estimation."

In the period under the regimes of Act No. 136 and Republic Act No. 296, the issues centered on which CFI, or
branch thereof, had the jurisdiction over the action for the annulment of judgment. It was held in Mas v. Dumara-
og that "the power to open, modify or vacate a judgment is not only possessed by, but is restricted to the court in
which the judgment was rendered." In J.M. Tuason & Co., Inc. v. Torres, the Court declared that "the jurisdiction
to annul a judgment of a branch of the Court of First Instance belongs solely to the very same branch which
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rendered the judgment." In Sterling Investment Corporation v. Ruiz, the Court enjoined a branch of the CFI of
Rizal from taking cognizance of an action filed with it to annul the judgment of another branch of the same court.

In Dulap v. Court of Appeals, the Court observed that the philosophy underlying the pronouncements in these
cases was the policy of judicial stability, as expressed in Dumara-og, to the end that the judgment of a court of
competent jurisdiction could not be interfered with by any court of concurrent jurisdiction. Seeing that the
pronouncements in Dumara-og, J.M. Tuason & Co., Inc. and Sterling Investment confining the jurisdiction to annul
a judgment to the court or its branch rendering the judgment would "practically amount to judicial legislation," the
Court found the occasion to re-examine the pronouncements. Observing that the plaintiffs cause of action in an
action to annul the judgment of a court "springs from the alleged nullity of the judgment based on one ground or
another, particularly fraud, which fact affords the plaintiff a right to judicial interference in his behalf," and that that
the two cases were distinct and separate from each other because "the cause of action (to annul judgment) is
entirely different from that in the action which gave rise to the judgment sought to be annulled, for a direct attack
against a final and executory judgment is not incidental to, but is the main object of, the proceeding," the Court
concluded that "there is no plausible reason why the venue of the action to annul the judgment should necessarily
follow the venue of the previous action" if the outcome was not only to violate the existing rule on venue for
personal actions but also to limit the opportunity for the application of such rule on venue for personal actions.
The Court observed that the doctrine under Dumara-og, J.M. Tuason & Co., Inc. and Sterling Investment could
then very well "result in the difficulties precisely sought to be avoided by the rules; for it could be that at the time of
the filing of the second action for annulment, neither the plaintiff nor the defendant resides in the same place
where either or both of them did when the first action was commenced and tried," thus unduly depriving the
parties of the right expressly given them by the Rules of Court "to change or transfer venue from one province to
another by written agreement - a right conferred upon them for their own convenience and to minimize their
expenses in the litigation - and renders innocuous the provision on waiver of improper venue in Section 4 (of Rule
4 of the Revised Rules of Court)." The Court eventually ruled:

Our conclusion must therefore be that a court of first instance or a branch thereof has the authority and
jurisdiction to take cognizance of, and to act in, a suit to annul a final and executory judgment or order rendered
by another court of first instance or by another branch of the same court. The policy of judicial stability, which
underlies the doctrine laid down in the cases of Dumara-og, J.M. Tuason & Co., Inc. and Sterling Investment
Corporation, et al., supra, should be held subordinate to an orderly administration of justice based on the existing
rules of procedure and the law. x x x

In 1981, the Legislature enacted Batas Pambansa Blg. 129 (Judiciary Reorganization Act of 1980). Among
several innovations of this legislative enactment was the formal establishment of the annulment of a judgment or
final order as an action independent from the generic classification of litigations in which the subject matter was
not capable of pecuniary estimation, and expressly vested the exclusive original jurisdiction over such action in
the CA. The action in which the subject of the litigation was incapable of pecuniary estimation continued to be
under the exclusive original jurisdiction of the RTC, which replaced the CFI as the court of general jurisdiction.
Since then, the RTC no longer had jurisdiction over an action to annul the judgment of the RTC, eliminating all
concerns about judicial stability. To implement this change, the Court introduced a new procedure to govern the
action to annul the judgment of the RTC in the 1997 revision of the Rules of Court under Rule 47, directing in
Section 2 thereof that "[t]he annulment may be based only on the grounds of extrinsic fraud and lack of
jurisdiction."
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The Court has expounded on the nature of the remedy of annulment of judgment or final order in Dare Adventure
Farm Corporation v. Court of Appeals, viz.:
A petition for annulment of judgment is a remedy in equity so exceptional in nature that it may be availed of only
when other remedies are wanting, and only if the judgment, final order or final resolution sought to be annulled
was rendered by a court lacking jurisdiction or through extrinsic fraud. Yet, the remedy, being exceptional in
character, is not allowed to be so easily and readily abused by parties aggrieved by the final judgments, orders or
resolutions. The Court has thus instituted safeguards by limiting the grounds for the annulment to lack of
jurisdiction and extrinsic fraud, and by prescribing in Section 1 of Rule 47 of the Rules of Court that the petitioner
should show that the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no
longer available through no fault of the petitioner. A petition for annulment that ignores or disregards any of the
safeguards cannot prosper.

The attitude of judicial reluctance towards the annulment of a judgment, final order or final resolution is
understandable, for the remedy disregards the time-honored doctrine of immutability and unalterability of final
judgments, a solid corner stone in the dispensation of justice by the courts. The doctrine of immutability and
unalterability serves a two-fold purpose, namely: (a) to avoid delay in the administration of justice and thus,
procedurally, to make orderly the discharge of judicial business; and (b) to put an end to judicial controversies, at
the risk of occasional errors, which is precisely why the courts exist. As to the first, a judgment that has acquired
finality becomes immutable and unalterable and is no longer to be modified in any respect even if the modification
is meant to correct an erroneous conclusion of fact or of law, and whether the modification is made by the court
that rendered the decision or by the highest court of the land. As to the latter, controversies cannot drag on
indefinitely because fundamental considerations of public policy and sound practice demand that the rights and
obligations of every litigant must not hang in suspense for an indefinite period of time.

The objective of the remedy of annulment of judgment or final order is to undo or set aside the judgment or final
order, and thereby grant to the petitioner an opportunity to prosecute his cause or to ventilate his defense. If the
ground relied upon is lack of jurisdiction, the entire proceedings are set aside without prejudice to the original
action being refiled in the proper court. If the judgment or final order or resolution is set aside on the ground of
extrinsic fraud, the CA may on motion order the trial court to try the case as if a timely motion for new trial had
been granted therein. The remedy is by no means an appeal whereby the correctness of the assailed judgment or
final order is in issue; hence, the CA is not called upon to address each error allegedly committed by the trial
court.
Based on the foregoing, the RTC did not have the jurisdiction to determine or to review the validity of the decree
of adoption issued by the erstwhile CFI of Occidental Mindoro by virtue of the equal rank and category between
the RTC and the CFI. The proper court with jurisdiction to do so was the CA, which has been vested by Section 9
of Batas Pambansa Blg. 129[16] with the exclusive original jurisdiction over actions for the annulment of the
judgments of the RTC, to wit:
Sec. 9. Jurisdiction. - The [Court of Appeals] shall exercise:

xxxx

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional Trial Courts; and

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xxxx
Conformably with the foregoing, therefore, we join the CA's following exposition, to wit:
Even supposing that the first adoption case suffers from infirmities, the lower court is bereft of authority to annul
the decree of adoption which was rendered by the CFI of Occidental Mindoro, a court of equal rank. Indeed, no
court has the authority to nullify the judgments or processes of another court of equal rank and category, having
the equal power to grant the reliefs sought. Such power devolves exclusively upon the proper appellate court. The
raison d'etre for the rule is to avoid conflict of power between different courts of equal or coordinate jurisdiction
which would surely lead to confusion and seriously hinder the proper administration of justice (Gallardo-Corro vs.
Gallardo, 350 SCRA 568).[17] (Emphasis supplied)
It is also relevant to mention that the judgment or final order of a court of law can be set aside only through a
direct attack commenced in the court of competent jurisdiction. For this reason, any attack in this action for
partition against the validity of the adoption decree issued by the CFI of Occidental Mindoro cannot be permitted
because such would constitute a collateral attack against the judgment in the adoption case.

2.

The respondent did not discharge her burden of proof as the plaintiff to show that she was entitled to the partition

Even as we uphold the CA's disquisition on forbidding the RTC's interference with the CFI's decree of adoption,
we must reverse that part of the decision vacating and setting aside the judgment rendered by the RTC on March
30, 1998. It is our studied conclusion that the RTC correctly ruled against the right of respondent Remedios
Oribello to demand the partition of the real property belonging to the late Tomas Oribello on the ground that she
had not substantiated her right to the partition by preponderance of evidence.

Before going further, it is relevant to relive the nature of the remedy of judicial partition. The proceeding under
Rule 69 of the Rules of Court is a judicial controversy between persons who, being co-owners or coparceners of
common property, seek to secure a division or partition thereof among themselves, giving to each one of them the
part corresponding to him.[18] The object of partition is to enable those who own property as joint tenants, or
coparceners, or tenants in common to put an end to the joint tenancy so as to vest in each a sole estate in
specific property or an allotment in the lands or tenements.[19] According to American jurisprudence:[20]

The right of compulsory partition, in the case of coparceners was the gift of the common law, but in the case of
joint tenants and tenants in common it was first given by statutes. The common law, having established this right
in favor of coparceners, because their relationship being created by it, and not by an act or choice of their own, as
in the case of joint tenants and tenants in common, thought it reasonable that it should endure no longer than the
parties should be pleased with it; but at the same time deemed it expedient as well as just, that they should not be
placed in worse condition by the partition, than if they had continued to enjoy their respective interests in the lands
or property without a division. x x x [T]herefore, after the partition a warranty was annexed by the common law to
each part, so that, if any one should be impleaded, she might vouch her sisters, or those who had been her
coparceners at the time of the partition, or their heirs, and by this means also have their aid to deraign the
warranty paramount, if any existed, annexed to the purchase of their ancestor. (citations omitted)

To accord with the nature of the remedy of judicial partition, there are two stages defined under Rule 69 of the
Rules of Court. The first relates to the determination of the rights of the parties to the property held in common.
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The second concerns the physical segregation of each party's just share in the property held in common. The
second stage need not be gone into should the parties agree on the physical partition. As Justice Regalado
discussed in De Mesa v. Court of Appeals:[21]

The first stage of an action for judicial partition and/or accounting is concerned with the determination of whether
or not a co-ownership in fact exists and a partition is proper, that is, it is not otherwise legally proscribed and may
be made by voluntary agreement of all the parties interested in the property. This phase may end in a declaration
that plaintiff is not entitled to the desired partition either because a co-ownership does not exist or a partition is
legally prohibited. It may also end, on the other hand, with an adjudgment that a co-ownership does in truth exist,
that partition is proper in the premises, and that an accounting of rents and profits received by the defendant from
the real estate in question is in order. In the latter case, "the parties may, if they are able to agree, make partition
among themselves by proper instruments of conveyance, and the court shall confirm the partition so agreed upon
by all the parties." In either case, whether the action is dismissed or partition and/or accounting is decreed, the
order is a final one and may be appealed by any party aggrieved thereby.

The second stage commences when the parties are unable to agree upon the partition ordered by the court. In
that event, partition shall be effected for the parties by the court with the assistance of not more than three (3)
commissioners. This second phase may also deal with the rendition of the accounting itself and its approval by
the Court after the parties have been accorded the opportunity to be heard thereon, and an award for the
recovery by the party or parties thereto entitled of their just shares in the rents and profits of the real estate in
question. Such an order is, to be sure, also final and appealable.

In the decision ordering partition, the execution of that part of the judgment which will not necessitate any further
proceedings may be enforced. Further proceedings, such as the appointment of commissioners to carry out the
partition and the rendition and approval of the accounting, may be had without prejudice to the execution of that
part of the judgment which needs no further proceedings. Thus, it has been held that execution was entirely
proper to enforce the defendant's obligation to render an accounting and to exact payment of the money value of
the plaintiffs' shares in the personal property and attorney's fees due defendants, as well as the costs of the suit
and damages.

In this case, the CA has declared that Remedios Oribello, being the adopted daughter of the late Toribio Oribello,
was entitled to the judicial partition she hereby demanded by virtue of the decree of adoption of the CFI. Hence, it
has remanded the case to the RTC for the second stage of the partition proceedings.

The declaration of the CA in favor of Remedios Oribello was factually unwarranted. As the plaintiff, she had the
burden of proof, as the party demanding the partition of property, to establish her right to a share in the property
by preponderance of evidence, but she failed to provide the factual basis of her right to the partition warranted the
dismissal of her claim for judicial partition.

In its assailed judgment, the RTC found that Remedios Oribello did not satisfactorily establish her co-ownership of
the properties left by the late Toribio Oribello, cogently observing as follows:

The combination of all those stated above prods this Court to conclude that Toribio Oribello did not testify in the
court hearing of February 18, 1974 in Special Proceeding No. R-94. As per record of the case, it was a certain
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Toribio Orivillo who testified on that date. In the earlier part of this Decision (page 12), this Court made the
pronouncement that the names Toribio Orivillo, used in Special Proceeding No. R-94, and Toribio Oribello, used
in Special Proceeding No. R-274, refer to the same person. Both names refer to the same person as they were
meant to refer to the same physical person, but the physical person who physically appeared and actually testified
before the Court of First Instance in San Jose, Occidental Mindoro on February 18, 1974 was not Toribio Oribello
but one Toribio Orivillo or purporting to be one Toribio Orivillo, a person physically different from the physical
Toribio Oribcllo. There are several reasons why. According to Atty. Jaravata, the spouses Orivillo were in a hurry
to go back to the United States (TSN, November 17, 1997, page 6) which explained the reason why they were not
able to sign the petition for adoption. The petition (Exhibit "J") is a one-page petition, typed double-spaced. It is
accompanied by a one-page affidavit of consent to adoption executed by natural parents Alfredo Selga and
Amada Selga, also typed double-spaced. This one-page petition could be prepared within five minutes. It would
not take ten minutes to prepare this one-page petition assuming the typist is a slow one. If spouses Orivillo were
in a hurry to go back to the United States, a delay of ten minutes will not make much difference considering the
fact that they were still in the offices of Atty. Jaravata in San Jose, Occidental Mindoro. They were not in the
airport about to take their flight to the United States. The second reason is that if both spouses were really there,
they could have corrected the spelling of the surname, from Orivillo to Oribello. The third reason is that only one
month separated the filing of the petition and its hearing. It would not be economical for the would-be-adopter,
who was not shown to have been very rich but merely a sugar worker, to go to the United States in a hurry and
then come back here in the Philippines within a period of just thirty (30) days, who, upon facts established in this
case, did not show much interest in exercising parental authority over the supposedly-adopted child. She
remained in Occidental Mindoro. If this Toribio Orivillo was portrayed as being an eager-beaver childless parent in
coming back here in the Philippines within thirty days from departing the country in a hurry for the purpose of
testifying in our court of law so that he could adopt said Remedios Selga and have the experience of exercising
parental authority, the facts established in this case show that such portrayal was misleading and untruthful in that
he never showed interest to such adoption. Neither did he show interest or anxiety over that child, Remedios
Selga. The explanation of Atty. Ernesto Jaravata that they were in a hurry to go back to the United States was
merely to justify the absence of the signatures of both spouses in the one-page petition. Fourth, in the hearing of
February 18, 1974, if the real Toribio Oribello appeared in Court, he would have corrected his surname and he
would have stated his citizenship. It would be unnatural for a person not to react when his surname is misspelled.
Also, his citizenship was not stated just like in the petition. It is required in adoption cases to state the citizenship
of the adopter because there are legal requirements to satisfy in case of a foreigner adopting a Filipino citizen.

The petitioner Toribio Orivillo who testified in Special Proceeding No. R-94 was not the real Toribio Oribello who
was born on April 16, 1910 in Agoo, La Union and who died on August 18, 1993 in Agoo, La Union. Somebody
with the name Toribio Orivillo or purporting to be such stood for him and testified for him in the then Court of First
Instance based in San Jose, Occidental Mindoro on February 18, 1974.

As plaintiffs natural father said, Toribio Oribello did not know about the second adoption case (TSN, January 14,
1998, page 22).

This Court concludes now without an iota of doubt that Toribio Oribello did not know also about the first adoption
case (Special Proceeding No. R-94) just like the second one (Special Proceeding No. R-274). While the second
part of the Rule on res inter alios acta states that evidence that one did or did not do a certain thing at one time is
not admissible to prove that he did or did not do the same or similar thing at another time, it may be received to
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prove a specific intent, plan or scheme. Under the circumstances, these were machinations orchestrated by
Alfredo Selga as he himself expressly admitted with respect to the second adoption case.

This case is an action for judicial partition. As stated by the Supreme Court in the case of Municipality of Biñan v.
Garcia, December 22, 1989, a judicial partition has two phases. The first phase is an inquiry as to whether there
exists co-ownership of properties by several persons. The second phase is on the actual partition and accounting,
if applicable.

This Court finds that no-co-ownership exists between plaintiff and defendant. Hence, we cannot proceed to the
second phase.[22]

The foregoing findings by the RTC, that the Tomas Orivillo who had legally adopted Remedios Oribello under the
CFI's decree of adoption was not the same person as the Tomas Oribello whose property was the subject of her
demand for judicial partition, were supported by the records. In finding so, the RTC did not interfere with the
jurisdiction of the CFI as a court of equal rank and category, and did not negate the adoption decree, but simply
determined whether or not the claim of Remedios Oribello to the partition of the property of Tomas Oribello was
competently substantiated by preponderance of evidence. What the RTC thereby settled was only whether
Remedios Oribello was a co-owner of the property with Berlinda Oribello, the widow of Tomas Oribello. The RTC,
being the trial court with jurisdiction over the action for partition, undeniably possessed the fullest authority to hear
and settle the conflicting claims of the parties.

WHEREFORE, the Court REVERSES and SETS ASIDE the Decision promulgated on July 31, 2003 by the Court
of Appeals; REINSTATES the Judgment of the Regional Trial Court rendered on March 30, 1998 dismissing Civil
Case No. A-1757 entitled Remedios Oribello, represented by her Atty.-in-Fact Alfredo Selga v. Berlinda P.
Oribello; and ORDERS respondent Remedios Oribello to pay the costs of suit.

SO ORDERED.

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11. The Consolidated Bank and Trust Corporation vs CA

G.R. No. 138569, September 11, 2003

THE CONSOLIDATED BANK AND TRUST CORPORATION, PETITIONER, VS. COURT OF APPEALS AND
L.C. DIAZ AND COMPANY, CPA'S, RESPONDENTS.

DECISION

CARPIO, J.:

The Case

Before us is a petition for review of the Decision[1] of the Court of Appeals dated 27 October 1998 and its
Resolution dated 11 May 1999. The assailed decision reversed the Decision[2] of the Regional Trial Court of
Manila, Branch 8, absolving petitioner Consolidated Bank and Trust Corporation, now known as Solidbank
Corporation ("Solidbank"), of any liability. The questioned resolution of the appellate court denied the motion for
reconsideration of Solidbank but modified the decision by deleting the award of exemplary damages, attorney's
fees, expenses of litigation and cost of suit.

The Facts

Solidbank is a domestic banking corporation organized and existing under Philippine laws. Private respondent
L.C. Diaz and Company, CPA's ("L.C. Diaz"), is a professional partnership engaged in the practice of accounting.

Sometime in March 1976, L.C. Diaz opened a savings account with Solidbank, designated as Savings Account
No. S/A 200-16872-6.

On 14 August 1991, L.C. Diaz through its cashier, Mercedes Macaraya ("Macaraya"), filled up a savings (cash)
deposit slip for P990 and a savings (checks) deposit slip for P50. Macaraya instructed the messenger of L.C.
Diaz, Ismael Calapre ("Calapre"), to deposit the money with Solidbank. Macaraya also gave Calapre the
Solidbank passbook.

Calapre went to Solidbank and presented to Teller No. 6 the two deposit slips and the passbook. The teller
acknowledged receipt of the deposit by returning to Calapre the duplicate copies of the two deposit slips. Teller
No. 6 stamped the deposit slips with the words "DUPLICATE" and "SAVING TELLER 6 SOLIDBANK HEAD
OFFICE." Since the transaction took time and Calapre had to make another deposit for L.C. Diaz with Allied Bank,
he left the passbook with Solidbank. Calapre then went to Allied Bank. When Calapre returned to Solidbank to
retrieve the passbook, Teller No. 6 informed him that "somebody got the passbook."[3] Calapre went back to L.C.
Diaz and reported the incident to Macaraya.

Macaraya immediately prepared a deposit slip in duplicate copies with a check of P200,000. Macaraya, together
with Calapre, went to Solidbank and presented to Teller No. 6 the deposit slip and check. The teller stamped the
words "DUPLICATE" and "SAVING TELLER 6 SOLIDBANK HEAD OFFICE" on the duplicate copy of the deposit
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slip. When Macaraya asked for the passbook, Teller No. 6 told Macaraya that someone got the passbook but she
could not remember to whom she gave the passbook. When Macaraya asked Teller No. 6 if Calapre got the
passbook, Teller No. 6 answered that someone shorter than Calapre got the passbook. Calapre was then
standing beside Macaraya.

Teller No. 6 handed to Macaraya a deposit slip dated 14 August 1991 for the deposit of a check for P90,000
drawn on Philippine Banking Corporation ("PBC"). This PBC check of L.C. Diaz was a check that it had "long
closed."[4] PBC subsequently dishonored the check because of insufficient funds and because the signature in
the check differed from PBC's specimen signature. Failing to get back the passbook, Macaraya went back to her
office and reported the matter to the Personnel Manager of L.C. Diaz, Emmanuel Alvarez.

The following day, 15 August 1991, L.C. Diaz through its Chief Executive Officer, Luis C. Diaz ("Diaz"), called up
Solidbank to stop any transaction using the same passbook until L.C. Diaz could open a new account.[5] On the
same day, Diaz formally wrote Solidbank to make the same request. It was also on the same day that L.C. Diaz
learned of the unauthorized withdrawal the day before, 14 August 1991, of P300,000 from its savings account.
The withdrawal slip for the P300,000 bore the signatures of the authorized signatories of L.C. Diaz, namely Diaz
and Rustico L. Murillo. The signatories, however, denied signing the withdrawal slip. A certain Noel Tamayo
received the P300,000.

In an Information[6] dated 5 September 1991, L.C. Diaz charged its messenger, Emerano Ilagan ("Ilagan") and
one Roscon Verdazola with Estafa through Falsification of Commercial Document. The Regional Trial Court of
Manila dismissed the criminal case after the City Prosecutor filed a Motion to Dismiss on 4 August 1992.

On 24 August 1992, L.C. Diaz through its counsel demanded from Solidbank the return of its money. Solidbank
refused.

On 25 August 1992, L.C. Diaz filed a Complaint[7] for Recovery of a Sum of Money against Solidbank with the
Regional Trial Court of Manila, Branch 8. After trial, the trial court rendered on 28 December 1994 a decision
absolving Solidbank and dismissing the complaint.

L.C. Diaz then appealed[8] to the Court of Appeals. On 27 October 1998, the Court of Appeals issued its Decision
reversing the decision of the trial court.

On 11 May 1999, the Court of Appeals issued its Resolution denying the motion for reconsideration of Solidbank.
The appellate court, however, modified its decision by deleting the award of exemplary damages and attorney's
fees.

The Ruling of the Trial Court

In absolving Solidbank, the trial court applied the rules on savings account written on the passbook. The rules
state that "possession of this book shall raise the presumption of ownership and any payment or payments made
by the bank upon the production of the said book and entry therein of the withdrawal shall have the same effect
as if made to the depositor personally."[9]

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At the time of the withdrawal, a certain Noel Tamayo was not only in possession of the passbook, he also
presented a withdrawal slip with the signatures of the authorized signatories of L.C. Diaz. The specimen
signatures of these persons were in the signature cards. The teller stamped the withdrawal slip with the words
"Saving Teller No. 5." The teller then passed on the withdrawal slip to Genere Manuel ("Manuel") for
authentication. Manuel verified the signatures on the withdrawal slip. The withdrawal slip was then given to
another officer who compared the signatures on the withdrawal slip with the specimen on the signature cards. The
trial court concluded that Solidbank acted with care and observed the rules on savings account when it allowed
the withdrawal of P300,000 from the savings account of L.C. Diaz.

The trial court pointed out that the burden of proof now shifted to L.C. Diaz to prove that the signatures on the
withdrawal slip were forged. The trial court admonished L.C. Diaz for not offering in evidence the National Bureau
of Investigation ("NBI") report on the authenticity of the signatures on the withdrawal slip for P300,000. The trial
court believed that L.C. Diaz did not offer this evidence because it is derogatory to its action.

Another provision of the rules on savings account states that the depositor must keep the passbook "under lock
and key."[10] When another person presents the passbook for withdrawal prior to Solidbank's receipt of the notice
of loss of the passbook, that person is considered as the owner of the passbook. The trial court ruled that the
passbook presented during the questioned transaction was "now out of the lock and key and presumptively ready
for a business transaction."[11]

Solidbank did not have any participation in the custody and care of the passbook. The trial court believed that
Solidbank's act of allowing the withdrawal of P300,000 was not the direct and proximate cause of the loss. The
trial court held that L.C. Diaz's negligence caused the unauthorized withdrawal. Three facts establish L.C. Diaz's
negligence: (1) the possession of the passbook by a person other than the depositor L.C. Diaz; (2) the
presentation of a signed withdrawal receipt by an unauthorized person; and (3) the possession by an
unauthorized person of a PBC check "long closed" by L.C. Diaz, which check was deposited on the day of the
fraudulent withdrawal.

The trial court debunked L.C. Diaz's contention that Solidbank did not follow the precautionary procedures
observed by the two parties whenever L.C. Diaz withdrew significant amounts from its account. L.C. Diaz claimed
that a letter must accompany withdrawals of more than P20,000. The letter must request Solidbank to allow the
withdrawal and convert the amount to a manager's check. The bearer must also have a letter authorizing him to
withdraw the same amount. Another person driving a car must accompany the bearer so that he would not walk
from Solidbank to the office in making the withdrawal. The trial court pointed out that L.C. Diaz disregarded these
precautions in its past withdrawal. On 16 July 1991, L.C. Diaz withdrew P82,554 without any separate letter of
authorization or any communication with Solidbank that the money be converted into a manager's check.

The trial court further justified the dismissal of the complaint by holding that the case was a last ditch effort of L.C.
Diaz to recover P300,000 after the dismissal of the criminal case against Ilagan.

The dispositive portion of the decision of the trial court reads:


IN VIEW OF THE FOREGOING, judgment is hereby rendered DISMISSING the complaint.

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The Court further renders judgment in favor of defendant bank pursuant to its counterclaim the amount of Thirty
Thousand Pesos (P30,000.00) as attorney's fees.

With costs against plaintiff.

SO ORDERED.[12]
The Ruling of the Court of Appeals

The Court of Appeals ruled that Solidbank's negligence was the proximate cause of the unauthorized withdrawal
of P300,000 from the savings account of L.C. Diaz. The appellate court reached this conclusion after applying the
provision of the Civil Code on quasi-delict, to wit:
Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged
to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this chapter.
The appellate court held that the three elements of a quasi-delict are present in this case, namely: (a) damages
suffered by the plaintiff; (b) fault or negligence of the defendant, or some other person for whose acts he must
respond; and (c) the connection of cause and effect between the fault or negligence of the defendant and the
damage incurred by the plaintiff.

The Court of Appeals pointed out that the teller of Solidbank who received the withdrawal slip for P300,000
allowed the withdrawal without making the necessary inquiry. The appellate court stated that the teller, who was
not presented by Solidbank during trial, should have called up the depositor because the money to be withdrawn
was a significant amount. Had the teller called up L.C. Diaz, Solidbank would have known that the withdrawal
was unauthorized. The teller did not even verify the identity of the impostor who made the withdrawal. Thus, the
appellate court found Solidbank liable for its negligence in the selection and supervision of its employees.

The appellate court ruled that while L.C. Diaz was also negligent in entrusting its deposits to its messenger and its
messenger in leaving the passbook with the teller, Solidbank could not escape liability because of the doctrine of
"last clear chance." Solidbank could have averted the injury suffered by L.C. Diaz had it called up L.C. Diaz to
verify the withdrawal.

The appellate court ruled that the degree of diligence required from Solidbank is more than that of a good father
of a family. The business and functions of banks are affected with public interest. Banks are obligated to treat the
accounts of their depositors with meticulous care, always having in mind the fiduciary nature of their relationship
with their clients. The Court of Appeals found Solidbank remiss in its duty, violating its fiduciary relationship with
L.C. Diaz.

The dispositive portion of the decision of the Court of Appeals reads:


WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and a new one entered.
Ordering defendant-appellee Consolidated Bank and Trust Corporation to pay plaintiff-appellant the sum of Three
Hundred Thousand Pesos (P300,000.00), with interest thereon at the rate of 12% per annum from the date of
filing of the complaint until paid, the sum of P20,000.00 as exemplary damages, and P20,000.00 as attorney's
fees and expenses of litigation as well as the cost of suit; and

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Ordering the dismissal of defendant-appellee's counterclaim in the amount of P30,000.00 as attorney's fees.
SO ORDERED.[13]
Acting on the motion for reconsideration of Solidbank, the appellate court affirmed its decision but modified the
award of damages. The appellate court deleted the award of exemplary damages and attorney's fees. Invoking
Article 2231[14] of the Civil Code, the appellate court ruled that exemplary damages could be granted if the
defendant acted with gross negligence. Since Solidbank was guilty of simple negligence only, the award of
exemplary damages was not justified. Consequently, the award of attorney's fees was also disallowed pursuant to
Article 2208 of the Civil Code. The expenses of litigation and cost of suit were also not imposed on Solidbank.

The dispositive portion of the Resolution reads as follows:


WHEREFORE, foregoing considered, our decision dated October 27, 1998 is affirmed with modification by
deleting the award of exemplary damages and attorney's fees, expenses of litigation and cost of suit.

SO ORDERED.[15]
Hence, this petition.

The Issues

Solidbank seeks the review of the decision and resolution of the Court of Appeals on these grounds:
THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER BANK SHOULD SUFFER THE LOSS
BECAUSE ITS TELLER SHOULD HAVE FIRST CALLED PRIVATE RESPONDENT BY TELEPHONE BEFORE
IT ALLOWED THE WITHDRAWAL OF P300,000.00 TO RESPONDENT'S MESSENGER EMERANO ILAGAN,
SINCE THERE IS NO AGREEMENT BETWEEN THE PARTIES IN THE OPERATION OF THE SAVINGS
ACCOUNT, NOR IS THERE ANY BANKING LAW, WHICH MANDATES THAT A BANK TELLER SHOULD
FIRST CALL UP THE DEPOSITOR BEFORE ALLOWING A WITHDRAWAL OF A BIG AMOUNT IN A SAVINGS
ACCOUNT.

THE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE OF LAST CLEAR CHANCE AND IN
HOLDING THAT PETITIONER BANK'S TELLER HAD THE LAST OPPORTUNITY TO WITHHOLD THE
WITHDRAWAL WHEN IT IS UNDISPUTED THAT THE TWO SIGNATURES OF RESPONDENT ON THE
WITHDRAWAL SLIP ARE GENUINE AND PRIVATE RESPONDENT'S PASSBOOK WAS DULY PRESENTED,
AND CONTRARIWISE RESPONDENT WAS NEGLIGENT IN THE SELECTION AND SUPERVISION OF ITS
MESSENGER EMERANO ILAGAN, AND IN THE SAFEKEEPING OF ITS CHECKS AND OTHER FINANCIAL
DOCUMENTS.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE INSTANT CASE IS A LAST DITCH EFFORT
OF PRIVATE RESPONDENT TO RECOVER ITS P300,000.00 AFTER FAILING IN ITS EFFORTS TO
RECOVER THE SAME FROM ITS EMPLOYEE EMERANO ILAGAN.

THE COURT OF APPEALS ERRED IN NOT MITIGATING THE DAMAGES AWARDED AGAINST PETITIONER
UNDER ARTICLE 2197 OF THE CIVIL CODE, NOTWITHSTANDING ITS FINDING THAT PETITIONER BANK'S
NEGLIGENCE WAS ONLY CONTRIBUTORY.[16]
The Ruling of the Court

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The petition is partly meritorious.

Solidbank's Fiduciary Duty under the Law

The rulings of the trial court and the Court of Appeals conflict on the application of the law. The trial court pinned
the liability on L.C. Diaz based on the provisions of the rules on savings account, a recognition of the contractual
relationship between Solidbank and L.C. Diaz, the latter being a depositor of the former. On the other hand, the
Court of Appeals applied the law on quasi-delict to determine who between the two parties was ultimately
negligent. The law on quasi-delict or culpa aquiliana is generally applicable when there is no pre-existing
contractual relationship between the parties.

We hold that Solidbank is liable for breach of contract due to negligence, or culpa contractual.

The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple
loan.[17] Article 1980 of the Civil Code expressly provides that "x x x savings x x x deposits of money in banks
and similar institutions shall be governed by the provisions concerning simple loan." There is a debtor-creditor
relationship between the bank and its depositor. The bank is the debtor and the depositor is the creditor. The
depositor lends the bank money and the bank agrees to pay the depositor on demand. The savings deposit
agreement between the bank and the depositor is the contract that determines the rights and obligations of the
parties.

The law imposes on banks high standards in view of the fiduciary nature of banking. Section 2 of Republic Act
No. 8791 ("RA 8791"),[18] which took effect on 13 June 2000, declares that the State recognizes the "fiduciary
nature of banking that requires high standards of integrity and performance."[19] This new provision in the general
banking law, introduced in 2000, is a statutory affirmation of Supreme Court decisions, starting with the 1990 case
of Simex International v. Court of Appeals,[20] holding that "the bank is under obligation to treat the accounts of
its depositors with meticulous care, always having in mind the fiduciary nature of their relationship."[21]

This fiduciary relationship means that the bank's obligation to observe "high standards of integrity and
performance" is deemed written into every deposit agreement between a bank and its depositor. The fiduciary
nature of banking requires banks to assume a degree of diligence higher than that of a good father of a family.
Article 1172 of the Civil Code states that the degree of diligence required of an obligor is that prescribed by law or
contract, and absent such stipulation then the diligence of a good father of a family.[22] Section 2 of RA 8791
prescribes the statutory diligence required from banks - that banks must observe "high standards of integrity and
performance" in servicing their depositors. Although RA 8791 took effect almost nine years after the unauthorized
withdrawal of the P300,000 from L.C. Diaz's savings account, jurisprudence[23] at the time of the withdrawal
already imposed on banks the same high standard of diligence required under RA No. 8791.

However, the fiduciary nature of a bank-depositor relationship does not convert the contract between the bank
and its depositors from a simple loan to a trust agreement, whether express or implied. Failure by the bank to pay
the depositor is failure to pay a simple loan, and not a breach of trust.[24] The law simply imposes on the bank a
higher standard of integrity and performance in complying with its obligations under the contract of simple loan,
beyond those required of non-bank debtors under a similar contract of simple loan.

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The fiduciary nature of banking does not convert a simple loan into a trust agreement because banks do not
accept deposits to enrich depositors but to earn money for themselves. The law allows banks to offer the lowest
possible interest rate to depositors while charging the highest possible interest rate on their own borrowers. The
interest spread or differential belongs to the bank and not to the depositors who are not cestui que trust of banks.
If depositors are cestui que trust of banks, then the interest spread or income belongs to the depositors, a
situation that Congress certainly did not intend in enacting Section 2 of RA 8791.

Solidbank's Breach of its Contractual Obligation

Article 1172 of the Civil Code provides that "responsibility arising from negligence in the performance of every
kind of obligation is demandable." For breach of the savings deposit agreement due to negligence, or culpa
contractual, the bank is liable to its depositor.

Calapre left the passbook with Solidbank because the "transaction took time" and he had to go to Allied Bank for
another transaction. The passbook was still in the hands of the employees of Solidbank for the processing of the
deposit when Calapre left Solidbank. Solidbank's rules on savings account require that the "deposit book should
be carefully guarded by the depositor and kept under lock and key, if possible." When the passbook is in the
possession of Solidbank's tellers during withdrawals, the law imposes on Solidbank and its tellers an even higher
degree of diligence in safeguarding the passbook.

Likewise, Solidbank's tellers must exercise a high degree of diligence in insuring that they return the passbook
only to the depositor or his authorized representative. The tellers know, or should know, that the rules on savings
account provide that any person in possession of the passbook is presumptively its owner. If the tellers give the
passbook to the wrong person, they would be clothing that person presumptive ownership of the passbook,
facilitating unauthorized withdrawals by that person. For failing to return the passbook to Calapre, the authorized
representative of L.C. Diaz, Solidbank and Teller No. 6 presumptively failed to observe such high degree of
diligence in safeguarding the passbook, and in insuring its return to the party authorized to receive the same.

In culpa contractual, once the plaintiff proves a breach of contract, there is a presumption that the defendant was
at fault or negligent. The burden is on the defendant to prove that he was not at fault or negligent. In contrast, in
culpa aquiliana the plaintiff has the burden of proving that the defendant was negligent. In the present case, L.C.
Diaz has established that Solidbank breached its contractual obligation to return the passbook only to the
authorized representative of L.C. Diaz. There is thus a presumption that Solidbank was at fault and its teller was
negligent in not returning the passbook to Calapre. The burden was on Solidbank to prove that there was no
negligence on its part or its employees.

Solidbank failed to discharge its burden. Solidbank did not present to the trial court Teller No. 6, the teller with
whom Calapre left the passbook and who was supposed to return the passbook to him. The record does not
indicate that Teller No. 6 verified the identity of the person who retrieved the passbook. Solidbank also failed to
adduce in evidence its standard procedure in verifying the identity of the person retrieving the passbook, if there is
such a procedure, and that Teller No. 6 implemented this procedure in the present case.

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Solidbank is bound by the negligence of its employees under the principle of respondeat superior or command
responsibility. The defense of exercising the required diligence in the selection and supervision of employees is
not a complete defense in culpa contractual, unlike in culpa aquiliana.[25]

The bank must not only exercise "high standards of integrity and performance," it must also insure that its
employees do likewise because this is the only way to insure that the bank will comply with its fiduciary duty.
Solidbank failed to present the teller who had the duty to return to Calapre the passbook, and thus failed to prove
that this teller exercised the "high standards of integrity and performance" required of Solidbank's employees.

Proximate Cause of the Unauthorized Withdrawal

Another point of disagreement between the trial and appellate courts is the proximate cause of the unauthorized
withdrawal. The trial court believed that L.C. Diaz's negligence in not securing its passbook under lock and key
was the proximate cause that allowed the impostor to withdraw the P300,000. For the appellate court, the
proximate cause was the teller's negligence in processing the withdrawal without first verifying with L.C. Diaz. We
do not agree with either court.

Proximate cause is that cause which, in natural and continuous sequence, unbroken by any efficient intervening
cause, produces the injury and without which the result would not have occurred.[26] Proximate cause is
determined by the facts of each case upon mixed considerations of logic, common sense, policy and
precedent.[27]

L.C. Diaz was not at fault that the passbook landed in the hands of the impostor. Solidbank was in possession of
the passbook while it was processing the deposit. After completion of the transaction, Solidbank had the
contractual obligation to return the passbook only to Calapre, the authorized representative of L.C. Diaz.
Solidbank failed to fulfill its contractual obligation because it gave the passbook to another person.

Solidbank's failure to return the passbook to Calapre made possible the withdrawal of the P300,000 by the
impostor who took possession of the passbook. Under Solidbank's rules on savings account, mere possession of
the passbook raises the presumption of ownership. It was the negligent act of Solidbank's Teller No. 6 that gave
the impostor presumptive ownership of the passbook. Had the passbook not fallen into the hands of the impostor,
the loss of P300,000 would not have happened. Thus, the proximate cause of the unauthorized withdrawal was
Solidbank's negligence in not returning the passbook to Calapre.

We do not subscribe to the appellate court's theory that the proximate cause of the unauthorized withdrawal was
the teller's failure to call up L.C. Diaz to verify the withdrawal. Solidbank did not have the duty to call up L.C. Diaz
to confirm the withdrawal. There is no arrangement between Solidbank and L.C. Diaz to this effect. Even the
agreement between Solidbank and L.C. Diaz pertaining to measures that the parties must observe whenever
withdrawals of large amounts are made does not direct Solidbank to call up L.C. Diaz.

There is no law mandating banks to call up their clients whenever their representatives withdraw significant
amounts from their accounts. L.C. Diaz therefore had the burden to prove that it is the usual practice of Solidbank
to call up its clients to verify a withdrawal of a large amount of money. L.C. Diaz failed to do so.

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Teller No. 5 who processed the withdrawal could not have been put on guard to verify the withdrawal. Prior to the
withdrawal of P300,000, the impostor deposited with Teller No. 6 the P90,000 PBC check, which later bounced.
The impostor apparently deposited a large amount of money to deflect suspicion from the withdrawal of a much
bigger amount of money. The appellate court thus erred when it imposed on Solidbank the duty to call up L.C.
Diaz to confirm the withdrawal when no law requires this from banks and when the teller had no reason to be
suspicious of the transaction.

Solidbank continues to foist the defense that Ilagan made the withdrawal. Solidbank claims that since Ilagan was
also a messenger of L.C. Diaz, he was familiar with its teller so that there was no more need for the teller to verify
the withdrawal. Solidbank relies on the following statements in the Booking and Information Sheet of Emerano
Ilagan:
xxx Ilagan also had with him (before the withdrawal) a forged check of PBC and indicated the amount of P90,000
which he deposited in favor of L.C. Diaz and Company. After successfully withdrawing this large sum of money,
accused Ilagan gave alias Rey (Noel Tamayo) his share of the loot. Ilagan then hired a taxicab in the amount of
P1,000 to transport him (Ilagan) to his home province at Bauan, Batangas. Ilagan extravagantly and lavishly spent
his money but a big part of his loot was wasted in cockfight and horse racing. Ilagan was apprehended and
meekly admitted his guilt.[28] (Emphasis supplied.)
L.C. Diaz refutes Solidbank's contention by pointing out that the person who withdrew the P300,000 was a certain
Noel Tamayo. Both the trial and appellate courts stated that this Noel Tamayo presented the passbook with the
withdrawal slip.

We uphold the finding of the trial and appellate courts that a certain Noel Tamayo withdrew the P300,000. The
Court is not a trier of facts. We find no justifiable reason to reverse the factual finding of the trial court and the
Court of Appeals. The tellers who processed the deposit of the P90,000 check and the withdrawal of the
P300,000 were not presented during trial to substantiate Solidbank's claim that Ilagan deposited the check and
made the questioned withdrawal. Moreover, the entry quoted by Solidbank does not categorically state that
Ilagan presented the withdrawal slip and the passbook.

Doctrine of Last Clear Chance

The doctrine of last clear chance states that where both parties are negligent but the negligent act of one is
appreciably later than that of the other, or where it is impossible to determine whose fault or negligence caused
the loss, the one who had the last clear opportunity to avoid the loss but failed to do so, is chargeable with the
loss.[29] Stated differently, the antecedent negligence of the plaintiff does not preclude him from recovering
damages caused by the supervening negligence of the defendant, who had the last fair chance to prevent the
impending harm by the exercise of due diligence.[30]

We do not apply the doctrine of last clear chance to the present case. Solidbank is liable for breach of contract
due to negligence in the performance of its contractual obligation to L.C. Diaz. This is a case of culpa contractual,
where neither the contributory negligence of the plaintiff nor his last clear chance to avoid the loss, would
exonerate the defendant from liability.[31] Such contributory negligence or last clear chance by the plaintiff merely
serves to reduce the recovery of damages by the plaintiff but does not exculpate the defendant from his breach of
contract.[32]

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Mitigated Damages

Under Article 1172, "liability (for culpa contractual) may be regulated by the courts, according to the
circumstances." This means that if the defendant exercised the proper diligence in the selection and supervision
of its employee, or if the plaintiff was guilty of contributory negligence, then the courts may reduce the award of
damages. In this case, L.C. Diaz was guilty of contributory negligence in allowing a withdrawal slip signed by its
authorized signatories to fall into the hands of an impostor. Thus, the liability of Solidbank should be reduced.

In Philippine Bank of Commerce v. Court of Appeals,[33] where the Court held the depositor guilty of contributory
negligence, we allocated the damages between the depositor and the bank on a 40-60 ratio. Applying the same
ruling to this case, we hold that L.C. Diaz must shoulder 40% of the actual damages awarded by the appellate
court. Solidbank must pay the other 60% of the actual damages.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION. Petitioner Solidbank
Corporation shall pay private respondent L.C. Diaz and Company, CPA's only 60% of the actual damages
awarded by the Court of Appeals. The remaining 40% of the actual damages shall be borne by private
respondent L.C. Diaz and Company, CPA's. Proportionate costs. SO ORDERED.

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12. Department of Finance vs Hon. Marino M. Dela Cruz

G.R. No. 209331, August 24, 2015

DEPARTMENT OF FINANCE, REPRESENTED BY HON. CESAR V. PURISIMA IN HIS OFFICIAL CAPACITY


AS SECRETARY, AND THE BUREAU OF CUSTOMS, REPRESENTED BY HON. ROZZANO RUFINO B.
BIAZON, IN HIS OFFICIAL CAPACITY AS COMMISSIONER OF CUSTOMS, PETITIONERS, VS. HON.
MARINO M. DELA CRUZ, JR., IN HIS CAPACITY AS EXECUTIVE JUDGE, REGIONAL TRIAL COURT,
MANILA, HON. FELICITAS O. LARON-CACANINDIN, IN HER CAPACITY AS PRESIDING JUDGE,
REGIONAL TRIAL COURT, MANILA, BRANCH 17, RONNIE C. SILVESTRE, EDWARD P. DELA CUESTA,
ROGEL C. GATCHALIAN, IMELDA D.CRUZ, LILIBETH S. SANDAG, RAYMOND P. VENTURA, MA. LIZA S.
TORRES, ARNEL C. ALCARAZ, MA. LOURDES V. MANGAOANG, FRANCIS AGUSTIN Y. ERPE, CARLOS T.
SO, MARIETTA D. ZAMORANOS, CARMELITA M. TALUSAN,[1] AREFILES H. CARREON,[2] AND
ROMALINO G. VALDEZ, RESPONDENTS.

DECISION

CARPIO, J.:

The Case

Petitioners assail the Order dated 4 October 2013[3] issued by Judge Felicitas O. Laron-Cacanindin (Judge
Laron-Cacanindin) of the Regional Trial Court of Manila, Branch 17 (RTC Branch 17), in Civil Case No. 13-
130820. The Order extended the 72-hour Temporary Restraining Order (TRO) issued by Executive Judge Marino
M. Dela Cruz, Jr. (Executive Judge Dela Cruz) in favor of respondents Silvestre, et al.[4] to 20 days or until 21
October 2013 without need of posting bond.

The Antecedent Facts

The case stemmed from the issuance of Executive Order No. 140 (EO 140) on 2 September 2013, which created
the Customs Policy Research Office (CPRO) in the Department of Finance (DOF). EO 140 states that the CPRO
"shall be responsible for reviewing the customs administration policies, rules and procedures, and thereafter
providing sound recommendations for the improvement of the same." Section 3 of EO 140 provides that "CPRO
shall be composed of its organic personnel, as approved by the Department of Budget and Management (DBM)
upon recommendation of the DOF Secretary, augmented and reinforced by DOF and BOC personnel as well as
those detailed or seconded from other agencies, whether attached to the DOF or not. x x x." Section 9 of EO 140
states that it shall "take effect immediately upon publication in two (2) newspapers of general circulation." EO 140
was published in Manila Bulletin and Philippine Star on 17 September 2013.

On the same day of the publication of EO 140, Bureau of Customs (BOC) Commissioner Rozzano Rufino B.
Biazon (Commissioner Biazon) issued Customs Personnel Order No. B-189-2013 (CPO 189-2013) detailing 27
BOC personnel holding the positions of Collector of Customs V and VI, including respondents in this case, to

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CPRO "effective immediately and valid until sooner revoked." CPO 189-2013 was approved by DOF Secretary
Cesar V. Purisima (Secretary Purisima).

On 30 September 2013, respondents filed an action for Declaratory Relief with Application for Temporary
Restraining Order and/or Writ of Preliminary Injunction before the Regional Trial Court (RTC) of Manila. On 1
October 2013, Executive Judge Dela Cruz issued a TRO for a period of 72 hours enjoining petitioners or any
person acting for and in their behalf from implementing CPO 189-2013. Thereafter, the case was raffled to the
sala of Judge Laron-Cacanindin.

In the assailed Order of 4 October 2013, Judge Laron-Cacanindin extended Executive Judge Dela Cruz's 72-hour
TRO for 20 days or until 21 October 2013. She then set the hearing for the issuance of a preliminary injunction on
18 October 2013.

On 21 October 2013, petitioners filed a Petition for Certiorari and Prohibition before this Court, with prayer for the
issuance of a TRO or a writ of preliminary mandatory injunction. Petitioners alleged that the case involves
personnel action affecting public officers which is under the exclusive jurisdiction of the Civil Service Commission
(CSC). Petitioners also alleged that respondents failed to exhaust all administrative remedies available to them
before filing the petition before the RTC. Petitioners also alleged that CPO 189-2013 is an internal personnel
order with application that is limited to and only within BOC and as such, it cannot be the subject of an action for
declaratory relief.

In their Comment, respondents alleged that the case involves the validity and constitutionality of CPO 189-2013,
and thus, it is beyond the jurisdiction of the CSC. Respondents further alleged that EO 140 violated Article 2 of
the Civil Code when it became effective immediately after its publication.

In their Reply, petitioners alleged that respondents only assailed the validity of EO 140 to justify their filing of an
action for declaratory relief. As regards its effectivity, petitioners alleged that EO 140 states that it shall "take
effect immediately upon publication in two (2) newspapers of general circulation."

In an Order dated 21 October 2013, Judge Laron-Cacanindin denied respondents' application for the issuance of
a writ of preliminary injunction.

In an Order dated 5 November 2013, Judge Laron-Cacanindin inhibited herself from further hearing the case.

The Issues

The issues for determination by this Court are the following:


Whether the RTC has jurisdiction over the action for declaratory relief filed by respondents;

Whether respondents failed to exhaust administrative remedies in filing the action before the RTC;

Whether EO 140 violated Article 2 of the Civil Code when it became effective immediately after its publication;
and

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Whether CPO 189-2013 was validly issued.
The Ruling of this Court

Jurisdiction over the Petition

The CSC has jurisdiction over all employees of government branches, subdivisions, instrumentalities, and
agencies, including government-owned or controlled corporations with original charters.[5] The CSC is the sole
arbiter of controversies relating to the civil service.[6] The rule is that disciplinary cases and cases involving
personnel actions, including "appointment through certification, promotion, transfer, reinstatement, reemployment,
detail, reassignment, demotion, and separation," are within the exclusive jurisdiction of the CSC.[7] This rule is
embodied in Section 1, Rule V of the Omnibus Rules Implementing Book V of Executive Order No. 292 and Other
Pertinent Civil Service Laws (Omnibus Rules) which states:
SECTION 1. x x x.

As used in these Rules, any action denoting movement or progress of personnel in the civil service shall be
known as personnel action. Such action shall include promotion, transfer, reinstatement, reemployment, detail,
secondment, reassignment, demotion and separation, x x x.
Under Section 8, Rule VII of the Omnibus Rules, "[a] detail is the movement of an employee from one department
or agency which is temporary in nature, which does not involve a reduction in rank, status or salary and does not
require the issuance of another appointment." CPO 189-2013 is an order detailing personnel from the BOC to
CPRO under the DOF.

A reading of the petition filed before the RTC shows that respondents were questioning their mass detail and
reassignment to CPRO. According to respondents, their detail was carried out in bad faith and was meant to
remove them from their permanent positions in the BOC. The action appears to be a personnel action under the
jurisdiction of the CSC.

However, the petition went beyond questioning the detail of respondents. Respondents further assailed the
validity and constitutionality of CPO 189-2013. Respondents alleged that CPO 189-2013 was issued even before
EC) 140, pursuant to which CPO 189-2013 was issued, became effective. Respondents alleged that CPO 189-
2013 was issued to beat the deadline of the Commission on Elections' ban on personnel movement from 28
September 2013 to 20 October 2013 due to the scheduled barangay elections. When respondents raised the
issue of validity and constitutionality of CPO 189-2013, the issue took the case beyond the scope of the CSC's
jurisdiction because the matter is no longer limited to personnel action. Thus, the RTC did not abuse its discretion
in taking cognizance of the action.

Failure to Exhaust Administrative Remedies

Petitioners allege that respondents failed to exhaust their administrative remedies before filing the case with the
RTC.

The doctrine of exhaustion of administrative remedies allows administrative agencies to carry out their functions
and discharge their responsibilities within the specialized areas of their respective competence.[8] The doctrine

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entails lesser expenses and provides for the speedier resolution of controversies.[9] Therefore, direct recourse to
the trial court, when administrative remedies are available, is a ground for dismissal of the action.

The doctrine, however, is not without exceptions. Among the exceptions are: (1) where there is estoppel on the
part of the party invoking the doctrine; (2) where the challenged administrative act is patently illegal, amounting to
lack of jurisdiction; (3) where there is unreasonable delay or official inaction that will irretrievably prejudice the
complainant; (4) where the amount involved is relatively so small as to make the rule impractical and oppressive;
(5) where the question involved is purely legal and will ultimately have to be decided by the courts of justice; (6)
where judicial intervention is urgent; (7) where the application of the doctrine may cause great and irreparable
damage; (8) where the controverted acts violate due process; (9) where the issue of non-exhaustion of
administrative remedies had been rendered moot; (10) where there is no other plain, speedy and adequate
remedy; (11) where strong public interest is involved; and (12) in quo warranto proceedings.[10]

In this case, respondents allege that CPO 189-2013 is contrary to law and unconstitutional. Respondents assail
CPO 189-2013 as patently illegal, arbitrary, and oppressive. This case clearly falls within the exceptions where
exhaustion of administrative remedies need not be resorted to by respondents.

Effectivity of EO 140

Respondents allege that EO 140 took effect only on 2 October 2013, fifteen days after its publication in two
newspapers of general circulation. Hence, respondents argue that when CPO 189-2013 was issued, EO 140 was
not yet effective.

Article 2 of the Civil Code of the Philippines, as amended by Executive Order No. 200,[11] is clear on this issue. It
states:
Art. 2. Laws shall take effect after fifteen days following the completion of their publication either in the Official
Gazette, or in a newspaper of general circulation in the Philippines, unless it is otherwise provided.
The proviso "unless it is otherwise provided" refers to an effectivity date other than after fifteen days following the
completion of the law's publication.[12] Thus, it is within the discretion of the legislature, or the Executive
Department in this case, whether to shorten or extend the fifteen-day period[13] as long as there is compliance
with the requirement of publication.

Here, Section 9 of EO 140 provides that the "order shall take effect immediately upon publication in two (2)
newspapers of general circulation." EO 140 was published in Manila Bulletin and Philippine Star on 17 September
2013. As such, EO 140 took effect on 17 September 2013.

In addition, the Court already ruled that "[interpretative regulations and those merely internal in nature, that is,
regulating only the personnel of the administrative agency and not the public, need not be published."[14] EO 140
is an internal regulation that affects primarily the personnel of the DOF and the BOC. It remains valid even without
publication.

Validity of CPO 189-2013

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Respondents assail the validity of CPO 189-2013. Respondents allege that under EO 140, CPRO shall be
composed of its organic personnel, as approved by the DBM upon recommendation of the DOF Secretary. The
organic personnel was supposed to be augmented and reinforced by DOF and BOC personnel. Respondents
allege that they were detailed to CPRO even before its organic personnel could be constituted.

We rule for respondents.

Section 3 of EO 140 provides:


SECTION 3. Personnel and Staffing Complement. The CPRO shall be composed of its organic personnel, as
approved by the Department of Budget and Management (DBM) upon recommendation of the DOF Secretary,
augmented and reinforced by DOF and BOC personnel as well as those detailed or seconded from other
agencies, whether attached to the DOF or not. In addition, the CPRO, upon approval of the DOF Secretary, may
hire or engage technical consultants to provide necessary support in the performance of its mandate.
Respondents were supposed to augment and reinforce the existing organic personnel of CPRO. Yet, at the time
of respondents' detail, CPRO had not been formally organized. CPRO had no organic personnel that had been
approved by the DBM upon recommendation of the DOF Secretary. The DOF Secretary had yet to promulgate
rules and regulations and to prescribe procedures and processes to enable CPRO to effectively exercise its
powers and duties, as required by Section 4 of EO 140.

In addition, under Section 8, Rule VII of the Omnibus Rules, a detail is temporary in nature. In fact, detail of
employees is only allowed for a maximum, period for those occupying professional, technical, and scientific
positions.[15] Section 8, Rule VII of the Omnibus Rules provides:
SEC. 8. A detail is the movement of an employee from one department or agency to another which is temporary
in nature, which does not involve a reduction in rank, status or salary and does not require the issuance of
another appointment.

The employee detailed receives his salary only from his mother unit/agency.

Detail shall be allowed only for a maximum period in the case of employees occupying professional, technical and
scientific position. If the employee believes that there is no justification for the detail, he may appeal his case to
the Commission. Pending appeal, the decision to detail the employee shall be executory unless otherwise
ordered by the Commission.
Section 2 of CSC Resolution No. 021181, dated 13 September 2002,[16] clarified the maximum period of detail of
employees. It states:
Section 2. Duration of the detail. The detail shall be allowed only for a maximum period of one year. Details
beyond one year may be allowed provided it is with the consent of the detailed employee. The extension or
renewal of the period of the detail shall be within the authority of the mother agency.

If the employee believes that there is no justification for the detail, he/she may appeal his/her case to the proper
Civil Service Commission Regional Office. Pending appeal, the detail shall be executory unless otherwise ordered
by said regional office. Decision of said regional office may be further appealed to the Commission en banc.
In this case, CPO 189-2013 did not provide for the period of respondents' detail. It only provided that the order
"shall be effective immediately and valid until sooner revoked," making the detail of respondents indefinite. There
was nothing to show that respondents were occupying professional, technical, and scientific positions that would
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have allowed their detail for the maximum period provided under Section 8, Rule VII of the Omnibus Rules.
Further, CSC Resolution No. 021181 did not distinguish between an ordinary employee and an employee
occupying professional, technical, and scientific position. Hence, it should have been specified that the maximum
period of respondents' detail should not exceed one year.

Petitioners assert, and we quote:


There is a cancer of corruption we must extinguish. The drive to rid the government of graft and corruption
deserves the support of everyone.

The principle of good governance cannot, should not, be trivialized nor oversimplified by tenuous whimpering and
individualism intended to detract from the urgent need to cleanse the Republic from a mainstream culture of
unabated corruption, perpetuated with impunity and sense of self-entitlement. The issue at hand is not about who,
but what; it is not about individual loss, but about national gain. Whether from the birth pains of reform, this nation
can gain a foothold, nay, a stride into restoring this nation into its prideful place from the clutches of a "kleptocratic
mafia" that had gained a strangehold into one of the nation's primary sources of revenue.[17]
Indeed, we commend and support the reforms being undertaken in the different agencies of the government.
However, we cannot allow department heads to take shortcuts that will undermine and disregard the basic
procedures of the law.

WHEREFORE, we PARTIALLY GRANT the petition. We sustain the validity of Executive Order No. 140. We rule
that the Regional Trial Court has jurisdiction over the action for declaratory relief filed by respondents. We further
rule that Customs Personnel Order No. B-189-2013 was not validly issued.

SO ORDERED.

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13. Butiong vs Plazo

G.R. No. 187524, August 05, 2015

SPOUSES MARIA BUTIONG AND FRANCISCO VILLAFRIA, SUBSTITUTED BY DR. RUEL B. VILLAFRIA,
PETITIONERS, VS. MA. GRACIA RIÑOZA PLAZO AND MA. FE RIÑOZA ALARAS, RESPONDENTS.

DECISION

PERALTA, J.:

Before the-Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and
set aside the Decision[1] and Resolution,[2] dated March 13, 2009 and April 23, 2009, respectively, of the Court
Appeals (CA) in CA-G.R. SP No. 107347, which affirmed the Judgment[3] dated October 1, 2001 of the Regional
Trial Court (RTC) of Nasugbu, Batangas, Branch 14, in Civil Case No. 217.

The antecedent facts are as follows:

On November 16, 1989, Pedro L. Riñoza died intestate, leaving several heirs, including his children with his first
wife, respondents Ma. Gracia R. Plazo and Ma. Fe Alaras, as well as several properties including a resort
covered by Transfer Certificates of Title (TCT) No. 51354 and No. 51355, each with an area of 351 square
meters, and a family home, the land on which it stands is covered by TCT Nos. 40807 and 40808, both located in
Nasugbu, Batangas.[4]

In their Amended Complaint for Judicial Partition with Annulment of Title and Recovery of Possession[5] dated
September 15, 1993, respondents alleged that sometime in March 1991, they discovered that their co-heirs,
Pedro's second wife, Benita Tenorio and other children, had sold the subject properties to petitioners, spouses
Francisco Villafria and Maria Butiong, who are now deceased and substituted by their son, Dr. Ruel B. Villafria,
without their knowledge and consent. When confronted about the sale, Benita acknowledged the same, showing
respondents a document she believed evidenced receipt of her share in the sale, which, however, did not refer to
any sort of sale but to a previous loan obtained by Pedro and Benita from a bank.[6] The document actually
evidenced receipt from Banco Silangan of the amount of P87,352.62 releasing her and her late husband's
indebtedness therefrom.[7] Upon inquiry, the Register of Deeds of Nasugbu informed respondents that he has no
record of any transaction involving the subject properties, giving them certified true copies of the titles to the
same. When respondents went to the subject properties, they discovered that 4 out of the 8 cottages in the resort
had been demolished. They were not, however, able to enter as the premises were padlocked.

Subsequently, respondents learned that on July 18, 1991, a notice of an extra-judicial settlement of estate of their
late father was published in a tabloid called Balita. Because of this, they caused the annotation of their adverse
claims over the subject properties before the Register of Deeds of Nasugbu and filed their complaint praying,
among others, for the annulment of all documents conveying the subject properties to the petitioners and
certificates of title issued pursuant thereto.[8]

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In their Answer,[9] petitioners denied the allegations of the complaint on the ground of lack of personal knowledge
and good faith in acquiring the subject properties. In the course of his testimony during trial, petitioner Francisco
further contended that what they purchased was only the resort.[10] He also presented an Extra-Judicial
Settlement with Renunciation, Repudiations and Waiver of Rights and Sale which provides, among others, that
respondents' co-heirs sold the family home to the spouses Rolando and Ma. Cecilia Bondoc for P1 million as well
as a Deed of Sale whereby Benita sold the resort to petitioners for P650,000.00.[11]

On October 1, 2001, the trial court nullified the transfer of the subject properties to petitioners and spouses
Bondoc due to irregularities in the documents of conveyance offered by petitioners.as well as the circumstances
surrounding the execution of the same. Specifically, the Extra-Judicial Settlement was notarized by a notary
public who was not duly commissioned as such on the date it was executed.[12] The Deed of Sale was undated,
the date of the acknowledgment therein was left blank, and the typewritten name "Pedro Riñoza, Husband" on the
left side of the document was not signed.[13] The trial court also observed that both documents were never
presented to the Office of the Register of Deeds for registration and that the titles to the subject properties were
still in the names of Pedro and his second wife Benita. In addition, the supposed notaries and buyers of the
subject properties were not even presented as witnesses who supposedly witnessed the signing and execution of
the documents of conveyance.[14] On the basis thereof, the trial court ruled in favor of respondents, in its
Judgment, the pertinent portions of its fallo provide:

WHEREFORE, foregoing premises considered, judgment is hereby rendered as follows:

xxxx

4. a) Declaring as a nullity the Extra-Judicial Settlement with Renunciation, Repudiation and Waiver of Rights and
Sale" (Exh. "1", Villafria) notarized on December 23, 1991 by Notary Public Antonio G. Malonzo of Manila, Doc.
No. 190, Page No. 20, Book No. IXII, Series of 1991.

b) Declaring as a nullity the Deed of Absolute Sale (Exh. "2", Villafria), purportedly executed by Benita T. Riñoza
in favor of spouses Francisco Villafria and Maria Butiong, purportedly notarized by one Alfredo de Guzman,
marked Doc. No. 1136, Page No. 141, Book No. XXX, Series of 1991.

c) Ordering the forfeiture of any and all improvements introduced by defendants Francisco Villafria dnd Maria
Butiong in the properties covered by TCT No. 40807, 40808, 51354 and 51355 of the Register of Deeds for
Nasugbu, Batangas.

5. Ordering defendant Francisco Villafria and all persons, whose occupancy within the premises of the four (4)
parcels of land described in par. 4-c above is derived from the rights and interest of defendant Villafria, to vacate
its premises and to deliver possession thereof, and all improvements existing thereon to plaintiffs, for and in
behalf of the estate of decedent Pedro L. Riñoza.

6. Declaring the plaintiffs and the defendants-heirs in the Amended Complaint to be the legitimate heirs of
decedent Pedro L. RifSoza, each in the capacity and degree established, as well as their direct successors-in-
interest, and ordering the defendant Registrar of Deeds to issue the corresponding titles in their names in the
proportion established by law, pro indiviso, in TCT Nos. 40807, 40808, 51354, 51355 and 40353 (after
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restoration) within ten (10) days from finality of this Decision, upon payment of lawful fees, except TCT No. 40353,
which shall be exempt from all expenses for its restoration.

With no costs.

SO ORDERED.[15]

On appeal, the CA affirmed the trial court's Judgment in its Decision[16] dated October 31, 2006 in the following
wise:

The person before whom the resort deed was acknowledged, Alfredo de Guzman, was not commissioned as a
notary public from 1989 to July 3, 1991, the date the certification was issued. Such being the case, the resort
deed is not a public document and the presumption of- regularity accorded to public documents will not apply to
the same. As laid down in Tigno, el al. v. Aquino, et al.:

The validity of a notarial certification necessarily derives from the authority of the notarial officer. If the notary
public does net have the capacity to notarize a document, but does so anyway, then the document should be
treated as unnotarized. The rule may strike as rather harsh, and perhaps may prove to be prejudicial to parties in
good faith relying on the proferred authority of the notary public or the person pretending to be one. Still, to admit
otherwise would render merely officious the elaborate process devised by this Court in order that a lawyer may
receive a notarial commission. Without such a rule, the notarization of a document by a duly-appointed notary
public will have the same legal effect as one accomplished by a non-lawyer engaged in pretense.

The notarization of a document carries considerable legal effect. Notarization of a private document converts such
document into a public one, and renders it admissible in court without further proof of its authenticity. Thus,
notarization is not an empty routine; to the contrary, it engages public interest in a substantial degree and the
protection of that interest requires preventing those who are not qualified or authorized to act as notaries public
from imposing upon the public and the courts and administrative offices generally.
Parenthetically, the settlement/family home deed cannot be considered a public document. This is because the
following cast doubt on the document's authenticity, to wit:

1.) The date of its execution was not indicated;


2.) The amount of consideration was superimposed;
3.) It was not presented to the Registry of Deeds of Nasugbu, Batangas for annotation; and
4.) Not even the supposed notary public," Alfredo de Guzman, or the purported buyer, the Spouses Rolando and
Ma. Cecilia Bondoc, were presented as witnesses.

Concededly, the absence of notarization in the resort deed and/or the lacking details in the settlement/family
home deed did not necessarily invalidate the transactions evidenced by the said documents. However, since the
said deeds are private documents, perforce, their due execution and authenticity becomes subject to the
requirement of proof under the Rules on Evidence, Section 20, Rule 132 of which provides:
Sec. 20. Proof of private document. - Before any private document offered as authentic is received in evidence, its
due execution aijd .authenticity must be proved either:

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(a) By anyone who saw the document executed or written; or
(b) By evidence of the genuineness of the signature or handwriting of the maker.
The Complaining Heirs insist that the settlement/family home and the resort deed are void as their signatures
thereon are forgeries as opposed to the Villafrias who profess the deeds' enforceability. After the Complaining
Heirs presented proofs in support of their claim that their signatures were forged, the burden then fell upon the
Villafrias to disprove the same, or conversely, to prove the authenticity and due execution of the said deeds. The
Villafrias failed in this regard.

As aforestated, the Villafrias did not present as witnesses (a) the notary public who purportedly notarized the
questioned instrument, (b) the witnesses who appeared] in the instruments as eyewitnesses to the signing, or (c)
an expert to prove the authenticity and genuineness of all the signatures appearing o,n the said instruments.
Verily, the rule that, proper foundation must be laid for the admission of documentary evidence; that is, the identity
and authenticity of the document must be reasonably established as a pre-requisite to its admission, was
prudently observed by the lower court when it refused to admit the settlement/family home and the resort deeds
as their veracity are doubtful.[17]

Aggrieved, petitioners, substituted by their son Ruel Villafria, filed a Motion for Reconsideration dated November
24, 2006 raising the trial court's lack of jurisdiction. It was alleged that when the Complaint for Judicial Partition
with Annulment of Title and Recovery of Possession was filed, there was yet no settlement of Pedro's estate,
determination as to the nature thereof, nor was there an identification of the number of legitimate heirs. As such,
the trial court ruled on the settlement of the intestate estate of Pedro in its ordinary jurisdiction when the action
filed was for Judicial Partition. Considering that the instant action is really one for settlement of intestate estate,
the trial court, sitting merely in its probate jurisdiction, exceeded its jurisdiction when it ruled upon the issues of
forgery and ownership. Thus, petitioner argued that said ruling is void and has no effect for having been rendered
without jurisdiction. The Motion for Reconsideration was, however, denied by the appellate court on February 26,
2007.

On appeal, this Court denied on June 20, 2007, petitioner's Petition for Review on Certiorari for submitting a
verification of the petition, a certificate of non-forum shopping and an affidavit of service that failed to comply with
the 2004 Rules on Notarial Practice regarding competent evidence of affiant's identities.[18] In its Resolution[19]
dated September 26, 2007, this Court also denied petitioner's Motion for Reconsideration in the absence of any
compelling reason to warrant a modification of the previous denial. Thus, the June 20, 2007 Resolution became
final and executory on October 31, 2007 as certified by the Entry of Judgment issued by the Court.[20]

On January 16, 2008, the Court further denied petitioner's motion for leave to admit a second motion for
reconsideration of its September 26, 2007 Resolution, considering that the same is a prohibited pleading under
Section 2, Rule 52, in relation to Section 4, Rule 56 of the 1997 Rules of Civil Procedure, as amended.
Furthermore, petitioner's letter dated December 18, 2007 pleading the Court to take a second, look at his petition
for review on certiorari and that a decision thereon be rendered based purely on its merits was noted without
action.[21]

Unsatisfied, petitioner wrote a letter dated March 24, 2008 addressed to then Chief Justice Reynato S. Puno
praying that a decision on the case be rendered based on the .merits and not on formal requirements "as he
stands to lose everything his parents had left him just because the verification against non-forum shopping is
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formally defective." However, in view of the Entry of Judgment having been made on October 31, 2007, the Court
likewise noted said letter without action.[22]

On November 27, 2008, the RTC issued an Order, issuing a Partial Writ of Execution of its October 1, 2001
Decision with respect to the portions disposing of petitioner's claims as affirmed by the CA.

The foregoing notwithstanding, petitioner filed, on February 11, 2009, a Petition for Annulment of Judgment and
Order before the CA assailing the October 1, 2001 Decision as well as the November 27, 2008 Order of the RTC
on the grounds of extrinsic fraud and lack of jurisdiction. In its Decision dated March 13, 2009, however, the CA
dismissed the petition and affirmed the rulings of the trial court in the following wise:

Although the assailed Decision of the Court a quo has already become final and executory and in fact entry of
judgment was issued on 31 October 2007, supra, nevertheless, to put the issues to rest, We deem it apropos to
tackle the same.

The Petitioner argues that the assailed Decision and Order of the Court a quo, supra, should be annulled and set
aside on the grounds of extrinsic fraud and lack of jurisdiction.

We are not persuaded,

xxxx

Section 2 of the Rules as stated above provides that the annulment of a judgment may "be based only on grounds
of extrinsic fraud and lack of jurisdiction." In RP v. The Heirs of Sancho Magdato, the High Tribunal stressed that:
There is extrinsic fraud when "the unsuccessful party had been prevented from exhibiting fully his case, by fraud
or deception practiced on him by his opponent, as by keeping him away from court, ... or where the defendant
never had knowledge of the suit, being kept in ignorance by the acts of the plaintiff; ..."
Otherwise put, extrinsic or collateral fraud pertains to such fraud which prevents the aggrieved party from having
a trial or presenting his case to the court, or is used to procure the judgment without fair submission of the
controversy. This refers to acts intended to keep the unsuccessful party away from the courts as when there is a
false promise of compromise or when one is kept in ignorance of the suit.

The pivotal issues before Us are: (1) whether there was a time during the proceedings below that the Petitioners
ever prevented from exhibiting fully their case, by fraud or deception, practiced on them by Respondents, and (2)
whether the Petitioners were kept away from the court or kept in ignorance by the acts of the Respondent?

We find nothing of that sort. Instead, what We deduced as We carefully delved into the evidentiary facts
surrounding the instant case as well as the proceedings below as shown in the 36-page Decision of the Court a
quo, is that the Petitioners were given ample time to rebut the allegations of the Respondents and had in fact
addressed every detail of Respondent's cause of action against them. Thus, Petitioners' allegation of the Court a
quo's lack of jurisdiction is misplaced.

Our pronouncement on the matter finds support in the explicit ruling of the Supreme Court in Sps. Santos, et al. v.
Sps. Lumbao, thus:
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It is elementary that the active participation of a party in a case pending against him before a court is tantamount
to recognition of that court's jurisdiction and willingness to abide by the resolution of the case which will bar said
party from later on impugning the court's jurisdiction.
In fine, under the circumstances obtaining in this case the Petitioners are stopped from assailing the Court a quo's
lack of jurisdiction.

Too, We do not find merit in the Petitioners' second issue, supra.

As mentioned earlier, entry of judgment had already been made on the assailed Decision and Order as early as
31 October 2007.

xxxx

It maybe that the doctrine of finality of judgments permits certain equitable remedies such as a petition for
annulment. But the rules are clear. The annulment by the Court of Appeals of judgments or final orders and
resolutions in civil actions of the Regional Trial Courts is resorted to only where the ordinary remedies of new trial,
appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner,
supra.

If Petitioners lost their chance to avail themselves of the appropriate remedies or appeal before the Supreme
Court, that is their own look out. The High Tribunal has emphatically pointed out in Mercado, et al. v. Security
Bank Corporation, thus:
A principle almost repeated to satiety is that "an action for annulment of judgment cannot and is not a substitute
for the lost remedy of-appeal." A party must have first availed of appeal, a motion for new trial or a petition for
relief before an action for annulment can prosper. Its obvious rationale is to prevent the party from benefiting from
his inaction or negligence. Also, the action for annulment of judgment must be based either on (a) extrinsic fraud
or (b) lack of jurisdiction or denial of due process. Having failed to avail of the remedies and there being a clear
showing that neither of the grounds was present, the petition must be dismissed. Only a disgruntled litigant would
find such legal disposition unacceptable.[23]
When the appellate court denied Petitioner's Motion for Reconsideration in its Resolution dated April 23, 2009,
petitioner filed the instant Petition for Review on Certiorari on June 10, 2009, invoking the following ground:

I.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE REGIONAL
TRIAL COURT, BRANCH 14, NASUGBU, BATANGAS, ACTED WITHOUT JURISDICTION IN ENTERTAINING
THE SPECIAL PROCEEDING FOR THE SETTLEMENT OF ESTATE OF PEDRO RIÑOZA AND THE CIVIL
ACTION FOR ANNULMENT OF TITLE OF THE HEIRS AND THIRD PERSONS IN ONE PROCEEDING.[24]

Petitioner asserts that while the complaint filed by respondents was captioned as "Judicial Partition with
Annulment of Title and Recovery of Possession," the allegations therein show that the cause of action is actually
one for settlement of estate of decedent Pedro. Considering that settlement of estate is a special proceeding
cognizable by a probate court of limited jurisdiction while judicial partition with annulment of title and recovery of
possession are ordinary civil actions cognizable by a court of general jurisdiction, the trial court exceeded its
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jurisdiction in entertaining the latter while it was sitting merely in its probate jurisdiction. This is in view of the
prohibition found in the Rules on the joinder of special civil actions and ordinary civil actions.[25] Thus, petitioner
argued that the ruling of the trial court is void and has no effect for having been rendered in without jurisdiction.

Petitioner also reiterates the arguments raised before the appellate court that since the finding of forgery relates
only to the signature of respondents and not to their co-heirs who assented to the conveyance, the transaction
should be considered valid as to them. Petitioner also denies the findings of the courts below that his parents are
builders in bad faith for they only took possession of the subject properties after the execution of the transfer
documents and after they paid the consideration on the sale.

The petition is bereft of merit.

Petitioner maintains that since respondents' complaint alleged the following causes of action, the same is actually
one for settlement of estate and not of judicial partition:

FIRST CAUSE OF ACTION

1. That Pedro L. Riñoza, Filipino and resident of Nasugbu, Batangas at the time of his death, died intestate on
November 16, 1989. Copy of his death certificate is hereto attached as Annex "A";

2. That Plaintiffs together with the Defendants enumerated from paragraph 2-A to 2-J are the only known heirs of
the above-mentioned decedent. The plaintiffs and the Defendants Rolando, Rafael, Antonio, Angelito, Lorna all
surnamed Riñoza, and Myrna R. Limon or Myrna R. Rogador, Epifanio Belo and Ma. Theresa R. Demafelix are
the decedent's legitimate children with his first wife, while Benita Tenorio Rifioza, is the decedent's widow and
Bernadette Riñoza, the decedent's daughter with said widow. As such, said parties are co-owners by virtue of an
intestate inheritance from the decedent, of the properties enumerated in the succeeding paragraph;

3. That the decedent left the following real properties all located in Nasugbu, Batangas:

xxxx

16. That the estate of decedent Pedro L. Riñoza has no known legal indebtedness;

17. That said estate remains undivided up to this date and it will be to the best interest of all heirs that same be
partitioned judicially.[26]

Petitioner is mistaken. It is true that some of respondents' causes of action pertaining to the properties left behind
by the decedent Pedro, his known heirs, and the nature and extent of their interests thereon, may fall under an
action for settlement of estate. However, a complete reading of the complaint would readily show that, based on
the nature of the suit, the allegations therein, and the reliefs prayed for, the action is clearly one for judicial
partition with annulment of title and recovery of possession.

Section 1, Rule 74 of the Rules of Court provides:

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RULE 74
Summary Settlement of Estate

Section 1. Extrajudicial settlement by agreement between heirs. — If the decedent left no will and no debts and
the heirs are all of age, or the minors are represented by their judicial or legal representatives duly authorized for
the purpose, the parties may without securing letters of administration, divide the estate among themselves as
they see fit by means of a public instrument filed in the office of the register of deeds, and should they disagree,
they may do so in an ordinary action of partition. If there is only one heir, he may adjudicate to himself the entire
estate by means of an affidavit filled in the office of the register of deeds. The parties to an extrajudicial
settlement, whether by public instrument or by stipulation in a pending action for partition, or the sole heir who
adjudicates the entire estate to himself by means of an affidavit shall file, simultaneously with and as a condition
precedent to the filing of the public instrument, or stipulation in the action for partition, or of the affidavit in the
office of the register of deeds, a bond with the said register of deeds, in an amount equivalent to the value of the
personal property involved as certified to under oath by the parties concerned and conditioned upon the payment
of any just claim that may be filed under section 4 of this rule. It shall be presumed that the decedent left no debts
if no creditor files a petition for letters of administration within two (2) years after the death of the decedent.

The fact of the extrajudicial settlement or administration shall be published in a newspaper of general circulation
in the manner provided in the next succeeding section; but no extrajudicial settlement shall be binding upon any
person who has not participated therein or had no notice thereof.[27]

In this relation, Section 1, Rule 69 of the Rules of Court provides:

Section 1. Complaint in action for partition of real estate. — A person having the right to compel the partition of
real estate may do so as provided in this Rule, setting forth in his complaint the nature and extent of his title and
an adequate description of the real estate of which partition is demanded and joining as defendants all other
persons interested in the property.[28]

As can be gleaned from the foregoing provisions, the allegations of respondents in their complaint are but
customary, in fact, mandatory, to a complaint for partition of real estate. Particularly, the complaint alleged: (1)
that Pedro died intestate; (2) that respondents, together with their co-heirs, are all of legal age, with the exception
of one who is represented by a judicial representative duly authorized for the purpose; (3) that the heirs
enumerated are the only known heirs of Pedro; (4) that there is an account and description of all real properties
left by Pedro; (5) that Pedro's estate has no known indebtedness; and (6) that respondents, as rightful heirs to the
decedent's estate, pray for the partition of the same in accordance with the laws of intestacy. It is clear, therefore,
that based on the allegations of the complaint, the case is one for judicial partition. That the complaint alleged
causes of action identifying the heirs of the decedent, properties of the estate, and their rights thereto, does not
perforce make it an action for settlement of estate.

It must be recalled that the general rule is that when a person dies intestate, or, if testate, failed to name an
executor in his will or the executor so named is incompetent, or refuses the trust, or. fails to furnish the bond
required by the Rules of Court, then the decedent's estate shall be judicially administered and the competent
court shall appoint a qualified administrator in the order established in Section 6 of Rule 78 of the Rules of
Court.[29] An exception to this rule, however, is found in the aforequoted Section 1 of Rule 74 wherein the heirs of
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a decedent, who left no will and no debts due from his estate, may divide the estate either extrajudicially or in an
ordinary action for partition without submitting the same for judicial administration nor applying for the
appointment of an administrator by the court.[30] The reason is that where the deceased dies without pending
obligations, there is no necessity for the appointment of an administrator to administer the estate for them and to
deprive the real owners of their possession to which they are immediately entitled.[31]

In this case, it was expressly alleged in the complaint, and was not disputed, that Pedro died without a will,
leaving his estate without any pending obligations. Thus, contrary to petitioner'.s contention, respondents were
under no legal obligation to submit me subject properties of the estate to a special proceeding for settlement of
intestate estate, and are, in fact, encouraged to have the same partitioned, judicially or extrajudicially, by Pereira
v. Court of Appeals:[32]

Section 1, Rule 74 of the Revised Rules of Court, however, does not preclude the heirs from instituting
administration proceedings, even if the estate has no" debts or obligations, if they do not desire to resort for good
reasons to an ordinary action for partition. While Section 1 allows the heirs to divide the estate among themselves
as they may see fit, or to resort to an ordinary action for partition, the said provision does not compel them to do
so if they have good reasons to take a different course of action. It should be noted that recourse to an
administration proceeding even if the estate has no debts is sanctioned only if the heirs have good reasons for not
resorting to an action for partition. Where' partition is possible, either in or out of court, the estate should not be
burdened with an administration proceeding without good and compelling reasons.

Thus, it has been repeatedly held that when a person dies without leaving pending obligations to be paid, his
heirs, whether of age or not, are not bound to submit the property to a judicial administration, which is always long
and costly, or to apply for the appointment of an administrator by the Court. It has been uniformly held that in such
case the judicial administration and the appointment of an administrator are superfluous and unnecessary
proceedings.[33]

Thus, respondents committed no error in filing an action for judicial partition instead of a special proceeding for
the settlement of estate as the same is expressly permitted by law. That the complaint contained allegations
inherent in an action for settlement of estate does not mean that there was a prohibited joinder of causes of action
for questions as to the estate's properties as well as a determination of the heirs, their status as such, and the
nature and extent of their titles to the estate, may also be properly ventilated in partition proceedings alone.[34] In
fact, a complete inventory of the estate may likewise be done during the partition proceedings, especially since
the estate has no debts.[35] Indeed, where the more expeditious remedy of partition is available to the heirs, then
they may not be compelled to submit to administration proceedings, dispensing of the risks of delay and of the
properties being dissipated.[36]

Moreover, the fact that respondents' complaint al$o prayed for the annulment of title and recovery of possession
does not strip the trial court off of its jurisdiction to hear and decide the case. Asking for the annulment of certain
transfers of property could very well be achieved in an action for partition,[37] as can be seen in cases where
courts determine the parties' rights arising from complaints asking not only for the partition of estates but also for
the annulment of titles and recovery of ownership and possession of property.[38] In fact, in Bagayas v.
Bagayas,[39] wherein a complaint for annulment of sale and partition was dismissed by the trial court due to the

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impropriety of an action for annulment as it constituted a collateral attack on the certificates of title of the
respondents therein, this Court found the dismissal to be improper in the following manner:

In Lacbayan v. Samoy, Jr. (Lacbayan) which is an action for partition premised on the existence or non-existence
of co-ownership between the parties, the Court categorically pronounced that a resolution on the issue of
ownership does not subject the Torrens title issued over the disputed realties to a collateral attack. It must be
borne in mind that what cannot be collaterally attacked is the certificate of title and not the title itself. As
pronounced in Lacbayan:

There is no dispute that a Torrens certificate of title cannot be collaterally attacked, but that rule is not material to
the case at bar. What cannot be collaterally attacked is the certificate of title and not the title itself. The certificate
referred to is that document issued by the Register of Deeds known as the TCT. In contrast, the title referred to by
law means ownership which is, more often than not, represented by that document. Petitioner apparently
confuses title with the certificate of title. Title as a concept of ownership should not be confused with the certificate
of title as evidence of such ownership although both are interchangeably used. (Emphases supplied)

Thus, the RTC erroneously dismissed petitioner's petition for annulment of sale on the ground that it constituted a
collateral attack since she was actually assailing Rogelio and Orlando's title to the subject lands and not any
Torrens certificate of title over the same.

Indeed, an action for partition does not preclude the settlement of the issue of ownership. In fact, the
determination as to the existence of the same is necessary in the resolution of an action for partition, as held in
Municipality of Biñan v. Garcia:[40]

The first phase of a partition and/or accounting suit is taken up with the determination of whether or not a co-
ownership in fact exists, and a partition is proper (i.e., not otherwise legally proscribed) and may be made by
voluntary agreement of all the parties interested in the property. This phase may end with a declaration that
plaintiff is not entitled to have a partition either because a co-ownership does not exist, or partition is legally
prohibited. It may end, on ¦ the other hand, with an adjudgment that a co-ownership does in truth exist, partition is
proper in the premises and an accounting of rents and profits received by the defendant from the real estate in
question is in order, x x x

The second phase commences when it appears that "the parties are unable to agree upon the partition" directed
by the court. In that event[,] partition shall be done for the parties by the [c]ourt with the assistance of not more
than three (3) commissioners. This second stage may well also deal with the rendition of the accounting itself and
its approval by the [cjourt after the- parties have been accorded opportunity to be heard thereon, and an award for
the recovery by the party or parties thereto entitled of their just share in the rents and profits of the real estate in
question, x x x.[41]

An action for partition, therefore, is premised on the existence or non-existence of co-ownership between the
parties.[42] Unless and until the issue of co-ownership is definitively resolved, it would be premature to effect a
partition of an estate.[43]

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In view of the foregoing, petitioner's argument that the trial court acted without jurisdiction in entertaining -the
action of settlement of estate and annulment of title in a single proceeding is clearly erroneous for the instant
complaint is precisely one for judicial partition with annulment of title and recovery of possession, filed within the
confines of applicable law and jurisprudence. Under Section 1[44] of Republic Act No. 7691 (RA 7691),[45]
amending Batas Pambansa Big. 129, the RTC shall exercise exclusive original jurisdiction over all civil actions in
which the subject of the litigation is incapable of pecuniary estimation. Since the action herein was not merely for
partition and recovery of ownership but also for annulment of title and documents, the action is incapable of
pecuniary estimation and thus cognizable by the RTC. Hence, considering that the trial court clearly had
jurisdiction in rendering its decision, the instant petition for annulment Sf judgment must necessarily fail.

Note that even if the instant action was one for annulment of title alone, without the prayer for judicial partition, the
requirement of instituting a separate special proceeding for the determination of the status and rights of the
respondents as putative heirs may be dispensed with, in light of the fact that the parties had voluntarily submitted
the issue to the trial court and had already presented evidence regarding the issue of heirship.[46] In Portugal v.
Portugal-Beltran,[47] the Court explained:

In the case at bar, respondent, believing rightly or wrongly that she was the sole heir to Portugal's estate,
executed on February 15, 1988 the questioned Affidavit of Adjudication under the second sentence of Rule 74,
Section 1 of the Revised Rules of Court. Said rule is an exception to the general rule that when a person dies
leaving a property, it should be judicially administered and the competent court should appoint a qualified
administrator, in the order established in Sec. 6, Rule 78 in case the deceased left no will, or in case he did, he
failed to name an executor therein.

xxxx

It appearing, however, that in the present case the only property of the intestate estate of Portugal is the
Caloocan parcel of land, to still subject it, under the circumstances of the case, to a special proceeding which
could be long, hence, not expeditious, just to establish the status of petitioners as heirs is not only impractical; it is
burdensome to the estate with the costs and expenses of an administration proceeding. And it is superfluous in
light of the fact that the parties to the civil case - subject of the present case, could and had already in fact
presented evidence before the trial court which assumed jurisdiction over the case upon the issues it defined
during pre-trial.

In fine, under the circumstances of the present case, there being no compelling reason to still subject Portugal's
estate to administration proceedings since a determination of petitioners' status as heirs could be achieved in the
civil case filed by petitioners, the trial court should proceed to evaluate the evidence presented by the parties
during the trial and render a decision thereon upon the issues it defined during pre-trial, x x x.[48]

Thus, in view of the clarity of respondents' complaint and the causes of action alleged therein, as well as the fact
that the trial court, in arriving at its decision, gave petitioner more than ample opportunity to advance his claims,
petitioner cannot now be permitted to allege lack of jurisdiction just because the judgment rendered was adverse
to them. To repeat, the action filed herein is one for judicial partition and not for settlement of intestate estate.
Consequently, that respondents also prayed for the annulment of title and recovery of possession in the same

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proceeding does not strip the court off of its jurisdiction for asking for the annulment of certain transfers of
property could very well be achieved in an action for partition.

As for petitioner's contention that the sale must be considered valid as to the heirs who assented to the
conveyance as well as their allegation of good faith, this Court does not find any Compelling reason to deviate
from the ruling of the appellate court. As sufficiently found by both courts below, the authenticity and due
execution of the documents on which petitioner's claims are based were inadequately proven. They were
undated, forged, and acknowledged before a notary public who was not commissioned as such on the date they
were executed. They were never presented to the Register of Deeds for registration. Neither were the supposed
notaries and buyers of the subject properties presented as witnesses.

While it may be argued that Benita, one of the co-heirs to the estate, actually acknowledged the sale of the resort,
the circumstances surrounding the same militate against the fact of its occurrence. Not only was the Deed of Sale
supposedly executed by Benita undated and unsigned by Pedro, but the document she presented purportedly
evidencing her receipt of her share in the sale, did not refer to any sort of sale but to a previous loan obtained by
Pedro and Benita from a bank.

Moreover, credence must be given on the appellate court's observations as to petitioners' actuations insofar as
the transactions alleged herein are concerned. First, they were seemingly uncertain as to the number and/or
identity of the properties bought by them.[49] In their Answer, they gave the impression that" they bought both the
resort and the family home and yet, during trial, Francisco Villafria claimed they only bought the resort. In fact, it
was only then that they presented the subject Extra-Judicial Settlement and Deed of Sale.[50] Second, they never
presented any other document which would evidence their actual payment of consideration to the selling
heirs.[51] Third, in spite of the blatant legal infirmities of the subject documents of conveyance, petitioners still
took possession of the properties, demolished several cottages, and introduced permanent improvements
thereon.

In all, the Court agrees with the appellate court that petitioners failed to adequately substantiate, with convincing,
credible and independently verifiable proof, their claim that they had, in fact, purchased the subject properties.
The circumstances surrounding the purported transfers cast doubt on whether they actually took place. In
substantiating their claim, petitioners relied solely on the Extra-Judicial Settlement and Deed of Sale, who utterly
failed to prove their authenticity and due execution. They cannot, therefore, be permitted to claim absolute
ownership of the subject lands based on the same.

Neither can they be considered as innocent purchasers for value and builders in good faith. Good faith consists in
the belief of the builder that the land the latter is building on is one's own without knowledge of any defect or flaw
in one's title.[52] However, in view of the manifest defects in the instruments conveying their titles, petitioners
should have been placed on guard. Yet, they still demolished several cottages and constructed improvement on
the properties. Thus, their claim of good faith cannot be given credence.

Indeed, a judgment which has acquired finality becomes immutable and unalterable, hence, may no longer be
modified in any respect except to correct clerical errors or mistakes, all the issues between the parties being
deemed resolved and. laid to rest.[53] It is a fundamental principle in our judicial system and essential to an
effective and efficient administration of justice that, once a judgment has become final, the winning party be, not
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through a mere subterfuge, deprived of the fruits of the verdict.[54] Exceptions to the immutability of final
judgment are allowed only under the most extraordinary of circumstances.[55] Yet, when petitioner is given more
than ample opportunity to be heard, unbridled access to the appellate courts, as well as unbiased judgments
rendered after a consideration of evidence presented by the parties, as in the case at hand, the Court shall refrain
from reversing the rulings of the courts below in the absence of any showing that the same were rendered with
fraud or lack of jurisdiction.

WHEREFORE, premises considered, the instant petition is DENIED. The Decision and Resolution, dated March
13, 2009 and April 23, 2009, respectively, of the Court Appeals in CA-G.R. SP No. 107347, which affirmed the
Judgment dated October 1, 2001 of the Regional Trial Court of Nasugbu, Batangas, Branch 14, in Civil Case No.
217, insofar as it concerns the resort covered by Transfer Certificates of Title No. 51354 and No. 51355, and
family home covered by TCT No. 40807 and 40808, are AFFIRMED.

SO ORDERED.

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