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UNITED CLAIMANTS G.R. No. 187107 VELASCO, JR., J.

:
ASSOCIATION OF NEA (UNICAN),
represented by its representative The Case
BIENVENIDO R. LEAL, in his Present:
official capacity as its President and in
his own individual capacity, This is an original action for Injunction to restrain and/or prevent the
EDUARDO R. LACSON, ORENCIO CORONA, C.J.,
F. VENIDA, JR., THELMA V. CARPIO, implementation of Resolution Nos. 46 and 59, dated July 10, 2003 and September
OGENA, BOBBY M. CARANTO, VELASCO, JR., 3, 2003, respectively, otherwise known as the National Electrification
MARILOU B. DE JESUS, EDNA G. LEONARDO-DE CASTRO, Administration (NEA) Termination Pay Plan, issued by respondent NEA Board of
RAA, and ZENAIDA P. OLIQUINO, BRION,
in their own capacities and in behalf PERALTA, Administrators (NEA Board).
of all those similarly situated officials BERSAMIN,
and employees of the National DEL CASTILLO, The Facts
Electrification Administration, ABAD,*
Petitioners, VILLARAMA, JR.,
PEREZ, Petitioners are former employees of NEA who were terminated from their
MENDOZA,** employment with the implementation of the assailed resolutions.
- versus - SERENO,*
REYES, and
PERLAS-BERNABE, JJ. Respondent NEA is a government-owned and/or controlled corporation
NATIONAL ELECTRIFICATION
created in accordance with Presidential Decree No. (PD) 269 issued on August 6,
ADMINISTRATION (NEA), NEA
BOARD OF ADMINISTRATORS 1973. Under PD 269, Section 5(a)(5), the NEA Board is empowered to organize or
(NEA BOARD), ANGELO T. REYES reorganize NEAs staffing structure, as follows:
as Chairman of the NEA Board of
Administrators, EDITHA S. BUENO,
Section 5. National Electrification Administration; Board of
Ex-Officio Member and NEA
Administrators; Administrator.
Administrator, and WILFRED L.
BILLENA, JOSPEPH D.
(a) For the purpose of administering the provisions of this
KHONGHUN, and FR. JOSE
Decree, there is hereby established a public corporation to be
VICTOR E. LOBRIGO, Members, Promulgated:
known as the National Electrification Administration. All of the
NEA Board, January 31, 2012
powers of the corporation shall be vested in and exercised by a
Respondents.
Board of Administrators, which shall be composed of a Chairman
x-----------------------------------------------------------------------------------------x
and four (4) members, one of whom shall be the Administrator as
ex-officio member. The Chairman and the three other members
DECISION
shall be appointed by the President of the Philippines to serve for
a term of six years. x x x
xxxx Section 77. Implementing Rules and Regulations. - The
DOE shall, in consultation with the electric power industry
The Board shall, without limiting the generality of the participants and end-users, promulgate the Implementing Rules
foregoing, have the following specific powers and duties. and Regulations (IRR) of this Act within six (6) months from the
effectivity of this Act, subject to the approval by the Power
1. To implement the provisions and purposes of this Commission.
Decree;

xxxx Thus, the Rules and Regulations to implement RA 9136 were issued on
February 27, 2002. Under Sec. 3(b)(ii), Rule 33 of the Rules and Regulations, all the
5. To establish policies and guidelines for employment on
the basis of merit, technical competence and moral character, and, NEA employees and officers are considered terminated and the 965 plantilla
upon the recommendation of the Administrator to organize or positions of NEA vacant, to wit:
reorganize NEAs staffing structure, to fix the salaries of personnel
and to define their powers and duties. (Emphasis supplied.) Section 3. Separation and Other Benefits.

(a) x x x
Thereafter, in order to enhance and accelerate the electrification of
(b) The following shall govern the application of Section
the whole country, including the privatization of the National Power Corporation, 3(a) of this Rule:
Republic Act No. (RA) 9136, otherwise known as the Electric Power Industry Reform
Act of 2001 (EPIRA Law), was enacted, taking effect on June 26, 2001. The law xxxx

imposed upon NEA additional mandates in relation to the promotion of the role of (ii) With respect to NEA officials and employees,
rural electric cooperatives to achieve national electrification. Correlatively, Sec. 3 they shall be considered legally terminated and shall be
of the law provides: entitled to the benefits or separation pay provided in
Section 3(a) herein when a restructuring of NEA is
implemented pursuant to a law enacted by Congress or
Section 3. Scope. - This Act shall provide a framework for pursuant to Section 5(a)(5) of Presidential Decree No.
the restructuring of the electric power industry, including the 269. (Emphasis supplied.)
privatization of the assets of NPC, the transition to the desired
competitive structure, and the definition of the responsibilities of
the various government agencies and private entities. (Emphasis Meanwhile, on August 28, 2002, former President Gloria Macapagal-
supplied.) Arroyo issued Executive Order No. 119 directing the NEA Board to submit a
reorganization plan. Thus, the NEA Board issued the assailed resolutions.
Sec. 77 of RA 9136 also provides:
On September 17, 2003, the Department of Budget and Management
approved the NEA Termination Pay Plan. This petition must be dismissed.

Thereafter, the NEA implemented an early retirement program The procedural issues raised by respondents shall first be discussed.
denominated as the Early Leavers Program, giving incentives to those who availed
of it and left NEA before the effectivity of the reorganization plan. The other This Court Has Jurisdiction over the Case
employees of NEA were terminated effective December 31, 2003.
Respondents essentially argue that petitioners violated the principle of hierarchy
Hence, We have this petition. of courts, pursuant to which the instant petition should have been filed with the
Regional Trial Court first rather than with this Court directly.
The Issues
We explained the principle of hierarchy of courts in Mendoza v. Villas,[1] stating:
Petitioners raise the following issues:
In Chamber of Real Estate and Builders Associations, Inc.
(CREBA) v. Secretary of Agrarian Reform, a petition for certiorari
1. The NEA Board has no power to terminate all the NEA filed under Rule 65 was dismissed for having been filed directly
employees; with the Court, violating the principle of hierarchy of courts, to wit:
2. Executive Order No. 119 did not grant the NEA Board the power
Primarily, although this Court, the Court of Appeals
to terminate all NEA employees; and and the Regional Trial Courts have concurrent jurisdiction
3. Resolution Nos. 46 and 59 were carried out in bad faith. to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction, such concurrence
does not give the petitioner unrestricted freedom of
On the other hand, respondents argue in their Comment dated August 20, choice of court forum. In Heirs of Bertuldo Hinog v.
2009 that: Melicor, citing People v. Cuaresma, this Court made the
following pronouncements:

1. The Court has no jurisdiction over the petition; This Courts original jurisdiction to issue
2. Injunction is improper in this case given that the assailed writs of certiorari is not exclusive. It is shared by
this Court with Regional Trial Courts and with the
resolutions of the NEA Board have long been implemented; and
Court of Appeals. This concurrence of jurisdiction
3. The assailed NEA Board resolutions were issued in good faith. is not, however, to be taken as according to parties
seeking any of the writs an absolute, unrestrained
freedom of choice of the court to which
The Courts Ruling
application therefor will be directed. There is after November 18, 2002, directing the termination of all employees of the NPC on
all a hierarchy of courts. That hierarchy is
determinative of the venue of appeals, and also January 31, 2003. Despite such apparent disregard of the principle of hierarchy of
serves as a general determinant of the courts, the petition was given due course. We perceive no compelling reason to
appropriate forum for petitions for the treat the instant case differently.
extraordinary writs. A becoming regard for that
judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs
against first level (inferior) courts should be filed
with the Regional Trial Court, and those against
the latter, with the Court of Appeals. A direct
invocation of the Supreme Courts original The Remedy of Injunction Is still Available
jurisdiction to issue these writs should be
allowed only when there are special and
important reasons therefor, clearly and Respondents allege that the remedy of injunction is no longer available to
specifically set out in the petition. This is [an] petitioners inasmuch as the assailed NEA Board resolutions have long been
established policy. It is a policy necessary to
implemented.
prevent inordinate demands upon the Courts time
and attention which are better devoted to those
matters within its exclusive jurisdiction, and to Taking respondents above posture as an argument on the untenability of
prevent further over-crowding of the Courts
the petition on the ground of mootness, petitioners contend that the principle of
docket. (Emphasis supplied.)
mootness is subject to exceptions, such as when the case is of transcendental
importance.
Evidently, the instant petition should have been filed with the RTC. However, as an
exception to this general rule, the principle of hierarchy of courts may be set aside
In Funa v. Executive Secretary,[3] the Court passed upon the seeming moot
for special and important reasons. Such reason exists in the instant case involving
issue of the appointment of Maria Elena H. Bautista (Bautista) as Officer-in-Charge
as it does the employment of the entire plantilla of NEA, more than 700 employees
(OIC) of the Maritime Industry Authority (MARINA) while concurrently serving as
all told, who were effectively dismissed from employment in one swift stroke. This
Undersecretary of the Department of Transportation and Communications. There,
to the mind of the Court entails its attention.
even though Bautista later on was appointed as Administrator of MARINA, the
Court ruled that the case was an exception to the principle of mootness and that
Moreover, the Court has made a similar ruling in National Power Corporation
the remedy of injunction was still available, explaining thus:
Drivers and Mechanics Association (NPC-DAMA) v. National Power Corporation
(NPC).[2] In that case, the NPC-DAMA also filed a petition for injunction directly with
A moot and academic case is one that ceases to present a
this Court assailing NPC Board Resolution Nos. 2002-124 and 2002-125, both dated justiciable controversy by virtue of supervening events, so that a
declaration thereon would be of no practical use or value. Congress or pursuant to Sec. 5(a)(5) of PD 269 through which the reorganization
Generally, courts decline jurisdiction over such case or dismiss it
on ground of mootness. However, as we held in Public Interest was carried out, viz:
Center, Inc. v. Elma, supervening events, whether intended or
accidental, cannot prevent the Court from rendering a decision if
there is a grave violation of the Constitution. Even in cases where Section 5. National Electrification Administration; Board of
supervening events had made the cases moot, this Court did not Administrators; Administrator.
hesitate to resolve the legal or constitutional issues raised to
formulate controlling principles to guide the bench, bar, and (a) For the purpose of administering the provisions of this
public. Decree, there is hereby established a public corporation to be
known as the National Electrification Administration. x x x
As a rule, the writ of prohibition will not lie to enjoin acts
already done. However, as an exception to the rule on mootness, xxxx
courts will decide a question otherwise moot if it is capable of
repetition yet evading review. (Emphasis supplied.) The Board shall, without limiting the generality of the
foregoing, have the following specific powers and duties.

Similarly, in the instant case, while the assailed resolutions of the NEA xxxx
Board may have long been implemented, such acts of the NEA Board may well be
5. To establish policies and guidelines for employment on
repeated by other government agencies in the reorganization of their offices. the basis of merit, technical competence and moral character, and,
Petitioners have not lost their remedy of injunction. upon the recommendation of the Administrator to organize or
reorganize NEAs staffing structure, to fix the salaries of personnel
and to define their powers and duties. (Emphasis supplied.)
The Power to Reorganize Includes the Power to Terminate
Thus, petitioners argue that the power granted unto the NEA Board to
The meat of the controversy in the instant case is the issue of whether the NEA
organize or reorganize does not include the power to terminate employees but
Board had the power to pass Resolution Nos. 46 and 59 terminating all of its
only to reduce NEAs manpower complement.
employees.

Such contention is erroneous.


This must be answered in the affirmative.

In Betoy v. The Board of Directors, National Power Corporation,[4] the Court upheld
Under Rule 33, Section 3(b)(ii) of the Implementing Rules and Regulations of the
the dismissal of all the employees of the NPC pursuant to the EPIRA Law. In ruling
EPIRA Law, all NEA employees shall be considered legally terminated with the
that the power of reorganization includes the power of removal, the Court
implementation of a reorganization program pursuant to a law enacted by
explained:
[R]eorganization involves the reduction of personnel, (a) Where there is a significant increase in the
consolidation of offices, or abolition thereof by reason of economy number of positions in the new staffing pattern of the
or redundancy of functions. It could result in the loss of ones department or agency concerned;
position through removalor abolition of an office. However, for a
reorganization for the purpose of economy or to make the (b) Where an office is abolished and other
bureaucracy more efficient to be valid, it must pass the test of performing substantially the same functions is created;
good faith; otherwise, it is void ab initio. (Emphasis supplied.)
(c) Where incumbents are replaced by those less
qualified in terms of status of appointment, performance
Evidently, the termination of all the employees of NEA was within the NEA and merit;
Boards powers and may not successfully be impugned absent proof of bad faith.
(d) Where there is a reclassification of offices in
the department or agency concerned and the reclassified
Petitioners Failed to Prove that the NEA Board Acted in Bad Faith offices perform substantially the same function as the
original offices;
Next, petitioners challenge the reorganization claiming bad faith on the
(e) Where the removal violates the order of
part of the NEA Board. separation provided in Section 3 hereof. (Emphasis
supplied.)
Congress itself laid down the indicators of bad faith in the reorganization
of government offices in Sec. 2 of RA 6656, an Act to Protect the Security of Tenure It must be noted that the burden of proving bad faith rests on the one alleging it.
of Civil Service Officers and Employees in the Implementation of Government As the Court ruled in Culili v. Eastern Telecommunications, Inc.,[5] According to
Reorganization, to wit: jurisprudence, basic is the principle that good faith is presumed and he who alleges
bad faith has the duty to prove the same. Moreover, in Spouses Palada v. Solidbank
Section 2. No officer or employee in the career service Corporation,[6] the Court stated, Allegations of bad faith and fraud must be proved
shall be removed except for a valid cause and after due notice and
hearing. A valid cause for removal exists when, pursuant to a bona by clear and convincing evidence.
fide reorganization, a position has been abolished or rendered
redundant or there is a need to merge, divide, or consolidate Here, petitioners have failed to discharge such burden of proof.
positions in order to meet the exigencies of the service, or other
lawful causes allowed by the Civil Service Law. The existence of
any or some of the following circumstances may be considered as In alleging bad faith, petitioners cite RA 6656, particularly its Sec. 2, subparagraphs
evidence of bad faith in the removals made as a result of (b) and (c). Petitioners have the burden to show that: (1) the abolished offices were
reorganization, giving rise to a claim for reinstatement or
reappointment by an aggrieved party: replaced by substantially the same units performing the same functions; and (2)
incumbents are replaced by less qualified personnel.
on the manpower requirements of the privatized companies. The
privatization and restructuring of the NPC was, therefore, done
Petitioners failed to prove such facts. Mere allegations without hard evidence in good faith as its primary purpose was for economy and to
cannot be considered as clear and convincing proof. make the bureaucracy more efficient. (Emphasis supplied.)

Next, petitioners state that the NEA Board should not have abolished all the offices Evidently, the fact that the NEA Board resorted to terminating all the incumbent
of NEA and instead made a selective termination of its employees while retaining employees of NPC and, later on, rehiring some of them, cannot, on that ground
the other employees. alone, vitiate the bona fides of the reorganization.

Petitioners argue that for the reorganization to be valid, it is necessary to WHEREFORE, the instant petition is hereby DISMISSED. Resolution Nos. 46
only abolish the offices or terminate the employees that would not be retained and and 59, dated July 10, 2003 and September 3, 2003, respectively, issued by the NEA
the retention of the employees that were tasked to carry out the continuing Board of Directors are hereby UPHELD.
mandate of NEA. Petitioners argue in their Memorandum dated July 27, 2010:
No costs.
A valid reorganization, pursued in good faith, would have resulted
to: (1) the abolition of old positions in the NEAs table of
organization that pertain to the granting of franchises and rate SO ORDERED.
fixing functions as these were all abolished by Congress (2) the
creation of new positions that pertain to the additional mandates
of the EPIRA Law and (3) maintaining the old positions that were
not affected by the EPIRA Law.

The Court already had the occasion to pass upon the validity of the similar
reorganization in the NPC. In the aforecited case of Betoy,[7] the Court upheld the
policy of the Executive to terminate all the employees of the office before rehiring
those necessary for its operation. We ruled in Betoy that such policy is not tainted
with bad faith:

It is undisputed that NPC was in financial distress and the


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

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

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

SO ORDERED.
G.R. No. L-21450 April 15, 1968 Failure to prosecute and (2) Absence of a demand upon the Surety for the
payment of the amount due under the judgment. Upon these grounds the Surety
SERAFIN TIJAM, ET AL., plaintiffs-appellees, prayed the Court not only to deny the motion for execution against its counter-
vs. bond but also the following affirmative relief : "to relieve the herein bonding
MAGDALENO SIBONGHANOY alias GAVINO SIBONGHANOY and LUCIA company of its liability, if any, under the bond in question" (Id. p. 54) The Court
BAGUIO, defendants, denied this motion on the ground solely that no previous demand had been made
MANILA SURETY AND FIDELITY CO., INC. (CEBU BRANCH) bonding company and on the Surety for the satisfaction of the judgment. Thereafter the necessary
defendant-appellant. demand was made, and upon failure of the Surety to satisfy the judgment, the
plaintiffs filed a second motion for execution against the counterbond. On the
F. S. Urot and G. A. Uriate for plaintiffs-appellees. date set for the hearing thereon, the Court, upon motion of the Surety's counsel,
Carlos J. Cuizon for defendants Gavino Sibonghanoy and Lucia Baguio. granted the latter a period of five days within which to answer the motion. Upon
Villaluz Law Office, Velasco Law Office, Pages and Soberano for defendant- its failure to file such answer, the Court granted the motion for execution and the
appellant Manila Surety and Fidelity Company, Inc. corresponding writ was issued.

DIZON, J.: Subsequently, the Surety moved to quash the writ on the ground that the same
was issued without the required summary hearing provided for in Section 17 of
On July 19, 1948 — barely one month after the effectivity of Republic Act No. 296 Rule 59 of the Rules of Court. As the Court denied the motion, the Surety
known as the Judiciary Act of 1948 — the spouses Serafin Tijam and Felicitas appealed to the Court of Appeals from such order of denial and from the one
Tagalog commenced Civil Case No. R-660 in the Court of First Instance of Cebu denying its motion for reconsideration (Id. p. 97). Its record on appeal was then
against the spouses Magdaleno Sibonghanoy and Lucia Baguio to recover from printed as required by the Rules, and in due time it filed its brief raising therein no
them the sum of P1,908.00, with legal interest thereon from the date of the filing other question but the ones covered by the following assignment of errors:
of the complaint until the whole obligation is paid, plus costs. As prayed for in the
complaint, a writ of attachment was issued by the court against defendants' I. That the Honorable Court a quo erred in issuing its order dated
properties, but the same was soon dissolved upon the filing of a counter-bond by November 2, 1957, by holding the incident as submitted for resolution,
defendants and the Manila Surety and Fidelity Co., Inc. hereinafter referred to as without a summary hearing and compliance with the other mandatory
the Surety, on the 31st of the same month. requirements provided for in Section 17, Rule 59 of the Rules of Court.

After being duly served with summons the defendants filed their answer in which, II. That the Honorable Court a quo erred in ordering the issuance of
after making some admissions and denials of the material averments of the execution against the herein bonding company-appellant.
complaint, they interposed a counterclaim. This counterclaim was answered by
the plaintiffs. III. That the Honorable Court a quo erred in denying the motion to quash
the writ of execution filed by the herein bonding company-appellant as
After trial upon the issues thus joined, the Court rendered judgment in favor of well as its subsequent motion for reconsideration, and/or in not quashing
the plaintiffs and, after the same had become final and executory, upon motion or setting aside the writ of execution.
of the latter, the Court issued a writ of execution against the defendants. The writ
having been returned unsatisfied, the plaintiffs moved for the issuance of a writ Not one of the assignment of errors — it is obvious — raises the question of lack
of execution against the Surety's bond (Rec. on Appeal, pp. 46-49), against which of jurisdiction, neither directly nor indirectly.
the Surety filed a written opposition (Id. pp. 49) upon two grounds, namely, (1)
Although the appellees failed to file their brief, the Court of Appeals, on There are three cases decided by the Honorable Supreme Court which
December 11, 1962, decided the case affirming the orders appealed from. may be worthy of consideration in connection with this case, namely:
Tyson Tan, et al. vs. Filipinas Compañia de Seguros, et al., G.R. No. L-
On January 8, 1963 — five days after the Surety received notice of the decision, it 10096, March 23, 1956; Pindangan Agricultural Co., Inc. vs. Jose P. Dans,
filed a motion asking for extension of time within which to file a motion for etc., et al., G.R. No. L-14591, September 26, 1962; and Alfredo
reconsideration. The Court of Appeals granted the motion in its resolution of Montelibano, et al. vs. Bacolod-Murcia Milling Co., Inc., G.R. No. L-15092,
January 10 of the same year. Two days later the Surety filed a pleading entitled September 29, 1962, wherein the Honorable Supreme Court frowned
MOTION TO DISMISS, alleging substantially that appellees action was filed in the upon the 'undesirable practice' of appellants submitting their case for
Court of First Instance of Cebu on July 19, 1948 for the recovery of the sum of decision and then accepting the judgment, if favorable, but attacking it
P1,908.00 only; that a month before that date Republic Act No. 296, otherwise for lack of jurisdiction when adverse.
known as the Judiciary Act of 1948, had already become effective, Section 88 of
which placed within the original exclusive jurisdiction of inferior courts all civil Considering, however, that the Supreme Court has the "exclusive"
actions where the value of the subject-matter or the amount of the demand does appellate jurisdiction over "all cases in which the jurisdiction of any
not exceed P2,000.00, exclusive of interest and costs; that the Court of First inferior court is in issue" (See. 1, Par. 3[3], Judiciary Act of 1948, as
Instance therefore had no jurisdiction to try and decide the case. Upon these amended), we have no choice but to certify, as we hereby do certify, this
premises the Surety's motion prayed the Court of Appeals to set aside its decision case to the Supreme Court.1äwphï1.ñët
and to dismiss the case. By resolution of January 16, 1963 the Court of Appeals
required the appellees to answer the motion to dismiss, but they failed to do so. ACCORDINGLY, pursuant to Section 31 of the Judiciary Act of 1948 as
Whereupon, on May 20 of the same year, the Court resolved to set aside its amended, let the record of this case be forwarded to the Supreme Court.
decision and to certify the case to Us. The pertinent portions of its resolution read
as follows: It is an undisputed fact that the action commenced by appellees in the Court of
First Instance of Cebu against the Sibonghanoy spouses was for the recovery of
It would indeed appear from the record that the action at bar, which is a the sum of P1,908.00 only — an amount within the original exclusive jurisdiction
suit for collection of money in the sum of exactly P1,908.00 exclusive of of inferior courts in accordance with the provisions of the Judiciary Act of 1948
interest, was originally instituted in the Court of First Instance of Cebu on which had taken effect about a month prior to the date when the action was
July 19, 1948. But about a month prior to the filing of the complaint, commenced. True also is the rule that jurisdiction over the subject matter is
more specifically on June 17, 1948, the Judiciary Act of 1948 took effect, conferred upon the courts exclusively by law, and as the lack of it affects the very
depriving the Court of First Instance of original jurisdiction over cases in authority of the court to take cognizance of the case, the objection may be raised
which the demand, exclusive of interest, is not more than P2,000.00. at any stage of the proceedings. However, considering the facts and
(Secs. 44[c] and 86[b], R.A. No. 296.) circumstances of the present case — which shall forthwith be set forth — We are
of the opinion that the Surety is now barred by laches from invoking this plea at
We believe, therefore, that the point raised in appellant's motion is an this late hour for the purpose of annuling everything done heretofore in the case
important one which merits serious consideration. As stated, the with its active participation.
complaint was filed on July 19, 1948. This case therefore has been
pending now for almost 15 years, and throughout the entire proceeding As already stated, the action was commenced in the Court of First Instance of
appellant never raised the question of jurisdiction until after receipt of Cebu on July 19, 1948, that is, almostfifteen years before the Surety filed its
this Court's adverse decision. motion to dismiss on January 12, 1963 raising the question of lack of
jurisdiction for the first time.
It must be remembered that although the action, originally, was exclusively such relief, repudiate or question that same jurisdiction (Dean vs. Dean, 136 Or.
against the Sibonghanoy spouses the Surety became a quasi-party therein since 694, 86 A.L.R. 79). In the case just cited, by way of explaining the rule, it was
July 31, 1948 when it filed a counter-bond for the dissolution of the writ of further said that the question whether the court had jurisdiction either of the
attachment issued by the court of origin (Record on Appeal, pp. 15-19). Since subject-matter of the action or of the parties was not important in such cases
then, it acquired certain rights and assumed specific obligations in connection because the party is barred from such conduct not because the judgment or order
with the pending case, in accordance with sections 12 and 17, Rule 57, Rules of of the court is valid and conclusive as an adjudication, but for the reason that such
Court (Bautista vs. Joaquin, 46 Phil. 885; Kimpang & Co. vs. Javier, 65 Phil. 170). a practice can not be tolerated — obviously for reasons of public policy.

Upon the filing of the first motion for execution against the counter-bond the Furthermore, it has also been held that after voluntarily submitting a cause and
Surety not only filed a written opposition thereto praying for its denial but also encountering an adverse decision on the merits, it is too late for the loser to
asked for an additional affirmative relief — that it be relieved of its liability under question the jurisdiction or power of the court (Pease vs. Rathbun-Jones etc., 243
the counter-bond upon the grounds relied upon in support of its opposition — U.S. 273, 61 L. Ed. 715, 37 S. Ct. 283; St. Louis etc. vs. McBride, 141 U.S. 127, 35 L.
lack of jurisdiction of the court a quo not being one of them. Ed. 659). And in Littleton vs. Burgess, 16 Wyo. 58, the Court said that it is not right
for a party who has affirmed and invoked the jurisdiction of a court in a particular
Then, at the hearing on the second motion for execution against the counter- matter to secure an affirmative relief, to afterwards deny that same jurisdiction
bond, the Surety appeared, through counsel, to ask for time within which to file to escape a penalty.
an answer or opposition thereto. This motion was granted, but instead of such
answer or opposition, the Surety filed the motion to dismiss mentioned Upon this same principle is what We said in the three cases mentioned in the
heretofore. 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
A party may be estopped or barred from raising a question in different ways and decision and then accepting the judgment, only if favorable, and attacking it for
for different reasons. Thus we speak of estoppel in pais, or estoppel by deed or by lack of jurisdiction, when adverse — as well as in Pindañgan etc. vs. Dans, et al.,
record, and of estoppel by laches. 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
Laches, in a general sense is failure or neglect, for an unreasonable and Relation et al., G.R. L-20307, Feb. 26, 1965, and Mejia vs. Lucas, 100 Phil. p. 277.
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 The facts of this case show that from the time the Surety became a quasi-party on
a reasonable time, warranting a presumption that the party entitled to assert it July 31, 1948, it could have raised the question of the lack of jurisdiction of the
either has abandoned it or declined to assert it. Court of First Instance of Cebu to take cognizance of the present action by reason
of the sum of money involved which, according to the law then in force, was
The doctrine of laches or of "stale demands" is based upon grounds of public within the original exclusive jurisdiction of inferior courts. It failed to do so.
policy which requires, for the peace of society, the discouragement of stale claims Instead, at several stages of the proceedings in the court a quo as well as in the
and, unlike the statute of limitations, is not a mere question of time but is Court of Appeals, it invoked the jurisdiction of said courts to obtain affirmative
principally a question of the inequity or unfairness of permitting a right or claim relief and submitted its case for a final adjudication on the merits. It was only
to be enforced or asserted. after an adverse decision was rendered by the Court of Appeals that it finally
woke up to raise the question of jurisdiction. Were we to sanction such conduct
It has been held that a party can not invoke the jurisdiction of a court to sure on its part, We would in effect be declaring as useless all the proceedings had in
affirmative relief against his opponent and, after obtaining or failing to obtain the present case since it was commenced on July 19, 1948 and compel the
judgment creditors to go up their Calvary once more. The inequity and unfairness issuance of a writ of execution dated October 30, 1957 of the
of this is not only patent but revolting. plaintiffs, after which this incident shall be deemed submitted for
resolution.
Coming now to the merits of the appeal: after going over the entire record, We
have become persuaded that We can do nothing better than to quote in toto, SO ORDERED.
with approval, the decision rendered by the Court of Appeals on December 11,
1962 as follows: Given in open court, this 2nd day of November, 1957, at Cebu
City, Philippines.
In Civil Case No. R-660 of the Court of First Instance of Cebu, which was a
suit for collection of a sum of money, a writ of attachment was issued (Sgd.) JOSE M. MENDOZA
against defendants' properties. The attachment, however, was Judge
subsequently discharged under Section 12 of Rule 59 upon the filing by
defendants of a bond subscribed by Manila Surety & Fidelity Co., Inc. (Record on Appeal, pp.
64-65, emphasis ours)
After trial, judgment was rendered in favor of plaintiffs.
Since the surety's counsel failed to file any answer or objection within the
The writ of execution against defendants having been returned totally period given him, the court, on December 7, 1957, issued an order
unsatisfied, plaintiffs moved, under Section 17 of Rule 59, for issuance of granting plaintiffs' motion for execution against the surety; and on
writ of execution against Manila Surety & Fidelity Co., Inc. to enforce the December 12, 1957, the corresponding writ of execution was issued.
obligation of the bond. But the motion was, upon the surety's opposition,
denied on the ground that there was "no showing that a demand had On December 24, 1957, the surety filed a motion to quash the writ of
been made, by the plaintiffs to the bonding company for payment of the execution on the ground that the same was "issued without the
amount due under the judgment" (Record on Appeal, p. 60). requirements of Section 17, Rule 59 of the Rules of Court having been
complied with," more specifically, that the same was issued without the
Hence, plaintiffs made the necessary demand upon the surety for required "summary hearing". This motion was denied by order of
satisfaction of the judgment, and upon the latter's failure to pay the February 10, 1958.
amount due, plaintiffs again filed a motion dated October 31, 1957, for
issuance of writ of execution against the surety, with notice of hearing on On February 25, 1958, the surety filed a motion for reconsideration of the
November 2, 1957. On October 31, 1957, the surety received copy of said above-stated order of denial; which motion was likewise denied by order
motion and notice of hearing. of March 26, 1958.

It appears that when the motion was called on November 2, 1957, the From the above-stated orders of February 10, 1958 and March 26, 1958
surety's counsel asked that he be given time within which to answer the — denying the surety's motion to quash the writ of execution and motion
motion, and so an order was issued in open court, as follows:1äwphï1.ñët for reconsideration, respectively — the surety has interposed the appeal
on hand.
As prayed for, Atty. Jose P. Soberano, Jr., counsel for the Manila
Surety & Fidelity Co., Inc., Cebu Branch, is given until Wednesday,
November 6, 1957, to file his answer to the motion for the
The surety insists that the lower court should have granted its motion to because, as stated above, the record will show that when the motion was
quash the writ of execution because the same was issued without the called, what the surety's counsel did was to ask that he be allowed and
summary hearing required by Section 17 of Rule 59, which reads; given time to file an answer. Moreover, it was stated in the order given in
open court upon request of the surety's counsel that after the four-day
"Sec. 17. When execution returned unsatisfied, recovery had upon period within which to file an answer, "the incident shall be deemed
bond. — If the execution be returned unsatisfied in whole or in submitted for resolution"; and counsel apparently agreed, as the order
part, the surety or sureties on any bond given pursuant to the was issued upon his instance and he interposed no objection thereto.
provisions of this role to secure the payment of the judgment
shall become finally charged on such bond, and bound to pay to It is also urged that although according to Section 17 of Rule 59, supra,
the plaintiff upon demand the amount due under the judgment, there is no need for a separate action, there must, however, be a
which amount may be recovered from such surety or sureties separate judgment against the surety in order to hold it liable on the
after notice and summary hearing in the same action." (Emphasis bond (Appellant's Brief, p. 15). Not so, in our opinion. A bond filed for
ours) discharge of attachment is, per Section 12 of Rule 59, "to secure the
payment to the plaintiff of any judgment he may recover in the action,"
Summary hearing is "not intended to be carried on in the formal manner and stands "in place of the property so released". Hence, after the
in which ordinary actions are prosecuted" (83 C.J.S. 792). It is, rather, a judgment for the plaintiff has become executory and the execution is
procedure by which a question is resolved "with dispatch, with the least "returned unsatisfied" (Sec. 17, Rule 59), as in this case, the liability of the
possible delay, and in preference to ordinary legal and regular judicial bond automatically attaches and, in failure of the surety to satisfy the
proceedings" (Ibid, p. 790). What is essential is that "the defendant is judgment against the defendant despite demand therefor, writ of
notified or summoned to appear and is given an opportunity to hear what execution may issue against the surety to enforce the obligation of the
is urged upon him, and to interpose a defense, after which follows an bond.
adjudication of the rights of the parties" (Ibid., pp. 793-794); and as to the
extent and latitude of the hearing, the same will naturally lie upon the UPON ALL THE FOREGOING, the orders appealed from are hereby affirmed, with
discretion of the court, depending upon the attending circumstances and costs against the appellant Manila Surety and Fidelity Company, Inc.
the nature of the incident up for consideration.

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

It is argued that the surety's counsel did not file an answer to the motion
"for the simple reason that all its defenses can be set up during the
hearing of the motion even if the same are not reduced to writing"
(Appellant's brief, p. 4). There is obviously no merit in this pretense