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G.R. No. L-21450 April 15, 1968 On January 8, 1963 — five days after the Surety received notice
of the decision, it filed a motion asking for extension of time within
SERAFIN TIJAM, ET AL., plaintiffs-appellees, vs. which to file a motion for reconsideration. The Court of Appeals
MAGDALENO SIBONGHANOY alias GAVINO SIBONGHANOY and granted the motion in its resolution of January 10 of the same year.
LUCIA BAGUIO, defendants, MANILA SURETY AND FIDELITY CO., Two days later the Surety filed a pleading entitled MOTION TO
INC. (CEBU BRANCH) bonding company and defendant- DISMISS, alleging substantially that appellees action was filed in
appellant. the Court of First Instance of Cebu on July 19, 1948 for the recovery
of the sum of P1,908.00 only; that a month before that date
DIZON, J.:
Republic Act No. 296, otherwise known as the Judiciary Act of
On July 19, 1948 — barely one month after the effectivity of 1948, had already become effective, Section 88 of which placed
Republic Act No. 296 known as the Judiciary Act of 1948 — the within the original exclusive jurisdiction of inferior courts all civil
spouses Serafin Tijam and Felicitas Tagalog commenced Civil actions where the value of the subject-matter or the amount of
Case No. R-660 in the Court of First Instance of Cebu against the the demand does not exceed P2,000.00, exclusive of interest and
spouses Magdaleno Sibonghanoy and Lucia Baguio to recover costs; that the Court of First Instance therefore had no jurisdiction
from them the sum of P1,908.00, with legal interest thereon from to try and decide the case. Upon these premises the Surety's
the date of the filing of the complaint until the whole obligation is motion prayed the Court of Appeals to set aside its decision and
paid, plus costs. As prayed for in the complaint, a writ of to dismiss the case. By resolution of January 16, 1963 the Court of
attachment was issued by the court against defendants' Appeals required the appellees to answer the motion to dismiss,
properties, but the same was soon dissolved upon the filing of a but they failed to do so. Whereupon, on May 20 of the same year,
counter-bond by defendants and the Manila Surety and Fidelity the Court resolved to set aside its decision and to certify the case
Co., Inc. hereinafter referred to as the Surety, on the 31st of the to Us. The pertinent portions of its resolution read as follows:
same month.
It would indeed appear from the record that the action at bar,
After being duly served with summons the defendants filed their which is a suit for collection of money in the sum of exactly
answer in which, after making some admissions and denials of the P1,908.00 exclusive of interest, was originally instituted in the Court
material averments of the complaint, they interposed a of First Instance of Cebu on July 19, 1948. But about a month prior
counterclaim. This counterclaim was answered by the plaintiffs. to the filing of the complaint, more specifically on June 17, 1948,
the Judiciary Act of 1948 took effect, depriving the Court of First
After trial upon the issues thus joined, the Court rendered Instance of original jurisdiction over cases in which the demand,
judgment in favor of the plaintiffs and, after the same had exclusive of interest, is not more than P2,000.00. (Secs. 44[c] and
become final and executory, upon motion of the latter, the Court 86[b], R.A. No. 296.)
issued a writ of execution against the defendants. The writ having
been returned unsatisfied, the plaintiffs moved for the issuance of We believe, therefore, that the point raised in appellant's motion
a writ of execution against the Surety's bond (Rec. on Appeal, pp. is an important one which merits serious consideration. As stated,
46-49), against which the Surety filed a written opposition (Id. pp. the complaint was filed on July 19, 1948. This case therefore has
49) upon two grounds, namely, (1) Failure to prosecute and (2) been pending now for almost 15 years, and throughout the entire
Absence of a demand upon the Surety for the payment of the proceeding appellant never raised the question of jurisdiction
amount due under the judgment. Upon these grounds the Surety until after receipt of this Court's adverse decision.
prayed the Court not only to deny the motion for execution
There are three cases decided by the Honorable Supreme Court
against its counter-bond but also the following affirmative relief :
which may be worthy of consideration in connection with this
"to relieve the herein bonding company of its liability, if any, under
case, namely: Tyson Tan, et al. vs. Filipinas Compañia de Seguros,
the bond in question" (Id. p. 54) The Court denied this motion on
et al., G.R. No. L-10096, March 23, 1956; Pindangan Agricultural
the ground solely that no previous demand had been made on
Co., Inc. vs. Jose P. Dans, etc., et al., G.R. No. L-14591, September
the Surety for the satisfaction of the judgment. Thereafter the
26, 1962; and Alfredo Montelibano, et al. vs. Bacolod-Murcia
necessary demand was made, and upon failure of the Surety to
Milling Co., Inc., G.R. No. L-15092, September 29, 1962, wherein the
satisfy the judgment, the plaintiffs filed a second motion for
Honorable Supreme Court frowned upon the 'undesirable
execution against the counterbond. On the date set for the
practice' of appellants submitting their case for decision and then
hearing thereon, the Court, upon motion of the Surety's counsel,
accepting the judgment, if favorable, but attacking it for lack of
granted the latter a period of five days within which to answer the
jurisdiction when adverse.
motion. Upon its failure to file such answer, the Court granted the
motion for execution and the corresponding writ was issued. Considering, however, that the Supreme Court has the "exclusive"
appellate jurisdiction over "all cases in which the jurisdiction of any
Subsequently, the Surety moved to quash the writ on the ground
inferior court is in issue" (See. 1, Par. 3[3], Judiciary Act of 1948, as
that the same was issued without the required summary hearing
amended), we have no choice but to certify, as we hereby do
provided for in Section 17 of Rule 59 of the Rules of Court. As the
certify, this case to the Supreme Court.1äwphï1.ñët
Court denied the motion, the Surety appealed to the Court of
Appeals from such order of denial and from the one denying its ACCORDINGLY, pursuant to Section 31 of the Judiciary Act of
motion for reconsideration (Id. p. 97). Its record on appeal was 1948 as amended, let the record of this case be forwarded to the
then printed as required by the Rules, and in due time it filed its Supreme Court.
brief raising therein no other question but the ones covered by the
following assignment of errors: It is an undisputed fact that the action commenced by appellees
in the Court of First Instance of Cebu against the Sibonghanoy
I. That the Honorable Court a quo erred in issuing its order dated spouses was for the recovery of the sum of P1,908.00 only — an
November 2, 1957, by holding the incident as submitted for amount within the original exclusive jurisdiction of inferior courts in
resolution, without a summary hearing and compliance with the accordance with the provisions of the Judiciary Act of 1948 which
other mandatory requirements provided for in Section 17, Rule 59 had taken effect about a month prior to the date when the action
of the Rules of Court. was commenced. True also is the rule that jurisdiction over the
subject matter is conferred upon the courts exclusively by law,
II. That the Honorable Court a quo erred in ordering the issuance
and as the lack of it affects the very authority of the court to take
of execution against the herein bonding company-appellant.
cognizance of the case, the objection may be raised at any
III. That the Honorable Court a quo erred in denying the motion to stage of the proceedings. However, considering the facts and
quash the writ of execution filed by the herein bonding company- circumstances of the present case — which shall forthwith be set
appellant as well as its subsequent motion for reconsideration, forth — We are of the opinion that the Surety is now barred
and/or in not quashing or setting aside the writ of execution. by laches from invoking this plea at this late hour for the purpose
of annuling everything done heretofore in the case with its active
Not one of the assignment of errors — it is obvious — raises the participation.
question of lack of jurisdiction, neither directly nor indirectly.
As already stated, the action was commenced in the Court of First
Although the appellees failed to file their brief, the Court of Instance of Cebu on July 19, 1948, that is, almostfifteen years
Appeals, on December 11, 1962, decided the case affirming the before the Surety filed its motion to dismiss on January 12, 1963
orders appealed from. raising the question of lack of jurisdiction for the first time.
2

It must be remembered that although the action, originally, was Instead, at several stages of the proceedings in the court a quo as
exclusively against the Sibonghanoy spouses the Surety became well as in the Court of Appeals, it invoked the jurisdiction of said
a quasi-party therein since July 31, 1948 when it filed a counter- courts to obtain affirmative relief and submitted its case for a final
bond for the dissolution of the writ of attachment issued by the adjudication on the merits. It was only after an adverse decision
court of origin (Record on Appeal, pp. 15-19). Since then, it was rendered by the Court of Appeals that it finally woke up to
acquired certain rights and assumed specific obligations in raise the question of jurisdiction. Were we to sanction such
connection with the pending case, in accordance with sections conduct on its part, We would in effect be declaring as useless all
12 and 17, Rule 57, Rules of Court (Bautista vs. Joaquin, 46 Phil. 885; the proceedings had in the present case since it was
Kimpang & Co. vs. Javier, 65 Phil. 170). commenced on July 19, 1948 and compel the judgment creditors
to go up their Calvary once more. The inequity and unfairness of
Upon the filing of the first motion for execution against the this is not only patent but revolting.
counter-bond the Surety not only filed a written opposition thereto
praying for its denial but also asked for an additional affirmative Coming now to the merits of the appeal: after going over the
relief — that it be relieved of its liability under the counter-bond entire record, We have become persuaded that We can do
upon the grounds relied upon in support of its opposition — lack nothing better than to quote in toto, with approval, the decision
of jurisdiction of the court a quo not being one of them. rendered by the Court of Appeals on December 11, 1962 as
follows:
Then, at the hearing on the second motion for execution against
the counter-bond, the Surety appeared, through counsel, to ask In Civil Case No. R-660 of the Court of First Instance of Cebu, which
for time within which to file an answer or opposition thereto. This was a suit for collection of a sum of money, a writ of attachment
motion was granted, but instead of such answer or opposition, the was issued against defendants' properties. The attachment,
Surety filed the motion to dismiss mentioned heretofore. however, was subsequently discharged under Section 12 of Rule
59 upon the filing by defendants of a bond subscribed by Manila
A party may be estopped or barred from raising a question in Surety & Fidelity Co., Inc.
different ways and for different reasons. Thus we speak of
estoppel in pais, or estoppel by deed or by record, and of After trial, judgment was rendered in favor of plaintiffs.
estoppel by laches.
The writ of execution against defendants having been returned
Laches, in a general sense is failure or neglect, for an totally unsatisfied, plaintiffs moved, under Section 17 of Rule 59, for
unreasonable and unexplained length of time, to do that which, issuance of writ of execution against Manila Surety & Fidelity Co.,
by exercising due diligence, could or should have been done Inc. to enforce the obligation of the bond. But the motion was,
earlier; it is negligence or omission to assert a right within a upon the surety's opposition, denied on the ground that there was
reasonable time, warranting a presumption that the party entitled "no showing that a demand had been made, by the plaintiffs to
to assert it either has abandoned it or declined to assert it. the bonding company for payment of the amount due under the
judgment" (Record on Appeal, p. 60).
The doctrine of laches or of "stale demands" is based upon
grounds of public policy which requires, for the peace of society, Hence, plaintiffs made the necessary demand upon the surety for
the discouragement of stale claims and, unlike the statute of satisfaction of the judgment, and upon the latter's failure to pay
limitations, is not a mere question of time but is principally a the amount due, plaintiffs again filed a motion dated October 31,
question of the inequity or unfairness of permitting a right or claim 1957, for issuance of writ of execution against the surety, with
to be enforced or asserted. notice of hearing on November 2, 1957. On October 31, 1957, the
surety received copy of said motion and notice of hearing.
It has been held that a party can not invoke the jurisdiction of a
court to sure affirmative relief against his opponent and, after It appears that when the motion was called on November 2, 1957,
obtaining or failing to obtain such relief, repudiate or question that the surety's counsel asked that he be given time within which to
same jurisdiction (Dean vs. Dean, 136 Or. 694, 86 A.L.R. 79). In the answer the motion, and so an order was issued in open court, as
case just cited, by way of explaining the rule, it was further said follows:1äwphï1.ñët
that the question whether the court had jurisdiction either of the
subject-matter of the action or of the parties was not important in As prayed for, Atty. Jose P. Soberano, Jr., counsel for the Manila
such cases because the party is barred from such conduct not Surety & Fidelity Co., Inc., Cebu Branch, is given until Wednesday,
because the judgment or order of the court is valid and November 6, 1957, to file his answer to the motion for the issuance
conclusive as an adjudication, but for the reason that such a of a writ of execution dated October 30, 1957 of the
practice can not be tolerated — obviously for reasons of public plaintiffs, after which this incident shall be deemed submitted for
policy. resolution.

Furthermore, it has also been held that after voluntarily submitting SO ORDERED.
a cause and encountering an adverse decision on the merits, it is
Given in open court, this 2nd day of November, 1957, at Cebu
too late for the loser to question the jurisdiction or power of the
City, Philippines.
court (Pease vs. Rathbun-Jones etc., 243 U.S. 273, 61 L. Ed. 715, 37
S. Ct. 283; St. Louis etc. vs. McBride, 141 U.S. 127, 35 L. Ed. 659). And (Sgd.) JOSE M. MENDOZA
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 Judge
court in a particular matter to secure an affirmative relief, to
afterwards deny that same jurisdiction to escape a penalty. (Record on Appeal, pp.
64-65, emphasis ours)
Upon this same principle is what We said in the three cases
mentioned in the resolution of the Court of Appeals of May 20, Since the surety's counsel failed to file any answer or objection
1963 (supra) — to the effect that we frown upon the "undesirable within the period given him, the court, on December 7, 1957,
practice" of a party submitting his case for decision and then issued an order granting plaintiffs' motion for execution against
accepting the judgment, only if favorable, and attacking it for the surety; and on December 12, 1957, the corresponding writ of
lack of jurisdiction, when adverse — as well as in Pindañgan etc. execution was issued.
vs. Dans, et al., G.R. L-14591, September 26, 1962; Montelibano, et
On December 24, 1957, the surety filed a motion to quash the writ
al., vs. Bacolod-Murcia Milling Co., Inc., G.R. L-15092; Young Men
of execution on the ground that the same was "issued without the
Labor Union etc. vs. The Court of Industrial Relation et al., G.R. L-
requirements of Section 17, Rule 59 of the Rules of Court having
20307, Feb. 26, 1965, and Mejia vs. Lucas, 100 Phil. p. 277.
been complied with," more specifically, that the same was issued
The facts of this case show that from the time the Surety became without the required "summary hearing". This motion was denied
a quasi-party on July 31, 1948, it could have raised the question of by order of February 10, 1958.
the lack of jurisdiction of the Court of First Instance of Cebu to take
On February 25, 1958, the surety filed a motion for reconsideration
cognizance of the present action by reason of the sum of money
of the above-stated order of denial; which motion was likewise
involved which, according to the law then in force, was within the
denied by order of March 26, 1958.
original exclusive jurisdiction of inferior courts. It failed to do so.
3

From the above-stated orders of February 10, 1958 and March 26, G.R. No. 139031 October 18, 2004
1958 — denying the surety's motion to quash the writ of execution
and motion for reconsideration, respectively — the surety has MARIE ANTOINETTE R. SOLIVEN, petitioner, vs.
interposed the appeal on hand. FASTFORMS PHILIPPINES, INC., respondent.

The surety insists that the lower court should have granted its DECISION
motion to quash the writ of execution because the same was
SANDOVAL-GUTIERREZ, J.:
issued without the summary hearing required by Section 17 of Rule
59, which reads; For our resolution is the instant petition for review on
certiorari1 assailing the Decision2 dated February 8, 1999 and
"Sec. 17. When execution returned unsatisfied, recovery had upon
Resolution dated June 17, 1999, both issued by the Court of
bond. — If the execution be returned unsatisfied in whole or in
Appeals in CA-G.R. CV No. 51946.
part, the surety or sureties on any bond given pursuant to the
provisions of this role to secure the payment of the judgment shall Records show that on May 20, 1994, Marie Antoinette R. Soliven,
become finally charged on such bond, and bound to pay to the petitioner, filed with the Regional Trial Court, Branch 60, Makati
plaintiff upon demand the amount due under the judgment, City a complaint for sum of money with damages against
which amount may be recovered from such surety or sureties after Fastforms Philippines, Inc., respondent, docketed as Civil Case No.
notice and summary hearing in the same action." (Emphasis ours) 94-1788.
Summary hearing is "not intended to be carried on in the formal The complaint alleges that on June 2, 1993, respondent, through
manner in which ordinary actions are prosecuted" (83 C.J.S. 792). its president Dr. Eduardo Escobar, obtained a loan from petitioner
It is, rather, a procedure by which a question is resolved "with in the amount of One Hundred Seventy Thousand Pesos
dispatch, with the least possible delay, and in preference to (₱170,000.00), payable within a period of twenty-one (21) days,
ordinary legal and regular judicial proceedings" (Ibid, p. 790). with an interest of 3%, as evidenced by a promissory
What is essential is that "the defendant is notified or summoned to note3 executed by Dr. Escobar as president of respondent. The
appear and is given an opportunity to hear what is urged upon loan was to be used to pay the salaries of respondent’s
him, and to interpose a defense, after which follows an employees. On the same day, respondent issued a postdated
adjudication of the rights of the parties" (Ibid., pp. 793-794); and check (dated June 25, 1993)4 in favor of petitioner in the amount
as to the extent and latitude of the hearing, the same will naturally of ₱175,000.00 (representing the principal amount of ₱170,000.00,
lie upon the discretion of the court, depending upon the plus ₱5,000.00 as interest). It was signed by Dr. Escobar and Mr.
attending circumstances and the nature of the incident up for Lorcan Harney, respondent's vice-president. About three weeks
consideration. later, respondent, through Dr. Escobar, advised petitioner not to
deposit the postdated check as the account from where it was
In the case at bar, the surety had been notified of the plaintiffs'
drawn has insufficient funds. Instead, respondent proposed to
motion for execution and of the date when the same would be
petitioner that the ₱175,000.00 be "rolled-over," with a monthly
submitted for consideration. In fact, the surety's counsel was
interest of 5% (or ₱8,755.00). Petitioner agreed to the proposal.
present in court when the motion was called, and it was upon his
Subsequently, respondent, through Dr. Escobar, Mr. Harney and
request that the court a quo gave him a period of four days within
Mr. Steve Singson, the new president, issued several checks in the
which to file an answer. Yet he allowed that period to lapse
total sum of ₱76,250.00 in favor of petitioner as payment for
without filing an answer or objection. The surety cannot now,
interests corresponding to the months of June, August,
therefore, complain that it was deprived of its day in court.
September, October and December, 1993. Later, despite
It is argued that the surety's counsel did not file an answer to the petitioner’s repeated demands, respondent refused to pay its
motion "for the simple reason that all its defenses can be set up principal obligation and interests due.
during the hearing of the motion even if the same are not
In her complaint, petitioner prays:
reduced to writing" (Appellant's brief, p. 4). There is obviously no
merit in this pretense because, as stated above, the record will "WHEREFORE, premises considered, it is respectfully prayed of this
show that when the motion was called, what the surety's counsel Honorable Court that judgment be rendered:
did was to ask that he be allowed and given time to file an
answer. Moreover, it was stated in the order given in open court (a) holding/declaring defendant (now respondent) guilty of
upon request of the surety's counsel that after the four-day period breach of contract x x x; and
within which to file an answer, "the incident shall be deemed
submitted for resolution"; and counsel apparently agreed, as the (b) ordering defendant to pay plaintiff (now petitioner) the
order was issued upon his instance and he interposed no following sums:
objection thereto.
₱195,155.00 as actual damages;
It is also urged that although according to Section 17 of Rule
₱200,000.00 as moral damages;
59, supra, there is no need for a separate action, there must,
however, be a separate judgment against the surety in order to ₱100,000.00 as exemplary damages; and
hold it liable on the bond (Appellant's Brief, p. 15). Not so, in our
opinion. A bond filed for discharge of attachment is, per Section ₱100,000.00 as attorney’s fees, plus the costs of suit.
12 of Rule 59, "to secure the payment to the plaintiff of any
judgment he may recover in the action," and stands "in place of Plaintiff prays for such other relief just and equitable in the
the property so released". Hence, after the judgment for the premises."
plaintiff has become executory and the execution is "returned
Respondent, in its answer with counterclaim,5 denied that it
unsatisfied" (Sec. 17, Rule 59), as in this case, the liability of the
obtained a loan from petitioner; and that it did not authorize its
bond automatically attaches and, in failure of the surety to satisfy
then president, Dr. Eduardo Escobar, to secure any loan from
the judgment against the defendant despite demand therefor,
petitioner or issue various checks as payment for interests.
writ of execution may issue against the surety to enforce the
obligation of the bond. After trial on the merits, the court a quo rendered a Decision
dated July 3, 19956 in favor of petitioner, the dispositive portion of
UPON ALL THE FOREGOING, the orders appealed from are hereby
which reads:
affirmed, with costs against the appellant Manila Surety and
Fidelity Company, Inc. "22. WHEREFORE, the court hereby renders judgment as follows:
Reyes, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro, 22.1. The defendant FASTFORMS PHILS., INC. is ordered to pay the
Angeles and Fernando, JJ., concur. plaintiff, MARIE ANTOINETTE R. SOLIVEN, the following amounts:

22.1.1. ₱175,000.00 – the amount of the loan and its interest


covered by the check (Exh. 3);
4

22.1.2. Five (5%) percent of ₱175,000.00 – a month from June 25, "Conformably, since the action is principally for the collection of a
1993 until the ₱175,000.00 is fully paid – less the sum of ₱76,250.00 debt, and the prayer for damages is not one of the main causes
– as interest; of action but merely a consequence thereto, it should not be
considered in determining the jurisdiction of the court."
22.1.3. ₱50,000.00 – as attorney’s fees.
While it is true that jurisdiction may be raised at any time, "this rule
22.2. The COMPLAINT for MORAL and EXEMPLARY damages is presupposes that estoppel has not supervened."13 In the instant
DISMISSED. case, respondent actively participated in all stages of the
proceedings before the trial court and invoked its authority by
22.3. The COUNTERCLAIM is DISMISSED; and
asking for an affirmative relief. Clearly, respondent is estopped
22.4. Costs is taxed against the defendant." from challenging the trial court’s jurisdiction, especially when an
adverse judgment has been rendered. In PNOC Shipping and
Respondent then filed a motion for reconsideration7 questioning Transport Corporation vs. Court of Appeals,14 we held:
for the first time the trial court’s jurisdiction. It alleged that since the
amount of petitioner’s principal demand (₱195,155.00) does not "Moreover, we note that petitioner did not question at all the
exceed ₱200,000.00, the complaint should have been filed with jurisdiction of the lower court x x x in its answers to both the
the Metropolitan Trial Court pursuant to Republic Act No. 7691.8 amended complaint and the second amended complaint. It did
so only in its motion for reconsideration of the decision of the lower
Petitioner opposed the motion for reconsideration, stressing that court after it had received an adverse decision. As this Court held
respondent is barred from assailing the jurisdiction of the trial court in Pantranco North Express, Inc. vs. Court of Appeals (G.R. No.
since it has invoked the latter’s jurisdiction by seeking affirmative 105180, July 5, 1993, 224 SCRA 477, 491), participation in all stages
relief in its answer to the complaint and actively participated in all of the case before the trial court, that included invoking its
stages of the trial.9 authority in asking for affirmative relief, effectively barred
petitioner by estoppel from challenging the court’s jurisdiction.
In its Order dated October 11, 1995,10 the trial court denied Notably, from the time it filed its answer to the second amended
respondent’s motion for reconsideration, holding that it has complaint on April 16, 1985, petitioner did not question the lower
jurisdiction over the case because the totality of the claim therein court’s jurisdiction. It was only on December 29, 1989 when it filed
exceeds ₱200,000.00. The trial court also ruled that respondent, its motion for reconsideration of the lower court’s decision that
under the principle of estoppel, has lost its right to question its petitioner raised the question of the lower court’s lack of
jurisdiction. jurisdiction. Petitioner thus foreclosed its right to raise the issue of
jurisdiction by its own inaction." (underscoring ours)
On appeal, the Court of Appeals reversed the trial court’s
Decision on the ground of lack of jurisdiction. The Appellate Court Similarly, in the subsequent case of Sta. Lucia Realty and
held that the case is within the jurisdiction of the Metropolitan Trial Development, Inc. vs. Cabrigas,15 we ruled:
Court, petitioner’s claim being only ₱195,155.00; and that
respondent may assail the jurisdiction of the trial court anytime "In the case at bar, it was found by the trial court in its 30
even for the first time on appeal. September 1996 decision in LCR Case No. Q-60161(93) that
private respondents (who filed the petition for reconstitution of
Petitioner filed a motion for reconsideration but was denied by the titles) failed to comply with both sections 12 and 13 of RA 26 and
Court of Appeals in its Resolution dated June 17, 1999.11 therefore, it had no jurisdiction over the subject matter of the
case. However, private respondents never questioned the trial
Hence, this petition.
court’s jurisdiction over its petition for reconstitution throughout
The fundamental issue for our resolution is whether the trial court the duration of LCR Case No. Q-60161(93). On the contrary,
has jurisdiction over Civil Case No. 94-1788. private respondents actively participated in the reconstitution
proceedings by filing pleadings and presenting its evidence. They
Section 1 of Republic Act No. 7691, which took effect on April 15, invoked the trial court’s jurisdiction in order to obtain affirmative
199412 or prior to the institution of Civil Case No. 94-1788, provides relief – the reconstitution of their titles. Private respondents have
inter alia that where the amount of the demand in civil cases thus foreclosed their right to raise the issue of jurisdiction by their
instituted in Metro Manila exceeds ₱200,000.00, exclusive of own actions.
interest, damages of whatever kind, attorney’s fees, litigation
expenses, and costs, the exclusive original jurisdiction thereof is "The Court has constantly upheld the doctrine that while
lodged with the Regional Trial Court. jurisdiction may be assailed at any stage, a litigant’s participation
in all stages of the case before the trial court, including the
Under Section 3 of the same law, where the amount of the invocation of its authority in asking for affirmative relief, bars such
demand in the complaint instituted in Metro Manila does not party from challenging the court’s jurisdiction (PNOC Shipping
exceed ₱200,000.00, exclusive of interest, damages of whatever and Transport Corporation vs. Court of Appeals, 297 SCRA 402
kind, attorney’s fees, litigation expenses, and costs, the exclusive [1998]). A party cannot invoke the jurisdiction of a court to secure
original jurisdiction over the same is vested in the Metropolitan Trial affirmative relief against his opponent and after obtaining or
Court, Municipal Trial Court and Municipal Circuit Trial Court. failing to obtain such relief, repudiate or question that same
jurisdiction (Asset Privatization Trust vs. Court of Appeals, 300 SCRA
In Administrative Circular No. 09-94 dated March 14, 1994, we 579 [1998]; Province of Bulacan vs. Court of Appeals, 299 SCRA
specified the guidelines in the implementation of R.A. 7691. 442 [1998]). The Court frowns upon the undesirable practice of a
Paragraph 2 of the Circular provides: party participating in the proceedings and submitting his case for
decision and then accepting judgment, only if favorable, and
"2. The exclusion of the term ‘damages of whatever kind’ in
attacking it for lack of jurisdiction, when adverse (Producers Bank
determining the jurisdictional amount under Section 19 (8) and
of the Philippines vs. NLRC, 298 SCRA 517 [1998], citing Ilocos Sur
Section 33 (1) of B.P. Blg. 129, as amended by R.A. No. 7691,
Electric Cooperative, Inc. vs. NLRC, 241 SCRA 36 [1995])."
applies to cases where the damages are merely incidental to or
(underscoring ours)
a consequence of the main cause of action. However, in cases
where the claim for damages is the main cause of action, or one WHEREFORE, the instant petition is GRANTED. The assailed Decision
of the causes of action, the amount of such claim shall be dated February 8, 1999 and Resolution dated June 17, 1999 of the
considered in determining the jurisdiction of the court." Court of Appeals in CA-G.R. CV No. 51946 are REVERSED. The
(underscoring ours) Decision dated July 3, 1995 and Resolution dated October 11,
1995 of the Regional Trial Court, Branch 60, Makati City in Civil
Here, the main cause of action is for the recovery of sum of money
Case No. 94-1788 are hereby AFFIRMED.
amounting to only ₱195,155.00. The damages being claimed by
petitioner are merely the consequences of this main cause of SO ORDERED.
action. Hence, they are not included in determining the
jurisdictional amount. It is plain from R.A. 7691 and our Panganiban, Corona, and Carpio Morales*, JJ., concur.
Administrative Circular No. 09-94 that it is the Metropolitan Trial
Court which has jurisdiction over the instant case. As correctly
stated by the Court of Appeals in its assailed Decision:
5

G.R. No. 88643 July 23, 1991 because Art. 254 of the Labor Code prohibits the issuance of an
injunction or restraining order 'in any case involving or growing out
HON. ARIEL C. SANTOS, as Labor Arbiter of the National Capital of labor disputes . . . except as otherwise provided in Articles 218
Region, petitioner, vs. and 264 of this Code."
HON. WILLLAM BAYHON, as Presiding Judge of the Regional Trial
Court, NCR, BRANCH XXIII, Manila, ATTY. NICOLAS GEROCHI, JR., Article 218 speaks of the power of the Commission to issue an
ATTY. MARJORIE DOCDOCIL, PRISCILLA CARRERA, respondents. injunction due to a labor dispute, while Art. 264 refers to the power
of the same Commission to issue injunction in case of strikes or
GRINO-AQUINO, J.: lockouts.

In this petition for certiorari with preliminary injunction/temporary Petitioner alleges further that Judge Bayhon has no jurisdiction to
restraining order, Labor Arbiter Ariel C. Santos (herein petitioner) cite petitioner for contempt, for the case grew out of a labor
questions the jurisdiction of the Regional Trial Court to issue a writ dispute.1âwphi1
of preliminary junction to prevent the enforcement of the writ of
execution in a labor case, and said Judge's order dated May 31, Respondents, on the other hand, claim that Judge Bayhon has
1989 citinghim (petitioner) for indirect contempt and ordering his jurisdiction over the third party claim for respondent Carrera was
arrest for disobeying the injunction. never a party in the labor dispute between Anthony Ching
(judgment debtor) and the members of the Kamapi (judgment
On November 6, 1985, a decision was rendered by Labor Arbiter creditors), and she had no employer-employee relationship with
Ceferina Diosana in NLRC-NCR Case No. 1-313-85 entitled, any of them.
"Kamapi vs. Poly-Plastic Products and/or Anthony Ching," in favor
of Kamapi. The decision was affirmed in toto by the National The petition has no merit, for the power of the NLRC to execute its
Labor Relations Commission (NLRC) on August 18, 1987. After the judgments extends only to properties unquestionably belonging
decision had become final and executory, Kamapi obtained a to the judgment debtor (Special Servicing Corp. vs. Centro La Paz,
writ of execution against the properties, consisting of machineries 121 SCRA 748).
and equipment, of Poly-Plastic Products or Anthony Ching.
However, respondent Priscilla Carrera filed a third party claim The general rule that no court has the power to interfere by
alleging that Anthony Ching had sold the machinery and pieces injunction with the judgments or decrees of another court with
of equipment to her. Nevertheless, the public auction sale concurrent or coordinate jurisdiction possessing equal power to
proceeded on March 29, 1988. It was conducted by Deputy grant injunctive relief, applies only when no third-party claimant is
Sheriff Jaime Pambuan in the presence of Carrera and her involved (Traders Royal Bank vs. Intermediate Appellate Court,
counsel after the judgment creditor had posted an indemnity 133 SCRA 142). When a third-party, or a stranger to the action,
bond of P115,000 in favor of the deputy sheriff to answer for any asserts a claim over the property levied upon, the claimant may
damage that he may incur should it be found later that the third- vindicate his claim by an independent action in the proper civil
party claim is valid and lawful. court which may stop the execution of the judgment on property
not belonging to the judgment debtor. The following rulings of this
On April 4, 1988, Carrera filed in the Regional Trial Court of Manila Court are apropos:
(Civil Case No. 88-44154) her claim to the levied properties and
obtained a temporary restraining order enjoining Labor Arbiter When the sheriff, acting beyond the bounds of his authority, seizes
Diosana and NLRC Deputy Sheriff Pambuan from issuing a a stranger's property, the writ of injunction, which is issued to stop
certificate of sale over the levied properties. the auction sale of that property, is not an interference with the
writ oil execution issued by another court because the writ of
On April 12, 1988, Diosana inhibited herself from hearing Carrera's execution was improperly implemented by the sheriff. Under that
third-party complaint. The case was re-raffled and assigned to writ, he could attach the property of the judgment debtor. He is
Labor Arbiter Ariel Santos. not authorized to levy upon the property of the third claimant.
(National Mines and Allied Workers Union vs. Vera, 133 SCRA 259.)
During the hearing of the third-party claim by Labor Arbiter Santos
on April 26, 1988, Carrera's counsel, Atty. Nicolas Gerochi, Jr., There is no question that the writ of execution was issued against
submitted a xerox copy of the alleged deed of sale but the the judgment debtors (the Former Owner) in Civil Case No. Q-
petitioner asked to see the original. Atty. Gerochi brought to the 29325, Court of First Instance (now Regional Trial Court) Branch IV
May 9, 1988 hearing the supposed original copy but upon of Quezon City. However, what was levied upon by the Sheriff are
comparison, it was found to be not the original of the xerox copy the properties allegedly owned by the New Owners of the TML
that was presented by Atty. Gerochi. On May 11, 1988, Labor Garments, Inc. This fact of ownership was claimed by the New
Arbiter Santos issued an order declaring the xerox copy of the Owners or petitioners herein in their Motion to Intervene before the
deed of sale fictitious and allowing the execution to proceed trial court. Petitioners contend that they were not the original
against the properties of Poly-Plastic Products. parties impleaded as co-defendants in Civil Case No. Q-29325;
that they were not summoned to appear before the court; that
Santos and Pambuan filed a motion to dismiss the civil case on they did not participate in any manner in the proceedings before
the ground that the RTC did not have jurisdiction over the labor the court and that the decision of the court a quo did not include
case, for exclusive jurisdiction is vested in the NLRC (Art. 255, Labor them as judgment debtors who should pay the judgment debt,
Code) and no injunction or restraining order may be issued by any and therefore to compel them to pay the obligation incurred by
court or entity in a labor dispute. the former owner of TML Garments, Inc., without due process of
law will amount to a deprivation of their property, Wellsettled is
On April 22, 1988, Judge William Bayhon of RTC, Manila, issued an
the rule that a writ of execution can only be issued against one
order enjoining Labor Arbiter Ceferina Diosana and sheriff Jaime
who is a party to the action and not against one who, not being
Pambuan from enforcing the writ of execution against the
a party in the case, has not yet had his day in court. (New
properties claimed by Camera pending the determination of the
Owners/Management of TML Garments, Inc. vs. Zaragoza, 170
validity of the sale made in her favor by the judgment debtor Poly-
SCRA 563.)
Plastic Products and Anthony Ching.
If the disputed property did not belong to the judgment debtor in
On May 13, 1988, Atty. Gerochi filed in Civil Case No. 8844154 an
NLRC Case No. 7-2577-84, it could not be validly levied upon by
urgent omnibus motion praying that herein petitioner be cited for
the sheriff for the satisfaction of the judgment therein. (Peñalosa,
indirect contempt for disobeying the order of the court dated
et al. vs. Hon. Villanueva, et al., 177 SCRA 778.)
April 22, 1988 and to order his arrest.
Consequently, the Regional Trial Court of Manila had jurisdiction
On May 31, 1989, Judge William Bayhon issued an order declaring
to stop by injunction the National Labor Relations Commission's
Santos guilty beyond reasonable doubt of indirect contempt,
sheriff from proceeding with the auction sale of the property
ordering his immediate arrest, sentencing him to seven (7) days in
claimed by the private respondent, to satisfy the claims of the
jail, and to pay a fine of P1,000 with subsidiary imprisonment in
labor union against the Poly-Plastic Products.
case of insolvency. He further ordered the return of the
machineries and equipment of Priscilla Camera. Santos forthwith WHEREFORE, the petition is dismissed for lack of merit.
elevated the matter to this Court for review on the ground that
Judge Bayhon's arrest order dated May 31, 1989 is a nullity SO ORDERED.
6

G.R. No. 95694 October 9, 1997 That the above described land was before the sale, my own
exclusive property, being inherited from my deceased parents,
VICENTE VILLAFLOR, substituted by his heirs, petitioner, vs. and my ownership to it and that of my predecessors lasted more
COURT OF APPEALS and NASIPIT LUMBER CO., INC., respondents. than fifty (50) years, possessing and occupying the same,
peacefully, openly and interruption for that length of time.
PANGANIBAN, J.:
Likewise on January 16, 1940, Hermogenes Patete, in a Deed of
In this rather factually complicated case, the Court reiterates the
Absolute Sale (exh. D), sold to Villaflor, a parcel of agricultural
binding force and effect of findings of specialized administrative
land, containing an area of 20 hectares, more or less, and
agencies as well as those of trial courts when affirmed by the
particularly described and bounded as follows:
Court of Appeals; rejects petitioner's theory of simulation of
contracts; and passes upon the qualifications of private A certain parcel of agricultural land planted to abaca and corn
respondent corporation to acquire disposable public agricultural with visible concrete monuments marking the boundaries and
lands prior to the effectivity of the 1973 Constitution. bounded on the North by Public Land area-private Road; on the
East by land claimed by Cirilo Piencenaves; on the South by Public
The Case
Land containing an area of 20 hectares more or less, now under
Before us is a petition for review on certiorari seeking the reversal Tax Declaration No. 29451 in the name of Vicente Villaflor the
of the Decision1 of the Court of Appeals, dated September 27, whole parcel of which this particular parcel, is assessed at
1990, in CA. G.R CV No. 09062, affirming the dismissal by the trial P22,550.00 for purposes of taxation under the above said Tax
court of Petitioner Vicente Villaflor's complaint against Private Declaration No. 29451.
Respondent Nasipit Lumber Co., Inc. The disposition of both the
This deed states:
trial and the appellate courts are quoted in the statement of facts
below. . . . (O)n June 22, 1937 but the formal document was then
executed, and since then until the present time, the said VICENTE
The Facts
VILLAFLOR has been in continuous and open possession and
The facts of this case, as narrated in detail by Respondent Court occupation of the same; (and)
of Appeals, are as follows:2
That the above described property was before the sale, my own
The evidence, testimonial and documentary, presented during and exclusive property, being inherited from my deceased
the trial show that on January 16, 1940, Cirilo Piencenaves, in a parents and my ownership to it and that of my predecessors
Deed of Absolute Sale (exh. A), sold to [petitioner], a parcel of lasted more than fifty (50) years, possessing and occupying same,
agricultural land containing an area of 50 hectares,3 more or less, peacefully, openly and continuously without interruption for that
and particularly described and bounded as follows: length of time.

A certain parcel of agricultural land planted to abaca with visible On February 15, 1940, Fermin Bocobo, in a Deed of Absolute Sale
concrete monuments marking the boundaries and bounded on (exh. B), sold to Villaflor, a parcel of agricultural land, containing
the NORTH by Public Land now Private Deeds on the East by an area of 18 hectares, more or less, and particularly described
Serafin Villaflor, on the SOUTH by Public Land; and on the West by and bounded as follows:
land claimed by H. Patete, containing an area of 60 hectares
A certain parcel of agricultural land planted with abaca with
more or less, now under Tax Dec. 29451 in the (sic) of said Vicente
visible part marking the corners and bounded on the North by the
Villaflor, the whole parcel of which this particular parcel is only a
corners and bounded on the North by Public Land; on the East by
part, is assessed at P22,550.00 under the above said Tax Dec.
Cirilo Piencenaves; on the South by Hermogenes Patete and West
Number.
by Public Land, containing an area of 18 hectares more or less
This deed states: now under Tax Declaration No. 29451 in the name of Vicente
Villaflor. The whole parcel of which this particular parcel is only a
That the above described land was sold to the said VICENTE part is assessed as P22,550.00 for purposes of taxation under the
VILLAFLOR, . . . on June 22, 1937, but no formal document was above said Tax Declaration Number (Deed of Absolute Sale
then executed, and since then until the present time, the said executed by Fermin Bocobo date Feb. 15, 1940). This document
Vicente Villaflor has been in possession and occupation of (the was annotated in Registry of Deeds on February 16, 1940).
same); (and)
This deed states:
That the above described property was before the sale, of my
exclusive property having inherited from my long dead parents That the above described property was before the sale of my own
and my ownership to it and that of my [sic] lasted for more than exclusive property, being inherited from my deceased parents,
fifty (50) years, possessing and occupying same peacefully, and my ownership to it and that of my predecessors lasted more
publicly and continuously without interruption for that length of than fifty (50) years, possessing and occupying the same
time. peacefully, openly and continuously without interruption for that
length of time.
Also on January 16, 1940, Claudio Otero, in a Deed of Absolute
Sale (exh. C) sold to Villaflor a parcel of agricultural land, On November 8, 1946, Villaflor, in a Lease Agreement (exh.
containing an area of 24 hectares, more or less, and particularly Q),4 leased to Nasipit Lumber Co., Inc. a parcel of land,
described and bounded as follows: containing an area of two (2) hectares, together with all the
improvements existing thereon, for a period of five (5) years from
A certain land planted to corn with visible concrete June 1, 1946 at a rental of P200.00 per annum "to cover the
measurements marking the boundaries and bounded on the annual rental of house and building sites for thirty three (33) houses
North by Public Land and Tungao Creek; on the East by Agusan or buildings." This agreement also provides:5
River; on the South by Serafin Villaflor and Cirilo Piencenaves; and
on the West by land of Fermin Bacobo containing an area of 24 3. During the term of this lease, the Lessee is authorized and
hectares more or less, under Tax Declaration No. 29451 in the empowered to build and construct additional houses in addition
name already of Vicente Villaflor, the whole parcel of which this to the 33 houses or buildings mentioned in the next preceding
particular land is only a part, is assessed at P22,550.00 under the paragraph, provided however, that for every additional house or
above said Tax Declaration No. 29451. building constructed the Lessee shall pay unto the Lessor an
amount of fifty centavos (¢50) per month for every house or
This deed states: building. The Lessee is empowered and authorized by the Lessor
to sublot (sic) the premises hereby leased or assign the same or
That the above described land was sold to the said VICENTE any portion of the land hereby leased to any person, firm and
VILLAFLOR, . . . on June 22, 1937, but no sound document was then corporation; (and)
executed, however since then and until the present time, the said
Vicente Villaflor has been in open and continuous possession and 4. The Lessee is hereby authorized to make any construction
occupation of said land; (and) and/or improvement on the premises hereby leased as he may
deem necessary and proper thereon, provided however, that
7

any and all such improvements shall become the property of the delivery to it of such deed of absolute sale, shall pay unto the
Lessor upon the termination of this lease without obligation on the Party of the First Part in cash, the sum of Twelve Thousand
part of the latter to reimburse the Lessee for expenses incurred in (P12,000.00) Pesos in Philippine Currency, provided, however, that
the construction of the same. the Party of the First Part, shall be reimbursed by the Party of the
Second Part with one half of the expenses incurred by the Party
Villaflor claimed having discovered that after the execution of the of the First Part for survey and attorney's fees; and other incidental
lease agreement, that Nasipit Lumber "in bad faith . . . expenses not exceeding P300.00.
surreptitiously grabbed and occupied a big portion of plaintiff's
property . . ."; that after a confrontation with the corporate's (sic) On December 2, 1948, Villaflor filed Sales Application No.
field manager, the latter, in a letter dated December 3, 1973 (exh. V-8078 (exh. 1) with the Bureau of Lands, Manila, "to purchase
R),6stated recalling having "made some sort of agreement for the under the provisions of Chapter V, XI or IX of Commonwealth Act.
occupancy (of the property at Acacia, San Mateo), but I no No. 141 (The Public Lands Act), as amended, the tract of public
longer recall the details and I had forgotten whether or not we lands . . . and described as follows: "North by Public Land; East by
did occupy your land. But if, as you say, we did occupy it, then Agusan River and Serafin Villaflor; South by Public Land and West
(he is ) sure that the company is obligated to pay the rental." by public land (Lot Nos. 5379, 5489, 5412, 5490, 5491, 5492, 5849,
5850, 5851, 5413, 5488, 5489, 5852, 5853, 5854, 5855, 5856, 5857,
On July 7, 1948, in an "Agreement to Sell" (exh. 2), Villaflor 5858, 5859 and 5860 . . . containing an area of 140 hectares . . . ."
conveyed to Nasipit Lumber, two (2) parcels of land . . . described Paragraph 6 of the Application, states: "I understand that this
as follows:7 application conveys no right to occupy the land prior to its
approval, and I recognized (sic) that the land covered by the
PARCEL ONE
same is of public domain and any and all rights may have with
Bounded on the North by Public Land and Tungao Creek; on the respect thereto by virtue of continuous occupation and
East by Agusan River and Serafin Villaflor; on the South by Public cultivation are hereby relinquished to the Government."9 (exh. 1-
Land, on the West by Public Land. Improvements thereon consist D)
of abaca, fruit trees, coconuts and thirty houses of mixed
On December 7, 1948, Villaflor and Nasipit Lumber executed an
materials belonging to the Nasipit Lumber Company. Divided into
"Agreement" (exh 3).10 This contract provides:
Lot Nos. 5412, 5413, 5488, 5490, 5491, 5492, 5850, 5849, 5860, 5855,
5851, 5854, 5855, 5859, 5858, 5857, 5853, and 5852. Boundaries of 1. That the First Party is the possessor since 1930 of two (2) parcels
this parcel of land are marked by concrete monuments of the of land situated in sitio Tungao, Barrio of San Mateo, Municipality
Bureau of Lands. Containing an area of 112,000 hectares. of Butuan, Province of Agusan;
Assessed at P17,160.00 according to Tax Declaration No. V-315
dated April 14, 1946. 2. That the first parcel of land abovementioned and described in
Plan PLS-97 filed in the office of the Bureau of Lands is made up of
PARCEL TWO Lots Nos. 5412, 5413, 5488, 5490, 5491, 5492, 5849, 5850, 5851, 5852,
5853, 5854, 5855, 5856, 5857, 5858, 5859 and 5860 and the second
Bounded on the North by Pagudasan Creek; on the East by
parcel of land is made of Lots Nos. 5399, 5409, 5410 and 5411;
Agusan River; on the South by Tungao Creek; on the West by
Public Land. Containing an area of 48,000 hectares more or less. 3. That on July 7, 1948, a contract of Agreement to Sell was
Divided into Lot Nos. 5411, 5410, 5409, and 5399. Improvements executed between the contracting parties herein, covering the
100 coconut trees, productive, and 300 cacao trees. Boundaries said two parcels of land, copy of said Agreement to Sell is hereto
of said land are marked by concrete monuments of the Bureau attached marked as Annex "A" and made an integral part of this
pf (sic) Lands. Assessed value — P6,290.00 according to Tax No. document. The parties hereto agree that the said Agreement to
317, April 14, 1946. Sell be maintained in full force and effect with all its terms and
conditions of this present agreement and in no way be
This Agreement to Sell provides:
considered as modified.
3. That beginning today, the Party of the Second Part shall
4. That paragraph 4 of the Contract of Agreement to Sell, marked
continue to occupy the property not anymore in concept of
as annex, "A" stipulates as follows:
lessee but as prospective owners, it being the sense of the parties
hereto that the Party of the Second Part shall not in any manner Par. 4. That the Party of the Second Part has bound as it does
be under any obligation to make any compensation to the Party hereby bind itself, its executors and administrators, to pay unto the
of the First Part, for the use, and occupation of the property herein Party of the First Part of the sum of FIVE THOUSAND PESOS
before described in such concept of prospective owner, and it (P5,000.00) Philippine Currency, upon presentation by the latter to
likewise being the sense of the parties hereto to terminate as they the former of satisfactory evidence that:
do hereby terminate, effective on the date of this present
instrument, the Contract of Lease, otherwise known as Doc. No. a) The Bureau of Lands will have any objection to the obtainment
420, Page No. 36, Book No. II, Series of 1946 of Notary Public by Party of the First Part of a favor, either thru ordinary land
Gabriel R. Banaag, of the Province of Agusan. registration proceedings or thru administrative means and
procedure.
4. That the Party of the Second Part has bound as it does hereby
bind itself, its executors and administrators, to pay unto the party b) That there is no other private claimant to the properties
of the First Part the sum of Five Thousand Pesos (P5,000.00), hereinabove described.
Philippine Currency, upon presentation by the latter to the former
of satisfactory evidence that: 5. That the First Party has on December 2, 1948, submitted to the
Bureau of Lands, a Sales Application for the twenty-two (22) lots
(a) The Bureau of Lands will not have any objection to the comprising the two abovementioned parcels of land, the said
obtainment by the Party of the First Part of a Certificate of Torrens Sales Application was registered in the said Bureau under No. V-
Title in his favor, either thru ordinary land registration proceedings 807;
or thru administrative means procedure.
6. That in reply to the request made by the First Party to the Bureau
(b) That there is no other private claimant to the properties of Lands, in connection with the Sales Application No. V-807, the
hereinbefore described. latter informed the former that action on his request will be
expedited, as per letter of the Chief, Public Land Division, dated
5. That the Party of the First Part has bound as he does hereby bind December 2, 1948, copy of which is hereto attached marked as
to undertake immediately after the execution of these presents to annex "B" and made an integral part of this agreement:
secure and obtain, or cause to be secured and obtained, a
Certificate of Torrens Title in his favor over the properties described 7. That for and in consideration of the premises above stated and
on Page (One) hereof, and after obtainment of such Certificate the amount of TWENTY FOUR THOUSAND (P24,000.00) PESOS that
of Torrens Title, the said Party of the First Part shall execute a the Second Party shall pay to the First Party, by these presents, the
(D)eed of Absolute Sale unto and in favor of the Party of the First Party hereby sells, transfers and conveys unto the Second
Second Part, its executors, administrators and assigns, it being the Party, its successors and assigns, his right, interest and participation
sense of the parties that the Party of the Second Part upon under, an(d) by virtue of the Sales Application No. V-807, which
8

he has or may have in the lots mentioned in said Sales Application 7. That I believe the said company is qualified to acquire public
No. V-807; land, and has the means to develop (sic) the above-mentioned
land;
8. That the amount of TWENTY FOUR THOUSAND (P24,000.00)
PESOS, shall be paid by the Second Party to the First Party, as xxx xxx xxx
follows:
WHEREFORE, and in consideration of the amount of FIVE
a) The amount of SEVEN THOUSAND (P7,000.00) PESOS, has THOUSAND PESOS (P5,000.00) to be reimbursed to me by the
already been paid by the Second Party to the First Party upon the aforementioned Nasipit Lumber Company, Inc., after its receipt of
execution of the Agreement to Sell, on July 7, 1948; the order of award, the said amount representing part of the
purchase price of the land aforesaid, the value of the
b) The amount of FIVE THOUSAND (P5,000.00) PESOS shall be paid improvements I introduced thereon, and the expenses incurred in
upon the signing of this present agreement; and the publication of the Notice of Sale, I, the applicant, Vicente J.
Villaflor, hereby voluntarily renounce and relinquish whatever
c) The balance of TWELVE THOUSAND (P12,000.00) shall be paid
rights to, and interests I have in the land covered by my above-
upon the execution by the First Party of the Absolute Deed of Sale
mentioned application in favor of the Nasipit Lumber Company,
of the two parcels of land in question in favor of the Second Party,
Inc.
and upon delivery to the Second Party of the Certificate of
Ownership of the said two parcels of land. Also on August 16, 1950, Nasipit Lumber filed a Sales Application
over the two (2) parcels of land, covering an area of 140 hectares,
9. It is specially understood that the mortgage constituted by the
more or less. This application was also numbered V-807 (exh. Y).
First Party in favor of the Second Party, as stated in the said
contract of Agreement to Sell dated July 7, 1948, shall cover not On August 17, 1950 the Director of Lands issued an "Order of
only the amount of SEVEN THOUSAND (P7,000.00) PESOS as Award"13 in favor of Nasipit Lumber Company, Inc., pertinent
specified in said document, but shall also cover the amount of portion of which reads:
FIVE THOUSAND (P5,000.00) PESOS to be paid as stipulated in
paragraph 8, sub-paragraph (b) of this present agreement, if the 4. That at the auction sale of the land held on July 24, 1950 the
First Party should fail to comply with the obligations as provided for highest bid received was that of Nasipit Lumber Company, Inc.
in paragraphs 2, 4, and 5 of the Agreement to Sell; which offered P41.00 per hectare or P5,740.00 for the whole tract,
which bid was equaled by applicant Vicente J. Villaflor, who
10. It is further agreed that the First Party obligates himself to sign, deposited the amount of P574.00 under Official Receipt No. B-
execute and deliver to and in favor of the Second Party, its 1373826 dated July 24, 1950 which is equivalent to 10% of the bid.
successors and assigns, at anytime upon demand by the Second Subsequently, the said . . . Villaflor paid the amount of P5,160.00 in
Party such other instruments as may be necessary in order to give full payment of the purchase price of the above-mentioned land
full effect to this present agreement; and for some reasons stated in an instrument of relinquishment
dated August 16, 1950, he (Vicente J. Villaflor) relinquished his
In the Report dated December 31, 1949 by the public land
rights to and interest in the said land in favor of the Nasipit Lumber
inspector, District Land Office, Bureau of Lands, in Butuan, the
Company, Inc. who filed the corresponding application
report contains an Indorsement of the aforesaid District Land
therefore.
Officer recommending rejection of the Sales Application of
Villaflor for having leased the property to another even before he In view of the foregoing, and it appearing that the proceedings
had acquired transmissible rights thereto. had . . . were in accordance with law and in [sic] existing
regulations, the land covered thereby is hereby awarded to
In a letter of Villaflor dated January 23, 1950, addressed to the
Nasipit Lumber Company, Inc. at P41.00 per hectare or P5,740.00
Bureau of Lands, he informed the Bureau Director that he was
for the whole tract.
already occupying the property when the Bureau's Agusan River
Valley Subdivision Project was inaugurated, that the property was This application should be entered in the record of this Office as
formerly claimed as private properties (sic), and that therefore, Sales Entry No. V-407.
the property was segregated or excluded from disposition
because of the claim of private ownership. In a letter of Nasipit It is Villaflor's claim that he only learned of the Order of Award on
Lumber dated February 22, 1950 (exh. X)11 addressed to the January 16, 1974, or after his arrival to the Philippines, coming from
Director of Lands, the corporation informed the Bureau that it Indonesia, where he stayed for more than ten (10) years; that he
recognized Villaflor as the real owner, claimant and occupant of went to Butuan City in the latter part of 1973 upon the call of his
the land; that since June 1946, Villaflor leased two (2) hectares brother Serafin Villaflor, who was then sick and learned that
inside the land to the company; that it has no other interest on the Nasipit Lumber (had) failed and refused to pay the agreed
land; and that the Sales Application of Villaflor should be given rentals, although his brother was able to collect during the early
favorable consideration. years; and that Serafin died three days after his (Vicente's) arrival,
and so no accounting of the rentals could be made; that on
xxx xxx xxx November 27, 1973, Villaflor wrote a letter to Mr. G.E.C. Mears of
Nasipit Lumber, reminding him of their verbal agreement in 1955 .
On July 24, 1950, the scheduled date of auction of the property
. . that Mr. Mears in a Reply dated December 3, 1973, appears to
covered by the Sales Application, Nasipit Lumber offered the
have referred the matter to Mr. Noriega, the corporate general
highest bid of P41.00 per hectare, but since an applicant under
manager, but the new set of corporate officers refused to
CA 141, is allowed to equal the bid of the highest bidder, Villaflor
recognize (Villaflor's) claim, for Mr. Florencio Tamesis, the general
tendered an equal bid; deposited the equivalent of 10% of the
manager of Nasipit Lumber, in a letter dated February 19, 1974,
bid price and then paid the assessment in full.
denied Villaflor's itemized claim dated January 5, 1974 (exh. V) to
xxx xxx xxx be without valid and legal basis. In the 5th January, 1974 letter,
Villaflor claimed the total amount of P427,000.00 . . . .
On August 16, 1950, Villaflor executed a document, denominated
as a "Deed of Relinquishment of Rights" (exh. N),12 pertinent In a formal protest dated January 31, 197414 which Villaflor filed
portion of which reads: with the Bureau of Lands, he protested the Sales Application of
Nasipit Lumber, claiming that the company has not paid him
5. That in view of my present business in Manila, and my change P5,000.00 as provided in the Deed of Relinquishment of Rights
in residence from Butuan, Agusan to the City of Manila, I cannot, dated August 16, 1950.
therefore, develope (sic) or cultivate the land applied for as
projected before; xxx xxx xxx

6. That the Nasipit Lumber Company, Inc., a corporation duly . . . (T)hat in a Decision dated August 8, 1977 (exh. 8), the Director
organized . . . is very much interested in acquiring the land of Lands found that the payment of the amount of P5,000.00 in
covered by the aforecited application . . . ; the Deed . . . and the consideration in the Agreement to Sell were
duly proven, and ordered the dismissal of Villaflor's protest and
gave due course to the Sales Application of Nasipit Lumber.
Pertinent portion of the Decision penned by Director of Lands,
9

Ramon Casanova, in the Matter of SP No. V-807 (C-V-407) . . . payment had accrued. The fact that he only made a command
reads: (sic) for payment on January 31, 1974, when he filed his protest or
twenty-four (24) years later is immediately nugatory of his claim for
xxx xxx xxx non-payment.

During the proceedings, Villaflor presented another claim entirely But Villaflor maintains that he had no knowledge or notice that
different from his previous claim — this time, for recovery of rentals the order of award had already been issued to NASIPIT as he had
in arrears arising from a supposed contract of lease by Villaflor as gone to Indonesia and he had been absent from the Philippines
lessor in favor of Nasipit as lessee, and indemnity for damages during all those twenty-four (24) years. This of course taxes
supposedly caused improvements on his other property . . . in the credulity. . . . .
staggering amount of Seventeen Million (P17,000,000.00) Pesos.
Earlier, he had also demanded from NASIPIT . . . (P427,000.00) . . . Second, it should be understood that the condition that NASIPIT
also as indemnity for damages to improvements supposedly should reimburse Villaflor the amount of Five Thousand (P5,000.00)
caused by NASIPIT on his other real property as well as for Pesos upon its receipt of the order of award was fulfilled as said
reimbursement of realty taxes allegedly paid by him thereon. award was issued to NASIPIT on August 17, 1950. The said deed of
relinquishment was prepared and notarized in Manila with Villaflor
xxx xxx xxx and NASIPIT signing the instrument also in Manilaon August 16,
1950 (p. 77, (sic)). The following day or barely a day after that, or
It would seem that . . . Villaflor has sought to inject so many
on August 17, 1950, the order of award was issued by this Office
collaterals, if not extraneous claims, into this case. It is the
to NASIPIT also in Manila. Now, considering that Villaflor is
considered opinion of this Office that any claim not within the
presumed to be more assiduous in following up with the Bureau of
sphere or scope of its adjudicatory authority as an administrative
Lands the expeditious issuance of the order of award as the
as well as quasi-judicial body or any issue which seeks to delve
payment of the Five Thousand (P5,000.00) Pesos (consideration)
into the merits of incidents clearly outside of the administrative
would depend on the issuance of said order to award NASIPIT,
competence of this Office to decide may not be entertained.
would it not be reasonable to believe that Villaflor was at hand
There is no merit in the contention of Villaflor that owing to Nasipit's when the award was issued to NASIPIT an August 17, 1950, or
failure to pay the amount of . . . (P5,000.00) . . . (assuming that barely a day which (sic) he executed the deed of relinquishment
Nasipit had failed) the deed of relinquishment became null and on August 16, 1950, in Manila? . . . .
void for lack of consideration. . . . .
Third, on the other hand, NASIPIT has in his possession a sort of
xxx xxx xxx "order" upon itself — (the deed of relinquishment wherein he (sic)
obligated itself to reimburse or pay Villaflor the . . . consideration
. . . The records clearly show, however, that since the execution of of the relinquishment upon its receipt of the order of award) for
the deed of relinquishment . . . Villaflor has always considered and the payment of the aforesaid amount the moment the order of
recognized NASIPIT as having the juridical personality to acquire award is issued to it. It is reasonable to presume that NASIPIT has
public lands for agricultural purposes. . . . . paid the Five Thousand (P5,000.00) Pesos to Villaflor.

xxx xxx xxx A person in possession of an order on himself for the payment of
money, or the delivery of anything, has paid the money or
Even this Office had not failed to recognize the juridical delivered the thing accordingly. (Section 5(k) B-131 Revised Rules
personality of NASIPIT to apply for the purchase of public lands . . of Court.
. when it awarded to it the land so relinquished by Villaflor (Order
of Award dated August 17, 1950) and accepted its application It should be noted that NASIPIT did not produce direct evidence
therefor. At any rate, the question whether an applicant is as proof of its payment of the Five Thousand (P5,000.00) Pesos to
qualified to apply for the acquisition of public lands is a matter Villaflor. Nasipit's explanation on this point is found satisfactory.
between the applicant and this Office to decide and which a
third party like Villaflor has no personality to question beyond . . . (I)t was virtually impossible for NASIPIT, after the lapse of the
merely calling the attention of this Office thereto. intervening 24 years, to be able to cope up with all the records
necessary to show that the consideration for the deed of
xxx xxx xxx relinquishment had been fully paid. To expect NASIPIT to keep
intact all records pertinent to the transaction for the whole quarter
Villaflor offered no evidence to support his claim of non-payment of a century would be to require what even the law does not.
beyond his own self-serving assertions and expressions that he had Indeed, even the applicable law itself (Sec. 337, National Internal
not been paid said amount. As protestant in this case, he has the Revenue Code) requires that all records of corporations be
affirmative of the issue. He is obliged to prove his allegations, preserved for only a maximum of five years.
otherwise his action will fail. For, it is a well settled principle (') that
if plaintiff upon whom rests the burden of proving his cause of NASIPIT may well have added that at any rate while "there are
action fails to show in a satisfactory manner the facts upon which transactions where the proper evidence is impossible or extremely
he bases his claim, the defendant is under no obligation to prove difficult to produce after the lapse of time . . . the law creates
his exceptions or special defenses (Belen vs. Belen, 13 Phil. 202; presumptions of regularity in favor of such transactions (20 Am. Jur.
Mendoza vs. Fulgencio, 8 Phil. 243). 232) so that when the basic fact is established in an action the
existence of the presumed fact must be assumed by force of law.
xxx xxx xxx (Rule 13, Uniform Rules of Evidence; 9 Wigmore, Sec. 2491).

Consequently, Villaflor's claim that he had not been paid must Anent Villaflor's claim that the 140-hectare land relinquished and
perforce fail. awarded to NASIPIT is his private property, little (need) be said. . .
. . The tracks of land referred to therein are not identical to the
On the other hand, there are strong and compelling reasons to
lands awarded to NASIPIT. Even in the assumption that the lands
presume that Villaflor had already been paid the amount of Five
mentioned in the deeds of transfer are the same as the 140-
Thousand (P5,000.00) Pesos.
hectare area awarded to NASIPIT, their purchase by Villaflor (or)
First, . . . What is surprising, however, is not so much his claims the latter's occupation of the same did not change the character
consisting of gigantic amounts as his having forgotten to adduce of the land from that of public land to a private property. The
evidence to prove his claim of non-payment of the Five Thousand provision of the law is specific that public lands can only be
(P5,000.00) Pesos during the investigation proceedings when he acquired in the manner provided for therein and not otherwise
had all the time and opportunity to do so. . . . The fact that he did (Sec. 11, C.A. No. 141, as amended). The records show that
not adduce or even attempt to adduce evidence in support Villaflor had applied for the purchase of the lands in question with
thereof shows either that he had no evidence to offer . . . that this Office (Sales Application No. V-807) on December 2, 1948. . .
NASIPIT had already paid him in fact. What is worse is that Villaflor . . There is a condition in the sales application signed by Villaflor to
did not even bother to command payment, orally or in writing, of the effect that he recognizes that the land covered by the same
the Five Thousand (P5,000.00) Pesos which was supposed to be is of public domain and any and all rights he may have with
due him since August 17, 1950, the date when the order of award respect thereto by virtue of continuous occupation and
was issued to Nasipit, and when his cause of action to recover cultivation are relinquished to the Government (paragraph 6,
10

Sales Application No. V-807 . . .) of which Villaflor is very much much less to Howard J. Nell Company. (See MEMORANDUM FOR
aware. It also appears that Villaflor had paid for the publication THE APPLICANT-ASSIGNOR, dated January 5, 1977). . . .
fees appurtenant to the sale of the land. He participated in the
public auction where he was declared the successful bidder. He . . . Villaflor did not adduce evidence in support of his claim that
had fully paid the purchase prive (sic) thereof (sic). It would be a he had not been paid the . . . (P12,000.00) . . . consideration of the
(sic) height of absurdity for Villaflor to be buying that which is Agreement to Sell dated July 7, 1948 (Exh. "38 NALCO") beyond
owned by him if his claim of private ownership thereof is to be his mere uncorroborated assertions. On the other hand, there is
believed. The most that can be said is that his possession was strong evidence to show that said Twelve Thousand (P12,000.00)
merely that of a sales applicant to when it had not been awarded Pesos had been paid by (private respondent) to Edward J. Nell
because he relinquished his interest therein in favor of NASIPIT who Company by virtue of the Deed of Assignment of Credit executed
(sic) filed a sales application therefor. by Villaflor (Exh. "41 NALCO") for the credit of the latter.

xxx xxx xxx Atty. Gabriel Banaag, resident counsel of NASIPIT who is in a
position to know the facts, testified for NASIPIT. He described that
. . . During the investigation proceedings, Villaflor presented as his it was he who notarized the "Agreement to Sell" (Exh. "F"); that he
Exhibit "(sic)" (which NASIPIT adopted as its own exhibit and had it knew about the execution of the document of December 7, 1948
marked in evidence as Exhibit "1") a duly notarized "agreement to (Exh. "38") confirming the said "Agreement to Sell" having been
Sell" dated July 7, 1948, by virtue of which Villaflor undertook to sell previously consulted thereon by Jose Fernandez, who signed said
to Nasipit the tracts of land mentioned therein, for a consideration document on behalf of NASIPIT . . . that subsequently, in January
of Twenty-Four Thousand (P24,000.00) Pesos. Said tracts of land 1949, Villaflor executed a Deed of Assignment of credit in favor of
have been verified to be identical to the parcels of land formerly Edward J. Nell Company (Exh. "41 NALCO") whereby Villaflor
applied for by Villaflor and which the latter had relinquished in ceded to the latter his receivable for NASIPIT corresponding to the
favor of NASIPIT under a deed of relinquishment executed by him remaining balance in the amount of Twelve Thousand . . . Pesos
on August 16, 1950. In another document executed on December of the total consideration . . . stipulated in both the "Agreement to
7, 1948 . . . Villaflor as "FIRST PARTY" and NASIPIT as "SECOND PARTY" Sell" (Exh. "F") and the document dated December 7, 1948 (Exh.
confirmed the "Agreement to Sell" of July 7, 1948, which was "39");
maintained "in full force and effect with all its terms and conditions . . . . He further testified that the said assignment of credit was
. . ." (Exh. "38-A"); and that "for and in consideration of . . . TWENTY communicated to (private respondent) under cover letter dated
FOUR THOUSAND (P24,000.00) PESOS that the Second Party shall January 24, 1949 (Exh. "41-A") and not long thereafter, by virtue of
pay to the First Party . . . the First Party hereby sells, transfers and the said assignment of credit, (private respondent) paid the
conveys unto the Second Party . . . his right interest and balance of Twelve Thousand . . . due to Villaflor to Edward J. Nell
participation under and by virtue of the Sales Application No. V- Company . . . . Atty. Banaag's aforesaid testimony stand
807" and, in its paragraph 8, it made stipulations as to when part unrebutted; hence, must be given full weight and credit. . . .
of the said consideration . . . was paid and when the balance was Villaflor and his counsel were present when Atty. Banaag's
to be paid, to wit: foregoing testimony was Villaflor did not demur, nor did he rebut
the same, despite having been accorded full opportunity to do
a) the amount of SEVEN THOUSAND . . . PESOS has already been so.
paid by the Second Party to the First Party upon the execution of
the Agreement to Sell, on July 17, 1948; xxx xxx xxx

b) the amount of FIVE THOUSAND . . . PESOS shall be paid upon Having found that both the Five Thousand . . . consideration of the
the signing of this present agreement; and deed of Relinquishment . . . and that the remaining balance of
. . . (P12,000.00) to complete the Twenty-Four Thousand
c) the amount of TWELVE THOUSAND . . . PESOS, shall be paid upon (P24,000.00) Pesos consideration of both the Agreement to Sell
the execution by the First Party of the Absolute Sale of the Two dated July 7, 1948, and the document, dated December 7, 1948,
parcels of land in question in favor of the Second Party of the executed by the former in favor of the latter, have been paid
Certificate of Ownership of the said two parcels of land. (Exh. 38- Villaflor the issue on prescription and laches becomes academic
B). (Emphasis ours) and needs no further discussion.

It is thus clear from this subsequent document marked Exhibit "38 But more than all the questions thus far raised and resolved is the
ANALCO" that of the consideration of the "Agreement to Sell" question whether a sales patent can be issued to NASIPIT for the
dated July 7, 1948, involving the 140-hectare area relinquished by 140-hectare area awarded to it in the light of Section 11, Article
Villaflor in favor of NASIPIT, in the amount of Twenty-Four Thousand XIV of the new Constitution which provides in its pertinent portion
(P24,000.00) Pesos: to wit:

(1) the amount of Seven Thousand (P7,000.00) Pesos was already . . . No private corporation or association may hold alienable land
paid upon the execution of the "Agreement to Sell" on July 7, 1948, of the public domain except by lease not to exceed one
receipt of which incidentally was admitted by Villaflor in the thousand hectares in area . . . .
document of December 7, 1948;
The Secretary of Justice had previous occasion to rule on this point
(2) the amount of Five Thousand (P5,000.00) Pesos was paid when in his opinion No. 140, s. 1974. Said the Honorable Justice
said document was signed by Vicente J. Villaflor as the First Party Secretary:
and Nasipit thru its President, as the Second Party, on December
7, 1948; and On the second question, (referring to the questions when may a
public land be considered to have been acquired by purchase
(3) the balance of Twelve Thousand (P12,000.00) Pesos to be paid before the effectivity of the new Constitution posed by the
upon the execution by the First Party of the Absolute Deed of Sale Director of Lands in his query on the effect on pending
of the two parcels of land in favor of the Second Party, and upon applications for the issuance of sales patent in the light of Section
delivery to the Second Party of the Certificate of Ownership of the 11, Art. XIV of the New Constitution aforecited), you refer to this
said two parcels of land. Office's Opinion No. 64 series of 1973 in which I stated:

Villaflor contends that NASIPIT could not have paid Villaflor the On the other hand, with respect to sales applications ready for
balance of Twelve Thousand (P12,000.00) Pesos . . . consideration issuance of sales patent, it is my opinion that where the applicant
in the Agreement to Sell will only be paid to applicant-assignor had, before the Constitution took effect, fully complied with all this
(referring to Villaflor) upon obtaining a Torrens Title in his favor over obligations under the Public Land Act in order to entitle him to a
the 140-hectare of land applied for and upon execution by him Sales patent, there would be no legal or equitable justification for
of a Deed of Absolute Sale in favor of Nasipit Lumber Company, refusing to issue or release the sales patent.
Inc. . . . . Inasmuch as applicant-assignor was not able to obtain a
Torrens Title over the land in question he could not execute an With respect to the point as to when the Sales applicant has
absolute Deed of (sic) Nasipit Lumber Co., Inc. Hence, the complied with all the terms and conditions which would entitle
Agreement to Sell was not carried out and no Twelve Thousand him to a sales patent, the herein above Secretary of Justice went
(P12,000.00) Pesos was overpaid either to the applicant-assignor, on:
11

That as to when the applicant has complied with all the terms and deed into one without a cause or consideration nor ipso
conditions which would entitle him to a patent is a questioned facto rescinds the same. Appellant, though, has the right to
(sic) fact which your office would be in the best position to demand payment with legal interest for the delay or to demand
determine. However, relating this to the procedure for the rescission.
processing of applications mentioned above, I think that as the
applicant has fulfilled the construction/cultivation requirements xxx xxx xxx
and has fully paid the purchase price, he should be deemed to
However, appellant's cause of action, either for specific
have acquired by purchase the particular tract of land and (sic)
performance or rescission of contract, with damages, lies within
the area (sic) in the provision in question of the new constitution
the jurisdiction of civil courts, not with administrative bodies.
would not apply.
xxx xxx xxx
From the decision of the Director of Lands, Villaflor filed a Motion
for Reconsideration which was considered as an Appeal M.N.R. Lastly, appellee has acquired a vested right to the subject area
Case 4341, to the Ministry of Natural Resources. and, therefore, is deemed not affected by the new constitutional
provision that no private corporation may hold alienable land of
On June 6, 1979, the Minister of Natural Resources rendered a
the public domain except by lease.
Decision (exh. 9), 15 dismissing the appeal and affirming the
decision of the Director of Lands, pertinent portions of which xxx xxx xxx
reads:
Implementing the aforesaid Opinion No. 64 of the Secretary of
After a careful study of the records and the arguments of the Justice, the then Secretary of Agriculture and Natural Resources
parties, we believe that the appeal is not well taken. issued a memorandum, dated February 18, 1974, which
pertinently reads as follows:
Firstly, the area in dispute is not the private property of appellant.
In the implementation of the foregoing opinion, sales application
The evidence adduced by appellant to establish his claim of
of private individuals covering areas in excess of 24 hectares and
ownership over the subject area consists of deeds of absolute sale
those of corporations, associations, or partnership which fall under
executed in his favor on January 16, and February 15, 1940, by
any of the following categories shall be given due course and
four (4) different persons, namely, Cirilo Piencenaves, Fermin
issued patents, to wit:
Balobo, Claudio Otero and Hermogenes Patete.
1. Sales application for fishponds and for agricultural purposes
However, an examination of the technical descriptions of the
(SFA, SA and IGPSA) wherein prior to January 17, 1973;
tracts of land subject of the deeds of sale will disclose that said
parcels are not identical to, and do not tally with, the area in a. the land covered thereby was awarded;
controversy.
b. cultivation requirements of law were complied with as shown
It is a basic assumption of our policy that lands of whatever by investigation reports submitted prior to January 17, 1973;
classification belong to the state. Unless alienated in accordance
with law, it retains its rights over the same as dominus, (Santiago c. land was surveyed and survey returns already submitted to the
vs. de los Santos, L-20241, November 22, 1974, 61 SCRA 152). Director of Lands for verification and approval; and

For, it is well-settled that no public land can be acquired by d. purchased price was fully paid.
private persons without any grant, express or implied from the
government. It is indispensable then that there be showing of title From the records, it is evident that the aforestated requisites have
from the state or any other mode of acquisition recognized by been complied with by appellee long before January 17, 1973,
law. (Lee Hong Hok, et al. vs. David, et al., L-30389, December 27, the effectivity of the New Constitution. To restate, the disputed
1972, 48 SCRA 379.) area was awarded to appellee on August 17, 1950, the purchase
price was fully paid on July 26, 1951, the cultivation requirements
It is well-settled that all lands remain part of the public domain were complied with as per investigation report dated December
unless severed therefrom by state grant or unless alienated in 31, 1949, and the land was surveyed under Pls-97.
accordance with law.
On July 6, 1978, petitioner filed a complaint16 in the trial court for
We, therefore, believe that the aforesaid deeds of sale do not "Declaration of Nullity of Contract (Deed of Relinquishment of
constitute clear and convincing evidence to establish that the Rights), Recovery of Possession (of two parcels of land subject of
contested area is of private ownership. Hence, the property must the contract), and Damages" at about the same time that he
be held to be public domain. appealed the decision of the Minister of Natural Resources to the
Office of the President.
"There being no evidence whatever that the property in question
was ever acquired by the applicants or their ancestors either by On January 28, 1983, petitioner died. The trial court ordered his
composition title from the Spanish Government or by possessory widow, Lourdes D. Villaflor, to be substituted as petitioner. After
information title or by any other means for the acquisition of public trial in due course, the then Court of First Instance of Agusan del
lands, the property must be held to be public domain." (Lee Hong Norte and Butuan City, Branch III,17 dismissed the complaint on the
Hok, et al., vs. David , et al., L-30389 December 27, 1972, 48 SCRA grounds that: (1) petitioner admitted the due execution and
378-379 citing Heirs of Datu Pendatun vs. Director of Lands; see genuineness of the contract and was estopped from proving its
also Director of Lands vs. Reyes, L-27594, November 28, 1975, 68 nullity, (2) the verbal lease agreements were unenforceable
SCRA 177). under Article 1403 (2) (e) of the Civil Code, and (3) his causes of
action were barred by extinctive prescription and/or laches. It
Be that as it may, appellant, by filing a sales application over the ruled that there was prescription and/or laches because the
controverted land, acknowledged unequivocably [sic] that the alleged verbal lease ended in 1966, but the action was filed only
same is not his private property. on January 6, 1978. The six-year period within which to file an
action on an oral contract per Article 1145 (1) of the Civil Code
"As such sales applicant, appellant manifestly acknowledged that
expired in 1972. The decretal portion18 of the trial court's decision
he does not own the land and that the same is a public land
reads:
under the administration of the Bureau of Lands, to which the
application was submitted, . . . All of its acts prior thereof, including WHEREFORE, the foregoing premises duly considered, judgment is
its real estate tax declarations, characterized its possessions of the hereby rendered in favor of the defendant and against the
land as that of a "sales applicant" and consequently, as one who plaintiff. Consequently, this case is hereby ordered DISMISSED. The
expects to buy it, but has not as yet done so, and is not, therefore, defendant is hereby declared the lawful actual physical
its owner." (Palawan Agricultural and Industrial Co., Inc. vs. possessor-occupant and having a better right of possession over
Director of Lands, L-25914, March 21, 1972, 44 SCRA 20, 21). the two (2) parcels of land in litigation described in par. 1.2 of the
complaint as Parcel I and Parcel II, containing a total area of One
Secondly, appellant's alleged failure to pay the consideration
Hundred Sixty (160) hectares, and was then the subject of the
stipulated in the deed of relinquishment neither converts said
Sales Application No. V-807 of the plaintiff (Exhibits 1, 1-A, 1-B, pp.
12

421 to 421-A, Record), and now of the Sales Application No. 807, (2) Did the Court of Appeals err in upholding the validity of the
Entry No. V-407 of the defendant Nasipit Lumber Company contracts to sell and the deed of relinquishment? Otherwise
(Exhibit Y, pp. 357-358, Record). The Agreements to Sell Real stated, did the Court of Appeals err in finding the deed of
Rights, Exhibits 2 to 2-C, 3 to 3-B, and the Deed of Relinquishment relinquishment of rights and the contracts to sell valid, and not
of Rights, Exhibits N to N-1, over the two parcels of land in litigation simulated or fictitious?
are hereby declared binding between the plaintiff and the
defendant, their successors and assigns. (3) Is the private respondent qualified to acquire title over the
disputed property?
Double the costs against the plaintiff.
The Court's Ruling
The heirs of petitioner appealed to Respondent Court of
Appeals19 which, however, rendered judgment against petitioner The petition is bereft of merit. It basically questions the sufficiency
via the assailed Decision dated September 27, 1990 finding of the evidence relied upon by the Court of Appeals, alleging that
petitioner's prayers — (1) for the declaration of nullity of the deed public respondent's factual findings were based on speculations,
of relinquishment, (2) for the eviction of private respondent from surmises and conjectures. Petitioner insists that a review of those
the property and (3) for the declaration of petitioner's heirs as findings is in order because they were allegedly (1) rooted, not on
owners — to be without basis. The decretal portion20 of the specific evidence, but on conclusions and inferences of the
assailed 49-page, single-spaced Decision curtly reads: Director of Lands which were, in turn, based on misapprehension
of the applicable law on simulated contracts; (2) arrived at
WHEREFORE, the Decision appealed from, is hereby AFFIRMED, whimsically — totally ignoring the substantial and admitted fact
with costs against plaintiff-appellants. that petitioner was not notified of the award in favor of private
respondent; and (3) grounded on errors and misapprehensions,
Not satisfied, petitioner's heirs filed the instant 57-page petition for particularly those relating to the identity of the disputed area.
review dated December 7, 1990. In a Resolution dated June 23,
1991, the Court denied this petition "for being late." On First Issue: Primary Jurisdiction of the Director of Lands and
reconsideration — upon plea of counsel that petitioners were Finality of Factual Findings of the Court of Appeals
"poor" and that a full decision on the merits should be rendered —
the Court reinstated the petition and required comment from Underlying the rulings of the trial and appellate courts is the
private respondent. Eventually, the petition was granted due doctrine of primary jurisdiction; i.e., courts cannot and will not
course and the parties thus filed their respective memoranda. resolve a controversy involving a question which is within the
jurisdiction of an administrative tribunal, especially where the
The Issues question demands the exercise of sound administrative discretion
requiring the special knowledge, experience and services of the
Petitioner, through his heirs, attributes the following errors to the administrative tribunal to determine technical and intricate
Court of Appeals: matters of fact.21

I. Are the findings of the Court of Appeals conclusive and binding In recent years, it has been the jurisprudential trend to apply this
upon the Supreme Court? doctrine to cases involving matters that demand the special
competence of administrative agencies even if the question
II. Are the findings of the Court of Appeals fortified by the similar
involved is also judicial in character. It applies "where a claim is
findings made by the Director of Lands and the Minister of Natural
originally cognizable in the courts, and comes into play whenever
Resources (as well as by the Office of the President)?
enforcement of the claim requires the resolution of issues which,
III. Was there "forum shopping?". under a regulatory scheme, have been placed within the special
competence of an administrative body; in such case, the judicial
IV. Are the findings of facts of the Court of Appeals and the trial process is suspended pending referral of such issues to the
court supported by the evidence and the law? administrative body for its view."22

V. Are the findings of the Court of Appeals supported by the very In cases where the doctrine of primary jurisdiction is clearly
terms of the contracts which were under consideration by the said applicable, the court cannot arrogate unto itself the authority to
court? resolve a controversy, the jurisdiction over which is initially lodged
with an administrative body of special
VI. Did the Court of Appeals, in construing the subject contracts, competence.23 In Machete vs. Court of Appeals, the Court
consider the contemporaneous and subsequent act of the upheld the primary jurisdiction of the Department of Agrarian
parties pursuant to article 1371 of the Civil Code? Reform Adjudicatory Board (DARAB) in an agrarian dispute over
the payment of back rentals under a leasehold contract.24 In
VII. Did the Court of Appeals consider the fact and the unrefuted
Concerned Officials of the Metropolitan Waterworks and
claim of Villaflor that he never knew of the award in favor of
Sewerage System vs. Vasquez,25the Court recognized that the
Nasipit?
MWSS was in the best position to evaluate and to decide which
VIII. Did the Court of Appeals correctly apply the rules on bid for a waterworks project was compatible with its development
evidence in its findings that Villaflor was paid the P5,000.00 plan.
consideration because Villaflor did not adduce any proof that he
The rationale underlying the doctrine of primary jurisdiction finds
was not paid?
application in this case, since the questions on the identity of the
IX. Is the Court of Appeals' conclusion that the contract is not land in dispute and the factual qualification of private respondent
simulated or fictitious simply because it is genuine and duly as an awardee of a sales application require a technical
executed by the parties, supported by logic or the law? determination by the Bureau of Lands as the administrative
agency with the expertise to determine such matters. Because
X. May the prestations in a contract agreeing to transfer certain these issues preclude prior judicial determination, it behooves the
rights constitute estoppel when this very contract is the subject of courts to stand aside even when they apparently have statutory
an action for annulment on the ground that it is fictitious? power to proceed, in recognition of the primary jurisdiction of the
administrative agency.26
XI. Is the Court of Appeals' conclusion that the lease agreement
between Villaflor is verbal and therefore, unenforceable One thrust of the multiplication of administrative agencies is that
supported by the evidence and the law? the interpretation of contracts and the determination of private
rights thereunder is no longer a uniquely judicial function,
After a review of the various submissions of the parties, particularly exercisable only by our regular courts.27
those of petitioner, this Court believes and holds that the issues
can be condensed into three as follows: Petitioner initiated his action with a protest before the Bureau of
Lands and followed it through in the Ministry of Natural Resources
(1) Did the Court of Appeals err in adopting or relying on the and thereafter in the Office of the President. Consistent with the
factual findings of the Bureau of Lands, especially those affirmed doctrine of primary jurisdiction, the trial and the appellate courts
by the Minister (now Secretary) of Natural Resources and the trial
court?
13

had reason to rely on the findings of these specialized points, questions and issues raised by petitioner before the trial
administrative bodies. court, the appellate court and now before this Court are basically
the same as those brought up before the aforesaid specialized
The primary jurisdiction of the director of lands and the minister of administrative agencies. As held by the Court of
natural resources over the issues regarding the identity of the Appeals:34
disputed land and the qualification of an awardee of a sales
patent is established by Sections 3 and 4 of Commonwealth Act We find that the contentious points raised by appellant in this
No. 141, also known as the Public Land Act: action, are substantially the same matters he raised in BL Claim
No. 873 (N). In both actions, he claimed private ownership over
Sec. 3. The Secretary of Agriculture and Commerce (now the land in question, assailed the validity and effectiveness of the
Secretary of Natural Resources) shall be the executive officer Deed of Relinquishment of Rights he executed in August 16, 1950,
charged with carrying out the provisions of this Act through the that he had not been paid the P5,000.00 consideration, the value
Director of Lands, who shall act under his immediate control. of the improvements he introduced on the land and other
expenses incurred by him.
Sec. 4. Subject to said control, the Director of Lands shall have
direct executive control of the survey, classification, lease, sale or In this instance, both the principle of primary jurisdiction of
any other form of concession or disposition and management of administrative agencies and the doctrine of finality of factual
the lands of the public domain, and his decision as to questions of findings of the trial courts, particularly when affirmed by the Court
fact shall be conclusive when approved by the Secretary of of Appeals as in this case, militate against petitioner's cause.
Agriculture and Commerce. Indeed, petitioner has not given us sufficient reason to deviate
from them.
Thus, the Director of Lands, in his decision, said:28
Land in Dispute Is Public Land
. . . It is merely whether or not Villaflor has been paid the Five
Thousand (P5,000.00) Pesos stipulated consideration of the deed Petitioner argues that even if the technical description in the
of relinquishment made by him without touching on the nature of deeds of sale and those in the sales application were not
the deed of relinquishment. The administration and disposition of identical, the area in dispute remains his private property. He
public lands is primarily vested in the Director of Lands and alleges that the deeds did not contain any technical description,
ultimately with the Secretary of Agriculture and Natural Resources as they were executed prior to the survey conducted by the
(now Secretary of Natural Resources), and to this end — Bureau of Lands; thus, the properties sold were merely described
by reference to natural boundaries. His private ownership thereof
Our Supreme Court has recognized that the Director of Lands is a
was also allegedly attested to by private respondent's former field
quasi-judicial officer who passes on issues of mixed facts and law
manager in the latter's February 22, 1950 letter, which contained
(Ortua vs. Bingson Encarnacion, 59 Phil 440). Sections 3 and 4 of
an admission that the land leased by private respondent was
the Public Land Law thus mean that the Secretary of Agriculture
covered by the sales application.
and Natural Resources shall be the final arbiter on questions of
fact in public land conflicts (Heirs of Varela vs. Aquino, 71 Phil 69; This contention is specious. The lack of technical description did
Julian vs. Apostol, 52 Phil 442). not prove that the finding of the Director of Lands lacked
substantial evidence. Here, the issue is not so much whether the
The ruling of this Office in its order dated September 10, 1975, is
subject land is identical with the property purchased by petitioner.
worth reiterating, thus:
The issue, rather, is whether the land covered by the sales
. . . it is our opinion that in the exercise of his power of executive application is private or public land. In his sales application,
control, administrative disposition and allegation of public land, petitioner expressly admitted that said property was public land.
the Director of Lands should entertain the protest of Villaflor and This is formidable evidence as it amounts to an admission against
conduct formal investigation . . . to determine the following points: interest.
(a) whether or not the Nasipit Lumber Company, Inc. paid or
In the exercise of his primary jurisdiction over the issue, Director of
reimbursed to Villaflor the consideration of the rights in the amount
Lands Casanova ruled that the land was public:35
of P5,000.00 and what evidence the company has to prove
payment, the relinquishment of rights being part of the . . . Even (o)n the assumption that the lands mentioned in the
administrative process in the disposition of the land in question . . deeds of transfer are the same as the 140-hectare area awarded
.. to Nasipit, their purchase by Villaflor (or) the latter's occupation of
the same did not change the character of the land from that of
. . . . Besides, the authority of the Director of Lands to pass upon
public land to a private property. The provision of the law is
and determine questions considered inherent in or essential to the
specific that public lands can only be acquired in the manner
efficient exercise of his powers like the incident at issue, i.e. ,
provided for therein and not otherwise (Sec. 11, C.A. No. 141, as
whether Villaflor had been paid or not, is conceded bylaw.
amended). The records show that Villaflor had applied for the
Reliance by the trial and the appellate courts on the factual purchase of lands in question with this Office (Sales Application
findings of the Director of Lands and the Minister of Natural No. V-807) on December 2, 1948. . . . There is a condition in the
Resources is not misplaced. By reason of the special knowledge sales application . . . to the effect that he recognizes that the land
and expertise of said administrative agencies over matters falling covered by the same is of public domain and any and all rights
under their jurisdiction, they are in a better position to pass he may have with respect thereto by virtue of continuous
judgment thereon; thus, their findings of fact in that regard are occupation and cultivation are relinquished to the Government
generally accorded great respect, if not finality,29 by the (paragraph 6, Sales Application No. V-807 of Vicente J. Villaflor, p.
courts.30 The findings of fact of an administrative agency must be 21, carpeta) of which Villaflor is very much aware. It also appears
respected as long as they are supported by substantial evidence, that Villaflor had paid for the publication fees appurtenant to the
even if such evidence might not be overwhelming or even sale of the land. He participated in the public auction where he
preponderant. It is not the task of an appellate court to weigh was declared the successful bidder. He had fully paid the
once more the evidence submitted before the administrative purchase prive (sic) thereor (sic). It would be a (sic) height of
body and to substitute its own judgment for that of the absurdity for Villaflor to be buying that which is owned by him if his
administrative agency in respect of sufficiency of evidence.31 claim of private ownership thereof is to be
believed. . . . .
However, the rule that factual findings of an administrative
agency are accorded respect and even finality by courts admits This finding was affirmed by the Minister of Natural Resources:36
of exceptions. This is true also in assessing factual findings of lower
Firstly, the area in dispute is not the private property of appellant
courts.32 It is incumbent on the petitioner to show that the
(herein petitioner).
resolution of the factual issues by the administrative agency
and/or by the trial court falls under any of the exceptions. The evidence adduced by (petitioner) to establish his claim of
Otherwise, this Court will not disturb such findings.33 ownership over the subject area consists of deeds of absolute sale
executed in his favor . . . .
We mention and quote extensively from the rulings of the Bureau
of Lands and the Minister of Natural Resources because the
14

However, an examination of the technical descriptions of the Petitioner explains that the Agreement to Sell dated December 7,
tracts of land subject of the deeds of sale will disclose that said 1948 did not and could not transfer ownership because
parcels are not identical to, and do not tally with, the area in paragraph 8 (c) thereof stipulates that the "balance of twelve
controversy. thousand pesos (12,000.00) shall be paid upon the execution by
the First Party [petitioner] of the Absolute Deed of Sale of the two
It is a basic assumption of our policy that lands of whatever parcels of land in question in favor of the Second Party, and upon
classification belong to the state. Unless alienated in accordance delivery to the Second Party [private respondent] of the
with law, it retains its rights over the same as dominus. (Santiago Certificate of Ownership of the said two parcels of land." The
vs. de los Santos, L-20241, November 22, 1974, 61 SCRA 152). mortgage provisions in paragraphs 6 and 7 of the agreement
state that the P7,000.00 and P5,000.00 were "earnest money or a
For it is well-settled that no public land can be acquired by private
loan with antichresis by the free occupancy and use given to
persons without any grant, express or implied from the
Nasipit of the 140 hectares of land not anymore as a lessee." If the
government. It is indispensable then that there be showing of title
agreement to sell transferred ownership to Nasipit, then why was
from the state or any other mode of acquisition recognized by
it necessary to require petitioner, in a second agreement, to
law. (Lee Hong Hok, et al. vs. David, et al., L-30389, December 27,
mortgage his property in the event of nonfulfillment of the
1972, 48 SCRA 379).
prestations in the first agreement?
xxx xxx xxx
True, the agreement to sell did not absolutely transfer ownership
We, therefore, believe that the aforesaid deeds of sale do not of the land to private respondent. This fact, however, does not
constitute clear and convincing evidence to establish that the show that the agreement was simulated. Petitioner's delivery of
contested area is of private ownership. Hence, the property must the Certificate of Ownership and execution of the deed of
be held to be public domain. absolute sale were suspensive conditions, which gave rise to a
corresponding obligation on the part of the private
There being no evidence whatever that the property in question respondent, i.e., the payment of the last installment of the
was ever acquired by the applicants or their ancestors either by consideration mentioned in the December 7, 1948 Agreement.
composition title from the Spanish Government or by possessory Such conditions did not affect the perfection of the contract or
information title or by any other means for the acquisition of public prove simulation. Neither did the mortgage.
lands, the property must be held to be public domain.
Simulation occurs when an apparent contract is a declaration of
Be that as it may, [petitioner], by filing a sales application over the a fictitious will, deliberately made by agreement of the parties, in
controverted land, acknowledged unequivocably [sic] that the order to produce, for the purpose of deception, the appearance
same is not his private property. of a juridical act which does not exist or is different from that which
was really executed.40 Such an intention is not apparent in the
As such sales applicant manifestly acknowledged that he does agreements. The intent to sell, on the other hand, is as clear as
not own the land and that the same is a public land under the daylight.
administration of the Bureau of Lands, to which the application
was submitted, . . . All of its acts prior thereof, including its real Petitioner alleges further that the deed of relinquishment of right
estate tax declarations, characterized its possessions of the land did not give full effect to the two agreements to sell, because the
as that of a "sales applicant". And consequently, as one who preliminary clauses of the deed allegedly served only to give
expects to buy it, has not as yet done so, and is not, therefore, its private respondent an interest in the property as a future owner
owner." (Palawan Agricultural and Industrial Co., Inc. vs. Director thereof and to enable respondent to follow up petitioner's sales
of Lands, L-25914, March 21, 1972, 44 SCRA 15). application.

Clearly, this issue falls under the primary jurisdiction of the Director We disagree. Such an intention is not indicated in the deed. On
of Lands because its resolution requires "survey, classification, . . . the contrary, a real and factual sale is evident in paragraph 6
disposition and management of the lands of the public domain." thereof, which states: "That the Nasipit Lumber Co., Inc., . . . is very
It follows that his rulings deserve great respect. As petitioner failed much interested in acquiring the land covered by the aforecited
to show that this factual finding of the Director of Lands was application to be used for purposes of mechanized, farming" and
unsupported by substantial evidence, it assumes finality. Thus, the penultimate paragraph stating: ". . . VICENTE J. VILLAFLOR,
both the trial and the appellate courts correctly relied on such hereby voluntarily renounce and relinquish whatever rights to,
finding.37 We can do no less. and interests I have in the land covered by my above-mentioned
application in favor of the Nasipit Lumber Co., Inc."
Second Issue: No Simulation of Contracts Proven
We also hold that no simulation is shown either in the letter, dated
Petitioner insists that contrary to Article 137138 of the Civil Code, December 3, 1973, of the former field manager of private
Respondent Court erroneously ignored the contemporaneous respondent, George Mear. A pertinent portion of the letter reads:
and subsequent acts of the parties; hence, it failed to ascertain
their true intentions. However, the rule on the interpretation of (a)s regards your property at Acacia, San Mateo, I recall that we
contracts that was alluded to by petitioner is used in affirming, not made some sort of agreement for the occupancy, but I no longer
negating, their validity. Thus, Article 1373,39 which is a conjunct of recall the details and I had forgotten whether or not we actually
Article 1371, provides that, if the instrument is susceptible of two or did occupy your land. But if, as you say, we did occupy it, then I
more interpretations, the interpretation which will make it valid am sure that the Company is obligated to pay a rental.
and effectual should be adopted. In this light, it is not difficult to
understand that the legal basis urged by petitioner does not The letter did not contain any express admission that private
support his allegation that the contracts to sell and the deed of respondent was still leasing the land from petitioner as of that
relinquishment are simulated and fictitious. Properly understood, date. According to Mear, he could no longer recall the details of
such rules on interpretation even negate petitioner's thesis. his agreement with petitioner. This cannot be read as evidence of
the simulation of either the deed of relinquishment or the
But let us indulge the petitioner awhile and determine whether the agreements to sell. It is evidence merely of an honest lack of
cited contemporaneous and subsequent acts of the parties recollection.
support his allegation of simulation. Petitioner asserts that the
relinquishment of rights and the agreements to sell were simulated Petitioner also alleges that he continued to pay realty taxes on
because, first, the language and terms of said contracts negated the land even after the execution of said contracts. This is
private respondent's acquisition of ownership of the land in issue; immaterial because payment of realty taxes does not necessarily
and second, contemporaneous and subsequent prove ownership, much less simulation of said contracts.41
communications between him and private respondent allegedly
Nonpayment of the Consideration
showed that the latter admitted that petitioner owned and
Did Not Prove Simulation
occupied the two parcels; i.e., that private respondent was not
applying for said parcels but was interested only in the two Petitioner insists that nonpayment of the consideration in the
hectares it had leased, and that private respondent supported contracts proves their simulation. We disagree. Nonpayment, at
petitioner's application for a patent. most, gives him only the right to sue for collection. Generally, in a
15

contract of sale, payment of the price is a resolutory condition . . . (P12,000.00) . . . of the total consideration . . . . ; He further
and the remedy of the seller is to exact fulfillment or, in case of a testified that the said assignment . . . was communicated to
substantial breach, to rescind the contract under Article 1191 of NASIPIT under cover letter dated January 24, 1949 (Exh. "41-A")
the Civil Code.42 However, failure to pay is not even a breach, but and not long thereafter, by virtue of the said assignment of credit,
merely an event which prevents the vendor's obligation to convey NASIPIT paid the balance . . . to Edward J. Nell Company (p.
title from acquiring binding force.43 58, ibid). Atty. Banaag's aforesaid testimony stand unrebutted;
hence, must be given full weight and credit.
Petitioner also argues that Respondent Court violated evidentiary
rules in upholding the ruling of the Director of Lands that petitioner xxx xxx xxx
did not present evidence to show private respondent's failure to
pay him. We disagree. Prior to the amendment of the rules on The Director of Lands also found that there had been payment of
evidence on March 14, 1989, Section 1, Rule 131, states that each the consideration in the relinquishment of rights:49
party must prove his or her own affirmative allegations.44 Thus, the
On the other hand, there are strong and compelling reasons to
burden of proof in any cause rested upon the party who, as
presume that Villaflor had already been paid the amount of Five
determined by the pleadings or the nature of the case, asserts the
Thousand (P5,000.00) Pesos.
affirmative of an issue and remains there until the termination of
the action.45 Although nonpayment is a negative fact which need First, . . . What is surprising, however, is not so much his claims
not be proved, the party seeking payment is still required to prove consisting of gigantic amounts as his having forgotten to adduce
the existence of the debt and the fact that it is already due.46 evidence to prove his claim of non-payment of the Five Thousand
(P5,000.00) Pesos during the investigation proceedings when he
Petitioner showed the existence of the obligation with the
had all the time and opportunity to do so. . . . . The fact that he
presentation of the contracts, but did not present any evidence
did not adduce or even attempt to adduce evidence in support
that he demanded payment from private respondent. The
thereof shows either that he had no evidence to offer of that
demand letters dated January 2 and 5, 1974 (Exhs. "J" and "U"),
NASIPIT had already paid him in fact. What is worse is that Villaflor
adduced in evidence by petitioner, were for the payment of
did not even bother to command payment, orally or in writing, of
back rentals, damages to improvements and reimbursement of
the Five Thousand (P5,000.00) Pesos which was supposed to be
acquisition costs and realty taxes, not payment arising from the
due him since August 17, 1950, the date when the order of award
contract to sell.
was issued to Nasipit, and when his cause of action to recover
Thus, we cannot fault Respondent Court for adopting the finding payment had accrued. The fact that he only made a command
of the Director of Lands that petitioner "offered no evidence to for payment on January 31, 1974, when he filed his protest or
support his claim of nonpayment beyond his own self-serving twenty-four (24) years later is immediately nugatory of his claim for
assertions," as he did not even demand "payment, orally or in non-payment.
writing, of the five thousand (P5,000.00) pesos which was
But Villaflor maintains that he had no knowledge or notice that
supposed to be due him since August 17, 1950, the date when the
the order of award had already been issued to NASIPIT as he had
order of award was issued to Nasipit, and when his cause of
gone to Indonesia and he had been absent from the Philippines
action to recover payment had accrued." Nonpayment of the
during all those twenty-four (24) years. This of course taxes
consideration in the contracts to sell or the deed of relinquishment
credulity. . . .
was raised for the first time in the protest filed with the Bureau of
Lands on January 31, 1974. But this protest letter was not the . . . It is more in keeping with the ordinary course of things that he
demand letter required by law. should have acquired information as to what was transpiring in his
affairs in Manila . . . .
Petitioner alleges that the assignment of credit and the letter of
the former field manager of private respondent are Second, it should be understood that the condition that NASIPIT
contemporaneous and subsequent acts revealing the should reimburse Villaflor the amount of Five Thousand (P5,000.00)
nonpayment of the consideration. He maintains that the Pesos upon its receipt of the order of award was fulfilled as said
P12,000.00 credit assigned pertains to the P5,000.00 and P7,000.00 award was issued to NASIPIT on August 17, 1950. The said deed of
initial payments in the December 7, 1948 Agreement, because relinquishment was prepared and notarized in Manila with Villaflor
the balance of P12,000.00 was not yet "due and accruing." This is and NASIPIT signing the instrument also in Manila. Now,
consistent, he argues, with the representation that private considering that Villaflor is presumed to be more assiduous in
respondent was not interested in filing a sales application over the following up with the Bureau of Lands the expeditious issuance of
land in issue and that Nasipit was instead supporting petitioner's the order of award as the (consideration) would depend on the
application thereto in Mear's letter to the Director of Lands dated issuance of said order to award NASIPIT, would it not be
February 22, 1950 (Exh. "X")47 reasonable to believe that Villaflor was at hand when the award
was issued to NASIPIT on August 17, 1950, or barely a day which
This argument is too strained to be acceptable. The assignment of
he executed the deed of relinquishment on August 16, 1950, in
credit did not establish the nondelivery of these initial payments
Manila? . . . .
of the total consideration. First, the assignment of credit
happened on January 19, 1949, or a month after the signing of Third, on the other hand, NASIPIT has in his possession a sort of
the December 7, 1948 Agreement and almost six months after the "order" upon itself — (the deed of relinquishment wherein he(sic)
July 7, 1948 Agreement to Sell. Second, it does not overcome the obligated itself to reimburse or pay Villaflor the . . . consideration
recitation in the Agreement of December 7, 1948: ". . . a) The of the relinquishment upon its receipt of the order of award) for
amount of SEVEN THOUSAND (P7,000.00) PESOS has already been the payment of the aforesaid amount the moment the order of
paid by the Second Party to the First Party upon the execution of award is issued to it. It is reasonable to presume that NASIPIT has
the Agreement to Sell, on July 7, 1948; b) The amount of FIVE paid the (consideration) to Villaflor.
THOUSAND (P5,000.00) PESOS shall be paid upon the signing of this
present agreement; . . . . " xxx xxx xxx

Aside from these facts, the Director of Lands found evidence of . . . (I)t was virtually impossible for NASIPIT, after the lapse of the
greater weight showing that payment was actually made:48 intervening 24 years, to be able to cope up with all the records
necessary to show that the consideration for the deed of
. . . (T)here is strong evidence to show that said . . . (P12,000.00) relinquishment had been fully paid. To expect NASIPIT to keep
had been paid by NASIPIT to Edward J. Nell Company by virtue of intact all records pertinent to the transaction for the whole quarter
the Deed of Assignment of Credit executed by Villaflor (Exh. "41 of a century would be to require what even the law does not.
NALCO") for the credit of the latter. Indeed, even the applicable law itself (Sec. 337, National Internal
Revenue Code) requires that all records of corporations be
Atty. Gabriel Banaag, resident counsel of NASIPIT . . . declared
preserved for only a maximum of five years.
that it was he who notarized the "Agreement to Sell" (Exh. "F"); . . .
that subsequently, in January 1949, Villaflor executed a Deed of NASIPIT may well have added that at any rate while there are
Assignment of credit in favor of Edward J. Nell Company (Exh. "41 transactions where the proper evidence is impossible or extremely
NALCO") whereby Villaflor ceded to the latter his receivable for difficult to produce after the lapse of time . . . the law creates
NASIPIT corresponding to the remaining balance in the amount of presumptions of regularity in favor of such transactions (20 Am. Jur.
16

232) so that when the basic fact is established in an action the controversies arising from disagreements in civil or contractual
existence of the presumed fact must be assumed by force of law. relations between the litigants.) Consequently, the determination
(Rule 13, Uniform Rules of Evidence; 9 Wigmore, Sec. 2491). of whether private respondent is qualified to become an
awardee of public land under C.A. 141 by sales application is
The Court also notes that Mear's letter of February 22, 1950 was included therein.
sent six months prior to the execution of the deed of
relinquishment of right. At the time of its writing, private All told, the only disqualification that can be imputed to private
respondent had not perfected its ownership of the land to be able respondent is the prohibition in the 1973 Constitution against the
to qualify as a sales applicant. Besides, although he was a party holding of alienable lands of the public domain by
to the July 7, 1948 Agreement to Sell, Mear was not a signatory to corporations.54 However, this Court earlier settled the matter,
the Deed of Relinquishment or to the December 7, 1948 ruling that said constitutional prohibition had no retroactive effect
Agreement to Sell. Thus, he cannot be expected to know the and could not prevail over a vested right to the land. In Ayog
existence of and the amendments to the later contracts. These vs. Cusi, Jr.,55 this Court declared:
circumstances explain the mistaken representations, not
misrepresentations, in said letter. We hold that the said constitutional prohibition has no retroactive
application to the sales application of Biñan Development Co.,
Lack of Notice of the Award Inc. because it had already acquired a vested right to the land
applied for at the time the 1973 Constitution took effect.
Petitioner insists that private respondent suppressed evidence,
pointing to his not having been notified of the Order of Award That vested right has to be respected. It could not be abrogated
dated August 17, 1950.50 At the bottom of page 2 of the order, by the new Constitution. Section 2, Article XIII of the 1935
petitioner was not listed as one of the parties who were to be Constitution allows private corporations to purchase public
furnished a copy by Director of Lands Jose P. Dans. Petitioner also agricultural lands not exceeding one thousand and twenty-four
posits that Public Land Inspector Sulpicio A. Taeza irregularly hectares. Petitioner's prohibition action is barred by the doctrine
received the copies for both private respondent and the city of vested rights in constitutional law.
treasurer of Butuan City. The lack of notice for petitioner can be
easily explained. Plainly, petitioner was not entitled to said notice "A right is vested when the right to enjoyment has become the
of award from the Director of Lands, because by then, he had property of some particular person or persons as a present
already relinquished his rights to the disputed land in favor of interest." (16 C.J.S. 1173). It is "the privilege to enjoy property legally
private respondent. In the heading of the order, he was referred vested, to enforce contracts, and enjoy the rights of property
to as sales applicant-assignor. In paragraph number 4, the order conferred by existing law" (12 C.J. 955, Note 46, No. 6) or "some
stated that, on August 16, 1950, he relinquished his rights to the right or interest in property which has become fixed and
land subject of the award to private respondent. From such date, established and is no longer open to doubt or controversy"
the sales application was considered to be a matter between the (Downs vs. Blount, 170 Fed. 15, 20, cited in Balboa vs. Farrales, 51
Bureau of Lands and private respondent only. Considering these Phil. 498, 502).
facts, the failure to give petitioner a copy of the notice of the
The due process clause prohibits the annihilation of vested rights.
award cannot be considered as suppression of
"A state may not impair vested rights by legislative enactment, by
evidence.51 Furthermore, this order was in fact available to
the enactment or by the subsequent repeal of a municipal
petitioner and had been referred to by him since January 31, 1974
ordinance, or by a change in the constitution of the State, except
when he filed his protest with the Bureau of Lands.52
in a legitimate exercise of the police power" (16 C.J.S. 1177-78).
Third Issue: Private Respondent Qualified
It has been observed that, generally, the term "vested right"
for an Award of Public Land
expresses the concept of present fixed interest, which in right
Petitioner asserts that private respondent was legally disqualified reason and natural justice should be protected against arbitrary
from acquiring the parcels of land in question because it was not State action, or an innately just an imperative right which an
authorized by its charter to acquire disposable public agricultural enlightened free society, sensitive to inherent and irrefragable
lands under Sections 121, 122 and 123 of the Public Land Act, prior individual rights, cannot deny (16 C.J.S. 1174, Note 71, No. 5, citing
to its amendment by P.D. No. 763. We disagree. The requirements Pennsylvania Greyhound Lines, Inc. vs. Rosenthal, 192 Atl. 2nd
for a sales application under the Public Land Act are: (1) the 587).
possession of the qualifications required by said Act (under
Secretary of Justice Abad Santos in his 1973 opinion ruled that
Section 29) and (2) the lack of the disqualifications mentioned
where the applicant, before the Constitution took effect, had fully
therein (under Sections 121, 122, and 123). However, the transfer
complied with all his obligations under the Public Land Act in order
of ownership via the two agreements dated July 7 and December
to entitle him to a sales patent, there would seem to be no legal
7, 1948 and the relinquishment of rights, being private contracts,
or equitable justification for refusing to issue or release the sales
were binding only between petitioner and private respondent.
patent (p. 254, Rollo).
The Public Land Act finds no relevance because the disputed
land was covered by said Act only after the issuance of the order In Opinion No. 140, series of 1974, he held that as soon as the
of award in favor of private respondent. Thus, the possession of applicant had fulfilled the construction or cultivation requirements
any disqualification by private respondent under said Act is and has fully paid the purchase price, he should be deemed to
immaterial to the private contracts between the parties thereto. have acquired by purchase the particular tract of land and to him
(We are not, however, suggesting a departure from the rule that the area limitation in the new Constitution would not apply.
laws are deemed written in contracts.) Consideration of said
provisions of the Act will further show their inapplicability to these In Opinion No. 185, series of 1976, Secretary Abad Santos held that
contracts. Section 121 of the Act pertains to acquisitions of public where the cultivation requirements were fulfilled before the new
land by a corporation from a grantee, but petitioner never Constitution took effect but the full payment of the price was
became a grantee of the disputed land. On the other hand, completed after January 17, 1973, the applicant was,
private respondent itself was the direct grantee. Sections 122 and nevertheless, entitled to a sales patent (p. 256, Rollo).
123 disqualify corporations, which are not authorized by their
charter, from acquiring public land; the records do not show that Such a contemporaneous construction of the constitutional
private respondent was not so authorized under its charter. prohibition by a high executive official carries great weight and
should be accorded much respect. It is a correct interpretation of
Also, the determination by the Director of Lands and the Minister section 11 of Article XIV.
of Natural Resources of the qualification of private respondent to
become an awardee or grantee under the Act is persuasive on In the instant case, it is incontestable that prior to the effectivity of
Respondent Court. In Espinosa vs. Makalintal,53 the Court ruled the 1973 Constitution the right of the corporation to purchase the
that, by law, the powers of the Secretary of Agriculture and land in question had become fixed and established and was no
Natural Resources regarding the disposition of public lands — longer open to doubt or controversy.
including the approval, rejection, and reinstatement of
Its compliance with the requirements of the Public Land Law for
applications — are of executive and administrative nature. (Such
the issuance of a patent had the effect of segregating the said
powers, however, do not include the judicial power to decide
land from the public domain. The corporation's right to obtain a
17

patent for that land is protected by law. It cannot be deprived of already been acquired and awarded to private respondent. In
that right without due process (Director of Lands vs. CA, 123 Phil. any event, petitioner's cause of action on these alleged lease
919). agreements prescribed long before he filed Civil Case No. 2072-
III, as correctly found by the trial and appellate courts.59 Thus, it is
The Minister of Natural Resources ruled, and we agree, that no longer important, in this case, to pass upon the issue of whether
private respondent was similarly qualified to become an awardee or not amendments to a lease contract can be proven by parol
of the disputed land because its rights to it vested prior to the evidence. The same holds true as regards the issue of forum-
effectivity of the 1973 Constitution:56 shopping.

Lastly, appellee has acquired a vested right to the subject area All in all, petitioner has not provided us sufficient reason to disturb
and, therefore, is deemed not affected by the new constitutional the cogent findings of the Director of Lands, the Minister of Natural
provision that no private corporation may hold alienable land of Resources, the trial court and the Court of Appeals.
the public domain except by lease.
WHEREFORE, the petition is hereby DISMISSED.
It may be recalled that the Secretary of Justice in his Opinion No.
64, series of 1973, had declared, to wit: SO ORDERED.

On the other hand, with respect to sales application ready for Narvasa, C.J., Romero and Francisco, JJ., concur.
issuance of sales patent, it is my opinion that where the applicant
had, before, the constitution took effect, fully complied with all his
obligations under the Public Land act in order to entitle him to
sales patent, there would seem to be not legal or equitable
justification for refusing to issue or release the sales patent.

Implementing the aforesaid Opinion No. 64 . . . , the then Secretary


of Agriculture and Natural Resources issued a memorandum,
dated February 18, 1974, which pertinently reads as follows:

In the implementation of the foregoing opinion, sales application


of private individuals covering areas in excess of 24 hectares and
those of corporations, associations, or partnership which fall under
any of the following categories shall be given due course and
issued patents, to wit:

Sales application for fishponds and for agricultural purposes (SFA,


SA and IGPSA) wherein prior to January 17, 1973,

a. the land covered thereby was awarded;

b. cultivation requirements of law were complied with as shown


by investigation reports submitted prior to January 17, 1973;

c. land was surveyed and survey returns already submitted to the


Director of Lands for verification and approval; and

d. purchase price was fully paid.

From the records, it is evident that the aforestated requisites have


been complied with by appellee long before January 17, 1973,
the effectivity of the New Constitution. To restate, the disputed
area was awarded to appellee on August 17, 1950, the purchase
price was fully paid on July 26, 1951, the cultivation requirements
were complied with as per investigation report dated December
31, 1949, and the land was surveyed under Pls-97.

The same finding was earlier made by the Director of Lands:57

It is further contended by Villaflor that Nasipit has no juridical


personality to apply for the purchase of public lands for
agricultural purposes. The records clearly show, however, that
since the execution of the deed of relinquishment of August 16,
1950, in favor of Nasipit, Villaflor has always considered and
recognized Nasipit as having the juridical personality to acquire
public lands for agricultural purposes. In the deed of
relinquishment . . . , it is stated:

6. That the Nasipit Lumber Co., Inc., a corporation duly organized


in accordance with the laws of the Philippines, . . . .

Even this Office had not failed to recognize the juridical


personality of Nasipit to apply for the purchase of public lands . . .
when it awarded to it the land so relinquished by Villaflor (Order
of Award dated August 17, 1950) and accepted its application
therefor. At any rate, the question whether an applicant is
qualified to apply for the acquisition of public lands is a matter
between the applicant and this Office to decide and which a
third party like Villaflor has no personality to question beyond
merely calling the attention of this Office thereto.

Needless to say, we also agree that the November 8, 1946 Lease


Agreement between petitioner and private respondent had
been terminated by the agreements to sell and the
relinquishment of rights. By the time the verbal leases were
allegedly made in 1951 and 1955,58 the disputed land had
18

Even then, the question of the Manila RTC's jurisdiction over the
case is tied up with R-II Builder's payment of the correct docket
fees which should be paid in full upon the filing of the pleading or
other application which initiates an action or proceeding.4 While
G.R. No. 192649 June 22, 2011
it is, consequently, true that jurisdiction, once acquired, cannot
HOME GUARANTY CORPORATION, Petitioner, vs. be easily ousted,5 it is equally settled that a court acquires
R-II BUILDERS INC. and NATIONAL HOUSING jurisdiction over a case only upon the payment of the prescribed
AUTHORITY, Respondents. filing and docket fees.6 Already implicit from the filing of the
complaint in the City of Manila where the realties comprising the
RESOLUTION Asset Pool are located, the fact that the case is a real action is
evident from the allegations of R-II Builders’ original Complaint,
PEREZ, J.: Amended and Supplemental Complaint and Second Amended
Complaint which not only sought the nullification of the DAC in
Before the Court are: (a) the Entry of Appearance filed by Atty.
favor of HGC but, more importantly, prayed for the transfer of
Lope E. Feble of the Toquero Exconde Manalang Feble Law
possession of and/or control of the properties in the Asset Pool. Its
Offices as collaborating counsel for respondent R-II Builders, Inc.
current protestations to the contrary notwithstanding, no less than
(R-II Builders), with prayer to be furnished all pleadings, notices
R-II Builders – in its opposition to HGC’s motion to dismiss – admitted
and other court processes at its given address; and (b) the motion
that the case is a real action as it affects title to or possession of
filed by R-II Builders, seeking the reconsideration of Court's
real property or an interest therein.7 Having only paid docket fees
decision dated 9 March 2011 on the following grounds:1
corresponding to an action where the subject matter is incapable
I of pecuniary estimation, R-II Builders cannot expediently claim
that jurisdiction over the case had already attached.
THE HONORABLE COURT ERRED IN RULING THAT RTC MANILA,
BRANCH 22, HAD NO JURISDICTION OVER THE PRESENT CASE SINCE In De Leon v. Court of Appeals,8 this Court had, of course, ruled
RTC-MANILA, BRANCH 24, TO WHICH THE INSTANT CASE WAS that a case for rescission or annulment of contract is not
INITIALLY RAFFLED HAD NO AUTHORITY TO HEAR THE CASE BEING A susceptible of pecuniary estimation although it may eventually
SPECIAL COMMERCIAL COURT. result in the recovery of real property. Taking into consideration
the allegations and the nature of the relief sought in the complaint
II. in the subsequent case of Serrano v. Delica,9 however, this Court
determined the existence of a real action and ordered the
THE HONORABLE COURT ERRED IN RULING THAT THE CORRECT payment of the appropriate docket fees for a complaint for
DOCKET FEES WERE NOT PAID. cancellation of sale which prayed for both permanent and
preliminary injunction aimed at the restoration of possession of the
In urging the reversal of the Court's decision, R-II Builders argues
land in litigation is a real action. In discounting the apparent
that it filed its complaint with the Manila RTC which is undoubtedly
conflict in said rulings, the Court went on to rule as follows in Ruby
vested with jurisdiction over actions where the subject matter is
Shelter Builders and Realty Development Corporation v. Hon.
incapable of pecuniary estimation; that through no fault of its
Pablo C, Formaran,10 to wit:
own, said complaint was raffled to Branch 24, the designated
Special Commercial Court (SCC) tasked to hear intra-corporate The Court x x x does not perceive a contradiction
controversies; that despite the determination subsequently made between Serrano and the Spouses De Leon. The Court calls
by Branch 24 of the Manila RTC that the case did not involve an attention to the following statement in Spouses De Leon: "A review
intra-corporate dispute, the Manila RTC did not lose jurisdiction of the jurisprudence of this Court indicates that in determining
over the same and its Executive Judge correctly directed its re- whether an action is one the subject matter of which is not
raffling to Branch 22 of the same Court; that the re-raffle and/or capable of pecuniary estimation, this Court has adopted the
amendment of pleadings do not affect a court's jurisdiction criterion of first ascertaining the nature of the principal action or
which, once acquired, continues until the case is finally remedy sought." Necessarily, the determination must be done on
terminated; that since its original Complaint, Amended and a case-to-case basis, depending on the facts and circumstances
Supplemental Complaint and Second Amended Complaint all of each. What petitioner conveniently ignores is that in Spouses
primarily sought the nullification of the Deed of Assignment and De Leon, the action therein that private respondents instituted
Conveyance (DAC) transferring the Asset Pool in favor of before the RTC was "solely for annulment or rescission" of the
petitioner Home Guaranty Corporation (HGC), the subject matter contract of sale over a real property. There appeared to be no
of the case is clearly one which is incapable of pecuniary transfer of title or possession to the adverse party x x x.
estimation; and, that the court erred in holding that the case was (Underscoring Supplied)1avvphi1
a real action and that it evaded the payment of the correct
docket fees computed on the basis of the assessed value of the Having consistently sought the transfer of possession and control
realties in the Asset Pool. of the properties comprising the Asset Pool over and above the
nullification of the Deed of Conveyance in favor of HGC, it follows
R-II Builders' motion is bereft of merit. R-II Builders should have paid the correct and appropriate docket
fees, computed according to the assessed value thereof. This
The record shows that, with the raffle of R-II Builders’ complaint
much was directed in the 19 May 2008 Order issued by Branch 22
before Branch 24 of the Manila RTC and said court’s grant of the
of the Manila RTC which determined that the case is a real action
application for temporary restraining order incorporated therein,
and admitted the Amended and Supplemental Complaint R-II
HGC sought a preliminary hearing of its affirmative defenses
Builders subsequently filed in the case.11 In obvious evasion of said
which included, among other grounds, lack of jurisdiction and
directive to pay the correct docket fees, however, R-II Builders
improper venue. It appears that, at said preliminary hearing, it was
withdrew its Amended and Supplemental Complaint and, in lieu
established that R-II Builders’ complaint did not involve an intra-
thereof, filed its Second Amended Complaint which, while
corporate dispute and that, even if it is, venue was improperly laid
deleting its causes of action for accounting and conveyance of
since none of the parties maintained its principal office in Manila.
title to and/or possession of the entire Asset Pool, nevertheless
While it is true, therefore, that R-II Builders had no hand in the
prayed for its appointment as Receiver of the properties
raffling of the case, it cannot be gainsaid that Branch 24 of the
comprising the same. In the landmark case of Manchester
RTC Manila had no jurisdiction over the case. Rather than ordering
Development Corporation v. Court of Appeals,12 this Court ruled
the dismissal of the complaint, however, said court issued the 2
that jurisdiction over any case is acquired only upon the payment
January 2008 order erroneously ordering the re-raffle of the case.
of the prescribed docket fee which is both mandatory and
In Atwel v. Concepcion Progressive Association, Inc.2 and Reyes
jurisdictional. Although it is true that the Manchester Rule does not
v. Hon. Regional Trial Court of Makati, Branch 1423which involved
apply despite insufficient filing fees when there is no intent to
SCCs trying and/or deciding cases which were found to be civil in
defraud the government,13R-II Builders’ evident bad faith should
nature, this Court significantly ordered the dismissal of the
clearly foreclose the relaxation of said rule.
complaint for lack of jurisdiction instead of simply directing the re-
raffle of the case to another branch. In addition to the jurisdictional and pragmatic aspects underlying
the payment of the correct docket fees which have already been
discussed in the decision sought to be reconsidered, it finally bears
19

emphasizing that the Asset Pool is comprised of government


properties utilized by HGC as part of its sinking fund, in pursuit of its
mandate as statutory guarantor of government housing
programs. With the adverse consequences that could result from
G.R. No. 202664, November 20, 2015
the transfer of possession and control of the Asset Pool, it is
imperative that R-II Builders should be made to pay the docket MANUEL LUIS C. GONZALES AND FRANCIS MARTIN D.
and filing fees corresponding to the assessed value of the GONZALES, Petitioners, v. GJH LAND, INC. (FORMERLY KNOWN AS
properties comprising the same. S.J. LAND, INC.), CHANG HWAN JANG A.K.A. STEVE JANG, SANG
RAK KIM, MARIECHU N. YAP, AND ATTY. ROBERTO P. MALLARI
WHEREFORE, the Court resolves to:
II, Respondent.
(a) NOTE the Entry of Appearance of Atty. Lope E. Feble of
DECISION
Tuquero Exconde Manalang Feble Law Offices as collaborating
counsel for respondent R-II Builders, Inc.; and DENY counsel’s PERLAS-BERNABE, J.:
prayer to be furnished with all pleadings notices and other court
processes at Unit 2704-A, West Tower, Philippine Stock Exchange This is a direct recourse to the Court, via a petition for review
Centre, Exchange Road, Ortigas Center Pasig, since only the lead on certiorari,1 from the Orders dated April 17, 20122 and July 9,
counsel is entitled to service of court processes; 20123 of the Regional Trial Court (RTC) of Muntinlupa City, Branch
276 (Branch 276) dismissing Civil Case No. 11-077 for lack of
(b) DENY with FINALITY R-II Builders, Inc.’s Motion for jurisdiction.
Reconsideration of the Decision dated 9 March 2011 for lack of
merit, the basic issues having been already passed upon and The Facts
there being no substantial argument to warrant a modification of
the same. No further pleadings or motions shall be entertained
herein. On August 4, 2011, petitioners Manuel Luis C. Gonzales4 and
Francis Martin D. Gonzales (petitioners) filed a Complaint5 for
Let an Entry of Judgment in this case be made in due course. "Injunction with prayer for Issuance of Status Quo Order, Three (3)
and Twenty (20)-Day Temporary Restraining Orders, and Writ of
SO ORDERED. Preliminary Injunction with Damages" against respondents GJH
Land, Inc. (formerly known as S.J. Land, Inc.), Chang Hwan Jang,
JOSE PORTUGAL PEREZ
Sang Rak Kim, Mariechu N. Yap, and Atty. Roberto P. Mallari
Associate Justice II6 (respondents) before the RTC of Muntinlupa City seeking to
enjoin the sale of S.J. Land, Inc.'s shares which they purportedly
bought from S.J. Global, Inc. on February 1, 2010. Essentially,
petitioners alleged that the subscriptions for the said shares were
already paid by them in full in the books of S.J. Land, Inc.,7 but
were nonetheless offered for sale on July 29, 2011 to the
corporation's stockholders,8 hence, their plea for injunction.

The case was docketed as Civil Case No. 11-077 and raffled
to Branch 276, which is not a Special Commercial Court. On
August 9, 2011, said branch issued a temporary restraining
order,9 and later, in an Order10 dated August 24, 2011, granted the
application for a writ of preliminary injunction.

After filing their respective answers11 to the complaint,


respondents filed a motion to dismiss12 on the ground of lack of
jurisdiction over the subject matter, pointing out that the case
involves an intra-corporate dispute and should, thus, be heard by
the designated Special Commercial Court of Muntinlupa City.13

The RTC Ruling

In an Order14 dated April 17, 2012, Branch 276 granted the motion
to dismiss filed by respondents. It found that the case involves an
intra-corporate dispute that is within the original and exclusive
jurisdiction of the RTCs designated as Special Commercial Courts.
It pointed out that the RTC of Muntinlupa City, Branch 256 (Branch
256) was specifically designated by the Court as the Special
Commercial Court, hence, Branch 276 had no jurisdiction over the
case and cannot lawfully exercise jurisdiction on the matter,
including the issuance of a Writ of Preliminary
Injunction.15 Accordingly, it dismissed the case.

Dissatisfied, petitioners filed a motion for


reconsideration,16 arguing that they filed the case with the Office
of the Clerk of Court of the RTC of Muntinlupa City which assigned
the same to Branch 276 by raffle.17 As the raffle was beyond their
control, they should not be made to suffer the consequences of
the wrong assignment of the case, especially after paying the
filing fees in the amount of P235,825.00 that would be for naught
if the dismissal is upheld.18 They further maintained that the RTC
has jurisdiction over intra-corporate disputes under Republic Act
No. (RA) 8799,19 but since the Court selected specific branches to
hear and decide such suits, the case must, at most, be transferred
or raffled off to the proper branch.20

In an Order21 dated July 9, 2012, Branch 276 denied the motion for
reconsideration, holding that it has no authority or power to order
20

the transfer of the case to the proper Special Commercial Court, (6) In all cases not within the exclusive jurisdiction of any court,
citing Calleja v. Panday22 (Calleja); hence, the present petition. tribunal, person or body exercising jurisdiction or any court,
tribunal, person or body exercising judicial or quasi-judicial
The Issue Before the Court functions; x x x x

The essential issue for the Court's resolution is whether or not


Branch 276 of the RTC of Muntinlupa City erred in dismissing the As enunciated in Durisol Philippines, Inc. v.
case for lack of jurisdiction over the subject matter. CA:31chanroblesvirtuallawlibrary
The Court's Ruling The regional trial court, formerly the court of first instance, is a court
of general jurisdiction. All cases, the jurisdiction over which is not
The petition is meritorious.
specifically provided for by law to be within the jurisdiction of any
At the outset, the Court finds Branch 276 to have correctly other court, fall under the jurisdiction of the regional trial
categorized Civil Case No. 11-077 as a commercial case, more court.32ChanRoblesVirtualawlibrary
particularly, an intra-corporate dispute,23 considering that it cralawlawlibrary
relates to petitioners' averred rights over the shares of stock
offered for sale to other stockholders, having paid the same in full.
To clarify, the word "or" in Item 5.2, Section 5 of RA 8799 was
Applying the relationship test and the nature of the controversy
intentionally used by the legislature to particularize the fact that
test, the suit between the parties is clearly rooted in the existence
the phrase "the Courts of general jurisdiction" is equivalent to the
of an intra-corporate relationship and pertains to the
phrase "the appropriate Regional Trial Court." In other words, the
enforcement of their correlative rights and obligations under the
jurisdiction of the SEC over the cases enumerated under Section
Corporation Code and the internal and intra-corporate
5 of PD 902-A was transferred to the courts of general jurisdiction,
regulatory rules of the corporation,24 hence, intra-corporate,
that is to say (or, otherwise known as), the proper Regional Trial
which should be heard by the designated Special Commercial
Courts. This interpretation is supported by San Miguel Corp. v.
Court as provided under A.M. No. 03-03-03-SC25 dated June 17,
Municipal Council,33 wherein the Court held that:
2003 in relation to Item 5.2, Section 5 of RA 8799.
[T]he word "or" may be used as the equivalent of "that is to say"
The present controversy lies, however, in the procedure to be and gives that which precedes it the same significance as that
followed when a commercial case - such as the instant intra- which follows it. It is not always disjunctive and is sometimes
corporate dispute -has been properly filed in the official station of interpretative or expository of the preceding
the designated Special Commercial Court but is, however, later word.34cralawlawlibrary
wrongly assigned by raffle to a regular branch of that station.

As a basic premise, let it be emphasized that a court's acquisition Further, as may be gleaned from the following excerpt of the
of jurisdiction over a particular case's subject matter is different Congressional deliberations:
from incidents pertaining to the exercise of its jurisdiction.
Jurisdiction over the subject matter of a case is conferred by law, Senator [Raul S.] Roco: x x x.
whereas a court's exercise of jurisdiction, unless provided by the
law itself, is governed by the Rules of Court or by the orders issued x x x x
from time to time by the Court.26 In Lozada v. Bracewell,27 it was
recently held that the matter of whether the RTC resolves an issue x x x. The first major departure is as regards the Securities and
in the exercise of its general jurisdiction or of its limited jurisdiction Exchange Commission. The Securities and Exchange Commission
as a special court is only a matter of procedure and has nothing has been authorized under this proposal to reorganize itself. As an
to do with the question of jurisdiction. administrative agency, we strengthened it and at the same time
we take away the quasi-judicial functions. The quasi-judicial
Pertinent to this case is RA 8799 which took effect on August 8, functions are now given back to the courts of general jurisdiction
2000. By virtue of said law, jurisdiction over cases enumerated in - the Regional Trial Court, except for two categories of cases.
Section 528 of Presidential Decree No. 902-A29 was transferred from
the Securities and Exchange Commission (SEC) to the RTCs, being In the case of corporate disputes, only those that are now
courts of general jurisdiction. Item 5.2, Section 5 of RA 8799 submitted for final determination of the SEC will remain with the
provides: SEC. So, all those cases, both memos of the plaintiff and the
defendant, that have been submitted for resolution will continue.
SEC. 5. Powers and Functions of the Commission. - x x x At the same time, cases involving rehabilitation, bankruptcy,
suspension of payments and receiverships that were filed before
x x x x June 30, 2000 will continue with the SEC. in other words, we are
avoiding the possibility, upon approval of this bill, of people filing
5.2 The Commission's jurisdiction over all cases enumerated under cases with the SEC, in manner of speaking, to select their court.35
Section 5 of Presidential Decree No. 902-A is hereby transferred to
the Courts of general jurisdiction or the appropriate Regional Trial x x x x (Emphasis supplied)
Court: Provided, that the Supreme Court in the exercise of its
authority may designate the Regional Trial Court branches that
shall exercise jurisdiction over the cases. The Commission shall Therefore, one must be disabused of the notion that the transfer
retain jurisdiction over pending cases involving intra-corporate of jurisdiction was made only in favor of particular RTC branches,
disputes submitted for final resolution which should be resolved and not the RTCs in general.
within one (1) year from the enactment of this Code. The
Commission shall retain jurisdiction over pending suspension of Consistent with the foregoing, history depicts that when the
payments/rehabilitation cases filed as of 30 June 2000 until finally transfer of SEC cases to the RTCs was first implemented, they were
disposed. (Emphasis supplied) transmitted to the Executive Judges of the RTCs for raffle between
or among its different branches, unless a specific branch has
been designated as a Special Commercial Court, in which
The legal attribution of Regional Trial Courts as courts of general instance, the cases were transmitted to said branch.36 It was only
jurisdiction stems from Section 19 (6), Chapter II of Batas on November 21, 2000 that the Court designated certain RTC
Pambansa Bilang (BP) 129,30 known as "The Judiciary branches to try and decide said SEC cases37 without, however,
Reorganization Act of 1980":chanRoblesvirtualLawlibrary providing for the transfer of the cases already distributed to or filed
with the regular branches thereof. Thus, on January 23, 2001, the
Section 19. Jurisdiction in civil cases.- Regional Trial Courts shall Court issued SC Administrative Circular No. 08-200138 directing the
exercise exclusive original jurisdiction: transfer of said cases to the designated courts (commercial SEC
courts). Later, or on June 17, 2003, the Court issued A.M. No. 03-
x x x x
03-03-SC consolidating the commercial SEC courts and the
intellectual property courts39 in one RTC branch in a particular
21

locality, i.e., the Special Commercial Court, to streamline the 16.1 Copies of the letters dated 13 May 2011 are attached hereto
court structure and to promote expediency.40 Accordingly, the and made integral parts hereof as Annexes "J" and "K",
RTC branch so designated was mandated to try and decide SEC respectively.
cases, as well as those involving violations of intellectual property
rights, which were, thereupon, required to be filed in the Office of 17. On 29 July 2011, MLCG and FMDG received an Offer Letter
the Clerk of Court in the official station of the designated Special addressed to stockholders of GJH Land, Inc. from Yap informing
Commercial Courts, to wit: all stockholders that GJH Land, Inc. is now offering for sale the
unpaid shares of stock of MLCG and FMDG. The same letter states
1. The Regional Courts previously designated as SEC Courts that the offers to purchase these shares will be opened on 10
through the: (a) Resolutions of this Court dated 21 November August 2011 with payments to be arranged by deposit to the
2000, 4 July 2001, 12 November 2002, and 9 July 2002 all issued in depository bank of GJH Land, Inc.
A.M. No. 00-11-03-SC; (b) Resolution dated 27 August 2001 in A.M.
No. 01-5-298-RTC; and (c) Resolution dated 8 July 2002 in A.M. No. 17.1 A copy of the undated Offer Letter is attached hereto and
01-12-656-RTC are hereby DESIGNATED and shall be CALLED made and made an integral part hereof as Annex "L".
as Special Commercial Courts to try and decide cases involving
18. The letter of GJH Land, Inc. through Yap, is totally without legal
violations of Intellectual Property Rights which fall within their
and factual basis because as evidenced by the Deeds of
jurisdiction and those cases formerly cognizable by the Securities
Assignment signed and certified by Yap herself, all the S.J. Land,
and Exchange Commission:
Inc. shares acquired by MLCG and FMDG have been fully paid in
the books of S.J. Land, Inc.
x x x x
19. With the impending sale of the alleged unpaid subscriptions
4. The Special Commercial Courts shall have jurisdiction over
on 10 August 2011, there is now a clear danger that MLCG and
cases arising within their respective territorial jurisdiction with
FMDG would be deprived of these shares without legal and factual
respect to the National Capital Judicial Region and within the
basis.
respective provinces with respect to the First to Twelfth Judicial
Regions. Thus, cases shall be filed in the Office of the Clerk of Court
20. Furthermore, if they are deprived of these shares through the
in the official station of the designated Special Commercial
scheduled sale, both MLCG and FMDG would suffer grave and
Court;41
irreparable damage incapable of pecuniary estimation.
x x x x (Underscoring supplied)
21. For this reason, plaintiffs now come to the Honorable Court for
injunctive relief so that after trial on the merits, a permanent
It is important to mention that the Court's designation of Special injunction should be issued against the defendants preventing
Commercial Courts was made in line with its constitutional them from selling the shares of the plaintiffs, there being no basis
authority to supervise the administration of all courts as provided for such sale.46cralawlawlibrary
under Section 6, Article VIII of the 1987 Constitution:

Section 6. The Supreme Court shall have administrative supervision According to jurisprudence, "it is not the caption but the
over all courts and the personnel thereof. allegations in the complaint or other initiatory pleading which give
meaning to the pleading and on the basis of which such pleading
may be legally characterized."47 However, so as to avert any
The objective behind the designation of such specialized courts future confusion, the Court requires henceforth, that all initiatory
is to promote expediency and efficiency in the exercise of the pleadings state the action's nature both in its caption and the
RTCs' jurisdiction over the cases enumerated under Section 5 of body, which parameters are defined in the dispositive portion of
PD 902-A. Such designation has nothing to do with the statutory this Decision.
conferment of jurisdiction to all RTCs under RA 8799 since in the
first place, the Court cannot enlarge, diminish, or dictate when Going back to the case at bar, the Court nonetheless deems that
jurisdiction shall be removed, given that the power to define, the erroneous raffling to a regular branch instead of to a Special
prescribe, and apportion jurisdiction is, as a general rule, a matter Commercial Court is only a matter of procedure - that is, an
of legislative prerogative.42 Section 2, Article VIII of the 1987 incident related to the exercise of jurisdiction - and, thus, should
Constitution provides:chanRoblesvirtualLawlibrary not negate the jurisdiction which the RTC of Muntinlupa City had
already acquired. In such a scenario, the proper course of action
Section 2. The Congress shall have the power to define, prescribe, was not for the commercial case to be dismissed; instead, Branch
and apportion the jurisdiction of the various courts but may not 276 should have first referred the case to the Executive Judge for
deprive the Supreme Court of its jurisdiction over cases re-docketing as a commercial case; thereafter, the Executive
enumerated in Section 5 hereof. Judge should then assign said case to the only designated
Special Commercial Court in the station, i.e.,Branch 256.
x x x x
Note that the procedure would be different where the RTC
Here, petitioners filed a commercial case, i.e., an intra-corporate acquiring jurisdiction over the case has multiple special
dispute, with the Office of the Clerk of Court in the RTC of commercial court branches; in such a scenario, the Executive
Muntinlupa City, which is the official station of the designated Judge, after re-docketing the same as a commercial case, should
Special Commercial Court, in accordance with A.M. No. 03-03- proceed to order its re-raffling among the said special branches.
03-SC. It is, therefore, from the time of such filing that the RTC of
Muntinlupa City acquired jurisdiction over the subject matter or Meanwhile, if the RTC acquiring jurisdiction has no branch
the nature of the action.43 Unfortunately, the commercial case designated as a Special Commercial Court, then it
was wrongly raffled to a regular branch, e.g., Branch 276, instead should refer the case to the nearest RTC with a designated
of being assigned44to the sole Special Commercial Court in the Special Commercial Court branch within the judicial
RTC of Muntinlupa City, which is Branch 256. This error may have region.48 Upon referral, the RTC to which the case was referred to
been caused by a reliance on the complaint's caption, i.e., "Civil should re-docket the case as a commercial case, and then: (a) if
Case for Injunction with prayer for Status Quo Order, TRO and the said RTC has only one branch designated as a Special
Damages,"45 which, however, contradicts and more importantly, Commercial Court, assign the case to the sole special branch; or
cannot prevail over its actual allegations that clearly make out an (b) if the said RTC has multiple branches designated as Special
intra-corporate dispute: Commercial Courts, raffle off the case among those special
branches.
16. To the surprise of MLCG and FMDG, however, in two identical
letters both dated 13 May 2011, under the letterhead of GJH Land,
In all the above-mentioned scenarios, any difference regarding
Inc., Yap, now acting as its President, Jang and Kim demanded
the applicable docket fees should be duly accounted for. On the
payment of supposed unpaid subscriptions of MLCG and FMDG
other hand, all docket fees already paid shall be duly credited,
amounting to P10,899,854.30 and P2,625,249.41, respectively.
and any excess, refunded.
22

At this juncture, the Court finds it fitting to clarify that the RTC the imprimatur of statutory law, i.e., Batas Pambansa Bilang (BP)
mistakenly relied on the Calleja case to support its ruling. 129.52To restate, the designation of Special Commercial Courts
In Calleja, an intra-corporate dispute49 among officers of a was merely intended as a procedural tool to expedite the
private corporation with principal address at Goa, Camarines Sur, resolution of commercial cases in line with the court's exercise of
was filed with the RTC of San Jose, Camarines Sur, Branch 58 jurisdiction. This designation was not made by statute but only by
instead of the RTC of Naga City, which is the official station of the an internal Supreme Court rule under its authority to promulgate
designated Special Commercial Court for Camarines Sur. rules governing matters of procedure and its constitutional
Consequently, the Court set aside the RTC of San Jose, Camarines mandate to supervise the administration of all courts and the
Sur's order to transfer the case to the RTC of Naga City and personnel thereof.53 Certainly, an internal rule promulgated by the
dismissed the complaint considering that it was filed before a Court cannot go beyond the commanding statute. But as a more
court which, having no internal branch designated as a Special fundamental reason, the designation of Special Commercial
Commercial Court, had no jurisdiction over those kinds of Courts is, to stress, merely an incident related to the court's
actions, i.e., intra-corporate disputes. Calleja involved two exercise of jurisdiction, which, as first discussed, is distinct from the
different RTCs, i.e., the RTC of San Jose, Camarines Sur and the RTC concept of jurisdiction over the subject matter. The RTC's general
of Naga City, whereas the instant case only involves one jurisdiction over ordinary civil cases is therefore not abdicated by
RTC, i.e., the RTC of Muntinlupa City, albeit involving two different an internal rule streamlining court procedure.
branches of the same court, i.e.,Branches 256 and 276. Hence,
owing to the variance in the facts attending, it was then improper In fine, Branch 276's dismissal of Civil Case No. 11-077 is set aside
for the RTC to rely on the Calleja ruling. and the transfer of said case to Branch 256, the designated
Special Commercial Court of the same RTC of Muntinlupa City,
Besides, the Court observes that the fine line that distinguishes under the parameters above-explained, is hereby ordered.
subject matter jurisdiction and exercise of jurisdiction had been
clearly blurred in Calleja. Harkening back to the statute that had WHEREFORE, the petition is GRANTED. The Orders dated April 17,
conferred subject matter jurisdiction, two things are apparently 2012 and July 9, 2012 of the Regional Trial Court (RTC) of
clear: (a) that the SEC's subject matter jurisdiction over intra- Muntinlupa City, Branch 276 in Civil Case No. 11-077 are
corporate cases under Section 5 of Presidential Decree No. 902-A hereby REVERSED and SET ASIDE. Civil Case No. 11-077
was transferred to the Courts of general jurisdiction, i.e., the is REFERRED to the Executive Judge of the RTC of Muntinlupa City
appropriate Regional Trial Courts; and (b) the designated for re-docketing as a commercial case. Thereafter, the Executive
branches of the Regional Trial Court, as per the rules promulgated Judge shall ASSIGNsaid case to Branch 256, the sole designated
by the Supreme Court, shall exercise jurisdiction over such cases. Special Commercial Court in the RTC of Muntinlupa City, which
Item 5.2, Section 5 of RA 8799 provides: is ORDERED to resolve the case with reasonable dispatch. In this
regard, the Clerk of Court of said RTC shall DETERMINE the
SEC. 5. Powers and Functions of the Commission. - x x x appropriate amount of docket fees and, in so doing, ORDER the
payment of any difference or, on the other hand, refund any
5.2 The Commission's jurisdiction over all cases enumerated under excess.
Section 5 of Presidential Decree No. 902-A is hereby transferred to
the Courts of general jurisdiction or the appropriate Regional Trial Furthermore, the Court hereby RESOLVES that henceforth, the
Court: Provided, that the Supreme Court in the exercise of its following guidelines shall be observed:
authority may designate the Regional Trial Court branches that
shall exercise jurisdiction over the cases, x x x.cralawlawlibrary 1. If a commercial case filed before the proper RTC is wrongly
raffled to its regular branch, the proper courses of action are as
follows:
In contrast, the appropriate jurisprudential reference to this case
would be Tan v. Bausch & Lomb, Inc.,50which involves a criminal 1.1 If the RTC has only one branch designated as a Special
complaint for violation of intellectual property rights filed before Commercial Court, then the case shall be referred to the
the RTC of Cebu City but was raffled to a regular branch thereof Executive Judge for re-docketing as a commercial case, and
(Branch 21), and not to a Special Commercial Court. As it turned thereafter, assigned to the sole special branch;
out, the regular branch subsequently denied the private
complainant's motion to transfer the case to the designated 1.2 If the RTC has multiple branches designated as Special
special court of the same RTC, on the ground of lack of Commercial Courts, then the case shall be referred to the
jurisdiction. The CA reversed the regular branch and, Executive Judge for re-docketing as a commercial case, and
consequently, ordered the transfer of the case to the designated thereafter, raffled off among those special branches; and
special court at that time (Branch 9). The Court, affirming the CA,
declared that the RTC had acquired jurisdiction over the subject 1.3 If the RTC has no internal branch designated as a Special
matter. In view, however, of the designation of another court as Commercial Court, then the case shall be referred to the nearest
the Special Commercial Court in the interim (Branch 11 of the RTC with a designated Special Commercial Court branch within
same Cebu City RTC), the Court accordingly ordered the transfer the judicial region. Upon referral, the RTC to which the case was
of the case and the transmittal of the records to said Special referred to should re- docket the case as a commercial case, and
Commercial Court instead.51Similarly, the transfer of the present then: (a) if the said RTC has only one branch designated as a
intra-corporate dispute from Branch 276 to Branch 256 of the same Special Commercial Court, assign the case to the sole special
RTC of Muntinlupa City, subject to the parameters above- branch; or (b) if the said RTC has multiple branches designated as
discussed is proper and will further the purposes stated in A.M. No. Special Commercial Courts, raffle off the case among those
03-03-03-SC of attaining a speedy and efficient administration of special branches.
justice.
2. If an ordinary civil case filed before the proper RTC is wrongly
For further guidance, the Court finds it apt to point out that the raffled to its branch designated as a Special Commercial Court,
same principles apply to the inverse situation of ordinary civil then the case shall be referred to the Executive Judge for re-
cases filed before the proper RTCs but wrongly raffled to its docketing as an ordinary civil case. Thereafter, it shall be raffled
branches designated as Special Commercial Courts. In such a off to all courts of the same RTC (including its designated special
scenario, the ordinary civil case should then be referred to the branches which, by statute, are equally capable of exercising
Executive Judge for re-docketing as an ordinary civil case; general jurisdiction same as regular branches), as provided for
thereafter, the Executive Judge should then order the raffling of under existing rules.
the case to all branches of the same RTC, subject to limitations
3. All transfer/raffle of cases is subject to the payment of the
under existing internal rules, and the payment of the correct
appropriate docket fees in case of any difference. On the other
docket fees in case of any difference. Unlike the limited
hand, all docket fees already paid shall be duly credited, and any
assignment/raffling of a commercial case only to branches
excess, refunded.
designated as Special Commercial Courts in the scenarios stated
above, the re-raffling of an ordinary civil case in this instance to all 4. Finally, to avert any future confusion, the Court requires that all
courts is permissible due to the fact that a particular branch which initiatory pleadings state the action's nature both in its caption
has been designated as a Special Commercial Court does not and body. Otherwise, the initiatory pleading may, upon motion or
shed the RTC's general jurisdiction over ordinary civil cases under
23

by order of the court motu proprio, be dismissed without prejudice Petitioner’s motion to dismiss the complaint for lack of jurisdiction
to its re-filing after due rectification. This last procedural rule is is pursuant to Section 1, Rule 16 of the 1997 Rules of Civil
prospective in application. Procedure, as amended, which provides:

5. All existing rules inconsistent with the foregoing are deemed Sec. 1. Grounds. Within the time for but before filing the answer to
superseded. the complaint or pleading asserting a claim, a motion to dismiss
may be made on any of the following grounds:

SO ORDERED. xxxxxxxxx

G.R. No. 154282 April 7, 2006 b.) That the court has no jurisdiction over the subject matter of the
claim.
VANGIE BARRAZONA, Petitioner, vs.
REGIONAL TRIAL COURT, BRANCH 61, BAGUIO CITY and SAN-AN As mentioned earlier, petitioner stated in her motion that
REALTY AND DEVELOPMENT CORPORATION, herein represented by respondent’s allegations in its complaint show that it is one for
RODRIGO CHUA TIU, Respondents. ejectment cognizable, not by the RTC but, by the MTC of Baguio
City.
DECISION
In Herrera, et al. v. Bollos, et al.,1 we emphasized the basic rule
SANDOVAL-GUTIERREZ, J.: that jurisdiction of the court over the subject matter of the action
is determined by the allegations of the complaint at the time of its
For our resolution is the instant Petition for Certiorari under Rule 65
filing, irrespective of whether or not the plaintiff is entitled to
of the 1997 Rules of Civil Procedure, as amended, assailing the
recover upon all or some of the claims asserted therein. What
Order dated June 19, 2002 of the Regional Trial Court (RTC),
determines the jurisdiction of the court is the nature of the action
Branch 61, Baguio City, denying petitioner’s Motion to Dismiss Civil
pleaded as appearing from the allegations in the complaint. The
Case No. 5238-R, entitled "SAN-AN REALTY and DEVELOPMENT
averments therein and the character of the relief sought are the
CORPORATION, herein represented by RODRIGO CHUA TIU,
ones to be consulted.
plaintiff, v. VANGIE BARRAZONA, defendant."
It bears reiterating paragraph 5 of the complaint, thus:
San-an Realty and Development Corporation, respondent, owns
a building located at Naguilian corner Asin Road, Baguio City. 5. That the plaintiff has demanded the defendant to pay her
Vangie Barrazona, petitioner, has been leasing portions of the overdue account, now amounting to P971,838.15, the last
building identified as Units 203 A and B at the second floor. The demand to vacate and payment of arrears having been made
period of the lease is for two (2) years, commencing July 15, 2001 in writing on March 27, 2002 xxx.
and ending June 30, 2003. The monthly rental is P400.00 per
square meter for Unit 203 A and P500.00 per square meter for Unit This allegation clearly shows that respondent made several
203 B. demands upon petitioner to pay her overdue rentals and to
vacate the premises; and that the last demand to pay and
Starting August 2001, petitioner defaulted in the payment of the vacate in writing was on March 27, 2002. Respondent thus
monthly rentals and failed to pay despite demands by complied with Section 2, Rule 70 of the 1997 Rules of Civil
respondent. Thus, on May 14, 2002, respondent filed with the RTC, Procedure, as amended, which provides:
Branch 61, Baguio City, a Complaint for Collection of Sum of
Money with Damages, docketed as Civil Case No. 5238-R. Sec. 2. Lessor to proceed against lessee only after demand. —
Unless otherwise stipulated, such action by the lessor shall be
On June 3, 2002, petitioner filed with the RTC a Motion to Dismiss commenced only after demand to pay or comply with the
on the ground, among others, that the RTC has no jurisdiction over conditions of the lease and to vacate is made upon the lessee, or
the complaint considering that the allegations therein clearly by serving written notice of such demand upon the person found
indicate that the action is one for ejectment (illegal detainer) on the premises, or by posting such notice on the premises if no
which is under the exclusive jurisdiction of the Municipal Trial Court person be found thereon, and the lessee fails to comply therewith
(MTC). Petitioner pointed out the following allegations in after fifteen (15) days in the case of land or five (5) days in the
paragraphs 4 and 5 of the complaint showing that it is not for sum case of buildings. (2a)
of money but for ejectment:
Indeed, while the complaint is captioned "Collection of Sum of
4. That the defendant has failed to pay the rentals for the said Money with Damages," the allegations therein show that
leased premises for the month of August 2001 up to the present; respondent’s action is for ejectment. All ejectment cases are
within the jurisdiction of the MTC.2
5. That the plaintiff has demanded the defendant to pay her
overdue account, now amounting to P971,838.15, the last Next, petitioner maintains that the Order of the RTC denying her
demand to vacate and payment of arrears having been made Motion to Dismiss violates the Constitution as it does not state the
in writing on March 27, 2002 xxx. facts and the law on which it is based. The challenged Order is
reproduced as follows:
In an Order dated June 19, 2002, the RTC denied the Motion to
Dismiss for lack of merit. ORDER

Forthwith, petitioner filed the instant Petition for Certiorari alleging This Court finds that the grounds stated in the Motion to Dismiss to
that: (1) the RTC committed grave abuse of discretion amounting be without merit, hence, the same is denied.
to lack or excess of jurisdiction in denying her Motion to Dismiss;
and (2) the Resolution denying her Motion to Dismiss is SO ORDERED.
unconstitutional as it does not state its legal basis.
We have admonished the trial courts not to issue a minute order
On the other hand, respondent, in praying for the dismissal of the or resolution like the one specified above. A trial court should state
petition, contends that (1) the complaint is for the collection of in its order the reasons for the dismissal of the complaint so that
unpaid rentals as there is absolutely no allegation that its intent is when the order is appealed, the appellate court can readily
to eject petitioner from the premises; (2) petitioner should have determine from a casual perusal thereof whether there is a prima
first filed a motion for reconsideration before resorting to the facie justification for the dismissal.3
extraordinary suit of certiorari; and (3) the assailed order denying
petitioner’s motion to dismiss is interlocutory and, therefore, Under Section 3, Rule 16 of the 1997 Rules of Civil Procedure, as
cannot be the subject of a petition for certiorari.1avvphil.net amended, we require that resolutions disposing of a motion to
dismiss shall state clearly and distinctly the reasons therefor, thus:
We hold that in denying petitioner’s motion to dismiss the
complaint, the RTC acted with grave abuse of discretion. Sec. 3. Resolution of motion. — After the hearing, the court may
dismiss the action or claim, deny the motion, or order the
amendment of the pleading.
24

The court shall not defer the resolution of the motion for the reason
that the ground relied upon is not indubitable.

In every case, the resolution shall state clearly and distinctly the
reasons therefor.

This requirement proscribes the common practice of perfunctorily


dismissing a motion to dismiss for "lack of merit." Such cavalier
dispositions can often pose difficulty and misunderstanding on the
part of the aggrieved party in taking recourse therefrom and
likewise on the higher court called upon to resolve the same,
usually on certiorari.4

While an order denying a motion to dismiss is interlocutory and G.R. No. 184197 February 11, 2010
non-appeallable, however, if the denial is without or in excess of
jurisdiction, certiorari and prohibition are proper remedies from RAPID CITY REALTY AND DEVELOPMENT CORPORATION, Petitioner,
such order of denial.5 In Time, Inc. v. Reyes,6 this Court, speaking vs.
through Justice J.B. L. Reyes, held: The motion to dismiss was ORLANDO VILLA and LOURDES PAEZ-VILLA,1 Respondents.
predicated on the respondent court’s lack of jurisdiction to
DECISION
entertain the action; and the rulings of this Court are that writs of
certiorari or prohibition, or both, may issue in case of a denial or CARPIO MORALES, J.:
deferment of an action or on the basis of a motion to dismiss for
lack of jurisdiction.7 Verily, the writ of certiorari is granted to keep Sometime in 2004, Rapid City Realty and Development
an inferior court within the bounds of its jurisdiction or to prevent it Corporation (petitioner) filed a complaint for declaration of nullity
from committing such a grave abuse of discretion amounting to of subdivision plans . . . mandamus and damages against several
lack or excess of jurisdiction.8 defendants including Spouses Orlando and Lourdes Villa
(respondents). The complaint, which was docketed at the
Lastly, we cannot go along with respondent’s contention that Regional Trial Court of Antipolo City as Civil Case No. 04-7350, was
petitioner should have first filed a motion for reconsideration lodged at Branch 71 thereof.
before resorting to the remedy of certiorari. While the rule is that
before certiorari may be availed of, petitioner must first file a After one failed attempt at personal service of summons, Gregorio
motion for reconsideration with the lower court of the act or order Zapanta (Zapanta), court process server, resorted to substituted
complained of,9 however, such rule is not without exception. We service by serving summons upon respondents’ househelp who
have, in several instances, dispensed with the filing of a motion for did not acknowledge receipt thereof and refused to divulge their
reconsideration of a lower court’s ruling, such as: where the names. Thus Zapanta stated in the Return of Summons:
proceedings in which the error occurred is a patent
nullity;10 where the question is purely of law; when public interest is THIS IS TO CERTIFY that on September 24, 2004, the undersigned
involved; where judicial intervention is urgent or its application caused the service of summons together with a copy of the
may cause great and irreparable damage;11 and where the court complaint with its annexes to defendant Spouses Lourdes Estudillo
a quo has no jurisdiction,12 as in this case. Paez-Cline and Orlando Villa at their given address at 905 Padre
Faura Street, Ermita Manila, as per information given by two lady
WHEREFORE, the petition is GRANTED. The Order dated June 19, househelps who are also residing at the said address, the
2002 issued by the RTC, Branch 61, Baguio City, in Civil Case No. defendant spouses are not around at that time. On the 27th of
5238-R, is ANNULLED and SET ASIDE. September, 2004, I returned to the same place to serve the
summons. I served the summons and the copy of the complaint
SO ORDERED. with its annexes to the two ladies (The same lady househelp I met
on Sept. 24, 2004) but they refused to sign to acknowledge receipt
ANGELINA SANDOVAL-GUTIERREZ
and they refused to tell their name as per instruction of the
Associate Justice
defendants. With me who can attest to the said incident is Mr. Jun
Llanes, who was with me at that time.2 x x x (emphasis and
underscoring supplied)

Despite substituted service, respondents failed to file their Answer,


prompting petitioner to file a "Motion to Declare Defendants[-
herein respondents] in Default" which the trial court granted by
Order of May 3, 2005.

More than eight months thereafter or on January 30, 2006,


respondents filed a Motion to Lift Order of Default,3claiming that
on January 27, 2006 they "officially received all pertinent papers
such as Complaint and Annexes. Motion to Dismiss of the Solicitor
General and the ORDER dated May 3, 2005 granting the Motion
to Declare [them] in Default." And they denied the existence of
two women helpers who allegedly refused to sign and
acknowledge receipt of the summons. In any event, they
contended that assuming that the allegation were true, the
helpers had no authority to receive the documents.4

By Order of July 17, 2006, the trial court set aside the Order of
Default and gave herein respondents five days to file their Answer.
Respondents just the same did not file an Answer, drawing
petitioner to again file a Motion to declare them in default, which
the trial court again granted by Order of February 21, 2007.

On April 18, 2007, respondents filed an Omnibus Motion for


reconsideration of the second order declaring them in default
and to vacate proceedings, this time claiming that the trial court
did not acquire jurisdiction over their persons due to invalid service
of summons.
25

The trial court denied respondents’ Omnibus Motion by Order of 4. In the case of respondents, there is no reason why they should
May 22, 2007 and proceeded to receive ex-parteevidence for not receive the Orders of this Honorable Court since the subject
petitioner. of the case is their multi-million real estate property and naturally
they would not want to be declared in default or lose the same
Respondents, via certiorari, challenged the trial court’s February outright without the benefit of a trial on the merits;
21, 2007 and April 18, 2007 Orders before the Court of Appeals.
5. It would be the height of injustice if the respondents is [sic]
In the meantime, the trial court, by Decision of September 4, 2007, denied the equal protection of the laws[;]
rendered judgment in favor of petitioner.
6. Respondents must be afforded "Due process of Law" as
By Decision of April 29, 2008,5 the appellate court annulled the trial enshrined in the New Constitution, which is a basic right of every
court’s Orders declaring respondents in default for the second Filipino, since they were not furnished copies of pleadings by the
time in this wise: plaintiff and the Order dated May 3, 2005;

In assailing the orders of the trial court through their Motion to Lift… x x x x9
and later their Omnibus Motion… the petitioners [herein-
respondents] never raised any other defense in avoidance of the and accordingly prayed as follows:
respondents’ [herein petitioners] claim, and instead focused all
their energies on questioning the said court’s jurisdiction. The latter WHEREFORE, . . . it is most respectfully prayed . . . that the Order
motion clearly stated prefatorily their counsel’s reservation or dated May 5, 2005 declaring [them] in default be LIFTED.10
"special appearance to question jurisdiction" over the persons of
Respondents did not, in said motion, allege that their filing thereof
the petitioners. "A party who makes a special appearance in
was a special appearance for the purpose only to question the
court challenging the jurisdiction of said court based on the
jurisdiction over their persons. Clearly, they had acquiesced to the
ground of invalid service of summons is not deemed to have
jurisdiction of the court.
submitted himself to the jurisdiction of the court."6(citation
omitted; italics, emphasis and underscoring supplied) WHEREFORE, the petition is GRANTED. The assailed Court of
Appeals Decision of April 29, 2008 is REVERSED and SET ASIDE.
Petitioner’s motion for reconsideration having been denied by the
appellate court by Resolution of August 12, 2008, it comes to the Let the original records of Civil Case No. 04-7350 be remanded to
Court via petition for review on certiorari, arguing in the main that the court of origin, Regional Trial Court of Antipolo City, Branch 71.
respondents, in filing the first Motion to Lift the Order of Default,
voluntarily submitted themselves to the jurisdiction of the court. SO ORDERED.

The petition is impressed with merit. CONCHITA CARPIO MORALES


Associate Justice
It is settled that if there is no valid service of summons, the court
can still acquire jurisdiction over the person of the defendant by
virtue of the latter’s voluntary appearance. Thus Section 20 of Rule
14 of the Rules of Court provides:

Sec. 20. Voluntary appearance. – The defendant’s voluntary


appearance in the action shall be equivalent to service of
summons. The inclusion in a motion to dismiss of other grounds
aside from lack of jurisdiction over the person shall not be deemed
a voluntary appearance.

And Philippine Commercial International Bank v. Spouses Wilson


Dy Hong Pi and Lolita Dy, et al. enlightens:

Preliminarily, jurisdiction over the defendant in a civil case is


acquired either by the coercive power of legal processes exerted
over his person, or his voluntary appearance in court. As a general
proposition, one who seeks an affirmative relief is deemed to have
submitted to the jurisdiction of the court. It is by reason of this rule
that we have had occasion to declare that the filing of motions
to admit answer, for additional time to file answer, for
reconsideration of a default judgment, and to lift order of default
with motion for reconsideration, is considered voluntary
submission to the court’s jurisdiction. This, however, is tempered by
the concept of conditional appearance, such that a party who
makes a special appearance to challenge, among others, the
court’s jurisdiction over his person cannot be considered to have
submitted to its authority.

Prescinding from the foregoing, it is thus clear that:

(1) Special appearance operates as an exception to the general


rule on voluntary appearance;

(2) Accordingly, objections to the jurisdiction of the court over the


person of the defendant must be explicitly made, i.e., set forth in
an unequivocal manner; and

(3) Failure to do so constitutes voluntary submission to the


jurisdiction of the court, especially in instances where a pleading
or motion seeking affirmative relief is filed and submitted to the
court for resolution.7 (italics and underscoring supplied)

In their first Motion to Lift the Order of Default8 dated January 30,
2006, respondents alleged:

xxxx
26

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