1. SPOUSES EFREN N. RIGOR and ZOSIMA D.

RIGOR, for themselves and as owners

of CHIARA CONSTRUCTION, petitioners,
vs.
CONSOLIDATED ORIX LEASING and FINANCE CORPORATION, respondent.

CARPIO, J.:

The Facts

Petitioners obtained a loan from private respondent Consolidated Orix Leasing and Finance
Corporation3 ("Private Respondent" for brevity) in the amount of P1,630,320.00. Petitioners
executed a promissory note on July 31, 1996 promising to pay the loan in 24 equal monthly
installments of P67,930.00 every fifth day of the month commencing on September 5, 1996.4 The
promissory note also provides that default in paying any installment renders the entire unpaid
amount due and payable. To secure payment of the loan, petitioners executed in favor of private
respondent a deed of chattel mortgage over two dump trucks.5

Petitioners failed to pay several installments despite demand from private respondent. On
January 5, 1998, private respondent sought to foreclose the chattel mortgage by filing a
complaint for Replevin with Damages against petitioners before the Regional Trial Court of
Dagupan City ("Dagupan trial court" for brevity). After service of summons, petitioners moved to
dismiss the complaint on the ground of improper venue based on a provision in the promissory
note which states that, "x x x all legal actions arising out of this note or in connection with the
chattels subject hereof shall only be brought in or submitted to the proper court in Makati City,
Philippines."

Private respondent opposed the motion to dismiss and argued that venue was properly laid in
Dagupan City where it has a branch office based on a provision in the deed of chattel mortgage
which states that, "x x x in case of litigation arising out of the transaction that gave rise to this
contract, complete jurisdiction is given the proper court of the city of Makati or any proper court
within the province of Rizal, or any court in the city, or province where the holder/mortgagee has
a branch office, waiving for this purpose any proper venue."

After a further exchange of pleadings, the Dagupan trial court denied petitioners’ motion to
dismiss in an Order dated June 3, 1998.6 On July 15, 1998, the Dagupan trial court denied their
motion to reconsider the Order of June 3, 1998.7

Not satisfied with the orders, petitioners filed a petition for certiorari before the Court of Appeals
imputing grave abuse of discretion by the Dagupan trial court in denying the motion to dismiss.
On October 19, 1998, the Court of Appeals rendered the decision denying due course and
dismissing the petition. On November 27, 1998, the Court of Appeals issued a resolution denying
the motion for reconsideration.

Hence, the instant petition.

The Ruling of the Court of Appeals

In dismissing the petition, the Court of Appeals ruled as follows:

By and large, it was therefore not an error or grave abuse of discretion when the
controversial Motion to Dismiss was denied by the respondent court. Indeed, venue is
properly laid in the case at bar under the provisions of the Chattel Mortgage in issue."8

The Issue
In petitioners’ memorandum, the sole issue posed is:

"WHETHER VENUE WAS PROPERLY LAID UNDER THE PROVISIONS OF THE

CHATTEL MORTGAGE CONTRACT IN THE LIGHT OF ARTICLE 1374 OF THE CIVIL
CODE."

The controversy stems from the conflicting provisions on venue in the promissory note and the
deed of chattel mortgage. Consequently, the decisive issue is the correct interpretation of the
venue provisions in the two contracts. The venue provision in the promissory note reads as
follows:

"It expressly (sic) agreed that all legal actions arising out of this note or in connection with
the chattels subject hereof shall only be brought in or submitted to the proper court
in Makati City, Philippines."

On the other hand, the venue provision in the deed of chattel mortgage reads:

"VENUE. The payment herein mentioned whether covered by notes or not, are payable
at the office address of the MORTGAGEE or its assignee and in case of litigation
arising out of the transaction that gave rise to this contract, complete jurisdiction
is given the proper court of the city of Makati or any proper court within the
province of Rizal, or any court in the city, or province where the holder/mortgagee
has a branch office, waiving for this purpose any proper venue."

Petitioners argue that the promissory note should prevail over the deed of chattel mortgage
because this is the principal contract being sued upon while the deed of chattel mortgage
"merely accompanies" the promissory note. According to petitioners, the words "shall only" in the
promissory note makes exclusive and restricts venue to the proper court in Makati City.
Petitioners contend that the venue provision in the promissory note does not contain qualifying
words that the parties intended the venue provision in the deed of chattel mortgage to be a
modification of the venue in the promissory note. Petitioners maintain that the Court of Appeals
erroneously applied Article 1374 of the Civil Code in construing the promissory note and the
deed of chattel mortgage. According to petitioners, this article applies only to conflicting
provisions in one and the same contract and not to those found in two distinct and entirely
separate contracts such as in the instant case. Petitioners further assert that any ambiguity
should be decided against private respondent under the contract of adhesion doctrine.

Private respondent counters that the alternative venues provided under the deed of chattel
mortgage may not be disregarded as meaningless verbiage. While the promissory note confines
venue to the proper court in Makati City, the deed of chattel mortgage has modified this. Private
respondent points out that petitioners’ loan under the promissory note as secured by the deed of
chattel mortgage was negotiated and concluded by the parties in Dagupan City, and booked at
private respondent’s Dagupan branch office. Further, the seizure of the mortgaged vehicles in
Dagupan City, as allowed by the deed of chattel mortgage, constitutes private respondent’s
cause of action in the Dagupan trial court. Private respondent maintains that the convenience of
the parties is the overriding consideration in determining venue. This is best achieved by laying
the same in Dagupan City where private respondent has a branch office, while petitioners reside
in nearby Tarlac. Private respondent bewails that petitioners filed the motion to dismiss as a
dilatory tactic.

The Court’s Ruling

The petition is bereft of merit. The Court finds no reversible error in the Court of Appeals’
conclusion that venue was properly laid in the Dagupan trial court.

The issue presented in this case is not novel.

As a general rule, all personal actions may be commenced and tried where the plaintiff or any of
the principal plaintiffs resides, or where the defendant or any of the principal defendants resides,
at the election of the plaintiff.9 However, by written agreement of the parties, the venue of an
action may be changed or transferred from one place to another.10

Under the promissory note, petitioners are obliged to pay private respondent the loan in
accordance with the agreed schedule. To secure the promissory note, petitioners constituted a
chattel mortgage in favor of private respondent over two dump trucks. Both contracts contain
venue provisions.

There is no dispute that the words "shall only" preceding the designation of venue in the
promissory note, standing alone, is mandatory and restrictive. However, the deed of chattel
mortgage executed to secure the loan obligation provides alternative venues. Should we
disregard the venue provision in the deed of chattel mortgage as mere surplusage as contended
by petitioners?

The answer is in the negative.

The chattel mortgage constituted over the two dump trucks is an accessory contract to the loan
obligation as embodied in the promissory note.11 The chattel mortgage cannot exist as an
independent contract since its consideration is the same as that of the principal contract.12 A
principal obligation is an indispensable condition for the existence of an accessory contract.
Indeed, contracts may be classified according to the degree of dependence.13 Loans, sales or
leases are classified as principal contracts while pledges, mortgages and suretyships are
classified as accessory contracts because their existence is dependent upon the principal
obligations they guarantee or secure.14

The Court held in National Power Corporation vs. Court of Appeals15 that the provisions of an
accessory contract such as a surety bond must be read in its entirety and together with the
principal contract between the parties. We quote the pertinent portion of the decision thus:

Applying the doctrine to the instant case, we cannot sustain petitioners’ contentions. The
promissory note and the deed of chattel mortgage must be construed together. Private
respondent explained that its older standard promissory notes confined venue in Makati City
where it had its main office. After it opened a branch office in Dagupan City, private respondent
made corrections in the deed of chattel mortgage, but due to oversight, failed to make the
corresponding corrections in the promissory notes. Petitioners affixed their signatures in both
contracts.

WHEREFORE, the petition is DENIED.

 2. ALONA G. ROLDAN, Petitioner
vs
SPOUSES CLARENCE I. BARRIOS and ANNA LEE T. BARRIOS, ROMMEL
MATORRES, and HON. JEMENA ABELLAR ARBIS, in her capacity as Presiding
Judge, Branch 6, Regional Trial Court, Aldan, Respondents

DECISION

The antecedent facts are as follows:

On February 3, 2014, petitioner Alona G. Roldan filed an action3 for foreclosure of real estate
mortgage against respondents spouses Clarence I. Barrios and Anna Lee T. Barrios and
respondent Romel D. Matorres, docketed as Civil Case No. 9811. She alleged the following:

xxxx

2. That on October 13, 2008, defendants borrowed from plaintiff the sum of Two Hundred Fifty
Thousand Pesos (₱250,000.00), Philippine Currency, payable within the period of one (1) year
from said date, with an interest thereon at the rate of 5% per month; and to secure the prompt
and full payment of the principal and interest, defendants made and executed on October 13,
2008 a Deed of Real Estate Mortgage in favor of plaintiff upon a parcel of land and
improvements thereon described as follows:

A parcel of land (Lot 5891-A-4) situated in Baybay, Makato, Aklan, containing an area of four
hundred seventy-eight (478) square meters, more or less x x x declared in the name of Spouses
Clarence Barrios and Anna Lee T. Barrios, assessed in the sum of ₱13,380.00, tax effectivity for
the year 2008. Said land is covered by OCT No. P-5561 pt.

5. That there are no other persons having or claiming interest in the mortgaged property except
Romel D. Matorres whom plaintiff recently discovered that the defendants mortgaged again to
the said person the same property subject of this suit for One Hundred Fifty Thousand Pesos,
(₱150,000.00) on June 11, 2012 x x x The said Romel D. Matorres is however a mortgagee in
bad faith.

WHEREFORE, it is respectfully prayed that upon due notice and hearing, judgment be rendered
ordering defendants SPS. CLARENCE I. BARRIOS and ANNA LEE T. BARRIOS:

1. To pay unto the court within the reglementary period of ninety days the sum of ₱250,000.00
together with the stipulated interest at five percent (5%) per month starting from February 2011 to
the present, plus the additional sum of ₱25,000.00 the total amount due for attorney's fees;
litigation expenses and costs; and that in default of such payment, the above-mentioned property
be ordered sold to pay off the mortgage debt and its accumulated interest;

2. To teach the defendants a lesson for having mortgaged the property subject of this suit without
plaintiffs consent or knowledge, the defendants be ordered to pay the plaintiff the sum of
₱50,000.00 as exemplary damages.

3. That plaintiff be granted such other relief in law and equity.4

Respondents spouses Barrios filed their Answer5 with Special and Affirmative Defenses
contending that the computation of their alleged loan obligation was not accurate; that they had
filed with the RTC a petition for rehabilitation of a financially distressed individuals under Special
Proceeding No. 9845, thus there is a need to suspend the foreclosure proceed1ngs. On the other
hand, respondent Matorres filed his Answer6 with Special and Affirmative Defenses admitting that
the subject land was mortgaged to him; that he had also filed a judicial foreclosure case against
respondents spouses Barrios pending with the RTC of Kalibo Aldan, Branch 6, docketed as Civil
Case No. 9642; that petitioner had no cause of action against him as they did not have any
transaction with each other; and prayed for damages and attorney's fees, and cross-claim
against respondent spouses for moral damages.

On July 22, 2014, the RTC issued the assailed Order as follows:

Civil Cases Nos. 9642 and 9811 are complaints for Foreclosure of Real Estate Mortgage that
involved the same property, Lot 5891-A-4, situated in Baybay, Makato, Aklan, owned by Spouses
Clarence Barrios and Anna Lee Barrios.

It appearing from the complaint that the assessed value of the property mortgaged is only
₱13,380.00 and the instant cases being a real action, the assessed value of the property
determines the jurisdiction. The assessed value of the property involved being below
1âwphi1

₱20,000.00, it is the first level court that has jurisdiction over the cases. Premises considered, for
lack of jurisdiction, Civil Cases Nos. 9642 and 9811 are ordered DISMISSED without prejudice.

SO ORDERED.7

Petitioner and respondent Matorres filed their respective motions for reconsideration.

In an Order dated August 18, 2014, the RTC denied petitioner's motion as follows:

xxxx

Petitioner in her Motion argued that foreclosure of real estate mortgage is an action incapable of
pecuniary estimation and jurisdiction lies with the Regional Trial Court.

Petitioner's argument is devoid of merit.

A petition for foreclosure of real estate mortgage is a real action and the assessed value of the
property determines jurisdiction while location of the property determines the venue.

Premises considered, the Motion for Reconsideration is DENIED for lack of merit.

SO ORDERED.8

Respondent Matorres' motion for reconsideration was also denied in an Order9 dated September
1, 2014.

Petitioner filed the instant petition for certiorari alleging grave abuse of discretion committed by
the RTC when it ordered the dismissal of her foreclosure case without prejudice and denying her
motion for reconsideration. She argues that foreclosure of mortgage is an action incapable of
pecuniary estimation which is within the exclusive jurisdiction of the RTC.

In his Comment, respondent Matorres joins the position and arguments of petitioner that the
cause of action of the foreclosure cases is incapable of pecuniary estimation, hence, falling
within the jurisdiction of the RTC.

The issue for resolution is whether the RTC committed grave abuse of discretion in dismissing
the foreclosure cases filed with it on the ground of lack of jurisdiction.
Preliminarily, we need to point out that generally a direct recourse to this Court is highly
improper, for it violates the established policy of strict observance of the judicial hierarchy of
courts. Although this Court, the RTCs and the Court of Appeals have concurrent jurisdiction to
issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction,
such concurrence does not give the petitioner unrestricted freedom· of choice of court forum.
This Court is a court of last resort, and must so remain if it is to satisfactorily perform the
functions assigned to it by the Constitution and immemorial tradition. 10 However, the judicial
hierarchy of courts is not an iron-clad rule. A strict application of the rule of hierarchy of courts is
not necessary when the cases brought before the appellate courts do not involve factual but legal
questions. 11 Since petitioner raises a pure question of law pertaining to the court's jurisdiction on
complaint for judicial foreclosure of sale, we would allow petitioner's direct resort to us.

The RTC dismissed the foreclosure cases finding that being a real action and the assessed value
of the mortgaged property is only ₱13,380.00, it is the first level court which has jurisdiction over
the case and not the RTC.

Jurisdiction over the subject matter is the power to hear and determine cases of the general
class to which the proceedings in question belong. It is conferred by law and an objection based
on this ground cannot be waived by the parties. 12 To determine whether a court has jurisdiction
over the subject matter of a case, it is important to determine the nature of the cause of action
and of the relief sought. 13

Batas Pambansa Big. (BP) 129 as amended by Republic Act No. (RA) 7691 pertinently provides
for the jurisdiction of the RTC and the first level courts as follows:

Sec. 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive original
jurisdiction:

1. In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;

2. In all civil actions which involve the title to, or possession of, real property, or any interest
therein, where the assessed value of the property involved exceeds Twenty thousand pesos
(₱20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty thousand
pesos (₱20,000.00) except actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts.

and

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts in civil cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts shall exercise:

xxxx

3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real
property, or any interest therein where the assessed value of the property or interest therein does
not exceed Twenty thousand pesos (₱20,000.00) or, in civil actions in Metro Manila, where such
assessed value does not exceed Fifty thousand pesos (₱50,000.00) exclusive of interest,
damages of whatever kind, attorney's fees, litigation expenses and costs: Provided, That in
cases of land not declared for taxation purposes, the value of such property shall be determined
by the assessed value of the adjacent lots.

From the foregoing, the RTC exercises exclusive original jurisdiction in civil actions where the
subject of the litigation is incapable of pecuniary estimation. It also has jurisdiction in civil cases
involving title to, or possession of, real property or any interest in it where the assessed value of
the property involved exceeds ₱20,000.00, and if it is below 1!20,000.00, it is the first level court
which has jurisdiction. An action "involving title to real property" means that the plaintiffs cause of
action is based on a claim that he owns such property or that he has the legal right to have
exclusive control, possession, enjoyment, or disposition of the same. 14

The allegations and reliefs sought in petitioner's action for foreclosure of mortgage showed that
the loan obtained by respondents spouses Barrios from petitioner fell due and they failed to pay
such loan which was secured by a mortgage on the property of the respondents spouses; and
prayed that in case of default of payment of such mortgage indebtedness to the court, the
property be ordered sold to answer for the obligation under the mortgage contract and the
accumulated interest. It is worthy to mention that the essence of a contract of mortgage
indebtedness is that a property has been identified or set apart from the mass of the property of
the debtor-mortgagor as security for the payment of money or the fulfillment of an obligation to
answer the amount of indebtedness, in case of default in payment. 15 Foreclosure is but a
necessary consequence of non-payment of the mortgage indebtedness. 16 In a real estate
mortgage when the principal obligation is not paid when due, the mortgagee has the right to
foreclose the mortgage and to have the property seized and sold with the view of applying the
proceeds to the payment of the obligation. 17 Therefore, the foreclosure suit is a real action so far
as it is against property, and seeks the judicial recognition of a property debt, and an order for
the sale of the res. 18

Petitioner cites Russell v. Vestil19to show that action for foreclosure of mortgage is an action
incapable of pecuniary estimation and, therefore, within the jurisdiction of the RTC. We are not
persuaded. In the Russell case, we held:

In Singsong vs. Isabela Sawmill, we had the occasion to rule that:

[I]n determining whether an action is one the subject matter of which is not capable of pecuniary
estimation, this Court has adopted the criterion of first ascertaining the nature of the principal
action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is
considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or
in the courts of first instance would depend on the amount of the claim. However, where the
basic issue is something other than the right to recover a sum of money, where the money claim
is purely incidental to, or a consequence of, the principal relief sought, this Court has considered
such actions as cases where the subject of the litigation may not be estimated in terms of money,
and are cognizable exclusively by courts of first instance (now Regional Trial Courts).

Examples of actions incapable of pecuniary estimation are those for specific performance,
support, or foreclosure of mortgage or annulment of judgment; also actions questioning the
validity of a mortgage, annulling a deed of sale or conveyance and to recover the price paid and
for rescission, which is a counterpart of specific performance.

While actions under Sec. 33(3) of B.P. 129 are also incapable of pecuniary estimation, the law
specifically mandates that they are cognizable by the MTC, METC, or MCTC where the
assessed value of the real property involved does exceed ₱20,000.00 in Metro Manila, or
₱50,000.00, if located elsewhere. If the value exceeds ₱20,000.00 or ₱50,000.00 as the case
may be, it is the Regional Trial Courts which have jurisdiction under Sec. 19(2). However, the
subject matter of the complaint in this case is annulment of a document denominated as
"DECLARATION OF HEIRS AND DEED OF CONFIRMATION OF PREVIOUS ORAL
PARTITION.20

Clearly, the last paragraph clarified that while civil actions which involve title to, or possession of,
real property, or any interest therein, are also incapable of pecuniary estimation as it is not for
recovery of money, the court's jurisdiction will be determined by the assessed value of the
property involved.
WHEREFORE, the petition for certiorari is DISMISSED

3. SPOUSES CLAUDIO and CARMENCITA TRAYVILLA, Petitioners

vs.
BERNARDO SEJAS and JUVY PAGLINAWAN, represented by JESSIE
PAGLINAWAN, Respondents.

DECISION

Factual Antecedents

In 2005, Petitioners Claudio and Carmencita Trayvilla instituted before the RTC Civil Case No.
4633-2K5 against respondent Bernardo Sejas (Sejas). In their Complaint6 for specific
performance ad damages, petitioners claimed among others that Sejas was the registered owner
of a 434-square meter parcel of land in Tukuran, Zamboanga del Sur covered by Transfer
Certificate of Title No. T-8,3377 (TCT T-8,337); that by virtue of a private handwritten
document,8 Sejas sold said parcel of land to them in 1982; that thereafter, they took possession
of the land and constructed a house thereon; that they resided in said house and continued to
reside therein; that Sejas later reasserted his ownership over said land

and was thus guilty of fraud and deceit in so doing; and that they caused the annotation of an
adverse claim. They prayed that Sejas be ordered to execute a final deed of sale over the
property and transfer the same to them, and that they be awarded the sum of P30,000.00 as
attorney’s fees plus P1,500.00 per court appearance of counsel.

In an Amended Complaint,9 this time for specific performance, reconveyance, and damages,
petitioners impleaded respondent Juvy Paglinawan (Paglinawan) as additional defendant,
claiming that Sejas subsequently sold the subject property to her, after which she caused the
cancellation of TCT T-8,337 and the issuance of a new title – TCT T-46,627 – in her name.
Petitioners prayed that Sejas be ordered to execute a final deed of sale in their favor and transfer
the property to them; that Paglinawan’s TCT T-6,627 be canceled and the property be
reconveyed to them; and that they be awarded P50,000.00 in moral damages, in addition to the
P30,000.00 attorney’s fees and P1,500.00 per court appearance of counsel originally prayed for
in the Complaint.

However, the additional docket fees for the moral damages prayed for in the Amended Complaint
were not paid.10 Likewise, for the additional causes of action, no docket fees were charged and
paid Respondents moved for dismissal of the case, claiming lack of jurisdiction over the subject
matter and prescription. The RTC denied the motion in a September 3, 2007 Order.11

Respondents filed a Motion for Reconsideration,12 arguing that petitioners’ case was not for
specific performance but was in reality a real action or one involving title to and possession of
real property, in which case the value of the property should be alleged in the complaint in order
that the proper filing fee may be computed and paid; that since the value of the land was not
alleged in the Amended Complaint, the proper filing fee was not paid, and for this reason the
case should be dismissed; and that petitioners’ cause of action is barred by prescription since the
10-year period to sue upon the handwritten contract–counted from their purchase of the land in
1982 – had already lapsed when they filed the case in 2005. However, in a February 21, 2008
Order,13 the RTC denied the motion, stating among others that petitioners’ case is not a real
action but indeed one for specific performance and thus one which is incapable of pecuniary
estimation.

Ruling of the Court of Appeals

Respondents filed an original Petition for Certiorari14 before the CA, which was docketed as CA-
G.R. SP No. 02315. On November 29, 2011, the CA issued the assailed Decision, which
contained the following pronouncement:

The petition is meritorious.

Jurisdiction is defined as the authority to hear and determine a cause or the right to act in a case.
In addition to being conferred by the Constitution and the law, the rule is settled that a court’s
jurisdiction over the subject matter is determined by the relevant allegations in the complaint, the
law in effect when the action is filed, and the character of the relief sought irrespective of whether
the plaintiff is entitled to all or some of the claims asserted.

Consistent with Section 1, Rule 141 of the Revised Rules of Court which provides that the
prescribed fees shall be paid in full "upon the filing of the pleading or other application which
initiates an action or proceeding", the wellentrenched rule is to the effect that a court acquires
jurisdiction over a case only upon the payment of the prescribed filing and docket fees.

Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC and Supreme Court
Amended Administrative Circular No. 35-2004, provides that:

SEC. 7. Clerks of Regional Trial Courts. –

(a) For filing an action or a permissive OR COMPULSORY counterclaim, CROSSCLAIM, or

money claim against an estate not based on judgment, or for filing a third-party, fourth-party, etc.
complaint, or a complaint-in-intervention, if the total sum claimed, INCLUSIVE OF INTERESTS,
PENALTIES, SURCHARGES, DAMAGES OF WHATEVER KIND, AND ATTORNEY’S FEES,
LITIGATION EXPENSES AND COSTS and/or in cases involving property, the FAIR MARKET
value of the REAL property in litigation STATED IN THE CURRENT TAX DECLARATION OR
CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNAL REVENUE, WHICHEVER IS
HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE PROPERTY IN LITIGATION
OR THE VALUE OF THE PERSONAL PROPERTY IN LITIGATION X X X AS ALLEGED BY
THE CLAIMANT, is:

[Table of fees omitted.]

If the action involves both a money claim and relief pertaining to property, then THE fees will be
charged on both the amounts claimed and value of property based on the formula prescribed in
this paragraph a.

(b) For filing:

1. Actions where the value of the subject matter cannot be estimated

2. Special civil actions, except judicial foreclosure of mortgage, EXPROPRIATION

PROCEEDINGS, PARTITION AND QUIETING OF TITLE which will [sic]

3. All other actions not involving property

[Table of fees omitted.]

The docket fees under Section 7(a), Rule 141, in cases involving real property depend on the fair
market value of the same: the higher the value of the real property, the higher the docket fees
due. In contrast, Section 7(b)(1), Rule 141 imposes a fixed or flat rate of docket fees on actions
incapable of pecuniary estimation.
 xxxx

As can be gleaned from the records, the Amended Complaint was styled as one for ‘Specific
Performance and Damages,’ whereby private respondents15 sought to compel petitioner Sejas to
execute the deed of sale over the subject land in their favor on the premise that they bought the
said land from petitioner Sejas through a private document. They declared themselves to be the
true and real owners of the subject land and had in fact taken possession over it to the exclusion
of others including petitioner Sejas.

While it may appear that the suit filed is one for specific performance, hence an action incapable
of pecuniary estimation, a closer look at the allegations and reliefs prayed for in the Complaint,
however, shows that private respondents were not merely seeking the execution of the deed of
sale in their favor. They were also asking the lower court earnestly to cancel TCT No. T-46,627
which was allegedly issued to petitioner Paglinawan through fraudulent means and have the
same reconveyed to them as the owners of the subject land. The ultimate purpose then of private
respondents in filing the complaint before the RTC is to secure their vaunted ownership and title
to the subject land which they claimed was purchased from petitioner Sejas. Their cause of
action clearly springs from their right as purchaser of the subject land. Under these
circumstances, the suit before the RTC is a real action, affecting as it did title to the real property
sought to be reconveyed. A real action is one in which the plaintiff seeks the recovery of real
property; or, as indicated in what is now Section 1, Rule 4 of the Rules of Court, a real action is
an action affecting title to or recovery of possession of real property.

Section 7, Rule 141 of the Rules of Court, prior to its amendment by A.M. No. 04-2-04-SC, had a
specific paragraph governing the assessment of the docket fees for real action, to wit:

In a real action, the assessed value of the property, or if there is none, the estimated value
thereof shall be alleged by the claimant and shall be the basis in computing the fees.

But it is important to note that, with the amendments introduced by A.M. No. 04-2-04-SC, which
became effective on 16 August 2004, the paragraph in Section 7, Rule 141 of the Rules of Court,
pertaining specifically to the basis for the computation of docket fees for real actions was deleted.
Instead, Section 7(1) of Rule 141, as amended, provides that ‘in cases involving real property,
the FAIR MARKET value of the REAL property in litigation STATED IN THE CURRENT TAX
DECLARATION OR CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNAL
REVENUE, WHICH [sic] IS HIGHER, OR IF THERE IS NONE, THE STATED VALUE OF THE
PROPERTY IN LITIGATION x x x’ shall be the basis for the computation of the docket fees.

Unfortunately, private respondents never alleged in their Amended Complaint, much less in the
prayer portion thereof, the fair market value of the subject res as stated in the Tax Declaration or
current zonal valuation of the Bureau of Internal Revenue, which [sic] is higher, or if there is
none, the stated value thereof, to serve as basis for the receiving clerk in computing and arriving
at the proper amount of filing fee due thereon. In the absence of such allegation, it cannot be
determined whether the RTC or the MTC has original and exclusive jurisdiction over the
petitioners’ action. There is therefore no showing on the face of the complaint that the RTC has
exclusive jurisdiction over the action of the private respondents. Hence, the RTC erred in taking
cognizance of the case despite private respondents’ non-payment of the correct docket fees
which must be computed in accordance with Section 7(1), Rule 141 of the Rules of Court, as
amended.

The consistent rule is that ‘a case is deemed filed only upon payment of the docket fee
regardless of the actual date of filing in court,’ and that jurisdiction over any case is acquired only
upon the payment of the prescribed docket fee which is both mandatory and jurisdictional. x x x

xxxx
This case at bench bears similarity to Gochan v. Gochan,16 where the Supreme Court held that
although the caption of the complaint filed by therein respondents Mercedes Gochan, et al. with
the RTC was denominated as one for ‘specific performance and damages,’ the relief sought was
the conveyance or transfer of real property, or ultimately, the execution of deeds of conveyance
in their favor of the real properties enumerated in the provisional memorandum of agreement.
Under these circumstances, the case before the RTC was actually a real action, affecting as it
did title to or possession of real property. Consequently, the basis for determining the correct
docket fees shall be the assessed value of the property, or the estimated value thereof as
alleged in the complaint. But since Mercedes Gochan failed to allege in their complaint the value
of the real properties, the Court found that the RTC did not acquire jurisdiction over the same for
non-payment of the correct docket fees.

More to the point is Huguete v. Embudo.17 There, petitioners argued that a complaint for
annulment of a deed of sale and partition is incapable of pecuniary estimation, and thus falls
within the exclusive jurisdiction of the RTC. However, the Supreme Court ruled that ‘the nature of
an action is not determined by what is stated in the caption of the complaint but by the
allegations of the complaint and the reliefs prayed for. Where the ultimate objective of the
plaintiffs, like petitioners herein, is to obtain title to real property, it should be filed in the proper
court having jurisdiction over the assessed value of the property subject thereof.’

Likewise, in Siapno v. Manalo,18 the Supreme Court disregarded the title/denomination of therein
plaintiff Manalo’s amended petition as one for Mandamus with Revocation of Title and Damages;
and adjudged the same to be a real action, the filing fees for which should have been computed
based on the assessed value of the subject property or, if there was none, the estimated value
thereof. x x x

xxxx

In fine, We rule and so hold that the RTC never acquired jurisdiction over Civil Case No. 4633-
2K5, hence, its act of taking cognizance of the subject Complaint was tainted with grave abuse of
discretion amounting to lack or excess of jurisdiction. Grave abuse of discretion is defined as
capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.

Issues

Petitioners raise the following issues:

1. Did the Court of Appeals ruled [sic] correctly when it dismissed the complaint by reason of
Petitioner-Appellants’ alleged non-payment of the correct dockets [sic] fees due to its [sic] failure
to alleged [sic] the fair market value or the stated value of the subject property in the amended
complaint?

2. Did the filing of the amended complaint sufficiently divested [sic] and ousted [sic] the trial court
of its jurisdiction over the case that had initially validly attached by virtue of the Original complaint
for specific performance?22

Our Ruling

The Court denies the Petition.

As correctly ruled by the CA, while petitioners’ Amended Complaint was denominated as one
mainly for specific performance, they additionally prayed for reconveyance of the property, as
well as the cancellation of Paglinawan’s TCT T-46,627. In other words, petitioners’ aim in filing
Civil Case No. 4633-2K5 was to secure their claimed ownership and title to the subject property,
which qualifies their case as a real action. Pursuant to Section 1, Rule 4 of the 1997 Rules of
Civil Procedure,27 a real action is one that affects title to or possession of real property, or an
interest therein.

Since Civil Case No. 4633-2K5 is a real action made so by the Amended Complaint later filed,
petitioners should have observed the requirement under A.M. No. 04-2-04-SC28 relative to
declaring the fair market value of the property as stated in the current tax declaration or zonal
valuation of the Bureau of Internal Revenue (BIR). Since no such allegation was made in the
Amended Complaint, then the value of the subject property as stated in the handwritten
document sued upon and restated in the Amended Complaint should be the basis for
determining jurisdiction and the amount of docket fees to be paid.

The CA is correct in its general observation that in the absence of the required declaration of the
fair market value as stated in the current tax declaration or zonal valuation of the property, it
cannot be determined whether the RTC or first level court has original and exclusive jurisdiction
over the petitioners’ action, since the jurisdiction of these courts is determined on the basis of the
value of the property. Under applicable rules,

Jurisdiction of RTCs, as may be relevant to the instant petition, is provided in Sec. 19 of BP

129,29 which reads:

WHEREFORE, the Petition is DENIED.

 4. VIRGILIO C. BRIONES, Petitioner,
vs.
COURT OF APPEALS and CASH ASIA CREDIT CORPORATION, Respondents.

DECISION

The Facts

The instant case arose from a Complaint6 dated August 2, 2010 filed by Virgilio C. Briones
(Briones) for Nullity of Mortgage Contract, Promissory Note, Loan Agreement, Foreclosure of
Mortgage, Cancellation of Transfer Certificate of Title (TCT) No. 290846, and Damages against
Cash Asia before the RTC.7 In his complaint, Briones alleged that he is the owner of a property
covered by TCT No. 160689 (subject property), and that, on July 15, 2010, his sister informed
him that his property had been foreclosed and a writ of possession had already been issued in
favor of Cash Asia.8 Upon investigation, Briones discovered that: (a) on December 6, 2007, he
purportedly executed a promissory note,9 loan agreement,10 and deed of real estate
mortgage11 covering the subject property (subject contracts) in favor of Cash Asia in order to
obtain a loan in the amount of ₱3,500,000.00 from the latter;12 and (b) since the said loan was left
unpaid, Cash Asia proceeded to foreclose his property.13 In this relation, Briones claimed that he
never contracted any loans from Cash Asia as he has been living and working in Vietnam since
October 31, 2007. He further claimed that he only went back to the Philippines on December 28,
2007 until January 3, 2008 to spend the holidays with his family, and that during his brief stay in
the Philippines, nobody informed him of any loan agreement entered into with Cash Asia.
Essentially, Briones assailed the validity of the foregoing contracts claiming his signature to be
forged.14

For its part, Cash Asia filed a Motion to Dismiss15 dated August 25, 2010, praying for the outright
dismissal of Briones’s complaint on the ground of improper venue.16 In this regard, Cash Asia
pointed out the venue stipulation in the subject contracts stating that "all legal actions arising out
of this notice in connection with the Real Estate Mortgage subject hereof shall only be brought in
or submitted tothe jurisdiction of the proper court of Makati City."17 In view thereof, it contended
that all actions arising out of the subject contracts may only be exclusively brought in the courts
of Makati City, and as such, Briones’s complaint should be dismissed for having been filed in the
City of Manila.18

In response, Briones filed an opposition,19 asserting, inter alia, that he should not be covered by
the venue stipulation in the subject contracts as he was never a party therein. He also reiterated
that his signatures on the said contracts were forgeries.20

The RTC Ruling

In an Order21 dated September 20, 2010, the RTC denied Cash Asia’s motion to dismiss for lack
of merit. In denying the motion, the RTC opined that the parties must be afforded the right to be
heard in view of the substance of Briones’s cause of action against Cash Asia as stated in the
complaint.22

Cash Asia moved for reconsideration23 which was, however, denied in an Order24 dated October
22, 2010. Aggrieved, it filed a petition for certiorari25 before the CA.

The CA Ruling

In a Decision26 dated March 5, 2012, the CA annulled the RTC Orders, and accordingly,
dismissed Briones’s complaint without prejudice to the filing of the same before the proper court
in Makati City.
Dissatisfied, Briones moved for reconsideration,30 which was, however, denied in a
Resolution31 dated October 4, 2012, hence, this petition.

The Issue Before the Court

The primordial issue for the Court’s resolution is whether or not the CA gravely abused its
discretion in ordering the outright dismissal of Briones’s complaint on the ground of improper
venue.

The Court’s Ruling

The petition is meritorious.

At the outset, the Court stresses that "[t]o justify the grant of the extraordinary remedy of
certiorari, [the petitioner] must satisfactorily show that the court or quasi-judicial authority gravely
abused the discretion conferred upon it. Grave abuse of discretion connotes judgment exercised
in a capricious and whimsical manner that is tantamount to lack of jurisdiction. To be considered
‘grave,’ discretion must be exercised in a despotic manner by reason of passion or personal
hostility, and must be so patent and gross as to amount to an evasion of positive duty or to a
virtual refusal to perform the duty enjoined by or to act at all in contemplation of law."32 Guided by
the foregoing considerations, the Court finds that the CA gravely abused its discretion in ordering
the outright dismissal of Briones’s complaint against Cash Asia, without prejudice to its re-filing
before the proper court in Makati City.

Rule 4 of the Rules of Court governs the rules on venue of civil actions, to wit:

Rule 4
VENUE OF ACTIONS

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

Forcible entry and detainer actions shall be commenced and tried in the municipal trial court of
the municipality or city wherein the real property involved, or a portion thereof, is situated.

SEC. 2. Venue of personal actions. — All other actions may be commenced and tried where the
plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal
defendants resides, or in the case of a non-resident defendant where he may be found, at the
election of the plaintiff.

SEC. 3. Venue of actions against nonresidents. — If any of the defendants does not resideand is
not found in the Philippines, and the action affects the personal status of the plaintiff, or any
property of said defendant located in the Philippines,the action may be commenced and tried in
the court of the place where the plaintiff resides, or where the property or any portion thereof is
situated or found.

SEC. 4. When Rule not applicable. — This Rule shall not apply –

(a) In those cases where a specific rule or law provides otherwise; or

(b) Where the parties have validly agreed in writing before the filing of the action on the
exclusive venue thereof.
Based therefrom, the general rule is that the venue of real actions is the court which has
jurisdiction over the area wherein the real property involved, or a portion thereof, is situated;
while the venue of personal actions is the court which has jurisdiction where the plaintiff or the
defendant resides, at the election of the plaintiff. As an exception, jurisprudence in Legaspi v.
Rep. of the Phils.33 instructs that the parties, thru a written instrument, may either introduce
another venue where actions arising from such instrument may be filed, or restrict the filing of
said actions in a certain exclusive venue, viz.:

As regards restrictive stipulations on venue, jurisprudence instructs that it must be shown

thatsuch stipulation is exclusive. In the absence of qualifying or restrictive words, such as
1âw phi 1

"exclusively," "waiving for this purpose any other venue," "shall only" preceding the designation
of venue, "to the exclusion of the other courts," or words of similar import, the stipulation should
be deemed as merely an agreement on an additional forum,not as limiting venue to the specified
place.34 (Emphases and underscoring supplied)

In this relation, case law likewise provides that in cases where the complaint assails only the
terms, conditions, and/or coverage of a written instrument and not its validity, the exclusive
venue stipulation contained therein shall still be binding on the parties, and thus, the complaint
may be properly dismissed on the ground of improper venue.35 Conversely, therefore, a complaint
directly assailing the validity of the written instrument itself should not be bound by the exclusive
venue stipulation contained therein and should be filed in accordance with the general rules on
venue. To be sure, it would be inherently consistent for a complaint of this nature to recognize
the exclusive venue stipulation when it, in fact, precisely assails the validity of the instrument in
which such stipulation is contained.

In this case, the venue stipulation found in the subject contracts is indeed restrictive in nature,
considering that it effectively limits the venue of the actions arising therefrom to the courts of
Makati City. However, it must be emphasized that Briones' s complaint directly assails the validity
of the subject contracts, claiming forgery in their execution. Given this circumstance, Briones
cannot be expected to comply with the aforesaid venue stipulation, as his compliance therewith
would mean an implicit recognition of their validity. Hence, pursuant to the general rules on
venue, Briones properly filed his complaint before a court in the City of Manila where the subject
property is located.

In conclusion, the CA patently erred and hence committed grave abuse of discretion in
dismissing Briones's complaint on the ground of improper venue.

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

SO ORDERED.
 5. EMILIANO S. SAMSON, Petitioner,
vs.
SPOUSES JOSE and GUILLERMINA GABOR, TANAY RURAL BANK, INC., and
REGISTER OF DEEDS OF MORONG, RIZAL, Respondents.

DECISION

The antecedents of the case are as follows:

Respondent spouses Jose and Guillermina Gabor are the registered owners of a parcel of land
with an area of Sixty-One Thousand Eighty-Five (61,085) square meters, more or less, situated
at Barrio Mapunso, Tanay, Rizal Province, and covered by Transfer Certificate of Title (TCT) No.
M-25565 issued by the Register of Deeds of Morong.3

On November 14, 1985, the Spouses Gabor executed a Deed of Assignment transferring Twenty
Thousand Six Hundred Thirty-One (20,631) square meters undivided portion of the
aforementioned parcel of land in favor of petitioner Emiliano S. Samson as attorney’s fees in
payment for the services rendered by the latter for the former.

On April 4, 2006, petitioner Samson filed a Complaint11 before the RTC of Pasig City for
Recovery of Property or its Value against respondent spouses, Tanay Rural Bank, Inc., and the
Register of Deeds of Morong, Rizal, claiming that he had been payinghis one-third (1/3) share of
realty taxes covering the subject portion of land for the years 2002 to 2004. In 2005, however, his
payment was rejected by the Municipal Treasurer of Tanay, Rizal, at such time he discovered
that respondent spouses had already mortgaged the entire property in favor of respondent Bank
back in November 2002.

On August 18, 2006, the RTC of Pasig City dismissed the complaint on the grounds of improper
venue, res judicata, and that the complaint states no cause of action.12 It held that the suit is a
real action which should be filed in the RTC of Morong, Rizal, where the property subject of the
case is situated. Moreover, the lower court pointed out that as early as 1991, herein petitioner
had already filed a Complaint for Partition of Real Property and Damages involving the same
subject property against the same parties, which complaint was already dismissed by this Court
with finality. Thus, the principle of res judicataapplies. Finally, the trial court held that petitioner’s
complaint states no cause ofaction against herein respondent Bank as it does not allege any
details as to the liability or any violation of petitioner’s rights.

Claiming that the lower court erred in dismissing his complaint, petitioner Samson filed an appeal
with the CA, which likewise dismissed the same for having been improperly brought before it.
The appellate court ruled in its Decision13 dated May 9, 2008 that since petitioner’s appeal raised
only issues purely of law, it should be dismissed outright.

Undaunted, petitioner filed the instant petition invoking the following arguments:

II.

SINCE THE PETITIONER’S COMPLAINT IS BOTH REAL AND PERSONAL, IT WAS

PROPERLY FILED WITH THE REGIONAL TRIAL COURT OF PASIG CITY.

III.

The petition lacks merit.

We agree with the CA’s decision to dismiss petitioner’s appeal, pursuant to Section 2, Rule 50 of
the 1997 Rules of Civil Procedure which mandates the dismissal of an appeal that raises only
questions of law.14 The appeal of petitioner, as correctly held by the CA, essentially raised issues
purely of law.

Time and again, this Court has distinguished cases involving pure questions of law from those of
pure questions of fact in the following manner:

A question of fact exists when a doubt or difference arises as to the truth or falsity of alleged
facts. If the query requires a re-evaluation of the credibility of witnesses or the existence or
relevance of surrounding circumstances and their relation to each other, the issue in that query is
factual. On the other hand, there is a question of law when the doubt or difference arises as to
what the law is on certain state of facts and which does not call for an existence of the probative
value of the evidence presented by the parties-litigants. In a case involving a question of law, the
resolution of the issue rests solely on what the law provides on the given set of circumstances.
Ordinarily, the determination of whether an appeal involves only questions of law or both
questions of law and fact is best left to the appellate court.All doubts as to the correctness of the
conclusions of the appellate court will be resolved in favor of the CA unless it commits an error or
commits a grave abuse of discretion.15

In the instant case, petitioner appealed the Order of the trial court which dismissed his complaint
for improper venue, lack of cause of action, and res judicata.16 Dismissals based on these
grounds do not involve a review of the facts of the case but merely the application of the law,
specifically in this case, Rule 16 of the Revised Rules of Civil Procedure. The issue to be
resolved is limited towhether or not saidrule was properly applied, which will only involve a
reviewof the complaint, the motions to dismiss, and the trial court’s order of dismissal, but not the
probative value of the evidence submitted nor the truthfulness or falsity of the facts. Considering,
therefore, that the subjectappeal raised only questions of law, the CA committed no error in
dismissing the same.

We, likewise, agree with the decision of the RTC of Pasig City dismissing petitioner’s complaint
on the ground that the same should have been filed in the RTC of Morong, Rizal, where the
property subject of this case is situated. Petitioner claims that as shown by the caption of his
complaint which reads "For Recovery of Property or its Value," his cause of action is in the
alternative, both real and personal. As such, his action may be commenced and tried where the
petitioner resides or where any of the respondents resides, at the election of the
petitioner.17 Petitioner’s argument is misplaced. In Latorre v. Latorre,18 we ruled that:

Sections 1 and 2, Rule 4 of the 1997 Rules of Civil Procedure provide an answer to the issue of
venue. Actions affecting title to or possession of real property or an interest therein (real actions)
shall be commenced and tried in the proper court that has territorial jurisdiction over the area
where the real property is situated. On the other hand, all other actions (personal actions) shall
be commenced and tried in the proper courts where the plaintiff or any of the principal plaintiffs
resides or where the defendant or any of the principal defendants resides. x x x.

In this jurisdiction, we adhere to the principle that the nature of an action is determined by the
allegations in the Complaint itself, rather than by its title or heading. Itis also a settled rule that
what determines the venue of a case is the primary objective for the filing of the case. x x
x19 While the complaint of the petitioner was denominated as one for "Recovery of Property or its
Value," all of his claims are actually anchored on his claim of ownership over the one-third (1/3)
portion of the subject property. In his complaint, petitioner sought the return of the portion of the
subject property or its value on the basis of his co-ownership thereof. Necessarily, his alternative
claim for the value of the property is still dependent on the determination of ownership, which is
an action affecting title to or possession of real property or an interest therein. Clearly,
petitioner’s claim is a realaction which should have been filed in the court where the property lies,
which in this case, is the RTC of Morong, Rizal.
Petitioner is mistaken. In Philippine National Bank v. Gateway Property Holdings, Inc.,35 we have
laid down certain guidelines in determining whether there is identity of causes of action in the
following manner:

Apropos, Carlet v. Court of Appealsstates that:

SO ORDERED.

6. LEY CONSTRUCTION AND DEVELOPMENT CORPORATION, represented by its

President, JANET C. LEY, Petitioner,
vs.
MARVIN MEDEL SEDANO, doing business under the name and style "LOLA TABA
LOLO PATO PALENGKE AT PALUTO SA SEASIDE,", Respondent.

DECISION

PERLAS-BERNABE, J.:

The Facts

On March 13, 2012, petitioner filed a Complaint for Collection of Sum of Money and
Damages4 against respondent Marvin Medel Sedano (respondent), doing business under the
name and style "Lola Taha Lalo Pata Palengke at Paluto sa Seaside," before the Valenzuela-
RTC,

In his Answer with Third-Party Complaint, Respondent likewise pointed out that the venue was
improperly laid since Section 2116 of the lease contract provides that "[a]ll actions or case[s] filed
in connection with this case shall be filed with the Regional Trial Court of Pasay City, exclusive of
all others."17 Hence, the complaint should be dismissed on the ground of improper venue.

Finally, respondent argued that he paid petitioner the amounts of ₱3,518,352.00 as deposit and
advance rentals under the lease contract, and that he made a ₱400,000.00 overpayment, all of
which amounts were not liquidated or credited to respondent during the subsistence of the lease
contract. Thus, respondent interposed a counterclaim, seeking petitioner to reimburse the said
amounts to him, and to pay him moral and exemplary damages, including litigation expenses, in
view of petitioner's filing of such baseless suit.18

In its Comment/Opposition19 to respondent's affirmative defense of improper venue, petitioner

argued that Section 21 of the lease contract is not a stipulation as to venue, but a stipulation on
jurisdiction which is void.20 This is because such stipulation deprives other courts, i.e., the
Municipal Trial Courts, of jurisdiction over cases which, under the law, are within its exclusive
original jurisdiction, such as an action for unlawful detainer.21 Petitioner further posited that
respondent had already submitted himself to the jurisdiction of the Valenzuela-RTC and had
waived any objections on venue, since he sought affirmative reliefs from the said court when he
asked several times for additional time to file his responsive pleading, set-up counterclaims
against petitioner, and impleaded PNCC as a third-party defendant.22

Meanwhile, in its Answer to Third Party Complaint with Counterclaim,23 PNCC contended that
respondent has no cause of action against it, since he acknowledged PNCC’s right to receive
rent, as evidenced by his direct payment thereof to PNCC.24 Respondent also entered into a
contract of lease with PNCC after learning that petitioner had been evicted from the premises by
virtue of a court ruling.25
 The Valenzuela-RTC Ruling

In an Order26 dated June 15, 2015, the Valenzuela-RTC granted respondent's motion and
dismissed the complaint on the ground of improper venue. It held that Section 21 of the lease
contract between petitioner and respondent is void insofar as it limits the filing of cases with the
R TC of Pasay City, even when the subject matter jurisdiction over the case is with the
Metropolitan Trial Courts.27 However, with respect to the filing of cases cognizable by the RTCs,
the stipulation validly limits the venue to the RTC of Pasay City.28 Since petitioner's complaint is
one for collection of sum of money in an amount that is within the jurisdiction of the R TC,
petitioner should have filed the case with the RTC of Pasay City.29

The Valenzuela-RTC also found no merit in petitioner's claim that respondent waived his right to
question the venue when he filed several motions for extension of time to file his answer. It
pointed out that improper venue was among the defenses raised in respondent's Answer. As
such, it was timely raised and, therefore, not waived.30

Aggrieved, petitioner moved for reconsideration31 which was, however, denied by the Valenzuela-
RTC in its Order32 dated January 27, 2016; hence, the present petition.

The Issue Before the Court

The sole issue for the Court's resolution is whether or not the Valenzuela-RTC erred in ruling that
venue was improperly laid.

The Court's Ruling

The petition has no merit.

Rule 4
VENUE OF ACTIONS

Section 1. Venue of real actions. - Actions affecting title to or possession of real property, or
interest therein, shall be commenced and tried in the proper court which has jurisdiction over the
area wherein the

real property involved, or a portion thereof, is situated.

Forcible entry and detainer actions shall be commenced and tried in the municipal trial court of
the municipality or city wherein the real property involved, or a portion thereof, is situated.

Section 2. Venue of personal actions. -All other actions may be commenced and tried where
the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the
principal defendants resides, or in the case of a non-resident defendant where he may be
found, at the election of the plaintiff.

Section 3. Venue of actions against nonresidents. - If any of the defendants does not reside and
is not found in the Philippines, and the action affects the personal status of the plaintiff, or any
property of said defendant located in the Philippines, the action may be commenced and tried in
the court of the place where the plaintiff resides, or where the property or any portion thereof is
situated or found.

Section 4. When Rule not applicable. - This Rule shall not apply -

(a) In those cases where a specific rule or law provides otherwise; or

(b) Where the parties have validly agreed in writing before the filing of the action on the
exclusive venue thereof. (Emphases supplied)

Based on these provisions, the venue for personal actions shall - as a general rule - lie with the
court which has jurisdiction where the plaintiff or the defendant resides, at the election of the
plaintiff.33 As an exception, parties may, through a written instrument, restrict the filing of said
actions in a certain exclusive venue.34 In Briones v. Court of Appeals,35 the Court explained:

Written stipulations as to venue may be restrictive in the sense that the suit may be filed only in
the place agreed upon, or merely permissive in that the parties may file their suit not only in the
place agreed upon but also in the places fixed by law. As in any other agreement, what is
essential is the ascertainment of the intention of the parties respecting the matter.

As regards restrictive stipulations on venue, jurisprudence instructs that it must be shown that
such stipulation is exclusive. In the absence of qualifying or restrictive words, such as
"exclusively," "waiving for this purpose any other venue," "shall only" preceding the designation
of venue, "to the exclusion of the other courts," or words of similar import, the stipulation should
be deemed as merely an agreement on an additional forum, not as limiting venue to the specified
place.36

In Pilipino Telephone Corporation v. Tecson,37 the Court held that an exclusive venue stipulation
is valid and binding, provided that: (a) the stipulation on the chosen venue is exclusive in nature
or in intent; (b) it is expressed in writing by the parties thereto; and (c) it is entered into before the
filing of the suit.38

After a thorough study of the case, the Court is convinced that all these elements are present
and that the questioned stipulation in the lease contract, i.e., Section 21 thereof, is a valid venue
stipulation that limits the venue of the cases to the courts of Pasay City. It states:

21. Should any of the party (sic) renege or violate any terms and conditions of this lease
contract, it shall be liable for damages. All actions or case[s] filed in connection with this
1âwp hi1

lease shall be filed with the Regional Trial Court of Pasay City, exclusive of all
others.39 (Emphases and underscoring supplied)

The above provision clearly shows the parties' intention to limit the place where actions or
cases arising from a violation of the terms and conditions of the contract of lease may be
instituted. This is evident from the use of the phrase "exclusive of all others" and the specification
of the locality of Pasay City as the place where such cases may be filed.

In this case, it is undisputed that petitioner's action was one for collection of sum of money in an
amount43 that falls within the exclusive jurisdiction of the RTC.44 Since the lease contract already
provided that all actions or cases involving the breach thereof should be filed with the RTC of
Pasay City, and that petitioner’s complaint purporting the said breach fell within the RTC's
exclusive original jurisdiction, the latter should have then followed the contractual stipulation and
filed its complaint before the RTC of Pasay City. However, it is undeniable that petitioner filed its
complaint with the Valenzuela-RTC; hence, the same is clearly dismissible on the ground of
improper venue, without prejudice, however, to its refiling in the proper court.

That respondent had filed several motions for extension of time to file a responsive pleading, or
that he interposed a counterclaim or third-party complaint in his answer does not necessarily
mean that he waived the affirmative defense of improper venue. The prevailing rule on objections
to improper venue is that the same must be raised at the earliest opportunity, as in an answer or
a motion to dismiss; otherwise, it is deemed waived.45 Here, respondent timely raised the ground
of improper venue since it was one of the affirmative defenses raised in his Answer with Third-
Party Complaint.46 As such, it cannot be said that he had waived the same.
WHEREFORE, the petition is DENIED.

7. SPOUSES MARIA BUTIONG and VILLAFRlA, DR. RUEL B. SPOUSES MARIA

FRANCISCO substituted by VILLAFRIA, Petitioners,
vs.
MA. GRACIA RINOZA PLAZO and MA. FE RINOZA ALARAS, Respondents.

The antecedent facts are as follows:

On November 16, 1989, Pedro L. Rifioza died intestate, leaving several heirs, including his_
children with his first wife, respondents Ma. Gracia R. Plazo and Ma. Fe Alaras, as well as
several properties including a resort covered by Transfer Certificates of Title (TCT) No. 51354
and No. 51355, each with an area of 351 square meters, and a family home, the land on which it
stands is covered by TCT Nos. 40807 and 40808, both located in Nasugbu, Batangas. 4

In their Amended Complaint for Judicial Partition with Annulment of Title and Recovery of
Possession 5 dated September 15, 1993, respondents alleged that sometime in March 1991, they
discovered that their co-heirs, Pedro’s second wife, Benita"Tenorio and other children, had sold
the subject properties to petitioners, spouses Francisco Villafria and Maria Butiong, who are now
deceased and substituted by their son, Dr. Ruel B. Villafria, without their knowledge and consent.
When confronted about the sale, Benita acknowledged the same, showing respondents a
document she believed evidenced receipt of her share in the sale, which, however, did not refer
to any sort of sale but to a previous loan obtoiined by Pedro and Benita from a bank. 6 The
document actually evidenced receipt from Banco Silangan of the amount of ₱87, 352.62
releasing her and her late husband’s indebtedness therefrom. 7 Upon inquiry, the Register of
Deeds of Nasugbu informed respondents that he has no record of any transaction involving the
subject properties, giving them certified true copies of the titles to the same. When respondents
went to the subject properties, they discovered that 4 out of the 8 cottages in the resort had been
demolished. They were not, however, able to enter as the premises were padlocked.

Subsequently, respondents learned that on July 18, 1991, a notice of an extra-judicial settlement
of estate of their late father was published in a tabloid called Balita. Because of this, They caused
the annotation of their adverse claims over the subject properties before the Register of Deeds of
Nasugbu and filed their complaint praying, among others, for the annulment of all documents
conveying the subject properties to the petitioners and certificates of title issued pursuant
thereto. 8

In their Answer, 9 petitioners denied the allegations of the complaint on the groun_d of lack of
personal knowledge and good faith in acquiring the subject properties. In the course of his
testimony during trial, petitioner Francisco further contended that what they purchased was only
the resort. 10 He also presented an Extra-Judicial Settlement with Renunciation, Repudiations and
Waiver of Rights and Sale which provides, among others, that respondents' co-heirs sold the
family home to the spouses Rolando and Ma. Cecilia Bondoc for Pl million as well as a Deed of
Sale whereby Benita sold the resort to petitioners for ₱650, 000.00. 11

On October 1, 2001, the trial court nullified the transfer of the subject Properties to petitioners
and spouses Bondoc due to irregularities in the Documents of conveyance offered by petitioner’s
.as well as the circumstances Surrounding the execution of the same. Specifically, the Extra-
Judicial Settlement was notarized by a notary public that was not duly commissioned as such on
the date it was executed. 12 The Deed of Sale was Undated, the date of the acknowledgment
therein was left blank, and the Typewritten name "Pedro Rifioza, Husband" on the left side of the
document Was not signed. 13 The trial court also observed that both documents were Never
presented to the Office of the Register of Deeds for registration and That the titles to the subject
properties were still in the names of Pedro and His second wife Benita. In addition, the supposed
notaries and buyers of the Subject properties were not even presented as witnesses whom
supposedly witnessed the signing and execution of the documents of conveyance. 14 On The
basis thereof, the triaI court ruled in favor of respondents, in its Judgment, the pertinent portions
of its fallo provide:

WHEREFORE, foregoing premises considered, judgment is Hereby rendered as follows:

xxxx

4. A) Declaring as a nullity the ~'Extra-Judicial Settlement with Renunciation, Repudiation and

Waiver of Rights and Sale" (Ex. "l ", Villafria) notarized on December 23, 1991 by Notary Public
Antonio G. Malonzo of Manila, Doc. No. 190, Page No. 20, Book No. IXII, Series of 1991. .

b) Declaring as a nullity the Deed of Absolute Sale (Ex. "2", Villafria), purportedly
executed by Benita T. Rifioza in favor of spouses Francisco Villafria and Maria Butiong,
purportedly notarized by one Alfredo de Guzman marked Doc. No. 1136, Page No. 141,
and Book. No. XXX, Series of 1991.

c) Ordering the forfeiture of any and all improvements introduced By defendants

Francisco Villafria and Maria Butiong in the properties Covered by TCT No. 40807,
40808, 51354 and 51355 of the Register of Deeds for Nasugbu, Batangas. .

5. Ordering defendant Francisco Villafria and all persons, whose Occupancy within the premises
of the four- (4) parcels of land described in Par. 4-c above is derived from the rights and interest
of defendant Villafria, to vacate its premises and to deliver possession thereof, and all
improvements existing thereon to plaintiffs, for and in behalf of the estate of decedent Pedro L.
Rifioza.

6. Declaring the plaintiffs and the defendants-heirs in the Amended Complaint to be the
legitimate heirs of decedent Pedro L. Rifioza, each in the capacity and degree established, as
well as their direct successors-in interest, and ordering the defendant Registrar of Deeds to issue
the co1Tesponding titles in their names in the proportion established by law, pro in division, in
TCT Nos. 40807, 40808, 51354, 51355 and 40353 (after restoration) within ten (10) days from
finality of this Decision, 4pon payment of lawful fees, except TCT No. 40353, which shall be
exempt from all expenses for its restoration.

With no costs.

SO ORDERED. 15

On appeal, the CA affirmed the trial ‘court’s Judgment in its Decision 16 dated October 31, 2006 in
the following wise:

Aggrieved, petitioners, substituted by their son Ruel Villafria, filed a Motion for Reconsideration
dated November 24, 2006 raising the trial court’s lack of jurisdiction. It was alleged that when the
Complaint for Judicial Partition with Annulment of Title and Recovery of Possession was filed,
there was yet no settlement of Pedro's estate, determination as to the nature thereof, nor was
there an identification of the number of legitimate heirs. As such, the trial court ruled on the
settlement of the intestate estate of Pedro in its ordinary· jurisdiction when the action filed was for
Judidal Partition. Considering that the instant action is really one for settlement of intestate
estate, the trial court, sitting merely in its probate jurisdiction, exceeded its jurisdiction when it
ruled upon the issues of forgery and ownership. Thus, petitioner argued that. Said ruling is void
and has no effect for having been rendered without jurisdiction. The Motion for Reconsideration
was, however, denied by the appellate court on February 26, 2007.

On appeal, this Court denied on June 20, 2007, petitioner's Petition for Review on Certiorari for
submitting a verification of the petition, a certificate of non-forum shopping and an affidavit of
service that failed to comply with the 2004 Rules on Notarial Practice regarding competent
evidence of affiant' s identities. 18 In its Resolution 19 dated September 26, 2007, this Court also
denied petitioner's Motion for Reconsideration in the absence of any compelling reason to
warrant a modification of the previous denial. Thus, the June 20, 2007 Resolution became final
and executors on October 31, 2007 as certified by the Entry of Judgment issued by the
Court. 20 On January 16, 2008, the Court further denied petitioner' s motion for leave to admit a
second motion for reconsideration of its September 26, 2007 Resolution, considering that the
same is a prohibited pleading under Section 2, Rule 52, in relation to Section 4, Rule 56 of the
1997 Rules of Civil Procedure, as amended. Furthennore, petitioner's letter dated December 18,
2007 pleading the Court to take a second. Look at his petition for review on certiorari and that a
decision thereon be rendered based purely on its merits was noted without action. 21

Unsatisfied, petitioner wrote a letter dated March 24, 2008 addressed to then Chief Justice
Reynato S. Puno praying that a decision on the case be rendered based on the. Merits and not
on formal requirements "as he stands to lose everything his parents had left him just because the
verification against non-forum shopping is formally defective." However, in view of the Entry of
Judgment having been made on October 31, 2007, the Court likewise noted said letter without
action. 22

On November 27, 2008, the RTC issued an Order, issuing a Part Writ of Execution of its October
1, 2001 Decision with respect to the portions disposing of petitioner's claims as affirmed by the
CA.

The foregoing notwithstanding, petitioner filed, on February 11, 200 a Petition for Annulment of
Judgment and· Order before the CA assailing October 1, 2001 Decision as well as the November
27, 2008 Order of the RTC on the grounds of extrinsic fraud and lack of jurisdiction. In Decision
dated March 13, 2009, however, the CA dismissed the petition a affirmed the rulings of the trial
court in the following wise: Although the assailed Decision of the Court a quo has already
become final and executory and in fact entry of judgment was issued on 31 October 2007, supra,
nevertheless, to put the issues to rest,·We deem it apropos to tackle the same.

The Petitioner argues that the assailed Decision and Order of the Court a quo, supra, should be
annulled and set aside on the grounds of extrinsic fraud and lack of jurisdiction.

We are not persuaded.

xxxx

Section 2 of the Rules as stated above provides that the annulment of a judgment may "be
based only on grounds of extrinsic fraud and lack of jurisdiction." In RP v. The Heirs of Sancho
Magdato, the High Tribunal stressed that: There is extrinsic fraud when "the unsuccessful party
had been ·prevented from exhibiting fully his case, by fraud or deception practiced on him by his
opponent, as by keeping him away from court, ... or where the defendant never had knowledge
of the suit, being kept in ignorance by the acts of the plaintiff; ... "

Otherwise put, extrinsic or collateral fraud pertains to such fraud, which prevents the aggrieved
party ·from having a trial or presenting his case to the court, or is used to procure the judgment
without fair submission of the controversy. This refers to acts intended to keep the unsuccessful
party away from the courts as when there is a false promise of compromise or when one is kept
in ignorance of the suit. The pivotal issues before us are (1) whether. There was a time during
the proceedings below that the Petitioners ever prevented from exhibiting fully their case, by
fraud or deception, practiced on them by Respondents, and (2) whether the Petitioners were kept
away from the court or kept in ignorance by the acts of the Respondent?

xxxx
I.

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT RULING THAT THE
REGIONAL TRIAL COURT, BRANCH 14, NASUGBU, BATANGAS, ACTED WITHOUT
JURISDCITION IN ENTERTAINING THE SPECIAL PROCEEDING FOR THE SETTLEMENT
OF ESTATE OF PEDRO RINOZA AND THE CIVIL ACTION FOR ANNULMENT OF TITLE OF
THE HEIRS AND THIRD PERSONS IN ONE PROCEEDING. 24

Petitioner asserts that while the complaint filed by respondents was captioned as "Judicial
Partition with Annulment of Title and Recovery of Possession," the allegations therein show that
the cause of action is actually one for settlement of estate of decedent Pedro. Considering that
settlement of estate is a special proceeding cognizable by a probate court of limited jurisdiction
while judicial partition with annulment of title and recovery of possession are ordinary civil actions
cognizable by a court of general jurisdiction, the trial court exceeded its jurisdiction in entertaining
the latter while it was sitting merely in its probate jurisdiction. This is in view of the prohibition
found in the Rules on the joiner of special civil actions and ordinary civil actions. 25 Thus,
petitioner argued that the ruling of the trial court is void and has no effect for having been
rendered in without jurisdiction.

The petition is bereft of merit. Petitioner maintains that since. Respondents’ complaint alleged the
following causes of action, the same is actually one for settlement of estate and not of judicial
partition: FIRST CAUSE OF ACTION

Petitioner is mistaken. It is true that some of respondents' causes of action pertaining to the
properties left behind by the decedent Pedro, his known heirs, and the nature and extent of their
interests thereon may fall under an action for settlement of estate. However, a complete reading
of the complaint would readily show that, based on the nature of the suit, the llegations therein,
and the relief’s prayed for, the action, is clearly one for udicial partition with annulment of title and
recovery of possession.

Section 1, Rule 74 of the Rules of Court proyides:

RULE 74
Summary Settlement of Estate

Section 1. Extrajudicial settlement by agreement between heirs. - If the decedent left no will and
no debts and the heirs are all of age5 or the minors are represented by their judicial or legal
representatives duly authorized for the purpose, the parties may without securing letters of
administration, divide the estate among themselves as they see fit by means of a public
instrument filed in the office of the register of deeds, and should they disagree, they may do so in
an ordinary action of partition. If there is only one heir, he may adjudicate to himself the entire
estate by means of an affidavit filled in the office of the register of deeds. The parties to an
Extrajudicial settlement, whether by public instrument or by stipulation in a pending action for
partition, or the sole heir who adjudicates the entire estate to himself by means of an affidavit
shall file, simultaneously with and as a condition precedent to the filing of the public instrument,
or stipulation in the action for partition, or of the affidavit in the office of the register of deeds, a
bond with the said register of deeds, in an amount equivalent to the value of the personal
property involved as certified to under oath by the parties concerned and conditioned upon the
payment of any just claim that may be filed under section 4 of this rule. It shall be presumed that
the decedent left no debts if no creditor files a petition for letters of administration within two (2)
years after the death of the decedent.

The fact of the Extrajudicial settlement or administration shall be Published in a newspaper of

general circulation in the manner provided in the next succeeding section; but no Extrajudicial
settlement shall be binding upon any person who has not participated therein or had no notice
thereof. 27
In this relation, Section 1, Rule 69 of the Rules of Court provides:

Section 1. Complaint in action for partition of real estate. - A person having the right to compel
the partition of real estate may do so as provided in this Rule, setting forth in his complaint the
nature and extent of his title and an adequate description of the real estate of which partition is
demanded and joining as defendants all other persons interested in the property. 28

As can be gleaned from the foregoing provisions, the allegations of respondents in their
complaint are but customary, in fact, mandatory, to a complaint for partition of real estate.
Particularly, the complaint alleged: (1) that Pedro died intestate; (2) that respondents, together
with their co-heirs, are all of legal age, with the exception of one who is represented by a judicial
representative duly authorized for the purpose; (3) that the heirs enumerated are the only known
heirs of Pedro; (4) that there is an account and description of all real properties left by Pedro; (5)
that Pedro's estate has no known indebtedness; and (6) that respondents, as rightful heirs to the
decedent’s estate, pray for the partition of the same in accordance with the laws of intestacy. It is
clear, therefore, that based on the allegations of the complaint, the case is one for judicial
partition. That the complaint alleged causes of action identifying the heirs of the decedent,
properties of the estate, and their rights thereto, does not perforce make it an action for
settlement of estate.

It must be recalled that the general rule is that when a person dies intestate, or, if testate, failed
to name an executor in his will or the executor o named is incompetent, or refuses the trust, or.
Fails to furnish the bond equipped by the Rules of Court, then the decedent's estate shall be
judicially administered and the competent court shall appoint a qualified administrator the order
established in Section 6 of Rule 78 of the Rules of Court. 29 An exception to this rule, however, is
found in the aforequoted Section 1 of Rule 4 wherein the heirs of a decedent, who left no will and
no debts due from is estate, may divide the estate either extrajudicially or in an ordinary action or
partition without submitting the same for judicial administration nor applying for the appointment
of an administrator by the court. 30 The reasons that where the deceased dies without pending
obligations, there is no necessity for the appointment of an administrator to administer the. Estate
for hem and to deprive the real owners of their possession to which they are immediately
entitled. 31

In this case, it was expressly alleged in the complaint, and was not isputed, that Pedro died
without a will, leaving his estate without any ending obligations. Thus, contrary to petitioner’s
contention, respondents were under no legal obligation to submit the subject properties of the
estate of a special proceeding for settlement of intestate estate, and are, in fact, encouraged to
have the same partitioned, judicially or extrajudicially, by ereira v. Court of Appeals: 32
LYLITH B. FAUSTO, JONATHAN FAUSTO, RICO ALVIA, ARSENIA TOCLOY, LOURDES
ADOLFO AND ANECITA MANCITA, Petitioners, v. MULTI AGRI-FOREST AND COMMUNITY
DEVELOPMENT COOPERATIVE (FORMERLY MAF CAMARINES SUR EMPLOYEES
COOPERATIVE, INC.), Respondent.

Factual Antecedents

Multi Agri-Forest and Community Development Cooperative4 (respondent) is a registered credit

cooperative wherein Lylith Fausto (Lylith), Jonathan Fausto (Jonathan), Rico Alvia (Rico),
Arsenia Tocloy (Arsenia), Lourdes Adolfo (Lourdes) and Anecita Mancita (Anecita)5 (collectively,
the petitioners) are active members.6

On September 10, 1998, Lylith obtained a loan from the respondent in the amount of
P80,000.00, with due date on January 8, 1999.7 Subsequently, she secured another loan in the
amount of P50,000.00 which will fall due on March 14, 1999.8 Shortly thereafter, she procured a
third loan from the respondent also in the amount of P50,000.00.9 All of the mentioned
transactions were evidenced by separate promissory notes, with Anecita and Lourdes signing as
co-makers in the first and second loans, and Rico and Glicerio Barce (Glicerio) in the third loan.

Similarly, on October 27, 1998, Jonathan obtained a loan from the respondent in the amount of
P60,000.00 to fall due on February 24, 1999, with Lylith and Glicerio as co-makers.10 Thereafter,
on December 10, 1998, he obtained a second loan in the amount of P100,000.00, with Lylith and
Arsenia as his co-makers.11 All five loans obtained by Lylith and Jonathan were imposed with an
interest of 2.3% per month, with surcharge of 2% in case of default in payment of any installment
due.

Lylith and Jonathan, however, failed to pay their loans despite repeated demands. Thus, on
December 12, 2000, the respondent, through its Acting Manager Ma. Lucila G. Nacario
(Nacario), filed five separate complaints12 for Collection of Sum of Money before the Municipal
Trial Court in Cities (MTCC) of Naga City against the petitioners.

After the respondent rested its case, Rico, Glicerio, Lourdes, Arsenia and Anecita filed a motion
to dismiss by way of a demurrer to evidence on the ground of lack of authority of Nacario to file
the complaints and to sign the verification against forum shopping. They likewise claimed that the
complaints were prematurely filed since no demand letters were sent to them.13

The respondent filed an opposition to the demurrer to evidence alleging that the petitioners
expressly waived the need for notice or demand for payment in the promissory notes. It likewise
averred that there was a subsequent board resolution confirming the authority of Nacario to file
the complaints on behalf of the respondent.14

In an Order15 dated July 24, 2009, the MTCC of Naga City, Branch 1 denied the petitioners'
demurrer to evidence for lack of merit. It pointed out that the petitioners failed to raise the
supposed lack of authority of Nacario in their Answer; hence, the said defense was deemed
waived. As regards the lack of notice, it noted that the promissory notes evidencing the loans
stipulated a waiver on the need for notice or demand in case of default in payment of any
installment due, in which case the entire balance immediately becomes due and payable.

Subsequently, in a Decision16 dated August 1, 2011, the MTCC ruled in favor of the respondent
and held the petitioners liable for the payment of specified amount of loans, which include
interests, penalties and surcharges, plus 12% interest thereon. The dispositive portion of the
decision reads, as follows:chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, the Court finds for the [respondent], ordering the
following:cralawlawlibrary
 1. In Civil Case No. 11318, [Jonathan, Lylith and Glicerio] are hereby ordered jointly and
severally to pay to [the respondent] the amount of Php 129,881.60 plus 12% interest
thereon from the filing of the case until the whole amount is fully paid.
2. In Civil Case No. 11319, [Lylith, Lourdes and Anecita] are hereby ordered jointly and
severally to pay to [the respondent] the amount of Php 178,564.79 plus 12% interest
thereon from the filing of the case until the whole amount is fully paid.
3. In Civil Case No. 11438, [Jonathan, Lylith and Arsenia] are hereby ordered jointly and
severally to pay to [the respondent] the amount of Php 166,756.39 plus 12% interest
thereon from the filing of the case until the whole amount is fully paid.
4. In Civil Case No. 11439, [Lylith, Rico and Glicerio] are hereby ordered jointly and
severally to pay to [the respondent] the amount of Php 30,700.00 plus 12% interest
thereon from the filing of the case until the whole amount is fully paid.
5. In Civil Case No. 11440, [Lylith, Lourdes and Anecita] are hereby ordered jointly and
severally to pay to [the respondent] the amount of Php 111,526.34 plus 12% interest
thereon from the filing of the case until the whole amount is fully paid.

SO ORDERED.17

chanrobleslaw
Unyielding, the petitioners appealed the foregoing decision with the Regional Trial Court (RTC) of
Naga City. After the parties submitted their respective memoranda, the RTC rendered a Joint
Decision18 dated December 12, 2011, affirming with modification the decision of the MTCC. It
reverted the liability of the petitioners to the original amount of the loan stated in the promissory
notes and reduced the interest and surcharge to 12% per annum, respectively. The dispositive
portion of the decision reads, thus:chanRoblesvirtualLawlibrary

SO ORDERED.21

chanrobleslaw
On February 22, 2012, the petitioners filed a petition for review with the CA.22 They reiterated
their claim that Nacario lacked the authority to file the complaints on behalf of the respondent in
the absence of a board resolution authorizing her to do so. They farther questioned the
respondent's failure to resort to mediation or conciliation before filing the cases in court.23 They
also pointed out that the RTC overlooked the fact that the respondent sent demand letters only to
Lylith and Jonathan, to the exclusion of their co-makers.24 Finally, they contended that the MTCC
had no jurisdiction over the complaints considering that the total amount involved was way over
its jurisdictional amount of P100,000.00 nor to the increase in the same in the amount of
P200,000.00, brought about by the amendment provided in Republic Act (R.A.) No.
7691.25cralawred

On March 17, 2014, the CA rendered a Decision,26 affirming the decision of the RTC, the
dispositive portion of which reads, as follows:chanRoblesvirtualLawlibrary

chanrobleslaw
The CA ruled that the MTCC had jurisdiction over the case considering that pursuant to R.A. No.
7691, the jurisdictional amount pertaining to its authority had been increased to P200,000.00,
and each of the complaints filed by the respondent are within this stated amount. It pointed out
that the totality rule raised by the petitioners does not apply since the respondent filed separate
complaints pertaining to different loan transactions.28

On September 11, 2014, the petitioners interposed the present appeal with this Court. The
petitioners contend that the CA erred in upholding the jurisdiction of the MTCC to hear the cases
in contravention to the totality rule. They maintain that the MTCC has no jurisdiction over the
complaints since the total amount of the claims exceeds the jurisdictional amount that pertains to
the MTCC. They likewise point out the lack of authority of Nacario to act on behalf of the
respondent, there being no board resolution empowering her to do so at the time she filed the
complaints. Further, they argue that the respondent failed to resort to mediation or conciliation
before filing the cases with the MTCC. Finally, they asseverate that the CA erred in overlooking
the lack of demand or notice upon the co-makers of Lylith and
Jonathan.chanroblesvirtuallawlibrary

Ruling of the Court

The petition lacks merit.

The MTCC has jurisdiction over the

complaints

A reading of the petition shows that the issues raised herein had been thoroughly discussed and
passed upon by the CA. On the issue of jurisdiction, the CA correctly upheld the jurisdiction of
the MTCC of Naga City to hear the cases. R.A. No. 7691, which amended Section 33 of Batas
Pambansa Bilang 129 (BP 129), increased the jurisdictional amount pertaining to the MTCC.
Pertinently, Section 5 of R.A. No. 7691 reads:chanRoblesvirtualLawlibrary

Sec. 5. After five (5) years from the effectivity of this Act, the jurisdictional amounts mentioned in
Sec. 19(3), (4), and (8); and Sec. 33(1) of Batas Pambansa Blg. 129 as amended by this Act,
shall be adjusted to Two hundred thousand pesos (P200,000.00). Five (5) years thereafter, such
jurisdictional amounts shall be adjusted further to Three hundred thousand pesos (P300,000.00):
Provided, however, That in the case of Metro Manila, the abovementioned jurisdictional amounts
shall be adjusted after five (5) years from the effectivity of this Act to Four hundred thousand
pesos (P400,000.00).

chanrobleslaw
It was emphasized in Crisostomo v. De Guzman,34 that the intent of R.A. No. 7691 was to
expand the jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts by amending the pertinent provisions of BP 129 or the Judiciary
Reorganization Act of 1980. Under Section 5 of the said law, the increase in jurisdictional amount
for all kinds of claims before first level courts outside of Metro Manila was to be implemented in a
staggered basis over a period of 10 years. The first adjustment was to take place five years after
the effectivity of the law. The second and final adjustment, on the other hand, would be made five
years thereafter.35 In particular, the first adjustment in jurisdictional amount of first level courts
outside of Metro Manila from P100,000.00 to P200,000.00 took effect on March 20, 1999.
Meanwhile, the second adjustment from P200,000.00 to P300,000.00 became effective on
February 22, 2004 in accordance with Circular No. 65-2004 issued by the Office of the Court
Administrator on May 13, 2004.36

Considering that the complaints were filed in 2000, the jurisdictional amount to be applied is
P200,000.00, exclusive of interests, surcharges, damages, attorney's fees and litigation costs.
This jurisdictional amount pertains to the totality of all the claims between the parties embodied in
the same complaint or to each of the several claims should they be contained in separate
complaints. This is the unequivocal meaning of the last proviso in Section 33(1) of B.P. 129,
which reads:chanRoblesvirtualLawlibrary

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts in civil cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit Trial Courts shall exercise:chanRoblesvirtualLawlibrary
(1) Exclusive original jurisdiction over civil actions and probate proceedings, testate and
intestate, including the grant of provisional remedies in proper cases, where the value of the
personal property, estate, or amount of the demand does not exceed One hundred thousand
pesos (P100,000.00) or, in Metro Manila where such personal property, estate, or amount of the
demand does not exceed Two hundred thousand pesos (P200,000.00) exclusive of interest
damages of whatever kind, attorney's fees, litigation expenses, and costs, the amount of which
must be specifically alleged: Provided, That where there are several claims or causes of
action between the same or different parties, embodied in the same complaint, the amount
of the demand shall be the totality of the claims in all the causes of action, irrespective of
whether the causes of action arose out of the same or different transactions [.]

x x x x (Emphasis ours)

chanrobleslaw
Therefore, the CA correctly ruled that the totality rule does not apply in the case. As, can be
deduced from the above stated provision, the totality of claims rule applies only when there are
several claims or causes of action between the same or different parties embodied in
the same complaint, in which case the total amount of the claims shall be determinative of the
proper court which has jurisdiction over the case. The instant case, however, does not call for the
application of the rule since there are five complaints, each pertaining to a distinct and separate
claim not exceeding P200,000.00. The petitioners' act of lumping altogether the amount of the
claims in all of the complaints and arguing that the total amount of P1,216,342.91 exceeds the
jurisdictional amount that pertains to the MTCC is a gross misinterpretation of the provision.

The Board of Directors (BOD)

ratified the acts of Nacario.

The petitioners asseverate that Nacario has no authority to file the complaints on behalf of the
respondent. They argue that it is only by the authority of a board resolution that Nacario may be
able to validly pursue acts in representation of the cooperative. They also contend that the
applicable law is R.A. No. 6938 or the Cooperative Code of the Philippines (Cooperative
Code),37 and not the Corporation Code of the Philippines (Corporation Code).

That the applicable law should be the Cooperative Code and not the Corporation Code is not
sufficient to warrant a different resolution of this case. Verily, both codes recognize the authority
of the BOD, through a duly-issued board resolution, to act and represent the corporation or the
cooperative, as the case maybe, in the conduct of official business. In Section 2338 of the
Corporation Code, it is provided that all corporate powers of all corporations formed under the
Code shall be exercised by the BOD. All businesses are conducted and all properties of
corporations are controlled and held by the same authority. In the same manner, under Section
39 of the Cooperative Code, the BOD is given the power to direct and supervise the business,
manages the property of the cooperative and may, by resolution, exercise all such powers of the
cooperative. The BOD, however, may authorize a responsible officer to act on its behalf through
the issuance of a board resolution attesting to its consent to the representation and providing for
the scope of authority.

Nevertheless, there were instances when the Court recognized the authority of some officers to
file a case on behalf of the corporation even without the presentation of the board resolution.
In Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue,39 it was noted,
thus:chanRoblesvirtualLawlibrary

In a slew of cases, however, we have recognized the authority of some corporate officers to sign
the verification and certification against forum shopping. In Mactan-Cebu International Airport
Authority v. CA, we recognized the authority of a general manager or acting general manager to
sign the verification and certificate against forum shopping; in Pfizer v. Galan, we upheld the
validity of a verification signed by an "employment specialist" who had not even presented any
proof of her authority to represent the company; in Novelty Philippines, Inc., v. CA, we ruled that
a personnel officer who signed the petition but did not attach the authority from the company is
authorized to sign the verification and non-forum shopping certificate; and in Lepanto
Consolidated Mining Company v. WMC Resources International Pty. Ltd. (Lepanto), we ruled
that the Chairperson of the Board and President of the Company can sign the verification and
certificate against non-forum shopping even without the submission of the board's authorization.

In sum, we have held that the following officials or employees of the company can sign
the verification and certification without need of a board resolution: (1) the Chairperson of
the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting
General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor
case.40 (Citation omitted and emphasis ours)

chanrobleslaw
In the abovementioned cases, however, the Court clarified that the determination of the
sufficiency of the authority of the concerned officers was done on a case to case basis. The
rationale in justifying the authority of corporate officers or representatives of the corporation to
sign the verification or certificate against forum shopping is that they are in the best position to
verify the truthfulness and correctness of the allegations in the petition.41 Nonetheless, this was
not meant to trump the established rule of issuing a board resolution and appending a copy
thereof to the complaint or petition so as to preclude any question on the authority to file the
petition, particularly in signing the verification and certification against forum shopping.

Apart from the foregoing, the lack of authority of a corporate officer to undertake an action on
behalf of the corporation or cooperative may be cured by ratification through the subsequent
issuance of a board resolution, recognizing the validity of the action or the authority of the
concerned officer. In Yasuma v. Heirs of Cecilio S. de Villa,42 the Court emphasized,
thus:chanRoblesvirtualLawlibrary

[T]he corporation may ratify the unauthorized act of its corporate officer. Ratification means that
the principal voluntarily adopts, confirms and gives sanction to some unauthorized act of its
agent on its behalf. It is this voluntary choice, knowingly made, which amounts to a ratification of
what was theretofore unauthorized and becomes the authorized act of the party so making the
ratification. The substance of the doctrine is confirmation after conduct, amounting to a substitute
for a prior authority. Ratification can be made either expressly or impliedly. Implied ratification
may take various forms—like silence or acquiescence, acts showing approval or adoption of the
act, or acceptance and retention of benefits flowing therefrom.43 (Citations omitted)

chanrobleslaw
In this case, the respondent expressly recognized the authority of Nacario to file the complaints
in Resolution No. 47, Series of 2008,44 in which the BOD resolved to recognize, ratify and affirm
as if the same were fully authorized by the BOD, the filing of the complaints before the MTCC of
Naga City by Nacario. In a similar issue raised in Swedish Match Philippines, Inc. v. The
Treasurer of the City of Manila,45 the Court upheld the subsequent issuance of a board resolution
recognizing the authority of the corporation's finance manager as sufficient to acknowledge the
authority of the said officer to file a petition with the RTC on behalf of the corporation. It
ratiocinated that, by virtue of the issuance of the board resolution, the corporation ratified the
authority of the concerned corporate officer to represent it in the petition filed before the RTC and
consequently to sign the verification and certification of non-forum shopping on behalf of the
corporation.46 Here, considering that Nacario's authority had been ratified by the BOD, there is
no reason for the Court not to uphold said authority.

Mediation before the Cooperative

Development Authority (CDA) is not
compulsory

The petitioners likewise raised an issue with respect to the lack of effort on the part of the
respondent to resort to mediation before the CDA prior to filing the complaints in court.
Indeed, expressed in Section 121 of the Cooperative Code is the preference for the amicable
settlement of disputes before the CDA. It does not appear, however, that mediation or
conciliation is a mandatory requirement that is considered fatal to a case directly filed in a regular
court. The provision reads as follows:chanRoblesvirtualLawlibrary

Sec. 121. Settlement of Disputes. Disputes among members, officers, directors and committee
members, and intra-cooperative disputes shall, as far as practicable, be settled amicably in
accordance with the conciliation or mediation mechanisms embodied in the by-laws of the
cooperative, and in applicable laws.

Should such a conciliation/mediation proceeding fail, the matter shall be settled in a court of
competent jurisdiction.

chanrobleslaw
The non-compulsory nature of the resort to mediation is evident from the language of the
provision. The decision to mediate depends on the submission of one or both parties to undergo
the procedure by requesting the CDA to mediate, coupled with the parties' mutual agreement to
recognize its authority. The procedure therefore is optional and rests on the parties' agreement to
submit to the same. Clearly, it is not mandatory to undergo mediation first before seeking
recourse to regular courts. This being the case, the respondent's direct resort to the court is not
fatal to its cases.

The requirement for demand or

notice may be waived.

Anent the petitioners' claim that no notice or demand was sent to them, the CA correctly ruled
that the instant case falls under the exceptions to the necessity of demand. Specifically, Article
1169, paragraph 1 of the Civil Code provides that demand is not necessary when the obligation
or the law expressly so declares. In the promissory notes signed by the petitioners, there is a
uniform provision which states that "[i]n case of default in payment of any installment due as
herein agreed, the entire balance of this note shall immediately become due and payable at the
option of the [respondent] without any notice or demand." This amounts to the express waiver of
the need for demand before the debtor incurs in delay.

The petitioners cannot evade liability by invoking that the stipulation on the waiver of notice
applies only to the principal. It bears noting that the promissory notes state that the petitioners
bound themselves jointly and severally liable with the principal debtor for the entire amount of the
obligation. A solidary or joint and several obligation is one in which each debtor is liable for the
entire obligation.47 The petitioners being co-makers, their liability is immediate and absolute as
the principal debtor. The terms of the promissory notes apply to co-makers in equal force as with
the principal debtors. This includes stipulation on the waiver of notice from the creditor before the
obligation becomes due and demandable.

The interest imposed on the money

judgment must he modified to
conform to prevailing jurisprudence.

The RTC, in its decision, ruled that the stipulated interest rates of 2.3% per month and 2%
surcharge per month are excessive and unconscionable as the combination of these rates
already amounted to 51.6% of the principal. Finding such stipulation void for being exorbitant and
therefore contrary to morals, if not against the law, it reduced the rate of interest and surcharge
to 1% per month or twelve percent (12%) per annum, which was then the prevailing rate of legal
interest.

Such ruling of the RTC finds support in a plethora of cases where this Court ruled that the
imposition of iniquitous and unconscionable interest rate renders the same void and warrants the
imposition of the legal interest rate. In Ruiz v. CA,48 the Court found the 3% interest imposed on
four promissory notes as excessive and equitably reduced the same to 12% per
annum. Likewise, in Chua, et al. v. Timan, et al.,49 the Court ruled that the stipulated interest
rates of 7% and 5% per month imposed on loans are excessive and reduced the same to the
legal rate of 1% per month or 12% per annum. And, in Macalinao v. Bank of the Philippine
Islands,50 the Court further reduced the 3% interest imposed by the CA on purchases made
using Bank of the Philippine Islands credit card to 1% per month, finding that 36% per annum of
interest, which even excludes penalty charges, is excessive and unconscionable.

In this case, the RTC correctly ruled that the stipulated interest rate of 2.3% per month on the
promissory notes and 2% per month surcharge are excessive, iniquitous, exorbitant and
unconscionable, thus, rendering the same void. Since the stipulation on the interest rate is void, it
is as if there was no express contract thereon, in which case, courts may reduce the interest rate
as reason and equity demand.51 Thus, it is only just and reasonable for the RTC to reduce the
interest to the acceptable legal rate of 1% per month or 12% per annum. This ruling was affirmed
by the CA.

In view, however, of the ruling of this Court in Nacar v. Gallery Frames, et al.,52 there is a need to
modify the rate of legal interest imposed on the money judgment in order to conform to the
prevailing jurisprudence. In the said case, the Court discussed the modification on the rules in
the imposition or computation of legal interest laid down in the landmark case of Eastern
Shipping Lines, Inc. v. Court of Appeals,53 brought about by Resolution No. 796 dated May 16,
2013 issued by the Bangko Sentral ng Pilipinas Monetary Board. The pertinent portion
in Nacar reads as follows:chanRoblesvirtualLawlibrary

Recently, however, the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its Resolution
No. 796 dated May 16, 2013, approved the amendment of Section 2 of Circular No. 905, Series
of 1982 and, accordingly, issued Circular No. 799, Series of 2013, effective July 1, 2013, the
pertinent portion of which reads:chanRoblesvirtualLawlibrary

The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following
revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby
amending Section 2 of Circular No. 905, Series of 1982:chanRoblesvirtualLawlibrary

Section 1. The rate of interest for the loan or forbearance of any money, goods or credits
and the rate allowed in judgments, in the absence of an express contract as to such rate
of interest, shall be six percent (6%) per annum.

Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and
Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial
Institutions are hereby amended accordingly. ChanRoblesVirtualawlibrary

This Circular shall take effect on 1 July 2013.

chanrobleslaw
Thus, from the foregoing, in the absence of an express stipulation as to the rate of interest that
would govern the parties, the rate of legal interest for loans or forbearance of any money, goods
or credits and the rate allowed in judgments shall no longer be twelve percent (12%) per annum -
as reflected in the case of Eastern Shipping Lines and Subsection X305.1 of the Manual of
Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of
Regulations for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular No.
799 - but will now be six percent (6%) per annum effective July 1, 2013. x x x.54 (Citations
omitted and emphasis ours)

chanrobleslaw
Consistent with the foregoing, the Court hereby reduces the rate of interest on the principal loans
to six percent (6%) per annum and the surcharge imposed thereon also to the prevailing legal
rate of six percent (6%) per annum.

WHEREFORE, premises considered,