JAN-DEC CONSTRUCTION CORPORATION vs.

COURT OF APPEALS
G.R. No. 146818 February 6, 2006

Facts:
On December 17, 1999, Jan-Dec Construction Corporation (petitioner) filed a complaint before
the Regional Trial Court, Branch 276, Muntinlupa City against Metro-South Intermodal Transport
Terminal Corporation and Food Terminal, Inc. for Sum of Money and Enforcement of Contractor Lien.
The petitioner alleges in the complaint that respondent leased to Intermodal a portion of its property
located at DPB Avenue, FTI Compound, Taguig City for the purpose of operating a bus terminal;
Intermodal contracted with the petitioner for the construction of a bus terminal on the leased property
at an agreed contract price of P27,097,990.00 with 10% down-payment and the balance payable in
eleven equal monthly payments; the petitioner performed its obligation under the construction
agreement with the corresponding change orders but, in gross violation of its obligation, Intermodal
paid only a fraction of the agreed consideration; despite demands, Intermodal failed to pay the balance
of P23,720,000.00; petitioner learned that respondent will take-over the bus terminal; respondent
should assume the unpaid obligations of Intermodal in the event of such takeover in view of the
petitioner's preferential lien over the bus terminal under Article 2242, paragraphs 3 and 4 of the Civil
Code.
In its answer, Intermodal contends that the petitioner has no cause of action against it since the
latter did not properly comply with its obligation to the former. Intermodal points to the respondent as
the party solely liable to the petitioner since respondent failed to comply with its obligations under the
lease contract by failing to deliver the 5-hectare permanent terminal site and to provide road access to
the terminal. Petitioner maintains that respondent is liable for the obligations of Intermodal should it
take-over the bus terminal, under Articles 1312 and 2242, paragraphs 3 and 4, of the Civil Code.

Issue: Whether or not the court gravely abuse its discretion

Held:
No. Respondent avers that the present petition for certiorari should be dismissed for being an
improper remedy from the final order of the CA. Respondent submits that appeal via a petition for
review under Rule 45 of the 1997 Rules of Civil Procedure is the correct recourse. In the event that the
petition is given due course, respondent contends that CA did not abuse its discretion, much less err, in
dismissing petitioner's petition for certiorari because appeal is the proper remedy from the RTC's Order
dismissing the complaint against petitioner since the order of dismissal is final and not interlocutory.
Furthermore, respondent insists that the complaint failed to state any cause of action against it because
respondent is not a party to the construction agreement between petitioner and Intermodal and, as
such, cannot be held liable for the debts incurred by the latter.
Prefatorily, the Court notes that petitioner filed a special civil action for certiorari under Rule 65 of the
1997 Rules of Civil Procedure. As a rule, the remedy from a judgment or final order of the CA is appeal
via petition for review under Rule 45 of the Rules.
Under Rule 45, decisions, final orders or resolutions of the CA in any case, regardless of the
nature of the action or proceedings involved, may be appealed to the Court by filing a petition for
review, which would be but a continuation of the appellate process over the original case. It seeks to
correct errors of judgment committed by the court, tribunal, or officer. In contrast, a special civil action
for certiorari under Rule 65 is an independent action based on the specific grounds therein provided and
proper only if there is no appeal or any plain, speedy and adequate remedy in the ordinary course of
law. It is an extraordinary process for the correction of errors of jurisdiction and cannot be availed of as
a substitute for the lost remedy of an ordinary appeal. However, the assailed Resolution of the CA
dismissing petitioner's petition for certiorari amounts to nothing more than an error of judgment,
correctible by appeal. When a court, tribunal, or officer has jurisdiction over the person and the subject
matter of the dispute, the decision on all other questions arising in the case is an exercise of that
jurisdiction. Consequently, all errors committed in the exercise of said jurisdiction are merely errors of
judgment. Under prevailing procedural rules and jurisprudence, errors of judgment are not proper
subjects of a special civil action for certiorari. For if every error committed by the trial court or quasi-
judicial agency were to be the proper subject of review by certiorari, then trial would never end and the
dockets of appellate courts would be clogged beyond measure. For this reason, where the issue or
question involved affects the wisdom or legal soundness of the decision, not the jurisdiction of the court
to render said decision, the same is beyond the province of a special civil action for certiorari. Since
petitioner filed the instant special civil action for certiorari, instead of appeal via a petition for review,
the petition should be dismissed. Besides, the RTC was correct in dismissing the complaint against
respondent for failure to state a cause of action against it.
DEVELOPMENT BANK OF THE PHILIPPINES vs. THE MINISTER OF LABOR
G.R. No. 75801 March 20, 1991

Facts:

On 3 February 1981, Samahang Pagkakaisang Manggagawa sa RMC-Gatcord (Samahan for

brevity), in representation of its 1,000 workers/members, filed a complaint against Riverside Mills
Corporation (RMC for brevity) for non-payment of Presidential Decree 1713's P1.00 daily wage increase
and P60.00 monthly Emergency Cost of Living Allowance (ECOLA) with the Ministry (now Department) of
Labor and Employment.
After trial, the Ministry's NCR Director Severo M. Pucan issued an order on July 9, 1981
mandating RMC "to pay the complainants-Samahan additional mandatory ECOLA of P60.00/month and
the P1.00 increase in the minimum wage, retroactive as of August 1981." Deputy Minister Vicente
Leogardo, Jr. affirmed the said decision on January 6, 1982, upon appeal by the company, Riverside Mills
Corporation.
It also appears that petitioner DBP had instituted extra-judicial foreclosure proceedings as early as 1983
on the properties and other assets of RMC as a result of the latter's failure to meet its obligations on the
loan it had previously secured from DBP. Thereafter, the total balance of the judgment award in the
labor case previously mentioned, was recomputed at three million three hundred one thousand nine
hundred ninety seven pesos and seventy five centavos (P3,301,997.75) in an order issued by Director
Severo M. Pucan dated April 11, 1985.
On 21 January 1986, DBP received a Notice of Conference from Severo Pucan of the Ministry of
Labor and Employment (MOLE) ordering DBP to appear before Atty. Roberto A. Jerez on January 23,
1986. DBP learned that the respondent-Samahan was able to secure a decision in its favor in the labor
case above-mentioned, which they wanted to enforce against DBP. On 21 April 1986, a Notice of
Garnishment was served upon DBP for the amount of P3,301,997.75.

Issue: Whether or not a writ of garnishment may be issued against the proceeds of RMC's properties
foreclosed by DBP and sold to Rosario Textile Mills, by the application of the worker's right of preference
under Article 110 of the Labor Code.

Held:
Republic Act No. 6715 amending Article 110 of the Labor Code reads:
Sec. 1. Article 110 of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines, is
hereby further amended to read as follows:
Art. 110. Worker's preference in case of bankruptcy. - In the event of bankruptcy or liquidation of the
employer's business, his workers shall enjoy first preference as regards their unpaid wages and other
monetary claims shall be paid in full before the claims of the Government and other creditors may be
paid. (Amendments italicized)
Accordingly, Section 10, Rule III, Book III of the Omnibus Rules Implementing the Labor Code has also
been amended by Section I of the Rules and Regulations Implementing R.A. 6715, as approved by the
then Secretary of Labor on May 24, 1989, which now provides:
Sec. 10. Payment of wages and other monetary claims in case of bankruptcy. - In case of bankruptcy or
liquidation of the employer's business, the unpaid wages and other monetary claims of the employees
shall be given first preference and shall be paid in full before the claims of the Government and other
creditors may be paid.
Notably, the terms "declaration" of bankruptcy or "judicial" liquidation have been eliminated. However,
despite said amendments, the same interpretation of Article 110 as applied in the case of Development
Bank of the Philippines vs. Hon. Labor Arbiter Ariel C. Santos et al. (171 SCRA 138) was adopted by this
Court in recent cases (G.R. No. 86932, DBP vs. NLRC et al., June 27, 1990; G.R. Nos. 82763-64, DBP vs.
NLRC et al., March 19, 1990).
Because of its impact on the entire system of credit, Article 110 of the Labor Code cannot be viewed in
isolation of, and must always be reckoned with the provisions of the Civil Code on concurrence and
preference of credits (DBP vs. NLRC, et al., supra), thus, it may not be invoked by employees of RMC, like
private respondent-Samahan herein, in the absence of a formal declaration of bankruptcy or judicial
liquidation order.
Hence, the disputed garnishment of the money paid by Rosario Textile Mills to DBP corresponding to the
partial installment of the sales price of RMC's foreclosed properties is not justified.
Clearly, the authority of the sheriff is limited to money or properties belonging to Riverside Mills
Corporation, the judgment debtor in the labor case concerned. Hence, when the sheriff garnished the
monies paid by Rosario Textile Mills to DBP, the sheriff, in effect had garnished funds not belonging to
Riverside Mills Corporation but to DBP. This is violative of the basic rule that the power of the court or
tribunal in the execution of its judgment extends only over properties unquestionably belonging to the
judgment debtor (Special Services Corporation vs. Centro La Paz, 121 SCRA 748 [1985], DBP vs. Hon. Sec.
of Labor et al., G. R. No. 79251, November 28, 1989, citing the case of National Mines and Allied
Worker's Union vs. Hon. Vera et al., 133 SCRA 259 [1984]). Undoubtedly, when the sheriff garnished the
funds belonging to the Development Bank of the Philippines, he exceeded the authority vested in him in
the writ of execution, and when the Deputy Minister of Labor sustained the same in his order, he acted
with grave abuse of discretion correctible by certiorari.
ATLANTIC ERECTORS VS. HERBAL COVE REALTY
G.R. No. 148568. March 20, 2003

FACTS:

Atlantic Erectors and Herbal Cove Realty entered into a Construction Contract, whereby Atlantic
agreed to construct a four unit townhouse for a specified contract price. The contract period was for 180
days. Atlantic claims the period was not followed due to reasons attributable to Herbal suspension
orders and additional works. However, Herbal denied such claims and pointed to Atlantic as having
exceeded the 180 period aggravated by defective workmanship and utilization of materials which were
not in compliance with specifications. Atlantic filed a complaint for sum of money representing cost of
materials and for labor on the houses constructed with damages with the RTC of Makati. In addition,
they also filed a notice of lis pendens for annotation during the pendency of the civil case they filed.
Herbal filed a Motion to Dismiss the Complaint for lack of jurisdiction and for failure to state a
cause of action. In addition, they filed a Motion to Cancel Notice of Lis Pendens. They argue that the
Notices of lis pendens are without basis because the action is a purely personal action to collect a sum of
money and recover damages and does not directly affect title to, use, or possession of real property.
RTC initially granted the Motion to Cancel Notice; however, they reversed and reinstated the Notices
after Atlantic filed a Motion for Reconsideration. CA reinstated the initial order of the RTC granting
Herbals Motion to Cancel the Notice of Lis Pendens.

Issue: Whether or not money claims representing cost of materials for and labor on the houses
constructed on property are a proper lien for annotation of lis pendens on the property titled.

HELD: No. As a general rule, the only instances in which a notice of lis pendens may be availed of are as
follows: (a) an action to recover possession of real estate; (b) an action for partition; and (c) any other
court proceedings that directly affect the title to the land or the building thereon or the use or the
occupation thereof. The complaint was a purely personal action and a simple collection case. It did not
contain any material averment of any enforceable right, interest or lien in connection with the subject
matter. The annotation of a notice of lis pendens on titles is not proper where the proceedings
instituted are actions in personam. Respondent Herbal Cove argues that the annotation is bereft of any
factual or legal basis, because petitioners Complaint does not directly affect the title to the property, or
the use or the possession thereof. It also claims that petitioners Complaint did not assert ownership of
the property or any right to possess it. Moreover, respondent attacks as baseless the annotation of the
Notice of Lis Pendens through the enforcement of a contractors lien under Article 2242 of the Civil
Code.
FRANCISCO C. MANABAT vs. LAGUNA FEDERATION OF FACOMAS, INC.
G.R. No. L-23888 March 18, 1967
Facts:
In a suit filed by Laguna Federation of Facomas, Inc. against Nieves M. Vda. de Roxas, a
judgment for the plaintiff was rendered and pursuant to it, a writ of execution was issued on
February, 8, 1960, by virtue of which Francisco Manabat, the provincial sheriff, sold at public auction
on November 24, 1960 all rights, titles and interests of Nieves M. Vda. de Roxas in ten 10 parcels of
land for a total price of P37,000. Upon discovery, however, that the parcels of land sold were subject
to registered liens such as writs of execution and attachment annotated at the back of the respective
title certificates, the sheriff instituted an action for interpleader on February 21, 1961 in the same
Court of First Instance of Laguna, for the different creditors or lienholders to litigate among
themselves and determine their rights to the P37,000 proceeds of the sale.
After stipulation of facts and submission of documentary evidence by the parties, the Court of First
Instance ruled, in its decision of December 6, 1961, that the aforementioned defendants-
claimants are entitled to the proceeds of the sale in the order of preference in accordance with the
dates of the registration of their credits.

Isuue:

Whether or not the the rule to follow in the satisfaction of the credits involved is that of
preference in the order of dates of registration, as held by the court a quo, or distribution pro rata, as
appellants maintain.

Held:

Appellants' reasoning is that this is an instance of several credits referring to the same
specific real property; and that the rule in such case is to satisfy all the aforesaid credits pro rata,
following Article 2249 of the Civil Code:

ART. 2249. If there are two or more credits with respect to the same specific real property or
real rights, they shall be satisfied pro rata, after the payment of the taxes and assessments upon the
immovable property or real right. The above provision of the new Civil Code altered the set-up under
the old one in that while previously the rule provided for was priority of payment in regard to credits
referring to the same specific real property, now the general rule is pro rata.
Nonetheless, even under the new system, not all credits referring to the same specific real property
come under the pro rata rule. Article 2249 itself, expressly provides that taxes and assessments
upon the real property are to be paid first.
It being expressly provided that said credits are preferred only as to later credits, it follows that the
same limitation applies as to their preference among themselves for purposes of satisfying several
credits annotated by attachments or executions, the rule is still preference according to priority of the
credits in the order of time. For, otherwise, the result would be absurd that the preference of an
attachment or execution lien over later credits, as above provided for, could easily be defeated by
simply obtaining writs of attachment or execution, and annotating them. It not being disputed that
appellants' credit is later than those of appellees Laguna Federation of Facomas, Inc., Valeriana
Lim-aco de Almeda and Cosmopolitan Insurance Co., Inc., the appellees' credits must be deemed
preferred to that of appellants. To satisfy them pro rata would erase the difference between earlier
and later credits provided for by par. 7 of Article 2242 aforementioned.