Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 134241 August 11, 2003

DAVID REYES (Substituted by Victoria R. Fabella), petitioner,

vs.
JOSE LIM, CHUY CHENG KENG and HARRISON LUMBER, INC., respondents.

CARPIO, J.:

The Case

1
This is a petition for review on certiorari of the Decision dated 12 May 1998 of the Court of Appeals in CA-G.R. SP No. 46224. The Court of
Appeals dismissed the petition for certiorari assailing the Orders dated 6 March 1997, 3 July 1997 and 3 October 1997 of the Regional Trial
2
Court of Paranaque, Branch 260 ("trial court") in Civil Case No. 95-032.

The Facts

On 23 March 1995, petitioner David Reyes ("Reyes") filed before the trial court a complaint for annulment of contract and damages against
respondents Jose Lim ("Lim"), Chuy Cheng Keng ("Keng") and Harrison Lumber, Inc. ("Harrison Lumber").

3
The complaint alleged that on 7 November 1994, Reyes as seller and Lim as buyer entered into a contract to sell ("Contract to Sell") a parcel of
land ("Property") located along F.B. Harrison Street, Pasay City. Harrison Lumber occupied the Property as lessee with a monthly rental of
P35,000. The Contract to Sell provided for the following terms and conditions:

1. The total consideration for the purchase of the aforedescribed parcel of land together with the perimeter walls found therein is
TWENTY EIGHT MILLION (P28,000,000.00) PESOS payable as follows:

(a) TEN MILLION (P10,000,000.00) PESOS upon signing of this Contract to Sell;

(b) The balance of EIGHTEEN MILLION (P18,000,000.00) PESOS shall be paid on or before March 8, 1995 at 9:30 A.M. at a bank to be
designated by the Buyer but upon the complete vacation of all the tenants or occupants of the property and execution of the Deed
of Absolute Sale. However, if the tenants or occupants have vacated the premises earlier than March 8, 1995, the VENDOR shall give
the VENDEE at least one week advance notice for the payment of the balance and execution of the Deed of Absolute Sale.

2. That in the event, the tenants or occupants of the premises subject of this sale shall not vacate the premises on March 8, 1995 as
stated above, the VENDEE shall withhold the payment of the balance of P18,000,000.00 and the VENDOR agrees to pay a penalty of
Four percent (4%) per month to the herein VENDEE based on the amount of the downpayment of TEN MILLION (P10,000,000.00)
4
PESOS until the complete vacation of the premises by the tenants therein.

The complaint claimed that Reyes had informed Harrison Lumber to vacate the Property before the end of January 1995. Reyes also informed
5
Keng and Harrison Lumber that if they failed to vacate by 8 March 1995, he would hold them liable for the penalty of P400,000 a month as
provided in the Contract to Sell. The complaint further alleged that Lim connived with Harrison Lumber not to vacate the Property until the
P400,000 monthly penalty would have accumulated and equaled the unpaid purchase price of P18,000,000.

6
On 3 May 1995, Keng and Harrison Lumber filed their Answer denying they connived with Lim to defraud Reyes. Keng and Harrison Lumber
alleged that Reyes approved their request for an extension of time to vacate the Property due to their difficulty in finding a new location for
their business. Harrison Lumber claimed that as of March 1995, it had already started transferring some of its merchandise to its new business
7
location in Malabon.

8
On 31 May 1995, Lim filed his Answer stating that he was ready and willing to pay the balance of the purchase price on or before 8 March
1995. Lim requested a meeting with Reyes through the latters daughter on the signing of the Deed of Absolute Sale and the payment of the
balance but Reyes kept postponing their meeting. On 9 March 1995, Reyes offered to return the P10 million down payment to Lim because
Reyes was having problems in removing the lessee from the Property. Lim rejected Reyes offer and proceeded to verify the status of Reyes
title to the Property. Lim learned that Reyes had already sold the Property to Line One Foods Corporation ("Line One") on 1 March 1995 for
P16,782,840. After the registration of the Deed of Absolute Sale, the Register of Deeds issued to Line One TCT No. 134767 covering the
Property. Lim denied conniving with Keng and Harrison Lumber to defraud Reyes.

1
On 2 November 1995, Reyes filed a Motion for Leave to File Amended Complaint due to supervening facts. These included the filing by Lim of a
complaint for estafa against Reyes as well as an action for specific performance and nullification of sale and title plus damages before another
9
trial court. The trial court granted the motion in an Order dated 23 November 1995.

10
In his Amended Answer dated 18 January 1996, Lim prayed for the cancellation of the Contract to Sell and for the issuance of a writ of
preliminary attachment against Reyes. The trial court denied the prayer for a writ of preliminary attachment in an Order dated 7 October 1996.

On 6 March 1997, Lim requested in open court that Reyes be ordered to deposit the P10 million down payment with the cashier of the
Regional Trial Court of Paraaque. The trial court granted this motion.

On 25 March 1997, Reyes filed a Motion to Set Aside the Order dated 6 March 1997 on the ground the Order practically granted the reliefs Lim
11 12
prayed for in his Amended Answer. The trial court denied Reyes motion in an Order dated 3 July 1997. Citing Article 1385 of the Civil Code,
the trial court ruled that an action for rescission could prosper only if the party demanding rescission can return whatever he may be obliged
to restore should the court grant the rescission.

13
The trial court denied Reyes Motion for Reconsideration in its Order dated 3 October 1997. In the same order, the trial court directed Reyes
to deposit the P10 million down payment with the Clerk of Court on or before 30 October 1997.

14 15
On 8 December 1997, Reyes filed a Petition for Certiorari with the Court of Appeals. Reyes prayed that the Orders of the trial court dated 6
March 1997, 3 July 1997 and 3 October 1997 be set aside for having been issued with grave abuse of discretion amounting to lack of
jurisdiction. On 12 May 1998, the Court of Appeals dismissed the petition for lack of merit.

Hence, this petition for review.

The Ruling of the Court of Appeals

The Court of Appeals ruled the trial court could validly issue the assailed orders in the exercise of its equity jurisdiction. The court may grant
16
equitable reliefs to breathe life and force to substantive law such as Article 1385 of the Civil Code since the provisional remedies under the
Rules of Court do not apply to this case.

The Court of Appeals held the assailed orders merely directed Reyes to deposit the P10 million to the custody of the trial court to protect the
interest of Lim who paid the amount to Reyes as down payment. This did not mean the money would be returned automatically to Lim.

The Issues

Reyes raises the following issues:

1. Whether the Court of Appeals erred in holding the trial court could issue the questioned Orders dated March 6, 1997, July 3, 1997
and October 3, 1997, requiring petitioner David Reyes to deposit the amount of Ten Million Pesos (P10,000,000.00) during the
pendency of the action, when deposit is not among the provisional remedies enumerated in Rule 57 to 61 of the 1997 Rules on Civil
Procedure.

2. Whether the Court of Appeals erred in finding the trial court could issue the questioned Orders on grounds of equity when there is
17
an applicable law on the matter, that is, Rules 57 to 61 of the 1997 Rules on Civil Procedure.

The Courts Ruling

Reyes contentions are without merit.

Reyes points out that deposit is not among the provisional remedies enumerated in the 1997 Rules of Civil Procedure. Reyes stresses the
18
enumeration in the Rules is exclusive. Not one of the provisional remedies in Rules 57 to 61 applies to this case. Reyes argues that a court
cannot apply equity and require deposit if the law already prescribes the specific provisional remedies which do not include deposit. Reyes
19
invokes the principle that equity is "applied only in the absence of, and never against, statutory law or x x x judicial rules of procedure." Reyes
20
adds the fact that the provisional remedies do not include deposit is a matter of dura lex sed lex.

The instant case, however, is precisely one where there is a hiatus in the law and in the Rules of Court. If left alone, the hiatus will result in
unjust enrichment to Reyes at the expense of Lim. The hiatus may also imperil restitution, which is a precondition to the rescission of the
Contract to Sell that Reyes himself seeks. This is not a case of equity overruling a positive provision of law or judicial rule for there is none that
governs this particular case. This is a case of silence or insufficiency of the law and the Rules of Court. In this case, Article 9 of the Civil Code
21
expressly mandates the courts to make a ruling despite the "silence, obscurity or insufficiency of the laws." This calls for the application of
22 23
equity, which "fills the open spaces in the law."

2
Thus, the trial court in the exercise of its equity jurisdiction may validly order the deposit of the P10 million down payment in court. The
purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to ensure restitution. Equity jurisdiction aims to
do complete justice in cases where a court of law is unable to adapt its judgments to the special circumstances of a case because of the
24
inflexibility of its statutory or legal jurisdiction. Equity is the principle by which substantial justice may be attained in cases where the
25
prescribed or customary forms of ordinary law are inadequate.

Reyes is seeking rescission of the Contract to Sell. In his amended answer, Lim is also seeking cancellation of the Contract to Sell. The trial court
then ordered Reyes to deposit in court the P10 million down payment that Lim made under the Contract to Sell. Reyes admits receipt of the
P10 million down payment but opposes the order to deposit the amount in court. Reyes contends that prior to a judgment annulling the
26 27
Contract to Sell, he has the "right to use, possess and enjoy" the P10 million as its "owner" unless the court orders its preliminary
28
attachment.

To subscribe to Reyes contention will unjustly enrich Reyes at the expense of Lim. Reyes sold to Line One the Property even before the
balance of P18 million under the Contract to Sell with Lim became due on 8 March 1995. On 1 March 1995, Reyes signed a Deed of Absolute
29 30 31
Sale in favor of Line One. On 3 March 1995, the Register of Deeds issued TCT No. 134767 in the name of Line One. Reyes cannot claim
ownership of the P10 million down payment because Reyes had already sold to another buyer the Property for which Lim made the down
32
payment. In fact, in his Comment dated 20 March 1996, Reyes reiterated his offer to return to Lim the P10 million down payment.

On balance, it is unreasonable and unjust for Reyes to object to the deposit of the P10 million down payment. The application of equity always
involves a balancing of the equities in a particular case, a matter addressed to the sound discretion of the court. Here, we find the equities
weigh heavily in favor of Lim, who paid the P10 million down payment in good faith only to discover later that Reyes had subsequently sold the
Property to another buyer.

33
In Eternal Gardens Memorial Parks Corp. v. IAC, this Court held the plaintiff could not continue to benefit from the property or funds in
litigation during the pendency of the suit at the expense of whomever the court might ultimately adjudge as the lawful owner. The Court
declared:

In the case at bar, a careful analysis of the records will show that petitioner admitted among others in its complaint in Interpleader that it is
still obligated to pay certain amounts to private respondent; that it claims no interest in such amounts due and is willing to pay whoever is
declared entitled to said amounts. x x x

Under the circumstances, there appears to be no plausible reason for petitioners objections to the deposit of the amounts in litigation after
having asked for the assistance of the lower court by filing a complaint for interpleader where the deposit of aforesaid amounts is not only
required by the nature of the action but is a contractual obligation of the petitioner under the Land Development Program (Rollo, p. 252).

There is also no plausible or justifiable reason for Reyes to object to the deposit of the P10 million down payment in court. The Contract to Sell
can no longer be enforced because Reyes himself subsequently sold the Property to Line One. Both Reyes and Lim are now seeking rescission
of the Contract to Sell. Under Article 1385 of the Civil Code, rescission creates the obligation to return the things that are the object of the
contract. Rescission is possible only when the person demanding rescission can return whatever he may be obliged to restore. A court of
34
equity will not rescind a contract unless there is restitution, that is, the parties are restored to the status quo ante.

35
Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot refuse to deposit the P10 million down payment in court. Such
deposit will ensure restitution of the P10 million to its rightful owner. Lim, on the other hand, has nothing to refund, as he has not received
36
anything under the Contract to Sell.

37
In Government of the Philippine Islands v. Wagner and Cleland Wagner, the Court ruled the refund of amounts received under a contract is
a precondition to the rescission of the contract. The Court declared:

The Government, having asked for rescission, must restore to the defendants whatever it has received under the contract. It will only
be just if, as a condition to rescission, the Government be required to refund to the defendants an amount equal to the purchase
price, plus the sums expended by them in improving the land. (Civil Code, art. 1295.)

38
The principle that no person may unjustly enrich himself at the expense of another is embodied in Article 22 of the Civil Code. This principle
applies not only to substantive rights but also to procedural remedies. One condition for invoking this principle is that the aggrieved party has
39
no other action based on contract, quasi-contract, crime, quasi-delict or any other provision of law. Courts can extend this condition to the
hiatus in the Rules of Court where the aggrieved party, during the pendency of the case, has no other recourse based on the provisional
remedies of the Rules of Court.

Thus, a court may not permit a seller to retain, pendente lite, money paid by a buyer if the seller himself seeks rescission of the sale because
40
he has subsequently sold the same property to another buyer. By seeking rescission, a seller necessarily offers to return what he has received
from the buyer. Such a seller may not take back his offer if the court deems it equitable, to prevent unjust enrichment and ensure restitution,
to put the money in judicial deposit.

3
There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of
41
another against the fundamental principles of justice, equity and good conscience. In this case, it was just, equitable and proper for the trial
42
court to order the deposit of the P10 million down payment to prevent unjust enrichment by Reyes at the expense of Lim.

WHEREFORE, we AFFIRM the Decision of the Court of Appeals.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 171124 February 13, 2008

ALEJANDRO NG WEE, petitioner,

vs.
MANUEL TANKIANSEE, respondent.

NACHURA, J.:

1
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the September 14, 2005 Decision of the
2
Court of Appeals (CA) in CA-G.R. SP No. 90130 and its January 6, 2006 Resolution denying the motion for reconsideration thereof.

The facts are undisputed. Petitioner Alejandro Ng Wee, a valued client of Westmont Bank (now United Overseas Bank), made several money
placements totaling P210,595,991.62 with the bank's affiliate, Westmont Investment Corporation (Wincorp), a domestic entity engaged in the
3
business of an investment house with the authority and license to extend credit.

Sometime in February 2000, petitioner received disturbing news on Wincorp's financial condition prompting him to inquire about and
investigate the company's operations and transactions with its borrowers. He then discovered that the company extended a loan equal to his
total money placement to a corporation [Power Merge] with a subscribed capital of only P37.5M. This credit facility originated from another
loan of about P1.5B extended by Wincorp to another corporation [Hottick Holdings]. When the latter defaulted in its obligation, Wincorp
instituted a case against it and its surety. Settlement was, however, reached in which Hottick's president, Luis Juan L. Virata (Virata), assumed
4
the obligation of the surety.

Under the scheme agreed upon by Wincorp and Hottick's president, petitioner's money placements were transferred without his knowledge
and consent to the loan account of Power Merge through an agreement that virtually freed the latter of any liability. Allegedly, through the
false representations of Wincorp and its officers and directors, petitioner was enticed to roll over his placements so that Wincorp could loan
5
the same to Virata/Power Merge.

Finding that Virata purportedly used Power Merge as a conduit and connived with Wincorp's officers and directors to fraudulently obtain for
his benefit without any intention of paying the said placements, petitioner instituted, on October 19, 2000, Civil Case No. 00-99006 for
6
damages with the Regional Trial Court (RTC) of Manila. One of the defendants impleaded in the complaint is herein respondent Manuel
7
Tankiansee, Vice-Chairman and Director of Wincorp.

8
On October 26, 2000, on the basis of the allegations in the complaint and the October 12, 2000 Affidavit of petitioner, the trial court ordered
the issuance of a writ of preliminary attachment against the properties not exempt from execution of all the defendants in the civil case
9 10
subject, among others, to petitioner's filing of a P50M-bond. The writ was, consequently, issued on November 6, 2000.

Arguing that the writ was improperly issued and that the bond furnished was grossly insufficient, respondent, on December 22, 2000, moved
11 12
for the discharge of the attachment. The other defendants likewise filed similar motions. On October 23, 2001, the RTC, in an Omnibus
13
Order, denied all the motions for the discharge of the attachment. The defendants, including respondent herein, filed their respective
14 15
motions for reconsideration but the trial court denied the same on October 14, 2002.

Incidentally, while respondent opted not to question anymore the said orders, his co-defendants, Virata and UEM-MARA Philippines
Corporation (UEM-MARA), assailed the same via certiorari under Rule 65 before the CA [docketed as CA-G.R. SP No. 74610]. The appellate
16 17
court, however, denied the certiorari petition on August 21, 2003, and the motion for reconsideration thereof on March 16, 2004. In a
petition for review on certiorari before this Court, in G.R. No. 162928, we denied the petition and affirmed the CA rulings on May 19, 2004 for
18
Virata's and UEM-MARA's failure to sufficiently show that the appellate court committed any reversible error. We subsequently denied the
19
petition with finality on August 23, 2004.

4
 20
On September 30, 2004, respondent filed before the trial court another Motion to Discharge Attachment, re-pleading the grounds he raised
in his first motion but raising the following additional grounds: (1) that he was not present in Wincorp's board meetings approving the
21
questionable transactions; and (2) that he could not have connived with Wincorp and the other defendants because he and Pearlbank
22
Securities, Inc., in which he is a major stockholder, filed cases against the company as they were also victimized by its fraudulent schemes.

Ruling that the grounds raised were already passed upon by it in the previous orders affirmed by the CA and this Court, and that the additional
grounds were respondent's affirmative defenses that properly pertained to the merits of the case, the trial court denied the motion in its
23
January 6, 2005 Order.

24
With the denial of its motion for reconsideration, respondent filed a certiorari petition before the CA docketed as CA-G.R. SP No. 90130. On
25
September 14, 2005, the appellate court rendered the assailed Decision reversing and setting aside the aforementioned orders of the trial
26
court and lifting the November 6, 2000 Writ of Preliminary Attachment to the extent that it concerned respondent's properties. Petitioner
27
moved for the reconsideration of the said ruling, but the CA denied the same in its January 6, 2006 Resolution.

Thus, petitioner filed the instant petition on the following grounds:

A.

IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS SHOULD NOT HAVE GIVEN DUE COURSE TO THE PETITION FOR
CERTIORARI FILED BY RESPONDENT, SINCE IT MERELY RAISED ERRORS IN JUDGMENT, WHICH, UNDER PREVAILING JURISPRUDENCE,
ARE NOT THE PROPER SUBJECTS OF A WRIT OF CERTIORARI.

B.

MOREOVER, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS COMMITTED SERIOUS LEGAL ERROR IN RESOLVING
FAVORABLY THE GROUNDS ALLEGED BY RESPONDENT IN HIS PETITION AND (SIC) LIFTING THE WRIT OF PRELIMINARY ATTACHMENT,
SINCE THESE GROUNDS ALREADY RELATE TO THE MERITS OF CIVIL CASE NO. 00-99006 WHICH, UNDER PREVAILING JURISPRUDENCE,
CANNOT BE USED AS BASIS (SIC) FOR DISCHARGING A WRIT OF PRELIMINARY ATTACHMENT.

C.

LIKEWISE, IT IS RESPECTFULLY SUBMITTED THAT THE COURT OF APPEALS ERRED IN SUSTAINING THE ERRORS IN JUDGMENT ALLEGED
BY RESPONDENT, NOT ONLY BECAUSE THESE ARE BELIED BY THE VERY DOCUMENTS HE SUBMITTED AS PROOF OF SUCH ERRORS,
28
BUT ALSO BECAUSE THESE HAD EARLIER BEEN RESOLVED WITH FINALITY BY THE LOWER COURT.

For his part, respondent counters, among others, that the general and sweeping allegation of fraud against respondent in petitioner's affidavit-
respondent as an officer and director of Wincorp allegedly connived with the other defendants to defraud petitioner-is not sufficient basis for
the trial court to order the attachment of respondent's properties. Nowhere in the said affidavit does petitioner mention the name of
respondent and any specific act committed by the latter to defraud the former. A writ of attachment can only be granted on concrete and
specific grounds and not on general averments quoting perfunctorily the words of the Rules. Connivance cannot also be based on mere
association but must be particularly alleged and established as a fact. Respondent further contends that the trial court, in resolving the Motion
to Discharge Attachment, need not actually delve into the merits of the case. All that the court has to examine are the allegations in the
complaint and the supporting affidavit. Petitioner cannot also rely on the decisions of the appellate court in CA-G.R. SP No. 74610 and this
29
Court in G.R. No. 162928 to support his claim because respondent is not a party to the said cases.

We agree with respondent's contentions and deny the petition.

In the case at bench, the basis of petitioner's application for the issuance of the writ of preliminary attachment against the properties of
respondent is Section 1(d) of Rule 57 of the Rules of Court which pertinently reads:

Section 1. Grounds upon which attachment may issue.-At the commencement of the action or at any time before entry of judgment,
a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment
that may be recovered in the following cases:

xxxx

(d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the
action is brought, or in the performance thereof.

For a writ of attachment to issue under this rule, the applicant must sufficiently show the factual circumstances of the alleged fraud because
30
fraudulent intent cannot be inferred from the debtor's mere non-payment of the debt or failure to comply with his obligation. The applicant
31
must then be able to demonstrate that the debtor has intended to defraud the creditor. In Liberty Insurance Corporation v. Court of
32
Appeals, we explained as follows:
5
 To sustain an attachment on this ground, it must be shown that the debtor in contracting the debt or incurring the obligation
intended to defraud the creditor. The fraud must relate to the execution of the agreement and must have been the reason which
induced the other party into giving consent which he would not have otherwise given. To constitute a ground for attachment in
Section 1 (d), Rule 57 of the Rules of Court, fraud should be committed upon contracting the obligation sued upon. A debt is
fraudulently contracted if at the time of contracting it the debtor has a preconceived plan or intention not to pay, as it is in this case.
Fraud is a state of mind and need not be proved by direct evidence but may be inferred from the circumstances attendant in each
33
case.

34
In the instant case, petitioner's October 12, 2000 Affidavit is bereft of any factual statement that respondent committed a fraud. The affidavit
narrated only the alleged fraudulent transaction between Wincorp and Virata and/or Power Merge, which, by the way, explains why this
Court, in G.R. No. 162928, affirmed the writ of attachment issued against the latter. As to the participation of respondent in the said
transaction, the affidavit merely states that respondent, an officer and director of Wincorp, connived with the other defendants in the civil
case to defraud petitioner of his money placements. No other factual averment or circumstance details how respondent committed a fraud or
how he connived with the other defendants to commit a fraud in the transaction sued upon. In other words, petitioner has not shown any
specific act or deed to support the allegation that respondent is guilty of fraud.

35
The affidavit, being the foundation of the writ, must contain such particulars as to how the fraud imputed to respondent was committed for
36
the court to decide whether or not to issue the writ. Absent any statement of other factual circumstances to show that respondent, at the
time of contracting the obligation, had a preconceived plan or intention not to pay, or without any showing of how respondent committed the
alleged fraud, the general averment in the affidavit that respondent is an officer and director of Wincorp who allegedly connived with the
37
other defendants to commit a fraud, is insufficient to support the issuance of a writ of preliminary attachment. In the application for the writ
38
under the said ground, compelling is the need to give a hint about what constituted the fraud and how it was perpetrated because
39
established is the rule that fraud is never presumed. Verily, the mere fact that respondent is an officer and director of the company does not
necessarily give rise to the inference that he committed a fraud or that he connived with the other defendants to commit a fraud. While under
certain circumstances, courts may treat a corporation as a mere aggroupment of persons, to whom liability will directly attach, this is only
40
done when the wrongdoing has been clearly and convincingly established.

Let it be stressed that the provisional remedy of preliminary attachment is harsh and rigorous for it exposes the debtor to humiliation and
41 42
annoyance. The rules governing its issuance are, therefore, strictly construed against the applicant, such that if the requisites for its grant
43
are not shown to be all present, the court shall refrain from issuing it, for, otherwise, the court which issues it acts in excess of its jurisdiction.
Likewise, the writ should not be abused to cause unnecessary prejudice. If it is wrongfully issued on the basis of false or insufficient allegations,
44
it should at once be corrected.

Considering, therefore, that, in this case, petitioner has not fully satisfied the legal obligation to show the specific acts constitutive of the
alleged fraud committed by respondent, the trial court acted in excess of its jurisdiction when it issued the writ of preliminary attachment
against the properties of respondent.

45
We are not unmindful of the rule enunciated in G.B. Inc., etc. v. Sanchez, et al., that

[t]he merits of the main action are not triable in a motion to discharge an attachment otherwise an applicant for the dissolution
46
could force a trial of the merits of the case on his motion.

However, the principle finds no application here because petitioner has not yet fulfilled the requirements set by the Rules of Court for the
47
issuance of the writ against the properties of respondent. The evil sought to be prevented by the said ruling will not arise, because the
propriety or impropriety of the issuance of the writ in this case can be determined by simply reading the complaint and the affidavit in support
of the application.

Furthermore, our ruling in G.R. No. 162928, to the effect that the writ of attachment is properly issued insofar as it concerns the properties of
48
Virata and UEM-MARA, does not affect respondent herein, for, as correctly ruled by the CA, respondent is "never a party thereto." Also, he is
not in the same situation as Virata and UEM-MARA since, as aforesaid, while petitioner's affidavit detailed the alleged fraudulent scheme
perpetrated by Virata and/or Power Merge, only a general allegation of fraud was made against respondent.

We state, in closing, that our ruling herein deals only with the writ of preliminary attachment issued against the properties of respondent-it
does not concern the other parties in the civil case, nor affect the trial court's resolution on the merits of the aforesaid civil case.

WHEREFORE, premises considered, the petition is DENIED. The September 14, 2005 Decision and the January 6, 2006 Resolution of the Court
of Appeals in CA-G.R. SP No. 90130 are AFFIRMED.

SO ORDERED.

6
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-24581 January 31, 1966

MIGUEL PEREZ RUBIO, petitioner,

vs.
THE HONORABLE SAMUEL REYES, ROBERT O. PHILLIPS and MAGDALENA YSMAEL PHILLIPS, respondents.

DIZON, J.:

Upon the facts alleged in the complaint filed in Civil Case No. 8632 of the Court of First Instance of Rizal by Robert O. Phillips and Sons, Inc., et
al. vs. Miguel Perez Rubio, said plaintiffs prayed for judgment as follows:

1. That a temporary restraining order and/or ex parte writ of preliminary injunction be issued against the defendant to prevent
and restrain them from further unlawful and willful interference with the transaction between the plaintiff corporation with Alfonso
T. Yuchengco on the sale of the shares of stock of Hacienda Benito, Inc., and from enforcing whatever amount he may claim to be
due to them from the plaintiffs under the Agreements (Annexes "A", "A-I" and "A-2"), after the approval of the injunction bond;

2. That, after the hearing, judgment be rendered in favor of the plaintiffs against the defendant:

a) Restraining him from willfully and unlawfully interfering with the transaction of the plaintiffs with Alfonso T. Yuchengco
on the sale of the shares of stock of Hacienda Benito, Inc.;

b) Declaring that the defendant has no right to rescind the Agreements as referred to in Annexes "A", "A-1" and "A-2";

c) Declaring that the defendant has no vendors' lien over the shares of stock of Hacienda Benito, Inc., sold by them to the
plaintiff corporation;

d) Restraining the defendant from enforcing any collection action against the plaintiffs until the obligations, if any, mature;

e) Making the writ of preliminary injunction permanent;

f) Sentencing the defendant to pay the plaintiffs;

(1) P2,500,000.00, more or less, as actual damages;

(2) Moral damages which this Honorable Court may deem just and reasonable;

(3) Exemplary damages, which this Honorable Court may deem just and reasonable;

(4) P50,000.00, as attorney's fees; and

(5) Costs of suit; and

2 That the plaintiffs be granted such further and other reliefs to which they may be entitled in law and in equity.".

Upon an ex-parte petition filed by the plaintiffs, the respondent judge issued on April 1, 1965 a writ of preliminary injunction to be mentioned
again later. Subsequently, the respondent judge also denied Perez Rubio's motion to dissolve the preliminary injunction.

It appears that the Perez Rubio spouses owned shares of stock in Hacienda Benito, Inc. registered in their names and in the names of Joaquin
Ramirez and Joaquin Ramirez, Jr. On August 13, 1963 the Perez Rubios, with the conformity of the Ramirezes, sold said shares to Robert O.
Phillips and Sons, Inc. for P5,500,000.00 payable in installments and other conditions agreed upon as follows:

xxx xxx xxx

7
 3. That for and in consideration of the mutual agreements and promises, MIGUEL and MARIA LUISA hereby sell to PHILLIPS all the
shares of stock of Hacienda Benito, Inc. registered in their names and in the names of Joaquin Ramirez and Joaquin Ramirez, Jr. for
the total price of FIVE MILLION FIVE HUNDRED THOUSAND PESOS (P5,500,000.00), Philippine Currency, payable as follows:

"a. FIFTY THOUSAND PESOS (P50,000.00) upon execution of this agreement.

"b. ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000.00) within sixty (60) days from this date.

"c. ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on April 30, 1964 less the amount of
P96,830.56 due the Hacienda Benito, Inc. from MARIA LUISA and the amount of P127,096.09 from MIGUEL; hereby
authorized PHILLIPS to deduct said amounts and to pay the same to Hacienda Benito, Inc.

"d. ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on or before April 30, 1965.

"e. ONE MILLION TWO HUNDRED AND FIFTY THOUSAND PESOS (P1,250,000.00) on or before April 30, 1965.

"f. FIVE HUNDRED THOUSAND PESOS (P500,000.00) on or before April 30, 1967."

4. That should PHILLIPS fail to pay the amount of ONE MILLION TWO HUNDRED THOUSAND PESOS (P1,200,000.00) due sixty (60)
days from this date and to execute the letter of credit and/or bond or both to secure the payment of the remaining installments, as
agreed upon, then the Sellers shall have the right, at their own discretion, either to rescind this agreement or to enforce the same,
provided that any number of days used by the Sellers to consider the acceptability of the bank or bonding company proposed by
PHILLIPS shall be added to the period of sixty (60) days herein mentioned;

5. That in case of default, PHILLIPS shall pay interest at the rate of eight percent (8%) per annum on all amounts in arrears until paid
in full either by the guaranteeing bank, bonding company or PHILLIPS;

6. That all the installments due during the years 1964, 1965, 1966, and 1967 with all the conditions above mentioned, shall be jointly
and severally guaranteed by means of Irrevocable Standby Letter of Credit from a bank in favor of MIGUEL and MARIA LUISA, in the
proportion they may agree, which shall be communicated to the bank and to PHILLIPS before final contract is entered into with the
bank, or by a bond from a bonding company duly approved by MIGUEL and MARIA LUISA;

7. That the stock certificates corresponding to the shares sold, including those in the names of Joaquin Ramirez and Joaquin Ramirez,
Jr. shall not be transferred to PHILLIPS until the installments due within sixty (60) days from this date is paid in full.1wph1.t

On June 23, 1964 Robert O. Phillips and Sons, Inc., and Robert O. Phillips, himself and his wife, entered into an agreement with the Perez
Rubios deferring payment of the April 30, 1964 installments already overdue to August 31, 1964 under the following conditions:

(a) The deferred installment would bear an interest of eight (8%) per cent per annum from April 30, 1964 although partial payments
on the principal and on the interest due may be paid during the period granted, in such amounts and at such times as funds are
available to Robert C. Phillips & Son, Inc.;

(b) Should Robert O. Phillips & Sons, Inc. fail to pay the particular installment now due on August 31, 1964 or any of the subsequent
installments on the exact date due, the whole obligation would become immediately demandable without notice;

(c) In consideration of this extension granted to Robert O. Phillips & Sons, Inc., Robert O. Phillips himself and his wife, Magdalena
Ysmael Phillips, jointly and severally guaranteed all the installments and other obligations of Robert O. Phillips & Sons, Inc., under the
original contract of sale dated April 13, 1963.

In the meantime, Robert D. Phillips, in his behalf and in that of his wife and Robert O. Phillips and Sons, Inc., entered into negotiations for the
sale of their shares of stock in Hacienda Benito, Inc. to Alfonso Yuchengco. Upon being informed of this, the Perez Rubios, through their
attorney-in-fact, Joaquin Ramirez, reminded the Phillips spouses and the Phillips corporation in writing of their obligations under the contract
of sale of April 13, 1963 and reminded them in particular that the shares subject matter thereof were still subject to the payment of the unpaid
balance of the sale price. They gave a similar notice to Alfonso Yuchengco, but expressed no objection to the sale provided the obligations in
their favor were satisfied.

On March 26, 1965, the Phillips (individuals and corporation), through their attorney, Juan T. David, sent a letter to the Perez Rubios telling
them, in substance, that the only obstacle to the consummation of the Phillips-Yuchengco sale of the shares of stock of Hacienda Benito, Inc.
was their letter of November 24, 1964 and warned that unless the same was withdrawn by March 29, they would seek redress elsewhere. On
March 27, 1965, the Perez Rubios, for their part, wrote the Phillips that due to the latter's inability to comply with the former's conditions, the
negotiations going on between them were cancelled, and should the full amount due to them remained unpaid by noon of March 31, 1965,
they would file action in court in the afternoon thereof. However, on March 30, 1965, stealing a march on the Perez Rubios, the Phillips

8
(individuals and corporation) filed Civil Case No. 8632 mentioned heretofore where they obtained, ex-parte, a preliminary injunction to this
effect:

IT IS HEREBY ORDERED by the undersigned Judge of the Court of First Instance that, until further orders, you, all your attorneys,
representatives, agents, and any other person assisting you, REFRAIN from interfering with the transaction between the plaintiff
corporation with Alfonso T. Yuchengco on the sale of the shares of stock of Hacienda Benito, Inc., and from enforcing whatever
amount he may claim to be due to them from the plaintiffs under the Agreements (Annexes "A", "A-1", and "A-2") mentioned in the
complaint.

On April 8, 1965 the Perez Rubios filed a motion to dissolve the above reproduced writ of preliminary injunction, which the respondent judge
denied on May 6, 1964. But even before the motion aforesaid could be acted upon, they also filed their answer to the complaint with a
counterclaim of P4,500,000.00 representing the unpaid balance of the sale price of their shares. Because of this the Perez Rubios were charged
with contempt.

The original petition for certiorari filed in this case is based principally on the allegation that, in taking cognizance of Civil Case No. 8632 and in
issuing the writ of preliminary injunction ex-parte mentioned heretofore, the respondent court committed a grave abuse of discretion and, as
a consequence, the petition prayed that the respondent judge be restrained from in any way proceeding with the case, and to restrain the
respondent Phillips from proceeding with the sale of the shares of stock of Hacienda Benito, Inc. or any of its assets to Alfonso Yuchengco or to
any other person, or from performing any act which will diminish the value of said shares of stock or deplete the assets of the company.

On October 4, 1965, Miguel Perez Rubio, to whom all the Perez Rubio shares had been assigned, filed in this Court a motion for the admission
of an amended supplemental petition impleading the following additional parties: Victoria Valley Development Corporation and
Manufacturers Bank and Trust Co., who objected to their inclusion as such on different grounds. The supplemental petition also prayed that
certain parties be cited and later punished for contempt; for the issuance of a preliminary mandatory injunction and a writ of attachment as
follows:

1. The Manufacturer's Bank & Trust Company and/or Victoria Valley Development Corporation be ordered to return the properties it
bought from Hacienda Benito, Inc., to Hacienda Benito, Inc.;

2. That a writ of attachment be issued in favor of your petitioner against the properties of the Respondents Phillips including those of
Hacienda Benito, Inc., or against the proceeds of their sale in the ordinary course of business and of the other corporations who were
defendants in Civil Case No. 8766 for an amount equivalent to your petitioner's counterclaim;

3. Respondents Phillips be held in contempt of this Honorable Court;

4. Alfonso Yuchengco, Antonio de las Alas, Ambrosio Padilla, Leonides S. Virata, Macario Tiu, Romeo Villonco be summoned before
this Honorable Court to show cause why they should not be held in contempt of this Honorable Court.

Petitioner likewise prays that:

"1. He be declared to have had a vendor's lien over the shares of stock he sold to Respondents Phillips on installments and which up
to now remain unpaid;

"2. He be permitted to sue and collect on the outstanding balance of P4,250,000 due for sale of the shares of Hacienda Benito, Inc.,
to Respondents Phillips; and, therefore,

"3. The injunction and order of the Respondent Court dated April 1, 1965 (Annex "1") be revoked and be declared null and void."

Petitioner likewise prays for such other relief as may be just and equitable in the premises.

When the original petition was filed, We issued a preliminary injunction to this effect:

NOW, THEREFORE, until further orders from this Court, You, your agents, your representatives and/or any person or persons acting
in your behalf, are hereby enjoined: (FIRST) from proceeding with Civil Case No. 8632 (Robert O. Phillips & Sons, Inc. vs. Miguel Perez
Rubio); (SECOND) from proceeding with the sale of the shares of stock of Hacienda Benito, Inc., or any of its assets, to Alfonso
Yuchengco or to any other person; and (THIRD) from performing any act which will either diminish the value of said Hacienda,
subject matter of the above-mentioned case.

Thereafter, respondents filed an ex-parte petition either for the modification of the preliminary injunction issued by Us or for its dissolution
upon a counterbond.

9
The first question to be resolved now is the admission of the amended supplemental petition. In this connection we do not deem it necessary
nor advisable at this stage of the proceedings to lengthily discuss the merits of the facts alleged therein. Suffice it to say that we deem them
sufficient if proven to entitle petitioners to relief against the additional parties therein named. The same is, therefore, admitted.

On the other hand, the petition that the original respondents as well as the new parties be cited for contempt, and the petition for the
issuance of a mandatory injunction and a writ of preliminary attachment may best and properly be taken up only after a full hearing of this
case on the merits, for to resolve them now one way or the other will necessarily require a consideration of the main issue involved herein.

In connection with the urgent ex-parte petition filed by the respondents (except the respondent judge) for a modification of the preliminary
injunction herein granted or for its dissolution upon the filing of a bond, it appears that the Hacienda Benito, Inc. is not a party respondent
neither upon the original petition nor upon the amended supplemental petition, although it is plain from the allegations made in both that the
shares of stock of said company, and naturally its assets, are the very subject of controversy. However, the injunction issued in this case is
directed exclusively to the parties herein and, in connection with the assets of said hacienda, they are the only ones enjoined from performing
any act which will either diminish the value of said shares of stock or deplete the assets of said hacienda. The petition for modification this
regard is, therefore, not well founded and modification and is denied.

Inasmuch as the petition for the dissolution of the preliminary injunction issued by Us in this case, upon the filing of a bond, is ex-parte, the
respondents are hereby ordered to serve a copy thereof upon petitioner, who is hereby required to submit his comments in connection
therewith, if he so desires, within ten days from receipt thereof.1wph1.t

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 125027 August 12, 2002

ANITA MANGILA, petitioner,

vs.
COURT OF APPEALS and LORETA GUINA, respondents.

CARPIO, J.:

The Case

1
This is a petition fore review on certiorari under Rule 45 of the Rules of Court, seeking to set aside the Decision of the Court of Appeals
2
affirming the Decision of the Regional Trial Court, Branch 108, Pasay City. The trial court upheld the writ of attachment and the declaration of
default on petitioner while ordering her to pay private respondent P109,376.95 plus 18 percent interest per annum, 25 percent attorneys fees
and costs of suit.

The Facts

Petitioner Anita Mangila ("petitioner" for brevity) is an exporter of sea foods and doing business under the name and style of Seafoods
Products. Private respondent Loreta Guina ("private respondent" for brevity) is the President and General Manager of Air Swift International, a
single registered proprietorship engaged in the freight forwarding business.

Sometime in January 1988, petitioner contracted the freight forwarding services of private respondent for shipment of petitioners products,
such as crabs, prawns and assorted fishes, to Guam (USA) where petitioner maintains an outlet. Petitioner agreed to pay private respondent
cash on delivery. Private respondents invoice stipulates a charge of 18 percent interest per annum on all overdue accounts. In case of suit, the
3
same invoice stipulates attorneys fees equivalent to 25 percent of the amount due plus costs of suit.

On the first shipment, petitioner requested for seven days within which to pay private respondent. However, for the next three shipments,
4
March 17, 24 and 31, 1988, petitioner failed to pay private respondent shipping charges amounting to P109, 376.95.

Despite several demands, petitioner never paid private respondent. Thus, on June 10, 1988, private respondent filed Civil Case No. 5875
before the Regional Trial Court of Pasay City for collection of sum of money.

10
On August 1, 1988, the sheriff filed his Sheriffs Return showing that summons was not served on petitioner. A woman found at petitioners
house informed the sheriff that petitioner transferred her residence to Sto. Nio, Guagua, Pampanga. The sheriff found out further that
5
petitioner had left the Philippines for Guam.

Thus, on September 13, 1988, construing petitioners departure from the Philippines as done with intent to defraud her creditors, private
6
respondent filed a Motion for Preliminary Attachment. On September 26, 1988, the trial court issued an Order of Preliminary Attachment
against petitioner. The following day, the trial court issued a Writ of Preliminary Attachment.

The trial court granted the request of its sheriff for assistance from their counterparts in RTC, Pampanga. Thus, on October 28, 1988, Sheriff
Alfredo San Miguel of RTC Pampanga served on petitioners household help in San Fernando, Pampanga, the Notice of Levy with the Order,
7
Affidavit and Bond.

8
On November 7, 1988, petitioner filed an Urgent Motion to Discharge Attachment without submitting herself to the jurisdiction of the trial
court. She pointed out that up to then, she had not been served a copy of the Complaint and the summons. Hence, petitioner claimed the
9
court had not acquired jurisdiction over her person.

In the hearing of the Urgent Motion to Discharge Attachment on November 11, 1988, private respondent sought and was granted a re-setting
to December 9, 1988. On that date, private respondents counsel did not appear, so the Urgent Motion to Discharge Attachment was deemed
10
submitted for resolution.

The trial court granted the Motion to Discharge Attachment on January 13, 1989 upon filing of petitioners counter-bond. The trial court,
however, did not rule on the question of jurisdiction and on the validity of the writ of preliminary attachment.

11
On December 26, 1988, private respondent applied for an alias summons, which the trial court issued on January 19, 1989. It was only on
12
January 26, 1989 that summons was finally served on petitioner.

On February 9, 1989, petitioner filed a Motion to Dismiss the Complaint on the ground of improper venue. Private respondents invoice for the
freight forwarding service stipulates that "if court litigation becomes necessary to enforce collection xxx the agreed venue for such action is
13
Makati, Metro Manila." Private respondent filed an Opposition asserting that although "Makati" appears as the stipulated venue, the same
14
was merely an inadvertence by the printing press whose general manager executed an affidavit admitting such inadvertence. Moreover,
15
private respondent claimed that petitioner knew that private respondent was holding office in Pasay City and not in Makati. The lower court,
finding credence in private respondents assertion, denied the Motion to Dismiss and gave petitioner five days to file her Answer. Petitioner
filed a Motion for Reconsideration but this too was denied.

16
Petitioner filed her Answer on June 16, 1989, maintaining her contention that the venue was improperly laid.

On June 26, 1989, the trial court issued an Order setting the pre-trial for July 18, 1989 at 8:30 a.m. and requiring the parties to submit their
pre-trial briefs. Meanwhile, private respondent filed a Motion to Sell Attached Properties but the trial court denied the motion.

On motion of petitioner, the trial court issued an Order resetting the pre-trial from July 18, 1989 to August 24, 1989 at 8:30 a.m..

17
On August 24, 1989, the day of the pre-trial, the trial court issued an Order terminating the pre-trial and allowing the private respondent to
present evidence ex-parte on September 12, 1989 at 8:30 a.m.. The Order stated that when the case was called for pre-trial at 8:31 a.m., only
the counsel for private respondent appeared. Upon the trial courts second call 20 minutes later, petitioners counsel was still nowhere to be
found. Thus, upon motion of private respondent, the pre-trial was considered terminated.

On September 12, 1989, petitioner filed her Motion for Reconsideration of the Order terminating the pre-trial. Petitioner explained that her
counsel arrived 5 minutes after the second call, as shown by the transcript of stenographic notes, and was late because of heavy traffic.
Petitioner claims that the lower court erred in allowing private respondent to present evidence ex-parte since there was no Order considering
the petitioner as in default. Petitioner contends that the Order of August 24, 1989 did not state that petitioner was declared as in default but
still the court allowed private respondent to present evidence ex-parte.18

On October 6, 1989, the trial court denied the Motion for Reconsideration and scheduled the presentation of private respondents evidence
ex-parte on October 10, 1989.1wphi1.nt

On October 10, 1989, petitioner filed an Omnibus Motion stating that the presentation of evidence ex-parte should be suspended because
there was no declaration of petitioner as in default and petitioners counsel was not absent, but merely late.

19
On October 18, 1989, the trial court denied the Omnibus Motion.

On November 20, 1989, the petitioner received a copy of the Decision of November 10, 1989, ordering petitioner to pay respondent
P109,376.95 plus 18 percent interest per annum, 25 percent attorneys fees and costs of suit. Private respondent filed a Motion for Execution
Pending Appeal but the trial court denied the same.
11
 The Ruling of the Court of Appeals

On December 15, 1995, the Court of Appeals rendered a decision affirming the decision of the trial court. The Court of Appeals upheld the
validity of the issuance of the writ of attachment and sustained the filing of the action in the RTC of Pasay. The Court of Appeals also affirmed
the declaration of default on petitioner and concluded that the trial court did not commit any reversible error.

Petitioner filed a Motion for Reconsideration on January 5, 1996 but the Court of Appeals denied the same in a Resolution dated May 20, 1996.

Hence, this petition.

The Issues

The issues raised by petitioner may be re-stated as follows:

I.

WHETHER RESPONDENT COURT ERRED IN NOT HOLDING THAT THE WRIT OF ATTACHMENT WAS IMPROPERLY ISSUED AND SERVED;

II.

WHETHER THERE WAS A VALID DECLARATION OF DEFAULT;

III.

WHETHER THERE WAS IMPROPER VENUE.

IV.

20
WHETHER RESPONDENT COURT ERRED IN DECLARING THAT PETITIONER IS OBLIGED TO PAY P109, 376.95, PLUS ATTORNEYS FEES.

The Ruling of the Court

Improper Issuance and Service of Writ of Attachment

Petitioner ascribes several errors to the issuance and implementation of the writ of attachment. Among petitioners arguments are: first, there
was no ground for the issuance of the writ since the intent to defraud her creditors had not been established; second, the value of the
properties levied exceeded the value of private respondents claim. However, the crux of petitioners arguments rests on the question of the
validity of the writ of attachment. Because of failure to serve summons on her before or simultaneously with the writs implementation,
petitioner claims that the trial court had not acquired jurisdiction over her person and thus the service of the writ is void.

As a preliminary note, a distinction should be made between issuance and implementation of the writ of attachment. It is necessary to
distinguish between the two to determine when jurisdiction over the person of the defendant should be acquired to validly implement the
writ. This distinction is crucial in resolving whether there is merit in petitioners argument.

This Court has long settled the issue of when jurisdiction over the person of the defendant should be acquired in cases where a party resorts to
provisional remedies. A party to a suit may, at any time after filing the complaint, avail of the provisional remedies under the Rules of Court.
Specifically, Rule 57 on preliminary attachment speaks of the grant of the remedy "at the commencement of the action or at any time
21
thereafter." This phrase refers to the date of filing of the complaint which is the moment that marks "the commencement of the action." The
reference plainly is to a time before summons is served on the defendant, or even before summons issues.

22
In Davao Light & Power Co., Inc. v. Court of Appeals, this Court clarified the actual time when jurisdiction should be had:

"It goes without saying that whatever be the acts done by the Court prior to the acquisition of jurisdiction over the person of
defendant - issuance of summons, order of attachment and writ of attachment - these do not and cannot bind and affect the
defendant until and unless jurisdiction over his person is eventually obtained by the court, either by service on him of summons or
other coercive process or his voluntary submission to the courts authority. Hence, when the sheriff or other proper officer
commences implementation of the writ of attachment, it is essential that he serve on the defendant not only a copy of the
applicants affidavit and attachment bond, and of the order of attachment, as explicitly required by Section 5 of Rule 57, but also the
summons addressed to said defendant as well as a copy of the complaint xxx." (Emphasis supplied.)

12
Furthermore, we have held that the grant of the provisional remedy of attachment involves three stages: first, the court issues the order
granting the application; second, the writ of attachment issues pursuant to the order granting the writ; and third, the writ is implemented. For
the initial two stages, it is not necessary that jurisdiction over the person of the defendant be first obtained. However, once the
implementation of the writ commences, the court must have acquired jurisdiction over the defendant for without such jurisdiction, the court
23
has no power and authority to act in any manner against the defendant. Any order issuing from the Court will not bind the defendant.

In the instant case, the Writ of Preliminary Attachment was issued on September 27, 1988 and implemented on October 28, 1988. However,
the alias summons was served only on January 26, 1989 or almost three months after the implementation of the writ of attachment.

The trial court had the authority to issue the Writ of Attachment on September 27 since a motion for its issuance can be filed "at the
commencement of the action." However, on the day the writ was implemented, the trial court should have, previously or simultaneously with
the implementation of the writ, acquired jurisdiction over the petitioner. Yet, as was shown in the records of the case, the summons was
actually served on petitioner several months after the writ had been implemented.

Private respondent, nevertheless, claims that the prior or contemporaneous service of summons contemplated in Section 5 of Rule 57
provides for exceptions. Among such exceptions are "where the summons could not be served personally or by substituted service despite
diligent efforts or where the defendant is a resident temporarily absent therefrom x x x." Private respondent asserts that when she
commenced this action, she tried to serve summons on petitioner but the latter could not be located at her customary address in Kamuning,
24
Quezon City or at her new address in Guagua, Pampanga. Furthermore, respondent claims that petitioner was not even in Pampanga; rather,
she was in Guam purportedly on a business trip.

Private respondent never showed that she effected substituted service on petitioner after her personal service failed. Likewise, if it were true
that private respondent could not ascertain the whereabouts of petitioner after a diligent inquiry, still she had some other recourse under the
Rules of Civil Procedure.

The rules provide for certain remedies in cases where personal service could not be effected on a party. Section 14, Rule 14 of the Rules of
Court provides that whenever the defendants "whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by leave
of court, be effected upon him by publication in a newspaper of general circulation x x x." Thus, if petitioners whereabouts could not be
ascertained after the sheriff had served the summons at her given address, then respondent could have immediately asked the court for
25
service of summons by publication on petitioner.

Moreover, as private respondent also claims that petitioner was abroad at the time of the service of summons, this made petitioner a resident
26
who is temporarily out of the country. This is the exact situation contemplated in Section 16, Rule 14 of the Rules of Civil Procedure,
providing for service of summons by publication.

In conclusion, we hold that the alias summons belatedly served on petitioner cannot be deemed to have cured the fatal defect in the
enforcement of the writ. The trial court cannot enforce such a coercive process on petitioner without first obtaining jurisdiction over her
person. The preliminary writ of attachment must be served after or simultaneous with the service of summons on the defendant whether by
27
personal service, substituted service or by publication as warranted by the circumstances of the case. The subsequent service of summons
does not confer a retroactive acquisition of jurisdiction over her person because the law does not allow for retroactivity of a belated service.

Improper Venue

Petitioner assails the filing of this case in the RTC of Pasay and points to a provision in private respondents invoice which contains the
following:

"3. If court litigation becomes necessary to enforce collection, an additional equivalent (sic) to 25% of the principal amount will be
28
charged. The agreed venue for such action is Makati, Metro Manila, Philippines."

Based on this provision, petitioner contends that the action should have been instituted in the RTC of Makati and to do otherwise would be a
ground for the dismissal of the case.

We resolve to dismiss the case on the ground of improper venue but not for the reason stated by petitioner.

29
The Rules of Court provide that parties to an action may agree in writing on the venue on which an action should be brought. However, a
30
mere stipulation on the venue of an action is not enough to preclude parties from bringing a case in other venues. The parties must be able
to show that such stipulation is exclusive. Thus, absent words that show the parties intention to restrict the filing of a suit in a particular place,
courts will allow the filing of a case in any venue, as long as jurisdictional requirements are followed. Venue stipulations in a contract, while
31
considered valid and enforceable, do not as a rule supersede the general rule set forth in Rule 4 of the Revised Rules of Court. In the absence
of qualifying or restrictive words, they should be considered merely as an agreement on additional forum, not as limiting venue to the
32
specified place.

13
In the instant case, the stipulation does not limit the venue exclusively to Makati. There are no qualifying or restrictive words in the invoice
that would evince the intention of the parties that Makati is the "only or exclusive" venue where the action could be instituted. We therefore
agree with private respondent that Makati is not the only venue where this case could be filed.

Nevertheless, we hold that Pasay is not the proper venue for this case.

Under the 1997 Rules of Civil Procedure, the general rule is venue in personal actions is "where the defendant or any of the defendants resides
33
or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff." The exception to this rule is when the
parties agree on an exclusive venue other than the places mentioned in the rules. But, as we have discussed, this exception is not applicable in
this case. Hence, following the general rule, the instant case may be brought in the place of residence of the plaintiff or defendant, at the
election of the plaintiff (private respondent herein).

In the instant case, the residence of private respondent (plaintiff in the lower court) was not alleged in the complaint. Rather, what was alleged
was the postal address of her sole proprietorship, Air Swift International. It was only when private respondent testified in court, after
petitioner was declared in default, that she mentioned her residence to be in Better Living Subdivision, Paraaque City.

34
In the earlier case of Sy v. Tyson Enterprises, Inc., the reverse happened. The plaintiff in that case was Tyson Enterprises, Inc., a corporation
owned and managed by Dominador Ti. The complaint, however, did not allege the office or place of business of the corporation, which was in
Binondo, Manila. What was alleged was the residence of Dominador Ti, who lived in San Juan, Rizal. The case was filed in the Court of First
Instance of Rizal, Pasig. The Court there held that the evident purpose of alleging the address of the corporations president and manager was
to justify the filing of the suit in Rizal, Pasig instead of in Manila. Thus, the Court ruled that there was no question that venue was improperly
laid in that case and held that the place of business of Tyson Enterpises, Inc. is considered as its residence for purposes of venue. Furthermore,
the Court held that the residence of its president is not the residence of the corporation because a corporation has a personality separate and
distinct from that of its officers and stockholders.

35
In the instant case, it was established in the lower court that petitioner resides in San Fernando, Pampanga while private respondent resides
36
in Paraaque City. However, this case was brought in Pasay City, where the business of private respondent is found. This would have been
permissible had private respondents business been a corporation, just like the case in Sy v. Tyson Enterprises, Inc. However, as admitted by
37
private respondent in her Complaint in the lower court, her business is a sole proprietorship, and as such, does not have a separate juridical
38 39
personality that could enable it to file a suit in court. In fact, there is no law authorizing sole proprietorships to file a suit in court.

40
A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise. The
law merely recognizes the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual and
41
requires its proprietor or owner to secure licenses and permits, register its business name, and pay taxes to the national government. The
42
law does not vest a separate legal personality on the sole proprietorship or empower it to file or defend an action in court.

Thus, not being vested with legal personality to file this case, the sole proprietorship is not the plaintiff in this case but rather Loreta Guina in
her personal capacity. In fact, the complaint in the lower court acknowledges in its caption that the plaintiff and defendant are Loreta Guina
and Anita Mangila, respectively. The title of the petition before us does not state, and rightly so, Anita Mangila v. Air Swift International, but
rather Anita Mangila v. Loreta Guina. Logically then, it is the residence of private respondent Guina, the proprietor with the juridical
personality, which should be considered as one of the proper venues for this case.

All these considered, private respondent should have filed this case either in San Fernando, Pampanga (petitioners residence) or Paraaque
(private respondents residence). Since private respondent (complainant below) filed this case in Pasay, we hold that the case should be
dismissed on the ground of improper venue.

Although petitioner filed an Urgent Motion to Discharge Attachment in the lower court, petitioner expressly stated that she was filing the
motion without submitting to the jurisdiction of the court. At that time, petitioner had not been served the summons and a copy of the
43 44
complaint. Thereafter, petitioner timely filed a Motion to Dismiss on the ground of improper venue. Rule 16, Section 1 of the Rules of Court
provides that a motion to dismiss may be filed "[W]ithin the time for but before filing the answer to the complaint or pleading asserting a
45
claim." Petitioner even raised the issue of improper venue in his Answer as a special and affirmative defense. Petitioner also continued to
46
raise the issue of improper venue in her Petition for Review before this Court. We thus hold that the dismissal of this case on the ground of
improper venue is warranted.

The rules on venue, like other procedural rules, are designed to insure a just and orderly administration of justice or the impartial and
evenhanded determination of every action and proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted
47
freedom to choose where to file the complaint or petition.

We find no reason to rule on the other issues raised by petitioner.1wphi1.nt

WHEREFORE, the petition is GRANTED on the grounds of improper venue and invalidity of the service of the writ of attachment. The decision
of the Court of Appeals and the order of respondent judge denying the motion to dismiss are REVERSED and SET ASIDE. Civil Case No. 5875 is
hereby dismissed without prejudice to refiling it in the proper venue. The attached properties of petitioner are ordered returned to her
immediately. SO ORDERED.
14
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-23851 March 26, 1976

WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff-appellant,

vs.
LEE E. WON alias RAMON LEE and BIENVENIDO A. TAN, defendants-appellees.

CASTRO, C.J.:

This is an appeal from the order of the Court of First Instance of Rizal, in civil case 7656, dismissing the plaintiff-appellant's complaint of
interpleader upon the grounds of failure to state a cause of action and res judicata.

In its amended and supplemental complaint of October 23, 1963, the Wack Wack Golf & Country Club, Inc., a non-stock, civic and athletic
corporation duly organized under the laws of the Philippines, with principal office in Mandaluyong, Rizal (hereinafter referred to as the
Corporation), alleged, for its first cause of action, that the defendant Lee E. Won claims ownership of its membership fee certificate 201, by
virtue of the decision rendered in civil case 26044 of the CFI of Manila, entitled "Lee E. Won alias Ramon Lee vs. Wack Wack Golf & Country
Club, Inc." and also by virtue of membership fee certificate 201-serial no. 1478 issued on October 17, 1963 by Ponciano B. Jacinto, deputy clerk
of court of the said CFI of Manila, for and in behalf of the president and the secretary of the Corporation and of the People's Bank & Trust
Company as transfer agent of the said Corporation, pursuant to the order of September 23, 1963 in the said case; that the defendant
Bienvenido A. Tan, on the other hand, claims to be lawful owner of its aforesaid membership fee certificate 201 by virtue of membership fee
certificate 201-serial no. 1199 issued to him on July 24, 1950 pursuant to an assignment made in his favor by "Swan, Culbertson and Fritz," the
original owner and holder of membership fee certificate 201; that under its articles of incorporation and by-laws the Corporation is authorized
to issue a maximum of 400 membership fee certificates to persons duly elected or admitted to proprietary membership, all of which have
been issued as early as December 1939; that it claims no interest whatsoever in the said membership fee certificate 201; that it has no means
of determining who of the two defendants is the lawful owner thereof; that it is without power to issue two separate certificates for the same
membership fee certificate 201, or to issue another membership fee certificate to the defendant Lee, without violating its articles of
incorporation and by-laws; and that the membership fee certificate 201-serial no. 1199 held by the defendant Tan and the membership fee
certificate 201-serial No. 1478 issued to the defendant Lee proceed from the same membership fee certificate 201, originally issued in the
name of "Swan, Culbertson and Fritz".

For its second cause of action. it alleged that the membership fee certificate 201-serial no. 1478 issued by the deputy clerk of court of court of
the CFI of Manila in behalf of the Corporation is null and void because issued in violation of its by-laws, which require the surrender and
cancellation of the outstanding membership fee certificate 201 before issuance may be made to the transferee of a new certificate duly signed
by its president and secretary, aside from the fact that the decision of the CFI of Manila in civil case 26044 is not binding upon the defendant
Tan, holder of membership fee certificate 201-serial no. 1199; that Tan is made a party because of his refusal to join it in this action or bring a
separate action to protect his rights despite the fact that he has a legal and beneficial interest in the subject matter of this litigation; and that
he is made a part so that complete relief may be accorded herein.

The Corporation prayed that (a) an order be issued requiring Lee and Tan to interplead and litigate their conflicting claims; and (b) judgment.
be rendered, after hearing, declaring who of the two is the lawful owner of membership fee certificate 201, and ordering the surrender and
cancellation of membership fee certificate 201-serial no. 1478 issued in the name of Lee.

In separate motions the defendants moved to dismiss the complaint upon the grounds of res judicata, failure of the complaint to state a cause
1
of action, and bar by prescription. These motions were duly opposed by the Corporation. Finding the grounds of bar by prior judgment and
failure to state a cause of action well taken, the trial court dismissed the complaint, with costs against the Corporation.

In this appeal, the Corporation contends that the court a quo erred (1) in finding that the allegations in its amended and supplemental
complaint do not constitute a valid ground for an action of interpleader, and in holding that "the principal motive for the present action is to
reopen the Manila Case and collaterally attack the decision of the said Court"; (2) in finding that the decision in civil case 26044 of the CFI of
Manila constitutes res judicata and bars its present action; and (3) in dismissing its action instead of compelling the appellees to interplead and
litigate between themselves their respective claims.

The Corporations position may be stated elsewise as follows: The trial court erred in dismissing the complaint, instead of compelling the
appellees to interplead because there actually are conflicting claims between the latter with respect to the ownership of membership fee
certificate 201, and, as there is not Identity of parties, of subject-matter, and of cause of action, between civil case 26044 of the CFI of Manila
and the present action, the complaint should not have been dismissed upon the ground of res judicata.

On the other hand, the appellees argue that the trial court properly dismissed the complaint, because, having the effect of reopening civil case
26044, the present action is barred by res judicata.
15
Although res judicata or bar by a prior judgment was the principal ground availed of by the appellees in moving for the dismissal of the
complaint and upon which the trial court actually dismissed the complaint, the determinative issue, as can be gleaned from the pleadings of
the parties, relates to the propriety and timeliness of the remedy of interpleader.

2
The action of interpleader, under section 120 of the Code of Civil Procedure, is a remedy whereby a person who has personal property in his
possession, or an obligation to render wholly or partially, without claiming any right to either, comes to court and asks that the persons who
claim the said personal property or who consider themselves entitled to demand compliance with the obligation, be required to litigate among
themselves in order to determine finally who is entitled to tone or the one thing. The remedy is afforded to protect a person not against
3 4
double liability but against double vexation in respect of one liability. The procedure under the Rules of Court is the same as that under the
5
Code of Civil Procedure, except that under the former the remedy of interpleader is available regardless of the nature of the subject-matter
of the controversy, whereas under the latter an interpleader suit is proper only if the subject-matter of the controversy is personal property or
relates to the performance of an obligation.

There is no question that the subject matter of the present controversy, i.e., the membership fee certificate 201, is proper for an interpleader
suit. What is here disputed is the propriety and timeliness of the remedy in the light of the facts and circumstances obtaining.

6 7
A stakeholder should use reasonable diligence to hale the contending claimants to court. He need not await actual institution of
8
independent suits against him before filing a bill of interpleader. He should file an action of interpleader within a reasonable time after a
9 10
dispute has arisen without waiting to be sued by either of the contending claimants. Otherwise, he may be barred by laches or undue
11 12
delay. But where he acts with reasonable diligence in view of the environmental circumstances, the remedy is not barred.

Has the Corporation in this case acted with diligence, in view of all the circumstances, such that it may properly invoke the remedy of
interpleader? We do not think so. It was aware of the conflicting claims of the appellees with respect to the membership fee certificate 201
long before it filed the present interpleader suit. It had been recognizing Tan as the lawful owner thereof. It was sued by Lee who also claimed
the same membership fee certificate. Yet it did not interplead Tan. It preferred to proceed with the litigation (civil case 26044) and to defend
itself therein. As a matter of fact, final judgment was rendered against it and said judgment has already been executed. It is not therefore too
late for it to invoke the remedy of interpleader.

It has been held that a stakeholder's action of interpleader is too late when filed after judgment has been rendered against him in favor of one
13
of the contending claimants, especially where he had notice of the conflicting claims prior to the rendition of the judgment and neglected
the opportunity to implead the adverse claimants in the suit where judgment was entered. This must be so, because once judgment is
14 15
obtained against him by one claimant he becomes liable to the latter. In once case, it was declared:

The record here discloses that long before the rendition of the judgment in favor of relators against the Hanover Fire
Insurance Company the latter had notice of the adverse claim of South to the proceeds of the policy. No reason is shown
why the Insurance Company did not implead South in the former suit and have the conflicting claims there determined.
The Insurance Company elected not to do so and that suit proceeded to a final judgment in favor of relators. The Company
thereby became independently liable to relators. It was then too late for such company to invoke the remedy of
interpleader

The Corporation has not shown any justifiable reason why it did not file an application for interpleader in civil case 26044 to compel the
appellees herein to litigate between themselves their conflicting claims of ownership. It was only after adverse final judgment was rendered
against it that the remedy of interpleader was invoked by it. By then it was too late, because to he entitled to this remedy the applicant must
be able to show that lie has not been made independently liable to any of the claimants. And since the Corporation is already liable to Lee
under a final judgment, the present interpleader suit is clearly improper and unavailing.

It is the general rule that before a person will be deemed to be in a position to ask for an order of intrepleader, he must be
prepared to show, among other prerequisites, that he has not become independently liable to any of the claimants. 25 Tex.
Jur. p. 52, Sec. 3; 30 Am. Jur. p. 218, Section 8.

It is also the general rule that a bill of interpleader comes too late when it is filed after judgment has been rendered in
favor of one of the claimants of the fund, this being especially true when the holder of the funds had notice of the
conflicting claims prior to the rendition of the judgment and had an opportunity to implead the adverse claimants in the
suit in which the judgment was rendered. United Procedures Pipe Line Co. v. Britton, Tex. Civ. App. 264 S.W. 176; Nash v.
16
McCullum, Tex. Civ. 74 S.W. 2d 1046; 30 Am. Jur. p. 223, Sec. 11; 25 Tex. Jur. p. 56, Sec. 5; 108 A.L.R., note 5, p. 275.

Indeed, if a stakeholder defends a suit filed by one of the adverse claimants and allows said suit to proceed to final judgment against him, he
cannot later on have that part of the litigation repeated in an interpleader suit. In the case at hand, the Corporation allowed civil case 26044 to
proceed to final judgment. And it offered no satisfactory explanation for its failure to implead Tan in the same litigation. In this factual
situation, it is clear that this interpleader suit cannot prosper because it was filed much too late.

If a stakeholder defends a suit by one claimant and allows it to proceed so far as a judgment against him without filing a bill
of interpleader, it then becomes too late for him to do so. Union Bank v. Kerr, 2 Md. Ch. 460; Home Life Ins. Co. v. Gaulk, 86
Md. 385, 390, 38 A. 901; Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. It is one o the main offices of a bill of interpleader

16
 to restrain a separate proceeding at law by claimant so as to avoid the resulting partial judgment; and if the stakeholder
acquiesces in one claimant's trying out his claim and establishing it at law, he cannot then have that part of the litigation
repeated in an interpleader suit. 4 Pomeroy's Eq. Juris. No. 162; Mitfor's Eq. Pleading (Tyler's Ed.) 147 and 236; Langdell's
17
Summary of Eq. Pleading, No. 162' De Zouche v. Garrizon, 140 Pa. 430, 21 A/450.

It is the general rule that a bill of interpleader comes too late when application therefore is delayed until after judgment
has been rendered in favor of one of the claimants of the fund, and that this is especially true where the holder of the fund
had notice of the conflicting claims prior to the rendition of such judgment and an opportunity to implead the adverse
claimants in the suit in which such judgment was rendered. (See notes and cases cited 36 Am. Dec. 703, Am. St. Rep. 598,
also 5 Pomeroy's Eq. Juris. Sec. 41.)

The evidence in the opinion of the majority shows beyond dispute that the appellant permitted the Parker county suit to
proceed to judgment in favor of Britton with full notice of the adverse claims of the defendants in the present suit other
than the assignees of the judgment (the bank and Mrs. Pabb) and no excuse is shown why he did not implead them in the
18
suit.

To now permit the Corporation to bring Lee to court after the latter's successful establishment of his rights in civil case 26044 to the
membership fee certificate 201, is to increase instead of to diminish the number of suits, which is one of the purposes of an action of
interpleader, with the possibility that the latter would lose the benefits of the favorable judgment. This cannot be done because having elected
to take its chances of success in said civil case 26044, with full knowledge of all the fact, the Corporation must submit to the consequences of
defeat.

The act providing for the proceeding has nothing to say touching the right of one, after contesting a claim of one of the
claimants to final judgment unsuccessfully, to involve the successful litigant in litigation anew by bringing an interpleader
action. The question seems to be one of first impression here, but, in other jurisdictions, from which the substance of the
act was apparently taken, the rule prevails that the action cannot be resorted to after an unsuccessful trial against one of
the claimants.

It is well settled, both by reasons and authority, that one who asks the interposition of a court of equity to compel others,
claiming property in his hands, to interplead, must do so before putting them to the test of trials at law. Yarborough v.
Thompson, 3 Smedes & M. 291 (41 Am. Dec. 626); Gornish v. Tanner, 1 You. & Jer. 333; Haseltine v. Brickery, 16 Grat. (Va.)
116. The remedy by interpleader is afforded to protect the party from the annoyance and hazard of two or more actions
touching the same property or demand; but one who, with knowledge of all the facts, neglects to avail himself of the relief,
or elects to take the chances for success in the actions at law, ought to submit to the consequences of defeat. To permit an
unsuccessful defendant to compel the successful plaintiffs to interplead, is to increase instead of to diminish the number of
suits; to put upon the shoulders of others the burden which he asks may be taken from his own. ....'

It is urged, however, that the American Surety Company of New York was not in position to file an interpleader until it had
tested the claim of relatrix to final judgment, and that, failing to meet with success, it promptly filed the interpleader. The
reason why, it urges, it was not in such position until then is that had it succeeded before this court in sustaining its
construction of the bond and the law governing the bond, it would not have been called upon to file an interpleader, since
there would have been sufficient funds in its hands to have satisfied all lawful claimants. It may be observed, however, that
the surety company was acquainted with all of the facts, and hence that it simply took its chances of meeting with success
by its own construction of the bond and the law. Having failed to sustain it, it cannot now force relatrix into litigation anew
with others, involving most likely a repetition of what has been decided, or force her to accept a pro rata part of a fund,
19
which is far from benefits of the judgment.

Besides, a successful litigant cannot later be impleaded by his defeated adversary in an interpleader suit and compelled to prove his claim
anew against other adverse claimants, as that would in effect be a collateral attack upon the judgment.

The jurisprudence of this state and the common law states is well-settled that a claimant who has been put to test of a trial
by a surety, and has establish his claim, may not be impleaded later by the surety in an interpleader suit, and compelled to
prove his claim again with other adverse claimants. American Surety Company of New York v. Brim, 175 La. 959, 144 So.
727; American Surety Company of New York v. Brim (In Re Lyong Lumber Company), 176 La. 867, 147 So. 18; Dugas v. N.Y.
Casualty Co., 181 La. 322, 159 So. 572; 15 Ruling Case Law, 228; 33 Corpus Juris, 477; 4 Pomeroy's Jurisprudence, 1023;
Royal Neighbors of America v. Lowary (D.C.) 46 F2d 565; Brackett v. Graves, 30 App. Div. 162, 51 N.Y.S. 895; De Zouche v.
Garrison, 140 Pa. 430, 21 A. 450, 451; Manufacturer's Finance Co. v. W.I. Jones Co. 141 Ga., 519, 81 S.E. 1033; Hancock
Mutual Life Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383.

There can be no doubt that relator's claim has been finally and definitely established, because that matter was passed
upon by three courts in definitive judgments. The only remaining item is the value of the use of the land during the time
that relator occupied it. The case was remanded solely and only for the purpose of determining the amount of that credit.
20
In all other aspects the judgment is final.

17
 It is generally held by the cases it is the office of interpleader to protect a party, not against double liability, but against
double vexation on account of one liability. Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. And so it is said that it is too late
for the remedy of interpleader if the party seeking this relef has contested the claim of one of the parties and suffered
judgment to be taken.

In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576. 578, it was said: 'It is the general rule that a bill of interpleader
comes too late when application therefor is delayed until after judgment has been rendered in favor of one of the
claimants of the fund, and this is especially true where the holder of the fund had notice of the conflicting claims prior to
the rendition of such judgment and an opportunity to implead the adverse claimants in the suit in which such judgment
was rendered. See notes and cases cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5 Pomeroy's Equity Jurisprudence No.
41.'

The principle thus stated has been recognized in many cases in other jurisdictions, among which may be cited American
Surety Co. v. O'Brien, 223 Mass. 177, 111 N.E. 787; Phillips v. Taylor, 148 Md. 157, 129 A. 18; Moore v. Hill, 59 Ga. 760, 761;
Yearborough v. Thompson, 3 Smedes & M. (11 Miss.) 291, 41 Am. Dec. 626. See, also, 33 C.J. p. 447, No. 30; Nash v.
McCullum, (Tex. Civ. App.) 74 S.W. 2d 1042, 1047.

It would seem that this rule should logically follow since, after the recovery of judgment, the interpleading of the judgment
21
creditor is in effect a collateral attack upon the judgment.

In fine, the instant interpleader suit cannot prosper because the Corporation had already been made independently liable in civil case 26044
and, therefore, its present application for interpleader would in effect be a collateral attack upon the final judgment in the said civil case; the
appellee Lee had already established his rights to membership fee certificate 201 in the aforesaid civil case and, therefore, this interpleader
suit would compel him to establish his rights anew, and thereby increase instead of diminish litigations, which is one of the purposes of an
interpleader suit, with the possiblity that the benefits of the final judgment in the said civil case might eventually be taken away from him; and
because the Corporation allowed itself to be sued to final judgment in the said case, its action of interpleader was filed inexcusably late, for
which reason it is barred by laches or unreasonable delay.

ACCORDINGLY, the order of May 28, 1964, dismissing the complaint, is affirmed, at appellant's cost.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. NO. 142628 February 6, 2007

SPRINGFIELD DEVELOPMENT CORPORATION, INC. and HEIRS OF PETRA CAPISTRANO PIIT, Petitioners,
vs.
HONORABLE PRESIDING JUDGE OF REGIONAL TRIAL COURT OF MISAMIS ORIENTAL, BRANCH 40, CAGAYAN DE ORO CITY, DEPARTMENT OF
AGRARIAN REFORM ADJUDICATION BOARD (DARAB), DAR REGION X DIRECTOR, ROSALIO GAMULO, FORTUNATO TELEN, EMERITA
OLANGO, THERESA MONTUERTO, DOMINGO H. CLAPERO, JOEL U. LIM, JENEMAIR U. POLLEY, FIDELA U. POLLEY, JESUS BATUTAY, NICANOR
UCAB, EMERIA U. LIM, EMILITO CLAPERO, ANTONINA RIAS, AURILLIO ROMULO, ERWIN P. CLAPERO, EVELITO CULANGO, VILMA/CRUISINE
ALONG, EFREN EMATA, GREGORIO CABARIBAN, and SABINA CANTORANA, Respondents.

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court. The principal issue presented for resolution is
whether the Regional Trial Court (RTC) has jurisdiction to annul final judgment of the Department of Agrarian Reform Adjudication Board
(DARAB).

The antecedent facts:

Petra Capistrano Piit previously owned Lot No. 2291 located in Cagayan de Oro City which measured 123,408 square meters under Transfer
Certificate of Title No. T-62623. Springfield Development Corporation, Inc. (Springfield) bought Lot No. 2291-C with an area of 68,732 square
1
meters, and Lot No. 2291-D with an area of 49,778 square meters. Springfield developed these properties into a subdivision project called
2
Mega Heights Subdivision.

3
On May 4, 1990, the Department of Agrarian Reform (DAR), through its Municipal Agrarian Reform Officer, issued a Notice of Coverage,
placing the property under the coverage of Republic Act (R.A.) No. 6657 or the Comprehensive Agrarian Reform Law of 1988. There being an

18
opposition from the heirs of Petra Piit, the case was docketed as DARAB Case No. X-305. On August 27, 1991, DARAB Provincial Adjudicator
4
Abeto A. Salcedo, Jr. rendered a decision declaring the nature of the property as residential and not suitable for agriculture. The Regional
5
Director filed a notice of appeal, which the Provincial Adjudicator disallowed for being pro forma and frivolous. The decision became final and
6 7
executory and Springfield proceeded to develop the property.

The DAR Regional Director then filed a petition for relief from judgment of the DARAB Decision, docketed as DARAB Case No. 0555. In its
Decision dated October 5, 1995, the DARAB granted the petition and gave due course to the Notice of Coverage. It also directed the Municipal
8
Agrarian Reform Office to proceed with the documentation, acquisition, and distribution of the property to the true and lawful beneficiaries.

The DARAB also issued an Order dated May 22, 1997, ordering the heirs of Piit and Springfield to pay the farmer-beneficiaries the amount of
Twelve Million, Three Hundred Forty Thousand, Eight Hundred Pesos (P12,340,800.00), corresponding to the value of the property since the
property has already been developed into a subdivision.

On June 13, 1997, Springfield and the heirs of Piit (petitioners) filed with the RTC of Cagayan de Oro City, Branch 40, a petition for annulment
of the DARAB Decision dated October 5, 1995 and all its subsequent proceedings. Petitioners contend that the DARAB decision was rendered
9
without affording petitioners any notice and hearing.

10
On motion filed by the farmer-beneficiaries, the RTC issued an Order dated June 25, 1997, dismissing the case for lack of jurisdiction.

On July 2, 1997, petitioners filed with the Court of Appeals (CA) a special civil action for certiorari, mandamus, and prohibition with prayer for
11
the issuance of writ of preliminary injunction and/or temporary restraining order, docketed as CA-G.R. SP No. 44563. Petitioners alleged that
the RTC committed grave abuse of discretion when it ruled that the annulment of judgment filed before it is actually an action for certiorari in
a different color. According to petitioners, what it sought before the RTC is an annulment of the DARAB Decision and not certiorari, as the
12
DARAB Decision is void ab initio for having been rendered without due process of law.

13
In the assailed Decision dated July 16, 1998, the CA dismissed the petition for lack of merit, ruling that the RTC does not have jurisdiction to
14
annul the DARAB Decision because it is a co-equal body.

However, on January 12, 1999, the CA ordered the elevation of the DARAB records before it, declaring that it "overlooked the fact that
15
petitioners likewise applied for a writ of prohibition against the enforcement of the DARAB decision which they claim to be patently void."
Forwarded to the CA were the records of the original case filed with the DARAB-Region X, and it appearing that the petition for relief from
16
judgment and its pertinent records were forwarded to the DARAB Central Office, the CA issued another Resolution on December 20, 1999,
requiring the DARAB Central Office to forward the records of the case. But after receipt of the records, the CA simply denied petitioners'
17
motion for reconsideration per Resolution dated February 23, 2000 without specifically resolving the issues raised concerning the prayer for
a writ of prohibition.

Hence, the present petition on the following grounds:

THE COURT OF APPEALS COMMITTED A CLEAR ERROR OF LAW IN APPLYING THE PRINCIPLE OF JUDICIAL STABILITY TO JUSTIFY ITS
CONCLUSION DIVESTING THE REGIONAL TRIAL COURT OF ITS JURISDICTION VESTED BY LAW OVER CASES WHERE THE EXCLUSIVE
JURISDICTION WAS NOT EXPRESSLY GRANTED TO ANY OTHER COURTS [SIC] OR TRIBUNAL, IN EFFECT, MODIFYING THE APPLICABLE
LAW ON THE MATTER.

II

THE COURT OF APPEALS IRREGULARLY DISMISSED PETITIONERS' MOTION FOR RECONSIDERATION AFTER IT HAD RESOLVED TO
ENTERTAIN PETITIONERS' PETITION FOR PROHIBITION AND TO REVIEW THE DARAB PROCEEDINGS, THEREBY DEPARTING FROM THE
USUAL COURSE OF JUDICIAL PROCEEDINGS.

III

THE HONORABLE SUPREME COURT, BEING THE HIGHEST TEMPLE OF RIGHTS, AND TO AVOID SERIOUS MISCARRIAGE OF JUSTICE AND
NEEDLESS DELAYS, IS MOST RESPECTFULLY URGED TO TAKE COGNIZANCE OF THE PETITION FILED IN CA-G.R. SP No. 44563 IN THE
18
EXERCISE OF ITS CONCURRENT JURISDICTION, AS IF THE PETITION WAS ORIGINALLY LODGED BEFORE IT.

Petitioners argue that under Batas Pambansa (B.P.) Blg. 129, there is no provision that vests with the CA jurisdiction over actions for
annulment of DARAB judgments. Petitioners, however, contend that the RTC may take cognizance of the annulment case since Section 19 of
B.P. Blg. 129 vests the RTC with general jurisdiction and an action for annulment is covered under such general jurisdiction. According to
19
petitioners, "this is but a logical consequence of the fact that no other courts were expressly given the jurisdiction over such actions."
Petitioners further argue that the CA was in error when it summarily ignored their application for a writ of prohibition, as it was necessary to

19
restrain the DARAB from enforcing its void decision; and even if the DARAB decision was valid, the writ of prohibition could have enjoined the
execution of the DARAB decision since there have been changes which will make the execution unjust and inequitable.

In their Joint-Comments, the farmer-beneficiaries and the DARAB (respondents) refute petitioners' allegation that they were not afforded due
process in the DARAB proceedings, stating that petitioners were impleaded as a party thereto, and in fact, they attended some of the hearings
although their counsel was absent. Respondents also adopt the CA's ruling that the RTC is not vested with any jurisdiction to annul the DARAB
decision.

As stated at the outset, the main issue in this case is whether the RTC has jurisdiction to annul a final judgment of the DARAB.

Note must be made that the petition for annulment of the DARAB decision was filed with the RTC on June 13, 1997, before the advent of the
1997 Rules of Civil Procedure, which took effect on July 1, 1997. Thus, the applicable law is B.P. Blg. 129 or the Judiciary Reorganization Act of
1980, enacted on August 10, 1981.

It is also worthy of note that before the effectivity of B.P. Blg. 129, a court of first instance has the authority to annul a final and executory
judgment rendered by another court of first instance or by another branch of the same court. This was the Court's ruling in Dulap v. Court of
20 21
Appeals. Yet, in subsequent cases, the Court held that the better policy, as a matter of comity or courteous interaction between courts of
first instance and the branches thereof, is for the annulment cases to be tried by the same court or branch which heard the main action.

22
The foregoing doctrines were modified in Ngo Bun Tiong v. Sayo, where the Court expressed that pursuant to the policy of judicial stability,
the doctrine of non-interference between concurrent and coordinate courts should be regarded as highly important in the administration of
justice whereby the judgment of a court of competent jurisdiction may not be opened, modified or vacated by any court of concurrent
jurisdiction.

23
With the introduction of B.P. Blg. 129, the rule on annulment of judgments was specifically provided in Section 9(2), which vested in the then
Intermediate Appellate Court (now the CA) the exclusive original jurisdiction over actions for annulment of judgments of RTCs. Sec. 9(3) of B.P.
Blg. 129 also vested the CA with "exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders, or awards of Regional
Trial Courts and quasi-judicial agencies, instrumentalities, boards or commissions, except those falling within the appellate jurisdiction of the
Supreme Court in accordance with the Constitution, the provisions of this Act, and of sub-paragraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948." As provided in paragraph 16 of the Interim Rules and
Guidelines implementing B.P. Blg. 129, the quasi-judicial bodies whose decisions are exclusively appealable to the CA are those, which under
24
the law, R.A. No. 5434, or its enabling acts, are specifically appealable to the CA.

Significantly, B.P. Blg. 129 does not specifically provide for any power of the RTC to annul judgments of quasi-judicial bodies. However, in BF
25
Northwest Homeowners Association, Inc. v. Intermediate Appellate Court, the Court ruled that the RTCs have jurisdiction over actions for
annulment of the decisions of the National Water Resources Council, which is a quasi-judicial body ranked with inferior courts, pursuant to its
original jurisdiction to issue writs of certiorari, prohibition, and mandamus, under Sec. 21(1) of B.P. Blg. 129, in relation to acts or omissions of
an inferior court. This led to the conclusion that despite the absence of any provision in B.P. Blg. 129, the RTC had the power to entertain
petitions for annulment of judgments of inferior courts and administrative or quasi-judicial bodies of equal ranking. This is also in harmony
26
with the "pre-B.P. Blg. 129" rulings of the Court recognizing the power of a trial court (court of first instance) to annul final judgments. Hence,
while it is true, as petitioners contend, that the RTC had the authority to annul final judgments, such authority pertained only to final
judgments rendered by inferior courts and quasi-judicial bodies of equal ranking with such inferior courts.

The foregoing statements beg the next question, i.e., whether the DARAB is a quasi-judicial body with the rank of an inferior court such that
the RTC may take cognizance of an action for the annulments of its judgments. The answer is no.

The DARAB is a quasi-judicial body created by Executive Order Nos. 229 and 129-A. R.A. No. 6657 delineated its adjudicatory powers and
27
functions. The DARAB Revised Rules of Procedure adopted on December 26, 1988 specifically provides for the manner of judicial review of its
decisions, orders, rulings, or awards. Rule XIV, Section 1 states:

SECTION 1. Certiorari to the Court of Appeals. Any decision, order, award or ruling by the Board or its Adjudicators on any agrarian dispute or
on any matter pertaining to the application, implementation, enforcement or interpretation of agrarian reform laws or rules and regulations
promulgated thereunder, may be brought within fifteen (15) days from receipt of a copy thereof, to the Court of Appeals by certiorari, except
as provided in the next succeeding section. Notwithstanding an appeal to the Court of Appeals the decision of the Board or Adjudicator
appealed from, shall be immediately executory.

28
Further, the prevailing 1997 Rules of Civil Procedure, as amended, expressly provides for an appeal from the DARAB decisions to the CA.

The rule is that where legislation provides for an appeal from decisions of certain administrative bodies to the CA, it means that such bodies
29
are co-equal with the RTC, in terms of rank and stature, and logically, beyond the control of the latter.

Given that DARAB decisions are appealable to the CA, the inevitable conclusion is that the DARAB is a co-equal body with the RTC and its
decisions are beyond the RTC's control. The CA was therefore correct in sustaining the RTC's dismissal of the petition for annulment of the
DARAB Decision dated October 5, 1995, as the RTC does not have any jurisdiction to entertain the same.
20
This brings to fore the issue of whether the petition for annulment of the DARAB judgment could be brought to the CA. As previously noted,
Section 9(2) of B.P. Blg. 129 vested in the CA the exclusive original jurisdiction over actions for annulment of judgments, but only those
rendered by the RTCs. It does not expressly give the CA the power to annul judgments of quasi-judicial bodies. Thus, in Elcee Farms, Inc. v.
30
Semillano, the Court affirmed the ruling of the CA that it has no jurisdiction to entertain a petition for annulment of a final and executory
judgment of the NLRC, citing Section 9 of B.P. Blg. 129, as amended, which only vests in the CA "exclusive jurisdiction over actions for
31
annulment of judgments of Regional Trial Courts." This was reiterated in Galang v. Court of Appeals, where the Court ruled that that the CA is
without jurisdiction to entertain a petition for annulment of judgment of a final decision of the Securities and Exchange Commission.

Recent rulings on similar cases involving annulments of judgments of quasi-judicial bodies are also quite instructive on this matter.

32
In Cole v. Court of Appeals, involving an annulment of the judgment of the HLURB Arbiter and the Office of the President (OP), filed with the
CA, the Court stated that, "(U)nder Rule 47 of the Rules of Court, the remedy of annulment of judgment is confined to decisions of the
Regional Trial Court on the ground of extrinsic fraud and lack of jurisdiction x x x." The Court further ruled, viz.:

Although the grounds set forth in the petition for annulment of judgment are fraud and lack of jurisdiction, said petition cannot prosper for the
simple reason that the decision sought to be annulled was not rendered by the Regional Trial Court but by an administrative agency (HLU
Arbiter and Office of the President), hence, not within the jurisdiction of the Court of Appeals. There is no such remedy as annulment of
judgment of the HLURB or the Office of the President. Assuming arguendo that the annulment petition can be treated as a petition for review
under Rule 43 of the 1997 Rules of Civil Procedure, the same should have been dismissed by the Court of Appeals, because no error of
judgment was imputed to the HLURB and the Office of the President. Fraud and lack of jurisdiction are beyond the province of petitions under
Rule 43 of the Rules of Court, as it covers only errors of judgment. A petition for annulment of judgment is an initiatory remedy, hence no error
of judgment can be the subject thereof. Besides, the Arbiter and the Office of the President indisputably have jurisdiction over the cases
brought before them in line with our ruling in Francisco Sycip, Jr. vs. Court of Appeals, promulgated on March 17, 2000, where the aggrieved
townhouse buyers may seek protection from the HLURB under Presidential Decree No. 957, otherwise known as "Subdivision and
33
Condominium Buyers' Protective Decree." (Emphasis supplied)

34
In Macalalag v. Ombudsman, the Court ruled that Rule 47 of the 1997 Rules of Civil Procedure on annulment of judgments or final orders and
resolutions covers "annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for
which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies could no longer be availed of through no
fault of the petitioner." Thus, the Court concluded that judgments or final orders and resolutions of the Ombudsman in administrative cases
cannot be annulled by the CA, more so, since The Ombudsman Act specifically deals with the remedy of an aggrieved party from orders,
directives and decisions of the Ombudsman in administrative disciplinary cases only, and the right to appeal is not to be considered granted to
parties aggrieved by orders and decisions of the Ombudsman in criminal or non-administrative cases.

While these cases involve annulments of judgments under the 1997 Rules of Civil Procedure, as amended, still, they still find application in the
present case, as the provisions of B.P. Blg. 129 and the 1997 Rules of Civil Procedure, as amended, on annulment of judgments are identical.

Consequently, the silence of B.P. Blg. 129 on the jurisdiction of the CA to annul judgments or final orders and resolutions of quasi-judicial
bodies like the DARAB indicates its lack of such authority.

Further, petitioners are also asking the Court to take cognizance of their prayer for the issuance of a writ of prohibition, which they claim was
35
not acted upon by the CA, citing the Court's action in Fortich v. Corona where the Court took cognizance of the petition previously filed with
the CA due to compelling reasons. The Court is not persuaded to do so.

Fortich involved a 144-hectare land located at San Vicente, Sumilao, Bukidnon, owned by the Norberto Quisumbing, Sr. Management and
Development Corporation (NQSRMDC), which was leased as a pineapple plantation to Del Monte Philippines, Inc. for a period of 10 years.
During the existence of the lease, the DAR placed the entire 144-hectare property under compulsory acquisition and assessed the land value at
P2.38 million. When the NQSRMDC/BAIDA (Bukidnon Agro-Industrial Development Association) filed an application for conversion due to the
passage of Resolution No. 6 by the Provincial Development Council of Bukidnon and Ordinance No. 24 by the Sangguniang Bayan of Sumilao,
Bukidnon, reclassifying the area from agricultural to industrial/institutional, the same was disapproved by the DAR Secretary and instead, the
property was placed under the compulsory coverage of Comprehensive Agrarian Reform Program for distribution to all qualified beneficiaries.
This prompted Governor Carlos O. Fortich of Bukidnon to file an appeal with the OP, while NQSRMDC filed with the CA a petition for certiorari,
and prohibition with preliminary injunction.

The OP then issued a Decision dated March 29, 1996 reversing the DAR Secretary's decision and approving the application for conversion.
Executive Secretary Ruben D. Torres denied the DAR's motion for reconsideration for having been filed beyond the reglementary period of 15
days, and it was also declared that the OP Decision dated March 29, 1996 had already become final and executory.

Because of this, the farmer-beneficiaries staged a hunger strike on October 9, 1997, protesting the OP's decision. In order to resolve the strike,
the OP issued a so-called "Win/Win" resolution on November 7, 1997, modifying the decision in that NQSRMDC's application for conversion is
approved only with respect to the approximately 44-hectare portion of the land adjacent to the highway, as recommended by the Department
of Agriculture, while the remaining approximately 100 hectares traversed by an irrigation canal and found to be suitable for agriculture shall be
distributed to qualified farmer-beneficiaries.1awphi1.net

21
 36
A petition for certiorari and prohibition under Rule 65 of the Revised Rules of Court was then filed with the Court, which was contested by
the Office of the Solicitor General on the ground that the proper remedy should have been to file a petition for review directly with the CA in
accordance with Rule 43 of the Revised Rules of Court.

In resolving the issue, the Court recognized the rule that the Supreme Court, CA and RTC have original concurrent jurisdiction to issue a writ of
certiorari, prohibition, and mandamus. However, due to compelling reasons and in the interest of speedy justice, the Court resolved to take
primary jurisdiction over the petition in the interest of speedy justice, after which the Court nullified the act of the OP in re-opening the case
and substantially modifying its March 29, 1996 Decision which had already become final and executory, as it was in gross disregard of the rules
and basic legal precept that accord finality to administrative determinations.

It must be stressed at this point that the Court, as a rule, will not entertain direct resort to it unless the redress desired cannot be obtained in
the appropriate courts, and exceptional and compelling circumstances, such as cases of national interest and of serious implications, justify the
37
availment of the extraordinary remedy of writ of certiorari, prohibition, or mandamus calling for the exercise of its primary jurisdiction. The
Court finds no compelling circumstances in this case to warrant a relaxation of the foregoing rule. The Fortich case is not analogous with the
present case such that the Court is not bound to abandon all rules, take primary jurisdiction, and resolve the merits of petitioners' application
for a writ of prohibition.

In the present case, the assailed DARAB Decision dated October 5, 1995 granting the petition for relief from judgment and giving due course to
the Notice of Coverage was made pursuant to a petition for relief from judgment filed by the DAR, albeit petitioners are contesting the validity
of the proceedings held thereon. On the other hand, in Fortich, the OP's "Win/Win" resolution dated November 7, 1997 was made motu
proprio, as a result of the hunger strike staged by the farmer-beneficiaries.

Further, the OP's "Win/Win" Resolution dated November 7, 1997 in the Fortich case is a patently void judgment since it was evident that there
was already an existing final and executory OP Decision dated March 29, 1996. In this case, the assailed DARAB Decision dated October 5, 1995
appears to be regular on its face, and for its alleged nullity to be resolved, the Court must delve into the records of the case in order to
determine the validity of petitioners' argument of lack of due process, absent notice and hearing.

Moreover, the principle of hierarchy of courts applies generally to cases involving factual questions. As it is not a trier of facts, the Court
38
cannot entertain cases involving factual issues. The question of whether the DARAB Decision dated October 5, 1995 is null and void and
enforceable against petitioners for having been rendered without affording petitioners due process is a factual question which requires a
review of the records of this case for it to be judiciously resolved.

The Court notes that the CA, indeed, failed to resolve petitioners' prayer for the issuance of the writ of prohibition, which, significantly, focuses
on the alleged nullity of the DARAB Decision dated October 5, 1995. On this score, the CA found that the application for the issuance of the
writ of prohibition was actually a collateral attack on the validity of the DARAB decision. But, a final and executory judgment may be set aside
39
in three ways; and a collateral attack, whereby in an action to obtain a different relief, an attack on the judgment is nevertheless made as an
40 41
incident thereof, is one of these. This tenet is based upon a court's inherent authority to expunge void acts from its records. Despite
recognizing the need to resolve petitioners' application for the writ of prohibition in its Resolution dated January 12, 1999, the CA nonetheless
42
summarily denied petitioners' motion for reconsideration in its Resolution dated February 23, 2000, leaving the matter hanging and
unresolved.

At first, the Court considered resolving the merits of petitioners' motion for reconsideration concerning their application for a writ of
prohibition against enforcing the DARAB Decision dated October 5, 1995. Thus, in a Resolution dated June 5, 2006, the Court directed the CA
to transmit the records of DARAB Case No. 0555, which was previously required by the CA to be forwarded to it per Resolution dated
43
December 20, 1999. However, as of even date, the CA has not complied with the Court's Resolution. Withal, upon re-examination of the
issues involved in this case, the Court deems it more judicious to remand this case to the CA for immediate resolution of petitioners' motion
for reconsideration, re: their application for the writ of prohibition.

Moreover, the radical conflict in the findings of the Provincial Adjudicator and the DARAB as regards the nature of the subject property
necessitates a review of the present case. In this regard, the CA is in a better position to fully adjudicate the case for it can delve into the
records to determine the probative value of the evidence supporting the findings of the Provincial Adjudicator and of the DARAB. In addition,
the CA is empowered by its internal rules to require parties to submit additional documents, as it may find necessary to promote the ends of
substantial justice, and further order the transmittal of the proper records for it to fully adjudicate the case. After all, it is an avowed policy of
the courts that cases should be determined on the merits, after full opportunity to all parties for ventilation of their causes and defenses,
44
rather than on technicality or some procedural imperfections. In that way, the ends of justice would be served better.

WHEREFORE, the petition is PARTLY GRANTED. This case is REMANDED to the Court of Appeals which is DIRECTED to resolve petitioners'
prayer for the issuance of the writ of prohibition in their Motion for Reconsideration.

Upon finality of this Decision, let the records be remanded forthwith to the Court of Appeals.

No pronouncement as to costs.

SO ORDERED.
22
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 158290 October 23, 2006

HILARION M. HENARES, JR., VICTOR C. AGUSTIN, ALFREDO L. HENARES, DANIEL L. HENARES, ENRIQUE BELO HENARES, and CRISTINA BELO
HENARES, petitioners,
vs.
LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD and DEPARTMENT OF TRANSPORTATION AND COMMUNICATIONS,
respondents.

QUISUMBING, J.:

Petitioners challenge this Court to issue a writ of mandamus commanding respondents Land Transportation Franchising and Regulatory Board
(LTFRB) and the Department of Transportation and Communications (DOTC) to require public utility vehicles (PUVs) to use compressed natural
gas (CNG) as alternative fuel.

1
Citing statistics from the Metro Manila Transportation and Traffic Situation Study of 1996, the Environmental Management Bureau (EMB) of
2 3 4
the National Capital Region, a study of the Asian Development Bank, the Manila Observatory and the Department of Environment and
5
Natural Resources (DENR) on the high growth and low turnover in vehicle ownership in the Philippines, including diesel-powered vehicles,
two-stroke engine powered motorcycles and their concomitant emission of air pollutants, petitioners attempt to present a compelling case for
judicial action against the bane of air pollution and related environmental hazards.

Petitioners allege that the particulate matters (PM) complex mixtures of dust, dirt, smoke, and liquid droplets, varying in sizes and
compositions emitted into the air from various engine combustions have caused detrimental effects on health, productivity, infrastructure
and the overall quality of life. Petitioners particularly cite the effects of certain fuel emissions from engine combustion when these react to
other pollutants. For instance, petitioners aver, with hydrocarbons, oxide of nitrogen (NO x) creates smog; with sulfur dioxide, it creates acid
rain; and with ammonia, moisture and other compounds, it reacts to form nitric acid and harmful nitrates. Fuel emissions also cause
retardation and leaf bleaching in plants. According to petitioner, another emission, carbon monoxide (CO), when not completely burned but
emitted into the atmosphere and then inhaled can disrupt the necessary oxygen in blood. With prolonged exposure, CO affects the nervous
6
system and can be lethal to people with weak hearts.

Petitioners add that although much of the new power generated in the country will use natural gas while a number of oil and coal-fired fuel
stations are being phased-out, still with the projected doubling of power generation over the next 10 years, and with the continuing high
demand for motor vehicles, the energy and transport sectors are likely to remain the major sources of harmful emissions. Petitioners refer us
7
to the study of the Philippine Environment Monitor 2002 , stating that in four of the country's major cities, Metro Manila, Davao, Cebu and
Baguio, the exposure to PM10, a finer PM which can penetrate deep into the lungs causing serious health problems, is estimated at over
8
US$430 million. The study also reports that the emissions of PMs have caused the following:

Over 2,000 people die prematurely. This loss is valued at about US$140 million.

Over 9,000 people suffer from chronic bronchitis, which is valued at about US$120 million.

Nearly 51 million cases of respiratory symptom days in Metro Manila (averaging twice a year in Davao and Cebu, and five to six
times in Metro Manila and Baguio), costs about US$170 million. This is a 70 percent increase, over a decade, when compared with
9
the findings of a similar study done in 1992 for Metro Manila, which reported 33 million cases.

Petitioners likewise cite the University of the Philippines' studies in 1990-91 and 1994 showing that vehicular emissions in Metro Manila have
resulted to the prevalence of chronic obstructive pulmonary diseases (COPD); that pulmonary tuberculosis is highest among jeepney drivers;
and there is a 4.8 to 27.5 percent prevalence of respiratory symptoms among school children and 15.8 to 40.6 percent among child vendors.
The studies also revealed that the children in Metro Manila showed more compromised pulmonary function than their rural counterparts.
Petitioners infer that these are mostly due to the emissions of PUVs.

To counter the aforementioned detrimental effects of emissions from PUVs, petitioners propose the use of CNG. According to petitioners, CNG
10
is a natural gas comprised mostly of methane which although containing small amounts of propane and butane, is colorless and odorless and
considered the cleanest fossil fuel because it produces much less pollutants than coal and petroleum; produces up to 90 percent less CO
compared to gasoline and diesel fuel; reduces NOx emissions by 50 percent and cuts hydrocarbon emissions by half; emits 60 percent less PMs;
and releases virtually no sulfur dioxide. Although, according to petitioners, the only drawback of CNG is that it produces more methane, one of
11
the gases blamed for global warming.

23
Asserting their right to clean air, petitioners contend that the bases for their petition for a writ of mandamus to order the LTFRB to require
12 13
PUVs to use CNG as an alternative fuel, lie in Section 16, Article II of the 1987 Constitution, our ruling in Oposa v. Factoran, Jr., and Section
14
4 of Republic Act No. 8749 otherwise known as the "Philippine Clean Air Act of 1999."

Meantime, following a subsequent motion, the Court granted petitioners' motion to implead the Department of Transportation and
Communications (DOTC) as additional respondent.

In his Comment for respondents LTFRB and DOTC, the Solicitor General, cites Section 3, Rule 65 of the Revised Rules of Court and explains that
the writ of mandamus is not the correct remedy since the writ may be issued only to command a tribunal, corporation, board or person to do
an act that is required to be done, when he or it unlawfully neglects the performance of an act which the law specifically enjoins as a duty
resulting from an office, trust or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is
15
entitled, there being no other plain, speedy and adequate remedy in the ordinary course of law. Further citing existing jurisprudence, the
Solicitor General explains that in contrast to a discretionary act, a ministerial act, which a mandamus is, is one in which an officer or tribunal
performs in a given state of facts, in a prescribed manner, in obedience to a mandate of legal authority, without regard to or the exercise of his
own judgment upon the propriety or impropriety of an act done.

The Solicitor General also notes that nothing in Rep. Act No. 8749 that petitioners invoke, prohibits the use of gasoline and diesel by owners of
motor vehicles. Sadly too, according to the Solicitor General, Rep. Act No. 8749 does not even mention the existence of CNG as alternative fuel
and avers that unless this law is amended to provide CNG as alternative fuel for PUVs, the respondents cannot propose that PUVs use CNG as
alternative fuel.

The Solicitor General also adds that it is the DENR that is tasked to implement Rep. Act No. 8749 and not the LTFRB nor the DOTC. Moreover,
16
he says, it is the Department of Energy (DOE), under Section 26 of Rep. Act No. 8749, that is required to set the specifications for all types of
17
fuel and fuel-related products to improve fuel compositions for improved efficiency and reduced emissions. He adds that under Section 21 of
the cited Republic Act, the DOTC is limited to implementing the emission standards for motor vehicles, and the herein respondents cannot
alter, change or modify the emission standards. The Solicitor General opines that the Court should declare the instant petition for mandamus
without merit.

Petitioners, in their Reply, insist that the respondents possess the administrative and regulatory powers to implement measures in accordance
18 19
with the policies and principles mandated by Rep. Act No. 8749, specifically Section 2 and Section 21. Petitioners state that under these
laws and with all the available information provided by the DOE on the benefits of CNG, respondents cannot ignore the existence of CNG, and
their failure to recognize CNG and compel its use by PUVs as alternative fuel while air pollution brought about by the emissions of gasoline and
diesel endanger the environment and the people, is tantamount to neglect in the performance of a duty which the law enjoins.

Lastly, petitioners aver that other than the writ applied for, they have no other plain, speedy and adequate remedy in the ordinary course of
law. Petitioners insist that the writ in fact should be issued pursuant to the very same Section 3, Rule 65 of the Revised Rules of Court that the
Solicitor General invokes.

In their Memorandum, petitioners phrase the issues before us as follows:

I. WHETHER OR NOT THE PETITIONERS HAVE THE PERSONALITY TO BRING THE PRESENT ACTION

II. WHETHER OR NOT THE PRESENT ACTION IS SUPPORTED BY LAW

III. WHETHER OR NOT THE RESPONDENT IS THE AGENCY RESPONSIBLE TO IMPLEMENT THE SUGGESTED ALTERNATIVE OF REQUIRING
PUBLIC UTILITY VEHICLES TO USE COMPRESSED NATURAL GAS (CNG)

IV. WHETHER OR NOT THE RESPONDENT CAN BE COMPELLED TO REQUIRE PUBLIC UTILITY VEHICLES TO USE COMPRESSED NATURAL
20
GAS THROUGH A WRIT OF MANDAMUS

Briefly put, the issues are two-fold. First, Do petitioners have legal personality to bring this petition before us? Second, Should mandamus issue
against respondents to compel PUVs to use CNG as alternative fuel?

21
According to petitioners, Section 16, Article II of the 1987 Constitution is the policy statement that bestows on the people the right to
22
breathe clean air in a healthy environment. This policy is enunciated in Oposa. The implementation of this policy is articulated in Rep. Act No.
8749. These, according to petitioners, are the bases for their standing to file the instant petition. They aver that when there is an omission by
the government to safeguard a right, in this case their right to clean air, then, the citizens can resort to and exhaust all remedies to challenge
23
this omission by the government. This, they say, is embodied in Section 4 of Rep. Act No. 8749.

Petitioners insist that since it is the LTFRB and the DOTC that are the government agencies clothed with power to regulate and control motor
vehicles, particularly PUVs, and with the same agencies' awareness and knowledge that the PUVs emit dangerous levels of air pollutants, then,
the responsibility to see that these are curbed falls under respondents' functions and a writ of mandamus should issue against them.

24
The Solicitor General, for his part, reiterates his position that the respondent government agencies, the DOTC and the LTFRB, are not in a
position to compel the PUVs to use CNG as alternative fuel. The Solicitor General explains that the function of the DOTC is limited to
implementing the emission standards set forth in Rep. Act No. 8749 and the said law only goes as far as setting the maximum limit for the
emission of vehicles, but it does not recognize CNG as alternative engine fuel. The Solicitor General avers that the petition should be addressed
to Congress for it to come up with a policy that would compel the use of CNG as alternative fuel.

Patently, this Court is being asked to resolve issues that are not only procedural. Petitioners challenge this Court to decide if what petitioners
propose could be done through a less circuitous, speedy and unchartered course in an issue that Chief Justice Hilario G. Davide, Jr. in his
24
ponencia in the Oposa case, describes as "inter-generational responsibility" and "inter-generational justice."

Now, as to petitioners' standing. There is no dispute that petitioners have standing to bring their case before this Court. Even respondents do
not question their standing. This petition focuses on one fundamental legal right of petitioners, their right to clean air. Moreover, as held
previously, a party's standing before this Court is a procedural technicality which may, in the exercise of the Court's discretion, be set aside in
view of the importance of the issue raised. We brush aside this issue of technicality under the principle of the transcendental importance to
the public, especially so if these cases demand that they be settled promptly.

Undeniably, the right to clean air not only is an issue of paramount importance to petitioners for it concerns the air they breathe, but it is also
impressed with public interest. The consequences of the counter-productive and retrogressive effects of a neglected environment due to
emissions of motor vehicles immeasurably affect the well-being of petitioners. On these considerations, the legal standing of the petitioners
deserves recognition.

Our next concern is whether the writ of mandamus is the proper remedy, and if the writ could issue against respondents.

Under Section 3, Rule 65 of the Rules of Court, mandamus lies under any of the following cases: (1) against any tribunal which unlawfully
neglects the performance of an act which the law specifically enjoins as a duty; (2) in case any corporation, board or person unlawfully neglects
the performance of an act which the law enjoins as a duty resulting from an office, trust, or station; and (3) in case any tribunal, corporation,
board or person unlawfully excludes another from the use and enjoyment of a right or office to which such other is legally entitled; and there
is no other plain, speedy, and adequate remedy in the ordinary course of law.

25
In University of San Agustin, Inc. v. Court of Appeals, we said,

It is settled that mandamus is employed to compel the performance, when refused, of a ministerial duty, this being its
main objective. It does not lie to require anyone to fulfill contractual obligations or to compel a course of conduct, nor to
control or review the exercise of discretion. On the part of the petitioner, it is essential to the issuance of a writ of
mandamus that he should have a clear legal right to the thing demanded and it must be the imperative duty of the
respondent to perform the act required. It never issues in doubtful cases. While it may not be necessary that the duty be
absolutely expressed, it must however, be clear. The writ will not issue to compel an official to do anything which is not his
duty to do or which is his duty not to do, or give to the applicant anything to which he is not entitled by law. The writ
neither confers powers nor imposes duties. It is simply a command to exercise a power already possessed and to perform a
duty already imposed. (Emphasis supplied.)

In this petition the legal right which is sought to be recognized and enforced hinges on a constitutional and a statutory policy already
articulated in operational terms, e.g. in Rep. Act No. 8749, the Philippine Clean Air Act of 1999. Paragraph (a), Section 21 of the Act specifically
provides that when PUVs are concerned, the responsibility of implementing the policy falls on respondent DOTC. It provides as follows:

SEC 21. Pollution from Motor Vehicles. - a) The DOTC shall implement the emission standards for motor vehicles set pursuant to and
as provided in this Act. To further improve the emission standards, the Department [DENR] shall review, revise and publish the
standards every two (2) years, or as the need arises. It shall consider the maximum limits for all major pollutants to ensure
substantial improvement in air quality for the health, safety and welfare of the general public.

Paragraph (b) states:

b) The Department [DENR] in collaboration with the DOTC, DTI and LGUs, shall develop an action plan for the control and
management of air pollution from motor vehicles consistent with the Integrated Air Quality Framework . . . . (Emphasis supplied.)

There is no dispute that under the Clean Air Act it is the DENR that is tasked to set the emission standards for fuel use and the task of
developing an action plan. As far as motor vehicles are concerned, it devolves upon the DOTC and the line agency whose mandate is to
oversee that motor vehicles prepare an action plan and implement the emission standards for motor vehicles, namely the LTFRB.

26
In Oposa we said, the right to a balanced and healthful ecology carries with it the correlative duty to refrain from impairing the environment.
We also said, it is clearly the duty of the responsible government agencies to advance the said right.

25
Petitioners invoke the provisions of the Constitution and the Clean Air Act in their prayer for issuance of a writ of mandamus commanding the
respondents to require PUVs to use CNG as an alternative fuel. Although both are general mandates that do not specifically enjoin the use of
any kind of fuel, particularly the use of CNG, there is an executive order implementing a program on the use of CNG by public vehicles.
Executive Order No. 290, entitled Implementing the Natural Gas Vehicle Program for Public Transport (NGVPPT), took effect on February 24,
2004. The program recognized, among others, natural gas as a clean burning alternative fuel for vehicle which has the potential to produce
substantially lower pollutants; and the Malampaya Gas-to-Power Project as representing the beginning of the natural gas industry of the
Philippines. Paragraph 1.2, Section 1 of E.O. No. 290 cites as one of its objectives, the use of CNG as a clean alternative fuel for transport.
Furthermore, one of the components of the program is the development of CNG refueling stations and all related facilities in strategic
locations in the country to serve the needs of CNG-powered PUVs. Section 3 of E.O. No. 290, consistent with E.O. No. 66, series of 2002,
designated the DOE as the lead agency (a) in developing the natural gas industry of the country with the DENR, through the EMB and (b) in
formulating emission standards for CNG. Most significantly, par. 4.5, Section 4 tasks the DOTC, working with the DOE, to develop an
implementation plan for "a gradual shift to CNG fuel utilization in PUVs and promote NGVs [natural gas vehicles] in Metro Manila and Luzon
through the issuance of directives/orders providing preferential franchises in present day major routes and exclusive franchises to NGVs in
newly opened routes" A thorough reading of the executive order assures us that implementation for a cleaner environment is being
addressed. To a certain extent, the instant petition had been mooted by the issuance of E.O. No. 290.

Regrettably, however, the plain, speedy and adequate remedy herein sought by petitioners, i.e., a writ of mandamus commanding the
respondents to require PUVs to use CNG, is unavailing. Mandamus is available only to compel the doing of an act specifically enjoined by law
as a duty. Here, there is no law that mandates the respondents LTFRB and the DOTC to order owners of motor vehicles to use CNG. At most
the LTFRB has been tasked by E.O. No. 290 in par. 4.5 (ii), Section 4 "to grant preferential and exclusive Certificates of Public Convenience (CPC)
or franchises to operators of NGVs based on the results of the DOTC surveys."

Further, mandamus will not generally lie from one branch of government to a coordinate branch, for the obvious reason that neither is inferior
27
to the other. The need for future changes in both legislation and its implementation cannot be preempted by orders from this Court,
especially when what is prayed for is procedurally infirm. Besides, comity with and courtesy to a coequal branch dictate that we give sufficient
time and leeway for the coequal branches to address by themselves the environmental problems raised in this petition.

In the same manner that we have associated the fundamental right to a balanced and healthful ecology with the twin concepts of "inter-
28
generational responsibility" and "inter-generational justice" in Oposa, where we upheld the right of future Filipinos to prevent the
destruction of the rainforests, so do we recognize, in this petition, the right of petitioners and the future generation to clean air. In Oposa we
said that if the right to a balanced and healthful ecology is now explicitly found in the Constitution even if the right is "assumed to exist from
the inception of humankind, it is because of the well-founded fear of its framers [of the Constitution] that unless the rights to a balanced and
healthful ecology and to health are mandated as state policies by the Constitution itself, thereby highlighting their continuing importance and
imposing upon the state a solemn obligation to preserve the first and protect and advance the second, the day would not be too far when all
29
else would be lost not only for the present generation, but also for those to come. . ."

It is the firm belief of this Court that in this case, it is timely to reaffirm the premium we have placed on the protection of the environment in
the landmark case of Oposa. Yet, as serious as the statistics are on air pollution, with the present fuels deemed toxic as they are to the
environment, as fatal as these pollutants are to the health of the citizens, and urgently requiring resort to drastic measures to reduce air
pollutants emitted by motor vehicles, we must admit in particular that petitioners are unable to pinpoint the law that imposes an indubitable
legal duty on respondents that will justify a grant of the writ of mandamus compelling the use of CNG for public utility vehicles. It appears to us
that more properly, the legislature should provide first the specific statutory remedy to the complex environmental problems bared by herein
petitioners before any judicial recourse by mandamus is taken.

WHEREFORE, the petition for the issuance of a writ of mandamus is DISMISSED for lack of merit.

SO ORDERED.

26
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 168696 February 28, 2006

MA. LUTGARDA P. CALLEJA, JOAQUIN M. CALLEJA, JR., JADELSON PETER P. CALLEJA, MA. JESSICA T. FLORES, MERCIE C. TIPONES and
PERFECTO NIXON C. TABORA, Petitioners,
vs.
JOSE PIERRE A. PANDAY, AUGUSTO R. PANDAY and MA. THELNA P. MALLARI, Respondents.

AUSTRIA-MARTINEZ, J.:

1
This resolves the petition for review on certiorari assailing the Order of the Regional Trial Court of San Jose, Camarines Sur, Branch 58 (RTC-Br.
58) issued on July 13, 2005.

The antecedent facts are as follows.

On May 16, 2005, respondents filed a petition with the Regional Trial Court of San Jose, Camarines Sur for quo warranto with Damages and
Prayer for Mandatory and Prohibitory Injunction, Damages and Issuance of Temporary Restraining Order against herein petitioners.
Respondents alleged that from 1985 up to the filing of the petition with the trial court, they had been members of the board of directors and
officers of St. John Hospital, Incorporated, but sometime in May 2005, petitioners, who are also among the incorporators and stockholders of
said corporation, forcibly and with the aid of armed men usurped the powers which supposedly belonged to Respondents.

On May 24, 2005, RTC-Br. 58 issued an Order transferring the case to the Regional Trial Court in Naga City. According to RTC-Br. 58, since the
verified petition showed petitioners therein (herein respondents) to be residents of Naga City, then pursuant to Section 7, Rule 66 of the 1997
Rules of Civil Procedure, the action for quo warranto should be brought in the Regional Trial Court exercising jurisdiction over the territorial
area where the respondents or any of the respondents resides. However, the Executive Judge of RTC, Naga City refused to receive the case
folder of the subject case for quo warranto, stating that improper venue is not a ground for transferring a quo warranto case to another
administrative jurisdiction.

The RTC-Br. 58 then proceeded to issue and serve summons on herein petitioners (respondents below). Petitioner Tabora filed his Answer
dated June 8, 2005, raising therein the affirmative defenses of (1) improper venue, (2) lack of jurisdiction, and (3) wrong remedy of quo
warranto. Thereafter, the other petitioners also filed their Answer, also raising the same affirmative defenses. All the parties were then
required to submit their respective memoranda.

On July 13, 2005, RTC-Br. 58 issued the assailed Order, the pertinent portions of which read as follows:

It is undisputed that the plaintiffs cause of action involves controversies arising out of intra-corporate relations, between and among
stockholders, members or associates of the St. John Hospital Inc. which originally under PD 902-A approved on March 11, 1976 is within the
original and exclusive jurisdiction of the Securities and Exchange Commission to try and decide in addition to its regulatory and adjudicated
functions (Section 5, PD 902-A). Upon the advent of RA 8799 approved on July 19, 2000, otherwise known as the Securities and Regulation
Code, the Commissions jurisdiction over all cases enumerated in Section 5, Presidential Decree 902-A were transferred ["]to the Court of
general jurisdiction or the appropriate Regional Trial Court with a proviso that the "Supreme Court in the exercise of its authority may
designate the Regional Trial Court branches that shall exercise jurisdiction over these cases." Pursuant to this mandate of RA 8799, the
Supreme Court in the exercise of said mandated authority, promulgated on November 21, 2000, A.M. No. 00-11-03-SC which took effect 15
December 2000 designated certain branches of the Regional Trial Court to try and decide Securities and Exchange Commission Cases arising
within their respective territorial jurisdiction with respect to the National Capital Region and within the respective provinces in the First to
Twelve Judicial Region. Accordingly, in the Province of Camarines Sur, (Naga City) RTC Branch 23 presided by the Hon. Pablo M. Paqueo, Jr. was
designated as "special court" (Section 1, A.M. No. 00-11-03-SC).

Subsequently, on January 23, 2001, supplemental Administrative Circular No. 8-01 which took effect on March 1, 2001 was issued by the
Supreme Court which directed that "all SEC cases originally assigned or transmitted to the regular Regional Trial Court shall be transferred to
branches of the Regional Trial Court specially designated to hear such cases in accordance with A.M. No. 00-11-03-SC.

On March 13, 2001, A.M. No. 01-2-04 SC was promulgated and took effect on April 1, 2001.

From the foregoing discussion and historical background relative to the venue and jurisdiction to try and decide cases originally enumerated in
Section 5 of PD 902-A and later under Section 5.2 of RA 8799, it is evident that the clear intent of the circular is to bestow the juridiction "to try
and decide these cases to the "special courts" created under A.M. No. 00-11-03-SC. . . .

27
Under Section 8, of the Interim Rules, [a] Motion to Dismiss is among the prohibited pleadings. On the otherhand, the Supreme Court under
Administrative Order 8-01 has directed the transfer from the regular courts to the branches of the Regional Trial Courts specially designated to
try and decide intra-corporate dispute.

In the light of the above-noted observations and discussion, the Motion to Dismiss is DENIED pursuant to the Interim Rules of Procedure for
Intra-Corporate Controversies (A.M. No. 01-2-04-SC) which mandates that motion to dismiss is a prohibited pleading (Section 8) and in
consonance with Administrative Order 8-01 of the Supreme Court dated March 1, 2001, this case is hereby ordered remanded to the Regional
Trial Court Branch 23, Naga City which under A.M. No. 00-11-03-SC has been designated as special court to try and decide intra-corporate
controversies under R.A. 8799.

The scheduled hearing on the prayer for temporary restraining order and preliminary injunction set on July 18, 2005 is hereby cancelled.

For reasons of comity the issue of whether Quo Warranto is the proper remedy is better left to the court of competent jurisdiction to rule
upon.

2
SO ORDERED.

Petitioners no longer moved for reconsideration of the foregoing Order and, instead, immediately elevated the case to this Court via a petition
for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure.

The petition raises the following issues:

WHETHER A BRANCH OF THE REGIONAL TRIAL COURT WHICH HAS NO JURISDICTION TO TRY AND DECIDE A CASE HAS AUTHORITY TO
REMAND THE SAME TO ANOTHER CO-EQUAL COURT IN ORDER TO CURE THE DEFECTS ON VENUE AND JURISDICTION

II

WHETHER OR NOT ADMINISTRATIVE CIRCULAR NO. 8-01 DATED JANUARY 23, 2001 WHICH TOOK EFFECT ON MARCH 1, 2001 MAY BE
3
APPLIED IN THE PRESENT CASE WHICH WAS FILED ON MAY 16, 2005.

In their Comment, respondents argue that the present petition should be denied due course and dismissed on the grounds that (1) an appeal
under Rule 45 is inappropriate in this case because the Order dated July 13, 2005 is merely an interlocutory order and not a final order as
contemplated under Rule 45 of the 1997 Rules of Civil Procedure; (2) a petition for review on certiorari under Rule 45 is the wrong remedy
under A.M. No. 04-9-07-SC, which provides that "all decisions and final orders in cases falling under the Interim Rules of Corporate
Rehabilitation and the Interim Rules of Procedure Governing Intra-Corporate Controversies under Republic Act No. 8799 shall be appealable to
the Court of Appeals through a petition for review under Rule 43 of the Rules of Court;" and (3) the petition was intended merely to delay the
proceedings in the trial court because when the case was transferred to Branch 21 of the Regional Trial Court, said court granted petitioners
motion to hold the proceedings in view of the present petition pending before this Court.

Subsequently, petitioners also filed an Urgent Motion to Restore Status Quo Ante, alleging that on January 12, 2006, respondent Jose Pierre
Panday, with the aid of 14 armed men, assaulted the premises of St. John Hospital in Naga City, taking away the daily hospital collections
estimated at P400,000.00.

The Court notes that, indeed, petitioners chose the wrong remedy to assail the Order of July 13, 2005. It is hornbook principle that Rule 45 of
4
the 1997 Rules of Civil Procedure governs appeals from judgments or final orders. The Order dated July 13, 2005 is basically a denial of herein
petitioners prayer in their Answer for the dismissal of respondents case against them. As a consequence of the trial courts refusal to dismiss
the case, it then directed the transfer of the case to another branch of the Regional Trial Court that had been designated as a special court to
hear cases formerly cognizable by the SEC. Verily, the order was merely interlocutory as it does not dispose of the case completely, but leaves
something more to be done on its merits. Such being the case, the assailed Order cannot ordinarily be reviewed through a petition under Rule
5
45. As we held in Tolentino v. Natanauan, to wit:

In the case of Bangko Silangan Development Bank vs. Court of Appeals, the Court reiterated the well-settled rule that:

. . . an order denying a motion to dismiss is merely interlocutory and therefore not appealable, nor can it be the subject of a petition for review
on certiorari. Such order may only be reviewed in the ordinary course of law by an appeal from the judgment after trial. The ordinary
procedure to be followed in that event is to file an answer, go to trial, and if the decision is adverse, reiterate the issue on appeal from the final
6
judgment.

It appears, however, that the longer this case remains unresolved, the greater chance there is for more violence between the parties to erupt.
7
In Philippine Airlines v. Spouses Kurangking, the Court proceeded to give due course to a case despite the wrong remedy resorted to by the
petitioner therein, stating thus:
28
While a petition for review on certiorari under Rule 45 would ordinarily be inappropriate to assail an interlocutory order, in the interest,
however, of arresting the perpetuation of an apparent error committed below that could only serve to unnecessarily burden the parties, the
Court has resolved to ignore the technical flaw and, also, to treat the petition, there being no other plain, speedy and adequate remedy, as a
special civil action for certiorari. Not much, after all, can be gained if the Court were to refrain from now making a pronouncement on an issue
8
so basic as that submitted by the parties.

In this case, the basic issue of which court has jurisdiction over cases previously cognizable by the SEC under Section 5, Presidential Decree No.
902-A (P.D. No. 902-A), and the propensity of the parties to resort to violence behoove the Court to look beyond petitioners technical lapse of
filing a petition for review on certiorari instead of filing a petition for certiorari under Rule 65 with the proper court. Thus, the Court shall
proceed to resolve the case on its merits.

It should be noted that allegations in a complaint for quo warranto that certain persons usurped the offices, powers and functions of duly
9
elected members of the board, trustees and/or officers make out a case for an intra-corporate controversy. Prior to the enactment of R.A. No.
10
8799, the Court, adopting Justice Jose Y. Ferias view, declared in Unilongo v. Court of Appeals that Section 1, Rule 66 of the 1997 Rules of
Civil Procedure is "limited to actions of quo warranto against persons who usurp a public office, position or franchise; public officers who
forfeit their office; and associations which act as corporations without being legally incorporated," while "[a]ctions of quo warranto against
corporations, or against persons who usurp an office in a corporation, fall under the jurisdiction of the Securities and Exchange Commission
11
and are governed by its rules. (P.D. No. 902-A as amended)."

However, R.A. No. 8799 was passed and Section 5.2 thereof provides as follows:

5.2. The Commissions jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is hereby transferred to the
Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, That the Supreme Court in the exercise of its authority may
designate the Regional Trial Court branches that shall exercise jurisdiction over these cases. xxx

Therefore, actions of quo warranto against persons who usurp an office in a corporation, which were formerly cognizable by the Securities and
Exchange Commission under PD 902-A, have been transferred to the courts of general jurisdiction. But, this does not change the fact that Rule
66 of the 1997 Rules of Civil Procedure does not apply to quo warranto cases against persons who usurp an office in a private corporation.
Presently, Section 1(a) of Rule 66 reads thus:

Section 1. Action by Government against individuals. An action for the usurpation of a public office, position or franchise may be commenced
by a verified petition brought in the name of the Republic of the Philippines against

(a) A person who usurps, intrudes into, or unlawfully holds or exercises a public office, position or franchise;

xxxx

12
As explained in the Unilongo case, Section 1(a) of Rule 66 of the present Rules no longer contains the phrase "or an office in a corporation
created by authority of law" which was found in the old Rules. Clearly, the present Rule 66 only applies to actions of quo warranto against
persons who usurp a public office, position or franchise; public officers who forfeit their office; and associations which act as corporations
without being legally incorporated despite the passage of R.A. No. 8799. It is, therefore, The Interim Rules of Procedure Governing Intra-
Corporate Controversies Under R.A. No. 8799 (hereinafter the Interim Rules) which applies to the petition for quo warranto filed by
respondents before the trial court since what is being questioned is the authority of herein petitioners to assume the office and act as the
board of directors and officers of St. John Hospital, Incorporated.

The Interim Rules provide thus:

Section 1. (a) Cases covered. These Rules shall govern the procedure to be observed in civil cases involving the following:

xxxx

(2) Controversies arising out of intra-corporate, partnership, or association relations, between and among stockholders, members,
or associates, and between, any or all of them and the corporation, partnership, or association of which they are stockholders,
members, or associates, respectively;

(3) Controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or
associations;

xxxx

SEC. 5. Venue. All actions covered by these Rules shall be commenced and tried in the Regional Trial Court which has jurisdiction
over the principal office of the corporation, partnership, or association concerned. xxx (Emphasis ours)

29
Pursuant to Section 5.2 of R.A. No. 8799, the Supreme Court promulgated A.M. No. 00-11-03-SC (effective December 15, 2000) designating
certain branches of the Regional Trial Courts to try and decide cases formerly cognizable by the Securities and Exchange Commission. For the
Fifth Judicial Region, this Court designated the following branches of the Regional Trial Court, to wit:

Camarines Sur (Naga City) Branch 23, Judge Pablo M. Paqueo, Jr.
Albay (Legaspi City) Branch 4, Judge Gregorio A. Consulta
Sorsogon (Sorsogon) Branch 52, Judge Honesto A. Villamor

Subsequently, the Court promulgated A.M. No. 03-03-03-SC, effective July 1, 2003, which provides that:

1. The Regional Courts previously designated as SEC Courts through the: (a) Resolutions of this Court dated 21 November 2000, 4
July 2001, 12 November 2002, and 9 July 2002, all issued in A.M. No. 00-11-03-SC, (b) Resolution dated 27 August 2001 in A.M. No.
01-5-298-RTC; and (c) Resolution dated 8 July 2002 in A.M. No. 01-12-656-RTC are hereby DESIGNATED and shall be CALLED as
Special Commercial Courts to try and decide cases involving violations of Intellectual Property Rights which fall within their
jurisdiction and those cases formerly cognizable by the Securities and Exchange Commission;

xxxx

4. The Special Commercial Courts shall have jurisdiction over cases arising within their respective territorial jurisdiction with
respect to the National Capital Judicial Region and within the respective provinces with respect to the First to Twelfth Judicial
Regions. Thus, cases shall be filed in the Office of the Clerk of Court in the official station of the designated Special Commercial
Court; (Emphasis ours)

The next question then is, which branch of the Regional Trial Court has jurisdiction over the present action for quo warrato? Section 5 of the
Interim Rules provides that the petition should be commenced and tried in the Regional Trial Court that has jurisdiction over the principal
office of the corporation. It is undisputed that the principal office of the corporation is situated at Goa, Camarines Sur. Thus, pursuant to A.M.
No. 00-11-03-SC and A.M. No. 03-03-03-SC, it is the Regional Trial Court designated as Special Commercial Courts in Camarines Sur which shall
have jurisdiction over the petition for quo warranto filed by herein Respondents.

Evidently, the RTC-Br. 58 in San Jose, Camarines Sur is bereft of jurisdiction over respondents petition for quo warranto. Based on the
allegations in the petition, the case was clearly one involving an intra-corporate dispute. The trial court should have been aware that under
R.A. No. 8799 and the aforementioned administrative issuances of this Court, RTC-Br. 58 was never designated as a Special Commercial Court;
hence, it was never vested with jurisdiction over cases previously cognizable by the SEC.

Such being the case, RTC-Br. 58 did not have the requisite authority or power to order the transfer of the case to another branch of the
Regional Trial Court. The only action that RTC-Br. 58 could take on the matter was to dismiss the petition for lack of jurisdiction. In HLC
13
Construction and Development Corp. v. Emily Homes Subdivision Homeowners Association, the Court held that the trial court, having no
jurisdiction over the subject matter of the complaint, should dismiss the same so the issues therein could be expeditiously heard and resolved
by the tribunal which was clothed with jurisdiction.

Note, further, that respondents petition for quo warranto was filed as late as 2005. A.M. No. 03-03-03-SC took effect as early as July 1, 2003
and it was clearly provided therein that such petitions shall be filed in the Office of the Clerk of Court in the official station of the designated
Special Commercial Court. Since the official station of the designated Special Commercial Court for Camarines Sur is the Regional Trial Court in
Naga City, respondents should have filed their petition with said court. A.M. No. 00-11-03-SC having been in effect for four years and A.M. No.
03-03-03-SC having been in effect for almost two years by the time respondents filed their petition, there is no cogent reason why respondents
were not aware of the appropriate court where their petition should be filed.

The ratiocination of RTC-Br.58 that Administrative Circular No. 08-2001 authorized said trial court to order the transfer of respondents
petition to the Regional Trial Court of Naga City is specious because as of the time of filing of the petition, A.M. No. 03-03-03-SC, which clearly
stated that cases formerly cognizable by the SEC should be filed with the Office of the Clerk of Court in the official station of the designated
Special Commercial Court, had been in effect for almost two years. Thus, the filing of the petition with the Regional Trial Court of San Jose,
Camarines Sur, which had no jurisdiction over those kinds of actions, was clearly erroneous.

WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED. The Order of the Regional Trial Court of San Jose, Camarines Sur dated July
13, 2005 is SET ASIDE for being NULL and VOID. The petition for quo warranto in Civil Case No. T-1007 (now re-docketed as SEC Case No. RTC
2005-0001), entitled "Jose Pierre A. Panday, et al. v. Sps. Joaquin M. Calleja, Jr., et al." is ordered DISMISSED.

SO ORDERED.

30
 Republic of the Philippines
SUPREME COURT

SECOND DIVISION

G.R. No. 153951. July 29, 2005

PHILIPPINE NATIONAL BANK, Petitioners,

vs.
SANAO MARKETING CORPORATION, SPOUSES AMADO A. SANAO and SOLEDAD F. SANAO and SPOUSES WILLIAM (Willy) F. SANAO and
HELEN SANAO and the COURT OF APPEALS, Respondents.

TINGA, J.:

1
Before the Court is a Petition for Review under Rule 45 of the Rules of Court, wherein petitioner Philippine National Bank (PNB) seeks the
2
review of the Decision rendered by the Court of Appeals Thirteenth Division in C.A. G.R. SP No. 63162. The assailed Decision nullified two
3
orders of the Regional Trial Court (RTC) of Pili, Camarines Sur, Branch 32, which respectively granted PNBs petition for issuance of a writ of
possession over seven (7) parcels of land and directed the execution pending appeal of such writ of possession.

The antecedents are as follows:

In July 1997, Sanao Marketing Corporation, the spouses Amado A. Sanao and Soledad F. Sanao and the spouses William (Willy) F. Sanao and
Helen Sanao (all respondents herein), as joint and solidary debtors, obtained a loan in the amount of One Hundred Fifty Million Pesos
(P150,000,000.00) from PNB secured by a real estate mortgage of several parcels of land situated in the municipalities of Pili, Tigaon and
4
Camaligan, all of Camarines Sur, and Naga City. The contract expressly provided that the mortgage shall be governed by the provisions of Act
5
No. 3135, as amended. The pertinent portions of said contract provide that:

....

F. FORECLOSURE, POWER OF ATTORNEY, RECEIVERSHIP

If at any time the Mortgagors fail or refuse to pay the obligation herein secured, or any of the amortization of such indebtedness when due, or
to comply with any of the conditions and stipulations herein agreed, or shall during the time this mortgage is in force, institute insolvency
proceedings or be involuntarily declared insolvent, or shall use the proceeds of this loan for purposes other than those specified herein, or if
the mortgage cannot be recorded in or the Mortgagors fail to register the same with the corresponding Registry of Deeds, then all the
obligations of the Mortgagors secured by this mortgage and all the amortization thereof shall immediately become due, payable and defaulted
and the Mortgagee may immediately foreclose this mortgage judicially in accordance with the Rules of Court, or extrajudicially in accordance
with Act No. 3135, as amended, and P.D. 385. For the purpose of extrajudicial foreclosure, the Mortgagors hereby appoint the Mortgagee their
Attorney-in-Fact to sell the properties mortgaged under Act No. 3135, as amended, to sign all documents and perform any act requisite and
necessary to accomplish said purpose and to appoint its substitute as Attorney-in-Fact with the same powers as above specified. In case of
judicial foreclosure, the Mortgagors hereby consent to the appointment of the Mortgagee or of any of its employees as receiver, without any
bond, to take charge of the mortgaged properties at once, and to hold possession of the same and the rents, benefits and profits derived from
6
the mortgaged properties before the sale, less costs and expenses of the receivership. . . .

For failure of respondents to fully pay the loan upon its maturity, PNB caused the extrajudicial foreclosure of the mortgage through a certain
Atty. Marvel C. Clavecilla (Atty. Clavecilla), a notary public for and in the City of Naga. The Notice of Extra-Judicial Foreclosure Sale announced
that the sale of 13 titles consisting of 14 parcels of land located in Camarines Sur and Naga City is scheduled on 22 March 1999 at nine oclock
in the morning or soon thereafter, at the entrance of the Municipal Court of Pili, Camarines Sur. This notice was published in the 7, 14 and 21
February 1999 issues of the Vox Bikol- a weekly tabloid published every Sunday and circulated in the Bicol region and continents with Bicol
7
communities.

8
Thereafter, Atty. Clavecilla executed a Provisional Certificate of Sale dated 26 April 1999 certifying that on the 22nd day of March 1999, at
exactly ten oclock in the morning, he sold at a public auction at the "lobby/main entrance of the Regional Trial Court, Hall of Justice, Naga
City" the mortgaged properties to PNB for Two Hundred Thirteen Million One Hundred Sixty-Two Thousand Seven Hundred Eighty- Seven and
9
Fifty Centavos (P213,162,787.50), which amount the latter considered as payment pro tanto of petitioners loan. This Provisional Certificate of
Sale was registered with the Registry of Deeds of Camarines Sur on 3 May 1999 and with the Registry of Deeds of Naga City on 16 June 1999
10
for the properties respectively covered by their registries.

11
On 26 April 2000, respondents Amado A. Sanao and Sanao Marketing Corporation filed a complaint with the RTC of Naga City, Branch 61,
against PNB, the Register of Deeds of the City of Naga and the Province of Camarines Sur, and Atty. Clavecilla, for the court to declare the
12
Provisional Certificate of Sale and the auction and foreclosure proceedings null and void.

31
On 11 August 2000, PNB filed with the RTC of Pili, Camarines Sur, Branch 32, a petition for the issuance of a writ of possession, docketed
therein as Spec. Proc. P-1182, over the properties located in Pili that are covered by Transfer Certificates of Title Nos. 21448, 24221, 14133,
13
15218, 15489, 13856, 15216.

To the petition, respondents Amado A. Sanao and Sanao Marketing Corporation interposed an answer in opposition, with special and
14
affirmative defenses.

15
PNB countered with its comments/reply to opposition.

16
On 24 November 2000, the RTC of Pili issued its first assailed order, granting the writ of possession prayed for by PNB.

Amado A. Sanao and Sanao Marketing Corporation filed a Motion for Reconsideration w/ Opposition to the Motion for Execution Pending
17 18 19
Appeal, which was denied per the second assailed order dated 24 January 2001 of the RTC of Pili.

20
Respondents then filed a Petition for certiorari and prohibition under Rule 65 of the Rules of Court before the Court of Appeals, imputing
grave abuse of discretion on the part of the RTC of Pili in the issuance of the two assailed orders. The Petition likewise prayed for the issuance
of a temporary restraining order which the Court of Appeals granted on 15 February 2001, enjoining the RTC of Pili and PNB from
implementing the challenged orders.

21
In their Memorandum, respondents pointed out that the PNB had allegedly failed to submit the application for extrajudicial foreclosure of
mortgage to the proper clerk of court after payment of the filing fee, in contravention of Supreme Court Administrative Order No. 3 and
Administrative Circular No. 3-98. In addition, respondents averred that the foreclosure sale was null and void as it was done at the lobby/main
22
entrance of the RTC Hall of Justice, Naga City and not at the entrance of the Municipal Trial Court of Pili, Camarines Sur as published.

PNB, on the other hand, posited that the invoked administrative order is not applicable as extrajudicial proceedings conducted by a notary
23
public, as in the case at bar, do not fall within the contemplation of the directive.

With regard to the variance of the venues of the auction sale as published in Vox Bikol and as recorded in the Provisional Certificate of Sale,
24 25
PNB asserted that there was no violation of Act No. 3135 or of the terms of the real estate mortgage contract, as the sale of the mortgaged
26
properties located in Camarines Sur were held in Naga City which is well within the territorial jurisdiction of said province.

27
The Court of Appeals ruled in favor of herein respondents. The Court of Appeals rendered a litany of lapses that the notary public committed
in the conduct of the foreclosure proceedings which in its estimation had effectively undermined the soundness of the foreclosure sale.
Accordingly, the Court of Appeals held that the Provisional Certificate of Sale, upon which the issuance of the writ of possession was based, is
fatally infirm, and that consequently, the writ of possession was not validly issued as the procedural requirements for its issuance were not
28
satisfied.

Thus, the Court of Appeals declared null and void the two assailed orders of the RTC of Pili for having been issued with grave abuse of
29
discretion amounting to lack or excess of jurisdiction.

Aggrieved by the Decision, PNB filed the instant petition, arguing in the main that in nullifying the orders of the RTC of Pili, the Court of Appeals
departed from the accepted and usual course of judicial proceedings as the issuance of writs of possession is purely ministerial on the part of
30
the trial court.

31
In their comment, respondents point out that the instant petition should not be given due course as it is not sufficient in form and substance.
Respondents proffered the following grounds, thus: (1) there was no special of attorney or Board Resolution or Secretarys Certificate attached
to the petition which could serve as basis for the petitioners signatory Domitila A. Amon to verify or attest to the truth of the allegations
contained therein, in violation of existing laws and jurisprudence on the matter; (2) petitioners failed to move for a reconsideration of the
assailed Decision of the Court of Appeals; (3) petitioners failed to disclose another similar case involving the same legal issues now pending in
the Twelfth Division of the Court of Appeals, docketed as C.A. G.R. CV No. 73718, which is an appeal from an original petition for issuance of
writ of possession filed by the same petitioner before the RTC of San Jose, Camarines Sur, Branch 58; (4) petitioner failed to furnish the Twelfth
Division of the Court of Appeals a copy of the petition in C.A. G.R. No. 73718 pending therein, in violation of Section 5, Rule 7 of the 1997 Rules
of Civil Procedure, which failure could lead to conflicting resolutions, between two divisions of the Court of Appeals and to the giving of
inadequate information to the Supreme Court; and (5) the petition was only accompanied by Annexes A, B, C, D and E, which annexes do not
32
satisfy the requirements laid down in Sections 4 and 5 of Rule 45 of the Rules of Court.

Respondents also reiterate that the PNB in the conduct of the extrajudicial foreclosure proceedings did not comply with Administrative Order
No. 3 and Administrative Circular No. 3-98, and that the notice of publication was not sufficient to justify the execution of the Provisional
33
Certificate of Sale.

34
Traversing the alleged procedural errors, PNB in its Reply raise the following arguments:

32
 35
First, Mrs. Domitila A. Amon had authority to sign and verify its petition under Board Resolution No. 15 dated 8 October 1997, in line with her
36
authority to prosecute and defend cases for and/or against the bank.

Second, there are exceptions to the general rule that a motion for reconsideration must first be filed before elevating a case to a higher court.
PNB insists that the Decision of the Court of Appeals is a patent nullity as it runs counter to the provisions of Act No. 3135 and existing
37
jurisprudence stating that Administrative Order No. 3 covers judicial foreclosures. As such, the filing of a motion for reconsideration prior to
elevating the case on certiorari may be dispensed with.

Lastly, the case which according to respondents is not mentioned in the certification of non-forum shopping was commenced by respondents
themselves, not PNB, and that the issues similar to those in the instant case have yet to be raised in respondents appeal to the Court of
38
Appeals. Moreover, the subject matter and the properties involved in the other case are altogether different.

There is merit in the petition.

A writ of possession is "a writ of execution employed to enforce a judgment to recover the possession of land. It commands the sheriff to enter
39
the land and give possession of it to the person entitled under the judgment."

40 41
A writ of possession may be issued under the following instances: (1)in land registration proceedings under Section 17 of Act 496; (2) in a
judicial foreclosure, provided the debtor is in possession of the mortgaged realty and no third person, not a party to the foreclosure suit, had
42
intervened; (3) in an extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No. 3135, as amended by Act No. 4118; and (4)
43
in execution sales (last paragraph of Section 33, Rule 39 of the Rules of Court).

The present case falls under the third instance. Under Section 7 of Act No. 3135, as amended by Act No. 4118, a writ of possession may be
issued either (1) within the one-year redemption period, upon the filing of a bond, or (2) after the lapse of the redemption period, without
44
need of a bond. Section 7 of Act No. 3135, as amended by Act No. 4118, provides:

SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place
where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount
equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made
without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in
form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in case of
property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real
property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each
case the clerk of court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen
of Act Numbered Four hundred and ninety-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed
to the sheriff of the province in which the property is situated, who shall execute said order immediately.

Under the above-quoted provision, the purchaser in a foreclosure sale may apply for a writ of possession during the redemption period by
filing an ex parte motion under oath for that purpose in the corresponding registration or cadastral proceeding in the case of property covered
by a Torrens title. Upon the filing of such motion and the approval of the corresponding bond, the law also in express terms directs the court
45
to issue the order for a writ of possession.

A writ of possession may also be issued after consolidation of ownership of the property in the name of the purchaser. It is settled that the
buyer in a foreclosure sale becomes the absolute owner of the property purchased if it is not redeemed during the period of one year after the
registration of sale. As such, he is entitled to the possession of the property and can demand it any time following the consolidation of
ownership in his name and the issuance of a new transfer certificate of title. In such a case, the bond required in Section 7 of Act No. 3135 is
no longer necessary. Possession of the land then becomes an absolute right of the purchaser as confirmed owner. Upon proper application
46
and proof of title, the issuance of the writ of possession becomes a ministerial duty of the court. It was held, thus:

As the purchaser of the properties in the extra-judicial foreclosure sale, the PNCB is entitled to a writ of possession therefore. The law on
extrajudicial foreclosure of mortgage provides that a purchaser in an extrajudicial foreclosure sale may take possession of the foreclosed
property even before the expiration of the redemption period, provided he furnishes the necessary bond. Possession of the property may be
obtained by filing an ex parte motion with the regional trial court of the province or place where the property is situated. Upon filing of the
motion and the required bond, it becomes a ministerial duty of the court to order the issuance of a writ of possession in favor of the
purchaser. After the expiration of the one-year period without redemption being effected by the property owner, the right of the purchaser to
the possession of the foreclosed property becomes absolute. The basis of this right to possession is the purchasers ownership of the property.
47
Mere filing of an ex parte motion for the issuance of the writ of possession would suffice, and no bond is required.

Any question regarding the regularity and validity of the sale, as well as the consequent cancellation of the writ, is to be determined in a
subsequent proceeding as outlined in Section 8 of Act No. 3135, as amended by Act No. 4118. Such question is not to be raised as a
48
justification for opposing the issuance of the writ of possession, since, under the Act, the proceeding is ex parte.

In case it is disputed that there was violation of the mortgage or that the procedural requirements for the foreclosure sale were not followed,
Section 8 of Act No. 3135, as amended by Act No. 4118, provides, to wit:
33
SECTION 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given
possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the
mortgage was not violated or the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of this
petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Number Four hundred and ninety-
six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who
obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four
hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the appeal.

The law is clear that the purchaser must first be placed in possession. If the trial court later finds merit in the petition to set aside the writ of
possession, it shall dispose the bond furnished by the purchaser in favor of the mortgagor. Thereafter, either party may appeal from the order
of the judge. The rationale for the mandate is to allow the purchaser to have possession of the foreclosed property without delay, such
49
possession being founded on his right of ownership.

It has been consistently held that the duty of the trial court to grant a writ of possession is ministerial. Such writ issues as a matter of course
upon the filing of the proper motion and the approval of the corresponding bond. The court neither exercises its official discretion nor
50
judgment. The judge issuing the order following these express provisions of law cannot be charged with having acted without jurisdiction or
51
with grave abuse of discretion. If only to stress the writs ministerial character, we have, in previous cases, disallowed injunction to prohibit
its issuance, just as we have held that the issuance of the same may not be stayed by a pending action for annulment of mortgage or the
52
foreclosure itself.

In the case at bar, PNB has sufficiently established its right to the writ of possession. It presented as documentary exhibits the contract of real
53 54
estate mortgage and the Provisional Certificate of Sale on the face of which appears proof of its registration with the Registry of Deeds in
Camarines Sur on 3 May 1999. There is also no dispute that the lands were not redeemed within one year from the registration of the
Provisional Certificate of Sale. It should follow, therefore, that PNB has acquired an absolute right, as purchaser, to the writ of possession. The
RTC of Pili had the ministerial duty to issue that writ, as it did actually, upon mere motion, conformably to Section 7 of Act No. 3135, as
55
amended.

However on certiorari, the Court of Appeals declared null and void the orders of the RTC of Pili granting the writ of possession and denying
respondents motion for reconsideration. The Court of Appeals exhaustively discussed the reasons for such a declaration, noting the
procedural errors of PNB in the conduct of the foreclosure proceedings which allegedly rendered the foreclosure sale and the Provisional
Certificate of Sale of doubtful validity.

56
The Court of Appeals relied on the case of Cometa v. Intermediate Appellate Court in holding that "for a writ of possession to be validly
issued . in an extrajudicial foreclosure proceeding, all the procedural requirements should be complied with. Any flaw afflicting its stages
57
could affect the validity of its issuance." The Court of Appeals reproached the RTC of Pili Sur for granting the writ despite the existence of
these alleged procedural lapses.

This was erroneous. The judge to whom an application for writ of possession is filed need not look into the validity of the mortgage or the
manner of its foreclosure. In the issuance of a writ of possession, no discretion is left to the trial court. Any question regarding the cancellation
of the writ or in respect of the validity and regularity of the public sale should be determined in a subsequent proceeding as outlined in Section
58
8 of Act No. 3135.

In fact, the question of the validity of the foreclosure proceedings can be threshed out in Civil Case No. RTC 2000-00074, pending before the
RTC of Naga City, Branch 61, which was filed by respondents before PNB had filed a petition for the issuance of a writ of possession. The Court
of Appeals should not have ruled on factual issues on which the RTC of Naga had yet to make any finding. Besides, a review of such factual
matters is not proper in a petition for certiorari.

Having noted the foregoing, the Court dispenses with the need to discuss the soundness of the foreclosure proceedings, the authenticity of the
Provisional Certificate of Sale, and the applicability of Supreme Court Administrative Order No. 3 and Administrative Circular No. 3-98. A review
of the foregoing matters properly lies within the jurisdiction of the RTC of Naga City, Branch 61.

It is worthy of note that the pendency of the case for annulment of the foreclosure proceedings is not a bar to the issuance of the writ of
59
possession. Pending such proceedings whose subject is the validity of the foreclosure proceedings, the purchaser in a foreclosure sale is
entitled to the possession of property. Until such time the foreclosure sale is annulled, the issuance of the writ of possession is ministerial on
60
the part of the RTC of Pili.

61
In addition, the Court of Appeals reliance on the case of Cometa is misplaced. The cited case involved the issuance of a writ of possession
following an execution sale. The declaration therein that the issuance of said writ is dependent on the valid execution of the procedural stages
preceding it does not contemplate writs of possession available in extrajudicial foreclosures of real estate mortgages under Section 7 of Act
No. 3135, as amended by Act No. 4118.

Considering that the RTC of Pili issued the writ of possession in compliance with the provisions of Act No. 3135, as amended, it cannot be
charged with having acted in excess of its jurisdiction or with grave abuse of discretion. Absent grave abuse of discretion, respondents should
have filed an ordinary appeal instead of a petition for certiorari. The soundness of the order granting the writ of possession is a matter of

34
judgment with respect to which the remedy is ordinary appeal. An error of judgment committed by a court in the exercise of its legitimate
jurisdiction is not the same as "grave abuse of discretion." Errors of judgment are correctible by appeal, while those of jurisdiction are
62
reviewable by certiorari.

Palpably, the Court of Appeals exceeded its jurisdiction when it granted respondents petition for certiorari and set aside the orders dated 24
November 2000 and 24 January 2001 of the RTC of Pili in Spec. Proc No. P-1182, and also when it made a determination as to the validity of
the foreclosure proceedings in clear violation of Act No. 3135. The contention, therefore, that the Court should not entertain the instant
petition until a motion for reconsideration has been filed may not hold water where the proceeding in which the error occurred is a patent
63
nullity. Thus, we hold that a motion for reconsideration may be dispensed with in the instant case.

Anent the other procedural grounds for the denial of the instant petition, suffice it to say that PNBs rejoinder has sufficiently refuted
respondents assertions. We find and so hold that there was substantial compliance with the procedural requirements of the Court.

Although belatedly filed, the Resolution of the PNB Board amply demonstrates Mrs. Domitila A. Amons authority to sign and verify the instant
petition. PNB likewise was not obligated to disclose the alluded case pending before the Court of Appeals as it was not initiated by the bank
64
and, more importantly, the subject matter and the properties involved therein are altogether different. It is well to remember at this point
that rules of procedure are but mere tools designed to facilitate the attainment of justice. Their strict and rigid application which would result
65
in technicalities that tend to frustrate rather than promote substantial justice, must always be avoided. In proper cases, procedural rules may
66
be relaxed or suspended in the interest of substantial justice. And the power of the Court to except a particular case from its rules whenever
67
the purposes of justice require it cannot be questioned.

WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated 11 June 2002 in CA-G.R. S.P. No. 63162 is REVERSED
and SET ASIDE. The orders dated 24 November 2000 and 24 January 2001 of the Regional Trial Court of Pili, Camarines Sur, Branch 32 in Spec.
Pro. No. P-1182 directing the issuance of a writ of possession in favor of PNB are AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 141962 January 25, 2006

DANILO DUMO and SUPREMA DUMO, Petitioners,

vs.
ERLINDA ESPINAS, JHEAN PACIO, PHOL PACIO, MANNY JUBINAL, CARLITO CAMPOS, and SEVERA ESPINAS, Respondents.

AUSTRIA-MARTINEZ, J.:

1
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Decision of the Court of Appeals (CA) dated
October 14, 1999 in CA-G.R. SP No. 50239, which set aside the Decision of the Regional Trial Court (RTC) of Bauang, La Union, Branch 33, and
2
reinstated with modification the judgment of the Municipal Trial Court (MTC) of the same town and province; and its Resolution of February
18, 2000, denying petitioners motion for reconsideration.

The present case arose from a complaint for forcible entry with prayer for the issuance of a temporary restraining order and/or preliminary
injunction filed by spouses Danilo and Suprema Dumo (petitioners) against Erlinda Espinas, Jhean Pacio, Phol Pacio, Manny Jubinal, Carlito
Campos and Severa Espinas (respondents) with the MTC of Bauang, La Union. The case was docketed as Civil Case No. 881. In their complaint,
petitioners alleged:

2. That plaintiffs are the owners-possessors of a parcel of sandy land with all the improvements standing thereon, located in
Paringao, Bauang, La Union, with an area of 1, 514 square meters, covered by Tax Declaration No. 22839, a photocopy of the said tax
declaration is hereto attached as Annex "A";

3. That on November 17, 1995, defendant Severa J. Espinas filed a civil complaint before this same court, docketed as civil case no.
857, entitled "Quieting of Title and/or Ownership and Possession against spouses Sandy and Presnida Saldana, subject matter of the
case being the same real property mentioned in paragraph 2 above, for which plaintiffs seeks (sic) that the Honorable Court takes
judicial notice of the same;
35
 4. That although a decision has been rendered against the defendants in civil case no. 857, the same was not enforced as per
Sheriffs return dated November 4, 1996, attached to the records of civil case no. 857;

5. That on October 30, 1996, at about 1:45 P.M., all defendants acting for the interest of Severa Espinas, apparently disgruntled with
the refusal of the sheriff to put them in possession over the questioned real property, and in open defiance with the official action
taken by the sheriff, took it upon themselves, employing force, intimidation, and threat, to enter the said question (sic) real property,
and despite protestations made by plaintiffs, who were there then present and visibly outnumbered by defendants and their agents
who were armed with sticks, bolos, hammers, and other deadly weapons, successfully drove out plaintiffs, and took over the
premises; that arrogantly, the defendants were boasting aloud that they were under instructions by the "judge" to do just that to
forcibly enter and take over the premises; that defendants while inside the premises, demolished and totally tore down all the
improvements standing thereon, consisting of, but not limited to shed structures intended for rent to the public;

6. That defendants are still in the premises to date, and have even started putting and continuously putting up structures thereon;

7. That the plaintiff being the rightful owner of the disputed property and not being a party in civil case no. 857, can never be bound
by the proceedings thereon; that the acts of defendants in forcibly entering the property of plaintiff, and taking over the same
without no lawful basis is patently a violation of her proprietary rights, the commission and the continuance of the unlawful acts
3
aforementioned of defendants verily works injustice to plaintiffs;

Petitioners prayed for the payment of actual damages in the amount of P75,000.00, lost earnings of P5,000.00 per day, moral damages of
4
P100,000.00 and attorneys fees in the amount of P50,000.00.

On November 12, 1996, the MTC issued a temporary restraining order directing the defendants to cease and desist from destroying or
5
demolishing the improvements found on the subject land and from putting up structures thereon. In its Order of January 15, 1997, the MTC
6
issued a writ of preliminary injunction.

In their Answer, respondents contended as part of their Special and Affirmative Defenses:

1. That Sps. Marcelino and Severa Espinas purchased the questioned parcel of land from Carlos Calica in 1943;

2. That said parcel of land has been declared for taxation purposes under their name and the real estate taxes have [been] religiously
paid;

3. That said parcel of land has been surveyed, which Plan Psu-202273 is duly approved by the Director of Land, with an area of 1,065
sq. m. more or less;

4. That to remove and clear all doubts and cloud over the ownership of said parcel of land, Civil Case No. 857 was filed and after
hearing, decision was rendered declaring herein defendants the lawful owners of said parcel of land;

5. That under and by virtue of said Decision, defendants entered, occupied and possessed said land, and in the exercise of their right
of ownership, cleaned the same of illegally constructed structures which were done without the knowledge and consent of herein
7
defendants;

After trial, the MTC rendered judgment holding that petitioners were able to prove their right of possession over the subject property. The
dispositive portion of the MTC Decision reads as follows:

WHEREFORE, in view of the foregoing considerations, judgment is rendered in favor of the plaintiffs spouses Danilo and Suprema Dumo and
against all the defendants and therefore, the Court declares the plaintiffs the priority of possession or physical possession de-facto of the land
subject matter of the suit. The preliminary mandatory injunction heretofore issued by this Court is hereby made permanent and if the
defendants and their agents or any person acting in their behalf are still in the premises are ordered to vacate said property. The defendants
are likewise ordered to pay jointly and severally the plaintiffs the amount of P30,000.00 as actual damages plus P500.00 a day as lost earning
of the premises from October 30, 1996 up to the time defendants vacate the premises; P30,000.00 as moral damages; P10,000.00 as
exemplary damages; and P30,000.00 as attorneys fee and to pay double cost.

8
SO ORDERED.

36
 9
Aggrieved by the decision of the MTC, respondents appealed the case to the RTC of Bauang, La Union. It was docketed as Civil Case No. 1099-
BG.

In a letter filed with this Court dated July 24, 1998, RTC Judge Rose Mary R. Molina-Alim who handles Civil Case No. 1099-BG, requested that
she be allowed to inhibit herself from further sitting in said case on the ground that the petitioners have filed an administrative complaint
against her for partiality, and by reason of such complaint she honestly feels that she can no longer continue deciding Civil Case No. 1099-BG
10
without bias and unnecessary pressure. However, in this Courts Resolution of September 15, 1998, Judge Molina-Alims request was denied
on the ground that the mere filing of an administrative complaint does not preclude a judge from deciding a case submitted to him/her for
11
resolution. Hence, Judge Molina-Alim proceeded in deciding the case.

In its Decision dated December 18, 1998, the RTC reversed and set aside the Decision of the MTC and dismissed the case filed by the
12
petitioners. The RTC ruled:

Prescinding from the above factual antecedents, as between defendant Severa Espinas who acquired the property on October 18, 1943
through purchase (Exhibit "1") and plaintiffs who allegedly possessed it on May 23, 1987 by virtue of the deed of partition with absolute sale
(Exhibit "A"), the former had a possession antedating that of the latter. Even if the possession of plaintiffs predecessors-in-interest, Sps. Pedro
and Bernardo Trinidad since 1951, were to be considered, still, defendant Severa Espinas enjoys the priority of possession long before the filing
of the instant case on October 30, 1996. Under these circumstances, priority in time should be the pivotal cog in resolving the issue of
possession.

What is more, defendant Severa Espinas was never divested of her possession except in 1987 when the plaintiffs put up the retaining seawall
on the western portion and cyclone wire on the southern portion of the property without her (Severa) consent. Despite the latters
protestations, plaintiffs continued to introduce these improvements and challenged her to file a suit in Court. (Minutes of the ocular
inspection, April 23, 1997). And lately, in Civil Case No. 857 (Exhibit "3"), when defendants Saldy and Fresnida Saldaa tried to encroach on the
property claiming ownership thereof. What is more, the possession of defendant Severa Espinas since 1943 was bolstered by the decision
rendered in the land registration case (Exhibit "U"), as well as in the civil case (Exhibit "E"), wherein she was declared the owner of the
property in question.

Hence, the MTC erred in finding plaintiffs to have priority of possession. On the contrary, defendants (sic) evidence is very clear that defendant
Severa Espinas and her husband had been in actual, open, continuous, adverse in the concept of owner, possession of the land since 1943. In
addition, the evidence of possession presented in the land registration and quieting of title cases (Exhibits "U" and "E") surely dispels any iota
of doubt that may exist in regard to the possession of defendant Severa Espinas over the subject property.

As regards the issue on the award of damages:

The rule is settled that in forcible entry or unlawful detainer cases, the only damage that can be recovered is the fair rental value or the
reasonable compensation for the use and occupation of the leased property. The reason for this is that in such cases, the only issue raised in
ejectment cases is that of rightful possession; hence, the damages which could be recovered are those which the plaintiff could have sustained
as a mere possessor, or those caused by the loss of the use and occupation of the property, and not the damages which he may have suffered
but which have no direct relation to his loss of material possession (Araos vs. Court of Appeals, 232 SCRA 770).

Then too, under Section 17 of Rule 70 of the 1997 Rules of Civil Procedure, in forcible entry and unlawful detainer, the monetary award is
limited to the sum justly due as arrears of rent or as reasonable compensation for the use and occupation of the premises, attorneys fees
and costs. In this case, the MTC erred in awarding P30,000.00 as actual damages plus P500.00 a day as loss earnings, P30,000.00 as moral
damages, P10,000.00 as exemplary damages. These damages are not the reasonable compensation for the use and occupation of the
property. Rather, these are damages which may have been suffered by plaintiffs which have no direct relation to the use of material
possession, hence, should not have been awarded (Araos vs. C.A., supra).

Besides, the award of P30,000.00 as actual damages plus P500.00 a day as loss earnings has no factual and legal basis, hence, should have
been disallowed.

True, the aforecited rule now allows attorneys fees to be awarded, but the grant of the same must be in accordance with Article 2208 of the
Civil Code, thus:

Article 2208. In the absence of stipulation, attorneys fees cannot be recovered except

1) In any other cases (sic) where the court deems it just and equitable

In all cases must be reasonable.

37
The award of attorneys fees by the MTC lacks basis. The body of the appealed decision indeed does not show justification for the award.
Hence, there is no basis for such award, which, consequently, should have been removed. The power of the Court to award attorneys fees
under the above cited article, demands factual, legal and equitable justification. Its basis cannot be left to speculation and gesture (Morales vs.
13
C.A. G.R. No. 117228, June 19, 1997).

Petitioners then filed a petition for review with the CA. On October 14, 1999, the CA promulgated the presently assailed Decision setting aside
the judgment of the RTC and reinstating with modification the decision of the MTC, by deleting the awards for actual, moral and exemplary
14
damages. The CA held that the MTC correctly found that the petitioners were in possession of the subject land prior to the time when
respondents allegedly forcibly entered the property; that it is error for the RTC to reach all the way back to 1943 to determine priority in
possession considering that "prior possession" means possession immediately prior to the act of disturbance; that Civil Case No. 857, which
was an action to quiet title filed by respondent Severa Espinas against spouses Sandy and Presnida Saldana, is not binding on petitioners; and,
that the alleged difference in the identities of the lands of petitioners and respondents was not raised as a defense in the Answer of
respondents. As regards the award of damages, the CA agreed with the ruling of the RTC that in forcible entry and unlawful detainer cases, the
only damage that can be recovered is the fair rental value or the reasonable compensation for the use and occupation of the property
concerned; nonetheless, it sustained the award of attorneys fees by the MTC.

15
Petitioners filed a Motion for Partial Reconsideration but the same was denied by the CA in its Resolution dated February 18, 2000.

Hence, the present petition with the following assignment of errors:

1. THAT THE COURT OF APPEALS, UNDER THE INSTANT DECISION AND RESOLUTION, ANNEXES A AND B HEREOF, COMMITTED A
REVERSIBLE ERROR IN NOT DECLARING THE DECISION OF RTC JUDGE ROSE MARY MOLINA ALIM AS NULL AND VOID FOR BEING
VIOLATIVE OF PETITIONERS CONSTITUTIONAL RIGHT TO DUE PROCESS IN VIEW OF HER ADMITTED BIAS IN DECIDING THE CASE.

2. MOREOVER, THE COURT OF APPEALS, UNDER THE SAID DECISION AND RESOLUTION, ANNEXES A AND B HEREOF, COMMITTED A
REVERSIBLE ERROR IN DELETING THE AWARDS OF ACTUAL, MORAL AND EXEMPLARY DAMAGES MADE BY THE MUNICIPAL TRIAL
COURT, CONSIDERING THAT THE SAID AWARDS ARE ALREADY RES JUDICATA BECAUSE:

(a) THAT, AS AFORESAID, THE DECISION OF JUDGE ALIM WHICH INCLUDED THE DELETION OF THE SAID DAMAGES IS NULL
AND VOID, AND DID NOT AFFECT THE MTC DECISION, AND,

(b) THAT, IN ANY EVENT, THE HEREIN RESPONDENTS DID NOT QUESTION THE AMOUNTS OF SAID AWARD IN THEIR APPEAL
FROM THE DECISION OF THE MUNICIPAL TRIAL COURT TO THE REGIONAL TRIAL COURT THEREBY RENDERING SAID
16
AWARDS, FINAL AND RES JUDICATA.

In their first assignment of error, petitioners contend that the Decision rendered by the RTC dated December 18, 1998 is null and void because
it violates petitioners constitutional right to due process considering that Judge Rose Mary R. Molina-Alim who sat during the trial and penned
the questioned RTC decision had previously admitted her bias against petitioners.

We do not agree.

17
In Gochan vs. Gochan, we have sufficiently discussed the matter of a judges inhibition from hearing a case vis--vis the right of a party to due
process, to wit:

A critical component of due process is a hearing before a tribunal that is impartial and disinterested. Every litigant is indeed entitled to nothing
less than "the cold neutrality of an impartial judge." All the other elements of due process, like notice and hearing, would be meaningless if the
ultimate decision were to come from a biased judge. Section 1 of Rule 137 of the Rules of Court provides:

SECTION 1. Disqualification of judges. - No judge or judicial officer shall sit in any case in which he, or his wife or child, is pecuniarily interested
as heir, legatee, creditor or otherwise, or in which he is related to either party within the sixth degree of consanguinity or affinity, or to counsel
within the fourth degree, computed according to the rules of the civil law, or in which he has been executor, administrator, guardian, trustee
or counsel, or in which he has presided in any inferior court when his ruling or decision is the subject of review, without the written consent of
all parties in interest, signed by them and entered upon the record.

A judge may, in the exercise of his sound discretion, disqualify himself from sitting in a case, for just or valid reasons other than those
mentioned above.

The Rules contemplate two kinds of inhibition: compulsory and voluntary. The instances mentioned in the first paragraph of the cited Rule
conclusively presume that judges cannot actively and impartially sit in a case. The second paragraph, which embodies voluntary inhibition,
leaves to the discretion of the judges concerned whether to sit in a case for other just and valid reasons, with only their conscience as guide.

38
To be sure, judges may not be legally prohibited from sitting in a litigation. But when circumstances reasonably arouse suspicions, and out of
such suspicions a suggestion is made of record that they might be induced to act with prejudice for or against a litigant, they should conduct a
careful self-examination. Under the second paragraph of the cited Section of the Rules of Court, parties have the right to seek the inhibition or
the disqualification of judges who do not appear to be wholly free, disinterested, impartial or independent in handling a case. Whether judges
should inhibit themselves therefrom rests on their own "sound discretion." That discretion is a matter of conscience and is addressed primarily
to their sense of fairness and justice.

However, judges are exhorted to exercise their discretion in a way that the peoples faith in the courts of justice would not be impaired. A
salutary norm for them to observe is to reflect on the possibility that the losing parties might nurture at the back of their minds the thought
that the former have unmeritoriously tilted the scales of justice against them. Of course, the judges right must be weighed against their
duty to decide cases without fear of repression.

Verily, the second paragraph of Section 1 of Rule 137 does not give judges the unfettered discretion to decide whether to desist from
hearing a case. The inhibition must be for just and valid causes. The mere imputation of bias or partiality is not enough ground for them to
inhibit, especially when the charge is without basis. This Court has to be shown acts or conduct clearly indicative of arbitrariness or
prejudice before it can brand them with the stigma of bias or partiality.

In a string of cases, the Supreme Court has said that bias and prejudice, to be considered valid reasons for the voluntary inhibition of judges,
must be proved with clear and convincing evidence. Bare allegations of their partiality will not suffice. It cannot be presumed, especially if
weighed against the sacred oaths of office of magistrates, requiring them to administer justice fairly and equitably -- both to the poor and the
rich, the weak and the strong, the lonely and the well-connected.

Equally important is the established doctrine that bias and prejudice must be shown to have resulted in an opinion on the merits on the
basis of an extrajudicial source, not on what the judge learned from participating in the case. As long as opinions formed in the course of
judicial proceedings are based on the evidence presented and the conduct observed by the magistrate, such opinion -- even if later found to be
erroneous -- will not prove personal bias or prejudice on the part of the judge. While palpable error may be inferred from the decision or the
order itself, extrinsic evidence is required to establish bias, bad faith, malice or corrupt purpose. At bottom, to disqualify a judge, the movant
18
must prove bias and prejudice by clear and convincing evidence. (Emphasis ours)

What makes the present case different from the usual cases passed upon by this Court is the fact that, as stated earlier, Judge Molina-Alim
herself manifested in her letter-request for inhibition that in view of the administrative case filed by herein petitioners charging her with
19
partiality, she honestly feels that she "can no longer continue deciding the appealed case free from bias and unnecessary pressure."
Petitioners contend that Judge Molina-Alims manifestation is an admission of bias. Hence, by reason of such admission, there is no longer any
need for them to prove the same. However, it must be emphasized that the Court denied Judge Molina-

Alims request for inhibition holding that the mere filing of an administrative complaint does not preclude a judge from deciding a case
20
submitted to him/her for resolution for there are judicial remedies available to the parties should there be an adverse decision. It is clear
from the Resolution that the Court was not persuaded by the reason put forth by Judge Molina-Alim in her request for inhibition. It should be
clearly understood from the above-cited Resolution that the Court found no sufficient basis to allow Judge Molina-Alim to inhibit herself from
hearing Civil Case No. 1099-BG. The Court ruled that the mere fact that an administrative case for alleged partiality was filed against her by
herein petitioners does not justify her recusal. Indeed, a careful reading of the letter-request of Judge Molina-Alim shows that her request for
inhibition stems solely from the fact that herein petitioners had filed an administrative case against her for partiality. There is no other
statement in said letter-request, categorical or implied, which would show that her purported bias resulted from any other source.
Notwithstanding Judge Molina-Alims statements in her request for inhibition, we find that petitioners allegations of bias and partiality remain
unsubstantiated. Indeed, bare allegations of partiality and prejudgment will not suffice in the absence of clear and convincing evidence to
overcome the presumption that the judge will undertake his noble role to dispense justice according to law and evidence and without fear or
21
favor. There should be adequate evidence to prove the allegations, and there must be showing that the judge had an interest, personal or
22
otherwise, in the prosecution of the case.

To reiterate, the mere filing of an administrative case against a judge is not a ground for disqualifying him from hearing the case, for if on every
occasion the party apparently aggrieved would be allowed to either stop the proceedings in order to await the final decision on the desired
disqualification, or demand the immediate inhibition of the judge on the basis alone of his being so charged, many cases would have to be kept
23
pending or perhaps there would not be enough judges to handle all the cases pending in all the courts. This Court has to be shown acts or
24
conduct of the judge clearly indicative of arbitrariness or prejudice before the latter can be branded the stigma of being biased or partial.
Moreover, while judges are given wide latitude of discretion in determining if it is indeed proper for them to hear or sit in a particular case, it
should be emphasized that this choice is not absolute and must be based on a just and valid cause and on a rational and logical assessment of
25
the circumstances prevailing in the case brought before him. The option given to a judge to choose whether or not to handle a particular
case should be counter-balanced by the judges sworn duty to administer justice without fear of repression.

In any case, petitioners contention that they have been deprived of due process is denied by the fact that they were able to appeal the
questioned RTC Decision to the CA via a petition for review and, subsequently, file a motion for reconsideration of the CA Decision. The
essence of due process is found in the reasonable opportunity to be heard and submit any evidence one may have in support of one's
26 27
defense. What the law proscribes is the lack of opportunity to be heard. As long as a party is given the opportunity to defend his interests in
28
due course, he would have no reason to complain, for it is this opportunity to be heard that makes up the essence of due process.

39
In their second assignment of error, petitioners point out that in their petition for review filed with the CA, they did not raise as an issue the
award of damages made by the MTC. Similarly, respondents did not specifically assign as error the award of damages by the MTC when they
appealed the case to the RTC; neither did they file an appeal with the CA questioning the award of damages by the MTC. On this basis,
petitioners conclude that the award for damages not having been appealed, the same had become final and executory. Hence, the RTC had no
authority to reverse the judgment of the MTC respecting the award of damages. In the same way, petitioners contend that the CA did not have
jurisdiction to rule on the matter of damages because this issue was not raised in the appeal filed before it.

We are not persuaded.

29
We have held that an appellate court is clothed with ample authority to review rulings even if they are not assigned as errors. This is
30
especially so if the court finds that their consideration is necessary in arriving at a just decision of the case before it. We have consistently
held that an unassigned error closely related to an error properly assigned, or upon which a determination of the question raised by the error
31
properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as an error. Petitioners
admit in the present petition that herein respondents, in their appeal with the RTC, raised the question of whether or not the prevailing party
may be awarded damages. Since this issue had been seasonably raised, it became open to further evaluation. It was only logical and natural for
the RTC to deal with the question of whether petitioners are indeed entitled to the damages awarded by the MTC.

Moreover, even if the issue on damages was not raised by herein respondents in their appeal with the RTC, it is not erroneous on the part of
the RTC to delete the award of damages in the MTC decision considering that the RTC judgment reversed the decision of the MTC. It would be
the height of inconsistency if the RTC sustained the award of damages in favor of herein petitioners when, in the same decision, it reversed the
MTC judgment and dismissed the complaint of petitioners.

Lastly, we agree with the CA and the RTC that there is no basis for the MTC to award actual, moral and exemplary damages in view of the
settled rule that in ejectment cases, the only damage that can be recovered is the fair rental value or the reasonable compensation for the use
32
and occupation of the property. Considering that the only issue raised in ejectment is that of rightful possession, damages which could be
recovered are those which the plaintiff could have sustained as a mere possessor, or those caused by the loss of the use and occupation of the
33
property, and not the damages which he may have suffered but which have no direct relation to his loss of material possession. Although the
MTCs order for the reimbursement to petitioners of their alleged lost earnings over the subject premises, which is a beach resort, could have
been considered as compensation for their loss of the use and occupation of the property while it was in the possession of the respondents,
records do not show any evidence to sustain the same. Thus, we find no error in the ruling of the RTC that the award for lost earnings has no
evidentiary or factual basis; and in the decision of the CA affirming the same.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals dated October 14, 1999 and
February 18, 2000, respectively, are AFFIRMED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. NO. 155179 August 24, 2007

VICTORINO QUINAGORAN, Petitioner,

vs.
COURT OF APPEALS and THE HEIRS OF JUAN DE LA CRUZ, Respondents.

AUSTRIA-MARTINEZ, J.:

1
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision of the Court Appeals (CA) in
2
CA-GR SP No. 60443 dated May 27, 2002 and its Resolution dated August 28, 2002, which denied petitioner's Motion for Reconsideration.

The factual antecedents.

The heirs of Juan dela Cruz, represented by Senen dela Cruz (respondents), filed on October 27, 1994 a Complaint for Recovery of Portion of
Registered Land with Compensation and Damages against Victorino Quinagoran (petitioner) before the Regional Trial Court (RTC) Branch XI of
3
Tuao, Cagayan, docketed as Civil Case No. 240-T. They alleged that they are the co-owners of a a parcel of land containing 13,100 sq m located
4
at Centro, Piat, Cagayan, which they inherited from the late Juan dela Cruz; that in the mid-70s, petitioner started occupying a house on the
north-west portion of the property, covering 400 sq m, by tolerance of respondents; that in 1993, they asked petitioner to remove the house
as they planned to construct a commercial building on the property; that petitioner refused, claiming ownership over the lot; and that they
5
suffered damages for their failure to use the same. Respondents prayed for the reconveyance and surrender of the disputed 400 sq m, more

40
or less, and to be paid the amount of P5,000.00 monthly until the property is vacated, attorney's fees in the amount of P20,000.00, costs of
6
suit and other reliefs and remedies just and equitable.

Petitioner filed a Motion to Dismiss claiming that the RTC has no jurisdiction over the case under Republic Act (R.A.) No. 7691, which expanded
the exclusive original jurisdiction of the Municipal Trial Court (MTC) to include all civil actions which involve title to, or possession of, real
property, or any interest therein which does not exceed P20,000.00. He argued that since the 346 sq m lot which he owns adjacent to the
contested property has an assessed value of P1,730.00, the assessed value of the lot under controversy would not be more than the said
7
amount.

The RTC denied petitioner's Motion to Dismiss in an Order dated November 11, 1999, thus:

The Court finds the said motion to be without merit. The present action on the basis of the allegation of the complaint partakes of the nature
of action publicciana (sic) and jurisdiction over said action lies with the Regional Trial Court, regardless of the value of the property. This is so
because in paragraph 8 of the complaint, it is alleged that the plaintiff demanded from the defendant the removal of the house occupied by
the defendant and the possession of which is "Only due to Tolerance (sic) of herein plaintiffs".

8
WHEREFORE, for lack of merit, the motion to dismiss is hereby denied.

9
Petitioner's Motion for Reconsideration was also denied by the RTC.

10
Petitioner then went to the CA on a Petition for Certiorari and Prohibition seeking the annulment of the Orders of the RTC.

11
On May 27, 2002, the CA rendered the herein assailed Decision dismissing petitioner's action and affirming in toto the RTC. Pertinent
portions of said Decision, read:

At the onset, we find that the complaint filed by the Heirs of Juan dela Cruz, represented by Senen dela Cruz adequately set forth the
jurisdictional requirements for a case to be cognizable by the Regional Trial Court. The Complaint is captioned "recovery of portion of
registered land" and it contains the following allegations:

7. That since plaintiffs and defendant were neighbors, the latter being the admitted owner of the adjoining lot, the former's
occupancy of said house by defendant was only due to the tolerance of herein plaintiffs;

8. That plaintiffs, in the latter period of 1993, then demanded the removal of the subject house for the purpose of constructing a
commercial building and which herein defendant refused and in fact now claims ownership of the portion in which said house
stands;

9. That repeated demands relative to the removal of the subject house were hence made but which landed on deaf ears;

10. That a survey of the property as owned by herein plaintiffs clearly establishes that the subject house is occupying Four Hundred
(400) square meters thereof at the north-west portion thereof, as per the approved survey plan in the records of the Bureau of
Lands.

xxxx

It is settled that when the complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as where it does not state how entry
was effected or how and when dispossession started, the remedy should either be an accion publiciana or an accion reinvindicatoria in the
proper regional trial court. In the latter instances, jurisdiction pertains to the Regional Trial Court.

As another legal recourse from a simple ejectment case governed by the Revised Rules of Summary Procedure, an accion publiciana is the
plenary action to recover the right of possession when dispossession has lasted more than one year or when dispossession was effected by
means other than those mentioned in Rule 70 of the Rules of Court. Where there is no allegation that there was denial of possession through
any of the methods stated in Section 1, Rule 70 of the Rules of Court, or where there is no lease contract between the parties, the proper
remedy is the plenary action of recovery of possession. Necessarily, the action falls within the jurisdiction of the Regional Trial Court. Thus, we
find that the private respondents [heirs of dela Cruz] availed of the proper remedy when they filed the action before the court a quo.

Undoubtedly, the respondent court therefore did not act with grave abuse of discretion amounting to or in excess of jurisdiction in denying
Quinagoran's Motion to Dismiss and the Motion for Reconsideration, thereof, because it has jurisdiction to hear and decide the instant case.

xxxx

It would not be amiss to point out that the nature of the action and jurisdiction of courts are determined by the allegations in the complaint.
As correctly held by the Regional Trial Court, "the present action on the basis of the allegation of the complaint partakes of the nature of

41
action publiciana and jurisdiction over said action lies with the Regional Trial Court regardless of the value of the property. Therefore, we
completely agree with the court a quo's conclusion that the complaint filed by the Heirs of Juan dela Cruz, represented by Senen dela Cruz, is
in the nature of an accion publiciana and hence it is the Regional Trial Court which has jurisdiction over the action, regardless of the assessed
12
value of the property subject of present controversy.

13
Petitioner's Motion for Reconsideration was denied on August 28, 2002 for lack of merit.

Petitioner now comes before this Court on a petition for review claiming that under R.A. No. 7691 the jurisdiction of the MTC, Metropolitan
Trial Court (MeTC), and Municipal Trial Court in Cities (MTCC) was expanded to include exclusive original jurisdiction over civil actions when
14
the assessed value of the property does not exceed P20,000.00 outside Metro Manila and P50,000.00 within Metro Manila. He likewise avers
15
that it is an indispensable requirement that the complaint should allege the assessed value of the property involved. In this case, the
complaint does not allege that the assessed value of the land in question is more than P20,000.00. There was also no tax declaration attached
to the complaint to show the assessed value of the property. Respondents therefore failed to allege that the RTC has jurisdiction over the
16
instant case. The tax declaration covering Lot No. 1807 owned by respondents and where the herein disputed property is purportedly part --
17
a copy of which petitioner submitted to the CA -- also shows that the value of the property is only P551.00. Petitioner then prays that the CA
Decision and Resolution be annulled and set aside and that the complaint of herein respondents before the trial court be dismissed for lack of
18
jurisdiction.

Respondents contend that: the petition is without factual and legal bases, and the contested decision of the CA is entirely in accordance with
19 20
law; nowhere in the body of their complaint before the RTC does it state that the assessed value of the property is below P20,000.00; the
contention of petitioner in his Motion to Dismiss before the RTC that the assessed value of the disputed lot is below P20,000.00 is based on
21
the assessed value of an adjacent property and no documentary proof was shown to support the said allegation; the tax declaration which
petitioner presented, together with his Supplemental Reply before the CA, and on the basis of which he claims that the disputed property's
assessed value is only P551.00, should also not be given credence as the said tax declaration reflects the amount of P56,100.00 for the entire
22
property.

The question posed in the present petition is not complicated, i.e., does the RTC have jurisdiction over all cases of recovery of possession
regardless of the value of the property involved?

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

23 24 25
Republic Act No. 7691 which amended Batas Pambansa Blg. 129 and which was already in effect when respondents filed their complaint
26
with the RTC on October 27, 1994, expressly provides:

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

xxxx

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

xxxx

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 (P20,000.00) or, in civil actions in Metro Manila,
where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages or 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.(Emphasis supplied)

The Court has also declared that all cases involving title to or possession of real property with an assessed value of less than P20,000.00 if
27
outside Metro Manila, falls under the original jurisdiction of the municipal trial court.

28
In Atuel v. Valdez the Court likewise expressly stated that:

42
Jurisdiction over an accion publiciana is vested in a court of general jurisdiction. Specifically, the regional trial court exercises exclusive original
jurisdiction "in all civil actions which involve x x x possession of real property." However, if the assessed value of the real property involved
does not exceed P50,000.00 in Metro Manila, and P20,000.00 outside of Metro Manila, the municipal trial court exercises jurisdiction over
29
actions to recover possession of real property.

That settled, the next point of contention is whether the complaint must allege the assessed value of the property involved. Petitioner
maintains that there should be such an allegation, while respondents claim the opposite.

In no uncertain terms, the Court has already held that a complaint must allege the assessed value of the real property subject of the complaint
30
or the interest thereon to determine which court has jurisdiction over the action. This is because the nature of the action and which court
has original and exclusive jurisdiction over the same is determined by the material allegations of the complaint, the type of relief prayed for by
the plaintiff and the law in effect when the action is filed, irrespective of whether the plaintiffs are entitled to some or all of the claims
31
asserted therein.

In this case, the complaint denominated as "Recovery of Portion of Registered Land with Compensation and Damages," reads:

1. That plaintiffs are the only direct and legitimate heirs of the late Juan dela Cruz, who died intestate on February 3, 1977, and are
all residents of Centro, Piat, Cagayan;

xxxx

4. That plaintiffs inherited from x x x Juan dela Cruz x x x a certain parcel of land x x x containing an area of 13,111 square meters.

5. That sometime in the mid-1960's, a house was erected on the north-west portion of the aforedescribed lot x x x.

xxxx

7. That since plaintiffs and defendant were neighbors, the latter being the admitted owner of the adjoining lot, the former's
occupancy of said house by defendant was only due to the tolerance of herein plaintiffs;

8. That plaintiffs, in the latter period of 1993, then demanded the removal of the subject house for the purpose of constructing a
commercial building and which herein defendant refused and in fact now claims ownership of the portion in which said house
stands;

9. That repeated demands relative to the removal of the subject house were hence made but which landed on deaf ears;

10. That a survey of the property as owned by herein plaintiffs clearly establishes that the subject house is occupying Four Hundred
(400) square meters thereof at the north-west portion thereof, as per the approved survey plan in the records of the Bureau of
32
Lands.

Nowhere in said complaint was the assessed value of the subject property ever mentioned. There is therefore no showing on the face of the
33
complaint that the RTC has exclusive jurisdiction over the action of the respondents. Indeed, absent any allegation in the complaint of the
assessed value of the property, it cannot be determined whether the RTC or the MTC has original and exclusive jurisdiction over the
34 35
petitioner's action. The courts cannot take judicial notice of the assessed or market value of the land. 1avvphi1

36
Jurisdiction of the court does not depend upon the answer of the defendant or even upon agreement, waiver or acquiescence of the parties.
Indeed, the jurisdiction of the court over the nature of the action and the subject matter thereof cannot be made to depend upon the
defenses set up in the court or upon a motion to dismiss for, otherwise, the question of jurisdiction would depend almost entirely on the
37
defendant.

Considering that the respondents failed to allege in their complaint the assessed value of the subject property, the RTC seriously erred in
38 39
denying the motion to dismiss. Consequently, all proceedings in the RTC are null and void, and the CA erred in affirming the RTC.

WHEREFORE, the petition is GRANTED. The Court of Appeals's Decision in CA-GR SP No. 60443 dated May 27, 2002 and its Resolution dated
August 28, 2002, are REVERSED and SET ASIDE. The Regional Trial Courts Orders dated November 11, 1999 and May 11, 2000, and all
proceedings therein are declared NULL and VOID. The complaint in Civil Case No. 240-T is dismissed without prejudice.

No costs.

SO ORDERED.

43
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 137013 May 6, 2005

RUBEN SANTOS, petitioner,

vs.
SPOUSES TONY AYON and MERCY AYON, respondents.

SANDOVAL-GUTIERREZ, J.:

1
For our resolution is the petition for review on certiorari assailing the Decision of the Court of Appeals dated October 5, 1998 in CA-G.R. SP
2
No. 4735 and its Resolution dated December 11, 1998 denying the motion for reconsideration.

The petition alleges that on November 6, 1996, Ruben Santos, petitioner, filed with the Municipal Trial Court in Cities (MTCC), Branch 2, Davao
City a complaint for illegal detainer against spouses Tony and Mercy Ayon, respondents, docketed as Civil Case No. 3506-B-96.

In his complaint, petitioner averred that he is the registered owner of three lots situated at Lanzona Subdivision, Matina, Davao City, covered
by Transfer Certificates of Title (TCT) Nos. 108174, 108175, and 108176. Respondent spouses are the registered owners of an adjacent parcel
of land covered by TCT No. T-247792. The previous occupant of this property built a building which straddled both the lots of the herein
parties. Respondents have been using the building as a warehouse.

Petitioner further alleged in his complaint that in 1985, when he bought the three lots, he informed respondents that the building occupies a
portion of his land. However, he allowed them to continue using the building. But in 1996, he needed the entire portion of his lot, hence, he
demanded that respondents demolish and remove the part of the building encroaching his property and turn over to him their possession. But
they refused. Instead, they continued occupying the contested portion and even made improvements on the building. The dispute was then
referred to the barangay lupon, but the parties failed to reach an amicable settlement. Accordingly, on March 27, 1996, a certification to file
action was issued.

In their answer, respondents sought a dismissal of this case on the ground that the court has no jurisdiction over it since there is no lessor-
lessee relationship between the parties. Respondents denied they were occupying petitioner's property by mere tolerance, claiming they own
the contested portion and have been occupying the same long before petitioner acquired his lots in 1985.

On July 31, 1997, the MTCC rendered its Decision in favor of petitioner, thus:

"WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendants ordering the latter, their successors-in-
interest and other persons acting in their behalf to vacate the portion of the subject properties and peacefully surrender possession
thereof to plaintiff as well as dismantle/remove the structures found thereon.

Defendants are further ordered to pay reasonable value for the use and occupation of the encroached area in the amount of One
Thousand Pesos (P1,000.00) a month beginning September 1996 and the subsequent months thereafter until premises are vacated;
to pay attorney's fees of Ten Thousand Pesos (P10,000.00); and to pay the costs of suit.

3
SO ORDERED."

On appeal, the Regional Trial Court (RTC), Branch 11, Davao City, in its Decision dated February 12, 1998 in Civil Case No. 25, 654-97, affirmed
4
in toto the MTCC judgment. The RTC upheld the finding of the MTCC that respondents' occupation of the contested portion was by mere
tolerance. Hence, when petitioner needed the same, he has the right to eject them through court action.

Respondents then elevated the case to the Court of Appeals through a petition for review. In its Decision dated October 5, 1988 now being
challenged by petitioner, the Court of Appeals held that petitioner's proper remedy should have been an accion publiciana before the RTC, not
an action for unlawful detainer, thus:

"In this case, petitioners were already in possession of the premises in question at the time private respondent bought three (3) lots
at the Lanzona Subdivision in 1985, a portion of which is occupied by a building being used by the former as a bodega. Apart from
private respondent's bare claim, no evidence was alluded to show that petitioners' possession was tolerated by (his) predecessor-in-
interest. The fact that respondent might have tolerated petitioners' possession is not decisive. What matters for purposes of
determining the proper cause of action is the nature of petitioners' possession from its inception. And in this regard, the Court notes
that the complaint itself merely alleges that defendants-petitioners have been 'occupying a portion of the above properties of the

44
 plaintiff for the past several years by virtue of the tolerance of the plaintiff.' Nowhere is it alleged that his predecessor likewise
tolerated petitioners' possession of the premises. x x x.

Consequently, x x x, respondent should present his claim before the Regional Trial Court in an accion publiciana and not before the
Municipal Trial Court in a summary proceeding of unlawful detainer.

WHEREFORE, the decision under review is hereby REVERSED and SET ASIDE. Accordingly, the complaint for unlawful detainer is
5
ordered DISMISSED."

Petitioner filed a motion for reconsideration, but was denied by the Appellate Court in its Resolution dated December 11, 1998.

Hence, the instant petition for review on certiorari ascribing to the Court of Appeals the following errors:

"I

THE HONORABLE COURT OF APPEALS MISAPPLIED THE LAW IN DISMISSING THE INSTANT CASE ON THE GROUND THAT PETITIONER
SHOULD PRESENT HIS CLAIM BEFORE THE REGIONAL TRIAL COURT IN AN ACCION PUBLICIANA.

II

THE FINDINGS OF THE HONORABLE COURT OF APPEALS IS NOT IN CONSONANCE WITH EXISTING LAWS AND JURISPRUDENCE."

The sole issue here is whether the Court of Appeals committed a reversible error of law in holding that petitioner's complaint is within the
competence of the RTC, not the MTCC.

Petitioner contends that it is not necessary that he has prior physical possession of the questioned property before he could file an action for
unlawful detainer. He stresses that he tolerated respondents' occupancy of the portion in controversy until he needed it. After his demand
that they vacate, their continued possession became illegal. Hence, his action for unlawful detainer before the MTCC is proper.

Respondents, in their comment, insisted that they have been in possession of the disputed property even before petitioner purchased the
same on April 10, 1985. Hence, he cannot claim that they were occupying the property by mere tolerance because they were ahead in time in
physical possession.

We sustain the petition.

It is an elementary rule that the jurisdiction of a court over the subject matter is determined by the allegations of the complaint and cannot be
6
made to depend upon the defenses set up in the answer or pleadings filed by the defendant. This rule is no different in an action for forcible
7
entry or unlawful detainer. All actions for forcible entry or unlawful detainer shall be filed with the proper Metropolitan Trial Courts, the
Municipal Trial Courts and the Municipal Circuit Trial Courts, which actions shall include not only the plea for restoration of possession but also
8
all claims for damages and costs arising therefrom. The said courts are not divested of jurisdiction over such cases even if the defendants
therein raises the question of ownership over the litigated property in his pleadings and the question of possession cannot be resolved without
9
deciding the issue of ownership.

Section 1, Rule 70 on forcible entry and unlawful detainer of the 1997 Rules of Civil Procedure, as amended, reads:

"Section 1. Who may institute proceedings, and when. Subject to the provisions of the next succeeding section, a person deprived
of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other
person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to
hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor,
vendee or other person may, at any time within one (1) year after such unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any
person or persons claiming under them, for the restitution of such possession, together with damages and costs."

Under the above provision, there are two entirely distinct and different causes of action, to wit: (1) a case for forcible entry, which is an action
to recover possession of a property from the defendant whose occupation thereof is illegal from the beginning as he acquired possession by
force, intimidation, threat, strategy or stealth; and (2) a case for unlawful detainer, which is an action for recovery of possession from
defendant whose possession of the property was inceptively lawful by virtue of a contract (express or implied) with the plaintiff, but became
10
illegal when he continued his possession despite the termination of his right thereunder.

Petitioner's complaint for unlawful detainer in Civil Case No. 3506-B-96 is properly within the competence of the MTCC. His pertinent
allegations in the complaint read:

45
 "4. That defendants (spouses) have constructed an extension of their residential house as well as other structures and have been
occupying a portion of the above PROPERTIES of the plaintiff for the past several years by virtue of the tolerance of the plaintiff
since at the time he has no need of the property;

5. That plaintiff needed the property in the early part of 1996 and made demands to the defendants to vacate and turn over the
premises as well as the removal (of) their structures found inside the PROPERTIES of plaintiff; that without any justifiable reasons,
defendants refused to vacate the portion of the PROPERTIES occupied by them to the damage and prejudice of the plaintiff.

6. Hence, plaintiff referred the matter to the Office of the Barangay Captain of Matina Crossing 74-A, Davao City for a possible
settlement sometime in the latter part of February 1996. The barangay case reached the Pangkat but no settlement was had.
Thereafter, a 'Certification To File Action' dated March 27, 1996 was issued x x x;

11
x x x." (underscoring ours)

Verily, petitioner's allegations in his complaint clearly make a case for an unlawful detainer. We find no error in the MTCC assuming jurisdiction
over petitioner's complaint. A complaint for unlawful detainer is sufficient if it alleges that the withholding of the possession or the refusal to
12
vacate is unlawful without necessarily employing the terminology of the law. Here, there is an allegation in petitioner's complaint that
respondents occupancy on the portion of his property is by virtue of his tolerance. Petitioner's cause of action for unlawful detainer springs
from respondents' failure to vacate the questioned premises upon his demand sometime in 1996. Within one (1) year therefrom, or on
November 6, 1996, petitioner filed the instant complaint.

It bears stressing that possession by tolerance is lawful, but such possession becomes unlawful when the possessor by tolerance refuses to
13
vacate upon demand made by the owner. Our ruling in Roxas vs. Court of Appeals is applicable in this case: "A person who occupies the land
of another at the latter's tolerance or permission, without any contract between them, is necessarily bound by an implied promise that he will
vacate upon demand, failing which, a summary action for ejectment is the proper remedy against him."

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 47435 are hereby
REVERSED and SET ASIDE. The Decision dated February 12, 1998 of the Regional Trial Court, Branch 11, Davao City in Civil Case No. 25, 654-97,
affirming the Decision dated July 31, 1997 of the Municipal Trial Court in Cities, Branch 2, Davao City in Civil Case No. 3506-B-96, is hereby
REINSTATED.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 148759 June 8, 2006

GERMELINA TORRES RACAZA and BERNALDITA TORRES PARAS, Petitioners,

vs.
1
ERNESTO GOZUM, Respondent.

AZCUNA, J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioners Germelina Torres Racaza and Bernaldita Torres Paras
2 3
seek the nullification of the decision dated July 12, 2000 as well as the resolution dated June 28, 2001 rendered by the Court of Appeals (CA)
4
in CA-G.R. CV No. 61227 which reversed and set aside the decision dated September 30, 1998 of the Regional Trial Court (RTC), Branch 158 of
Pasig City, consequently dismissing the complaint for accion publiciana filed by petitioners against respondent Ernesto Gozum.

The antecedents of this case are as follows:

The plaintiffs are the registered co-owners of a parcel of land under Transfer Certificate of Title No. PT-92411 situated at Amang Rodriguez
Avenue, Santolan, Pasig City. Standing on this lot is a 2-storey, 3-door apartment. The property was formerly owned by the father of the
plaintiffs, the late Carlos Torres.

In 1981, defendant Ernesto Gozum occupied the back portion of the property on a P3,500.00 monthly rental and continued to occupy the
same even after the death of Carlos Torres on December 26, 1993.

46
On July 1, 1995, plaintiffs sent Gozum a letter of demand to vacate [the] premises (Annex G, Complaint). After a failed barangay conciliation,
on November 24, 1995, plaintiffs commenced an ejectment case [with the Metropolitan Trial Court] against Gozum. The case was, however,
dismissed due to [a] technicality.

Almost two (2) years thereafter, on May 27, 1997, plaintiffs sent anew a formal demand letter to vacate on the ground that the verbal contract
of lease over the property had already expired sometime in July 1995, and the same has not been renewed and since then, defendant had
discontinued paying the monthly rentals of P3,500.00. When this latter demand was not heeded, on June 4, 1997, the present complaint for
recovery of possession or accion publiciana was initiated before the Regional Trial Court of Pasig City.

The initial reaction of the defendant was to file a motion to dismiss based on lack of jurisdiction claiming that the cause of action should have
been for unlawful detainer falling within the jurisdiction of the municipal trial courts and that the provision of P.D. No. 1508 was not complied
with.

In the Order dated September 30, 1997, the court a quo denied the motion to dismiss on the ground that an unlawful detainer must be filed
within one (1) year from the notice to vacate [given] as early as July 1, 1995 and since over two (2) years had passed when the case was filed,
the proper action is accion publiciana and no longer unlawful detainer.

Defendant thereafter filed his answer asseverating that he has a 10-year contract of lease (Annex 1, Complaint) over the premises executed
between him and plaintiffs late father on October 1, 1989 to expire on September 30, 1999 and so, the notice to vacate and the present case
were all prematurely done. Defendant likewise denied the allegation that he has not been paying rentals. The truth is that it was the plaintiffs
who refused to receive payments so that the same were deposited with the bank. In the same answer, defendant asserted that the contract of
lease gave him the right of first refusal to buy the property and in violation thereof, plaintiffs have already sold the property to a certain
Ernesto Brana.

After due proceedings on September 30, 1998, the appealed decision was promulgated with the following dispositive portion:

"WHEREFORE, in view of the foregoing, judgment is rendered in favor of the plaintiffs and against the defendant, ordering the latter and all
persons claiming rights under him to vacate the premises covered by Transfer Certificate of Title No. PT-92411 of the Register of Deeds of Pasig
City and turn it over to the plaintiffs. Defendant is also ordered to pay plaintiffs the amount of P3,500.00 effective July 1, 1995 until such time
he shall have vacated the premises. In addition, he shall pay attorneys fees in the amount of P30,000.00 plus P1,500.00 per court appearance
and the cost of suit.

SO ORDERED.

5
Pasig City, September 30, 1998." (pp. 4-5, RTC Decision; pp. 76-77, Rollo).

Aggrieved, respondent seasonably appealed the decision to the CA, ascribing to the lower court the following errors:

I. THE COURT A QUO ERRED IN HOLDING THAT THE PLAINTIFFS HAVE A LEGAL RIGHT TO RECOVER POSSESSION OF THE SUBJECT
PROPERTY FROM THE DEFENDANT.

II. THE LOWER COURT ERRED IN NOT RECOGNIZING THE VALIDITY OF THE CONTRACT OF LEASE DATED OCTOBER 5, 1989, WHICH
WAS PREVIOUSLY EXECUTED BY THE PLAINTIFFS FATHER, ATTORNEY CARLOS P. TORRES, AND HEREIN DEFENDANT.

III. THE COURT A QUO ERRED IN DECLARING THAT THE ABOVEMENTIONED CONTRACT IS FRAUDULENT, FABRICATED AND FICTITIOUS
AND THAT THE SIGNATURE OF ATTY. TORRES AFFIXED THEREON IS NOT GENUINE.

6
IV. THE TRIAL COURT COMMITTED ERROR IN AWARDING DAMAGES AND ATTORNEYS FEES IN FAVOR OF PLAINTIFFS.

After the submission by the parties of their respective briefs but prior to the resolution of the appeal, petitioners filed with the CA a Motion to
7
Dismiss or for Execution Pending Appeal dated December 6, 1999 on the ground that the lease contract relied upon by respondent to justify
his continued possession of the subject property had, by its own terms and respondents own admission, expired on September 30, 1999.

Thereafter, without acting upon petitioners motion to dismiss, the CA reversed the decision of the RTC and dismissed the case, holding that
the lower court had no jurisdiction over the complaint for accion publiciana considering that it had been filed before the lapse of one (1) year
from the date the last letter of demand to respondent had been made. The CA ruled that the proper remedy of petitioners should have been
an action for unlawful detainer filed with the first level court, or the municipal or metropolitan trial court.

Their motion for reconsideration having been denied, petitioners filed this present petition arguing that:

1) The Court of Appeals decided a question of substance not in accord with jurisprudence and remedial law authorities when it
declared as null and void the entire proceedings in the trial court despite the fact that:

47
 (i) petitioners correctly filed the accion publiciana with the trial court below;

(ii) respondent actively participated in the trial proceeding, testified in person, and submitted to the trial courts authority
to decide the case; and

(iii) respondent did not raise any jurisdictional issue in his appeal where he raised only the substantive portions of the trial
courts decision.

2) The Court of Appeals likewise departed from the accepted and usual course of judicial proceedings amounting to serious abuse of
discretion when it chose to ignore the glaring fact that respondents appeal had become moot and academic with the expiration of
8
the lease contract upon which his appeal rested.

9
In due course, respondent filed his Comment dated October 10, 2001, asserting that the CA correctly set aside the decision of the
RTC because the lower court had no jurisdiction over the subject matter of the case. In this regard, respondent pointed out that he
10
had previously assailed the jurisdiction of the trial court in the proceedings below via his Motion to Dismiss dated July 8, 1997.
11
Respondent likewise adopted the reasoning of the CA and argued that petitioners ran afoul of Section 1, Rule 70 of the Rules of
12
Court considering that petitioners Complaint dated June 4, 1997 for recovery of possession was filed only within months from the
date the second demand letter to vacate dated May 27, 1997 was served upon him.

13
In their Reply dated October 20, 2001, petitioners countered that respondent is estopped from raising any jurisdictional issue in connection
with the demand letter dated May 27, 1997 considering that respondent never argued during the trial or even in his appeal to the CA that the
existence of the second letter divested the trial court of jurisdiction over the complaint.

The petition has merit.

14
The allegations of a complaint determine the nature of the action as well as which court will have jurisdiction over the case. The complaint
15
would be deemed sufficient if, on its face, it shows that the court has jurisdiction without resorting to parol testimony. Precisely because
ejectment proceedings are summary in nature, the complaint should contain a statement of facts which would bring the party clearly within
the class of cases for which the statutes provide a remedy.

In the present case, petitioners made the following allegations in their complaint:

xxx

2. [Petitioners] are the duly registered co-owners of a parcel of land and its improvements, more particularly identified as a 3-door
apartment, specifically located between Fumakilla Laboratories, Inc. and the Shell Gasoline Station along Amang Rodriguez, Sr.
Avenue, Santolan, Pasig City, Metro Manila x x x.

3. Sometime in 1981, [respondent] entered into a verbal lease contract with the parents of herein [petitioners], who agreed to lease
to the [respondent], on a month-to-month basis, the aforementioned property at the rental rate of Php3,500.00 per month.

4. On July 1, 1995, [petitioners] sent [respondent] a Notice to Vacate x x x informing the latter of the termination of the said verbal
lease contract and demanding from him to vacate and peacefully surrender to the [petitioners] the aforesaid premises, the
possession of which [respondent] has unlawfully withheld from the latter. Notwithstanding these written and oral demands,
[respondent] has repeatedly failed and up to now still refuses to turn over the said premises peacefully to the [petitioners].

Since that time, [respondent] has failed to remit his monthly rentals of Php3,500.00 so that as of May 30, 1997, [respondent] has incurred
16
rental arrears now totaling Php 80,500.00 x x x

To summarize, petitioners claim that (1) they are the owners of the property, being the successors-in-interest of the original owners; (2) their
predecessors-in-interest entered into a verbal lease agreement with respondent on a month-to-month basis; (3) they decided to terminate the
verbal lease contract upon the expiration of the last monthly term sometime in 1995; and (4) on July 1, 1995, they demanded that respondent
leave the property, but respondent refused to do so.

Undeniably, the foregoing averments constitute a cause of action that is based primarily on unlawful deprivation or withholding of possession.
Petitioners seek the recovery of the possession of the leased premises following the lapse of the term of the verbal lease contract entered into
by petitioners predecessors-in-interest with respondent. The allegation that the contract is on a month-to-month basis becomes material in
17
this sense because it signifies that the lease contract is terminable at the end of every month. Thus, petitioners may exercise their right to
terminate the contract at the end of any month even if none of the conditions of the contract had been violated, and such right cannot be
defeated by the lessee's timely payment of the rent or by his willingness to continue doing so. The lease contract expires at the end of every
month unless there is an implied or tacit renewal thereof as when the lessee is allowed to continue enjoying the leased premises for fifteen
(15) days after the end of every month with the acquiescence of the lessor. Such exception, however, cannot be invoked when notice to vacate
18
is given to the lessee in which case the contract of lease expires at the end of the month.

48
Moreover, even if the month-to-month agreement is only on a verbal basis, if it is shown that the property is needed for the lessors own use
or for the use of an immediate member of the family or for any of the other statutory grounds to eject, then the lease is considered
19
terminated as of the end of the month, after proper notice or demand to vacate has been given. At this juncture, it must be pointed out that
20
notice or demand to vacate had been properly served upon respondent through the letter dated July 1, 1995, to wit:

July 1/95

Dear Ernesto Gozom,

I would like to reiterate my verbal demand upon you to vacate the premises you are presently occupying made sixty (60) days ago.

21
The said premises should be vacated within THIRTY (30) DAYS upon receipt hereof for I badly needed it and please take this notice as my final
demand after I have verbally given you sixty (60) days already.

Hoping you will give this matter your preferential and utmost attention in order to avoid a costly litigation.

Very truly yours,

(sgd.)
GERMELINA T. RACAZA and

(sgd.)
BERNALDITA T. PARAS

Verily, respondents right to remain in possession of the property subject of the lease was extinguished upon the expiration of the grace period
mentioned in the July 1, 1995 demand letter. It thus becomes respondents obligation to turn over the property to petitioners, failing which
petitioners would have the right to immediately resort to ejectment action to recover possession. Their complaint could thus fall under two
kinds of ejectment suits, the first being for unlawful detainer cognizable by the metropolitan or municipal trial courts under Rule 70 and the
22
second being for accion publiciana cognizable by the regional trial courts.

An action for unlawful detainer exists when a person unlawfully withholds possession of any land or building against or from a lessor, vendor,
23
vendee or other persons, after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied.
This summary action should be filed with the municipal trial courts within one year after the occurrence of the unlawful deprivation or
24
withholding of possession. Beyond the one-year period, the real right of possession may be recovered through the filing of an accion
25
publiciana with the regional trial courts.

In upholding the propriety of the mode adopted by petitioners to recover possession of their real property, the trial court found that more
than one (1) year had lapsed from the time of petitioners dispossession, to wit:

xxx

As to the first issue, the [petitioners] have the legal right to recover the property from the [respondent]. [Petitioners] are the absolute owners
of the property and the portion of the property which is occupied by the [respondent]. The possession by the [respondent] of the back portion
of the property is unlawful and [petitioners] have been unlawfully deprived of the property since July 1, 1995 when they served the notice to
vacate to the [respondent]. [Respondent] admits that after the notice to vacate was served upon him, he stopped paying his monthly rentals
to the [petitioners]. The present action for recovery of possession was filed more than one year from the time the cause of action of the
26
[petitioners] accrued, which was from the time the [respondent] stopped paying his rental to the [petitioners] or on July 1, 1995. x x x

Respondent nevertheless insists, for the first time, that the one-year period must be reckoned from the date of the second demand letter to
vacate, that is, on May 27, 1997. Considering that petitioners complaint was filed within days from this date, respondent contends that the
RTC had no jurisdiction to hear the case. Adopting in toto the position of the CA, respondent argues that petitioners should have filed an action
for unlawful detainer instead with the metropolitan or municipal trial courts.

The records of the case, however, do not support this view. Demand or notice to vacate is not a jurisdictional requirement when the action is
based on the expiration of the lease. Any notice given would only negate any inference that the lessor has agreed to extend the period of the
lease. The law requires notice to be served only when the action is due to the lessees failure to pay or the failure to comply with the
27
conditions of the lease. The one-year period is thus counted from the date of first dispossession. To reiterate, the allegation that the lease
was on a month-to-month basis is tantamount to saying that the lease expired every month. Since the lease already expired mid-year in 1995
as communicated in petitioners letter dated July 1, 1995, it was at that time that respondents occupancy became unlawful.

Even assuming, for the sake of argument, that a demand or notice to vacate was necessary, a reading of the second letter shows that
petitioners were merely reiterating their original demand for respondent to vacate on the basis of the expiration of the verbal lease contract
28
mentioned in the first letter. For clarity, the full text of the second letter sent by petitioners counsel is reproduced below:
49
Dear Mr. Gozom:

My principals, Germelina Torres Racaza and Bernaldita Torres Paras, have brought to me for legal action the fact of your unjustified and
unlawful possession and occupation of the entire back portion of their apartment building, located between Fumakilla Laboratories Inc. and
the Shell Gasoline Station along Amang Rodriguez, Sr. Avenue, Santolan, Pasig City, Metro Manila.

According to my principals, your verbal contract of lease covering the said premises already expired sometime in July 1995 and the same
has never been renewed, for which reason you discontinued paying your monthly rentals of Php3,500.00.

Notwithstanding their constant reminders and requests to you, for you to immediately vacate the aforesaid leased premises in view of the
expiration of the lease contract, you have up to this time failed and still refuse to vacate the said premises to the prejudice of my clients.

In this regard, please consider this letter our formal demand and notice for you to vacate the said leased premises on or before the 2nd day of
June 1997. Should you fail to so vacate and leave the premises and to pay your total monthly rental arrearages, amounting to Php 80,500.00,
on or before the said date, we shall be constrained to pursue all available remedies under the law to protect the interests of my clients.

Very truly yours,

(sgd.)
ATTY. CELSO P. YLADAN II
Counsel for Germelina Torres Racaza and Bernaldita Torres Paras

(Emphases supplied.)

The Court has, in the past, ruled that subsequent demands which are merely in the nature of reminders or reiterations of the original demand
do not operate to renew the one-year period within which to commence the ejectment suit considering that the period will still be reckoned
29
from the date of the original demand.

Besides, the allegations in the complaint and the answer put in issue the existence and validity of the verbal lease contract itself. Respondent
contends that the lease term over the property is ten (10) years based on a written lease contract purportedly executed by him and
petitioners predecessors-in interest. In this situation, it is the RTC which would be in the best position to determine the true nature of the
agreement between the parties and to decide which of the two agreements is valid. In fact, it found that the written lease contract was
spurious and not binding upon the petitioners.

Moreover, it is too late for respondent to invoke the defense of lack of jurisdiction on the ground that the action was filed before the lapse of
one year from the date of last demand. Based on the records, respondent never pursued this line of argument in the proceedings before the
trial court and even in his appeal to the CA. While it is true that prior to the filing of his answer, respondent moved to dismiss the complaint on
the theory that the allegations therein merely constituted an action for unlawful detainer, the motion did not raise any jurisdictional issue
relative to the second demand letter. When his motion to dismiss was denied, respondent no longer challenged the jurisdiction of the trial
court in his subsequent pleadings and instead actively participated in the proceedings held before the RTC by relying principally on the
strength of the written lease contract allegedly executed between him and petitioners predecessors-in-interest. It was only when the CA motu
proprio dismissed the complaint that respondent conveniently thought of adopting the novel theory embodied in the assailed decision of the
appellate court. Under these circumstances, estoppel has already set in.

30
In Tijam v. Sibonghanoy, this Court held that a partys active participation in all stages of the case before the trial court, which includes
invoking the courts authority to grant affirmative relief, effectively estops such party from later challenging that same courts jurisdiction. The
CAs conclusion that the doctrine enunciated in Tijam has been abandoned is erroneous as, in fact, the same has been upheld and reiterated in
31
many succeeding cases. Thus, while an order or decision rendered without jurisdiction is a total nullity and may be assailed at any stage, a
partys active participation in the proceedings in the tribunal which rendered the order or decision will bar such party from attacking its
jurisdiction.

32
In any event, this Court notes that by respondents own claim, the term of the alleged written lease contract expired on September 30, 1999
or several months before the decision of the appellate court was rendered. The CA should have taken cognizance of this material fact
considering that the statement is binding upon respondent and is an admission which renders moot the issue of who has a better right of
possession.

WHEREFORE, the petition is GRANTED and the assailed Decision dated July 12, 2000 as well as the Resolution dated June 28, 2001 rendered by
the Court of Appeals in CA-G.R. CV No. 61227 are REVERSED and SET ASIDE. Accordingly, the Decision dated September 30, 1998 of the
Regional Trial Court, Branch 158, Pasig City in Civil Case No. 66295 is REINSTATED.

No costs.

SO ORDERED.

50
 Republic of the Philippines
SUPREME COURT

SECOND DIVISION

G.R. No. 160384. April 29, 2005

CESAR T. HILARIO, for himself and as Attorney-in-Fact of IBARRA, NESTOR, LINA and PRESCILLA, all surnamed HILARIO, Petitioners,
vs.
ALLAN T. SALVADOR, Respondents.

HEIRS OF SALUSTIANO SALVADOR, namely, REGIDOR M. SALVADOR and VIRGINIA SALVADOR-LIM, respondents-intervenors.

CALLEJO, SR., J.:

1
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the Decision of the Court of Appeals (CA) in CA-G.R. CV
2
No. 63737 as well as its Resolution denying the motion for the reconsideration of the said decision.

The Antecedents

On September 3, 1996, petitioners Cesar, Ibarra, Nestor, Lina and Prescilla, all surnamed Hilario, filed a complaint with the Regional Trial Court
(RTC) of Romblon, Romblon, Branch 71, against private respondent Allan T. Salvador. They alleged therein, inter alia, as follows:

2. That, the plaintiffs are co-owners by inheritance from Concepcion Mazo Salvador of a parcel of land designated as Cad. Lot No. 3113-part,
located at Sawang, Romblon, Romblon, which property was [adjudged] as the hereditary share of their father, Brigido M. Hilario, Jr. when their
father was still single, and which adjudication was known by the plaintiffs*+ fathers co-heirs;

3. That, sometime in 1989, defendant constructed his dwelling unit of mixed materials on the property of the plaintiffs father without the
knowledge of the herein plaintiffs or their predecessors-in-interest;

4. That, demands have been made of the defendant to vacate the premises but the latter manifested that he have (sic) asked the prior consent
of their grandmother, Concepcion Mazo Salvador;

5. That, to reach a possible amicable settlement, the plaintiffs brought the matter to the Lupon of Barangay Sawang, to no avail, evidenced by
the CERTIFICATE TO FILE ACTION hereto attached as ANNEX B;

6. That, the unjustified refusal of the defendant to vacate the property has caused the plaintiffs to suffer shame, humiliation, wounded
feelings, anxiety and sleepless nights;

3
7. That, to protect their rights and interest, plaintiffs were constrained to engage the services of a lawyer.

The petitioners prayed that, after due proceedings, judgment be rendered in their favor, thus:

WHEREFORE, it is prayed of this Honorable Court that after due process (sic), an order be issued for the defendant to vacate and peacefully
turn over to the plaintiffs the occupied property and that defendant be made to pay plaintiffs:

a. actual damages, as follows:

a.1. transportation expenses in connection with the projected settlement of the case amounting to P1,500.00 and for the subsequent
attendance to the hearing of this case at P1,500.00 each schedule;

a.2. attorneys fees in the amount of P20,000.00 and P500.00 for every court appearance;

b. moral and exemplary damages in such amount incumbent upon the Honorable Court to determine; and

4
c. such other relief and remedies just and equitable under the premises.

The private respondent filed a motion to dismiss the complaint on the ground of lack of jurisdiction over the nature of the action, citing Section
5
33 of Batas Pambansa (B.P.) Blg. 129, as amended by Section 3(3) of Republic Act (R.A.) No. 7691. He averred that

(1) the complaint failed to state the assessed value of the land in dispute;
51
(2) the complaint does not sufficiently identify and/or describe the parcel of land referred to as the subject-matter of this action;

both of which are essential requisites for determining the jurisdiction of the Court where the case is filed. In this case, however, the assessed
value of the land in question is totally absent in the allegations of the complaint and there is nothing in the relief prayed for which can be
picked-up for determining the Courts jurisdiction as provided by law.

In the face of this predicament, it can nevertheless be surmised by reading between the lines, that the assessed value of the land in question
cannot exceed P20,000.00 and, as such, it falls within the jurisdiction of the Municipal Trial Court of Romblon and should have been filed
6
before said Court rather than before the RTC.

7
The petitioners opposed the motion. They contended that the RTC had jurisdiction over the action since the court can take judicial notice of
the market value of the property in question, which was P200.00 per square meter and considering that the property was 14,797 square
meters, more or less, the total value thereof is P3,500,000.00. Besides, according to the petitioners, the motion to dismiss was premature and
"the proper time to interpose it is when the [petitioners] introduced evidence that the land is of such value."

8
On November 7, 1996, the RTC issued an Order denying the motion to dismiss, holding that the action was incapable of pecuniary estimation,
and therefore, cognizable by the RTC as provided in Section 19(1) of B.P. Blg. 129, as amended.

9
After the denial of the motion to dismiss, the private respondent filed his answer with counterclaim. Traversing the material allegations of the
complaint, he contended that the petitioners had no cause of action against him since the property in dispute was the conjugal property of his
grandparents, the spouses Salustiano Salvador and Concepcion Mazo-Salvador.

10
On April 8, 1997, Regidor and Virginia Salvador filed their Answer-in-Intervention making common cause with the private respondent. On her
11
own motion, however, Virginia Salvador was dropped as intervenor.

During trial, the petitioners adduced in evidence Tax Declaration No. 8590-A showing that in 1991 the property had an assessed value of
12
P5,950.00.

On June 3, 1999, the trial court rendered judgment finding in favor of the petitioners. The dispositive portion of the decision reads:

WHEREFORE, as prayed for, judgment is rendered:

Ordering the defendant to vacate and peacefully turn over to the plaintiffs the occupied property; and

Dismissing defendants counterclaim.

13
SO ORDERED.

Aggrieved, the private respondent and respondent-intervenor Regidor Salvador appealed the decision to the CA, which rendered judgment on
May 23, 2003 reversing the ruling of the RTC and dismissing the complaint for want of jurisdiction. The fallo of the decision is as follows:

IN VIEW OF THE FOREGOING, the appealed decision is REVERSED, and the case DISMISSED, without prejudice to its refilling in the proper court.

14
SO ORDERED.

The CA declared that the action of the petitioners was one for the recovery of ownership and possession of real property. Absent any
allegation in the complaint of the assessed value of the property, the Municipal Trial Court (MTC) had exclusive jurisdiction over the action,
15
conformably to Section 33 of R.A. No. 7691.

16
The petitioners filed a motion for reconsideration of the said decision, which the appellate court denied. Hence, they filed the instant
petition, with the following assignment of errors:

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR IN HOLDING THAT THE INSTANT CASE, ACCION
REINVINDICATORIA, FALLS WITHIN THE EXCLUSIVE ORIGINAL JURISDICTION OF THE MUNICIPAL TRIAL COURT OF ROMBLON, AND NOT WITH
THE REGIONAL TRIAL COURT OF ROMBLON.

II

52
THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS REVERSIBLE ERROR IN ORDERING THE REFILING OF THE CASE IN THE [PROPER]
COURT, INSTEAD OF DECIDING THE CASE ON THE MERITS BASED ON THE COMPLETE RECORDS ELEVATED BEFORE SAID APPELLATE COURT AND
17
IN NOT AFFIRMING IN TOTO THE DECISION OF THE TRIAL COURT.

The Ruling of the Court

The lone issue for our resolution is whether the RTC had jurisdiction over the action of the petitioners, the plaintiffs in the RTC, against the
private respondent, who was the defendant therein.

The petitioners maintain that the RTC has jurisdiction since their action is an accion reinvindicatoria, an action incapable of pecuniary
estimation; thus, regardless of the assessed value of the subject property, exclusive jurisdiction falls within the said court. Besides, according
to the petitioners, in their opposition to respondents motion to dismiss, they made mention of the increase in the assessed value of the land
in question in the amount of P3.5 million. Moreover, the petitioners maintain that their action is also one for damages exceeding P20,000.00,
over which the RTC has exclusive jurisdiction under R.A. No. 7691.

The petition has no merit.

It bears stressing that the nature of the action and which court has original and exclusive jurisdiction over the same is determined by the
material allegations of the complaint, the type of relief prayed for by the plaintiff and the law in effect when the action is filed, irrespective of
18
whether the plaintiffs are entitled to some or all of the claims asserted therein. The caption of the complaint is not determinative of the
nature of the action. Nor does the jurisdiction of the court depend upon the answer of the defendant or agreement of the parties or to the
waiver or acquiescence of the parties.

We do not agree with the contention of the petitioners and the ruling of the CA that the action of the petitioners in the RTC was an accion
reinvindicatoria. We find and so rule that the action of the petitioners was an accion publiciana, or one for the recovery of possession of the
real property subject matter thereof. An accion reinvindicatoria is a suit which has for its object the recovery of possession over the real
property as owner. It involves recovery of ownership and possession based on the said ownership. On the other hand, an accion publiciana is
one for the recovery of possession of the right to possess. It is also referred to as an ejectment suit filed after the expiration of one year after
19
the occurrence of the cause of action or from the unlawful withholding of possession of the realty.

The action of the petitioners filed on September 3, 1996 does not involve a claim of ownership over the property. They allege that they are co-
owners thereof, and as such, entitled to its possession, and that the private respondent, who was the defendant, constructed his house
thereon in 1989 without their knowledge and refused to vacate the property despite demands for him to do so. They prayed that the private
respondent vacate the property and restore possession thereof to them.

When the petitioners filed their complaint on September 3, 1996, R.A. No. 7691 was already in effect. Section 33(3) of the law provides:

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:

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the
assessed value of the property or interest therein does not exceed Twenty Thousand Pesos (P20,000.00) or, in civil actions in Metro Manila,
where such assessed value does not exceed Fifty Thousand Pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorneys
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.

Section 19(2) of the law, likewise, provides that:

Sec. 19. Jurisdiction in civil cases. The Regional Trial Court shall exercise exclusive original jurisdiction:

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

The jurisdiction of the court over an action involving title to or possession of land is now determined by the assessed value of the said property
and not the market value thereof. The assessed value of real property is the fair market value of the real property multiplied by the assessment
20
level. It is synonymous to taxable value. The fair market value is the price at which a property may be sold by a seller, who is not compelled
to sell, and bought by a buyer, who is not compelled to buy.
53
Even a cursory reading of the complaint will show that it does not contain an allegation stating the assessed value of the property subject of
21 22
the complaint. The court cannot take judicial notice of the assessed or market value of lands. Absent any allegation in the complaint of the
assessed value of the property, it cannot thus be determined whether the RTC or the MTC had original and exclusive jurisdiction over the
petitioners action.

We note that during the trial, the petitioners adduced in evidence Tax Declaration No. 8590-A, showing that the assessed value of the property
in 1991 was P5,950.00. The petitioners, however, did not bother to adduce in evidence the tax declaration containing the assessed value of the
property when they filed their complaint in 1996. Even assuming that the assessed value of the property in 1991 was the same in 1995 or
1996, the MTC, and not the RTC had jurisdiction over the action of the petitioners since the case involved title to or possession of real property
23
with an assessed value of less than P20,000.00.

We quote with approval, in this connection, the CAs disquisition:

The determining jurisdictional element for the accion reinvindicatoria is, as RA 7691 discloses, the assessed value of the property in question.
For properties in the provinces, the RTC has jurisdiction if the assessed value exceeds P20,000, and the MTC, if the value is P20,000 or below.
An assessed value can have reference only to the tax rolls in the municipality where the property is located, and is contained in the tax
declaration. In the case at bench, the most recent tax declaration secured and presented by the plaintiffs-appellees is Exhibit B. The loose
remark made by them that the property was worth 3.5 million pesos, not to mention that there is absolutely no evidence for this, is irrelevant
in the light of the fact that there is an assessed value. It is the amount in the tax declaration that should be consulted and no other kind of
value, and as appearing in Exhibit B, this is P5,950. The case, therefore, falls within the exclusive original jurisdiction of the Municipal Trial
24
Court of Romblon which has jurisdiction over the territory where the property is located, and not the court a quo.

It is elementary that the tax declaration indicating the assessed value of the property enjoys the presumption of regularity as it has been
25
issued by the proper government agency.

Unavailing also is the petitioners argumentation that since the complaint, likewise, seeks the recovery of damages exceeding P20,000.00, then
the RTC had original jurisdiction over their actions. Section 33(3) of B.P. Blg. 129, as amended, quoted earlier, explicitly excludes from the
determination of the jurisdictional amount the demand for "interest, damages of whatever kind, attorneys fees, litigation expenses, and
costs." This Court issued Administrative Circular No. 09-94 setting the guidelines in the implementation of R.A. No. 7691, and paragraph 2
thereof states that

2. The exclusion of the term "damages of whatever kind" in determining the jurisdictional amount under Section 19(8) and Section 33(1) of
B.P. Blg. 129, as amended by R.A. 7691, applies to cases where the damages are merely incidental to or a consequence of the main cause of
action. However, in cases where the claim for damages is the main cause of action, or one of the causes of action, the amount of such claim
shall be considered in determining the jurisdiction of the court.

Neither may the petitioners find comfort and solace in Section 19(8) of B.P. Blg. 129, as amended, which states:

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

(8) In all other cases in which the demand, exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses, and costs or
the value of the property in controversy exceeds One Hundred Thousand Pesos (P100,000.00) or, in such other cases in Metro Manila, where
the demand, exclusive of the above-mentioned items exceeds Two Hundred Thousand Pesos (P200,000.00).

The said provision is applicable only to "all other cases" other than an action involving title to, or possession of real property in which the
assessed value is the controlling factor in determining the courts jurisdiction. The said damages are merely incidental to, or a consequence of,
26
the main cause of action for recovery of possession of real property.

Since the RTC had no jurisdiction over the action of the petitioners, all the proceedings therein, including the decision of the RTC, are null and
27
void. The complaint should perforce be dismissed.

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 63737 are AFFIRMED.
Costs against the petitioners.

SO ORDERED.

54
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 138377 February 28, 2000

CONCEPCION V. AMAGAN, JOSEFINA V. AMAGAN and DINA V. AMAGAN, petitioners,

vs.
TEODORICO T. MARAYAG, respondent.

PANGANIBAN, J.:

As a general rule, an ejectment suit cannot be abated or suspended by the mere filing before the regional trial court (RTC) of another action
raising ownership of the property as an issue. As an exception, however, unlawful detainer actions may be suspended even on appeal, on
considerations of equity, such as when the demolition of petitioners' house would result from the enforcement of the municipal circuit trial
court (MCTC) judgment.

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the February 9, 1999 Resolution of the Court of
1
Appeals (CA) in CA-GR SP No. 50472, which disposed as follows:

It is plain to see that this Court, under its Decision, merely nullified the Order of the Respondent, dated November 26, 1996 granting
Private Respondent's "Motion for Execution Pending Appeal" and denying Petitioners "Motion for Reconsideration" [of] its said
Order. This Court did not enjoin the Respondent Court from resolving Petitioners" appeal from the Decision of the Municipal [Circuit]
Trial Court, on its merits.

Petitioners' complaint for "Quieting of Title and Reconveyance in Civil Case No. 1632" filed [at] the Regional Trial Court does not
abate the proceeding in Civil Case No. 1671 (TG) before the Respondent Court (Asset Privatization Trust v. Court of Appeals, 229
SCRA 627; Felicidad Javier, et al., versus Hon. Regino T. Veridiano, II, et al., 237 SCRA 565).

In sum, then, the [im]pugned Orders of the Respondent Court are in accord with case law and issued in the exercise of its sound
discretion.

IN THE LIGHT OF ALL THE FOREGOING, the Petition is denied due course and is hereby dismissed. No cost.

2
SO ORDERED.

3
Also challenged by petitioners is the April 22, 1999 CA Resolution denying their Motion for Reconsideration.

The Facts

The facts as found by the Court of Appeals are as follows:

. . . . On June 3, 1996, the private respondent filed a complaint against the petitioners for "unlawful detainer" with the Municipal
[Circuit] Trial Court in Silang, Cavite. On September 27, 1996, the trial court promulgated a Decision in favor of the private
respondent and against the petitioners, the decretal portion of which reads as follows:

IN VIEW OF THE FOREGOING, this Court for the plaintiff and against the defendants finds ordering the latter as follows:

1. To vacate the property of plaintiff located at San Vicente, Silang, Cavite containing an area of 420 square meters and
covered by Tax Declaration No. 13023 and remove their house constructed thereon;

2. To pay plaintiff, jointly and severally, the amount of P10,000.00 starting from June 1, 1996 until the subject premises are
fully vacated, as reasonable compensation for their continued unlawful use and occupation of the same and another
amount of P50,000.00 as and by way of attorney's fees and other litigation expenses; and

3. To pay the cost of suit.1wphi1.nt

55
 SO ORDERED.

The petitioners appealed to the Regional Trial Court of Cavite from said Decision, which appeal was docketed as Civil Case No. 1671.
On November 26, 1996, the private respondent filed a "Motion for Execution Pending Appeal" with the Respondent Court which, on
November 26, 1996, issued an Order granting said motion, the decretal portion of which reads as follows:

As prayed for by the plaintiff(s), through (their) counsel, and finding the grounds alleged in their "Motion for Immediate
Exec(u)tion" to be impressed with merit, the same is hereby GRANTED.

Accordingly, let a writ of execution pending appeal be issued in this case.

"The Petitioners' Motion for Reconsideration" [of] said Order, was denied by the Respondent Court per its Order dated February 21,
1997.

In the interim, the petitioners filed, on December 10, 19[96], a complaint against private respondent in the Regional Trial Court for
"Quieting of Title, Reconveyance and Damages," entitled "Concepcion v. Amagan, et al. versus Teodorico Marayag, Civil Case No.
1682 (TG).

The petitioners filed, a "Petition for Certiorari," in the Court of Appeals, under Rule 65 of the Rules of Court, dated April 28, 1997,
against the respondents for the nullification of the aforesaid Orders of the Respondent Court, dated November 26, 1996 and
February 21, 1997, in Civil Case No. 1671, granting private respondent's "Motion for Reconsideration" respectively, which Petition
was entitled "Concepcion v. Amagan, et al., versus Regional Trial Court, et al., CA-G.R. [SP No. 43611]." This Court issued a Resolution
granting petitioners' plea for a temporary restraining order which expired on June 25, 1997.

On July 7, 1997, the private respondent filed, with the Respondent Court, in Civil Case No. 1671 (TG), an "Ex-Parte Omnibus Motion
to Direct Sheriff To Make a Report And/Or Implement Writ of Execution and Declare the Case Submitted for Decision" with the
parties submitting to the Respondent Court their respective "Memorandum on Appeal." The next day, July 18, 1997, this Court
promulgated, in CA-G.R. [SP No. 43611], a Decision in favor of the petitioners and against the respondents therein the decretal
portion of which reads as follows:

WHEREFORE, the Petition for certiorari is hereby GRANTED. Accordingly, the Order dated February 21, 1997, allowing
execution pending appeal is REVERSED and SET ASIDE.

On July 11, 1997, the Respondent Court issued an Order granting private respondent's Omnibus Motion,' supra. The private
respondent likewise filed a Petition for Review' with the Supreme Court, from the Decision of this Court in CA-G.R. [SP No. 43611]
and its Resolution denying private respondent's "Motion for Reconsideration" but the Supreme Court, per its Resolution dated
November 12, 1997, issued a Resolution denying private respondents['] "Petition for Review." The Resolution of the Supreme Court
became final and executory.

On December 12, 1997, the private respondent filed with the Respondent Court, in Civil Case No. TG-1671, a "Manifestation and Ex-
Parte Motion" praying that the Respondent Court resolve the case and promulgate its Decision on the merits. However, the
petitioners filed an Opposition to private respondent's motion, contending that the proceedings before the Respondent Court, in
Civil Case No. 1671 (TG), be suspended pending decision, on the merits, of the Regional Trial Court, in Civil Case No. 1682 (Quieting
of Title, Reconveyance with Damages). On April 3, 1998, the Respondent Court issued its Order granting private respondent's
motion, declaring that the Court, under its Decision, in CA-G.R. [SP No. 43611], merely nullified its Order granting execution pending
appeal but did not enjoin the Respondent Court from hearing and resolving Civil Case No. 16[7]1 on the merits. The petitioners filed
a "Motion for Reconsideration" of the aforesaid Order of the Respondent Court but the latter issued an Order dated December 14,
1998 denying petitioners' Motion for Reconsideration, in this language.

Anent the Motion for Reconsideration, movants anchored their arguments that this Court should restrain itself from
further proceeding with the appealed case because of the decision, resolution of the Court of Appeals, and resolution of
the Supreme Court. It is worthy to note that [what] was brought up with the higher Courts was the Order of the Court
allowing the execution pending appeal, the said Order was reversed and set aside by the Court of Appeals[;] however,
there was no permanent injunction that has been issued for this Court to stop from further proceeding with the case. The
said motion is, therefore, DENIED for lack of merit.

The facts of this case may be simply summarized as follows. The MCTC rendered a Decision granting the ejectment suit filed by respondent
against herein petitioners. While an appeal was pending before the RTC, respondent filed a Motion for immediate execution of the MCTC
4
judgment, which was granted. However, the Court of Appeals later reversed the RTC Order granting the execution pending appeal, a reversal
that was subsequently affirmed by the Supreme Court. Meanwhile, petitioners also filed before the RTC a new action for quieting of title
involving the same property.

Petitioners thence claimed that the proceedings in the ejectment appeal should be suspended pending final judgment in the quieting of title
case. The RTC ruled in the negative.
56
 Ruling of the Court of Appeals

In sustaining the RTC, the CA held in two short paragraphs that its earlier Decision in CA-GR SP No. 43611 enjoined only the execution of the
judgment pending appeal. Without discussing petitioners' plea for an exception, it curtly applied the jurisprudential principle that an action for
quieting of title would not abate an ejectment suit.

5
Hence, this Petition.

The Issue

In their Memorandum, petitioners submitted for the consideration of the Court the following issues:

I. Whether or not the 8 July 1997 Decision and 23 September 1997 Resolution of the Court of Appeals in CA-G.R. SP No. 43911
(Annex I), as affirmed in toto by the Supreme Court, called off and restrained the proceedings in this case;

II. Whether or not the dispositive portion of the Decision in CA-G.R. SP No. 43611 should be referred to its body and text.

III. Whether or not the Court of Appeals' Decision having been based on Vda. de Legaspi vs. Avendano . . ., is now final and executory
as it was upheld by the Supreme Court in toto.

IV. Whether or not Lao vs. Court of Appeals [. . .] is applicable to the present case, and

6
V. Whether or not the Court of Appeals failed to consider and pass judgment on the exceptional nature of the present case.

In the main, the issue is whether the peculiar circumstances of this case justify the suspension of the ejectment proceedings on appeal before
the RTC, pending the resolution of the action for quieting of title.

The Court's Ruling

The Petition is meritorious.

Main Issue:

Suspension of the Ejectment Suit

Unlawful detainer and forcible entry suits under Rule 70 are designed to summarily restore physical possession of a piece of land or building to
one who has been illegally or forcibly deprived thereof, without prejudice to the settlement of the parties' opposing claims of juridical
possession in appropriate proceedings. It has been held that these actions "are intended to avoid disruption of public order by those who
7
would take the law in their hands purportedly to enforce their claimed right of possession." In these cases, the issue is pure physical or de
facto possession, and pronouncements made on questions of ownership are provisional in nature.

As a general rule, therefore, a pending civil action involving ownership of the same property does not justify the suspension of ejectment
proceedings. "The underlying reasons for the above ruling were that the actions in the Regional Trial Court did not involve physical or de facto
possession, and, on not a few occasions, that the case in the Regional Trial Court was merely a ploy to delay disposition of the ejectment
8
proceeding, or that the issues presented in the former could quite as easily be set up as defenses in the ejectment action and there resolved."

Only in rare instances is suspension allowed to await the outcome of the pending civil action. One such exception is Vda. de Legaspi v.
Avendao, wherein the Court declared:

. . . . Where the action, therefore, is one of illegal detainer, as distinguished from one of forcible entry, and the right of the plaintiff to
recover the premises is seriously placed in issue in a proper judicial proceeding, it is more equitable and just and less productive of
confusion and disturbance of physical possession, with all its concomitant inconvenience and expenses. For the Court in which the
issue of legal possession, whether involving ownership or not, is brought to restrain, should a petition for preliminary injunction be
filed with it, the effects of any order or decision in the unlawful detainer case in order to await the final judgment in the more
substantive case involving legal possession or ownership. It is only where there has been forcible entry that as a matter of public
policy the right to physical possession should be immediately set at rest in favor of the prior possession regardless of the fact that
the other party might ultimately be found to have superior claim to the premises involved, thereby to discourage any attempt to
9
recover possession thru force, strategy or stealth and without resorting to the courts.

From the foregoing, it is clear that the mere existence of a judicial proceeding putting at issue the right of the plaintiff to recover the premises
10
is not enough reason to justify an exception to the general rule. In Salinas v. Navarro, the Court explained that "the exception to the rule in . .
. Vda. de Legaspi is based on strong reasons of equity not found in the present petition. The right of the petitioners is not so seriously placed in
57
issue in the annulment case as to warrant a deviation, on equitable grounds, from the imperative nature of the rule. In the Vda. de Legaspi
case, execution of the decision in the ejectment case would also have meant demolition of the premises, a factor not present in this petition."

After a close reading of the peculiar circumstances of the instant case, however, we hold that equitable considerations impel an exception to
the general rule. In its earlier July 8, 1997 Decision in CA-GR No. 43611-SP which has long become final, the Court of Appeals, through Justice
Artemio G. Toquero, arrived upon the following factual findings which are binding on herein parties:

Admittedly, petitioners who appealed the judgment in the ejectment case did not file a supersedeas bond. Neither have they been
depositing the compensation for their use and occupation of the property in question as determined by the trial court. Ordinarily,
these circumstances would justify an execution pending appeal. However, there are circumstances attendant to this case which
would render immediate execution injudicious and inequitable.

ONE. Private respondent Teodorico T. Marayag anchors his action for unlawful detainer on the theory that petitioners' possession of
the property in question was by mere tolerance. However, in answer to his demand letter dated April 13, 1996 (Annex "D"),
petitioners categorically denied having any agreement with him, verbal or written, asserting that they are "owners of the premises
we are occupying at 108 J. P. Rizal Street, San Vicente, Silang, Cavite." In other words, it is not merely physical possession but
ownership as well that is involved in this case.

TWO. In fact, to protect their rights to the premises in question, petitioners filed an action for reconveyance, quieting of title and
damages against private respondents, docketed as Civil Case No. TG-1682 of the Regional Trial Court, Branch 18, Tagaytay City. The
issue of ownership is squarely raised in this action. Undoubtedly, the resolution of this issue will be determinative of who is entitled
to the possession of the premises in question.

THREE. The immediate execution of the judgment in the unlawful detainer case will include the removal of the petitioners' house
[from] the lot in question.

To the mind of the Court it is injudicious, nay inequitable, to allow demolition of petitioners' house prior to the determination of the
11
question of ownership [of] the lot on which it stands.

Indisputably, the execution of the MCTC Decision would have resulted in the demolition of the house subject of the ejectment suit; thus, by
parity of reasoning, considerations of equity require the suspension of the ejectment proceedings. We note that, like Vda. de Legaspi, the
respondent's suit is one of unlawful detainer and not of forcible entry. And most certainly, the ejectment of petitioners would mean a
demolition of their house, a matter that is likely to create the "confusion, disturbance, inconveniences and expenses" mentioned in the said
exceptional case.

12
Necessarily, the affirmance of the MCTC Decision would cause the respondent to go through the whole gamut of enforcing it by physically
removing the petitioners from the premises they claim to have been occupying since 1937. (Respondent is claiming ownership only of the land,
not of the house.) Needlessly, the litigants as well as the courts will be wasting much time and effort by proceeding at a stage wherein the
outcome is at best temporary, but the result of enforcement is permanent, unjust and probably irreparable.1wphi1.nt

We should stress that respondent's claim to physical possession is based not on an expired or a violated contract of lease, but allegedly on
"mere tolerance." Without in any way prejudging the proceedings for the quieting of title, we deem it judicious under the present exceptional
circumstances to suspend the ejectment case.

The Suspension of Proceedings

Even During Appeal

One final point. In Vda. de Legaspi, the Court held that "if circumstances should so require, the proceedings in the ejectment case may be
suspended in whatever stage it may be found." This statement is unequivocally clear; it includes even the appellate stage.

WHEREFORE, the Petition is GRANTED and the appealed Decision REVERSED and SET ASIDE. The Regional Trial Court of Cavite is DIRECTED to
suspend further action in Civil Case No. 1671 until Civil Case No. 1682 is concluded. No costs.

SO ORDERED.

58