G.R. No. 140746             March 16, 2005

PANTRANCO NORTH EXPRESS, INC., and ALEXANDER BUNCAN, Petitioner, vs.STANDARD INSURANCE COMPANY, INC., and MARTINA GICALE, Respondents.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari assailing the Decision1 dated July 23 1999 and Resolution2 dated November 4, 1999 of the Court of Appeals in CA-G.R. CV No. 38453, entitled "Standard Insurance Company, Inc., and Martina Gicale vs. PANTRANCO North Express, Inc., and Alexander Buncan."

In the afternoon of October 28, 1984, Crispin Gicale was driving the passenger jeepney owned by his mother Martina Gicale, respondent herein. It was then raining. While driving north bound along the National Highway in Talavera, Nueva Ecija, a passenger bus, owned by Pantranco North Express, Inc., petitioner, driven by Alexander Buncan, also a petitioner, was trailing behind. When the two vehicles were negotiating a curve along the highway, the passenger bus overtook the jeepney. In so doing, the passenger bus hit the left rear side of the jeepney and sped away.

Crispin reported the incident to the Talavera Police Station and respondent Standard Insurance Co., Inc. (Standard), insurer of the jeepney. The total cost of the repair was P21,415.00, but respondent Standard paid only P8,000.00. Martina Gicale shouldered the balance of P13,415.00.

Thereafter, Standard and Martina, respondents, demanded reimbursement from petitioners Pantranco and its driver Alexander Buncan, but they refused. This prompted respondents to file with the Regional Trial Court (RTC), Branch 94, Manila, a complaint for sum of money.

In their answer, both petitioners specifically denied the allegations in the complaint and averred that it is the Metropolitan Trial Court, not the RTC, which has jurisdiction over the case.

On June 5, 1992, the trial court rendered a Decision3 in favor of respondents Standard and Martina, thus:

"WHEREFORE, and in view of the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs, Standard Insurance Company and Martina Gicale, and against defendants Pantranco Bus Company and Alexander Buncan, ordering the latter to pay as follows:

(1) to pay plaintiff Standard Insurance the amount of P8,000.00 with interest due thereon from November 27, 1984 until fully paid;

(2) to pay plaintiff Martina Gicale the amount of P13,415.00 with interest due thereon from October 22, 1984 until fully paid;

(3) to pay the sum of P10,000.00 for attorney’s fees;

(4) to pay the expenses of litigation and the cost of suit.

SO ORDERED."

On appeal, the Court of Appeals, in a Decision4 dated July 23, 1999, affirmed the trial court’s ruling, holding that:

"The appellants argue that appellee Gicale’s claim of P13,415.00 and appellee insurance company’s claim of P8,000.00 individually fell under the exclusive original jurisdiction of the municipal trial court. This is not correct because under the Totality Rule provided for under Sec. 19, Batas Pambansa Bilang 129, it is the sum of the two claims that determines the jurisdictional amount.

x x x

In the case at bench, the total of the two claims is definitely more than P20,000.00 which at the time of the incident in question was the jurisdictional amount of the Regional Trial Court.

Appellants contend that there was a misjoinder of parties. Assuming that there was, under the Rules of Court (Sec. 11, Rule 7) as well as under the Rules of Civil Procedure (ditto), the same does not affect the jurisdiction of the court nor is it a ground to dismiss the complaint.

x x x

It does not need perspicacity in logic to see that appellees Gicale’s and insurance company’s individual claims against appellees (sic) arose from the same vehicular accident on October 28, 1984 involving appellant Pantranco’s bus and appellee Gicale’s jeepney. That being the case, there was a question of fact common to all the parties: Whose fault or negligence caused the damage to the jeepney?

Appellants submit that they were denied their day in court because the case was deemed submitted for decision "without even declaring defendants in default or to have waived the presentation of evidence." This is incorrect. Of course, the court did not declare defendants in default because that is done only when the defendant fails to tender an answer within the reglementary period. When the lower court ordered that the case is deemed submitted for decision that meant that the defendants were deemed to have waived their right to present evidence. If they failed to adduce their evidence, they should blame nobody but themselves. They failed to be present during the scheduled hearing for the reception of their evidence despite notice and without any motion or explanation. They did not even file any motion for reconsideration of the order considering the case submitted for decision.

Finally, contrary to the assertion of the defendant-appellants, the evidence preponderantly established their liability for quasi-delict under Article 2176 of the Civil Code."

Petitioners filed a motion for reconsideration but was denied by the Appellate Court in a Resolution dated November 4, 1999.

Hence, this petition for review on certiorari raising the following assignments of error:

"I

WHETHER OR NOT THE TRIAL COURT HAS JURISDICTION OVER THE SUBJECT OF THE ACTION CONSIDERING THAT RESPONDENTS’ RESPECTIVE CAUSE OF ACTION AGAINST PETITIONERS DID NOT ARISE OUT OF THE SAME TRANSACTION NOR ARE THERE QUESTIONS OF LAW AND FACTS COMMON TO BOTH PETITIONERS AND RESPONDENTS.

II

WHETHER OR NOT PETITIONERS ARE LIABLE TO RESPONDENTS CONSIDERING THAT BASED ON THE EVIDENCE ADDUCED AND LAW APPLICABLE IN THE CASE AT BAR, RESPONDENTS HAVE NOT SHOWN ANY RIGHT TO THE RELIEF PRAYED FOR.

III

WHETHER OR NOT PETITIONERS WERE DEPRIVED OF THEIR RIGHT TO DUE PROCESS."

For their part, respondents contend that their individual claims arose out of the same vehicular accident and involve a common question of fact and law. Hence, the RTC has jurisdiction over the case.

I

Petitioners insist that the trial court has no jurisdiction over the case since the cause of action of each respondent did not arise from the same transaction and that there are no common questions of law and fact common to both parties. Section 6, Rule 3 of the Revised Rules of Court,5 provides:

"Sec. 6. Permissive joinder of parties. – All persons in whom or against whom any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the alternative, may, except as otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one complaint, where any question of law or fact common to all such plaintiffs or to all such defendants may arise in the action; but the court may make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put to expense in connection with any proceedings in which he may have no interest."

Permissive joinder of parties requires that: (a) the right to relief arises out of the same transaction or series of transactions; (b) there is a question of law or fact common to all the plaintiffs or defendants; and (c) such joinder is not otherwise proscribed by the provisions of the Rules on jurisdiction and venue.6

In this case, there is a single transaction common to all, that is, Pantranco’s bus hitting the rear side of the jeepney. There is also a common question of fact, that is, whether petitioners are negligent. There being a single transaction common to both respondents, consequently, they have the same cause of action against petitioners.

To determine identity of cause of action, it must be ascertained whether the same evidence which is necessary to sustain the second cause of action would have been sufficient to authorize a recovery in the first.7 Here, had respondents filed separate suits against petitioners, the same evidence would have been presented to sustain the same cause of action. Thus, the filing by both respondents of the complaint with the court below is in order. Such joinder of parties avoids multiplicity of suit and ensures the convenient, speedy and orderly administration of justice.

Corollarily, Section 5(d), Rule 2 of the same Rules provides:

"Sec. 5. Joinder of causes of action. – A party may in one pleading assert, in the alternative or otherwise, as many causes of action as he may have against an opposing party, subject to the following conditions:

x x x

(d) Where the claims in all the causes of action are principally for recovery of money the aggregate amount claimed shall be the test of jurisdiction."

The above provision presupposes that the different causes of action which are joined accrue in favor of the same plaintiff/s and against the same defendant/s and that no misjoinder of parties is involved.8 The issue of whether respondents’ claims shall be lumped together is determined by paragraph (d) of the above provision. This paragraph embodies the "totality rule" as exemplified by Section 33 (1) of B.P. Blg. 1299 which states, among others, that "where there are several claims or causes of action between the same or different parties, embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes of action, irrespective of whether the causes of action arose out of the same or different transactions."

As previously stated, respondents’ cause of action against petitioners arose out of the same transaction. Thus, the amount of the demand shall be the totality of the claims.

Respondent Standard’s claim is P8,000.00, while that of respondent Martina Gicale is P13,415.00, or a total ofP21,415.00. Section 19 of B.P. Blg. 129 provides that the RTC has "exclusive original jurisdiction over all other cases, in which the demand, exclusive of interest and cost or the value of the property in controversy, amounts to more than twenty thousand pesos (P20,000.00)." Clearly, it is the RTC that has jurisdiction over the instant case. It bears emphasis that when the complaint was filed, R.A. 7691 expanding the jurisdiction of the Metropolitan, Municipal and Municipal Circuit Trial Courts had not yet taken effect. It became effective on April 15, 1994.

II

The finding of the trial court, affirmed by the Appellate Court, that petitioners are negligent and thus liable to respondents, is a factual finding which is binding upon us, a rule well-established in our jurisprudence. It has been repeatedly held that the trial court's factual findings, when affirmed by the Appellate Court, are conclusive and binding upon this Court, if they are not tainted with arbitrariness or oversight of some fact or circumstance of significance and influence. Petitioners have not presented sufficient ground to warrant a deviation from this rule.10

III

There is no merit in petitioners’ contention that they were denied due process. Records show that during the hearing, petitioner Pantranco’s counsel filed two motions for resetting of trial which were granted by the trial court. Subsequently, said counsel filed a notice to withdraw. After respondents had presented their evidence, the trial court, upon petitioners’ motion, reset the hearing to another date. On this date, Pantranco failed to appear. Thus, the trial court warned Pantranco that should it fail to appear during the next hearing, the case will be submitted for resolution on the basis of the evidence presented. Subsequently, Pantranco’s new counsel manifested that his client is willing to settle the case amicably and moved for another postponement. The trial court granted the motion. On the date of the hearing, the new counsel manifested that Pantranco’s employees are on strike and moved for another postponement. On the next hearing, said counsel still failed to appear. Hence, the trial court considered the case submitted for decision.

We have consistently held that the essence of due process is simply an opportunity to be heard, or an opportunity to explain one’s side or an opportunity to seek for a reconsideration of the action or ruling complained of.11

Petitioner Pantranco filed an answer and participated during the trial and presentation of respondents’ evidence. It was apprised of the notices of hearing issued by the trial court. Indeed, it was afforded fair and reasonable opportunity to explain its side of the controversy. Clearly, it was not denied of its right to due process. What is frowned upon is the absolute lack of notice and hearing which is not present here.

WHEREFORE, the petition is DENIED. The assailed Decision dated July 23 1999 and Resolution dated November 4, 1999 of the Court of Appeals in CA-G.R. CV No. 38453 are hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

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.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 63737 as well as its Resolution2 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[’] father’s 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;

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

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. attorney’s 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

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

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 33 of Batas Pambansa (B.P.) Blg. 129, as amended by Section 3(3) of Republic Act (R.A.) No. 7691.5 He averred that –

(1) the complaint failed to state the assessed value of the land in dispute;

(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 Court’s 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 before said Court rather than before the RTC. …6

The petitioners opposed the motion.7 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 isP3,500,000.00. 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."

On November 7, 1996, the RTC issued an Order8 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.

After the denial of the motion to dismiss, the private respondent filed his answer with counterclaim.9 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.

On April 8, 1997, Regidor and Virginia Salvador filed their Answer-in-Intervention10 making common cause with the private respondent. On her own motion, however, Virginia Salvador was dropped as intervenor.11

During trial, the petitioners adduced in evidence Tax Declaration No. 8590-A showing that in 1991 the property had an assessed value of P5,950.00.12

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 defendant’s counterclaim.

SO ORDERED.13

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.

SO ORDERED.14

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, conformably to Section 3315 of R.A. No. 7691.

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

I

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

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 IN NOT AFFIRMING IN TOTO THE DECISION OF THE TRIAL COURT.17

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 respondent’s 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 exceedingP20,000.00, 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 whether the plaintiffs are entitled to some or all of the claims asserted therein.18 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 the occurrence of the cause of action or from the unlawful withholding of possession of the realty.19

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, 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.

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 level. It is synonymous to taxable value.20 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.

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 the complaint.21 The court cannot take judicial notice of the assessed or market value of lands.22 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 with an assessed value of less than P20,000.00.23

We quote with approval, in this connection, the CA’s 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 Court of Romblon which has jurisdiction over the territory where the property is located, and not the court a quo.24

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

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, attorney’s 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 court’s jurisdiction. The said damages are merely incidental to, or a consequence of, the main cause of action for recovery of possession of real property.26

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 void. The complaint should perforce be dismissed.27

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.

G.R. NO. 155179               August 24, 2007

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

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Decision1of the Court Appeals (CA) in CA-GR SP No. 60443 dated May 27, 2002 and its Resolution2 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 Tuao, Cagayan, docketed as Civil Case No. 240-T.3 They alleged that they are the co-owners of a a parcel of land containing 13,100 sq m located at Centro, Piat, Cagayan, which they inherited from the late Juan dela Cruz;4 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 suffered damages for their failure to use the same.5 Respondents prayed for the reconveyance and surrender of the disputed 400 sq m, more 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 suit and other reliefs and remedies just and equitable.6

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 exceedP20,000.00. 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 amount.7

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".

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

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

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

On May 27, 2002, the CA rendered the herein assailed Decision dismissing petitioner's action and affirming in totothe RTC.11 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.

x x x x

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 anaccion 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.

x x x x

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 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 value of the property subject of present controversy.12

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

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 the assessed value of the property does not exceedP20,000.00 outside Metro Manila and P50,000.00 within Metro Manila.14 He likewise avers that it is an indispensable requirement that the complaint should allege the assessed value of the property involved.15 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 instant case.16 The tax declaration covering Lot No. 1807 owned by respondents and where the herein disputed property is purportedly part -- a copy of which petitioner submitted to the CA -- also shows that the value of the property is only P551.00.17Petitioner 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 jurisdiction.18

Respondents contend that: the petition is without factual and legal bases, and the contested decision of the CA is entirely in accordance with law;19 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;20 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 the assessed value of an adjacent property and no documentary proof was shown to support the said allegation;21 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 property.22

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; andP50,000.00, if within.

Republic Act No. 769123 which amended Batas Pambansa Blg. 12924 and which was already in effect25 when respondents filed their complaint with the RTC on October 27, 1994,26 expressly provides:

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

x x x x

(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.

x x x x

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:

x x x x

(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 outside Metro Manila, falls under the original jurisdiction of the municipal trial court.27

In Atuel v. Valdez28 the Court likewise expressly stated that:

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 actions to recover possession of real property.29

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 or the interest thereon to determine which court has jurisdiction over the action.30 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 asserted therein.31

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;

x x x x

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.

x x x x

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.32

Nowhere in said complaint was the assessed value of the subject property ever mentioned. There is therefore no showing on the face of the complaint that the RTC has exclusive jurisdiction over the action of the respondents.33Indeed, 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 petitioner's action.34 The courts cannot take judicial notice of the assessed or market value of the land.351avvphi1

Jurisdiction of the court does not depend upon the answer of the defendant or even upon agreement, waiver or acquiescence of the parties.36 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 defendant.37

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

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 Court’s 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.

G.R. No. 119347 March 17, 1999

EULALIA RUSSELL, PUPERTO TAUTHO, FRANCISCO TAUTHO, SUSANA T. REALES, APITACIO TAUTHO, DANILO TAUTHO, JUDITHA PROS, GREGORIO TAUTHO, DEODITA T. JUDILLA, AGRIPINO TAUTHO, FELIX TAUTHO, WILLIAM TAUTHO, AND MARILYN PERALES, petitioners, vs.HONORABLE AUGUSTINE A. VESTlL, ADRIANO TAGALOG, MARCELO TAUTHO, JUANITA MENDOZA, DOMINGO BANTILAN, RAUL BATALUNA AND ARTEMIO CABATINGAN, respondent.

 

KAPUNAN, J.:

Before us is a Petition for Certiorari to set aside the Order dated January 12, 1995 issued by respondent Judge Augustine A. Vestil of the Regional Trial Court of Mandaue City, Branch 56, dismissing the complaint filed by petitioners on ground of lack of jurisdiction, as well as his Order dated February 13, 1995 denying petitioners' Motion for Reconsideration of the order of dismissal.

The facts of the case are as follows:

On September 28, 1994, petitioners filed a complaint against private respondents, denominated "DECLARATION OF NULLITY AND PARTITION," with the Regional Trial Court of Mandaue City, Branch 56, docketed as Civil Case No. MAN-2275. The complaint, in substance, alleged that petitioners are co-owners of that parcel of land, Lot 6149 situated in Liloan, Cebu and containing an area of 56,977.40 square meters, more or less. The land was previously owned by the spouses Casimero Tautho and Cesaria Tautho. Upon the death of said spouses, the property was inherited by their legal heirs, herein petitioners and private respondents. Since then, the lot had remained undivided until petitioners discovered a public document denominated "DECLARATION OF HEIRS AND DEED OF CONFIRMATION OF A PREVIOUS ORAL AGREEMENT OF PARTITION," executed on June 6, 1990. By virtue of this deed, private respondents divided the property among themselves to the exclusion of petitioners who are also entitled to the said lot as heirs of the late spouses Casimero Tautho and Cesaria Tautho. Petitioners claimed that the document was false and perjurious as the private respondents were not the only heirs and that no oral partition of the property whatsoever had been made between the heirs. The complaint prayed that the document be declared null and void and an order be issued to partition the land among all the heirs. 1

On November 24, 1994, private respondents filed a Motion to Dismiss 2 the complaint on the ground of lack of jurisdiction over the nature of the case as the total assessed value of the subject land is P5,000.00 which under section 33 (3) 3 of Batas Pambansa Blg. 129, as amended by R.A. No. 7691, 4 falls within the exclusive jurisdiction of the Municipal Circuit Trial Curt of Liloan, Compostela. 5

Petitioners filed an Opposition to the Motion to Dismiss 6 saying that the Regional Trial Court has jurisdiction over the case since the action is one which is incapable of pecuniary estimation within the contemplation of Section 19(1) of B.P. 129, as amended. 7

On January 12, 1995, the respondent judge issued an Order granting the Motion to Dismiss. 8 A Motion for Reconsideration of said order was filed by petitioners on January 30, 1995 alleging that the same is contrary to law because their action is not one for recovery of title to or possession of the land but an action to annul a document or declare it null and void, 9 hence, one incapable of pecuniary estimation falling within the jurisdiction of the Regional Trial Court. Private respondents did not oppose the motion for reconsideration.

On February 13, 1995, the respondent judge issued another Order denying the motion for reconsideration. 10

Hence, this petition wherein the sole issue raised is whether or not the Regional Trial Court has jurisdiction to entertain Civil Case No. MAN-2275.

We find merit in the petition.

Petitioners maintain the view that the complaint filed before the Regional Trial Court is for the annulment of a document denominated as "DECLARATION OF HEIRS AND DEED OF CONFIRMATION OF PREVIOUS ORAL PARTITION," which is clearly one incapable of pecuniary estimation, thus, cognizable by the Regional Trial Court.

Private respondents, on the other hand, insists that the action is one for re-partition and since the assessed value of the property as stated in the complaint is P5,000.00, then, the case falls within the jurisdiction of the Municipal Circuit Trial Court of Liloan, Compostela, Cebu.

For better appreciation of the facts, the pertinent portions of the complaint are reproduced hereunder:

xxx xxx xxx

3. That the plaintiffs and the defendants are the legal heirs of spouses Casimero Tautho and Cesaria N. Tautho who died long time ago;

4. That in life the spouses became the owners in fee simple of a certain parcel of land, which is more particularly described as follows:

A parcel of land containing 56,97740 square meters,

more or less, located at Cotcot, Liloan, Cebu.

designated as Lot 6149 per Technical Description and Certification issued by the Office of the Land Management copy of which are hereto attached as Annexes "A" and "A-1" and are made part hereof: total assessed value is P5,000.00;

5. That the passed to the children of the spouses (who are all deceased except for defendant Marcelo Tautho), namely: Zacarias, Epifania, Vicenta, Felecisimo, Maria, Lorencia and Marcelo, and which in turn passed to the plaintiffs and defendants upon their death they being their descendants and legal heirs;

6. That the subject parcel of land has for year been undivided by and among the legal heirs of said previous owners;

7. That, very recently, plaintiffs discovered a public document, which is a declaration of heirs and deed of confirmation of a previous oral agreement of partition, affecting the land executed by and among the defendants whereby defendants divided the property among themselves to the exclusion of plaintiffs who are entitled thereto; attached hereto as Annex "B" and is made part hereof is xerox copy of said document;

8. That the instrument (Annex "B") is false and perjurious and is a complete nullity because the defendants are not the only heirs of Casimero Tautho; plaintiffs are also heirs and descendants of said deceased; moreover, there has been no oral partition of the property;

9. That pursuant to said document (Annex "B"), defendants had procured tax declarations of the land for their supposed "shares" to the great damage and prejudice of plaintiffs;

10. That the property in controversy should be divided into seven (7) equal parts since Casimero Tautho and Cesaria N. Tautho had seven children;

11. That the parties had failed to settle the controversy amicably at the barangay level; attached hereto as Annex "C" is Certification to file Action;

12. That by reason of the foregoing unjust and illegal act of defendants, plaintiffs were forced to bring instant action and contract the services of the undersigned counsel with whom they bind themselves to pay P30,000.00 as attorney's fees.

WHEREFORE, it is most respectfully prayed of this Honorable Court to declare null and void the document (Annex "B") of declaration of heirs and confirmation and to order the partition of the land into seven (7) equal parts; each part shall respectively go to the seven (7) children of Casimero Tautho and considering six (6) of them died already the same shall go to their children or descendants, and to order the defendants to pay plaintiffs attorney's fees in the amount of P30,000.00.

Plaintiffs further pray for such other reliefs and remedies just and equitable under the premises. 11

We agree with petitioners.

The complaint filed before the Regional Trial Court is doubtless one incapable of pecuniary estimation and therefore within the jurisdiction of said court.

In Singsong vs. Isabela Sawmill, 12 we had the occasion to rule that:

[I]n determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a

consequence of, the principal relief sought, this Court has considered such where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance (now Regional Trial Courts). 13

Examples of actions incapable of pecuniary estimation are those for specific performance, support, or foreclosure of mortgage or annulment of judgment; 14 also actions questioning the validity of a mortgage, 15 annulling a deed of sale or conveyance and to recover the price paid 16 and for rescession, which is a counterpart of specific performance. 17

While actions under Sec. 33(3) of B.P. 129 are also incapable of pecuniary estimation, the law specifically mandates that they are cognizable by the MTC, METC, or MCTC where the assessed value of the real property involved does exceed P20,000.00 in Metro Manila, or P50,000.00, if located elsewhere. If the value exceeds P20,000.00 or P50,000.00 as the case may be, it is the Regional Trial Courts which have jurisdiction under Sec. 19(2). 18 However, the subject matter of the complaint in this case is annulment of a document denominated as "DECLARATION OF HEIRS AND DEED OF CONFIRMATION OF PREVIOUS ORAL PARTITION."

The main purpose of petitioners in filing the complaint is to declare null and void the document in which private respondents declared themselves as the only heirs of the late spouses Casimero Tautho and Cesaria Tautho and divided his property among themselves to the exclusion of petitioners who also claim to be legal heirs and entitled to the property. While the complaint also prays for the partition of the property, this is just incidental to the main action, which is the declaration of nullity of the document above-described. It is axiomatic that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein. 19

WHEREFORE, premises considered, the petition is hereby GRANTED. The Order dismissing Civil Case No. MAN-2275, as well as the Order denying the motion for reconsideration of said Order, is SET ASIDE.

The Regional Trial Court, Branch 56, Mandaue City is ORDERED to proceed with dispatch in resolving Civil Case No. MAN-2275. No costs.

SO ORDERED.

G.R. No. 80040 September 30, 1988

ISMAEL AMORGANDA and TRINIDAD G. AMORGANDA, petitioners, vs.HONORABLE COURT OF APPEALS, ESTANISLAO SAYCON and CLARA SAYCON, respondents.

Marcelo G. Flores for petitioner.

Leo B. Diocos for respondents.

 

PADILLA, J.:

Review on certiorari of the decision * rendered by the respondent appellate court on 17 July 1987, in CA-G.R. SP No. 09614, entitled: "Estanislao Saycon, et al., petitioners, versus Hon. Eleuterio E. Chiu, etc. et al., respondents," which set aside, for being null and void, the order issued by Judge Eleuterio E. Chill on 23 April 1986 in Civil Case No. 8794 of the Regional Trial Court of Negros Oriental, restraining the defendants therein, now private respondents, from cultivating, taking possession of, gathering the fishes and shrimps or other products thereon, or committing acts of interference or disturbance in the plaintiffs' possession of the fishpond in question, and directed the dismissal of said Civil Case No. 8794.

The facts of the case, in brief, are as follows:

On 30 July 1977, herein private respondents, spouses Estanislao and Clara Saycon, leased to herein petitioners, spouses Ismael and Trinidad Amorganda, a fishpond located at Cabalulan Manipis, Tanjay Negros Oriental, which "land is a part or portion of PLA No. 2086 containing an area of SEVEN (7) hectares, more or less, 'in the name of Pedro Saycon, lessors' deceased father,' " for a period of ten (10) years from said date. Rentals in the amount of P3,000,00 a year for the entire lease period were duly paid to and received by the lessors. On 30 January 1981, the lease period was extended for two (2) years, to expire on 30 July 1989. Again, rentals for the extended period were paid to and received by the lessors. Then, on 20 December 1982, the lessors, in consideration of another advance rental on the fishpond, again agreed to extend the lease period for another eight (8) years from 30 July 1989 and terminating on 31, July 1997. 1

On 5 January 1986, however, the lessors, herein private respondents Estanislao and Clara Saycon, harvested bangus and shrimps from the fishpond without the knowledge and consent of the lessees, herein petitioners Ismael and Trinidad Amorganda. Consequently, the petitioners filed a criminal complaint for qualified theft against the private respondents before the Provincial Fiscal of Negros Oriental. The complaint was docketed as I.S. Case No. 86-F and is still pending preliminary investigation therein. 2

Then, on 27 February 1986, the private respondents, allegedly with the aid of armed men, forcibly entered the leased fishpond and prevented the petitioners and their workers from entering the premises. As a result, the petitioners filed a complaint against the private respondents before the Regional Trial Court of Negros Oriental, docketed therein as Civil Case No. 8794, to compel the private respondents to return the leased premises to them and for damages in the amounts of. (1) P25,000. 00 every three (3) months or P100,000.00 a year, until possession of the fishpond is restored to the lessees; (b) P20,000.00, as moral damages and P10,000.00, as exemplary damages; (c) P10,000.00, as attorney's fees and P500.00 per appearance in court of counsel; and (d) such other actual expenses and damages as may be proved during the trial. The petitioners further prayed that a writ of preliminary injunction be immediately issued restraining the private respondents, their agents or persons acting in their behalf, from cultivating, taking possession of, or committing acts which would disturb or interfere with petitioners' possession of said fishpond. 3

Finding the application for the issuance of a writ of preliminary injunction to be sufficient in form and substance, the trial court issued a temporary restraining order on 4 March 1986, directing the private respondents, defendants therein, to refrain from cultivating, taking possession of, gathering fishes, shrimps and other products from the land in question until further orders, and set the application for preliminary injunction for hearing on 13 March 1986. 4

On 26 March 1986, the private respondents filed their Answer to the complaint, alleging that the private respondent Estanislao Saycon is not the true owner of the property which he had leased to the petitioners, but the government of the Philippines, because it reverted to the government after the license of Pedro Saycon, late father of private respondents Estanislao Saycon, was cancelled and all improvements existing in the area forfeited in favor of the government; that the petitioners have no right whatsoever to the fishpond because their earlier rights were lost upon the cancellation of the license of said Pedro Saycon and the area declared open for disposition to any interested party and qualified applicant; that the trial court has no jurisdiction to take cognizance of disputes relative to possessory rights over the fishpond in question, which belongs to the Bureau of Fisheries and Aquatic Resources (BFAR); that the herein petitioners failed to exhaust all administrative remedies before resort was made to the courts; and that the petitioners have no cause of action since the fishpond in question had been forfeited in favor of the government and petitioners are not applicants for permit to operate or lease the same from the government. 5

On 23 April 1986, the trial court granted the application for issuance of a writ of preliminary injunction "restraining, enjoining, and prohibiting the defendants, their agents, servants, and/or any person acting in their behalves from cultivating, taking possession of, gathering the fishes and shrimps or other products thereon, or committing acts of interference or disturbance in the plaintiffs' possession" of the fishpond in question upon the filing of an injunction bond in the amount of P50,000.00. 6 The private respondents filed a motion for reconsideration of the order, but their motion was denied on 11 June 1986. 7

Consequently, the private respondents filed a petition with the Intermediate Appellate Court (now Court of Appeals) to annul and set aside the order of 23 April 1986 on the grounds that: (1) the trial court has no jurisdiction over the case since the complaint filed is in the nature of recovery of possession and should have been filed in the Municipal Court of Tanjay Negros Oriental, where the land is situated, in accordance with Rule 70 of the Rules of Court; (2) there is no cause of action because "(w)hen the BFAR issued an Order confiscating the fishpond in favor of the Government and declaring the contract of lease between Saycon and the Amorgandas to be null and void, the rights of the Amorgandas for (to) possession over the fishpond was (were) not anymore existing; they might have some rights for sum of money from the Saycons. The respondents have no right whatsoever to step in the shoes of the government; and (3) non-exhaustion of administrative remedies in that the action should have been filed with the BFAR before resort was made to the courts. 8

The herein petitioners in due course filed their comment with the Court of Appeals 9 and on 17 July 1987, the respondent appellate court issued the decision in question, declaring null and void the order of the regional trial court of 23 April 1986, for the reason that the complaint is one for recovery of possession over which the regional trial court has no jurisdiction, and directing the trial court to dismiss Civil Case No. 8794 of the Regional Trial Court of Negros Oriental. 10

On 10, August 1987, the petitioners filed, by registered mail, a motion for reconsideration of the decision, 11 but the respondent appellate court denied the motion for having been filed beyond the reglementary period. 12 Hence, the present recourse. The Court gave due course to the petition. 13

The petitioners raise two (2) issues, to wit:

(1) whether or not the petitioners' motion for reconsideration of the decision of the respondent appellate court had been filed out of time and the said decision, is already final and executory; and

(2) whether or not the Regional Trial Court of Negros Oriental has jurisdiction over the case.

On the procedural issue, it appears that counsel for the herein petitioners received a copy of the decision of the Court of Appeals on 24 July 1987. Pursuant to the rules, 14 he had fifteen (15) days from said date, or up to 8 August 1987, within which to appeal therefrom or file a motion for its reconsideration. Counsel for the petitioners, however, filed the motion for reconsideration only on 10 August 1987, or two (2) days after the expiration of the reglementary period. Counsel for the petitioners, in explaining the delay, claimed that the last day for filing the motion for reconsideration, 8 August 1987, fell on a holiday, a Saturday, so that he filed the motion for reconsideration on Monday, 10 August 1987, the day following a holiday and Sunday.

Saturday, 8 August 1987, however, was not an official holiday so that the petitioners' motion for reconsideration was filed beyond the reglementary period. But a strong compelling reason, i.e., the prevention of a grave miscarriage of justice exists in this case that would warrant a suspension of the Rules and excuse the delay of two (2) calendar days in the filing of said motion for reconsideration.

The private respondents have admitted to have unilaterally terminated the lease contract executed between them and the petitioners, and prevented the latter from entering the fishpond, subject matter of the lease contract, despite the fact that the lease between them is to expire only on 31 July 1997, and that rentals have been paid to private respondents by the petitioners up to said date. Their (private respondents) excuse is that they have lost their right over the land since said land, which had been previously leased to their late father, Pedro Saycon, had been forfeited in favor of the government.

Indeed, the private respondents have lost whatever right they may have had over the fishpond in question after said land had been forfeited in favor of the government. In his Order, dated 11 April 1985, the Director of the Bureau of Fisheries and Aquatic Resources (BFAR) categorically stated that the heirs of Pedro Saycon, among them the private respondent Estanislao Saycon, "have no more leg to stand on, much less anymore personality to assert any right over the area under OFP No. F-234-B. 15 That being the case, what right had the private respondents to enter the fishpond and exclude the petitioners there from? The fact that the Director of the BFAR, in his Order of 11 April 1985, had ordered that any occupant thereon should vacate the premises did not give the private respondents license to renege on their obligation under the contract 6f lease and eject the petitioners from the land. As correctly stated by the trial court in its order dated 23 April 1986, "(t)he Order of the BFAR (Exhibit "L") relied upon by the defendant (private respondent herein) is of no moment, for the government is not a party in this case. The said Order would become material and relevant only when the government takes legal action against any possessor of the fishpond in question. 16

Besides, the private respondents who appear to be guilty of coercion, stand to unjustly profit from their fraudulent and deceitful act at the expense of the petitioners who may not be able to recover the rentals advanced by them to the private respondents.

One other reason for suspending the Rules and allowing the petitioners to appeal is that there is no indication that, in filing the motion for reconsideration on Monday, 10 August 1987, instead of Saturday, 8 August 1987, counsel for the petitioners was motivated by a desire to delay the proceedings or obstruct the administration of justice. His mistaken belief that Saturday is a legal holiday appears to be pardonable since the courts of justice do not hold office on Saturdays. Anyway, the delay of two (2) calendar days—one of which was a Sunday—in the filing of the motion for reconsideration did not prejudice the cause of the private respondents, or that said private respondents suffered material injury by reason of the delay.

In Lagunzad vs. Court of Appeals, 17 the Court said, and we quote.

We cannot just more petitioner's plea for a review of his case in this instance. There is not the slightest indication of malice on his part or of a desire to delay the proceedings and to transgress the rules on procedure. If at all, his was an honest mistake or miscalculation worsened by some fortuitous occurrence which we deem condonable under the circumstances. For we have, in many cases granted relief where a stringent application of the requirement of timeliness of pleadings would have denied a litigant substantial justice and equity. Suffice it to note that the rules on technicality were promulgated to secure not to override substantial justice. As it should be in this case especially because the petition appears also to be impressed with merit.

The other issue raised by the petitioners is: whether or not the Regional Trial Court of Negros Oriental has jurisdiction over the case.

The respondent appellate court, in its decision under review, found that the regional trial court has no jurisdiction over the case since the object of the complaint was to recover possession of the land which the herein private respondents had secured by means of force, threats and intimidation. Said the appellate court:

... It is quite obvious from the foregoing that the object of the complaint is to recover possession of the property in question which private respondents acquired as lessees thereof, but of which they were deprived by petitioners by means of "force, threats and intimidation." The complaint thus alleges the facts which confer exclusive jurisdiction in the Municipal Trial Court to try the case. (Sec. 33(2), BP 129). The Honorable respondent Court being devoid of jurisdiction over the main case, it was, likewise, without jurisdiction to issue the writ of preliminary injunction dated 23 April 1986. 18

We do not agree. While the herein petitioners' complaint in the trial court alleges that they were dispossessed of the leased fishpond by the lessors, herein private respondents, by means of force, stealth and intimidation, so that the complaint would appear, at first blush, to be one for forcible entry and damages, the action is, in reality, one for specific performance, i.e., to compel the private respondents, as lessors, to comply with their obligations under the lease contract and return the possession of the leased premises to them, and for damages due to their (private respondents') unjust occupation of the land. Such action is one not capable of pecuniary estimation and comes within the exclusive original jurisdiction of regional trial courts. Thus, Article 1654 of the Civil Code provides:

Art. 1654. The lessor is obliged:

(a) To deliver the thing which is the object of the contract in such a condition as to render it fit for the use intended;

(2) To make on the same during the lease all the necessary repairs in order to keep it suitable for the use it has been devoted, unless there is a stipulation to the contrary;

(3) To maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract.

In De Rivera vs. Halili, 19 the Court said that the action to compel the lessor to comply with his obligation "to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract" is within the exclusive original jurisdiction of the court of first instance, now the regional trial court.

In Lapitan vs. Scandia Inc., 20 the Court, speaking through the eminent Mr. Justice Jose B.L. Reyes, also said:

A review of the jurisprudence of this Court indicates that in determining whether an action is one not capable of peculliary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, or where the money claim is purely incidental to, or a consequence of, the principal relief sought like in the suits to have the defendant perform his paint of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance. ...

Since the present action is to compel the private respondents to perform their part of the contract of lease "to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract," the action is within the exclusive original jurisdiction of the regional trial court. 21

The respondent Court of Appeals, therefore, erroneously classified the present action as one for forcible entry and damages which is cognizable exclusively by the municipal trial court. Accordingly, the decision appealed from should be reversed and set aside.

We also find no merit in the claim of the private respondents that the Bureau of Fisheries and Aquatic Resources (BFAR) has exclusive jurisdiction over the case. In Pitargue vs. Sorilla 22 the Court ruled:

... The vesting of the Lands Department with authority to administer, dispose, and alienate public lands, ... must not be understood as depriving the other branches of the Government of the exercise of their respective functions or powers thereon, such as the authority to stop disorders and quell breaches of the peace by the police, and the authority on the part of the courts to take jurisdiction over possessory actions arising therefrom not involving, directly or indirectly, alienation and disposition.

WHEREFORE, the judgment appealed from is hereby REVERSED and SET ASIDE and another one entered affirming the order issued by the trial court on 23 April 1986 in Civil Case No. 8794 of the Regional Trial Court of Negros Oriental. With costs against the private respondents.

SO ORDERED.

G.R. No. 138896               June 20, 2000

BARANGAY SAN ROQUE, TALISAY, CEBU, petitioner, vs.Heirs of FRANCISCO PASTOR namely: EUGENIO SYLIANCO, TEODORO SYLIANCO, TEODORO SYLIANCO, ISABEL SYLIANCO, EUGENIA S. ONG, LAWRENCE SYLIANCO, LAWSON SYLIANCO, LAWINA S. NOTARIO, LEONARDO SYLIANCO JR. and LAWFORD SYLIANCO, respondents.

PANGANIBAN, J.:

An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within the jurisdiction of the regional trial courts, regardless of the value of the subject property.

The Case

Before us is a Petition for Review on Certiorari assailing the March 29, 1999 Order1 of the Regional Trial Court (RTC) of Cebu City (Branch 58) in Civil Case No. CEB-21978, in which it dismissed a Complaint for eminent domain. It ruled as follows:

Premises considered, the motion to dismiss is hereby granted on the ground that this Court has no jurisdiction over the case. Accordingly, the Orders dated February 19, 1999 and February 26, 1999, as well as the Writ of Possession issued by virtue of the latter Order are hereby recalled for being without force and effect.2

Petitioner also challenges the May 14, 1999 Order of the RTC denying reconsideration.

The Facts

Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu (Branch 1)3 a Complaint to expropriate a property of the respondents. In an Order dated April 8, 1997, the MTC dismissed the Complaint on the ground of lack of jurisdiction. It reasoned that "[e]minent domain is an exercise of the power to take private property for public use after payment of just compensation. In an action for eminent domain, therefore, the principal cause of action is the exercise of such power or right. The fact that the action also involves real property is merely incidental. An action for eminent domain is therefore within the exclusive original jurisdiction of the Regional Trial Court and not with this Court."4

Assailed RTC Ruling

The RTC also dismissed the Complaint when filed before it, holding that an action for eminent domain affected title to real property; hence, the value of the property to be expropriated would determine whether the case should be filed before the MTC or the RTC. Concluding that the action should have been filed before the MTC since the value of the subject property was less than P20,000, the RTC ratiocinated in this wise:

The instant action is for eminent domain. It appears from the current Tax Declaration of the land involved that its assessed value is only One Thousand Seven Hundred Forty Pesos (P1,740.00). Pursuant to Section 3, paragraph (3), of Republic Act No. 7691, all civil actions involving title to, or possession of, real property with an assessed value of less than P20,000.00 are within the exclusive original jurisdiction of the Municipal Trial Courts. In the case at bar, it is within the exclusive original jurisdiction of the Municipal Trial Court of Talisay, Cebu, where the property involved is located.

The instant action for eminent domain or condemnation of real property is a real action affecting title to or possession of real property, hence, it is the assessed value of the property involved which determines the jurisdiction of the court. That the right of eminent domain or condemnation of real, property is included in a real action affecting title to or possession of real property, is pronounced by retired Justice Jose Y. Feria, thus, "Real actions are those affecting title to or possession of real property. These include partition or condemnation of, or foreclosures of mortgage on, real property. . . ."5

Aggrieved, petitioner appealed directly to this Court, raising a pure question of law.6 In a Resolution dated July 28, 1999, the Court denied the Petition for Review "for being posted out of time on July 2, 1999, the due date being June 2, 1999, as the motion for extension of time to file petition was denied in the resolution of July 14, 1999."7 In a subsequent Resolution dated October 6, 1999, the Court reinstated the Petition.8

Issue

In its Memorandum, petitioner submits this sole issue for the consideration of this Court:

Which court, MTC or RTC, has jurisdiction over cases for eminent domain or expropriation where the assessed value of the subject property is below Twenty Thousand (P20,000.00) Pesos?9

This Court's Ruling

The Petition is meritorious.

Main Issue:

Jurisdiction over an Expropriation Suit

In support of its appeal, petitioner cites Section 19 (1) of BP 129, which provides that RTCs shall exercise exclusive original jurisdiction over "all civil actions in which the subject of the litigation is incapable of pecuniary estimation; . . . . ." It argues that the present action involves the exercise of the right to eminent domain, and that such right is incapable of pecuniary estimation.

Respondents, on the other hand, contend that the Complaint for Eminent Domain affects the title to or possession of real property. Thus, they argue that the case should have been brought before the MTC, pursuant to BP 129 as amended by Section 3 (3) of RA 7691. This law provides that MTCs shall have exclusive original jurisdiction over all civil actions that involve title to or possession of real property, the assessed value of which does not exceed twenty thousand pesos or, in civil actions in Metro Manila, fifty thousand pesos exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs.

We agree with the petitioner that an expropriation suit is incapable of pecuniary estimation. The test to determine whether it is so was laid down by the Court in this wise:

A review of the jurisprudence of this Court indicates that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, or where the money claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance. The rationale of the rule is plainly that the second class cases, besides the determination of damages, demand an inquiry into other factors which the law has deemed to be more within the competence of courts of first instance, which were the lowest courts of record at the time that the first organic laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine Commission of June 11, 1901). 10

In the present case, an expropriation suit does not involve the recovery of a sum of money. Rather, it deals with the exercise by the government of its authority and right to take private property for public use. 11 In National Power Corporation v. Jocson, 12 the Court ruled that expropriation proceedings have two phases:

The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal

of the action, "of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint." An order of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action and leaves nothing more to be done by the Court on the merits. So, too, would an order of condemnation be a final one, for thereafter as the Rules expressly state, in the proceedings before the Trial Court, "no objection to the exercise of the right of condemnation (or the propriety thereof) shall be filed or heard."

The second phase of the eminent domain action is concerned with the determination by the court of "the just compensation for the property sought to be taken." This is done by the Court with the assistance of not more than three (3) commissioners. The order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. . . .

It should be stressed that the primary consideration in an expropriation suit is whether the government or any of its instrumentalities has complied with the requisites for the taking of private property. Hence, the courts determine the authority of the government entity, the necessity of the expropriation, and the observance of due process. 1 In the main, the subject of an expropriation suit is the government's exercise of eminent domain, a matter that is incapable of pecuniary estimation.

True, the value of the property to be expropriated is estimated in monetary terms, for the court is duty-bound to determine the just compensation for it.1avvphi1 This, however, is merely incidental to the expropriation suit. Indeed, that amount is determined only after the court is satisfied with the propriety of the expropriation.

Verily, the Court held in Republic of the Philippines v. Zurbano that "condemnation proceedings are within the jurisdiction of Courts of First Instance," 14 the forerunners of the regional trial courts. The said case was decided during the effectivity of the Judiciary Act of 1948 which, like BP 129 in respect to RTCs, provided that courts of first instance had original jurisdiction over "all civil actions in which the subject of the litigation is not capable of pecuniary estimation." 15 The 1997 amendments to the Rules of Court were not intended to change these jurisprudential precedents.

We are not persuaded by respondents' argument that the present action involves the title to or possession of a parcel of land. They cite the observation of retired Justice Jose Y. Feria, an eminent authority in remedial law, that condemnation or expropriation proceedings are examples of real actions that affect the title to or possession of a parcel of land. 16

Their reliance is misplaced. Justice Feria sought merely to distinguish between real and personal actions. His discussion on this point pertained to the nature of actions, not to the jurisdiction of courts. In fact, in his pre-bar lectures, he emphasizes that jurisdiction over eminent domain cases is still within the RTCs under the 1997 Rules.

To emphasize, the question in the present suit is whether the government may expropriate private property under the given set of circumstances. The government does not dispute respondents' title to or possession of the same. Indeed, it is not a question of who has a better title or right, for the government does not even claim that it has a title to the property. It merely asserts its inherent sovereign power to "appropriate and control individual property for the public benefit, as the public necessity, convenience or welfare may demand." 17

WHEREFORE, the Petition is hereby GRANTED and the assailed Orders SET ASIDE. The Regional Trial Court is directed to HEAR the case. No costs.

SO ORDERED.

G.R. No. L-3448            November 27, 1950

MANUEL CRUZ, petitioner, vs.BIENVENIDO A. TAN, Judge of the Court of First Instance of Rizal, Rizal City Branch, and TELESFORA YAMBAO, respondents.

Eliseo Caunca for petitioner.Miguel R. Cornejo for respondents.

JUGO, J.:

This is a petition for a writ of certiorari and prohibition with injunction.

On August 3, 1949, the respondent Telesfora Yambao (plaintiff in civil case No. 898, Court of First Instance of Rizal — Rizal City Branch) filed a complaint against the petitioner Manuel Cruz (defendant in said case), in which she prayed that the petitioner herein be ordered to finish the construction of a house mentioned in the complaint, or to pay her the sum of P644.31. Within ten days from receipt of the summons, the petitioner filed a motion for a bill of particulars, which was denied by the court in an order dated September 3, 1949, received by the petitioner on September 15, 1949.

On September 19, 1949, the petitioner filed a motion to dismiss the case on the ground that the Court of First Instance of Rizal has no jurisdiction over the subject-matter of the suit inasmuch as the demand contained in the prayer is only for P644.31, which falls under the jurisdiction of the Justice of the Peace or the Judge of the municipal Court.

The motion to dismiss was denied by the court in an order dated October 3, 1949, which order also set the case for trial on the merits on October 10, 1949, although the petitioner had not yet filed his answer nor had he been declared in default.

Said order setting the case for trial on October 10, 1949 was received by the petitioner's counsel on October 12, 1949, that is, two days afterward.

On October 10, 1949, the court dismissed the case for lack of interest of the parties, as they did not appear at the trial.

On October 12, 1949, the respondent Telesfora Yambao filed a motion praying that the trial of the case be set for November 14, 1949, without asking that the order dismissing the case be set aside.

The above-mentioned motion for setting the trial on November 14, 1949 was heard on October 15, 1949, but as the petitioner's counsel received notice of said motion on the said date, October 15, in the afternoon, he could not appear at the hearing of said motion in the morning of October 15.

The court, acting upon said motion of October 12 set the case for trial on November 17, 1949.

The petitioner filed a so-called "Manifestation," dated November 17, 1949, stating that inasmuch as the order of dismissal had not been set aside, said order had become final.

On November 10, 1949, the petitioner filed the present petition with this court.

The respondent court after having been informed by the petitioner that he had filed a petition for a writ ofcertiorari and prohibition with injunction with the Supreme Court, issued an order postponing the trial of the case to November 29, 1949, and setting aside the order of dismissal dated October 10, 1949.

It is not necessary to pass on all the questions raised by both parties in their pleadings and memoranda in this court, except the question as to jurisdiction, for that is decisive of this case.

It will be noted that the demand of the complaint filed in the Court of First Instance of Rizal is for the sum of P644.31. The alternative remedy of specific performance, which consists in finishing the house, is capable of pecuniary estimation at the same amount, more or less, for, otherwise, the respondent Telesfora Yambao would not have made such alternative demand.

In the Judiciary Act of 1948 (Republic Act No. 296), we find the following pertinent provisions:

SEC. 44. Original jurisdiction. — Courts of First Instance shall have original jurisdiction:

xxx           xxx           xxx

(c) In all cases in which the demand, exclusive of interest, or the value of the property in controversy, amounts to more than two thousand pesos; (Emphasis supplied.)

Sec. 86. Jurisdiction of justices of the peace and judges of municipal courts of chartered cities. — The jurisdiction of justices of the peace and judges of municipal courts of chartered cities shall consist of:

xxx           xxx           xxx

(b) Original jurisdiction in civil actions arising in their respective municipalities, and not exclusively cognizable by the Courts of First Instance.

SEC. 88. Original jurisdiction in civil cases. — In all civil actions, including those mentioned in rules 59 and 62 of the

Rules of Court, arising in his municipality or city, and not exclusively cognizable by the Court of First Instance, the justice of the peace and the judge of a municipal court shall have exclusive original jurisdiction where the value of the subject-matter or amount of the demand does not exceed two thousand pesos, exclusive of interest and costs. . . .(Emphasis supplied.)

It is clear from the above provisions that the case in question comes within the exclusive original jurisdiction of the municipal court or justice of the peace court.

The respondent argues that the value of the house, the construction of which has almost been completed, requiring only the expenditure of P644.31 to complete it, according to the allegations of the complaint, is more than P2,873.37, and that consequently the value of the property involved is beyond the jurisdiction of the municipal court. The jurisdiction of the respective courts is determined by the value of the demand and not the value of the transaction out of which the demand arose; that is what the law says in unmistakable terms. The alternative prayer for specific performance is also of the same value, for, as said above, the alternative prayers would not have been made in the complaint if one was more valuable than the other; hence, the specific performance alternatively prayed for, is capable of pecuniary estimation at P644.31 (sec. 88, par. 2, Rep. Act No. 296).

In view of the foregoing, it is declared that the respondent Judge of the Court of First Instance of Rizal is without jurisdiction to try the case referred to, and he is ordered to stop further proceedings by dismissing the case. With costs against the respondent Telesfora Yambao.

G.R. No. L-24668           July 31, 1968

ANDRES LAPITAN, plaintiff-appellant, vs.SCANDIA, INC., and GENERAL ENGINEERING CO., defendants-appellees.

Florido and Florido for plaintiff-appellant. Ponce Enrile, Siguion Reyna, Montecillo and Belo and Jesus P. Garcia for defendant-appellee Scandia, Inc. Jose R. Limchin for defendant-appellee General Engineering Co.

REYES, J.B.L., J.:

Andres Lapitan has appealed directly to this Court against an order of the Court of First Instance of Cebu, dismissing, for lack of jurisdiction, his complaint for rescission and damages against appellees Scandia, Inc., of Manila and General Engineering Co. of Cebu.

Lapitan's complaint in the court below averred that on April 17, 1963 he purchased from Scandia, Inc., through its sub-dealer in Cebu City, General Engineering Co., one ABC Diesel Engine, of 16 horse power, for P3,735.00, paid in cash; that he bought the engine for running a rice and corn mill at Ormoc City, Leyte; that defendants had warranted and assured him that all spare parts for said engine are kept in stock in their stores, enabling him to avoid loss due to long periods of waiting, and that defendants would replace any part of the engine that might break within twelve months after delivery. Plaintiff further charged that on June 28, 1963, the cam rocker arm of the engine broke due to faulty material and workmanship and it stopped functioning; that the sellers were unable to send a replacement until August 29, 1963; that barely six days after replacement the new part broke again due to faulty casting and poor material, so he (Lapitan) notified the sellers and demanded rescission of the contract of sale; that he sought return of the price and damages but defendants did not pay. He, therefore, prayed (1) for rescission of the contract; (2) reimbursement of the price; (3) recovery of P4,000.00 actual damages plus P1,000.00 attorney's fees; (4) recovery of such moral and exemplary damages as the court deems just and equitable; and (5) costs and other proper relief.

After filing answers disclaiming liability, Scandia, Inc., moved to dismiss the complaint on the ground that the total amount claimed was only P8,735.00, and was within the exclusive jurisdiction of the municipal court, under Republic Act 3828, amending the Judiciary Act by increasing the jurisdiction of municipal courts to civil cases involving P10,000.00 or less.

After argument, the Court of First Instance of Cebu dismissed the action for lack of jurisdiction, invoking Cruz vs. Judge B. Tan, 48 O.G. 1320, 87 Phil. 527.

Unable to obtain reconsideration, Lapitan appealed directly to this Court, arguing (1) that rescission was incapable of pecuniary estimation, and (2) that as he claimed moral and exemplary damages, besides the price of P3,735.00, P4,000.00 actual damages, and P1,000.00 attorneys' fees, the value of his demand exceeded the jurisdiction of the municipal court.

A review of the jurisprudence of this Court indicates that in determining whether an action is one the subject matter of which is not capable of

pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, or where the money claim is purely incidental to, or a consequence of, the principal relief sought, like in suits to have the defendant perform his part of the contract (specific performance) and in actions for support, or for annulment of a judgment or to foreclose a mortgage, 1 this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by courts of first instance. The rationale of the rule is plainly that the second class cases, besides the determination of damages, demand an inquiry into other factors which the law has deemed to be more within the competence of courts of first instance, which were the lowest courts of record at the time that the first organic laws of the Judiciary were enacted allocating jurisdiction (Act 136 of the Philippine Commission of June 11, 1901).

Actions for specific performance of contracts have been expressly pronounced to be exclusively cognizable by courts of first instance: De Jesus vs. Judge Garcia, L-26816, February 28, 1967; Manufacturers' Distributors, Inc. vs. Yu Siu Liong, L-21285, April 29, 1966. And no cogent reason appears, and none is here advanced by the parties, why an action for rescission (or resolution) should be differently treated, a rescission being a counterpart, so to speak, of "specific performance". In both cases, the court would certainly have to undertake an investigation into facts that would justify one act or the other. No award for damages may be had in an action for rescission without first conducting an inquiry into matters which would justify the setting aside of a contract, in the same manner that courts of first instance would have to make findings of fact and law in actions not capable of pecuniary estimation expressly held to be so by this Court, arising from issues like those raised in Arroz v. Alojado, et al., L-22153, March 31, 1967 (the legality or illegality of the conveyance sought for and the determination of the validity of the money deposit made); De Ursua v. Pelayo, L-13285, April 18, 1950 (validity of a judgment); Bunayog v. Tunas, L-12707, December 23, 1959 (validity of a mortgage); Baito v. Sarmiento, L-13105, August 25, 1960 (the relations of the parties, the right to support created by the relation, etc., in actions for support); De Rivera, et al. v. Halili, L-15159, September 30, 1963 (the validity or nullity of documents upon which claims are predicated). Issues of the same nature may be raised by a party against whom an action for rescission has been brought, or by the plaintiff himself. It is, therefore, difficult to see why a prayer for damages in an action for rescission should be taken as the basis for concluding such action as one capable of pecuniary estimation — a prayer which must be included in the main action if plaintiff is to be compensated for what he may have suffered as a result of the breach committed by defendant, and not later on precluded from recovering damages by the rule against splitting a cause of action and discouraging multiplicity of suits.2

Of course, where the money claim is prayed for as an alternative relief to specific performance, an equivalence is implied that permits the jurisdiction to be allocated by the amount of the money claim (Cruz vs. Tan, 87 Phil. 627). But no such equivalence can be deduced in the case at bar, where the money award can be considered only if the rescission is first granted.

We, therefore, rule that the subject matter of actions for rescission of contracts are not capable of pecuniary estimation, and that the court below erred in declining to entertain appellant's action for lack of jurisdiction.

WHEREFORE, the appealed order of dismissal is reversed and set aside, and the case is ordered remanded to the court of origin for further proceedings conformable to this opinion. Costs against appellees.

G.R. No. 176858               September 15, 2010

HEIRS OF JUANITA PADILLA, represented by CLAUDIO PADILLA, Petitioners, vs.DOMINADOR MAGDUA, Respondent.

D E C I S I O N

CARPIO, J.:

The Case

Before the Court is a petition for review on certiorari1 assailing the Orders dated 8 September 20062 and 13 February 20073 of the Regional Trial Court (RTC) of Tacloban City, Branch 34, in Civil Case No. 2001-10-161.

The Facts

Juanita Padilla (Juanita), the mother of petitioners, owned a piece of land located in San Roque, Tanauan, Leyte. After Juanita’s death on 23 March 1989, petitioners, as legal heirs of Juanita, sought to have the land partitioned. Petitioners sent word to their eldest brother Ricardo Bahia (Ricardo) regarding their plans for the partition of the land. In a letter dated 5 June 1998 written by Ricardo addressed to them, petitioners were surprised to find out that Ricardo had declared the land for himself, prejudicing their rights as co-heirs. It was then discovered that Juanita had allegedly executed a notarized Affidavit of Transfer of Real Property4 (Affidavit) in favor of Ricardo on 4 June 1966 making him the sole owner of the land. The records do not show that the land was registered under the Torrens system.

On 26 October 2001, petitioners filed an action with the RTC of Tacloban City, Branch 34, for recovery of ownership, possession, partition and damages. Petitioners sought to declare void the sale of the land by Ricardo’s daughters, Josephine Bahia and Virginia Bahia-Abas, to respondent Dominador Magdua (Dominador). The sale was made during the lifetime of Ricardo.

Petitioners alleged that Ricardo, through misrepresentation, had the land transferred in his name without the consent and knowledge of his co-heirs. Petitioners also stated that prior to 1966, Ricardo had a house constructed on the land. However, when Ricardo and his wife Zosima separated, Ricardo left for Inasuyan, Kawayan, Biliran and the house was leased to third parties.

Petitioners further alleged that the signature of Juanita in the Affidavit is highly questionable because on 15 May 1978 Juanita executed a written instrument stating that she would be leaving behind to her children the land which she had inherited from her parents.

Dominador filed a motion to dismiss on the ground of lack of jurisdiction since the assessed value of the land was within the jurisdiction of the Municipal Trial Court of Tanauan, Leyte.

In an Order dated 20 February 2006,5 the RTC dismissed the case for lack of jurisdiction. The RTC explained that the assessed value of the land in the amount of P590.00 was less than the amount cognizable by the RTC to acquire jurisdiction over the case.6

Petitioners filed a motion for reconsideration. Petitioners argued that the action was not merely for recovery of ownership and possession, partition and damages but also for annulment of deed of sale. Since actions to annul contracts are actions beyond pecuniary estimation, the case was well within the jurisdiction of the RTC.

Dominador filed another motion to dismiss on the ground of prescription.

In an Order dated 8 September 2006, the RTC reconsidered its previous stand and took cognizance of the case. Nonetheless, the RTC denied the motion for reconsideration and dismissed the case on the ground of prescription pursuant to Section 1, Rule 9 of the Rules of Court. The RTC ruled that the case was filed only in 2001 or more than 30 years since the Affidavit was executed in 1966. The RTC explained that while the right of an heir to his inheritance is imprescriptible, yet when one of the co-heirs appropriates the property as his own to the exclusion of all other heirs, then prescription can set in. The RTC added that since prescription had set in to question the transfer of the land under the Affidavit, it would seem logical that no action could also be taken against the deed of sale executed by Ricardo’s daughters in favor of Dominador. The dispositive portion of the order states:

WHEREFORE, premises considered, the order of the Court is reconsidered in so far as the pronouncement of the Court that it has no jurisdiction over the nature of the action. The dismissal of the action, however, is maintained not by reason of lack of jurisdiction but by reason of prescription.

SO ORDERED.7

Petitioners filed another motion for reconsideration which the RTC denied in an Order dated 13 February 2007 since petitioners raised no new issue.

Hence, this petition.

The Issue

The main issue is whether the present action is already barred by prescription.

The Court’s Ruling

Petitioners submit that the RTC erred in dismissing the complaint on the ground of prescription. Petitioners insist that the Affidavit executed in 1966 does not conform with the requirement of sufficient repudiation of co-ownership by Ricardo against his co-heirs in accordance with Article 494 of the Civil Code. Petitioners assert that the Affidavit became part of public records only because it was kept by the Provincial Assessor’s office for real property tax declaration purposes. However, such cannot be contemplated by law as a record or

registration affecting real properties. Petitioners insist that the Affidavit is not an act of appropriation sufficient to be deemed as constructive notice to an adverse claim of ownership absent a clear showing that petitioners, as co-heirs, were notified or had knowledge of the Affidavit issued by their mother in Ricardo’s favor.

Respondent Dominador, on the other hand, maintains that Juanita, during her lifetime, never renounced her signature on the Affidavit or interposed objections to Ricardo’s possession of the land, which was open, absolute and in the concept of an owner. Dominador contends that the alleged written instrument dated 15 May 1978 executed by Juanita years before she died was only made known lately and conveys the possibility of being fabricated. Dominador adds that the alleged ‘highly questionable signature’ of Juanita on the Affidavit was only made an issue after 35 years from the date of the transfer in 1966 until the filing of the case in 2001. As a buyer in good faith, Dominador invokes the defense of acquisitive prescription against petitioners.

At the outset, only questions of law may be raised in a petition for review on certiorari under Rule 45 of the Rules of Court. The factual findings of the lower courts are final and conclusive and may not be reviewed on appeal except under any of the following circumstances: (1) the conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no citation of specific evidence on which the factual findings are based; (7) the finding of absence of facts is contradicted by the presence of evidence on record; (8) the findings of the Court of Appeals are contrary to those of the trial court; (9) the Court of Appeals manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion; (10) the findings of the Court of Appeals are beyond the issues of the case; and (11) such findings are contrary to the admissions of both parties.8

We find that the conclusion of the RTC in dismissing the case on the ground of prescription based solely on the Affidavit executed by Juanita in favor of Ricardo, the alleged seller of the property from whom Dominador asserts his ownership, is speculative. Thus, a review of the case is necessary.

Here, the RTC granted the motion to dismiss filed by Dominador based on Section 1, Rule 9 of the Rules of Court which states:

Section 1. Defenses and objections not pleaded. – Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the case. (Emphasis supplied)

The RTC explained that prescription had already set in since the Affidavit was executed on 31 May 1966 and petitioners filed the present case only on 26 October 2001, a lapse of more than 30 years. No action could be taken against the deed of sale made in favor of Dominador without assailing the Affidavit, and the action to question the Affidavit had already prescribed.

After a perusal of the records, we find that the RTC incorrectly relied on the Affidavit alone in order to dismiss the case without considering petitioners’ evidence. The facts show that the land was sold to Dominador by Ricardo’s daughters, namely Josephine Bahia and Virginia Bahia-Abas, during the lifetime of Ricardo. However, the alleged deed of sale was not presented as evidence and neither was it shown that Ricardo’s daughters had any authority from Ricardo to dispose of the land. No cogent evidence was ever presented that Ricardo gave his consent to, acquiesced in, or ratified the sale made by his daughters to Dominador. In its 8 September 2006 Order, the RTC hastily concluded that Ricardo’s daughters had legal personality to sell the property:

On the allegation of the plaintiffs (petitioners) that Josephine Bahia and Virginia Bahia-Abas had no legal personality or right to [sell] the subject property is of no moment in this case. It should be Ricardo Bahia who has a cause of action against [his] daughters and not the herein plaintiffs. After all, Ricardo Bahia might have already consented to or ratified the alleged deed of sale.9

Also, aside from the Affidavit, Dominador did not present any proof to show that Ricardo’s possession of the land had been open, continuous and exclusive for more than 30 years in order to establish extraordinary acquisitive prescription.10 Dominador merely assumed that Ricardo had been in possession of the land for 30 years based on the Affidavit submitted to the RTC. The petitioners, on the other hand, in their pleading filed with the RTC for recovery of ownership, possession, partition and damages, alleged that Ricardo left the land after he separated from his wife sometime after 1966 and moved to another place. The records do not mention, however, whether Ricardo had any intention to go back to the land or whether Ricardo’s family ever lived there.

Further, Dominador failed to show that Ricardo had the land declared in his name for taxation purposes from 1966 after the Affidavit was

executed until 2001 when the case was filed. Although a tax declaration does not prove ownership, it is evidence of claim to possession of the land.

Moreover, Ricardo and petitioners are co-heirs or co-owners of the land. Co-heirs or co-owners cannot acquire by acquisitive prescription the share of the other co-heirs or co-owners absent a clear repudiation of the co-ownership, as expressed in Article 494 of the Civil Code which states:

Art. 494. x x x No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs as long as he expressly or impliedly recognizes the co-ownership.

Since possession of co-owners is like that of a trustee, in order that a co-owner’s possession may be deemed adverse to the cestui que trust or other co-owners, the following requisites must concur: (1) that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or other co-owners, (2) that such positive acts of repudiation have been made known to the cestui que trust or other co-owners, and (3) that the evidence thereon must be clear and convincing.11

In the present case, all three requisites have been met. After Juanita’s death in 1989, petitioners sought for the partition of their mother’s land. The heirs, including Ricardo, were notified about the plan. Ricardo, through a letter dated 5 June 1998, notified petitioners, as his co-heirs, that he adjudicated the land solely for himself. Accordingly, Ricardo’s interest in the land had now become adverse to the claim of his co-heirs after repudiating their claim of entitlement to the land. In Generosa v. Prangan-Valera,12 we held that in order that title may prescribe in favor of one of the co-owners, it must be clearly shown that he had repudiated the claims of the others, and that they were apprised of his claim of adverse and exclusive ownership, before the prescriptive period begins to run.

However, in the present case, the prescriptive period began to run only from 5 June 1998, the date petitioners received notice of Ricardo’s repudiation of their claims to the land. Since petitioners filed an action for recovery of ownership and possession, partition and damages with the RTC on 26 October 2001, only a mere three years had lapsed. This three-year period falls short of the 10-year or 30-year acquisitive prescription period required by law in order to be entitled to claim legal ownership over the land. Thus, Dominador cannot invoke acquisitive prescription.

Further, Dominador’s argument that prescription began to commence in 1966, after the Affidavit was executed, is erroneous. Dominador merely relied on the Affidavit submitted to the RTC that Ricardo had been in possession of the land for more than 30 years. Dominador did not submit any other corroborative evidence to establish Ricardo’s alleged possession since 1966. In Heirs of Maningding v. Court of Appeals,13 we held that the evidence relative to the possession, as a fact, upon which the alleged prescription is based, must be clear, complete and conclusive in order to establish the prescription. Here, Dominador failed to present any other competent evidence to prove the alleged extraordinary acquisitive prescription of Ricardo over the land. Since the property is an unregistered land, Dominador bought the land at his own risk, being aware as buyer that no title had been issued over the land. As a consequence, Dominador is not afforded protection unless he can manifestly prove his legal entitlement to his claim.

With regard to the issue of the jurisdiction of the RTC, we hold that the RTC did not err in taking cognizance of the case.

Under Section 1 of Republic Act No. 7691 (RA 7691),14 amending Batas Pambansa Blg. 129, the RTC shall exercise exclusive jurisdiction on the following actions:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of 1980", is hereby amended to read as follows:

"Sec. 19. Jurisdiction in civil cases. – Regional Trial Courts shall exercise exclusive original jurisdiction.

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

"(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty Thousand Pesos (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; x x x

On the other hand, Section 3 of RA 7691 expanded the jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts over all civil actions which involve title to or possession of real property, or any interest, outside Metro Manila where the assessed value does not exceed Twenty thousand pesos (P20,000.00). The provision states:

Section 3. Section 33 of the same law is hereby amended to read as follows:

"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 Trial Circuit Trial Courts shall exercise:

x x x

"(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, 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."

In the present case, the records show that the assessed value of the land was P590.00 according to the Declaration of Property as of 23 March 2000 filed with the RTC. Based on the value alone, being way belowP20,000.00, the MTC has jurisdiction over the case. However, petitioners argued that the action was not merely for recovery of ownership and possession, partition and damages but also for annulment of deed of sale. Since annulment of contracts are actions incapable of pecuniary estimation, the RTC has jurisdiction over the case.151avvphi1

Petitioners are correct. In Singson v. Isabela Sawmill,16 we held that:

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

When petitioners filed the action with the RTC they sought to recover ownership and possession of the land by questioning (1) the due execution and authenticity of the Affidavit executed by Juanita in favor of Ricardo which caused Ricardo to be the sole owner of the land to the exclusion of petitioners who also claim to be legal heirs and entitled to the land, and (2) the validity of the deed of sale executed between Ricardo’s daughters and Dominador. Since the principal action sought here is something other than the recovery of a sum of money, the action is incapable of pecuniary estimation and thus cognizable by the RTC. Well-entrenched is the rule that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the party is entitled to all or some of the claims asserted.17

In sum, we find that the Affidavit, as the principal evidence relied upon by the RTC to dismiss the case on the ground of prescription, insufficiently established Dominador’s rightful claim of ownership to the land. Thus, we direct the RTC to try the case on the merits to determine who among the parties are legally entitled to the land.

WHEREFORE, we GRANT the petition. We REVERSE AND SET ASIDE the Orders dated 8 September 2006 and 13 February 2007 of the Regional Trial Court of Tacloban City, Branch 34 in Civil Case No. 2001-10-161.

SO ORDERED.

G.R. No. 181622               November 20, 2013

GENESIS INVESTMENT, INC., CEBU JAYA REALTY INC., and SPOUSES RHODORA and LAMBERT LIM,Petitioners, vs.HEIRS of CEFERINO EBARASABAL,* NAMELY: ROGELIO EBARASABAL, SPOUSES LIGAYA E. GULIMLIM AND JOSE GULIMLIM, SPOUSES VISITACION E. CONEJOS and ELIAS CONEJOS, BEN TEJERO, POCAS TEJERO, GERTRUDES TEJERO, BANING HAYO, LACIO EBARASABAL and JULIETA EBARASABAL; HEIRS OF FLORO EBARASABAL, namely: SOFIA ABELONG, PEPITO EBARASABAL AND ELPIDIO EBARASABAL; HEIRS OF LEONA EBARASABAL- APOLLO, namely: SILVESTRA A. MOJELLO and MARCELINO APOLLO; HEIRS OF PEDRO EBARASABAL, namely: BONIFACIO EBARASABAL, SERGIO EBARASABAL and JAIME EBARASABAL; HEIRS of ISIDRO EBARASABAL, NAMELY: SPOUSES CARLOSA E. NUEVO and FORTUNATO NUEVA;** HEIRS of BENITO EBARASABAL, namely: PAULO BAGAAN, SPOUSES CATALINA A. MARIBAO and RENE MARIBAO, VICENTE ABRINICA and PATRON EBARASABAL; HEIRS of JULIAN EBARASABAL, NAMELY: ALFREDO BAGAAN,

JUAN BAGAAN, AVELINO BAGAAN, FERDINAND BAGAAN, MAURO BAGAAN, SPOUSES ROWENA B. LASACA and FRANCISCO LACASA,*** SPOUSES MARIA B. CABAG and EMILIO CABAG and ESTELITA BAGAAN, all being represented herein by VICTOR MOJELLO, FEDERICO BAGAAN and PAULINO EBARASABAL, as their Attorneys-in-Fact, Respondents.

D E C I S I O N

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the Decision1 and Resolution,2 dated July 11, 2007 and January 10, 2008, respectively, of the Court of Appeals (CA) in CA-G.R. CEB-SP No. 01017.

The antecedents of the case are as follows:

On November 12, 2003, herein respondents filed against herein petitioners a Complaint3 for Declaration of Nullity of Documents, Recovery of Shares, Partition, Damages and Attorney's Fees. The Complaint was filed with the Regional Trial Court (RTC) of Barili, Cebu.

On August 5, 2004, herein petitioners filed a Motion to Dismiss4 contending, among others, that the RTC has no jurisdiction to try the case on the ground that, as the case involves title to or possession of real property or any interest therein and since the assessed value of the subject property does not exceed P20,000.00 (the same being only P11,990.00), the action falls within the jurisdiction of the Municipal Trial Court (MTC).5

In its Order6 dated September 29, 2004, the RTC granted petitioners' Motion to Dismiss, holding as follows:

x x x x

And while the prayer of the plaintiffs for the annulment of documents qualified the case as one incapable of pecuniary estimation thus, rendering it cognizable supposedly by the second level courts but considering that Republic Act No. 7691 expressly provides to cover "all civil actions" which phrase understandably is to include those incapable of pecuniary estimation, like the case at bar, this Court is of the view that said law really finds application here more so that the same case also "involves title to, or possession of, real property, or any interest therein." For being so, the assessed value of the real property involved is determinative of which court has jurisdiction over the case. And the plaintiffs admitting that the assessed value of the litigated area is less thanP20,000.00, the defendants are correct in arguing that the case is beyond this Court's jurisdiction.7

Respondents filed a Motion for Partial Reconsideration,8 arguing that their complaint consists of several causes of action, including one for annulment of documents, which is incapable of pecuniary estimation and, as such, falls within the jurisdiction of the RTC.9

On March 17, 2005, the RTC issued an Order granting respondents' Motion for Partial Reconsideration and reversing its earlier Order dated September 29, 2004. The RTC ruled, thus:

On the issue of want of jurisdiction, this court likewise finds to be with merit the contention of the movants as indeed the main case or the primary relief prayed for by the movants is for the declaration of nullity or annulment of documents which unquestionably is incapable of pecuniary estimation and thus within the exclusive original jurisdiction of this court to try although in the process of resolving the controversy, claims of title or possession of the property in question is involved which together with all the other remaining reliefs prayed for are but purely incidental to or as a consequence of the foregoing principal relief sought.10

Petitioners filed a Motion for Reconsideration,11 but the RTC denied it in its Order dated June 23, 2005.

Aggrieved, petitioners filed a petition for certiorari with the CA. However, the CA dismissed the petition via its assailed Decision dated July 11, 2007, holding that the subject matter of respondents' complaint is incapable of pecuniary estimation and, therefore, within the jurisdiction of the RTC, considering that the main purpose in filing the action is to declare null and void the documents assailed therein.12

Petitioners' Motion for Reconsideration was, subsequently, denied in the CA Resolution dated January 10, 2008.

Hence, the instant petition for review on certiorari raising the sole issue, to wit:

Whether or not the Honorable Court of Appeals gravely erred in concluding that the Regional Trial Court, Branch 60 of Barili, Cebu has jurisdiction over the instant case when the ALLEGATIONS IN THE COMPLAINT clearly shows that the main cause of action of the respondents is for the Recovery of their Title, Interest, and Share over

a Parcel of Land, which has an assessed value of P11,990.00 and thus, within the jurisdiction of the Municipal Trial Court.13

The petition lacks merit.

For a clearer understanding of the case, this Court, like the CA, finds it proper to quote pertinent portions of respondents' Complaint, to wit:

x x x x

1. Plaintiffs are all Filipino, of legal age, surviving descendants – either as grandchildren or great grandchildren – and heirs and successors-in-interest of deceased Roman Ebarsabal, who died on 07 September 1952 x x x

x x x x

8. During the lifetime of Roman Ebarsabal, he acquired a parcel of land situated in Basdaku, Saavedra, Moalboal, Cebu, x x x.

x x x x

with a total assessed value of P2,890.00 x x x. However, for the year 2002, the property was already having (sic) a total assessed value of P11,990.00 x x x.

9. Upon the death of said Roman Ebarsabal, his eight (8) children named in par. 7 above, became co-owners of his above-described property by hereditary succession; taking peaceful possession and enjoyment of the same in fee simple pro indiviso, paying the real estate taxes thereon and did not partition the said property among themselves until all of them likewise died, leaving, however, their respective children and descendants and/or surviving heirs and successors-in-interest, and who are now the above-named plaintiffs herein;

10. The plaintiffs who are mostly residents in (sic) Mindanao and Manila, have just recently uncovered the fact that on 28th January 1997, the children and descendants of deceased Gil Ebarsabal, namely: Pelagio, Hipolito, Precela, Fructuosa, Roberta, Florentino, Erlinda, Sebastian, Cirilo, all surnamed Ebarsabal, have executed among themselves a Deed of Extrajudicial Settlement with Sale of Roman Ebarsabal's entire property described above, by virtue of which they allegedly extrajudicially settled the same and, for P2,600,000.00 – although only the sum of P950,000.00 was reflected in their Deed of Sale for reason only known to them, they sold the whole property to defendants Genesis Investment Inc. represented by co-defendant Rhodora B. Lim, the wife of Lambert Lim, without the knowledge, permission and consent of the plaintiffs who are the vendors' co-owners of the lot in question, x x x.

11. Surprisingly, however, the defendant Genesis managed to have the Tax Declaration of the property issued in the name of co-defendant Cebu Jaya Realty Incorporated, a firm which, as already intimated above, is also owned by Spouses Lambert and Rhodora B. Lim, instead of in the name of Genesis Investment, Incorporated, which is actually the vendee firm of the lot in question.

x x x x

Hence, the reason why Cebu Jaya Realty, Incorporated is joined and impleaded herein as a co-defendant.

12. Without the participation of the plaintiffs who are co-owners of the lot in question in the proceedings, the aforementioned extrajudicial settlement with sale cannot be binding upon the plaintiff-co-owners.

13. Further, where as in this case, the other heirs who are the plaintiffs herein, did not consent to the sale of their ideal shares in the inherited property, the sale was only to be limited to the pro indiviso share of the selling heirs.

x x x x

14. By representation, the plaintiffs, are therefore, by law, entitled to their rightful shares from the estate of the deceased Roman Ebarsabal consisting of seven (7) shares that would have been due as the shares of seven (7) other children of Roman Ebarsabal who are also now deceased, namely: Ceferino, Floro, Leona, Pedro, Isidoro, Julian and Benito, all surnamed Ebarsabal.

15. The defendants who had prior knowledge of the existence of the other heirs who are co-owners of the vendors of the property they purchased, had unlawfully acted in bad faith in insisting to buy the whole property in co-ownership, only from the heirs and successors-in-interest of deceased Gil Ebarsabal, who is only one (1) of the eight (8) children of deceased Roman Ebarsabal, and without notifying thereof in whatever manner the plaintiffs who are the heirs and successors-in-interest of the other co-owners of the property-in-question; thus, have compelled the plaintiffs herein to file this instant case in court to protect their interests, x x x.

x x x x

PRAYER

WHEREFORE, in view of all the foregoing, it is most respectfully prayed of this Honorable Court that, after due notice and hearing, judgment shall be rendered in favor of the plaintiffs, as follows, to wit:

1 – Declaring as null and void and not binding upon the plaintiffs, the following documents to wit:

(a) Deed of Extrajudicial Settlement with Sale executed by and between the heirs of deceased Gil Ebarsabal headed by Pedro Ebarsabal, and Genesis Investment, Inc., represented by Rhodora Lim, dated 28th of January, 1997, marked as Annex-A;

(b) Memorandum of Agreement executed between Pedro Ebarsabal and Genesis Investment, Inc., represented by Rhodora Lim dated 27 January, which document is notarized;

(c) Tax Declaration of Real Property issued to Cebu Jaya Realty, Inc., marked as Annex-D;

2 – Ordering the defendants to make partition of the property in litigation with the plaintiffs into eight (8) equal shares; to get one (1) share thereof, which is the only extent of what they allegedly acquired by purchase as mentioned above, and to transfer, restore or reconvey and deliver to the plaintiffs, seven (7) shares thereof, as pertaining to and due for the latter as the heirs and successors-in-interest of the seven (7) brothers and sister of deceased Gil Ebarsabal already named earlier in this complaint;

x x x x

Further reliefs and remedies just and equitable in the premises are also herein prayed for.

x x x x14

It is true that one of the causes of action of respondents pertains to the title, possession and interest of each of the contending parties over the contested property, the assessed value of which falls within the jurisdiction of the MTC. However, a complete reading of the complaint would readily show that, based on the nature of the suit, the allegations therein, and the reliefs prayed for, the action is within the jurisdiction of the RTC.

As stated above, it is clear from the records that respondents' complaint was for "Declaration of Nullity of Documents, Recovery of Shares, Partition, Damages and Attorney's Fees." In filing their Complaint with the RTC, respondents sought to recover ownership and possession of their shares in the disputed parcel of land by questioning the due execution and validity of the Deed of Extrajudicial Settlement with Sale as well as the Memorandum of Agreement entered into by and between some of their co-heirs and herein petitioners. Aside from praying that the RTC render judgment declaring as null and void the said Deed of Extrajudicial Settlement with Sale and Memorandum of Agreement, respondents likewise sought the following: (1) nullification of the Tax Declarations subsequently issued in the name of petitioner Cebu Jaya Realty, Inc.; (2) partition of the property in litigation; (3) reconveyance of their respective shares; and (3) payment of moral and exemplary damages, as well as attorney's fees, plus appearance fees.1âwphi1

Clearly, this is a case of joinder of causes of action which comprehends more than the issue of partition of or recovery of shares or interest over the real property in question but includes an action for declaration of nullity of contracts and documents which is incapable of pecuniary estimation.15

As cited by the CA, this Court, in the case of Singson v. Isabela Sawmill,16 held that:

In determining whether an action is one the subject matter of which is not capable of pecuniary estimation, this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable by courts of first instance [now Regional Trial Courts].17

This rule was reiterated in Russell v. Vestil18 and Social Security System v. Atlantic Gulf and Pacific Company of Manila Inc.19

Contrary to petitioners contention, the principal relief sought by petitioners is the nullification of the subject Extrajudicial Settlement with Sale entered into by and between some of their co-heirs and respondents, insofar as their individual shares in the subject property are concerned. Thus, the recovery of their undivided shares or interest over the disputed lot, which were included in the sale, simply becomes a necessary consequence if the above deed is nullified. Hence, since the principal action sought in respondents Complaint is something other than the recovery of a sum of money, the action is incapable of pecuniary estimation and, thus, cognizable by the RTC.20 Well entrenched is the rule that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the party is entitled to all or some of the claims asserted.21

Moreover, it is provided under Section 5 (c), Rule 2 of the Rules of Court that where the causes of action are between the same parties but pertain to different venues or jurisdictions, the joinder may be allowed in the RTC provided one of the causes of action falls within the jurisdiction of said court and the venue lies therein. Thus, as shown above, respondents complaint clearly falls within the jurisdiction of the RTC.

WHEREFORE, the petition is DENIED. The Decision and Resolution dated July 11, 2007 and January 10, 2008, respectively, of the Court of Appeals in CA-G.R. CEB-SP No. 01017 are AFFIRMED.

SO ORDERED.

G.R. No. 138248 September 7, 2005

BARANGAY PIAPI, herein represented by its chairman ANDRES L. LUGNASIN and LIBERATO LARGO, RITA LARGO, SABAS MONTECALBO, SR., CARLOS ZAMORA, DONATA SESICAN, DIZAR CASTILLO, ALEJANDOR GICALE, SALVACION SALE, PABLO MORASTIL, JOSE JAVELOSA, ISIDRA BERNAL, FELIX EGHOT, CORAZON EGHOT, ROSALINA REMONDE, ROA EGHOT, CEFERINA LAGROSA, MARIO ARANEZ, ALBERTO CAMARILLO, BOBBY DULAOTO, NOEL ZAMORA, MARTINO MORALLAS, DANILO FAILAGA, MARITA BRAGAT, NATIVIDAD LAGRAMON, RAQUEL GEROZAGA, SHIRLY CESAR, PIO ZAMORA, ANDRES LUGNASIN, ELPIDIO SESICAN, CRESENTA BORJA, CARLITO TANEZA, JR., MARCIAL RELLON, JEANILITO SUMALINOG, ALBERTO ZAMORA, and LUISITO LAGROSA, Petitioners, vs.IGNACIO TALIP representing the HEIRS OF JUAN JAYAG, Respondent.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari1 assailing the Orders dated January 12, 19992 and April 20, 19993of the Regional Trial Court (RTC), Branch 18, Digos, Davao del Sur in Civil Case No. 3715 filed by the above-named petitioners against respondent Ignacio Talip representing the heirs of Juan Jayag.

The factual antecedents as borne by the records are:

On August 28, 1998, petitioners filed with the said RTC a complaint for reconveyance and damages with prayer for issuance of a temporary restraining order and/or writ of preliminary injunction against respondent, docketed as Civil Case No. 3715.

The complaint alleges that petitioners and their predecessors-in-interest have been in actual, peaceful, continuous and open possession for more than 30 years of a parcel of land consisting of 3.2 hectares situated in Piapi, Padada, Davao del Sur. It is covered by Original Certificate of Title (OCT) No. P-(3331)-4244 of the Registry of Deeds, same province, issued in the name of Juan Jayag and has a market value of P15,000.00. The same land was subdivided into lots consisting of 100 square meters each, where the individual petitioners built their houses. On the remaining portion were constructed their barangay center, multi-purpose gym and health center. Respondent fraudulently obtained from the said Registry of Deeds a Transfer Certificate of Title (TCT) in his name. In 1998, he paid real estate taxes and subsequently, he threatened to build a barb-wire fence around the land.

Instead of filing an answer, respondent moved to dismiss the complaint on the ground that the RTC has no jurisdiction over the case considering that the assessed value of the land is only P6,030.00. Respondent, citing Section 33 (3) of BP Blg. 129, as amended by R.A. No. 7691,4 maintains that the case falls within the exclusive jurisdiction of the Municipal Circuit Trial Court of Padada-Kiblawan, Davao del Sur.

In their opposition to the motion to dismiss, petitioners alleged that jurisdiction is vested in the RTC considering that the total assessed value of the property is P41,890.00, as shown by a Real Property Field Appraisal and Assessment Sheet dated August 20, 1996 issued by Atty. Marcos D. Risonar, Jr., Provincial Assessor of Davao del Sur.5

On January 12, 1999, the trial court issued an Order dismissing the complaint for lack of jurisdiction.

Petitioners then filed a motion for reconsideration but was denied in an Order dated April 20, 1999.

Hence, petitioners directly filed with this Court the instant petition for review on certiorari assailing the trial court’s Order dismissing the complaint for lack of jurisdiction.

Petitioners contend that under Section 19 (1) of BP Blg. 129, as amended, the RTC has jurisdiction over the complaint for reconveyance since it is incapable of pecuniary estimation.

The contention is bereft of merit. This case is analogous to Huguete vs. Embudo.6 There, petitioners argued that a complaint for annulment of a deed of sale and partition is incapable of pecuniary estimation, and thus falls within the exclusive jurisdiction of the RTC. However, we ruled that "the nature of an action is not determined by what is stated in the caption of the complaint but by the allegations of the complaint and the reliefs prayed for. Where the ultimate objective of the plaintiffs, like petitioners herein, is to obtain title to real property, it should be filed in the proper court having jurisdiction over the assessed value of the property subject thereof."

Indeed, basic as a hornbook principle is that the nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein.7

Let us examine the pertinent allegations in petitioners’ complaint below:

"x x x x x x

2. Plaintiffs by themselves and/or thru their predecessors-in-interest have been in actual possession, in the concept of an owner, in good faith and in a manner that is open, peaceful, uninterrupted, public, adverse and continuous, for more than 30 years, the following described parcel of land, viz:

‘A parcel of land containing an area of 3.2 hectares, more of less, covered by OCT No. P-(3331)-4244, in the name of Juan Jayag and situated in Piapi, Padada, Davao del Sur.’

2a. The market value of the above-described land is Fifteen Thousand Pesos (P15,000.00).

3. The respective areas that private plaintiffs occupy consisted of an average of 100 square meters on which their homes and houses are built while a large chunk of the above-described property has been used or set aside for the barangay site of and other infrastructures for Piapi, Padada, Davao del Sur.

x x x x x x

5. Defendant or his predecessor-in-interest has never been in possession, of the land in suit and except for the year 1998, has not paid taxes thereon nor declared the same for taxation purposes – a clear index that defendant’s title over the same is not genuine.

6. Defendant, in procuring title to the land in suit did so by fraud, mistake and/or misrepresentation, hence, he holds the title for the benefit and in trust of the landowner – that is, herein plaintiffs.

7. Defendant is by law under obligation to reconvey the land in suit in favor of herein plaintiffs, x x x."

It can easily be discerned that petitioners’ complaint involves title to, or possession of, real property. However, they failed to allege therein the assessed value of the subject property. Instead, what they stated is the market value of the land at P15,000.00.

Section 19 (2) of Batas Pambansa Blg. 129, as amended provides:

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

x x x x x x

(2) In all civil actions which involve the title to, or possession of, real property, or any interest thereon, 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 Rule requires that "the assessed value of the property, or if there is none, the estimated value thereof, shall be alleged by the claimant."8 It bears reiterating that what determines jurisdiction is the allegations in the complaint and the reliefs prayed for. Petitioners’ complaint is for reconveyance of a parcel of land. Considering that their action involves the title to or interest in real property, they should have alleged therein its assessed value. However, they only specified the market value or estimated value, which is P15,000.00. Pursuant to the provision of Section 33 (3) quoted earlier, it is the Municipal Circuit Trial Court of Padada-Kiblawan, Davao del Sur, not the RTC, which has jurisdiction over the case.

WHEREFORE, the petition is DENIED. The assailed Orders dated January 12, 1999 and April 20, 1999 of the Regional Trial Court, Branch 18, Digos, Davao del Sur in Civil Case No. 3715 are hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

G.R. No. 134230            July 17, 2002

JOVENAL OUANO, petitioner, vs.PGTT INTERNATIONAL INVESTMENT CORPORATION and HON. JUDGE RAMON G. CODILLA, JR.,respondents.

SANDOVAL-GUTIERREZ, J.:

PGTT International Investment Corporation (PGTT), respondent, is a corporation duly organized under existing laws, with address at YASCO Bldg., M. J. Cuenco Ave., Cebu City.

On December 11, 1997, PGTT filed with the Regional Trial Court (RTC), Branch 20, Cebu City, a verified complaint against Jovenal Ouano, petitioner, docketed as Civil Case No. CEB- 21319, entitled "PGTT INTERNATIONAL INVESTMENT CORPORATION, Plaintiff, vs. JUVENAL OUANO, Defendant," for "Recovery of Ownership and Possession of Real Property and Damages."1 In its complaint, PGTT alleged that it is the owner of Lot Nos. 1-10, Block 2 of the Sunnymeade Crescent Subdivision located at Pit-os, Talamban, Cebu City. Sometime in October of 1996, PGTT found that Ouano uprooted the concrete monuments of the said lots, plowed them and planted corn thereon. Despite PGTT’s demand that he vacate the lots and restore them to their original condition, Ouano refused, claiming he is the owner and lawful possessor of the 380 square meters he occupied. Due to Ouano’s wrongful act, PGTT was deprived of the use of its property and suffered damages in the amount of P100,000.00 a year. Likewise, PGTT was constrained to file the subject action and hired the services of his counsel for P100,000.00. PGTT prayed:

"WHEREFORE, in view of all the foregoing, it is most respectfully prayed that after due notice and hearing, judgment be rendered ordering defendant (Jovenal Ouano) to vacate the premises and restore the lots to their original condition; pay plaintiff (PGTT) P100,000.00 as damages per year, beginning October, 1996 until he shall have vacated the premises and restored the lots to their original condition; pay P100,000.00 as attorney's fees; and pay P50,000.00 as expenses of litigation.

"Plaintiff prays for such other reliefs and remedies, just and equitable under the premises."2

On February 5, 1998, Ouano filed a motion to dismiss the complaint on the ground that it is the Municipal Trial Court (MTC), not the RTC, which has jurisdiction over it considering that the assessed value of the lots involved is only P2,910, as indicated in the latest tax declaration,3 citing Section 19 (paragraph 2) and Section 33 (paragraph 3) of Batas Pambansa Bilang 129 (The Judiciary Reorganization Act of 1980), as amended by Republic Act No. 7691.4

In its opposition to Ouano’s motion, PGTT contends that the RTC has jurisdiction since the market value of the lots is P49,760.00.5 Besides, the complaint is not only an action for recovery of ownership and possession of real property, but also for damages exceeding P100,000.00, over which claim the RTC has exclusive original jurisdiction under Section 19 (paragraph 8) of the same law.

On March 6, 1998, the RTC, presided by Judge Ramon G. Codilla, Jr., issued an Order denying the motion to dismiss, holding that:

"This court believes that this court has jurisdiction to try this case considering that the real properties consist of ten parcels of land in a subdivision and the court takes note that there is a discrepancy somewhere by the Office of the City Assessor in the Assessment of the parcels of land for only less thanP2,000.00 and that the government is very much at a loss by these unrealistic valuation."6

Ouano filed a motion for reconsideration but was likewise denied by the RTC in its Order dated May 27, 1998. The trial court ruled it has

jurisdiction over the case because "(i)t is of judicial knowledge that the real properties situated in Cebu City command a higher valuation than those indicated in the tax declaration. The observation of plaintiff’s (PGTT’s) counsel as to the issue on damages is likewise sustained considering that, being a corporation, it may have incurred damages in the form of unrealized profits."7

Hence the present petition for certiorari filed by Ouano under Rule 65 of the 1997 Rules of Civil Procedure, as amended, assailing the Orders of respondent judge dated March 6, 1998 and May 27, 1998 as having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.

At the outset, it is necessary to stress that a direct recourse to this Court is highly improper, for it violates the established policy of strict observance of the judicial hierarchy of courts.8 We need to reiterate, for the guidance of petitioner, that this Court’s original jurisdiction to issue a writ of certiorari (as well as prohibition, mandamus,quo warranto, habeas corpus and injunction) is concurrent with the Court of Appeals (CA), as in the present case, and with the RTCs in proper cases within their respective regions.9 However, this concurrence of jurisdiction does not grant a party seeking any of the extraordinary writs the absolute freedom to file his petition with the court of his choice. This Court is a court of last resort, and must so remain if it is to satisfactorily perform the functions assigned to it by the Constitution and immemorial tradition.10 The hierarchy of courts determines the appropriate forum for such petitions. Thus, petitions for the issuance of such extraordinary writs against the first level ("inferior") courts should be filed with the RTC, and those against the latter, with the CA.11 A direct invocation of this Court’s original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is the established policy. It is a policy that is necessary to prevent inordinate demands upon this Court’s time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of its docket.12 Unfortunately, the instant petition does not allege any special and compelling reason to justify a direct recourse to this Court. However, we deem it more appropriate and practical to resolve the controversy in order to avoid further delay, but only in this instance.

The lone issue for our resolution is whether the RTC has jurisdiction over Civil Case No. CEB-21319.

The complaint seeks to recover from private respondent the ownership and possession of the lots in question and the payment of damages. Since the action involves ownership and possession of real property, the jurisdiction over the subject matter of the claim is determined by the assessed value, not the market value, thereof, pursuant to Batas Pambansa Blg. 129, as amended by R.A. 7691. Section 33 (paragraph 3) of the said 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:

x x x.

(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, 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.

x x x." (Emphasis ours)

Likewise, Section 19 (paragraph 2) of the same law reads:

"Sec. 19. Jurisdiction in civil cases. - The Regional Trial Court shall exercise exclusive originaljurisdiction:

x x x.

(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;

x x x." (Emphasis ours)

It is undisputed that the assessed value of the property involved, as shown by the corresponding tax declaration, is only P2,910.00. As

such, the complaint is well within the MTC’s P20,000.00 jurisdictional limit.

The finding of respondent judge that the value of the lots is higher than that indicated in the tax declaration and that, therefore, the RTC has jurisdiction over the case is highly speculative. It is elementary that the tax declaration indicating the assessed value of the property enjoys the presumption of regularity as it has been issued by the proper government agency.

Respondent judge further held that since the complaint also seeks the recovery of damages exceedingP100,000.00, then it is within the competence of the RTC pursuant to Section 19 (paragraph 8) of Batas Pambansa Blg. 129, as amended by R.A. 7691, which states:

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

x x x

"(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)." (Emphasis ours)

The above provision does not apply to the instant case. It 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 court’s jurisdiction. Besides, the same provision explicitly excludes from the determination of the jurisdictional amount the demand for "interest, damages of whatever kind, attorney’s fees, litigation expenses, and costs". The exclusion of such damages is reiterated in Section 33, paragraph 3 of the sameBatas Pambansa Blg. 129, as amended, quoted earlier. The said damages are merely incidental to, or a consequence of, the main cause of action for recovery of ownership and possession of real property. In this connection, this Court issued Administrative Circular No. 09-94 setting the guidelines in the implementation of R.A. 7691. Paragraph 2 states:

"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." (Emphasis ours)

We thus find that in issuing the assailed orders denying petitioner’s motion to dismiss, thus taking cognizance of the case, the RTC committed grave abuse of discretion.

WHEREFORE, the instant petition is GRANTED. The assailed Orders issued by respondent RTC on March 6, 1998 and May 27, 1998 in Civil Case No. CEB-21319 are SET ASIDE. Accordingly, the complaint is orderedDISMISSED.

SO ORDERED.

G.R. No. 136109               August 1, 2002

RADIO COMMUNICATIONS OF THE PHILIPPINES, INC., petitioner, vs.COURT OF APPEALS and MANUEL DULAWON, respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

This is a petition for review of the decision of the Court of Appeals1 in CA-G.R. SP No. 45987 dated April 30, 19982 and its resolution dated October 15, 19983 denying the motion for reconsideration.

On June 18, 1997, private respondent Manuel Dulawon filed with the Regional Trial Court of Tabuk, Kalinga, Branch 25, a complaint for breach of contract of lease with damages against petitioner Radio Communications of the Philippines, Inc. (RCPI). Petitioner filed a motion to dismiss the complaint for lack of jurisdiction contending that it is the Municipal Trial Court which has jurisdiction as the complaint is basically one for collection of unpaid rentals in the sum of P84,000.00, which does not exceed the jurisdictional amount of P100,000.00 for Regional Trial Courts. The trial court denied the motion to dismiss,4 as well as petitioner’s motion for reconsideration.5Hence, petitioner went to the Court of Appeals on a petition for certiorari. On April 30, 1998, the Court of Appeals dismissed the petition. The dispositive portion thereof reads:

WHEREFORE, the petition is hereby DENIED DUE COURSE and is DISMISSED. Costs against petitioner.

SO ORDERED.6

The motion for reconsideration of the foregoing decision was denied on October 15, 1998. Hence, this petition.

The issue for resolution in this petition is whether or not the Regional Trial Court has jurisdiction over the complaint filed by private respondent.

Pertinent portion of Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, provides:

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

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

x x x           x x x          x x x

(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 abovementioned items exceeds Two hundred thousand pesos (P200,000.00).7

Corollary thereto, Administrative Circular No. 09-94, states:

x x x           x x x          x x x

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. 129, as amended by R.A. No. 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.

x x x           x x x          x x x

In Russell, et al., v. Vestil, et al.,8 the Court held that in determining whether an action is one the subject matter of which is not capable of pecuniary estimation, the nature of the principal action or remedy sought must first be ascertained. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and jurisdiction over the action will depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, the action is one where the subject of the litigation may not be estimated in terms of money, which is cognizable exclusively by Regional Trial Courts.

It is axiomatic that jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the complaint and the character of the relief sought, irrespective of whether the plaintiff is entitled to all or some of the claims asserted therein.9

In the case at bar, the allegations in the complaint plainly show that private respondent’s cause of action is breach of contract. The pertinent portion of the complaint recites:

x x x           x x x          x x x

2. That sometime during the end of the year 1995, defendant through its appropriate officials negotiated with plaintiff the lease of a portion of the latter’s building x x x

3. That the lease contract was effective for a period of three (3) years of from January 1, 1996 to January 1, 1998 with advance payment for the year 1996. The advance was not however given in lump sum but on installment. One check that was given in payment of one month’s rental for 1996 was even stale and had to be changed only after demand;

4. That as per contract the monthly rental for 1997 was P3,300.00 while for 1998, it is P3,700.00;

5. That the defendant surreptitiously removed its equipments and other personalities from the leased premises and failed to pay rentals due for the months of January to March 1997 to the damage and prejudice of plaintiff; that this failure and refusal on the part of plaintiff accelerated the payment of all rentals for each month for the years 1997 and 1998;

6. That the acts of defendant amounts to a breach of contract which is unlawful and malicious, as in fact, it caused plaintiff serious anxiety, emotional stress, and sleepless nights for which he is entitled to moral damages;

7. That plaintiff conveyed his feelings to Mr. Ronald C. Manalastas as evidenced by a letter dated January 7, 1997 a copy of which is hereto attached to form part hereof as Annex "B". This was later followed by a letter of plaintiff’s counsel a machine copy of which is hereto attached to form part hereof and marked as Annex "C". Both these letters landed on deaf ears thereby aggravating the worries/anxieties of plaintiff;

8. That the period agreed is for the benefit of both parties and any unilateral termination constitutes breach of contract;

9. That defendant actually used the leased premises during the year 1996; that had it not been for the contract, plaintiff could have leased the premises to other persons for business purposes; that this unlawful and malicious breach of contract cannot be lawfully countenanced hence defendant must be taught a lesson by being ordered to pay exemplary damages;

x x x x x x x x x.10

It is settled that a breach of contract is a cause of action either for specific performance or rescission of contracts.11 In Manufacturer’s Distributors, Inc. v. Siu Liong,12 the Court held that actions for specific performance are incapable of pecuniary estimation and therefore fall under the jurisdiction of the Regional Trial Court.13 Here, the averments in the complaint reveal that the suit filed by private respondent was primarily one for specific performance as it was aimed to enforce their three-year lease contract which would incidentally entitle him to monetary awards if the court should find that the subject contract of lease was breached. As alleged therein, petitioner’s failure to pay rentals due for the period from January to March 1997, constituted a violation of their contract which had the effect of accelerating the payment of monthly rentals for the years 1997 and 1998. The same complaint likewise implied a premature and unilateral termination of the term of the lease with the closure of and removal all communication equipment in the leased premises.14 Under the circumstances, the court has to scrutinize the facts and the applicable laws in order to determine whether there was indeed a violation of their lease agreement that would justify the award of rentals and damages. The prayer, therefore, for the payment of unpaid rentals in the amount of P84,000.00 plus damages consequent to the breach is merely incidental to the main action for specific performance. Similarly, in Manufacturer’s Distributor’s Inc.,15 the Court explained –

x x x           x x x          x x x

That plaintiff’s complaint also sought the payment by the defendant of P3,376.00, plus interest and attorney’s fees, does not give a pecuniary estimation to the litigation, for the payment of such amounts can only be ordered as a consequence of the specific performance primarily sought. In other words, such payment would be but an incident or consequence of defendant's liability for specific performance. If no such liability is judicially declared, the payment can not be awarded. Hence, the amounts sought do not represent the value of the subject of litigation.

"Subject matter over which jurisdiction can not be conferred by consent, has reference, not to the res or property involved in the litigation nor to a particular case, but to the class of cases, the purported subject of litigation, the nature of the action and of the relief sought (Appeal of Maclain, 176 NW. 817)."

Specifically, it has been held that:

"The Court has no jurisdiction of a suit for specific performance of a contract, although the damages alleged for its breach, if permitted, are within the amount of which that court has jurisdiction." (Mebane Cotton Breeding Station. vs. Sides, 257 SW. 302; 21 C.J.S. 59, note).

x x x           x x x          x x x

Clearly, the action for specific performance case, irrespective of the amount of rentals and damages sought to be recovered, is incapable of pecuniary estimation, hence cognizable exclusively by the Regional Trial Court. The trial court, therefore, did not err in denying petitioner’s motion to dismiss.

WHEREFORE, in view of all the foregoing, the petition is DENIED and the assailed decision of the Court of Appeals in CA-G.R. SP No. 45987 is AFFIRMED.

SO ORDERED.

G.R. No. 173115               April 16, 2009

ATTY. VIRGILIO R. GARCIA, Petitioner, vs.EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. and ATTY. SALVADOR C. HIZON, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. Nos. 173163-64               April 16, 2009

EASTERN TELECOMMUNICATIONS PHILIPPINES, INC. and ATTY. SALVADOR C. HIZON, Petitioners, vs.ATTY. VIRGILIO R. GARCIA, Respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

Assailed before Us via consolidated petitions for certiorari under Rule 45 of the Rules of Court is the Decision1 of the Court of Appeals in CA-G.R. SP No. 88887 and No. 89066 dated 24 March 2006, which dismissed the petitions for certiorari questioning the Decision2 of the National Labor Relations Commission (NLRC) dated 21 March 2003, docketed as NLRC NCR CA No. 028901-01. The NLRC reversed the decision of the Labor Arbiter dated 30 September 2002, finding the preventive suspension and dismissal of Atty. Virgilio R. Garcia illegal, and dismissed the case for lack of jurisdiction.

The facts are not disputed.

Atty. Virgilio R. Garcia was the Vice President and Head of Business Support Services and Human Resource Departments of the Eastern Telecommunications Philippines, Inc. (ETPI).

ETPI is a corporation duly organized and existing under the laws of the Republic of the Philippines.

Atty. Salvador C. Hizon is the President/Chief Executive Officer of ETPI.

On 16 January 2000, Atty. Garcia was placed under preventive suspension based on three complaints for sexual harassment filed by Atty. Maria Larrie Alinsunurin, former manager of ETPI’s Office of the Legal Counsel; Ms. Emma Valeros-Cruz, Assistant Vice President of ETPI and former secretary of Atty. Garcia; and Dr. Mercedita M. Macalintal, medical retainer/company physician of ETPI. In response to the complaints, the Human Resources Department constituted a Committee on Decorum to investigate the complaints. By reason of said complaints, Atty. Garcia was placed in preventive suspension. The committee conducted an investigation where Atty. Garcia was given copies of affidavits of the witnesses against him and a chance to defend himself and to submit affidavits of his witnesses. The Committee submitted a report which recommended his dismissal.3 In a letter dated 14 April 2000, Atty. Hizon advised Atty. Garcia that his employment with ETPI was, per recommendation of the Committee, terminated effective 16 April 2000.

A complaint-affidavit for illegal dismissal with prayer for full backwages4 and recovery of moral and exemplary damages was filed on 11 July 2000 by Atty. Virgilio R. Garcia against ETPI and Atty. Salvador C. Hizon.5 The case, docketed as NLRC NCR-30-07-02787-00, was assigned to Labor Arbiter Patricio P. Libo-on. The parties submitted their respective position papers,6 reply position papers7 and rejoinders.8 Per agreement of the parties, ETPI and Atty. Hizon filed a sur-rejoinder on 6 March 2001.9 Atty. Garcia manifested that he was no longer submitting a sur-rejoinder and was submitting the case for resolution.

On 15 April 2001, Atty. Garcia filed a Motion to Inhibit, praying that Labor Arbiter Libo-on inhibit himself from further proceeding with the case, on the ground that he was a fraternity brother of Atty. Hizon.10 Atty. Garcia thereafter filed a second Motion to Inhibit11 on 10 May 2001. ETPI and Atty. Hizon opposed said motion, arguing that the reason on which it was grounded was not one of those provided by law.12 In an Order dated 13 June 2001, said motions were denied.13 Atty. Garcia appealed said order before the NLRC via a Memorandum on Appeal dated 4 July 2001,14 to which ETPI and Atty. Hizon filed an Answer.15

The NLRC, in its decision dated 20 December 2001, set aside the order of Labor Arbiter Libo-on and ordered the re-raffling of the case.16 ETPI and Atty. Hizon moved for the reconsideration17 of the decision, but the same was denied.18 Consequently, the case was re-raffled to Labor Arbiter Ramon Valentin C. Reyes.19

The parties were directed to submit their respective memoranda.20 Atty. Garcia filed his memorandum21 on 9 July 2002 while ETPI and Atty. Hizon submitted their memorandum22 on 22 July 2002. On 16 August 2002, with leave of court, ETPI and Atty. Hizon filed a Reply Memorandum, raising for the first time the issue of lack of jurisdiction.

In his decision dated 30 September 2002, Labor Arbiter Reyes found the preventive suspension and subsequent dismissal of Atty. Garcia illegal. The dispositive portion of the decision reads:

WHEREFORE, premises all considered, judgment is hereby rendered, finding the preventive suspension and the dismissal illegal and ordering the respondents to:

1. Reinstate complainant to his former position without loss of seniority rights and other benefits appurtenant to the position that complainant received prior to the illegal dismissal;

2. Pay complainant his backwages which for purpose of appeal is computed to the amount ofP4,200,000.00 (P150,000 x 28);

3. Pay complainant Moral damages in the amount of P1,000,000.00 and Exemplary damages in the amount of P500,000.00.23

On 14 November 2002, Atty. Garcia filed an Ex-Parte Motion for the Issuance of a Writ of Execution.24 On 20 November 2002, Labor Arbiter Reyes issued a Writ of Execution insofar as the reinstatement aspect of the decision was concerned.25 ETPI and Atty. Hizon filed a Very Urgent Motion to Lift/Quash Writ of Execution on 28 November 2002.26 Per Sheriff’s Return on the Writ of Execution, said writ remained unsatisfied because ETPI and Atty. Hizon refused to reinstate Atty. Garcia to his former position.27

On 29 November 2002, Atty. Garcia filed an Ex-Parte Motion for the Issuance of an Alias Writ of Execution praying that said writ be issued ordering the sheriff to enforce the decision by garnishing the amount ofP450,000.00 representing his monthly salaries for two months and 13th month pay from any of ETPI’s bank accounts.28 Atty. Garcia manifested that he was no longer filing any responsive pleading to the Very Urgent Motion to Lift/Quash Writ of Execution because the Labor Arbiter lost jurisdiction over the case when an appeal had been perfected.29 In an Order dated 10 December 2002, Labor Arbiter Reyes denied the Very Urgent Motion to Lift/Quash Writ of Execution, explaining that it still had jurisdiction over the reinstatement aspect of the decision, notwithstanding the appeal taken, and that the grounds relied upon for the lifting or quashing of the writ were not valid grounds.30 Labor Arbiter Reyes subsequently issued a 1st Alias Writ of Execution dated 11 December 2002 ordering the sheriff to proceed to the premises of ETPI to reinstate Atty. Garcia and/or garnish the amounts prayed for.31 Per Sheriff’s Return dated 17 January 2003, the 1st Alias Writ of Execution was satisfied with the amount of P450,000.00 being released for proper disposition to Atty. Garcia.32

ETPI and Atty. Hizon appealed the decision to the NLRC, filing a Notice of Appeal and Memorandum of Appeal,33which appeal was opposed by Atty. Garcia.34 The appeal was docketed as NLRC NCR CA Case No. 028901-01. ETPI and Atty. Hizon filed a Supplemental Appeal Memorandum dated 23 January 2003 (With Very Urgent Motion for Issuance of Temporary Restraining Order).35 In a Manifestation ad Cautelam dated 28 January 2003, without waiving their right to continue to question the jurisdiction of the Labor Arbiter, they informed the Labor Arbiter that they had filed a Supplemental Appeal Memorandum before the NLRC and asked that all processes relating to the implementation of the reinstatement order be held in abeyance so as not to render moot the reliefs prayed for in said Supplemental Appeal Memorandum.36 They likewise filed on 31 January 2003 a Very Urgent Motion to Lift/Quash Order of Garnishment ad Cautelam, praying that the notice of garnishment on ETPI’s bank account with Metrobank, Dela Costa Branch, or with other banks with which ETPI maintained an account and which received said notice of garnishment be immediately lifted/quashed.37 On 12 February 2003, Atty. Garcia filed his Opposition to said Supplemental Appeal Memorandum.38

On 3 February 2003, Atty. Garcia filed an Ex-Parte Motion for the Issuance of a 2nd Alias Writ of Execution.39 In an Order dated 5 February 2003, Labor Arbiter Reyes lifted the notice of garnishment on ETPI’s bank account with Metrobank, Dela Costa Branch.40 On 10 February 2003, Labor Arbiter Reyes issued a 2nd Writ of Execution.41

In a Manifestation ad Cautelam42 dated 10 February 2003, ETPI and Atty. Hizon said that they filed with the NLRC on 7 February 2003 an Urgent Petition (for Preliminary Injunction With Issuance of Temporary Restraining Order)43 which prayed, inter alia, for the issuance of a temporary restraining order to restrain the execution pending appeal of the order of reinstatement and to enjoin the Labor Arbiter from issuing writs of execution or other processes implementing the decision dated 30 September 2002. They added that they also filed on 7 February 2003 a Notice to Withdraw44 their Supplemental Appeal Memorandum dated 23 January 2003.

ETPI and Atty. Hizon, without waiving their right to continue to question the jurisdiction of the Labor Arbiter over the case, filed on 18 February 2003 a Motion to Inhibit, seeking the inhibition of Labor Arbiter Reyes for allegedly evident partiality in favor of the complainant in issuing writs of execution in connection with the order of reinstatement contained in his decision dated 30 September 2002, despite the pendency of an Urgent Petition (for Preliminary Injunction With Prayer for the Issuance of Temporary Restraining Order) with the NLRC,

which sought the restraining of the execution pending appeal of the order of reinstatement.45 The petition for injunction was docketed as NLRC NCR IC No. 0001193-02. Atty. Garcia filed an opposition,46 to which ETPI and Atty. Hizon filed a reply.47 Said motion to inhibit was subsequently granted by Labor Arbiter Reyes.48 The case was re-raffled to Labor Arbiter Elias H. Salinas.49

In an Order dated 26 February 2003, the NLRC, in NLRC NCR IC No. 0001193-02, issued a temporary restraining order (TRO) enjoining Labor Arbiter Reyes from executing pending appeal the order of reinstatement contained in his decision dated 30 September 2002, and from issuing similar writs of execution pending resolution of the petition for preliminary injunction. It directed ETPI and Atty. Hizon to post a bond in the amount ofP30,000.00 to answer for any damage which Atty. Garcia may suffer by reason of the issuance of the TRO.50

On 21 March 2003, the NLRC rendered its decision in NLRC NCR CA Case No. 028901-01 reversing the decision of Labor Arbiter Reyes and dismissing the case for lack of jurisdiction. The decretal portion of the decision reads:

WHEREFORE, the decision appealed from is REVERSED, and the instant case DISMISSED for lack of jurisdiction.51

The Commission ruled that the dismissal of Atty. Garcia, being ETPI’s Vice President, partook of the nature of an intra-corporate dispute cognizable by Regional Trial Courts and not by Labor Arbiters. It added that ETPI and Atty. Hizon were not barred by estoppel from challenging the jurisdiction of the Labor Arbiter over the instant case.

Atty. Garcia moved for the reconsideration52 of the decision, which ETPI and Atty. Hizon opposed.53 In a resolution dated 16 December 2003, the motion for reconsideration was denied for lack of merit.54

On 26 March 2003, Atty. Garcia filed a Motion to Inhibit, requesting Associate Commissioner Angelita A. Gacutan to inhibit herself from further participating in the deliberation and resolution of the case for manifest bias and partiality in favor of ETPI and Atty. Hizon. The motion was later withdrawn.55

On 3 April 2003, the NLRC made permanent the TRO it issued pursuant to its ruling in NLRC NCR CA Case No. 028901-01, that since the Labor Arbiter had no jurisdiction over the case, the decision of the Labor Arbiter dated 30 September 2002 was void.56

On 6 March 2004, the resolution dated 16 December 2003 became final and executory. Consequently, on 14 June 2004, an entry of judgment was made recording said resolution in the Book of Entries of Judgments.57

On 18 June 2004, ETPI and Atty. Hizon filed a Motion to Discharge and/or Release the Appeal Bond58 in the amount of P5,700,000.00 that they had posted. 59

On 9 July 2004, Atty. Garcia filed a Motion to Set Aside Finality of Judgment With Opposition to Motion to Discharge Appeal Bond,60 claiming that he did not receive the resolution dated 16 December 2003 of the NLRC, the same having been sent to his former address at 9 Isidora St., Don Antonio Heights, Diliman, Quezon City, and not to his new address at 4 Pele St., Filinvest 2, Batasan Hills, Quezon City, where he had been receiving all pleadings, Resolutions, Orders and Decisions pertaining to the instant case since April 2001. On 19 July 2004, ETPI and Atty. Hizon filed their opposition thereto. On 23 August 2004, the NLRC, admitting that it missent the resolution dated 16 December 2003 denying Atty. Garcia’s motion for reconsideration, issued an order granting the motion. It recalled and set aside the Entry of Judgment dated 14 June 2004 and denied the Motion to Discharge and/or Release the Appeal Bond.61

In its Motion for Reconsideration dated 17 September 2004, ETPI and Atty. Hizon argued that the NLRC correctly sent the resolution of 16 December 2003 to counsel’s allegedly old address, considering that same was counsel’s address of record, there being no formal notice filed with the NLRC informing it of a change of address. They contended that the aforesaid resolution had become final and executory, and that Atty. Garcia should bear the consequences of his inequitable conduct and/or gross negligence.62 On 10 January 2005, the NLRC denied the motion for reconsideration.63

On 14 March 2005, Atty. Garcia appealed to the Court of Appeals via a Petition for Certiorari. It prayed that the Decision dated 21 March 2003 and resolution dated 16 December 2003 of the NLRC be annulled and set aside, and that the decision of the Labor Arbiter dated 30 September 2002 be reinstated.64 The appeal was docketed as CA-G.R. SP No. 88887.

On 28 March 2005, ETPI and Atty. Hizon likewise filed a Petition for Certiorari asking that the Orders dated 23 August 2004 and 10 January 2005 of the NLRC be set aside; that its resolution dated 16 December 2003 be declared final and executory; and that the NLRC be directed to discharge and/or release Supersedeas Bond No. JCL (15) 00823 SICI Bond No. 75069 dated 18 November 2002 posted by them.65 The appeal was docketed as CA-G.R. SP No. 89066.

Upon motion of Atty. Garcia, the two petitions for certiorari were consolidated.66

On 24 March 2006, the assailed decision of the Court of Appeals was rendered, the dispositive portion reading:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the consolidated petitions are hereby DISMISSED for lack of merit. Without costs in both instances.67

The appellate court, on ETPI and Atty. Hizon’s argument that Atty. Garcia’s petition for certiorari was filed out of time, ruled that the NLRC did not commit grave abuse of discretion in liberally applying the rules regarding changes in the address of counsel. It likewise ruled that Atty. Garcia, being the Vice President for Business Support Services and Human Resource Departments of ETPI, was a corporate officer at the time he was removed. Being a corporate officer, his removal was a corporate act and/or an intra-corporate controversy, the jurisdiction of which rested with the Securities and Exchange Commission (now with the Regional Trial Court), and not the Labor Arbiter and the NLRC. It added that ETPI and Atty. Hizon were not estopped from questioning the jurisdiction of the Labor Arbiter before the NLRC on appeal, inasmuch as said issue was seasonably raised by ETPI and Atty. Hizon in their reply memorandum before the Labor Arbiter.

On 18 April 2006, Atty. Garcia filed his Motion for Reconsideration.68 On 20 April 2006, ETPI and Atty. Hizon filed a Motion for Partial Reconsideration.69 The parties filed their respective comments thereon.70 On 14 June 2006, the Court of Appeals denied the motions for reconsideration.71

Atty. Garcia is now before us via a Petition for Review, which he filed on 3 August 2006.72 The petition was docketed as G.R. No. 173115. On 8 August 2006, he filed an Amended Petition for Review.73 He prays that the decision of the NLRC dated 21 March 2003 and its resolution dated 16 December 2003, and the decision of the Court of Appeals dated 24 March 2006 and its resolution dated 14 June 2006, be reconsidered and set aside and that the decision of the Labor Arbiter dated 30 September 2002 be affirmed and reinstated.

ETPI and Atty. Hizon are also before us by way of a Petition for Certiorari.74 The petition which was filed on 6 July 2006 was docketed as G.R. Nos. 173163-64.

In our resolution dated 30 August 2006, G.R. Nos. 173163-64 were consolidated with G.R. No. 173115, and the parties were required to comment on the petitions within ten days from notice. 75 Atty. Garcia filed his comment on 13 November 2006,76 while ETPI and Atty. Hizon filed theirs on 29 November 2006.77

On 15 January 2007, we noted the comments filed by the parties and required them to file their Replies to said comments.78 ETPI and Atty. Hizon79 filed their Reply on 26 February 2007, with Atty. Garcia filing his on 2 March 2007.80

On 26 March 2007, we gave due course to the petitions and required the parties to submit the respective memoranda within 30 days from notice.81 Atty. Garcia submitted his Memorandum82 on 12 June 2007 and ETPI and Atty. Hizon filed theirs on 13 July 2007.83 With leave of court, ETPI and Atty. Hizon filed a reply memorandum.84

Atty. Garcia raises the lone issue:

WHETHER THE QUESTION OF LEGALITY OR ILLEGALITY OF THE REMOVAL OR TERMINATION OF EMPLOYMENT OF AN OFFICER OF A CORPORATION IS AN INTRA-CORPORATE CONTROVERSY THAT FALLS UNDER THE ORIGINAL EXCLUSIVE JURISDICTION OF THE REGIONAL TRIAL COURTS?85

ETPI and Atty. Hizon argue that the Court of Appeals, in ruling that the NLRC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in issuing its order dated 23 August 2004 and its resolution dated 10 January 2005, committed grave reversible error and decided questions of substance in a way not in accordance with law and applicable decisions of the Honorable Court, and departed from the accepted and usual course of judicial proceedings, necessitating the Honorable Court’s exercise of its power of supervision.

I

THE RESOLUTION DATED 16 DECEMBER 2003 ISSUED BY THE NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) HAS ALREADY BECOME FINAL AND EXECUTORY AND HAS VESTED UPON PETITIONERS ETPI, ET AL. A RIGHT RECOGNIZED AND PROTECTED UNDER THE LAW CONSIDERING THAT:

A. RESPONDENT’S COPY OF SAID RESOLUTION WAS PROPERLY SENT TO HIS ADDRESS OF RECORD, AT THE LATEST ON 15 JANUARY 2004, IN ACCORDANCE WITH WELL ESTABLISHED JURISPRUDENCE. HENCE, RESPONDENT GARCIA HAD ONLY UNTIL 15 MARCH 2004 WITHIN WHICH TO FILE HIS PETITION FOR

CERTIORARI WITH THE COURT OF APPEALS. RESPONDENT GARCIA FAILED TO FILE HIS PETITION FOR CERTIORARI BY SAID DATE.

B. NOTWITHSTANDING THE FOREGOING, RESPONDENT GARCIA HAD ACTUAL NOTICE OF THE ISSUANCE OF THE SAME AS OF 24 JUNE 2004. HENCE RESPONDENT GARCIA HAD ONLY UNTIL 23 AUGUST 2004 WITHIN WHICH TO FILE HIS PETITION FOR CERTIORARI WITH THE COURT OF APPEALS. RESPONDENT GARCIA FAILED TO FILE HIS PETITION FOR CERTIORARI BY SAID DATE.

C. EVEN IF THE DATE OF RECEIPT IS RECKONED FROM 15 SEPTEMBER 2005, THE DATE RESPONDENT GARCIA ADMITTED IN HIS PETITION FOR CERTIORARI TO BE THE DATE OF HIS RECEIPT OF THE COPY OF THE RESOLUTION DATED 16 DECEMBER 2003 AT HIS ALLEGED NEW ADDRESS, RESPONDENT GARCIA HAD ONLY UNTIL 15 NOVEMBER 2005 TO FILE HIS PETITION FOR CERTIORARI DATED 11 MARCH 2005. RESPONDENT GARCIA FAILED TO FILE HIS PETITION FOR CERTIORARI BY SAID DATE.

II

THE COURT OF APPEALS ERRED IN AFFIRMING THE NLRC’S LIBERAL APPLICATION OF RULES CONSIDERING THAT A LIBERAL APPLICATION OF RULES CANNOT BE USED TO DEPRIVE A RIGHT THAT HAS ALREADY IPSO FACTO VESTED ON PETITIONERS ETPI, ET AL.

III

THE COURT OF APPEALS ERRED IN RULING THAT THE NLRC DID NOT COMMIT GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING ITS ORDER DATED 23 AUGUST 2004 AND RESOLUTION DATED 10 JANUARY 2005 CONSIDERING THAT RESPONDENT GARCIA MAY NOT ASSAIL THE FINALITY OF RESOLUTION DATED 16 DECEMBER 2003 THROUGH A MERE MOTION.

IV

THE COURT OF APPEALS ERRED IN FAILING TO RULE ON PETITIONERS’ COUNTER-MOTION TO CITE RESPONDENT GARCIA IN CONTEMPT OF COURT DESPITE ITS PREVIOUS RESOLUTION DATED 30 MAY 2005 STATING THAT IT SHALL ADDRESS THE SAME IN THE DECISION ON THE MERITS OF THE CASE.86

The issue raised by Atty. Garcia – whether the termination or removal of an officer of a corporation is an intra-corporate controversy that falls under the original exclusive jurisdiction of the regional trial courts – is not novel. The Supreme Court, in a long line of cases, has decreed that a corporate officer’s dismissal or removal is always a corporate act and/or an intra-corporate controversy, over which the Securities and Exchange Commission [SEC] (now the Regional Trial Court)87 has original and exclusive jurisdiction.88

We have ruled that an intra-corporate controversy is one which pertains to any of the following relationships: (1) between the corporation, partnership or association and the public; (2) between the corporation, partnership or association and the State insofar as the former’s franchise, permit or license to operate is concerned; (3) between the corporation, partnership or association and its stockholders, partners, members or officers; and (4) among the stockholders, partners or associates themselves.89 In Lozon v. National Labor Relations Commission,90 we declared that Presidential Decree No. 902-A confers on the SEC original and exclusive jurisdiction to hear and decide controversies and cases involving intra-corporate and partnership relations between or among the corporation, officers and stockholders and partners, including their elections or appointments x x x.

Before a dismissal or removal could properly fall within the jurisdiction of the SEC, it has to be first established that the person removed or dismissed was a corporate officer.91 "Corporate officers" in the context of Presidential Decree No. 902-A92 are those officers of the corporation who are given that character by the Corporation Code or by the corporation’s by-laws.93 There are three specific officers whom a corporation must have under Section 25 of the Corporation Code.94 These are the president, secretary and the treasurer. The number of officers is not limited to these three. A corporation may have such other officers as may be provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers is thus limited by law and by the corporation’s by-laws.1avvphi1

In the case before us, the by-laws of ETPI provide:

ARTICLE VOfficers

Section 1. Number. – The officers of the Company shall be a Chairman of the Board, a President, one or more Vice-Presidents, a Treasurer, a Secretary, an Assistant Secretary, and such other officers as may be from time to time be elected or appointed by the Board of Directors. One person may hold any two compatible offices.95

Atty. Garcia tries to deny he is an officer of ETPI. Not being a corporate officer, he argues that the Labor Arbiter has jurisdiction over the case. One of the corporate officers provided for in the by-laws of ETPI is the Vice-President. It can be gathered from Atty. Garcia’s complaint-affidavit that he was Vice President for Business Support Services and Human Resource Departments of ETPI when his employment was terminated effective 16 April 2000. It is therefore clear from the by-laws and from Atty. Garcia himself that he is a corporate officer. One who is included in the by-laws of a corporation in its roster of corporate officers is an officer of said corporation and not a mere employee.96 Being a corporate officer, his removal is deemed to be an intra-corporate dispute cognizable by the SEC and not by the Labor Arbiter.

We agree with both the NLRC and the Court of Appeals that Atty. Garcia’s ouster as Vice-President, who is a corporate officer of ETPI, partakes of the nature of an intra-corporate controversy, jurisdiction over which is vested in the SEC (now the RTC). The Labor Arbiter thus erred in assuming jurisdiction over the case filed by Atty. Garcia, because he had no jurisdiction over the subject matter of the controversy.

Having ruled which body has jurisdiction over the instant case, we find it unnecessary, due to mootness, to further discuss and rule on the issues raised by ETPI and Atty. Hizon regarding the NLRC order dated 23 August 2004 granting Atty. Garcia’s Motion to Set Aside Finality of Judgment with Opposition to Motion to Discharge Appeal Bond, and its resolution dated 10 January 2005 denying their motion for reconsideration thereon. The decision of the Labor Arbiter, who had jurisdiction over the case, was properly dismissed by the NLRC. Consequently, Supersedeas Bond No. JCL (15) 00823 SICI Bond No. 75069 dated 18 November 2002, posted by ETPI as a requirement for the filing of an appeal before the NLRC, is ordered discharged.

WHEREFORE, premises considered, the petition for certiorari of Atty. Garcia in G.R. No. 173115 is hereby DENIED. The petition for review on certiorari of ETPI and Atty. Hizon in G.R. Nos. 173163-64 is PARTIALLY GRANTED insofar as the discharge of Supersedeas Bond No. JCL (15) 00823 SICI Bond No. 75069 dated 18 November 2002 is concerned. This ruling is without prejudice to Atty. Garcia’s taking recourse to and seeking relief through the appropriate remedy in the proper forum.

SO ORDERED.

G.R. No. 170770               January 9, 2013

VITALIANO N. AGUIRRES II and FIDEL N. AGUIRRE, Petitioners, vs.FQB+7, INC., NATHANIEL D. BOCOBO, PRISCILA BOCOBO and ANTONIO DE VILLA, Respondents.

D E C I S I O N

DEL CASTILLO, J.:

Pursuant to Section 145 of the Corporation Code, an existing intra-corporate dispute, which does not constitute a continuation of corporate business, is not affected by the subsequent dissolution of the corporation.

Before the Court is a Petition for Review on Certiorari of the June 29, 2005 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 87293, which nullified the trial court’s writ of preliminary injunction and dismissed petitioner Vitaliano N. Aguirre’s (Vitaliano) Complaint before the Regional Trial Court (RTC) for lack of jurisdiction. The dispositive portion of the assailed Decision reads:

WHEREFORE, the assailed October 15, 2004 Order, as well as the October 27, 2004 Writ of Preliminary Injunction, are SET ASIDE. With FQB+7, Inc.’s dissolution on September 29, 2003 and Case No. 04111077’s ceasing to become an intra-corporate dispute said case is hereby ordered DISMISSED for want of jurisdiction.

SO ORDERED.2

Likewise assailed in this Petition is the appellate court’s December 16, 2005 Resolution,3 which denied a reconsideration of the assailed Decision.

Factual Antecedents

On October 5, 2004, Vitaliano filed, in his individual capacity and on behalf of FQB+7, Inc. (FQB+7), a Complaint4for intra-corporate

dispute, injunction, inspection of corporate books and records, and damages, against respondents Nathaniel D. Bocobo (Nathaniel), Priscila D. Bocobo (Priscila), and Antonio De Villa (Antonio). The Complaint alleged that FQB+7 was established in 1985 with the following directors and subscribers, as reflected in its Articles of Incorporation:

Directors Subscribers

1. Francisco Q. Bocobo 1. Francisco Q. Bocobo

2. Fidel N. Aguirre 2. Fidel N. Aguirre

3. Alfredo Torres 3. Alfredo Torres

4. Victoriano Santos 4. Victoriano Santos

5. Victorino Santos5 5. Victorino Santos

6. Vitaliano N. Aguirre II

7. Alberto Galang

8. Rolando B. Bechayda6

To Vitaliano’s knowledge, except for the death of Francisco Q. Bocobo and Alfredo Torres, there has been no other change in the above listings.

The Complaint further alleged that, sometime in April 2004, Vitaliano discovered a General Information Sheet (GIS) of FQB+7, dated September 6, 2002, in the Securities and Exchange Commission (SEC) records. This GIS was filed by Francisco Q. Bocobo’s heirs, Nathaniel and Priscila, as FQB+7’s president and secretary/treasurer, respectively. It also stated FQB+7’s directors and subscribers, as follows:

Directors Subscribers

1. Nathaniel D. Bocobo 1. Nathaniel D. Bocobo

2. Priscila D. Bocobo 2. Priscila D. Bocobo

3. Fidel N. Aguirre 3. Fidel N. Aguirre

4. Victoriano Santos 4. Victorino7 Santos

5. Victorino Santos 5. Victorino Santos

6. Consolacion Santos8 6. Consolacion Santos9

Further, the GIS reported that FQB+7’s stockholders held their annual meeting on September 3, 2002.10

The substantive changes found in the GIS, respecting the composition of directors and subscribers of FQB+7, prompted Vitaliano to write to the "real" Board of Directors (the directors reflected in the Articles of Incorporation), represented by Fidel N. Aguirre (Fidel). In this letter11 dated April 29, 2004, Vitaliano questioned the validity and truthfulness of the alleged stockholders meeting held on September 3, 2002. He asked the "real" Board to rectify what he perceived as erroneous entries in the GIS, and to allow him to inspect the corporate books and records. The "real" Board allegedly ignored Vitaliano’s request.

On September 27, 2004, Nathaniel, in the exercise of his power as FQB+7’s president, appointed Antonio as the corporation’s attorney-in-fact, with power of administration over the corporation’s farm in Quezon Province.12Pursuant thereto, Antonio attempted to take over the farm, but was allegedly prevented by Fidel and his men.13

Characterizing Nathaniel’s, Priscila’s, and Antonio’s continuous representation of the corporation as a usurpation of the management powers and prerogatives of the "real" Board of Directors, the Complaint asked for an injunction against them and for the nullification of all their previous actions as purported directors, including the GIS they had filed with the SEC. The Complaint also sought damages for the plaintiffs and a declaration of Vitaliano’s right to inspect the corporate records.

The case, docketed as SEC Case No. 04-111077, was assigned to Branch 24 of the RTC of Manila (Manila RTC), which was a designated special commercial court, pursuant to A.M. No. 03-03-03-SC.14

The respondents failed, despite notice, to attend the hearing on Vitaliano’s application for preliminary injunction.15Thus, in an Order16 dated October 15, 2004, the trial court granted the application based only on Vitaliano’s testimonial and documentary evidence, consisting of the corporation’s articles of incorporation, by-laws, the GIS, demand letter on the "real" Board of Directors, and police blotter of the incident between Fidel’s and Antonio’s groups. On October 27, 2004, the trial court issued the writ of preliminary injunction17 after Vitaliano filed an injunction bond.

The respondents filed a motion for an extension of 10 days to file the "pleadings warranted in response to the complaint," which they

received on October 6, 2004.18 The trial court denied this motion for being a prohibited pleading under Section 8, Rule 1 of the Interim Rules of Procedure Governing Intra-corporate Controversies under Republic Act (R.A.) No. 8799.19

The respondents filed a Petition for Certiorari and Prohibition,20 docketed as CA-G.R. SP No. 87293, before the CA. They later amended their Petition by impleading Fidel, who allegedly shares Vitaliano’s interest in keeping them out of the corporation, as a private respondent therein.21

The respondents sought, in their certiorari petition, the annulment of all the proceedings and issuances in SEC Case No. 04-11107722 on the ground that Branch 24 of the Manila RTC has no jurisdiction over the subject matter, which they defined as being an agrarian dispute.23 They theorized that Vitaliano’s real goal in filing the Complaint was to maintain custody of the corporate farm in Quezon Province. Since this land is agricultural in nature, they claimed that jurisdiction belongs to the Department of Agrarian Reform (DAR), not to the Manila RTC.24 They also raised the grounds of improper venue (alleging that the real corporate address is different from that stated in the Articles of Incorporation)25 and forum-shopping26 (there being a pending case between the parties before the DAR regarding the inclusion of the corporate property in the agrarian reform program).27Respondents also raised their defenses to Vitaliano’s suit, particularly the alleged disloyalty and fraud committed by the "real" Board of Directors,28 and respondents’ "preferential right to possess the corporate property" as the heirs of the majority stockholder Francisco Q. Bocobo.29

The respondents further informed the CA that the SEC had already revoked FQB+7’s Certificate of Registration on September 29, 2003 for its failure to comply with the SEC reportorial requirements.30 The CA determined that the corporation’s dissolution was a conclusive fact after petitioners Vitaliano and Fidel failed to dispute this factual assertion.31

Ruling of the Court of Appeals

The CA determined that the issues of the case are the following: (1) whether the trial court’s issuance of the writ of preliminary injunction, in its October 15, 2004 Order, was attended by grave abuse of discretion amounting to lack of jurisdiction; and (2) whether the corporation’s dissolution affected the trial court’s jurisdiction to hear the intra corporate dispute in SEC Case No. 04-111077.32

On the first issue, the CA determined that the trial court committed a grave abuse of discretion when it issued the writ of preliminary injunction to remove the respondents from their positions in the Board of Directors based only on Vitaliano’s self-serving and empty assertions. Such assertions cannot outweigh the entries in the GIS, which are documented facts on record, which state that respondents are stockholders and were duly elected corporate directors and officers of FQB+7, Inc. The CA held that Vitaliano only proved a future right in case he wins the suit. Since an injunction is not a remedy to protect future, contingent or abstract rights, then Vitaliano is not entitled to a writ.33

Further, the CA disapproved the discrepancy between the trial court’s October 15, 2004 Order, which granted the application for preliminary injunction, and its writ dated October 27, 2004. The Order enjoined all the respondents "from entering, occupying, or taking over possession of the farm owned by Atty. Vitaliano Aguirre II," while the writ states that the subject farm is "owned by plaintiff corporation located in Mulanay, Quezon Province." The CA held that this discrepancy imbued the October 15, 2004 Order with jurisdictional infirmity.34

On the second issue, the CA postulated that Section 122 of the Corporation Code allows a dissolved corporation to continue as a body corporate for the limited purpose of liquidating the corporate assets and distributing them to its creditors, stockholders, and others in interest. It does not allow the dissolved corporation to continue its business. That being the state of the law, the CA determined that Vitaliano’s Complaint, being geared towards the continuation of FQB+7, Inc.’s business, should be dismissed because the corporation has lost its juridical personality.35 Moreover, the CA held that the trial court does not have jurisdiction to entertain an intra-corporate dispute when the corporation is already dissolved.36

After dismissing the Complaint, the CA reminded the parties that they should proceed with the liquidation of the dissolved corporation based on the existing GIS, thus:

With SEC’s revocation of its certificate of registration on September 29, 2004 [sic], FQB+7, Inc. will be obligated to wind up its affairs. The Corporation will have to be liquidated within the 3-year period mandated by Sec. 122 of the Corporation Code.

Regardless of the method it will opt to liquidate itself, the Corporation will have to reckon with the members of the board as duly listed in the General Information Sheet last filed with SEC. Necessarily, and as admitted in the complaint below, the following as listed in the Corporation’s General Information Sheet dated September 6, 2002, will have to continue acting as Members of the Board of FQB+7, Inc. viz:

x x x x37

Herein petitioners filed a Motion for Reconsideration.38 They argued that the CA erred in ruling that the October 15, 2004 Order was inconsistent with the writ. They explained that pages 2 and 3 of the said Order were interchanged in the CA’s records, which then misled the CA to its erroneous conclusion. They also posited that the original sentence in the correct Order reads: "All defendants are further enjoined from entering, occupying or taking over possession of the farm owned by plaintiff corporation located in Mulanay, Quezon." This sentence is in accord with what is ordered in the writ, hence the CA erred in nullifying the Order.

On the second issue, herein petitioners maintained that the CA erred in characterizing the reliefs they sought as a continuance of the dissolved corporation’s business, which is prohibited under Section 122 of the Corporation Code. Instead, they argued, the relief they seek is only to determine the real Board of Directors that can represent the dissolved corporation.

The CA denied the Motion for Reconsideration in its December 16, 2005 Resolution.39 It determined that the crucial issue is the trial court’s jurisdiction over an intra-corporate dispute involving a dissolved corporation.40Based on the prayers in the Complaint, petitioners seek a determination of the real Board that can take over the management of the corporation’s farm, not to sit as a liquidation Board. Thus, contrary to petitioners’ claims, their Complaint is not geared towards liquidation but a continuance of the corporation’s business.

Issues

1. Whether the CA erred in annulling the October 15, 2004 Order based on interchanged pages.

2. Whether the Complaint seeks to continue the dissolved corporation’s business.

3. Whether the RTC has jurisdiction over an intra-corporate dispute involving a dissolved corporation.

Our Ruling

The Petition is partly meritorious.

On the nullification of the Order of preliminary injunction.

Petitioners reiterate their argument that the CA was misled by the interchanged pages in the October 15, 2004 Order. They posit that had the CA read the Order in its correct sequence, it would not have nullified the Order on the ground that it was issued with grave abuse of discretion amounting to lack of jurisdiction.41

Petitioners’ argument fails to impress. The CA did not nullify the October 15, 2004 Order merely because of the interchanged pages. Instead, the CA determined that the applicant, Vitaliano, was not able to show that he had an actual and existing right that had to be protected by a preliminary injunction. The most that Vitaliano was able to prove was a future right based on his victory in the suit. Contrasting this future right of Vitaliano with respondents’ existing right under the GIS, the CA determined that the trial court should not have disturbed the status quo. The CA’s discussion regarding the interchanged pages was made only in addition to its above ratiocination. Thus, whether the pages were interchanged or not will not affect the CA’s main finding that the trial court issued the Order despite the absence of a clear and existing right in favor of the applicant, which is tantamount to grave abuse of discretion. We cannot disturb the CA’s finding on this score without any showing by petitioners of strong basis to warrant the reversal.

Is the Complaint a continuation of

business?

Section 122 of the Corporation Code prohibits a dissolved corporation from continuing its business, but allows it to continue with a limited personality in order to settle and close its affairs, including its complete liquidation, thus:

Sec. 122. Corporate liquidation. – Every corporation whose charter expires by its own limitation or is annulled by forfeiture or otherwise, or whose corporate existence for other purposes is terminated in any other manner, shall nevertheless be continued as a body corporate for three (3) years after the time when it would have been so dissolved, for the purpose of prosecuting and defending suits by or against it and enabling it to settle and close its affairs, to dispose of and convey its property and to distribute its assets, but not for the purpose of continuing the business for which it was established.

x x x x

Upon learning of the corporation’s dissolution by revocation of its corporate franchise, the CA held that the intra-corporate Complaint, which aims to continue the corporation’s business, must now be dismissed under Section 122.

Petitioners concede that a dissolved corporation can no longer continue its business. They argue, however, that Section 122 allows a dissolved corporation to wind up its affairs within 3 years from its dissolution. Petitioners then maintain that the Complaint, which seeks only a declaration that respondents are strangers to the corporation and have no right to sit in the board or act as officers thereof, and a return of Vitaliano’s stockholdings, intends only to resolve remaining corporate issues. The resolution of these issues is allegedly part of corporate winding up.

Does the Complaint seek a continuation of business or is it a settlement of corporate affairs? The answer lies in the prayers of the Complaint, which state:

P R A Y E R

WHEREFORE, it is most respectfully prayed of this Honorable Court that judgment be rendered in favor of the plaintiffs and against the defendants, in the following wise:

I. ON THE PRAYER OF TRO/STATUS QUO ORDER AND WRIT OF PRELIMINARY INJUNCTION:

1. Forthwith and pending the resolution of plaintiffs’ prayer for issuance of writ of preliminary injunction, in order to maintain the status quo, a status quo order or temporary restraining order (TRO) be issued enjoining the defendants, their officers, employees, and agents from exercising the powers and authority as members of the Board of Directors of plaintiff FQB as well as officers thereof and from misrepresenting and conducting themselves as such, and enjoining defendant Antonio de Villa from taking over the farm of the plaintiff FQB and from exercising any power and authority by reason of his appointment emanating from his co-defendant Bocobos.

2. After due notice and hearing and during the pendency of this action, to issue writ of preliminary injunction prohibiting the defendants from committing the acts complained of herein, more particularly those enumerated in the immediately preceeding paragraph, and making the injunction permanent after trial on the merits.

II. ON THE MERITS

After trial, judgment be rendered in favor of the plaintiffs and against the defendants, as follows:

1. Declaring defendant Bocobos as without any power and authority to represent or conduct themselves as members of the Board of Directors of plaintiff FQB, or as officers thereof.

2. Declaring that Vitaliano N. Aguirre II is a stockholder of plaintiff FQB owning fifty (50) shares of stock thereof.

3. Allowing Vitaliano N. Aguirre II to inspect books and records of the company.

4. Annulling the GIS, Annex "C" of the Complaint as fraudulent and illegally executed and filed.

5. Ordering the defendants to pay jointly and solidarily the sum of at least P200,000.00 as moral damages; at least P100,000.00 as exemplary damages; and at least P100,000.00 as and for attorney’s fees and other litigation expenses.

Plaintiffs further pray for costs and such other relief just and equitable under the premises.42

The Court fails to find in the prayers above any intention to continue the corporate business of FQB+7. The Complaint does not seek to enter into contracts, issue new stocks, acquire properties, execute business transactions, etc. Its aim is not to continue the corporate business, but to determine and vindicate an alleged stockholder’s right to the return of his stockholdings and to participate in the election of directors, and a corporation’s right to remove usurpers and strangers from its affairs. The Court fails to see how the resolution of these issues can be said to continue the business of FQB+7.

Neither are these issues mooted by the dissolution of the corporation. A corporation’s board of directors is not rendered functus officio by its dissolution. Since Section 122 allows a corporation to continue its existence for a limited purpose, necessarily there must be a board that will continue acting for and on behalf of the dissolved corporation for that purpose. In fact, Section 122 authorizes the dissolved corporation’s board of directors to conduct its liquidation within three years from its dissolution. Jurisprudence has even recognized the

board’s authority to act as trustee for persons in interest beyond the said three-year period.43 Thus, the determination of which group is the bona fide or rightful board of the dissolved corporation will still provide practical relief to the parties involved.

The same is true with regard to Vitaliano’s shareholdings in the dissolved corporation. A party’s stockholdings in a corporation, whether existing or dissolved, is a property right44 which he may vindicate against another party who has deprived him thereof. The corporation’s dissolution does not extinguish such property right. Section 145 of the Corporation Code ensures the protection of this right, thus:

Sec. 145. Amendment or repeal. – No right or remedy in favor of or against any corporation, its stockholders, members, directors, trustees, or officers, nor any liability incurred by any such corporation, stockholders, members, directors, trustees, or officers, shall be removed or impaired either by the subsequent dissolution of said corporation or by any subsequent amendment or repeal of this Code or of any part thereof. (Emphases supplied.)

On the dismissal of the Complaint forlack of jurisdiction.

The CA held that the trial court does not have jurisdiction over an intra-corporate dispute involving a dissolved corporation. It further held that due to the corporation’s dissolution, the qualifications of the respondents can no longer be questioned and that the dissolved corporation must now commence liquidation proceedings with the respondents as its directors and officers.

The CA’s ruling is founded on the assumptions that intra-corporate controversies continue only in existing corporations; that when the corporation is dissolved, these controversies cease to be intra-corporate and need no longer be resolved; and that the status quo in the corporation at the time of its dissolution must be maintained. The Court finds no basis for the said assumptions.

Intra-corporate disputes remain evenwhen the corporation is dissolved.

Jurisdiction over the subject matter is conferred by law. R.A. No. 879945 conferred jurisdiction over intra-corporate controversies on courts of general jurisdiction or RTCs,46 to be designated by the Supreme Court. Thus, as long as the nature of the controversy is intra-corporate, the designated RTCs have the authority to exercise jurisdiction over such cases.

So what are intra-corporate controversies? R.A. No. 8799 refers to Section 5 of Presidential Decree (P.D.) No. 902-A (or The SEC Reorganization Act) for a description of such controversies:

a) Devices or schemes employed by or any acts, of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or of the stockholder, partners, members of associations or organizations registered with the Commission;

b) Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members, or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity;

c) Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations.

The Court reproduced the above jurisdiction in Rule 1 of the Interim Rules of Procedure Governing Intra-corporate Controversies under R.A. No. 8799:

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

(1) Devices or schemes employed by, or any act of, the board of directors, business associates, officers or partners, amounting to fraud or misrepresentation which may be detrimental to the interest of the public and/or of the stockholders, partners, or members of any corporation, partnership, or association;

(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;

(4) Derivative suits; and

(5) Inspection of corporate books.

Meanwhile, jurisprudence has elaborated on the above definitions by providing tests in determining whether a controversy is intra-corporate. Reyes v. Regional Trial Court of Makati, Br. 14247 contains a comprehensive discussion of these two tests, thus:

A review of relevant jurisprudence shows a development in the Court's approach in classifying what constitutes an intra-corporate controversy. Initially, the main consideration in determining whether a dispute constitutes an intra-corporate controversy was limited to a consideration of the intra-corporate relationship existing between or among the parties. The types of relationships embraced under Section 5(b) x x x were as follows:

a) between the corporation, partnership, or association and the public;

b) between the corporation, partnership, or association and its stockholders, partners, members, or officers;

c) between the corporation, partnership, or association and the State as far as its franchise, permit or license to operate is concerned; and

d) among the stockholders, partners or associates themselves. xxx

The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC now the RTC, regardless of the subject matter of the dispute. This came to be known as the relationship test.

However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc., the Court introduced the nature of the controversy test. We declared in this case that it is not the mere existence of an intra-corporate relationship that gives rise to an intra-corporate controversy; to rely on the relationship test alone will divest the regular courts of their jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers, or stockholders. We saw that there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the dispute.

Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of ascertaining whether the controversy itself is intra-corporate. The controversy must not only be rooted in the existence of an intra-corporate relationship, but must as well pertain to the enforcement of the parties' correlative rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If the relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not exist, then no intra-corporate controversy exists.

The Court then combined the two tests and declared that jurisdiction should be determined by considering not only the status or relationship of the parties, but also the nature of the question under controversy. This two-tier test was adopted in the recent case of Speed Distribution, Inc. v. Court of Appeals:

'To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the branches of the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or relationship of the parties, and [b] the nature of the question that is the subject of their controversy.1âwphi1

The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all of the parties and the corporation, partnership, or association of which they are stockholders, members or associates, between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns the individual franchises. The second element requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character, necessarily, the case does not involve an intra-corporate controversy.' (Citations and some emphases omitted; emphases supplied.)

Thus, to be considered as an intra-corporate dispute, the case: (a) must arise out of intra-corporate or partnership relations, and (b) the nature of the question subject of the controversy must be such that it is intrinsically connected with the regulation of the corporation or the

enforcement of the parties’ rights and obligations under the Corporation Code and the internal regulatory rules of the corporation. So long as these two criteria are satisfied, the dispute is intra-corporate and the RTC, acting as a special commercial court, has jurisdiction over it.

Examining the case before us in relation to these two criteria, the Court finds and so holds that the case is essentially an intra-corporate dispute. It obviously arose from the intra-corporate relations between the parties, and the questions involved pertain to their rights and obligations under the Corporation Code and matters relating to the regulation of the corporation. We further hold that the nature of the case as an intra-corporate dispute was not affected by the subsequent dissolution of the corporation.

It bears reiterating that Section 145 of the Corporation Code protects, among others, the rights and remedies of corporate actors against other corporate actors. The statutory provision assures an aggrieved party that the corporation’s dissolution will not impair, much less remove, his/her rights or remedies against the corporation, its stockholders, directors or officers. It also states that corporate dissolution will not extinguish any liability already incurred by the corporation, its stockholders, directors, or officers. In short, Section 145 preserves a corporate actor’s cause of action and remedy against another corporate actor. In so doing, Section 145 also preserves the nature of the controversy between the parties as an intra-corporate dispute.

The dissolution of the corporation simply prohibits it from continuing its business. However, despite such dissolution, the parties involved in the litigation are still corporate actors. The dissolution does not automatically convert the parties into total strangers or change their intra-corporate relationships. Neither does it change or terminate existing causes of action, which arose because of the corporate ties between the parties. Thus, a cause of action involving an intra-corporate controversy remains and must be filed as an intra-corporate dispute despite the subsequent dissolution of the corporation.

WHEREFORE, premises considered, the Petition for Review on Certiorari is PARTIALLY GRANTED. The assailed June 29, 2005 Decision of the Court of Appeals in CA-G.R. SP No. 87293, as well as its December 16, 2005 Resolution, are ANNULLED with respect to their dismissal of SEC Case No. 04-111077 on the ground of lack of jurisdiction. The said case is ordered REINSTATED before Branch 24 of the Regional Trial Court of Manila. The rest of the assailed issuances are AFFIRMED.

SO ORDERED.

G.R. No. 180384               March 26, 2010

LAND BANK OF THE PHILIPPINES, Petitioner, vs.CORAZON M. VILLEGAS, Respondent.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 180891

LAND BANK OF THE PHILIPPINES, Petitioner, vs.HEIRS OF CATALINO V. NOEL and PROCULA P. SY, Respondents.

D E C I S I O N

ABAD, J.:

These consolidated cases1 are about the jurisdiction of a Regional Trial Court (RTC), acting as a Special Agrarian Court, over just compensation cases involving agricultural lands located outside its regular territorial jurisdiction but within the province where it is designated as agrarian court under the Comprehensive Agrarian Reform Law of 1988.

The Facts and the Case

Petitioner Land Bank of the Philippines (Land Bank) filed cases for determination of just compensation against respondent Corazon M. Villegas in Civil Case 2007-14174 and respondent heirs of Catalino V. Noel and Procula P. Sy in Civil Case 2007-14193 before the RTC of Dumaguete City, Branch 32, sitting as a Special Agrarian Court for the province of Negros Oriental. Respondent Villegas’ property was in Hibaiyo, Guihulngan City, Negros Oriental, while respondent heirs’ land was in Nangca, Bayawan City, Negros Oriental. These lands happened to be outside the regular territorial jurisdiction of RTC Branch 32 of Dumaguete City.

On September 13, 2007 RTC, Branch 32 dismissed Civil Case 2007-14174 for lack of jurisdiction.2 It ruled that, although it had been designated Special Agrarian Court for Negros Oriental, the designation

did not expand its territorial jurisdiction to hear agrarian cases under the territorial jurisdiction of the RTC, Branch 64 of Guihulngan City where respondent Villegas’ property can be found.

On November 16, 2007 RTC, Branch 32 also dismissed Civil Case 2007-14193 for lack of jurisdiction. It pointed out that RTC, Branch 63 of Bayawan City had jurisdiction over the case since respondent heirs’ property was within the latter court’s territorial jurisdiction.

Petitioner Land Bank moved for the reconsideration of the dismissal of the two cases but RTC, Branch 32 denied both motions.3 Aggrieved, Land Bank directly filed this petitions for certiorari4 before this Court, raising a purely question of law.

Sole Question Presented

The sole question presented in these cases is whether or not an RTC, acting as Special Agrarian Court, has jurisdiction over just compensation cases involving agricultural lands located outside its regular jurisdiction but within the province where it is designated as an agrarian court under the Comprehensive Agrarian Reform Law of 1998.

The Court’s Ruling

The RTC, Branch 32 based its order on Deputy Court Administrator (DCA) Zenaida Elepaño’s opinion that single sala courts have jurisdiction over agrarian cases involving lands located within its territorial jurisdiction. An RTC branch acting as a special agrarian court, she claimed, did not have expanded territorial jurisdiction. DCA Elepaño said:

x x x [B]eing a single sala court, the Regional Trial Court, Branch 64, Guihulngan, Negros Oriental, has jurisdiction over all cases, including agrarian cases, cognizable by the Regional Trial Court emanating from the geographical areas within its territorial jurisdiction.

Further, the jurisdiction of the Special Agrarian Courts over agrarian cases is co-extensive with its territorial jurisdiction. Administrative Order No. 80 dated July 18, 1989, as amended by Administrative Order No. 80A-90 dated February 23, 1990, did not expand the territorial jurisdiction of the courts designated as Special Agrarian Courts.5

Respondent Villegas6 adopts DCA Elepaño’s view. Villegas points out that the designation of RTC, Branch 32 as a Special Agrarian Court did not expand its territorial jurisdiction. Although it has been designated Special Agrarian Court for the Province of Negros Oriental, its jurisdiction as an RTC did not cover the whole province.

Respondent Villegas adds that, in hearing just compensation cases, RTC, Branch 64 in Guihulngan City should be no different from the situation of other single sala courts that concurrently hear drugs and family-related cases even as the Supreme Court has designated family and drugs courts in Dumaguete City within the same province. Further, Guihulngan City is more than 100 kilometers from Dumaguete City where RTC, Branch 32 sits. For practical considerations, RTC, Branch 64 of Guihulngan City should hear and decide the case.

For their part, on June 19, 2009 respondent heirs of Noel informed7 the Court that petitioner Land Bank had already paid them for their land. Consequently, they have no further interest in the outcome of the case. It is not clear, however, if the trial court had already approved a settlement.1avvphi1

"Jurisdiction" is the court’s authority to hear and determine a case. The court’s jurisdiction over the nature and subject matter of an action is conferred by law.8 In this case, the law that confers jurisdiction on Special Agrarian Courts designated by the Supreme Court in every province is Republic Act (R.A.) 6657 or the Comprehensive Agrarian Reform Law of 1988. Sections 56 and 57 are the relevant provisions:

SEC. 56. Special Agrarian Court. - The Supreme Court shall designate at least one (1) branch of the Regional Trial Court (RTC) within each province to act as a Special Agrarian Court.

The Supreme Court may designate more branches to constitute such additional Special Agrarian Courts as may be necessary to cope with the number of agrarian cases in each province. In the designation, the Supreme Court shall give preference to the Regional Trial Courts which have been assigned to handle agrarian cases or whose presiding judges were former judges of the defunct Court of Agrarian Relations.

The Regional Trial Court (RTC) judges assigned to said courts shall exercise said special jurisdiction in addition to the regular jurisdiction of their respective courts.

SEC. 57. Special Jurisdiction. - The Special Agrarian Courts shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, and the prosecution of all criminal offenses under this Act. The Rules of Court shall apply to

all proceedings before the Special Agrarian Courts unless modified by this Act.

The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty (30) days from submission of the case for decision.

The law is clear. A branch of an RTC designated as a Special Agrarian Court for a province has the original and exclusive jurisdiction over all petitions for the determination of just compensation in that province. In Republic v. Court of Appeals,9 the Supreme Court ruled that Special Agrarian Courts have original and exclusive jurisdiction over two categories of cases: (1) all petitions for the determination of just compensation to landowners, and (2) the prosecution of all criminal offenses under R.A. 6657.

By "special" jurisdiction, Special Agrarian Courts exercise power in addition to or over and above the ordinary jurisdiction of the RTC, such as taking cognizance of suits involving agricultural lands located outside their regular territorial jurisdiction, so long as they are within the province where they sit as Special Agrarian Courts.

R.A. 6657 requires the designation by the Supreme Court before an RTC Branch can function as a Special Agrarian Court. The Supreme Court has not designated the single sala courts of RTC, Branch 64 of Guihulngan City and RTC, Branch 63 of Bayawan City as Special Agrarian Courts. Consequently, they cannot hear just compensation cases just because the lands subject of such cases happen to be within their territorial jurisdiction.

Since RTC, Branch 32 of Dumaguete City is the designated Special Agrarian Court for the province of Negros Oriental, it has jurisdiction over all cases for determination of just compensation involving agricultural lands within that province, regardless of whether or not those properties are outside its regular territorial jurisdiction.

WHEREFORE, the Court GRANTS the petitions, SETS ASIDE the orders of the Regional Trial Court, Branch 32 of Dumaguete City dated September 13, 2007 and October 30, 2007 in Civil Case 2007-14174, entitled Land Bank of the Philippines v. Corazon Villegas, and its orders dated November 16, 2007 and December 14, 2007 in Civil Case 2007-14193, entitled Land Bank of the Philippines v. Heirs of Catalino V. Noel and Procula P. Sy, which orders dismissed the cases before it for lack of jurisdiction. Further, the Court DIRECTS the Regional Trial Court, Branch 32 of Dumaguete City to immediately hear and decide the two cases unless a compromise agreement has in the meantime been approved in the latter case.

SO ORDERED.

G.R. No. 187256               February 23, 2011

CONSTANCIO F. MENDOZA and SANGGUNIANG BARANGAY OF BALATASAN, BULALACAO, ORIENTAL MINDORO, Petitioners, vs.MAYOR ENRILO VILLAS and BRGY. KAGAWAD LIWANAG HERATO and MARLON DE CASTRO, Manager, Pinamalayan Branch, Land Bank of the Philippines, Respondents.

R E S O L U T I O N

VELASCO, JR., J.:

Before this Court is a Petition dated April 7, 20091 filed by Constancio F. Mendoza and Sangguniang Barangay of Balatasan, Bulalacao, Oriental Mindoro. In the Petition, it is prayed that the Court: (1) set aside the Order dated February 2, 20092 of the Regional Trial Court (RTC), Branch 43 in Roxas, Oriental Mindoro and its Order dated March 17, 20093 denying petitioners’ motion for reconsideration of the Order dated February 2, 2009; and (2) direct the RTC to continue with the proceedings in Special Civil Action No. 08-10 entitled Constancio Mendoza v. Mayor Enrilo Villas.

The factual antecedents of the case are as follows:

In the 2007 barangay elections, Mendoza obtained the highest votes for the position of Punong Barangay of Barangay Balatasan, Bulalacao, Oriental Mindoro, while respondent Liwanag Herato obtained the highest number of votes for the position of Barangay Kagawad. Notably, Mayor Enrilo Villas was the incumbent Mayor of Bulalacao, Oriental Mindoro at the time of the barangay elections.4

After the elections, the Commission on Elections (COMELEC) proclaimed Mendoza as the duly-elected Punong Barangay of Balatasan. Thus, the losing candidate, Thomas Pajanel, filed a petition for quo warranto with the Municipal Trial Court (MTC) of Mansalay-Bulalacao which was docketed as Election Case No. 407-B. The MTC issued a Decision dated February 23, 2008, disqualifying Mendoza and declaring that Herato was entitled to succeed him as Punong Barangay with Herato garnering the highest number of votes as a Barangay Kagawad. Mendoza appealed the MTC Decision to the COMELEC.

On February 28, 2008, Villas administered the Oath of Office to Herato.5 Then, Villas issued Memorandum No. 2008-03-010 dated March 3, 2008,6 directing all department heads of the Municipal Government to act only on documents signed or authorized by Herato.

Meanwhile, Mendoza sought the advice of the Department of the Interior and Local Government (DILG) as to who should exercise the powers of Punong Barangay of Balatasan given the prevailing controversy.

In a letter dated April 11, 2008,7 DILG Undersecretary Austere A. Panadero responded to Mendoza’s inquiry informing Villas that Mendoza should occupy the post of Punong Barangay as there was no Writ of Execution Pending Appeal of the MTC Decision dated February 23, 2008.

Nevertheless, the Bulalacao Municipal Administrator, Edezer Aceron, by the authority of Villas, issued a letter dated April 23, 20088 to respondent Marlon de Castro, Manager, Pinamalayan Branch, Land Bank of the Philippines (LBP), requesting that transactions entered into by Mendoza in behalf of Barangay Bulalacao should not be honored. In the same letter, Aceron dismissed the DILG letter dated April 11, 2008, saying that it is merely advisory and not binding on the municipal government of Bulalacao and the LBP.

In response, de Castro issued Villas and Mendoza a letter dated April 24, 2008,9 advising both parties that the LBP shall not honor any transaction with regard the accounts of Barangay Balatasan.

Thereafter, petitioners filed a Petition dated May 5, 2008 for Mandamus with Damages and Prayer for the Writ of Preliminary Mandatory Injunction, docketed as Special Civil Action No. 08-10 pending with the Regional Trial Court, Branch 43 in Roxas, Oriental Mindoro. Petitioners prayed that the LBP be directed to release the funds of Barangay Balatasan to them in order to render necessary, basic public services to the inhabitants of the barangay.

Thus, Villas and Herato filed an Answer dated May 16, 2008 interposing the following affirmative defenses: (1) that the petition for mandamus was defective, being directed against two or more different entities and requiring to perform different acts; and (2) that Mendoza does not have any clear and legal right for the writ of mandamus.

On the other hand, the LBP also filed its Answer dated June 5, 2008, stating that its decision of withholding the barangay funds was a mere act of prudence given the controversy surrounding the true Punong Barangay of Balatasan while manifesting that it will release the funds to whom the Court directs it to.

Thereafter, Villas and Herato filed a Motion to Dismiss dated November 7, 2008. In the Motion, a copy of the COMELEC Resolution dated September 8, 2008 in COMELEC Case No. SPA-07-243-BRGY was attached. This case originated from a disqualification case against Mendoza filed with the COMELEC by Senen Familara before the conduct of the 2007 barangay elections. In the Resolution, the COMELEC disqualified Mendoza as a candidate for Punong Barangay of Barangay Balatasan in the 2007 barangay elections for having already served three (3) consecutive terms for the same position. In response, Mendoza presented a Certification dated February 27, 200910 from the COMELEC which stated that COMELEC Case No. SPA-07-243-BRGY is still pending with the Commission.

In an attempt to clarify the issues on the matter, Mendoza again sought the opinion of the DILG regarding the controversy. Thus, the DILG issued another letter, denominated as DILG Opinion No. 5, Series of 2009 dated January 2009,11 reiterating its stance that the MTC Decision dated February 23, 2008 has not yet become final and executory.

Nevertheless, the RTC issued the assailed order dated February 2, 2009 dismissing the petition on the strength of the COMELEC Resolution dated September 8, 2008 disqualifying Mendoza from running in the 2007 elections. As stated, petitioners’ motion for reconsideration of the Order dated February 2, 2009 was denied in an Order dated March 17, 2009.

From such orders the petitioners went directly to this Court.

The instant petition is a direct recourse to this Court from the assailed orders of the RTC. Notably, petitioners did not cite the rule under the Rules of Court by which the petition was filed. If the petition is to be treated as a petition filed under Rule 65 of the Rules of Court, the petition must be dismissed outright for having been filed prematurely.

In Chamber of Real Estate and Builders Associations, Inc. (CREBA) v. Secretary of Agrarian Reform,12 a petition for certiorari filed under Rule 65 was dismissed for having been filed directly with the Court, violating the principle of hierarchy of courts, to wit:

Primarily, although this Court, the Court of Appeals and the Regional Trial Courts have concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give the petitioner unrestricted freedom of

choice of court forum. In Heirs of Bertuldo Hinog v. Melicor, citing People v. Cuaresma, this Court made the following pronouncements:

This Court’s original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this Court with Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also serves as a general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is [an] established policy. It is a policy necessary to prevent inordinate demands upon the Court’s time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court’s docket. (Emphasis supplied.)

Similarly, there are no special and important reasons that petitioners cite to justify their direct recourse to this Court under Rule 65.

On the other hand, direct recourse to this Court has been allowed for petitions filed under Rule 45 when only questions of law are raised, as in this case. Thus, the Court ruled in Barcenas v. Tomas:13

Section 1 of Rule 45 clearly states that the following may be appealed to the Supreme Court through a petition for review by certiorari: 1) judgments; 2) final orders; or 3) resolutions of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or similar courts, whenever authorized by law. The appeal must involve only questions of law, not of fact.

This Court has, time and time again, pointed out that it is not a trier of facts; and that, save for a few exceptional instances, its function is not to analyze or weigh all over again the factual findings of the lower courts. There is a question of law when doubts or differences arise as to what law pertains to a certain state of facts, and a question of fact when the doubt pertains to the truth or falsity of alleged facts.

Under the principle of the hierarchy of courts, decisions, final orders or resolutions of an MTC should be appealed to the RTC exercising territorial jurisdiction over the former. On the other hand, RTC judgments, final orders or resolutions are appealable to the CA through either of the following: an ordinary appeal if the case was originally decided by the RTC; or a petition for review under Rule 42, if the case was decided under the RTC's appellate jurisdiction.

Nonetheless, a direct recourse to this Court can be taken for a review of the decisions, final orders or resolutions of the RTC, but only on questions of law. Under Section 5 of Article VIII of the Constitution, the Supreme Court has the power to

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court may provide, final judgments and orders of lower courts in:

x x x x

(e) All cases in which only an error or question of law is involved.

This kind of direct appeal to this Court of RTC judgments, final orders or resolutions is provided for in Section 2(c) of Rule 41, which reads:

SEC. 2. Modes of appeal.¾

x x x x

(c) Appeal by certiorari.¾In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45.

Procedurally then, petitioners could have appealed the RTC Decision affirming the MTC (1) to this Court on questions of law only; or (2) if there are factual questions involved, to the CA -- as they in fact did. Unfortunately for petitioners, the CA properly dismissed their petition for review because of serious procedural defects. This action foreclosed their only available avenue for the review of the factual findings of the RTC. (Emphasis supplied.)

Thus, the Court shall exercise liberality and consider the instant petition as one filed under Rule 45. In Artistica Ceramica, Inc. v. Ciudad Del Carmen Homeowner’s Association, Inc.,14 citing Republic v. Court of Appeals,15 the Court noted that it has the discretion to determine whether a petition was filed under Rule 45 or 65 of the Rules of Court:

Admittedly, this Court, in accordance with the liberal spirit pervading the Rules of Court and in the interest of justice, has the discretion to treat a petition for certiorari as having been filed under Rule 45, especially if filed within the reglementary period for filing a petition for review.lawphi1

Nevertheless, even providing that the petition was not filed prematurely, it must still be dismissed for having become moot and academic.

In Gunsi, Sr. v. Commissioners, The Commission on Elections,16 the Court defined a moot and academic case as follows:

A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical value. As a rule, courts decline jurisdiction over such case, or dismiss it on ground of mootness.

With the conduct of the 2010 barangay elections, a supervening event has transpired that has rendered this case moot and academic and subject to dismissal. This is because, as stated in Fernandez v. Commission on Elections,17 "whatever judgment is reached, the same can no longer have any practical legal effect or, in the nature of things, can no longer be enforced." Mendoza’s term of office has expired with the conduct of last year’s local elections. As such, Special Civil Action No. 08-10, where the assailed Orders were issued, can no longer prosper. Mendoza no longer has any legal standing to further pursue the case, rendering the instant petition moot and academic.

WHEREFORE, the Petition is DENIED.

SO ORDERED.

G.R. No. 183409               June 18, 2010

CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC. (CREBA), petitioner, vs.THE SECRETARY OF AGRARIAN REFORM, Respondent.

D E C I S I O N

PEREZ, J.:

This case is a Petition for Certiorari and Prohibition (with application for temporary restraining order and/or writ of preliminary injunction) under Rule 65 of the 1997 Revised Rules of Civil Procedure, filed by herein petitioner Chamber of Real Estate and Builders Associations, Inc. (CREBA) seeking to nullify and prohibit the enforcement of Department of Agrarian Reform (DAR) Administrative Order (AO) No. 01-02, as amended by DAR AO No. 05-07,1 and DAR Memorandum No. 88,2 for having been issued by the Secretary of Agrarian Reform with grave abuse of discretion amounting to lack or excess of jurisdiction as some provisions of the aforesaid administrative issuances are illegal and unconstitutional.

Petitioner CREBA, a private non-stock, non-profit corporation duly organized and existing under the laws of the Republic of the Philippines, is the umbrella organization of some 3,500 private corporations, partnerships, single proprietorships and individuals directly or indirectly involved in land and housing development, building and infrastructure construction, materials production and supply, and services in the various related fields of engineering, architecture, community planning and development financing. The Secretary of Agrarian Reform is named respondent as he is the duly appointive head of the DAR whose administrative issuances are the subject of this petition.

The Antecedent Facts

The Secretary of Agrarian Reform issued, on 29 October 1997, DAR AO No. 07-97,3 entitled "Omnibus Rules and Procedures Governing Conversion of Agricultural Lands to Non-Agricultural Uses," which consolidated all existing implementing guidelines related to land use conversion. The aforesaid rules embraced all private agricultural lands regardless of tenurial arrangement and commodity produced, and all untitled agricultural lands and agricultural lands reclassified by Local Government Units (LGUs) into non-agricultural uses after 15 June 1988.

Subsequently, on 30 March 1999, the Secretary of Agrarian Reform issued DAR AO No. 01-99,4 entitled "Revised Rules and Regulations on the Conversion of Agricultural Lands to Non-agricultural Uses," amending and updating the previous rules on land use conversion. Its coverage includes the following agricultural lands, to wit: (1) those to be converted to residential, commercial, industrial, institutional and other non-agricultural purposes; (2) those to be devoted to another type of agricultural activity such as livestock, poultry, and fishpond ─ the effect of which is to exempt the land from the Comprehensive Agrarian Reform Program (CARP) coverage; (3) those to be converted to non-agricultural use other than that previously authorized; and (4) those reclassified to residential, commercial, industrial, or other non-agricultural uses on or after the effectivity of Republic Act No. 66575 on 15 June 1988 pursuant to Section 206 of Republic Act No. 71607 and other pertinent laws and regulations, and are to be converted to such uses.

On 28 February 2002, the Secretary of Agrarian Reform issued another Administrative Order, i.e., DAR AO No. 01-02, entitled "2002 Comprehensive Rules on Land Use Conversion," which further amended DAR AO No. 07-97 and DAR AO No. 01-99, and repealed all issuances inconsistent therewith. The aforesaid DAR AO No. 01-02 covers all applications for conversion from agricultural to non-agricultural uses or to another agricultural use.

Thereafter, on 2 August 2007, the Secretary of Agrarian Reform amended certain provisions8 of DAR AO No. 01-02 by formulating DAR AO No. 05-07, particularly addressing land conversion in time of exigencies and calamities.

To address the unabated conversion of prime agricultural lands for real estate development, the Secretary of Agrarian Reform further issued Memorandum No. 88 on 15 April 2008, which temporarily suspended the processing and approval of all land use conversion applications.

By reason thereof, petitioner claims that there is an actual slow down of housing projects, which, in turn, aggravated the housing shortage, unemployment and illegal squatting problems to the substantial prejudice not only of the petitioner and its members but more so of the whole nation.

Hence, this petition.

The Issues

In its Memorandum, petitioner posits the following issues:

I.

WHETHER THE DAR SECRETARY HAS JURISDICTION OVER LANDS THAT HAVE BEEN RECLASSIFIED AS RESIDENTIAL, COMMERCIAL, INDUSTRIAL, OR FOR OTHER NON-AGRICULTURAL USES.

II.

WHETHER THE DAR SECRETARY ACTED IN EXCESS OF HIS JURISDICTION AND GRAVELY ABUSED HIS DISCRETION BY ISSUING AND ENFORCING [DAR AO NO. 01-02, AS AMENDED] WHICH SEEK TO REGULATE RECLASSIFIED LANDS.

III.

WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE LOCAL AUTONOMY OF LOCAL GOVERNMENT UNITS.

IV.

WHETHER [DAR AO NO. 01-02, AS AMENDED] VIOLATE[S] THE DUE PROCESS AND EQUAL PROTECTION CLAUSE[S] OF THE CONSTITUTION.

V.

WHETHER MEMORANDUM NO. 88 IS A VALID EXERCISE OF POLICE POWER.9

The subject of the submission that the DAR Secretary gravely abused his discretion is AO No. 01-02, as amended, which states:

Section 3. Applicability of Rules. – These guidelines shall apply to all applications for conversion, from agricultural to non-agricultural uses or to another agricultural use, such as:

x x x x

3.4 Conversion of agricultural lands or areas that have been reclassified by the LGU or by way of a Presidential Proclamation, to residential, commercial, industrial, or other non-agricultural uses on or after the effectivity of RA 6657 on 15 June 1988, x x x. [Emphasis supplied].

Petitioner holds that under Republic Act No. 6657 and Republic Act No. 8435,10 the term agricultural lands refers to "lands devoted to or suitable for the cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock, poultry or fish, including the harvesting of such farm products, and other farm activities and practices performed by a farmer in conjunction with such farming operations done by a person whether natural or juridical, and not classified by the law as mineral, forest, residential, commercial or industrial land." When the Secretary of Agrarian Reform, however, issued DAR AO No. 01-02, as amended, he included in the definition of agricultural lands "lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988." In effect, lands reclassified from agricultural to residential, commercial, industrial, or other non-agricultural uses after 15 June 1988 are considered to be agricultural lands for purposes of conversion, redistribution, or otherwise. In so doing, petitioner avows that the Secretary of Agrarian Reform acted without jurisdiction as he has no authority to expand or enlarge the legal signification of the term agricultural lands through DAR AO No. 01-02. Being a mere administrative issuance, it must conform to the statute it seeks to implement, i.e., Republic Act No. 6657, or to the Constitution, otherwise, its validity or constitutionality may be questioned.

In the same breath, petitioner contends that DAR AO No. 01-02, as amended, was made in violation of Section 6511 of Republic Act No. 6657 because it covers all applications for conversion from agricultural to non-agricultural uses or to other agricultural uses, such as the conversion of agricultural lands or areas that have been reclassified by the LGUs or by way of Presidential Proclamations, to residential, commercial, industrial or other non-agricultural uses on or after 15 June 1988. According to petitioner, there is nothing in Section 65 of Republic Act No. 6657 or in any other provision of law that confers to the DAR the jurisdiction or authority to require that non-awarded lands or reclassified lands be submitted to its conversion authority. Thus, in issuing and enforcing DAR AO No. 01-02, as amended, the Secretary of Agrarian Reform acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

Petitioner further asseverates that Section 2.19,12 Article I of DAR AO No. 01-02, as amended, making reclassification of agricultural lands subject to the requirements and procedure for land use conversion, violates Section 20 of Republic Act No. 7160, because it was not provided therein that reclassification by LGUs shall be subject to conversion procedures or requirements, or that the DAR’s approval or

clearance must be secured to effect reclassification. The said Section 2.19 of DAR AO No. 01-02, as amended, also contravenes the constitutional mandate on local autonomy under Section 25,13 Article II and Section 2,14 Article X of the 1987 Philippine Constitution.

Petitioner similarly avers that the promulgation and enforcement of DAR AO No. 01-02, as amended, constitute deprivation of liberty and property without due process of law. There is deprivation of liberty and property without due process of law because under DAR AO No. 01-02, as amended, lands that are not within DAR’s jurisdiction are unjustly, arbitrarily and oppressively prohibited or restricted from legitimate use on pain of administrative and criminal penalties. More so, there is discrimination and violation of the equal protection clause of the Constitution because the aforesaid administrative order is patently biased in favor of the peasantry at the expense of all other sectors of society.

As its final argument, petitioner avows that DAR Memorandum No. 88 is not a valid exercise of police power for it is the prerogative of the legislature and that it is unconstitutional because it suspended the land use conversion without any basis.

The Court’s Ruling

This petition must be dismissed.

Primarily, although this Court, the Court of Appeals and the Regional Trial Courts have concurrent jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction, such concurrence does not give the petitioner unrestricted freedom of choice of court forum.15 In Heirs of Bertuldo Hinog v. Melicor,16 citing People v. Cuaresma,17 this Court made the following pronouncements:

This Court's original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this Court with Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is not, however, to be taken as according to parties seeking any of the writs an absolute, unrestrained freedom of choice of the court to which application therefor will be directed. There is after all a hierarchy of courts. That hierarchy is determinative of the venue of appeals, and also serves as a general determinant of the appropriate forum for petitions for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A direct invocation of the Supreme Court’s original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is [an] established policy. It is a policy necessary to prevent inordinate demands upon the Court’s time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court’s docket.18 (Emphasis supplied.)

The rationale for this rule is two-fold: (a) it would be an imposition upon the precious time of this Court; and (b) it would cause an inevitable and resultant delay, intended or otherwise, in the adjudication of cases, which in some instances had to be remanded or referred to the lower court as the proper forum under the rules of procedure, or as better equipped to resolve the issues because this Court is not a trier of facts.19

This Court thus reaffirms the judicial policy that it 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 availment of the extraordinary remedy of writ of certiorari, calling for the exercise of its primary jurisdiction.20

Exceptional and compelling circumstances were held present in the following cases: (a) Chavez v. Romulo,21 on citizens’ right to bear arms; (b) Government of [the] United States of America v. Hon. Purganan,22 on bail in extradition proceedings; (c) Commission on Elections v. Judge Quijano-Padilla,23 on government contract involving modernization and computerization of voters’ registration list; (d) Buklod ng Kawaning EIIB v. Hon. Sec. Zamora,24 on status and existence of a public office; and (e) Hon. Fortich v. Hon. Corona,25 on the so-called "Win-Win Resolution" of the Office of the President which modified the approval of the conversion to agro-industrial area.26

In the case at bench, petitioner failed to specifically and sufficiently set forth special and important reasons to justify direct recourse to this Court and why this Court should give due course to this petition in the first instance, hereby failing to fulfill the conditions set forth in Heirs of Bertuldo Hinog v. Melicor.27 The present petition should have been initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts. Failure to do so is sufficient cause for the dismissal of this petition.

Moreover, although the instant petition is styled as a Petition for Certiorari, in essence, it seeks the declaration by this Court of the unconstitutionality or illegality of the questioned DAR AO No. 01-02, as amended, and Memorandum No. 88. It, thus, partakes of the nature of a Petition for Declaratory Relief over which this Court has only appellate, not original, jurisdiction.28 Section 5, Article VIII of the 1987 Philippine Constitution provides:

Sec. 5. The Supreme Court shall have the following powers:

(1) Exercise original jurisdiction over cases affecting ambassadors, other public ministers and consuls, and over petitions for certiorari, prohibition, mandamus, quo warranto, and habeas corpus.

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court may provide, final judgments and orders of lower courts in:

(a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. (Emphasis supplied.)

With that, this Petition must necessarily fail because this Court does not have original jurisdiction over a Petition for Declaratory Relief even if only questions of law are involved.

Even if the petitioner has properly observed the doctrine of judicial hierarchy, this Petition is still dismissible.

The special civil action for certiorari is intended for the correction of errors of jurisdiction only or grave abuse of discretion amounting to lack or excess of jurisdiction. Its principal office is only to keep the inferior court within the parameters of its jurisdiction or to prevent it from committing such a grave abuse of discretion amounting to lack or excess of jurisdiction.29

The essential requisites for a Petition for Certiorari under Rule 65 are: (1) the writ is directed against a tribunal, a board, or an officer exercising judicial or quasi-judicial functions; (2) such tribunal, board, or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the ordinary course of law.30

Excess of jurisdiction as distinguished from absence of jurisdiction means that an act, though within the general power of a tribunal, board or officer, is not authorized and invalid with respect to the particular proceeding, because the conditions which alone authorize the exercise of the general power in respect of it are wanting.31Without jurisdiction means lack or want of legal power, right or authority to hear and determine a cause or causes, considered either in general or with reference to a particular matter. It means lack of power to exercise authority.32 Grave abuse of discretion implies such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction or, in other words, where the power is exercised in an arbitrary manner by reason of passion, prejudice, or personal hostility, and it must be so patent or gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.33

In the case before this Court, the petitioner fails to meet the above-mentioned requisites for the proper invocation of a Petition for Certiorari under Rule 65. The Secretary of Agrarian Reform in issuing the assailed DAR AO No. 01-02, as amended, as well as Memorandum No. 88 did so in accordance with his mandate to implement the land use conversion provisions of Republic Act No. 6657. In the process, he neither acted in any judicial or quasi-judicial capacity nor assumed unto himself any performance of judicial or quasi-judicial prerogative. A Petition for Certiorari is a special civil action that may be invoked only against a tribunal, board, or officer exercising judicial functions. Section 1, Rule 65 of the 1997 Revised Rules of Civil Procedure is explicit on this matter, viz.:

SECTION 1. Petition for certiorari. – When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment must be rendered annulling or modifying the proceedings of such tribunal, board or officer.1avvphi1

A tribunal, board, or officer is said to be exercising judicial function where it has the power to determine what the law is and what the legal rights of the parties are, and then undertakes to determine these questions and adjudicate upon the rights of the parties. Quasi-judicial function, on the other hand, is "a term which applies to the actions, discretion, etc., of public administrative officers or bodies x x x required to investigate facts or ascertain the existence of facts, hold hearings, and draw conclusions from them as a basis for their official action and to exercise discretion of a judicial nature."34

Before a tribunal, board, or officer may exercise judicial or quasi-judicial acts, it is necessary that there be a law that gives rise to some specific rights of persons or property under which adverse claims to such rights are made, and the controversy ensuing therefrom is brought before a tribunal, board, or officer clothed with power and authority to determine the law and adjudicate the respective rights of the contending parties.35

The Secretary of Agrarian Reform does not fall within the ambit of a tribunal, board, or officer exercising judicial or quasi-judicial functions. The issuance and enforcement by the Secretary of Agrarian Reform of the questioned DAR AO No. 01-02, as amended, and Memorandum No. 88 were done in the exercise of his quasi-legislative and administrative functions and not of judicial or quasi-judicial functions. In issuing the aforesaid administrative issuances, the Secretary of Agrarian Reform never made any adjudication of rights of the parties. As such, it can never be said that the Secretary of Agrarian Reform had acted with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing and enforcing DAR AO No. 01-02, as amended, and Memorandum No. 88 for he never exercised any judicial or quasi-judicial functions but merely his quasi-legislative and administrative functions.

Furthermore, as this Court has previously discussed, the instant petition in essence seeks the declaration by this Court of the unconstitutionality or illegality of the questioned DAR AO No. 01-02, as amended, and Memorandum No. 88. Thus, the adequate and proper remedy for the petitioner therefor is to file a Petition for Declaratory Relief, which this Court has only appellate and not original jurisdiction. It is beyond the province of certiorari to declare the aforesaid administrative issuances unconstitutional and illegal because certiorari is confined only to the determination of the existence of grave abuse of discretion amounting to lack or excess of jurisdiction. Petitioner cannot simply allege grave abuse of discretion amounting to lack or excess of jurisdiction and then invoke certiorari to declare the aforesaid administrative issuances unconstitutional and illegal. Emphasis must be given to the fact that the writ of certiorari dealt with in Rule 65 of the 1997 Revised Rules of Civil Procedure is a prerogative writ, never demandable as a matter of right, "never issued except in the exercise of judicial discretion."36

At any rate, even if the Court will set aside procedural infirmities, the instant petition should still be dismissed.

Executive Order No. 129-A37 vested upon the DAR the responsibility of implementing the CARP. Pursuant to the said mandate and to ensure the successful implementation of the CARP, Section 5(c) of the said executive order authorized the DAR to establish and promulgate operational policies, rules and regulations and priorities for agrarian reform implementation. Section 4(k) thereof authorized the DAR to approve or disapprove the conversion, restructuring or readjustment of agricultural lands into non-agricultural uses. Similarly, Section 5(l) of the same executive order has given the DAR the exclusive authority to approve or disapprove conversion of agricultural lands for residential, commercial, industrial, and other land uses as may be provided for by law. Section 7 of the aforesaid executive order clearly provides that "the authority and responsibility for the exercise of the mandate of the [DAR] and the discharge of its powers and functions shall be vested in the Secretary of Agrarian Reform x x x."

Under DAR AO No. 01-02, as amended, "lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988" have been included in the definition of agricultural lands. In so doing, the Secretary of Agrarian Reform merely acted within the scope of his authority stated in the aforesaid sections of Executive Order No. 129-A, which is to promulgate rules and regulations for agrarian reform implementation and that includes the authority to define agricultural lands for purposes of land use conversion. Further, the definition of agricultural lands under DAR AO No. 01-02, as amended, merely refers to the category of agricultural lands that may be the subject for conversion to non-agricultural uses and is not in any way confined to agricultural lands in the context of land redistribution as provided for under Republic Act No. 6657.

More so, Department of Justice Opinion No. 44, Series of 1990, which Opinion has been recognized in many cases decided by this Court, clarified that after the effectivity of Republic Act No. 6657 on 15 June 1988 the DAR has been given the authority to approve land conversion.38 Concomitant to such authority, therefore, is the authority to include in the definition of agricultural lands "lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988" for purposes of land use conversion.

In the same vein, the authority of the Secretary of Agrarian Reform to include "lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988" in the definition of agricultural lands finds basis in jurisprudence. In Ros v. Department of Agrarian Reform,39 this Court has enunciated that after the passage of Republic Act No. 6657, agricultural lands, though reclassified, have to go through the process of conversion, jurisdiction over which is vested in the DAR. However, agricultural lands, which are already reclassified before the effectivity of Republic Act No. 6657 which is 15 June 1988, are exempted from conversion.40 It bears stressing that the said date of effectivity of Republic Act No. 6657 served as the cut-off period for automatic reclassifications or rezoning of agricultural lands that no longer require any DAR conversion clearance or authority.41 It necessarily follows that any reclassification made thereafter can be the subject of DAR’s conversion authority. Having recognized the DAR’s conversion authority over lands reclassified after 15 June 1988, it can no longer be argued that the Secretary of Agrarian Reform was wrongfully given the authority and power to include "lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988" in the definition of agricultural lands. Such inclusion does not unduly expand or enlarge the definition of agricultural lands; instead, it made clear what are the lands that can be the subject of DAR’s conversion authority, thus, serving the very

purpose of the land use conversion provisions of Republic Act No. 6657.

The argument of the petitioner that DAR AO No. 01-02, as amended, was made in violation of Section 65 of Republic Act No. 6657, as it covers even those non-awarded lands and reclassified lands by the LGUs or by way of Presidential Proclamations on or after 15 June 1988 is specious. As explained in Department of Justice Opinion No. 44, series of 1990, it is true that the DAR’s express power over land use conversion provided for under Section 65 of Republic Act No. 6657 is limited to cases in which agricultural lands already awarded have, after five years, ceased to be economically feasible and sound for agricultural purposes, or the locality has become urbanized and the land will have a greater economic value for residential, commercial or industrial purposes. To suggest, however, that these are the only instances that the DAR can require conversion clearances would open a loophole in Republic Act No. 6657 which every landowner may use to evade compliance with the agrarian reform program. It should logically follow, therefore, from the said department’s express duty and function to execute and enforce the said statute that any reclassification of a private land as a residential, commercial or industrial property, on or after the effectivity of Republic Act No. 6657 on 15 June 1988 should first be cleared by the DAR.42

This Court held in Alarcon v. Court of Appeals43 that reclassification of lands does not suffice. Conversion and reclassification differ from each other. Conversion is the act of changing the current use of a piece of agricultural land into some other use as approved by the DAR while reclassification is the act of specifying how agricultural lands shall be utilized for non-agricultural uses such as residential, industrial, and commercial, as embodied in the land use plan, subject to the requirements and procedures for land use conversion. In view thereof, a mere reclassification of an agricultural land does not automatically allow a landowner to change its use. He has to undergo the process of conversion before he is permitted to use the agricultural land for other purposes.44

It is clear from the aforesaid distinction between reclassification and conversion that agricultural lands though reclassified to residential, commercial, industrial or other non-agricultural uses must still undergo the process of conversion before they can be used for the purpose to which they are intended.

Nevertheless, emphasis must be given to the fact that DAR’s conversion authority can only be exercised after the effectivity of Republic Act No. 6657 on 15 June 1988.45 The said date served as the cut-off period for automatic reclassification or rezoning of agricultural lands that no longer require any DAR conversion clearance or authority.46 Thereafter, reclassification of agricultural lands is already subject to DAR’s conversion authority. Reclassification alone will not suffice to use the agricultural lands for other purposes. Conversion is needed to change the current use of reclassified agricultural lands.

It is of no moment whether the reclassification of agricultural lands to residential, commercial, industrial or other non-agricultural uses was done by the LGUs or by way of Presidential Proclamations because either way they must still undergo conversion process. It bears stressing that the act of reclassifying agricultural lands to non-agricultural uses simply specifies how agricultural lands shall be utilized for non-agricultural uses and does not automatically convert agricultural lands to non-agricultural uses or for other purposes. As explained in DAR Memorandum Circular No. 7, Series of 1994, cited in the 2009 case of Roxas & Company, Inc. v. DAMBA-NFSW and the Department of Agrarian Reform,47 reclassification of lands denotes their allocation into some specific use and providing for the manner of their utilization and disposition or the act of specifying how agricultural lands shall be utilized for non-agricultural uses such as residential, industrial, or commercial, as embodied in the land use plan. For reclassified agricultural lands, therefore, to be used for the purpose to which they are intended there is still a need to change the current use thereof through the process of conversion. The authority to do so is vested in the DAR, which is mandated to preserve and maintain agricultural lands with increased productivity. Thus, notwithstanding the reclassification of agricultural lands to non-agricultural uses, they must still undergo conversion before they can be used for other purposes.

Even reclassification of agricultural lands by way of Presidential Proclamations to non-agricultural uses, such as school sites, needs conversion clearance from the DAR. We reiterate that reclassification is different from conversion. Reclassification alone will not suffice and does not automatically allow the landowner to change its use. It must still undergo conversion process before the landowner can use such agricultural lands for such purpose.48 Reclassification of agricultural lands is one thing, conversion is another. Agricultural lands that are reclassified to non-agricultural uses do not ipso facto allow the landowner thereof to use the same for such purpose. Stated differently, despite having reclassified into school sites, the landowner of such reclassified agricultural lands must apply for conversion before the DAR in order to use the same for the said purpose.

Any reclassification, therefore, of agricultural lands to residential, commercial, industrial or other non-agricultural uses either by the LGUs or by way of Presidential Proclamations enacted on or after 15 June 1988 must undergo the process of conversion, despite having undergone reclassification, before agricultural lands may be used for other purposes.

It is different, however, when through Presidential Proclamations public agricultural lands have been reserved in whole or in part for public use or purpose, i.e., public school, etc., because in such a case, conversion is no longer necessary. As held in Republic v. Estonilo,49 only a positive act of the President is needed to segregate or reserve a piece of land of the public domain for a public purpose. As such, reservation of public agricultural lands for public use or purpose in effect converted the same to such use without undergoing any conversion process and that they must be actually, directly and exclusively used for such public purpose for which they have been reserved, otherwise, they will be segregated from the reservations and transferred to the DAR for distribution to qualified beneficiaries under the CARP.50 More so, public agricultural lands already reserved for public use or purpose no longer form part of the alienable and disposable lands of the public domain suitable for agriculture.51Hence, they are outside the coverage of the CARP and it logically follows that they are also beyond the conversion authority of the DAR.

Clearly from the foregoing, the Secretary of Agrarian Reform did not act without jurisdiction or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction in (1) including lands not reclassified as residential, commercial, industrial or other non-agricultural uses before 15 June 1988 in the definition of agricultural lands under DAR AO No. 01-02, as amended, and; (2) issuing and enforcing DAR AO No. 01-02, as amended, subjecting to DAR’s jurisdiction for conversion lands which had already been reclassified as residential, commercial, industrial or for other non-agricultural uses on or after 15 June 1988.

Similarly, DAR AO No. 01-02, as amended, providing that the reclassification of agricultural lands by LGUs shall be subject to the requirements of land use conversion procedure or that DAR’s approval or clearance must be secured to effect reclassification, did not violate the autonomy of the LGUs.

Section 20 of Republic Act No. 7160 states that:

SECTION 20. Reclassification of Lands. – (a) A city or municipality may, through an ordinance passed by the sanggunian after conducting public hearings for the purpose, authorize the reclassification of agricultural lands and provide for the manner of their utilization or disposition in the following cases: (1) when the land ceases to be economically feasible and sound for agricultural purposes as determined by the Department of Agriculture or (2) where the land shall have substantially greater economic value for residential, commercial, or industrial purposes, as determined by the sanggunian concerned: Provided, That such reclassification shall be limited to the following percentage of the total agricultural land area at the time of the passage of the ordinance:

x x x x

(3) For fourth to sixth class municipalities, five percent (5%): Provided, further, That agricultural lands distributed to agrarian reform beneficiaries pursuant to Republic Act Numbered Sixty-six hundred fifty-seven (R.A. No. 6657), otherwise known as "The Comprehensive Agrarian Reform Law," shall not be affected by the said reclassification and the conversion of such lands into other purposes shall be governed by Section 65 of said Act.

x x x x

(e) Nothing in this Section shall be construed as repealing, amending, or modifying in any manner the provisions of R.A. No. 6657.

The aforequoted provisions of law show that the power of the LGUs to reclassify agricultural lands is not absolute. The authority of the DAR to approve conversion of agricultural lands covered by Republic Act No. 6657 to non-agricultural uses has been validly recognized by said Section 20 of Republic Act No. 7160 by explicitly providing therein that, "nothing in this section shall be construed as repealing or modifying in any manner the provisions of Republic Act No. 6657."

DAR AO No. 01-02, as amended, does not also violate the due process clause, as well as the equal protection clause of the Constitution. In providing administrative and criminal penalties in the said administrative order, the Secretary of Agrarian Reform simply implements the provisions of Sections 73 and 74 of Republic Act No. 6657, thus:

Sec. 73. Prohibited Acts and Omissions. – The following are prohibited:

x x x x

(c) The conversion by any landowner of his agricultural land into any non-agricultural use with intent to avoid the application of this Act to his landholdings and to disposes his tenant farmers of the land tilled by them;

x x x x

(f) The sale, transfer or conveyance by a beneficiary of the right to use or any other usufructuary right over the land he acquired by virtue of being a beneficiary, in order to circumvent the provisions of this Act.

x x x x

Sec. 74. Penalties. ─ Any person who knowingly or willfully violates the provisions of this Act shall be punished by imprisonment of not less than one (1) month to not more than three (3) years or a fine of not less than one thousand pesos (P1,000.00) and not more than fifteen thousand pesos (P15,000.00), or both, at the discretion of the court.

If the offender is a corporation or association, the officer responsible therefor shall be criminally liable.

And Section 11 of Republic Act No. 8435, which specifically provides:

Sec. 11. Penalty for Agricultural Inactivity and Premature Conversion. – x x x.

Any person found guilty of premature or illegal conversion shall be penalized with imprisonment of two (2) to six (6) years, or a fine equivalent to one hundred percent (100%) of the government's investment cost, or both, at the discretion of the court, and an accessory penalty of forfeiture of the land and any improvement thereon.

In addition, the DAR may impose the following penalties, after determining, in an administrative proceedings, that violation of this law has been committed:

a. Consolation or withdrawal of the authorization for land use conversion; and

b. Blacklisting, or automatic disapproval of pending and subsequent conversion applications that they may file with the DAR.

Contrary to petitioner’s assertions, the administrative and criminal penalties provided for under DAR AO No. 01-02, as amended, are imposed upon the illegal or premature conversion of lands within DAR’s jurisdiction, i.e., "lands not reclassified as residential, commercial, industrial or for other non-agricultural uses before 15 June 1998."

The petitioner’s argument that DAR Memorandum No. 88 is unconstitutional, as it suspends the land use conversion without any basis, stands on hollow ground.

It bears emphasis that said Memorandum No. 88 was issued upon the instruction of the President in order to address the unabated conversion of prime agricultural lands for real estate development because of the worsening rice shortage in the country at that time. Such measure was made in order to ensure that there are enough agricultural lands in which rice cultivation and production may be carried into. The issuance of said Memorandum No. 88 was made pursuant to the general welfare of the public, thus, it cannot be argued that it was made without any basis.

WHEREFORE, premises considered, the instant Petition for Certiorari is DISMISSED. Costs against petitioner.

SO ORDERED.