Subject Matter Jurisdiction

Hasegawa and Nippon Engineering vs Kitamura

THIRD DIVISION
KAZUHIRO HASEGAWA and NIPPON
ENGINEERING CONSULTANTS CO.,
LTD.,
Petitioners,

- versus -

G.R. No. 149177

Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
Promulgated:

MINORU KITAMURA,
Respondent.

November 23, 2007

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DECISION
NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court assailing the April 18, 2001 Decision[1] of the Court of Appeals
(CA) in CA-G.R. SP No. 60827, and the July 25, 2001 Resolution [2] denying the
motion for reconsideration thereof.

On March 30, 1999, petitioner Nippon Engineering Consultants Co., Ltd.

(Nippon), a Japanese consultancy firm providing technical and management
support in the infrastructure projects of foreign governments, [3] entered into an
Independent Contractor Agreement (ICA) with respondent Minoru Kitamura, a
Japanese national permanently residing in the Philippines.[4] The agreement
provides that respondent was to extend professional services to Nippon for a year
starting on April 1, 1999.[5] Nippon then assigned respondent to work as the
project manager of the Southern Tagalog Access Road (STAR) Project in
the Philippines, following the company's consultancy contract with the Philippine
Government.[6]
When the STAR Project was near completion, the Department of Public
Works and Highways (DPWH) engaged the consultancy services of Nippon,
on January 28, 2000, this time for the detailed engineering and construction
supervision of the Bongabon-Baler Road Improvement (BBRI) Project.
[7]
Respondent was named as the project manager in the contract's Appendix 3.1.[8]
On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's general
manager for its International Division, informed respondent that the company had
no more intention of automatically renewing his ICA. His services would be
engaged by the company only up to the substantial completion of the STAR Project
on March 31, 2000, just in time for the ICA's expiry.[9]
Threatened with impending unemployment, respondent, through his lawyer,
requested a negotiation conference and demanded that he be assigned to the BBRI
project. Nippon insisted that respondents contract was for a fixed term that had
already expired, and refused to negotiate for the renewal of the ICA.[10]
As he was not able to generate a positive response from the petitioners,
respondent consequently initiated on June 1, 2000 Civil Case No. 00-0264 for
specific performance and damages with the Regional Trial Court of Lipa City.[11]
For their part, petitioners, contending that the ICA had been perfected
in Japan and executed by and between Japanese nationals, moved to dismiss the
complaint for lack of jurisdiction. They asserted that the claim for improper pretermination of respondent's ICA could only be heard and ventilated in the proper

courts of Japan following the principles of lex loci celebrationis and lex contractus.
[12]

In the meantime, on June 20, 2000, the DPWH approved Nippon's request
for the replacement of Kitamura by a certain Y. Kotake as project manager of the
BBRI Project.[13]
On June 29, 2000, the RTC, invoking our ruling in Insular Government v.
Frank that matters connected with the performance of contracts are regulated by
the law prevailing at the place of performance, [15] denied the motion to dismiss.
[16]
The trial court subsequently denied petitioners' motion for reconsideration,
[17]
prompting them to file with the appellate court, on August 14, 2000,
their first Petition forCertiorari under Rule 65 [docketed as CA-G.R. SP No.
60205].[18] On August 23, 2000, the CA resolved to dismiss the petition on
procedural groundsfor lack of statement of material dates and for insufficient
verification and certification against forum shopping.[19] An Entry of Judgment was
later issued by the appellate court on September 20, 2000.[20]
[14]

Aggrieved by this development, petitioners filed with the CA, on September

19, 2000, still within the reglementary period, a secondPetition
for Certiorari under Rule 65 already stating therein the material dates and
attaching thereto the proper verification and certification. This second petition,
which substantially raised the same issues as those in the first, was docketed as
CA-G.R. SP No. 60827.[21]
Ruling on the merits of the second petition, the appellate court rendered the
assailed April 18, 2001 Decision[22] finding no grave abuse of discretion in the trial
court's denial of the motion to dismiss. The CA ruled, among others, that the
principle of lex loci celebrationiswas not applicable to the case, because nowhere
in the pleadings was the validity of the written agreement put in issue. The CA thus
declared that the trial court was correct in applying instead the principle of lex loci
solutionis.[23]
Petitioners' motion for reconsideration was subsequently denied by the CA in
the assailed July 25, 2001 Resolution.[24]

Remaining steadfast in their stance despite the series of denials, petitioners

instituted the instant Petition for Review on Certiorari[25]imputing the following
errors to the appellate court:
A.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED
IN FINDING THAT THE TRIAL COURT VALIDLY EXERCISED
JURISDICTION OVER THE INSTANT CONTROVERSY, DESPITE
THE FACT THAT THE CONTRACT SUBJECT MATTER OF THE
PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEEN
TWO JAPANESE NATIONALS, WRITTEN WHOLLY IN THE
JAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.
B.
THE HONORABLE COURT OF APPEALS GRAVELY
ERRED IN OVERLOOKING THE NEED TO REVIEW OUR
ADHERENCE TO THE PRINCIPLE OF LEX LOCI SOLUTIONIS IN
THE LIGHT OF RECENT DEVELOPMENT[S] IN PRIVATE
INTERNATIONAL LAWS.[26]

The pivotal question that this Court is called upon to resolve is whether the
subject matter jurisdiction of Philippine courts in civil cases for specific
performance and damages involving contracts executed outside the country by
foreign nationals may be assailed on the principles of lex loci celebrationis, lex
contractus, the state of the most significant relationship rule, or forum non
conveniens.
However, before ruling on this issue, we must first dispose of the procedural
matters raised by the respondent.
Kitamura contends that the finality of the appellate court's decision in CAG.R. SP No. 60205 has already barred the filing of the second petition docketed as
CA-G.R. SP No. 60827 (fundamentally raising the same issues as those in the first
one) and the instant petition for review thereof.
We do not agree. When the CA dismissed CA-G.R. SP No. 60205 on account
of the petition's defective certification of non-forum shopping, it was a dismissal
without prejudice.[27] The same holds true in the CA's dismissal of the said case due
to defects in the formal requirement of verification [28] and in the other requirement

in Rule 46 of the Rules of Court on the statement of the material dates. [29] The
dismissal being without prejudice, petitioners can re-file the petition, or file a
second petition attaching thereto the appropriate verification and certification as
they, in fact didand stating therein the material dates, within the prescribed
period[30] in Section 4, Rule 65 of the said Rules.[31]
The dismissal of a case without prejudice signifies the absence of a decision
on the merits and leaves the parties free to litigate the matter in a subsequent action
as though the dismissed action had not been commenced. In other words, the
termination of a case not on the merits does not bar another action involving the
same parties, on the same subject matter and theory.[32]
Necessarily, because the said dismissal is without prejudice and has no res
judicata effect, and even if petitioners still indicated in the verification and
certification of the second certiorari petition that the first had already been
dismissed on procedural grounds,[33] petitioners are no longer required by the Rules
to indicate in their certification of non-forum shopping in the instant petition for
review of the second certiorari petition, the status of the aforesaid first petition
before the CA. In any case, an omission in the certificate of non-forum shopping
about any event that will not constitute res judicata and litis pendentia, as in the
present case, is not a fatal defect. It will not warrant thedismissal and nullification
of the entire proceedings, considering that the evils sought to be prevented by the
said certificate are no longer present.[34]
The Court also finds no merit in respondent's contention that petitioner
Hasegawa is only authorized to verify and certify, on behalf ofNippon,
the certiorari petition filed with the CA and not the instant petition. True, the
Authorization[35] dated September 4, 2000, which is attached to the
second certiorari petition and which is also attached to the instant petition for
review, is limited in scopeits wordings indicate that Hasegawa is given the
authority to sign for and act on behalf of the company only in the petition filed
with the appellate court, and that authority cannot extend to the instant petition for

review.[36] In a plethora of cases, however, this Court has liberally applied the Rules
or even suspended its application whenever a satisfactory explanation and a
subsequent fulfillment of the requirements have been made. [37] Given that
petitioners herein sufficiently explained their misgivings on this point and
appended to their Reply[38] an updated Authorization[39] for Hasegawa to act on
behalf of the company in the instant petition, the Court finds the same as sufficient
compliance with the Rules.
However, the Court cannot extend the same liberal treatment to the defect in
the verification and certification. As respondent pointed out, and to which we
agree, Hasegawa is truly not authorized to act on behalf of Nippon in this case. The
aforesaid September 4, 2000 Authorization and even the subsequent August 17,
2001 Authorization were issued only by Nippon's president and chief executive
officer, not by the company's board of directors. In not a few cases, we have ruled
that corporate powers are exercised by the board of directors; thus, no person, not
even its officers, can bind the corporation, in the absence of authority from the
board.[40] Considering that Hasegawa verified and certified the petition only on his
behalf and not on behalf of the other petitioner, the petition has to be denied
pursuant to Loquias v. Office of the Ombudsman.[41] Substantial compliance will not
suffice in a matter that demands strict observance of the Rules. [42] While technical
rules of procedure are designed not to frustrate the ends of justice, nonetheless,
they are intended to effect the proper and orderly disposition of cases and
effectively prevent the clogging of court dockets.[43]
Further, the Court has observed that petitioners incorrectly filed a Rule 65
petition to question the trial court's denial of their motion to dismiss. It is a wellestablished rule that an order denying a motion to dismiss is interlocutory,
and cannot be the subject of the extraordinarypetition for certiorari or mandamus.
The appropriate recourse is to file an answer and to interpose as defenses the
objections raised in themotion, to proceed to trial, and, in case of an adverse

decision, to elevate the entire case by appeal in due course.[44] While there are
recognized exceptions to this rule,[45] petitioners' case does not fall among them.
This brings us to the discussion of the substantive issue of the case.
Asserting that the RTC of Lipa City is an inconvenient forum, petitioners
question its jurisdiction to hear and resolve the civil case for specific performance
and damages filed by the respondent. The ICA subject of the litigation was entered
into and perfected in Tokyo, Japan, by Japanese nationals, and written wholly in
the Japanese language. Thus, petitioners posit that local courts have no substantial
relationship to the parties[46] following the [state of the] most significant
relationship rule in Private International Law.[47]
The Court notes that petitioners adopted an additional but different theory
when they elevated the case to the appellate court. In the Motion to
Dismiss[48] filed with the trial court, petitioners never contended that the RTC is an
inconvenient forum. They merely argued that the applicable law which will
determine the validity or invalidity of respondent's claim is that of Japan, following
the principles of lex loci celebrationis and lex contractus.[49] While not abandoning
this stance in their petition before the appellate court, petitioners
on certiorarisignificantly invoked the defense of forum non conveniens.[50] On
petition for review before this Court, petitioners dropped their other arguments,
maintained the forum non conveniens defense, and introduced their new argument
that the applicable principle is the [state of the] most significant relationship rule.
[51]

Be that as it may, this Court is not inclined to deny this petition merely on
the basis of the change in theory, as explained in Philippine Ports Authority v. City
of Iloilo.[52] We only pointed out petitioners' inconstancy in their arguments to
emphasize their incorrect assertion of conflict of laws principles.

To elucidate, in the judicial resolution of conflicts problems, three

consecutive phases are involved: jurisdiction, choice of law, and recognition and
enforcement of judgments. Corresponding to these phases are the following
questions: (1) Where can or should litigation be initiated? (2) Which law will the
court apply? and (3) Where can the resulting judgment be enforced?[53]
Analytically, jurisdiction and choice of law are two distinct concepts.
[54]
Jurisdiction considers whether it is fair to cause a defendant to travel to this
state; choice of law asks the further question whether the application of a
substantive law which will determine the merits of the case is fair to both parties.
The power to exercise jurisdiction does not automatically give a state constitutional
authority to apply forum law. While jurisdiction and the choice of the lex fori will
often coincide, the minimum contacts for one do not always provide the
necessary significant contacts for the other.[55] The question of whether the law of
a state can be applied to a transaction is different from the question of whether the
courts of that state have jurisdiction to enter a judgment.[56]
In this case, only the first phase is at issuejurisdiction. Jurisdiction,
however, has various aspects. For a court to validly exercise its power to adjudicate
a controversy, it must have jurisdiction over the plaintiff or the petitioner, over the
defendant or the respondent, over the subject matter, over the issues of the case
and, in cases involving property, over the res or the thing which is the subject of
the litigation.[57]In assailing the trial court's jurisdiction herein, petitioners are
actually referring to subject matter jurisdiction.
Jurisdiction over the subject matter in a judicial proceeding is conferred by
the sovereign authority which establishes and organizes the court. It is given only
by law and in the manner prescribed by law.[58] It is further determined by the
allegations of the complaint irrespective of whether the plaintiff is entitled to all or

some of the claims asserted therein.[59] To succeed in its motion for the dismissal of
an action for lack of jurisdiction over the subject matter of the claim, [60] the movant
must show that the court or tribunal cannot act on the matter submitted to it
because no law grants it the power to adjudicate the claims.[61]
In the instant case, petitioners, in their motion to dismiss, do not claim that
the trial court is not properly vested by law with jurisdiction to hear the subject
controversy for, indeed, Civil Case No. 00-0264 for specific performance and
damages is one not capable of pecuniary estimation and is properly cognizable by
the RTC of Lipa City.[62] What they rather raise as grounds to question subject
matter jurisdiction are the principles of lex loci celebrationis and lex
contractus, and the state of the most significant relationship rule.
The Court finds the invocation of these grounds unsound.
Lex loci celebrationis relates to the law of the place of the ceremony [63] or
the law of the place where a contract is made. [64] The doctrine of lex
contractus or lex loci contractus means the law of the place where a contract is
executed or to be performed.[65] It controls the nature, construction, and validity of
the contract[66] and it may pertain to the law voluntarily agreed upon by the parties
or the law intended by them either expressly or implicitly.[67] Under the state of the
most significant relationship rule, to ascertain what state law to apply to a dispute,
the court should determine which state has the most substantial connection to the
occurrence and the parties. In a case involving a contract, the court should consider
where the contract was made, was negotiated, was to be performed, and the
domicile, place of business, or place of incorporation of the parties. [68] This rule
takes into account several contacts and evaluates them according to their relative
importance with respect to the particular issue to be resolved.[69]

Since these three principles in conflict of laws make reference to the law
applicable to a dispute, they are rules proper for the second phase, the choice of
law.[70] They determine which state's law is to be applied in resolving the
substantive issues of a conflicts problem.[71]Necessarily, as the only issue in this
case is that of jurisdiction, choice-of-law rules are not only inapplicable but also
not yet called for.
Further, petitioners' premature invocation of choice-of-law rules is exposed
by the fact that they have not yet pointed out any conflict between the laws
of Japan and ours. Before determining which law should apply, first there should
exist a conflict of laws situation requiring the application of the conflict of laws
rules.[72] Also, when the law of a foreign country is invoked to provide the proper
rules for the solution of a case, the existence of such law must be pleaded and
proved.[73]
It should be noted that when a conflicts case, one involving a foreign
element, is brought before a court or administrative agency, there are three
alternatives open to the latter in disposing of it: (1) dismiss the case, either because
of lack of jurisdiction or refusal to assume jurisdiction over the case; (2) assume
jurisdiction over the case and apply the internal law of the forum; or (3) assume
jurisdiction over the case and take into account or apply the law of some other
State or States.[74] The courts power to hear cases and controversies is derived
from the Constitution and the laws. While it may choose to recognize laws of
foreign nations, the court is not limited by foreign sovereign law short of treaties or
other formal agreements, even in matters regarding rights provided by foreign
sovereigns.[75]

Neither can the other ground raised, forum non conveniens,[76] be used to
deprive the trial court of its jurisdiction herein. First, it is not a proper basis for a
motion to dismiss because Section 1, Rule 16 of the Rules of Court does not
include it as a ground.[77] Second, whether a suit should be entertained or dismissed
on the basis of the said doctrine depends largely upon the facts of the particular
case and is addressed to the sound discretion of the trial court. [78] In this case, the
RTC decided to assume jurisdiction. Third, the propriety of dismissing a case based
on this principle requires a factual determination; hence, this conflicts principle is
more properly considered a matter of defense.[79]
Accordingly, since the RTC is vested by law with the power to entertain and
hear the civil case filed by respondent and the grounds raised by petitioners to
assail that jurisdiction are inappropriate, the trial and appellate courts correctly
denied the petitioners motion to dismiss.
WHEREFORE, premises
on certiorari is DENIED.
VENANCIO FIGUEROA y
CERVANTES,[1]
Petitioner,

considered,

the

petition

for

review

G.R. No. 147406

Present:

- versus -

QUISUMBING, J.,
YNARES-SANTIAGO,
Chairperson,
AUSTRIA-MARTINEZ,
NACHURA, and
REYES, JJ.
Promulgated:

PEOPLE OF THE PHILIPPINES,

Respondent.

July 14, 2008

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DECISION
NACHURA, J.:

When is a litigant estopped by laches from assailing the jurisdiction of a

tribunal? This is the paramount issue raised in this petition for review of
the February 28, 2001 Decision[2] of the Court of Appeals (CA) in CA-G.R. CR
No. 22697.
Pertinent are the following antecedent facts and proceedings:
On July 8, 1994, an information[3] for reckless imprudence resulting in
homicide was filed against the petitioner before the Regional Trial Court (RTC) of
Bulacan, Branch 18.[4] The case was docketed as Criminal Case No. 2235-M-94.
[5]
Trial on the merits ensued and onAugust 19, 1998, the trial court convicted the
petitioner as charged.[6] In his appeal before the CA, the petitioner questioned,
among others, for the first time, the trial courts jurisdiction.[7]
The appellate court, however, in the challenged decision, considered the
petitioner to have actively participated in the trial and to have belatedly attacked
the jurisdiction of the RTC; thus, he was already estopped by laches from asserting
the trial courts lack of jurisdiction. Finding no other ground to reverse the trial
courts decision, the CA affirmed the petitioners conviction but modified the
penalty imposed and the damages awarded.[8]
Dissatisfied, the petitioner filed the instant petition for review
on certiorari raising the following issues for our resolution:
a. Does the fact that the petitioner failed to raise the issue of
jurisdiction during the trial of this case, which was initiated and filed by
the public prosecutor before the wrong court, constitute laches in relation
to the doctrine laid down in Tijam v. Sibonghanoy, notwithstanding the
fact that said issue was immediately raised in petitioners appeal to the
Honorable Court of Appeals? Conversely, does the active participation of

the petitioner in the trial of his case, which is initiated and filed not by
him but by the public prosecutor, amount to estoppel?
b. Does the admission of the petitioner that it is difficult
to immediately stop a bus while it is running at 40 kilometers per
hour for the purpose of avoiding a person who unexpectedly crossed
the road, constitute enough incriminating evidence to warrant his
conviction for the crime charged?
c. Is the Honorable Court of Appeals justified in considering the
place of accident as falling within Item 4 of Section 35 (b) of the Land
Transportation and Traffic Code, and subsequently ruling that the speed
limit thereto is only 20 kilometers per hour, when no evidence
whatsoever to that effect was ever presented by the prosecution during
the trial of this case?
d. Is the Honorable Court of Appeals justified in convicting the
petitioner for homicide through reckless imprudence (the legally correct
designation is reckless imprudence resulting to homicide) with
violation of the Land Transportation and Traffic Code when the
prosecution did not prove this during the trial and, more importantly, the
information filed against the petitioner does not contain an allegation to
that effect?
e. Does the uncontroverted testimony of the defense witness
Leonardo Hernal that the victim unexpectedly crossed the road resulting
in him getting hit by the bus driven by the petitioner not enough
evidence to acquit him of the crime charged? [9]

Applied uniformly is the familiar rule that the jurisdiction of the court to
hear and decide a case is conferred by the law in force at the time of the institution
of the action, unless such statute provides for a retroactive application thereof.
[10]
In this case, at the time the criminal information for reckless imprudence
resulting in homicide with violation of the Automobile Law (now Land
Transportation and Traffic Code) was filed, Section 32(2) of Batas
Pambansa (B.P.) Blg. 129[11] had already been amended by Republic Act No. 7691.
[12]
The said provision thus reads:

Sec. 32. Jurisdiction of Metropolitan Trial Courts, Municipal

Trial Courts and Municipal Circuit Trial Courts in Criminal Cases.
Except in cases falling within the exclusive original jurisdiction of
Regional Trial Courts and the Sandiganbayan, the Metropolitan Trial
Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall
exercise:
xxxx
(2) Exclusive original jurisdiction over all offenses punishable
with imprisonment not exceeding six (6) years irrespective of the amount
of fine, and regardless of other imposable accessory or other penalties,
including the civil liability arising from such offenses or predicated
thereon, irrespective of kind, nature, value or amount thereof: Provided,
however, That in offenses involving damage to property through criminal
negligence, they shall have exclusive original jurisdiction thereof.

As the imposable penalty for the crime charged herein is prision

correccional in its medium and maximum periods or imprisonment for 2 years, 4
months and 1 day to 6 years,[13] jurisdiction to hear and try the same is conferred on
the Municipal Trial Courts (MTCs). Clearly, therefore, the RTC of Bulacan does
not have jurisdiction over Criminal Case No. 2235-M-94.
While both the appellate court and the Solicitor General acknowledge this
fact, they nevertheless are of the position that the principle of estoppel by laches
has already precluded the petitioner from questioning the jurisdiction of the RTC
the trial went on for 4 years with the petitioner actively participating therein and
without him ever raising the jurisdictional infirmity. The petitioner, for his part,
counters that the lack of jurisdiction of a court over the subject matter may be
raised at any time even for the first time on appeal. As undue delay is further
absent herein, the principle of laches will not be applicable.
To settle once and for all this problem of jurisdiction vis--vis estoppel by
laches, which continuously confounds the bench and the bar, we shall analyze the
various Court decisions on the matter.

As early as 1901, this Court has declared that unless jurisdiction has been
conferred by some legislative act, no court or tribunal can act on a matter
submitted to it.[14] We went on to state in U.S. v. De La Santa[15] that:
It has been frequently held that a lack of jurisdiction over the subjectmatter is fatal, and subject to objection at any stage of the proceedings,
either in the court below or on appeal (Ency. of Pl. & Pr., vol. 12, p. 189,
and large array of cases there cited), and indeed, where the subjectmatter is not within the jurisdiction, the court may dismiss the
proceeding ex mero motu. (4 Ill., 133; 190 Ind., 79; Chipman
vs. Waterbury, 59 Conn., 496.)
Jurisdiction over the subject-matter in a judicial proceeding is
conferred by the sovereign authority which organizes the court; it is
given only by law and in the manner prescribed by law and an objection
based on the lack of such jurisdiction can not be waived by the
parties.
x x x[16]

Later, in People v. Casiano,[17] the Court explained:

4. The operation of the principle of estoppel on the question of
jurisdiction seemingly depends upon whether the lower court actually
had jurisdiction or not. If it had no jurisdiction, but the case was
tried and decided upon the theory that it had jurisdiction, the
parties are not barred, on appeal, from assailing such jurisdiction,
for the same must exist as a matter of law, and may not be conferred
by consent of the parties or by estoppel (5 C.J.S., 861-863). However,
if the lower court had jurisdiction, and the case was heard and decided
upon a given theory, such, for instance, as that the court
had no jurisdiction, the party who induced it to adopt such theory will
not be permitted, on appeal, to assume an inconsistent positionthat the
lower court had jurisdiction. Here, the principle of estoppel applies. The
rule that jurisdiction is conferred by law, and does not depend upon the
will of the parties, has no bearing thereon. Thus, Corpus Juris Secundum
says:
Where accused has secured a decision that the
indictment is void, or has been granted an instruction based
on its defective character directing the jury to acquit, he is
estopped, when subsequently indicted, to assert that the

former indictment was valid. In such case, there may be a

new prosecution whether the indictment in the former
prosecution was good or bad. Similarly, where, after the
jury was impaneled and sworn, the court on accused's
motion quashed the information on the erroneous
assumption that the court had no jurisdiction, accused
cannot successfully plead former jeopardy to a new
information. x x x (22 C.J.S., sec. 252, pp. 388-389; italics
ours.)
Where accused procured a prior conviction to be set
aside
on
the
ground
that
the
court
was without jurisdiction, he is estoppedsubsequently to
assert, in support of a defense of previous jeopardy, that
such court had jurisdiction. (22 C.J.S. p. 378.) [18]

But in Pindagan Agricultural Co., Inc. v. Dans,[19] the Court, in not

sustaining the plea of lack of jurisdiction by the plaintiff-appellee therein, made the
following observations:
It is surprising why it is only now, after the decision has been
rendered, that the plaintiff-appellee presents the question of this Courts
jurisdiction over the case. Republic Act No. 2613 was enacted
on August 1, 1959. This case was argued on January 29,
1960. Notwithstanding this fact, the jurisdiction of this Court was never
impugned until the adverse decision of this Court was handed
down. The conduct of counsel leads us to believe that they must have
always been of the belief that notwithstanding said enactment of
Republic Act 2613 this Court has jurisdiction of the case, such conduct
being born out of a conviction that the actual real value of the properties
in question actually exceeds the jurisdictional amount of this Court
(over P200,000). Our minute resolution in G.R. No. L-10096, Hyson
Tan, et al. vs. Filipinas Compaa de Seguros, et al., of March 23, 1956,
a parallel case, is applicable to the conduct of plaintiff-appellee in this
case, thus:
x x x that an appellant who files his brief and submits his
case to the Court of Appeals for decision, without
questioning the latters jurisdiction until decision is
rendered therein, should be considered as having

voluntarily waived so much of his claim as would exceed

the jurisdiction of said Appellate Court; for the reason that
a contrary rule would encourage the undesirable practice of
appellants submitting their cases for decision to the Court
of Appeals in expectation of favorable judgment, but with
intent of attacking its jurisdiction should the decision be
unfavorable: x x x[20]

Then came our ruling in Tijam v. Sibonghanoy[21] that a party may be barred
by laches from invoking lack of jurisdiction at a late hour for the purpose of
annulling everything done in the case with the active participation of said party
invoking the plea. We expounded, thus:
A party may be estopped or barred from raising a question in
different ways and for different reasons. Thus, we speak of estoppel in
pais, of estoppel by deed or by record, and of estoppel by laches.
Laches, in a general sense, is failure or neglect, for an
unreasonable and unexplained length of time, to do that which, by
exercising due diligence, could or should have been done earlier; it is
negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it.
The doctrine of laches or of stale demands is based upon
grounds of public policy which requires, for the peace of society, the
discouragement of stale claims and, unlike the statute of limitations, is
not a mere question of time but is principally a question of the inequity
or unfairness of permitting a right or claim to be enforced or asserted.
It has been held that a party cannot invoke the jurisdiction of a
court to secure affirmative relief against his opponent and, after
obtaining or failing to obtain such relief, repudiate or question that same
jurisdiction (Dean vs. Dean, 136 Or. 694, 86 A.L.R. 79). In the case just
cited, by way of explaining the rule, it was further said that the question
whether the court had jurisdiction either of the subject matter of the
action or of the parties was not important in such cases because the
party is barred from such conduct not because the judgment or order of
the court is valid and conclusive as an adjudication, but for the reason

that such a practice cannot be toleratedobviously for reasons of

public policy.
Furthermore, it has also been held that after voluntarily
submitting a cause and encountering an adverse decision on the merits,
it is too late for the loser to question the jurisdiction or power of the
court (Pease vs. Rathbun-Jones etc., 243 U.S. 273, 61 L. Ed. 715, 37
S.Ct. 283; St. Louis etc. vs. McBride, 141 U.S. 127, 35 L. Ed.
659). And in Littleton vs. Burgess, 16 Wyo. 58, the Court said that it is
not right for a party who has affirmed and invoked the jurisdiction of a
court in a particular matter to secure an affirmative relief, to afterwards
deny that same jurisdiction to escape a penalty.
Upon this same principle is what We said in the three cases
mentioned in the resolution of the Court of Appeals of May 20, 1963
(supra)to the effect that we frown upon the undesirable practice of a
party submitting his case for decision and then accepting the judgment,
only if favorable, and attacking it for lack of jurisdiction, when adverse
as well as in Pindagan etc. vs. Dans et al., G.R. L-14591, September
26, 1962; Montelibano et al. vs. Bacolod-Murcia Milling Co., Inc., G.R.
L-15092; Young Men Labor Union etc. vs. The Court of Industrial
Relations et al., G.R. L-20307, Feb. 26, 1965, and Mejia vs. Lucas, 100
Phil. p. 277.
The facts of this case show that from the time the Surety became a quasi-party
on July 31, 1948, it could have raised the question of the lack of jurisdiction of the
Court of First Instance of Cebu to take cognizance of the present action by reason of
the sum of money involved which, according to the law then in force, was within the
original exclusive jurisdiction of inferior courts. It failed to do so. Instead, at several
stages of the proceedings in the court a quo, as well as in the Court of Appeals, it
invoked the jurisdiction of said courts to obtain affirmative relief and submitted its
case for a final adjudication on the merits. It was only after an adverse decision was
rendered by the Court of Appeals that it finally woke up to raise the question of
jurisdiction. Were we to sanction such conduct on its part, We would in effect be
declaring as useless all the proceedings had in the present case since it was
commenced on July 19, 1948 and compel the judgment creditors to go up their
Calvary once more. The inequity and unfairness of this is not only patent but
revolting.[22]

For quite a time since we made this pronouncement in Sibonghanoy, courts

and tribunals, in resolving issues that involve the belated invocation of lack of
jurisdiction, have applied the principle of estoppel by laches. Thus, in Calimlim v.
Ramirez,[23] we pointed out thatSibonghanoy was developing into a general
rule rather than the exception:
A rule that had been settled by unquestioned acceptance and
upheld in decisions so numerous to cite is that the jurisdiction of a court
over the subject-matter of the action is a matter of law and may not be
conferred by consent or agreement of the parties. The lack of
jurisdiction of a court may be raised at any stage of the proceedings,
even on appeal. This doctrine has been qualified by recent
pronouncements which stemmed principally from the ruling in the cited
case of Sibonghanoy. It is to be regretted, however, that the holding in
said case had been applied to situations which were obviously not
contemplated therein. The exceptional circumstance involved
in Sibonghanoy which justified the departure from the accepted concept
of non-waivability of objection to jurisdiction has been ignored and,
instead a blanket doctrine had been repeatedly upheld that rendered the
supposed ruling in Sibonghanoy not as the exception, but rather the
general rule, virtually overthrowing altogether the time-honored
principle that the issue of jurisdiction is not lost by waiver or by
estoppel.
In Sibonghanoy, the defense of lack of jurisdiction of the court
that rendered the questioned ruling was held to be barred by estoppel by
laches. It was ruled that the lack of jurisdiction having been raised for
the first time in a motion to dismiss filed almost fifteen (15) years after
the questioned ruling had been rendered, such a plea may no longer be
raised for being barred by laches. As defined in said case, laches is
failure or neglect, for an unreasonable and unexplained length of time,
to do that which, by exercising due diligence, could or should have been
done earlier; it is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to
assert has abandoned it or declined to assert it.[24]

In Calimlim, despite the fact that the one who benefited from the plea of
lack of jurisdiction was the one who invoked the courts jurisdiction, and who later
obtained an adverse judgment therein, we refused to apply the ruling

in Sibonghanoy. The Court accorded supremacy to the time-honored principle

that the issue of jurisdiction is not lost by waiver or by estoppel.
Yet, in subsequent cases decided after Calimlim, which by sheer volume are
too plentiful to mention, the Sibonghanoy doctrine, as foretold in Calimlim,
became the rule rather than the exception. As such, in Soliven v. Fastforms
Philippines, Inc.,[25] the Court ruled:
While it is true that jurisdiction may be raised at any time, this
rule presupposes that estoppel has not supervened. In the instant case,
respondent actively participated in all stages of the proceedings before
the trial court and invoked its authority by asking for an affirmative
relief. Clearly, respondent is estopped from challenging the trial courts
jurisdiction, especially when an adverse judgment has been
rendered. In PNOCShipping and Transport Corporation vs. Court of
Appeals, we held:
Moreover, we note that petitioner did not question at
all the jurisdiction of the lower court x x x in its answers to
both the amended complaint and the second amended
complaint. It did so only in its motion for reconsideration
of the decision of the lower court after it had received an
adverse decision. As this Court held in Pantranco North
Express, Inc. vs. Court of Appeals (G.R. No. 105180, July
5, 1993, 224 SCRA 477, 491), participation in all stages of
the case before the trial court, that included invoking its
authority in asking for affirmative relief, effectively barred
petitioner by estoppel from challenging the courts
jurisdiction. Notably, from the time it filed its answer to the
second amended complaint on April 16, 1985, petitioner
did not question the lower courts jurisdiction. It was only
on December 29, 1989 when it filed its motion for
reconsideration of the lower courts decision that petitioner
raised the question of the lower courts lack of
jurisdiction. Petitioner thus foreclosed its right to raise the
issue of jurisdiction by its own inaction. (italics ours)
Similarly, in the subsequent case of Sta. Lucia Realty and
Development, Inc. vs. Cabrigas, we ruled:

In the case at bar, it was found by the trial court in

its 30 September 1996 decision in LCR Case No. Q60161(93) that private respondents (who filed the petition
for reconstitution of titles) failed to comply with both
sections 12 and 13 of RA 26 and therefore, it had no
jurisdiction over the subject matter of the case. However,
private respondents never questioned the trial courts
jurisdiction over its petition for reconstitution throughout
the duration of LCR Case No. Q-60161(93). On the
contrary, private respondents actively participated in the
reconstitution proceedings by filing pleadings and
presenting its evidence. They invoked the trial courts
jurisdiction in order to obtain affirmative relief the
reconstitution of their titles. Private respondents have thus
foreclosed their right to raise the issue of jurisdiction by
their own actions.
The Court has constantly upheld the doctrine that
while jurisdiction may be assailed at any stage, a litigants
participation in all stages of the case before the trial court,
including the invocation of its authority in asking for
affirmative relief, bars such party from challenging the
courts jurisdiction (PNOC Shipping and Transport
Corporation vs. Court of Appeals, 297 SCRA 402
[1998]). A party cannot invoke the jurisdiction of a court
to secure affirmative relief against his opponent and after
obtaining or failing to obtain such relief, repudiate or
question that same jurisdiction (Asset Privatization Trust
vs. Court of Appeals, 300 SCRA 579 [1998];Province of
Bulacan vs. Court of Appeals, 299 SCRA 442 [1998]). The
Court frowns upon the undesirable practice of a party
participating in the proceedings and submitting his case for
decision and then accepting judgment, only if favorable,
and attacking it for lack of jurisdiction, when
adverse (Producers Bank of the Philippines vs. NLRC, 298
SCRA 517 [1998], citing Ilocos Sur Electric Cooperative,
Inc. vs. NLRC, 241 SCRA 36 [1995]). (italics ours)[26]

Noteworthy, however, is that, in the 2005 case of Metromedia Times

Corporation v. Pastorin,[27] where the issue of lack of jurisdiction was raised only

in the National Labor Relations Commission (NLRC) on appeal, we stated, after

examining the doctrines of jurisdiction vis--vis estoppel, that the ruling
in Sibonghanoy stands as an exception, rather than the general
rule. Metromedia, thus, was not estopped from assailing the jurisdiction of the
labor arbiter before the NLRC on appeal.[28]
Later, in Francel Realty Corporation v. Sycip,[29] the Court clarified that:
Petitioner argues that the CAs affirmation of the trial courts
dismissal of its case was erroneous, considering that a full-blown trial
had already been conducted. In effect, it contends that lack of
jurisdiction could no longer be used as a ground for dismissal after trial
had ensued and ended.
The above argument is anchored on estoppel by laches, which has
been used quite successfully in a number of cases to thwart dismissals
based on lack of jurisdiction. Tijam v. Sibonghanoy, in which this
doctrine was espoused, held that a party may be barred from questioning
a courts jurisdiction after being invoked to secure affirmative relief
against its opponent. In fine, laches prevents the issue of lack of
jurisdiction from being raised for the first time on appeal by a litigant
whose purpose is to annul everything done in a trial in which it has
actively participated.
Laches is defined as the failure or neglect for an unreasonable
and unexplained length of time, to do that which, by exercising due
diligence, could or should have been done earlier; it is negligence or
omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned it or
declined to assert it.
The ruling in Sibonghanoy on the matter of jurisdiction is,
however, the exception rather than the rule. Estoppel by laches may be
invoked to bar the issue of lack of jurisdiction only in cases in which the
factual milieu is analogous to that in the cited case. In such
controversies, laches should be clearly present; that is, lack of
jurisdiction must have been raised so belatedly as to warrant the
presumption that the party entitled to assert it had abandoned or
declined to assert it. That Sibonghanoy applies only to exceptional
circumstances is clarified in Calimlim v. Ramirez, which we quote:

A rule that had been settled by unquestioned

acceptance and upheld in decisions so numerous to cite is
that the jurisdiction of a court over the subject-matter of the
action is a matter of law and may not be conferred by
consent or agreement of the parties. The lack of
jurisdiction of a court may be raised at any stage of the
proceedings, even on appeal. This doctrine has been
qualified by recent pronouncements which stemmed
principally from the ruling in the cited case
of Sibonghanoy. It is to be regretted, however, that the
holding in said case had been applied to situations which
were obviously not contemplated therein. The exceptional
circumstance involved in Sibonghanoy which justified the
departure from the accepted concept of non-waivability of
objection to jurisdiction has been ignored and, instead a
blanket doctrine had been repeatedly upheld that rendered
the supposed ruling in Sibonghanoy not as the exception,
but rather the general rule, virtually overthrowing
altogether the time-honored principle that the issue of
jurisdiction is not lost by waiver or by estoppel.
Indeed, the general rule remains: a courts lack of jurisdiction
may be raised at any stage of the proceedings, even on appeal. The
reason is that jurisdiction is conferred by law, and lack of it affects the
very authority of the court to take cognizance of and to render judgment
on the action. Moreover, jurisdiction is determined by the averments of
the complaint, not by the defenses contained in the answer.[30]

Also, in Mangaliag v. Catubig-Pastoral,[31] even if the pleader of lack of

jurisdiction actively took part in the trial proceedings by presenting a witness to
seek exoneration, the Court, reiterating the doctrine in Calimlim, said:
Private respondent argues that the defense of lack of jurisdiction may be
waived by estoppel through active participation in the trial. Such,
however, is not the general rule but an exception, best characterized by
the peculiar circumstances in Tijam vs. Sibonghanoy. In Sibonghanoy,
the party invoking lack of jurisdiction did so only after fifteen years and
at a stage when the proceedings had already been elevated to the
CA. Sibonghanoy is an exceptional case because of the presence of

laches, which was defined therein as failure or neglect for an

unreasonable and unexplained length of time to do that which, by
exercising due diligence, could or should have been done earlier; it is
the negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert has abandoned
it or declined to assert it.[32]

And in the more recent Regalado v. Go,[33] the Court again emphasized
that laches should be clearly present for the Sibonghanoydoctrine to be applicable,
thus:
Laches is defined as the failure or neglect for an unreasonable and
unexplained length of time, to do that which, by exercising due diligence, could or
should have been done earlier, it is negligence or omission to assert a right within
a reasonable length of time, warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert it.
The ruling in People v. Regalario that was based on the landmark doctrine
enunciated in Tijam v. Sibonghanoy on the matter of jurisdiction byestoppel is the
exception rather than the rule. Estoppel by laches may be invoked to bar the issue
of lack of jurisdiction only in cases in which the factual milieu is analogous to
that in the cited case. In such controversies, laches should have been clearly
present; that is, lack of jurisdiction must have been raised so belatedly as to
warrant the presumption that the party entitled to assert it had abandoned or
declined to assert it.
In Sibonghanoy, the defense of lack of jurisdiction was raised for the first
time in a motion to dismiss filed by the Surety almost 15 years after the
questioned ruling had been rendered. At several stages of the proceedings, in the
court a quo as well as in the Court of Appeals, the Surety invoked the jurisdiction
of the said courts to obtain affirmative relief and submitted its case for final
adjudication on the merits. It was only when the adverse decision was rendered
by the Court of Appeals that it finally woke up to raise the question of
jurisdiction.
Clearly, the factual settings attendant in Sibonghanoy are not present in the
case at bar. Petitioner Atty. Regalado, after the receipt of the Court of Appeals
resolution finding her guilty of contempt, promptly filed a Motion for
Reconsideration assailing the said courts jurisdiction based on procedural
infirmity in initiating the action. Her compliance with the appellate courts
directive to show cause why she should not be cited for contempt and filing a
single piece of pleading to that effect could not be considered as an active
participation in the judicial proceedings so as to take the case within the milieu

of Sibonghanoy. Rather, it is the natural fear to disobey the mandate of the court
that could lead to dire consequences that impelled her to comply.[34]

The Court, thus, wavered on when to apply the exceptional circumstance

in Sibonghanoy and on when to apply the general rule enunciated as early as in De
La Santa and expounded at length in Calimlim. The general rule should, however,
be, as it has always been, thatthe issue of jurisdiction may be raised at any stage of
the proceedings, even on appeal, and is not lost by waiver or by
estoppel. Estoppel by laches, to bar a litigant from asserting the courts absence
or lack of jurisdiction, only supervenes in exceptional cases similar to the factual
milieu of Tijam v. Sibonghanoy. Indeed, the fact that a person attempts to invoke
unauthorized jurisdiction of a court does not estop him from thereafter challenging
its jurisdiction over the subject matter, since such jurisdiction must arise by law
and not by mere consent of the parties. This is especially true where the person
seeking to invoke unauthorized jurisdiction of the court does not thereby secure
any advantage or the adverse party does not suffer any harm.[35]
Applying the said doctrine to the instant case, the petitioner is in no way
estopped by laches in assailing the jurisdiction of the RTC, considering that he
raised the lack thereof in his appeal before the appellate court. At that time, no
considerable period had yet elapsed for laches to attach. True, delay alone, though
unreasonable, will not sustain the defense of estoppel by laches unless it further
appears that the party, knowing his rights, has not sought to enforce them until the
condition of the party pleading laches has in good faith become so changed that he
cannot be restored to his former state, if the rights be then enforced, due to loss of
evidence, change of title, intervention of equities, and other causes.[36] In applying
the principle of estoppel by laches in the exceptional case of Sibonghanoy, the
Court therein considered the patent and revolting inequity and unfairness of having
the judgment creditors go up their Calvary once more after more or less 15 years.
[37]
The same, however, does not obtain in the instant case.
We note at this point that estoppel, being in the nature of a forfeiture, is not
favored by law. It is to be applied rarelyonly from necessity, and only in
extraordinary circumstances. The doctrine must be applied with great care and the
equity must be strong in its favor.[38] When misapplied, the doctrine of estoppel
may be a most effective weapon for the accomplishment of injustice. [39] Moreover,

a judgment rendered without jurisdiction over the subject matter is void. [40] Hence,
the Revised Rules of Court provides for remedies in attacking judgments rendered
by courts or tribunals that have no jurisdiction over the concerned cases. No laches
will even attach when the judgment is null and void for want of jurisdiction.[41] As
we have stated in Heirs of Julian Dela Cruz and Leonora Talaro v. Heirs of
Alberto Cruz,[42]
It is axiomatic that the jurisdiction of a tribunal, including a quasijudicial officer or government agency, over the nature and subject matter
of a petition or complaint is determined by the material allegations
therein and the character of the relief prayed for, irrespective of whether
the petitioner or complainant is entitled to any or all such
reliefs. Jurisdiction over the nature and subject matter of an action is
conferred by the Constitution and the law, and not by the consent or
waiver of the parties where the court otherwise would have no
jurisdiction over the nature or subject matter of the action. Nor can it
be acquired through, or waived by, any act or omission of the parties.
Moreover, estoppel does not apply to confer jurisdiction to a tribunal
that has none over the cause of action. x x x
Indeed, the jurisdiction of the court or tribunal is not affected by
the defenses or theories set up by the defendant or respondent in his
answer or motion to dismiss. Jurisdiction should be determined by
considering not only the status or the relationship of the parties but also
the nature of the issues or questions that is the subject of the controversy.
x x x x The proceedings before a court or tribunal without
jurisdiction, including its decision, are null and void, hence, susceptible
to direct and collateral attacks.[43]

With the above considerations, we find it unnecessary to resolve the other

issues raised in the petition.
RUBY SHELTER BUILDERS
G.R. No. 175914
AND
REALTY
DEVELOPMENT
CORPORATION,
Petition
Present:
er,

YNARES-SANTIAGO, J.,

- versus-

Chairperson,
AUSTRIA-MARTINEZ,
HON.
PABLO
C.
FORMARAN III, Presiding
Judge of Regional Trial
Court Branch 21, Naga
City, as Pairing Judge for
Regional
Trial
Court
Branch
22,
Formerly
Presided
By
HON.
NOVELITA
VILLEGASLLAGUNO (Retired 01 May
2006), ROMEO Y. TAN,
ROBERTO L. OBIEDO and
ATTY. TOMAS A. REYES,

CHICO-NAZARIO,
NACHURA, and
PERALTA, JJ.

Promulgated:

Respon
dents.
February 10, 2009

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

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under

Rule 45 of the Rules of Court seeking the reversal of the
Decision[1]dated 22 November 2006 of the Court of Appeals in CAG.R. SP No. 94800. The Court of Appeals, in its assailed Decision,
affirmed the Order[2] dated 24 March 2006 of the Regional Trial
Court (RTC), Branch 22, of Naga City, in Civil Case No. RTC-20060030, ordering petitioner Ruby Shelter Builders and Realty
Development Corporation to pay additional docket/filing fees,
computed based on Section 7(a) of Rule 141 of the Rules of Court,
as amended.
The present Petition arose from the following facts:

Petitioner
obtained
a
loan[3] in
the
total
amount
of P95,700,620.00 from respondents Romeo Y. Tan (Tan) and
Roberto L. Obiedo (Obiedo), secured by real estate mortgages
over five parcels of land, all located in Triangulo, Naga City,
covered by Transfer Certificates of Title (TCTs) No. 38376, [4] No.
29918,[5] No. 38374,[6] No. 39232,[7] and No. 39225,[8] issued by the
Registry of Deeds for Naga City, in the name of petitioner. When
petitioner was unable to pay the loan when it became due and
demandable, respondents Tan and Obiedo agreed to an extension
of the same.

In a Memorandum of Agreement[9] dated 17 March 2005,

respondents Tan and Obiedo granted petitioner until 31 December

2005 to settle its indebtedness, and condoned the interests,

penalties and surcharges accruing thereon from 1 October
2004 to 31
December
2005which
amounted
to P74,678,647.00. The Memorandum of Agreement required, in
turn, that petitioner execute simultaneously with the said
Memorandum, by way of dacion en pago, Deeds of Absolute
Sale in favor of respondents Tan and Obiedo, covering the same
parcels of land subject of the mortgages. The Deeds of Absolute
Sale would be uniformly dated 2 January 2006, and state that
petitioner sold to respondents Tan and Obiedo the parcels of land
for the following purchase prices:

TCT No.

Purchase Price

38376

P 9,340,000.00

29918

P 28,000,000.00

38374

P 12,000,000.00

39232

P 1,600,000.00

39225

P 1,600,000.00

Petitioner could choose to pay off its indebtedness with

individual or all five parcels of land; or it could redeem said
properties by paying respondents Tan and Obiedo the following
prices for the same, inclusive of interest and penalties:

TCT No.

Redemption Price

38376

P 25,328,939.00

29918

P 35,660,800.00

38374

P 28,477,600.00

39232

P 6,233,381.00

39225

P 6,233,381.00

In the event that petitioner is able to redeem any of the

afore-mentioned parcels of land, the Deed of Absolute Sale
covering the said property shall be nullified and have no force and
effect; and respondents Tan and Obiedo shall then return the
owners duplicate of the corresponding TCT to petitioner and also
execute a Deed of Discharge of Mortgage. However, if petitioner
is unable to redeem the parcels of land within the period agreed
upon, respondents Tan and Obiedo could already present the
Deeds of Absolute Sale covering the same to the Office of the
Register of Deeds for Naga City so respondents Tan and Obiedo
could acquire TCTs to the said properties in their names.

The Memorandum of Agreement further provided that should

petitioner contest, judicially or otherwise, any act, transaction, or
event related to or necessarily connected with the said
Memorandum and the Deeds of Absolute Sale involving the five
parcels of land, it would pay respondents Tan and
Obiedo P10,000,000.00 as liquidated damages inclusive of costs
and attorneys fees. Petitioner would likewise pay respondents
Tan and Obiedo the condoned interests, surcharges and penalties.
[10]
Finally, should a contest arise from the Memorandum of
Agreement, Mr. Ruben Sia (Sia), President of petitioner
corporation, personally assumes, jointly and severally with
petitioner, the latters monetary obligation to respondent Tan and
Obiedo.

Respondent Atty. Tomas A. Reyes (Reyes) was the Notary

Public who notarized the Memorandum of Agreement dated 17
March 2005between respondent Tan and Obiedo, on one hand,
and petitioner, on the other.

Pursuant to the Memorandum of Agreement, petitioner,

represented by Mr. Sia, executed separate Deeds of Absolute
Sale,[11] over the five parcels of land, in favor of respondents Tan
and Obiedo. On the blank spaces provided for in the said Deeds,
somebody wrote the 3rd of January 2006 as the date of their
execution. The Deeds were again notarized by respondent Atty.
Reyes also on 3 January 2006.

Without payment having been made by petitioner on 31

December 2005, respondents Tan and Obiedo presented the
Deeds of Absolute Sale dated 3 January 2006 before the Register
of Deeds of Naga City on 8 March 2006, as a result of which, they
were able to secure TCTs over the five parcels of land in their
names.

On 16 March 2006, petitioner filed before the RTC a

Complaint[12] against respondents Tan, Obiedo, and Atty. Reyes, for
declaration of nullity of deeds of sales and damages, with prayer
for the issuance of a writ of preliminary injunction and/or
temporary restraining order (TRO). The Complaint was docketed
as Civil Case No. 2006-0030.

On the basis of the facts already recounted above, petitioner

raised two causes of action in its Complaint.

As for the first cause of action, petitioner alleged that as

early as 27 December 2005, its President already wrote a letter
informing respondents Tan and Obiedo of the intention of
petitioner to pay its loan and requesting a meeting to compute
the final amount due. The parties held meetings on 3 and 4
January 2006 but they failed to arrive at a mutually acceptable
computation of the final amount of loan payable. Respondents
Tan and Obiedo then refused the request of petitioner for further
dialogues.
Unbeknownst to petitioner, despite the ongoing
meetings, respondents Tan and Obiedo, in evident bad faith,
already had the pre-executed Deeds of Absolute Sale notarized
on 3 January 2006 by respondent Atty. Reyes. Atty. Reyes, in
connivance with respondents Tan and Obiedo, falsely made it
appear in the Deeds of Absolute Sale that Mr. Sia had personally
acknowledged/ratified the said Deeds before Atty. Reyes.

Asserting that the Deeds of Absolute Sale over the five

parcels of land were executed merely as security for the payment
of its loan to respondents Tan and Obiedo; that the Deeds of
Absolute Sale, executed in accordance with the Memorandum of
Agreement, constitutedpactum commisorium and as such, were
null and void; and that the acknowledgment in the Deeds of
Absolute Sale were falsified, petitioner averred:

13.
That by reason of the fraudulent actions by
the [herein respondents], [herein petitioner] is prejudiced
and is now in danger of being deprived, physically and
legally, of the mortgaged properties without benefit of
legal processes such as the remedy of foreclosure and its
attendant procedures, solemnities and remedies available
to a mortgagor, while [petitioner] is desirous and willing
to pay its obligation and have the mortgaged properties
released.[13]

In support of its second cause of action, petitioner narrated

in its Complaint that on 18 January 2006, respondents Tan and
Obiedo forcibly took over, with the use of armed men, possession
of the five parcels of land subject of the falsified Deeds of
Absolute Sale and fenced the said properties with barbed
wire. Beginning 3 March 2006, respondents Tan and Obiedo
started demolishing some of the commercial spaces standing on
the parcels of land in question which were being rented out by
petitioner. Respondents Tan and Obiedo were also about to tear
down a principal improvement on the properties consisting of a
steel-and-concrete structure housing a motor vehicle terminal
operated by petitioner. The actions of respondents Tan and
Obiedo were to the damage and prejudice of petitioner and its
tenants/lessees. Petitioner, alone, claimed to have suffered at
least P300,000.00 in actual damages by reason of the physical
invasion by respondents Tan and Obiedo and their armed goons of
the five parcels of land.

Ultimately, petitioners prayer in its Complaint reads:

WHEREFORE, premises considered, it is most

respectfully prayed of this Honorable Court that upon the
filing of this complaint, a 72-hour temporary restraining
order be forthwith issued ex parte:

(a) Restraining [herein

Obiedo, their agents, privies
committing act/s tending to
properties from the [herein

respondents] Tan and

or representatives, from
alienate the mortgaged
petitioner] pending the

resolution of the case, including but not limited to the

acts complained of in paragraph 14, above;

(b) Restraining the Register of Deeds of Naga City

from entertaining moves by the [respondents] to have
[petitioners] certificates of title to the mortgaged
properties
cancelled
and
changed/registered
in
[respondents] Tans and Obiedos names, and/or released
to them;

(c) After notice and hearing, that a writ of

preliminary injunction be issued imposing the same
restraints indicated in the next preceding two paragraphs
of this prayer; and

(d) After trial, judgment be rendered:

1.

Making the injunction permanent;

2. Declaring the provision in the Memorandum of

Agreement requiring the [petitioner] to execute deed of
sales (sic) in favor of the [respondents Tan and Obiedo]
as dacion en pago in the event of non-payment of the
debt as pactum commissorium;

3. Annulling the Deed[s] of Sale for TCT Nos.

29918,
38374,
38376,
39225
and
39232,
all
dated January 3, 2006, the same being in contravention
of law;

4. Ordering the [respondents] jointly and solidarily

to pay the [petitioner] actual damages of at
least P300,000.00; attorneys fees in the amount
of P100,000.00 plus P1,000.00 per court attendance of
counsel as appearance fee; litigation expenses in the
amount of at least P10,000.00 and exemplary damages in
the amount of P300,000.00, plus the costs.

[Petitioner] further prays for such other reliefs as

may be proper, just and equitable under the premises.[14]

Upon filing its Complaint with the RTC on 16 March 2006,

petitioner paid the sum of P13,644.25 for docket and other legal
fees, as assessed by the Office of the Clerk of Court. The Clerk of
Court initially considered Civil Case No. 2006-0030 as an action
incapable of pecuniary estimation and computed the docket and
other legal fees due thereon according to Section 7(b)(1), Rule
141 of the Rules of Court.

Only respondent Tan filed an Answer [15] to the Complaint of

petitioner. Respondent Tan did admit that meetings were held
with Mr. Sia, as the representative of petitioner, to thresh out Mr.
Sias charge that the computation by respondents Tan and Obiedo
of the interests, surcharges and penalties accruing on the loan of
petitioner was replete with errors and uncertainties. However, Mr.
Sia failed to back up his accusation of errors and uncertainties
and to present his own final computation of the amount
due. Disappointed and exasperated, respondents Tan and Obiedo
informed Mr. Sia that they had already asked respondent Atty.

Reyes to come over to notarize the Deeds of Absolute

Sale. Respondent Atty. Reyes asked Mr. Sia whether it was his
signature appearing above his printed name on the Deeds of
Absolute Sale, to which Mr. Sia replied yes. On 4 January 2006,
Mr. Sia still failed to establish his claim of errors and uncertainties
in the computation of the total amount which petitioner must pay
respondent Tan and Obiedo. Mr. Sia, instead, sought a ninemonth extension for paying the loan obligation of petitioner and
the reduction of the interest rate thereon to only one percent (1%)
per month. Respondents Tan and Obiedo rejected both demands.

Respondent Tan maintained that the Deeds of Absolute Sale

were not executed merely as securities for the loan of
petitioner. The Deeds of Absolute Sale over the five parcels of
land were the consideration for the payment of the total
indebtedness of petitioner to respondents Tan and Obiedo, and
the condonation of the 15-month interest which already accrued
on the loan, while providing petitioner with the golden opportunity
to still redeem all or even portions of the properties covered by
said Deeds. Unfortunately, petitioner failed to exercise its right to
redeem any of the said properties.

Belying that they forcibly took possession of the five parcels

of land, respondent Tan alleged that it was Mr. Sia who, with the
aid of armed men, on board a Sports Utility Vehicle and a truck,
rammed into the personnel of respondents Tan and Obiedo
causing melee and disturbance. Moreover, by the execution of
the Deeds of Absolute Sale, the properties subject thereof
were, ipso jure, delivered to respondents Tan and Obiedo. The
demolition of the existing structures on the properties was
nothing but an exercise of dominion by respondents Tan and
Obiedo.

Respondent Tan, thus, sought not just the dismissal of the

Complaint of petitioner, but also the grant of his
counterclaim. The prayer in his Answer is faithfully reproduced
below:

Wherefore, premises considered, it is most

respectfully prayed that, after due hearing, judgment be
rendered dismissing the complaint, and on the
counterclaim, [herein petitioner] and Ruben Sia, be
ordered to indemnify, jointly and severally [herein
respondents Tan and Obiedo] the amounts of not less
than P10,000,000.00 as liquidated damages and the
further sum of not less than P500,000.00 as attorneys
fees. In the alternative, and should it become necessary,
it is hereby prayed that [petitioner] be ordered to pay
herein [respondents Tan and Obiedo] the entire principal
loan ofP95,700,620.00, plus interests, surcharges and
penalties computed from March 17, 2005 until the entire
sum is fully paid, including the amount ofP74,678,647.00
foregone interest covering the period from October 1,
2004 to December 31, 2005 or for a total of fifteen (15)
months, plus incidental expenses as may be proved in
court, in the event that Annexes G to L be
nullified. Other relief and remedies as are just and
equitable under the premises are hereby prayed for.[16]

Thereafter, respondent Tan filed before the RTC an Omnibus

Motion in which he contended that Civil Case No. 2006-0030
involved real properties, the docket fees for which should be
computed in accordance with Section 7(a), not Section 7(b)(1), of
Rule 141 of the Rules of Court, as amended by A.M. No. 04-2-04SC which took effect on 16 August 2004. Since petitioner did not

pay the appropriate docket fees for Civil Case No. 2006-0030, the
RTC did not acquire jurisdiction over the said case. Hence,
respondent Tan asked the RTC to issue an order requiring
petitioner to pay the correct and accurate docket fees pursuant to
Section 7(a), Rule 141 of the Rules of Court, as amended; and
should petitioner fail to do so, to deny and dismiss the prayer of
petitioner for the annulment of the Deeds of Absolute Sale for
having been executed in contravention of the law or of the
Memorandum of Agreement as pactum commisorium.

As required by the RTC, the parties submitted their Position

Papers on the matter. On 24 March 2006, the RTC issued an
Order[17]granting respondent Tans Omnibus Motion. In holding
that both petitioner and respondent Tan must pay docket fees in
accordance with Section 7(a), Rule 141 of the Rules of Court, as
amended, the RTC reasoned:

It must be noted that under paragraph (b) 2. of

the said Section 7, it is provided that QUIETING OF
TITLE which is an action classified as beyond pecuniary
estimation shall be governed by paragraph (a). Hence,
the filing fee in an action for Declaration of Nullity of Deed
which is also classified as beyond pecuniary estimation,
must be computed based on the provision of Section 7(A)
herein-above, in part, quoted.

Since [herein respondent], Romeo Tan in his Answer

has a counterclaim against the plaintiff, the former must
likewise pay the necessary filling (sic) fees as provided for
under Section 7 (A) of Amended Administrative
Circular No. 35-2004 issued by the Supreme Court.[18]

Consequently, the RTC decreed on the matter of docket/filing

fees:

WHEREFORE, premises considered, the [herein

petitioner] is hereby ordered to pay additional filing fee
and the [herein respondent], Romeo Tan is also ordered to
pay docket and filing fees on his counterclaim, both
computed based on Section 7(a) of the Supreme Court
Amended Administrative Circular No. 35-2004 within
fifteen (15) days from receipt of this Order to the Clerk of
Court, Regional Trial Court, Naga City and for the latter to
compute and to collect the said fees accordingly.[19]

Petitioner moved[20] for the partial reconsideration of the 24

March 2006 Order of the RTC, arguing that Civil Case No. 20060030 was principally for the annulment of the Deeds of Absolute
Sale and, as such, incapable of pecuniary estimation. Petitioner
submitted that the RTC erred in applying Section 7(a), Rule 141 of
the Rules of Court, as amended, to petitioners first cause of
action in its Complaint in Civil Case No. 2006-0030.

In its Order[21] dated 29 March 2006, the RTC refused to

reconsider its 24 March 2006 Order, based on the following
ratiocination:

Analyzing, the action herein pertains to real

property, for as admitted by the [herein petitioner], the
deeds of sale in question pertain to real property x x

x. The Deeds of Sale subject of the instant case have

already been transferred in the name of the [herein
respondents Tan and Obiedo].

Compared with Quieting of Title, the latter action is

brought when there is cloud on the title to real property or
any interest therein or to prevent a cloud from being cast
upon title to the real property (Art. 476, Civil Code of
the Philippines) and the plaintiff must have legal or
equitable title to or interest in the real property which is
the subject matter of the action (Art. 447, ibid.), and
yet plaintiff in QUIETING OF TITLE is required to pay the
fees in accordance with paragraph (a) of Section 7 of the
said Amended Administrative Circular No. 35-2004,
hence, with more reason that the [petitioner] who no
longer has title to the real properties subject of the
instant case must be required to pay the required fees in
accordance withSection 7(a) of the Amended
Administrative Circular No. 35-2004 afore-mentioned.

Furthermore, while [petitioner] claims that the action

for declaration of nullity of deed of sale and memorandum
of agreement is one incapable of pecuniary estimation,
however, as argued by the [respondent Tan], the issue as
to how much filing and docket fees should be paid was
never raised as an issue in the case of Russell vs.
Vestil, 304 SCRA 738.

xxxx

WHEREFORE, the Motion for Partial Reconsideration

is hereby DENIED.[22]

In a letter dated 19 April 2006, the RTC Clerk of Court

computed, upon the request of counsel for the petitioner, the
additional docket fees petitioner must pay for in Civil Case No.
2006-0030 as directed in the afore-mentioned RTC Orders. Per
the computation of the RTC Clerk of Court, after excluding the
amount petitioner previously paid on 16 March 2006, petitioner
must still pay the amount of P720,392.60 as docket fees.[23]

Petitioner, however, had not yet conceded, and it filed a

Petition for Certiorari with the Court of Appeals; the petition was
docketed as CA-G.R. SP No. 94800. According to petitioner, the
RTC[24] acted with grave abuse of discretion, amounting to lack or
excess of jurisdiction, when it issued its Orders dated 24 March
2006 and 29 March 2006 mandating that the docket/filing fees for
Civil Case No. 2006-0030, an action for annulment of deeds of
sale, be assessed under Section 7(a), Rule 141 of the Rules of
Court, as amended. If the Orders would not be revoked,
corrected, or rectified, petitioner would suffer grave injustice and
irreparable damage.

On 22 November 2006, the Court of Appeals promulgated its

Decision wherein it held that:

Clearly, the petitioners complaint involves not only

the annulment of the deeds of sale, but also the recovery
of the real properties identified in the said documents. In
other words, the objectives of the petitioner in filing the

complaint were to cancel the deeds of sale and

ultimately, to recover possession of the same. It is
therefore a real action.

Consequently, the additional docket fees that must

be paid cannot be assessed in accordance with Section
7(b). As a real action, Section 7(a) must be applied in the
assessment and payment of the proper docket fee.

Resultantly, there is no grave abuse of discretion

amounting to lack or excess of jurisdiction on the part of
the court a quo. By grave abuse of discretion is meant
capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, and mere abuse of
discretion is not enough it must be grave. The abuse
must be grave and patent, and it must be shown that the
discretion was exercised arbitrarily and despotically.

Such a situation does not exist in this particular

case. The evidence is insufficient to prove that the
court a quo acted despotically in rendering the assailed
orders. It acted properly and in accordance with
law. Hence, error cannot be attributed to it.[25]

Hence, the fallo of the Decision of the appellate court reads:

WHEREFORE,
the
petition
for
certiorari
is DENIED. The assailed Orders of the court a quo
are AFFIRMED.[26]

Without seeking reconsideration of the foregoing Decision

with the Court of Appeals, petitioner filed its Petition for Review
onCertiorari before this Court, with a lone assignment of error, to
wit:

18.
The herein petitioner most respectfully
submits that the Court of Appeals committed a grave and
serious reversible error in affirming the assailed Orders of
the Regional Trial Court which are clearly contrary to
the pronouncement of this Honorable Court in the
case of Spouses De Leon v. Court of Appeals, G.R.
No. 104796, March 6, 1998, not to mention the fact
that if the said judgment is allowed to stand and not
rectified, the same would result in grave injustice and
irreparable damage to herein petitioner in view of the
prohibitive amount assessed as a consequence of said
Orders.[27]

In Manchester Development Corporation v. Court of Appeals,

the Court explicitly pronounced that [t]he court acquires
jurisdiction over any case only upon the payment of the
prescribed docket fee. Hence, the payment of docket fees is not
only mandatory, but also jurisdictional.
[28]

In Sun Insurance Office, Ltd. (SIOL) v. Asuncion,[29] the Court

laid down guidelines for the implementation of its previous
pronouncement in Manchester under particular circumstances, to
wit:

1. It is not simply the filing of the complaint or

appropriate initiatory pleading, but the payment of the
prescribed docket fee, that vests a trial court with
jurisdiction over the subject matter or nature of the
action. Where the filing of the initiatory pleading is not
accompanied by payment of the docket fee, the court
may allow payment of the fee within a reasonable time
but in no case beyond the applicable prescriptive or
reglementary period.

2.
The
same
rule
applies
to
permissive
counterclaims, third-party claims and similar pleadings,
which shall not be considered filed until and unless the
filing fee prescribed therefor is paid. The court may also
allow payment of said fee within a reasonable time but
also in no case beyond its applicable prescriptive or
reglementary period.

3. Where the trial court acquires jurisdiction over a

claim by the filing of the appropriate pleading and
payment of the prescribed filing fee but, subsequently,
the judgment awards a claim not specified in the
pleading, or if specified the same has been left for
determination by the court, the additional filing fee
therefor shall constitute a lien on the judgment. It shall be
the responsibility of the Clerk of Court or his duly

authorized deputy to enforce said lien and assess and

collect the additional fee.

In the Petition at bar, the RTC found, and the Court of

Appeals affirmed, that petitioner did not pay the correct amount
of docket fees for Civil Case No. 2006-0030. According to both
the trial and appellate courts, petitioner should pay docket fees in
accordance with Section 7(a), Rule 141 of the Rules of Court, as
amended. Consistent with the liberal tenor of Sun Insurance, the
RTC, instead of dismissing outright petitioners Complaint in Civil
Case No. 2006-0030, granted petitioner time to pay the additional
docket fees. Despite the seeming munificence of the RTC,
petitioner refused to pay the additional docket fees assessed
against it, believing that it had already paid the correct amount
before, pursuant to Section 7(b)(1), Rule 141 of the Rules of
Court, as amended.

Relevant to the present controversy are the following

provisions under Rule 141 of the Rules of Court, as amended by
A.M.
No.
04-2-04-SC[30] and
Supreme
Court
Amended
[31]
Administrative Circular No. 35-2004 :

SEC. 7. Clerks of Regional Trial Courts.

(a)
For filing an action or a permissive OR
COMPULSORY counterclaim, CROSS-CLAIM, or money
claim against an estate not based on judgment, or for
filing a third-party, fourth-party, etc. complaint, or a
complaint-in-intervention, if the total sum claimed,
INCLUSIVE OF INTERESTS, PENALTIES, SURCHARGES,

DAMAGES OF WHATEVER KIND, AND ATTORNEYS

FEES, LITIGATIO NEXPENSES AND COSTS and/or in cases
involving property, the FAIR MARKET value of the REAL
property in litigation STATED IN THE CURRENT TAX
DECLARATION OR CURRENT ZONAL VALUATION OF THE
BUREAU OF INTERNAL REVENUE, WHICHEVER IS HIGHER,
OR IF THERE IS NONE, THE STATED VALUE OF THE
PROPERTY IN LITIGATION OR THE VALUE OF THE
PERSONAL PROPERTY IN LITIGATION OR THE VALUE OF
THE PERSONAL PROPERTY IN LITIGATION AS ALLEGED BY
THE CLAIMANT, is:

[Table of fees omitted.]

If the action involves both a money claim and relief

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

(b)

For filing:

1.
Actions where the
subject matter cannot be estimated

value

of

the

2.
Special civil actions, except judicial
foreclosure
of
mortgage,
EXPROPRIATION
PROCEEDINGS, PARTITION AND QUIETING OF TITLE
which will

3.

All other actions not involving property

[Table of fees omitted.]

The docket fees under Section 7(a), Rule 141, in cases

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

In order to resolve the issue of whether petitioner paid the

correct amount of docket fees, it is necessary to determine the
true nature of its Complaint. The dictum adhered to in this
jurisdiction is that the nature of an action is determined by the
allegations in the body of the pleading or Complaint itself, rather
than by its title or heading.[32] However, the Court finds it
necessary, in ascertaining the true nature of Civil Case No. 20060030, to take into account significant facts and circumstances
beyond the Complaint of petitioner, facts and circumstances
which petitioner failed to state in its Complaint but were disclosed
in the preliminary proceedings before the court a quo.

Petitioner persistently avers that its Complaint in Civil Case

No. 2006-0030 is primarily for the annulment of the Deeds of
Absolute Sale. Based on the allegations and reliefs in the
Complaint alone, one would get the impression that the titles to
the subject real properties still rest with petitioner; and that the

interest of respondents Tan and Obiedo in the same lies only in

the Deeds of Absolute Sale sought to be annulled.

What petitioner failed to mention in its Complaint was that

respondents Tan and Obiedo already had the Memorandum of
Agreement, which clearly provided for the execution of the Deeds
of Absolute Sale, registered on the TCTs over the five parcels of
land, then still in the name of petitioner. After respondents Tan
and Obiedo had the Deeds of Absolute Sale notarized on 3
January 2006 and presented the same to Register of Deeds
for Naga City on 8 March 2006, they were already issued TCTs
over the real properties in question, in their own
names. Respondents Tan and Obiedo have also acquired
possession of the said properties, enabling them, by petitioners
own admission, to demolish the improvements thereon.

It is, thus, suspect that petitioner kept mum about the aforementioned facts and circumstances when they had already taken
place before it filed its Complaint before the RTC on 16 March
2006. Petitioner never expressed surprise when such facts and
circumstances were established before the RTC, nor moved to
amend its Complaint accordingly. Even though the Memorandum
of Agreement was supposed to have long been registered on its
TCTs over the five parcels of land, petitioner did not pray for the
removal of the same as a cloud on its title. In the same vein,
although petitioner alleged that respondents Tan and Obiedo
forcibly took physical possession of the subject real properties,
petitioner did not seek the restoration of such possession to
itself. And despite learning that respondents Tan and Obiedo
already secured TCTs over the subject properties in their names,
petitioner did not ask for the cancellation of said titles. The only
logical and reasonable explanation is that petitioner is reluctant to
bring to the attention of the Court certain facts and

circumstances, keeping its Complaint safely worded, so as to

institute only an action for annulment of Deeds of Absolute
Sale. Petitioner deliberately avoided raising issues on the title
and possession of the real properties that may lead the Court to
classify its case as a real action.

No matter how fastidiously petitioner attempts to conceal

them, the allegations and reliefs it sought in its Complaint in Civil
Case No. 2006-0030 appears to be ultimately a real action,
involving as they do the recovery by petitioner of its title to and
possession of the five parcels of land from respondents Tan and
Obiedo.

A real action is one in which the plaintiff seeks the recovery

of real property; or, as indicated in what is now Section 1, Rule 4
of the Rules of Court, a real action is an action affecting title to or
recovery of possession of real property. [33]

Section 7, Rule 141 of the Rules of Court, prior to its

amendment by A.M. No. 04-2-04-SC, had a specific paragraph
governing the assessment of the docket fees for real action, to
wit:

In a real action, the assessed value of the property,

or if there is none, the estimated value thereof shall be
alleged by the claimant and shall be the basis in
computing the fees.

It was in accordance with the afore-quoted provision that the

Court, in Gochan v. Gochan,[34] held that although the caption of
the complaint filed by therein respondents Mercedes Gochan, et
al. with the RTC was denominated as one for specific
performance and damages, the relief sought was the
conveyance or transfer of real property, or ultimately, the
execution of deeds of conveyance in their favor of the real
properties enumerated in the provisional memorandum of
agreement. Under these circumstances, the case before the RTC
was actually a real action, affecting as it did title to or possession
of real property. Consequently, the basis for determining the
correct docket fees shall be the assessed value of the property, or
the estimated value thereof as alleged in the complaint. But
since Mercedes Gochan failed to allege in their complaint the
value of the real properties, the Court found that the RTC did not
acquire jurisdiction over the same for non-payment of the correct
docket fees.

Likewise, in Siapno v. Manalo,[35] the Court disregarded the

title/denomination of therein plaintiff Manalos amended petition
as one for Mandamus with Revocation of Title and Damages; and
adjudged the same to be a real action, the filing fees for which
should have been computed based on the assessed value of the
subject property or, if there was none, the estimated value
thereof. The Court expounded inSiapno that:

In his amended petition, respondent Manalo prayed

that NTAs sale of the property in dispute to Standford
East Realty Corporation and the title issued to the latter
on the basis thereof, be declared null and void. In a very
real sense, albeit the amended petition is styled as one
for Mandamus with Revocation of Title and Damages, it
is, at bottom, a suit to recover from Standford the

realty in question and to vest in respondent the

ownership and possession thereof. In short, the amended
petition is in reality an action in res or a real action. Our
pronouncement in Fortune Motors (Phils.), Inc. vs. Court
of Appeals is instructive. There, we said:

A prayer for annulment or rescission

of contract does not operate to efface the
true objectives and nature of the action
which is to recover real property. (Inton, et
al., v. Quintan, 81 Phil. 97, 1948)

An action for the annulment or

rescission of a sale of real property is a
real action. Its prime objective is to
recover said real property. (Gavieres v.
Sanchez, 94 Phil. 760, 1954)

An action to annul a real estate mortgage

foreclosure sale is no different from an action
to annul a private sale of real property. (Muoz
v. Llamas, 87 Phil. 737, 1950).

While it is true that petitioner does

not directly seek the recovery of title or
possession of the property in question,
his action for annulment of sale and his
claim for damages are closely intertwined
with the issue of ownership of the
building which, under the law, is
considered
immovable
property,
the

recovery of which is petitioner's primary

objective. The prevalent doctrine is that
an action for the annulment or rescission
of a sale of real property does not
operate to efface the fundamental and
prime objective and nature of the case,
which is to recover said real property. It is
a real action.

Unfortunately, and evidently to evade payment of

the correct amount of filing fee, respondent Manalo never
alleged in the body of his amended petition, much less in
the prayer portion thereof, the assessed value of the
subject res, or, if there is none, the estimated value
thereof, to serve as basis for the receiving clerk in
computing and arriving at the proper amount of filing fee
due thereon, as required under Section 7 of this
Courts en banc resolution of 04 September 1990 (Re:
Proposed Amendments to Rule 141 on Legal Fees).

Even the amended petition, therefore, should have

been expunged from the records.

In fine, we rule and so hold that the trial court never

acquired jurisdiction over its Civil Case No. Q-95-24791.[36]

It was in Serrano v. Delica,[37] however, that the Court dealt

with a complaint that bore the most similarity to the one at
bar. Therein respondent Delica averred that undue influence,

coercion, and intimidation were exerted upon him by therein

petitioners
Serrano, et
al.
to
effect
transfer
of
his
properties. Thus, Delica filed a complaint before the RTC against
Serrano, et al., praying that the special power of attorney, the
affidavit, the new titles issued in the names of Serrano, et al., and
the contracts of sale of the disputed properties be cancelled; that
Serrano, et al. be ordered to pay Delica, jointly and severally,
actual, moral and exemplary damages in the amount
of P200,000.00, as well as attorneys fee of P200,000.00 and
costs of litigation; that a TRO and a writ of preliminary injunction
be issued ordering Serrano, et al.to immediately restore him to his
possession of the parcels of land in question; and that after trial,
the writ of injunction be made permanent. The Court dismissed
Delicas complaint for the following reasons:

A careful examination of respondents complaint is

that it is a real action.
In Paderanga vs. Buissan, we
held that in a real action, the plaintiff seeks the recovery
of real property, or, as stated in Section 2(a), Rule 4 of the
Revised Rules of Court, a real action is one affecting title
to real property or for the recovery of possession of, or for
partition or condemnation of, or foreclosure of a mortgage
on a real property.

Obviously, respondents complaint is a real action

involving not only the recovery of real properties, but
likewise the cancellation of the titles thereto.

Considering that respondents complaint is a real

action, 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 and shall be the basis in

computing the fees.

We note, however, that neither the assessed value

nor the estimated value of the questioned parcels of
land were alleged by respondent in both his original and
amended complaint. What he stated in his amended
complaint is that the disputed realties have a BIR zonal
valuation ofP1,200.00 per square meter. However, the
alleged BIR zonal valuation is not the kind of valuation
required by the Rule. It is the assessed value of the
realty. Having utterly failed to comply with the
requirement of the Rule that he shall allege in his
complaint the assessed value of his real properties in
controversy, the correct docket fee cannot be computed.
As such, his complaint should not have been accepted by
the trial court. We thus rule that it has not acquired
jurisdiction over the present case for failure of herein
respondent to pay the required docket fee. On this ground
alone, respondents complaint is vulnerable to dismissal. [38]

Brushing aside the significance of Serrano, petitioner argues

that said decision, rendered by the Third Division of the Court,
and not by the Court en banc, cannot modify or reverse the
doctrine laid down in Spouses De Leon v. Court of Appeals.
[39]
Petitioner relies heavily on the declaration of this Court
in Spouses De Leon that an action for annulment or rescission of a
contract of sale of real property is incapable of pecuniary
estimation.

The Court, however, does not perceive a contradiction

between Serrano and the Spouses De Leon. The Court calls
attention to the following statement in Spouses De Leon: 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. Necessarily, the determination must be done on
a case-to-case basis, depending on the facts and circumstances of
each. What petitioner conveniently ignores is that in Spouses De
Leon, the action therein that private respondents instituted before
the RTC was solely for annulment or rescission of the contract of
sale over a real property.[40] There appeared to be no transfer of
title or possession to the adverse party. Their complaint simply
prayed for:

1. Ordering the nullification or rescission of the

Contract of Conditional Sale (Supplementary Agreement)
for having violated the rights of plaintiffs (private
respondents) guaranteed to them under Article 886 of the
Civil Code and/or violation of the terms and conditions of
the said contract.

2. Declaring void ab initio the Deed of Absolute

Sale for being absolutely simulated; and

3. Ordering defendants (petitioners) to pay

plaintiffs (private respondents) attorney's fees in the
amount of P100,000.00.[41]

As this Court has previously discussed herein, the nature of

Civil Case No. 2006-0030 instituted by petitioner before the RTC is
closer to that of Serrano, rather than of Spouses De Leon, hence,
calling for the application of the ruling of the Court in the former,
rather than in the latter.

It is also important to note that, with the amendments

introduced by A.M. No. 04-2-04-SC, which became effective on 16
August 2004, the paragraph in Section 7, Rule 141 of the Rules of
Court, pertaining specifically to the basis for computation of
docket fees for real actions was deleted. Instead, Section 7(1) of
Rule 141, as amended, provides that in cases involving real
property, the FAIR MARKET value of the REAL property in
litigation STATED IN THE CURRENT TAX DECLARATION OR
CURRENT ZONAL VALUATION OF THE BUREAU OF INTERNAL
REVENUE, WHICH IS HIGHER, OR IF THERE IS NONE, THE STATED
VALUE OF THE PROPERTY IN LITIGATION x x x shall be the basis
for the computation of the docket fees. Would such an
amendment have an impact on Gochan,Siapno, and Serrano? The
Court rules in the negative.

A real action indisputably involves real property. The docket

fees for a real action would still be determined in accordance with
the value of the real property involved therein; the only difference
is in what constitutes the acceptable value. In computing the
docket fees for cases involving real properties, the courts, instead
of relying on the assessed or estimated value, would now be
using the fair market value of the real properties (as stated in
the Tax Declaration or the Zonal Valuation of the Bureau of
Internal Revenue, whichever is higher) or, in the absence thereof,
the stated value of the same.

In sum, the Court finds that the true nature of the action
instituted by petitioner against respondents is the recovery of title
to and possession of real property. It is a real action necessarily
involving real property, the docket fees for which must be
computed in accordance with Section 7(1), Rule 141 of the Rules
of Court, as amended. The Court of Appeals, therefore, did not
commit any error in affirming the RTC Orders requiring petitioner
to pay additional docket fees for its Complaint in Civil Case No.
2006-0030.

The Court does not give much credence to the allegation of

petitioner that if the judgment of the Court of Appeals is allowed
to stand and not rectified, it would result in grave injustice and
irreparable injury to petitioner in view of the prohibitive amount
assessed against it. It is a sweeping assertion which lacks
evidentiary support. Undeniably, before the Court can conclude
that the amount of docket fees is indeed prohibitive for a party, it
would have to look into the financial capacity of said party. It
baffles this Court that herein petitioner, having the capacity to
enter
into
multi-million
transactions,
now
stalls
at
paying P720,392.60 additional docket fees so it could champion
before the courts its rights over the disputed real
properties. Moreover, even though the Court exempts individuals,
as indigent or pauper litigants, from paying docket fees, it has
never extended such an exemption to a corporate entity.

WHEREFORE, premises considered, the instant Petition for

Review is hereby DENIED. The Decision, dated 22 November
2006, of the Court of Appeals in CA-G.R. SP No. 94800, which
affirmed the Orders dated 24 March 2006 and 29 March 2006 of
the RTC, Branch 22, of Naga City, in Civil Case No. RTC-20060030, ordering petitioner Ruby Shelter Builders and Realty

Development Corporation to pay additional docket/filing fees,

computed based on Section 7(a), Rule 141 of the Rules of Court,
as amended, is hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.

FRANCISCO I. CHAVEZ and

PEOPLE OF THE PHILIPPINES,
Petitioners,

G.R. No. 125813

Present:
QUISUMBING, J.,
Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

- versus -

COURT OF APPEALS, RAFAEL

BASKIAS and RICARDO MANAPAT,
Respondents.

Promulgated:
February 6, 2007

x----------------------------------------------------------------------------x
DECISION
TINGA, J.:
An Information for Libel dated 26 June 1995 was filed before the Regional
Trial Court (RTC) of Manila against private respondents Rafael Baskinas and
Ricardo Manapat, with petitioner Francisco Chavez as the complainant. The
Information reads in part:

That on or about March 1995, in the City of Manila, Philippines, the said
accused [Baskinas and Manapat] conspiring and confederating with others whose
true names, real identities and present whereabouts are still unknown and helping
one another, with malicious intent of impeaching the honesty, virtue, character
and reputation of one FRANCISCO I. CHAVEZ, former Solicitor General of the
Philippines, and with the evident purpose of injuring and exposing him to public
ridicule, hatred and contempt, did then and there willfully, unlawfully and
maliciously cause to be published in Smart File, a magazine of general
circulation in Manila, and in their respective capacity as Editor-in-Chief and
Author-Reporter, the following, to wit:
xxxx
with which published articles, the said accused meant and intended to convey, as
in fact they did mean and convey false and malicious imputations of a defect, vice
and crime, which insinuations and imputations as the accused well knew are
entirely false and untrue and without the foundation in fact whatsoever, and tend
to impeach, besmirch and destroy the good name, character and reputation of said
FRANCISCO I. CHAVEZ, as in fact, he was exposed to dishonor, discredit,
public hatred, contempt and ridicule.
CONTRARY TO LAW.[1]

Private respondents moved to quash the Information, as well as the

corresponding warrants of arrest subsequently issued. However, these motions
were denied by the RTC of Manila, Branch 16, in an Order dated 31 August 1995.
[2]
Private respondents then filed a Petition for Certiorari with the Court of Appeals,
assailing the 31 August 1995 Order. The petition was granted in a Decision
dated 21 December 1995, hence the present petition.
The crux of the matter revolves around whether the above-quoted
Information is sufficient to sustain a charge for libel, considering the following
requirement imposed by Article 360 of the Revised Penal Code, as amended by
Rep. Act No. 4363:

Article 360. Persons responsible.Any person who shall publish, exhibit

or cause the publication or exhibition of any defamation in writing or by similar
means, shall be responsible for the same.
The author or editor of a book or pamphlet, or the editor or business
manager of a daily newspaper, magazine or serial publication, shall be responsible
for the defamations contained therein to the same extent as if he were the author
thereof.
The criminal action and civil action for damages in cases of written
defamations, as provided for in this chapter shall be filed simultaneously or
separately with the court of first instance of the province or city where the
libelous article is printed and first published or where any of the offended
parties actually resides at the time of the commission of the offense: Provided,
however, That where one of the offended parties is a public officer whose office is
in the City of Manila at the time of the commission of the offense, the action shall
be filed in the Court of First Instance of the City of Manila or of the city or
province where the libelous article is printed and first published, and in case such
public officer does not hold office in the City of Manila, the action shall be filed
in the Court of First Instance of the province or city where he held office at the
time of the commission of the offense or where the libelous article is printed and
first published and in case one of the offended parties is a private individual, the
action shall be filed in the Court of First Instance of the province or city where he
actually resides at the time of the commission of the offense or where the libelous
matter is printed and first published x x x. (Emphasis supplied.)

Referring to the fact that the Information against private respondents states
that the libelous matter was caused to be published in Smart File, a magazine of
general circulation in Manila, the Court of Appeals deemed the cases of Agbayani
v. Sayo[3] and Soriano v. IAC[4] as controlling. Based on the doctrines pronounced in
said cases, the appellate court held that the Information failed to allege where the
written defamation was printed and first published, an allegation sine qua non if
the circumstances as to where the libel was printed and first published is used as
the basis of the venue of the publication. [5] It was observed that venue of libel
cases where the complainant is a private person is either in any of only two places,
namely: (1) where the subject article was printed and first published; and (2) where
complainant of the commission actually resides at the time of the commission of
the offense. The Information, it was noted, did not indicate that the libelous

articles were printed or first published in Manila, or that petitioner resided

in Manila at the time of the publication of the articles.
The Court of Appeals further observed that even during the preliminary
investigation, private respondents had already interposed thatSmart File was
actually printed and first published in the City of Makati, and that the address of
the publisher Animal Farms Publication as indicated in the editorial page of the
publication itself was a post office box with the Makati Central Post Office. Even
as this observation was disputed by petitioner, who insisted the place of private
respondents printing and publishing business was actually in Manila, the Court of
Appeals noted that he should have been alerted enough by private respondents'
adverse insistence and that a due investigation would have inevitably revealed that
private respondents had transferred from their previous Manila address to Makati
by the time the subject articles were published.[6]

Before
this
Court,
petitioner
attacks
the
reliance
placed
on Agbayani and Soriano, primarily by pointing out that in both cases, the
complainants were public officers, and not private officials. Petitioner submits that
the 1965 amendments to Article 360 of the Revised Penal Code which imposed the
present venue requisites were introduced in order to preclude the harassment of
members of the press through libel suits filed in remote and distant places by
public officers. Petitioner also assails the conclusion of the Court of Appeals that
the place of printing and first publication of Smart File was in Makati, saying that
this was derived out of hearsay evidence.
Does the subject information sufficiently vest jurisdiction in the Manila trial
courts to hear the libel charge, in consonance with Article 360 of the Revised Penal
Code? Jurisprudence applying the provision has established that it does not.

Agbayani supplies a comprehensive restatement of the rules of venue in

actions for criminal libel, following the amendment by Rep. Act No. 4363 of the
Revised Penal Code:
Article 360 in its original form provided that the venue of the criminal and
civil actions for written defamations is the province wherein the libel was
published, displayed or exhibited, regardless of the place where the same was
written, printed or composed. Article 360 originally did not specify the public
officers and the courts that may conduct the preliminary investigation of
complaints for libel.
Before article 360 was amended, the rule was that a criminal action for
libel may be instituted in any jurisdiction where the libelous article was published
or circulated, irrespective of where it was written or printed (People v. Borja, 43
Phil. 618). Under that rule, the criminal action is transitory and the injured party
has a choice of venue.

Experience had shown that under that old rule the offended party could
harass the accused in a libel case by laying the venue of the criminal action in a
remote or distant place.
Thus, in connection with an article published in the Daily Mirror and the
Philippine Free Press, Pio Pedrosa, Manuel V. Villareal and Joaquin Roces were
charged with libel in the justice of the peace court of San Fabian, Pangasinan
(Amansec v. De Guzman, 93 Phil. 933).
To forestall such harassment, Republic Act No. 4363 was enacted. It lays
down specific rules as to the venue of the criminal action so as to prevent the
offended party in written defamation cases from inconveniencing the accused by
means of out-of-town libel suits, meaning complaints filed in remote municipal
courts (Explanatory Note for the bill which became Republic Act No. 4363,
Congressional Record of May 20, 1965, pp. 424-5; Time, Inc. v. Reyes, L-28882,
May 31, 1971, 39 SCRA 303, 311).
The rules on venue in article 360 may be restated thus:
1. Whether the offended party is a public official or a private person,
the criminal action may be filed in the Court of First Instance of the
province or city where the libelous article is printed and first
published.

2. If the offended party is a private individual, the criminal action may

also be filed in the Court of First Instance of the province where he
actually resided at the time of the commission of the offense.
3. If the offended party is a public officer whose office is in Manila at the
time of the commission of the offense, the action may be filed in the
Court of First Instance of Manila.

4. If the offended party is a public officer holding office outside

of Manila, the action may be filed in the Court of First Instance of the
province or city where he held office at the time of the commission of
the offense.[7] (Emphasis supplied.)

The rules, as restated in Agbayani, do not lay a distinction that only those
actions for criminal libel lodged by public officers need be filed in the place of
printing and first publication. In fact, the rule is quite clear that such place of
printing and first publication stands as one of only two venues where a private
person may file the complaint for libel, the other venue being the place of
residence of the offended party at the time the offense was committed. The very
language itself of Article 360, as amended, does not support petitioner's thesis that
where the complainant is a private person, a more liberal interpretation of the
phrase printed and first published is warranted than when a public officer is the
offended party. To wit:
Article 360. Persons responsible.x x x The criminal and civil action for
damages in cases of written defamations as provided for in this chapter, shall be
filed simultaneously or separately with the Court of First Instance of the province
or city where the libelous article is printed and first published or where any of the
offended parties actually resides at the time of the commission of the offense.
xxx

Where the law does not distinguish, we should not distinguish.[8]

Petitioner faults the Court of Appeals for relying on Agbayani and Soriano,
two cases wherein the complainant was a public officer. Yet the Court has since
had the opportunity to reiterate the Agbayani doctrine even in cases where the
complainants were private persons.

Most telling of the recent precedents is Agustin v. Pamintuan,[9] which

involved a criminal action for libel filed by a private person, the acting general
manager of the Baguio Country Club, with the RTC of Baguio City. The relevant
portion of the Information is quoted below:
That on or about the 17th day of March 2000, in the City of Baguio,
Philippines, and within the jurisdiction of this Honorable Court, the said accused,
with deliberate intent and malicious intent and evil motive of attacking, injuring
and impeaching the character, honesty, integrity, virtue and reputation of one
Anthony De Leon the acting general manager of the Baguio Country Club, and as
a private citizen of good standing and reputation in the community and with
malicious intent of exposing the (sic) Anthony De Leon to public hatred,
contempt, ridicule, discredit and dishonor, without any justifiable motive, did then
and there willfully, maliciously and criminally prepare or cause to prepare, write
in his column "Cocktails" andpublish in the Philippine Daily Inquirer, a
newspaper of general circulation in the City of Baguio and in the entire
Philippines x x x.[10](Emphasis supplied.)

The phrase the Philippine Daily Inquirer, a newspaper of general circulation

in the City of Baguio and in the entire Philippines bears obvious similarity to the
reference in the Information in this case to the publication involved as Smart
File, a magazine of general circulation in Manila, and both private complainants
in Agustin and the case at bar were private citizens at the time of the filing of the
complaint. Yet the Court in Agustin ruled that the failure to allege that Baguio was
the venue of printing and first publication, or that the complainant therein was a
resident of Baguio, constituted a substantial defect that could not even be cured by
mere amendment. The rules on venue as laid down in Agbayani were restated

in Agustin,[11] retaining no distinction as to venue whether the offended party is a

public official or a private person. In fact, the Court considered the phrase a
newspaper of general circulation in the city of Baguio as so utterly incapable of
establishing Baguio as venue that the bulk of the discussion instead centered on
whether the allegation that the complainant was the acting general manager of the
Baguio Country Club sufficiently established that he was a resident of Baguio City.
On that point, the Court ruled that it did not.
In Macasaet v. People,[12] the complainant was again a private person.[13] The
Information for libel against a gossip columnist and the editors of the tabloid which
published the column was filed with the RTC of Quezon City, but it failed to state
at all where the tabloid was printed and first published, or where the complainant
resided. Even as evidence was presented during trial that complainant was a
resident ofQuezon City, the Court ultimately held that the allegations contained in
the Information [were] utterly insufficient to vest jurisdiction on the RTC of
Quezon City.[14] Again, the rules laid down in Agbayani were cited as controlling.
[15]
The Court further held that the evidence establishing the complainant's place of
residence as Quezon City could not cure the defect of the Information, noting that
it is settled that jurisdiction of a court over a criminal case is determined by the
allegations of the complaint or information.[16]
Macasaet resolutely stated that since the place of printing and first
publication or the place of residence at the time are matters deal[ing] with the
fundamental issue of the court's jurisdiction, Article 360 of the Revised Penal
Code, as amended, mandates that either one of these statements must be alleged in
the information itself and the absence of both from the very face of the information
renders the latter fatally defective.[17] We affirm that proposition, which is fatal to
this petition. There is no question that the Information fails to allege that the City
of Manila was the place where the offending articles were printed and first
published, or that petitioner was a resident of Manila at the time the articles were
published.

Petitioner does submit that there is no need to employ the clause printed and
first published in indicating where the crime of libel was committed, as the term
publish is generic and within the general context of the term 'print' in so far as
the latter term is utilized to refer to the physical act of producing the
publication.[18] Certainly, that argument flies in the face of our holding in Agustin,
which involved a similarly worded Information, and which stands as a precedent
we have no inclination to disturb. Still, a perusal of the Information in this case
reveals that the word published is utilized in the precise context of noting that
the defendants cause[d] to be published in 'Smart File', a magazine of general
circulation in Manila. The Information states that the libelous articles were
published in Smart File, and not that they were published in Manila. The place
Manila is in turn employed to situate where Smart File was in general
circulation, and not where the libel was published or first printed. The fact
that Smart File was in general circulation in Manila does not necessarily establish
that it was published and first printed in Manila, in the same way that while leading
national dailies such as the Philippine Daily Inquirer or thePhilippine Star are in
general circulation in Cebu, it does not mean that these newspapers are published
and first printed in Cebu.
Indeed, if we hold that the Information at hand sufficiently vests jurisdiction
in Manila courts since the publication is in general circulation in Manila, there
would be no impediment to the filing of the libel action in other locations
where Smart File is in general circulation. Using the example of the Inquirer or
the Star, the granting of this petition would allow a resident of Aparri to file a
criminal case for libel against a reporter or editor in Jolo, simply because these
newspapers are in general circulation in Jolo. Such a consequence is precisely what
Rep. Act No. 4363 sought to avoid.
Our ruling in Banal III v. Panganiban[19] might tend to support petitioner's
argument that the phrase printed and first published need not be necessarily

employed in the Information. The Information in that case filed by private persons
before the Makati City RTC read that the libelous matter was found in a newspaper
column of the Philippine Daily Inquirer which is published in English in the City
of Makati, Metro Manila, Philippines and of general circulation in the Philippines
and abroad x x x x.[20] The Court did observe that this information was sufficient
in form[21] as it clearly stated that the newspaper is published in Makati City but
circulated throughout the country, which allegation accordingly vests jurisdiction
over the offense charged in the RTC of Makati City. [22] Yet even notwithstanding
the fact that the information in Banal III did not use the phrase printed and first
published, it still categorically stated, at the very least, that the libelous matter
was published in English in the City of Makati. In contrast, what the Information
at bar categorically states is that the libelous matter was published in Smart File,
not published in Manila.[23] The fact that the present Information further alleges
that Smart File was of general circulation in Manila does not necessarily mean
that the magazine was printed and first published in Manila. In any event, as the
language in the present information hews closer to that in Agustin rather
than Banal III, we find the former as the appropriate precedent to apply in this
case.
For us to grant the present petition, it would be necessary to abandon
the Agbayani rule providing that a private person must file the complaint for libel
either in the place of printing and first publication, or at the complainant's place of
residence. We would also have to abandon the subsequent cases that reiterate this
rule in Agbayani, such as Soriano, Agustin, and Macasaet. There is no convincing
reason to resort to such a radical action. These limitations
imposed on libel actions filed by private persons are hardly onerous,
especially as they still allow such persons to file the civil or criminal complaint in
their respective places of residence, in which situation there is no need to embark
on a quest to determine with precision where the libelous matter was printed and
first published.

If this disquisition impresses an unduly formalistic reading of the Information

at hand, it should be reiterated that the flaws in the Information strike at the very
heart of the jurisdiction of the Manila RTC. It is settled that jurisdiction of a court
over a criminal case is determined by the allegations of the complaint or
information,[24] and the offense must have been committed or any one of its
essential ingredients took place within the territorial jurisdiction of the court.
[25]
Article 360 states, in as unequivocal a manner as possible, that the criminal and
civil action for libel shall be filed with the court of the province or city where the
libelous article is printed and first published, or where any of the offended parties
actually resides at the time of the commission of the offense. If the Information
for libel does not establish with particularity any of these two venue requirements,
the trial court would have no jurisdiction to hear the criminal case.
Another point bears to be added. We are unable to share petitioner's
insistence that since the protection of members of the mass media from frivolous
libel suits filed by public officers in far-flung

places appears to have been a motivating force behind the amendments to Article
360, a more liberal interpretation of the provision should obtain if the complainant
is a private person. Without the venue requirements under Article 360, a private
person induced by a motive to harass could, similarly as a public officer, coerce a
journalist to defend against a libel suit filed in the most remote of places. While
Rep. Act No. 4363 does attribute value to the right to comment on the performance
of public officials of their duties, it actually extends its protection to the right of
any person to free expression, by assuring a reasonable venue requirement even if
the subject of comment is not a public officer. Libel stands as an exception to one
of the most cherished constitutional rights, that of free expression. While libel laws
ensure a modicum of responsibility in one's own speech or expression, a prescribed
legal standard that conveniences the easy proliferation of libel suits fosters an
atmosphere that inhibits the right to speak freely. When such a prescribed standard
is submitted for affirmation before this Court, as is done in this petition, it must
receive the highest possible scrutiny, as it may interfere with the most basic of
democratic rights.
Finally, we decline to resolve the other issues raised in the petition, as the
Information by itself is defective on its face, for the reasons we have stated, that
there is no need to evaluate whether Smart File was actually printed and first
published in Manila or Makati City. The plain fact is that the Information failed to
make the sufficient allegation in that regard, and even any ascertainment that the
articles were printed and first published in Manila does not cure the jurisdictional
defect of the Information.

WHEREFORE, the petition is DENIED.

SPRINGFIELD DEVELOPMENT
CORPORATION, INC. and

G.R. NO. 142628

HEIRS OF PETRA CAPISTRANO

PIIT,
Petitioners,
Present:

- versus -

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

HONORABLE PRESIDING
JUDGE OF REGIONAL TRIAL
COURT OF MISAMIS ORIENTAL,
BRANCH 40, CAGAYAN DE ORO
CITY, DEPARTMENT OF AGRARIAN
REFORM ADJUDICATION BOARD
(DARAB), DAR REGION X DIRECTOR,
ROSALIO GAMULO, FORTUNATO
TELEN, EMERITA OLANGO, THERESA
MONTUERTO, DOMINGO H. CLAPERO,
JOEL U. LIM, JENEMAIR U. POLLEY,
FIDELA U. POLLEY, JESUS BATUTAY,
NICANOR UCAB, EMERIA U. LIM,
EMILITO CLAPERO, ANTONINA RIAS,
AURILLIO ROMULO, ERWIN P.
CLAPERO, EVELITO CULANGO,
VILMA/CRUISINE ALONG, EFREN
EMATA, GREGORIO CABARIBAN,
and SABINA CANTORANA,
Promulgated:
Respondents.
February 6, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DECISION
AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court. The principal issue presented for resolution is whether the

Regional Trial Court (RTC) has jurisdiction to annul final judgment of the
Department of Agrarian Reform Adjudication Board (DARAB).
The antecedent facts:
Petra Capistrano Piit previously owned Lot No. 2291 located
in Cagayan de Oro City which measured 123,408 square meters under Transfer
Certificate of Title No. T-62623. Springfield Development Corporation, Inc.
(Springfield) bought Lot No. 2291-C with an area of 68,732 square meters, and Lot
No. 2291-D with an area of 49,778 square meters. [1] Springfield developed these
properties into a subdivision project called Mega Heights Subdivision.[2]
On May 4, 1990, the Department of Agrarian Reform (DAR), through its
Municipal Agrarian Reform Officer, issued a Notice of Coverage, [3] placing the
property under the coverage of Republic Act (R.A.) No. 6657 or the
Comprehensive Agrarian Reform Law of 1988. There being an opposition from the
heirs of Petra Piit, the case was docketed as DARAB Case No. X-305. On August
27, 1991, DARAB Provincial Adjudicator Abeto A. Salcedo, Jr. rendered a
decision declaring the nature of the property as residential and not suitable for
agriculture.[4] The Regional Director filed a notice of appeal, which the Provincial
Adjudicator disallowed for being pro forma and frivolous. [5] The decision became
final and executory[6] and Springfield proceeded to develop the property.[7]
The DAR Regional Director then filed a petition for relief from judgment of
the DARAB Decision, docketed as DARAB Case No. 0555. In its Decision
dated October 5, 1995, the DARAB granted the petition and gave due course to the
Notice of Coverage. It also directed the Municipal Agrarian Reform Office to
proceed with the documentation, acquisition, and distribution of the property to the
true and lawful beneficiaries.[8]

The DARAB also issued an Order dated May 22, 1997, ordering the heirs
of Piit and Springfield to pay the farmer-beneficiaries the amount of Twelve
Million, Three Hundred Forty Thousand, Eight Hundred Pesos (P12,340,800.00),
corresponding to the value of the property since the property has already been
developed into a subdivision.
On June 13, 1997, Springfield and the heirs of Piit (petitioners) filed with the
RTC of Cagayan de Oro City, Branch 40, a petition for annulment of the DARAB
Decision dated October 5, 1995 and all its subsequent proceedings. Petitioners
contend that the DARAB decision was rendered without affording petitioners any
notice and hearing.[9]
On motion filed by the farmer-beneficiaries, the RTC issued an Order
dated June 25, 1997, dismissing the case for lack of jurisdiction.[10]
On July 2, 1997, petitioners filed with the Court of Appeals (CA) a special
civil action for certiorari, mandamus, and prohibition with prayer for the issuance
of writ of preliminary injunction and/or temporary restraining order, docketed as
CA-G.R. SP No. 44563.[11] Petitioners alleged that the RTC committed grave abuse
of discretion when it ruled that the annulment of judgment filed before it is actually
an action for certiorari in a different color. According to petitioners, what it sought
before the RTC is an annulment of the DARAB Decision and not certiorari, as the
DARAB Decision is void ab initio for having been rendered without due process
of law.[12]
In the assailed Decision[13] dated July 16, 1998, the CA dismissed the petition
for lack of merit, ruling that the RTC does not have jurisdiction to annul the
DARAB Decision because it is a co-equal body.[14]

However, on January 12, 1999, the CA ordered the elevation of the DARAB
records before it, declaring that it overlooked the fact that petitioners likewise
applied for a writ of prohibition against the enforcement of the DARAB decision
which they claim to be patently void. [15] Forwarded to the CA were the records of
the original case filed with the DARAB-Region X, and it appearing that the
petition for relief from judgment and its pertinent records were forwarded to the
DARAB Central Office, the CA issued another Resolution on December 20, 1999,
[16]
requiring the DARAB Central Office to forward the records of the case. But
after receipt of the records, the CA simply denied petitioners motion for
reconsideration per Resolution[17] dated February 23, 2000 without specifically
resolving the issues raised concerning the prayer for a writ of prohibition.
Hence, the present petition on the following grounds:
I
THE COURT OF APPEALS COMMITTED A CLEAR ERROR OF
LAW IN APPLYING THE PRINCIPLE OF JUDICIAL STABILITY TO
JUSTIFY ITS CONCLUSION DIVESTING THE REGIONAL TRIAL
COURT OF ITS JURISDICTION VESTED BY LAW OVER CASES
WHERE THE EXCLUSIVE JURISDICTION WAS NOT EXPRESSLY
GRANTED TO ANY OTHER COURTS [SIC] OR TRIBUNAL, IN
EFFECT, MODIFYING THE APPLICABLE LAW ON THE MATTER.
II
THE COURT OF APPEALS IRREGULARLY DISMISSED
PETITIONERS MOTION FOR RECONSIDERATION AFTER IT
HAD RESOLVED TO ENTERTAIN PETITIONERS PETITION FOR
PROHIBITION AND TO REVIEW THE DARAB PROCEEDINGS,
THEREBY DEPARTING FROM THE USUAL COURSE OF
JUDICIAL PROCEEDINGS.
III
THE HONORABLE SUPREME COURT, BEING THE HIGHEST
TEMPLE OF RIGHTS, AND TO AVOID SERIOUS MISCARRIAGE

OF JUSTICE AND NEEDLESS DELAYS, IS MOST RESPECTFULLY

URGED TO TAKE COGNIZANCE OF THE PETITION FILED IN
CA-G.R. SP No. 44563 IN THE EXERCISE OF ITS CONCURRENT
JURISDICTION, AS IF THE PETITION WAS ORIGINALLY
LODGED BEFORE IT.[18]

Petitioners argue that under Batas Pambansa (B.P.) Blg. 129, there is no
provision that vests with the CA jurisdiction over actions for annulment of
DARAB judgments. Petitioners, however, contend that the RTC may take
cognizance of the annulment case since Section 19 of B.P. Blg. 129 vests the RTC
with general jurisdiction and an action for annulment is covered under such general
jurisdiction. According to petitioners, this is but a logical consequence of the fact
that no other courts were expressly given the jurisdiction over such
actions.[19] Petitioners further argue that the CA was in error when it summarily
ignored their application for a writ of prohibition, as it was necessary to restrain the
DARAB from enforcing its void decision; and even if the DARAB decision was
valid, the writ of prohibition could have enjoined the execution of the DARAB
decision since there have been changes which will make the execution unjust and
inequitable.
In their Joint-Comments, the farmer-beneficiaries and the DARAB
(respondents) refute petitioners allegation that they were not afforded due process
in the DARAB proceedings, stating that petitioners were impleaded as a party
thereto, and in fact, they attended some of the hearings although their counsel was
absent. Respondents also adopt the CAs ruling that the RTC is not vested with any
jurisdiction to annul the DARAB decision.
As stated at the outset, the main issue in this case is whether the RTC has
jurisdiction to annul a final judgment of the DARAB.
Note must be made that the petition for annulment of the DARAB decision
was filed with the RTC on June 13, 1997, before the advent of the 1997 Rules of

Civil Procedure, which took effect on July 1, 1997. Thus, the applicable law is
B.P. Blg. 129 or the Judiciary Reorganization Act of 1980, enacted on August 10,
1981.
It is also worthy of note that before the effectivity of B.P. Blg. 129, a court
of first instance has the authority to annul a final andexecutory judgment rendered
by another court of first instance or by another branch of the same court. This was
the Courts ruling in Dulapv. Court of Appeals.[20] Yet, in subsequent cases,[21] the
Court held that the better policy, as a matter of comity or courteous interaction
between courts of first instance and the branches thereof, is for the annulment
cases to be tried by the same court or branch which heard the main action.
The foregoing doctrines were modified in Ngo Bun Tiong v. Sayo,[22] where
the Court expressed that pursuant to the policy of judicial stability, the doctrine of
non-interference between concurrent and coordinate courts should be regarded as
highly important in the administration of justice whereby the judgment of a court
of competent jurisdiction may not be opened, modified or vacated by any court of
concurrent jurisdiction.
With the introduction of B.P. Blg. 129,[23] the rule on annulment of
judgments was specifically provided in Section 9(2), which vested in the then
Intermediate Appellate Court (now the CA) the exclusive original jurisdiction over
actions for annulment of judgments of RTCs. Sec. 9(3) of B.P. Blg. 129 also vested
the CA with exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders, or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the
provisions of this Act, and of sub-paragraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of
1948. As provided in paragraph 16 of the Interim Rules and Guidelines
implementing B.P. Blg. 129, the quasi-judicial bodies whose decisions are

exclusively appealable to the CA are those, which under the law, R.A. No. 5434,
[24]
or its enabling acts, are specifically appealable to the CA.
Significantly, B.P. Blg. 129 does not specifically provide for any power of
the RTC to annul judgments of quasi-judicial bodies. However, in BF Northwest
Homeowners Association, Inc. v. Intermediate Appellate Court,[25] the Court ruled
that the RTCs have jurisdiction over actions for annulment of the decisions of the
National Water Resources Council, which is a quasi-judicial body ranked with
inferior courts, pursuant to its original jurisdiction to issue writs of certiorari,
prohibition, and mandamus, under Sec. 21(1) of B.P. Blg. 129, in relation to acts or
omissions of an inferior court. This led to the conclusion that despite the absence
of any provision in B.P. Blg. 129, the RTC had the power to entertain petitions for
annulment of judgments of inferior courts and administrative or quasi-judicial
bodies of equal ranking. This is also in harmony with the pre-B.P. Blg. 129
rulings of the Court recognizing the power of a trial court (court of first instance)
to annul final judgments.[26] Hence, while it is true, as petitioners contend, that the
RTC had the authority to annul final judgments, such authority pertained only to
final judgments rendered by inferior courts and quasi-judicial bodies of equal
ranking with such inferior courts.
The foregoing statements beg the next question, i.e., whether the DARAB is
a quasi-judicial body with the rank of an inferior courtsuch that the RTC may
take cognizance of an action for the annulments of its judgments. The answer is
no.
The DARAB is a quasi-judicial body created by Executive Order Nos. 229
and 129-A. R.A. No. 6657 delineated its adjudicatory powers and functions. The
DARAB Revised Rules of Procedure adopted on December 26,
1988[27] specifically provides for the manner of judicial review of its decisions,
orders, rulings, or awards. Rule XIV, Section 1 states:

SECTION 1. Certiorari to the Court of Appeals. Any decision,

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

Further, the prevailing 1997 Rules of Civil Procedure, as amended, expressly

provides for an appeal from the DARAB decisions to the CA.[28]
The rule is that where legislation provides for an appeal from decisions of
certain administrative bodies to the CA, it means that such bodies are co-equal
with the RTC, in terms of rank and stature, and logically, beyond the control of the
latter.[29]
Given that DARAB decisions are appealable to the CA, the inevitable
conclusion is that the DARAB is a co-equal body with the RTC and its
decisions are beyond the RTCs control. The CA was therefore correct in
sustaining the RTCs dismissal of the petition for annulment of the DARAB
Decision dated October 5, 1995, as the RTC does not have any jurisdiction to
entertain the same.
This brings to fore the issue of whether the petition for annulment of the
DARAB judgment could be brought to the CA. As previously noted, Section 9(2)
of B.P. Blg. 129 vested in the CA the exclusive original jurisdiction over actions
for annulment of judgments, but only those rendered by the RTCs. It does not
expressly give the CA the power to annul judgments of quasi-judicial
bodies. Thus, in Elcee Farms, Inc. v. Semillano,[30] the Court affirmed the ruling of

the CA that it has no jurisdiction to entertain a petition for annulment of a final

andexecutory judgment of the NLRC, citing Section 9 of B.P. Blg. 129, as
amended, which only vests in the CA exclusive jurisdiction over actions for
annulment of judgments of Regional Trial Courts. This was reiterated
in Galang v. Court of Appeals,[31] where the Court ruled that that the CA is without
jurisdiction to entertain a petition for annulment of judgment of a final decision of
the Securities and Exchange Commission.
Recent rulings on similar cases involving annulments of judgments of quasijudicial bodies are also quite instructive on this matter.
In Cole v. Court of Appeals,[32] involving an annulment of the judgment of
the HLURB Arbiter and the Office of the President (OP), filed with the CA, the
Court stated that, (U)nder Rule 47 of the Rules of Court, the remedy of annulment
of judgment is confined to decisions of the Regional Trial Court on the ground of
extrinsic fraud and lack of jurisdiction x x x. The Court further ruled, viz.:
Although the grounds set forth in the petition for annulment of
judgment are fraud and lack of jurisdiction, said petition cannot prosper
for the simple reason that the decision sought to be annulled was not
rendered by the Regional Trial Court but by an administrative
agency (HLU Arbiter and Office of the President), hence, not within
the jurisdiction of the Court of Appeals. There is no such remedy as
annulment of judgment of the HLURB or the Office of the
President. Assuming arguendo that the annulment petition can be
treated as a petition for review under Rule 43 of the 1997 Rules of
Civil Procedure, the same should have been dismissed by the Court of
Appeals, because no error of judgment was imputed to the HLURB and
the Office of the President. Fraud and lack of jurisdiction are beyond the
province of petitions under Rule 43 of the Rules of Court, as it covers
only errors of judgment. A petition for annulment of judgment is an
initiatory remedy, hence no error of judgment can be the subject
thereof. Besides, the Arbiter and the Office of the President indisputably
have jurisdiction over the cases brought before them in line with our
ruling in Francisco Sycip, Jr. vs. Court of Appeals, promulgated on

March 17, 2000, where the aggrieved townhouse buyers may seek
protection from the HLURB under Presidential Decree No. 957,
otherwise known as Subdivision and Condominium Buyers Protective
Decree.[33] (Emphasis supplied)

In Macalalag v. Ombudsman,[34] the Court ruled that Rule 47 of the 1997

Rules of Civil Procedure on annulment of judgments or final orders and resolutions
covers annulment by the Court of Appeals of judgments or final orders and
resolutions in civil actions of Regional Trial Courts for which the ordinary
remedies of new trial, appeal, petition for relief or other appropriate remedies
could no longer be availed of through no fault of the petitioner. Thus, the Court
concluded that judgments or final orders and resolutions of the Ombudsman in
administrative cases cannot be annulled by the CA, more so, since The
Ombudsman Act specifically deals with the remedy of an aggrieved party from
orders, directives and decisions of the Ombudsman in administrative disciplinary
cases only, and the right to appeal is not to be considered granted to parties
aggrieved by orders and decisions of the Ombudsman in criminal or nonadministrative cases.
While these cases involve annulments of judgments under the 1997 Rules of
Civil Procedure, as amended, still, they still find application in the present case, as
the provisions of B.P. Blg. 129 and the 1997 Rules of Civil Procedure, as amended,
on annulment of judgments are identical.
Consequently, the silence of B.P. Blg. 129 on the jurisdiction of the CA to
annul judgments or final orders and resolutions of quasi-judicial bodies like the
DARAB indicates its lack of such authority.
Further, petitioners are also asking the Court to take cognizance of their
prayer for the issuance of a writ of prohibition, which they claim was not acted
upon by the CA, citing the Courts action in Fortich v. Corona[35] where the Court

took cognizance of the petition previously filed with the CA due to compelling
reasons. The Court is not persuaded to do so.
Fortich involved
a
144-hectare
land
located
at
San
Vicente, Sumilao, Bukidnon, owned by the Norberto Quisumbing, Sr. Management
and Development Corporation (NQSRMDC), which was leased as a pineapple
plantation to Del Monte Philippines, Inc. for a period of 10 years. During the
existence of the lease, the DAR placed the entire 144-hectare property under
compulsory acquisition and assessed the land value at P2.38 million. When the
NQSRMDC/BAIDA (Bukidnon Agro-Industrial Development Association) filed
an application for conversion due to the passage of Resolution No. 6 by the
Provincial Development Council of Bukidnon and Ordinance No. 24 by
theSangguniang Bayan of Sumilao, Bukidnon, reclassifying the area from
agricultural to industrial/institutional, the same was disapproved by the DAR
Secretary and instead, the property was placed under the compulsory coverage of
Comprehensive Agrarian Reform Program for distribution to all qualified
beneficiaries. This prompted Governor Carlos O. Fortich of Bukidnon to file an
appeal with the OP, while NQSRMDC filed with the CA a petition for certiorari,
and prohibition with preliminary injunction.
The OP then issued a Decision dated March 29, 1996 reversing the DAR
Secretarys decision and approving the application for conversion. Executive
Secretary Ruben D. Torres denied the DARs motion for reconsideration for having
been filed beyond thereglementary period of 15 days, and it was also declared that
the OP Decision dated March 29, 1996 had already become final and executory.
Because of this, the farmer-beneficiaries staged a hunger strike on October
9, 1997, protesting the OPs decision. In order to resolve the strike, the OP issued
a so-called Win/Win resolution on November 7, 1997, modifying the decision in
that NQSRMDCs application for conversion is approved only with respect to the

approximately 44-hectare portion of the land adjacent to the highway, as

recommended by the Department of Agriculture, while the remaining
approximately 100 hectares traversed by an irrigation canal and found to be
suitable for agriculture shall be distributed to qualified farmer-beneficiaries.
A petition for certiorari and prohibition under Rule 65 of the Revised Rules
of Court[36] was then filed with the Court, which was contested by the Office of the
Solicitor General on the ground that the proper remedy should have been to file a
petition for review directly with the CA in accordance with Rule 43 of the Revised
Rules of Court.
In resolving the issue, the Court recognized the rule that the Supreme Court,
CA and RTC have original concurrent jurisdiction to issue a writ of certiorari,
prohibition, and mandamus. However, due to compelling reasons and in the
interest of speedy justice, the Court resolved to take primary jurisdiction over the
petition in the interest of speedy justice, after which the Court nullified the act of
the OP in re-opening the case and substantially modifying its March 29, 1996
Decision which had already become final and executory, as it was in gross
disregard of the rules and basic legal precept that accord finality to administrative
determinations.
It must be stressed at this point that the Court, as a rule, will not entertain
direct resort to it unless the redress desired cannot be obtained in the appropriate
courts, and exceptional and compelling circumstances, such as cases of national
interest and of serious implications, justify the availment of the extraordinary
remedy of writ of certiorari, prohibition, or mandamus calling for the exercise of
its primary jurisdiction.[37] The Court finds no compelling circumstances in this
case to warrant a relaxation of the foregoing rule. TheFortich case is not
analogous with the present case such that the Court is not bound to abandon all

rules, take primary jurisdiction, and resolve the merits of petitioners' application
for a writ of prohibition.
In the present case, the assailed DARAB Decision dated October 5, 1995
granting the petition for relief from judgment and giving due course to the Notice
of Coverage was made pursuant to a petition for relief from judgment filed by the
DAR, albeit petitioners are contesting the validity of the proceedings held
thereon. On the other hand, in Fortich, the OPs Win/Win resolution
dated November 7, 1997 was made motu proprio, as a result of the hunger strike
staged by the farmer-beneficiaries.
Further, the OPs Win/Win Resolution dated November 7, 1997 in
the Fortich case is a patently void judgment since it was evident that there was
already an existing final and executory OP Decision dated March 29, 1996. In this
case, the assailed DARAB Decision datedOctober 5, 1995 appears to be regular on
its face, and for its alleged nullity to be resolved, the Court must delve into the
records of the case in order to determine the validity of petitioners argument of
lack of due process, absent notice and hearing.
Moreover, the principle of hierarchy of courts applies generally to cases
involving factual questions. As it is not a trier of facts, the Court cannot entertain
cases involving factual issues.[38] The question of whether the DARAB Decision
dated October 5, 1995 is null and void and enforceable against petitioners for
having been rendered without affording petitioners due process is a factual
question which requires a review of the records of this case for it to be judiciously
resolved.
The Court notes that the CA, indeed, failed to resolve petitioners prayer for
the issuance of the writ of prohibition, which, significantly, focuses on the alleged
nullity of the DARAB Decision dated October 5, 1995. On this score, the CA

found that the application for the issuance of the writ of prohibition was actually a
collateral attack on the validity of the DARAB decision. But, a final
and executoryjudgment may be set aside in three ways;[39] and a collateral attack,
whereby in an action to obtain a different relief, an attack on the judgment is
nevertheless made as an incident thereof,[40] is one of these. This tenet is based
upon a court's inherent authority to expunge void acts from its records. [41] Despite
recognizing the need to resolve petitioners application for the writ of prohibition
in its Resolution dated January 12, 1999, the CA nonetheless summarily denied
petitioners motion for reconsideration in its Resolution dated February 23, 2000,
[42]
leaving the matter hanging and unresolved.
At first, the Court considered resolving the merits of petitioners' motion for
reconsideration concerning their application for a writ of prohibition against
enforcing the DARAB Decision dated October 5, 1995. Thus, in a Resolution
dated June 5, 2006, the Court directed the CA to transmit the records of DARAB
Case No. 0555, which was previously required by the CA to be forwarded to it per
Resolution datedDecember 20, 1999.[43] However, as of even date, the CA has not
complied with the Court's Resolution. Withal, upon re-examination of the issues
involved in this case, the Court deems it more judicious to remand this case to the
CA for immediate resolution of petitioners' motion for reconsideration, re: their
application for the writ of prohibition.
Moreover, the radical conflict in the findings of the Provincial Adjudicator
and the DARAB as regards the nature of the subject property necessitates a review
of the present case. In this regard, the CA is in a better position to fully adjudicate
the case for it can delve into the records to determine the probative value of the
evidence supporting the findings of the Provincial Adjudicator and of the
DARAB. In addition, the CA is empowered by its internal rules to require parties
to submit additional documents, as it may find necessary to promote the ends of
substantial justice, and further order the transmittal of the proper records for it to

fully adjudicate the case. After all, it is an avowed policy of the courts that cases
should be determined on the merits, after full opportunity to all parties for
ventilation of their causes and defenses, rather than on technicality or some
procedural imperfections. In that way, the ends of justice would be served better.
[44]

WHEREFORE, the petition is PARTLY GRANTED. This case

is REMANDED to the Court of Appeals which is DIRECTED to resolve
petitioners prayer for the issuance of the writ of prohibition in their Motion for
Reconsideration.
Upon finality of this Decision, let the records be remanded forthwith to the
Court of Appeals.
No pronouncement as to costs.
SO ORDERED.

TILIA STA. ANA,

Petitioner,

G.R. No. 164340

Present:

- versus -

SPOUSES LEON G. CARPO and

AURORA CARPO,
Respondents.

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
Promulgated:
November 28, 2008

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of
the Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA)
Decision[2] dated March 5, 2004 which reversed and set aside the Decision[3] of the
Department of Agrarian Reform Adjudication Board (DARAB) dated June 24,
1998 and reinstated the Decision[4] of the Provincial Agrarian Reform Adjudicator
(PARAD) of Laguna dated October 12, 1993.

The Facts
Respondent Leon Carpo[5] (Leon) and his brother Francisco G. Carpo are the
registered co-owners of a parcel of land designated as Lot No. 2175 of the Santa
Rosa Estate Subdivision, situated at Sta. Rosa, Laguna, covered by Transfer
Certificate of Title (TCT) No. T-17272 [6] of the Register of Deeds of Laguna, with
an area of 91,337 square meters, more or less. A portion thereof, consisting of 3.5
hectares, pertained to Leon and his wife, respondent Aurora Carpo. It was devoted
to rice and corn production (subject land) and was tenanted by one Domingo
Pastolero (Domingo), husband of Adoracion Pastolero (Adoracion). [7] When
Domingo passed away, Adoracion together with her son Elpidio Pastolero,
assumed the tenancy rights of Domingo over the subject land.
However, on December 29, 1983, Adoracion, by executing a
notarized Pinanumpaang Salaysay[8] with the conformity of Leon, and for a
consideration of P72,500.00, transferred her rights in favor of petitioner Otilia Sta.
Ana[9] (petitioner) who, together with her husband, Marciano de la Cruz
(Marciano), became the new tenants of the subject land.
At the outset, the parties had a harmonious tenancy relationship.
Unfortunately, circumstances transpired which abraded the relationship. The
Department of Agrarian Reform (DAR) mediated in order to amicably settle the
controversy, but no settlement was reached by the parties. Thus, the instant case.
[10]

In their Complaint for Ejectment due to Non-Payment of Lease

Rentals[11] dated December 1, 1989, respondents alleged that it was their agreement
with petitioner and Marciano to increase the existing rentals from 36 cavans to 45
cavans, and that, if respondents wanted to repossess the property, they only had to
pay the petitioner the amount of P72,500.00, the same amount paid by the latter to
Adoracion. Respondents further averred that despite repeated demands, petitioner
refused to pay the actual rentals from July 1985 to September 1989, in violation of
Presidential Decree (P.D.) No. 817; and that the subject land had been declared,
upon the recommendation of the Human Settlements Committee, suitable for
commercial and industrial purposes, per Zoning Ordinance of 1981 of the

Municipality of Sta. Rosa, Laguna. Respondents prayed that petitioner be ejected

from the subject land and be directed to pay P75,016.00 as unpaid rentals.
In their Answer[12] dated January 26, 1990, petitioner and Marciano denied
that there was an agreement to increase the existing rental which was already fixed
at 36 cavans of palay, once or twice a year depending on the availability of
irrigation water; that neither was there an agreement as to the future surrender of
the land in favor of the respondents; that they did not refuse to pay the rentals
because they even sent verbal and written notices to the respondents, advising
them to accept the same; and that in view of the latters failure to respond,
petitioner and Marciano were compelled to sell the harvest and to deposit the
proceeds thereof in Savings Account No. 9166 with the Universal Savings Bank at
Sta. Rosa, Laguna under the names of Leon and Marciano. As their special
affirmative defense, petitioner and Marciano claimed that Marciano is a farmerbeneficiary of the subject land pursuant to P.D. 27. Petitioner and Marciano
prayed for the outright dismissal of the complaint and for the declaration of
Marciano as full owner of the subject land.
Thereafter, trial on the merits ensued.
The PARADs Ruling
On October 12, 1993, the PARAD ruled that petitioner and Marciano
deliberately defaulted in the payment of the rentals due the respondents. The
PARAD found that the deposit made with Republic Planters Bank was actually in
the names of petitioner and Marciano, hence, personal to them. The PARAD also
found that it was only during the hearing that petitioner and Marciano deposited
the amount ofP40,000.00 with the Universal Savings Bank for the unpaid rentals.
As such the PARAD considered the deposits as late payments and as implied
admission that indeed petitioner and Marciano did not pay the past rentals when
they fell due. The PARAD further held and disposed thus:
The intent of the defendant to subject the said area under
PD 27 should pass the criteria set. Foremost is the determination of the
aggregate riceland of plaintiff. He must have more than seven (7)
hectares of land principally devoted to the planting of palay. Area over

seven (7) hectares shall be the one to be covered by PD 27 on Operation

Land Transfer (OLT). In the case at bar, defendants failed to prove that
plaintiff has more than the required riceland. In fact the subject 3.5
hectares are jointly owned by two. Hence, coverage for OLT is remote.
Defendant claimed that plaintiff is covered by LOI 474,
and therefore, he is zero retention of area. In reference to said law,
wherein it provides landowner with other agricultural land of more than
7 hectares, or have other industrial lands from where he and his family
derived resources, then, the owner cannot retain any riceland. However,
this is not applicable in the instant case, as the defendant failed to prove
that plaintiff has other source of income from where they will derive
their sustenance.
WHEREFORE, in view of the foregoing, Judgment is hereby
rendered:
a) Ordering the ejectment of defendant from the subject
landholding for non-payment of lease rentals;
b) Ordering the defendant Marciano de la Cruz to surrender the
possession and cultivation of the subject land to herein
plaintiffs;
c) Ordering the defendant to pay as actual damage the amount
of P75,016.00 corresponding to the unpaid rentals from July
18, 1985 up to September 16, 1989[; and]
d) [D]eclaring the subject land not covered by Presidential
Decree No. 27, Republic Act [No.] 6657, and Executive Order
No. 228.
SO ORDERED.

Petitioner and Marciano sought relief from the DARAB.[13]

The DARABs Ruling
On June 24, 1998, the DARAB held:

It is a fundamental rule in this jurisdiction that for non-payment

of lease rentals to warrant the dispossession and ejectment of a tenant,
the same must be made in a willful and deliberate manner (Cabero v.
Caturna, et al., CA-G.R. 05886-R, March 10, 1977). For a valid ouster
or ejectment of a farmer-tenant, the willful and deliberate intent not to
pay lease rentals and/or share can be ascertained when there is a
determination of will not to do a certain act.
Considering the circumstances obtaining in this case, it cannot be
concluded that the defendants-appellants deliberately failed or refused to
pay their lease rentals. It was not the fault of defendants-appellants
herein that the rentals did not reach the plaintiffs-appellees because the
latter choose to lend a deaf ear to the notices sent to them. Clearly,
therefore plaintiffs-appellees failed to show by substantial evidence that
the defendants-appellants deliberately failed or refused to pay their lease
rentals. It has been held that the mere failure of a tenant to pay the
landowners share does not necessarily give the latter the right to eject
the former when there is lack of deliberate intent on the part of the
tenant to pay (Roxas y Cia v. Cabatuando, 1 SCRA 1106).

Thus:
WHEREFORE, finding the appeal interposed by the
defendants-appellants to be meritorious, the Decision appealed from is
herebySET ASIDE and another judgment issued as follows:
1. Enjoining plaintiffs-appellees to respect the peaceful
possession and cultivation of the land in suit by the defendantsappellants; and
2. Directing the MARO of Sta. Rosa, Laguna to assist the parties
in the proper accounting of lease rentals to be paid by the
defendants-appellants to the plaintiffs-appellees.
No costs.
SO ORDERED.
Aggrieved, respondents appealed to the CA. On April 16, 2003, Marciano
passed away.[14]

The CAs Ruling

On March 5, 2004, the CA affirmed the factual findings of the PARAD that
petitioner and Marciano failed to pay the rentals and that there was no valid tender
of payment. The CA added that this failure to pay was tainted with bad faith and
deliberate intent. Thus, petitioner and Marciano did not legally comply with their
duties as tenants. Moreover, the CA held that the subject land was not covered by
P.D. 27, Republic Act (R.A.) No. 6657 and Executive Order (E.O.) No. 228, since
the same had become a residential, commercial and industrial land, to wit:
In the case at bar, We opted to give more weight to the petitioners
contention that the subject landholding is for residential, commercial,
and industrial purposes as declared by zoning ordinance of 1981 of the
town of Sta. Rosa, Laguna upon recommendation of the Human
Settlement Committee xxx. The vicinity map of the subject
landholding shows that it is almost beside Nissan Motors Technopa[r]k
and surrounded by the South Expressway and several companies such as
the Coca-Cola Bottlers Philippines, Inc. and Toyota Motors Philippines
along the Pulong Santa Cruz,National Road. The vicinity map shows
therefore that the subject landholding is a residential, commercial, and
industrial area exempted from the coverage of P.D. No. 27, Republic
Act. No. 6657 and Executive Order No. 228.

The CA ruled in favor of the respondents in this wise:

WHEREFORE, premises considered and pursuant to
applicable law and jurisprudence on the matter, the present Petition is
herebyGRANTED. Accordingly, the decision of the Department of
Agrarian Reform Adjudication Board-Central Office, Elliptical Road,
Diliman, Quezon City (promulgated on June 24, 1998) is
hereby REVERSED and SET
ASIDE and
a
new
one
entered- REINSTATING the decision of the Department of Agrarian
Reform Adjudication Board-Region IV, Office of the Provincial
Adjudicator, Sta. Cruz, Laguna (dated October 12, 1993). No
pronouncement as to costs.
SO ORDERED.

Petitioner filed a Motion for Reconsideration [15] assailing the aforementioned

Decision which the CA, however, denied in its Resolution[16] dated June 28, 2004.
Hence, this Petition based on the following grounds:
THE HONORABLE COURT OF APPEALS SERIOUSLY ERR
ED IN ARROGATING UPON ITSELF WHAT IS OTHERWISE D
ARS POWER TO DETERMINE WHETHER THE
SUBJECT
AGRICULTURAL
LAND HAS
BECOMERESIDENTIAL/INDUSTRIAL/COMMERCIAL.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED
WHEN IT EQUATED LAND RECLASSIFICATION WITH LAND
CONVERSION FOR PURPOSES OF DETERMINING THE
PROPRIETY OF EJECTMENT OF AN AGRICULTURAL LESSEE.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED
WHEN IT FAILED TO NOTE THAT AN EJECTMENT SUIT BASED
ON A CLAIM OF NON-PAYMENT OF LEASE RENTAL
IS DIAMETRICALLY ANTITHETICAL TO THE CLAIM THAT
THE SUBJECT LAND IS NO LONGER AGRICULTURAL BUT A
RESIDENTIAL, COMMERCIAL AND INDUSTRIAL AREA
EXEMPTED FROM THE COVERAGE OF P.D. NO. 27, REPUBLIC
ACT NO. 6657 AND EXECUTIVE ORDER NO. 228.
THE DECISION DATED MARCH 5, 2004--INSOFAR AS IT
ADOPTED THE FINDING OF DARAB-REGION IV, OFFICE OF
THE PROVINCIAL ADJUDICATOR, STA. CRUZ, LAGUNA
INSTEAD OF THAT OF THE DARAB-CENTRAL--IS VIOLATIVE
OF SEC. 14, ART. VIII OF THE 1987 CONSTITUTION FOR HAVING
DECIDED WITHOUT EXPRESSING THEREIN CLEARLY AND
DISTINCTLY THE FACTS AND THE LAW ON WHICH SAID
DECISION IS BASED.
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN
RESORTING TO SURMISES AND CONJECTURES WHEN IT
RULED THAT THE FAILURE OF THE HEREIN PETITIONER AND
HER DECEASED HUSBAND TO DELIVER THE LEASE RENTALS
TO HEREIN RESPONDENTS, WAS DONE SO IN BAD FAITH AND
WITH DELIBERATE INTENT TO DEPRIVE THE LAND OWNERS
THEREOF.

Petitioner asseverates that there is no evidence to support respondents' claim

that the failure to pay the lease rentals was tainted with malevolence, as the records
are replete with acts indicative of good faith on the part of the petitioner and
Marciano and bad faith on the part of respondents.
Moreover, petitioner claimed that the power to determine whether or not the
subject land is non-agricultural, hence, exempt from the coverage of the
Comprehensive Agrarian Reform Law (CARL), lies with the DAR, and not with
the courts; that mere reclassification by way of a zoning ordinance does not
warrant the dispossession of a tenant but conversion does, and entitles the tenant to
payment of disturbance compensation; the legal concepts of reclassification and
conversion are separate and distinct from each other; that respondents' complaint
before the PARAD alleged and established the fact that the subject land is a
riceland, therefore, agricultural; that the CA failed to explain why it upheld the
findings of the PARAD on the issue of non-payment of lease rentals; and that
though the issue of non-payment of lease rentals is a question of fact, due to the
conflict of the factual findings of the PARAD and CA with those of the DARAB,
petitioner asks that this Court review the evidence on record, and pursuant to the
CA decision in Cabero v. Caturna, et al.,[17] rule on whether petitioner willfully and
deliberately refused to pay lease rentals as to warrant her dispossession from the
subject land.[18]
On the other hand, respondents aver that petitioner and her family are
wealthy, as they own numerous properties in Sta. Rosa, Laguna including a
luxurious house;[19] that, as such, petitioner cannot be considered as a landless
tenant deserving the protection of agrarian reform laws; that the DARAB negated
the
highest
degree
of
respect
the
factual
findings
of
the
PARAD deserved; that petitioner's claims that Marciano repeatedly made

verbal and written notices[20] for Leon to accept their lease rentals were fraudulent
designs to disguise the deliberate intent of petitioner not to pay the lease rentals;
that when Leon went to petitioner's residence, petitioner did not pay
the P10,000.00 due as lease rentals; that during the hearing before the PARAD,
when respondents' counsel requested that they be furnished a bank certificate as to
the existence of said bank deposits in Republic Planters Bank as of April 20, 1987
and October 1, 1987, petitioner herself commented, Nagdeposito ho talaga kami
sa pangalan namin;[21] that the statement of petitioner is an admission that bank
deposits, if any, were made, not in the name of Leon as contained in the written
notices, but rather in the names of petitioner and Marciano; that such certificate
was not introduced in evidence and that upon inquiry, said deposits do not actually
exist; that per recent inquiry, the bank deposit in Universal Savings Bank only
containsP1,020.19 due to previous withdrawals made by Marciano; that the
foregoing circumstances indicate a pattern of fraudulent misrepresentations by the
petitioner to mislead the DARAB into believing that petitioner and Marciano did
not deliberately refuse to pay the lease rentals; that from July 18, 1985 up to the
present, petitioner failed to pay the lease rentals showing again, the deliberate
refusal to pay; that this default on the part of the petitioner has been recurring for
several years already, thus depriving the respondents as landowners of their share
of the subject land in violation of the principle of social justice; that as raised in
respondents Omnibus Supplemental Motion for Reconsideration[22] before the
DARAB and as found by the CA based on its vicinity map, [23] the subject land is of
a residential, commercial and industrial character, exempted from agrarian reform
coverage; and that the DARAB erred in not finding the sale of the tenancy rights of
Adoracion to petitioner and Marciano for P72,500.00 violative of P.D. 27 even if
the same was with Leon's consent. The sale, respondents contend was therefore,
null and void ab initio, not susceptible of any ratification.[24]
Our Ruling
Before we resolve this case on the merits, a procedural issue must be
disposed of.
Respondents strongly argue that the instant Petition was filed out of time
because, while petitioner originally claimed to have received her copy of the CA
Resolution[25] dated June 28, 2004, denying her Motion for Reconsideration,[26] on

July 12, 2004, petitioner eventually admitted, after respondents showed proof to
the contrary, that she actually received the said Resolution on July 7, 2004.
[27]
Thus, petitioner had only up to July 22, 2004 to appeal the CA's ruling to this
Court. In this case, petitioner filed her Motion[28] for Extension of Time to File
Petition for Review on Certiorari (Motion) on July 23, 2004. As such, there was no
more period to extend. Further, the instant Petition was filed on August 27, 2004,
or three (3) days beyond the thirty-day extended period. Hence, respondents submit
that the CA decision had already become final and executory.[29]
Petitioner alleges that on July 15, 2004, she met with her counsel to engage
the latter's legal services. During said meeting, counsel asked petitioner about the
date of receipt of the assailed CA Resolution. Petitioner replied that she received
her copy on July 12, 2004. OnJuly 20, 2004, counsel filed an Entry of Appearance
with the CA.[30] On July 23, 2004, petitioner through counsel filed the Motion for
Extension of Time to File Petition for Review. On August 11, 2004, petitioner
received a copy of respondents' Opposition to the Motion. Thereafter, upon
verification, petitioner admitted that she received the copy of the CA Resolution
on July 7, 2004. Thus, her Motion was admittedly filed one day late. Petitioner
begs the indulgence of this Court for her oversight and mistake, attributing the
same to her lack of education and old age.
Rules of procedure are merely tools designed to facilitate the attainment of
justice. If the application of the Rules would tend to frustrate rather than to
promote justice, it is always within our power to suspend the rules or except a
particular case from their operation. Law and jurisprudence grant to courts the
prerogative to relax compliance with the procedural rules, even the most
mandatory in character, mindful of the duty to reconcile the need to put an end to
litigation speedily and the parties' right to an opportunity to be heard.[31]
Our recent ruling in Tanenglian v. Lorenzo[32] is instructive:
We have not been oblivious to or unmindful of the extraordinary
situations that merit liberal application of the Rules, allowing us,
depending on the circumstances, to set aside technical infirmities and
give due course to the appeal. In cases where we dispense with the
technicalities, we do not mean to undermine the force and effectivity of
the periods set by law. In those rare cases where we did not stringently

apply the procedural rules, there always existed a clear need to prevent
the commission of a grave injustice. Our judicial system and the courts
have always tried to maintain a healthy balance between the strict
enforcement of procedural laws and the guarantee that every litigant be
given the full opportunity for the just and proper disposition of his cause.

In this case, petitioner was one day late in filing her Motion for Extension.
To deny the Petition on this ground alone is too harsh a penalty for a days delay,
taking into consideration the time, resources and effort spent by petitioner and even
by the respondents, in order to pursue this case all the way to this Court. Thus, we
dispense with the apparent procedural defect and resolve this case on the
merits. The ends of justice are better served when cases are determined on the
merits with all parties given full opportunity to ventilate their causes and
defenses rather than on technicality or some procedural imperfections.[33]
The Petition is impressed with merit.
In sum, there are two (2) ultimate issues that require resolution in this case:
1) Whether the CA erred in ruling that the subject land had
already become residential, commercial and/or industrial, thus, excluded
from the coverage of our laws on agrarian
reform; and
2)

Whether the petitioner, as an agricultural tenant, failed to pay her lease

rentals when the same fell due as to warrant her dispossession of
the subject land.

On the first issue, we rule in the affirmative.

To recapitulate, the instant case sprang from a Complaint for Ejectment
based on Non-Payment of lease rentals. Though an allegation was made by the
respondents that the land had been declared, upon the recommendation of the
Human Settlements Committee, suitable for commercial and industrial purposes,
per Zoning Ordinance of 1981 of the Municipality of Sta. Rosa, no argument was
advanced by respondents to support such allegation, in the same way that no prayer
for the ejectment of the tenants was raised based on that allegation. The PARAD
held that petitioner should be ejected for non-payment of lease rentals. It also

ruled that the subject land is not covered by P.D. No. 27, R.A. No. 6657, and E.O.
No. 228, not on the basis of the allegation in the complaint, but on the respondents'
right of retention.

On appeal, the DARAB concentrated on the issue of petitioners failure to

pay lease rentals. When the DARAB ruled that petitioner and Marciano did not
deliberately fail to pay said rentals, respondents raised a new issue in their
Omnibus Motion that the transaction between Adoracion and petitioner was void in
violation of P.D. No. 27, despite the conformity of Leon. This issue was not
resolved by the DARAB.
Finally, when the case reached the CA, the appellate court affirmed the
findings of the PARAD that petitioner and Marciano deliberately and in bad faith
did not pay the lease rentals. The CA, however, also held that the subject land had
already become a residential, commercial and industrial area based on the vicinity
map showing that the land was surrounded by commercial and industrial
establishments.
Without doubt, the PARAD acted without jurisdiction when it held that the
subject land was no longer covered by our agrarian laws because of the retention
rights of the respondents. The CA likewise acted without jurisdiction when it ruled
that the land had become non-agricultural based on a zoning ordinance of 1981
on the strength of a mere vicinity map. These rulings violated the doctrine of
primary jurisdiction.
The doctrine of primary jurisdiction precludes the courts from resolving a
controversy over which jurisdiction has initially been lodged in an administrative
body of special competence. For agrarian reform cases, jurisdiction is vested in the
Department of Agrarian Reform (DAR); more specifically, in the Department of
Agrarian Reform Adjudication Board (DARAB). Executive Order 229 vested the
DAR with (1) quasi-judicial powers to determine and adjudicate agrarian reform
matters; and (2) jurisdiction over all matters involving the implementation of
agrarian reform, except those falling under the exclusive original jurisdiction of the
Department of Agriculture and the Department of Environment and Natural
Resources.[34]
In Department of Agrarian Reform v. Abdulwahid,[35] we held:
As held by this Court in Centeno v. Centeno [343 SCRA
153], "the DAR is vested with the primary jurisdiction to determine and

adjudicate agrarian reform matters and shall have the exclusive

jurisdiction over all matters involving the implementation of the agrarian
reform program." The DARAB has primary, original and appellate
jurisdiction "to determine and adjudicate all agrarian disputes, cases,
controversies, and matters or incidents involving the implementation of
the Comprehensive Agrarian Reform Program under R.A. No. 6657,
E.O. Nos. 229, 228 and 129-A, R.A. No. 3844 as amended by R.A. No.
6389, P.D. No. 27 and other agrarian laws and their implementing rules
and regulations."
Under Section 3 (d) of R.A. No. 6657 (CARP Law),
"agrarian dispute" is defined to include "(d) . . . any controversy relating
to tenurial arrangements, whether leasehold, tenancy, stewardship or
otherwise over lands devoted to agriculture, including disputes
concerning farmworkers associations or representation of persons in
negotiating, fixing, maintaining, changing or seeking to arrange terms or
conditions of such tenurial arrangements. It includes any controversy
relating to compensation of lands acquired under this Act and other terms
and conditions of transfer of ownership from landowners to
farmworkers, tenants and other agrarian reform beneficiaries, whether
the disputants stand in the proximate relation of farm operator and
beneficiary, landowner and tenant, or lessor and lessee."

Simply put, agrarian disputes, as defined by law and settled in jurisprudence,

are within the primary and exclusive original jurisdiction of the PARAD and the
DARAB, while issues of retention and non-coverage of a land under agrarian
reform, among others, are within the domain of the DAR Secretary.
Thus, Section 3, Rule II of the 2003 DARAB Rules of Procedure provides:

SECTION 3. Agrarian Law Implementation Cases. The

Adjudicator or the Board shall have no jurisdiction over matters
involving the administrative implementation of RA No. 6657, otherwise
known as the Comprehensive Agrarian Reform Law (CARL) of 1988
and other agrarian laws as enunciated by pertinent rules and
administrative orders, which shall be under the exclusive prerogative of
and cognizable by the Office of the Secretary of the DAR in accordance
with his issuances, to wit:
3.1

Classification and identification of landholdings for

coverage under the agrarian reform program and the initial
issuance of CLOAs and EPs, including protests or
oppositions thereto and petitions for lifting of such
coverage;
3.2
Classification, identification, inclusion, exclusion,
qualification, or disqualification of potential/actual farmerbeneficiaries;
3.3
Subdivision surveys of land under CARP;
3.4
Recall, or cancellation of provisional lease rentals,
Certificates of Land Transfers (CLTs) and CARP
Beneficiary Certificates (CBCs) in cases outside the
purview of Presidential Decree (PD) No. 816, including the
issuance, recall, or cancellation of EPs or CLOAs not yet
registered with the Register of Deeds;
3.5
Exercise of the right of retention by the landowner;
3.6
Application for exemption from coverage under Section 10
of RA 6657;
3.7
Application for exemption pursuant to Department of
Justice (DOJ) Opinion No. 44 (1990);
3.8
Exclusion from CARP coverage of agricultural land used
for livestock, swine, and poultry raising;
3.9
Cases of exemption/exclusion of fish pond and prawn
farms from the coverage of CARP pursuant to RA 7881;
3.10 Issuance of Certificate of Exemption for land subject of
Voluntary Offer to Sell (VOS) and Compulsory Acquisition
(CA) found unsuitable for agricultural purposes;
3.11 Application for conversion of agricultural land to
residential, commercial, industrial, or other non-agricultural
uses and purposes including protests or oppositions thereto;
3.12 Determination of the rights of agrarian reform
beneficiaries to homelots;

3.13

Disposition of excess area of the tenants/farmerbeneficiary's landholdings;

3.14 Increase in area of tillage of a tenant/farmer-beneficiary;
3.15 Conflict of claims in landed estates administered by DAR
and its predecessors; or
3.16 Such other agrarian cases, disputes, matters or concerns
referred to it by the Secretary of the DAR.

Verily, there is an established tenancy relationship between petitioner and

respondents in this case. An action for Ejectment for Non-Payment of lease rentals
is clearly an agrarian dispute, cognizable at the initial stage by
the PARAD and thereafter by the DARAB.[36] But issues with respect to the
retention rights of the respondents as landowners and the exclusion/exemption of
the subject land from the coverage of agrarian reform are issues not cognizable by
the PARAD and the DARAB, but by the DAR Secretary because, as
aforementioned, the same are Agrarian Law Implementation (ALI) Cases.
It has not escaped our notice that, as this case progressed and reached a
higher level in the hierarchy of tribunals, the respondents would, invariably, proffer
an additional theory or defense, in order to effect petitioners eviction from the
land. As a consequence, the simple issue of ejectment based on non-payment of
rentals has been muddled.
Proof necessary for the resolution of the issue of the land being covered by,
or excluded/exempted from, P.D. No. 27, R.A. No. 6657, and other pertinent
agrarian laws, as well as of the issue of the right of retention of the respondents,
was not offered in evidence. Worse, the PARAD resolved the issue of retention
even if it was not raised by the respondents at that level, and even if the PARAD
had no jurisdiction over the same.
Likewise, the CA ruled that the land had ceased being agricultural on the
basis of a mere vicinity map, in open disregard of the Doctrine of Primary
Jurisdiction, since the issue was within the province of the Secretary of DAR.
We take this opportunity to remind the PARAD and the CA that courts of
justice have no power to decide a question not in issue. A judgment that goes

beyond the issues, and purports to adjudicate something on which the parties were
not
heard,
is
extra-judicial,
irregular
and
invalid. This norm applies not only to courts of justice, but also to quasijudicial

bodies such as the PARAD. Accordingly, premature and irregular were the
PARAD ruling on the retention rights of the respondents, and the CA decision on
the non-agricultural character of the land subject of this controversy -- these issues
not having passed the scrutiny of the DAR Secretary -- are premature and irregular.
[37]

Thus, we cannot allow ourselves to fall into the same error as that committed
by the PARAD and the CA, and resolve the issue of the non-agricultural nature of
the subject land by receiving, at this stage, pieces of evidence and evaluating the
same, without the respondents having first introduced them in the proper forum.
The Office of the DAR Secretary is in a better position to resolve the issues on
retention and exclusion/exemption from agrarian reform coverage, being the
agency lodged with such authority inasmuch it possesses the necessary expertise
on the matter.[38]
Likewise, we refrain from entertaining the issue raised by respondents that
petitioner and her family are not landless tenants and are therefore not deserving of
any protection under our laws on agrarian reform, because fairness and due process
dictate that issues not raised in the proceedings below should not be raised for the
first time on appeal.[39]
On the second issue, we rule in the negative.
Under Section 37 of Republic Act No. 3844,[40] as amended, coupled with
the fact that the respondents are the complainants themselves, the burden of proof
to
show the existence of
a
lawful
cause
for
the
ejectment
of the petitioner as an agricultural lessee rests upon the respondents as

agricultural lessors.[41] This proceeds from the principle that a tenancy

relationship, once established, entitles the tenant to security of tenure. Petitioner
can only be ejected from the agricultural landholding on grounds provided by law.
[42]
Section 36 of the same law pertinently provides:
Sec. 36. Possession of Landholding; Exceptions.
Notwithstanding any agreement as to the period or future surrender, of
the land, an agricultural lessee shall continue in the enjoyment and
possession of his landholding except when his dispossession has been
authorized by the Court in a judgment that is final and executory if after
due hearing it is shown that:
xxxx
(6)
The agricultural lessee does not pay the lease rental when it falls
due: Provided, That if the non-payment of the rental shall be due to crop
failure to the extent of seventy-five per centum as a result of a fortuitous
event, the non-payment shall not be a ground for dispossession, although
the obligation to pay the rental due that particular crop is not thereby
extinguished;
xxxx

Respondents failed to discharge such burden. The agricultural tenant's

failure to pay the lease rentals must be willful and deliberate in order to warrant his
dispossession of the land that he tills.
Petitioner's counsel opines that there appears to be no decision by this Court
on the matter; he thus submits that we should use the CA decision in Cabero v.
Caturna. This is not correct. In an En Banc Decision by this Court in Roxas y
Cia v. Cabatuando, et al.,[43] we held that under our law and jurisprudence, mere
failure of a tenant to pay the landholder's share does not necessarily give the latter
the right to eject the former when there is lack of deliberate intent on the part of the
tenant to pay. This ruling has not been overturned.

The term deliberate is characterized by or results from slow, careful,

thorough calculation and consideration of effects and consequences. [44] The term
willful, on the other hand, is defined as one governed by will without yielding to
reason or without regard to reason.[45]
We agree with the findings of the DARAB that it was not the fault of
petitioner that the lease rentals did not reach the respondents because the latter
chose to ignore the notices sent to them. To note, as early as November 10, 1986,
Marciano executed an Affidavit[46]stating that Leon refused to receive the
respective lease rentals consisting of 37 cavans for November 1985 and July
1986. For 1987, Marciano wrote Leon two letters[47] informing him of the
availability of the lease rentals for April and October of the same year. On April
27, 1988, Marciano sought DAR intervention and mediation with respect to the
execution of a leasehold contract and the fixing of the leasehold rentals.
[48]
Meetings were set but respondents failed to attend. [49] The dispute was referred
to the barangay but the parties failed to amicably settle.[50]
These factual circumstances negate the PARAD findings of Marcianos and
petitioner's deliberate and willful intent not to pay lease rentals. Good faith was
clearly demonstrated by Marciano and petitioner when, because respondents
refused to accept the proffered payment, they even went to the point of seeking
government intervention in order to address their problems with
respondents. Absent such deliberate and willful refusal to pay lease rentals,
petitioner's ejectment from the subject land is not justified.

WHEREFORE, the instant Petition is GRANTED. The assailed Decision

of the Court of Appeals in CA-G.R. SP No. 60640 is herebyREVERSED and SET
ASIDE. The Decision of the Department of Agrarian Reform Adjudication Board
(DARAB)
dated June
24,
1998 in
DARAB
Case
No.
2203
is REINSTATED without prejudice to the rights of respondent-spouses Leon and
Aurora Carpo to seek recourse from the Office of the Department of Agrarian
Reform (DAR) Secretary on the other issues they raised. No costs.
SO ORDERED.