Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 199133

September 29, 2014

ESPERANZA TUMPAG, substituted by her son, PABLITO TUMPAG BELNAS, JR., Petitioner,
vs.
SAMUEL TUMPAG, Respondent.
DECISION
BRION, J.:
We resolve the petition for review on certiorari assailing the November 30, 2010 decision and the September 28,
2011 resolution of the Court of Appeals (CA), Cebu City in CA-G.R. CV No. 78155. The CA dismissed, without
prejudice, the complaint for recovery of possession and damages that the petitioner filed before the Regional Trial
Court (RTC) because the complaint failed to allege the assessed value of the disputed property in the case.
1

Brief Statement of Facts

On March 13, 1995, Esperanza Tumpag (petitioner) filed a complaint for recovery of possession with damages
(docketed as Civil Case No. 666) against Samuel Tumpag (respondent) before the RTC, Branch 61, Kabankalan
City, Negros Occidental. The complaint alleged that:
1) Plaintiff (referring to the petitioner) is of legal age, widow, Filipino citizen and a resident of Barangay
Tuyom, Cauayan, Negros Occidental, while Defendant (referring to the respondent) is also of legal age,
married, Filipino and a residentof Barangay Tuyom, Cauayan, Negros Occidental, where he maybe served
with summons and other processes of this Honorable Court; 2) Plaintiff is the absolute owner of a parcel of
land, identified as Lot No. 1880-A, Cauayan Cadastre, containing an area of TWELVE THOUSAND NINE
HUNDRED NINETY TWO (12,992) SQUARE METERS, more or less, situated in Barangay Tuyom,
Cauayan, Negros Occidental, more particularly bounded and described in Transfer Certificate of Title No. T70184, dated April 27, 1983, issued by the Register of Deeds of Negros Occidental in favor of Plaintiff, xerox
copy of which is hereto attached as ANNEX "A" and made an integral part hereof;
3) Defendant has been occupying a portion of not less than ONE THOUSAND (1,000) SQUARE METERS
ofthe above-described parcel of land of the Plaintiff for more than TEN (10) years, at the tolerance of
Plaintiff;
4) Sometime in 1987, Plaintiff wanted to recover the portion occupied by Defendant but Defendant refused
to return to Plaintiff or vacate said portion he has occupied inspite of repeated demands from Plaintiff. And,
to prevent Plaintiff from recovering the portion he has occupied, Defendant instigated his other relatives to
file a case against the herein Plaintiff, and, in1988, herein Defendant Samuel Tumpag, together with Luz
Tagle Vda. De Tumpag and other relatives, filed a civil case, number 400, before this court against herein
Plaintiff, Esperanza Tumpag, for cancellation of her title with damages;
5) Said Civil Case No. 400 was dismissed by this Honorable Court through its Resolution, dated October 11,
1989, penned by the Presiding Judge, the late Artemio L. Balinas, prompting the Plaintiffs in said case to
elevate the said resolution of thisHonorable Court to the Court of Appeals, and their appeal is identified as
C.A. G.R. No. CV-25699;

6) On June 28, 1991, the Court of Appeals rendered a decision in the said appealed case, the dispositive
portion of which read:
"PREMISES CONSIDERED, the appealed Resolution dated October 11, 1989 is hereby AFFIRMED."
and, that the same has become final on March 11, 1994 and was entered, on August 26, 1994, in the Book
of Entries of Judgment, xerox copy of said Entry of Judgment of the Court of Appeals is hereto attached as
ANNEX "B" and made part hereof;
7) Herein Plaintiff needs the portion occupied by Defendant and she has orally demanded from Defendant of
the return of the same, but Defendant refused and still refuses todo so. Hence, Plaintiff brought the matter
before the Office of the Barangay Captain of Barangay Tuyom, Cauayan, Negros Occidental, for conciliation,
on March 3, 1995. But, unfortunately, Defendant refused to vacate or return the portion he occupies to
Plaintiff. Attached hereto as ANNEX "C," and made part hereof, is the Certification of the Barangay Captain
of Barangay Tuyom, Cauayan, Negros Occidental, certifying that this matter was brought to his attention for
conciliation;
8) Defendants refusal to return the portion he occupies to Plaintiff has caused Plaintiff to suffer actual
damages in the amount of not less than TEN THOUSAND PESOS (P10,000.00), per annum;
9) Defendants unjustifiable refusal to return the portion he occupies to Plaintiff has caused Plaintiff to suffer
mental anguish, embarrassment, untold worries, sleepless nights, fright and similar injuries, entitling her to
moral damages moderately assessed at not less than FIFTY THOUSAND PESOS (P50,000.00);
10) To serve as deterrent (sic) toother persons similarly inclined and by way of example for the public good,
Defendant should be made to pay exemplary damages in the amountof not less than TWENTY FIVE
THOUSAND PESOS (P25,000.00);
11) The unjustifiable refusal of Defendant to return the property to the Plaintiff leaves Plaintiff no other
alternative but to file this present action, forcing her to incur litigation expenses amounting to not less than
ONE THOUSAND PESOS (P1,000.00), attorneys fees in the amount of TWENTY THOUSAND PESOS
(P20,000.00) plus ONE THOUSAND PESOS (P1,000.00) for every court appearance.
4

xxxx
Together with his answer (which was later amended), the respondent moved to dismiss the complaint on the
following grounds: failure to state a cause of action; that the action was barred by prior judgment; and lack of
jurisdiction.
5

The RTC, in an order dated January 16, 1996, denied the respondents motion to dismiss and proceeded with pretrial and trial.
6

During the pendency of the case, the petitioner died and was substituted by her son Pablito Tumpag Belnas, Jr.

In a decision dated June 3, 2002, the RTC ordered the respondent to return possession of the subject portion of the
property to the petitioner and to pay the petitioner P10,000.00 as actual damages, P20,000.00 as moral damages,
and P10,000.00 as attorneys fees.
8

In his appeal to the CA, among the grounds the respondent raised was the issue of the RTCs lack of jurisdiction
over the case.
9

In its assailed decision, the CA agreed with the respondent and nullified the RTCs June 3, 2002 decision and all
proceedings before the trial court. It held that the petitioners failure to allege in her complaint the assessed value of
the disputed property warranted the complaints dismissal, although without prejudice, because the courts
10

jurisdiction over the case should be "determined by the material allegations of the complaint" and "cannot be made
to depend upon the defenses set up in court or upon a motion to dismiss for, otherwise, the question of jurisdiction
would depend almost entirely on the defendant." The petitioner moved to reconsider but the CA denied her motion
in its resolution dated September 28, 2011. The CAs ruling and denial of the motion for reconsideration gave rise to
the present petition for review on certiorari filed with this Court.
11

12

13

The petitioner now argues that the respondent, after having actively participated in all stages of the proceedings in
Civil Case No. 666, is now estopped from assailing the RTCs jurisdiction; that the subject case had been litigated
before the RTC for more than seven (7) years and was pending before the CA for almost eight (8) years. Further,
she argues that the dismissal of her complaint was not warranted considering that she had a meritorious case as
attached to her complaint was a copy of a Declaration of Real Property indicating that the assessed value of the
disputed property is P20,790.00.
Our Ruling
We find MERIT in the present petition. The CAs dismissal of the petitioners complaint for recoveryof possession
iserroneous and unwarranted.
It is well-settled that jurisdiction over a subject matter is conferred by law, not by the parties action or conduct, and
is, likewise, determined from the allegations in the complaint. Under Batas Pambansa Blg. 129, as amended by
Republic Act No. 7691, the jurisdiction of Regional Trial Courts over civil actions involving title to, or possession of,
real property, orany interest therein, is limited to cases where the assessed value of the property involved exceeds
Twenty thousand pesos (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty thousand
pesos (P50,000.00), except actions for forcible entry into and unlawful detainer of lands or buildings.
14

15

16

17

18

Here, the petitioner filed a complaint for recovery of possession of real property before the RTC but failed to allege
in her complaint the propertys assessed value. Attached, however, to the petitioners complaint was a copy of a
Declaration of Real Property showing that the subject property has a market value of P51,965.00 and assessed
value of P20,790.00. The CA was fully aware ofthis attachment but still proceeded to dismiss the petitioners
complaint:
Record shows that the complaint was filed with the Regional Trial Court on December 13, 1995. There is no
allegation whatsoever in the complaint for accion publiciana concerning the assessed value of the property involved.
Attached however to the complaint is a copy of the Declaration of Real Property of subject land which was signed by
the owner stating that its market valueis P51,965 and its assessed value is P20,790.00.(Emphasis ours)
19

Generally, the court should only look into the facts alleged in the complaint to determine whether a suit is within its
jurisdiction. There may be instances, however, when a rigid application of this rule may result in defeating
substantial justice or in prejudice to a partys substantial right. In Marcopper Mining Corp. v. Garcia, we allowed
the RTC to consider, in addition to the complaint, other pleadings submitted by the parties in deciding whether or not
the complaint should be dismissed for lack of cause of action. In Guaranteed Homes, Inc. v. Heirs of Valdez, et
al., we held that the factual allegations in a complaint should be considered in tandem with the statements and
inscriptions on the documents attached to it as annexes or integral parts.
20

21

22

23

In the present case, we find reason not to strictly apply the abovementioned general rule, and to consider the facts
contained in the Declaration of Real Property attachedto the complaint in determining whether the RTC had
jurisdiction over the petitioners case. A mere reference to the attached document could faciallyresolve the question
on jurisdiction and would have rendered lengthy litigation on this point unnecessary.
In his comment to the present petition, the respondent contends that the assessed value of the property subjectof
the case is actually much below than the value stated in the attached Declaration of Real Property. However, the
test of the sufficiency of the facts alleged in the complaint is whether, admitting the facts alleged, the court can
render a valid judgment upon the complaint in accordance withthe plaintiffs prayer. The defendant, in filing a
motion to dismiss, hypothetically admits the truth of the factual and material allegations in the complaint, as well as
the documents attached to a complaint whose due execution and genuineness are not denied under oath by the
24

25

26

defendant; these attachments mustbe considered as part of the complaint without need of introducing evidence
thereon.
27

Lastly, we note that the present petitioner's situation comes close with those of the respondents in Honorio Bernardo
v. Heirs of Eusebio Villegas, where the Villegas heirs, in filing their complaint for accion publiciana before the RTC,
failed to allege the assessed value of the subject property. On the complaints omission, the defendant questioned
the RTCs jurisdiction in his answer to the complaint and, again, in his appeal before the CA.
28

In Bernardo v. Heirs of Villegas, we affirmed the CA ruling that upheld the RTCs jurisdiction over the case despite
the complaints failure to allege the assessed value of the property because the defendant-petitioner was found to
have actively participatedin the proceedings before the trial court and was already estopped from assailing the
jurisdiction of the RTC. While we mention this case and its result, we cannot, however, apply the principle of
estoppel (on the question of jurisdiction)to the present respondent.
29

We rule that the respondent is notestopped from assailing the RTCs jurisdiction over the subject civil case. Records
show that the respondent has consistently brought the issue of the court's lack of jurisdiction in his motions,
pleadings and submissions throughout the proceedings, until the CA dismissed the petitioner's complaint, not on the
basis of a finding of lack of jurisdiction, but due to the insufficiency of the petitioner's complaint, i.e. failure to allege
the assessed value of the subject property. Even in his comment filed before this Court, the respondent maintains
that the RTC has no jurisdiction over the subject matter of the case.
1wphi1

Lack of jurisdiction over the subject matter of the case can always be raised anytime, even for the first time on
appeal, since jurisdictional issues, as a rule, cannot be acquired through a waiver or enlarged by the omission of
the parties or conferred by the acquiescence of the court. Thus, the respondent is not prevented from raising the
question on the court's jurisdiction in his appeal, if any, to the June 3, 2002 decision of the RTC in Civil Case No.
666. WHEREFORE, premised considered, we GRANT the present petition for review on certiorari and SET ASIDE
the decision dated November 30, 2010 and resolution dated September 28, 2011 of the Court of Appeals, Cebu City
in CA-G.R. CV No. 78155.
30

31

Accordingly, we REINSTATE the decision dated June 3, 2002 of the Regional Trial Court, Branch 61, Kabankalan
City, Negros Occidental in Civil Case No. 666.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 178911

September 17, 2014

EDUARDO D. MONSANTO, DECOROSO D. MONSANTO, SR., and REV. FR. PASCUAL D. MONSANTO,
JR.,Petitioners,
vs.
LEONCIO LIM and LORENZO DE GUZMAN, Respondents.
DECISION
DEL CASTILLO, J.:
"Filing the appropriate initiatory pleading and the payment of the prescribed docket fees vest a trial court with
jurisdiction over the subject matter."
1

Assailed in this Petition for Review on Certiorari are the March 12, 2007 Decision of the Court of Appeals (CA)
which denied the Petition for Certiorari in CA-G.R. CEB-SP No. 01343 and its July 6, 2007 Resolution denying the
herein petitioners' Motion for Reconsideration.
2

Factual Antecedents
In a letter dated February 18, 2004, Flordelis B. Menzon, Regional Director of the Home Development Mutual Fund
(Pag-IBIG), requested the intervention of Executive Judge Sinforiano A. Monsanto (Executive Judge Monsanto) of
the Regional Trial Court (RTC) of Catbalogan, Samar on the alleged anomalous auction sale conducted by Sheriff
IVLorenzo De Guzman (De Guzman). According to Pag-IBIG, De Guzman previously acceded to its request to
move the date of the auction sale to January 20, 2004; however, to its surprise, the sale proceeded as originally
scheduled on January 15, 2004. Pag-IBIG also claimed that the winning bid of Leoncio Lim (Leoncio) in the amount
of P500,000.00 was grossly disadvantageous to the government considering that the outstanding loan obligations of
the mortgagor, Eduardo Monsanto (Eduardo), was more than the bid amount. Pag-IBIG thus manifested that
6

It is for this reason that we are making this protest. Sheriff de Guzman failed to comply with our request for
deferment despitehis [acquiescence]. We are requesting for your intervention to nullify the results of the auction sale
conducted last January 15, 2004. This will give our office a chance to be able to participate and recoup our
investment.
We trust that you will give thismatter preferential attention.

Executive Judge Monsantorefrained from acting on the letter considering that Eduardo is his relative; instead he reassigned the same to Judge Sibanah E. Usman (Judge Usman) of Branch 28.
8

In an Order dated May 3, 2004 and captioned "In the Matter of the Extrajudicial Foreclosure of Mortgage Filed by
the Home Development Mutual Fund (Pag-IBIG Fund)," Judge Usman declared that on even date, RTC-Branch 28
conducted a hearing; that Atty. Cesar Lee argued on behalf of Pag-IBIG; and that Pascual Monsanto (Pascual)
appeared on behalf of Eduardo. However, Judge Usman noted that no formal petition orcomplaint was actually filed
which presents a judicial issue; moreover, the acts complained of partake of administrative matter. Consequently,
Judge Usman referred the matter to the Office of the Court Administrator (OCA) for further action.
9

Subsequently, Pascual filed with the OCA, copy furnished the RTCCatbalogan, Samar, Branches 27 and 28, a
Motion to Lift Writ of Execution and Notice to Vacate dated March 13, 2004. Pascual alleged thaton March 5, 2005,
De Guzman, Sheriff of Branch 27, issueda Notice to Vacate; that the same is being enforced with grave threats and
harassment; thatthe protest of Pag-IBIG remains pending with and unresolved by OCA; thatthe trial court did not
transmit the records of the case tothe OCA; that the winning bid of P500,000.00 submitted by Leoncio is
disadvantangeous to the government; that Eduardos loan with PagIBIG is being proposed for restructuring; and that
the writ of execution and notice to vacate would gravely prejudice their rights. Pascual thus prayed that:
10

A. An order be issued lifting the Writ of Execution and the Notice to Vacate;
B. An order be issued enjoining or restraining the subject Sheriff from enforcing the said Notice to vacate;
and
C. Court officials or personnel above mentioned be made to explain respecting the handling of the above
captioned case as cited above, and if found negligent be so sanctioned in accordance with the law.
11

Acting on the aforesaid Motion to Lift Writ of Execution and Notice to Vacate, the OCA, in a letter dated May 9,
2005 directed Judge Usman to
12

(1) conduct an investigation on the missing records of Home Development Mutual Fund (Pag-IBIG) vs. Eduardo
Monsanto and to report thereon within THIRTY (30) days from notice; and (2) take action on (a) Items A and B of
the Motion to Lift Writ ofExecution and Notice to Vacate and (b) the letter of Home Development Mutual Fund dated
18 February 2004, a copy of which is annexed to the Motion to Lift Writ of Execution and Notice to Vacate, herewith
attached. Pursuant to the above directive, Judge Usman notified Pag-IBIG, Eduardo, and Leoncio of a hearing
scheduled on June 14, 2005. This time, the case was captioned as "Home Development Mutual Fund (Pag-IBIG
Fund), mortgagee, v. Eduardo Monsanto, mortgagor."
13

14

In a Manifestation dated June 7, 2005 and filed before Branch 28, PagIBIG informed the trial court that the loan of
Eduardo had been restructured and that Eduardo had commenced paying monthly amortizations; that as a result of
the restructuring, Pag-IBIG is withdrawing its Petition for Extra-judicial Foreclosure; and that it is no longer interested
in pursuing an administrative action against De Guzman.
15

Leoncio opposed Pag-IBIGs manifestation.

16

Meanwhile, the record shows that on April 11, 2005, Leoncio filed with Branch 27 a Manifestation with Ex-Parte
Motion for Issuance of Writ of Possession claiming that the reglementary period had elapsed without Eduardo
redeeming the subject property; as such, he is already entitled to the issuance of a writ of possession.
17

On July 15, 2005, Decoroso D. Monsanto and Pascual moved to intervene in the case. Both claimed that they are
co-owners and actual possessors of the subject property.
18

Ruling of the Regional Trial Court Branch 28

In an Order dated July 1, 2005, the RTC-Branch 28, Catbalogan, Samar resolved two pending motions, i.e., (1) the
motion for issuance of writ of possession filed by Leoncio with Branch 27; and (2) the motion to lift writ of execution
and notice to vacate filed by Pascual with the OCA butcopy furnished the RTC Catbalogan, Samar, Branches 27
and 28 viz:
19

20

After careful and judicious scrutiny of the records of thiscase, this Court is highly convinced that the public auction
sale conducted by Mr. De Guzman and Atty. Ma. Luz Lampasa-Pabilona, Clerk of Court whereby Mr. Leoncio Lim
emerged as the highest bidder and purchaser of the subject property in good faith, and also given a Certificate of
Sale issued by the Sheriff and the same was registered with the Registry of Deeds on March 5, 2004 are in order.
The impugned Sheriff De Guzman had accordingly performed his functions. Accordingly, there is no showing that
hehas abuse[d] his authority during the conduct of the public auction. Such being the case, this Court is further
convinced that the motion filed by Leoncio Lim through counsel Atty. Labid being meritorious should be given due
course. On the other hand, the motion to lift writ of execution and notice to vacatefiled by Rev. Fr. Pascual D.
Monsanto, Jr. being devoid of merit should be denied.
Atty. Cesar E. Lee filed a manifestation dated June 7, 2005, praying that an order be issued directing Lorenzo
deGuzman, Sheriff to make the necessary notice to all concern[ed] of the fact that the mortgagee has restructured
his loan with the mortgagor, and in effect, redeemed his obligation subject matter of this foreclosure proceeding.
Mr. De Guzman explained that even assuming that there was restructuring of the [mortgage] loan it is very clear that
it was done after the lapse of the one (1) year redemption period and also there was no notice given to the Office of
the Clerk of Court. Moreover,if there was actual payment the Office of the Clerk of Court was never x x x informed
by Mr. Monsanto. WHEREFORE, premises considered, this Court finds that the instant motion to lift writ of
execution and notice to vacate the [premises] is devoid of merit, hence denied; likewise the manifestation of Atty.
Cesar Lee dated June 7, 2005 being devoid of merit is also denied. The motion for issuance of writ of possession
filed by Leoncio Lim through counsel Atty. Labid being meritorious is hereby ordered GRANTED, hence let a writ of
possession be issued immediately in favor of Mr. Leoncio Lim purchaser in good faith.
Let a copy of this order be furnished the Hon. Presbitero J. Velasco, Jr., Court Administrator for his information and
guidance.
SO ORDERED.

21

Eduardo, Pascual,and Pag-IBIG filed motions for reconsideration; however, the same were denied by the trial court
in its August 30, 2005 Order.
22

Ruling of the Court of Appeals

Petitioners thus filed a Petition for Certiorari with the CA, which was docketed as CA-G.R. CEB SP No. 01343.
They claimed that the RTC committed grave abuse of discretion indenying their Motion to Lift Writ of Execution and
Notice to Vacate and in granting Lims Ex ParteMotion for Issuance of Writ of Possession through its July 1, 2005
Order, arguing that Lims motion was not made under oath; that there are third parties in possession of the subject
property; that they were not notified of the confirmation of the sale; that the mere filing of the Certificate of Sale
withthe Register of Deeds without presenting the owners duplicate copy is not tantamount to registration; that since
the Certificate of Sale was not registered, then the period to redeem did not begin to run; that De Guzmans March
7, 2005 Notice to Vacate was illegal, since at the time, no writ of possession was yet issued; that De Guzmans
actions in enforcing the writ of possession on July 8 and 15, 2005 while their motion for reconsideration was
pending is inhuman and violated their constitutional rights; and that out of justice and equity, they should be
allowed to redeem the property. Petitioners prayed for the reversal of the RTCs July 1, 2005 and August 30, 2005
Orders and for the CA to restore the status quo ante.
23

On March 12, 2007, the CA issued the assailed Decision finding no grave abuse of discretion on the part of the RTC
and affirming its July 1, 2005 and August 30, 2005 Orders, viz:
ACCORDINGLY, in line with the foregoing disquisitions, the petition is hereby DENIED. The assailed Orders dated 1
July 2005 and 30 August 2005 are AFFIRMED IN TOTO.
SO ORDERED.

24

Petitioners filed their Motion for Reconsideration, which the CA denied in its assailed July 6, 2007 Resolution.
Hence, the present Petition.
Issues
Petitioners raise the following grounds for the Petition:
1. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY ERRED IN RULING THAT NO
GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE HONORABLE REGIONAL TRIAL COURT
BRANCH 27, EIGHTH JUDICIAL REGION, CATBALOGAN, SAMAR IN ITS ISSUANCE OF THE WRIT OF
POSSESSION AND ITS ISSUANCE DOES NOT NEED A MOTION FOR THE CONFIRMATION OF SALE
WHICH REQUIRES A HEARING;
2. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY ERRED IN FINDING THAT THE
CERTIFICATE OF SALE WAS REGISTERED OR THAT THE MEREFILING WITH THE REGISTER OF
DEEDS OF THE SAME IS TANTAMOUNT TO ITS REGISTRATION, THUS THE REDEMPTION PERIOD
HAD STARTED TO RUN, ON THE COURTS CONJECTURE THAT P.D. 1529 IMPLIEDLY REPEALED ACT
NO. 3135, PARTICULARLY SECTION 6, THEREOF;
3. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY ERRED IN AFFIRMING THE
COURT A QUOS FINDINGS THAT ALL THE PETITIONERS WERE DULY NOTIFIED BUT FAILED TO
APPEAR DURING THE HEARING ON THE MOTION FOR THE ISSUANCE OF THE WRIT
OFPOSSESSION. IT ERRED IN ALLUDING THAT IN THE COURSE OF THE PROCEEDINGS OF THIS
INSTANT CASE, PETITIONERS WERE NOT DENIED DUE PROCESS OF LAW; AND
4. THE HONORABLE COURT OF APPEALS 20TH DIVISION, CEBU CITY ERRED IN RULING THAT
PETITIONERS DECOROSO AND FR. PASCUAL, JR. DO NOT HOLDTHE FORECLOSED PROPERTY
ADVERSELY TO THAT OF THE PETITIONER-MORTGAGOR, FOR BEING MERE ASSIGNEES,
THEYDERIVED THEIR POSSESSORY RIGHTS FROM PETITIONER-MORTGAGOR.
25

Petitioners Arguments
Praying that the assailed CA Decision and Resolution be set aside, petitioners reiterate intheir Petition and
Reply the points they raised in their CA Petition. Thus, they argue that the ex partemotion for the issuance of a writ
of possession should be under oath, and requires prior notice and hearing; that the mere filing of the sheriffs
certificate of sale with the Register of Deeds is not equivalent to registration as required in order for the one-year
redemption period to commence; that Presidential Decree No. 1529 did not repeal Act No. 3135; that the occupants
of the subject property hold rights adverse to the mortgagor Eduardo; and that the extrajudicial foreclosure
proceedings was attended by numerous irregularities.
26

Respondent Lims Arguments

On the other hand, Leoncio in his Comment insists in essence that the mere filing of the sheriffs Certificate of Sale
with the Samar Register of Deeds on March 5, 2004 was equivalent to the registration thereof; that the Samar
Registrar of Deeds assured him that merereceipt of the Certificate of Sale is tantamount to registration; that he
relied upon this representation and assurance in good faith; and that petitioners remedy is to file a separate case for
recovery of ownership and possession.
27

Our Ruling
The Petition is dismissed.

"Filing the appropriate initiatory pleading and the payment of the prescribed docket fees vest a trial court with
jurisdiction over the subject matter." Section 5, Rule 1 of the Rules of Court specifically providesthat "[a] civil action
is commenced by the filing of the original complaint in court." Moreover, "[e]very ordinary civil action must bebased
on a cause of action."
28

29

No proper initiatory pleading was filed before the trial court.

In this case, records show that no formal complaint or petition was filed in court. The case was supposedly
"commenced" through a letter of Pag-IBIG asking the intervention of Executive Judge Monsanto on the alleged
anomalous foreclosure sale conducted by De Guzman. However, saidletter could not in any way be considered as a
pleading. Section 1, Rule 6 of the Rules of Court defines pleadings as "written statements of the respective claims
and defenses of the parties submitted to the court for appropriate judgment." To stress, Pag-IBIGs letter could not
be considered as a formal complaint or petition. First, the parties to the case were not identified pursuant to Section
1, Rule 3 and Section 1, Rule 7. Second, the so-called claim or cause of action was not properly mentioned or
specified. Third, the letter miserably failed to comply with the requirements of Rule 7, Rules of Court. The letter bore
no caption; it was not even assigned a docket number; the parties were not properly identified;the allegations were
not properly set forth; no particular relief issought; in fact, only the intervention of Executive Judge Monsanto is
requested; it was notsigned by a counsel; and most of all, there is no verification orcertification against forumshopping.
30

31

We have also noted that in its July1, 2005 Order, Judge Usman of Branch 28 resolved the following incidents: (1)
the motion for issuance of writ of possession filed by Leoncio; and (2) the motion to lift writ of execution and notice
to vacate. However, the said Manifestation with Ex Parte Motion for Issuance of Writ of Possession was not even
filed before Branch28; in fact, it was submitted for consideration of Branch 27. Moreover, the Motion to Lift Writ of
Execution and Notice to Vacatewas filed by Pascual before the OCA; the RTC Branches 27 and 28 of Catbalogan,
Samar, were only furnished copies thereof.
In addition, it is quite unfortunate that Judge Usman proceeded to take cognizance of the case notwithstanding his
prior observation as stated in the May 3, 2004 Order that no formal petition or complaint was actually filed and which
presents a judicial issue.In fact, Judge Usman even opined that the acts complained of partake of administrative
matter and thus referred the same to the OCA for further action. The May 9, 2005 letter of OCA directing Judge
Usman to take action on the Motion to Lift Writ of Execution and Notice to Vacatecould not be interpreted as vesting
Judge Usman with the authority and jurisdiction to take cognizance of the matter. Nothing to that effect could be
inferred from the tenor of the May 9, 2005 letter ofOCA. Jurisdiction is vested by law. When OCA directed Judge
Usman to take action on the Motion to Lift Writ of Execution and Notice to Vacate, it did not deprive the latter ofhis
discretion to dismiss the matter/case for lack of jurisdiction, if the matter/case so warrants.
In fine, there being no proper initiatory pleading filed, then the RTC Branch 28 did not acquire jurisdiction over the
matter/case.
No payment of docket fees.
We have also noted that no docket feeswere paid before the trial court. Section 1, Rule 141 of the Rules of Court
mandates that "[u]pon the filing of the pleading or other application which initiates an action or proceeding, the fees
prescribed therefor shall be paid in full." "It is hornbook law that courts acquire jurisdiction over a case only upon
payment of the prescribed docket fee."
32

In Far East Bank and Trust Company v. Shemberg Marketing Corporation, we ruled thus: A court acquires
jurisdiction over a case only upon the payment of the prescribed fees. The importance of filing fees cannot be
gainsaid for these are intended to take care of court expenses inthe handling of cases in terms of costs of supplies,
use of equipment, salaries and fringe benefits of personnel, and others, computed as to man-hours used in the
handling of each case. Hence, the non-payment or insufficient payment of docket fees can entail tremendous losses
to government in general and to the judiciary in particular.
33

In fine, since no docket or filing feeswere paid, then the RTC Branch 28 did not acquire jurisdiction over the
matter/case. It therefore erred in taking cognizance of the same. Consequently, all the proceedings undertaken by
the trial court are null and void,and without force and effect. In, particular, the July 1, 2005 and August 30, 2005
Orders of the RTC are null and void.
1wphi1

It is settled jurisprudence that "[a]ny decision rendered without jurisdiction is a total nullity and may be struck down
at any time, even on appeal before this Court." Prescinding from the foregoing, we hold that the RTC-Branch 28 did
not acquire jurisdiction over the instant matter/case there being no formal initiatory pleading filed as well asnonpayment of docket fees. Consequently, all proceedings had before the RTC Branch 28 were null and void for lack of
jurisdiction.
34

WHEREFORE, the Petition is DENIED. The assailedMarch 12, 2007 Decision and July 6, 2007 Resolution of the
Court of Appeals in CA-G.R. CEBSP No. 01343 are ANNULLED and SET ASIDE. The July 1, 2005 and August 30,
2005 Orders of the Regional Trial Court of Catbalogan, Samar, Branch 28 are DECLARED NULL and VOID. All
proceedings, processes and writs emanating therefrom are likewise NULLIFIED and VOIDEDfor lack of jurisdiction.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 176973

February 25, 2015

DAVID M. DAVID, Petitioner,

vs.
FEDERICO M. PARAGAS, JR., Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 seeking to annul and set aside the July 31, 2006
Decision and the February 23, 2007 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 80942. The said
issuances modified the July 21, 2003 Order of the Regional Trial Court, Branch 200, Las Pias City (RTC) in Civil
Case No. LP-02-0165, a case for Declaratory Relief and Sum of Money with Damages filed by petitioner David M.
David (David) against Philam Plans Inc. (PPI), Severo Henry G. Lobrin (Lobrin), respondent Federico M. Paragas,
Jr. (Paragas), Rodelio S. Datoy (Datoy), Rizal Commercial Banking Corporation, Paranaque Branch (RCBC), and
Gerald P.S. Agarra (Agarra).
1

The RTC Order resolved the Motion to Admit Supplemental Complaint filed by David and the Joint Omnibus
Motion filed by David, Lobrin and Datoy. In the said Order, the RTC admitted the attached supplemental complaint
and approved the compromise agreement. The questioned CA decision nullified the approval by the RTC of the
compromise agreement.
4

The Antecedents

Sometime in 1995, David, Paragas and Lobrin agreed to venture into a business in Hong Kong (HK). They created
Olympia International, Ltd. (Olympia)under HK laws. Olympia had offices in HK and the Philippines. David handled
the marketing aspect of the business while Lobrin and Datoy were in charge of operations. In late1995, Olympia
started with "selling, through catalogs, consumer products such as appliances, furniture and electronic equipment to
the OFWs in Hong Kong, to be delivered to their addresses in the Philippines. They coined the name Kayang-Kaya
for the venture."
6

In early 1998, Olympia became the exclusive general agent in HK of PPIs pre-need plans through the General
Agency Agreement. In late 2001, Olympia launched the Pares-Pares program by which planholders would earn
points with cash equivalents for successfully enlisting new subscribers. The cash equivalents, in turn, would be used
for the payment of monthly premiums of the planholders. PPI authorized Olympia to accept the premium payments,
including the cash equivalent of the bonus points, and to remit the same, net of commissions, to PPI in the
Philippines. The money from HK was to be remitted through Olympias account in RCBC. In turn, Olympia was to
pay the planholders bonuses as well as the share of profits for the directors. David was tasked to personally remit
said amounts to PPI as he was the only signatory authorized to transact on behalf of Olympia regarding the RCBC
accounts.
7

As Paragas alleged, the amount remitted by Olympia to RCBC from September 2001 to May 25, 2002
reachedP82,978,543.00, representing the total net earnings from the pre-need plans, 30% of which comprised the
bonus points earned by the subscribers under the Pares-Pares program. The rest was to be distributed among the
four partners.
In 2002, the state of affairs among the partners went sour upon Lobrins discovery that David failed to remit to PPI
the 30% cash equivalent of the bonus points.
In a meeting held on June 1, 2002 in HK, David tried to explain his side, but no settlement was reached.
Later, Lobrin discovered that only P19,302,902.13 remained of the P82,978,543.00 remitted from HK to the RCBC
account. As the Chairperson of Olympias Board of Directors (BOD),he demanded the return of the
entireP82,978,543.00.
On June 17, 2002, the BOD stripped David of his position as a director. It then informed RCBC of his removal. In
another letter, it also instructed RCBC to prohibit any transaction regarding the funds or their withdrawal therefrom
pending the determination of their rightful owner/s. Meanwhile, a Watch-List Order was issued against David
pursuant to the letter sent by Paragas counsel to the Bureau of Immigration. As a result, he was prevented from
boarding a flight to Singapore on June 29, 2002.
Constrained by these circumstances, David filed a complaint for Declaratory Relief, Sum of Money and Damages
before the RTC. He insisted on his entitlement to the commissions due under the regular and Pares-Pares programs
in his capacity as Principal Agent under the General Agency Agreement with PPI; that he be allowed to hold the
cash deposits of P19,302,902.00 to the extent of P18,631,900.00 as a trust fund for the benefit of the subscribers of
the Pares-Pares program; that RCBC be ordered to recognize no other signatory relative to the said deposits except
him; and that Paragas, Lobrin and Datoy be held liable in an amount not less thanP20,000,000.00, representing the
missing amount and/or unauthorized disbursements from the funds of Olympia, plus the payment of moral
damages, exemplary damages and attorneys fees.
Paragas and Lobrin filed their answers with compulsory Counterclaims against David, to wit:
8

First Counterclaim - to mandate David to render an accounting of the amounts mentioned;

Second Counterclaim - to require David to turn over such books of accounts and other documents owned by
Olympia as well as all records pertaining to Olympias business transactions in the Philippines;
Third Counterclaim - to make David pay the amount of P24,893,562.90 to Philam as cash bonuses of the respective
original subscribers;

Fourth Counterclaim - to make David pay Lobrin and Paragas the amount of P24,521,245.00 each, as and by way
of actual damages, representing (1) Lobrin and Paragas respective shares as co-owners in the net profit of Olympia
from the sale of the Pre-need plan under the pares-pares program in the amount of P14,521,245.00 and the amount
of P10,000,000.00 representing the cost of plane fares, living allowances and unrealized profit;
Fifth Counterclaim - to hold David liable to pay Lobrin and Paragas the amount of P20,000,000.00 each, as and by
way of moral damages;
Sixth Counterclaim - to make David pay the amount of P10,000,000.00 as and by way of exemplary damages; and
Seventh Counterclaim - to hold David personally liable to pay Lobrin and Paragas the amount of P1,000,000.00 as
attorneys fees, plus such amount as may be proved during the trial as litigation expenses and cost of suit.
9

On March 5, 2003, David filed the supplemental complaint, with a manifestation that an amicable settlement was
struck with Lobrin and Datoy whereby they agreed to withdraw the complaint and counterclaims against each other.
On May 6, 2003, Lobrin and Olympia through their counsel, confirmed that on March 26, 2003, they had arrived at a
compromise. The agreement clearly stated that Lobrin was acting on Olympias behalf, on the basis of a resolution
passed during the board meeting held on March 21, 2003. The settlement reads:
10

COMPROMISE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This Agreement, entered into by and between:
DAVID M. DAVID, of legal age, married, Filipino and with address at 23 Pablo Roman Street, BF Homes,
Paranaque, hereinafter referred to as DMD;
-andOLYMPIA INTERNATIONAL LIMITED, a corporation organized and existing under the laws of Hong Kong, with
principal office at 13/F Li Dong Building, 7-11 Li Yuen Street East, Central, Hong Kong, and herein represented by
its Attorney-in-Fact, Henry G. Lobrin, and herein after referred to as Olympia;
WITNESSETH: That
WHEREAS, Olympia has passed a board resolution during the meeting of its Board of Directors held in Hong Kong
on 21 March 2003 constituting and appointing as such its herein Attorney-in-Fact for the purposes stated in said
resolution, a copy of which is hereto attached as Annex "A"; WHEREAS, there is a pending case before Branch 200
of the Regional Trial Court of Las Pi[]as City docketed as Civil Case No. LP-02-0165 ("the Case") and among the
defendants in said Case are Henry G. Lobrin, Federico M. Paragas, Jr. and Roberto S. Datoy who are presently
directors of Olympia;
WHEREAS, the causes of action in the complaint in said Case against aforesaid Lobrin, Paragas, Jr. and Datoy are
in their capacity as shareholders/directors of Olympia, and likewise concern the relationship and rights between
DMD and Olympia International Ltd., including the status of the latters operations and financial position;
WHEREAS, another issue in said case is the respective rights of herein parties DMD and Olympia under and
pursuant to the General Agency Agreement (GAA) with Philam Plans Inc., ("PPI") dated 10 February 1998;
WHEREAS, corollary to the issue of the GAA is the respective obligation of DMD and Olympia to the planholders of
PPI under the regular and pares pares program, specifically the binhing yaman and pamilyaman benefits due to
approximately 12,000 planholders of Philam Plans Inc. ("PPI") as per the list attached to the complaint in said Case;
WHEREAS, both DMD and Olympia are desirous of settling the Case amicably under mutually acceptable terms
and conditions:

NOW, THEREFORE, parties hereby agree as follows:

1. Olympia hereby waives its rights and interests to the trust fund presently in Account Nos. 1-21425224-0, 07214108903-003 and 0000005292 with the Rizal Commercial Banking Corporation
("RCBC") and Account No. 0301-01334-5 with the Equitable PCI Bank pertaining to the cash
benefits of the approximately 12,000 planholders of Philam Plans, Inc., per the list attached to the
complaint in the Case;
2. Olympia further agrees that the same shall be settled exclusively by DMD, subject to the
requirement that it shall be furnished a copy of the Statement of Benefits pertaining to each
planholder;
3. Olympia likewise no longer interposes any objection/opposition to the payment of the cash
benefits to the planholders from said trust funds, and shall make of record in the Case the
withdrawal of its opposition;
4. DMD shall drop as party Defendants from the Case Severo Henry G. Lobrin, Federico M.
Paragas, Jr. and Rodelio S. Datoy;
5. Olympia shall withdraw its First Compulsory Counterclaim, Second Compulsory Counterclaim and
Third Compulsory Counterclaim as stated in the "Answer with Compulsory Counterclaims" dated 3
October 2002 filed in said Case, because the subject matters of said compulsory counterclaims are
exclusively the concern of Olympia as a corporation and are now the subject of this Compromise
Agreement;
6. Olympia shall likewise withdraw the Fourth Compulsory Counterclaim, Fifth Compulsory
Counterclaim, Sixth Compulsory Counterclaim and Seventh Compulsory Counterclaim in so far as
they refer to claims to which the claimants will be entitled in their capacity as shareholder and/or
director of Olympia;
7. The Fourth Compulsory Counterclaim, Fifth Compulsory Counterclaim, Sixth Compulsory
Counterclaim and Compulsory Counterclaim (sic) will also be withdrawn by Henry G. Lobrin in his
personal capacity;
8. For this purpose, the following motions shall be filed pursuant to this Agreement;
a. A Joint Motion shall be filed in the case for the dismissal of the complaint and compulsory
counterclaims as above stated;
b. A Motion to Withdraw Opposition to the Motion to Release Benefits and Supplemental
Motion (to Release Benefits) be filed by Olympia through its Attorney-in-Fact.
IN WITNESS WHEREOF, parties hereto set their hands this ____ day of _________ in ____________________.
1wphi1

DAVID M. DAVID

OLYMPIA
INTERNATIONAL
Ltd.
By:
HENRY G. LOBRIN
Attorney-in Fact
HENRY G. LOBRIN

In his personal capacity

[Emphases supplied]

11

On May 15, 2003, David and Lobrin filed the Joint Omnibus Motion to formally inform the RTC of the compromise
agreement. They asserted the following:
2. Said agreement was executed between Plaintiff and Olympia, the latter being represented by Defendant
Lobrin as Olympias Attorney-in-Fact, pursuant to a resolution passed by a majority vote during the board
meeting held in Hong [Kong] on 21 March 2003 wherein Defendants Lobrin, Paragas, Jr. and Datoy were all
present, authorizing said Attorney-in-Fact to negotiate a compromise settlement regarding instant case, the
payment of the accrued benefits due the planholders of Philam Plan, Inc. under the regular and Pares-Pares
program as well as the disposition of the cash and other deposits with Rizal Commercial Banking
Corporation (RCBC) and other accounts in other banks. Said resolution is appended to the Agreement as its
Annex "A";
3. By virtue of said Agreement, Olympia no longer questions and hereby waives whatever rights and interest
it may have to the deposits constituting the trust fund pertaining to the cash benefits of the approximately
12,000 planholders of Philam Plans Inc., per the list attached to the complaint in instant case in Account
Nos. 1-214-25224-0, 07214108903-003 and 0000005292 with RCBC and Account No. 0301-01334-5 with
the Equitable-PCI Bank;
4. Olympia further withdraws its objection/opposition to the payment of the cash benefits to the planholders
from said trust funds which shall remain to be the sole responsibility/accountability of Plaintiff, subject to the
requirement that Olympia through its authorized Attorney-in-Fact shall be furnished a copy of the Statement
of Benefits pertaining to each planholder;
5. As a consequence of the above, Defendants Severo Henry G. Lobrin, Federico M. Paragas, Jr. and
Rodelio S. Datoy shall be dropped as party defendants in instant case, to which no objection will be
interposed by Plaintiff, and the motion to declare Defendant Datoy in default for failure to file his Answer is
similarly withdrawn for having been rendered moot and academic by the Agreement;
6. Olympia hereby withdraw[s] its First, Second and Third Compulsory Counterclaims against herein Plaintiff
considering that the legal and factual bases thereof are matters which are exclusively the concern of
Olympia as a corporation and have been the subject of the Agreement;
7. Olympia likewise withdraws the Fourth, Fifth, Sixth and Seventh Compulsory Counterclaim in so far as
they refer to the claims pertaining to Defendants Paragas, Lobrin and Datoy in their capacity as
shareholders and/or directors of Olympia;
8. Defendant Lobrin likewise withdraws the Fourth, Fifth, Sixth and Seventh Compulsory Counterclaim in so
far as they refer to claims pertaining to him in his personal capacity;
9. Plaintiff likewise withdraws his complaint against Defendant Gera[l]d P.S. Algarra based on the statements
contained in the latters Answer, and said Defendant likewise withdraws his Counterclaims against plaintiff,
however, Plaintiff reserves his right to implead the proper party Defendant; and
10. This motion is without prejudice to the right of Defendant Paragas to join and/or avail of the benefits of
the Agreement and instant Motion hereinafter.
12

On May 8, 2003, Paragas questioned the existence of the cited BOD resolution granting Lobrin the authority to
settle the case, as well as the validity of the agreement through an affidavit duly authenticated by the Philippine
Consul, Domingo Lucinario, Jr. He pointed to the fact that Olympia, as an entity, was never a party in the
controversy.

On July 21, 2003, the RTC granted Davids Motion to Admit the Supplemental Complaint and approved the
compromise agreement, to wit:
Further, finding the agreement in the JOINT OMNIBUS MOTION to be well-taken, not contrary to law, public policy
and morals, the same is hereby APPROVED and the motion GRANTED. The resolution is hereby rendered based
thereon, thus, the parties concerned are enjoined to faithfully comply with all the terms and conditions stated
therein. As prayed for by the parties concerned in the JOINT OMNIBUS MOTION, let Henry G. Lobrin, Rodelio S.
Datoy and Gera[l]d PS Algarra BE DROPPED as party defendants except defendant Federico Paragas, Jr. who filed
an Opposition thereto, and the compulsory counterclaims between defendants Lobrin, Datoy and Algarra and
plaintiff David against each other DISMISSED. The withdrawal of the motion to declare defendant Datoy is hereby
noted.
13

On August 15, 2003, Paragas moved for reconsideration, claiming that although the parties had the prerogative to
settle their differences amicably, the intrinsic and extrinsic validity of the compromise agreement, as well as its
basis, may be questioned if illicit and unlawful.
14

In its September 30, 2003 Order, the RTC denied the motion of Paragas.
15

Unperturbed, Paragas elevated the issue to the CA via a petition for certiorari under Rule 65 of the Rules of Court.
In its July 31, 2006 Decision, the CA reversed the RTCs approval of the compromise agreement. It explained that
the agreement entered into by David, Lobrin and Datoy was invalid for two reasons: First, the agreement was
between David and Olympia, which was not a party in the case; and second, assuming that Olympia could be
considered a party, there was no showing that the signatory had the authority from Olympia or from the other parties
being sued to enter into a compromise.
David moved for reconsideration. In its February 23, 2007 Resolution, the CA denied his motion. Hence, this
petition.
GROUNDS OF THE PETITION
I. RESPONDENT COURT LACKEDAND/OR EXCEEDED ITS JURISDICTION WHEN IT MODIFIED THE
ORDER OF THE TRIAL COURT DATED JULY21, 2003, DESPITE THE ASSIGNMENT OF ERROR
BEINGSPECIFICALLY LIMITED TO THE ORDER OF THE TRIAL COURT DATED SEPTEMBER 30, 2003
WHICH DENIED THE MOTION FOR RECONSIDERATION FILED BY HEREIN PRIVATE RESPONDENT
II. OLYMPIA IS NOT A PARTY TO THE CASE BELOW, HENCE, THE DISMISSAL OF THE COMPLAINT
AND COMPULSORY COUNTERCLAIMS ARE PERSONAL IN NATURE TO THE PARTIES AND IS WITHIN
THE PURVIEW OF SECTION 2 OF RULE 17
III. THERE IS DENIAL OF DUE PROCESS OF LAW WHEN RESPONDENT COURT ANNULLED THE
COMPROMISE AGREEMENT BASED ON UNSUBSTANTIATED ALLEGATIONS OF FACT CONTAINED IN
THE PETITION.
16

In his reply, David limited his "discussion to the issue that still has a practical bearing on the case below," that is,
whether or not the nullification of the Compromise Agreement similarly nullified the dismissal of both the complaint
as against the defendants xxx.
17

18

19

In the Resolution, dated February 16,2011, the Court gave due course to the petition and directed the parties to file
their respective memoranda. While Paragas was able to file his memorandum on May 16, 2011, Davids
memorandum was dispensed with in a resolution, dated June 19, 2013, for his failure to file one within the extended
period granted by the Court. Position of David
20

21

David charges the CA with grave abuse of discretion in dispensing a relief more than what Paragas prayed for.
According to David, the CA exceeded its jurisdiction when it annulled the compromise agreement despite the fact
that the assignment of error in the petition of Paragas before the CA was limited only to the review of the
correctness of the RTCs September 30, 2003 Order denying the motion for reconsideration and not the July 21,

2003 Order approving the compromise agreement. In other words, David is of the view that because Paragas did
not assail the July 21, 2003 Order, the same should not have been modified by the CA.
He further insists that the CA should not have annulled the compromise agreement because the July 21, 2003 RTC
Order did not refer to the approval of the compromise agreement, but to the agreement of the parties to dismiss the
claims and counterclaims against each other. In support of this position, David takes refuge in the RTC statement
that the parties had the right to "amicably settle their issues even if subject compromise agreement had not been
entered into." To him, it was not the "Compromise Agreement" that was approved, but the "underlying agreement
between the parties to withdraw their claims against each other which are personal to them in nature."
Lastly, David submits that he was denied due process of law when the CA annulled the compromise agreement
based on unsubstantiated allegations of fact, that is, the allegation that the board meeting granting Lobrin the
authority to enter into compromise with him on behalf of Olympia and on behalf of the other parties did not take
place. He believes that Paragas failed to prove his allegations and, therefore, the meeting, as supported by the
minutes signed by one Flordeliza Sacapano, must be respected as a matter of fact.
The Courts Ruling
The Court denies the petition.
The CA did not exceed its
jurisdiction in modifying
the July 21, 2003 RTC Order
In his petition, David claims that the CA exceeded its jurisdiction when it modified the July 21, 2003 Order of the
RTC by admitting Davids supplemental complaint and approving the earlier mentioned compromise agreement
even though Paragas petition for certiorari before the CA only questioned the September 30, 2003 Order of the
RTC denying his motion for reconsideration.
22

This Court is unmoved by this position advocated by David.

In countless cases, the Court has allowed the consideration of other grounds or matters not raised or assigned as
errors. In the case of Cordero vs. F.S. Management & Development Corporation, the Court wrote:
23

While a party is required to indicate in his brief an assignment of errors and only those assigned shall be considered
by the appellate court in deciding the case, appellate courts have ample authority to rule on matters not assigned as
errors in an appeal if these are indispensable or necessary to the just resolution of the pleaded issues. Thus this
Court has allowed the consideration of other grounds or matters not raised or assigned as errors, to wit: 1) grounds
affecting jurisdiction over the subject matter; 2) matters which are evidently plain or clerical errors within the
contemplation of the law; 3) matters the consideration of which is necessary in arriving at a just decision and
complete resolution of the case or to serve the interest of justice or to avoid dispensing piecemeal justice; 4) matters
of record which were raised in the trial court and which have some bearing on the issue submitted which the parties
failed to raise or which the lower court ignored; 5) matters closely related to an error assigned; and 6) matters upon
which the determination of a question properly assigned is dependent.[Emphases supplied]
24

In this case, while it is true that Paragas petition for certiorari before the CA only assailed the subsequent order of
the RTC denying his August 15, 2003 Motion for Reconsideration, he did pray in the said motion for reconsideration
that it set aside and reverse its approval of the Joint Omnibus Motion. The prayer reads:
WHEREFORE, it is respectfully prayed of this Honorable Court that the Order dated 21 July 2003 be MODIFIED to
SET ASIDE and REVERSE the approval of the Joint Omnibus Motion dated 15 May 2003 and a new one be issued
DENYING said motion.
25

Obviously, the resolution of his motion for reconsideration necessarily involved the July 21, 2003 Order of the RTC
as it was indispensable and inextricably linked with the September 30, 2003 Order being assailed.

The CA did not err in annulling the

compromise agreement.
At the outset, David asserts that the CA based the annulment of the compromise agreement exclusively on the
unsubstantiated allegations of Paragas.
The Court disagrees. A careful reading of the assailed CA decision reveals that it did not merely rely on the claims of
Paragas. What the CA did was to analyze and appreciate the circumstances behind the compromise agreement. In
revisiting and delving deep into the records, the Court indeed agrees with the CA that the RTC gravely abused its
discretion in approving the agreement for the following reasons:
First, the subject compromise agreement could not be the basis of the withdrawal of the respective complaint and
counterclaims of the parties for it was entered into by David with a non-party in the proceedings. Even if the Court
interprets that the RTC approved the underlying agreement to withdraw the claims and counterclaims between the
parties, the terms and conditions of the subject compromise agreement cannot cover the interests of Olympia, being
a non-party to the suit.
Second, the RTC had no authority to approve the said compromise agreement because Olympia was not impleaded
as a party, although its participation was indispensable to the resolution of the entire controversy.
A compromise agreement could not be
the basis of dismissal/withdrawal of a
complaint and counterclaims if it was
entered into with a non-party to the
suit.
A compromise agreement is a contract whereby the parties make reciprocal concessions in order to resolve their
differences and, thus, avoid or put an end to a lawsuit. They adjust their difficulties in the manner they have agreed
upon, disregarding the possible gain in litigation and keeping in mind that such gain is balanced by the danger of
losing. It must not be contrary to law, morals, good customs and public policy, and must have been freely and
intelligently executed by and between the parties. A compromise agreement may be executed in and out of court.
Once a compromise agreement is given judicial approval, however, it becomes more than a contract binding upon
the parties. Having been sanctioned by the court, it is entered as a determination of a controversy and has the force
and effect of a judgment.
26

27

Verily, a judicially approved compromise agreement, in order to be binding upon the litigants with the force and
effect of a judgment, must have been executed by them. In this case, the compromise agreement was signed by
David in his capacity as the complainant in the civil case, and Olympia, through Lobrin as its agent. The agreement
made plain that the terms and conditions the "parties" were to follow were agreed upon by David and Olympia.
Datoy and Paragas never appeared to have agreed to such terms for it was Olympia, despite not being a party to
the civil case, which was a party to the agreement. Despite this, David claims that the concessions were made by
Olympia on behalf of the non-signatory parties and such should be binding on them.
David must note that Olympia is a separate being, or at least should be treated as one distinct from the personalities
of its owners, partners or even directors. Under the doctrine of processual presumption, this Court has to presume
that Hong Kong laws is the same as that of the Philippines particularly with respect to the legal characterization of
Olympias legal status as an artificial person. Elementary is the rule that under Philippine corporate and partnership
laws, a corporation or a partnership possesses a personality separate from that of its incorporators or partners.
Olympia should, thus, be accorded the status of an artificial being at least for the purpose of this controversy.
On that basis, Olympias interest should be detached from those of directors Paragas, Lobrin, Datoy, and even
David. Their (individual directors) interest are merely indirect, contingent and inchoate. Because Olympias
involvement in the compromise was not the same as that of the other parties who were, in the first place, never part
of it, the compromise agreement could not have the force and effect of a judgment binding upon the litigants,
specifically Datoy and Paragas. Conversely, the judicially approved withdrawal of the claims on the basis of that
compromise could not be given effect for such agreement did not concern the parties in the civil case.

David, nevertheless, points out that the validity of the dismissal of the claims and counterclaims must remain on the
argument that the compromise agreement was made in their personal capacities inasmuch as he filed the complaint
against Paragas, Lobrin and Datoy also in their personal capacities. He draws support from the Answer with
Compulsory Counterclaims filed by Paragas and Lobrin. The counterclaims against him did not involve Olympia,
save for the demand to render an accounting as well as to turn over the books of account and records pertaining to
the latter. David, thus, stated:
28

It is very clear from the order of July 21, 2003 that the agreement being referred to as having been approved is not
the Compromise Agreement but the agreement of the parties to dismiss the claims and counterclaims against each
other. This is obvious when the order stated that it is within the right of the parties to amicably settle the issues even
if subject Compromise Agreement had not been entered into. Clearly, it was not the Compromise Agreement that
was approved, because precisely it involved Olympia, but the underlying agreement between the parties to withdraw
their claims against each other which are personal to them in nature. As noted by the trial court, even without the
Compromise Agreement, parties could still settle the case amicably and withdraw the claims against one another
which is precisely what the parties did.
29

His contention is devoid of merit.

While David repeatedly claims that his complaint against Paragas, Lobrin and Datoy was personal in character, a
review of the causes of action raised by him in his complaint shows that it primarily involved Olympia. As defined, a
cause of action is an act or omission by which a party violates a right of another. It requires the existence of a legal
right on the part of the plaintiff, a correlative obligation of the defendant to respect such right and an act or omission
of such defendant in violation of the plaintffss rights.
30

In his complaint, David raised three causes of action. The first one dealt with the alleged omission on the part of the
other venture partners to respect his right, being Olympias beneficial owner and PPIs principal agent under the
GAA, over the income generated from the sale PPIs pre-need plans. The second dealt with his right over all
amounts that the venture partners disbursed in excess of those authorized by him, under the premise that he
remained Olympias beneficial owner. The third dealt with the acts of the venture partners in causing undue
humiliation and shame when he was prevented from boarding his Singapore-bound plane pursuant to the WatchList Order issued by the Bureau of Immigration at the behest of a letter sent by the counsel of Paragas. Accordingly,
David prayed that the RTC:
a. Declare him as the one entitled to the commission due under the regular and Pares-Pares programs net of the
agents commission in his capacity as Principal Agent under the General Agency Agreement with Philam Plans, Inc.;
b. Hold the cash deposits of P19,302,902.00 to the extent of P18,631,900.00 as a trust fund for the benefit of the
subscribers of the Pares-Pares Program and validly held in trust by [him];
c. Order Defendant RCBC to recognize no other signatory to said deposits except [him].
xxxx

31

Essentially, David was asking for judicial determination of his rights over Olympias revenues, funds in the RCBC
bank accounts and the amounts used and expended by Olympia through the acts of its directors/defendants.
Nothing therein can be said to be "personal" claims against Paragas, Lobrin and Datoy, except for his claim for
damages resulting from the humiliation he suffered when he was prevented from boarding his Singapore-bound
plane. Obviously, the argument that they executed the compromise agreement in their personal capacities does not
hold water.
For even if the Court looks closer at the concessions made, many provisions deal with Olympias interests instead of
the personal claims they have against one another. A review of the Joint Omnibus Motion would also show that the
compromise agreement dealt more with David and Olympia. Given this, Olympia did not have the standing in court
to enter into a compromise agreement unless impleaded as a party. The RTC did not have the authority either to
determine Olympias rights and obligations. Furthermore, to allow the compromise agreement to stand is to deprive
Olympia of its properties and interest for it was never shown that the person who signed the agreement on its behalf
had any authority to do so.

More importantly, Lobrin, who signed the compromise agreement, failed to satisfactorily prove his authority to bind
Olympia. The CA observed, and this Court agrees, that the "board resolution" allegedly granting authority to Lobrin
to enter into a compromise agreement on behalf of Olympia was more of a part of the "minutes" of a board meeting
containing a proposal to settle the case with David or to negotiate a settlement. It should be noted that the said
document was not prepared or issued by the Corporate Secretary of Olympia but by a "Secretary to the Meeting."
Moreover, the said resolution was neither acknowledged before a notarial officer in Hong Kong nor authenticated
before the Philippine Consul in Hong Kong. Considering these facts, the RTC should have denied the Joint
Omnibus Motion and disapproved the compromise agreement. In fine, Olympia was not shown to have properly
consented to the agreement, for the rule is, a corporation can only act through its Board of Directors or anyone with
the authority of the latter. To allow the compromise agreement to stand is to deprive Olympia of its properties and
interest for it was never shown that Lobrin had the necessary authority to sign the agreement on Olympias behalf.
32

Olympia is an indispensable
Party
In Lotte Phil. Co., Inc. v. Dela Cruz, the Court reiterated that an indispensable party is a party-in-interest without
whom no final determination can be had of an action, and who shall be joined either as plaintiffs or defendants. The
joinder of indispensable parties is mandatory. The presence of indispensable parties is necessary to vest the court
with jurisdiction, which is "the authority to hear and determine a cause, the right to act in a case."
33

34

Considering that David was asking for judicial determination of his rights in Olympia, it is without a doubt, an
indispensable party as it stands to be injured or benefited by the outcome of the main proceeding. It has such an
interest in the controversy that a final decree would necessarily affect its rights. Not having been impleaded,
Olympia cannot be prejudiced by any judgment where its interests and properties are adjudicated in favor of another
even if the latter is a beneficial owner. It cannot be said either to have consented to the judicial approval of the
compromise, much less waived substantial rights, because it was never a party in the proceedings.
Moreover, Olympias absence did not confer upon the RTC the jurisdiction or authority to hear and resolve the whole
controversy. This lack of authority on the part of the RTC which flows from the absence of Olympia, being an
indispensable party, necessarily negates any binding effect of the subject judicially-approved compromise
agreement.
1wphi1

Time and again, the Court has held that the absence of an indispensable party renders all subsequent actions of the
court null and void for want of authority to act, not only as to the absent parties but even to those present. The
failure to implead an indispensable party is not a mere procedural matter. Rather, it brings to fore the right of a
disregarded party to its constitutional rights to due process. Having Olympia's interest being subjected to a judiciallyapproved agreement, absent any participation in the proceeding leading to the same, is procedurally flawed. It is
unfair for being violative of its right to due process. In fine, a holding that is based on a compromise agreement that
springs from a void proceeding for want of jurisdiction over the person of an indispensable party can never become
binding, final nor executory and it may be "ignored wherever and whenever it exhibits its head."
35

Lest it be misunderstood, after the remand of this case to the R TC, the parties can still enter into a compromise
agreement on matters which are personal to them. That is their absolute right. They can dismiss their claims and
counterclaims against each other, but the dismissal should not be dependent or contingent on a compromise
agreement, one signatory to which is not a party. It should not also involve or affect the rights of Olympia, the nonparty, unless it is properly impleaded as one. Needless to state, a judicial determination of the rights of Olympia,
when it is not a party, would necessarily affect the rights of its shareholders or partners, like Paragas, without due
process of law.
WHEREFORE, the petition is DENIED. The July 31, 2006 Decision of the Court of Appeals and its February 23,
2007 Resolution in CA-G.R. SP No. 80942 are hereby AFFIRMED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 204444

January 14, 2015

VIRGILIO C. BRIONES, Petitioner,

vs.
COURT OF APPEALS and CASH ASIA CREDIT CORPORATION, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari are the Decision dated March 5, 2012 and the Resolution dated October 4,
2012 of the Court of Appeals (CA) in CA-G.R. SP No. 117474, which annulled the Orders dated September 20,
2010 and October 22, 2010 of the Regional Trial Court of Manila, Branch 173 (RTC) in Civil Case No. 10-124040,
denying private respondent Cash Asia Credit Corporation's (Cash Asia) motion to dismiss on the ground of improper
venue.
1

The Facts

The instant case arose from a Complaint dated August 2, 2010 filed by Virgilio C. Briones (Briones) for Nullity of
Mortgage Contract, Promissory Note, Loan Agreement, Foreclosure of Mortgage, Cancellation of Transfer
Certificate of Title (TCT) No. 290846, and Damages against Cash Asia before the RTC. In his complaint, Briones
alleged that he is the owner of a property covered by TCT No. 160689 (subject property), and that, on July 15, 2010,
his sister informed him that his property had been foreclosed and a writ of possession had already been issued in
favor of Cash Asia. Upon investigation, Briones discovered that: (a) on December 6, 2007, he purportedly executed
a promissory note, loan agreement, and deed of real estate mortgage covering the subject property (subject
contracts) in favor of Cash Asia in order to obtain a loan in the amount of P3,500,000.00 from the latter; and (b)
since the said loan was left unpaid, Cash Asia proceeded to foreclose his property. In this relation, Briones claimed
that he never contracted any loans from Cash Asia as he has been living and working in Vietnam since October 31,
2007. He further claimed that he only went back to the Philippines on December 28, 2007 until January 3, 2008 to
spend the holidays with his family, and that during his brief stay in the Philippines, nobody informed him of any loan
agreement entered into with Cash Asia. Essentially, Briones assailed the validity of the foregoing contracts claiming
his signature to be forged.
6

10

11

12

13

14

For its part, Cash Asia filed a Motion to Dismiss dated August 25, 2010, praying for the outright dismissal of
Brioness complaint on the ground of improper venue. In this regard, Cash Asia pointed out the venue stipulation in
the subject contracts stating that "all legal actions arising out of this notice in connection with the Real Estate
Mortgage subject hereof shall only be brought in or submitted tothe jurisdiction of the proper court of Makati
City." In view thereof, it contended that all actions arising out of the subject contracts may only be exclusively
brought in the courts of Makati City, and as such, Brioness complaint should be dismissed for having been filed in
the City of Manila.
15

16

17

18

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

20

The RTC Ruling

In an Order dated September 20, 2010, the RTC denied Cash Asias motion to dismiss for lack of merit. In denying
the motion, the RTC opined that the parties must be afforded the right to be heard in view of the substance of
Brioness cause of action against Cash Asia as stated in the complaint.
21

22

Cash Asia moved for reconsideration which was, however, denied in an Order dated October 22, 2010. Aggrieved,
it filed a petition for certiorari before the CA.
23

24

25

The CA Ruling
In a Decision dated March 5, 2012, the CA annulled the RTC Orders, and accordingly, dismissed Brioness
complaint without prejudice to the filing of the same before the proper court in Makati City. It held that the RTC
gravely abused its discretion in denying Cash Asias motion to dismiss, considering that the subject contracts clearly
provide that actions arising therefrom should be exclusively filed before the courts of Makati City only. As such, the
CA concluded that Brioness complaint should have been dismissed outright on the ground of improper venue, this,
notwithstanding Brioness claim of forgery.
26

27

28

29

Dissatisfied, Briones moved for reconsideration, which was, however, denied in a Resolution dated October 4,
2012, hence, this petition.
30

31

The Issue Before the Court

The primordial issue for the Courts resolution is whether or not the CA gravely abused its discretion in ordering the
outright dismissal of Brioness complaint on the ground of improper venue.
The Courts Ruling

The petition is meritorious.

At the outset, the Court stresses that "[t]o justify the grant of the extraordinary remedy of certiorari, [the petitioner]
must satisfactorily show that the court or quasi-judicial authority gravely abused the discretion conferred upon it.
Grave abuse of discretion connotes judgment exercised in a capricious and whimsical manner that is tantamount to
lack of jurisdiction. To be considered grave, discretion must be exercised in a despotic manner by reason of
passion or personal hostility, and must be so patent and gross as to amount to an evasion of positive duty or to a
virtual refusal to perform the duty enjoined by or to act at all in contemplation of law." Guided by the foregoing
considerations, the Court finds that the CA gravely abused its discretion in ordering the outright dismissal of
Brioness complaint against Cash Asia, without prejudice to its re-filing before the proper court in Makati City.
32

Rule 4 of the Rules of Court governs the rules on venue of civil actions, to wit:
Rule 4
VENUE OF ACTIONS
SECTION 1. Venue of real actions. Actions affecting title to or possession of real property, or interest therein,
shall be commenced and tried in the proper court which has jurisdiction over the area wherein the real property
involved, or a portion thereof, is situated.
Forcible entry and detainer actions shall be commenced and tried in the municipal trial court of the municipality or
city wherein the real property involved, or a portion thereof, is situated.
SEC. 2. Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of
the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a
non-resident defendant where he may be found, at the election of the plaintiff.
SEC. 3. Venue of actions against nonresidents. If any of the defendants does not resideand is not found in the
Philippines, and the action affects the personal status of the plaintiff, or any property of said defendant located in the
Philippines,the action may be commenced and tried in the court of the place where the plaintiff resides, or where the
property or any portion thereof is situated or found.
SEC. 4. When Rule not applicable. This Rule shall not apply
(a) In those cases where a specific rule or law provides otherwise; or
(b) Where the parties have validly agreed in writing before the filing of the action on the exclusive venue
thereof.
Based therefrom, the general rule is that the venue of real actions is the court which has jurisdiction over the area
wherein the real property involved, or a portion thereof, is situated; while the venue of personal actions is the court
which has jurisdiction where the plaintiff or the defendant resides, at the election of the plaintiff. As an exception,
jurisprudence in Legaspi v. Rep. of the Phils. instructs that the parties, thru a written instrument, may either
introduce another venue where actions arising from such instrument may be filed, or restrict the filing of said actions
in a certain exclusive venue, viz.:
33

The parties, however, are not precluded from agreeing in writing on an exclusive venue, as qualified by Section 4 of
the same rule. Written stipulations as to venue may be restrictive in the sense that the suit may be filed only in the
place agreed upon, or merely permissive in that the parties may file their suitnot only in the place agreed upon but
also in the places fixed by law. As in any other agreement, what is essential is the ascertainment of the intention of
the parties respecting the matter.
As regards restrictive stipulations on venue, jurisprudence instructs that it must be shown thatsuch stipulation is
exclusive. In the absence of qualifying or restrictive words, such as "exclusively," "waiving for this purpose any
1wphi1

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

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

In this case, the venue stipulation found in the subject contracts is indeed restrictive in nature, considering that it
effectively limits the venue of the actions arising therefrom to the courts of Makati City. However, it must be
emphasized that Briones' s complaint directly assails the validity of the subject contracts, claiming forgery in their
execution. Given this circumstance, Briones cannot be expected to comply with the aforesaid venue stipulation, as
his compliance therewith would mean an implicit recognition of their validity. Hence, pursuant to the general rules on
venue, Briones properly filed his complaint before a court in the City of Manila where the subject property is located.
In conclusion, the CA patently erred and hence committed grave abuse of discretion in dismissing Briones's
complaint on the ground of improper venue.
WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated March 5, 2012 and the Resolution dated
October 4, 2012 of the Court of Appeals in CA-G.R. SP No. 117474 are hereby ANNULLED and SET ASIDE. The
Orders dated September 20, 2010 and October 22, 2010 of the Regional Trial Court of Manila, Branch 173 in Civil
Case No. 10-124040 are REINSTATED.
SO ORDERED.