1.2 cases-subj matter jurisdiction.pdf

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SUBJECT MATTER JURISDICTION

HASEGAWA v.KITAMURA [G.R. NO. 149177 : November 23, 2007]

Before the Court is a Petition for Review on Certiorariunder Rule 45 of

the Rules of Court assailing the April 18, 2001 Decision1

of the Court ofAppeals (CA) in CA-G.R. SP No. 60827, and the July 25, 2001Resolution2denying the motion for reconsideration thereof.

On March 30, 1999, petitioner Nippon Engineering Consultants Co.,Ltd. (Nippon), a Japanese consultancy firm providing technical andmanagement support in the infrastructure projects of foreigngovernments,3 entered into an Independent Contractor Agreement(ICA) with respondent Minoru Kitamura, a Japanese nationalpermanently residing in the Philippines.4The agreement provides thatrespondent was to extend professional services to Nippon for a yearstarting on April 1, 1999.5Nippon then assigned respondent to work as

the project manager of the Southern Tagalog Access Road (STAR)Project in the Philippines, following the company's consultancycontract with the Philippine Government.6

When the STAR Project was near completion, the Department ofPublic Works and Highways (DPWH) engaged the consultancyservices of Nippon, on January 28, 2000, this time for the detailedengineering and construction supervision of the Bongabon-Baler RoadImprovement (BBRI) Project.7Respondent was named as the projectmanager in the contract's Appendix 3.1.8

On February 28, 2000, petitioner Kazuhiro Hasegawa, Nippon's

general manager for its International Division, informed respondentthat the company had no more intention of automatically renewing hisICA. His services would be engaged by the company only up to the

substantial completion of the STAR Project on March 31, 2000, just intime for the ICA's expiry.9

Threatened with impending unemployment, respondent, through hislawyer, requested a negotiation conference and demanded that he beassigned to the BBRI project. Nippon insisted that respondent'scontract was for a fixed term that had already expired, and refused tonegotiate for the renewal of the ICA.10

As he was not able to generate a positive response from thepetitioners, respondent consequently initiated on June 1, 2000 CivilCase No. 00-0264 for specific performance and damages with theRegional 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 todismiss the complaint for lack of jurisdiction. They asserted that theclaim for improper pre-termination of respondent's ICA could only beheard and ventilated in the proper courts of Japan following theprinciples of lex loci celebrationis and lex contractus.12

In the meantime, on June 20, 2000, the DPWH approved Nippon'srequest for the replacement of Kitamura by a certain Y. Kotake asproject manager of the BBRI Project.13

On June 29, 2000, the RTC, invoking our ruling in Insular Governmentv. Frank14 that matters connected with the performance of contracts

are regulated by the law prevailing at the place of performance,15denied the motion to dismiss.16 The trial court subsequently deniedpetitioners' motion for reconsideration,17prompting them to file with theappellate court, on August 14, 2000, their firstPetition for Certiorariunder Rule 65 [docketed as CA-G.R. SP No. 60205].18On August 23,2000, the CA resolved to dismiss the petition on procedural grounds'forlack of statement of material dates and for insufficient verification and


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certification against forum shopping.19An Entry of Judgment was laterissued by the appellate court on September 20, 2000.20

Aggrieved by this development, petitioners filed with the CA, onSeptember 19, 2000, still within the reglementary period, a secondPetition for Certiorari under Rule 65 already stating therein the materialdates and attaching thereto the proper verification and certification.

This second petition, which substantially raised the same issues asthose in the first, was docketed as CA-G.R. SP No. 60827.21

Ruling on the merits of the second petition, the appellate courtrendered the assailed April 18, 2001 Decision22finding no grave abuseof discretion in the trial court's denial of the motion to dismiss. The CAruled, among others, that the principle of lex loci celebrationiswas notapplicable to the case, because nowhere in the pleadings was thevalidity of the written agreement put in issue. The CA thus declaredthat the trial court was correct in applying instead the principle of lexloci solutionis.23

Petitioners' motion for reconsideration was subsequently denied by theCA 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 Certiorari25imputing the following errors to the appellate court:

A. THE HONORABLE COURT OF APPEALS GRAVELY ERRED INFINDING THAT THE TRIAL COURT VALIDLY EXERCISEDJURISDICTION OVER THE INSTANT CONTROVERSY, DESPITETHE FACT THAT THE CONTRACT SUBJECT MATTER OF THE

PROCEEDINGS A QUO WAS ENTERED INTO BY AND BETWEENTWO JAPANESE NATIONALS, WRITTEN WHOLLY IN THEJAPANESE LANGUAGE AND EXECUTED IN TOKYO, JAPAN.

B. THE HONORABLE COURT OF APPEALS GRAVELY ERRED INOVERLOOKING THE NEED TO REVIEW OUR ADHERENCE TO THEPRINCIPLE OF LEX LOCI SOLUTIONIS IN THE LIGHT OF RECENTDEVELOPMENT[S] IN PRIVATE INTERNATIONAL LAWS.26

The pivotal question that this Court is called upon to resolve is whetherthe subject matter jurisdiction of Philippine courts in civil cases forspecific performance and damages involving contracts executedoutside the country by foreign nationals may be assailed on theprinciples of lex loci celebrationis, lex contractus, the "state of the mostsignificant relationship rule," or forum non conveniens.

However, before ruling on this issue, we must first dispose of theprocedural matters raised by the respondent.

Kitamura contends that the finality of the appellate court's decision inCA-G.R. SP No. 60205 has already barred the filing of the secondpetition docketed as CA-G.R. SP No. 60827 (fundamentally raising thesame issues as those in the first one) and the instant Petition forReview thereof.

We do not agree. When the CA dismissed CA-G.R. SP No. 60205 onaccount of the petition's defective certification of non-forum shopping, it

was a dismissal without prejudice.27

The same holds true in the CA'sdismissal of the said case due to defects in the formal requirement ofverification28and in the other requirement in Rule 46 of the Rules ofCourt on the statement of the material dates.29 The dismissal beingwithout prejudice, petitioners can re-file the petition, or file a secondpetition attaching thereto the appropriate verification and certificationas they, in fact did and stating therein the material dates, within theprescribed period30in Section 4, Rule 65 of the said Rules.31

The dismissal of a case without prejudice signifies the absence of adecision on the merits and leaves the parties free to litigate the matterin a subsequent action as though the dismissed action had not been

commenced. In other words, the termination of a case not on themerits does not bar another action involving the same parties, on thesame subject matter and theory.32

Necessarily, because the said dismissal is without prejudice and hasno res judicataeffect, and even if petitioners still indicated in theverification and certification of the second certiorari petition that thefirst had already been dismissed on procedural grounds,33petitioners


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are no longer required by the Rules to indicate in their certification ofnon-forum shopping in the instant Petition for Review of the secondcertiorari petition, the status of the aforesaid first petition before theCA. In any case, an omission in the certificate of non-forum shoppingabout any event that will not constitute res judicataand 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 longerpresent.34

The Court also finds no merit in respondent's contention that petitionerHasegawa is only authorized to verify and certify, on behalf of Nippon,the certiorari petition filed with the CA and not the instant petition. True,the Authorization35dated September 4, 2000, which is attached to thesecond certiorari petition and which is also attached to the instantPetition for Review, is limited in scope its wordings indicate thatHasegawa is given the authority to sign for and act on behalf of thecompany only in the petition filed with the appellate court, and thatauthority cannot extend to the instant Petition for Review .36 In a

plethora of cases, however, this Court has liberally applied the Rules oreven suspended its application whenever a satisfactory explanationand a subsequent fulfillment of the requirements have been made.37Given that petitioners herein sufficiently explained their misgivings onthis point and appended to their Reply38an updated Authorization39forHasegawa to act on behalf of the company in the instant petition, theCourt finds the same as sufficient compliance with the Rules.

However, the Court cannot extend the same liberal treatment to thedefect in the verification and certification. As respondent pointed out,and to which we agree, Hasegawa is truly not authorized to act onbehalf of Nippon in this case. The aforesaid September 4, 2000

Authorization and even the subsequent August 17, 2001 Authorizationwere issued only by Nippon's president and chief executive officer, notby the company's board of directors. In not a few cases, we have ruledthat corporate powers are exercised by the board of directors; thus, noperson, not even its officers, can bind the corporation, in the absenceof authority from the board.40Considering that Hasegawa verified andcertified the petition only on his behalf and not on behalf of the otherpetitioner, the petition has to be denied pursuant to Loquias v. Office of

the Ombudsman.41Substantial compliance will not suffice in a matterthat demands strict observance of the Rules.42While technical rules ofprocedure are designed not to frustrate the ends of justice,nonetheless, they are intended to effect the proper and orderlydisposition of cases and effectively prevent the clogging of courtdockets.43

Further, the Court has observed that petitioners incorrectly filed a Rule65 petition to question the trial court's denial of their motion to dismiss.It is a well-established rule that an order denying a motion to dismiss isinterlocutory, and cannot be the subject of the extraordinary Petition forCertiorarior mandamus. The appropriate recourse is to file an answerand to interpose as defenses the objections raised in the motion, toproceed to trial, and, in case of an adverse decision, to elevate theentire case by appeal in due course.44 While there are recognizedexceptions to this rule,45petitioners' 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 forspecific performance and damages filed by the respondent. The ICAsubject 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 relationshipto the parties46following the [state of the] most significant relationshiprule in Private International Law.47

The Court notes that petitioners adopted an additional but differenttheory when they elevated the case to the appellate court. In the

Motion to Dismiss48

filed with the trial court, petitioners nevercontended that the RTC is an inconvenient forum. They merely arguedthat the applicable law which will determine the validity or invalidity ofrespondent's claim is that of Japan, following the principles of lex locicelebrationisand lex contractus.49While not abandoning this stance intheir petition before the appellate court, petitioners on certiorarisignificantly invoked the defense of forum non conveniens.50 OnPetition for Review before this Court, petitioners dropped their other


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arguments, maintained the forum non conveniens defense, andintroduced their new argument that the applicable principle is the [stateof the] most significant relationship rule.51

Be that as it may, this Court is not inclined to deny this petition merelyon the basis of the change in theory, as explained in Philippine Ports

Authority v. City of Iloilo.52We only pointed out petitioners' inconstancy

in their arguments to emphasize their incorrect assertion of conflict oflaws principles.

To elucidate, in the judicial resolution of conflicts problems, threeconsecutive phases are involved: jurisdiction, choice of law, andrecognition and enforcement of judgments. Corresponding to thesephases are the following questions: (1) Where can or should litigationbe initiated? (2) Which law will the court apply? and (3) Where can theresulting 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 tothis state; choice of law asks the further question whether theapplication of a substantive law which will determine the merits of thecase is fair to both parties. The power to exercise jurisdiction does notautomatically 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.55The question of whether the law ofa state can be applied to a transaction is different from the question ofwhether the courts of that state have jurisdiction to enter a judgment.56

I n t h i s c a s e , o n l y t h e f i r s t p h a s e i s a t i s s u e

jurisdiction.!"#r$bl%&'(r)#l l#*l(br#r

Jurisdiction, however, has various aspects. For a court to validlyexercise its power to adjudicate a controversy, it must have jurisdictionover the plaintiff or the petitioner, over the defendant or therespondent, over the subject matter, over the issues of the case and, incases involving property, over the resor 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 conferredby the sovereign authority which establishes and organizes the court. Itis given only by law and in the manner prescribed by law.58It is furtherdetermined by the allegations of the complaint irrespective of whether

the plaintiff is entitled to all or some of the claims asserted therein.59Tosucceed in its motion for the dismissal of an action for lack of

jurisdiction over the subject matter of the claim,60 the movant mustshow that the court or tribunal cannot act on the matter submitted to itbecause no law grants it the power to adjudicate the claims.61

In the instant case, petitioners, in their motion to dismiss, do not claimthat the trial court is not properly vested by law with jurisdiction to hearthe subject controversy for, indeed, Civil Case No. 00-0264 for specificperformance and damages is one not capable of pecuniary estimationand is properly cognizable by the RTC of Lipa City.62What they ratherraise as grounds to question subject matter jurisdiction are the

principles of lex loci celebrationisand lex contractus, and the "state ofthe most significant relationship rule."

The Court finds the invocation of these grounds unsound.

Lex loci celebrationis relates to the "law of the place of theceremony"63or the law of the place where a contract is made.64Thedoctrine of lex contractus or lex loci contractus means the "law of theplace where a contract is executed or to be performed."65 It controlsthe nature, construction, and validity of the contract66 and it maypertain to the law voluntarily agreed upon by the parties or the law

intended by them either expressly or implicitly.

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Under the "state of themost significant relationship rule," to ascertain what state law to applyto a dispute, the court should determine which state has the mostsubstantial connection to the occurrence and the parties. In a caseinvolving a contract, the court should consider where the contract wasmade, was negotiated, was to be performed, and the domicile, place ofbusiness, or place of incorporation of the parties.68This rule takes into


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account several contacts and evaluates them according to their relativeimportance with respect to the particular issue to be resolved.69

Since these three principles in conflict of laws make reference to thelaw applicable to a dispute, they are rules proper for the second phase,the choice of law.70They determine which state's law is to be applied inresolving the substantive issues of a conflicts problem.71 Necessarily,

as the only issue in this case is that of jurisdiction, choice-of-law rulesare not only inapplicable but also not yet called for.

Further, petitioners' premature invocation of choice-of-law rules isexposed by the fact that they have not yet pointed out any conflictbetween the laws of Japan and ours. Before determining which lawshould apply, first there should exist a conflict of laws situationrequiring the application of the conflict of laws rules.72Also, when thelaw of a foreign country is invoked to provide the proper rules for thesolution of a case, the existence of such law must be pleaded andproved.73

It should be noted that when a conflicts case, one involving a foreignelement, is brought before a court or administrative agency, there arethree alternatives open to the latter in disposing of it: (1) dismiss thecase, either because of lack of jurisdiction or refusal to assume

jurisdiction over the case; (2) assume jurisdiction over the case andapply the internal law of the forum; or (3) assume jurisdiction over thecase and take into account or apply the law of some other State orStates.74The court's power to hear cases and controversies is derivedfrom the Constitution and the laws. While it may choose to recognizelaws of foreign nations, the court is not limited by foreign sovereign lawshort of treaties or other formal agreements, even in matters regardingrights provided by foreign sovereigns.75

Neither can the other ground raised, forum non conveniens,76be usedto deprive the trial court of its jurisdiction herein. First, it is not a properbasis for a motion to dismiss because Section 1, Rule 16 of the Rulesof Court does not include it as a ground.77 Second, whether a suitshould be entertained or dismissed on the basis of the said doctrinedepends largely upon the facts of the particular case and is addressed

to the sound discretion of the trial court.78 In this case, the RTCdecided to assume jurisdiction. Third, the propriety of dismissing acase 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 bypetitioners to assail that jurisdiction are inappropriate, the trial andappellate courts correctly denied the petitioners' motion to dismiss.

WHEREFORE, premises considered, the Petition for Review onCertiorariis DENIED.

SO ORDERED.

FIGUEROA v.PEOPLE [G.R. NO. 147406 : July 14, 2008]

When is a litigant estopped by laches from assailing the jurisdiction ofa tribunal? This is the paramount issue raised in this Petition forReview of the February 28, 2001 Decision2 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 information3for reckless imprudence resulting inhomicide was filed against the petitioner before the Regional Trial

Court (RTC) of Bulacan, Branch 18.4 The case was docketed asCriminal Case No. 2235-M-94.5 Trial on the merits ensued and on

August 19, 1998, the trial court convicted the petitioner as charged.6Inhis appeal before the CA, the petitioner questioned, among others, forthe first time, the trial court's jurisdiction.7

The appellate court, however, in the challenged decision, consideredthe petitioner to have actively participated in the trial and to have


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belatedly attacked the jurisdiction of the RTC; thus, he was alreadyestopped by laches from asserting the trial court's lack of jurisdiction.Finding no other ground to reverse the trial court's decision, the CAaffirmed the petitioner's conviction but modified the penalty imposedand the damages awarded.8

Dissatisfied, the petitioner filed the instant Petition for Review on

Certiorariraising the following issues for our resolution:

A. Does the fact that the petitioner failed to raise the issue ofjurisdiction during the trial of this case, which was initiated and filed bythe public prosecutor before the wrong court, constitute laches inrelation to the doctrine laid down in Tijam v. Sibonghanoy,notwithstanding the fact that said issue was immediately raised inpetitioner's 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?cralawred

b. Does the admission of the petitioner that it is difficult to immediatelystop a bus while it is running at 40 kilometers per hour for the purposeof avoiding a person who unexpectedly crossed the road, constituteenough incriminating evidence to warrant his conviction for the crimecharged?cralawred

c. Is the Honorable Court of Appeals justified in considering the placeof accident as falling within Item 4 of Section 35 (b) of the LandTransportation and Traffic Code, and subsequently ruling that thespeed limit thereto is only 20 kilometers per hour, when no evidencewhatsoever to that effect was ever presented by the prosecution during

the trial of this case?cralawred

d. Is the Honorable Court of Appeals justified in convicting thepetitioner for homicide through reckless imprudence (the legally correctdesignation is "reckless imprudence resulting to homicide") withviolation of the Land Transportation and Traffic Code when theprosecution did not prove this during the trial and, more importantly,

the information filed against the petitioner does not contain anallegation to that effect?cralawred

e. Does the uncontroverted testimony of the defense witness LeonardoHernal that the victim unexpectedly crossed the road resulting in himgetting hit by the bus driven by the petitioner not enough evidence toacquit him of the crime charged?9

Applied uniformly is the familiar rule that the jurisdiction of the court tohear and decide a case is conferred by the law in force at the time ofthe institution of the action, unless such statute provides for aretroactive application thereof.10 In this case, at the time the criminalinformation for reckless imprudence resulting in homicide with violationof the Automobile Law (now Land Transportation and Traffic Code) wasfiled, Section 32(2) of Batas Pambansa (B.P.) Blg. 12911had alreadybeen amended by Republic Act No. 7691.12 The said provision thusreads:

Sec. 32. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courtsand Municipal Circuit Trial Courts in Criminal Cases. Except in casesfalling within the exclusive original jurisdiction of Regional Trial Courtsand the Sandiganbayan, the Metropolitan Trial Courts, Municipal TrialCourts, and Municipal Circuit Trial Courts shall exercise:

x x x

(2) Exclusive original jurisdiction over all offenses punishable withimprisonment not exceeding six (6) years irrespective of the amount offine, 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 propertythrough criminal negligence, they shall have exclusive original

jurisdiction thereof.

As the imposable penalty for the crime charged herein is prisioncorreccional in its medium and maximum periods or imprisonment for 2years, 4 months and 1 day to 6 years,13jurisdiction to hear and try the


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jurisdiction over the case. Republic Act No. 2613 was enacted onAugust 1, 1959. This case was argued on January 29, 1960.Notwithstanding this fact, the jurisdiction of this Court was neverimpugned until the adverse decision of this Court was handed down.The conduct of counsel leads us to believe that they must have alwaysbeen of the belief that notwithstanding said enactment of Republic Act2613 this Court has jurisdiction of the case, such conduct being born

out of a conviction that the actual real value of the properties inquestion actually exceeds the jurisdictional amount of this Court (overP200,000). Our minute resolution in G.R. No. L-10096, Hyson Tan, etal. v. Filipinas Compaa de Seguros, et al., of March 23, 1956, aparallel case, is applicable to the conduct of plaintiff-appellee in thiscase, thus:

x x x that an appellant who files his brief and submits his case to theCourt of Appeals for decision, without questioning the latter's

jurisdiction until decision is rendered therein, should be considered ashaving 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 submittingtheir cases for decision to the Court of Appeals in expectation offavorable judgment, but with intent of attacking its jurisdiction shouldthe decision be unfavorable: x x x20

Then came our ruling in Tijam v. Sibonghanoy21 that a party may bebarred by laches from invoking lack of jurisdiction at a late hour for thepurpose of annulling everything done in the case with the activeparticipation of said party invoking the plea. We expounded, thus:

A party may be estopped or barred from raising a question in differentways 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 unreasonableand unexplained length of time, to do that which, by exercising duediligence, could or should have been done earlier; it is negligence oromission to assert a right within a reasonable time, warranting a

presumption that the party entitled to assert it either has abandoned itor declined to assert it.

The doctrine of laches or of "stale demands" is based upon grounds ofpublic policy which requires, for the peace of society, thediscouragement of stale claims and, unlike the statute of limitations, isnot 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 tosecure affirmative relief against his opponent and, after obtaining orfailing to obtain such relief, repudiate or question that same jurisdiction(Dean v. Dean, 136 Or. 694, 86 A.L.R. 79). In the case just cited, byway of explaining the rule, it was further said that the question whetherthe court had jurisdiction either of the subject matter of the action or ofthe parties was not important in such cases because the party isbarred from such conduct not because the judgment or order of thecourt is valid and conclusive as an adjudication, but for the reason thatsuch a practice cannot be tolerated obviously for reasons of public

policy.

Furthermore, it has also been held that after voluntarily submitting acause and encountering an adverse decision on the merits, it is toolate for the loser to question the jurisdiction or power of the court(Pease v. Rathbun-Jones etc., 243 U.S. 273, 61 L. Ed. 715, 37 S.Ct.283; St. Louis etc. v. McBride, 141 U.S. 127, 35 L. Ed. 659). And inLittleton v. Burgess, 16 Wyo. 58, the Court said that it is not right for aparty who has affirmed and invoked the jurisdiction of a court in aparticular matter to secure an affirmative relief, to afterwards deny thatsame jurisdiction to escape a penalty.

Upon this same principle is what We said in the three cases mentionedin the resolution of the Court of Appeals of May 20, 1963 (supra) to theeffect that we frown upon the "undesirable practice" of a partysubmitting his case for decision and then accepting the judgment, onlyif favorable, and attacking it for lack of jurisdiction, when adverse aswell as in Pindagan etc. v. Dans et al., G.R. L-14591, September 26,1962; Montelibano et al. v. Bacolod-Murcia Milling Co., Inc., G.R.


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L-15092; Young Men Labor Union etc. v. The Court of IndustrialRelations et al., G.R. L-20307, Feb. 26, 1965, and Mejia v. Lucas, 100Phil. p. 277.

The facts of this case show that from the time the Surety became aquasi-party on July 31, 1948, it could have raised the question of thelack of jurisdiction of the Court of First Instance of Cebu to take

cognizance of the present action by reason of the sum of moneyinvolved which, according to the law then in force, was within theoriginal exclusive jurisdiction of inferior courts. It failed to do so.Instead, at several stages of the proceedings in the court a quo, aswell as in the Court of Appeals, it invoked the jurisdiction of said courtsto obtain affirmative relief and submitted its case for a final adjudicationon the merits. It was only after an adverse decision was rendered bythe 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 ineffect be declaring as useless all the proceedings had in the presentcase 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 belatedinvocation of lack of jurisdiction, have applied the principle of estoppelby laches. Thus, in Calimlim v. Ramirez,23 we pointed out thatSibonghanoy was developing into a general rule rather than theexception:

A rule that had been settled by unquestioned acceptance and upheldin decisions so numerous to cite is that the jurisdiction of a court overthe subject-matter of the action is a matter of law and may not be

conferred by consent or agreement of the parties. The lack ofjurisdiction of a court may be raised at any stage of the proceedings,even on appeal. This doctrine has been qualified by recentpronouncements which stemmed principally from the ruling in the citedcase of Sibonghanoy. It is to be regretted, however, that the holding insaid case had been applied to situations which were obviously notcontemplated therein. The exceptional circumstance involved inSibonghanoy 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 renderedthe supposed ruling in Sibonghanoy not as the exception, but ratherthe general rule, virtually overthrowing altogether the time-honoredprinciple that the issue of jurisdiction is not lost by waiver or byestoppel.

In Sibonghanoy, the defense of lack of jurisdiction of the court thatrendered the questioned ruling was held to be barred by estoppel bylaches. It was ruled that the lack of jurisdiction having been raised forthe first time in a motion to dismiss filed almost fifteen (15) years afterthe questioned ruling had been rendered, such a plea may no longerbe 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 havebeen done earlier; it is negligence or omission to assert a right within areasonable time, warranting a presumption that the party entitled toassert has abandoned it or declined to assert it.24

In Calimlim, despite the fact that the one who benefited from the pleaof lack of jurisdiction was the one who invoked the court's jurisdiction,and who later obtained an adverse judgment therein, we refused toapply the ruling in Sibonghanoy. The Court accorded supremacy to thetime-honored principle that the issue of jurisdiction is not lost by waiveror by estoppel.

Yet, in subsequent cases decided after Calimlim, which by sheervolume are too plentiful to mention, the Sibonghanoy doctrine, asforetold in Calimlim, became the rule rather than the exception. Assuch, in Soliven v. Fastforms Philippines, Inc.,25the Court ruled:

While it is true that jurisdiction may be raised at any time, "this rulepresupposes that estoppel has not supervened." In the instant case,respondent actively participated in all stages of the proceedings beforethe trial court and invoked its authority by asking for an affirmativerelief. Clearly, respondent is estopped from challenging the trial court's

jurisdiction, especially when an adverse judgment has been rendered.


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In PNOC Shipping and Transport Corporation v. Court of Appeals, weheld:

Moreover, we note that petitioner did not question at all the jurisdictionof the lower court x x x in its answers to both the amended complaintand the second amended complaint. It did so only in its motion forreconsideration of the decision of the lower court after it had received

an adverse decision. As this Court held in Pantranco North Express,Inc. v. Court of Appeals (G.R. No. 105180, July 5, 1993, 224 SCRA477, 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 court's

jurisdiction. Notably, from the time it filed its answer to the secondamended complaint on April 16, 1985, petitioner did not question thelower court's jurisdiction. It was only on December 29, 1989 when itfiled its motion for reconsideration of the lower court's decision thatpetitioner raised the question of the lower court's lack of jurisdiction.Petitioner thus foreclosed its right to raise the issue of jurisdiction by itsown inaction. (italics ours)

Similarly, in the subsequent case of Sta. Lucia Realty andDevelopment, Inc. v. Cabrigas, we ruled:

In the case at bar, it was found by the trial court in its 30 September1996 decision in LCR Case No. Q-60161(93) that private respondents(who filed the petition for reconstitution of titles) failed to comply withboth sections 12 and 13 of RA 26 and therefore, it had no jurisdictionover the subject matter of the case. However, private respondentsnever questioned the trial court's jurisdiction over its petition forreconstitution 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 itsevidence. They invoked the trial court's jurisdiction in order to obtainaffirmative relief - the reconstitution of their titles. Private respondentshave thus foreclosed their right to raise the issue of jurisdiction by theirown actions.

The Court has constantly upheld the doctrine that while jurisdictionmay be assailed at any stage, a litigant's participation in all stages ofthe case before the trial court, including the invocation of its authority inasking for affirmative relief, bars such party from challenging thecourt's jurisdiction (PNOC Shipping and Transport Corporation v. Courtof 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 questionthat same jurisdiction (Asset Privatization Trust v. Court of Appeals,300 SCRA 579 [1998]; Province of Bulacan v. Court of Appeals, 299SCRA 442 [1998]). The Court frowns upon the undesirable practice ofa party participating in the proceedings and submitting his case fordecision and then accepting judgment, only if favorable, and attackingit for lack of jurisdiction, when adverse (Producers Bank of thePhilippines v. NLRC, 298 SCRA 517 [1998], citing Ilocos Sur ElectricCooperative, Inc. v. NLRC, 241 SCRA 36 [1995]). (italics ours)26

Noteworthy, however, is that, in the 2005 case of Metromedia TimesCorporation v. Pastorin,27where the issue of lack of jurisdiction was

raised only in the National Labor Relations Commission (NLRC) onappeal, 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 fromassailing the jurisdiction of the labor arbiter before the NLRC onappeal.28chanrobles virtual law library

Later, in Francel Realty Corporation v. Sycip,29the Court clarified that:

Petitioner argues that the CA's affirmation of the trial court's dismissalof its case was erroneous, considering that a full-blown trial hadalready been conducted. In effect, it contends that lack of jurisdiction

could no longer be used as a ground for dismissal after trial hadensued and ended.

The above argument is anchored on estoppel by laches, which hasbeen used quite successfully in a number of cases to thwart dismissalsbased on lack of jurisdiction. Tijam v. Sibonghanoy, in which thisdoctrine was espoused, held that a party may be barred from


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questioning a court's jurisdiction after being invoked to secureaffirmative relief against its opponent. In fine, laches prevents the issueof lack of jurisdiction from being raised for the first time on appeal by alitigant whose purpose is to annul everything done in a trial in which ithas actively participated.

Laches is defined as the "failure or neglect for an unreasonable and

unexplained length of time, to do that which, by exercising duediligence, could or should have been done earlier; it is negligence oromission to assert a right within a reasonable time, warranting apresumption that the party entitled to assert it either has abandoned itor declined to assert it."

The ruling in Sibonghanoy on the matter of jurisdiction is, however, theexception rather than the rule.chanrobles virtual law library Estoppel bylaches may be invoked to bar the issue of lack of jurisdiction only incases 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 ordeclined to assert it. That Sibonghanoy applies only to exceptionalcircumstances is clarified in Calimlim v. Ramirez, which we quote:

A rule that had been settled by unquestioned acceptance and upheldin decisions so numerous to cite is that the jurisdiction of a court overthe subject-matter of the action is a matter of law and may not beconferred 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 recentpronouncements which stemmed principally from the ruling in the citedcase of Sibonghanoy. It is to be regretted, however, that the holding in

said case had been applied to situations which were obviously notcontemplated therein. The exceptional circumstance involved inSibonghanoy which justified the departure from the accepted conceptof non-waivability of objection to jurisdiction has been ignored and,instead a blanket doctrine had been repeatedly upheld that renderedthe supposed ruling in Sibonghanoy not as the exception, but ratherthe general rule, virtually overthrowing altogether the time-honored

principle that the issue of jurisdiction is not lost by waiver or byestoppel.

Indeed, the general rule remains: a court's lack of jurisdiction may beraised at any stage of the proceedings, even on appeal. The reason isthat jurisdiction is conferred by law, and lack of it affects the veryauthority of the court to take cognizance of and to render judgment on

the action. Moreover, jurisdiction is determined by the averments of thecomplaint, not by the defenses contained in the answer.30

Also, in Mangaliag v. Catubig-Pastoral,31even if the pleader of lack ofjurisdiction actively took part in the trial proceedings by presenting awitness to seek exoneration, the Court, reiterating the doctrine inCalimlim, said:

Private respondent argues that the defense of lack of jurisdiction maybe waived by estoppel through active participation in the trial. Such,however, is not the general rule but an exception, best characterizedby the peculiar circumstances in Tijam v. Sibonghanoy. InSibonghanoy, the party invoking lack of jurisdiction did so only afterfifteen years and at a stage when the proceedings had already beenelevated to the CA. Sibonghanoy is an exceptional case because ofthe presence of laches, which was defined therein as failure or neglectfor an unreasonable and unexplained length of time to do that which,by exercising due diligence, could or should have been done earlier; itis the negligence or omission to assert a right within a reasonable time,warranting a presumption that the party entitled to assert hasabandoned it or declined to assert it.32

And in the more recent Regalado v. Go,33the Court again emphasizedthat laches should be clearly present for the Sibonghanoy doctrine tobe applicable, thus:

Laches is defined as the "failure or neglect for an unreasonable andunexplained length of time, to do that which, by exercising duediligence, could or should have been done earlier, it is negligence oromission to assert a right within a reasonable length of time,


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warranting a presumption that the party entitled to assert it either hasabandoned it or declined to assert it."

The ruling in People v. Regalario that was based on the landmarkdoctrine enunciated in Tijam v. Sibonghanoy on the matter of

jurisdiction by estoppel is the exception rather than the rule. Estoppelby 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, lachesshould have been clearly present; that is,lack of jurisdiction must have been raised so belatedly as to warrantthe presumption that the party entitled to assert it had abandoned ordeclined to assert it.

InSibonghanoy, the defense of lack of jurisdiction was raised for thefirst time in a motion to dismiss filed by the Surety almost 15 yearsafter the questioned ruling had been rendered. At several stages of theproceedings, in the court a quo as well as in the Court of Appeals, theSurety invoked the jurisdiction of the said courts to obtain affirmativerelief and submitted its case for final adjudication on the merits. It was

only when the adverse decision was rendered by the Court of Appealsthat it finally woke up to raise the question of jurisdiction.

Clearly, the factual settings attendant in Sibonghanoy are not presentin the case at bar. Petitioner Atty. Regalado, after the receipt of theCourt of Appeals resolution finding her guilty of contempt, promptlyfiled a Motion for Reconsideration assailing the said court's jurisdictionbased on procedural infirmity in initiating the action. Her compliancewith the appellate court's directive to show cause why she should notbe cited for contempt and filing a single piece of pleading to that effectcould not be considered as an active participation in the judicialproceedings so as to take the case within the milieu of Sibonghanoy.

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

The Court, thus, wavered on when to apply the exceptionalcircumstance in Sibonghanoy and on when to apply the general ruleenunciated as early as in De La Santa and expounded at length inCalimlim. The general rule should, however, be, as it has always been,

that the issue of jurisdiction may be raised at any stage of theproceedings, even on appeal, and is not lost by waiver or by estoppel.Estoppel by laches, to bar a litigant from asserting the court's absenceor lack of jurisdiction, only supervenes in exceptional cases similar tothe factual milieu of Tijam v. Sibonghanoy. Indeed, the fact that aperson attempts to invoke unauthorized jurisdiction of a court does notestop him from thereafter challenging its jurisdiction over the subject

matter, since such jurisdiction must arise by law and not by mereconsent of the parties. This is especially true where the person seekingto invoke unauthorized jurisdiction of the court does not thereby secureany advantage or the adverse party does not suffer any harm.35

Applying the said doctrine to the instant case, the petitioner is in noway estopped by laches in assailing the jurisdiction of the RTC,considering that he raised the lack thereof in his appeal before theappellate court. At that time, no considerable period had yet elapsedfor laches to attach. True, delay alone, though unreasonable, will notsustain the defense of "estoppel by laches" unless it further appearsthat the party, knowing his rights, has not sought to enforce them until

the condition of the party pleading laches has in good faith become sochanged that he cannot be restored to his former state, if the rights bethen enforced, due to loss of evidence, change of title, intervention ofequities, and other causes.36 In applying the principle of estoppel bylaches in the exceptional case of Sibonghanoy, the Court thereinconsidered the patent and revolting inequity and unfairness of havingthe judgment creditors go up their Calvary once more after more orless 15 years.37 The same, however, does not obtain in the instantcase.

We note at this point that estoppel, being in the nature of a forfeiture, isnot favored by law. It is to be applied rarely only from necessity, and

only in extraordinary circumstances. The doctrine must be applied withgreat care and the equity must be strong in its favor.38 Whenmisapplied, the doctrine of estoppel may be a most effective weaponfor the accomplishment of injustice.39Moreover, a judgment renderedwithout jurisdiction over the subject matter is void.40 Hence, theRevised Rules of Court provides for remedies in attacking judgmentsrendered by courts or tribunals that have no jurisdiction over theconcerned cases. No laches will even attach when the judgment is null


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and void for want of jurisdiction.41As we have stated in Heirs of JulianDela Cruz and Leonora Talaro v. Heirs of Alberto Cruz,42

It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial officer or government agency, over the nature and subjectmatter of a petition or complaint is determined by the materialallegations therein and the character of the relief prayed for,

irrespective of whether the petitioner or complainant is entitled to anyor all such reliefs. Jurisdiction over the nature and subject matter of anaction is conferred by the Constitution and the law, and not by theconsent or waiver of the parties where the court otherwise would haveno jurisdiction over the nature or subject matter of the action. Nor can itbe acquired through, or waived by, any act or omission of the parties.Moreover, estoppel does not apply to confer jurisdiction to a tribunalthat has none over the cause of action. x x x

Indeed, the jurisdiction of the court or tribunal is not affected by thedefenses or theories set up by the defendant or respondent in hisanswer or motion to dismiss. Jurisdiction should be determined by

considering not only the status or the relationship of the parties butalso the nature of the issues or questions that is the subject of thecontroversy. x x x x The proceedings before a court or tribunal without

jurisdiction, including its decision, are null and void, hence, susceptibleto direct and collateral attacks.43

With the above considerations, we find it unnecessary to resolve theother issues raised in the petition.

WHEREFORE, premises considered, the Petition for Review onCertiorari is GRANTED. Criminal Case No. 2235-M-94 is herebyDISMISSED without prejudice.

SO ORDERED.

RUBY SHELTER v.HON. PABLO C. FORMARAN [G.R. NO.175914 : February 10, 2009]

Before this Court is a Petition for Review on Certiorariunder Rule 45 ofthe Rules of Court seeking the reversal of the Decision1 dated 22November 2006 of the Court of Appeals in CA-G.R. SP No. 94800. TheCourt of Appeals, in its assailed Decision, affirmed the Order2dated 24

March 2006 of the Regional Trial Court (RTC), Branch 22, of NagaCity, in Civil Case No. RTC-2006-0030, ordering petitioner RubyShelter Builders and Realty Development Corporation to pay additionaldocket/filing fees, computed based on Section 7(a) of Rule 141 of theRules of Court, as amended.

The present Petition arose from the following facts:

Petitioner obtained a loan3in the total amount of P95,700,620.00 fromrespondents Romeo Y. Tan (Tan) and Roberto L. Obiedo (Obiedo),secured by real estate mortgages over five parcels of land, all locatedin Triangulo, Naga City, covered by Transfer Certificates of Title (TCTs)No. 38376,4 No. 29918,5 No. 38374,6 No. 39232,7 and No. 39225,8issued by the Registry of Deeds for Naga City, in the name ofpetitioner. When petitioner was unable to pay the loan when it becamedue and demandable, respondents Tan and Obiedo agreed to anextension of the same.

In a Memorandum of Agreement9dated 17 March 2005, respondentsTan and Obiedo granted petitioner until 31 December 2005 to settle itsindebtedness, and condoned the interests, penalties and surchargesaccruing thereon from 1 October 2004 to 31 December 2005 whichamounted to P74,678,647.00. The Memorandum of Agreementrequired, in turn, that petitioner execute simultaneously with the saidMemorandum, "by way of dacion en pago," Deeds of Absolute Sale infavor of respondents Tan and Obiedo, covering the same parcels ofland subject of the mortgages. The Deeds of Absolute Sale would beuniformly dated 2 January 2006, and state that petitioner sold torespondents Tan and Obiedo the parcels of land for the followingpurchase prices:


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TCT No.Purchase Price

38376P 9,340,000.00

29918P 28,000,000.00

38374

P 12,000,000.00 39232P 1,600,000.00

39225P 1,600,000.00Petitioner could choose to pay off its indebtedness with individual or allfive parcels of land; or it could redeem said properties by payingrespondents Tan and Obiedo the following prices for the same,inclusive of interest and penalties:

TCT No.Redemption Price

38376P 25,328,939.0029918

P 35,660,800.0038374

P 28,477,600.0039232

P 6,233,381.0039225

P 6,233,381.00In the event that petitioner is able to redeem any of the afore-mentioned parcels of land, the Deed of Absolute Sale covering the saidproperty shall be nullified and have no force and effect; andrespondents Tan and Obiedo shall then return the owner's duplicate ofthe corresponding TCT to petitioner and also execute a Deed ofDischarge of Mortgage. However, if petitioner is unable to redeem theparcels of land within the period agreed upon, respondents Tan andObiedo could already present the Deeds of Absolute Sale covering thesame to the Office of the Register of Deeds for Naga City so

respondents Tan and Obiedo could acquire TCTs to the said propertiesin their names.

The Memorandum of Agreement further provided that should petitionercontest, judicially or otherwise, any act, transaction, or event related toor 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 damagesinclusive of costs and attorney's fees. Petitioner would likewise payrespondents Tan and Obiedo the condoned interests, surcharges andpenalties.10Finally, 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 latter'smonetary obligation to respondent Tan and Obiedo.

Respondent Atty. Tomas A. Reyes (Reyes) was the Notary Public whonotarized the Memorandum of Agreement dated 17 March 2005between respondent Tan and Obiedo, on one hand, and petitioner, onthe other.

Pursuant to the Memorandum of Agreement, petitioner, represented byMr. Sia, executed separate Deeds of Absolute Sale,11 over the fiveparcels of land, in favor of respondents Tan and Obiedo. On the blankspaces provided for in the said Deeds, somebody wrote the 3 rd ofJanuary 2006 as the date of their execution. The Deeds were againnotarized by respondent Atty. Reyes also on 3 January 2006.

Without payment having been made by petitioner on 31 December2005, respondents Tan and Obiedo presented the Deeds of AbsoluteSale dated 3 January 2006 before the Register of Deeds of Naga Cityon 8 March 2006, as a result of which, they were able to secure TCTsover the five parcels of land in their names.

On 16 March 2006, petitioner filed before the RTC a Complaint12against respondents Tan, Obiedo, and Atty. Reyes, for declaration ofnullity of deeds of sales and damages, with prayer for the issuance of awrit of preliminary injunction and/or temporary restraining order (TRO).The Complaint was docketed as Civil Case No. 2006-0030.


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On the basis of the facts already recounted above, petitioner raisedtwo causes of action in its Complaint.

As for the first cause of action, petitioner alleged that as early as 27December 2005, its President already wrote a letter informingrespondents Tan and Obiedo of the intention of petitioner to pay itsloan and requesting a meeting to compute the final amount due. The

parties held meetings on 3 and 4 January 2006 but they failed to arriveat a mutually acceptable computation of the final amount of loanpayable. Respondents Tan and Obiedo then refused the request ofpetitioner for further dialogues. Unbeknownst to petitioner, despite theongoing meetings, respondents Tan and Obiedo, in evident bad faith,already had the pre-executed Deeds of Absolute Sale notarized on 3January 2006 by respondent Atty. Reyes. Atty. Reyes, in connivancewith respondents Tan and Obiedo, falsely made it appear in the Deedsof Absolute Sale that Mr. Sia had personally acknowledged/ratified thesaid 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 torespondents Tan and Obiedo; that the Deeds of Absolute Sale,executed in accordance with the Memorandum of Agreement,constituted pactum commisorium and as such, were null and void; andthat the acknowledgment in the Deeds of Absolute Sale were falsified,petitioner averred:

13. That by reason of the fraudulent actions by the [hereinrespondents], [herein petitioner] is prejudiced and is now in danger ofbeing deprived, physically and legally, of the mortgaged propertieswithout benefit of legal processes such as the remedy of foreclosureand its attendant procedures, solemnities and remedies available to a

mortgagor, while [petitioner] is desirous and willing to pay its obligationand have the mortgaged properties released.13

In support of its second cause of action, petitioner narrated in itsComplaint that on 18 January 2006, respondents Tan and Obiedoforcibly took over, with the use of armed men, possession of the fiveparcels 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 thecommercial spaces standing on the parcels of land in question whichwere being rented out by petitioner. Respondents Tan and Obiedowere also about to tear down a principal improvement on theproperties consisting of a steel-and-concrete structure housing a motorvehicle terminal operated by petitioner. The actions of respondents Tan

and Obiedo were to the damage and prejudice of petitioner and itstenants/lessees. Petitioner, alone, claimed to have suffered at leastP300,000.00 in actual damages by reason of the physical invasion byrespondents Tan and Obiedo and their armed goons of the five parcelsof land.

Ultimately, petitioner's prayer in its Complaint reads:

WHEREFORE, premises considered, it is most respectfully prayed ofthis Honorable Court that upon the filing of this complaint, a 72-hourtemporary restraining order be forthwith issued ex parte:

(a) Restraining [herein respondents] Tan and Obiedo, their agents,privies or representatives, from committing act/s tending to alienate themortgaged properties from the [herein petitioner] pending theresolution of the case, including but not limited to the acts complainedof in paragraph "14", above;

(b) Restraining the Register of Deeds of Naga City from entertainingmoves by the [respondents] to have [petitioner's] certificates of title tothe mortgaged properties cancelled and changed/registered in[respondents] Tan's and Obiedo's names, and/or released to them;

(c) After notice and hearing, that a writ of preliminary injunction beissued imposing the same restraints indicated in the next precedingtwo paragraphs of this prayer; andcralawlibrary

(d) After trial, judgment be rendered:

1. Making the injunction permanent;


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2. Declaring the provision in the Memorandum of Agreement requiringthe [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; attorney's fees inthe amount of P100,000.00 plus P1,000.00 per court attendance ofcounsel as appearance fee; litigation expenses in the amount of atleast P10,000.00 and exemplary damages in the amount ofP300,000.00, plus the costs.

[Petitioner] further prays for such other reliefs as may be proper, justand equitable under the premises.14

Upon filing its Complaint with the RTC on 16 March 2006, petitionerpaid the sum of P13,644.25 for docket and other legal fees, asassessed by the Office of the Clerk of Court. The Clerk of Court initiallyconsidered Civil Case No. 2006-0030 as an action incapable ofpecuniary estimation and computed the docket and other legal feesdue thereon according to Section 7(b)(1), Rule 141 of the Rules ofCourt.

Only respondent Tan filed an Answer15to the Complaint of petitioner.Respondent Tan did admit that meetings were held with Mr. Sia, as therepresentative of petitioner, to thresh out Mr. Sia's charge that the

computation by respondents Tan and Obiedo of the interests,surcharges and penalties accruing on the loan of petitioner was repletewith errors and uncertainties. However, Mr. Sia failed to back up hisaccusation of errors and uncertainties and to present his own finalcomputation of the amount due. Disappointed and exasperated,respondents Tan and Obiedo informed Mr. Sia that they had alreadyasked 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 ofAbsolute Sale, to which Mr. Sia replied yes. On 4 January 2006, Mr.Sia still failed to establish his claim of errors and uncertainties in thecomputation of the total amount which petitioner must pay respondentTan and Obiedo. Mr. Sia, instead, sought a nine-month extension forpaying the loan obligation of petitioner and the reduction of the interestrate 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 notexecuted merely as securities for the loan of petitioner. The Deeds of

Absolute Sale over the five parcels of land were the consideration forthe payment of the total indebtedness of petitioner to respondents Tanand Obiedo, and the condonation of the 15-month interest whichalready accrued on the loan, while providing petitioner with the goldenopportunity to still redeem all or even portions of the propertiescovered by said Deeds. Unfortunately, petitioner failed to exercise itsright 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 armedmen, on board a Sports Utility Vehicle and a truck, rammed into thepersonnel of respondents Tan and Obiedo causing melee anddisturbance. Moreover, by the execution of the Deeds of AbsoluteSale, the properties subject thereof were, ipso jure, delivered torespondents Tan and Obiedo. The demolition of the existing structureson the properties was nothing but an exercise of dominion byrespondents Tan and Obiedo.

Respondent Tan, thus, sought not just the dismissal of the Complaintof 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, andon the counterclaim, [herein petitioner] and Ruben Sia, be ordered toindemnify, jointly and severally [herein respondents Tan and Obiedo]the amounts of not less than P10,000,000.00 as liquidated damages


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and the further sum of not less than P500,000.00 as attorney's fees. Inthe alternative, and should it become necessary, it is hereby prayedthat [petitioner] be ordered to pay herein [respondents Tan and Obiedo]the entire principal loan of P95,700,620.00, plus interests, surchargesand penalties computed from March 17, 2005 until the entire sum isfully paid, including the amount of P74,678,647.00 foregone interestcovering the period from October 1, 2004 to December 31, 2005 or for

a total of fifteen (15) months, plus incidental expenses as may beproved in court, in the event that Annexes "G" to "L" be nullified. Otherrelief and remedies as are just and equitable under the premises arehereby prayed for.16

Thereafter, respondent Tan filed before the RTC an Omnibus Motion inwhich he contended that Civil Case No. 2006-0030 involved realproperties, the docket fees for which should be computed inaccordance with Section 7(a), not Section 7(b)(1), of Rule 141 of theRules of Court, as amended by A.M. No. 04-2-04-SC which took effecton 16 August 2004. Since petitioner did not pay the appropriate docketfees for Civil Case No. 2006-0030, the RTC did not acquire jurisdiction

over the said case. Hence, respondent Tan asked the RTC to issue anorder requiring petitioner to pay the correct and accurate docket feespursuant 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 ofpetitioner for the annulment of the Deeds of Absolute Sale for havingbeen 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 onthe matter. On 24 March 2006, the RTC issued an Order17 grantingrespondent Tan's Omnibus Motion. In holding that both petitioner andrespondent 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 isprovided that QUIETING OF TITLE which is an action classified asbeyond pecuniary estimation "shall be governed by paragraph (a)".Hence, the filing fee in an action for Declaration of Nullity of Deedwhich 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 acounterclaim against the plaintiff, the former must likewise pay thenecessary 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 herebyordered to pay additional filing fee and the [herein respondent], RomeoTan 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 fromreceipt of this Order to the Clerk of Court, Regional Trial Court, NagaCity and for the latter to compute and to collect the said feesaccordingly.19

Petitioner moved20for the partial reconsideration of the 24 March 2006Order of the RTC, arguing that Civil Case No. 2006-0030 wasprincipally for the annulment of the Deeds of Absolute Sale and, assuch, incapable of pecuniary estimation. Petitioner submitted that theRTC erred in applying Section 7(a), Rule 141 of the Rules of Court, asamended, to petitioner's first cause of action in its Complaint in CivilCase No. 2006-0030.

In its Order21dated 29 March 2006, the RTC refused to reconsider its24 March 2006 Order, based on the following ratiocination:

Analyzing, the action herein pertains to real property, for as admittedby the [herein petitioner], "the deeds of sale in question pertain to realproperty" x x x. The Deeds of Sale subject of the instant case havealready been transferred in the name of the [herein respondents Tanand Obiedo].


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Compared with Quieting of Title, the latter action is brought when thereis cloud on the title to real property or any interest therein or to preventa cloud from being cast upon title to the real property (Art. 476, CivilCode of the Philippines) and the plaintiff must have legal or equitabletitle to or interest in the real property which is the subject matter of theaction (Art. 447, ibid.), and yet plaintiff in QUIETING OF TITLE isrequired to pay the fees in accordance with paragraph (a) of Section 7

of the said Amended Administrative Circular No. 35-2004, hence, withmore reason that the [petitioner] who no longer has title to the realproperties subject of the instant case must be required to pay therequired fees in accordance with Section 7(a) of the Amended

Administrative Circular No. 35-2004 afore-mentioned.

Furthermore, while [petitioner] claims that the action for declaration ofnullity of deed of sale and memorandum of agreement is oneincapable of pecuniary estimation, however, as argued by the[respondent Tan], the issue as to how much filing and docket feesshould be paid was never raised as an issue in the case of Russell v.Vestil, 304 SCRA 738.

x x x

WHEREFORE, the Motion for Partial Reconsideration is herebyDENIED.22

In a letter dated 19 April 2006, the RTC Clerk of Court computed, uponthe request of counsel for the petitioner, the additional docket feespetitioner must pay for in Civil Case No. 2006-0030 as directed in theafore-mentioned RTC Orders. Per the computation of the RTC Clerk ofCourt, after excluding the amount petitioner previously paid on 16March 2006, petitioner must still pay the amount of P720,392.60 asdocket fees.23

Petitioner, however, had not yet conceded, and it filed a Petition forCertiorariwith the Court of Appeals; the petition was docketed as CA-G.R. SP No. 94800. According to petitioner, the RTC24 acted withgrave 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, anaction 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 notbe revoked, corrected, or rectified, petitioner would suffer graveinjustice and irreparable damage.

On 22 November 2006, the Court of Appeals promulgated its Decision

wherein it held that:

Clearly, the petitioner's complaint involves not only the annulment ofthe deeds of sale, but also the recovery of the real properties identifiedin the said documents. In other words, the objectives of the petitionerin 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 beassessed in accordance with Section 7(b). As a real action, Section7(a) must be applied in the assessment and payment of the properdocket fee.

Resultantly, there is no grave abuse of discretion amounting to lack orexcess of jurisdiction on the part of the court a quo. By grave abuse ofdiscretion is meant capricious and whimsical exercise of judgment asis equivalent to lack of jurisdiction, and mere abuse of discretion is notenough - it must be grave. The abuse must be grave and patent, and itmust be shown that the discretion was exercised arbitrarily anddespotically.!"#r$bl%&'(r)#l l#*l(br#r

Such a situation does not exist in this particular case. The evidence isinsufficient 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 assailedOrders of the court a quo are AFFIRMED.26


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Without seeking reconsideration of the foregoing Decision with theCourt of Appeals, petitioner filed its Petition for Review on Certioraribefore this Court, with a lone assignment of error, to wit:

18. The herein petitioner most respectfully submits that the Court ofAppeals committed a grave and serious reversible error in affirming theassailed Orders of the Regional Trial Court which are clearly contrary

to the pronouncement of this Honorable Court in the case of SpousesDe Leon v. Court of Appeals, G.R. No. 104796, March 6, 1998, not tomention the fact that if the said judgment is allowed to stand and notrectified, the same would result in grave injustice and irreparabledamage to herein petitioner in view of the prohibitive amount assessedas a consequence of said Orders.27

In Manchester Development Corporation v. Court of Appeals,28 theCourt explicitly pronounced that "[t]he court acquires jurisdiction overany case only upon the payment of the prescribed docket fee." Hence,the payment of docket fees is not only mandatory, but also

jurisdictional.

In Sun Insurance Office, Ltd. (SIOL) v. Asuncion,29the Court laid downguidelines for the implementation of its previous pronouncement inManchester under particular circumstances, to wit:

1. It is not simply the filing of the complaint or appropriate initiatorypleading, but the payment of the prescribed docket fee, that vests atrial court with jurisdiction over the subject matter or nature of theaction. Where the filing of the initiatory pleading is not accompanied bypayment of the docket fee, the court may allow payment of the feewithin a reasonable time but in no case beyond the applicableprescriptive or reglementary period.

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

3. Where the trial court acquires jurisdiction over a claim by the filing ofthe appropriate pleading and payment of the prescribed filing fee but,subsequently, the judgment awards a claim not specified in thepleading, or if specified the same has been left for determination by thecourt, the additional filing fee therefor shall constitute a lien on the

judgment. It shall be the responsibility of the Clerk of Court or his dulyauthorized deputy to enforce said lien and assess and collect the

additional fee.

In the Petition at bar, the RTC found, and the Court of Appealsaffirmed, that petitioner did not pay the correct amount of docket feesfor Civil Case No. 2006-0030. According to both the trial and appellatecourts, petitioner should pay docket fees in accordance with Section7(a), Rule 141 of the Rules of Court, as amended. Consistent with theliberal tenor of Sun Insurance, the RTC, instead of dismissing outrightpetitioner's Complaint in Civil Case No. 2006-0030, granted petitionertime to pay the additional docket fees. Despite the seemingmunificence of the RTC, petitioner refused to pay the additional docketfees assessed against it, believing that it had already paid the correct

amount before, pursuant to Section 7(b)(1), Rule 141 of the Rules ofCourt, as amended.

Relevant to the present controversy are the following provisions underRule 141 of the Rules of Court, as amended by A.M. No. 04-2-04-SC30and Supreme Court Amended Administrative Circular No. 35-200431:

SEC. 7. Clerks of Regional Trial Courts.'

(a) For filing an action or a permissive OR COMPULSORYcounterclaim, CROSS-CLAIM, or money claim against an estate notbased 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 ATTORNEY'S FEES,LITIGATIO NEXPENSES AND COSTS and/or in cases involvingproperty, the FAIR MARKET value of the REAL property in litigationSTATED IN THE CURRENT TAX DECLARATION OR CURRENTZONAL VALUATION OF THE BUREAU OF INTERNAL REVENUE,


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WHICHEVER IS HIGHER, OR IF THERE IS NONE, THE STATEDVALUE OF THE PROPERTY IN LITIGATION OR THE VALUE OF THEPERSONAL PROPERTY IN LITIGATION OR THE VALUE OF THEPERSONAL PROPERTY IN LITIGATION AS ALLEGED BY THECLAIMANT, is:

[Table of fees omitted.]

If the action involves both a money claim and relief pertaining toproperty, then THE fees will be charged on both the amounts claimedand value of property based on the formula prescribed in thisparagraph a.

(b) For filing:

1. Actions where the value of the subject matter cannot be estimated

2. Special civil actions, except judicial foreclosure of mortgage,

EXPROPRIATION PROCEEDINGS, PARTITION AND QUIETING OFTITLE 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 realproperty depend on the fair market value of the same: the higher thevalue 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 correctamount of docket fees, it is necessary to determine the true nature ofits Complaint. The dictum adhered to in this jurisdiction is that thenature of an action is determined by the allegations in the body of thepleading or Complaint itself, rather than by its title or heading.32However, the Court finds it necessary, in ascertaining the true nature of

Civil Case No. 2006-0030, to take into account significant facts andcircumstances beyond the Complaint of petitioner, facts andcircumstances which petitioner failed to state in its Complaint but weredisclosed 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, onewould get the impression that the titles to the subject real propertiesstill rest with petitioner; and that the interest of respondents Tan andObiedo in the same lies only in the Deeds of Absolute Sale sought tobe annulled.

What petitioner failed to mention in its Complaint was that respondentsTan and Obiedo already had the Memorandum of Agreement, whichclearly provided for the execution of the Deeds of Absolute Sale,registered on the TCTs over the five parcels of land, then still in thename of petitioner. After respondents Tan and Obiedo had the Deedsof Absolute Sale notarized on 3 January 2006 and presented the same

to Register of Deeds for Naga City on 8 March 2006, they were alreadyissued TCTs over the real properties in question, in their own names.Respondents Tan and Obiedo have also acquired possession of thesaid properties, enabling them, by petitioner's own admission, todemolish the improvements thereon.

It is, thus, suspect that petitioner kept mum about the afore-mentionedfacts and circumstances when they had already taken place before itfiled its Complaint before the RTC on 16 March 2006. Petitioner neverexpressed surprise when such facts and circumstances wereestablished before the RTC, nor moved to amend its Complaintaccordingly.!"#r$bl%&'(r)#l l#*l(br#r

Even though the Memorandum of Agreement was supposed to havelong 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 itstitle. In the same vein, although petitioner alleged that respondents Tanand Obiedo forcibly took physical possession of the subject realproperties, petitioner did not seek the restoration of such possession to


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itself. And despite learning that respondents Tan and Obiedo alreadysecured TCTs over the subject properties in their names, petitioner didnot ask for the cancellation of said titles. The only logical andreasonable explanation is that petitioner is reluctant to bring to theattention of the Court certain facts and circumstances, keeping itsComplaint safely worded, so as to institute only an action forannulment of Deeds of Absolute Sale. Petitioner deliberately avoided

raising issues on the title and possession of the real properties thatmay lead the Court to classify its case as a real action.

No matter how fastidiously petitioner attempts to conceal them, theallegations and reliefs it sought in its Complaint in Civil Case No.2006-0030 appears to be ultimately a real action, involving as they dothe recovery by petitioner of its title to and possession of the fiveparcels of land from respondents Tan and Obiedo.

A real action is one in which the plaintiff seeks the recovery of realproperty; or, as indicated in what is now Section 1, Rule 4 of the Rulesof 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 byA.M. No. 04-2-04-SC, had a specific paragraph governing theassessment 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 shallbe 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 complaintfiled by therein respondents Mercedes Gochan, et al. with the RTCwas denominated as one for "specific performance and damages," therelief sought was the conveyance or transfer of real property, orultimately, the execution of deeds of conveyance in their favor of thereal properties enumerated in the provisional memorandum ofagreement. Under these circumstances, the case before the RTC wasactually a real action, affecting as it did title to or possession of real

property. Consequently, the basis for determining the correct docketfees shall be the assessed value of the property, or the estimatedvalue thereof as alleged in the complaint. But since Mercedes Gochanfailed to allege in their complaint the value of the real properties, theCourt found that the RTC did not acquire jurisdiction over the same fornon-payment of the correct docket fees.

Likewise, in Siapno v. Manalo,35 the Court disregarded the title/denomination of therein plaintiff Manalo's amended petition as one forMandamus with Revocation of Title and Damages; and adjudged thesame to be a real action, the filing fees for which should have beencomputed based on the assessed value of the subject property or, ifthere was none, the estimated value thereof. The Court expounded inSiapno that:

In his amended petition, respondent Manalo prayed that NTA's sale ofthe property in dispute to Standford East Realty Corporation and thetitle 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, asuit to recover from Standford the realty in question and to vest inrespondent the ownership and possession thereof. In short, theamended petition is in reality an action in res or a real action. Ourpronouncement in Fortune Motors (Phils.), Inc. v. Court of Appeals isinstructive. There, we said:

A prayer for annulment or rescission of contract does not operate toefface the true objectives and nature of the action which is to recoverreal 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 nodifferent from an action to annul a private sale of real property. (Muozv. Llamas, 87 Phil. 737, 1950).


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While it is true that petitioner does not directly seek the recovery of titleor possession of the property in question, his action for annulment ofsale and his claim for damages are closely intertwined with the issue ofownership of the building which, under the law, is consideredimmovable property, the recovery of which is petitioner's primaryobjective. The prevalent doctrine is that an action for the annulment orrescission of a sale of real property does not operate to efface the

fundamental and prime objective and nature of the case, which is torecover said real property. It is a real action.

Unfortunately, and evidently to evade payment of the correct amount offiling fee, respondent Manalo never alleged in the body of his amendedpetition, much less in the prayer portion thereof, the assessed value ofthe subject res, or, if there is none, the estimated value thereof, toserve as basis for the receiving clerk in computing and arriving at theproper amount of filing fee due thereon, as required under Section 7 ofthis Court's en banc resolution of 04 September 1990 (Re: Proposed

Amendments to Rule 141 on Legal Fees).

Even the amended petition, therefore, should have been expungedfrom the records.

In fine, we rule and so hold that the trial court never acquiredjurisdiction over its Civil Case No. Q-95-24791.36

It was in Serrano v. Delica,37 however, that the Court dealt with acomplaint that bore the most similarity to the one at bar. Thereinrespondent Delica averred that undue influence, coercion, andintimidation were exerted upon him by therein petitioners Serrano, etal. to effect transfer of his properties. Thus, Delica filed a complaintbefore 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 attorney's fee of P200,000.00 and costs of litigation; that aTRO and a writ of preliminary injunction be issued ordering Serrano, etal. to immediately restore him to his possession of the parcels of land

in question; and that after trial, the writ of injunction be madepermanent. The Court dismissed Delica's complaint for the followingreasons:

A careful examination of respondent's complaint is that it is a realaction. In Paderanga v. Buissan, we held that "in a real action, theplaintiff 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, orfor partition or condemnation of, or foreclosure of a mortgage on a realproperty.' "

Obviously, respondent's complaint is a real action involving not onlythe recovery of real properties, but likewise the cancellation of the titlesthereto.

Considering that respondent's complaint is a real action, the Rulerequires 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 "estimatedvalue" of the questioned parcels of land were alleged by respondent inboth his original and amended complaint. What he stated in hisamended complaint is that the disputed realties have a "BIR zonalvaluation" of P1,200.00 per square meter. However, the alleged "BIRzonal valuation" is not the kind of valuation required by the Rule. It isthe assessed value of the realty. Having utterly failed to comply withthe requirement of the Rule that he shall allege in his complaint theassessed value of his real properties in controversy, the correct docketfee cannot be computed. As such, his complaint should not have been

accepted by the trial court. We thus rule that it has not acquiredjurisdiction over the present case for failure of herein respondent topay the required docket fee. On this ground alone, respondent'scomplaint is vulnerable to dismissal.38

Brushing aside the significance of Serrano, petitioner argues that saiddecision, rendered by the Third Division of the Court, and not by the


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Court en banc, cannot modify or reverse the doctrine laid down inSpouses De Leon v. Court of Appeals.39Petitioner relies heavily on thedeclaration of this Court in Spouses De Leon that an action forannulment or rescission of a contract of sale of real property isincapable of pecuniary estimation.

The Court, however, does not perceive a contradiction between

Serrano and the Spouses De Leo

1.2 cases-subj matter jurisdiction.pdf

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