Republic of the Philippines SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 172293 August 28, 2013

ARACELI J. CABRERA and ARNEL CABRERA and in behalf of the heirs of SEVERINO CABRERA,Petitioners, vs. ANGELA G. FRANCISCO, FELIPE C. GELLA, VICTOR C. CELLA, ELENA LEILANI G. REYES, MA. RIZALINA G.ILIGAN and DIANA ROSE GELLA, Respondents.

D E C I S I O N

DEL CASTILLO, J.:

"The nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the Complaint of the plaintiffs x x x. The averments in the Complaint and the character of the relief sought arc the ones to be consulted. x x x"1

This Petition for Review on Certiorari2 assails the July 6, 2005 Decision3 of the Court of Appeals (CA) in CA-G.R. CV No. 75126 which dismissed the appeal filed by petitioners Arceli J. Cabrera (Arceli) and Arnel Cabrera (Arnel), in their own behalf and in behalf of the heirs of Severino Cabrera (petitioners), and affirmed the Order4 dated May 2, 2002 of the Regional Trial Court (RTC), Branch 12, San Jose, Antique in Civil Case No. 2001-9-3267. The said RTC Order granted the Motion to Dismiss5 of respondents Angela G. Francisco, Felipe C. Gella, Victor C. Gella, Elena Leilani G. Reyes, Ma. Rizalina G. Iligan and Diana Rose Gella (respondents) and dismissed petitioners Complaint6 denominated as Collection of Agents Compensation, Commission and Damages. Likewise assailed is the CA Resolution7 dated April 5, 2006 which denied petitioners Motion for Reconsideration.8

Factual Antecedents

On October 25, 1976, respondents father, Atty. Lorenzo C. Gella (Atty. Gella), executed a private document confirming that he has appointed Severino Cabrera (Severino), husband of Araceli and father of Arnel as administrator of all his real properties located in San Jose, Antique9 consisting of about 24 hectares of land described as Lot No. 1782-B and covered by Transfer Certificate of Title No. T-16987.10

When Severino died in 1991, Araceli and Arnel, with the consent of respondents, took over the administration of the properties. Respondents likewise instructed them to look for buyers of the properties, allegedly promising them "a commission of five percent of the total purchase price of the said properties as compensation for their long and continued administration"11 thereof.

Accordingly, petitioners introduced real estate broker and President of ESV Marketing and Development Corporation, Erlinda Veegas (Erlinda), to the respondents who agreed to have the said properties developed by Erlindas company. However, a conflict arose when respondents appointed Erlinda as the new administratrix of the properties and terminated Aracelis and Arnels services.

Petitioners, through counsel, wrote respondents and demanded for their five percent commission and compensation to no avail. Hence, on September 3, 2001, they filed a Complaint for Collection of Agents Compensation, Commission and Damages12 against respondents before the RTC. Attached to their Complaint is a copy of the tax declaration for Lot No. 1782-B.13

Ruling of the Regional Trial Court

Petitioners prayed that they be paid (1) commission and compensation in the form of real property equivalent to five percent of the 24-hectare Lot No. 1782-B, (2) moral damages of P100,000.00, and (3) attorneys fees and litigation expenses of P100,000.00.

Respondents filed a Motion to Dismiss14 based on the following grounds: (1) lack of jurisdiction, (2) failure to state a cause of action, and (3) lack of legal capacity of Araceli and Arnel to sue in behalf of the other heirs of Severino.

Respondents argued that for RTCs outside of Metro Manila to take cognizance of a civil suit, the jurisdictional amount must exceed P200,000.00 pursuant to Section 5 of Republic Act (RA) No. 7691 which amended Section 19 of Batas Pambansa Blg. (BP) 129. And since the total market value of Lot No. 1782-B is P3,550,072,15 five percent thereof is only P177,506.60 or less than the said jurisdictional amount, then the RTC has no jurisdiction over petitioners Complaint. Respondents also posited that the Complaint states no cause of action since petitioners supposed right to any commission remained inchoate as Lot No. 1782-B has not yet been sold; in fact, the Complaint merely alleged that petitioners introduced a real estate broker to respondents. Lastly, respondents averred that petitioners have no legal capacity to sue on behalf of Severinos other heirs and that the verification and certification of non-forum shopping attached to the Complaint only mentioned Araceli and Arnel as plaintiffs.

Finding respondents arguments to be well-taken, the RTC, in an Order16 dated May 2, 2002 ruled:

WHEREFORE, premises considered, the respondents Motion to Dismiss is granted. Consequently, this case is hereby DISMISSED. Costs against the petitioners.

SO ORDERED.17

Petitioners filed a Notice of Appeal,18 hence, the elevation of the records of the case to the CA.

Ruling of the Court of Appeals

Petitioners averred that their claim is one which is incapable of pecuniary estimation or one involving interest in real property the assessed value of which exceeds P200,000.00. Hence, it falls under the exclusive original jurisdiction of the RTC. Moreover, they asserted that they are not only claiming for commission but also for compensation for the services rendered by Severino as well as by Araceli and Arnel for the administration of respondents properties. Citing Section 3, Rule 319 of the Rules of Court, petitioners justified the inclusion of Severinos other heirs as plaintiffs in the Complaint.

In the Decision20 dated July 6, 2005, the CA concluded that the Complaint is mainly for collection of sum of money and not one which is incapable of pecuniary estimation since petitioners are claiming five percent of the total purchase price of Lot No. 1782-B. Neither does it involve an interest over a property since petitioners are merely claiming payment for their services. The appellate court also ruled that the Complaint did not state a cause of action since it failed to show the existence of petitioners right that was allegedly violated by respondents. Moreover, it found no evidence of

Aracelis and Arnels authority to file the Complaint for and in behalf of Severinos other heirs. In sum, the CA found no error on the part of the RTC in granting respondents Motion to Dismiss. Thus:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING the appeal filed in this case and AFFIRMING the Order rendered by the lower court in Civil Case No. 2001-9-3267 with double costs against petitioners.

SO ORDERED.21

Petitioners filed a Motion for Reconsideration22 questioning solely the CAs affirmance of the RTCs finding on lack of jurisdiction. This was, however, also denied in a Resolution23 dated April 5, 2006.

Hence, the present Petition for Review on Certiorari.

Issues

Whether the CA erred in affirming the RTCs findings that it has no jurisdiction over the subject matter of the case; that the Complaint states no cause of action; and that petitioners Araceli and Arnel have no legal capacity to sue in behalf of the other heirs of Severino.

The Parties Arguments

At the outset, petitioners claim that the RTC did not make its own independent assessment of the merits of respondents Motion to Dismiss but only blindly adopted the arguments raised therein. This, to them, violates the Courts pronouncement in Atty. Osumo v. Judge Serrano24 enjoining judges to be faithful to the law and to maintain professional competence.

As to the substantial issues, petitioners reiterate the arguments they raised before the CA. They insist that their Complaint is one which is incapable of pecuniary estimation or involves interest in real property the assessed value of which exceeds P200,000.00 and falls within the RTCs jurisdiction. At any rate, they emphasize that they likewise seek to recover damages, the amount of which should have been considered by the RTC in determining jurisdiction. Moreover, they have a cause of action against the respondents because an agency under the Civil Code is presumed to be for a compensation.25 And what they are claiming in their Complaint is such compensation for the services rendered not only by Severino but also by Araceli and Arnel as administrators/agents of respondents properties. Lastly, they allege that pursuant to Section 3, Rule 3 of the Rules of Court, the joining of Severinos other heirs as plaintiffs in the Complaint, is proper.

On the other hand, respondents assert that petitioners Complaint, as correctly found by the CA, is for a specific sum of money seeking to recover the amount of P177,503.60,26 which is below the jurisdictional amount for RTCs outside of Metro Manila. As to petitioners claim for damages, the same is only incidental to the principal claim for agents compensation and therefore should not be included in computing the total amount of the claim for purposes of determining jurisdiction. Respondents likewise point out that the CAs affirmance of the RTCs findings that the Complaint states no cause of action and that Araceli and Arnel have no capacity to sue in behalf of the other heirs can no longer be questioned before this Court as they are already final and executory since petitioners failed to assail them in their Motion for Reconsideration with the CA. Be that as it may, no error can be imputed to the CA for affirming the said findings as they are in accordance with law.

Our Ruling

The Petition lacks merit. Contrary to petitioners claim, the RTC made an independent assessment of the merits of respondents Motion to Dismiss.

It cannot be gainsaid that "it is the Courts bounden duty to assess independently the merits of a motion x x x."27In this case, the RTC complied with this duty by making its own independent assessment of the merits of respondents Motion to Dismiss. A reading of the RTCs Order will show that in resolving said motion, it judiciously examined the Complaint and the documents attached thereto as well as the other pleadings filed in connection with the said motion.28 Based on these, it made an extensive discussion of its observations and conclusions. This is apparent from the following portions of the said Order, to wit:

x x x In the instant case, the plaintiffs complaint does not even mention specifically the amount of their demand outside of their claim for damages and attorneys fees. They are only demanding the payment of their alleged commission/compensation and that of the late Severino Cabrera which they fixed at 5% of Lot No. 1782-B allegedly with an area of 24 hectares. They did not also state the total monetary value of Lot 1782-B neither did they mention the monetary equivalent of 5% of Lot No. 1782-B. In short, the complaint fails to establish that this Court has jurisdiction over the subject matter of the claim.

As the tax declaration covering Lot No. 1782-B has been attached to the complaint as Annex "C" and made an integral part thereof, the court, in its desire to determine whether it has jurisdiction over the subject matter of plaintiffs claim computed the total market value of Lot No. 1782-B, including the value of the trees and the plants standing thereon, as appearing in said Annex "C". The computation shows the amount of P3,508,370.00. Five percent thereof is P175,418.50. It is way below the jurisdictional amount for the Regional Trial Court outside Metro Manila which is pegged at more than P200,000. Clearly, therefore, this Court has no jurisdiction over the subject matter of the plaintiffs complaint as correctly contended by the defendants.29

x x x x

A careful scrutiny of the complaint in this case reveals that it is bereft of any allegation that Lot No. 1782-B or any portion thereof has already been sold thru the plaintiffs efforts prior to the alleged dismissal as agents or brokers of the defendants. As they failed to sell Lot No. 1782-B or any portion thereof, then they are not entitled to any commission, assuming in gratia argumenti that they were promised 5% commission by defendants should they be able to sell Lot No. 1782-B or any part or parcel of the said lot.

Besides, the court notices that the appointment of the plaintiffs father (Annex "A"-Complaint) does not state in any manner that he is entitled to a compensation or commission when it is supposed to be the repository of what had been agreed upon between him and Atty. Lorenzo C. Gella, relative to his designation as administrator of Atty. Gella. As such, the plaintiffs cannot claim now that Severino Cabrera is entitled to any compensation or commission as Annex "A" does not so provide.30

x x x x

An examination of the records of this case reveals that there is nothing in plaintiffs complaint showing that they were empowered by the other heirs of the late Severino Cabrera to take this action on their behalf. x x x31

Clearly, petitioners claim that the RTC merely adopted the arguments of respondents in their Motion to Dismiss when it resolved the same is belied by the above-quoted disquisition of the RTC on the matter and therefore deserves no credence.

Petitioners Complaint is neither one which is incapable of pecuniary estimation nor involves interest in a real property.

Section 19(1) and (2) of BP 12932 as amended by RA 769133 read:

SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive original jurisdiction:

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

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds twenty thousand pesos (P20,000.00) or for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts;

x x x x

Insisting that the RTC has jurisdiction over their Complaint, petitioners contend that the same is one which is incapable of pecuniary estimation or involves interest in a real property the assessed value of which exceedsP200,000.00.

The Court does not agree. To ascertain the correctness of petitioners contention, the averments in the Complaint and the character of the relief sought in the said Complaint must be consulted.34 This is because the jurisdiction of the court is determined by the nature of the action pleaded as appearing from the allegations in the Complaint.35 Hence, the pertinent portions of petitioners Complaint are hereunder reproduced:

x x x x

2. That on October 25, 1976 the defendants father the late Atty. Lorenzo Gella, x x x designated x x x Severino Cabrera as agent or administrator of all his real properties located in San Jose, Antique x x x.

3. That said Severino Cabrera immediately assumed his duties and responsibilities faithfully as agent or administrator until his death in 1991 of the properties of Lorenzo Gella in San Jose, Antique consisting of about 24 hectares x x x which later became Lot No. 1782-B in the name of the defendants, covered by T.C.T. No. T-16987, Register of Deeds of Antique x x x.

4. That after the death of said Severino Cabrera in 1991, with the consent of the defendants, his wife took over his duties and responsibilities as agent or administratrix of the above-named properties of the defendants in San Jose, Antique with the help of her son, Arnel Cabrera as encargado and the plaintiffs were also instructed by the defendants to look for buyers of their properties and plaintiffs were promised by defendants a commission of five

percent of the total purchase price of the said properties as compensation for their long and continued administration of all the said properties.

5. That sometime in 1994 plaintiffs approached the real estate broker Erlinda Veegas to sell the above-described Lot No. 1782-B and the plaintiffs gave her the addresses of the defendants who at all times live in Metro Manila. Thereafter defendants agreed to have the said property developed by ESV Marketing & Development Corporation represented by its President, said Erlinda Veegas and defendants also designated said Erlinda Veegas as administratrix of said property and at the same time defendants dismissed plaintiffs as agents or administrators thereof;

6. That on August 1, 2001 plaintiffs, through counsel wrote defendants demanding payment of their five percent of twenty four hectares properties under their administration for twenty five years in the form of real estate in the subdivision of Lot 1782-B as their compensation or commission, but defendants refused and failed to pay plaintiffs in cash or in kind of what is due them;

7. That in view of the aforesaid failure and refusal of defendants to pay their compensation or commission and instead they were dismissed and replaced by the said Erlinda Veegas they themselves recommended to defendants, the plaintiffs have suffered public humiliation, mental anguish, and serious anxiety for which plaintiffs should be adjudged and entitled to moral damages in the sum of not less than Php100,000.00 each.

8. That defendants ingratitude and unjustified refusal to pay plaintiffs x x x their compensation or commission for twenty five years service as administrators and had successfully found a developer of defendants property but only to be dismissed, plaintiffs were compelled to institute this action and incur expenses as well as attorneys fees in the sum of Php100,000.00.

P R A Y E R

WHEREFORE, it is respectfully prayed that after due hearing, judgment be rendered against defendants jointly and severally in favor of the plaintiffs, as follows:

a. To pay plaintiffs their compensation or commission in the form of real estate from Lot No. 1782-B subdivision equivalent to five percent of twenty four hectares properties under their administration;

b. To pay plaintiffs moral damages in the amount of not less than Php100,000.00 each;

c. Attorneys fee and litigation expenses in the amount of not less than Php100,000.00 each and pay the costs of suit

x x x x36 (Italics and Emphases supplied)

The Court in Ungria v. Court of Appeals37 restated the criterion laid down in Singson v. Isabela Sawmill38 to ascertain if an action is capable or not of pecuniary estimation, viz:

In determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered

capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the Courts of First Instance would depend on the amount of the claim. However, where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable exclusively by Courts of First Instance (now Regional Trial Courts).

It can be readily seen from the allegations in the Complaint that petitioners main purpose in filing the same is to collect the commission allegedly promised them by respondents should they be able to sell Lot No. 1782-B, as well as the compensation for the services rendered by Severino, Araceli and Arnel for the administration of respondents properties. Captioned as a Complaint for Collection of Agents Compensation, Commission and Damages, it is principally for the collection of a sum of money representing such compensation and commission. Indeed, the payment of such money claim is the principal relief sought and not merely incidental to, or a consequence of another action where the subject of litigation may not be estimated in terms of money. In fact, petitioners in this case estimated their claim to be equivalent to five percent of the purchase price of Lot No. 1782-B. Therefore, the CA did not err when it ruled that petitioners Complaint is not incapable of pecuniary estimation.

The Court cannot also give credence to petitioners contention that their action involves interest in a real property. The October 25, 1976 letter39 of Atty. Gella confirming Severinos appointment as administrator of his properties does not provide that the latters services would be compensated in the form of real estate or, at the very least, that it was for a compensation. Neither was it alleged in the Complaint that the five percent commission promised to Araceli and Arnel would be equivalent to such portion of Lot No. 1782-B. What is clear from paragraph 4 thereof is that respondents instructed petitioners to look for buyers of their properties and "were promised by respondents a commission of five percent of the total purchase price of the said properties as compensation for their long and continued administration of all the said properties." Also, petitioners allegation in paragraph 6 that respondents failed to pay them "in cash or in kind" of what is due them negates any agreement between the parties that they should be paid in the form of real estate. Clearly, the allegations in their Complaint failed to sufficiently show that they have interest of whatever kind over the properties of respondents. Given these, petitioners claim that their action involves interest over a real property is unavailing. Thus, the Court quotes with approval the CAs ratiocination with respect to the same:

As to their weak claim of interest over the property, it is apparent that their only interest is to be compensated for their long-term administration of the properties. They do not claim an interest in the properties themselves but merely payment for their services, such payment they compute to be equivalent to five (5%) percent of the value of the properties. Under Section 1, Rule 4 of the Rules of Court, a real action is an action affecting title to or possession of real property, or interest therein. These include partition or condemnation of, or foreclosure of mortgage on, real property. Plaintiffs-appellants interest is obviously not the one contemplated under the rules on jurisdiction.40

Petitioners demand is below the jurisdictional amount required for RTCs outside of Metro Manila, hence, the RTC concerned in this case has no jurisdiction over petitioners Complaint.

To determine whether the RTC in this case has jurisdiction over petitioners Complaint, respondents correctly argued that the same be considered vis--vis Section 19(8) of BP 129, which provides:

SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive original jurisdiction:

x x x x

(8) In all other cases in which the demand, exclusive of interests, damages of whatever kind, attorneys fees, litigation expenses, and costs or the value of the property exceeds One hundred thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand, exclusive of the abovementioned items exceeds Two hundred thousand pesos (P200,000.00).

This jurisdictional amount of exceeding P100,000.00 for RTCs outside of Metro Manila was adjusted toP200,000.00 effective March 20, 1999 in pursuance to Section 5 of RA 769141 which further provides:

SEC. 5. After five (5) years from the effectivity of this Act, the jurisdictional amounts mentioned in Sec. 19(3), (4), and (8); and Sec. 33(1) of Batas Pambansa Blg. 129 as amended by this Act, shall be adjusted to Two hundred thousand pesos (P200,000.00). Five (5) years thereafter, such jurisdictional amounts shall be adjusted further to Three hundred thousand pesos (P300,000.00): Provided, however, That in the case of Metro Manila, the abovementioned jurisdictional amounts shall be adjusted after five (5) years from the effectivity of this Act to Four hundred thousand pesos (P400,000.00).

Hence, when petitioners filed their Complaint on September 3, 2001, the said increased jurisdictional amount was already effective. The demand in their Complaint must therefore exceed P200,000.00 in order for it to fall under the jurisdiction of the RTC.

Petitioners prayed that they be paid five percent of the total purchase price of Lot No. 1782-B. However, since the Complaint did not allege that the said property has already been sold, as in fact it has not yet been sold as respondents contend, there is no purchase price which can be used as basis for computing the five percent that petitioners are claiming. Nevertheless and as mentioned, petitioners were able to attach to their Complaint a copy of the tax declaration for Lot No. 1782-B showing a total market value of P3,550,072.00.42 And since "the fair market value is the price at which a property may be sold by a seller, who is not compelled to sell, and bought by a buyer, who is not compelled to buy,"43 the RTC correctly computed the amount of petitioners claim based on the propertys market value. And since five percent of P3,550,072.00 is only P177,503.60 or below the jurisdictional amount of exceeding P200,000.00 set for RTCs outside of Metro Manila, the RTC in this case has no jurisdiction over petitioners claim.

There is no merit to petitioners averment that their demand for moral damages should be included in the computation of their total claims. Paragraph 8, Section 19 of BP 129 expressly speaks of demand which is exclusive of damages of whatever kind. This exclusion was later explained by the Court in Administrative Circular No. 09-94 dated June 14, 1994 as follows:

2. The exclusion of the term "damages of whatever kind" in determining the jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. No. 7691, applies to cases where the damages are merely incidental to or a consequence of the main cause of action. However, in cases where the claim for damages is the main cause of action, or one of the causes of action, the amount of such claim shall be considered in determining the jurisdiction of the court. 1wphi1

Here, the moral damages being claimed by petitioners are merely the consequence of respondents alleged non-payment of commission and compensation the collection of which is petitioners main

cause of action. Thus, the said claim for moral damages cannot be included in determining the jurisdictional amount.

In view of the foregoing, the CA did not err in affirming the RTCs conclusion that it has no jurisdiction over petitioners claim.

The CAs affirmance of the RTCs findings that the Complaint states no cause of action and that Araceli and Arnel have no authority to sue in behalf of Severinos other heirs cannot be raised in this Petition.

As pointed out by respondents, petitioners tailed to question in their Motion for Reconsideration before the CA its affirmance of the RTC's findings that the Complaint states no cause of action and that Araceli and Arne! have no authority to sue in behalf of the other heirs of Severino. Suffice it to say that ''prior to raising these arguments before this Court, they should have raised the matter in their Motion for Reconsideration in order to give the appellate court an opportunity to correct its ruling. For them to raise these issues be tore this Court now would be improper, since they failed to do so be tore the CA."44

WHEREFORE, the Petition for Review on Certiorari is DENIED and the assailed Decision dated July 6, 2005 and the Resolution dated April 5, 2006 of the Court of Appeals in CA-G.R. CV No. 75126 are AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO Associate Justice

Republic of the Philippines SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 208232 March 10, 2014

SURVIVING HEIRS OF ALFREDO R. BAUTISTA, namely: EPIFANIA G. BAUTISTA and ZOEY G. BAUTISTA,Petitioners, vs. FRANCISCO LINDO and WELHILMINA LINDO; and HEIRS OF FILIPINA DAQUIGAN, namely: MA. LOURDES DAQUIGAN, IMELDA CATHERINE DAQUIGAN, IMELDA DAQUIGAN and CORSINO DAQUIGAN, REBECCA QUIAMCO and ANDRES QUIAMCO, ROMULO LORICA and DELIA LORICA, GEORGE CAJES and LAURA CAJES, MELIDA BANEZ and FRANCISCO BANEZ, MELANIE GOFREDO, GERV ACIO CAJES and ISABEL CAJES, EGMEDIO SEGOVIA and VERGINIA SEGOVIA, ELSA N. SAM, PEDRO M. SAM and LINA SAM, SANTIAGO MENDEZ and MINA MENDEZ, HELEN M. BURTON and LEONARDO BURTON, JOSE JACINTO and BIENVENIDA JACINTO, IMELDA DAQUIGAN, LEO MA TIGA and ALICIA MATIGA, FLORENCIO ACEDO JR., and LYLA VALERIO, Respondents.

D E C I S I O N

VELASCO, JR., J.:

The Case

This is a Petition for Review on Certiorari under Rule 45 assailing the April 25, 2013 Order of the Regional Trial Court (RTC) in Civil Case No. (1798)-021 as well as its Order of July 3, 2013 denying reconsideration.

The Facts

Alfredo R. Bautista (Bautista), petitioners predecessor, inherited in 1983 a free-patent land located in Poblacion, Lupon, Davao Oriental and covered by Original Certificate of Title (OCT) No. (1572) P-6144. A few years later, he subdivided the property and sold it to several vendees, herein respondents, via a notarized deed of absolute sale dated May 30, 1991. Two months later, OCT No. (1572) P-6144 was canceled and Transfer Certificates of Title (TCTs) were issued in favor of the vendees.1

Three years after the sale, or on August 5, 1994, Bautista filed a complaint for repurchase against respondents before the RTC, Branch 32, Lupon, Davao Oriental, docketed as Civil Case No. 1798,2 anchoring his cause of action on Section 119 of Commonwealth Act No. (CA) 141, otherwise known as the "Public Land Act," which reads:

SECTION 119. Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a period of five years from the date of the conveyance.

Respondents, in their Answer, raised lack of cause of action, estoppel, prescription, and laches, as defenses.

Meanwhile, during the pendency of the case, Bautista died and was substituted by petitioner Epifania G. Bautista (Epifania).

Respondents Francisco and Welhilmina Lindo later entered into a compromise agreement with petitioners, whereby they agreed to cede to Epifania a three thousand two hundred and thirty square meter (3,230 sq.m.)-portion of the property as well as to waive, abandon, surrender, and withdraw all claims and counterclaims against each other. The compromise was approved by the RTC in its Decision dated January 27, 2011, the fallo of which reads:

WHEREFORE, a DECISION is hereby rendered based on the above-quoted Compromise Agreement and the parties are enjoined to strictly comply with the terms and conditions of the same.

SO ORDERED.3

Other respondents, however, filed a Motion to Dismiss4 dated February 4, 2013, alleging that the complaint failed to state the value of the property sought to be recovered. Moreover, they asserted that the total selling price of all the properties is only sixteen thousand five hundred pesos (PhP 16,500), and the selling price or market value of a property is always higher than its assessed value. Since Batas Pambansa Blg. (BP) 129, as amended, grants jurisdiction to the RTCs over civil actions involving title to or possession of real property or interest therein where the assessed value is more

than PhP 20,000, then the RTC has no jurisdiction over the complaint in question since the property which Bautista seeks to repurchase is below the PhP 20,000 jurisdictional ceiling.

RTC Ruling5

Acting on the motion, the RTC issued the assailed order dismissing the complaint for lack of jurisdiction. The trial court found that Bautista failed to allege in his complaint that the value of the subject property exceeds 20 thousand pesos. Furthermore, what was only stated therein was that the total and full refund of the purchase price of the property is PhP 16,500. This omission was considered by the RTC as fatal to the case considering that in real actions, jurisdictional amount is determinative of whether it is the municipal trial court or the RTC that has jurisdiction over the case.

With respect to the belated filing of the motion, the RTC, citing Cosco Philippines Shipping, Inc. v. Kemper Insurance Company,6 held that a motion to dismiss for lack of jurisdiction may be filed at any stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel. The dispositive portion of the assailed Order reads:

WHEREFORE, the complaint for Repurchase, Consignation, with Preliminary Injunction and Damages is hereby dismissed for lack of jurisdiction.

SO ORDERED.7

Assignment of Errors

Their motion for reconsideration having been denied, petitioners now seek recourse before this Court with the following assigned errors:

I

THE PUBLIC RESPONDENT RTC ERRED IN ADMITTING THE MOTION TO DISMISS DATED FEBRUARY 4, 2013, BELATEDLY FILED BY THE PRIVATE RESPONDENTS IN THE CASE.

II

THE PUBLIC RESPONDENT RTC ERRED IN HOLDING THAT THE INSTANT CASE FOR REPURCHASE IS A REAL ACTION.8

The Issue

Stated differently, the issue for the Courts resolution is: whether or not the RTC erred in granting the motion for the dismissal of the case on the ground of lack of jurisdiction over the subject matter.

Arguments

Petitioners argue that respondents belatedly filed their Motion to Dismiss and are now estopped from seeking the dismissal of the case, it having been filed nine (9) years after the filing of the complaint and after they have actively participated in the proceedings. Additionally, they allege that an action for repurchase is not a real action, but one incapable of pecuniary estimation, it being founded on privity of contract between the parties. According to petitioners, what they seek is the enforcement of their right to repurchase the subject property under Section 119 of CA 141.

Respondents, for their part, maintain that since the land is no longer devoted to agriculture, the right of repurchase under said law can no longer be availed of, citing Santana v. Marias.9 Furthermore, they suggest that petitioners intend to resell the property for a higher profit, thus, the attempt to repurchase. This, according to respondents, goes against the policy and is not in keeping with the spirit of CA 141 which is the preservation of the land gratuitously given to patentees by the State as a reward for their labor in cultivating the property. Also, the Deed of Absolute Sale presented in evidence by Bautista was unilaterally executed by him and was not signed by respondents. Lastly, respondents argue that repurchase is a real action capable of pecuniary estimation.

Our Ruling

The petition is meritorious.

Jurisdiction of courts is granted by the Constitution and pertinent laws.

Jurisdiction of RTCs, as may be relevant to the instant petition, is provided in Sec. 19 of BP 129, which reads:

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

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

2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts.

On the other hand, jurisdiction of first level courts is prescribed in Sec. 33 of BP 129, which provides:

Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in civil cases.Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise:

x x x x

3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots.

The core issue is whether the action filed by petitioners is one involving title to or possession of real property or any interest therein or one incapable of pecuniary estimation.

The course of action embodied in the complaint by the present petitioners predecessor, Alfredo R. Bautista, is to enforce his right to repurchase the lots he formerly owned pursuant to the right of a free-patent holder under Sec. 119 of CA 141 or the Public Land Act.

The Court rules that the complaint to redeem a land subject of a free patent is a civil action incapable of pecuniary estimation.

It is a well-settled rule that jurisdiction of the court is determined by the allegations in the complaint and the character of the relief sought.10 In this regard, the Court, in Russell v. Vestil,11 wrote that "in determining whether an action is one the subject matter of which is not capable of pecuniary estimation this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the RTCs would depend on the amount of the claim." But where the basic issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions as cases where the subject of the litigation may not be estimated in terms of money, and, hence, are incapable of pecuniary estimation. These cases are cognizable exclusively by RTCs.12

Settled jurisprudence considers some civil actions as incapable of pecuniary estimation, viz:

1. Actions for specific performance;

2. Actions for support which will require the determination of the civil status;

3. The right to support of the plaintiff;

4. Those for the annulment of decisions of lower courts;

5. Those for the rescission or reformation of contracts;13

6. Interpretation of a contractual stipulation.14

The Court finds that the instant cause of action to redeem the land is one for specific performance.

The facts are clear that Bautista sold to respondents his lots which were covered by a free patent. While the deeds of sale do not explicitly contain the stipulation that the sale is subject to repurchase by the applicant within a period of five (5) years from the date of conveyance pursuant to Sec. 119 of CA 141, still, such legal provision is deemed integrated and made part of the deed of sale as prescribed by law. It is basic that the law is deemed written into every contract.15 Although a contract is the law between the parties, the provisions of positive law which regulate contracts are deemed written therein and shall limit and govern the relations between the parties.16Thus, it is a binding prestation in favor of Bautista which he may seek to enforce. That is precisely what he did. He filed a complaint to enforce his right granted by law to recover the lot subject of free patent. Ergo, it is clear that his action is for specific performance, or if not strictly such action, then it is akin or analogous to one of specific performance. Such being the case, his action for specific performance is incapable of pecuniary estimation and cognizable by the RTC.

Respondents argue that Bautistas action is one involving title to or possession of real property or any interests therein and since the selling price is less than PhP 20,000, then jurisdiction is lodged with the MTC. They rely on Sec. 33 of BP 129.

Republic Act No. 769117 amended Sec. 33 of BP 129 and gave Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed twenty thousand pesos (PhP 20,000) or, in civil actions in Metro Manila, where such assessed value does not exceed fifty thousand pesos (PhP 50,000) exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses and costs.

At first blush, it appears that the action filed by Bautista involves title to or possession of the lots he sold to respondents. Since the total selling price is less than PhP 20,000, then the MTC, not the RTC, has jurisdiction over the case. This proposition is incorrect for the re-acquisition of the lots by Bautista or herein successors-in-interests, the present petitioners, is but incidental to and an offshoot of the exercise of the right by the latter to redeem said lots pursuant to Sec. 119 of CA 141. The reconveyance of the title to petitioners is solely dependent on the exercise of such right to repurchase the lots in question and is not the principal or main relief or remedy sought. Thus, the action of petitioners is, in reality, incapable of pecuniary estimation, and the reconveyance of the lot is merely the outcome of the performance of the obligation to return the property conformably to the express provision of CA 141.

Even if we treat the present action as one involving title to real property or an interest therein which falls under the jurisdiction of the first level court under Sec. 33 of BP 129, as the total selling price is only PhP 16,000 way below the PhP 20,000 ceiling, still, the postulation of respondents that MTC has jurisdiction will not hold water. This is because respondents have actually participated in the proceedings before the RTC and aggressively defended their position, and by virtue of which they are already barred to question the jurisdiction of the RTC following the principle of jurisdiction by estoppel.

In Heirs of Jose Fernando v. De Belen, it was held that the party raising defenses to the complaint, actively participating in the proceedings by filing pleadings, presenting his evidence, and invoking its authority by asking for an affirmative relief is deemed estopped from questioning the jurisdiction of the court.18

Here, we note that aside from the belated filing of the motion to dismissit having been filed nine (9) years from the filing of the complaintrespondents actively participated in the proceedings through the following acts:

1. By filing their Answer and Opposition to the Prayer for Injunction19 dated September 29, 1994 whereby they even interposed counterclaims, specifically: PhP 501,000 for unpaid survey accounts, PhP 100,000 each as litigation expenses, PhP 200,000 and PhP 3,000 per daily appearance by way of attorneys fees, PhP 500,000 as moral damages, PhP 100,000 by way of exemplary damages, and costs of suit;

2. By participating in Pre-trial;

3. By moving for the postponement of their presentation of evidence;20

4. By presenting their witness;21 and

5. By submitting the compromise agreement for approval.22

Having fully participated in all stages of the case, and even invoking the RTCs authority by asking for affirmative reliefs, respondents can no longer assail the jurisdiction of the said trial court. Simply

put, considering the extent of their participation in the case, they are, as they should be, considered estopped from raising lack of jurisdiction as a ground for the dismissal of the action. 1wphi1

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The April 25, 2013 and July 3, 2013 Orders of the Regional Trial Court in Civil Case No. (1798)-021 are hereby REVERSED and SET ASIDE.

The Regional Trial Court, Branch 32 in Lupon, Davao Oriental is ORDERED to proceed with dispatch in resolving Civil Case No. (1798)-021.

No pronouncement as to costs.

SO ORDERED.

PRESBITERO J. VELASCO, JR. Associate Justice

Republic of the Philippines SUPREME COURT

Manila

EN BANC

G.R. No. L-60367 September 30, 1982

ATTY. VENUSTIANO T. TAVORA, petitioner, vs. HON. ROSARIO R. VELOSO, in her capacity as the Presiding Judge of Branch III of the City Court of Manila, and JULIETA CAPATI, respondents.

PLANA, J.:

Venustiano T. Tavora, a resident of Marikina, Metro Manila, owns an apartment in Quiapo, Manila which he has leased to Julieta Capati, a resident of Quiapo. On account of alleged violations of the lease agreement by the lessee (unauthorized subleasing and failure to pay rent), the lessor filed on January 12, 1981 an ejectment suit (Civil Case No. 060828) in the City Court of Manila. The defendant filed a motion t/ dismiss on the sole ground of lack of jurisdiction for failure of the plaintiff to bring the dispute first to the barangay court for possible amicable settlement under PD 1508. Parenthetically, there is no question that there has been no attempt to amicably settle the dispute between Tavora and Capati at the barangay level.

After denying the motion to dismiss as well as a subsequent motion for reconsideration, the municipal court reversed itself and dismissed the ejectment case.

Alleging grave abuse of discretion amounting to lack of jurisdiction, petitioner Tavora has come to this Court on certiorari and mandamus praying that the order of dismissal be set aside and that respondent judge be ordered to hear and decide the case.

The sole issue raised is one of law: Under the given facts, is the respondent judge barred from taking cognizance of the ejectment case pursuant to Sec-6 of PD 1508 establishing a system of amicably settling disputes at the barangay level? The section reads:

SECTION 6. Conciliation, precondition to filing of complaint. No complaint, petition, action or proceeding involving any matter within the authority of the Lupon as provided in Section 2 hereof shall be filed or instituted in court or any other government office for adjudication unless there has been a confrontation of the parties before the Lupon Chairman or the Pangkat and no conciliation or settlement has been reached as certified by the Lupon Secretary or the Pangkat Secretary, attested by the Lupon or Pangkat Chairman, or unless the settlement has been repudiated ... (Emphasis supplied.)

For the above provision to be operative, the controversy must be within the jurisdiction of the Lupong Tagapayapa (Lupon or Barangay court). On this point, the relevant provisions of PD 1508 are:

SECTION 2. Subject matters for amicable settlement. The Lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except:

(1) Where one party is the government, or any subdivision or instrumentality thereof;

(2) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions;

(3) Offenses punishable by imprisonment exceeding 30 days, or a fine exceeding P200.00;

(4) Offenses where there is no private offended party;

(5) Such other classes of disputes which the Prime Minister may in the interest of justice determine, upon recommendation of the Minister of Justice and the Minister of Local Government.

SECTION 3. Venue. Disputes between or among persons actually residing in the same barangayshall be brought for amicable settlement before the Lupon of said barangay. Those involving actual residents of different barangays within the same city or municipality shall be brought in the barangay where the respondent or any of the respondents actually resides, at the election of the complainant. However, all disputes which involve real property or any interest therein shall be brought in the barangay where the real property or any part thereof is situated.

The Lupon shall have no authority over disputes:

(1) involving parties who actually reside in barangays of different cities or municipalities, except where such barangays adjoin each other; and

(2) involving real property located in different municipalities. (Emphasis supplied.)

The foregoing provisions are quite clear. Section 2 specifies the conditions under which the Lupon of a barangay "shall have authority" to bring together the disputants for amicable settlement of their

dispute: The parties must be "actually residing in the same city or municipality." At the same time, Section 3 while reiterating that the disputants must be "actually residing in the same barangay" or in "different barangays within the same city or municipality unequivocably declares that the Lupon shall have "no authority" over disputes "involving parties who actually reside in barangays of different cities or municipalities," except where such barangays adjoin each other.

Thus, by express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over disputes where the parties are not actual residents of the same city or municipality, except where the barangays in which they actually reside adjoin each other,

It is true that immediately after specifying the barangay whose Lupon shall take cognizance of a given dispute, Sec. 3 of PD 1508 adds:

However, all disputes which involve real property or any interest therein shall be brought in the barangay where the real property or any part thereof is situated.

Actually, however, this added sentence is just an ordinary proviso and should operate as such. The operation of a proviso, as a rule, should be limited to its normal function, which is to restrict or vary the operation of the principal clause, rather than expand its scope, in the absence of a clear indication to the contrary.

The natural and appropriate office of a proviso is . . . to except something from the enacting clause; to limit, restrict, or qualify the statute in whole or in part; or to exclude from the scope of the statute that which otherwise would be within its terms. (73 Am Jur 2d 467.)

Therefore, the quoted proviso should simply be deemed to restrict or vary the rule on venue prescribed in the principal clauses of the first paragraph of Section 3, thus: Although venue is generally determined by the residence of the parties, disputes involving real property shall be brought in the barangay where the real property or any part thereof is situated, notwithstanding that the parties reside elsewhere within the same city/municipality.

In the instant case, the plaintiff in the ejectment case (petitioner herein) is a resident of Marikina, while the defendant (private respondent) is a resident of Quiapo. No Lupon therefore is authorized to take cognizance of their dispute.

Finding the petition to be meritorious, the dismissal of Civil Case No. 060828 (ejectment) by the respondent Judge being predicated upon a misconstruction of PD 1508, the same should be granted. (Co Tiamco vs. Diaz, 75 Phil. 672.)

Accordingly, the assailed order of dismissal dated February 22, 1982 as well as the order dated March 23, 1982 denying reconsideration thereof, are hereby set aside; and the respondent Judge is directed to hear and decide the aforesaid ejectment case on its merits. Costs against private respondents.

SO ORDERED.

Fernando CJ., Teehankee, Barredo, Makasiar, Aquino, Concepcion, Jr., Guerrero, Abad Santos, De Castro, Melencio-Herrera, Escolin, Vasquez and Gutierrez, JJ., concur.

Relova, J., took no part.

Republic of the Philippines SUPREME COURT

Manila

SECOND DIVISION

A.M. No. MTJ-00-1265 April 6, 2000

VALENCIDES VERCIDE, complainant, vs. JUDGE PRISCILLA T. HERNANDEZ, Fifth Municipal Circuit Trial Court, Clarin and Tudela, Misamis Occidental, respondent.

D E C I S I O N

MENDOZA, J.:

This is a complaint filed against Judge Priscilla T. Hernandez of the Fifth Municipal Circuit Trial Court, Clarin and Tudela, Misamis Occidental, charging her with grave abuse of authority and ignorance of the law for her dismissal of a case which complainant Valencides Vercide and his wife had filed against Daria Lagas Galleros for recovery of possession of a piece of land. The land is located in Upper Centro, Tudela, Misamis Occidental. Defendant Galleros is a resident of the same municipality, while complainant and his wife are residents of Dipolog City. Because of this fact, the case was filed in court without prior referral to the Lupong Tagapamayapa.

However, this matter was raised by defendant in her answer as an affirmative defense, and respondent, in her order of July 15, 1997, ordered the dismissal of the case without prejudice to the prosecution of the counterclaim pleaded by the defendant in her answer. In support of her order, respondent cited P.D. No. 1508, 3 of which provides:

Venue. - Disputes between or among persons actually residing in the same barangay shall be brought for amicable settlement before the Lupon of said barangay. Those involving actual residents of different barangays within the same city or municipality shall be brought in the barangay where the respondent or any of the respondents actually resides, at the election of the complainant. However, all disputes which involve real property or any interest therein shall be brought in the barangay where the real property or any part thereof is situated. (Emphasis added)

Complainant and his wife moved for a reconsideration, citing the following provisions of R.A. 7160, "The Local Government Code of 1991":

SEC. 408. Subject matter for Amicable Settlement; Exception Thereto. The lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except:

(a) Where one party is the government of any subdivision or instrumentality thereof;

(b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five Thousand pesos (P5,000.00);

(d) Offenses where there is no private offended party;

(e) Where the dispute involves real property located in different cities or municipalities unless the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(g) Such other classes of disputes which the President may determine in the interest of justice or upon recommendation of the Secretary of Justice. marie

The court in which the non-criminal cases not falling within the authority of the lupon under this Code are filed may, at any time before trial, motu proprio refer the case to the lupon concerned for amicable settlement.

SEC. 409. Venue. - (a) Disputes between persons actually residing in the same barangay shall be brought for amicable settlement before the lupon of said barangay.

(b) Those involving actual residents of different barangays within the same city of municipality shall be brought in the barangay where the respondent or any of the respondents actually resides, at the election of the complainant.

(c) All disputes involving real property or any interest therein shall be brought in the barangay where the real property or the larger portion thereof is situated.

(d) Those arising at the workplace where the contending parties are employed or at the institution where such parties are enrolled for study shall be brought in the barangay where such workplace or institution is located.

Objections to venue shall be raised in the mediation proceedings before the punong barangay; otherwise, the same shall be deemed waived. Any legal question which may confront the punong barangay in resolving objections to venue herein referred to may be submitted to the Secretary of Justice or his duly designated representative whose ruling thereon shall be binding.

They argued that under 408(f), in relation to 409(c), where the parties to a dispute involving real property or any interest therein are not actual residents of the same city or municipality or of adjoining barangays, prior resort to barangay conciliation is not required.

However, respondent denied the motion. In her order dated September 9, 1997, respondent stated:

The Court after taking into consideration the Motion for Reconsideration and the ground relied upon by the counsel finds that counsel for the plaintiffs failed to correlate Sections 408 and 409 of Republic Act No. 7160 and to consider Rule VIII, paragraph (a) of the Katarungang Pambarangay Rules, the rules and regulations [of] which were promulgated to implement Sections 399 to 422, Chapter 7, Title One Book III and Section 515, Book IV of R.A. No. 7160, otherwise known as the Katarungang Pambarangay Law, to wit:

"RULE VIII - PRE-CONDITION FOR FORMAL ADJUDICATION

Conciliation, pre-condition for filing of complaint in court or government office. novero

(a) No individual may go directly to court or to any government office for adjudication of his dispute with another individual upon any matter falling within the authority of the Punong Barangay or Pangkat ng Tagapagkasundo to settle under these Rules, unless, after personal confrontation of the parties before them earnest efforts to conciliate have failed to result in a settlement or such settlement has been effectively repudiated."

and also Rule VI, Section 3 paragraph (c) of the same Katarungang Pambarangay Rules which provides:

"Rule VI - Amicable Settlement of Disputes

Section 3. Venue. The place of settlement shall be subject to the following rules:

. . . .

(c) Dispute involving real property shall be brought for settlement in the Barangay where the real property or larger portion thereof is situated.

From the provisions of the above-cited Rules it was very clear that parties whose disputes involved real property should first br[ing] the said dispute before the barangay where the property was located, and that [because of] failure to bring the dispute before the Barangay for conciliation no action may be filed in court for final adjudication of the said dispute.

That parties should first comply with the provisions of the Katarungang Pambarangay Law before the Court can acquire jurisdiction over the complaint. That non-compliance of the plaintiff to the requirement of the Katarungang Pambarangay Law was admitted by her in paragraph 3 of the complaint. Her allegation of non-compliance with the mandatory requirement of Lupon Conciliation before the filing of the complaint, in a way divest[s] the Court of its jurisdiction over the case. In the 1997 Rules of Civil Procedure, Rule 16, Section 1, paragraph (j) provides:

"That a condition precedent for filing the claim has not been complied with"

WHEREFORE, in view of the foregoing, the Motion for Reconsideration is hereby denied.

Complainant alleges that in dismissing Civil Case No. 295, respondent judge committed "(a) Grave abuse of authority by knowingly rendering an unjust and unlawful order; (b) Ignorance of the law in its highest order, she being a judge; (c) Grave disobedience to the jurisprudence laid down by the Supreme Court of the Philippines on the matter of exemption of lupon conciliation of contending parties who are not residen[ts] of the same city or municipality." He states that respondent "practically threw several decisions of the Supreme Court on the matter out of the window and obviously followed hook, line and sinker the arguments of the [defendant] Daria Galleros."

In answer, respondent judge claims that she merely followed the law in dismissing the case. She prays that the complaint against her be dismissed and that complainant be ordered to stop harassing her just because he had not been able to obtain the relief he wanted in Civil Case No. 295. nigel

In its memorandum dated February 29, 2000, the Office of the Court Administrator recommends the dismissal of this case on the ground that the "issue [raised] is purely judicial and is best resolved by a court of competent jurisdiction" and that, even if respondent had erred, she should not be held

administratively liable since there is no allegation that she acted in bad faith or knowingly rendered an unjust judgment.

In Tavora v. Veloso,1 this Court already ruled that where parties do not reside in the same city or municipality or in adjoining barangays, there is no requirement for them to submit their dispute involving real property to the Lupong Tagapamayapa. As explained in that case:

The sole issue raised is one of law: Under the given facts, is the respondent judge barred from taking cognizance of the ejectment case pursuant to Sec. 6 of PD 1508 establishing a system of amicably settling disputes at the barangay level? The section reads:

"SECTION. 6. Conciliation, precondition to filing of complaint. - No complaint, petition, action or proceeding involving any matter within the authority of the Lupon as provided in Section 2 hereof shall be filed or instituted in court or any other government office for adjudication unless there has been a confrontation of the parties before the Lupon Chairman or the Pangkat and no conciliation or settlement has been reached as certified by the Lupon Secretary or the Pangkat Secretary, attested by the Lupon or Pangkat Chairman, or unless the settlement has been repudiated. . . ." (Italics supplied)

For the above provision to be operative, the controversy must be within the jurisdiction of the Lupong Tagapayapa (Lupon or Barangay court). On this point, the relevant provisions of PD 1508 are:

"SECTION 2. Subject matters for amicable settlement. - The Lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except:

(1) Where one party is the government, or any subdivision or instrumentality thereof;

(2) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions;

(3) Offenses punishable by imprisonment exceeding 30 days, or a fine exceeding P200.00;

(4) Offenses were there is no private offended party;

(5) Such other classes of disputes which the Prime Minister may in the interest of justice determine, upon recommendation of the Minister of Justice and the Minister of Local Government. ella

"SECTION 3. Venue. Disputes between or among persons actually residing in the same barangay shall be brought for amicable settlement before the Lupon of said barangay. Those involving actual residents of different barangays within the same city or municipality shall be brought in the barangay where the respondent or any of the respondents actually resides, at the election of the complainant. However, all disputes which involve real property or any interest therein shall be brought in the barangay where the real property or any part thereof is situated.

"The Lupon shall have no authority over disputes:

(1) involving parties who actually reside in barangays of different cities or municipalities, except where such barangays adjoin each other; and

(2) involving real property located in different municipalities." (Italics supplied)

The foregoing provisions are quite clear. Section 2 specifies the conditions under which the Lupon of a barangay "shall have authority" to bring together the disputants for amicable settlement of their dispute: The parties must be "actually residing in the same city or municipality." At the same time, Section 3 while reiterating that the disputants must be "actually residing in the same barangay" or in "different barangays within the same city or municipality" unequivocably declares that the Lupon shall have "no authority" over disputes "involving parties who actually reside in barangays of different cities or municipalities," except where such barangays adjoin each other.

Thus, by express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over disputes where the parties are not actual residents of the same city or municipality, except where the barangays in which they actually reside adjoin each other.

It is true that immediately after specifying the barangay whose Lupon shall take cognizance of a given dispute, Sec. 3 of PD 1508 adds:

"However, all disputes which involve real property or any interest therein shall be brought in the barangay where the real property or any part thereof is situated."

Actually, however, this added sentence is just an ordinary proviso and should operate as such. marinella

The operation of a proviso, as a rule, should be limited to its normal function, which is to restrict or vary the operation of the principal clause, rather than expand its scope, in the absence of a clear indication to the contrary.2

To be sure, the Court was interpreting in that case the provisions of P.D. No. 1508 which, except for some modifications, are applicable to the case before respondent judge because they are now found in 408-409 of R.A. No. 7160 which took effect on January 1, 1992. The ruling in Tavora v. Veloso, reiterated in other cases,3should be familiar to the bench and the bar. As we have held in Espiritu v. Jovellanos,4 the phrase "Ignorance of the law excuses no one" has a special application to judges who, under the injunction of Canon 1.01 of the Code of Judicial Conduct, "should be the embodiment of competence, integrity, and independence." In Bacar v. De Guzman,5 it was held that when the law violated is basic, the failure to observe it constitutes gross ignorance. Reiterating this ruling, it was emphasized in Almeron v. Sardido6 that the disregard of an established rule of law amounts to gross ignorance of the law and makes the judge subject to disciplinary action.

In the case at bar, respondent showed patent ignorance if not disregard of this Courts rulings on the jurisdiction of the Lupong Tagapamayapa by her erroneous quotations of the provisions of the Katarungang Pambarangay Rules implementing R.A. No. 7160. While a judge may not be held administratively accountable for every erroneous order or decision he renders, his error may be so gross or patent that he should be administratively disciplined for gross ignorance of the law and incompetence.

In this case, respondent at first cited P.D. No. 1508, 3 as basis of her action. When her attention was called to the fact that this had been repealed by 409(c) of R.A. No. 7160, respondent, who obviously was more intent in justifying her previous order than correcting her error, quoted out of context the provisions of the Katarungang Pambarangay Rules implementing the Katarungang Pambarangay provisions of R.A. No. 7160. She thus violated Canon 3 of the Code of Judicial Conduct which provides that "In every case, a judge shall endeavor diligently to ascertain the facts and the applicable law unswayed by partisan interest, public opinion or fear of criticism."

Contrary to respondents interpretation, it is clear even from the Katarungang Pambarangay Rules that recourse to barangay conciliation proceedings is not necessary where the parties do not reside in the same municipality or city or in adjoining barangays. Rule VI of the same states in pertinent part:

SECTION 2. Subject matters for settlement. - All disputes may be the subject of proceedings for amicable settlement under these rules except the following enumerated cases:

(a) Where one party is the government, or any subdivision or instrumentality thereof; alonzo

(b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions;

(c) Offenses for which the law prescribes a maximum penalty of imprisonment exceeding one (1) year or a fine exceeding Five Thousand pesos (P5,000.00);

(d) Offenses where there is no private offended party;

(e) Where the dispute involves real properties located in different cities or municipalities unless the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangay units adjoin each other and the parties thereto to agree to submit their differences to amicable settlement by an appropriate lupon;

(g) Such other classes of disputes which the President may determine in the interest of justice or upon the recommendation of the Secretary of Justice.

The foregoing exceptions notwithstanding, the court in which non-criminal cases not falling within the authority of the lupon under these Katarungang Pambarangay Law and Rules are filed may, at any time before trial, motu proprio refer the case to the lupon concerned for amicable settlement.

SECTION 3. Venue. The place of settlement shall be subject to the following rules:

(a) Where the parties reside in the same barangay, the dispute shall be brought for settlement in said barangay;

(b) Where the parties reside in different barangays in the same city or municipality, the dispute shall be settled in the barangay where the respondent or any one of the respondents actually resides, at the choice of the complainant;

(c) Dispute involving real property shall be brought for settlement in the barangay where the real property or larger portion thereof is situated;

(d) Disputes arising at the workplace where the contending parties are employed or at the institution where such parties are enrolled for study, shall be brought in the barangay where such workplace or institution is located;

(e) Any objection relating to venue shall be raised before the Punong Barangay during the mediation proceedings before him. Failure to do so shall be deemed a waiver of such objection;

(f) Any legal question which may confront the Punong Barangay in resolving objections to venue herein referred to may be submitted to the Secretary of Justice, or his duly designated representative, whose ruling thereon shall be binding. brando

(Emphasis added)

Indeed, these provisions, which are also found in P.D. No. 1508, have already been authoritatively interpreted by this Court, and the duty of respondent judge was to follow the rulings of this Court. Her insistence on her own interpretation of the law can only be due either to an ignorance of this Courts ruling or to an utter disregard thereof. We choose to believe that her failure to apply our rulings to the case before her was simply due to gross ignorance which, nevertheless, is inexcusable. In accordance with the ruling in Ting v. Atal,7 in which a judge who was similarly found guilty of gross ignorance of the law was fined P2,000.00, respondent judge should likewise be fined the same amount.

WHEREFORE, respondent is hereby found guilty of gross ignorance of the law and is hereby ordered to pay a FINE of TWO THOUSAND (P2,000.00) PESOS with a WARNING that repetition of the same or similar acts will be dealt with more severely.

SO ORDERED.

Republic of the Philippines SUPREME COURT

THIRD DIVISION

G.R. No. 157830 November 17, 2005

DANTE M. PASCUAL, represented by REYMEL R. SAGARIO, Petitioner, vs. MARILOU M. PASCUAL, Respondent.

D E C I S I O N

CARPIO MORALES, J.:

On challenge via Petition for Review on Certiorari is the February 10, 2003 Order of the Regional Trial Court (RTC) of Isabela, Branch 23 at Roxas dismissing, on motion of herein respondent Marilou M. Pascual, the complaint filed against her by her brother-herein petitioner Dante M. Pascual, represented by his attorney-in-fact Reymel R. Sagario (Sagario), for non-compliance with the conciliation provision-pre condition to filing of complaint in court under R.A. 7160 (the Local Government Code).

Petitioner, a permanent resident of the United States of America, appointed Sagario as his attorney-in-fact by a Special Power of Attorney (SPA) dated April 10, 2002:

1. To file a case for the cancellation of Transfer Certificate of Title No. T-271656 issued in the name of Marilou M. Pascual as well as the Deed of Sale of Registered Land (Dec. No. 639; Page No. 52; Book No. XXI; Series of 1994) and/or Reconveyance at the appropriate court;

2. To collect the monthly rentals from the tenant;

3. To enter into amicable settlement with Marilou M. Pascual or any other mode of payment/and/or dispute resolution;

4. To execute and sign any and all papers, contracts/documents which may be necessary relative to the above acts.

x x x1

Pursuant to the SPA, Sagario filed on October 14, 2002 before the Isabela RTC at Roxas a complaint entitled "Dante M. Pascual, plaintiff v. Marilou M. Pascual and Register of Deeds, Defendants," docketed as Civil Case No. Br. 23-713-02, for Annulment of Transfer Certificate of Title No. T-271657 of Isabela and Deed of Absolute Sale of Registered Land and/or Reconveyance with Damages.2

To the Complaint the defendant-herein respondent Marilou M. Pascual filed a Motion to Dismiss3 on two grounds one of which was non-compliance with the requirement under Section 412 of the Local Government Code,4 she contending that there is no showing that the dispute was referred to the barangay court before the case was filed in court.

By the assailed Order of February 10, 2003,5 Branch 23 of the Isabela RTC at Roxas granted respondents Motion to Dismiss in this wise:

. . . RA 7160 repealing P.D. 1508 otherwise known as the Revised Katarungang Pambarangay provides under Section 409 "All disputes involving real property or any interest therein shall be brought in the barangay where the real property or the larger portion thereof is situated." Hence, the reliance of the plaintiff on Section 408 of R.A. 7160 is incorrect. When real property or any interest therein is involved, the dispute shall be filed before the barangay where the property is located, regardless of the residence of the parties. Besides, it is incorrect to say that the parties are not residents of the same place, Vira, Roxas, Isabela. The Attorney-in-fact of the plaintiff in the person of Reymel R. Sagario is a resident of Vira, Roxas, Isabela, and he substitute (sic)Dante Pascual by virtue of said Special Power of Attorney. Hence, said Attorney-in-fact should have brought the dispute before barangay Vira, Roxas, Isabela, where the property is located. In the case of Royales vs. Intermediate Appellate Court 127 SCRA 470, "Ordinarily, non-compliance with the condition precedent prescribed by P.D. 1508 could affect the sufficiency of the plaintiffs cause of action and make his complaint vulnerable to dismissal on ground of lack of cause of action or prematurity."6 (Emphasis and underscoring supplied)

Petitioners Motion for Reconsideration7 of the above-said order was denied by Order of March 24, 2003:8

x x x

Consequently, the Court is [of] the opinion that the said Attorney-in-fact shall be deemed to be the real party in interest, reading from the tenor of the provisions of the Special Power of Attorney. Being a real party in interest, the Attorney-in-fact is therefore obliged to bring this case first

before the Barangay Court. Sec. 3, Rule 3 of the Rules of Court provides that "Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest.

x x x

Being the real party in interest, the Attorney-in-fact may therefore bring the necessary complaint before the Lupon Tagapayapa and appear in person as if he is the owner of the land.9 (Emphasis and underscoring supplied)

Hence, the present petition questioning "the palpable legal errors" of the RTC.

Petitioner argues that since he, not his attorney-in-fact Sagario, is the real party in interest, and since he actually resides abroad, the lupon would have no jurisdiction to pass upon the dispute involving real property, he citingAgbayani v. Belen.10

Respondent submits, on the other hand, that Section 408, paragraph (f), of the Local Government Code, is qualified by paragraph (c) of Section 409 of the same Code the latter of which provides that "[a]ll disputes involving real property or any interest therein shall be brought in the barangay where the real property is located," hence, the use of the word "shall" makes it mandatory for the bringing of the dispute before the lupon.

That attorney-in-fact Sagario is a resident of the same barangay as that of hers, respondent argues in any event, brings the matter under the jurisdiction of the lupon, for Sagario, following Section 3 of Rule 3 of the 1997 Rules of Civil Procedure which provides:

Sec. 3. Representative as parties. - Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name for the benefit of an undisclosed principal may sue or be sued without joining the principal except when the contract involves things belonging to the principal,

being a substitute, becomes the real party-in-interest.

Respondents submissions do not lie.

The pertinent provisions of the Local Government Code read:

SEC. 408. Subject Matter for Amicable Settlement; Exception Thereto. The lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except:

(a) Where one party is the government or any subdivision or instrumentality thereof;

(b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five Thousand pesos (P5,000.00);

(d) Offenses where there is no private offended party;

(e) Where the dispute involves real properties located in different cities or municipalities unless the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon; and

(g) Such other classes of disputes which the President may determine in the interest of justice or upon the recommendation of the Secretary of Justice.

The court in which non-criminal cases not falling within the authority of the lupon under this Code are filed may, at any time before trial, motu proprio refer the case to the lupon concerned for amicable settlement. (Emphasis supplied)

SEC. 409. Venue. (a) Disputes between persons actually residing in the same barangay shall be brought for amicable settlement before the lupon of said barangay .

(b) Those involving actual residents of different barangays within the same city or municipality shall be brought in the barangay where the respondent or any of the respondents actually resides, at the election of the complainant.

(c) All disputes involving real property or any interest therein shall be brought in the barangay where the real property or the larger portion thereof is situated.

(d) Those arising at the workplace where the contending parties are employed or at the institution where such parties are enrolled for study shall be brought in the barangay where such workplace or institution is located.

Objections to venue shall be raised in the mediation proceedings before the punong barangay; otherwise, the same shall be deemed waived. Any legal question which may confront the punong barangay in resolving objections to venue herein referred to may be submitted to the Secretary of Justice or his duly designated representative whose ruling thereon shall be binding. (Emphasis supplied)

In the 1982 case of Tavora v. Veloso,11 this Court held that where the parties are not actual residents in the same city or municipality or adjoining barangays, there is no requirement for them to submit their dispute to thelupon as provided for in Section 6 vis a vis Sections 2 and 3 of P.D. 1508 (Katarungang Pambarangay Law).

[B]y express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over disputes where theparties are not actual residents of the same city or municipality, except where the barangays in which they actually reside adjoin each other. (Underscoring supplied)

In the 2000 case of Vercide v. Hernandez,12 this Court, noting that the Tavora ruling, reiterated in other cases including the 1996 case of Agbayani13 cited by petitioner, was decided under the provisions of P.D. No. 1508 (Katarungang Pambarangay) Law which were, except for some modifications, echoed in Sections 408-409 of the Local Government Code which took effect on January 1, 1992, held that the Tavora ruling remained.

To construe the express statutory requirement of actual residency as applicable to the attorney-in-fact of the party-plaintiff, as contended by respondent, would abrogate the meaning of a "real party in interest" as defined in Section 2 of Rule 314 of the 1997 Rules of Court vis a vis Section 3 of the same Rule which was earlier quoted but misread and misunderstood by respondent.

In fine, since the plaintiff-herein petitioner, the real party in interest, is not an actual resident of the barangay where the defendant-herein respondent resides, the local lupon has no jurisdiction over their dispute, hence, prior referral to it for conciliation is not a pre-condition to its filing in court.

The RTC thus erred in dismissing petitioners complaint.

WHEREFORE, the petition is granted. The assailed February 10, 2003 Order, as well as the March 24, 2003 Order denying reconsideration of the first, of Branch 23 of the Regional Trial Court of Isabela at Roxas is SET ASIDE. Said court is accordingly directed to reinstate Civil Case No. 23-713-02 to its docket and take appropriate action thereon with dispatch.

SO ORDERED.

THIRD DIVISION

[G.R. No. 128574. September 18, 2002.]

UNIVERSAL ROBINA SUGAR MILLING CORPORATION, Petitioner, v. HEIRS OF ANGEL

TEVES, Respondents.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

Andres Abanto owned two parcels of land situated in Campuyo, Manjuyod, Negros Oriental. One lot,

consisting of 55,463 square meters, is registered in his name under Transfer Certificate of Title (TCT)

No. H-37 of the Registry of Deeds of said province. The other lot with an area of 193,789 square

meters is unregistered. He died on February 16, 1973. 1 chanrob1es virtua1 1aw 1ibra ry

On October 19, 1974, Andres Abantos heirs executed an "Extrajudicial Settlement of the Estate of the

Deceased Andres Abanto and Simultaneous Sale." 2 In this document, Abantos heirs adjudicated unto

themselves the two lots and sold the (a) unregistered lot of 193,789 square meters to the United

Planters Sugar Milling Company, Inc. (UPSUMCO), and (b) the registered lot covered by TCT No. H-37

to Angel M. Teves, for a total sum of P115,000.00. The sale was not registered. 3

Out of respect for his uncle Ignacio Montenegro, who was UPSUMCOs founder and president, Teves

verbally allowed UPSUMCO to use the lot covered by TCT No. H-37 for pier and loading facilities, free

of charge, subject to the condition that UPSUMCO shall shoulder the payment of real property taxes

and that its occupation shall be co-terminus with its corporate existence. 4 UPSUMCO then built a

guesthouse and pier facilities on the property. 5

Years later, UPSUMCOs properties were acquired by the Philippine National Bank (PNB). Later, PNB

transferred the same properties to the Asset Privatization Trust (APT) which, in turn, sold the same to

the Universal Robina Sugar Milling Corporation (URSUMCO). URSUMCO then took possession of

UPSUMCOs properties, including Teves lot covered by TCT No. H-37.

Upon learning of URSUMCOs acquisition of his lot, Teves formally asked the corporation to turn over

to him possession thereof or the corresponding rentals. He stated in his demand letters that he merely

allowed UPSUMCO to use his property until its corporate dissolution; and that it was not mortgaged by

UPSUMCO with the PNB and, therefore, not included among the foreclosed properties acquired by

URSUMCO. 6

URSUMCO refused to heed Teves demand, claiming that it acquired the right to occupy the property

from UPSUMCO which purchased it from Andres Abanto; and that it was merely placed in the name of

Angel Teves, as shown by the "Deed of Transfer and Waiver of Rights and Possession" dated

November 26, 1987. 7 Under this document, UPSUMCO transferred to URSUMCO its application for

agricultural and foreshore lease. The same document partly states that the lands subject of the

foreshore and agricultural lease applications are bounded on the north by the "titled property of

Andres Abanto bought by the transferor (UPSUMCO) but placed in the name of Angel Teves" .

URSUMCO further claimed that it was UPSUMCO, not Teves, which has been paying the corresponding

realty taxes.

Consequently, on June 18, 1992, Teves filed with the Regional Trial Court (RTC), Dumaguete City,

Branch 43, a complaint for recovery of possession of real property with damages against URSUMCO,

docketed as Civil Case No. 10235.

On September 4, 1992, Teves died 8 and was substituted by his heirs. 9

On April 6, 1994, the RTC rendered its Decision 10 finding that URSUMCO has no personality to

question the validity of the sale of the property between the heirs of Andres Abanto and Angel Teves

since it is not a party thereto; that Teves failure to have the sale registered with the Registry of

Deeds would not vitiate his right of ownership, unless a third party has acquired the land in good faith

and for value and has registered the subsequent deed; that the list of properties acquired by

URSUMCO from the PNB does not include the disputed lot and, therefore, was not among those

conveyed by UPSUMCO to URSUMCO. The dispositive portion of the Decision reads: jgc:chanrobles.com.ph

"Wherefore, in view of the foregoing, judgment is hereby rendered: chanrob1es virtual 1aw l ibra ry

1. Declaring plaintiff (Teves) the owner of the parcel of land covered by Transfer Certificate of Title

No. H-37 situated at Campuyo, Manju