FIRST DIVISION

IRENE SANTE AND REYNALDO

SANTE, G.R. No. 173915
Petitioners,
Present:
- versus -
PUNO, C.J., Chairperson,
HON. EDILBERTO T. CARPIO MORALES,
CLARAVALL, in his capacity as
Presiding Judge of Branch 60, Regional LEONARDO-DE CASTRO,
Trial Court of Baguio City, and VITA
BERSAMIN, and
N. KALASHIAN,
VILLARAMA, JR., JJ.
Respondents.
Promulgated:

February 22, 2010

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

DECISION

VILLARAMA, JR., J.:

Before this Court is a petition for certiorari[1] under Rule 65 of the 1997 Rules of Civil
Procedure, as amended, filed by petitioners Irene and Reynaldo Sante assailing the
Decision[2] dated January 31, 2006 and the Resolution[3] dated June 23, 2006 of the
Seventeenth Division of the Court of Appeals in CA-G.R. SP No. 87563. The assailed
decision affirmed the orders of the Regional Trial Court (RTC) of Baguio City, Branch
60, denying their motion to dismiss the complaint for damages filed by respondent
Vita Kalashian against them.

The facts, culled from the records, are as follows:

On April 5, 2004, respondent filed before the RTC of Baguio City a complaint for
damages[4] against petitioners. In her complaint, docketed as Civil Case No. 5794-
R, respondent alleged that while she was inside the Police Station of Natividad,
Pangasinan, and in the presence of other persons and police officers, petitioner Irene
Sante uttered words, which when translated in English are as follows, How many
rounds of sex did you have last night with your boss, Bert? You fuckin bitch! Bert
refers to Albert Gacusan, respondents friend and one (1) of her hired personal
security guards detained at the said station and who is a suspect in the killing of
petitioners close relative. Petitioners also allegedly went around Natividad,
Pangasinan telling people that she is protecting and cuddling the suspects in the
aforesaid killing. Thus, respondent prayed that petitioners be held liable to pay moral
damages in the amount of P300,000.00; P50,000.00 as exemplary
damages; P50,000.00 attorneys fees; P20,000.00 litigation expenses; and costs of
suit.

Petitioners filed a Motion to Dismiss[5] on the ground that it was the Municipal Trial
Court in Cities (MTCC) and not the RTC of Baguio, that had jurisdiction over the
case. They argued that the amount of the claim for moral damages was not more than
the jurisdictional amount of P300,000.00, because the claim for exemplary damages
should be excluded in computing the total claim.

On June 24, 2004,[6] the trial court denied the motion to dismiss citing our ruling
in Movers-Baseco Integrated Port Services, Inc. v. Cyborg Leasing
Corporation.[7] The trial court held that the total claim of respondent amounted
toP420,000.00 which was above the jurisdictional amount for MTCCs outside Metro
Manila. The trial court also later issued Orders on July 7, 2004 [8] and July 19,
2004,[9] respectively reiterating its denial of the motion to dismiss and denying
petitioners motion for reconsideration.

Aggrieved, petitioners filed on August 2, 2004, a Petition for Certiorari and

Prohibition,[10] docketed as CA-G.R. SP No. 85465, before the Court of Appeals.
Meanwhile, on July 14, 2004, respondent and her husband filed an Amended
Complaint[11] increasing the claim for moral damages from P300,000.00
to P1,000,000.00. Petitioners filed a Motion to Dismiss with Answer Ad
Cautelam and Counterclaim, but the trial court denied their motion in an
Order[12] dated September 17, 2004.
Hence, petitioners again filed a Petition for Certiorari and Prohibition[13] before the
Court of Appeals, docketed as CA-G.R. SP No. 87563, claiming that the trial court
committed grave abuse of discretion in allowing the amendment of the complaint to
increase the amount of moral damages from P300,000.00 to P1,000,000.00. The
case was raffled to the Seventeenth Division of the Court of Appeals.

On January 23, 2006, the Court of Appeals, Seventh Division, promulgated a decision
in CA-G.R. SP No. 85465, as follows:
WHEREFORE, finding grave abuse of discretion on the part of [the] Regional Trial
Court of Baguio, Branch 60, in rendering the assailed Orders dated June 24, 2004
and July [19], 2004 in Civil Case No. 5794-R the instant petition for certiorari is
GRANTED. The assailed Orders are hereby ANNULLED and SET ASIDE. Civil
Case No. 5794-R for damages is ordered DISMISSED for lack of jurisdiction.

SO ORDERED.[14]

The Court of Appeals held that the case clearly falls under the jurisdiction of the MTCC
as the allegations show that plaintiff was seeking to recover moral damages in the
amount of P300,000.00, which amount was well within the jurisdictional amount of the
MTCC. The Court of Appeals added that the totality of claim rule used for determining
which court had jurisdiction could not be applied to the instant case because plaintiffs
claim for exemplary damages was not a separate and distinct cause of action from her
claim of moral damages, but merely incidental to it. Thus, the prayer for exemplary
damages should be excluded in computing the total amount of the claim.

On January 31, 2006, the Court of Appeals, this time in CA-G.R. SP No. 87563,
rendered a decision affirming the September 17, 2004 Order of the RTC denying
petitioners Motion to Dismiss Ad Cautelam. In the said decision, the appellate court
held that the total or aggregate amount demanded in the complaint constitutes the
basis of jurisdiction. The Court of Appeals did not find merit in petitioners posture
that the claims for exemplary damages and attorneys fees are merely incidental to
the main cause and should not be included in the computation of the total claim.

The Court of Appeals additionally ruled that respondent can amend her complaint
by increasing the amount of moral damages from P300,000.00 to P1,000,000.00, on
the ground that the trial court has jurisdiction over the original complaint and
respondent is entitled to amend her complaint as a matter of right under the Rules.
Unable to accept the decision, petitioners are now before us raising the following
issues:
I.

WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION ON THE PART
OF THE (FORMER) SEVENTEENTH DIVISION OF THE HONORABLE
COURT OF APPEALS WHEN IT RESOLVED THAT THE REGIONAL TRIAL
COURT OF BAGUIO CITY BRANCH 60 HAS JURISDICTION OVER THE
SUBJECT MATTER OF THE CASE FOR DAMAGES AMOUNTING
TO P300,000.00;

II.

WHETHER OR NOT THERE WAS GRAVE ABUSE OF DISCRETION ON THE

PART OF THE HONORABLE RESPONDENT JUDGE OF THE REGIONAL
TRIAL COURT OF BAGUIO BRANCH 60 FOR ALLOWING THE
COMPLAINANT TO AMEND THE COMPLAINT (INCREASING THE
AMOUNT OF DAMAGES TO 1,000,000.00 TO CONFER JURISDICTION
OVER THE SUBJECT MATTER OF THE CASE DESPITE THE PENDENCY
OF A PETITION FOR CERTIORARI FILED AT THE COURT OF APPEALS,
SEVENTH DIVISION, DOCKETED AS CA G.R. NO. 85465.[15]

In essence, the basic issues for our resolution are:

1) Did the RTC acquire jurisdiction over the case? and
2) Did the RTC commit grave abuse of discretion in allowing the
amendment of the complaint?

Petitioners insist that the complaint falls under the exclusive jurisdiction of the
MTCC. They maintain that the claim for moral damages, in the amount
of P300,000.00 in the original complaint, is the main action. The exemplary damages
being discretionary should not be included in the computation of the jurisdictional
amount. And having no jurisdiction over the subject matter of the case, the RTC
acted with grave abuse of discretion when it allowed the amendment of the complaint
to increase the claim for moral damages in order to confer jurisdiction.

In her Comment,[16] respondent averred that the nature of her complaint is for
recovery of damages. As such, the totality of the claim for damages, including the
exemplary damages as well as the other damages alleged and prayed in the
complaint, such as attorneys fees and litigation expenses, should be included in
determining jurisdiction. The total claim being P420,000.00, the RTC has
jurisdiction over the complaint.

We deny the petition, which although denominated as a petition for certiorari, we

treat as a petition for review on certiorari under Rule 45 in view of the issues raised.

Section 19(8) of Batas Pambansa Blg. 129,[17] as amended by Republic Act No.
7691,[18] states:
SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive
original jurisdiction:
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages of
whatever kind, attorneys fees, litigation expenses, and costs or the value of the
property in controversy exceeds One hundred thousand pesos (P100,000.00) or, in
such other cases in Metro Manila, where the demand, exclusive of the
abovementioned items exceeds Two hundred thousand pesos (P200,000.00).

Section 5 of Rep. Act No. 7691 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).

Relatedly, Supreme Court Circular No. 21-99 was issued declaring that the first
adjustment in jurisdictional amount of first level courts outside of Metro Manila
from P100,000.00 to P200,000.00 took effect on March 20, 1999. Meanwhile, the
second adjustment from P200,000.00 to P300,000.00 became effective on February
22, 2004 in accordance with OCA Circular No. 65-2004 issued by the Office of the
Court Administrator on May 13, 2004.

Based on the foregoing, there is no question that at the time of the filing of the
complaint on April 5, 2004, the MTCCs jurisdictional amount has been adjusted
to P300,000.00.

But where damages is the main cause of action, should the amount of moral damages
prayed for in the complaint be the sole basis for determining which court has
jurisdiction or should the total amount of all the damages claimed regardless of kind
and nature, such as exemplary damages, nominal damages, and attorneys fees, etc.,
be used?

In this regard, Administrative Circular No. 09-94[19] is instructive:

xxxx

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. (Emphasis ours.)

In the instant case, the complaint filed in Civil Case No. 5794-R is for the recovery of
damages for the alleged malicious acts of petitioners. The complaint principally sought
an award of moral and exemplary damages, as well as attorneys fees and litigation
expenses, for the alleged shame and injury suffered by respondent by reason of
petitioners utterance while they were at a police station in Pangasinan. It is settled that
jurisdiction is conferred by law based on the facts alleged in the complaint since the
latter comprises a concise statement of the ultimate facts constituting the plaintiffs
causes of action.[20] It is clear, based on the allegations of the complaint, that
respondents main action is for damages. Hence, the other forms of damages being
claimed by respondent, e.g., exemplary damages, attorneys fees and litigation expenses,
are not merely incidental to or consequences of the main action but constitute the
primary relief prayed for in the complaint.

In Mendoza v. Soriano,[21] it was held that 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. In the said case, the
respondents claim of P929,000.06 in damages and P25,000 attorneys fees plus P500
per court appearance was held to represent the monetary equivalent for
compensation of the alleged injury. The Court therein held that the total amount of
monetary claims including the claims for damages was the basis to determine the
jurisdictional amount.

Also, in Iniego v. Purganan,[22] the Court has held:

The amount of damages claimed is within the jurisdiction of the RTC, since it is

the claim for all kinds of damages that is the basis of determining the jurisdiction

of courts, whether the claims for damages arise from the same or from different

causes of action.

xxxx

Considering that the total amount of damages claimed was P420,000.00, the Court
of Appeals was correct in ruling that the RTC had jurisdiction over the case.

Lastly, we find no error, much less grave abuse of discretion, on the part of the Court
of Appeals in affirming the RTCs order allowing the amendment of the original
complaint from P300,000.00 to P1,000,000.00 despite the pendency of a petition for
certiorari filed before the Court of Appeals. While it is a basic jurisprudential
principle that an amendment cannot be allowed when the court has no jurisdiction
over the original complaint and the purpose of the amendment is to confer
jurisdiction on the court,[23] here, the RTC clearly had jurisdiction over the original
complaint and amendment of the complaint was then still a matter of right.[24]

WHEREFORE, the petition is DENIED, for lack of merit. The Decision

and Resolution of the Court of Appeals dated January 31, 2006 and June 23, 2006,
respectively, are AFFIRMED. The Regional Trial Court of Baguio City, Branch 60
is DIRECTED to continue with the trial proceedings in Civil Case No. 5794-R with
deliberate dispatch.

No costs.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson
 Today is Wednesday, July 12, 2017

Republic of the Philippines

SUPREME COURT
Baguio City

SECOND DIVISION

G.R. No. 164594 April 22, 2015

MICHAEL SEBASTIAN, Petitioner,

vs.
ANNABEL LAGMAY NG, represented by her Attorney-in-fact, ANGELITA
LAGMAY, Respondent.

DECISION

BRION, J.:

We resolve the petition for review on certiorari,1 filed by petitioner Michael Sebastian (Michael),
assailing the March 31, 2004 Decision,2 and the July 15, 2004 Resolution3 of the Court of Appeals
(CA) in CA-G.R. SP No. 65450.

The CA decision reversed and set aside the decision of the Regional Trial Court (RTC) of Palayan
City, Branch 40, in SP. Proc. Case No. 0096-P.

Factual Background

Sometime in 1997, Angelita Lagmay (Angelita), acting as representative and attorney-in-fact of her
daghter Annabel Lagmay Ng (Annabel), filed a complaint before the Barangay Justice of Siclong,
Laur, Nueva Ecija. She sought to collect from Michael the sum of P350,000.00 that Annabel sent to
Michael. She claimed that Annabel and Michael were once sweethearts, and that they agreed to
jointly invest their financial resources to buy a truck. She alleged that while Annabel was working in
Hongkong, Annabel sent Michael the amount of P350,000.00 to purchase the truck. However, after
Annabel and Michaels relationship has ended, Michael allegedly refused to return the money to
Annabel, prompting the latter to bring the matter before the Barangay Justice.

On July 9, 1997, the parties entered into an amicable settlement, evidenced by a document
denominated as "kasunduan"4 wherein Michael agreed to pay Annabel the amount of P250,000.00
on specific dates. The kasunduan was signed by Angelita (on behalf of Annabel), Michael, and the
members of the pangkat ng tagapagkasundo. The kasunduanreads: KASUNDUAN

Nagkasundo ang dalawang panig napagkayari ng labing apat na buwan (14 months) simula
ngayong July 9, 1997 hanggang September 1998 ay kailangan ng maibigay ni Mr. Sebastian ang
pera ni Ms. Anabelle Lagmay.

At napagkasunduan ay dalawang hulog ang halagang P250,000.00 na pera ni Ms.Lagmay at simula

ng pagbibigay ni Mr. Sebastian ay sa buwan ng September 1998.

At upang may katunayan ang lahat ng napag usapan ay lumagda sa ibaba nito at sa harap ng mga
saksi ngayong ika-9 ng Hulyo, 1997

Mrs. Angelita Lagmay (Lagda)

Mr. Michael Sebastian (Lagda)

Saksi: Kagawad Rolando Mendizabal (Lagda)

Hepe Quirino Sapon (Lagda)

Benjamin Sebastian (Lagda)

Jun Roxas - (Lagda)

Angelita alleged that the kasunduan was not repudiated within a period of ten (10) days from the
settlement, in accordance with the Katarungang Pambarangay Law embodied in the Local
Government Code of 1991 [Republic Act (R.A.) No. 7160], and Section 14 of its Implementing Rules.
When Michael failed to honor the kasunduan, Angelita brought the matter back to the Barangay, but
the Barangay Captain failed to enforce the kasunduan, and instead, issued a Certification to File
Action.

After about one and a half years from the date of the execution of the kasunduan or on January 15,
1999, Angelita filed with the Municipal Circuit Trial Court (MCTC) of Laur and Gabaldon, Nueva
Ecija, a Motion for Execution of the kasunduan.

Michael moved for the dismissal of the Motion for Execution, citing as a ground Angelitas alleged
violation of Section 15, Rule 13 of the 1997 Rules of Civil Procedure.

On January 17, 2000, the MCTC rendered a decision5 in favor of Annabel, the dispositive portion of
which reads, as follows:

WHEREFORE, the plaintiff through counsel has satisfactorily proven by preponderance of evidence
based on Exhibits "A," "B," "C," "D," and "F," that defendant has obligation to the plaintiff in the
amount of P250,000.00.

IN VIEW OF THE FOREGOING, the Motion for Execution filed by the plaintiff is hereby granted
based on Sec. 2, Rule 7 of the Implementing Rules and Regulations of Republic Act No. 7160, and
therefore, defendant is hereby ordered within 15 days upon receipt of this decision to pay the plaintiff
the amount of P250,000.00 as evidenced by the Kasunduan (Exhibit "C") with legal interests from
July 9, 1997 until said obligation is fully paid, and to pay attorneys fees for the plaintiffs counsel in
the amount of P15,000.00 and to pay the cost of the suit.

SO ORDERED.

Michael filed an appeal with the RTC arguing that the MCTC committed grave abuse of discretion in
prematurely deciding the case. Michael also pointed out that a hearing was necessary for the
petitioner to establish the genuineness and due execution of the kasunduan. The Regional Trial
Courts Ruling

In its November 13, 2000 Decision,6 the RTC, Branch 40 of Palayan City upheld the MCTC decision,
finding Michael liable to pay Annabel the sum of P250,000.00. It held that Michael failed to assail the
validity of the kasunduan, or to adduce any evidence to dispute Annabels claims or the applicability
of the Implementing Rules and Regulations of R.A. No. 7160. The dispositive portion of the decision
reads:

WHEREFORE, the assailed Decision and Order of the lower court is hereby MODIFIED in that the
appellant is ordered to pay the appellee the amount of Two hundred Fifty Thousand pesos
(P250,000.00) plus twelve percent interest(12%) per annum from September,1998 up to the time it is
actually paid and fifty Thousand Pesos(P50,000.00) representing attorney's fees.

Michael filed a Motion for Reconsideration arguing that: (i) an amicable settlement or arbitration
award can be enforced by the Lupon within six (6) months from date of settlement or after the lapse
of six (6) months, by ordinary civil action in the appropriate City or Municipal Trial Court and not by a
mere Motion for execution; and (ii) the MCTC does not have jurisdiction over the case since the
amount of P250,000.00 (as the subject matter of the kasunduan) is in excess of MCTCs
jurisdictional amount of P200,000.00.7

In its March 13, 2001 Order, the RTC granted Michaels Motion for Reconsideration, and ruled that
there is merit in the jurisdictional issue he raised. It dismissed Angelitas Motion for Execution, and
set aside the MCTC Decision. The dispositive portion of the said Order reads: WHEREFORE, the
Motion for Reconsideration is GRANTED. The Decision of the Court dated November 13, 2000 is
hereby SET ASIDE. The Decision of the Municipal Trial Court of Laur, Nueva Ecija dated January
17, 2000 is likewise SET ASIDE and the Motion for Execution of Kasunduan is DISMISSED, the said
court having had no jurisdiction to hear and decide the matter.8

Angelita moved for the reconsideration of the March 13, 2001 Order, but the motion was
subsequently denied. Aggrieved, she filed a Petition for Review 9with the CA.

The Court of Appeals Ruling

On August 2, 2001, the CA initially dismissed the petition for review on a mere technical ground of
failure to attach the Affidavit of Service. Angelita moved for reconsideration, attaching in her motion
the Affidavit of Service. The CA granted the motion.

On March 31, 2004, the CA rendered its decision granting the petition, and reversing the RTCs
decision. The CA declared that the "appropriate local trial court" stated in Section 2, Rule VII of the
Implementing Rules of R.A. No. 7160 refers to the municipal trial courts. Thus, contrary to Michaels
contention, the MCTC has jurisdiction to enforce any settlement or arbitration award, regardless of
the amount involved.
The CA also ruled that Michaels failure to repudiate the kasunduan in accordance with the
procedure prescribed under the Implementing Rules of R.A. No. 7160, rendered the kasunduan final.
Hence, Michael can no longer assail the kasunduan on the ground of forgery.

Michael moved to reconsider this decision, but the CA denied his motion in its resolution dated July
15, 2004. Hence, this petition.

The Petition

In the present petition for review on certiorari, Michael alleges that the kasunduan cannot be given
the force and effect of a final judgment because it did not conform to the provisions of the
Katarungang Pambarangay law embodied in Book III, Title One, Chapter 7 of R.A. No. 7160. He
points out the following irregularities in the kasunduans execution, and claims that the agreement
forged between him and Angelita was fictitious and simulated:

(1) there was no record of the complaint in the Barangay;

(2) there was no notice of mediation sent to him;

(3) there was no constitution of the Pangkat Ng Tagapagasundo;

(4) the parties were never called upon to choose the three (3) members from among
the Lupon members;

(5) he had no participation in the execution of the kasunduan;

(6) his signature in the kasunduan was forged;

(7) he did not personally appear before the Barangay;

(8) there was no attestation clause;

(9) the kasunduan was neither reported nor filed before the MCTC; and

(10) Annabel, the real party in interest, did not personally appear before the
Barangay as required by the law.

Michael additionally claims that the kasunduan is merely in the nature of a private document. He
also reiterates that since the amount of P250,000.00 the subject matter of the kasunduan is in
excess of MCTCs jurisdictional amount of P200,000.00, the kasunduan is beyond the MCTCs
jurisdiction to hear and to resolve. Accordingly, the proceedings in the Barangay are all nullity.

The Issues

The issues to be resolved in the present petition are:

1. Whether or not the MCTC has the authority and jurisdiction to execute the
kasunduan regardless of the amount involved;
 2. Whether or not the kasunduan could be given the force and effect of a final
judgment; and

3. Whether or not the kasunduan can be enforced.

The Courts Ruling

We deny the petition.

A perusal of the body of the motion for

execution shows that it is actually in the
nature of an action for execution; hence, it
was a proper remedy;

We note at the outset that Michael raised in his brief before the CA the issue of wrong remedy.
He alleged that Angelitas recourse should have been to file a civil action, not a mere motion for
execution, in a regular court. However, the CA failed to address this issue and only ruled on the
issues of the kasunduans irregularities and the MCTCs jurisdiction.

A simple reading of Section 417 of the Local Government Code readily discloses the two-tiered
mode of enforcement of an amicable settlement. The provision reads:

Section 417. Execution.- The amicable settlement or arbitration award may be enforced by execution
by the lupon within six (6) months from the date of the settlement. After the lapse of such time, the
settlement may be enforced by action in the appropriate city or municipal court. [Emphasis ours.]

Under this provision, an amicable settlement or arbitration award that is not repudiated within a
period of ten (10) days from the settlement may be enforced by: first, execution by the Lupon within
six (6) months from the date of the settlement; or second, by an action in the appropriate city or
municipal trial court if more than six (6) months from the date of settlement has already elapsed.

Under the first mode of enforcement, the execution of an amicable settlement could be done on
mere motion of the party entitled thereto before the Punong Barangay.10 The proceedings in this case
are summary in nature and are governed by the Local Government Code and the Katarungang
Pambarangay Implementing Rules and Regulations.

The second mode of enforcement, on the other hand, is judicial in nature and could only be
resortedto through the institution of an action in a regular form before the proper City/Municipal Trial
Court.11 The proceedings shall be governed by the provisions of the Rules of Court. Indisputably,
Angelita chose to enforce the kasunduan under the second mode and filed a motion for execution,
which was docketed as Special Proceedings No. 45-99. The question for our resolution is: Whether
the MCTC, through Angelitas motion for execution, is expressly authorized to enforce the
kasunduan under Section 417 of the Local Government Code?

The Court rules in the affirmative.

It is undisputed that what Angelita filed before the MCTC was captioned "motion for execution,"
rather than a petition/complaint for execution.
A perusal of the motion for execution, however, shows that it contains the material requirements of
an initiatory action.

First, the motion is sufficient in form12 and substance.13 It is complete with allegations of the ultimate
facts constituting the cause of action; the names and residences of the plaintiff and the defendant; it
contains the prayer for the MCTC to order the execution of the kasunduan; and there was also a
verification and certification against forum shopping.

Furthermore, attached to the motion are: 1) the authenticated special power of attorney of Annabel,
authorizing Angelita to file the present action on her behalf; and 2) the copy of the kasunduan whose
contents were quoted in the body of the motion for execution.

It is well-settled that what are controlling in determining the nature of the pleading are the allegations
in the body and not the caption.14

Thus, the motion for execution that Angelita filed was intended to be an initiatory pleading or an
original action that is compliant with the requirement under Section 3, Rule 6 of the Rules of Court
that the complaint should allege the plaintiffs cause of action and the names and residences of the
plaintiff and the defendant.

Angelitas motion could therefore be treated as an original action, and not merely as a motion/special
proceeding. For this reason, Annabel has filed the proper remedy prescribed under Section 417 of
the Local Government Code.

However, Angelita should pay the proper docket fees corresponding to the filing of an action for
execution. The docket fees shall be computed by the Clerk of Court of the MCTC, with due
consideration, of course, of what Angelita had already paid when her motion for execution was
docketed as a special proceeding.

The kasunduan has the force and effect of a final judgment.

Under Section 416 of the Local Government Code, the amicable settlement and arbitration award
shall have the force and effect of a final judgment of a court upon the expiration of ten (10) days from
the date of its execution, unless the settlement or award has been repudiated or a petition to nullify
the award has been filed before the proper city or municipal court.

Moreover, Section 14, Rule VI of the Katarungang Pambarangay Implementing Rules states that the
partys failure to repudiate the settlement within the period of ten (10) days shall be deemed a waiver
of the right to challenge the settlement on the ground that his/her consent was vitiated by fraud,
violence or intimidation.

In the present case, the records reveal that Michael never repudiated the kasunduan within the
period prescribed by the law. Hence, the CA correctly ruled that the kasunduan has the force and
1w phi1

effect of a final judgment that is ripe for execution.

Furthermore, the irregularities in the kasunduans execution, and the claim of forgery are deemed
waived since Michael never raised these defenses in accordance with the procedure prescribed
under the Local Government Code. Thus, we see no reason to discuss these issues in the present
case.
The MCTC has the authority and jurisdiction

to enforce the kasunduan regardless of the amount involved.

The Court also finds that the CA correctly upheld the MCTCs jurisdiction to enforce any settlement
or arbitration award issued by the Lupon.

We again draw attention to the provision of Section 417 of the Local Government Code that after the
lapse of the six (6) month period from the date of the settlement, the agreement may be enforced by
action in the appropriate city or municipal court.

The law, as written, unequivocally speaks of the "appropriate city or municipal court" as the forum for
the execution of the settlement or arbitration award issued by the Lupon. Notably, in expressly
conferring authority over these courts, Section 417 made no distinction with respect to the amount
involved or the nature of the issue involved. Thus, there can be no question that the laws
intendment was to grant jurisdiction over the enforcement of settlement/arbitration awards to the city
or municipal courts the regardless of the amount. A basic principle of interpretation is that words
must be given their literal meaning and applied without attempted interpretation where the words of a
statute are clear, plain and free from ambiguity.15

WHEREFORE, premises considered, we hereby DENY the petitioner's petition for review on
certiorari, and AFFIRM the March 31, 2004 Decision of the Court of Appeals in CA-G.R. SP No.
65450.

Angelita Lagmay is ORDERED to pay the proper docket fees to be computed by the Clerk of Court
of the Municipal Circuit Trial Court of Laur and Gabaldon, Nueva Ecija, with due consideration of
what she had paid when her motion for execution was docketed as a special proceeding.

SO ORDERED.

ARTURO D. BRION
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

MARIANO C. DEL CASTILLO JOSE CATRAL MENDOZA

Associate Justice Associate Justice

MARVIC M.V.F. LEONEN

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P.A. SERENO

Chief Justice

Footnotes

1
Rollo, pp. 3-35.

2
Id. at 4 I-47; penned by Associate Justice Hakim S. Abdulwahid and concu1Ted in
by Associate Justices Delilah Vidallon-Magtolis and Andres B. Reyes, Jr.

3
Id. at 76.

4
Id. at 85.

5
Id. at 119-121.

6
CA rollo, pp. 78-83.

7
Id. at 131-149.

8
Id. at 159-161.

9
Id. at 171-179.

10
The Katarungang Pambarangay Implementing Rules and Regulations issued by
the Department of Interior and Local Government provides:

SECTION 3. Motion for Execution. - The disputant/s may file a motion with
the Punong Barangay, copy furnished to the other disputant/s, for the
execution of a final settlement or award which has not been complied with.

SECTION 4. Hearing. - On the day the motion for execution is filed, the
Punong Barangay shall set the same for hearing on a date agreed to by the
movant, which shall not be later than five (5) days from the date of the filing
of the motion. The Punong Barangay shall give immediate notice of hearing
to the other party.
 During the hearing, the Punong Barangay shall ascertain the fact of non-
compliance with the terms of the settlement or award. Upon such
determination of non-compliance, the Punong Barangay shall strongly urge
the party obliged to voluntarily comply with the settlement or award.
SECTION 5. Issuance, form and contents of the notice of the execution. -
The Punong Barangay shall within [5] days from the day of hearing,
determine whether or not voluntary compliance can be secured. Upon the
lapse of said five-day period, there being no voluntary compliance, he shall
issue a notice of execution in the name of the Lupong Tagapamayapa. The
said notice must intelligently refer to the settlement or award and the amount
actually due thereunder if it be for money, or the terms thereof which must be
complied with.

SECTION 6. Procedure for execution:

a. If the execution be for the payment of money, the party obliged is allowed
a period of five [5] days to make a voluntary payment, failing which, the
Punong Barangay shall take possession of sufficient personal property
located in the barangay of the party obliged to satisfy the settlement or award
from the proceeds of the sale thereof with legal interest such sale to be
conducted in accordance with the procedure herein provided. If sufficient
personal property exists, the party obliged is allowed to point out which of
them shall be taken possession of ahead of the others. If personal property is
not sufficient to satisfy the settlement or award, the deficiency shall be
satisfied in accordance with the applicable provisions of the Rules of Court.

b. If it be for the delivery or restitution of property located in the barangay, the

Punong Barangay shall oust therefrom the person against whom the
settlement or award is rendered and place the place the party entitled thereto
in possession of such property.

If it be for the delivery or restitution of property located in another barangay of

the same city or municipality, the Punong Barangay issuing the notice shall
authorize the Punong Barangay of the barangay where the propertyis
situated to take possession of the property and to act in accordance with
paragraph [b] hereof.

d. If a settlement or award directs to a party to execute a conveyance of land,

or to deliver deeds or other documents, or to perform any other specific act,
and the party fails to comply within the time specified, the Punong Barangay
may direct the Lupon Secretary to perform the act at the cost of the
disobedient party and the act when so done shall like effects as if done by
the party.

Miguel v. Montanez, G.R. No. 191336, January 25, 2012; Chavez v. Court of
11

Appeals, G.R. No. 159411, March 18, 2005.

12
A pleading is sufficient in form when it contains the following: (1) A Caption, setting
forth the name of the court, the title of the action indicating the names of the parties,
and the docket number which is usually left in blank, as the Clerk of Court has to
assign yet a docket number; (2) The Body, reflecting the designation, the allegations
of the partys claims or defenses, the relief prayed for, and the date of the pleading;
 (3) The Signature and Address of the party or counsel; (4) Verification. This is
required to secure an assurance that the allegations have been made in good faith,
or are true and correct and not merely speculative; (5) A Certificate of Non-forum
Shopping, which although not jurisdictional, the same is obligatory; (6)An Explanation
in case the pleading is not filed personally to the Court. Likewise, for pleading
subsequent to the complaint, if the same is not served personally to the parties
affected, there must also be an explanation why service was not done personally.
(Spouses Carlos Munsalud and Winnie Munsalud v. National Housing Authority, G.R.
No. 167181, December 23, 2008.)

13
Substance is one which relates to the material allegations in the pleading. It is
determinative of whether or not a cause of action exists. It is the central piece, the
core, and the heart constituting the controversy addressed to the court for its
consideration. It is the embodiment of the essential facts necessary to confer
jurisdiction upon the court. (Spouses Carlos Munsalud and Winnie Munsalud v.
National Housing Authority, supra note 12.)

14
Id.

Globe-Mackay Cable and Radio Corporation v. NLRC, G.R. No. 82511, March 3,
15

1992, 206 SCRA 701, 711.

The Lawphil Project - Arellano Law Foundation

Today is Wednesday, July 12, 2017

 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 176492 October 20, 2014

MARIETTA N. BARRIDO, Petitioner,

vs.
LEONARDO V. NONATO, Respondent.

DECISION

PERALTA, J.:

For the Court's resolution is a Petition for Review filed by petitioner Marietta N. Barrido questioning
the Decision1 of the Court of Appeals (CA), dated November 16, 2006, and its Resolution2 dated
January 24, 2007 in CA-G.R. SP No. 00235. The CA affirmed the Decision3 of the Regional Trial
Court (RTC) ofBacolod City, Branch 53, dated July 21, 2004, in Civil Case No. 03-12123, which
ordered the partition of the subject property.

The facts, as culled from the records, are as follows: In the course of the marriage of respondent
Leonardo V. Nonato and petitioner Marietta N. Barrido,they were able to acquire a property situated
in Eroreco, Bacolod City, consisting ofa house and lot, covered by Transfer Certificate of Title (TCT)
No. T-140361. On March 15, 1996, their marriage was declared void on the ground of psychological
incapacity. Since there was no more reason to maintain their co-ownership over the property,
Nonato asked Barrido for partition, but the latter refused. Thus, on January 29, 2003, Nonato filed a
Complaint for partition before the Municipal Trial Court in Cities (MTCC) of Bacolod City, Branch 3.

Barrido claimed, by way of affirmative defense, that the subject property had already been sold to
their children, Joseph Raymund and Joseph Leo. She likewise moved for the dismissal of the
complaint because the MTCC lacked jurisdiction, the partition case being an action incapable of
pecuniary estimation.

The Bacolod MTCC rendered a Decision dated September 17, 2003, applying Article 129 of the
Family Code. It ruled in this wise:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered, ordering the conjugal

property of the former Spouses Leonardo and Marietta Nonato, a house and lot covered by TCT No.
T-140361 located at Eroreco, Bacolod City, which was their conjugal dwelling, adjudicated to the
defendant Marietta Nonato, the spouse with whom the majority of the common children choose to
remain.

Furthermore, defendants counterclaim is hereby granted, ordering plaintiff to pay

defendant P10,000.00 as moral damages for the mental anguish and unnecessary inconvenience
brought about by this suit; and an additionalP10,000.00 as exemplary damages to deter others from
following suit; and attorneys fees of P2,000.00 and litigation expenses of P575.00.

SO ORDERED.4

Nonato appealed the MTCC Decision before the RTC. On July 21, 2004, the Bacolod RTC reversed
the ruling of the MTCC. It found that even though the MTCC aptly applied Article 129 of the Family
Code, it nevertheless made a reversible error in adjudicating the subject property to Barrido. Its
dispositive portion reads:

WHEREFORE, premises considered, the decision dated September 17, 2003 is hereby REVERSED
and SET ASIDE and a new judgment is hereby rendered ordering the parties:

(1) to equitably partition the house and lot covered by TCT No. T-140361;

(2) to reimburse Joseph Raymund and Joseph Leo Nonato of the amount advanced
by them in payment of the debts and obligation of TCT No. T-140361 with Philippine
National Bank;

(3) to deliver the presumptive legitimes of Joseph Raymund and Joseph Leo Nonato
pursuant to Article 51 of the Family Code.

SO ORDERED.5

Upon appeal, the CA affirmed the RTC Decision on November 16, 2006. It held that since the
propertys assessed value was only P8,080.00, it clearly fell within the MTCCs jurisdiction. Also,
although the RTC erred in relying on Article 129 of the FamilyCode, instead of Article 147, the
dispositive portion of its decision still correctly ordered the equitable partition of the property. Barrido
filed a Motion for Reconsideration, which was, however, denied for lack of merit.

Hence, Barrido brought the case to the Court via a Petition for Review. She assigned the following
errors in the CA Decision:

I.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE MTCC HAD
JURISDICTION TO TRY THE PRESENT CASE.

II.

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE LOT COVERED BY
TCT NO. T-140361 IS CONJUGAL AFTER BEING SOLD TO THE CHILDREN, JOSEPH LEO
NONATO AND JOSEPH RAYMUND NONATO.

III.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT ARTICLE 129 OF THE
FAMILY CODE HAS NO APPLICATION IN THE PRESENT CASE, ON THE ASSUMPTION

THAT THE TRIAL COURT HAD JURISDICTION OVER THE CASE.6

The petition lacks merit.

Contrary to Barridos contention, the MTCC has jurisdiction to take cognizance of real actions or
those affecting title to real property, or for the recovery of possession, or for the partition or
condemnation of, or foreclosure of a mortgage on real property.7 Section 33 of Batas Pambansa
Bilang 1298 provides:

Section 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:

xxxx

(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 propertyor interest therein does not
exceed Twenty thousand pesos (P20,000.00)or, in civil actions in Metro Manila, where such
assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages
of whatever kind, attorney's fees, litigation expenses and costs: Provided, That value of such
property shall be determined by the assessed value of the adjacent lots. (as amended by R.A. No.
7691)9

Here, the subject propertys assessed value was merely P8,080.00, an amount which certainly does
not exceed the required limit of P20,000.00 for civil actions outside Metro Manila tofall within the
jurisdiction of the MTCC. Therefore, the lower court correctly took cognizance of the instant case.

The records reveal that Nonatoand Barridos marriage had been declared void for psychological
incapacity under Article 3610 of the Family Code. During their marriage, however, the conjugal
partnership regime governed their property relations. Although Article 12911 provides for the

procedure in case of dissolution of the conjugal partnership regime, Article 147 specifically covers
the effects of void marriages on the spouses property relations. Article 147 reads:

Art. 147. When a man and a woman who are capacitated to marry each other, live exclusively with
each other as husband and wife without the benefit of marriage or under a void marriage, their
wages and salaries shall be owned by them in equal shares and the property acquired by both of
them through their work or industry shall be governed by the rules on co-ownership.

In the absence of proof to the contrary, properties acquired while they lived together shall be
presumed tohave been obtained by their joint efforts, work or industry, and shall beowned by them in
equal shares. For purposes of this Article, a party who did not participate in the acquisition by the
other party of any property shall be deemed to have contributed jointly in the acquisition thereof if the
former's efforts consisted in the care and maintenance of the family and of the household.
Neither party can encumber or dispose by acts inter vivos of his or her share in the property
acquired during cohabitation and owned in common, without the consent of the other, until after the
termination of their cohabitation.

When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in
the co-ownership shall be forfeited in favor of their common children. In case of default of or waiver
by any or all of the common children or their descendants, each vacant share shall belong to the
respective surviving descendants. In the absence of descendants, such share shall belong to the
innocent party. In all cases, the forfeiture shall take place upon termination of the cohabitation.
1w phi1

This particular kind of co-ownership applies when a man and a woman, suffering no illegal
impedimentto marry each other, exclusively live together as husband and wife under a void marriage
or without the benefit of marriage.12 It is clear, therefore, that for Article 147 to operate, the man and
the woman: (1) must be capacitated to marry each other; (2) live exclusively with each other as
husband and wife; and (3) their union is without the benefit of marriage or their marriage is void.
Here, all these elements are present.13 The term "capacitated" inthe first paragraph of the provision
pertains to the legal capacity of a party to contract marriage.14 Any impediment to marry has not been
shown to have existed on the part of either Nonato or Barrido. They lived exclusively with each other
as husband and wife. However, their marriage was found to be void under Article 36 of the Family
Code on the ground of psychological incapacity.15

Under this property regime, property acquired by both spouses through their work and industry shall
be governed by the rules on equal coownership. Any property acquired during the union is prima
faciepresumed to have been obtained through their joint efforts. A party who did not participate in the
acquisition of the property shall be considered as having contributed to the same jointly if said party's
efforts consisted in the care and maintenance of the family household.16 Efforts in the care and
maintenance of the family and household are regarded as contributions to the acquisition of common
property by one who has no salary or income or work or industry.17

In the analogous case of Valdez,18 it was likewise averred that the trial court failed to apply the
correct law that should govern the disposition of a family dwelling in a situation where a marriage is
declared void ab initiobecause of psychological incapacity on the part of either or both parties in the
contract of marriage.The Court held that the court a quodid not commit a reversible error in utilizing
Article 147 of the Family Code and in ruling that the former spouses own the family home and all
their common property in equal shares, as well as in concluding that, in the liquidation and partition
of the property that they owned in common, the provisions on coownership under the Civil Code
should aptly prevail.19 The rules which are set up to govern the liquidation of either the absolute
community or the conjugal partnership of gains, the property regimes recognized for valid and
voidable marriages, are irrelevant to the liquidation of the co-ownership that exists between
common-law spousesor spouses of void marriages.20

Here, the former spouses both agree that they acquired the subject property during the subsistence
of their marriage. Thus, it shall be presumed to have been obtained by their joint efforts, work or
industry, and shall be jointly owned by them in equal shares. Barrido, however, claims that the
ownership over the property in question is already vested on their children, by virtue of a Deed of
Sale. But aside from the title to the property still being registered in the names of the former
spouses, said document of safe does not bear a notarization of a notary public. It must be noted that
without the notarial seal, a document remains to be private and cannot be converted into a public
document,21 making it inadmissible in evidence unless properly authenticated.22 Unfortunately,
Barrido failed to prove its due execution and authenticity. In fact, she merely annexed said Deed of
Sale to her position paper. Therefore, the subject property remains to be owned in common by
Nonato and Barrido, which should be divided in accordance with the rules on co-ownership.

WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals,
dated November 16, 2006, as well as its Resolution dated January 24, 2007 in CA-G.R. SP No.
00235, are hereby AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA*
Associate Justice
Acting Chairperson

WE CONCUR:

MARTIN S. VILLARAMA, JR.

Associate Justice

BIENVENIDO L. REYES ESTELA M. PERLAS-BERNABE**

Associate Justice Associate Justice

FRANCIS H. JARDELEZA
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court's Division.

DIOSDADO M. PERALTA
Associate Justice
Acting Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Acting Chairperson's
Attestation, I certify that the conclusions in the above Decision had been reached in consultation
before the case was assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice

Footnotes

* Per Special Order No. 1815 dated October 3, 2014 .

** Designated Acting Member, in lieu of Associate Justice Presbitero J. Velasco, Jr.,
per Special Order No. 1816 dated October 3, 2014.

1
Penned by Associate Justice Pampio A. Abarintos, with Associate Justices Agustin
S. Dizon and Priscilla Baltazar-Padilla; concurring; rollo, pp. 21-32.

2
Id at 39-40.

3
CA rollo, pp. 29-33.

4
Rollo, pp. 23-24.

5
Id. at 24.

6
Id. at 14.

7
Fortune Motors (Phils.), Inc. v. Court of Appeals, 258-A Phil. 336, 340 (1989).

8
Entitled AN ACT REORGANIZING THE JUDICIARY, APPROPRIATING FUNDS
THEREFOR, AND FOR OTHER PURPOSES.

9
Emphasis ours.

10
Art. 36. A marriage contracted by any party who, at the time of the celebration, was
psychologically incapacitated to comply with the essential marital obligations of
marriage, shall likewise be void even if such incapacity becomes manifest only after
its solemnization. (As amended by Executive Order 227)

11
Art. 129. Upon the dissolution of the conjugal partnership regime, the following
procedure shall apply:

(1) An inventory shall be prepared, listing separately all the properties of the
conjugal partnership and the exclusive properties of each spouse.

(2) Amounts advanced by the conjugal partnership in payment of personal

debts and obligations of either spouse shall be credited to the conjugal
partnership as an asset thereof.

(3) Each spouse shall be reimbursed for the use ofhis or her exclusive funds
in the acquisition of property or for the value of his or her exclusive property,
the ownership of which has been vested by law in the conjugal partnership.

(4) The debts and obligations of the conjugal partnership shall be paid out of
the conjugal assets. 1wphi 1

In case of insufficiency of said assets, the spouses shall be solidarily liable

for the unpaid balance with their separate properties, in accordance with the
provisions of paragraph (2) of Article 121.
 (5) Whatever remains of the exclusive properties of the spouses shall
thereafter be delivered to each of them.

(6) Unless the owner had been indemnified from whatever source, the loss or
deterioration of movables used for the benefit of the family, belonging to
either spouse, even due to fortuitous event, shall be paid to said spouse from
the conjugal funds, if any.

(7) The net remainder of the conjugal partnership properties shall constitute
the profits, which shall be divided equally between husband and wife, unless
a different proportion or division was agreed upon in the marriage
settlements or unless there has been a voluntary waiver or forfeiture of such
share as provided in this Code.

(8) The presumptive legitimes of the common children shall be delivered

upon the partition in accordance with Article 51.

(9) In the partition of the properties, the conjugal dwelling and the lot on
which it is situated shall, unless otherwise agreed upon by the parties, be
adjudicated to the spouse with whom the majority of the common children
choose to remain. Children below the age of seven years are deemed to
have chosen the mother, unless the court has decided otherwise. In case
there is no such majority, the court shall decide, taking into consideration the
best interests of said children.

12
Valdes v. Regional Trial Court, Branch 102, Quezon City, 328 Phil. 1289, 1296
(1996).

13
Mercado-Fehr v. Fehr, 460 Phil. 445, 457 (2003).

14
Valdes v. Regional Trial Court, Branch 102, Quezon City, supranote 12.

15
Mercado-Fehr v. Fehr, supranote 13.

16
Id.

17
Agapay v. Palang, 342 Phil. 302, 311 (1997).

18
Valdes v. Regional Trial Court, Branch 102, Quezon City, supranote 12.

19
Id.

20
Id.

21
Gonzales v. Atty. Ramos, 499 Phil. 345, 347 (2005).

22
Salas v. Sta. Mesa Market Corporation, 554 Phil. 343, 348 (2007).

The Lawphil Project - Arellano Law Foundation

 THIRD DIVISION

[G.R. No. 138896. June 20, 2000]

BARANGAY SAN ROQUE, TALISAY, CEBU, petitioner, vs. Heirs of

FRANCISCO PASTOR, namely: EUGENIO SYLIANCO, TEODORO
SYLIANCO, ISABEL SYLIANCO, EUGENIA S. ONG, LAWRENCE
SYLIANCO, LAWSON SYLIANCO, LAWINA S. NOTARIO, LEONARDO
SYLIANCO JR. and LAWFORD SYLIANCO, respondents.

DECISION

PANGANIBAN, J.:

An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls

within the jurisdiction of the regional trial courts, regardless of the value of the
subject property.

The Case

Before us is a Petition for Review on Certiorari assailing the March 29, 1999
Order of the Regional Trial Court (RTC) of Cebu City (Branch 58) in Civil
[1]

Case No. CEB-21978, in which it dismissed a Complaint for eminent domain.

It ruled as follows:

"Premises considered, the motion to dismiss is hereby granted on

the ground that this Court has no jurisdiction over the case.
Accordingly, the Orders dated February 19, 1999 and February
26, 1999, as well as the Writ of Possession issued by virtue of the
latter Order are hereby recalled for being without force and
effect."
[2]

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

Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu
(Branch 1) a Complaint to expropriate a property of the respondents. In an
[3]

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

Assailed RTC Ruling

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

"The instant action is for eminent domain. It appears from the

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

"The instant action for eminent domain or condemnation of real

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

Aggrieved, petitioner appealed directly to this Court, raising a pure question of

law. In a Resolution dated July 28, 1999, the Court denied the Petition for
[6]

Review "for being posted out of time on July 2, 1999, the due date being June
2, 1999, as the motion for extension of time to file petition was denied in the
resolution of July 14, 1999." In a subsequent Resolution dated October 6,
[7]

1999, the Court reinstated the Petition. [8]

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

We agree with the petitioner that an expropriation suit is incapable of

pecuniary estimation. The test to determine whether it is so was laid down by
the Court in this wise:

"A review of the jurisprudence of this Court indicates that in

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

In the present case, an expropriation suit does not involve the recovery of a
sum of money. Rather, it deals with the exercise by the government of its
authority and right to take private property for public use. In National Power
11

Corporation v. Jocson, the Court ruled that expropriation proceedings have

12

two phases:

"The first is concerned with the determination of the authority of

the plaintiff to exercise the power of eminent domain and the
propriety of its exercise in the context of the facts involved in the
suit. It ends with an order, if not of dismissal of the action, of
condemnation declaring that the plaintiff has a lawful right to take
the property sought to be condemned, for the public use or
purpose described in the complaint, upon the payment of just
compensation to be determined as of the date of the filing of the
complaint. An order of dismissal, if this be ordained, would be a
final one, of course, since it finally disposes of the action and
leaves nothing more to be done by the Court on the merits. So,
too, would an order of condemnation be a final one, for thereafter
as the Rules expressly state, in the proceedings before the Trial
Court, no objection to the exercise of the right of condemnation
(or the propriety thereof) shall be filed or heard.

"The second phase of the eminent domain action is concerned

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

It should be stressed that the primary consideration in an expropriation suit is

whether the government or any of its instrumentalities has complied with the
requisites for the taking of private property. Hence, the courts determine the
authority of the government entity, the necessity of the expropriation, and the
observance of due process. In the main, the subject of an expropriation suit
13

is the governments exercise of eminent domain, a matter that is incapable of

pecuniary estimation.

True, the value of the property to be expropriated is estimated in monetary

terms, for the court is duty-bound to determine the just compensation for it.
This, however, is merely incidental to the expropriation suit. Indeed, that
amount is determined only after the court is satisfied with the propriety of the
expropriation.

Verily, the Court held in Republic of the Philippines v. Zurbano that

"condemnation proceedings are within the jurisdiction of Courts of First
Instance," the forerunners of the regional trial courts. The said case was
14

decided during the effectivity of the Judiciary Act of 1948 which, like BP 129 in
respect to RTCs, provided that courts of first instance had original jurisdiction
over "all civil actions in which the subject of the litigation is not capable of
pecuniary estimation." The 1997 amendments to the Rules of Court were not
15

intended to change these jurisprudential precedents.

We are not persuaded by respondents argument that the present action

involves the title to or possession of a parcel of land. They cite the observation
of retired Justice Jose Y. Feria, an eminent authority in remedial law, that
condemnation or expropriation proceedings are examples of real actions that
affect the title to or possession of a parcel of land.
16

Their reliance is misplaced. Justice Feria sought merely to distinguish

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

To emphasize, the question in the present suit is whether the government

may expropriate private property under the given set of circumstances. The
government does not dispute respondents title to or possession of the same.
Indeed, it is not a question of who has a better title or right, for the government
does not even claim that it has a title to the property. It merely asserts its
inherent sovereign power to "appropriate and control individual property for
the public benefit, as the public necessity, convenience or welfare may
demand." 17
WHEREFORE, the Petition is hereby GRANTED and the assailed
Orders SET ASIDE. The Regional Trial Court is directed to HEAR the case.
No costs.

SO ORDERED.
EN BANC

G.R. No. 202664, November 20, 2015

MANUEL LUIS C. GONZALES AND FRANCIS MARTIN D. GONZALES, Petitioners, v. GJH LAND, INC.
(FORMERLY KNOWN AS S.J. LAND, INC.), CHANG HWAN JANG A.K.A. STEVE JANG, SANG RAK
KIM, MARIECHU N. YAP, AND ATTY. ROBERTO P. MALLARI II, Respondent.

DECISION

PERLAS-BERNABE, J.:

This is a direct recourse to the Court, via a petition for review on certiorari,1 from the Orders dated April 17,
20122 and July 9, 20123 of the Regional Trial Court (RTC) of Muntinlupa City, Branch 276 (Branch 276)
dismissing Civil Case No. 11-077 for lack of jurisdiction.

The Facts

On August 4, 2011, petitioners Manuel Luis C. Gonzales4 and Francis Martin D. Gonzales (petitioners) filed a
Complaint5 for "Injunction with prayer for Issuance of Status Quo Order, Three (3) and Twenty (20)-Day
Temporary Restraining Orders, and Writ of Preliminary Injunction with Damages" against respondents GJH
Land, Inc. (formerly known as S.J. Land, Inc.), Chang Hwan Jang, Sang Rak Kim, Mariechu N. Yap, and
Atty. Roberto P. Mallari II6 (respondents) before the RTC of Muntinlupa City seeking to enjoin the sale of S.J.
Land, Inc.'s shares which they purportedly bought from S.J. Global, Inc. on February 1, 2010. Essentially,
petitioners alleged that the subscriptions for the said shares were already paid by them in full in the books
of S.J. Land, Inc.,7 but were nonetheless offered for sale on July 29, 2011 to the corporation's
stockholders,8 hence, their plea for injunction.

The case was docketed as Civil Case No. 11-077 and raffled to Branch 276, which is not a Special
Commercial Court. On August 9, 2011, said branch issued a temporary restraining order,9 and later, in an
Order10 dated August 24, 2011, granted the application for a writ of preliminary injunction.

After filing their respective answers11 to the complaint, respondents filed a motion to dismiss12 on the
ground of lack of jurisdiction over the subject matter, pointing out that the case involves an intra-corporate
dispute and should, thus, be heard by the designated Special Commercial Court of Muntinlupa City.13

The RTC Ruling

In an Order14 dated April 17, 2012, Branch 276 granted the motion to dismiss filed by respondents. It found
that the case involves an intra-corporate dispute that is within the original and exclusive jurisdiction of the
RTCs designated as Special Commercial Courts. It pointed out that the RTC of Muntinlupa City, Branch 256
(Branch 256) was specifically designated by the Court as the Special Commercial Court, hence, Branch 276
had no jurisdiction over the case and cannot lawfully exercise jurisdiction on the matter, including the
issuance of a Writ of Preliminary Injunction.15 Accordingly, it dismissed the case.

Dissatisfied, petitioners filed a motion for reconsideration,16 arguing that they filed the case with the Office
of the Clerk of Court of the RTC of Muntinlupa City which assigned the same to Branch 276 byraffle.17 As the
raffle was beyond their control, they should not be made to suffer the consequences of the wrong
assignment of the case, especially after paying the filing fees in the amount of P235,825.00 that would be
for naught if the dismissal is upheld.18 They further maintained that the RTC has jurisdiction over intra-
corporate disputes under Republic Act No. (RA) 8799,19 but since the Court selected specific branches to
hear and decide such suits, the case must, at most, be transferred or raffled off to the proper branch.20

In an Order21 dated July 9, 2012, Branch 276 denied the motion for reconsideration, holding that it has no
authority or power to order the transfer of the case to the proper Special Commercial Court, citingCalleja v.
Panday22 (Calleja); hence, the present petition.

The Issue Before the Court

The essential issue for the Court's resolution is whether or not Branch 276 of the RTC of Muntinlupa City
erred in dismissing the case for lack of jurisdiction over the subject matter.

The Court's Ruling

The petition is meritorious.

At the outset, the Court finds Branch 276 to have correctly categorized Civil Case No. 11-077 as a
commercial case, more particularly, an intra-corporate dispute,23 considering that it relates to petitioners'
averred rights over the shares of stock offered for sale to other stockholders, having paid the same in full.
Applying the relationship test and the nature of the controversy test, the suit between the parties is clearly
rooted in the existence of an intra-corporate relationship and pertains to the enforcement of their correlative
rights and obligations under the Corporation Code and the internal and intra-corporate regulatory rules of
the corporation,24 hence, intra-corporate, which should be heard by the designated Special Commercial
Court as provided under A.M. No. 03-03-03-SC25 dated June 17, 2003 in relation to Item 5.2, Section 5 of
RA 8799.

The present controversy lies, however, in the procedure to be followed when a commercial case - such
as the instant intra-corporate dispute -has been properly filed in the official station of the
designated Special Commercial Court but is, however, later wrongly assigned by raffle to a
regular branch of that station.

As a basic premise, let it be emphasized that a court's acquisition of jurisdiction over a particular case's
subject matter is different from incidents pertaining to the exercise of its jurisdiction. Jurisdiction over the
subject matter of a case is conferred by law, whereas a court's exercise of jurisdiction, unless provided
by the law itself, is governed by the Rules of Court or by the orders issued from time to time by the
Court.26 In Lozada v. Bracewell,27 it was recently held that the matter of whether the RTC resolves an
issue in the exercise of its general jurisdiction or of its limited jurisdiction as a special court
is only a matter of procedure and has nothing to do with the question of jurisdiction.

Pertinent to this case is RA 8799 which took effect on August 8, 2000. By virtue of said law, jurisdiction over
cases enumerated in Section 528 of Presidential Decree No. 902-A29 was transferred from the Securities and
Exchange Commission (SEC) to the RTCs, being courts of general jurisdiction. Item 5.2, Section 5 of
RA 8799 provides: cha nRoblesv irt ual Lawlib rary

SEC. 5. Powers and Functionsof the Commission. - x x x

xxxx

5.2 The Commission's jurisdiction over all cases enumerated under Section 5 of Presidential
Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate
Regional Trial Court: Provided, that the Supreme Court in the exercise of its authority may
designate the Regional Trial Court branches that shall exercise jurisdiction over the cases. The
Commission shall retain jurisdiction over pending cases involving intra-corporate disputes submitted for final
resolution which should be resolved within one (1) year from the enactment of this Code. The Commission
shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of 30 June 2000
until finally disposed. (Emphasis supplied) c ralawlaw lib rary

The legal attribution of Regional Trial Courts as courts of general jurisdiction stems from Section 19
(6), Chapter II of Batas Pambansa Bilang (BP) 129,30 known as "The Judiciary Reorganization Act of
1980": chanRoblesv irt ual Lawlib rary
Section 19. Jurisdiction in civil cases.- Regional Trial Courts shall exercise exclusive original jurisdiction: chanRo blesvi rtua lLawl ib rary

xxxx

(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising
jurisdiction or any court, tribunal, person or body exercising judicial or quasi-judicial functions; x x x x
cralawlawl ibra ry

As enunciated in Durisol Philippines, Inc. v. CA:31 chanrob lesvi rtua llawli bra ry

The regional trial court, formerly the court of first instance, is a court of general jurisdiction. All cases, the
jurisdiction over which is not specifically provided for by law to be within the jurisdiction of any other court,
fall under the jurisdiction of the regional trial court.32
cralawlawl ibra ry
ChanRob les Vi rtualawl ib rary

To clarify, the word "or" in Item 5.2, Section 5 of RA 8799 was intentionally used by the legislature to
particularize the fact that the phrase "the Courts of general jurisdiction" is equivalent to the phrase "the
appropriate Regional Trial Court." In other words, the jurisdiction of the SEC over the cases enumerated
under Section 5 of PD 902-A was transferred to the courts of general jurisdiction, that is to say (or,
otherwise known as), the proper Regional Trial Courts. This interpretation is supported by San Miguel Corp.
v. Municipal Council,33 wherein the Court held that: chanRoblesvi rtua lLawl ibra ry

[T]he word "or" may be used as the equivalent of "that is to say" and gives that which precedes it the same
significance as that which follows it. It is not always disjunctive and is sometimes interpretative or
expository of the preceding word.34 cra lawlawlib rary

Further, as may be gleaned from the following excerpt of the Congressional deliberations: chanRoble svi rtual Lawli bra ry

Senator [Raul S.] Roco: x x x.

xxxx

x x x. The first major departure is as regards the Securities and Exchange Commission. The Securities and
Exchange Commission has been authorized under this proposal to reorganize itself. As an administrative
agency, we strengthened it and at the same time we take away the quasi-judicial functions. The quasi-
judicial functions are now given back to the courts of general jurisdiction - the Regional Trial
Court, except for two categories of cases.

In the case of corporate disputes, only those that are now submitted for final determination of the SEC will
remain with the SEC. So, all those cases, both memos of the plaintiff and the defendant, that have been
submitted for resolution will continue. At the same time, cases involving rehabilitation, bankruptcy,
suspension of payments and receiverships that were filed before June 30, 2000 will continue with the SEC.
in other words, we are avoiding the possibility, upon approval of this bill, of people filing cases with the SEC,
in manner of speaking, to select their court.35

x x x x (Emphasis supplied) cralaw l awlibra ry

Therefore, one must be disabused of the notion that the transfer of jurisdiction was made only in favor of
particular RTC branches, and not the RTCs in general.

Consistent with the foregoing, history depicts that when the transfer of SEC cases to the RTCs was first
implemented, they were transmitted to the Executive Judges of the RTCs for raffle between or among its
different branches, unless a specific branch has been designated as a Special Commercial Court, in
which instance, the cases were transmitted to said branch.36 It was only on November 21, 2000 that
the Court designated certain RTC branches to try and decide said SEC cases37 without, however, providing
for the transfer of the cases already distributed to or filed with the regular branches thereof. Thus, on
January 23, 2001, the Court issued SC Administrative Circular No. 08-200138 directing the transfer of said
cases to the designated courts (commercial SEC courts). Later, or on June 17, 2003, the Court issued A.M.
No. 03-03-03-SC consolidating the commercial SEC courts and the intellectual property courts39 in one RTC
branch in a particular locality, i.e., the Special Commercial Court, to streamline the court structure
and to promote expediency.40 Accordingly, the RTC branch so designated was mandated to try and
decide SEC cases, as well as those involving violations of intellectual property rights, which were, thereupon,
required to be filed in the Office of the Clerk of Court in the official station of the designated Special
Commercial Courts, to wit: chanRoble svirtual Lawli bra ry

1. The Regional Courts previously designated as SEC Courts through the: (a) Resolutions of this Court dated
21 November 2000, 4 July 2001, 12 November 2002, and 9 July 2002 all issued in A.M. No. 00-11-03-SC;
(b) Resolution dated 27 August 2001 in A.M. No. 01-5-298-RTC; and (c) Resolution dated 8 July 2002 in
A.M. No. 01-12-656-RTC are hereby DESIGNATED and shall be CALLED as Special Commercial Courts to try
and decide cases involving violations of Intellectual Property Rights which fall within their jurisdiction
andthose cases formerly cognizable by the Securities and Exchange Commission: chanRoble svirtual Lawlib ra ry

xxxx

4. The Special Commercial Courts shall have jurisdiction over cases arising within their respective territorial
jurisdiction with respect to the National Capital Judicial Region and within the respective provinces with
respect to the First to Twelfth Judicial Regions. Thus,cases shall be filed in the Office of the Clerk of Court in
the official station of the designated Special Commercial Court;41

x x x x (Underscoring supplied) cra lawlawlib ra ry

It is important to mention that the Court's designation of Special Commercial Courts was made in line with
its constitutional authority to supervise the administration of all courts as provided under Section 6, Article
VIII of the 1987 Constitution: chanRoble svirtual Lawlib ra ry

Section 6. The Supreme Court shall have administrative supervision over all courts and the personnel
thereof. cralawlawl ibra ry

The objective behind the designation of such specialized courts is to promote expediency and efficiency
in the exercise of the RTCs' jurisdiction over the cases enumerated under Section 5 of PD 902-A. Such
designation has nothing to do with the statutory conferment of jurisdiction to all RTCs under RA 8799 since
in the first place, the Court cannot enlarge, diminish, or dictate when jurisdiction shall be removed, given
that the power to define, prescribe, and apportion jurisdiction is, as a general rule, a matter of
legislative prerogative.42 Section 2, Article VIII of the 1987 Constitution provides: c hanRoblesvi rt ualLaw lib rary

Section 2. The Congress shall have the power to define, prescribe, and apportion the jurisdiction of the
various courts but may not deprive the Supreme Court of its jurisdiction over cases enumerated in Section 5
hereof.

xxxx
cralawlawl ibra ry

Here, petitioners filed a commercial case, i.e., an intra-corporate dispute, with the Office of the Clerk of
Court in the RTC of Muntinlupa City, which is the official station of the designated Special Commercial Court,
in accordance with A.M. No. 03-03-03-SC. It is, therefore, from the time of such filing that the RTC of
Muntinlupa City acquired jurisdiction over the subject matter or the nature of the
action.43 Unfortunately, the commercial case was wrongly raffled to a regular branch, e.g., Branch
276, instead of being assigned44to the sole Special Commercial Court in the RTC of Muntinlupa
City, which is Branch 256. This error may have been caused by a reliance on the complaint's caption, i.e.,
"Civil Case for Injunction with prayer for Status Quo Order, TRO and Damages,"45 which, however,
contradicts and more importantly, cannot prevail over its actual allegations that clearly make out an intra-
corporate dispute: cha nRoblesv irt ual Lawlib rary

16. To the surprise of MLCG and FMDG, however, in two identical letters both dated 13 May 2011, under the
letterhead of GJH Land, Inc., Yap, now acting as its President, Jang and Kim demanded payment of
supposed unpaid subscriptions of MLCG and FMDG amounting to P10,899,854.30 and P2,625,249.41,
respectively.
16.1 Copies of the letters dated 13 May 2011 are attached hereto and made integral parts hereof as
Annexes "J" and "K", repectively.
17. On 29 July 2011, MLCG and FMDG received an Offer Letter addressed to stockholders of GJH Land, Inc.
from Yap informing all stockholders that GJH Land, Inc. is now offering for sale the unpaid shares of stock of
MLCG and FMDG. The same letter states that the offers to purchase these shares will be opened on 10
August 2011 with payments to be arranged by deposit to the depository bank of GJH Land, Inc.
17.1 A copy of the undated Offer Letter is attached hereto and made and made an integral part hereof as
Annex "L".
18. The letter of GJH Land, Inc. through Yap, is totally without legal and factual basis because as evidenced
by the Deeds of Assignment signed and certified by Yap herself, all the S.J. Land, Inc. shares acquired by
MLCG and FMDG have been fully paid in the books of S.J. Land, Inc.

19. With the impending sale of the alleged unpaid subscriptions on 10 August 2011,there is now a clear
danger that MLCG and FMDG would be deprived of these shares without legal and factual basis.

20. Furthermore, if they are deprived of these shares through the scheduled sale, both MLCG and FMDG
would suffer grave and irreparable damage incapable of pecuniary estimation.

21. For this reason, plaintiffs now come to the Honorable Court for injunctive relief so that after trial on the
merits, a permanent injunction should be issued against the defendants preventing them from selling the
shares of the plaintiffs, there being no basis for such sale.46
cralaw lawlib rary

According to jurisprudence, "it is not the caption but the allegations in the complaint or other initiatory
pleading which give meaning to the pleading and on the basis of which such pleading may be legally
characterized."47 However, so as to avert any future confusion, the Court requires henceforth, that all
initiatory pleadings state the action's nature both in its caption and the body, which parameters are defined
in the dispositive portion of this Decision.

Going back to the case at bar, the Court nonetheless deems that the erroneous raffling to a regular branch
instead of to a Special Commercial Court is only a matter of procedure - that is, an incident related to the
exercise of jurisdiction - and, thus, should not negate the jurisdiction which the RTC of Muntinlupa City had
already acquired. In such a scenario, the proper course of action was not for the commercial case to be
dismissed; instead, Branch 276 should have first referred the case to the Executive Judge for re-
docketing as a commercial case; thereafter, the Executive Judge should then assign said case to
the only designated Special Commercial Court in the station,i.e., Branch 256.

Note that the procedure would be different where the RTC acquiring jurisdiction over the case hasmultiple
special commercial court branches; in such a scenario, the Executive Judge, after re-docketing the same
as a commercial case, should proceed to order its re-raffling among the said special branches.

Meanwhile, if the RTC acquiring jurisdiction has no branch designated as a Special Commercial Court,
then it should refer the case to the nearest RTC with a designated Special Commercial Court branch within
the judicial region.48 Upon referral, the RTC to which the case was referred to should re-docket the case as a
commercial case, and then: (a) if the said RTC has only one branch designated as a Special Commercial
Court, assign the case to the sole special branch; or (b) if the said RTC has multiple branches designated as
Special Commercial Courts, raffle off the case among those special branches.

In all the above-mentioned scenarios, any difference regarding the applicable docket fees should be duly
accounted for. On the other hand, all docket fees already paid shall be duly credited, and any excess,
refunded.

At this juncture, the Court finds it fitting to clarify that the RTC mistakenly relied on the Calleja case to
support its ruling. In Calleja, an intra-corporate dispute49 among officers of a private corporation with
principal address at Goa, Camarines Sur, was filed with the RTC of San Jose, Camarines Sur, Branch 58
instead of the RTC of Naga City, which is the official station of the designated Special Commercial Court for
Camarines Sur. Consequently, the Court set aside the RTC of San Jose, Camarines Sur's order to transfer
the case to the RTC of Naga City and dismissed the complaint considering that it was filed before a court
which, having no internal branch designated as a Special Commercial Court, had no jurisdiction over those
kinds of actions, i.e., intra-corporate disputes. Calleja involved two different RTCs, i.e., the RTC of San
Jose, Camarines Sur and the RTC of Naga City, whereas the instant case only involves one RTC, i.e., the
RTC of Muntinlupa City, albeit involving two different branches of the same court, i.e., Branches 256 and
276. Hence, owing to the variance in the facts attending, it was then improper for the RTC to rely on the
Calleja ruling.

Besides, the Court observes that the fine line that distinguishes subject matter jurisdiction and exercise of
jurisdiction had been clearly blurred in Calleja. Harkening back to the statute that had conferred subject
matter jurisdiction, two things are apparently clear: (a) that the SEC's subject matter jurisdiction over
intra-corporate cases under Section 5 of Presidential Decree No. 902-A was transferred to the Courts of
general jurisdiction, i.e., the appropriate Regional Trial Courts; and (b) the designated branches of the
Regional Trial Court, as per the rules promulgated by the Supreme Court, shall exercise jurisdiction over
such cases. Item 5.2, Section 5 of RA 8799 provides: chanRoble svi rtual Lawli bra ry

SEC. 5. Powers and Functions of the Commission. - x x x

xxxx

5.2 The Commission's jurisdiction over all cases enumerated under Section 5 of Presidential
Decree No. 902-A is hereby transferred to the Courts of general jurisdiction or the appropriate
Regional Trial Court: Provided, that the Supreme Court in the exercise of its authority may
designate the Regional Trial Court branches that shall exercise jurisdiction over the cases, x x x. cralawlawlib rary

In contrast, the appropriate jurisprudential reference to this case would be Tan v. Bausch & Lomb,
Inc.,50 which involves a criminal complaint for violation of intellectual property rights filed before the RTC of
Cebu City but was raffled to a regular branch thereof (Branch 21), and not to a Special Commercial Court.
As it turned out, the regular branch subsequently denied the private complainant's motion to transfer the
case to the designated special court of the same RTC, on the ground of lack of jurisdiction. The CA reversed
the regular branch and, consequently, ordered the transfer of the case to the designated special court at
that time (Branch 9). The Court, affirming the CA, declared that the RTC had acquired jurisdiction over the
subject matter. In view, however, of the designation of another court as the Special Commercial Court in the
interim (Branch 11 of the same Cebu City RTC), the Court accordingly ordered the transfer of the case and
the transmittal of the records to said Special Commercial Court instead.51Similarly, the transfer of the
present intra-corporate dispute from Branch 276 to Branch 256 of the same RTC of Muntinlupa
City, subject to the parameters above-discussed is proper and will further the purposes stated in
A.M. No. 03-03-03-SC of attaining a speedy and efficient administration of justice.

For further guidance, the Court finds it apt to point out that the same principles apply to the inverse
situation of ordinary civil cases filed before the proper RTCs but wrongly raffled to its branches
designated as Special Commercial Courts. In such a scenario, the ordinary civil case should then be
referred to the Executive Judge for re-docketing as an ordinary civil case; thereafter, the
Executive Judge should then order the raffling of the case to all branches of the same RTC,
subject to limitations under existing internal rules, and the payment of the correct docket fees in
case of any difference. Unlike the limited assignment/raffling of a commercial case only to branches
designated as Special Commercial Courts in the scenarios stated above, the re-raffling of an ordinary civil
case in this instance to all courts is permissible due to the fact that a particular branch which has been
designated as a Special Commercial Court does not shed the RTC's general jurisdiction over ordinary civil
cases under the imprimatur of statutory law, i.e., Batas Pambansa Bilang (BP) 129.52 To restate, the
designation of Special Commercial Courts was merely intended as a procedural tool to expedite the
resolution of commercial cases in line with the court's exercise of jurisdiction. This designation was not
made by statute but only by an internal Supreme Court rule under its authority to promulgate rules
governing matters of procedure and its constitutional mandate to supervise the administration of all courts
and the personnel thereof.53 Certainly, an internal rule promulgated by the Court cannot go beyond the
commanding statute. But as a more fundamental reason, the designation of Special Commercial Courts is, to
stress, merely an incident related to the court's exercise of jurisdiction, which, as first discussed, is distinct
from the concept of jurisdiction over the subject matter. The RTC's general jurisdiction over ordinary civil
cases is therefore not abdicated by an internal rule streamlining court procedure.

In fine, Branch 276's dismissal of Civil Case No. 11-077 is set aside and the transfer of said case to Branch
256, the designated Special Commercial Court of the same RTC of Muntinlupa City, under the parameters
above-explained, is hereby ordered.

WHEREFORE, the petition is GRANTED. The Orders dated April 17, 2012 and July 9, 2012 of the Regional
Trial Court (RTC) of Muntinlupa City, Branch 276 in Civil Case No. 11-077 are herebyREVERSED and SET
ASIDE. Civil Case No. 11-077 is REFERRED to the Executive Judge of the RTC of Muntinlupa City for re-
docketing as a commercial case. Thereafter, the Executive Judge shall ASSIGNsaid case to Branch 256, the
sole designated Special Commercial Court in the RTC of Muntinlupa City, which is ORDERED to resolve the
case with reasonable dispatch. In this regard, the Clerk of Court of said RTC shall DETERMINE the
appropriate amount of docket fees and, in so doing, ORDER the payment of any difference or, on the other
hand, refund any excess.
Furthermore, the Court hereby RESOLVES that henceforth, the following guidelines shall be observed:
1. If a commercial case filed before the proper RTC is wrongly raffled to its regular branch, the proper
courses of action are as follows:
1.1 If the RTC has only one branch designated as a Special Commercial Court, then the case shall be
referred to the Executive Judge for re-docketing as a commercial case, and thereafter, assigned to the sole
special branch;

1.2 If the RTC has multiple branches designated as Special Commercial Courts, then the case shall be
referred to the Executive Judge for re-docketing as a commercial case, and thereafter, raffled off among
those special branches; and

1.3 If the RTC has no internal branch designated as a Special Commercial Court, then the case shall be
referred to the nearest RTC with a designated Special Commercial Court branch within the judicial region.
Upon referral, the RTC to which the case was referred to should re- docket the case as a commercial case,
and then: (a) if the said RTC has only one branch designated as a Special Commercial Court, assign the case
to the sole special branch; or (b) if the said RTC has multiple branches designated as Special Commercial
Courts, raffle off the case among those special branches.
2. If an ordinary civil case filed before the proper RTC is wrongly raffled to its branch designated as a
Special Commercial Court, then the case shall be referred to the Executive Judge for re-docketing as an
ordinary civil case. Thereafter, it shall be raffled off to all courts of the same RTC (including its designated
special branches which, by statute, are equally capable of exercising general jurisdiction same as regular
branches), as provided for under existing rules.

3. All transfer/raffle of cases is subject to the payment of the appropriate docket fees in case of any
difference. On the other hand, all docket fees already paid shall be duly credited, and any excess, refunded.

4. Finally, to avert any future confusion, the Court requires that all initiatory pleadings state the action's
nature both in its caption and body. Otherwise, the initiatory pleading may, upon motion or by order of the
court motu proprio, be dismissed without prejudice to its re-filing after due rectification. This last procedural
rule is prospective in application.

5. All existing rules inconsistent with the foregoing are deemed superseded. cra lawlawlib rary

SO ORDERED.

Sereno, C.J. Carpio, Velasco, Jr., Peralta, Bersamin, Del Castillo, Villarama, Jr., Reyes, and Jardeleza, JJ.,
concur.
Leonardo-De Castro, J., I concur in the result. I subscribe to the ruling in the Calleja case that the misfiling
of a commercial case with a court not duly designated Special Commercial Court is an error of
jurisdiction. However the Supreme Court has constitutional and legal basis [RA 8799] to promulgated the
guidelines here for future cases.
Brion, and Mendoza, JJ., on leave.
Perez, J., I submitted a dissenting opinion.
Leonen, J., see concurring opinion.