Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 172293

August 28, 2013

ARACELI J. CABRERA and ARNEL CABRERA and in behalf of the heirs of SEVERINO
CABRERA,Petitioners,
vs.
ANGELA G. FRANCISCO, FELIPE C. GELLA, VICTOR C. CELLA, ELENA LEILANI G. REYES,
MA. RIZALINA G.ILIGAN and DIANA ROSE GELLA, Respondents.
DECISION
DEL CASTILLO, J.:
"The nature of an action, as well as which court or body has jurisdiction over it, is determined based
on the allegations contained in the Complaint of the plaintiffs x x x. The averments in the Complaint
and the character of the relief sought arc the ones to be consulted. x x x"1
This Petition for Review on Certiorari2 assails the July 6, 2005 Decision3 of the Court of Appeals (CA)
in CA-G.R. CV No. 75126 which dismissed the appeal filed by petitioners Arceli J. Cabrera (Arceli)
and Arnel Cabrera (Arnel), in their own behalf and in behalf of the heirs of Severino Cabrera
(petitioners), and affirmed the Order4 dated May 2, 2002 of the Regional Trial Court (RTC), Branch
12, San Jose, Antique in Civil Case No. 2001-9-3267. The said RTC Order granted the Motion to
Dismiss5 of respondents Angela G. Francisco, Felipe C. Gella, Victor C. Gella, Elena Leilani G.
Reyes, Ma. Rizalina G. Iligan and Diana Rose Gella (respondents) and dismissed petitioners
Complaint6 denominated as Collection of Agents Compensation, Commission and Damages.
Likewise assailed is the CA Resolution7 dated April 5, 2006 which denied petitioners Motion for
Reconsideration.8
Factual Antecedents
On October 25, 1976, respondents father, Atty. Lorenzo C. Gella (Atty. Gella), executed a private
document confirming that he has appointed Severino Cabrera (Severino), husband of Araceli and
father of Arnel as administrator of all his real properties located in San Jose, Antique9 consisting of
about 24 hectares of land described as Lot No. 1782-B and covered by Transfer Certificate of Title
No. T-16987.10
When Severino died in 1991, Araceli and Arnel, with the consent of respondents, took over the
administration of the properties. Respondents likewise instructed them to look for buyers of the
properties, allegedly promising them "a commission of five percent of the total purchase price of the
said properties as compensation for their long and continued administration"11 thereof.
Accordingly, petitioners introduced real estate broker and President of ESV Marketing and
Development Corporation, Erlinda Veegas (Erlinda), to the respondents who agreed to have the
said properties developed by Erlindas company. However, a conflict arose when respondents
appointed Erlinda as the new administratrix of the properties and terminated Aracelis and Arnels
services.

Petitioners, through counsel, wrote respondents and demanded for their five percent commission
and compensation to no avail. Hence, on September 3, 2001, they filed a Complaint for Collection of
Agents Compensation, Commission and Damages12 against respondents before the RTC. Attached
to their Complaint is a copy of the tax declaration for Lot No. 1782-B.13
Ruling of the Regional Trial Court
Petitioners prayed that they be paid (1) commission and compensation in the form of real property
equivalent to five percent of the 24-hectare Lot No. 1782-B, (2) moral damages of P100,000.00, and
(3) attorneys fees and litigation expenses of P100,000.00.
Respondents filed a Motion to Dismiss14 based on the following grounds: (1) lack of jurisdiction, (2)
failure to state a cause of action, and (3) lack of legal capacity of Araceli and Arnel to sue in behalf of
the other heirs of Severino.
Respondents argued that for RTCs outside of Metro Manila to take cognizance of a civil suit, the
jurisdictional amount must exceed P200,000.00 pursuant to Section 5 of Republic Act (RA) No. 7691
which amended Section 19 of Batas Pambansa Blg. (BP) 129. And since the total market value of
Lot No. 1782-B is P3,550,072,15 five percent thereof is only P177,506.60 or less than the said
jurisdictional amount, then the RTC has no jurisdiction over petitioners Complaint. Respondents
also posited that the Complaint states no cause of action since petitioners supposed right to any
commission remained inchoate as Lot No. 1782-B has not yet been sold; in fact, the Complaint
merely alleged that petitioners introduced a real estate broker to respondents. Lastly, respondents
averred that petitioners have no legal capacity to sue on behalf of Severinos other heirs and that the
verification and certification of non-forum shopping attached to the Complaint only mentioned Araceli
and Arnel as plaintiffs.
Finding respondents arguments to be well-taken, the RTC, in an Order16 dated May 2, 2002 ruled:
WHEREFORE, premises considered, the respondents Motion to Dismiss is granted. Consequently,
this case is hereby DISMISSED. Costs against the petitioners.
SO ORDERED.17
Petitioners filed a Notice of Appeal,18 hence, the elevation of the records of the case to the CA.
Ruling of the Court of Appeals
Petitioners averred that their claim is one which is incapable of pecuniary estimation or one involving
interest in real property the assessed value of which exceeds P200,000.00. Hence, it falls under the
exclusive original jurisdiction of the RTC. Moreover, they asserted that they are not only claiming for
commission but also for compensation for the services rendered by Severino as well as by Araceli
and Arnel for the administration of respondents properties. Citing Section 3, Rule 319 of the Rules of
Court, petitioners justified the inclusion of Severinos other heirs as plaintiffs in the Complaint.
In the Decision20 dated July 6, 2005, the CA concluded that the Complaint is mainly for collection of
sum of money and not one which is incapable of pecuniary estimation since petitioners are claiming
five percent of the total purchase price of Lot No. 1782-B. Neither does it involve an interest over a
property since petitioners are merely claiming payment for their services. The appellate court also
ruled that the Complaint did not state a cause of action since it failed to show the existence of
petitioners right that was allegedly violated by respondents. Moreover, it found no evidence of

Aracelis and Arnels authority to file the Complaint for and in behalf of Severinos other heirs. In
sum, the CA found no error on the part of the RTC in granting respondents Motion to Dismiss. Thus:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING
the appeal filed in this case and AFFIRMING the Order rendered by the lower court in Civil Case No.
2001-9-3267 with double costs against petitioners.
SO ORDERED.21
Petitioners filed a Motion for Reconsideration22 questioning solely the CAs affirmance of the RTCs
finding on lack of jurisdiction. This was, however, also denied in a Resolution23 dated April 5, 2006.
Hence, the present Petition for Review on Certiorari.
Issues
Whether the CA erred in affirming the RTCs findings that it has no jurisdiction over the subject
matter of the case; that the Complaint states no cause of action; and that petitioners Araceli and
Arnel have no legal capacity to sue in behalf of the other heirs of Severino.
The Parties Arguments
At the outset, petitioners claim that the RTC did not make its own independent assessment of the
merits of respondents Motion to Dismiss but only blindly adopted the arguments raised therein. This,
to them, violates the Courts pronouncement in Atty. Osumo v. Judge Serrano24 enjoining judges to
be faithful to the law and to maintain professional competence.
As to the substantial issues, petitioners reiterate the arguments they raised before the CA. They
insist that their Complaint is one which is incapable of pecuniary estimation or involves interest in
real property the assessed value of which exceeds P200,000.00 and falls within the RTCs
jurisdiction. At any rate, they emphasize that they likewise seek to recover damages, the amount of
which should have been considered by the RTC in determining jurisdiction. Moreover, they have a
cause of action against the respondents because an agency under the Civil Code is presumed to be
for a compensation.25 And what they are claiming in their Complaint is such compensation for the
services rendered not only by Severino but also by Araceli and Arnel as administrators/agents of
respondents properties. Lastly, they allege that pursuant to Section 3, Rule 3 of the Rules of Court,
the joining of Severinos other heirs as plaintiffs in the Complaint, is proper.
On the other hand, respondents assert that petitioners Complaint, as correctly found by the CA, is
for a specific sum of money seeking to recover the amount of P177,503.60,26 which is below the
jurisdictional amount for RTCs outside of Metro Manila. As to petitioners claim for damages, the
same is only incidental to the principal claim for agents compensation and therefore should not be
included in computing the total amount of the claim for purposes of determining jurisdiction.
Respondents likewise point out that the CAs affirmance of the RTCs findings that the Complaint
states no cause of action and that Araceli and Arnel have no capacity to sue in behalf of the other
heirs can no longer be questioned before this Court as they are already final and executory since
petitioners failed to assail them in their Motion for Reconsideration with the CA. Be that as it may, no
error can be imputed to the CA for affirming the said findings as they are in accordance with law.
Our Ruling

The Petition lacks merit.

Contrary to petitioners claim, the RTC
made an independent assessment of the
merits of respondents Motion to
Dismiss.
It cannot be gainsaid that "it is the Courts bounden duty to assess independently the merits of a
motion x x x."27In this case, the RTC complied with this duty by making its own independent
assessment of the merits of respondents Motion to Dismiss. A reading of the RTCs Order will show
that in resolving said motion, it judiciously examined the Complaint and the documents attached
thereto as well as the other pleadings filed in connection with the said motion.28 Based on these, it
made an extensive discussion of its observations and conclusions. This is apparent from the
following portions of the said Order, to wit:
x x x In the instant case, the plaintiffs complaint does not even mention specifically the amount of
their demand outside of their claim for damages and attorneys fees. They are only demanding the
payment of their alleged commission/compensation and that of the late Severino Cabrera which they
fixed at 5% of Lot No. 1782-B allegedly with an area of 24 hectares. They did not also state the total
monetary value of Lot 1782-B neither did they mention the monetary equivalent of 5% of Lot No.
1782-B. In short, the complaint fails to establish that this Court has jurisdiction over the subject
matter of the claim.
As the tax declaration covering Lot No. 1782-B has been attached to the complaint as Annex "C"
and made an integral part thereof, the court, in its desire to determine whether it has jurisdiction over
the subject matter of plaintiffs claim computed the total market value of Lot No. 1782-B, including
the value of the trees and the plants standing thereon, as appearing in said Annex "C". The
computation shows the amount of P3,508,370.00. Five percent thereof is P175,418.50. It is way
below the jurisdictional amount for the Regional Trial Court outside Metro Manila which is pegged at
more than P200,000. Clearly, therefore, this Court has no jurisdiction over the subject matter of the
plaintiffs complaint as correctly contended by the defendants.29
xxxx
A careful scrutiny of the complaint in this case reveals that it is bereft of any allegation that Lot No.
1782-B or any portion thereof has already been sold thru the plaintiffs efforts prior to the alleged
dismissal as agents or brokers of the defendants. As they failed to sell Lot No. 1782-B or any portion
thereof, then they are not entitled to any commission, assuming in gratia argumenti that they were
promised 5% commission by defendants should they be able to sell Lot No. 1782-B or any part or
parcel of the said lot.
Besides, the court notices that the appointment of the plaintiffs father (Annex "A"-Complaint) does
not state in any manner that he is entitled to a compensation or commission when it is supposed to
be the repository of what had been agreed upon between him and Atty. Lorenzo C. Gella, relative to
his designation as administrator of Atty. Gella. As such, the plaintiffs cannot claim now that Severino
Cabrera is entitled to any compensation or commission as Annex "A" does not so provide.30
xxxx
An examination of the records of this case reveals that there is nothing in plaintiffs complaint
showing that they were empowered by the other heirs of the late Severino Cabrera to take this
action on their behalf. x x x31

Clearly, petitioners claim that the RTC merely adopted the arguments of respondents in their Motion
to Dismiss when it resolved the same is belied by the above-quoted disquisition of the RTC on the
matter and therefore deserves no credence.
Petitioners Complaint is neither one
which is incapable of pecuniary
estimation nor involves interest in a real
property.
Section 19(1) and (2) of BP 12932 as amended by RA 769133 read:
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive original
jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;
(2) In all civil actions which involve the title to, or possession of, real property, or any interest
therein, where the assessed value of the property involved exceeds twenty thousand pesos
(P20,000.00) or for civil actions in Metro Manila, where such value exceeds Fifty thousand
pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts;
xxxx
Insisting that the RTC has jurisdiction over their Complaint, petitioners contend that the same is one
which is incapable of pecuniary estimation or involves interest in a real property the assessed value
of which exceedsP200,000.00.
The Court does not agree. To ascertain the correctness of petitioners contention, the averments in
the Complaint and the character of the relief sought in the said Complaint must be consulted.34 This
is because the jurisdiction of the court is determined by the nature of the action pleaded as
appearing from the allegations in the Complaint.35 Hence, the pertinent portions of petitioners
Complaint are hereunder reproduced:
xxxx
2. That on October 25, 1976 the defendants father the late Atty. Lorenzo Gella, x x x
designated x x x Severino Cabrera as agent or administrator of all his real properties located
in San Jose, Antique x x x.
3. That said Severino Cabrera immediately assumed his duties and responsibilities faithfully
as agent or administrator until his death in 1991 of the properties of Lorenzo Gella in San
Jose, Antique consisting of about 24 hectares x x x which later became Lot No. 1782-B in the
name of the defendants, covered by T.C.T. No. T-16987, Register of Deeds of Antique x x x.
4. That after the death of said Severino Cabrera in 1991, with the consent of the defendants,
his wife took over his duties and responsibilities as agent or administratrix of the abovenamed properties of the defendants in San Jose, Antique with the help of her son, Arnel
Cabrera as encargado and the plaintiffs were also instructed by the defendants to look for
buyers of their properties and plaintiffs were promised by defendants a commission of five

percent of the total purchase price of the said properties as compensation for their long and
continued administration of all the said properties.
5. That sometime in 1994 plaintiffs approached the real estate broker Erlinda Veegas to sell
the above-described Lot No. 1782-B and the plaintiffs gave her the addresses of the
defendants who at all times live in Metro Manila. Thereafter defendants agreed to have the
said property developed by ESV Marketing & Development Corporation represented by its
President, said Erlinda Veegas and defendants also designated said Erlinda Veegas as
administratrix of said property and at the same time defendants dismissed plaintiffs as
agents or administrators thereof;
6. That on August 1, 2001 plaintiffs, through counsel wrote defendants demanding payment
of their five percent of twenty four hectares properties under their administration for twenty
five years in the form of real estate in the subdivision of Lot 1782-B as their compensation or
commission, but defendants refused and failed to pay plaintiffs in cash or in kind of what is
due them;
7. That in view of the aforesaid failure and refusal of defendants to pay their compensation or
commission and instead they were dismissed and replaced by the said Erlinda Veegas they
themselves recommended to defendants, the plaintiffs have suffered public humiliation,
mental anguish, and serious anxiety for which plaintiffs should be adjudged and entitled to
moral damages in the sum of not less than Php100,000.00 each.
8. That defendants ingratitude and unjustified refusal to pay plaintiffs x x x their
compensation or commission for twenty five years service as administrators and had
successfully found a developer of defendants property but only to be dismissed, plaintiffs
were compelled to institute this action and incur expenses as well as attorneys fees in the
sum of Php100,000.00.
PRAYER
WHEREFORE, it is respectfully prayed that after due hearing, judgment be rendered against
defendants jointly and severally in favor of the plaintiffs, as follows:
a. To pay plaintiffs their compensation or commission in the form of real estate from Lot No.
1782-B subdivision equivalent to five percent of twenty four hectares properties under their
administration;
b. To pay plaintiffs moral damages in the amount of not less than Php100,000.00 each;
c. Attorneys fee and litigation expenses in the amount of not less than Php100,000.00 each
and pay the costs of suit
x x x x36 (Italics and Emphases supplied)
The Court in Ungria v. Court of Appeals37 restated the criterion laid down in Singson v. Isabela
Sawmill38 to ascertain if an action is capable or not of pecuniary estimation, viz:
In determining whether an action is one the subject matter of which is not capable of pecuniary
estimation this Court has adopted the criterion of first ascertaining the nature of the principal action
or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered

capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the Courts
of First Instance would depend on the amount of the claim. However, where the basic issue is
something other than the right to recover a sum of money, where the money claim is purely
incidental to, or a consequence of, the principal relief sought, this Court has considered such actions
as cases where the subject of the litigation may not be estimated in terms of money, and are
cognizable exclusively by Courts of First Instance (now Regional Trial Courts).
It can be readily seen from the allegations in the Complaint that petitioners main purpose in filing the
same is to collect the commission allegedly promised them by respondents should they be able to
sell Lot No. 1782-B, as well as the compensation for the services rendered by Severino, Araceli and
Arnel for the administration of respondents properties. Captioned as a Complaint for Collection of
Agents Compensation, Commission and Damages, it is principally for the collection of a sum of
money representing such compensation and commission. Indeed, the payment of such money claim
is the principal relief sought and not merely incidental to, or a consequence of another action where
the subject of litigation may not be estimated in terms of money. In fact, petitioners in this case
estimated their claim to be equivalent to five percent of the purchase price of Lot No. 1782-B.
Therefore, the CA did not err when it ruled that petitioners Complaint is not incapable of pecuniary
estimation.
The Court cannot also give credence to petitioners contention that their action involves interest in a
real property. The October 25, 1976 letter39 of Atty. Gella confirming Severinos appointment as
administrator of his properties does not provide that the latters services would be compensated in
the form of real estate or, at the very least, that it was for a compensation. Neither was it alleged in
the Complaint that the five percent commission promised to Araceli and Arnel would be equivalent to
such portion of Lot No. 1782-B. What is clear from paragraph 4 thereof is that respondents
instructed petitioners to look for buyers of their properties and "were promised by respondents a
commission of five percent of the total purchase price of the said properties as compensation for
their long and continued administration of all the said properties." Also, petitioners allegation in
paragraph 6 that respondents failed to pay them "in cash or in kind" of what is due them negates any
agreement between the parties that they should be paid in the form of real estate. Clearly, the
allegations in their Complaint failed to sufficiently show that they have interest of whatever kind over
the properties of respondents. Given these, petitioners claim that their action involves interest over a
real property is unavailing. Thus, the Court quotes with approval the CAs ratiocination with respect
to the same:
As to their weak claim of interest over the property, it is apparent that their only interest is to be
compensated for their long-term administration of the properties. They do not claim an interest in the
properties themselves but merely payment for their services, such payment they compute to be
equivalent to five (5%) percent of the value of the properties. Under Section 1, Rule 4 of the Rules of
Court, a real action is an action affecting title to or possession of real property, or interest therein.
These include partition or condemnation of, or foreclosure of mortgage on, real property. Plaintiffsappellants interest is obviously not the one contemplated under the rules on jurisdiction.40
Petitioners demand is below the
jurisdictional amount required for RTCs
outside of Metro Manila, hence, the RTC
concerned in this case has no
jurisdiction over petitioners Complaint.
To determine whether the RTC in this case has jurisdiction over petitioners Complaint, respondents
correctly argued that the same be considered vis--vis Section 19(8) of BP 129, which provides:

SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive original
jurisdiction:
xxxx
(8) In all other cases in which the demand, exclusive of interests, damages of whatever kind,
attorneys fees, litigation expenses, and costs or the value of the property exceeds One hundred
thousand pesos (P100,000.00) or, in such other cases in Metro Manila, where the demand,
exclusive of the abovementioned items exceeds Two hundred thousand pesos (P200,000.00).
This jurisdictional amount of exceeding P100,000.00 for RTCs outside of Metro Manila was adjusted
toP200,000.00 effective March 20, 1999 in pursuance to Section 5 of RA 769141 which further
provides:
SEC. 5. After five (5) years from the effectivity of this Act, the jurisdictional amounts mentioned in
Sec. 19(3), (4), and (8); and Sec. 33(1) of Batas Pambansa Blg. 129 as amended by this Act, shall
be adjusted to Two hundred thousand pesos (P200,000.00). Five (5) years thereafter, such
jurisdictional amounts shall be adjusted further to Three hundred thousand pesos (P300,000.00):
Provided, however, That in the case of Metro Manila, the abovementioned jurisdictional amounts
shall be adjusted after five (5) years from the effectivity of this Act to Four hundred thousand pesos
(P400,000.00).
Hence, when petitioners filed their Complaint on September 3, 2001, the said increased jurisdictional
amount was already effective. The demand in their Complaint must therefore exceed P200,000.00 in
order for it to fall under the jurisdiction of the RTC.
Petitioners prayed that they be paid five percent of the total purchase price of Lot No. 1782-B.
However, since the Complaint did not allege that the said property has already been sold, as in fact
it has not yet been sold as respondents contend, there is no purchase price which can be used as
basis for computing the five percent that petitioners are claiming. Nevertheless and as mentioned,
petitioners were able to attach to their Complaint a copy of the tax declaration for Lot No. 1782-B
showing a total market value of P3,550,072.00.42 And since "the fair market value is the price at
which a property may be sold by a seller, who is not compelled to sell, and bought by a buyer, who is
not compelled to buy,"43 the RTC correctly computed the amount of petitioners claim based on the
propertys market value. And since five percent of P3,550,072.00 is only P177,503.60 or below the
jurisdictional amount of exceeding P200,000.00 set for RTCs outside of Metro Manila, the RTC in
this case has no jurisdiction over petitioners claim.
There is no merit to petitioners averment that their demand for moral damages should be included in
the computation of their total claims. Paragraph 8, Section 19 of BP 129 expressly speaks of
demand which is exclusive of damages of whatever kind. This exclusion was later explained by the
Court in Administrative Circular No. 09-94 dated June 14, 1994 as follows:
2. The exclusion of the term "damages of whatever kind" in determining the jurisdictional amount
under Section 19 (8) and Section 33 (1) of B.P. Blg. 129, as amended by R.A. No. 7691, applies to
cases where the damages are merely incidental to or a consequence of the main cause of action.
However, in cases where the claim for damages is the main cause of action, or one of the causes of
action, the amount of such claim shall be considered in determining the jurisdiction of the court.
1wphi1

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

cause of action. Thus, the said claim for moral damages cannot be included in determining the
jurisdictional amount.
In view of the foregoing, the CA did not err in affirming the RTCs conclusion that it has no
jurisdiction over petitioners claim.
The CAs affirmance of the RTCs
findings that the Complaint states no
cause of action and that Araceli and
Arnel have no authority to sue in behalf
of Severinos other heirs cannot be
raised in this Petition.
As pointed out by respondents, petitioners tailed to question in their Motion for Reconsideration
before the CA its affirmance of the RTC's findings that the Complaint states no cause of action and
that Araceli and Arne! have no authority to sue in behalf of the other heirs of Severino. Suffice it to
say that ''prior to raising these arguments before this Court, they should have raised the matter in
their Motion for Reconsideration in order to give the appellate court an opportunity to correct its
ruling. For them to raise these issues be tore this Court now would be improper, since they failed to
do so be tore the CA."44
WHEREFORE, the Petition for Review on Certiorari is DENIED and the assailed Decision dated July
6, 2005 and the Resolution dated April 5, 2006 of the Court of Appeals in CA-G.R. CV No. 75126 are
AFFIRMED.
SO ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 208232

March 10, 2014

SURVIVING HEIRS OF ALFREDO R. BAUTISTA, namely: EPIFANIA G. BAUTISTA and ZOEY G.

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

DECISION
VELASCO, JR., J.:
The Case
This is a Petition for Review on Certiorari under Rule 45 assailing the April 25, 2013 Order of the
Regional Trial Court (RTC) in Civil Case No. (1798)-021 as well as its Order of July 3, 2013 denying
reconsideration.
The Facts
Alfredo R. Bautista (Bautista), petitioners predecessor, inherited in 1983 a free-patent land located
in Poblacion, Lupon, Davao Oriental and covered by Original Certificate of Title (OCT) No. (1572) P6144. A few years later, he subdivided the property and sold it to several vendees, herein
respondents, via a notarized deed of absolute sale dated May 30, 1991. Two months later, OCT No.
(1572) P-6144 was canceled and Transfer Certificates of Title (TCTs) were issued in favor of the
vendees.1
Three years after the sale, or on August 5, 1994, Bautista filed a complaint for repurchase against
respondents before the RTC, Branch 32, Lupon, Davao Oriental, docketed as Civil Case No.
1798,2 anchoring his cause of action on Section 119 of Commonwealth Act No. (CA) 141, otherwise
known as the "Public Land Act," which reads:
SECTION 119. Every conveyance of land acquired under the free patent or homestead provisions,
when proper, shall be subject to repurchase by the applicant, his widow, or legal heirs, within a
period of five years from the date of the conveyance.
Respondents, in their Answer, raised lack of cause of action, estoppel, prescription, and laches, as
defenses.
Meanwhile, during the pendency of the case, Bautista died and was substituted by petitioner
Epifania G. Bautista (Epifania).
Respondents Francisco and Welhilmina Lindo later entered into a compromise agreement with
petitioners, whereby they agreed to cede to Epifania a three thousand two hundred and thirty square
meter (3,230 sq.m.)-portion of the property as well as to waive, abandon, surrender, and withdraw all
claims and counterclaims against each other. The compromise was approved by the RTC in its
Decision dated January 27, 2011, the fallo of which reads:
WHEREFORE, a DECISION is hereby rendered based on the above-quoted Compromise
Agreement and the parties are enjoined to strictly comply with the terms and conditions of the same.
SO ORDERED.3
Other respondents, however, filed a Motion to Dismiss4 dated February 4, 2013, alleging that the
complaint failed to state the value of the property sought to be recovered. Moreover, they asserted
that the total selling price of all the properties is only sixteen thousand five hundred pesos (PhP
16,500), and the selling price or market value of a property is always higher than its assessed value.
Since Batas Pambansa Blg. (BP) 129, as amended, grants jurisdiction to the RTCs over civil actions
involving title to or possession of real property or interest therein where the assessed value is more

than PhP 20,000, then the RTC has no jurisdiction over the complaint in question since the property
which Bautista seeks to repurchase is below the PhP 20,000 jurisdictional ceiling.
RTC Ruling5
Acting on the motion, the RTC issued the assailed order dismissing the complaint for lack of
jurisdiction. The trial court found that Bautista failed to allege in his complaint that the value of the
subject property exceeds 20 thousand pesos. Furthermore, what was only stated therein was that
the total and full refund of the purchase price of the property is PhP 16,500. This omission was
considered by the RTC as fatal to the case considering that in real actions, jurisdictional amount is
determinative of whether it is the municipal trial court or the RTC that has jurisdiction over the case.
With respect to the belated filing of the motion, the RTC, citing Cosco Philippines Shipping, Inc. v.
Kemper Insurance Company,6 held that a motion to dismiss for lack of jurisdiction may be filed at any
stage of the proceedings, even on appeal, and is not lost by waiver or by estoppel. The dispositive
portion of the assailed Order reads:
WHEREFORE, the complaint for Repurchase, Consignation, with Preliminary Injunction and
Damages is hereby dismissed for lack of jurisdiction.
SO ORDERED.7
Assignment of Errors
Their motion for reconsideration having been denied, petitioners now seek recourse before this
Court with the following assigned errors:
I
THE PUBLIC RESPONDENT RTC ERRED IN ADMITTING THE MOTION TO DISMISS DATED
FEBRUARY 4, 2013, BELATEDLY FILED BY THE PRIVATE RESPONDENTS IN THE CASE.
II
THE PUBLIC RESPONDENT RTC ERRED IN HOLDING THAT THE INSTANT CASE FOR
REPURCHASE IS A REAL ACTION.8
The Issue
Stated differently, the issue for the Courts resolution is: whether or not the RTC erred in granting the
motion for the dismissal of the case on the ground of lack of jurisdiction over the subject matter.
Arguments
Petitioners argue that respondents belatedly filed their Motion to Dismiss and are now estopped from
seeking the dismissal of the case, it having been filed nine (9) years after the filing of the complaint
and after they have actively participated in the proceedings. Additionally, they allege that an action
for repurchase is not a real action, but one incapable of pecuniary estimation, it being founded on
privity of contract between the parties. According to petitioners, what they seek is the enforcement of
their right to repurchase the subject property under Section 119 of CA 141.

Respondents, for their part, maintain that since the land is no longer devoted to agriculture, the right
of repurchase under said law can no longer be availed of, citing Santana v. Marias.9 Furthermore,
they suggest that petitioners intend to resell the property for a higher profit, thus, the attempt to
repurchase. This, according to respondents, goes against the policy and is not in keeping with the
spirit of CA 141 which is the preservation of the land gratuitously given to patentees by the State as
a reward for their labor in cultivating the property. Also, the Deed of Absolute Sale presented in
evidence by Bautista was unilaterally executed by him and was not signed by respondents. Lastly,
respondents argue that repurchase is a real action capable of pecuniary estimation.
Our Ruling
The petition is meritorious.
Jurisdiction of courts is granted by the Constitution and pertinent laws.
Jurisdiction of RTCs, as may be relevant to the instant petition, is provided in Sec. 19 of BP 129,
which reads:
Sec. 19. Jurisdiction in civil cases.Regional Trial Courts shall exercise exclusive original
jurisdiction:
1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;
2) In all civil actions which involve the title to, or possession of, real property, or any interest
therein, where the assessed value of the property involved exceeds Twenty thousand pesos
(P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty thousand
pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit Trial Courts.
On the other hand, jurisdiction of first level courts is prescribed in Sec. 33 of BP 129, which provides:
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in civil cases.Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial
Courts shall exercise:
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 property or interest therein does
not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such
assessed value does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest, damages
of whatever kind, attorneys fees, litigation expenses and costs: Provided, That in cases of land not
declared for taxation purposes, the value of such property shall be determined by the assessed
value of the adjacent lots.
The core issue is whether the action filed by petitioners is one involving title to or possession of real
property or any interest therein or one incapable of pecuniary estimation.

The course of action embodied in the complaint by the present petitioners predecessor, Alfredo R.
Bautista, is to enforce his right to repurchase the lots he formerly owned pursuant to the right of a
free-patent holder under Sec. 119 of CA 141 or the Public Land Act.
The Court rules that the complaint to redeem a land subject of a free patent is a civil action
incapable of pecuniary estimation.
It is a well-settled rule that jurisdiction of the court is determined by the allegations in the complaint
and the character of the relief sought.10 In this regard, the Court, in Russell v. Vestil,11 wrote that "in
determining whether an action is one the subject matter of which is not capable of pecuniary
estimation this Court has adopted the criterion of first ascertaining the nature of the principal action
or remedy sought. If it is primarily for the recovery of a sum of money, the claim is considered
capable of pecuniary estimation, and whether jurisdiction is in the municipal courts or in the RTCs
would depend on the amount of the claim." But where the basic issue is something other than the
right to recover a sum of money, where the money claim is purely incidental to, or a consequence of,
the principal relief sought, this Court has considered such actions as cases where the subject of the
litigation may not be estimated in terms of money, and, hence, are incapable of pecuniary
estimation. These cases are cognizable exclusively by RTCs.12
Settled jurisprudence considers some civil actions as incapable of pecuniary estimation, viz:
1. Actions for specific performance;
2. Actions for support which will require the determination of the civil status;
3. The right to support of the plaintiff;
4. Those for the annulment of decisions of lower courts;
5. Those for the rescission or reformation of contracts;13
6. Interpretation of a contractual stipulation.14
The Court finds that the instant cause of action to redeem the land is one for specific performance.
The facts are clear that Bautista sold to respondents his lots which were covered by a free patent.
While the deeds of sale do not explicitly contain the stipulation that the sale is subject to repurchase
by the applicant within a period of five (5) years from the date of conveyance pursuant to Sec. 119 of
CA 141, still, such legal provision is deemed integrated and made part of the deed of sale as
prescribed by law. It is basic that the law is deemed written into every contract.15 Although a contract
is the law between the parties, the provisions of positive law which regulate contracts are deemed
written therein and shall limit and govern the relations between the parties.16Thus, it is a binding
prestation in favor of Bautista which he may seek to enforce. That is precisely what he did. He filed a
complaint to enforce his right granted by law to recover the lot subject of free patent. Ergo, it is clear
that his action is for specific performance, or if not strictly such action, then it is akin or analogous to
one of specific performance. Such being the case, his action for specific performance is incapable of
pecuniary estimation and cognizable by the RTC.
Respondents argue that Bautistas action is one involving title to or possession of real property or
any interests therein and since the selling price is less than PhP 20,000, then jurisdiction is lodged
with the MTC. They rely on Sec. 33 of BP 129.

Republic Act No. 769117 amended Sec. 33 of BP 129 and gave Metropolitan Trial Courts, Municipal
Trial Courts, and Municipal Circuit Trial Courts exclusive original jurisdiction in all civil actions which
involve title to, or possession of, real property, or any interest therein where the assessed value of
the property or interest therein does not exceed twenty thousand pesos (PhP 20,000) or, in civil
actions in Metro Manila, where such assessed value does not exceed fifty thousand pesos (PhP
50,000) exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses and
costs.
At first blush, it appears that the action filed by Bautista involves title to or possession of the lots he
sold to respondents. Since the total selling price is less than PhP 20,000, then the MTC, not the
RTC, has jurisdiction over the case. This proposition is incorrect for the re-acquisition of the lots by
Bautista or herein successors-in-interests, the present petitioners, is but incidental to and an offshoot
of the exercise of the right by the latter to redeem said lots pursuant to Sec. 119 of CA 141. The
reconveyance of the title to petitioners is solely dependent on the exercise of such right to
repurchase the lots in question and is not the principal or main relief or remedy sought. Thus, the
action of petitioners is, in reality, incapable of pecuniary estimation, and the reconveyance of the lot
is merely the outcome of the performance of the obligation to return the property conformably to the
express provision of CA 141.
Even if we treat the present action as one involving title to real property or an interest therein which
falls under the jurisdiction of the first level court under Sec. 33 of BP 129, as the total selling price is
only PhP 16,000 way below the PhP 20,000 ceiling, still, the postulation of respondents that MTC
has jurisdiction will not hold water. This is because respondents have actually participated in the
proceedings before the RTC and aggressively defended their position, and by virtue of which they
are already barred to question the jurisdiction of the RTC following the principle of jurisdiction by
estoppel.
In Heirs of Jose Fernando v. De Belen, it was held that the party raising defenses to the complaint,
actively participating in the proceedings by filing pleadings, presenting his evidence, and invoking its
authority by asking for an affirmative relief is deemed estopped from questioning the jurisdiction of
the court.18
Here, we note that aside from the belated filing of the motion to dismissit having been filed nine
(9) years from the filing of the complaintrespondents actively participated in the proceedings
through the following acts:
1. By filing their Answer and Opposition to the Prayer for Injunction19 dated September 29,
1994 whereby they even interposed counterclaims, specifically: PhP 501,000 for unpaid
survey accounts, PhP 100,000 each as litigation expenses, PhP 200,000 and PhP 3,000 per
daily appearance by way of attorneys fees, PhP 500,000 as moral damages, PhP 100,000
by way of exemplary damages, and costs of suit;
2. By participating in Pre-trial;
3. By moving for the postponement of their presentation of evidence;20
4. By presenting their witness;21 and
5. By submitting the compromise agreement for approval.22
Having fully participated in all stages of the case, and even invoking the RTCs authority by asking
for affirmative reliefs, respondents can no longer assail the jurisdiction of the said trial court. Simply

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

WHEREFORE, premises considered, the instant petition is hereby GRANTED. The April 25, 2013
and July 3, 2013 Orders of the Regional Trial Court in Civil Case No. (1798)-021 are hereby
REVERSED and SET ASIDE.
The Regional Trial Court, Branch 32 in Lupon, Davao Oriental is ORDERED to proceed with
dispatch in resolving Civil Case No. (1798)-021.
No pronouncement as to costs.
SO ORDERED.
PRESBITERO J. VELASCO, JR.
Associate Justice
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-60367 September 30, 1982
ATTY. VENUSTIANO T. TAVORA, petitioner,
vs.
HON. ROSARIO R. VELOSO, in her capacity as the Presiding Judge of Branch III of the City
Court of Manila, and JULIETA CAPATI, respondents.

PLANA, J.:
Venustiano T. Tavora, a resident of Marikina, Metro Manila, owns an apartment in Quiapo, Manila
which he has leased to Julieta Capati, a resident of Quiapo. On account of alleged violations of the
lease agreement by the lessee (unauthorized subleasing and failure to pay rent), the lessor filed on
January 12, 1981 an ejectment suit (Civil Case No. 060828) in the City Court of Manila. The
defendant filed a motion t/ dismiss on the sole ground of lack of jurisdiction for failure of the plaintiff
to bring the dispute first to the barangay court for possible amicable settlement under PD 1508.
Parenthetically, there is no question that there has been no attempt to amicably settle the dispute
between Tavora and Capati at the barangay level.
After denying the motion to dismiss as well as a subsequent motion for reconsideration, the
municipal court reversed itself and dismissed the ejectment case.
Alleging grave abuse of discretion amounting to lack of jurisdiction, petitioner Tavora has come to
this Court on certiorari and mandamus praying that the order of dismissal be set aside and that
respondent judge be ordered to hear and decide the case.

The sole issue raised is one of law: Under the given facts, is the respondent judge barred from
taking cognizance of the ejectment case pursuant to Sec-6 of PD 1508 establishing a system of
amicably settling disputes at the barangay level? The section reads:
SECTION 6. Conciliation, precondition to filing of complaint. No complaint,
petition, action or proceeding involving any matter within the authority of the
Lupon as provided in Section 2 hereof shall be filed or instituted in court or any other
government office for adjudication unless there has been a confrontation of the
parties before the Lupon Chairman or the Pangkat and no conciliation or settlement
has been reached as certified by the Lupon Secretary or the Pangkat Secretary,
attested by the Lupon or Pangkat Chairman, or unless the settlement has been
repudiated ... (Emphasis supplied.)
For the above provision to be operative, the controversy must be within the jurisdiction of the Lupong
Tagapayapa (Lupon or Barangay court). On this point, the relevant provisions of PD 1508 are:
SECTION 2. Subject matters for amicable settlement. The Lupon of each
barangay shall have authority to bring together the parties actually residing in the
same city or municipality for amicable settlement of all disputes except:
(1) Where one party is the government, or any subdivision or instrumentality thereof;
(2) Where one party is a public officer or employee, and the dispute relates to the
performance of his official functions;
(3) Offenses punishable by imprisonment exceeding 30 days, or a fine exceeding
P200.00;
(4) Offenses where there is no private offended party;
(5) Such other classes of disputes which the Prime Minister may in the interest of
justice determine, upon recommendation of the Minister of Justice and the Minister of
Local Government.
SECTION 3. Venue. Disputes between or among persons actually residing in the
same barangayshall be brought for amicable settlement before the Lupon of said
barangay. Those involving actual residents of different barangays within the same
city or municipality shall be brought in the barangay where the respondent or any of
the respondents actually resides, at the election of the complainant. However, all
disputes which involve real property or any interest therein shall be brought in the
barangay where the real property or any part thereof is situated.
The Lupon shall have no authority over disputes:
(1) involving parties who actually reside in barangays of different cities or
municipalities, except where such barangays adjoin each other; and
(2) involving real property located in different municipalities. (Emphasis supplied.)
The foregoing provisions are quite clear. Section 2 specifies the conditions under which the Lupon of
a barangay "shall have authority" to bring together the disputants for amicable settlement of their

dispute: The parties must be "actually residing in the same city or municipality." At the same time,
Section 3 while reiterating that the disputants must be "actually residing in the same barangay" or
in "different barangays within the same city or municipality unequivocably declares that the Lupon
shall have "no authority" over disputes "involving parties who actually reside in barangays of different
cities or municipalities," except where such barangays adjoin each other.
Thus, by express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over
disputes where the parties are not actual residents of the same city or municipality, except where the
barangays in which they actually reside adjoin each other,
It is true that immediately after specifying the barangay whose Lupon shall take cognizance of a
given dispute, Sec. 3 of PD 1508 adds:
However, all disputes which involve real property or any interest therein shall be
brought in the barangay where the real property or any part thereof is situated.
Actually, however, this added sentence is just an ordinary proviso and should operate as such. The
operation of a proviso, as a rule, should be limited to its normal function, which is to restrict or vary
the operation of the principal clause, rather than expand its scope, in the absence of a clear
indication to the contrary.
The natural and appropriate office of a proviso is . . . to except something from the
enacting clause; to limit, restrict, or qualify the statute in whole or in part; or to
exclude from the scope of the statute that which otherwise would be within its terms.
(73 Am Jur 2d 467.)
Therefore, the quoted proviso should simply be deemed to restrict or vary the rule on
venue prescribed in the principal clauses of the first paragraph of Section 3, thus: Although venue is
generally determined by the residence of the parties, disputes involving real property shall be
brought in the barangay where the real property or any part thereof is situated, notwithstanding that
the parties reside elsewhere within the same city/municipality.
In the instant case, the plaintiff in the ejectment case (petitioner herein) is a resident of Marikina,
while the defendant (private respondent) is a resident of Quiapo. No Lupon therefore is authorized to
take cognizance of their dispute.
Finding the petition to be meritorious, the dismissal of Civil Case No. 060828 (ejectment) by the
respondent Judge being predicated upon a misconstruction of PD 1508, the same should be
granted. (Co Tiamco vs. Diaz, 75 Phil. 672.)
Accordingly, the assailed order of dismissal dated February 22, 1982 as well as the order dated
March 23, 1982 denying reconsideration thereof, are hereby set aside; and the respondent Judge is
directed to hear and decide the aforesaid ejectment case on its merits. Costs against private
respondents.
SO ORDERED.
Fernando CJ., Teehankee, Barredo, Makasiar, Aquino, Concepcion, Jr., Guerrero, Abad Santos, De
Castro, Melencio-Herrera, Escolin, Vasquez and Gutierrez, JJ., concur.
Relova, J., took no part.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
A.M. No. MTJ-00-1265

April 6, 2000

VALENCIDES VERCIDE, complainant,

vs.
JUDGE PRISCILLA T. HERNANDEZ, Fifth Municipal Circuit Trial Court, Clarin and Tudela,
Misamis Occidental, respondent.
DECISION
MENDOZA, J.:
This is a complaint filed against Judge Priscilla T. Hernandez of the Fifth Municipal Circuit Trial
Court, Clarin and Tudela, Misamis Occidental, charging her with grave abuse of authority and
ignorance of the law for her dismissal of a case which complainant Valencides Vercide and his wife
had filed against Daria Lagas Galleros for recovery of possession of a piece of land. The land is
located in Upper Centro, Tudela, Misamis Occidental. Defendant Galleros is a resident of the same
municipality, while complainant and his wife are residents of Dipolog City. Because of this fact, the
case was filed in court without prior referral to the Lupong Tagapamayapa.
However, this matter was raised by defendant in her answer as an affirmative defense, and
respondent, in her order of July 15, 1997, ordered the dismissal of the case without prejudice to the
prosecution of the counterclaim pleaded by the defendant in her answer. In support of her order,
respondent cited P.D. No. 1508, 3 of which provides:
Venue. - Disputes between or among persons actually residing in the same barangay shall be
brought for amicable settlement before the Lupon of said barangay. Those involving actual residents
of different barangays within the same city or municipality shall be brought in the barangay where
the respondent or any of the respondents actually resides, at the election of the
complainant. However, all disputes which involve real property or any interest therein shall be
brought in the barangay where the real property or any part thereof is situated. (Emphasis added)
Complainant and his wife moved for a reconsideration, citing the following provisions of R.A. 7160,
"The Local Government Code of 1991":
SEC. 408. Subject matter for Amicable Settlement; Exception Thereto. The lupon of each
barangay shall have authority to bring together the parties actually residing in the same city or
municipality for amicable settlement of all disputes except:
(a) Where one party is the government of any subdivision or instrumentality thereof;
(b) Where one party is a public officer or employee, and the dispute relates to the
performance of his official functions;
(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five
Thousand pesos (P5,000.00);

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

(e) Where the dispute involves real property located in different cities or municipalities unless
the parties thereto agree to submit their differences to amicable settlement by an appropriate
lupon;
(f) Disputes involving parties who actually reside in barangays of different cities or
municipalities, except where such barangay units adjoin each other and the parties thereto
agree to submit their differences to amicable settlement by an appropriate lupon;
(g) Such other classes of disputes which the President may determine in the interest of
justice or upon recommendation of the Secretary of Justice. marie
The court in which the non-criminal cases not falling within the authority of the lupon under this Code
are filed may, at any time before trial, motu proprio refer the case to the lupon concerned for
amicable settlement.
SEC. 409. Venue. - (a) Disputes between persons actually residing in the same barangay shall be
brought for amicable settlement before the lupon of said barangay.
(b) Those involving actual residents of different barangays within the same city of
municipality shall be brought in the barangay where the respondent or any of the
respondents actually resides, at the election of the complainant.
(c) All disputes involving real property or any interest therein shall be brought in the barangay
where the real property or the larger portion thereof is situated.
(d) Those arising at the workplace where the contending parties are employed or at the
institution where such parties are enrolled for study shall be brought in the barangay where
such workplace or institution is located.
Objections to venue shall be raised in the mediation proceedings before the punong barangay;
otherwise, the same shall be deemed waived. Any legal question which may confront the punong
barangay in resolving objections to venue herein referred to may be submitted to the Secretary of
Justice or his duly designated representative whose ruling thereon shall be binding.
They argued that under 408(f), in relation to 409(c), where the parties to a dispute involving real
property or any interest therein are not actual residents of the same city or municipality or of
adjoining barangays, prior resort to barangay conciliation is not required.
However, respondent denied the motion. In her order dated September 9, 1997, respondent stated:
The Court after taking into consideration the Motion for Reconsideration and the ground relied upon
by the counsel finds that counsel for the plaintiffs failed to correlate Sections 408 and 409 of
Republic Act No. 7160 and to consider Rule VIII, paragraph (a) of the Katarungang Pambarangay
Rules, the rules and regulations [of] which were promulgated to implement Sections 399 to 422,
Chapter 7, Title One Book III and Section 515, Book IV of R.A. No. 7160, otherwise known as the
Katarungang Pambarangay Law, to wit:
"RULE VIII - PRE-CONDITION FOR FORMAL ADJUDICATION

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

(a) No individual may go directly to court or to any government office for adjudication of his dispute
with another individual upon any matter falling within the authority of the Punong Barangay or
Pangkat ng Tagapagkasundo to settle under these Rules, unless, after personal confrontation of the
parties before them earnest efforts to conciliate have failed to result in a settlement or such
settlement has been effectively repudiated."
and also Rule VI, Section 3 paragraph (c) of the same Katarungang Pambarangay Rules which
provides:
"Rule VI - Amicable Settlement of Disputes
Section 3. Venue. The place of settlement shall be subject to the following rules:
....
(c) Dispute involving real property shall be brought for settlement in the Barangay where the real
property or larger portion thereof is situated.
From the provisions of the above-cited Rules it was very clear that parties whose disputes involved
real property should first br[ing] the said dispute before the barangay where the property was
located, and that [because of] failure to bring the dispute before the Barangay for conciliation no
action may be filed in court for final adjudication of the said dispute.
That parties should first comply with the provisions of the Katarungang Pambarangay Law before the
Court can acquire jurisdiction over the complaint. That non-compliance of the plaintiff to the
requirement of the Katarungang Pambarangay Law was admitted by her in paragraph 3 of the
complaint. Her allegation of non-compliance with the mandatory requirement of Lupon Conciliation
before the filing of the complaint, in a way divest[s] the Court of its jurisdiction over the case. In the
1997 Rules of Civil Procedure, Rule 16, Section 1, paragraph (j) provides:
"That a condition precedent for filing the claim has not been complied with"
WHEREFORE, in view of the foregoing, the Motion for Reconsideration is hereby denied.
Complainant alleges that in dismissing Civil Case No. 295, respondent judge committed "(a) Grave
abuse of authority by knowingly rendering an unjust and unlawful order; (b) Ignorance of the law in
its highest order, she being a judge; (c) Grave disobedience to the jurisprudence laid down by the
Supreme Court of the Philippines on the matter of exemption of lupon conciliation of contending
parties who are not residen[ts] of the same city or municipality." He states that respondent
"practically threw several decisions of the Supreme Court on the matter out of the window and
obviously followed hook, line and sinker the arguments of the [defendant] Daria Galleros."
In answer, respondent judge claims that she merely followed the law in dismissing the case. She
prays that the complaint against her be dismissed and that complainant be ordered to stop harassing
her just because he had not been able to obtain the relief he wanted in Civil Case No. 295. nigel
In its memorandum dated February 29, 2000, the Office of the Court Administrator recommends the
dismissal of this case on the ground that the "issue [raised] is purely judicial and is best resolved by
a court of competent jurisdiction" and that, even if respondent had erred, she should not be held

administratively liable since there is no allegation that she acted in bad faith or knowingly rendered
an unjust judgment.
In Tavora v. Veloso,1 this Court already ruled that where parties do not reside in the same city or
municipality or in adjoining barangays, there is no requirement for them to submit their dispute
involving real property to the Lupong Tagapamayapa. As explained in that case:
The sole issue raised is one of law: Under the given facts, is the respondent judge barred from
taking cognizance of the ejectment case pursuant to Sec. 6 of PD 1508 establishing a system of
amicably settling disputes at the barangay level? The section reads:
"SECTION. 6. Conciliation, precondition to filing of complaint. - No complaint, petition, action or
proceeding involving any matter within the authority of the Lupon as provided in Section 2 hereof
shall be filed or instituted in court or any other government office for adjudication unless there has
been a confrontation of the parties before the Lupon Chairman or the Pangkat and no conciliation or
settlement has been reached as certified by the Lupon Secretary or the Pangkat Secretary, attested
by the Lupon or Pangkat Chairman, or unless the settlement has been repudiated. . . ." (Italics
supplied)
For the above provision to be operative, the controversy must be within the jurisdiction of the Lupong
Tagapayapa (Lupon or Barangay court). On this point, the relevant provisions of PD 1508 are:
"SECTION 2. Subject matters for amicable settlement. - The Lupon of each barangay shall have
authority to bring together the parties actually residing in the same city or municipality for amicable
settlement of all disputes except:
(1) Where one party is the government, or any subdivision or instrumentality thereof;
(2) Where one party is a public officer or employee, and the dispute relates to the
performance of his official functions;
(3) Offenses punishable by imprisonment exceeding 30 days, or a fine exceeding P200.00;
(4) Offenses were there is no private offended party;
(5) Such other classes of disputes which the Prime Minister may in the interest of justice
determine, upon recommendation of the Minister of Justice and the Minister of Local
Government. ella
"SECTION 3. Venue. Disputes between or among persons actually residing in the same
barangay shall be brought for amicable settlement before the Lupon of said barangay. Those
involving actual residents of different barangays within the same city or municipality shall be brought
in the barangay where the respondent or any of the respondents actually resides, at the election of
the complainant. However, all disputes which involve real property or any interest therein shall be
brought in the barangay where the real property or any part thereof is situated.
"The Lupon shall have no authority over disputes:
(1) involving parties who actually reside in barangays of different cities or municipalities, except
where such barangays adjoin each other; and

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

The foregoing provisions are quite clear. Section 2 specifies the conditions under which the Lupon of
a barangay "shall have authority" to bring together the disputants for amicable settlement of their
dispute: The parties must be "actually residing in the same city or municipality." At the same time,
Section 3 while reiterating that the disputants must be "actually residing in the same barangay" or
in "different barangays within the same city or municipality" unequivocably declares that the
Lupon shall have "no authority" over disputes "involving parties who actually reside in barangays
of different cities or municipalities," except where such barangays adjoin each other.
Thus, by express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over
disputes where the parties are not actual residents of the same city or municipality, except where the
barangays in which they actually reside adjoin each other.
It is true that immediately after specifying the barangay whose Lupon shall take cognizance of a
given dispute, Sec. 3 of PD 1508 adds:
"However, all disputes which involve real property or any interest therein shall be brought in the
barangay where the real property or any part thereof is situated."
Actually, however, this added sentence is just an ordinary proviso and should operate as such.
marinella
The operation of a proviso, as a rule, should be limited to its normal function, which is to restrict or
vary the operation of the principal clause, rather than expand its scope, in the absence of a clear
indication to the contrary.2
To be sure, the Court was interpreting in that case the provisions of P.D. No. 1508 which, except for
some modifications, are applicable to the case before respondent judge because they are now found
in 408-409 of R.A. No. 7160 which took effect on January 1, 1992. The ruling in Tavora v. Veloso,
reiterated in other cases,3should be familiar to the bench and the bar. As we have held in Espiritu v.
Jovellanos,4 the phrase "Ignorance of the law excuses no one" has a special application to judges
who, under the injunction of Canon 1.01 of the Code of Judicial Conduct, "should be the embodiment
of competence, integrity, and independence." In Bacar v. De Guzman,5 it was held that when the law
violated is basic, the failure to observe it constitutes gross ignorance. Reiterating this ruling, it was
emphasized in Almeron v. Sardido6 that the disregard of an established rule of law amounts to gross
ignorance of the law and makes the judge subject to disciplinary action.
In the case at bar, respondent showed patent ignorance if not disregard of this Courts rulings
on the jurisdiction of the Lupong Tagapamayapa by her erroneous quotations of the provisions of the
Katarungang Pambarangay Rules implementing R.A. No. 7160. While a judge may not be held
administratively accountable for every erroneous order or decision he renders, his error may be so
gross or patent that he should be administratively disciplined for gross ignorance of the law and
incompetence.
In this case, respondent at first cited P.D. No. 1508, 3 as basis of her action. When her attention
was called to the fact that this had been repealed by 409(c) of R.A. No. 7160, respondent, who
obviously was more intent in justifying her previous order than correcting her error, quoted out of
context the provisions of the Katarungang Pambarangay Rules implementing the Katarungang
Pambarangay provisions of R.A. No. 7160. She thus violated Canon 3 of the Code of Judicial
Conduct which provides that "In every case, a judge shall endeavor diligently to ascertain the facts
and the applicable law unswayed by partisan interest, public opinion or fear of criticism."

Contrary to respondents interpretation, it is clear even from the Katarungang Pambarangay Rules
that recourse to barangay conciliation proceedings is not necessary where the parties do not reside
in the same municipality or city or in adjoining barangays. Rule VI of the same states in pertinent
part:
SECTION 2. Subject matters for settlement. - All disputes may be the subject of proceedings for
amicable settlement under these rules except the following enumerated cases:
(a) Where one party is the government, or any subdivision or instrumentality thereof; alonzo
(b) Where one party is a public officer or employee, and the dispute relates to the
performance of his official functions;
(c) Offenses for which the law prescribes a maximum penalty of imprisonment exceeding
one (1) year or a fine exceeding Five Thousand pesos (P5,000.00);
(d) Offenses where there is no private offended party;
(e) Where the dispute involves real properties located in different cities or municipalities
unless the parties thereto agree to submit their differences to amicable settlement by an
appropriate lupon;
(f) Disputes involving parties who actually reside in barangays of different cities or
municipalities, except where such barangay units adjoin each other and the parties thereto to
agree to submit their differences to amicable settlement by an appropriate lupon;
(g) Such other classes of disputes which the President may determine in the interest of
justice or upon the recommendation of the Secretary of Justice.
The foregoing exceptions notwithstanding, the court in which non-criminal cases not falling within the
authority of the lupon under these Katarungang Pambarangay Law and Rules are filed may, at any
time before trial, motu proprio refer the case to the lupon concerned for amicable settlement.
SECTION 3. Venue. The place of settlement shall be subject to the following rules:
(a) Where the parties reside in the same barangay, the dispute shall be brought for
settlement in said barangay;
(b) Where the parties reside in different barangays in the same city or municipality, the
dispute shall be settled in the barangay where the respondent or any one of the respondents
actually resides, at the choice of the complainant;
(c) Dispute involving real property shall be brought for settlement in the barangay where the
real property or larger portion thereof is situated;
(d) Disputes arising at the workplace where the contending parties are employed or at the
institution where such parties are enrolled for study, shall be brought in the barangay where
such workplace or institution is located;

(e) Any objection relating to venue shall be raised before the Punong Barangay during the
mediation proceedings before him. Failure to do so shall be deemed a waiver of such
objection;
(f) Any legal question which may confront the Punong Barangay in resolving objections to
venue herein referred to may be submitted to the Secretary of Justice, or his duly designated
representative, whose ruling thereon shall be binding. brando
(Emphasis added)
Indeed, these provisions, which are also found in P.D. No. 1508, have already been authoritatively
interpreted by this Court, and the duty of respondent judge was to follow the rulings of this Court.
Her insistence on her own interpretation of the law can only be due either to an ignorance of this
Courts ruling or to an utter disregard thereof. We choose to believe that her failure to apply our
rulings to the case before her was simply due to gross ignorance which, nevertheless, is
inexcusable. In accordance with the ruling in Ting v. Atal,7 in which a judge who was similarly found
guilty of gross ignorance of the law was fined P2,000.00, respondent judge should likewise be fined
the same amount.
WHEREFORE, respondent is hereby found guilty of gross ignorance of the law and is hereby
ordered to pay a FINE of TWO THOUSAND (P2,000.00) PESOS with a WARNING that repetition of
the same or similar acts will be dealt with more severely.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
THIRD DIVISION
G.R. No. 157830 November 17, 2005
DANTE M. PASCUAL, represented by REYMEL R. SAGARIO, Petitioner,
vs.
MARILOU M. PASCUAL, Respondent.
DECISION
CARPIO MORALES, J.:
On challenge via Petition for Review on Certiorari is the February 10, 2003 Order of the Regional
Trial Court (RTC) of Isabela, Branch 23 at Roxas dismissing, on motion of herein respondent Marilou
M. Pascual, the complaint filed against her by her brother-herein petitioner Dante M. Pascual,
represented by his attorney-in-fact Reymel R. Sagario (Sagario), for non-compliance with the
conciliation provision-pre condition to filing of complaint in court under R.A. 7160 (the Local
Government Code).
Petitioner, a permanent resident of the United States of America, appointed Sagario as his attorneyin-fact by a Special Power of Attorney (SPA) dated April 10, 2002:

1. To file a case for the cancellation of Transfer Certificate of Title No. T-271656 issued in the name
of Marilou M. Pascual as well as the Deed of Sale of Registered Land (Dec. No. 639; Page No. 52;
Book No. XXI; Series of 1994) and/or Reconveyance at the appropriate court;
2. To collect the monthly rentals from the tenant;
3. To enter into amicable settlement with Marilou M. Pascual or any other mode of payment/and/or
dispute resolution;
4. To execute and sign any and all papers, contracts/documents which may be necessary relative to
the above acts.
x x x1
Pursuant to the SPA, Sagario filed on October 14, 2002 before the Isabela RTC at Roxas a
complaint entitled "Dante M. Pascual, plaintiff v. Marilou M. Pascual and Register of Deeds,
Defendants," docketed as Civil Case No. Br. 23-713-02, for Annulment of Transfer Certificate of Title
No. T-271657 of Isabela and Deed of Absolute Sale of Registered Land and/or Reconveyance with
Damages.2
To the Complaint the defendant-herein respondent Marilou M. Pascual filed a Motion to Dismiss3 on
two grounds one of which was non-compliance with the requirement under Section 412 of the Local
Government Code,4 she contending that there is no showing that the dispute was referred to the
barangay court before the case was filed in court.
By the assailed Order of February 10, 2003,5 Branch 23 of the Isabela RTC at Roxas granted
respondents Motion to Dismiss in this wise:
. . . RA 7160 repealing P.D. 1508 otherwise known as the Revised Katarungang Pambarangay
provides under Section 409 "All disputes involving real property or any interest therein shall be
brought in the barangay where the real property or the larger portion thereof is situated." Hence, the
reliance of the plaintiff on Section 408 of R.A. 7160 is incorrect. When real property or any interest
therein is involved, the dispute shall be filed before the barangay where the property is
located, regardless of the residence of the parties. Besides, it is incorrect to say that the parties
are not residents of the same place, Vira, Roxas, Isabela. The Attorney-in-fact of the plaintiff in
the person of Reymel R. Sagario is a resident of Vira, Roxas, Isabela, and he
substitute (sic)Dante Pascual by virtue of said Special Power of Attorney. Hence, said Attorneyin-fact should have brought the dispute before barangay Vira, Roxas, Isabela, where the property is
located. In the case of Royales vs. Intermediate Appellate Court 127 SCRA 470, "Ordinarily, noncompliance with the condition precedent prescribed by P.D. 1508 could affect the sufficiency of the
plaintiffs cause of action and make his complaint vulnerable to dismissal on ground of lack of cause
of action or prematurity."6 (Emphasis and underscoring supplied)
Petitioners Motion for Reconsideration7 of the above-said order was denied by Order of March 24,
2003:8
xxx
Consequently, the Court is [of] the opinion that the said Attorney-in-fact shall be deemed to be
the real party in interest, reading from the tenor of the provisions of the Special Power of
Attorney. Being a real party in interest, the Attorney-in-fact is therefore obliged to bring this case first

before the Barangay Court. Sec. 3, Rule 3 of the Rules of Court provides that "Where the action is
allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity,
the beneficiary shall be included in the title of the case and shall be deemed to be the real party in
interest.
xxx
Being the real party in interest, the Attorney-in-fact may therefore bring the necessary complaint
before the Lupon Tagapayapa and appear in person as if he is the owner of the land.9 (Emphasis
and underscoring supplied)
Hence, the present petition questioning "the palpable legal errors" of the RTC.
Petitioner argues that since he, not his attorney-in-fact Sagario, is the real party in interest, and since
he actually resides abroad, the lupon would have no jurisdiction to pass upon the dispute involving
real property, he citingAgbayani v. Belen.10
Respondent submits, on the other hand, that Section 408, paragraph (f), of the Local Government
Code, is qualified by paragraph (c) of Section 409 of the same Code the latter of which provides that
"[a]ll disputes involving real property or any interest therein shall be brought in the barangay where
the real property is located," hence, the use of the word "shall" makes it mandatory for the bringing
of the dispute before the lupon.
That attorney-in-fact Sagario is a resident of the same barangay as that of hers, respondent argues
in any event, brings the matter under the jurisdiction of the lupon, for Sagario, following Section 3 of
Rule 3 of the 1997 Rules of Civil Procedure which provides:
Sec. 3. Representative as parties. - Where the action is allowed to be prosecuted or defended by a
representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title
of the case and shall be deemed to be the real party in interest. A representative may be a trustee of
an express trust, a guardian, an executor or administrator, or a party authorized by law or these
Rules. An agent acting in his own name for the benefit of an undisclosed principal may sue or be
sued without joining the principal except when the contract involves things belonging to the principal,
being a substitute, becomes the real party-in-interest.
Respondents submissions do not lie.
The pertinent provisions of the Local Government Code read:
SEC. 408. Subject Matter for Amicable Settlement; Exception Thereto. The lupon of each
barangay shall have authority to bring together the parties actually residing in the same city or
municipality for amicable settlement of all disputes except:
(a) Where one party is the government or any subdivision or instrumentality thereof;
(b) Where one party is a public officer or employee, and the dispute relates to the performance of his
official functions;
(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five Thousand
pesos (P5,000.00);

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

(e) Where the dispute involves real properties located in different cities or municipalities unless the
parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;
(f) Disputes involving parties who actually reside in barangays of different cities or municipalities,
except where such barangay units adjoin each other and the parties thereto agree to submit their
differences to amicable settlement by an appropriate lupon; and
(g) Such other classes of disputes which the President may determine in the interest of justice or
upon the recommendation of the Secretary of Justice.
The court in which non-criminal cases not falling within the authority of the lupon under this Code are
filed may, at any time before trial, motu proprio refer the case to the lupon concerned for amicable
settlement. (Emphasis supplied)
SEC. 409. Venue. (a) Disputes between persons actually residing in the same barangay shall be
brought for amicable settlement before the lupon of said barangay .
(b) Those involving actual residents of different barangays within the same city or municipality shall
be brought in the barangay where the respondent or any of the respondents actually resides, at the
election of the complainant.
(c) All disputes involving real property or any interest therein shall be brought in the barangay where
the real property or the larger portion thereof is situated.
(d) Those arising at the workplace where the contending parties are employed or at the institution
where such parties are enrolled for study shall be brought in the barangay where such workplace or
institution is located.
Objections to venue shall be raised in the mediation proceedings before the punong barangay;
otherwise, the same shall be deemed waived. Any legal question which may confront the punong
barangay in resolving objections to venue herein referred to may be submitted to the Secretary of
Justice or his duly designated representative whose ruling thereon shall be binding. (Emphasis
supplied)
In the 1982 case of Tavora v. Veloso,11 this Court held that where the parties are not actual
residents in the same city or municipality or adjoining barangays, there is no requirement for them
to submit their dispute to thelupon as provided for in Section 6 vis a vis Sections 2 and 3 of P.D.
1508 (Katarungang Pambarangay Law).
[B]y express statutory inclusion and exclusion, the Lupon shall have no jurisdiction over disputes
where theparties are not actual residents of the same city or municipality, except where the
barangays in which they actually reside adjoin each other. (Underscoring supplied)
In the 2000 case of Vercide v. Hernandez,12 this Court, noting that the Tavora ruling, reiterated in
other cases including the 1996 case of Agbayani13 cited by petitioner, was decided under the
provisions of P.D. No. 1508 (Katarungang Pambarangay) Law which were, except for some
modifications, echoed in Sections 408-409 of the Local Government Code which took effect on
January 1, 1992, held that the Tavora ruling remained.

To construe the express statutory requirement of actual residency as applicable to the attorney-infact of the party-plaintiff, as contended by respondent, would abrogate the meaning of a "real party in
interest" as defined in Section 2 of Rule 314 of the 1997 Rules of Court vis a vis Section 3 of the
same Rule which was earlier quoted but misread and misunderstood by respondent.
In fine, since the plaintiff-herein petitioner, the real party in interest, is not an actual resident of the
barangay where the defendant-herein respondent resides, the local lupon has no jurisdiction over
their dispute, hence, prior referral to it for conciliation is not a pre-condition to its filing in court.
The RTC thus erred in dismissing petitioners complaint.
WHEREFORE, the petition is granted. The assailed February 10, 2003 Order, as well as the March
24, 2003 Order denying reconsideration of the first, of Branch 23 of the Regional Trial Court of
Isabela at Roxas is SET ASIDE. Said court is accordingly directed to reinstate Civil Case No. 23713-02 to its docket and take appropriate action thereon with dispatch.
SO ORDERED.

THIRD DIVISION
[G.R. No. 128574. September 18, 2002.]
UNIVERSAL ROBINA SUGAR MILLING CORPORATION, Petitioner, v. HEIRS OF ANGEL
TEVES, Respondents.
DECISION

SANDOVAL-GUTIERREZ, J.:

Andres Abanto owned two parcels of land situated in Campuyo, Manjuyod, Negros Oriental. One lot,
consisting of 55,463 square meters, is registered in his name under Transfer Certificate of Title (TCT)
No. H-37 of the Registry of Deeds of said province. The other lot with an area of 193,789 square
meters is unregistered. He died on February 16, 1973. 1

chanrob1es vi rt ua1 1aw 1i bra ry

On October 19, 1974, Andres Abantos heirs executed an "Extrajudicial Settlement of the Estate of the
Deceased Andres Abanto and Simultaneous Sale." 2 In this document, Abantos heirs adjudicated unto
themselves the two lots and sold the (a) unregistered lot of 193,789 square meters to the United
Planters Sugar Milling Company, Inc. (UPSUMCO), and (b) the registered lot covered by TCT No. H-37
to Angel M. Teves, for a total sum of P115,000.00. The sale was not registered. 3

Out of respect for his uncle Ignacio Montenegro, who was UPSUMCOs founder and president, Teves
verbally allowed UPSUMCO to use the lot covered by TCT No. H-37 for pier and loading facilities, free
of charge, subject to the condition that UPSUMCO shall shoulder the payment of real property taxes
and that its occupation shall be co-terminus with its corporate existence. 4 UPSUMCO then built a
guesthouse and pier facilities on the property. 5
Years later, UPSUMCOs properties were acquired by the Philippine National Bank (PNB). Later, PNB
transferred the same properties to the Asset Privatization Trust (APT) which, in turn, sold the same to
the Universal Robina Sugar Milling Corporation (URSUMCO). URSUMCO then took possession of
UPSUMCOs properties, including Teves lot covered by TCT No. H-37.
Upon learning of URSUMCOs acquisition of his lot, Teves formally asked the corporation to turn over
to him possession thereof or the corresponding rentals. He stated in his demand letters that he merely
allowed UPSUMCO to use his property until its corporate dissolution; and that it was not mortgaged by
UPSUMCO with the PNB and, therefore, not included among the foreclosed properties acquired by
URSUMCO. 6
URSUMCO refused to heed Teves demand, claiming that it acquired the right to occupy the property
from UPSUMCO which purchased it from Andres Abanto; and that it was merely placed in the name of
Angel Teves, as shown by the "Deed of Transfer and Waiver of Rights and Possession" dated
November 26, 1987. 7 Under this document, UPSUMCO transferred to URSUMCO its application for
agricultural and foreshore lease. The same document partly states that the lands subject of the
foreshore and agricultural lease applications are bounded on the north by the "titled property of
Andres Abanto bought by the transferor (UPSUMCO) but placed in the name of Angel Teves" .
URSUMCO further claimed that it was UPSUMCO, not Teves, which has been paying the corresponding
realty taxes.
Consequently, on June 18, 1992, Teves filed with the Regional Trial Court (RTC), Dumaguete City,
Branch 43, a complaint for recovery of possession of real property with damages against URSUMCO,
docketed as Civil Case No. 10235.
On September 4, 1992, Teves died 8 and was substituted by his heirs. 9
On April 6, 1994, the RTC rendered its Decision 10 finding that URSUMCO has no personality to
question the validity of the sale of the property between the heirs of Andres Abanto and Angel Teves
since it is not a party thereto; that Teves failure to have the sale registered with the Registry of
Deeds would not vitiate his right of ownership, unless a third party has acquired the land in good faith
and for value and has registered the subsequent deed; that the list of properties acquired by
URSUMCO from the PNB does not include the disputed lot and, therefore, was not among those
conveyed by UPSUMCO to URSUMCO. The dispositive portion of the Decision reads:

jgc:chan robles. com.ph

"Wherefore, in view of the foregoing, judgment is hereby rendered:

chanrob1e s virtual 1aw l ibra ry

1. Declaring plaintiff (Teves) the owner of the parcel of land covered by Transfer Certificate of Title
No. H-37 situated at Campuyo, Manjuyod, Negros Oriental and as such, is entitled to the possession of
said land subject to the provision of Article 448 of the New Civil Code. Accordingly, except where the
immediate premises of the guest house and pier are concerned, defendant (URSUMCO) is directed to
vacate the remaining portion of said property;
2. Declaring defendant as the owner of the guest house and pier and as a builder in good faith of said
guest house and pier;
3. Declaring plaintiff as entitled to the option under Article 448 of the New Civil Code, namely:

chan rob1es v irt ual 1aw l ibra ry

(a) To appropriate the guest house and pier as his own upon payment of indemnity under Articles 546
and 548 of the New Civil Code, or
(b) To oblige defendant to buy the land in question unless its value is considerably more than the
improvements (guest house and pier), in which case defendant shall pay reasonable rent.
4. Declaring defendant as entitled to retain possession of the guest house and pier until defendant is
indemnified of the useful and necessary expenses for the preservation of said improvements provided
in Article 546 of the New Civil Code and such other expenses for luxury as may be allowed under
Article 548 of the same Code in case plaintiff takes the option of appropriating for himself the
improvements;
5. Ordering defendant to pay plaintiff reasonable attorneys fees in the amount of P15,000.00;
6. Dismissing all other claims for damages by plaintiff and the counterclaim for lack of merit; and
7. Ordering defendant to pay the costs of this suit.
"SO ORDERED."

c ralaw virtua1aw l ibra ry

On appeal by URSUMCO, the Court of Appeals 11 affirmed the RTC decision, holding that the
transaction between Angel Teves and Andres Abantos heirs is a contract of sale, not one to sell,
because ownership was immediately conveyed to the purchaser upon payment of P115,000.00. The
Court of Appeals further held that Teves failure to cause the registration of the sale is not fatal since a
contract of sale is perfected by mere consent of the contracting parties and has the force of law
between them. Besides, his failure to refer the case to the barangay cannot affect the jurisdiction
already acquired by the court over the subject matter and the person of "defendant-appellant"
URSUMCO.
On October 29, 1996, URSUMCO filed a motion for reconsideration but was denied by the Appellate

Court in a Resolution dated February 10, 1997. 12

Hence, the instant petition for review on certiorari 13 raising the following legal issues:

chanrob1es vi rt ual 1aw li bra ry

1. Whether the respondents have established a cause of action against petitioner;

2. Whether petitioner herein has the legal capacity to question the validity of the sale; and
3. Whether the complaint should have been dismissed for lack of barangay conciliation.
The petition is bereft of merit.
Petitioner URSUMCO contends that respondents have no cause of action because the "Extrajudicial
Settlement of the Estate of the Deceased Andres Abanto and Simultaneous Sale" is merely a promise
to sell and not an absolute deed of sale, hence, did not transfer ownership of the disputed lot to Angel
Teves. Assuming that the document is a contract of sale, the same is void for lack of consideration
because the total price of P115,000.00 does not specifically refer to the lot covered by TCT No. H-37,
making the price uncertain. Furthermore, the transaction, being unregistered, does not bind third
parties.
Petitioners contentions lack merit. As held by the RTC and the Court of Appeals, the transaction is not
merely a contract to sell but a contract of sale. In a contract of sale, title to the property passes to the
vendee upon delivery of the thing sold; while in a contract to sell, ownership is, by agreement,
reserved in the vendor and is not to pass to the vendee until full payment of the purchase price. 14 In
the case at bar, the subject contract, duly notarized, provides: 15
"EXTRA-JUDICIAL SETTLEMENT OF THE ESTATE OF THE DECEASED ANDRES ABANTO AND
SIMULTANEOUS SALE
KNOW ALL MEN BY THESE PRESENTS:

chan rob1es v irt ual 1aw l ibra ry

That VICTORINA C. VDA. DE ABANTO, widow, and GUMERSINDA A. ABANTO-MALDO, married to

Porferio Maldo, both of legal age, Filipinos, and residents of Olimpia, Bais City, hereby freely and
spontaneously
DECLARE AND MAKE MANIFEST THAT:

chan rob 1es vi rtual 1aw lib rary

1. That they are the only legitimate heirs of the deceased Andres Abanto, being the surviving spouse
and the legally adopted daughter of the deceased Andres Abanto;
2. That the aforementioned deceased died on February 16, 1973 in the City of Bais, which was his
residence at the time of his death;

3. That said decedent died without leaving any will and without debts and his only surviving heirs are
the aforementioned Victorina C. Vda. de Abanto and Gumersinda A. Maldo;
4. That the deceased left as his estate and only real properties, certain parcels of land which are more
particularly described and founded as follows:

chanro b1es vi rt ual 1aw li bra ry

PARCEL ONE TCT NO. H-37

"A parcel of agricultural land, with the improvements thereon, containing an area of FIFTY-FIVE
THOUSAND FOUR HUNDRED SIXTY THREE (55,463) SQUARE METERS MORE OR LESS, situated in
barrio Campuyo, Manjuyod, Negros Oriental and bounded on the Northeast by Taon Strait; on the
South by the property claimed by Nazario Acabal; on the west by North Bais Bay, public land and the
properties claimed by Fortunato Acabal and Manuel Gonzales as described in TCT No. H-37."

c ralaw virtua1aw l ibra ry

PARCEL TWO
"A parcel of unregistered land, together with the improvements, accessions and other interests over
the said lot, situated at barrio Campuyo, Municipality of Manjuyod, Province of Negros Oriental,
containing an area of ONE HUNDRED NINETY THREE THOUSAND, SEVEN HUNDRED EIGHTY NINE
(193,789) square meters more or less, as described on plan Psu. 123473 and as amended by PSU 0701-000 and as declared under Tax Declaration No. 00589 and assessed in said tax declaration for
taxation purposes at P24,860.00"
5. That the parties herein have agreed as they hereby agree to adjudicate said parcels of land unto
themselves in accordance with Sec. 1, Rule 74 of the Rules of Court and to sell, transfer and convey
for a total sum of ONE HUNDRED FIFTEEN THOUSAND PESOS (P115,000.00) Philippine currency the
above described properties in the following manner to wit:

chanro b1es vi rt ual 1aw li bra ry

1. TO THE UNITED PLANTERS SUGAR MILLING CO., INC., a domestic corporation duly organized and
existing under the laws of the Philippines, with residence and office address at Alangilanan, Manjuyod,
Negros Oriental That parcel which is described as parcel two above;
2. TO ANGEL M. TEVES, of legal age, Filipino, married to Elena Teves, a resident of and with postal
address at Bais City That parcel described as parcel one above.
In witness whereof, we have hereunto affixed our signatures this 19th day of October 1974 at the City
of Bais, Philippines.
(Sgd.)
VICTORINA C. VDA. DE ABANTO
Heir Vendor

(Sgd.)
GUMERSINDA ABANTO-MALDO
Heir Vendor
UNITED PLANTERS SUGAR MILLING CO., INC.
Vendee
by:

chan rob1es v irt ual 1aw l ibra ry

(Sgd.)
IGNACIO VICENTE
President
(Sgd.)
ANGEL M. TEVES
Vendee
(Sgd.) witnesses (Sgd.)"

It is clear from the recitals of the above contract that it is an extrajudicial settlement of the estate of
the deceased Andres Abanto, and simultaneous sale of the properties described therein, including the
subject lot. Clearly indicated therein is that the Abanto heirs sold to Teves the lot covered by TCT No.
H-37. There is no showing that the Abanto heirs merely promised to sell the said lot to Teves.
That absolute ownership over the land (TCT No. H-37) was indeed transferred to Teves is further
shown by his acts subsequent to the execution of the contract. As found by the trial court, it was
Teves, not Andres Abantos heirs, who allowed UPSUMCO to construct pier facilities and guesthouse on
the land. When the property was erroneously included among UPSUMCOs properties that were
transferred to petitioner URSUMCO, it was Teves, not the heirs of Andres Abanto, who informed
petitioner that he owns the same and negotiated for an arrangement regarding its use. Teves even
furnished petitioner documents and letters 16 showing his ownership of the lot, such as a copy of the
"Extrajudicial Settlement of the Estate of the Deceased Andres Abanto and Simultaneous Sale" 17 and
a certified true copy of TCT No. H-37 covering the disputed lot. 18 Indeed, the trial court and the

Court of Appeals correctly ruled that Teves purchased the lot from the Abanto heirs, thus:

jgc: chan roble s.com.p h

"1. That Angel Teves was the purchaser of the land in question covered by Transfer Certificate of Title
No. H-37 in an Extrajudicial Settlement of Estate of Andres Abanto and Simultaneous Sale, dated
October 19, 1974 (Exhibit "A"), more particularly described as follows:

jgc:chanro bles. com.ph

"A parcel of agricultural land, with the improvements thereon, containing an area of FIFTY-FIVE
THOUSAND FOUR HUNDRED SIXTY THREE (55,463) SQUARE METERS MORE OR LESS, situated in
barrio Campuyo, Manjuyod, Negros Oriental and bounded on the Northeast by Taon Strait; on the
South by the property claimed by Nazario Acabal; on the west by North Bais Bay, Public land and the
properties claimed by Fortunato Acabal and Manuel Gonzales as described in TCT No. H-37." 19
If we follow petitioners posture that the transaction was only a contract to sell, ownership of the lot
would have remained with the Abanto heirs, not with UPSUMCO. Consequently, UPSUMCO would not
have transferred any right over the property to petitioner URSUMCO.
We are likewise unconvinced by petitioners assertion that the price or consideration of the contract is
not certain. In a contract of sale, one of the contracting parties obligates himself to transfer the
ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in
money or its equivalent. 20 The subject of the sale embodied in the "Extrajudicial Settlement of Estate
of the Deceased Andres Abanto and Simultaneous Sale" consists of two parcels of land. It is clear from
the said instrument that the amount of P115,000.00 refers to the price for the two lots as a whole.
Thus, contrary to petitioners claim, the price of the subject property is not uncertain.
That the contract of sale was not registered does not affect its validity. Being consensual in nature, it
is binding between the parties, the Abanto heirs and Teves. Article 1358 of the New Civil Code, which
requires the embodiment of certain contracts in a public instrument, is only for convenience, and the
registration of the instrument would merely affect third persons. 21 Formalities intended for greater
efficacy or convenience or to bind third persons, if not done, would not adversely affect the validity or
enforceability of the contract between the contracting parties themselves. 22 Thus, by virtue of the
valid sale, Angel Teves stepped into the shoes of the heirs of Andres Abanto and acquired all their
rights to the property.
Anent the second issue, petitioner contends that being an innocent purchaser for value of the lot and
its current possessor, it has the personality to assail the validity of the sale in question.
An innocent purchaser is one who acquired the property for a valuable consideration, not knowing that
the title of the vendor or grantor is null and void. 23 He is also one who buys the property of another
without notice that some other person has a right to, or interest in, such property and pays a full and
fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of
some other persons in the property. 24 The concept underscores two important factors: (1) the
property which is bought for consideration, and (2) the lack of knowledge or notice of adverse claim or
interest prior to the sale. Both factors are not present insofar as petitioner URSUMCO is concerned.

For one, petitioner acquired almost all of UPSUMCOS properties for a consideration but failed to prove
that the lot covered by TCT No. H-37 was included therein. In fact, the lot was not among the
properties acquired by petitioner from the APT whose holdings were limited only to those UPSUMCO
properties foreclosed by the PNB. Also, the "Deed of Transfer and Waiver of Rights and Possession"
shows that only the following properties and rights of UPSUMCO were transferred to petitioner
URSUMCO:25

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1. The guest house and pier at Campuyo site in the Municipality of Manjuyod, Negros Oriental;
2. A parcel of land consisting of twenty five (25) hectares, more or less, leading to the Campuyo pier
which is the subject matter of UPSUMCOs agricultural lease application pending with the Bureau of
Lands and Land District Officer, Dumaguete City; and
3. Pending application for an industrial or foreshore lease of that portion of the adjacent government
land approximately 270,000 square meters, later amended to be 16,000 square meters.
The foregoing list does not specifically include the subject lot. Admittedly, the same "Deed of Transfer
and Waiver of Rights and Possession" states that a "titled property of Andres Abanto bought by the
transferor (UPSUMCO) but placed in the name of Angel Teves" is on the northern boundary of the
above-mentioned lands subject of the foreshore and agricultural lease applications. 26 However, such
description is insufficient to establish that the "titled property" is indeed owned by UPSUMCO.
Petitioner cannot likewise assert that it has no adequate notice of any adverse claim over the lot in
controversy. Teves informed petitioner of his ownership and demanded that he be placed in
possession thereof or, in the alternative, that he be paid the corresponding rentals. Moreover,
petitioner should have been sufficiently forewarned of a probable anomaly or irregularity in the
ownership of the subject lot, considering that it was registered not in the name of UPSUMCO, but in
the name of Andres Abanto. A purchaser cannot close his eyes to facts which should put a reasonable
man upon his guard, and then claim that he acted in good faith under the belief that there was no
defect in the title of the vendor. 27
The petition having been stripped of these anchors, both the RTC and the Court of Appeals correctly
ruled that petitioner has no sufficient cause of action against Angel Teves, represented by herein
respondents. Not being a party to the contract of sale between Andres Abantos heirs and Angel
Teves, and not being a subsequent innocent purchaser for value, petitioner cannot claim any right of
possession over the land in question. Surely, petitioner is proscribed from questioning Teves
ownership.
Regarding the third issue, suffice it to state that being a corporation, petitioner cannot be impleaded
as a party to a barangay conciliation proceeding. Section 1, Rule VI of the Katarungang Pambarangay
Rules implementing the Katarungang Pambarangay Law 28 provides:

jgc:chanrob les.com. ph

"Section 1. Parties. Only individuals shall be parties to these proceedings either as complainants or
respondents. No complaint by or against corporations, partnerships or other juridical entities shall be
filed, received or acted upon." (Emphasis ours)
Incidentally, Respondents, in their memorandum, pray that petitioner URSUMCO be declared a
recalcitrant possessor in bad faith and be held liable for damages in the following amounts: (1)
P1,060,000.00 as actual damages; (2) P100,000.00 as moral damages; and (3) P50,000.00 as
exemplary damages.
We quote with approval the disquisition of the RTC, affirmed by the Court of Appeals, dismissing
respondents claim for damages, thus:

jgc:c hanro bles. com.ph

"As to the damages claimed by plaintiff (Teves), the Court holds that he is not entitled to any of the
damages claimed considering that Article 448 of the Civil Code does not provide such remedy.
Furthermore, there is no evidence showing that defendant had made use of the land except with
respect to the pier and guesthouse which defendant had validly acquired from the United Planters
Sugar Milling Company (Exhibit "3"). However, based on equitable considerations, considering that
plaintiff was compelled to litigate in view of the refusal of defendant despite demand by the plaintiff
(Exhibits "C", "D", "F", "G", "H") to pay rental for the use of the property in question, defendant
should pay plaintiff reasonable attorneys fees in the amount of P15,000.00." 29
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated September
30, 1996 in CA-G.R. CV No. 46352 is AFFIRMED.
SO ORDERED.

chan rob1e s virtua1 1aw 1ib rary