G.R. No.

164702

March 15, 2006

PARTIDO NG MANGGAGAWA (PM) and BUTIL FARMERS PARTY (BUTIL), Petitioners, vs. The HON. COMMISSION ON ELECTIONS (COMELEC), represented by its HON. CHAIRMAN BENJAMIN ABALOS, SR., Respondent. DECISION PUNO, J.: The petition at bar involves the formula for computing the additional seats due, if any, for winners in party-list elections. The antecedents are undisputed. Several party-list participants sent queries to the respondent COMELEC regarding the formula to be adopted in computing the additional seats for the party-list winners in the May 10, 2004 elections. In response, the respondent Commission issued Resolution No. 6835,1 adopting the simplified formula of "one additional seat per additional two percent of the total party-list votes." The resolution reads: Considering that the simplified formula has long been the one adopted by the Commission and is now the formula of choice of the Supreme Court in its latest resolution on the matter, the Commission RESOLVED, as it hereby RESOLVES, to adopt the simplified formula of one additional seat per additional two percent of the total party-list votes in the proclamation of the party-list winners in the coming May 10, 2004 National and Local Elections.2(emphasis supplied) In finding that this simplified formula is the "formula of choice of the Supreme Court," respondent Commission quoted the memorandum of Commissioner Mehol K. Sadain, Commissioner-In-Charge for Party-List concerns, viz: By way of review, following is a highlight of the legal discourse on the two [percent] vote requirement for the party-list system and the corollary issue on additional seat allocation. Section 11(b) and Section 12 of R.A. 7941 (Party-List System Act) provide that "the parties, organizations, and coalitions receiving at least two percent (2%) of the total votes cast for the partylist system shall be entitled to one seat each, provided that those garnering more than two percent (2%) of the votes shall be entitled to additional seats in proportion to their total number of votes xxx. The COMELEC shall tally all the votes for the parties, organizations, or coalitions on a nationwide basis, rank them according to the number of votes received and allocate party-list representatives proportionately according to the percentage of votes obtained by each party, organization or coalition as against the total nationwide votes cast for the party-list system." These provisions of [the] statute were transformed into the following formulas by the Supreme Court in Veterans Federation Party vs. COMELEC (G.R. Nos. 136781, 136786 & 136795, October 6, 2000). For the party-list candidate garnering the highest number of votes, the following formula was adopted:

Number of votes of first party = Total votes for party-list system

Proportion of votes of first party relative to total votes for the partylist system

And for the additional seats of other parties who reached the required two percent mark, the following formula applies: No. of votes of concerned party = No. of votes of first party x

Additional seats concerned party

No. of additional seats allocated to the first party

The applicability of these formulas was reiterated in the June 25, 2003 Resolution of the Supreme Court in Ang Bagong Bayani-OFW Labor Party vs. COMELEC, et al. (G.R. No. 147589) and Bayan Muna vs. COMELEC, et al. (G.R. No. 147613) penned by Justice Artemio Panganiban, wherein the Court declared that party-list BUHAY was not entitled to an additional seat even if it garnered 4.46 [percent] of the total party-list votes, contrary to BUHAY's contention which was based on the COMELEC simplified formula of one additional seat per an additional two percent of the total partylist votes. However, on November 10, 2003,3 the Supreme Court promulgated a Resolution in the same case, this time penned by Chief Justice Hilario Davide, Jr., granting BUHAY's motion for reconsideration of the June 25, 2003 Resolution, to wit: It is thus established in the Resolution of 25 June 2003 that, like APEC, BUTIL, CIBAC and AKBAYAN, BUHAY had obtained more than four percent (4%) of the total number of votes validly cast for the party-list system and obtained more than 0.50 for the additional seats. Accordingly, just like the first four whose additional nominees are now holding office as member of the House of Representatives, BUHAY should be declared entitled to one additional seat. Effectively, the Supreme Court, with Justices Jose Vitug and Panganiban registering separate opinions, adopted the simplified COMELEC formula of one additional seat per additional two percent of the total party-list votes garnered when it declared BUHAY entitled to one additional seat and proceeded to order the COMELEC to proclaim BUHAY's second nominee.4 (emphasis supplied) Party-List Canvass Report No. 205 showed that the total number of votes cast for all the party-list participants in the May 10, 2004 elections was 12,721,952 and the following parties, organizations and coalitions received at least two percent (2%) of the total votes cast for the party-list system, to wit: Votes Received 1,203,305 934,995 852,473 Percentage to Total Votes Cast (%) 9.4585 7.3495 6.7008

Rank 1 2 3

Party-List Group Bayan Muna (BAYAN MUNA) Association of Philippine Electric Cooperatives (APEC) Akbayan! Citizen's Action Party (AKBAYAN!)

4 5 6 7 8 9 10 11 12 13 14 15 16

Buhay Hayaan Yumabong (BUHAY) Anakpawis (AP) Citizen's Battle Against Corruption (CIBAC) Gabriela Women's Party (GABRIELA) Partido ng Manggagawa (PM) Butil Farmers Party (BUTIL) Alliance of Volunteer Educators (AVE) Alagad (ALAGAD) Veterans Freedom Party (VFP) Cooperative Natcco Network Party (COOPNATCCO) Anak Mindanao (AMIN) Ang Laban ng Indiginong Filipino (ALIF) An Waray (AN WARAY)

705,730 538,396 495,193 464,586 448,072 429,259 343,498 340,977 340,759 270,950 269,750 269,345 268,164

5.5473 4.2320 3.8924 3.6518 3.5220 3.3742 2.7000 2.6802 2.6785 2.1298 2.1204 2.1172 2.1079

Based on the simplified formula, respondent Commission issued Resolution No. NBC 040046 proclaiming the following parties, organizations and coalition as winners and their qualified nominees as representatives to the House of Representatives: BAYAN MUNA (BAYAN MUNA) - 3 seats 1. Saturnino C. Ocampo 2. Teodoro A. Casio, Jr. 3. Joel G. Virador ASSOCIATION OF PHILIPPINE ELECTRIC COOPERATIVES (APEC) - 3 seats 1. Edgar L. Valdez 2. Ernesto G. Pablo 3. Sunny Rose A. Madamba AKBAYAN! CITIZEN'S ACTION PARTY (AKBAYAN!) - 3 seats 1. Loreta Ann P. Rosales 2. Mario Joyo Aguja

3. Ana Theresa Hontiveros-Baraquel BUHAY HAYAAN YUMABONG (BUHAY) - 2 seats 1. Rene M. Velarde 2. Hans Christian M. Seeres ANAKPAWIS (AP) - 2 seats 1. Crispin B. Beltran 2. Rafael V. Mariano CITIZEN'S BATTLE AGAINST CORRUPTION (CIBAC) - 1 seat Emmanuel Joel J. Villanueva GABRIELA WOMEN'S PARTY (GABRIELA) - 1 seat Liza Largoza-Maza PARTIDO NG MANGGAGAWA (PM) - 1 seat Renato B. Magtubo BUTIL FARMERS PARTY (BUTIL) - 1 seat Benjamin A. Cruz ALLIANCE OF VOLUNTEER EDUCATORS (AVE) - 1 seat Eulogio R. Magsaysay ALAGAD (ALAGAD) - 1 seat xxx VETERANS FREEDOM PARTY (VFP) - 1 seat Ernesto S. Gidaya COOPERATIVE NATCCO NETWORK PARTY (COOP-NATCCO) - 1 seat Guillermo P. Cua AN WARAY (AN WARAY) - 1 seat Florencio G. Noel

ANAK MINDANAO (AMIN) - 1 seat Mujiv S. Hataman7 Subsequently, ALIF was also proclaimed as "duly-elected party-list participant and its nominee, Hadji Acmad M. Tomawis, as elected representative to the House of Representatives."8 On June 22, 2004, petitioners PM and BUTIL, together with CIBAC, filed a Joint Motion for Immediate Proclamation9 with the respondent Commission en banc. They prayed that they be declared as entitled to one (1) additional seat each and their respective second nominees be proclaimed as duly elected members of the House of Representatives. As basis, they cited the formula used by the Court in Ang Bagong Bayani-OFW Labor Party v. COMELEC,10 viz: Votes Cast for Qualified Party Additional Seats = Votes Cast for First Party On June 25, 2004, petitioners and CIBAC filed a Supplement to the Joint Motion (For Immediate Proclamation)11 to justify their entitlement to an additional seat, as follows: 5. To compute the additional seats that movants are entitled to using the Veterans formula of the Supreme Court in the aforesaid Ang Bagong Bayani-OFW Labor Party and Bayan Muna cases, and Party List Canvass Report No. 20, the following process is done: Bayan Muna is the "First Party" with 1,203,305 votes. To determine the number of seats allocated to the first party, we use the Veterans formula, to wit: Number of votes of first party = Total Votes for party-list system x Allotted Seats for First Party

Proportion of votes of first party relative to total votes for party-list system

Applying this formula, we arrive at 9.4585% 1,203,305 = 9.4585% 12,721,952 6. Having obtained 9.4585%, the first party, Bayan Muna, is allotted three (3) seats. 7. The number of additional seats that the movants are entitled to are determined as follows: Votes Cast for Qualified Party Additional Seats = Votes Cast for First Party x Allotted Seats for First Party

For BUTIL, the computation is as follows: 429,259 Additional Seats = 1,203,305 For CIBAC, the computation is: 495,193 Additional Seats = 1,203,305 For PM, the computation is: 448,072 Additional Seats = 1,203,305 8. All the foregoing results are greater than one (1); therefore, the movant-party list organizations are entitled to one (1) additional seat each.12 On July 31, 2004, respondent Commission en banc, issued Resolution No. NBC 04-011,13 viz: This pertains to the 06 July 2004 Memorandum of the Supervisory Committee, National Board of Canvassers, submitting its comment/recommendation on the petition filed by Luzon Farmers Party (BUTIL), Citizens Battle Against Corruption (CIBAC), Partido ng Manggagawa (PM) and Gabriela Women's Party for additional seat and to immediately proclaim their respective second nominees to the House of Representatives, and the letter of Atty. Ivy Perucho, Legal counsel of the CIBAC, relative to the Joint Motion for Immediate Proclamation filed by BUTIL, CIBAC, PM requesting to calendar for resolution the said Joint Motion. The Memorandum of the Supervisory Committee reads: "This has reference to the Urgent Motion for Resolution (re: Joint Motion for Immediate Proclamation dated 22 June 2004) filed on July 1, 2004 by movants Luzon Farmers Party (BUTIL), Citizens Battle Against Corruption (CIBAC) and Partido ng Manggagawa (PM), NBC Case No. 04-197 (195) and a similar motion filed by party-list Gabriela Women's Party (NBC No. 04-200) through counsel, praying to declare that the herein movants are entitled to one (1) additional seat each, and to immediately proclaim the second nominees, to wit: x x x The Supreme Court, in its latest Resolution promulgated on November 10, 2003 (sic) in Ang Bagong Bayani-OFW Labor Party vs. Comelec, et al. (G.R. No. 147589) and Bayan Muna vs. Comelec, et al. (G.R. No. 147613), laid down a simplified formula of one additional seat per additional two (2) percent of the total party list votes. The same simplified formula was adopted by the Commission in its Resolution No. 6835 promulgated 08 May 2004, to quote: "The additional seats of other parties who reached the required two percent mark, the following formula applies: x3 = 1.1171 x3 = 1.2345 x3 = 1.0701

Additional seats for concerned party

No. of votes of concerned party = No. of votes of the first party x

No. of additional seats allocated to first party

The aforenamed party-list organizations have not obtained the required additional two (2) percent of the total party-list votes for them to merit an additional seat. For your Honors' consideration." xxx Considering the foregoing, the Commission RESOLVED, as it hereby RESOLVES, to direct the Supervisory Committee to cause the re-tabulation of the votes for Citizens Battle Against Corruption (CIBAC), Luzon Farmers Party (BUTIL), Partido ng Manggagawa (PM) and Gabriela Women's Party (Gabriela) and to submit its comment/recommendation, together with the tabulated figures of the foregoing parties, for appropriate action of the Commission. Let the Supervisory Committee implement this resolution and to furnish copies hereof to the parties concerned for their information and guidance. SO ORDERED.14 (emphases supplied) For failure of the respondent Commission to resolve the substantive issues raised by petitioners and to cause the re-tabulation of the party-list votes despite the lapse of time, petitioners PM and BUTIL filed the instant petition on August 18, 2004. They seek the issuance of a writ of mandamus to compel respondent Commission: a) to convene as the National Board of Canvassers for the PartyList System; b) to declare them as entitled to one (1) additional seat each; c) to immediately proclaim their respective second nominees; d) to declare other similarly situated party-list organizations as entitled to one (1) additional seat each; and e) to immediately proclaim similarly situated parties' second nominees as duly elected representatives to the House of Representatives.15 They submit as sole issue: WHETHER OR NOT RESPONDENT COMELEC EN BANC, AS THE NATIONAL BOARD OF CANVASSERS FOR THE PARTY-LIST SYSTEM, COULD BE COMPELLED BY THE HONORABLE COURT TO MECHANICALLY APPLY THE FORMULA STATED IN ITS 25 JUNE 2003 RESOLUTION REITERATED IN THE 20 NOVEMBER 2003 RESOLUTION IN ANG BAGONG BAYANI CASES IN THE DETERMINATION OF QUALIFIED PARTY-LIST ORGANIZATIONS AND IN THE PROCLAMATION OF THEIR RESPECTIVE NOMINEES.16 We shall first resolve the procedural issues. Respondent Commission, through the Office of the Solicitor General, submits that petitioners' recourse to a petition for mandamus with this Court is improper. It raises the following procedural issues: (a) the proper remedy from the assailed resolution of the respondent Commission is a petition for certiorari under Rule 65 of the Rules of Court; (b) the instant action was filed out of time; and (c) failure to file a motion for reconsideration of the assailed resolution with the respondent Commission is fatal to petitioners' action.17 In assailing petitioners' recourse to a petition for mandamus, respondent Commission relies on Section 7, Article IX(A) of the 1987 Constitution which provides that "any decision, order or ruling" of the respondent Commission "may be brought to the Supreme Court on certiorari by the aggrieved

party within thirty days from receipt of a copy thereof." It contends that in Aratuc v. COMELEC18 and Dario v. Mison,19 this provision was construed as the special civil action of certiorari under Rule 65 and not the appeal by certiorari under Rule 45. Respondent Commission further contends that its duty to proclaim the second nominees of PM and BUTIL is not ministerial but discretionary, hence, it is not subject to the writ of mandamus. The arguments fail to impress. Under the Constitution, this Court has original jurisdiction over petitions for certiorari, prohibition and mandamus.20 We have consistently ruled that where the duty of the respondent Commission is ministerial, mandamus lies to compel its performance.21 A purely ministerial act, as distinguished from a discretionary act, is one which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to the mandate of legal authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of the act done.22 The case at bar is one of mandamus over which this Court has jurisdiction for it is respondent Commission's ministerial duty to apply the formula as decided by this Court after interpreting the existing law on party-list representation. It is given that this Court has the ultimate authority to interpret laws and the Constitution.23Respondent Commission has no discretion to refuse enforcement of any decision of this Court under any guise or guile. In any event, it is the averments in the complaint, and not the nomenclature given by the parties, that determine the nature of the action.24 Though captioned as a Petition for Mandamus, the same may be treated as a petition for certiorari and mandamus considering that it alleges that the respondent Commission acted contrary to prevailing jurisprudence, hence, with grave abuse of discretion and without jurisdiction. In previous rulings,25 we have treated differently labeled actions as special civil actions for certiorari under Rule 65 for reasons such as "justice, equity and fairplay"26 and "novelty of the issue presented and its far-reaching effects."27 The petition at bar involves the rightful representation in the House of Representatives of the marginalized groups by the party-list winners and their constitutional claim merits more than a disposition based on thin technicality. Next, respondent Commission contends that the petition at bar was filed belatedly. Under Article IX(A), Section 7 of the Constitution and Rule 64, Section 3 of the Rules of Court, the instant petition must be filed within thirty (30) days from receipt of the notice of the decision, order or ruling to be reviewed. Since more than 30 days have lapsed from the time PM and BUTIL allegedly received notice of respondent Commission's Resolution No. 6835, it is urged that the instant petition was filed out of time.28 Again, the contention is without merit. We have interpreted Article IX(A), Section 7 of the Constitution and Rule 64, Section 3 of the Rules of Court to mean final orders, rulings and decisions of the respondent Commission rendered in the exercise of its adjudicatory or quasi-judicial powers.29 Before resolving whether Resolution No. 6835 was rendered in the exercise of respondent Commission's adjudicatory or quasi-judicial powers, we recapitulate the pertinent events. On May 8, 2004, respondent Commission issued Resolution No. 6835. On June 2, 2004, it also issued Resolution No. NBC 04-004 holding petitioners entitled to only one (1) nominee each on the basis of Resolution No. 6835. On June 22, 2004, petitioners filed a Joint Motion for Immediate Proclamation with party-list co-participant CIBAC, claiming entitlement to an additional seat using the formula stated in Ang Bagong Bayani. Thereafter, they filed their Supplement to the Joint Motion (For Immediate Proclamation). On July 1, 2004, they filed an Urgent Motion for Resolution (Re: Joint

Motion for Immediate Proclamation dated 22 June 2004) and again, on July 12, 2004, they filed their Motion to Resolve (Re: Joint Motion for Immediate Proclamation filed on 22 June 2004). In response, respondent Commission en banc issued Resolution No. NBC 04-011 quoted above, which directed the Supervisory Committee "to cause the re-tabulation of the votes" of CIBAC, GABRIELA and petitioners PM and BUTIL. The resolution referred to the Memorandum of the Supervisory Committee which adopted the simplified formula in Resolution No. 6835. Without further ado, petitioners BUTIL and PM filed the instant petition on August 18, 2004 or eighteen (18) days after the promulgation of Resolution No. NBC 04-011. Clearly, the instant petition was timely filed. We hold that Resolution No. 6835 was not rendered in the exercise of respondent COMELEC's quasijudicial powers. Its issuance was not brought about by a matter or case filed before the respondent Commission. Rather, it was issued by the respondent Commission in the exercise of its administrative function to enforce and administer election laws to ensure an orderly election. Finally, respondent Commission contends that petitioners' failure to file a motion for reconsideration of Resolution No. 6835 is fatal. Again, the argument is without merit. Under Rule 13, Section 1(d) of the COMELEC Rules of Procedure, a motion for reconsideration of an en banc ruling, order or decision of the respondent Commission is not allowed. Moreover, the issue of what formula applies in determining the additional seats to be allocated to party-list winners is a pure question of law that is a recognized exception to the rule on exhaustion of administrative remedies.30 We shall now resolve the substantive issue: the formula for computing the additional seats due, if any, for winners in party-list elections. Petitioners cite the formula crafted by the Court in the landmark case of Veterans Federation Party v. COMELEC.31 They allege that the June 25, 2003 Resolution of the Court in Ang Bagong BayaniOFW v. COMELEC32 "reiterated that the additional seats for qualified party-list organizations shall be computed in accordance with the above formula in Veterans" and that the November 20, 2003 Resolution33 of the Court in the same case "had not departed from its 25 June 2003 Resolution."34 A review of the pertinent legal provisions and jurisprudence on the party-list system is appropriate. The Constitution provides: Art. VI, Section 5. (1) The House of Representatives shall be composed of not more than two hundred and fifty members, unless otherwise fixed by law, who shall be elected from legislative districts apportioned among the provinces, cities, and the Metropolitan Manila area in accordance with the number of their respective inhabitants, and on the basis of a uniform and progressive ratio, and those who, as provided by law, shall be elected through a party-list system of registered national, regional, and sectoral parties or organizations. (emphasis supplied) Pursuant to the Constitution's mandate, Congress enacted R.A. No. 7941, also known as the "PartyList System Act," to "promote proportional representation in the election of representatives to the House of Representatives through a party-list system." The law provides as follows: Section 11. Number of Party-List Representatives.-- xxx In determining the allocation of seats for the second vote, the following procedure shall be observed:

(a) The parties, organizations, and coalitions shall be ranked from the highest to the lowest based on the number of votes they garnered during the elections. (b) The parties, organizations, and coalitions receiving at least two percent (2%) of the total votes cast for the party-list system shall be entitled to one seat each: Provided, That those garnering more than two percent (2%) of the votes shall be entitled to additional seats in the proportion of their total number of votes: Provided, finally, That each party, organization, or coalition shall be entitled to not more than three (3) seats. Section 12. Procedure in Allocating Seats for Party-List Representatives.-- The COMELEC shall tally all the votes for the parties, organizations, or coalitions on a nationwide basis, rank them according to the number of votes received and allocate party-list representatives proportionately according to the percentage of votes obtained by each party, organization, or coalition as against the total nationwide votes cast for the party-list system. (emphases supplied) These provisions on the party-list system were put to test in the May 11, 1998 elections. In the landmark case of Veterans,35 several petitions for certiorari, prohibition and mandamus, with prayers for the issuance of temporary restraining orders or writs of preliminary injunction, were filed by some parties and organizations that had obtained at least two percent of the total party-list votes cast in the May 11, 1998 party-list elections, against COMELEC and 38 other parties, organizations and coalitions which had been declared by COMELEC as entitled to party-list seats in the House of Representatives. The following issues were raised: 1) whether the twenty percent constitutional allocation is mandatory; 2) whether the two percent threshold requirement and the three-seat limit under Section 11(b) of R.A. No. 7941 is constitutional; and 3) how the additional seats of a qualified party should be determined. In said case, the Court set the "four inviolable parameters" of the partylist system under the Constitution and R.A. No. 7941, to wit: First, the twenty percent allocation -- the combined number of all party-list congressmen shall not exceed twenty percent of the total membership of the House of Representatives, including those elected under the party list. Second, the two percent threshold -- only those parties garnering a minimum of two percent of the total valid votes cast for the party-list system are "qualified" to have a seat in the House of Representatives. Third, the three-seat limit -- each qualified party, regardless of the number of votes it actually obtained, is entitled to a maximum of three seats; that is, one "qualifying" and two additional seats. Fourth, proportional representation -- the additional seats which a qualified party is entitled to shall be computed "in proportion to their total number of votes." Likewise, the Court spelled out the formula for allocating the seats for party-list winners, thus: Step One. There is no dispute among the petitioners, the public and the private respondents, as well as the members of this Court, that the initial step is to rank all the participating parties, organizations and coalitions from the highest to the lowest based on the number of votes they each received. Then the ratio for each party is computed by dividing its votes by the total votes cast for all the parties participating in the system. All parties with at least two percent of the total votes are guaranteed one seat each. Only these parties shall be considered in the computation of additional seats. The party receiving the highest number of votes shall thenceforth be referred to as the "first" party.

Step Two. The next step is to determine the number of seats the first party is entitled to, in order to be able to compute that for the other parties. Since the distribution is based on proportional representation, the number of seats to be allotted to the other parties cannot possibly exceed that to which the first party is entitled by virtue of its obtaining the most number of votes. xxx Now, how do we determine the number of seats the first party is entitled to? x x x The formula x x x is as follows: Number of votes of first party = Total votes for Party-list system

Proportion of votes of first party relative to total votes for party-list system

If the proportion of votes received by the first party without rounding it off is equal to at least six percent of the total valid votes cast for all the party list groups, then the first party shall be entitled to two additional seats or a total of three seats overall. If the proportion of votes without a rounding off is equal to or greater than four percent, but less than six percent, then the first party shall have one additional or a total of two seats. And if the proportion is less than four percent, then the first party shall not be entitled to any additional seat. xxx Step Three. The next step is to solve for the number of additional seats that the other qualified parties are entitled to, based on proportional representation. The formula is encompassed by the following complex fraction: No. of votes of concerned party Total No. of votes for partylist system x No. of votes of first party Total No. of votes for partylist system In simplified form, it is written as follows: No. of votes of concerned party

Additional seats for concerned = party

No. of additional seats allocated to the first party

Additional seats for concerned party

No. of additional seats allocated to the first party36

No. of votes of first party (emphases supplied) Applying this formula, the Court found the outcome of the May 11, 1998 party-list elections as follows: %age Initial of No. Total of Votes Seats 5.50% 1 3.51% 1 3.41% 1 3.33% 1 2.79% 1 2.61% 1 2.60% 1 2.57% 1 2.54% 1 2.36% 1 2.13% 1 2.07% 1 2.04% 1 1 321,646/503,487 * 1 = 0.64 312,500/503,487 * 1 = 0.62 304,802/503,487 * 1 = 0.61 255,184/503,487 * 1 = 0.51 239,042/503,487 * 1 = 0.47 238,303/503,487 * 1 = 0.47 235,548/503,487 * 1 = 0.47 232,376/503,487 * 1 = 0.46 215,643/503,487 * 1 = 0.43 194,617/503,487 * 1 = 0.39 189,802/503,487 * 1 = 0.38 186,388/503,487 * 1 = 0.37

Organization

Votes Garnered 503,487 321,646 312,500 304,802 255,184 239,042 238,303 235,548 232,376 215,643 194,617 189,802 186,388

Additional Seats

Total

1. APEC 2. ABA 3. ALAGAD 4. VETERANS FEDERATION 5. PROMDI 6. AKO 7. NCSFO 8. ABANSE!PINAY 9. AKBAYAN! 10. BUTIL 11. SANLAKAS 12. COOP-NATCCO 13. COCOFED

2 1 1 1 1 1 1 1 1 1 1 1 137

The case of Ang Bagong Bayani arose during the May 14, 2001 party-list elections. Two petitions for certiorari were filed by several party-list candidates: (a) to challenge a resolution of the COMELEC approving the participation of some 154 organizations and parties in the May 14, 2001 party-list elections; and (b) to disqualify certain parties classified as "political parties" and "organizations/coalitions" by COMELEC. In a Decision dated June 26, 2001, the Court established the eight-point guideline38 for the screening of party-list participants. The case was then remanded to the COMELEC for the immediate conduct of summary evidentiary hearings to implement the eightpoint guideline. In due time, COMELEC submitted its compliance reports to the Court. Based on the compliance reports, the Court issued several resolutions proclaiming BAYAN MUNA with its three nominees and AKBAYAN!, BUTIL, APEC and CIBAC, with one nominee each, as party-list winners.39

Subsequently, several motions for proclamation were filed by other party-list participants. In resolving the motions, the Court had to consider, among others, the effect of the disqualification after the elections of many party-list participants to the total votes cast for the party-list elections. In the previous case of Labo v. COMELEC,40 this Court ruled that the votes cast for an ineligible or disqualified candidate cannot be considered "stray" except when the electorate is fully aware in fact and in law of a candidate's disqualification so as to bring such awareness within the realm of notoriety but nonetheless cast their votes in favor of the ineligible candidate. In its Resolution dated June 25, 2003, the Court held that the Labo doctrine cannot be applied to the party-list system in view of Sec. 10 of R.A. No. 7941 which expressly provides that the votes cast for a party, a sectoral organization or a coalition "not entitled to be voted for shall not be counted." The Court then proceeded to determine the number of nominees the party-list winners were entitled, thus:41 We shall now determine the number of nominees each winning party is entitled to, in accordance with the formula in Veterans. For purposes of determining the number of its nominees, BAYAN MUNA (the party that obtained the highest number of votes) is considered the first party. The applicable formula is as follows: Number of votes of first party = Total votes for party-list system

Proportion of votes of first party relative to total votes for party-list system

Applying this formula, we arrive at 26.19 percent: xxx Having obtained 26.19 percent, BAYAN MUNA is entitled to three (3) seats. This finding is pursuant to our ruling in Veterans x x x. xxx [W]e shall compute only the additional seat or seats to be allocated, if any, to the other qualified parties -- BUHAY, AMIN, ABA, COCOFED, PM, SANLAKAS and ABANSE! PINAY. Applying the relevant formula in Veterans to BUHAY, we arrive at 0.51: Votes Cast for Qualified Party = Votes Cast for First Party 290,760 = 1,708,253 = 0.51 x 3 x

Additional Seats

Allotted Seats for First Party

Since 0.51 is less than one, BUHAY is not entitled to any additional seat. It is entitled to only one qualifying seat like all the other qualified parties that are ranked below it, as shown in Table No. 3: Table No. 3 Rank 2 3 4 5 6 7 8 9 10 11 12 Party-list APEC AKBAYAN! BUTIL CIBAC BUHAY AMIN ABA COCOFED PM SANLAKAS ABANSE! PINAY Votes 802,060 377,852 330,282 323,810 290,760 252,051 242,199 229,165 216,823 151,017 135,211 Percentage (%) 12.29 5.79 5.06 4.96 4.46 3.86 3.71 3.51 3.32 2.31 2.07 Additional Seats n/c n/c n/c n/c 0.51 0.44 0.42 0.40 0.38 0.26 0.24

The additional seats for APEC, AKBAYAN!, BUTIL and CIBAC, if any, were not determined in the Court's Resolution dated June 25, 2003, as there was a separate pending motion filed by BAYAN MUNA to set aside the resolution of the COMELEC proclaiming APEC, AKBAYAN!, BUTIL and CIBAC's respective additional nominees. Dissatisfied by the Court's June 25, 2003 Resolution, BUHAY filed a motion to have it declared as entitled to one (1) additional seat. On November 20, 2003, in the same case of Ang Bagong Bayani,42 the Court computed the additional seats for APEC, AKBAYAN!, BUTIL and CIBAC in accordance with the formula stated in the Court's Resolution dated June 25, 2003, and found the results as follows: APEC -- 1.40

AKBAYAN -- 0.66 BUTIL CIBAC -- 0.58 -- 0.56

Then, the Court resolved pro hac vice to grant BUHAY's motion, reasoning that: It is thus established in the Resolution of 25 June 2003 that, like APEC, BUTIL, CIBAC and AKBAYAN, BUHAY had obtained more than four percent (4%) of the total number of votes validly cast for the party-list system and obtained more than 0.50 for the additional seats. Accordingly, just

like the first four whose additional nominees are now holding office as member of the House of Representatives, BUHAY should be declared entitled to additional seat.43 In light of all these antecedents, we deny the petition. The formula in the landmark case of Veterans prevails. First, the June 25, 2003 Resolution of the Court in Ang Bagong Bayani referred to the Veterans case in determining the number of seats due for the party-list winners. The footnote on said resolution in computing the additional seats for the party-list winners states: "[f]or a discussion of how to compute additional nominees for parties other than the first, see Veterans, supra, at pp. 280-282. x x x."44 The Court likewise held that: We also take this opportunity to emphasize that the formulas devised in Veterans for computing the number of nominees that the party-list winners are entitled to cannot be disregarded by the concerned agencies of government, especially the Commission on Elections. These formulas ensure that the number of seats allocated to the winning party-list candidates conform to the principle of proportional representation mandated by the law.45(emphases supplied) Second, in the November 20, 2003 Resolution in Ang Bagong Bayani, the Court gave an additional seat to BUHAY only because it was similarly situated to APEC, BUTIL, CIBAC and AKBAYAN which "had obtained more than four percent (4%) of the total number of votes validly cast for the party-list system and obtained more than 0.50 for the additional seats." Well to note, the grant of an additional seat to BUHAY was pro hac vice, thus: ACCORDINGLY, the Court hereby RESOLVES, pro hac vice 1. To consider closed and terminated the issue regarding the proclamation by the COMELEC of the additional nominees of APEC, BUTIL, CIBAC and AKBAYAN, such nominees having taken their oath and assumed office; 2. To DECLARE that BUHAY is entitled to one (1) additional seat in the party-list system in the elections of May 2001 and; 3. To ORDER the COMELEC to proclaim BUHAY's second nominee. SO ORDERED.46 (emphasis supplied) Pro hac vice is a Latin term meaning "for this one particular occasion."47 A ruling expressly qualified as pro hac vice cannot be relied upon as a precedent to govern other cases. It was therefore erroneous for respondent Commission to apply the November 20, 2003 Resolution and rule that the formula in Veterans has been abandoned. The confusion in the petition at bar must have been created by the way the Veterans formula was cited in the June 25, 2003 Resolution of the Court in Ang Bagong Bayani.48 Be that as it may, we reiterate that the prevailing formula for the computation of additional seats for party-list winners is the formula stated in the landmark case of Veterans, viz: Additional seats for concerned No. of votes of concerned No. of additional seats allocated to

party

party No. of votes of the first party

first party49

Applying said formula to the undisputed figures in Party-List Canvass Report No. 20, we do not find petitioners entitled to any additional seat. Thus: 448,072 Additional seats for PM = 1,203,305 = Additional seats for BUTIL = 1,203,305 = 0.71 0.74 429,259 x 2 x 2

IN VIEW WHEREOF, the petition is DENIED. SO ORDERED. G.R. No. 165501 March 28, 2006

SPOUSES JESUS and EVANGELINE PASCO, Petitioners, vs. PISON-ARCEO AGRICULTURAL AND DEVELOPMENT CORPORATION, Respondent. DECISION CARPIO MORALES,J.: From the Court of Appeals August 27, 20031 decision which denied their petition for review of the decision of the Bacolod City Regional Trial Court (RTC) affirming with modification that of the June 30, 2000 of the Talisay City Municipal Trial Court in Cities (MTCC), Spouses Jesus and Evangeline Pasco (petitioners) brought the case to this Court on a Petition for Review on Certiorari. Respondent, Pison-Arceo Agricultural and Development Corporation, is the registered owner of a parcel of land containing more than 100 hectares covered by Transfer Certificate of Title (TCT) No. T-88078 of the Register of Deeds of Negros Occidental. Constructed on respondents parcel of land are houses which are occupied by its workers. Petitioners, among other workers, used to work for respondent until 1987. They having ceased to be employed by respondent, petitioners were asked to vacate the house they were occupying but they refused, hence, respondent filed a complaint for unlawful detainer against them before the MTCC in Talisay City.

In their Answer to the Complaint,2 petitioners claimed that, inter alia, they built the house occupied by them at their own expense and their stay on the land was upon the tolerance of respondent. In their Position Paper,3 petitioners claimed that respondent constructed houses for its workers but the house they were occupying was destroyed by a typhoon, forcing them to build their house; respondents demand was merely for them to vacate the house, as they had paid rentals thru salary/wage deductions; and their refusal to vacate the house is justified, they being the owners and actual possessors thereof. By Decision of June 30, 2000,4 the MTCC of Talisay rendered judgment in favor of respondent upon the following findings: As adduced, it is explicitly clear that [respondent] provided housing facilities to every worker in its hacienda without a requiring payment of rentals, however, with an implied promise that the same be vacated upon their cessation from work. . . . On the issue that [petitioners] were responsible in building their own houses is devoid of merit. . . . However,[petitioners] made repairs on their houses when [the] same were destroyed by typhoon sometime in 1975. These are repairs badly needed at that time there being no however express authority from [respondent]. xxxx As to the contention of [petitioners] in Civil Case No. 677, [respondent] is amenable to remove whatever improvements they have introduced thereto including the trees they planted. . . . x x x x (Underscoring supplied)5 Accordingly, the MTCC disposed as follows: WHEREFORE, judgment is hereby rendered for [respondent] and herein [petitioners in Civil Case No. 677], spouses Jesus Pasco and Evangeline Pasco . . .and those persons claiming under their names are hereby ordered: 1. To vacate the premises of [respondents] Lot 707, Talisay Cadastre covered by Transfer Certificate of Title No. T-88078 and to remove whatever improvements they introduced thereon; 2. To pay [respondent] the sum of P50.00 a month as rental payment from the time of the filing of the herein complaint until they have vacated the premises; and 3. To pay the sum of P5,000.00 as attorneys fees. SO ORDERED.6 (Underscoring supplied) After the promulgation on June 30, 2000 of the MTCC decision or on August 23, 2000, the Municipal Agrarian Reform Office (MARO) of Talisay City sent a Notice of Coverage and Field Investigation7 (Notice of Coverage) advising respondent that its parcel of land is now covered under Republic Act 6657 otherwise known as the Comprehensive Agrarian Reform Law (CARL), and inviting the presence of a representative to a field investigation to be conducted on September 12,

2000 during which it (respondent) may pinpoint its retained area in accordance with Section 6 of the CARL. In the meantime, as petitioners appealed the MTCC decision in the Unlawful Detainer Case to the RTC, they, on August 24, 2000, filed a Memorandum of Appeal8 contending that the MTCC: I. . . . . ERRED IN FINDING THE [PETITIONERS] TO BE BUILDERS, PLANTERS OR SOWERS IN BAD FAITH. II. . . . . ERRED IN NOT FINDING [RESPONDENT] TO BE OWNERS IN BAD FAITH. III. . . . . ERRED IN APPLYING ARTICLES 449 TO 451 OF THE CIVIL CODE. IV. . . . . HAS NO JURISDICTION OVER THE COMPLAINT UNTIL [PETITIONERS] RIGHT OF RETENTION UNTIL ARTICLE 546 OF THE CIVIL CODE HAS EXPIRED. x x x x9 In their Memorandum, petitioners argued that respondents hacienda is covered by the CARL and they are qualified beneficiaries thereunder; whether they are qualified beneficiaries is material to the determination of whether they are planters or builders or sowers in bad faith; "upon knowledge that the land subject of the unlawful detainer case is a[n] hacienda, it is within the sound discretion of the judge to clarify from the parties whether or not the subject land is covered by [CARL] and whether or not the defendants are qualified agrarian reform beneficiaries"; "it is mandatory on the part of the courts to take judicial notice of agrarian laws"; and the unlawful detainer case, at all events, was prematurely filed as respondents right to eject them would arise only after they are reimbursed of their expenses in repairing the house and, therefore, the MTCC has no jurisdiction yet to order their ejectment. By Decision of December 5, 2000,10 the RTC of Bacolod City affirmed the June 30, 2000 decision of MTCC Talisay, with modification, disposing as follows: WHEREFORE, the decision rendered by the Municipal Trial Court in Cities, dated June 30, 2000 is hereby modified as follows: "WHEREFORE, judgment is hereby rendered for [respondent] . . . . against spouses Jesus Pasco and Evangeline Pasco and the persons claiming under their names are hereby ordered: 1. To vacate the premises of [respondents] Lot 707, Talisay Cadastre covered by Transfer Certificate of Title No. T-88078 and to remove the house they constructed thereon; 2. To pay [respondent] the sum of P50.00 a month as rental payment from the time of the filing of the herein complaint until they have vacated the premises; and 3. To pay the sum of P5,000.00 as attorneys fees. With costs against the [petitioners].11 (Underscoring supplied) Petitioners moved to reconsider12 the RTC decision, they contending that the MTCC had no jurisdiction over the complaint for unlawful detainer in view of the agrarian dispute between them and

respondent; and by Order13 of June 8, 2001, petitioners motion for reconsideration was denied. Hence, they elevated the case to the Court of Appeals14 before which they raised, in the main, the issues of: I. . . . A. Whether or not the Notice of Coverage issued by DAR and which was ADMITTED by [respondents]sufficient evidence to prove that [respondents] land is covered by CARP. B. Whether or not [petitioners] evidence to prove that they are potential agrarian reform beneficiarieshas been existing at the time of the filing of the complaint for ejectment against them. II. WHETHER OR NOT THERE IS AN AGRARIAN DISPUTE BETWEEN THE PARTIES IN CIVIL CASE NO. 677 SO AS TO NULLIFY THE PROCEEDINGS IN THE MUNICIPAL TRIAL COURT IN CITIES FOR LACK OF JURISDICTION. xxxx AND WHETHER OR NOT THE APPELLATE COURT ERRED IN NOT DISMISSING RESPONDENTS COMPLAINT FOR EJECTMENT, HAVING BEEN BROUGHT BY A PARTY WHO IS NOT THE REAL PARTY-IN-INTEREST.15 (Underscoring supplied) To their petition before the appellate court, petitioners attached a copy of the Notice of Coverage and Field Investigation sent by the MARO, Talisay City to respondent. In the meantime, the MARO of Talisay City issued on August 24, 2004 a Certification16 that herein petitioner Jesus Pasco is registered as potential Comprehensive Agrarian Reform Program (CARP) beneficiary in the land owned by respondent. By the assailed Decision of August 27, 2003,17 the appellate court denied petitioners petition, ratiocinating as follows: Well settled is the rule that the only issue in ejectment cases is the physical possession of the premises, independent of any claim of ownership by the parties, and this must be so because the issue of ownership cannot be definitely decided in an ejectment case. Considering that the petitioners were in possession of the subject property by sheer tolerance of its owners, they knew that their occupation of the premises may be terminated any time. Persons who occupy the land of another at the latters tolerance or permission, without any contract between them is necessarily bound by an implied promise that they will vacate the same upon demand, failing in which a summary action for ejectment is the proper remedy against them. In the instant case, the petitioners admitted in their Answer almost all the allegations in the complaint. Since the petitioners occupy the subject land at the owners tolerance, they are bound to vacate the same, failing which, an ejectment suit is the proper remedy against them. We agree with the allegations of the respondent corporation that the petitioners defenses: (1) that the subject land is covered by CARP; (2) that there is an agrarian dispute; and (3) that the case is not brought by a real party-in-interest are mere afterthoughts to muddle the case and win at all

costs. These issues were not raised before the trial court. The fact is that the petitioners had admitted from the very start that the respondent is the owner of the lot in question. They are therefore in estoppel if they deny the fact the complaint was brought by the real party-in-interest. In the same manner, the defense that the court has no jurisdiction over the ejectment case because of an agrarian dispute or the land is covered by CARP is likewise untenable. Basic is the rule that the material averments in the complaint, which in this case is for ejectment, determine the jurisdiction of the court. And, jurisprudence dictates that the court does not lose its jurisdiction over an ejectment case by the simple expedient of a party raising as a defense therein the alleged existence of a tenancy relationship between the parties. Moreover, it is a settled rule that no question will be raised on appeal unless it has been raised in the court below. Anent the allegation that the respondent is not the real party in interest, the same deserves scant consideration. Even granting that there is indeed a co-ownership over a portion of the subject land, the law says that anyone of the co-owners may bring an action in ejectment. Thus, the respondent (plaintiff) is unquestionable a real party in interest.18 (Emphasis and underscoring supplied) Hence, the petition at bar19 assailing the appellate courts decision upon the following issues: 1. Whether or not one who has been identified by the Department of Agrarian Reform (DAR) as potential agrarian reform beneficiary may be ejected from the land where he is identified as such, by the landowner, who has already been notified by the DAR of the coverage of his land by the Comprehensive Agrarian Reform Program of the government. 2. Whether or not the foregoing issue involves an issue affecting the jurisdiction of the court over the nature of the action or it involves primary jurisdiction. 3. Whether or not the matters involving jurisdiction of the court over the nature of the action could be raised for the first time on appeal.20 (Underscoring supplied) As reflected above, the theory of petitioner before the MTCC is different from that proffered before the RTC. Thus, before the MTCC, they claimed that the house they are occupying was built at their own expense. Before the RTC, they raised for the first time that, they being qualified beneficiaries of the CARP, the same should be considered in determining whether they are builders, planters, or sowers in good faith. And, for the first time too, they assailed the MTCCs lack of jurisdiction over the action due to prematurity, they contending that respondents right to eject them would accrue only after they are reimbursed of their expenses in the repair of the house. In their motion for reconsideration of the RTC decision, petitioners this time argued that the MTCC had no jurisdiction over the case in view of the agrarian dispute between them and respondent. As a rule, a party who deliberately adopts a certain theory upon which the case is tried and decided by the lower court will not be permitted to change theory on appeal. Points of law, theories, issues and arguments not brought to the attention of the lower court need not be, and ordinarily will not be, considered by a reviewing court, as these cannot be raised for the first time at such late stage. Basic considerations of due process underlie this rule.21 The aforecited rule is not without exception, however. As correctly argued by petitioners, though not raised below, the issue of lack of jurisdiction over the subject matter may be considered by the reviewing court as it may be raised at any stage of the proceedings.22

The issuance during the pendency of the case of a Notice of Coverage to respondent does not, however, automatically make the ejectment case an agrarian dispute over which the Department of Agrarian Reform Adjudication Board (DARAB) has jurisdiction.23 The issuance of a Notice of Coverage is merely a preliminary step for the States acquisition of the land for agrarian reform purposes and it does not automatically vest title or transfer the ownership of the land to the government. The purpose of a Notice of Coverage is explained by this Court, thus: . . . The Notice of Coverage shall also invite the landowner to attend the field investigation to be scheduled at least two weeks from notice. The field investigation is for the purpose of identifying the landholding and determining its suitability for agriculture and its productivity. . . . The date of the field investigation shall also be sent by the DAR Municipal Office to representatives of the L[and] B[ank] [of the] P[hilippines], BARC, DENR and prospective farmer beneficiaries. The field investigation shall be conducted on the date set with the participation of the landowner and the various representatives. . . . Should there be a variance between the findings of the DAR and the LBP as to whether the land be placed under agrarian reform, the land's suitability to agriculture, the degree or development of the slope, etc., the conflict shall be resolved by a composite team of the DAR, LBP, DENR and DA which shall jointly conduct further investigation. . . . Clearly then, the notice requirements under the CARL are not confined to the Notice of Acquisition set forth in Section 16 of the law. They also include the Notice of Coverage first laid down in DAR A.O. No. 12, Series of 1989 and subsequently amended in DAR A.O. No. 9, Series of 1990 and DAR A.O. No. 1, Series of 1993. This Notice of Coverage does not merely notify the landowner that his property shall be placed under CARP and that he is entitled to exercise his retention right; it also notifies him, pursuant to DAR A.O. No. 9, Series of 1990, that a public hearing shall be conducted where he and representatives of the concerned sectors of society may attend to discuss the results of the field investigation, the land valuation and other pertinent matters. Under DAR A.O. No. 1, Series of 1993, the Notice of Coverage also informs the landowner that a field investigation of his landholding shall be conducted where he and the other representatives may be present. x x x x24 (Underscoring supplied) Since during a field investigation the DAR and Land Bank of the Philippines would make a determination as to whether, among other things, "the land will be placed under agrarian reform, the lands suitability to agriculture," a Notice of Coverage does not ipso facto render the land subject thereof a land reform area. The owner retains its right to eject unlawful possessors of his land, as what respondent did in the present case.
lavvphil.net

As for the registration of petitioners as potential CARP beneficiaries, the same does not help their cause. As "potential" CARP beneficiaries, they are included in the list of those who may be awarded land under the CARP. Nothing in the records of the case shows that the DAR has made an award in favor of petitioners, hence, no rights over the land they occupy can be considered to have vested in their favor in accordance with Section 24 of the CARL which reads: Section 24. Award to Beneficiaries. The rights and responsibilities of the beneficiary shall commence from the time the DAR makes an award of the land to him, which award shall be completed within one hundred eighty (180) days from the time the DAR takes actual possession of the land. Ownership of the beneficiary shall be evidenced by a Certificate of Land Ownership Award, which shall contain the restrictions and conditions provided for in this Act, and shall be recorded in the Register of Deeds concerned and annotated on the Certificate of Title. (Emphasis and underscoring supplied)

Moreover, to allow petitioners to continue to stay in respondents land on the ground that they are potential CARP beneficiaries would give them preferential treatment over other potential CARP reform beneficiaries who are not occupying the premises and still awaiting the award to be made by the DAR in their favor. Worse, to further tolerate petitioners occupancy of respondents land might give other potential CARP beneficiaries the wrong signal that they too can occupy the land which may be awarded to them even before they are chosen or before an award is made in their favor. WHEREFORE, the petition is DENIED for lack of merit. No pronouncement as to costs. SO ORDERED. G.R. No. 129247 March 3, 2006

SPOUSES ARSENIO and NIEVES S. REYES, Petitioners, vs. SOLEMAR DEVELOPMENT CORPORATION and RENATO M. TANSECO, Respondents. x------------------------x G.R. No. 136270 March 3, 2006

SPOUSES ARSENIO and NIEVES S. REYES, Petitioners, vs. REPUBLIC OF THE PHILIPPINES, Respondent. DECISION SANDOVAL-GUTIERREZ, J.: These two (2) consolidated petitions involve a parcel of land with an area of 66,787 square meters, more or less, identified as Lot 1 of subdivision plan Psd-18002, being a portion of land described in Plan II-483 LRC (GLRO) Record No. 707, situated at Barangay San Dionisio, Municipality (now City) of Paraaque. Petitioners in G.R. No. 129247 assail the Decision dated December 10, 1996 of the Court of Appeals in CA-G.R. SP No. 37467, entitled "Solemar Development Corporation and Renato M. Tanseco v. Hon. Omar U. Umin." In G.R. No. 136270, petitioners, in their motion for reconsideration, seek the reversal of our Resolution dated December 13, 1999 denying the petition on grounds of res judicata and stability of judgments. G.R. No. 129247 On January 14, 1992, spouses Arsenio and Nieves Reyes, petitioners, filed with the Regional Trial Court (RTC), Branch 135, Makati City, a Complaint for "Damages and Preliminary Injunction with Prayer for a Temporary Restraining Order" (TRO) against respondent Solemar Development Corporation (Solemar), represented by its president, Renato Tanseco, also a respondent, docketed as Civil Case No. 92-109.

In their Complaint, petitioners alleged that they are the registered owners of the property in question as evidenced by Transfer Certificate of Title (TCT) No. 31798 (40312) of the Registry of Deeds of Paraaque City. Sometime in December 1991, they fenced the property and posted two (2) security guards to prevent trespassers from entering the premises. On January 6, 1992, respondent Renato Tanseco, accompanied by police officers, "employing force and intimidation," entered the premises and demolished its perimeter fence. Respondent "tried to eject them (petitioners) from their property thru the unlawful and felonious illegal notice of demolition and permit." They thus prayed for the issuance of a writ of preliminary injunction to prevent respondents from ejecting them from the property without any court order. In their Answer, respondents raised the defense that they own the disputed property, asserting that petitioners title is of doubtful authenticity as found by the Land Registration Authority (LRA) Verification Committee. Petitioners filed their Reply thereto, after which they filed a Motion for Leave to File Amended Complaint, impleading Solemars lessee, AMI (Philippines) Inc., as additional defendant. They also included additional causes of action, praying among others, that respondent Solemars titles be nullified. Respondents filed an Opposition to petitioners motion arguing that (1) the amendments will substantially change petitioners original cause of action or theory of the case and that (2) their certificate of title will be subjected to collateral attack. On May 6, 1992, the RTC admitted petitioners Amended Complaint. After their motion for reconsideration was denied on July 11, 1992, respondents filed a Petition for Certiorari and Prohibition with the Court of Appeals assailing the Order of the RTC admitting petitioners Amended Complaint, docketed as CA G.R. SP No. 28364. On March 11, 1993, the Appellate Court granted the petition and annulled the RTC Order dated May 6, 1992 admitting petitioners Amended Complaint. On September 6, 1993, petitioners filed a Motion for Reconsideration, but it was denied. Petitioners elevated the matter to this Court in a Petition for Review on Certiorari, docketed as G.R. No. 111755. On January 26, 1994, we issued a Resolution affirming the March 11, 1993 Decision of the Court of Appeals. Our Resolution became final and executory after we denied with finality petitioners motion for reconsideration on March 21, 1994. Back to the RTC. Respondents filed a Motion to Dismiss the complaint in Civil Case No. 92-109 on the ground of lack of jurisdiction considering that the allegations therein clearly show that the action is one for forcible entry, which is under the exclusive jurisdiction of the Municipal Trial Court (MTC). On March 30, 1995, the RTC denied the motion to dismiss, holding that it has jurisdiction over the case since it "is for recovery of damages and recovery of possession of real property and, of necessary consequence, the issue of ownership thereof is brought to fore." On June 8, 1995, the RTC denied respondents motion for reconsideration. Forthwith, respondents filed a Petition for Certiorari, Prohibition and Mandamus with the Court of Appeals, docketed therein as CA-G.R. SP No. 37467. In a Decision dated December 10, 1996, the Appellate Court granted the petition and ordered the RTC to dismiss the case for lack of jurisdiction, finding that "a careful reading of the allegations therein would show that the complaint for damages, taken in its full context, was meant to restore private respondents to the peaceful possession of the land and to prevent petitioners from further depriving the former of the lawful occupation thereof." The Appellate Court further held:

It is thus clear that while private respondents may have valid claims for indemnity for what they perceived were the result of wrongful or illegal acts committed by petitioners, it is nevertheless unquestionable that in filing their complaint, private respondents were asking the court to determine their right, or the lack of it, to possess the subject property. It follows, therefore, that the damages allegedly suffered by private respondents are merely incidental to the issue of possession which is the very heart of the parties dispute. On May 7, 1997, the Court of Appeals denied petitioners motion for reconsideration. Hence, this Petition for Review on Certiorari where the issue for our resolution is whether petitioners complaint is one for forcible entry falling under the jurisdiction of the MTC or for the recovery of ownership falling under the jurisdiction of the RTC. We hold that the Court of Appeals did not err in ordering the RTC, Branch 135, Makati City, to dismiss petitioners complaint in Civil Case No. 92-109. Jurisdiction of the court over the subject matter of the action is determined by the allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein.1 It cannot be made to depend on the exclusive characterization of the case by one of the parties.2 After reviewing carefully the allegations in petitioners complaint, specifically paragraphs 4, 10, and 15,3 we found no reason to deviate from the finding of the Appellate Court that indeed the complaint is for forcible entry. Significantly, the complaint was filed on January 14, 1992, or within one (1) year, specifically within eight (8) days, from the alleged forcible entry to the property by respondent Tanseco on January 6, 1992.4 While captioned as a Complaint for Damages with Application for a TRO and Preliminary Injunction, yet the allegations therein show that petitioners are asserting their right to the peaceful possession of their property which is proper in an ejectment suit. All ejectment cases are within the jurisdiction of the MTC.5 Accordingly, the denial of the petition in this case is in order. G.R. No. 136270 On July 29, 1992, the Republic of the Philippines, represented by the Administrator of the LRA, herein respondent, filed with the RTC, Branch 60, Makati City, a Complaint for Declaration of Nullity and Cancellation of TCT No. 31798 (40312) in the name of spouses Arsenio and Nieves Reyes, docketed as Civil Case No. 92-2135. The complaint alleges that the land title of said spouses, now petitioners, is of doubtful authenticity, having been obtained through fraud, as found by the LRA Verification Committee. The Republic prayed that the same be declared void and be cancelled by the Register of Deeds of Paraaque City. In their Answer, petitioners maintained that their title is valid and that the so called LRA Verification Committee Report appears to have been irregularly issued. As compulsory counterclaim, they pleaded that their title to the property be declared valid and their right to recover from the Assurance Fund be upheld "in the unlikely possibility that the same is nullified because of the negligence, incompetence, inadvertence, let alone due to the anomalous practices of those charged with the issuance of land titles." They prayed that the Republics complaint be dismissed and that judgment be rendered on their counterclaim. Solemar filed a Complaint for Quieting of Title against petitioners with the RTC, Branch 61, Makati City, docketed as Civil Case No. 93-1566. On April 26, 1996, the RTC rendered a Decision declaring that TCT No. 31798 (40312) in the name of herein petitioners, spouses Reyes, is spurious and directed the Register of Deeds of Paraaque City to cancel the same. The RTC found that:

From the evidence presented to prove the validity of SOLEMARs eight (8) titles, the Court finds an exhaustive and detailed presentation of evidence tracing the historical origin of SOLEMARs titles termed as "TRACE BACK" (Exhibit "I"), from the original registration proceedings before the Court of First Instance of Rizal and other administrative matters leading to the issuance of SOLEMARs Titles. Upon the other hand, the evidence consisting of public documents to prove the nature of the REYES title, SOLEMAR submitted a detailed origin of REYES title as shown in the Verification Committee Report dated November 7, 1990 of the Land Registration Authority (LRA) tracing the series of falsification and dubious source of REYES title and their predecessors title which led the LRA to conclude that REYES title is of doubtful validity and authenticity and includes its recommendation to the Office of the Solicitor General for the filing of a case for the cancellation of REYES title and requesting the National Bureau of Investigation to prosecute the parties responsible for the irregularities. On the above findings on the evidence, the Court concludes that SOLEMAR has duly established its case through overwhelming preponderance of evidence on the validity of SOLEMARs titles. At the same time, the evidence of SOLEMAR has likewise proven that defendants REYES titles are fake and spurious and/or total nullity as found by government agencies. Petitioners filed a Motion for New Trial and/or Motion for Reconsideration of the Decision. But the trial court denied the same. On September 16, 1996, petitioners filed a Notice of Appeal, but it was not given due course. The trial court ruled that the motion filed earlier, which is pro forma, did not suspend the period to appeal, thus its Decision became final on May 19, 1996. On September 24, 1996, the trial court issued a writ of execution. Thereupon, the Register of Deeds of Paraaque City cancelled petitioners TCT No. 31798 (40312). Petitioners filed with the Court of Appeals a Petition for Certiorari, Prohibition and Mandamus. In its Decision of July 30, 1997, the Appellate Court denied the petition for having been filed out of time, prompting petitioners to file with this Court a Petition for Review on Certiorari, docketed as G.R. No. 130888. In a Resolution dated January 28, 1998, we affirmed the Decision of the Appellate Court. In a Resolution dated April 13, 1998, we denied with finality petitioners motion for reconsideration. Thus, the RTC Decision in Civil Case No. 93-1566 for quieting of title in favor of respondents has been put to rest. Since Solemars titles have been declared valid, the Solicitor General, on April 29, 1997, filed a Motion to Withdraw the Republics Complaint in Civil Case No. 92-2135 for declaration of nullity of petitioners land title. On June 19, 1997, the RTC denied the motion to withdraw the complaint on the grounds that (a) a court may not grant plaintiffs motion to dismiss his complaint if the defendant who pleaded a compulsory counterclaim objected thereto; and that (b) the Decision of the RTC, Branch 61, Makati City, in Civil Case No. 93-1566 for quieting of title in favor of Solemar does not constitute res judicata on Civil Case No. 92-2135 wherein the Solicitor General filed a motion to withdraw the Republics complaint. The Solicitor General then filed a Motion for Reconsideration but it was denied on January 12, 1998 by the RTC. This prompted the Solicitor General to file with the Court of Appeals a Petition for Certiorari assailing the Resolution of the RTC denying their motion to withdraw the complaint. The Appellate Court granted the petition. It ordered the trial court to dismiss the Republics Complaint and petitioners counterclaim, without prejudice for the latter to pursue their claim against the Assurance Fund. They filed a Motion for Reconsideration, but it was denied by the Appellate Court.

On January 6, 1999, petitioners filed with this Court the instant Petition for Review on Certiorari, docketed as G.R. No. 136270, contending that the dismissal of their complaint will deprive them the opportunity to recover damages from the Assurance Fund. The Republic filed a Manifestation and Motion (in lieu of Comment) alleging that, "(A)fter a thorough re-evaluation of the record of this case. it would be to the best interest of the state that this case be remanded to the court a quo for further proceedings on the following grounds: (a) that the Decision in Civil Case No. 93-1566 for quieting of title cannot bind the Republic because it is not a party to the case; and (b) the Republic would in effect be recognizing the ownership of Solemar over the property. Solemar filed a Motion for Leave to Intervene as respondent-intervenor. In our Resolution dated July 14, 1999, we granted the motion. Solemar alleged that "(W)ith the denial with finality of petitioners motion for reconsideration and the issuance of the corresponding Entry of Judgment by this Honorable Court, the Decision of the RTC of Makati, Branch 61, in Civil Case No. 93-1566 declaring as spurious TCT No. (31798) 40312 issued in the name of Nieves S. Reyes, married to Arsenio Reyes and declaring as valid Solemars titles, can now be considered as final, conclusive and entitled to full faith and credit. The matter cannot be reopened anymore without violating the principle of res judicata." On December 13, 1999, we issued a Resolution denying the instant petition on the grounds of res judicata and stability of judgments, thus: First, the order of dismissal of the Republics complaint is proper. The complaint asserted that TCT No. (31798) 40312 is of doubtful authenticity. This matter, however, was passed upon in Civil Case No. 93-1566. In said case, petitioners were initially declared as in default, but were later given several opportunities to present their evidence, but this notwithstanding, they still failed to do so (pp. 279-280, Rollo). After due proceedings, the trial court rendered a decision quieting SOLEMARs titles, adjudging the same as valid and declaring TCT No. (31798) 40312 spurious, and accordingly directing therein defendant Register of Deeds of Paraaque, Metro Manila, to cancel the same. Said decision was sustained on appeal in CA-GR SP No. 44779. The matter was finally disposed of by this Court when we adversely resolved the petition in G.R. No. 130888 (First Division, January 28, 1998) filed by petitioners. Petitioners motion for reconsideration was denied with finality in our resolution dated April 13, 1998. In his manifestation and motion in lieu of comment, the Solicitor General posits that the aforestated decision in Civil Case No. 93-1566 which became final and executory is conclusive only between the parties therein, that is, SOLEMAR and petitioners, and cannot bind respondent, considering that suits to quiet title are not technically suits in rem, nor are they in personam, but are against the person in respect of the res, or quasi in rem; and that the dismissal of Civil Case No. 92-2135 on the basis of the decision in Civil Case No. 93-1566 would in effect require respondent Republic to recognize the ownership of SOLEMAR over the subject property. This ratiocination is quite strained. A comparison of the two civil cases will show that the requisites of res judicata are present, viz: (a) the former judgment or order must be final; (b) it must be a judgment or order on the merits; (c) it must have been rendered by a court having jurisdiction over the subject matter and the parties; and (d) there must be, between the first and the second actions, identity of parties, of subject matter, and of cause of action (Ybaez v. Court of Appeals, 253 SCRA 540 [1996]). The argument that there is no identity of parties since the Republic was not impleaded in Civil Case No. 93-1566 is also suspect. It has been repeatedly emphasized by the Court that absolute identity of parties is not required in order for res judicata to apply because substantial identity is sufficient. This means that the parties in both cases need not be physically identical provided there is privity between them. Notably, Civil Case No. 93-1566 was filed not only against petitioners but also against the Register

of Deeds of Paraaque, Metro Manila, an officer of the Republic. Thus, the Republic cannot be considered a stranger in said case, which clearly involves rights of ownership of realty. Another point. To allow the remand of the instant case to the court a quo, as prayed for by the Solicitor General, will indeed violate the principle of stability of judgments. To permit the same will necessarily allow Branch 60 of the Regional Trial Court of Makati City to pass upon issues already ruled upon by a coordinate tribunal or court of law, whose decision and action were in fact sustained by this Court. Second, we find the order of dismissal of petitioners counterclaim likewise proper. Primarily, it is significant to stress that a compulsory counterclaim is essentially auxillary or ancillary to the main controversy inasmuch as it arises out of or is necessarily connected with the transaction or occurrence that is the subject matter of the complaint (Herrera: Comments on the 1997 Rules of Civil Procedure, As Amended, Vol. VII, p. 78). Hence, the ruling on the doubtful authenticity of TCT No. (31798) 40312 already necessarily dismisses the "principal counterclaim" insisted by petitioners, that is, a claim that the subject title and its derivative titles be declared genuine, valid, and authentic, since the counterclaim cannot subsist with the dismissal of the main case (Moran, Comments on the Rules of Court, Vol. I, 1995 ed., p. 356). As regards petitioners "alternative relief" or their claim to be compensated and/or declared entitled to recover from the Assurance Fund, we agree with the Court of Appeals when it held that the dismissal of the complaint and counterclaim in Civil Case No. 922135 is "without prejudice to the defendants pursuing their claim against the Assurance Fund after impleading the proper parties." An action for compensation from the Assurance Fund must be filed against the Register of Deeds of the province or city where the land is situated and the National Treasurer as defendants when "such action is brought to recover for loss or damage or for deprivation of land or any estate or interest therein arising wholly through fraud, negligence, omission, mistake or misfeasance of the court personnel, Register of Deeds, his deputy, or other employees of the registry in the performance of their respective duties." (Section 96, Presidential Decree No. 1529). If "such action is brought to recover for loss or damage or for deprivation of land or any interest therein arising through fraud, negligence, mistake or misfeasance of persons other than court personnel, the Register of Deeds, his deputy or other employees of the registry," the action must be brought against the Register of Deeds, the National Treasurer, as well as other persons as co-defendants. The parties indispensable in a claim against the Assurance Fund, particularly the Register of Deeds of Paraaque and the National Treasurer should have been included in the action so that relief from the Assurance Fund may be adjudged in the same proceeding. Further, the one-paragraph counterclaim does not sufficiently allege facts that constitute conditions justifying payment of damages from the Assurance Fund such as factual allegations of fraud and negligence. Petitioners may suitably comply with these requirements by filing a new action specifically to recover from the fraud. Petitioners filed a Motion for Reconsideration. In our Resolution dated February 16, 2000, we found "no cogent reason to reverse or modify our December 13, 1999 Resolution"; and held that "the arguments raised in the motion for reconsideration have been amply discussed and we find no reason to disturb our earlier ruling." However, we disposed of petitioners motion for reconsideration as follows: WHEREFORE, the instant case (G.R. No. 132670) is hereby ordered consolidated with G.R. No. 129247 ("Arsenio Reyes, et al. v. Court of Appeals, et al.") where the motion for reconsideration filed herein (G.R. No. 136270) may be properly resolved.

SO ORDERED. In the same dispositive portion, we should have also DENIED petitioners motion for reconsideration in light of our ratiocination earlier quoted, instead of merely ordering the consolidation of this case with G.R. No. 136270. WHEREFORE, we DENY the petition in G.R. No. 129247. Petitioners Motion for Reconsideration of our Resolution dated December 13, 1999 in G.R. No. 136270 is also DENIED. Costs against petitioners. SO ORDERED. G.R. No. 159938 March 31, 2006

SHANGRI-LA INTERNATIONAL HOTEL MANAGEMENT, LTD., SHANGRI-LA PROPERTIES, INC., MAKATI SHANGRI-LA HOTEL & RESORT, INC., AND KUOK PHILIPPINES PROPERTIES, INC., Petitioners, vs. DEVELOPERS GROUP OF COMPANIES, INC., Respondent. DECISION GARCIA, J.: In this petition for review under Rule 45 of the Rules of Court, petitioners Shangri-La International Hotel Management, Ltd. (SLIHM), et al. assail and seek to set aside the Decision dated May 15, 20031 of the Court of Appeals (CA) in CA-G.R. CV No. 53351 and its Resolution2 of September 15, 2003 which effectively affirmed with modification an earlier decision of the Regional Trial Court (RTC) of Quezon City in Civil Case No. Q-91-8476, an action for infringement and damages, thereat commenced by respondent Developers Group of Companies, Inc. (DGCI) against the herein petitioners. The facts: At the core of the controversy are the "Shangri-La" mark and "S" logo. Respondent DGCI claims ownership of said mark and logo in the Philippines on the strength of its prior use thereof within the country. As DGCI stresses at every turn, it filed on October 18, 1982 with the Bureau of Patents, Trademarks and Technology Transfer (BPTTT) pursuant to Sections 2 and 4 of Republic Act (RA) No. 166,3 as amended, an application for registration covering the subject mark and logo. On May 31, 1983, the BPTTT issued in favor of DGCI the corresponding certificate of registration therefor, i.e., Registration No. 31904. Since then, DGCI started using the "Shangri-La" mark and "S" logo in its restaurant business. On the other hand, the Kuok family owns and operates a chain of hotels with interest in hotels and hotel-related transactions since 1969. As far back as 1962, it adopted the name "Shangri-La" as part of the corporate names of all companies organized under the aegis of the Kuok Group of Companies (the Kuok Group). The Kuok Group has used the name "Shangri-La" in all Shangri-La hotels and hotel-related establishments around the world which the Kuok Family owned.

To centralize the operations of all Shangri-la hotels and the ownership of the "Shangri-La" mark and "S" logo, the Kuok Group had incorporated in Hong Kong and Singapore, among other places, several companies that form part of the Shangri-La International Hotel Management Ltd. Group of Companies. EDSA Shangri-La Hotel and Resort, Inc., and Makati Shangri-La Hotel and Resort, Inc. were incorporated in the Philippines beginning 1987 to own and operate the two (2) hotels put up by the Kuok Group in Mandaluyong and Makati, Metro Manila. All hotels owned, operated and managed by the aforesaid SLIHM Group of Companies adopted and used the distinctive lettering of the name "Shangri-La" as part of their trade names. From the records, it appears that Shangri-La Hotel Singapore commissioned a Singaporean design artist, a certain Mr. William Lee, to conceptualize and design the logo of the Shangri-La hotels. During the launching of the stylized "S" Logo in February 1975, Mr. Lee gave the following explanation for the logo, to wit: The logo which is shaped like a "S" represents the uniquely Asean architectural structures as well as keep to the legendary Shangri-la theme with the mountains on top being reflected on waters below and the connecting centre [sic] line serving as the horizon. This logo, which is a bold, striking definitive design, embodies both modernity and sophistication in balance and thought. Since 1975 and up to the present, the "Shangri-La" mark and "S" logo have been used consistently and continuously by all Shangri-La hotels and companies in their paraphernalia, such as stationeries, envelopes, business forms, menus, displays and receipts. The Kuok Group and/or petitioner SLIHM caused the registration of, and in fact registered, the "Shangri-La" mark and "S" logo in the patent offices in different countries around the world. On June 21, 1988, the petitioners filed with the BPTTT a petition, docketed as Inter Partes Case No. 3145, praying for the cancellation of the registration of the "Shangri-La" mark and "S" logo issued to respondent DGCI on the ground that the same were illegally and fraudulently obtained and appropriated for the latter's restaurant business. They also filed in the same office Inter Partes Case No. 3529, praying for the registration of the same mark and logo in their own names. Until 1987 or 1988, the petitioners did not operate any establishment in the Philippines, albeit they advertised their hotels abroad since 1972 in numerous business, news, and/or travel magazines widely circulated around the world, all readily available in Philippine magazines and newsstands. They, too, maintained reservations and booking agents in airline companies, hotel organizations, tour operators, tour promotion organizations, and in other allied fields in the Philippines. It is principally upon the foregoing factual backdrop that respondent DGCI filed a complaint for Infringement and Damages with the RTC of Quezon City against the herein petitioners SLIHM, Shangri-La Properties, Inc., Makati Shangri-La Hotel & Resort, Inc., and Kuok Philippine Properties, Inc., docketed as Civil Case No. Q-91-8476 and eventually raffled to Branch 99 of said court. The complaint with prayer for injunctive relief and damages alleged that DGCI has, for the last eight (8) years, been the prior exclusive user in the Philippines of the mark and logo in question and the registered owner thereof for its restaurant and allied services. As DGCI alleged in its complaint, SLIHM, et al., in promoting and advertising their hotel and other allied projects then under construction in the country, had been using a mark and logo confusingly similar, if not identical, with its mark and "S" logo. Accordingly, DGCI sought to prohibit the petitioners, as defendants a quo, from using the "Shangri-La" mark and "S" logo in their hotels in the Philippines.

In their Answer with Counterclaim, the petitioners accused DGCI of appropriating and illegally using the "Shangri-La" mark and "S" logo, adding that the legal and beneficial ownership thereof pertained to SLIHM and that the Kuok Group and its related companies had been using this mark and logo since March 1962 for all their corporate names and affairs. In this regard, they point to the Paris Convention for the Protection of Industrial Property as affording security and protection to SLIHM's exclusive right to said mark and logo. They further claimed having used, since late 1975, the internationally-known and specially-designed "Shangri-La" mark and "S" logo for all the hotels in their hotel chain. Pending trial on the merits of Civil Case No. Q-91-8476, the trial court issued a Writ of Preliminary Injunction enjoining the petitioners from using the subject mark and logo. The preliminary injunction issue ultimately reached the Court in G.R. No. 104583 entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. In a decision4 dated March 8, 1993, the Court nullified the writ of preliminary injunction issued by the trial court and directed it to proceed with the main case and decide it with deliberate dispatch. While trial was in progress, the petitioners filed with the court a motion to suspend proceedings on account of the pendency before the BPTTT of Inter Partes Case No. 3145 for the cancellation of DGCI's certificate of registration. For its part, respondent DGCI filed a similar motion in that case, invoking in this respect the pendency of its infringement case before the trial court. The parties' respective motions to suspend proceedings also reached the Court via their respective petitions in G.R. No. 114802, entitled Developers Group of Companies, Inc. vs. Court of Appeals, et al. and G.R. No. 111580, entitled Shangri-La International Hotel Management LTD., et al. vs. Court of Appeals, et al., which were accordingly consolidated. In a consolidated decision5 dated June 21, 2001, the Court, limiting itself to the core issue of whether, despite the petitioners' institution of Inter Partes Case No. 3145 before the BPTTT, herein respondent DGCI "can file a subsequent action for infringement with the regular courts of justice in connection with the same registered mark," ruled in the affirmative, but nonetheless ordered the BPTTT to suspend further proceedings in said inter partes case and to await the final outcome of the main case. Meanwhile, trial on the merits of the infringement case proceeded. Presented as DGCI's lone witness was Ramon Syhunliong, President and Chairman of DGCI's Board of Directors. Among other things, this witness testified that: 1. He is a businessman, with interest in lumber, hotel, hospital, trading and restaurant businesses but only the restaurant business bears the name "Shangri-La" and uses the same and the "S-logo" as service marks. The restaurant now known as "Shangri-La Finest Chinese Cuisine" was formerly known as the "Carvajal Restaurant" until December 1982, when respondent took over said restaurant business. 2. He had traveled widely around Asia prior to 1982, and admitted knowing the Shangri-La Hotel in Hong Kong as early as August 1982. 3. The "S-logo" was one of two (2) designs given to him in December 1982, scribbled on a piece of paper by a jeepney signboard artist with an office somewhere in Balintawak. The unnamed artist supposedly produced the two designs after about two or three days from the time he (Syhunliong) gave the idea of the design he had in mind.

4. On October 15, 1982, or before the unknown signboard artist supposedly created the "Shangri-La" and "S" designs, DGCI was incorporated with the primary purpose of "owning or operating, or both, of hotels and restaurants". 5. On October 18, 1982, again prior to the alleged creation date of the mark and logo, DGCI filed an application for trademark registration of the mark "SHANGRI-LA FINEST CHINESE CUISINE & S. Logo" with the BPTTT. On said date, respondent DGCI amended its Articles of Incorporation to reflect the name of its restaurant, known and operating under the style and name of "SHANGRI-LA FINEST CHINESE CUISINE." Respondent DGCI obtained Certificate of Registration No. 31904 for the "Shangri-La" mark and "S" logo. Eventually, the trial court, on the postulate that petitioners', more particularly petitioner SLIHM's, use of the mark and logo in dispute constitutes an infringement of DGCI's right thereto, came out with its decision6 on March 8, 1996 rendering judgment for DGCI, as follows: WHEREFORE, judgment is hereby rendered in favor of [respondent DGCI] and against [SLIHM, et al.] a) Upholding the validity of the registration of the service mark "Shangri-la" and "S-Logo" in the name of [respondent]; b) Declaring [petitioners'] use of said mark and logo as infringement of [respondent's] right thereto; c) Ordering [petitioners], their representatives, agents, licensees, assignees and other persons acting under their authority and with their permission, to permanently cease and desist from using and/or continuing to use said mark and logo, or any copy, reproduction or colorable imitation thereof, in the promotion, advertisement, rendition of their hotel and allied projects and services or in any other manner whatsoever; d) Ordering [petitioners] to remove said mark and logo from any premises, objects, materials and paraphernalia used by them and/or destroy any and all prints, signs, advertisements or other materials bearing said mark and logo in their possession and/or under their control; and e) Ordering [petitioners], jointly and severally, to indemnify [respondent] in the amounts of P2,000,000.00 as actual and compensatory damages, P500,000.00 as attorney's fee and expenses of litigation. Let a copy of this Decision be certified to the Director, Bureau of Patents, Trademarks and Technology Transfer for his information and appropriate action in accordance with the provisions of Section 25, Republic Act No. 166 Costs against [petitioners]. SO ORDERED. [Words in brackets added.] Therefrom, the petitioners went on appeal to the CA whereat their recourse was docketed as CA G.R. SP No. 53351.

As stated at the threshold hereof, the CA, in its assailed Decision of May 15, 2003,7 affirmed that of the lower court with the modification of deleting the award of attorney's fees. The appellate court predicated its affirmatory action on the strength or interplay of the following premises: 1. Albeit the Kuok Group used the mark and logo since 1962, the evidence presented shows that the bulk use of the tradename was abroad and not in the Philippines (until 1987). Since the Kuok Group does not have proof of actual use in commerce in the Philippines (in accordance with Section 2 of R.A. No. 166), it cannot claim ownership of the mark and logo in accordance with the holding in Kabushi Kaisha Isetan v. IAC8, as reiterated in Philip Morris, Inc. v. Court of Appeals.9 2. On the other hand, respondent has a right to the mark and logo by virtue of its prior use in the Philippines and the issuance of Certificate of Registration No. 31904. 3. The use of the mark or logo in commerce through the bookings made by travel agencies is unavailing since the Kuok Group did not establish any branch or regional office in the Philippines. As it were, the Kuok Group was not engaged in commerce in the Philippines inasmuch as the bookings were made through travel agents not owned, controlled or managed by the Kuok Group. 4. While the Paris Convention protects internationally known marks, R.A. No. 166 still requires use in commerce in the Philippines. Accordingly, and on the premise that international agreements, such as Paris Convention, must yield to a municipal law, the question on the exclusive right over the mark and logo would still depend on actual use in commerce in the Philippines. Petitioners then moved for a reconsideration, which motion was denied by the CA in its equally assailed Resolution of September 15, 2003.10 As formulated by the petitioners, the issues upon which this case hinges are: 1. Whether the CA erred in finding that respondent had the right to file an application for registration of the "Shangri-La" mark and "S" logo although respondent never had any prior actual commercial use thereof; 2. Whether the CA erred in finding that respondent's supposed use of the identical "ShangriLa" mark and "S" logo of the petitioners was not evident bad faith and can actually ripen into ownership, much less registration; 3. Whether the CA erred in overlooking petitioners' widespread prior use of the "Shangri-La" mark and "S" logo in their operations; 4. Whether the CA erred in refusing to consider that petitioners are entitled to protection under both R.A. No. 166, the old trademark law, and the Paris Convention for the Protection of Industrial Property; 5. Whether the CA erred in holding that SLIHM did not have the right to legally own the "Shangri-La" mark and "S" logo by virtue of and despite their ownership by the Kuok Group; 6. Whether the CA erred in ruling that petitioners' use of the mark and logo constitutes actionable infringement;

7. Whether the CA erred in awarding damages in favor of respondent despite the absence of any evidence to support the same, and in failing to award relief in favor of the petitioners; and 8. Whether petitioners should be prohibited from continuing their use of the mark and logo in question. There are two preliminary issues, however, that respondent DGCI calls our attention to, namely: 1. Whether the certification against forum-shopping submitted on behalf of the petitioners is sufficient; 2. Whether the issues posed by petitioners are purely factual in nature hence improper for resolution in the instant petition for review on certiorari. DGCI claims that the present petition for review should be dismissed outright for certain procedural defects, to wit: an insufficient certification against forum shopping and raising pure questions of fact. On both counts, we find the instant petition formally and substantially sound. In its Comment, respondent alleged that the certification against forum shopping signed by Atty. Lee Benjamin Z. Lerma on behalf and as counsel of the petitioners was insufficient, and that he was not duly authorized to execute such document. Respondent further alleged that since petitioner SLIHM is a foreign entity based in Hong Kong, the Director's Certificate executed by Mr. Madhu Rama Chandra Rao, embodying the board resolution which authorizes Atty. Lerma to act for SLIHM and execute the certification against forum shopping, should contain the authentication by a consular officer of the Philippines in Hong Kong. In National Steel Corporation v. CA,11 the Court has ruled that the certification on non-forum shopping may be signed, for and in behalf of a corporation, by a specifically authorized lawyer who has personal knowledge of the facts required to be disclosed in such document. The reason for this is that a corporation can only exercise its powers through its board of directors and/or its duly authorized officers and agents. Physical acts, like the signing of documents, can be performed only by natural persons duly authorized for the purpose.12 Moreover, Rule 7, Section 5 of the Rules of Court concerning the certification against forum shopping does not require any consular certification if the petitioner is a foreign entity. Nonetheless, to banish any lingering doubt, petitioner SLIHM furnished this Court with a consular certification dated October 29, 2003 authenticating the Director's Certificate authorizing Atty. Lerma to execute the certification against forum shopping, together with petitioners' manifestation of February 9, 2004. Respondent also attacks the present petition as one that raises pure questions of fact. It points out that in a petition for review under Rule 45 of the Rules of Court, the questions that may properly be inquired into are strictly circumscribed by the express limitation that "the petition shall raise only questions of law which must be distinctly set forth."13 We do not, however, find that the issues involved in this petition consist purely of questions of fact. These issues will be dealt with as we go through the questions raised by the petitioners one by one. Petitioners' first argument is that the respondent had no right to file an application for registration of the "Shangri-La" mark and "S" logo because it did not have prior actual commercial use thereof. To respondent, such an argument raises a question of fact that was already resolved by the RTC and concurred in by the CA.

First off, all that the RTC found was that respondent was the prior user and registrant of the subject mark and logo in the Philippines. Taken in proper context, the trial court's finding on "prior use" can only be interpreted to mean that respondent used the subject mark and logo in the country before the petitioners did. It cannot be construed as being a factual finding that there was prior use of the mark and logo before registration. Secondly, the question raised is not purely factual in nature. In the context of this case, it involves resolving whether a certificate of registration of a mark, and the presumption of regularity in the performance of official functions in the issuance thereof, are sufficient to establish prior actual use by the registrant. It further entails answering the question of whether prior actual use is required before there may be a valid registration of a mark. Under the provisions of the former trademark law, R.A. No. 166, as amended, which was in effect up to December 31, 1997, hence, the law in force at the time of respondent's application for registration of trademark, the root of ownership of a trademark is actual use in commerce. Section 2 of said law requires that before a trademark can be registered, it must have been actually used in commerce and service for not less than two months in the Philippines prior to the filing of an application for its registration. Registration, without more, does not confer upon the registrant an absolute right to the registered mark. The certificate of registration is merely a prima facie proof that the registrant is the owner of the registered mark or trade name. Evidence of prior and continuous use of the mark or trade name by another can overcome the presumptive ownership of the registrant and may very well entitle the former to be declared owner in an appropriate case.14 Among the effects of registration of a mark, as catalogued by the Court in Lorenzana v. Macagba,15 are: 1. Registration in the Principal Register gives rise to a presumption of the validity of the registration, the registrant's ownership of the mark, and his right to the exclusive use thereof. xxx 2. Registration in the Principal Register is limited to the actual owner of the trademark and proceedings therein pass on the issue of ownership, which may be contested through opposition or interference proceedings, or, after registration, in a petition for cancellation. xxx [Emphasis supplied]
1avvphil.et

Ownership of a mark or trade name may be acquired not necessarily by registration but by adoption and use in trade or commerce. As between actual use of a mark without registration, and registration of the mark without actual use thereof, the former prevails over the latter. For a rule widely accepted and firmly entrenched, because it has come down through the years, is that actual use in commerce or business is a pre-requisite to the acquisition of the right of ownership.16 While the present law on trademarks17 has dispensed with the requirement of prior actual use at the time of registration, the law in force at the time of registration must be applied, and thereunder it was held that as a condition precedent to registration of trademark, trade name or service mark, the same must have been in actual use in the Philippines before the filing of the application for registration.18 Trademark is a creation of use and therefore actual use is a pre-requisite to exclusive ownership and its registration with the Philippine Patent Office is a mere administrative confirmation of the existence of such right.19

By itself, registration is not a mode of acquiring ownership. When the applicant is not the owner of the trademark being applied for, he has no right to apply for registration of the same. Registration merely creates a prima faciepresumption of the validity of the registration, of the registrant's ownership of the trademark and of the exclusive right to the use thereof.20 Such presumption, just like the presumptive regularity in the performance of official functions, is rebuttable and must give way to evidence to the contrary. Here, respondent's own witness, Ramon Syhunliong, testified that a jeepney signboard artist allegedly commissioned to create the mark and logo submitted his designs only in December 1982.21 This was two-and-a-half months after the filing of the respondent's trademark application on October 18, 1982 with the BPTTT. It was also only in December 1982 when the respondent's restaurant was opened for business.22 Respondent cannot now claim before the Court that the certificate of registration itself is proof that the two-month prior use requirement was complied with, what with the fact that its very own witness testified otherwise in the trial court. And because at the time (October 18, 1982) the respondent filed its application for trademark registration of the "Shangri-La" mark and "S" logo, respondent was not using these in the Philippines commercially, the registration is void. Petitioners also argue that the respondent's use of the "Shangri-La" mark and "S" logo was in evident bad faith and cannot therefore ripen into ownership, much less registration. While the respondent is correct in saying that a finding of bad faith is factual, not legal,23 hence beyond the scope of a petition for review, there are, however, noted exceptions thereto. Among these exceptions are: 1. When the inference made is manifestly mistaken, absurd or impossible;24 2. When there is grave abuse of discretion;25 3. When the judgment is based on a misapprehension of facts;26 4. When the findings of fact are conflicting;27 and 5. When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent.28 And these are naming but a few of the recognized exceptions to the rule. The CA itself, in its Decision of May 15, 2003, found that the respondent's president and chairman of the board, Ramon Syhunliong, had been a guest at the petitioners' hotel before he caused the registration of the mark and logo, and surmised that he must have copied the idea there: Did Mr. Ramon Syhunliong, [respondent's] President copy the mark and devise from one of [petitioners'] hotel (Kowloon Shangri-la) abroad? The mere fact that he was a visitor of [petitioners'] hotel abroad at one time (September 27, 1982) establishes [petitioners'] allegation that he got the idea there.29 Yet, in the very next paragraph, despite the preceding admission that the mark and logo must have been copied, the CA tries to make it appear that the adoption of the same mark and logo could have been coincidental:

The word or name "Shangri-la" and the S-logo, are not uncommon. The word "Shangri-la" refers to a (a) remote beautiful imaginary place where life approaches perfection or (b) imaginary mountain land depicted as a utopia in the novel Lost Horizon by James Hilton. The Lost Horizon was a well-read and popular novel written in 1976. It is not impossible that the parties, inspired by the novel, both adopted the mark for their business to conjure [a] place of beauty and pleasure. The S-logo is, likewise, not unusual. The devise looks like a modified Old English print.30 To jump from a recognition of the fact that the mark and logo must have been copied to a rationalization for the possibility that both the petitioners and the respondent coincidentally chose the same name and logo is not only contradictory, but also manifestly mistaken or absurd. Furthermore, the "S" logo appears nothing like the "Old English" print that the CA makes it out to be, but is obviously a symbol with oriental or Asian overtones. At any rate, it is ludicrous to believe that the parties would come up with the exact same lettering for the word "Shangri-La" and the exact same logo to boot. As correctly observed by the petitioners, to which we are in full accord: x x x When a trademark copycat adopts the word portion of another's trademark as his own, there may still be some doubt that the adoption is intentional. But if he copies not only the word but also the word's exact font and lettering style and in addition, he copies also the logo portion of the trademark, the slightest doubt vanishes. It is then replaced by the certainty that the adoption was deliberate, malicious and in bad faith.31 It is truly difficult to understand why, of the millions of terms and combination of letters and designs available, the respondent had to choose exactly the same mark and logo as that of the petitioners, if there was no intent to take advantage of the goodwill of petitioners' mark and logo.32 One who has imitated the trademark of another cannot bring an action for infringement, particularly against the true owner of the mark, because he would be coming to court with unclean hands.33 Priority is of no avail to the bad faith plaintiff. Good faith is required in order to ensure that a second user may not merely take advantage of the goodwill established by the true owner. This point is further bolstered by the fact that under either Section 17 of R.A. No. 166, or Section 151 of R.A. No. 8293, or Article 6bis(3) of the Paris Convention, no time limit is fixed for the cancellation of marks registered or used in bad faith.34 This is precisely why petitioners had filed an inter partes case before the BPTTT for the cancellation of respondent's registration, the proceedings on which were suspended pending resolution of the instant case. Respondent DGCI also rebukes the next issue raised by the petitioners as being purely factual in nature, namely, whether the CA erred in overlooking petitioners' widespread prior use of the "Shangri-La" mark and "S" logo in their operations. The question, however, is not whether there had been widespread prior use, which would have been factual, but whether that prior use entitles the petitioners to use the mark and logo in the Philippines. This is clearly a question which is legal in nature. It has already been established in the two courts below, and admitted by the respondent's president himself, that petitioners had prior widespread use of the mark and logo abroad: There is, to be sure, an impressive mass of proof that petitioner SLIHM and its related companies abroad used the name and logo for one purpose or another x x x.35 [Emphasis supplied] In respondent's own words, "[T]he Court of Appeals did note petitioners' use of the mark and logo but held that such use did not confer to them ownership or exclusive right to use them in the

Philippines."36 To petitioners' mind, it was error for the CA to rule that their worldwide use of the mark and logo in dispute could not have conferred upon them any right thereto. Again, this is a legal question which is well worth delving into. R.A. No. 166, as amended, under which this case was heard and decided provides: Section 2. What are registrable. - Trademarks, trade names and service marks owned by persons, corporations, partnerships or associations domiciled in the Philippines and by persons, corporations, partnerships or associations domiciled in any foreign country may be registered in accordance with the provisions of this Act: Provided, That said trademarks trade names, or service marks are actually in use in commerce and services not less than two months in the Philippines before the time the applications for registration are filed: And provided, further, That the country of which the applicant for registration is a citizen grants by law substantially similar privileges to citizens of the Philippines, and such fact is officially certified, with a certified true copy of the foreign law translated into the English language, by the government of the foreign country to the Government of the Republic of the Philippines. Section 2-A. Ownership of trademarks, trade names and service marks; how acquired. - Anyone who lawfully produces or deals in merchandise of any kind or who engages in any lawful business, or who renders any lawful service in commerce, by actual use thereof in manufacture or trade, in business, and in the service rendered, may appropriate to his exclusive use a trademark, a trade name, or a servicemark not so appropriated by another, to distinguish his merchandise, business or service from the merchandise, business or services of others. The ownership or possession of a trademark, trade name, service mark, heretofore or hereafter appropriated, as in this section provided, shall be recognized and protected in the same manner and to the same extent as are other property rights known to this law. [Emphasis supplied] Admittedly, the CA was not amiss in saying that the law requires the actual use in commerce of the said trade name and "S" logo in the Philippines. Hence, consistent with its finding that the bulk of the petitioners' evidence shows that the alleged use of the Shangri-La trade name was done abroad and not in the Philippines, it is understandable for that court to rule in respondent's favor. Unfortunately, however, what the CA failed to perceive is that there is a crucial difference between the aforequoted Section 2 and Section 2-A of R.A. No. 166. For, while Section 2 provides for what is registrable, Section 2-A, on the other hand, sets out how ownership is acquired. These are two distinct concepts. Under Section 2, in order to register a trademark, one must be the owner thereof and must have actually used the mark in commerce in the Philippines for 2 months prior to the application for registration. Since "ownership" of the trademark is required for registration, Section 2-A of the same law sets out to define how one goes about acquiring ownership thereof. Under Section 2-A, it is clear that actual use in commerce is also the test of ownership but the provision went further by saying that the mark must not have been so appropriated by another. Additionally, it is significant to note that Section 2-A does not require that the actual use of a trademark must be within the Philippines. Hence, under R.A. No. 166, as amended, one may be an owner of a mark due to actual use thereof but not yet have the right to register such ownership here due to failure to use it within the Philippines for two months. While the petitioners may not have qualified under Section 2 of R.A. No. 166 as a registrant, neither did respondent DGCI, since the latter also failed to fulfill the 2-month actual use requirement. What is worse, DGCI was not even the owner of the mark. For it to have been the owner, the mark must not have been already appropriated (i.e., used) by someone else. At the time of respondent DGCI's

registration of the mark, the same was already being used by the petitioners, albeit abroad, of which DGCI's president was fully aware. It is respondent's contention that since the petitioners adopted the "Shangri-La" mark and "S" logo as a mere corporate name or as the name of their hotels, instead of using them as a trademark or service mark, then such name and logo are not trademarks. The two concepts of corporate name or business name and trademark or service mark, are not mutually exclusive. It is common, indeed likely, that the name of a corporation or business is also a trade name, trademark or service mark. Section 38 of R.A. No. 166 defines the terms as follows: Sec. 38. Words and terms defined and construed - In the construction of this Act, unless the contrary is plainly apparent from the context - The term "trade name" includes individual names and surnames, firm names, trade names, devices or words used by manufacturers, industrialists, merchants, agriculturists, and others to identify their business, vocations or occupations; the names or titles lawfully adopted and used by natural or juridical persons, unions, and any manufacturing, industrial, commercial, agricultural or other organizations engaged in trade or commerce. The term "trade mark" includes any word, name, symbol, emblem, sign or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured, sold or dealt in by others. The term "service mark" means a mark used in the sale or advertising of services to identify the services of one person and distinguish them from the services of others and includes without limitation the marks, names, symbols, titles, designations, slogans, character names, and distinctive features of radio or other advertising. [Emphasis supplied] Clearly, from the broad definitions quoted above, the petitioners can be considered as having used the "Shangri-La" name and "S" logo as a tradename and service mark. The new Intellectual Property Code (IPC), Republic Act No. 8293, undoubtedly shows the firm resolve of the Philippines to observe and follow the Paris Convention by incorporating the relevant portions of the Convention such that persons who may question a mark (that is, oppose registration, petition for the cancellation thereof, sue for unfair competition) include persons whose internationally well-known mark, whether or not registered, is identical with or confusingly similar to or constitutes a translation of a mark that is sought to be registered or is actually registered.37 However, while the Philippines was already a signatory to the Paris Convention, the IPC only took effect on January 1, 1988, and in the absence of a retroactivity clause, R.A. No. 166 still applies.38 Under the prevailing law and jurisprudence at the time, the CA had not erred in ruling that: The Paris Convention mandates that protection should be afforded to internationally known marks as signatory to the Paris Convention, without regard as to whether the foreign corporation is registered, licensed or doing business in the Philippines. It goes without saying that the same runs afoul to Republic Act No. 166, which requires the actual use in commerce in the Philippines of the subject mark or devise. The apparent conflict between the two (2) was settled by the Supreme Court in this wise "Following universal acquiescence and comity, our municipal law on trademarks regarding the requirement of actual use in the Philippines must subordinate an international

agreement inasmuch as the apparent clash is being decided by a municipal tribunal (Mortensen vs. Peters, Great Britain, High Court of Judiciary of Scotland, 1906, 8 Sessions 93; Paras, International Law and World Organization, 1971 Ed., p. 20). Withal, the fact that international law has been made part of the law of the land does not by any means imply the primacy of international law over national law in the municipal sphere. Under the doctrine of incorporation as applied in most countries, rules of international law are given a standing equal, not superior, to national legislative enactments (Salonga and Yap, Public International Law, Fourth ed., 1974, p. 16)."39 [Emphasis supplied] Consequently, the petitioners cannot claim protection under the Paris Convention. Nevertheless, with the double infirmity of lack of two-month prior use, as well as bad faith in the respondent's registration of the mark, it is evident that the petitioners cannot be guilty of infringement. It would be a great injustice to adjudge the petitioners guilty of infringing a mark when they are actually the originator and creator thereof. Nor can the petitioners' separate personalities from their mother corporation be an obstacle in the enforcement of their rights as part of the Kuok Group of Companies and as official repository, manager and operator of the subject mark and logo. Besides, R.A. No. 166 did not require the party seeking relief to be the owner of the mark but "any person who believes that he is or will be damaged by the registration of a mark or trade name."40 WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals dated May 15, 2003 and September 15, 2003, respectively, and the Decision of the Regional Trial Court of Quezon City dated March 8, 1996 are hereby SET ASIDE. Accordingly, the complaint for infringement in Civil Case No. Q-91-8476 is ordered DISMISSED. SO ORDERED. G.R. No. 159507 April 19, 2006

ANICETO G. SALUDO, JR., Petitioner, vs. AMERICAN EXPRESS INTERNATIONAL, INC., and/or IAN T. FISH and DOMINIC MASCRINAS, Respondents. DECISION CALLEJO, SR., J.: Before the Court is the Petition for Review on Certiorari filed by Aniceto G. Saludo, Jr. seeking to reverse and set aside the Decision1 dated May 22, 2003 of the Court of Appeals in CA-G.R. SP No. 69553. The assailed decision directed the Regional Trial Court (RTC) of Maasin City, Southern Leyte, Branch 25 thereof, to vacate and set aside its Orders dated September 10, 2001 and January 2, 2002 in Civil Case No. R-3172, and enjoined the presiding judge2 thereof from conducting further proceedings in said case, except to dismiss the complaint filed therewith on ground of improper venue. The petition also seeks to reverse and set aside the appellate court's Resolution dated August 14, 2003 denying the motion for reconsideration of the assailed decision. The factual and procedural antecedents are as follows: Aniceto G. Saludo, Jr. filed a complaint for damages against the American Express International, Inc. (AMEX) and/or its officers Ian T. Fish, Vice-President and Country Manager, and Dominic

Mascrinas, Head of Operations, with the RTC of Maasin City, Southern Leyte. The case was raffled to Branch 25 of the said court. The complaint alleged, inter alia, that plaintiff (herein petitioner Saludo) "is a Filipino citizen, of legal age, and a member of the House of Representatives and a resident of Ichon, Macrohon, Southern Leyte, Philippines." On the other hand, defendant (herein respondent AMEX, Inc.) "is a corporation doing business in the Philippines and engaged in providing credit and other credit facilities and allied services with office address at 4th floor, ACE Building, Rada Street, Legaspi Village, Makati City." The other defendants (herein respondents Fish and Mascrinas) are officers of respondent AMEX, and may be served with summons and other court processes at their office address. The complaint's cause of action stemmed from the alleged wrongful dishonor of petitioner Saludo's AMEX credit card and the supplementary card issued to his daughter. The first dishonor happened when petitioner Saludo's daughter used her supplementary credit card to pay her purchases in the United States some time in April 2000. The second dishonor occurred when petitioner Saludo used his principal credit card to pay his account at the Hotel Okawa in Tokyo, Japan while he was there with other delegates from the Philippines to attend the Congressional Recognition in honor of Mr. Hiroshi Tanaka. The dishonor of these AMEX credit cards were allegedly unjustified as they resulted from respondents' unilateral act of suspending petitioner Saludo's account for his failure to pay its balance covering the period of March 2000. Petitioner Saludo denied having received the corresponding statement of account. Further, he was allegedly wrongfully charged for late payment in June 2000. Subsequently, his credit card and its supplementary cards were canceled by respondents on July 20, 2000. Petitioner Saludo claimed that he suffered great inconvenience, wounded feelings, mental anguish, embarrassment, humiliation and besmirched political and professional standing as a result of respondents' acts which were committed in gross and evident bad faith, and in wanton, reckless and oppressive manner. He thus prayed that respondents be adjudged to pay him, jointly and severally, actual, moral and exemplary damages, and attorney's fees. In their answer, respondents specifically denied the allegations in the complaint. Further, they raised the affirmative defenses of lack of cause of action and improper venue. On the latter, respondents averred that the complaint should be dismissed on the ground that venue was improperly laid because none of the parties was a resident of Leyte. They alleged that respondents were not residents of Southern Leyte. Moreover, notwithstanding the claim in his complaint, petitioner Saludo was not allegedly a resident thereof as evidenced by the fact that his community tax certificate, which was presented when he executed the complaint's verification and certification of non-forum shopping, was issued at Pasay City. To buttress their contention, respondents pointed out that petitioner Saludo's complaint was prepared in Pasay City and signed by a lawyer of the said city. Respondents prayed for the dismissal of the complaint a quo. Thereafter, respondents filed an Opposition to Ex-Parte Motion (to Set Case for Pre-Trial) and Motion for Preliminary Hearing (on Affirmative Defense of Improper Venue) to which petitioner Saludo filed his Comments and/or Objections to the Affirmative Defense of Improper Venue. He asserted that any allegation refuting his residency in Southern Leyte was baseless and unfounded considering that he was the congressman of the lone district thereof at the time of the filing of his complaint. He urged the court a quo to take judicial notice of this particular fact. As a member of Congress, he possessed all the qualifications prescribed by the Constitution including that of being a resident of his district. He was also a member of the Integrated Bar of the Philippines-Southern Leyte Chapter, and has been such ever since his admission to the Bar. His community tax certificate

was issued at Pasay City only because he has an office thereat and the office messenger obtained the same in the said city. In any event, the community tax certificate is not determinative of one's residence. In the Order dated September 10, 2001, the court a quo denied the affirmative defenses interposed by respondents. It found the allegations of the complaint sufficient to constitute a cause of action against respondents. The court a quo likewise denied respondents' affirmative defense that venue was improperly laid. It reasoned, thus: x x x [T]he fact alone that the plaintiff at the time he filed the complaint was and still is, the incumbent Congressman of the Lone District of Southern Leyte with residence at Ichon, Macrohon, Southern Leyte, is enough to dispell any and all doubts about his actual residence. As a high-ranking government official of the province, his residence there can be taken judicial notice of. As such his personal, actual and physical habitation or his actual residence or place of abode can never be in some other place but in Ichon, Macrohon, Southern Leyte. It is correctly stated by the plaintiff, citing the case of Core v. Core, 100 Phil. 321 that, "residence, for purposes of fixing venue of an action, is synonymous with domicile. This is defined as the permanent home, the place to which, whenever absent for business or pleasure, one intends to return, and depends on the facts and circumstances, in the sense that they disclose intent. A person can have but one domicile at a time. A man can have but one domicile for one and the same purpose at any time, but he may have numerous places of residence. Venue could be at place of his residence. (Masa v. Mison, 200 SCRA 715 [1991])3 Respondents sought the reconsideration thereof but the court a quo denied the same in the Order dated January 2, 2002. They then filed with the appellate court a petition for certiorari and prohibition alleging grave abuse of discretion on the part of the presiding judge of the court a quo in issuing the September 10, 2001 and January 2, 2002 Orders. Upon respondents' posting of a bond, the appellate court issued on March 14, 2002 a temporary restraining order which enjoined the presiding judge of the court a quo from conducting further proceedings in Civil Case No. R-3172. On May 22, 2003, the appellate court rendered the assailed decision granting respondents' petition for certiorari as it found that venue was improperly laid. It directed the court a quo to vacate and set aside its Orders dated September 10, 2001 and January 2, 2002, and enjoined the presiding judge thereof from further proceeding in the case, except to dismiss the complaint. The appellate court explained that the action filed by petitioner Saludo against respondents is governed by Section 2, Rule 4 of the Rules of Court. The said rule on venue of personal actions basically provides that personal actions may be commenced and tried where plaintiff or any of the principal plaintiffs resides, or where defendant or any of the principal defendants resides, at the election of plaintiff. Venue was improperly laid in the court a quo, according to the appellate court, because not one of the parties was a resident of Southern Leyte. Specifically, it declared that petitioner Saludo was not a resident thereof. The appellate court pronounced that, for purposes of venue, the residence of a person is his personal, actual or physical habitation, or his actual residence or place of abode, which may not necessarily be his legal residence or domicile provided he resides therein with continuity and consistency.4 The appellate court quoted the following discussion in Koh v. Court of Appeals5 where the Court distinguished the terms "residence" and "domicile" in this wise: x x x [T]he term domicile is not exactly synonymous in legal contemplation with the term residence, for it is [an] established principle in Conflict of Laws that domicile refers to the relatively more

permanent abode of a person while residence applies to a temporary stay of a person in a given place. In fact, this distinction is very well emphasized in those cases where the Domiciliary Theory must necessarily supplant the Nationality Theory in cases involving stateless persons. xxxx "There is a difference between domicile and residence. Residence is used to indicate a place of abode, whether permanent or temporary; domicile denotes a fixed permanent residence to which when absent, one has the intention of returning. A man may have a residence in one place and a domicile in another. Residence is not domicile, but domicile is residence coupled with intention to remain for an unlimited time. A man can have but one domicile for one and the same purpose at any time, but he may have numerous places of residence. His place of residence generally is his place of domicile, but is not by any means, necessarily so since no length of residence without intention of remaining will constitute domicile."6 (Italicized for emphasis) In holding that petitioner Saludo is not a resident of Maasin City, Southern Leyte, the appellate court referred to his community tax certificate, as indicated in his complaint's verification and certification of non-forum shopping, which was issued at Pasay City. Similarly, it referred to the same community tax certificate, as indicated in his complaint for deportation filed against respondents Fish and Mascrinas. Under Republic Act No. 7160,7 the community tax certificate shall be paid in the place of residence of the individual, or in the place where the principal office of the juridical entity is located.8 It also pointed out that petitioner Saludo's law office, which was also representing him in the present case, is in Pasay City. The foregoing circumstances were considered by the appellate court as judicial admissions of petitioner Saludo which are conclusive upon him and no longer required proof. The appellate court chided the court a quo for stating that as incumbent congressman of the lone district of Southern Leyte, judicial notice could be taken of the fact of petitioner Saludo's residence thereat. No evidence had yet been adduced that petitioner Saludo was then the congressman of Southern Leyte and actual resident of Ichon, Macrohon of the said province. The appellate court held that, based on his complaint, petitioner Saludo was actually residing in Pasay City. It faulted him for filing his complaint with the court a quo when the said venue is inconvenient to the parties to the case. It opined that under the rules, the possible choices of venue are Pasay City or Makati City, or any place in the National Capital Judicial Region, at the option of petitioner Saludo. It stressed that while the choice of venue is given to plaintiff, said choice is not left to his caprice and cannot deprive a defendant of the rights conferred upon him by the Rules of Court.9 Further, fundamental in the law governing venue of actions that the situs for bringing real and personal civil actions is fixed by the rules to attain the greatest possible convenience to the party litigants by taking into consideration the maximum accessibility to them - i.e., to both plaintiff and defendant, not only to one or the other - of the courts of justice.10 The appellate court concluded that the court a quo should have given due course to respondents' affirmative defense of improper venue in order to avoid any suspicion that petitioner Saludo's motive in filing his complaint with the court a quo was only to vex and unduly inconvenience respondents or even to wield influence in the outcome of the case, petitioner Saludo being a powerful and influential figure in the said province. The latter circumstance could be regarded as a "specie of forum shopping" akin to that in Investors Finance Corp. v. Ebarle11 where the Court mentioned that the filing of the civil action before the court in Pagadian City "was a specie of forum shopping" considering that plaintiff therein was an influential person in the locality.

The decretal portion of the assailed Decision dated May 22, 2003 of the appellate court reads: UPON THE VIEW WE TAKE OF THIS CASE, THUS, the challenged orders must be, as they hereby are, VACATED and SET ASIDE and the respondent judge, or any one acting in his place or stead, is instructed and enjoined to desist from further proceeding in the case, except to dismiss it. The temporary restraining order earlier issued is hereby converted into a writ of preliminary injunction, upon the posting this time by petitioners [herein respondents], within five (5) days from receipt of this decision, of a bond in the amount of Five Million Pesos (P5,000,000.00), to answer for all damages that private respondent [herein petitioner] may sustain by reason of the issuance of such injunction should the Court finally decide that petitioners are not entitled thereto. Private respondent, if he so minded, may refile his case for damages before the Regional Trial Court of Makati City or Pasay City, or any of the Regional Trial Courts of the National Capital Judicial Region. Without costs. SO ORDERED.12 Petitioner Saludo sought the reconsideration of the said decision but the appellate court, in the Resolution dated August 14, 2003, denied his motion for reconsideration. Hence, he filed the instant petition for review with the Court alleging that: The Court of Appeals, (Special Fourth Division), in promulgating the afore-mentioned Decision and Resolution, has decided a question of substance in a way probably not in accord with law or with applicable decisions of this Honorable Court. (a) the Court of Appeals erred in not taking judicial notice of the undisputed fact that herein petitioner is the incumbent congressman of the lone district of Southern Leyte and as such, he is a residence (sic) of said district; (b) the Court of Appeals erred in dismissing the complaint on the basis of improper venue due to the alleged judicial admission of herein petitioner; (c) the Court of Appeals in dismissing the complaint ignored applicable decisions of this Honorable Court; and
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(d) the Court of Appeals erred in deciding that herein petitioner violated the rules on venue, and even speculated that herein petitioner's motive in filing the complaint in Maasin City was only to vex the respondents.13 In gist, the sole substantive issue for the Court's resolution is whether the appellate court committed reversible error in holding that venue was improperly laid in the court a quo in Civil Case No. R-3172 because not one of the parties, including petitioner Saludo, as plaintiff therein, was a resident of Southern Leyte at the time of filing of the complaint. The petition is meritorious. Petitioner Saludo's complaint for damages against respondents before the court a quo is a personal action. As such, it is governed by Section 2, Rule 4 of the Rules of Courts which reads: SEC. 2. Venue of personal actions. - All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.

The choice of venue for personal actions cognizable by the RTC is given to plaintiff but not to plaintiff's caprice because the matter is regulated by the Rules of Court.14 The rule on venue, like other procedural rules, is designed to insure a just and orderly administration of justice, or the impartial and evenhanded determination of every action and proceeding.15 The option of plaintiff in personal actions cognizable by the RTC is either the place where defendant resides or may be found, or the place where plaintiff resides. If plaintiff opts for the latter, he is limited to that place.16 Following this rule, petitioner Saludo, as plaintiff, had opted to file his complaint with the court a quo which is in Maasin City, Southern Leyte. He alleged in his complaint that he was a member of the House of Representatives and a resident of Ichon, Macrohon, Southern Leyte to comply with the residency requirement of the rule. However, the appellate court, adopting respondents' theory, made the finding that petitioner Saludo was not a resident of Southern Leyte at the time of the filing of his complaint. It hinged the said finding mainly on the fact that petitioner Saludo's community tax certificate, indicated in his complaint's verification and certification of non-forum shopping, was issued at Pasay City. That his law office is in Pasay City was also taken by the appellate court as negating petitioner Saludo's claim of residence in Southern Leyte. The appellate court committed reversible error in finding that petitioner Saludo was not a resident of Southern Leyte at the time of the filing of his complaint, and consequently holding that venue was improperly laid in the court a quo. In Dangwa Transportation Co., Inc. v. Sarmiento,17 the Court had the occasion to explain at length the meaning of the term "resides" for purposes of venue, thus: In Koh v. Court of Appeals, we explained that the term "resides" as employed in the rule on venue on personal actions filed with the courts of first instance means the place of abode, whether permanent or temporary, of the plaintiff or the defendant, as distinguished from "domicile" which denotes a fixed permanent residence to which, when absent, one has the intention of returning. "It is fundamental in the law governing venue of actions (Rule 4 of the Rules of Court) that the situs for bringing real and personal civil actions are fixed by the rules to attain the greatest convenience possible to the parties-litigants by taking into consideration the maximum accessibility to them of the courts of justice. It is, likewise, undeniable that the term domicile is not exactly synonymous in legal contemplation with the term residence, for it is an established principle in Conflict of Laws that domicile refers to the relatively more permanent abode of a person while residence applies to a temporary stay of a person in a given place. In fact, this distinction is very well emphasized in those cases where the Domiciliary Theory must necessarily supplant the Nationality Theory in cases involving stateless persons. "This Court held in the case of Uytengsu v. Republic, 50 O.G. 4781, October, 1954, reversing its previous stand in Larena v. Ferrer, 61 Phil. 36, and Nuval v. Guray, 52 Phil. 645, that 'There is a difference between domicile and residence. Residence is used to indicate a place of abode, whether permanent or temporary; domicile denotes a fixed permanent residence to which when absent, one has the intention of returning. A man may have a residence in one place and a domicile in another. Residence is not domicile, but domicile is residence coupled with the intention to remain for an unlimited time. A man can have but one domicile for one and the same purpose at any time, but he may have numerous places of residence. His place of residence generally is his place of domicile, but is not by any means, necessarily so since no length of residence without intention of remaining will constitute domicile.' (Italicized for emphasis)

"We note that the law on venue in Courts of First Instance (Section 2, of Rule 4, Rules of Court) in referring to the parties utilizes the words 'resides or may be found,' and not 'is domiciled,' thus: 'Sec. 2(b) Personal actions - All other actions may be commenced and tried where the defendant or any of the defendants resides or may be found, or where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff.' (Italicized for emphasis) "Applying the foregoing observation to the present case, We are fully convinced that private respondent Coloma's protestations of domicile in San Nicolas, Ilocos Norte, based on his manifested intention to return there after the retirement of his wife from government service to justify his bringing of an action for damages against petitioner in the C.F.I. of Ilocos Norte, is entirely of no moment since what is of paramount importance is where he actually resided or where he may be found at the time he brought the action, to comply substantially with the requirements of Sec. 2(b) of Rule 4, Rules of Court, on venue of personal actions." (Koh v. Court of Appeals, supra, pp. 304-305.) The same construction of the word "resides" as used in Section 1, Rule 73, of the Revised Rules of Court, was enunciated in Fule v. Court of Appeals, et al. (G.R. No. L-40502) and Fule v. Hon. Ernani C. Pao, et al. (G.R. No. L-42670), decided on November 29, 1976. Thus, this Court, in the aforecited cases, stated: "2. But, the far-ranging question is this: What does the term 'resides' mean? Does it refer to the actual residence or domicile of the decedent at the time of his death? We lay down the doctrinal rule that the term 'resides' connotes ex vi termini 'actual residence' as distinguished from 'legal residence or domicile.' This term 'resides,' like the terms 'residing' and 'residence' is elastic and should be interpreted in the light of the object or purposes of the statute or rule in which it is employed. In the application of venue statutes and rules - Section 1, Rule 73 of the Revised Rules of Court is of such nature - residence rather than domicile is the significant factor. Even where the statute uses the word 'domicile' still it is construed as meaning residence and not domicile in the technical sense. Some cases make a distinction between the terms 'residence' and 'domicile' but as generally used in statutes fixing venue, the terms are synonymous, and convey the same meaning as the term 'inhabitant.' In other words, 'resides' should be viewed or understood in its popular sense, meaning, the personal, actual or physical habitation of a person, actual residence or place of abode. It signifies physical presence in a place and actual stay thereat. In this popular sense, the term means merely residence, that is, personal residence, not legal residence or domicile. Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one's domicile. No particular length of time of residence is required though; however, the residence must be more than temporary."18 There is no dispute that petitioner Saludo was the congressman or the representative of the lone district of Southern Leyte at the time of filing of his complaint with the court a quo. Even the appellate court admits this fact as it states that "it may be conceded that private respondent ever so often travels to Maasin City, Southern Leyte, because he is its representative in the lower house."19 As a member of the House of Representatives, petitioner Saludo was correctly deemed by the court a quo as possessing the requirements for the said position,20 including that he was then a resident of the district which he was representing, i.e., Southern Leyte. Significantly, for purposes of election law, the term "residence" is synonymous with "domicile," thus: x x x [T]he Court held that "domicile" and "residence" are synonymous. The term "residence," as used in the election law, imports not only an intention to reside in a fixed place but also personal presence in that place, coupled with conduct indicative of such intention. "Domicile" denotes a fixed

permanent residence to which when absent for business or pleasure, or for like reasons, one intends to return. x x x21 It can be readily gleaned that the definition of "residence" for purposes of election law is more stringent in that it is equated with the term "domicile." Hence, for the said purpose, the term "residence" imports "not only an intention to reside in a fixed place but also personal presence in that place, coupled with conduct indicative of such intention."22 When parsed, therefore, the term "residence" requires two elements: (1) intention to reside in the particular place; and (2) personal or physical presence in that place, coupled with conduct indicative of such intention. As the Court elucidated, "the place where a party actually or constructively has a permanent home, where he, no matter where he may be found at any given time, eventually intends to return and remain, i.e., his domicile, is that to which the Constitution refers when it speaks of residence for the purposes of election law."23 On the other hand, for purposes of venue, the less technical definition of "residence" is adopted. Thus, it is understood to mean as "the personal, actual or physical habitation of a person, actual residence or place of abode. It signifies physical presence in a place and actual stay thereat. In this popular sense, the term means merely residence, that is, personal residence, not legal residence or domicile. Residence simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place and also an intention to make it one's domicile."24 Since petitioner Saludo, as congressman or the lone representative of the district of Southern Leyte, had his residence (or domicile) therein as the term is construed in relation to election laws, necessarily, he is also deemed to have had his residence therein for purposes of venue for filing personal actions. Put in another manner, Southern Leyte, as the domicile of petitioner Saludo, was also his residence, as the term is understood in its popular sense. This is because "residence is not domicile, but domicile is residence coupled with the intention to remain for an unlimited time." Reliance by the appellate court on Koh v. Court of Appeals25 is misplaced. Contrary to its holding,26 the facts of the present case are not similar to the facts therein. In Koh, the complaint was filed with the Court of First Instance in San Nicolas, Ilocos Norte by plaintiff who admitted that he was a resident of Kamias, Quezon City. Save for the fact that he grew up in San Nicolas, Ilocos Norte and that he manifested the intent to return there after retirement, plaintiff therein had not established that he was actually a resident therein at the time of the filing of his complaint. Neither did he establish that he had his domicile therein because although he manifested the intent to go back there after retirement, the element of personal presence in that place was lacking. To reiterate, domicile or residence, as the terms are taken as synonyms, imports "not only an intention to reside in a fixed place but also personal presence in that place, coupled with conduct indicative of such intention."27 In contrast, petitioner Saludo was the congressman or representative of Southern Leyte at the time of filing of his complaint with the court a quo. Absent any evidence to the contrary, he is deemed to possess the qualifications for the said position, including that he was a resident therein. And following the definition of the term "residence" for purposes of election law, petitioner Saludo not only had the intention to reside in Southern Leyte, but he also had personal presence therein, coupled with conduct indicative of such intention. The latter element, or his bodily presence as an inhabitant in Southern Leyte, was sufficient for petitioner Saludo to be considered a resident therein for purposes of venue. The following ratiocination of the court a quo is apt:

Residence in civil law is a material fact, referring to the physical presence of a person in a place. A person can have two or more residences, such as a country residence and a city residence. (Quetulio v. Ruiz, S.C. Off. Gaz. 156, Commentaries and Jurisprudence in Civil Law, Vol. 1, page 211, Tolentino). Residence is acquired by living in a place; on the other hand, domicile can exist without actually living in the place. The important thing for domicile is that, once residence has been established in one place, there be an intention to stay there permanently, even if residence is also established in some other place. Thus, if a person lives with his family habitually in Quezon City, he would have his domicile in Quezon City. If he also has a house for vacation purposes in the City of Baguio, and another house in connection with his business in the City of Manila, he would have residence in all three places (Tolentino, Commentaries and Jurisprudence on Civil Law, Vol. 1, Page 212, 1990 Edition) so that one[']s legal residence or domicile can also be his actual, personal or physical residence or habitation or place of abode if he stays there with intention to stay there permanently. In the instant case, since plaintiff has a house in Makati City for the purpose of exercising his profession or doing business and also a house in Ichon, Macrohon, Southern Leyte, for doing business and/or for election or political purposes where he also lives or stays physically, personally and actually then he can have residences in these two places. Because it would then be preposterous to acknowledge and recognize plaintiff Aniceto G. Saludo, Jr. as congressman of Southern Leyte without also recognizing him as actually, personally and physically residing thereat, when such residence is required by law.28 The fact then that petitioner Saludo's community tax certificate was issued at Pasay City is of no moment because granting arguendo that he could be considered a resident therein, the same does not preclude his having a residence in Southern Leyte for purposes of venue. A man can have but one domicile for one and the same purpose at any time, but he may have numerous places of residence.29 That petitioner Saludo was the congressman or representative of the lone district of Southern Leyte at the time of the filing of his complaint was admitted as a fact by the court a quo. In this connection, it consequently held that, as such, petitioner Saludo's residence in Southern Leyte, the district he was the representing, could be taken judicial notice of. The court a quo cannot be faulted for doing so because courts are allowed "to take judicial notice of matters which are of public knowledge, or are capable of unquestionable demonstration, or ought to be known to judges because of their judicial functions." 30 Courts are likewise bound to take judicial notice, without the introduction of evidence, of the law in force in the Philippines, 31 including its Constitution. The concept of "facts of common knowledge" in the context of judicial notice has been explained as those facts that are "so commonly known in the community as to make it unprofitable to require proof, and so certainly known to as to make it indisputable among reasonable men." 32 Moreover, "though usually facts of 'common knowledge' will be generally known throughout the country, it is sufficient as a basis for judicial notice that they be known in the local community where the trial court sits." 33 Certainly, the fact of petitioner Saludo being the duly elected representative of Southern Leyte at the time could be properly taken judicial notice of by the court a quo, the same being a matter of common knowledge in the community where it sits. Further, petitioner Saludo's residence in Southern Leyte could likewise be properly taken judicial notice of by the court a quo. It is bound to know that, under the Constitution, one of the qualifications of a congressman or representative to the House of Representatives is having a residence in the district in which he shall be elected.

In fine, petitioner Saludo's act of filing his complaint with the court a quo cannot be characterized as a "specie of forum-shopping" or capricious on his part because, under the rules, as plaintiff, he is precisely given this option. Finally, respondents' claim that the instant petition for review was not properly verified by petitioner Saludo deserves scant consideration. Section 4, Rule 7 of the Rules of Court reads: Sec. 4. Verification. - Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or accompanied by affidavit. A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based on authentic records. A pleading required to be verified which contains a verification based on "information and belief," or upon "knowledge, information and belief," or lacks proper verification, shall be treated as an unsigned pleading. Petitioner Saludo's verification and certification of non-forum shopping states that he has "read the contents thereof [referring to the petition] and the same are true and correct of my own personal knowledge and belief and on the basis of the records at hand." The same clearly constitutes substantial compliance with the above requirements of the Rules of Court. WHEREFORE, premises considered, the petition is GRANTED. The Decision dated May 22, 2003 and Resolution dated August 14, 2003 of the Court of Appeals in CA-G.R. SP No. 69553 are REVERSED and SET ASIDE. The Orders dated September 10, 2001 and January 2, 2002 of the Regional Trial Court of Maasin City, Southern Leyte, Branch 25 thereof, in Civil Case No. R-3172 are REINSTATED. SO ORDERED. G.R. No. 150280 April 26, 2006

UNIVERSITY OF THE EAST, Petitioner, vs. MARIBETH ANG WONG, Respondent. RESOLUTION CORONA, J.: This is a petition for review of the May 31, 2001 decision1 of the Court of Appeals finding no grave abuse of discretion on the part of the Regional Trial Court (RTC), Branch 3, Manila2 in issuing the writ of preliminary injunction3 in civil case no. 99-95981.4 The facts follow. The parties entered into several contracts whereby respondent leased from petitioner University of the East (UE) various canteen spaces within UEs campuses. The contracts subject of this case provided for their expiration on December 31, 1999.

In December 1998, a meeting was held to discuss reports on contaminated food sold in respondents canteens. According to respondent, however, petitioner verbally assured her that the contracts would be renewed. Hence, she spent P700,000 for the renovation of the canteens.5 Petitioner, on the other hand, denied this. The minutes6of the meeting were presented to prove that no such assurance was given. Besides, the renovation had been commenced in August 1998, months before the meeting.7 On September 30, October 26 and November 29 of 1999,8 respondent was notified in writing that the lease contracts would not be renewed. On December 22, 1999, respondent filed with the Manila RTC an urgent petition for mandatory injunction with damages9 alleging that the non-renewal of the lease contracts would result in irreparable injury to her. On January 17, 2000, a writ of preliminary injunction was issued after respondent posted a bond for P50,000.10Petitioners motion for reconsideration was denied.11 In a petition for certiorari before the Court of Appeals,12 petitioner imputed grave abuse of discretion amounting to lack of jurisdiction on the part of the trial court when it issued the writ of preliminary injunction without showing that the requisites for its issuance had been met. On May 31, 2001, the Court of Appeals dismissed the petition. The issuance of a preliminary injunction rests entirely within the discretion of the court taking cognizance of the case and is generally not interfered with except in cases of manifest abuse. No manifest abuse has been shown on the part of respondent Judge de Castro, when he in fact granted preliminary injunction to serve the purpose for which it was created, which was to preserve status quo.13 Hence, this recourse. Petitioner argued that to be entitled to the equitable relief of preliminary injunction respondent must indubitably show a clear and positive right to injunctive relief; otherwise the preventive aid of equity by preliminary injunction cannot be invoked.14 Respondents action was based on alleged verbal assurances that the contracts would be renewed which was, however, controverted by documentary evidence showing that no such commitment was made. In her comment,15 respondent stressed that, having leased the canteen spaces for nine years, she had a right to renew the contracts. Otherwise, serious damage in the form of lost investments and lost opportunities for income would result. On September 30, 2002, petitioner manifested16 that the case had become moot and academic since the extension of the lease prayed for by respondent had already lapsed. Attached was an order dated July 24, 2002 of the trial court.17 It read: At todays hearing, the Court apprised both parties thru counsels that the relief sought for in the partition has lapsed. In short, the 2-year extension of the lease prayed for by [respondent] has transpired.
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WHEREFORE, due to the aforesaid supervening event, the petition is now moot and academic. Accordingly, the writ of preliminary injunction previously issued is LIFTED and this petition is hereby DISMISSED. xxx [Respondent] is, however, instructed to comply with the Order dated July 11, 2002 on its rental arrearages to [petitioner.] [Respondent] is also directed to pay the accruing rentals from December 31, 2001 until she vacates the premises. An earlier order of the trial court dated July 11, 200218 read: xxx [Respondent] has not paid the rentals for more than 2 years. The injunction issued herein was for [respondent] to continue to occupy the leased premises. However, this is not an excuse to forego the rentals. [Petitioner] states that rentals have accumulated to P12,605,469.20 as of December 31, 2001. xxx xxx xxx WHEREFORE, xxx [respondent] is directed to pay [petitioner] the sum of P12,605,469.20 plus the accrued rentals thereafter from (December 31, 2001).19 The main issue before us is the propriety of the writ of preliminary injunction issued by the trial court. The lease contracts all expired on December 31, 1999. Respondent sought to renew the same for another two years, from December 31, 1999 to December 31, 2001. The Manila RTC issued a writ of preliminary injunction to maintain the status quo pending the determination of whether the lease contracts should be renewed or not.Therefore, on December 31, 2001, the date which marked the end of the two-year extension being sought, the writ lost its usefulness. In fact, there is no evidence that petitioner ever agreed to the two-year extension being sought by respondent. Taken together with the trial courts finding that respondent herein was not paying her rentals, it appears that respondent was holding on to the leased spaces within the UE campuses only by virtue of the trial courts writ of preliminary injunction and not because of any express or implied meeting of the minds on the renewal of the lease. It taxes our sense of fairness to know that respondent was apparently using the judicial process to circumvent her obligation to pay the rentals due from her. Her ejectment and the collection of all arrearages from her are therefore in order, if these have not been effected yet. WHEREFORE, the petition is hereby GRANTED. SO ORDERED. G.R. No. 141393 April 19, 2006

CATHERINE A. YEE, Petitioner, vs. HON. ESTRELLITA P. BERNABE, ACTING PROVINCIAL PROSECUTOR OF BENGUET, Respondent. DECISION AZCUNA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court against the order 1 dated December 10, 1999 of the Regional Trial Court (RTC), Branch 62, of La Trinidad, Benguet as well as its subsequent order dated December 28, 1999 denying the motion for reconsideration filed by petitioner Catherine Yee in Criminal Case No. 99-CR-3603 entitled "People of the Philippines v. Catherine Yee." The facts are undisputed. On October 20, 1999, an information 2 for violation of Republic Act No. 6539 was filed with the RTC in La Trinidad, Benguet against petitioner, stating as follows: The undersigned accuses CATHERINE A. YEE for VIOLATION OF REPUBLIC ACT NO. 6539, OTHERWISE KNOWN AS ANTI-CARNAPPING ACT OF 1972, AS AMENDED, committed as follows: That on or about the 25th day of March, 1998, in the Municipality of La Trinidad, Benguet, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, with intent of gain and without the knowledge and consent of the owner thereof, by means of force and intimidation, did then and there willfully, unlawfully and feloniously take, steal and carry away an Isuzu Elf chiller van with Plate No. USA 359 belonging to PRICINIA ESGUERRA, to the damage and prejudice of the owner thereof. CONTRARY TO LAW. Because the offense charged is classified as a heinous crime, the information was automatically assigned to RTC, Branch 62 which is specifically designated to hear and decide heinous offenses and crimes within the region. On October 29, 1999, petitioner filed a motion for reduction of bail bond and voluntary surrender with the RTC. The trial court granted the motion on the same day and required petitioner to deposit cash in the amount ofP100,000 for her provisional liberty. Thereafter, on November 10, 1999, petitioner filed a motion to conduct preliminary reinvestigation 3 which was treated by the trial court as a motion for preliminary investigation. Petitioner claimed that she was never informed or notified of the preliminary investigation and submitted, in support thereof, a certification to the effect that the subpoena for the proceedings had not been served upon her. Despite admitting the fact that there was lack of notice upon petitioner, the motion was denied by the RTC in the challenged order dated December 10, 1999, the dispositive portion of which reads: Acting on the motion to conduct preliminary re-investigation which is truly a motion for preliminary investigation, the Court hereby denies the same. Set the arraignment of the accused on 16 December 1999 at 8:30 oclock in the morning. Issue subpoena to the accused to be served through Counsel. SO ORDERED. 4 The trial court likewise denied petitioners subsequent motion for reconsideration 5 in the Order dated December 28, 1999. Aggrieved, petitioner invokes the jurisdiction of this Court, arguing principally that the denial of her motion for preliminary reinvestigation was improper because (1) Section 7, Rule 112 of the Rules of

Court which requires that a motion for preliminary investigation be filed within five (5) days from the time the accused learns of the filing of the information is not applicable to her case; and, (2) petitioners acts of filing a motion to reduce bail, voluntarily surrendering herself, and posting bail before her arraignment do not constitute a waiver of her right to preliminary investigation. 6 Thereafter, respondent Estrellita P. Bernabe, the Acting Provincial Prosecutor of Benguet, submitted her comment7 and contended that petitioner had not been deprived of her right to a preliminary investigation as one had, in fact, been conducted. In any event, respondent Bernabe averred that petitioners failure to seasonably claim her right to demand a preliminary investigation when she moved for the reduction of her bail bond and when she subsequently posted bail evinced her intent to waive such right. Respondent Bernabe likewise pointed out that the petition is fatally flawed because it did not comply with Section 1, Rule 65 of the Rules of Court, there being no allegation that the orders of the trial court were tainted with grave abuse of discretion amounting to lack or excess of jurisdiction. In a separate comment, 8 the Hon. Fernando P. Cabato, Presiding Judge of the RTC, Branch 62, of La Trinidad, Benguet, put in issue the propriety of the remedy taken by petitioner, asserting that the challenged orders are not the final orders that can be subject of an appeal by certiorari to the Supreme Court under Rule 45. Similarly, Judge Cabato also maintained that the denial of petitioners motion was justified considering that petitioner had already posted bail to secure her provisional release. For its part, the Office of the Solicitor General (OSG), in its Comment 9 dated July 23, 2000, contended that the trial court did not commit any reversible error in denying petitioners motion for preliminary reinvestigation, considering that such denial was authorized by the last paragraph of Section 7, Rule 112 10 of the Rules of Court. The OSG was likewise of the view that petitioners act of posting bail constituted a waiver of her right to question any irregularity in, or even the absence of, a preliminary investigation relative to the filing of an information against her. The threshold issue in this case involves a determination of the propriety of the mode adopted by petitioner to seek relief against the orders of the RTC. On this score, it must be kept in mind that an aggrieved party is permitted to apply for relief by way of two distinctly different modes, that is, either through an appeal by certiorariunder Rule 45, or through a special civil action for certiorari under Rule 65. The remedy taken by petitioner, that is, an appeal by certiorari under Rule 45, brings up for review errors committed by the court in the exercise of its jurisdiction amounting to nothing more than errors of judgment. 11Specifically, this mode of appeal involves the review of judgments, awards or final orders on the merits where only questions of law are raised. 12 It must be stressed, however, that only judgments or final orders that completely dispose of the case or a particular matter can be the subject of such review. 13 Hence, appeal is not allowed against interlocutory orders which are merely provisional and decide some point or matter but are not a final decision of the whole controversy. 14 The rationale for this rule was stated in Rudecon Management Corporation v. Singson, 15 which quoted Sitchon v. Sheriff of Occidental Negros, 16 to wit: The reason of the law in permitting appeal only from a final order or judgment, and not from interlocutory or incidental one, is to avoid multiplicity of appeals in a single action, which must necessarily suspend the hearing and decision on the merits of the case during the pendency of the appeal. If such appeal were allowed, the trial on the merits of the case should necessarily be delayed for a considerable length of time, and compel the adverse party to incur unnecessary expenses; for one of the parties may interpose as many appeals as incidental questions may be raised by him and interlocutory orders rendered or issued by the lower court.

It is noteworthy that the assailed orders denying petitioners motion for preliminary reinvestigation are merely interlocutory and may be questioned not at this stage of the proceedings but rather as part of an appeal that may eventually be taken from the final judgment rendered in the case. Stated otherwise, the orders do not finally dispose of the proceeding or of any independent offshoot of it and there has been no adjudication on the merits nor any definitive pronouncement as to the guilt or innocence of petitioner with respect to the crime with which she is charged. Granting, for the sake of argument, that the prosecutor would maintain the finding of probable cause against petitioner after the reinvestigation of the case, and, thereafter, the RTC would sustain the finding of probable cause against petitioner and issue a warrant for her arrest, the trial court would subsequently have to proceed to trial, receive the evidence of the parties and render judgment on the basis thereof. Petitioner would then have the following options: (a) to proceed to trial, and, if convicted, file a petition for review under Rule 45; or (b) to file a petition for certiorari under Rule 65, to nullify the resolutions of the RTC on the ground of grave abuse of discretion amounting to excess or lack of jurisdiction in issuing the said resolutions and decision. 17 Neither can the petition be treated as a special civil action for certiorari under Rule 65 of the Rules of Court. As pointed out by respondent Fiscal, the petition does not allege grave abuse of discretion tantamount to lack or excess of jurisdiction, which is the ground for a petition for certiorari under Rule 65 of the Rules of Court. An act of a court or tribunal may only be considered as committed in grave abuse of discretion when the same was performed in a capricious or whimsical exercise of judgment which is equivalent to lack of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform a duty enjoined by law or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or personal hostility. 18 In this connection, it is only upon showing that the court acted without or in excess of jurisdiction or with grave abuse of discretion that an interlocutory order such as that involved in this case may be impugned. Be that as it may, it must be emphasized that this practice is applied only under certain exceptional circumstances to prevent unnecessary delay in the administration of justice and so as not to unduly burden the courts. 19
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Furthermore, such a petition should be filed with the Court of Appeals and not with this Court, following the rule on the hierarchy of courts. As a matter of policy, direct resort to this Court will not be entertained unless the redress desired cannot be obtained in the appropriate lower courts, and exceptional and compelling circumstances, such as in cases involving national interest and those of serious implications, justify the availment of the extraordinary remedy of the writ of certiorari, calling for the exercise of its primary jurisdiction. 20 In Ouano v. PGTT Intl. Corp., 21 the policy was restated in this wise: We need to reiterate, for the guidance of petitioner, that this Courts original jurisdiction to issue a writ of certiorari (as well as prohibition, mandamus, quo warranto, habeas corpus and injunction) is concurrent with the Court of Appeals (CA), as in the present case, and with the RTCs in proper cases within their respective regions. However, this concurrence of jurisdiction does not grant a party seeking any of the extraordinary writs the absolute freedom to file his petition with the court of his choice. This Court is a court of last resort, and must so remain if it is to satisfactorily perform the functions assigned to it by the Constitution and immemorial tradition. The hierarchy of courts determines the appropriate forum for such petitions. Thus, petitions for the issuance of such extraordinary writs against the first level ("inferior") courts should be filed with the RTC, and those against the latter, with the CA. A direct invocation of this Courts original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition. This is the established policy. It is a policy that is necessary to

prevent inordinate demands upon this Courts time and attention which are better devoted to those matters within its exclusive jurisdiction, and to prevent further over-crowding of its docket. x x x In sum, the petition does not raise any special and important reason or exceptional and compelling circumstance that would justify direct recourse to this Court. Consequently, the failure of petitioner to strictly adhere to the doctrine on the hierarchy of courts constitutes sufficient cause for the dismissal of the present petition. 22 WHEREFORE, the petition is DENIED. No costs. SO ORDERED. G.R. No. 125256 May 2, 2006

JESUS DURAN and DEMETRIA A. DURAN, Petitioners, vs. COURT OF APPEALS, JORGE OLIVAR, PRAXEDES UMPAD GANTUANGCO, joined by her husband, ALBERTO GANTUANGCO, EMILIA DICHOS, LUISA NUEZ joined by her husband, FAUSTINO NUNEZ, and JUANITO LAWAS, Respondents. x--------------------------------x G.R. No. 126973 May 2, 2006

JESUS DURAN and DEMETRIA A. DURAN, Petitioners, vs. COURT OF APPEALS, MERCEDES U. GUANTANGCO and her husband, GEORGE OLIVAR, EMILIO DICHOS, JUANITO LAWAS, BERLIE LUMAPAT, LUISANUEZ and her husband, HON. MEINRADO P. PAREDES, as Presiding Judge of the REGIONAL TRIAL COURT, Respondents. DECISION TINGA, J.: These consolidated petitions challenge the Decisions of the Court of Appeals in CA-G.R. CV No. 31730 dated May 23, 19961 and CA-G.R. SP No. 21084 dated October 9, 1996,2 which respectively ordered the reconveyance of portions of the disputed lot to private respondents and dismissed the complaint for unlawful detainer filed by petitioners. There is no substantial dispute regarding the following facts which we quote from the decision of the Court of Appeals in CA-G.R. CV No. 31730: The complaint in the case at bench is for Reconveyance of certain portions of a 449 square meter parcel of land situated in Mabolo, Cebu City covered by Transfer Certificate of Title No. 99527 (Exhibit "1") in the name of defendant-appellant Jesus Duran who is married to Demetria Duran. Plaintiffs-appellees Jorge Olivar, Praxedes Umpad Gantuangco assisted by husband Alberto Gantuangco, Emilio Dichos, Luisa Nuez assisted by her husband Faustino Nunez and Juanito Lawas sought to recover the portions on which they have built their respective dwellings as shown on Exhibit "A", a Sketch Plan of the controverted lot.

Transfer Certificate of Title No. 25018 (Exhibit "B") shows that the prior owner of the lot was one Antonina Oporto who leased out the property to the plaintiffs-appellees and the defendantsappellants. Oporto decided to sell the whole lot later. Two witnesses namely plaintiffs-appellees Jorge Olivar and Praxedes Gantuangco gave concurring testimonies that plaintiffs-appellees and defendants-appellants requested owner-lessor Antonina Oporto to sell the lot to them. Evidence further shows that the latter acceded to sell the land to the parties at P100.00 per square meter. Defendant-appellant Jesus Duran however was designated by plaintiffs to negotiate for the lowering of the purchase price. This fact is practically corroborated by defendants-appellants claim that it was Jesus Duran who insisted that he be the one to bargain with Antonina Oporto. Subsequently however, defendant-appellant Jesus Duran bought the lot in its entirety for himself from Antonina Oporto on January 29, 1987 for the sum ofP37,000.00 or at approximately P82.41 per square meter. The aggrieved plaintiffs-appellees learned of the transaction only when they were summoned to appear before the barangay captain in anticipation of the filing of the case for unlawful detainer. As a consequence, plaintiffs-appellees impute bad faith on defendant-appellant Jesus Duran. Defendants-appellants filed an Unlawful Detainer case with the Municipal Trial Court, Branch II, Cebu City docketed as CEB-8576. The Municipal Trial Court ruled in their favor in this other case, which deals only with the question of possession. On appeal, the Municipal Trial Courts decision was affirmed by the Regional Trial Court. The RTCs decision is now the subject of a Petition for Review docketed as CA-G.R. SP No. 21084 presently pending before another Division of this Court. In this case for Reconveyance originally filed before the RTC of Cebu City, Brach 13, the court a quo rendered judgment the decretal portion of which is hereunder quoted as follows: "WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs ordering defendants to convey the ownership and possession to the plaintiffs of portions of Lot No. 4, Block 6 as stated in paragraph 2 of the complaint as per sketch plan marked as Exhibit A. Plaintiffs are ordered to reimburse defendants the sum ofP44,900.00 at the rate of P100.00 per square meter for the total area of 449 square meters within a period of thirty (30) days from and after this decision shall have become final and executory. Failure on the part of any plaintiff to reimburse defendants means forfeiture of his or her right to have the portion of the lot he/she is occupying conveyed to him/her. "The claims for damages in the complaint as well as in the counterclaim are hereby dismissed. No cost. "SO ORDERED."3
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The Court of Appeals ruled that there was a verbal contract of agency between the parties whereby petitioner, Jesus Duran, was constituted as an agent to negotiate the purchase of the subject property at a lesser price. It held that a constructive trust was created and that Jesus Duran breached his fiduciary duty not only because he concealed the fact that the negotiations had been successfully completed but, worse, he purchased the property for himself. Thus, he has the duty to convey the pertinent portions of the property upon the demand of private respondents and payment by them of the acquisition cost. It appears that at the time this Decision was rendered, the case for unlawful detainer was pending before another division of the Court of Appeals. At any rate, the case ultimately landed in the same 13th Division which decided the reconveyance case. The appellate court, adopting the facts in the reconveyance case, rendered judgment in favor of private respondents ruling that the prior determination of the capacity in which petitioners acted in

purchasing the subject property is indispensable to the correct resolution of who between the parties have a better right to physical possession. Since it was ruled that petitioners are obliged to convey the pertinent portions of the property to private respondents, the Court of Appeals dismissed the complaint for unlawful detainer filed by petitioners against them. No motions for reconsideration were filed. Petitioners now dispute the appellate courts findings that an agency was constituted between the parties; that there was constructive trust; and that Jesus Duran was guilty of fraud or breach of trust. Allegedly, these findings do not find support in the evidence on record. Petitioners insist that Jesus Duran was only designated as the spokesman to represent the private respondents in the negotiations for the sale of the property.4 They further argue that the Court of Appeals erred in adopting the facts in the reconveyance case and using them as evidence in the unlawful detainer case, insisting that an action for reconveyance of property has no effect on ejectment suits regarding the same property. Procedurally, they contend that the motion for reconsideration of the RTC decision did not toll the period within which the decision may be brought on petition for review before the Court of Appeals. Hence, the petition for review was filed late and should not have been taken cognizance of.5 Private respondents, on the other hand, insist that Jesus Duran was the one who suggested that he would talk to Antonina Oporto to ask her to lower the purchase price. They then agreed that he would act as agent on behalf of private respondents in the sale negotiations. A fiduciary relationship was therefore created which petitioners breached when they purchased the property for themselves. Private respondents also argue that the petition in G.R. No. 125256 raises a question of fact because it assails the credibility of the testimonies upon which the Court of Appeals based its Decision.6 In G.R. No. 126973, private respondents aver that while a motion for reconsideration of a decision of the Municipal Trial Court is a prohibited pleading under the 1991 Revised Rule on Summary Procedure, this is not the case once the matter is elevated to the Regional Trial Court (RTC). In such an instance, the ordinary rules, which allows a motion for reconsideration and tolls the period within which a petition for review may be filed before the Court of Appeals, apply. They further contend that the appellate court correctly ruled that the issue of possession cannot be decided independently of the question of ownership. Hence, the inquiry it made into the title of the property as adjudged in the reconveyance case was necessary.7 We affirm the challenged Decisions of the Court of Appeals. In Morales v. Court of Appeals,8 we defined a trust and the categories of trust, viz: Trusts are either express or implied. Express trusts are created by the intention of the trustor or of the parties, while implied trusts come into being by operation of law, either through implication of an intention to create a trust as a matter of law or through the imposition of the trust irrespective of, and even contrary to, any such intention. In turn, implied trusts are either resulting or constructive trusts. Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice and

prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold.9 [Emphasis supplied] The burden of proving the existence of a trust is generally on the party asserting its existence. Such proof must be clear and must satisfactorily show the existence of the trust and its elements. While oral evidence may be presented to prove the existence of an implied trust, such evidence must be trustworthy because oral evidence can easily be fabricated. Further, the evidence must be received by the courts with extreme caution. The existence of an implied trust should not be made to rest on loose, equivocal and indefinite declarations.10 In this case, both the trial court and the Court of Appeals declared that preponderance of evidence, in credibility and number, exists in favor of private respondents. The Court of Appeals quoted the testimonies of private respondents Jorge Olivar, Praxedes Gantuangco and Emilio Dichos all to the effect that they had an agreement with Antonina Oporto to purchase the subject property but that, upon petitioner Jesus Durans expression of his desire to have the purchase price lowered, they gave their authority for the latter to negotiate the reduction of the purchase price for the property. Unfortunately, Jesus Duran breached the trust reposed upon him by leading private respondents to believe that he intended to work towards the groups objective and concealing the fact that he had already purchased the property for himself at a reduced price. In contrast, all that petitioners offered in evidence was petitioner Demetria Durans statement that there could not have been any such transaction because she was always with her husband. Jesus Duran, who was in the best position to rebut private respondents claims, did not even take the witness stand and no justifiable reason was given to explain his absence. We find no reason to disturb the evaluation of the trial court and the Court of Appeals of the credibility of the testimonies of private respondents witnesses. It is a settled rule that the assessment of the credibility of witnesses is a domain best left to the trial court judge because of his unique opportunity to observe their deportment and demeanor on the witness stand, a vantage point denied appellate tribunals. And when his findings have been affirmed by the Court of Appeals, these are generally binding and conclusive upon this Court.11 There is no showing that the trial court and the Court of Appeals overlooked matters which, if taken under advisement, would have altered the outcome of the case. Their factual findings regarding the agreement between the parties and legal conclusion that a constructive trust was created and later breached by Jesus Duran are substantially supported by the evidence on record and, for this reason, must stand. Petitioners theory that Jesus Duran was not constituted as an agent because private respondents did not entrust money to him for the negotiations has no merit. By his own admission, Jesus Duran volunteered and was authorized by private respondents to represent them in the negotiations for the sale of the property. Whether the designation was as a spokesman or as an agent is immaterial. His actions thereafter should have been in representation of, not only himself, but also private respondents as dictated by the principle of equity, which lies at the core of constructive trust. On the matter of the dismissal of the complaint for unlawful detainer, we find the same correct in view of the operative antecedents. Section 33 of Batas Pambansa Blg. 129 provides that Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise "exclusive original jurisdiction over cases of

forcible entry and unlawful detainer: Provided, That when, in such cases, the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine the issue of possession." In this case, petitioners assert a right to possess by virtue of their purchase of the property. Private respondents, on the other hand, also claim ownership by virtue of constructive trust. The issue of ownership, being inextricably linked with that of possession, should therefore be resolved for purposes of determining the question of possession. Given the Court of Appealss ruling that petitioners assertion of ownership is unlawful and that private respondents are entitled to reconveyance, the appellate court could not but take its own findings into account to determine who among the parties has a better right to possession. It correctly dismissed the complaint for unlawful detainer and ruled that petitioners are obliged to turn over the possession of the pertinent portions of the property to private respondents being the owners thereof. As regards the procedural question of whether the Court of Appeals should have given due course to the petition purportedly filed late because private respondents filed a prohibited motion for reconsideration of the RTCs decision, it is settled that a motion for reconsideration may be filed from a decision of the RTC in the exercise of its appellate jurisdiction over decisions of the inferior courts in ejectment cases.12 Petitioners contention should, perforce, be rejected. WHEREFORE, the instant petitions are hereby DENIED. The Decisions of the Court of Appeals in CA-G.R. CV No. 31730 dated May 23, 1996 and CA-G.R. SP No. 21084 dated October 9, 1996, are hereby AFFIRMED. No pronouncement as to costs. SO ORDERED. G.R. No. 148759 June 8, 2006

GERMELINA TORRES RACAZA and BERNALDITA TORRES PARAS, Petitioners, vs. ERNESTO GOZUM,1 Respondent. DECISION AZCUNA, J.: In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioners Germelina Torres Racaza and Bernaldita Torres Paras seek the nullification of the decision2 dated July 12, 2000 as well as the resolution3dated June 28, 2001 rendered by the Court of Appeals (CA) in CAG.R. CV No. 61227 which reversed and set aside the decision4 dated September 30, 1998 of the Regional Trial Court (RTC), Branch 158 of Pasig City, consequently dismissing the complaint for accion publiciana filed by petitioners against respondent Ernesto Gozum. The antecedents of this case are as follows: The plaintiffs are the registered co-owners of a parcel of land under Transfer Certificate of Title No. PT-92411 situated at Amang Rodriguez Avenue, Santolan, Pasig City. Standing on this lot is a 2-

storey, 3-door apartment. The property was formerly owned by the father of the plaintiffs, the late Carlos Torres. In 1981, defendant Ernesto Gozum occupied the back portion of the property on a P3,500.00 monthly rental and continued to occupy the same even after the death of Carlos Torres on December 26, 1993. On July 1, 1995, plaintiffs sent Gozum a letter of demand to vacate [the] premises (Annex G, Complaint). After a failed barangay conciliation, on November 24, 1995, plaintiffs commenced an ejectment case [with the Metropolitan Trial Court] against Gozum. The case was, however, dismissed due to [a] technicality. Almost two (2) years thereafter, on May 27, 1997, plaintiffs sent anew a formal demand letter to vacate on the ground that the verbal contract of lease over the property had already expired sometime in July 1995, and the same has not been renewed and since then, defendant had discontinued paying the monthly rentals of P3,500.00. When this latter demand was not heeded, on June 4, 1997, the present complaint for recovery of possession oraccion publiciana was initiated before the Regional Trial Court of Pasig City. The initial reaction of the defendant was to file a motion to dismiss based on lack of jurisdiction claiming that the cause of action should have been for unlawful detainer falling within the jurisdiction of the municipal trial courts and that the provision of P.D. No. 1508 was not complied with. In the Order dated September 30, 1997, the court a quo denied the motion to dismiss on the ground that an unlawful detainer must be filed within one (1) year from the notice to vacate [given] as early as July 1, 1995 and since over two (2) years had passed when the case was filed, the proper action is accion publiciana and no longer unlawful detainer. Defendant thereafter filed his answer asseverating that he has a 10-year contract of lease (Annex 1, Complaint) over the premises executed between him and plaintiffs late father on October 1, 1989 to expire on September 30, 1999 and so, the notice to vacate and the present case were all prematurely done. Defendant likewise denied the allegation that he has not been paying rentals. The truth is that it was the plaintiffs who refused to receive payments so that the same were deposited with the bank. In the same answer, defendant asserted that the contract of lease gave him the right of first refusal to buy the property and in violation thereof, plaintiffs have already sold the property to a certain Ernesto Brana. After due proceedings on September 30, 1998, the appealed decision was promulgated with the following dispositive portion: "WHEREFORE, in view of the foregoing, judgment is rendered in favor of the plaintiffs and against the defendant, ordering the latter and all persons claiming rights under him to vacate the premises covered by Transfer Certificate of Title No. PT-92411 of the Register of Deeds of Pasig City and turn it over to the plaintiffs. Defendant is also ordered to pay plaintiffs the amount of P3,500.00 effective July 1, 1995 until such time he shall have vacated the premises. In addition, he shall pay attorneys fees in the amount of P30,000.00 plus P1,500.00 per court appearance and the cost of suit. SO ORDERED. Pasig City, September 30, 1998." (pp. 4-5, RTC Decision; pp. 76-77, Rollo).5

Aggrieved, respondent seasonably appealed the decision to the CA, ascribing to the lower court the following errors: I. THE COURT A QUO ERRED IN HOLDING THAT THE PLAINTIFFS HAVE A LEGAL RIGHT TO RECOVER POSSESSION OF THE SUBJECT PROPERTY FROM THE DEFENDANT. II. THE LOWER COURT ERRED IN NOT RECOGNIZING THE VALIDITY OF THE CONTRACT OF LEASE DATED OCTOBER 5, 1989, WHICH WAS PREVIOUSLY EXECUTED BY THE PLAINTIFFS FATHER, ATTORNEY CARLOS P. TORRES, AND HEREIN DEFENDANT. III. THE COURT A QUO ERRED IN DECLARING THAT THE ABOVEMENTIONED CONTRACT IS FRAUDULENT, FABRICATED AND FICTITIOUS AND THAT THE SIGNATURE OF ATTY. TORRES AFFIXED THEREON IS NOT GENUINE. IV. THE TRIAL COURT COMMITTED ERROR IN AWARDING DAMAGES AND ATTORNEYS FEES IN FAVOR OF PLAINTIFFS.6 After the submission by the parties of their respective briefs but prior to the resolution of the appeal, petitioners filed with the CA a Motion to Dismiss or for Execution Pending Appeal7 dated December 6, 1999 on the ground that the lease contract relied upon by respondent to justify his continued possession of the subject property had, by its own terms and respondents own admission, expired on September 30, 1999. Thereafter, without acting upon petitioners motion to dismiss, the CA reversed the decision of the RTC and dismissed the case, holding that the lower court had no jurisdiction over the complaint for accion publicianaconsidering that it had been filed before the lapse of one (1) year from the date the last letter of demand to respondent had been made. The CA ruled that the proper remedy of petitioners should have been an action for unlawful detainer filed with the first level court, or the municipal or metropolitan trial court. Their motion for reconsideration having been denied, petitioners filed this present petition arguing that: 1) The Court of Appeals decided a question of substance not in accord with jurisprudence and remedial law authorities when it declared as null and void the entire proceedings in the trial court despite the fact that: (i) petitioners correctly filed the accion publiciana with the trial court below; (ii) respondent actively participated in the trial proceeding, testified in person, and submitted to the trial courts authority to decide the case; and (iii) respondent did not raise any jurisdictional issue in his appeal where he raised only the substantive portions of the trial courts decision. 2) The Court of Appeals likewise departed from the accepted and usual course of judicial proceedings amounting to serious abuse of discretion when it chose to ignore the glaring fact that respondents appeal had become moot and academic with the expiration of the lease contract upon which his appeal rested.8

In due course, respondent filed his Comment9 dated October 10, 2001, asserting that the CA correctly set aside the decision of the RTC because the lower court had no jurisdiction over the subject matter of the case. In this regard, respondent pointed out that he had previously assailed the jurisdiction of the trial court in the proceedings below via his Motion to Dismiss10 dated July 8, 1997. Respondent likewise adopted the reasoning of the CA and argued that petitioners ran afoul of Section 1, Rule 7011 of the Rules of Court considering that petitioners Complaint12 dated June 4, 1997 for recovery of possession was filed only within months from the date the second demand letter to vacate dated May 27, 1997 was served upon him. In their Reply13 dated October 20, 2001, petitioners countered that respondent is estopped from raising any jurisdictional issue in connection with the demand letter dated May 27, 1997 considering that respondent never argued during the trial or even in his appeal to the CA that the existence of the second letter divested the trial court of jurisdiction over the complaint. The petition has merit. The allegations of a complaint determine the nature of the action as well as which court will have jurisdiction over the case.14 The complaint would be deemed sufficient if, on its face, it shows that the court has jurisdiction without resorting to parol testimony.15 Precisely because ejectment proceedings are summary in nature, the complaint should contain a statement of facts which would bring the party clearly within the class of cases for which the statutes provide a remedy. In the present case, petitioners made the following allegations in their complaint: xxx 2. [Petitioners] are the duly registered co-owners of a parcel of land and its improvements, more particularly identified as a 3-door apartment, specifically located between Fumakilla Laboratories, Inc. and the Shell Gasoline Station along Amang Rodriguez, Sr. Avenue, Santolan, Pasig City, Metro Manila x x x. 3. Sometime in 1981, [respondent] entered into a verbal lease contract with the parents of herein [petitioners], who agreed to lease to the [respondent], on a month-to-month basis, the aforementioned property at the rental rate of Php3,500.00 per month. 4. On July 1, 1995, [petitioners] sent [respondent] a Notice to Vacate x x x informing the latter of the termination of the said verbal lease contract and demanding from him to vacate and peacefully surrender to the [petitioners] the aforesaid premises, the possession of which [respondent] has unlawfully withheld from the latter. Notwithstanding these written and oral demands, [respondent] has repeatedly failed and up to now still refuses to turn over the said premises peacefully to the [petitioners]. Since that time, [respondent] has failed to remit his monthly rentals of Php3,500.00 so that as of May 30, 1997, [respondent] has incurred rental arrears now totaling Php 80,500.00 x x x16 To summarize, petitioners claim that (1) they are the owners of the property, being the successorsin-interest of the original owners; (2) their predecessors-in-interest entered into a verbal lease agreement with respondent on a month-to-month basis; (3) they decided to terminate the verbal lease contract upon the expiration of the last monthly term sometime in 1995; and (4) on July 1, 1995, they demanded that respondent leave the property, but respondent refused to do so.

Undeniably, the foregoing averments constitute a cause of action that is based primarily on unlawful deprivation or withholding of possession. Petitioners seek the recovery of the possession of the leased premises following the lapse of the term of the verbal lease contract entered into by petitioners predecessors-in-interest with respondent. The allegation that the contract is on a monthto-month basis becomes material in this sense because it signifies that the lease contract is terminable at the end of every month.17 Thus, petitioners may exercise their right to terminate the contract at the end of any month even if none of the conditions of the contract had been violated, and such right cannot be defeated by the lessee's timely payment of the rent or by his willingness to continue doing so. The lease contract expires at the end of every month unless there is an implied or tacit renewal thereof as when the lessee is allowed to continue enjoying the leased premises for fifteen (15) days after the end of every month with the acquiescence of the lessor. Such exception, however, cannot be invoked when notice to vacate is given to the lessee in which case the contract of lease expires at the end of the month.18 Moreover, even if the month-to-month agreement is only on a verbal basis, if it is shown that the property is needed for the lessors own use or for the use of an immediate member of the family or for any of the other statutory grounds to eject, then the lease is considered terminated as of the end of the month, after proper notice or demand to vacate has been given.19 At this juncture, it must be pointed out that notice or demand to vacate had been properly served upon respondent through the letter20 dated July 1, 1995, to wit: July 1/95 Dear Ernesto Gozom, I would like to reiterate my verbal demand upon you to vacate the premises you are presently occupying made sixty (60) days ago. The said premises should be vacated within THIRTY (30)21 DAYS upon receipt hereof for I badly needed it and please take this notice as my final demand after I have verbally given you sixty (60) days already. Hoping you will give this matter your preferential and utmost attention in order to avoid a costly litigation. Very truly yours, (sgd.) GERMELINA T. RACAZA and (sgd.) BERNALDITA T. PARAS Verily, respondents right to remain in possession of the property subject of the lease was extinguished upon the expiration of the grace period mentioned in the July 1, 1995 demand letter. It thus becomes respondents obligation to turn over the property to petitioners, failing which petitioners would have the right to immediately resort to ejectment action to recover possession. Their complaint could thus fall under two kinds of ejectment suits, the first being for unlawful detainer cognizable by the metropolitan or municipal trial courts under Rule 70 and the second being for accion publiciana cognizable by the regional trial courts.22

An action for unlawful detainer exists when a person unlawfully withholds possession of any land or building against or from a lessor, vendor, vendee or other persons, after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied.23 This summary action should be filed with the municipal trial courts within one year after the occurrence of the unlawful deprivation or withholding of possession.24 Beyond the one-year period, the real right of possession may be recovered through the filing of an accion publiciana with the regional trial courts. 25 In upholding the propriety of the mode adopted by petitioners to recover possession of their real property, the trial court found that more than one (1) year had lapsed from the time of petitioners dispossession, to wit: xxx As to the first issue, the [petitioners] have the legal right to recover the property from the [respondent]. [Petitioners] are the absolute owners of the property and the portion of the property which is occupied by the [respondent]. The possession by the [respondent] of the back portion of the property is unlawful and [petitioners] have been unlawfully deprived of the property since July 1, 1995 when they served the notice to vacate to the [respondent]. [Respondent] admits that after the notice to vacate was served upon him, he stopped paying his monthly rentals to the [petitioners]. The present action for recovery of possession was filed more than one year from the time the cause of action of the [petitioners] accrued, which was from the time the [respondent] stopped paying his rental to the [petitioners] or on July 1, 1995. x x x26 Respondent nevertheless insists, for the first time, that the one-year period must be reckoned from the date of the second demand letter to vacate, that is, on May 27, 1997. Considering that petitioners complaint was filed within days from this date, respondent contends that the RTC had no jurisdiction to hear the case. Adopting in toto the position of the CA, respondent argues that petitioners should have filed an action for unlawful detainer instead with the metropolitan or municipal trial courts. The records of the case, however, do not support this view. Demand or notice to vacate is not a jurisdictional requirement when the action is based on the expiration of the lease. Any notice given would only negate any inference that the lessor has agreed to extend the period of the lease. The law requires notice to be served only when the action is due to the lessees failure to pay or the failure to comply with the conditions of the lease.27 The one-year period is thus counted from the date of first dispossession. To reiterate, the allegation that the lease was on a month-to-month basis is tantamount to saying that the lease expired every month. Since the lease already expired midyear in 1995 as communicated in petitioners letter dated July 1, 1995, it was at that time that respondents occupancy became unlawful. Even assuming, for the sake of argument, that a demand or notice to vacate was necessary, a reading of the second letter shows that petitioners were merely reiterating their original demand for respondent to vacate on the basis of the expiration of the verbal lease contract mentioned in the first letter. For clarity, the full text of the second letter28 sent by petitioners counsel is reproduced below: Dear Mr. Gozom: My principals, Germelina Torres Racaza and Bernaldita Torres Paras, have brought to me for legal action the fact of your unjustified and unlawful possession and occupation of the entire back portion of their apartment building, located between Fumakilla Laboratories Inc. and the Shell Gasoline Station along Amang Rodriguez, Sr. Avenue, Santolan, Pasig City, Metro Manila.

According to my principals, your verbal contract of lease covering the said premises already expired sometime in July 1995 and the same has never been renewed, for which reason you discontinued paying your monthly rentals of Php3,500.00. Notwithstanding their constant reminders and requests to you, for you to immediately vacate the aforesaid leased premises in view of the expiration of the lease contract, you have up to this time failed and still refuse to vacate the said premises to the prejudice of my clients. In this regard, please consider this letter our formal demand and notice for you to vacate the said leased premises on or before the 2nd day of June 1997. Should you fail to so vacate and leave the premises and to pay your total monthly rental arrearages, amounting to Php 80,500.00, on or before the said date, we shall be constrained to pursue all available remedies under the law to protect the interests of my clients. Very truly yours, (sgd.) ATTY. CELSO P. YLADAN II Counsel for Germelina Torres Racaza and Bernaldita Torres Paras (Emphases supplied.) The Court has, in the past, ruled that subsequent demands which are merely in the nature of reminders or reiterations of the original demand do not operate to renew the one-year period within which to commence the ejectment suit considering that the period will still be reckoned from the date of the original demand.29 Besides, the allegations in the complaint and the answer put in issue the existence and validity of the verbal lease contract itself. Respondent contends that the lease term over the property is ten (10) years based on a written lease contract purportedly executed by him and petitioners predecessorsin interest. In this situation, it is the RTC which would be in the best position to determine the true nature of the agreement between the parties and to decide which of the two agreements is valid. In fact, it found that the written lease contract was spurious and not binding upon the petitioners. Moreover, it is too late for respondent to invoke the defense of lack of jurisdiction on the ground that the action was filed before the lapse of one year from the date of last demand. Based on the records, respondent never pursued this line of argument in the proceedings before the trial court and even in his appeal to the CA. While it is true that prior to the filing of his answer, respondent moved to dismiss the complaint on the theory that the allegations therein merely constituted an action for unlawful detainer, the motion did not raise any jurisdictional issue relative to the second demand letter. When his motion to dismiss was denied, respondent no longer challenged the jurisdiction of the trial court in his subsequent pleadings and instead actively participated in the proceedings held before the RTC by relying principally on the strength of the written lease contract allegedly executed between him and petitioners predecessors-in-interest. It was only when the CA motu proprio dismissed the complaint that respondent conveniently thought of adopting the novel theory embodied in the assailed decision of the appellate court. Under these circumstances, estoppel has already set in. In Tijam v. Sibonghanoy,30 this Court held that a partys active participation in all stages of the case before the trial court, which includes invoking the courts authority to grant affirmative relief, effectively estops such party from later challenging that same courts jurisdiction. The CAs conclusion that the doctrine enunciated in Tijam has been abandoned is erroneous as, in fact, the

same has been upheld and reiterated in many succeeding cases.31Thus, while an order or decision rendered without jurisdiction is a total nullity and may be assailed at any stage, a partys active participation in the proceedings in the tribunal which rendered the order or decision will bar such party from attacking its jurisdiction. In any event, this Court notes that by respondents own claim,32 the term of the alleged written lease contract expired on September 30, 1999 or several months before the decision of the appellate court was rendered. The CA should have taken cognizance of this material fact considering that the statement is binding upon respondent and is an admission which renders moot the issue of who has a better right of possession. WHEREFORE, the petition is GRANTED and the assailed Decision dated July 12, 2000 as well as the Resolution dated June 28, 2001 rendered by the Court of Appeals in CA-G.R. CV No. 61227 are REVERSED and SET ASIDE. Accordingly, the Decision dated September 30, 1998 of the Regional Trial Court, Branch 158, Pasig City in Civil Case No. 66295 is REINSTATED. No costs. SO ORDERED. G.R. No. 125684 June 8, 2006

ALEJO ARANDA, SIMEONA JOSON-ARANDA, BONIFACIA ARANDA, PELAGIA ARANDA, DOMINADOR ARANDA, VIVENCIO ARANDA, LOLITA ARANDA, JEFFREY ARANDA, and FELICIANO ARANDA, Petitioners, vs. FORTUNE SAVINGS & LOAN ASSOCIATION, INC., THE PROVINCIAL SHERIFF OF CAVITE, SABRINO C. ARANDA, VERONICA ARANDA, THE REGISTER OF DEEDS OF THE PROVINCE OF CAVITE and THE HONORABLE COURT OF APPEALS, Respondents. DECISION CALLEJO, SR., J.: Before the Court is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 36111 dismissing the petition for the annulment of the Decision2 of the Regional Trial Court (RTC) of Bacoor, Cavite, Branch 19, in Civil Case No. BCV-82-16, as well as the Resolution denying the motion for reconsideration thereof. The Antecedents On January 5, 1979, Alejo Aranda purchased from the then Ministry of Agrarian Reform (Ministry) a parcel of land consisting of 20,890 square meters identified as Lot No. 1260-B, Subdivision Plan SWO-40076 of the Yaptinchay Estate in Carmona, Cavite, for which he was issued Transfer Certificate of Title (TCT) No. 102248.3 The transfer was covered by a Deed of Sale4 where Aranda was prohibited from encumbering or selling the property within five years from said date without the Ministrys written consent. On June 19, 1980, the Ministry issued a Permit to Mortgage5 in favor of Aranda, with the condition that, in case the mortgagee is a private banking institution or private person, the following clause should be incorporated in the deed of mortgage: "In the event of foreclosure, only persons who are

qualified to purchase land under Commonwealth Act No. 539, Republic Act No. 1162, as amended[,] Republic Act No. 3844, as amended, or government banking institution or agencies, or any private banking institution may participate in the public auction sale thereof." It was also required that the mortgage contract be submitted to the Ministry for verification and final approval. Arandas pending loan application with Fortune Savings and Loan Association, Inc. (FSLAI) was approved. Thus, on June 24, 1980, Aranda, with the consent of his wife, Simeona Joson, executed a Mortgage Contract6 in favor of FSLAI. The loan (for P95,000.00) was evidenced by a Promissory Note,7 whereby the spouses Aranda, jointly and severally, obliged themselves to pay their obligation on or before July 21, 1983.8 The Ministry approved the loan as well as the contract. The spouses Aranda, however, failed to pay the loan, upon which FSLAI filed a petition for the extrajudicial foreclosure of the mortgage. When Alejo Aranda received the Notice of Sheriffs Sale, he filed a Complaint9against the FSLAI and the Provincial Sheriff for the nullification of the mortgage and the extrajudicial foreclosure in the RTC of Cavite. The case was docketed as Civil Case No. BCV-82-16. On December 22, 1983, Alejo Aranda, assisted by counsel, Atty. Franco L. Loyola, and the FSLAI, assisted by Atty. Julio S. Francisco, executed a compromise agreement10 which was submitted to the court for approval. The RTC approved the agreement in its Decision11 dated January 5, 1984, to wit: 1. That plaintiff hereby waives all his claims embodied in the complaint; 2. That plaintiff admits that his total obligation is ONE HUNDRED SIXTY-TWO THOUSAND FOUR HUNDRED SEVENTY-FOUR PESOS & 44/100 (P162,474.44) as of today; 3. That plaintiff agreed and promised to pay the defendant Fortune Savings & Loan Association, Inc., the said amount of P162,474.44 on installment basis as follows: a) P10,000.00 upon the execution of this compromise agreement which amount shall be applied in the foreclosure sale expenses and penalty charges; b) P5,000.00 every month beginning January 22, 1983 until the full payment of the plaintiffs obligation; 4. That plaintiff agreed to pay the stipulated interest of 22.5% per annum and a penalty charge of 3% per annum on the diminishing unpaid balance; 5. That the aforementioned obligation of the plaintiff shall still be secured by the Real Estate Mortgage executed by plaintiff on June 10, 1980 and entered in the Notarial Register of the Notary Public of Rizal, Atty. Julio Francisco as Doc. No. 181; Page No. 38; Book No. XIV; Series of 1980 wherein the plaintiff mortgaged his 20,840 square meters [of] land covered by Transfer Certificate of Title No. T-102248; 6. That, should the plaintiff fail to pay any of the aforementioned monthly installment, then the whole unpaid indebtedness shall become due and payable, and in case of such an event, the plaintiff/mortgagor agreed to pay the stipulated interest and

penalty charge on the unpaid balance from date of default as agreed in paragraph 4 hereof; 7. That, as stated in the aforesaid Deed of Real Estate Mortgage, should the plaintiff/mortgagor fail to pay any of the foregoing installment, the defendant/mortgagee/bank shall have the right to foreclose the said mortgage either judicially or extra-judicially; the defendant/mortgagee/bank is hereby appointed by the plaintiff/mortgagor as attorney-in-fact to conduct the extra-judicial foreclosure sale; 8. That should the defendant/mortgagee/bank choose to foreclose the said mortgage either judicially or extra-judicially, the plaintiff/mortgagor is agreeable to pay attorneys fees of 25% of the unpaid balance and the expenses of the foreclosure sale. WHEREFORE, plaintiff and defendants respectfully pray that this Honorable Court approve the foregoing compromise agreement by making a judgment based on the same. Makati, Metro Manila, 22nd day of December 1983. (Sgd.) ALEJO ARANDA Plaintiff-Mortgagor FORTUNE SAVINGS & LOAN ASSOCIATION, INC. Defendant-Mortgagee By: (Sgd.) DOLORES G. VILLENA Accountant Assisted by: (Sgd.) ATTY. FRANCO L. LOYOLA Counsel for Plaintiff Assisted by: (Sgd.) ATTY. JULIO S. FRANCISCO Counsel for Defendants

WHEREFORE, finding the foregoing Compromise Agreement to be the term and voluntary will of parties, and the same not being contrary to law, morals, and public policy, judgment is hereby (sic) in accordance with the terms and conditions therein set forth, without any pronouncement as to costs. SO ORDERED.12 However, Alejo failed to pay his account as provided in the decision. Thus, on motion of the FSLAI, the RTC issued an Order13 dated July 25, 1985 allowing the corporation to foreclose the real estate mortgage extrajudicially. In due time, the FSLAI filed a petition for extrajudicial foreclosure of real estate mortgage with the Ex-Officio Provincial Sheriff of Cavite. The sale of the property at public auction was set on August 26, 1985. Alejo Aranda did not oppose the petition. The FSLAI was declared the winning bidder

during the public auction and the Deputy Sheriff executed a Certificate of Sale14 over the property on the same day. Alejo Aranda failed to redeem the property. On September 4, 1992, the Register of Deeds issued TCT No. 358872 in favor of the FSLAI over the parcel of land.15 On December 30, 1992, it sold a portion of the property, Lot No. 1260-B-1 with an area of 7,500 square meters to Sabrino C. Aranda (Alejo Arandas brother) for P150,000.00.16 On December 21, 1991, Geodetic Engineer Bienvenido Corpuz conducted a subdivision survey of Lot No. 1260-B-1. He prepared a subdivision plan17 where the property was subdivided into four lots: Lot Nos. 1260-B-1-A, 1260-B-1-B, 1260-B-1-C, and 1260-B-1-D. Sabrino Aranda later sold Lot No. 1260-B-1-B to the Nishin Netsuken Philippines Corporation (NNPC). The Register of Deeds thereafter issued the following titles: to Sabrino Aranda, TCT No. T36321118 covering Lot No. 1260-B-1-A (1,955 square meters), TCT No. T-36321319 covering Lot No. 1260-B-1-C (3,933 square meters), and TCT No. T-36321420 covering Lot No. 1260-B-1-D (258 square meters); to NNPC, TCT No. T-36321221covering Lot No. 1260-B-1-B (1,356 square meters). On March 8, 1993, Alejo Aranda, as plaintiff, through counsel Atty. Dennis Angeles, filed a Complaint22 in the RTC of Cavite for the cancellation of the titles covering the said lots with prayer for damages. He alleged that his brother, through machination, borrowed the owners duplicate of TCT No. 102248, used the same as collateral for a loan which he secured from the FSLAI, and falsified his (Alejos) signature on the mortgage contract. Since he was unaware of the mortgage, the monthly amortizations were not paid, and the property was foreclosed by the FSLAI as a consequence. Alejo Aranda further alleged that, as shown in the title covering the property, it could "not be sold or transferred except by hereditary succession or to the government;" thus, the mortgage of the property to the FSLAI, the foreclosure of the real estate mortgage, the sale at public auction to the FSLAI and to the other defendants, as well as the torrens title issued under their names, are null and void. Alejo prayed that, after due hearing, judgment be rendered in his favor as follows: WHEREFORE, it is most respectfully prayed that this Honorable Court render judgment in favor of plaintiff and against defendants, ordering: ON THE PRAYER FOR TEMPORARY RESTRAINING ORDER/PRELIMINARY INJUNCTION 1. Issuing a Temporary Restraining Order ex-parts (sic) and after due hearing, a Writ of Preliminary Injunction enjoining herein defendants or anyone claiming rights under them from further performing any act which would work injustice to herein plaintiff; ON THE MAIN CAUSE OF ACTION 1. Ordering the cancellation of Transfer Certificate of Title Nos. T-363211, T-363213, [and] T363214 in the name of defendant Sabrino C. Aranda; Transfer Certificate of Title No. T363212 in the name of defendant Nishin Netsuken Philippines Corporation; and Transfer Certificate of Title No. T-358872 in the name of defendant Fortune Savings Loan Association, Inc.; 2. Declaring plaintiff to be the owner of the real estate covered by Transfer Certificate of Title No. T-102248 reinstating the same to be valid and subsisting;

3. Ordering defendants to jointly and severally pay plaintiff: a) Moral damages in the amount of P100,000.00 b) Exemplary damages in the sum of P100,000.00 c) The sum of P100,000.00 as and for attorneys fees. Plaintiff prays for other reliefs just and equitable in the premises.23 The case was docketed as Civil Case No. BCV-93-26. NNPC filed a motion to dismiss the complaint on the ground that the complaint did not allege that the property was purchased in bad faith and without value. In his Answer24 to the complaint, Sabrino alleged the following by way of special and affirmative defenses: 6. That when herein defendant who was then abroad and/or away from home returned, came to know of what happened, he pleaded with defendant Fortune Savings & Loan Association, Inc., explaining to the latter that he was a part owner of the property, as a result of which herein defendant was allowed to buy a portion of 7,500 square meters at the price demanded by defendant Fortune Savings & Loan Association, Inc., which was P150,000.00 as evidenced by a deed of sale dated December 30, 1991, a xerox copy of which is hereto attached and marked as ANNEXES "1" and "1-A" hereof; 7. That herein defendant later on sold a portion of 1,356 sq. meters, known as Lot 1260-B-1B, to his co-defendant Nishin Netsuken Philippine Corporation for a valuable consideration and in good faith, which act, was, and still within the right of herein defendant to do, as he was already the absolute owner thereof; 8. That plaintiff has therefore no cause of action against the herein defendant, but even assuming without admitting that plaintiff might have some right before to redeem said property or any portion thereof, the said right was already deemed waived or abandoned; 9. That plaintiff is, therefore, in estoppel to exercise whatever right, if any, he might have in the premises.25 On July 22, 1993, the RTC issued an Order26 denying the motion to dismiss filed by NNPC.
lavvphi 1.net

Subsequently, the FSLAI filed a motion to dismiss the complaint on the ground, inter alia, of res judicata. It alleged that the action of plaintiff was barred by the decision of the RTC in Civil Case No. BCV-82-16 which was based on the compromise agreement entered into by the parties. For his part, plaintiff filed a manifestation and motion praying that his complaint be dismissed without prejudice. During the December 15, 1993 hearing in Civil Case No. BCV-93-26, plaintiffs counsel, Atty. Dennis Angeles, presented the former counsel of plaintiff, Atty. Franco Loyola, as witness. The latter admitted the genuineness of his and plaintiffs signatures on the complaint in Civil Case No. BCV-8216, and on the compromise agreement which the parties and their counsel submitted to the court for approval. He likewise admitted the due execution of the Compromise Agreement.

On March 25, 1994, the RTC issued an Order27 granting the motion of the FSLAI to dismiss the complaint on the ground that the action of plaintiff was barred by the decision of the RTC in Civil Case No. BCV-82-16. Plaintiff did not appeal the order. On January 6, 1995, Alejo, his wife Simeona, and their children, filed a Complaint for annulment of the decision of the RTC in Civil Case No. BCV-82-16 before the Court of Appeals. The complaint reiterated the material allegations of the complaint in Civil Case No. BCV-93-26 relative to the nullity of the real estate mortgage in favor of FSLAI, the extrajudicial foreclosure thereof, the sale of the properties covered by the deed, and the torrens titles thereafter issued by the Register of Deeds. It was further alleged that Sabrino Aranda and his wife conspired with FSLAI to forge Alejos signature on the complaint in Civil Case No. BCV-82-16; Alejo never authorized Atty. Franco Loyola to file the complaint in said case; the signature in the compromise agreement purporting to be his is a forgery; Alejo never appeared nor participated in said case, hence, the proceedings and judgment therein are null and void; and, the complaint in Civil Case No. BCV-93-26 was dismissed without prejudice. It was likewise prayed that judgment be rendered as follows: WHEREFORE, it is most respectfully prayed that, pending final determination of the present case, it is most respectfully prayed that: a. A temporary restraining order immediately be issued restraining the defendants from committing the acts complained of; b. After hearing on the petition for preliminary injunction, a writ of preliminary injunction be issued restraining all the defendants from committing the acts complained of; and after hearing on the merits, judgment be rendered in favor of the plaintiffs and against the defendants in the following tenor: 1. Making the writ of injunction permanent; 2. Declaring the mortgage in favor of defendant Bank, and all supporting papers thereto, null and void ab initio; 3. Declaring the Decision dated January 5, 1984, Annex D, in Civil Case No. BCV82-16 and all proceedings before and after rendition of said Decision, null and void ab initio for lack of jurisdiction; 4. Declaring the Order dated March 25, 1994 in Civil Case No. BCV-93-26 null and void, or at least without prejudice; 5. Declaring the Extrajudicial Foreclosure proceedings and the Certificate of Sale executed by the defendant Provincial Sheriff against the property of plaintiffs null and void ab initio; 6. Declaring Transfer Certificate of Title Nos. T-213097, T-363212, T-363211, T363213, T-363214, and T-358872 null and void ab initio, and ordering the defendant Register of Deeds to cancel said titles; 7. Ordering the defendants to return and reconvey the property subject of this case to the plaintiffs free from all liens and encumbrances, and the Register of Deeds of the Province of Cavite to issue new title in the names of plaintiffs Alejo Aranda and Simeona Joson-Aranda over the property;

8. In any event, ordering the defendants to pay to plaintiffs the following amounts: a. P50,000.00 as actual damages; b. P300,000.00 as moral damages; c. P300,000.00 as exemplary damages; d. P50,000.00 as attorneys fees. Plaintiffs [pray] for such other reliefs to which they may be entitled under the law and premises. FSLAI alleged, by way of defense, that (1) the complaint was barred by the decision of the RTC in Civil Case No. BCV-82-16 and by the Order of the RTC in Civil Case No. BCV-93-26 dismissing plaintiffs second complaint on the ground of res judicata; (2) the children of the spouses Alejo Aranda and Simeona Joson-Aranda, as plaintiffs, have no cause of action against it; (3) they are estopped from assailing the compromise agreement of the parties in Civil Case No. BCV-82-16 and the decision of the RTC based thereon; and (4) they were guilty of forum shopping. On February 22, 1996, the CA rendered judgment dismissing the complaint for lack of merit.28 The appellate court averred that the testimony of Atty. Franco Loyola in Civil Case No. BCV-93-26 taken on December 15, 1993, belied plaintiffs factual allegations. It also ruled that the action was barred by prescription. The Alejo Aranda spouses filed a motion for reconsideration, which the appellate court denied.29 The Alejo Aranda spouses, through their new counsel, Atty. Jose Alvarez, forthwith filed the instant Petition for Review on Certiorari, alleging that the CA erred in ruling as follows: (1) that the RTC had jurisdiction in Civil Case No. BCV-82-16; (2) that their action for the nullification of the decision of the RTC in Civil Case No. BCV-82-16 had prescribed; and (3) that the dismissal of their complaint in Civil Case No. BCV-93-26 was with prejudice. Petitioners maintain that they never authorized Atty. Franco Loyola to sign the compromise agreement in Civil Case No. BCV-82-16; in any event, their complaint in Civil Case No. BCV-93-26 was dismissed without any answer having been filed by defendant therein. Considering that the dismissal of the complaint was not on the merits of the case, it was not a bar to their complaint in the CA. They aver that the appellate court should have ordered an investigation on their claim that their counsels, Atty. Franco Loyola and Atty. Dennis Angeles, took advantage of their ignorance and illiteracy, and abandoned their cause. In any event, petitioners point out, the trial court dismissed their complaint in Civil Case No. BCV-9326 on their motion, before any answer was filed; hence, the dismissal of their complaint was without prejudice. The petition has no merit. First. Petitioners Bonifacia Aranda, Pelagia Aranda, Dominador Aranda, Vivencio Aranda, Lolita Aranda, Jeffrey Aranda, and Feliciano Aranda contend that they are the real parties-in-interest in the CA and in this Court, and thus had a cause of action for the nullification of the decision of the RTC in Civil Case No. BCV-82-16 and for the reversal of the CA decision. They joined their parents, spouses Alejo Aranda and Simeona Joson-Aranda as plaintiffs in the CA, on their claim that they are

the "compulsory heirs" of said spouses. However, under the law on succession, "the rights to the succession are transmitted from the moment of death of the decedent,"30 and that "compulsory heirs are called to succeed by operation of law;"31 as such, petitioners will only become compulsory heirs of their parents upon the death of the latter. Second. Petitioners claim that petitioner Alejo Aranda did not secure the services of Atty. Loyola as his counsel in Civil Case No. BCV-82-16 and that said counsel forged his (Alejos) signature in the complaint in Civil Case No. BCV-82-16, as well as the one above his typewritten name on page three of the compromise agreement. However, such allegation has been proved to be a complete prevarication by no less than petitioner Alejo Aranda himself, through his former counsel, Atty. Loyola, when the latter testified on December 15, 1993, during the hearing of the motion to withdraw the complaint. The lawyer categorically declared that the signatures in the complaint in Civil Case No. BCV-82-16 and the compromise agreement in said case were genuine. Moreover, the CA dismissed the petition for the annulment of the decision of the RTC in Civil Case No. BCV-82-16 based on the testimony of petitioner Alejo Arandas own witness, Atty. Franco Loyola: However, the allegations in the petition are not deserving of credence. The petitioners claim that they never filed nor authorized Atty. Loyola to file the complaint subject of Civil Case No. 82-16, much less the compromise agreement is not believable considering the following circumstances: First, the transcript of stenographic notes taken during the hearing held on December 15, 1993 in Civil Case No. 93-26 (a case admittedly filed by petitioner Alejo Aranda) reveals that petitioner Alejo Aranda himself, through his own counsel, Atty. Dennis Angeles, presented as witness, Atty. Franco Loyola who testified in this wise: ATTY. ANGELES: Your Honor, we are offering the testimony of Atty. Franco Loyola to testify and prove that he was the counsel on record of the plaintiff in Civil Case No. 82-16 entitled Alejo Aranda versus Fortune Savings & Loan Association, Inc. and Provincial Sheriff of Cavite and such lawyer was responsible for the execution of the compromise agreement signed by the parties particularly by his client Alejo Aranda. With the kind permission of this Honorable Court. COURT: Proceed. Q: What was the purpose in coming to you? A: The purpose in coming to me is that they can (sic) recover the property subject matter of the sheriff sale under extrajudicial foreclosure pursuing. Q: After your conversation, what happened? A: I prepared a complaint signed by Mr. Aranda against Fortune Savings & Loan Association, Inc., and the Provincial Sheriff of Cavite before [the] then Court of First Instance of Bacoor, Branch 5, docketed as Civil Case No. 82-16. xxx Q: On page no. 8 of the complaint, at the last page, there is a signature of Alejo Aranda. Will you kindly go over the same and tell the Honorable Court whose signature is that? A: That is the signature of Alejo Aranda, Sir. xxx

Q: Why do you know that that is the signature of Alejo Aranda? A: I was present, Sir, when that was signed in the presence of the Clerk of Court, Adriano Vista, before we filed our complaint before the Court of First Instance of Bacoor, Cavite. Q: Now, will you kindly inform this Court whether that was already terminated? A: That case was terminated by compromise agreement/settlement, Sir. xxx Q: I am showing to you again the compromise agreement and calling your attention to the signature of one Alejo Aranda appearing on page 11 of the compromise agreement, do you know whose signature is this? A: This (sic) were all signed by Alejo Aranda, Sir. Q: And why do you know that these are the signatures of Alejo Aranda? A: It was signed in my presence. If I remember correctly, it was signed right in the office of Fortune Savings where the representatives of Fortune Savings, Dolores Villena and Atty. Julio Francisco were also present. I can distinctly remember Alejo Aranda. xxx Q: Now, prior to the time Alejo Aranda affixed his signature on pages 2 and 3 of the compromise agreement, will you kindly inform this Honorable Court whether Alejo Aranda was duly advised of the contents of the compromise agreement? A: Yes, Sir. I have already explained the contents of the compromise agreement to him because it involved monetary obligation it is incumbent for me to explain to him the meaning of the compromise agreement that has to be approved by the court. xxx Q: On the basis of this compromise agreement, what happened? A: It was approved, Sir, by the court and the decision was made by Judge Ildefonso Nobleza dated January 5, 1984. [Underscoring ours; Tsn, December 15, 1993, pp. 4-19] The foregoing quoted portions of the transcript of stenographic notes of the hearing held on December 15, 1993, in Civil Case No. 93-26, clearly belies Alejo Arandas claim that he did not sign nor authorize the filing of the complaint in Civil Case No. 82-16, and participated therein through his former counsel, Atty. Loyola. It is to be noted that Atty. Loyola was presented as witness by herein petitioner Alejo Aranda himself through his counsel, Atty. Dennis Angeles, in Civil Case No. 93-26. Petitioners did not file any Reply to refute the copy of the transcript attached to the Comment of respondent bank; hence, it is deemed admitted by the petitioners. Secondly, the assailed judgment upon compromise was rendered on January 5, 1984. Writ of execution was issued on July 25, 1985 and writ of possession on November 20, 1989. Assuming [that] petitioners did not receive copies of

the decision and the writ of execution, certainly, they would be aware of the writ of possession as the same would have involved a physical transfer of the subject property by the sheriff to respondent bank. The present petition for annulment of judgment was filed only on January 6, 1995. The inordinate delay in questioning the judgment and seeking its annulment puts in serious doubt the veracity of the allegation of fraud.32 Third. Petitioners contention that the CA should have ordered the investigation of Atty. Loyola and Atty. Angeles is anchored on an erroneous factual premise, namely, that the CA found said counsels to have committed acts of misconduct to the prejudice of the rights of their client, petitioner Alejo Aranda. However, a careful study of the CA decision shows that no such findings were made. The appellate court merely declared that even assuming the truth of the allegations in the petition, they merely constitute extrinsic fraud, a ground for the annulment of the RTC Decision in Civil Case No. BCV-82-16: "A judgment can be annulled on the following grounds: that the judgment is void for want of jurisdiction; that the judgment is void for lack of due process; or that it has been obtained by fraud." (Regidor v. Court of Appeals, 219 SCRA 530; Ruiz v. Court of Appeals, 201 SCRA 577). The allegations in the petition that petitioner Alejo Aranda never filed nor authorized Atty. Franco Loyola to file the complaint for annulment of real estate mortgage which was docketed as Civil Case No. 8216; that the signature in said complaint was forged, that petitioner Alejo Aranda never appeared nor participated in the proceedings of said Civil Case No. 82-16; that Alejo Aranda never authorized the compromise agreement, and that the signature appearing in said compromise agreement dated December 22, 1983 which was wrongfully made the basis of the herein assailed judgment upon compromise dated January 5, 1984, was a forgery, could legally constitute extrinsic fraud that would be a ground for annulment of judgment. Among the instances of extrinsic or collateral fraud are: keeping the unsuccessful party away from court by a false promise of compromise, or purposely keeping him in ignorance of the suit; or where an attorney fraudulently pretends to represent a party, and connives at his defeat, or being regularly employed, corruptly sells out his clients interest (Magno v. Court of Appeals, 107 SCRA 285, at page 292).33 Indeed, there is no declaration that Atty. Franco Loyola ever committed any act of misconduct as counsel of petitioner Alejo Aranda in Civil Case No. BCV-82-16. In fact, the CA declared that as gleaned from the evidence of petitioner Alejo Aranda in the RTC in Civil Case No. BCV-93-26, the signature of Atty. Loyola and petitioner Alejo Aranda in the complaint in Civil Case No. BCV-82-16 and in the compromise agreement were genuine. Moreover, petitioner spouses never bothered to file any administrative complaint against Atty. Loyola or Atty. Angeles to assert their claim. Fourth. We are convinced that the complaint of petitioners in the CA assailing the decision of the RTC in Civil Case No. BCV-82-16 based on the compromise agreement of the parties is merely an afterthought. The records show that the RTC rendered judgment in Civil Case No. BCV-82-16 as early as January 5, 1984. Based on the decision of the RTC, the extrajudicial foreclosure of the real estate mortgage in favor of respondent FSLAI was aborted. In his complaint in Civil Case No. BCV93-26 filed on March 8, 1993, petitioner Alejo Aranda claimed that the torrens titles to the property were issued to and under the names of private respondents. He must have likewise discovered that the torrens titles were so issued following the decision of the RTC in Civil Case No. BCV-82-16, the extrajudicial foreclosure of the real estate mortgage executed by petitioner spouses Alejo Aranda with private respondents as buyers therein. However, petitioner Alejo Aranda failed to file a petition for the annulment of the decision of the RTC in Civil Case No. BCV-82-16 on the ground of extrinsic fraud; instead, he filed a complaint for the nullification of said titles against private respondents herein in the RTC. It was only on January 6, 1995 that petitioners filed their complaint in the CA for the nullification of the decision of the RTC in Civil Case No. BCV-82-16, following the dismissal of the complaint in Civil Case No. BCV-93-26.

Fifth. Petitioners claim that the complaint in Civil Case No. BCV-93-26 was dismissed without prejudice is belied by the records of the case. The Order of the RTC in Civil Case No. BCV-93-26 shows that the complaint was dismissed based on res judicata: Considering that the plaintiff himself seeks the dismissal of this case and considering further defendant Fortune Savings and Loan Association, Inc.s grounds for seeking the dismissal of this case, particularly that of res judicata, to be well-founded, this Court has no alternative but to dismiss this case. WHEREFORE, let this case be dismissed. SO ORDERED.34 An order of the court dismissing the complaint on the ground of res judicata is an adjudication of the case on the merits although no trial has been held. Such an order is thus an absolute bar to the filing of a subsequent action for the same cause between the same parties.35 The decision referred to in the Order of the RTC which barred the complaint of petitioner Alejo Aranda in Civil Case No. BCV-93-26 was the Decision of the RTC in Civil Case No. BCV-82-16. The aforementioned Order of the trial court thus affirmed the validity of the RTC decision in Civil Case No. BCV-82-16. Therein plaintiff Alejo Aranda (now petitioner) did not appeal the Order. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against petitioners. SO ORDERED. G.R. No. 172556 June 9, 2006

TRANS MIDDLE EAST (PHILS.), Petitioner, vs. SANDIGANBAYAN (5th Division) PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), The Board of Directors of Equitable PCI Bank, represented by its Chairman, CORAZON DELA PAZ and SABINO ACUT, JR. (in his capacity as Corporate Secretary of Equitable PCI Bank), Respondents. DECISION TINGA, J.: The integrity of the judicial system is founded on the soundness and rationality of the judgments emanating from it. Decisions which are blatantly erroneous or founded on oblique reasoning inevitably foment doubt within the dispirited public as to the impartiality and judiciousness of the magistrates concerned. A critical eye must especially be cast on rulings which are not only wrong, haphazardly grounded and obtusely one-sided, but fortuitously timed to engender the most advantage to the victor and damage to the loser. This Petition for Certiorari was filed by petitioner Trans Middle East (Phil.) Equities Inc. (TMEE), the registered owners of erstwhile sequestered shares in Equitable-PCI Bank (EPCIB) assailing a Resolution1 promulgated by the Sandiganbayan on 22 May 2006. The Resolution declared that a Temporary Restraining Order (TRO) initially issued 14 years ago by this Court in cases that were

closed and terminated ten years ago, remained in effect, thus disqualifying TMEE from voting on its shares. The annual stockholders meeting of EPCIB was scheduled on 23 May 2006, or the day after the Resolution was promulgated, leaving questions as to the timing of the promulgation. In any event, the Resolution is rooted in dubious and erroneous legal premises. The writ of certiorari lies. A narration of the relevant antecedents ensues. TMEE is the registered owner of 6,119,067 common shares of stock in the then PCBank, now Equitable-PCI Bank. On 15 April 1986, these shares were sequestered by the Presidential Commission on Good Government (PCGG) on the theory that as they actually belong to Benjamin Romualdez they constitute illegally acquired wealth. Thereafter, a complaint, docketed as Civil Case No. 0035, was filed against Romualdez by the PCGG before the Sandiganbayan for the recovery of these shares. Upon motion, TMEE was allowed to intervene by the Sandiganbayan, and it sought to enjoin the PCGG from voting these shares. In 1991, the Sandiganbayan, upon motion of TMEE, issued resolutions that enjoined the PCGG from voting the shares of TMEE and authorized TMEE in exercising its voting rights. These resolutions were challenged before the Supreme Court, through petitions docketed as G.R. Nos. 105808 and 105809. The Court then issued a TRO enjoining the implementation of the Sandiganbayan resolutions. Subsequently, G.R. Nos. 105808 and 105809 were consolidated with several other cases, which were collectively resolved the Court in a 23 January 1995 consolidated decision entitled Republic v. Sandiganbayan.2 The Court resolved to maintain the TRO it issued enjoining the implementation of the 1991 orders of the Sandiganbayan, decreeing as follows: WHEREFORE, judgment is hereby rendered: xxxx B. CONFIRMING AND MAINTAINING the temporary restraining orders issued in G.R. Nos. 104883, 105170, 105206, 105808, 105809, 107233, and 107908, which shall continue in force and effect during the continuation of the proceedings in the corresponding civil actions in the Sandiganbayan, subject to the latters power to modify or terminate the same in the exercise of its sound discretion in light of such evidence as may subsequently be adduced.3 (Emphasis supplied) In a subsequent Resolution dated 22 July 1997, concerning pending motions for contempt against PCI Bank and TMEE, the Court found it necessary to render the following rulings: WHEREFORE, the Court Resolved: xxxx II. To DIRECT the Sandiganbayan, in reiteration of this Courts prior directives, promptly to adjudicate after due trial and proper proceedings the ultimate factual issue of whether or not the movants are the legitimate, bona fideowners of the sequestered shares of stock (or the same constitute ill-gotten wealth which should revert to and be forefeited in favor of the Republic, represented by the PCGG); and pending such adjudication, resolve, with all deliberate dispatch but not later than sixty (60) days from notice of this Resolution, the preliminary questions of whether there is prima facie factual foundation for the sequestration of said stock, and for reasonable ground for apprehension of dissipation, loss or wastage of assets if the holders of the sequestered stock are permitted to vote them;

III. To COMMAND TMEE and the PCGG forthwith to formally request the Sandiganbayan to set Civil Case No. 0035 for hearing so that the issues set out in the immediately preceding paragraph hereof may be determined with all deliberate dispatch; and IV. To PROHIBIT from this date and until completion by the Sandiganbayan of its determination of the preliminary questions set out in paragraph II hereof, the exercise of the right to vote pertaining to the sequestered PCIB shares of stock in question by either the PCGG or TMEE at any meeting of the PCIB.4 Meanwhile, in January and February of 1997, TMEE filed two motions before the Sandiganbayan, both urging the nullification or lifting of the writ of sequestration. It contended that no valid writ of sequestration was ever issued, the sequestration having been effected through a letter dated 15 April 1986 addressed to EPCIB signed by only one PCGG commissioner, in violation of the PCGG Rules and Regulations promulgated on 11 April 1986 that required writs of sequestration to be issued by at least two commissioners. While TMEE argued that it was entitled to the actual custody and control of the shares, it nonetheless manifested that it was willing to deposit these shares in escrow to allay any fear of dissipation, loss or wastage of the subject shares, as well as on all future cash and stock dividends to be declared on the said shares. In April of 1998, PCGG filed with the Sandiganbayan a Motion for Issuance of Restraining Order, seeking to enjoin the holding of the EPCIB stockholders meeting on 30 April 1998, on the ground that since the 1997 Supreme Court Resolution enjoined both the PCGG and TMEE from voting the sequestered stocks, these shares stood to be diluted considering a proposal in the agenda to increase the authorized capital stock of EPCIB, among others. In a Resolution dated 29 April 1998, the Sandiganbayan dismissed these fears of the PCGG as unfounded. Moreover, in the same Resolution the Sandiganbayan acknowledged that this Court had granted it the power to modify or terminate this Courts temporary restraining order in the exercise of its sound discretion in the light of subsequent evidence. Accordingly, the Sandiganbayan proceeded to recognize the right of TMEE to vote the shares of stock registered in its name, and to allow it to vote at the stockholders meeting of 30 April 1998. The Sandiganbayan justified such recognition based on the following premises: (a) that the PCGG which bore the burden of proof to show prima facie foundation for the sequestration of TMEE shares had failed to timely do so; (b) that no damage or dissipation of the sequestered shares would result should TMEE be allowed to vote them; and (c) that on its face, the writ of sequestration was issued only by one PCGG Commissioner, in violation of the PCGGs rules and regulations promulgated on 11 April 1986. Thus, the Sandiganbayan ruled: UNDER THE PREMISES: (2) Philippine Commercial and Industrial Banks (PCIB) Chairman of the meeting and the secretary thereof are directed to acknowledge the right of intervenor Trans Middle East (Phil.) Equities, Inc. (TMEE) to vote the shares of stocks registered in its name and allow it to vote at the Stockholders Meeting scheduled on April 30, 1998 at 9:00 oclock in the morning or at any other time to which said stockholders meeting may be continued or reset. TMEE shall post a bond of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS to answer for any undue damage that the plaintiff PCGG or the PCIB shall suffer by reason of the sequestered shares of stock having been voted by and for said intervenor.5 The pending motion for nullification of the writ of sequestration was left unresolved then. On 10 January 2003, the Sandiganbayan issued a Resolution on the motions filed by TMEE in 1997 assailing the sequestration order. The Sandiganbayan granted the motion to nullify the writ of sequestration of TMEE shares, ruling that the sequestration order null and void as it was issued only

by one PCGG Commissioner. It cited the decision of this Court in Republic v. Sandiganbayan6 wherein it was ruled that a writ of sequestration signed by only one PCGG commissioner was an obvious transgression of the PCGG rules.7 At the same time, based on TMEEs manifestation that it was willing to deposit the subject shares in escrow to allay any fear of dissipation, loss or wastage of the subject shares, the Sandiganbayan ordered that the shares be deposited in escrow with the Land Bank of the Philippines. The Resolution decreed: WHEREFORE, in view of the foregoing: 1) The "URGENT MOTION TO NULLIFY WRIT OF SEQUESTRATION" dated January 28, 1997 filed by movant Trans Middle East (Phils.) Equities, Inc., is hereby GRANTED. Accordingly, Sequestration Order No. 86-0056 dated April 15, 1986 is hereby declared null and void for having been issued by one PCGG Commissioner only in direct contravention of Section 3 of the PCGGs own Rules and Regulations. Conformably, however, with the manifestation of the movant trans Middle East (Phils.) Equities, Inc. itself, the Court will not order the return of its shares of stocks sequestered per Sequestration Order No. 86-0056 dated April 15, 1986, but orders that the same, including the interests earned thereon, to be deposited with the Land Bank of the Philippines in escrow for the persons, natural or judicial, who shall eventually be adjudged lawfully entitled thereto.8 (emphasis supplied) PCGG filed motions for the reconsideration of both the 1998 and 2003 resolutions of the Sandiganbayan. These motions have not yet been resolved to date. In the meantime, TMEE alleged that it has voted the subject shares from 1998 up to 2005.9 On 2 May 2006, the PCGG filed a Motion for Execution of this Courts Decision in G.R. Nos. 105808 and 105809, which was promulgated on 23 January 1995, or more than ten (10) years earlier. It was argued therein that the 1995 Decision became final and executory by virtue of an entry of judgment dated 2 April 1996 which was allegedly received by the PCGG only on 2 March 2006.10 The purported receipt then only of the entry of judgment came one (1) day after the EPCIBs proxy validation deadline with closure of the Record Book of EPCIB. Desiring to "exercise its voting rights as upheld by the Supreme Court", the PCGG prayed of the Sandiganbayan to issue the appropriate order permitting it to vote the sequestered shares or, in the alternative, to order "re-enforced and/or reissued" the TRO affirmed by the Supreme Court in the 1995 Decision, which enjoined TMEE from voting the sequestered shares. The Motion for Execution was heard on 5 May 2006, with TMEE making no appearance therein. The Sandiganbayan ordered TMEE to comment on the said motion within ten (10) days. Then on May 9, 2006, the PCGG filed an Urgent Ex-Parte Motion to Reinforce/Re-issue TRO, praying that the Sandiganbayan issue an order re-enforcing and/or re-issuing the TRO issued by this Court in G.R. Nos. 105808 and 105809 and to execute the TRO under the Decision of the Supreme Court dated January 13, 1995. The PCGG argued that due to the fact that the stockholders meeting of EPCIB was scheduled on 23 May 2006, there was an urgent need for the re-enforcement or reissuance of the TRO affirmed by the Supreme Court in its 1995 Decision. The PCGG also alleged that they had received reports that "the Romualdezes are bent on disposing of their shares in EPCIB," and that should they "gain control of the bank of (sic) electing themselves and/or their dummies/nominees to the helm of the bank, there is a danger that the sequestered Equitable-PCI Bank shares might dissipate or be disposed of."11

On 22 May 2006, the Sandiganbayan issued the Resolution now assailed before the Court. The Sandiganbayan acknowledged that the 1998 and 2003 Resolutions it earlier issued had indeed modified the TRO issued by this Court, and that it had the authority, as granted by the Court, to modify or terminate such TRO. Nevertheless, the Sandiganbayan ruled that both resolutions had not yet attained finality since it itself still had to resolve the motions for reconsideration respectively related thereto filed by the PCGG in 1998 and 2003. The Sandiganbayan opined that it could not reissue the TRO since it was this Court which issued the same. Still, the Sandiganbayan ruled that it could state that the two resolutions modifying this Courts TRO "have not attained finality as the motions for reconsiderations thereto have not been resolved by [the Sandiganbayan]." The dispositive portion of the Resolution read: WHEREFORE, pertinent to the instant motion, this Court hereby declares that considering that two resolutions modifying the Supreme Courts TRO have not attained finality as the motions for reconsiderations filed thereto have not been resolved by this Court, the TRO, which was issued by the Supreme Court disqualifying both the PCGG nominees, TMEE, PAH and PAR, from voting the sequestered shares in the Equitable PCI Bank and Benguet Corporation, respectively is still existing and in full force and effect.12 On the following day, 23 May 2003, TMEE filed the instant petition with this Court, with a prayer for the issuance of a Temporary Restraining Order or a Writ of Preliminary Injunction "to preserve and maintain the status quo wherein TMEE [was] allowed to vote the shares registered in its name and restraining the respondents from enforcing the [22 May 2003 Sandiganbayan] Resolution granting the motion to re-enforce/re-issue TRO, until the final resolution" of this Court. In the absence of an injunctive order restraining the holding of the stockholders meeting on 23 May 2006, the meeting was held. Over the objections of TMEE, the election of a new Board of Directors of EPCIB was held. Since TMEE was not allowed to vote its shares, it was unable to elect any representative to the Board of Directors despite the fact that it maintained enough shares to be entitled to at least one board seat. Thus, in its Supplemental Petition attached to a Motion for Leave of Court to File Supplemental Petition, TMEE prayed for the issuance of a resolution directing the maintenance of the status quo prior to the disputed election of directors; restraining the new Board and the officers elected by them from further performing their functions; and directing the Chairman and Corporate Secretary to recognize and allow the old Board and officers to serve in a hold-over capacity until further orders from this Court.13 In the course of deliberating the matter of provisional relief sought by TMEE, the self-evident nature of the correct resolution on the points of law emerged, and a consensus developed within the Court that the petition be resolved immediately. The challenged Resolution is ostensibly grounded on an earlier decision of this Court, yet is ultimately oblivious to the full import of that decision and other juridical precedents as well. The Sandiganbayan in its Resolution likewise sub silencio contradicts earlier rulings it had previously rendered in connection with the same issues, yet takes refuge from its inconsistency on its very own inaction on two still pending motions for reconsideration filed eight and three years ago, respectively. Considering that all the respondents have duly filed their respective comments, there is no impediment to the immediate resolution of the case on the merits. We are compelled to act promptly in light of the highly disturbing circumstances attending this case. This Court cannot countenance unabashed trifling with the judicial process, turn a blind eye on a patent simulacrum of judicial adjudication and allow a glaring travesty of justice to go unchecked in time. The assailed Resolution in this case, promulgated by the Sandiganbayan on 22 May 2006, has been used to maximum benefit by the respondents, all connected with EPCIB, in an obvious corporate

squabble which saw its apotheosis in the long scheduled annual stockholders meeting on 23 May 2006 wherein TMEE was deprived of its right to vote its shares despite the fact that it would have been able to elect at least one (1) seat on the Board of Directors. The Court is also impelled by the recognition that the annulment of the Sandiganbayan resolution would have a pronounced consequent effect on the financial community, if not the banking public at large. Hence, the need to resolve this matter promptly. We now accordingly adjudicate. The Court first dispenses with procedural issues raised that are ultimately minor. The petition is denominated as one for certiorari with prayer preliminary injunction and/or temporary restraining order, under the ambit of Rule 65 of the Rules of Court. Respondent Board of Directors of EPCIB argue that the failure of TMEE to file a motion for reconsideration with the Sandiganbayan precluded the immediate resort to the special civil action of certiorari. As a general rule, certiorari as a special civil action does not lie unless a motion for reconsideration is first filed before the respondent court. However, this rule does not apply when special circumstances warrant immediate or more direct action.14 It is well-settled that the availability of appeal does not foreclose recourse to the extraordinary remedies of certiorari or prohibition where appeal is not adequate, or equally beneficial, speedy and sufficient.15 Where the exigencies of the case are such that the ordinary methods of appeal may not prove adequateeither in point of promptness or completeness, so that a partial if not a total failure of justice could resulta writ of certiorari may still be issued.16 It cannot evade notice that the assailed Sandiganbayan Resolution was promulgated one (1) day before the scheduled stockholders meeting of EPCIB. Evidently, TMEE could no longer have relied on the Sandiganbayan to reverse itself literally overnight, in time for the meeting. The filing of a motion for reconsideration would not have been an adequate or speedy remedy for TMEE. Hence, resort to the special civil action of certiorari without filing a motion for reconsideration is justified under the circumstances. The more consequential procedural objection lies in the failure of TMEE in its petition to pray for the annulment of the 22 May 2006 Sandiganbayan Resolution despite the denomination of the petition as one for certiorari, and the arguments therein that the Sandiganbayan acted with grave abuse of discretion in rendering the Resolution. On this failure, the respondents in their respective comments argue that the petition, which was accompanied by a prayer for writ of preliminary injunction and/or TRO, is effectively an original action for injunction beyond the jurisdiction of this Court. TMEE, in its Supplemental Petition filed seven (7) days after the filing of the petition, did subsequently pray for the nullification of the Sandiganbayan resolution on the ground of grave abuse of discretion. TMEE deserves some blame for failing to include such prayer in its original petition, yet given the attendant circumstances, it would be an act of triviality to dismiss the petition on that ground alone. For one, even assuming that the petition is indeed an original action for injunction, it was ruled in Del Mar v. Pagcor17 that "this Court has the discretionary power to take cognizance of the petition at bar if compelling reasons, or the nature and importance of the issues raised, warrant the immediate exercise of its jurisdiction."18 Indeed, such compelling reasons, as adverted to before, are present in this case. More fundamentally, it is evident from the allegations in the petition, replete with imputations of grave abuse of discretion on the part of the Sandiganbayan when it promulgated its resolution, that the nature of the petition is one for certiorari, with injunction sought only as an ancillary relief. The nature of an action, as well as which court or body has jurisdiction over it, is determined based on the

material allegations contained in the petition.19 Any doubts as to whether TMEE seeks the annulment of the Sandiganbayan resolution are cleared by the Supplemental Petition, which expressly seeks such relief. The Court is also inclined to view this defect with liberality, considering that TMEE had only one (1) calendar day to prepare the petition, which sought to vindicate the exercise of its voting rights in the EPCIB stockholders meeting, which was enjoined by the Sandiganbayan resolution promulgated just the day before such election. The forced haste under which the petition was prepared cannot be attributed to the fault of TMEE, and any resulting errors in the petition that are of the non-fatal variety can be overlooked. Respondents, particularly the EPCIB Board of Directors, ascribe a few other procedural errors on the part of the petitioner, but these are so minor that they do not merit the attention of the Court. Suffice it to say, they do not adduce a compulsory rule that would mandate the dismissal of the petition contrary to the discretion of the Court to do otherwise. We now turn to the merits of the case. The assailed Sandiganbayan resolution was occasioned by an "Urgent Ex-Parte Motion to Reinforce/Re-issue TRO" filed by the PCGG, which prayed for the issuance of an order re-enforcing and/or re-issuing the TRO issued by this Court in G.R. Nos. 105808 and 105809. The sort of relief sought is unconventional to say the least. No such remedy is provided for under the rules of procedure, although it is not expressly barred. The uniqueness of the relief sought should nonetheless be cause for skepticism on the part of the court hearing the claim. Procedural rules exist to provide a methodical system that would facilitate the judicious disposition of cases. A recourse that finds no authorization or support under the rules could in fact be aimed to subvert orderly procedure, an end that runs contrary to the interest of justice. The judicial duty, when confronted with such a pleading as the "motion for the reinforcement/reissuance" of the PCGG, is to look beyond the verbiage and ascertain the real nature of the action on which the prayer is founded. In this case, it is ineluctable that what the PCGG sought through its motion was injunctive relief that would refrain TMEE from exercising its voting rights in the 2004 EPCIB stockholders meeting, or other meetings for that matter. While the legal basis for such prayer is suggested on the continued recognition of a provisional remedy granted a long time ago, the ultimate goal of the motion is to secure injunctive relief. As such, the rules on injunction must apply. The relevant antecedent facts actually point to three successive recourses to injunctive relief which were availed of in this case. The first was the 1986 order of sequestration, sequestration being in itself a form of a provisional remedy, an extraordinary measure intended to prevent the destruction, concealment or dissipation of sequestered properties and, thereby, to conserve and preserve them, pending the judicial determination in the appropriate proceeding of whether the property was in truth ill-gotten.20 The second injunctive relief involved in this case came in the form of the TRO issued by this Court in 1992 in G.R. Nos. 105808 and 105809, restraining the implementation of the 1992 Sandiganbayan order allowing TMEE to vote its shares. The right to the TRO is grounded on the subsistence of the sequestration order. The same TRO issued in G.R. Nos. 105808 and 105809 was reaffirmed in the 1995 Supreme Court Decision inRepublic v. Sandiganbayan, an unusual step in itself considering that normally, a provisional injunctive order survives only as long as the case wherein it was issued. But since the

said TRO related to pending incidents in Civil Case No. 0035 before the Sandiganbayan, the Court ceded control over the TRO to the anti-graft court, with a specific grant of authority on the latter to "to modify or terminate the same in the exercise of its sound discretion in light of such evidence as may subsequently be adduced". The Sandiganbayan did just that through its 1998 and 2003 Resolutions which respectively recognized TMEEs rights to vote the shares and nullified the writ of sequestration. The third mode of injunctive relief involved herein was the PCGGs motion for the "re-enforcement or reissuance" of the earlier Supreme Court TRO. Palpably, this motion prayed for the reaffirmation of the TRO granted by the Supreme Court in G.R. Nos. 105808 & 105809, cases which were closed and terminated nearly 10 years ago; but at the same time effectively sought to enjoin the 1998 and 2003 Sandiganbayan Resolutions, praying as the PCGG did that TMEE be denied the right to vote its shares notwithstanding the two Sandiganbayan resolutions. For injunctive relief to avail to the PCGG, it must be able to demonstrate the existence of a clear legal right to be entitled to such relief.21 In the absence of a clear legal right, the issuance of the injunctive relief constitutes grave abuse of discretion.22 There could only be two putative sources of such legal right of the PCGG the 1986 sequestration order and the 1995 Decision of this Court which affirmed the 1992 TRO issued by the Supreme Court. Yet closer scrutiny of either reveals no foundational recognition of a clear legal right of the PCGG. It is settled that as a general rule, the registered owner of the shares of a corporation, even if they are sequestered by the government through the PCGG, exercises the right and the privilege of voting on them.23 The PCGG as a mere conservator cannot, as a rule, exercise acts of dominion by voting these shares.24 The registered owner of sequestered shares may only be deprived of these voting rights, and the PCGG authorized to exercise the same, only if it is able to establish that (1) there is prima facie evidence showing that the said shares are ill-gotten and thus belong to the State; and (2) there is an imminent danger of dissipation, thus necessitating the continued sequestration of the shares and authority to vote thereupon by the PCGG while the main issue is pending before the Sandiganbayan.25 Clearly, the existence of the writ of sequestration alone would not legally justify barring TMEE from voting its shares. Such preclusion may only occur if there is prima facie evidence showing that the said shares are ill-gotten and there is an imminent danger of dissipation. The Sandiganbayan or any other court has yet to pronounce any findings to those effects. In fact, the Sandiganbayan, in its 1998 Resolution, instead declared that TMEE possessed "a prima facie right" as owner of the registered owner of the sequestered shares, and that there appeared to be "no strong grounds for apprehension of dissipation or loss of assets of TMEE."26 Concerns over dissipation have likewise been assuaged that the shares have been deposited in escrow with the Land Bank of the Philippines on the initiative of TMEE itself. In any event, the nullification in 2003 of the very writ of sequestration by the Sandiganbayan further militates against any recognition that the sequestration order established a clear legal right that entitled the PCGG to injunctive relief. We now examine whether the legal consequences of the 1995 Decision of the Court provide a clear legal right to injunctive relief to the PCGG. An examination of the dispositive portion of the 1995 Decision insofar as it pertains to TMEE puts in doubt whether its "execution" should have resulted in barring TMEE from voting its shares in the 2006 stockholders meeting. While the 1995 Decision maintained the earlier TRO barring TMEE from voting its shares, it also authorized the Sandiganbayan "to modify or terminate the same in the exercise of its sound discretion in light of such evidence as may subsequently be adduced."

In that sense, the 1995 Decision consisted of two (2) phases. The first phase consists of the affirmation of the TRO, a stance that subsisted as a matter of default. The second phase, however, consists of either the modification or termination of the TRO by the Sandiganbayan in light of the evidence subsequently adduced. Should the condition set in the second phase modification or termination by the Sandiganbayan then the first phase is ended, and the affirmation of the TRO can no longer be acknowledged as the default action. There is no question that the Sandiganbayan did modify the TRO by virtue of its 1998 and 2003 Resolutions. The 1998 Resolution "acknowledge[d] the right of intervenor Trans Middle East (Phil.) Equities, Inc. (TMEE) to vote the shares of stocks registered in its name." The 2003 Resolution went even further in declaring null and void the 1986 sequestration order. Both resolutions thoroughly explained the reasons for granting favorable reliefs to TMEE.27 The 1998 Resolution even specifically invoked the 1995 Decision of this Court that categorically declared that the Sandiganbayan had the power to modify or terminate the restraining order in the exercise of its sound discretion in the light of such evidence as may be subsequently adduced.28 Respondent Board of Directors contest the argument that the 1998 Resolution either lifted or terminated the 1992 TRO, alleging that the dispositive portion therein29 merely allowed TMEE to votes it shares for the stockholders meeting on 30 April 1998, and not at other stockholders meetings held in previous years. This claim is belied by a close look at the dispositive portion of the 1998 Resolution, which directed the then PCI Bank to "xxx acknowledge the right of [TMEE] to vote the shares of stocks registered in its name and allow it to vote at the Stockholders Meeting scheduled on April 30, 1998".30 As evidenced by the use of the conjunctive "and", there were two directives contained in that order, namely: that the right of TMEE to vote the shares of stocks registered in its name; and to allow TMEE to vote at the 1998 stockholders meeting. The first directive, mandating the recognition of TMEEs right to vote its shares, is not subjected to any limitation as to time or particular circumstance. Neither did the Sandiganbayans discussion in the body of the 1998 Resolution support the view that the right of TMEE to vote the shares was limited to the 1998 stockholders meeting. Respondents are generally silent as to the effect of the 2003 Resolution nullifying the writ of sequestration. Yet the import of that ruling is equally important to this case. The 2003 Resolution nullifying the sequestration order over TMEEs shares was based on the fact, of which there appears to be no serious contest, that the said order, dated 15 April 1986, was signed by only one PCGG commissioner in violation of the PCGG Rules and Regulations promulgated on 11 April 1986.31 The 2003 Resolution particularly cited the Courts 1998 Decision in Republic v. Sandiganbayan,32 penned by Chief Justice Panganiban, which categorically ruled that "the writ [of sequestration] must bear the signatures of two commissioners, because their signatures are the best evidence of their approval thereof."33 The Court also noted that the PCGG Rules took effect on 11 April 1986, and that "the signing of sequestration orders by two commissioners had already been encouraged after April 11, 1986."34 The binding effect of the same provision of the PCGG Rules on the PCGG after 11 April 1986 was also affirmed in the 1996 ruling in Republic v. Sandiganbayan,35 also penned by Chief Justice Panganiban. Quoting the same provision requiring that the writ of sequestration may be issued upon the authority of at least two commissioners, the Court said that the provision was "couched in clear and simple language [and] leaves no room for interpretation".

The finding of the Sandiganbayan that the writ of sequestration was null and void was material to the determination whether the PCGG had the right to the injunctive relief it sought. This point is especially relevant, since if the sequestration order against TMEE is declared null and void, the earlier TRO will become functus officio. The TRO cannot continue to exist if the sequestration order is null and void from the beginning. Based on the 2003 Sandiganbayan Resolution, the sequestration order against TMEE is deemed void as of 15 April 1986, or more than 20 years ago. Not only the clarity, but the very existence of the legal right on which the PCGG grounds its right to relief became controverted as a result of the 2003 Resolution. These twin resolutions of the Sandiganbayan pose a critical impediment to a determination that the PCGG had a clear legal right to protect that would justify injunctive relief in its favor. At the very least, these resolutions, issued within the bounds of authority granted by this Court to the Sandiganbayan, becloud the continued efficacy to this day of the 1992 TRO; at most, they confirm that the 1992 TRO no longer subsists. The Court is inclined towards the latter view. Clearly, it would be proper to assert that the 1998 and 2003 Resolutions of the Sandiganbayan were issued not only in compliance with but in execution and implementation of the 1995 Decision of the Court. Considering that the Sandiganbayan had already modified or terminated the restraining order, pursuant to the authority granted it by this Court, it may be very well be that there is nothing left in the 1995 Decision to execute. At bare minimum, considering the accomplished modification and virtual termination of the restraining order as of 2003, execution of the 1995 Decision in 2006 cannot possibly contemplate the revival of the TRO. Obviously, the Sandiganbayan failed to consider these points when it rendered the assailed Resolution. It does not even appear that the Sandiganbayan evaluated the PCGGs motion within the frame of mind that a clear legal right must exist to entitle the PCGGs prayer. Instead, it engaged in a mechanical application of technicalities in a manner that failed to consider the more crucial issues at hand. There is an admitted convenience in simply pronouncing, as the Sandiganbayan did, that since the motions for reconsideration to the 1998 and 2003 Resolutions had not been resolved, the efficacy of those resolutions cannot yet be recognized. It cannot be denied though that the two resolutions are properly characterized as interlocutory orders, as they do not finally dispose of Civil Case No. 0035. In Valarao v. Pascual,36 the Court contended with the question of whether respondents therein were bound to respect the authority of a special administrator on the ground that the interlocutory order appointing such administrator was not yet final and executory because of a pending motion for reconsideration. The Court held: [R]espondents cannot disobey the reasonable exercise of the authority of a special administrator on the dubious ground that the order appointing petitioner Valarao as special administratrix had not in the meantime become final and executory because of a pending motion for reconsideration filed by them. The fallacy of this reasoning is apparent, for an interlocutory order is not instantly appealable and therefore there is no period nor action to suspend or interrupt by a motion for reconsideration; it is even well settled that a special civil action for certiorari does not suspend the immediate enforceability of an interlocutory order absent a temporary restraining order or an injunction. In the same manner, the appointment of a special administrator being an interlocutory order is not interrupted by a motion for reconsideration and thus must be obeyed as the proceedings in the probate court progress.37 The same characteristics of the interlocutory order in Valarao apply in this case. Since the orders recognizing TMEE to vote its shares and nullifying the writ of sequestration are both unappealable, they can only be assailed through a special civil action for certiorari, the filing of which however does not ipso facto inhibit the effectivity of the assailed order unless specifically enjoined. For this reason,

it cannot be said that the 1998 and 2003 Resolutions, interlocutory as they are in character, are not yet susceptible to enforcement during the motions for reconsideration therefor. It also bears notice that from the time the 1998 Resolution recognized the right of TMEE to vote its shares until eight (8) years later, no serious challenges were posed against the right of TMEE to vote those shares by reason of the pending motion for reconsideration. There is some dispute as to whether during the last eight years of EPCIB stockholder meetings, TMEE was actually able to formally vote its shares38 or merely consented to a common slate of nominees previously agreed upon to negate the need to conduct an actual meeting.39 Yet whatever the fact may be, these stockholders meetings and election of the Board of Directors were conducted to the satisfaction of TMEE, which was able to successfully elect at least one nominee to the Board. Those circumstances do not bear the mark of TMEE being deprived of the right to vote its shares in the stockholders meetings from 1998 to 2005, when the contrary should have resulted if the position of the respondents were to be believed. For all intents and purposes, the 1998 and 2003 Resolutions had been respected prior to the current year by the Sandiganbayan and the parties. Given the pending motions for reconsideration, theoretically it is still within the power of the Sandiganbayan to reverse or modify the 1998 and 2003 resolutions. Yet if the Sandiganbayan were so minded to modify or reverse the two earlier resolutions, it should do so directly and explicitly, not only tangentially or by implication as it actually did, and at that based on premises which contradict the predicates on which its 1998 and 2003 Resolutions are anchored. In other words, it may reverse its earlier rulings only on the evidentiary foundations prescribed by this Court in its 1995 Decision which have to pertain to the existence of a valid basis for sequestration or the danger of dissipation of the sequestered shares. Until and unless it reconsiders the 1998 and 2003 Resolutions in that fashion and on that basis, the Sandiganbayan is bound to respect them, moreso because they are its own rulings. It is thus precluded from performing any act or promulgate any issuance inconsistent with the letter, tenor and disposition of those previous rulings which remain extant. It cannot re-enforce the TRO against TMEE or recognizing the continued legal effects of the nullified sequestration order, as it did through the challenged resolutions. It can only do so by reconsidering the 1998 and 2003 resolutions. Thus, it can be appreciated why the Sandiganbayan in the challenged Resolution merely opted to declare the TRO confirmed in this Courts 1995 Decision is "is still existing and in full force and effect," desisting as it did from ordering the execution of the 1995 Decision. Such declaration, however, is not wholly correct as it is incomplete. It did not include the fact that the TRO had already been modified by the 1998 and 2003 Resolutions of the Sandiganbayan. Moreover, it failed to consider the well-established doctrine that the registered owner of sequestered shares is generally entitled to vote the shares.40 The Court thus rules, with considerable ease, that the 22 May 2006 Resolution of the Sandiganbayan was issued with grave abuse of discretion, and must be annulled. The Court finds the actions of the PCGG in this case distressing. Its actions and resort to unconventional modes of relief towards the end of depriving TMEE the right to vote its shares, notwithstanding two Sandiganbayan rulings recognizing such right are tantamount to abuse of the judicial process. For one, concerning the Motion for Execution of Judgment it had filed on 2 May 2006, it appears highly suspect that the PCGG would await more than ten years before it would move to execute or enforce the 1995 Decision of the Supreme Court. Entry of Judgment on that Decision was dated 2 April 1996. Under Article 1144 of the Civil Code, an action based upon a judgment must be brought

within ten years from the time the right of action accrues, or within ten years counted from the time the judgment became final.41 Under Section 2, Rule 37, the date of finality of the judgment or final order shall be deemed to be the date of its entry. Notably, nothing in the rules of procedure provides that the entry of judgment be served on the parties, or reckons the date of finality of the judgment from the moment the entry of judgment is received by the parties. Hence, the fact that PCGG allegedly was served the Entry of Judgment only on 2 March 2006 does not detract from the fact that any action to execute or enforce the 1995 Decision of the Supreme Court was barred by prescription after 2 April 2006. The filing of the two motions by the PCGG before the Sandiganbayan was made only in May of 2006. In its motion to reinforce/reissue TRO before the Sandiganbayan, the PCGG adverted to reports that the sequestered shares were in danger of dissipation and diminution as the Romualdezes "were bent on disposing their shares in Equitable-PCI Bank."42 The shares of EPCIB, including the interests earned thereon, are deposited in escrow with the Land Bank of the Philippines, on order of the Sandiganbayan in its 2003 Resolution, at the instance of no less than TMEE. Unless otherwise ordered by the Sandiganbayan, these shares would remain in escrow until Civil Case No. 0035 is finally resolved by the Sandiganbayan. As such, these shares have been apparently insulated from dissipation and diminution. They cannot be simply be disposed of, conveyed or encumbered by TMEE, even if the sequestration order were voided or the TRO lifted. This being the situation, the only way by which these shares under escrow may be diminished or dissipated would be through radical corporate changes within EPCIB, such as through the increase of capital stock, or even through the dissolution or merger of the bank itself. However, it remains highly dubious that TMEE could, by exercising its right to vote the shares, effect such changes that would diminish or dissipate those stocks that it could not dispose of. The shares of TMEE comprise only 7.13% of the outstanding capital stock of EPCIB,43 and would entitle TMEE to only one (1) seat in the 15-person Board of Directors.44 TMEE is very much a minority stockholder in Equitable-PCI Bank, and on its own, incapable of imposing its will on the bank. It is not beyond the realm of possibility that these shares of TMEE in EPCIB, minimal as they may be, could somehow accord TMEE a significant degree of influence in the policies and decisions of the bank. At the same time, considering the limited number of shares TMEE holds, this prospect should be considered, on its face, highly unlikely. Yet the PCGG staked its motion before the Sandiganbayan on the claim that the allowance of TMEE to vote its shares could somehow diminish or dissipate those shares deposited in escrow, a highly facile claim considering the circumstances. Still, the Sandiganbayan refused to subject such claim to any scrutiny at all, and worse, granted the relief sought on the dubious premises. Our attention is also called to the letter dated 22 May 2006, written by PCGG Commissioner William Dichoso, and addressed to the Board of Directors of EPCIB.45 The letter, captioned "TRO Issued by the Sandiganbayan in Civil Case No. 0035 (Republic of the Philippines v. Benjamin Romualdez)", bluntly states that the Sandiganbayan "has issued a Temporary Restraining Order restraining xxx [TMEE] from voting in the stockholders meeting of [EPCIB]," and advises that "Copy of the Temporary Restraining Order will follow."46 No such temporary restraining order was issued by the Sandiganbayan. Certainly, the challenged Resolution does not contain any directive for the issuance of a separate temporary restraining order. All the challenged Resolution affirms is the supposed continuing force of the TRO as affirmed by 1995 Decision of the Court. But as earlier discussed, while the 1995 Decision affirmed the earlier TRO issued by the Court, it also affirmed the right of the Sandiganbayan to modify or terminate such TRO if the evidence so warranted. The Sandiganbayan has exercised such right and has chosen not

to disavow such exercise. Neither has the modification or termination of the TRO been reversed or set aside by a higher court. The impression left by the PCGG letter to EPCIB was that the bank had no choice outside of violating a judicial order but to disallow TMEE from voting its shares. Yet even with the assailed Resolution of the Sandiganbayan, such a conclusion is not so evident. At the very least, the PCGG letter conveyed the message that the Sandiganbayan had enjoined the voting of TMEE shares in the 23 May 2006 stockholders meeting when in fact the anti-graft court did not provide for an injunctive relief in such manner. Still, ultimate blame must be foisted on the Sandiganbayan. Wittingly or unwittingly, it became complicit in the denial of justice to TMEE when it issued the assailed Resolution, despite the lack of ample basis to support it. Had it ruled judiciously on the motion, the resultant farce would not have been staged. More to the point, had it resolved the pending motions for reconsideration in a timely manner, this entire controversy could have been avoided. Finally, we consider the consequences of the annulment of the assailed Resolution on the subsequently held stockholders meeting and election of the Board of Directors of EPCIB. It appears that there is no serious dispute that TMEE would have been entitled to one seat on the Board had it been able to vote its shares. TMEE asserts that it has 51,827,640 EPCIB shares,47 equivalent to 7.13% of the outstanding capital stock of the bank. Respondent Board of Directors admits that the shares of TMEE constitute 7.13% of the outstanding capital stock of the bank.48 Since Section 24 of the Corporation Code allows a stockholder such as TMEE to cumulate all of his shares in the voting for directors, a 7.13 % stock interest in the outstanding capital stock is sufficient to elect one seat in the 15-seat EPCIB Board of Directors.49 However, relying on the null and void Resolution of the Sandiganbayan, respondents Board of Directors and Corporate Secretary prevented TMEE from voting its shares and electing its nominee or representative to the Board of Directors. Clearly, TMEE is entitled to one seat on the Board of Directors of EPCIB. There is the option of annulling the entire election, but such step would be too drastic in light of the fact that only one of the 15 seats should be necessarily affected upon the seating of TMEEs nominee to the Board of Directors. The more prudent step on the part of the Court is to declare that one nominee or representative of TMEE is entitled to be seated immediately on the Board of Directors, and to direct the respondents EPCIB Board and Board Corporate Secretary to admit and recognize said nominee or representative of TMEE to the Board of Directors in place of the person who was elected to the Board at the 23 May 2006 annual stockholders meeting had TMEE not been disallowed to vote its shares. The Court, as far back as 1998, already admonished the PCGG and the Sandiganbayan to speedily proceed with the hearings and resolutions of the main cases for recovery and reconveyance of alleged ill-gotten wealth.50 In ordinary times, what the Court should be resolving right now in the exercise of judicial review should be the final decisions of the Sandiganbayan on the recovery of sequestered assets, and not preliminary matters like those now before us. It is this unconscionable delay that has precisely allowed this unwanted circus to march into this Court. The protracted delay serves no end except to foster mockery of the judicial system. WHEREFORE, the PETITION is GRANTED. The Resolution of the Sandiganbayan dated 22 May 2006 is declared NULL and VOID. The election at the 23 May 2006 annual stockholders meeting of the person to the seat in the Equitable-PCI Bank Board of Directors to which petitioner Trans Middle East (Phils.), Inc. is entitled is likewise declared NULL and VOID.

PENDING FINALITY OF THIS DECISION AND IMMEDIATELY UPON RECEIPT HEREOF, respondents Board of Directors of Equitable-PCI Bank and Corporate Secretary Sabino E. Acut, Jr. are DIRECTED NOT TO RECOGNIZE said person whose election to the Board of Directors is set aside and nullified herein and TO RECOGNIZE the nominee or representative of TMEE as a duly elected member of the Board of Directors, with all the rights and privileges appertaining to the position. SO ORDERED. G.R. No. 153134 June 27, 2006

BANCO FILIPINO SAVINGS AND MORTGAGE BANK, Petitioner, vs. ANTONIO G. DIAZ and ELSIE B. DIAZ, Respondents. DECISION CALLEJO, SR., J.: Before the Court is the Petition for Review on Certiorari filed by Banco Filipino Savings and Mortgage Bank of the Decision1 dated November 12, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 64475 allowing respondents spouses Antonio and Elsie Diaz to withdraw their deposit on consignation in the amount of P1,034,600.002 held by the Regional Trial Court (RTC) of Makati City, Branch 61. The assailed decision reversed and set aside the orders of the said lower court which had denied the respondents' motion to withdraw deposit. Likewise assailed is the Resolution of April 12, 2002 of the appellate court denying the reconsideration of the assailed decision. The present case is an offshoot of the CA Decision3 of October 31, 1990 in CA-G.R. SP No. 21089 and Decision4of November 14, 1997 in CA-G.R. CV No. 42899, both of which had already become final and executory. As culled therefrom and from the pleadings filed by the parties in the present case, the factual and procedural antecedents are as follows: On March 8, 1979, spouses Antonio and Elsie Diaz (the respondents) secured a loan from Banco Filipino Savings and Mortgage Bank (petitioner bank) in the amount of P400,000.00 bearing an interest rate of 16% per annum. In November 1982, the said loan was restructured or consolidated in the increased amount of P3,163,000.00 payable within a period of 20 years at an interest rate of 21% per annum. The obligation was to be paid in equal monthly amortization of P56,227.00, and secured by a real estate mortgage over two commercial lots situated at Bolton and Bonifacio Streets in Davao City. As additional collateral, the respondents assigned the rentals on the mortgaged properties in favor of petitioner bank. Despite repeated demands made on them, the respondents defaulted in the payment of their obligation beginning October 1986. Before petitioner bank could institute the proceedings to foreclose on the mortgaged properties, the respondents filed with the RTC of Davao City a complaint for "Declaration of Interest Rates and Penalty Charges as Unconscionable and Its Reduction, Reformation of Contract, Annulment of Assignment of Rentals, Damages and Attorney's Fees with Injunction," docketed as Civil Case No. 17840. The RTC of Davao City (Branch 12) denied the application for the issuance of a writ of preliminary injunction. It held that, by respondent Antonio Diaz' own admission, the respondents had been remiss in paying the amortization as agreed upon in the contract; hence, the conditions in the real estate mortgage contract had been violated. As such, petitioner bank could rightfully foreclose the mortgaged properties. On appeal by the respondent

spouses, the CA, in its Decision of October 31, 1990 in CA-G.R. SP No. 21089, affirmed the said Order of the RTC of Davao City. Thereafter, the respondents filed another complaint with the RTC of Makati City for "Consignation and Declaration of Cancellation of Obligation, with Prayer for Issuance of a Preliminary Injunction and Temporary Restraining Order." The case was docketed as Civil Case No. 91-3090, and raffled to Branch 61 of the said RTC. For failure to file its answer, petitioner bank was declared in default. In addition to the facts established in the previous case, the RTC of Makati City, based on the ex parte evidence of the respondents, made the finding that during the period of January 3, 1983 and January 25, 1985, when petitioner bank was ordered closed by the Central Bank, the respondents paid a total amount of P1,311,308.48. Further, as of January 25, 1985, the respondents' total obligation amounted to P3,391,501.99. The respondents made additional payments from February 11, 1985 until September 1991 amounting to P2,356,910.00. If these additional payments were to be applied to the principal, the remaining balance would only be P1,034,600.00 as of September 16, 1991. The respondents tried to settle their account by tendering the sum of P1,034,600.00 as full payment of their loan obligation. However, petitioner bank, through its then Liquidator Ricardo P. Lirio, refused to accept the said amount. According to petitioner bank, the respondents' obligation at that time amounted to P10,160,649.13. The respondents then deposited by way of consignation with the RTC of Makati City, a manager's check dated December 5, 1991, in the amount of P1,034,600.00 as full payment of their loan obligation. Petitioner bank was duly informed of such consignation. In its Decision dated March 6, 1992, the RTC of Makati City ruled that the respondents' total obligation to petitioner bank amounted only to P1,034,600.00 exclusive of interests, and the latter could not charge and/or collect any interest during the time that it was closed by the Central Bank as, in fact, banks that were ordered closed by the Central Bank ceased to be liable for the payment of interests on deposits. It also considered the deposited check as consignation of the respondents' entire debt and that there was a valid consignation. Accordingly, the respondents' obligation to petitioner bank was declared as fully paid and/or cancelled. On appeal by petitioner bank, the CA, in its Decision dated November 14, 1997 in CA-G.R. CV No. 42899, reversed and set aside the decision of the RTC of Makati City. On the procedural aspect, the CA found that the lower court erred in denying petitioner bank's motion to lift order of default. Regarding the substantive issue, the CA held that the lower court likewise erroneously declared that petitioner bank, during the time that it was ordered closed by the Central Bank, could not charge or collect interests on the respondents' loan obligation. Citing the principle of unjust enrichment, the CA posited that it was with more reason that distressed banks, like petitioner bank, should be allowed to collect interests on the loans that they had extended to their borrowers. According to the CA, the fact that distressed banks were freed from the obligation to pay any interest due on deposits when they were closed and ordered to stop operations did not mean that their borrowers were similarly freed from their contractual obligation to pay interests. It distinguished the contracts between the banks and their depositors from those between the banks and their borrowers. The CA declared that the deposited amount of P1,034,600.00 failed to effect a valid consignation in law because it did not include all interests due. It ratiocinated that for a valid consignation to exist, the tender of the principal must be accompanied with the tender of interests which had accrued; otherwise, the said tender would not be effective. The CA then reversed and set aside the decision of the RTC of Makati City and entered a new one dismissing Civil Case No. 91-3090. The subsequent facts pertain to the case now before the Court:

Upon finality of the decision of the CA in CA-G.R. CV No. 42899, declaring that there was no valid consignation and dismissing Civil Case No. 91-3090, the respondents filed with the RTC of Makati City a motion to withdraw deposit. They averred therein that with the finality of the CA decision dismissing their complaint, they are now withdrawing the amount of P1,034,600.00 which they had deposited by way of consignation with the said lower court. In addition, they alleged that their loan obligation was eventually settled with the payment of the amount ofP25,000,000.00 through negotiations made with petitioner bank by the brothers James and Francisco Gaisano as attorneysin-fact of the respondents. Upon such payment, Corazon L. Costan, petitioner bank's 2nd Assistant Vice-President and Davao Main Branch Manager, issued on February 10, 1999 the Cancellation of the Real Estate Mortgage over the respondents' commercial lots. According to the respondents, there was no longer any obstacle to the immediate release of their deposit. They prayed that they be allowed to withdraw the money which they deposited on consignation with the said court (RTC of Makati City). Petitioner bank opposed the respondents' motion. It alleged that as of December 31, 1998, the respondents' loan obligation stood at P28,810,330.51. Petitioner bank asserted that the deposit in question should be released to it as part of the full payment of the respondents' obligation. It maintained that it accepted the said consignation; hence, the respondents could no longer withdraw the said amount. Petitioner bank refuted the respondents' claim that there was already full payment of their obligation with the payment by the Gaisanos of P25,000,000.00. Petitioner bank stated that it negotiated with the Gaisanos on January 7, 1999 and the sum agreed thereon was allegedly for the payment of the respondents' obligation as of December 31, 1998 which amounted to P28,810,330.51. Petitioner bank added that during this negotiation, it took into account and deducted from the said total obligation the amounts of P1,462,901.00, representing the payments made by the respondents in 1990 and 1991, and P1,034,600.00, representing the deposit made by the respondents with the RTC of Makati City. The net obligation of the respondents after deducting these amounts stood at P26,312,828.52 and it was this amount that petitioner bank agreed to be settled with the payment by the Gaisanos of P25,100,000.00, not P25,000,000.00 as alleged by the respondents. Petitioner bank accused the respondents of being in bad faith in that while its negotiation with the Gaisanos had not yet been finalized, the respondents sought to withdraw the deposit in question which was part of the consideration that induced petitioner bank to agree to settle the respondents' obligation with the payment by the Gaisanos of P25,100,000.00 Petitioner bank prayed that the deposit in question be released to it in order that it could be applied to the respondents' total loan obligation. After consideration of the parties' respective arguments, the RTC of Makati City issued the Order dated July 31, 2000 stating as follows: Acting on the Motion to Withdraw Deposit mailed by plaintiff[s], [the respondents herein] on 26 January 1999 in Davao City with Opposition thereto filed by defendant Banco Filipino Savings and Mortgage Bank on 08 February 1999. It appears on record that the Complaint for Consignation filed by the plaintiff[s] before this Court, dated 13 December 1991 and was dismissed by the Court of Appeals on 14 November 1997 which found that the deposited amount of P1,034,600.00 did not include the interest due and was not in full satisfaction of the defendant's claim and there was no valid tender of payment and consignation. The dismissal of the complaint for Consignation by the Appellate Court did not absolve the obligation of plaintiff to apply the consignation to the outstanding obligation to the defendant and thus, the

deposited amount may still be applied for payment of the obligation after due hearing on the deficiency claim of the defendant against the plaintiff. WHEREFORE, in view of the foregoing, the MOTION TO WITHDRAW DEPOSIT is hereby DENIED for lack of merit. SO ORDERED.5 The respondents sought the reconsideration thereof but the RTC of Makati City denied their motion in its Order dated December 14, 2000. They then filed with the CA a Petition for Certiorari alleging grave abuse of discretion on the part of the presiding judge6 of the said lower court in promulgating the orders denying their motion to withdraw deposit. Acting on the said petition, the CA rendered the Decision dated November 12, 2001 in CA-G.R. SP No. 64475 reversing and setting aside the Orders dated July 31, 2000 and December 14, 2000 of the RTC of Makati City. It declared that the respondents had the statutory unilateral right to withdraw their deposit by way of consignation because there was no acceptance of the same by petitioner bank. On this point, the CA relied on Article 1260 of the Civil Code which provides, in part, that "[b]efore the creditor has accepted the consignation, or before a judicial declaration that the consignation has been properly made, the debtor may withdraw the thing or sum deposited, allowing the obligation to remain in force." The CA stressed that petitioner bank had not "performed any prior unmistakable and deliberate act denominating a preemptive acceptance of the deposit in partial settlement of the loan obligation."7 The claim of "acceptance" was found to be an afterthought on the part of petitioner bank and proffered for the sole purpose of opposing the respondents' motion to withdraw deposit. Even assuming that there was acceptance by petitioner bank, the CA opined that such acceptance must retroact to December 5, 1991 when the deposit was judicially made. In such a case, petitioner bank's computation of the respondents' outstanding loan obligation would have to be modified and reduced accordingly because the interest rate of 21% would then have to be applied to the reduced loan balance as of December 5, 1991. The CA strongly condemned the fact that the respondents' original loan of P400,000.00 in 1972 ballooned toP28,810,330.51 as of December 31, 1998 based on petitioner bank's statement of account. The principal amount plus interests, surcharges, insurance premiums, sheriff's and attorney's fees, notarization fees, etc., all added up to the respondents' outstanding balance. According to the CA, the surcharges for missed monthly payments that petitioner bank charged the respondents amounted to twice as much as the 21% interest rate, resulting in an effective interest rate of more than 60% per annum. Citing Medel v. Court of Appeals,8 this rate was characterized by the CA as "excessive, iniquitous, unconscionable and exorbitant" and likened petitioner bank to Shylock, the moneylender in William Shakespeare's The Merchant of Venice, who asked for a literal pound of flesh as payment for the money he lent. The CA found as credible the respondents' claim that, on their behalf, the Gaisanos had secured a compromise agreement with petitioner bank with the payment of P25,100,000.00 and, consequently, the mortgage over the respondents' commercial lots was cancelled. Further, the auction sale of these properties which was scheduled on January 27, 1999 was cancelled by petitioner bank itself in its letter to the Sheriff. The dispositive portion of the assailed decision of the CA reads:

WHEREFORE, the foregoing premises considered, the petitioners' [the respondents herein] petition for certiorari is GRANTED. The Orders dated July 31, 2000 and December 14, 2000 of the public court in Civil Case No. 91-3090 are REVERSED and SET ASIDE, and another one entered allowing the withdrawal by the petitioners of their deposit of P1,034,600.00 held in custodia legis with said court. No costs. SO ORDERED.9 Petitioner bank sought the reconsideration of the said decision but the CA, in its Resolution dated April 12, 2002, denied its motion. Hence, petitioner bank's recourse to the Court. The basic contention of petitioner bank is that the CA erred in reversing the Orders dated July 31, 2000 and December 14, 2000 of the RTC of Makati City which had denied the respondents' motion to withdraw deposit. Petitioner bank posits that the said lower court did not commit grave abuse of discretion in issuing the said orders because, as stated in the CA Decision of November 14, 1997 in CA-G.R. CV No. 42899, there was no valid consignation since the amount tendered (P1,034,600.00) by the respondents did not include the interests that accrued on the principal and, therefore, was not in full settlement of their outstanding obligation. Petitioner bank maintains that the dismissal of the respondents' complaint for consignation in Civil Case No. 91-3090 did not discharge their obligation to petitioner bank. Hence, the deposited amount may still be applied to the payment of such obligation. Petitioner bank claims that it accepted the respondents' deposit on consignation as partial payment of their obligation after the CA had declared the same to have been improperly made and ineffective to discharge the respondents of their obligation to petitioner bank. The RTC of Makati City thus did not allegedly commit grave abuse of discretion in holding that the deposited amount of P1,034,600.00 may still be applied to the payment of their outstanding obligation of P28,810,330.51 as of December 31, 1998. It is likewise petitioner bank's view that respondents erroneously resorted to the remedy of certiorari in assailing the orders of the RTC of Makati City. By filing their motion to withdraw deposit with the said lower court, the respondents allegedly recognized its jurisdiction and assuming arguendo that it committed an error in the exercise thereof, the appropriate remedy to correct the same was by ordinary appeal, not certiorari. Petitioner bank emphasizes that it already accepted the deposit of P1,034,600.00 such that it could no longer be withdrawn by the respondents. It reiterated that as of December 31, 1998, the respondents' total obligation wasP28,810,330.51 and when it negotiated with the Gaisanos in January 1999, it deducted therefrom the sums ofP1,462,901.00, representing previous payments of the respondents, and P1,034,600.00, representing the deposit in question. After these deductions, the respondents' net obligation stood at P26,312,828.52, and it was this amount that petitioner bank agreed to be settled with the payment of P25,100,000.00 by the Gaisanos. This allegedly showed its acceptance of the deposit in question as it was part of the consideration for the settlement of the respondents' obligation of P28,810,330.51. Petitioner bank strongly takes exception to the portion of the assailed CA decision comparing it to Shylock and characterizing the surcharges and interests as "excessive, iniquitous, unconscionable and exorbitant." It faults the respondents for being remiss in paying their amortization. Had they been religious in paying the same, then their obligation would not have reached the amount of over P28,000,000.00. Petitioner bank denies that it delayed the foreclosure of the respondents' mortgaged properties in order to allow the loan arrearages to accumulate. Rather, the delay was allegedly the respondents' doing as they filed with the RTC of Davao City a complaint to enjoin the

said foreclosure. Moreover, petitioner bank points out that in several cases,10 the Court recognized that interests and surcharges are two entirely different things that may be simultaneously collected in connection with loan agreements. Petitioner bank, thus, prays for the reversal of the Decision dated November 12, 2001 and Resolution dated April 12, 2002 of the appellate court allowing the respondents to withdraw their deposit on consignation ofP1,034,600.00 held by the RTC of Makati City. The petition is denied. The Court shall first address the procedural issue on the propriety of respondents' filing with the CA of a petition for certiorari in assailing the Orders of the RTC of Makati City denying their motion to withdraw deposit. Petitioner bank submits that such tack was erroneous, as they should have filed an appeal. Petitioner bank's submission is not correct. A special civil action for certiorari may be instituted when any tribunal, board or officer, exercising judicial or quasi-judicial functions, has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of law.11 To recall, in the present case, the RTC of Makati City had already rendered its original judgment in Civil Case No 91-3090 and the same was appealed to the CA. Acting on the appeal, the CA reversed the judgment of the RTC of Makati City and dismissed the respondents' complaint for consignation. The CA decision became final and executory. Subsequently, the respondents filed the motion to withdraw deposit with the RTC of Makati City and which the latter denied in the Orders of July 31, 2000 and December 14, 2000. These orders, issued after the original judgment had already been rendered, were interlocutory and, therefore, not appealable. Since no appeal was available against such orders, the respondents properly availed of the remedy of certiorari before the CA. On the other hand, the only substantive issue for the Court's resolution is whether the appellate court erred in reversing the Orders dated July 31, 2000 and December 14, 2000 of the RTC of Makati City which denied the respondents' motion to withdraw deposit and, consequently, allowing them to withdraw their deposit ofP1,034,600.00 held on consignation by the said lower court. Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment and it generally requires a prior tender of payment.12 In order that consignation may be effective, the debtor must show that: (1) there was a debt due; (2) the consignation of the obligation had been made because the creditor to whom tender of payment was made refused to accept it, or because he was absent or incapacitated, or because several persons claimed to be entitled to receive the amount due or because the title to the obligation has been lost; (3) previous notice of the consignation had been given to the person interested in the performance of the obligation; (4) the amount due was placed at the disposal of the court; and (5) after the consignation had been made, the person interested was notified thereof.13 As earlier mentioned, the CA, in its Decision of November 14, 1997 in CA-G.R. CV No. 42899, ruled that there was no valid consignation because the amount tendered as payment was insufficient. In other words, the element of a valid tender of payment was not satisfied. This decision became final and executory. The issue that now confronts the Court relates to the right of the respondents to withdraw the amount deposited with the RTC of Makati City. Article 1260 of the Civil Code of the Philippines pertinently provides:

Art. 1260. Once the consignation has been duly made, the debtor may ask the judge to order the cancellation of the obligation. Before the creditor has accepted the consignation, or before a judicial confirmation that the consignation has been properly made, the debtor may withdraw the thing or the sum deposited, allowing the obligation to remain in force. This provision has been explained in this wise: x x x The right of the debtor to withdraw the thing or amount deposited in court, depends upon whether or not the consignation has already been accepted or judicially declared proper. Before that time, the debtor is still the owner, and he may withdraw it; in this case, the obligation will remain in full force as before the deposit. But once the consignation has been accepted by the creditor or judicially declared as properly made, the debtor loses his right over the thing or amount deposited, and he cannot withdraw the same without the consent of the creditor; if the creditor consents to the withdrawal in such case, the obligation is revived as against the debtor personally, but all rights of preference of the creditor over the thing and all his actions against co-debtors, guarantors and sureties are extinguished. xxxx x x x We believe, however, that the contrary view is more acceptable. Before the consignation has been accepted by the creditor or judicially declared as properly made, the debtor is still the owner of the thing or amount deposited, and, therefore, the other parties liable for the obligation have no right to oppose his withdrawal of such thing or amount. The debtor merely uses his right, and unless the law expressly limits that use of his right, it cannot be prevented by the objections of anyone. Our law grants to the debtor the right to withdraw, without any limitation, and we should not read a nonexisting limitation into the law. Although the other parties liable for the obligation would have been benefited if the consignation had been allowed to become effective, before that moment they have not acquired such an interest as would give them a right to oppose the exercise of the right of the debtor to withdraw the consignation. Before the consignation has been judicially declared proper, the creditor may prevent the withdrawal by the debtor, by accepting the consignation, even with reservations. Thus, when the amount consigned does not cover the entire obligation, the creditor may accept it, reserving his right to the balance. x x x14 Thus, under Article 1260 of the Civil Code, the debtor may withdraw, as a matter of right, the thing or amount deposited on consignation in the following instances: (1) Before the creditor has accepted the consignation; or (2) Before a judicial declaration that the consignation has been properly made. Obviously, in this case, there was no judicial declaration that the consignation had been properly made. On the contrary, the CA declared that there was no valid consignation. What remains to be determined then is whether petitioner bank had already accepted the deposit in question so as to prevent the respondents from exercising their right to withdraw the same. Petitioner bank insists that it had already done so. In fact, petitioner bank avers, it took into account and deducted the deposit in question from the respondents' outstanding obligation

of P28,810,330.51 as of December 31, 1998 when it negotiated with the Gaisanos. Deducting the deposit in question as well as the payments made by the respondents during the period of 1990 and 1991, their net obligation stood at P26,312,828.52. It was this amount that petitioner bank allegedly agreed to be settled with the payment of P25,100,000.00 by the Gaisanos on behalf of the respondents. To prove this claim, petitioner bank relies on the statement of account15 prepared by its employees purportedly showing that the deposit in question was deducted from the respondents' outstanding obligation as of December 31, 1998. This statement of account, however, is self-serving and has no probative value especially considering that the persons who prepared the same were not presented in court. Thus, other than its bare allegation, petitioner bank has failed to establish by convincing evidence that it had made such acceptance of the deposit in question prior to the respondents' filing of their motion to withdraw deposit as to effectively prevent them from withdrawing the sum of P1,034,600.00 held by the RTC of Makati City. On the other hand, in the assailed decision, the CA categorically made the finding that petitioner bank made no acceptance of the deposit in question, even if only as partial payment of the respondents' outstanding obligation: Nor could it be successfully argued with any modicum of persuasion, x x x, that the bank had performed any prior unmistakable and deliberate act denominating a preemptive acceptance of the deposit in partial settlement of the loan obligation. Otherwise, it would not have waited until the petitioners [the respondents herein] filed their motion to withdraw more than a year after this Court's aforecited decision. The claimed "acceptance" was obviously an afterthought, and proffered for the sole purpose of opposing the deposit withdrawal.16 This finding of fact of the CA that petitioner bank had not accepted the deposit in question, even with reservation, is accorded respect by this Court following the salutary rule that findings of facts of the appellate court are generally conclusive on the Supreme Court.17 It is significant to note that the RTC of Makati City never made any factual finding on whether or not there had been acceptance of the deposit in question by petitioner bank.18 The said lower court did not even apply Article 1260 of the Civil Code when it denied the respondents' motion to withdraw deposit. With the finding that petitioner bank had not made any prior acceptance of the deposit in question, the CA accordingly did not commit reversible error in setting aside the Orders of the RTC of Makati City which had denied the respondents' motion to withdraw deposit. Indeed, absent this prior acceptance by petitioner bank or a judicial declaration that the consignation had been properly made, the respondents remain the owners of the sum ofP1,034,600.00 deposited with the RTC of Makati City. When they filed their motion to withdraw the deposit, they did so in the exercise of their right. At this point, it bears mentioning that it is not disputed that the Gaisano brothers, as attorneys-in-fact of the respondents, eventually paid to petitioner bank some time in January 1999 the sum of P25,100,000.00 as settlement of the respondents' obligation. To the Court's mind, the payment of the said sum already constituted substantial compliance by the respondents of their obligation considering that their loan, as restructured or consolidated in November 1982, amounted to only P3,163,000.00. As noted by the CA, the surcharges imposed by petitioner bank on the respondents as of November 15, 1998 reached P16,569,534.62.19 Article 122920 of the Civil Code specifically empowers the judge to reduce the civil penalty equitably, when the principal obligation has been partly or irregularly complied with. Upon this premise, the Court holds that the said surcharges should be equitably

reduced such that the payment of P25,100,000.00 constituted substantial compliance by the respondents of their obligation to petitioner bank. The Court need not delve on the other issues raised, particularly relating to the interests imposed by petitioner bank in connection with the respondents' loan, as these were already passed upon in the other cases (CA-G.R. SP No. 21089 and CA-G.R. CV No. 42899) involving the same parties. WHEREFORE, premises considered, the petition is DENIED. The Decision dated November 12, 2001 and Resolution of April 12, 2002 of the Court of Appeals in CA-G.R. SP No. 64475 are AFFIRMED. SO ORDERED G.R. No. 136260 July 28, 2006

ELENITA C. ISHIDA and CONTINENT JAPAN CO., INC., petitioners, vs. ANTUSA DE MESA-MAGNO, FIRMO DE MESA, MERCED LORENZA DE MESA, TEODORO DE MESA, and LOURDES DE MESA-MENDOZA, respondents. DECISION GARCIA, J.: Assailed and sought to be set aside in this petition for review under Rule 45 of the Rules of Court is the Decision1dated October 15, 1996 of the Court of Appeals (CA) in CA-G.R. CV No. 441550, as reiterated in its Resolution2of October 28, 1998 denying herein petitioners' motion for reconsideration. The basic CA Decision reversed that of the Regional Trial Court (RTC) of Quezon City, Branch 106, in an action for annulment of sale thereat commenced by the petitioners against the herein respondents. Reviewed, the records reveal the following factual antecedents: Sometime in June 1987, the spouses Francisco Magno and Antusa de Mesa-Magno, the latter acting in her own behalf and in behalves of her co-respondent brothers and sisters, namely, Firmo de Mesa, Merced Lorenza de Mesa, Teodoro de Mesa and Lourdes de Mesa-Mendoza, executed a Deed of Sale with Mortgage3 in favor of petitioner Continent Japan Co., Inc., represented in the deed by its co-petitioner Elenita Ishida. Subject of the deed were a fishpond, a residential lot and a horticular land, all located in Lubao, Pampanga and registered under three separate transfer certificates of title (TCTs) in the names of respondent Antusa de Mesa-Magno and her co-respondents. The consideration for the sale was Five Million, One Hundred Fifty Thousand (P5,150,000.00) Pesos, of which Two Million, Seven Hundred Fifty Thousand (P2,750,000.00) Pesos was paid at the time the deed was executed, with the balance of Two Million, Four Hundred Thousand (P2,400,000.00) Pesos being secured by a mortgage of the properties sold. As agreed, the aforesaid balance of P2,400,000.00 in the purchase price shall be paid, as follows: P500,000.00, on or before October 31, 1987; and P1,900,000.00, on or before December 31, 1987. Despite the sale, titles to the properties were not immediately transferred to the vendee-mortgagor Continent Japan Company, Inc., because its Articles of Incorporation which is required to effect the

transfer was not readily available. It was only sometime in October 1987, after the vendee had submitted its Articles of Incorporation showing it to be a domestic corporation, that three (3) TCTs over the properties sold were issued in its name, to wit: TCT Nos. 249756-R, 249757-R and 2497-R. Meanwhile, due to the alleged failure of the respondents to immediately effect the transfer of titles to the corporation, the latter's alleged financial partners withdrew their financial commitments. On account thereof, the corporation was not able to make payments of the balance in the purchase price, by reason of which the respondents foreclosed the mortgage in accordance with the terms and conditions of the parties' Deed of Sale With Mortgage. Thereafter, foreclosure proceedings ensued. Ultimately, the respondents acquired the mortgaged properties in a public auction and obtained new TCTs in their names. It was against the foregoing backdrop of events that, on January 11, 1988, in the RTC of Quezon City, the petitioners filed against the respondents their complaint4 in this case, which was docketed as Civil Case No. Q-Q-52656 and raffled to Branch 106 of the court. After the issues were joined and all preliminary incidents resolved, the trial court came out with its decision5 on October 4, 1993, rendering judgment for the petitioners, as plaintiffs, thus: WHEREFORE, by preponderance of evidence, judgment is hereby rendered declaring the contract of sale of the fishpond property entered into by and between Sps. Francisco Magno and Antusa de Mesa Magno and Continent Japan Co. Inc. represented by Alenita Ishida annulled. Defendants are ordered to return to plaintiff the amount of Four Million Five Hundred Thousand (P4,500,000.00) Pesos plus interest at the rate of 12% per annum from August 1, 1987 until fully paid. The titles over the property subject of the sale having been registered back to the name of defendants/vendors, the plaintiff is under no obligation to restore anything to the defendant. Further, defendant is hereby ordered to pay plaintiff the following: 1. The amount of One Hundred Thousand (P100,000.00) or actual and moral damages; 2. The amount of Fifty (P50,000.00) Thousand Pesos as attorney's fees, and 3. Costs of suit. SO ORDERED. Therefrom, the respondents went on appeal to the CA in CA-G.R. CV No. 441550. As stated at the threshold hereof, the appellate court, in its Decision6 dated October 15, 1996, reversed that of the RTC and dismissed the petitioners' complaint, to wit: WHEREFORE, premises considered, the appeal is GRANTED. The decision appealed from is hereby REVERSED and SET ASIDE and new judgment is hereby rendered DISMISSING the complaint. Counter-claim is likewise DISMISSED. Costs against plaintiff-appellees. SO ORDERED.

Their motion for reconsideration having been denied by the CA in its equally challenged Resolution7 of October 28, 1998, petitioners are now with this Court via the present recourse, arguing that the CA acted with patent grave abuse of discretion I XXX IN FAILING TO RULE THAT THE TRIAL COURT CORRECTLY DECREED THE ANNULMENT OF THE SALE OF THE FISHPOND PROPERTY. II XXX IN FAILING TO RULE THAT THE COMPLAINT WAS NOT RENDERED MOOT AND ACADEMIC BY THE FORECLOSURE AND CONSOLIDATION OF THE SUBJECT PROPERTIES BY RESPONDENTS. III XXX IN FAILING TO RULE THAT THE TRIAL COURT CORRECTLY RENDERED JUDGMENT IN FAVOR OF PETITIONERS.8 The petition lacks merit. As we see it, the forefront issue is whether, under the facts obtaining in this case, the CA committed an error in reversing the trial court's decision annulling the parties' Deed of Sale with Mortgage. We rule and so hold that the CA did not. From the very allegations of petitioners' initiatory pleading before the trial court which they simply styled as aComplaint without specifying what their complaint was for, it is crystal clear that petitioners as plaintiffs in the suit never asked the trial court to annul the subject Deed of Sale with Mortgage. Instead, in their complaint, petitioners merely prayed for a judgment ordering the respondents, as defendants: 1. to effect the transfer of the titles over the property to Continent Japan Co., Inc. and to deliver the same; 2. to pay actual damages in the amount of One Million Five Hundred (P1,500,000.00) Pesos which was sustained by plaintiffs due to the failure by defendants to immediately effect the transfer and delivery of the titles over the land, causing the former's financial partners to withdraw their financial commitments; 3. to restore of the piggery property or in the alternative, the reduction of the consideration in the amount of Three Hundred Fifty Thousand (P350,000.00) Pesos; 4. to compensate the plaintiffs in the amount of One Hundred Thousand (P100,000.00) Pesos for the fruits harvested from the property as well as the fixtures removed from the property bought; 5. to compensate the plaintiffs in the amount of One Million (P1,000,000.00) Pesos for the difference in the actual number of prawns harvested from the fishpond;

6. to compensate Elenita Ishida the amount of Two Hundred Fifty Thousand (P250,000.00) Pesos as and by was of moral damages; 7. to pay exemplary damages in the amount of Two Hundred Fifty Thousand (P250,000.00) Pesos; 8. to pay attorney's fees in the amount of Two Hundred Fifty Thousand (P250,000.00) Pesos; and 9. to pay the costs of suit. Clear it is from the above that petitioners never asked for the annulment of the contract of sale with mortgage. For sure, the reliefs prayed for are even inconsistent with what the trial court decreed, i.e., annulment of the parties' basic contract. The Court, as did the CA before it, is thus at a loss to understand why the trial court, instead of focusing itself to the reliefs sought by the petitioners, proceeded to annul the basic contract itself, a course of action which, to stress, is even inconsistent with the very existence of the contract from whence the reliefs asked merely sprung. As aptly pointed out by the CA in the decision under review: A careful perusal of the complaint will show as clearly appearing in the discussion of the facts of the case that nowhere in its prayer nor in the body of the complaint did [petitioners] ask for the annulment of the contract of sale with the [respondents]. Evidence is wanting for such a relief to be granted. (Words in brackets supplied). Evidently, in veering away from what the complaint prayed for, the trial court was of the view that there was no meeting of the minds of the parties vis a vis their Deed of Sale with Mortgage. In the words of the trial court, "[E]vident is the existence of the documents executed prior to, at the time or subsequent to the alleged transaction and agreement to sell and to buy the subject property." The records indeed show that after the execution of the Deed of Sale with Mortgage, the parties executed anAddendum thereto (Exh. "6"), enumerating therein certain properties within the area of the real properties subject of the sale, which were excluded therefrom. As correctly observed by the CA, however, the Addendum was not even necessary because the excluded properties were already enumerated in pages 2 and 3 of the Deed of Sale with Mortgage. In any event, and, again, as correctly pointed out by the CA, to which we are in full accord: It is error for the court a quo to hold that there was no meeting of the minds between the parties. It must be borne in mind that the principal object of the contract of sale with mortgage are the three adjoining parcels of land, and that the confusion as to the exclusion of the piggery as well as the fruits harvested does not warrant the annulment of the contract. They are merely incidental to the contract. To warrant a declaration of nullity of the contract, the doubts or obscurities must be cast upon the principal object of the contract (which in this case are three parcels of land) in such a way that the true intention of the parties cannot be known . Par. 2, Art. 1378 of the Civil Code provides: xxx xxx xxx

If the doubts are cast upon the principal object of the contract in such a way that it cannot be known what may have been the intention or will of the parties, the contract shall be null and void. If the doubt refers to the incidental circumstances of an onerous contract, the doubt shall be settled in favor of the greatest reciprocity. For this purpose, par. 1 of the abovecited articles provides: When it is absolutely impossible to settle doubts by the rules established in the preceding articles, and the doubts refer to incidental circumstances of a gratuitous contract, the least transmission of rights and interests shall prevail. If the contract is onerous, the doubt shall be settled in favor of the greatest reciprocity of interest. Such a confusion merely led to the failure of the parties to express in the contract the true intention of their agreement, the proper remedy of which is reformation of the contact under Chapter 4, Title 2, Book IV (Obligations and Contracts) of the Civil Code. This brings us to petitioners' second submission that the CA committed grave abuse of discretion in failing to rule that their complaint was not rendered moot and academic by the foreclosure proceedings and the resulting consolidation of titles over the mortgaged assets in the names of the respondents. Put differently but with the same sense, it is petitioners' contention that despite the foreclosure proceedings and the consolidation of titles in respondents' name, the viability of their complaint was never affected. We disagree. First, with the reality that the properties subject of the suit were already sold at a public auction and titles thereto already registered in the names of the respondents there is simply no rhyme nor reason to hold that the complaint had not thereby been rendered moot and academic, more so in the light of the prayers therein embodied. Second, and as explained by the CA in its Resolution of October 28, 1998 which denied petitioners' motion for reconsideration: xxx To ask for the annulment or rescission of the transaction between the parties at this time will be iniquitous considering that [petitioners] had a hand in the delay in the transfer of the titles to the properties in the name of the [petitioner] Continent Japan Co. Besides, as [respondent] correctly pointed out, no evidence was adduced during the proceedings before the trial court tending to prove that [petitioners] are entitled to the annulment of the contract between them as a relief.9 With the view we take of this case, we find it unnecessary to address petitioners' third lament. WHEREFORE, the petition is DENIED and the assailed Decision and Resolution of the CA in CAG.R. CV No. 441550 are AFFIRMED. Costs against petitioners. G.R. No. 165500 August 30, 2006

PHILIPPINE BANK OF COMMUNICATIONS and ROMEO G. DELA ROSA, Petitioners, vs. ELENITA B. TRAZO, Respondent. DECISION CHICO-NAZARIO, J.: Petitioners are asking Us to reverse, in this Petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, the Decision 1 of the Court of Appeals dated 25 March 2004 and its Resolution 2 dated 23 September 2004 denying petitioners Motion for Reconsideration. The facts of the case are as follows: In order to facilitate the payment of her salaries and other monetary benefits from her employer, petitioner Philippine Bank of Communications (PBCOM 3), respondent Elenita B. Trazo opened a payroll account with China Banking Corporation (CBC) under Current Account No. 101-003921-9. On or about 29 December 1997, petitioner Romeo G. dela Rosa, PBCOM assistant vice-president, instructed CBC to credit all accounts under its payroll with the medical and clothing subsidy for the year 1998. Accordingly, respondent Trazos current account was credited on that date with the amount of P7,000.00 for such annual subsidy. On 31 December 1997, respondent Trazo, then project manager of the information technology and management group, resigned from PBCOM. Since respondent Trazo severed her employment with PBCOM effective 1 January 1998 and was, therefore, no longer entitled to the medical and clothing subsidy for the year 1998, petitioner dela Rosa wrote William Lim, CBC senior assistant vice-president, on 5 January 1997 authorizing/directing CBC/Lim to debit the sum of P7,000.00 from respondent Trazos current account. Acting upon such authority/directive, CBC/Lim debited said amount from respondent Trazos account on the same date. Meanwhile, respondent Trazo drew checks against her current account in favor of Bliss Development Corporation (BDC) and the House of Sara Lee Phils., Inc. However, the checks were dishonored by CBC due to insufficiency of funds, which was occasioned by the P7,000.00 debit from her current account. Averring that PBCOM, through dela Rosa, had no authority to unilaterally order the debiting of her current account and that CBC, through Lim, made such debit without her knowledge and consent resulting in the dishonor of her checks, respondent Trazo instituted an action for damages against PBCOM, dela Rosa, CBC, and Lim before the Regional Trial Court (RTC) of Quezon City (Branch 79). Summons was served on CBC and Lim on 19 May 1998 and on petitioners herein, PBCOM and dela Rosa, on 27 May 1998. On 27 May 1998 and 11 June 1998, or before the expiration of the reglementary period for filing their answers, CBC and Lim, and PBCOM and dela Rosa, respectively, filed motions for 15-day extension of time. On 8 June 1998, respondent Trazo filed a Motion to Declare Defendants China Banking Corporation and William Lim in Default and Opposition to Motion for Extension of Time to File Answer and/or

Responsive Pleading. On 15 June 1998, respondent Trazo filed a Motion to Declare Defendants Philippine Bank of Communication and Romeo G. dela Rosa in Default. On 16 June 1998, CBC and Lim filed a Motion to Dismiss the case on the ground of improper venue. On 24 June 1998, PBCOM and dela Rosa filed their own Motion to Dismiss on the ground that the complaint failed to state a cause of action. On 7 October 1998, the lower court issued an Omnibus Order granting the motions to dismiss and declaring the motions to declare defendants in default moot and academic. The dispositive portion of the Omnibus Order is as follows: PREMISES CONSIDERED, the case against defendants China Bank and William Lim is DISMISSED on the ground of improper venue. The case against defendants Philippine Bank of Communications and Romeo G. dela Rosa is DISMISSED for lack of cause of action. 4 Respondent Trazo filed with the trial court a Notice of Appeal. In the assailed Decision, the Court of Appeals ruled in favor of respondent Trazo, disposing of the case in the following manner: WHEREFORE, the omnibus order dated October 7, 1998 of the Regional Trial Court of Quezon City (Branch 79) is REVERSED and SET ASIDE and the complaint REINSTATED. Appellant is given ten (10) days from notice of finality of this decision within which to amend the complaint. 5 Petitioners filed their Motion for Reconsideration on 14 April 2004, while CBC and Lim filed their Motion for Reconsideration on 19 April 2004. On 23 September 2004, the Court of Appeals issued the assailed Resolution wherein both motions for reconsideration were denied for lack of merit. Hence, the instant Petition, where petitioners PBCOM and Trazo bring before us the following issues: A. WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE COMPLAINT STATED A CAUSE OF ACTION FOR DAMAGES AGAINST PETITIONERS ARISING OUT OF THE ALLEGED UNLAWFUL DEBITING OF RESPONDENTS CHINABANK ACCOUNT, NOTWITHSTANDING THAT IT WAS CHINABANK WHICH DEBITED THE ACCOUNT, NOT PETITIONERS. B. WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPLAINT PLEADED A CAUSE OF ACTION FOR ABUSE OF RIGHTS AGAINST PETITIONERS. C. WHETHER OR NOT THE COURT OF APPEALS ERRED IN ORDERING THE AMENDMENT OF THE COMPLAINT DESPITE THE COMPLAINTS ABSOLUTE FAILURE TO STATE A CAUSE OF ACTION AGAINST PETTIONERS. D.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT THE VENUE CLAUSE IN THE APPLICATION FOR NEW CURRENT ACCOUNTS IS NOT EXCLUSIVE. 6 Only CBC, and not petitioners PBCOM and dela Rosa, can move for dismissal on the ground of improper venue. The Application for New Current Accounts, which embodies the terms and conditions of respondent Trazos relationship with CBC, contains a stipulation on venue, to wit: In case of litigation hereunder, venue shall be in the City Court or Court of First Instance of Manila as the case may be for determination of any and all questions arising thereunder. 7 The RTC of Quezon City dismissed the complaint against CBC and Lim based on this stipulation, but the Court of Appeals reversed said dismissal. According to the Court of Appeals, absent any qualifying or restrictive words, a stipulation on venue should be considered merely as an agreement on an additional forum, and not to be considered as limiting venue to the specified place. 8 Before proceeding any further, it bears to point out that among the multiple defendants in the case filed by respondent Trazo, only CBC and its officer Lim can assert the alleged impropriety of venue since they are privy to and covered by the contract containing the venue stipulation. Indeed, the dispositive portion of the RTC decision shows that the dismissal on the ground of improper venue was effective only as against CBC and Lim. As CBC and Lim did not appeal the decision of the Court of Appeals reversing the RTC ruling, such decision has become final and executory as regards its disposition on the issue regarding venue. Nevertheless, We agree with the Court of Appeals that it was incorrect for the RTC to dismiss the complaint on the ground of improper venue. The parties must be able to show that the stipulation is exclusive. Thus, sans words expressing the parties intention to restrict the filing of a suit in a particular place, courts will allow the filing of a case in any of the venues prescribed by law or stipulated by the parties, as long as the jurisdictional requirements are followed. 9 The subject clause contains no qualifying nor restrictive words, such as "must," or "exclusively," as would indicate the parties intention "mandatorily to restrict the venue of actions to the courts of (Manila) only." 10In the 8 December 2000 case of Langkaan Realty Development, Inc. v. United Coconut Planters Bank, 11 where the venue stipulation contained the word "shall," 12 we held that the stipulations of the parties "lack qualifying or restrictive words to indicate the exclusivity of the agreed forum," 13 and therefore "the stipulated place is considered only as an additional, not a limiting venue." 14 Consequently, the dismissal by the RTC of the complaint against CBC and Lim on ground of improper venue is erroneous, and was correctly reversed by the Court of Appeals. Respondent Trazos complaint contains a cause of action against petitioners PBCOM and dela Rosa. As discussed above, the RTC dismissed the complaint, insofar as it operates against CBC and Lim, on the ground of improper venue. In the same Omnibus Order, the RTC also dismissed the same complaint on the ground of failure to state a cause of action, this time, insofar as the complaint operates against petitioners PBCOM and dela Rosa. The Court of Appeals, in reversing the Order of the RTC dismissing the complaint on the ground of failure to state a cause of action, held: Par. 13 of the complaint recites appellants alleged cause of action against [PBCOM and dela Rosa]. It reads:

"13. Upon further personal inquiry with [PBCOM], [respondent Trazo] found out that on January 5, 1998 [petitioner] ROMEO G. DE LA ROSA, without [respondent Trazos] knowledge, consent and approval, wrote a letter and authorized/directed x x x CHINABANK and WILLIAM LIM `to debit the account of Elenita Trazo under C/A #101-003921-9 in the amount of PESOS: SEVEN THOUSAND PESOS ONLY P7,000.00 representing her medical and clothing subsidy for the year 1998. He even acknowledged and admitted that [respondent Trazo] resigned from PBCom effective December 31, 1997. He further stated that CHINABANK make the `Managers check payable to Philippine Bank of Communications. x x x." Crucial to appellants action against [PBCOM and dela Rosa] is the issue of whether the latter had the right to authorize/direct [CBC and Lim] to debit the amount of P7,000.00 from appellants current account and, if so, whether appellant was entitled to notice of such authority/directive. In authorizing/directing [CBC and Lim] to debit appellants current account, [PBCOM and dela Rosa] had, in effect, sought to recover, without resorting to a court action, an amount erroneously credited to her. And because appellant was not given the courtesy of a notice of such authority/directive, she was lulled into the belief that her funds at CBC were sufficient to cover the checks she was issuing. Nevertheless, the lower court ruled that the averment in par. 13 of the complaint is insufficient to make out a cause of action against [PBCOM and dela Rosa] on the theory that the "debit (of) the amount of P7,000.00 from the account of [respondent Trazo] x x x cannot be attributed as the fault of (PBCOM) since the fiduciary relationship exists only between (CBC) and [respondent Trazo] as its depositor and the primary responsibility whether to deposit or not lies with (CBC) alone." However, the lower court did not consider whether the act of authorizing/directing CBC/Lim to debit appellants current account without giving notice to her constitutes a cause of action against [PBCOM and dela Rosa], for abuse of rights. The modern tendency is to depart from the classical and traditional theory and to grant indemnity for damages in cases where there is an abuse of rights, even when the act is not illicit (Sea Commercial Company, Inc. vs. Court of Appeals, 319 SCRA 210). But even supposing that the asserted act of [PBCOM and dela Rosa] is insufficient to make out a case of abuse of rights, the lower court could have simply ordered appellant to amend the complaint. Thus, Sec. 1, Rule 10, in relation to Sec. 3, Rule 16, id., allows amendment of pleadings before a responsive pleading is served. Amendment of the complaint, by way of supplementing and amplifying facts as would carve out a clear abuse of rights situation, would prevent multiplicity of suits. This is so because of Our ruling that the dismissal of the complaint against [CBC and Lim] on ground of improper venue is erroneous, with the effect that the complaint against them is reinstated. However, affirmance of the dismissal of the complaint against [PBCOM and dela Rosa] anchored on failure to state a cause of action would trigger the filing of a new action against the latter, thereby spawning two suits, i.e., the instant action and the new one. Amendment, not dismissal, of the complaint is proper to avoid multiplicity of suits (Eugenio, Sr. vs. Velez, 185 SCRA 425). The policy in this jurisdiction is that amendment of pleadings is favored and liberally allowed in the interest of substantial justice. Amendment of the complaint may be allowed even if an order for its dismissal has been issued provided that the motion to amend is filed before the order of dismissal acquired finality (Tirona vs. Alejo, 367 SCRA 17). Rules of Procedure, after all, are but tools designed to facilitate the attainment of justice (Valenzuela vs. Court of Appeals, 363 SCRA 779). 15

Petitioners argue that the afore-quoted paragraph 13 shows that PBCOM and dela Rosa merely requested CBC to debit the account of respondent Trazo, and that nothing in said paragraph shows that PBCOM and dela Rosa were actually responsible for the alleged unlawful debiting of respondents account. 16 As regards the Court of Appeals finding that the complaint contains a cause of action against petitioners for abuse of rights, 17 petitioners claim that the elements of abuse of rights are not found in the complaint, since no bad faith was imputed to PBCOM and dela Rosa in requesting the debiting of the amount stated, and since there was no allegation showing that PBCOM and dela Rosa acted with the sole intent of prejudicing or injuring respondent in requesting the same. 18 While we agree with petitioners that the complaint does not contain a cause of action against them for abuse of rights, their petition would, nonetheless, fail. A cause of action is an act or omission of one party in violation of the legal right of the other. 19 A motion to dismiss based on lack of cause of action hypothetically admits the truth of the allegations in the complaint. 20 The allegations in a complaint are sufficient to constitute a cause of action against the defendants if, hypothetically admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer therein. A cause of action exists if the following elements are present, namely: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of damages. 21 The Court of Appeals, like the RTC, seems to have acquiesced in the petitioners statement 22 that respondents cause of action against them is found exclusively in paragraph 13 of the complaint. An examination of the subject complaint, 23 however, reveals that it contains other provisions establishing the cause of action against petitioners PBCOM and de la Rosa, not the least of which is paragraph 23, which provides: 23. In debiting the checking/current account of the plaintiff, without her knowledge, consent and approval, defendants acted in a wanton, reckless and oppressive manner. Defendants PBCOM and ROMEO G. DE LA ROSA had no cause nor reason to unilaterally order the debiting of plaintiffs account as it was her personal property and not of defendant PBCOM. Even if defendant PBCOM erroneously credited plaintiff with monetary benefits, plaintiff was to receive, as she did receive separation benefits equivalent to more than FIVE HUNDRED THOUSAND PESOS (P500,000.00) more or less, from defendant PBCOM itself. A reasonable set-off or compensation should and could have been resorted to. However, defendant PBCOM never utilized this option. Defendant PBCOM neither informed plaintiff of said transaction, much less seek her approval and authority to debit her CHINABANK account when at the time of the debitting (sic), January 5, 1998, she was no longer an employee of PBCOM. (Emphasis supplied.) 24 As regards respondent Trazos entitlement to damages, the complaint recites that: In order not to jeopardize her housing loan obligations with BDC and Sara Lee, Phil., Inc., and considering the legal actions foisted against her, x x x [respondent Trazo] made immediate restitution to BDC and Sara Lee Phil., Inc. for her outstanding obligations, which included unwarranted charges and penalties which were not [respondent Trazos] making. 25 The Complaint also claims that the actions of defendants therein, including petitioners PBCOM and dela Rosa, caused "mental anguish, moral shock, besmirched reputation, social humiliation, serious

fright and anxiety, sleepless nights and wounded feelings." 26 The same was reiterated in Annex K of said complaint, wherein respondent Trazo, through her legal representative, wrote to petitioner dela Rosa, in his capacity as Assistant Vice-President of petitioner PBCOM, stating: On January 5, 1997, you, as AVP of PBCOMs Human Resource Management Department, authorized CHINA BANKING CORPORATION to debit our clients account under C/A # 101-0039219 in the amount of SEVEN THOUSAND PESOS (P7,000.00), representing her medical and clothing subsidy for the year 1998, without notifying our client, much less acquiring her consent and approval. However, our client resigned from PBCOM effective July 1, 1998, during which time the same account already ceased to be a payroll account. As a result of your action[,] our client incurred damages and injury in several personal transactions involving check payments made by her under said checking account with CHINA BANKING CORPORATION. This unfortunate incident caused her untold sufferings, not to mention lost opportunities in her profession and other businesses, besmirched reputation, sleepless nights, mental anguish and wounded feelings. 27 Paragraph 20 28 of the complaint makes its Annex K an integral part thereof. We find a sufficient cause of action in the above-quoted allegations. If these allegations are assumed to be true, respondent Trazo would indeed be entitled to damages, though the amount of the same would still depend on the evidence presented during trial. We carefully scrutinize the allegations in the Complaint. It provides that "(d)efendants PBCOM and ROMEO G. DE LA ROSA had no cause nor reason to unilaterally order the debitting (sic) of plaintiffs account as it was her personal property and not of defendant PBCOM." 29 The Complaint also described the action of all defendants, including petitioners PBCOM and dela Rosa, as unjust and illegal, 30 and done in a wanton, reckless and oppressive manner. 31 The cause of action stated in the Complaint, therefore, consists in (1) a right in favor of the plaintiff, which in this case consists of a right to her personal property; 32 (2) an obligation on the part of the named defendant to respect her right to her personal property; and (3) an act of such defendant violative of the right of the plaintiff, which in this case is the order by petitioners to CBC and Lim to debit respondent Trazos account, an act which petitioners allege to have caused them damage. In the case at bar, the allegations in the complaint verily show a cause of action. To sustain a motion to dismiss for lack of cause of action, the Complaint must show that the claim for relief does not exist rather than that a claim has been defectively stated or is ambiguous, indefinite or uncertain. 33 We, however, disagree with the Court of Appeals when it decided that the allegations in the complaint show a cause of action against petitioners for abuse of rights under Article 19 34 of the Civil Code. The elements of abuse of rights are: (1) a legal right or duty; (2) which is exercised in bad faith; and (3) for the sole intent of prejudicing or injuring another. 35 Rather, the allegations bare commission of an act contrary to law under Article 20 of the same Code, which provides: Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. Whereas Article 19 provides for a cause of action for damages in cases when there is no law violated, the act causing damage being within rights or duties of defendant, Article 20 furnishes a general sanction for violations of provisions of law which do not especially provide their own sanction. 36 The complaint clearly alleges a violation of respondent Trazos property rights with

respect to her checking account. Article 429 of the Civil Code provides that the owner or lawful possessor of the thing has the right to exclude any person from the enjoyment and disposal thereof. Petitioners retort that the complaint did not base its claim for damages on Articles 19, 20 and 21 of the Civil Code,37 and faults the Court of Appeals for making out "a cause of action for respondent on grounds not even alleged in the Complaint. 38 We, however, have held in Consolidated Dairy Products, Co. v. Court of Appeals, 39 that the applicable law to a set of facts stated in the complaint need not be set out directly. Consequently, the complaint need not state that the property right alleged to have been violated is found in Article 429 of the Civil Code, or that such violation entitled petitioner Trazo to damages pursuant to Article 20 of the same Code, which provides a cause of action therefor. Petitioners claim that respondent failed to specify in the complaint the standard of proper conduct and decency required of PBCOM and the basis of invoking such standard on PBCOM 40 did not improve their position any. The complaint should state only ultimate facts, not conclusions of law, nor evidentiary facts. In determining whether the allegations of a complaint are sufficient to support a cause of action, the complaint does not have to establish or allege the facts proving the existence of a cause of action at the outset; this will have to be done at the trial on the merits of the case. 41 Ultimate facts refer to the principal, determinative, constitutive facts upon the existence of which the cause of action rests. The term does not refer to details of probative matter or particulars of evidence which establish the material ingredients. 42 In their last ditch efforts to save their cause, petitioners assert that the duty to notify respondent regarding the debiting of her account properly belongs to CBC 43 and that, had CBC denied petitioners "request," then there would have been no alleged debit of respondents account. 44 Petitioners add that the mere act of "requesting" a bank to return a certain amount of money erroneously credited to one of the banks depositors cannot be considered an act which violates the rights of said depositor. 45 Petitioners allegations are in the nature of defenses, and, thus, cannot be considered in determining the sufficiency of the cause of action. For the complaint to be dismissed for failure to state the cause of action, the insufficiency of the cause of action must appear on the face of the complaint. 46 If the allegations in a complaint can furnish a sufficient basis by which the complaint can be maintained, the same should not be dismissed regardless of the defenses that may be assessed by the defendants. 47 WHEREFORE, the instant petition is DENIED for lack of merit. The assailed Decision and Resolution of the Court of Appeals, which reversed and set aside the Regional Trial Court of Quezon Citys 7 October 1998 Omnibus Order dismissing respondents complaint, are AFFIRMED. Costs against petitioners. SO ORDERED. G.R. No. 136415 October 31, 2006

VIRGILIO P. CEZAR, petitioner, vs. HON. HELEN RICAFORT-BAUTISTA in her capacity as Presiding Judge of RTC, Branch 260, City of Paraaque and SPECIFIED MATERIALS, CO., respondents.

DECISION

CHICO-NAZARIO, J.: This Petition for Certiorari seeks the annulment of the Decision dated 9 September 19971 of respondent Honorable Helen Ricafort-Bautista of the Regional Trial Court (RTC) of Paraaque City, in Civil Case No. 96-0473 entitled, "Specified Materials Corporation v. Virgilio P. Cezar doing business under the name and style `Virosell Construction and Supply.'" The dispositive portion of the assailed decision provides: WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff, ordering defendant to pay plaintiff, as follows: 1. P2,005,000.00 representing the total amount that remain unpaid; plus, 2. A penalty of three (3%) percent per month on the value of each delivery receipt and sales invoice computed from the time the obligation fell due until the same is fully paid; 3. P401,000.00 as attorney's fees.2 On 11 November 1996, private respondent Specified Materials Corporation filed a Complaint3 for collection of sum of money against petitioner arising from the latter's failure to pay the construction materials it purportedly purchased under a credit line extended by private respondent. At the time of the institution of the action, petitioner's obligation stood at P1,860,000.00, and under the terms of the credit arrangement, materials sold to petitioner was supposed to be paid within thirty days from date of delivery, subject to an interest charge of 3% per month for delayed payments. As petitioner failed to pay for the construction materials, private respondent sent two letters4 to petitioner and his brother, Perfecto, reminding them of their obligation. In response, petitioner sent three letters all dated 12 August 1996.5 In the first letter, petitioner manifested his willingness to settle his account with private respondent as long as his obligation conforms with the submitted list of materials he actually used. In the second letter, petitioner requested that any intended legal action on the part of private respondent be suspended until such time that all deliveries and payments made in his account are verified.6 Finally, in the third letter, petitioner requested that an inventory be undertaken of the construction materials delivered by private respondent as well as those actually withdrawn and used by petitioner.7 On 3 September 1996, private respondent's representatives met with petitioner in order to reconcile their conflicting records. During said meeting, petitioner allegedly admitted that he failed to take into account some deliveries made in 1995 amounting to around P648,750.00. Petitioner then requested that they meet again after two days so that he could verify his documents but he failed to show up for the subsequent meetings. Thereafter, private respondent sent a final demand letter to petitioner.8 After the filing of the complaint, summons9 was issued to petitioner and this was served by Sheriff Juan C. Marquez with the pertinent portion of the return stating: SHERIFF'S RETURN

I HEREBY CERTIFY that: I HAVE SERVED a copy/ies of the summons, complaint and annexes issued in Civil Case No. 96-0473, entitled Specified Materials Corp. versus Virgilio P. Cezar. x x x PERSONS SERVED Virgilio P. Cezar DATE OF SERVICE January 9, 1997 HOW SERVED served thru Mr. Arsenio Robles, an employee of defendant who [is] authorized to transact business, as per his signature appearing below summons.

As petitioner failed to file his answer to the complaint, private respondent moved that he be declared in default.10This motion was favorably acted upon by public respondent through the Order dated 14 March 1997,11 and private respondent was able to present its evidence. On 15 May 1997, private respondent filed a Motion to Admit Amended Complaint alleging that it erroneously computed petitioner's obligation to be P1,860,000.00, when it should have amounted to P2,005,000.00. A copy of the motion and the Amended Complaint were personally received by petitioner as evidenced by his signatures thereon.12 The Amended Complaint was ordered admitted on 16 May 1997.13 On 9 September 1997, public respondent issued its now assailed decision. On 3 November 1997, petitioner, by way of special appearance, filed a Motion to Set Aside Decision arguing that the trial court did not acquire jurisdiction over his person.14 This motion was denied through public respondent's order dated 7 November 1997.15 Following the denial of its Motion to Set Aside Decision, petitioner filed before the Court of Appeals a Petition for Annulment of Judgment, Preliminary Injunction with Prayer for Temporary Restraining Order.16 This petition was dismissed for "failure to attach an affidavit of merit alleging the facts supporting the good and substantial defense, as well as the affidavits of witnesses or document supporting the defense."17 Petitioner then filed a motion for reconsideration but this was denied by the Court of Appeals in its Resolution dated 20 March 1998.18 According to the Court of Appeals Under Section 1, Rule 47 of the 1997 Rules of Civil Procedure, the annulment of a judgment or final order or resolution in civil actions of the Regional Trial Courts may be availed of only when the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner. The instant petition for annulment was filed before this Court on November 24, 1997. Clearly, petitioner had other remedies available when he filed the instant petition for annulment. Following this set-back, petitioner filed before this Court a Petition for Review on Certiorari19 of the resolutions of the Court of Appeals but we denied the same on 15 June 1998 for failure to comply with procedural requirements.20 Our resolution became final and executory on 7 September 1998.21 On 10 November 1998, private respondent filed a Motion for Execution before the trial court.22 The scheduled hearing of this motion on 13 November 1998 was ordered reset to 19 November 1998 after petitioner filed an Urgent Ex-Parte Motion to Re-Set Hearing.23 The records also disclose that the 19 November 1998 hearing did not push through and in fact, it was rescheduled a couple of

more times per agreement of the parties.24 Finally, on 18 December 1998, public respondent granted private respondent's Motion for Execution.25 Hence, the present petition raising the sole issue: 1. WHETHER OR NOT THE COURT A QUO ACQUIRED JURISDICTION OVER THE PERSON OF THE PETITIONER BY VIRTUE OF THE SUBSTITUTED SERVICE OF SUMMONS EFFECTED BY SHERIFF JUAN C. MARQUEZ.26 The petition is unmeritorious. Petitioner argues that since the trial court never acquired jurisdiction over his person, its Decision of 9 September 1997 is null and void. He claims that the person who allegedly received the summons on his behalf, and who was identified in the sheriff's return as Arsenio Robles, was not his employee. He adds that when he conducted an inquiry, he found out that Robles was a native of Batangas and was merely peddling mango seedlings within the vicinity of his office when the summons was served. He also maintains that had he been given the opportunity to present his defense, he would have shown that his obligation to private respondent is less than the amount as established by the trial court. Private respondent retorts that petitioner's insistence that the court a quo did not acquire jurisdiction over him is belied by the fact that petitioner had actual knowledge of all the proceedings since he was furnished with all the copies of the pleadings and court orders. Private respondent points out that the Motion to Admit Amended Complaint and the Amended Complaint were personally served on petitioner himself as shown by his signatures appearing thereon. Moreover, private respondent is of the view that the sheriff who served the summons upon petitioner enjoys the presumption of regularity in the performance of duty a presumption which petitioner was unable to overcome. On 16 June 1999, this Court issued a temporary restraining order enjoining the enforcement of the court a quo's decision dated 9 September 1997 and resolution dated 28 November 1997.27 It is fundamental that courts acquire jurisdiction over the plaintiff once the complaint is filed. On the other hand, there are two ways through which jurisdiction over the defendant or respondent is acquired either through the service of summons upon them or through their voluntary appearance in court. In the case of Avon Insurance PLC v. Court of Appeals,28 we discussed the function of summons in court actions, to be Fundamentally, the service of summons is intended to give official notice to the defendant or respondent that an action had been commenced against it. The defendant or respondent is thus put [on] guard as to the demands of the plaintiff as stated in the complaint. The service of summons upon the defendant becomes an important element in the operation of a court's jurisdiction upon a party to a suit, as service of summons upon the defendant is the means by which the court acquires jurisdiction over his person. Without service of summons, or when summons are improperly made, both the trial and the judgment, being in violation of due process, are null and void, unless the defendant waives the service of summons by voluntarily appearing and answering the suit. 29 Elsewhere, we declared that jurisdiction of the court over the person of the defendant or respondent cannot be acquired notwithstanding his knowledge of the pendency of a case against him unless he was validly served with summons.30 Such is the important role a valid service of summons plays in court actions.

The Rules of Court31 requires that, whenever practicable, summons must be served by handing a copy thereof to the defendant in person. In case the defendant refuses to receive and sign for it, by tendering the summons to him or her. However, in the event that summons cannot be served within a reasonable time, the Rules permit that substituted service may be resorted to, thus: Sec. 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendant's office or regular place of business with some competent person in charge thereof. In this case, the sheriff employed the substituted service of summons. The defect, however, in the manner in which he implemented this mode of service of summons is readily apparent on the face of the return. It must be emphasized that laws providing for modes other than the personal service of summons must be strictly followed in order for the court to acquire jurisdiction over the person of respondent or defendant. Compliance therewith should appear affirmatively on the return.32 The essence of this requirement was enunciated in the case ofKeister v. Navarro33 to be The summons must be served to the defendant in person. It is only when the defendant cannot be served personally within a reasonable time that a substituted service may be made. Impossibility of prompt service should be shown by stating the efforts made to find the defendant personally and the fact that such efforts failed. This statement should be made in the proof of service. This is necessary because substituted service is in derogation of the usual method of service. It has been held that this method of service is "in derogation of the common law; it is a method extraordinary in character, and hence may be used only as prescribed and in the circumstances authorized by statute." Thus, under the controlling decisions, the statutory requirements of substituted service must be followed strictly, faithfully and fully, and any substituted service other than that authorized by the statute is considered ineffective.34 (Emphases supplied.) As the sheriff's return in the present case does not contain any statement with regard to the impossibility of personal service the same is patently defective and so the presumption of regularity in the performance of official functions will not lie.35 Nevertheless, we still hold that jurisdiction was validly acquired by the trial court. Although the substituted service upon him of summons was defective, said defect was cured by his voluntary appearance.36 As the records of this case disclose, after private respondent moved for the execution of the trial court's decision, petitioner filed a motion for a re-setting of the court's hearing thereon. In Flores v. Zurbito,37 we held that an appearance in whatever form without expressly objecting to the jurisdiction of the court over the person, is a submission to the jurisdiction of the court over the person of the defendant or respondent, thus: A voluntary appearance is a waiver of the necessity of a formal notice. An appearance in whatever form, without expressly objecting to the jurisdiction of the court over the person, is a submission to the jurisdiction of the court over the person. While the formal method of entering an appearance in a cause pending in the courts is to deliver to the clerk a written direction ordering him to enter the appearance of the person who subscribes it, an appearance may be made by simply filing a formal motion, or plea or answer. This formal

method of appearance is not necessary. He may appear without such formal appearance and thus submit himself to the jurisdiction of the court. He may appear by presenting a motion, for example, and unless by such appearance he specifically objects to the jurisdiction of the court, he thereby gives his assent to the jurisdiction of the court over his person.38 Hence, in this case, petitioner's filing of a Motion for Re-setting of the Hearing effectively cured the defect of the substituted service of summons. Petitioner's insistence of lack of jurisdiction over his person is utterly lacking in any legal basis. WHEREFORE, premises considered, the present Petition is DISMISSED. The Decision dated 9 September 1997 rendered by the Regional Trial Court of Paraaque City in Civil Case No. 96-0473 is hereby AFFIRMED and the Temporary Restraining Order issued by this Court on 16 June 1999 is hereby LIFTED. With costs. SO ORDERED. G.R. Nos. 169131-32 January 20, 2006

LULLETE S. KO and ARLETTE SIMPLICIANO BASILIO, Petitioners, vs. PHILIPPINE NATIONAL BANK, Laoag Branch, and the REGISTER OF DEEDS OF ILOCOS NORTE,Respondents. DECISION YNARES-SANTIAGO, J.: This is a petition for review on certiorari assailing the April 27, 2005 Order1 of the Regional Trial Court of Laoag City, Branch 14, in Civil Case No. 12523-14 dismissing petitioners complaint, and the July 28, 2005 Resolution2denying petitioners motion for reconsideration. The case stemmed from an action filed by petitioners in the trial court for Annulment of Mortgage, Extra-judicial Foreclosure Sale, Annulment of Transfer Certificate of Title Nos. T-21064 and T-21065 and Deed of Sale with a Prayer for Preliminary Injunction and Restraining Order. The complaint alleged that the assailed mortgage and the foreclosure proceedings were null and void since the written consent of petitioners, as beneficiaries of the mortgaged property, were not secured. Respondent bank denied the claim and alleged that in the execution of the mortgage, petitioners in fact gave their consent. During the course of the proceedings, petitioners and their counsel failed to attend a scheduled trial. Upon motion of respondent bank, the complaint was dismissed. In its order dated April 27, 2005, the trial court stated: When the case was called, Atty. Lorenzo Castillo, counsel for the plaintiffs did not appear despite proper notice. No plaintiff appeared. Atty. Eduardo Alcantara, counsel for defendant bank appeared. Atty. Alcantara manifested that there were numerous occasions in the past when plaintiffs and counsel did not attend. He pointed out that there is an apparent lack of interest on the part of plaintiff to prosecute the action. He moved to dismiss the case on that legal ground.

WHEREFORE, in view of the above premises, the above-entitled case is hereby ordered dismissed. SO ORDERED.3 Petitioners filed a motion for reconsideration claiming that they have been continuously pursuing negotiations with respondent bank to purchase back the property and have gained positive results. Respondent bank countered that from the time the complaint was filed, a period of three years had elapsed but petitioners failed to prosecute their case, showing lack of interest in the early resolution thereof. The trial court denied the motion for reconsideration. Hence, the instant petition for review on the following grounds: I THE TRIAL COURT ERRED IN LAW IN DISMISSING PETITIONERS COMPLAINT ON THE GROUND OF THEIR FAILURE TO APPEAR AT THE SCHEDULED HEARING DESPITE THAT DEFENDANT PNB HAS BEEN EQUALLY GUILTY LIKEWISE. II THE TRIAL COURT ERRED IN LAW IN DISMISING THE CASE DESPITE THAT THE CASE INVOLVES A PROPERTY OF SIGNIFICANT IMPORTANCE AND VALUE TO THE LIFE AND DIGNITY OF THE PETITIONERS THIS (sic) CALLING FOR THE OVERRIDING CONSIDERATION OF A JUDGMENT BASED ON THE MERITS OVER THE PRIMORDIAL INTEREST OF PROCEDURE AND TECHNICALITIES.4 The petition lacks merit. On the procedural aspect, we find that petitioners erred in filing a petition for review on certiorari under Rule 45 of the Rules of Court instead of filing an appeal with the Court of Appeals. Section 3, Rule 17 of the Rules of Court provides: SEC. 3. Dismissal due to fault of plaintiff.If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon the motion of the defendant or upon the courts own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court. (Emphasis supplied) Upon the order of dismissal, petitioners counsel filed a timely motion for reconsideration which was denied by the trial court. Considering that an order of dismissal for failure to prosecute has the effect of an adjudication on the merits, petitioners counsel should have filed a notice of appeal with the appellate court within the reglementary period.5 Instead of filing a petition under Rule 45 of the Rules of Court, the proper recourse was an ordinary appeal with the Court of Appeals under Rule 41, which provides: Sec. 2. Modes of Appeal. (a) Ordinary appeal. The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal

with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party x x x. (Emphasis supplied) The rule is clear. In order to perfect an appeal all that is required is a pro forma notice of appeal. Perhaps due to failure to file a notice of appeal within the remaining two days of the appeal period, petitioners counsel instead filed the instant petition. The rules of procedure, however, do not exist for the convenience of the litigants. These rules are established to provide order to and enhance the efficiency of our judicial system. They are not to be trifled with lightly or overlooked by mere expedience of invoking "substantial justice." In Balindong v. Court of Appeals6 we stated: Hence, rules of procedure must be faithfully followed except only when for persuasive reasons, they may be relaxed to relieve a litigant of an injustice not commensurate with his failure to comply with the prescribed procedure. Concomitant to a liberal application of the rules of procedure should be an effort on the part of the party invoking liberality to explain its failure to comply with the rules. Procedural law has its own rationale in the orderly administration of justice, namely, to ensure the effective enforcement of substantive rights by providing for a system that obviates arbitrariness, caprice, despotism or whimsicality in the settlement of disputes. The enforcement of procedural rules is not antithetical to the substantive rights of the litigants. The policy of the courts is to give effect to both procedural and substantive laws, as complementing each other, in the just and speedy resolution of the dispute between the parties. (Emphasis supplied) Even on the merits, petitioners cause must still fail. The trial court dismissed the complaint due to petitioners and counsels apparent lack of interest to prosecute the case. Petitioners counsel argued that their repeated failure to attend the hearing was caused by conflicts in his schedule and by his lack of knowledge of the trial dates. He also contended that respondent bank and counsel have been similarly guilty thereof, and that petitioners have informed the court of ongoing negotiations for the re-purchase of the foreclosed property. Hence, petitioners invoke liberality and the primordial interest of substantial justice over the strict enforcement of the rules of technicality. We are not persuaded. In every action, the plaintiff is duty-bound to prosecute the same with utmost diligence and with reasonable dispatch to enable him to obtain the relief prayed for and, at the same time, minimize the clogging of the court dockets. The expeditious disposition of cases is as much the duty of the plaintiff as the court. It must be remembered that a defendant in a case likewise has the right to the speedy disposition of the action filed against him7 considering that any delay in the proceedings entail prolonged anxiety and valuable time wasted. In the case at bar, three years have since lapsed from the filing of the complaint on May 3, 2002 and the order of dismissal on April 27, 2005. Petitioners failure to prosecute their case and proceed with the trial during the span of three years leads to no other conclusion than that petitioners have no interest in seeing their case terminated at the earliest possible time; or that petitioners case is unmeritorious from inception. Whichever the case may be, the dismissal order of the trial court stand and is now immutable. Petitioners cannot claim that they were deprived of due process. True, the right to due process safeguards the opportunity to be heard and to submit any evidence one may have in support of his claim or defense.8Nonetheless, we have time and again held that where the opportunity to be heard, either through verbal arguments or pleadings, is accorded, and the party can "present its side" or defend its "interest in due course," there is no denial of due process.9 What the law proscribes is the lack of opportunity to be heard.10

Petitioners had the opportunity to present their case and claim the relief they seek. But their inadvertence and lack of circumspect renders the trial courts order dismissing their case final and executory. WHEREFORE, the petition is DENIED. The assailed April 27, 2005 Order of the Regional Trial Court of Laoag City, Branch 14 and its July 28, 2005 Resolution in Civil Case No. 12523-14 are AFFIRMED. SO ORDERED. A.C. No. 5655 January 23, 2006

VALERIANA U. DALISAY, Complainant, vs. ATTY. MELANIO MAURICIO, JR., Respondent. RESOLUTION SANDOVAL-GUTIERREZ, J.: At bar is a motion for reconsideration of our Decision dated April 22, 2005 finding Atty. Melanio "Batas" Mauricio, Jr., respondent, guilty of malpractice and gross misconduct and imposing upon him the penalty of suspension from the practice of law for a period of six (6) months. A brief revisit of facts is imperative, thus: On October 13, 2001, Valeriana U. Dalisay, complainant, engaged respondents services as counsel in Civil Case No. 00-044, entitled "Lucio De Guzman, etc., complainants, v. Dalisay U. Valeriana, respondent," pending before the Municipal Trial Court, Branch 1, Binangonan, Rizal. Notwithstanding his receipt of documents and attorneys fees in the total amount of P56,000.00 from complainant, respondent never rendered legal services for her. As a result, she terminated the attorney-client relationship and demanded the return of her money and documents, but respondent refused. On January 13, 2004, Investigating Commissioner Lydia A. Navarro of the Integrated Bar of the Philippines (IBP) Commission on Bar Discipline, found that "for the amount of P56,000.00 paid by the complainant x x x, no action had been taken nor any pleadings prepared by the respondent except his alleged conferences and opinions rendered when complainant frequented his law office." She recommended that respondent be required to refund the amount of P56,000.00 to the complainant, and surprisingly, that the complaint be dismissed. On February 27, 2004, the IBP Board of Governors passed Resolution No. XVI-2004-121, adopting and approving in toto Commissioner Navarros Report and Recommendation. On April 22, 2005, we rendered the assailed Decision. Incidentally, upon learning of our Decision, respondent went to the MTC, Branch I, Binangonan, Rizal to verify the status of Civil Case No. 00-044. There, he learned of the trial courts Decision dated December 6, 2001 holding that "the tax declarations and title" submitted by complainant "are not official records of the Municipal Assessor and the Registry of Deed." Thereupon, respondent filed a Sworn Affidavit Complaint1 against complainant charging her with violations of Article 1712 and

172,3 and/or Article 1824 of the Revised Penal Code. He alleged that complainant offered tampered evidence. In this motion for reconsideration, respondent raises the following arguments: First, complainant did not engage his services as counsel in Civil Case No. 00-044. She hired him for the purpose of filing two new petitions, a petition for declaration of nullity of title and a petition for review of a decree. Second, Civil Case No. 00-044 was "considered submitted for decision" as early as August 6, 2001, or more than two months prior to October 13, 2001, the date he was engaged as counsel, hence, "he could not have done anything anymore" about it. Third, complainant refused to provide him with documents related to the case, preventing him from doing his job. And fourth, complainant offered tampered evidence in Civil Case No. 00-004, prompting him to file falsification cases against her. In her opposition to the motion, complainant contends that: (1) respondent violated the principle of confidentiality between a lawyer and his client when he filed falsification charges against her; (2) respondent should have returned her money; (3) respondent should have verified the authenticity of her documents earlier if he really believed that they are falsified; and (4) his refusal to return her money despite this Courts directive constitutes contempt. We deny respondents motion for reconsideration. It is axiomatic that no lawyer is obliged to act either as adviser or advocate for every person who may wish to become his client. He has the right to decline employment. But once he accepts money from a client, an attorney-client relationship is established, giving rise to the duty of fidelity to the clients cause.5 From then on, he is expected to be mindful of the trust and confidence reposed in him. He must serve the client with competence and diligence, and champion the latters cause with wholehearted devotion.6 Respondent assumed such obligations when he received the amount of P56,000.00 from complainant and agreed to handle Civil Case No. 00-044. Unfortunately, he had been remiss in the performance of his duties. As we have ruled earlier, "there is nothing in the records to show that he (respondent) entered his appearance as counsel of record for complainant in Civil Case No. 00-044." Neither is there any evidence nor pleading submitted to show that he initiated new petitions. With ingenuity, respondent now claims that "complainant did not engage his services for Civil Case No. 00-044" but, instead, she engaged him for the filing of two new petitions. This is obviously a last-ditch attempt to evade culpability. Respondent knows very well that if he can successfully disassociate himself as complainants counsel in Civil Case No.00-044, he cannot be held guilty of any dereliction of duties. But respondents current assertion came too late in the day. He is already bound by his previous statements. In his Verified Comment on the Affidavit-Complaint,7 he categorically stated that complainant engaged his services in Civil Case No. 00-044, originally handled by Atty. Oliver Lozano, thus:

4.a. Complainant was referred to the Respondent by Atty. Oliver Lozano. 4.b. The referral intrigued Respondent no end, simply because Atty. Oliver Lozano is a bright lawyer and is very much capable of handling Civil Case No. 00-044. 4.c. Respondent-out of respect from Atty. Oliver Lozano did not inquire the reason for the referral. But he was made to understand that he was being referred because Atty. Oliver Lozano believed that Respondent would be in a better position to prosecute and/or defend the Complainant in Civil Case No. 00-044. xxxxxx 5.c. Complainant went to the law office of Respondent on October 13, 2001 and demanded that he provides her with free legal service. xxxxxx 5.e. Respondent, however, told Complainant that the case (Civil Case No. 00-044) would not entitle her to a free legal service and advised her to just re-engage the services of Atty. Oliver Lozano. 5.f. Undaunted, Complainant asked Respondent to assess her case and how she and her lawyer should go prosecuting and/or defending her position therein. 5.g. Honestly believing that Complainant was no longer represented by counsel in Civil Case No. 00-044 at that time, Respondent gave his professional opinion on the factual and legal matters surrounding the said case. 5.h. Apparently impressed with the opinion of the Respondent, Complainant became even more adamant in asking the former to represent her in Civil Case No. 00-044. 5.i. Respondent then told Complainant that she would be charged as a regular client is she insists in retaining his services. 5.j. It was at this juncture that Complainant asked Respondent about his fees. 5.k. After re-assessing Civil Case No. 00-044, Respondent told Complainant that he will have to charge her with an acceptance fee of One Hundred Thousand Pesos (P100,000.00), aside form being charged for papers/pleadings that may have to be prepared and filed in court in connection with the aforesaid case. xxxxxx 5.n. A few days after, Respondent got a call from Atty. Oliver Lozano. The said Atty. Oliver Lozano interceded for and in behalf of Complainant and asked that the acceptance fee that Respondent was charging the Complainant be reduced. xxxxxx

5.r. Complainant then returned to the office of the Respondent on October 20, 2001. The latter then informed the former of his conversation with Atty. Oliver Lozano and his (respondents) decision to reduce the acceptance fee. 5.s. Complainant was very grateful at the time, even shedding a tear or two simply because Respondent had agreed to handle her case at a greatly reduced acceptance fee. Statements of similar tenor can also be found in respondents Memorandum8 filed with the IBP. Undoubtedly, respondents present version is a flagrant departure from his previous pleadings. This cannot be countenanced. A party should decide early what version he is going to advance. A change of theory in the latter stage of the proceedings is objectionable, not due to the strict application of procedural rules, but because it is contrary to the rules of fair play, justice and due process.9 The present administrative case was resolved by the IBP on the basis of respondents previous admission that complainant engaged his legal services in Civil Case No. 00-044. He cannot now unbind himself from such admission and its consequences. In fact, if anything at all has been achieved by respondents inconsistent assertions, it is his dishonesty to this Court. At any rate, assuming arguendo that complainant indeed engaged respondents services in filing the two (2) new petitions, instead of Civil Case No. 00-044, still, his liability is unmistakable. There is nothing in the records to show that he filed any petition. The ethics of the profession demands that, in such a case, he should immediately return the filing fees to complainant. In Parias v. Paguinto,10 we held that "a lawyer shall account for all money or property collected from the client. Money entrusted to a lawyer for a specific purpose, such as for filing fee, but not used for failure to file the case must immediately be returned to the client on demand." Per records, complainant made repeated demands, but respondent is yet to return the money. Neither do we find merit in respondents second argument. The fact that Civil Case No. 00-044 was already "submitted for decision" does not justify his inaction. After agreeing to handle Civil Case No. 00-044, his duty is, first and foremost, to enter his appearance. Sadly, he failed to do this simple task. He should have returned complainants money. Surely, he cannot expect to be paid for doing nothing. In his third argument, respondent attempts to evade responsibility by shifting the blame to complainant. He claims that she refused to provide him with documents vital to the case. He further claims that he would be violating the Code of Professional Responsibility by handling a case without adequate preparation. This is preposterous. When a lawyer accepts a case, his acceptance is an implied representation that he possesses the requisite academic learning, skill and ability to handle the case.11 As a lawyer, respondent knew where to obtain copies of the certificates of title. As a matter of fact, he admitted that his Law Office, on its own, managed to verify the authenticity of complainants title. It bears reiterating that respondent did not take any action on the case despite having been paid for his services. This is tantamount to abandonment of his duties as a lawyer and taking undue advantage of his client. Finally, in an ironic twist of fate, respondent became the accuser of complainant. In his fourth argument,respondent accuses her of offering falsified documentary evidence in Civil Case No. 00004, prompting him to file falsification cases against her. He thus justifies his inability to render legal services to complainant. Assuming that complainant indeed offered falsified documentary evidence in Civil Case No. 00-044, will it be sufficient to exonerate respondent? We believe not. First, Canon 19 outlines the procedure

in dealing with clients who perpetrated fraud in the course of a legal proceeding. Consistent with its mandate that a lawyer shall represent his client with zeal and only within the bounds of the law, Rule 19.02 of the same Canon specifically provides: Rule 19.02 A lawyer who has received information that his clients has, in the course of the representation, perpetrated a fraud upon a person or tribunal, shall promptly call upon the client to rectify the same, andfailing which he shall terminate the relationship with such client in accordance with the Rules of Court. As a lawyer, respondent is expected to know this Rule. Instead of inaction, he should have confronted complainant and ask her to rectify her fraudulent representation. If complainant refuses, then he should terminate his relationship with her. Understandably, respondent failed to follow the above-cited Rule. This is because there is no truth to his claim that he did not render legal service to complainant because she falsified the documentary evidence in Civil Case No.00-044. This brings us to the second reason why we cannot sustain his fourth argument. The pleadings show that he learned of the alleged falsification long after complainant had terminated their attorney-client relationship. It was a result of his active search for a justification of his negligence in Civil Case No. 00-044. As a matter of fact, he admitted that he verified the authenticity of complainants title only after the "news of his suspension spread in the legal community." To our mind, there is absurdity in invoking subsequent knowledge of a fact as justification for an act or omission that is fait accompli. Obviously, in filing falsification charges against complainant, respondent was motivated by vindictiveness. In fine, let it be stressed that the authority of an attorney begins with his or her retainer.12 It gives rise to a relationship between an attorney and a client that is highly fiduciary in nature and of a very delicate, exacting, and confidential character, requiring a high degree of fidelity and good faith.13 If much is demanded from an attorney, it is because the entrusted privilege to practice law carries with it the correlative duties not only to the client but also to the court, to the bar, and to the public. A lawyer who performs his duty with diligence and candor not only protects the interest of his client; he also serves the ends of justice, does honor to the bar, and helps maintain the respect of the community to the legal profession.14 Indeed, law is an exacting goddess demanding of her votaries not only intellectual but also moral discipline. WHEREFORE, we DENY respondents motion for reconsideration. Our Decision dated April 22, 2005 is immediately executory. Respondent is directed to report immediately to the Office of the Bar Confidant his compliance with our Decision. Let a copy of this Resolution be attached to his personal record and copies furnished the Integrated Bar of the Philippines and the Office of the Court Administrator for dissemination to all courts. SO ORDERED. G.R. No. 164876 January 23, 2006

LAND BANK OF THE PHILIPPINES, Petitioner, vs. LEONILA P. CELADA, Respondent.

DECISION YNARES-SANTIAGO, J.: Respondent Leonila P. Celada owns 22.3167 hectares of agricultural land situated in Calatrava, Carmen, Bohol registered under TCT No. 16436,1 of which 14.1939 hectares was identified in 1998 by the Department of Agrarian Reform (DAR) as suitable for compulsory acquisition under the Comprehensive Agrarian Reform Program (CARP). The matter was then indorsed to petitioner Land Bank of the Philippines (LBP) for field investigation and land valuation. In due course, LBP valued respondents land at P2.1105517 per square meter for an aggregate value of P299,569.61.2 The DAR offered the same amount to respondent as just compensation, but it was rejected. Nonetheless, on August 27, 1999, LBP deposited the said sum in cash and bonds in the name of respondent.3 Pursuant to Section 16(d) of Republic Act (RA) No. 6657 or the Comprehensive Agrarian Reform Law of 1988, the matter was referred to the DAR Adjudication Board (DARAB), Region VII-Cebu City, for summary administrative hearing on determination of just compensation. The case was docketed as DARAB Case No. VII-4767-B-990. While the DARAB case was pending, respondent filed, on February 10, 2000, a petition4 for judicial determination of just compensation against LBP, the DAR and the Municipal Agrarian Reform Officer (MARO) of Carmen, Bohol, before the Regional Trial Court of Tagbilaran City. The same was docketed as Civil Case No. 6462 and raffled to Branch 3, the designated Special Agrarian Court (SAC). Respondent alleged that the current market value of her land is at least P150,000.00 per hectare based on the following factors: 14.1. The land in question has been mortgaged to the defunct Rural Bank of San Miguel (Bohol), Inc., for P1,220,000.00 on July 23, 1998 since it was appraised at P15.00 per square meter; 14.2. Agricultural lands in said barangay are priced ranging from P140,000.00 to P150,000.00 per hectare and current land transactions reveal said price range; 14.3. The land in question is titled or registered property, cultivated and fully developed with rice5 and corn occupying the greater portion thereof; 14.4. The topography of the land, its soil condition, climate and productivity of surrounding lots justify the just compensation requested or asked for; 14.5. Even the class and base unit market value for agricultural lands in Bohol is about thirty (30) times higher than the price offered per hectare by DAR/LBP.6 On April 27, 2000, LBP filed its Answer7 raising non-exhaustion of administrative remedies as well as forum-shopping as affirmative defense. According to petitioner, respondent must first await the outcome of the DARAB case before taking any judicial recourse; that its valuation was arrived at by applying the formula prescribed by law whereas respondents was based only on the "current value of like properties".

The DAR and the MARO likewise filed an Answer8 averring that the determination of just compensation rests exclusively with the LBP. Thus, they are not liable to respondent and are merely nominal parties in the case. Meanwhile, the DARAB Provincial Adjudicator (PARAD) issued an Order9 dated April 12, 2000 affirming the valuation made by LBP. Respondent failed to appear in the DARAB case despite due notice. On June 4, 2001, the SAC issued an order resolving petitioners affirmative defense in this wise: WHEREFORE, the Affirmative Defense of x x x Land Bank is hereby denied. Besides, in the mind of the court, the recourse to the DARAB is x x x of no moment since it is only conciliatory to the parties. Upon agreement of the parties, the pre-trial is reset to June 11, 2001 at 9:00 in the morning. SO ORDERED.10 Thereafter, a pre-trial conference was conducted11 and trial on the merits ensued. On March 1, 2003, the SAC rendered judgment as follows: WHEREFORE, in view of all the foregoing, the Court hereby fixes the compensation of the land of petitioner at P2.50 per square meter or a total of P354,847.50 for the portion of 14.1939 hectares subject of compulsory acquisition under the CARP which it believes just, fair and equitable under the present circumstances and which shall earn legal interest of twelve percent (12%) per annum from the time of its taking by the DAR. Furthermore, respondent Land Bank is hereby ordered to indemnify petitioner the amount of P10,000.00 for attorneys fee and incidental expenses of P5,000.00 and costs. SO ORDERED.12 LBP elevated the matter to the Court of Appeals which, however, dismissed the appeal outright on the following grounds: 1. The petition is not accompanied with an affidavit of service, although there is an explanation that respondent, respondents counsel and Judge Venancio J. Amila were furnished with copies of the petition by registered mail x x x. 2. Petitioners counsel indicated his IBP and PTR but not his Roll of Attorneys Number x x x. 3. Copies of (a) PARAD Decision x x x adverted to in the petition which fixed the land valuation for just compensation at P299,569.11 and (b) petitioners Petition for Judicial Determination of Just Compensationfiled with the Regional Trial Court of Tagbilaran City, Branch 3, were not attached as annexes, x x x.13 Upon denial of its motion for reconsideration,14 LBP filed the instant petition under Rule 45 of the Rules of Court, alleging that: A

THE COURT OF APPEALS ERRED IN X X X RIGIDLY OR STRICTLY APPLYING PROCEDURAL LAW AT THE EXPENSE OF SUBSTANTIAL JUSTICE AND THE RIGHT TO APPEAL. B THE SAC A QUO ERRED IN ASSUMING JURISDICTION OVER THE PETITION FOR DETERMINATION OF JUST COMPENSATION WHILE ADMINISTRATIVE PROCEEDINGS IS ON-GOING BEFORE THE DARAB, REGION VII, CEBU CITY. C THE SAC A QUO ERRED IN FIXING THE JUST COMPENSATION OF THE LAND BASED NOT ON ITS ACTUAL LAND USE BUT ON THE VALUATION OF NEIGHBORING LANDS. D THE SAC A QUO ERRED IN AWARDING ATTORNEYS FEES AND INCIDENTAL EXPENSES X X X.15 On the first assigned error, petitioner asserts that the Court of Appeals should have liberally construed the rules of procedure and not dismissed its appeal on technical grounds. We agree with petitioner. The Court of Appeals dismissed petitioners appeal on three technical grounds, namely: (a) lack of affidavit of service; (b) failure of counsel to indicate his Roll of Attorneys number; and (c) failure to attach material portions of the records. However, the lack of affidavit of service is not deemed fatal where the petition filed below is accompanied by the original registry receipts showing that the petition and its annexes were served upon the parties.16 On the other hand, the failure of counsel to indicate his Roll of Attorneys number would not affect respondents substantive rights, such that petitioners counsel could have been directed to comply with the latter requirement rather than dismiss the petition on purely technical grounds. As for petitioners failure to attach material portions of the records, we held in Donato v. Court of Appeals17 that: [T]he failure of the petitioner to x x x append to his petition copies of the pleadings and other material portions of the records as would support the petition, does not justify the outright dismissal of the petition. It must be emphasized that the RIRCA (Revised Internal Rules of the Court of Appeals) gives the appellate court a certain leeway to require parties to submit additional documents as may be necessary in the interest of substantial justice. Under Section 3, paragraph d of Rule 3 of the RIRCA, the CA may require the parties to complete the annexes as the court deems necessary, and if the petition is given due course, the CA may require the elevation of a complete record of the case as provided for under Section 3(d)(5) of Rule 6 of the RIRCA x x x.18 An examination of the records and pleadings filed before the Court of Appeals reveals that there was substantial compliance with procedural requirements. Moreover, we have held time and again that cases should, as much as possible, be determined on the merits after the parties have been given full opportunity to ventilate their causes and defenses, rather than on technicality or some procedural imperfection.19 After all, technical rules of procedure are not ends in themselves but are primarily devised to help in the proper and expedient dispensation of justice. In appropriate cases, therefore, the rules may be construed liberally in order to meet and advance the cause of substantial justice.20

While a remand of the case to the appellate court would seem to be in order, we deem it proper to resolve the case on the merits if only to write finis to the present controversy. We do not agree with petitioners submission that the SAC erred in assuming jurisdiction over respondents petition for determination of just compensation despite the pendency of the administrative proceedings before the DARAB. In Land Bank of the Philippines v. Court of Appeals,21 the landowner filed an action for determination of just compensation without waiting for the completion of the DARABs re-evaluation of the land. The Court nonetheless held therein that the SAC acquired jurisdiction over the action for the following reason: It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners. This original and exclusive jurisdiction of the RTC would be undermined if the DAR would vest in administrative officials original jurisdiction in compensation cases and make the RTC an appellate court for the review of administrative decision. Thus, although the new rules speak of directly appealing the decision of adjudicators to the RTCs sitting as Special Agrarian Courts, it is clear from Sec. 57 that the original and exclusive jurisdiction to determine such cases is in the RTCs. Any effort to transfer such jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs into appellate jurisdiction would be contrary to Sec. 57 and therefore would be void. Thus, direct resort to the SAC by private respondent is valid.22 It would be well to emphasize that the taking of property under RA No. 6657 is an exercise of the power of eminent domain by the State.23 The valuation of property or determination of just compensation in eminent domain proceedings is essentially a judicial function which is vested with the courts and not with administrative agencies.24Consequently, the SAC properly took cognizance of respondents petition for determination of just compensation. In the same vein, there is no merit to petitioners contention that respondent failed to exhaust administrative remedies when she directly filed the petition for determination of just compensation with the SAC even before the DARAB case could be resolved. The issue is now moot considering that the valuation made by petitioner had long been affirmed by the DARAB in its order dated April 12, 2000. As held in Land Bank of the Philippines v. Wycoco,25 the doctrine of exhaustion of administrative remedies is inapplicable when the issue is rendered moot and academic, as in the instant case. With regard to the third assigned error, however, we agree with petitioner that the SAC erred in setting aside petitioners valuation of respondents land on the sole basis of the higher valuation given for neighboring properties. In this regard, the SAC held: It appears from the evidence of petitioner that the neighboring lands of similar classification were paid higher than what was quoted to her land by respondent Land Bank as the value per square meter to her land was only quoted at P2.1105517 while the others which were of the same classification were paid by respondent Bank at P2.42 more or less, per square meter referring to the land of Consuelito Borja (Exh. D) and Cesar Borja (Exh. F). Furthermore, the land of petitioner was allegedly mortgaged for a loan of P1,200,000.00 before the Rural Bank of San Miguel, Bohol and that it was purchased by her from a certain Felipe Dungog for P450,000.00 although no documents therefor were shown to support her claim. Nevertheless, the Court finds a patent disparity in the price quotations by respondent Land Bank for the land of petitioner and that of the other landowners brought under CARP which could be caused by deficient or erroneous references due to the petitioners indifference and stubborn attitude in not cooperating with respondent bank in submitting the data needed for the evaluation of the property. x x x At any rate, the price quotation by respondent Land Bank on the land of the petitioner is low more so that it was done some four years

ago, particularly, on June 22, 1998 (Exh. 1) and the same has become irrelevant in the course of time due to the devaluation of the peso brought about by our staggering economy.26 As can be gleaned from above ruling, the SAC based its valuation solely on the observation that there was a "patent disparity" between the price given to respondent and the other landowners. We note that it did not apply the DAR valuation formula since according to the SAC, it is Section 17 of RA No. 6657 that "should be the principal basis of computation as it is the law governing the matter".27 The SAC further held that said Section 17 "cannot be superseded by any administrative order of a government agency",28 thereby implying that the valuation formula under DAR Administrative Order No. 5, Series of 1998 (DAR AO No. 5, s. of 1998),29 is invalid and of no effect. While SAC is required to consider the acquisition cost of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declaration and the assessments made by the government assessors30 to determine just compensation, it is equally true that these factors have been translated into a basic formula by the DAR pursuant to its rule-making power under Section 49 of RA No. 6657.31 As the government agency principally tasked to implement the agrarian reform program, it is the DARs duty to issue rules and regulations to carry out the object of the law. DAR AO No. 5, s. of 1998 precisely "filled in the details" of Section 17, RA No. 6657 by providing a basic formula by which the factors mentioned therein may be taken into account. The SAC was at no liberty to disregard the formula which was devised to implement the said provision. It is elementary that rules and regulations issued by administrative bodies to interpret the law which they are entrusted to enforce, have the force of law, and are entitled to great respect.32 Administrative issuances partake of the nature of a statute33 and have in their favor a presumption of legality.34 As such, courts cannot ignore administrative issuances especially when, as in this case, its validity was not put in issue. Unless an administrative order is declared invalid, courts have no option but to apply the same. Thus, Section 17 of RA No. 6657 states: SEC. 17. Determination of Just Compensation. In determining just compensation, the cost of acquisition of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessment made by government assessors, shall be considered. The social and economic benefits contributed by the farmers and the farmworkers and by the Government to the property as well as the nonpayment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation. As stated earlier, the above provision is implemented through DAR AO No. 5, s. of 1998, which provides that: A. There shall be one basic formula for the valuation of lands covered by VOS or CA: LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1) Where: LV = Land Value CNI = Capitalized Net Income CS = Comparable Sales

MV = Market Value per Tax Declaration The above formula shall be used if all three factors are present, relevant, and applicable. A1. When the CS factor is not present and CNI and MV are applicable, the formula shall be: LV = (CNI x 0.9) + (MV x 0.1) A2. When the CNI factor is not present, and CS and MV are applicable, the formula shall be: LV = (CS x 0.9) + (MV x 0.1) A3. When both the CS and CNI are not present and only MV is applicable, the formula shall be: LV = MV x 2 In no case shall the value of idle land using the formula MV x 2 exceed the lowest value of land within the same estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of claimfolder. Accordingly, petitioner applied the formula under A1 above since the comparable sales factor ("CS factor") was not present. As observed by the SAC itself, respondent refused to cooperate with the local valuation office of petitioner and did not provide the necessary data to arrive at a proper "CS factor". DAR AO No. 5, s. of 1998 defines "CS factor" as follows: C. CS shall refer to any one or the average of all the applicable sub-factors, namely ST, AC and MVM: Where: ST = Peso Value of Sales Transactions as defined under Item C.2 AC = Acquisition Cost as defined under Item C.3 MVM = Market Value Based on Mortgage as defined under Item C.4 xxxx C.2. The criteria in the selection of the comparable sales transaction (ST) shall be as follows: a. When the required number of STs is not available at the barangay level, additional STs may be secured from the municipality where the land being offered/covered is situated to complete the required three comparable STs. In case there are more STs available than what is required at the municipal level, the most recent transactions shall be considered. The same rule shall apply at the provincial level when no STs are available at the municipal level. In all cases, the combination of STs sourced from the barangay, municipality and province shall not exceed three transactions. b. The land subject of acquisition as well as those subject of comparable sales transactions should be similar in topography, land use, i.e., planted to the same crop. Furthermore, in case of permanent crops, the subject properties should be more or less comparable in terms of their stages of productivity and plant density.

c. The comparable sales transactions should have been executed within the period January 1, 1985 to June 15, 1988, and registered within the period January 1, 1985, to September 13, 1988. xxxx C.3. Acquisition Cost (AC) AC shall be deemed relevant when the property subject of acquisition was acquired through purchase or exchange with another property within the period January 1, 1985 to June 15, 1988 and registered within the period January 1, 1985 to September 13, 1988, and the condition of said property is still substantially similar from the date of purchase or exchange to the date of FI. xxxx C.4. Market Value Based on Mortgage (MVM) For MVM to be relevant or applicable, the property subject of acquisition should have been mortgaged as of June 15, 1988 and the condition of the property is still substantially similar up to the date of FI. MVM shall refer to the latest available appraised value of the property. In the case at bar, while respondent attempted to prove during the hearings before the SAC, comparable sales transactions, the acquisition cost of the property as well as its mortgage value, she failed to submit adequate documentary evidence to support the same. Consequently, there was nothing from which the "CS factor" could be determined. In contrast, petitioner arrived at its valuation by using available factors culled from the Department of Agriculture and Philippine Coconut Authority,35 and by computing the same in accordance with the formula provided, thus COMPUTATION (Applicable Formula) : LV = 0.90 CNI + 0.10 MV Comparable Land Transactions (P x x x x ____ ) = P x-x-x Capitalized Net Income: Cassava 16,666.67 x 0.90 = 15,000.00 Corn/Coco 26,571.70 = 23,914.53 Market Value Cassava 8,963.78 x 0.10 = 896.38 per Tax Declaration: Corn/Coco 10,053.93 = 1,005.39 Computed Value per Hectare: Cassava 15,896.38; Corn/Coco 24,919.92 xxx Value per hectare used: Cassava 15,896.38 x 6.0000 has. = 95,378.28 Corn/Coco 24,919.92 x 8.1939 has. = 204,191.33 Payment due to LO : P299, 569.61

The above computation was explained by Antero M. Gablines, Chief of the Claims, Processing, Valuation and Payment Division of the Agrarian Operations Center of the Land Bank, to wit: ATTY. CABANGBANG: (On direct): xxxx q. What are the items needed for the Land Bank to compute? a. In accordance with Administrative Order No. 5, series of 1998, the value of the land should be computed using the capitalized net income plus the market value. We need the gross production of the land and its output and the net income of the property. q. You said "gross production". How would you fix the gross production of the property? a. In that Administrative Order No. 5, if the owner of the land is cooperative, he is required to submit the net income. Without submitting all his sworn statements, we will get the data from the DA (Agriculture) or from the coconut authorities. xxxx q. In this recommended amount which you approved, how did you arrive at this figure? a. We used the data from the Philippine (Coconut) Authority and the Agriculture and the data stated that Cassava production was only 10,000 kilos per hectare; corn, 2,000 kilos; and coconuts, 15.38 kilos per hectare. The data stated that in the first cropping of 1986, the price of cassava was P1.00 per kilo; corn was sold at P7.75 per kilo; and the Philippine Coconut Authority stated that during that time, the selling price of coconuts was P8.23 per kilo. q. After these Production data and selling price, there is here a "cost of operation", what is this? a. It is the expenses of the land owner or farmer. From day one of the cultivation until production. Without the land owners submission of the sworn statement of the income, production and the cost, x x x Administrative Order No. 5 states that x x x we will use 20% as the net income, meaning 80% of the production in peso. This is the cost of valuation. q. 80 % for what crops? a. All crops except for coconuts where the cost of expenses is only 20%. q. Summing all these data, what is the value per hectare of the cassava? a. The cassava is P15,896.38. q. How about the corn x x x intercropped with coconuts? a. P24,919.92.36 Under the circumstances, we find the explanation and computation of petitioner to be sufficient and in accordance with applicable laws. Petitioners valuation must thus be upheld.

Finally, there is no basis for the SACs award of 12% interest per annum in favor of respondent. Although in some expropriation cases, the Court allowed the imposition of said interest, the same was in the nature of damages for delay in payment which in effect makes the obligation on the part of the government one of forbearance.37 In this case, there is no delay that would justify the payment of interest since the just compensation due to respondent has been promptly and validly deposited in her name in cash and LBP bonds. Neither is there factual or legal justification for the award of attorneys fees and costs of litigation in favor of respondent. WHEREFORE, the instant petition is GRANTED. The Decision of the Regional Trial Court, Tagbilaran City, Branch 3 in Civil Case No. 6462 dated March 1, 2003 is REVERSED and SET ASIDE. A new judgment is entered fixing the just compensation for respondents land at P2.1105517 per square meter or a total of P299,569.61. SO ORDERED. G.R. No. 144180 January 30, 2006

COCA COLA BOTTLERS PHILS., INC., NATALE J. DICOSMO, STEVE HEATH, MARY CHUA, ALBERTO FAJARDO, JESS BANGSIL, LITO GARCIA, NOEL ROXAS, CHITO ENRIQUEZ, FREDERICK KERULF, ARMANDO CANLAS and DANILO DAUZ, Petitioners, vs. RODOLFO CABALO, JUANITO GERONA, LUIS GERONA, LUIS DE OCAMPO and MARIO NILO MECUA,Respondents. DECISION CHICO-NAZARIO, J.: Before Us is a petition for review on certiorari questioning the Resolution1 of the Court of Appeals dated 25 April 2000 which dismissed petitioners original action of certiorari filed therein. Being questioned as well is the Resolution2 dated 12 July 2000 which dismissed petitioners motion for reconsideration. The present controversy finds its genesis in an illegal dismissal case filed by herein respondents against petitioners, the facts of which are narrated by the Labor Arbiter in his Decision dated 26 November 1998, viz: Complainants aver that they have been under the employ of respondent company for more than ten (10) to thirteen (13) years as follows: NAME DATE HIRED DATE DISMISSED 1. Rodolfo G. Cabalo June 6, 1983 June 16, 1996 2. Juanito E. Gerona May 15, 1983 Oct. 2, 1996 3. Luis T. Ocampo May 1, 1984 July 10, 1996 4. Mario Nilo Mecua July 30, 1985 Dec. 16, 1995

as route helper, cargadors or pahinantes, accompanying the salesmen/drivers in their deliveries to sari-sari stores, restaurants, groceries, supermarkets that they were all under the supervision and control of respondent Company which provided them with the tools, equipment and other working material; that they worked exclusively at the plants, sales offices, delivery truck and/or respondent Companys premises. Respondent Company maintains that being one of the largest softdrink manufacturer in the country, it employs a sizeable workforce all over the country; that due to the fluctuating and variable conditions in the market, e.g., unusually high volume of work and unexpected shortages in manpower complement, the Company at times is constrained to augment its workforce so as to cope with operational needs; that in order to meet its fluctuating operational needs, the Company engages the services of workers apart from its regular workforce for its different plants; that the engagement of such services is necessarily on a temporary basis due to the temporary nature of the operational needs of the Company lasting for a limited period; that if, for example, the Company anticipates or actually experiences an unusually high volume of work or an unexpected shortage of manpower in any of its plants or sales offices arising from variable economic factors, it engages the services of outside workers to temporarily complement its regular workforce in the said plants or sales offices; that as part of its adaptive operational measures, the Company engaged the services of workers on a temporary basis for a limited period of five (5) months; that pursuant to the workers arrangement with the Company, their services were automatically terminated upon the expiration of the five-month period agreed upon by the parties. Hence, the said workers employment with the Company ceased thereafter; that complainants have now filed the present Complaint claiming that they worked in the Company and should, therefore, have achieved regular employment status in the Company; that however, other than their self-serving assertions, there is no document on record that will support complainants alleged service periods with the Company.3 The case before the Labor Arbiter was decided in favor of herein petitioners for lack of evidence as to the existence of an employer-employee relationship. The dispositive portion of the decision reads: WHEREFORE, complainants having failed to establish their claimed employer-employee relationship with the respondent corporation by CLEAR and CONVINCING competent evidence, the Complaint is hereby ordered DISMISSED.4 On appeal to the National Labor Relations Commission (NLRC) by the respondents, the NLRC declared that any decision it will render on the matter will border on prematurity as "there is dearth of evidence on both sides of the fence to allow this forum to judiciously decide the case meritoriously."5 It added that "(t)he issue of employer-employee relationship has not been fully threshed out in the proceedings a quo,"6 thus, under the circumstances, it was "left with no option except to remand this case to the Labor Arbiter a quo for further proceedings with the sole objective of fully threshing out the issue of employer-employee relationship."7 The dispositive portion of the NLRC decision states: PREMISES CONSIDERED, the appealed decision is hereby SET ASIDE and the records of this case is hereby REMANDED to the Arbitration Branch of origin for further proceedings to thresh out the issue of employer-employee relationship. In this regard, exhaustive efforts should be exerted to serve summons on Lipercon Services, Inc., being co-respondent.8 Petitioners moved for reconsideration of the aforequoted decision which motion was denied by the NLRC on 29 December 1999.9

Aggrieved, petitioners sought relief before the Court of Appeals via a petition for certiorari dated 26 March 2000. In a Resolution dated 25 April 2000, the Seventh Division of the Court of Appeals dismissed the petition. It held: For failure to comply with Sec. 11, Rule 13 of the 1997 Rules of Civil Procedure and for failure to attach certified true copy of the assailed NLRC Resolution dated December 29, 1999 as required under Sec. 1, Rule 65 of the Rules of Court, the petition is DISMISSED.10 Petitioners motion for reconsideration was denied on 12 July 2000, the Court of Appeals holding that: Petitioners contend that they faithfully complied with Section 1, Rule 65 of the Rules of Court which requires the petition to be accompanied by a certified true copy of the judgment, order or resolution subject thereof. However, a review of the records indubitably shows that this requirement had not been complied with regarding the assailed NLRC Resolution dated December 29, 1999 which was neither a certified true copy nor a duplicate original thereof, but a mere photocopy. WHEREFORE, there being no cogent reason or basis to reconsider Our previous Resolution, the Motion for Reconsideration is hereby DENIED.11 Petitioners are now before us on petition for review, assigning as errors the following: I. THE COURT OF APPEALS SERIOUSLY ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING THE C.A. PETITION NOTWITHSTANDING THE FACTS THAT: A. PETITIONERS REQUESTED FOR CERTIFIED TRUE COPIES OF THE 30 SEPTEMBER 1999 DECISION AND 29 DECEMBER 1999 RESOLUTION BOTH ISSUED BY THE NLRC BUT ONLY CERTIFIED XEROX COPIES WERE GIVEN B. PETITIONERS REQUESTED THE HONORABLE COURT OF APPEALS TO FURNISH THEM WITH CERTIFIED TRUE COPIES OF THE QUESTIONED FIRST AND SECOND RESOLUTIONS BUT LIKE THE NLRC, THE HONORABLE COURT OF APPEALS ONLY GAVE CERTIFIED XEROX COPIES. II. THE COURT OF APPEALS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS IN THAT IT ISSUED THE FIRST AND SECOND RESOLUTIONS IN VIOLATION OF THE RULE ON LIBERAL CONSTRUCTION OF THE RULES OF COURT On The First Issue: The Court of Appeals based its denial of the petition on Section 1, Rule 65 of the Rules of Court which provides that any petition filed under Rule 65 should be accompanied by a certified true copy of the judgment, order or resolution subject thereof and that, in this particular case, the petition was not so accompanied by a certified true copy of the NLRC resolution dated 29 December 1999 but only by a "mere photocopy."

The problem presented is not novel. In fact, it is a fairly recurrent one in petitions for certiorari of NLRC decisions as it seems to be the practice of the NLRC to issue certified "xerox copies" only instead of certified "true copies."12We have, however, put an end to this issue in Quintano v. NLRC13 when we declared that there is no substantial distinction between a photocopy or a "Xerox copy" and a "true copy" for as long as the photocopy is certified by the proper officer of the court, tribunal, agency or office involved or his duly-authorized representative and that the same is a faithful reproduction of the original. We held therein: The submission of the duplicate original or certified true copy of judgment, order, resolution or ruling subject of a petition for certiorari is essential to determine whether the court, body or tribunal, which rendered the same, indeed, committed grave abuse of discretion. The provision states that either a legible duplicate original or certified true copy thereof shall be submitted. If what is submitted is a copy, then it is required that the same is certified by the proper officer of the court, tribunal, agency or office involved or his duly-authorized representative. The purpose for this requirement is not difficult to see. It is to assure that such copy is a faithful reproduction of the judgment, order, resolution or ruling subject of the petition. xxxx Indeed, for all intents and purposes, a "certified Xerox copy" is no different from a "certified true copy" of the original document. The operative word in the term "certified true copy" under Section 3, Rule 46 of the Rules of Court is "certified". The word means "made certain." It comes from the Latin word certificare meaning, to make certain. Thus, as long as the copy of the assailed judgment, order, resolution or ruling submitted to the court has been certified by the proper officer of the court, tribunal, agency or office involved or his duly-authorized representative and that the same is a faithful reproduction thereof, then the requirement of the law has been complied with. It is presumed that, before making the certification, the authorized representative had compared the Xerox copy with the original and found the same a faithful reproduction thereof.14 A perusal of the attached NLRC Decision easily discloses that it is not a "mere photocopy" but is, in fact, a certified photocopy of said decision. Each page of the decision has been certified by the NLRC Third Divisions Deputy Clerk of Court, Atty. Catalino R. Laderas, who is undoubtedly a proper officer to make the said certification.15Moreover, there seems to be no question that the attached copy of the NLRC decision is a faithful reproduction thereof. The Court of Appeals, however, zeroed in on the copy of the NLRC Resolution denying petitioners motion for reconsideration. As correctly pointed out by it, said copy is neither a certified true copy nor a certified photocopy of the NLRC resolution but seems to be a mere photocopy of the duplicate original copy sent to petitioners counsel. On The Second Issue: The petition filed before the Court of Appeals did not contain an explanation as to why service upon the Office of the Solicitor General (0SG) and Atty. Omar M.C. Alam, counsel for respondents, was not made personally, albeit an affidavit of service by registered mail was attached thereto. The failure to make such written explanation, in violation of Section 11, Rule 13 of the 1997 Rules of Court, was the second ground for the dismissal of the petition. Section 11, Rule 13 states: SEC. 11. Priorities in modes of service and filing. Whenever practicable, the service and filing of pleadings and other papers shall be done personally. Except with respect to papers emanating from

the court, a resort to other modes must be accompanied by a written explanation why the service or filing was not done personally. A violation of this Rule may be cause to consider the paper as not filed. The requirement for personal service is mandatory such that Section 11, Rule 13 gives the court the discretion to consider a pleading or paper as not filed if the other modes of service of filing were resorted to and no written explanation was made as to why personal service was not done.16 In the seminal case of Solar Team Entertainment, Inc. v. Judge Ricafort,17 we stressed that strictest compliance with Section 11 of Rule 13 is mandated beginning one (1) month from the promulgation of said decision; i.e. one month from 05 August 1998. The subject petition was filed on 26 March 2000. Petitioners explain, however, that their omission was due to inadvertence and was not a product of any malevolent scheme to prejudice respondents in any way. Thus, the evil sought to be avoided by the requirement of an explanation to curb the practice of delaying the receipt of a pleading by a party through the simple expedient of serving the same by mail was not present. Petitioners thus pray for a liberal construction of the provision in question following Section 6, Rule 1 of the Rules of Court.18 We are not persuaded. In Solar,19 as reiterated in the recent case of Ello v. Court of Appeals,20 we explained that the courts discretionary power to consider a pleading or paper as not filed for violation of Section 11, Rule 13 must be exercised properly and reasonably, taking into account the following factors: (1) the practicability of personal service; (2) the importance of the subject matter of the case or the issues involved therein; and (3) the prima facie merit of the pleading sought to be expunged for violation of Section 11. We find that the Court of Appeals did not err in dismissing the petition for failure to observe the requirement of a written explanation why service was not made personally to the OSG and to Atty. Omar M.C. Alam, counsel for respondents. First, it cannot be said that serving the petition on the OSG and Atty. Alam through personal service was not practical nor realistic under the circumstances. We note that the office of petitioners counsel, the firm of Bocobo Rondain Mendiola Cruz and Formoso, is in Pasig City while that of the OSG is in Makati City and that of Atty. Alam is in Quezon City. Considering that the law firm has for its client one of the biggest corporations in the country, it is safe to presume precisely because of the absence of an explanation why service was not made personally that the Pasig firm has in its employ enough people to effect personal service. Moreover, the NLRC Resolution denying petitioners motion for reconsideration was received by their counsel on 10 February 2000.21 Petitioners, therefore, had until 11 April 2000 within which to file their petition for certiorari. From the records of the case, the petition was filed as early as 29 March 2000. Thus, petitioners had all the time in the world to serve their petition upon the OSG and respondents counsel by personal service and their failure to do so becomes inexcusable under the circumstances. We have also considered the fact that the issue presented before the Court of Appeals is not one of first impression nor is it of such importance as to justify the relaxation of the rules of court on the ground of inadvertence. Likewise, from a reading of the petition, it does not appear that petitioners have a prima facie case. It is to be recalled that the sole issue presented by the Court of Appeals is whether or not the NLRC, under the facts of the case, gravely abused its discretion in vacating and setting aside the decision of the Labor Arbiter and remanding the case to the arbitral branch of origin for further proceedings. In Sevillana v. I.T. (International) Corp.,22 we had already enunciated that the NLRC is not precluded by the rules to allow the parties to submit additional evidence to prove their

respective claims even on appeal or to order the remand of the case to the administrative agency concerned for further study and investigation upon such issues. IN SUM, we stress that petitioners claim of inadvertence as their reason for their failure to provide a written explanation why service of their petition was not made personally cannot and does not justify its omission. Such inadvertence does not constitute excusable negligence especially since said rule had already been in effect for three years before petitioners filed their petition before the Court of Appeals.23 That petitioners blithely expect this Court to turn a blind eye to their procedural blunder underscores their utter disregard of the requirement in Section 11, Rule 13. Verily, such disregard of the rule cannot justly be rationalized by harking on the policy of liberal construction and substantial compliance.24 To paraphrase Solar, if any controversy regarding a violation of Section 11 of Rule 13 were to be indiscriminately resolved under Section 6 of Rule 1 or Alonso v. Villamor25 and other analogous cases, then Section 11 would become meaningless and its sound purpose negated.26 WHEREFORE, premises considered, the instant petition is DENIED. The Resolutions of the Court of Appeals dated 25 April 2000 and 12 July 2000, respectively, are AFFIRMED. With costs. SO ORDERED. G.R. No. 164947 January 31, 2006

SONIA MACEDA ALIAS SONIALITA MACEDA AND GEMMA MACEDAMACATANGAY, Petitioners, vs. ENCARNACION DE GUZMAN VDA. DE MACATANGAY, Respondent. DECISION CARPIO MORALES, J.: Petitioner Sonia Maceda (Sonia) and Bonifacio Macatangay (Macatangay) contracted marriage on July 26, 1964.1The union bore one child, petitioner Gemma Macatangay (Gemma), on March 27, 1965.2 The couple separated not long after the marriage. In 1967, the couple executed a Kasunduan3 whereby they agreed to live separately. Macatangay soon lived with Carmen Jaraza (Carmen). After the death on December 7, 1998 of Macatangay who was a member of the Social Security System (SSS) or on December 14, 1998, his common-law wife Carmen filed a death benefit application before the SSS Lucena Branch. The SSS denied4 her application, it ruling that it is Macatangays wife who is his primary beneficiary. On January 9, 1999, petitioner Sonia filed before the SSS a death benefit application. Macatangays children with his common-law wife Carmen, namely Jay, Elena, and Joel, aged 27, 31, and 29 years old, respectively, also filed in 19995 separate applications for death benefits following the SSS denial of their mothers application.

On September 10, 1999, the SSS denied Macatangays illegitimate childrens claim on the ground that under Republic Act 8282, "THE SOCIAL SECURITY ACT OF 1997," it is the dependent spouse, until he or she remarries, who is the primary beneficiary of the deceased member.6 Petitioner Sonias application for death benefit was approved on December 20, 1999. She received a lump sum amount of P33,000 representing "pensions" 7 from the SSS. On February 22, 2000, Macatangays mother, herein respondent Encarnacion de Guzman, filed a petition before the Social Security Commission (SSC) in Makati City8 against herein petitioners Sonia and Gemma, for the grant to her of social security benefits, she claiming that her son designated her and his three illegitimate children as his beneficiaries under the SSS;9 she was made to sign a document regarding the distribution of benefits of Macatangay by SSS Lucena Branch Chief Atty. Corazon M. Villamayor who, however, did not furnish her a copy thereof nor inform her of its nature;10 and after she signed the document, the three illegitimate children received notices denying their application for death benefits.11 The SSS office in Quezon City filed a petition-in-intervention in the petition filed by respondent before the SSC in Makati City.12 In her position paper, respondent contended as follows: [I]n the present case, the agreement of the spouses to live separately four (4) months after their marriage and which agreement was finally made in writing before the Barangay will unquestionably show that Sonia or Sonialita Maceda was not dependent upon the late member for support and therefore cannot be considered as his primary beneficiary under the aforesaid law. Said agreement, though proscribed by law by reasons of public policy, was a mutual agreement short of a court decree for legal separation and will not in any way change the fact that the two lived separately. This under any circumstances will dispute the presumption of the dependency for support arising from the legitimacy of the marital union as reasoned out by the SSS in their Petition for Intervention.13 (Emphasis and underscoring supplied) Petitioners, on the other hand, hinged their claim on Section 8(e) and (k) of The Social Security Act of 1997. Thus they argued: Section 8 (e) and (k) of Republic Act 8282 is crystal clear on who should be Bonifacio De Guzman Macatangays beneficiary, thus: (e) Dependents The dependents shall be the following: (1) The legal spouse entitled by law to receive support from the member; (2) The legitimate, legitimated or legally adopted, and illegitimate child who is unmarried, not gainfully employed and has not reached twenty-one years (21) of age, or if over twenty-one (21) years of age, he is congenitally or while still a minor has been permanently incapacitated and incapable of self-support, physically or mentally, and (3) The parent who is receiving regular support from the member. (k) Beneficiaries The dependent spouse until he or she remarries, the dependent legitimate, legitimated or legally adopted, and illegitimate children, who shall be the primary

beneficiaries of the member; Provided, That the dependent illegitimate children shall be entitled to fifty percent (50%) of the share of the legitimate, legitimated or legally adopted children: Provided, further, That in the absence of the dependent legitimate, legitimated or legally adopted children of the member, his/her dependent illegitimate children shall be entitled to one hundred percent (100%) of the benefits. In their absence, the dependent parents who shall be the second beneficiaries of the member. In the absence of all the foregoing, any other person designated by the member as his/her secondary beneficiary. (Underscoring and emphasis in the original)14 As for the SSS, it argued that: [T]o be considered dependent for support, a surviving spouse of a member must only show that she is entitle[d] for support from the member by virtue of a valid marriage. The surviving spouse is not required to show that he/she actually received support from the member during his/her lifetime. Her dependency for support is actually presumed from the legitimacy of the marital union.15 (Emphasis and underscoring supplied) The SSC, taking the Kasunduan16 as proof that Sonia was no longer dependent for support on Bonifacio,17 and declaring that the SSS Lucena Branch acted in good faith in granting the benefits to Sonia, granted respondents petition by Resolution of November 14, 2001.18 It accordingly disposed as follows: IN VIEW OF ALL THE FOREGOING, the Commission hereby orders respondent Sonia (Sonialita) Macatangay to refund the monthly pensions paid to her by mistake and for the SSS to collect the same immediately upon receipt hereof. Meanwhile, the System is ordered to grant the SS lump sum death benefits of member Bonifacio Macatangay to designated beneficiaries Encarnacion Macatangay, Elena, Joel, and Jay Macatangay, subject to existing rules and regulations. SO ORDERED.19 (Underscoring supplied) Petitioners motion for reconsideration20 of the SSC Resolution was denied by Order of August 14, 2002.21 Petitioners thereupon filed a petition for review,22 docketed as CA G.R. No. 73038, before the Court of Appeals which dismissed it outright, by the present challenged Resolution of October 21, 2002,23 on the following procedural grounds: A perusal of the petition however shows that there was no written explanation as to why respondents were not personally served copies of the petition as required under Section 11, Rule 13 of the 1997 Rules of Civil Procedure. Also, the petition is not accompanied by copies of the pleadings and documents relevant and pertinent thereto(i.e., position papers filed by the parties before the SSC, motion to dismiss filed by petitioner before the SSC) as required under Section 6, Rule 43 of the 1997 Rules of Civil Procedure. Finally, petitioners counsel failed to comply with the requirements under Bar Matter No. 287 which requires that "all lawyers shall indicate in all pleadings, motions and papers signed and filed by them the number and date of their official receipt indicating payment of their annual membership dues to

the Integrated Bar of the Philippines for the current year x x x." In the instant petition, Atty. Calayan failed to indicate the number and date of the official receipt evidencing payment of IBP dues.24 (Italics in the original; underscoring supplied) Via an Omnibus Motion,25 petitioners prayed the Court of Appeals to (a) RECONSIDER its Resolution dated October 21, 2002 dismissing the Petition for Review; and (b) ADMIT the thereto attached certified true copies of the parties Position Papers and the petitioners Motion to Dismiss filed with the SSC,26 the Certificate of Life Membership of their counsel Atty. Ronaldo Antonio Calayan,27 and the Official Receipt showing said counsels payment of lifetime membership fee to the Integrated Bar of the Philippines.28 The Court of Appeals, finding no substantial compliance by petitioners with the requirement in Section 11, Rule 13 of the 1997 Rules of Civil Procedure reading: Section 11. Priorities in Modes of Service and Filing Whenever practicable, the service and filing of pleadings and other papers shall be done personally. Except with respect to papers emanating from the court, a resort to other modes must be accompanied by a written explanation why the service or filing was not done personally. A violation of this rule may cause to consider the paper as not filed., denied the Omnibus Motion by Resolution of August 4, 2004.29 Hence, the present Petition for Review30 faulting the appellate court as follows: I. THE HONORABLE COURT OF APPEALS ERRED IN STRICTLY ADHERING TO TECHNICALITIES, RATHER THAN IN SUBSTANTIAL COMPLIANCE, IN THE APPLICATION OF THE PROVISIONS OF THE 1997 RULES ON CIVIL PROCEDURE. II. THE CIRCUMSTANCES PREVAILING IN THIS PETITION FIND SUPPORT IN DECISIONS OF THIS HONORABLE COURT IN FAVOR OF THE REVERSAL OF THE COURT OF APPEALS DECISION UNDER REVIEW.31(Underscoring supplied) Petitioners posit that they complied substantially with Section 11, Rule 13 of the Rules of Court, as follows: Sonias affidavit of service clearly shows the impracticability of personal service of copies of the petition to the adverse parties. Manifest in the same affidavit is the intervenor Social Security Systems address in Quezon City; that of the private respondents lawyer in Lopez, Quezon, and that of Social Security Commission in Makati City. Sonias counsels address is Lucena City. The distance between these addresses, it is most respectfully submitted as a matter of judicial notice, may be construed as more than competent indicia as to why Sonia resorted to service by mail.32 (Underscoring supplied) And they cite jurisprudence calling for a liberal interpretation of the Rules in the interest of substantial justice,33specifically Barnes v. Reyes34 which classifies Section 11, Rule 13 of the Rules as a directory, rather than a mandatory, rule. The petition is meritorious. In Solar Team Entertainment, Inc. v. Ricafort,35 this Court, passing upon Section 11 of Rule 13 of the Rules of Court, held that a court has the discretion to consider a pleading or paper as not filed if said rule is not complied with.

Personal service and filing are preferred for obvious reasons. Plainly, such should expedite action or resolution on a pleading, motion or other paper; and conversely, minimize, if not eliminate, delays likely to be incurred if service or filing is done by mail, considering the inefficiency of the postal service. Likewise, personal service will do away with the practice of some lawyers who, wanting to appear clever, resort to the following less than ethical practices: (1) serving or filing pleadings by mail to catch opposing counsel off-guard, thus leaving the latter with little or no time to prepare, for instance, responsive pleadings or an opposition; or (2) upon receiving notice from the post office that the registered containing the pleading of or other paper from the adverse party may be claimed, unduly procrastinating before claiming the parcel, or, worse, not claiming it at all, thereby causing undue delay in the disposition of such pleading or other papers. If only to underscore the mandatory nature of this innovation to our set of adjective rules requiring personal service whenever practicable, Section 11 of Rule 13 then gives the court the discretion to consider a pleading or paper as not filed if the other modes of service or filing were not resorted to and no written explanation was made as to why personal service was not done in the first place. The exercise of discretion must, necessarily consider the practicability of personal service, for Section 11 itself begins with the clause "whenever practicable". We thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997 Rules of Civil Procedure, personal service and filing is the general rule, and resort to other modes of service and filing, the exception. Henceforth, whenever personal service or filing is practicable, in the light of the circumstances of time, place and person, personal service or filing is mandatory. Only when personal service or filing is not practicable may resort to other modes be had, which must then be accompanied by a written explanation as to why personal service or filing was not practicable to begin with. In adjudging the plausibility of an explanation, a court shall likewise consider the importance of the subject matter of the case or the issues involved therein, and the prima facie merit of the pleading sought to be expunged for violation of Section 11.36 (Emphasis and underscoring supplied) In Musa v. Amor, this Court, on noting the impracticality of personal service, exercised its discretion and liberally applied Section 11 of Rule 13:37 As [Section 11, Rule 13 of the Rules of Court] requires, service and filing of pleadings must be done personally whenever practicable. The court notes that in the present case, personal service would not be practicable. Considering the distance between the Court of Appeals and Donsol, Sorsogon where the petition was posted, clearly, service by registered mail [sic] would have entailed considerable time, effort and expense. A written explanation why service was not done personally might have been superfluous. In any case, as the rule is so worded with the use of "may", signifying permissiveness, a violation thereof gives the court discretion whether or not to consider the paper as not filed. While it is true that procedural rules are necessary to secure an orderly and speedy administration of justice, rigid application of Section 11, Rule 13 may be relaxed in this case in the interest of substantial justice.38 (Emphasis and underscoring supplied) In the case at bar, the address of respondents counsel is Lopez, Quezon, while petitioner Sonias counsels is Lucena City.39 Lopez, Quezon is 83 kilometers away from Lucena City.40 Such distance makes personal service impracticable. As in Musa v. Amor,41 a written explanation why service was not done personally "might have been superfluous."

As this Court held in Tan v. Court of Appeals,42 liberal construction of a rule of procedure has been allowed where, among other cases, "the injustice to the adverse party is not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed." Without preempting the findings of the Court of Appeals on the merits of petitioners petition in CA G.R. No. 73038, if petitioners allegations of fact and of law therein are true and the outright dismissal of their petition is upheld without giving them the opportunity to prove their allegations, petitioner Sonia would be deprived of her rightful death benefits just because of the Kasunduan she forged with her husband Macatangay which contract is, in the first place, unlawful.43 The resulting injustice would not be commensurate to petitioners counsels "thoughtlessness" in not explaining why respondents were not personally served copies of the petition. WHEREFORE, the petition is GRANTED. The Resolutions of the Court of Appeals dated October 21, 2002 and August 4, 2004 in CA G.R. No. 73038 are REVERSED and SET ASIDE. Let the records of the case be REMANDED to the Court of Appeals which is DIRECTED to take appropriate action on petitioners petition for review in light of the foregoing discussions. SO ORDERED. G.R. No. 149118 February 16, 2006

FLAVIANA LIM CAJAYON and CARMELITA LIM CONSTANTINO, Petitioners, vs. SPOUSES SANTIAGO and FORTUNATA BATUYONG, Respondents. DECISION TINGA, J.: This petition for review on certiorari challenges the two rulings of the Court of Appeals in CA G.R. SP. No. 50952. The first decision dated 27 November 20001 upheld the ruling of the Regional Trial Court (RTC) affirming the Metropolitan Trial Court (MeTC) order for ejectment, while the Resolution dated 5 July 20012 denied the motion for reconsideration. First, the factual background of the case. Flaviana Lim Cajayon and Carmelita Lim Constantino (petitioners) and Isagani P. Candelaria (Candelaria) were co-owners of a 260-square meter lot, then covered by Transfer Certificate of Title (TCT) No. C-10870. On 1 February 1995, a partition agreement3 was entered into by petitioners and Candelaria, wherein Lot 6-A, Psd 00-034294, containing an area of 100 square meters, more or less, was adjudicated to Candelaria, while Lot 6-B, Psd 00-034294, containing an area of 160 square meters, more or less, was given to petitioners. TCT No. C-10870 was cancelled and TCT No. 288500 was issued in the name of petitioners. On 30 May 1995, Candelaria sold his property, including the improvements thereon, to Spouses Santiago and Fortunata Batuyong (respondents). TCT No. 294743 was issued in their names over the said parcel of land.4

On 21 May 1996, petitioners started the construction of a seven (7)-door bungalow-type building that allegedly intruded into the lot of Respondents. At the instance of respondents, petitioners were summoned by barangay officials to a meeting on the matter. It was then agreed upon that petitioners would defer the construction work pending the result of a relocation survey to be conducted by a government surveyor. A verification survey was conducted by Geodetic Engineer Florentina C. Valencia. She submitted a report dated 12 November 1996 which yielded the findings that Lot 6-A (Candelarias) and Lot 6-B (petitioners) were not correctly positioned geographically on the ground with respect to TCT No. 294743. Thus, as per survey, sub-lot B with an area of 10.43 square meters serves as right of way of Lot 6-B (petitioners lot) while sub-lot C with an area of 10.18 square meters was the portion of Lot 6A (respondents lot) presently occupied by petitioners.5 Despite the delineation of said boundaries, petitioners proceeded with the forestalled construction, allegedly occupying at least 20.61 square meters of respondents lot, including the portion being used as right of way for petitioners tenants. After respondents secured a permit from the barangay and the Caloocan City Building Official to fence their lot, they made demands to petitioners to vacate the encroached portion but to no avail. Respondents brought the matter to the barangay but no amicable settlement was reached. A Certificate to File Action was issued to them by the Barangay Lupon Tagapayapa. A final demand was made through a letter dated 20 May 1997 upon petitioners to vacate the encroached premises. Petitioners, however, vehemently refused to vacate and surrender the premises. On 14 April 1997, respondents filed an ejectment case against petitioners before the Metropolitan Trial Court6(MeTC) of Caloocan City, docketed as Civil Case No. 23359. In a Decision7 dated 2 July 1998, the MeTC ordered petitioners to vacate and surrender possession of a portion of respondents lot and to pay P500.00 per month as fair rental value from May 1996 until the premises is finally vacated, plus P5,000.00 as attorneys fees and costs of the suit.8 On appeal, the RTC9 affirmed the judgment of the MeTC.10 In doing so, the RTC debunked the three (3) arguments posed by petitioners. First, contrary to petitioners submission, the RTC ruled that the MeTC had jurisdiction over the instant complaint. The RTC noted that the issue of jurisdiction was never raised in the court a quo while on the other hand, petitioners actively participated in the proceedings therein by filing their Answer and Position Paper. Evidently, petitioners raised the question of jurisdiction as a mere afterthought as he did so only after he obtained an adverse judgment. Second, the allegations of the complaint sufficiently averred a case for ejectment which the RTC found to be within the jurisdiction of the court a quo. Third, the trial court ruled that petitioners categorically recognized the validity of the verification survey done by Engineer Valencia, as shown by the presence of petitioner Flaviana Cajayon during the verification survey and setting of monuments per survey report.11 Petitioners filed a motion for new trial and/or reconsideration but it was denied in an Order12 dated 12 January 1999 of the RTC. They elevated the case to the Court of Appeals by way of petition for review under Rule 42 of the Rules of Court. On 27 November 2000, the appellate court rendered a Decision13 dismissing the petition. Holding that the exclusive jurisdiction to try unlawful detainer cases is vested with the MeTC, the appellate court ratiocinated, thus: The complaint in the instant case establishes jurisdictional facts necessary to sustain the action for unlawful detainer and the remedy it seeks is merely to obtain possession of the controverted lot from Respondents. Specifically, it alleges that sometime on May 21, 1996, petitioners started construction works in the area which intruded into a portion of respondents property; that the parties eventually

agreed to stop the construction subject to the result of a survey to be conducted thereon; that a survey was conducted in the presence of the parties and a report was submitted by Engr. Valencia on November 12, 1996, showing an encroachment of about 20.61 square meters of respondents lot including that portion being used as a right of way for petitioners tenants; that even after the boundaries had been verified, petitioners resumed the construction on the area; that despite verbal and written demands, the last of which was made on March 20, 1999, petitioners refused to vacate and surrender the encroached area. Surely, respondents resort to unlawful detainer when petitioners failed to leave the controverted premises upon demand is in order.14 The appellate court also held that the fact that petitioners houses already stood on the controverted lot long before the purchase of the land by respondents failed to negate the case for ejectment.15 The appellate court emphasized that prior physical possession is not a condition sine qua non in unlawful detainer cases. The court likewise sustained the RTC findings on the validity of the verification survey conducted by Engineer Valencia that petitioners have encroached on a 20.61 square meter portion of respondents lot. On 5 July 2001, the Court of Appeals issued a Resolution16 denying petitioners Motion for Reconsideration. Petitioners now come to us via the present petition, submitting as issues the question of jurisdiction and the weight to be accorded to the verification survey results.17 Petitioners anchor their petition on the court a quos lack of jurisdiction over the instant suit. The averments in the complaint do not make out a case for ejectment, they claim, as their entry into the disputed lot was not made by force, intimidation, threat, strategy or stealth. Neither was their possession of the disputed property by virtue of the tolerance of respondents or the latters predecessor-in-interest. Respondents counter that the jurisdictional elements necessary to maintain an action for unlawful detainer clearly obtain in the case at bar, namely: (a) after the parties agreed to the conduct of a survey by a government surveyor and after the survey, it was determined that the structures introduced by herein petitioners have encroached a portion of herein respondents lot; (b) notices to vacate and surrender of possession of the encroached portion were made to petitioners, the last being on March 20, 1997; and (c) the suit was instituted on April 11, 1997 or within one (1) year from date of last demand.18 Respondents also stress that possession of the premises by petitioners took place more than one year before the filing of the complaint and the absence of an allegation in the complaint that such possession of the disputed portion was merely by virtue of respondents tolerance does not deprive the lower court of its original and exclusive jurisdiction nor will it negate respondents action for unlawful detainer.19 It is settled that jurisdiction of the court in ejectment cases is determined by the allegations of the complaint and the character of the relief sought.20 The Complaint21 filed by respondents (plaintiffs therein) alleged these material facts:
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2. That defendants and Isagani P. Candelaria were the former co-owners of a certain piece of land located in Maypajo, Caloocan City containing an area of 260 square meters, more or less, under TCT No. C-10870 issued by the Register of Deeds of Caloocan City;

3. That on February 1, 1995, said co-owners subdivided this parcel of land by virtue of a Partition Agreement wherein Lot 6-A, Psd 00-034294, containing an area of 100 square meters, more or less, was given to Isagani P. Candelaria, while Lot 6-B, Psd 00-034294, containing an area of 160 square meters, more or less, was given to defendants. A copy of said Partition Agreement is hereto attached as Annex "A"; xxx xxx xxx 5. That on May 30, 1995, Isagani P. Candelaria sold his share to the herein plaintiffs, including the improvements thereon, in the sum of P100,000.00, under a Deed of Absolute Sale x x x; xxx xxx xxx 7. That sometime in May 21, 1996, defendants started construction works in the area and intruded into the lot owned by the plaintiffs causing the latter to protest and report the matter to the barangay authorities; 8. That on the same day, the parties were summoned to appear before the Barangay Chairman wherein defendants agreed to stop the construction works, and in a subsequent conference on June 7, 1996, they agreed to defer the matter pending the result of a survey to be conducted by a government surveyor; xxx xxx xxx 11. That the following day, September 5, 1996, Geodetic Engineer Florentina C. Valencia conducted a survey of the aforesaid property and placed the concrete monuments thereon in the presence of plaintiffs and defendants; 12. That on November 12, 1996, a verification survey report was submitted by Geodetic Engineer Florentina C. Valencia together with the survey verification plan xxx; 13. That despite defendants knowledge of the property boundary, and despite repeated serious objections from plaintiffs, defendants proceeded to construct a seven-door bungalow-type semi-concrete building, occupying at least 10.18 square meters and another 10.43 square meters for the right of way, thus encroaching upon at least 20.61 square meters of plaintiffs lot, and further demolishing plaintiffs wall. xxx xxx xxx 20. That despite repeated and continuous demands made by plaintiffs upon defendants, both oral and written, the last being on March 20, 1997, defendants in manifest bad faith, wanton attitude, and in a malevolent and oppressive manner and in utter disregard of the property rights of plaintiffs, have failed and refused, and still fail and refuse to vacate the same up to the present time x x x.22 From the above-quoted allegations taken in tandem with the textbook distinctions between forcible entry and unlawful detainer, it is clear that the complaint makes out a case for forcible entry, as opposed to unlawful detainer. The distinctions between the two forms of ejectment suits, are: first, in forcible entry, the plaintiff must prove that he was in prior physical possession of the premises until he was deprived thereof by the defendant, whereas, in unlawful detainer, the plaintiff need not have

been in prior physical possession; second, in forcible entry, the possession of the land by the defendant is unlawful from the beginning as he acquires possession thereof by force, intimidation, threat, strategy or stealth, while in unlawful detainer, the possession of the defendant is inceptively lawful but it becomes illegal by reason of the termination of his right to the possession of the property under his contract with the plaintiff; third, in forcible entry, the law does not require a previous demand for the defendant to vacate the premises, but in unlawful detainer, the plaintiff must first make such demand, which is jurisdictional in nature.23 Respondents had been in prior physical possession of the property in the concept of owner prior to petitioners intrusion on 21 May 1996. When petitioners encroached upon respondents lot and started construction works thereon the latter was dispossessed of the area involved. Despite various demands by respondents to vacate, petitioners obstinately refused to do so. Clearly, petitioners entry into the said property was illegal from the beginning, precluding an action for unlawful detainer. On the other hand, to establish a case of forcible entry, the complaint must allege that one in physical possession of a land or building has been deprived of that possession by another through force, intimidation, threat, strategy or stealth.24 It is not essential, however, that the complaint should expressly employ the language of the law. It would be sufficient that facts are set up showing that dispossession took place under said conditions.25 The words "by force, intimidation, threat, strategy or stealth" include every situation or condition under which one person can wrongfully enter upon real property and exclude another, who has had prior possession thereof. To constitute the use of "force" as contemplated in the above-mentioned provision, the trespasser does not have to institute a state of war. Nor is it even necessary that he use violence against the person of the party in possession. The act of going on the property and excluding the lawful possessor therefrom necessarily implies the exertion of force over the property, and this is all that is necessary.26 In the case at bar, petitioners encroachment into respondents property in an oppressive and malevolent manner, coupled with their refusal to vacate the premises despite knowledge of the proper boundaries and heedless of respondents serious objections, indelibly connotes "force" within the meaning of the law. Petitioners contend that while they concede they might have intruded on respondents property, the action is barred by prescription because it was filed more than one (1) year after the occurrence of the alleged intrusion. The contention is baseless. Section 1, Rule 70 of the Rules of Court allows a plaintiff to bring an action in the proper inferior court for forcible entry or unlawful detainer within one (1) year, respectively, after such unlawful deprivation or withholding of possession. In forcible entry, the one-year period is counted from the date of actual entry on the land.27 Records show that the ejectment suit was instituted on 11 April 1997. Petitioners actual entry into the property, according to the complaint, took place on 21 May 1996. Thus, the suit was filed well within the one (1)-year period mandated by law. As a collateral issue, petitioners claim that they are at least entitled to the rights of a builder in good faith on the premise that they are not the owners of the property encroached upon. This contention is not tenable. Good faith consists in the belief of the builder that the land he is building on is his and his ignorance of any defect or flaw in his title.28 In the instant case, when the verification survey report came to petitioners knowledge their good faith ceased. The survey report is a professionals field confirmation of petitioners encroachment of respondents titled property. It is doctrinal in land registration law that possession of titled property adverse to the registered owner is necessarily tainted with bad faith. Thus, proceeding with the construction works on the disputed lot despite knowledge of respondents ownership put petitioners in bad faith.

Now, the second issue. Petitioners question the evidentiary weight of the verification survey report. They point out that since the survey was a unilateral act of respondents, done as it was without their consent, they should not be bound by its findings.29 In raising the issue, petitioners are in effect asking this Court to reassess the factual findings of the courts below, a task which is beyond this Courts domain. Factual matters cannot be raised in a petition for review on certiorari. This Court at this stage is limited to reviewing errors of law that may have been committed by the lower courts.30We find no ample reason to depart from this rule, more so in this case where the Court of Appeals has affirmed the factual findings of the RTC and the MeTC. Moreover, there is a presumption that official duty is regularly performed,31 i.e., government officials who perform them are clothed with the presumption of regularity,32 as the courts below pointed out.33 In this case, the verification survey was conducted by a government functionary. Even prescinding from the presumption of regularity, what appears on record is that the verification survey was conducted with the agreement of both parties and in their presence. That was the finding made by the courts below and affirmed by the appellate court without any wrinkle.34 WHEREFORE, based on the foregoing, this Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners.
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SO ORDERED. G.R. No. 158895 February 16, 2006

SPS. THELMA and GREGORIO ABRAJANO, SPS. VIRGINIA and RODEL LAVA and OSCAR DACILLO,Petitioners, vs. HEIRS OF AUGUSTO F. SALAS, JR., namely: TERESITA D. SALAS, FABRICE CYBILL D. SALAS, MA. CRISTINA S. LESACA and KARINA D. SALAS, and COURT OF APPEALS Respondents. DECISION TINGA, J.: Before us is a Petition for Review on Certiorari1 dated August 2, 2003, assailing the Decision2 of the Court of Appeals in CA-G.R. SP No. 75882 dated April 30, 2003, which ruled that the trial court judge should have inhibited himself from hearing the case and directed that it be raffled off to another branch, and its Resolution3 dated July 15, 2003 which denied petitioners motion for reconsideration. The facts as condensed from the records are as follows: Augusto L. Salas, Jr. (Salas) was the registered owner of a large parcel of land located in Lipa City, Batangas. On May 15, 1987, Salas and Laperal Realty Development Corporation (Laperal) entered into an Owner-Contractor Agreement whereby the latter undertook the horizontal development of Salass Lipa properties. Salas also subsequently executed a Special Power of Attorney authorizing Laperal to exercise general control, supervision and management of the sale, for cash or installment, of the lands or portions thereof covered by the Owner-Contractor Agreement.

On August 6, 1996, Teresita Salas filed with the Regional Trial Court (RTC) of Makati City a verified petition for the declaration of presumptive death of her husband, Augusto, who had then been missing for more than seven (7) years. The petition, docketed as Sp. Proc. No. M-4394, was granted on December 12, 1996. Meanwhile, Laperal subdivided the properties and sold portions thereof to Rockway Real Estate Corporation (Rockway), South Ridge Village, Inc. (South Ridge), spouses Gregorio and Thelma Abrajano (Abrajanos), spouses Rodel and Virginia Lava (Lavas), Oscar Dacillo (Dacillo), Eduardo A. Vacuna (Vacuna), Marahani Development Corporation (Marahani), Florante dela Cruz (dela Cruz) and Jesus Vicente B. Capellan (Capellan). On February 3, 1998, the Heirs of Salas filed a Complaint4 for declaration of nullity of sale, conveyance, cancellation of contract, accounting and damages against the above-named buyers of the properties. The Complaint was docketed as Civil Case No. 98-0047 and raffled to the sala of Judge Avelino G. Demetria (Judge Demetria). The Heirs of Salas alleged that they suffered lesion on account of the simulated sales of Salas properties by Laperal for which they demanded accounting from the latter and damages from the buyers. Laperal filed a Motion to Dismiss5 on the ground of failure to comply with the arbitration clause in the Owner-Contractor Agreement. Vacuna and Capellan filed an Answer with Compulsory Counterclaim and Cross-Claim,6 alleging that the Complaint states no cause of action; that plaintiffs have no capacity to sue; that the condition precedent of resorting to arbitration was not complied with; that they were buyers in good faith and for value; and that plaintiffs claim over the subject properties is a virtual opening of Salass succession prior to the required 10-year period of disappearance under Art. 390 of the Civil Code.7 Marahani and dela Cruz filed an Answer with Compulsory Counterclaim and Cross-Claim,8 raising as affirmative defenses the prescription of the cause of action for rescission; the lack of capacity to sue of one of the plaintiffs; that they were buyers in good faith; that the sale to them of a portion of Salass property was for a consideration; and that the arbitration clause in the Owner-Contractor Agreement should have first been complied with. The Abrajanos, the Lavas, and Dacillo filed a Joint Answer with Counterclaim and CrossClaim,9 raising essentially the same affirmative defenses as the rest of the defendants. For their part, Southridge and Rockway filed separate Answers,10 claiming that plaintiffs Complaint is tantamount to opening Salass succession before the mandatory 10-year period of absence under the Civil Code. Southridge further averred that it is a purchaser in good faith and that the arbitration clause should have first been resorted to. The Heirs of Salas opposed Laperals Motion to Dismiss, arguing that the arbitration clause is inapplicable since there are defendants who are not privy to the Owner-Contractor Agreement. Besides, the agreement purportedly allows any of the parties to seek its cancellation. In an Order11 dated August 19, 1998, Judge Demetria granted the motion to dismiss, prompting the Heirs of Salas to question the order of dismissal before the Supreme Court in G.R. No. 135362. On December 13, 1999, the Supreme Court set aside the order of dismissal and directed the trial court to proceed with the hearing of the case.12 When the case was remanded to the trial court, Vacuna and Capellan filed a Motion for Leave to Conduct Preliminary Hearing on the Defendants Affirmative Defenses,13 praying that the affirmative

defenses in their answer be heard in a preliminary hearing pursuant to Sec. 6, Rule 16 of the 1997 Rules of Civil Procedure (Rules of Court). The Heirs of Salas filed a Comment,14 contending that the affirmative defense of lack of capacity to sue has no basis in view of the issuance of letters of administration in favor of Teresita D. Salas by the RTC of Makati in Sp. Proc. No. M-4394. Judge Demetria granted the motion to conduct preliminary hearing in his Order15 dated August 17, 2001. Accordingly, hearings on the affirmative defenses were conducted at which the Heirs of Salas participated. On March 31, 2002, the Abrajanos, the Lavas, and Dacillo filed a Formal Offer of Evidence16 to which the Heirs of Salas filed their Comments/Objections.17 Subsequently, they also filed a motion to inhibit Judge Demetria from further hearing the case pursuant to Sec. 1, Par. 2, Rule 137 of the Rules of Court, averring that the previous dismissal of the complaint by the judge, as well as the preliminary hearing ordered by him on motion of the defendants, "have rendered the plaintiffs uneasy and doubtful as to whether they will ever obtain an impartial judgment."18 Defendants opposed the Motion for Inhibition. On September 13, 2002, Judge Demetria issued an Order19 denying the Motion for Inhibition on the ground that his previous dismissal of the case on the issue of arbitration was just an interpretation of the law, rules and jurisprudence without any intent to give undue advantage to the other parties. Their Motion for Reconsideration20 having been denied,21 the Heirs of Salas filed a petition for certiorari before the Court of Appeals, assailing Judges Demetrias Order on the ground that his denial of the Motion for Inhibition is a violation of their right to due process as it deprived them of the "cold neutrality of an impartial judge." Judge Demetria allegedly allowed the delay in the resolution of the main case by dismissing the same without considering all of the issues raised by the buyers only to allow the latter to relitigate the same issues in a preliminary hearing. Interpreting Sec. 6, Rule 16 of the Rules of Court, the appellate court held that the provision applies only if no motion to dismiss had been filed. If a motion to dismiss had been filed and denied, the defendant may also reiterate the grounds thereof as affirmative defenses but no preliminary hearing may be had thereon because a motion to dismiss had already been filed and decided. According to the Court of Appeals, the reversal by the Supreme Court of the trial courts order of dismissal operated as a denial of the motion to dismiss. Hence, a preliminary hearing on the affirmative defenses should no longer have been conducted. Accordingly, even as the Court of Appeals found no indication of bias and partiality on the part of Judge Demetria, it ordered his inhibition because the Heirs of Salas had already allegedly lost faith in his actions. With the denial of their Motion for Reconsideration, petitioners are now before this Court asserting that the Court of Appeals erroneously applied Sec. 6, Rule 16 of the Rules of Court. They contend that respondents participated fully in the preliminary hearings on the affirmative defenses and that it was only after the admission of the evidence presented by petitioners that they filed a motion to inhibit Judge Demetria. In their Comment22 dated October 27, 2003, respondents counter that the validity of the hearing on the affirmative defenses was not raised as an issue in CA-G.R. SP. No. 75882. Rather, what was at issue was whether Judge Demetria should inhibit himself from hearing the case considering that respondents had already lost faith that they will obtain impartial judgment. Moreover, they stress that

the case had been rendered moot and academic because Judge Demetria issued an Order23 on May 8, 2003, inhibiting himself from the case. Petitioners filed a Reply24 dated January 28, 2004, arguing that the propriety of the preliminary hearings conducted is necessarily connected to the issue of whether Judge Demetria should have inhibited himself. They further contend that the case has not been rendered moot and academic by Judge Demetrias inhibition because should the latters Order granting the motion to conduct preliminary hearings be upheld, then the new presiding judge could make a ruling based on the evidence already presented. First, the issue of mootness. As a general rule, courts of justice constituted to pass upon substantial rights will not consider questions where no actual interests are involved.25 Courts generally decline jurisdiction when the issues are already moot. It does not escape our attention, however, that the preliminary hearings on petitioners affirmative defenses are nearing conclusion with the filing of petitioners Formal Offer of Evidence and respondents Comments/Objections. To put to naught the proceedings already taken only to repeat them during trial serves no practical purpose. Clearly, the Courts declaration on the issues raised would still be of practical use and value. Besides, this case presents an important procedural issue which is capable of repetition if left unresolved. Hence, we shall not refrain from expressing an opinion and rendering a decision on the merits. At the heart of the present controversy is the question of the propriety of Judge Demetrias Order granting petitioners motion to conduct preliminary hearings on their affirmative defenses. Sec. 6, Rule 16 of the Rules of Court provides: Sec. Pleading grounds as affirmative defenses.If no motion to dismiss has been filed, any of the grounds for dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed. The dismissal of the complaint under this section shall be without prejudice to the prosecution in the same or separate action of a counterclaim pleaded in the answer. This section is explicit in stating that the defendant may reiterate any of the grounds for dismissal provided under Rule 16 of the Rules of Court as affirmative defenses but that a preliminary hearing may no longer be had thereon if a motion to dismiss had already been filed. The section, however, does not contemplate a situation, such as the one obtaining in this case, where there are several defendants but only one filed a motion to dismiss. In such a case, should the denial of the motion to dismiss prejudice the other defendants such that they may no longer move for a preliminary hearing on their own affirmative defenses? The answer is no. Translated in terms of this case, the Motion to Dismiss filed by Laperal does not affect the right of the other defendants, including petitioners herein, to plead their own affirmative defenses and be preliminarily heard thereon. The trial court is likewise not proscribed from granting,

in its discretion, such a motion for preliminary hearing. The only caveat is that the ground of noncompliance with the condition precedent of resorting to arbitration, which was raised in Laperals Motion to Dismiss, may no longer be included in the preliminary hearing because it has already been heard and finally resolved. That said, we now examine whether the Court of Appeals erred in ordering Judge Demetrias inhibition. The rule on inhibition and disqualification of judges is laid down in Sec. 1, Rule 137 of the Rules of Court: Sec. 1. Disqualification of judges.No judge or judicial officer shall sit in any case in which he, or his wife or child, is pecuniarily interested as heir, legatee, creditor or otherwise, or in which he is related to either party within the sixth degree of consanguinity or affinity, or to counsel within the fourth degree, computed according to the rules of the civil law, or in which he has been executor, administrator, guardian, trustee or counsel, or in which he has presided in any inferior court when his ruling or decision is the subject of review, without the written consent of all parties in interest, signed by them and entered upon the record. A judge may, in the exercise of his sound discretion, disqualify himself from sitting in a case, for just or valid reasons other than those mentioned above. Thus stated, the rule contemplates two kinds of inhibition: compulsory disqualification assumes that a judge cannot actively or impartially sit on a case for the reasons stated in the first paragraph, while voluntary inhibition under the second paragraph leaves to the judges discretion whether he should desist from sitting in a case for other just and valid reasons with only his conscience to guide him.26 The issue of voluntary inhibition is primarily a matter of conscience and sound discretion on the part of the judge.27 This discretion is an acknowledgement of the fact that judges are in a better position to determine the issue of inhibition, as they are the ones who directly deal with the parties-litigants in their courtrooms.28 The decision on whether he should inhibit himself, however, must be based on his rational and logical assessment of the circumstances prevailing in the case brought before him.29 The rule does not give the judge the unfettered discretion to decide whether he should desist from hearing a case. The inhibition must be for just and valid causes.30 The mere imputation of bias, partiality and prejudgment will not suffice in the absence of clear and convincing evidence to overcome the presumption that the judge will undertake his noble role to dispense justice according to law and evidence and without fear or favor.31 The disqualification of a judge cannot be based on mere speculations and surmises or be predicated on the adverse nature of the judges rulings towards the movant for inhibition.32 The basis of the motion for inhibition filed by respondents in this case is Judge Demetrias Order dismissing the Complaint and subsequent grant of petitioners motion for preliminary hearing on their affirmative defenses. This situation has allegedly made respondents uneasy and doubtful as to whether they will obtain impartial judgment. We believe that these circumstances give Judge Demetria a just and valid reason for inhibiting himself. When the situation is such that would induce doubt as to a judges actuations and probity, or incite such a state of mind, he should conduct a careful self-examination.33 In this case, Judge Demetrias Order dismissing the Complaint already caused considerable delay in the proceedings. His subsequent order granting the motion for preliminary hearing, while correct, caused further prejudice to respondents of a character that would make them doubt his probity and

neutrality. Rightly so, Judge Demetria ultimately thought it more prudent to inhibit himself than to have any order, resolution or decision he would make in the case put under a cloud of distrust and skepticism. In view of the foregoing, we deem it best that Civil Case No. 98-0047 be forthwith tried by the presiding judge of Branch 12 of the Regional Trial Court of Lipa City, Hon. Vicente F. Landicho, to whom the case was re-raffled upon Judge Demetrias inhibition. WHEREFORE, the instant petition is hereby GRANTED IN PART. The Decision of the Court of Appeals dated April 30, 2003 and its Resolution dated July 15, 2003 are hereby REVERSED and SET ASIDE. Civil Case No. 98-0047 is hereby REMANDED to Branch 12, Regional Trial Court of Lipa City, for further proceedings in accordance with this Decision. SO ORDERED. A.C. No. 5653 February 27, 2006

JOHN SIY LIM, Complainant, vs. ATTY. CARMELITO A. MONTANO, Respondent. DECISION CALLEJO, SR., J.: Atty. Carmelito A. Montano stands charged with gross misconduct relative to his filing of Civil Case No. C-19928 entitled Spouses Tomas See Tuazon and Natividad See Deecho v. John Siy Lim and the Register of Deeds of Caloocan City.1 It appears that complainant John Siy Lim was the defendant in Civil Case No. C-14542 for reformation of contract, quieting of title, with damages, then pending before the Regional Trial Court (RTC) of Caloocan City, Branch 131.2The subject of the dispute was a 650-square meter conjugal lot along A. del Mundo Street, 7th Avenue, Caloocan City covered by Transfer Certificate of Title (TCT) No. 860. After trial, the RTC ruled in favor of defendant (complainant herein), and declared that the deed of sale the parties executed on July 15, 1987 was an absolute and unconditional conveyance of subject property by the plaintiff in favor of such defendant. On motion for reconsideration, however, the trial court reversed itself and declared that the sale was in fact an equitable mortgage. It thus ordered the cancellation of TCT No. 152621 and the reinstatement of the previous title on the subject property. The complainant appealed the case to the Court of Appeals, docketed as CA-G.R. CV No. 40167. In its Decision dated March 31, 1995, the appellate court reversed the ruling of the RTC, to wit: WHEREFORE, the appealed Order dated November 16, 1992, is hereby REVERSED and SET ASIDE, and the original Decision of the trial court, dated December 2, 1991, hereby REINSTATED, with the modification that plaintiff-appellee is ordered to pay defendant-appellant the sum of Five Thousand (P5,000.00) Pesos a month as reasonable rental for the use and occupation of Apartment No. 161 from July 15, 1988 until the premises shall have been vacated and possession thereof peacefully turned over to defendant-appellant.

The counterclaim for attorneys fees of defendant-appellant is DENIED. There is no clear showing that the action taken by plaintiff-appellee was done in bad faith. There should be no penalty on the right to litigate.3 The aggrieved party elevated the matter to this Court, and the petition was docketed as G.R. No. 119794. On October 3, 2000, the Court affirmed the ruling of the CA and denied the petition.4 Entry of judgment was made of record on October 3, 2000.5 On January 4, 2002, respondent filed a Notice of Appearance6 as counsel of Tomas See Tuazon (the losing party) in the RTC of Caloocan City, Branch 131 in Civil Case No. C-14542. On January 7, 2002, he filed, in behalf of his client, a "Motion to Comply to [sic] Decision without Writ,"7 worded as follows: 1. Plaintiff is aware that pursuant to the decision of the court, as affirmed by the Court of Appeals and the Supreme Court, the decision on the present case had already become final and executory. 2. In order to avoid undue inconvenience on the part of herein defendant, plaintiff shall voluntarily settle the money judgment as stated in the decision sought to be enforced. 3. The plaintiff will be filing Eight Hundred Ten Thousand (P810,000.00) Pesos, equivalent to 162 months of rent as per decision and the same to be covered by supersedeas bond issued by a reliable insurance company to answer for said obligation. 4. Every month starting February 15, 2002, plaintiff shall deposit to the court the amount of P5,000.00 as monthly rent.8 On the same date, respondent, in behalf of his clients (the spouses Tomas See Tuazon) filed the Complaint9 for nullity of TCT and other documents, reconveyance, maintenance of physical possession before the RTC of Caloocan City, eventually raffled to Branch 121 thereof (Civil Case No. C-19928). Meantime, on February 19, 2002, Judge Luisito C. Sardillo of Branch 12610 issued an Order11 in Civil Case No. C-14542 granting the Motion for Execution with Manifestation earlier filed by the prevailing party (complainant herein), and denying for lack of merit, the "Motion to Comply to [sic] Decision without Writ" filed by respondent counsel. This prompted the complainant to file the instant complaint for disbarment against respondent. In his Complaint-Affidavit12 dated March 20, 2002, complainant alleged that respondent filed the complaint in Civil Case No. C-19928 out of malice, pointing out that it involves "the same parties, the same causes of action and relief prayed for as that of Civil Case No. C-14542." Thus, the complainant prayed that the respondent be "disbarred and/or suspended from the practice of law for his gross misconduct," on the following allegation: 6. Evidently, I have been subjected to harassment by the antics of the respondent in filing a recycled case docketed as Civil Case No. C-19928 on January 07, 2002. Respondent is guilty in abetting the conduct of his clients, Sps. Tuazon. He has clearly violated his lawyers oath not to promote or sue groundless, false or unlawful suits among others. Instead of counseling his clients to abide and obey the decision of our Supreme Court, the final arbiter of all controversies and disputes, he is showing disrespect to a final and executory decision of our court.13

In his Comment,14 respondent denied the allegations against him. While he admitted that he filed Civil Case No. C-19928 as counsel for the plaintiff therein, he claimed that it was not filed with malicious intent. Moreover, while the new case involved the same party, it was for a different cause of action and relief, and, as such, the principle of res judicata did not apply. He further explained that the complaint in Civil Case No. C-14542 was for declaratory relief or reformation of instrument, while Civil Case No. 19928 was for annulment of title. He accepted the case based on "his professional appreciation that his client had a good case." In his Reply,15 the complainant stressed that the respondent was guilty of forum shopping; Civil Case No. C-19928 was nothing but a revival of the old complaint; and "the lame excuse of the respondent that the present case is an action in rem while the other case is an action in personam" did not merit consideration. On November 25, 2002, the Court resolved to refer the matter to the Integrated Bar of the Philippines (IBP) for investigation, report and recommendation.16 On September 1, 2003, the IBP Commission on Bar Discipline assigned the case to Commissioner Salvador L. Pea. Only the counsel for the respondent appeared at the mandatory conference held on September 30, 2003. Finding that there were no factual issues in the case, Commissioner Pea terminated the mandatory conference and ordered the parties to submit their respective verified Position Papers, and, thereafter, considered the case submitted for resolution. The case was re-assigned to Commissioner Doroteo B. Aguila who submitted his Report and Recommendation dated May 9, 2005, finding the respondent guilty of misconduct. It was recommended that respondent be meted a two months suspension from the practice of law. According to the Investigating Commissioner, the elements of res judicata are present in this case as to bar the filing of Civil Case No. C-19928 since (a) the judgment in Civil Case No. C-14542, upholding the validity of the absolute deed of sale, had attained finality; (b) the court which rendered the decision had the required jurisdiction; and (c) the disposition of the case was a judgment on the merits. On October 22, 2005, the Board of Governors of the IBP Commission on Bar Discipline issued Resolution No. XVII-2005-108, adopting said Report and Recommendation with the modification that respondent be suspended from the practice of law for six (6) months. We agree that respondent is administratively liable.
lavvph!1.net

In this case, it is clear that respondent is guilty of forum shopping. By his own admission, he was aware that Civil Case No. C-14542 was already final and executory when he filed the second case (Civil Case No. C-19928). His allegation that he "was not the original counsel of his clients" and that "when he filed the subsequent case for nullity of TCT, his motive was to protect the rights of his clients whom he believed were not properly addressed in the prior case for reformation and quieting of title," deserves scant consideration. As a responsible member of the bar, he should have explained the effect of such final and executory decision on his clients rights, instead of encouraging them to file another case involving the same property and asserting the same rights. The essence of forum shopping is the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. It exists when, as a result of an adverse opinion in one forum, a party seeks a favorable opinion in another, or when he institutes two or more actions or proceedings grounded on the same cause to increase the chances of obtaining a favorable decision. An important factor in determining

its existence is the vexation caused to the courts and the parties-litigants by the filing of similar cases to claim substantially the same reliefs.17 Forum shopping exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in another.18 Thus, the following requisites should concur: (a) identity of parties, or at least such parties as represent the same interests in both actions, (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and (c) the identity of the two preceding particulars is such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration. x x x19 The fact that the parties in the first and second cases are not identical will not prevent the application of the principle of res judicata. Mere substantial identity of parties, or a community of interests between a party in the first case and a party in the subsequent case, even if the latter was not impleaded in the first case, is sufficient.20Moreover, a party cannot, by varying the form of action or adopting a different method of presenting his case, escape the operation of the principle that one and the same cause of action shall not be twice litigated between the same parties or their privies.21 This was what respondent resorted to in order to give some semblance of merit to the complaint for annulment of title. He should have realized that the ruling of the Court in Tuazon v. Court of Appeals22 effectively determined with finality the rights and obligations of the parties under the questioned deed of sale. A lawyer owes fidelity to the cause of his client but not at the expense of truth and the administration of justice.23The filing of multiple petitions constitutes abuse of the Courts processes and improper conduct that tends to impede, obstruct and degrade the administration of justice and will be punished as contempt of court. Needless to state, the lawyer who files such multiple or repetitious petitions (which obviously delays the execution of a final and executory judgment) subjects himself to disciplinary action for incompetence (for not knowing any better) or for willful violation of his duties as an attorney to act with all good fidelity to the courts, and to maintain only such actions as appear to him to be just and are consistent with truth and honor. 24 The filing of another action concerning the same subject matter, in violation of the doctrine of res judicata, runs contrary to Canon 12 of the Code of Professional Responsibility, which requires a lawyer to exert every effort and consider it his duty to assist in the speedy and efficient administration of justice. By his actuations, respondent also violated Rule 12.0225 and Rule 12.0426 of the Code, as well as a lawyers mandate "to delay no man for money or malice."27 Lawyers should be reminded that their primary duty is to assist the courts in the administration of justice. Any conduct which tends to delay, impede or obstruct the administration of justice contravenes such lawyers duty. Indeed, the Court has time and again warned not to resort to forum shopping for this practice clogs the court dockets.28 While we rule that the respondent should be sanctioned for his actions, we also note that the power to disbar should be exercised with great caution, to be imposed only in a clear case of misconduct that seriously affects the standing and character of the lawyer as an officer of the Court and as a member of the bar. Disbarment should never be decreed where any lesser penalty could accomplish the end desired.29 WHEREFORE, for violating Canon 12 of the Code of Professional Responsibility, respondent Atty. Carmelito A. Montano is SUSPENDED from the practice of law for a period of six (6) months. He is STERNLY WARNED that any future violation of his duties as a lawyer will be dealt with more

severely. This Decision is immediately executory. Atty. Montano is DIRECTED to inform the Court of the date of receipt of this decision. SO ORDERED. G.R. No. 129318 October 27, 2006

DIRECTOR CELSO PASCUAL OF THE TELECOMMUNICATIONS OFFICE, LEGASPI CITY, petitioner, vs. HON. ORLANDO D. BELTRAN, AS JUDGE, RTC OF TUGUEGARAO, BRANCH 4, and MRS. MONSERAT RAYMUNDO ASSISTED BY HER HUSBAND DOMICIANO RAYMUNDO, respondents.

DECISION

CHICO-NAZARIO, J.: This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to nullify the Resolution1 dated 27 January 1997 of the Court of Appeals in CA-G.R. SP No. 41488, dismissing the petition, and the subsequent Resolution dated 21 May 1997 denying2 the Motion for Reconsideration. Petitioner Celso Pascual was then the Regional Director, while, private respondent Monserat Raymundo was the Human Resource Management Officer of the Telecommunications Office of the Department of Transportation and Communications (DOTC), Region II, Tuguegarao City. On 25 April 1990, private respondent was charged before the DOTC, Region II, Tuguegarao City, with Conduct Grossly Prejudicial to the Best Interest of the Service/Gross Insubordination/Violation of Reasonable Office Rules and Regulations, Gross Discourtesy in the Course of Official Functions and Gross Dishonesty Through Falsification of Official Document, by petitioner, as Regional Director of the Telecommunications Office, Region II, Tuguegarao, Cagayan. The acts which gave rise to the charges are as follows: That on March 13, 1990, February 22, 1990, February 20, 1990, February 16, 1990, February 13, 1990, July 10, 1989, you have deliberately arrogated unto yourself the authority vested in the Regional Director by signing official communications/correspondences despite the posting of Regional Office Order No. 87-01 S. October 6, 1987 notifying all concerned that all official correspondences shall be signed by the Regional Director; that on similar instances, on matters relating to the functions of implementing policies and without being officially issued the delegated authority to sign for and on behalf of the head of office, had signed communications thereof as an OIC but on the pretext as a HRMO of the office which is a clear manifestation of open disobedience/hostility to authority and wanton disregard of reasonable office rules and regulations and additionally, a conduct prejudicial to the interest of the service;

That on or about 9:30 AM of March 16, 1990 and some other occasions, while in the office performing the functions of your position as HRMO of the office and therefore a pro-people oriented officer, you descended down to the level of an "unschooled/unlearned" by shouting to the top of your voice and making discourteous remarks against management you ought to serve openly before everybody by roaming around entering every room in the office not only making a mockery of your oath of office but also disturbing the other employees of their day's work aside from creating an unwholesome/unpleasant environment within the office; That on September 5, 1989, you went on undertime for two (2) hours as appearing in the report of the official timekeeper whereas in your DTR, the entry thereof shows that you went out of the office at about 5:00 PM and that on January 27, 1989, February 23 and 24, 1989, March 8, 1989, June 20, 1989, July 14, 1989 and September 14, 1989 you went on unauthorized absences during regular office hours whereas in your DTR, the entries thereof (Time in and Time out) are complete, hence, the discrepancy and conclusion that you have stolen government time (theft of government time) and had falsified official documents which constitute gross dishonesty.3 On 2 August 1993, DOTC Assistant Secretary Pacifico F. Maghacot, Jr., exonerated private respondent of the offenses charged. The Order exonerating the private respondent in part reads: On charges of conduct grossly prejudicial to the to the best interest of the service, gross insubordination and violation of reasonable office rules and regulations, the prosecution miserably failed to present substantial evidence, both testimonial and documentary, to warrant the findings of guilt against the respondent. It was alleged that respondent has committed the acts by deliberately arrogating herself the authority vested in the Regional Director by signing official communications/correspondence supposedly to be signed by the latter. However, not a single evidence or communications relative thereto had been presented during the hearing that would substantiate such imputation. Witness Felisa D. Suyo even testified to the effect that there are specific functions in the job description of an employee which can be performed without prior authority from the Regional Director. Moreover, the Regional Office Order No. 87-01 dated October 6, 1987 which was allegedly violated by the herein respondent is quite vague, as [is] clearly shown in its text, to wit: Republic of the Philippines Department of Transportation and Communications TELECOMMUNICATIONS OFFICE Regional Office No. IX Tuguegarao, Cagayan October 6, 1987 REGIONAL OFFICE ORDER NO. 87-01 SUBJECT: MR. CELSO PASCUAL, DOTC Regional Director, Telecommunications Office, Assumption to Duty: Effective today, the undersigned is assuming the duties as DOTC Director of the Telecommunications Office, Region II.

As such, all official correspondence shall be prepared for the signature of the undersigned. (SGD) CELSO V. PASCUAL Regional Director The logical interpretation of this order as it should be, is that all official correspondence usually signed by the Regional Director shall be prepared for his signature. Routinary correspondence such that within, the scope and function of an employee as provided in their respective job description are definitely not included. These conclusion finds support in no less than the testimony of prosecution witness, Ms. Felisa D. Suyo, during cross examination, thus: Q - Do you agree with me that this memorandum of the Director is contrary to the job description? A - Yes sir (TSN, p. 17, October 8, 1991) xxxx Q- In short Miss Witness, this official order is in conflict with some of your functions specified under the job description because it limits what has been written in the job description, is it not? A- Yes, sir. (TSN, pp. 25-26 October 8, 1991) On charges of gross dishonesty in the course of official function, the prosecution has not proven the same. In fact, it has not presented a single proof on the matter. The same is true on the charge of dishonesty through falsification of official document. The official document being referred to here is the daily time record or CSC Form No. 48 of the respondent for the month of September, 1989 which she allegedly falsified the time entry or the 5th day by entering her TIME OUT at 5:00 pm, when she reportedly went undertime at 3:00 pm. Verification of the original copy of the DTR revealed that there was indeed an alteration or superimposition thereon. The time entry of 3:00 pm appeared to have been superimposed over the time entry of 5:00 p.m. or vice versa. In the direct examination of prosecution witness Mina Flor Talay, she made a clarification on the matter by testifying to the fact that the correct TIME OUT of the correspondent was 3:00 p.m., thus: Q - According to your report, this is Civil Service Form No. 48 which shows that respondent was out during September 5, 1989 which shows that she went out at 3:00 0'clock, is that right? A - Yes sir. Q - And according to this form it was written here that her time out is 5:00 O'clock.

A - No, sir, that is 3:00 O'clock" (TSN, pp. 32-33, October 8 1991) She affirmed said testimonies during cross examination. She said: Q- You stated [a] while ago that Mrs. Raymundo went undertime for two hours on September 5, 1989. What was your basis in saying that Mrs. Raymundo went undertime for two hours? A - It is specified in her DTR on September 5, 1989 that she went out at 3:00 O'clock, sir. Q - So, this is suppose to be 3:00 O'clock? A - Yes sir. Q - So the actual time is actually reflected in her DTR? A - Yes sir. (TSN, pp. 34-35, October 8, 1991). Apparently, the prosecution's evidence itself belies the charge of dishonesty and falsification of official documents against the respondent. As to the tampering on the DTR, the same was not clarified and the person supposedly liable thereto was not identified too. xxxx Needless to say, the guilt of the respondent on all charges was never established. Therefore, there's no option but to exonerate her.4 On 22 October 1993, private respondent, assisted by her husband Domiciano Raymundo, filed an action5 for damages arising from Malicious Administrative Suit against petitioner, in the Regional Trial Court (RTC) of Tuguegarao, Cagayan, Branch IV, docketed as Civil Case No. 4693, primarily on the basis of the administrative complaint for Conduct Grossly Prejudicial to the Best Interest of the Service/Gross Insubordination/Violation of Reasonable Office Rules and Regulations, Gross Discourtesy in the Course of Official Functions and Gross Dishonesty, filed by petitioner against private respondent. During the trial, petitioner was represented by the Office of the Solicitor General (OSG). On 27 September 1995, private respondent filed a motion[6] to disqualify the OSG from representing petitioner on the following grounds: that no right or interest of the government is involved, that petitioner is sued in his private capacity, and that petitioner had retired from the government since July 1995. Petitioner opposed[7] the motion on the following grounds: First, petitioner is being sued for acts arising from and related to his official position and function as Regional Director of the Telecommunications Office. Second, even if there is an allegation that petitioner is sued in his private capacity, the same could not defeat the protection accorded to public officials who are sued

for acts related to or arising from their office. Third, the acts complained of arose from petitioner's actions while in the performance of his official duties as Regional Director, thus, he is entitled to be represented by the OSG under Presidential Decree No. 478 (Defining the Powers and Functions of the Office of the Solicitor General), and reproduced in Section 35(1), Title 3, Book 4 of the Administrative Code of 1987. Fourth, the presumption is that petitioner acted in the performance of his official duties, thus, it is preposterous to argue that since petitioner had retired from public office, he is no longer allowed to be represented by the Solicitor General. Fifth, there is no law which supports private respondent's claim that he is no longer allowed to be represented by the OSG. On 19 January 1996, the public respondent, Hon. Orlando D. Beltran, as Judge of the RTC of Tuguegarao, Cagayan, issued an order,[8] granting the motion to disqualify. The ratio of the Order reads: The Court finds the motion to be meritorious. It may be granted, arguendo that herein defendant is being sued for acts which he committed in his official capacity but it is also true that the cause of action is for torts, for which he may be held personally answerable. Otherwise stated, since it is alleged that defendant acted with malice and [bad] faith and, thus, he should be made to pay damages to the plaintiff, the interest of the Government is in no way involved so that further appearance by the Solicitor General in his defense is unjustified. A Motion for Reconsideration was filed but the same was denied in an Order dated 27 March 1996 wherein public respondent ruminated thus: The order disqualifying the Office of the Solicitor General (herein referred to as SOLGEN) from continuing to appear as counsel for the defendant Celso Pascual after the latter had retired from the government service was anchored upon the fact that, as the cause of action of the plaintiff is for damages based on tort, the defendant may be held personally liable for his acts and, therefore, the interests of the Government, the protection of which appears to be the sole justification of SOLGEN's appearing as defendant's counsel, is not adversely affected. The Court, as the movants mistakenly construe the order, did not yet make any finding that defendant is already liable for the acts complained of as tortuous. It could not yet have made such findings as no trial has been held nor evidence presented. Thus, the contention of the movants, on this point at least, has no factual basis It could very well be that the plaintiff may not be able to substantiate her complaint and the Court will dismiss it. The Court is in full agreement with the movant's submission that plaintiff has yet to establish by competent proof her cause of action. On this there can be no dispute. The Court is not persuaded by the allegations of the movants that to disqualify the SOLGEN from this case would result in a "disregard of the importance of the presumption of regularity of performance of public officers" which in turn "would throw the door wide open and expose public officials acting within the scope of their functions and authorities (sic) to private litigations." However this case may turn out, whether for or against the plaintiff, will not result in a disregard of the presumption enjoyed by public officials that they have regularly performed their duty. Neither will an adverse decision against herein defendant mean that the presumption of regularity of performance of official duty has been disregarded by this Court to the detriment of the State.[9] On 16 May 1996, the OSG filed a manifestation and motion[10] stating, among other things, that they intend to elevate the issue to the Supreme Court;[11] consequently, they pray that the case be held in abeyance pending resolution of its petition before the higher court. The RTC in an

Order[12] dated 28 May 1996 granted the motion and held in abeyance the case for sixty days in order to afford the OSG adequate time to file its intended petition with the Supreme Court. The RTC further ruled that if no petition is filed with the Supreme Court, the case shall be set for hearing. On 6 August 1996, petitioner filed a Petition for Certiorari[13] with the Court of Appeals by petitioner. Petitioner contends that the trial court acted with grave abuse of discretion amounting to lack of or in excess of authority in issuing the Order dated 19 January 1996, granting private respondent's Motion to Disqualify the OSG from appearing in behalf of petitioner and the Order dated 27 March 1996, denying the motion for reconsideration thereof. On 27 January 1997, the Court of Appeals dismissed[14] the Petition on two grounds: 1) that the case is barred by laches as the Petition was filed 118 days after receipt of the denial of the motion for reconsideration; and 2) violation of Circular No. 28-91, as the Petition was signed by petitioner's counsel. A motion for reconsideration was filed by petitioner but the same was denied by the Court of Appeals in an Order[15] dated 12 May 1997. Hence, this Petition raising two issues for Resolution: WHETHER THE OSG IS DISQUALIFIED FROM REPRESENTING A PUBLIC OFFICIAL SUED WHILE IN THE PERFORMANCE OF HIS OFFICIAL DUTIES AND HAD RETIRED DURING THE PENDENCY OF THE TRIAL WHETHER THE TECHNICAL ISSUE SHOULD BE GIVEN PREFERENCE OVER THE MORE SUBSTANTIAL ISSUE INVOLVING PUBLIC POLICY AND GREATER INTEREST OF JUSTICE A perusal of the foregoing issues readily reveals that petitioner raises two aspects of the case for consideration, both procedural and substantive. We deny this petition for its procedural and substantive flaws. As regards the procedural aspect, petitioner contends that the Court of Appeals should have given preference to the substantial issue of the case rather than the technical issue in the greater interest of justice, as it dismissed the Petition on the ground that it was the Solicitor General who signed the Certification of non-forum shopping and that the case was filed 118 days late. We shall first discuss the appellate court's dismissal of the Petition for non-compliance with the requirements regarding certification of non-forum shopping. Note that the certificate of non-forum shopping attached to the Petition for Certiorari filed with the Court of Appeals was signed by Solicitor Benilda Tejada. It is settled that the requirement to file a certificate of non-forum shopping is mandatory and that failure to comply with this requirement cannot be excused. The certification is a peculiar and personal responsibility of the party, an assurance given to the court or other tribunal that there are no other pending cases involving basically the same parties, issues and causes of action. Hence, the certification must be accomplished by the party himself because he has actual knowledge of whether or not he has initiated similar actions or proceedings in different courts or tribunals. Even his

counsel may be unaware of such facts. Thus, the requisite certification executed by the plaintiff's counsel will not suffice,[16] as in the case at bar. On the issue of timeliness of the filing of the Petition for Certiorari before the Court of Appeals, the Petition was filed 118 days late as ruled by the Court of Appeals. Since the Petition for Certiorari was filed with the Court of Appeals on 6 August 1996, the Revised Rules of Court should be applied. The Revised Rules of Court do not fix a specific time frame for the filing of a Special Civil Action for Certiorari under Rule 65 thereof. Jurisprudence at that time merely requires that the same be filed within a reasonable time from receipt of the questioned judgment or order. The period of three months (90 days) has been found as reasonable to file the Petition for Certiorari.[17] A Petition brought after 99 days is barred by laches.[18]Now, under the 1997 Rules of Civil Procedure, a Petition for Certiorari shall be filed not later than 60 days from notice of the judgment, order or resolution.[19] As alleged by the petitioner, the Order dated 19 January 1996, issued by public respondent granting private respondent's Motion to Disqualify the OSG from appearing in behalf of the petitioner, was received by petitioner on 9 February 1996, and the Order dated 27 March 1996, denying the motion for reconsideration was received by petitioner on 10 April 1996. The Petition for Certiorari was filed with the Court of Appeals on 6 August 1996, or after the lapse of 118 days, from the receipt of the Order denying his motion for reconsideration. Thus, in either law, the Petition was barred by laches. Procedural rules are not to be disdained as mere technicalities. They may not be ignored to suit the convenience of a party. Adjective law ensures the effective enforcement of substantive rights through the orderly and speedy administration of justice. Rules are not to be intended to hamper litigants or complicate litigation. But they help provide for a vital system of justice where suitor's may be heard in the correct form and manner, at the prescribed time in a peaceful though adversarial confrontation before a judge whose authority litigants acknowledge. Public order and our system of justice are well served by a conscientious observance of the rules of procedure, particularly by government officials and agencies.[20] Ordinarily, we would dismiss this case solely on procedural grounds as discussed above. However, considering the significance of the substantive issue, we deem it just and equitable to also resolve the same. On matters of substance, what needs to be addressed is the issue of whether or not a public official is entitled to representation by the OSG in a civil action for damages arising from an administrative suit filed against him by another public official. This issue is best resolved by a close scrutiny of the nature and extent of the power and authority lodged by law on the Solicitor General. The authority of the OSG to represent the Republic of the Philippines, its agencies and instrumentalities and its officials and agents, is embodied under Section 35(1), Chapter 12, Title III, Book IV of the Administrative Code of 1987 which provides that: SEC. 35. Powers and Functions.The Office of the Solicitor General shall represent the Government of the Philippines, its agencies and intrumentalities and its officials and agents in any litigation, proceeding, investigation or matter requiring the services of lawyers. When authorized by the President or head of the office concerned, it shall also represent government owned or controlled corporations. The Office of the Solicitor General shall constitute the law office of the Government and, as such, shall discharge duties requiring the services of lawyers. It shall have the following specific powers and functions:

(1) Represent the Government in the Supreme Court and the Court of Appeals in all criminal proceedings; represent the Government and its officers in the Supreme Court, Court of Appeals, and all other courts or tribunals in all civil actions and special proceedings in which the Government or any officer thereof in his official capacity is a party. (Emphasis supplied.) The import of the above-quoted provision of the Administrative Code of 1987 is to impose upon the OSG the duty to appear as counsel for the Government, its agencies and instrumentalites and its officials and agents before the Supreme Court, the Court of Appeals, and all other courts and tribunals in any litigation, proceeding, investigation or matter requiring the services of a lawyer. We emphasized its mandatory character in the case of Gonzales v. Chavez,[21] thus: It is patent that the intent of the lawmaker was to give the designated official, the Solicitor General, in this case, the unequivocal mandate to appear for the government in legal proceedings. Spread out in the laws creating the office is the discernible intent which may be gathered from the term "shall," which is invariably employed, from Act No. 136 (1901) to the more recent Executive Order No. 292 (1987). xxxx The decision of this Court as early as 1910 with respect to the duties of the Attorney-General well applies to the Solicitor General under the facts of the present case. The Court then declared: In this jurisdiction, it is the duty of the Attorney General 'to perform the duties imposed upon him by law' and 'he shall prosecute all causes, civil and criminal, to which the Government of the Philippine Islands, or any officer thereof, in his official capacity, is a party x x x.' xxxx The Court is firmly convinced that, considering the spirit and the letter of the law, there can be no other logical interpretation of Sec. 35 of the Administrative Code than that it is, indeed, mandatory upon the OSG to "represent the Government of the Philippines, its agencies and instrumentalities and its officials and agents in any litigation, proceeding, investigation or matter requiring the services of a lawyer." (Emphases supplied.) The provision allows a public official to be represented by the Solicitor General in all civil, criminal and special proceedings, when such proceedings arise from the former's acts in his official capacity. However, in the case at bar, petitioner is actually sued in his personal capacity inasmuch as his principal, the State, can never be the author of any wrongful act.[22] The Complaint filed by the private respondent with the RTC merely identified petitioner as Director of the Telecommunications Office, but did not categorically state that he was being sued in his official capacity. The mere mention in the Complaint of the petitioner's position as Regional Director of the Telecommunications Office does not transform the action into one against petitioner in his official capacity. What is determinative of the nature of the cause of action are the allegations in the complaint. It is settled that the nature of a cause of action is determined by the facts alleged in the complaint as constituting the cause of action.[23] The purpose of an action or suit and the law to govern it is to be determined not by the claim of the party filling the action, made in his argument or brief, but rather by the complaint itself, its allegations and prayer for relief.[24]

Also, it is evident from the Complaint filed by the private respondent before the RTC that she sued petitioner for allegedly having personal motives in filing the administrative case against her. The Complaint in part reads: Sometime on April 25, 1990, the herein defendant (herein petitioner) in utter bad faith and in grave abuse of his authority and discretion as the Regional Director, and with the malicious intent of harassing, oppressing, vexing, embarrassing, molesting, and/or putting to ridicule the herein plaintiff (respondent herein), and with the further malicious intention of blemishing plaintiff's good name and reputation in the community, filed a baseless and unmeritorious administrative complaint against the herein plaintiff at the Telecommunications Office, Department of Transportation and Communication in Tuguegarao, Cagayan.[25] (Underscoring supplied.) In fact, it can also be observed in the same Complaint that the reliefs sought by private respondent are directed against the petitioner personally and not his office. Respondent is claiming liability directly from petitioner. The relief sought by respondent is stated as follows: As a consequence of the filing of the patently malicious, flimsy and baseless administrative complaint, plaintiff suffered from mental anguish, serious anxiety, torment, wounded feelings, sleepless nights, besmirched reputation and social humiliation, apart from the fact that she was exposed to ridicule by his friends and officemates including his relatives and neighbors not to mention that her credibility as a public government official, was put into a bad light, for which reasons she demands by way of moral damages from defendant the amount of ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00); xxxx Wherefore, it is respectfully prayed of this Honorable Court that after due proceedings, judgment be rendered in favor of the plaintiff and against the defendant by condemning the latter to pay to the former the following: A) P150,000.00 as and by way of moral damages; B) P50,000.00 as and by way of exemplary damages; C) P15,000.00 as and by way of actual expenses of litigation; D) P10,000.00 as and by way of Attorney's fees; and such sum of money representing litigation expenses as maybe proven during the trial on the merit, plus the cost of suit.[26] (Emphases supplied.) The authority of the Solicitor General to represent a public official in a suit against the latter is discussed in the cases of Anti-Graft League of the Philippines, Inc. v. Ortega.[27] In Anti-Graft League of the Philippines, Inc. v. Ortega,[28] this Court interpreted such an authority as to embrace "both civil and criminal investigation, proceeding or matter requiring the services of a lawyer." However, in Solicitor General v. Garrido,[29] the Court sustained the authority of the Solicitor General to enter his appearance on behalf of public officials charged with violating a penal statute for acts connected with the performance of his official duties.

In the case of Urbano v. Chavez,[30] this Court clarified its pronouncements in the cases of AntiGraft League of the Philippines, Inc. v. Ortega and Solicitor General v. Garrido. In the Anti-Graft League of the Philippines, Inc. v. Ortega and Solicitor General v. Garrido cases, the OSG was authorized to enter its appearance as counsel for any public official, against whom a criminal charge had been instituted, during the preliminary investigation stage thereof. Nevertheless, in the same case, this Court held that once an information is filed against the public official, the OSG can no longer represent the said official in the litigation. The anomaly in this paradigm becomes obvious when, in the event of a judgment of conviction, the case is brought on appeal to the appellate courts. The OSG, as the appellate counsel of the People of the Philippines, is expected to take a stand against the accused. Accordingly, there is a clear conflict of interest here, and one which smacks of ethical considerations, where the OSG, as counsel for the public official, defends the latter in the preliminary investigation stage of the criminal case, and where the same office, as appellate counsel of the People of the Philippines, represents the prosecution when the case is brought on appeal. This anomalous situation could not have been contemplated and allowed by the law, its unconditional terms and provisions notwithstanding. It is a situation which cannot be countenanced by the Court. There is likewise another reason, as earlier discussed, why the OSG cannot represent an accused in a criminal case. Inasmuch as the State can speak and act only by law, whatever it does say and do must be lawful, and that which in unlawful is not the word or deed of the State, but is the mere wrong or trespass of those individual persons who falsely speak and act in its name. Therefore, the accused public official should not expect the State, through the OSG, to defend him for a wrongful act which cannot be attributed to the State itself. In the same light, a public official who is sued in a criminal case is actually sued in his personal capacity inasmuch as his principal, the State, can never be the author of a wrongful act, much less commit a crime. The Court further ruled that its observation should apply as well to a public official who is hailed to court in a civil suit for damages arising from a felony allegedly committed by him. Any pecuniary liability he may be held to account for on the occasion of such civil suit is for his own account. The Sate is not liable for the same. A fortiori, the Office of the Solicitor General likewise has no authority to represent him in such a civil suit for damages. To repeat, the Solicitor General is the lawyer of the government, any of its agents and officials in any litigation, proceeding, investigation or matter requiring the services of a lawyer. The exception is when such officials or agents are being charged or are being civilly sued for damages arising from a felony. This rationale must apply with greater force in the case at bar. Here, the private respondent filed an action for damages arising from Malicious Administrative Suit against petitioner with the RTC of Tuguegarao, Cagayan, Branch IV. Petitioner was sued for damages arising from the administrative complaint he filed against respondent with the DOTC, for Conduct Grossly Prejudicial to the Best Interest of the Service/Gross Insubordination/Violation of Reasonable Office Rules and Regulations, Gross Discourtesy in the Course of Official functions and Gross Dishonesty. Private respondent was subsequently exonerated by the DOTC for failure of the petitioner to present substantial evidence to prove his charges against private respondent. Also, an action for recovery of damages for the commission of an injury to a person is a personal action.[31] A personal action is one brought for the recovery of personal property, for the enforcement of some contract of recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property.

More so, any liability the petitioner may be held to account for on the occasion of such civil suit is for his own account and the State is not liable for the same. Thus, the OSG has no authority to represent him in such civil suit for damages. Considering the foregoing, we rule that the trial court did not commit grave abuse of discretion amounting to excess of or lack of jurisdiction in issuing the assailed orders. By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, and it must be shown that the discretion was exercised arbitrarily or despotically. For certiorari to lie, there must be capricious, arbitrary and whimsical exercise of power, the very antithesis of the judicial prerogative in accordance with centuries of both civil law and common law traditions.[32] We do not find here a capricious, whimsical and arbitrary exercise of power by the Judge or by the Court of Appeals questioning the act of the lower court. WHEREFORE, in view of the foregoing, the instant Petition is hereby DISMISSED and the Resolutions dated 27 January 1997 and 21 May 1997 of the Court of Appeals are hereby AFFIRMED. The Orders dated 19 January 1996 and 27 March 1996 of the RTC of Tuguegarao, Cagayan, Branch IV, in Civil Case No. 4693, disqualifying the Office of the Solicitor General from appearing as counsel of petitioner are likewise AFFIRMED. The Office of the Solicitor General is permanently prohibited from representing petitioner in said case. No pronouncement as to costs. SO ORDERED. G.R. No. 152483 July 14, 2006

RURAL BANK OF SIATON, (NEGROS ORIENTAL), INC., petitioner, vs. FELIX MACAJILOS and QUIRICO MACAJILOS, JR., respondents. DECISION YNARES-SANTIAGO, J.: This petition for review on certiorari assails the April 18, 2001 Decision1 of the Court of Appeals in CA-G.R. CV No. 51290, which affirmed the July 12, 1995 Decision2 of the Regional Trial Court of Negros Oriental, Dumaguete City, Branch 39 in Civil Case No. 9049, and the November 12, 2001 Resolution3 denying petitioner Rural Bank of Siaton, Inc.'s (RBSI) motion for reconsideration. The controversy arose from the complaint for removal of cloud over title to and/or recovery of real property and damages filed by Felix Macajilos and Quirico Macajilos, Jr. (Macajilos) against RBSI and Fidela Macalipay (Fidela) on July 27, 1987. In their complaint,4 Macajilos alleged that they are the children of the late Gregoria Macalipay Macajilos who during her lifetime owned and possessed a parcel of residential land situated at Poblacion, Siaton, Negros Oriental with an area of 441 square meters; that upon Gregoria's death on July 25, 1959, Macajilos inherited the subject property as compulsory heirs of Gregoria, their father Quirico Macajilos, Sr. having predeceased Gregoria; that in 1975, Macajilos allowed Juanito Macalipay, a nephew of Gregoria to build a house on the subject property where he lived together with his wife Fidela, and their son, Lamberto; that Fidela and Lamberto continued to live in the house even after the death of Juanito; that on February 12, 1975, Fidela executed an "Affidavit of Heirship" before a Notary Public at Dumaguete City falsely claiming to be the sole heir of Gregoria Macalipay and adjudicating to herself the subject property; that the tax declaration in the name of Gregoria

Macalipay was cancelled and transferred to the name of Fidela under Tax Declaration No. 022478; that Lamberto was the manager of RBSI when Fidela obtained a loan using as collateral the subject property; that Fidela defaulted thus the subject property was foreclosed and sold at public auction with RBSI as the only and highest bidder; that Fidela failed to redeem the property thus RBSI was able to transfer the tax declaration to its name; that Macajilos have always been in actual possession under claim of ownership of the subject property from the time of their mother's death up to the present; that RBSI knew that Fidela did not own the subject property; that Macajilos filed a criminal case for estafa through falsification of public document (Criminal Case No. 9096 before the Municipal Trial Court in Cities, Dumaguete City, Branch I) against Fidela and Lamberto immediately upon discovery of the foreclosure sale; that in her counter affidavit in the preliminary investigation of that criminal case, Fidela denied that she signed the "Affidavit of Heirship". In its answer,5 RBSI claimed it considered Fidela to be the owner of the subject property as she was in actual physical possession thereof when she applied for a loan; that Macajilos maliciously built a house on the subject property pretending to be the owners thereof; that, if they owned the subject property, they are already in estoppel since the mortgage document was duly registered with the Register of Deeds and they have constructive notice thereof; that the extrajudicial foreclosure and the public auction proceedings were duly published and that the Sheriff's Certificate of Sale in favor of RBSI and the final deed of sale were registered with the Register of Deeds of the Province of Negros Oriental. On the other hand, Fidela averred in her answer6 that the property belonged to her late husband, Juanito Macalipay; that she lacks formal education and anything she did was the work of her son, Lamberto, who was at the time the manager of RBSI. After trial, the trial court found in favor of Macajilos, thus: WHEREFORE, on the basis of the foregoing discussion, judgment is hereby rendered: 1. Declaring the foreclosure of the mortgaged property null and void ab initio; 2. Declaring [Macajilos] the rightful owners of the land subject matter of this case; 3. Ordering the Provincial Assessor's Office to cancel Tax Dec. No. 022478 in the name of Fidela Macalipay and issue another Tax Declaration in the name of Felix Macajilos and Quirico Macajilos covering the same property; 4. Ordering the Rural Bank of Siaton, Inc. to immediately release from mortgage the land covered by Tax Dec. 022478 in the name of Fidela Macalipay; and 5. Ordering the Rural Bank of Siaton, Inc. to pay [Macajilos] the following: a. P10,000.00 as moral damages; b. P10,000.00 as exemplary damages; c. P5,000.00 as attorney's fees; and d. costs of the suit. SO ORDERED.7

The trial court noted that RBSI failed to ascertain whether Fidela was the lawful owner of the property being mortgaged. Rather, it relied on the tax declaration in Fidela's name and the "Affidavit of Ownership and Possession" that she executed. No investigator inspected the premises. Thus, the trial court ruled that RBSI must suffer for its failure to investigate and determine the lawful owner of the subject property who turned out to be Macajilos. The Court of Appeals denied RBSI's appeal and affirmed the decision of the trial court in toto. Hence, this petition. The assigned errors revolve around four principal issues: (1) who between Macajilos and RBSI has a superior right over the property, (2) assuming the Macajilos brothers have a better right, whether RBSI was a mortgagee-buyer in good faith of the subject property, (3) assuming the Macajilos brothers have a better right, whether they are barred from recovering the subject property due to estoppel and laches, and (4) whether the award of damages in favor of Macajilos was proper. RBSI principally raises questions of fact that have been settled by the court a quo. As a general rule, questions of fact are not covered by a petition for review under Rule 45 of the Rules of Court because it is limited to a review of errors of law committed by the appellate court especially so in the case at bar where the findings of fact of the trial court and Court of Appeals coincide and are, thus, binding on this Court.8 However, RBSI claims that the instant case falls under recognized exceptions to this general rule because the lower courts' conclusions are grounded entirely on speculations, surmises or conjectures,9 and are based on a misapprehension of facts.10 After a review of the records, we rule that RBSI failed to impugn the ruling of the lowers courts on the main issue of ownership over the subject property. However, the award of damages should be modified by deleting the award of exemplary damages for lack of factual and legal bases. Anent the first issue, RBSI contends that Fidela owned the mortgaged property based on her answer to the complaint where she asserted that she inherited the subject property from her late husband, Juanito Macalipay. It argues that the lower courts should not have given credence to the subsequent repudiation by Fidela of her ownership over the subject property during the pre-trial conference as the same was done allegedly in exchange for her being dropped from the instant case. The contention lacks merit. To begin with, Fidela was not dropped from the case. During the hearing on April 18, 1988, the trial court sought to have Fidela dropped from the case considering her admission during the pre-trial conference that Macajilos owned the subject property. However, counsel for Macajilos objected.11 Consequently, Atty. Rosalinda Ybaez continued to represent Fidela throughout the trial of this case. Moreover, RBSI has failed to produce evidence to show that Fidela's admission was not freely and knowingly given. While it is true that Fidela was no longer presented as a witness after the pre-trial conference for reasons not borne out by the records, this does not necessarily mean that her repudiation of ownership over the subject property was prompted by ill-will against RBSI. The pretrial order dated December 2, 1987 reflected Fidela's admissions during the pre-trial conference: 2. Co-defendant Fidela Macalipay's claims: that the property in question did really belong to plaintiffs [herein respondents Macajilos brothers] by virtue of their rightful succession to the same; that it was her own son, Lamberto Macalipay, who subsequently became an officer-incharge as manager of co-defendant Rural Bank of Siaton, who so maneuvered her into signing certain documents, in effect making her a debtor of Rural Bank of Siaton, which

circumstances were never explained to her by her son Lamberto Macalipay; and that as a consequence of it, said Rural Bank of Siaton did grant a loan to her although the proceeds of said loan only went into the hands of Lamberto Macalipay, her son; that Fidela Macalipay recognizes the fact that she absolutely had nothing, and in fact still has nothing, to do with the property in question, the same property's ownership being always that of plaintiffs, which ownership she recognizes;12 (Italics supplied) Although the records do not contain the transcript during the pre-trial conference, it should be noted that on April 18, 1988, the trial court recalled the events that transpired during the pre-trial conference where Fidela freely and knowingly acknowledged that Macajilos were the rightful owners of the subject property, thus: COURT: Then, what happened now[?] Did you convince Fidela that she was just a daughter-in law? In this case, Fidela was a daughter-in-law of Logronio:13 The first cousin of the plaintiffs. COURT: Fidela Macalipay whom you are representing is merely the daughter Ybaez:14 Is the mother of Lamberto COURT: Wait a minute, is the wife of the plaintiff's cousin? Ybaez: Yes, your honor. COURT: And even her husband, the plaintiff's cousin, had nothing to do with this property, right? Ybaez: Yes, that is what the defendant COURT: And even your client, the co-defendant Fidela Macalipay, admits that it was only her son, Lamberto, who soon became OIC

Logronio: Who was the OIC at the time. COURT: Yes, who soon became the OIC of the Rural Bank who did something using Fidela's name. Is that correct? Logronio: Yes, your honor. xxxx COURT: But Fidela said, "Yes, the plaintiff really owned this property," admitting it. Ybaez: Yes, your honor. COURT: What is the problem of this case now? Logronio: So, we have no more problem with Fidela, as far as ownership is concerned. Our target now is the Rural Bank of Siaton who appears to have purchased this property and the foreclosure, and have it transferred to their name and even threatening to eject the plaintiffs who are the real owners x x x.15(Emphasis supplied) As regards Fidela's initial assertion of ownership over the subject property, we agree with the findings of the Court of Appeals that the same should not be given weight. It bears stressing that only a thumb mark appears on top of her printed name at the last page of her answer and the name of the lawyer who prepared the same was not even indicated. The records also show that Fidela's answer was belatedly filed with the trial court. In her opposition16 to the motion to have her declared in default, there was a plea for understanding and a statement that the attached answer was prepared by an unnamed lawyer, without being formally engaged, out of pity and compassion for Fidela who was an indigent. Thus, as between the allegations in the answer which was merely thumbmarked by Fidela and prepared by an unknown lawyer, and her admissions in open court with the assistance of her counsel of record, Atty. Rosalinda Ybaez, during the pre-trial conference of this case, the lower courts correctly gave weight to the latter. At any rate, the lower courts' finding that the subject property rightly belonged to Macajilos was not principally grounded on Fidela's admission. Rather, this admission merely confirmed the undisputed documentary evidence which showed Gregoria Macalipay as the owner of the subject property and the same passed on to her two sons upon her death. The records show that Tax Declaration No. 85817 covering the period prior to the year 1949,18Tax Declaration No. 1389519 for the year 1949, Tax

Declaration No. 2586420 for the year 1969 and Tax Declaration No. 1065121 for the year 1974 over the subject property were all in the name of Gregoria Macalipay. It is true that tax declarations or realty tax payments are not conclusive evidence of ownership, however, they constitute good indicia of possession in the concept of owner and a claim of title over the subject property.22Coupled with her uncontested actual possession of the subject property, these tax declarations constitute strong evidence of ownership over the subject property by Gregoria Macalipay,23 the mother of herein respondents Macajilos. The tax declarations in the name of Gregoria Macalipay takes on great significance because Fidela tacked her claim of ownership to that of Gregoria Macalipay. In 1975, Fidela had Tax Declaration No. 10651 in the name of Gregoria Macalipay cancelled through the execution of an "Affidavit of Heirship" where she claimed to be the sole heir of Gregoria Macalipay. Yet, she was merely the wife of Juanito who was a nephew of Gregoria. Neither she nor Juanito could inherit from Gregoria whose compulsory heirs are respondents Macajilos. Clearly, the "Affidavit of Heirship" was fraudulent and could never be Fidela's source of ownership over the subject property. Neither could Tax Declaration No. 022478 in the name of Fidela and the "Affidavit of Ownership and Possession" be the source of any derivative right of ownership of RBSI over the subject property considering that these documents were the products of the aforementioned fraudulent scheme. Thus, the trial court correctly ruled that the mortgage over the subject property and the foreclosure proceedings were a nullity, and that respondents Macajilos brothers should be declared the lawful owners of the subject property. We note that in its Memorandum,24 RBSI contended, among others, that should this Court rule in favor of Macajilos, the mortgage should be declared valid insofar as the one-half portion of the subject property is concerned, based on the alleged admission by respondent Quirico Macajilos, Jr. on cross-examination that there was an oral settlement of the estate of Gregoria Macalipay where respondents Macajilos brothers agreed that the subject property should be apportioned between respondent Quirico Macajilos, Jr. and Fidela Macalipay. This issue is being raised by RBSI for the first time on appeal and only belatedly in its memorandum before this Court. Well-settled is the rule that points of law, theories, issues and arguments not adequately brought to the attention of the trial court need not be, and ordinarily will not be, considered by a reviewing court as they cannot be raised for the first time on appeal.25 An issue which was neither averred in the complaint nor raised during the trial in the court below cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair play, justice and due process.26 Thus, we cannot bend backwards to examine this issue raised by RBSI at this late stage in the proceedings. Be that as it may, even if we were to consider RBSI's new theory and, thus, assume that the aforementioned oral settlement did take place, the relinquishment of respondent Felix Macajilos' one-half share in the subject property in favor of Fidela would amount to an oral donation of real property which, under Article 74927 of the Civil Code, is null and void.28 This void donation to Fidela did not ripen into ownership through acquisitive prescription because, as will be discussed in detail shortly, RBSI was a mortgagee-buyer in bad faith. Only six years had elapsed from the auction sale to the filing of the instant case, which is less than the required 30-year-period for extraordinary acquisitive prescription29 to set in. Anent the second issue, we agree with the trial court and the Court of Appeals that RBSI was a mortgagee-buyer in bad faith. The subject property was mortgaged three times by Fidela to RBSI, to wit: in 1975 for P2,000.00, in 1976 for 10,000.00, and in 1978 for P12,300.00. After fully paying the first two mortgage debts, Fidela failed to pay the third thus the property was extrajudicially foreclosed and sold at public auction with RBSI as the only and highest bidder. However, in contracting the

aforesaid mortgages, RBSI failed to exercise the proper diligence in verifying the true owners of the subject property. Certainly, a mortgagee is not expected to conduct an exhaustive investigation on the history of the mortgagor's title but RBSI, especially because it is a banking institution, must have at least exercised due diligence before entering into said contract. Banks are expected to exercise more care and prudence than private individuals in their dealings because their business is impressed with public interest.30 It is a standard practice for banks before approving a loan to send representatives to the premises of the land offered as collateral and to investigate who are the real owners thereof.31 However, in the case at bar, no investigator was sent to the location of the subject property to verify the real owners thereof. Instead, RBSI relied solely on Tax Declaration No. 022478 in the name of Fidela as well as the "Affidavit of Possession and Ownership" that RBSI required her to execute.32 Atty. Teodoro Singson, a witness for RBSI, explained that when RBSI was established in 1974, there was so much money coming from the Central Bank that the bank was in a hurry to grant loans and was not strict with the documents presented by prospective borrowers as collateral.33 What is more, Atty. Singson admitted that RBSI was aware that Tax Declaration No. 022478 in the name of Fidela was previously in the name of Gregoria Macalipay and that the tax declaration was transferred to the name of Fidela through the "Affidavit of Heirship" she executed naming her as the sole heir of Gregoria Macalipay.34However, it did not take steps to ascertain whether Fidela was, indeed, the sole heir of Gregoria Macalipay. Rather, it placed full faith on the false representation of Fidela that her husband, Juanito Macalipay, was the son of Gregoria Macalipay.35 To make matters worse, neither did it inquire from Lamberto, son of Fidela, who was then the manager of the bank when the first loan was granted to her in 1975, as to whether his father, Juanito Macalipay, was the son of Gregoria Macalipay.36 As its defense, RBSI dwells on the alleged error of the trial court in finding Lamberto as the manager of RBSI when the mortgage debts were contracted when in fact Lamberto was a mere clerk-typist. However, the records show that RBSI categorically admitted during the pre-trial conference that Lamberto was the manager of the bank when the loan transactions took place.37 Even in its Reply38 dated June 21, 2002 filed before this Court, RBSI admitted that Lamberto was the officer-incharge (OIC) of the bank prior to 1978 or when the first two mortgage debts were contracted by his mother, Fidela, and that Lamberto was demoted to the rank of a clerk-typist only in 1978.39 At any rate, we need not belabor this point because whether Lamberto was an OIC or a mere clerktypist of the bank when the mortgage debts were contracted will not excuse RBSI from exercising prudence in verifying the true owners of the subject property. The fact that Lamberto was the son of its prospective debtor, Fidela, should have prompted RBSI to be more cautious in granting the loan. Based on the foregoing, it is clear that RBSI chose to close its eyes to facts which should have put a reasonable man on his guard.40 Far from being prudent, RBSI hastily granted the loan without investigation, and placed full faith on the false documents submitted by Fidela. Consequently, it cannot now claim that it acted in good faith on the belief that there was no defect in the title of Fidela. While the findings of the lower courts that RBSI was a mortgagee-buyer in bad faith is in accord with the evidence on record, we must point out, however, that they overlooked the fact that the subject property is an unregistered piece of land. As we ruled in David v. Bandin,41 which was reiterated in Sales v. Court of Appeals,42 "the issue of good faith or bad faith of a buyer is relevant only where the subject of the sale is a registered land but not where the property is an unregistered land. One who purchases an unregistered land does so at his peril. His claim of having bought the land in good faith, i.e., without notice that some other person has a right to, or interest in, the property, would not protect him if it turns out that the seller does not actually own the property." Nevertheless, the

application of this doctrine will not affect the outcome of this case. RBSI bought the property during the auction sale at its own peril and must suffer the consequences of its failure to investigate the true owners of the subject property who turned out to be respondents Macajilos brothers. Although the discussion on RBSI's bad faith would now seem superfluous given the application of this doctrine, the finding of bad faith is still relevant in the resolution of the last issue with respect to the award of damages. Anent the third issue, we likewise agree with the findings of the Court of Appeals that respondent Macajilos brothers are not barred by laches or estoppel from recovering the ownership of the subject property. They are not estopped from denying the representations of Fidela that she owns the subject property because they were never privy to the loan agreements between the bank and Fidela. The fact that the mortgages and subsequent foreclosure proceedings were duly registered with the register of deeds will not cure their nullity because Fidela never owned the subject property. Neither can respondent Macajilos brothers be said to have slept on their rights. Essentially, laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, by the exercise of due diligence, could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it.43 In the case at bar, respondents Macajilos brothers performed acts which showed their intent to assert their rightful ownership over the subject property. Specifically, in 1980, respondent Quirico Macajilos, Jr. came across the notice of public auction of the subject property in the public market.44 Upon investigation with the provincial assessor's office, he discovered that Fidela had mortgaged the subject property to RBSI by transferring the tax declaration to her name after falsely claiming in the "Affidavit of Heirship" that she was the sole heir of Gregoria Macalipay. Consequently, in 1981 or within a year from the discovery of the fraudulent scheme perpetuated by Fidela, respondents Macajilos brothers filed a criminal case against Fidela and Lamberto for estafa through falsification of public document.45 After knowing about the foreclosure of the subject property, respondent Quirico Macajilos, Jr. took possession of the subject property46 and demanded Fidela to vacate. In 1987, the instant case to remove cloud over the title and/or recovery of real property and damages was filed by respondents Macajilos brothers against RBSI as an off-shoot of the latter's demand on respondent Quirico Macajilos to vacate the subject property. All in all, these acts show that respondents Macajilos brothers did not sleep on their rights but reasonably took steps to assert their ownership over the subject property. Anent the fourth issue, we note that the task of fixing the amount of damages primarily rests with the trial court as the circumstances of each case may warrant provided that the bases therefor are fully established.47 In the case at bar, the trial court awarded moral and exemplary damages as well as attorney's fees in view of its finding that RBSI acted in bad faith.48 As previously discussed, this finding of bad faith by the trial court is sufficiently supported by the evidence on record. However, the award of exemplary damages should be deleted since there is no clear and convincing proof that RBSI acted in a wanton, fraudulent, reckless, oppressive or malevolent manner to warrant the imposition of the same.49 WHEREFORE, the petition is PARTLY GRANTED. The April 18, 2001 Decision and November 12, 2001 Resolution of the Court of Appeals in CA-G.R. CV No. 51290 which affirmed the July 12, 1995 Decision of the Regional Trial Court of Negros Oriental, Dumaguete City, Branch 39 in Civil Case No. 9049 declaring respondents Felix Macajilos and Quirico Macajilos, Jr. the rightful owners of the subject property, are AFFIRMED with theMODIFICATION that the award of exemplary damages is DELETED for lack of basis.

SO ORDERED. G.R. No. 147749 June 22, 2006

SAN PABLO MANUFACTURING CORPORATION, Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE,* Respondent. DECISION CORONA, J.: In this petition for review under Rule 45 of the Rules of Court, San Pablo Manufacturing Corporation (SPMC) assails the July 19, 20001 and April 3, 2001 resolutions of the Court of Appeals in CA-G.R. SP No. 59139. SPMC is a domestic corporation engaged in the business of milling, manufacturing and exporting of coconut oil and other allied products. It was assessed and ordered to pay by the Commissioner of Internal Revenue the total amount of P8,182,182.852 representing deficiency millers tax and manufacturers sales tax,3 among other deficiency taxes,4 for taxable year 1987. The deficiency millers tax was imposed on SPMCs sales of crude oil to United Coconut Chemicals, Inc. (UNICHEM) while the deficiency sales tax was applied on its sales of corn and edible oil as manufactured products. SPMC opposed the assessments but the Commissioner denied its protest. SPMC appealed the denial of its protest to the Court of Tax Appeals (CTA) by way of a petition for review docketed as CTA Case No. 5423. In its March 10, 2000 decision, the CTA cancelled SPMCs liability for deficiency manufacturers tax on the sales of corn and edible oils but upheld the Commissioners assessment for the deficiency millers tax. SPMC moved for the partial reconsideration of the CTA affirmation of the millers tax assessment but it was denied. SPMC elevated the case to the Court of Appeals via a petition for review of the CTA decision insofar as it upheld the deficiency millers tax assessment. In its July 19, 2000 resolution, the appellate court dismissed the petition on the principal ground5 that the verification attached to it was signed merely by SPMCs chief financial officer without the corporate secretarys certificate, board resolution or power of attorney authorizing him to sign the verification and certification against forum shopping. SPMC sought a reconsideration of the resolution but the same was denied. Hence, this petition. Did the Court of Appeals err when it dismissed SPMCs appeal? SPMC contends that its appeal should have been given due course since it substantially complied with the requirements on verification and certification against forum shopping. It insists on the liberal application of the rules because, on the merits of the petition, SPMC was not liable for the 3% millers tax. It maintains that the crude oil which it sold to UNICHEM was actually exported by UNICHEM as an ingredient of fatty acid and glycerine, hence, not subject to millers tax pursuant to Section 168 of the 1987 Tax Code. For SPMC, Section 168 of the 1987 Tax Code contemplates two exemptions from the millers tax: (a) the milled products in their original state were actually exported by the miller himself or by

another person, and (b) the milled products sold by the miller were actually exported as an ingredient or part of any manufactured article by the buyer or manufacturer of the milled products. The exportation may be effected by the miller himself or by the buyer or manufacturer of the milled products. Since UNICHEM, the buyer of SPMCs milled products, subsequently exported said products, SPMC should be exempted from the millers tax. The petition must fail. Under Rule 43, Section 5 of the Rules of Court, appeals from the CTA and quasi-judicial agencies to the Court of Appeals should be verified. A pleading required to be verified which lacks proper verification shall be treated as an unsigned pleading.6 Moreover, a petition for review under Rule 43 requires a sworn certification against forum shopping.7 Failure of the petitioner to comply with any of the requirements of a petition for review is sufficient ground for the dismissal of the petition.8 A corporation may exercise the powers expressly conferred upon it by the Corporation Code and those that are implied by or are incidental to its existence through its board of directors and/or duly authorized officers and agents.9 Hence, physical acts, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by specific act of the board of directors.10 In the absence of authority from the board of directors, no person, not even the officers of the corporation, can bind the corporation.11 SPMCs petition in the Court of Appeals did not indicate that the person who signed the verification/certification on non-forum shopping was authorized to do so. SPMC merely relied on the alleged inherent power of its chief financial officer to represent SPMC in all matters regarding the finances of the corporation including, among others, the filing of suits to defend or protect it from assessments and to recover erroneously paid taxes. SPMC even admitted that no power of attorney, secretarys certificate or board resolution to prove the affiants authority was attached to the petition. Thus, the petition was not properly verified. Since the petition lacked proper verification, it was to be treated as an unsigned pleading subject to dismissal.12 In PET Plans, Inc. v. Court of Appeals,13 the Court upheld the dismissal by the Court of Appeals of the petition on the ground that the verification and certification against forum shopping was signed by PET Plans, Inc.s first vice-president for legal affairs/corporate secretary without any certification that he was authorized to sign in behalf of the corporation. In BPI Leasing Corporation v. Court of Appeals,14 the Court ruled that the petition should be dismissed outright on the ground that the verification/certification against forum shopping was signed by BPI Leasing Corporations counsel with no specific authority to do so. Since the counsel was purportedly acting for the corporation, he needed a resolution issued by the board of directors that specifically authorized him to institute the petition and execute the certification. Only then would his actions be legally binding on the corporation.15 In this case, therefore, the appellate court did not commit an error when it dismissed the petition on the ground that it was signed by a person who had not been issued any authority by the board of directors to represent the corporation. Neither can the Court subscribe to SPMCs claim of substantial compliance or to its plea for a liberal application of the rules. Save for the most persuasive of reasons, strict compliance with procedural rules is enjoined to facilitate the orderly administration of justice.16 Substantial compliance will not suffice in a matter involving strict observance such as the requirement on non-forum shopping,17 as

well as verification. Utter disregard of the rules cannot justly be rationalized by harping on the policy of liberal construction.18 But even if the fatal procedural infirmity were to be disregarded, the petition must still fail for lack of merit. As the CTA correctly ruled, SPMCs sale of crude coconut oil to UNICHEM was subject to the 3% millers tax. Section 168 of the 1987 Tax Code provided: Sec. 168. Percentage tax upon proprietors or operators of rope factories, sugar central mills, coconut oil mills, palm oil mills, cassava mills and desiccated coconut factories. Proprietors or operators of rope factories, sugar central and mills, coconut oil mills, palm oil mills, cassava mills and desiccated coconut factories, shall pay a tax equivalent to three percent (3%) of the gross value in money of all the rope, sugar, coconut oil, palm oil, cassava flour or starch, dessicated coconut, manufactured, processed or milled by them, including the by-product of the raw materials from which said articles are produced, processed or manufactured, such tax to be based on the actual selling price or market value of these articles at the time they leave the factory or mill warehouse:Provided, however, That this tax shall not apply to rope, coconut oil, palm oil and the by-product of copra from which it is produced or manufactured and dessicated coconut, if such rope, coconut oil, palm oil, copra by-products and dessicated coconuts, shall be removed for exportation by the proprietor or operator of the factory or the miller himself, and are actually exported without returning to the Philippines, whether in their original state or as an ingredient or part of any manufactured article or products: Provided further, That where the planter or the owner of the raw materials is the exporter of the aforementioned milled or manufactured products, he shall be entitled to a tax credit of the miller's taxes withheld by the proprietor or operator of the factory or mill, corresponding to the quantity exported, which may be used against any internal revenue tax directly due from him: and Provided, finally, That credit for any sales, miller's or excise taxes paid on raw materials or supplies used in the milling process shall not be allowed against the miller's tax due, except in the case of a proprietor or operator of a refined sugar factory as provided hereunder. (emphasis supplied) The language of the exempting clause of Section 168 of the 1987 Tax Code was clear. The tax exemption applied only to the exportation of rope, coconut oil, palm oil, copra by-products and dessicated coconuts, whether in their original state or as an ingredient or part of any manufactured article or products, by the proprietor or operator of the factory or by the miller himself. The language of the exemption proviso did not warrant the interpretation advanced by SPMC. Nowhere did it provide that the exportation made by the purchaser of the materials enumerated in the exempting clause or the manufacturer of products utilizing the said materials was covered by the exemption. Since SPMCs situation was not within the ambit of the exemption, it was subject to the 3% millers tax imposed under Section 168 of the 1987 Tax Code. SPMCs proposed interpretation unduly enlarged the scope of the exemption clause. The rule is that the exemption must not be so enlarged by construction since the reasonable presumption is that the State has granted in express terms all it intended to grant and that, unless the privilege is limited to the very terms of the statute, the favor would be intended beyond what was meant.19 Where the law enumerates the subject or condition upon which it applies, it is to be construed as excluding from its effects all those not expressly mentioned. Expressio unius est exclusio alterius. Anything that is not included in the enumeration is excluded therefrom and a meaning that does not appear nor is intended or reflected in the very language of the statute cannot be placed therein.20 The rule proceeds from the premise that the legislature would not have made specific

enumerations in a statute if it had the intention not to restrict its meaning and confine its terms to those expressly mentioned.21 The rule of expressio unius est exclusio alterius is a canon of restrictive interpretation.22 Its application in this case is consistent with the construction of tax exemptions in strictissimi juris against the taxpayer. To allow SPMCs claim for tax exemption will violate these established principles and unduly derogate sovereign authority. WHEREFORE, the petition is hereby DENIED. Costs against petitioner. SO ORDERED. G.R. No. 156903 November 24, 2006

SPOUSES CARLOS and TERESITA RUSTIA, Petitioners, vs. EMERITA RIVERA, Respondent. DECISION SANDOVAL-GUTIERREZ, J.: For our resolution is the instant Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision1 of the Court of Appeals, dated August 29, 2002, in CA-G.R. SP No. 63265. In September 1995, Emerita Rivera, respondent, filed with the Metropolitan Trial Court (MeTC), Branch 36, Quezon City, a complaint for sum of money against spouses Carlos and Teresita Rustia, petitioners, and Rosemarie F. Rocha. The complaint was docketed as Civil Case No. 0206. Respondent alleged therein that petitioners obtained from her a loan of P130,000.00, payable within thirty (30) days without need of prior demand. As security for the loan, petitioners executed a promissory note, with Rosemarie Rocha as their co-maker. The loan bears an interest of five percent (5%) per month. Petitioners paid the interest corresponding to the period from January 1991 to March 1994. Thereafter, despite respondents written demands, they failed to pay any interest or the principal obligation. Respondent then prayed that judgment be rendered ordering petitioners to pay the loan, the accrued interest thereon, and attorneys fees. After the courts denial of their motion to dismiss the complaint, petitioners filed their answer admitting that respondent extended to them a loan of P130,000.00. However, they denied having agreed to pay interest thereon. While they paid respondent P6,500.00 every month, however, it was for the settlement of the principal obligation. In fact, they overpaid P123,500.00. They prayed that the case be dismissed and that respondent be ordered to refund to them their overpayment plus damages, attorneys fees, and litigation expenses. During the hearing, respondent offered in evidence petitioners promissory note and petitioner Teresita Rustias letter addressed to respondent agreeing to pay 5% monthly interest.

Teresita denied having borrowed P130,000.00 from respondent; that respondent delivered the said amount to petitioners as investment in the latters business; and that the monthly payment of P6,500.00 they tendered to respondent corresponds to her share in the profits. On June 11, 1999, the trial court rendered its Decision,2 the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants, as follows: 1. Ordering the defendants to pay, jointly and severally, the plaintiff the sum of P130,000.00 plus accrued interest of 5% per month to be reckoned from April 1994 until the same is fully paid; 2. Ordering the defendants to pay, jointly and severally, the sum of P10,000.oo as and for attorneys fees; 3. Ordering the defendants to pay the costs of suit. SO ORDERED. On appeal by petitioners, the Regional Trial Court (RTC), Branch 77, Quezon City affirmed the MeTCs Decision in toto. Petitioners filed a motion for reconsideration but it was denied by the RTC as it does not contain a notice of the time and place of hearing required by Sections 4 and 5, Rule 15 of the 1997 Rules of Civil Procedure, as amended. Petitioners filed with the Court of Appeals a petition for review, docketed as CA-G.R. SP No. 63265, but it was denied in a Decision dated August 29, 2002. Their motion for reconsideration was likewise denied. Hence, the instant petition raising the following issues: 1. Whether the Court of Appeals erred in holding that the motion for reconsideration filed with the RTC by petitioners is but a mere scrap of paper for lack of notice of hearing; 2. Whether the Court of Appeals erred when it failed to apply Article 1956 of the Civil Code providing that no interest shall be due unless it has been expressly stipulated in writing; On the first issue, Sections 4 and 5, Rule 15 of the 1997 Rules of Civil Procedure, as amended, provide: SEC. 4. Hearing of motion. Except for motions which the court may act upon without prejudicing the rights of the adverse party, every written motion shall be set for hearing by the applicant. Every written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to ensure its receipt by the other party at least three (3) days before the date of hearing, unless the court for good cause sets the hearing on shorter notice.

SEC. 5. Notice of hearing. The notice of hearing shall be addressed to all parties concerned, and shall specify the time and date of the hearing which must not be later than ten (10) days after the filing of the motion. Section 4 lays the general rule that all written motions shall be set for hearing by the movant, except the non-litigated motions or those which may be acted upon by the court without prejudicing the rights of the adverse party. These ex parte motions include a motion for extension of time to file pleadings,3 motion for extension of time to file an answer,4 and a motion for extension of time to file a record on appeal.5 In Manila Surety and Fidelity Co., Inc. v. Bath Construction and Company,6 we ruled that a notice of time and place of hearing is mandatory for motions for new trial or motion for reconsideration, as in this case. We have reiterated this doctrine inMagno v. Ortiz,7 Calero v. Yaptichay,8 Vda. de Azarias v. Maddela,9 Phil. Advertising Counselors, Inc. v. Revilla,10Sacdalan v. Bautista,11 New Japan Motors, Inc. v. Perucho,12 Firme v. Reyes, et al.,13 and others. More recently, in National Commercial Bank of Saudi Arabia v. Court of Appeals,14 we reaffirmed the rule that the requirement of notice under Sections 4 and 5, Rule 15 is mandatory and the lack thereof is fatal to a motion for reconsideration.
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We thus hold that the Court of Appeals did not err when it affirmed the RTC ruling that petitioners motion for reconsideration is but a mere scrap of paper because it does not comply with Sections 4 and 5, Rule 15. Anent the second issue, contrary to petitioners contention, the trial court found that petitioner Teresita Rustia sent respondent a letter begging the latters indulgence regarding her difficulty and that of her husband in paying the 5% monthly interest on their P130,000.00 loan. This finding by the trial court was upheld by the RTC and the Court of Appeals. Indeed, such letter proves that petitioners agreed to pay interest. It is basic that findings of fact by the trial court, when affirmed by the Court of Appeals, are binding and conclusive upon this Court.15 Verily, the Court of Appeals did not err when it sustained the lower courts finding that respondent is entitled to the payment of interests on the subject loan. WHEREFORE, we DENY the petition. The challenged Decision of the Court of Appeals dated August 29, 2002 in CA-G.R. SP No. 63265 is AFFIRMED IN TOTO. Costs against petitioners. SO ORDERED. G.R. No. 163735 November 24, 2006

GREEN ASIA CONSTRUCTION AND DEVELOPMENT CORPORATION AND SPS. RENATO AND DELIA LEGASPI, Petitioners, vs. THE HONORABLE COURT OF APPEALS AND PCI LEASING AND FINANCE, INC., Respondents. DECISION QUISUMBING, J.: This special civil action for certiorari impugns the Decision1 and Resolution2 of the Court of Appeals, dated March 18, 2004 and May 26, 2004, respectively, in CA-G.R. CV No. 78117, for alleged grave abuse of discretion amounting to lack or excess of jurisdiction when it affirmed the Orders3 of the Regional Trial Court of Angeles City, Branch 57 in LRC Case No. A-124-1088.

The facts are as follows: On June 8, 1995, petitioner Green Asia Construction and Development Corporation (GACDC), represented by its president, petitioner Renato Legaspi, obtained a loan of P2,600,0004 from private respondent PCI Leasing and Finance, Inc. (PCILFI). As security, GACDC, represented by petitioner spouses Renato and Delia Legaspi, executed a real estate mortgage5 for P450,000 in favor of PCILFI. The mortgage covered three parcels of land located in Barrio Balibago, Angeles City, under TCT Nos. 100362, 100363, and 100364.6 When GACDC failed to pay the loan on maturity, the mortgage was foreclosed extrajudicially. PCILFI was the highest bidder at the foreclosure sale. A certificate of sale7 dated February 3, 1998 was accordingly issued to PCILFI and duly registered with the Registry of Deeds of Angeles City. On April 12, 2000, PCILFI filed a petition for the issuance of a writ of possession8 with the Regional Trial Court of Angeles City, Branch 57, docketed as LRC Case No. A-124-1088. The trial court granted PCILFIs petition, thus: WHEREFORE, let a writ of possession be issued in favor of petitioner PCI Leasing and Finance, Inc. directing the Sheriff of this Court to eject the Green Asia Construction and Development Corporation and all persons presently staying therein and claiming rights over the premises previously covered by TCT Nos. 100362, 100363, and 100364 of the Registry of Deeds of Angeles City, and to place the petitioner in possession thereof. SO ORDERED.9 On May 8 and May 30, 2002, GACDC filed an urgent omnibus motion10 and a supplement to the urgent omnibus motion,11 respectively, praying for the setting aside of the certificate of sale, cancellation of the writ of possession, and the suspension of the implementation of the said writ of possession. On September 2, 2002, the trial court issued the first assailed order denying for lack of merit the aforesaid motion. GACDCs motion for reconsideration was denied in the second assailed order of October 14, 2002. GACDC elevated the case to the Court of Appeals, which affirmed the assailed orders of the trial court, to wit: WHEREFORE, finding no cogent reason to disturb the assailed Orders, the instant appeal is DENIED. The assailed orders dated September 2, 2002 and October 14, 2002 of the Regional Trial Court (RTC) of Angeles City, Branch 57 in LRC Case No. A-124-1088 are AFFIRMED. SO ORDERED.12 Hence, the instant petition raising the following as issues: 1. WHETHER OR NOT THE PETITION IN LRC CASE NO. A-124-1088 IS PROPER IN FORM AND IN SUBSTANCE CONSIDERING THAT THE SIGNATORY OF THE VERIFICATION AND CERTIFICATION AGAINST FORUM SHOPPING, FLORECITA R.

GONZALES, IS NOT DULY AUTHORIZED AS SUCH BY PCI LEASING AND/OR THERE WAS A FAILURE TO SHOW PROOF OF SUCH AUTHORITY. 2. WHETHER APPEAL IS AN APPROPRIATE REMEDY IN ACTIONS FOR THE ISSUANCE OF WRIT OF POSSESSION PURSUANT TO THE PROVISIONS OF ACT 3135, AS AMENDED.13 Petitioners contend that the petition for the issuance of writ of possession is not proper in form and substance because the verification and certification on non-forum shopping was not signed by PCILFI or its duly authorized representative. Further, petitioners argue that Section 8 of Act No. 313514 clearly provides that appeal in the proceedings in which possession was requested is the appropriate remedy. Private respondent, however, counters that the finding of the trial court that the questioned petition was sufficient in form and substance is binding on this Court. It stresses that there is no specific requirement in the Rules of Court to include the Secretarys Certificate in the certification on nonforum shopping. Private respondent also argues that the assailed Orders of the trial court are not appealable since they are not in the nature of a judgment on the merits. After serious consideration of the arguments raised by the parties, we find the petition without merit. Anent the first issue, it bears stressing that a certification on non-forum shopping is required only in a complaint or a petition which is an initiatory pleading. In this case, the subject petition for the issuance of a writ of possession filed by private respondent is not an initiatory pleading. Although private respondent denominated its pleading as a petition, it is more properly a motion. What distinguishes a motion from a petition or other pleading is not its form or the title given by the party executing it, but its purpose. The purpose of a motion is not to initiate litigation, but to bring up a matter arising in the progress of the case where the motion is filed.15 Indeed, an original action is not necessary to acquire possession in favor of the purchaser at an extrajudicial foreclosure of real property. The right to possession is based simply on the purchasers ownership of the property. Thus, the mere filing of an ex parte motion for the issuance of a writ of possession would suffice. No verification and certification on non-forum shopping need be attached to the motion at all. Hence, it is immaterial that the verification and certification on non-forum shopping in private respondents questioned petition was signed by its lawyer. Such insignificant lapse does not render the said petition defective in form. As to the second issue, Section 8 of Act No. 3135 states: SEC. 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the summary procedure provided for in section one hundred and twelve of Act Numbered Four hundred and ninety-six; and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who obtained possession. Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall continue in effect during the pendency of the appeal. (Emphasis supplied.)

Clearly, the remedy of petitioners from the assailed Orders of the trial court was to file a petition to set aside the sale and cancel the writ of possession. Under the aforequoted provision, the aggrieved party may thereafter appeal from any disposition by the court on the matter.16 We note, however, that what petitioners filed with the trial court were an urgent omnibus motion and a supplement to the urgent omnibus motion to set aside the sale and cancel the writ of possession. In the said motions, petitioners alleged there was no basis for the extrajudicial foreclosure because the mortgage was void. Note that the nullity of the mortgage is not covered by the remedy outlined under Section 8 of Act No. 3135. The said provision specifically lists the following exclusive grounds for a petition to set aside the sale and cancel the writ of possession: (1) that the mortgage was not violated; and (2) that the sale was not made in accordance with the provisions of Act No. 3135. Any question regarding the validity of the mortgage or its foreclosure cannot be a legal ground for refusing the issuance of a writ of possession. Indeed, regardless of whether or not there is a pending suit for annulment of the mortgage or the foreclosure itself, the purchaser is entitled to a writ of possession.17 Petitioners should have filed a separate and independent action for annulment of the mortgage or the foreclosure. The remedy under Section 8 of Act No. 3135 is inapplicable in this case. The trial court thus correctly denied petitioners motions to set aside the sale and cancel the writ of possession on the ground of nullity of the mortgage.
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Hence, in our view, the Court of Appeals did not err, nor did it commit grave abuse of discretion amounting to lack or excess of jurisdiction, in affirming the assailed Orders of the trial court. WHEREFORE, the petition is DISMISSED. The impugned Decision dated March 18, 2004 and Resolution dated May 26, 2004, of the Court of Appeals in CA-G.R. CV No. 78117 are AFFIRMED. Costs against petitioners. SO ORDERED. G.R. No. 141480 November 29, 2006

CARLOS B. DE GUZMAN, Petitioner, vs. TOYOTA CUBAO, INC., Respondent. DECISION AZCUNA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul the Order,1 dated September 9, 1999, of the Regional Trial Court of Quezon City (the RTC), Branch 105, which dismissed the complaint for damages filed by petitioner Carlos B. De Guzman against respondent Toyota Cubao, Inc. On November 27, 1997, petitioner purchased from respondent a brand new white Toyota Hi-Lux 2.4 SS double cab motor vehicle, 1996 model, in the amount of P508,000. Petitioner made a down

payment of P152,400, leaving a balance of P355,600 which was payable in 36 months with 54% interest. The vehicle was delivered to petitioner two days later. On October 18, 1998, petitioner demanded the replacement of the engine of the vehicle because it developed a crack after traversing Marcos Highway during a heavy rain. Petitioner asserted that respondent should replace the engine with a new one based on an implied warranty. Respondent countered that the alleged damage on the engine was not covered by a warranty. On April 20, 1999, petitioner filed a complaint for damages2 against respondent with the RTC. Respondent moved to dismiss the case on the ground that under Article 1571 of the Civil Code, the petitioners cause of action had prescribed as the case was filed more than six months from the date the vehicle was sold and/or delivered. In an Order dated September 9, 1999, the RTC granted respondents motion and dismissed the complaint, thus: For the Courts consideration are: (1) defendants Motion to Dismiss; (2) plaintiffs Opposition thereto; (3) defendants Reply; and (4) plaintiffs Rejoinder. The Court agrees with the plaintiffs counsel that the subject pick-up is a consumer product because it is used for personal, family or agricultural purposes, contrary to defendant counsels claim that it is not because it is a non-consumable item. Since no warranty card or agreement was attached to the complaint, the contract of sale of the subject pick-up carried an implied warranty that it was free from any hidden faults or defects, or any charge or encumbrance not declared or known to the buyer. The prescriptive period thereof is six (6) months under the Civil Code (Art. 1571). Under RA No. 7394, the provisions of the Civil Code on conditions and warranties shall govern all contracts of sale with condition and warranties (Art. 67). The duration of the implied warranty (not accompanied by an express warranty) shall endure not less than sixty days nor more than one (1) year following the sale of new consumer products (Art. 68, par. [e]). The two (2) year prescriptive period under Art. 169 cannot prevail over Art. 68 because the latter is the specific provision on the matter. The Court has noted that the prescriptive period for implied and express warranties cannot be the same. In the Civil Code, a redhibitory action for violation of an implied warranty against hidden defects prescribes in six (6) months, while if it based on an express warranty[,] the action prescribes in four (4) years. Under RA No. 7394, the implied warranty cannot be more than one (1) year; however, the implied warranty can only be of equal duration to that an express warranty when the implied warranty of merchantability accompanies an express warranty (Art. 68, par. [e]). Therefore, the prescriptive period of two years under Art. 169 does not cover an implied warranty, which is not accompanied by an express warranty. It is applicable to cases where there is an express warranty in the sale of the consumer product. Relative to plaintiffs argument that the claim for moral and exemplary damages and attorneys fees is based on quasi-delict or breach of contract, such are merely ancillary to the main cause of action which is based on warranty against hidden defects. Without the latter, the former cannot stand alone. Based on the record, the subject vehicle was purchased on 27 November 1997 and delivered on 29 November 1997. This case was filed only on 20 April 1999 or almost nineteen (19) months from [the] sale and/or delivery. Applying Art. 1571 of Civil Code, the action is barred by prescription because

the complaint was filed more than six (6) months after the sale and/or delivery of the vehicle. In addition, the duration of the implied warranty of not more than one (1) year under Art. 68, par (e) of RA No. 7394 has already elapsed. Accordingly, defendants Motion is granted and the plaintiffs Complaint is ordered dismissed. SO ORDERED3 On December 21, 1999, the RTC denied petitioners motion for reconsideration, as follows: Submitted for resolution are: (1) plaintiffs Motion for Reconsideration; (2) defendants Opposition; and (3) plaintiffs Reply. Although plaintiffs motion was filed beyond the ten-day period, the Court is convinced that it was not for the purpose of delay; hence, it cannot be considered as a mere scrap of paper. After a thorough study, the Court resolves that while reference to Art. 68, par. (e) of RA No. 7394 may have been misplaced, yet the subject sale carried an implied warranty whose prescriptive period is six (6) months under Art. 1571 of the Civil Code. Accordingly, plaintiffs Motion for Reconsideration is DENIED. SO ORDERED.4 Petitioner thereupon filed a petition for review on certiorari with this Court. The petition should be denied. First, on procedural grounds, the petition should forthwith be denied for violation of the hierarchy of courts. Petitioner states that the present petition is an "appeal by certiorari on pure questions of law, from the final Order of Branch 105 of the Regional Trial Court of Quezon City in Civil Case No. Q-9937381 under Rule 45 of the Rules of Court." Upon receipt of the Order of the RTC, dated September 9, 1999, on September 21, 1999, petitioner filed a motion for reconsideration on September 28, 1999. On December 21, 1999, the RTC denied petitioners motion. When petitioner received a copy of the said order on January 18, 2000, he had fifteen (15) days from receipt within which to appeal to the Court of Appeals by filing a notice of appeal under Section 2(a) of Rule 41, from an order of the RTC issued in the exercise of its original jurisdiction. The RTCs order dated September 9, 1999 and its subsequent order dated December 21, 1999 partake of the nature of a final disposition of the case. Hence, the appropriate remedy petitioner should have taken was to file a notice of appeal from the RTC to the Court of Appeals, not a petition for review on certiorari directly with this Court. Although petitioner intended his petition, filed on February 2, 2000, to be one filed under Rule 45 and he filed it well within the 15-day reglementary period counted from January 18, 2000, the same was in effect a petition forcertiorari under Rule 65, and is therefore dismissible for violation of the hierarchy of courts under Section 4 thereof. Petitioner failed to show that special and important reasons or exceptional and compelling circumstances exist to justify a direct filing of the petition with this Court instead of first taking an appeal to the Court of Appeals.5Likewise, petitioner cannot find refuge in the argument that he was raising pure questions of law. The sole matter petitioner assails in this action is the RTCs order of dismissal of his complaint for damages on the ground of prescription which was tantamount to an adjudication on the merits. Again, petitioner should have

resorted to the remedy of appealing the case to the Court of Appeals by filing a notice of appeal with the RTC. Second, even if the Court were to disregard the procedural infirmity, the petition should be denied for lack of merit. In his complaint, petitioner alleged and prayed, thus: 2. Last 27 November 1997, the plaintiff purchased from the defendant a brand new Toyota Hilux 2.4 motor vehicle with [E]ngine [N]o. 2-L-9514743. It was delivered to the plaintiff on 29 November 1997. Copies of the Vehicle Sales Invoice and Vehicle Delivery Note issued by the defendant are hereto attached as Annexes "A" and "B," respectively. 3. Last 18 October 1998, after only 12,000 kilometers of use, the vehicles engine cracked. Although it was previously driven through a heavy rain, it didnt pass through flooded streets high enough to stop sturdy and resistant vehicles. Besides, vehicles of this class are advertised as being capable of being driven on flooded areas or rugged terrain. 4. As plaintiff knows no reason why the vehicles engine would crack just like that, the same could only be due to the fact that said engine and/or the vehicle itself was defective even from the time it was bought. 5. Brought to the attention, defendant refused to answer for this defect saying it is not covered by the vehicles warranty. It refused to replace the vehicle as plaintiff demanded (or at least its engine, or even repair the damage). 6. As a result of defendants actions, plaintiff suffered mental anxiety and sleepless nights for which he demands an award of P200,000.00 moral damages. 7. By way of example for the public good, plaintiff should also be awarded exemplary damages in the amount of P200,000.00. 8. Forced to litigate to enforce his rights, plaintiff incurred, and shall further incur, litigationrelated expenses (including those for his counsels fees) in the total estimated sum of P100,000. WHEREFORE, it is respectfully prayed that judgment be rendered ordering defendant: a. to replace the subject vehicle with a brand new one or at least to replace its engine all at defendants cost; b. pay the plaintiff: i. P200,000 moral damages; ii. P200,000 exemplary damages; iii. P200,000 attorneys fees and litigation expenses; and iv. the costs of suit.

Other reliefs just and equitable are, likewise, prayed for.6 Petitioner contends that the dismissal on the ground of prescription was erroneous because the applicable provision is Article 169 of Republic Act No. 7394 (otherwise known as "The Consumer Act of the Philippines" which was approved on April 13, 1992), and not Article 1571 of the Civil Code. Petitioner specifies that in his complaint, he neither asked for a rescission of the contract of sale nor did he pray for a proportionate reduction of the purchase price. What petitioner claims is the enforcement of the contract, that is, that respondent should replace either the vehicle or its engine with a new one. In this regard, petitioner cites Article 169 of Republic Act No. 7394 as the applicable provision, so as to make his suit come within the purview of the two-year prescriptive period. Tangentially, petitioner also justifies that his cause of action has not yet prescribed because this present suit, which was an action based on quasi-delict, prescribes in four years. On the other hand, respondent maintains that petitioners cause of action was already barred by the statute of limitations under Article 1571 of the Civil Code for having been filed more than six months from the time the vehicle was purchased and/or delivered. Respondent reiterates that Article 169 of Republic Act No. 7394 does not apply. Petitioners argument is erroneous. Article 1495 of the Civil Code states that in a contract of sale, the vendor is bound to transfer the ownership of and to deliver the thing that is the object of sale. Corollarily, the pertinent provisions of the Code set forth the available remedies of a buyer against the seller on the basis of a warranty against hidden defects: Art. 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold may have, should they render it unfit for the use for which it is intended, or should they diminish its fitness for such use to such an extent that, had the vendee been aware thereof, he would not have acquired it or would have given a lower price for it; but said vendor shall not be answerable for patent defects or those which may be visible, or for those which are not visible if the vendee is an expert who, by reason of this trade or profession, should have known them. (Emphasis supplied) Art. 1566. The vendor is responsible to the vendee for any hidden faults or defects in the thing sold, even though he was not aware thereof. This provision shall not apply if the contrary has been stipulated and the vendor was not aware of the hidden faults or defects in the thing sold. Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six months from the delivery of the thing sold. (Emphasis supplied) Under Article 1599 of the Civil Code, once an express warranty is breached, the buyer can accept or keep the goods and maintain an action against the seller for damages. In the absence of an existing express warranty on the part of the respondent, as in this case, the allegations in petitioners complaint for damages were clearly anchored on the enforcement of an implied warranty against hidden defects, i.e., that the engine of the vehicle which respondent had sold to him was not defective. By filing this case, petitioner wants to hold respondent responsible for breach of implied warranty for having sold a vehicle with defective engine. Such being the case, petitioner should have exercised this right within six months from the delivery of the thing sold.7 Since petitioner filed the complaint on April 20, 1999, or more than nineteen months counted from November 29, 1997 (the date of the delivery of the motor vehicle), his cause of action had become time-barred.

Petitioner contends that the subject motor vehicle comes within the context of Republic Act No. 7394. Thus, petitioner relies on Article 68 (f) (2) in relation to Article 169 of Republic Act No. 7394. Article 4 (q) of the said law defines "consumer products and services" as goods, services and credits, debts or obligations which are primarily for personal, family, household or agricultural purposes, which shall include, but not limited to, food, drugs, cosmetics, and devices. The following provisions of Republic Act No. 7394 state: Art. 67. Applicable Law on Warranties. The provisions of the Civil Code on conditions and warranties shall govern all contracts of sale with conditions and warranties. Art. 68. Additional Provisions on Warranties. In addition to the Civil Code provisions on sale with warranties, the following provisions shall govern the sale of consumer products with warranty: e) Duration of warranty. The seller and the consumer may stipulate the period within which the express warranty shall be enforceable. If the implied warranty on merchantability accompanies an express warranty, both will be of equal duration.
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Any other implied warranty shall endure not less than sixty (60) days nor more than one (1) year following the sale of new consumer products. f) Breach of warranties xxx xxx 2) In case of breach of implied warranty, the consumer may retain in the goods and recover damages, or reject the goods, cancel the contract and recover from the seller so much of the purchase price as has been paid, including damages. (Emphasis supplied.) Consequently, even if the complaint is made to fall under the Republic Act No. 7394, the same should still be dismissed since the prescriptive period for implied warranty thereunder, which is one year, had likewise lapsed. WHEREFORE, the petition is DENIED for being in violation of the hierarchy of courts, and in any event, for lack of merit. No costs. SO ORDERED. G.R. No. 168943 October 27, 2006

IGLESIA NI CRISTO, petitioner, vs. HON. THELMA A. PONFERRADA, in her capacity as Presiding Judge, Regional Trial Court, Br. 104, Quezon City, and HEIRS OF ENRIQUE G. SANTOS, respondents.

DECISION

CALLEJO, SR, J.: This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 72686 and its Resolution2 denying the motion for reconsideration of the said decision. On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, all surnamed Santos, and Sonia Santos-Wallin, represented by Enrique G. Santos, filed a complaint3 for Quieting of Title and/or Accion Reinvindicatoria before the Regional Trial Court (RTC) of Quezon City against the Iglesia Ni Cristo (INC), defendant therein. Plaintiffs alleged therein that, during his lifetime, Enrique Santos was the owner of a 936-squaremeter parcel of land located in Tandang Sora, Quezon City covered by Transfer Certificate of Title (TCT) No. 57272 issued by the Register of Deeds on July 27, 1961 which cancelled TCT No. 57193289. He had been in possession of the owners duplicate of said title and had been in continuous, open, adverse and peaceful possession of the property. He died on February 9, 1970 and was survived by his wife, Alicia Santos, and other plaintiffs, who were their children. Thereafter, plaintiffs took peaceful and adverse possession of the property, and of the owners duplicate of said title. When the Office of the Register of Deeds of Quezon City was burned on June 11, 1988, the original copy of said title was burned as well. The Register of Deeds had the title reconstituted as TCT No. RT-110323, based on the owners duplicate of TCT No. 57272. Sometime in February 1996, plaintiffs learned that defendant was claiming ownership over the property based on TCT No. 321744 issued on September 18, 1984 which, on its face, cancelled TCT No. 320898, under the name of the Philippine National Bank, which allegedly cancelled TCT No. 252070 in the names of the spouses Marcos and Romana dela Cruz. They insisted that TCT Nos. 321744, 320898 and 252070 were not among the titles issued by the Register of Deeds of Quezon City and even if the Register of Deeds issued said titles, it was contrary to law. Enrique Santos, during his lifetime, and his heirs, after his death, never encumbered or disposed the property. In 1996, plaintiffs had the property fenced but defendant deprived them of the final use and enjoyment of their property. Plaintiffs prayed that, after due proceedings, judgment be rendered in their favor, thus: WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered quieting the title of plaintiffs over and/or recover possession of their said property in the name of deceased Enrique Santos, covered by said TCT No. RT-110323(57272) of the Register of Deeds at Quezon City and that: 1. The title of defendant, TCT No. 321744 be ordered cancelled by the Register of Deeds of Quezon City; 2. The defendant be ordered to pay plaintiffs claims for actual damages in the sum of P100,000.00; 3. The defendant be ordered to pay plaintiffs claims for compensatory damages in the sum of at leastP1,000,000.00; 4. The defendant be ordered to pay plaintiffs claims for reimbursement of the lawyers professional fees consisting of the aforesaid P50,000.00 acceptance fee

and reimbursement of the said success fee in par. 10 above; and lawyers expenses of P2,000.00 for each hearing in this case; 5. The defendant be ordered to pay expenses and costs of litigation in the sum of at leastP200,000.00. Other reliefs that are just and equitable in the premises are, likewise, prayed for.4 As gleaned from the caption of the complaint, plaintiffs appear to be the heirs of Enrique Santos, represented by Enrique G. Santos. The latter signed the Verification and Certificate of Non-Forum Shopping which reads: I, ENRIQUE G. SANTOS, of legal age, under oath, state that I am one of the children of the late Enrique Santos and I represent the heirs of said Enrique Santos who are my co-plaintiffs in the above-captioned case and that I directed the preparation of the instant complaint, the contents of which are true and correct to the best of my knowledge and the attachments are faithful reproductions of the official copies in my possession. I hereby certify that I have not commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or different Divisions thereof, or any other tribunal or agency, and to the best of my knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals, or different Divisions thereof, or any other tribunal or agency, and that I shall notify this Commission within three days from notice that a similar action or proceeding has been filed or is pending thereat. IN WITNESS WHEREOF, I hereby affix my signature this 23rd day of October 2001 at Pasig City, Metro Manila. (Sgd.) ENRIQUE G. SANTOS SUBSCRIBED AND SWORN to before me this 23rd day of October 2001 at Pasig City, affiant exhibiting to me his CTC No. 07303074 issued at Sta. Cruz, Laguna on April 16, 2001. (Sgd.) PETER FRANCIS G. ZAGALA Notary Public Until December 31, 2002 PTR No. 0287069 Issued on 1-10-01 At Pasig City5 Defendant moved to dismiss plaintiffs complaint on the following grounds: (1) plaintiffs failed to faithfully comply with the procedural requirements set forth in Section 5, Rule 7 of the 1997 Rules of Civil Procedure; (2) the action (either Quieting of Title or Accion Reinvindicatoria) had prescribed, the same having been filed only on October 24, 2001 beyond the statutory ten-year period therefor; and (3) that the complaint is defective in many respects.6

Defendant asserted that the case involved more than one plaintiff but the verification and certification against forum shopping incorporated in the complaint was signed only by Enrique Santos. Although the complaint alleges that plaintiffs are represented by Enrique Santos, there is no showing that he was, indeed, authorized to so represent the other plaintiffs to file the complaint and to sign the verification and certification of non-forum shopping.7 Thus, plaintiffs failed to comply with Section 5, Rule 7 of the Rules of Court. Defendant cited the ruling of this Court in Loquias v. Office of the Ombudsman.8 Defendant maintained that the complaint is defective in that, although there is an allegation that Enrique Santos represents the other heirs, there is nothing in the pleading to show the latters authority to that effect; the complaint fails to aver with particularity the facts showing the capacity of defendant corporation to sue and be sued; and the pleading does not state the address of plaintiffs. Defendant likewise averred that the complaint should be dismissed on the ground of prescription. It argued that plaintiffs anchor their claim on quieting of title and considering that they are not in possession of the land in question, their cause of action prescribed after ten years. On the other hand, if the supposed right of plaintiffs is based on accion reinvindicatoria, prescription would set in after 10 years from dispossession. In both cases, defendant asserts, the reckoning point is 1984 when defendant acquired TCT No. 321744 and possession of the land in question. In their Comment9 on the motion, plaintiffs averred that the relationship of a co-owner to the other coowners is fiduciary in character; thus, anyone of them could effectively act for another for the benefit of the property without need for an authorization. Consequently, Enrique Santos had the authority to represent the other heirs as plaintiffs and to sign the verification and certification against forum shopping.10 On the issue of prescription, plaintiffs argued that the prescriptive period for the actions should be reckoned from 1996, when defendant claimed ownership over the property and barred plaintiffs from fencing their property, not in 1984 when TCT No. 321744 was issued by the Register of Deeds in the name of defendant as owner. In its reply, defendant averred that absent any authority from his co-heirs, Enrique Santos must implead them as plaintiffs as they are indispensable parties. In response, plaintiffs aver that a coowner of a property can execute an action for quieting of title without impleading the other coowners. The trial court issued an Order11 denying defendants motion to dismiss. It declared that since Enrique Santos was one of the heirs, his signature in the verification and certification constitutes substantial compliance with the Rules. The court cited the ruling of this Court in Dar v. AlonzoLegasto.12 The court, likewise, held that prescription had not set in and that failure to state the address of plaintiffs in the complaint does not warrant the dismissal of the complaint. Defendant filed a motion for reconsideration, which the court likewise denied in an Order13 dated July 10, 2002. Unsatisfied, defendant, as petitioner, filed a Petition for Certiorari and Prohibition with Prayer for the Issuance of a Temporary Restraining Order and/or Preliminary Injunction14 before the CA, raising the following issues: I. WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD THAT THE CERTIFICATION OF NON-FORUM SHOPPING SIGNED BY ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE,

IN CLEAR CONTRAVENTION OF THE RULES OF COURT, AND THE RULING IN LOQUIAS V. OFFICE OF THE OMBUDSMAN, G.R. NO. 1399396 (SIC), AUGUST 16, 2000, 338 SCRA 62, AND ORTIZ V. COURT OF APPEALS, G.R. NO. 127393, 299 SCRA 708 (DECEMBER 4, 1998). II. WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION IN APPLYING THE RULING IN DAR, ET. AL. V. HON. ROSE MARIE ALONZO-LEGASTO, ET. AL., G.R. NO. 143016, AUGUST 30, 2000 TO THE INSTANT CASE. III. WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD THAT THE AUTHORITY OF ENRIQUE G. SANTOS TO REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE "INC" IS A MATTER OF EVIDENCE. IV. WHETHER OR NOT RESPONDENT JUDGE GRAVELY ERRED AND ABUSED HER DISCRETION WHEN SHE HELD THAT THE ACTION FOR QUIETING OF TITLE AND/OR ACCION REINVINDICATORIA (CIVIL CASE NO. Q-01-45415) HAS NOT YET PRESCRIBED.15 Petitioner averred that, of the plaintiffs below, only plaintiff Enrique Santos signed the verification and certification of non-forum shopping. Under Section 5, Rule 7 of the 1997 Rules of Civil Procedure, all the plaintiffs must sign, unless one of them is authorized by a special power of attorney to sign for and in behalf of the others. Petitioner argues that the bare claim of Enrique Santos that he signed the verification and certification in his behalf and of the other plaintiffs who are his co-heirs/co-owners of the property does not even constitute substantial compliance of the rule. Contrary to the ruling of the trial court, the absence or existence of an authority of Enrique Santos to sign the verification and certification for and in behalf of his co-plaintiffs is not a matter of evidence. The defect is fatal to the complaint of respondents and cannot be cured by an amendment of the complaint. The trial court erred in applying the ruling of this Court in Dar v. Alonzo-Legasto.16 Petitioner maintained that the action of respondents, whether it be one for quieting of title or an accion reinvindicatoria, had prescribed when the complaint was filed on October 24, 2001. Petitioner asserts that this is because when respondents filed their complaint, they were not in actual or physical possession of the property, as it (petitioner) has been in actual possession of the property since 1984 when TCT No. 321744 was issued to it by the Register of Deeds. This is evident from the nature of a reinvindicatory action itself which is an action whereby plaintiff alleges ownership over the subject parcel of land and seeks recovery of its full possession. By their action, respondents thereby admitted that petitioner was in actual possession of the property, and as such, respondents action for quieting of title or accion reinvindicatoria may prescribe in ten (10) years from 1984 or in 1994, it appearing that it acted in good faith when it acquired the property from the registered owner, conformably with Article 555(4) of the New Civil Code. On April 7, 2005, the CA rendered the assailed decision17 dismissing the petition, holding that the RTC did not commit grave abuse of its discretion amounting to lack or excess of jurisdiction in denying petitioners motion to dismiss. As the Court held in DAR v. Alonzo-Legasto18 and in Gudoy v.

Guadalquiver,19 the certification signed by one with respect to a property over which he shares a common interest with the rest of the plaintiffs (respondents herein) substantially complied with the Rules. As to the issue of prescription, the appellate court held that the prescriptive period should be reckoned from 1996, when petitioner claimed ownership and barred respondents from fencing the property. Petitioner is now before this Court on petition for review on certiorari, raising the following issues: I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN RULING THAT THE CERTIFICATION OF NON-FORUM SHOPPING SIGNED BY RESPONDENT ENRIQUE G. SANTOS ALONE IS A SUBSTANTIAL COMPLIANCE WITH SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL PROCEDURE AND IN APPLYING THE CASE OF GUDOY V. GUADALQUIVER, 429 SCRA 723, WITHOUT REGARD TO MORE RECENT JURISPRUDENCE. II. WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE AUTHORITY OF RESPONDENT ENRIQUE G. SANTOS TO REPRESENT HIS CO-HEIRS IN THE FILING OF THE COMPLAINT AGAINST THE PETITIONER IS A MATTER OF EVIDENCE. III. WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION FOR QUIETING OF TITLE AND/OR ACCION REINVINDICATORIA (CIVIL CASE NO. Q-0145415) HAS NOT YET PRESCRIBED.20 Petitioner reiterated its arguments in support of its petition in the CA as its arguments in support of its petition in the present case. Sections 4 and 5, Rule 7 of the Revised Rules of Court on verification and certification against forum shopping read: Sec. 4. Verification. Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or accompanied by affidavit. A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based on authentic records. A pleading required to be verified which contains a verification based on "information and belief" or upon "knowledge, information and belief," or lacks a proper verification, shall be treated as an unsigned pleading. Sec. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court,

tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions. The purpose of verification is simply to secure an assurance that the allegations of the petition (or complaint) have been made in good faith; or are true and correct, not merely speculative. This requirement is simply a condition affecting the form of pleadings, and noncompliance therewith does not necessarily render it fatally defective. Indeed, verification is only a formal, not a jurisdictional requirement.21 The issue in the present case is not the lack of verification but the sufficiency of one executed by only one of plaintiffs. This Court held in Ateneo de Naga University v. Manalo,22 that the verification requirement is deemed substantially complied with when, as in the present case, only one of the heirs-plaintiffs, who has sufficient knowledge and belief to swear to the truth of the allegations in the petition (complaint), signed the verification attached to it. Such verification is deemed sufficient assurance that the matters alleged in the petition have been made in good faith or are true and correct, not merely speculative. The same liberality should likewise be applied to the certification against forum shopping. The general rule is that the certification must be signed by all plaintiffs in a case and the signature of only one of them is insufficient. However, the Court has also stressed in a number of cases that the rules on forum shopping were designed to promote and facilitate the orderly administration of justice and thus should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. The rule of substantial compliance may be availed of with respect to the contents of the certification. This is because the requirement of strict compliance with the provisions merely underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded.23 The substantial compliance rule has been applied by this Court in a number of cases: Cavile v. Heirs of Cavile,24where the Court sustained the validity of the certification signed by only one of petitioners because he is a relative of the other petitioners and co-owner of the properties in dispute; Heirs of Agapito T. Olarte v. Office of the President of the Philippines,25 where the Court allowed a certification signed by only two petitioners because the case involved a family home in which all the petitioners shared a common interest; Gudoy v. Guadalquiver,26where the Court considered as valid the certification signed by only four of the nine petitioners because all petitioners filed as coowners pro indiviso a complaint against respondents for quieting of title and damages, as such, they all have joint interest in the undivided whole; and Dar v. Alonzo-Legasto,27 where the Court sustained the certification signed by only one of the spouses as they were sued jointly involving a property in which they had a common interest.

It is noteworthy that in all of the above cases, the Court applied the rule on substantial compliance because of the commonality of interest of all the parties with respect to the subject of the controversy. Applying the doctrines laid down in the above cases, we find and so hold that the CA did not err in affirming the application of the rule on substantial compliance. In the instant case, the property involved is a 936-square-meter real property. Both parties have their respective TCTs over the property. Respondents herein who are plaintiffs in the case below have a common interest over the property being the heirs of the late Enrique Santos, the alleged registered owner of the subject property as shown in one of the TCTs. As such heirs, they are considered co-owners pro indiviso of the whole property since no specific portion yet has been adjudicated to any of the heirs. Consequently, as one of the heirs and principal party, the lone signature of Enrique G. Santos in the verification and certification is sufficient for the RTC to take cognizance of the case. The commonality of their interest gave Enrique G. Santos the authority to inform the RTC on behalf of the other plaintiffs therein that they have not commenced any action or claim involving the same issues in another court or tribunal, and that there is no other pending action or claim in another court or tribunal involving the same issues. Hence, the RTC correctly denied the motion to dismiss filed by petitioner. Considering that at stake in the present case is the ownership and possession over a prime property in Quezon City, the apparent merit of the substantive aspects of the case should be deemed as a special circumstance or compelling reason to allow the relaxation of the rule. Time and again, this Court has held that rules of procedure are established to secure substantial justice. Being instruments for the speedy and efficient administration of justice, they may be used to achieve such end, not to derail it. In particular, when a strict and literal application of the rules on non-forum shopping and verification will result in a patent denial of substantial justice, these may be liberally construed.28 The ends of justice are better served when cases are determined on the merits after all parties are given full opportunity to ventilate their causes and defenses rather than on technicality or some procedural imperfections.29 Indeed, this Court strictly applied the rules on verification and certification against forum shopping as in the cases of Loquias v. Office of the Ombudsman30 and Tolentino v. Rivera.31 However, in both cases, the commonality of interest between or among the parties is wanting. In Loquias, the coparties were being sued in their individual capacities as mayor, vice mayor and members of the municipal board. In Tolentino, the lone signature of Tolentino was held insufficient because he had no authority to sign in behalf of the Francisco spouses. In such case, the Court concluded that Tolentino merely used the spouses names for whatever mileage he thought he could gain. It is thus clear from these cases that the commonality of interest is material in the relaxation of the Rules. Anent the issue of the authority of Enrique G. Santos to represent his co-heirs/co-plaintiffs, we find no necessity to show such authority. Respondents herein are co-owners of the subject property. As such co-owners, each of the heirs may properly bring an action for ejectment, forcible entry and detainer, or any kind of action for the recovery of possession of the subject properties. Thus, a coowner may bring such an action, even without joining all the other co-owners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all.32 We uphold the validity of the complaint because of the following circumstances: (1) the caption of the instant case is Heirs of Enrique Santos v. Iglesia ni Cristo;33 (2) the opening statement of the complaint states that plaintiffs are the heirs of Enrique Santos and likewise names the particular heirs of the latter who instituted the complaint below;34 (3) the case involves a property owned by the predecessor-in-interest of plaintiffs therein;35 and (4) the verification signed by Enrique G. Santos

clearly states that he is one of the children of the late Enrique Santos and that he represents the heirs of said Enrique Santos.36 On the issue of prescription of action, petitioner avers that the action of respondents is one to quiet title and/or accion reinvindicatoria, and that respondents asserted ownership over the property and sought the recovery of possession of the subject parcel of land. It insists that the very nature of the action presupposes that respondents had not been in actual and material possession of the property, and that it was petitioner which had been in possession of the property since 1984 when it acquired title thereon. The action of respondent prescribed in ten years from 1984 when petitioner allegedly dispossessed respondents, in accordance with Article 555(4) of the New Civil Code. The contention of petitioner has no merit. The nature of an action is determined by the material allegations of the complaint and the character of the relief sought by plaintiff, and the law in effect when the action was filed irrespective of whether he is entitled to all or only some of such relief.37 As gleaned from the averments of the complaint, the action of respondents was one for quieting of title under Rule 64 of the Rules of Court, in relation to Article 476 of the New Civil Code. The latter provision reads: Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein. A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an interest in land appearing in some legal form but which is, in fact, unfounded, or which it would be inequitable to enforce.38 An action for quieting of title is imprescriptible until the claimant is ousted of his possession.39 The owner of a real property, as plaintiff, is entitled to the relief of quieting of title even if, at the time of the commencement of his action, he was not in actual possession of real property. After all, under Article 477 of the New Civil Code, the owner need not be in possession of the property. If on the face of TCT No. 321744 under the name of plaintiff, its invalidity does not appear but rests partly in pais, an action for quieting of title is proper.40 In the present case, respondents herein, as plaintiffs below, alleged in their complaint, that their father, Enrique Santos, was the owner of the property based on TCT No. 57272 issued on July 27, 1961; and that, after his death on February 9, 1970, they inherited the property; Enrique Santos, during his lifetime, and respondents, after the death of the former, had been in actual, continuous and peaceful possession of the property until 1994 when petitioner claimed ownership based on TCT No. 321744 issued on September 18, 1984 and barred respondents from fencing their property. Petitioners claim that it had been in actual or material possession of the property since 1984 when TCT No. 321744 was issued in its favor is belied by the allegations in the complaint that respondents had been in actual and material possession of the property since 1961 up to the time they filed their complaint on October 24, 2001. Admittedly, respondents interposed the alternative reinvindicatory action against petitioner. An accion reinvindicatoria does not necessarily presuppose that the actual and material possession of the property is on defendant and that plaintiff seeks the recovery of such possession from

defendant. It bears stressing that anaccion reinvindicatoria is a remedy seeking the recovery of ownership and includes jus possidendi, jus utendi, andjus fruendi as well. It is an action whereby a party claims ownership over a parcel of land and seeks recovery of its full possession.41 Thus, the owner of real property in actual and material possession thereof may file an accion reinvindicatoria against another seeking ownership over a parcel of land including jus vindicandi, or the right to exclude defendants from the possession thereof. In this case, respondents filed an alternative reinvindicatory action claiming ownership over the property and the cancellation of TCT No. 321744 under the name of petitioner. In fine, they sought to enforce their jus utendi and jus vindicandi when petitioner claimed ownership and prevented them from fencing the property. Since respondents were in actual or physical possession of the property when they filed their complaint against petitioner on October 24, 2001, the prescriptive period for the reinvindicatory action had not even commenced to run, even if petitioner was able to secure TCT No. 321744 over the property in 1984. The reason for this is that x x x one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession.42 IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the Court of Appeals in CA-G.R. SP No. 72686 is AFFIRMED. Costs against petitioner. SO ORDERED. G.R. No. 170232 December 5, 2006

VETTE INDUSTRIAL SALES CO., INC., KENNETH TAN, ESTRELLA CHENG, LUISITO RAMOS, YVETTE TAN, KESSENTH CHENG, VEVETTE CHENG and FELESAVETTE CHENG, petitioners, vs. SUI SOAN S. CHENG a.k.a. CHENG SUI SOAN, respondent. x ---------------------------------------------------- x G.R. No. 170301 December 5, 2006

SUI SOAN S. CHENG a.k.a. CHENG SUI SOAN, petitioner, vs. VETTE INDUSTRIAL SALES CO., INC., KENNETH TAN, ESTRELLA CHENG, LUISITO RAMOS, YVETTE TAN, KESSENTH CHENG, VEVETTE CHENG and FELESAVETTE CHENG, respondents.

DECISION

YNARES-SANTIAGO, J.: These consolidated Petitions for Review on Certiorari1 assail the Decision2 dated September 22, 2005 of the Court of Appeals in CA-G.R. SP No. 88863 entitled, "Vette Industrial Sales, Company, Inc., Kenneth Tan, Estrella Cheng, Luisito Ramos, Yvette Tan, Kessenth Cheng, Vevette Cheng, and Felesavette Cheng, Petitioners versus Hon. Regional Trial Court of Manila, Branch 173, and Sui Soan S. Cheng a.k.a. Cheng Sui Soan, Respondents." Also assailed is the Resolution3 dated October 27, 2005 denying petitioners motion for partial reconsideration and respondent Suis motion for reconsideration. In his Complaint4 for specific performance and damages filed against Vette Industrial Sales Company, Inc., Kenneth Tan, Estrella Cheng, Luisito Ramos, Yvette Tan, Kessenth Cheng, Vevette Cheng, and Felesavette Cheng (petitioners) and docketed as Civil Case No. 03-105691, Sui Soan S. Cheng a.k.a. Cheng Sui Soan (Sui) alleged that on October 24, 2001, he executed a Deed of Assignment,5 where he transferred his 40,000 shares in the company in favor of Kenneth Tan, Vevette Cheng, Felesavette Cheng, and Yvette Tan (Petitioners-Assignees). To implement the Deed of Assignment, the company acknowledged in a Memorandum of Agreement (MOA),6 that it owed him P6.8 million pesos, plus insurance proceeds amounting to P760,000.00 and a signing bonus of P300,000.00. Thereafter, he was issued 48 postdated checks but after the 11th check, the remaining checks were dishonored by the bank. Sui also claimed that petitioners did not remit to him the insurance proceeds, thus breaching their obligation under the MOA which entitled him to moral and exemplary damages, and attorneys fees. In their Answer With Compulsory Counterclaim,7 petitioners alleged that Sui sold his shares for only P1.00 per share which they already paid; that the MOA was unenforceable because it was executed without authorization from the board of directors; that the MOA was void for want of consideration; and that petitioner Kenneth Tan executed the MOA after Sui issued threats and refused to sign the waiver and quitclaim. After the issues were joined, pre-trial was set on July 3, 2003.8 However, the case was first submitted for mediation but it was referred back to the court for continuation of the proceedings when no settlement was arrived at during mediation. Sui thereafter filed a Motion to Set Pre-trial9 on December 16, 2003. Petitioners received the motion but they did not attend because there was no notice from the Court setting the pre-trial date. On December 29, 2003, petitioners received two orders from the trial court. The first Order10 allowed Sui to present evidence ex-parte, while the second Order11 revoked the first order after the trial court noted that "what was set for consideration on December 16, 2003 was merely a motion to set pretrial." Thus, the trial court reset the pre-trial on January 15, 2004 but it was postponed and moved to May 21, 2004. On said date, Sui and his counsel, Atty. Pedro M. Ferrer (Atty. Ferrer), failed to appear. Consequently, the trial court ordered the dismissal of the case without prejudice on the part of petitioners to present and prove their counterclaim and set the hearing for reception of evidence on June 22, 2004.12 Atty. Ferrer filed a Manifestation and Motion for Reconsideration13 of the order of dismissal, explaining that he arrived late for the hearing because he had to drop by his office to get the case folder because he had just arrived from South Cotabato where he served as Chief Counsel in the Provincial Board of Canvassers for Governor Datu Pax Mangudadatu and Congressman Suharto Mangudadatu. The trial court required petitioners to file their Comment on the Manifestation and Motion for Reconsideration. In their Opposition,14 petitioners asserted that the motion for reconsideration be

denied outright because (1) Sui did not comply with the three-day notice rule which is mandatory under Section 4, Rule 15 of the Rules of Court considering that petitioners received the manifestation and motion for reconsideration only one day prior to the date of hearing of the motion for resolution, thus the same must be treated as a mere scrap of paper; (2) the trial court did not comply with Section 6 of Rule 15 of the Rules15 when it acted on the manifestation and motion of Sui despite the latters failure to submit proof of receipt by petitioners of the manifestation and motion; (3) the negligence of counsel binds the client, thus, when Atty. Ferrer arrived late for the hearing, the trial court correctly dismissed the complaint; and (4) the explanation of Atty. Ferrer is unacceptable because traffic gridlocks are daily events in the metropolis, thus, Atty. Ferrer should have left his place early. In his Reply,16 Sui averred that the motion complied with Section 5 of Rule 15 of the Rules17 and that the setting of the hearing of the motion on May 28, 2004 was within the three day period for it was filed on May 25, 2004. He added that the same was not heard because the trial court allowed petitioners to file a comment on the manifestation and motion for reconsideration, which was received by the latter prior to the said setting. In an Order dated December 16, 2004,18 the trial court granted Suis motion for reconsideration and set aside the dismissal of the complaint, the dispositive portion of which provides: WHEREFORE, prescinding with such ruling and in the interest of substantial justice, plaintiffs motion is GRANTED and the order dated May 21, 2004 is hereby lifted and set aside with the warning that any delay in this proceedings will not be countenanced by the Court. Set pre-trial anew on February 15, 2005. Notify the parties. SO ORDERED.19 The trial court cited Ace Navigation Co., Inc. v. Court of Appeals,20 which held that since rules of procedure are mere tools designed to facilitate the attainment of justice, their strict and rigid application which would result in technicalities that tend to frustrate rather than promote substantial justice must always be avoided the dismissal of an appeal on purely technical ground is frowned upon especially if it will result to unfairness. The Motion for Reconsideration21 filed by petitioners was denied by the trial court22 hence they filed a Petition for Certiorari23 with the Court of Appeals which granted the petition, thus: UPON THE VIEW WE TAKE OF THIS CASE, THUS, the writ applied for is partly GRANTED. The assailed orders must be, as they hereby are, VACATED and SET ASIDE, and another hereby issued dismissing the instant complaint, but "without prejudice." This means that the complaint can be REINSTATED. On the other hand, petitioners are hereby given leave to present before the Trial Court evidence of their counterclaim. Without costs in this instance. SO ORDERED.24 The Court of Appeals noted that both Atty. Ferrer and Sui were not in attendance at the pre-trial conference; that Section 5 of Rule 18 mentions only the effect of the failure to appear on the part of

"the plaintiff" but is silent on the effect of failure of the partys counsel to appear at the pre-trial; that the Manifestation and Motion for Reconsideration25 mentioned only the reasons why Atty. Ferrer was absent without stating that he was fully authorized in writing to enter into an amicable settlement, or to submit to alternative modes of dispute resolution, or to enter into stipulations or admissions of facts and of documents; and that there was no explanation for Suis nonappearance. Thus, based on these circumstances, the Court of Appeals held that dismissal of the case is proper but without prejudice to the filing of a new action.26 Both parties moved for reconsideration but the same were jointly denied in a Resolution dated October 27, 2005. Hence, these consolidated Petitions. In G.R. No. 170232, petitioners raise the following errors: I. THE COURT OF APPEALS ERRED IN NOT DISMISSING THE COMPLAINT OF RESPONDENT CHENG IN CIVIL CASE NO. 03-105691 WITH PREJUDICE. II. THE COURT OF APPEALS ERRED IN CONCLUDING THAT RESPONDENTS COUNSEL FAILED TO APPRECIATE THE BASIC RULES ON PRE-TRIAL. III. THE COURT OF APPEALS ERRED IN NOT CONSIDERING THE MISTAKE OR NEGLIGENCE OF RESPONDENTS COUNSEL AS BINDING ON THE RESPONDENT HIMSELF. IV. THE COURT OF APPEALS ERRED IN APPLYING THE RULINGS OF THE HONORABLE COURT IN THE DE LOS REYES VS. CAPULE (102 PHIL. 464) AND SUAREZ VS. COURT OF APPEALS (220 SCRA 274)CASES. V. THE COURT OF APPEALS ERRED IN NOT CONSIDERING RESPONDENTS MANIFESTATION AND MOTION FOR RECONSIDERATION DATED MAY 21, 2004 FILED BEFORE THE TRIAL COURT AS A MERE SCRAP, AND A USELESS PIECE, OF PAPER AND IN NOT CONSIDERING THE ORDER DATED MAY 21, 2004 OF THE TRIAL COURT AS ALREADY FINAL IN VIEW OF THE PROCEDURAL INVALIDITY/DEFECTIVENESS (I.E. IT FAILED TO COMPLY WITH SECTIONS 4 AND 6 OF THE RULES) OF RESPONDENTS MANIFESTATION AND MOTION FOR RECONSIDERATION DATED MAY 21, 2004. In G.R. No. 170301, Sui raises the following issues, thus: I. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE NON-APPEARANCE OF PETITIONER IN THE PRE-TRIAL MAY BE EXCUSED FOR A VALID CAUSE.

II. THE COURT OF APPEALS ERRED IN NOT RULING THAT THE CASE OF ACE NAVIGATION CO. INC. VS. COURT OF APPEALS IS SQUARELY APPLICABLE TO THE INSTANT CASE. The core issue for resolution is whether the Court of Appeals erred in dismissing without prejudice Civil Case No. 03-105691 and in ruling that the trial court committed grave abuse of discretion when it granted Suis motion for reconsideration to set aside the order of dismissal of the complaint. The judge has the discretion whether or not to declare a party non-suited.27 It is, likewise, settled that the determination of whether or not an order of dismissal issued under such conditions should be maintained or reconsidered rests upon the sound discretion of the trial judge.28 The next question to be resolved is whether there was grave abuse of discretion of the trial judge. We hold that there was none. The case of Estate of Salud Jimenez v. Philippine Export Processing Zone29 discussed the propriety of filing a Petition for Certiorari under Section 1 of Rule 65 of the Rules of Court, thus: A petition for certiorari is the proper remedy when any tribunal, board, or officer exercising judicial or quasi-judicial functions has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal, nor any plain, speedy, and adequate remedy at law. Grave abuse of discretion is defined as the capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. An error of judgment committed in the exercise of its legitimate jurisdiction is not the same as "grave abuse of discretion." An abuse of discretion is not sufficient by itself to justify the issuance of a writ of certiorari. The abuse must be grave and patent, and it must be shown that the discretion was exercised arbitrarily and despotically. As a general rule, a petition for certiorari will not lie if an appeal is the proper remedy thereto such as when an error of judgment as well as of procedure are involved. As long as a court acts within its jurisdiction and does not gravely abuse its discretion in the exercise thereof, any supposed error committed by it will amount to nothing more than an error of judgment reviewable by a timely appeal and not assailable by a special civil action of certiorari. However, in certain exceptional cases, where the rigid application of such rule will result in a manifest failure or miscarriage of justice, the provisions of the Rules of Court which are technical rules may be relaxed. Certiorari has been deemed to be justified, for instance, in order to prevent irreparable damage and injury to a party where the trial judge has capriciously and whimsically exercised his judgment, or where there may be danger of clear failure of justice, or where an ordinary appeal would simply be inadequate to relieve a party from the injurious effects of the judgment complained of.30 (Emphasis supplied) Lack of jurisdiction and excess of jurisdiction are distinguished thus: the respondent acts without jurisdiction if he does not have the legal power to determine the case; where the respondent, being clothed with the power to determine the case, oversteps his authority as determined by law, he is performing a function in excess of his jurisdiction.31 Thus, we now discuss whether the trial court granted the motion for reconsideration of Sui and reinstated the complaint without basis in law. Citing the case of Ace Navigation Co., Inc. v. Court of Appeals,32 the trial court held that rules of procedures are mere tools designed to facilitate the attainment of justice and must be relaxed if its strict and rigid application would frustrate rather than promote substantial justice. Thus, it lifted and set aside its order of dismissal in the interest of substantial justice, which is the legal basis for the trial court to grant the motion for reconsideration of Sui.

We have repeatedly warned against the injudicious and often impetuous issuance of default orders.33 While it is desirable that the Rules of Court be faithfully observed, courts should not be so strict about procedural lapses that do not really impair the proper administration of justice. If the rules are intended to ensure the proper and orderly conduct of litigation, it is because of the higher objective they seek which is the attainment of justice and the protection of substantive rights of the parties. Thus, the relaxation of procedural rules, or saving a particular case from the operation of technicalities when substantial justice requires it, as in the instant case, should no longer be subject to cavil.34 When the Court of Appeals held that the case is dismissible because Sui did not attend the pre-trial conference, it failed to consider the explanation of Atty. Ferrer that Sui executed a "Special Power of Attorney" in his behalf and that he was not absent on the scheduled pre-trial but was only late. Under Section 4 of Rule 18 of the Rules,35 the non-appearance of a party at the pre-trial may be excused when there is a valid cause shown or when a representative shall appear in his behalf, and is fully authorized in writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and to enter into stipulations or admissions of facts and of documents. Although Sui was absent during the pre-trial, Atty. Ferrer alleged that he was fully authorized to represent Sui. Moreover, it is not entirely accurate to state that Atty. Ferrer was absent during the pre-trial because he was only late, the reasons for which he explained in his Manifestation and Motion for Reconsideration. The circumstances attendant in the instant case compel this Court to relax the rules of procedure in the interest of substantial justice. Petitioners claim that the motion for reconsideration of Sui was procedurally defective because it was not served three days before the date of the hearing and no proof of service was given to the court, in violation of Sections 4 and 6 of Rule 15. Petitioners also aver that they received the Manifestation and Motion for Reconsideration of Sui on May 27, 2004 but the hearing was scheduled on May 28, 2004. Thus, it is nothing but a scrap of paper because it violated the three-day notice rule. We are not persuaded. In the instant case, we find that the purpose of a notice of hearing had been served. In Vlason Enterprises Corporation v. Court of Appeals,36 we enumerated the exceptions to the rule on notice of hearing, to wit: The Court has consistently held that a motion which does not meet the requirements of Sections 4 and 5 of Rule 15 of the Rules of Court is considered a worthless piece of paper, which the clerk of court has no right to receive and the trial court has no authority to act upon. Service of a copy of a motion containing a notice of the time and the place of hearing of that motion is a mandatory requirement, and the failure of movants to comply with these requirements renders their motions fatally defective. However, there are exceptions to the strict application of this rule. These exceptions are as follows: "x x x Liberal construction of this rule has been allowed by this Court in cases (1) where a rigid application will result in a manifest failure or miscarriage of justice; especially if a party successfully shows that the alleged defect in the questioned final and executory judgment is not apparent on its face or from the recitals contained therein; (2) where the interest of substantial justice will be served; (3) where the resolution of the motion is addressed solely to the sound and judicious discretion of the court; and (4) where the injustice to the adverse party is not commensurate [to] the degree of his thoughtlessness in not complying with the procedure prescribed."

The present case falls under the first exception. Petitioner was not informed of any cause of action or claim against it. All of a sudden, the vessels which petitioner used in its salvaging business were levied upon and sold in execution to satisfy a supposed judgment against it. To allow this to happen simply because of a lapse in fulfilling the notice requirement which, as already said, was satisfactorily explained would be a manifest failure or miscarriage of justice. A notice of hearing is conceptualized as an integral component of procedural due process intended to afford the adverse parties a chance to be heard before a motion is resolved by the court. Through such notice, the adverse party is permitted time to study and answer the arguments in the motion. Circumstances in the case at bar show that private respondent was not denied procedural due process, and that the very purpose of a notice of hearing had been served. On the day of the hearing, Atty. Desierto did not object to the said Motion for lack of notice to him; in fact, he was furnished in open court with a copy of the motion and was granted by the trial court thirty days to file his opposition to it. These circumstances clearly justify a departure from the literal application of the notice of hearing rule. In other cases, after the trial court learns that a motion lacks such notice, the prompt resetting of the hearing with due notice to all the parties is held to have cured the defect. Verily, the notice requirement is not a ritual to be followed blindly. Procedural due process is not based solely on a mechanistic and literal application that renders any deviation inexorably fatal. Instead, procedural rules are liberally construed to promote their objective and to assist in obtaining a just, speedy and inexpensive determination of any action and proceeding. For the foregoing reasons, we believe that Respondent Court committed reversible error in holding that the Motion for Reconsideration was a mere scrap of paper.37 (Emphasis supplied) When the trial court received Suis Manifestation and Motion for Reconsideration, it did not immediately resolve the motion. Instead, it allowed petitioners to file their comment and also leave to file a rejoinder if Sui files a reply.38These circumstances justify a departure from the literal application of the rule because petitioners were given the opportunity to study and answer the arguments in the motion. Petitioners claim that Sui failed to attach proof of service in violation of Section 6, Rule 15 of the Rule, must fail. In Republic of the Philippines v. Court of Appeals,39 we held, thus: Nonetheless, considering the question raised in the appeal of the government and the amount involved in this case, we think the Court of Appeals should have considered the subsequent service of the motion for reconsideration to be a substantial compliance with the requirement in Rule 15, 6. In De Rapisura v. Nicolas, the movant also failed to attach to his motion for reconsideration proof of service of a copy thereof to the other party. Nonetheless, this Court held the failure not fatal as the adverse party had actually received a copy of the motion and was in fact present in court when the motion was heard. It was held that the demands of substantial justice were satisfied by the actual receipt of said motion under those conditions.40 Petitioners admitted that they received a copy of Suis Manifestation and Motion for Reconsideration. In fact, they had the opportunity to oppose the same. Under these circumstances, we find that the demands of substantial justice and due process were satisfied.

It is the policy of the Court to afford party-litigants the amplest opportunity to enable them to have their cases justly determined, free from the constraints of technicalities.41 It should be remembered that rules of procedure are but tools designed to facilitate the attainment of justice, such that when rigid application of the rules tend to frustrate rather than promote substantial justice, this Court is empowered to suspend their operation.42 WHEREFORE, in view of the foregoing, the Decision dated September 22, 2005 and the Resolution dated October 27, 2005 of the Court of Appeals in CA-G.R. SP No. 88863 is REVERSED and SET ASIDE. The Order of the Regional Trial Court in Civil Case No. 03-105691, lifting its previous order of dismissal is REINSTATED and AFFIRMED. SO ORDERED. G.R. No. 144215 June 27, 2006

THE MANILA ELECTRIC COMPANY, Petitioner, vs. SOUTH PACIFIC PLASTIC MANUFACTURING CORPORATION, Respondent. x-------------------------------x G.R. No. 144300 June 27, 2006

SOUTH PACIFIC PLASTIC MANUFACTURING CORPORATION, Petitioner, vs. THE MANILA ELECTRIC COMPANY, Respondent. DECISION CORONA, J.: Before us are two petitions for review1 of the decision2 dated July 28, 2000 of the Court of Appeals (CA) in CA-G.R. SP No. 41399, the dispositive portion of which read: THE FOREGOING CONSIDERED, the Amended Decision while AFFIRMED, is hereby MODIFIED, by also directing the [South Pacific Plastic Manufacturing Corporation] to pay the [Manila Electric Company] P100,000.00 exemplary damages and P25,000.00 attorneys fees. SO ORDERED.3 The Manila Electric Company (Meralco) is a corporation duly organized and existing under Philippine laws engaged in the distribution and sale of electric power. South Pacific Plastic Manufacturing Corporation (South Pacific) is a corporation duly organized and existing under Philippine laws engaged in the manufacture, sale and exportation of plastic products. Both assail the decision of the CA via separate petitions for review. The cases were consolidated by this Court in a resolution dated July 18, 2001.4 The facts, as summarized by the CA, are as follows: South Pacific and Manila Electric Company (Meralco) were parties to several Contracts of Services under four (4) Contract Account Numbers, namely, Account Numbers 9487-4712-12, 9487-4922-18,

9487-902216 and 9487-9212-16. Under these contracts, Meralco agreed to supply South Pacific with electric power at the latters factory located at T. Santiago Street, Canumay, Valenzuela, Metro Manila. In consideration for Meralcos services, South Pacific agreed to pay the former its monthly billings as determined by the four (4) electric supply reading instruments to which the aforementioned account numbers have been assigned respectively. These electric meter instruments were installed by Meralco in South Pacifics premises. Under the contract of services, both parties agreed that: "6. The monthly bills for electric service rendered shall be paid by the CUSTOMER to collectors or at the COMPANYS main or branch offices or at its authorized banks within ten (10) days from the date said bills are presented for payment and should the CUSTOMER fail to pay any of the bills under this agreement or any other agreements, whether prior or present, with the COMPANY when due or should the CUSTOMER fail to comply with any of the terms and conditions of this agreement or any other agreements the COMPANY shall have the right to discontinue the supply of electric energy at the expiration of five (5) days from and after delivery to the CUSTOMER of a written notice to this effect. xxx xxx xxx CUSTOMERS LIABILITY Customers will be held responsible for tampering, interfering with, or breaking of seals of meters or other equipment of the Company installed on the Customers premises, and shall be held liable for the same according to law. PAYMENTS: xxx In the event of the stoppage or the failure by any meter to register the full amount of energy consumed, the Customer shall be billed for such period on an estimated consumption based upon his use of energy in a similar period of like use. xxx xxx xxx DISCONTINUANCE OF SERVICE The company reserves the right to discontinue service in case the Customer is in arrears in the payment of bills orfor failure to pay the adjusted bills in those cases where the meter stopped or failed to register the correct amount of energy consumed, or for failure to comply with any of these terms and conditions, or in the case of or to prevent fraud upon the Company. Before disconnection is made in the case of or to prevent fraud, the Company may adjust the bill of said Customer accordingly and if the adjusted bill is not paid, the Company may disconnect the same. xxx" For several years, Meralco continuously supplied South Pacific with electric power. The latter, in turn, regularly paid its bills for electric consumption as registered in the metering devices installed by Meralco. In 1981, however, South Pacific began receiving notices from Meralco demanding payment for certain amounts representing electric power consumption allegedly not reflected on South Pacifics

electric meters, and which was allegedly due to the defective electric meters installed in the latters premises. A routine inspection on the metering facilities at South Pacifics, and in the presence of the latters representative officer on numerous occasions starting June 1981 until 198[4], however, revealed that the four (4) electric meters installed therein were defective and were allegedly found to be tampered. For some time, said meters had been allegedly reflecting unusually lower power consumption by South Pacific than it actually used, as a result of which, the latter had not been paying the corresponding amount for its actual electricity consumption, thus, causing Meralco to sustain undue losses. Based on the results of, and findings at the inspection and the consequent laboratory tests, Meralco determined the number of kilowatt hours in unregistered electric energy actually used covering certain periods when South Pacific would have been liable to pay said unregistered electric consumption. Subsequently, Meralco sent the corresponding demand letters to South Pacific for the payment of the adjusted bills totaling P1,572,346.85, covering the period from April 1981 to April 1984, under threat of disconnection.5 On August 15, 1984, Meralco sent South Pacific a letter demanding the payment of the sum of P1,338,727.77 under threat of termination of all service contracts and disconnection of all power supply to South Pacifics premises.6 On August 23, 1984, South Pacific filed a petition for prohibition with the Regional Trial Court of Valenzuela, Metro Manila, Branch 171 docketed as Civil Case No. 2099-V-84. It alleged that irreparable damage to both its business and reputation, as well as immeasurable injury to its more than 1,500 employees, would result if Meralco was allowed to terminate its services and disconnect power supply to it.7 The trial court rendered a decision dated February 10, 1995 dismissing South Pacifics petition and awarding to Meralco the sum of P1,174,190.91 on its counterclaim, plus P25,000 as attorneys fees.8 South Pacific filed a motion for reconsideration while Meralco filed a motion for partial reconsideration (and to amend to conform to evidence). In an order dated January 31, 1996, the trial court denied both motions for reconsideration but granted the motion to amend of Meralco.9 Thus, in an amended decision dated February 8, 1996, the trial court reiterated its ruling dismissing South Pacifics petition but increasing the award on Meralcos counterclaims to P6,199,393.02.10 Both parties appealed the amended decision. On July 28, 2000, the CA rendered a decision not only affirming the amended decision but also awarding exemplary damages to Meralco in the amount of P100,000. In this petition before us, South Pacific raises the following grounds in support of its petition: 4.1 THE FINDINGS OF THE HONORABLE COURT OF APPEALS ARE NOT SUPPORTED BY THE EVIDENCE ON RECORD. 4.2 MERALCO MISERABLY FAILED TO JUSTIFY ITS ADJUSTED BILLINGS AGAINST SOUTH PACIFIC. 4.3 THERE WAS NO LEGAL BASIS FOR THE AWARD OF EXEMPLARY DAMAGES.11

It prays that the CAs decision be reversed and set aside and that its petition for prohibition be granted. Meralco, on the other hand, filed its petition on this sole ground: THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURTS RULING THAT THERE WAS NO FACTUAL AND LEGAL BASIS TO HOLD SOUTH PACIFIC LIABLE FOR THE DIFFERENTIAL BILLINGS AMOUNTING TO P397,155.94 AS A RESULT OF THE TAMPERING DISCOVERED ON 17 JUNE 1981 (ACCOUNT NO. 9487-4712), 16 JANUARY 1982 (ACCOUNT NO. 9487-4922-18), 13 APRIL 1981 (ACCOUNT NO. 9487-9012 [OLD]), 21 NOVEMBER 1983 (ACCOUNT NO. 9487-9022-16 [NEW]) AND 13 APRIL 1981 (ACCOUNT NO. 9487-[9212-16]).12 It prays that South Pacific be also held liable for the amount of P397,155.94, with interest thereon at the legal rate commencing from the date of demand on August 15, 1984 until the amount is fully paid.13 It is obvious that both parties want this Court to revisit the factual findings of the lower courts. Well established is the doctrine that under Rule 45 of the Rules of Court, only questions of law, not of fact, may be raised before the Supreme Court. It must be stressed that this Court is not a trier of facts and it is not its function to re-examine and weigh anew the respective evidence of the parties. Factual findings of the trial court, especially those affirmed by the CA, are conclusive on this Court when supported by the evidence on record.14 While this Court has recognized several exceptions to this rule,15 none of these exceptions applies here. Both the trial court and the CA found that South Pacific was liable for the unregistered electric power consumption which it failed to pay due to its defective meters inability to reflect the correct number of kilowatt hours actually used.16 As held by the CA: Contrary to South Pacifics contention that the award of P6,199,393.02 in favor of Meralco was not supported by evidence, We believe, however, that the latter is entitled to said amount. The lower court, in its assailed Decisions, was able to arrive at its own computation based on the figures submitted by Meralco which South Pacific failed to refute. These figures were apparently arrived at based on the findings during routine inspections, laboratory tests and computations made by Meralco in accordance with the stipulation in the service contracts providing that in the event any meter fails to register the full amount of energy consumed, "the Customer shall be billed for such period on an estimated consumption based upon his use of energy in a similar period of like use." There was nothing irregular in the manner that Meralco was able to come up with the adjusted billings.17 We see no reason to disturb these findings. Both the trial court and the CA also found that Meralco was not entitled to the differential billings in the total amount of P397,155.94: xxx However, the Court is at a loss how [Meralco] arrived at the computation of the differential bills under Account No. 9487-4712-12 in the amount of P12,288.97 as a result of the June 17, 1981 inspection; the amount ofP121,470.90 on January 16, 1982 inspection of Account No. 9487-492218; the amount of P73,496.33 on April 13, 1981 inspection of Account No. 9498-9012-18 (old); the amount of P62,695.72 on November 21, 1983 inspection of Account No. 9487-9022-16 (New) and the amount of P127,204.02 on April 13, 1981 inspection of Account No. 9487-9212-16. The date or period when the computation of differential billings as the result of the inspections conducted on June 17, 1981 of Account No. 9487-4712-12; the inspection on January 16, 1982 of Account No.

9487-4922-18; the inspection on April 13, 1981 of Account No. 9498-90[1]2-18 (old); the inspection on November 21, 1983 of Account No. 9487-9022-16 (New) and the inspection on April 13, 1981 of Account No. 9487-9212-16 started and the reasons thereof [were] not clearly and convincingly given/explained by [Meralco]. There is no clear and positive evidence of the exact date prior to the inspection conducted on June 17, 1981, January 16, 1982, April 13, 1981, November 21, 1983 and April 13, 1981 of the respective accounts numbers when the meters failed to register the actual electric consumption of [South Pacific]. There is no convincing proof when [South Pacific] started to benefit out of the unregistered electric energy. The abnormally low registration in the meters could have been caused by other factors and not a conclusive proof/result of the tampered condition of the meter or metering facilities. The Court is of the considered view that [South Pacific] should not be held liable to pay the differential bills corresponding to the said periods in the total amount of P397,155.94. The said adjusted billings appeared to be without factual and legal basis.18 No compelling reason has been shown by Meralco for this Court to disturb and reverse the trial courts findings and conclusions, as affirmed by the CA. Likewise, the award of exemplary damages to Meralco must be sustained. The CA granted exemplary damages because South Pacific acted in a fraudulent manner:19 On numerous occasions, and while in the presence of South Pacifics officers, Meralco agents were able to discover that the former had been using a removable short circuiting device as indicated by the pricked holes on the secondary current leads for lower and upper element near the [bushing current transformer or] BCT terminal. Further inspection revealed that the [BCT] terminal, main terminal and cover seals of the electric meters were deformed. This meant that the electric meters concerned were not registering the full amount of electric energy actually being used by the former. These, among other instances, point to South Pacifics culpability. It would seem inconceivable for all the four electric meters inside South Pacifics premises to be in such a defective condition even without any deliberate act on its part. The evidence in the case at bar affords a substantial basis of fact to justify a conclusion that South Pacific must be held responsible for the tampered meters.20 Again, fraud is a question of fact which must be alleged and proved at the level of the courts below.21 Fraud cannot be presumed and must be proven by clear and convincing evidence.22 We agree with the CA that it was incredible that not just one but all four meters in South Pacifics premises would, at the same time, fail to completely register the amount of energy consumed. South Pacifics full physical control of these meters clearly enabled it to tamper with them and this undeniably redounded to its benefit. Lastly, we also affirm the award for attorneys fees, considering the exemplary damages granted.23 WHEREFORE, both petitions are hereby DENIED. The assailed decision of the Court of Appeals dated July 28, 2000 in CA-G.R. SP No. 41399 is AFFIRMED in toto. Costs against both parties. SO ORDERED. G.R. No. 148423 December 6, 2006

ESPERANZA G. FRONDARINA, joined by her husband, PEDRO A. FRONDARINA, petitioners, vs. NAPOLEON MALAZARTE and LAURA P. MALAZARTE, respondents.

DECISION

VELASCO, JR., J.: There is no standard by which the weight of conflicting evidence can be ascertained. We have no test of the truth of human testimony except its conformity to our knowledge, observation, and experience.1 The Case This petition for review seeks to overturn the Decision of the Court of Appeals (CA) in CA-G.R. SP No. 61335 which sustained the Olongapo City Regional Trial Courts dismissal of the forcible entry complaint originally filed by petitioners Frondarina spouses against the respondent Malazarte spouses in Civil Case No. 2853 before the Olongapo City Municipal Trial Court in Cities (MTCC). The Facts Evidence culled from the records of the Olongapo City MTCC2 shows that on July 22, 1970, Lot 5, Block 15-B, Gordon Heights Subdivision, Olongapo City (disputed lot), with an area of 450 square meters, was acquired by Flordelina Santos from Iluminado Amar. On June 17, 1971, Cirila Gongora, petitioner Esperanza Frondarinas sister, in turn, acquired the disputed lot from Santos, as shown in the Deed of Transfer of Possessory Right over a Lot (Exhibit "B"). On the same date, Gongora, as Esperanza Frondarinas predecessor-in-interest, filed a Miscellaneous Sales Application (MSA) (Exhibit "D") with the Bureau of Lands. The disputed lot was also declared in Gongoras name for taxation purposes under Tax Declaration No. 32821 in 1970 (Exhibit "E"), under Tax Declaration No. 16-0611 in 1974 (Exhibit "F"), and under Tax Declaration No. 16-0431 in 1980 (Exhibit "G"). She also paid the real estate taxes due on said property as shown by the April 12, 1985 Official Receipt No. 7841503, representing real estate taxes on the property for the years 1980 to 1985 (Exhibit "H"). Petitioner Esperanza Frondarina, in turn, obtained the disputed lot from her sister, Cirila Gongora, on February 19, 1985, as evidenced by the Waiver and/or Renunciation of Rights to a Parcel of Land (Exhibit "A"). On July 1, 1985, said petitioner likewise filed an MSA with the Bureau of Lands over the disputed lot. Petitioner Esperanza Frondarina also declared the disputed lot in her name in 1986 under Tax Declaration No. 004-3574 (Exhibit "J") and paid real estates taxes on the property for the years 1986 to 1988 (inclusive of Exhibits "K" to "K-3"). She also had the lot surveyed (inclusive of Exhibits "L," "L-1," "M," "N," "N-1," "N-2," and "O"), fenced it with four (4) strands of barbed wire, and tended two (2) mango and one (1) coconut trees and planted different kinds of vegetables on the lot. Meanwhile, respondents Malazartes alleged that on March 1, 1988, they bought the said lot from Romeo Valencia (Exhibit "S"); and that they resided on the lot since May 1988. On the said date, respondents immediately started the construction of their house on the lot without a building

permitas their application was denied due to petitioners complaint. They also admitted that an employee of the City Engineers Office told them to stop the construction because of the complaint and absence of a building permit. In the meantime, the records reveal that on March 18, 1988, after they allegedly bought the said lot, respondents threatened petitioners caretaker, Lorenza Andrada. More so, according to petitioner Esperanza Frondarina, in her testimony, the respondents dug holes to put up posts, riprapped the rear of the lot, and deposited hollow blocks to construct a house. On March 28, 1988, when confronted by petitioners Frondarinas on why they entered petitioners lot, respondents replied that they got permission to enter the land from Mr. Valencia, as they had bought it from him. Petitioners then reported the matter to the City Engineers Office; and Mr. Malik of said office went to the said place and told the respondents to stop the construction of the house as they had no building permit. The respondents, however, continued the construction on the lot as shown in the photographs taken by petitioner Esperanza Frondarina on May 18, 1988 (Exhibits "T," "T-1," "T-2," and "T-3"). Aggrieved, on April 5, 1988, petitioners sent a letter request to City Engineer Nicolas D. de Leon (Exhibits "P," "P-1," and "S"); and on April 28, 1989, they also sent letters to then Mayor Richard Gordon and Atty. Ma. Ellen Aguilar about respondents intrusion on their lot (Exhibits "R" and "Q," respectively). Furthermore, the Olongapo City MTCC found that respondents witness, Romeo Valencia, admitted that his possession of the disputed lot had already been questionedfor almost three (3) yearsby petitioners before he sold it to respondents.3 Thus, according to the MTCC, "it is very clear from the evidence that [petitioners] did not only have prior possession of the subject lot, but it is also clear that the possession of the land by [petitioners]4was not adverse, uninterrupted, open and in the concept of owners." The Ruling of the Olongapo City MTCC Finding that the "totality of evidence preponderates in favor of [petitioners Frondarinas] who have sufficiently established their cause of action against [respondents Malazartes],"5 the MTCC rendered its February 28, 2000 Decision in favor of petitioners, the fallo of which reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants, as follows: 1. ordering the defendants and all and any other persons claiming under them to vacate the parcel of land located at No. 5 Latires Street, Gordon Heights, Olongapo City, also identified as Lot 5, Block 15-B, Gordon Heights Subdivision, Gordon Heights, Olongapo City, with an area of 450 square meters, declared in the name of plaintiff Esperanza G. Frondarina under Tax Declaration No. 004-3574 and more particularly described under paragraph 2 of the complaint, and to deliver its possession to the plaintiffs; 2. ordering the defendants to remove from the subject premises all constructions that they built thereat; 3. ordering the defendants, jointly and severally to pay unto the plaintiffs actual damages in the amount of P3,000.00 and reasonable rentals of P500.00 every month from the time of forcible entry on March 18, 1988 until the time defendants have vacated the premises and delivered possession thereof to the plaintiffs; and

4. ordering the defendants to pay jointly and severally, unto the plaintiffs the sum of P15,000.00, as attorneys fees, plus costs.6 On April 26, 2006, respondents Malazartes filed a Notice of Appeal7 from the adverse Decision of the Olongapo City MTCC with the Olongapo City Regional Trial Court (RTC) Branch 72. The Ruling of the Olongapo City RTC Upon respondents appeal, the Olongapo City RTC Branch 72 arrived at factual findings8 diametrically opposed to the facts culled by the Olongapo City MTCC. According to the trial court, it was convinced that respondents were in actual and physical possession of the disputed lot through their predecessor-in-interest, Romeo Valencia; because they bought it from him on March 1, 1988 and they started to occupy the disputed lot on March 18, 1988 according to the testimony of Laura Malazarte. The trial court said that "this [testimonial evidence] is the strong point in the evidence on record in favor of the [respondents]." The trial court further discoursed that: [P]laintiffs failed to prove, with preponderance of evidence, that they were in actual and physical possession of the subject land. The plaintiffs were not in personal actual and physical possession of the subject land. The plaintiffs possession was through a caretaker. Esperanza Frondarina testified on this fact: Q Did you occupy the property after it was sold to you by your sister? A I have a caretaker, sir. Q What is the name of your caretaker Mrs. Witness? A Andrada sir. (TSN, p. 4, Nov. 16, 1989). The plaintiffs have only hearsay knowledge of who planted the two mango trees and one coconut tree. Q Mrs. Frondarina, do you know who planted this two mango trees and one (1) coconut tree? A Santos [Flordelina] from whom my sister bought the lot sir. xxx Q You were there present when these trees were planted Mrs. Witness? A I was not present sir. (TSN, pp. 11 to 12, Nov. 16, 1989).

The evidence of the plaintiffs in the imputed forcible entry sometime on March 18, 1988 was also hearsay. Mrs. Esperanza Frondarinas testimony went this way: Q You said that you a have a caretaker of this lot on or about March 18, 1988, how was it possible for the Malazarte to enter your lot if you a have a "bantay" there? A My caretaker told me that she was being threatened. Q Who threatened her? A She told that she was threatened by the Malazarte and certain Mr. Valencia. (TSN, p. 21, Nov. 16, 1988). Moreover, the trial court reasoned that petitioners pieces of evidence on the issues of possession and forcible entry were of "hearsay nature"which could have been remedied by presenting their caretaker, Andrada, who, according to the trial court, was not presented as witness. Further, the Olongapo City RTC stated that petitioners did not explain why their caretaker could not testify which led to its presumption that "if Andrada is presented, her testimony will be adverse to the cause of [petitioners]." Thus, it found that the respondents were in personal, actual, and physical possession of the disputed lot; they did not commit forcible entry; and the evidence on record supported their cause. On September 13, 2000, the Olongapo City RTC rendered a Decision in favor of respondents Malazartes: WHEREFORE, judgment is hereby rendered reversing in toto the Decision in Civil Case No. 2853 and a new decision is issued dismissing the complaint. The plaintiffs are ordered to pay the defendants the sum of P6, 400.00 by way of attorneys fees; and the costs of this suit.9 Unconvinced, the Frondarina spouses filed a petition for review10 with the CA on November 8, 2000 which was docketed as CA-G.R. SP No. 61335. The Ruling of the Court of Appeals Finding no reversible error in the Olongapo City RTCs ruling, the Court of Appeals (CA) on March 13, 2001 rendered a Decision affirming in toto11 the September 13, 2000 Decision of the trial court. The CA sustained the findings and conclusions of the Olongapo City RTC that petitioners Frondarina spouses failed to prove that they were in actual and physical possession of the disputed lot. It ruled that the Frondarina spouses possession was through a caretaker, Lorenza Andrada, who did not appear as witness because of alleged threats made by respondents Malazartes and their predecessor-in-interest, Romeo Valencia. However, the court a quo concluded that petitioner Esperanza Frondarinas testimony on the alleged threat to her caretaker, Andrada, constituted hearsay evidence, as it was based on the personal knowledge of said petitioner. Thus, the CA declared that respondents Malazartes imputed forcible entry was not supported by evidence on record.12 Aggrieved, petitioners Frondarina spouses filed the instant petition for review on July 11, 2001 raising the following issues:13

I - THE COURT OF APPEALS RENDERED THE DECISION IN GRAVE ABUSE OF ITS DISCRETION IN THE APPRECIATION OF FACTS; II - THE AFFIRMING DECISION OF THE COURT OF APPEALS OMITTED PETITIONERS PRIOR, ACTUAL POSSESSION ON THE DISPUTED PROPERTY, ESSENTIAL TO THE ISSUE IN FORCIBLE ENTRY; III - THE APPELLATE DECISION RENDERS RECOGNITION OF PRIVATE RESPONDENTS UNLAWFUL ENTRY AS LAWFUL, DISREGARDED THE MENACING ATTITUDE [OR] INTENT TO FORCIBLY ACQUIRE THE LAND BY FORCE. The Courts Ruling This petition for review is meritorious. The preliminary matter to be addressed is whether the Court should entertain questions of fact in this petition. A close perusal of the three issues presented for review before the Court readily reveals a lone issuewho between petitioners Frondarina spouses and respondents Malazarte spouses have prior possession of the disputed lot. Undeniably, this is a question of fact which is proscribed by Rule 45 of the 1997 Rules of Civil Procedure. It is clear under Section 1, Rule 45 of the 1997 Rules of Civil Procedure that petitions for review on certiorari shall ONLY raise questions of law. Questions of fact are not permitted because generally, the findings of fact of the CA are final, conclusive, and cannot be reviewed on appeal. The reason behind the rule is that the Court is not a trier of facts and it is not its duty to review, evaluate, and weigh the probative value of the evidence adduced before the lower courts. The bar on factual issues, however, admits of certain reasonable deviations like when the judgment is based on misappreciation of facts or when the findings of facts of the CA are conflicting or contrary to the trial courts own findings.14 The records manifest that the conclusions of facts of the CA and the Olongapo City RTC are both contradictory or conflicting with those of the Olongapo City MTCC. For this reason alone and so as to dispense equitable justice to those deserving, a departure from the "factual issue bar rule" is timely and in order. To reiterate, the core issue in this instant petition is who between petitioners Frondarinas and respondents Malazartes are entitled to the possession of Lot 5, Block 15-B of the Gordon Heights Subdivision in Olongapo City. After examining closely the transcripts of testimonies, the Court gives credence to petitioners claim that they and their predecessors-in-interest had been in peaceful, physical possession of the said lot since 1971 for the following reasons: 1. Petitioner Esperanza Frondarina, housekeeper, resided at 81 Fendler Street, East Tapinac, Olongapo City;15while Romeo Valencia, driver of Olongapo City Councilor Jesus Danugrao, resided at Block 14, Gordon Heights, Olongapo City. Petitioners visited the lot three (3) to four (4) times a week16 and had a caretaker in the person of Lorenza Andrada. Romeo Valencia claimed to have occupied the lot for 15 years from 1975 and had put up a riprap fence in 1980.17 Thus, it is apparent

that none of the parties actually resided at the said lot. The Court believes that the Frondarinas went to the lot three (3) or four (4) times a week and exercised acts of ownership and possession over it by fencing the sides of the lot with barbwire, planting vegetables like camote, okra, and others, and by tending two (2) mango trees and one (1) coconut tree planted by Esperanzas sister, Cirila Gongora;18 and when they were not on the lot, their caretaker, Lorenza Andrada, a neighbor residing at an adjacent lot, oversaw the disputed lot. The actuations of petitioners Frondarinas are more in accordance with the usual course of human conduct and common experience. On the other hand, Mr. Romeo Valencias claim that he occupied the lot for 15 years deserves scant consideration for it was not possible for him to be on the said lot most of the time because his job as Councilor Jesus Danugraos driver took up most of his time. 2. Mr. Romeo Valencia testified that he checked with the Bureau of Lands and City Assessor if there was no owner of the lot before he occupied it in 1975; and he was told that the lot had not been declared in the name of any person.19 This is false, for as early as 1970, the lot was declared for taxation with the City Assessor in the name of Cirila Gongora through Tax Declaration No. 32821 (Exhibit "E"), which became effective in 1970; and Tax Declaration No. 16-0611 (Exhibit "F"), which became effective in 1974. In addition, the said lot was registered with the Bureau of Lands on June 17, 1971 by Cirila Gongora, predecessor-in-interest of petitioners, through a Miscellaneous Sales Application (Exhibit "D"). Considering that Mr. Valencia made a false statement on an essential point material to the determination of the issue of possession, his testimony on all other matters is not worthy of belief and necessarily bereft of truth. It is a settled axiom that "if witnesses testify falsely as to any material fact of their own testimony, their testimony should be discarded as a whole and cannot be relied on for whatever purpose."20 Falsus in uno, falsus in omnibus (false in one thing, false in everything).21 Also long established is the fundamental precept that witnesses willfully falsifying the truth in one particular testimony, when upon oath, ought never to be believed upon the strength of their own testimony, whatever they may assert.22While there is a presumption that witnesses will generally declare the truth, this belief "ceases as soon as it manifestly appears that they are capable of perjury."23 Considering that Mr. Valencia lied by stating that the lot was not registered in the name of another person with the Bureau of Lands and the Olongapo City Assessor before he allegedly started possessing the same lot in 1975, then the Court rules that his testimony on the fact of possession of the lot does not constitute evidence of the truth of said allegations and consequently disregards the same testimony, because it is bereft of weight and credit. 3. Petitioner Esperanza Frondarinas testimony revealed acts that are consistent with one who has been deprived of possession by force, strategy, and stealth by respondents as follows: a. Petitioner immediately confronted respondents why they unlawfully entered their land on March 18, 1988, and asked them why respondents were building a riprap and digging holes in the ground and why they deposited hollow blocks in the premises. Respondents simply replied that they acquired their rights over the said lot from a certain Valencia; b. After respondents unlawfully entered petitioners land on March 18, 1988, petitioners verbally reported the incident to the Office of the City Engineer and when the latter ordered one of its employees to go to the premises to investigate, said employee told respondents to stop any construction as they were not granted a building permit. Notwithstanding the warning from the City Engineers Office, respondents continued with their construction without any building permit; c. On April 5, 1988, through a letter request, petitioners informed the Office of the City Engineer of the defiance of respondents and said office told petitioners that respondents were backed up by influential people;24

d. On April 29, 1988, petitioner sent a letter to then Mayor Richard Gordon about their problem with the respondents (Exhibit "R"); and on the same date, petitioners complained to the City Legal Officer, Atty. Ma. Ellen Aguilar (Exhibit "Q"); and e. When nothing happened to their written complaints, petitioners filed the Complaint for ejectment with the Olongapo City MTCC. The aforementioned acts of petitioners were all in accordance with the behavior of a person who had been illegally and unfairly deprived of possession, and these clearly demonstrated that they had actually been in possession of said lot prior to respondents forcible entry. The appellate court completely disregarded petitioners claim of possession simply because their caretaker, Ms. Lorenza Andrada, was not able to testify to corroborate petitioners claim of possession. The court a quo gave short shrift of the justification for non-appearance of Ms. Andradathat she was threatened by Mr. Valencia, the predecessor-in-interest of the Malazartes. However, the Court finds that the threats on caretaker Lorenza Andrada to prevent her from testifying were substantiated by petitioner Esperanza Frondarina and policeman Eduardo Labrador; and the Court is convinced that Ms. Andrada was intimidated by respondents to prevent her from testifying, the latter knowing the importance of such parol evidence. Thus, the presumption that "evidence willfully suppressed would be adverse if produced" would not apply to the case at bar because it was not petitioners who restrained Ms. Andrada from testifying but respondents themselves; hence, petitioners had every reason to have the caretakers testimony adduced as evidence. Moreover, despite the inability of Ms. Andrada to testify, there was ample documentary and parol evidence to support petitioners claim of possession. Petitioners Frondarinas physical possession of the disputed lot was strongly corroborated by PO3 Labrador, who stated under oath that he saw petitioner Esperanza in possession of the lot. This jibes with petitioner Esperanza Frondarinas story that she used to go to the lot at least three (3) times a week; and that on days petitioner Esperanza Frondarina was not in actual possession of the lot, Ms. Andrada oversaw it and exercised acts of possession in representation of petitioners. More importantly, the undisputed pieces of documentary proof like the tax declarations, tax receipts, and miscellaneous sales applications, which antedate those of respondents, unquestionably demonstrate the truth and factual basis of petitioners claim of possession. Mr. Valencias testimony on his alleged occupation of the said lot must give way to the clearly established facts that petitioners and their predecessors-in-interest had been in possession of the lot much earlier than respondents and Mr. Valencia. Under the admitted facts rule, "evidence of whatever description must yield to the extent that it conflicts with admitted or clearly established facts."25 The Court gives superior credit to petitioners witnesses whose testimonies on material points are in accord with facts already established, rather than to respondents and witness Romeo Valencia whose testimonies were shown to be false or "bereft of weight and credence."26 On the allegation that the inability of caretaker Andrada to testify prejudiced the claim of petitioners that respondents Malazartes committed acts of forcible entry in the subject lot, we find that undisputed documentary evidencethe letters to City Engineer De Leon (Exhibit "P"), to City Legal Officer Aguilar (Exhibit "Q"), and to then Mayor Gordon (Exhibit "R"), and the complaint for ejectment; as well as the convincing testimonies of petitioner Esperanza Frondarina and PO3 Labrador and the admission against interest made by respondent Laura Malazarte that she and Napoleon Malazarte entered the land only on March 18, 1998 and constructed their house on the lot despite the absence of a mayors permitcan only lead to the inference that they entered the land by strategy and stealth. We find strong "circumstantial evidence" from established facts to warrant the conclusion that, indeed, respondents committed forcible entry on the disputed lot.

Circumstantial or presumptive evidence is defined as "the existence of the principal facts x x x only inferred from one or more circumstances which have been established directly." It is further explained as "an inference of a fact from other facts proved, and the fact thus inferred and assented to by the mind is said to be presumed, that is to say, it is taken for granted until the contrary is proved."27 In effect, the absence of Andradas testimony did not do any damage to petitioners cause of actionas ample circumstantial evidence is extant on record sufficient to convince the Court that respondents committed acts of forcible entry. 4. The chain of transfers from the original owner of the lotMr. Iluminado Amarto petitioner Frondarinas readily reveals possession of the said lot since July 22, 1970: a. On July 22, 1970, Iluminado Amar executed a Deed of Transfer of Possessory Right (Exhibit "C") in favor of Flordelina Santos; b. On June 17, 1971, Flordelina Santos executed a Deed of Transfer of Possessory Right Over a Lot (Exhibit "B") in favor of Cirila Gongora; and c. On February 19, 1985, Cirila Gongora executed a Waiver and/or Renunciation of Rights to a Parcel of Land (Exhibit "A") in favor of petitioner Esperanza Frondarina. On the other hand, the Deed of Renunciation and Quitclaim (Exhibit "5"), executed by Romeo Valencia on March 1, 1988 in favor of the spouses Malazartes, pales in comparison with the three (3) successive transferswhich started on July 22, 1970that eventually resulted in the transfer of said rights in favor of petitioner Esperanza Frondarina. The first in time is the first in right. Thus, the much earlier conveyance by Iluminado Amar on July 22, 1970, without doubt, prevails over the Deed of Renunciation and Quitclaim executed on March 1, 1988 in favor of the Malazartes. 5. The tax declarations and tax receipts of petitioners and their predecessors-in-interest are dated much earlier than those of Romeo Valencia and respondents Malazartes. The following tax declarations over the said lot support petitioners position, thus: a. Tax Declaration No. 32821 (Exhibit "E") in the name of Cirila Gongora, predecessor-ininterest of petitioners. This declaration became effective in 1970; b. Tax Declaration No. 16-0611 (Exhibit "F") also in the name of Cirila Gongora which became effective in 1974; c. Tax Declaration No. 16-0431 (Exhibit "G") in the name of Cirila Gongora which became effective in 1980; and d. Tax Declaration No. 004-3574 (Exhibit "J") in the name of petitioner Esperanza Frondarina which became effective in 1986. On the other hand, respondents Malazartes could only present Tax Declaration No. 004-5057 (Exhibit "3") in the name of Romeo Valencia, which became effective in 1985 and Tax Declaration No. 004-5228 (Exhibit "7") in the names of respondents Malazartes, which became effective in 1988. Clearly, the tax declarations of petitioners and that of their predecessors-in-interest are earlier than and superior to those of respondents, and these buttress petitioners claim that they had been in actual and peaceful possession of the said lot prior to respondents intrusion in 1988. Simply put, tax

declarations are clear manifestations and strong indications of possession and occupation of a parcel of land. In the same vein, the old tax receipts of petitioners are evidential and suggestive demonstration of their possession of the subject lot in the concept of an ownerconsider Tax Receipt No. 7841503 (Exhibit "H") in the name of Cirila Gongora (predecessor-in-interest of petitioners) which reflects the tax payments from 1980-1985; and Tax Receipts Nos. 014949 (Exhibit "K"), 014899 (Exhibit "K-1"), 022657 (Exhibit "K-2"), and 022620 (Exhibit "K-3"), all in the name of Esperanza Frondarina, showing real estate tax payments for the years 1986 to 1988. Juxtaposed with petitioners receipts are Tax Receipts Nos. 013487 (Exhibit "4") and 013435 (Exhibit "4-A") in the name of Romeo Valencia issued for the year 1987, and Tax Receipt No. 024196 (Exhibit "8") for real estate taxes paid for 1988. Undeniably, the tax payments over the disputed lot by the Frondarinas are much earlier than those made by the Malazartes. These pieces of denotative evidence tend to show that petitioners had been in possession of the said lot not later than 1980. Verily, it has been settled jurisprudence that although tax declarations or real estate payments of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of an owner.28Based on the tax declarations and tax receipts of both parties, we rule that petitioners have sufficiently adduced convincing evidence of possession over the disputed lot. 6. The Miscellaneous Sales Application (Exhibit "D") filed by predecessor-in-interest Cirila Gongora on June 17, 1971 is much ahead in time than the Miscellaneous Sales Application filed by Romeo Valencia (predecessor-in-interest of Malazartes) on October 14, 1977. Thus, the earlier filing of sales application by the predecessor-in-interest of petitionersCirila Gongoraindicates petitioners occupation and possession of the disputed lot ahead of Romeo Valencias alleged occupation and possession of it. In the light of the foregoing reasons, the Court rules that petitioners have established their right to physical possession over the subject lot. Considering that respondents were informed by petitioners that the disputed lot was owned by them and had the right of possession over said lot, but still, respondents persisted in building their house on it, respondents are therefore declared builders in bad faith and shall lose their house without any right to reimbursement. WHEREFORE, the petition is GRANTED. The March 13, 2001 Decision of the Court of Appeals in CA-G.R. SP No. 61335 and the September 13, 2000 Decision of the Olongapo City Regional Trial Court in Civil Case No. 192-0-2000 are REVERSED and SET ASIDE; and the February 28, 2000 Decision of the Olongapo City MTCC in Civil Case No. 2853 is hereby REINSTATED. No costs. SO ORDERED. G.R. No. 148021 December 6, 2006

SIME DARBY EMPLOYEES ASSOCIATION, OSCAR E. PACIS, RAMON C. REYES, FRANCISCO R. REY, ROLITO C. MARTIREZ, RAUL E. BARDE, HELINO A. TIAMSON, JOSE G. AQUINO, ESTANILO M. SAMSON, CELESTINO A. SANTOS, REYNALDO MENDOZA, RAMON A. CIPRIANO, R. CAJAYON, EMMANUEL M. PALIS, JOSELITO DE PAZ, ARNOLD J. DE GUZMAN, BENJAMIN C. DELA PAZ, JR., FERDINAND R. SACLUTI, LAMBERTO S. LOPEZ, JR., GAVINO

T. REFUERZO, ORLANDO B. PATENIA, EDWIN H. GULAPA, RUBEN G. CRUZ, REYNALDO E. ATANACIO, CONRADO D. FRANCISCO, JR., CRESENCIO Q. TABADAY, ERNESTO A. IGNACIO, ISAGANI A. RAMOS, DENNIS V. CABUSLAY, SAMUEL G. MAMARADLO, ALANO R. VENTURA, JR., ANGELINO B. HERMONO, MIGUEL K. LUNA, CELEDONIO B. FRONDA, PATRICIO P. ARANTE III, ARSENIO D. CRUZ, LEOCADIO M. CANDELARIA, ARNALDO R. AUREADA, DANILO F. SAN DIEGO, ALEXANDER G. CUEVAS, ROLANDO G. SANTOS, ISABELO V. ANDRES, JR., ARTURO M. LORENZO, JERRY F. SANTIAGO, ARMAND G. MARIANO, REYNALDO YBANEZ, ROSUARDO S. CONDEZ, DINDO CRUZ LAUREANO, ROY A. DE GUZMAN, FICOMEDES P. CALUGAY, RANDOLPH P. RAAGAS, PEDRO A. MAGNO, BENJAMIN P. DELLOMAS, ENRIQUE B. TAMAYO, FERNANDO C. LOPEZ, ROMAN P. NABONG, JULIETO P. DIZON, ROMEO E. SANTOS, PABLO P. CABRERA, JR., NELSON D. ANGELES, RICARDO P. CANLAS, REY L. DE GUZMAN, TANGLAW E. DELA PAZ, LUDIVICO C. LACUNA, ALEXANDER D. PUA, JUANITO L. SANTOS, EDGARDO B. VERZOSA, HILARIO S. MALINAG, ANDRES C. SANTIAGO, DANILO S. MENDOZA, JOSE J. CASTILLO, EDUARDO F. CAYABYAB, EDGARDO C. FLORENCIO, LARRY DELA CRUZ, RODOLFO B. MARIANO, VIRGILIO C. VERGARA, JESUS B. BERNAS, FELICIANO R. PERALTA, HANNIE C. REJUSO, RODELIO L. SATOS, JUAN MATA, EDGARDO A. JOSEF, REYNALDO V. SIMON, JUANITO T. GINEZ, DONARDO C. EVANGELISTA, JUAN ESTAQUIO, RAMON C. MANUEL, EFREN D. GONZALES, DOMINADOR S. HERNANDEZ, MARIO C. DIAZ, JAIME DAVID, REMEGIO T. GAJAYON, JORDAN ALBA V. JIMENEZ, LUCIO I. CAPCO, FRANCISCO FRANCISCO, ALFREDO E. ESTEL, REYNALDO P. MENDOZA, JOEL G. DIZON, ADOLFO J. SANTOS, ROBERTO C. PECSON, JOSE B. GARCIA, GEORGE A. NAGMA, DOMINGO S. CUEVAS, JR., RAMON A. CIPRIANO, ROBERTO A. BUENCONSEJO, VICTOR H. VIZMONTE, EDWARD L. GARCIA, RODRIGO S. MAGBALOT, EMELITO R. DELA PAZ, CARLOS O. RIEGO, REYNALDO MAGALLON, BENJAMIN C. GERON, RODRIGO C. LABRO, EDUARDO N. PAPA, CENON J. CUMAL, EDDIE P. ESPINASE, REYNALDO S. DIAMANTE, RODELIO C. DERPO, VIRGILIO A. SICAT, FELIX G. MARIANO, ARTURO R. APOSTOL, BONIFACIO V. POLICINA, EDIZER R. ALCAIDE, ROLANDO G. SANTOS, MELCHOR A. SAN PASCUAL, ROLANDO FRONDA, SALVADOR B. COPINO, JR., VILLAMOR VELASCO, ARTURO CASILANG, MACARIO S. BERSOLA, LESLIE CASTOR, RAFAEL V. ALANO, ROMEO DE ASIS, RAMILO R. DELA PAZ, JOVENTINO C. OLBIS, RODOLFO M. CERES, ARMANDO C. LLENADO, EDUARDO A. SALVADOR, APOLINARIO F. GAYO, ARNOLD Z. MAXIMO, FLORANTE R. PADIERNOS, DANILO M. EUSEBIO, NOEL D. JEGIRA, NESTOR J. QUIMSON, ANTONIO VILLAMOR, BENITO D. ARIOLA, JOSE D. MALLARI, BRAULIO S. TOLENTINO, JUANITO D. BUNGAY, ARNIEL R. DOMINGO, JESUS V. ESCOTO, MIGUEL L. LIBAO, RODOLFO G. NAYCALO, JR., GREGORIO E. UMARAN. ROMULO J. VILLARAZA, APOLINARIO S. VILLENA, ROLANDO R. LOPEZ, ERNESTO VALEROS, ESTELITO E. DE GUZMAN, ROLANDO F. ADUNA, RONNIE S. MANUEL, MAXIMO B. GRAFIL, TEODORO V. HENSON, ABELARDO P. TORRES, RENATO C. MEDINA, ELDER M. CASIS, LOPE L. MAY, ARMANDO R. LATI, RICARDO C. CASTILLO, ARCADIO C. DELA CRUZ, BAYANI S. DE GUZMAN, BUENAVENTURA D. VILLALON, ESTELITO B. MARQUEZ, JR., DOMINGO L. CECILIO, NOEL A. NEPOMUCENO, GAMIE S. VILLANUEVA, HILARION B. GUTOMAN, NORBERTO H. MURILLO, EFREN I. JACINTO, CEZAR DE JESUS, EDGARDO B. CORONADO, FERNANDO P. DELA CRUZ, CESAR D. AGUIRRE, ELMER S. LITUANIA, RAINIER M. TIAMZON, MARIO M. TIMOTEO, ARMANDO SIGUENZA, AURELIO A. GRIT, ALEJANDRO LIBAO, RONALDO A. BAUTISTA, SERAFINO B. SANTOS, JR., MARIO M. DONEZA, JR., ROMULO F. REVILLA, FERNANDO B. FAUSTO, ROMEO A. IGNACIO, MARIO C. TAYOAN, REYNALDO P. ESGUERRA, MANUEL A. DE GUZMAN, ROBERTO F. VICENTE, HONORIO B. LIGONES, REYNALDO V. FELIPE, CONSTANTINO F. TALAN, FLORENCIO S. ANDRES, MARIO S. ENRIQUEZ, RICARDO M. JOCSON, JR., GIL L. LACSINA, HERNANI C. LINGA, ELMER L. SANTOS, ROBERTO A. BAYLOSIS, ROBERT G. CHRISTENSEN, CESAR APOSTOL, ROBERTO T. CRUZ, CLEMENTE TAGABI, GIL; BARION, NOEL SEGISMUNDO, ROSAURO D. TOPACIO, ET AL., petitioners, vs.

NATIONAL LABOR RELATIONS COMMISSION, (THIRD DIVISION), COMMISSIONERS IRENEO B. BERNARDO, LOURDES C. JAVIER, and TITO F. GENILO, SIME DARBY PILIPINAS, INC., SEAN T. OKELLY, RICARDO J. ROMULO, VICENTE PATERNO, LUIS LORENZO, RICARDO ANONAS, ELSIE MAGLAYA, EMMANUEL TAMAYO, RAUL PANLASIGUI, MARTIN S. BERRY, NIK MOHAMED BIN NIK YHAKOB, MOHAMED JAFAR BIN ABDUL and TUNKU TAN SRIDATO SERI AHMAD BIN TUNKU YAHAYA, SD RETREAD SYSTEMS, INC., ET AL.,respondents.

DECISION

TINGA, J.: For the Courts adjudication is a petition for review under Rule 45, seeking to set aside the Decision of the Court of Appeals in CA-G.R. SP No. 54424, which affirmed the 30 April 1999 Resolution of the National Labor Relations Commission (NLRC) in NLRC NCR-CNS. 00-09-06571-95, 00-11-0757795, 00-01-00284-96, CA No. 017268-98.1 The facts of the case, as culled from the findings of the Court of appeals follow. Sometime in October 1995, Sime Darby Employees Association (the Union) submitted its proposal to Sime Darby Pilipinas, Inc. (the Company) for the remaining two (2) years of their then existing Collective Bargaining Agreement (CBA). The company gave its counter-proposal, but the parties failed to reach a mutual settlement. Thus, in a letter to the union president, the company declared a deadlock in the negotiations. Subsequently, the company sought the intervention of the Department of Labor and Employment (DOLE) by filing a Notice of CBA Deadlock and Request for Preventive Mediation.2 Such action did not sit well with the union, which objected to the deadlock. It also filed its opposition to the Assumption of Jurisdiction/Certification to Arbitration. The company filed a Notice of Lockout on 21 June 1995, on the ground of deadlock in the collective bargaining negotiations, docketed as NCMB-NCR-NL-06-013-95, and sent a Notice of Lock Out Vote3 dated 24 July 1995 to the National Conciliation and Mediation Board (NCMB). On the other hand, the union conducted its strike vote referendum on 23 June 1995, and filed its Strike Vote Result Report 4to NCMB also on 24 July 1995, and docketed as NCMB-NCR-NS-Case No. 06-26595. On 06 August 1995, the company declared and implemented a lockout against all the hourly employees of its tire factory on the ground of sabotage5 and work slowdown. On September 1995, the Union filed a complaint for illegal lockout before the DOLE-NLRC, docketed as NLRC NCR Case No. 00-09-06517-95. Meanwhile, on 19 October 1995, the stockholders of the company approved the sale of the companys tire manufacturing assets and business operation. The company issued a memorandum dated 20 October 1995 informing all its employees of the plan to sell the tire manufacturing assets and operations. Consequently, on 27 October 1995, the company filed with the DOLE a Closure and Sale of Tire Manufacturing Operation.

On 15 November 1995, the company individually served notices of termination to all the employees, including the individual petitioners.6 On account of the lockout, the employees were barred from entering company premises, and were only allowed to enter to get their personal belongings and their earned benefits on 21-22 November 1995. During said dates, the employees likewise received their separation pay equivalent to 150% of the base rate for every year of credited service; they also signed and executed individual quitclaims and releases. On 24 November 1995, the company filed with the DOLE a Notice of Termination of Employees dated 17 November 1995, covering all its employees in the tire manufacturing and support operations effective 15 December 1995.7 In November 1995, petitioners filed a complaint for Illegal Dismissal before the DOLE, docketed as NLRC NCR Case No. 00-11-07577-95.8 In January of the following year, petitioners filed a complaint for Unfair Labor Practice (ULP), docketed as NLRC-NCR Case No. 00-01-00284-96. The cases for illegal dismissal, illegal lockout and unfair labor practice were then consolidated and eventually assigned to Labor Arbiter Enrico Portillo. On 24 April 1996, the company sold its tire manufacturing plant and facilities to Goodyear Philippines, Inc. (Goodyear) under a Memorandum of Agreement of even date. On 20 August 1996, the company and its officers filed a motion to conduct ocular inspection of the tire factory premises to establish that it was sold to Goodyear.9 The motion was opposed by the union. On 14 July 1998, the company filed a motion for the return of the separation pay received by the complainants, pending the resolution of the case. On 25 August 1998, Labor Arbiter Enrico Angelo C. Portillo issued an Order,10 the dispositive portion of which reads: WHEREFORE, premises considered, the respondents instant motion11 shall be treated in the resolution of the above-caption cases on the merits. In lieu of the continuation of the trial, the parties are hereby given the opportunity to submit their respective memorandum within ten (10) days from receipt hereof, and thereafter the instant cases shall be deemed submitted for resolution without further notice. SO ORDERED.12 On 26 October 1998, the Union, without filing the memorandum as ordered by the labor arbiter, filed an Appeal Memorandum with a petition for injunction and/or a temporary restraining order before the NLRC. On 29 October 1998, the labor arbiter rendered his Decision in the consolidated cases, dismissing for lack of merit petitioners complaints against the company for illegal lockout, illegal dismissal and unfair labor practice. The labor arbiter found the lockout valid and legal, and justified by the incidents of continued work slowdown, mass absences, and consistent low production output, high rate of waste and scrap tires and machine breakdown. Likewise, the consequent mass termination of all the employees was declared to be a valid and authorized termination of employment due to closure of the establishment, the company having complied with the requirements laid down by Article 283 of the Labor Code, i.e., written notice of termination to the employees concerned, a report to the DOLE, and payment of the prescribed separation pay. He added that the companys decision to sell all of its assets was a valid and legitimate exercise of its management prerogative. Anent the claim of unfair

labor practice, the labor arbiter found no evidence to substantiate the same, and that the records merely showed that the closure of and eventual cessation from business was justified by the circumstances in order to protect the companys investments and assets. Furthermore, the labor arbiter ruled that the quitclaims and receipts signed by petitioners were voluntarily signed, indicating that the settlement reached by petitioners and the company was just and reasonable. Finally, the labor arbiter declared that the motions for ocular inspection and return of separation pay field by the company are rendered moot and academic in view of said Decision.13 The labor arbiter thus adjudicated: WHEREFORE, foregoing premises considered, the consolidated complaints for illegal lockout, illegal dismissal and unfair labor practice are hereby DISMISSED for lack of merit. The complaint against respondent SD Retread System, is likewise ordered dismissed for failure of the complainants to sufficiently establish and substantiate their claim that the latter and respondent Sime Darby are one and the same company, and for lack of employeremployee relationship. SO ORDERED.14 Petitioners appealed the labor arbiters Decision to the NLRC on 01 December 1998.15 Said appeal, however, was dismissed on 30 April 1999 for lack of merit.16 The NLRC affirmed en toto the labor arbiters Decision. In addition, it ruled that that the labor arbiter could not have lost jurisdiction over the case when petitioners appealed his 25 August 1998 Order since the Order was interlocutory in nature and cannot be appealed separately. Thus, the labor arbiter still had jurisdiction over the consolidated complaints when he issued his Decision. Petitioners prayer for damages and attorneys fees was also struck down by the NLRC, holding that petitioners are not entitled thereto considering that it was not shown that the dismissal was done in a wanton and oppressive manner.17Petitioners motion for reconsideration was also denied, prompting them to file a petition for certiorari with the Court of Appeals, claiming grave abuse of discretion on the part of the NLRC. The Court of Appeals denied the petition for lack of merit and affirmed the Decision of the NLRC.18 The appellate court declared that the labor arbiters was not divested of its jurisdiction over the consolidated cases when petitioners filed their appeal memorandum on 26 October 1998 since the Order dated 25 August 1998 which they sought to appeal is interlocutory in nature. Thus, the labor arbiters Decision. Thus, the labor arbiters Decision has the force and effect of a valid judgment.19 Finding that said Decision was supported by substantial evidence, the appellate court affirmed the dismissal of the complaints against SD Retread System for failure of the petitioners to substantiate the claim of the existence of employer-employee relationship.20 Petitioners sought reconsideration of the Court of Appeals Decision, but their motion was denied for lack of merit.21 In the instant petition, petitioners reiterate that they were denied due process when they were dismissed right on the day they were handed down their termination letters, without the benefit of the thirty (30)-day notice as required by law, and invoke the Courts ruling in Serrano v. NLRC22 They deny having executed quitclaims in favor of the company. Furthermore, petitioners insist that the labor arbiter had lost jurisdictional competence to issue his 29 October 1998 Decision since they have already perfected their appeal on 26 October 1998, making said Decision void ab initio. They likewise claim that the labor arbiter erred when it failed to consider as admitted the matters contained in their Request for Admission after respondents failed to file a sworn answer thereto. Finally, they allege that the decisions of the Court of Appeals and the NLRC lacked evidentiary support.

On the other hand, the company asserts that it complied with the 30-day notice requirement under Art. 283 of the Labor Code when it notified the employees on 15 November 1995 that their termination was to take effect on 15 December 1995. In any case, the alleged violation of the thirty (30) day notice requirement was never raised in the proceedings below, except in petitioners supplemental motion for reconsideration of the Court of Appeals Decision. This being the case, the issue of failure to abide by the 30-day notice rule can no longer be raised for the first time on appeal.23 The company points out that the ruling in Serrano24 does not apply to this case sinceSerrano involved the retrenchment of only one employee, Ruben Serrano, from an establishment which remained and continued in business, while in the present scenario, the companys business operation ceased for good, and the employees were furnished individual termination notices thirty (30) days before the actual date of separation.25 The company maintains that the 25 August 1995 Order, being in the nature of an interlocutory order, is unappealable hence, the labor arbiter retained its jurisdiction over the cases even after the Order was "appealed" to the NLRC. It maintains that the decisions of the labor arbiter and the NLRC and the Court of Appeals are supported by substantial evidence. Furthermore, it insists on the legality of the lockout and termination of employment, and denies having committed an unfair labor practice.26 For its part, respondent SD Retread Systems, Inc. argues that it has a separate and distinct entity from Sime Darby Pilipinas, Inc., and hence, denies the existence of an employer-employee relationship with petitioners.27 The petition is bereft of merit. Despite petitioners attempt to phrase its issues to show apparent questions of law, it is obvious that the petition raises mostly factual issues, which are not proper in a petition for review. Rule 45 of the Rules of Court limits the function of the Court to the review or revision of errors of law and not to a second analysis of the evidence. The Court observes that petitioners come to this Court with the same arguments it presented in the proceedings below, which have been competently discussed and disposed of by the appellate court and the labor tribunals. However, the petition presents two (2) questions of law which need to be addressed, to wit: (i) the alleged loss of jurisdictional competence on the part of the labor arbiter to issue his Decision after petitioners appealed his 25 August 1995 Order, and (ii) that petitioners Request for Admission should have been granted and the evidence included therein should have been admitted since respondents reply/objection thereto were not made under oath.28 The 25 August 1998 Order of the labor arbiter partakes the nature of an interlocutory order, or one which refers to something between the commencement and end of the suit which decides some point or matter but it is not the final decision of the whole controversy.29 An interlocutory order is not appealable until after the rendition of the judgment on the merits for a contrary rule would delay the administration of justice and unduly burden the courts.30 The 25 August 1998 Order merely terminated formal trial of the consolidated cases, declared that the motion for inspection will be dealt with in the resolution of the case, and ordered the submission of the parties respective memoranda after which the case shall be submitted for resolution. It did not put an end to the issues of illegal lockout, ULP, and illegal dismissal. Being interlocutory in nature, the 25 August 1998 Order could not have been validly appealed such that it would divest the labor arbiter of his jurisdiction over the consolidated cases. This being the case, the labor arbiter still had jurisdiction when he rendered his Decision.

Even if petitioners filed a special civil action for certiorari, which would have been the proper remedy, the same would still fail. The Court finds that the labor arbiter did not commit any grave abuse of discretion when he issued the 25 August 1998 Order. For one, the holding of an adversarial trial is discretionary on the labor arbiter and the parties cannot demand it as a matter of right.31 Section 4, Rule V of the New Rules of Procedure of the NLRC32grants a labor arbiter wide latitude to determine, after the submission by the parties of their position papers/memoranda, whether there is need for a formal trial or hearing.33 As this court has so often held, a formal type or trial-type hearing is not at all times and in all instances essential to due process the requirements of which are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of controversy.34In one case, this Court held that a party has no vested right to a formal hearing simply and merely because the labor arbiter granted its motion and set the case for hearing.35 Related to the issue of jurisdiction is the allegation that the decisions of the Court of Appeals, the NLRC and the labor arbiter are without evidentiary support since the respondent was not able to present a single evidence due to the 25 August 1998 Order of the labor arbiter terminating the trial of the cases and requiring submission of the parties memoranda, and ordaining at the end of the memorandum period the submission of the cases for decision. Petitioners argument that had the labor arbiter allowed respondents to present their evidence during the formal trial, the Decision would have been different, cannot be sustained. As previously stated, the labor arbiter enjoys wide discretion in determining whether there is a need for a formal hearing in a given case, and he or she may use all reasonable means to ascertain the facts of each case without regard to technicalities. With or without a formal hearing, the labor arbiter may still adequately decide the case since he can resolve the issues on the basis of the pleadings and other documentary evidence previously submitted. When the parties submitted their position papers and other pertinent pleadings to the labor arbiter, it is understood/given/deemed that they have included therein all the pieces of evidence needed to establish their respective cases. The rationale for this rule is explained by the Court in one case, thus: (P)etitioner believes that had there been a formal hearing, the arbiters alleged mistaken reliance on some of the documentary evidence submitted by parties would have been cured and remedied by them, presumably through the presentation of controverting evidence. Evidently, this postulate is not in consonance with the need for speedy disposition of labor cases, for the parties may then willfully withhold their evidence and disclose the same only during the formal hearing, thus creating surprises which could merely complicate the issues and prolong the trial. There is a dire need to lessen technicalities in the process of settling labor disputes."36 Elementary is the principle that this court is not a trier of facts. Judicial review of labor cases does not go beyond the evaluation of the sufficiency of the evidence upon which its labor officials findings rest.37 As such, the findings of facts and conclusion of the NLRC are generally accorded not only great weight and respect but even clothed with finality and deemed binding on this Court as long as they are supported by substantial evidence. In the instant case, the Court finds that the labor arbiters decision, which was affirmed by both the NLRC and the Court of Appeals cite as basis thereof the evidence presented by both the petitioners and respondents in their pleadings. It is no longer the Courts function to assess and evaluate all over again the evidence, testimonial and documentary, adduced by the parties to an appeal, particularly where the findings of both the labor arbiter, the NLRC and the appellate court trial court on the matter coincide, as in this case at bar.38 The submission that petitioners Request for Admission should have been deemed admitted in their favor after respondents had failed to file a sworn reply or objection thereto cannot be sustained.

A request for admission is a remedy provided by Rule 26 of the Rules of Court, which allows a party to file and serve upon any other party a written request for the admission of : (i) the genuineness of any material and relevant document described in and exhibited with the request; or (ii) the truth of any material and relevant matter of fact set forth in the request. Said request must be answered under oath within the period indicated in the request, otherwise the matters of which admission were requested should be deemed admitted. Petitioners claim that respondents, instead of filing an answer under oath, filed an unsworn reply/objection thereto. Thus, the admissions should be deemed admitted in their favor. Petitioners Request for Admission does not fall under Rule 26 of the Rules of Court. A review of said Request for Admission shows that it contained matters which are precisely the issues in the consolidated cases, and/or irrelevant matters; for example, the reasons behind the lockout, the companys motive in the CBA negotiations, lack of notice of dismissal, the validity of the release and quitclaim, etc.39 Rule 26 as a mode of discovery contemplates of interrogatories that would clarify and tend to shed light on the truth or falsity of the allegations in a pleading. That is its primary function. It does not refer to a mere reiteration of what has already been alleged in the pleadings.40 Otherwise stated, petitioner's request constitutes "an utter redundancy and a useless, pointless process which the respondent should not be subjected to." The rule on admission as a mode of discovery is intended "to expedite trial and to relieve parties of the costs of proving facts which will not be disputed on trial and the truth of which can be ascertained by reasonable inquiry." Thus, if the request for admission only serves to delay the proceedings by abetting redundancy in the pleadings, the intended purpose for the rule will certainly be defeated.41 More importantly, well-settled is the rule that hearings and resolutions of labor disputes are not governed by the strict and technical rules of evidence and procedure observed in the regular courts of law. Technical rules of procedure are not applicable in labor cases, but may apply only by analogy or in a suppletory character, for instance, when there is a need to attain substantial justice and an expeditious, practical and convenient solution to a labor problem.42 In view of the nature of the matters requested for admission by the petitioners, their request for admission would have only served to delay the proceedings. One final note. Petitioners claim that the alleged failure of the company to notify them of their termination renders their dismissal illegal, and thus they should be reinstated and paid with full backwages or given separation pay, following the Courts ruling in Serrano v. Court of Appeals. The argument does not hold. The ruling in Serrano has already been superseded by the case of Agabon v. National Labor Relation Commission.43 The Agabonenunciates the new doctrine that if the dismissal is for just cause but statutory due process was not observed, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural requirements of due process.44 But in any case, the issue of illegal dismissal had already been resolved by the NLRC and the Court of Appeals, which both found that the company had an authorized cause and had complied with the requirements of due process when it dismissed petitioners. WHEREFORE, the petition is DENIED and the Decision dated 31 July 2000 in CA-G.R. SP No. 54424 is AFFIRMED.

SO ORDERED. G.R. No. 146322 December 6, 2006

ERNESTO RAMAS UYPITCHING and RAMAS UYPITCHING SONS, INC., petitioners, vs. ERNESTO QUIAMCO, respondent.

DECISION

CORONA, J.: Honeste vivere, non alterum laedere et jus suum cuique tribuere. To live virtuously, not to injure others and to give everyone his due. These supreme norms of justice are the underlying principles of law and order in society. We reaffirm them in this petition for review on certiorari assailing the July 26, 2000 decision1 and October 18, 2000 resolution of the Court of Appeals (CA) in CA-G.R. CV No. 47571. In 1982, respondent Ernesto C. Quiamco was approached by Juan Davalan,2 Josefino Gabutero and Raul Generoso to amicably settle the civil aspect of a criminal case for robbery3 filed by Quiamco against them. They surrendered to him a red Honda XL-100 motorcycle and a photocopy of its certificate of registration. Respondent asked for the original certificate of registration but the three accused never came to see him again. Meanwhile, the motorcycle was parked in an open space inside respondents business establishment, Avesco-AVNE Enterprises, where it was visible and accessible to the public. It turned out that, in October 1981, the motorcycle had been sold on installment basis to Gabutero by petitioner Ramas Uypitching Sons, Inc., a family-owned corporation managed by petitioner Atty. Ernesto Ramas Uypitching. To secure its payment, the motorcycle was mortgaged to petitioner corporation.4 When Gabutero could no longer pay the installments, Davalan assumed the obligation and continued the payments. In September 1982, however, Davalan stopped paying the remaining installments and told petitioner corporations collector, Wilfredo Verao, that the motorcycle had allegedly been "taken by respondents men." Nine years later, on January 26, 1991, petitioner Uypitching, accompanied by policemen,5 went to Avesco-AVNE Enterprises to recover the motorcycle. The leader of the police team, P/Lt. Arturo Vendiola, talked to the clerk in charge and asked for respondent. While P/Lt. Vendiola and the clerk were talking, petitioner Uypitching paced back and forth inside the establishment uttering "Quiamco is a thief of a motorcycle." On learning that respondent was not in Avesco-AVNE Enterprises, the policemen left to look for respondent in his residence while petitioner Uypitching stayed in the establishment to take photographs of the motorcycle. Unable to find respondent, the policemen went back to Avesco-

AVNE Enterprises and, on petitioner Uypitchings instruction and over the clerks objection, took the motorcycle. On February 18, 1991, petitioner Uypitching filed a criminal complaint for qualified theft and/or violation of the Anti-Fencing Law6 against respondent in the Office of the City Prosecutor of Dumaguete City.7 Respondent moved for dismissal because the complaint did not charge an offense as he had neither stolen nor bought the motorcycle. The Office of the City Prosecutor dismissed the complaint8 and denied petitioner Uypitchings subsequent motion for reconsideration. Respondent filed an action for damages against petitioners in the RTC of Dumaguete City, Negros Oriental, Branch 37.9 He sought to hold the petitioners liable for the following: (1) unlawful taking of the motorcycle; (2) utterance of a defamatory remark (that respondent was a thief) and (3) precipitate filing of a baseless and malicious complaint. These acts humiliated and embarrassed the respondent and injured his reputation and integrity. On July 30, 1994, the trial court rendered a decision10 finding that petitioner Uypitching was motivated with malice and ill will when he called respondent a thief, took the motorcycle in an abusive manner and filed a baseless complaint for qualified theft and/or violation of the Anti-Fencing Law. Petitioners acts were found to be contrary to Articles 1911 and 2012 of the Civil Code. Hence, the trial court held petitioners liable to respondent for P500,000 moral damages, P200,000 exemplary damages and P50,000 attorneys fees plus costs. Petitioners appealed the RTC decision but the CA affirmed the trial courts decision with modification, reducing the award of moral and exemplary damages to P300,000 and P100,000, respectively.13 Petitioners sought reconsideration but it was denied. Thus, this petition. In their petition and memorandum, petitioners submit that the sole (allegedly) issue to be resolved here is whether the filing of a complaint for qualified theft and/or violation of the Anti-Fencing Law in the Office of the City Prosecutor warranted the award of moral damages, exemplary damages, attorneys fees and costs in favor of respondent. Petitioners suggestion is misleading. They were held liable for damages not only for instituting a groundless complaint against respondent but also for making a slanderous remark and for taking the motorcycle from respondents establishment in an abusive manner. Correctness of the Findings of the RTC and CA As they never questioned the findings of the RTC and CA that malice and ill will attended not only the public imputation of a crime to respondent14 but also the taking of the motorcycle, petitioners were deemed to have accepted the correctness of such findings. This alone was sufficient to hold petitioners liable for damages to respondent. Nevertheless, to address petitioners concern, we also find that the trial and appellate courts correctly ruled that the filing of the complaint was tainted with malice and bad faith. Petitioners themselves in fact described their action as a "precipitate act."15 Petitioners were bent on portraying respondent as a thief. In this connection, we quote with approval the following findings of the RTC, as adopted by the CA: x x x There was malice or ill-will [in filing the complaint before the City Prosecutors Office] because Atty. Ernesto Ramas Uypitching knew or ought to have known as he is a lawyer, that there was no probable cause at all for filing a criminal complaint for qualified theft and fencing activity against [respondent]. Atty. Uypitching had no personal knowledge that

[respondent] stole the motorcycle in question. He was merely told by his bill collector ([i.e.] the bill collector of Ramas Uypitching Sons, Inc.)[,] Wilfredo Verao[,] that Juan Dabalan will [no longer] pay the remaining installment(s) for the motorcycle because the motorcycle was taken by the men of [respondent]. It must be noted that the term used by Wilfredo Verao in informing Atty. Ernesto Ramas Uypitching of the refusal of Juan Dabalan to pay for the remaining installment was []taken[], not []unlawfully taken[] or stolen. Yet, despite the double hearsay, Atty. Ernesto Ramas Uypitching not only executed the [complaint-affidavit] wherein he named [respondent] as the suspect of the stolen motorcycle but also charged [respondent] of qualified theft and fencing activity before the City [Prosecutors] Office of Dumaguete. The absence of probable cause necessarily signifies the presence of malice. What is deplorable in all these is that Juan Dabalan, the owner of the motorcycle, did not accuse [respondent] or the latters men of stealing the motorcycle[,] much less bother[ed] to file a case for qualified theft before the authorities. That Atty. Uypitchings act in charging [respondent] with qualified theft and fencing activity is tainted with malice is also shown by his answer to the question of Cupid Gonzaga16 [during one of their conversations] - "why should you still file a complaint? You have already recovered the motorcycle"[:] "Aron motagam ang kawatan ug motor." ("To teach a lesson to the thief of motorcycle.")17 Moreover, the existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of the trial court, when affirmed by the appellate court, are conclusive on this Court. We see no compelling reason to reverse the findings of the RTC and the CA. Petitioners Abused Their Right of Recovery as Mortgagee(s) Petitioners claim that they should not be held liable for petitioner corporations exercise of its right as seller-mortgagee to recover the mortgaged vehicle preliminary to the enforcement of its right to foreclose on the mortgage in case of default. They are clearly mistaken. True, a mortgagee may take steps to recover the mortgaged property to enable it to enforce or protect its foreclosure right thereon. There is, however, a well-defined procedure for the recovery of possession of mortgaged property: if a mortgagee is unable to obtain possession of a mortgaged property for its sale on foreclosure, he must bring a civil action either to recover such possession as a preliminary step to the sale, or to obtain judicial foreclosure.18 Petitioner corporation failed to bring the proper civil action necessary to acquire legal possession of the motorcycle. Instead, petitioner Uypitching descended on respondents establishment with his policemen and ordered the seizure of the motorcycle without a search warrant or court order. Worse, in the course of the illegal seizure of the motorcycle, petitioner Uypitching even mouthed a slanderous statement. No doubt, petitioner corporation, acting through its co-petitioner Uypitching, blatantly disregarded the lawful procedure for the enforcement of its right, to the prejudice of respondent. Petitioners acts violated the law as well as public morals, and transgressed the proper norms of human relations. The basic principle of human relations, embodied in Article 19 of the Civil Code, provides: Art. 19. Every person must in the exercise of his rights and in the performance of his duties, act with justice, give every one his due, and observe honesty and good faith. Article 19, also known as the "principle of abuse of right," prescribes that a person should not use his right unjustly or contrary to honesty and good faith, otherwise he opens himself to liability.19 It seeks to preclude the use of, or the tendency to use, a legal right (or duty) as a means to unjust ends.

There is an abuse of right when it is exercised solely to prejudice or injure another.20 The exercise of a right must be in accordance with the purpose for which it was established and must not be excessive or unduly harsh; there must be no intention to harm another.21 Otherwise, liability for damages to the injured party will attach. In this case, the manner by which the motorcycle was taken at petitioners instance was not only attended by bad faith but also contrary to the procedure laid down by law. Considered in conjunction with the defamatory statement, petitioners exercise of the right to recover the mortgaged vehicle was utterly prejudicial and injurious to respondent. On the other hand, the precipitate act of filing an unfounded complaint could not in any way be considered to be in accordance with the purpose for which the right to prosecute a crime was established. Thus, the totality of petitioners actions showed a calculated design to embarrass, humiliate and publicly ridicule respondent. Petitioners acted in an excessively harsh fashion to the prejudice of respondent. Contrary to law, petitioners willfully caused damage to respondent. Hence, they should indemnify him.22 WHEREFORE, the petition is hereby DENIED. The July 26, 2000 decision and October 18, 2000 resolution of the Court of Appeals in CA-G.R. CV No. 47571 are AFFIRMED. Triple costs against petitioners, considering that petitioner Ernesto Ramas Uypitching is a lawyer and an officer of the court, for his improper behavior. SO ORDERED. G.R. No. 154284 October 27, 2006

BIBIANA FARMS & MILLS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (5th Division) and ROGELIO MAJASOL, respondents.

DECISION

AUSTRIA-MARTINEZ, J.: Assailed in the herein Petition for Certiorari under Rule 65 of the Rules of Court is the Resolution dated June 11, 2002, rendered by the Court of Appeals1 (CA) in CA-G.R. SP No. 69403, which denied petitioners motion for reconsideration of its Resolution dated September 19, 2001 denying the petition of private respondent for failure to pay docket fees, and directing private respondent to file his reply to petitioners Comment. Petitioner is a corporation engaged in hog and cattle raising, and corn milling, while Rogelio Majasol (private respondent) was employed therein as assistant to the head of the feeds mixing department. On June 5, 1998, petitioners security guards caught private respondent, as he was about to go out, with a tupperware-full of feeds. When confronted about it, he told the guards that he was going to

feed it to his chicks. The matter was reported to the management and an inquiry was conducted. Private respondent was not allowed to report for work anymore in the afternoon of June 5. On June 15, 1998, a conference was held before the Department of Labor and Employment (DOLE) where attempts at an amicable settlement were made.2 However, before the case could be settled, a show-cause memorandum was issued to private respondent on June 17, 1998.3 In a reply dated June 19, 1998, private respondent denied the incident. Private respondent also stated that even if it was true, given the length of his service with petitioner, he does not deserve to be terminated.4 On June 22, 1998, petitioner wrote private respondent informing him of their decision to separate him from employment. The notice of termination stated that petitioner was constrained to evaluate his case based on the affidavits of the security guards since he failed to submit his explanation within three days from service of the show-cause memo.5 On June 23, 1998, private respondent lodged a complaint for illegal dismissal, non-payment of allowance and service incentive leave pay.6 The complaint was later amended to include vacation leave, unpaid wages, damages and attorneys fees.7 In a Decision dated May 31, 1999, Labor Arbiter (LA) Noel Augusto S. Magbanua dismissed the complaint for illegal dismissal and ordered the payment of unpaid wages and proportionate 13th month pay in favor of private respondent.8 The LAs decision was initially reversed and set aside by the National Labor Relations Commission (NLRC) in its Decision dated April 28, 2000.9 It was the NLRCs finding that petitioners evidence does not support their claim that private respondent violated the trust and confidence reposed on him by virtue of his position.10 The NLRC also found that private respondent was not accorded due process, and his termination was not commensurate to his violation.11 On motion for reconsideration, the NLRC, in its Resolution dated July 31, 2000, revised its decision and ruled that private respondents dismissal is legal and with regard to due process. The NLRC set aside its order to reinstate private respondent, deleted all awards for money claims and reinstated the LAs award for unpaid wages and proportionate 13th month pay.12 Private respondent filed a motion for reconsideration of the NLRCs Resolution, but this was denied per Resolution dated May 31, 2001.13 Private respondent then filed a special civil action for certiorari with the CA, which, in a Resolution dated September 19, 2001, dismissed the petition on the ground of failure to pay docket fees.14 On private respondents motion for reconsideration, the CA granted the same per Resolution dated February 4, 2002.15 Petitioner then filed a motion for reconsideration of said Resolution but the CA denied this in the assailed Resolution dated June 11, 2002.16 Hence, the present petition based on the sole ground that: THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT REVERSED THE RESOLUTION DATED 19 SEPTEMBER 2001 DISMISSING THE PETITION FOR FAILURE TO PAY THE NECESSARY DOCKET FEES.17 The thrust of petitioners argument is that private respondents failure to pay the docket fees is a case of negligence. According to petitioner, respondent had until September 4, 2001, within which to

pay the docket fees; instead, he waited until October 15, 2001, or until after the CA first dismissed his petition that he paid the same. Petitioner also argues that private respondents claim that payment of docket fees in the form of cash was originally enclosed in the petition should not be accepted; and given the mandatory nature of the payment of docket fees within the reglementary period, the CA should not have reconsidered its previous dismissal of the petition. The Court denies the petition, as the CA did not commit any grave abuse of discretion in admitting private respondents belated payment of docket fees and reinstating his petition. Section 3, Rule 46 of the 1997 Rules of Civil Procedure, provides: SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. - The petition shall contain the full names and actual addresses of all the petitioners and respondents, a concise statement of the matters involved, the factual background of the case, and the grounds relied upon for the relief prayed for. In actions filed under Rule 65, the petition shall further indicate the material dates showing when notice of the judgment or final order or resolution subject thereof was received, when a motion for new trial or reconsideration, if any, was filed and when notice of the denial thereof was received. xxxx The petitioner shall pay the corresponding docket and other lawful fees to the clerk of court and deposit the amount of P500.00 for costs at the time of the filing of the petition. The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition. (Emphasis supplied) Under the foregoing rule, non-compliance with any of the requirements shall be a sufficient ground for the dismissal of the petition. Corollarily, the rule is that a court cannot acquire jurisdiction over the subject matter of a case, unless the docket fees are paid. And where the filing of the initiatory pleading is not accompanied by payment of the docket fees, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.18 In several cases, however, the Court entertained certain exceptions due to the peculiar circumstances attendant in these cases, which warrant a relaxation of the rules on payment of docket fees. It was held in La Salette College v. Pilotin,19 that the strict application of the rule may be qualified by the following: first, failure to pay those fees within the reglementary period allows only discretionary, not automatic, dismissal; second, such power should be used by the court in conjunction with its exercise of sound discretion in accordance with the tenets of justice and fair play, as well as with a great deal of circumspection in consideration of all attendant circumstances.20 Thus, in Villamor v. Court of Appeals,21 the Court sustained the decision of the CA to reinstate the private respondents appeal despite having paid the docket fees almost one year after the notice of appeal was filed, finding that there is no showing that the private respondents deliberately refused to pay the requisite fee within the reglementary period and abandon their appeal. The Court also found that it was imperative for the CA to review the ruling of the trial court to avoid a miscarriage of justice. Thus, the Court concluded, "Under the circumstances obtaining in the case at bar, we see no cogent reason to reverse the resolutions of the respondent court. It is the policy of the court to encourage hearing of appeals on their merits. To resort to technicalities which the petitioner

capitalizes on in the instant petition would only tend to frustrate rather than promote substantial justice."22 In the present case, the CA, in the exercise of its discretionary power, accepted private respondents explanation that the money for the payment of docket fees was originally enclosed in the petition for certiorari but was misplaced, and reinstated the petition. The CA may have abused its discretion when it ignored the rule on payment of docket fees, but the Court finds that such abuse was not tainted with any capricious, despotic, oppressive or whimsical exercise of judgment. The term grave abuse of discretion, in its juridical sense, connotes capricious, despotic, oppressive or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse must be of such degree as to amount to an evasion of positive duty or a virtual refusal to perform a duty enjoined by law, as where the power is exercised in an arbitrary and capricious manner by reason of passion and hostility. The word "capricious", usually used in tandem with the term "arbitrary", conveys the notion of willful and unreasoning action. Thus, when seeking the corrective hand of certiorari, a clear showing of caprice and arbitrariness in the exercise of discretion is imperative.23 It should be noted that it was only after the CA dismissed his petition that private respondent learned that the payment for the docket fees did not reach the CA. Consequently, he filed a motion for reconsideration and enclosed postal money orders as payment. While private respondent may have taken the unnecessary risk in initially enclosing cash in his petition, nevertheless, it was clearly not a dilatory tactic nor intended to circumvent the Rules of Court. In fact, private respondent subsequently paid the docket fees even before the CA had passed upon their motion for reconsideration, which is indicative of his good faith and willingness to comply with the Rules.24 More importantly, the Court notes that there are two divergent rulings with regard to the propriety of private respondents dismissal. The Labor Arbiter, in its Decision dated May 31, 1999, held that private respondents dismissal was valid. On the other hand, the NLRC, in its Decision dated April 28, 2000, made its own factual finding that private respondents dismissal was tainted with illegality. The NLRC may have reconsidered its ruling per its Resolution dated July 31, 2000, still, the Court finds it more judicious to have this issue fully threshed out and properly resolved on appeal to the CA. Clearly, the CAs exercise of its discretionary power was not made with any grave abuse, but in recognition of the need to ensure that every party litigant is given the amplest opportunity for the proper and just disposition of his cause freed from the constraints of technicalities.25 Rules of procedures are intended to promote, not to defeat, substantial justice and, therefore, they should not be applied in a very rigid and technical sense. The exception is that, while the Rules are liberally construed, the provisions with respect to the rules on the manner and periods for perfecting appeals are strictly applied. As an exception to the exception, these rules have sometimes been relaxed on equitable considerations. Also, in some cases the Supreme Court has given due course to an appeal perfected out of time where a stringent application of the rules would have denied it, but only when to do so would serve the demands of substantial justice and in the exercise of equity jurisdiction of the Supreme Court. The underlying consideration in this petition is that the act of dismissing the notice of appeal, if done in excess of the trial courts jurisdiction, amounts to an undue denial of the petitioners right to appeal. The importance and real purpose of the remedy of appeal has been emphasized in Castro v. Court of Appealswhere this Court ruled that an appeal is an essential part of our judicial system and trial courts are advised to proceed with caution so as

not to deprive a party of the right to appeal and instructed that every party-litigant should be afforded the amplest opportunity for the proper and just disposition of his cause, freed from the constraints of technicalities.26 The Court could have resolved this case on its merits considering that the records have already been elevated. It appears, however, that the present petition involved only the issue of whether or not the CA gravely abused its discretion in accepting private respondents belated payment of docket fees. It was on this issue that the parties focused their arguments, and it would be a deprivation of their respective rights to due process if the Court were to resolve the merits of this case, without giving them the opportunity to present their respective stances. Consequently, the Court remands this case to the CA for the continuation of the proceedings before it. WHEREFORE, the petition is DISMISSED. This case is remanded to the Court of Appeals for further proceedings. No costs. SO ORDERED. G.R. No. 160895 October 30, 2006

JOSE R. MARTINEZ, petitioner, vs. REPUBLIC OF THE PHILIPPINES, respondents.

DECISION

TINGA, J.: The central issue presented in this Petition for Review is whether an order of general default issued by a trial court in a land registration case bars the Republic of the Philippines, through the Office of the Solicitor General, from interposing an appeal from the trial courts subsequent decision in favor of the applicant. The antecedent facts follow. On 24 February 1999, petitioner Jose R. Martinez (Martinez) filed a petition for the registration in his name of three (3) parcels of land included in the Cortes, Surigao del Sur Cadastre. The lots, individually identified as Lot No. 464-A, Lot No. 464-B, and Lot No. 370, Cad No. 597, collectively comprised around 3,700 square meters. Martinez alleged that he had purchased lots in 1952 from his uncle, whose predecessors-in-interest were traceable up to the 1870s. It was claimed that Martinez had remained in continuous possession of the lots; that the lots had remained unencumbered; and that they became private property through prescription pursuant to Section 48(b) of Commonwealth Act No. 141. Martinez further claimed that he had been constrained to

initiate the proceedings because the Director of the Land Management Services had failed to do so despite the completion of the cadastral survey of Cortes, Surigao del Sur.1 The case was docketed as Land Registration Case No. N-30 and raffled to the Regional Trial Court (RTC) of Surigao del Sur, Branch 27. The Office of the Solicitor General (OSG) was furnished a copy of the petition. The trial court set the case for hearing and directed the publication of the corresponding Notice of Hearing in the Official Gazette. On 30 September 1999, the OSG, in behalf of the Republic of the Philippines, opposed the petition on the grounds that appellees possession was not in accordance with Section 48(b) of Commonwealth Act No. 141; that his muniments of title were insufficient to prove bona-fide acquisition and possession of the subject parcels; and that the properties formed part of the public domain and thus not susceptible to private appropriation.2 Despite the opposition filed by the OSG, the RTC issued an order of general default, even against the Republic of the Philippines, on 29 March 2000. This ensued when during the hearing of even date, no party appeared before the Court to oppose Martinezs petition.3 Afterwards, the trial court proceeded to receive Martinezs oral and documentary evidence in support of his petition. On 1 August 2000, the RTC rendered a Decision4 concluding that Martinez and his predecessors-in-interest had been for over 100 years in possession characterized as continuous, open, public, and in the concept of an owner. The RTC thus decreed the registration of the three (3) lots in the name of Martinez. From this Decision, the OSG filed a Notice of Appeal dated 28 August 2000,5 which was approved by the RTC. However, after the records had been transmitted to the Court of Appeals, the RTC received a letter dated 21 February 20016 from the Land Registration Authority (LRA) stating that only Lot Nos. 464-A and 464-B were referred to in the Notice of Hearing published in the Official Gazette; and that Lot No. 370, Cad No. 597 had been deliberately omitted due to the lack of an approved survey plan for that property. Accordingly, the LRA manifested that this lot should not have been adjudicated to Martinez for lack of jurisdiction. This letter was referred by the RTC to the Court of Appeals for appropriate action.7 On 10 October 2003, the Court of Appeals promulgated the assailed Decision,8 reversing the RTC and instead ordering the dismissal of the petition for registration. In light of the opposition filed by the OSG, the appellate court found the evidence presented by Martinez as insufficient to support the registration of the subject lots. The Court of Appeals concluded that the oral evidence presented by Martinez merely consisted of general declarations of ownership, without alluding to specific acts of ownership performed by him or his predecessors-in-interest. It likewise debunked the documentary evidence presented by Martinez, adjudging the same as either inadmissible or ineffective to establish proof of ownership. No motion for reconsideration appears to have been filed with the Court of Appeals by Martinez, who instead directly assailed its Decision before this Court through the present petition. We cannot help but observe that the petition, eight (8) pages in all, was apparently prepared with all deliberate effort to attain nothing more but the perfunctory. The arguments raised center almost exclusively on the claim that the OSG no longer had personality to oppose the petition, or appeal its allowance by the RTC, following the order of general default. Starkly put, "the [OSG] has no personality to raise any issue at all under the circumstances pointed out hereinabove."9 Otherwise, it is content in alleging that "[Martinez] presented sufficient and persuasive proof to substantiate the fact that his title to Lot Nos. 464-A and 464-B is worth the confirmation he seeks to be done in this registration case";10 and that the RTC had since issued a new Order dated 1 September 2003, confirming Martinezs title over Lot No. 370.

In its Comment dated 24 May 2004,11 the OSG raises several substantial points, including the fact that it had duly opposed Martinezs application for registration before the RTC; that jurisprudence and the Rules of Court acknowledge that a party in default is not precluded from appealing the unfavorable judgment; that the RTC had no jurisdiction over Lot No. 370 since its technical description was not published in the Official Gazette; and that as found by the Court of Appeals the evidence presented by Martinez is insufficient for registering the lots in his name.12 Despite an order from the Court requiring him to file a Reply to the Comment, counsel for Martinez declined to do so, explaining, among others, that "he felt he would only be taxing the collective patience of this [Court] if he merely repeats x x x what petitioner had succinctly stated x x x on pages four (4) to seven (7) of his said petition." Counsel for petitioner was accordingly fined by the Court.13 The Courts patience is taxed less by redundant pleadings than by insubstantial arguments. The inability of Martinez to offer an effective rebuttal to the arguments of the OSG further debilitates what is an already weak petition. The central question, as posed by Martinez, is whether the OSG could have still appealed the RTC decision after it had been declared in default. The OSG argues that a party in default is not precluded from filing an appeal, citingMetropolitan Bank & Trust Co. v. Court of Appeals,14 and asserts that "[t]he Rules of Court expressly provides that a party who has been declared in default may appeal from the judgment rendered against him."15 There is error in that latter, unequivocal averment, though one which does not deter from the ultimate correctness of the general postulate that a party declared in default is allowed to pose an appeal. Elaboration is in order. We note at the onset that the OSG does not impute before this Court that the RTC acted improperly in declaring public respondent in default, even though an opposition had been filed to Martinezs petition. Under Section 26 of Presidential Decree No. 1529, as amended, the order of default may be issued "[i]f no person appears and answers within the time allowed." The RTC appears to have issued the order of general default simply on the premise that no oppositor appeared before it on the hearing of 29 March 2000. But it cannot be denied that the OSG had already duly filed its Opposition to Martinezs petition long before the said hearing. As we held in Director of Lands v. Santiago:16 [The] opposition or answer, which is based on substantial grounds, having been formally filed, it was improper for the respondent Judge taking cognizance of such registration case to declare the oppositor in default simply because he failed to appear on the day set for the initial healing. The pertinent provision of law which states: "If no person appears and answers within the time allowed, the court may at once upon motion of the applicant, no reason to the contrary appearing, order a general default to be recorded . . . ," cannot be interpreted to mean that the court can just disregard the answer before it, which has long been filed, for such an interpretation would be nothing less than illogical, unwarranted, and unjust. Had the law intended that failure of the oppositor to appear on the date of the initial hearing would be a ground for default despite his having filed an answer, it would have been so stated in unmistakable terms, considering the serious consequences of an order of default. Especially in this case where the greater public interest is involved as the land sought to be registered is alleged to be public land, the respondent Judge should have received the applicant's evidence and set another date for the reception of the oppositor's evidence. The oppositor in the Court below and petitioner herein should have been accorded ample opportunity to establish the government's claim.17 Strangely, the OSG did not challenge the propriety of the default order, whether in its appeal before the Court of Appeals or in its petition before this Court. It would thus be improper for the Court to

make a pronouncement on the validity of the default order since the same has not been put into issue. Nonetheless, we can, with comfort, proceed from same apparent premise of the OSG that the default order was proper or regular. The juridical utility of a declaration of default cannot be disputed. By forgoing the need for adversarial proceedings, it affords the opportunity for the speedy resolution of cases even as it penalizes parties who fail to give regard or obedience to the judicial processes. The extent to which a party in default loses standing in court has been the subject of considerable jurisprudential debate. Way back in 1920, in Velez v. Ramas,18 we declared that the defaulting defendant "loses his standing in court, he not being entitled to the service of notices in the case, nor to appear in the suit in any way. He cannot adduce evidence; nor can he be heard at the final hearing."19 These restrictions were controversially expanded inLim Toco v. Go Fay,20 decided in 1948, where a divided Court pronounced that a defendant in default had no right to appeal the judgment rendered by the trial court, except where a motion to set aside the order of default had been filed. This, despite the point raised by Justice Perfecto in dissent that there was no provision in the then Rules of Court or any law "depriving a defaulted defendant of the right to be heard on appeal."21 The enactment of the 1964 Rules of Court incontestably countermanded the Lim Toco ruling. Section 2, Rule 41 therein expressly stated that "[a] party who has been declared in default may likewise appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order of default has been presented by him in accordance with Rule 38."22 By clearly specifying that the right to appeal was available even if no petition for relief to set aside the order of default had been filed, the then fresh Rules clearly rendered the Lim Toco ruling as moot. Another provision in the 1964 Rules concerning the effect of an order of default acknowledged that "a party declared in default shall not be entitled to notice of subsequent proceedings, nor to take part in the trial."23Though it might be argued that appellate proceedings fall part of "the trial" since there is no final termination of the case as of then, the clear intent of the 1964 Rules was to nonetheless allow the defaulted defendant to file an appeal from the trial court decision. Indeed, jurisprudence applying the 1964 Rules was unhesitant to affirm a defaulted defendants right to appeal, as guaranteed under Section 2 of Rule 41, even as Lim Toco was not explicitly abandoned. In the 1965 case of Antonio, et al. v. Jacinto,24 the Court acknowledged that the prior necessity of a ruling setting aside the order of default "however, was changed by the Revised Rules of Court. Under Rule 41, section 2, paragraph 3, a party who has been declared in default may likewise appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order of default has been presented by him in accordance with Rule 38."25 It was further qualified in Matute v. Court of Appeals26 that the new availability of a defaulted defendants right to appeal did not preclude "a defendant who has been illegally declared in default from pursuing a more speedy and efficacious remedy, like a petition for certiorari to have the judgment by default set aside as a nullity."27 In Tanhu v. Ramolete,28 the Court cited with approval the commentaries of Chief Justice Moran, expressing the reformulated doctrine that following Lim Toco, a defaulted defendant "cannot adduce evidence; nor can he be heard at the final hearing, although [under Section 2, Rule 41,] he may appeal the judgment rendered against him on the merits."29 Thus, for around thirty-odd years, there was no cause to doubt that a defaulted defendant had the right to appeal the adverse decision of the trial court even without seeking to set aside the order of

default. Then, in 1997, the Rules of Civil Procedure were amended, providing for a new Section 2, Rule 41. The new provision reads: SECTION 1. Subject of appeal.An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable. No appeal may be taken from: (a) An order denying a motion for new trial or reconsideration; (b) An order denying a petition for relief or any similar motion seeking relief from judgment; (c) An interlocutory order; (d) An order disallowing or dismissing an appeal; (e) An order denying a motion to set aside a judgment by consent, confession or compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent; (f) An order of execution; (g) A judgment or final order for or against or one or more of several parties or in separate claims, counterclaims, cross-claims and third-party complaints, while the main case is pending, unless the court allows an appeal therefrom; and (h) An order dismissing an action without prejudice. In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action under Rule 65. Evidently, the prior warrant that a defaulted defendant had the right to appeal was removed from Section 2, Rule 41. On the other hand, Section 3 of Rule 9 of the 1997 Rules incorporated the particular effects on the parties of an order of default: Sec. 3. Default; declaration of.If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. (a) Effect of order of default.A party in default shall be entitled to notice of subsequent proceedings but shall not take part in the trial. (b) Relief from order of default.A party declared in default may any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice.

(c) Effect of partial default.When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. (d) Extent of relief to be awarded.A judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. xxx It cannot be escaped that the old provision expressly guaranteeing the right of a defendant declared in default to appeal the adverse decision was not replicated in the 1997 Rules of Civil Procedure. Should this be taken as a sign that under the 1997 Rules a defaulted defendant no longer has the right to appeal the trial court decision, or that the Lim Toco doctrine has been reinstated? If post-1997 jurisprudence and the published commentaries to the 1997 Rules were taken as an indication, the answer should be in the negative. The right of a defaulted defendant to appeal remains extant. By 1997, the doctrinal rule concerning the remedies of a party declared in default had evolved into a fairly comprehensive restatement as offered in Lina v. Court of Appeals:30 a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion, under oath, to set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or excusable neglect, and that he has meritorious defenses; (Sec 3, Rule 18) b) If the judgment has already been rendered when the defendant discovered the default, but before the same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule 37; c) If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief under Section 2 of Rule 38; and d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41)31 The fourth remedy, that of appeal, is anchored on Section 2, Rule 41 of the 1964 Rules. Yet even after that provisions deletion under the 1997 Rules, the Court did not hesitate to expressly rely again on the Lina doctrine, including the pronouncement that a defaulted defendant may appeal from the judgment rendered against him. This can be seen in the cases of Indiana Aerospace University v. Commission on Higher Education,32 Tan v. Dumarpa,33 and Crisologo v. Globe Telecom, Inc.34 Annotated textbooks on the 1997 Rules of Civil Procedure similarly acknowledge that even under the new rules, a defaulted defendant retains the right to appeal as previously confirmed under the old Section 2, Rule 41. In his textbook on Civil Procedure, Justice Francisco answers the question "What are the remedies available to a defending party in default?" with a reiteration of the Lina doctrine, including the remedy that a defaulted defendant "may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set

aside the order of default has been presented by him."35 Justice Regalado also restates the Linarule in his textbook on Civil Procedure, opining that the remedies enumerated therein, even if under the former Rules of Procedure, "would hold true under the present amended Rules."36 Former Court of Appeals Justice Herrerra likewise reiterates the Lina doctrine, though with the caveat that an appeal from an order denying a petition for relief from judgment was no longer appealable under Section 1, Rule 41 of the 1997 Rules.37 Herrera further adds: Section 2, paragraph [2] of the former Rule 41, which allows an appeal from a denial of a petition for relief, was deleted from the present Rule, and confined appeals to cases from a final judgment or final order that completely disposes of the case, or of a particular matter therein, when declared by these rules to be appealable. A judgment by default may be considered as one that completely disposes of the case.38 We are hard-pressed to find a published view that the enactment of the 1997 Rules of Civil Procedure accordingly withdrew the right, previously granted under the 1964 Rules, of a defaulted defendant to appeal the judgment by default against him. Neither is there any provision under the 1997 Rules which expressly denies the defaulted defendant such a right. If it is perplexing why the 1997 Rules deleted the previous authorization under the old Section 2, Rule 41 (on subject of appeal), it is perhaps worth noting that its counterpart provision in the 1997 Rules, now Section 1, Rule 41, is different in orientation even as it also covers "subject of appeal." Unlike in the old provision, the bulk of the new provision is devoted to enumerating the various rulings from which no appeal may be taken, and nowhere therein is a judgment by default included. A declaration therein that a defaulted defendant may still appeal the judgment by default would have seemed out of place. Yet even if it were to assume the doubtful proposition that this contested right of appeal finds no anchor in the 1997 Rules, the doctrine still exists, applying the principle of stare decisis. Jurisprudence applying the 1997 Rules has continued to acknowledge the Lina doctrine which embodies this right to appeal as among the remedies of a defendant, and no argument in this petition persuades the Court to rule otherwise. In Rural Bank of Sta. Catalina v. Land Bank of the Philippines,39 the Court, through Justice Callejo, Sr., again provided a comprehensive restatement of the remedies of the defending party declared in default, which we adopt for purposes of this decision: It bears stressing that a defending party declared in default loses his standing in court and his right to adduce evidence and to present his defense. He, however, has the right to appeal from the judgment by default and assail said judgment on the ground, inter alia, that the amount of the judgment is excessive or is different in kind from that prayed for, or that the plaintiff failed to prove the material allegations of his complaint, or that the decision is contrary to law. Such party declared in default is proscribed from seeking a modification or reversal of the assailed decision on the basis of the evidence submitted by him in the Court of Appeals, for if it were otherwise, he would thereby be allowed to regain his right to adduce evidence, a right which he lost in the trial court when he was declared in default, and which he failed to have vacated. In this case, the petitioner sought the modification of the decision of the trial court based on the evidence submitted by it only in the Court of Appeals.40 If it cannot be made any clearer, we hold that a defendant party declared in default retains the right to appeal from the judgment by default on the ground that the plaintiff failed to prove the material allegations of the complaint, or that the decision is contrary to law, even without need of the prior filing of a motion to set aside the order of default. We reaffirm that the Lim Toco doctrine, denying such right to appeal unless the order of default has been set aside, was no longer controlling in this jurisdiction upon the effectivity of the 1964 Rules of Court, and up to this day.

Turning to the other issues, we affirm the conclusion of the Court of Appeals that Martinez failed to adduce the evidence needed to secure the registration of the subject lots in his name. It should be noted that the OSG, in appealing the case to the Court of Appeals, did not introduce any new evidence, but simply pointed to the insufficiency of the evidence presented by Martinez before the trial court. The Court of Appeals was careful to point out that the case against Martinez was established not by the OSGs evidence, but by petitioners own insufficient evidence. We adopt with approval the following findings arrived at by the Court of Appeals, thus: The burden of proof in land registration cases is incumbent on the applicant who must show that he is the real and absolute owner in fee simple of the land applied for. Unless the applicant succeeds in showing by clear and convincing evidence that the property involved was acquired by him or his ancestors by any of the means provided for the proper acquisition of public lands, the rule is settled that the property must be held to be a part of the public domain. The applicant must, therefore, present competent and persuasive proof to substantiate his claim. He may not rely on general statements, or mere conclusions of law other than factual evidence of possession and title. Considered in the light of the opposition filed by the Office of the Solicitor General, we find the evidence adduced by appellee, on the whole, insufficient to support the registration of the subject parcels in his name. To prove the provenance of the land, for one, all that appellee proffered by way of oral evidence is the following cursory testimony during his direct examination, viz: xxxx Q You mentioned that you are the owner of these three (3) parcels of land. How did you begin the ownership of the same? A I bought it from my uncles Julian Martinez and Juan Martinez. xxxx Q x x x x Who took possession of these parcels of land from then on? A I took possession, sir Q As owner? A Yes, as owner. Q Up to the present who is in possession as owner of these parcels of land? A I took possession. Q Before Julian Martinez and Juan Martinez sold these parcels of land before you took possession who were the owners and in possession of these? A Hilarion Martinez, the father of my predecessors-in-interest and also my grandfather. xxxx

Court: Q Of your own knowledge[,] where [sic] did your grandfather Hilarion Martinez acquire these lands? A According to my grandfather he bought that land from a certain Juan Casano in the year 1870s[,] I think. xxxx Q By the way[,] when did your grandfather Hilarion Martinez die? A Either in 1920 or 1921. Q Since you said your immediate predecessors-in-interest Julian Martinez and Juan Martinez inherited the same from your grandfather. Can you say it the same that your predecessors-in-interest were the owners and possessors of the same since 1921 up to the time they sold the land to you in 1952? A Yes, sir. xxxx In the dreary tradition of most land registration cases, appellee has apparently taken the absence of representation for appellant at the hearing of his petition as license to be perfunctory in the presentation of his evidence. Actual possession of land, however, consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property. It is not enough for an applicant to declare himself or his predecessors-in-interest the possessors and owners of the land for which registration is sought. He must present specific acts of ownership to substantiate the claim and cannot just offer general statements which are mere conclusions of law requiring evidentiary support and substantiation. The record shows that appellee did not fare any better with the documentary evidence he adduced before the trial court. The October 20, 1952 Deed of Sale by which appellee claims to have purchased the subject parcels from his uncle, Julian Martinez, was not translated from the vernacular in which it was executed and, by said token, was inadmissible in evidence. Having submitted a white print copy of the survey plan for Lot Nos. 464-A and 464-B, appellee also submitted the tracing cloth plan for Lot No. 370 which does not, however, appear to be approved by the Director of Lands. In much the same manner that the submission of the original tracing cloth plan is a mandatory statutory requirement which cannot be waived, the rule is settled that a survey plan not approved by the Director of Lands is not admissible in evidence.41 These findings of the Court of Appeals, arrived at after a sufficiently extensive evaluation of the evidence, stand in contrast to that contained in the RTC decision, encapsulated in a oneparagraph prcis of the factual allegations of Martinez concerning how he acquired possession of the subject properties. The Court of Appeals, of course, is an appropriate trier of facts, and a comparison between the findings of fact of the Court of Appeals and that of the RTC clearly demonstrates that it was the appellate court which reached a more thorough and considered evaluation of the evidence.

As correctly held by the Court of Appeals, the burden of proof expected of the petitioner in a land registration case has not been matched in this case. WHEREFORE, the petition is DISMISSED. Costs against petitioner. SO ORDERED. G.R. No. 136433 December 6, 2006

ANTONIO B. BALTAZAR, petitioner, vs. HONORABLE OMBUDSMAN, EULOGIO M. MARIANO, JOSE D. JIMENEZ, JR., TORIBIO E. ILAO, JR. and ERNESTO R. SALENGA, respondents.

DECISION

VELASCO, JR., J.: The Case Ascribing grave abuse of discretion to respondent Ombudsman, this Petition for Review on Certiorari,1 under Rule 45 pursuant to Section 27 of RA 6770,2 seeks to reverse and set aside the November 26, 1997 Order3 of the Office of the Special Prosecutor (OSP) in OMB-1-94-3425 duly approved by then Ombudsman Aniano Desierto on August 21, 1998, which recommended the dismissal of the Information4 in Criminal Case No. 23661 filed before the Sandiganbayan against respondents Pampanga Provincial Adjudicator Toribio E. Ilao, Jr., Chief Legal Officer Eulogio M. Mariano and Legal Officer Jose D. Jimenez, Jr. (both of the DAR Legal Division in San Fernando, Pampanga), and Ernesto R. Salenga. The petition likewise seeks to set aside the October 30, 1998 Memorandum5 of the OSP duly approved by the Ombudsman on November 27, 1998 which denied petitioner's Motion for Reconsideration.6 Previously, the filing of the Information against said respondents was authorized by the May 10, 1996 Resolution7 and October 3, 1996 Order8 of the Ombudsman which found probable cause that they granted unwarranted benefits, advantage, and preference to respondent Salenga in violation of Section 3 (e) of RA 3019.9 The Facts Paciencia Regala owns a seven (7)-hectare fishpond located at Sasmuan, Pampanga. Her Attorneyin-Fact Faustino R. Mercado leased the fishpond for PhP 230,000.00 to Eduardo Lapid for a three (3)-year period, that is, from August 7, 1990 to August 7, 1993.10 Lessee Eduardo Lapid in turn subleased the fishpond to Rafael Lopez for PhP 50,000.00 during the last seven (7) months of the original lease, that is, from January 10, 1993 to August 7, 1993.11 Respondent Ernesto Salenga was hired by Eduardo Lapid as fishpond watchman (bante-encargado). In the sub-lease, Rafael Lopez rehired respondent Salenga.

Meanwhile, on March 11, 1993, respondent Salenga, through a certain Francis Lagman, sent his January 28, 1993 demand letter12 to Rafael Lopez and Lourdes Lapid for unpaid salaries and nonpayment of the 10% share in the harvest. On June 5, 1993, sub-lessee Rafael Lopez wrote a letter to respondent Salenga informing the latter that for the last two (2) months of the sub-lease, he had given the rights over the fishpond to Mario Palad and Ambit Perez for PhP 20,000.00.13 This prompted respondent Salenga to file a Complaint14 before the Provincial Agrarian Reform Adjudication Board (PARAB), Region III, San Fernando, Pampanga docketed as DARAB Case No. 552-P93 entitled Ernesto R. Salenga v. Rafael L. Lopez and Lourdes L. Lapid for Maintenance of Peaceful Possession, Collection of Sum of Money and Supervision of Harvest. The Complaint was signed by respondent Jose D. Jimenez, Jr., Legal Officer of the Department of Agrarian Reform (DAR) Region III Office in San Fernando, Pampanga, as counsel for respondent Salenga; whereas respondent Eulogio M. Mariano was the Chief Legal Officer of DAR Region III. The case was assigned to respondent Toribio E. Ilao, Jr., Provincial Adjudicator of DARAB, Pampanga. On May 10, 1993, respondent Salenga amended his complaint.15 The amendments included a prayer for the issuance of a temporary restraining order (TRO) and preliminary injunction. However, before the prayer for the issuance of a TRO could be acted upon, on June 16, 1993, respondent Salenga filed a Motion to Maintain Status Quo and to Issue Restraining Order16 which was set for hearing on June 22, 1993. In the hearing, however, only respondent Salenga with his counsel appeared despite notice to the other parties. Consequently, the ex-partepresentation of respondent Salengas evidence in support of the prayer for the issuance of a restraining order was allowed, since the motion was unopposed, and on July 21, 1993, respondent Ilao, Jr. issued a TRO.17 Thereafter, respondent Salenga asked for supervision of the harvest, which the board sheriff did. Accordingly, defendants Lopez and Lapid received their respective shares while respondent Salenga was given his share under protest. In the subsequent hearing for the issuance of a preliminary injunction, again, only respondent Salenga appeared and presented his evidence for the issuance of the writ. Pending resolution of the case, Faustino Mercado, as Attorney-in-Fact of the fishpond owner Paciencia Regala, filed a motion to intervene which was granted by respondent Ilao, Jr. through the November 15, 1993 Order. After the trial, respondent Ilao, Jr. rendered a Decision on May 29, 1995 dismissing the Complaint for lack of merit; but losing plaintiff, respondent Salenga, appealed the decision before the DARAB Appellate Board. Complaint Before the Ombudsman On November 24, 1994, pending resolution of the agrarian case, the instant case was instituted by petitioner Antonio Baltazar, an alleged nephew of Faustino Mercado, through a ComplaintAffidavit18 against private respondents before the Office of the Ombudsman which was docketed as OMB-1-94-3425 entitled Antonio B. Baltazar v. Eulogio Mariano, Jose Jimenez, Jr., Toribio Ilao, Jr. and Ernesto Salenga for violation of RA 3019. Petitioner charged private respondents of conspiracy through the issuance of the TRO in allowing respondent Salenga to retain possession of the fishpond, operate it, harvest the produce, and keep the sales under the safekeeping of other private respondents. Moreover, petitioner maintains that respondent Ilao, Jr. had no jurisdiction to hear and act on DARAB Case No. 552-P93 filed by respondent Salenga as there was no tenancy relation between respondent Salenga and Rafael L. Lopez, and thus, the complaint was dismissible on its face.

Through the December 14, 1994 Order,19 the Ombudsman required private respondents to file their counter-affidavits, affidavits of their witnesses, and other controverting evidence. While the other respondents submitted their counter-affidavits, respondent Ilao, Jr. instead filed his February 9, 1995 motion to dismiss, February 21, 1995 Reply, and March 24, 1995 Rejoinder. Ombudsmans Determination of Probable Cause On May 10, 1996, the Ombudsman issued a Resolution20 finding cause to bring respondents to court, denying the motion to dismiss of respondent Ilao, Jr., and recommending the filing of an Information for violation of Section 3 (e) of RA 3019. Subsequently, respondent Ilao, Jr. filed his September 16, 1996 Motion for Reconsideration and/or Re-investigation21 which was denied through the October 3, 1996 Order.22 Consequently, the March 17, 1997 Information23 was filed against all the private respondents before the Sandiganbayan which was docketed as Criminal Case No. 23661. Before the graft court, respondent Ilao, Jr. filed his May 19, 1997 Motion for Reconsideration and/or Re-investigation which was granted through the August 29, 1997 Order.24 On September 8, 1997, respondent Ilao, Jr. subsequently filed his Counter-Affidavit25 with attachments while petitioner did not file any reply-affidavit despite notice to him. The OSP of the Ombudsman conducted the reinvestigation; and the result of the re-investigation was embodied in the assailed November 26, 1997 Order26 which recommended the dismissal of the complaint in OMB-1-94-3425 against all private respondents. Upon review, the Ombudsman approved the OSPs recommendation on August 21, 1998. Petitioners Motion for Reconsideration27 was likewise denied by the OSP through the October 30, 1998 Memorandum28 which was approved by the Ombudsman on November 27, 1998. Consequently, the trial prosecutor moved orally before the Sandiganbayan for the dismissal of Criminal Case No. 23661 which was granted through the December 11, 1998 Order.29 Thus, the instant petition is before us. The Issues Petitioner raises two assignments of errors, to wit: THE HONORABLE OMBUDSMAN ERRED IN GIVING DUE COURSE A MISPLACED COUNTER-AFFIDAVIT FILED AFTER THE TERMINATION OF THE PRELIMINARY INVESTIGATION AND/OR THE CASE WAS ALREADY FILED BEFORE THE SANDIGANBAYAN. ASSUMING OTHERWISE, THE HONORABLE OMBUDSMAN LIKEWISE ERRED IN REVERSING HIS OWN RESOLUTION WHERE IT WAS RESOLVED THAT ACCUSED AS PROVINCIAL AGRARIAN ADJUDICATOR HAS NO JURISDICTION OVER A COMPLAINT WHERE THERE EXIST [sic] NO TENANCY RELATIONSHIP CONSIDERING [sic] COMPLAINANT IS NOT A TENANT BUT A "BANTE-ENCARGADO" OR WATCHMANOVERSEER HIRED FOR A SALARY OF P3,000.00 PER MONTH AS ALLEGED IN HIS OWN COMPLAINT.30 Before delving into the errors raised by petitioner, we first address the preliminary procedural issue of the authority and locus standi of petitioner to pursue the instant petition.

Preliminary Issue: Legal Standing Locus standi is defined as "a right of appearance in a court of justice x x x on a given question."31 In private suits, standing is governed by the "real-parties-in interest" rule found in Section 2, Rule 3 of the 1997 Rules of Civil Procedure which provides that "every action must be prosecuted or defended in the name of the real party in interest." Accordingly, the "real-party-in interest" is "the party who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit."32 Succinctly put, the plaintiffs standing is based on their own right to the relief sought. The records show that petitioner is a non-lawyer appearing for himself and conducting litigation in person. Petitioner instituted the instant case before the Ombudsman in his own name. In so far as the Complaint-Affidavit filed before the Office of the Ombudsman is concerned, there is no question on his authority and legal standing. Indeed, the Office of the Ombudsman is mandated to "investigate and prosecute on its own or on complaint by any person, any act or omission of any public officer or employee, office or agency, when such act or omission appears to be illegal, unjust, improper or inefficient (emphasis supplied)."33 The Ombudsman can act on anonymous complaints and motu proprio inquire into alleged improper official acts or omissions from whatever source, e.g., a newspaper.34 Thus, any complainant may be entertained by the Ombudsman for the latter to initiate an inquiry and investigation for alleged irregularities. However, filing the petition in person before this Court is another matter. The Rules allow a nonlawyer to conduct litigation in person and appear for oneself only when he is a party to a legal controversy. Section 34 of Rule 138 pertinently provides, thus: SEC. 34. By whom litigation conducted. In the court of a justice of the peace a party may conduct his litigation in person, with the aid of an agent or friend appointed by him for that purpose, or with the aid of an attorney. In any other court, a party may conduct his litigation personally or by aid of an attorney, and hisappearance must be either personal or by a duly authorized member of the bar (emphases supplied). Petitioner has no legal standing Is petitioner a party or a real party in interest to have the locus standi to pursue the instant petition? We answer in the negative. While petitioner may be the complainant in OMB-1-94-3425, he is not a real party in interest. Section 2, Rule 3 of the 1997 Rules of Civil Procedure stipulates, thus: SEC. 2. Parties in interest. A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest. The same concept is applied in criminal and administrative cases. In the case at bar which involves a criminal proceeding stemming from a civil (agrarian) case, it is clear that petitioner is not a real party in interest. Except being the complainant, the records show that petitioner is a stranger to the agrarian case. It must be recalled that the undisputed owner of the fishpond is Paciencia Regala, who intervened in DARAB Case No. 552-P93 through her Attorney-inFact Faustino Mercado in order to protect her interest. The motion for intervention filed by Faustino Mercado, as agent of Paciencia Regala, was granted by respondent Provincial Adjudicator Ilao, Jr. through the November 15, 1993 Order in DARAB Case No. 552-P93.

Agency cannot be further delegated Petitioner asserts that he is duly authorized by Faustino Mercado to institute the suit and presented a Special Power of Attorney35 (SPA) from Faustino Mercado. However, such SPA is unavailing for petitioner. For one, petitioners principal, Faustino Mercado, is an agent himself and as such cannot further delegate his agency to another. Otherwise put, an agent cannot delegate to another the same agency. The legal maxim potestas delegata non delegare potest; a power once delegated cannot be re-delegated, while applied primarily in political law to the exercise of legislative power, is a principle of agency.36 For another, a re-delegation of the agency would be detrimental to the principal as the second agent has no privity of contract with the former. In the instant case, petitioner has no privity of contract with Paciencia Regala, owner of the fishpond and principal of Faustino Mercado. Moreover, while the Civil Code under Article 189237 allows the agent to appoint a substitute, such is not the situation in the instant case. The SPA clearly delegates the agency to petitioner to pursue the case and not merely as a substitute. Besides, it is clear in the aforecited Article that what is allowed is a substitute and not a delegation of the agency. Clearly, petitioner is neither a real party in interest with regard to the agrarian case, nor is he a real party in interest in the criminal proceedings conducted by the Ombudsman as elevated to the Sandiganbayan. He is not a party who will be benefited or injured by the results of both cases. Petitioner: a stranger and not an injured private complainant Petitioner only surfaced in November 1994 as complainant before the Ombudsman. Aside from that, not being an agent of the parties in the agrarian case, he has no locus standi to pursue this petition. He cannot be likened to an injured private complainant in a criminal complaint who has direct interest in the outcome of the criminal case. More so, we note that the petition is not pursued as a public suit with petitioner asserting a "public right" in assailing an allegedly illegal official action, and doing so as a representative of the general public. He is pursuing the instant case as an agent of an ineffective agency. Petitioner has not shown entitlement to judicial protection Even if we consider the instant petition as a public suit, where we may consider petitioner suing as a "stranger," or in the category of a "citizen," or "taxpayer," still petitioner has not adequately shown that he is entitled to seek judicial protection. In other words, petitioner has not made out a sufficient interest in the vindication of the public order and the securing of relief as a "citizen" or "taxpayer"; more so when there is no showing that he was injured by the dismissal of the criminal complaint before the Sandiganbayan. Based on the foregoing discussion, petitioner indubitably does not have locus standi to pursue this action and the instant petition must be forthwith dismissed on that score. Even granting arguendo that he has locus standi, nonetheless, petitioner fails to show grave abuse of discretion of respondent Ombudsman to warrant a reversal of the assailed November 26, 1997 Order and the October 30, 1998 Memorandum. First Issue: Submission of Counter-Affidavit The Sandiganbayan, not the Ombudsman, ordered re-investigation

On the substantive aspect, in the first assignment of error, petitioner imputes grave abuse of discretion on public respondent Ombudsman for allowing respondent Ilao, Jr. to submit his CounterAffidavit when the preliminary investigation was already concluded and an Information filed with the Sandiganbayan which assumed jurisdiction over the criminal case. This contention is utterly erroneous. The facts clearly show that it was not the Ombudsman through the OSP who allowed respondent Ilao, Jr. to submit his Counter-Affidavit. It was the Sandiganbayan who granted the prayed for reinvestigation and ordered the OSP to conduct the re-investigation through its August 29, 1997 Order, as follows: Considering the manifestation of Prosecutor Cicero Jurado, Jr. that accused Toribio E. Ilao, Jr. was not able to file his counter-affidavit in the preliminary investigation, there appears to be some basis for granting the motion of said accused for reinvestigation. WHEREFORE, accused Toribio E. Ilao, Jr. may file his counter-affidavit, with documentary evidence attached, if any, with the Office of the Special Prosecutor within then (10) days from today. Theprosecution is ordered to conduct a reinvestigation within a period of thirty (30) days.38 (Emphases supplied.) As it is, public respondent Ombudsman through the OSP did not exercise any discretion in allowing respondent Ilao, Jr. to submit his Counter-Affidavit. The OSP simply followed the graft courts directive to conduct the re-investigation after the Counter-Affidavit of respondent Ilao, Jr. was filed. Indeed, petitioner did not contest nor question the August 29, 1997 Order of the graft court. Moreover, petitioner did not file any reply-affidavit in the re-investigation despite notice. Re-investigation upon sound discretion of graft court Furthermore, neither can we fault the graft court in granting the prayed for re-investigation as it can readily be seen from the antecedent facts that respondent Ilao, Jr. was not given the opportunity to file his Counter-Affidavit. Respondent Ilao, Jr. filed a motion to dismiss with the Ombudsman but such was not resolved before the Resolutionfinding cause to bring respondents to trialwas issued. In fact, respondent Ilao, Jr.s motion to dismiss was resolved only through the May 10, 1996 Resolution which recommended the filing of an Information. Respondent Ilao, Jr.s Motion for Reconsideration and/or Re-investigation was denied and the Information was filed with the graft court. Verily, courts are given wide latitude to accord the accused ample opportunity to present controverting evidence even before trial as demanded by due process. Thus, we held in Villaflor v. Vivar that "[a] component part of due process in criminal justice, preliminary investigation is a statutory and substantive right accorded to the accused before trial. To deny their claim to a preliminary investigation would be to deprive them of the full measure of their right to due process."39 Second Issue: Agrarian Dispute Anent the second assignment of error, petitioner contends that DARAB Case No. 552-P93 is not an agrarian dispute and therefore outside the jurisdiction of the DARAB. He maintains that respondent Salenga is not an agricultural tenant but a mere watchman of the fishpond owned by Paciencia Regala. Moreover, petitioner further argues that Rafael Lopez and Lourdes Lapid, the respondents in the DARAB case, are not the owners of the fishpond. Nature of the case determined by allegations in the complaint

This argument is likewise bereft of merit. Indeed, as aptly pointed out by respondents and as borne out by the antecedent facts, respondent Ilao, Jr. could not have acted otherwise. It is a settled rule that jurisdiction over the subject matter is determined by the allegations of the complaint.40 The nature of an action is determined by the material averments in the complaint and the character of the relief sought,41 not by the defenses asserted in the answer or motion to dismiss.42 Given that respondent Salengas complaint and its attachment clearly spells out the jurisdictional allegations that he is an agricultural tenant in possession of the fishpond and is about to be ejected from it, clearly, respondent Ilao, Jr. could not be faulted in assuming jurisdiction as said allegations characterize an agricultural dispute. Besides, whatever defense asserted in an answer or motion to dismiss is not to be considered in resolving the issue on jurisdiction as it cannot be made dependent upon the allegations of the defendant. Issuance of TRO upon the sound discretion of hearing officer As regards the issuance of the TRO, considering the proper assumption of jurisdiction by respondent Ilao, Jr., it can be readily culled from the antecedent facts that his issuance of the TRO was a proper exercise of discretion. Firstly, the averments with evidence as to the existence of the need for the issuance of the restraining order were manifest in respondent Salengas Motion to Maintain Status Quo and to Issue Restraining Order,43 the attached Police Investigation Report,44 and Medical Certificate.45 Secondly, only respondent Salenga attended the June 22, 1993 hearing despite notice to parties. Hence, Salengas motion was not only unopposed but his evidence adduced ex-parte also adequately supported the issuance of the restraining order. Premises considered, respondent Ilao, Jr. has correctly assumed jurisdiction and properly exercised his discretion in issuing the TROas respondent Ilao, Jr. aptly maintained that giving due course to the complaint and issuing the TRO do not reflect the final determination of the merits of the case. Indeed, after hearing the case, respondent Ilao, Jr. rendered a Decision on May 29, 1995 dismissing DARAB Case No. 552-P93 for lack of merit. Court will not review prosecutors determination of probable cause Finally, we will not delve into the merits of the Ombudsmans reversal of its initial finding of probable cause or cause to bring respondents to trial. Firstly, petitioner has not shown that the Ombudsman committed grave abuse of discretion in rendering such reversal. Secondly, it is clear from the records that the initial finding embodied in the May 10, 1996 Resolution was arrived at before the filing of respondent Ilao, Jr.s Counter-Affidavit. Thirdly, it is the responsibility of the public prosecutor, in this case the Ombudsman, to uphold the law, to prosecute the guilty, and to protect the innocent. Lastly, the function of determining the existence of probable cause is proper for the Ombudsman in this case and we will not tread on the realm of this executive function to examine and assess evidence supplied by the parties, which is supposed to be exercised at the start of criminal proceedings. In Perez v. Hagonoy Rural Bank, Inc.,46 as cited in Longos Rural Waterworks and Sanitation Association, Inc. v. Hon. Desierto,47 we had occasion to rule that we cannot pass upon the sufficiency or insufficiency of evidence to determine the existence of probable cause.48 WHEREFORE, the instant petition is DENIED for lack of merit, and the November 26, 1997 Order and the October 30, 1998 Memorandum of the Office of the Special Prosecutor in Criminal Case No. 23661 (OMB-1-94-3425) are hereby AFFIRMED IN TOTO, with costs against petitioner. SO ORDERED. G.R. No. 121165 September 26, 2006

HON. DOMINADOR F. CARILO, Presiding Judge, R.T.C. XI-19 Digos, Davao del Sur, BONIFACIO J. GUYOT, Clerk of Court and Provincial Sheriff of Davao del Sur, ALFREDO C. SENOY, Deputy Prov. Sheriff assigned to R.T.C. XI-19 Digos, Davao del Sur, MARCOS D. RISONAR, JR., ., Registrar of Deeds of Davao del Sur, and MARIA GONZALES, petitioners, vs. HON. COURT OF APPEALS, MARIA PAZ DABON and ROSALINDA DABON, respondents. RESOLUTION QUISUMBING, J.: For review on certiorari is the Decision1 dated February 22, 1995 of the Court of Appeals in CA-G.R. SP No. 23687, which annulled and set aside the judgment and orders of the Regional Trial Court (RTC) of Digos, Davao del Sur, Branch 19, in Civil Case No. 2647, Maria Gonzales v. Priscilla Manio and Jose Manio. The facts as culled from the records are as follows: On April 2, 1990, petitioner Maria Gonzales filed a complaint against the spouses Priscilla and Jose Manio with the RTC of Digos, Davao del Sur, Branch 19. Gonzales sought the execution of the deed of sale in her favor for the property she bought from Priscilla Manio. She also asked for damages and attorney's fees. Gonzales alleged that on April 26, 1988, she paid P10,000 to Priscilla as downpayment on the P400,000 purchase price of the lot with improvements, since Priscilla had a special power of attorney from her son, Aristotle, the owner of the land. They also agreed that the balance would be paid within three months after the execution of the deed of sale. Yet, after the lapse of the period and despite repeated demands, Priscilla did not execute the deed of sale. Thus, Gonzales filed an action for specific performance against the spouses Priscilla and Jose Manio. For failure to file an Answer, the Manios were declared in default and Gonzales was allowed to present evidenceex parte. After trial, the court rendered judgment in favor of Gonzales, which we quote verbatim: WHEREFORE, premises considered, it is hereby ordered that judgment is rendered in favor of plaintiff and against defendants, ordering defendants: 1) To execute the final deed of sale and transfer of the property mentioned in paragraph 4 above to plaintiff, or should the defendant refuse to execute the deed of sale, the Clerk of Court be directed to execute the same upon plaintiff's depositing of the sum of P390,000.00 with the Clerk of Court as complete and valid payment thereof to defendant Priscilla Manio; 2) To pay plaintiff the sum of P100,000.00 for moral damages and P50,000.00 for exemplary damages; 3) To pay plaintiff the sum of P50,000.00 for attorney's fees plus P700.00 per appearances of plaintiff's counsel before this Honorable Court as appearance fees; 4) To pay plaintiff the sum of P5,000.00 as litigation expenses.

SO ORDERED.2 Gonzales deposited with the Clerk of Court the P390,000 balance of the price and filed a motion for execution.3She later withdrew the motion because the trial court's decision was not properly served on the defendants. After numerous delays, the sheriff finally personally served a copy of the decision on Priscilla on August 4, 1990, at the ungodly hour of 12:00 midnight at Sitio Wilderness, Barangay Mount Carmel, Bayugan, Agusan del Sur.4 Since there was no appeal, the trial court's decision became final and executory. But the writ of execution was not served upon the defendants, since according to the Sheriff's Return, the defendants could not be located. The sheriff, likewise, informed the trial court that the money judgment could be readily satisfied by the petitioner's cash deposit should the trial court grant the motion to release the cash deposit filed by Gonzales.5 Subsequently, Gonzales filed a motion asking that the Clerk of Court be directed to be the one to execute a deed of conveyance. Gonzales also filed a motion to withdraw the cash deposit for the balance of the price to offset the award of damages. The trial court granted both motions but later modified the amount to P207,800. On October 29, 1990, Gonzales filed a petition for the nullification of the Owner's Duplicate Certificate of Title No. 16658 and asked that a new certificate be issued in her name to give effect to the deed of conveyance since Priscilla refused to relinquish the owner's duplicate copy. Consequently, the trial court declared the owner's duplicate copy of TCT No. 16658 void, and directed the City Civil Registrar to issue a new certificate of title in favor of Gonzales. The orders were reiterated in subsequent orders and TCT No. T-23690 was issued under the name of Gonzales. On December 14, 1990, herein respondents Maria Paz Dabon and Rosalina Dabon, claiming to have bought the aforementioned lot from Aristotle Manio filed before the Court of Appeals a petition for annulment of judgment and orders of the RTC in Civil Case No. 2647. The case was docketed as CA G.R. SP No. 23687, entitled "Maria Paz Dabon and Rosalina Dabon v. Hon. Dominador F. Carillo, Presiding Judge, RTC Branch 19, Digos, Davao del Sur; Bonifacio J. Guyot, Clerk of Court and Provincial Sheriff of Davao del Sur; Alfredo C. Senoy, Deputy Prov. Sheriff assigned to RTC Br. 19, Digos, Davao del Sur; Marcos D. Risonar, Jr., Registrar of Deeds of Davao del Sur; and Maria Gonzales." The Dabons alleged therein that the judgment of the trial court was void ab initio because of lack of jurisdiction over their persons, as the real parties in interest, and that they were fraudulently deprived of their right to due process. They also prayed for a Temporary Restraining Order and for Preliminary Prohibitory Injunction against Gonzales. They gave the trial court a notice of their action for the annulment of the judgment and subsequent orders in Civil Case No. 2647.6 Meanwhile, Gonzales filed before the trial court a motion for the issuance of a writ of possession. The Dabons filed an opposition on the following grounds: (1) The writ of possession cannot be enforced because the defendants named in the writ, the Manios, were no longer in possession of the property; (2) They had bought the lot with the improvements therein and had taken possession, although they had not yet registered their ownership with the Register of Deeds; and (3) The court did not acquire jurisdiction over them as the real parties in interest. On December 17, 1990, the Court of Appeals, without giving due course to the petition, issued a resolution restraining the trial court from implementing its Decision dated June 19, 19907 and its subsequent orders thereto in Civil Case No. 2647 until further notice from the Court of Appeals. It also required Gonzales to file her Comment.8

The Court of Appeals in a resolution denied the application for preliminary injunction and appointed a commissioner to receive evidence of the parties.9 Following the Commissioner's report, the Court of Appeals found that (1) the contract of sale between Gonzales and Priscilla was unenforceable because the sale was evidenced by a handwritten note which was vague as to the amount and which was not notarized; (2) the trial court did not acquire jurisdiction over the indispensable parties; and (3) the proceedings were attended with fraud. The Court of Appeals nullified the judgment of the RTC in Civil Case No. 2647 and cancelled TCT No. T-23690. The dispositive portion of said judgment reads as follows: WHEREFORE, premises considered, the questioned decision, dated June 19, 1990 (and all orders arising therefrom), of the Regional Trial Court (Branch 19) in Digos, Davao del Sur is hereby ANNULLED and SET ASIDEand the Transfer Certificate of Title No. T-23690 which was issued thereafter declared null and void and ordered canceled. Costs against the private respondent. SO ORDERED.10 On July 17, 1995, Gonzales' Motion for Reconsideration was denied. Hence, the instant petition, assigning the following errors: I The Honorable Court of Appeals erred in not holding that the purchase of the disputed property by petitioner Maria Gonzales from Aristotle Manio thru the latter's mother and attorney-in-fact was a valid contract as between the contracting parties. II THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT PETITIONER MARIA GONZALES WAS IN GOOD FAITH IN BUYING THE DISPUTED PROPERTY FROM ARISTOTLE MANIO THRU THE LATTER'S MOTHER AND ATTORNEY-IN-FACT. III THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING IN THE INSTANT CASE THE DOCTRINE IN DOUBLE SALE UNDER ARTICLE 1544 OF THE CIVIL CODE OF THE PHILIPPINES. IV THE HONORABLE COURT OF APPEALS GRAVELY FAILED TO APPRECIATE THE FACT THAT PRIVATE RESPONDENTS' [PETITIONERS BELOW] CLAIM IS HIGHLY INCREDIBLE, IMPROBABLE, AND FRAUDULENT. V THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT PRIVATE RESPONDENTS MARIA PAZ DABON AND ROSALINA DABON HAVE NO RIGHT TO BRING THE INSTANT SUIT.

VI COROLLARILY, THE HONORABLE COURT OF APPEALS ERRED IN NOT SUSTAINING PETITIONER MARIA GONZALES' [PRIVATE RESPONDENT BELOW] CLAIM FOR DAMAGES AGAINST THE PRIVATE RESPONDENTS [PETITIONERS BELOW].11 Simply, the threshold issues in this petition are: (1) whether the Court of Appeals erred in declaring the sale of the land to Gonzales by Priscilla invalid; (2) whether there was basis to annul the judgment of the RTC; and (3) whether the Dabons could file the action for annulment of judgment. We shall discuss the issues jointly. Prefatorily, we note that named as petitioners are Presiding Judge Dominador Carillo; Bonifacio Guyot, Alfredo Senoy, Clerk of Court and Deputy Sheriff of the same court, respectively; Marcos D. Risonar, Registrar of Deeds of Davao del Sur; and Maria Gonzales. In our view, petitioner Gonzales apparently had impleaded Judge Carillo, Guyot, Senoy and Risonar in this petition by merely reversing the designation of said public officers among the respondents below in the Court of Appeals, as now among the petitioners herein. Since they are not interested parties and would not benefit from any of the affirmative reliefs sought, only Maria Gonzales remains as the genuine partypetitioner in the instant case. We now come to the main issues: (1) Was there sufficient basis to annul the judgment in Civil Case No. 2647? (2) Are the Dabons proper parties to file the petition for annulment of judgment? Petitioner Gonzales contends that the respondents do not have standing before the Court of Appeals to file a petition for annulment of the judgment in Civil Case No. 2647 because respondents were not parties therein. Petitioner maintains that respondents have no right that could be adversely affected by the judgment because they are not the owners of the property. Petitioner claims that the Court of Appeals should have applied the doctrine of double sale to settle the issue of ownership and declare her the true owner of the property. Petitioner concludes that respondents not being the owners and are not real parties in interest in the complaint for specific performance have no right to bring the action for annulment of the judgment. According to petitioner Gonzales, she did not implead Aristotle as defendant in Civil Case No. 2647 since a decision against Priscilla, Aristotle's attorney-in-fact, would bind Aristotle also. Respondents (Maria Paz and Rosalina Dabon) now insist that they are parties in interest as buyers, owners and possessors of the contested land and that they had been fraudulently deprived of their day in court during the proceedings in the trial court in Civil Case No. 2647. They have no remedy in law other than to file a case for the annulment of judgment of the trial court in said case. Petitioner Gonzales should be reminded of Section 3 of Rule 3 of the Rules on Civil Procedure which explicitly states that an action should be brought against the real party in interest,12 and in case the action is brought against the agent, the action must be brought against an agent acting in his own name and for the benefit of an undisclosed principal without joining the principal, except when the contract involves things belonging to the principal.13 The real party in interest is the party who would be benefited or injured by the judgment or is the party entitled to the avails of the suit. We have held that in such a situation, an attorney-in-fact is not a real party in interest and that there is no law permitting an action to be brought by and against an attorney-in-fact.14 Worth stressing, the action filed by Gonzales before the RTC is for specific performance to compel Priscilla to execute a deed of sale, involving real property which, however, does not belong to Priscilla but to Aristotle Manio, the son of Priscilla. The complaint only named as defendant Priscilla,

joined by her spouse, yet Priscilla had no interest on the lot and can have no interest whatever in any judgment rendered. She was not acting in her own name, nor was she acting for the benefit of an undisclosed principal. The joinder of all indispensable parties is a condition sine qua non of the exercise of judicial powers, and the absence of indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present.15 Accordingly, the failure to implead Aristotle Manio as defendant renders all proceedings in the Civil Case No. 2647, including the order granting the cancellation of TCT No. 16658 and issuance of a new title, null and void. It is settled that a person need not be a party to the judgment sought to be annulled.16 What is essential is that he can prove his allegation that the judgment was obtained by fraud or collusion and he would be adversely affected thereby,17 because if fully substantiated by preponderance of evidence, those allegations could be the basis for annulment of the assailed judgment. In the present case, even if respondents were not parties to the specific performance case, any finding that there was extrinsic fraud in the institution of the complaint, i.e. exclusion of the real party in interest, and collusion between petitioner and Sheriff Senoy, would adversely affect the respondents' ownership and thus, could be their basis for annulment of the judgment. Pertinently, Section 2 of Rule 47 of the Rules on Civil Procedure explicitly provides the two grounds for annulment of judgment, namely: extrinsic fraud and lack of jurisdiction.18 There is extrinsic fraud when a party has been prevented by fraud or deception from presenting his case. Fraud is extrinsic where it prevents a party from having a trial or from presenting his entire case to the court, or where it operates upon matters pertaining not to the judgment itself but to the manner in which it is procured. The overriding consideration when extrinsic fraud is alleged is that the fraudulent scheme of the prevailing litigant prevented a party from having his day in court.19 It must be distinguished from intrinsic fraud which refers to acts of a party at a trial which prevented a fair and just determination of the case, and which could have been litigated and determined at the trial or adjudication of the case.20 In its Decision dated February 22, 1995, the Court of Appeals found that indices of fraud attended the case before the trial court: First, the plaintiff deliberately excluded the Dabons as party to the case despite knowledge that the Dabons had alleged that they had bought the land from Aristotle. Second, the Sheriff's Return was suspiciously served on a Saturday, at midnight, on August 4, 1990. Third, the trial court ordered the plaintiff to deposit the full payment of property, but subsequently ordered its withdrawal. Lastly, there was no notice given to the person named in the certificate of title which Gonzales wanted to be annulled. Of the indices of fraud cited by the Court of Appeals, the failure to comply with the notification requirement in the petition for the cancellation of title amounts to extrinsic fraud. Under the Property Registration Decree, all parties in interest shall be given notice.21 There is nothing in the records that show Gonzales notified the actual occupants or lessees of the property. Further, the records show that Gonzales had known of the sale of the land by Aristotle to the Dabons and despite her knowledge, the former did not include the Dabons in her petition for the annulment of title. Deliberately failing to notify a party entitled to notice also constitutes extrinsic fraud.22 This fact is sufficient ground to annul the order allowing the cancellation of title in the name of Gonzales. Likewise, under Rule 47, a judgment is void for lack of jurisdiction over the persons of the real parties in interest,i.e., Aristotle Manio and the Dabons.

Lastly, petitioner insists that the contract of sale between her and Priscilla was valid and enforceable because under the provision on double sale,23 she owned the land because she bought the lot on April 26, 1988, while the same was allegedly sold to the Dabons on October 19, 1989. In our view, the doctrine on double sale holds no relevance in this case. The pertinent article of the Civil Code provides: ART. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first possession thereof in good faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith recorded it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in possession; and in the absence thereof; to the person who presents the oldest title, provided there is good faith. Otherwise stated, where it is immovable property that is the subject of a double sale, ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith. The requirement of the law is two-fold: acquisition in good faith and registration in good faith.24 At this juncture, we must emphasize that the action for annulment of judgment under Rule 47 of the Rules of Court does not involve the merits of the final order of the trial court.25 The issue of whether before us is a case of double sale is outside the scope of the present petition for review. The appellate court only allowed the reception of extraneous evidence to determine extrinsic fraud. To determine which sale was valid, review of evidence is necessary. This we cannot do in this petition. An action for annulment of judgment is independent of the case where the judgment sought to be annulled is rendered26 and is not an appeal of the judgment therein.27 The extraneous evidence presented to the appellate court cannot be used to supplant the evidence in the records of the specific performance case because the extraneous evidence was not part of the records on the merits of the case. Again, the extraneous evidence was only allowed merely to prove the allegations of extrinsic fraud. Accordingly, we hold that the issue of ownership of the subject real property cannot be addressed in this petition for review. Annulment of judgment is not a relief to be granted indiscriminately by the courts. It is a recourse equitable in character and allowed only in exceptional cases as where there is no available or other adequate remedy.28 This case falls under said exception. In this case, where it was found that the trial court did not have jurisdiction over the real parties in interest, and that notices were deliberately not given, amount to extrinsic fraud. The Court of Appeals did not err in granting the annulment of the judgment in Civil Case No. 2647 and the orders subsequent thereto, for lack of jurisdiction and extrinsic fraud. WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated February 22, 1995 of the Court of Appeals in CA-G.R. SP No. 23687, is AFFIRMED. Costs against petitioner Maria Gonzales. SO ORDERED. G.R. No. 153476 September 27, 2006

HKO AH PAO, HENRY TENG and ANNA TENG, petitioners, vs. LAURENCE TING, ANTHONY TING and EDMUND TING, respondents. DECISION AZCUNA, J.: This is a petition for review1 of the decision and resolution of the Court of Appeals (CA), dated January 31, 2002 and May 7, 2002, respectively, in CA-G.R. CV No. 47804, entitled "Hko Ah Pao, et al., v. Laurence Chua Ting, et al." The controversy involves two feuding families of the same clan battling over a piece of property registered in the name of respondents. Petitioners claim that the property was bought by their patriarch, the late Teng Ching Lay, who allegedly entrusted the same to his son from a previous marriage, Arsenio Ting, the deceased father of herein respondents. The antecedents2 are as follows: On June 12, 1961, the spouses Aristeo Mayo and Salud Masangkay sold for P70,000 the property subject of this case which is located at 1723 Vasquez St., Malate, Manila to Arsenio Ting. Transfer Certificate of Title (TCT) No. 63991 was subsequently issued in the name of Arsenio Ting on June 14, 1961. Arsenio Ting was the son of Teng Ching Lay by his first marriage. At the time of the sale, Arsenio was a practicing lawyer and, being a Filipino, was qualified to acquire and own real property in the Philippines. Arsenio was likewise the manager and controlling stockholder of Triumph Timber, Inc. in Butuan City. Teng Ching Lay, on the other hand, was a Chinese citizen, and although his name did not appear in the corporate records of Triumph Timber, Inc., he was the one making business decisions for the company.3 He became a naturalized Filipino citizen on January 18, 1966. A colonial-style house was standing on the disputed lot when it was bought. Teng Ching Lay occupied the same, together with his second wife, petitioner Hko Ah Pao, and their children, petitioners Henry and Anna Teng. Arsenio also stayed in the same house. Several years later, Arsenio married Germana Chua. They moved to a new house that was erected on the same lot behind the old colonial house. Germana bore three sons, respondents herein, namely, Laurence, Anthony and Edmund, all surnamed Ting. Later, Arsenio and his family relocated to Butuan City but they would stay in their old house in Malate whenever they came to Manila. A caretaker was hired to oversee it. Teng Ching Lay also transferred to Butuan City. Petitioners remained in the colonial house, and Teng Ching Lay would join them each time he went to Manila. Arsenio died in 1972, predeceasing his father, Teng Ching Lay, and leaving as compulsory heirs, the surviving spouse, Germana, and respondents who were all minors at that time. In the intestate proceedings for the settlement of Arsenio's estate before the Court of First Instance (CFI) of Agusan del Norte and Butuan City, the court issued an Order on October 23, 1975 approving the project of partition which included, among others, the property in question which was adjudicated in favor of respondents.

On February 4, 1976, Germana filed a petition for guardianship with the City Court of Butuan over the persons and properties of her minor children. The court appointed her as guardian on November 21, 1978. In view of the Order of the CFI adjudicating the disputed property in favor of respondents, TCT No. 63991 was cancelled and in lieu thereof, TCT No. 134412 was issued in the name of respondents on July 3, 1979. Two years later, trouble brewed between Teng Ching Lay and his daughter-in-law, Germana, concerning the properties in Manila and Butuan City, as well as the stocks of Triumph Timber, Inc. which involved millions of pesos. On April 28, 1981, Teng Ching Lay filed before the City Court of Butuan a motion to recall Germana's guardianship over her minor children for her failure to give him, as the paternal grandfather of the minors, notice of the guardianship proceedings pursuant to Articles 344 and 355 of the Civil Code.4 He added that Germana sought the guardianship merely to seek authority to sell the properties of the wards. On her part, Germana averred that Teng Ching Lay had raised this issue only as a leverage against her in their case before the Securities and Exchange Commission (SEC) pertaining to the liquidation of the assets of Timber Triumph, Inc. On July 21, 1987, the court rendered a decision revoking the letters of guardianship of Germana, from which she appealed. On January 30, 1989, Teng Ching Lay died. His surviving heirs, however, decided not to contest any further the letters of guardianship previously granted to Germana. Hence, on November 3, 1989, the case was ordered terminated.5 An estate tax return signed by petitioner Anna Teng was filed for the estate of Teng Ching Lay whose given address when he was alive was in Buhangin, Butuan City. The residence of petitioners who were listed as heirs was stated to be on A. Vasquez Street, Ermita, Manila, which is the property in question. Appearing on the dorsal side of the estate tax return was a list of properties belonging to Teng Ching Lay. The only properties that were listed, however, were those located in Cavite and Butuan City. On May 27, 1991, respondents, through counsel, sent a demand letter to petitioners to vacate the property in question. When the latter refused, respondents instituted an ejectment case against them in the Metropolitan Trial Court (MeTC) of Manila. Petitioners, in turn, on January 21, 1992, filed a complaint for the cancellation of title and partition with damages and prayer for a restraining order and/or preliminary injunction against respondents before the Regional Trial Court (RTC) of Manila. Petitioners, who have been residing in the property since 1961, demanded the reconveyance of its title in their favor on the ground that Arsenio merely held the property in trust for Teng Ching Lay. According to petitioners, Teng Ching Lay purchased the property from the spouses Aristeo Mayo and Salud Masangkay but it was made to appear in the contract of sale that Arsenio was the vendee because of the constitutional prohibition against aliens owning land in the Philippines. They claim that they became aware of the TCT in the name of respondents only when the latter instituted an ejectment suit against them, and notwithstanding the efforts on their part to settle the dispute, respondents refused to recognize their ownership of the property. Petitioners' principal witness was Angel Sembrano, corporate accountant of Triumph Timber, Inc., and Teng Ching Lay's personal accountant. According to Sembrano, he met Arsenio when he was hired as an accountant of Triumph Timber, Inc. in 1959. As Teng Ching Lay's personal accountant from 1960 to 1989, he prepared the latter's income tax returns and purchases. In June of 1961, Arsenio allegedly told him that his father was going to buy a house in Manila, and directed him to

prepare a voucher and a check of the corporation for P200,000 payable to Teng Ching Lay. Said voucher and check, however, along with the other records of the corporation, were allegedly lost during the flood that hit Butuan City in 1981. Sembrano likewise stated that when he went to Manila in November of 1961, Teng Ching Lay brought him to the house that he purportedly bought but since he was a Chinese national at that time, the title to the property was placed in the name of Arsenio.6 On cross-examination, Sembrano mentioned that he did not know who the vendor of the property was but the purchase price, as he was supposedly told by Arsenio, was P150,000; that not all the documents of the corporation were presented in the proceedings at the SEC; that he did not know where the proceeds of the check went; and, that Teng Ching Lay filed income tax returns for 1961 and 1962. He insisted that Arsenio informed him that the check was intended for the purchase price of the house and lot in Manila, and that he even saw the unsigned deed of conveyance.7 Respondents, on the other hand, contended that the property was paid for and legally acquired by their father, Arsenio, and that it was among those adjudicated to them by virtue of a special proceedings before the CFI of Agusan del Norte and Butuan City. They asked for the dismissal of the complaint, and filed a counterclaim that prayed for damages as well as compensation for the use of a portion of the property by petitioners. Meanwhile, on February 24, 1993, the MeTC rendered a decision in the ejectment case ordering petitioners to vacate the premises. Petitioners appealed to the RTC of Manila but the RTC affirmed the decision of the MeTC, stating that petitioners failed to take earnest efforts to reach a compromise agreement with respondents prior to the filing of the ejectment case. On September 30, 1994, the RTC, in the aforestated civil case, rendered its decision dismissing the complaint filed by petitioners on the ground that petitioners failed to prove that Arsenio was merely holding the subject property in trust for his father, Teng Ching Lay, thus: WHEREFORE, judgment is rendered dismissing the complaint, with costs against plaintiffs. SO ORDERED.8 On appeal, the CA affirmed the decision of the RTC on January 31, 2002, thus: WHEREFORE, premises considered, the appealed Decision of the lower court in Civil Case No. 92-60333 is hereby AFFIRMED in toto by this Court. SO ORDERED.9 Petitioners filed a motion for reconsideration but the same was denied by the CA. Hence, this petition raising the following issues: I WHETHER THE RULE ON LACHES MAY BE APPLIED TO THIS CASE. II

WHETHER SECTION 42 (2nd SENTENCE), RULE 130 OF THE REVISED RULES OF EVIDENCE AND THE HOLDINGS IN SEVERAL CASES MAY BE APPLICABLE TO THE TESTIMONY OF ANGEL SEMBRANO RELATIVE TO THE DECLARATION, AS WELL AS ACTION, OF THE LATE TENG CHING LAY THAT THE LATTER OWNED THE PROPERTY IN QUESTION. III WHETHER SECTION 38, RULE 130, OF THE REVISED RULES OF EVIDENCE MAY BE APPLICABLE TO THE TESTIMONY OF ANGEL SEMBRANO AFFECTING THE DECLARATION TO HIM OF ARSENIO TING, I.E. "BIBILI SI TATAY NG BAHAY SA MAYNILA" AS AN EXCEPTION TO THE HEARSAY RULE. IV WHETHER THE HOLDING IN PEOPLE V. ULPINDO, 256 SCRA 201 AND PEOPLE V. LIAN, 255 SCRA 532 MAY BE APPLIED TO ANGEL SEMBRANO'S TESTIMONY AS CONTAINED IN THE TSN. V WHETHER SECTION 34, RULE 130, OF THE REVISED RULES OF EVIDENCE MAY BE APPLICABLE TO RESPONDENT ANTHONY TING'S ADMISSION AS EXTANT IN THE RECORD TO SHOW SPECIFIC INTENT, HABIT AND THE LIKE ON THE PART OF TENG CHING LAY IN HAVING HIS SON, ARSENIO TING, ACT AS HIS TRUSTEE OF SEVERAL PROPERTIES. VI WHETHER SECTION 26, RULE 130 OF THE REVISED RULES OF EVIDENCE (ON ADMISSION AGAINST INTEREST) AND SECTION 4, RULE 129 (ON JUDICIAL ADMISSION) OF THE SAME RULES MAY BE APPLIED TO RESPONDENT ANTHONY TING'S ADMISSION AS EXTANT IN THE RECORD, I.E., THE PROPERTY IN QUESTION WAS OWNED BY TENG CHING LAY. VII WHETHER, AS APPLIED TO THE UNDISPUTED FACTS OF THE CASE, THE RULE ON BURDEN OF EVIDENCE, I.E., TO SHOW THAT ARSENIO TING PAID THE PRICE OF THE SUBJECT PROPERTY, BEING CAPABLE OF DOING SO, WAS SHIFTED TO RESPONDENTS AFTER PETITIONERS HAD SUCCESSFULLY PROVEN, BY TESTIMONIAL EVIDENCE, THAT THE PURCHASE PRICE OF THE PROPERTY WAS PAID BY TENG CHING LAY AND MERELY ENTRUSTED THE SAME TO HIS SON, ARSENIO TING, AS THE FORMER WAS THEN A CHINESE CITIZEN WHO WAS NOT ALLOWED TO OWN REAL ESTATE PROPERTY (1935 CONSTITUTION) LET ALONE THE FACT THAT THE FORMER, BY PREVIOUS CONDUCT, HAD ALREADY ENTRUSTED TO HIS SON SEVERAL PROPERTIES UNDER THE SAME REASON. The Court notes that while the petition had been filed under Rule 45, the issues and the contentions advanced herein have been presented in a manner that a resolution of such will require this Court to re-examine the findings of fact of both the RTC and the CA.

The basic rule is that factual questions are beyond the province of this Court in a petition for review10 because only questions purely of law may be raised in such a petition. One test to determine if there exists a question of fact or law in a given case is whether the Court can resolve the issue that was raised without having to review or evaluate the evidence, in which case, it is a question of law; otherwise, it will be a question of fact. Thus, the petition must not involve the calibration of the probative value of the evidence presented.11 In addition, the facts of the case must be undisputed, and the only issue that should be left for the Court to decide is whether or not the conclusion drawn by the CA from a certain set of facts was appropriate.12 In the present case, however, the circumstances surrounding the ownership of the property that is central to the parties' disagreement are put at issue. A resolution of this point will require a reevaluation of the evidence on record. In an appeal via certiorari, the Court may not review the factual findings of the CA,13 and petitioners have not shown that this case falls under any of the recognized exceptions to this rule.14 Nonetheless, even if the Court were to exercise utmost liberality and veer away from the rule, the records will show that, indeed, petitioners failed to establish their case by a preponderance of evidence. In civil cases, the burden of proof to be established by a preponderance of evidence is on the party who is asserting the affirmative of an issue.15 Preponderance of evidence means probability of truth. It is evidence that is more convincing to the court as worthy of belief than that which is offered in opposition thereto.16 Petitioners primarily rely on Angel Sembrano's testimony to substantiate their claim. The latter's testimony, however, consists mainly of hearsay, which carries no probative value.17 He did not have personal knowledge as to the execution of the contract of sale between Arsenio and the Masangkay spouses nor the alleged agreement between the former and Teng Ching Lay. He could only testify as to what the deceased had allegedly told him. Thus, any evidence, whether oral or documentary, is hearsay if its evidentiary weight is not based on the personal knowledge of the witness but on the knowledge of some other person not on the witness stand.18 Even if the alleged statement of Arsenio to Sembrano relating to the fact that his father, Teng Ching Lay, was buying a house in Manila, can be admissible in evidence as a declaration against his pecuniary interest under Section 38 of Rule 130 of the Rules of Court,19 still, the veracity as to whether the deceased actually made this statement is subject to scrutiny. Clearly, the RTC and the CA cast doubt on Sembrano's credibility, and the Court does not find any reason to hold otherwise. Time and again, the Court has held that it will not interfere with the trial court's assessment regarding the credibility of witnesses, absent any showing that it overlooked, misapplied or misunderstood some facts or circumstances of weight and substance or that it gravely abused its discretion. Here, both the RTC and the CA were not convinced of the truthfulness of Sembrano's bare testimony. He did not present any documentary proof to support his statements, particularly with regard to the P200,000 check that he supposedly gave to Arsenio for the payment of the property in question. Furthermore, Sembrano's testimony on behalf of petitioners is about an alleged declaration against an interest of a person who is dead in an action that is in effect a claim against his estate. Such a testimony if coming from a party would be barred by the surviving parties rule, or the dead man's statute, in the Rules of Court: Section 23, Rule 130. Disqualification by reason of death or insanity of adverse party. Parties or assignors of parties to a case, or persons in whose behalf a case is prosecuted,

against an executor or administrator or other representative of a deceased person, or against a person of unsound mind, upon a claim or demand against the estate of such deceased person or against such person of unsound mind, cannot testify as to any matter of fact occurring before the death of such deceased person or before such person became of unsound mind. And while Sembrano is not a party, he is practically a surrogate of petitioners since he was the personal accountant of their predecessor-in-interest and the corporate accountant of the corporation he controlled. At any event, the issues propounded by petitioners have been discussed lengthily and ruled upon by the RTC and the CA in their respective decisions. Hence, the Court does not deem it necessary to further delve into these matters. The evidence on record supports the assailed findings and conclusions specifically with regard to the ownership of the property in question that is reflected in the Torrens title20 which was issued in the name of Arsenio pursuant to the deed of sale. As a rule, the findings of fact of the trial court, especially when adopted and affirmed by the CA, are final and conclusive and may not be reviewed on appeal to this Court.21 This Court is not a trier of facts and generally does not weigh anew the evidence already passed upon by the CA.22 Absent any showing that some facts of certain weight and substance were overlooked which, if considered, would affect the outcome of the case, the Court, as in this case, will uphold the findings of the RTC and the CA. Consequently, since petitioners failed to prove that Teng Ching Lay was the real owner of the property involved herein, their proposition that a constructive trust exists must likewise fail. WHEREFORE, the petition is DENIED. The decision and resolution of the Court of Appeals, dated January 31, 2002 and May 7, 2002, respectively, in CA-G.R. CV No. 47804, are AFFIRMED. Costs against petitioners. SO ORDERED. G.R. No. 140138 October 11, 2006

SPS. ANGEL L. SADANG and MARITONI A. SADANG, petitioners, vs. HONORABLE COURT OF APPEALS and CATHAY LAND, INC., respondents.

DECISION

AZCUNA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court questioning the Decision of the Court of Appeals which granted the petition for certiorari, prohibition and mandamus

of private respondent which sought to annul the the following orders: An order of the Regional Trial Court of Pasig, Branch 160, denying private respondents motion to dismiss petitioners complaint for damages, revocation/annulment of development permit, barangay certification, MMDA certification, with prayer for temporary restraining order and a writ of preliminary injunction; and the order denying the motion for reconsideration. The facts are as follows: Petitioners filed a complaint with the Regional Trial Court of Pasig City, Branch 160, on July 21, 1997.1 The complaint was denominated "For Damages, Revocation/Annulment of Development Permit, Barangay Certification, MMDA Certification With Prayer For Temporary Restraining Order and Later Writ of Preliminary Injunction." The following were alleged in the complaint: Plaintiffs, herein petitioners, Angel L. Sadang and his wife, Maritoni A. Sadang are registered owners of a house and lot located at No. 2 Gen. Malvar Street, San Antonio Village, Pasig City. Sometime in 1986, defendant, herein private respondent Cathay Land, Inc. (Cathay) purchased four residential lots in the same San Antonio Village, which are adjacent to plaintiffs residence, and located at the corner of Amber Avenue, Gen. Araneta and General Lukban Streets. After its purchase of the said four lots, Cathay made known its plans to construct two 35-storey residential condominium buildings to be known as the Astoria Plaza. The residents of San Antonio Village, particularly plaintiffs immediately objected to the construction of the two 35-storey residential condominium buildings through letters of the president of the San Antonio Village Association, Inc. (AVA), Roy Eduardo T. Lucero to Gregorio R. Rupisan, Barangay Captain of their barangay, and Wilfredo I. Imperial, Regional Director of the HLURB. Despite the objections, Cathay proceeded to construct through its retained construction company, Golangco. Regional Director of the HLURB Imperial initially denied Cathays development permit on the ground that there was apparently an inadvertent misprint of the zoning map which caused the zoning map and the actual location of the streets to not conform. Imperial found that the subject properties are within a Light Intensity Residential Zone. Even assuming that the properties are within a commercial zone, the height of the structures cannot exceed four storeys since they are adjoining a residential area, pursuant to Sec. 10 of Metro Manila Zoning Ordinance series of 81-01. Allegedly, Imperial suddenly reversed the denial of the development permit by granting Cathays motion for reconsideration. According to plaintiffs, Barangay Captain Rupisan granted the locational clearance, through a certification dated September 11, 1995, misrepresenting therein that Barangay San Antonio had no objections to the project. The City Development and Planning Officer of Pasig City, Luisa S. Soriano, issued a certification dated September 5, 1995 attesting that the four lots owned by Cathay are within a Medium Intensity Commercial Zone. The Acting Metro Manila Zoning Administrator, or the Metro Manila Authority, issued a certification dated September 18, 1995 allowing Cathay and Golangco to proceed with the construction.

Questioning Cathays continuing construction and the development permit, certification for construction and MMDA certification issued, plaintiffs filed the abovementioned complaint in the Regional Trial Court.2 Plaintiffs prayed for the following: (1) Immediately upon filing of this complaint, a temporary restraining order or a cease and desist order be issued enjoining defendants Cathay and Golangco from continuing with the construction of the 35-storey Astoria Plaza located at the corner of Amber Avenue, Gen. Araneta and Gen. Lukban Streets within the San Antonio Village, Pasig City adjacent to plaintiffs residence; (2) After notice and hearing , a writ of preliminary injunction issue enjoining defendants Cathay and Golangco from continuing with the construction of the 35-storey Astoria Plaza, located at the corner of Amber Avenue, Gen. Araneta and Gen. Lukban Streets, within the San Antonio Village, Pasig City adjacent to plaintiffs residence; (3) After hearing, judgment be rendered as follows: (a) Permanently enjoining defendants Cathay and Golangco from continuing the construction of the 35-storey Astoria Plaza located at the corner of Amber Avenue, Gen. Araneta, Gen. Lukban Streets, within the San Antonio Village, Pasig City adjacent to plaintiffs residence; (b) Declaring null and void the following: (1) Development Permit dated 1 December 1995 issued by defendant Wilfredo I. Imperial, Regional Director, ENCRFO, HLURB; (2) Locational Clearance dated 11 September 1995 issued by Gregorio Rupisan, Barangay Captain, San Antonio Village; (3) Certification to Construct in a C-2 Zone issued by Luisa S. Soriano, City Development & Planning Officer, Pasig City; (4) MMDA Certification dated 18 September 1995 issued by Orlando Malabanan Metro Manila Zoning Administration, MMDA. (c) Ordering defendants jointly and severally to pay plaintiffs: 1. Actual damages 2. Moral damages 3. Attorneys fees P 100,000 P1,000,000 P 100,000

Plaintiffs pray for such other relief and remedy which may be deemed just and equitable under the premises.3 Defendant Cathay filed a motion to dismiss the complaint, which the trial court denied. After a motion for reconsideration was denied, defendant filed a petition for certiorari, prohibition and mandamus

with a prayer for the issuance of a writ of preliminary injunction and/or temporary restraining order with the Court of Appeals.4 The Court of Appeals decided, as follows: There can be no debate that private respondents first cause of action pertains to the same subject matter as that of HLURB No. REM-A-960603 earlier initiated by private respondent Angel L. Sadang against petitioner before the HLURB. Both proceedings are for the nullification of one and the same development permit covering Astoria Plaza Condominium. A decision was rendered by the HLURB against them which was appealed to the Office of the President where it is pending. Surely, he cannot now seek in the RTC for the annulment of the development permit issued pursuant to the HLURB decision without awaiting the final outcome of the HLURB case. This would be a violation of the doctrine of primary jurisdiction. The doctrine of primary jurisdiction simply calls for the determination of administrative questions, which are ordinarily questions of fact, by administrative agencies rather than courts of justice. Increasingly, the Supreme Court has been committed to the view that unless the law speaks clearly unequivocally, the choice should fall on an administrative agency. True, private respondents rightly argue they are not buyers of subdivision lots or condominium units who are the owner or developer, as envisioned by the enabling act of [the] HLURB. The undeniable fact, however, is that private respondent Angel L. Sadang invoked the jurisdiction of the HLURB by filing a complaint before it in connection with the Astoria Plaza Condominium and the decision thereof is pending appeal brought by him before the Office of the President. He must await the definitive decision of the administrative case before he can claim a cause of action in the present complaint. He is also estopped to dispute now the legal competence of HLURB on the issue. The [claim that the HLURB case is a] "mere incident to the damage suit ruling" of respondent Judge is not conducive to orderly administration of justice. Precisely, one of the reasons for the primary jurisdiction rule in administrative cases is to avoid conflicting rulings between administrative agencies and the courts. To repeat, the instant complaint specifically seeks the declaration of nullity of the development permit dated 01 December 1995 issued by HLURB the same relief sought in the HLURB and now pending appeal before the Office of the President. Under the aforesaid doctrine, the suit before the RTC seeking the same relief is, therefore, premature. Private respondents cannot also ask for the annulment of (a) the locational clearance of the barangay captain, (b) certification to construct in a C-2 Zone issued by the City Development Planning Officer, Pasig City, and, (c) the MMDA certification issued by Metro Manila Zoning Administration in the present case. They never opposed the issuances of the aforementioned documents at their offices/agencies of origin. If they did not know beforehand of their issuances, upon learning of their existence, they did not file any motion for reconsideration with the agency concerned before commencing the instant case. This is in line with the doctrine of exhaustion of administrative remedies which means that an administrative decision must first be appealed to the administrative superiors up to the highest level before it may be elevated to a court of justice for review. And it may be added that the case does not fall under the established exceptions. Significantly, there is no allegation at all in the complaint that private respondents first sought reconsideration of the issuances of the three aforesaid documents with their respective

agencies of origins prior to this suit. This is a condition precedent to the existence of a cause of action. To be sure, the complaint may be treated as one for damages based on the allegations of the fifth cause of action, above quoted. Reprinting private respondents words in their comment: Plaintiffs questions as to the validity of defendants building permits as well as zoning violations are incidental issues to their suit, the main controversy being their claim for damages arising from quasi-delict. A suit of this nature is within the legal competence of the RTC, pursuant to Section 19 (1), BP 129 as amended. But, that approach will be academic in the light of the resolution of the succeeding issue. Coming to the issue of forum shopping, it is a matter of record that the complaints first cause of action was priorly brought to [HLURB] by private respondent Angel L. Sadang and the president of [San] Antonio Village Association. In the affidavit of non-forum shopping Angel signed, and he certified under oath that xxx 3. I have not commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or different divisions thereof or any other tribunal or agency; 4. To the best of my knowledge, no such action or proceeding is pending in the Court of Appeals, or any division thereof or other tribunal or agency; 5. If I should thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, Court of Appeals or any division thereof or any other tribunal or agency, I undertake to report this fact within five (5) days therefrom to the aforesaid courts, other tribunal or agency; The consequent question is: could there be a violation of the non-forum shopping rule when one of the causes of action in the complaint is pending before another agency, and with the full knowledge of the plaintiff? If in the affirmative, should the entire case be dismissed? Private respondent Angel L. Sadang signed the letter-complaint to the HLURB as one of the complainants. At the time he filed the case at bar, said HLURB case was pending as in fact it is still pending except that it is on appeal before the Office of the President made by private respondent Angel and his co-signor to the letter complaint. The fact that private respondent Angel L. Sadang still signed the certificate of non-forum shopping under the aforementioned circumstances is a clear case of a "submission of a false certification or non-compliance with any of the undertaking therein x x x". And the rules say "failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing." Forum-shopping and/or violation of Section 5, Rule 7 of the 1997 Rules of Civil Procedure was the third ground in petitioners Motion to Dismiss before respondent Judge. Private respondents filed their "Omnibus Opposition" to said motion, followed by their "Motion to Submit Additional Evidence In Support of

Opposition to Motion to Dismiss." For the questioned order dated 12 December 1997 of respondent Judge, there was due hearing. Stated simply, the provision on non-forum shopping (Sec. 5, Rule 7) of the 1997 Rules of Civil Procedure applies. As there is breach thereof, "dismissal of the case without prejudice" is in order. By way of recap, since the contested orders were issued with grave abuse of discretion amounting to lack or excess of jurisdiction, certiorari must be granted. WHEREFORE, the orders dated 12 December 1997 and 02 February 1998 are hereby SET ASIDE and Civil Case No. 66375 entitled "Spouses Angel L. Sadang and Maritoni A. Sadang, plaintiffs, vs. Cathay Land Inc., William Golangco Construction Corp., Wilfredo I. Imperial, Gragorio B. Rupisan, Luisa Soriano and Orlando Malabanan, defendants" is DISMISSED without prejudice. SO ORDERED. From the decision of the Court of Appeals, petitioners filed this petition for review, raising the following issues: I PUBLIC RESPONDENT ERRED IN HOLDING THAT THE LOWER COURT LACKS JURISDICTION IN ENTERTAINING PETITIONERS ACTION FOR DAMAGES, REVOCATION/ANNULMENT OF DEVELOPMENT PERMITS, BARANGAY CERTIFICATION, MMDA CERTIFICATION WITH PRAYER FOR TEMPORARY RESTRAINING ORDER AND LATER WRIT OF PRELIMINARY INJUNCTION. II PUBLIC RESPONDENT ERRED IN RULING THAT PETITIONERS ARE GUILTY OF FORUM SHOPPING. Petitioners prayed that "the Decision of the Honorable Court of Appeals promulgated on April 30, 1999 as well as its Resolution promulgated on September 17, 1999 be set aside and that this case be remanded to the Regional Trial Court, Branch 160, Pasig City, for continuation of trial on the merits." This Court fully agrees with the Court of Appeals that there has been a violation of the rule on forum shopping by the non-disclosure of the filing with an administrative agency, the HLURB, of a complaint raising the same issues as those brought before the Regional Trial Court by petitioners herein. For while the decision of the HLURB may not necessarily constitute res judicata to bar the suit filed in the Regional Trial Court, so that strictly speaking it is not a lis pendens relative to the suit filed in court, the purpose of including the words "or agency" in addition to "any other tribunal" in the non-forum shopping certificate required is to advise the court of the possible application of the doctrine of primary jurisdiction, namely, that technical matters such as zoning classifications and building certifications should be primarily resolved first by the administrative agency whose expertise relates thereto.

As the Court of Appeals rightly pointed out, petitioner Angel I. Sadang himself filed the complaint before the HLURB and took the appeal from its decision to the Office of the President. The nondisclosure of this fact in his non-forum shopping certification provided sufficient ground to dismiss the complaint. After all, the dismissal is, as stated in the dispositive portion of the decision of the Court of Appeals, "without prejudice." This Court thus finds no reversible error committed by the Court of Appeals. WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioners. SO ORDERED. G.R. No. 167003 October 23, 2006

PANFILO A. ABAIGAR, petitioner, vs. JESUS A. ABAIGAR, respondent.

DECISION

CARPIO MORALES, J.: On challenge are the Resolutions of the Court of Appeals dated November 30, 20041 and February 4, 20052dismissing herein petitioner's Petition for Review, its certification against forum shopping having been signed merely by his counsel as petitioner had, before its filing, left for the United States. Section 5, Rule 7 of the 1997 Rules of Civil Procedure, as amended, provides: SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. x x x (Italics in the original; emphasis supplied)

Similarly, Sections 2 and 3, Rule 423 state: SEC. 2. Forms and contents. x x x The petitioner shall also submit together with the petition a certification under oath that he has not theretofore commenced any other action involving the same issues in the Supreme Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action or proceeding, he must state the status of the same; and if he should thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the aforesaid courts and other tribunal or agency thereof within five (5) days therefrom. SEC.3.Effect of failure to comply with requirements. The failure of the petitioner to comply with any of the foregoing requirements regarding the payment of the docket and other lawful fees, the deposit for costs, proof of service of the petition, and the contents of and the documents which should accompany the petition shall be sufficient ground for the dismissal thereof. (Italics in the original; emphasis supplied) A certification by counsel and not by the principal party himself is no certification at all.4 It is a defective certification which is tantamount to non-compliance with the requirement prescribed by the Rules of Court and constitutes a valid cause for the dismissal of the petition.5 This is because it is the petitioner and not the counsel who is in the best position to know whether he actually filed or caused the filing of the petition.6 The appellate court, strictly speaking, was, therefore, correct when it dismissed the petition in this case. There have been instances, however, that the Rule on the matter has been relaxed. Thus, in Donato v. Court of Appeals7 where the therein petitioner was, at the time of he filing of the petition, in the United States where he was residing, the Rule on certification against forum shopping was relaxed. The petition for review filed before the CA contains a certification against forum shopping but said certification was signed by petitioner's counsel. In submitting the certification of nonforum shopping duly signed by himself in his motion for reconsideration, petitioner has aptly drawn the Court's attention to the physical impossibility of filing the petition for review within the 15-day reglementary period to appeal considering that he is a resident of 1125 South Jefferson Street, Roanoke, Virginia, U.S.A. were he to personally accomplish and sign the certification. We fully agree with the petitioner that it was physically impossible for the petition to have been prepared and sent to the petitioner in the United States, for him to travel from Virginia, U.S.A. to the nearest Philippine Consulate in Washington, D.C., U.S.A., in order to sign the certification before the Philippine Consul, and for him to send back the petition to the Philippines within the 15-day reglementary period. Thus, we find thatpetitioner has adequately explained his failure to personally sign the certification which justifies relaxation of the rule. 8 (Emphasis and underscoring supplied) In Sy Chin v. Court of Appeals9 and in the recent case of Paul Lee Tan v. Paul Sycip and Merritto Lim10 where the therein petitions before the Court of Appeals bore defective Verifications and Certifications of Non-forum Shopping, this Court excused the procedural lapse in the interest of substantial justice.

In fine, when the interest of substantial justice overrides the procedural lapse, the Rule on the matter may be relaxed. An examination of the records of the case is thus in order to determine whether a relaxation of the Rule is warranted in the interest of substantial justice. From the records of the case, the following material facts are culled: Panfilo A. Abaigar (petitioner) filed on July 5, 2000 a complaint11 for Forcible Entry against his brother-herein respondent Jesus A. Abaigar before the Municipal Circuit Trial Court (MCTC) in Calbiga, Samar which docketed it as Civil Case No. 02-2000. In his Complaint, petitioner alleged as follows: Respondent, by separate letters both dated August 25, 1997,12demanded from his (petitioner's) tenants, Domingo G. Alea and Jesus Solayao, who were cultivating a 2-hectare parcel of land covered by Tax Declaration No. 3059 (formerly by Tax Declaration No. 12057 in the name of his (petitioner's) and respondent's father), to vacate the land. As respondent's demand remained unheeded, he forcibly entered the land in December 1999 and prevented the tenants from cultivating it. On petitioner's arrival from the United States in April 2000, he contracted a laborer to cultivate the land, but on June 29, 2000, again, with open display of force, threat, and intimidation, and despite his protest, respondent forcibly ousted the laborer. By Decision of March 19, 2004,13 the MCTC ruled in favor of petitioner. On appeal, the Regional Trial Court (RTC) noted that respondent had been adjudged in a decision in Civil Case No. CC-92-0045, Panfilo Abaigar v. Prospero Leanda, Luis Baco and Pablito Pachoco, for Recovery of Possession,14 to be the owner of the land in question, which decision had become final and executory in 1999; that respondent and petitioner's purported tenants Domingo Alea and Jesus Solayao entered into a tenancy agreement, but the latter failed to pay rentals, hence, they were evicted in December 1998; and that petitioner's allegation that respondent acquired possession of the property by force, intimidation, threat, strategy or stealth, was unsubstantiated. More importantly, the RTC found that petitioner was not in actual possession of the land as early as 1992, hence, he was not in prior physical possession of the premises when he was allegedly deprived thereof by respondent. Thus, by Resolution dated July 16, 2004,15 the RTC reversed the trial court's decision, disposing as follows: WHEREFORE, the appealed decision is hereby REVERSED and the Complaint is DISMISSED; the defendant[-herein respondent] is declared the owner and actual possessor of one-half of the property in question under Tax Declaration No. 3059 now revised per ARP-04040-0002; and for the plaintiff not to bother anymore the defendant in his possession of the said property. Plaintiff is ordered to pay the defendant litigation expenses in the amount of Php. 5,000.00; Attorney's fees of Php. 15,000.00; moral damages of Php. 15,000.00 and costs.16 (Underscoring in the original; emphasis supplied) As stated early on, the Court of Appeals, by Resolution dated November 30, 2004,17 dismissed the petition on the ground that petitioner did not personally sign the certification against forum-shopping. Petitioner moved for reconsideration of the appellate court's dismissal of his petition, explaining that he had left for the United States before the filing of the petition, which fact should, so petitioner

pleaded, be deemed "reasonable cause for failure to personally sign the certification;" and that he has a good and meritorious case and substantial justice could be better served if his petition is reinstated. The motion was denied by the Court of Appeals by Resolution dated February 4, 2005.18 In his present petition, petitioner "most humbly submit[s] that the circumstances prevailing in the instant case and the opportunity for [him] to have the case reviewed on appeal, at his instance (sic), [be considered] compelling reasons" to relax the Rule.19 Petitioner does not specify "the prevailing circumstances" nor advance that he has or why he has a meritorious case to merit setting aside of technicalities. To this Court, the above-stated material facts do not call for a relaxation of the Rule on certification against forum shopping. WHEREFORE, the petition is DENIED. Costs against petitioner. SO ORDERED. G.R. NO. 142937 November 15, 2005 PHILIPPINE AMUSEMENT AND GAMING CORPORATION, Petitioner, vs. MARITA A. ANGARA and BEATRIZ T. LA VICTORIA, Respondents. DECISION AUSTRIA-MARTINEZ, J.: Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Resolution1of the Court of Appeals (CA) dated January 31, 2000 in CA-G.R. SP No. 56375, which dismissed petitioners petition for review for late filing; and the Resolution dated April 7, 2000, which denied petitioners motion for reconsideration. The factual background of the case is as follows: Respondents Beatriz T. La Victoria (La Victoria) and Marita A. Angara (Angara) were Slot Machine Roving Token Attendants (SMRTAs)2 of petitioner Philippine Amusement and Gaming Corporation (PAGCOR) assigned at its casino in Davao City. In a letter dated July 23, 1997, the PAGCOR Board of Directors dismissed them from service, effective June 28, 1997, for loss of trust and confidence.3 It appears that respondent La Victoria was dismissed for alleged short selling of tokens while respondent Angara was dismissed for alleged token passing and condoning or actively assisting La Victoria in covering up her shortage. On August 12, 1997, respondents filed a motion for reconsideration4 but their motion was denied.5 On October 17, 1997, respondents filed their appeal memorandum with the Civil Service Commission (CSC).6 In a resolution dated October 21, 1997, the CSC directed PAGCOR Chairman Alicia Ll. Reyes to submit her comment on the said appeal together with the records of the case

within ten days from receipt of the resolution.7 Instead of filing a comment, petitioner filed a motion to dismiss, on November 24, 1997, on the ground that the appeal was filed out of time.8 On May 27, 1999, the CSC issued Resolution No. 991110. It treated petitioners motion to dismiss as its comment and, on the basis of respondents appeal memorandum, ruled in the latters favor. It reversed the respondents dismissal and ordered their reinstatement.9 Petitioner filed a motion for reconsideration10 but was denied by the CSC in its Resolution No. 992571 dated November 19, 1999.11 On December 22, 1999, petitioner filed a motion for a twenty-day extension of time from December 23, 1999 or until January 11, 2000 within which to file its petition for review with the CA.12 On January 10, 2000, petitioner filed its petition for review with the CA.13 On January 13, 2000, the CA granted petitioners motion for extension but only for fifteen days from December 23, 1999 or until January 7, 2000.14 On January 31, 2000, the CA issued the first assailed Resolution denying due course to the petition for review for having been filed three days past the extended period granted by the court.15 On February 22, 2000, petitioner filed a motion for reconsideration, contending that the petition was filed within the twenty-day extension it had asked for and thus should have been given due course. It further invoked liberal interpretation of the Rules for consideration of equity and substantial justice.16 On April 7, 2000, the CA rendered the second assailed Resolution denying for lack of merit petitioners motion for reconsideration.17 The CA held that: Section 3,18 Rule 43 of the 1997 Rules of Civil Procedure expressly provides that only one extension of fifteen (15) days may be granted to a petitioner within which to file a petition for review; petitioner took the risk when it asked for a twenty-day extension, evidently assuming that the court will grant the extension prayed for; even if the petition was timely filed, it will still have to be denied for the following formal defects: (a) the petition lacks an affidavit of service as mandated under Section 1319 of Rule 13; (b) the signatory to the certification against forum shopping was not shown to have been validly and legally authorized by the petitioner to sign the same; and (c) the written explanation required under Section 11,20 Rule 13 shows that the respondents were furnished, not with copies of the petition for review, but with copies of the "Motion for Extension of Time to File Verified Petition for Review." Hence, the present petition for review on certiorari anchored on the following assigned errors: I THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN DISMISSING PETITIONERS VERIFIED PETITION FOR REVIEW. II THE CIVIL SERVICE COMMISSION (CSC) ERRED IN DECLARING PRIVATE RESPONDENTS DISMISSAL WITHOUT CAUSE AND WITHOUT DUE PROCESS EVEN WITHOUT AWAITING THE

COMMENT OF THE PETITIONER AND THE COMPLETE RECORDS OF THE CASE, WHERE THE MERIT OF THE CASE SHOULD HAVE BEEN FAIRLY AND IMPARTIALLY ASSESSED. III THE ACTS OF RTAs LA VICTORIA AND ANGARA CONSTITUTE DISHONESTY, A VIOLATION OF PAGCORS RULES ON EMPLOYEES DISCIPLINE REGARDED AS LOSS OF TRUST AND CONFIDENCE. IV RTAs LA VICTORIA AND ANGARA HOLD CONFIDENTIAL POSITIONS WHOSE REMOVAL FROM THE SERVICE CAN BE JUSTIFIED THROUGH LOSS OF TRUST AND CONFIDENCE. V THE APPEAL FILED BY THE RESPONDENTS BEFORE THE CSC WAS NOT WITHIN THE REGLEMENTARY PERIOD TO FILE AN APPEAL, AND THEREFORE, THE CSC COULD NOT VALIDLY ACT ON IT.21 Petitioner submits that technicalities should be set aside in the interest of substantial justice. It avers that the dismissal of the petition filed three days past the granted period is unwarranted because the delay is excusable. It points out that: the case was originally handled by PAGCOR and referred to the Office of the Government Corporate Counsel for proper handling on December 10, 1999; the case was assigned to the present counsel for preparation of the petition only on December 13, 1999, or ten days before December 23, 1999, the expiry date for appeal; counsel had to coordinate with the former handling counsel of PAGCOR in order to be apprised of the factual background of the case and collate the documents and exhibits necessary for the preparation of the petition. On the failure to attach an affidavit of service, petitioner contends that the CA did not require it to attach the same. Besides, the CA had notice that the petition was duly furnished all the parties, as manifested by the annotation of the registry receipt numbers, place and date of filing opposite the names of the parties, located at the last page of the petition, such that there was substantial compliance with the requirements of the Rules. As to the verification and certification of non-forum shopping, petitioner maintains that the same was signed by the Managing Head for Corporate and Legal Services Department, Atty. Carlos R. Bautista, the officer of the petitioner who has personal knowledge of all the cases, perhaps, more knowledgeable than the head of the office. With regard to the written explanation in the petition which states that respondents were furnished with copies of the "Motion for Extension of Time to File Verified Petition for Review," petitioner submits that it should be considered a mere typographical error. Moreover, petitioner submits that its case is meritorious. It insists that it was denied due process when the CSC treated petitioners motion to dismiss as its comment and decided the case forthwith, without allowing petitioner to submit its comment or the whole record of the case be elevated to it. Besides, petitioner maintains that the records show that respondents committed acts of dishonesty which are punishable with dismissal, even on the first offense.

Furthermore, petitioner submits that since respondents are confidential employees, pursuant to Section 1622 of Presidential Decree No. 186923 (the PAGCOR Charter), they did not have fixed term of office; their tenure of employment was dependent on the continued confidence of their superiors; such confidence was lost because it was proven that they committed dishonest acts in the performance of their duties. Lastly, petitioner submits that since the CSC admitted that the appeal of the respondents was filed out of time, it should not have entertained the same. Therefore, petitioners decision dismissing respondents from service, being final and executory, should stand. Respondents, on the other hand, submit that the instant petition should have been dismissed outright since the verification and certification of non-forum shopping was signed by Atty. Bautista, the Managing Head for Corporate and Legal Services Department, and no board resolution was attached to show that he is petitioners duly authorized representative. They further submit that there is no proof of service. As to the issues presented by petitioner, respondents contend that the appeal before the CSC was not filed beyond the reglementary period because respondents were not furnished with petitioners resolution dismissing them from service for loss of trust and confidence. Respondent La Victoria claims that she secured a copy through her own efforts while respondent Angara alleges that she was never furnished with a decision dismissing her from service. Besides, they submit that there is no rule before the CSC which provides that whenever a motion for reconsideration is denied, the moving party has only the remaining period from notice of denial within which to file notice of appeal. In any event, they aver that the CSC did not err in admitting the appeal because it is within its power to relax the rules to attain substantial justice. They further contend that the CSC did not err in issuing Resolution No. 991110 despite the absence of the records since petitioner was deemed to have waived such right to file its comment when it chose to file a motion to dismiss. Moreover, the CSC did not err in ruling that respondents were not dismissed for cause and after due process since loss of trust and confidence is not one among the grounds for disciplinary action and there was no formal investigation conducted but a summary proceeding. On one hand, the Court finds that petitioner has offered no justifiable reasons in filing the petition for review three days past the period granted since the Rules allow only a 15-day extension and petitioners counsel cannot assume that his request for a 20-day extension will be granted. The reasons proffered by petitioners counsel that he "needs sufficient time to collate and review the records of the case which are still in the possession of PAGCOR in order to come up with a well studied and appropriate Verified Petition for Review"24 and "since assigned counsel is saddled with the preparation of equally important pleadings coupled with almost daily appearances in court"25 are not exceptionally meritorious or most compelling reasons to allow petitioner additional three days or up to January 10, 2000, after the lapse of the fifteen-day period on January 7, 2000. On the other hand, the Court notes that the last day for filing the petition for review, that is, January 7, 2000, fell on a Friday. Petitioner filed its petition for review on January 10, 2000, Monday, which was the next working day. Therefore, the delay in filing the motion for extension was actually for one day only. It has been held that a one-day delay does not justify the appeals denial where no element of intent to delay the administration of justice could be attributed to the petitioner.26 Needless to stress, the real purpose behind the limitation of the period of appeal is to forestall or avoid an unreasonable delay in the administration of justice and to put an end to controversies.27

In this case, the Court is inclined to excuse the one-day delay, in order to fully settle the merits of the case. After all, the policy of our judicial system is to encourage full adjudication of the merits of an appeal. With respect to the non-attachment of the affidavit of service, such is not fatal to the petition since the registry receipts attached to the petition clearly show that respondents were served copies of the petition.28 The demands of substantial justice were satisfied by the actual receipt of the petition. In fact, respondents filed their comment thereon.29 With respect to the verification and certification signed by Atty. Bautista, petitioners Managing Head for Corporate and Legal Services Department, it is but logical that he be the party affixing his signature therein, considering that the person who is in the best position to ascertain the truthfulness and the correctness of the allegations in the petition is its legal officer, who necessarily knows the status of any suit involving the company.30 As to the written explanation stating that respondents were furnished with copies of the "Motion for Extension of Time to File Verified Petition for Review,"31 it should be considered as a typographical or clerical error since what was actually furnished, as shown by the heading of the pleading, is a "Verified Petition for Review."32 While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and the swift unclogging of court dockets is a laudable objective, it nevertheless must not be met at the expense of substantial justice.33 Time and again, this Court has reiterated the doctrine that the rules of procedure are mere tools intended to facilitate the attainment of justice, rather than frustrate it. A strict and rigid application of the rules must always be eschewed when it would subvert the primary objective of the rules, that is, to enhance fair trials and expedite justice. Technicalities should never be used to defeat the substantive rights of the other party. Every party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities.34 Thus, the CA should have refrained from hastily dismissing the petition on procedural flaws. In similar cases,35 the Court ordinarily remands the case to the CA for proper disposition on the merits. However, in the present case, considering the issues raised and the fact that the records of the case are before us, the Court deems it more appropriate and practical to resolve the present controversy in order to avoid further delay.36 The issue on the nature of employment of an employee of the petitioner has been laid to rest in Civil Service Commission vs. Salas, wherein the Court en banc, speaking through the learned Justice Florenz D. Regalado, held:37 In reversing the decision of the CSC, the Court of Appeals opined that the provisions of Section 16 of Presidential Decree No. 1869 may no longer be applied in the case at bar because the same is deemed to have been repealed in its entirety by Section 2(1), Article IX-B of the 1987 Constitution. This is not completely correct. On this point, we approve the more logical interpretation advanced by the CSC to the effect that "Section 16 of PD 1869 insofar as it exempts PAGCOR positions from the provisions of Civil Service Law and Rules has been amended, modified or deemed repealed by the 1987 Constitution and Executive Order No. 292 (Administrative Code of 1987). However, the same cannot be said with respect to the last portion of Section 16 which provides that "all employees of the casino and related services shall be classified as confidential appointees." While such executive declaration emanated merely from the provisions of Section 2, Rule XX of the Implementing Rules of the Civil Service Act of 1959, the power to declare a position as policy-

determining, primarily confidential or highly technical as defined therein has subsequently been codified and incorporated in Section 12(9), Book V of Executive Order No. 292 or the Administrative Code of 1987. This later enactment only serves to bolster the validity of the categorization made under Section 16 of Presidential Decree No. 1869. Be that as it may, such classification is not absolute and all-encompassing. Prior to the passage of the aforestated Civil Service Act of 1959, there were two recognized instances when a position may be considered primarily confidential: Firstly, when the President, upon recommendation of the Commissioner of Civil Service, has declared the position to be primarily confidential; and, secondly, in the absence of such declaration, when by the nature of the functions of the office there exists "close intimacy" between the appointee and appointing power which insures freedom of intercourse without embarrassment or freedom from misgivings of betrayals of personal trust or confidential matters of state. At first glance, it would seem that the instant case falls under the first category by virtue of the express mandate under Section 16 of Presidential Decree No. 1869. An in-depth analysis, however, of the second category evinces otherwise. When Republic Act No. 2260 was enacted on June 19, 1959, Section 5 thereof provided that "the non-competitive or unclassified service shall be composed of positions expressly declared by law to be in the non-competitive or unclassified service or those which are policy-determining, primarily confidential, or highly technical in nature." In the case of Piero, et al. vs. Hechanova, et al., the Court obliged with a short discourse there on how the phrase "in nature" came to find its way into the law, thus: "The change from the original wording of the bill (expressly declared by law x x x to be policydetermining, etc.) to that finally approved and enacted (or which are policy determining, etc. in nature) came about because of the observations of Senator Taada, that as originally worded the proposed bill gave Congress power to declare byfiat of law a certain position as primarily confidential or policy-determining, which should not be the case. The Senator urged that since the Constitution speaks of positions which are primarily confidential, policy-determining or highly technical in nature, it is not within the power of Congress to declare what positions are primarily confidential or policydetermining. It is the nature alone of the position that determines whether it is policy-determining or primarily confidential. Hence, the Senator further observed, the matter should be left to the proper implementation of the laws, depending upon the nature of the position to be filled, and if the position is highly confidential then the President and the Civil Service Commissioner must implement the law. To a question of Senator Tolentino, But in positions that involved both confidential matters and matters which are routine, x x x who is going to determine whether it is primarily confidential? Senator Taada replied: SENATOR TAADA: Well, at the first instance, it is the appointing power that determines that: the nature of the position. In case of conflict then it is the Court that determines whether the position is primarily confidential or not." Hence the dictum that, at least since the enactment of the Civil Service Act of 1959, it is the nature of the position which finally determines whether a position is primarily confidential, policy-determining or highly technical. And the Court in the aforecited case explicitly decreed that executive pronouncements, such as Presidential Decree No. 1869, can be no more than initial determinations that are not conclusive in case of conflict. It must be so, or else it would then lie within the discretion of the Chief Executive to deny to any officer, by executive fiat,

the protection of Section 4, Article XII (now Section 2[3], Article IX-B) of the Constitution. In other words, Section 16 of Presidential Decree No. 1869 cannot be given a literally stringent application without compromising the constitutionally protected right of an employee to security of tenure. The doctrinal ruling enunciated in Piero finds support in the 1935 Constitution and was reaffirmed in the 1973 Constitution, as well as in the implementing rules of Presidential Decree No. 807, or the Civil Service Decree of the Philippines. It may well be observed that both the 1935 and 1973 Constitutions contain the provision, in Section 2, Article XII-B thereof, that "appointments in the Civil Service, except as to those which are policy-determining, primarily confidential, or highly technical in nature, shall be made only according to merit and fitness, to be determined as far as practicable by competitive examination." Corollarily, Section 5 of Republic Act No. 2260 states that "the noncompetitive or unclassified service shall be composed of positions expressly declared by law to be in the non-competitive or unclassified service or those which are policy-determining, primarily confidential, or highly technical in nature." Likewise, Section 1 of the General Rules in the implementing rules of Presidential Decree No. 807 states that "appointments in the Civil Service, except as to those which are policy-determining, primarily confidential, or highly technical in nature, shall be made only according to merit and fitness to be determined as far as practicable by competitive examination." Let it be here emphasized, as we have accordingly italicized them, that these fundamental laws and legislative or executive enactments all utilized the phrase "in nature" to describe the character of the positions being classified. The question that may now be asked is whether the Piero doctrineto the effect that notwithstanding any statutory classification to the contrary, it is still the nature of the position, as may be ascertained by the court in case of conflict, which finally determines whether a position is primarily confidential, policy-determining or highly technicalis still controlling with the advent of the 1987 Constitution and the Administrative Code of 1987, Book V of which deals specifically with the Civil Service Commission, considering that from these later enactments, in defining positions which are policy-determining, primarily confidential or highly technical, the phrase "in nature" was deleted. We rule in the affirmative. The matter was clarified and extensively discussed during the deliberations in the plenary session of the 1986 Constitutional Commission on the Civil Service provisions, to wit: "MR. FOZ: Which department of government has the power or authority to determine whether a position is policy-determining or primarily confidential or highly technical? FR. BERNAS: The initial decision is made by the legislative body or by the executive department, but the final decision is done by the court. The Supreme Court has constantly held that whether or not a position is policy-determining, primarily confidential or highly technical, it is determined not by the title but by the nature of the task that is entrusted to it. For instance, we might have a case where a position is created requiring that the holder of that position should be a member of the Bar and the law classifies this position as highly technical. However, the Supreme Court has said before that a position which requires mere membership in the Bar is not a highly technical position. Since the term highly technical means something beyond the ordinary requirements of the profession, it is always a question of fact. MR. FOZ: Does not Commissioner Bernas agree that the general rule should be that the merit system or the competitive system should be upheld? FR. BERNAS: I agree that that should be the general rule; that is why we are putting this as an exception.

MR. FOZ: The declaration that certain positions are policy-determining, primarily confidential or highly technical has been the source of practices which amount to the spoils system. FR. BERNAS: The Supreme Court has always said that, but if the law of the administrative agency says that a position is primarily confidential when in fact it is not, we can always challenge that in court. It is not enough that the law calls it primarily confidential to make it such; it is the nature of the duties which makes a position primarily confidential. MR. FOZ: The effect of a declaration that a position is policy-determining, primarily confidential or highly technicalas an exceptionis to take it away from the usual rules and provisions of the Civil Service Law and to place it in a class by itself so that it can avail itself of certain privileges not available to the ordinary run of government employees and officers. FR. BERNAS: As I have already said, this classification does not do away with the requirement of merit and fitness.All it says is that there are certain positions which should not be determined by competitive examination. For instance, I have just mentioned a position in the Atomic Energy Commission. Shall we require a physicist to undergo a competitive examination before appointment? Or a confidential secretary or any position in policy-determining administrative bodies, for that matter? There are other ways of determining merit and fitness than competitive examination. This is not a denial of the requirement of merit and fitness." It is thus clearly deducible, if not altogether apparent, that the primary purpose of the framers of the 1987 Constitution in providing for the declaration of a position as policy-determining, primarily confidential or highly technical is to exempt these categories from competitive examination as a means for determining merit and fitness.It must be stressed further that these positions are covered by security of tenure, although they are considered non-competitive only in the sense that appointees thereto do not have to undergo competitive examinations for purposes of determining merit and fitness. In fact, the CSC itself ascribes to this view as may be gleaned from its questioned resolution wherein it stated that "the declaration of a position as primarily confidential if at all, merely exempts the position from the civil service eligibility requirement." Accordingly, the Piero doctrine continues to be applicable up to the present and is hereby maintained. Such being the case, the submission that PAGCOR employees have been declared confidential appointees by operation of law under the bare authority of CSC Resolution No. 91-830 must be rejected.38 (Emphasis supplied) In Philippine Amusement and Gaming Corporation vs. Rilloraza,39 the Court, in reiterating the foregoing pronouncements, further stated that: Justice Regalados incisive discourse yields three (3) important points: first, the classification of a particular position as primarily confidential, policy-determining or highly technical amounts to no more than an executive or legislative declaration that is not conclusive upon the courts, the true test being the nature of the position. Second, whether primarily confidential, policy-determining or highly technical, the exemption provided in the Charter pertains to exemption from competitive examination to determine merit and fitness to enter the civil service. Such employees are still protected by the mantle of security of tenure. Last, and more to the point, Section 16 of P.D. 1869, insofar as it declares all positions within PAGCOR as primarily confidential, is not absolutely binding on the courts.40 In the present case, as SMRTAs, respondents duties and responsibilities are:

JOB SUMMARY: Working under the supervision of the Slot Machine Supervisor, the Slot Machine Roving Token Attendant provides cash-to-token exchange services to slot machine players. DUTIES AND RESPONSIBILITIES: 1. Handles cash-to-token exchange transactions with slot machine players. 2. Accounts for the proper use, safekeeping, and liquidation of the individual vale issued by Treasury. 3. Provides optimum customer service to casino players in accordance with the established House Rules and company policies. 4. Notifies the Slot Machine Attendant of any need for jackpot payment or hopper refills, and informs the Slot Machine Technician of any fault codes or machine malfunctions. 5. Ensures the cleanliness of slot machine units, the proper arrangement of slot machine area stools, and the return of empty coin trays, bowls or tubes to the Token Counter or to a designated location. 6. Assists in the preparation of periodic slot machine reports, and in the maintenance of the sections files records and reports. 7. Notifies the Slot Machine Head/Asst. Head/Supervisor of any incident of doubtful nature. 8. Performs other duties as may be designated by the Casino Operations Manager.41 As a SMRTA, each of them earns P3,000.00 a month.42 From the nature of respondents functions, their organizational ranking, and their compensation level, it is obviously beyond debate that respondents, occupying one of the lowest ranks in petitioner, cannot be considered confidential employees. Their job description spells out their routinary functions. As enumerated in their functions, there is nothing to suggest that their positions were "highly," or much less "primarily" confidential in nature. There is no showing of that element of trust indicative of a primarily confidential position, as defined in De los Santos vs. Mallare,43 thus: Every appointment implies confidence, but much more than ordinary confidence is reposed in the occupant of a position that is primarily confidential. The latter phrase denotes not only confidence in the aptitude of the appointee for the duties of the office but primarily close intimacy which insures freedom of intercourse without embarrassment or freedom from misgivings of betrayals of personal trust or confidential matters of state.44 Petitioner, therefore, cannot justify respondents dismissal on loss of trust and confidence since the latter are not confidential employees. Being regular employees that enjoy security of tenure, respondents can only be dismissed for just cause and with due process, notice and hearing. Petitioner cannot, in the alternative, allege that respondents are being dismissed for dishonesty since petitioners thesis, in its motion for reconsideration in the CSC and petition before the CA, has always been that respondents, as confidential employees, can be dismissed for loss of trust and confidence. Besides, dishonesty is not the reason for which they were dismissed per the letter of dismissal of July 23, 1997, but for loss of trust and confidence.45

Moreover, the petitioner cannot claim it was deprived of due process of law when the CSC granted respondents appeal without the comment of the petitioner or the records before it. Petitioner was directed to file its comment but chose instead to move for the dismissal of the appeal. It must be remembered that the CSC, being an administrative body with quasi-judicial powers, is not bound by the technical rules of procedure and evidence in the adjudication of cases, subject only to limitations imposed by basic requirements of due process.46 In Ang Tibay vs. Court of Industrial Relations,47 we held that the provision for flexibility in administrative procedure does not go so far as to justify orders without a basis in evidence having rational probative value. In the present case, since petitioner claims that respondents are confidential employees and can be dismissed on loss of trust and confidence, the attachments to respondents appeal memorandum, namely: (a) the letter dated February 6, 1997 from the petitioners Board of Directors confirming respondent La Victorias regular appointment as SMRTA, effective January 8, 1997, after six months probationary period, with a salary of P3,000 a month;48 (b) the letter dated July 11, 1996 from the petitioners Board of Directors confirming respondent Angaras regular appointment as SMRTA, effective June 4, 1996 with a salary of P3,000 a month;49 (c) the letter dated July 28, 1997 from Richard S. Syhongpan (Syhongpan), Branch Manager, Casino Filipino, Davao, addressed to respondent Angara informing her of preventive suspension effective same date, pending investigation;50 (d) two letters, both dated July 1, 1997, from Syhongpan, separately addressed to respondents, requiring them to appear before the Branch Management Panel;51 (e) the letter dated July 2, 1998 of respondent La Victoria addressed to the Branch Manager, explaining her side on the incident she was investigated on;52 (f) the Memorandum dated July 5, 1997 from Syhongpan directing respondent Angara to report to the Corporate Office on July 7, 1997 for further investigation;53 (g) the two letters, both of July 23, 1997, separately addressed to respondents, from Teresita S. Ela, Managing Head of the Personnel Administration Department of PAGCOR, informing them that the Board of Directors in the meeting on July 22, 1997 resolved to dismiss them from service for loss of trust and confidence effective June 28, 1997;54 (h) respondents appeal for reconsideration dated August 12, 1997 filed with Alicia Ll. Reyes, Chairman and Chief Executor Officer of PAGCOR;55 (i) respondents tracer letter dated September 12, 1997 addressed to Reyes, requesting speedy disposition of their appeal for reconsideration;56 (j) the Reply to Endorsement of Appeal for Reconsideration, dated September 12, 1997 from Reyes addressed to then Senate President Ernesto Maceda, on the denial of respondent La Victorias appeal for reconsideration of their dismissal;57 and (k) the letter dated September 17, 1997 from Romeo T. Trio, PAGCORs Corporate Secretary, informing respondents of the denial of their appeal for reconsideration by the PAGCORs Board of Directors;58and settled jurisprudence enunciated in Civil Service Commission vs. Salas and Philippine Amusement and Gaming Corporation vs. Rilloraza, are sufficient bases for the CSCs decision in favor of respondents. Besides, petitioner was given the opportunity to be heard when it filed a motion for reconsideration of Resolution No. 991110, wherein it attached the records of the case, which included all the documents attached to respondents appeal memorandum.59 The CSC, however, after a thorough re-evaluation of the arguments raised by petitioner, found no sufficient legal and factual basis to modify or alter its decision in the resolution. Petitioner cannot bewail denial of due process since it was given the opportunity to present its side on the propriety of respondents dismissal through its motion for reconsideration and the attachments therein.60 Accordingly, the demands of due process have been sufficiently met. WHEREFORE, the petition is DENIED for lack of merit. SO ORDERED.

FIRST DIVISION

ANATALIA B. RAMOS, Petitioner,

G.R. No. 137247 Present: PANGANIBAN, C.J. Chairperson, YNARES-SANTIAGO, AUSTRIA-MARTINEZ, CALLEJO, SR., and CHICO-NAZARIO, JJ.

- versus -

Promulgated: SPOUSES DOMINGO A. DIZON and EDNA MEDINA DIZON, Respondents. August 7, 2006 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari of the Decision dated 16 October 1998[1] and the Resolution dated 13 January 1999,[2] both promulgated by the Court of Appeals in CA-G.R. CV No. 48544, affirming the Decision dated 24 January 1995[3] of the trial court in Civil Case No. 93-66439, a petition for registration of consolidation of ownership over real property filed by herein petitioner. In the Petition filed before the Regional Trial Court (RTC), Manila, Branch 45, and docketed as Civil Case No. 93-66439, petitioner alleged that respondents are the owners of an undivided one-half portion of a parcel of land with an area of about 89.35 square meters located in Limay Street, Manuguit Subdivision, Tondo,

Manila, as evidenced by Transfer Certificate of Title (TCT) No. 172510 of the Registry of Deeds of Manila; that on 1 February 1988, respondent Domingo executed a Special Power of Attorney (SPA) authorizing Elpidio Domingo to sell one-half portion of said parcel of land; that Elpidio, acting pursuant to the provisions of the SPA sold, with a right to repurchase within five months, one-half of the land covered by TCT No. 172510 to petitioner; and that respondent Domingo failed to redeem or repurchase the disputed land within the five-month period provided for under the Deed of Sale Under Pacto de Retro, thus, ownership over the subject land was consolidated in petitioner. Respondent Domingo filed an Answer/Opposition[4] to the Petition alleging that the SPA was executed for the purpose of enabling Elpidio to secure a loan of P150,000.00 by using Domingos share in the land covered by TCT No. 172510 as security. The proceeds of the loan was supposed to be used for the construction of a duplex residential house to be supervised by Elpidio. However, Elpidio obtained a loan of P350,000.00 and used a substantial portion thereof for his personal advantage and benefit. As Elpidio had exceeded his authority, Domingo claimed that he revoked the SPA through several letters and by a formal notice of revocation sent by his counsel. As for the pacto de retro sale, Domingo maintains that the same was simulated as Elpidio had already obtained a loan totaling P350,000.00 from petitioner as evidenced by a Real Estate Mortgage executed by the two of them. In any case, he claims that the pacto de retro sale should be treated as an equitable mortgage which cannot be enforced through a petition for consolidation of ownership. Elpidio likewise filed his Answer[5] to the Petition but this was ordered stricken off the record by the trial court judge[6] as it appeared that only respondent Domingo was the defendant and oppositor in the case before the court a quo. The Pre-Trial Order enumerated the parties respective exhibits, to wit:
PLAINTIFFS EXHIBITS: 1. Exh. A Transfer Certificate of Title No. 172510 of the Registry of Deeds of Manila admitted; 2. B Special Power of Attorney admitted with the qualification that it was revoked later on; 3. admitted; C Deed of Sale under Pacto de Retro not

DEFENDANTS EXHIBITS: 1. Exh. 1 Promissory Note dated April 17, 1988, for the amount of P 150,000.00 executed by Elpidio Dizon in favor of Anatalia Ramos admitted the contents subject to the presentation of the original document; 2. 2 Promissory Note for P 150,000.00 dated April 17, 1988 executed by Elpidio Dizon, mortgagor admitted. 3. 3 Deed of Real Estate Mortgage executed by Elpidio R. Dizon, in favor of Anatalia Ramos, Mortgagee, over the property covered by TCT No. 172510 admitted; 4. 4 Deed of Sale under Pacto de Retro, which was previously marked as Exh. C for the petitioner admitted; 5. 6. 7. 8. 4-A 4-a-1 5 5-A Second page of Exh. 4 Typewritten name of Domingo A. Dizon;

Special Power of Attorney; Second page thereof;

9. 6 Letter of Revocation of the Special Power of Attorney (Reserved Exhibit); 10. 7 Transcript of Stenographic Notes in Civil Case No. [7] 90-51838 (Reserved).

During the trial of the case, petitioner herself took the witness stand and testified[8] that on 10 August 1988, Elpidio sold to her, with a right to repurchase, one-half of a parcel of land located in Limay, Tondo, Manila, which was owned by respondent Domingo. According to her, Elpidio was then authorized by a SPA executed by respondent Domingo to enter into said transaction with her. It was agreed upon that the owner (referring to respondent Domingo) had five months within which he could buy back the property from her. Respondent Domingo, however, failed to exercise his right forcing her to institute the Petition for consolidation of ownership before the court a quo.

Petitioner presented Elpidio as her second witness and he essentially reiterated what petitioner had stated in her testimony. After the conclusion of Elpidios testimony, petitioner offered into evidence Exhibits A, B, and C,[9] all of which were admitted by the trial court. With this, petitioner rested her case. In the same hearing, Elpidio was subjected to cross-examination during which he declared that he owns the two-door residential apartment built on respondent Domingos share in the land covered by TCT No. 172510. The apartment building, however, encroaches upon the other half portion of the said land which is owned by Elpidios brother, Ricardo Dizon. Sometime in March 1988, he offered to sell to respondent Domingo, for P550,000.00, the partially built two-door structure, as well as Ricardos portion of the land on which a part of said building stood. Respondent Domingo agreed to Elpidiosproposal such that he remitted to the latter the amount of P207,000.00. Later, he tried to collect from respondent Domingo the remainder of the purchase amount. Respondent Domingo then suggested that Elpidio secure a loan from the Government Service Insurance System (GSIS) in order to complete the construction of the two-door apartment. Adopting respondent Domingos suggestion, Elpidio secured a loan from petitioner in the initial amount of P150,000.00 evidenced by a promissory note dated 17 April 1988 and marked as Exhibit 1 for respondent Domingo. In order to secure this loan, petitioner and Elpidio agreed to execute a real estate mortgage over the land embraced by TCT No. 172510. The real estate mortgage was marked as Exhibit 3. Subsequently, the amount of the loan extended by petitioner was increased to P350,000.00 as shown by Exhibit 3-A a document entitled Increase in the Loan Value of Real Estate Mortgage dated April 24, 1988. Elpidio likewise admitted before the court that the amount of P350,000.00 appearing in the pacto de retro sale dated 10 August 1988 was the same sum of money he earlier received from petitioner for which the promissory note and Real Estate Mortgage with its subsequent increase in loan value were executed. It was also revealed during Elpidios cross-examination that respondent Domingo had previously filed a case for specific performance and/or rescission against him,docketed as Civil Case No. 90-51838 and assigned to RTC Manila, Branch XLI. The subject matter of said action was the purported contract of sale between respondent Domingo and Elpidio involving the same apartment building and a

portion of Ricardos land. The trial court decided in favor of respondent Domingo and disposed of the case in the following manner:
PREMISES CONSIDERED, judgment is hereby rendered 1) declaring the contract of sale entered into by and between plaintiff [respondent Domingo] and defendant [Elpidio] over that undivided portion of Lot 27-B-3 in the name of Ricardo Dizonand the building constructed thereon rescinded: 2) ordering defendant to pay plaintiff as follows a) b) the sum of P207,000.00 with interest thereon at the legal rate from January 29, 1990 until the same is fully paid; the sum of P350,000.00 with interest thereon at the rate of 3% a month from January 29, 1990 until the same is fully paid; and the sum of P50,000.00 as and by way of attorneys fees and expenses of litigation.

c)

The reliefs prayed for by the Intervenor is hereby denied. Costs against the defendant.[10]

Parenthetically, the trial court in Civil Case No. 90-51838 made the following pronouncement with respect to the transaction between petitioner and Elpidio:
Plaintiffs evidence, however, which is not controverted by the defendant shows that he has paid defendant the total sum of P207,000.00 in cash. In addition, defendant as attorney-in-fact of plaintiff mortgaged plaintiffs property to Anatalia Ramos for the total sum of P350,000.00 which defendant received and appropriated for his own personal benefit. To secure payment of the same, he sold plaintiffs property to Anatalia Ramos on a pacto de retro arrangement for the aforesaid sum. While the deed evidencing the sale was denominated as a Deed of Sale under Pacto de Retro, in view of the testimony given by the defendant, the court is inclined to believe that the transaction was actually in the nature of an equitable mortgage. Defendant testified that the consideration of the sale is a loan. Interest payment thereon has been agreed upon as 3% per month. The property remained in the possession of defendant as attorney-in-fact of plaintiff.[11]

The decision in Civil Case No. 90-51838 was pending appeal at the time Elpidio took the witness stand.[12] On 19 December 1994, respondent Domingos counsel manifested before the trial court in Civil Case No. 93-66439 that he was no longer presenting testimonial evidence; instead, he requested that the following documents be marked in evidence:
Exhibits 6 6-A 7 7-A Decision dated March 20, 1992 Dispositive portion thereto TCT No. 172510 entry thereon Registered owners[13]

Also, respondent Domingos counsel was given ten days to submit his formal offer of evidence in writing and petitioner was given the same period of time to file her comment or opposition thereto after which the case would be submitted for resolution.[14] The trial court, however, prior to the submission of respondent Domingos formal offer of evidence, rendered a Decision dated 24 January 1995 holding that the contract between petitioner and Elpidio was actually one of equitable mortgage and not a pacto de retro sale. According to the trial court
As regards the first issue raised, Art. Code hereinbelow quoted finds significant application. 1602, New Civil

Art. [1602]. The contract shall be presumed to be an equitable mortgage, in any of the following case[s]: (1) When the price of a sale with right to repurchase is unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; xxxx (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. The testimony of petitioners witness Elpidio R. Dizon readily disclosed that prior to the execution of the Deed of Sale under Pacto de Retro, he had

already obtained from Anatalia Ramos the total amount of P350,000.00 evidenced by Promissory Notes and Real Estate Mortgage. It may be fairly inferred therefrom that the real intention of the parties is that the transaction leading to execution of the Deed of Sale under Pacto de Retro shall secure the payment of Elpidio Dizons indebtedness covered by the Promissory Notes and Real Estate Mortgage executed by in favor of Anatalia Ramos. It is also clearly shown that the price of the sale with right to repurchase is unusually inadequate because the improvements erected on the lot belonging to Domingo Dizon was even offered to the latter for sale byElpidio Dizon for P550,000.00. Moreover, the possession of the subject property has remained with the representative/agent of the owner Domingo Dizon even long after the right of redemption has expired. Under these circumstances, the court cannot but conclude that the deed in question is in reality a mortgage. With this conclusion, the court, therefore, holds the petition as being improper and is dismissed.[15]

It was only on 31 January 1995 when respondent Domingo filed his Formal Offer of Exhibits.[16] Petitioner thereafter filed a Notice of Appeal[17] and elevated the case before the Court of Appeals which affirmed the Decision of the trial court in the Decision now assailed before us. The dispositive portion of the Court of Appeals ruling provides:
WHEREFORE, finding no reversible error in the judgment appealed from, the same is hereby AFFIRMED. With costs against the appellant.[18]

Petitioners Motion for Reconsideration was likewise resolved in favor of herein respondents.[19] Hence, this Petition raising the following issues for our consideration:
A. AFFIRMING THE DECISION OF THE TRIAL COURT IN DISMISSING THE PETITION ALTHOUGH THE (SPOUSES) DIZON DID NOT PRESENT ANY EVIDENCE. B. AFFIRMING THE TRIAL COURT WHEN IT TOOK COGNIZANCE OF THE SPOUSES DIZONS EVIDENCE WHICH WAS NOT FORMALLY OFFERED. C. APPLYING THE RELAXED RULE ENUNCIATED IN VDA. DE ONATE vs. COURT OF APPEALS CONSIDERING THAT THE QUESTIONED EXHIBITS WERE NOT PROPERLY IDENTIFIED AND WITHOUT ANY EXPLANATION OR RECITAL OF THE CONTENTS THEREOF NOR

ANY OPPORTUNITY AFFORDED RAMOS TO CROSS-EXAMINE THE WITNESS IDENTIFYING THE SAME. D. AFFIRMING THE DECISION OF THE TRIAL COURT WHEN IT TOOK COGNIZANCE OF THE SPOUSES DIZONS EVIDENCE WITHOUT, HOWEVER, ALLOWING RAMOS TO FILE HER COMMENT/OPPOSITION THERETO. E. AFFIRMING THE DECISION OF THE TRIAL COURT THAT ELPIDIO DIZON ADMITTED HAVING SPENT FOR HIS OWN PERSONAL ADVANTAGE AND BENEFIT THE AMOUNT OF P150,000.00. F. COROLLARY THERETO, FAILING TO RULE ON THE ISSUE AS TO THE VALIDITY OF THE SPA IN FAVOR OF ELPIDIO DIZON. G. HOLDING THAT EXHIBITS 3 AND 4 REVEAL THE REAL INTENT OF THE PARTIES WAS TO HAVE THE PROPERTY STAND AS SECURITY FOR THE DEBT, NOTOF THE OWNER DOMINGO DIZO, BUT HIS NEPHEW AND ATTORNEY-IN-FACT \, ELPIDIO DIZON. H. HOLDING THAT THE CONSIDERATION OF THE SALE TO RAMOS WAS UNUSUALLY INADEQUATE RESULTING IN THE CONCLUSION THAT THE TRANSACTION BETWEEN THE PARTIES WAS AN EQUITABLE MORTGAGE.[20]

The Petition mainly raises the questions of (1) whether the Court of Appeals erred in applying the rule enunciated in the case of Vda. De Oate v. Court of Appeals[21]pertaining to the admission and consideration of evidence not formally offered, and (2) whether the Court of Appeals erred in sustaining the trial courts ruling that the contract between petitioner and Elpidio was actually one of equitable mortgage and not a pacto de retro sale. Petitioner argues that it is axiomatic that the court shall not consider evidence which has not been formally offered.[22] In this regard, they argue that Exhibits 1 to 7, inclusive of sub-markings, should not have been considered by the trial court in its Decision considering that the same were not formally offered in evidence. To support this assertion, petitioner quotes from our following pronouncement in Interpacific Transit, Inc. v. Aviles[23]:
It is instructive at this point to make a distinction between identification of documentary evidence and its formal offer as an exhibit. The first is done in the course of the trial and is accompanied by the marking of the evidence as an exhibit. The second is done only when the party rests its case and not

before. The mere fact that a particular document is identified and marked as an exhibit does not mean it will be or has been offered as part of the evidence of the party. The party may decide to formally offer it if it believes this will advance its cause, and then again it may decide not to do so at all. In the latter event, the trial court is, under Rule 132, Section 35 (sic) not authorized to consider it.

Similarly, relied upon by petitioner was our holding in Chua v. Court of Appeals[24] where we declared that:
The offer of evidence is necessary because it is the duty of the judge to rest his findings of facts and his judgment only and strictly upon the evidence offered by the parties at the trial. Such offer may be made orally or in writing sufficient to show that the party is ready and willing to submit the evidence to the court.

Petitioner also assails the Court of Appeals for its alleged improper application of rule enunciated in Vda. De Oate, as the requirements laid out in said case, relative to the admission of evidence which was not formally offered, were not observed in the present case. Petitioner insists she was deprived of due process as she no opportunity to file her objection to or comment on respondent Domingos exhibits. Moreover, she was denied the occasion to cross examine the witness regarding their exhibits. We are not convinced. The applicable provision of the Rules of Court on this matter is Sec. 34, Rule 132. It reads:
SEC. 34. Offer of evidence. The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is offered must be specified.

The case of Vda. De Oate, which was relied upon by the Court of Appeals, reiterated our previous rulings in People v. Napat-a[25] and People v. Mate[26] relative to the admission and consideration of exhibits which were not formally offered during the trial. We declared in Vda. De Oate[27] that
From the foregoing provision, it is clear that for evidence to be considered, the same must be formally offered. Corollarily, the mere fact that a particular document to identified and marked as an exhibit does not mean that is has already

been offered as part of the evidence of a party. In Interpacific Transit, Inc. v. Aviles [186 SCRA 385], we had the occasion to make a distinction between identification of documentary evidence and its formal offer as an exhibit. We said that the first is done in the course of the trial and is accompanied by the marking of the evidence as an exhibit while the second is done only when the party rests its case and not before. A party, therefore, may opt to formally offer his evidence if he believes that it will advance his cause or not to do so at all. In the event he chooses to do the latter, the trial court is not authorized by the Rules to consider the same. However, in People v. Napat-a [179 SCRA 403] citing People v. Mate [103 SCRA 404], we relaxed the foregoing rule and allowed evidence not formally offered to be admitted and considered by the trial court provided the following requirements are present, viz: first, the same must have been duly identified by testimony duly recorded and, second, the same must have been incorporated in the records of the case. (Underscoring supplied.)

In this case, we find and so rule that these requirements have been satisfied. The exhibits in question were presented and marked during the pre-trial of the case thus, they have been incorporated into the records. Further, Elpidio himself explained the contents of these exhibits when he was interrogated by respondents counsel as follows:
Q: The initial amount you secured from Anatalia Ramos was in the amount of P150,000.00 covered by this Promissory Note executed by you, is it not? I cannot recall this Promissory Note but I was able to get a loan from her in the amount of P150,000.00.

A:

COURT: You examine the Promissory Note xxxx ATTY. RUIZ: May we ask that original copy be shown to the witness, Your Honor. ATTY. DAVID: Your Honor, this was the subject of the stipulation during the pre-trial conference.

xxxx ATTY. DAVID: Q: Is it correct that even before August 10, 1988 you have already obtained from Anatalia Ramos the total amount of P350,000.00 covered by Promissory Notes and the Real Estate Mortgage, is it not?

WITNESS: A: Yes, sir. xxxx ATTY. DAVID: Q: Is it correct, therefore, Mr. Dizon, that the total amount of P350,000.00 that you received all in all from Anatalia Ramos as of May 4, 1988 as evidenced by this document Exhibit 3-A is the same amount of P350,000.00 reflected in the Pacto de Retro Sale dated August 10, 1988?

WITNESS: A: Q: Yes, sir. Is it not also a fact, Mr. Dizon, that the property subject of this case, is likewise the subject of another case in Civil Case No. 90-51838 which is a complaint for Specific Performance and/or Rescission filed by Domingo Dizon against you? xxxx WITNESS: A: Its on appeal.

COURT: Yes, there is a pending case but its now on appeal? WITNESS: Yes, Your Honor.[28]

To our mind, this exchange between Elpidio and respondents counsel sufficiently described the contents of the above-mentioned exhibits presented by respondents particularly the promissory notes and Deed of Real Estate Mortgage. Nor can petitioner be heard to complain now that she was deprived of the opportunity to cross-examine Elpidio. It bears stressing that respondents Exhibits were presented during Elpidios cross-examination and in the presence of petitioners counsel. In fact, Elpidio was even subjected to an immediate re-direct examination by petitioners counsel. Although the questions posed to him at his redirect examination pertained solely to Civil Case No. 90-51838 still, the opportunity was there for petitioners counsel to question him as regards the other exhibits of respondents. The fact that petitioners lawyer opted not to conduct a more thorough re-direct examination was his own choice. Indeed, it may even be a part of his tactic on this case but it certainly does not amount to a deprivation of due process as now claimed by petitioner. But what further defeats petitioners cause on this issue is that respondents exhibits were marked and admitted during the pre-trial stage as shown by the PreTrial Order quoted earlier. And so, we reiterate here our ruling in Marmont Resort Hotel Enterprises v. Guiang,[29] to wit:
Both the trial and appellate courts held that the first and second Memoranda of Agreement are not properly considered as forming part of the record of this case, because neither had been formally presented and offered in evidence at the trial of Civil Case No. 2896-C. The record shows, however, as noted earlier, that at the pre-trial conference held on 2 October 1980, both petitioner Marmont and respondent spouses had agreed upon a stipulation of facts and issues recognizing the existence of those same two (2) agreements. Such stipulation of facts constitutes a judicial admission, the veracity of which requires no further proof and which may be controverted only upon a clear showing that such stipulation had been entered into through palpable mistake. On this point, Section 2, Rule 129 of the Revised Rules of Court provides: Section 2. Judicial Admissions.-Admission made by the parties in the pleadings, or in the course of the trial or other proceedings do not require proof and cannot be contradicted unless previously shown to have been made through palpable mistake. There has been no showing and respondent spouses do not claim that palpable mistake had intervened here, in respect of the formulation of the facts stipulated by the parties at the pre-trial conference. Absent any such showing, that stipulation of facts is incontrovertible, and may be relied upon by the

courts. Respondent spouses are estopped from raising as an issue in this case the existence and admissibility in evidence of both the first and second Memoranda of Agreement which, having been marked as exhibits during pre-trial, properly form part of the record of this case, event though not formally offered in evidence after trial. (Emphasis supplied.)

Therefore, notwithstanding the fact that respondents exhibits were not formally offered prior to the rendition of the Decision in Civil Case No. 93-66439 by the court a quo, the trial court judge committed no error when he admitted and considered them in the resolution of the case. After all, the pre-trial forms part of the proceedings and matters dealt with therein may not be brushed aside in the process of decision making. Otherwise, the real essence of compulsory pre-trial would be inconsequential and worthless.[30] Anent the second issue, petitioner maintains that the SPA authorized Elpidio to sell or negotiate the sale of the property in dispute. Although said authority was later on revoked, it was nevertheless subsisting when she and Elpidio agreed on the pacto de retro sale or long after the amount of P350,000.00 was received and consumed for the construction of the two-door apartment. Petitioner further assails the Court of Appeals conclusion that the selling price of the disputed property was unusually inadequate as this finding is not supported by any proof. We reject petitioners submission. Under Article 1602 of the Civil Code, the contract of sale will be presumed to be an equitable mortgage in any of the following cases:
(1) (2) (3) When the price of a sale with right to repurchase is unusually inadequate; When the vendor remains in possession as lessee or otherwise; When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed; When the purchaser retains for himself a part of the purchase price; When the vendor binds himself to pay the taxes on the things sold;

(4) (5)

(6)

In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.

In the case at bar, it was disclosed by Elpidio that up to the time when he took the witness stand on 20 September 1994, he still maintained possession of the two-door apartment and that he was still collecting rent from the tenant occupying one of the units. This despite the lapse of a considerable length of time from 7 January 1989 the date when the five-month repurchase period stipulated in the pacto de retro sale was supposed to have lapsed. Had the agreement between petitioner and Elpidio been a pacto de retrosale, we fail to see any logic in her allowing Elpidios continued possession of the structure and collection of the rent payments therefrom over such a long period of time. As the essence of a pacto de retro sale is that title and ownership of the property sold are immediately bestowed upon the vendee a retro, subject to the resolutory condition of repurchase by the vendor a retro within the agreed period,[31] petitioner should have immediately enforced her right to the rental payments. Failure on her part to do so casts doubt as to the true nature of the transaction she entered into with Elpidio. Moreover, it does not escape our attention that according to Elpidio, the amount of P350,000.00 stated in the Deed of Sale Under Pacto de Retro is the same amount as that covered by the Real Estate Mortgage and the two promissory notes signed by him. There was therefore no separate consideration received by him from the execution of the pactode retro sale apart from the proceeds of the earlier loans he obtained from petitioner. This undoubtedly gives credence to respondents position that the pacto de retro sale was but a security for the loans extended by petitioner. WHEREFORE, premises considered, the present Petition is DENIED and the Court of Appeals Decision dated 16 October 1998 and Resolution dated 13 January 1999in CA-G.R. CV No. 48544, affirming the 24 January 1995 Decision of the Manila Regional Trial Court, Branch 45 in Civil Case No. 93-66439 are AFFIRMED. Costs against petitioner. SO ORDERED.
G.R. No. 149576 August 8, 2006 REPUBLIC OF THE PHILIPPINES, represented by the Land Registration Authority, Petitioner, vs. KENRICK DEVELOPMENT CORPORATION, Respondent.

DECISION CORONA, J.: The Republic of the Philippines assails the May 31, 2001 decision 1 and August 20, 2001 resolution of the Court of Appeals in CA-G.R. SP No. 52948 in this petition for review under Rule 45 of the Rules of Court. This case stemmed from the construction by respondent Kenrick Development Corporation of a concrete perimeter fence around some parcels of land located behind the Civil Aviation Training Center of the Air Transportation Office (ATO) in 1996. As a result, the ATO was dispossessed of some 30,228 square meters of prime land. Respondent justified its action with a claim of ownership over the property. It presented Transfer Certificate of Title (TCT) Nos. 135604, 135605 and 135606 issued in its name and which allegedly originated from TCT No. 17508 registered in the name of one Alfonso Concepcion. ATO verified the authenticity of respondents titles with the Land Registration Authority (LRA). On May 17, 1996, Atty. Jose Loriega, head of the Land Title Verification Task Force of the LRA, submitted his report. The Registrar of Deeds of Pasay City had no record of TCT No. 17508 and its ascendant title, TCT No. 5450. The land allegedly covered by respondents titles was also found to be within Villamor Air Base (headquarters of the Philippine Air Force) in Pasay City. By virtue of the report, the Office of the Solicitor General (OSG), on September 3, 1996, filed a complaint for revocation, annulment and cancellation of certificates of title in behalf of the Republic of the Philippines (as represented by the LRA) against respondent and Alfonso Concepcion. It was raffled to Branch 114 of the Regional Trial Court of Pasay City where it was docketed as Civil Case No. 96-1144. On December 5, 1996, respondent filed its answer which was purportedly signed by Atty. Onofre Garlitos, Jr. as counsel for respondent. Since Alfonso Concepcion could not be located and served with summons, the trial court ordered the issuance of an alias summons by publication against him on February 19, 1997. The case was thereafter punctuated by various incidents relative to modes of discovery, pre-trial, postponements or continuances, motions to dismiss, motions to declare defendants in default and other procedural matters. During the pendency of the case, the Senate Blue Ribbon Committee and Committee on Justice and Human Rights conducted a hearing in aid of legislation on the matter of land registration and titling. In particular, the legislative investigation looked into the issuance of fake titles and focused on how respondent was able to acquire TCT Nos. 135604, 135605 and 135606. During the congressional hearing held on November 26, 1998, one of those summoned was Atty. Garlitos, respondents former counsel. He testified that he prepared respondents answer and transmitted an unsigned draft to respondents president, Mr. Victor Ong. The signature appearing above his name was not his. He authorized no one to sign in his behalf either. And he did not know who finally signed it. With Atty. Garlitos revelation, the Republic promptly filed an urgent motion on December 3, 1998 to declare respondent in default, 2 predicated on its failure to file a valid answer. The Republic argued

that, since the person who signed the answer was neither authorized by Atty. Garlitos nor even known to him, the answer was effectively an unsigned pleading. Pursuant to Section 3, Rule 7 of the Rules of Court, 3 it was a mere scrap of paper and produced no legal effect. On February 19, 1999, the trial court issued a resolution granting the Republics motion. 4 It found respondents answer to be sham and false and intended to defeat the purpose of the rules. The trial court ordered the answer stricken from the records, declared respondent in default and allowed the Republic to present its evidence ex parte. The Republic presented its evidence ex parte, after which it rested its case and formally offered its evidence. Meanwhile, respondent sought reconsideration of the February 19, 1999 resolution but the trial court denied it. Aggrieved, respondent elevated the matter to the Court of Appeals via a petition for certiorari 5 seeking to set aside the February 19, 1999 resolution of the trial court. Respondent contended that the trial court erred in declaring it in default for failure to file a valid and timely answer. On May 31, 2001, the Court of Appeals rendered the assailed decision. It found Atty. Garlitos statements in the legislative hearing to be unreliable since they were not subjected to crossexamination. The appellate court also scrutinized Atty. Garlitos acts after the filing of the answer 6 and concluded that he assented to the signing of the answer by somebody in his stead. This supposedly cured whatever defect the answer may have had. Hence, the appellate court granted respondents petition for certiorari. It directed the lifting of the order of default against respondent and ordered the trial court to proceed to trial with dispatch. The Republic moved for reconsideration but it was denied. Thus, this petition. Did the Court of Appeals err in reversing the trial courts order which declared respondent in default for its failure to file a valid answer? Yes, it did. A party may, by his words or conduct, voluntarily adopt or ratify anothers statement. 7 Where it appears that a party clearly and unambiguously assented to or adopted the statements of another, evidence of those statements is admissible against him. 8 This is the essence of the principle of adoptive admission. An adoptive admission is a partys reaction to a statement or action by another person when it is reasonable to treat the partys reaction as an admission of something stated or implied by the other person. 9 By adoptive admission, a third persons statement becomes the admission of the party embracing or espousing it. Adoptive admission may occur when a party: (a) expressly agrees to or concurs in an oral statement made by another; 10 (b) hears a statement and later on essentially repeats it; 11 (c) utters an acceptance or builds upon the assertion of another; 12 (d) replies by way of rebuttal to some specific points raised by another but ignores further points which he or she has heard the other make 13 or

(e) reads and signs a written statement made by another. 14 Here, respondent accepted the pronouncements of Atty. Garlitos and built its case on them. At no instance did it ever deny or contradict its former counsels statements. It went to great lengths to explain Atty. Garlitos testimony as well as its implications, as follows: 1. While Atty. Garlitos denied signing the answer, the fact was that the answer was signed. Hence, the pleading could not be considered invalid for being an unsigned pleading. The fact that the person who signed it was neither known to Atty. Garlitos nor specifically authorized by him was immaterial. The important thing was that the answer bore a signature. 2. While the Rules of Court requires that a pleading must be signed by the party or his counsel, it does not prohibit a counsel from giving a general authority for any person to sign the answer for him which was what Atty. Garlitos did. The person who actually signed the pleading was of no moment as long as counsel knew that it would be signed by another. This was similar to addressing an authorization letter "to whom it may concern" such that any person could act on it even if he or she was not known beforehand. 3. Atty. Garlitos testified that he prepared the answer; he never disowned its contents and he resumed acting as counsel for respondent subsequent to its filing. These circumstances show that Atty. Garlitos conformed to or ratified the signing of the answer by another. Respondent repeated these statements of Atty. Garlitos in its motion for reconsideration of the trial courts February 19, 1999 resolution. And again in the petition it filed in the Court of Appeals as well as in the comment 15and memorandum it submitted to this Court. Evidently, respondent completely adopted Atty. Garlitos statements as its own. Respondents adoptive admission constituted a judicial admission which was conclusive on it. Contrary to respondents position, a signed pleading is one that is signed either by the party himself or his counsel. Section 3, Rule 7 is clear on this matter. It requires that a pleading must be signed by the party or counsel representing him. Therefore, only the signature of either the party himself or his counsel operates to validly convert a pleading from one that is unsigned to one that is signed. Counsels authority and duty to sign a pleading are personal to him. He may not delegate it to just any person. The signature of counsel constitutes an assurance by him that he has read the pleading; that, to the best of his knowledge, information and belief, there is a good ground to support it; and that it is not interposed for delay. 16Under the Rules of Court, it is counsel alone, by affixing his signature, who can certify to these matters. The preparation and signing of a pleading constitute legal work involving practice of law which is reserved exclusively for the members of the legal profession. Counsel may delegate the signing of a pleading to another lawyer 17 but cannot do so in favor of one who is not. The Code of Professional Responsibility provides:

Rule 9.01 A lawyer shall not delegate to any unqualified person the performance of any task which by law may only be performed by a member of the Bar in good standing. Moreover, a signature by agents of a lawyer amounts to signing by unqualified persons, 18 something the law strongly proscribes. Therefore, the blanket authority respondent claims Atty. Garlitos entrusted to just anyone was void. Any act taken pursuant to that authority was likewise void. There was no way it could have been cured or ratified by Atty. Garlitos subsequent acts. Moreover, the transcript of the November 26, 1998 Senate hearing shows that Atty. Garlitos consented to the signing of the answer by another "as long as it conformed to his draft." We give no value whatsoever to such self-serving statement. No doubt, Atty. Garlitos could not have validly given blanket authority for just anyone to sign the answer. The trial court correctly ruled that respondents answer was invalid and of no legal effect as it was an unsigned pleading. Respondent was properly declared in default and the Republic was rightly allowed to present evidence ex parte. Respondent insists on the liberal application of the rules. It maintains that even if it were true that its answer was supposedly an unsigned pleading, the defect was a mere technicality that could be set aside. Procedural requirements which have often been disparagingly labeled as mere technicalities have their own validraison d etre in the orderly administration of justice. To summarily brush them aside may result in arbitrariness and injustice. 19 The Courts pronouncement in Garbo v. Court of Appeals 20 is relevant: Procedural rules are [tools] designed to facilitate the adjudication of cases. Courts and litigants alike are thus [enjoined] to abide strictly by the rules. And while the Court, in some instances, allows a relaxation in the application of the rules, this, we stress, was never intended to forge a bastion for erring litigants to violate the rules with impunity. The liberality in the interpretation and application of the rules applies only in proper cases and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy administration of justice. Like all rules, procedural rules should be followed except only when, for the most persuasive of reasons, they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the prescribed procedure. 21 In this case, respondent failed to show any persuasive reason why it should be exempted from strictly abiding by the rules. As a final note, the Court cannot close its eyes to the acts committed by Atty. Garlitos in violation of the ethics of the legal profession. Thus, he should be made to account for his possible misconduct. WHEREFORE, the petition is hereby GRANTED. The May 31, 2001 decision and August 20, 2001 resolution of the Court of Appeals in CA-G.R. SP No. 52948 are REVERSED and SET ASIDE and the February 19, 1999 resolution of the Regional Trial Court of Pasay City, Branch 114 declaring respondent in default is herebyREINSTATED.

Let a copy of this decision be furnished the Commission on Bar Discipline of the Integrated Bar of the Philippines for the commencement of disbarment proceedings against Atty. Onofre Garlitos, Jr. for his possible unprofessional conduct not befitting his position as an officer of the court. SO ORDERED. G.R. No. 152714 August 10, 2006 PANGASINAN FIVE STAR BUS CO., INC., Petitioner, vs. SPOUSES LEON & LUISA BARREDO, Respondents. DECISION CALLEJO, SR., J.: Before the Court is a Petition for Review on Certiorari of the Decision 1 of the Court of Appeals (CA) in CA-G.R. CV No. 60791 affirming, on appeal, the Decision of the Regional Trial Court (RTC) of Valenzuela City in Civil Case No. 4509-2-94. At around 10:30 a.m. on April 14, 1994, a Pangasinan Five Star Bus Co., Inc. passenger bus with plate no. NKP 484 driven by Emilio Credo bumped the rear portion of an owner-type jeep. The driver of the smaller vehicle, Leon Barredo, Jr., sustained serious injuries and was confined at the The Family Clinic Hospital for acute lumbosacral strain secondary to vehicular accident. He did not fully recover and eventually lost his job as a forklift operator with the Barber Dubai Shipping Agencies (PVT) Ltd. where he had been earning $518.00 a month. 2 On November 14, 1994, the spouses Leon and Luisa Barredo filed a complaint for damages before the RTC of Valenzuela City against the bus company and Emilio Credo. The complaint was later amended. After the defendants filed their Answer to the complaint, pre-trial was set on February 6, 13, 15, 22, 27 and 29, 1996, all at 8:30 a.m. 3 Several pre-trial conferences were held to give the parties the chance to settle the case amicably, to no avail. On May 2, 1996, or after more than a year, the court terminated pre-trial and set June 27 and July 11, 1996 as trial dates. However, this setting and subsequent ones were cancelled, as defendants manifested their willingness to settle the case amicably. 4 Upon agreement of the parties, the RTC set the trial on April 22, 29 and May 8, 1997. 5 However, the trial set on April 22, 1997 did not proceed because the defendants and their counsel failed to appear. On plaintiffs motion, the court issued an Order declaring the defendants "as in default" and allowed the plaintiffs to adduce evidence ex parte before the Acting Branch Clerk of Court. 6 Plaintiffs presented their evidence ex parte on April 23, 1997, and among the documentary evidence adduced were the following: the Employment Contract of Leon M. Barredo, Jr.; 7receipts for costs of the repair of the vehicle of plaintiffs, hospitalization and medical expenses; and the medical certificate issued to the plaintiffs from Barredo, Jr. Thereafter, plaintiffs manifested that they were resting their case. Barely a week thereafter, or on April 30, 1997, the RTC rendered judgment in favor of the plaintiffs. The dispositive portion reads: WHEREFORE, judgment is hereby rendered as follows:

1. Ordering the defendants, jointly and solidarily, to pay plaintiffs the sum of P70,000.00 as actual damages for the repair of the owner-type jeep and medical expenses; 2. Ordering the defendants, jointly and solidarily, to pay plaintiff Leon Barredo, Jr. the sum of $36,080.00 in the concept of loss earnings for at least the next five (5) years of his gainful life; 3. Ordering the defendants to pay the plaintiffs the sum of P100,000.00 as moral damages; 4. Ordering the defendants to pay the plaintiffs the sum of P100,000.00 as exemplary damages; 5. Ordering the defendants to pay the plaintiffs the amount of P1,000.00 as litigation expenses; 6. Ordering the defendants to pay the plaintiffs the amount of P10,000.00 as attorneys fees, plus the costs. SO ORDERED. 8 The trial court declared that defendants and their counsel were considered "as in default" for their failure to appear at the trial on April 22, 1997." 9 On May 14, 1997, defendants filed a Motion to Lift the Order of Default alleging therein that, since the pre-trial had been terminated as early as May 2, 1996, they could no longer be declared as in default due to their absence on the April 22, 1997 trial, and that, consequently, the order of the court declaring them as in default was void. They insisted that they were not notified of the setting on April 22, 1997; besides, their counsels absence was excusable because he was suffering from a recurring fever aggravated by dry cough. 10 The defendants further alleged that they had meritorious defenses: it was Leon Barredo, Jr. who was reckless and negligent, thus causing the accident. In any event, the defendant bus company was not directly liable to the plaintiffs because it had always exercised due diligence in the selection and supervision of its employees. Meantime, defendants received a copy of the decision of the court on May 19, 1997. They filed an unverified motion for reconsideration thereof, maintaining that the absence of their counsel during the April 22, 1997 trial was beyond their control. They prayed that the decision of the trial court be set aside and, in the interest of justice, that they be allowed to cross-examine the witnesses of the plaintiff and adduce evidence in their behalf. 11 However, defendants failed to append to their motion any affidavit of merit. On June 3, 1997, the RTC issued an Order 12 denying defendants motions. It declared that, although defendants were erroneously declared as in default in its April 22, 1997 Order for failure to appear at the scheduled hearing on said date, the clear import of said Order was to consider defendants as having waived their right to be present and to allow the plaintiffs to present evidence ex parte. The RTC clarified that the April 22, 1997 Order merely allowed the plaintiffs to present their evidence in the absence of defendants. It also pointed out that in its Decision dated April 30, 1997 it stated that "the plaintiffs were just allowed to present their evidence ex parte in view of the non-appearance of the defendants and their counsel on said date of hearing." 13

The bus company and Credo appealed the decision, as well as the June 3, 1997 Order of the RTC, to the CA. They alleged that the lower court gravely erred when it declared them as in default at the initial trial of the case; it acted with apparent bias and partiality, thereby depriving them of due process of law; and that it gravely erred in deciding the case based solely on the evidence presented by the Barredo spouses which, however, were not even formally offered. They insisted that the trial court acted with undue and suspicious haste when it rendered judgment barely a week after they were declared as in default. 14 On July 6, 2001, the CA rendered judgment dismissing the appeal, holding that the trial court had already clarified its April 22, 1997 Order in its June 3, 1997 Order. The minutes of the proceedings before the Branch Clerk of Court on April 23, 1997 show that the Barredo spouses formally offered their evidence and rested their case thereafter. 15 The aggrieved parties filed a motion for reconsideration, which the appellate court denied on February 19, 2002. Pangasinan Five Star Bus Co., Inc., now petitioner, forthwith filed the instant petition, seeking the reversal of the appellate courts ruling. The following issues are raised: I COULD THE TRIAL COURT DECLARE DEFENDANTS AS IN DEFAULT WHEN THE PROCEEDING WHICH DEFENDANTS FAILED TO ATTEND WAS JUST THE INITIAL HEARING OF THE CASE AND NOT A PRE-TRIAL CONFERENCE. II WITH THE ERRONEOUS DECLARATION OF DEFENDANTS AS IN DEFAULT BY THE TRIAL COURT, COUPLED WITH ITS PRECIPITATE AND HASTY ISSUANCE OF DECISION, DID DEFENDANTS-PETITIONER LOSE THEIR STANDING IN COURT, SUCH THAT THEY COULD NO LONGER TAKE PART IN FURTHER PROCEEDINGS IN THE COURT A QUO MUCH LESS ADDUCE EVIDENCE IN SUPPORT OF THEIR DEFENSES; [III] WHETHER OR NOT THE JUDGMENT BY DEFAULT ISSUED BY THE TRIAL COURT SHOULD BE ANNULLED FOR BEING NULL AND VOID THE SAME HAVING BEEN ISSUE (SIC) THROUGH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION, AND THE CASE REMANDED TO THE TRIAL COURT FOR FURTHER PROCEEDINGS, FOR RECEPTION OF DEFENDANTS EVIDENCE. 16 Petitioner reiterates its argument in the CA that the RTC erred in declaring it as in default because the April 22, 1997 setting was for the initial presentation of respondents evidence, as plaintiffs therein. It claims that while the trial court had the discretion to consider it as having forfeited its right to cross-examine respondents or their witnesses, it retained the right to present evidence in support of its defense. Petitioner points out that the trial court rendered judgment on April 30, 1997, or barely a week after it was declared as in default and after respondents presented their evidence before the Branch Clerk of Court. Petitioner asserts that the trial courts April 22, 1997 Order declaring it as in default is void and did not divest it of its standing in court. Petitioner thus prays that the April 22, 1997 Order of the trial court and its Decision dated April 30, 1997 be declared void, and that the case be remanded to the trial court for it to adduce evidence. In their Comment on the petition, respondents aver that petitioner raised factual issues which are improper in a petition for review on certiorari in this Court; worse, it merely reiterated its arguments in the CA to support the instant petition. They assert that the decision of the CA is in accord with law and the evidence on record, and that the decision of the trial court had become final and executory due to petitioners failure to append an affidavit of merit in its May 14, 1997 Motion to Lift the Order of Default.

They pointed out that respondent Leon Barredo, Jr. had not been able to recover from the injuries he sustained from the accident and remains bedridden. We hold that the trial courts April 22, 1997 Order is partially void in that it erroneously declared petitioner as in default for its representatives failure to appear at the scheduled trial. Under Section 2, Rule 20 of the Rules of Court, 17 a party who fails to appear at a pre-trial conference may be non-suited or considered as in default. If the defendant is declared as in default, the court may allow the plaintiff to present his evidence ex parte before the Branch Clerk of Court, and, thereafter, render judgment on the basis of the evidence of the plaintiffs. On the other hand, if the defendant is absent during the initial trial without any justifiable reason therefor, the defendant cannot be declared as in default for such absence. However, the court may allow the plaintiff to present his evidence before the Branch Clerk of Court ex parte. By the absence of the defendant, he waives, not only his right to cross-examine the plaintiff and his witnesses, but also to adduce evidence in his behalf. 18 However, the court, in the exercise of its judicial discretion, may allow the plaintiff to present his evidence ex parte before the Branch Clerk of Court without prejudice to the right of the defendant to present his own evidence after the plaintiff shall have rested his case. In this case, the pre-trial of the case had already been terminated on May 2, 1996. The court had set the trial of the case, by agreement of the parties, on April 22, 1997. Only the respondents, as plaintiffs, appeared at the scheduled trial of the case. The RTC thus erred in declaring the petitioner (defendant below), as in default for the failure of its representative and counsel to appear at the trial. This error in the April 22, 1997 Order was even admitted by the trial court in its June 3, 1997 Order. However, we find that the portion of the April 22, 1997 Order allowing respondents (as plaintiffs) to present their evidence ex parte before the Branch Clerk of Court is correct. Contrary to the contention of petitioner, the trial set on April 22, 1997 was for the presentation of the evidence of the parties. The Order of the court on February 18, 1997 postponed the setting to April 22, 29 and May 8, 1997. There is no showing in the records that the setting on April 22, 1997 was only for the reception of the evidence of respondents, and that the setting on April 29, 1997 was for petitioner and its co-defendant to present their evidence. The trial court did not specifically declare in its April 22, 1997 Order that petitioner had thereby waived its right to adduce its evidence for failure to appear during the April 22, 1997 trial date. Indeed, there was no need for the trial court to do so, for one is deemed to have waived the right to adduce evidence by an unexplained absence. Petitioners unexplained absence raises no other logical conclusion, that is, it was no longer interested to adduce evidence in its behalf. Petitioners claim that its counsel was absent due to "fever aggravated by dry cough," even if true, is not excusable. It bears stressing that it was represented by a law firm, and that a member of such firm could have appeared before the RTC to ask for postponement on that ground. At the very least, the lawyer handling the case could have informed the Branch Clerk of Court and requested for the postponement of the hearing of the case. And even assuming that its counsel was indisposed, petitioner should have seen to it that its representative attended the trial and requested for such postponement. The absence of petitioners representative and counsel at the trial on April 22, 1997 was thus inexcusable. We note that petitioner even failed to append to its two motions, motion to lift order of default and motion for reconsideration of the trial courts decision, the required affidavits to support its claim that the absence of its representative and its counsel on April 22, 1997 was excusable and that it has meritorious defenses. While petitioner was not required to append to its motion to set aside the order of default on the ground that it was improper for the trial court to do so, it was nevertheless required to append the required affidavits to the motion for reconsideration on the ground of excusable

negligence. The failure of the petitioner to append the requisite affidavits rendered the motion pro forma and the decision final and executory. As we held in Philippine Commercial and Industrial Bank v. Judge Rodolfo Ortiz: 19 Two more points need be dealt with before this opinion is ended. It is true that when fraud, accident, mistake or excusable negligence is invoked as ground of a motion for new trial, it should "be proved in the manner provided for proof of motions," i.e., by "affidavits or depositions" unless the court should direct that "the matter be heard wholly or partly on oral testimony or depositions." It is also required that "affidavits of merits" be attached to the motion. A motion for new trial grounded on fraud, accident, mistake or excusable negligence should thus ordinarily be accompanied by two (2) affidavits: one, setting forth the facts and circumstances alleged to constitute such fraud, accident, mistake, or excusable negligence; and the other, an affidavit of merits, setting forth the particular facts claimed to constitute the movants meritorious cause of action or defense. The reason for the first is quite obvious: it is to enable the court to determine if the movants claim of fraud, etc., is not a mere conclusion but is indeed borne out of the relevant facts. The reason for the second is equally evident: it would be useless, a waste of time, to set aside the judgment and reopen the case to allow the movant to adduce evidence when he has no valid cause of action or meritorious defense. Where, therefore, a motion for new trial on the ground of fraud, etc., is unaccompanied by either or both affidavits, the motion is pro forma a scrap of paper, as it were, and will not interrupt the running of the period of appeal. x x x20 Petitioner even failed to append to its petition a copy of its Answer to the Complaint and Amended Complaint of the respondents. Considering the foregoing, the Court finds it unnecessary to still resolve the other issues raised by petitioner. WHEREFORE, the petition is DENIED. Costs against the petitioner. SO ORDERED. G.R. No. 164871 August 22, 2006 TRUST INTERNATIONAL PAPER CORPORATION, petitioner, vs. MARILOU R. PELAEZ, Respondent. DECISION CHICO-NAZARIO, J.: This Petition for Review under Rule 45 of the Rules of Court with an Urgent Application for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction, seeks to set aside the Resolutions of the Court of Appeals in CA-G.R. SP No. 73356 entitled, "Marilou R. Pelaez v. National Labor Relations Commission, et al." dated 13 February 20041 and 29 July 2004, respectively. The first Resolution denied petitioner Trust International Paper Corporations (TIPCO) Petition for Relief from Judgment, while the second denied its motion seeking reconsideration thereof.

Respondent Marilou R. Pelaez started her employment with petitioner as Secretary. She earned various promotions, the last of which was her appointment as Corporate Cashier in 1993. After undergoing substantial business losses for the fiscal year 1996-1997, petitioner implemented cost-cutting and streamlining programs to alleviate its financial predicament. In the course of carrying out the said programs, several positions were abolished and declared redundant, one of which was the position of Corporate Cashier. Thus, on 24 December 1997, respondent received a memorandum from Jose Reyes, petitioners Chief Financial Officer, informing her that her services were terminated. She accepted her severance from the employ of petitioner and turned over her accountabilities to the different departments which absorbed her responsibilities. Thereafter, she was no longer required to report for work. Sometime in January 1998, respondent found out the creation of the position of Treasury Clerk in petitioners plantilla which has the same job description and responsibilities as that of Corporate Cashier. Feeling deceived, respondent immediately filed on 6 January 1998 a Complaint for illegal dismissal, non-payment/underpayment of salaries, separation pay, retirement benefits, service incentive leave and sick leave benefits, and damages against petitioner, Elon Ting, the president of TIPCO, Efren TanLapco, the Chief Operating Officer of TIPCO and Jose E. Reyes, the Chief Financial Officer of TIPCO before the Arbitration Branch of the DOLE-NCR. On 12 January 1998, respondent received her separation benefits from petitioner in the amount of P539,974.20 and correspondingly signed a Deed of Release and Quitclaim. In a Decision dated 21 September 1999, the Labor Arbiter found petitioner guilty of illegal dismissal and awarded to respondent backwages, separation pay and damages. The decretal portion of the Decision reads: CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered finding complainant to have been illegally retrenched by respondents. Consequently, they are ordered to pay in solidum complainant as follows: a) Backwages as of August 29 August, 1999 Php 484,000.00 b) Separation Pay Php 459,800.00 c) Moral Damages Php 300,000.00 d) Exemplary Damages Php 100,000.00 e) Vacation and sick leaves Php 55,974.20 f) 5% of the awarded money claims as attorneys fees. The sum of Php 539,974.20 should be deducted from the awards granted to complainant.2 On 22 October 1999, petitioner appealed to the National Labor Relations Commission (NLRC). In a Decision dated 31 May 2002, the NLRC reversed the findings and rulings of the Labor Arbiter. It affirmed the validity of petitioners redundancy program, which was the ground for the termination of respondents employment. The dispositive portion of the Decision provides:

WHEREFORE, the decision appealed from is hereby VACATED and SET ASIDE and a new one entered DISMISSING the complaint for lack of merit.3 On 5 July 2002, respondent filed a Motion for Reconsideration which the NLRC denied in a Resolution dated 31 July 2002. Unfazed with the setback, respondent filed a special civil action for certiorari under Rule 65 of the Rules of Court with the Court of Appeals arguing that grave abuse of discretion was committed by the NLRC in setting aside the Labor Arbiters Decision despite having been duly supported by the facts and the law. In due time, the Court of Appeals rendered a Decision in favor of respondent on the ground that respondents dismissal due to redundancy did not meet the requirements of law; hence, the same was illegal. The Court of Appeals decreed: WHEREFORE, premises considered, the instant petition is GRANTED. The decision of public respondent NLRC in NLRC NCR CA No. 021691-99, as well as its subsequent resolution denying petitioners motion for reconsideration, are hereby ANNULLED AND SET ASIDE and the decision of the labor arbiter a quo REINSTATED.4 The Decision of the Court of Appeals became final and executory as no appeal or motion for reconsideration was filed by either party. Hence, on 25 July 2003, an Entry of Judgment was issued by the Court of Appeals. On 29 December 2003, petitioner filed a Petition for Relief from Judgment with the Court of Appeals. Petitioner anchored its petition on the "excusable negligence" of its counsel Siguion Reyna, Montecillo & Ongsiakos (Siguion Reyna) law firm and the gross negligence of Atty. Elena C. Cardinez (Atty. Cardinez), a newly hired junior associate of the Siguion Reyna law firm, who allegedly handled the case for petitioner. Petitioner revealed that the instant case was assigned to Atty. Cardinez in June 2003 and that all notices, orders and legal processes in connection with the instant case were immediately forwarded to her for appropriate action. Petitioner contended that the Siguion Reyna law firm was never remiss in its duty to follow up the status of the case with Atty. Cardinez. In fact, it was the law firm itself, through Atty. Cardinezs supervising lawyers and co-counsels, Attys. Carla E. Santamaria-Sea, Cheryll Ann L. Pea and Rean Mayo D. Javier, who had to elicit reports from her. When asked about the developments of the case, Atty. Cardinez supposedly informed the law firm that everything was in order regarding petitioners defense, when in fact, it was not. Eventually, Atty. Cardinez never reported to work and that she was nowhere to be found despite the law firms diligent efforts to search for her. She did not turn over the case files in her possession, including the Court of Appeals file folders of the instant case. Petitioner maintained that the acts of Atty. Cardinez in misrepresenting to the law firm that everything was in order regarding its defense, when in fact, it was not, and the fact that she took the files with her constitute gross negligence and should not bind petitioner. Corollarily, petitioner argues that the Siguion Reyna law firms fault can only be categorized as an excusable neglect for it was not remiss in making follow-ups about the status of the case with Atty. Cardinez. It acknowledged that the law firms mistake was that it put faith in the assurances of Atty. Cardinez, who repeatedly gave her word that nothing was amiss in the defense of petitioners position in the instant case.

Unconvinced, the Court of Appeals, in a Resolution dated 13 February 2004, denied petitioners Petition for Relief from Judgment, ratiocinating as follows: There is no use arguing that the instant case was unloaded by Attys. Pea and Javier, to a certain Atty. Elena C. Cardinez, as it is the responsibility of the law firm of Siguion Reyna Montecillo and Ongsiako Law Office itself, to prepare and submit the appropriate relief or remedy of its client. The negligence or failure of its partners or associates to perform its duties and tasks is not excusable negligence that could merit relief under Rule 38 of the Rules of Court. The doctrinal rule is that the negligence of the counsel binds the client because, otherwise, there would never be an end to a suit so long as counsel could allege its own fault or negligence to support the clients case and obtain remedies and relief already lost by the operation of law.5 Subsequently, petitioner filed a Motion for Reconsideration which was denied by the Court of Appeals in a Resolution dated 29 July 2004. Hence, the instant Petition. In its Memorandum, petitioner submitted the following issues: A. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT FAILED TO RECOGNIZE THE GROSS AND PALPABLE NEGLIGENCE, BORDERING ON FRAUD, COMMITTED BY PETITIONERS FORMER HANDLING COUNSEL, ATTY. CARDINEZ, WHOSE NEGLIGENCE AND ACTIVE MISREPRESENTATION PREVENTED PETITIONER FROM EXHAUSTING ALL THE LEGAL REMEDIES AVAILABLE TO IT, PARTICULARLY, THE REMEDY OF APPEAL TO THE SUPREME COURT. B. WHETHER THE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT STRICTLY APPLIED THE TECHNICAL RULES OF PROCEDURE TO THE DETRIMENT OF SUBSTANTIAL JUSTICE. C. WHETHER THE COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT FAILED TO TAKE INTO CONSIDERATION PETITIONERS GOOD AND SUBSTANTIAL DEFENSE, WHICH MUST BE FULLY VENTILATED, CONSIDERING THAT IT STANDS TO LOSE THE STAGGERING SUM OF MORE THAN TWO MILLION PESOS (P2,000,000.00)6 At the onset, it must be pointed out that the present petition seeking the setting aside of the Court of Appeals Resolutions dated 13 February 2004 and 29 July 2004, denying petitioners petition for relief from judgment, is a petition for review on certiorari under Rule 45 of the Rules of Court. Section 1(b) of Rule 41 of the Rules of Court, however, provides: SECTION 1. Subject of appeal. An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable.

No appeal may be taken from: xxxx (b) An order denying a petition for relief or any similar motion seeking relief from judgment. xxxx In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action under Rule 65. Thus, in Azucena v. Foreign Manpower Services,7 it was held: Neither may petitioner seek to set aside the Court of Appeals April 26, 2001 Resolution denying his petition for relief from judgment through the same mode of review (petition for review on certiorari), for under Section 1(b) of Rule 41 of the Rules of Court, the denial of a petition for relief from judgment is subject only to a special civil action for certiorari under Rule 65. (Emphasis supplied.) Based on the foregoing, the denial of a petition for relief from judgment can only be assailed before this Court via a special civil action under Rule 65 and not through a petition for review on certiorari under Rule 45. In availing of a petition for review on certiorari under Rule 45 to obtain the reversal of the Court of Appeals Resolutions denying its petition for relief from judgment, petitioner certainly has made use of the wrong remedy. Even if this Court was to treat the instant petition as a special civil action for certiorari under Rule 65, the same would still have to be dismissed. In Mercury Drug Corporation v. Court of Appeals,8 the Court clarified the nature of a petition for relief from judgment: A petition for relief from judgment is an equitable remedy that is allowed only in exceptional cases when there is no other available or adequate remedy. When a party has another remedy available to him, which may be either a motion for new trial or appeal from an adverse decision of the trial court, and he was not prevented by fraud, accident, mistake or excusable negligence from filing such motion or taking such appeal, he cannot avail himself of this petition. x x x. This Court likewise ruled: Indeed, relief will not be granted to a party who seeks avoidance from the effects of the judgment when the loss of the remedy at law was due to his own negligence; otherwise the petition for relief can be used to revive the right to appeal which had been lost thru inexcusable negligence.9 In the present case, petitioner posits that the Court of Appeals committed grave error when it failed to recognize the gross and palpable negligence, bordering on fraud, committed by Atty. Cardinez, whose negligence prevented petitioner from exhausting all the legal remedies available to it. It is undisputed that the counsel of record of petitioner is the Siguion Reyna law firm. The law firm failed to notify petitioner of the adverse decision of the Court of Appeals to enable it to file a motion for reconsideration or to appeal from the said decision. The law firms failure to inform petitioner of the decision is inexcusable negligence which cannot be a ground for relief from judgment. This is in

line with jurisprudence that notice sent to counsel of record is binding upon the client, and the neglect or failure of counsel to inform his client of an adverse judgment resulting in the loss of right to appeal will not justify the setting aside of a judgment that is valid and regular on its face.10 The negligence of Atty. Cardinez, the law firms new associate, apparent in her mishandling of the cause of petitioner likewise constitutes inexcusable negligence. Negligence, to be excusable, must be one which ordinary diligence and prudence could have not guarded against. It must be pointed out that Atty. Cardinezs name did not appear in any of the pleadings filed by petitioner before the Labor Arbiter, the NLRC, and the Court of Appeals. It was only in the petition for relief filed before the Court of Appeals that the name of Atty. Cardinez appeared for the first time. In the petition for relief, Atty. Cardinez was blamed by petitioner and its counsel, the Siguion Reyna law firm, for squandering petitioners opportunity to appeal the Court of Appeals decision. What appears on the records is that the Comment and Memorandum of petitioner before the Court of Appeals were signed by Attys. Carla E. Santamaria-Sea, Cheryll Ann L. Pea and Rean Mayo D. Javier. From the foregoing, it is apparent that the handling lawyers of the law firm were putting the blame on Atty. Cardinez when they lost the case and forgot to file the appeal. Besides, if the case was, indeed, unloaded to Atty. Cardinez, the supervising lawyers would have detected the omission of the former considering that it is a common practice in a law firm that when it hires a new associate, his or her work is ordinarily reviewed by the more senior associate of the law firm. If the supervising lawyers of Atty. Cardinez, namely, Attys. Sea, Pea and Javier, were not remiss in their duty to follow up the status of the case, they would have known that they have not received or reviewed any pleadings from Atty. Cardinez pertaining to the case under consideration. Simply, petitioners counsel, the Siguion Reyna law firm itself, was guilty of inexcusable neglect in handling petitioners case before the Court of Appeals. Petitioner insists that its case is an exception to the general rule that the negligence of counsel binds the client. Petitioner invokes this Courts ruling in Peoples Homesite and Housing Operation v. Workmens Compensation Commission,11 Somoso v. Court of Appeals,12 Apex Mining, Inc. v. Court of Appeals,13 Salazar v. Court of Appeals,14 Sarraga, Sr. v. Banco Filipino Savings and Mortgage Bank,15 and Heirs of Pael v. Court of Appeals,16where this Court departed from the general rule that the client is bound by the mistakes of his lawyer considering that, in said cases, the lawyers were grossly negligent in their duty to maintain their clients cause and such amounted to a deprivation of their clients property without due process of law. In said cases, the petitions for relief from judgment were given due course. However, we find that the ruling in said cases do not apply in the instant case. In Peoples Homesite, the counsel failed to apprise the petitioners therein of the hearing and the case was heard in their absence. The counsel also did not inform the petitioners that he had received a copy of the decision and neither did he file a motion for reconsideration or a petition to set aside judgment to protect the interests of his clients. When asked to explain, the counsel merely said that he did not inform the petitioners because the case escaped his attention. On account of these attendant facts, this Court found that there was "something fishy and suspicious" with the actions of counsel. The Court therein, in allowing the petition for relief from judgment and in remanding the case to the court of origin, had, in mind, the attending probability that petitioners counsel colluded with the adverse party, which is utterly wanting in the present case. In the case at bar, petitioners counsel was able to actively defend its case before the Labor Arbiter, the NLRC and the Court of Appeals. In fact, the Siguion Reyna law firm was able to obtain a favorable decision for petitioner before the NLRC. The instant case is clearly at variance with the Peoples Homesite case.

In Somoso, the counsel of spouses Somoso informed them that he was withdrawing his appearance as counsel of the case. A decision dated 8 March 1985 was issued by the trial court against the spouses. The counsel received the decision on 15 August 1985, but the spouses came to know of the decision only on 27 September 1985, the day they received the letter from their counsel informing them of such decision. On 27 September 1985, the counsel belatedly filed in court his motion to withdraw as counsel which was dated 10 June 1985. This Court granted spouses petition for relief from judgment as they were able to prove that they were entitled thereto considering that their counsel had earlier informed them of his intention to withdraw from the case, but belatedly filed the formal withdrawal. In the present case, it has been Attys. Santamaria-Sea, Pea and Javier who participated in the proceedings before the Court of Appeals. They did not notify the Court of Appeals that they had withdrawn from the case. There was completely no reason for them not to file an appeal, being the handling counsel of record during the pendency of the case before the Court of Appeals. The case of Apex Mining, Inc. invoked by petitioner is not on all fours with the instant case. In Apex, petitioners counsel did not attend the scheduled hearing for the reception of the evidence. The law firm did not even bother to inform its client of the scheduled hearing, as a result of which both counsel and petitioners were unable to attend the same. After the trial court issued an order declaring petitioners in default for having waived their right to present evidence, their counsel did not take steps to have the same set aside. In addition, the negligent counsel deliberately misrepresented in the progress report that the case was still pending with Court of Appeals when the same was dismissed months earlier. These circumstances are absent in the case under consideration because at no time was petitioner was deprived of its right to submit evidence to support its argument. Neither can the case of Salazar be applied in the case under consideration. In the former, petitioners were deprived of their right to present evidence at the trial through the gross and palpable mistake of their counsel who agreed to submit the case for decision without fully substantiating their defense. In the instant case, petitioner was able to ventilate its defense though various pleadings and documentary evidence before the Labor Arbiter, the NLRC and the Court of Appeals. In Sarraga, the petition for relief from judgment was granted due to the attending circumstance where the counsel of record was grossly negligent in defending the cause of the client. On the other hand, in the present case, petitioner is placing the blame on the alleged gross negligence of an attorney who was not even been shown to have participated in the proceedings of the case. In Heirs of Antonio Pael, this Court found that there was a showing of "badges of fraud" displayed by the counsel of the unsuccessful party when he resorted to two clearly inconsistent remedies, namely appeal and motion for new trial. In contrast, the instant case merely illustrates a scenario where a counsel committed a simple and inexcusable negligence to the prejudice of the client. In sum, this is not a case where the negligence of counsel is one that is so gross, palpable, pervasive and reckless which deprives the party of his or her day in court. For this reason, the Court need no longer concern itself with the propriety of the ruling of the Court of Appeals reinstating the decision of the Labor Arbiter. The Court is bound by the Court of Appeals ruling which had become final and executory due to the simple and inexcusable negligence of petitioners counsel in allowing the reglementary period to lapse without perfecting an appeal. WHEREFORE, the petition is DENIED. The Resolutions of the Court of Appeals dated 13 February 2004 and 29 July 2004 in CA-G.R. SP

No. 73356 denying petitioners petition for relief from judgment, are AFFIRMED. Costs against petitioner. SO ORDERED. G.R. No. 160211 August 28, 2006 VENANCIO R. NAVA, Petitioner, vs. The Honorable Justices RODOLFO G. PALATTAO, GREGORY S. ONG, and MA. CRISTINA G. CORTEZ-ESTRADA as Members of the Sandiganbayans Fourth Division, and the PEOPLE OF THE PHILIPPINES,Respondents. DECISION PANGANIBAN, CJ: A meticulous review of the records and the evidence establishes the guilt of the accused beyond reasonable doubt. Clearly, the prosecution was able to prove all the elements of the crime charged. Hence, the conviction of petitioner is inevitable. The Case Before us is a Petition for Certiorari 1 under Rule 65 of the Rules of Court, assailing the June 2, 2003 Decision 2and September 29, 2003 Resolution of the Sandiganbayan in Criminal Case No. 23627. The dispositive portion of the challenged Decision reads: "WHEREFORE, premises considered, judgment is hereby rendered convicting accused VENANCIO NAVA Y RODRIGUEZ of the crime of violation of the Anti-Graft and Corrupt Practices Act particularly Section 3(g) thereof, or entering on behalf of government in any contract or transaction manifestly and grossly disadvantageous to the same whether or not the pubic officer profited or will profit thereby. In the absence of any aggravating or mitigating circumstances, applying the Indeterminate Sentence Law, accused is hereby sentenced to suffer the penalty of imprisonment of six (6) years, and one (1) day as minimum to twelve (12) years and one (1) day as maximum and to suffer perpetual disqualification from public office. Accused Nava is further ordered to pay the government the amount of P380,013.60 which it suffered by way of damages because of the unlawful act or omission committed by the herein accused Venancio Nava. "From the narration of facts, there hardly appears any circumstance that would suggest the existence of conspiracy among the other accused in the commission of the crime. "Thus in the absence of conspiracy in the commission of the crime complained of and as the herein other accused only acted upon the orders of accused Venancio Nava, in the absence of any criminal intent on their part to violate the law, the acts of the remaining accused are not considered corrupt practices committed in the performance of their duties as public officers and consequently, accused AJATIL JAIRAL Y PONGCA, ROSALINDA MERKA Y GUANZON & JOSEPH VENTURA Y ABAD are hereby considered innocent of the crime charged and are herebyacquitted." 3 The assailed Resolution dated September 29, 2003, denied reconsideration. The Facts

The Sandiganbayan narrated the facts of this case as follows: "The complaint involving the herein accused was initiated by the COA, Region XI, Davao City, which resulted from an audit conducted by a team which was created by the COA Regional Office per COA Regional Assignment Order No. 91-74 dated January 8, 1991. The objective of the team [was] to conduct an audit of the 9.36 million allotment which was released in 1990 by the DECS, Region XI to its Division Offices. "In the Audit Report, the amount of P603,265.00 was shown to have been released to the DECS Division of Davao del Sur for distribution to the newly nationalized high schools located within the region. Through the initiative of accused Venancio Nava, a meeting was called among his seven (7) schools division superintendents whom he persuaded to use the money or allotment for the purchase of Science Laboratory Tools and Devices (SLTD). In other words, instead of referring the allotment to the one hundred fifty-five (155) heads of the nationalized high schools for the improvement of their facilities, accused Nava succeeded in persuading his seven (7) schools division superintendents to use the allotment for the purchase of science education facilities for the calendar year 1990. "In the purchase of the school materials, the law provides that the same shall be done through a public bidding pursuant to Circular No. 85-55, series of 1985. But in the instant case, evidence shows that accused Nava persuaded his seven (7) schools division superintendents to ignore the circular as allegedly time was of the essence in making the purchases and if not done before the calendar year 1990, the funds allotted will revert back to the general fund. "In the hurried purchase of SLTDs, the provision on the conduct of a public bidding was not followed. Instead the purchase was done through negotiation. Evidence shows that the items were purchased from Jovens Trading, a business establishment with principal address at Tayug, Pangasinan; D[I]mplacable Enterprise with principal business address at 115 West Capitol Drive, Pasig, Metro Manila and from Evelyn Miranda of 1242 Oroqueta Street, Sta. Cruz, Manila. As disclosed by the audit report, the prices of the [SLTDs] as purchased from the above-named sellers exceeded the prevailing market price ranging from 56% to 1,175% based on the mathematical computation done by the COA audit team. The report concluded that the government lost P380,013.60. That the injury to the government as quantified was the result of the nonobservance by the accused of the COA rules on public bidding and DECS Order No. 100 suspending the purchases of [SLTDs]." 4 The Commission on Audit (COA) Report recommended the filing of criminal and administrative charges against the persons liable, including petitioner, before the Office of the OmbudsmanMindanao. Petitioner was subsequently charged in an Information 5 filed on April 8, 1997, worded as follows: "That on or about the period between November to December 1990, and for sometime prior or subsequent thereto, in Digos, Davao Del Sur and/or Davao City, Philippines and within the jurisdiction of this Honorable Court, the accused Venancio R. Nava (DECS-Region XI Director) and Ajatil Jairal (Division Superintendent, DECS, Davao del Sur), both high[-]ranking officials and Rosalinda Merka, and Teodora Indin (Administrative Officer and Assistant Division Superintendent, respectively of DECS-Division of Davao Del Sur), all low ranking officials, while in the discharge of their respective official functions, committing the offense in relation to their office and with grave abuse [of] authority, conniving and confederating with one another, did then and there willfully, unlawfully and feloniously enter, on behalf of the government, into transactions with DImplacable Enterprise and Jovens Trading, respectively, represented by accused Antonio S. Tan and Evelyn

Miranda and Joseph Ventura for the purchase of Science Laboratory Tools and Devices (SLTD) intended for use by the public high schools in the area amounting to [P603,265.00], Philippine currency, without the requisite public bidding and in violation of DECS Order No. 100, Series of 1990, which transaction involved an overprice in the amount of P380,013.60 and thus, is manifestly and grossly disadvantageous to the government." 6 Special Prosecution Officer II Evelyn T. Lucero-Agcaoili recommended the dismissal of the foregoing Information on the ground, among others, that there was no probable cause. She argued that only estimates were made to show the discrepancy of prices instead of a comparative listing on an item to item basis. 7 The recommendation was disapproved, however, by then Ombudsman Aniano A. Desierto. Ruling of the Sandiganbayan After due trial, only petitioner was convicted, while all the other accused were acquitted. 8 Petitioner was found guilty of violating Section 3(g) of the Anti-Graft and Corrupt Practices Act, or entering on behalf of the government any contract or transaction manifestly and grossly disadvantageous to the latter, whether or not the public officer profited or would profit thereby. The Sandiganbayan (SBN) said that, in the purchase of the Science Laboratory Tools and Devices (SLTDs), petitioner had not conducted a public bidding in accordance with COA Circular No. 85-55A. As a result, the prices of the SLTDs, as purchased, exceeded the prevailing market price from 56 percent to 1,175 percent, based on the mathematical computations of the COA team. 9 In his defense, petitioner had argued that the said COA Circular was merely directory, not mandatory. Further, the purchases in question had been done in the interest of public service. 10 The Sandiganbayan did not give credence to the foregoing defenses raised by petitioner. On the contrary, it found the evidence adduced by petitioners co-accused, Superintendent Ajatil Jairal, to be "enlightening," manifesting an intricate web of deceit spun by petitioner and involving all the other superintendents in the process.11 The graft court did not accept the claim of petitioner that he signed the checks only after the other signatories had already signed them. The evidence showed that blank Philippine National Bank (PNB) checks had been received by Nila E. Chavez, a clerk in the regional office, for petitioners signature. The Sandiganbayan opined that the evidence amply supported Jairals testimony that the questioned transactions had emanated from the regional office, as in fact, all the documents pertinent to the transaction had already been prepared and signed by petitioner when the meeting with the superintendents was called sometime in August 1990. 12 In that meeting, the superintendents were given prepared documents like the Purchase Orders and vouchers, together with the justification. 13 This circumstance prompted Jairal to conduct his own canvass. The Sandiganbayan held that this act was suggestive of the good faith of Jairal, thereby negating any claim of conspiracy with the other co-accused and, in particular, petitioner. In its assailed Resolution, the SBN denied petitioners Motion for Reconsideration. It held that the series of acts culminating in the questioned transactions constituted violations of Department of Education, Culture and Sports (DECS) Order No. 100; and COA Circular No. 85-55A. Those acts, ruled the SBN, sufficiently established that the contract or transaction entered into was manifestly or grossly disadvantageous to the government.

Hence, this Petition. 14 The Issues Petitioner raises the following issues for our consideration: "I. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in upholding the findings of the Special Audit Team that irregularly conducted the audit beyond the authorized period and which team falsified the Special Audit Report. "II. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in upholding the findings in the special audit report where the Special Audit Team egregiously failed to comply with the minimum standards set by the Supreme Court and adopted by the Commission on Audit in violation of petitioners right to due process, and which report suppressed evidence favorable to the petitioner. "III. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in upholding the findings in the Special Audit Report considering that none of the allegedly overpriced items were canvassed or purchased by the Special Audit Team such that there is no competent evidence from which to determine that there was an overprice and that the transaction was manifestly and grossly disadvantageous to the government. "IV. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in finding that there was an overprice where none of the prices of the questioned items exceeded the amount set by the Department of Budget and Management. "V. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in selectively considering the findings in the decision in Administrative Case No. XI-91-088 and failing to consider the findings thereon that petitioner was justified in undertaking a negotiated purchase and that there was no overpricing. "VI. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in selectively considering the findings of XI-91-088 and failing to consider the findings thereon that petitioner was justified in undertaking a negotiated purchase, there was no overpricing, and that the purchases did not violate DECS Order No. 100. "VII. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in failing to absolve the petitioner where conspiracy was not proven and the suppliers who benefited from the alleged overpricing were acquitted. "VIII. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in admitting in evidence and giving probative value to Exhibit 8 the existence and contents of which are fictitious. "IX. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in giving credence to the self-serving and perjurious testimony of co-accused Ajatil Jairal that the questioned transactions emanated from the regional office [in spite] of the documentary evidence and the testimony of the accused supplier which prove that the transaction emanated from the division office of Digos headed by co-accused Ajatil Jairal.

"X. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in finding that the petitioner entered into a transaction that was manifestly and grossly disadvantageous to the government where the evidence clearly established that the questioned transactions were entered into by the division office of Digos through co-accused Ajatil Jairal. "XI. Whether the public respondent committed grave abuse of discretion amounting to a lack of or excess of jurisdiction in convicting the petitioner in the absence of proof beyond reasonable doubt." 15 All these issues basically refer to the question of whether the Sandiganbayan committed reversible errors (not grave abuse of discretion) in finding petitioner guilty beyond reasonable doubt of violation of Section 3(g), Republic Act No. 3019. The Courts Ruling The Petition has no merit. Procedural Issue: Propriety of Certiorari At the outset, it must be stressed that to contest the Sandiganbayans Decision and Resolution on June 2, 2003 and September 29, 2003, respectively, petitioner should have filed a petition for review on certiorari under Rule 45, not the present Petition for Certiorari under Rule 65. Section 7 of Presidential Decree No. 1606, 16 as amended by Republic Act No. 8249, 17 provides that "[d]ecisions and final orders of the Sandiganbayan shall be appealable to the Supreme Court by petition for review on certiorari raising pure questions of law in accordance with Rule 45 of the Rules of Court." Section 1 of Rule 45 of the Rules of Court likewise provides that "[a] party desiring to appeal by certiorari from a judgment or final order or resolution of the x x x Sandiganbayan x x x whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth." Basic is the principle that when Rule 45 is available, recourse under Rule 65 cannot be allowed either as an add-on or as a substitute for appeal. 18 The special civil action for certiorari is not and cannot be a substitute for an appeal, when the latter remedy is available. 19 This Court has consistently ruled that a petition for certiorari under Rule 65 lies only when there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law. 20 A remedy is considered plain, speedy and adequate if it will promptly relieve the petitioner from the injurious effects of the judgment and the acts of the lower court or agency or as in this case, the Sandiganbayan. 21 Since the assailed Decision and Resolution were dispositions on the merits, and the Sandiganbayan had no remaining issue to resolve, an appeal would have been the plain, speedy and adequate remedy for petitioner. To be sure, the remedies of appeal and certiorari are mutually exclusive and not alternative or successive. 22 For this procedural lapse, the Petition should have been dismissed outright. Nonetheless, inasmuch as it was filed within the 15-day period provided under Rule 45, the Court treated it as a petition for review (not certiorari) under Rule 45 in order to accord substantial justice to the parties. Thus, it was given due course and the Court required the parties to file their Memoranda.

Main Issue: Sufficiency of Evidence Petitioner argues that the Sandiganbayan erred in convicting him, because the pieces of evidence to support the charges were not convincing. Specifically, he submits the following detailed argumentation: "1. the Special Audit Report was fraudulent, incomplete, irregular, inaccurate, illicit and suppressed evidence in favor of the Petitioner; "2. there was no competent evidence to determine the overprice as none of the samples secured by the audit team from the Division of Davao del Sur were canvassed or purchased by the audit team; "3. the allegedly overpriced items did not exceed the amount set by the Department of Budget and Management; "4. the decision in an administrative investigation were selectively lifted out of context; "5. the administrative findings that Petitioner was justified in undertaking a negotiated purchase, that there was no overpricing, and that the purchases did not violate DECS Order No. 100 were disregarded; "6. Exhibit 8, the contents of which are fictitious, was admitted in evidence and given probative value; "7. The suppliers who benefited from the transactions were acquitted, along with the other accused who directly participated in the questioned transactions; and "8. The self-serving and perjury-ridden statements of co-accused Jairal were given credence despite documentary and testimonial evidence to the contrary." 23 Petitioner further avers that the findings of fact in the Decision dated October 21, 1996 in DECS Administrative Case No. XI-91-088 24 denied any overpricing and justified the negotiated purchases in lieu of a public bidding. 25Since there was no overpricing and since he was justified in undertaking the negotiated purchase, petitioner submits that he cannot be convicted of violating Section 3(g) of Republic Act No. 3019. Validity of Audit The principal evidence presented during trial was the COA Special Audit Report (COA Report). The COA is the agency specifically given the power, authority and duty to examine, audit and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of fund and property owned by or pertaining to the government. 26 It has the exclusive authority to define the scope of its audit and examination and to establish the required techniques and methods. 27 Thus, COAs findings are accorded not only respect but also finality, when they are not tainted with grave abuse of discretion. 28 Only upon a clear showing of grave abuse of discretion may the courts set aside decisions of government agencies entrusted with the regulation of activities coming under their special technical knowledge and training. 29 In this case, the SBN correctly accorded credence to the COA Report. As will be shown later, the Report can withstand legal scrutiny.

Initially, petitioner faults the audit team for conducting the investigation beyond the twenty-one day period stated in the COA Regional Office Assignment Order No. 91-174 dated January 8, 1991. But this delay by itself did not destroy the credibility of the Report. Neither was it sufficient to constitute fraud or indicate bad faith on the part of the audit team. Indeed, in the conduct of an audit, the length of time the actual examination occurs is dependent upon the documents involved. If the documents are voluminous, then it necessarily follows that more time would be needed. 30 What is important is that the findings of the audit should be sufficiently supported by evidence. Petitioner also imputes fraud to the audit team for making "it appear that the items released by the Division Office of Davao Del Sur on 21 February 1991 were compared with and became the basis for the purchase of exactly the same items on 20 February 1991." 31 The discrepancy regarding the date when the samples were taken and the date of the purchase of the same items for comparison was not very material. The discrepancy per se did not constitute fraud in the absence of ill motive. We agree with respondents in their claim of clerical inadvertence. We accept their explanation that the wrong date was written by the supplier concerned when the items were bought for comparison. Anyway, the logical sequence of events was clearly indicated in the COA Report: "1.5.1. Obtained samples of each laboratory tools and devices purchased by the Division of Davao del Sur, Memorandum Receipts covering all the samples were issued by the agency to the audit team and are marked as Exhibits 1.2 and 3 of this Report." "1.5.2. Bought and presented these samples to reputable business establishments in Davao City like Mercury Drug Store, Berovan Marketing Incorporated and [A]llied Medical Equipment and Supply Corporation (AMESCO) where these items are also available, for price verification. "1.5.3. Available items which were exactly the same as the samples presented were purchased from AMESCO and Berovan Marketing Incorporated, the business establishments which quoted the lowest prices. Official receipts were issued by the AMESCO and Berovan Marketing Incorporated which are hereto marked as Exhibits 4,5,6 and 7 respectively." 32 The COA team then tabulated the results as follows: 33 Recanvassed Purchased Unit Cost % of Price + 10% OverAllow. Difference pricing P8.80 14.30 P103.40 8.06 Total Quantity Amount of Purchased Overpricing P41,360.00 2,821.00

Item Flask Brush made of Nylon P112.20 Test Tube Glass Pyrex (18x50 mm) 22.36 Graduated Cylinder Pyrex (100ml) 713.00 Glass Spirit Burner (alcohol lamp) 163.50 Spring Balance (12.5kg)Germany 551.00 Iron Wire Gauge 16.20

1,175% 400 56% 350

159.50 38.50 93.50 9.90

553.50 125.00 457.50 6.30

347% 325% 489% 64%

324 144 102 47

179,334.00 18,000.00 46,665.00 296.10

Bunsen Burner

701.00

90.75

610.25

672%

150

91,537.50

Total P380,013.60 What is glaring is the discrepancy in prices. The tabulated figures are supported by Exhibits "E-1," "E-2," "E-3," and "E-4," the Official Receipts evidencing the equipment purchased by the audit team for purposes of comparison with those procured by petitioner. 34 The authenticity of these Exhibits is not disputed by petitioner. As the SBN stated in its Decision, the fact of overpricing -- as reflected in the aforementioned exhibits -- was testified to or identified by Laura S. Soriano, team leader of the audit team. 35 It is hornbook doctrine that the findings of the trial court are accorded great weight, since it was able to observe the demeanor of witnesses firsthand and up close. 36 In the absence of contrary evidence, these findings are conclusive on this Court. It was therefore incumbent on petitioner to prove that the audit team or any of its members thereof was so motivated by ill feelings against him that it came up with a fraudulent report. Since he was not able to show any evidence to this end, his contention as to the irregularity of the audit due to the discrepancy of the dates involved must necessarily fail. An audit is conducted to determine whether the amounts allotted for certain expenditures were spent wisely, in keeping with official guidelines and regulations. It is not a witch hunt to terrorize accountable public officials. The presumption is always that official duty has been regularly performed 37 -- both on the part of those involved with the expense allotment being audited and on the part of the audit team -- unless there is evidence to the contrary. Due Process Petitioner likewise invokes Arriola v. Commission on Audit 38 to support his claim that his right to due process was violated. In that case, this Court ruled that the disallowance made by the COA was not sufficiently supported by evidence, as it was based on undocumented claims. Moreover, in Arriola, the documents that were used as basis of the COA Decision were not shown to petitioners, despite their repeated demands to see them. They were denied access to the actual canvass sheets or price quotations from accredited suppliers. As the present petitioner pointed out in his Memorandum, the foregoing jurisprudence became the basis for the COA to issue Memorandum Order No. 97-012 dated March 31, 1997, which states: "3.2 To firm up the findings to a reliable degree of certainty, initial findings of overpricing based on market price indicators mentioned in pa. 2.1 above have to be supported with canvass sheet and/or price quotations indicating: a) the identities of the suppliers or sellers; b) the availability of stock sufficient in quantity to meet the requirements of the procuring agency; c) the specifications of the items which should match those involved in the finding of overpricing; d) the purchase/contract terms and conditions which should be the same as those of the questioned transaction" Petitioners reliance on Arriola is misplaced. First, that Decision, more so, the COA Memorandum Order that was issued pursuant to the former, was promulgated after the period when the audit in the

present case was conducted. Neither Arriola nor the COA Memorandum Order can be given any retroactive effect. Second and more important, the circumstances in Arriola are different from those in the present case. In the earlier case, the COA merely referred to a cost comparison made by the engineer of COA-Technical Services Office (TSO), based on unit costs furnished by the Price Monitoring Division of the COA-TSO. The COA even refused to show the canvass sheets to the petitioners, explaining that the source document was confidential. In the present case, the audit team examined several documents before they arrived at their conclusion that the subject transactions were grossly disadvantageous to the government. These documents were included in the Formal Offer of Evidence submitted to the Sandiganbayan. 39 Petitioner was likewise presented an opportunity to controvert the findings of the audit team during the exit conference held at the end of the audit, but he failed to do so. 40 Further, the fact that only three canvass sheets/price quotations were presented by the audit team does not bolster petitioners claim that his right to due process was violated. To be sure, there is no rule stating that all price canvass sheets must be presented. It is enough that those that are made the basis of comparison be submitted for scrutiny to the parties being audited. Indubitably, these documents were properly submitted and testified to by the principal prosecution witness, Laura Soriano. Moreover, petitioner had ample opportunity to controvert them. Public Bidding Petitioner oscillates between denying that he was responsible for the procurement of the questioned SLTDs, on the one hand; and, on the other, stating that the negotiated purchase was justifiable under the circumstances. On his disavowal of responsibility for the questioned procurement, he claims that the transactions emanated from the Division Office of Digos headed by Jairal. 41 However, in the administrative case 42 filed against petitioner before the DECS, it was established that he "gave the go signal" 43 that prompted the division superintendents to procure the SLTDs through negotiated purchase. This fact is not disputed by petitioner, who quotes the same DECS Decision in stating that his "acts were justifiable under the circumstances then obtaining at that time and for reasons of efficient and prompt distribution of the SLTDs to the high schools." 44 In justifying the negotiated purchase without public bidding, petitioner claims that "any delay in the enrichment of the minds of the public high school students of Davao del Sur is detrimental and antithetical to public service." 45Although this reasoning is quite laudable, there was nothing presented to substantiate it. Executive Order No. 301 states the general rule that no contract for public services or for furnishing supplies, materials and equipment to the government or any of its branches, agencies or instrumentalities may be renewed or entered into without public bidding. The rule however, is not without exceptions. Specifically, negotiated contracts may be entered into under any of the following circumstances: "a. Whenever the supplies are urgently needed to meet an emergency which may involve the loss of, or danger to, life and/or property; "b. Whenever the supplies are to be used in connection with a project or activity which cannot be delayed without causing detriment to the public service;

"c. Whenever the materials are sold by an exclusive distributor or manufacturer who does not have subdealers selling at lower prices and for which no suitable substitute can be obtained elsewhere at more advantageous terms to the government; "d. Whenever the supplies under procurement have been unsuccessfully placed on bid for at least two consecutive times, either due to lack of bidders or the offers received in each instance were exorbitant or non-conforming to specifications; "e. In cases where it is apparent that the requisition of the needed supplies through negotiated purchase is most advantageous to the government to be determined by the Department Head concerned; "f. Whenever the purchase is made from an agency of the government." 46 National Center for Mental Health v. Commission on Audit 47 upheld the validity of the negotiated contracts for the renovation and the improvement of the National Center for Mental Health. In that case, petitioners were able to show that the long overdue need to renovate the Center "made it compelling to fast track what had been felt to be essential in providing due and proper treatment and care for the centers patients." 48 This justification was likewise accepted in Baylon v. Ombudsman 49 in which we recognized that the purchases were made in response to an emergency brought about by the shortage in the blood supply available to the public. The shortage was a matter recognized and addressed by then Secretary of Health Juan M. Flavier, who attested that "he directed the NKTI [National Kidney and Transplant Institute] to do something about the situation and immediately fast-track the implementation of the Voluntary Blood Donation Program of the government in order to prevent further deaths owing to the lack of blood." 50 Unfortunately for petitioner, there was no showing of any immediate and compelling justification for dispensing with the requirement of public bidding. We cannot accept his unsubstantiated reasoning that a public bidding would unnecessarily delay the purchase of the SLTDs. Not only would he have to prove that indeed there would be a delay but, more important, he would have to show how a public bidding would be detrimental and antithetical to public service. As the COA Report aptly states, the law on public bidding is not an empty formality. It aims to secure the lowest possible price and obtain the best bargain for the government. It is based on the principle that under ordinary circumstances, fair competition in the market tends to lower prices and eliminate favoritism. 51 In this case, the DECS Division Office of Davao del Sur failed to conduct public bidding on the subject transactions. The procurement of laboratory tools and devices was consummated with only the following documents to compensate for the absence of a public bidding: "1.13.a Price lists furnished by the Supply Coordination Office 1.13.b. Price lists furnished by the Procurement Services of the Department of Budget and Management 1.13.c. Price lists of Esteem Enterprises" 52

The COA Report states that the Division Office merely relied on the above documents as basis for concluding that the prices offered by DImplacable Enterprises and Jovens Trading were reasonable. But as found by the COA, reliance on the foregoing supporting documents was completely without merit on the following grounds: "a. The Supply Coordination Office was already dissolved or abolished at the time when the transactions were consummated, thus, it is illogical for the management to consider the price lists furnished by the Supply Coordination Office. "b. The indorsement letter made by the Procurement Services of the Department of Budget and Management containing the price lists specifically mentions Griffin and George brands, made in England. However, the management did not procure these brands of [SLTDs]. "c. The price lists furnished by the Esteem Enterprises does not deserve the scantest consideration, since there is no law or regulation specifically mentioning that the price lists of the Esteem Enterprises will be used as basis for buying [SLTDs]." 53 Granting arguendo that petitioner did not have a hand in the procurement and that the transactions emanated from the Division Office of Davao del Sur, we still find him liable as the final approving authority. In fact, Exhibit "B-2" -- Purchase Order No. 90-024, amounting to P231,012 and dated December 17, 1990 -- was recommended by Jairal and approved by petitioner. 54 This exhibit was part of the evidence adduced in the Sandiganbayan to prove that the purchase of the SLTDs was consummated and duly paid by the DECS without any proof of public bidding. Although this Court has previously ruled 55 that all heads of offices have to rely to a reasonable extent on their subordinates and on the good faith of those who prepare bids, purchase supplies or enter into negotiations, it is not unreasonable to expect petitioner to exercise the necessary diligence in making sure at the very least, that the proper formalities in the questioned transaction were observed -- that a public bidding was conducted. This step does not entail delving into intricate details of product quality, complete delivery or fair and accurate pricing. Unlike other minute requirements in government procurement, compliance or non-compliance with the rules on public bidding is readily apparent; and the approving authority can easily call the attention of the subordinates concerned. To rule otherwise would be to render meaningless the accountability of high-ranking public officials and to reduce their approving authority to nothing more than a mere rubber stamp. The process of approval is not a ministerial duty of approving authorities to sign every document that comes across their desks, and then point to their subordinates as the parties responsible if something goes awry. Suspension of Purchases Obviously working against petitioner is DECS Order No. 100 dated September 3, 1990 which states thus: "In view of the Governments call for economy measures coupled with the deficiency in allotments intended for the payment of salary standardization, retirement benefits, bonus and other priority items, the procurement of reference and supplementary materials, tools and devices equipment, furniture, including land acquisition and land improvement shall be suspended for CY 1990. However, the following items shall be exempted from the said suspension: a) textbooks published by the Instructional Materials Corporation and its commercial edition;

b) elementary school desks and tablet arm chairs[.]" As the COA Report succinctly states, the Administrative Order is explicit in its provisions that tools and deviceswere among the items whose procurement was suspended by the DECS for the year 1990. Petitioner claims that in the administrative case against him, there was no mention of a violation of DECS Order No. 100. 56 He alleges that the purchases of SLTDs by the division superintendents were entered into and perfected on July 1, 1990; that is, more than two (2) months before the issuance of DECS Order No. 100. He also alleged that the Sub-Allotment Advice (SAA) to the DECS Regional Office No. XI in the amount of P9.36M -- out of which P603,265.00 was used for the procurement of the questioned SLTDs -- had been released by the DECS Central Office in August 1990, a month before the issuance of DECS Order No. 100. The Court notes that these arguments are mere assertions bereft of any proof. There was no evidence presented to prove that the SAA was issued prior to the effectivity of DECS Order No. 100. On the other hand, the COA Report states that the DECS Division of Davao del Sur received the following Letters of Advice of Allotments (LAA): 57 "LAA NO. AMOUNT DATE OF LAA DO CO471-774-90 P141,956.00 October 24, 1990 DO-CO471-797-90 P161,309.00 November 16, 1990 DO-CO471-1007-90 P300,000.00 December 14, 1990" The foregoing LAAs were attached as annexes 58 to the COA Report and were presented during trial in the Sandiganbayan. 59 Also, Schools Division Superintendent Jairal had sent a letter to petitioner, requesting favorable consideration of a forthcoming release of funding for the different barangay and municipal high schools. The letter was dated October 16, 1990, 60 and was made well within the effectivity of the DECS Order. In that letter, Jairal mentioned the receipt by his office of DECS Order No. 100, albeit wrongly interpreting it as suspending only the purchases of reference books, supplementary readers, and so on, but allegedly silent on the purchase of laboratory supplies and materials. 61 Finally, the SLTDs were purchased within the covered period of DECS Order No. 100, as evidenced by the following relevant documents adduced by the COA audit team, among others: 1) Disbursement Voucher dated November 27, 1990 for the payment of various laboratory supplies and materials by DECS, Davao del Sur in the amount of P303,29.40 62 2) Official Receipt No. 455 dated January 7, 1991 amounting to P68,424.00 issued by Jovens Trading 63 3) Report of Inspection dated November 26, 1990 signed by Jacinta Villareal and Felicisimo Canoy 64 4) Sales Invoice No. 044 dated November 26, 1990 issued by Jovens Trading in favor of DECS amounting toP303,259.40 65

5) Certificate of Acceptance dated November 27, 1990 signed by Felicismo Canoy 66 6) Purchase Order No. 90-021 in favor of Jovens Trading dated November 26, 1990 recommended for approval by Ajatil Jairal 67 7) Official Receipt No. 92356 dated January 7, 1991 issued by DImplacable Enterprises amounting toP231,012.00 68 8) Purchase Order No. 90-024 dated December 17, 1990 recommended for approval by Ajatil Jairal and approved Director Venancio Nava amounting to P231,012.00." 69 The confluence of the foregoing circumstances indubitably establishes that petitioner indeed wantonly disregarded regulations. Additionally, DECS Order No. 100 negates his claim that the negotiated transaction -- done instead of a public bidding -- was justified. If that Order suspended the acquisition of tools and devices, then there was all the more reason for making purchases by public bidding. Since the buying of tools and devices was specifically suspended, petitioner cannot argue that the purchases were done in the interest of public service. Proof of Guilt To sustain a conviction under Section 3(g) of Republic Act No. 3019, it must be clearly proven that 1) the accused is a public officer; 2) the public officer entered into a contract or transaction on behalf of the government; and 3) the contract or transaction was grossly and manifestly disadvantageous to the government. 70 From the foregoing, it is clear that the Sandiganbayan did not err in ruling that the evidence presented warranted a verdict of conviction. Petitioner is a public officer, who approved the transactions on behalf of the government, which thereby suffered a substantial loss. The discrepancy between the prices of the SLTDs purchased by the DECS and the samples purchased by the COA audit team clearly established such undue injury. Indeed, the discrepancy was grossly and manifestly disadvantageous to the government. We must emphasize however, that the lack of a public bidding and the violation of an administrative order do not by themselves satisfy the third element of Republic Act No. 3019, Section 3(g); namely, that the contract or transaction entered into was manifestly and grossly disadvantageous to the government, as seems to be stated in the Resolution of the Sandiganbayan denying the Motion for Reconsideration. 71 Lack of public bidding alone does not result in a manifest and gross disadvantage. Indeed, the absence of a public bidding may mean that the government was not able to secure the lowest bargain in its favor and may open the door to graft and corruption. Nevertheless, the law requires that the disadvantage must be manifest and gross. Penal laws are strictly construed against the government. 72 If the accused is to be sent to jail, it must be because there is solid evidence to pin that person down, not because of the omission of a procedural matter alone. Indeed, all the elements of a violation of Section 3(g) of Republic Act No. 3019 should be established to prove the culpability of the accused. In this case, there is a clear showing that all the elements of the offense are present. Thus, there can be no other conclusion other than conviction. We note, however, that petitioner was sentenced to suffer the penalty of six (6) years and one (1) day as minimum to twelve (12) years and one (1) day as maximum. Under Section 9 of Republic Act 3019, petitioner should be punished with imprisonment of not less than six (6) years and one (1)

month nor more than fifteen years. Thus, we adjust the minimum penalty imposed on petitioner in accordance with the law. WHEREFORE, the Petition is DENIED. The assailed Decision and Resolution are AFFIRMED, with the MODIFICATION that the minimum sentence imposed shall be six (6) years and one (1) month, not six (6) years and one (1) day. Costs against petitioner. SO ORDERED. G.R. No. 162734 August 29, 2006 MARIE ANTONETTE ABIGAIL C. SALIENTES, ORLANDO B. SALIENTES, and ROSARIO C. SALIENTES,Petitioners, vs. LORAN S.D. ABANILLA, HONORABLE JUDGE PEDRO SABUNDAYO, JR., REGIONAL TRIAL COURT, BRANCH 203, MUNTINLUPA CITY, Respondents DECISION QUISUMBING, J.: The instant petition assails the Decision 1dated November 10, 2003 of the Court of Appeals in CAG.R. SP No. 75680, which dismissed the petition for certiorari against the orders of the Regional Trial Court in Special Proceedings No. 03-004. Likewise assailed is the Court of Appeals Resolution 2dated March 19, 2004 denying reconsideration. The facts of the case are as follows: Private respondent Loran S.D. Abanilla and petitioner Marie Antonette Abigail C. Salientes are the parents of the minor Lorenzo Emmanuel S. Abanilla. They lived with Marie Antonettes parents, petitioners Orlando B. Salientes and Rosario C. Salientes. Due to in-laws problems, private respondent suggested to his wife that they transfer to their own house, but Marie Antonette refused. So, he alone left the house of the Salientes. Thereafter, he was prevented from seeing his son. Later, Loran S.D. Abanilla in his personal capacity and as the representative of his son, filed a Petition for Habeas Corpus and Custody, 3 docketed as Special Proceedings No. 03-004 before the Regional Trial Court of Muntinlupa City. On January 23, 2003, the trial court issued the following order: Upon verified Petition for a Writ of Habeas Corpus by Petitioners, the Respondents Marie Antonette Abigail C. Salientes, Orlando B. Salientes and Rosario C. Salientes are hereby directed to produce and bring before this Court the body of minor Lorenzo Emmanuel Salientes Abanilla on January 31, 2003 at 1:00 oclock in the afternoon and to show cause why the said child should not be discharged from restraint. Let this Writ be served by the Sheriff or any authorized representative of this Court, who is directed to immediately make a return. SO ORDERED. 4 Petitioners moved for reconsideration which the court denied.

Consequently, petitioners filed a petition for certiorari with the Court of Appeals, but the same was dismissed on November 10, 2003. The appellate court affirmed the February 24, 2003 Order of the trial court holding that its January 23, 2003 Order did not award the custody of the 2-year-old child to any one but was simply the standard order issued for the production of restrained persons. The appellate court held that the trial court was still about to conduct a full inquiry, in a summary proceeding, on the cause of the minors detention and the matter of his custody. The Court of Appeals ruled thus: WHEREFORE, the petition is hereby DISMISSED for lack of merit. SO ORDERED. 5 Petitioners moved for reconsideration, which was denied on March 19, 2004. Hence, petitioners interposed this appeal by certiorari anchored on the following grounds: 1. The Court of Appeals erred in not pronouncing the respondent judge gravely abused his discretion, amounting to lack or in excess of jurisdiction in issuing an order for the petitioner-mother to first show cause why her own three-year old child in her custody should not be discharged from a so-called "restraint" despite no evidence at all of restraint and no evidence of compelling reasons of maternal unfitness to deprive the petitioner-mother of her minor son of tender years. The assailed orders, resolutions and decisions of the lower court and the Court of Appeals are clearly void; 2. The Court of Appeals erred in not pronouncing that the respondent judge gravely abused his discretion in issuing a writ of habeas corpus which clearly is not warranted considering that there is no unlawful restraint by the mother and considering further that the law presumes the fitness of the mother, thereby negating any notion of such mother illegally restraining or confining her very own son of tender years. The petition is not even sufficient in substance to warrant the writ. The assailed orders are clearly void. 3. Contrary to the Court of Appeals decision, the "Sombong vs. CA" case supports rather than negates the position of the petitioners. 4. Contrary to the Court of Appeals decision, summary proceeding does violence to the tenderyears-rule 5. The Court of Appeals failed to consider that the private respondent failed to present prima facie proof of any compelling reason of the unfitness of the petitioner-mother; 6. The Court of Appeals failed to see that the New Rules on Custody SUFFICES AS REMEDY. 6 Plainly put, the issue is: Did the Court of Appeals err when it dismissed the petition for certiorari against the trial courts orders dated January 23, 2003 and February 24, 2003? Petitioners contend that the order is contrary to Article 213 7 of the Family Code, which provides that no child under seven years of age shall be separated from the mother unless the court finds compelling reasons to order otherwise. They maintain that herein respondent Loran had the burden of showing any compelling reason but failed to present even a prima facie proof thereof. Petitioners posit that even assuming that there were compelling reasons, the proper remedy for private respondent was simply an action for custody, but not habeas corpus. Petitioners assert

that habeas corpus is unavailable against the mother who, under the law, has the right of custody of the minor. They insist there was no illegal or involuntary restraint of the minor by his own mother. There was no need for the mother to show cause and explain the custody of her very own child. Private respondent counters that petitioners argument based on Article 213 of the Family Code applies only to the second part of his petition regarding the custody of his son. It does not address the first part, which pertains to his right as the father to see his son. He asserts that the writ of habeas corpus is available against any person who restrains the minors right to see his father and vice versa. He avers that the instant petition is merely filed for delay, for had petitioners really intended to bring the child before the court in accordance with the new rules on custody of minors, they would have done so on the dates specified in the January 23, 2003 and the February 24, 2003 orders of the trial court. Private respondent maintains that, under the law, he and petitioner Marie Antonette have shared custody and parental authority over their son. He alleges that at times when petitioner Marie Antonette is out of the country as required of her job as an international flight stewardess, he, the father, should have custody of their son and not the maternal grandparents. As correctly pointed out by the Court of Appeals, the assailed January 23, 2003 Order of the trial court did not grant custody of the minor to any of the parties but merely directed petitioners to produce the minor in court and explain why they are restraining his liberty. The assailed order was an interlocutory order precedent to the trial courts full inquiry into the issue of custody, which was still pending before it. Under Rule 41, Section 1 8 of the Rules of Court, an interlocutory order is not appealable but the aggrieved party may file an appropriate special action under Rule 65. The aggrieved party must show that the court gravely abused its discretion in issuing the interlocutory order. In the present case, it is incumbent upon petitioners to show that the trial court gravely abused its discretion in issuing the order. Habeas corpus may be resorted to in cases where rightful custody is withheld from a person entitled thereto. 9Under Article 211 10 of the Family Code, respondent Loran and petitioner Marie Antonette have joint parental authority over their son and consequently joint custody. Further, although the couple is separated de facto, the issue of custody has yet to be adjudicated by the court. In the absence of a judicial grant of custody to one parent, both parents are still entitled to the custody of their child. In the present case, private respondents cause of action is the deprivation of his right to see his child as alleged in his petition. 11 Hence, the remedy of habeas corpus is available to him. In a petition for habeas corpus, the childs welfare is the supreme consideration. The Child and Youth Welfare Code 12 unequivocally provides that in all questions regarding the care and custody, among others, of the child, his welfare shall be the paramount consideration. 13 Again, it bears stressing that the order did not grant custody of the minor to any of the parties but merely directed petitioners to produce the minor in court and explain why private respondent is prevented from seeing his child. This is in line with the directive in Section 9 14 of A.M. 03-04-04SC 15 that within fifteen days after the filing of the answer or the expiration of the period to file answer, the court shall issue an order requiring the respondent (herein petitioners) to present the minor before the court. This was exactly what the court did. Moreover, Article 213 of the Family Code deals with the judicial adjudication of custody and serves as a guideline for the proper award of custody by the court. Petitioners can raise it as a counter argument for private respondents petition for custody. But it is not a basis for preventing the father

to see his own child. Nothing in the said provision disallows a father from seeing or visiting his child under seven years of age. In sum, the trial court did not err in issuing the orders dated January 23, 2003 and February 24, 2003. Hence, the Court of Appeals properly dismissed the petition for certiorari against the said orders of the trial court. WHEREFORE, the petition is DENIED. The Decisiondated November 10, 2003 and the Resolutiondated March 19, 2004 of the Court of Appeals in CA-G.R. SP No. 75680 are AFFIRMED. Costs against petitioners. SO ORDERED. G.R. No. 141860 August 31, 2006 MALAYAN INSURANCE CO., INC., Petitioner, vs. IPIL INTERNATIONAL INC., ANCHOR ORIENT LINES-SINGAPORE, MED-LINES PHILIPPINES, BALTMED SHIPPING CO., and OCEAN MARINE MUTUAL PROTECTION & INDEMNITY ASSOCIATION, LTD.,Respondents. DECISION TINGA, J.: In this Petition for Review1 under Rule 45 of the 1997 Rules of Civil Procedure, petitioner Malayan Insurance Co., Inc. (Malayan) assails the Decision2 dated 6 October 1999 of the Fifteenth Division
1Rollo, pp. 13-34; Dated 27 March 2000.

2Id. at 36-42; Penned by Associate Justice Jose L. Sabio, Jr. with the concurrence of Associate Justices Hector L. Hofilea and Omar U. Amin.

of the Court of Appeals in C.A.-G.R. CV No. 56922 and its Resolution3 dated 2 February 2000 denying its Motion for Reconsideration.4

Following are the factual and legal antecedents.

On 25 January 1995, Malayan filed before the Regional Trial Court (RTC) of Manila, Branch 1, a complaint for civil damages, docketed as Civil Case No. 95-72660 (the civil case), against respondents Anchor Orient Lines-Singapore (Anchor), a foreign corporation, and its agent, Ipil International, Inc. (Ipil). Ipil and Anchor then filed their Answer on 27 March 1995.5 Having received a copy of the Answer on 4 April 1995, Malayan filed a motion to have the pre-trial set by the trial court.6 The trial court set the case for pretrial on 28 June 1995.7

The pre-trial on 28 June 1995 did not push through as Malayan requested that it be reset to either 19 or 20 July 1995. The trial court set it for 26 July 1995, on which date Ipil, Anchor and their counsels failed to appear. As a consequence, they were declared as in default
3Id. at 44-46.

4Id. at 73-81; Dated 27 October 1999.

5Id. at 14.

6Records, p. 23.

7Id. at 26.

and Malayan was allowed to present evidence ex parte on 1 August 1995. 8

Subsequently, however, the trial court lifted the order of default per Ipil and Anchors prayer in their motion filed on 3 August 1995. In addition, the trial court set the pretrial on 13 September 1995, 9 but which was again re-scheduled on 18 October 1995 by the trial court acting upon the Joint Motion to Reset Pre-trial filed by Malayan, Ipil and Anchor.10

On 18 October 1995, Malayan filed a Motion for Leave to File Amended Complaint, together with the Amended Complaint which the trial court admitted on 4 December 1995.11 The Amended Complaint impleaded additional defendants namely, Baltmed Shipping Company (Baltmed), Med-Lines Philippines (Med-lines), Ocean Marine Mutual Protection and Indemnity Association Ltd. (P&I Club) and Pandiman Philippines, Inc (Pandiman). 12 In view of this, the trial court on 6 December 1995, reset the pre-trial until further notice.13

9Records, p. 56.

10Rollo, p. 37; Records, pp. 59 and 61.

11Id. at 37; id. at 77.

12Records, p. 66.

13Rollo, p. 37.

After summons were duly served upon the newly-impleaded defendants, Pandiman filed a Motion to Dismiss on 26 January 1996. Med-lines, on the other hand, had been granted two extensions before finally filing its Answer With Compulsory Counterclaim on 7 March 1996. 14

On the scheduled hearing of Pandimans Motion to Dismiss, Malayan was granted ten (10) days to file its Comment thereto which it did file on 8 March 1996. Pandiman subsequently filed its Reply to the Comment. Thereafter, the trial court ordered Pandiman to be dropped as party-defendant per its Order15 dated 7 June 1996.16

Then on 7 February 1997, the trial court issued an Order17 dismissing the Civil case for failure to prosecute for an unreasonable length of time pursuant to Section 3, Rule 17 of the Rules of Court. Malayan filed a motion for reconsideration of the order which the trial court likewise denied per Order18 dated 23 May 1997, the pertinent portions of which we quote as follows:

14Id. at 37; Records, pp. 124-126.

15Records, pp. 141-142.

16Rollo, p. 37.

17Records, p. 147.

18Id. at 162-163; Penned by Judge Eloy R. Bello, Jr.

The last order of the court is dated June 7, 1996. After said order, the case was ready for pre-trial. It is admitted by the plaintiff that it should have moved for pre-trial. However, it failed to do so. The plaintiff claims that its failure was due to inadvertence.

xxxx

Is the admitted neglect on the part of the plaintiff, excusable negligence? Excusable neglect means a failure to take the proper steps at the proper time, not in consequence of [the] partys own carelessness, inattention or willful disregard of the process of unavoidable hindrance or accident on (sic) reliance on the care and vigilance of his counsel or on promises made by the adverse party. (Blacks Law Dictionary, 5th Edition); (p. 122, Remedial Law, Vol. II, by Herrera).

In the present case, the inadvertence alleged is the plaintiffs counsel forming a new partnership and having moved its office from Oriental Mindoro to Quezon City.

It appears on record that when plaintiff filed its opposition to the motion to dismiss by defendant Pandiman, plaintiffs counsel was already at Suites B and C, 12th Floor, G.E. Antonio Building, T.M. Kalaw Street, Ermita, Manila. And that was March 6, 1996.

The last order of the court was dated June 6, 1996. Seven months passed from June 6, 1996 up to January 10, 1997, the date of the pleading when the counsel informed the court of the change of address. The said pleading informing the court of such change of address was mailed on February 25, 1997 and reached this court on March 10, 1997.

This court is of the opinion that the pleading informing the court of the change of address was made only after the plaintiffs counsel received the order of dismissal on February 12, 1997, as shown by the return card attached to the record. The pleading is[,] no doubt, antedated to justify the herein movants ground for his motions.

From the foregoing, this court is of the view, that the failure of plaintiff to take the necessary steps in prosecuting its case is not an excusable negligence.19

Malayan filed an appeal before the Court of Appeals alleging that: (1) the trial court erred in not setting the Civil case in the pre-trial calendar pursuant to Section 5, Rule 20 of the Revised Rules of Court, the applicable rule at the time of dismissal; (2) the trial court did not decide in accord with law and jurisprudence when it imputed inexcusable negligence to Malayan for its failure to have the Civil case for pre-trial; (3) the trial court gravely abused its discretion in dismissing the Civil case; (4) the trial court gravely erred in dismissing the Civil case without considering Malayans meritorious cause of action.20

The Court of Appeals denied the appeal. Citing Montejo v. Urotia,21 it held that the question of what constitutes an unreasonable length of time to prosecute a case depends upon the circumstances of each case and is a matter best left to the sound discretion of the trial court, which will not be disturbed in the absence of any showing of abuse thereof. The appellate court moreover declared that while it is the duty of the Clerk of Court to include a case in the trial calendar after the issues are joined, fix the date for trial, and cause the corresponding notices to be served upon the parties, the plaintiff is not

19Rollo, pp. 53-54; Records, pp. 162-163.

20Rollo, p. 40.

21148-B Phil. 43, 50 (1971).

relieved of his own duty to prosecute a case diligently. If the clerk in the instant case had been negligent, it was Malayans duty to call the trial courts attention to that fact so that the administration of justice would not suffer delay. 22

The Court of Appeals moreover stressed that Malayan was less than honest in explaining why it failed to prosecute the case within a reasonable time. The appellate court in addition believed that due process was complied with when Malayan was given an opportunity to explain its side through its motion for reconsideration.23

In the instant Petition, Malayan asserts that the Court of Appeals reliance on Montejo v. Urutia is misplaced as the facts in the cited case are different from the those in the case at bar. Malayan points out that the cause for the dismissal of the case in Montejo was therein plaintiffs failure to comply, for a period of more than two years, with the trial courts order to cause the service of summons to seventeen (17) of the twenty (20) additional defendants. The dismissal thus involved the evasion for an unreasonable length of time by therein plaintiff of a positive duty imposed by the trial court.24 In the case

at bar, Malayan only failed to have the case set for pre-trial which was the duty and obligation of the Clerk of Court, according to the Revised Rules of Court.

22Rollo, p. 41.

23 Id. at 42.

24Rollo, pp. 22-23.

Moreover, Malayan submits that the cases cited in Montejo involved special circumstances which warranted the dismissal of the actions therein. For instance in the cited case of See Chuan v. De La Fuente,25 the Court in ruling that therein petitioner failed to prosecute his action for an unreasonable length of time, i.e., one (1) year, four

(4) months and four (4) days, considered that the petitioner was prosecuting not an ordinary action but the provisional remedy of a writ of preliminary injunction.26

Malayan likewise claims that the appellate court gravely abused its discretion in failing to consider the circumstances surrounding the present case and in giving more weight to the rule of technicality than to the rule of equity and substantial justice.27

Ipil, in its two (2)-page Comment,28 states in the main that the determination of what constitutes an unreasonable length of time is discretionary on the part of the trial court and is a factual issue which may not be reviewed on a petition filed under Rule 45 of the 1997 Rules of Civil Procedure.29

2590 Phil. 813 (1952).

26Rollo, p. 21.

27Id. at 19.

28Id. at 90-91; Dated 20 September 2000.

29Id. at 90.

Med-Lines, in its Comment,30 avers that the dismissal of the Civil case was proper even if the duty to have the case set for trial devolved on the Clerk of Court as Malayan failed to take the necessary steps to prosecute the case within a reasonable length of time.31 It maintains that the appellate court correctly applied the doctrine inMontejo to the instant case.32

Malayan, in its Reply,33 while admitting that it was remiss in moving for the resumption of the pre-trial, submits that there was no unjustified inaction on its part. It maintains that it actively prosecuted the Civil case even after the trial court suspended the pre-trial until further orders. It contends that it did not violate any positive duty mandated by the Revised Rules of Court or by the trial court. To the contrary, the trial court unilaterally imposed on itself the duty to order the resumption of the pre-trial when it suspended the same until further orders.34

In a Resolution dated 12 December 2005, the Court noted that Anchor, Baltmed and P&I Club are not registered with the Securities and Exchange Commission and have no resident agents in the Philippines. Thus, we dispense with their respective Comments and resolve the instant case on the basis of the pleadings at hand.

30Id. at 98-104; Dated 22 March 2001.

31Id. at 101.

32Id. at 99-100.

33Id. at 181-186.

34Id. at 183-184.

There is merit in the petition.

The crux of the controversy is whether Malayan failed to

prosecute the Civil case for an unreasonable length of time for no

justifiable cause. The relevant provision is Section 3, Rule 17 of the

Revised Rules of Court which reads:

SEC. 3. Failure to prosecute.If plaintiff fails to appear at the time of the trial, or to prosecute his action for an unreasonable length of time, or to comply with these rules or any order of the court, the action may be dismissed upon motion of the defendant or upon the courts own motion. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise provided by the court. (Emphasis supplied.)

while the related Section 3, Rule 17 of the 1997 Rules of Civil

Procedure states:

SEC. 3. Dismissal due to fault of plaintiff.If, for no justifiable cause, the plaintiff fails to appear on the date of the presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon the courts own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the court. (Emphasis supplied.)

The rules contemplate certain instances where the complaint

may be dismissed due to the plaintiff's fault: (1) if he fails to appear

during a scheduled trial, especially on the date for the presentation

of his evidence in chief; (2) if he fails to prosecute his action for an unreasonable length of time; (3) if he fails to comply with the rules or any order of the court; or (4) where the plaintiff fails to appear when so required at the pre-trial.35

There is failure to prosecute when the plaintiff, being present, is not ready or is unwilling to proceed with the scheduled trial or when postponements in the past are due to the plaintiffs own making, intended to be dilatory or cause substantial prejudice on the part of the defendant.36 The failure of a plaintiff to prosecute the action without any justifiable cause within a reasonable period of time will give rise to the presumption that he is no longer interested to obtain from the court the relief prayed for in his complaint; hence, the court is authorized to order the dismissal of the complaint on its own motion or on motion of the defendants. The presumption is not, by any means, conclusive because the plaintiff, on a motion for reconsideration of the order of dismissal, may allege and establish a justifiable cause for such failure.37

Considering the circumstances of the case and the reasons given by Malayan, it cannot be concluded that it failed to prosecute the case for an unreasonable length of time for no justifiable cause. The dismissal of the Civil case on 7 February 1997 was mainly attributed to Malayans failure to have the case set for pre-trial anew for eight

35BPI v. Court of Appeals, 362 Phil. 362, 367-368 (1999).

36Belonio v. Rodriguez, G.R. No. 161379, 11 August 2005, 466 SCRA 557, 577-578.

37Olave v. Mistas, G.R. No. 155193, 26 November 2004, 444 SCRA 479, 494.

(8) months since the last order of the trial court.38 The last order of the court was dated 7 June 1996 wherein Pandiman was ordered to be dropped as defendant in the Amended Complaint. Previously on 6 December 1995, the trial court issued an order resetting the pre-trial "until further notice."39 At that time too, the duty to have the case set for pre-trial devolved on the Clerk of Court, according to Section 5, Rule 20 of the Revised Rules of Court, to wit:

SEC. 5. Pre-trial calendar. The court shall cause to be prepared a pre-trial calendar of cases for consideration as above provided. Upon submission of the last pleading in a particular case, it shall be the duty of the clerk of court to place such case in the pre-trial calendar.

While we agree with the appellate court that this duty imposed on the clerk of court does not excuse the plaintiff from prosecuting his case diligently, bearing the foregoing in mind, we believe Malayans failure to have the case set for pre-trial is attended by justifiable cause. There is reason to believe that Malayan awaited the further orders of the trial court which explains its failure to have the case set for pretrial. Relatedly, the span of time involved is not unreasonably that long to give rise to the inference that Malayan has lost interest in the case. As to whether the other reasons offered are truthful, namely that counsel for Malayan had moved its office owing to the formation of a new partnership and that there was a delay in the transfer of files, these are matters which bear little significance in determining whether there was indeed failure to prosecute the case for an unreasonable

38Rollo, pp. 53-54.

39Id. at 81.

period of time. The Court is more focused as it should in finding out

whether Malayan has, based on the record, displayed lack of intent to

pursue its case. And we find that the opposite is true. From its

diligence in the prosecution of the civil case before the order of

dismissal, not to mention its vigor in appealing said Order, Malayan

has shown determination to pursue its case.

Pertinently, the Court ruled in Belonio v. Rodriguez,40 that:

The power of the trial court to dismiss an action for non-prosequitur is not without its limits. If a pattern or scheme to delay the disposition of the case or a wanton failure to observe the mandatory requirement of the rules on the part of the plaintiff is not present, as in this case, courts should not wield their authority to dismiss. Indeed, while the dismissal rests on the prerogative of the trial court, it must soundly be exercised not be abused, as there must be sufficient reason to justify its extinctive effect on the plaintiffs cause of action. Deferment of proceedings may be tolerated so that the court, aimed at a just and inexpensive determination of the action, may adjudge cases only after a full and free presentation of all the evidence by both parties. In this regard, courts are reminded to exert earnest efforts to resolve the matters before them on the merits, and adjudicate the case in accord with the relief sought by the parties so that appeals may be discouraged; otherwise, in hastening the proceedings, they further delay the final settlement of the case.41(Emphasis supplied.)

In the absence of a pattern or scheme to delay the disposition of

the case or a wanton failure to observe the mandatory requirement of

the rules on the part of the plaintiff, as in the case at bar, courts should

decide to dispense with rather than wield their authority to dismiss.42

40G.R. No. 161379, 11 August 2005, 466 SCRA 557.

41Id. at 582-583.

42Marahay v. Melicor, G.R. No. 44980, 6 February 1990, 181 SCRA 811, 817.

In the cases cited in Montejo, the case mainly relied upon by the appellate court in its disquisition, there were special circumstances which warranted the dismissal of the actions therein. In four (4) of the cited cases,43including the frequently quoted Smith Bell & Co., Ltd., et al. v. American President Lines, Ltd., et al.,44 plaintiffs failed to prosecute for a period of four (4) years, a considerably longer period than that in the case at bar, from which plaintiffs disinterest in pursuing their respective cases can reasonably be inferred. In the other cases wherein the plaintiffs were found to have failed to prosecute their cases for less than a year,45 either there was a manifest scheme to delay the proceedings or plaintiffs had failed to perform an order of the trial court.

In contrast, Malayan, in the case at bar did not fail to perform an order of the trial court. There was no apparent pattern to delay the case, the period involved is much too short for one to conclude its disinterest in pursuing the case, and the civil case involved an action for damagesan ordinary action which is much less urgent than a special civil action or a provisional remedy. Quite the opposite,

43E.E. Elser, Inc. et al. v. De La Rama Steamship Co., Inc., et al., 94 Phil. 812 (1954); Adorable, et al. v. Bonifacio,et al., 105 Phil. 1269 (1959); Ventura, et al. v. Baysa, et al., 114 Phil. 122 (1962).

4494 Phil. 879 (1954).

45Flores v. Philippine Alien Property Administrator, 107 Phil. 773 (1960); Sunico v. Villapando, 14 Phil. 352 (1909);Masiglat v. Mayor of Pasay City, et al., 104 Phil. 319 (1958); Bautista v. Teodoro, Jr., 101 Phil. 701 (1957).

Malayan evinced earnestness in prosecuting the civil case by filing a motion to set it for pre-trial,46 appearing on the date of the pre-trial on 26 July 199547 and duly filing its Comment to Pandimans Motion to Dismiss.48 We also note that the trial court issued an order on 6 December 1995 resetting the pretrial "until further notice." These circumstances foist upon the Court no other action but to rule that the trial court should have exercised its discretion differently from how it actually did.

Further confirming our opinion is the case of Olave v. Mistas,49 decided under the present rules of procedure in which the responsibility to move for pre-trial has shifted to the plaintiff. In Olave, the Court amended the dismissal of the Amended Complaint to a dismissal without prejudice to serve the ends of substantial justice. We ruled, thus:

It must be stressed that even if the plaintiff fails to promptly move for pre-trial without any justifiable cause for such delay, the extreme sanction of dismissal of the complaint might not be warranted if no substantial prejudice would be caused to the defendant, and there are special and compelling reasons which would make the strict application of the rule clearly unjustified

50

xxxx

46Records, p. 23.

47Rollo, p. 37.

48Id.

49Supra note 39 at 479-499.

50Id. at 495.

If, in this recent case, we have shown liberality to the plaintiff who failed to have the case set for pre-trial when it was clearly his responsibility to do so under the present Rules already in force at the time, there is no reason not to extend the same favorable treatment to Malayan which likewise failed to initiate the pre-trial when, under the Rules in effect at that time, the duty to have the case set for pre-trial was lodged not on the plaintiff but on the Clerk of Court.

All things considered, the Court of Appeals committed a reversible error.

WHEREFORE, the instant petition is GRANTED. The Decision dated 6 October 1999 of the Court of Appeals and its Resolution dated 2 February 2000 in C.A.-G.R. CV No. 56922 are REVERSED. The Regional Trial Court of Manila, Branch 1, is DIRECTED to try and decide Civil Case No. 95-72660 with deliberate dispatch.

SO ORDERED.

G.R. No. 153696

September 11, 2006

SPOUSES HUMBERTO DELOS SANTOS and CARMENCITA DELOS SANTOS, petitioners, vs. HON. EMMANUEL C. CARPIO, Presiding Judge of RTC, Branch 16, Davao City and METROPOLITAN BANK and TRUST COMPANY, respondents. DECISION AUSTRIA-MARTINEZ, J.: Before us is a petition for review on certiorari under Rule 45 of the Rules of Court filed by spouses Humberto delos Santos and Carmencita delos Santos (petitioners) assailing the Decision1 dated April 30, 2002 of the Court of Appeals (CA) in CA-G.R. SP No. 64961.2 The antecedent facts of the case as summarized by the CA are as follows: On January 3, 2001, Metropolitan Bank and Trust Company (or "Metrobank") filed a complaint3 for sum of money against spouses Humberto and Carmencita delos Santos (or "petitioners") before the Regional Trial Court of Davao City (Branch 16). On January 22, 2001, petitioners were served with the summons, together with a copy of the complaint. As petitioners failed to file an answer within the reglementary period, Metrobank, on February 8, 2001,4 filed a motion to declare them in default. The motion was set for hearing on February 16, 2001. Acting on the motion, the lower court, presided over by Hon. Emmanuel C. Carpio (or "respondent judge"), issued an order dated February 12, 2001 declaring petitioners in default and setting the ex-partepresentation of Metrobank's evidence on March 7, 2001. On February 15, 2001, petitioners filed an opposition to Metrobank's motion to declare them in default, claiming that upon receipt of the summons, they immediately sought the services

of Atty. Philip Pantojan (or "Atty. Pantojan") of the Into Pantojan Gonzales and Marasigan Law Offices but it was only on February 12, 2001 that they were able to meet with Atty. Pantojan. Petitioners alleged that not being "learned in law", they were unaware "of the consequences of delay in the filing of their answer." On the same date, February 15, 2001, petitioners filed a motion to admit answer, as well as the answer. In an order dated February 16, 2001, respondent judge disregarded petitioners' opposition to Metrobank's motion for default and stood pat on his previous default order. On February 19, 2001, Metrobank filed an opposition to petitioners' motion to admit answer, arguing that said motion was rendered moot and academic by the February 12, 2001 order. Metrobank also chided petitioners for violating the three-day notice rule under Sec. 4, Rule 15 of the 1997 Rules of Civil Procedure. In an order dated February 20, 2001, the motion to admit answer was denied. On February 27, 2001, petitioners filed a motion to lift the order of default; Metrobank opposed the motion. In their motion, petitioners reiterated that, being laymen, they were unaware of the fifteen-day period within which to file the answer and that their failure to do so was due to the unavailability of Atty. Pantojan who was then "always out of town." They attached to their motion an "Affidavit of Merits" which restated the contents of the motion. Petitioners further claimed that "if given our day in Court, we have a meritorious defense to set up against the allegations of the plaintiff's complaint." On March 2, 2001, respondent judge issued an order holding in abeyance the exparte reception of evidence pending resolution of petitioners' motion to lift the order of default. On March 5, 2001, respondent judge issued an order denying petitioners' motion to lift the order of default and setting the reception of Metrobank's evidence on March 7, 2001, as previously scheduled. On that date (March 7, 2001), Metrobank presented its evidence and the case was submitted for decision. Petitioners moved for reconsideration of the March 5, 2001 order but their motion was denied on March 21, 2001.5 Aggrieved, petitioners filed a Petition for Certiorari with the CA ascribing grave abuse of discretion committed by the trial court amounting to lack of jurisdiction in issuing the Orders dated February 12 and 16, 2001, declaring them in default and denying their Opposition to Metropolitan Bank and Trust Company's (Metrobank) Motion to Declare them in Default, respectively; and the Orders dated March 5 and 21, 2001 denying their Motion to Lift the Order of Default and their Motion for Reconsideration, respectively. In a Decision dated April 30, 2002, the CA denied the petition for lack of merit and accordingly dismissed the same. The CA did not find the excuse proffered by petitioners, i.e., the ignorance of procedural rules and their lawyer's unavailability, as constitutive of excusable negligence. It also ruled that for an order of default to be set aside, petitioners must have a meritorious defense or that something could be gained by having the order of default set aside; that petitioners' affidavit of merit did not show a meritorious defense since it merely stated that "they have a meritorious defense to set up against the allegation of petitioners' complaint" but there was no discussion of such defense and the facts which they intend to prove in support thereof. The CA further found unmeritorious the contention of petitioners that they were declared in default without giving them ample time to file an opposition to Metrobank's Motion to Declare them in Default; that under Section 3, Rule 9 of the Rules of Court, it is provided that the court shall, upon

motion of the claiming party with notice to the defending party in default, and proof of such failure, declare the defending party in default; and that since it is clear from the records that the reglementary period for filing an answer had expired with no responsive pleading filed by petitioners, the trial court had properly declared them in default. The CA further declared that even assuming that the trial court committed a procedural lapse in declaring petitioners in default before the scheduled hearing of Metrobank's motion, such error is not so serious as to constitute grave abuse of discretion. Hence, the instant petition filed by petitioners raising the following issues, to wit: 1. Whether or not the procedural lapse committed by Honorable Public Respondent in issuing an Order declaring petitioners' [sic] in default on 12 February 2001 or four (4) days before the scheduled hearing of Metrobank's Motion to declare petitioners' [sic] in default on 16 February 2001 is so serious as to constitute grave abuse of discretion. 2. Whether or not LITIS PENDENTIA raised by petitioners' [sic] as an affirmative defense is a meritorious defense. 3. Whether or not it is beyond the authority of the Honorable Trial Court to rule on the issue of LITIS PENDENTIA simply and chiefly because the defendants failed to seasonably raise it. 4. What constitutes Affidavit of Merit? 6 Petitioners claim that the trial court committed grave abuse of discretion in declaring them in default in its Order dated February 12, 2001, which was four days before the hearing set on Metrobank's Motion to Declare them in Default; that their failure to file their Answer within the reglementary period was due to the fact that the services of their counsel of choice could not be secured within the period; that they had filed their Motion to Admit Answer and their Answer as well as their Opposition to respondent's motion to declare them in default on February 15, 2001, a day prior to the scheduled date of hearing. Petitioners aver that under Section 1, Rule 9 of the Rules of Court, defenses like the "court has no jurisdiction, litis pendentia, res judicata and prescription" can be taken cognizance of by the court despite the fact that they are not in a motion to dismiss or Answer; that the trial court should have looked into their affirmative defense of litis pendentia raised in their Answer since it is a meritorious defense as it is a ground for a dismissal of a complaint. They further contend that although the affirmative defense of litis pendentia had reached the trial court's attention, it still refused to pass judgment on said legal concern; that the defense of litis pendentia raised in their Answer is sufficient to show that the affidavit of merit showed a meritorious defense; that the procedural lapse committed by the trial court would cause the unlawful deprivation of their property rights through undue haste. In its Comment, Metrobank contends that petitioners failed to file a motion for reconsideration before filing the instant petition which would vest authority for this Court to assume jurisdiction; that the rule on declaration of default did not expressly mandate the trial court to conduct a hearing of the motion as it merely requires that the notice of the motion was made to the defending party; that the trial court declared petitioners in default since they failed to file their Answer within the reglementary period; that assuming arguendo that the trial court committed procedural lapse in declaring petitioners in default before the scheduled hearing, there is still no grave abuse of discretion committed by the trial court since even if the hearing was held, it would not make any difference as petitioners failed to file their Answer within the reglementary period.

Metrobank further argues that petitioners' negligence is not excusable because if they have consulted the associates of Atty. Pantojan, they would definitely be advised to ask for an extension of time to file their answer; that petitioners failed to present a meritorious defense since aside from merely stating in general terms their claim of litis pendentia as a defense, the same is misplaced because Civil Case No. 28,362-2001 pending in RTC of Davao City, Branch 16, and Civil Case No. 27,875-2000 filed by petitioners in RTC of Davao City, Branch 10, have separate and distinct causes of action; that the trial court is correct in not ruling on the issue of litis pendentia as petitioners' Answer was not admitted as part of the records of the case. Petitioners filed their Reply contending that appeal by certiorari under Rule 45 does not require prior filing of a motion for reconsideration; that the procedural lapse committed by the trial court in declaring petitioners in default before the scheduled hearing should not be tolerated since petitioners' land and building are at stake; and that they should not be faulted for not consulting the associates of Atty. Pantojan as they reposed their trust and confidence in him. Petitioners and Metrobank filed their respective memoranda. Metrobank's Memorandum no longer questioned petitioners' non-filing of a motion for reconsideration of the CA decision. Prefatorily, we agree with petitioners that in appeal by certiorari, the prior filing of a motion for reconsideration is not required.7 The principal issue before us is whether or not the CA erred in upholding the Orders of the trial court declaring petitioners in default and denying their Motion to Lift Order of Default. We rule in the affirmative. Section 3, Rule 9 of the Rules of Court provides: Sec. 3. Default; declaration of If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. Clearly, there are three requirements which must be complied with by the claiming party before the court may declare the defending party in default, to wit: (1) the claiming party must file a motion asking the court to declare the defending party in default; (2) the defending party must be notified of the motion to declare him in default; (3) the claiming party must prove that the defending party has failed to answer within the period provided by the Rule. In filing motions, Section 4, Rule 15 of the Rules of Court, specifically provides: Sec. 4. Hearing of motion. Except for motions which the court may act upon without prejudicing the rights of the adverse party, every written motion shall be set for hearing by the applicant. (Emphasis supplied) xxxx Prior to the present rule on default introduced by the 1997 Rules of Civil Procedure, as amended, Section 1 of the former Rule 18 on default is silent on whether or not there is need for a notice of a

motion to declare defendant in default.8 The Court then ruled that there is no need.9 However, the present rule expressly requires that the motion of the claiming party should be with notice to the defending party.10 The purpose of a notice of a motion is to avoid surprises on the opposite party and to give him time to study and meet the arguments.11 The notice of a motion is required when the party has the right to resist the relief sought by the motion and principles of natural justice demand that his right be not affected without an opportunity to be heard.12 Therefore, as the present rule on default requires the filing of a motion and notice of such motion to the defending party, it is not enough that the defendant failed to answer the complaint within the reglementary period to be a sufficient ground for declaration in default. The motion must also be heard. In this case, it is not disputed that petitioners were served summons on January 22, 2001.13 Under Section 1, Rule 11 of the Rules of Court, the defendant shall file his answer to the complaint within 15 days after service of summons, unless a different period is fixed by the court. Petitioners' answer was due on February 6, 2001, but no answer was filed by petitioners. Thus, Metrobank filed a Motion14 to declare petitioners in default on February 9, 2001, setting the hearing thereof on February 16, 2001. However, four days before the scheduled hearing, the trial court issued the Order dated February 12, 2001, declaring petitioners in default. We could not see any justifiable reason why the trial court chose not to hear the petitioners on the date and time fixed in Metrobank's motion, and instead, hastily granted the motion before it could be heard on the ground that it had found the motion to be impressed with merit. Indeed, in totally disregarding the purpose for which the filing of a motion and notice to defending party are required by the Rules, the trial court had acted in a despotic manner that is correctly assailed through a petition for certiorari which petitioners have seasonably filed with the CA. Again, respondent Judge acted capriciously when he totally ignored petitioners' Opposition to Metrobank's Motion to Declare them in Default and denied their Motion to Admit Answer, both filed on February 15, 2001, a day before the scheduled hearing, which showed their desire to be heard before the motion to declare them in default is resolved by the trial court. A mere perusal of the Answer attached to the Motion to Admit Answer would readily reveal that petitioners raised a special and affirmative defense the other action pending between the same parties for the same cause. Petitioners alleged that they entered into several loan agreements with Metrobank involving an aggregate amount ofP12,500,000.00 which was the basis of petitioners' causes of action in a civil case they earlier filed against Metrobank with the RTC of Davao City, Branch 10, docketed as Civil Case No. 27,875-2000, for damages, fixing of interest rates, application of excess interest payments; that the principal obligation of P12,500,000.00 includes all other loans which petitioners have with Metrobank; that the P500,000.00 obligation covered by the promissory note subject of the instant Civil Case No. 28,362-2001 is part of the P12,500,000.00 loan of petitioners, subject of Civil Case No. 27,875-2000 that was earlier filed; and that a written copy of the P500,000.00 loan was not attached to the complaint. Thus, the trial court is deemed to have been apprised of the affirmative defense of litis pendentia. Instead of unceremoniously discarding petitioners' Opposition and Motion to Admit Answer15 which were filed before the scheduled date of hearing of the motion to declare petitioners in default, it behooved upon the trial court to delve into the merits of the Opposition and the Answer. The trial court then should have been guided by Section 11, Rule 11 of the Rules of Court, to wit:

Sec. 11. Extension of time to plead. - Upon motion and on such terms as may be just, the court may extend the time to plead provided in these Rules. The court may also, upon like terms, allow an answer or other pleading to be filed after the time fixed by these Rules. and Section 1, Rule 9 of the 1997 Rules of Procedure which provides: Sec. 1. Defenses and objections not pleaded. - Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim. Under Rule 11, it is within the discretion of the trial court to permit the filing of defendant's answer even beyond the reglementary period, provided there is justification for the belated action, and there was no showing that the defendant intended to delay the case. Petitioners may be considered to have committed excusable negligence when they waited for the counsel of their choice who was out of town which caused the delay in filing their Answer; and the Motion to Admit Answer was filed before the scheduled date of hearing on the Motion to Declare Petitioners in Default, showing that petitioners had no intention to delay the case. Under Rule 9, the trial court may motu proprio dismiss the claim when it appears from the pleadings or evidence on the record that there is another cause of action pending between the same parties for the same cause. With the alleged affirmative defense of litis pendentia, the trial court had justifiable compelling reason to recall its premature Order declaring petitioners in default. In a case,16 we found the trial court to have gravely abused its discretion when it declared defendants in default; that the answer should be admitted because it had been filed before it was declared in default and no prejudice was caused to plaintiff; and that the hornbook rule is that default judgments are generally disfavored.17 In this case, since the Order dated February 12, 2001 declaring petitioners in default is null and void, the filing of the Answer may be considered as having been filed before petitioners were declared in default and therefore no prejudice was caused to Metrobank and there was no undue delay on the part of petitioners. Basic elementary sense of fairness, liberality and substantial justice so dictate that the premature Order be considered as null and void. It is the avowed policy of the law to accord both parties every opportunity to pursue and defend their cases in the open and relegate technicality to the background in the interest of substantial justice.18 Since the Order dated February 12, 2001 was null and void, the trial court likewise committed grave abuse of discretion in issuing the Orders dated March 5, 2001 and March 21, 2001 denying petitioners' Motion to Lift Order of Default and Motion for Reconsideration, respectively. We reiterate the ruling in Akut v. Court of Appeals,19 where we found that the trial court committed grave abuse of discretion in declaring therein petitioners in default and in denying their motion to set aside the order of default, thus:

The controlling principle ignored by respondent court is that it is within sound judicial discretion to set aside an order of default and to permit a defendant to file his answer and to be heard on the merits even after the reglementary period for the filing of the answer has expired. This discretion should lean towards giving party-litigants every opportunity to properly present their conflicting claims on the merits of the controversy without resorting to technicalities. Courts should be liberal in setting aside orders of default, for default judgments are frowned upon, and unless it clearly appears that reopening of the case is intended for delay, it is best that the trial courts give both parties every chance to fight their case fairly and in the open, without resort to technicality. x x x x x x Moreover, petitioners' answer shows that they have a prima facie meritorious defense. They should, therefore, be given their day in court to avoid the danger of committing a grave injustice if they were denied an opportunity to introduce evidence in their behalf. Our ruling in Mercader v. Bonto20 and the copious precedents therein cited that "considering that the late filing of defendants' answer was due to excusable negligence and that they appear to have a meritorious defense; that defendants filed an answer before they were declared in default; and that the late filing of the answer did not in any way prejudice or deprive the plaintiff of any substantial right, nor was there intention to unduly delay the case, WE hold that the respondent judge committed an abuse of discretion in declaring the defendants in default and in refusing to set aside the order of default" is fully applicable to the case at bar. Time and again the Court has enjoined trial judges to act with circumspection and not to precipitately declare parties in default, needlessly compelling the aggrieved party to undergo the additional expense, anxiety and delay of seeking the intervention of the appellate courts and depriving them of the much needed time and attention that could instead have well been devoted to the study and disposition of more complex and complicated cases and issues.21 (Emphasis supplied) In sum, we find that the RTC Order declaring petitioners in default and its subsequent Order denying petitioners' Motion to Lift Order of Default are null and void; and the CA erroneously upheld the assailed Orders of the trial court. WHEREFORE, the petition for review is GRANTED. The Decision of the Court of Appeals dated April 30, 2002 in CA-G.R. SP No. 64961 is REVERSED and SET ASIDE. The Order of Default of the Regional Trial Court is SET ASIDE and the Answer filed by petitioners is deemed ADMITTED. The trial court is DIRECTED to continue with deliberate speed with the proceedings in the case below. Costs against private respondent. SO ORDERED. A.C. No. 6549 September 22, 2006

ROBERTO POON, complainant, vs. ATTY. JANETTE BASSIG-CHUA, respondent. DECISION

YNARES-SANTIAGO, J.: Roberto Poon (Roberto) was the defendant in a case entitled "Metro Central Mercantile Corporation (MCMC) v. Robert Poon," for unlawful detainer and docketed as Civil Case No. 174709 before the Metropolitan Trial Court (MTC) of Manila, Branch 23, presided by Judge Tingaraan U. Guiling. Atty. Janette Bassig-Chua (respondent), on the other hand, was the counsel of the plaintiff, MCMC. In a sworn complaint1 dated July 23, 2004, Roberto charged respondent with grave professional misconduct for deliberately failing to furnish his (Roberto) counsel, Atty. Antonio R. Tupaz (Atty. Tupaz) of the pleadings and motions she filed in Civil Case No. 174709. Roberto prays that respondent be disbarred for grave professional misconduct and for the total disregard of his right to due process. Roberto alleged that when respondent filed a Complaint2 in behalf of her client, the same was deficient because it did not contain any Annex "B." Thus, Atty. Tupaz, filed a Motion to Complete the Complaint.3 Respondent filed an Opposition4 stating that the annexes were complete and that the Annex "B" referred to was a statement of account which had already been furnished to him before the filing of the complaint. Copy of said Opposition was served by respondent to Atty. Tupaz. On March 18, 2003, respondent filed a Motion to Render Judgment5 contending that Roberto failed to file his answer within the reglementary period. Copy thereof was sent only to Roberto. On April 2, 2002, the MTC treated said motion as one to declare Roberto in default and directed respondent to show proof of service thereof to the latter. Indicated in the said order were the address of both Roberto and his counsel, Atty. Tupaz.6 In her Compliance dated April 10, 2003, respondent informed the MTC that the Motion to Render Judgment was personally served to Roberto. Again, copy of said compliance was furnished only to the latter but not to Atty. Tupaz.7 On April 15, 2003, the MTC granted the Motion to Render Judgment8 and subsequently rendered a judgment9 in favor of MCMC on July 1, 2003. The MTC served copy of the said decision and April 15, 2003 order only to Roberto and not to Atty. Tupaz. On September 23, 2003, Roberto filed a Petition for Certiorari and Injunction10 with Branch 33 of the Regional Trial Court (RTC) of Manila, but was denied for lack of merit on December 4, 2003.11 Pending the resolution of Roberto's motion for reconsideration, respondent filed a motion for execution dated January 19, 2004 of the MTC decision. The same was granted by the MTC which issued a writ of execution directing Roberto to vacate the leased premises within five (5) days from receipt thereof. Atty. Tupaz filed a Very Urgent Manifestation and Motion to Recall Order of Execution,12 to which respondent filed an Opposition.13 Roberto claimed that for the fourth time, respondent did not furnish Atty. Tupaz with a copy of the said Opposition. The MTC denied the Very Urgent Manifestation and Motion to Recall Order of Execution, hence, Roberto was ousted from the leased premises. In sum, Roberto maintained that respondent failed to live up to a lawyer's duty to uphold the rights of the parties in a case, even that of the adverse party. Roberto asserts that respondent violated his right to due process by repeatedly and deliberately failing to furnish his counsel of the following pleadings: (1) Plaintiff's (Respondent) Motion to Render Judgment; (2) Compliance; (3) Motion for Execution; and (4) Opposition to the Very Urgent Manifestation and Motion to Recall Order of Execution. Respondent argued that she did not commit any professional misconduct in not furnishing Roberto's counsel of the abovementioned pleadings. She averred that when she filed the Motion to Render

Judgment on March 21, 2003, there was no legal basis to know that Roberto was represented by Atty. Tupaz because she received the Motion to Complete Complaint filed by the latter only on March 24, 2003, and prior to this, there was no formal appearance filed by the latter. Likewise, she claimed that Atty. Tupaz never appeared in the MTC case to represent the complainant. Respondent added that she sent her Opposition to the Very Urgent Manifestation and Motion to Recall Order of Execution to Roberto because Atty. Tupaz again failed to indicate in the Notice of Hearing of said motion, the date and time of the setting of the hearing. On October 4, 2005, Lydia A. Navarro, Investigating Commissioner of the Integrated Bar of the Philippines (IBP) Commission on Bar Discipline recommended that respondent be suspended from the practice of law for a period of three months. Commissioner Navarro found that respondent admitted that she failed to furnish Atty. Tupaz with the pleadings she filed. In a Resolution dated March 20, 2006,14 the IBP Board of Governors adopted and approved the recommendation of Commissioner Navarro. The only issue for resolution is whether respondent should be held administratively liable for failure to furnish Atty. Tupaz of the pleadings she filed. Section 2, Rule 13 of the Revised Rules of Court provides that service is the act of providing a party with a copy of the pleading or paper concerned. If any party has appeared by counsel, service upon him shall be made upon his counsel or one of them, unless service upon the party himself is ordered by the court. Moreover, an attorney is presumed to be properly authorized to represent any cause in which he appears, and no written power of attorney is required to authorize him to appear in court for his client.15 In the instant case, there is no doubt that Atty. Tupaz is the counsel of record of Roberto. After respondent filed a Complaint on February 17, 2003 against Roberto, Atty. Tupaz filed on behalf of the latter a Motion to Complete the Complaint. Respondent filed an Opposition dated March 24, 2003 and furnished both Atty. Tupaz and Roberto a copy of the same. However, subsequent pleadings such as the Compliance; the Motion for Execution; and the Opposition to the Very Urgent Manifestation and Motion to Recall Order of Execution, were furnished only to Roberto and not to Atty. Tupaz. Respondent admitted not serving a copy of the Motion to Render Judgment to Atty. Tupaz because she received the Motion to Complete the Complaint only on March 24, 2003 after she had already filed the Motion to Render Judgment on March 21, 2003. However, except for her bare allegations,16 she presented no proof to substantiate her claim as to her date of receipt of said motion. Moreover, an entry of appearance is not necessary for Atty. Tupaz to be recognized as counsel of Roberto. The fact that he filed a pleading in behalf of the latter is sufficient notice to respondent that he is the counsel of record of Roberto and that copy of the pleadings should be served to him and not to the latter. Anent her Compliance to the MTC's order dated April 2, 2002, respondent cannot claim that Roberto is not represented by Atty. Tupaz considering that the April 2, 2002 order clearly reflected that the MTC sent a copy thereof not only to Roberto but also to his counsel, Atty. Tupaz.17 The same is true with respect to respondent's Motion for Execution dated January 19, 2004 and February 19, 2004 Opposition to Atty. Tupaz's Very Urgent Manifestation and Motion to Recall Order of Execution. This is because at the time she filed the motion for execution, she already received on September 22, 2003 the petition for certiorari filed by Atty. Tupaz with the RTC. More so as regards

the Opposition of respondent considering that she stubbornly failed to furnish Atty. Tupaz with a copy thereof although it was very clear that it was the latter counsel who signed the motion she was opposing. It is elementary that when a party is represented by counsel, all notices should be sent to the party's lawyer at his given address.18 The purpose of the rule is obviously to maintain a uniform procedure calculated to place in competent hands the orderly prosecution of a party's case.19 In J.M. Javier Logging Corporation v. Mardo,20 we held, thus: This rule is not a mere technicality, but one founded on considerations of fair play. A party engages an attorney of record precisely because it does not feel competent to deal with the intricacies of law and procedure. Furthermore, as the party directly served would have to communicate with its attorney and turn over to him the notice received, the net result would be to noticeably shorten the usable period for taking the proper steps required to protect the party's interests. In sum, we find that respondent should be reprimanded for failing to comply with the rules. Under Canon 1 of the Code of Professional Responsibility, a lawyer shall uphold the Constitution, obey the laws of the land and promote respect for the law and legal processes. Nevertheless, the penalty of three months suspension from the practice of law is too harsh and not commensurate to the infraction of respondent vis--vis the damage caused to Roberto. The latter was declared in default because he did not file an answer within the reglementary period. His motion to complete the complaint was correctly treated as a mere scrap of paper for non-compliance with Section 5, Rule 15 of the Rules of Court. Neither can Roberto be considered to have been denied due process considering that he was able to elevate the case to the RTC. Indeed, due process is merely an opportunity to be heard which in this case was amply afforded to him. WHEREFORE, for failure to observe Section 2, Rule 13 of the Revised Rules of Court, respondent Atty. Janette Bassig-Chua is found GUILTY of simple misconduct and is hereby REPRIMANDED and STERNLY WARNED that a repetition of the same or similar acts in the future will be dealt with more severely. SO ORDERED. G.R. No. 147832 December 6, 2006

THE PEOPLE OF THE PHILIPPINES, petitioner, vs. DANILO P. GABRIEL, respondent.

DECISION

SANDOVAL-GUTIERREZ, J.:

Before us is a petition for review on certiorari assailing the Resolution1 of the Court of Appeals (Special Third Division) dated April 10, 2001 in CA-G.R. SP No. 63552. In two (2) separate Informations dated January 16, 1999, the Office of the City Prosecutor of Olongapo City charged Danilo P. Gabriel, respondent, with violation of the Dangerous Drugs Act. The first Information, docketed as Criminal Case No. 27-99, reads: That on or about the fifteenth (15th) day of January 1999, in the City of Olongapo, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, without being lawfully authorized, did then and there willfully, unlawfully, and knowingly sell, deliver and give away to another person Methamphetamine Hydrochloride, otherwise known as "Shabu", which is a regulated drug, approximately weighing Four Grams and Eight Thousand Five Hundred Thirty-Five Ten Thousandths (4.8535) of a gram. CONTRARY TO LAW. The other Information, docketed as Criminal Case No. 28-99, is quoted as follows: That on or about the fifteen (15th) day of January 1999, in the City of Olongapo, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, without the corresponding license or prescription, did then and there willfully, unlawfully and knowingly have in his person, possession and control Sixty-two Grams and Nine Thousand Seven Hundred Ninety One Ten Thousandths (62.9791) of a gram of methamphetamine hydrochloride, otherwise known as "Shabu", which is a regulated drug. CONTRARY TO LAW. Both cases were raffled off and consolidated in Branch 74 of the Regional Trial Court (RTC), Olongapo City, then presided by Judge Fatima G. Asdala. Assistant City Prosecutor Roel G. Samonte was assigned to prosecute the cases. On July 19, 2000, Judge Asdala wrote the Office of the City Prosecutor of Olongapo City asking for the immediate relief of Assistant City Prosecutor Samonte for his "poor performance which has disrupted and adversely affected the smooth and orderly proceedings in the criminal cases." She requested that Prosecutor Raymond C. Viray be assigned to prosecute the cases. On July 20, 2000, Officer-in-Charge (OIC) Armando C. Velasco of the Office of the City Prosecutor of Olongapo City issued Memorandum No. 45, Series 2000 relieving Assistant City Prosecutor Samonte as trial prosecutor of Branch 74. On July 26, 2000, when Criminal Cases Nos. 27-99 and 28-99 were called for hearing, Judge Asdala ordered the provisional dismissal of the cases for failure to prosecute as no prosecutor appeared. On August 8, 2000, OIC Velasco issued Memorandum Order No. 53, Series 2000 designating Assistant City Prosecutor Ildefonso F. Recitis as prosecutor of Branch 74. On August 17, 2000, Assistant City Prosecutor Samonte filed a Motion for Reconsideration of the Order dated July 26, 2000 dismissing the cases. He alleged that the Office of the City Prosecutor of Olongapo City could not assign Prosecutor Viray to Branch 74 since he is the prosecutor in a Family Court; and that Assistant City Prosecutor Recitis, having been assigned to Branch 74 effective August 17, 2000, can now prosecute the cases.

On November 9, 2000, Judge Reynaldo V. Roura, the pairing judge of Judge Asdala in Branch 74, denied the motion for reconsideration. On January 3, 2001, the Office of the Solicitor General (OSG) received a letter dated November 24, 2000 from the Office of the City Prosecutor, Olongapo City, recommending the filing of a petition for certiorari with the Court of Appeals in order to challenge the RTC Order dated November 9, 2000 dismissing the cases. On March 5, 2001, the OSG filed with the Court of Appeals the corresponding petition for certiorari, docketed as CA-G.R. SP No. 63552. On April 10, 2001, the Court of Appeals dismissed the petition on the ground that it was "timebarred." It held that the 60-day period within which to file the petition should be counted from November 22, 2000, the date the Office of the City Prosecutor of Olongapo City received a copy of the assailed Order, not from January 3, 2001, the date of receipt by the OSG of the same Order. The only issue for our determination is whether the filing by the OSG of the petition for certiorari with the Court of Appeals is within the reglementary period. Section 4, Rule 65 of the 1997 Rules of Civil Procedure, as amended, reads in part: SEC. 4. When and where petition filed. The petition (for certiorari) may be filed not later than sixty (60) days from notice of the judgment, order, or resolution. In case a motion for reconsideration or new trial is timely filed, whether such motion is required or not, the sixty (60) day period shall be counted from notice of the denial of said motion. xxx In criminal actions brought before the Court of Appeals or the Supreme Court, the authority to represent the State is solely vested in the OSG. This is pursuant to Section 35 (1), Chapter 12, Title III, Book III of the Administrative Code of 1987, as amended, providing that the OSG shall represent the Government in the Supreme Court and the Court of Appeals in all criminal proceedings. In People v. Eduarte,2 People v. Nano,3 and People v. Mendoza,4 we ruled that "only the Solicitor General may bring or defend actions on behalf of the People of the Philippines once such actions are brought before the Court of Appeals or Supreme Court." Under Section 5, Rule 110 of the Revised Rules on Criminal Procedure, as amended, "All criminal actions, either commenced by complaint or by information, shall be prosecuted under the direction and control of a public prosecutor." The rule is that when a party is represented by counsel in an action in court, notices of all kinds, including motions, pleadings, and orders must be served on said counsel and notice to him is notice to the client.5The RTC sent a copy of its Order dated November 9, 2000 to the Olongapo City Prosecutor who received it on November 22, 2000. Perforce, it follows that the running of the 60-day period to file a petition for certiorari must commence from that date, not from January 3, 2001, as claimed by the Solicitor General. It appears that the Olongapo City Prosecutor did not act with dispatch in sending the questioned Order to the OSG. He received it on November 22, 2000. But it was only on January 3, 2001, or after 41 days, when the OSG received the same. In turn, the latter filed with the Court of Appeals the petition only on March 5, 2001, or after 43 days. Clearly, a total of 84 days had elapsed from receipt of the challenged Order by the Olongapo City Prosecutor before the Solicitor General filed the petition for certiorari with the Court of Appeals.

In Yutingco v. Court of Appeals,6 we explained that the 60-day period was set "to avoid any unreasonable delay that would violate the constitutional rights of parties to a speedy disposition of their cases" and for this reason, "ought to be considered inextendible." Thus, we hold that the Court of Appeals did not err in dismissing the petition for certiorari for having been filed late. WHEREFORE, we DENY the petition and we AFFIRM the Resolution of the Court of Appeals (Special Third Division) dated April 10, 2001 in CA-G.R. SP No. 63552. No costs. SO ORDERED. G.R. No. 156951 September 22, 2006

REPUBLIC OF THE PHILIPPINES, petitioner, vs. SOUTHSIDE HOMEOWNERS ASSOCIATION, INC. and the REGISTER OF DEEDS OF PASIG, RIZAL,respondents. x-------------------------------------------x BASES CONVERSION DEVELOPMENT AUTHORITY, intervenor x-------------------------------------------x DEPARTMENT OF NATIONAL DEFENSE, represented by HON. SECRETARY ANGELO T. REYES, and the ARMED FORCES OF THE PHILIPPINES, represented by CHIEF OF STAFF, AFP, GENERAL NARCISO L. ABAYA, intervenors x-------------------------------------------x G.R. No. 173408 September 22, 2006

RENE A.V. SAGUISAG, MGEN. MARCIANO ILAGAN (Ret.), MGEN. PONCIANO MILLENA (Ret.), BGEN. JUANITO MALTO (Ret.), BGEN. RAYMUNDO JARQUE (Ret.) and COL. DOMINADOR P. AMADOR (Ret.),petitioners, vs. L/T. GEN. HERMOGENES C. ESPERON, JR., respondent. x-------------------------------------------x DECISION GARCIA, J.: Before the Court are these two petitions having, as common denominator, the issue of ownership of a large tract of land. In the first, a petition for review under Rule 45 of the Rules of Court and docketed as G.R. No. 156951, the petitioner Republic of the Philippines seeks to nullify and set aside the Decision1 dated

January 28, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 59454, affirming the dismissal by the Regional Trial Court (RTC) of Pasig City, Branch 71, of the Republics complaint for declaration of nullity and cancellation of a land title against the herein private respondent, the Southside Homeowners Association, Inc. (SHAI). In the second, docketed as G.R. No. 173408, petitioners Rene Saguisag and five (5) retired military officers pray that Lt. Gen. Hermogenes C. Esperon, Jr., the present Chief of Staff of the Armed Forces of the Philippines (AFP), be asked to show cause why he should not be cited for contempt for having announced time and again that the military officers and their families in the contempt action would be ousted and evicted from the property subject of the main petition even before the issue of ownership thereof is finally resolved by the Court. After the private respondent SHAI had filed its Comment2 to the petition in G.R. No. 156951, the Bases Conversion Development Authority (BCDA), followed by the Department of National Defense (DND) and the AFP, joined causes with the petitioner Republic and thus sought leave to intervene. The Court, per its Resolutions dated September 3, 2003,3 and September 29, 2003,4 respectively, allowed the intervention and admitted the corresponding petitions-for-intervention. Per Resolution of the Court dated August 09, 2006, both petitions were ordered consolidated. The Republics recourse in G.R. No. 156951 is cast against the following backdrop: On July 12, 1957, then President Carlos P. Garcia issued Proclamation No. 4235 establishing a military reservation known as Fort William McKinley later renamed Fort Andres Bonifacio Military Reservation (FBMR). The proclamation "withdr[ew] from sale or settlement and reserve[d] for military purposes, under the administration of the Chief of Staff of the [AFP] the [certain] parcels of the public domain [indicated in plan Psu-2031]" situated in the several towns and a city of what was once the Province of Rizal. On its face, the proclamation covers three (3) large parcels of land, to wit: Parcel No. 2 (portion), Parcel No. 3 (or 3-A) and Parcel No. 4 (or 4-A). Parcel No. 3 with an area of 15,912,684 square meters and Parcel No. 4 with an area of 7,660,128 square meters are described in the proclamation as situated inside Fort McKinley, Rizal. Specifically mentioned as excluded from Parcel No. 4 albeit within its boundaries are the American Battle Monument Cemetery (606,985 sq. m.), the Traffic Circle (7,093 sq. m.) and the Diplomatic and Consular area (100,000 sq.m.). Several presidential proclamations would later issue excluding certain defined areas from the operation of Proclamation No. 423 and declaring them open for disposition. These are Proclamation No. 4616 and Proclamation No. 462,7 both series of 1965, excluding portions of the reservation and declaring them the AFP Officers Village and the AFP EMs Village, respectively, to be disposed of under Republic Act (R.A.) 2748 and R.A. 7309 in relation to the Public Land Act (C.A. 141, as amended). Excluded, too, under Proclamation No. 172 dated October 16, 1987 and to be disposed pursuant to the same laws aforementioned, save those used or earmarked for public/quasi-public purposes, are portions of the reservation known as Lower and Upper Bicutan, Western Bicutan and the Signal Village, all in Taguig, Metro Manila. In 1992, Congress enacted the Bases Conversion and Development Act (R.A. 7227, as amended), investing the BCDA the power to own, hold and administer portions of Metro Manila military camps that may be transferred to it by the President10 and to dispose, after the lapse of a number of months, portions of Fort Bonifacio.11 At the core of the instant proceedings for declaration of nullity of title are parcels of land with a total area of 39.99 hectares, more or less, known as or are situated in what is referred to as

the JUSMAG housing area in Fort Bonifacio. As may be gathered from the pleadings, military officers, both in the active and retired services, and their respective families, have been occupying housing units and facilities originally constructed by the AFP on the JUSMAG area. Private respondent SHAI is a non-stock corporation organized mostly by wives of AFP military officers. Records show that SHAI was able to secure from the Registry of Deeds of the Province of Rizal a title Transfer Certificate of Title (TCT) No. 1508412 - in its name to the bulk of, if not the entire, JUSMAG area. TCT No. 15084 particularly describes the property covered thereby as follows: A parcel of land (Lot 3-Y-1, Psd-76057, being a portion of Parcel 3 of plan Psu-2031) situated in Jusmang (sic) Area, Fort Bonifacio, Province of Rizal. containing an area of (398,602) SQUARE METERS. xxx. A parcel of land (Lot 3-Y-2, Psd-76057 as shown on subdivision Plan Psd 76057, being a portion of parcel 3 of plan Psu-2031, LRC Rec. No.) situated in Jusmang (sic) Area, Fort Bonifacio, Province of Rizal. containing an area of (1,320) SQUARE METERS xxx.. (Underscoring added.) The Rizal Registry issued TCT No. 15084 on October 30, 1991 on the basis of a notarized Deed of Sale13purportedly executed on the same date by then Director Abelardo G. Palad, Jr. (Palad, for brevity) of the Lands Management Bureau (LMB) in favor of SHAI. The total purchase price as written in the conveying deed wasP11,997,660.00 or P30.00 per square meter. It appears that in the process of the investigation conducted by the Department of Justice on reported land scams at the FBMR, a copy of the aforesaid October 30, 1991 deed of sale surfaced and eventually referred to the National Bureau of Investigation (NBI) for examination. The results of the examination undertaken by NBI Document Examiner Eliodoro Constantino are embodied in his Questioned Documents Report (QDR) No. 815-1093.14 Its highlights: QUESTIONED SPECIMENS: 1. Original copy of the Deed of Sale issued in favor of the Navy Officers Village Association (NOVA) containing the signature of "ABELARDO G. PALAD, JR." designated as "Q-961" . 2. Original copy of the Deed of Sale issued in favor of SHAI containing the signature of "ABELARDO G. PALAD, JR." ... designated as "Q-962. xxx xxx xxx PURPOSE OF EXAMINATION: To determine whether or not the questioned and sample/specimen signatures "ABELARDO G. PALAD, JR." were written by one and the same person. FINDINGS: Scientific comparative examination and analysis of the specimens, submitted, under stereoscopic microscope and magnifying lens, with the aid of photographic enlargement reveals that there exist fundamental, significant differences in writing characteristics between

the questioned and the standard/sample signatures "ABELARDO G. PALAD, JR." such as in: - The questioned signatures show slow, drawn, painstaking laborious manner in execution of strokes; that of the standard/sample signatures show free, rapid coordinated and spontaneous strokes in the manner of execution of letters/elements. xxx xxx xxx Furthermore, the questioned signature "ABELARDO G. PALAD, JR." marked "Q-961" is a product of TRACING PROCESS by CARBON-OUTLINE METHOD. CONCLUSION: Based on the above FINDINGS, the questioned and the standard/sample signatures "ABELARDO G. PALAD, JR." were not written by one and the same person. The questioned signature "ABELARDO G. PALAD, JR." marked "Q-961" is a TRACED FORGERY by carbon process. REMARKS: The other questioned Deeds of Sale containing the signatures of "ABELARDO G. PALAD, JR." are still in the process of examination.15 On October 16, 1993, then President Fidel V. Ramos issued Memorandum Order No. 17316 directing the Office of the Solicitor General (OSG) to institute action towards the cancellation of TCT No. 15084 and the title acquired by the Navy Officers Village Association (NOVA) over a bigger parcel within the reservation. A month later, the OSG, in behalf of the petitioner Republic, filed with the RTC of Pasig City the corresponding nullification and cancellation of title suit against the private respondent SHAI. In its complaint, docketed as Civil Case No. 63883 and eventually raffled to Branch 71 of the court, the Republic alleged that fraud attended SHAIs procurement of TCT No. 15084. In paragraph No. 5 of the complaint, the Republic alleged that TCT No. 15084 is void owing, inter alia, to the following circumstances: a) the conveying deed is spurious as the purported signature thereon of Palad is a forgery; b) there are no records with the LMB of (i) the application to purchase and (ii) the alleged payment of the purchase price; and c) the property in question is inalienable, being part of a military reservation established under Proclamation No. 423.17 In its ANSWER with counterclaim, respondent SHAI denied the material allegations of the complaint and countered that the impugned title as well as the October 30, 1991 Deed of Sale are valid documents which the Republic is estopped to deny.18 SHAI also alleged paying in full the purchase price indicated in the deed as evidenced byOfficial Receipt No. 6030203-C dated October 29, 1991. On October 19, 1994, the case was heard on pre-trial in the course of which the Republic, as plaintiff therein, marked (and later offered in evidence) the Deed of Sale dated October 30, 1991 as its Exhibit "A," and TCT No. 15084 as Exhibit "B." Respondent, then defendant SHAI adopted Exhibits "A" and "B" as its Exhibits "1" and"2," respectively. As the pre-trial order was written, it would appear that the parties agreed to limit the issue to the due execution and genuineness of Exhs. "A" and "B."19

During the trial, the Republic presented as expert witness NBI Document Examiner Eliodoro Constantino who testified on NBI QDR No. 815-1093 and asserted that the signature of Palad in Exhibit "A" is a forgery. For his part, Palad dismissed as forged his signature appearing in the same document and denied ever signing the same, let alone in front of a notary public holding office outside of the LMB premises. Pressing the point, Palad stated that he could not have had signed the conveying deed involving as it did a reservation area which, apart from its being outside of the LMBs jurisdiction, is inalienable in the first place. The testimony of other witnesses revolved around the absence of bureau records respecting SHAIs application to acquire, payment of the purchase price and Psd-76057, the plan described in TCT No. 15084. 20 For its part, then defendant SHAI presented an opposing expert witness in the person of Police Inspector Redencion Caimbon who brought with him PNP QDR No. 001-96 and testified that Palads signature in Exhibit "A"(same as Exh. "1") is genuine. Mrs. Virginia Santos, then SHAI president, likewise testified, saying that applications to purchase were signed and then filed with the LMB by one Engr. Eugenia Balis,21 followed by the payment in full of the contract price. Atty. Vicente Garcia, the then Register of Deeds of Rizal, also testified about his having endorsed to Palad a letter-inquiry he received from SHAI respecting the authenticity of TCT No. 15084. Palads response-letter dated January 23, 1992 (Exh. "10"), according to Atty. Garcia, is to the effect that TCT No. 15084 must be genuine as it emanated from the Registrys office on the basis of the October 30, 1991 Deed of Sale.22 On rebuttal, Palad would deny authorship of Exhibit "10" and an LMB official would disclaim transmitting the same to Atty. Garcia. Eventually, in a decision23 dated October 7, 1997, the trial court rendered judgment dismissing the Republics complaint, to wit: WHEREFORE, in view of the foregoing, the Complaint dated November 15, 1991 is hereby DISMISSED without pronouncement as to costs. The counterclaims are also DISMISSED. SO ORDERED. In not so many words, the trial court considered the parcels covered by the deed in question as no longer part of the FBMR. Therefrom, the Republic went on appeal to the CA whereat its appellate recourse was docketed as CA-G.R. CV No. 59454. In the herein assailed Decision24 dated January 28, 2003, the appellate court affirmed in toto that of the trial court. Hence, this petition of the Republic on the threshold abstract submission that the CA "completely ignored, overlooked and/or grossly misappreciated facts of substance which, if duly considered, will materially affect the outcome of this case." In its COMMENT To Petition, private respondent SHAI parlays the "what-can-be-raised" line. It urges the dismissal of the petition on the ground that the issues raised therein, particularly those bearing on the authenticity ofExhibit "A"/"1," are mainly questions of fact, adding that the matter of the inalienability of the area purportedly sold is outside the issue agreed upon during the pre-trial stage.

The desired dismissal cannot be granted on the bases of the reasons proffered above. While the Court, in a petition for review of CA decisions under Rule 45 of the Rules of Court, usually limits its inquiry only to questions of law, this rule is far from absolute. Reyes v. Court of Appeals,25 citing Floro v. Llenado,26 for one, suggests as much. In Floro, we wrote: xxx There are, however, exceptional circumstances that would compel the Court to review the finding of facts of the [CA], summarized in and subsequent cases as follows: 1) when the inference made is manifestly mistaken, absurd or impossible; 2) when there is grave abuse of discretion; 3) when the finding is grounded entirely on speculations, surmises or conjectures; 4) when the judgment of the [CA] are based on misapprehension of facts; 5) when the findings of facts are conflicting; 6) ; 7) ; 8) ; 9) when the [CA] manifestly overlooked certain relevant facts not disputed by the parties and which if properly considered would justify a different conclusion; and 10) when the findings of facts are premised on the absence of evidence and are contradicted by the evidence on record. (Words in bracket, added.) To the mind of the Court, the instant case is within the purview of at least three of the exceptions listed above, foremost of which is item #9. Private respondent SHAIs stance about the petitioner Republic being barred from raising the issue of inalienability since it failed to plead or assert the same at the pre-trial proceedings is, to a degree, correct. For the general rule, as articulated in Permanent Concrete Products, Inc. v. Teodoro,27 is that the determination of issues at a pre-trial conference bars the consideration of others on appeal. It should be pointed out, however, that the rationale for such preliminary, albeit mandatory, conference is to isolate as far as possible the trial out of the realm of surprises and back-handed maneuverings. And lest it be overlooked, the adverted rule on the procedure to be observed in pretrials is, as Bergano v. Court of Appeals28 teaches, citing Gicano v. Gegato,29 subject to exceptions. And without meaning to diminish the importance of the same rule, the Court is possessed with inherent power to suspend its own rules or to except a particular case from its operations whenever the demands of justice so require.30 Given the foregoing considerations, the rule to be generally observed in pre-trial conferences hardly poses an insurmountable obstacle to tackling the question of inalienability which, under the premises, is an issue more legal than factual. As it were, the element of surprise is not really present here. For the issue of inalienability, which is central to the Republics cause of action, was raised in its basic complaint, passed upon by the CA and, before it, by the trial court31 and of which at least one witness (Palad) was examined as follows: Q: Mr. Witness you stated that the parcel of land in question at the time of the land alleged sale was part of the [FBMR]. Now as part of the [FBRM] do you know whether the said parcel of land can be the subject of disposition? A: If it is part of the reservation it cannot be sold and it is already part of those government lands that has been assigned to other government agencies that is no longer within my jurisdiction. Meaning to say I have no more say on that because the proclamation to the effect was reserving this for particular purpose under the DND .32 (Words in bracket added.) At any rate, Palads testimony drew nary an objection from private respondent SHAI. It even crossexamined said witness.33 The rule obtains that the introduction of evidence bearing on an issue not

otherwise included in the pre-trial order amounts to implied consent conferring jurisdiction on the court to try such issue.34 Digressing from the procedural aspects of this case, we now consider the clashing assertions regarding the JUSMAG area. Was it, during the period material, alienable or inalienable, as the case may be, and, therefore, can or cannot be subject of a lawful private conveyance? Petitioner Republic, as do the intervenors, asserts the inalienable character of the JUSMAG area, the same having not effectively been separated from the military reservation and declared as alienable and disposable. The Republics and the intervenors parallel assertions are correct. The President, upon the recommendation of the Secretary of Environment and Natural Resources, may designate by proclamation any tract or tracts of land of the public domain as reservations for the use of the Republic or any of its branches, or for quasi-public uses or purposes.35 Such tract or tracts of land thus reserved shall be non-alienable and shall not be subject to sale or other disposition until again declared alienable.36 Consistent with the foregoing postulates, jurisprudence teaches that a military reservation, like the FBMR, or a part thereof is not open to private appropriation or disposition and, therefore, not registrable,37 unless it is in the meantime reclassified and declared as disposable and alienable public land.38 And until a given parcel of land is released from its classification as part of the military reservation zone and reclassified by law or by presidential proclamation as disposable and alienable, its status as part of a military reservation remains,39 even if incidentally it is devoted for a purpose other than as a military camp or for defense. So it must be here. There can be no quibbling that the JUSMAG area subject of the questioned October 30, 1991 sale formed part of the FBMR as originally established under Proclamation No. 423. And while private respondent SHAI would categorically say that the petitioner Republic had not presented evidence that "subject land is within military reservation,"40 and even dared to state that the JUSMAG area is the private property of the government and therefore removed from the concept of public domain per se,41 its own evidence themselves belie its posture. We start with its Exhibit "2" (petitioners Exh. "B"), a copy of TCT No. 15084, which described the area covered thereby measuring 399,922 square meters as a "portion of Parcel 3 of plan Psu-2031 situated in Jusmang (sic) area Fort Bonifacio." Complementing its Exhibit "2" is its Exhibit "1" - the deed of sale - which technically described the property purportedly being conveyed to private respondent SHAI as follows: A PARCEL OF LAND (Lot 3-Y-1, Psd-76067, being a portion of Parcel 3 of plan Psu-2031) situated in Jusmag (sic) area, Fort Bonifacio, Province of Rizal. Xxx (Emphasis added) As the Court distinctly notes, the disputed property, as described in private respondents Exhibits "1" and "2,"formed part of that wide expanse under Proclamation No. 423 which lists, as earlier stated, three (3) parcels of land of the public domain as falling within its coverage. These include, inter alia, the entire 15,912,684-square meter area constituting Parcel No. 3 of Plan Psu 2031 located inside the now renamed Fort Mckinley which, to a redundant point, was declared a military reservation. The Court has, on the issue of inalienability, taken stock of the Compilation Map of Approved Surveys Plan inside Parcels 1, 2, 3 and 4, of plan Psu 203142 prepared in September 1995 and certified by the Department of Environment and Natural Resources (DENR). It indicates in colored ink the outlines of Parcels 2, 3 and 4 covered by Proclamation No. 423. As there also shown, the 399,992-square meter area embraced by SHAIs TCT No. 15084, defined in the legend by red-

colored stripes, is within the violet-colored borders of Parcel No. 3 and Parcel No. 4 of Proclamation No. 423. Indubitably, the area covered by SHAIs TCT No. 15084 was and is still part of the FBMR, more particularly within the 15,912,684- square meter Parcel No. 3 of the reservation. The petitioner Republic, joined by the intervenors BCDA, DND and AFP in this appellate proceedings, has maintained all along this thesis. Towards discharging its burden of proving that the disputed property is part of the reservation, the petitioner Republic need only to demonstrate that all of the 15,912,684 square meters of Parcel No. 3 of Plan Psu 2031 have been reserved for military purposes. The evidence, however, of the fact of reservation is the law or, to be more precise, Proclamation No. 423 itself, the contents and issuance of which courts can and should take judicial notice of under Section 1, Rule 129 of the Rules of Court.43 The Republic has, since the filing of its underlying complaint, invoked Proclamation No. 423. In the process, it has invariably invited attention to the proclamations specific area coverage to prove the nullity of TCT No. 15084, inasmuch as the title embraced a reserved area considered inalienable, and hence, beyond the commerce of man. In this regard, the appellate court seemed to have glossed over, if not entirely turned a blind eye on, certain admissions made by the private respondent, the most basic being those made in its answer to the Republics allegations in paragraph 5 (e) and (g) of its complaint. To the Republics allegations that the property covered by TCT No. 15084 was and remains part the FBMR, SHAIs answer thereto reads: 2. It specifically denies the allegations in paragraphs 5 of the complaint, the truth of the matter being that in the Deed of Sale , the Director of Lands Certificate (sic) that he is "authorized under the law to sell" the subject property and that the "lots were duly awarded by the [LBM] to the vendee.44 ( Emphasis and word in bracket added.) In net effect, private respondent SHAI admitted what the petitioner Republic alleged in par. 5 (e) and (g) of the complaint, the formers denial to such allegations on the inalienable nature of the property covered by TCT No. 15084 being in the nature of a general denial. Under the rules on pleadings, a specific, not a general, denial is required; a denial is not specific because it is so qualified or termed "specific" by the pleader.45 The defendant must specify each material factual allegation the truth of which he absolutely denies and, whenever practicable, shall set forth the substance of the matters upon which he will rely to support his denial.46 Else, the denial will be regarded as general and will, therefore, be regarded as an admission of a given material fact/s stated in the complaint. What private respondent SHAI did under the premises was to enter what, under the Rules, is tantamount to a general denial of the Republics averments that what SHAIs TCT No. 15084 covers is part of the military reservation. In the process, private respondent SHAI is deemed to admit the reality of such averment. To be sure, the petitioner Republic, as plaintiff below, had more than sufficiently established its claim on the inalienability of the parcels of land covered by TCT No. 15084. In fine, it had discharged the burden of proof on the issue of inalienability. Be that as it may, the burden of evidence to disprove inalienability or, to be precise, that said parcels of land had, for settlement purposes, effectively been withdrawn from the reservation or excluded from the coverage of Proclamation No. 423, devolves upon the private respondent. This is as it should be for the cogency of SHAIs claim respecting the validity of both the underlying deed of sale (Exh. "A"/"1") and its TCT No. 15084 (Exh. "B"/"2") rests on the postulate that what it purportedly bought from the LMB had ceased to be part of the reserved lands of the public domain. Elsewise put, SHAI must prove that the JUSMAG area had been withdrawn from the reservation and declared open for disposition, failing which it has no enforceable right over the area as against the State.

Private respondent SHAI has definitely not met its burden by reason of lack of evidence. To be sure, it has not, because it cannot even if it wanted to, pointed to any presidential act specifically withdrawing the disputed parcels from the coverage of Proclamation No. 423. Worse still, its own Exhibit "5,"47 a letter dated March 19, 1991 of then PA Commanding General, M/Gen Lisandro Abadia, to one Mrs. Gabon, then President of the SHAI, cannot but be viewed as a partys judicial admission that the disputed land has yet to be excluded from the military reservation. The Abadia letter, with its feature dis-serving to private respondent SHAI, reads in part as follows: Dear Mrs. Gabon: This is in connection with your move to make a petition to President Aquino regarding the possible exclusion of Southside Housing Area from the military reservation and for its eventual allotment to the military officers presently residing thereat. Allow me to state that I interpose no objection . I find it helpful to our officers to be provided a portion of the Fort Bonifacio military reservation . (Underscoring added.) Owing to the foregoing considerations, the Court is hard put to understand how the CA could still have found for SHAI.. The appellate court, apparently swayed by what SHAI said in its Brief for the Appellees48 that: Appellant [petitioner Republic] is probably unaware that , then President Diosdado Macapagal issued Proclamation 461 when he excluded from the operation of Proclamation No. 423 an area of 2,455,810 square meters more or less. Likewise on October 16, 1987, then President Corazon Aquino issued Proclamation No. 172 excluding five (5) parcels of land from the operation of Proclamation No. 423 also located at Fort Bonifacio containing an area of 4,436, 478 . So if we deduct the 6,892,288 [2,455,810 + 4,436,478 = 6,892,288] square meters covered by Proclamation Nos. 461 and 172 of the areas reserved for military purposes of 7,053,143 square meters, what is only left is 160,857 square meters or more or less 16 hectares .49 justified its holding on the alienability of the disputed land with the following disquisition: The foregoing admission aside, appellants [now petitioners] reliance on Proclamation No. 493 [should be 423] in insisting that the land in litigation is inalienable because it is part of the [FBMR] is too general to merit serous consideration. While it is true that, under the said July 12, 1957 Proclamation, then President Carlos P. Garcia reserved the area now known as Fort Bonifacio for military purposes, appellee [now respondent] correctly calls our attention to the fact, among other matters, that numerous exceptions thereto had already been declared through the years. The excluded areas under Proclamation No. 461, dated September 29, 1965 and Proclamation No. 172, dated October 16, 1987 alone already total 6,892,338 square meters. (Figures in bracket added.) The CAs justifying line does not commend itself for concurrence. For one, it utilizes SHAIs misleading assertion as a springboard to justify speculative inferences. Per our count, Proclamation 423 reserved for military purposes roughly a total area of 25,875,000 square meters, not 7,053,143. On the other hand, Proclamation Nos. 461 and 172 excluded a combined area of 6,892,338 square meters. Now then, the jump from an acknowledgment of the disputed parcels of land having been reserved for military purposes to a rationalization that they must have been excluded from the reservation because 6,892,338 square meters had already been withdrawn from Proclamation 423 is simply speculative. Needless to stress, factual speculations do not make for proof.

Corollary to the first reason is the fact that private respondent SHAI - and quite understandably, the appellate court - had not pointed to any proclamation, or legislative act for that matter, segregating the property covered by TCT No. 15084 from the reservation and classifying the same as alienable and disposable lands of the public domain. To reiterate what we earlier said, lands of the public domain classified as a military reservation remains as such until, by presidential fiat or congressional act, the same is released from such classification and declared open to disposition.50 The October 30, 1991 Deed of Sale purportedly executed by Palad, assuming for the nonce its authenticity, could not plausibly be the requisite classifying medium converting the JUSMAG area into a disposable parcel. And private respondent SHAIs unyielding stance that would have the Republic in estoppel to question the transfer to it by the LMB Director of the JUSMAG area is unavailing. It should have realized that the Republic is not usually estopped by the mistake or error on the part of its officials or agents.51 Since the parcels of land in question allegedly sold to the private respondent are, or at least at the time of the supposed transaction were, still part of the FBMR, the purported sale is necessarily void ab initio. The Court can hypothetically concede, as a matter of fact, the withdrawal of the JUSMAG area from the ambit of Proclamation No. 423 and its reclassification as alienable and disposable lands of the public domain. Still, such hypothesis would not carry the day for private respondent SHAI. The reason therefor is basic: Article XII, Section 352 of the 1987 Constitution forbids private corporations from acquiring any kind of alienable land of the public domain, except through lease for a limited period. While Fr. Bernas had stated the observation that the reason for the ban is not very clear under existing jurisprudence,53 the fact remains that private corporations, like SHAI, are prohibited from purchasing or otherwise acquiring alienable public lands. Even if on the foregoing score alone, the Court could write finis to this disposition. An appropriate closure to this case could not be had, however, without delving to an extent on the issue of the validity of the October 30, 1991 Deed of Sale which necessarily involves the question of the authenticity of what appears to be Palads signature thereon. With the view we take of the case, the interplay of compelling circumstances and inferences deducible therefrom, would, as a package, cast doubt on the authenticity of such deed, if not support a conclusion that the deed is spurious. Consider: 1. Palad categorically declared that his said signature on the deed is a forgery. The Court perceives no reason why he should lie, albeit respondent states, without elaboration, that Palads declaration is aimed at avoiding "criminal prosecution".54 The NBI signature expert corroborated Palads allegation on forgery.55Respondent SHAIs expert witness from the PNP, however, disputes the NBIs findings. In net effect, both experts from the NBI and the PNP cancel each other out. 2. Palad signed the supposed deed of sale in Manila, possibly at the LMB office at Plaza Cervantes, Binondo. Even if he acted in an official capacity, Palad nonetheless proceeded on the same day to Pasig City to appear before the notarizing officer. The deed was then brought to the Rizal Registry and there stamped "Received" by the entry clerk. That same afternoon, or at 3:14 p.m. of October 30, 1991 to be precise, TCT No. 15084 was issued. In other words, the whole conveyance and registration process was done in less than a day. The very unusual dispatch is quite surprising. Stranger still is why a bureau head, while in the exercise of his functions as the bureaus authorized contracting officer, has to repair to another city just to have a deed notarized.

3. There is absolutely no record of the requisite public land application to purchase required under Section 89 of the Public Land Act.56 There is also no record of the deed of sale and of documents usually accompanying an application to purchase, inclusive of the investigation report and the property valuation. The Certification under the seal of the LMB bearing date November 24, 1994 and issued/signed by Alberto Recalde, OIC, Records Management Division of the LMB pursuant to a subpoena issued by the trial court57attest to this fact of absence of records. Atty. Alice B. Dayrit, then Chief, Land Utilization and Disposition Division, LMB, testified having personally looked at the bureau record book, but found no entry pertaining to SHAI.58 4. In its Answer as defendant a quo, respondent SHAI states that the "deed of sale specifically meritorious Official Receipt No. 6030203C dated 29 October 1991, (sic) as evidence of full payment of the agreed purchase price.." An official receipt (O.R.) is doubtless the best evidence to prove payment. While it kept referring to O.R. No. 6030203 as its evidence of the required payment,59 it failed to present and offer the receipt in evidence. A Certification under date September 15, 1993 of the OIC Cash Division, LMB, states that "OR # 6030203 in the amount of P11,977,000.00 supposedly paid by [SHAI] is not among the series of [ORs] issued at any time by the National Printing Office to the Cashier, LMB, Central Office."60 A copy of the OR receipt is not appended to any of the pleadings filed before the Court. We can thus validly presume that no such OR exists or, if it does, that its presentation would be adverse to SHAI. A contract of sale is void where the price, which appears in the document as paid has, in fact, never been paid.61 5. The purchase price was, according to the witnesses for SHAI, paid in full in cash to the cashier of the LMB the corresponding amount apparently coming in a mix of P500 and P100 denominations. Albeit plausible, SHAIs witnesses account taxes credulity to the limit. A final consideration in G.R. No. 156951. This case could not have come to pass without the participation of a cabal of cheats out to make a dishonest buck at the expense of the government and most likely the members of SHAI. No less than its former president (Ms. Virginia Santos) testified that a "facilitator" did, for a fee, the necessary paper and leg work before the LMB and the Registry of Deeds that led to the execution of the Deed of Sale and issuance of the certificate of title in question.62 Ms. Santos identified Eugenia Balis, a geodetic engineer, as the "facilitator"63 who "facilitated all these presentation" of documents,64 and most of the time, "directly transacted" with the LMB and the Register of Deeds leading to acquisition of title.65 Engr. Balis was, in the course of Ms. Santos testimony, directly mentioned by name for at least fifteen (15) times. Not surprisingly, Engr. Balis did not appear in court, despite SHAIs stated intention to present her as witness.66 The extent of the misappropriation of the Fort Bonifacio land involved in this and the NOVA area litigations is, as described in the Report of the FactFinding Commission,67 "so epic in scale as to make the overpricing of land complained of in the two hundred AFP [Retirement and Separation Benefits System] RSBS cases (P703 million) seem like petty shoplifting in comparison."68 The members of private respondent SHAI may very well have paid for what they might have been led to believe as the purchase price of the JUSMAG housing area. The sad reality, however, is that the over P11 Million they paid, if that be the case, for a piece of real estate contextually outside the commerce of man apparently fell into the wrong hands and did not enter the government coffers. Else, there must be some memorials of such payment. At bottom, this disposition is nothing more than restoring the petitioner Republic, and eventually the BCDA, to what rightfully belongs to it in law and in fact. There is nothing unjust to this approach.

With the foregoing disquisitions, the petition for contempt in G.R. No. 173408 need not detain us long. As it were, the question raised by the petitioners therein respecting the ownership of the JUSMAG area and, accordingly, of the right of the petitioning retired military officers to remain in the housing units each may be occupying is now moot and academic. However, contempt petitioners expressed revulsion over the efforts of the military establishment, particularly the AFP Chief of Staff, to oust them from their respective dwellings, if that really be the case, even before G.R. No. 156951 could be resolved, is understandable as it is justified. We thus end thisponencia with a reminder to all and sundry that might is not always right; that ours is still a government of laws and not of men, be they in the civilian or military sector. Accordingly, the Court will not treat lightly any attempt to trifle, intended or otherwise, with its processes and proceedings. A becoming respect to the majesty of the law and the prerogatives of the Court is a must for the orderly administration of justice to triumph. WHEREFORE, the petition in G.R. No. 156951 is GRANTED and the appealed CA Decision is REVERSED andSET ASIDE. Accordingly, the Deed of Sale dated October 30, 1991 (Exh. "A"/"1") purportedly executed in favor of private respondent SHAI and TCT No. 15084 (Exh. "B"/"2") of the Registry of Deeds of Rizal issued on the basis of such deed are declared VOID. The Register of Deeds of Pasig or Taguig, as the case may be, is hereby ordered to CANCEL TCT No. 15084 in the name of SHAI and the area covered thereby is DECLARED part of the Fort Bonifacio Military Reservation, unless the same has, in the interim, been duly excluded by law or proclamation from such reservation. Private respondent SHAI, its members, representatives and/or their assigns shall vacate the subject parcels of land immediately upon the finality of this decision, subject to the provisions of Republic Act No. 7227, otherwise known as the Bases Conversion and Development Act. Cost against the private respondent SHAI. Having said our piece in G.R. No. 173408, we need not speak any further thereon other than to deny as we hereby similarly DENY the same. SO ORDERED. G.R. No. 155058 September 26, 2006

PINAKAMASARAP CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, respondent. DECISION AUSTRIA-MARTINEZ, J.: The use of mere photocopies of certified true copies of judgments or orders subject matter of a petition renders that petition deficient and subject to dismissal. In order for such deficiencies to be corrected and the petition reinstated, there must be a showing of substantial and/or subsequent compliance with the requirements.1 Mere invocations of liberality, without more, will not do.2 For want of certified true copies of the assailed decisions and resolution and copies of material pleadings, the Petition for Certiorari in CA-G.R. SP No. 68894 entitled "Pinakamasarap Corp. v. National Labor Relations Commission, Malayang Samahan ng mga Manggagawa sa Balanced Foods, Inc., Jose Acebuche, et al." was dismissed by the Court of Appeals (CA) in a Resolution dated March 25, 20023 and the Motion for Reconsideration denied in its Resolution of September 3,

2002.4 These CA Resolutions are now being questioned in the Petition for Review on Certiorari before the Court. The facts are of record. Pinakamasarap Corporation (petitioner) filed with the National Labor Relations Commission (NLRC) two complaints for unfair labor practice docketed as NLRC NCR Case No. 00-04-02589-93 against Malayang Samahan ng Manggagawa sa Balanced Food and Nilo Letada, together with 14 other union officers and NLRC NCR Case No. 08-05251-935 against Malayang Samahan ng mga Manggagawa sa Balanced Food and Jose Acebuche, along with 90 other union members (private respondents). The parties in NLRC NCR Case No. 00-04-02589-93 went all the way to this Court where their petitions have been resolved with finality.6 It is only NLRC NCR Case No. 08-05251-93 which is involved in the present case. The Labor Arbiter (LA) in NLRC NCR Case No. 08-05251-937 issued a Decision dated August 18, 1998, the decretal portion of which reads: WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered declaring the subject strike to be illegal. The complainant's prayer for the decertification of the respondent union being outside of the jurisdiction of this Arbitration Branch may not be given due course. And finally, the claims for moral and exemplary damages for want of factual basis are dismissed. SO ORDERED.8 Private respondents appealed9 to the NLRC which, in a Decision dated November 29, 2001, modified the August 18, 1998 LA Decision, as follows: WHEREFORE, premises considered, the Decision appealed from is hereby MODIFIED in that complainant is directed to reinstate respondents named in the complaint to their former positions but without backwages. In the event that reinstatement is not feasible complainant company is directed to pay respondents separation pay at one (1/2) half month per year of service. SO ORDERED.10 Petitioner filed a Motion for Reconsideration11 which the NLRC denied in its January 15, 2002 Resolution.12 It then filed a Petition for Certiorari under Rule 65 with the CA.13 It attached to the Petition photocopies of the August 18, 1998 LA Decision,14 November 29, 2001 NLRC Decision,15 and January 15, 2002 NLRC Resolution.16 On the upper portion of page 9 of the Petition are markings indicating that counsel for private respondents, the NLRC and the Office of the Solicitor General recieved copies of the petition.17 On the lower portion is a verification signed by Domingo Tan and Armando Ampil as petitioner's General Manager and Legal Counsel, respectively.18 The CA dismissed the Petition in its March 25, 2002 Resolution, thus: It appearing that the attached copy of the assailed decisions and resolution are mere xeroxed copies, not certified true copies [as] required by Section 1 of Rule 65, 1997 Rules of

Civil Procedure, the instant petition is ordered DISMISSED (Cadayon v. Court of Appeals, 324 SCRA 619 [2000]); Baez v. Court of Appeals,270 SCRA 19 [1997]). Likewise, it also failed to append other materials pleadings, such as, the complaint, position papers and appeal memoranda submitted below. SO ORDERED.19 Petitioner filed a Motion for Reconsideration on the ground that its Annexes "A", "B" and "C" to the Petition are certified true copies and certified xerox copies of the assailed decision and resolution.20 As to the lack of copies of the pleadings, this omission was excusable because Annexes "A" and "B" already contain summaries of said pleadings.21 The CA denied the Motion for Reconsideration in its September 3, 2002 Resolution which reads: Contrary to petitioner's insistence in its Motion for Reconsideration dated April 19, 2002, the NLRC Decision dated November 29, 2001 and the NLRC Resolution dated January 15, 2002, attached to the petition, are not certified true copies but merely xeroxed copies, in violation of Section 1, par. 2, Rule 65 of the 1997 Rules of Civil Procedure, and a veritable ground for the dismissal of a petition for certiorari x x x. Moreover, petitioner's Motion for Reconsideration dated April 19, 2002 contains no written explanation why service copy thereof to the respondents was not done personally but thru registered mail, in violation of Section 11, Rule 13 of the same 1997 Rules and a cause to consider the paper as not filed. ACCORDINGLY, petitioner's aforesaid Motion for Reconsideration dated April 9, 2002, is DENIED. SO ORDERED.22 Unconvinced that its petition was deficient, petitioner filed the present Petition for Review, ascribing the following errors to the CA: Error I. The Supreme Court admits petitions [sic] which are "certified true copy" of the "judgment or final order or resolution certified by the clerk of the court a quo," the Court of Appeals which issue[s] "certified xerox copy" of its final orders and resolutions cannot, in justice and in law, dismiss Pina's petition semantically no different in reproduction and import from the Comission's "certified true copy" [sic]. Error II. Contrary to law and grave abuse of discretion [sic], the public respondent Commission condoned anarachy by imposing [sic] the private respondent to wreak havoc and chaos on the petitioner they already had damaged irreparably [sic].23 The petition is devoid of merit. There are strict requirements petitioner ought to have followed when it sought to avail of the extraordinary remedy of certiorari.24 It should have attached clearly legible duplicate original or certified true copy of the judgment, order, resolution, or ruling subject of the petition.25 There is a sound reason behind this policy and it is to ensure that the copy of the judgment or order sought to be reviewed is a faithful reproduction of the original so that the reviewing court would have a definitive basis in its determination of whether the court, body or tribunal which rendered the assailed

judgment or order committed grave abuse of discretion.26 Also, it should have appended photocopies of material portions of the record as are referred to in the assailed judgment or final order and other documents relevant or pertinent thereto27 unless a summary thereof can already be found in a document, a certified true copy of which is attached to the petition.28 By "duplicate original" and "certified true copy" we mean the following: 1. The "duplicate original copy" shall be understood to be that copy of the decision, judgment, resolution or order which is intended for and furnished to a party in the case or proceeding in the court or adjudicative body which rendered and issued the same. The "certified true copy" thereof shall be such other copy furnished to a party at his instance or in his behalf, duly authenticated by the authorized officers or representatives of the issuing entity as hereinbefore specified. 2. The duplicate original copy must be duly signed or initialed by the authorities or the corresponding officer or representative of the issuing entity, or shall at least bear the dry seal thereof or any other official indication of the authenticity and completeness of such copy. x x x 3. The certified true copy must further comply with all the regulations therefor of the issuing entity and it is the authenticated original of such certified true copy, and not a mere xerox copy thereof, which shall be utilized as an annex to the petition or other initiatory pleading.29 (Emphasis ours) Petitioner's Annexes "A", "B", and "C" to the Petition are neither duplicate original copies nor certified true copies of the LA Decision and assailed NLRC Decision and Resolution, respectively. While every page of said attachments bear the marking "certified true copy", it is readily apparent that these are not original authenticated copies but mere xerox copies of certified true copies. Petitioner argues that said attachments are not any different from the certified true copies of documents issued by the CA. But they are strikingly distinct. The certified true copies of CA documents attached to the present Petition are authenticated original copies of the certified true copies in that, while the contents of said documents have been merely imprinted on pieces of paper through a photocopying or duplicating process, said contents have been certified true and correct by the agency or officer having custody of the original copy of the documents and, more important, the certification and signature thereon are in original print and not merely photocopies thereof.30On the other hand, the attachments in question do not even come close. The contents of these attachments are mere photoprints of the documents they purport to represent. Not only that, the certifications and signatures of the certifying officer are all mere photoprints of the certifications and signatures they purport to represent. There is no question then that Annexes "A", "B" and "C" are mere xerox copies of certified true copies of the assailed NLRC Decision and Resolution. As the use of such xerox copies contravene paragraph 3 of Administrative Circular No. 3-96, it rendered the Petition insufficient in form.31 The CA committed no error in rejecting said attachments and dismissing the Petition. Petitioner, however, appeals for liberality. Petitioner does not deserve it. Liberality is not a mantra that, once chanted, will cast away all the infirmities of a petition. Invocation of liberality must be coupled with a showing that there has been a substantial or subsequent compliance with all the technical requirements32 or that it will serve the higher interest of justice that the petition be given due course and decided on the merits.33 Petitioner has not shown any earnest, even if belated, effort to comply. Instead, it has obstinately clung to the mistaken notion that its attachments were certified

true copies of the assailed NLRC Decision and Resolution. In its Motion for Reconsideration from the March 25, 2002 CA Resolution, petitioner made no effort to rectify its error by attaching the real certified true copies of the needed documents. Even in the present Petition, copies of the assailed NLRC Decision and Resolution petitioners attached are also xerox copies of the certified true copies thereof.34 There is no basis at all for us to suspend enforcement of the technical requirements of the Rules and allow its Petition.35 That said, we dispense with discussion on the second issue raised by petitioner as this delves into the merits of the case, the resolution of which requires precisely the attachments that were omitted from its Petition. WHEREFORE, the petition is hereby DENIED. Double costs against petitioner. SO ORDERED. G.R. No. 148852 September 27, 2006

MARILYN VALDECANTOS, petitioner, vs. PEOPLE OF THE PHILIPPINES and FERNANDO GOKIOCO, respondents. DECISION AUSTRIA-MARTINEZ, J.: Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by Marilyn Valdecantos (petitioner) assailing the Resolutions dated December 7, 20001 and June 22, 20012 of the Court of Appeals (CA) which dismissed herein petitioner's petition for review and denied her motion for reconsideration, respectively, issued in CA-G.R. CR No. 24645. Petitioner was charged in the Metropolitan Trial Court (MTC) of Caloocan City, Branch 49, with violation of BatasPambansa Bilang 22, docketed as Criminal Case No. C-178508. The Information reads: That on or about the 28th day of February, 1997 in Caloocan City, Metro Manila, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, did then and there willfully, unlawfully and feloniously made and issue Check No. 035539 dated February 28, 1997 in the amount of P13,100.00 drawn against UNION BANK, to apply for value in favor of FERNANDO GOKIOKO, well knowing at the time of issue that she/he had no sufficient funds in or credit with the drawee bank for the payment of such check in full presentment, which check was subsequently dishonored for insufficiency of funds or credit, had not said accused, without any valid reason, ordered the bank to stop the payment of said check, and with intent to defraud, failed and still fails to pay said FERNANDO GOKIOKO the amount of P13,100.00 despite receipt of notice from the drawee bank that said check had been dishonored and had not been paid. 3 Upon arraignment, petitioner entered a plea of not guilty. Trial thereafter ensued. On June 30, 1999, the MTC rendered its Decision,4 the dispositive portion of which reads:

WHEREFORE, after a careful consideration of the foregoing evidence, the Court finds accused Marilyn Valdecantos y Valmosea, GUILTY beyond reasonable doubt of the offense of issuing a worthless check defined and penalized in Batas Pambansa Blg. 22 and hereby sentences the said accused to a penalty of imprisonment of six (6) months and to pay a fine of twenty-six thousand pesos (P26,000.00) with subsidiary imprisonment in case of insolvency. Accused is further ordered to indemnify complainant Fernando Gokioko the amount of thirteen thousand one hundred pesos (P13,100.00) representing the amount of the dishonored check with interest thereon at the rate of 12% per annum starting February 28, 1997 until the amount is fully paid, to reimburse to the said complainant the amount of twenty-thousand pesos (P20,000.00) as and for attorney's fees and to pay the costs of this suit. 5 Petitioner appealed the decision to the Regional Trial Court (RTC), Caloocan City, docketed as Criminal Case No. C-58312 and raffled to Branch 126. The RTC affirmed the MTC in its Decision dated July 24, 2000;6 and denied petitioner's motion for reconsideration in its Order dated October 16, 2000.7 Dissatisfied, petitioner filed a petition for review with the CA on November 28, 2000, docketed as CA-G.R. CR No. 24645. On December 1, 2000, petitioner filed a "Submission of Verification and Certification Against Forum Shopping"8 attaching thereto the Verification and Certification signed by petitioner on November 27, 2000. On December 7, 2000, the CA issued the assailed Resolution dismissing the petition on the following grounds: (a) The Regional Trial Court was not furnished a copy thereof as required by Section 1, Rule 42 of the present Rules of Court; (b) It is not verified and failed to contain a non-forum shopping certification as mandated by Section 2, Rule 42, supra, and (c) Only the two (2) lower court's decision and order denying the motion for reconsideration are attached without the other pleadings and material portion of the records as would support the allegations of the petition, such as, the information, position papers and appeal memoranda of the parties filed below, as provided for in Section 2, Rule 42, supra. Section 3, Rule 42, same, considers the above omissions as sufficient grounds for the dismissal of the petition.9 Upon receipt of the CA Resolution on December 18, 2000, petitioner filed her Motion for Reconsideration stating that her counsel's failure to attach the verification and certification against forum shopping which she had already signed was due to inadvertence or oversight of the latter's secretary who forgot to attach the same to the petition; that three days after the filing of her petition with the CA, she filed on December 1, 2000 a "Submission of Verification and Certification Against Forum Shopping" where she had attached her verification and certification thereto. She likewise attached to her motion for reconsideration copies of the following documents: (a) Information in Criminal Case No. 178508; (b) Memorandum of petitioner's appeal in the RTC; (c) Memorandum of private respondent in the RTC; (d) Motion for Reconsideration of the decision of the RTC; (e) Opposition to the Motion for Reconsideration; (f) Transcript of Stenographic Notes of the testimony of Union Bank representative Ariel Puno taken on May 11, 1999; (g) Union Bank Check No. 035539

dated February 28, 1997 in the sum of P13,100.00; and the proof of service of a copy of her petition which she furnished the RTC on December 19, 2000. In a Resolution dated June 22, 2001, the CA denied petitioner's motion for reconsideration in this wise: xxx Petitioner seasonably submitted a Motion for Reconsideration claiming inadvertence and oversight of his secretary in failing to comply with the missing requirements and altogether attaching the pertinent documents including a verification and certification against forumshopping. It should be stressed, however, that failure to file a certificate of non-forum shopping is mandatory and failure to comply with this requirement cannot be excused by the fact that plaintiff is not guilty of forum shopping, and that subsequent compliance with the certification requirement on non-forum shopping cannot excuse a party' failure to comply in the first instance.10 Hence, the instant Petition for Review on Certiorari anchored on the following issues: 1) Whether or not the Court of Appeals erred in dismissing petitioner's petition despite the fact that petitioner has submitted all the required documents, and instead ignored and disregarded the clear and manifest errors in the decisions of the MTC and RTC in convicting the petitioner. 2) Whether or not, on the basis of the evidence presented in the MTC, the petitioner could be convicted of having violated BP 22.11 Petitioner reiterates her contentions raised in her motion for reconsideration filed before the CA. She also claims that it is the declared policy of the courts to afford every litigant amplest opportunity for determination of his case freed from constraints of technicalities. Petitioner likewise contend that although our jurisdiction is confined to questions of law, it may extend its hand to accord justice to petitioner considering that the decision of the MTC finding her guilty of BP 22 was not supported and was even contrary to the evidence on record. A Comment was filed by the Office of the Solicitor General praying for the dismissal of the petition. The parties submitted their respective Memoranda as required by the Court. Preliminarily, we find it necessary to give proper perspective to the instant petition. Originally filed as a petition for review on certiorari under Rule 45 of the Rules of Court, the same should be considered as a petition for certiorariunder Rule 65 of the Rules of Court as there is nothing to review on the merits due to its outright dismissal by the CA, for being insufficient in form and substance.12 Ordinarily, the proper recourse of an aggrieved party from a decision of the CA is a petition for review on certiorari under Rule 45 of the Rules of Court. However, if the error, subject of the recourse, is one of jurisdiction, or the act complained of was perpetrated by a court with grave abuse of discretion amounting to lack or excess of jurisdiction, the proper remedy available to the aggrieved party is a petition for certiorari under Rule 65 of the said Rules.13 Inasmuch as the present petition principally assails the dismissal of the petition on ground of procedural flaws involving the jurisdiction of the court a quo to entertain the petition, it falls within the ambit of a special civil action for certiorari under Rule 65 of the Rules of Court.14

The CA dismissed the petition for review due to petitioner's failure (1) to attach the required verification and the certification on non-forum shopping, (2) to furnish the RTC with a copy of the petition, and (3) to attach the pleadings and material portions of the records of the case pursuant to Sections 1, 2 and 3 of Rule 42 of the Rules of Court.15 The Court grants the petition. The requirement regarding verification of a pleading is formal, not jurisdictional.16 Such requirement is simply a condition affecting the form of pleading, the non-compliance of which does not necessarily render the pleading fatally defective.17 Verification is simply intended to secure an assurance that the allegations in the pleading are true and correct and not the product of the imagination or a matter of speculation, and that the pleading is filed in good faith.18 The court may order the correction of the pleading if verification is lacking or act on the pleading although it is not verified, if the attending circumstances are such that strict compliance with the rules may be dispensed with in order that the ends of justice may thereby be served.19 While the lack of certification against forum shopping is generally not cured by its submission after the filing of the petition, and the submission of a certificate against forum shopping is deemed obligatory, it is not jurisdictional.20Not being jurisdictional, the requirement has been relaxed under justifiable circumstances under the rule on substantial compliance. In Roadway Express v. CA,21 the Court considered as substantial compliance the filing of a certification against forum shopping 14 days before the dismissal of the petition for review. In the same case, the Court stated that: x x x If subsequent compliance, citing Sanchez vs. CA, G.R. 111255, February 7, 1994, First Division, Minute Resolution, with Circular 28-91, after a petition was dismissed for noncompliance was considered by the court as substantial compliance, citing Fajardo, Jr. vs. CA, G.R. 112558, en banc, Minute Resolution, with more reason should the petition for review be allowed in this case, in view of the compliance prior to the dismissal of the petition.22 In Uy v. Landbank,23 the Court dismissed Uy's petition for lack of verification and certification against non-forum shopping. However, the Court subsequently reinstated the petition after Uy submitted a motion to admit certification and non-forum shopping certification and justified the reinstatement. In this case, on December 1, 2000, three days after petitioner filed her petition for review on November 28, 2000, she immediately rectified her error by filing a "Submission of Verification and Certification Against Forum Shopping" attaching thereto her Verification and Certification. Significantly, such verification and certification was submitted even before the petition was dismissed by the CA on December 7, 2000. In addition, the Court notes that petitioner had appended a verification and certification against forum shopping in her motion for extension of time to file petition for review with the CA which further lends credence to her claim that indeed it was only due to inadvertence that she failed to submit the certification in her petition for review. These circumstances mitigate the oversight. It is in the interest of substantial justice that the subsequent filing of the verification and certification of non-forum shopping be considered as substantial compliance of the rule.

Petitioner likewise attached the missing pleadings and pertinent documents of the case when she filed her motion for reconsideration. Jurisprudence dictates that the subsequent and substantial compliance of a petitioner may call for the relaxation of the rules of procedure. In Cusi-Hernandez v. Diaz,24 Piglas-Kamao v. National Labor Relations Commission,25 Mendoza v. David,26 the Court ruled that the subsequent submission of the missing documents with the motion for reconsideration amounts to substantial compliance. The reasons behind the failure of the petitioners in these cases to comply with the required attachments were no longer scrutinized.27 Noteworthy in each case was the fact that the petitioners therein substantially complied with the formal requirements when they filed their motion for reconsideration.28 In Donato v. CA,29 the Court reversed the CA's dismissal of a petition on the grounds that the (a) certificate of non-forum shopping was signed by petitioner's counsel and not by petitioner himself; and (b) only a certified copy of the questioned decision was annexed to the petition. Petitioner filed a motion for reconsideration where he attached a certification of non-forum shopping duly signed by him as well as copies of the material portions of the records of the lower courts. On petitioner's failure to attach material portions of the records, the Court held: In like manner, the failure of the petitioner to comply with Section 3, paragraph b, Rule 6 of the RIRCA, that is, to append to his petition copies of the pleadings and other material portions of the records as would support the petition, does not justify the outright dismissal of the petition.It must be emphasized that the RIRCA gives the appellate court a certain leeway to require parties to submit additional documents as may be necessary in the interest of substantial justice. Under Section 3, paragraph d of Rule 3 of the RIRCA, the CA may require the parties to complete the annexes as the court deems necessary, and if the petition is given due course, the CA may require the elevation of a complete record of the case as provided for under Section 3(d)(5) of Rule 6 of the RIRCA. At any rate, petitioner attached copies of the pleadings and other material portions of the records below with his motion for reconsideration x x x. (Emphasis supplied)30 The same leniency should also be extended to petitioner considering that petitioner, one day after receipt of the CA Resolution dismissing her petition for review, immediately complied with the rules and submitted the relevant pleadings and documents with her motion for reconsideration. The Court also takes note of the fact that petitioner had furnished the RTC with a copy of the petition the following day after her receipt of the CA Resolution dismissing her petition. Thus, petitioner's substantial compliance with Sections 1 and 2, Rule 42 of the Rules of Court should have prompted the CA to reconsider the dismissal of the petition for review on technical grounds. In dismissing the petition, the CA clearly put a premium on technicalities at the expense of a just resolution of the case 31 which should be avoided. In the Cusi-Hernandez32 case, where the formal requirements and substantial compliance were liberally construed, the Court held: We must stress that cases should be determined on the merits, after full opportunity to all parties for ventilation of their causes and defenses, rather than on technicality or some procedural imperfections. In that way, the ends of justice would be served better. Moreover, the Court has held: "Dismissal of appeals purely on technical grounds is frowned upon and the rules of procedure ought not to be applied in a very rigid, technical sense, for they are

adopted to help secure, not override, substantial justice, and thereby defeat their very aims." Rules of procedure are mere tools designed to expedite the decision or resolution of cases and other matters pending in court. A strict and rigid application of rules that would result in technicalities that tend to frustrate rather than promote substantial justice must be avoided.33 Petitioner contends that the MTC and RTC erred in finding that Union Bank Check No. 035539 was not sufficiently funded on the date of its presentment and that the bank statement presented failed to establish that it was the same account of petitioner against which the check was to be drawn. Petitioner points out that the evidence showed that there was sufficient fund to cover the check upon presentment and that Account No. 007-31719-2 which was in petitioner as well as in Felimon and Lydia Valdecantos's names from which account the check was supposed to be drawn was only changed with a new account number, i.e., Account No. 074-000206-5; that these accounts are one and the same which had sufficient fund to cover the check upon presentment. Petitioner also avers that the burden of proof lies with the prosecution, thus it should be the prosecution which must prove that petitioner did not maintain sufficient fund or credit in her account to pay the check within ninety days from the date of the check which it failed to do. Furthermore, in her petition for review filed with the CA, petitioner contends that the trial court erred in finding that the sole ground for her stop payment order was the loss of the Lancer car and that respondent Gokioko had still demanded for the issuance of five additional checks in the total amount of P65,500.00 as additional payment for the car. The Court will not resolve these issues in the present petition for certiorari. The issues involved are factual issues which require the weighing of evidence that is best addressed to the CA in the petition for review filed before it. Thus, the case should be remanded to the CA for the just resolution of the substantive issues. WHEREFORE, the petition is GRANTED. The Resolutions dated December 7, 2000 and June 22, 2001 of the Court of Appeals are REVERSED and SET ASIDE. The case is REMANDED to the Court of Appeals for proper disposition. No costs. SO ORDERED. G.R. No. 167245 September 27, 2006

ELPIDIO S. UY, petitioner, vs. FIRST METRO INTEGRATED STEEL CORP. and HON. ANTONIO I. DE CASTRO, in his capacity as Presiding Judge, Regional Trial Court, National Capital Judicial Region, Branch 3, Manila, respondents. DECISION YNARES-SANTIAGO, J.: This petition for review under Rule 45 of the Rules of Court assails the Decision1 of the Court of Appeals in CA-G.R. SP No. 81046 dated August 27, 2004 dismissing petitioner Elpidio S. Uy's

petition for certiorari and its Resolution2 dated February 22, 2005 denying the motion for reconsideration. The facts show that on July 5, 1999, private respondent First Metro Integrated Steel Corporation (FMISC) filed a complaint for sum of money with prayer for writ of preliminary attachment against Robert Juan Uy (Robert), Midland Integrated Construction Company (MICC) and herein petitioner Elpidio Uy, with the Regional Trial Court of Manila, which was docketed as Civil Case No. 99-94408 and raffled to Branch 3.3 It is alleged that on June 3, 5 and 6, 1998, FMISC delivered to MICC, Robert and petitioner deformed steel bars valued at P695,811.00. On June 9, 1998, Robert allegedly delivered to FMISC Metrobank Check No. 042892 in the amount of P695,811.00 issued by petitioner as payment. However, the check was dishonored upon presentment and despite demands, MICC, Robert and petitioner refused to pay, hence the complaint. In their Answer with Counterclaim and Crossclaim, Robert and MICC alleged that they are strangers to the contract between FMISC and petitioner; that Robert merely referred petitioner to FMISC; that petitioner left his check in Robert's office which was picked up by FMISC's collector; and that the deformed steel bars were delivered to and received by petitioner's representatives as certified to by Paul Eldrich V. Uy, petitioner's son.4 Petitioner filed his Answer with Counterclaim5 claiming that he had no business transaction with FMISC; that he issued the check in favor of FMISC in the amount of P695,811,00 but since it was not intended as payment to FMISC, he stopped the payment thereof. Hearings were thereafter conducted for the reception of evidence of FMISC, Robert and MICC. The initial reception of petitioner's evidence was set on February 28, 20016 but it was cancelled because petitioner had influenza. The hearing was reset to April 26, 2001 and May 10, 20017 but was again cancelled and moved to October 25, 2001 and December 13, 2001. During the October 25, 2001 hearing, petitioner was represented by Atty. Lucas C. Carpio, Jr. who appeared as Atty. Molina's collaborating counsel.8 The hearing was cancelled and rescheduled to December 13, 2001. However, on December 10, 2001, Atty. Molina withdrew his appearance as petitioner's counsel with the latter's consent.9 On December 13, 2001, Atty. Danilo Baares entered his appearance and requested for a resetting on February 14 and 28, 200210 which was granted by the trial court. On February 14, 2002, Atty. Baares appeared but instead of presenting evidence for the petitioner, he requested for a postponement and resetting of the hearing.11 During the scheduled hearing on February 28, 2002, Atty. Baares arrived late. Upon motion of FMISC, the trial court ordered that petitioner's right to present evidence is deemed waived and the parties were directed to file their respective memorandum.12 The case was deemed submitted for decision on November 18, 2002.13 Atty. Baares withdrew his appearance on January 8, 2003 with petitioner's conformity.14 On March 7, 2003, the trial court rendered judgment,15 the dispositive portion of which reads as follows: WHEREFORE, judgment is hereby rendered in favor of plaintiff ordering defendant Elpidio Uy to pay the former:

a) the sum of P690,000 with interest thereon at 12% per annum from July 1998 until fully paid; b) the sum of P110,000.00 as attorney's fees which is 16% of the principal amount; and c) the costs of suit. Defendant Robert Uy's cross-claim is denied as it is now academic. The counterclaims of both defendants herein against plaintiff and against each other are denied for lack of merit. SO ORDERED.16 On April 4, 2003, petitioner received a copy of the Decision. On April 21, 2003, petitioner through Atty. Lucas C. Carpio, Jr. filed a Motion for New Trial17 on the ground of gross negligence of petitioner's counsel in failing to attend the hearing for the reception of evidence, thus impairing his rights to due process. The trial court denied the motion for new trial in an Order18 dated October 1, 2003. Dissatisfied, petitioner filed with the Court of Appeals a petition for certiorari which dismissed the petition in its assailed Decision dated August 27, 2004. It held that the trial court correctly denied the motion for new trial because it was filed out of time and that a petition for certiorari is not the proper remedy for the denial of a motion for new trial. Petitioner's motion for reconsideration was denied, hence, this recourse on the grounds that 1. The Seventeenth (17th) Division of the Court of Appeals gravely erred in denying due course to the Petition for Certiorari on technical grounds, that is, for the purported failure of the Petitioner to file with the Court a Quo his Motion for New Trial within the reglementary period to appeal and that the only remedy for the denial of the latter motion is by appealing from the Judgment or Final order and not through a Special Civil Action for Certiorari under Rule 65 of the Revised Rules of Civil Procedure.19 2. The former Seventeenth (17th) Division of the Court of Appeals gravely erred in not finding that the Public Respondent Judge committed grave abuse of discretion tantamount to lack or excess of jurisdiction when he issued the assailed Order dated October 1, 2003 denying Petitioner's Motion for New Trial.20 A scrutiny of the records discloses that while the Motion for New Trial was received by the trial court on April 28, 2003, the date on the Registry Receipt attached to the Affidavit of Service21 as well as that stamped on the envelope22 which contained the copy of the motion, reveals that it was filed and served by registered mail on April 21, 2003, a Monday, because April 19, 2003, the last day for filing the same was a Saturday. Section 1, Rule 22 of the Rules of Court states in no uncertain terms that if the last day of the period thus computed falls on a Saturday, a Sunday, or a legal holiday in the place where the court sits, the time shall not run until the next working day. Thus, the motion was actually filed on time it having been filed on April 21, 2003, the next working day, following the last day for filing which fell on a Saturday.

Section 9, Rule 37 of the Rules of Court which provides that the remedy to an order denying a motion for new trial is to appeal the judgment or final order, must be read in conjunction with Section 1, Rule 41 which provides that: SEC. 1. Subject of appeal. An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these rules to be appealable. No appeal may be taken from: (a) An order denying a motion for new trial or reconsideration; xxxx In all the above instances where the judgment or final order is not appeasable, the aggrieved party may file an appropriate special civil action under Rule 65. (Emphasis supplied) Thus, the filing by the petitioner of a petition for certiorari with the Court of Appeals from the denial of the motion for new trial by the trial court is proper. Notwthstanding the foregoing, we find that the trial court correctly denied petitioner's motion for new trial. Section 1, Rule 37 provides that a motion for new trial may be filed within the period for taking an appeal based on the following grounds: (a) Fraud, accident, mistake or excusable negligence which ordinary prudence could not have guarded against and by reason of which such aggrieved party has probably been impaired in his rights; or xxxx Negligence to be excusable must be one which ordinary diligence and prudence could not have guarded against.23 In the instant case, we find the negligence of petitioner's counsel in failing to attend the hearings for the reception of evidence inexcusable. The trial court scheduled the hearing for the reception of petitioner's evidence seven times. The initial hearing set on February 28, 2001 was cancelled because petitioner allegedly had influenza. The hearings scheduled on April 26, 2001 and May 10, 2001 were cancelled and moved to October 25, 2001 and December 13, 2001. Petitioner was represented by Atty. Carpio, Jr. as collaborating counsel during the hearing on October 25, 2001 but no evidence was presented. Instead, the hearing was cancelled. On December 13, 2001, Atty. Baares, petitioner's new counsel, appeared but he requested for a resetting. On February 14, 2002, Atty. Baares moved to postpone the hearing to February 28, 2002 as previously scheduled. On February 28, 2002, Atty. Baares arrived late. Scrutiny of the records disclose that the hearings were postponed or cancelled without any justification. However, the trial court accommodated the requests for postponement or resetting in order to accord petitioner due process. Under the circumstances, we find petitioner's counsel's

failure to attend the seven scheduled hearings without justifiable reason tantamount to inexcusable neglect. As such, it cannot be a ground for new trial. In addition, the Rule requires that motions for new trial founded on fraud, accident, mistake or excusable negligence must be accompanied by affidavits of merits, i.e., affidavits showing the facts (not mere conclusions or opinions) constituting the valid cause of action or defense which the movant may prove in case a new trial is granted, because a new trial would serve no purpose and would just waste the time of the court as well as the parties if the complaint is after all groundless or the defense is nil or ineffective.24 Under the Rules, the moving party must show that he has a meritorious defense. The facts constituting the movant's good and substantial defense, which he may prove if the petition were granted, must be shown in the affidavit which should accompany the motion for a new trial.25 We examined petitioner's Affidavit of Merit and find that it did not contain clear statements of the facts constituting a good and valid defense which he might prove if given the chance to introduce evidence. The allegations that he has a "meritorious defense"26 and a "good cause"27 are mere conclusions which did not provide the court with any basis for determining the nature and merit of the case. An affidavit of merit should state facts, and not mere opinion or conclusions of law.28 Petitioner's motion for new trial and affidavit of merit did not mention the evidence which he was prevented from introducing, nor did it allege that such evidence would change the outcome of the case. Petitioner's argument that his counsel's negligence was so gross that he was deprived of due process fails to impress. Gross negligence is not one of the grounds for a motion for a new trial. We cannot declare his counsel's negligence as gross as to liberate him from the effects of his failure to present countervailing evidence.29 In Air Philippines Corporation v. International Business Aviation Services, Phils., Inc.,30 we did not consider as gross negligence the counsel's resort to dilatory schemes, such as (1) the filing of at least three motions to extend the filing of petitioner's Answer; (2) his nonappearance during the scheduled pretrials; and (3) the failure to file petitioner's pretrial Brief, even after the filing of several Motions to extend the date for filing. Besides, we find that petitioner's and his counsel's negligence are concurrent. During the initial hearing for the reception of his evidence, petitioner was absent allegedly due to influenza. During the succeeding scheduled hearings, petitioner was absent but his lawyer, Atty. Molina, was present but did not present any evidence. Instead, motions for postponement or resetting were made. In one occasion, Atty. Molina was absent but Atty. Carpio, Jr. appeared as collaborating counsel. Still, no evidence was presented but a resetting was again requested. On December 13, 2001, petitioner hired Atty. Baares as his new counsel, and the hearings were set on February 14 and 28, 2002. For petitioner, thus, to feign and insist upon a lack of awareness of the progress of the case is to unmask a penchant for the ludicrous.31 When he hired the services of Atty. Baares, it is highly improbable that he was unaware of the stage of the proceedings. In keeping with the normal cause of events, he should have made the proper inquiries from his former counsel as to the status of the case. Incidentally, we find it interesting that Atty. Lucas C. Carpio, Jr. who assisted petitioner in the preparation of the motion for new trial, wherein he claimed that his former counsel was grossly negligent in defending his case, was petitioner's collaborating counsel and who appeared in his behalf during the October 25, 2001 hearing but likewise presented no evidence for the petitioner. Finally, petitioner's counsel's inexcusable neglect did not amount to petitioner's deprivation of due process of law. The right to due process safeguards the opportunity to be heard and to submit any

evidence one may have in support of his claim or defense. In the instant case, petitioner was given several opportunities to be heard and to submit evidence but he squandered them. Indeed, from lethargy is misfortune born.32 Blunders and mistakes in the conduct of the proceedings in the trial court as a result of the ignorance, inexperience or incompetence of counsel do not qualify as a ground for new trial. If such were to be admitted as valid reasons for re-opening cases, there would never be an end to litigation so long as a new counsel could be employed to allege and show that the prior counsel had not been sufficiently diligent, experienced or learned. This will put a premium on the willful and intentional commission of errors by counsel, with a view to securing new trials in the event of conviction,33 or an adverse decision, as in the instant case. WHEREFORE, the instant petition is DENIED for lack of merit. SO ORDERED. G.R. No. 148261 October 9, 2006

NENUCA A. VELEZ, petitioner, vs. SHANGRI-LA'S EDSA PLAZA HOTEL, TERRY KO, COEN MASSELINK and VANESSA SUATENGCO,respondents.

DECISION

GARCIA, J.: Challenged in this petition for review under Rule 45 of the Rules of Court is the Decision1 dated November 22, 2000 of the Court of Appeals (CA), as reiterated in its Resolution2 of May 18, 2001, granting the petition for certiorari of the herein respondents in CA-G.R. SP No. 58182, entitled Shangri-la's Edsa Plaza Hotel, Terry Ko, Coen Masselink, and Vanessa Suatengco v. National Labor Relations Commission and Nenuca A. Velez. The facts: Herein petitioner Nenuca A. Velez was employed by respondent Edsa Shangri-la Hotel (Hotel) as an Executive Housekeeper, the highest ranking executive of the Hotel's housekeeping department, from April 1, 1991 until her dismissal on July 20, 1995. As executive housekeeper, the petitioner directly supervised the work of three (3) assistant executive housekeepers and eleven (11) supervisors of the Hotel. On April 25, 1995, all the assistants and supervisors3 of the Hotels Housekeeping Department wrote a letter to the petitioner requesting for an audience with her to discuss some issues and problems regarding the working relationship within the Housekeeping Department.

To address the situation immediately, the Hotels General Manager Terry Ko, one of the herein respondents, met with the signatories of the letter and asked for their explanations. In that meeting, the staff freely expressed their fears and anxieties about their job security, allegedly on account of the petitioner's highhanded manner in dealing with them. The next day, respondent Ko, together with his co-respondent Coen Masselink, talked to the petitioner regarding the complaints of her assistants and supervisors. On that occasion, the petitioner asked the Hotel management that she be given a free hand on the matter but her request was declined. In the meantime and as agreed upon, the petitioner went on leave with pay. It was felt that the petitioner's absence while the matter was not yet settled was necessary because her presence not only evoked fear among the staff but also created tension among the employees in the Housekeeping Department. Meanwhile, during the petitioner's leave of absence, the assistants and supervisors of the Housekeeping Department submitted their respective individual written complaints to the management. Most of the complaints related to the petitioner's poor inter-personal relations with her staff. Each of the complaining employees narrated her/his own experiences with the petitioner including the latter's highhandedness, partiality, absence of dialogue, fault-finding and giving no recognition. They claimed that these and other recurring problems had resulted in the demoralization of the supervisors. In a letter4 dated May 17, 1995, respondent Ko required the petitioner to explain her side and provided her with the staff's individual complaints. In his letter, Ko expressed to the petitioner his desire to see the problem resolved. In part, the letter reads: You will note from the letters of the supervisors that their complaints fall into six (6) general categories: (a) your failure or inability to maintain close and open communications with them, collectively and individually; (b) your methods allow an atmosphere of fear to prevail among the group; (c) your partiality in the treatment and appraisal of your staff; (d) your failure or inability to involve yourself in the day to day work problems of your staff; (e) your frequent emphasis on fault, and ignoring merit; and (f) your methods of criticism have undermined the respect and credibility of your supervisors, among their subordinates and with each other. As you know, the Housekeeping Department is one of the most important groups in the Hotel because its work immediately creates an impression on hotel guests. The guest gets its lasting impression of the Hotel from the room he occupies which the Housekeeping Department maintains. It is important, therefore, that the Housekeeping staff's morale is kept high by good management and excellent teamwork among its members. It is with these in mind that I ask you to give me your comments and explanation on the attached letters. As it is important that we resolve this problem as soon as possible, I ask that I have your written comment not later than Friday, May 26, 1995. Instead of submitting the desired comment, the petitioner, through counsel, requested for a formal written notice stating the particular acts or omissions for which she was being charged.5 On June 14, 1995, Ko again wrote6 the petitioner, this time specifying the following acts or omissions which the latter should answer and explain not later than June 22, 1995: a) failure or inability to communicate with them [i.e., the staff] collectively and individually, resulting in long existing problems being left unsolved;

b) your arbitrary method of management instills fear in all your subordinates, intimidating them and arousing their indifference if not hostility; c) you have shown partiality in the evaluation and treatment of your subordinates; d) daily, you always keep to your office for the most part of the day, thus isolating yourself from the work problems of your subordinates; e) in criticizing the work of your subordinates, you focus on fault, no matter how minor, and ignore merit; f) you publicly shout at and humiliate them, sometimes using foul words; g) you have abused your authority by requiring contract workers assigned to the hotel, to work at your residence. You threaten subordinates who displease you with immediate termination or use others to pressure them to resign; you also use your authority to reshuffle your subordinates, to punish them; h) unauthorized removal of hotel property (vacuum cleaner) from the hotel's premises for personal use. On June 20, 1995, the petitioner, again through counsel, reiterated her earlier request that the charges against her be described and delineated with sufficient definiteness or particularity so that she or her counsel could properly respond thereto.7 In another letter8 to the petitioner, Ko reiterated that she should submit her comment and/or explanation on the complaint not later than July 5, 1995 and set the investigation on July 6, 1995, at 2 oclock p.m. However, no reply thereto was submitted by the petitioner. During the investigation of July 6, 1995, the petitioner, with her counsel, appeared only to inform the investigating committee that the individual complaints furnished her by Ko, as well as Kos letters to her, were vague. Petitioner did not participate in the investigation proceedings. Notwithstanding the parties' disagreement on the alleged particularity of the charges and the nonparticipation of the petitioner in the fact-finding investigation, the committee proceeded and came out with the following infractions9 committed by the petitioner: 1. Causing dissatisfaction among her staff as a result of her autocratic management style. 2. Violating some important provisions of the Hotel's Code of Conduct, to wit: Section 19. Use of Company Time Premises, etc., for Personal Benefit: Using company time, premises, vehicles, tools, equipment or materials for personal benefit. Section 20. Unauthorized Possession of Company Property: Unauthorized possession or use of any company, employee or guest property, hotel supplies. 3. Violating, on the basis of the testimonies of her staff, the following provisions of the Hotel's Code of Conduct:

Section 4. Special Treatment or Privilege/ Bribery: Bribery in any form or manner; soliciting or demanding anything of value in exchange for or in consideration of any act, decision or service connected with the performance of the employee's duties or functions. Section 5. Borrowing, Accepting Money or Soliciting Material favors from supplier/ customers: Borrowing or accepting money, gifts, commission, offers of promises or soliciting material favors from suppliers or customers with which the Company has a business relationship for his own personal benefits. Section 13. Kickbacks: Entering into arrangements with suppliers, customers or guests to certain kickbacks or other preferential treatment. On the basis of the foregoing, the Hotel management terminated petitioner's employment due to "loss of confidence" effective July 16, 1995. On July 31, 1995, the petitioner filed with the Arbitration Branch of the National Labor Relations Commission (NLRC), a complaint for illegal dismissal against the respondents. On January 29, 1998, the Labor Arbiter dismissed the complaint for lack of merit. The Labor Arbiter found that the charges against the petitioner, which include misconduct, are serious and involve violation of the rules and regulations of the respondent Hotel. He added that the petitioner's refusal to give any explanation regarding the charges despite opportunities given her, could have only strengthened the respondent Hotel's distrust on the petitioner's competency and integrity as manager of its Housekeeping Department, compelling the Hotel to dismiss her. On petitioners appeal to the NLRC, the latter, in a decision dated April 13, 1999, granted the appeal and reversed the Labor Arbiter, ruling that the petitioners dismissal is illegal, and accordingly rendered judgment as follows: WHEREFORE, in the light of the foregoing discussion, the appeal is hereby granted. Consequently, the decision appealed from is ordered Reversed and Set Aside and a new one entered finding complainant's [petitioner's] dismissal illegal. Accordingly, respondents are ordered to pay complainant backwages from the time of her dismissal up to the promulgation of this judgment. Complainant is likewise entitled to separation pay in lieu of reinstatement at the rate of one month salary for every year of service, a fraction of month is considered one whole year. Lastly, moral and exemplary damages are ordered awarded to complainant in the amount of P200,000.00 and P100,000.00 respectively. Ten percent of the total monetary award is for attorney's fess recoverable by complainant. (Word in bracket supplied.) SO ORDERED. Both parties moved for reconsideration. In its resolution of January 31, 2000, the NLRC granted the petitioners partial motion for reconsideration and denied that of the respondents.

Imputing grave abuse of discretion on the part of the NLRC, the respondents went on certiorari to the CA in CA-G.R. SP No. 58182, raising the argument that the NLRC made no findings of facts from which it based its decision. Giving due course to the petition, the CA, in its decision10 of November 22, 2000, ultimately affirmed in toto the decision of the Labor Arbiter and ordered that the writ of preliminary injunction it issued on June 29, 2000 be made permanent, thus: WHEREFORE, the petition is given due course. The assailed decision of the NLRC is hereby set aside as well as the Resolution dated January 31, 2000. The decision of the Labor Arbiter is affirmed in toto. The Writ of Preliminary Injunction issued on June 29, 2000 is made permanent. Explains the CA in its reversal action: A reading of the public respondent's decision reveals that it just copied in toto the allegations of [petitioner] Velez' complaint, then followed by the finding that there has been "insufficient evidence to warrant the charge of loss of confidence." However, respondent Commission failed to state profoundly why it concluded that the evidence is insufficient, and why the statement of facts as narrated by the [petitioner] prevailed over the finding of facts of the Labor Arbiter. In trying to be very brief in resolving the appeal, the Commission completely disregarded the evidence presented to and appreciated by the Labor Arbiter. In so doing, the Commission failed to abide by the jurisprudence laid down by the Supreme Court . xxx xxx xxx The Commission's decision is bereft of support from the records. It reversed the decision of the Labor Arbiter without stating the reason therefor, without explanation whatever as to why the Arbiter's evidentiary findings were not worthy of credit. (Words in brackets supplied.) Hence, this appeal by the petitioner raising the following issues: (1) whether or not the CA erred in granting the respondents petition in CA-G.R. SP No. 58182 despite the fact that only three of the numerous pleadings, affidavits, documentary evidence and other supporting papers were attached to the said petition; and (2) whether or not the respondent Hotel illegally dismissed the petitioner. We AFFIRM. Petitioner bewails the appellate courts refusal to dismiss the respondents petition for certiorari in CA-G.R. SP No. 58182 on the ground that the petition is fatally defective as it was not accompanied by copies of all the pleadings and documents relevant and pertinent thereto, in contravention of Section 1, Rule 65 of the Rules of Court. We are not persuaded. Acceptance of a petition for certiorari as well as the grant of due course thereto are addressed to the sound discretion of a court. The court discerns whether, on the basis of what has been submitted, it could already judiciously determine the merits of the petition. Section 1, Rule 6511 of the Rules of

Court, in relation to Section 3, Rule 46, of the same Rules, does not specify the precise documents, pleadings or parts of the records that should be appended to a certiorari petition other than the judgment, final order, or resolution being assailed. The Rules only states that such documents, pleadings or records should be relevant or pertinent to the assailed resolution, judgment or order. In the petition for certiorari filed by the respondents with the CA, the decisions of the Labor Arbiter as well as that of the NLRC, and the latters resolution denying their motion for reconsideration were duly annexed. The Labor Arbiter summarized and discussed in his decision the material allegations embodied in the position papers of both parties. We see no reason, then, to disturb the appellate court's determination that the copies of the decisions and resolution attached to the petition in CAG.R. SP No. 58182 were sufficient to make out a prima facie case. This brings us to the more important issue of whether the petitioner was illegally dismissed. For a dismissal to be valid, two requisites must concur, namely: (a) the dismissal must be for any of the causes stated in Article 28212 of the Labor Code; and (b) the employee must have been accorded due process, basic of which is the opportunity to be heard and to defend himself.13 Simply put, an employer can terminate the services of an employee for just and valid causes, which must be supported by clear and convincing evidence, and with due process, meaning that the employee must be given notice with adequate opportunity to be heard before he is notified of his actual dismissal for cause. All were complied with by the respondents in this case. Petitioner insists, however, that she was dismissed from employment not for a just and valid cause and without due process of law. She contends that the accusation of dishonesty (when she brought a vacuum cleaner out of the Hotel's premises and utilized the services of the Hotel contract employees to work in her house without the knowledge of the Hotel) is wholly unsupported by the established facts. Paragraph (c) of Article 282 of the Labor Code provides that an employer may terminate an employment for fraud or willful breach by the employee of the trust reposed in him by his employer or the latters duly authorized representative. A breach is willful if done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. In China City Restaurant Corporation v. NLRC,14 the Court came up with the following guidelines for the application of the doctrine of loss of confidence: (a) the loss of confidence should not be simulated; (b) it should not be used as a subterfuge for causes which are improper, illegal or unjustified; (c) it should not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (d) it must be genuine, not a mere afterthought to justify an earlier action taken in bad faith. In Sulpicio Lines, Inc. v. Gulde,15 the Court emphasized that loss of trust and confidence, as a just cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust and confidence. As such, he must be invested with confidence on delicate matters, such as the custody, handling or care and protection of the property and assets of the employer. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to work for the employer.

Recent decisions of this Court have distinguished the treatment of managerial employees from that of the rank-and-file personnel, insofar as the application of the doctrine of loss of trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence, as ground for valid dismissal, requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal.16 Hence, in the case of managerial employees, proof beyond reasonable doubt is not required, albeit the evidence must be substantial and must establish clearly and convincingly the facts on which the loss of confidence rests and not on the employer's arbitrariness, whims and caprices or suspicion, otherwise the employee would eternally remain at the mercy of the employer.17 Here, the petitioner is not an ordinary rank-and-file employee. For sure, she held the position of an Executive Housekeeper, the highest ranking executive of the Housekeeping Department of the respondent Hotel. Hers is a position of responsibility which demands of her that she manage, control and take responsibility over activities in her department. As such, the petitioner is tasked to perform key and sensitive functions, which call for and bind her to more exacting work ethics.18 As explained by respondent Ko in his letter of May 17, 1995 to the petitioner: the Housekeeping Department is one of the most important groups in the Hotel because its work immediately creates an impression on hotel guests. The guest gets its lasting impression of the Hotel from the room he occupies which the Housekeeping Department maintains. It is important, therefore, that the Housekeeping staff's morale is kept high by good management and excellent teamwork among its members. Doubtless, petitioners sensitive position requires the full trust and confidence of her employer in every exercise of managerial discretion insofar as the conduct of her employer's business is concerned. Breaching that trust and confidence warrants dismissal from the service. We thus agree with the findings of the Labor Arbiter, as affirmed by the appellate court, that the petitioner betrayed the trust and confidence reposed on and expected of her when she brought home the Hotels vacuum cleaner and personally utilized the services of the Hotel's contract employees to work in her house without the knowledge of her employer, in violation of the Hotel's Code of Conduct. We quote with approval what the Labor Arbiter said in its decision:19 The second ground which respondent hotel used as basis for its loss of confidence in the complainant [petitioner] was her taking out of the hotel, without any authority, a vacuum cleaner belonging to the hotel, and using it in her house. She returned it to the hotel only after six months, when her subordinates filed their written complaint. Complainant [petitioner] did not deny the charge regarding the vacuum cleaner and she even admitted it in writing and under oath. This she did in her answers (Exhibit "8-A" and Exhibit "9-A") to respondent's request for admission (Exhibit "8"), their written interrogatories (Exhibit "9") and their request for stipulation (Exhibit "9-B"). The complainant's [petitioner's] own admission of the second charge provides enough basis for respondents' loss of confidence in complainant [petitioner]. Complainants [petitioners] use of the vacuum cleaner without authority violated her employers Code of Conduct (Exhibit "F"). Section 19 and Section 20 punishes with dismissal the following acts of dishonesty by an employee: Section 19. Use of Company Time Premises, etc., for Personal Benefit: Using company time, premises, vehicles, tools, equipment or materials for personal benefit. Section 20. Unauthorized Possession of Company Property: Unauthorized possession or use of any company, employee or guest property, hotel supplies. xxx xxx xxx

Respondents Hotels third ground for its loss of confidence in the complainant [petitioner] is the charge, also found in the written complaints of one of her subordinates, that she required employees of the hotels labor contractor, M.S. Ignacio, to clean her house and its surroundings. Respondents' evidence is that as Executive Housekeeper, complainant [petitioner] had the power to accept or reject any employee of the contractor to be assigned to the Hotel. Complainant admitted that she had this "personal arrangement" with the hotel labor contractor to assign workers to work at her house. Her husband, Mr. Jose R. Velez, who testified for her at hearing of the case, corroborated her admission. He likewise admitted that complainant [petitioner] did not pay M.S Ignacio for the work of his employees. According to Mr. Velez, these employees worked not only on weekends but also on weekdays whenever they did not have to work at the respondent hotel. The arrangement stopped only when a complaint was filed against complainant [petitioner]. After that, the couple hired regular maids to work at their house. The third described above is likewise not denied but even admitted. As in the previous charges, it provides basis for respondent Hotels loss of confidence in complainant [petitioner]. Complainants [petitioner's] arrangement with the hotels contractor violates its Code of Conduct. Section 4, 5 and 13 of the Code punish with dismissal the following act: Section 4. Special Treatment or Privilege/Bribery: Bribery in any form or manner; soliciting or demanding anything of value in exchange for or in consideration of any act, decision or service connected with the performance of the employee's duties or functions. Section 5. Borrowing, Accepting Money or Soliciting Material favors from supplier/customers: Borrowing or accepting money, gifts, commission, offers of promises or soliciting material favors from suppliers or customers with which the Company has a business relationship for his own personal benefits. Section 13. Kickbacks: Entering into arrangements with suppliers, customers or guests to certain kickbacks or other preferential treatment. The third substantial charge against her, that she used employees of a labor contractor of the hotel, to clean her house on a regular basis, is another case of misconduct. Considering her authority to accept or reject any employee of the contractor the latter may assign to the hotel, these workers assigned to her house clearly had no choice but to accept the assignment, despite the additional burden and the little pay. The free labor admittedly received by the complainant [petitioner] from the labor contractor of the respondent hotel, clearly violates the above-quoted provisions of the Code of Conduct. The lame excuse of the complainant [petitioner] that she can properly observe the manner of their work fails to persuade this Arbitration Branch. Equally unpersuasive is the petitioner's assertion that the charges against her were not supported by substantial evidence. We note that the Labor Arbiter used every reasonable means to ascertain the facts by giving the parties ample opportunity to present their respective causes. They were given the opportunity to file their respective position papers, affidavits and other documents. Regrettably, the petitioner failed to categorically refute any of the charges leveled against her but even admitted her misconduct. Undeniably, the acts committed by the petitioner adversely reflected on her competence and integrity, sufficient enough for her employer to lose trust and confidence in her. Nor can there be any procedural infirmity that could have attended the petitioners dismissal. Due notice and hearing were given her. The records clearly show that the petitioner was given ample

opportunity to explain and defend herself. But instead of availing of that right, the petitioner ignored the directives given her and chose to remain silent on the charges against her. Evidence shows that she was properly notified of the charges against her through the May 17, 1995 letter to her of respondent Ko, requiring her to explain her side and even provided her with the staff's individual complaints. This was followed by Kos letter of June 14, 1995 whereunder were specified the acts and omissions which the petitioner was required to answer and explain. And even as she appeared at the investigating committees hearing on July 6, 1995, she did not take part and merely satisfied herself by informing the committee that she could not answer the complaints as they were not specific. That hearing could have been her chance to clarify all matters but she purposely ignored it until eventually, she was notified of her dismissal. If this is not due process, then the petitioner is completely wrong. It cannot be overemphasized that there is no substitute for honesty for sensitive positions which call for utmost trust. Fairness dictates that the respondent Hotel should not be allowed to continue, under its, employ the petitioner who has breached the confidence reposed on her. Unlike other just causes for dismissal, trust in an employee, once lost, is difficult, if not impossible, to regain. Respondent Hotel has every right to dismiss the petitioner as a measure of self-preservation against acts patently inimical to its interests. With the reality that the petitioner was not illegally dismissed, she is not entitled to backwages. Backwages may be granted only when there is a finding that the dismissal is illegal.20 IN VIEW WHEREOF, the challenged Decision dated November 22, 2000 and Resolution dated May 18, 2001 of the CA are AFFIRMED. Costs against the petitioner. SO ORDERED. G.R. No. 150642 October 23, 2006

BENJAMIN G. NAVALTA, petitioner, vs. MARCELO S. MULI, respondent.

DECISION

SANDOVAL-GUTIERREZ, J.: For our resolution is the Petition for Review on Certiorari1 assailing the twin Resolutions2 dated July 30, 2001 and October 18, 2001 of the Court of Appeals in CA-G.R. SP No. 65789, entitled "Benjamin G. Navalta, petitioner, versus Marcelo S. Muli, respondent." The facts are:

On October 21, 1997, a contract entitled "Deed of Sale Under Pacto de Retro"3 was executed by Marcelo S. Muli, respondent, and Benjamin Navalta, petitioner. The contract provides that respondent is the registered owner and occupant of a two-fourth (2/4) portion of a parcel of land consisting of 144.40 square meters located at 439-G Herbosa Street, Tondo, Manila, covered by Transfer Certificate of Title (TCT) No. 216508 of the Registry of Deeds of Manila;4 that for a consideration of P325,000.00, respondent agrees to sell to petitioner his 2/4 portion of land together with the house and improvements thereon; that respondent reserves the right to repurchase the subject property for the same price within six (6) months from execution of the contract, or until April 21, 1998; and that should respondent fail to exercise such right, the sale shall become absolute and irrevocable. Respondent failed to repurchase the property within the stipulated period. Thus, on June 27, 1998, petitioner sent a demand letter to respondent asking him to vacate the property within ten (10) days from notice. However, respondent ignored the demand letter. Instead, respondent, on July 29, 1998, filed with the Regional Trial Court (RTC), Branch 14, Manila, a complaint for annulment of the contract against petitioner, docketed as Civil Case No. 98-89928. The complaint is mainly anchored on respondent's allegation that although the contract is entitled "Deed of Sale Under Pacto de Retro," what was really agreed upon by the parties was an "equitable mortgage in accordance with Articles 1602, 1603 and 1365 of the Civil Code."5 For his part, petitioner, on February 11, 1999, filed with the Metropolitan Trial Court (MeTC), Branch 6, Manila, a complaint6 for unlawful detainer against respondent, docketed as Civil Case No. 162403-CV. Petitioner alleged that respondent has no more right to continue occupying the subject property since he failed to repurchase the same within the period stipulated in the contract; and that despite demand, respondent refused to vacate the premises. In his answer,7 respondent averred that the complaint is premature as there is an action for annulment of the contract (Civil Case No. 98-89928) pending before the RTC involving the same parties and the same property. Thus, he prayed for the dismissal of the complaint. On May 26, 1999, the MeTC rendered a Decision8 in favor of the petitioner, thus: WHEREFORE, premises considered, judgment on the merits is hereby rendered for the plaintiff [Benjamin Navalta] as follows: 1. Ordering the defendant [Marcelo Muli] and all persons claiming rights of possession under him to voluntarily vacate the subject premises at No. 439 G Herbosa Street, Tondo, Manila and surrender the same to him; 2. Ordering the defendant to pay plaintiff the sum of P4,000.00 a month from May 1998 as reasonable compensation for use and occupation of the subject lot until fully vacated; 3. Ordering the defendant to pay plaintiff the sum of P5,000.00 as and for attorney's fees, plus costs of suit. SO ORDERED." The MeTC held:

"As the court notes that defendant had not controverted any of the allegations by the plaintiff, such as the termination of their contract, the receipt of the demand letter, and the referral to the Barangay [for conciliation], this court is disposed to order the ejectment of the defendant from the premises. Since, the plaintiff is now the new owner of the subject premises as evidenced by the Deed of Sale [Under Pacto de Retro], the defendant's continued occupancy is deemed to be on the plaintiff's tolerance which is terminable upon notice, which the latter did when he sent the demand letter. As provided in the case of Banco de Oro Savings and Mortgage Bank v. CA (182 SCRA 464): A person who occupies the land of another at the latter's tolerance or permission without any contract between them, is based on an implied promise that he will vacate upon demand, failing which a summary action for ejectment is the proper remedy against him. Further, an action for unlawful detainer may be filed when possession by the landlord, vendor, vendee or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied (Dela Paz v. Paniz, 245 SCRA 242), which in this case is the expiration of the right to repurchase the land. Also, the defendant's contention that there is still a pending annulment case at the RTC involving the subject premises is wholly unmeritorious. As held by the Supreme Court in numerous cases, the issue of ejectment is the right to physical possession of the premises or possession de facto (Del Rosario v. CA, 241 SCRA 519; De Luna v. CA, 221 SCRA 703). Upon appeal by respondent, the RTC, Branch 8, Manila, rendered a Decision9 reversing the MeTC Decision, holding that respondent could not sell his 2/4 share since the property has not yet been partitioned between him and his co-heirs. Thus, petitioner "cannot as yet exercise any possessory right over any specific part of the property covered by TCT No. 216508. The pertinent law provides that only those persons who have been deprived of possession of any land or building may institute ejectment proceedings (Sec. 1, Rule 70, Rules of Court)." Petitioner filed a Motion for Reconsideration10 contending that the RTC violated his right to due process since the issue of whether the questioned property is owned in common by respondent and his co-heirs was never raised by the parties in their pleadings. However, the RTC denied the motion in its Order11 dated July 11, 2001, reiterating that until there is a partition of the inherited property, petitioner cannot as yet exercise any possessory right over any specific portion of it. Petitioner then filed with the Court of Appeals a Petition for Review, under Rule 42 of the 1997 Rules of Civil Procedure, as amended, docketed as CA-G.R. SP No. 65789. On July 30, 2001, the appellate court issued a Resolution, now being assailed, dismissing the petition on the ground that the only documents attached thereto are the certified true copies of the Decisions of the MeTC and RTC, petitioner's motion for reconsideration of the RTC Decision, and the RTC Order denying the said motion. The Court of Appeals ruled that since Section 2, Rule 42 of the 1997 Rules of Civil Procedure, as amended, requires inter alia that the petition shall be accompanied byother papers that would support the allegations thereof, petitioner should have also attached to his petition "the complaint, answer, position papers and appeal memoranda of the parties."

Petitioner moved for a reconsideration12 contending that the documents and papers he attached to his petition are sufficient to support the allegations therein. Nonetheless, he attached to his motion the complaint, answer, reply to the answer, the position papers and memoranda of the parties, and prayed that in the interest of justice, his petition be reinstated. But the Court of Appeals, in a Resolution dated October 18, 2001, still denied his motion. Hence, the instant Petition for Review on Certiorari. Petitioner contends in the main that the Court of Appeals erred in not considering his submission of the additional copies of pleadings and papers as substantial compliance with the requirements under Rule 42. Respondent, in his Comment, prays for the dismissal of the petition for being unmeritorious. The sole issue here is whether the Court of Appeals erred in dismissing the petition in CA-G.R. SP No. 65789. Section 2 of Rule 42 requires that the petition for review shall be accompanied by copies of the pleadings and other material portions of the record as would support the allegations of the petition. Section 2 provides: Section 2. Form and contents. The petition shall be filed in seven (7) legible copies, with the original copy intended for the court being indicated as such by the petition, and shall (a) state the full names of the parties to the case, without impleading the lower courts or judges thereof either as petitioners or respondents; (b) indicate the specific material dates showing that it was filed on time; (c) set forth concisely a statement of the matters involved, the issues raised, the specification of errors of fact or law, or both, allegedly committed by the Regional Trial Court, and the reasons or arguments relied upon for the allowance of the appeal; (d) be accompanied by clearly legible duplicate originals or true copies of the judgments or final orders of both lower courts, certified correct by the clerk of court of the Regional Trial Court, the requisite number of plain copies thereof and of the pleadings and other material portions of the record as would support the allegations of the petition. Section 3 of the same Rule further provides that non-compliance by petitioner of any of the requirements stated in Section 2 is a ground for the dismissal of the petition, thus: Section 3. Effect of failure to comply with requirements. The failure of the petitioner to comply with any of the foregoing requirements [in Sections 1 and 2] regarding the payment of the docket and other lawful fees, the deposit for costs, proof of service of the petition, and the contents of and the documents which should accompany the petition, shall be sufficient ground for the dismissal thereof. (Underscoring supplied) However, Sections 4 and 6 of the same Rule authorize the Court of Appeals to exercise discretion whether to dismiss outright the petition or give due course to it, thus: Section 4. Action on the petition. The Court of Appeals may require the respondent to file a comment on the petition, not a motion to dismiss, within ten (10) days from notice, or dismiss the petition, if it finds the same to be patently without merit, prosecuted manifestly for delay, or that the questions raised therein are too unsubstantial to require consideration. (Underscoring supplied)

Section 6. Due course. If upon the filing of the comment or such other pleadings as the court may allow or require, or after the expiration of the period for the filing thereof without such comment or pleading having been submitted, the Court of Appeals finds prima facie that the lower court has committed an error of fact or law that will warrant a reversal or modification of the appealed decision, it may accordingly give due course to the petition. In the present case, the Court of Appeals found that the documents and papers attached to petitioner's petition for review are insufficient to support the allegations therein. However, an examination of the certified true copies of the Decisions of the MeTC and RTC, petitioner's motion for reconsideration of the RTC Decision, and the RTC Order denying the said motion attached to the petition reveals that they sustain the averments in this petition for review. At any rate, petitioner promptly filed with the Court of Appeals a motion for reconsideration and attached thereto copies of the complaint, answer, position papers and appeal memoranda of the parties the very papers the Court of Appeals observed to be lacking. Indeed, such submission by petitioner of those additional pleadings and papers in support of his petition constitutes substantial compliance with the requirements of Section 2, Rule 42. Clearly, in refusing to reconsider its assailed Resolution dismissing the petition despite petitioner's substantial compliance with the requirements of Section 2, Rule 42, the Court of Appeals placed a premium on technicalities at the expense of a just resolution of the case.13 This is a reversible error. It bears stressing that generally, cases should be determined on the merits rather than on technicality or some procedural imperfections.14 In that way, the ends of justice would be served better.15 Thus, dismissal of appeals purely on technical grounds is frowned upon. The rules of procedure should not be applied in a very rigid, technical sense, for they are adopted to help secure, not override, substantial justice, and thereby defeat their very aims.16 Rules of procedure are mere tools designed to expedite the decision or resolution of cases and other matters pending in court. A strict and rigid application of the rules that would result in technicalities that tend to frustrate rather than promote substantial justice must be avoided.17 Lastly, we note that petitioner has raised significant issues which should be resolved by the Court of Appeals. WHEREFORE, we GRANT the instant petition. The assailed Resolutions dated July 30, 2001 and October 18, 2001 of the Court of Appeals in CA-G.R. SP No. 65789 are REVERSED. The Petition for Review is REINSTATED. Let the records of this case be REMANDED to the Court of Appeals for further proceedings with dispatch. SO ORDERED. G.R. No. 156132 February 6, 2007

CITIBANK, N.A. (Formerly First National City Bank) and INVESTORS FINANCE CORPORATION, doing business under the name and style of FNCB Finance, Petitioners, vs. MODESTA R. SABENIANO, Respondent. RESOLUTION CHICO-NAZARIO, J.:

On 16 October 2006, this Court promulgated its Decision1 in the above-entitled case, the dispositive portion of which reads IN VIEW OF THE FOREGOING, the instant Petition is PARTLY GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. No. 51930, dated 26 March 2002, as already modified by its Resolution, dated 20 November 2002, is hereby AFFIRMED WITH MODIFICATION, as follows 1. PNs No. 23356 and 23357 are DECLARED subsisting and outstanding. Petitioner Citibank is ORDEREDto return to respondent the principal amounts of the said PNs, amounting to Three Hundred Eighteen Thousand Eight Hundred Ninety-Seven Pesos and Thirty-Four Centavos (P318,897.34) and Two Hundred Three Thousand One Hundred Fifty Pesos (P203,150.00), respectively, plus the stipulated interest of Fourteen and a half percent (14.5%) per annum, beginning 17 March 1977; 2. The remittance of One Hundred Forty-Nine Thousand Six Hundred Thirty Two US Dollars and Ninety-Nine Cents (US$149,632.99) from respondents Citibank-Geneva accounts to petitioner Citibank in Manila, and the application of the same against respondents outstanding loans with the latter, is DECLARED illegal, null and void. Petitioner Citibank is ORDERED to refund to respondent the said amount, or its equivalent in Philippine currency using the exchange rate at the time of payment, plus the stipulated interest for each of the fiduciary placements and current accounts involved, beginning 26 October 1979; 3. Petitioner Citibank is ORDERED to pay respondent moral damages in the amount of Three Hundred Thousand Pesos (P300,000.00); exemplary damages in the amount of Two Hundred Fifty Thousand Pesos (P250,000.00); and attorneys fees in the amount of Two Hundred Thousand Pesos (P200,000.00); and 4. Respondent is ORDERED to pay petitioner Citibank the balance of her outstanding loans, which, from the respective dates of their maturity to 5 September 1979, was computed to be in the sum of One Million Sixty-Nine Thousand Eight Hundred Forty-Seven Pesos and Forty Centavos (P1,069,847.40), inclusive of interest. These outstanding loans shall continue to earn interest, at the rates stipulated in the corresponding PNs, from 5 September 1979 until payment thereof. Subsequent thereto, respondent Modesta R. Sabeniano filed an Urgent Motion to Clarify and/or Confirm Decision with Notice of Judgment on 20 October 2006; while, petitioners Citibank, N.A. and FNCB Finance2 filed their Motion for Partial Reconsideration of the foregoing Decision on 6 November 2006. The facts of the case, as determined by this Court in its Decision, may be summarized as follows. Respondent was a client of petitioners. She had several deposits and market placements with petitioners, among which were her savings account with the local branch of petitioner Citibank (Citibank-Manila3 ); money market placements with petitioner FNCB Finance; and dollar accounts with the Geneva branch of petitioner Citibank (Citibank-Geneva). At the same time, respondent had outstanding loans with petitioner Citibank, incurred at Citibank-Manila, the principal amounts aggregating to P1,920,000.00, all of which had become due and demandable by May 1979. Despite repeated demands by petitioner Citibank, respondent failed to pay her outstanding loans. Thus, petitioner Citibank used respondents deposits and money market placements to off-set and liquidate her outstanding obligations, as follows

Respondents outstanding obligation (principal and interest as of 26 October 1979) Less: Proceeds from respondents money market placements with petitioner FNCB Finance (principal and interest as of 5 September 1979) Deposits in respondents bank accounts with petitioner Citibank

P 2,156,940.58

(1,022,916.66) (31,079.14)

Proceeds of respondents money market placements and dollar accounts with Citibank-Geneva (peso equivalent as of 26 October 1979) (1,102,944.78) Balance of respondents obligation P 0.00

Respondent, however, denied having any outstanding loans with petitioner Citibank. She likewise denied that she was duly informed of the off-setting or compensation thereof made by petitioner Citibank using her deposits and money market placements with petitioners. Hence, respondent sought to recover her deposits and money market placements. Respondent instituted a complaint for "Accounting, Sum of Money and Damages" against petitioners, docketed as Civil Case No. 11336, before the Regional Trial Court (RTC) of Makati City. After trial proper, which lasted for a decade, the RTC rendered a Decision4 on 24 August 1995, the dispositive portion of which reads WHEREFORE, in view of all the foregoing, decision is hereby rendered as follows: (1) Declaring as illegal, null and void the setoff effected by the defendant Bank [petitioner Citibank] of plaintiffs [respondent Sabeniano] dollar deposit with Citibank, Switzerland, in the amount of US$149,632.99, and ordering the said defendant [petitioner Citibank] to refund the said amount to the plaintiff with legal interest at the rate of twelve percent (12%) per annum, compounded yearly, from 31 October 1979 until fully paid, or its peso equivalent at the time of payment; (2) Declaring the plaintiff [respondent Sabeniano] indebted to the defendant Bank [petitioner Citibank] in the amount of P1,069,847.40 as of 5 September 1979 and ordering the plaintiff [respondent Sabeniano] to pay said amount, however, there shall be no interest and penalty charges from the time the illegal setoff was effected on 31 October 1979; (3) Dismissing all other claims and counterclaims interposed by the parties against each other. Costs against the defendant Bank. All the parties appealed the afore-mentioned RTC Decision to the Court of Appeals, docketed as CA-G.R. CV No. 51930. On 26 March 2002, the appellate court promulgated its Decision,5 ruling entirely in favor of respondent, to wit Wherefore, premises considered, the assailed 24 August 1995 Decision of the court a quo is hereby AFFIRMED with MODIFICATION, as follows:

1. Declaring as illegal, null and void the set-off effected by the defendant-appellant Bank of the plaintiff-appellants dollar deposit with Citibank, Switzerland, in the amount of US$149,632.99, and ordering defendant-appellant Citibank to refund the said amount to the plaintiff-appellant with legal interest at the rate of twelve percent (12%) per annum, compounded yearly, from 31 October 1979 until fully paid, or its peso equivalent at the time of payment; 2. As defendant-appellant Citibank failed to establish by competent evidence the alleged indebtedness of plaintiff-appellant, the set-off of P1,069,847.40 in the account of Ms. Sabeniano is hereby declared as without legal and factual basis; 3. As defendants-appellants failed to account the following plaintiff-appellants money market placements, savings account and current accounts, the former is hereby ordered to return the same, in accordance with the terms and conditions agreed upon by the contending parties as evidenced by the certificates of investments, to wit: (i) Citibank NNPN Serial No. 023356 (Cancels and Supersedes NNPN No. 22526) issued on 17 March 1977, P318,897.34 with 14.50% interest p.a.; (ii) Citibank NNPN Serial No. 23357 (Cancels and Supersedes NNPN No. 22528) issued on 17 March 1977, P203,150.00 with 14.50 interest p.a.; (iii) FNCB NNPN Serial No. 05757 (Cancels and Supersedes NNPN No. 04952), issued on 02 June 1977, P500,000.00 with 17% interest p.a.; (iv) FNCB NNPN Serial No. 05758 (Cancels and Supersedes NNPN No. 04962), issued on 02 June 1977, P500,000.00 with 17% interest per annum; (v) The Two Million (P2,000,000.00) money market placements of Ms. Sabeniano with the Ayala Investment & Development Corporation (AIDC) with legal interest at the rate of twelve percent (12%) per annum compounded yearly, from 30 September 1976 until fully paid; 4. Ordering defendants-appellants to jointly and severally pay the plaintiff-appellant the sum of FIVE HUNDRED THOUSAND PESOS (P500,000.00) by way of moral damages, FIVE HUNDRED THOUSAND PESOS (P500,000.00) as exemplary damages, and ONE HUNDRED THOUSAND PESOS (P100,000.00) as attorneys fees. Acting on petitioners Motion for Partial Reconsideration, the Court of Appeals issued a Resolution,6 dated 20 November 2002, modifying its earlier Decision, thus WHEREFORE, premises considered, the instant Motion for Reconsideration is PARTIALLY GRANTED as Sub-paragraph (V) paragraph 3 of the assailed Decisions dispositive portion is hereby ordered DELETED. The challenged 26 March 2002 Decision of the Court is AFFIRMED with MODIFICATION. Since the Court of Appeals Decision, dated 26 March 2002, as modified by the Resolution of the same court, dated 20 November 2002, was still principally in favor of respondent, petitioners filed the instant Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court. After giving

due course to the instant Petition, this Court promulgated on 16 October 2006 its Decision, now subject of petitioners Motion for Partial Reconsideration.
1awphi1.net

Among the numerous grounds raised by petitioners in their Motion for Partial Reconsideration, this Court shall address and discuss herein only particular points that had not been considered or discussed in its Decision. Even in consideration of these points though, this Court remains unconvinced that it should modify or reverse in any way its disposition of the case in its earlier Decision. As to the off-setting or compensation of respondents outstanding loan balance with her dollar deposits in Citibank-Geneva Petitioners take exception to the following findings made by this Court in its Decision, dated 16 October 2006, disallowing the off-setting or compensation of the balance of respondents outstanding loans using her dollar deposits in Citibank-Geneva Without the Declaration of Pledge, petitioner Citibank had no authority to demand the remittance of respondents dollar accounts with Citibank-Geneva and to apply them to her outstanding loans. It cannot effect legal compensation under Article 1278 of the Civil Code since, petitioner Citibank itself admitted that Citibank-Geneva is a distinct and separate entity. As for the dollar accounts, respondent was the creditor and Citibank-Geneva is the debtor; and as for the outstanding loans, petitioner Citibank was the creditor and respondent was the debtor. The parties in these transactions were evidently not the principal creditor of each other. Petitioners maintain that respondents Declaration of Pledge, by virtue of which she supposedly assigned her dollar accounts with Citibank-Geneva as security for her loans with petitioner Citibank, is authentic and, thus, valid and binding upon respondent. Alternatively, petitioners aver that even without said Declaration of Pledge, the off-setting or compensation made by petitioner Citibank using respondents dollar accounts with Citibank-Geneva to liquidate the balance of her outstanding loans with Citibank-Manila was expressly authorized by respondent herself in the promissory notes (PNs) she signed for her loans, as well as sanctioned by Articles 1278 to 1290 of the Civil Code. This alternative argument is anchored on the premise that all branches of petitioner Citibank in the Philippines and abroad are part of a single worldwide corporate entity and share the same juridical personality. In connection therewith, petitioners deny that they ever admitted that Citibank-Manila and Citibank-Geneva are distinct and separate entities. Petitioners call the attention of this Court to the following provision found in all of the PNs7 executed by respondent for her loans At or after the maturity of this note, or when same becomes due under any of the provisions hereof, any money, stocks, bonds, or other property of any kind whatsoever, on deposit or otherwise, to the credit of the undersigned on the books of CITIBANK, N.A. in transit or in their possession, may without notice be applied at the discretion of the said bank to the full or partial payment of this note. It is the petitioners contention that the term "Citibank, N.A." used therein should be deemed to refer to all branches of petitioner Citibank in the Philippines and abroad; thus, giving petitioner Citibank the authority to apply as payment for the PNs even respondents dollar accounts with CitibankGeneva. Still proceeding from the premise that all branches of petitioner Citibank should be considered as a single entity, then it should not matter that the respondent obtained the loans from Citibank-Manila and her deposits were with Citibank-Geneva. Respondent should be considered the debtor (for the loans) and creditor (for her deposits) of the same entity, petitioner Citibank. Since petitioner Citibank and respondent were principal creditors of each other, in compliance with the

requirements under Article 1279 of the Civil Code,8 then the former could have very well used offsetting or compensation to extinguish the parties obligations to one another. And even without the PNs, off-setting or compensation was still authorized because according to Article 1286 of the Civil Code, "Compensation takes place by operation of law, even though the debts may be payable at different places, but there shall be an indemnity for expenses of exchange or transportation to the place of payment." Pertinent provisions of Republic Act No. 8791, otherwise known as the General Banking Law of 2000, governing bank branches are reproduced below SEC. 20. Bank Branches. Universal or commercial banks may open branches or other offices within or outside the Philippines upon prior approval of the Bangko Sentral. Branching by all other banks shall be governed by pertinent laws. A bank may, subject to prior approval of the Monetary Board, use any or all of its branches as outlets for the presentation and/or sale of the financial products of its allied undertaking or its investment house units. A bank authorized to establish branches or other offices shall be responsible for all business conducted in such branches and offices to the same extent and in the same manner as though such business had all been conducted in the head office. A bank and its branches and offices shall be treated as one unit. xxxx SEC. 72. Transacting Business in the Philippines. The entry of foreign banks in the Philippines through the establishment of branches shall be governed by the provisions of the Foreign Banks Liberalization Act. The conduct of offshore banking business in the Philippines shall be governed by the provisions of Presidential Decree No. 1034, otherwise known as the "Offshore Banking System Decree." xxxx SEC. 74. Local Branches of Foreign Banks. In case of a foreign bank which has more than one (1) branch in the Philippines, all such branches shall be treated as one (1) unit for the purpose of this Act, and all references to the Philippine branches of foreign banks shall be held to refer to such units. SEC. 75. Head Office Guarantee. In order to provide effective protection of the interests of the depositors and other creditors of Philippine branches of a foreign bank, the head office of such branches shall fully guarantee the prompt payment of all liabilities of its Philippine branch. Residents and citizens of the Philippines who are creditors of a branch in the Philippines of a foreign bank shall have preferential rights to the assets of such branch in accordance with existing laws. Republic Act No. 7721, otherwise known as the Foreign Banks Liberalization Law, lays down the policies and regulations specifically concerning the establishment and operation of local branches of foreign banks. Relevant provisions of the said statute read

Sec. 2. Modes of Entry. - The Monetary Board may authorize foreign banks to operate in the Philippine banking system through any of the following modes of entry: (i) by acquiring, purchasing or owning up to sixty percent (60%) of the voting stock of an existing bank; (ii) by investing in up to sixty percent (60%) of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines; or (iii) by establishing branches with full banking authority: Provided, That a foreign bank may avail itself of only one (1) mode of entry: Provided, further, That a foreign bank or a Philippine corporation may own up to a sixty percent (60%) of the voting stock of only one (1) domestic bank or new banking subsidiary. Sec. 5. Head Office Guarantee. - The head office of foreign bank branches shall guarantee prompt payment of all liabilities of its Philippine branches. It is true that the afore-quoted Section 20 of the General Banking Law of 2000 expressly states that the bank and its branches shall be treated as one unit. It should be pointed out, however, that the said provision applies to a universal9 or commercial bank,10 duly established and organized as a Philippine corporation in accordance with Section 8 of the same statute,11 and authorized to establish branches within or outside the Philippines. The General Banking Law of 2000, however, does not make the same categorical statement as regards to foreign banks and their branches in the Philippines. What Section 74 of the said law provides is that in case of a foreign bank with several branches in the country, all such branches shall be treated as one unit. As to the relations between the local branches of a foreign bank and its head office, Section 75 of the General Banking Law of 2000 and Section 5 of the Foreign Banks Liberalization Law provide for a "Home Office Guarantee," in which the head office of the foreign bank shall guarantee prompt payment of all liabilities of its Philippine branches. While the Home Office Guarantee is in accord with the principle that these local branches, together with its head office, constitute but one legal entity, it does not necessarily support the view that said principle is true and applicable in all circumstances. The Home Office Guarantee is included in Philippine statutes clearly for the protection of the interests of the depositors and other creditors of the local branches of a foreign bank.12 Since the head office of the bank is located in another country or state, such a guarantee is necessary so as to bring the head office within Philippine jurisdiction, and to hold the same answerable for the liabilities of its Philippine branches. Hence, the principle of the singular identity of that the local branches and the head office of a foreign bank are more often invoked by the clients in order to establish the accountability of the head office for the liabilities of its local branches. It is under such attendant circumstances in which the American authorities and jurisprudence presented by petitioners in their Motion for Partial Reconsideration were rendered. Now the question that remains to be answered is whether the foreign bank can use the principle for a reverse purpose, in order to extend the liability of a client to the foreign banks Philippine branch to its head office, as well as to its branches in other countries. Thus, if a client obtains a loan from the foreign banks Philippine branch, does it absolutely and automatically make the client a debtor, not just of the Philippine branch, but also of the head office and all other branches of the foreign bank around the world? This Court rules in the negative. There being a dearth of Philippine authorities and jurisprudence on the matter, this Court, just as what petitioners have done, turns to American authorities and jurisprudence. American authorities and jurisprudence are significant herein considering that the head office of petitioner Citibank is located in New York, United States of America (U.S.A.).

Unlike Philippine statutes, the American legislation explicitly defines the relations among foreign branches of an American bank. Section 25 of the United States Federal Reserve Act13 states that Every national banking association operating foreign branches shall conduct the accounts of each foreign branch independently of the accounts of other foreign branches established by it and of its home office, and shall at the end of each fiscal period transfer to its general ledger the profit or loss accrued at each branch as a separate item. Contrary to petitioners assertion that the accounts of Citibank-Manila and Citibank-Geneva should be deemed as a single account under its head office, the foregoing provision mandates that the accounts of foreign branches of an American bank shall be conducted independently of each other. Since the head office of petitioner Citibank is in the U.S.A., then it is bound to treat its foreign branches in accordance with the said provision. It is only at the end of its fiscal period that the bank is required to transfer to its general ledger the profit or loss accrued at each branch, but still reporting it as a separate item. It is by virtue of this provision that the Circuit Court of Appeals of New York declared in Pan-American Bank and Trust Co. v. National City Bank of New York14 that a branch is not merely a tellers window; it is a separate business entity. The circumstances in the case of McGrath v. Agency of Chartered Bank of India, Australia & China15 are closest to the one at bar. In said case, the Chartered Bank had branches in several countries, including one in Hamburg, Germany and another in New York, U.S.A., and yet another in London, United Kingdom. The New York branch entered in its books credit in favor of four German firms. Said credit represents collections made from bills of exchange delivered by the four German firms. The same four German firms subsequently became indebted to the Hamburg branch. The London branch then requested for the transfer of the credit in the name of the German firms from the New York branch so as to be applied or setoff against the indebtedness of the same firms to the Hamburg branch. One of the question brought before the U.S. District Court of New York was "whether or not the debts and the alleged setoffs thereto are mutual," which could be answered by determining first whether the New York and Hamburg branches of Chartered Bank are individual business entities or are one and the same entity. In denying the right of the Hamburg branch to setoff, the U.S. District Court ratiocinated that The structure of international banking houses such as Chartered bank defies one rigorous description. Suffice it to say for present analysis, branches or agencies of an international bank have been held to be independent entities for a variety of purposes (a) deposits payable only at branch where made; Mutaugh v. Yokohama Specie Bank, Ltd., 1933, 149 Misc. 693, 269 N.Y.S. 65; Bluebird Undergarment Corp. v. Gomez, 1931, 139 Misc. 742, 249 N.Y.S. 319; (b) checks need be honored only when drawn on branch where deposited; Chrzanowska v. Corn Exchange Bank, 1916, 173 App. Div. 285, 159 N.Y.S. 385, affirmed 1919, 225 N.Y. 728, 122 N.E. 877; subpoena duces tecum on foreign banks record barred; In re Harris, D.C.S.D.N.Y. 1939, 27 F. Supp. 480; (d) a foreign branch separate for collection of forwarded paper; Pan-American Bank and Trust Company v. National City Bank of New York, 2 Cir., 1925, 6 F. 2d 762, certiorari denied 1925, 269 U.S. 554, 46 S. Ct. 18, 70 L. Ed. 408. Thus in law there is nothing innately unitary about the organization of international banking institutions. Defendant, upon its oral argument and in its brief, relies heavily on Sokoloff v. National City Bank of New York,1928, 250 N.Y. 69, 164 N.E. 745, as authority for the proposition that Chartered Bank, not the Hamburg or New York Agency, is ultimately responsible for the amounts owing its German customers and, conversely, it is to Chartered Bank that the German firms owe their obligations. The Sokoloff case, aside from its violently different fact situation, is centered on the legal problem of default of payment and consequent breach of contract by a branch bank. It does not stand for the principle that in every instance an international bank with branches is but one legal entity for

all purposes. The defendant concedes in its brief (p. 15) that there are purposes for which the various agencies and branches of Chartered Bank may be treated in law as separate entities. I fail to see the applicability of Sokoloff either as a guide to or authority for the resolution of this problem. The facts before me and the cases catalogued supra lend weight to the view that we are dealing here with Agencies independent of one another. xxxx I hold that for instant purposes the Hamburg Agency and defendant were independent business entities, and the attempted setoff may not be utilized by defendant against its debt to the German firms obligated to the Hamburg Agency. Going back to the instant Petition, although this Court concedes that all the Philippine branches of petitioner Citibank should be treated as one unit with its head office, it cannot be persuaded to declare that these Philippine branches are likewise a single unit with the Geneva branch. It would be stretching the principle way beyond its intended purpose. Therefore, this Court maintains its original position in the Decision that the off-setting or compensation of respondents loans with Citibank-Manila using her dollar accounts with CitibankGeneva cannot be effected. The parties cannot be considered principal creditor of the other. As for the dollar accounts, respondent was the creditor and Citibank-Geneva was the debtor; and as for the outstanding loans, petitioner Citibank, particularly Citibank-Manila, was the creditor and respondent was the debtor. Since legal compensation was not possible, petitioner Citibank could only use respondents dollar accounts with Citibank-Geneva to liquidate her loans if she had expressly authorized it to do so by contract. Respondent cannot be deemed to have authorized the use of her dollar deposits with CitibankGeneva to liquidate her loans with petitioner Citibank when she signed the PNs16 for her loans which all contained the provision that At or after the maturity of this note, or when same becomes due under any of the provisions hereof, any money, stocks, bonds, or other property of any kind whatsoever, on deposit or otherwise, to the credit of the undersigned on the books of CITIBANK, N.A. in transit or in their possession, may without notice be applied at the discretion of the said bank to the full or partial payment of this note. As has been established in the preceding discussion, "Citibank, N.A." can only refer to the local branches of petitioner Citibank together with its head office. Unless there is any showing that respondent understood and expressly agreed to a more far-reaching interpretation, the reference to Citibank, N.A. cannot be extended to all other branches of petitioner Citibank all over the world. Although theoretically, books of the branches form part of the books of the head office, operationally and practically, each branch maintains its own books which shall only be later integrated and balanced with the books of the head office. Thus, it is very possible to identify and segregate the books of the Philippine branches of petitioner Citibank from those of Citibank-Geneva, and to limit the authority granted for application as payment of the PNs to respondents deposits in the books of the former. Moreover, the PNs can be considered a contract of adhesion, the PNs being in standard printed form prepared by petitioner Citibank. Generally, stipulations in a contract come about after deliberate drafting by the parties thereto, there are certain contracts almost all the provisions of which have been drafted only by one party, usually a corporation. Such contracts are called contracts of adhesion, because the only participation of the party is the affixing of his signature or his "adhesion"

thereto. This being the case, the terms of such contract are to be construed strictly against the party which prepared it.17 As for the supposed Declaration of Pledge of respondents dollar accounts with Citibank-Geneva as security for the loans, this Court stands firm on its ruling that the non-production thereof is fatal to petitioners cause in light of respondents claim that her signature on such document was a forgery. It bears to note that the original of the Declaration of Pledge is with Citibank-Geneva, a branch of petitioner Citibank. As between respondent and petitioner Citibank, the latter has better access to the document. The constant excuse forwarded by petitioner Citibank that Citibank-Geneva refused to return possession of the original Declaration of Pledge to Citibank-Manila only supports this Courts finding in the preceding paragraphs that the two branches are actually operating separately and independently of each other. Further, petitioners keep playing up the fact that respondent, at the beginning of the trial, refused to give her specimen signatures to help establish whether her signature on the Declaration of Pledge was indeed forged. Petitioners seem to forget that subsequently, respondent, on advice of her new counsel, already offered to cooperate in whatever manner so as to bring the original Declaration of Pledge before the RTC for inspection. The exchange of the counsels for the opposing sides during the hearing on 24 July 1991 before the RTC reveals the apparent willingness of respondents counsel to undertake whatever course of action necessary for the production of the contested document, and the evasive, non-committal, and uncooperative attitude of petitioners counsel.18 Lastly, this Courts ruling striking down the Declaration of Pledge is not entirely based on respondents allegation of forgery. In its Decision, this Court already extensively discussed why it found the said Declaration of Pledge highly suspicious and irregular, to wit First of all, it escapes this Court why petitioner Citibank took care to have the Deeds of Assignment of the PNs notarized, yet left the Declaration of Pledge unnotarized. This Court would think that petitioner Citibank would take greater cautionary measures with the preparation and execution of the Declaration of Pledge because it involved respondents "all present and future fiduciary placements" with a Citibank branch in another country, specifically, in Geneva, Switzerland. While there is no express legal requirement that the Declaration of Pledge had to be notarized to be effective, even so, it could not enjoy the same prima facie presumption of due execution that is extended to notarized documents, and petitioner Citibank must discharge the burden of proving due execution and authenticity of the Declaration of Pledge. Second, petitioner Citibank was unable to establish the date when the Declaration of Pledge was actually executed. The photocopy of the Declaration of Pledge submitted by petitioner Citibank before the RTC was undated. It presented only a photocopy of the pledge because it already forwarded the original copy thereof to Citibank-Geneva when it requested for the remittance of respondents dollar accounts pursuant thereto. Respondent, on the other hand, was able to secure a copy of the Declaration of Pledge, certified by an officer of Citibank-Geneva, which bore the date 24 September 1979. Respondent, however, presented her passport and plane tickets to prove that she was out of the country on the said date and could not have signed the pledge. Petitioner Citibank insisted that the pledge was signed before 24 September 1979, but could not provide an explanation as to how and why the said date was written on the pledge. Although Mr. Tan testified that the Declaration of Pledge was signed by respondent personally before him, he could not give the exact date when the said signing took place. It is important to note that the copy of the Declaration of Pledge submitted by the respondent to the RTC was certified by an officer of Citibank-Geneva, which had possession of the original copy of the pledge. It is dated 24 September 1979, and this Court shall abide by the presumption that the written document is truly dated. Since it is undeniable

that respondent was out of the country on 24 September 1979, then she could not have executed the pledge on the said date. Third, the Declaration of Pledge was irregularly filled-out. The pledge was in a standard printed form. It was constituted in favor of Citibank, N.A., otherwise referred to therein as the Bank. It should be noted, however, that in the space which should have named the pledgor, the name of petitioner Citibank was typewritten, to wit The pledge right herewith constituted shall secure all claims which the Bank now has or in the future acquires against Citibank, N.A., Manila (full name and address of the Debtor), regardless of the legal cause or the transaction (for example current account, securities transactions, collections, credits, payments, documentary credits and collections) which gives rise thereto, and including principal, all contractual and penalty interest, commissions, charges, and costs. The pledge, therefore, made no sense, the pledgor and pledgee being the same entity. Was a mistake made by whoever filled-out the form? Yes, it could be a possibility. Nonetheless, considering the value of such a document, the mistake as to a significant detail in the pledge could only be committed with gross carelessness on the part of petitioner Citibank, and raised serious doubts as to the authenticity and due execution of the same. The Declaration of Pledge had passed through the hands of several bank officers in the country and abroad, yet, surprisingly and implausibly, no one noticed such a glaring mistake. Lastly, respondent denied that it was her signature on the Declaration of Pledge. She claimed that the signature was a forgery. When a document is assailed on the basis of forgery, the best evidence rule applies Basic is the rule of evidence that when the subject of inquiry is the contents of a document, no evidence is admissible other than the original document itself except in the instances mentioned in Section 3, Rule 130 of the Revised Rules of Court. Mere photocopies of documents are inadmissible pursuant to the best evidence rule. This is especially true when the issue is that of forgery. As a rule, forgery cannot be presumed and must be proved by clear, positive and convincing evidence and the burden of proof lies on the party alleging forgery. The best evidence of a forged signature in an instrument is the instrument itself reflecting the alleged forged signature. The fact of forgery can only be established by a comparison between the alleged forged signature and the authentic and genuine signature of the person whose signature is theorized upon to have been forged. Without the original document containing the alleged forged signature, one cannot make a definitive comparison which would establish forgery. A comparison based on a mere xerox copy or reproduction of the document under controversy cannot produce reliable results. Respondent made several attempts to have the original copy of the pledge produced before the RTC so as to have it examined by experts. Yet, despite several Orders by the RTC, petitioner Citibank failed to comply with the production of the original Declaration of Pledge. It is admitted that CitibankGeneva had possession of the original copy of the pledge. While petitioner Citibank in Manila and its branch in Geneva may be separate and distinct entities, they are still incontestably related, and between petitioner Citibank and respondent, the former had more influence and resources to convince Citibank-Geneva to return, albeit temporarily, the original Declaration of Pledge. Petitioner Citibank did not present any evidence to convince this Court that it had exerted diligent efforts to secure the original copy of the pledge, nor did it proffer the reason why Citibank-Geneva obstinately refused to give it back, when such document would have been very vital to the case of petitioner Citibank. There is thus no justification to allow the presentation of a mere photocopy of the Declaration of Pledge in lieu of the original, and the photocopy of the pledge presented by petitioner

Citibank has nil probative value. In addition, even if this Court cannot make a categorical finding that respondents signature on the original copy of the pledge was forged, it is persuaded that petitioner Citibank willfully suppressed the presentation of the original document, and takes into consideration the presumption that the evidence willfully suppressed would be adverse to petitioner Citibank if produced. As far as the Declaration of Pledge is concerned, petitioners failed to submit any new evidence or argument that was not already considered by this Court when it rendered its Decision. As to the value of the dollar deposits in Citibank-Geneva ordered refunded to respondent In case petitioners are still ordered to refund to respondent the amount of her dollar accounts with Citibank-Geneva, petitioners beseech this Court to adjust the nominal values of respondents dollar accounts and/or her overdue peso loans by using the values of the currencies stipulated at the time the obligations were established in 1979, to address the alleged inequitable consequences resulting from the extreme and extraordinary devaluation of the Philippine currency that occurred in the course of the Asian crisis of 1997. Petitioners base their request on Article 1250 of the Civil Code which reads, "In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an agreement to the contrary." It is well-settled that Article 1250 of the Civil Code becomes applicable only when there is extraordinary inflation or deflation of the currency. Inflation has been defined as the sharp increase of money or credit or both without a corresponding increase in business transaction. There is inflation when there is an increase in the volume of money and credit relative to available goods resulting in a substantial and continuing rise in the general price level.19 In Singson v. Caltex (Philippines), Inc.,20 this Court already provided a discourse as to what constitutes as extraordinary inflation or deflation of currency, thus We have held extraordinary inflation to exist when there is a decrease or increase in the purchasing power of the Philippine currency which is unusual or beyond the common fluctuation in the value of said currency, and such increase or decrease could not have been reasonably foreseen or was manifestly beyond the contemplation of the parties at the time of the establishment of the obligation. An example of extraordinary inflation, as cited by the Court in Filipino Pipe and Foundry Corporation vs. NAWASA,supra, is that which happened to the deutschmark in 1920. Thus: "More recently, in the 1920s, Germany experienced a case of hyperinflation. In early 1921, the value of the German mark was 4.2 to the U.S. dollar. By May of the same year, it had stumbled to 62 to the U.S. dollar. And as prices went up rapidly, so that by October 1923, it had reached 4.2 trillion to the U.S. dollar!" (Bernardo M. Villegas & Victor R. Abola, Economics, An Introduction [Third Edition]). As reported, "prices were going up every week, then every day, then every hour. Women were paid several times a day so that they could rush out and exchange their money for something of value before what little purchasing power was left dissolved in their hands. Some workers tried to beat the constantly rising prices by throwing their money out of the windows to their waiting wives, who would rush to unload the nearly worthless paper. A postage stamp cost millions of marks and a loaf of bread, billions." (Sidney Rutberg, "The Money Balloon", New York: Simon and Schuster, 1975, p. 19, cited in "Economics, An Introduction" by Villegas & Abola, 3rd ed.) The supervening of extraordinary inflation is never assumed. The party alleging it must lay down the factual basis for the application of Article 1250.

Thus, in the Filipino Pipe case, the Court acknowledged that the voluminous records and statistics submitted by plaintiff-appellant proved that there has been a decline in the purchasing power of the Philippine peso, but this downward fall cannot be considered "extraordinary" but was simply a universal trend that has not spared our country. Similarly, in Huibonhoa vs. Court of Appeals, the Court dismissed plaintiff-appellant's unsubstantiated allegation that the Aquino assassination in 1983 caused building and construction costs to double during the period July 1983 to February 1984. In Serra vs. Court of Appeals, the Court again did not consider the decline in the peso's purchasing power from 1983 to 1985 to be so great as to result in an extraordinary inflation. Like the Serra and Huibonhoa cases, the instant case also raises as basis for the application of Article 1250 the Philippine economic crisis in the early 1980s --- when, based on petitioner's evidence, the inflation rate rose to 50.34% in 1984. We hold that there is no legal or factual basis to support petitioner's allegation of the existence of extraordinary inflation during this period, or, for that matter, the entire time frame of 1968 to 1983, to merit the adjustment of the rentals in the lease contract dated July 16, 1968. Although by petitioner's evidence there was a decided decline in the purchasing power of the Philippine peso throughout this period, we are hard put to treat this as an "extraordinary inflation" within the meaning and intent of Article 1250. Rather, we adopt with approval the following observations of the Court of Appeals on petitioner's evidence, especially the NEDA certification of inflation rates based on consumer price index: xxx (a) from the period 1966 to 1986, the official inflation rate never exceeded 100% in any single year; (b) the highest official inflation rate recorded was in 1984 which reached only 50.34%; (c) over a twenty one (21) year period, the Philippines experienced a single-digit inflation in ten (10) years (i.e., 1966, 1967, 1968, 1969, 1975, 1976, 1977, 1978, 1983 and 1986); (d) in other years (i.e., 1970, 1971, 1972, 1973, 1974, 1979, 1980, 1981, 1982, 1984 and 1989) when the Philippines experienced double-digit inflation rates, the average of those rates was only 20.88%; (e) while there was a decline in the purchasing power of the Philippine currency from the period 1966 to 1986, such cannot be considered as extraordinary; rather, it is a normal erosion of the value of the Philippine peso which is a characteristic of most currencies. "Erosion" is indeed an accurate description of the trend of decline in the value of the peso in the past three to four decades. Unfortunate as this trend may be, it is certainly distinct from the phenomenon contemplated by Article 1250. Moreover, this Court has held that the effects of extraordinary inflation are not to be applied without an official declaration thereof by competent authorities. The burden of proving that there had been extraordinary inflation or deflation of the currency is upon the party that alleges it. Such circumstance must be proven by competent evidence, and it cannot be merely assumed. In this case, petitioners presented no proof as to how much, for instance, the price index of goods and services had risen during the intervening period.21 All the information petitioners provided was the drop of the U.S. dollar-Philippine peso exchange rate by 17 points from June 1997 to January 1998. While the said figure was based on the statistics of the Bangko Sentral ng Pilipinas (BSP), it is also significant to note that the BSP did not categorically declare that the same constitute as an extraordinary inflation. The existence of extraordinary inflation must be officially proclaimed by competent authorities, and the only competent authority so far recognized by this Court to make such an official proclamation is the BSP.22 Neither can this Court, by merely taking judicial notice of the Asian currency crisis in 1997, already declare that there had been extraordinary inflation. It should be recalled that the Philippines likewise

experienced economic crisis in the 1980s, yet this Court did not find that extraordinary inflation took place during the said period so as to warrant the application of Article 1250 of the Civil Code. Furthermore, it is incontrovertible that Article 1250 of the Civil Code is based on equitable considerations. Among the maxims of equity are (1) he who seeks equity must do equity, and (2) he who comes into equity must come with clean hands. The latter is a frequently stated maxim which is also expressed in the principle that he who has done inequity shall not have equity.23 Petitioner Citibank, hence, cannot invoke Article 1250 of the Civil Code because it does not come to court with clean hands. The delay in the recovery24 by respondent of her dollar accounts with Citibank-Geneva was due to the unlawful act of petitioner Citibank in using the same to liquidate respondents loans. Petitioner Citibank even attempted to justify the off-setting or compensation of respondents loans using her dollar accounts with Citibank-Geneva by the presentation of a highly suspicious and irregular, and even possibly forged, Declaration of Pledge. The damage caused to respondent of the deprivation of her dollar accounts for more than two decades is unquestionably relatively more extensive and devastating, as compared to whatever damage petitioner Citibank, an international banking corporation with undoubtedly substantial capital, may have suffered for respondents non-payment of her loans. It must also be remembered that petitioner Citibank had already considered respondents loans paid or liquidated by 26 October 1979 after it had fully effected compensation thereof using respondents deposits and money market placements. All this time, respondents dollar accounts are unlawfully in the possession of and are being used by petitioner Citibank for its business transactions. In the meantime, respondents businesses failed and her properties were foreclosed because she was denied access to her funds when she needed them most. Taking these into consideration, respondents dollar accounts with Citibank-Geneva must be deemed to be subsisting and continuously deposited with petitioner Citibank all this while, and will only be presently withdrawn by respondent. Therefore, petitioner Citibank should refund to respondent the U.S. $149,632.99 taken from her Citibank-Geneva accounts, or its equivalent in Philippine currency using the exchange rate at the time of payment, plus the stipulated interest for each of the fiduciary placements and current accounts involved, beginning 26 October 1979. As to respondents Motion to Clarify and/or Confirm Decision with Notice of Judgment Respondent, in her Motion, is of the mistaken notion that the Court of Appeals Decision, dated 26 March 2002, as modified by the Resolution of the same court, dated 20 November 2002, would be implemented or executed together with this Courts Decision. This Court clarifies that its affirmation of the Decision of the Court of Appeals, as modified, is only to the extent that it recognizes that petitioners had liabilities to the respondent. However, this Courts Decision modified that of the appellate courts by making its own determination of the specific liabilities of the petitioners to respondent and the amounts thereof; as well as by recognizing that respondent also had liabilities to petitioner Citibank and the amount thereof. Thus, for purposes of execution, the parties need only refer to the dispositive portion of this Courts Decision, dated 16 October 2006, should it already become final and executory, without any further modifications. As the last point, there is no merit in respondents Motion for this Court to already declare its Decision, dated 16 October 2006, final and executory. A judgment becomes final and executory by operation of law and, accordingly, the finality of the judgment becomes a fact upon the lapse of the reglementary period without an appeal or a motion for new trial or reconsideration being filed.25 This Court cannot arbitrarily disregard the reglementary period and declare a judgment final and

executory upon the mere motion of one party, for to do so will be a culpable violation of the right of the other parties to due process. IN VIEW OF THE FOREGOING, petitioners Motion for Partial Reconsideration of this Courts Decision, dated 16 October 2006, and respondents Motion for this Court to declare the same Decision already final and executory, are both DENIED for lack of merit. SO ORDERED. G.R. No. 160832 October 27, 2006

THE HEIRS OF EMILIO SANTIOQUE, represented by FELIMON W. SANTIOQUE, petitioners, vs. THE HEIRS OF EMILIO CALMA, CHICO-NAZARIO, JJ. FABIAN CALMA, AGATONA CALMA, and DEMETRIA CALMA, represented by LOPE AKOL and LUCIA CALMA-AKOL, and the REGISTER OF DEEDS OF THE PROVINCE OF TARLAC, respondents.

DECISION

CALLEJO, SR., J.: This is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 65352 affirming the Decision2 of the Regional Trial Court (RTC) in Civil Case No. 8634, as well as the Resolution dated November 21, 2003 which denied the motion for reconsideration thereof. On March 31, 1932, the Governor General granted a homestead patent over a 20.9740-hectare parcel of land located in Barrio Tibag, Tarlac, Tarlac. On the basis of said patent, Original Certificate of Title (OCT) No. 1112 was issued by the Register of Deeds on April 21, 1932. The title was cancelled by Transfer Certificate of Title (TCT) No. 13287. On November 27, 1953, TCT No. 13287 was cancelled by TCT No. 19181 under the names of Agatona Calma, Fabian Calma, Emilio Calma and Demetria Calma.3 On September 23, 1954, the parties executed a contract of lease in favor of the Spouses Lope A. Akol, who then executed an Assignment of Leasehold Rights under the Contract of Lease in favor of the Rehabilitation Finance Corporation (RFC) on January 26, 1955.4 In the meantime, Fabian Calma died intestate. A petition for the administration of his estate was filed in the RTC of Tarlac docketed as Special Proceedings No. 1262. Lucia Calma was appointed as administratrix of the estate. The heirs executed a Deed of Partition over the property on April 17, 1967. On September 13, 1967,5 TCT No. 19181 was cancelled by TCT No. 71826 in the names of Agatona Calma, Emilio Calma, Demetria Calma and Fabian Calma. Meanwhile, in 1967, a 20.564-ha parcel of land located in Tibag, Tarlac and identified as Lot No. 3844 of Pat-H-132104 - prt. was declared for taxation purposes under the name of Emilio Santioque (Tax Dec. No. 19675).6However, the declaration did not bear the name and signature of the declarant.

On June 3, 1973, Santioque died intestate. His children, Felimon, Rose, Filomena, Jose, Josefina, Ana, Rufino, and Avelina, all surnamed Santioque, filed on February 29, 1998, a complaint in the RTC of Tarlac for declaration of nullity of title, reconveyance, with damages, over a piece of land situated in Tibag, Tarlac City. The case was docketed as Civil Case No. 8634. The heirs claimed that on March 31, 1932, Emilio was awarded Homestead Patent No. 18577 by virtue of Homestead Application No. 132104 over a lot located in Barrio Tibag, Tarlac City; the said lot was identified as Lot No. 3844 of the Tarlac Cadastre No. 274, with an area of 20.5464 hectares; OCT No. 1112 was issued to Emilio on April 21, 1932, and from then had enjoyed full ownership and dominion over the said lot; and prior to his death, Emilio ordered Felimon to work for the recovery of the said property.7 They further averred that when Felimon went to the Register of Deeds of Tarlac for a final verification, he discovered that the lot covered by OCT No. 1112 was already registered in the names of Agatona, Fabian, Emilio and Demetria, all surnamed Calma, under TCT No. 19181 issued on November 27, 1953. It appeared from the said TCT No. 19181 that the title was a transfer from TCT No. 13287.8 The heirs contended that Emilio was the first registrant of the subject lot and, as such, was its lawful owner. The land could no longer be the subject matter of subsequent cadastral proceedings, and any title issued pursuant thereto would be void. They prayed that judgment be rendered in their favor, as follows: WHEREFORE, it is most respectfully prayed that after due notice and hearing, judgment be rendered ordering the nullification of TCT No. 19181 and TCT No. 13287 of the Register of Deeds of Tarlac and upholding and declaring the existence, legality and validity of the Homestead Patent bearing No. 18577 and OCT No. 1112 issued in the name of the late Emilio Santioque and 1. Ordering Defendants to reimburse to the Plaintiffs the income, profits or benefits unjustly derived by them from TCT No. 19181 and 13287 the estimation of which is left to the sound discretion of the Honorable Court; 2. Ordering the Defendants to pay to the Plaintiffs the amount of P50,000.00 as attorneys fees; 3. Cost of suit; 4. Any and all remedies just and equitable under the premises.9 The heirs of Calma filed a motion to dismiss the complaint alleging that (a) the action had prescribed and was barred by laches; (b) the claim has been abandoned, and (c) the complaint stated no cause of action.10 The court denied the motion. The heirs of Calma filed their answer, reiterating the grounds and allegations in their motion to dismiss by way of special and affirmative defenses.11 During trial, Felimon Santioque testified for the plaintiffs. He admitted that they had no copy of OCT No. 1112; the Register of Deeds likewise had no record of the said title, nor TCT No. 13287.12 He discovered from the said office that the subject lot was covered by TCT No. 19181 with the names of Agatona Calma and her co-heirs as owners.13 The title was, in turn, cancelled and replaced by TCT No. 71286 also in the names of Agatona Calma and her co-heirs. On cross-examination, Felimon declared that his father, Emilio, mentioned the property to the plaintiffs sometime before he died in 1973. From that time on, he tried to ascertain the particulars of

the property and succeeded in 1990 only when he went through the records at the Community Environment and Natural Resources Office (CENRO).14 Felimon declared that, on August 4, 1992, he secured a document from the Lands Management Bureau (LMB) stating that on March 1 to 6, 1930, a parcel of land with an area of 209,746 square meters located in Tibag, Tarlac, Tarlac, was surveyed by W. Santiago and approved on February 27, 1932.15 However, the document was not certified by the Chief Geodetic Engineer. Neither did the plaintiffs present the employee of the Bureau who prepared the document to testify on its authenticity. Felimon admitted that Amando Bangayan, Chief, Records Management Division of the LMB certified that, based on the survey records of Cadastral Survey No. 274 and as indicated in the Area Sheet of Lot 3844, Cad. 274, Emilio Santioque was the claimant of the lot. However, the Bureau had no available records of Homestead Application No. 132104 and Homestead Patent No. 18577 dated March 31, 1932.16 Felino Cortez, Chief, Ordinary and Cadastral Decree Division of the Land Registration Authority (LRA), certified that after due verification of the records of the Book of Cadastral Lots, Lot 3844 had been the subject of Cadastral Case No. 61, LRC Cad. Record No. 1879; the case had been decided but no final decree of registration had been issued; and the lot was subject to the annotation "con patent No. 18577 segun report of B.L."17 The Register of Deeds of Tarlac stated that, on January 25, 1998, despite diligent efforts, he could not locate TCT No. 13287 and OCT No. 1112 or any other document leading to the issuance of TCT No. 19181. He explained that in 1987 and 1988, his office had to be reconstructed, and titles and documents had to be moved from one place to another.18 The Register of Deeds issued a certification19 dated September 10, 1998 stating that despite diligent efforts, he could not locate OCT No. 1112 or any document showing how it was cancelled. The Records Officer of the Register of Deeds in Tarlac City also certified that OCT No. 1112 and TCT No. 13287 could not be found despite diligent efforts.20 After the heirs of Santioque rested their case, the defendants, heirs of Calma, demurred to plaintiffs evidence and sought its dismissal on the ground that the latter failed to establish a preponderance of evidence to support their ownership over the property.21 On August 11, 1999, the trial court issued an Order22 granting the demurrer and dismissing the complaint on the ground that plaintiffs failed to establish their case. The heirs of Santioque appealed said order to the CA claiming that I THE TRIAL COURT ERRED IN HOLDING THAT PLAINTIFFS-APPELLANTS FAILED TO PROVE THAT ORIGINAL CERTIFICATE OF TITLE NO. 1112 WAS ISSUED IN THE NAME OF EMILIO SANTIOQUE, THE PLAINTIFFS PREDECESSOR-IN-INTEREST, DESPITE THE FACT THAT SUFFICIENT, ADEQUATE AND CONVINCING EVIDENCE HAVE BEEN PRESENTED TO PROVE THAT SAID OCT 1112 WAS ISSUED IN THE NAME OF EMILIO SANTIOQUE. II THE TRIAL COURT ERRED IN RESORTING TO SPECULATIONS, SURMISES AND CONJECTURES WHEN IT RULED THAT OCT 1112 COULD HAVE BEEN ISSUED TO ANOTHER PERSON OTHER THAN THE LATE EMILIO SANTIOQUE. III

THE TRIAL COURT ALSO RESORTED TO SPECULATIONS, SURMISES AND CONJECTURES WHEN IT HELD THAT THERE WAS NO EVIDENCE TO PROVE THAT PATENT NO. 18577 WAS ISSUED TO EMILIO SANTIOQUE, THUS DISREGARDING THE COMPETENT AND SUFFICIENT EVIDENCE ADDUCED BY PLAINTIFFS-APPELLANTS TO PROVE THAT SAID PATENT WAS ISSUED TO EMILIO SANTIOQUE. IV THE TRIAL COURT ERRED IN HOLDING THAT TCT NO. 19181 ISSUED TO DEFENDANTS-APPELLEES WAS PRESUMED TO HAVE BEEN ISSUED IN THE ORDINARY COURSE OF BUSINESS WHEN IN FACT ITS ISSUANCE IS PLAINLY FRAUDULENT AND EVIDENTLY ANOMALOUS. V THE TRIAL COURT ERRED IN SWEEPINGLY CONCLUDING THAT DEFENDANTSAPPELLEES HAVE ACQUIRED THE SUBJECT PROPERTY BY ACQUISITIVE PRESCRIPTION AND IN RULING THAT PLAINTIFFS-APPELLANTS HAVE SLEPT ON THEIR RIGHT FOR MANY YEARS AND THAT THEY HAVE CONSTRUCTIVE NOTICE OF THE ISSUANCE OF DEFENDANTS-APPELLEES TITLE, THUS THEY ARE ESTOPPED BY LACHES. VI THE TRIAL COURT ERRED IN REFUSING WITHOUT VALID CAUSE TO ISSUE SUBPOENA DUCES TECUMAND AD TESTIFICANDUM TO THE REGISTER OF DEEDS OF TARLAC AND THE LAND REGISTRATION AUTHORITY IN ORDER TO SHED LIGHT ON THE WHEREABOUTS OF OCT 1112 AND THE ISSUANCE OF TCT NOS. 13287, 19181 AND 71826.23 On August 30, 2000, Felimon Santioque wrote to the Director of the National Bureau of Investigation (NBI), Federico Opinion, Jr., requesting for his assistance in "investigating the disappearance" of the copy of the Registrar of Deeds of Tarlac of OCT No. 1112 and TCT No. 13287.24 Attached to the said letter were the following certifications and investigation reports of the LRA: 1. Xerox copy of TCT No. 71826 dated September 13, 1967 under the names of Agatona Calma, Emilio Calma, Dorotea Calma and Lucia Calma.25 2. Certified xerox copy Tax Declaration No. 22116 in the name of Agatona Calma, et al;26 3. Certified xerox copy of Tax Declaration No. 39766 in the name of Agatona Calma, et al;27 4. Certified xerox copy of Tax Declaration No. 35226 in the names of Agatona Calma, et al;28 5. Certified xerox copy of the Investigation Report of Mr. Felix Cabrera Investigator, Land Registration Authority, dated September 30, 1999, finding that there are no documents in the Registry supporting the cancellation of OCT 1112 and the issuance of TCT Nos. 13287, and that TCT No. 71826 is irregularly issued inasmuch as no transaction which would justify its issuance appears in the Primary Entry Book;29

6. Certification of Mr. Andres B. Obiena, Records Officer I of the Register of Deeds of Tarlac, Tarlac, dated April 5, 1999, that OCT No. 1112 could not be located in the archives;30 7. Certification of Mr. Meliton I. Vicente, Jr., Community Environment and Natural Resources Officer of the DENR, Region III, that Lot No. 3844 is already covered by Homestead Application No. 132104 with Patent No. 1877 issued to Emilio Santioque on March 31, 1932;31 8. Certified xerox copy of Record Book Page 383 signed by Florida S. Quiaoit, Records Management Unit, CENRO III-6, Tarlac City, showing that Emilio Santioque is a claimant of Lot No. 3844 under Homestead Application No. HA-132104 and Patent No. 1877;32 9. Certified xerox copy of Area Sheet over Lot 3844 prepared for Emilio Santioque, certified by Emilanda M. David, Record Officer 1, DENRO, San Fernando, Pampanga dated February 29, 2000;33 10. Certified xerox copy of Case No. 6, Cad Record No. I, showing that Emilio Santioque was the claimant of Lot No. 3844, under Pat-H-132104 Part.34 The heirs of Santioque did not present the said documents at the trial below but they included the same in their appellants brief. Without waiting for the report of the NBI on their request, the heirs of Santioque filed a motion with the CA for the early resolution of the case.35 On June 27, 2003, the CA affirmed the appealed decision.36 The appellate court did not give probative weight to the certifications and other documents submitted by the heirs of Santioque, as their authenticity had not been established and the signatories therein were not presented for cross-examination. It noted that none of the "crucial documents" were presented in the trial court. Assuming that OCT No. 1112 was indeed issued to Emilio Santioque, the claim of his heirs was nevertheless barred by laches; the latter must bear the consequences of their fathers inaction. The heirs of Santioque filed a motion for reconsideration, which the CA resolved to deny on November 21, 2003.37 The heirs of Santioque, now petitioners, seek relief from this Court on the following issues: I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN NOT GIVING CREDENCE TO THE CERTIFICATIONS, DOCUMENTS, RECORDS AND PICTURES SUBMITTED BY PETITIONER BEFORE THE SAID COURT ON THE GROUND THAT THEY WERE NOT SUBMITTED IN EVIDENCE AT THE TRIAL AND THAT THEIR AUTHENTICITY HAS NOT BEEN ESTABLISHED, DESPITE THE FACT THAT PETITIONERS FAILURE TO SUBMIT THE SAME AS EVIDENCE BEFORE THE TRIAL COURT AND TO ESTABLISH THEIR AUTHENTICITY WAS DUE TO THE PREMATURE AND UNJUSTIFIED DISMISSAL OF THEIR COMPLAINT, WHICH WAS TANTAMOUNT TO DENIAL OF THEIR RIGHT TO BE HEARD AND TO DUE PROCESS. II.

THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT DESPITE PETITIONERS FAILURE TO PRESENT THEIR ORIGINAL CERTIFICATE OF TITLE, OCT NO. 1112, SUFFICIENT AND CONVINCING EVIDENCE WERE ADDUCED BY PETITIONERS TO PROVE THAT SAID TITLE WAS ISSUED TO THEIR PREDECESSORIN-INTEREST, EMILIO SANTIOQUE. ON THE OTHER HAND, SINCE PETITIONERS COMPLAINT WAS DISMISSED BY THE TRIAL COURT ON RESPONDENTS DEMURRER TO EVIDENCE, THE RESPONDENTS FAILED EITHER (1) TO CONTROVERT THE EVIDENCE ADDUCED BY PETITIONERS IN SUPPORT OF THEIR CLAIM OVER THE SUBJECT PROPERTY OR THEIR PRETENSION OF FACTS. III. THE HONORABLE COURT OF APPEALS GRAVELY MISAPPREHENDED THE FACTS OF THE CASE WHEN IT HELD THAT RESPONDENTS ARE IN ACTUAL POSSESSION OF THE SUBJECT PROPERTY, DESPITE CLEAR ABSENCE OF EVIDENCE BY RESPONDENTS TO SUPPORT THEIR CLAIM OF POSSESSION AND AS EVIDENCED BY THE PICTURES SUBMITTED BY PETITIONERS. IV. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONERS DID NOTHING TO RECOVER THEIR CERTIFICATE OF TITLE, OCT NO. 1112, IN A DIRECT ACTION IF INDEED SAID OCT NO. 1112 WAS ISSUED TO EMILIO SANTIOQUE AND INVALIDLY CANCELLED AND REPLACED WITH TCT NO. 13287 IN THE NAME OF RESPONDENTS, AND THAT THE PETITIONERS SHOULD BEAR THE CONSEQUENCES OF THEIR FATHER EMILIO SANTIOQUES INACTION, DESPITE THE FACT THAT PETITIONERS HAVE BEEN VIGILANT OF THEIR RIGHTS AND, HENCE, PRESCRIPTION AND LACHES DO NOT BAR PETITIONERS COMPLAINT. V. WHETHER OR NOT REMAND OF THE INSTANT CASE TO THE LOWER COURT IS PROPER, INSTEAD OF A DECISION ON THE MERITS.38 Petitioners contend that the appellate court erred in not giving credence to the certifications, records, documents and pictures they attached to their appellants brief. They aver that they had not yet discovered the said documents when they presented their evidence at the trial court; hence, they could have presented the documents and their affiants during the rebuttal stage of the proceedings had the trial court not prematurely aborted the proceedings before it. They insist that they were denied their right to due process when the trial court granted respondents demurrer to evidence and dismissed the case.39 Petitioners aver that they have clearly shown and proven their claim over the property, particularly through Tax Dec. No. 19675 and the contents of the Record Book. They posit that judicial notice should be taken that tax declarations are usually issued in the name of the prospective owner upon a showing of the basis of ownership. On the other hand, respondents have no factual and evidentiary basis to support their claim over the subject property since they have not adduced before the trial court any documentary and testimonial evidence to support ownership of the property. Petitioners further contend that they have clearly shown, through the pictures they submitted before the appellate court, that respondents have not been in actual possession of the property; hence, it cannot be presumed that respondents, as registered owners, are likewise in possession of the subject property.40

Petitioners aver that prescription and laches do not bar their complaint since they have been vigilant in protecting their rights. They contend that Emilio was old and sickly and died at an old age. Laches presupposes negligence, and neither Emilio nor his successors were negligent in protecting their rights over the subject property. It took sometime before they could lodge a complaint against respondents because they had to make inquiries first and retrieve documents from different offices to support their claim.41 For their part, respondents aver that there were no indicia of proof that OCT No.1112 was really issued to Emilio. The evidence proffered by the petitioners only tends to prove that Emilio was a mere claimant. It is not incumbent upon the respondents to present any proof that they are the owners of the subject lot because the property is registered in their name. The mere fact that the records are not available would not ipso facto mean that the transactions made affecting OCT No. 1112 were irregular.42 Respondents further aver that the appellate court was correct in not giving credence to the documents, which were not submitted during the trial even though they were obtainable at that time. To allow the introduction of these documents on appeal would violate the essence of due process as the respondents would not be able to interpose objections to their admissibility. Even if these documents were admitted, they would not help petitioners case since they would still not prove that Emilios claim ripened into full ownership. Respondents likewise agree with the finding of the appellate court that the complaint is already barred by prescription and laches.43 The petition is without merit. The core issues in this case are: (1) whether the trial court erred in granting the demurrer to evidence of respondents, and (2) whether petitioners claim is barred by prescription and laches. On the first issue, the Court holds that CA ruling which affirmed that of the RTC granting the demurrer is correct. Demurrer to evidence authorizes a judgment on the merits of the case without the defendant having to submit evidence on his part as he would ordinarily have to do, if it is shown by plaintiffs evidence that the latter is not entitled to the relief sought. The demurrer, therefore, is an aid or instrument for the expeditious termination of an action, similar to a motion to dismiss, which a court or tribunal may either grant or deny.44 A demurrer to evidence may be issued when, upon the facts and the law, the plaintiff has shown no right to relief.45 Where the plaintiffs evidence together with such inferences and conclusions as may reasonably be drawn therefrom does not warrant recovery against the defendant, a demurrer to evidence should be sustained.46 A demurrer to evidence is likewise sustainable when, admitting every proven fact favorable to the plaintiff and indulging in his favor all conclusions fairly and reasonably inferable therefrom, the plaintiff has failed to make out one or more of the material elements of his case,47 or when there is no evidence to support an allegation necessary to his claim.48 It should be sustained where the plaintiffs evidence is prima facie insufficient for a recovery.49 Petitioners, as plaintiffs below, were obliged to prove their claim in their complaint that their father, Emilio, applied for and was granted Homestead Patent No. 18577, and that OCT No. 1112 was issued by the Register of Deeds in his name on the basis of said patent. Petitioners had the burden of proof to present evidence on the fact in issue to establish their claim by their own evidence required by law.50 More so, where, as in this case, on the face of TCT No. 19181 under the names of the respondents, it was derived from TCT No. 13287, which in turn cancelled OCT No. 1112 issued

on April 21, 1932 on the basis of a homestead patent. It must be stressed that the original certificate of title carries a strong presumption that the provisions of law governing the registration of land have been complied with. The OCT enjoys a presumption of validity. Once the title is registered, the owners can rest secure on their ownership and possession.51 Once a homestead patent granted in accordance with law is registered, the certificate of title issued in virtue of said patent has the force and effect of a Torrens title issued under the land registration law.52 In the present case, petitioners failed to prove the material allegations in their complaint that Emilio Santioque applied for and was granted Patent No. 18577 and that OCT No. 1112 was issued on the basis thereof. We quote with approval the ruling of the RTC: The plaintiffs failed to prove that OCT [N]o. 1112 was issued in the name of Emilio Santioque. It was issued all right, but there is no evidence it was in the name of Emilio Santioque. OCT [N]o. 1112 could have been in the name of another person. Exhibit "B" merely shows that Emilio Santioque is a survey claimant. Exhibit "A" contradicted all these claims of plaintiffs. It is stated therein that Lot No. 3844 of Tarlac Cadastre, Cadastral Case [N]o. 61, L.R.C. Record No. 1879 was previously decided but no final decree of registration has yet issued thereon. Hence, there was already a decision by the cadastral court. In whose favor the land was awarded is a mystery up to the date. There is also no evidence that [P]atent [N]o. 18577 was issued to Emilio Santioque. In fact, there is no available record to prove that [P]atent [N]o. 18577 was in the name of Emilio Santioque. (Exhibit "B-1") It is safe to assume that the decision of the cadastral Court awarded the land to a person who was also the awardee of [P]atent [N]o. 18577, because of the entry "said lot is subject to annotation quote: "con patent no. 18577 segun report of the B.L." ", this being the very reason why no decree of registration was issued pursuant to the cadastral proceeding.53 Petitioners even failed to present Homestead Application No. 132104 allegedly filed by Emilio with the Bureau of Lands. In fact, as evidenced by the Certification of the LMB, it had no record of said application and patent. The records of the LMB relative to Cadastral Case No. 61 and LRC Cad. Record No. 1879 were, likewise, not presented. It should be noted that, under Section 14 of Commonwealth Act 141, The Public Land Act, there are certain requirements that a homestead applicant should comply with before a patent could be issued to him, thus: SECTION 14. No certificate shall be given or patent issued for the land applied for until at least one-fifth of the land has been improved and cultivated. The period within which the land shall be cultivated shall not be less than one nor more than five years, from the date of the approval of the application. The applicant shall, within the said period, notify the Director of Lands as soon as he is ready to acquire the title. If at the date of such notice, the applicant shall prove to the satisfaction of the Director of Lands, that he has resided continuously for at least one year in the municipality in which the land is located, or in a municipality adjacent to the same, and has cultivated at least one-fifth of the land continuously since the approval of the application, and shall make affidavit that no part of said land has been alienated or encumbered, and that he has complied with all the requirements of this Act, then, upon the payment of five pesos, as final fee, he shall be entitled to a patent.

Petitioners failed to present competent and credible evidence that Emilio Calma complied with the aforesaid requirements before his death. Petitioners rely on Tax Dec. No. 19675 to substantiate their claim over the subject property. However, it is axiomatic that tax receipts and tax declarations of ownership for taxation purposes do not constitute sufficient proof of ownership. They must be supported by other effective proofs.54 The appellate court was also correct in not giving credence to the certifications which petitioners submitted before it on the ground that the said documents were not presented in the trial court. Petitioners, thus, failed to prove the authenticity of said documents because they failed to present the government officials who certified the same. It is well settled that courts will consider as evidence only that which has been formally offered,55 otherwise, the opposing party would be denied due process of law.56 Thus, the Court explained in one case that A formal offer is necessary since judges are required to base their findings of fact and judgment onlyand strictlyupon the evidence offered by the parties at the trial. To allow a party to attach any document to his pleading and then expect the court to consider it as evidence may draw unwarranted consequences. The opposing party will be deprived of his chance to examine the document and object to its admissibility. The appellate court will have difficulty reviewing documents not previously scrutinized by the court below.57 Petitioners, however, contend that they could have presented the said documents during the rebuttal stage of the proceedings before the trial court. It bears stressing, however, that a plaintiff is bound to introduce all evidence that supports his case during the presentation of his evidence in chief.58 A party holding the affirmative of an issue is bound to present all of the evidence on the case in chief before the close of the proof, and may not add to it by the device of rebuttal.59 After the parties have produced their respective direct proofs, they are allowed to offer rebutting evidence only.60 Generally, rebuttal evidence is confined to that which explains, disproves, or counteracts evidence introduced by the adverse party. It is not intended to give a party an opportunity to tell his story twice or to present evidence that was proper in the case in chief. 61 However, the court for good reasons, in the furtherance of justice, may permit them to offer evidence upon their original case, and its ruling will not be disturbed in the appellate court where no abuse of discretion appears. This is usually allowed when the evidence is newly discovered, or where it has been omitted through inadvertence or mistake, or where the purpose of the evidence is to correct evidence previously offered.62 It is true that petitioners failed to adduce rebuttal evidence because respondents filed a Demurrer to Evidence. However, petitioners should have filed a motion for new trial based on newly-discovered evidence under Rule 37, Section 2 of the 1997 Rules of Civil Procedure after the trial court granted the demurrer and dismissed the complaint. Petitioners aver that the documents they submitted on appeal were not yet discovered during the presentation of their evidence before the trial court.63 Assuming this claim to be true, the Court notes however, that petitioners nevertheless failed to establish that they could not, with reasonable diligence, have discovered and produced the documents at the trial, and prove that such documents would probably alter the result, if presented. The documents belatedly submitted by petitioners on appeal can hardly be considered "newly discovered" since they are public records. Petitioners could have earlier secured copies thereof during trial. Moreover, a perusal of these documents reveals that even if admitted, they would not, in any way, bolster petitioners case, or remedy the vacuum in their evidence-in-chief.

Further, we agree with the appellate court that petitioners complaint is barred by prescription and laches. An action for reconveyance prescribes in ten years, the point of reference being the date of registration of the deed or the date of issuance of the certificate of title over the property.64 Even if we reckon the prescription period from TCT No. 19181 issued on November 27, 1953, the only title verified to be in the name of respondents, more than ten years have already elapsed since then until the time the petitioners filed their complaint on February 29, 1998. An action for reconveyance is imprescriptible only when the plaintiff is in actual possession of the property.65 In the present case, there is no showing that petitioners were in actual possession of the subject property. In any event, petitioners cause of action is likewise barred by laches. The essence of laches or "stale demands" is the failure or neglect for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier, thus giving rise to the presumption that the party entitled to assert it either has abandoned or declined to assert it.66 Petitioners right of action had long been barred by laches during the lifetime of their father, their predecessor in interest; petitioners must necessarily bear the consequences of their predecessors inaction. We quote, with approval, the following ruling of the CA: The trial court further held that "There is also no evidence that patent No. 18577 was issued to Emilio Santioque. In fact, there is no available record to prove that patent No. 18577 was in the name of Emilio Santioque. (Exhibit "B-1")." We add that nowhere in the certificates of title presented by appellants is the source of OCT No. 1112 indicated as Homestead Patent No. 18577. Even assuming that appellants constructive notice of another title over Lot No. 3844 could be reckoned only from 1953 when TCT No. 19181 was issued to replace TCT No. 13287, still appellants and their predecessors-in-interest waited 45 years before bringing the action below. Meanwhile, Lot No. 3844 became the subject of various litigations among appellees and with third parties, as well as several transactions, such as the contract of lease between Emilio Calmas heirs and spouses Lope A. Akol from 1954-1964 (Entry No. 46563); the Assignment of Leasehold rights to Rehabilitation Finance Corporation, 1955 (Entry No. 53205); the Termination of Lease (Entry No. 1-7584; the Partial Release of Leasehold (Entry No. 65888). No proof was submitted in the court below to belie the actual possession of the subject lot by the appellees, who as the registered owners are also presumed to be in possession of the same. While the indefeasibility of the Torrens title of appellees can be claimed only if a previous valid title to the same parcel does not exist (Register of Deeds vs. Philippine National Bank, 13 SCRA 46), appellants have failed to establish that OCT No. 1112 was issued in their fathers name and was later invalidly cancelled in 1947 and replaced with TCT No. 13287. Only in 1998 was an action brought to directly question the validity of TCT No. 13287. The principle of laches has indeed come into play. Laches or stale demand is based upon grounds of public policy which requires for the peace of society the discouragement of stale actions, and unlike the statute of limitations is not a mere question of time but primarily a question of the inequality or unfairness of permitting a right or claim to be enforced or asserted (Pangilinan vs. Court of Appeals, 279 SCRA 590). In Agne vs. Director of Lands, 181 SCRA 793, 809 [1990], it was held that the failure of the registered owners to assert their claim over the disputed property for almost thirty (30) years constituted laches. The question of laches is addressed to the sound discretion of the court. Laches being an equitable doctrine, its application is controlled by equitable considerations, although the better rule is that courts under the principle of equity will not be guided or bound strictly by

the statute of limitations or doctrine of laches when to do so would result in manifest wrong or injusticed result (Santiago vs. Court of Appeals, 278 SCRA 98). We are aware of rulings to the effect that even if the defendants have been in actual possession of the property for more than ten (10) years, the registered title of plaintiffs over the property cannot be lost by prescription or laches (Board of Liquidators vs. Roxas, 179 SCRA 809); or that an action by the registered owner to recover possession based on a Torrens title is not barred by laches (Dablo vs. Court of Appeals, 226 SCRA 621). However, the laches committed by the appellants pertained to the establishment of their very title itself. Only after they have recovered their title could they then have standing to question the title of the appellants and recover possession of the subject lot. Besides, it has been held that an action for reconveyance or quieting of title instituted only after thirty (30) years could be barred by laches (City Government of Danao vs. Monteverde Consunji, 358 SCRA 107). This being so, all the more should an action to recover title, filed after 45 years, be barred by laches where the complainants title is itself clearly doubtful.67 IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 65352 are AFFIRMED. Cost against the petitioners. SO ORDERED. G.R. No. 160347 November 29, 2006

ARCADIO and MARIA LUISA CARANDANG, Petitioners, vs. HEIRS OF QUIRINO A. DE GUZMAN, namely: MILAGROS DE GUZMAN, VICTOR DE GUZMAN, REYNALDO DE GUZMAN, CYNTHIA G. RAGASA and QUIRINO DE GUZMAN, JR., Respondents. DECISION CHICO-NAZARIO, J.: This is a Petition for Review on Certiorari assailing the Court of Appeals Decision1 and Resolution affirming the Regional Trial Court (RTC) Decision rendering herein petitioners Arcadio and Luisa Carandang [hereinafter referred to as spouses Carandang] jointly and severally liable for their loan to Quirino A. de Guzman. The Court of Appeals summarized the facts as follows: [Quirino de Guzman] and [the Spouses Carandang] are stockholders as well as corporate officers of Mabuhay Broadcasting System (MBS for brevity), with equities at fifty four percent (54%) and forty six percent (46%) respectively. On November 26, 1983, the capital stock of MBS was increased, from P500,000 to P1.5 million and P345,000 of this increase was subscribed by [the spouses Carandang]. Thereafter, on March 3, 1989, MBS again increased its capital stock, from P1.5 million to P3 million, [the spouses Carandang] yet again subscribed to the increase. They subscribed to P93,750 worth of newly issued capital stock.

[De Guzman] claims that, part of the payment for these subscriptions were paid by him, P293,250 for the November 26, 1983 capital stock increase and P43,125 for the March 3, 1989 Capital Stock increase or a total ofP336,375. Thus, on March 31, 1992, [de Guzman] sent a demand letter to [the spouses Carandang] for the payment of said total amount. [The spouses Carandang] refused to pay the amount, contending that a pre-incorporation agreement was executed between [Arcadio Carandang] and [de Guzman], whereby the latter promised to pay for the stock subscriptions of the former without cost, in consideration for [Arcadio Carandangs] technical expertise, his newly purchased equipment, and his skill in repairing and upgrading radio/communication equipment therefore, there is no indebtedness on their part [sic]. On June 5, 1992, [de Guzman] filed his complaint, seeking to recover the P336,375 together with damages. After trial on the merits, the trial court disposed of the case in this wise: "WHEREFORE, premises considered, judgment is hereby rendered in favor of [de Guzman]. Accordingly, [the spouses Carandang] are ordered to jointly and severally pay [de Guzman], to wit: (1) P336,375.00 representing [the spouses Carandangs] loan to de Guzman; (2) interest on the preceding amount at the rate of twelve percent (12%) per annum from June 5, 1992 when this complaint was filed until the principal amount shall have been fully paid; (3) P20,000.00 as attorneys fees; (4) Costs of suit. The spouses Carandang appealed the RTC Decision to the Court of Appeals, which affirmed the same in the 22 April 2003 assailed Decision: WHEREFORE, in view of all the foregoing the assailed Decision is hereby AFFIRMED. No costs.2 The Motion for Reconsideration filed by the spouses Carandang was similarly denied by the Court of Appeals in the 6 October 2003 assailed Resolution: WHEREFORE, in view thereof, the motion for reconsideration is hereby DENIED and our Decision of April 22, 2003, which is based on applicable law and jurisprudence on the matter is hereby AFFIRMED and REITERATED.3 The spouses Carandang then filed before this Court the instant Petition for Review on Certiorari, bringing forth the following issues: I. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO STRICTLY COMPLY WITH SECTION 16, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THERE IS AN ALLEGED LOAN FOR WHICH PETITIONERS ARE LIABLE, CONTRARY TO EXPRESS PROVISIONS OF BOOK IV, TITLE XI, OF THE NEW CIVIL CODE PERTAINING TO LOANS. III. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE RESPONDENTS WERE ABLE TO DISCHARGE THEIR BURDEN OF PROOF, IN COMPLETE DISREGARD OF THE REVISED RULES ON EVIDENCE. IV. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT FAILED TO APPLY SECTIONS 2 AND 7, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE. V. WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE PURPORTED LIABILITY OF PETITIONERS ARE JOINT AND SOLIDARY, IN VIOLATION OF ARTICLE 1207 OF THE NEW CIVIL CODE.4 Whether or not the RTC Decision is void for failing to comply with Section 16, Rule 3 of the Rules of Court The spouses Carandang claims that the Decision of the RTC, having been rendered after the death of Quirino de Guzman, is void for failing to comply with Section 16, Rule 3 of the Rules of Court, which provides: SEC. 16. Death of party; duty of counsel. Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. Failure of counsel to comply with this duty shall be a ground for disciplinary action. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor heirs. The court shall forthwith order the legal representative or representatives to appear and be substituted within a period of thirty (30) days from notice. If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the specified period, the court may order the opposing party, within a specified time, to procure the appointment of an executor or administrator for the estate of the deceased and the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such appointment, if defrayed by the opposing party, may be recovered as costs.

The spouses Carandang posits that such failure to comply with the above rule renders void the decision of the RTC, in adherence to the following pronouncements in Vda. de Haberer v. Court of Appeals5 and Ferreria v. Vda. de Gonzales6 : Thus, it has been held that when a party dies in an action that survives and no order is issued by the court for the appearance of the legal representative or of the heirs of the deceased in substitution of the deceased, and as a matter of fact no substitution has ever been effected, the trial held by the court without such legal representatives or heirs and the judgment rendered after such trial are null and void because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and judgment would be binding.7 In the present case, there had been no court order for the legal representative of the deceased to appear, nor had any such legal representative appeared in court to be substituted for the deceased; neither had the complainant ever procured the appointment of such legal representative of the deceased, including appellant, ever asked to be substituted for the deceased. As a result, no valid substitution was effected, consequently, the court never acquired jurisdiction over appellant for the purpose of making her a party to the case and making the decision binding upon her, either personally or as a representative of the estate of her deceased mother.8 However, unlike jurisdiction over the subject matter which is conferred by law and is not subject to the discretion of the parties,9 jurisdiction over the person of the parties to the case may be waived either expressly or impliedly.10Implied waiver comes in the form of either voluntary appearance or a failure to object.11 In the cases cited by the spouses Carandang, we held that there had been no valid substitution by the heirs of the deceased party, and therefore the judgment cannot be made binding upon them. In the case at bar, not only do the heirs of de Guzman interpose no objection to the jurisdiction of the court over their persons; they are actually claiming and embracing such jurisdiction. In doing so, their waiver is not even merely implied (by their participation in the appeal of said Decision), but express (by their explicit espousal of such view in both the Court of Appeals and in this Court). The heirs of de Guzman had no objection to being bound by the Decision of the RTC. Thus, lack of jurisdiction over the person, being subject to waiver, is a personal defense which can only be asserted by the party who can thereby waive it by silence. It also pays to look into the spirit behind the general rule requiring a formal substitution of heirs. The underlying principle therefor is not really because substitution of heirs is a jurisdictional requirement, but because non-compliance therewith results in the undeniable violation of the right to due process of those who, though not duly notified of the proceedings, are substantially affected by the decision rendered therein.12 Such violation of due process can only be asserted by the persons whose rights are claimed to have been violated, namely the heirs to whom the adverse judgment is sought to be enforced. Care should, however, be taken in applying the foregoing conclusions. In People v. Florendo,13 where we likewise held that the proceedings that took place after the death of the party are void, we gave another reason for such nullity: "the attorneys for the offended party ceased to be the attorneys for the deceased upon the death of the latter, the principal x x x." Nevertheless, the case at bar had already been submitted for decision before the RTC on 4 June 1998, several months before the passing away of de Guzman on 19 February 1999. Hence, no further proceedings requiring the appearance of de Guzmans counsel were conducted before the promulgation of the RTC Decision. Consequently, de Guzmans counsel cannot be said to have no authority to appear in trial, as trial had already ceased upon the death of de Guzman.

In sum, the RTC Decision is valid despite the failure to comply with Section 16, Rule 3 of the Rules of Court, because of the express waiver of the heirs to the jurisdiction over their persons, and because there had been, before the promulgation of the RTC Decision, no further proceedings requiring the appearance of de Guzmans counsel. Before proceeding with the substantive aspects of the case, however, there is still one more procedural issue to tackle, the fourth issue presented by the spouses Carandang on the noninclusion in the complaint of an indispensable party. Whether or not the RTC should have dismissed the case for failure to state a cause of action, considering that Milagros de Guzman, allegedly an indispensable party, was not included as a partyplaintiff The spouses Carandang claim that, since three of the four checks used to pay their stock subscriptions were issued in the name of Milagros de Guzman, the latter should be considered an indispensable party. Being such, the spouses Carandang claim, the failure to join Mrs. de Guzman as a party-plaintiff should cause the dismissal of the action because "(i)f a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action."14 The Court of Appeals held: We disagree. The joint account of spouses Quirino A de Guzman and Milagros de Guzman from which the four (4) checks were drawn is part of their conjugal property and under both the Civil Code and the Family Code the husband alone may institute an action for the recovery or protection of the spouses conjugal property. Thus, in Docena v. Lapesura [355 SCRA 658], the Supreme Court held that "x x x Under the New Civil Code, the husband is the administrator of the conjugal partnership. In fact, he is the sole administrator, and the wife is not entitled as a matter of right to join him in this endeavor. The husband may defend the conjugal partnership in a suit or action without being joined by the wife. x x x Under the Family Code, the administration of the conjugal property belongs to the husband and the wife jointly. However, unlike an act of alienation or encumbrance where the consent of both spouses is required, joint management or administration does not require that the husband and wife always act together. Each spouse may validly exercise full power of management alone, subject to the intervention of the court in proper cases as provided under Article 124 of the Family Code. x x x." The Court of Appeals is correct. Petitioners erroneously interchange the terms "real party in interest" and "indispensable party." A real party in interest is the party who stands to be benefited or injured by the judgment of the suit, or the party entitled to the avails of the suit.15 On the other hand, an indispensable party is a party in interest without whom no final determination can be had of an action,16 in contrast to a necessary party, which is one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action.17 The spouses Carandang are indeed correct that "(i)f a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action."18However, what dismissal on this ground entails is an examination of whether the parties presently pleaded are interested in the outcome of the litigation, and not whether all persons interested in such outcome are actually pleaded. The latter query is relevant in discussions concerning indispensable and necessary parties, but not in discussions concerning real parties in

interest. Both indispensable and necessary parties are considered as real parties in interest, since both classes of parties stand to be benefited or injured by the judgment of the suit. Quirino and Milagros de Guzman were married before the effectivity of the Family Code on 3 August 1988. As they did not execute any marriage settlement, the regime of conjugal partnership of gains govern their property relations.19 All property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved.20Credits are personal properties,21 acquired during the time the loan or other credit transaction was executed. Therefore, credits loaned during the time of the marriage are presumed to be conjugal property. Consequently, assuming that the four checks created a debt for which the spouses Carandang are liable, such credits are presumed to be conjugal property. There being no evidence to the contrary, such presumption subsists. As such, Quirino de Guzman, being a co-owner of specific partnership property,22 is certainly a real party in interest. Dismissal on the ground of failure to state a cause of action, by reason that the suit was allegedly not brought by a real party in interest, is therefore unwarranted. So now we come to the discussion concerning indispensable and necessary parties. When an indispensable party is not before the court, the action should likewise be dismissed.23 The absence of an indispensable party renders all subsequent actuations of the court void, for want of authority to act, not only as to the absent parties but even as to those present.24 On the other hand, the nonjoinder of necessary parties do not result in the dismissal of the case. Instead, Section 9, Rule 3 of the Rules of Court provides for the consequences of such non-joinder: Sec. 9. Non-joinder of necessary parties to be pleaded. Whenever in any pleading in which a claim is asserted a necessary party is not joined, the pleader shall set forth his name, if known, and shall state why he is omitted. Should the court find the reason for the omission unmeritorious, it may order the inclusion of the omitted necessary party if jurisdiction over his person may be obtained. The failure to comply with the order for his inclusion, without justifiable cause, shall be deemed a waiver of the claim against such party. The non-inclusion of a necessary party does not prevent the court from proceeding in the action, and the judgment rendered therein shall be without prejudice to the rights of such necessary party. Non-compliance with the order for the inclusion of a necessary party would not warrant the dismissal of the complaint. This is an exception to Section 3, Rule 17 which allows the dismissal of the complaint for failure to comply with an order of the court, as Section 9, Rule 3 specifically provides for the effect of such non-inclusion: it shall not prevent the court from proceeding in the action, and the judgment rendered therein shall be without prejudice to the rights of such necessary party. Section 11, Rule 3 likewise provides that the non-joinder of parties is not a ground for the dismissal of the action. Other than the indispensable and necessary parties, there is a third set of parties: the pro-forma parties, which are those who are required to be joined as co-parties in suits by or against another party as may be provided by the applicable substantive law or procedural rule.25 An example is provided by Section 4, Rule 3 of the Rules of Court:

Sec. 4. Spouses as parties. Husband and wife shall sue or be sued jointly, except as provided by law. Pro-forma parties can either be indispensable, necessary or neither indispensable nor necessary. The third case occurs if, for example, a husband files an action to recover a property which he claims to be part of his exclusive property. The wife may have no legal interest in such property, but the rules nevertheless require that she be joined as a party. In cases of pro-forma parties who are neither indispensable nor necessary, the general rule under Section 11, Rule 3 must be followed: such non-joinder is not a ground for dismissal. Hence, in a case concerning an action to recover a sum of money, we held that the failure to join the spouse in that case was not a jurisdictional defect.26The non-joinder of a spouse does not warrant dismissal as it is merely a formal requirement which may be cured by amendment.27 Conversely, in the instances that the pro-forma parties are also indispensable or necessary parties, the rules concerning indispensable or necessary parties, as the case may be, should be applied. Thus, dismissal is warranted only if the pro-forma party not joined in the complaint is an indispensable party. Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the spouses Carandang, seems to be either an indispensable or a necessary party. If she is an indispensable party, dismissal would be proper. If she is merely a necessary party, dismissal is not warranted, whether or not there was an order for her inclusion in the complaint pursuant to Section 9, Rule 3. Article 108 of the Family Code provides: Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements. This provision is practically the same as the Civil Code provision it superceded: Art. 147. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter. In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with the other partners of specific partnership property." Taken with the presumption of the conjugal nature of the funds used to finance the four checks used to pay for petitioners stock subscriptions, and with the presumption that the credits themselves are part of conjugal funds, Article 1811 makes Quirino and Milagros de Guzman co-owners of the alleged credit. Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an action for the recovery thereof. In the fairly recent cases of Baloloy v. Hular28 and Adlawan v. Adlawan,29 we held that, in a co-ownership, co-owners may bring actions for the recovery of coowned property without the necessity of joining all the other co-owners as co-plaintiffs because the suit is presumed to have been filed for the benefit of his co-owners. In the latter case and in that of De Guia v. Court of Appeals,30 we also held that Article 487 of the Civil Code, which provides that any of the co-owners may bring an action for ejectment, covers all kinds of action for the recovery of possession.31

In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code and relevant jurisprudence, any one of them may bring an action, any kind of action, for the recovery of co-owned properties. Therefore, only one of the co-owners, namely the co-owner who filed the suit for the recovery of the co-owned property, is an indispensable party thereto. The other co-owners are not indispensable parties. They are not even necessary parties, for a complete relief can be accorded in the suit even without their participation, since the suit is presumed to have been filed for the benefit of all co-owners.32 We therefore hold that Milagros de Guzman is not an indispensable party in the action for the recovery of the allegedly loaned money to the spouses Carandang. As such, she need not have been impleaded in said suit, and dismissal of the suit is not warranted by her not being a party thereto. Whether or not respondents were able to prove the loan sought to be collected from petitioners In the second and third issues presented by the spouses Carandang, they claim that the de Guzmans failed to prove the alleged loan for which the spouses Carandang were held liable. As previously stated, spouses Quirino and Milagros de Guzman paid for the stock subscriptions of the spouses Carandang, amounting to P336,375.00. The de Guzmans claim that these payments were in the form of loans and/or advances and it was agreed upon between the late Quirino de Guzman, Sr. and the spouses Carandang that the latter would repay him. Petitioners, on the other hand, argue that there was an oral pre-incorporation agreement wherein it was agreed that Arcardio Carandang would always maintain his 46% equity participation in the corporation even if the capital structures were increased, and that Quirino de Guzman would personally pay the equity shares/stock subscriptions of Arcardio Carandang with no cost to the latter. On this main issue, the Court of Appeals held: [The spouses Carandang] aver in its ninth assigned error that [the de Guzmans] failed to prove by preponderance of evidence, either the existence of the purported loan or the non-payment thereof. Simply put, preponderance of evidence means that the evidence as a whole adduced by one side is superior to that of the other. The concept of preponderance of evidence refers to evidence that is of greater weight, or more convincing, than that which is offered in opposition to it; it means probability of truth. [The spouses Carandang] admitted that it was indeed [the de Guzmans] who paid their stock subscriptions and their reason for not reimbursing the latter is the alleged pre-incorporation agreement, to which they offer no clear proof as to its existence. It is a basic rule in evidence that each party must prove his affirmative allegation. Thus, the plaintiff or complainant has to prove his affirmative allegations in the complaints and the defendant or respondent has to prove the affirmative allegations in his affirmative defenses and counterclaims.33 The spouses Carandang, however, insist that the de Guzmans have not proven the loan itself, having presented evidence only of the payment in favor of the Carandangs. They claim: It is an undeniable fact that payment is not equivalent to a loan. For instance, if Mr. "A" decides to pay for Mr. "Bs" obligation, that payment by Mr. "A" cannot, by any stretch of imagination, possibly mean that there is now a loan by Mr. "B" to Mr. "A". There is a possibility that such payment by Mr. "A" is purely out of generosity or that there is a mutual agreement between them. As applied to the instant case, that mutual agreement is the pre-incorporation agreement (supra) existing between Mr.

de Guzman and the petitioners --- to the effect that the former shall be responsible for paying stock subscriptions of the latter. Thus, when Mr. de Guzman paid for the stock subscriptions of the petitioners, there was no loan to speak of, but only a compliance with the pre-incorporation agreement.34 The spouses Carandang are mistaken. If indeed a Mr. "A" decides to pay for a Mr. "Bs" obligation, the presumption is that Mr. "B" is indebted to Mr. "A" for such amount that has been paid. This is pursuant to Articles 1236 and 1237 of the Civil Code, which provide: Art. 1236. The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary. Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor. Art. 1237. Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the creditor to subrogate him in his rights, such as those arising from a mortgage, guarantee, or penalty. Articles 1236 and 1237 are clear that, even in cases where the debtor has no knowledge of payment by a third person, and even in cases where the third person paid against the will of the debtor, such payment would produce a debt in favor of the paying third person. In fact, the only consequences for the failure to inform or get the consent of the debtor are the following: (1) the third person can recover only insofar as the payment has been beneficial to the debtor; and (2) the third person is not subrogated to the rights of the creditor, such as those arising from a mortgage, guarantee or penalty.35 We say, however, that this is merely a presumption. By virtue of the parties freedom to contract, the parties could stipulate otherwise and thus, as suggested by the spouses Carandang, there is indeed a possibility that such payment by Mr. "A" was purely out of generosity or that there was a mutual agreement between them. But such mutual agreement, being an exception to presumed course of events as laid down by Articles 1236 and 1237, must be adequately proven. The de Guzmans have successfully proven their payment of the spouses Carandangs stock subscriptions. These payments were, in fact, admitted by the spouses Carandang. Consequently, it is now up to the spouses Carandang to prove the existence of the pre-incorporation agreement that was their defense to the purported loan. Unfortunately for the spouses Carandang, the only testimony which touched on the existence and substance of the pre-incorporation agreement, that of petitioner Arcardio Carandang, was stricken off the record because he did not submit himself to a cross-examination of the opposing party. On the other hand, the testimonies of Romeo Saavedra,36 Roberto S. Carandang,37 Gertrudes Z. Esteban,38 Ceferino Basilio,39 and Ma. Luisa Carandang40touched on matters other than the existence and substance of the pre-incorporation agreement. So aside from the fact that these witnesses had no personal knowledge as to the alleged existence of the pre-incorporation agreement, the testimonies of these witnesses did not even mention the existence of a preincorporation agreement. Worse, the testimonies of petitioners Arcadio Carandang and Ma. Luisa Carandang even contradicted the existence of a pre-incorporation agreement because when they were asked by their counsel regarding the matter of the check payments made by the late Quirino A. de Guzman, Sr. in

their behalf, they said that they had already paid for it thereby negating their own defense that there was a pre-incorporation agreement excusing themselves from paying Mr. de Guzman the amounts he advanced or loaned to them. This basic and irrefutable fact can be gleaned from their testimonies which the private respondents are quoting for easy reference: a. With respect to the testimony of Ma. Luisa Carandang Q: Now, can you tell this Honorable Court how do you feel with respect to the Complaint of the plaintiff in this case charging you that you paid for this year and asking enough to paid (sic) your tax? A: We have paid already, so, we are not liable for anything payment (sic).41 b. With respect to the testimony of Arcadio Carandang "Q: How much? A: P40,000.00 to P50,000.00 per month. Q: The plaintiff also claimed thru witness Edgar Ragasa, that there were receipts issued for the payment of your shares; which receipts were marked as Exhibits "G" to "L" (Plaintiff). Im showing to you these receipts so marked by the plaintiff as their exhibits which were issued in the name of Ma. Luisa Carandang, your wife; and also, Arcadio M. Carandang. Will you please go over this Official Receipt and state for the records, who made for the payment stated in these receipts in your name? A: I paid for those shares."42 There being no testimony or documentary evidence proving the existence of the pre-incorporation agreement, the spouses Carandang are forced to rely upon an alleged admission by the original plaintiff of the existence of the pre-incorporation agreement. Petitioners claim that the late Quirino A. de Guzman, Sr. had admitted the existence of the preincorporation agreement by virtue of paragraphs 13 and 14 of their Answer and paragraph 4 of private respondents Reply. Paragraphs 13 and 14 of petitioners Answer dated 7 July 1992 state in full: 13. Sometime in November, 1973 or thereabout, herein plaintiff invited defendant Arcadio M. Carandang to a joint venture by pooling together their technical expertise, equipments, financial resources and franchise. Plaintiff proposed to defendant and mutually agreed on the following: 1. That they would organize a corporation known as Mabuhay Broadcasting Systems, Inc. 2. Considering the technical expertise and talent of defendant Arcadio M. Carandang and his new equipments he bought, and his skill in repairing and modifying radio/communication equipments into high proficiency, said defendant would have an equity participation in the corporation of 46%, and plaintiff 54% because of his financial resources and franchise.

3. That defendant would always maintain his 46% equity participation in the corporation even if the capital structures are increased, and that plaintiff would personally pay the equity shares/stock subscriptions of defendant with no cost to the latter. 4. That because of defendants expertise in the trade including the marketing aspects, he would be the President and General Manager, and plaintiff the Chairman of the Board. 5. That considering their past and trustworthy relations, they would maintain such relations in the joint venture without any mental reservation for their common benefit and success of the business. 14. Having mutually agreed on the above arrangements, the single proprietorship of plaintiff was immediately spun-off into a corporation now known as Mabuhay Broadcasting System, Inc. The incorporators are plaintiff and his family members/nominees controlling jointly 54% of the stocks and defendant Arcadio M. Carandang controlling singly 46% as previously agreed.43 Meanwhile, paragraphs 3 and 4 of private respondents Reply dated 29 July 1992 state in full: 3. Plaintiffs admits the allegation in paragraph 13.1 of the Answer only insofar the plaintiff and defendant Arcadio M. Carandang organized a corporation known as Mabuhay Broadcasting Systems, Inc. Plaintiff specifically denies the other allegations in paragraph 13 of the Answer, the same being devoid of any legal or factual bases. The truth of the matter is that defendant Arcadio M. Carandang was not able to pay plaintiff the agreed amount of the lease for a number of months forcing the plaintiff to terminate lease. Additionally, the records would show that it was the defendant Arcadio M. Carandang who proposed a joint venture with the plaintiff. It appears that plaintiff agreed to the formation of the corporation principally because of a directive of then President Marcos indicating the need to broaden the ownership of radio broadcasting stations. The plaintiff owned the franchise, the radio transmitter, the antenna tower, the building containing the radio transmitter and other equipment. Verily, he would be placed in a great disadvantage if he would still have to personally pay for the shares of defendant Arcadio M. Carandang. 4. Plaintiff admits the allegations in paragraph 14 of the Answer.44 In effect, the spouses Carandang are relying on the fact that Quirino de Guzman stated that he admitted paragraph 14 of the Answer, which incidentally contained the opening clause "(h)aving mutually agreed on the above arrangements, x x x." Admissions, however, should be clear and unambiguous. This purported admission by Quirino de Guzman reeks of ambiguity, as the clause "(h)aving mutually agreed on the above arrangements," seems to be a mere introduction to the statement that the single proprietorship of Quirino de Guzman had been converted into a corporation. If Quirino de Guzman had meant to admit paragraph 13.3, he could have easily said so, as he did the other paragraphs he categorically admitted. Instead, Quirino de Guzman expressly stated the opposite: that "(p)laintiff specifically denies the other allegations of paragraph 13 of the Answer."45 The Reply furthermore states that the only portion of paragraph 13 which Quirino de Guzman had admitted is paragraph 13.1, and only insofar as it said that Quirino de Guzman and Arcardio Carandang organized Mabuhay Broadcasting Systems, Inc.46 All the foregoing considered, we hold that Quirino de Guzman had not admitted the alleged preincorporation agreement. As there was no admission, and as the testimony of Arcardio Carandang

was stricken off the record, we are constrained to rule that there was no pre-incorporation agreement rendering Quirino de Guzman liable for the spouses Carandangs stock subscription. The payment by the spouses de Guzman of the stock subscriptions of the spouses Carandang are therefore by way of loan which the spouses Carandang are liable to pay.
1w phi 1

Whether or not the liability of the spouses Carandang is joint and solidary Finally, the Court of Appeals also upheld the RTC Decision insofar as it decreed a solidary liability. According to the Court of Appeals: With regards (sic) the tenth assigned error, [the spouses Carandang] contend that: "There is absolutely no evidence, testimonial or documentary, showing that the purported obligation of [the spouses Carandang] is joint and solidary. x x x "Furthermore, the purported obligation of [the spouses Carandang] does not at all qualify as one of the obligations required by law to be solidary x x x." It is apparent from the facts of the case that [the spouses Carandang] were married way before the effectivity of the Family Code hence; their property regime is conjugal partnership under the Civil Code. It must be noted that for marriages governed by the rules of conjugal partnership of gains, an obligation entered into by the husband and wife is chargeable against their conjugal partnership and it is the partnership, which is primarily bound for its repayment. Thus, when the spouses are sued for the enforcement of the obligation entered into by them, they are being impleaded in their capacity as representatives of the conjugal partnership and not as independent debtors, such that the concept of joint and solidary liability, as between them, does not apply.47 The Court of Appeals is correct insofar as it held that when the spouses are sued for the enforcement of the obligation entered into by them, they are being impleaded in their capacity as representatives of the conjugal partnership and not as independent debtors. Hence, either of them may be sued for the whole amount, similar to that of a solidary liability, although the amount is chargeable against their conjugal partnership property. Thus, in the case cited by the Court of Appeals, Alipio v. Court of Appeals,48 the two sets of defendant-spouses therein were held liable for P25,300.00 each, chargeable to their respective conjugal partnerships. WHEREFORE, the Decision of the Court of Appeals, affirming the judgment rendered against the spouses Carandang, is hereby AFFIRMED with the following MODIFICATION: The spouses Carandang are ORDERED to pay the following amounts from their conjugal partnership properties: (1) P336,375.00 representing the spouses Carandangs loan to Quirino de Guzman; and (2) Interest on the preceding amount at the rate of twelve percent (12%) per annum from 5 June 1992 when the complaint was filed until the principal amount can be fully paid; and (3) P20,000.00 as attorneys fees. No costs. SO ORDERED.

G.R. No. 146717

November 22, 2004

TRANSFIELD PHILIPPINES, INC., petitioner, vs. LUZON HYDRO CORPORATION, AUSTRALIA and NEW ZEALAND BANKING GROUP LIMITED and SECURITY BANK CORPORATION, respondents.

DECISION

TINGA, J.: Subject of this case is the letter of credit which has evolved as the ubiquitous and most important device in international trade. A creation of commerce and businessmen, the letter of credit is also unique in the number of parties involved and its supranational character. Petitioner has appealed from the Decision1 of the Court of Appeals in CA-G.R. SP No. 61901 entitled "Transfield Philippines, Inc. v. Hon. Oscar Pimentel, et al.," promulgated on 31 January 2001.2 On 26 March 1997, petitioner and respondent Luzon Hydro Corporation (hereinafter, LHC) entered into a Turnkey Contract3 whereby petitioner, as Turnkey Contractor, undertook to construct, on a turnkey basis, a seventy (70)-Megawatt hydro-electric power station at the Bakun River in the provinces of Benguet and Ilocos Sur (hereinafter, the Project). Petitioner was given the sole responsibility for the design, construction, commissioning, testing and completion of the Project.4 The Turnkey Contract provides that: (1) the target completion date of the Project shall be on 1 June 2000, or such later date as may be agreed upon between petitioner and respondent LHC or otherwise determined in accordance with the Turnkey Contract; and (2) petitioner is entitled to claim extensions of time (EOT) for reasons enumerated in the Turnkey Contract, among which are variations, force majeure, and delays caused by LHC itself.5 Further, in case of dispute, the parties are bound to settle their differences through mediation, conciliation and such other means enumerated under Clause 20.3 of the Turnkey Contract.6 To secure performance of petitioner's obligation on or before the target completion date, or such time for completion as may be determined by the parties' agreement, petitioner opened in favor of LHC two (2) standby letters of credit both dated 20 March 2000 (hereinafter referred to as "the Securities"), to wit: Standby Letter of Credit No. E001126/8400 with the local branch of respondent Australia and New Zealand Banking Group Limited (ANZ Bank)7 and Standby Letter of Credit No. IBDIDSB-00/4 with respondent Security Bank Corporation (SBC)8each in the amount of US$8,988,907.00.9 In the course of the construction of the project, petitioner sought various EOT to complete the Project. The extensions were requested allegedly due to several factors which prevented the completion of the Project on target date, such as force majeure occasioned by typhoon Zeb, barricades and demonstrations. LHC denied the requests, however. This gave rise to a series of legal actions between the parties which culminated in the instant petition.

The first of the actions was a Request for Arbitration which LHC filed before the Construction Industry Arbitration Commission (CIAC) on 1 June 1999.10 This was followed by another Request for Arbitration, this time filed by petitioner before the International Chamber of Commerce (ICC)11 on 3 November 2000. In both arbitration proceedings, the common issues presented were: [1) whether typhoon Zeb and any of its associated events constituted force majeure to justify the extension of time sought by petitioner; and [2) whether LHC had the right to terminate the Turnkey Contract for failure of petitioner to complete the Project on target date. Meanwhile, foreseeing that LHC would call on the Securities pursuant to the pertinent provisions of the Turnkey Contract,12 petitionerin two separate letters13 both dated 10 August 2000advised respondent banks of the arbitration proceedings already pending before the CIAC and ICC in connection with its alleged default in the performance of its obligations. Asserting that LHC had no right to call on the Securities until the resolution of disputes before the arbitral tribunals, petitioner warned respondent banks that any transfer, release, or disposition of the Securities in favor of LHC or any person claiming under LHC would constrain it to hold respondent banks liable for liquidated damages. As petitioner had anticipated, on 27 June 2000, LHC sent notice to petitioner that pursuant to Clause 8.214 of the Turnkey Contract, it failed to comply with its obligation to complete the Project. Despite the letters of petitioner, however, both banks informed petitioner that they would pay on the Securities if and when LHC calls on them.15 LHC asserted that additional extension of time would not be warranted; accordingly it declared petitioner in default/delay in the performance of its obligations under the Turnkey Contract and demanded from petitioner the payment of US$75,000.00 for each day of delay beginning 28 June 2000 until actual completion of the Project pursuant to Clause 8.7.1 of the Turnkey Contract. At the same time, LHC served notice that it would call on the securities for the payment of liquidated damages for the delay.16 On 5 November 2000, petitioner as plaintiff filed a Complaint for Injunction, with prayer for temporary restraining order and writ of preliminary injunction, against herein respondents as defendants before the Regional Trial Court (RTC) of Makati.17 Petitioner sought to restrain respondent LHC from calling on the Securities and respondent banks from transferring, paying on, or in any manner disposing of the Securities or any renewals or substitutes thereof. The RTC issued a seventy-two (72)-hour temporary restraining order on the same day. The case was docketed as Civil Case No. 00-1312 and raffled to Branch 148 of the RTC of Makati. After appropriate proceedings, the trial court issued an Order on 9 November 2000, extending the temporary restraining order for a period of seventeen (17) days or until 26 November 2000.18 The RTC, in its Order19 dated 24 November 2000, denied petitioner's application for a writ of preliminary injunction. It ruled that petitioner had no legal right and suffered no irreparable injury to justify the issuance of the writ. Employing the principle of "independent contract" in letters of credit, the trial court ruled that LHC should be allowed to draw on the Securities for liquidated damages. It debunked petitioner's contention that the principle of "independent contract" could be invoked only by respondent banks since according to it respondent LHC is the ultimate beneficiary of the Securities. The trial court further ruled that the banks were mere custodians of the funds and as such they were obligated to transfer the same to the beneficiary for as long as the latter could submit the required certification of its claims. Dissatisfied with the trial court's denial of its application for a writ of preliminary injunction, petitioner elevated the case to the Court of Appeals via a Petition for Certiorari under Rule 65, with prayer for

the issuance of a temporary restraining order and writ of preliminary injunction.20 Petitioner submitted to the appellate court that LHC's call on the Securities was premature considering that the issue of its default had not yet been resolved with finality by the CIAC and/or the ICC. It asserted that until the fact of delay could be established, LHC had no right to draw on the Securities for liquidated damages. Refuting petitioner's contentions, LHC claimed that petitioner had no right to restrain its call on and use of the Securities as payment for liquidated damages. It averred that the Securities are independent of the main contract between them as shown on the face of the two Standby Letters of Credit which both provide that the banks have no responsibility to investigate the authenticity or accuracy of the certificates or the declarant's capacity or entitlement to so certify. In its Resolution dated 28 November 2000, the Court of Appeals issued a temporary restraining order, enjoining LHC from calling on the Securities or any renewals or substitutes thereof and ordering respondent banks to cease and desist from transferring, paying or in any manner disposing of the Securities. However, the appellate court failed to act on the application for preliminary injunction until the temporary restraining order expired on 27 January 2001. Immediately thereafter, representatives of LHC trooped to ANZ Bank and withdrew the total amount of US$4,950,000.00, thereby reducing the balance in ANZ Bank to US$1,852,814.00. On 2 February 2001, the appellate court dismissed the petition for certiorari. The appellate court expressed conformity with the trial court's decision that LHC could call on the Securities pursuant to the first principle in credit law that the credit itself is independent of the underlying transaction and that as long as the beneficiary complied with the credit, it was of no moment that he had not complied with the underlying contract. Further, the appellate court held that even assuming that the trial court's denial of petitioner's application for a writ of preliminary injunction was erroneous, it constituted only an error of judgment which is not correctible by certiorari, unlike error of jurisdiction. Undaunted, petitioner filed the instant Petition for Review raising the following issues for resolution: WHETHER THE "INDEPENDENCE PRINCIPLE" ON LETTERS OF CREDIT MAY BE INVOKED BY A BENEFICIARY THEREOF WHERE THE BENEFICIARY'S CALL THEREON IS WRONGFUL OR FRAUDULENT. WHETHER LHC HAS THE RIGHT TO CALL AND DRAW ON THE SECURITIES BEFORE THE RESOLUTION OF PETITIONER'S AND LHC'S DISPUTES BY THE APPROPRIATE TRIBUNAL. WHETHER ANZ BANK AND SECURITY BANK ARE JUSTIFIED IN RELEASING THE AMOUNTS DUE UNDER THE SECURITIES DESPITE BEING NOTIFIED THAT LHC'S CALL THEREON IS WRONGFUL. WHETHER OR NOT PETITIONER WILL SUFFER GRAVE AND IRREPARABLE DAMAGE IN THE EVENT THAT: A. LHC IS ALLOWED TO CALL AND DRAW ON, AND ANZ BANK AND SECURITY BANK ARE ALLOWED TO RELEASE, THE REMAINING BALANCE OF THE SECURITIES PRIOR TO THE RESOLUTION OF THE DISPUTES BETWEEN PETITIONER AND LHC.

B. LHC DOES NOT RETURN THE AMOUNTS IT HAD WRONGFULLY DRAWN FROM THE SECURITIES.21 Petitioner contends that the courts below improperly relied on the "independence principle" on letters of credit when this case falls squarely within the "fraud exception rule." Respondent LHC deliberately misrepresented the supposed existence of delay despite its knowledge that the issue was still pending arbitration, petitioner continues. Petitioner asserts that LHC should be ordered to return the proceeds of the Securities pursuant to the principle against unjust enrichment and that, under the premises, injunction was the appropriate remedy obtainable from the competent local courts. On 25 August 2003, petitioner filed a Supplement to the Petition22 and Supplemental Memorandum,23 alleging that in the course of the proceedings in the ICC Arbitration, a number of documentary and testimonial evidence came out through the use of different modes of discovery available in the ICC Arbitration. It contends that after the filing of the petition facts and admissions were discovered which demonstrate that LHC knowingly misrepresented that petitioner had incurred delays notwithstanding its knowledge and admission that delays were excused under the Turnkey Contractto be able to draw against the Securities. Reiterating that fraud constitutes an exception to the independence principle, petitioner urges that this warrants a ruling from this Court that the call on the Securities was wrongful, as well as contrary to law and basic principles of equity. It avers that it would suffer grave irreparable damage if LHC would be allowed to use the proceeds of the Securities and not ordered to return the amounts it had wrongfully drawn thereon. In its Manifestation dated 8 September 2003,24 LHC contends that the supplemental pleadings filed by petitioner present erroneous and misleading information which would change petitioner's theory on appeal. In yet another Manifestation dated 12 April 2004,25 petitioner alleges that on 18 February 2004, the ICC handed down its Third Partial Award, declaring that LHC wrongfully drew upon the Securities and that petitioner was entitled to the return of the sums wrongfully taken by LHC for liquidated damages. LHC filed a Counter-Manifestation dated 29 June 2004,26 stating that petitioner's Manifestation dated 12 April 2004 enlarges the scope of its Petition for Review of the 31 January 2001 Decision of the Court of Appeals. LHC notes that the Petition for Review essentially dealt only with the issue of whether injunction could issue to restrain the beneficiary of an irrevocable letter of credit from drawing thereon. It adds that petitioner has filed two other proceedings, to wit: (1) ICC Case No. 11264/TE/MW, entitled "Transfield Philippines Inc. v. Luzon Hydro Corporation," in which the parties made claims and counterclaims arising from petitioner's performance/misperformance of its obligations as contractor for LHC; and (2) Civil Case No. 04-332, entitled "Transfield Philippines, Inc. v. Luzon Hydro Corporation" before Branch 56 of the RTC of Makati, which is an action to enforce and obtain execution of the ICC's partial award mentioned in petitioner's Manifestation of 12 April 2004. In its Comment to petitioner's Motion for Leave to File Addendum to Petitioner's Memorandum, LHC stresses that the question of whether the funds it drew on the subject letters of credit should be returned is outside the issue in this appeal. At any rate, LHC adds that the action to enforce the ICC's partial award is now fully within the Makati RTC's jurisdiction in Civil Case No. 04-332. LHC asserts that petitioner is engaged in forum-shopping by keeping this appeal and at the same time seeking the suit for enforcement of the arbitral award before the Makati court.

Respondent SBC in its Memorandum, dated 10 March 200327 contends that the Court of Appeals correctly dismissed the petition for certiorari. Invoking the independence principle, SBC argues that it was under no obligation to look into the validity or accuracy of the certification submitted by respondent LHC or into the latter's capacity or entitlement to so certify. It adds that the act sought to be enjoined by petitioner was already fait accompli and the present petition would no longer serve any remedial purpose. In a similar fashion, respondent ANZ Bank in its Memorandum dated 13 March 200328 posits that its actions could not be regarded as unjustified in view of the prevailing independence principle under which it had no obligation to ascertain the truth of LHC's allegations that petitioner defaulted in its obligations. Moreover, it points out that since the Standby Letter of Credit No. E001126/8400 had been fully drawn, petitioner's prayer for preliminary injunction had been rendered moot and academic. At the core of the present controversy is the applicability of the "independence principle" and "fraud exception rule" in letters of credit. Thus, a discussion of the nature and use of letters of credit, also referred to simply as "credits," would provide a better perspective of the case. The letter of credit evolved as a mercantile specialty, and the only way to understand all its facets is to recognize that it is an entity unto itself. The relationship between the beneficiary and the issuer of a letter of credit is not strictly contractual, because both privity and a meeting of the minds are lacking, yet strict compliance with its terms is an enforceable right. Nor is it a third-party beneficiary contract, because the issuer must honor drafts drawn against a letter regardless of problems subsequently arising in the underlying contract. Since the bank's customer cannot draw on the letter, it does not function as an assignment by the customer to the beneficiary. Nor, if properly used, is it a contract of suretyship or guarantee, because it entails a primary liability following a default. Finally, it is not in itself a negotiable instrument, because it is not payable to order or bearer and is generally conditional, yet the draft presented under it is often negotiable.29 In commercial transactions, a letter of credit is a financial device developed by merchants as a convenient and relatively safe mode of dealing with sales of goods to satisfy the seemingly irreconcilable interests of a seller, who refuses to part with his goods before he is paid, and a buyer, who wants to have control of the goods before paying.30 The use of credits in commercial transactions serves to reduce the risk of nonpayment of the purchase price under the contract for the sale of goods. However, credits are also used in non-sale settings where they serve to reduce the risk of nonperformance. Generally, credits in the non-sale settings have come to be known as standby credits.31 There are three significant differences between commercial and standby credits. First, commercial credits involve the payment of money under a contract of sale. Such credits become payable upon the presentation by the seller-beneficiary of documents that show he has taken affirmative steps to comply with the sales agreement. In the standby type, the credit is payable upon certification of a party's nonperformance of the agreement. The documents that accompany the beneficiary's draft tend to show that the applicant has not performed. The beneficiary of a commercial credit must demonstrate by documents that he has performed his contract. The beneficiary of the standby credit must certify that his obligor has not performed the contract.32 By definition, a letter of credit is a written instrument whereby the writer requests or authorizes the addressee to pay money or deliver goods to a third person and assumes responsibility for payment of debt therefor to the addressee.33 A letter of credit, however, changes its nature as different transactions occur and if carried through to completion ends up as a binding contract between the

issuing and honoring banks without any regard or relation to the underlying contract or disputes between the parties thereto.34 Since letters of credit have gained general acceptability in international trade transactions, the ICC has published from time to time updates on the Uniform Customs and Practice (UCP) for Documentary Credits to standardize practices in the letter of credit area. The vast majority of letters of credit incorporate the UCP.35 First published in 1933, the UCP for Documentary Credits has undergone several revisions, the latest of which was in 1993.36 In Bank of the Philippine Islands v. De Reny Fabric Industries, Inc.,37 this Court ruled that the observance of the UCP is justified by Article 2 of the Code of Commerce which provides that in the absence of any particular provision in the Code of Commerce, commercial transactions shall be governed by usages and customs generally observed. More recently, in Bank of America, NT & SA v. Court of Appeals,38 this Court ruled that there being no specific provisions which govern the legal complexities arising from transactions involving letters of credit, not only between or among banks themselves but also between banks and the seller or the buyer, as the case may be, the applicability of the UCP is undeniable. Article 3 of the UCP provides that credits, by their nature, are separate transactions from the sales or other contract(s) on which they may be based and banks are in no way concerned with or bound by such contract(s), even if any reference whatsoever to such contract(s) is included in the credit. Consequently, the undertaking of a bank to pay, accept and pay draft(s) or negotiate and/or fulfill any other obligation under the credit is not subject to claims or defenses by the applicant resulting from his relationships with the issuing bank or the beneficiary. A beneficiary can in no case avail himself of the contractual relationships existing between the banks or between the applicant and the issuing bank. Thus, the engagement of the issuing bank is to pay the seller or beneficiary of the credit once the draft and the required documents are presented to it. The so-called "independence principle" assures the seller or the beneficiary of prompt payment independent of any breach of the main contract and precludes the issuing bank from determining whether the main contract is actually accomplished or not. Under this principle, banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents, or for the general and/or particular conditions stipulated in the documents or superimposed thereon, nor do they assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods represented by any documents, or for the good faith or acts and/or omissions, solvency, performance or standing of the consignor, the carriers, or the insurers of the goods, or any other person whomsoever.39 The independent nature of the letter of credit may be: (a) independence in toto where the credit is independent from the justification aspect and is a separate obligation from the underlying agreement like for instance a typical standby; or (b) independence may be only as to the justification aspect like in a commercial letter of credit or repayment standby, which is identical with the same obligations under the underlying agreement. In both cases the payment may be enjoined if in the light of the purpose of the credit the payment of the credit would constitute fraudulent abuse of the credit.40 Can the beneficiary invoke the independence principle? Petitioner insists that the independence principle does not apply to the instant case and assuming it is so, it is a defense available only to respondent banks. LHC, on the other hand, contends that it would be contrary to common sense to deny the benefit of an independent contract to the very party

for whom the benefit is intended. As beneficiary of the letter of credit, LHC asserts it is entitled to invoke the principle. As discussed above, in a letter of credit transaction, such as in this case, where the credit is stipulated as irrevocable, there is a definite undertaking by the issuing bank to pay the beneficiary provided that the stipulated documents are presented and the conditions of the credit are complied with.41 Precisely, the independence principle liberates the issuing bank from the duty of ascertaining compliance by the parties in the main contract. As the principle's nomenclature clearly suggests, the obligation under the letter of credit is independent of the related and originating contract. In brief, the letter of credit is separate and distinct from the underlying transaction. Given the nature of letters of credit, petitioner's argumentthat it is only the issuing bank that may invoke the independence principle on letters of creditdoes not impress this Court. To say that the independence principle may only be invoked by the issuing banks would render nugatory the purpose for which the letters of credit are used in commercial transactions. As it is, the independence doctrine works to the benefit of both the issuing bank and the beneficiary. Letters of credit are employed by the parties desiring to enter into commercial transactions, not for the benefit of the issuing bank but mainly for the benefit of the parties to the original transactions. With the letter of credit from the issuing bank, the party who applied for and obtained it may confidently present the letter of credit to the beneficiary as a security to convince the beneficiary to enter into the business transaction. On the other hand, the other party to the business transaction, i.e., the beneficiary of the letter of credit, can be rest assured of being empowered to call on the letter of credit as a security in case the commercial transaction does not push through, or the applicant fails to perform his part of the transaction. It is for this reason that the party who is entitled to the proceeds of the letter of credit is appropriately called "beneficiary." Petitioner's argument that any dispute must first be resolved by the parties, whether through negotiations or arbitration, before the beneficiary is entitled to call on the letter of credit in essence would convert the letter of credit into a mere guarantee. Jurisprudence has laid down a clear distinction between a letter of credit and a guarantee in that the settlement of a dispute between the parties is not a pre-requisite for the release of funds under a letter of credit. In other words, the argument is incompatible with the very nature of the letter of credit. If a letter of credit is drawable only after settlement of the dispute on the contract entered into by the applicant and the beneficiary, there would be no practical and beneficial use for letters of credit in commercial transactions. Professor John F. Dolan, the noted authority on letters of credit, sheds more light on the issue: The standby credit is an attractive commercial device for many of the same reasons that commercial credits are attractive. Essentially, these credits are inexpensive and efficient. Often they replace surety contracts, which tend to generate higher costs than credits do and are usually triggered by a factual determination rather than by the examination of documents. Because parties and courts should not confuse the different functions of the surety contract on the one hand and the standby credit on the other, the distinction between surety contracts and credits merits some reflection. The two commercial devices share a common purpose. Both ensure against the obligor's nonperformance. They function, however, in distinctly different ways. Traditionally, upon the obligor's default, the surety undertakes to complete the obligor's performance, usually by hiring someone to complete that performance. Surety contracts, then, often involve costs of determining whether the obligor defaulted (a matter over which

the surety and the beneficiary often litigate) plus the cost of performance. The benefit of the surety contract to the beneficiary is obvious. He knows that the surety, often an insurance company, is a strong financial institution that will perform if the obligor does not. The beneficiary also should understand that such performance must await the sometimes lengthy and costly determination that the obligor has defaulted. In addition, the surety's performance takes time. The standby credit has different expectations. He reasonably expects that he will receive cash in the event of nonperformance, that he will receive it promptly, and that he will receive it before any litigation with the obligor (the applicant) over the nature of the applicant's performance takes place. The standby credit has this opposite effect of the surety contract: it reverses the financial burden of parties during litigation. In the surety contract setting, there is no duty to indemnify the beneficiary until the beneficiary establishes the fact of the obligor's performance. The beneficiary may have to establish that fact in litigation. During the litigation, the surety holds the money and the beneficiary bears most of the cost of delay in performance. In the standby credit case, however, the beneficiary avoids that litigation burden and receives his money promptly upon presentation of the required documents. It may be that the applicant has, in fact, performed and that the beneficiary's presentation of those documents is not rightful. In that case, the applicant may sue the beneficiary in tort, in contract, or in breach of warranty; but, during the litigation to determine whether the applicant has in fact breached the obligation to perform, the beneficiary, not the applicant, holds the money. Parties that use a standby credit and courts construing such a credit should understand this allocation of burdens. There is a tendency in some quarters to overlook this distinction between surety contracts and standby credits and to reallocate burdens by permitting the obligor or the issuer to litigate the performance question before payment to the beneficiary.42 While it is the bank which is bound to honor the credit, it is the beneficiary who has the right to ask the bank to honor the credit by allowing him to draw thereon. The situation itself emasculates petitioner's posture that LHC cannot invoke the independence principle and highlights its puerility, more so in this case where the banks concerned were impleaded as parties by petitioner itself. Respondent banks had squarely raised the independence principle to justify their releases of the amounts due under the Securities. Owing to the nature and purpose of the standby letters of credit, this Court rules that the respondent banks were left with little or no alternative but to honor the credit and both of them in fact submitted that it was "ministerial" for them to honor the call for payment.43 Furthermore, LHC has a right rooted in the Contract to call on the Securities. The relevant provisions of the Contract read, thus: 4.2.1. In order to secure the performance of its obligations under this Contract, the Contractor at its cost shall on the Commencement Date provide security to the Employer in the form of two irrevocable and confirmed standby letters of credit (the "Securities"), each in the amount of US$8,988,907, issued and confirmed by banks or financial institutions acceptable to the Employer. Each of the Securities must be in form and substance acceptable to the Employer and may be provided on an annually renewable basis.44 8.7.1 If the Contractor fails to comply with Clause 8.2, the Contractor shall pay to the Employer by way of liquidated damages ("Liquidated Damages for Delay") the amount of US$75,000 for each and every day or part of a day that shall elapse between the Target

Completion Date and the Completion Date, provided that Liquidated Damages for Delay payable by the Contractor shall in the aggregate not exceed 20% of the Contract Price. The Contractor shall pay Liquidated Damages for Delay for each day of the delay on the following day without need of demand from the Employer. 8.7.2 The Employer may, without prejudice to any other method of recovery, deduct the amount of such damages from any monies due, or to become due to the Contractor and/or by drawing on the Security."45 A contract once perfected, binds the parties not only to the fulfillment of what has been expressly stipulated but also to all the consequences which according to their nature, may be in keeping with good faith, usage, and law.46A careful perusal of the Turnkey Contract reveals the intention of the parties to make the Securities answerable for the liquidated damages occasioned by any delay on the part of petitioner. The call upon the Securities, while not an exclusive remedy on the part of LHC, is certainly an alternative recourse available to it upon the happening of the contingency for which the Securities have been proffered. Thus, even without the use of the "independence principle," the Turnkey Contract itself bestows upon LHC the right to call on the Securities in the event of default. Next, petitioner invokes the "fraud exception" principle. It avers that LHC's call on the Securities is wrongful because it fraudulently misrepresented to ANZ Bank and SBC that there is already a breach in the Turnkey Contract knowing fully well that this is yet to be determined by the arbitral tribunals. It asserts that the "fraud exception" exists when the beneficiary, for the purpose of drawing on the credit, fraudulently presents to the confirming bank, documents that contain, expressly or by implication, material representations of fact that to his knowledge are untrue. In such a situation, petitioner insists, injunction is recognized as a remedy available to it. Citing Dolan's treatise on letters of credit, petitioner argues that the independence principle is not without limits and it is important to fashion those limits in light of the principle's purpose, which is to serve the commercial function of the credit. If it does not serve those functions, application of the principle is not warranted, and the commonlaw principles of contract should apply. It is worthy of note that the propriety of LHC's call on the Securities is largely intertwined with the fact of default which is the self-same issue pending resolution before the arbitral tribunals. To be able to declare the call on the Securities wrongful or fraudulent, it is imperative to resolve, among others, whether petitioner was in fact guilty of delay in the performance of its obligation. Unfortunately for petitioner, this Court is not called upon to rule upon the issue of defaultsuch issue having been submitted by the parties to the jurisdiction of the arbitral tribunals pursuant to the terms embodied in their agreement.47 Would injunction then be the proper remedy to restrain the alleged wrongful draws on the Securities? Most writers agree that fraud is an exception to the independence principle. Professor Dolan opines that the untruthfulness of a certificate accompanying a demand for payment under a standby credit may qualify as fraud sufficient to support an injunction against payment.48 The remedy for fraudulent abuse is an injunction. However, injunction should not be granted unless: (a) there is clear proof of fraud; (b) the fraud constitutes fraudulent abuse of the independent purpose of the letter of credit and not only fraud under the main agreement; and (c) irreparable injury might follow if injunction is not granted or the recovery of damages would be seriously damaged.49 In its complaint for injunction before the trial court, petitioner alleged that it is entitled to a total extension of two hundred fifty-three (253) days which would move the target completion date. It

argued that if its claims for extension would be found meritorious by the ICC, then LHC would not be entitled to any liquidated damages.50 Generally, injunction is a preservative remedy for the protection of one's substantive right or interest; it is not a cause of action in itself but merely a provisional remedy, an adjunct to a main suit. The issuance of the writ of preliminary injunction as an ancillary or preventive remedy to secure the rights of a party in a pending case is entirely within the discretion of the court taking cognizance of the case, the only limitation being that this discretion should be exercised based upon the grounds and in the manner provided by law.51 Before a writ of preliminary injunction may be issued, there must be a clear showing by the complaint that there exists a right to be protected and that the acts against which the writ is to be directed are violative of the said right.52 It must be shown that the invasion of the right sought to be protected is material and substantial, that the right of complainant is clear and unmistakable and that there is an urgent and paramount necessity for the writ to prevent serious damage.53 Moreover, an injunctive remedy may only be resorted to when there is a pressing necessity to avoid injurious consequences which cannot be remedied under any standard compensation.54 In the instant case, petitioner failed to show that it has a clear and unmistakable right to restrain LHC's call on the Securities which would justify the issuance of preliminary injunction. By petitioner's own admission, the right of LHC to call on the Securities was contractually rooted and subject to the express stipulations in the Turnkey Contract.55Indeed, the Turnkey Contract is plain and unequivocal in that it conferred upon LHC the right to draw upon the Securities in case of default, as provided in Clause 4.2.5, in relation to Clause 8.7.2, thus: 4.2.5 The Employer shall give the Contractor seven days' notice of calling upon any of the Securities, stating the nature of the default for which the claim on any of the Securities is to be made, provided that no notice will be required if the Employer calls upon any of the Securities for the payment of Liquidated Damages for Delay or for failure by the Contractor to renew or extend the Securities within 14 days of their expiration in accordance with Clause 4.2.2.56 8.7.2 The Employer may, without prejudice to any other method of recovery, deduct the amount of such damages from any monies due, or to become due, to the Contractor and/or by drawing on the Security.57 The pendency of the arbitration proceedings would not per se make LHC's draws on the Securities wrongful or fraudulent for there was nothing in the Contract which would indicate that the parties intended that all disputes regarding delay should first be settled through arbitration before LHC would be allowed to call upon the Securities. It is therefore premature and absurd to conclude that the draws on the Securities were outright fraudulent given the fact that the ICC and CIAC have not ruled with finality on the existence of default. Nowhere in its complaint before the trial court or in its pleadings filed before the appellate court, did petitioner invoke the fraud exception rule as a ground to justify the issuance of an injunction.58 What petitioner did assert before the courts below was the fact that LHC's draws on the Securities would be premature and without basis in view of the pending disputes between them. Petitioner should not be allowed in this instance to bring into play the fraud exception rule to sustain its claim for the issuance of an injunctive relief. Matters, theories or arguments not brought out in the proceedings below will ordinarily not be considered by a reviewing court as they cannot be raised for the first time on appeal.59 The lower courts could thus not be faulted for not applying the fraud exception rule not only because the existence of fraud was fundamentally interwoven with the issue of default still

pending before the arbitral tribunals, but more so, because petitioner never raised it as an issue in its pleadings filed in the courts below. At any rate, petitioner utterly failed to show that it had a clear and unmistakable right to prevent LHC's call upon the Securities. Of course, prudence should have impelled LHC to await resolution of the pending issues before the arbitral tribunals prior to taking action to enforce the Securities. But, as earlier stated, the Turnkey Contract did not require LHC to do so and, therefore, it was merely enforcing its rights in accordance with the tenor thereof. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.60 More importantly, pursuant to the principle of autonomy of contracts embodied in Article 1306 of the Civil Code,61 petitioner could have incorporated in its Contract with LHC, a proviso that only the final determination by the arbitral tribunals that default had occurred would justify the enforcement of the Securities. However, the fact is petitioner did not do so; hence, it would have to live with its inaction. With respect to the issue of whether the respondent banks were justified in releasing the amounts due under the Securities, this Court reiterates that pursuant to the independence principle the banks were under no obligation to determine the veracity of LHC's certification that default has occurred. Neither were they bound by petitioner's declaration that LHC's call thereon was wrongful. To repeat, respondent banks' undertaking was simply to pay once the required documents are presented by the beneficiary. At any rate, should petitioner finally prove in the pending arbitration proceedings that LHC's draws upon the Securities were wrongful due to the non-existence of the fact of default, its right to seek indemnification for damages it suffered would not normally be foreclosed pursuant to general principles of law. Moreover, in a Manifestation,62 dated 30 March 2001, LHC informed this Court that the subject letters of credit had been fully drawn. This fact alone would have been sufficient reason to dismiss the instant petition. Settled is the rule that injunction would not lie where the acts sought to be enjoined have already become fait accompli or an accomplished or consummated act.63 In Ticzon v. Video Post Manila, Inc.64 this Court ruled that where the period within which the former employees were prohibited from engaging in or working for an enterprise that competed with their former employerthe very purpose of the preliminary injunction has expired, any declaration upholding the propriety of the writ would be entirely useless as there would be no actual case or controversy between the parties insofar as the preliminary injunction is concerned. In the instant case, the consummation of the act sought to be restrained had rendered the instant petition mootfor any declaration by this Court as to propriety or impropriety of the non-issuance of injunctive relief could have no practical effect on the existing controversy.65 The other issues raised by petitioner particularly with respect to its right to recover the amounts wrongfully drawn on the Securities, according to it, could properly be threshed out in a separate proceeding. One final point. LHC has charged petitioner of forum-shopping. It raised the charge on two occasions. First, in its Counter-Manifestation dated 29 June 200466 LHC alleges that petitioner presented before this Court the same claim for money which it has filed in two other proceedings, to wit: ICC Case No. 11264/TE/MW and Civil Case No. 04-332 before the RTC of Makati. LHC argues that petitioner's acts constitutes forum-shopping which should be punished by the dismissal of the claim in both forums. Second, in its Comment to Petitioner's Motion for Leave to File Addendum to Petitioner's Memorandum dated 8 October 2004, LHC alleges that by maintaining the present appeal and at the same time pursuing Civil Case No. 04-332wherein petitioner pressed for judgment on

the issue of whether the funds LHC drew on the Securities should be returnedpetitioner resorted to forum-shopping. In both instances, however, petitioner has apparently opted not to respond to the charge. Forum-shopping is a very serious charge. It exists when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in, or already resolved adversely, by some other court.67 It may also consist in the act of a party against whom an adverse judgment has been rendered in one forum, of seeking another and possibly favorable opinion in another forum other than by appeal or special civil action of certiorari, or the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court might look with favor upon the other party.68 To determine whether a party violated the rule against forum-shopping, the test applied is whether the elements of litis pendentia are present or whether a final judgment in one case will amount to res judicata in another.69 Forum-shopping constitutes improper conduct and may be punished with summary dismissal of the multiple petitions and direct contempt of court.70 Considering the seriousness of the charge of forum-shopping and the severity of the sanctions for its violation, the Court will refrain from making any definitive ruling on this issue until after petitioner has been given ample opportunity to respond to the charge. WHEREFORE, the instant petition is DENIED, with costs against petitioner. Petitioner is hereby required to answer the charge of forum-shopping within fifteen (15) days from notice. SO ORDERED. G.R. No. 124512 June 27, 2006

MA. ROSARIO SUAREZ, Petitioner, vs. JUDGE MARTIN S. VILLARAMA, JR., RTC, Pasig City, Branch 156 and SPS. ESCOLASTICO & CORDELIA BALLAR, Respondents. DECISION TINGA, J.: The instant petition challenges the orders of the Regional Trial Court1 (RTC) dated 15 February2 and 11 April 19963 dismissing Civil Case No. 63566 for failure to prosecute and denying the motion for reconsideration. The factual background is as follows: Petitioner Ma. Rosario Suarez instituted a complaint4 for specific performance with prayer for attachment before the RTC against Spouses Escolastico and Cordelia Ballar (respondents) on 1 September 1993. As respondents were permanent residents of the United States, extraterritorial service of summons was allowed. After being granted an extension of time to file their responsive pleadings, respondents filed a motion to dismiss dated 11 January 1994. The motion was denied by the RTC on 9 March 1994, which gave respondents fifteen (15) days to file their answer.

Despite having received the order denying their motion to dismiss on 22 March 1994, it was only on 9 February 1995 that the RTC received a copy of respondents answer dated 22 November 1994. In their answer, respondents averred that respondents issued four (4) post-dated checks, the first of which was dishonored when presented for payment for the reason of "Account Closed." This prompted respondents not to present the rest of the checks anymore. Consequently, petitioner cannot demand performance of their undertaking when petitioner herself failed to comply with her own undertaking.5 They put up a counterclaim for moral and exemplary damages, as well as for payment of attorneys fees. Due to repeated motions for postponement filed by both parties, it was only on 3 July 1994 that pretrial was terminated. Trial on the merits commenced on 10 August 1995. Later however, the continuation of the trial was impeded by successive motions for postponement filed by both parties. The subsequent dates of the trial were set for August 21, September 11 and 21. No hearing was held on 21 August due to petitioners request to have it transferred to the succeeding scheduled dates. The hearings set for the 11th and 21st of September were also moved to the 28th on petitioners motion. The hearing set on the 28th was also postponed upon respondents motion as their lawyer had another case to attend to. The RTC moved the trial date to 23 October 1995. On said date, however, petitioner again moved for postponement of the hearing. The trial court transferred the hearing date to 7 December 1995. As petitioner was still out of the country at that time, the RTC moved the date of hearing to 15 February 1996 at the instance of petitioners counsel. Finally, on 15 February 1996, petitioner as well as her counsel failed to appear at the continuation of the trial. Consequently, the trial court issued an order6 of even date dismissing the case for failure to prosecute. On 4 March 1996, petitioner filed an entry of appearance of new counsel as well as a motion for time to file her motion for reconsideration.7 Petitioner filed the motion for reconsideration on 6 March 1996. Petitioner alleged that the failure of her counsel to appear on the date of the trial was due to her counsel being terminally ill. In an order8 dated 11 April 1996, the RTC denied the motion for reconsideration, on the ground that the 15-day period for appeal cannot be extended. In a direct appeal to this Court via petition for review on certiorari on 23 April 1996, petitioner imputes grave abuse of discretion on the part of the RTC in dismissing the case for failure to prosecute and in denying her motion for reconsideration. We deal first with the procedural issue, which is the propriety of the remedy availed by petitioner. Respondents argue that the remedy against an order dismissing a complaint is appeal, not certiorari. We agree with respondents. At the outset, it bears stressing that the trial courts 15 February 1996 order dismissing the case for failure to prosecute is a final order. It operates as a judgment on the merits.9 Indeed, this is an express provision in Section 3,10 Rule 17 of the Rules of Court. The same characterization applies to the 11 April 1996 order denying the motion for reconsideration. It is axiomatic that the remedy against such final order is appeal and not certiorari.11

In Murillo v. Consul,12 which was later adopted by the 1997 Revised Rules of Civil Procedure, this Court had the occasion to clarify the three (3) modes of appeal from decisions of the RTC, namely: (1) ordinary appeal or appeal by writ of error, where judgment was rendered in a civil or criminal action by the RTC in the exercise of original jurisdiction; (2) petition for review, where judgment was rendered by the RTC in the exercise of appellate jurisdiction; and (3) petition for review to the Supreme Court. The first mode of appeal, governed by Rule 41, is taken to the Court of Appeals on questions of fact or mixed questions of fact and law. The second mode of appeal, covered by Rule 42, is brought to the Court of Appeals on questions of fact, of law, or mixed questions of fact and law. The third mode of appeal, provided for by Rule 45, is elevated to the Supreme Court only on questions of law. It is axiomatic that a question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. In the instant case, petitioner brought this petition for review on certiorari raising mixed questions of fact and law. She impugns the decision of the RTC dismissing her complaint for failure to prosecute. The resolution of the propriety of dismissal entails a review of the factual circumstances that led the trial court to decide in such manner. On the other hand, petitioner also questions the lower courts denial of her motion for reconsideration on the ground that it was filed out of time. There is indeed a question as to what and how the law should be applied. Therefore, petitioner should have brought this case to the Court of Appeals via the first mode of appeal under the aegis of Rule 41. Section 4 of Circular No. 2-90, in effect at the time of the antecedents, provides that an appeal taken to either the Supreme Court or the Court of Appeals by the wrong mode or inappropriate mode shall be dismissed. This rule is now incorporated in Section 5,13 Rule 56 of the 1997 Rules of Civil Procedure. Moreover, the filing of the case directly with this Court runs afoul of the doctrine of hierarchy of courts. Pursuant to this doctrine, direct resort from the lower courts to the Supreme Court will not be entertained unless the appropriate remedy cannot be obtained in the lower tribunals. This Court is a court of last resort, and must so remain if it is to satisfactorily perform the functions assigned to it by the Constitution and immemorial tradition.14Thus, a petition for review on certiorari assailing the decision involving both questions of fact and law must first be brought before the Court of Appeals. Notwithstanding the dismissibility of this case, we shall proceed to address the other issue involving a well-settled question of law.
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Petitioner argues that the motion for reconsideration was filed on time. Petitioner received the order of dismissal on 20 February 1996, thus, the 15-day period for filing of the motion for reconsideration would expire on 6 March 1996. On 4 March 1996, petitioners new counsel filed the Entry of Appearance with Motion for Time to File Motion for Reconsideration. Petitioner surmised that she has until 19 March 1996 within which to file her motion for reconsideration. In fact, she filed the said motion on 11 March 1996, still within the 15-day period. Furthermore, petitioner begs to differ from the trial courts interpretation of the ruling in Habaluyas Enterprises, Inc. v. Japson15 that the 15-day period for appealing or for filing a motion for reconsideration cannot be extended. Petitioner claims that the filing of the motion for extension was based on valid, legitimate and reasonable grounds, like her former counsel had been terminally sick and her new counsel needed more time to study the case.16

Respondents contend that the motion for extension to file the motion for reconsideration may no longer be filed before all courts lower than the Supreme Court. As ruled in Habaluyas, settled is the rule that the 15-day reglementary period for appealing or filing a motion for reconsideration or new trial cannot be extended, except in cases pending with the Supreme Court as a court of last resort which may in its sound discretion either grant or deny the extension requested.17 The trial court did not err in dismissing the motion for reconsideration. Petitioner received the order of dismissal on 20 February 1996. She had until 6 March 1996 to file the motion for reconsideration. The filing of the motion for extension did not toll nor extend the 15-day reglementary period. Hence, the period had already lapsed by the time petitioner filed her motion for reconsideration on 11 March 1996. Petitioner later beseeches this Courts liberality in addressing her procedural lapses. She claims that the lower court committed grave abuse of discretion in dismissing her case for non-suit. She argues that the RTC should have considered the fact that she had already started presenting her evidence to prove her causes of action, as well as the merits of her new counsels reason in asking for extension of time to file the motion for reconsideration.18 It is an accepted tenet that rules of procedure must be faithfully followed except only when, for persuasive and weighting reasons, they may be relaxed to relieve a litigant of an injustice commensurate with his failure to comply with the prescribed procedure. Concomitant to a liberal interpretation of the rules of procedure, however, should be an effort on the part of the party invoking liberality to adequately explain his failure to abide by the rules.19 In the case at bar, petitioner has not demonstrated any cogent reason for the Court to take an exception. Petitioner committed a blatant disregard of the basic procedural rules in appeals. The 15day reglementary period for the filing of the motion for reconsideration is mandatory and jurisdictional.20 Furthermore, the filing of the wrong mode of appeal to this Court is a patent ground for its dismissal. Anent the dismissal of the case for failure to prosecute, we find no fault on the part of the lower court. It is the duty of the plaintiff to appear on the date of the presentation of his evidence in chief on the complaint, prosecute his action within a reasonable length of time, and comply with the Rules and court orders. Failure to do so would justify the dismissal of the case.21 The true test for the exercise of the power to dismiss a case on the ground of failure to prosecute is whether, under the prevailing circumstances, the plaintiff is culpable for want of due diligence in failing to proceed with reasonable promptitude.22 There had been countless postponements of the trial dates upon motion of petitioners counsel which culminated in their non-appearance on the scheduled date of hearing. This fact, coupled with petitioners failure to comply with procedures laid down by the Rules of Court, justifies the dismissal of this case. WHEREFORE, the petition is DISMISSED. Costs against petitioner. SO ORDERED. G.R. No. 167724 June 27, 2006

BPI FAMILY SAVINGS BANK, INC., Petitioner, vs. MARGARITA VDA. DE COSCOLLUELA, Respondent. DECISION CALLEJO, SR., J.: Assailed before this Court is a Petition for Review under Rule 45 of the Rules of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 69732 granting respondents petition for certiorari, and its resolution denying petitioners motion for reconsideration. The Antecedents Respondent Margarita Coscolluela and her husband Oscar Coscolluela obtained an agricultural sugar crop loan from the Far East Bank & Trust Co. (FEBTC) Bacolod City Branch (later merged with petitioner Bank of the Philippine Islands) for crop years 1997 and 1998.2 However, in the book of FEBTC, the loan account of the spouses was treated as a single account,3 which amounted to P13,592,492.00 as evidenced by 67 Promissory Notes4 executed on various dates, from August 29, 1996 to January 23, 1998, to wit:
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Promissory Note No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 02-052-960971 02-052-961095 02-052-961122 02-052-961205 02-052-961231 02-052-961252 02-052-961274 02-052-961310 02-052-961373 02-052-961442 02-052-961464 02-052-961498 02-052-961542 02-052-970018

Date 29 August 1996 23 September 1996 27 September 1996 11 October 1996 18 October 1996 24 October 1996 30 October 1996 8 November 1996 21 November 1996 6 December 1996 12 December 1996 19 December 1996 27 December 1996 3 January 1997

Amount (in Phil. Peso) 148,000 1,200,000 550,000 180,000 155,000 190,000 115,000 90,000 125,000 650,000 240,000 164,000 200,000 120,000

15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40.

02-052-970052 02-052-970078 02-052-970087 02-052-970131 02-052-970163 02-052-970190 02-052-970215 02-052-970254 02-052-970293 02-052-970345 02-052-970367 02-052-970402 02-052-970422 02-052-970453 02-052-970478 02-052-970502 02-052-970539 02-052-970558 02-052-970589 02-052-970770 02-052-970781 02-052-970819 02-052-970852 02-052-970926 02-052-970949 02-052-970975

10 January 1997 15 January 1997 17 January 1997 23 January 1997 31 January 1997 7 February 1997 13 February 1997 20 February 1997 28 February 1997 7 March 1997 13 March 1997 21 March 1997 26 March 1997 4 April 1997 11 April 1997 17 April 1997 25 April 1997 30 April 1997 8 May 1997 25 June 1997 27 June 1997 4 July 1997 11 July 1997 1 August 1997 5 August 1997 8 August 1997

185,000 80,000 170,000 180,000 220,000 110,000 170,000 140,000 130,000 90,000 50,000 160,000 190,000 82,000 150,000 80,000 145,000 135,000 54,000 646,492 160,000 250,000 350,000 170,000 200,000 120,000

41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66.

02-052-970999 02-052-971028 02-052-971053 02-052-971073 02-052-971215 02-052-971253 02-052-971280 02-052-971317 02-052-971340 02-052-971351 02-052-971362 02-052-971394 02-052-971407 02-052-971449 02-052-971464 02-052-971501 02-052-971527 02-052-971538 02-052-971569 02-052-971604 02-052-971642 02-052-971676 02-052-971688 02-052-980019 02-052-980032 02-052-980064

15 August 1997 22 August 1997 29 August 1997 4 September 1997 12 September 1997 19 September 1997 26 September 1997 2 October 1997 10 October 1997 15 October 1997 16 October 1997 24 October 1997 29 October 1997 6 November 1997 13 November 1997 20 November 1997 25 November 1997 28 November 1997 4 December 1997 12 December 1997 18 December 1997 23 December 1997 29 December 1997 7 January 1998 8 January 1998 15 January 1998

150,000 110,000 130,000 90,000 160,000 190,000 140,000 115,000 115,000 700,000 90,000 185,000 170,000 105,000 170,000 150,000 620,000 130,000 140,000 220,000 185,000 117,000 100,000 195,000 170,000 225,000

67.

02-052-980079

23 January 1998

176,000

The promissory notes listed under Nos. 1 to 33 bear the maturity date of February 9, 1998, with a 30-day extension of up to March 11, 1998, while those listed under Nos. 34 to 67 bear December 28, 1998 as maturity date. Meanwhile, on June 13, 1997, the spouses Coscolluela executed a real estate mortgage in favor of FEBTC over their parcel of land located in Bacolod City covered by Transfer Certificate of Title (TCT) No. T-109329 as security of loans on credit accommodation obtained by the spouses from FEBTC and those that may be obtained by the mortgagees which was fixed at P7,000,000.00, as well as those that may be extended by the mortgagor to the mortgagees.5 Under the terms and conditions of the real estate mortgage, in the event of failure to pay the mortgage obligation or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding, shall become immediately due; upon such breach or violation of the terms and conditions thereof, FEBTC may, at its absolute discretion foreclose the same extrajudicially in accordance with the procedure prescribed by Act No. 3135, as amended, and for the purpose appointed FEBTC as its attorney-in-fact with full power and authority to enter the premises where the mortgaged property is located and to take actual possession and control thereof without need of any order of any court, nor written permission from the spouses, and with special power to sell the mortgaged property at a public or private sale at the option of the mortgagee; and that the spouses expressly waived the term of 30 days or any other terms granted by law as the period which must elapse before the mortgage agreement may be foreclosed and, in any case, such period has already lapsed. The mortgage was registered with the Registry of Deeds of Bacolod and was annotated in the title of the land on June 20, 1997.6 Meantime, Oscar died intestate and was survived by his widow, herein respondent. For failure to settle the outstanding obligation on the maturity dates, FEBTC sent a final demand letter7 to respondent on March 10, 1999 demanding payment, within five days from notice, of the principal of the loan amounting to P13,481,498.68, with past due interests and penalties or in the total amount of P19,482,168.31 as of March 9, 1999.8 Respondent failed to settle her obligation. On June 10, 1999, FEBTC filed a petition for the extrajudicial foreclosure of the mortgaged property, significantly only for the total amount of P4,687,006.68 exclusive of balance, interest and penalty, covered by promissory notes from 1 to 33, except nos. 2 and 10.9 While the extrajudicial foreclosure proceeding was pending, petitioner FEBTC filed a complaint10 with the Regional Trial Court (RTC) of Makati City, Branch 64, against respondent for the collection of the principal amount ofP8,794,492.00 plus interest and penalty, or the total amount of P12,672,000.31, representing the amounts indicated in the rest of the promissory notes, specifically Promissory Note Nos. 34 to 67, as well as those dated December 6, 1996 and September 23, 1996: PN No. 2-052-980079 2-052-980064 Date January 02, 1998 January 15, 1998 Amount 176,000.00 225,000.00 Annex A B

2-052-980032 2-052-980019 2-052-971688 2-052-971676 2-052-971642 2-052-971604 2-052-971569 2-052-971538 2-052-971527 2-052-971501 2-052-971464 2-052-971449 2-052-971407 2-052-971394 2-052-971362 2-052-971351 2-052-971340 2-052-971317 2-052-971280 2-052-971253 2-052-971215 2-052-971073 2-052-971053 2-052-971028 2-052-970999 2-052-970975

January 08, 1998 January 07, 1998 December 29, 1997 December 23, 1997 December 18, 1997 December 12, 1997 December 04, 1997 November 28, 1997 November 25, 1997 November 20, 1997 November 13, 1997 November 06, 1997 October 29, 1997 October 24, 1997 October 16, 1997 October 15, 1997 October 15, 1997 October 02, 1997 September 26, 1997 September 19, 1997 September 12, 1997 September 04, 1997 August 29, 1997 August 22, 1997 August 15, 1997 August 08, 1997

170,000.00 195,000.00 100,000.00 117,000.00 185,000.00 220,000.00 140,000.00 130,000.00 620,000.00 150,000.00 170,000.00 105,000.00 170,000.00 185,000.00 90,000.00 700,000.00 115,000.00 115,000.00 140,000.00 190,000.00 160,000.00 90,000.00 130,000.00 110,000.00 150,000.00 120,000.00

C D E F G H I J K L M N O P Q R S T U V W X Y Z AA BB

2-052-970949 2-052-970926 2-052-970852 2-052-970819 2-052-970781 2-052-970770 2-052-961442 2-052-961095

August 05, 1997 August 01, 1997 July 11, 1997 July 04, 1997 June 27, 1997 June 25, 1997 December 06, 1996 September 23, 1996

200,000.00 170,000.00 350,000.00 250,000.00 160,000.00 646,492.00 650,000.00 1,200,000.00

CC DD EE FF GG HH II JJ11

Petitioner prayed that, after due proceedings, judgment be rendered in its favor, thus: WHEREFORE, it is respectfully prayed that, after trial, judgment be rendered in its favor and against defendants ordering them to pay the following: a. The amount TWELVE MILLION SIX HUNDRED SEVENTY-TWO THOUSAND PESOS and 31/100 (P12,672,000.31), with additional stipulated interest and penalty equivalent to one (1%) percent of the amount due for every thirty (30) days or fraction thereof, until fully paid; b. Expense of litigation amounting to P50,000.00; c. The amount of P500,000.00 as attorneys fees. Other reliefs just and equitable in the premises are similarly prayed for.12 In her answer, respondent alleged, by way of special and affirmative defense, that the complaint was barred by litis pendentia, specifically, the pending petition for the extrajudicial foreclosure of the real estate mortgage, thus: 8) That plaintiff is guilty of forum shopping, in that some of the promissory notes attached to plaintiffs complaint are also the same promissory notes which were made the basis of the plaintiff in their extrajudicial foreclosure of mortgage filed against the defendant-spouses and also marked in evidence in support of their opposition to the issuance of the preliminary injunction in Civil Case No. 99-10864; 9) That plaintiff-bank has not only charged but over charged the defendant-spouses with excessive and exorbitant interest over and above those authorized by law. And in order to add more injury to the defendants, plaintiff also included other charges not legally collectible from the defendant-spouses; 10) That the act of the plaintiff-bank in seeking to collect twice on the same promissory notes is not only unfair and unjust but also condemnable as plaintiff seek to unjustly enrich itself at the expense of the defendants;

11) That there is another action pending between the same parties for the same cause; 12) That the claim or demand set forth in the plaintiffs complaint has either been waived, abandoned or otherwise extinguished.13 Petitioner presented Emmanuel Ganuelas, its loan officer in its Bacolod City Branch, as sole witness. He testified that the spouses Coscolluela were granted an agricultural sugar loan which is designed to finance the cultivation and plantation of sugar farms of the borrowers.14 Borrowers were allowed to make successive drawdowns or availments against the loan as their need arose. Each drawdown is covered by a promissory note with uniform maturity dates.15 The witness also testified that the loan account of the spouses was a "single loan account."16 After petitioner rested its case, respondent filed a demurrer to evidence17 contending, among others, that, with Ganuelas admission, there is only one loan account secured by the real estate mortgage, that the promissory notes were executed as evidence of the loans. Plaintiff was thus barred from instituting a personal action for collection of the drawdowns evidenced by Promissory Note Nos. 2, 10, and 34 to 67 after instituting a petition for extrajudicial foreclosure of the real estate mortgage for the amount covered by Promissory Note Nos. 1, 3 to 9, and 11 to 33. Respondent insisted that by filing a complaint for a sum of money, petitioner thereby split its cause of action against her; hence, the complaint must perforce be dismissed on the ground of litis pendentia. Petitioner opposed the demurrer arguing that while the loans were considered as a single account, each promissory note executed by respondent constituted a separate contract. It reiterated that its petition for the extrajudicial and foreclosure of the real estate mortgage before the Ex-Oficio Provincial Sheriff involves obligations different and separate from those in its action for a sum of money before the court. Thus, petitioner could avail of the personal action for the collection of the amount evidenced by the 36 promissory notes not subject of its petition for the extrajudicial foreclosure of the real estate mortgage. Petitioner insists that the promissory notes subject of its collection suit should be treated separately from the other set of obligations, that is, the 31 promissory notes subject of its extrajudicial foreclosure petition.18 In its Order19 dated January 10, 2002, the trial court denied the demurrer on the ground that the promissory notes executed by respondent and her deceased husband contained different amounts, and each note covered a loan distinct from the others. Thus, petitioner had the option to file a petition for the extrajudicial foreclosure of the real estate mortgage covering 31 of the promissory notes, and, as to the rest, to file an ordinary action for collection. Petitioner, thus, merely opted to institute an action for collection of the debt on the 36 promissory notes, and waived its action for the foreclosure of the security given on these notes. Respondent filed a motion for reconsideration,20 which the trial court denied in its February 19, 2002 Order,21prompting her to file a certiorari petition22 under Rule 65 with the CA, assailing the January 10, 2002 and February 19, 2002 Orders of the trial court. Respondent alleged that: 1. PUBLIC RESPONDENT GRAVELY ABUSED HER DISCRETION TANTAMOUNT TO LACK AND/OR EXCESS OF JURISDICTION IN HOLDING THAT THE RESPONDENT BANK CAN FILE SIMULTANEOUS ACTIONS FOR FORECLOSURE AND FOR COLLECTION. Meanwhile, on January 6, 2003, the parcel of land subject of the aforementioned real estate mortgage was sold at public auction where petitioner emerged as the highest bidder.23

On September 30, 2004, the CA rendered its Decision24 granting the petition, holding, under prevailing jurisprudence, the remedies either a real action to foreclose the mortgage or a personal action to collect the debt of a mortgage creditor are alternative and not cumulative. Since respondent availed of the first one, it was deemed to have waived the second. Further, the filing of both actions results in a splitting of a single cause of action. Thus, in denying her Demurrer to Evidence, the RTC committed grave abuse of discretion as it overruled settled judicial pronouncements. The dispositive part of the decision states: WHEREFORE, the instant petition is GRANTED. The assailed Orders dated January 10, 2002 and February 19, 2002 are SET ASIDE. SO ORDERED. The CA cited the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icaragal and Oriental Commercial Co., Inc.25 Aggrieved, petitioner filed a motion for reconsideration26 on October 12, 2004. Respondent filed her opposition27to the motion on October 26, 2004. The CA thereafter denied the motion in a resolution promulgated on April 6, 2005.28 Petitioner filed the instant petition for review on certiorari, alleging that: I. THE COURT OF APPEALS ERRED IN GRANTING THE PETITION FOR CERTIORARI OF RESPONDENT ON THE GROUND OF GRAVE ABUSE OF DISCRETION. xxxx The Trial Court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in denying the Demurrer to Evidence filed by the respondents. Petitioner, in instituting a petition for the Extra Judicial Foreclosure of the Mortgage of respondents based on 31 promissory notes executed by respondents and another action to collect on a separate set of 36 promissory notes, did not split their cause of action. xxxx The trial court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it denied respondents Demurrer to Evidence. In this wise, the Petition for Certiorari filed by respondents should not have been granted.29 During the pendency of this appeal, petitioner filed with this Court on December 2, 2005 a manifestation and joint motion for substitution, informing the court that petitioner bank has assigned to the Philippine Asset Investment, Inc. all its rights, title and interest over its non-performing loan accounts pursuant to Republic Act No. 9182 entitled "The Special Purpose Vehicle Act of 2002." The issues raised in this case are (1) whether the petition for certiorari under Rule 65 of the Rules of Court filed by respondent in the CA was the proper remedy to assail the January 10, 2002 Order of the trial court; (2) whether the appellate court issued its January 10, 2002 Order with grave abuse of its discretion amounting to excess or lack of jurisdiction.

Petitioner avers that the January 10, 2002 Order of the RTC denying the Demurrer to Evidence of respondent was interlocutory, and as such could not be the subject of a petition for certiorari.30 The RTC did not commit a grave abuse of its discretion in issuing its January 10, 2002 Order. Petitioner maintains that respondent executed 67 separate loan obligations evidenced by 67 separate promissory notes, with different amounts and maturity dates. It avers that each of the loans, as evidenced by each of the promissory notes, may properly be the subject of a separate action; thus, each promissory note is an actionable document. Moreover, the real estate mortgage executed by the spouses secured an obligation only to a fixed amount of P7,000,000.00 which is covered by Promissory Note Nos. 1 to 31, whereas the loans secured by the spouses covered by the Promissory Note Nos. 32 to 67 for the total amount of P12,672,000.31 were not secured by the real estate mortgage. Petitioner insists that it was proper to file the petition for extrajudicial foreclosure of the real estate mortgage only for respondents loan account covered by the 36 promissory notes for the amount of P7,755,733.64. It was not barred from filing a separate action for the collection of the P12,672,000.31 against respondent in the RTC for the drawdowns as evidenced by Promissory Note Nos. 34 to 67. What should apply, petitioner asserts, is the ruling of this Court in Caltex Philippines, Inc. v. Intermediate Appellate Court31 and Quiogue v. Bautista,32 and not the ruling of this Court in Bachrach which involves only one promissory note. Petitioner insists that, although respondent and her husband had a joint account with it, they had separate loan obligations as evidenced by the promissory notes; hence, it had separate causes of action for each and every drawdown evidenced by a promissory note. For her part, respondent admits having executed the promissory notes. However, as testified to by Ganuelas, the witness for petitioner, she and her husband only have one loan account with petitioner, hence, the latter had only one cause of action against her either for the collection of the entire loan account or for the extrajudicial foreclosure of the real estate mortgage, also for the entire amount of the loan. Petitioner cannot split her single loan account by filing a simple collection suit and a petition for extrajudicial foreclosure of the real estate mortgage without violating the rule against splitting a single cause of action. Respondent asserts that the real estate mortgage executed by respondent and her deceased husband was a security not only of their loan account in the amount of P7,000,000.00 but for all other loans that may have been extended to them in excess of that amount. The petition is unmeritorious. On the first issue, we agree with petitioners contention that the general rule is that an order denying a motion to dismiss or demurrer to evidence is interlocutory and is not appealable. Consequently, defendant must go to trial and adduce its evidence, and appeal, in due course, from an adverse decision of the trial court. However, the rule admits of exceptions. Where the denial by the trial court of a motion to dismiss or demurrer to evidence is tainted with grave abuse of discretion amounting to excess or lack of jurisdiction, the aggrieved party may assail the order of dismissal on a petition for certiorari under Rule 65 of the Rules of Court. A wide breadth of discretion is granted in certiorari proceedings in the interest of substantial justice and to prevent a substantial wrong.33 As the Court held in Preferred Home Specialties, Inc. v. Court of Appeals:34 It bears stressing that a writ of certiorari is of the highest utility and importance for curbing excessive jurisdiction and correcting errors and most essential to the safety of the people and the public welfare. Its scope has been broadened and extended, and is now one of the recognized modes for the correction of errors by this Court. The cases in which it will lie cannot be defined. To do so would be to destroy its comprehensiveness and limit its usefulness.

The appropriate function of a certiorari writ is to relieve aggrieved parties from the injustice arising from errors of law committed in proceedings affecting justiciable rights when no other means for an adequate and speedy relief is open. It is founded upon a sense of justice, to release against wrongs otherwise irreconcilable, wrongs which go unredressed because of want of adequate remedy which would be a grave reproach to any system of jurisprudence.35 The aggrieved party is entitled to a writ of certiorari where the trial court commits a grave abuse of discretion amounting to excess or lack of jurisdiction in denying a motion to dismiss a complaint on the ground of litis pendentia. An appeal while available eventually is cumbersome and inadequate for it requires the parties to undergo a useless and time-consuming and expensive trial. The second case constitutes a rude if not debilitating imposition on the trial and the docket of the judiciary.36 In the present case, we agree with the ruling of the CA that the RTC acted with grave abuse of discretion amounting to excess or lack of jurisdiction when it denied the Demurrer to Evidence of respondent and, in the process, ignored applicable rulings of this Court. Although respondent had the right to appeal the decision of the trial court against her after trial, however, she, as defendant, need not use up funds and undergo the tribulations of a trial and thereafter appeal from an adverse decision. Section 3, Rule 2 of the 1997 Rules of Civil Procedure provides that a party may not institute more than one suit for a single cause of action and, if two or more suits are instituted on the basis of the same cause of action, the filing of one on a judgment upon the merits in any one is available as ground for the dismissal of the other or others.37 A party will not be permitted to split up a single cause of action and make it a basis for several suits.38 A party seeking to enforce a claim must present to the court by the pleadings or proofs or both, all the grounds upon which he expects a judgment in his favor. He is not at liberty to split up his demands and prosecute it by piecemeal, or present only a portion of the grounds upon which special relief is sought, and leave the rest to be presented in a second suit if the first fails.39 The law does not permit the owner of a single or entire cause of action or an entire or indivisible demand to divide and split the cause or demand so as to make it the subject of several actions. The whole cause must be determined in one action. Indeed, in Goldberg v. Eastern Brewing Co.,40 the New York Supreme Court emphasized that: It was held in the case of Bendernagle v. Cocks, 19 Wend. 207 (32 Am.Dec. 448), that where a party had several demands or existing causes of action growing out of the same contract or resting in matter of account, which may be joined and sued for in the same action, they must be joined; and if the demands or causes of action be split up, and a suit brought for part only, and subsequently a second suit for the residue is brought, the first action may be pleaded in abatement or in bar of the second action. x x x41 The rule against splitting causes of action is not altogether one of original legal right but is one of interposition based upon principles of public policy and of equity to prevent the inconvenience and hardship incident to repeated and unnecessary litigation.42 It is not always easy to determine whether in a particular case under consideration, the cause of action is single and entire or separate. The question must often be determined, not by the general rules but by reference to the facts and circumstances of the particular case. Where deeds arising out of contract are distinct and separate, they give rise to separate cause of action for which separate action may be maintained; but it is also true that the same contract may give rise to different causes of action either by reason of successive breaches thereof or by reason of different stipulations or provisions of the contract.43 The true rule which determines whether a party has only a single and entire cause of action for all that is due him, and which must be sued for in one action, or has a

severable demand for which he may maintain separate suits, is whether the entire amount arises from one and the same act or contract or the several parts arise from distinct and different acts or contracts.44 Where there are entirely distinct and separate contracts, they give rise to separate causes of action for which separate actions may be instituted and presented. When money is payable by installments, a distinct cause of action assails upon the following due by each installment and they may be recovered in successive action. On the other hand, where several claims payable at different times arise out of the same transactions, separate actions may be brought as each liability accounts. But where no action is brought until more than one is due, all that are due must be included in one action; and that if an action is brought to recover upon one or more that are due but not upon all that are due, a recovery in such action will be a bar to a several or other actions brought to recover one or more claims of the other claims that were due at the time the first action was brought.45 The weight of authority is that in the absence of special controlling circumstances, an open or continuous running account between the same parties constitutes a single and indivisible demand, the aggregate of all the items of the account constituting the amount due. But the rule is otherwise where it affirmatively appears that the parties regarded the different items of the account as separate transactions and not parts of an ordinary running account. And there may also be, even between the same parties, distinct and separate actions upon which separate actions may be maintained.46 In fine, what is decisive is that there be either an express contract, or the circumstances must be such as to raise an implied contract embracing all the items to make them, when they arise, at different times, a single or entire demand or cause of action.47 Decisive of the principal issue is the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icaragal and Oriental Commercial Co., Inc.48 in which it ruled that on the nonpayment of a note secured by a mortgage, the creditor has a single cause of action against the debtor. The single cause of action consists in the recovery of the credit with execution of the suit. In a mortgage credit transaction, the credit gives rise to a personal action for collection of the money. The mortgage is the guarantee which gives rise to a mortgage foreclosure suit to collect from the very property that secured the debt.49 The action of the creditor is anchored on one and the same cause: the nonpayment by the debtor of the debt to the creditor-mortgagee. Though the debt may be covered by a promissory note or several promissory notes and is covered by a real estate mortgage, the latter is subsidiary to the former and both refer to one and the same obligation. A mortgage creditor may institute two alternative remedies against the mortgage debtor, either a personal action for the collection of debt, or a real action to foreclose the mortgage, but not both. Each remedy is complete by itself. As explained by this Court: We hold, therefore, that, in the absence of express statutory provisions, a mortgage creditor may institute against the mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In other words, he may pursue either of the two remedies, but not both. By such election, his cause of action can by no means be impaired, for each of the two remedies is complete in itself. Thus, an election to bring a personal action will leave open to him all the properties of the debtor for attachment and execution, even including the mortgaged property itself. And, if he waives such personal action and pursues his remedy against the mortgaged property, an unsatisfied judgment thereon would still give him the right to sue for a deficiency judgment, in which case, all the properties of the defendant, other than the mortgaged property, are again open to him for the satisfaction of the deficiency. In either case, his remedy is complete, his cause of action undiminished, and any advantages attendant to the pursuit of one or the other remedy are purely

accidental and are all under his right of election. On the other hand, a rule that would authorize the plaintiff to bring a personal action against the debtor and simultaneously or successively another action against the mortgaged property, would result not only in multiplicity of suits so offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of being sued in the place of his residence or of the residence of the plaintiff, and then again in the place where the property lies.50 If the mortgagee opts to foreclose the real estate mortgage, he thereby waives the action for the collection of the debt and vice versa.51 If the creditor is allowed to file its separate complaints simultaneously or successively, one to recover his credit and another to foreclose his mortgage, he will, in effect, be authorized plural redress for a single breach of contract at so much costs to the court and with so much vexation and oppressiveness to the debtor.52 In the present case, petitioner opted to file a petition for extrajudicial foreclosure of the real estate mortgage but only for the principal amount of P4,687,006.08 or in the total amount of P7,755,733.64 covering only 31 of the 67 promissory notes. By resorting to the extrajudicial foreclosure of the real estate mortgage, petitioner thereby waived its personal action to recover the amount covered not only by said promissory notes but also of the rest of the promissory notes. This is so because when petitioner filed its petition before the Ex-Oficio Provincial Sheriff on June 10, 1999, the entirety of the loan account of respondent under the 67 promissory notes was already due. The obligation of respondent under Promissory Note Nos. 1 to 33 became due on February 9, 1998 but was extended up to March 11, 1998, whereas, those covered by Promissory Note Nos. 34 to 67 matured on December 28, 1998. Petitioner should have caused the extrajudicial foreclosure of the real estate mortgage for the recovery of the entire obligation of respondent, on all the promissory notes. By limiting the account for which the real estate mortgage was being foreclosed to the principal amount of P4,687,006.68, exclusive of interest and penalties, petitioner thereby waived recovery of the rest of respondents agricultural loan account. It must be stressed that the parties agreed in the Real Estate Mortgage that in the event that respondent shall fail to pay the mortgage obligation "or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding shall become immediately due, payable and defaulted," thus: 3. The terms and conditions of the Mortgage have been violated when the Mortgagors failed and/or refused to pay, notwithstanding repeated demands, the installment and/or maturity amount of the Mortgage obligation which became due and payable on the said date; 4. Under the terms and conditions of the Mortgage Agreement, in the event the Mortgagors fail and/or refuse to pay the Mortgage obligation or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding, shall, without need for demand, notice, or any other act or deed, become immediately due, payable and defaulted; 5. The Mortgage Agreement provides that upon such breach or violation of the terms and conditions thereof, the Mortgagee may, at its absolute discretion foreclose the same extrajudicially in accordance with the procedure prescribed by Act No. 3135, as amended, and for the purpose appointed the Mortgagee as its attorney-in-fact with full power and authority to enter the premises where the Mortgaged property is located and to take actual possession and control thereof without need of any order of any Court, nor written permission from the Mortgagors, and with special power to sell the Mortgaged Property at a public or private sale at the option of the Mortgagee.53

Petitioner cannot split the loan account of respondent by filing a petition for the extrajudicial foreclosure of the real estate mortgage for the principal amount of P4,687,006.68 covered by the first set of promissory notes, and a personal action for the collection of the principal amount of P12,672,000.31 covered by the second set of promissory notes without violating the proscription against splitting a single cause of action against respondent. The contention of petitioner that respondents loan account that was secured by the real estate mortgage was limited only to those covered by the Promissory Note Nos. 1 to 33 or for the total amount of P7,000,000.00 is belied by the real estate mortgage and by its own evidence. Under the deed, the mortgage was to secure the payment of a credit accommodation already obtained by respondent, the principal of all of which was fixed at P7,000,000.00, as well as any other obligation that may be extended to respondent, including interest and expenses, to wit: That for and in consideration of credit accommodation obtained from the MORTGAGEE, and to secure the payment of the same and those that may hereafter be obtained, the principal of all of which is hereby fixed at SEVEN MILLION PESOS ONLY (P7,000,000.00), Philippine Currency, as well as those that the MORTGAGEE may extend to the MORTGAGOR, including interest and expenses or any other obligation owing to the MORTGAGEE, whether direct or indirect, principal or secondary, as appears in the accounts, books and records of the MORTGAGEE, the MORTGAGOR does hereby transfer and convey by way of mortgage unto the MORTGAGEE, its successors or assigns, the parcels of land which are described in the list inserted on the back of this document and/or appended herein, together with all the buildings and improvements now existing or which may hereafter be erected or constructed thereon, of which the MORTGAGOR declares that he/it is the absolute owner free from all liens and encumbrances. However, if the MORTGAGOR shall pay to the MORTGAGEE, its successors or assigns, the obligation secured by this mortgage when due, together with interest, and shall keep and perform all and singular the covenants and agreements herein contained for the MORTGAGOR to keep and perform, then this mortgage shall be void, otherwise, it shall remain in full force and effect.54 (Emphasis supplied) The testimony of Ganuelas in the RTC relative to the real estate mortgage follows: Q The real estate mortgage states: "That for and in consideration of credit accommodation obtained from the mortgagee." This simply means, Mr. Witness, that this mortgage is offered to secure loans already obtained by the mortgagor from the mortgagee Far East Bank and Trust Company. I am referring only to that phrase, obtained from the mortgagee, is that correct? A Yes, Sir. Q So from this phrase in the real estate mortgage, this mortgage was constituted to secure the credit accommodation already obtained by the mortgagor, the defendant spouses, as of the time of the execution of the real estate mortgage, is that correct? A Yes, Sir. Q Now since the loan secured by the defendants are evidenced by promissory notes, will you agree with me, Mr. Witness, that this real estate mortgage was executed for promissory notes already executed by the defendant spouses as of the time of the execution of the mortgage on June 13, 1997, is that correct? A Yes, Sir.

ATTY. MIRANO: For purposes of identification, we respectfully request that this phrase: "that for and in consideration of the credit accommodation obtained from the mortgagee" be bracketed and mark as Exhibit 6-B. (Acting court interpreter marking said phrase as Exhibit 6-B.) Q Now in accordance with the terms of this real estate mortgage, this real estate mortgage was executed by the defendant spouses not only to secure the loan already obtained by the said spouses as of the time of the execution of the mortgage on June 13, 1997 but also all other loans that may be extended by Far East Bank and Trust Company to the defendant spouses after the execution of the mortgage as stated in this portion of the real estate mortgage which we quote: "to secure the payment as and those that may hereafter be obtained," is that correct? A Yes, Sir. Q So from your statement, Mr. Witness, this real estate mortgage was offered by the defendant spouses as a security for the loans they already secured as of the time of the execution of the mortgage but also for the loans that they will secure thereafter, is that correct? A Yes, Sir.55 (Emphasis supplied) As gleaned from the plain terms of the real estate mortgage, the real estate of respondent served as continuing security liable for future advancements or obligations beyond the amount of P7,000,000.00. The mortgage partakes of the nature of contract for future advancements. As explained by this Court in the early case of Lim Julian v. Lutero:56 The rule, of course, is well settled that an action to foreclose a mortgage must be limited to the amount mentioned in the mortgage. The exact amount, however, for which the mortgage is given need not always be specifically named. The amount for which the mortgage is given may be stated in definite or general terms, as is frequently the case in mortgages to secure future advancements. The amount named in the mortgage does not limit the amount for which it may stand as security, if, from the four corners of the document, the intent to secure future indebtedness or future advancements is apparent. Where the plain terms, of the mortgage, evidence such an intent, they will control as against a contention of the mortgagor that it was the understanding of the parties that the mortgage was security only for the specific amount named. (Citizens Savings Bank v. Kock, 117 Mich. 225). In that case, the amount mentioned in the mortgage was $7,000. The mortgage, however, contained a provision that "the mortgagors agree to pay said mortgagee any sum of money which they may now or hereafter owe said mortgagee." At the time the action of foreclosure was brought, the mortgagors owed the mortgagee the sum of $21,522. The defendants contended that the amount to be recovered in an action to foreclose should be limited to the amount named in the mortgage. The court held that the amount named as consideration for the mortgage did not limit the amount for which the mortgage stood as security, if, from the whole instrument the intent to secure future indebtedness could be gathered. The court held that a mortgage to cover future advances is valid. (Michigan Insurance Co. v. Brown, 11 Mich. 265; Jones on Mortgages, 1, sec. 373; Keyes v. Bumps Administrator, 59 Vt. 391; Fisher v. Otis, 3 Pin. 78; Brown v. Kiefer, 71 N.Y. 610; Douglas v. Reynolds, 7 Peters [U.S.] 113; Shores v. Doherty, 65 Wis. 153) Literal accuracy in describing the amount due, secured by a mortgage, is not required, but the description of the debt must be correct and full enough to direct attention to the sources of correct information in regard to it, and be such as not to mislead or deceive as to the amount of it, by the language used. Reading the mortgage before us from its four corners, we find that the description of the debt is full enough to give information concerning the amount due. The mortgage recites that it is

given to secure the sum of P12,000, interest, commissions, damages, and all other amounts which may be found to be due at maturity. The terms of the contract are sufficiently clear to put all parties who may have occasion to deal with the property mortgaged upon inquiry. The parties themselves from the very terms of the mortgage could not be in ignorance at any time of the amount of their obligation and the security held to guarantee the payment. When a mortgage is given for future advancements and the money is paid to the mortgagor "little by little" and repayments are made from time to time, the advancements and the repayments must be considered together for the purpose of ascertaining the amount due upon the mortgage at maturity. Courts of equity will not permit the consideration of the repayments only for the purpose of determining the balance due upon the mortgage. (Luengo & Martinez v. Moreno, 26 Phil. 111) The mere fact that, in contract of advancements, the repayments at any one time exceeds the specific amount mentioned in the mortgage will not have the effect of discharging the mortgage when the advancements at that particular time are greatly in excess of the repayments; especially is this true when the contract of advancement or mortgage contains a specific provision that the mortgage shall cover all "such other amounts as may be then due." Such a provision is added to the contract of advancements or mortgage for the express purpose of covering advancements in excess of the amount mentioned in the mortgage. (Luengo & Martinez v. Moreno, supra) The sum found to be owing by the debtor at the termination of the contract of advancements between him and the mortgagee, during continuing credit, is still secured by the mortgage on the debtors property, and the mortgagee is entitled to bring the proper action for the collection of the amounts still due and to request the sale of the property covered by the mortgage. (Luengo & Martinez v. Moreno, supra; Russell v. Davey, 7 Grant Ch. 13; Patterson First National Bank v. Byard, 26 N.J. Equity 225) Under a mortgage to secure the payment of future advancements, the mere fact that the repayments on a particular day equal the amount of the mortgage will not discharge the mortgage before maturity so long as advancements may be demanded and are being received. (Luengo & Martinez v. Moreno, supra)57 Moreover, the series of loan advancements herein cannot be likened to the credit line discussed in Caltex Philippines, Inc. v. Intermediate Appellate Court,58 as petitioner posited in its reply59 filed before this Court. In Caltex, unlike the instant case, the real estate mortgage executed did not contain a "dragnet" clause60 that would subsume all past and future debts. The mortgage therein specifically secured only the loans extended prior to the mortgage. Thus, in the said case, the future debts were deemed as constituting a separate transaction from the past debts secured by the mortgage. The ruling of the Court in Quiogue v. Bautista61 is likewise inapplicable. In that case, the Court deemed the loan transactions as separate, considering that those were two separate loans secured by two separate mortgages. In this case, however, there is only one mortgage securing all 67 drawdowns made by respondent. In fine, for the failure of respondent to pay her loan obligation, petitioner had only one cause of action arising from such non-payment. This single cause of action consists in the recovery of the credit with execution of the security.62 Petitioner is proscribed from splitting its single cause of action by filing an extrajudicial foreclosure proceedings on June 10, 1999 with respect to the amounts in the 31 promissory notes, and, during the pendency thereof, file a collection case on June 23, 1999, with respect to the amounts in the remaining 36 promissory notes.

Considering, therefore, that, in the case at bar, petitioner had already instituted extrajudicial foreclosure proceedings of the mortgaged property, it is now barred from availing itself of a personal action for the collection of the indebtedness. IN VIEW OF ALL THE FOREGOING, the instant petition is DISMISSED for lack of merit. Costs against petitioner. SO ORDERED. A.M. No. RTJ-06-2005 [OCA-IPI No. 04-2122-RTJ] July 14, 2006

JOSEFINA CRUZ-AREVALO, complainant, vs. JUDGE LYDIA QUERUBIN-LAYOSA, Regional Trial Court, Branch 217, Quezon City, respondent. DECISION YNARES-SANTIAGO, J.: This administrative Complaint1 filed by Josefina Cruz-Arevalo charges Judge Lydia QuerubinLayosa2 with manifest bias and partiality and ignorance of the law relative to Civil Case No. Q-0350379, entitled Josefina Cruz-Arevalo and Conrado R. Cruz v. Home Development Mutual Fund and Federico S. Quimbo. Complainant narrates that Conrado R. Cruz executed an authorization letter3 and a special power of attorney (SPA)4 in her favor to represent him in Civil Case No. Q-03-50379 while he undergoes medical treatment in the United States of America (USA). Notwithstanding the presentation of the authorization letter and SPA during the pre-trial, respondent judge declared Cruz non-suited due to his absence. She also refused to issue an order to that effect thus depriving Cruz the right to challenge her order by way of petition for certiorari. Complainant also assails the order of respondent judge to exclude several paragraphs in the Affidavit which was adopted as the direct testimony of her witness without giving her counsel a chance to comment on the objections raised by the defendants. Moreover, she refused to issue a written order excluding certain paragraphs thus depriving complainant the opportunity to file certiorari proceedings. Complainant likewise accuses respondent judge of inaction, indifference or collusion by silence5 with the defendants for not acting on her Motions for Writs of Subpoena Duces Tecum and Ad Testificandum6 thus providing opportunity for defendant Quimbo to avoid compliance therewith. Complainant prays for the re-raffling of the case to ensure impartiality and proper dispensation of justice.7 On November 14, 2004, respondent judge made the following ruling in Civil Case No. Q-03-50379: Considering that plaintiff Josefina Cruz-Arevalo had filed a Complaint against undersigned Presiding Judge with the Office of the Court Administrator and considering further that she had also filed with said Office a motion for re-raffle of this case, on grounds of partiality and bias on the part of said Judge, while such grounds for re-raffle are unfounded and while there is no legal basis for inhibition, if only to assuage her fears of not obtaining a fair and impartial trial, and having already entertained serious doubt on her objectivity in trying and

eventually deciding the case, the undersigned Presiding Judge deems it wise to voluntarily inhibit herself from trying the case. Accordingly, undersigned Presiding Judge hereby inhibits herself from trying this case. Let the entire record be forwarded to the Office of the Executive Judge through the Clerk of Court of this Court for re-raffle.8 In her Comment9 dated January 12, 2005, respondent judge explains that the letter presented by complainant allegedly authorizing her to represent Cruz in the pre-trial of Civil Case No. Q-03-50379 is defective because it was not duly notarized and authenticated. She likewise found the SPA defective as it pertains to complainant's authority to receive Cruz's contribution to the PAG-IBIG Provident Fund and not to represent him in the pre-trial of the civil case. Thus, finding the absence of Cruz during the pre-trial inexcusable and without any proper representation in his behalf, respondent judge dismissed the complaint insofar as he is concerned. As regards the exclusion of several paragraphs in the Affidavit constituting as the direct testimony of Atty. Cecilio Y. Arevalo, Jr., respondent judge points out that she gave the other party the chance to go over the affidavit and make objections thereto like any direct testimonial evidence. She claims that no written order is necessary as demanded by complainant's counsel because her rulings were made in open court during the course of trial and are already reflected in the transcript of the stenographic notes. With regard to complainant's Motions for Writs of Subpoena Duces Tecum and Ad Testificandum, respondent judge avers that they were not given due course because the legal fees for said motions were unpaid and the person alleged to have possession or control of the documents sought to be produced is not named or specified therein.10 In its Report11 dated October 18, 2005, the Office of the Court Administrator (OCA) found complainant's accusations unmeritorious and recommended the dismissal of the administrative case for lack of merit.12 We agree with the findings and recommendation of the OCA. The records clearly show that Conrado R. Cruz was absent during the pre-trial of Civil Case No. Q03-50379, despite the specific mandate of the Rules of Court for parties and their counsel to personally appear therein.13While non-appearance of a party may be excused if a duly authorized representative shall appear in his behalf,14however Cruz failed to validly constitute complainant because his authorization letter and SPA were not respectively authenticated and specific as to its purpose. Without any authorized representative, the failure of Cruz to appear at the pre-trial made him non-suited. Respondent judge thus correctly dismissed the complaint in so far as he is concerned. 15 As regards the exclusion of certain paragraphs in the affidavit of complainant's witness, the rule is that evidence formally offered by a party may be admitted or excluded by the court. If a party's offered documentary or object evidence is excluded, he may move or request that it be attached to form part of the record of the case. If the excluded evidence is oral, he may state for the record the name and other personal circumstances of the witness and the substance of the proposed testimony. These procedures are known as offer of proof or tender of excluded evidence and are made for purposes of appeal. If an adverse judgment is eventually rendered against the offeror, he may in his appeal assign as error the rejection of the excluded evidence. The appellate court will better understand and appreciate the assignment of error if the evidence involved is included in the record of the case.16

On the other hand, the ruling on an objection must be given immediately after an objection is made, as what respondent judge did, unless the court desires to take a reasonable time to inform itself on the question presented; but the ruling shall always be made during the trial and at such time as will give the party against whom it is made an opportunity to meet the situations presented by the ruling.17 Respondent judge correctly ordered the striking out of portions in Atty. Arevalo's affidavit which are incompetent, irrelevant, or otherwise improper.18Objections based on irrelevancy and immateriality need no specification or explanation. Relevancy or materiality of evidence is a matter of logic, since it is determined simply by ascertaining its logical connection to a fact in issue in the case. We agree with OCA's observation that: There is also nothing irregular when respondent [judge] did not issue an order to reflect the objections of the defense counsel to each of the allegations in the sworn affidavit which was adopted as the direct testimony of complainant's counsel as the court's rulings thereto were made during the trial. As pointed out by respondent [judge], these matters are already reflected in the transcript of stenographic notes and are not subject to written order. Orders resolving motions for continuance made in the presence of the adverse party, or those made in the course of a hearing or trial, may properly be made orally. (Echaus vs. CA, GR No. 57343, July 23, 1990, [187 SCRA 672]). Moreover, the acts of a judge in his/her judicial capacity are not subject to disciplinary action even though erroneous in the absence of fraud, dishonesty or corruption which complainant failed to prove in the instant case. Further, while records show that the person alleged to have possession or control of the documents sought to be produced is actually named or specified in the Motions for Writs of Subpoena Duces Tecum and Ad Testificandumfiled by complainant in Civil Case No. Q-03-50379, respondent judge was correct not to have entertained the same as the legal fees corresponding thereto were not paid. Respondent judge is not obliged to remind complainant or her counsel regarding said fees as the rules of procedure and practice already mandate that fees prescribed in filing of pleadings or other application which initiates an action or proceeding shall be paid in full.19However, this issue has become moot as respondent judge subsequently issued the subpoena prayed for after the complainant paid the required fees. Finally, complainant failed to present evidence to show the alleged bias of respondent judge; mere suspicion that a judge was partial is not enough.20 Bare allegations of partiality will not suffice in an absence of a clear showing that will overcome the presumption that the judge dispensed justice without fear or favor. It bears to stress again that a judge's appreciation or misappreciation of the sufficiency of evidence adduced by the parties, or the correctness of a judge's orders or rulings on the objections of counsels during the hearing, without proof of malice on the part of respondent judge, is not sufficient to show bias or partiality.21 The Court will not shirk from its responsibility of imposing discipline upon erring members of the bench. At the same time, however, the Court should not hesitate to shield them from unfounded suits that only serve to disrupt rather than promote the orderly administration of justice. WHEREFORE, the instant administrative complaint against Judge Lydia Querubin-Layosa, Presiding Judge, Regional Trial Court of Quezon City, Branch 217, is DISMISSED for lack of merit. SO ORDERED. G.R. No. 141667 July 17, 2006

REPUBLIC OF THE PHILIPPINES, represented by NATIONAL ELECOMMUNICATIONS COMMISSION (NTC),petitioner,

vs. INTERNATIONAL COMMUNICATIONS CORPORATION (ICC), respondent. DECISION GARCIA, J.: In this petition for review under Rule 45 of the Rules of Court, petitioner Republic, through the National Telecommunications Commission (NTC), seeks the annulment and setting aside of the Amended Decision1dated September 30, 1999 of the Court of Appeals (CA), setting aside the orders dated June 4, 1996 and June 25, 1997 of the NTC insofar as said orders required respondent International Communications Corporation (ICC) to pay the amount of P1,190,750.50 by way of permit fee as a condition for the grant of a provisional authority to operate an international telecommunications leased circuit service, and the Resolution2 dated January 24, 2000, denying NTC's motion for reconsideration. There is no dispute as to the facts: On April 4, 1995, respondent ICC, holder of a legislative franchise under Republic Act (RA) No. 7633 to operate domestic telecommunications, filed with the NTC an application for a Certificate of Public Convenience and Necessity to install, operate, and maintain an international telecommunications leased circuit service between the Philippines and other countries, and to charge rates therefor, with provisional authority for the purpose. In an Order3 dated June 4, 1996, the NTC approved the application for a provisional authority subject, among others, to the condition: 2. That applicant [ICC] shall pay a permit fee in the amount of P1,190,750.00, in accordance with section 40(g) of the Public Service Act,4 as amended; Respondent ICC filed a motion for partial reconsideration of the Order insofar as the same required the payment of a permit fee. In a subsequent Order dated June 25, 1997, the NTC denied the motion. Therefrom, ICC went to the CA on a petition for certiorari with prayer for a temporary restraining order and/or writ of preliminary injunction, questioning the NTC's imposition against it of a permit fee of P1,190,750.50 as a condition for the grant of the provisional authority applied for. In its original decision5 dated January 29, 1999, the CA ruled in favor of the NTC whose challenged orders were sustained, and accordingly denied ICC's certiorari petition, thus: WHEREFORE, the instant petition is hereby DENIED. In view thereof, the assailed orders dated 4 June 1996 and 25 June 1997, requiring the payment of permit fees in the amount of One Million One Hundred Ninety Thousand Seven Hundred Fifty and 50/100 Pesos (P1,190,750.50) as a condition for the grant of a Provisional Authority to operate an International Circuit service, are hereby AFFIRMED. ACCORDINGLY, the International Communications Corporation is hereby ordered to pay the amount of One Million One Hundred Ninety Thousand Seven Hundred Fifty and 50/100 Pesos (P1,190,750.50) to the National Telecommunications Commission. SO ORDERED.

In time, ICC moved for a reconsideration. This time, the CA, in its Amended Decision dated September 30, 1999, reversed itself, to wit: WHEREFORE, the instant Motion for Reconsideration is hereby GRANTED. Accordingly, the Decision dated 29 January 1999 including the imposition by the public respondent of permit fees with respect to [ICCs] international leased circuit service is hereby REVERSED. Judgment is hereby rendered, setting aside the questioned orders dated 04 June 1996 and 25 June 1997, insofar as they impose upon petitioner ICC the payment of the amount of One Million One Hundred Ninety Thousand Seven Hundred Fifty and Fifty Centavos (P1,190,750.50) by way of permit fees as a condition for the grant of a provisional authority to operate an International Leased Circuit Service. No costs. SO ORDERED. (Word in bracket added). Petitioner NTC filed a motion for reconsideration, but its motion was denied by the CA in its equally challenged Resolution dated January 24, 2000. Hence, NTC's present recourse claiming that the CA erred in ruling that: 1. NTC has arrogated upon itself the power to tax an entity; 2. Section 40(g) of the Public Service Act has been amended by Section 5(g) of R.A. 7925;6 3. The imposition of permit fees is no longer authorized by R.A. 7925; and 4. The imposed permit fee in the amount of P1,190,750.50 for respondent's provisional authority is exorbitant. Before addressing the issues raised, we shall first dwell on the procedural matter raised by respondent ICC, namely, that the present petition should be dismissed outright for having been filed out of time. It is respondent's posture that petitioner's motion for reconsideration filed with the CA visa-vis the latter's Amended Decision is apro forma motion and, therefore, did not toll the running of the reglementary period to come to this Court via this petition for review. Under Section 2 of Rule 45 of the Rules of Court, a recourse to this Court by way of a petition for review must be filed within fifteen (15) days from notice of the judgment or final order or resolution appealed from, or of the denial of the petitioner's motion for new trial or reconsideration filed in due time after notice of the judgment. While a motion for reconsideration ordinarily tolls the period for appeal, one that fails to point out the findings or conclusions which were supposedly contrary to law or the evidence does not have such an effect on the reglementary period as it is merely a pro forma motion.7 In arguing for the outright dismissal of this petition, respondent ICC claims that the motion for reconsideration filed by petitioner NTC in connection with the CAs Amended Decision failed to point out specifically the findings or conclusions of the CA which were supposedly contrary to law. Respondent contends that the issues raised by the petitioner in its motion for reconsideration were mere reiterations of the same issues which had already been considered and passed upon by the CA when it promulgated its Amended Decision. On this premise, respondent maintains that petitioners aforementioned motion for reconsideration is a mere pro forma motion that did not toll the period for filing the present petition.

Under established jurisprudence, the mere fact that a motion for reconsideration reiterates issues already passed upon by the court does not, by itself, make it a pro forma motion.8 Among the ends to which a motion for reconsideration is addressed is precisely to convince the court that its ruling is erroneous and improper, contrary to the law or evidence; and in so doing, the movant has to dwell of necessity on issues already passed upon. If a motion for reconsideration may not discuss those issues, the consequence would be that after a decision is rendered, the losing party would be confined to filing only motions for reopening and new trial.9 Where there is no apparent intent to employ dilatory tactics, courts should be slow in declaring outright a motion for reconsideration as pro forma. The doctrine relating to pro forma motions has a direct bearing upon the movant's valuable right to appeal. Hence, if petitioner's motion for reconsideration was indeed pro forma, it would still be in the interest of justice to review the Amended Decision a quo on the merits, rather than to abort the appeal due to a technicality, especially where, as here, the industry involved (telecommunications) is vested with public interest. All the more so given that the instant petition raises some arguments that are well-worth resolving for future reference. This brings us to the substantive merits of the petition. In its Amended Decision, the CA ruled that petitioner NTC had arrogated upon itself the power to tax an entity, which it is not authorized to do. Petitioner disagreed, contending the fee in question is not in the nature of a tax, but is merely a regulatory measure. Section 40(g) of the Public Service Act provides: Sec. 40. The Commission is authorized and ordered to charge and collect from any public service or applicant, as the case may be, the following fees as reimbursement of its expenses in the authorization, supervision and/or regulation of the public services: xxx xxx xxx

g) For each permit, authorizing the increase in equipment, the installation of new units or authorizing the increase of capacity, or the extension of means or general extensions in the services, twenty centavos for each one hundred pesos or fraction of the additional capital necessary to carry out the permit. (Emphasis supplied) Clearly, Section 40(g) of the Public Service Act is not a tax measure but a simple regulatory provision for the collection of fees imposed pursuant to the exercise of the States police power. A tax is imposed under the taxing power of government principally for the purpose of raising revenues. The law in question, however, merely authorizes and requires the collection of fees for the reimbursement of the Commission's expenses in the authorization, supervision and/or regulation of public services. There can be no doubt then that petitioner NTC is authorized to collect such fees. However, the amount thereof must be reasonably related to the cost of such supervision and/or regulation.10 Petitioner NTC also assails the CA's ruling that Section 40(g) of the Public Service Act had been amended by Section 5(g) of R.A. No. 7925, which reads: Sec. 5. Responsibilities of the National Telecommunications Commission. - The National Telecommunications Commission (Commission) shall be the principal administrator of this Act and as such shall take the necessary measures to implement the policies and objectives

set forth in this Act. Accordingly, in addition to its existing functions, the Commission shall be responsible for the following: xxx xxx xxx

g) In the exercise of its regulatory powers, continue to impose such fees and charges as may be necessary to cover reasonable costs and expenses for the regulation and supervision of the operations of telecommunications entities. (Emphasis supplied) The CA ratiocinated that while Section 40(g) of the Public Service Act (CA 146, as amended), supra, allowed NTC to impose fees as reimbursement of its expenses related to, among other things, the "authorization" of public services, Section 5(g), above, of R.A. No. 7921 no longer speaks of "authorization" but only of "regulation" and "supervision." To the CA, the omission by Section 5(g) of R.A. No. 7921 of the word "authorization" found in Section 40(g) of the Public Service Act, as amended, meant that the fees which NTC may impose are only for reimbursement of its expenses for regulation and supervision but no longer for authorization purposes. We find, however, that NTC is correct in saying that there is no showing of legislative intent to repeal, even impliedly, Section 40(g), supra, of the Public Service Act, as amended. An implied repeal is predicated on a substantial conflict between the new and prior laws. In the absence of an express repeal, a subsequent law cannot be construed as repealing a prior one unless an irreconcilable inconsistency and repugnancy exist in the terms of the new and old laws.11 The two laws must be absolutely incompatible such that they cannot be made to stand together.12 Courts of justice, when confronted with apparently conflicting statutes or provisions, should endeavor to reconcile the same instead of declaring outright the validity of one as against the other. Such alacrity should be avoided. The wise policy is for the judge to harmonize such statutes or provisions if this is possible, bearing in mind that they are equally the handiwork of the same legislature, and so give effect to both while at the same time also according due respect to a coordinate department of the government. It is this policy the Court will apply in arriving at the interpretation of the laws and the conclusions that should follow therefrom.13 It is a rule of statutory construction that repeals by implication are not favored. An implied repeal will not be allowed unless it is convincingly and unambiguously demonstrated that the two laws are so clearly repugnant and patently inconsistent with each other that they cannot co-exist. This is based on the rationale that the will of the legislature cannot be overturned by the judicial function of construction and interpretation. Courts cannot take the place of Congress in repealing statutes. Their function is to try to harmonize, as much as possible, seeming conflicts in the laws and resolve doubts in favor of their validity and co-existence.14 Here, there does not even appear to be a conflict between Section 40(g) of the Public Service Act, as amended, and Section 5(g) of R.A. 7925. In fact, the latter provision directs petitioner NTC to "continue to impose such fees and charges as may be necessary to cover reasonable costs and expenses for the regulation and supervision of telecommunications entities." The absence alone of the word "authorization" in Section 5(g) of R.A. No. 7921 cannot be construed to mean that petitioner NTC had thus been deprived of the power to collect such fees. As pointed out by the petitioner, the words "authorization, supervision and/or regulation" used in Section 40(g) of the Public Service Act are not distinct and completely separable concepts which may be taken singly or piecemeal. Taken in their entirety, they are the quintessence of the Commission's regulatory functions, and must go hand-in-hand with one another. In petitioner's own words, "[t]he Commission authorizes, supervises and regulates telecommunications entities and these functions... cannot be considered singly without

destroying the whole concept of the Commission's regulatory functions."15 Hence, petitioner NTC is correct in asserting that the passage of R.A. 7925 did not bring with it the abolition of permit fees. However, while petitioner had made some valid points of argument, its position must, of necessity, crumble on the fourth issue raised in its petition. Petitioner itself admits that the fees imposed are precisely regulatory and supervision fees, and not taxes. This necessarily implies, however, that such fees must be commensurate to the costs and expenses involved in discharging its supervisory and regulatory functions. In the words of Section 40(g) of the Public Service Act itself, the fees and charges which petitioner NTC is authorized to collect from any public service or applicant are limited to the "reimbursement of its expenses in the authorization, supervision and/or regulation of public services." It is difficult to comprehend how the cost of licensing, regulating, and surveillance could amount to P1,190,750.50. The CA was correct in finding the amount imposed as permit fee exorbitant and in complete disregard of the basic limitation that the fee should be at least approximately commensurate to the expense. Petitioner itself admits that it had imposed the maximum amount possible under the Public Service Act, as amended. That is hardly taking into consideration the actual costs of fulfilling its regulatory and supervisory functions. Independent of the above, there is one basic consideration for the dismissal of this petition, about which petitioner NTC did not bother to comment at all. We refer to the fact that, as respondent ICC aptly observed, the principal ground given by the CA in striking down the imposition of the P1,190,750.50 fee is that respondent ICC is entitled to the benefits of the so-called "parity clause" embodied in Section 23 of R.A. No. 7925, to wit: Section 23. Equality of Treatment in the Telecommunications Industry. - Any advantage, favor, privilege, exemption, or immunity granted under existing franchises, or may hereafter be granted, shall ipso facto become part of previously granted telecommunications franchises and shall be accorded immediately and unconditionally to the grantees of such franchises x x x. In this connection, it is significant to note that the subsequent congressional franchise granted to the Domestic Satellite Corporation under Presidential Decree No. 947, states: Section 6. In consideration of the franchise and rights hereby granted, the grantee shall pay to the Republic of the Philippines during the life of this franchise a tax of one-half percent of gross earnings derived by the grantee from its operation under this franchise and which originate from the Philippines. Such tax shall be due and payable annually within ten days after the audit and approval of the accounts by the Commission on Audit as prescribed in Section 11 hereof and shall be in lieu of all taxes, assessments, charges, fees, or levies of any kind, nature, or description levied, established or collected by any municipal, provincial, or national authority x x x (Emphasis supplied) The CA was correct in ruling that the above-quoted provision is, by law, considered as ipso facto part of ICC's franchise due to the "parity clause" embodied in Section 23 of R.A. No. 7925. Accordingly, respondent ICC cannot be made subject to the payment of the subject fees because its payment of the franchise tax is "in lieu" of all other taxes and fees. WHEREFORE, the petition is hereby DENIED and the assailed Amended Decision and Resolution of the CA areAFFIRMED. SO ORDERED.