You are on page 1of 30

Civ Pro Part 3

G.R. No. 125813 February 6, 2007 FRANCISCO I. CHAVEZ and PEOPLE OF THE PHILIPPINES, Petitioners, vs. COURT OF APPEALS, RAFAEL BASKIAS and RICARDO MANAPAT, Respondents. DECISION TINGA, J.: An Information for Libel dated 26 June 1995 was filed before the Regional Trial Court (RTC) of Manila against private respondents Rafael Baskinas and Ricardo Manapat, with petitioner Francisco Chavez as the complainant. The Information reads in part: "That on or about March 1995, in the City of Manila, Philippines, the said accused [Baskinas and Manapat] conspiring and confederating with others whose true names, real identities and present whereabouts are still unknown and helping one another, with malicious intent of impeaching the honesty, virtue, character and reputation of one FRANCISCO I. CHAVEZ, former Solicitor General of the Philippines, and with the evident purpose of injuring and exposing him to public ridicule, hatred and contempt, did then and there willfully, unlawfully and maliciously cause to be published in "Smart File," a magazine of general circulation in Manila, and in their respective capacity as Editor-in-Chief and Author-Reporter, the following, to wit: xxxx with which published articles, the said accused meant and intended to convey, as in fact they did mean and convey false and malicious imputations of a defect, vice and crime, which insinuations and imputations as the accused well knew are entirely false and untrue and without the foundation in fact whatsoever, and tend to impeach, besmirch and destroy the good name, character and reputation of said FRANCISCO I. CHAVEZ, as in fact, he was exposed to dishonor, discredit, public hatred, contempt and ridicule. CONTRARY TO LAW.1 Private respondents moved to quash the Information, as well as the corresponding warrants of arrest subsequently issued. However, these motions were denied by the RTC of Manila, Branch 16, in an Order dated 31 August 1995.2 Private respondents then filed a Petition for Certiorari with the Court of Appeals, assailing the 31 August 1995 Order. The petition was granted in a Decision dated 21 December 1995, hence the present petition. The crux of the matter revolves around whether the above-quoted Information is sufficient to sustain a charge for libel, considering the following requirement imposed by Article 360 of the Revised Penal Code, as amended by Rep. Act No. 4363: Article 360. Persons responsible.Any person who shall publish, exhibit or cause the publication or exhibition of any defamation in writing or by similar means, shall be responsible for the same. The author or editor of a book or pamphlet, or the editor or business manager of a daily newspaper, magazine or serial publication, shall be responsible for the defamations contained therein to the same extent as if he were the author thereof. The criminal action and civil action for damages in cases of written defamations, as provided for in this chapter shall be filed simultaneously or separately with the court of first instance of the province or city where the libelous article is printed and first published or where any of the offended parties actually resides at the time of the commission of the offense: Provided, however, That where one of the offended parties is a public officer whose office is in the City of Manila at the time of the commission of the offense, the action shall be filed in the Court of First Instance of the City of Manila or of the city or province where the libelous article is printed and first published, and in case such public officer does not hold office in the City of Manila, the action shall be filed in the Court of First Instance of the province or city where he held office at the time of the commission of the offense or where the libelous article is printed and first published and in case one of the offended parties is a private individual, the action shall be filed in the Court of First Instance of the province or city where he actually resides at the time of the commission of the offense or where the libelous matter is printed and first published x x x. (Emphasis supplied.) Referring to the fact that the Information against private respondents states that the libelous matter was "caused to be published in Smart File, a magazine of general circulation in Manila," the Court of Appeals deemed the cases of Agbayani v. Sayo3 and Soriano v. IAC4 as controlling. Based on the doctrines pronounced in said cases, the appellate court held that the Information failed to allege where the written defamation was "printed and first published," an allegation sine qua non "if the circumstances as to where the libel was printed and first published is used as the basis of the venue of the publication."5 It was observed that "venue of libel cases where the complainant is a private person is either in any of only two places, namely: (1) where the subject article was printed and first published; and (2) where complainant of the commission actually resides at the time of the commission of the offense." The Information, it was noted, did not indicate that the libelous articles were printed or first published in Manila, or that petitioner resided in Manila at the time of the publication of the articles. The Court of Appeals further observed that even during the preliminary investigation, private respondents had already interposed that Smart File was actually printed and first published in the City of Makati, and that the address of the publisher Animal Farms Publication as indicated in the editorial page of the publication itself was a post office box with the Makati Central Post Office. Even as this observation was disputed by petitioner, who insisted the place of private respondents printing and publishing business was actually in Manila, the Court of Appeals noted that he should have been alerted enough by private respondents' adverse insistence and that a due investigation would have inevitably revealed that private respondents had transferred from their previous Manila address to Makati by the time the subject articles were published.6

Civ Pro Part 3


Before this Court, petitioner attacks the reliance placed on Agbayani and Soriano, primarily by pointing out that in both cases, the complainants were public officers, and not private officials. Petitioner submits that the 1965 amendments to Article 360 of the Revised Penal Code which imposed the present venue requisites were introduced in order to preclude the harassment of members of the press through libel suits filed in remote and distant places by public officers. Petitioner also assails the conclusion of the Court of Appeals that the place of printing and first publication of Smart File was in Makati, saying that this was derived out of hearsay evidence. Does the subject information sufficiently vest jurisdiction in the Manila trial courts to hear the libel charge, in consonance with Article 360 of the Revised Penal Code? Jurisprudence applying the provision has established that it does not. Agbayani supplies a comprehensive restatement of the rules of venue in actions for criminal libel, following the amendment by Rep. Act No. 4363 of the Revised Penal Code: Article 360 in its original form provided that the venue of the criminal and civil actions for written defamations is the province wherein the libel was published, displayed or exhibited, regardless of the place where the same was written, printed or composed. Article 360 originally did not specify the public officers and the courts that may conduct the preliminary investigation of complaints for libel. Before article 360 was amended, the rule was that a criminal action for libel may be instituted in any jurisdiction where the libelous article was published or circulated, irrespective of where it was written or printed (People v. Borja, 43 Phil. 618). Under that rule, the criminal action is transitory and the injured party has a choice of venue. Experience had shown that under that old rule the offended party could harass the accused in a libel case by laying the venue of the criminal action in a remote or distant place. Thus, in connection with an article published in the Daily Mirror and the Philippine Free Press, Pio Pedrosa, Manuel V. Villareal and Joaquin Roces were charged with libel in the justice of the peace court of San Fabian, Pangasinan (Amansec v. De Guzman, 93 Phil. 933). To forestall such harassment, Republic Act No. 4363 was enacted. It lays down specific rules as to the venue of the criminal action so as to prevent the offended party in written defamation cases from inconveniencing the accused by means of out-of-town libel suits, meaning complaints filed in remote municipal courts (Explanatory Note for the bill which became Republic Act No. 4363, Congressional Record of May 20, 1965, pp. 424-5; Time, Inc. v. Reyes, L-28882, May 31, 1971, 39 SCRA 303, 311). The rules on venue in article 360 may be restated thus: 1. Whether the offended party is a public official or a private person, the criminal action may be filed in the Court of First Instance of the province or city where the libelous article is printed and first published. 2. If the offended party is a private individual, the criminal action may also be filed in the Court of First Instance of the province where he actually resided at the time of the commission of the offense. 3. If the offended party is a public officer whose office is in Manila at the time of the commission of the offense, the action may be filed in the Court of First Instance of Manila. 4. If the offended party is a public officer holding office outside of Manila, the action may be filed in the Court of First Instance of the province or city where he held office at the time of the commission of the offense.7(Emphasis supplied.) The rules, as restated in Agbayani, do not lay a distinction that only those actions for criminal libel lodged by public officers need be filed in the place of printing and first publication. In fact, the rule is quite clear that such place of printing and first publication stands as one of only two venues where a private person may file the complaint for libel, the other venue being the place of residence of the offended party at the time the offense was committed. The very language itself of Article 360, as amended, does not support petitioner's thesis that where the complainant is a private person, a more liberal interpretation of the phrase "printed and first published" is warranted than when a public officer is the offended party. To wit: Article 360. Persons responsible.x x x The criminal and civil action for damages in cases of written defamations as provided for in this chapter, shall be filed simultaneously or separately with the Court of First Instance of the province or city where the libelous article is printed and first published or where any of the offended parties actually resides at the time of the commission of the offense. x x x Where the law does not distinguish, we should not distinguish.8 Petitioner faults the Court of Appeals for relying on Agbayani and Soriano, two cases wherein the complainant was a public officer. Yet the Court has since had the opportunity to reiterate the Agbayani doctrine even in cases where the complainants were private persons. Most telling of the recent precedents is Agustin v. Pamintuan,9 which involved a criminal action for libel filed by a private person, the acting general manager of the Baguio Country Club, with the RTC of Baguio City. The relevant portion of the Information is quoted below: That on or about the 17th day of March 2000, in the City of Baguio, Philippines, and within the jurisdiction of this Honorable Court, the said accused, with deliberate intent and malicious intent and evil motive of attacking, injuring and impeaching the character, honesty, integrity, virtue and reputation of one Anthony De Leon the acting general manager of the Baguio Country Club, and as a private citizen of good standing and reputation in the community and with malicious intent of exposing the (sic) Anthony De Leon to public hatred, contempt, ridicule, discredit and dishonor, without any justifiable motive, did

Civ Pro Part 3


then and there willfully, maliciously and criminally prepare or cause to prepare, write in his column "Cocktails" and publish in the Philippine Daily Inquirer, a newspaper of general circulation in the City of Baguio and in the entire Philippines x x x.10 (Emphasis supplied.) The phrase "the Philippine Daily Inquirer, a newspaper of general circulation in the City of Baguio and in the entire Philippines" bears obvious similarity to the reference in the Information in this case to the publication involved as "Smart File, a magazine of general circulation in Manila," and both private complainants in Agustin and the case at bar were private citizens at the time of the filing of the complaint. Yet the Court in Agustin ruled that the failure to allege that Baguio was the venue of printing and first publication, or that the complainant therein was a resident of Baguio, constituted a substantial defect that could not even be cured by mere amendment. The rules on venue as laid down in Agbayani were restated in Agustin,11 retaining no distinction as to venue whether the offended party is a public official or a private person. In fact, the Court considered the phrase "a newspaper of general circulation in the city of Baguio" as so utterly incapable of establishing Baguio as venue that the bulk of the discussion instead centered on whether the allegation that the complainant was the acting general manager of the Baguio Country Club sufficiently established that he was a resident of Baguio City. On that point, the Court ruled that it did not. In Macasaet v. People,12 the complainant was again a private person.13 The Information for libel against a gossip columnist and the editors of the tabloid which published the column was filed with the RTC of Quezon City, but it failed to state at all where the tabloid was printed and first published, or where the complainant resided. Even as evidence was presented during trial that complainant was a resident of Quezon City, the Court ultimately held that the allegations contained in the Information "[were] utterly insufficient to vest jurisdiction on the RTC of Quezon City."14 Again, the rules laid down in Agbayani were cited as controlling.15 The Court further held that the evidence establishing the complainant's place of residence as Quezon City could not cure the defect of the Information, noting that "it is settled that jurisdiction of a court over a criminal case is determined by the allegations of the complaint or information."16 Macasaet resolutely stated that since the place of printing and first publication or the place of residence at the time are "matters deal[ing] with the fundamental issue of the court's jurisdiction, Article 360 of the Revised Penal Code, as amended, mandates that either one of these statements must be alleged in the information itself and the absence of both from the very face of the information renders the latter fatally defective." 17 We affirm that proposition, which is fatal to this petition. There is no question that the Information fails to allege that the City of Manila was the place where the offending articles were printed and first published, or that petitioner was a resident of Manila at the time the articles were published. Petitioner does submit that there is no need to employ the clause "printed and first published" in indicating where the crime of libel was committed, as the term "publish" is "generic and within the general context of the term 'print' in so far as the latter term is utilized to refer to the physical act of producing the publication."18 Certainly, that argument flies in the face of our holding in Agustin, which involved a similarly worded Information, and which stands as a precedent we have no inclination to disturb. Still, a perusal of the Information in this case reveals that the word "published" is utilized in the precise context of noting that the defendants "cause[d] to be published in 'Smart File', a magazine of general circulation in Manila." The Information states that the libelous articles were published in Smart File, and not that they were published in Manila. The place "Manila" is in turn employed to situate where Smart File was in general circulation, and not where the libel was published or first printed. The fact that Smart File was in general circulation in Manila does not necessarily establish that it was published and first printed in Manila, in the same way that while leading national dailies such as the Philippine Daily Inquirer or the Philippine Star are in general circulation in Cebu, it does not mean that these newspapers are published and first printed in Cebu. Indeed, if we hold that the Information at hand sufficiently vests jurisdiction in Manila courts since the publication is in general circulation in Manila, there would be no impediment to the filing of the libel action in other locations where Smart File is in general circulation. Using the example of the Inquirer or the Star, the granting of this petition would allow a resident of Aparri to file a criminal case for libel against a reporter or editor in Jolo, simply because these newspapers are in general circulation in Jolo. Such a consequence is precisely what Rep. Act No. 4363 sought to avoid. Our ruling in Banal III v. Panganiban19 might tend to support petitioner's argument that the phrase "printed and first published" need not be necessarily employed in the Information. The Information in that case filed by private persons before the Makati City RTC read that the libelous matter was found in a newspaper column "of the Philippine Daily Inquirer which is published in English in the City of Makati, Metro Manila, Philippines and of general circulation in the Philippines and abroad x x x x."20 The Court did observe that this information was "sufficient in form"21 as it clearly stated "that the newspaper is published in Makati City but circulated throughout the country, which allegation accordingly vests jurisdiction over the offense charged in the RTC of Makati City."22 Yet even notwithstanding the fact that the information in Banal III did not use the phrase "printed and first published," it still categorically stated, at the very least, that the libelous matter was "published in English in the City of Makati." In contrast, what the Information at bar categorically states is that the libelous matter was "published in Smart File," not "published in Manila."23 The fact that the present Information further alleges that Smart File was "of general circulation in Manila" does not necessarily mean that the magazine was printed and first published in Manila. In any event, as the language in the present information hews closer to that in Agustin rather than Banal III, we find the former as the appropriate precedent to apply in this case. For us to grant the present petition, it would be necessary to abandon the Agbayani rule providing that a private person must file the complaint for libel either in the place of printing and first publication, or at the complainant's place of residence. We would also have to abandon the subsequent cases that reiterate this rule in Agbayani, such as Soriano, Agustin, and Macasaet. There is no convincing reason to resort to such a radical action. These limitations imposed on libel actions filed by private persons are hardly onerous, especially as they still allow such persons to file the civil or criminal complaint in their respective places of residence, in which situation there is no need to embark on a quest to determine with precision where the libelous matter was printed and first published. 1awphi1.net If this disquisition impresses an unduly formalistic reading of the Information at hand, it should be reiterated that the flaws in the Information strike at the very heart of the jurisdiction of the Manila RTC. It is settled that jurisdiction of a court over a criminal case is determined by the allegations of the complaint or information,24 and the offense must have been committed or any one of its essential ingredients took place within the territorial jurisdiction of the court.25 Article 360 states, in as unequivocal a manner as possible, that the criminal and civil action for libel shall be filed with the court of the province or city "where the libelous article is printed and first published, or where any of the offended parties actually resides at the time of the commission of the offense." If the Information for libel does not establish with particularity any of these two venue requirements, the trial court would have no jurisdiction to hear the criminal case.

Civ Pro Part 3


Another point bears to be added. We are unable to share petitioner's insistence that since the protection of members of the mass media from frivolous libel suits filed by public officers in far-flung places appears to have been a motivating force behind the amendments to Article 360, a more liberal interpretation of the provision should obtain if the complainant is a private person. Without the venue requirements under Article 360, a private person induced by a motive to harass could, similarly as a public officer, coerce a journalist to defend against a libel suit filed in the most remote of places. While Rep. Act No. 4363 does attribute value to the right to comment on the performance of public officials of their duties, it actually extends its protection to the right of any person to free expression, by assuring a reasonable venue requirement even if the subject of comment is not a public officer. Libel stands as an exception to one of the most cherished constitutional rights, that of free expression. While libel laws ensure a modicum of responsibility in one's own speech or expression, a prescribed legal standard that conveniences the easy proliferation of libel suits fosters an atmosphere that inhibits the right to speak freely. When such a prescribed standard is submitted for affirmation before this Court, as is done in this petition, it must receive the highest possible scrutiny, as it may interfere with the most basic of democratic rights. Finally, we decline to resolve the other issues raised in the petition, as the Information by itself is defective on its face, for the reasons we have stated, that there is no need to evaluate whether Smart File was actually printed and first published in Manila or Makati City. The plain fact is that the Information failed to make the sufficient allegation in that regard, and even any ascertainment that the articles were printed and first published in Manila does not cure the jurisdictional defect of the Information. WHEREFORE, the petition is DENIED. SO ORDERED.

Civ Pro Part 3


G.R. No. 91436 May 24, 1993 METROPOLITAN BANK & TRUST COMPANY, petitioner, vs. QUILTS & ALL, INC., respondent. Balane, Barican, Cruz, Alampay Law Office for petitioner. Ranel L.Trinidad for private respondent.

MELO, J.: The petition for review before us was filed under Rule 45 of the Revised Rules of Court and seeks to set aside the decision of the Court of Appeals in CAG.R. SP No. 18666 (Annex "L", pp. 98-104, Rollo) dated November 27, 1989, which disposed: WHEREFORE, judgment is hereby rendered giving due course to the petition and declaring that the honorable respondent court is without jurisdiction to pass upon the issue against defendants Senen B. Dizon and Relita P. de los Santos anent the authority of Senen B. Dizon to enter into a mortgage contract as this falls within the original and exclusive jurisdiction of the Securities and Exchange Commission, and ordering the suspension of further proceedings in Civil Case No. 5570 until said issue shall have been resolved by the Securities and Exchange Commission. Without pronouncement as to costs. (p. 103, Rollo) On April 7, 1987, Relita P. de los Santos (de los Santos) then Corporate Secretary then issued a Secretary's Certificate (Annex "A", p. 31, Rollo) which certified that in a special meeting of the Board of Directors of Quilts and All, Inc. (Quilts) its President, Mr. Senen B. Dizon (Dizon) was authorized and empowered to mortgage in favor of Metrobank, an property belonging to Quilts. On the basis of this Secretary's Certificate, Metrobank restructured Dizon's existing personal loan in the amount of P700,000.00 (Comment, p. 121, Rollo), secured by his house and lot at Angeles City and the property owned by Quilts covered by Transfer Certificate of Title No. 74172 (Annex "B", p. 32, Rollo). Aside from the mortgage lien, the secretary's Certificate was likewise annotated on TCT No. 74172 on April 10, 1977. On July 7, 1988, more than a year later, Metrobank received a letter from Atty. Cesar Villanueva, Quilt's counsel (Annex "D", p. 35, Rollo) offering the amount of P200,000.00 for the cancellation of the mortgage on the property owned by Quilts because, allegedly, "Mr. & Mrs. Senen Dizon had left the Philippines, leaving several creditors." Metrobank refused the offer since the amount offered did not approximate the appraised value of the mortgaged property. (Petition, p. 10, Rollo) On October 4, 1988, Atty. Ranel L. Trinidad, Quilt's new counsel wrote Metrobank. (Annex "C", p. 33, Rollo), reiterating the mortgage cancellation. In addition, counsel claimed that the alleged April 7, 1987 special meeting could not have taken place for lack of the requisite number of directors present to constitute a quorum since the Chairman and 2 other members of the Board of Directors were aboard on that date. On October 20, 1988, Quilts filed a complaint against Metrobank, Dizon and de los Santos for annulment and cancellation of mortgage (CC 5570, RTC-Br. 58, Angeles City) (Annex "E", p. 37, Rollo). On December 12, 1988, Metrobank moved to dismiss the complaint based on 1) lack of jurisdiction and 2) failure to state a cause of action. Judge Reynaldo B. Daway, granted the motion on February 9, 1989. (Annex "G", p. 51, Rollo). However, on August 4, 1989, upon Quilt's motion, Judge Daway issued an Order (Annex "J", p. 73, Rollo) reconsidering and setting aside the dismissal order because the grounds relied upon by Metrobank "did not appear to be indubitable", and deferred the determination of the motion until the trial. Metrobank filed an original petition for certiorari, prohibition or mandamus, contesting the reinstatement of the complaint and in the process reiterating as grounds lack of jurisdiction on the part of the trial court and failure of Quilt's complaint to state a cause of action. The Court of Appeals upheld the jurisdiction of the lower Court only with respect to Metrobank. It dismissed the case against Dizon and de los Santos, since the issue of whether or not these two persons had committed ultra vires acts is an intra-corporate matter which falls within the original and exclusive jurisdiction of the Securities and Exchange commission (SEC) pursuant to section 5 of Presidential Decree 902-A, as amended. Pending the outcome of the case that would be filed in the SEC, however, the Court of Appeals directed the suspension of the proceedings against Metrobank. The appellate court also stated that paragraph 10 of Quilt's complaint was sufficient basis for Quilt's case against Metrobank. Hence, the instant petition in which the central and key issue is whether or not Quilt's complaint sufficiently states a cause of action against Metrobank. Pertinent allegations of Quilt's complaint are quoted below: 4. That sometime on 7 April 1987, defendant Relita P. Delos Santos issued and signed a secretary's certificate certifying that she was the incumbent corporate secretary of plaintiff corporation and that a special meeting of the Board of Directors thereof was held on the same date at its principal office and that a resolution was passed and approved authorizing and empowering Senen B. Dizon, the then president of plaintiff corporation as the latter's attorney-in-fact, to mortgage in favor of defendant Metropolitan bank & Trust CompanyDau Branch the plaintiff's corporation's real property located at the Riverside Subd., Angeles City, covered by Transfer Certificate of Title No. 74172, Registry of Deeds of Angeles City, containing an area of 823 square meters, as security of the loan of SEVEN HUNDRED THOUSAND (P700,000.00) Philippine Pesos obtained by Mr. Senen B. Dizon in his personal capacity from the said bank, with full power and authority for Mr. Senen B. Dizon to sign, execute, acknowledge and deliver, for and in behalf of the plaintiff corporation relating to the said loan. A machine copy of the said secretary's certificate is hereto attached as Annex "B" hereof;

Civ Pro Part 3


5. That verifications made later by the stockholders and some members of the Board of Directors of the plaintiff corporation with the Registry of Deeds of Angeles City revealed that the parcel of land owned by the plaintiff corporation covered by TCT No. 74172 was mortgaged in favor of the defendant Metropolitan bank & Trust Company to guaranty the personal obligation of defendant Senen B. Dizon in the principal amount of P700,000.00 (see Annex "A-2" hereof); 6. That on 7 April 1987, plaintiff corporation had for its Board of Directors five (5) members namely: Romeo V. Rosas, Arcadio R. Sarmiento, Jr., Romeo N. Pangilinan, Senen B. Dizon, and Relita P. Delos Santos, and for a quorum to be had, for purposes of holding a valid meeting of the Board of Directors, at least three (3) members thereof should be present thereat; 7. That on 7 April 1987, Mr. Romeo V. Rosas was in the United States of America while Mr. Arcadio R. Sarmiento, Jr. was then in New Zealand. Mr. Romeo N. Pangilinan, although in the country on the said date, was never informed and never attended a meeting of the plaintiff corporation's Board of Directors. With the absence of three (3) of plaintiff corporation's five (5) member Board of Directors, no valid meeting could have been held; 8. That a perusal of the Amended Articles of Incorporation of the plaintiff corporation, particularly under the primary and secondary purposes for which it was created, will reveal that the corporation can not hypothecate any of its properties to secure the personal obligations of any of its shareholders, directors or officers. A machine copy of the plaintiff's corporation Amended Articles of Incorporation is hereto attached as Annexes "C" to "C-8" for pages 1 to 9, respectively, hereof; 9. That a letter demanding for the immediate cancellation of the real estate mortgage constituted upon TCT No. 74172 in favor of defendant Metropolitan Bank & Trust Company have been sent to the latter through its Dau branch Manager and Legal Department but the said bank failed and refused to comply with the valid demand of the plaintiff corporation. A copy of the said letter is hereto attached as Annexes "D" and "D-1" for pages 1 and 2, respectively, hereof; 10. That plaintiff corporation suffered and continue to suffer actual damages as a result of the illegal acts of defendants for which the former should be compensated in an amount to be proved during the trial of the instant cases. (pp. 38-40, Rollo). An examination of the complaint shows that the allegations therein pertain mostly to the alleged ultra vires acts of Dizon and de los Santos. Paragraph 10 of the complaint, upon which both the trial court and the Court of Appeals premised a case against Metrobank, merely expresses legal conclusions, and is not an averment or allegation of ultimate facts. In the case of Alzua and Armalot vs. Johnson, (21 Phil. 308 [1912]), we stated : . . . neither legal conclusions, nor conclusions or inferences of facts from facts not stated, nor incorrect inferences or conclusions from facts stated, being admitted by a demurrer to a complaint, conclusions of this nature is no wise aid the pleading. The ultimate facts upon which such conclusions rest must be alleged, though merely probative or evidential facts may be and should be omitted. (at p. 381.) We agree with Metrobank that the complaint does not contain allegations that Metrobank had prior knowledge of, or could have known with the exercise of due diligence, that the recitals in the Secretary's Certificate were false. The complaint does not even allege specific overt acts which show that Metrobank acted in conspiracy with its co-defendants to defraud Quilts. In the case of Bacolod-Murcia Milling Co., Inc. vs. First Farmers Milling Co., Inc. [103 SCRA 436 (1981)] we stated: . . . Granting, for the sake of argument, that, indeed, assistance in the "illegal" act was rendered, the same, however, is not supported by well-pleaded averments of facts. Nowhere is it alleged that defendants-appellees had notice, information or knowledge of any flaw, much less any illegality, in their co-defendants' actuations, assuming that there was such flaw or illegality. This absence is fatal and buoys up instead the PNB-NIDC's position of lack of cause of action. . . . (at pp. 441-442.) Although it is averred that the defendant's acts were done in bad faith, the Complaint does not contain any averment of facts showing that the acts were done in the manner alleged. Such a bare statement neither establishes any right or cause of action on the part of the plaintiff-appellant. It is a mere conclusion of law not sustained by declarations of facts, much less admitted by defendants-appellees. It does not, therefore, aid in any wise the complaint in setting forth a cause of action. . . . (pp. 441-442.) On the other hand, Metrobank cannot be faulted for relying on the Secretary's Certificate. It did so in good faith, unaware of any flaw and on the presumption that the ordinary course of business had been followed (Sec. 5-q, Rule 131, Revised Rules of Court) and that the Corporate Secretary had regularly performed her duties. WHEREFORE, premises considered, the herein petition is GRANTED. The Resolution of the Court of Appeals in CA-G.R. SP No. 18666, dated November 27, 1989 is MODIFIED in that Civil Case No. 5570 against Metrobank is hereby DISMISSED. No special pronouncement is made as to costs. SO ORDERED.

Civ Pro Part 3


G.R. No. 132753 February 15, 1999 MARIO SIASOCO, ANGELITA E. SIASOCO, MA. BELLA SIASOCO, ESTER SIASOCO-LAMUG, MA. LOURDES SIASOCO LAMUG-BARRIOS, MA. RAMONA SIASOCO-LAMUG, MA. VICTORIA SIASOCO LAMUG-DOMINGUEZ, BELEN SIASOCO-JOSE, RAFAEL SIASOCO JOSE, CYNTHIA SIASOCO JOSE, CRISTINA SIASOCO JOSE, ROBERTO SIASOCO JOSE, CARIDAD SIASOCO JOSE, RAMON SIASOCO JOSE, OSCAR SIASOCO, RUBEN SIASOCO, SALOME SIASOCO-PAZ, MEDARDO PAZ SIASOCO, ROLANDO PAZ SIASOCO, JESUS PAZ SIASOCO, NELLY STO. DOMINGO NARIO, MARY GRACE STO. DOMINGO NARIO and MARY ANNE STO. DOMINGO NARIO, petitioners, vs. COURT OF APPEALS; HON. MARCELINO BAUTISTA JR., Presiding Judge, Branch 215, Regional Trial Court, Quezon City; and the IGLESIA NI CRISTO, respondents.

PANGANIBAN, J.: Notwithstanding the filing of a responsible pleading by one defendant, the complaint may still be amended once, as a matter of right, by the plaintiff in respect to claims against the non-answering defendant(s). The Court also reiterates that certiorari is not the proper remedy to contest a lower court's final adjudication, since appeal is available as a recourse. Statement of the Case Petitioners assail the February 25, 1998 Decision 1 of the Court of Appeals 2 in CA-GR SP No. 45451, the dispositive portion of which reads: WHEREFORE, [the] foregoing considered, the present petition for certiorari is hereby DENIED for lack of merit. The Temporary Restraining Order issued by this Court on December 17, 1997 is hereby lifted. Petitioners are given six (6) days from receipt of this decision within which to file their answer. The motion for oral argument filed by respondent is rendered moot. Respondent court is ordered to proceed and resolve the case with deliberate speed. 3 The foregoing disposition affirmed two Orders of the Regional Trial Court (RTC) of Quezon City, Branch 215, dated August 11, 1997 and September 11, 1997 in Civil Case No. Q-97-29960. 4 The first Order (1) admitted the Amended Complaint; (2) dropped Defendant Carissa Homes Development and Properties, Inc. (hereafter referred to as "Carissa") from the Complaint; and (3) denied the Motion to Declare Defendants Siasoco et al. (herein petitioners) in Default. The second Order denied the Motion for Suspension filed by defendants and directed them to file their answer to plaintiff's Amended Complaint. Undaunted, petitioners seek recourse in this Court. 5 The Facts Petitioners were the registered owners of nine parcels of land located in Montalban, Rizal. In December 1994, they began to offer the subject properties for sale. Subsequently, Iglesia ni Cristo (INC) negotiated with the petitioners, but the parties failed to agree on the terms of the purchase. More than a year later, both parties revived their discussion. In a letter dated December 16, 1996, petitioners made a final offer to the INC. The latter's counsel sent a reply received by Petitioner Mario Siasoco on December 24, 1996, stating that the offer was accepted, but that the INC was "not amenable to your proposal to an undervaluation of the total consideration." In their letter dated January 8, 1997, petitioners claimed that the INC had not really accepted the offer, adding that, prior to their receipt of the aforementioned reply on December 24, 1996, they had already "contracted" with Carissa for the sale of the said properties "due to the absence of any response to their offer from INC." Maintaining that a sale had been consummated, INC demanded that the corresponding deed be executed in its favor. Petitioners refused. Then ensuing events narrated by the Court of Appeals, as follows: On January 14, 1997, private respondent filed a civil suit for [s]pecific [p]erformance and [d]amages against petitioners and Carissa Homes and Development & Properties, Inc. docketed as Civil Case No. Q-97-29960. Petitioners filed therein a Motion to Dismiss on the ground of improper venue and lack of capacity to sue. Carissa Homes filed its answer to the complaint on February 24, 1997. Pending resolution of petitioners' Motion to Dismiss, private respondent negotiated with Carissa Homes which culminated in the purchase of the subject properties of Carissa Homes by private respondent. On April 24, 1997, private respondent filed an [A]mended [C]omplaint, dropping Carissa Homes as one of the defendants and changing the nature of the case to a mere case for damages. Petitioners filed a Motion to Strike Out Amended Complaint, contending that the complaint cannot be amended without leave of court, since a responsive pleading has been filed. On August 11, 1997, the first assailed order denying petitioners' Motion to Strike Out Amended Complaint was rendered.

Civ Pro Part 3


On August 31, 1997, petitioners filed a Motion for Suspension of Proceeding pending the resolution [by] the respondent court of the Motion to Dismiss earlier filed. On September 11, 1997, the second assailed order denying petitioners' Motion to Suspend Proceeding was rendered[;] the Order reads: Filed also last September 1, 1997 [was] a Motion for Suspension by the defendant Siasoco thru their counsel Atty. Clara Dumandang-Singh. Although the court could not consider the motion filed because it violates the new rules on personal service, in the interest of justice, the court will resolve the motion. In the resolution of this court dated August 11, 1997, it state[d] that defendants [were being] given a period of five (5) days within which to file [an] answer to the Amended Complaint. The defendants here obviously refer to the defendants Mario Siasoco, et. al. In the Motion for Suspension filed by the defendants Siasoco, et al., the latter insist on the court resolving the motion to dismiss. As stated in the resolution, the motion to dismiss is now moot and academic because of the Amended Complaint from Specific Performance with Damages to just Damages. For this court to resolve the Motion to Dismiss . . . the first complaint, would be an exercise in futility. The main complaint now is damages and no longer Specific Performance with damages which [was] actually what the Resolution dated August 11, 1997 [was] all about. Be that as it may, the court gives defendants Siasoco, et al. fifteen (15) days from receipt of this Order to file their respective Answers to the Amended Complaint, not from the receipt of the resolution of the Motion to Dismiss which will not be forthcoming. Ruling of the Court of Appeals The Court of Appeals (CA) ruled that although private respondent could no longer amend its original Complaint as a matter of right, it was not precluded from doing so with leave of court. Thus, the CA concluded that the RTC had not acted with grave abuse of discretion in admitting private respondent's Amended Complaint. Petitioners argued that the trial court where the original Complaint for specific performance had been filed was not the proper venue. Debunking petitioners' argument, the CA explained that the RTC nevertheless had jurisdiction over the said Complaint. The CA also held that the amended Complaint did not substantially alter private respondent's cause of action, since petitioners were not being asked to legal obligation different from that stated in the original Complaint. Assignment of Errors In their Memorandum, petitioners submit, for the consideration of this Court, the following, issues: 6 A. Whether or not the respondent Court of Appeals gravely erred in holding that the respondent Judge's admission of INC's Amended Complaint was proper. B. Whether or not the respondent Court of Appeals gravely erred in affirming respondent Judge's denial of petitioners' "Motion for Suspension." C. Whether or not the respondent Court of Appeals gravely erred in refusing to hear petitioners' application for a temporary restraining order and writ of preliminary injunction. Simply stated, the question is: did the CA err in affirming the two Orders of the RTC which had allowed the Amended Complaint? The Court's Ruling The petition is devoid of merit. We sustain the Court of Appeals, but for reasons different from those given in the assailed Decision. Preliminary Issue: Propriety of Certiorari In their Petition and Memorandum, Mario Siasoco et. al. emphasize that "the instant suit was commenced pursuant to Rule 65 of the 1997 Rules of Procedure" and allege "that Respondent Court of Appeals committed grave abuse of discretion in issuing the challenged Decision February 25, 1988 . . . ." This is a procedural error. For the writcertiorari under Rule 65 to issue, the petitioner must show not only that the lower court acted with grave abuse of discretion, but also that "there is no appeal, or any other plain, speedy, and adequate remedy in the ordinary course of law." 7 Since the questioned CA Decision was a disposition on the merits, and since said Court has no remaining issue to resolve, the proper remedy available to petitioners was a petition for review under Rule 45, not Rule 65. Furthermore, as a general rule, certiorari under Rule 65 cannot issue unless the lower court, through a motion for reconsideration, has been given an opportunity to correct the imputed error. 8 Although there are recognized exceptions to this rule, petitioners do not claim that this case is one of them. For this procedural lapse, the instant petition should be dismissed outright.

Civ Pro Part 3


Nonetheless, inasmuch as the Petition was filed within the 15-day period provided under Rule 45, and considering the importance of the issue raised and the fact that private respondent did not question the propriety of the instant Petition, the Court treated the action as a petition for review (not certiorari) under Rule 45 in order to accord substantial justice to the parties. We will thus proceed to discuss the substantive issue. Main Issue: Admission of Amended Complaint Petitioners argue that the lower courts erred in admitting the Amended Complaint. Under the Rules, a "party may amend his pleading once as a matter of right at any time before a responsive pleading is served . . . ." 9 When private respondent filed its Amended Complaint, Carissa, the other party-defendant in the original Complaint, had already filed its Answer. Because a responsive pleading had been submitted, petitioners contend that private respondent should have first obtained leave of court before filing its Amended Complaint. This it failed to do. In any event, such leave could nor have been granted, allegedly because the amendment had substantially altered the cause of action. This argument is not persuasive. It is clear that plaintiff (herein private respondent) can amend its complaint once, as a matter of right, before a responsivepleading is filed. 10 Contrary to the petitioners' contention, the fact that Carissa had already filed its Answer did not bar private respondent from amending its original Complaint once, as a matter of right, against herein petitioners. Indeed, where some but not all the defendants have answered, plaintiffs may amend their Complaint once, as a matter of right, in respect to claims asserted solely against the non-answering defendants, but not as to claims asserted against the other defendants. 11 The rationale for the aforementioned rule is in Section 3, Rule 10 of the Rules of Court, which provides that after a responsive pleading has been filed, an amendment may be rejected when the defense is substantially altered. 12Such amendment does not only prejudice the rights of the defendant; it also delays the action. In the first place, where a party has not yet filed a responsive pleading, there are no defenses that can be altered. Furthermore, the Court has held that "[a]mendments to pleading are generally favored and should be liberally, allowed in furtherance of justice in order that every case may so far as possible be determined on its real facts and in order to speed the trial of cases or prevent the circuity of action and unnecessary expense, unless there are circumstances such as inexcusable delay or the taking of the adverse party by surprise or the like, which might justify a refusal of permission to amend." 13 In the present case, petitioners failed to prove that they were prejudiced by private respondent's Amended Complaint. True, Carissa had already filed its own Answer. Petitioners, however, have not yet filed any. Moreover, they do not allege that their defense is similar to that of Carissa. On the contrary, private respondent's claims against the latter and against petitioners are different. Against petitioners, whose offer to sell the subject parcels of land had allegedly been accepted by private respondent, the latter is suing for specific performance and damages for breach of contract. Although private respondent could no longer amend, as a matter of right, its Complaint against Carissa, it could do so against petitioners who, at the time, had not yet filed an answer. The amendment did not prejudice the petitioners or delay the action. Au contraire, it simplified the case and tended to expedite its disposition. The Amended Complaint became simply an action for damages, since the claims for specific performance and declaration of nullity of the sale have been deleted. RTC Had Jurisdiction Petitioners also insist that the RTC of Quezon City did not have jurisdiction over the original Complaint; hence, it did not have any authority to allow the amendment. They maintain that the original action or specific performance involving parcels of land in Montalban, Rizal should have been filed in the RTC of that area. Thus, they chide the CA or allegedly misunderstanding the distinction between territorial jurisdiction and venue, thereby erroneously holding that the RTC had jurisdiction over the original Complaint, although the venue was improperly laid. We disagree. True, an amendment cannot be allowed when the court has no jurisdiction over the original Complaint and the purpose of the amendment is to confer jurisdiction on the court. 14 In the present case, however, the RTC had jurisdiction because the original Complaint involved specific performance with damages. InLa Tondea Distillers v. Ponferrada, 15 this Court ruled that a complaint for "specific performance with damages" is a personal action and may be filed in the proper court where any of the parties reside, viz.: Finally, [w]e are not also persuaded by petitioner's argument that venue should be lodged in Bago City where the lot is situated. The complaint is one for "specific performance with damages." Private respondents do not claim ownership of the lot but in fact [recognize the] title of defendants by annotating a notice of lis pendens. In one case, a similar complaint for "specific performance with damages" involving real property, was held to be a personal action, which may be filed in the proper court where the party resides. Not being an action involving title to or ownership of real property, venue, in this case, was not improperly laid before the RTC of Bacolod City. 16 WHEREFORE, the Petition is hereby DENIED. Costs against petitioners. SO ORDERED.

Civ Pro Part 3


G.R. No. 105751 June 30, 1993 BA FINANCE CORPORATION, petitioner, vs. RUFINO CO, HIGHLINE MERCANTILE, INC., LUCITA VELOSO YAP, CLOVERLEAF SUPERMARKET, INC., SAN ANDRES COMMERCIAL and COURT OF APPEALS, respondents. Agbayani, Leal, Ebarle & Venturanza Law Office for petitioner. Angara, Abello, Concepcion, Regala & Cruz Law Office for respondent.

BELLOSILLO, J.: Does the dismissal of the complaint for nonappearance of plaintiff at the pre-trial, upon motion of defendants, carry with it the dismissal of their compulsory counterclaim? Petitioner BA Finance Corporation brought this action as plaintiff in the court below to recover a sum of money arising from a credit accommodation in the form of a discounting line which it granted to defendant Rufino Co, and from certain suretyship agreements executed in its favor by his co-defendants Highline Mercantile, Inc., Lucita Veloso Yap, Cloverleaf Supermarket, Inc., and San Andres Commercial. After defendants' Amended Answer to Complaint with Compulsory Counterclaim was admitted, the case was set for Pre-Trial Conference. For various reasons, however, the conference was repeatedly reset. On 19 December 1989, counsel for plaintiff, petitioner herein, failed to attend the Pre-Trial Conference. Consequently, defendants moved for dismissal of the case without prejudice. The motion was granted thus The plaintiff's representative and counsel having failed to appear for today's setting, Atty. Luis Vera Cruz, Jr., for the defendants moved that the above-entitled case be dismissed, without prejudice. Finding merit in said motion, the same is hereby granted. On 22 January 1990, private respondents moved to set the reception of their evidence in support of their counterclaim. Petitioner opposed the motion. On 2 April 1990, the trial court denied the motion of private respondents, prompting them to elevate the order of denial to the Court of Appeals which, on 18 December 1991, reversed the questioned order and directed the trial court to set the reception of their evidence on their counterclaim. Its motion for reconsideration having on 2 June 1992 been denied, petitioner instituted the instant petition. Petitioner contends that the dismissal of the complaint carries with it the dismissal of the counterclaim. Private respondents, on the other hand, claim that their compulsory counterclaim should not have been included in the dismissal. There is merit in the petition. The counterclaim of private respondents is not merely permissive but compulsory in nature: it arises out of, or is necessarily connected with, the transaction or occurrence that is the subject matter of the opposing party's claim; it does not require the presence of third parties of whom the court cannot acquire the presence of third parties of whom the court cannot acquire jurisdiction; and, the trial court has jurisdiction to entertain the claim. 1 The counterclaim of private respondents is denominated "compulsory" and consists of claims for alleged overpayments and damages. They assert that they are no longer indebted to petitioner and are in fact entitled to reimbursement for overpayments. They ask for damages for expenses incurred and inconveniences suffered by them as a result of the filing of the present action. 2 Clearly, the same evidence needed to sustain the counterclaim of private respondents would also refute the cause of action in petitioner's complaint. For, if private respondents could successfully show that they actually made overpayments on the credit accommodations extended by petitioner, then the complaint must fail. The counterclaim is therefore compulsory. The rule is that a compulsory counterclaim cannot "remain pending for independent adjudication by the court." 3This is because a compulsory counterclaim is auxiliary to the proceeding in the original suit and merely derives its jurisdictional support therefrom. 4 Thus, it necessarily follows that if the trial court no longer possesses jurisdiction to entertain the main action of the case, an when it dismisses the same, then the compulsory counterclaim being ancillary to the principal controversy, must likewise be similarly dismissed since no jurisdiction remains for the grant of any relief under the counterclaim. 5 Indeed, as Justice Vicente Abad Santos succinctly puts it . . . . The petitioner does not object to the dismissal of the civil case but nonetheless wants her counterclaim therein to subsist. Impossible. A person cannot eat his cake and have it at the same time. If the civil case is dismissed, so also in the counterclaim filed therein. 6 More recently, this Court ruled that the dismissal of the complaint on defendant's own motion operated likewise to dismiss the counterclaim questioning the complaint. 7 The Rules of Court provides a remedy to recover on defendant's counterclaim if plaintiff moves to dismiss the case. Under Sec. 2, Rule 17, defendant may raise objection to the dismissal of the complaint; in such case, the trial curt may not dismiss the main action.

10

Civ Pro Part 3


In the instant petition, private respondents themselves moved for the dismissal of the complaint, They could have simply asked the trial court to declare petitioners to be "non-suited" on their complaint, and "as in default" on their compulsory counterclaim, for their failure to appear at the pre-trial despite due notice. But private respondents did not. Neither did they reserve their right to maintain their counterclaim. Consequently, the dismissal of the complaint carried with it the dismissal of the compulsory counterclaim. It may also be stressed that private respondents moved to set for hearing the reception of evidence to support their counterclaim more than a month after the case was dismissed, i.e., they filed their motion after the lapse of thirty-three (33) days. By then, the order of dismissal had already become final. Thereafter, it was error for the appellate court to set it aside, there being no ground to warrant it. Only error of judgment, not error of jurisdiction, was involved. However, we are not unaware of the seeming unfairness, if not harshness, of the application of the Rule herein enunciated that dismissal of the complaint for failure to prosecute automatically carries with it dismissal of the compulsory counterclaim to a defendant who may be compelled to hire counsel to protect him in a frivolous complaint. Equity and justice dictate that he be accorded adequate relief under the circumstances. Henceforth, for the guidance of Bench and Bar, if any of the grounds to dismiss under Sec. 3, Rule 17, of the Rules of Court arises, 8 the proper recourse for a defendant who desires to pursue his compulsory counterclaim in the same proceeding is not to move for the dismissal of the complaint; instead, he should only move to have plaintiff declared non-suited on the complaint so that the latter can no longer present his evidence thereon, and simultaneously move that he be declared as in default on the compulsory counterclaim, and reserve the right to present evidence ex parte on his counterclaim. This will enable defendant who was unjustly haled to court to prove his compulsory counterclaim, which is intertwined with the complaint, because the trial court retains jurisdiction over the complaint and of the whole case. The non-dismissal of the complaint, the non-suit notwithstanding, provides the basis for the compulsory counterclaim to remain active and subsisting. But the procedure above stated, unfortunately, was not adopted by private respondents herein in the court below, hence, we reverse the Court of Appeals and sustain the trial court. WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals of 18 December 1991 in CA- G.R. No. CV-28420 is REVERSED and SET ASIDE. The Order of the Regional Trial Court of Manila, Branch 40, of 19 December 1989 dismissing Civil Case No. 84-26040 is REINSTATED and REITERATED. SO ORDERED.

11

Civ Pro Part 3


BANCO DE ORO UNIVERSAL BANK, - versus THE HON. COURT OF APPEALS and SPS. GABRIEL G. LOCSIN and MA. GERALDINE R. LOCSIN, Respondents. G.R. No. 160354

Subject of the present Petition for Review is the Court of Appeals June 5, 2003 Decision[1] annulling and setting aside the Orders[2] of the Regional Trial Court (RTC) of Mandaluyong denying respondents spouses Gabriel and Ma. Geraldine Locsins Motion to Dismiss the complaint of petitioner, Banco de Oro Universal Bank. The following antecedent facts are not disputed: On September 28, 1995, respondents Locsins entered into a Term Loan Agreement (TLA) with petitioner under which they obtained a loan of P700,000.00 which was secured by a Real Estate Mortgage of their property covered by TCT No. N-138739 (1st TLA). On February 29, 1996, the Locsins obtained a 2nd TLA from petitioner in the amount of P800,000.00, to secure which they executed a Real Estate Mortgage over their property covered by TCT No. 67286. This 2nd TLA was eventually settled on July 2, 1996, on account of which the mortgage was cancelled and the title was released on July 8, 1996. On November 6, 1996, the parties entered into a Credit Line Agreement (CLA) under which the Locsins obtained a credit line of P2.5 Million, to secure which their business partners, the spouses Juanito and Anita Evidente, executed a Real Estate Mortgage of their (the Evidentes) pr operties covered by TCT Nos. N-166336 and N-166637. Monthly amortization of the obligation appears to have been religiously paid until October of 1997. The Locsins having failed to comply with their obligation under the CLA, petitioner filed before the Quezon City Regional Trial Court (RTC) Executive Judge an application dated May 4, 1998 for the extra-judicial foreclosure of the mortgage which encumbered the Evidente properties under the CLA, as well as the mortgage of the Locsin property covering TCT N-67286 which secured the 2nd TLA. The application was granted and public auction of these properties was scheduled, and was actually carried out on July 23, 1998. The public auction was later nullified, however, on petitioners move, the Locsin property covered by TCT No. 67286 which s ecured the 2nd TLA having been erroneously included. An amended application for extrajudicial foreclosure was thus filed by petitioner, this time covering the same Evidente properties and TCT No. 138739, the property of the Locsins which secured the 1st TLA. Public auction of these properties was scheduled on August 26, 1998. Two days before the scheduled public auction or on August 24, 1998, the Locsins filed before the Quezon City Regional Trial Court (RTC) a complaint against petitioner, the RTC Clerk of Court and Ex-Oficio Sheriff of Quezon City, and Sheriff VI Marino V. Cahero, for Specific Performance, Tort and Damages with Prayer for the Issuance of a Temporary Restraining Order (TRO) and a Writ of Preliminary Injunction, docketed as Civil Case No. Q-9835337.[3] The pertinent allegations of the Locsins complaint are as follows: xxx 15. Defendant bank, through its Assistant Vice-President-Combank II, Agnes C. Tuason, told plaintiffs that the loan valuation of the two aforementioned properties [of the spouses Evidente securing the CLA] is PHP2.5 Million, and this was in fact the amount received by plaintiff from defendant bank . . . 16. The spouses Evidente, through plaintiffs, paid for the monthly installments due on the [CLA] until October, 1997, as evidenced by OR No. 167588 dated October 31, 1997 issued by defendant bank. . . . 17. The spouses Evidente were unable to make subsequent payments and the real estate mortgage over the Evidente properties was recommended for foreclosure. xxx 19. . . . [P]laintiffs advised defendant bank that they will be settling their 1st TLA in full and shall be taking the property covered by TCT No. N-138739 out of the mortgage. 20. However, to the shock of plaintiffs, defendant bank through its Account Officer, Nelia Umbal, refused to release the said property because the Evidente properties, the mortgage of which secures . . . the CLA dated November 6, 1996, will be insufficient to cover the balance of the said CLA. 21. Plaintiffs were surprised to learn that defendant bank capriciously, recklessly and oppressively gave a loan valuation of only PHP900,000.00 for each of [the] two Evidente properties, or a total of PHP1.8 Million. This valuation is unfair and unreasonable considering that the fair market value of these properties is around PHP5 Million. Furthermore, no reason was given by defendant bank for the sudden and unjust change in the valuation, which was originally pegged by defendant at PHP2.5 Million.

12

Civ Pro Part 3


22. In effect, the mortgaged property covered by TCT No. N-138739, which secures the 1st TLA dated September 28, 1995, and which has a loan valuation of PHP700,000.00, was also made a collateral for the CLA. Worse, the whole amount of the loan under the 1st TLA was declared due and demandable, although plaintiffs faithfully and regularly paid for the monthly amortization there[of]. 23. Thus, to complete, rather suspiciously, the security for the CLA which is for PHP2.5 Million, defendant bank further informed plaintiffs that it would cost them PHP1.4 Million to take the property covered by TCT No. N-138739 [which secured the first TLA] out of the mortgage, because the deficiency in the CLA secured by the Evidente properties must also be paid. This amount is preposterous considering that at the time, the remaining balance of the 1st TLA was only around PHP450,000,00. Moreover, plaintiffs were suffering from financial difficulties because of the sharp decline o f the pesos purchasing power. xxx 26. Defendant bank filed with the Executive Judge of Quezon City, through public defendants herein, an Application for Extra-Judicial foreclosure of Real Estate Mortgage under Act No, 3135, as amended, dated May 4, 1998. The application sought the sale in a public auction of the Evidente properties and plaintiffs property covered by TCT No. 67286 [which secured the second TLA and which TLA had been settled]. . . . xxx 31. Yet, defendant bank and public defendants allowed the public auction to proceed as scheduled [on July 23, 1998]. xxx 35. In the meantime, without making any effort to cancel the effects of the public auction held on July 23, 1998, defendant bank filed with public defendants an Amended Application for Extra-Judicial Foreclosure of Real Estate Mortgage under Act No. 3135, as amended. The amended application sought the sale in a public auction of the same Evidente properties and plaintiffs property covered by TCT No. N -138739 [which secured the first TLA]. 36. Acting upon the said application, public defendants issued another notice of Sheriff Sale dated July 28, 1998 which scheduled the public auction of the aforementioned real properties on August 26, 1998 . . . 37. Plaintiffs property covered by TCT No. N-138739 is erroneously included in the amended application and in the Notice of the Sheriffs Sale. The said mortgaged property secures the 1st TLA dated September 28, 1995, for which plaintiffs have faithfully and regularly paid for the monthly amortization due. On the other hand, defendant bank is foreclosing the said property and the two Evidente properties for alleged failure to pay the monthly installments due on the CLA dated November 8, 1996. xxx 38. Furthermore, defendant bank acted in bad faith and in willful breach of its contractual obligations to plaintiffs in understating the loan valuation of the two Evidente properties, and in effect declaring the property covered by TCT No. N-133739 [which secured the first TLA] as additional collateral for the said CLA. (Emphasis and underscoring supplied). The plaintiffs Locsins thus prayed that: A. Upon filing of this complaint, a temporary restraining order (TRO) be immediately issued ex-parte, enjoining defendants, their agents and/or representatives from enforcing the Notice of Sheriffs Sale dated July 28, 1998, and from proceeding with the scheduled public auction of the properties included therein, particularly plaintiffs real property covered by TCT No. N-138739, on August 26, 1998, or on any date thereafter, until further orders from the Honorable Court. B. After appropriate proceedings, a writ of preliminary injunction be issued, under the same tenor as above, and upon payment of such bond as may be fixed by the Honorable Court. C. After trial on the merits, judgment be rendered:

1. On the First Cause of Action, ordering defendant bank to faithfully comply with its obligations under the 1st TLA and the CLA, revert the loan valuation of the two Evidente properties covered by TCTs Nos. N-166336 and 166337 to PHP2.5 Million, and allow plaintiffs to take its property covered by TCT No. N-138739 out of the mortgage by paying the balance thereon, minus interests and penalties accruing from February 1998; 2. On the First and Second Causes of Action, ordering defendant bank to pay plaintiffs PHP500,000.00 in actual damages; 3. On the Third Cause of Action, ordering defendant bank to pay plaintiffs PHP1 Million in actual damages; 4. On the Fourth Cause of Action, ordering defendant bank to pay plaintiffs PHP500,000.00 in moral damages; 5. On the Fifth Cause of Action, ordering defendant bank to pay plaintiffs PHP300,000.00 in exemplary damages; 6. On the Sixth Cause of Action, ordering defendant bank to [pay] plaintiffs PHP200,[000].00 for attorneys fees and litigation expenses; 7. Making the injunction issued against defendants permanent; and 8. Ordering defendants to pay costs of suit.

13

Civ Pro Part 3


Other reliefs which are just and equitable are likewise prayed for.[4] (Emphasis and underscoring in the original; italics supplied). Branch 233 of the Quezon City RTC denied the Locsins prayer for the issuance of a TRO, by Order of August 25, 1998. In its September 8, 1998 ANSWER[5] with Compulsory Counterclaim filed on September 11, 1998, petitioner denied that its Asst. Vice President Agnes Tuason had told the Locsins that the loan valuation of the Evidente properties was P2.5 million for it in fact told them that the P2.5 million loan was approved inspite of the deficiency of the Evidente properties because of their [Locsins] good paying record with [it]. And it denied (specifically) too the Locsins complaints-allegations in paragraphs 19-25, alleging as follows: 8.2 All the promissory notes signed by [the Locsins] uniformly provide: Upon the occurrence as to Maker or any Co-Maker of this Promissory Note of any of the following events of default, the outstanding principal, accrued interest and any other sum payable hereunder or under any related agreement shall become immediately due and payable without presentment, demand, protest or notice of any kind (other than notice of the event and fact of default) all of which are hereby expressly waived by the Maker and all of the CoMakers, if any: xxx 3) Failure by the Maker or any Co-Maker to perform or the violation of any provision of this Promissory Note or any related agreement; xxx 6) The Maker or any Co-Maker fails to pay any money due under any other agreement, standby letter of credit or document evidencing, securing, guaranteeing or otherwise relating to indebtedness of the Maker or any Co-Maker to any other creditor, or there occurs, any event of default or any event which, but for the passage of time or the giving of notice, or both, would constitute under any such agreement, stand by letter of credit or document (and which has not been remedied within any applicable grace period): xxx 8.3 The letter of approval of the P2.5 million loan of [the Locsins] has a cross-default provision, which reads: 3.6 A default on any availment under this credit line facility shall automatically mean a default on [the Locsins] existing term loan under Promissory Note No. 29-01-9080-95 [covering the first TLA] and vice versa (Emphasis and underscoring supplied),[6] on which letter the Locsins affixed their conformity; that in light of the Locsins default in the settlement of their monthly obligations under the CLA, it sent them a January 7, 1998 de mand letter advising them of the Past Due Status of their promissory note covering the P2.5 million account to thereby automatically mean that [said promissory note] and the other loan account under [the promissory note covering the 1st TLA] with an outstanding balance of P460,652.95 are conside red Due and Demandable already; that after a follow up letter and a final letter of demand, the Locsins requested, by letter of February 26, 1998, that the promissory note under the 1st TLA and that under the CLA be treated separately and that one of their titles be released upon payment of P1.8 million; that by letter of March 5, 1998, it advised the Locsins that their request in their February 26, 1998 letter regarding the release of one of the [two Evidente titles] was approved, subject to the partial payment on Principal plus all interests and charges amounting to P1,934,465.79 as of March 20, 1998; that to its March 5, 1 998 letter, the Locsins, by letter of March ___, (sic) 1998, replied as follows: We would like to request for a thirty day extension on the deadline given us today for the payment of P1,900,000.00, or (sic) the release of one title under PN No. 11-01-0586-96 [covering the CLA] as the person very much interested in purchasing it has asked us for the same. At the same time we are also going to take out the property under PN No. 29-01-9080-95 [covering the first TLA], so that only one property under the fire (sic) account mentioned shall be left mortgaged to your bank. Thank you for your kind consideration.[7] (Underscoring supplied); that despite the grant of the Locsins request for extension of 30 days or up to April 20, 1998 to pay P1.9 million as a condition for the release of the title, the Locsins failed to come up therewith; and that the inclusion of the Locsins mortgaged title covering the 1st TLA in the amended application for extra-judicial foreclosure was not erroneous because of the cross-default provisions and acceleration clauses in the loan documents which [the Locsins] signed. As Compulsory Counterclaim petitioner alleged that on account of the filing of the baseless and malicious suit, it was constrained to engage the services of its counsel at an agreed fee of P200,000.00. It thus prayed for the dismissal of the Locsins complaint and the grant of its counterclaim. En passant, it does not appear that the Locsins filed a Reply[8] to petitioners Answer with Compulsory Counterclaim. On March 26, 1999, the Locsins filed an Omnibus Motion[9] (To Amend the Designation of the Plaintiffs; and to Admit Supplemental Complaint), which appears to have been granted by the Quezon City RTC. In their Supplemental Complaint,[10] they repleaded in toto the allegations in their August 24, 1998 Complaint and additionally alleged that petitioner proceeded with the public auction of the properties covered by the mortgage in the 1st TLA and the mortgage in the CLA on September 23, 1998, contrary to law. The Locsins thus prayed in their Supplemental Complaint as follows: 1. Ordering the cancellation of the public auction of TCT Nos. N-138739, N-166336 and N-166337 on September 23, 1998; 2. Declaring said auction of no legal force and effect; and

14

Civ Pro Part 3


3. Granting the following reliefs prayed for by plaintiffs in their [original] Complaint, to wit: x x x[11] (Emphasis and underscoring supplied). By Answer[12] (To Supplemental Complaint) dated June 1, 1999, petitioner admitted that the public auction (which was originally scheduled on August 26, 1998) did take place on September 23, 1998. It denied, however, that it was contrary to law.

More than eight months after the Locsins filed their Supplemental Complaint reflecting their prayer for the nullification of the September 23, 1998 public auction sale or on November 29, 1999, petitioner filed a complaint against the Locsins before the RTC of Mandaluyong where it was docketed as Civil Case No. MC-99-935,[13] for Collection of Sum of Money, alleging as follows: xxx 5. xxx 11. The [amended] extrajudicial sale was conducted on 23 September 1998 and Plaintiff was again declared the highest bidder . . . 12. The total outstanding obligation of Defendants at the time of the foreclosure was PESOS: FIVE MILLION TWENTY THREE THOUSAND FOUR HUNDRED NINETY SIX & 64/100 (P5,023.496.64). However, the appraised value of the properties was only P3,879,406.80 and plaintiff thus submitted a bid of PESOS: THREE MILLION EIGHT HUNDRED SEVENTY NINE THOUSAND FOUR HUNDRED SIX & 80/100 (P3,879.406.80); 13. After all expenses for the foreclosure and registration of the Certificate of Sale have been deducted from the aforementioned bid, there still remains an outstanding balance in the amount of PESOS: ONE MILLION ONE HUNDRED FORTY FOUR THOUSAND EIGHTY NINE & 84/100 (1,144,089.84), EXCLUSIVE OF INTEREST AT THE RATE OF TWENTY FIVE AND A HALF PERCENT (25.5%) per annum, which Plaintiff is entitled to recover from Defendants; 14. On 09 February 1999, counsel for plaintiff sent a letter to defendants dated 05 February 1999, demanding from the latter the payment of said deficiency but Defendants refused and failed and continue to refuse and fail to pay said obligation . . . 15. Due to Defendants unreasonable refusal and failure to comply with Plaintiffs just demands, Plaintiff was compelled to institute the present action and to engage the services of counsel to whom it bound itself to pay the sum of P130,000.00, plus appearance fee of P2,000.00 and other legal costs and expenses.[14] (Emphasis in the original; underscoring supplied). Petitioner accordingly prayed in its complaint that the Locsins be ordered to pay it jointly and severally 1. the outstanding obligation in the sum of PESOS: ONE MILLION ONE HUNDRED FORTY FOUR THOUSAND EIGHTY NINE & 84/100 (1,144,089.84), plus interest thereon at the rate of twenty five and a half percent (25.5%) per annum from 23 September 1998, the date of the foreclosure sale, until the obligation has been fully paid; 2. 3. attorneys fees in the sum of P130,000.00, plus appearance fee of P2,000.00; and costs of suit and expenses of litigation. Defendants failed to satisfy their obligations under the . . . Promissory Notes [covering the first TLA & the CLA] and Plaintiff deemed them in default;

Other just and equitable reliefs under the premises are likewise prayed for.[15] (Emphasis in the original). To petitioners complaint (for sum of money), the Locsins filed a Motion to Dismiss[16] on the ground that it should have bee n raised as compulsory counterclaim in their (the Locsins) complaint (for specific performance, damages and nullification of the public auction), a nd by failing to raise it as such, it is now barred by the rules. To the Motion, petitioner filed its Opposition which merited the Locsins filing of a Reply to Opposition.[17] Branch 213 of the Mandaluyong RTC denied the Locsins Motion to Dismiss petitioners Complaint, by Order of September 18, 200 0,[18] in this wise: The motion to dismiss is premised on the ground that plaintiffs claim in the instant case should have been raised in the previous case, [C]ivil [C]ase No. Q98-35337, wherein plaintiff herein was the defendant, said claim being a compulsory counterclaim and for failure to raise the same, it is now barred by the rules. It is noted, however, that the instant case is one for collection of alleged deficiency amount as the proceeds of the foreclo sure sale of defendants properties are not sufficient to cover the entire indebtedness. In effect, such claim did not arise as a consequence of [C]ivil Case No. 098-353337 but was already existing (sic) even before the institution of that earlier case. Without necessarily delving into the veracity of plaintiffs claim but merely considering its origin and natur e as alleged in the complaint, said claim is merely permissive and not compulsory. Thus, such a claim can stand as an independent action.[19] (Underscoring supplied). The Locsins Motion for Reconsideration having been denied by the Mandaluyong RTC by Order of March 21, 2001,[20] they appealed to the Court of Appeals which, by the present assailed decision of June 5, 2003,[21] reversed the Orders of the Mandaluyong RTC, it finding t hat petitioners complaint was a compulsory counterclaim which should have been raised in its Answer to the Locsins complaint, and having failed to do so, it is now barred; that litis

15

Civ Pro Part 3


pendentia and res judicata apply to the case; and that petitioner violated the rule on forum shopping, hence, the dismissal of its complaint is warranted. Explained the appellate court: [The Locsins] complaint in Civil Case No. Q-98-35337, pending before Branch 223 of the Regional; Trial Court of Quezon City asks specific performance by private respondent Banco de Oro of its obligations under the very same loan agreements covered by Real Estate Mortgages mentioned in private respondents Complaint in Civil Case No. MC-99-935 before the Mandaluyong City Trial Court. In both cases, the real properties involved are those covered by TCT Nos. N-138739, [N-166336] and N-166337. The basis of the parties respective complaints arose from the very same transactions, the Term Loan Agreement, dated September 28, 1995 and the Credit Line Agreement, dated November 6, 1996. Clearly, there is a logical connection between both claims which arose from the same transaction and are necessarily connected and it does not require the presence of third parties for its adjudication. A counterclaim is logically related to the opposing partys claim where separate tr ials of each of their respective claims would involve substantial duplication of effort and time by the parties and the courts. Moreover, Sec. 2, Rule 9 of the Rules of Court provides: Sec. 2. Compulsory counterclaim, or cross-claim, not set up barred. - A compulsory counterclaim. or a cross claim, not set up shall be barred. Private respondent should have raised its complaint as compulsory counterclaim in the Regional Trial Court of Quezon City. Failing to do so, it is now barred. The reason for the rule relating to counterclaims is to avoid multiplicity of suits and to enable the Courts to dispose of the whole matter in controversy in one action, and adjustment of defendants demand by counterclaim rather than by independent suit. (Reyes vs. Court of Appeals, 38 SCRA 138). [The Locsins] second argument is that private respondents complaint in Civil Case No. MC-99-935 constitutes litis pendentia, and therefore should have been dismissed by the trial court. For litis pendentia to be a ground for dismissal of an action, three elements must concur: (a) identity of parties, or at least such parties who represent the same interest in both actions; (b) identity of rights asserted and relief prayed for being founded on the same facts; and (c) the identity, with respect to the two preceding particulars in the two cases, is such that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other. Applying this test, the principle of litis pendentia and res judicata will certainly apply to the instant case, all three requisites are present. The parties are the same and what is involved in both Civil Case No. Q-98-35337 pending before the Quezon City Trial Court and Civil Case No. MC-99-935 before the Mandaluyong City Trial Court are the same subject matter and set of circumstances, which would entail presentation of the same evidence. Judgment in favor of one of the parties in Civil Case No. Q-9835337 would bar the institution of the case filed before the Mandaluyong City Trial Court. Finally, [the Locsins] assert that Civil Case MC-99-935 should be dismissed since private respondent is guilty of willful and deliberate forum shopping. Jurisprudence has defined forum-shopping as 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. Forum shopping exists where the elements of litis pendentia are present, and where the a final judgment in one case will amount to res judicata in the other. (Heirs of Victorina Motus Penaverde v. Heirs of Mariano Penaverde, 344 SCRA 69). Thus, there is forum shopping when there exist: a) identity of parties, or at least such parties as represent the same interest 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 amount to res judicata in the action under consideration. (Prubankers Association vs. Prudential Bank and Trust Company, 302 SCRA 83). As discussed earlier, the elements of litis pendentia being present and that res judicata will eventually result, a decision by the Quezon City Trial Court would bar the institution of the Civil Case in the Mandaluyong City Trial Court for the collection of deficiency claim in the foreclosure sale of the petitioners properties. Private respondent violated the rule on forum shopping and therefore, the summary dismissal of thei r action is warranted.[22] (Italics in the original; underscoring supplied). Hence, the present Petition for Review on Certiorari,[23] petitioner raising the following assignment of errors: I. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER BANKS COMPLAINT FOR COLLECTION OF SUM OF MONEY BASED ON DEFICIENCY CLAIM UNDER CIVIL CASE No. MC-99-935 IS A COMPULSORY COUNTERCLAIM AND SHOULD HAVE BEEN SET UP BY PETITIONER BANK IN PRIVATE RESPONDENTS COMPLAINT FOR SPECIFIC PERFORMANCE, TORT AND DAMAGES, AND ANNULMENT OF FORECLOSURE IN CIVIL CASE NO. Q-98-35337. II. THE COURT OF APPEALS ERRED IN HOLDING THAT THERE IS LITIS PENDENTIA AND THUS, CIVIL CASE No. MC-99-935 SHOULD BE DISMISSED. III. THE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER BANK IS GUILTY OF FORUM SHOPPING.[24] Petitioner argues that the Locsins complaint is one based on tort, whereas its complaint before the Mandaluyong RTC is based on contract and law, hence, the two causes of action are separate and distinct; that under the test for the determination of whether the counterclaim is compulsory or permissive, its suit before the RTC of Mandaluyong for collection of deficiency judgment is not a compulsory, but permissive counterclaim and may, therefore, proceed independently of the Locsins complaint. Petitioner adds that its claim arises from the loan agreement, whereas the Locsins claim arises from the annulment of the foreclosure sale; that litis pendentia and res judicata do not apply as grounds for dismissal of its complaint as a perusal of both complaints reveals different causes of action, and the rights asserted and the reliefs prayed for are different, and the rule on lis pendens is applicable only when the judgment to be rendered in the action first instituted will be such that regardless of which party is successful, it will amount to res judicata as to the second action, it citing Hongkong & Shanghai Bank v. Aldecon & Co.[25] Citing Enriquez, et al. v. Ramos, et al.,[26] petitioner further argues that an action for collection of a mortgage loan does not bar another for rescission of the mortgage if such is based on the non-compliance by the mortgagor of the mortgage contract.

16

Civ Pro Part 3


Petitioner further cites Roa v. PH Credit Corporation,[27] wherein this Court ruled that the pendency of a replevin suit does not bar a proceeding for deficiency claim as there is no identity of subject matter, cause of action and reliefs prayed for. Finally, petitioner cites Bangko Silangan Development Bank v. Court of Appeals,[28] wherein this Court held that: The test to determine identity of the causes of action is to ascertain whether the same evidence necessary to sustain the second cause of action is sufficient to authorize a recovery in the first, even if the form or nature of the two (2) actions are different from each other. If the same facts or evidence would sustain both, the two (2) actions are considered the same within the rule that the judgment in the former is a bar to the subsequent action; otherwise, it is not. This method has been considered the most accurate test as to whether a former judgment is a bar in subsequent proceedings between the same parties. It has even been designated as infallible. While it is true that the two (2) cases are founded in practically the same set of facts, as correctly observed by the Court of Appeals, it cannot be said that exactly the same evidence are needed to prove the causes of action in both cases. Thus, in Civil Case No, 91-56185 of the RTC of Manila, the evidence needed to prove that petitioner sustained damage to its reputation and goodwill is not the same evidence needed in Civil Case No. 221 of the RTC of Batangas to prove the allegation that a substantial amount of respondent Bausas bank deposit in petitioners bank was illega lly withdrawn without her consent or authority, The RTC of Batangas and the Court of Appeals, therefore, did not abuse their discretion in denying petitioners motion to dismiss which was based on the ground of litis pendentia.[29] (Emphasis and underscoring supplied). By their Comment,[30] the Locsins maintain that petitioners claim in Civil Case No. MC-99-935 is logically related to their claim in Civil Case No. Q-9835337, as they involve the same parties, rely on the same facts, subject matter and series of transactions and, therefore, would entail presentation of the same evidence; that petitioner having failed to set up its claim as a compulsory counterclaim[31] in Civil Case No. Q-98-35337, it is now barred from setting it up in Civil Case No. MC-99-935; and that litis pendentia and res judicata proscribe the filing of a separate complaint by petitioner which is guilty of willful and deliberate forum shopping. The petition is impressed with merit. It bears noting that when petitioner filed its Answer with Counterclaim to the Locsins complaint on September 11, 1998, the Real Estate Mortgages covering the 1st TLA and the CLA had not been extrajudicially foreclosed, the extra-judicial foreclosure having taken place subsequent thereto or on September 23, 1998. It bears noting too that until after the Locsins allegedly refused and failed to settle the alleged deficiency amount of their outstanding obligation, despite petitioners February 5, 1999 letter of demand sent to the Locsins on February 9, 1999, petitioners cause of action had not arisen. Petitioner could not, therefore, have set its claim subject of its complaint in Civil Case No. MC-99-935 as, assuming arguendo that it is, a compulsory counterclaim when it filed on September 11, 1998 its Answer with Compulsory Counterclaim to the Locsins complaint.[32] The counterclaim must be existing at the time of filing the answer, though not at the commencement of the action for under Section 3 of the former Rule 10, the counterclaim or cross-claim which a party may aver in his answer must be one which he may have at the time against the opposing party. That phrase can only have reference to the time of the answer. Certainly a premature counterclaim cannot be set up in the answer. This construction is not only explicit from the language of the aforecited provisions but also serves to harmonize the aforecited sections of Rule 10, with section 4 of the same rule which provides that a counterclaim . . . which either matured or was acquired by a party after serving his pleading may, wit h the permission of the court, be presented as a counterclaim . . . by supplemental pleading before judgment. Thus a party who fails to interpose a counterclaim although arising out of or is necessarily connected with the transaction or occurrence of the plaintiffs suit but which did not exist or mature at the time said party files his answer is not thereby barred from interposing such claim in a future litigation. . .[33] (Emphasis and underscoring supplied). While petitioner could have, after the Locsins filed on March 26, 1999 a Supplemental Complaint in Civil Case No. Q-98-35337, set up, in its Supplemental Answer, its claim subject of Civil Case No. MC-99-935, again assuming arguendo that it is a Compulsory Counterclaim, the setting up of such after-acquired counterclaim, is merely permissive, not compulsory.[34] At all events, even if the claim of petitioner - subject of its complaint in Civil Case No. MC-99-935 is a compulsory counterclaim which should have been set up in its Answer to the Locsins Supplemental Complaint, technicality should give way to justice and equity to enable petitioner to pursue its after -acquired claim against the Locsins. As for the issue of whether petitioners complaint is dismissible on the grounds of litis pendent ia or auter action pendant, and forum shopping, the abovequoted and recited allegations of the pleadings of the parties do not reflect identity of rights asserted and reliefs sought, as well as basis thereof, to a degree sufficient to give rise to the abatement of petitioners complaint on any of these grounds. WHEREFORE, the petition is hereby GRANTED. The assailed decision of the Court of Appeals is SET ASIDE. Let the case be REMANDED to the court of origin, Branch 213 of the Regional Trial Court of Mandaluyong, which is hereby DIRECTED to continue with dispatch the proceedings in Civil Case No. MC-99-935. No costs. SO ORDERED.

17

Civ Pro Part 3


G.R. No. 167471 February 5, 2007 GLICERIA SARMIENTO, Petitioner, vs. EMERITA ZARATAN, Respondent.

DECISION CHICO-NAZARIO, J.: This petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to nullify the Court of Appeals Decision 1 in CA-G.R. SP No. 79001 entitled, "Emerita Zaratan v. Hon. Ramon A. Cruz, as Presiding Judge of RTC, Quezon City, Branch 223, and Gliceria Sarmiento," dated 17 August 2004, which reversed and set side the Orders dated 19 June 2003 and 31 July 2003 of the Regional Trial Court (RTC) of Quezon City in Civil Case No. Q-03-49437, dismissing respondents appeal for failure to file the memorandum within the period provided for by law. On 2 September 2002, petitioner Gliceria Sarmiento filed an ejectment case2 against respondent Emerita Zaratan, in the Metropolitan Trial Court (MeTC) of Quezon City, Branch 36, docketed as Civil Case No. 29109. On 31 March 2003, the MeTC rendered a decision in favor of petitioner, the dispositive portion of which reads: WHEREFORE, the Court finds that plaintiff has sufficiently established her causes against the defendant and hereby order the defendant and all persons claiming rights under her: 1. to pay plaintiff the monthly rentals of P3,500.00 for the said premises from August 1, 2002 until defendant vacates the premises; 2. to pay plaintiff the sum of P20,000.00 plus P1,500.00 per appearance of counsel in court, as and for attorneys fees; and to pay the cost of suit.3 Respondent filed her notice of appeal.4 Thereafter, the case was raffled to the RTC of Quezon City, Branch 223, docketed as Civil Case No. Q-03-49437. In the Notice of Appealed Case,5 the RTC directed respondent to submit her memorandum in accordance with the provisions of Section 7(b) of Rule 40 of the Rules of Court and petitioner to file a reply memorandum within 15 days from receipt. Respondents counsel having received the notice on 19 May 2003, he had until 3 June 2003 within which to file the requisite memorandum. But on 3 June 2003, he filed a Motion for Extension of Time of five days due to his failure to finish the draft of the said Memorandum. He cited as reasons for the delay of filing his illness for one week, lack of staff to do the work due to storm and flood compounded by the grounding of the computers because the wirings got wet.6 But the motion remained unacted. On 9 June 2003, respondent filed her Memorandum. On 19 June 2003, the RTC dismissed the appeal as follows: Record shows that defendant-appellant received the Notice of Appealed Case, through counsel, on May 19, 2003 (Registry Return Receipt dated May 12, 2003, Record, back of p. 298). Thus, under Section 7(b), Rule 40 of the 1997 Rules of Civil Procedure, she had fifteen (15) days or until June 3, 2003 within which to submit a memorandum on appeal. As further appears on record, however, the required Memorandum was filed by defendant-appellant only on June 9, 2003 (Record, p. 623), or six (6) days beyond the expiration of the aforesaid fifteen day period. It should be stressed that while the rules should be liberally construed, the provisions on reglemenatry periods are strictly applied as they are "deemed indispensable to the prevention of needless delays and necessary to the orderly and speedy discharge of judicial business" (Legaspi-Santos vs. Court of Appeals, G.R. No. 60577, October 11, 1983) and strict compliance therewith is mandatory and imperative (FJR Garments Industries vs. Court of Appeals, G.R. No. L-49329, June 29, 1984). The same is true with respect to the rules on the manner and periods for perfecting appeals (Gutierrez vs. Court of Appeals, L-25972, November 26, 1968). Premises considered, the instant appeal is hereby DISMISSED. This renders academic defendant-appellants application for a writ of preliminary injunction.7 1awphi1.net On the basis of the above-quoted Order, petitioner filed a Motion for Immediate Execution,8 while respondent moved for the Reconsideration.9 Both motions were denied by the RTC on 31 July 2003. The Order in part reads: In the main, defendant-appellants Motion for Reconsideration is premised on the argument that she filed a timely "Motion for Extension of Time To File Memorandum," dated and filed on June 3, 2003, but that her motion was not acted upon by this Court. She adds that her appeal memorandum was filed well within the period sought by her in her "Motion for Extension of Time to File Memorandum" so that her appeal should not have been dismissed. The argument is without merit. This Court did not take cognizance of defendant-appellants "Motion for Extension of Time to File Memorandum," and rightly so, because it did not contain a notice of hearing as required by Sections 4 and 5, Rule 15 of the Rules of Court, an omission for which it could offer no explanation. As declared in the case of Gozon, et al. v. court of Appeals (G.R. No. 105781, June 17, 1993);

18

Civ Pro Part 3


xxx It is well-entrenched in this jurisdiction that a motion 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 has no right to receive, and the court has no authority to act upon. xxx Moreover, parties and counsel should not assume that courts are bound to grant the time they pray for. A motion that is not acted upon in due time is deemed denied (Orosa vs. Court of Appeals, 261 SCRA 376 [1996]). Thus, defendant-appellants appeal was properly dismissed on account of her failure to file an appeal memorandum within the fifteen (15) day period provided under Section 7(b), Rule 40 of the 1997 Rules of Civil Procedure. With regard to the "Motion for Immediate Execution," dated June 23, 2003, filed by plaintiff-appellee, the rule is explicit that the execution of a judgment in an ejectment case, must be sought with the inferior court which rendered the same. The appellate court which affirms a decision brought before it on appeal cannot decree its execution in the guise of an execution of the affirming decision. The only exception is when said appellate court grants an execution pending appeal, which is not the case herein (City of Manila vs. Court of Appeals, 204 SCRA 362; Sy vs. Romero, 214 SCRA 187).10 Petitioner moved for reconsideration of the said Order, while respondent sought clarification on whether the 31 July 2003 Order dismissing the appeal was anchored on Section (b), Rule 40 or Section 7(c) of the same Rule. On 27 August 2003, the RTC reconsidered its previous Order by granting petitioners motion for Immediate Execution, but denied respondents Motion for Clarification, in this wise: Section 21, Rule 70 of the Rules of Court provides that "the judgment of the Regional Trial Court against the defendant shall be immediately executory, without prejudice to a further appeal that may be taken therefrom. Pursuant to this Rule and taking into account the arguments of the plaintiff in her "Urgent Motion for Reconsideration," the Court is inclined to grant the same. As further correctly argued by the plaintiff, through counsel, during the hearing on her motion on August 15, 2003, the cases of City of Manila v. Court of Appeals (204 SCRA 362) and Sy vs. Romero (214 SCRA 187) cited in the July 31, 2003 Order refer to ejectment cases which has (sic) been decided with finality and hence, inapplicable to this case where a further appeal is still available to the defendant. It should likewise be noted that while the Supreme Court ruled in these cases that execution of a judgment in an ejectment case must be sought with the inferior court which rendered the same, it likewise provided that for an exception to this rule, that is, in cases where the appellate court grants an execution pending appeal, as the case herein. With regard to defendants Motion for Clarification, contained in her Opposition, the Court notes that the issues raised therein have already been squarely dealt with in the July 31, 2003 Order. The same must, therefore, be denied. 11 Aggrieved, respondent filed a Petition for Certiorari in the Court of Appeals, which was granted in a decision dated 17 August 2004. The appellate court nullified and set aside the 19 June 2003 and 31 July 2003 Orders of the RTC and ordered the reinsta tement of respondents appeal. Consequently, respondents appeal memorandum was admitted and the case remanded to the RTC for further proceedings. 12 Petitioner filed a motion for reconsideration13 on 13 September 2004, followed by a Motion for Inhibition14 of the members of the Eighth Division of the Court of Appeals on 20 September 2004. Both motions were denied for lack of merit on 10 March 2005. 15 Hence, this appeal by petitioner posing the following issues,16 thus: 1. Whether respondents petition for certiorari should have been dismissed in the first place; 2. Whether the trial court committed grave abuse of discretion in denying respondents motion for extension; 3. Whether it is Section 19 of Rule 7 that applies, and not Section 21; and 4. Whether the Court of Appeals Justices should have inhibited themselves from further proceeding with the subject case. Stated otherwise, the main issue for resolution is whether the Court of Appeals committed a reversible error of law in granting the Writ of Certiorari. In granting the petition, the Court of Appeals ruled that the RTC erred in dismissing respondents appeal for failure to file the required Memorandum withi n the period provided by law and in granting petitioners Motion for Immediate Execution of the MeTC decision. Before resolving the substantive issues raised by petitioner, the Court will first address the procedural infirmities ascribed by petitioner. Petitioner assails the correctness and propriety of the remedy resorted to by respondent by filing a Petition for Certiorari in the Court of Appeals. According to petitioner, certiorari is not appropriate and unavailing as the proper remedy is an appeal. It must be noted that respondents appeal in the RTC was dismissed for failure to file the required memorandum within the per iod allowed by law, as the Motion for Extension of Time to file Memorandum was not acted upon for failure to attach a notice of hearing. From the said dismissal, respondent filed a Petition for Certiorari in the Court of Appeals. Respondent correctly filed said petition pursuant to Section 41 of the Rules of Court, which 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.

19

Civ Pro Part 3


No appeal may be taken: xxxx (d) An order disallowing or dismissing an appeal; xxxx In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate civil action under Rule 65. (Underscoring supplied.) Petitioner also contends that the Petition for Certiorari filed in the Court of Appeals should be dismissed as the certification of non-forum shopping was defective. The verification in part reads: I, EMERITA ZARATAN, of legal age, after having been duly sworn to, according to law, depose and say: That I, Emerita Zaratan is one of the respondent (sic) in the above entitled case, hereby declare, that I have caused the preparation and filing of the foregoing Comment on the Petition; that I have read all the allegations therein, which are true and correct to the best of my own knowledge. That as respondent, I further certify that I have not commenced any other action or proceeding involving the same issues in the foregoing Petition in the Court of Appeals, the Supreme Court, or different Divisions thereof, respectively, or any tribunal, or agency; and should it be known that a similar action or proceeding has been filed or is pending in any of the abovementioned Courts or different Divisions thereof, the petitioner shall notify the Honorable Court to which this certification is filed, within five (5) days from such notice. (Underscoring ours.) Petitioner avers that respondent by stating in the above-quoted certification that she was the respondent, while in truth she was the petitioner and by stating that respondent caused the preparation of the comment on the petition, instead of the petition itself, indicate that respondent did not understand what she was signing. The defect of the verification all renders the petition in the Court of Appeals without legal effect and constitutes ground for its dismissal. The contention is baseless. The purpose of requiring a verification is to secure an assurance that the allegations of the petition 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 non-compliance therewith does not necessarily render it fatally defective.17 Perusal of the verification in question shows there was sufficient compliance with the requirements of the Rules and the alleged defects are not so material as to justify the dismissal of the petition in the Court of Appeals. The defects are mere typographical errors. There appears to be no intention to circumvent the need for proper verification and certification, which are intended to assure the truthfulness and correctness of the allegations in the petition and to discourage forum shopping.18 Now, the substantial issues. Corollary to the dismissal of the appeal by the RTC is the question of whether the lack of notice of hearing in the Motion for Extension of Time to file Memorandum on Appeal is fatal, such that the filing of the motion is a worthless piece of paper. Petitioner avers that, because of the failure of respondent to include a Notice of Hearing in her Motion for Extension of Time to file Memorandum on Appeal in the RTC, the latters motion is a worthless piece of paper with no legal effect. It is not disputed that respondent perfected her appeal on 4 April 2003 with the filing of her Notice of Appeal and payment of the required docket fees. However, before the expiration of time to file the Memorandum, she filed a Motion for Extension of Time seeking an additional period of five days within which to file her Memorandum, which motion lacked the Notice of Hearing required by Section 4, Rule 15 of the 1997 Rules of Court which 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. 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. As may be gleaned above and as held time and again, the notice requirement in a motion is mandatory. As a rule, a motion without a Notice of Hearing is considered pro forma and does not affect the reglementary period for the appeal or the filing of the requisite pleading. 19 As a general rule, notice of motion is required where a party has a 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.20 The three-day notice required by law is intended not for the benefit of the movant but to avoid surprises upon the adverse party and to give the latter time to study and meet the arguments of the motion. 21 Principles of natural justice demand that the right of a party should not be affected without giving it an opportunity to be heard. 22 The test is the presence of the opportunity to be heard, as well as to have time to study the motion and meaningfully oppose or controvert the grounds upon which it is based.23 Considering the circumstances of the present case, we believe that procedural due process was substantially complied with.

20

Civ Pro Part 3


There are, indeed, reasons which would warrant the suspension of the Rules: (a) the existence of special or compelling circumstances, b) the merits of the case, (c) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of rules, (d) a lack of any showing that the review sought is merely frivolous and dilatory, and (e) the other party will not be unjustly prejudiced thereby.24 Elements or circumstances (c), (d) and (e) exist in the present case. The suspension of the Rules is warranted in this case. The motion in question does not affect the substantive rights of petitioner as it merely seeks to extend the period to file Memorandum. The required extension was due to respondents counsels illness, lack of staff to do the work due to storm and flood, compounded by the grounding of the computers. There is no claim likewise that said motion was interposed to delay the appeal. 25 As it appears, respondent sought extension prior to the expiration of the time to do so and the memorandum was subsequently filed within the requested extended period. Under the circumstances, substantial justice requires that we go into the merits of the case to resolve the issue of who is entitled to the possession of the land in question. Further, it has been held that a "motion for extension of time x x x is not a litigated motion where notice to the adverse party is necessary to afford the latter an opportunity to resist the application, but an ex parte motion made to the court in behalf of one or the other of the parties to the action, in the absence and usually without the knowledge of the other party or parties." As a general rule, notice of motion is required where a party has a right to resist the relief sought by the motion and principles of natural justice demand that his rights be not affected without an opportunity to be heard. It has been said that "ex parte motions are frequently permissible in procedural matters, and also in situations and under circumstances of emergency; and an exception to a rule requiring notice is sometimes made where notice or the resulting delay might tend to defeat the objective of the motion." 26 It is well to remember that this Court, in not a few cases, has consistently held that cases shall be determined on the merits, after full opportunity to all parties for ventilation of their causes and defense, rather than on technicality or some procedural imperfections. In so doing, the ends of justice would be better served.27 Furthermore, this Court emphasized its policy that technical rules should accede to the demands of substantial justice because there is no vested right in technicalities. Litigations, should, as much as possible, be decided on their merits and not on technicality. 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. As has been the constant rulings of this Court, every party-litigant should be afforded the amplest opportunity for the proper and just disposition of his cause, free from constraints of technicalities. 28 Indeed, rules of procedure are mere tools designed to expedite the 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 justice must be avoided.29 The visible emerging trend is to afford every party-litigant the amplest opportunity for the proper and just determination of his cause, free from constraints and technicalities. Parenthetically, it must be noted also that when the appeal was dismissed on 19 June 2003, the memorandum was already filed in court on 9 June 2003. On the issue of immediate execution of judgment. The applicable provision is Section 19, Rule 70 of the Rules of Court, which reads: SEC. 19. Immediate Execution of judgment; how to stay the same.- If judgment is rendered against the defendant, execution shall issue immediately upon motion, unless an appeal has been perfected and the defendant to stay execution files a sufficient supersedeas bond, approved by the Municipal Trial Court and executed in favor of the plaintiff to pay the rents, damages, and costs accruing down to the time of the judgment appealed from, and unless, during the pendency of the appeal, he deposits with the appellate court the amount of rent due from time to time under the contract, if any, as determined by the judgment of the Municipal Trial Court. x x x. To stay the immediate execution of judgment in ejectment proceedings, Section 19 requires that the defendant-appellant must (a) perfect his appeal, (b) file a supersedeas bond, and (c) periodically deposit the rentals falling due during the pendency of the appeal. As correctly observed by the Court of Appeals, execution pending appeal was premature as respondent had already filed a supersedeas bond and the monthly rental for the current month of the premises in question.30 The invocation of petitioner of the provisions of Section 21, Rule 70 of the Rules of Court, which runs: Sec. 21. Immediate execution on appeal to Court of Appeals or Supreme Court.- The judgment of the Regional Trial Court against the defendant shall be immediately executory, without prejudice to a further appeal that may be taken therefrom. to justify the issuance of the writ of execution pending appeal in this case is misplaced. A closer examination of the above-quoted provision reveals that said provision applies to decision of the RTC rendered in its appellate jurisdiction, affirming the decision of the MeTC. In the case at bar, the RTC order was an order dismissing respondents appeal based on technicality. It did not resolve substantive matters delving on the merits of the parties claim in the ejectment case. Thus, the case brought to the Court of Appeals was the dismissal of the appeal for failure to file the required memorandum within the period provided by law, and not on the merits of the ejectment case. Lastly, petitioner posited the view that the Court of Appeals justices should have inhibited themselves because of bias and partiality for deciding the case within eight months and for being very selective in discussing the issues. We reject the proposition.

21

Civ Pro Part 3


Inhibition must be for just and valid causes. The mere imputation of bias and partiality is not enough ground for judges to inhibit, especially when the charge is without basis. This Court has to be shown acts or conduct clearly indicative of arbitrariness or prejudice before it can brand them with the stigma of bias and partiality.31 This Court has invariably held that for bias and prejudice to be considered valid reasons for the voluntary inhibition of judges, mere suspicion is not enough. Bare allegations of their partiality 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 and favor." 32 There is no factual support to petitioners charge of bias and partiality. A perusal of the records of the case fails to reveal tha t any bias or prejudice motivated the Court of Appeals in granting respondents petition. Neither did this Court find any questiona ble or suspicious circumstances leading to the issuance of the questioned decision, as suggested by petitioner. The fact alone that the Court of Appeals decided the case within eight months does not in any way indicate bias and partiality against petitioner. It is within the constitutional mandate to decide the case within 12 months.33 As to petitioners allegation that the Court of Appeals was selective in choosing what issues to resolve, it bears to stress again that "a judges appreciation or misappreciation of the sufficiency of evidence x x x adduced by the parties, x x x, without proof of malice on the part of respondent judge, is not sufficient to show bias and partiality."34 We also emphasized that "repeated rulings against a litigant, no matter how erroneously, vigorously and consistently expressed, do not amount to bias and prejudice which can be bases for the disqualification of a judge."35 IN ALL, petitioner utterly failed to show that the appellate court erred in issuing the assailed decision. On the contrary, it acted prudently in accordance with law and jurisprudence. WHEREFORE, the instant petition is hereby DENIED for lack of merit. The Decision dated 17 August 2004 and the Resolution dated 10 March 2005 of the Court of Appeals in CA-G.R. SP No. 79001 are hereby AFFIRMED. No costs. SO ORDERED.

22

Civ Pro Part 3


OFFICE OF THE OMBUDSMAN, - versus MAXIMO D. SISON, G.R. No. 185954 The Case Before us is a Petition for Review on Certiorari under Rule 45 assailing and seeking to set aside the Resolution[1] dated December 18, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 96611, entitled Maximo D. Sison v. Fr. Noel Labendia for Himself and in Representation of Isog Han Samar Movement, Diocese of Calbayog, Catbalogan, Samar. The CA Resolution denied petitioner Office of the Ombudsmans Omnibus Motion for Inte rvention and to Admit Attached Motion for Reconsideration of the CAs June 26, 2008 Decision.[2]

The Facts On October 11, 2004, the Isog Han Samar Movement, represented by Fr. Noel Labendia of the Diocese of Calbayog, Catbalogan, Samar, filed a lettercomplaint addressed to then Ombudsman, Hon. Simeon Marcelo, accusing Governor Milagrosa T. Tan and other local public officials[3] of the Province of Samar, including respondent Maximo D. Sison, of highly anomalous transactions entered into by them amounting to several millions of pesos. Sison was the Provincial Budget Officer. The letter-complaint stemmed from the audit investigation dated August 13, 2004 conducted by the Legal and Adjudication Office (LAO), Commission on Audit (COA), which found, among others, that various purchases totaling PhP 29.34 million went without proper bidding procedures and documentations; that calamity funds were expended without a State of Calamity having been declared by the President; and that purchases for rice, medicines, electric fans, and cement were substantially overpriced. The Special Audit Team, which was created under LAO Office Order No. 2003-059 dated July 7, 2003, summarized the corresponding COA audit findings and observations, to wit: 1. Rules and regulations pertaining to procurement of supplies and materials were consciously and continually violated as disclosed in the verification of selected purchases of the Province. Below were the findings and observations: a. Purchases of various items, totaling at least PhP 29.34 million and allegedly procured through public bidding, were found highly irregular for lack of proper bidding procedures and documentation; b. At least PhP 28.165 million worth of purchases through repeat orders were made by the Province without observing the pertinent law, rules and regulations governing this mode of procurement; and c. Emergency purchases of medicines and assorted goods totaling PhP 14.67 million were found not complying with the requirements set forth under the Rules and Regulations on Supplies and Property Management in Local Governments (RRSPMLG). Moreover, the purchases were charged against the calamity fund, despite absence of any declaration from the President that Samar was under a state of calamity, in violation of Sec. 324(d) of R.A. 7160. 2. Inconsistencies in the dates of supporting documents relating to the purchases discussed in finding No. 1 were so glaring that they raised doubts on the validity of the transactions per se; 3. The use of the 5% budgetary reserves for calamity as funding source of emergency purchases was not legally established, there being no declaration from the Office of the President that Samar was under a state of calamity, as required under Sec. 324(d) of R.A. 7160; 4. Splitting of requisitions and purchase orders was resorted to in violation of COA Circular No. 76-41 dated July 30, 1976;

5. There was overpricing in the purchase of rice, medicines, electric fans and cement in the amount of PhP 580,000.00, PhP 322,760.00, PhP 341,040.00, and PhP 3.6 million, respectively. An overpayment was also committed in the payments of cement in the amount of PhP 96,364.09; 6. Other observations gathered corollary to the purchases made are the following:

a. Purchase Orders were not duly accomplished to include a complete description of the items to be purchased, the delivery date and the terms of payment, in violation of the provisions of Section 74 and other corollary provisions of RRSPMLG. Some were even acknowledged by suppliers; b. At least 36 vouchers/claims were not supported with an official receipt, in violation of the provisions of Section 4 of PD 1445 that all disbursements must be supported with complete documentation; and c. Advanced deliveries of medicines and assorted goods were made on some purchases even before the purchase orders were prepared and before the public biddings were conducted. 7. The necessity and veracity of the distribution of t-shirts/caps, medicines, assorted goods and cement purchased by the Province of Samar could not be established due to rampant inconsistencies in dates, quantities, as well as the signatures of the alleged recipients in the Requisition and Issue Slip; and, 8. Financial Assistance (FA)/Assistance to Individuals in Crisis Situation (AICS) totaling at least PhP 5.4 million in 2002 and PhP 2.78 million as of April 2003 were granted to various applicant-recipients without subjecting them to the guidelines set forth by the Department of Social Welfare and Development (DSWD).[4] x x x

23

Civ Pro Part 3


On January 24, 2005, the Office of the Ombudsman, through Director Jose T. De Jesus, Jr., found basis to proceed with the administrative case against the impleaded provincial officials of Samar, docketed as OMB-C-A-05-0051-B. The latter were then required to file their counter-affidavits and countervailing evidence against the complaint. In his counter-affidavit, Sison vehemently denied the accusations contained in the letter-complaint and claimed his innocence on the charges. He asserted that his function is limited to the issuance of a certification that an appropriation for the requisition exists, that the corresponding amount has been obligated, and that funds are available. He did not, in any way, vouch for the truthfulness of the certification issued by the requesting parties. In addition, he averred that he never participated in the alleged irregularities as shown in the minutes and attendance sheet of the bidding. Further, he alleged that not one of the documentary evidences so far attached in the letter-complaint bore his signature and that he was neither factually connected nor directly implicated in the complaint. On May 6, 2005, Sison submitted his Position Paper to the Office of the Ombudsman and reiterated that he had not participated in the alleged anomalous purchases and use of public funds by the Province of Samar. On August 22, 2006, the Office of the Ombudsman rendered a Decision, finding Sison and several other local officials of the Province of Samar guilty of grave misconduct, dishonesty, and conduct prejudicial to the best interest of the service and dismissing him from service. The dispositive portion of the Decision reads: VIEWED IN THE FOREGOING LIGHT, DECISION is hereby rendered as follows: 1. Respondents ROLANDO B. MONTEJO, DAMIANO Z. CONDE, JR., ROMEO C. REALES, MAXIMO D. SISON, AURELIO A. BARDAJE and NUMERIANO C. LEGASPI are FOUND GUILTY of GRAVE MISCONDUCT, DISHONESTY and CONDUCT PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE, and are METED the penalty of DISMISSAL FROM SERVICE, and shall carry with it the cancellation of eligibility, forfeiture of retirement benefits, and the perpetual disqualification for re-employment in the government service. Accordingly, Governor Milagrosa T. Tan and Executive Director Presentacion R. Montesa of the Bureau of Local Government Finance, Department of Finance, are respectfully directed to implement this Order upon receipt hereof and to forthwith inform the Office of compliance herewith. 2. The administrative complaint against respondents MILAGROSA T. TAN, FE ORTEGA TAN ARCALES, SUSANO DIMAKILING SALURIO, BARTOLOME P. FIGUEROA, ANTONIO DE LEON BOLASTIG, III, ROSENAIDA A. ROSALES and BARTOLOME R. CASTILLO III is DISMISSED in view of their re-election in May 2004; 3. The administrative complaint against ERNESTO CARCILLAR ARCALES, FELIX T. BABALCON, JR., JIMMY R. DY, JUAN COLINARES LATORRE, JR., MARIA LOURDES CORTEZ UY, BIENVENIDA P. REPOL and RAMON P. DEAN, JR., who are no longer public officials, is DISMISSED. 4. 5. For insufficiency of evidence, the administrative complaint against ANAMIE P. MANATAD-NUNEZ and ROSIE AMARO VILLACORTE is DISMISSED. The Fact-Finding and Intelligence Office is DIRECTED to conduct further fact-finding investigations on the following:

a. On DV Nos. 221-2002-12-083 and 221-2002-11-065: (a) to DETERMINE the other public officials who may be held administratively liable; and (b) to FILE, if necessary, the corresponding Complaint; b. On Bid Nos. 079-2002, 442-2002, 554-2002, 861-2002, 937-2002, 947-2002, 1221-2002, 1375-2002, 1411-2002, 007-2003, 014-2003, 023-2003, 0472003 and 082-2002: (a) to VERIFY whether actual public biddings took place relative to the transactions covered by these bids; (b) to CHECK the veracity of the documents relative to the repeat orders made; (c) to DETERMINE the other public officials who may appear to be administratively liable therefor; and (d) to FILE, if warranted, the corresponding Complaint; and c. On Bid Nos. 078-2002, 448-2002, 931-2002, 1230-2001, 411-2002, 944-2002, 1244-2002, 1407-2001, 198-2002, 316-2002 and 431-2002: (a) to DETERMINE whether actual public biddings were held relative to the above-mentioned transactions; (b) to CHECK the veracity of the documents relative to the repeat orders made; (c) to ASCERTAIN the other public officials who may be held administratively liable therefor; and (d) to FILE the corresponding Complaint, if warranted. Accordingly, let a copy of this Memorandum be furnished the Fact- Finding and Intelligence Office for its appropriate action. SO ORDERED.[5] (Emphasis supplied.) Aggrieved, Sison appealed to the CA via a Petition for Review under Rule 43, docketed as CA-G.R. SP No. 96611. On June 26, 2008, the CA rendered a decision reversing and setting aside the decision of the Office of the Ombudsman against Sison. The fallo of the CA decision reads: WHEREFORE, the decision of the Ombudsman dated 22 August 2006 in OMB-C-A-05-0051-B in so far as it finds the herein petitioner MAXIMO D. SISON administratively liable for grave misconduct, dishonesty and conduct prejudicial to the best interest of service is hereby REVERSED and SET ASIDE for insufficiency of evidence. Accordingly, he is absolved from administrative liability as charged. SO ORDERED.[6] In ruling thus, the CA held that the Office of the Ombudsman failed to adduce substantial evidence in order to convict Sison. Moreover, it reasoned that Sisons responsibility as Provincial Budget Officer was to ensure that appropriations exist in relation to the emergency purchase being made and that he had

24

Civ Pro Part 3


no hand or discretion in characterizing a particular purchase as emergency in nature. Hence, he cannot be held administratively liable for simply attesting to the existence of appropriations for a certain purpose, save if such certification is proved to be false. On July 22, 2008, the Office of the Ombudsman filed an Omnibus Motion for Intervention and to Admit Attached Motion for Reconsideration, which was subsequently denied by the CA in its assailed resolution of December 18, 2008. Hence, we have this petition. The Issues I Whether the [CA] gravely erred in denying petitioners right to intervene in the proceedings, considering that (a) the Office of the Ombudsman has sufficient legal interest warranting its intervention in the proceedings before the [CA] since it rendered the subject decision pursuant to its administrative authority over public officials and employees; and (b) contrary to the appellate court a quos ruling, petit ioner Office of the Ombudsman filed its Omnibus Motion to Intervene and to Admit Attached Motion for Reconsideration on a patently erroneous decision of the [CA] which has not yet attained finality. II Whether the [CA] erred in ruling that the finding of the Office of the Ombudsman was not supported by substantial evidence. III Whether the [CA] erred in giving due course to respondents petition for review when this was prematurely filed as it disrega rded the well-entrenched jurisprudential doctrine of exhaustion of administrative remedies. Our Ruling The appeal lacks merit. Intervention Is Discretionary upon the Court The pivotal issue in this case is whether the Office of the Ombudsman may be allowed to intervene and seek reconsideration of the adverse decision rendered by the CA. In its Decision, the CA did not allow the Office of the Ombudsman to intervene, because (1) the Office of the Ombudsman is not a third party who has a legal interest in the administrative case against petitioner; (2) the Omnibus Motion for Intervention was filed after the CA rendered its Decision; and (3) the Office of the Ombudsman was the quasi-judicial body which rendered the impugned decision. In its Petition, however, the Office of the Ombudsman asserts that it has sufficient legal interest to warrant its intervention in the proceedings, since it rendered the subject decision pursuant to its administrative authority over public officials and employees. Further, it contends that the Omnibus Motion to Intervene was timely filed, since, at the time of its filing, the decision of the CA had not yet attained finality. We are not persuaded. It is fundamental that the allowance or disallowance of a Motion to Intervene is addressed to the sound discretion of the court.[7] The permissive tenor of the rules shows the intention to give to the court the full measure of discretion in permitting or disallowing the intervention,[8] thus: SECTION 1. Who may intervene. A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenors rights may be fully protected in a separate proceeding. SECTION 2. Time to intervene. The motion to intervene may be filed at any time before rendition of judgment by the trial court. A copy of the pleading-inintervention shall be attached to the motion and served on the original parties.[9] (Emphasis supplied.) Simply, intervention is a procedure by which third persons, not originally parties to the suit but claiming an interest in the subject matter, come into the case in order to protect their right or interpose their claim.[10] Its main purpose is to settle in one action and by a single judgment all conflicting claims of, or the whole controversy among, the persons involved.[11] To warrant intervention under Rule 19 of the Rules of Court, two requisites must concur: (1) the movant has a legal interest in the matter in litigation; and (2) intervention must not unduly delay or prejudice the adjudication of the rights of the parties, nor should the claim of the intervenor be capable of being properly decided in a separate proceeding. The interest, which entitles one to intervene, must involve the matter in litigation and of such direct and immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the judgment.[12] In support of its argument that it has legal interest, the Office of the Ombudsman cites Philippine National Bank v. Garcia, Jr. (Garcia). [13] In the said case, the Philippine National Bank (PNB) imposed upon its employee, Garcia, the penalty of forced resignation for gross neglect of duty. On appeal, the Civil Service Commission (CSC) exonerated Garcia from the administrative charges against him. In accordance with the ruling in Civil Service Commission v. Dacoycoy,[14] this Court affirmed the standing of the PNB to appeal to the CA the CSC resolution exonerating Garcia. After all, PNB was the aggrieved party which complained of Garcias acts of dishonesty. Should Garcia be finally exonerated, it might then be incumbent upon PNB to take him back into its fold. PNB should, therefore, be allowed to appeal a decision that, in its view, hampered its right to select honest and trustworthy employees, so that it can protect and preserve its name as a premier banking institution in the country.

25

Civ Pro Part 3


Based on the facts above, the Office of the Ombudsman cannot use Garcia to support its intervention in the appellate court for the following reasons: First, Sison was not exonerated from the administrative charges against him, and was, in fact, dismissed for grave misconduct, dishonesty, and conduct prejudicial to the best interest of the service by the Office of the Ombudsman in the administrative case, OMB-C-A-05-0051-B. Thus, it was Sison who appealed to the CA being, unquestionably, the party aggrieved by the judgment on appeal. Second, the issue here is the right of the Office of the Ombudsman to intervene in the appeal of its decision, not its right to appeal. And third, Garcia should be read along with Mathay, Jr. v. Court of Appeals[15] and National Appellate Board of the National Police Commission v. Mamauag (Mamauag),[16] in which this Court qualified and clarified the exercise of the right of a government agency to actively participate in the appeal of decisions in administrative cases. In Mamauag, this Court ruled: RA 6975 itself does not authorize a private complainant to appeal a decision of the disciplining authority. Sections 43 and 4 5 of RA 6975 authorize either party to appeal in the instances that the law allows appeal. One party is the PNP member -respondent when the disciplining authority imposes the penalty of demotion or dismissal from the service. The other party is the government when the disciplining authority imposes the penalty of demotion but the government believes that dismissal from the service is the proper penalty. However, the government party that can appeal is not the disciplining authority or tribunal which previously heard the case and imposed the penalty of demotion or dismissal from the service. The government party appealing must be the one that is prosecuting the administrative case against the respondent. Otherwise, an anomalous situation will result where the disciplining authority or tribunal hearing the case, instead of being impartial and detached, becomes an active participant in prosecuting the respondent. Thus, in Mathay, Jr. v. Court of Appeals, decided after Dacoycoy, the Court declared: To be sure when the resolutions of the Civil Service Commission were brought to the Court of Appeals, the Civil Service Commission was included only as a nominal party. As a quasi-judicial body, the Civil Service Commission can be likened to a judge who should detach himself from cases where his decisio n is appealed to a higher court for review. In instituting G.R. No. 126354, the Civil Service Commission dangerously departed from its role as adjudicator and became an advocate. Its mandated function is to hear and decide administrative cases instituted by or brought before it directly or on appeal, including cont ested appointments and to review decisions and actions of its offices and agencies, not to litigate. Clearly, the Office of the Ombudsman is not an appropriate party to intervene in the instant case. It must remain partial and detached. More importantly, it must be mindful of its role as an adjudicator, not an advocate. It is an established doctrine that judges should detach themselves from cases where their decisions are appealed to a higher court for review. The raison detre for such a doctrine is the fact that judges are not active combatants in such proceeding and must leave the opposing parties to contend their individual positions and the appellate court to decide the issues without the judges active participation.[17] When judges actively pa rticipate in the appeal of their judgment, they, in a way, cease to be judicial and have become adversarial instead.[18] In Pleyto v. Philippine National Police Criminal Investigation and Detection Group (PNP-CIDG),[19] the Court applied this doctrine when it held that the CA erred in granting the Motion to Intervene filed by the Office of the Ombudsman, to wit: The court or the quasi-judicial agency must be detached and impartial, not only when hearing and resolving the case before it, but even when its judgment is brought on appeal before a higher court. The judge of a court or the officer of a quasi-judicial agency must keep in mind that he is an adjudicator who must settle the controversies between parties in accordance with the evidence and applicable laws, regulations and/or jurisprudence. His judgment should already clearly and completely state his findings of fact and law. There must be no more need for him to justify further his judgment when it is appealed before appellate courts. When the court judge or the quasi-judicial officer intervenes as a party in the appealed case, he inevitably forsakes his detachment and impartiality, and his interest in the case becomes personal since his objective now is no longer only to settle the controversy between the original parties (which he had already accomplished by rendering his judgment), but more significantly, to refute the appellants assignment of e rrors, defend his judgment, and prevent it from being overturned on appeal. Likewise, the facts reveal that this case was elevated to the CA via a verified Petition for Review under Rule 43 of the Rules of Court and Supreme Court Administrative Circular No. 1-95 dated May 16, 1995, which govern appeals to the CA from judgments or final orders of quasi-judicial agencies. Rule 43, as well as Administrative Circular No. 1-95, provides that the petition for review shall state the full names of the parties to the case without impleading the court or agencies either as petitioners or respondents.[20] Thus, the only parties in such an appeal are the appellant as petitioner and appellee as respondent. The court or, in this case, the administrative agency that rendered the judgment appealed from, is not a party in the said appeal. Therefore, the Office of the Ombudsman does not have the legal interest to intervene. As the CA held correctly: The Office of the Ombudsman is not a third party who has a legal interest in the administrative case against the petitioner such that it would be directly affected by the judgment that this Court had rendered. It must be remembered that the legal interest required for an intervention must be direct and immediate in character. Lest it be forgotten, what was brought on appeal before this Court is the very Decision by the Office of the Ombudsman. Plainly, the Office of the Ombudsman, as an adjudicator, and not an advocate, has no legal interest at stake in the outcome of this Rule 43 Petition.[21]

26

Civ Pro Part 3


Motion for Intervention Was Not Filed on Time Furthermore, the Rules provides explicitly that a motion to intervene may be filed at any time before rendition of judgment by the trial court. In the instant case, the Omnibus Motion for Intervention was filed only on July 22, 2008, after the Decision of the CA was promulgated on June 26, 2008. In support of its position, petitioner cites Office of the Ombudsman v. Samaniego.[22] That case, however, is not applicable here, since the Office of the Ombudsman filed the motion for intervention during the pendency of the proceedings before the CA. It should be noted that the Office of the Ombudsman was aware of the appeal filed by Sison. The Rules of Court provides that the appeal shall be taken by filing a verified petition for review with the CA, with proof of service of a copy on the court or agency a quo.[23] Clearly, the Office of the Ombudsman had sufficient time within which to file a motion to intervene. As such, its failure to do so should not now be countenanced. The Office of the Ombudsman is expected to be an activist watchman, not merely a passive onlooker.[24] In this case, it cannot be denied that the Omnibus Motion for Intervention was belatedly filed. As we held in Rockland Construction Co., Inc. v. Singzon, Jr., no intervention is permitted after a decision has already been rendered.[25] In light of the foregoing considerations, all other issues raised in the petition are rendered moot and academic and no further discussion is necessary. WHEREFORE, the petition is DENIED. The CA Resolution dated December 18, 2008 in CA-G.R. SP No. 96611 is AFFIRMED. SO ORDERED.

GCP-MANNY TRANSPORT SERVICES, INC., Versus -

G.R. NO. 141484

HON. ABRAHAM Y. PRINCIPE, GCP-Manny Transport Services, Inc. is now before this Court on a petition for review on certiorari seeking the reversal of the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP. No. 43441 promulgated on May 26, 1999 and the Resolution[2] dated December 29, 1999. The antecedent facts, as summarized by the CA, are as follows: On April 18, 1990, private respondent filed the herein complaint for damages docketed as Civil Case No. 4142 for physical injuries sustained by him as a passenger of petitioners bus. On November 2, 1995, respondent court[3] rendered a decision in favor of the private respondent ordering the petitioner to pay the former the amount of P58,207.35 as actual and compensatory damages; P150,000.00 as moral damages; P10,000.00 as exemplary damages and P10,000.00 as attorneys fees, and costs. Copy of the decision sent to petitioner was returned for the reason that it had moved (residen ce), while copy sent to Atty. Arnold M. Aquino, then petitioners counsel, was returned unserved being unclaimed. Petitioner states that a copy of the decision was personally deli vered by the Civil Docket Clerk of the trial court on Atty. Aquino who had refused to receive the same saying he was no longer counsel for the petitioner, although no notice of withdrawal as counsel was filed by him in court. On April 11, 1996, private respondent filed a motion for execution of the judgment, copy furnished to Atty. Arnold M. Aquino and petitioner which the court granted on October 9, 1996. The assailed writ of execution was correspondingly issued, which petitioner received on October 30, 1996. On November 5, 1996, Atty. Jose de Luna entered his appearance as new counsel for the petitioner with motion for reconsideration of the order dated October 9, 1996 granting the motion for execution or the quashal of the writ of execution on the ground that petitioner had not been duly notified of the decision. On November 9, 1996, petitioner received a Notice of Demand for Payment from the deputies of the Ex-officio Sheriff of the RTC of Cagayan attaching thereto copies of the writ of execution and the decision. On November 14, 1996, petitioner filed a Notice of Appeal. Two(2) months later, on January 23, 1997, the respondent court issued the assailed resolution denying petitioners motion for reconsideration or to q uash writ of execution.[4] (citations omitted) Petitioner went to the CA on a petition for certiorari claiming that the denial of the respondent Judge of its motion for reconsideration was tainted with grave abuse of discretion since he was not duly notified of the decision and there is no legal and factual basis for the issuance of the writ of execution.[5] The appellate court found no such abuse of discretion and dismissed the petition.[6] It likewise denied petitioners motion for re consideration.[7] Hence, the present petition for review on certiorari alleging that:

27

Civ Pro Part 3


I THE COURT OF APPEALS COMMITED A GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION OR IN EXCESS OF IT IN FINDING THAT THE UNJUSTIFIABLE REFUSAL OF PETITIONERS COUNSEL ON RECORD TO RECEIVE IN OPEN COURT A COPY OF THE SUBJECT DECISION IS ONLY A MERE NEGLIGENCE OF COUNSEL AND THEREFORE, BINDS PETITIONER, HENCE, THE DECISION HAD BECOME FINAL AND EXECUTORY. II THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN AFFIRMING THE DECISION OF RESPONDENT JUDGE, BY CITING JURISPRUDENCE ON NEGLIGENCE OF COUNSEL BINDS HIS CLIENT WHICH IS NOT APPLICABLE IN THE INSTANT CASE BECAUSE THEY HAVE DIFFERENT FACTS.[8] Petitioner argues that: when a copy of the decision which the court sent to Atty. Aquino was returned to sender, respondent Judge resorted in causing the service of the decision to said counsel in open court, as petitioners counsel on record, when said lawyer appeared in the sala of respo ndent Judge for another case; petitioner should be deemed as having no notice of the trial court decision since its counsel, who had not withdrawn as such, refused to receive a copy of the same; such act of its counsel constitutes gross negligence which does not bind petitioner; there was also no valid service to Atty. Aquino because when he refused to receive a copy of the decision, what the civil docket clerk of the trial court should have done under the premises was to resort to substituted service; since there was no notice to petitioner regarding the trial court decision, the issuance of the writ of execution and the denial of petitioners notice of appeal by respondent Judge are null and void; and the case of Peoples Homesite and Housing Corp. vs. Ti ongco[9] held that when the lawyer failed to notify his client about the receipt of the decision, such lawyer is irresponsible and notice to him is not notice to client, such as in the case at bar.[10] Petitioner prays that the decision and the resolution promulgated by the CA be reversed; that an order be issued nullifying the writ of execution issued by respondent Judge; and that the notice of appeal of petitioner be granted as it has a very meritorious defense based on fortuitous event.[11] Respondent in his Comment contends that: since Atty. Aquino is the counsel of petitioner from the trial up to its termination and there is nothing in the record to show that he withdrew as counsel of petitioner, the copy of the decision mailed to him by registered mail although returned unserved is sufficient to serve as notice to him and to his client following Sec. 5 of Rule 13 of the Rules of Court; it was the duty of petitioner to notify the court that Atty. Aquino was no longer its lawyer; petitioner was negligent in hiring a new counsel more than a year from July 1995 when Atty. Aquino was no longer its lawyer; the implication is that Atty. Aquino was still its counsel when the decision was rendered and when a copy of the decision was sent to him by registered mail since it is elementary that if a lawyer is going to withdraw as counsel for his client, he should file a motion to withdraw as such with the conformity of the client; in this case, Atty. Aquino did not file any motion to withdraw as counsel for the petitioner thus he remained to be counsel of record of petitioner especially since it was only on October 26, 1996 when the services of Atty. Jose de Luna was engaged by petitioner; and the writ of execution issued is valid and proper considering that the decision of the court has already become final and executory.[12] Before going to the merits, this Court reiterates the distinction between petition for review on certiorari under Rule 45 and petition for certiorari under Rule 65. It should be recalled that a petition under Rule 45 brings up for review errors of judgment while a petition under Rule 65 concerns errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. Grave abuse of discretion is not an allowable ground under Rule 45. However, a petition for review on certiorari under Rule 45 may be considered as a petition for certiorari under Rule 65 where it is alleged that the respondents abused their discretion in their questioned actions.[13] Such is the case at bar. It is petitioners position that the CA committed grave abuse of discretion in finding tha t the unjustifiable refusal of its counsel on record to receive in open court a copy of the subject decision is only mere negligence of counsel which binds it. It then contends that the writ of execution should be quashed because the decision of the trial court had not become final and executory due to non-service of the decision upon its counsel. The Court does not agree. Jurisprudence is replete with pronouncements that clients are bound by the actions of their counsel in the conduct of their case.[14] If it were otherwise, and a lawyers mistake or negligence was admitted as a reason for the opening of a case, there would be no end to litigation so long as counsel had not been sufficiently diligent or experienced or learned.[15] The only exception to the general rule is when the counsels actuations are gross or palpable, resulting in serious injustice to client, that courts should accord relief to the party.[16] Indeed, if the error or negligence of the counsel did not result in the deprivation of due process to the client, nullification of the decision grounded on grave abuse of discretion is not warranted.[17] In this case, while Atty. Aquino, counsel of petitioner, was far from being vigilant in protecting the interest of his client, his infractions cannot be said to have deprived petitioner of due process that would justify deviation from the general rule that clients are bound by the actions of their counsel. As may be gleaned from the records, petitioner was able to actively participate in the proceedings a quo. It was duly represented by counsel during the trial. While it may have lost its right to appeal, it was not denied its day in court. As enunciated by this Court, the right to appeal is not a natural right or a part of due process but only a statutory privilege and may be exercised only in the manner and in accordance with the provisions of law. [18] As long as a party is given the opportunity to defend its interests in due course, it would have no reason to complain, for it is the opportunity to be heard that makes up the essence of due process.[19] The Court has also held that when petitioner is at fault or not entirely blameless, there is no reason to overturn well-settled jurisprudence or to interpret the rules liberally in its favor.[20] Where petitioner failed to act with prudence and diligence, its plea that it was not accorded the right to due process cannot elicit this Courts approval or even sympathy.[21] It is petitioners duty, as a client, to be in touch with his counsel so as to be constantly po sted about the case.[22] It is mandated to inquire from its counsel about the status and progress of the case from time to time and cannot expect that all it has to do is sit

28

Civ Pro Part 3


back, relax and await the outcome of the case.[23] It is also its responsibility, together with its counsel, to devise a system for the receipt of mail intended for them.[24] Petitioner was wanting in all these areas. Not only did it fail to regularly check on the status of the case, it also failed to ensure that it could be notified of the decision as soon as it was promulgated. Petitioner did not inform the court that it has severed its relationship with Atty. Aquino, its counsel of record.[25] Thus, insofar as the trial court was concerned, Atty. Aquino was still its counsel. Neither did it hire a new lawyer soon after Atty. Aquino allegedly ceased to be its counsel. Atty. Jose de Luna, its subsequent lawyer, stated that his services were engaged by petitioner only on October 26, 1996 or a year after the decision was rendered by the trial court, while Atty. Aquino is supposed to have resigned as petitioners counsel in July of 1995 or three months before the questioned decision was promulgated.[26] Insofar as petitioner is concerned, it knew that it did not have any counsel when the decision of the trial court was due for promulgation yet it did not engage the services of a new one to safeguard its interests. Petitioner also claims that it had no valid notice of the trial court decision therefore the writ of execution subsequently issued by the respondent Judge is null and void; and claims that the trial court should have resorted to substituted service when its counsel on record refused to receive a copy of the decision. Such claims have no merit. The fact that Atty. Aquino refused to receive a copy of the decision and no substituted service was effected does not erase the fact that a copy of the trial court decision had earlier been sent by registered mail to Atty. Aquino which was returned for the reason that he has moved.[27] This is sufficient service of the decision on petitioner since service upon counsel of record at his given address is service to petitioner.[28] As explained in Macondray & Co., Inc. vs. Provident Insurance Corp.:[29] If counsel moves to another address without informing the court of that change, such omission or neglect is inexcusable and will not stay the finality of the decision. The court cannot be expected to take judicial notice of the new address of a lawyer who has moved or to ascertain on its own whether or not the counsel of record has been changed and who the new counsel could possibly be or where he probably resides or holds office.[30] 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 the counsel. And notice to such counsel is notice to the client.[31] Notice sent to counsel of record is binding upon the client and the neglect or failure of counsel to inform him of an adverse judgment resulting in the loss of his right to appeal is not a ground for setting aside a judgment, valid and regular on its face.[32] While the rule admits of exceptions, in order to prevent a miscarriage of justice,[33] no such circumstance is here present as petitioner was duly accorded due process. This Court has also held that in cases where service was made on the counsel of record at his given address, notice sent to petitioner itself is not even necessary.[34] Even then, in the present case, the trial court had sent a copy of the decision to petitioners known addres s which was returned however for the reason that it has moved.[35] Petitioner also claims that the ruling of the Court in Peoples Homesite & Housing Corp. vs. Tiongco[36] should be applied in the present case. The Court disagrees. The differences in Peoples Homesite with the case at bar are apparent. In Peoples Homesite, the counsel failed to inform the petitioners of the scheduled hearing and the case was heard in their a bsence. The counsel also did not inform the petitioners that he had received a copy of the decision neither did he file a motion for reconsideration or a petition to set aside judgment to protect the interests of his clients. As soon as petitioners learned of the decision they contacted their counsel and failing to do so, hired the services of a new one. When asked to explain, the counsel merely said that he did not inform the petitioners because the case escaped his attention. Because of these actions, the Court found that there was something fishy and suspicious. Indeed, there was nothing which could have prevented the petitioners from attending the trial of the case themselves or moved for a reconsideration of the decision or took the necessary appeal from the judgment if only their counsel had informed them of the courts processes.[37] In this case, petitioner was able to actively defend its case in court. It also knew that Atty. Aquino was no longer its counsel months before the decision was rendered, unlike in Peoples Homesite, yet it did not take steps to hire a new one to protect its interests. The trial court was therefore correct when it denied petitioners motion for reconsideration of the order issuing the writ of execution. As ably discussed by respondent Judge in his resolution: The sole issue to be resolved in the case at bar is whether or not there was a valid service of the courts decision to defendants herein and thei r former counsel. Defendants main theory is that there was no valid service of the decision to them by registered mail, and that , neither was there a valid service of the decision to their former counsel, Atty. Arnold Aquino, who refused to receive it when the Civil Docket Clerk of this court personally handed a copy of the decision to him. Section 7, Rule 13 of the Rules of Court provides as follows: Section 7 Service of Final orders of Judgments. Final orders of Judgments shall be served either personally or by registered mail xxx For the Rule to apply, service must have been made on the counsel de parte (FOJAS VS. NAVARRO, L-26365, April 30, 1970) and if it was sent to his address on record and he fails to receive it for causes imputable to him it is not necessary to effect further service upon the party he represent (MAGNO, ET AL VS. C.A., et al. G.R. No. 58781, July 31, 1987).

29

Civ Pro Part 3


As borne by the records itself, a copy of this courts decision was sent thru registered mail on December 6, 1995 to Atty. Ar nold Aquino, who was at that time defendants counsel of record, at his given address on record but the same was returned with the annotation on the envelope that said counsel had moved. A separate copy of the decision was later sent thru registered mail to the defendant GCP Manny Transport Service, Inc. at its given address on record but was also returned to the Court with the same annotation that said defendant had moved. It is not disputed that the address on record of Atty. Arnold Aquino and GCP Manny Transport Service Inc. is 1310 Espaa Corner Galicia St., Sampaloc, Manila. It was there where copies of the decision were sent. In the case of Magno, et al. vs. C.A., et al., (G.R. No. 58781, July 31, 1978 [sic]) it was held that: (But) where a copy of the decision was sent to counsel at his address of record but the same was not received because he mov ed to another address without informing the court thereof, such omission or neglect will not stay the finality of the decision. Neither Atty. Arnold Aquino or defendant GCP Manny Transport Service, Inc. informed the court of their change of address. Naturally, copies of the decision in this case were sent at their address of record. It is not incumbent upon the court to determine the new address of party-litigants. On the contrary, it is the duty of the parties to inform the court of such change address. Moreover, notices of the court processes are ordinarily taken cared of by clerks who are naturally guided by addresses of record. To require the court and its personnel before sending out the notices to be continuously checking the records and the various addresses from which a counsel may have filed his pleadings and sending them to such addresses instead of his address of record is to show (sic) confusion and add an intolerable burden which is not permitted by the Rules of Court (INANA VS. GARCIA 25 SCRA 801, see Rule 7, Sec. 5, Rule 13, Sec.5). Notwithstanding separate service of copy of decision to herein defendant GCP Manny Transport Inc., and its counsel de parte thru registered mail, the Court, likewise, available of personal service of decision pursuant to Section 7 of said Rule 13. Be it noted that the Civil Docket Clerk personally handed a copy of the decision to Atty. Arnold Aquino who was in court but who refused to receive it alleging that he is no longer the counsel for the defendant. However, at the time of such service, Atty. Aquino remained to be defendants counsel of record since he did not formally withdraw as counsel for the GCP Manny Transport Inc. It has been held time and again that personal service of decision cannot be avoided by counsels declining to accept it and service is deemed complete regardlessof such refusal to accept. And notice to counsel op erates as notice to clients. It is now too late for herein defendants to advance the theory that they have not received a copy of the decision in this case, especially if the records thereof, would show otherwise. The Court was not amiss in seeing to it that its final orders and judgment were duly served or furnished the party-litigants and their respective counsels and if they refuse to receive the same, they must suffer the consequences thereof. The decision rendered by this Court has already attained finality, hence, may no longer be set aside not even reconsidered without militating against the provisions of our procedural laws.[38] As a final note, let it be emphasized that before a counsel of record may be considered relieved of his responsibility as such counsel on account of withdrawal, it is necessary that Section 26, Rule 138 of the Rules of Court, to wit: Section 26 Change of Attorneys - An attorney may retire at anytime from an action or special proceeding, by the written consent of his client filed in court. He may also retire at anytime from an action or special proceeding, without the consent of his client, should the court, on notice to the client and attorney, and on hearing, determine that he ought to be allowed to retire. In case of substitution, the name of the attorney newly employed shall be entered on the docket of the court in place of the former one, and the written notice of the change shall be given to the adverse party. should be observed. Unless said procedure is complied with, the counsel of record is regarded as the counsel who should be served with copies of the judgments, orders and pleadings and who should be held responsible for the case.[39] Indeed, a lawyers withdrawal as counse l must be made in a formal petition filed in the case, without which, notice of judgment rendered in the case served on the counsel of record, is, for all legal purposes, notice to the client, the date of receipt of which is considered the starting point from which the period of appeal prescribed by law shall begin to run.[40] Petitioner having failed to appeal in due time, the trial court did not commit any error or grave abuse of discretion in granting the motion for execution. WHEREFORE, the petition is hereby DISMISSED for lack of merit. Costs against petitioner. SO ORDERED.

30