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JANUARY 2010 CIVIL PROCEDURE Republic of the Philippines Supreme Court Manila THIRD DIVISION [G.R. No.

164436 : January 15, 2010] LITTIE SARAH A. AGDEPPA, LYNN SARAH A. AGDEPPA, LOUELLA JEANNE A. AGDEPPA, AND LALAINE LILIBETH A. AGDEPPA, PETITIONERS, VS. HEIRS OF IGNACIO BONETE, REPRESENTED BY DOROTEA BONETE, HIPOLITO BONETE, MILAGROS BONETE, MAURICIO BONETE, FERNANDO BONETE, AND OPHELIA BONETE, RESPONDENTS. DECISION NACHURA, J.: Before this Court is a Petition for Review on Certiorari, seeking the reversal of the Court of Appeals (CA) Decision, dated [3] December 27, 2002, which reversed and set aside the Order, dated May 21, 1990, issued by the Regional Trial Court (RTC), Branch 18, of Midsayap, Cotabato. The factual and procedural antecedents of the case are as follows: In 1979, respondent Dorotea Bonete (Dorotea), widow of the late Ignacio Bonete and mother of respondents Hipolito Bonete, Milagros Bonete, Mauricio Bonete, Fernando Bonete, and Ophelia Bonete (respondents), obtained a loan in the amount of P55,000.00 from Development Bank of the Philippines (DBP), Cotabato City Branch, in order to buy farm implements. A parcel of agricultural land, known as Lot No. (1144) H-207865 with an area of 18.00 hectares, covered by Transfer Certificate of Title (TCT) No. [4] T-56923, issued in the name of Dorotea and situated in Demapaco, Libungan, Cotabato (subject property), was used as collateral to secure the said loan. In 1982, respondents, through Dorotea, received a notice of collection from DBP. Respondents alleged that herein petitioner and counsel, Atty. Littie Sarah A. Agdeppa (Littie Sarah), expressed deep concern and sympathy for them. Consequently, Littie Sarah accompanied Dorotea to DBP and obligated herself to pay the loan. Thereafter, Dorotea was allegedly made to sign a document as Littie Sarah's security for the amount which the latter paid to DBP in connection with the said loan. Further, respondents alleged that, since 1982, Littie Sarah and her representatives had been gradually easing them out of the subject property and that they were ordered to stop the cultivation of their respective ricefields. Eventually, respondents were forcibly ejected from the subject property. Further, Littie Sarah planted corn and put up duck-raising projects on the subject property. On this account, respondents inquired from the Register of Deeds and found that the title to the subject property, which was in the name of respondents' predecessor-in-interest, the late Ignacio Bonete, had already been canceled and transferred to Littie Sarah under TCT No. T-75454 by virtue of a purported deed of sale. According to Dorotea, Littie Sarah took advantage of her by letting her sign a contract, ostensibly as security for the loan from DBP, which later turned out to be a deed of sale. Thus, respondents filed a [5] Complaint for Recovery of Ownership and Possession and/or Annulment of Deed of Sale of the Subject Property with Damages, docketed as Civil Case No. 484 before the RTC. Littie Sarah filed a Motion to Dismiss the Complaint based on the following grounds: 1) that respondents had no legal capacity to sue; 2) that respondents were not the real parties in interest; 3) that the Complaint stated no cause of action; and 4) that the claim or demand set forth in the Complaint had already been waived and extinguished. Later, the Complaint was amended, impleading herein petitioners Lynn Sarah Agdeppa, Louella Jeanne Agdeppa, and Lalaine Lilibeth [7] [8] Agdeppa, together with Littie Sarah, as defendants (petitioners). Respondents also filed an Opposition to the Motion to Dismiss. On May 21, 1990, the RTC issued an Order dismissing the Amended Complaint with costs against respondents. It held that the Amended Complaint did not show the character and representation that respondents claimed to have. TCT No. T-56923, covering the subject property, was not in the name of the late Ignacio Bonete but in Dorotea's name. Thus, the RTC held that respondents
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were not real parties in interest. Respondents filed a Motion for Reconsideration which the RTC denied in its Order dated January 12, 1991. Therein, the RTC held that respondents lacked the personality to sue; thus, a valid basis to grant the motion to dismiss on the ground that the complaint did not state a cause of action. Aggrieved, respondents went to the CA. On December 27, 2002, the CA reversed and set aside the RTC Order, and remanded the case to the RTC for further proceedings because Dorotea, being the former owner of the subject property, was a real party in interest. Petitioners filed their Motion for Reconsideration,
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which the CA denied in its Resolution

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dated April 28, 2004.

Hence, this Petition assigning the following errors: THE HONORABLE COURT OF APPEALS IN REVERSING THE ORDER OF DISMISSAL ISSUED BY THE REGIONAL TRIAL COURT, ACTED CONTRARY TO LAW AND JURISPRUDENCE; DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS; GRAVELY ERRED AND GRAVELY ABUSED ITS DISCRETION TANTAMOUNT TO LACK OF JURISDICTION; AND LAID DOWN A VERY BAD PRECEDENT, AS FOLLOWS: A. BY VIOLATING SPECIFICALLY THE PROVISIONS OF THE RULES OF COURT, PARTICULARLY SECS. 2 AND 3 OF RULE 3 OF THE RULES OF COURT, ON PARTIES-PLAINTIFFS TO CIVIL ACTIONS AND REAL PARTIES IN INTEREST; B. BY UPHOLDING THE LEGAL CAPACITY OF THE PLAINTIFFS HEIRS OF IGNACIO BONETE TO SUE AND TO FILE THIS CASE WHEN THE HONORABLE COURT OF APPEALS ITSELF EVEN RIGHTFULLY FOUND THAT TCT NO. T-56923 WAS ALREADY REGISTERED IN THE NAME OF DOROTEA BONETE, WHEN IT WAS SOLD TO HEREIN DEFENDANTS, SUCH THAT IGNACIO BONETE OR THE HEIRS OF IGNACIO BONETE [HAD] NOTHING TO DO WITH THE SAID PROPERTY- THUS[,] NOT THE REAL PARTY IN INTEREST AND [HAD] NO LEGAL PERSONALITY TO SUE AND LIKEWISE [HAD] NO CAUSE OF ACTION AGAINST DEFENDANTS (PETITIONERS HEREIN); C. THAT THE DECISION OF THIS HONORABLE COURT OF APPEALS WAS ISSUED CONTRARY TO LAW AND JURISPRUDENCE AND CONTRARY TO THE TRUE, ACTUAL AND EXISTING FACTS OF THIS CASE AND EVEN TO THE VERY FINDINGS OF THE HONORABLE COURT OF APPEALS ITSELF, BECAUSE WHILE THE HONORABLE COURT OF APPEALS RULED THAT DOROTEA BONETE AS REGISTERED OWNER IS A PARTY IN INTEREST, THIS CASE IS NOT PROSECUTED IN THE NAME OF DOROTEA BONETE, BUT IN THE NAME OF THE HEIRS OF IGNACIO BONETE, AND IF EVER THE NAME OF DOROTEA BONETE IS MENTIONED IT WAS MERELY [AND] ALLEGEDLY IN REPRESENTATION OF THE HEIRS OF IGNACIO BONETE AND NOT IN HER OWN PERSONAL CAPACITY; BUT WHICH REPRESENTATION IS NOT EVEN ALLEGED IN THE COMPLAINT, THUS STILL A VIOLATION OF THE RULES OF COURT; D. THAT THE REMANDING OF THIS CASE TO THE REGIONAL TRIAL COURT FOR FURTHER PROCEEDINGS WITH THE PARTY PLAINTIFF "HEIRS OF IGNACIO BONETE" NOT BEING A REAL PARTY IN INTEREST VIOLATES THE WELL ESTABLISHED "GENERAL RULE [THAT] ONE HAVING NO RIGHT OR INTEREST TO PROTECT CANNOT INVOKE THE JURISDICTION OF THE COURT AS A PARTY PLAINTIFF IN AN ACTION. (Ralla v. Ralla, 199 SCRA 495 [1991])" AND "THE GENERAL RULE OF x x x COMMON LAW x x x THAT EVERY ACTION MUST BE BROUGHT IN THE NAME OF THE PARTY WHOSE LEGAL RIGHT HAS BEEN INVADED OR INFRINGED"; E. IT WILL CREATE A VERY BAD AND IMPROPER PRECEDENT NOT WARRANTED UNDER THE PROVISIONS OF THE RULES OF COURT; [AND] F. WILL UNNECESSARILY CAUSE THE PARTIES UNDUE DELAY AND EXPENSES FOR AFTER ALL THE PARTIES-PLAINTIFFS THEREIN ARE [14] NOT THE REAL PARTIES IN INTEREST[.] The instant Petition is bereft of merit. While it is true that respondents committed a procedural infraction before the RTC, such infraction does not justify the dismissal of the case. Misjoinder of parties does not warrant the dismissal of the action.
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Rule 3, Section 11 of the Rules of Court clearly provides:

Sec. 11. Misjoinder and non-joinder of parties. -- Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately. It bears stressing that TCT No. T-56923, covering the subject property, was issued in the name of Dorotea. This is established by the record, and petitioners themselves admit this fact. However, because TCT No. T-75454, allegedly issued in favor of Littie Sarah, and

the purported deed of sale, allegedly executed by Dorotea in favor of Littie Sarah, are not on record. Considering the allegations in the pleadings, it is best that a trial on the merits be conducted. We fully agree with the apt and judicious ruling of the CA, when it said: As the former owner of the subject property, the same having been titled in her name under TCT No. T-56923, Dorotea Cariaga Bonete, being the real party [in] interest, has the legal capacity to file the instant case for reconveyance and annulment of deed of sale. The complaint was filed by the [respondents] precisely to question the issuance of TCT No. T-75454 in the name of Littie Sarah Agdeppa as the transaction allegedly contemplated was only to secure Dorotea's loan. Why the property became the subject of the deed of sale which is being disputed by Dorotea should be threshed out in a full-blown trial on the merits in order to afford the contending parties their respective days in court. As held in Del Bros. Hotel Corporation vs. Court of Appeals, 210 SCRA 33, the complaint is not supposed to contain evidentiary matters as this will have to be done at the trial on the merits of the case. A final note. A liberal construction of the Rules is apt in situations involving excusable formal errors in a pleading, as long as the same do not [16] subvert the essence of the proceeding, and they connote at least a reasonable attempt at compliance with the Rules. The Court is not precluded from rectifying errors of judgment, if blind and stubborn adherence to procedure would result in the sacrifice of substantial justice for technicality. To deprive respondents, particularly Dorotea, of their claims over the subject property on the strength of sheer technicality would be a travesty of justice and equity. WHEREFORE, the instant Petition is DENIED and the assailed Court of Appeals Decision is AFFIRMED. The Regional Trial Court, Branch 18 of Midsayap, Cotabato, is hereby directed to resolve this case on the merits with deliberate dispatch. Costs against petitioners. SO ORDERED. Corona, (Chairperson), Velasco, Jr., Peralta, and Mendoza, JJ., concur.

NOTES: Parties; misjoinder not ground for dismissal. Misjoinder of parties does not warrant the dismissal of the action. Rule 3, Section 11 of the Rules of Court clearly provides: Sec. 11, Misjoinder and non-joinder of parties. Neither misjoinder nor non-joinder of parties is ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately. It bears stressing that TCT No. T-56923, covering the subject property, was issued in the name of Dorotea. This is established by the record, and petitioners themselves admit this fact. However, because TCT No. T-75454, allegedly issued in favor of Littie Sarah, and the purported deed of sale, allegedly executed by Dorotea in favor of Littie Sarah, are not on record. Considering the allegations in the pleadings, it is best that a trial on the merits be conducted. We fully agree with the apt and judicious ruling of the CA, when it said: As the former owner of the subject property, the same having been titled in her name under TCT No. T-56923, Dorotea Cariaga Bonete, being the real party [in] interest, has the legal capacity to file the instant case for reconveyance and annulment of deed of sale. The complaint was filed by the [respondents] precisely to question the issuance of TCT No. T-75454 in the name of Littie Sarah Agdeppa as the transaction allegedly contemplated was only to secure Doroteas loan. Why the property became the subject of the deed of sale which is being disputed by Dorotea should be threshed out in a full-blown trial on the merits in order to afford the contending parties their respective days in court. As held in Del Bros. Hotel Corporation vs. Court of Appeals, 210 SCRA 33, the complaint is not supposed to contain evidentiary matters as this will have to be done at the trial on the merits of the case. Littie Sarah A. Agdeppa, et al. vs. Heirs of Ignacio Benete, represented by Doroteo Bonete, et al., G.R. No. 164436. January 15, 2010.

Littie Sarah Agdeppa v Heirs of Ignacio Bonete GR 164436 Jan 15 2010 (DIGEST) Facts: There was a piece of land titled in the name of Dorotea Bonete. Procured loan w/ DBP for purchase of farm impleements. DBP collect loan.Littie Sarah, Bonete's lawyer, paid for the loan w/ a security (which was later found to be a deed of sale). So action to annul sale MTD: Dismiss because not real party in interest - not real party in interest because lot always in the name of Dorotea, not IIgnacio RTC: granted CA: reversed Held: Misjoinder or nonjoinder of parties is not a cause of dismissal. Corut could drop or implead any party to correct the misjoinder or nonjoinder of parties. Mrs. Bonete : real owner = real party in interest - not their in her capacity as successor Supposing case filed by plaintiff v. B; B alleges that he is not an indispensable party, it is C - so dismiss case. How should the court rule? Court should just add the indispensable party, not the dismissal of the case Supposing the one that is sued is not even a necessary party? What the court should do? Dismiss! No COA. No misjoinder or nonjoinder because there was really no one to join! But dismissal is w/o prejudice. Plaintiff should refile case w/ proper party...

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 188360 January 21, 2010

SPS. HEBER & CHARLITA EDILLO, Petitioners, vs. SPS. NORBERTO & DESIDERIA DULPINA, Respondents. DECISION BRION, J.: We resolve in this Decision the Petition for Review on Certiorari filed by defendants-petitioners Spouses Heber and Charlita Edillo 2 3 (defendants-petitioners) who seek to reverse and set aside the Resolutions dated January 28, 2009 and June 11, 2009 of the Special Former Special Division of Five of the Court of Appeals (CA) in CA-G.R. SP No. 02436-MIN. The first assailed CA Resolution dismissed outright the defendants-petitioners Petition for Review for failure to state the factual background of the case; the second assailed CA Resolution denied the defendants-petitioners Motion for Reconsideration. FACTUAL BACKGROUND The facts of the case, gathered from the parties pleadings and annexes, are briefly summarized below. On February 21, 2006, plaintiffs-respondents Spouses Norberto and Desideria Dulpina (plaintiffs-respondents) filed a Complaint for Forcible Entry against the defendants-petitioners with the Municipal Circuit Trial Court of Del Carmen-San Isidro-San Benito, Surigao 4 del Norte (MCTC). The plaintiffs-respondents alleged that they purchased from Wencelito Camingue a 235-square meter residential lot and house 5 located in Poblacion, San Isidro, Surigao del Norte, through a Deed of Sale dated May 14, 1990. On August 8, 2005, defendantpetitioner Heber Edillo, without their consent and against their express prohibition, suddenly fenced off and occupied a 50-square meter portion of the western part of the disputed property while uttering threats against plaintiffs-respondents. On January 26, 2006, they sent the defendants-petitioners a notice to vacate the disputed property, but the defendants-petitioners refused to 6 comply. In their Answer dated March 1, 2006, the defendants-petitioners countered that the Complaint states no cause of action because 7 the plaintiffs-respondents failed to allege that they were in prior physical possession of the disputed property. They also alleged 8 9 that they acquired the disputed property through three (3) separate Deeds of Absolute Sale from Apolinar Saragoza, Felomino 10 11 Forcadilla, and Wenceslao Caunzad. THE MCTC RULING On May 23, 2007, the MCTC rendered judgment dismissing the Complaint. It ordered the plaintiffs-respondents to pay the 12 defendants-petitioners P10,000.00 as actual damages and another P10,000.00 as attorneys fees. The plaintiffs-respondents 13 counsel received a copy of the MCTC Judgment on May 31, 2007. On June 5, 2007, the plaintiffs-respondents filed a Motion for Reconsideration which the MCTC denied in its Resolution of June 8, 15 2007. On July 30, 2007, the plaintiffs-respondents filed a Notice of Appeal with the MCTC, which the latter granted. On August 15, 2007, the plaintiffs-respondents filed their Appeal Memorandum with the Regional Trial Court, Branch 31, Dapa, 16 Surigao del Norte (RTC).
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THE RTC RULING The RTC decided the appeal on November 7, 2007. It set aside the MCTC judgment and ordered the defendants-petitioners to vacate the subject property and to restore the plaintiffs-respondents to their possession. It likewise ordered the payment of P10,000.00 as 17 attorneys fees and the cost of suit. After the RTC denied their Motion for Reconsideration, the defendants-petitioners elevated the case to the CA through a Petition 20 for Review under Rule 42 of the Rules of Court. They argued that the plaintiffs-respondents appeal with the RTC was filed out of time since the Revised Rules of Summary Procedure (RRSP) prohibits the filing of a motion for reconsideration. THE CA RULING The CA dismissed the Petition in its Resolution of January 28, 2009 on the ground that it does not contain a statement of the factual background of the case, in violation of Sections 2 and 3 of Rule 42 of the Rules of Court. A special division of five (5) justices, 22 with Associate Justice Ruben C. Ayson dissenting, rendered the resolution. The defendants-petitioners moved to reconsider the dismissal, to amend the petition, and to admit their First Amended Petition. The CA denied the motions in its Resolution of June 11, 2009, noting that the amended petition did not correct the infirmity of the 24 original petition. Faced with this development, the defendants-petitioners filed the present Petition for Review on Certiorari under Rule 45 of the Rules of Court. THE PETITION The defendants-petitioners argue that the CAs outright dismissal of the petition was unwarranted since the Petition for Review and the Amended Petition (filed with the Motion for Reconsideration of the Dismissal of the Original Petition) sufficiently recited the factual background of the case. They submit that the annexes to the original and amended petitions, consisting of the Complaint, the Answer, the other pleadings, and the MCTC and RTC Decisions, also contain this factual background. They point out that a relaxation of technical rules is justified by the merits of the case the RTC had no jurisdiction to entertain the plaintiffs-respondents appeal because the MCTC Decision had become final and executory; the Motion for Reconsideration the plaintiffs-respondents filed is a prohibited pleading in summary proceedings and did not stop the running of the period for the decisions finality. For their part, the plaintiffs-respondents submit that the requirements set forth in Section 2 of Rule 42 of the Revised Rules of Court 25 are mandatory and the defendants-petitioners have no discretion but to comply, citing Galang v. Court of Appeals and Tan v. Court 26 of Appeals. OUR RULING We find for the defendants-petitioners. Procedure on Appeal; Liberal Construction of Rules An appeal to the CA from an RTC Decision rendered in the exercise of its appellate jurisdiction is via a Petition for Review under Rule 42 of the Revised Rules of Court. Section 2 of Rule 42 prescribes the following requirements: SEC. 2. Form and contents. The petition shall be filed in seven (7) legible copies, with the original copy intended for the court being indicated as such by the petitioner, and shall (a) state the full names of the parties to the case, without impleading the lower courts or judges thereof either as petitioners or respondents; (b) indicate the specific material dates showing that it was filed on time; (c) set forth concisely a statement of the matters involved, the issues raised, the specification of errors of fact or law, or both, allegedly committed by the Regional Trial Court, and the reasons or arguments relied upon for the allowance of the appeal; (d) be accompanied by clearly legible duplicate originals or true copies of the judgments or final orders of both lower courts, certified correct by the clerk of court of the Regional Trial Court, the requisite number of plain copies thereof and of the pleadings and other material portions of the record as would support the allegations of the petition.
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The petitioner shall also submit together with the petition a certification under oath that he has not theretofore commenced any other action involving the same issues in the Supreme Court, the Court of Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action or proceeding, he must state the status of the same; and if he should thereafter learn that a similar action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or different divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the aforesaid courts and other tribunal or agency thereof within five (5) days therefrom. (Emphasis supplied.) Non-compliance with these requirements is sufficient ground for the dismissal of the Petition, pursuant to Section 3 of the same Rule, which reads: SEC. 3. Effect of failure to comply with requirements. The failure of the petitioner to comply with any of the foregoing requirements regarding the payment of the docket and other lawful fees, the deposit for costs, proof of service of the petition, and the contents of and the documents which should accompany the petition shall be sufficient ground for the dismissal thereof. In not a few cases, we have ruled that the right to appeal is neither a natural right nor a part of due process; it is a mere statutory 27 privilege that may be exercised only in the manner and strictly in accordance with the provisions of law allowing the appeal. The party who seeks to appeal must comply with the requirements of the law and the rules; failure to comply leads to the dismissal and 28 the loss of the right to appeal. But while we have so ruled, we recognize nonetheless that the right to appeal is an essential part of our system of judicial processes, and courts should proceed with caution in order not to deprive a party of the right to appeal. We invariably made this recognition due to our overriding concern that every party-litigant be given the amplest opportunity to ventilate and secure the resolution of his 29 cause, free from the constraints of technicalities. This line of rulings is based, no less, on the Rules of Court which itself calls for a liberal construction of its provisions, with the objective of securing for the parties a just, speedy and inexpensive disposition of every 30 action and proceeding. In this line of rulings, we have repeatedly stressed that litigation is not merely a game of technicalities. The law and jurisprudence grant to courts in the exercise of their discretion along the lines laid down by this Court the prerogative to relax compliance with procedural rules of even the most mandatory character, mindful of the duty to reconcile both the need to put 31 an end to litigation speedily and the parties right to an opportunity to be heard. 1avvphi1 We are aware of the plaintiffs-respondents cited cases of Galang v. Court of Appeals and Tan v. Court of Appeals, but these rulings are not fully applicable to the present case as they are not squarely in point. Galang involved the dismissal of a petition with the CA for nonpayment of costs within three (3) days from notice of the order. It involved a direct failure to comply with a CA directive a matter vastly different from, and greater than, the question of sufficiency posed in this case. Tan, on the other hand, involved a motion for reconsideration that was considered a mere scrap of paper for lack of a notice of hearing. This is a matter that, at its core, is a due process concern the failure to afford the opposing party the opportunity to respond to the motion in a duly scheduled hearing. A commonality and the weightier reason (although not so given this characterization) behind our rulings in these cited cases is the lack of merit of the respective petitioners underlying cases. In both cases, we took into account the relative merits of the parties cases and found that a liberal interpretation, applied to the interlocutory issues before us, would be for naught because the petitioners underlying cases clearly lacked merit. As we ruled then, so do we rule now. We assess, albeit pr eliminarily, if the appeal 34 is meritorious on its face and relax the applicable rule of procedure only after a prima facie finding of merit. That there was substantial compliance with the Rules because the background facts can be found within the four corners of the 35 petition and its incorporated annexes, is not a novel ruling for this Court. In the case of Deloso v. Marapao (involving the same deficiency for lack of a specific and separate statement of facts outlining the factual background relied upon), we said: An examination of the petition filed with the Court of Appeals reveals that while it does not contain a separate section on statement of facts, the facts of the case are, in fact, integrated in the petition particularly in the discussion/argument portion. Moreover, the decision of the DARAB which contains the facts of the case was attached to the petition and was even quoted by the appellate court. The petition also sufficiently discusses the errors committed by the DARAB in its assailed decision. There was, therefore, substantial compliance with Sec. 6, Rule 43 of the Rules of Court. It is settled that liberal construction of the Rules may be invoked in situations where there may be some excusable formal deficiency or error in a pleading, provided that the same does not subvert the essence of the proceeding and connotes at least a reasonable attempt at compliance with the Rules.
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After all, rules of procedure are not to be applied in a very rigid, technical sense; they are used only to help secure substantial 36 justice. Given this precedent, it only remains for us to determine if we can apply a liberal construction of the Rules because a meaningful litigation of the case can ensue given the Petitions prima facie m erit. The defendants-petitioners meritorious case; a motion for reconsideration is a prohibited pleading in summary procedure. Our examination of the defendants-petitioners petition preliminarily tells us that it is not without merit, which merit would remain unventilated unless we relax our application of the technical requirements applicable to their appeal. The question, too, that the defendants-petitioners pose is not a minor one as it involves a very basic question of law whether the RTC has jurisdiction to entertain an appeal from a final and executory MCTC decision. According to the defendants-petitioners, the plaintiffs-respondents filing of a motion for reconsideration of the MCTC judgment did not stop the running of the period for appeal since a motion for reconsideration is a prohibited pleading under the RRSP. We agree with the defendants-petitioners. Jurisdiction over forcible entry and unlawful detainer cases belongs to the Metropolitan Trial Courts, the Municipal Trial Courts in 37 Cities, the Municipal Trial Courts, and the Municipal Circuit Trial Courts. The RRSP applies to prevent undue delays in the disposition of cases; to achieve this end, the filing of certain pleadings a motion for reconsideration, among others is 38 prohibited. Specifically, Section 19(c) of the Rules of Summary Procedure and Section 13(c) of Rule 70 of the Rules of Court consider a motion 39 for reconsideration of a judgment a prohibited pleading. Thus, when the plaintiffs-respondents filed on June 5, 2007 a Motion for Reconsideration of the MCTC Judgment, the motion did not stop the running of the period for appeal. With the continuous running of this period, the May 23, 2007 MCTC judgment (which the plaintiffs-respondents received through counsel on May 31, 2007) had long lapsed to finality when the plaintiffs-respondents filed their Notice of Appeal on July 30, 2007. The Doctrine of Immutability A judgment that has become final and executory is immutable and unalterable; the judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless 41 of whether the modification is attempted to be made by the court rendering it or by the highest Court of the land. While there are recognized exceptions e.g., the correction of clerical errors, the so-called nunc pro tunc entries which cause no prejudice to any party, void judgments, and whenever circumstances transpire after the finality of the decision rendering its execution unjust and 42 inequitable none of these exceptions apply to the present case. Litigation must at some time end, even at the risk of occasional errors. Public policy dictates that once a judgment becomes final, executory and unappealable, the prevailing party should not be denied the fruits of his victory by some subterfuge devised by the losing party. Unjustified delay in the enforcement of a judgment sets at naught the role and purpose of the courts to resolve 43 justiciable controversies with finality. In the present case, the lapse of the period for appeal rendered the RTC without any jurisdiction to entertain, much less grant, the plaintiffs-respondents appeal from the final and immutable MCTC judgment. This very basic legal reality would forever be lost if we allow the CA to dismiss the defendants-petitioners appeal outright on the basis of a technicality that, after all, has been substantially complied with. WHEREFORE, in light of all the foregoing, we hereby REVERSE and SET ASIDE the Resolutions dated January 28, 2009 and June 11, 2009 of the Special Former Special Division of Five of the Court of Appeals in CA-G.R. SP No. 02436-MIN. The Decision dated November 7, 2007 and Order dated July 1, 2008 of the Regional Trial Court, Branch 31, Dapa, Surigao del Norte are ANNULLED. The Judgment dated May 23, 2007 of the Municipal Circuit Trial Court, Del Carmen-San Isidro-San Benito, Surigao del Norte is REINSTATED. Costs against the plaintiffs-respondents. SO ORDERED.
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Notes: Summary procedure; effect of filing prohibited motion for reconsideration. According to the defendants-petitioners, the plaintiffs-respondents filing of a motion for reconsideration of the MCTC judgment did not stop the running of the period for appeal since a motion for reconsideration is a prohibited pleading under the RRSP. We agree with the defendants-petitioners. Jurisdiction over forcible entry and unlawful detainer cases belongs to the Metropolitan Trial Courts, the Municipal Trial Courts in Cities, the Municipal Trial Courts, and the Municipal Circuit Trial Courts. The RRSP [Revised Rules of Summary Procedure] applies to prevent undue delays in the disposition of cases; to achieve this end, the filing of certain pleadings a motion for reconsideration, among others is prohibited. Specifically, Section 19(c) of the Rules of Summary Procedure and Section 13(c) of Rule 70 of the Rules of Court consider a motion for reconsideration of a judgment a prohibited pleading. Thus, when the plaintiffs-respondents filed on June 5, 2007 a Motion for Reconsideration of the MCTC Judgment, the motion did not stop the running of the period for appeal. With the continuous running of this period, the May 23, 2007 MCTC judgment (which the plaintiffs-respondents received through counsel on May 31, 2007) had long lapsed to finality when the plaintiffs-respondents filed their Notice of Appeal on July 30, 2007. Sps. Heber & Charlita Edillo vs. Sps. Norberto & Desideria Dulpina, G.R. No. 188360, January 21, 2010.

FEBRUARY 2010 CIVIL PROCEDURE Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 162924 February 4, 2010

MID-PASIG LAND DEVELOPMENT CORPORATION, Petitioner, vs. MARIO TABLANTE, doing business under the name and style ECRM ENTERPRISES; ROCKLAND CONSTRUCTION COMPANY; LAURIE LITAM; and MC HOME DEPOT, INC., Respondents. DECISION NACHURA, J.: Assailed in the instant petition are the two (2) Resolutions of the Court of Appeals (CA) dated November 20, 2003 and March 22, 2004, dismissing the petition for certiorari before it on technical grounds and denying the motion for reconsideration thereof, respectively. The background facts are as follows: Petitioner is the registered owner of a piece of land situated in Pasig City, bounded by Meralco Avenue, Ortigas Avenue, Doa Julia Vargas Avenue, and Valle Verde Subdivision. On December 6, 1999, petitioner, represented by its Chairman and President, Ronaldo Salonga, and ECRM Enterprises, represented by its proprietor, Mario P. Tablante, executed an agreement whereby the former would lease to the latter an area, approximately one (1) hectare, of the aforesaid land, for a period of three (3) months, to be used as the staging area for the Home and Garden Exhibition Fair. On March 6, 2000, the date of the expiration of the Lease Agreement, Tablante assigned all his rights and interests under the said agreement to respondents Laurie M. Litam and/or Rockland Construction Company, Inc. (Rockland) under a Deed of Assignment of the same date. Petitioner eventually learned that respondent Tablante had executed a Contract of Lease with respondent MC Home Depot, Inc. on November 26, 1999 over the same parcel of land. Thereafter, respondent MC Home Depot, Inc. constructed improvements on the land and subdivided the area into fifty-nine (59) commercial stalls, which it leased to various entities. Upon the expiration of the lease on March 6, 2000, petitioner demanded 2 that respondents vacate the land. A final demand was made in a letter dated December 20, 2000. In order to forestall ejectment from the premises, respondent Rockland filed a case for Specific Performance with the Regional Trial Court (RTC), Branch 266, Pasig City, on January 11, 2001, compelling petitioner to execute a new lease contract for another three (3) years, commencing in July 2000. This was docketed as Civil Case No. 68213. Petitioner moved to dismiss the complaint on the ground that it was anticipatory in nature. Consequently, on August 22, 2001, petitioner filed Civil Case No. 8788 for unlawful detainer against herein respondents, raffled to the Municipal Trial Court (MTC), Pasig City, Branch 70. Simultaneously, petitioner filed a supplemental motion to dismiss Civil Case No. 68213, on the ground of litis pendentia. Petitioners motion to dismiss was denied. The denial was questioned and eventua lly 3 elevated to the Supreme Court. Meantime, on April 29, 2002, the MTC rendered judgment in the unlawful detainer (ejectment) case. In the main, the trial court ruled that the issue did not involve material or physical possession, but rather, whether or not ECRM had the right to exercise an option to renew its lease contract. The MTC stated that, considering that this issue was incapable of pecuniary estimation, jurisdiction over the case was vested in the RTC. The trial court, therefore, disposed, as follows: WHEREFORE, judgment is hereby rendered DISMISSING the complaint for lack of merit. In the meantime, the plaintiff is hereby 4 ordered to pay the defendants attorneys fees and expenses of litigation in the amount of TWENTY THOUSAND PESOS (P20,000.00). On appeal, the RTC, Pasig City, Branch 160, affirmed in toto. In its decision dated July 10, 2003, the RTC ruled that:
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Relative to the issue raised by the appellant that the lower court erred in finding it had no jurisdiction over the subject matter of this case as the question of whether or not ECRM under the provisions of the lease agreement (pars. 3 and 13) has the right to exercise an option to renew its lease contract is one incapable of pecuniary estimation and therefore jurisdiction is vested in the Regional Trial Court. Republic Act No. 7691 grants Metropolitan Trial Courts the exclusive jurisdiction over cases of forcible entry and unlawful detainer. Since it has been sufficiently established under the facts obtaining that the contract of lease has been renewed before the expiration of the lease period, and the appellant has consented to the renewal and assignment of the lease, it necessarily follows that the issue on whether the lower court erred in finding that it did not have jurisdiction over the subject matter raised by the 5 appellant, deserves scant consideration and this court need not delve into it anymore. A petition for certiorari was consequently filed with the CA. In the assailed resolution dated November 20, 2003, the CA resolved to dismiss the petition on the following grounds: 1) The verification and certification against non-forum shopping was signed by a certain Antonio A. Merelos as General Manager of the petitioner-corporation without attaching therewith a Corporate Secretar ys certificate or board resolution that he is authorized to sign for and on behalf of the petitioner; and 2) Lack of pertinent and necessary documents which are material portions of the record as required by Section 2, 6 Rule 42 of the Rules of Civil Procedure. The motion for reconsideration was denied; hence, the instant petition assigning the following errors: THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT THE VERIFICATION AND CERTIFICATION AGAINST FORUM-SHOPPING IN THE PETITION FAILED TO ATTACH THE BOARD RESOLUTION SHOWING THE AUTHORITY OF THE AFFIANT. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT THE PETITION LACKED THE PERTINENT AND NECESSARY DOCUMENTS REQUIRED BY THE RULES. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN DISMISSING THE PETITION THUS EFFECTIVELY UPHOLDING THE DECISION OF THE REGIONAL TRIAL COURT, TO WIT: (a) THAT THE LEASE AGREEMENT WAS UNILATERALLY RENEWED AND THAT PETITIONER IS ESTOPPED FROM DENYING SUCH UNILATERAL RENEWAL; (b) THAT RESPONDENTS TABLANTE/ECRM, ROCKLAND AND MC HOME DEPOT COULD VALIDLY OCCUPY THE PROPERTY IN THE ABSENCE OF ANY VALID LEASE AGREEMENT CONSENTED TO BY 8 PETITIONER; (c) PETITIONER *IS+ LIABLE FOR ATTORNEYS FEES AND COSTS OF SUIT. The petition is granted. In Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue, the Court had occasion to explain that: It must be borne in mind that Sec. 23, in relation to Sec. 25 of the Corporation Code, clearly enunciates that all corporate powers are exercised, all business conducted, and all properties controlled by the board of directors. A corporation has a separate and distinct personality from its directors and officers and can only exercise its corporate powers through the board of directors. Thus, it is clear that an individual corporate officer cannot solely exercise any corporate power pertaining to the corporation without authority from the board of directors. This has been our constant holding in cases instituted by a corporation. In a slew of cases, however, we have recognized the authority of some corporate officers to sign the verification and certification against forum shopping. In Mactan-Cebu International Airport Authority v. CA, we recognized the authority of a general manager or acting general manager to sign the verification and certificate against forum shopping; x x x. In sum, we have held that the following officials or employees of the company can sign the verification and certification without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.1avvphi1 While the above cases do not provide a complete listing of authorized signatories to the verification and certification required by the rules, the determination of the sufficiency of the authority was done on a case to case basis. The rationale applied in the foregoing cases is to justify the authority of corporate officers or representatives of the corporation to sign the verification or certificate 10 against forum shopping, being "in a position to verify the truthfulness and correctness of the allegations in the petition."
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From the foregoing, it is thus clear that the failure to attach the Secretarys Certificate, attesting to General Manager Antonio Mereloss authority to sign the Verification and Certification of Non -Forum Shopping, should not be considered fatal to the filing of the petition. Nonetheless, the requisite board resolution was subsequently submitted to the CA, together with the pertinent 11 documents. Considering that petitioner substantially complied with the rules, the dismissal of the petition was, therefore, unwarranted. Time and again, we have emphasized that dismissal of an appeal on a purely technical ground is frowned upon especially if it will result in unfairness. The rules of procedure ought not to be applied in a very rigid, technical sense for they have been adopted to help secure, not override, substantial justice. For this reason, courts must proceed with caution so as not to deprive a party of statutory appeal; rather, they must ensure that all litigants are granted the amplest opportunity for the proper and just 12 ventilation of their causes, free from the constraint of technicalities. After a finding that the CA erred in dismissing the petition before it, a remand of the case is in order. However, a perusal of the records reveals that this is no longer necessary in light of relevant developments obtaining in the case at bar. Petitioner, in its Memorandum dated October 28, 2005, alleged that respondents possessory claims had lapsed and, therefore, had become moot and academic. Respondent Rockland prayed that a three-year lease period be granted to it in order that it would be able to plan its activities more efficiently. Since the claimed "lease contract" had already expired as of July or August 2003, there 13 appears no reason why respondents should continue to have any claim to further possession of the property. Respondent Rockland also stated in its Memorandum dated March 16, 2006 that it was no longer in possession of the subject property considering that: 50. In a Resolution dated 17 September 2004, in the case of "Rockland Construction Company, Inc. vs. Mid-Pasig Land Development Corporation, et al.," docketed as SCA No. 2673, and the Omnibus Order dated 12 November 2004, affirming the aforesaid Resolution, Branch 67 Pasig City Regional Trial Court Presiding Judge Mariano M. Singzon awarded possession (albeit erroneously) of subject property to Pasig Printing Corporation, an intervenor in the SCA case. 51. At present, petitioner does not have a cause of action against herein respondent Rockland. Respondent is not unlawfully withholding possession of the property in question as in fact respondent is not in possession of the subject property. The issue of 14 possession in this ejectment case has therefore been rendered moot and academic. This allegation was confirmed by respondent MC Home Depot, Inc. in its Comment/Memorandum dated May 22, 2007 submitted to the Court. It stated therein that "the passage of time has rendered the issue of possession moot and academic with respect to 15 respondent Rockland, as the three-year period has long been expired in 2003." Furthermore, respondent MC Home Depot, Inc. asserts that it is in rightful possession of the land on the strength of a Memorandum of Agreement dated November 22, 2004 between the latter and Pasig Printing Corporation. By petitioners admission that while it remains the registered owner of t he land, possession of the same had been adjudicated in favor of Pasig Printing Corporation, another entity without any contractual relationship with petitioner, on the strength of an Order from the RTC of Pasig City. Considering that Pasig Printing Corporation has the jus possessionis over the subject property, it granted the MC Home Depot, Inc. actual occupation and possession of the subject 16 property for a period of four (4) years, renewable for another four (4) years upon mutual agreement of the parties. WHEREFORE, the petition is GRANTED. The assailed Resolutions of the Court of Appeals are REVERSED and SET ASIDE. However, in view of the developments which have rendered the issue of the right of possession over the subject property moot and academic, the main case is hereby considered CLOSED AND TERMINATED. No pronouncement as to costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC A.M. No. 08-2-01-0 February 11, 2010

RE: PETITION FOR RECOGNITION OF THE EXEMPTION OF THE GOVERNMENT SERVICE INSURANCE SYSTEM FROM PAYMENT OF LEGAL FEES. GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner. RESOLUTION CORONA, J.: May the legislature exempt the Government Service Insurance System (GSIS) from legal fees imposed by the Court on governmentowned and controlled corporations and local government units? This is the central issue in this administrative matter. The GSIS seeks exemption from the payment of legal fees imposed on government-owned or controlled corporations under Section 1 22, Rule 141 (Legal Fees) of the Rules of Court. The said provision states: SEC. 22. Government exempt. The Republic of the Philippines, its agencies and instrumentalities are exempt from paying the legal fees provided in this Rule. Local government corporations and government-owned or controlled corporations with or without independent charter are not exempt from paying such fees . However, all court actions, criminal or civil, instituted at the instance of the provincial, city or municipal treasurer or assessor under Sec. 280 of the Local Government Code of 1991 shall be exempt from the payment of court and sheriffs fees. (emphasis supplied) The GSIS anchors its petition on Section 39 of its charter, RA 8291 (The GSIS Act of 1997): SEC. 39. Exemption from Tax, Legal Process and Lien. It is hereby declared to be the policy of the State that the actuarial solvency of the funds of the GSIS shall be preserved and maintained at all times and that contribution rates necessary to sustain the benefits under this Act shall be kept as low as possible in order not to burden the members of the GSIS and their employers. Taxes imposed on the GSIS tend to impair the actuarial solvency of its funds and increase the contribution rate necessary to sustain the benefits of this Act. Accordingly, notwithstanding any laws to the contrary, the GSIS, its assets, revenues including accruals thereto, and benefits paid, shall be exempt from all taxes, assessments, fees, charges or duties of all kinds. These exemptions shall continue unless expressly and specifically revoked and any assessment against the GSIS as of the approval of this Act are hereby considered paid.Consequently, all laws, ordinances, regulations, issuances, opinions or jurisprudence contrary to or in derogation of this provision are hereby deemed repealed, superseded and rendered ineffective and without legal force and effect . Moreover, these exemptions shall not be affected by subsequent laws to the contrary unless this section is expressly, specifically and categorically revoked or repealed by law and a provision is enacted to substitute or replace the exemption referred to herein as an essential factor to maintain and protect the solvency of the fund, notwithstanding and independently of the guaranty of the national government to secure such solvency or liability. The funds and/or the properties referred to herein as well as the benefits, sums or monies corresponding to the benefits under this Act shall be exempt from attachment, garnishment, execution, levy or other processes issued by the courts, quasi-judicial agencies or administrative bodies including Commission on Audit (COA) disallowances and from all financial obligations of the members, including his pecuniary accountability arising from or caused or occasioned by his exercise or performance of his official functions or duties, or incurred relative to or in connection with his position or work except when his monetary liability, contractual or otherwise, is in favour of the GSIS. (emphasis supplied) The GSIS then avers that courts still assess and collect legal fees in actions and proceedings instituted by the GSIS notwithstanding its exemption from taxes, assessments, fees, charges, or duties of all kinds under Section 39. For this reason, the GSIS urges this Court to recognize its exemption from payment of legal fees.
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According to the GSIS, the purpose of its exemption is to preserve and maintain the actuarial solvency of its funds and to keep the contribution rates necessary to sustain the benefits provided by RA 8291 as low as possible. Like the terms "taxes," "assessments," "charges," and "duties," the term "fees" is used in the law in its generic and ordinary sense as any form of government imposition. The word "fees," defined as "charge[s] fixed by law for services of public officers or for the use of a privilege under control of 3 government," is qualified by the phrase "of all kinds." Hence, it includes the legal fees prescribed by this Court under Rule 141. Moreover, no distinction should be made based on the kind of fees imposed on the GSIS or the GSIS ability to pay because the law itself does not distinguish based on those matters. The GSIS argues that its exemption from the payment of legal fees would not mean that RA 8291 is superior to the Rules of Court. It 4 would merely show "deference" by the Court to the legislature as a co-equal branch. This deference will recognize the "compelling 5 and overriding" State interest in the preservation of the actuarial solvency of the GSIS for the benefit of its members. The GSIS further contends that the right of government workers to social security is an aspect of social justice. The right to social security is also guaranteed under Article 22 of the Universal Declaration of Human Rights and Article 9 of the International Covenant on Economic, Social and Cultural Rights. The Court has the power to promulgate rules concerning the protection and enforcement of constitutional rights, including the right to social security, but the GSIS is not compelling the Court to promulgate such rules. The GSIS is merely asking the Court to recognize and allow the exercise of the right of the GSIS "to seek relief from the courts of justice 6 sans payment of legal fees." Required to comment on the GSIS petition, the Office of the Solicitor General (OSG) maintains that the petition should be denied. According to the OSG, the issue of the GSIS exemption from legal fees has been resolved by the issuance by then Court 9 10 Administrator Presbitero J. Velasco, Jr. of OCA Circular No. 93-2004:
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TO : ALL JUDGES, CLERKS OF COURT AND COURT PERSONNEL OF THE METROPOLITAN TRIAL COURTS, MUNICIPAL TRIAL COURTS IN CITIES, MUNICIPAL TRIAL COURTS, MUNICIPAL CIRCUIT TRIAL COURTS, SHARIA CIRCUIT COURTS SUBJECT : REMINDER ON THE STRICT OBSERVANCE OF ADMINISTRATIVE CIRCULAR NO. 3-98 (Re: Payment of Docket and Filing Fees in Extra-Judicial Foreclosure); SECTION 21, RULE 141 OF THE RULES OF COURT; SECTION 3 OF PRESIDENTIAL DECREE NO. 385; and ADMINISTRATIVE CIRCULAR NO. 07-99 (Re: Exercise of Utmost Caution, Prudence, and Judiciousness in Issuance of Temporary Restraining Orders and Writs of Preliminary Injunctions) Pursuant to the Resolution of the Third Division of the Supreme Court dated 05 April 2004 and to give notice to the concern raised by the [GSIS] to expedite extrajudicial foreclosure cases filed in court, we wish to remind all concerned [of] the pertinent provisions of Administrative Circular No. 3-98, to wit: 2. No written request/petition for extrajudicial foreclosure of mortgages, real or chattel, shall be acted upon by the Clerk of Court, as Ex-Officio Sheriff, without the corresponding filing fee having been paid and the receipt thereof attached to the request/petition as provided for in Sec. 7(c), of Rule 141 of the Rules of Court. 3. No certificate of sale shall be issued in favor of the highest bidder until all fees provided for in the aforementioned sections and paragraph 3 of Section 9 (I) of Rule 141 of the Rules of Court shall have been paid.The sheriff shall attach to the records of the case a certified copy of the Official Receipt [O.R.] of the payment of the fees and shall note the O.R. number in the duplicate of the Certificate of Sale attached to the records of the case. Moreover, to settle any queries as to the status of exemption from payment of docket and legal fees of government entities, Section 21, Rule 141 of the Rules of Court explicitly provides: SEC. 21. Government exempt. The Republic of the Philippines, its agencies and instrumentalities are exempt from paying the legal fees provided in this Rule. Local governments and government-owned or controlled corporations with or without independent 11 charters are not exempt from paying such fees. xxx xxx xxx

The OSG contends that there is nothing in Section 39 of RA 8291 that exempts the GSIS from fees imposed by the Court in connection with judicial proceedings. The exemption of the GSIS from "taxes, assessments, fees, charges or duties of all kinds" is

necessarily confined to those that do not involve pleading, practice and procedure. Rule 141 has been promulgated by the Court pursuant to its exclusive rule-making power under Section 5(5), Article VIII of the Constitution. Thus, it may not be amended or repealed by Congress. On this Courts order, the Office of the Chief Attorney (OCAT) submitted a report and recommendation on the petition of the GSIS and the comment of the OSG thereon. According to the OCAT, the claim of the GSIS for exemption from the payment of legal fees has no legal basis. Read in its proper and full context, Section 39 intends to preserve the actuarial solvency of GSIS funds by exempting the GSIS from government impositions through taxes. Legal fees imposed under Rule 141 are not taxes. The OCAT further posits that the GSIS could not have been exempted by Congress from the payment of legal fees. Otherwise, Congress would have encroached on the rule-making power of this Court. According to the OCAT, this is the second time that the GSIS is seeking exemption from paying legal fees. The OCAT also points out that there are other government-owned or controlled corporations and local government units which asked for exemption from 15 paying legal fees citing provisions in their respective charters that are similar to Section 39 of RA 8291. Thus, the OCAT recommends that the petition of GSIS be denied and the issue be settled once and for all for the guidance of the concerned parties. Faced with the differing opinions of the GSIS, the OSG and the OCAT, we now proceed to probe into the heart of this matter: may Congress exempt the GSIS from the payment of legal fees? No. The GSIS urges the Court to show deference to Congress by recognizing the exemption of the GSIS under Section 39 of RA 8291 from legal fees imposed under Rule 141. Effectively, the GSIS wants this Court to recognize a power of Congress to repeal, amend or modify a rule of procedure promulgated by the Court. However, the Constitution and jurisprudence do not sanction such view. Rule 141 (on Legal Fees) of the Rules of Court was promulgated by this Court in the exercise of its rule-making powers under Section 5(5), Article VIII of the Constitution: Sec. 5. The Supreme Court shall have the following powers: xxx xxx xxx
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(5) Promulgate rules concerning the protection and enforcement of constitutional rights, pleading, practice, and procedure in all courts, the admission to the practice of law, the Integrated Bar, and legal assistance to the underprivileged. Such rules shall provide a simplified and inexpensive procedure for the speedy disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish, increase, or modify substantive rights. Rules of procedure of special courts and quasi-judicial bodies shall remain effective unless disapproved by the Supreme Court. xxx xxx x x x (emphasis supplied)
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The power to promulgate rules concerning pleading, practice and procedure in all courts is a traditional power of this Court. It necessarily includes the power to address all questions arising from or connected to the implementation of the said rules. The Rules of Court was promulgated in the exercise of the Courts rule-making power. It is essentially procedural in nature as it does not create, diminish, increase or modify substantive rights. Corollarily, Rule 141 is basically procedural. It does not create or take away a right but simply operates as a means to implement an existing right. In particular, it functions to regulate the procedure of 17 exercising a right of action and enforcing a cause of action. In particular, it pertains to the procedural requirement of paying the 18 prescribed legal fees in the filing of a pleading or any application that initiates an action or proceeding. Clearly, therefore, the payment of legal fees under Rule 141 of the Rules of Court is an integral part of the rules promulgated by this Court pursuant to its rule-making power under Section 5(5), Article VIII of the Constitution. In particular, it is part of the rules 19 concerning pleading, practice and procedure in courts. Indeed, payment of legal (or docket) fees is a jurisdictional requirement. It is not simply the filing of the complaint or appropriate initiatory pleading but the payment of the prescribed docket fee that vests a 20 trial court with jurisdiction over the subject-matter or nature of the action. Appellate docket and other lawful fees are required to 21 be paid within the same period for taking an appeal. Payment of docket fees in full within the prescribed period is mandatory for 22 the perfection of an appeal. Without such payment, the appellate court does not acquire jurisdiction over the subject matter of the 23 action and the decision sought to be appealed from becomes final and executory.

An interesting aspect of legal fees is that which relates to indigent or pauper litigants. In proper cases, courts may waive the collection of legal fees. This, the Court has allowed in Section 21, Rule 3 and Section 19, Rule 141 of the Rules of Court in recognition 24 of the right of access to justice by the poor under Section 11, Article III of the Constitution. Mindful that the rule with respect to 25 indigent litigants should not be ironclad as it touches on the right of access to justice by the poor, the Court acknowledged the exemption from legal fees of indigent clients of the Public Attorneys Office under Section 16 -D of the Administrative Code of 1987, 26 as amended by RA 9406. This was not an abdication by the Court of its rule-making power but simply a recognition of the limits of that power. In particular, it reflected a keen awareness that, in the exercise of its rule-making power, the Court may not dilute or defeat the right of access to justice of indigent litigants. The GSIS cannot successfully invoke the right to social security of government employees in support of its petition. It is a corporate entity whose personality is separate and distinct from that of its individual members. The rights of its members are not its rights; its rights, powers and functions pertain to it solely and are not shared by its members. Its capacity to sue and bring actions under Section 41(g) of RA 8291, the specific power which involves the exemption that it claims in this case, pertains to it and not to its members. Indeed, even the GSIS acknowledges that, in claiming exemption from the payment of legal fees, it is not asking that rules be made to enforce the right to social security of its members but that the Court recognize the alleged right of the GSIS "to seek 27 relief from the courts of justice sans payment of legal fees." However, the alleged right of the GSIS does not exist. The payment of legal fees does not take away the capacity of the GSIS to sue. It simply operates as a means by which that capacity may be implemented. Since the payment of legal fees is a vital component of the rules promulgated by this Court concerning pleading, practice and procedure, it cannot be validly annulled, changed or modified by Congress. As one of the safeguards of this Courts institutional independence, the power to promulgate rules of pleading, practice and procedure is now the Courts exclusive domain. That pow er 28 is no longer shared by this Court with Congress, much less with the Executive. Speaking for the Court, then Associate Justice (now Chief Justice) Reynato S. Puno traced the history of the rule-making power of 29 this Court and highlighted its evolution and development in Echegaray v. Secretary of Justice: 1avvphi1 Under the 1935 Constitution, the power of this Court to promulgate rules concerning pleading, practice and procedure was granted but it appeared to be co-existent with legislative power for it was subject to the power of Congress to repeal, alter or supplement. Thus, its Section 13, Article VIII provides: Sec. 13. The Supreme Court shall have the power to promulgate rules concerning pleading, practice and procedure in all courts, and the admission to the practice of law. Said rules shall be uniform for all courts of the same grade and shall not diminish, increase, or modify substantive rights. The existing laws on pleading, practice and procedure are hereby repealed as statutes, and are declared Rules of Court, subject to the power of the Supreme Court to alter and modify the same. The Congress shall have the power to repeal, alter or supplement the rules concerning pleading, practice and procedure, and the admission to the practice of law in the Philippines. The said power of Congress, however, is not as absolute as it may appear on its surface. In In re Cunanan, Congress in the exercise of its power to amend rules of the Supreme Court regarding admission to the practice of law, enacted the Bar Flunkers Act of 1953 which considered as a passing grade, the average of 70% in the bar examinations after July 4, 1946 up to August 1951 and 71% in the 1952 bar examinations. This Court struck down the law as unconstitutional. In his ponencia, Mr. Justice Diokno held that "x x x the disputed law is not a legislation; it is a judgment - a judgment promulgated by this Court during the aforecited years affecting the bar candidates concerned; and although this Court certainly can revoke these judgments even now, for justifiable reasons, it is no less certain that only this Court, and not the legislative nor executive department, that may do so. Any attempt on the part of these departments would be a clear usurpation of its function, as is the case with the law in question." The venerable jurist further ruled: "It is obvious, therefore, that the ultimate power to grant license for the practice of law belongs exclusively to this Court, and the law passed by Congress on the matter is of permissive character, or as other authorities say, merely to fix the minimum conditions for the license." By its ruling, this Court qualified the absolutist tone of the power of Congress to "repeal, alter or supplement the rules concerning pleading, practice and procedure, and the admission to the practice of law in the Philippines. The ruling of this Court in In re Cunanan was not changed by the 1973 Constitution. For the 1973 Constitution reiterated the power of this Court "to promulgate rules concerning pleading, practice and procedure in all courts, x x x which, however, may be repealed, altered or supplemented by the Batasang Pambansa x x x." More completely, Section 5(2)5 of its Article X provided: xxx xxx xxx

Sec. 5. The Supreme Court shall have the following powers. xxx xxx xxx

(5) Promulgate rules concerning pleading, practice, and procedure in all courts, the admission to the practice of law, and the integration of the Bar, which, however, may be repealed, altered, or supplemented by the Batasang Pambansa. Such rules shall provide a simplified and inexpensive procedure for the speedy disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish, increase, or modify substantive rights. Well worth noting is that the 1973 Constitution further strengthened the independence of the judiciary by giving to it the additional power to promulgate rules governing the integration of the Bar. The 1987 Constitution molded an even stronger and more independent judiciary. Among others, it enhanced the rule making power of this Court. Its Section 5(5), Article VIII provides: xxx Section 5. The Supreme Court shall have the following powers: xxx xxx xxx xxx xxx

(5) Promulgate rules concerning the protection and enforcement of constitutional rights , pleading, practice and procedure in all courts, the admission to the practice of law, the Integrated Bar, and legal assistance to the underprivileged. Such rules shall provide a simplified and inexpensive procedure for the speedy disposition of cases, shall be uniform for all courts of the same grade, and shall not diminish, increase, or modify substantive rights. Rules of procedure of special courts and quasi-judicial bodies shall remain effective unless disapproved by the Supreme Court . The rule making power of this Court was expanded. This Court for the first time was given the power to promulgate rules concerning the protection and enforcement of constitutional rights. The Court was also granted for the first time the power to disapprove rules of procedure of special courts and quasi-judicial bodies. But most importantly, the 1987 Constitution took away the power of Congress to repeal, alter, or supplement rules concerning pleading, practice and procedure . In fine, the power to promulgate rules of pleading, practice and procedure is no longer shared by this Court with Congress, more so with the Executive. The separation of powers among the three co-equal branches of our government has erected an impregnable wall that keeps the power to promulgate rules of pleading, practice and procedure within the sole province of this Court. The other branches trespass upon this prerogative if they enact laws or issue orders that effectively repeal, alter or modify any of the procedural rules promulgated by this Court. Viewed from this perspective, the claim of a legislative grant of exemption from the payment of legal fees under Section 39 of RA 8291 necessarily fails. Congress could not have carved out an exemption for the GSIS from the payment of legal fees without transgressing another equally 30 important institutional safeguard of the Courts independence fiscal autonomy. Fiscal autonomy recognizes the power and 31 authority of the Court to levy, assess and collect fees, including legal fees. Moreover, legal fees under Rule 141 have two basic 32 components, the Judiciary Development Fund (JDF) and the Special Allowance for the Judiciary Fund (SAJF). The laws which 33 established the JDF and the SAJF expressly declare the identical purpose of these funds to "guarantee the independence of the 34 Judiciary as mandated by the Constitution and public policy." Legal fees therefore do not only constitute a vital source of the Courts financial resources but also comprise an essential element of the Courts fiscal independence. Any exemption from the payment of legal fees granted by Congress to government-owned or controlled corporations and local government units will necessarily reduce the JDF and the SAJF. Undoubtedly, such situation is constitutionally infirm for it impairs the Courts gu aranteed fiscal autonomy and erodes its independence.

WHEREFORE, the petition of the Government Service Insurance System for recognition of its exemption from the payment of legal fees imposed under Section 22 of Rule 141 of the Rules of Court on government-owned or controlled corporations and local government units is hereby DENIED. The Office of the Court Administrator is hereby directed to promptly issue a circular to inform all courts in the Philippines of the import of this resolution. SO ORDERED. NOTES: Jurisdiction; payment of docket fees is jurisdictional requirement. Clearly, therefore, the payment of legal fees under Rule 141 of the Rules of Court is an integral part of the rules promulgated by this Court pursuant to its rule-making power under Section 5(5), Article VIII of the Constitution. In particular, it is part of the rules concerning pleading, practice and procedure in courts. Indeed, payment of legal (or docket) fees is a jurisdictional requirement. It is not simply the filing of the complaint or appropriate initiatory pleading but the payment of the prescribed docket fee that vests a trial court with jurisdiction over the subject-matter or nature of the action. Appellate docket and other lawful fees are required to be paid within the same period for taking an appeal. Payment of docket fees in full within the prescribed period is mandatory for the perfection of an appeal. Without such payment, the appellate court does not acquire jurisdiction over the subject matter of the action and the decision sought to be appealed from becomes final and executory. Re: Petition for recognition of the excemption of the Government Service Insurance System from payment of legal fees, A.M. No. 08-2-01-0, February 11, 2010.

MARCH 2010 CIVIL PROCEDURE Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 165273 March 10, 2010

LEAH PALMA, Petitioner, vs. HON. DANILO P. GALVEZ, in his capacity as PRESIDING JUDGE of the REGIONAL TRIAL COURT OF ILOILO CITY, BRANCH 24; and PSYCHE ELENA AGUDO, Respondents. DECISION PERALTA, J.: Assailed in this petition for certiorari under Rule 65 of the Rules of Court are the Orders dated May 7, 2004 and July 21, 2004 of the Regional Trial Court (RTC) of Iloilo City, Branch 24, granting the motion to dismiss filed by private respondent Psyche Elena Agudo and denying reconsideration thereof, respectively. On July 28, 2003, petitioner Leah Palma filed with the RTC an action for damages against the Philippine Heart Center (PHC), Dr. Danilo Giron and Dr. Bernadette O. Cruz, alleging that the defendants committed professional fault, negligence and omission for having removed her right ovary against her will, and losing the same and the tissues extracted from her during the surgery; and that although the specimens were subsequently found, petitioner was doubtful and uncertain that the same was hers as the label therein pertained that of somebody else. Defendants filed their respective Answers. Petitioner subsequently filed a Motion for Leave to Admit Amended Complaint, praying for the inclusion of additional defendants who were all nurses at the PHC, namely, Karla Reyes, Myra Mangaser and herein private respondent Agudo. Thus, summons were subsequently issued to them. On February 17, 2004, the RTC's process server submitted his return of summons stating that the alias summons, together with a copy of the amended complaint and its annexes, were served upon private respondent thru her husband Alfredo Agudo, who 3 received and signed the same as private respondent was out of the country. On March 1, 2004, counsel of private respondent filed a Notice of Appearance and a Motion for Extension of Time to File Answer stating that he was just engaged by private respondent's husband as she was out of the country and the Answer was already due.
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On March 15, 2004, private respondent's counsel filed a Motion for Another Extension of Time to File Answer, and stating that while the draft answer was already finished, the same would be sent to private respondent for her clarification/verification before the Philippine Consulate in Ireland; thus, the counsel prayed for another 20 days to file the Answer. On March 30, 2004, private respondent filed a Motion to Dismiss on the ground that the RTC had not acquired jurisdiction over her as she was not properly served with summons, since she was temporarily out of the country; that service of summons on her should 7 conform to Section 16, Rule 14 of the Rules of Court. Petitioner filed her Opposition to the motion to dismiss, arguing that a substituted service of summons on private respondent's husband was valid and binding on her; that service of summons under Section 16, Rule 14 was not exclusive and may be effected by other modes of service, i.e., by personal or substituted service. Private 8 9 respondent filed a Comment on petitioner's Opposition, and petitioner filed a Reply thereto. On May 7, 2004, the RTC issued its assailed Order granting private respondent's motion to dismiss. It found that while the summons was served at private respondent's house and received by respondent's husband, such service did not qualify as a valid service of summons on her as she was out of the country at the time the summons was served, thus, she was not personally served a summons; and even granting that she knew that a complaint was filed against her, nevertheless, the court did not acquire jurisdiction over her person as she was not validly served with summons; that substituted service could not be resorted to since it was established that private respondent was out of the country, thus, Section 16, Rule 14 provides for the service of summons on her by publication.
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Petitioner filed a motion for reconsideration, which the RTC denied in its Order dated July 21, 2004. Petitioner is now before us alleging that the public respondent committed a grave abuse of discretion amounting to lack or excess of jurisdiction when he ruled that: I. Substituted service of summons upon private respondent, a defendant residing in the Philippines but temporarily outside the country is invalid; II. Section 16, Rule 14, of the 1997 Rules of Civil Procedure limits the mode of service of summons upon a defendant residing in the Philippines, but temporarily outside the country, exclusively to extraterritorial service of summons under section 15 of the same rule; III. In not ruling that by filing two (2) motions for extension of time to file Answer, private respondent had voluntarily submitted herself to the jurisdiction of respondent court, pursuant to Section 20, Rule 14 of the 1997 Rules of Civil Procedure, hence, equivalent to having been served with summons; IV. The cases cited in his challenged Order of May 7, 2004 constitute stare decisis despite his own admission that 10 the factual landscape in those decided cases are entirely different from those in this case. Petitioner claims that the RTC committed a grave abuse of discretion in ruling that Section 16, Rule 14, limits the service of summons upon the defendant-resident who is temporarily out of the country exclusively by means of extraterritorial service, i.e., by personal service or by publication, pursuant to Section 15 of the same Rule. Petitioner further argues that in filing two motions for extension of time to file answer, private respondent voluntarily submitted to the jurisdiction of the court. In her Comment, private respondent claims that petitioner's certiorari under Rule 65 is not the proper remedy but a petition for review under Rule 45, since the RTC ruling cannot be considered as having been issued with grave abuse of discretion; that the petition was not properly verified because while the verification was dated September 15, 2004, the petition was dated September 30, 2004. She insists that since she was out of the country at the time the service of summons was made, such service should be governed by Section 16, in relation to Section 15, Rule 14 of the Rules of Court; that there was no voluntary appearance on her part when her counsel filed two motions for extension of time to file answer, since she filed her motion to dismiss on the ground of lack of jurisdiction within the period provided under Section 1, Rule 16 of the Rules of Court. In her Reply, petitioner claims that the draft of the petition and the verification and certification against forum shopping were sent to her for her signature earlier than the date of the finalized petition, since the petition could not be filed without her signed verification. Petitioner avers that when private respondent filed her two motions for extension of time to file answer, no special appearance was made to challenge the validity of the service of summons on her. The parties subsequently filed their respective memoranda as required. We shall first resolve the procedural issues raised by private respondent. Private respondent's claim that the petition for certiorari under Rule 65 is a wrong remedy thus the petition should be dismissed, is not persuasive. A petition for certiorari is proper when any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no 11 appeal, or any plain, speedy, and adequate remedy at law. There is "grave abuse of discretion" when public respondent acts in a capricious or whimsical manner in the exercise of its judgment as to be equivalent to lack of jurisdiction. Section 1, Rule 41 of the 1997 Rules of Civil Procedure states that an appeal may be taken only from a final order that completely disposes of the case; that no appeal may be taken from (a) an order denying a motion for new trial or reconsideration; (b) an order denying a petition for relief or any similar motion seeking relief from judgment; (c) an interlocutory order; (d) an order disallowing or dismissing an appeal; (e) an order denying a motion to set aside a judgment by consent, confession or compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent; (f) an order of execution; (g) a judgment or final order for or against one or more of several parties or in separate claims, counterclaims, cross-claims and third-party complaints, while the main case is pending, unless the court allows an appeal therefrom; or (h) an order dismissing an action without prejudice. In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action for certiorari under Rule 65.

In this case, the RTC Order granting the motion to dismiss filed by private respondent is a final order because it terminates the proceedings against her, but it falls within exception (g) of the Rule since the case involves several defendants, and the complaint for 12 damages against these defendants is still pending. Since there is no appeal, or any plain, speedy, and adequate remedy in law, the remedy of a special civil action for certiorari is proper as there is a need to promptly relieve the aggrieved party from the injurious 13 effects of the acts of an inferior court or tribunal. Anent private respondent's allegation that the petition was not properly verified, we find the same to be devoid of merit. 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 14 true and correct, not merely speculative. In this instance, petitioner attached a verification to her petition although dated earlier than the filing of her petition. Petitioner explains that since a draft of the petition and the verification were earlier sent to her in New York for her signature, the verification was earlier dated than the petition for certiorari filed with us. We accept such explanation. While Section 1, Rule 65 requires that the petition for certiorari be verified, this is not an absolute necessity where the 15 material facts alleged are a matter of record and the questions raised are mainly of law. In this case, the issue raised is purely of law. Now on the merits, the issue for resolution is whether there was a valid service of summons on private respondent. In civil cases, the trial court acquires jurisdiction over the person of the defendant either by the service of summons or by the latters 16 voluntary appearance and submission to the authority of the former. Private respondent was a Filipino resident who was temporarily out of the Philippines at the time of the service of summons; thus, service of summons on her is governed by Section 16, Rule 14 of the Rules of Court, which provides: Sec. 16. Residents temporarily out of the Philippines. When an action is commenced against a defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service may, by leave of court, be also effected out of the Philippines, as under the preceding section. (Emphasis supplied) The preceding section referred to in the above provision is Section 15, which speaks of extraterritorial service, thus: SEC. 15. Extraterritorial service. When the defendant does not reside and is not found in the Philippines, and the action affects the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 6; or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer. The RTC found that since private respondent was abroad at the time of the service of summons, she was a resident who was temporarily out of the country; thus, service of summons may be made only by publication. We do not agree. In Montefalcon v. Vasquez, we said that because Section 16 of Rule 14 uses the words "may" and "also," it is not mandatory. Other methods of service of summons allowed under the Rules may also be availed of by the serving officer on a defendant-resident who is temporarily out of the Philippines. Thus, if a resident defendant is temporarily out of the country, any of the following modes of service may be resorted to: (1) substituted service set forth in section 7 ( formerly Section 8), Rule 14; (2) personal service outside the country, with leave of court; (3) service by publication, also with leave of court; or (4) in any other manner the court may deem 18 sufficient. In Montalban v. Maximo, we held that substituted service of summons under the present Section 7, Rule 14 of the Rules of Court in a suit in personam against residents of the Philippines temporarily absent therefrom is the normal method of service of summons that will confer jurisdiction on the court over such defendant. In the same case, we expounded on the rationale in providing for substituted service as the normal mode of service for residents temporarily out of the Philippines. x x x A man temporarily absent from this country leaves a definite place of residence, a dwelling where he lives, a local base, so to speak, to which any inquiry about him may be directed and where he is bound to return. Where one temporarily absents himself, he
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leaves his affairs in the hands of one who may be reasonably expected to act in his place and stead; to do all that is necessary to protect his interests; and to communicate with him from time to time any incident of importance that may affect him or his business or his affairs. It is usual for such a man to leave at his home or with his business associates information as to where he may be contacted in the event a question that affects him crops up. If he does not do what is expected of him, and a case comes up in court against him, he cannot just raise his voice and say that he is not subject to the processes of our courts. He cannot stop a suit from being filed against him upon a claim that he cannot be summoned at his dwelling house or residence or his office or regular place of business. Not that he cannot be reached within a reasonable time to enable him to contest a suit against him. There are now advanced facilities of communication. Long distance telephone calls and cablegrams make it easy for one he left behind to communicate with 20 him. Considering that private respondent was temporarily out of the country, the summons and complaint may be validly served on her through substituted service under Section 7, Rule 14 of the Rules of Court which reads: SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendants re sidence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendants office or regular place of bus iness with some competent person in charge thereof. We have held that a dwelling, house or residence refers to the place where the person named in the summons is living at the time 21 when the service is made, even though he may be temporarily out of the country at the time. It is, thus, the service of the summons intended for the defendant that must be left with the person of suitable age and discretion residing in the house of the defendant. Compliance with the rules regarding the service of summons is as important as the issue of due process as that of 22 jurisdiction. 1avvphi1 Section 7 also designates the persons with whom copies of the process may be left. The rule presupposes that such a relation of confidence exists between the person with whom the copy is left and the defendant and, therefore, assumes that such person will 23 deliver the process to defendant or in some way give him notice thereof. In this case, the Sheriff's Return stated that private respondent was out of the country; thus, the service of summons was made at her residence with her husband, Alfredo P. Agudo, acknowledging receipt thereof. Alfredo was presumably of suitable age and discretion, who was residing in that place and, therefore, was competent to receive the summons on private respondent's behalf. Notably, private respondent makes no issue as to the fact that the place where the summons was served was her residence, though she was temporarily out of the country at that time, and that Alfredo is her husband. In fact, in the notice of appearance and motion for extension of time to file answer submitted by private respondent's counsel, he confirmed the Sheriff's Return by stating that private respondent was out of the country and that his service was engaged by respondent's husband. In his motion for another extension of time to file answer, private respondent's counsel stated that a draft of the answer had already been prepared, which would be submitted to private respondent, who was in Ireland for her clarification and/or verification before the Philippine Consulate there. These statements establish the fact that private respondent had knowledge of the case filed against her, and that her husband had told her about the case as Alfredo even engaged the services of her counsel. In addition, we agree with petitioner that the RTC had indeed acquired jurisdiction over the person of private respondent when the latter's counsel entered his appearance on private respondent's behalf, without qualification and without questioning the propriety of the service of summons, and even filed two Motions for Extension of Time to File Answer. In effect, private respondent, through counsel, had already invoked the RTCs jurisdiction over her person by praying that the motions for extension of time to file answer be granted. We have held that the filing of motions seeking affirmative relief, such as, to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, are considered 24 voluntary submission to the jurisdiction of the court. When private respondent earlier invoked the jurisdiction of the RTC to secure affirmative relief in her motions for additional time to file answer, she voluntarily submitted to the jurisdiction of the RTC and is 25 thereby estopped from asserting otherwise. Considering the foregoing, we find that the RTC committed a grave abuse of discretion amounting to excess of jurisdiction in issuing its assailed Orders.

WHEREFORE, the petition is GRANTED. The Orders dated May 7, 2004 and July 21, 2004 of the Regional Trial Court of Iloilo City, Branch 24, are hereby SET ASIDE. Private respondent is DIRECTED to file her Answer within the reglementary period from receipt of this decision. SO ORDERED. NOTES: Certiorari; not available to review final order; exception . Private respondents claim that the petition for certiorari under Rule 65 is a wrong remedy thus the petition should be dismissed, is not persuasive. A petition for certiorari is proper when any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal, or any plain, speedy, and adequate remedy at law. There is grave abuse of discretion when public respondent acts in a capricious or whimsical manner in the exercise of its judgment as to be equivalent to lack of jurisdiction. Section 1, Rule 41 of the 1997 Rules of Civil Procedure states that an appeal may be taken only from a final order that completely disposes of the case; that no appeal may be taken from (a) an order denying a motion for new trial or reconsideration; (b) an order denying a petition for relief or any similar motion seeking relief from judgment; (c) an interlocutory order; (d) an order disallowing or dismissing an appeal; (e) an order denying a motion to set aside a judgment by consent, confession or compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent; (f) an order of execution; (g) a judgment or final order for or against one or more of several parties or in separate claims, counterclaims, cross-claims and third-party complaints, while the main case is pending, unless the court allows an appeal therefrom; or (h) an order dismissing an action without prejudice. In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action for certiorari under Rule 65. In this case, the RTC Order granting the motion to dismiss filed by private respondent is a final order because it terminates the proceedings against her, but it falls within exception (g) of the Rule since the case involves several defendants, and the complaint for damages against these defendants is still pending. Since there is no appeal, or any plain, speedy, and adequate remedy in law, the remedy of a special civil action for certiorari is proper as there is a need to promptly relieve the aggrieved party from the injurious effects of the acts of an inferior court or tribunal. Leah Palma vs. Hon. Danilo P. Galvez, in his capacity as Presiding Judge of Regional Trial Court of Iloilo City, Branch 24, et al., G.R. No. 165273, March 10, 2010

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 183357 March 15, 2010

HONORIO BERNARDO, Petitioner, vs. HEIRS OF EUSEBIO VILLEGAS, Respondents. DECISION PEREZ, J.: This petition for review on certiorari under Rule 45 of the Rules of Court seeks to assail the validity of the Decision dated 21 April 2008 of the Court of Appeals, which affirmed the judgment of the Regional Trial Court (RTC) of Binangonan, Rizal in Civil Case No. R00-035. This controversy stemmed from a Complaint dated 14 November 2000 for accion publiciana filed by respondent Heirs of Eusebio Villegas against petitioner Honorio Bernardo, Romeo Gaza (Gaza) and Monina Francisco (Francisco). Respondents had earlier filed an ejectment case against the trio, docketed as Civil Case No. 99-065 with the Municipal Trial Court (MTC) of Binangonan, Rizal, which case was dismissed on the ground of lack of jurisdiction for having been filed beyond the one-year prescriptive period for filing a 2 forcible entry case. Respondents alleged in the Complaint that their father, Eusebio Villegas, is the registered owner of a parcel of land covered by Transfer Certificate of Title (TCT) No. 46891 with an area of 18,369 square meters and situated in Barangay Pag-asa, Binangonan, Rizal; that petitioner, by stealth and in the guise of merely grazing his cattle, surreptitiously entered into possession of a portion of respondents land; that petitioner conspired and confederated with Gaza and Francisco by illegally constructing their own hou ses on the subject land; that the issue of possession was brought to the barangay for conciliation but no settlement was reached by the parties; and that petitioner, Gaza and Francisco had forcibly, unlawfully and unjustly possessed and continue to possess the subject property and had refused to vacate the same. In his Answer, petitioner denied taking possession of any portion of the property of respondents. He argued that the cause of action 3 is barred by the judgment in the ejectment case. He claimed that he had been in possession of his land since the early 1950s. As he did before the MTC, petitioner also alleged lack of jurisdiction on the part of the RTC. Gaza alleged that he has been occupying an abandoned river bed adjacent to the property allegedly owned by respondents. Gaza averred that he entered into a written agreement with petitioner, who claimed to own the land and allowed him to build a nipa hut 5 thereon. An ocular inspection was conducted by the trial court judge. On 5 March 2007, the trial court rendered judgment in favor of respondents and ordered petitioner, Gaza and Francisco to vacate the subject land covered by TCT No. 46891 and to pay jointly and 6 severally respondents the amount of P30,000.00 as attorneys fees and the cost of suit. The trial court held that the suit, being an accion publiciana, falls within its jurisdiction. It found that the houses of petitioner and Gaza were inside the titled property of respondents. Its findings were based on the testimony of one of the respondents, Estelito Villegas; the relocation plan prepared by Engineer Rico J. Rasay; and the Technical Report on Verification Survey submitted by 7 Engineer Robert C. Pangyarihan, petitioners own witness. The trial court noted that petitioner failed to present any title or tax 8 declaration to prove ownership or possessory right. On appeal, the Court of Appeals affirmed the ruling of the trial court. In his appeal, petitioner questioned the jurisdiction of the trial court over the subject matter and argued that in their complaint, the respondents failed to state the assessed value of the property in dispute. The appellate court ruled that petitioner is estopped from
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raising the issue of jurisdiction because he failed to file a motion to dismiss on such ground and, instead, actively participated in the proceedings before the trial court. With respect to the argument that being indispensable parties, all of the heirs of Eusebio Villegas should have been impleaded as parties, the appellate court disagreed and invoked Article 487 of the Civil Code, which provides that any one of the co-owners may 9 bring an action for ejectment. The appellate court construed said provision to cover all kinds of actions for recovery of possession. The appellate court sustained the trial courts finding that the portions of the land occupied by petitioner and Gaza are own ed by respondents. The appellate court likewise ruled that respondents could not be guilty of laches considering that Estelito Villegas, upon seeing for the first time in 1996 that petitioner was already building his house on the premises, verbally asked him to 10 discontinue the construction. His motion for reconsideration having been denied, petitioner filed the instant petition. Petitioner insists that the trial court had no jurisdiction over the subject matter of the action for failure of respondents to allege the assessed value of the property involved in their complaint. Petitioner belies the ruling of the appellate court that he failed to raise objections before the trial court. Petitioner reiterates that he raised the defense of lack of jurisdiction as early as in his Answer filed before the trial court. Moreover, he argues that even if he did not raise the defense of lack of jurisdiction, the trial court should have dismissed the complaint motu proprio. Petitioner disputes the application to him of the doctrine of estoppel by laches in Tijam v. 11 Sibonghanoy. Petitioner avers that unlike in Tijam, he raised the issue of jurisdiction, not only in his answer, but also in his appeal.
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Respondents defend the ruling of the Court of Appeals and maintain that petitioner is estopped from challenging the jurisdiction of 13 the trial court. The issue presented before this Court is simple: Whether or not estoppel bars petitioner from raising the issue of lack of jurisdiction. Under Batas Pambansa Bilang 129, the plenary action of accion publiciana must be brought before the regional trial courts. With the 14 modifications introduced by Republic Act No. 7691 in 1994, the jurisdiction of the regional trial courts was limited to real actions where the assessed value exceeds P20,000.00, and P50,000.00 where the action is filed in Metro Manila, thus: SEC. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction: xxxx (2) In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00) or, for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts. Under the law as modified, jurisdiction is determined by the assessed value of the property. A reading of the complaint shows that respondents failed to state the assessed value of the disputed land. The averments read: xxxx 3. EUSEBIO VILLEGAS, deceased father of hte plaintiffs, is the registered owner of a parcel of land situated in Barangay Pag-asa (formerly Barangay Tayuman), Binangonan, Rizal with a land area of 18,369 square meters. The same is covered by and embraced in Transfer Certificate of Title No. 46891 of the Registry of Deeds for the Province of Rizal. x x x. 4. Plaintiffs are the legal heirs of EUSEBIO VILLEGAS and succeeded to the subject parcel of land by virtue of their inheritance rights as compulsory heirs of said deceased Eusebio Villegas and upon his death, immediately took over and were enjoying the peaceful possession of the said parcel of land and exercising said rights of possession and ownership thereof;

5. That sometime in 1996, defendant Honorio Bernardo, by stealth and in guise of merely grazing his cattle, without the consent of the plaintiffs, surreptitiously entered into the possession of a portion of the subject parcel of land. Employing threats and intimidations, he claimed later that the area he illegally occupied is purportedly not part and parcel of the land owned by the plaintiffs predecessor, Eusebio Villegas, and forcibly fe nced and built his house on the portion of land he illegally occupied; 6. Not being content with his own forcible and unlawful invasion, usurpation and incursion into the plaintiffs parcel of land, and in furtherance of his desire to forcibly exclude the plaintiffs of their lawful and for possession of the subject portion of plaintiffs parcel of land, defendant Bernardo, conspired and confederated with defendants Romeo Gaza and Monina Francisco by surreptitiously and illegally constructing their own houses on the subject parcel of land through stealth and intimidation; 7. That the issue of the possession of the subject parcel of land was brought under the Barangay Justice System in 1996 for conciliation but, no settlement was reached by the parties. Copies of the Certifications issued by the Barangay for that matter is hereto attached and marked as Annex "B"; 8. That the defendants have forcibly, unlawfully, and unjustly dispossessed and still continues to forcibly, unlawfully, and unjustly dispossesses the plaintiffs of their lawful rights of possession and ownership on a portion of the subject property since 1966 up to the present; 9. Because of the unjust refusal of the defendants to vacate the premises, plaintiffs were constrained to engage the services of counsel to protect their interest on the property for an agreed attorneys fee of P50,000.00, and have incurred litigation expenses[;] 10. By reason of the unlawful and forcible invasion by the defendants of the property of the plaintiffs which was accompanied by threats and intimidation, the plaintiffs have suffered and continue to suffer anxiety and sleepless nights for which the defendants should be made to indemnify by way of moral damages in the amount of at least P100,000.00; 11. To serve as an example to others who might be minded to commit similar wanton and unlawful acts, 15 defendants should be held answerable for exemplary damages of not less than P50,000.00. This fact was noted by the Court of Appeals in its Decision but it proceeded to rule in this wise: Records show that at the time plaintiffs-appellees filed their complaint below, R.A. No. 7691 which amended Batas Pambansa Blg. 129 was already in effect. However, the complaint failed to allege the assessed value of the real property involved. Although appellant indeed raised the issue of jurisdiction in his answer, he had not filed a motion to dismiss on this ground nor reiterated the matter thereafter but actively participated in the proceedings after the denial of his demurrer to evidence anchored on the failure of the plaintiffs to identify in their complaint all the heirs of the registered owner and supposed lack of technical description of the property in the certificate of title. Indeed, appellant is now estopped to question the trial courts jurisdiction over the s ubject matter and nature of the case having actively pursued throughout the trial, by filing various pleadings and presenting all relevant documentary and testimonial evidence, his theory that the portion occupied by him is not covered by the torrens title of Eusebio 16 Villegas. We agree. As already shown, nowhere in the complaint was the assessed value of the subject property ever mentioned. There is no showing on the face of the complaint that the RTC has jurisdiction exclusive of the MTC. Indeed, absent any allegation in the complaint of the assessed value of the property, it cannot readily be determined which of the two trial courts had original and exclusive jurisdiction 17 over the case. The general rule is that the jurisdiction of a court may be questioned at any stage of the proceedings. Lack of jurisdiction is one of those excepted grounds where the court may dismiss a claim or a case at any time when it appears from the pleadings or the 19 evidence on record that any of those grounds exists, even if they were not raised in the answer or in a motion to dismiss. The reason is that jurisdiction is conferred by law, and lack of it affects the very authority of the court to take cognizance of and to 20 render judgment on the action.
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However, estoppel sets in when a party participates in all stages of a case before challenging the jurisdiction of the lower court. One cannot belatedly reject or repudiate its decision after voluntarily submitting to its jurisdiction, just to secure affirmative relief against one's opponent or after failing to obtain such relief. The Court has, time and again, frowned upon the undesirable practice of a party submitting a case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction when 21 adverse. In Tijam, the Court held that it is iniquitous and unfair to void the trial courts decision for lack of jurisdiction considering that it was raised only after fifteen (15) years of tedious litigation, thus: The facts of this case show that from the time the Surety became a quasi-party on July 31, 1948, it could have raised the question of the lack of jurisdiction of the Court of First Instance of Cebu to take cognizance of the present action by reason of the sum of money involved which, according to the law then in force, was within the original exclusive jurisdiction of inferior courts. It failed to do so. Instead, at several stages of the proceedings in the court a quo as well as in the Court of Appeals, it invoked the jurisdiction of said courts to obtain affirmative relief and submitted its case for a final adjudication on the merits. It was only after an adverse decision was rendered by the Court of Appeals that it finally woke up to raise the question of jurisdiction. Were we to sanction such conduct on its part, We would in effect be declaring as useless all the proceedings had in the present case since it was commenced on July 19, 1948 and compel the judgment creditors to go up their Calvary once more. The inequity and unfairness of this is not only patent 22 but revolting. The principle of justice and equity as espoused in Tijam should be applied in this case. The MTC dismissed the ejectment case upon its ruling that the case is for accion publiciana. It did not assert jurisdiction over the case even if it could have done so based on the assessed value of the property subject of the accion publiciana. And there was no showing, indeed, not even an allegation, that the MTC was not aware of its jurisdictional authority over an accion publiciana involving property in the amount stated in the law. Moreover, petitioner did not bring up the issue of jurisdictional amount that would have led the MTC to proceed with the trial of the case. Petitioner obviously considered the dismissal to be in his favor. When, as a result of such dismissal, respondents brought the case as accion publiciana before the RTC, petitioner never brought up the issue of jurisdictional amount. What petitioner mentioned in his Answer before the RTC was the generally phrased allegation that "the Honorable Court has no jurisdiction over the subject 23 matter and the nature of the action in the above-entitled case." This general assertion, which lacks any basis, is not sufficient. Clearly, petitioner failed to point out the omission of the assessed value in the complaint. Petitioner actively participated during the trial by adducing evidence and filing numerous pleadings, none of which mentioned any defect in the jurisdiction of the RTC. It was only on appeal before the Court of Appeals, after he obtained an adverse judgment in the trial court, that petitioner, for the first time, came up with the argument that the decision is void because there was no allegation in the complaint about the value of the property. Clearly, petitioner is estopped from questioning the jurisdiction of the RTC. We note that the decisions of the RTC and of the Court of Appeals discussed extensively the merits of the case, which has been pending for nearly ten (10) years. It was handled by two (2) judges and its records had to be reconstituted after the fire that gutted 24 the courthouse. If we were to accede to petitioners prayer, all the effort, time and expenses of parties who participated in the litigation would be wasted. Quite obviously, petitioner wants a repetition of the process hoping for the possibility of a reversal of the decision. The Court will not countenance such practice. Significantly, the Technical Report on Verification Survey by Engineer Robert C. Pangyarihan, which was attached to and formed 26 part of the records, contained a tax declaration indicating that the subject property has an assessed value of P110,220.00. It is basic that the tax declaration indicating the assessed value of the property enjoys the presumption of regularity as it has been issued 27 by the proper government agency. Under Republic Act No. 7691, the RTC in fact has jurisdiction over the subject matter of the action.1avvphi1> Taking into consideration the decision of the MTC proclaiming that the case is one for accion publiciana and the assessed value of the property as evidenced by the case records, jurisdiction pertains, rightfully so, with the RTC. Perforce, the petition should be denied. WHEREFORE, the decision of the Court of Appeals dated 21 April 2008, affirming the judgment of the Regional Trial Court of Binangonan, Rizal dated 5 March 2007, is AFFIRMED. SO ORDERED.
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Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 171092 March 15, 2010

EDNA DIAGO LHUILLIER, Petitioner, vs. BRITISH AIRWAYS, Respondent. DECISION DEL CASTILLO, J.: Jurisdictio est potestas de publico introducta cum necessitate juris dicendi. Jurisdiction is a power introduced for the public good, on 1 account of the necessity of dispensing justice. Factual Antecedents On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint for damages against respondent British Airways before the Regional Trial Court (RTC) of Makati City. She alleged that on February 28, 2005, she took respondents flight 548 from Londo n, United Kingdom to Rome, Italy. Once on board, she allegedly requested Julian Halliday (Halliday), one of the respondents flight attendants, to assist her in placing her hand-carried luggage in the overhead bin. However, Halliday allegedly refused to help and assist her, and even sarcastically remarked that "If I were to help all 300 passengers in this flight, I would have a broken back!" Petitioner further alleged that when the plane was about to land in Rome, Italy, another flight attendant, Nickolas Kerrigan (Kerrigan), singled her out from among all the passengers in the business class section to lecture on plane safety. Allegedly, Kerrigan made her appear to the other passengers to be ignorant, uneducated, stupid, and in need of lecturing on the safety rules and regulations of the plane. Affronted, petitioner assured Kerrigan that she knew the planes safety regulations being a frequent traveler. Thereupon, Kerrigan allegedly thrust his face a mere few centimeters away from that of the petitioner and menacingly told her that "We dont like your attitude." Upon arrival in Rome, petitioner complained to respondents ground manager and demanded an apology. However, the latter declared that the flight stewards were "only doing their job." Thus, petitioner filed the complaint for damages, praying that respondent be ordered to pay P5 million as moral damages, P2 million as nominal damages, P1 million as exemplary damages, P300,000.00 as attorneys fees, P200,000.00 as litigation expenses, and cost of the suit. On May 16, 2005, summons, together with a copy of the complaint, was served on the respondent through Violeta Echevarria, 3 General Manager of Euro-Philippine Airline Services, Inc. On May 30, 2005, respondent, by way of special appearance through counsel, filed a Motion to Dismiss on grounds of lack of jurisdiction over the case and over the person of the respondent. Respondent alleged that only the courts of London, United 5 Kingdom or Rome, Italy, have jurisdiction over the complaint for damages pursuant to the Warsaw Convention, Article 28(1) of which provides: An action for damages must be brought at the option of the plaintiff, either before the court of domicile of the carrier or his principal place of business, or where he has a place of business through which the contract has been made, or before the court of the place of destination. Thus, since a) respondent is domiciled in London; b) respondents principal place of business is in London; c) petitioner bou ght her 6 ticket in Italy (through Jeepney Travel S.A.S, in Rome); and d) Rome, Italy is petitioners place of destination, then it follows that the complaint should only be filed in the proper courts of London, United Kingdom or Rome, Italy.
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Likewise, it was alleged that the case must be dismissed for lack of jurisdiction over the person of the respondent because the summons was erroneously served on Euro-Philippine Airline Services, Inc. which is not its resident agent in the Philippines. On June 3, 2005, the trial court issued an Order requiring herein petitioner to file her Comment/Opposition on the Motion to Dismiss 7 within 10 days from notice thereof, and for respondent to file a Reply thereon. Instead of filing a Comment/Opposition, petitioner 8 filed on June 27, 2005, an Urgent Ex-Parte Motion to Admit Formal Amendment to the Complaint and Issuance of Alias Summons. Petitioner alleged that upon verification with the Securities and Exchange Commission, she found out that the resident agent of respondent in the Philippines is Alonzo Q. Ancheta. Subsequently, on September 9, 2005, petitioner filed a Motion to Resolve 9 Pending Incident and Opposition to Motion to Dismiss. Ruling of the Regional Trial Court On October 14, 2005, the RTC of Makati City, Branch 132, issued an Order granting respondents Motion to Dismiss. It ruled that: The Court sympathizes with the alleged ill-treatment suffered by the plaintiff. However, our Courts have to apply the principles of international law, and are bound by treaty stipulations entered into by the Philippines which form part of the law of the land. One of this is the Warsaw Convention. Being a signatory thereto, the Philippines adheres to its stipulations and is bound by its provisions including the place where actions involving damages to plaintiff is to be instituted, as provided for under Article 28(1) thereof. The Court finds no justifiable reason to deviate from the indicated limitations as it will only run counter to the provisions of the Warsaw Convention. Said adherence is in consonance with the comity of nations and deviation from it can only be effected through proper denunciation as enunciated in the Santos case (ibid). Since the Philippines is not the place of domicile of the defendant nor is it the principal place of business, our courts are thus divested of jurisdiction over cases for damages. Neither was plaintiffs ticket issued in this country nor was her destination Manila but Rome in Italy. It bears stressing however, that referral to the court of proper jurisdiction does not constitute constructive denial of plaintiffs right to have access to our courts since the Warsaw Convention itself provided for jurisdiction over cases arising from international transportation. Said treaty stipulations must be complied with in good faith following the time honored principle of pacta sunt servanda. The resolution of the propriety of service of summons is rendered moot by the Courts want of jurisdiction over the instant c ase. WHEREFORE, premises considered, the present Motion to Dismiss is hereby GRANTED and this case is hereby ordered DISMISSED. Petitioner filed a Motion for Reconsideration but the motion was denied in an Order dated January 4, 2006. Petitioner now comes directly before us on a Petition for Review on Certiorari on pure questions of law, raising the following issues: Issues I. WHETHER X X X PHILIPPINE COURTs HAVE JURISDICTION OVER A TORTIOUS CONDUCT COMMITTED AGAINST A FILIPINO CITIZEN AND RESIDENT BY AIRLINE PERSONNEL OF A FOREIGN CARRIER TRAVELLING BEYOND THE TERRITORIAL LIMIT OF ANY FOREIGN COUNTRY; AND THUS IS OUTSIDE THE AMBIT OF THE WARSAW CONVENTION. II. WHETHER x x x RESPONDENT AIR CARRIER OF PASSENGERS, IN FILING ITS MOTION TO DISMISS BASED ON LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE CASE AND OVER ITS PERSON MAY BE DEEMED AS HAVING IN FACT AND IN LAW SUBMITTED ITSELF TO THE JURISDICTION OF THE LOWER COURT, ESPECIALLY SO, WHEN THE VERY LAWYER ARGUING FOR IT IS HIMSELF THE RESIDENT AGENT OF THE CARRIER. Petitioners Arguments Petitioner argues that her cause of action arose not from the contract of carriage, but from the tortious conduct committed by airline personnel of respondent in violation of the provisions of the Civil Code on Human Relations. Since her cause of action was not predicated on the contract of carriage, petitioner asserts that she has the option to pursue this case in this jurisdiction pursuant to Philippine laws. Respondents Arguments
11 10

In contrast, respondent maintains that petitioners claim for damages fell within the ambit of Article 28(1) of the Warsaw Convention. As such, the same can only be filed before the courts of London, United Kingdom or Rome, Italy. Our Ruling The petition is without merit. The Warsaw Convention has the force and effect of law in this country. It is settled that the Warsaw Convention has the force and effect of law in this country. In Santos III v. Northwest Orient Airlines, we held that: The Republic of the Philippines is a party to the Convention for the Unification of Certain Rules Relating to International Transportation by Air, otherwise known as the Warsaw Convention. It took effect on February 13, 1933. The Convention was concurred in by the Senate, through its Resolution No. 19, on May 16, 1950. The Philippine instrument of accession was signed by President Elpidio Quirino on October 13, 1950, and was deposited with the Polish government on November 9, 1950. The Convention became applicable to the Philippines on February 9, 1951. On September 23, 1955, President Ramon Magsaysay issued Proclamation No. 201, declaring our formal adherence thereto, "to the end that the same and every article and clause thereof may be observed and fulfilled in good faith by the Republic of the Philippines and the citizens thereof." The Convention is thus a treaty commitment voluntarily assumed by the Philippine government and, as such, has the force and 13 effect of law in this country. The Warsaw Convention applies because the air travel, where the alleged tortious conduct occurred, was between the United Kingdom and Italy, which are both signatories to the Warsaw Convention. Article 1 of the Warsaw Convention provides: 1. This Convention applies to all international carriage of persons, luggage or goods performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking. 2. For the purposes of this Convention the expression "international carriage" means any carriage in which, according to the contract made by the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two High Contracting Parties, or within the territory of a single High Contracting Party, if there is an agreed stopping place within a territory subject to the sovereignty, suzerainty, mandate or authority of another Power, even though that Power is not a party to this Convention. A carriage without such an agreed stopping place between territories subject to the sovereignty, suzerainty, mandate or authority of the same High Contracting Party is not deemed to be international for the purposes of this Convention. (Emphasis supplied) Thus, when the place of departure and the place of destination in a contract of carriage are situated within the territories of two High Contracting Parties, said carriage is deemed an "international carriage". The High Contracting Parties referred to herein were 14 the signatories to the Warsaw Convention and those which subsequently adhered to it. In the case at bench, petitioners place of departure was London, United Kingdom while her place of destination was Rome, Italy. 16 17 Both the United Kingdom and Italy signed and ratified the Warsaw Convention. As such, the transport of the petitioner is deemed to be an "international carriage" within the contemplation of the Warsaw Convention. Since the Warsaw Convention applies in the instant case, then the jurisdiction over the subject matter of the action is governed by the provisions of the Warsaw Convention. Under Article 28(1) of the Warsaw Convention, the plaintiff may bring the action for damages before 1. the court where the carrier is domiciled; 2. the court where the carrier has its principal place of business;
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3. the court where the carrier has an establishment by which the contract has been made; or 4. the court of the place of destination. In this case, it is not disputed that respondent is a British corporation domiciled in London, United Kingdom with London as its principal place of business. Hence, under the first and second jurisdictional rules, the petitioner may bring her case before the courts of London in the United Kingdom. In the passenger ticket and baggage check presented by both the petitioner and respondent, it appears that the ticket was issued in Rome, Italy. Consequently, under the third jurisdictional rule, the petitioner has the option to bring her case before the courts of Rome in Italy. Finally, both the petitioner and respondent aver that the place of destination is Rome, Italy, which is properly designated given the routing presented in the said passenger ticket and baggage check. Accordingly, petitioner may bring her action before the courts of Rome, Italy. We thus find that the RTC of Makati correctly ruled that it does not have jurisdiction over the case filed by the petitioner. Santos III v. Northwest Orient Airlines applies in this case. Petitioner contends that Santos III v. Northwest Orient Airlines cited by the trial court is inapplicable to the present controversy since the facts thereof are not similar with the instant case. We are not persuaded. In Santos III v. Northwest Orient Airlines, Augusto Santos III, a resident of the Philippines, purchased a ticket from Northwest Orient Airlines in San Francisco, for transport between San Francisco and Manila via Tokyo and back to San Francisco. He was wait-listed in the Tokyo to Manila segment of his ticket, despite his prior reservation. Contending that Northwest Orient Airlines acted in bad faith and discriminated against him when it canceled his confirmed reservation and gave his seat to someone who had no better right to it, Augusto Santos III sued the carrier for damages before the RTC. Northwest Orient Airlines moved to dismiss the complaint on ground of lack of jurisdiction citing Article 28(1) of the Warsaw Convention. The trial court granted the motion which ruling was affirmed by the Court of Appeals. When the case was brought before us, we denied the petition holding that under Article 28(1) of the Warsaw Convention, Augusto Santos III must prosecute his claim in the United States, that place being the (1) domicile of the Northwest Orient Airlines; (2) principal office of the carrier; (3) place where contract had been made (San Francisco); and (4) place of 21 destination (San Francisco). We further held that Article 28(1) of the Warsaw Convention is jurisdictional in character. Thus: A number of reasons tends to support the characterization of Article 28(1) as a jurisdiction and not a venue provision. First, the wording of Article 32, which indicates the places where the action for damages "must" be brought, underscores the mandatory nature of Article 28(1). Second, this characterization is consistent with one of the objectives of the Convention, which is to "regulate in a uniform manner the conditions of international transportation by air." Third, the Convention does not contain any provision prescribing rules of jurisdiction other than Article 28(1), which means that the phrase "rules as to jurisdiction" used in Article 32 must refer only to Article 28(1). In fact, the last sentence of Article 32 specifically deals with the exclusive enumeration in Article 28(1) as "jurisdictions," which, as such, cannot be left to the will of the parties regardless of the time when the damage occurred. xxxx In other words, where the matter is governed by the Warsaw Convention, jurisdiction takes on a dual concept. Jurisdiction in the international sense must be established in accordance with Article 28(1) of the Warsaw Convention, following which the jurisdiction of a particular court must be established pursuant to the applicable domestic law. Only after the question of which court has jurisdiction is determined will the issue of venue be taken up. This second question shall be governed by the law of the court to 22 which the case is submitted. Contrary to the contention of petitioner, Santos III v. Northwest Orient Airlines is analogous to the instant case because (1) the 24 domicile of respondent is London, United Kingdom; (2) the principal office of respondent airline is likewise in London, United 25 26 27 Kingdom; (3) the ticket was purchased in Rome, Italy; and (4) the place of destination is Rome, Italy. In addition, petitioner 28 29 30 based her complaint on Article 2176 of the Civil Code on quasi-delict and Articles 19 and 21 of the Civil Code on Human 31 Relations. In Santos III v. Northwest Orient Airlines, Augusto Santos III similarly posited that Article 28 (1) of the Warsaw Convention did not apply if the action is based on tort. Hence, contrary to the contention of the petitioner, the factual setting of 32 Santos III v. Northwest Orient Airlines and the instant case are parallel on the material points.
23 20 19 18

Tortious conduct as ground for the petitioners complaint is within the purview of the Warsaw Convention. Petitioner contends that in Santos III v. Northwest Orient Airlines, the cause of action was based on a breach of contract while her cause of action arose from the tortious conduct of the airline personnel and violation of the Civil Code provisions on Human 34 35 Relations. In addition, she claims that our pronouncement in Santos III v. Northwest Orient Airlines that "the allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the comprehension of the Warsaw Convention," is more of an 36 obiter dictum rather than the ratio decidendi. She maintains that the fact that said acts occurred aboard a plane is merely 37 incidental, if not irrelevant. We disagree with the position taken by the petitioner. Black defines obiter dictum as "an opinion entirely unnecessary for the 38 39 decision of the case" and thus "are not binding as precedent." In Santos III v. Northwest Orient Airlines, Augusto Santos III categorically put in issue the applicability of Article 28(1) of the Warsaw Convention if the action is based on tort. In the said case, we held that the allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the realm of the Warsaw Convention. In fact, our ruling that a cause of action based on tort did not bring the case outside the sphere of the Warsaw Convention was our ratio decidendi in disposing of the specific issue presented by Augusto Santos III. Clearly, the contention of the herein petitioner that the said ruling is an obiter dictum is without basis. Relevant to this particular issue is the case of Carey v. United Airlines, where the passenger filed an action against the airline arising from an incident involving the former and the airlines flight attendant during an international flight resulting to a heated exchange which included insults and profanity. The United States Court of Appeals (9th Circuit) held that the "passenger's action against the airline carrier arising from alleged confrontational incident between passenger and flight attendant on international flight was governed exclusively by the Warsaw Convention, even though the incident allegedly involved intentional misconduct by 41 the flight attendant." In Bloom v. Alaska Airlines, the passenger brought nine causes of action against the airline in the state court, arising from a confrontation with the flight attendant during an international flight to Mexico. The United States Court of Appeals (9th Circuit) held that the "Warsaw Convention governs actions arising from international air travel and provides the exclusive remedy for conduct which falls within its provisions." It further held that the said Convention "created no exception for an injury suffered as a result of 43 intentional conduct" which in that case involved a claim for intentional infliction of emotional distress. It is thus settled that allegations of tortious conduct committed against an airline passenger during the course of the international carriage do not bring the case outside the ambit of the Warsaw Convention. Respondent, in seeking remedies from the trial court through special appearance of counsel, is not deemed to have voluntarily submitted itself to the jurisdiction of the trial court. Petitioner argues that respondent has effectively submitted itself to the jurisdiction of the trial court when the latter stated in its Comment/Opposition to the Motion for Reconsideration that "Defendant [is at a loss] x x x how the plaintiff arrived at her erroneous impression that it is/was Euro-Philippines Airlines Services, Inc. that has been making a special appearance since x x x British Airways x x x has been clearly specifying in all the pleadings that it has filed with this Honorable Court that it is the one making a special 44 appearance." In refuting the contention of petitioner, respondent cited La Naval Drug Corporation v. Court of Appeals where we held that even if a party "challenges the jurisdiction of the court over his person, as by reason of absence or defective service of summons, and he also invokes other grounds for the dismissal of the action under Rule 16, he is not deemed to be in estoppel or to have waived his 46 objection to the jurisdiction over his person." This issue has been squarely passed upon in the recent case of Garcia v. Sandiganbayan, where we reiterated our ruling in La Naval 48 Drug Corporation v. Court of Appeals and elucidated thus: Special Appearance to Question a Courts Jurisdiction Is Not Voluntary Appearance The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly provides:
47 45 42 40 33

Sec. 20. Voluntary appearance. The defendants voluntary appearance in the action shall be equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance. Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his person, together with other grounds raised therein, is not deemed to have appeared voluntarily before the court. What the rule on voluntary appearance the first sentence of the above-quoted rule means is that the voluntary appearance of the defendant in court is without qualification, in which case he is deemed to have waived his defense of lack of jurisdiction over his person due to improper service of summons. The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she voluntarily appeared without qualification. Petitioner filed the following pleadings in Forfeiture I: (a) motion to dismiss; (b) motion for reconsideration and/or to admit answer; (c) second motion for reconsideration; (d) motion to consolidate forfeiture case with plunder case; and (e) motion to dismiss and/or to quash Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to quash Forfeiture II; and (b) motion for partial reconsideration. The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely for special appearance with the purpose of challenging the jurisdiction of the SB over her person and that of her three children. Petitioner asserts therein that SB did not acquire jurisdiction over her person and of her three children for lack of valid service of summons through improvident substituted service of summons in both Forfeiture I and Forfeiture II. This stance the petitioner never abandoned when she filed her motions for reconsideration, even with a prayer to admit their attached Answer Ex Abundante Ad Cautelam dated January 22, 2005 setting forth affirmative defenses with a claim for damages. And the other subsequent pleadings, likewise, did not abandon her stance and defense of lack of jurisdiction due to improper substituted services of summons in the forfeiture cases. Evidently, from the foregoing Sec. 20, Rule 14 of the 1997 Revised Rules on Civil Procedure, petitioner and her sons did not voluntarily appear before the SB constitutive of or equivalent to service of summons. Moreover, the leading La Naval Drug Corp. v. Court of Appeals applies to the instant case. Said case elucidates the current view in our jurisdiction that a special appearance before the court challenging its jurisdiction over the person through a motion to dismiss even if the movant invokes other groundsis not tantamount to estoppel or a waiver by the movant of his objection to jurisdiction over his person; and such is not constitutive of a voluntary submission to the jurisdiction of the court. 1avvphi1 Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB to cure the defective substituted services of summons. They are, therefore, not estopped from questioning the jurisdiction of the SB over their persons nor are they deemed to have waived such defense of lack of jurisdiction. Consequently, there being no valid substituted services of summons made, the SB did not acquire jurisdiction over the persons of petitioner and her children. And perforce, the proceedings in the subject forfeiture cases, insofar as petitioner and her three children are concerned, are null and void for lack of jurisdiction. (Emphasis supplied) In this case, the special appearance of the counsel of respondent in filing the Motion to Dismiss and other pleadings before the trial court cannot be deemed to be voluntary submission to the jurisdiction of the said trial court. We hence disagree with the contention of the petitioner and rule that there was no voluntary appearance before the trial court that could constitute estoppel or a waiver of respondents objection to jurisdiction over its person. WHEREFORE, the petition is DENIED. The October 14, 2005 Order of the Regional Trial Court of Makati City, Branch 132, dismissing the complaint for lack of jurisdiction, is AFFIRMED. SO ORDERED. NOTES: Judgment; obiter dictum. Petitioner contends that in Santos III vs. Northwest Orient Airlines, the cause of action was based on a breach of contract while her cause of action arose from the tortious conduct of the airline personnel and violation of the Civil Code provisions on Human Relations. In addition, she claims that our pronouncement in Santos III vs. Northwest Orient Airlines that the allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the comprehension of the Warsaw Convention, is more of

an obiter dictum rather than the ratio decidendi. She maintains that the fact that said acts occurred aboard a plane is merely incidental, if not irrelevant. We disagree with the position taken by the petitioner. Black defines obiter dictum as an opinion entirely unnecessary for the decision of the case and thus are not binding as precedent. In Santos III vs. Northwest Orient Airlines, Augusto Santos III categorically put in issue the applicability of Article 28(1) of the Warsaw Convention if the action is based on tort. In the said case, we held that the allegation of willful misconduct resulting in a tort is insufficient to exclude the case from the realm of the Warsaw Convention. In fact, our ruling that a cause of action based on tort did not bring the case outside the sphere of the Warsaw Convention was our ratio decidendi in disposing of the specific issue presented by Augusto Santos III. Clearly, the contention of the herein petitioner that the said ruling is an obiter dictum is without basis. Edna Diago Lhuillier vs. British Airways, G.R. No. 171092, March 15, 2010 Judgment; obiter dictum. We explained the concept of an obiter dictum in Villanueva vs. Court of Appeals by saying: It has been held that an adjudication on any point within the issues presented by the case cannot be considered as obiter dictum, and this rule applies to all pertinent questions, although only incidentally involved, which are presented and decided in the regular course of the consideration of the case, and led up to the final conclusion, and to any statement as to matter on which the decision is predicated. Accordingly, a point expressly decided does not lose its value as a precedent because the disposition of the case is , or might have been, made on some other ground, or even though, by reason of other points in the case, the result reached might have been the same if the court had held, on the particular point, otherwise than it did. A decision which the case could have turned on is not regarded as obiter dictum merely because, owing to the disposal of the contention, it was necessary to consider another question, nor can an additional reason in a decision, brought forward after the case has been disposed of on one ground, be regarded as dicta.

APRIL 2010 CIVIL PROCEDURE Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 160270 April 23, 2010

SUBIC BAY METROPOLITAN AUTHORITY, Petitioner, vs. MERLINO E. RODRIGUEZ and WIRA INTERNATIONAL TRADING CORP., both represented herein by HILDA M. BACANI, as their authorized representative, Respondents. DECISION CARPIO, J.: The Case This is a petition for review of the Court of Appeals (CA) Decision dated 20 June 2003 and Resolution dated 8 October 2003 in CA3 G.R. SP No. 74989. The CA dismissed the petition for certiorari and prohibition with prayer for temporary restraining order, preliminary or permanent injunction filed by Subic Bay Metropolitan Authority (SBMA) against Judge Ramon S. Caguioa of the Regional Trial Court (RTC) of Olongapo City, Branch 74, and Merlino E. Rodriguez and Wira International Trading Corporation (WIRA), both represented by Hilda Bacani. The CA also affirmed the Orders dated 21 November 2002 and 27 November 2002 issued by the RTC. The Antecedent Facts The factual and procedural antecedents of this case, as culled from the records, are as follows: On 29 September 2001, a cargo shipment described as "agricultural product" and valued at US$6,000 arrived at the Port of Subic, 4 Subic Bay Freeport Zone. On the basis of its declared value, the shipment was assessed customs duties and taxes totaling P57,101 5 which were paid by respondent WIRA, the shipments consignee. On 23 October 2001, Raval Manalas, Acting COO III of the Bureau of Customs, Port of Subic (BOC Subic Port), issued a Memorandum addressed to the BOC Subic Port District Collector, stating that upon examination, the subject shipment was found to contain rice. The Memorandum further stated as follows: that the importer claimed there was a misshipment since it also had a pending order for rice; that the "warehousing entry" was amended to reflect the change in description from "agricultural product" to rice; that the shipment, as a warehoused cargo inside the freeport zone, was duty and tax free, and was not recommended for any imposition of penalty and surcharge; that the consumption entry was changed to reflect a shipment of rice; and that the consumption entry, together with supporting documents belatedly received by the importer, was submitted to the bank although not yet filed with the 6 BOC. On 24 October 2001, Hilda Bacani (respondents authorized representative) wrote BOC Subic Port District Collector Billy Bibit, claiming that she was the representative of Metro Star Rice Mill (Metro Star), the importer of the subject cargo. She stated that there was a "misshipment" of cargo which actually contained rice, and that Metro Star is an authorized importer of rice as provided in the permits issued by the National Food Authority (NFA). Bacani requested that the "misshipment" be upgraded from "agricultural 7 product" to a shipment of rice, and at the same time manifested willingness to pay the appropriate duties and taxes. The following day, or on 25 October 2001, the BOC issued Hold Order No. 14/C1/2001 1025-101, directing BOC Subic Port officers to (1) hold the 8 delivery of the shipment, and (2) to cause its transfer to the security warehouse. On 26 October 2001, respondent WIRA, as the consignee of the shipment, paid the amount of P259,874 to the BOC representing 9 additional duties and taxes for the upgraded shipment.
1 2

On 30 October 2001, BOC Commissioner Titus Villanueva issued a directive stating as follows: 2nd Indorsement 30 October 2001

10

Returned to the District Collector of Customs, Port of Subic, the within (sic) Import Entry No. C 2550-01 covering the shipment of 2,000 bags Thai Rice 25% broken consigned to WIRA INTL TRADING CORPORATION (METRO STAR RICE MILL) ex MV Resolution V0139 with NFA Import Permit IP SN 000032 and IP SN 000033 both dated on 13 September 2001 duly issued by the Administrator, National Food Authority. Accordingly, the same may be released subject to payment of duties and taxes based on an upgraded value as provided for by the National Food Authority at $153.00/MT and compliance with all existing rules and regulations. Further, ensure cancellation of NFA Import Permit IP SN 000032 and IP SN 000033, to prevent the same from being recycled. Report to this office your compliance of herein directives. Be guided accordingly. (Sgd.) Titus Villanueva, CESO 1 Commissioner In accordance with the shipment upgrade, respondent WIRA paid on 28 November 2001 a further amount of P206,212 as customs 11 duties and taxes. On 4 December 2001, Fertony G. Marcelo, Officer-in-Charge of the Cash Division of BOC Subic Port issued a 12 certification/letter addressed to Mr. Augusto Canlas, General Manager of the Seaport Department, stating thus: This is to certify that the undersigned Collecting Officer validate[d] a revenue of Php 523,187.00 from above-mentioned 13 importation covered by O.R. Numbers 8083840 dated October 23, 2001, 8084068 dated October 26, 2001 and 8165208 dated November 28, 2001, respectively. And a Gate Pass was issued on December 3, 2001 with signature of Mr. Percito V. Lozada, Chief Assessment in behalf of the District Collector Billy C. Bibit. (Sgd.) Fertoni G. Marcelo Officer-in-charge, Cash Division (Collecting Officer) Noted: (Sgd. For) Coll. Billy C. Bibit Despite the above certification/letter, petitioner SBMA, through Seaport Department General Manager Augusto Canlas, refused to allow the release of the rice shipment. Hence, on 11 June 2002, respondents filed with the RTC of Olongapo City, a complaint for Injunction and Damages with prayer for issuance of Writ of Preliminary Prohibitory and Mandatory Injunction and/or Temporary Restraining Order against petitioner SBMA and Augusto L. Canlas, and the case was docketed as Civil Case No. 261-0-2002. The succeeding events were summarized by the trial court and reproduced by the Court of Appeals, as follows:
14

1. On June 11, 2002, a complaint for Injunction and Damages with prayer for issuance of Writ of Preliminary Prohibitory and Mandatory Injunction and/or Temporary Restraining Order was filed by the plaintiff/petitioners Mernilo E. Rodriguez, doing business under the name and style "Metro Star Rice Mill," represented by Attorney-infact Hilda M. Bacani, and WIRA International Trading, Inc. likewise represented by Hilda M. Bacani as authorized representative, against Subic Bay Metropolitan Authority (SBMA) and Augusto L. Canlas, in his personal and official capacity as General Manager of the Seaport Department of said SBMA. The complaint was docketed as Civil Case No. 261-0-[2002]. 2. On June 13, 2002, an Order was issued by the Executive Judge of the Regional Trial Court of Olongapo City, Branch 72, where plaintiffs/petitioners application for injunctive relief was granted. Said order restrained the

defendants/respondents for seventy-two (72) hours, from interfering with plaintiffs/petitioners right to enter the premises of the CCA compound located within the Bureau of Customs territory and authority within the Subic Bay Freeport Zone (SBFZ), Olongapo City, and to withdraw and release from said CCA warehouse the rice importation of plaintiffs and to take and possess the said imported rice consisting of 2,000 bags; and from interfering in any manner whatsoever with plaintiffs/petitioners rights and possession over the aforesaid impo rted rice. On the same day also, June 13, 2002, the raffle of the case was set on June 18, 2002 at 8:30 in the morning. 3. Copy of the complaint with summons together with aforesaid Temporary Restraining Order (TRO) was served by Sheriff Leopoldo Rabanes and Leandro Madarang of the Office of the Clerk of Court of the Regional Trial Court, Olongapo City, upon the defendants/respondents on the same day, June 13, 2002, at around 3:40 in the afternoon as shown by the Sheriff's return of service (Exh. "A-3" and Exh. "B-1") typed and found in the same pleadings. 4. The following day, on June 14, 2002, the same Sheriffs went back to defendants/respondents' office to determine whether or not the TRO issued by Branch 72 and served by them was followed. They were however, met by defendants/respondents Attys. Abella and Katalbas, in the office of defendant/respondent Canlas, who after much discussion, refused to honor the TRO issued by Branch 72 alleging among other[s], that said Order was illegal and therefore, will not be followed by the defendants/respondents. 5. Unsuccessful in their efforts, the Sheriffs of this Court prepared and filed their report dated June 17, 2002 outlining therein what transpired on June 14, 2002 and the circumstances surrounding the refusal by defendants/respondents to honor the TRO issued by Branch 72-RTC, Olongapo City (Exh. "C"). On the same day also, June 17, 2002, plaintiffs/petitioners-movants filed in the instant case a verified indirect contempt charge alleging therein that because of the defiance exhibited by the defendants/respondents[,] specifically Augusto L. Canlas, Attys. Francisco A. Abella, Jr. and Rizal V. Katalbas. Jr.[,] in not honoring the court's TRO, they prayed that said defendants/respondents, after due notice and hearing, be declared and adjudged guilty of indirect contempt committed against the court for having directly failed and refused to comply with the TRO dated June 13, 2002, and that they be punished with imprisonment and/or fine in accordance with Rule 71 of the 1997 Rules of Civil Procedure. 6. On June 18, 2002, the case was raffled to Branch 74 of herein court.
15

7. On June 24, 2002, a comment and/or opposition to the verified indirect contempt charge was filed by the defendants/respondents alleging therein that they cannot be cited for contempt of court because they had legal basis to refuse to honor the TRO.1avvphi1 8. Trial was conducted by the court in the indirect contempt charge on July 12, 2002 as per the courts Order of even date. Plaintiffs/petitioners presented Sheriff Leopoldo Rabanes who testified on direct examination. During the August 20, 2002 hearing, Sheriff Rabanes was cross-examined. Thereafter, the testimony of his co-Sheriff Leandro Madarang was stipulated upon the parties considering that his testimony would only corroborate in all principal points the testimony of Sheriff Rabanes. 9. On that same hearing also[,] plaintiffs/petitioners formally offered their evidence and rested. Defendants/respondents[,] however, in the meantime had earlier filed a motion on August 1, 2002[,] asking leave of court to file a motion to dismiss with attached "Motion to Dismiss" and in the said August 20, 2002 hearing, defendants/respondents further manifested that they were adopting their legal arguments marshalled in the said motion to dismiss insofar as the indirect contempt charge was concerned. 10. Thereafter, on August 29, 2002, defendants/respondents filed a manifestation with formal offer of evidence in the indirect contempt case essentially alleging that it is the Bureau of Customs that has jurisdiction over this case in view of a Warrant of Seizure and Detention case filed against the plaintiff/petitioners and denominated as Seizure Identification No. 200[2]-10. Therefore, since it is the Bureau of Customs that has jurisdiction, the indirect contempt case has no legal leg to stand on and as such, defendants/respondents had the right to refuse to comply with the subject TRO in this case. 11. With the said formal offer of exhibits filed by the defendants/respondents, the indirect contempt case was considered submitted for decision by this court.

In addition to the foregoing, on 19 July 2002, petitioner SBMA and Augusto Canlas filed their Answer to the Complaint for Injunction 16 and Damages with Counterclaim. On 1 August 2002, petitioner SBMA, Augusto Canlas, Francisco A. Abella, Jr. and Rizal V. Katalbas, Jr. filed a Consolidated Motion to Dismiss which sought the dismissal of (1) Civil Case No. 261-0-2002 (Complaint for Injunction and Damages) and (2) Civil Case No. 262-0-2002 (Petition for Indirect Contempt), alleging the existence of a Warrant of Seizure and 17 Detention, dated 22 May 2002, issued against the subject rice shipment. On 21 November 2002, the RTC issued an Order on the indirect contempt case, stating thus: WHEREFORE, foregoing considered, judgment is hereby rendered finding all of the defendants/respondents guilty of indirect contempt of court. Atty. Francisco A. Abella, Jr. is sentenced to suffer the penalty of imprisonment of ten (10) days and fined the amount of P10,000.00 Atty. Rizal V. Katalbas, Jr. is sentenced to pay a fine of P10,000.00. Augusto L. Canlas is sentenced to pay a fine of P5,000.00. Subsidiary imprisonment in case of insolvency for all. Let a warrant of arrest issue against Atty. Francisco A. Abella, Jr. The Clerk of Court, Atty. John V. Aquino, of the Regional Trial Court, Olongapo City is directed to collect the corresponding fine from each of the respondents immediately upon receipt of this order and to report the same to the court. SO ORDERED.
18

On 27 November 2002, the RTC issued another Order considering the pending incidents in the injunction case. The RTC held that there should be prior determination by the BOC on whether the 2,000 bags of imported rice were smuggled, and thus issued the following order: WHEREFORE, the Bureau of Customs, Customs District XIII, Port of Subic, Olongapo City through Atty. Titus A. Sangil, Chief, Law Division and Deputy Collector for Administration is hereby directed to resolve Seizure Identification Case No. 2002-10 and submit to the court its resolution therewith, within fifteen (15) days from receipt of this order. Meantime, the proceedings in this case are suspended until the court is in receipt of the resolution of the Bureau of Customs. Furnish a copy of this order to Atty. Titus A. Sangil at his abovecited office address. SO ORDERED.
19

The Court of Appeals Ruling Petitioner filed with the CA a Petition for Certiorari and Prohibition with prayer for Temporary Restraining Order and Preliminary or Permanent Injunction seeking to nullify and set aside the RTC Orders dated 21 November 2002 and 27 November 2002. On 20 June 2003, the CA rendered a Decision dismissing the petition for lack of merit and affirming the Orders issued by the RTC. We quote the dispositive portion of the CA decision below. WHEREFORE, premises considered, the assailed Orders dated November 21, 2002 and November 27, 2002 are hereby AFFIRMED in toto and the present petition is hereby DENIED DUE COURSE and accordingly DISMISSED for lack of merit. SO ORDERED.
20

Petitioners Motion for Reconsideration was denied by the CA in its Resolution of 8 October 2003. Hence, this appeal. The Issue

21

The issue for resolution in this case is whether the CA erred in affirming the RTC Orders dated 21 November 2002 and 27 November 2002. The Courts Ruling We find the appeal meritorious.

As a rule, actions for injunction and damages lie within the jurisdiction of the RTC pursuant to Section 19 of Batas Pambansa Blg. 129 22 (BP 129), otherwise known as the "Judiciary Reorganization Act of 1980," as amended by Republic Act (RA) No. 7691. An action for injunction is a suit which has for its purpose the enjoinment of the defendant, perpetually or for a particular time, from 23 the commission or continuance of a specific act, or his compulsion to continue performance of a particular act. It has an independent existence, and is distinct from the ancillary remedy of preliminary injunction which cannot exist except only as a part or 24 an incident of an independent action or proceeding. In an action for injunction, the auxiliary remedy of preliminary injunction, 25 prohibitory or mandatory, may issue. Until the propriety of granting an injunction, temporary or perpetual, is determined, the court (i.e., the RTC in this case) may issue a 26 temporary restraining order. A TRO is an interlocutory order or writ issued by the court as a restraint on the defendant until the propriety of granting an injunction can be determined, thus going no further in its operation than to preserve the status quo until 27 that determination. A TRO is not intended to operate as an injunction pendente lite, and should not in effect determine the issues 28 involved before the parties can have their day in court. Petitioner alleges that the RTC of Olongapo City has no jurisdiction over the action for injunction and damages filed by respondents on 11 June 2002 as said action is within the exclusive original jurisdiction of the BOC pursuant to Section 602 of Republic Act No. 1937, otherwise known as the "Tariff and Customs Code of the Philippines," as amended. Section 602 provides, thus: Sec. 602. Functions of the Bureau.- The general duties, powers and jurisdiction of the bureau shall include: xxx g. Exercise exclusive original jurisdiction over seizure and forfeiture cases under the tariff and customs laws. Petitioner contends that the imported 2,000 bags of rice were in the actual physical control and possession of the BOC as early as 25 October 2001, by virtue of the BOC Subic Port Hold Order of even date, and of the BOC Warrant of Seizure and Detention dated 22 May 2002. As such, the BOC had acquired exclusive original jurisdiction over the subject shipment, to the exclusion of the RTC. We agree with petitioner. It is well settled that the Collector of Customs has exclusive jurisdiction over seizure and forfeiture proceedings, and regular courts 29 cannot interfere with his exercise thereof or stifle or put it at naught. The Collector of Customs sitting in seizure and forfeiture 30 proceedings has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods. Regional trial courts are devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings 31 conducted by the BOC and to enjoin or otherwise interfere with these proceedings. Regional trial courts are precluded from 32 assuming cognizance over such matters even through petitions for certiorari, prohibition or mandamus. Verily, the rule is that from the moment imported goods are actually in the possession or control of the Customs authorities, even if no warrant for seizure or detention had previously been issued by the Collector of Customs in connection with the seizure and forfeiture proceedings, the BOC acquires exclusive jurisdiction over such imported goods for the purpose of enforcing the customs 33 laws, subject to appeal to the Court of Tax Appeals whose decisions are appealable to this Court. As we have clarified in 34 Commissioner of Customs v. Makasiar, the rule that RTCs have no review powers over such proceedings is anchored upon the policy of placing no unnecessary hindrance on the government's drive, not only to prevent smuggling and other frauds upon Customs, but more importantly, to render effective and efficient the collection of import and export duties due the State, which enables the government to carry out the functions it has been instituted to perform. Based on the records of this case, the BOC Subic Port issued a Hold Order against the subject rice shipment on 25 October 2001. However, on 30 October 2001, BOC Commissioner Titus Villanueva issued a directive to the BOC District Collector stating that the shipment "may be released subject to payment of duties and taxes based on an upgraded value x x x and compliance with all existing rules and regulations." Accordingly, respondents made additional payments of customs duties and taxes for the upgraded shipment. Consequently, on 4 December 2001, the Officer-in-Charge of the BOC Subic Port Cash Division issued a certification/letter addressed to Augusto Canlas, the General Manager of the Subic Seaport Department, stating that respondents have already paid the customs taxes and duties due on the shipment, and "a Gate Pass was issued on December 3, 2001 with signature of Mr. Percito V. Lozada, 35 36 Chief Assessment (sic) in behalf of the District Collector Billy C. Bibit." Thus, the Hold Order previously issued by the BOC had been superseded, and made ineffective, by the succeeding BOC issuances. 1avvphi1

However, BOC Subic Port District Collector Felipe A. Bartolome subsequently issued a Warrant of Seizure and Detention dated 22 May 2002 against the subject rice shipment. The warrant was issued upon recommendation made by Atty. Baltazar Morales of the 37 Customs Intelligence and Investigation Service (CIIS) on 29 April 2002. With the issuance of the warrant of seizure and detention, exclusive jurisdiction over the subject shipment was regained by the BOC. We note that the appellate court found suspicious the existence of the warrant of seizure and detention at the time of filing of the injunction and damages case with the RTC by respondents. The CA pointed out that petitioner did not mention the existence of the warrant in its Answer to the Complaint for Injunction and Damages, filed on 19 July 2002, and only mentioned the warrant in its Consolidated Motion to Dismiss [the Complaint for Injunction and Damages, and the Petition for Indirect Contempt], filed on 1 38 August 2002. We do not agree with the appellate court. Petitioner's apparent neglect to mention the warrant of seizure and detention in its Answer is insufficient to cast doubt on the existence of said warrant. Respondents filed a case for indirect contempt against Augusto L. Canlas, Atty. Francisco A. Abella, Jr., and Atty. Rizal V. Katalbas, Jr. for allegedly defying the TRO issued by the RTC in connection with the complaint for injunction and damages previously filed by respondents. Contempt constitutes disobedience to the court by setting up an opposition to its authority, justice and dignity. It signifies not only a willful disregard or disobedience of the court's orders but such conduct as tends to bring the authority of the court and the 40 administration of law into disrepute or in some manner to impede the due administration of justice. There are two kinds of contempt punishable by law: direct contempt and indirect contempt. Direct contempt is committed when a person is guilty of misbehavior in the presence of or so near a court as to obstruct or interrupt the proceedings before the same, including disrespect toward the court, offensive personalities toward others, or refusal to be sworn or to answer as a witness, or to subscribe an affidavit 41 or deposition when lawfully required to do so. Indirect contempt or constructive contempt is that which is committed out of the 42 presence of the court. Section 3 of Rule 71 of the Revised Rules of Civil Procedure includes, among the grounds for filing a case for indirect contempt, the following: Section 3. Indirect contempt to be punished after charge and hearing. After charge in writing has been filed, and an opportunity given to the accused to be heard by himself or counsel, a person guilty of any of the following acts may be punished for contempt: xxx (b) Disobedience of or resistance to a lawful writ, process, order, judgment or command of a court, or injunction granted by a court or judge, x x x (c) Any abuse of or any unlawful interference with the process or proceedings of a court not constituting direct contempt under Section 1 of this rule; (d) Any improper conduct tending, directly or indirectly, to impede, obstruct or degrade the administration of justice; xxx When the TRO issued by the RTC was served upon the SBMA officers on 13 June 2002, there was already an existing warrant of seizure and detention (dated 22 May 2002) issued by the BOC against the subject rice shipment. Thus, as far as the SBMA officers were concerned, exclusive jurisdiction over the subject shipment remained with the BOC, and the RTC had no jurisdiction over cases involving said shipment. Consequently, the SBMA officers refused to comply with the TRO issued by the RTC. Considering the foregoing circumstances, we believe that the SBMA officers may be considered to have acted in good faith when they refused to follow the TRO issued by the RTC. The SBMA officers' refusal to follow the court order was not contumacious but due to the honest belief that jurisdiction over the subject shipment remained with the BOC because of the existing warrant of seizure and detention against said shipment. Accordingly, these SBMA officers should not be held accountable for their acts which were done in good faith and not without legal basis. Thus, we hold that the RTC Order dated 21 November 2002 which found the SBMA officers guilty of indirect contempt for not complying with the RTC's TRO should be invalidated.
39

Finally, the RTC stated in its Order dated 27 November 2002 that based on the records, "there is a pending case with the Bureau of Customs District XIII, Port of Subic, Olongapo City, identified and docketed as Seizure Identification No. 2002-10 and involving the same 2,000 bags of imported rice that is also the subject matter of the case herein. The existence and pendency of said case before 43 the Bureau of Customs have in fact been admitted by the parties." The RTC then proceeded to order the suspension of court proceedings, and directed the BOC Subic Port Chief of the Law Division and Deputy Collector for Administration, Atty. Titus Sangil, to resolve the seizure case and submit to the RTC its resolution within fifteen (15) days from receipt of the court order. We quote the dispositive portion of the RTC Order dated 27 November 2002, to wit: WHEREFORE, the Bureau of Customs, Customs District XIII, Port of Subic, Olongapo City through Atty. Titus A. Sangil, Chief, Law Division and Deputy Collector for Administration is hereby directed to resolve Seizure Identification Case No. 2002-10 and submit to the court its resolution therewith, within fifteen (15) days from receipt of this order. Meantime, the proceedings in this case are suspended until the court is in receipt of the resolution of the Bureau of Customs. Furnish a copy of this order to Atty. Titus A. Sangil at his abovecited office address.
44

We find the issuance of the RTC Order dated 27 November 2002 improper. The pendency of the BOC seizure proceedings which was made known to the RTC through petitioner's consolidated motion to dismiss should have prompted said court to dismiss the case before it. As previously discussed, the BOC has exclusive original jurisdiction over seizure cases under Section 602 of the Tariff and Customs Code. The rule that the RTC must defer to the exclusive original jurisdiction of the BOC in cases involving seizure and forfeiture of goods is absolute. Thus, the RTC had no jurisdiction to issue its Order dated 27 November 2002. WHEREFORE, we GRANT the petition. We REVERSE the Court of Appeals Decision dated 20 June 2003 and Resolution dated 8 October 2003 in CA-G.R. SP No. 74989. We declare VOID the Regional Trial Court Orders dated 21 November 2002 and 27 November 2002. SO ORDERED. NOTES: Actions; action for injunction. As a rule, actions for injunction and damages lie within the jurisdiction of the RTC pursuant to Section 19 of Batas Pambansa Blg. 129 (BP 129), otherwise known as the Judiciary Reorganization Act of 1980, as amended by Republic Act (RA) No. 7691. An action for injunction is a suit which has for its purpose the enjoinment of the defendant, perpetually or for a particular time, from the commission or continuance of a specific act, or his compulsion to continue performance of a particular act. It has an independent existence, and is distinct from the ancillary remedy of preliminary injunction which cannot exist except only as a part or an incident of an independent action or proceeding. In an action for injunction, the auxiliary remedy of preliminary injunction, prohibitory or mandatory, may issue. Subic Bay Metropolitan Authority vs. Merlino E. Rodriguez, et al., G.R. No. 160270, April 23, 2010.

Republic of the Philippines SUPREME COURT Baguio City SECOND DIVISION G.R. No. 170483 April 19, 2010

MANUEL C. BUNGCAYAO, SR., represented in this case by his Attorney-in-fact ROMEL R. BUNGCAYAO, Petitioner, vs. FORT ILOCANDIA PROPERTY HOLDINGS, AND DEVELOPMENT CORPORATION, Respondent. DECISION CARPIO, J.: The Case Before the Court is a petition for review assailing the 21 November 2005 Decision of the Court of Appeals in CA-G.R. CV No. 82415. The Antecedent Facts Manuel C. Bungcayao, Sr. (petitioner) claimed to be one of the two entrepreneurs who introduced improvements on the foreshore area of Calayab Beach in 1978 when Fort Ilocandia Hotel started its construction in the area. Thereafter, other entrepreneurs began setting up their own stalls in the foreshore area. They later formed themselves into the DSierto Beach Resort Owners Associ ation, Inc. (DSierto). In July 1980, six parcels of land in Barrio Balacad (now Calayad) were transferred, ceded, and conveyed to the Philippine Tourism Authority (PTA) pursuant to Presidential Decree No. 1704. Fort Ilocandia Resort Hotel was erected on the area. In 1992, petitioner and other DSierto members applied for a foreshore lease with the Community Environment and Natural Resources Office (CENRO) and was granted a provisional permit. On 31 January 2002, Fort Ilocandia Property Holdings and Development Corporation (respondent) filed a foreshore application over a 14-hectare area abutting the Fort Ilocandia Property, including the 5-hectare portion applied for by DSierto members. The foreshore applications became the subject matter of a conflict case, docketed Department of Environment and Natural Resources (DE NR) Case No. 5473, between respondent and DSierto members. In an 3 undated Order, DENR Regional Executive Director Victor J. Ancheta denied the foreshore lease a pplications of the DSierto members, including petitioner, on the ground that the subject area applied for fell either within the titled property or within the 4 foreshore areas applied for by respondent. The DSierto members appealed the denial of their app lications. In a Resolution dated 21 August 2003, then DENR Secretary Elisea G. Gozun denied the appeal on the ground that the area applied for encroached on the titled property of respondent based on the final verification plan. In a letter dated 18 September 2003, respondent, through its Public Relations Manager Arlene de Guzman, invited the DSierto members to a luncheon meeting to discuss common details beneficial to all parties concerned. Atty. Liza Marcos (Atty. Marcos), wife of Governor Bongbong Marcos, was present as she was asked by Fort Ilocandia hotel officials to mediate over the conflict among the parties. Atty. Marcos offered P300,000 as financial settlement per claimant in consideration of the improvements introduced, on the condition that they would vacate the area identified as respondents property. A DSierto member made a counter -offer of P400,000, to which the other DSierto members agreed. Petitioner alleged that his son, Manuel Bungcayao, Jr., who attended the meeting, manifested that he still had to consult his parents about the offer but upon the undue pressure exerted by Atty. Marcos, he accepted the payment and signed the Deed of Assignment, 6 Release, Waiver and Quitclaim in favor of respondent. Petitioner then filed an action for declaration of nullity of contract before the Regional Trial Court of Laoag, City, Branch 13 (trial court), docketed as Civil Case Nos. 12891-13, against respondent. Petitioner alleged that his son had no authority to represent him and that the deed was void and not binding upon him.
5 1 2

Respondent countered that the area upon which petitioner and the other DSierto members constructed their improvements was part of its titled property under Transfer Certificate of Title No. T-31182. Respondent alleged that petitioners sons, Manuel, Jr. and Romel, attended the luncheon meeting on their own volition and they were able to talk to their parents through a cellular phone before they accepted respondents offer. As a counterclaim, respondent prayed that petitioner be required to return the amoun t of P400,000 from respondent, to vacate the portion of the respo ndents property he was occupying, and to pay damages because his continued refusal to vacate the property caused tremendous delay in the planned implementation of Fort Ilocandias expansion projects. In an Order dated 6 November 2003, the trial court confirmed the agreement of the parties to cancel the Deed of Assignment, Release, Waiver and Quitclaim and the return of P400,000 to respondent. Petitioners counsel, however, manifested that petitioner was still maintaining its claim for damages against respondent. Petitioner and respondent agreed to consider the case submitted for resolution on summary judgment. Thus, in its Order dated 28 November 2003, the trial court considered the case submitted for resolution. Petitioner filed a motion for reconsideration, alleging that he manifested in open court that he was withdrawing his earlier manifestation submitting the case for resolution. Respondent filed a Motion for Summary Judgment. The trial court rendered a Summary Judgment dated 13 February 2004. The Decision of the Trial Court The trial court ruled that the only issue raised by petitioner was his claim for damages while respondents issue was only hi s claim for possession of the property occupied by petitioner and damages. The trial court noted that the parties already stipulated on the issues and admissions had been made by both parties. The trial court ruled that summary judgment could be rendered on the case. The trial court ruled that the alleged pressure on petitioner s sons could not constitute force, violence or intimidation that could vitiate consent. As regards respondents counterclaim, the trial court ruled that based on the pleadings and admissions made, it was established that the property occupied by petitioner was within the titled property of respondent. The dispositive portion of the trial courts decision reads: WHEREFORE, the Court hereby renders judgment DISMISSING the claim of plaintiff for damages as it is found to be without legal basis, and finding the counterclaim of the defendant for recovery of possession of the lot occupied by the plaintiff to be meritorious as it is hereby GRANTED. Consequently, the plaintiff is hereby directed to immediately vacate the premises administratively adjudicated by the executive department of the government in favor of the defendant and yield its possession unto the defendant. No pronouncement is here made as yet of the damages claimed by the defendant. SO ORDERED.
10 9 8 7

Petitioner appealed from the trial courts decision. The Decision of the Court of Appeals In its 21 November 2005 Decision, the Court of Appeals affirmed the t rial courts decision in toto. The Court of Appeals sustained the trial court in resorting to summary judgment as a valid procedural device for the prompt disposition of actions in which the pleadings raise only a legal issue and not a genuine issue as to any material fact. The Court of Appeals ruled that in this case, the facts are not in dispute and the only issue to be resolved is whether the subject property was within the titled property of respondent. Hence, summary judgment was properly rendered by the trial court. The Court of Appeals ruled that the counterclaims raised by respondent were compulsory in nature, as they arose out of or were connected with the transaction or occurrence constituting the subject matter of the opposing partys claim and di d not require for its adjudication the presence of third parties of whom the court could not acquire jurisdiction. The Court of Appeals ruled that respondent was the rightful owner of the subject property and as such, it had the right to recover its possession from any other person to whom the owner has not transmitted the property, including petitioner. The dispositive portion of the Court of Appeals decision reads:

WHEREFORE, the assailed decision dated February 13, 2004 of the Regional Trial Court of Laoag City, Branch 13 is hereby AFFIRMED in toto. SO ORDERED.
11

Thus, the petition before this Court. The Issues Petitioner raises the following issues in his Memorandum:
12

1. Whether respondents counterclaim is compulsory; and 2. Whether summary judgment is appropriate in this case. The Ruling of this Court The petition has merit. Compulsory Counterclaim A compulsory counterclaim is any claim for money or any relief, which a defending party may have against an opposing party, which at the time of suit arises out of, or is necessarily connected with, the same transaction or occurrence that is the subject matter of the 13 plaintiffs complaint. It is compulsory in the sense that it is within the jurisdiction of the court, does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction, and will be barred in the future if not set up in the 14 15 answer to the complaint in the same case. Any other counterclaim is permissive. The Court has ruled that the compelling test of compulsoriness characterizes a counterclaim as compulsory if there should exist a 16 logical relationship between the main claim and the counterclaim. The Court further ruled that there exists such a relationship when conducting separate trials of the respective claims of the parties would entail substantial duplication of time and effort by the parties and the court; when the multiple claims involve the same factual and legal issues; or when the claims are offshoots of the 17 same basic controversy between the parties. The criteria to determine whether the counterclaim is compulsory or permissive are as follows: (a) Are issues of fact and law raised by the claim and by the counterclaim largely the same? (b) Would res judicata bar a subsequent suit on defendants claim, absent the compulsory rule? (c) Will substantially the same evidence support or refute plaintiffs claim as well as defendants counterclaim? (d) Is there any logical relations between the claim and the counterclaim? A positive answer to all four questions would indicate that the counterclaim is compulsory.
18

In this case, the only issue in the complaint is whether Manuel, Jr. is authorized to sign the Deed of Assignment, Release, Waiver and Quitclaim in favor of respondent without petitioners express approval and authority. In an Order dated 6 November 2003, the trial court confirmed the agreement of the parties to cancel the Deed of Assignment, Release, Waiver and Quitclaim and the return of P400,000 to respondent. The only claim that remained was the claim for damages against respondent. The trial court resolved this issue by holding that any damage suffered by Manuel, Jr. was personal to him. The trial court ruled that petitioner could not have suffered any damage even if Manuel, Jr. entered into an agreement with respondent since the agreement was null and void. Respondent filed three counterclaims. The first was for recovery of the P400,000 given to Manuel, Jr.; the second was for recovery of possession of the subject property; and the third was for damages. The first counterclaim was rendered moot with the issuance of the 6 November 2003 Order confirming the agreement of the parties to cancel the Deed of Assignment, Release, Waiver and 19 Quitclaim and to return the P400,000 to respondent. Respondent waived and renounced the third counterclaim for damages. The

only counterclaim that remained was for the recovery of possession of the subject property. While this counterclaim was an offshoot of the same basic controversy between the parties, it is very clear that it will not be barred if not set up in the answer to the complaint in the same case. Respondents second counterclaim, contrary to the findings of the trial court and the Court of Ap peals, is only a permissive counterclaim. It is not a compulsory counterclaim. It is capable of proceeding independently of the main case. The rule in permissive counterclaim is that for the trial court to acquire jurisdiction, the counterclaimant is bound to pay the 20 prescribed docket fees. Any decision rendered without jurisdiction is a total nullity and may be struck down at any time, even on 21 appeal before this Court. In this case, respondent did not dispute the non-payment of docket fees. Respondent only insisted that its claims were all compulsory counterclaims. As such, the judgment by the trial court in relation to the second counterclaim is 22 considered null and void without prejudice to a separate action which respondent may file against petitioner. 1avvphi1 Summary Judgment Section 1, Rule 35 of the 1997 Rules of Civil Procedure provides: Section 1. Summary Judgment for claimant. - A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in answer thereto has been served, move with supporting affidavits, depositions or admissions for a summary judgment in his favor upon all or any part thereof. Summary judgment has been explained as follows: Summary judgment is a procedural device resorted to in order to avoid long drawn out litigations and useless delays. When the pleadings on file show that there are no genuine issues of fact to be tried, the Rules allow a party to obtain immediate relief by way of summary judgment, that is, when the facts are not in dispute, the court is allowed to decide the case summarily by applying the law to the material facts. Conversely, where the pleadings tender a genuine issue, summary judgment is not proper. A "genuine issue" is such issue of fact which requires the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim. Section 3 of the said rule provides two (2) requisites for summary judgment to be proper: (1) there must be no genuine issue as to any material fact, except for the amount of damages; and (2) the party presenting the motion for summary judgment must be entitled to a judgment as a matter of law. A summary judgment is permitted only if there is no genuine issue as to any material fact and a moving party is entitled to a judgment as a matter of law. A summary judgment is proper if, while the pleadings on their face appear to raise issues, the affidavits, depositions, and admissions presented by the moving party show that such issues are not 23 genuine. Since we have limited the issues to the damages claimed by the parties, summary judgment has been properly rendered in this case. WHEREFORE, we MODIFY the 21 November 2005 Decision of the Court of Appeals in CA-G.R. CV No. 82415 which affirmed the 13 February 2004 Decision of the Regional Trial Court of Laoag City, Branch 13, insofar as it ruled that respondents countercla im for recovery of possession of the subject property is compulsory in nature. We DISMISS respondents permissive counterclaim without prejudice to filing a separate action against petitioner. SO ORDERED. NOTES: Judgments; summary judgment; when proper. Section 1, Rule 35 of the 1997 Rules of Civil Procedure provides: Section 1. Summary Judgment for claimant. - A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the pleading in answer thereto has been served, move with supporting affidavits, depositions or admissions for a summary judgment in his favor upon all or any part thereof. Summary judgment has been explained as follows: Summary judgment is a procedural device resorted to in order to avoid long drawn out litigations and useless delays. When the pleadings on file show that there are no genuine issues of fact to be tried, the Rules allow a party to obtain immediate relief by way of summary judgment, that is, when the facts are not in dispute, the court is allowed to decide the case summarily by applying the law to the material facts. Conversely, where the pleadings tender a genuine issue, summary judgment is not proper. A genuine

issue is such issue of fact which requires the presentation of evidence as distinguished from a sham, fictitious, contriv ed or false claim. Section 3 of the said rule provides two (2) requisites for summary judgment to be proper: (1) there must be no genuine issue as to any material fact, except for the amount of damages; and (2) the party presenting the motion for summary judgment must be entitled to a judgment as a matter of law. A summary judgment is permitted only if there is no genuine issue as to any material fact and a moving party is entitled to a judgment as a matter of law. A summary judgment is proper if, while the pleadings on their face appear to raise issues, the affidavits, depositions, and admissions presented by the moving party show that such issues are not genuine. Since we have limited the issues to the damages claimed by the parties, summary judgment has been properly rendered in this case. Manuel Bungcayao, Sr., et al. vs. Fort Ilocandia Property Holdings and Development Corporation, G.R. No. 170483, April 19, 2010.

MAY 2010 CIVIL PROCEDURE Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 164703 May 4, 2010

ALLAN C. GO, doing business under the name and style "ACG Express Liner," Petitioner, vs. MORTIMER F. CORDERO, Respondent. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 164747 MORTIMER F. CORDERO, Petitioner, vs. ALLAN C. GO, doing business under the name and style "ACG Express Liner," FELIPE M. LANDICHO and VINCENT D. TECSON, Respondents. DECISION VILLARAMA, JR., J.: For review is the Decision dated March 16, 2004 as modified by the Resolution dated July 22, 2004 of the Court of Appeals (CA) in 3 CA-G.R. CV No. 69113, which affirmed with modifications the Decision dated May 31, 2000 of the Regional Trial Court (RTC) of Quezon City, Branch 85 in Civil Case No. 98-35332. The factual antecedents: Sometime in 1996, Mortimer F. Cordero, Vice-President of Pamana Marketing Corporation (Pamana), ventured into the business of marketing inter-island passenger vessels. After contacting various overseas fast ferry manufacturers from all over the world, he came to meet Tony Robinson, an Australian national based in Brisbane, Australia, who is the Managing Director of Aluminium Fast Ferries Australia (AFFA). Between June and August 1997, Robinson signed documents appointing Cordero as the exclusive distributor of AFFA catamaran and other fast ferry vessels in the Philippines. As such exclusive distributor, Cordero offered for sale to prospective buyers the 25-meter 4 Aluminium Passenger catamaran known as the SEACAT 25. After negotiations with Felipe Landicho and Vincent Tecson, lawyers of Allan C. Go who is the owner/operator of ACG Express Liner of Cebu City, a single proprietorship, Cordero was able to close a deal for the purchase of two (2) SEACAT 25 as evidenced by the 5 Memorandum of Agreement dated August 7, 1997. Accordingly, the parties executed Shipbuilding Contract No. 7825 for one (1) 6 high-speed catamaran (SEACAT 25) for the price of US$1,465,512.00. Per agreement between Robinson and Cordero, the latter 7 shall receive commissions totalling US$328,742.00, or 22.43% of the purchase price, from the sale of each vessel. Cordero made two (2) trips to the AFFA Shipyard in Brisbane, Australia, and on one (1) occasion even accompanied Go and his family and Landicho, to monitor the progress of the building of the vessel. He shouldered all the expenses for airfare, food, hotel accommodations, transportation and entertainment during these trips. He also spent for long distance telephone calls to communicate regularly with Robinson, Go, Tecson and Landicho. However, Cordero later discovered that Go was dealing directly with Robinson when he was informed by Dennis Padua of Wartsila Philippines that Go was canvassing for a second catamaran engine from their company which provided the ship engine for the first SEACAT 25. Padua told Cordero that Go instructed him to fax the requested quotation of the second engine to the Park Royal Hotel
1 2

in Brisbane where Go was then staying. Cordero tried to contact Go and Landicho to confirm the matter but they were nowhere to be found, while Robinson refused to answer his calls. Cordero immediately flew to Brisbane to clarify matters with Robinson, only to find out that Go and Landicho were already there in Brisbane negotiating for the sale of the second SEACAT 25. Despite repeated follow-up calls, no explanation was given by Robinson, Go, Landicho and Tecson who even made Cordero believe there would be no further sale between AFFA and ACG Express Liner. In a handwritten letter dated June 24, 1998, Cordero informed Go that such act of dealing directly with Robinson violated his exclusive distributorship and demanded that they respect the same, without prejudice to legal action against him and Robinson 8 should they fail to heed the same. Corderos lawyer, Atty. Ernesto A. Tabujara, Jr. of ACCRA law firm, also wrote ACG Express Liner assailing the fraudulent actuations and misrepresentations committed by Go in connivance with his lawyers (Landicho and Tecson) 9 in breach of Corderos exclusive distributorship appointment. Having been apprised of Corderos demand letter, Thyne & Macartney, the lawyer of AFFA and Robinson, faxed a letter to ACCRA law firm asserting that the appointment of Cordero as AFFAs distributor was for the purpose of one (1) transaction only, tha t is, the purchase of a high-speed catamaran vessel by ACG Express Liner in August 1997. The letter further stated that Cordero was offered the exclusive distributorship, the terms of which were contained in a draft agreement which Cordero allegedly failed to return to 10 AFFA within a reasonable time, and which offer is already being revoked by AFFA. As to the response of Go, Landicho and Tecson to his demand letter, Cordero testified before the trial court that on the same day, Landicho, acting on behalf of Go, talked to him over the telephone and offered to amicably settle their dispute. Tecson and Landicho offered to convince Go to honor his exclusive distributorship with AFFA and to purchase all vessels for ACG Express Liner through him for the next three (3) years. In an effort to amicably settle the matter, Landicho, acting in behalf of Go, set up a meeting with Cordero on June 29, 1998 between 9:30 p.m. to 10:30 p.m. at the Mactan Island Resort Hotel lobby. On said date, however, only Landicho and Tecson came and no reason was given for Gos absence. Tecson and Landicho proposed that they will convince Go to pay him US$1,500,000.00 on the condition that they will get a cut of 20%. And so it was agreed between him, Landicho and Tecson that the latter would give him a weekly status report and that the matter will be settled in three (3) to four (4) weeks and neither party will file an action against each other until a final report on the proposed settlement. No such report was made by either Tecson or Landicho who, it turned out, had no intention to do so and were just buying time as the catamaran vessel was due to arrive from Australia. Cordero then filed a complaint with the Bureau of Customs (BOC) to prohibit the entry of SEACAT 25 from Australia based on misdeclaration and undervaluation. Consequently, an Alert Order was issued by Acting BOC Commissioner Nelson Tan for the vessel which in fact arrived on July 17, 1998. Cordero claimed that Go and Robinson had conspired to undervalue the 11 vessel by around US$500,000.00. On August 21, 1998, Cordero instituted Civil Case No. 98-35332 seeking to hold Robinson, Go, Tecson and Landicho liable jointly and solidarily for conniving and conspiring together in violating his exclusive distributorship in bad faith and wanton disregard of his rights, thus depriving him of his due commissions (balance of unpaid commission from the sale of the first vessel in the amount of US$31,522.01 and unpaid commission for the sale of the second vessel in the amount of US$328,742.00) and causing him actual, moral and exemplary damages, including P800,000.00 representing expenses for airplane travel to Australia, telecommunications bills and entertainment, on account of AFFAs untimely cancellation of the exclusive distributorship agreement. Cordero also prayed 12 for the award of moral and exemplary damages, as well as attorneys fees and litigation expenses. Robinson filed a motion to dismiss grounded on lack of jurisdiction over his person and failure to state a cause of action, asserting that there was no act committed in violation of the distributorship agreement. Said motion was denied by the trial court on December 20, 1999. Robinson was likewise declared in default for failure to file his answer within the period granted by the trial 13 court. As for Go and Tecson, their motion to dismiss based on failure to state a cause of action was likewise denied by the trial 14 court on February 26, 1999. Subsequently, they filed their Answer denying that they have anything to do with the termination by AFFA of Corderos authority as exclusive distributor in the P hilippines. On the contrary, they averred it was Cordero who stopped communicating with Go in connection with the purchase of the first vessel from AFFA and was not doing his part in making progress status reports and airing the clients grievances to his principal, AFFA, such that Go engaged the services of Landicho to fly to Australia and attend to the documents needed for shipment of the vessel to the Philippines. As to the inquiry for the Philippine price for a Wartsila ship engine for AFFAs other on -going vessel construction, this was merely requested by Robinson but which Cordero misinterpreted as indication that Go was buying a second vessel. Moreover, Landicho and Tecson had no transaction whatsoever with Cordero who had no document to show any such shipbuilding contract. As to the supposed meeting to settle their dispute, this was due to the malicious demand of Cordero to be given US$3,000,000 as otherwise he will expose in the media the alleged undervaluation of the vessel with the BOC. In any case, Cordero no longer had cause of action for his commission for the sale of the second vessel under the memorandum of agreement dated August 7, 1997 considering the termination of his authority by AFFAs 15 lawyers on June 26, 1998.

Pre-trial was reset twice to afford the parties opportunity to reach a settlement. However, on motion filed by Cordero through counsel, the trial court reconsidered the resetting of the pre-trial to another date for the third time as requested by Go, Tecson and Landicho, in view of the latters failure to appear at the pre-trial conference on January 7, 2000 despite due notice. The trial court further confirmed that said defendants misled the trial court in moving for continuance during the pre-trial conference held on December 10, 1999, purportedly to go abroad for the holiday season when in truth a Hold-Departure Order had been issued against 16 them. Accordingly, plaintiff Cordero was allowed to present his evidence ex parte. Corderos testimony regarding his transaction with defendants Go, Landicho and Tecson, and the latters offer of settle ment, was corroborated by his counsel who also took the witness stand. Further, documentary evidence including photographs taken of the June 29, 1998 meeting with Landicho, Tecson and Atty. Tabujara at Shangri-las Mactan Island Resort, photographs taken in Brisbane showing Cordero, Go with his family, Robinson and Landicho, and also various documents, communications, vouchers and bank transmittals were presented to prove that: (1) Cordero was properly authorized and actually transacted in behalf of AFFA as exclusive distributor in the Philippines; (2) Cordero spent considerable sums of money in pursuance of the contract with Go and ACG Express Liner; and (3) AFFA through Robinson paid Cordero his commissions from each scheduled payment made by Go for the first 17 SEACAT 25 purchased from AFFA pursuant to Shipbuilding Contract No. 7825. On May 31, 2000, the trial court rendered its decision, the dispositive portion of which reads as follows: WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in favor of Plaintiff and against defendants Allan C. Go, Tony Robinson, Felipe Landicho, and Vincent Tecson. As prayed for, defendants are hereby ordered to pay Plaintiff jointly and solidarily, the following: 1. On the First Cause of Action, the sum total of SIXTEEN MILLION TWO HUNDRED NINETY ONE THOUSAND THREE HUNDRED FIFTY TWO AND FORTY THREE CENTAVOS (P16,291,352.43) as actual damages with legal interest from 25 June 1998 until fully paid; 2. On the Second Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as moral damages; 3. On the Third Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as exemplary damages; and 4. On the Fourth Cause of Action, the sum of ONE MILLION PESOS (P1,000,000.00) as attorneys fees; Costs against the defendants. SO ORDERED.
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Go, Robinson, Landicho and Tecson filed a motion for new trial, claiming that they have been unduly prejudiced by the negligence of their counsel who was allegedly unaware that the pre-trial conference on January 28, 2000 did not push through for the reason that Cordero was then allowed to present his evidence ex-parte, as he had assumed that the said ex-parte hearing was being conducted 19 only against Robinson who was earlier declared in default. In its Order dated July 28, 2000, the trial court denied the motion for 20 new trial. In the same order, Corderos motion for execution pending appeal was granted. Defendants moved to reconsider the 21 22 said order insofar as it granted the motion for execution pending appeal. On August 8, 2000, they filed a notice of appeal. On August 18, 2000, the trial court denied the motion for reconsideration and on August 21, 2000, the writ of execution pending 23 appeal was issued. Meanwhile, the notice of appeal was denied for failure to pay the appellate court docket fee within the 24 25 prescribed period. Defendants filed a motion for reconsideration and to transmit the case records to the CA. On September 29, 2000, the CA issued a temporary restraining order at the instance of defendants in the certiorari case they filed with said court docketed as CA-G.R. SP No. 60354 questioning the execution orders issued by the trial court. Consequently, as requested by the defendants, the trial court recalled and set aside its November 6, 2000 Order granting the ex-parte motion for release of garnished funds, cancelled the scheduled public auction sale of levied real properties, and denied the ex-parte Motion for 26 Break-Open Order and Ex-Parte Motion for Encashment of Check filed by Cordero. On November 29, 2000, the trial court reconsidered its Order dated August 21, 2000 denying due course to the notice of appeal and forthwith directed the transmittal of 27 the records to the CA.

On January 29, 2001, the CA rendered judgment granting the petition for certiorari in CA-G.R. SP No. 60354 and setting aside the trial courts orders of execution pending appeal. Cordero appealed the said judgment in a pe tition for review filed with this Court 28 which was eventually denied under our Decision dated September 17, 2002. On March 16, 2004, the CA in CA-G.R. CV No. 69113 affirmed the trial court (1) in allowing Cordero to present his evidence ex-parte after the unjustified failure of appellants (Go, Tecson and Landicho) to appear at the pre-trial conference despite due notice; (2) in finding that it was Cordero and not Pamana who was appointed by AFFA as the exclusive distributor in the Philippines of its SEACAT 25 and other fast ferry vessels, which is not limited to the sale of one (1) such catamaran to Go on August 7, 1997; and (3) in finding that Cordero is entitled to a commission per vessel sold for AFFA through his efforts in the amount equivalent to 22.43% of the price of each vessel or US$328,742.00, and with payments of US$297,219.91 having been made to Cordero, there remained a balance of US$31,522.09 still due to him. The CA sustained the trial court in ruling that Cordero is entitled to damages for the breach of his exclusive distributorship agreement with AFFA. However, it held that Cordero is entitled only to commission for the sale of the first catamaran obtained through his efforts with the remaining unpaid sum of US$31,522.09 or P1,355,449.90 (on the basis of US$1.00=P43.00 rate) with interest at 6% per annum from the time of the filing of the complaint until the same is fully paid. As to the P800,000.00 representing expenses incurred by Cordero for transportation, phone bills, entertainment, food and lodging, the CA declared there was no basis for such award, the same being the logical and necessary consequences of the exclusive distributorship agreement which are normal in the field of sales and distribution, and the expenditures having redounded to the benefit of the distributor (Cordero). On the amounts awarded by the trial court as moral and exemplary damages, as well as attorneys fees, the CA reduce d the same to P500,000.00, P300,000.00 and P50,000.00, respectively. Appellants were held solidarily liable pursuant to the provisions of Article 1207 in relation to Articles 19, 20, 21 and 22 of the New Civil Code. The CA further ruled that no error was committed by the trial court in denying their motion for new trial, which said court found to be pro forma and did not raise any substantial matter as to warrant the conduct of another trial. By Resolution dated July 22, 2004, the CA denied the motions for reconsideration respectively filed by the appellants and appellee, and affirmed the Decision dated March 16, 2004 with the sole modification that the legal interest of 6% per annum shall start to run from June 24, 1998 until the finality of the decision, and the rate of 12% interest per annum shall apply once the decision becomes final and executory until the judgment has been satisfied. The case before us is a consolidation of the petitions for review under Rule 45 separately filed by Go (G.R. No. 164703) and Cordero (G.R. No. 164747) in which petitioners raised the following arguments: G.R. No. 164703 (Petitioner Go) I. THE HONORABLE COURT OF APPEALS DISREGARDED THE RULES OF COURT AND PERTINENT JURISPRUDENCE AND ACTED WITH GRAVE ABUSE OF DISCRETION IN NOT RULING THAT THE RESPONDENT IS NOT THE REAL PARTY-IN-INTEREST AND IN NOT DISMISSING THE INSTANT CASE ON THE GROUND OF LACK OF CAUSE OF ACTION; II. THE HONORABLE COURT OF APPEALS IGNORED THE LAW AND JURISPRUDENCE AND ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING HEREIN PETITIONER RESPONSIBLE FOR THE BREACH IN THE ALLEGED EXCLUSIVE DISTRIBUTORSHIP AGREEMENT WITH ALUMINIUM FAST FERRIES AUSTRALIA; III. THE HONORABLE APPELLATE COURT MISAPPLIED THE LAW AND ACTED WITH GRAVE ABUSE OF DISCRETION IN FINDING PETITIONER LIABLE IN SOLIDUM WITH THE CO-DEFENDANTS WITH RESPECT TO THE CLAIMS OF RESPONDENT; IV. THE HONORABLE COURT OF APPEALS MISAPPLIED LAW AND JURISPRUDENCE AND GRAVELY ABUSED ITS DISCRETION WHEN IT FOUND PETITIONER LIABLE FOR UNPAID COMMISSIONS, DAMAGES, ATTORNEYS FEES, AND LITIGATION EXPENSES; and V. THE HONORABLE APPELLATE COURT ACTED CONTRARY TO LAW AND JURISPRUDENCE AND GRAVELY ABUSED ITS DISCRETION WHEN IT EFFECTIVELY DEPRIVED HEREIN PETITIONER OF HIS RIGHT TO DUE PROCESS BY AFFIRMING THE LOWER COURTS DENIAL 29 OF PETITIONERS MOTION FOR NEW TRIAL. G.R. No. 164747

(Petitioner Cordero) I. THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE JUDGMENT OF THE TRIAL COURT AWARDING PETITIONER ACTUAL DAMAGES FOR HIS COMMISSION FOR THE SALE OF THE SECOND VESSEL, SINCE THERE IS SUFFICIENT EVIDENCE ON RECORD WHICH PROVES THAT THERE WAS A SECOND SALE OF A VESSEL. A. THE MEMORANDUM OF AGREEMENT DATED 7 AUGUST 1997 PROVIDES THAT RESPONDENT GO WAS CONTRACTUALLY BOUND TO BUY TWO (2) VESSELS FROM AFFA. B. RESPONDENT GOS POSITION PAPER AND COUNTER-AFFIDAVIT/POSITION PAPER THAT WERE FILED BEFORE THE BUREAU OF CUSTOMS, ADMITS UNDER OATH THAT HE HAD INDEED PURCHASED A SECOND VESSEL FROM AFFA. C. RESPONDENTS ADMITTED IN THEIR PRE-TRIAL BRIEF THAT THEY HAD PURCHASED A SECOND VESSEL. II. THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER IS NOT ENTITLED TO HIS COMMISSIONS FOR THE PURCHASE OF A SECOND VESSEL, SINCE IT WAS PETITIONERS EFFORTS WHICH ACTUALLY FACILITATED AND SET-UP THE TRANSACTION FOR RESPONDENTS. III. THE COURT OF APPEALS ERRED IN NOT IMPOSING THE PROPER LEGAL INTEREST RATE ON RESPONDENTS UNPAID OBLIGATION WHICH SHOULD BE TWELVE PERCENT (12%) FROM THE TIME OF THE BREACH OF THE OBLIGATION. IV. THE COURT OF APPEALS ERRED IN NOT SUSTAINING THE ORIGINAL AMOUNT OF CONSEQUENTIAL DAMAGES AWARDED TO PETITIONER BY THE TRIAL COURT CONSIDERING THE BAD FAITH AND FRAUDULENT CONDUCT OF RESPONDENTS IN 30 MISAPPROPRIATING THE MONEY OF PETITIONER. The controversy boils down to two (2) main issues: (1) whether petitioner Cordero has the legal personality to sue the respondents for breach of contract; and (2) whether the respondents may be held liable for damages to Cordero for his unpaid commissions and termination of his exclusive distributorship appointment by the principal, AFFA. I. Real Party-in-Interest First, on the issue of whether the case had been filed by the real party-in-interest as required by Section 2, Rule 3 of the Rules of Court, which defines such party as the one (1) to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. The purposes of this provision are: 1) to prevent the prosecution of actions by persons without any right, title or interest in the case; 2) to require that the actual party entitled to legal relief be the one to prosecute the action; 3) to avoid a 31 multiplicity of suits; and 4) to discourage litigation and keep it within certain bounds, pursuant to sound public policy. A case is dismissible for lack of personality to sue upon proof that the plaintiff is not the real party-in-interest, hence grounded on failure to 32 state a cause of action. On this issue, we agree with the CA in ruling that it was Cordero and not Pamana who is the exclusive distributor of AFFA in the 33 Philippines as shown by the Certification dated June 1, 1997 issued by Tony Robinson. Petitioner Go mentions the following documents also signed by respondent Robinson which state that "Pamana Marketing Corporation represented by Mr. Mortimer F. 34 35 Cordero" was actually the exclusive distributor: (1) letter dated 1 June 1997 ; (2) certification dated 5 August 1997 ; and (3) letter 36 dated 5 August 1997 addressed to petitioner Cordero concerning "commissions to be paid to Pamana Marketing Corporation." Such apparent inconsistency in naming AFFAs exclusive distributor in the Philippines is of no moment. For all intents and purposes, Robinson and AFFA dealt only with Cordero who alone made decisions in the performance of the exclusive distributorship, as with other clients to whom he had similarly offered AFFAs fast ferry vessels. Moreover, the stipulated commissions from each progress 37 payments made by Go were directly paid by Robinson to Cordero. Respondents Landicho and Tecson were only too aware of

Corderos authority as the person who was appointed and acted as exclusive distributor of AFFA, which can be gleaned from the ir act of immediately furnishing him with copies of bank transmittals everytime Go remits payment to Robinson, who in turn transfers a portion of funds received to the bank account of Cordero in the Philippines as his commission. Out of these partial payments of his commission, Cordero would still give Landicho and Tecson their respective "commission," or "cuts" from his own commission. Respondents Landicho and Tecson failed to refute the evidence submitted by Cordero consisting of receipts signed by them. Said amounts were apart from the earlier expenses shouldered by Cordero fo r Landichos airline tickets, transportation, food and hotel 38 accommodations for the trip to Australia. Moreover, petitioner Go, Landicho and Tecson never raised petitioner Corderos lack of personality to sue on behalf of Pamana, and did so only before the CA when they contended that it is Pamana and not Cordero, who was appointed and acted as exclusive 40 distributor for AFFA. It was Robinson who argued in support of his motion to dismiss that as far as said defendant is concerned, the 41 real party plaintiff appears to be Pamana, against the real party defendant which is AFFA. As already mentioned, the trial court denied the motion to dismiss filed by Robinson. We find no error committed by the trial court in overruling Robinsons objection over the improper resort to summons by publication upon a foreign national like him and in an action in personam, notwithstanding that he raised it in a special appearance specifically raising the issue of lack of jurisdiction over his person. Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, while jurisdiction over the defendants in a civil case is acquired either through the service of summons upon them in the 42 manner required by law or through their voluntary appearance in court and their submission to its authority. A party who makes a special appearance in court challenging the jurisdiction of said court based on the ground of invalid service of summons is not 43 deemed to have submitted himself to the jurisdiction of the court. In this case, however, although the Motion to Dismiss filed by Robinson specifically stated as one (1) of the grounds the lack of "personal jurisdiction," it must be noted that he had earlier filed a Motion for Time to file an appropriate responsive pleading even 44 beyond the time provided in the summons by publication. Such motion did not state that it was a conditional appearance entered to question the regularity of the service of summons, but an appearance submitting to the jurisdiction of the court by acknowledging the summons by publication issued by the court and praying for additional time to file a responsive pleading. Consequently, Robinson having acknowledged the summons by publication and also having invoked the jurisdiction of the trial court to secure affirmative relief in his motion for additional time, he effectively submitted voluntari ly to the trial courts jurisdiction. He is now 45 estopped from asserting otherwise, even before this Court. II. Breach of Exclusive Distributorship, Contractual Interference and Respondents Liability for Damages In Yu v. Court of Appeals, this Court ruled that the right to perform an exclusive distributorship agreement and to reap the profits resulting from such performance are proprietary rights which a party may protect. Thus, injunction is the appropriate remedy to prevent a wrongful interference with contracts by strangers to such contracts where the legal remedy is insufficient and the resulting injury is irreparable. In that case, the former dealer of the same goods purchased the merchandise from the manufacturer in England through a trading firm in West Germany and sold these in the Philippines. We held that the rights granted to the petitioner under the exclusive distributorship agreement may not be diminished nor rendered illusory by the expedient act of utilizing or interposing a person or firm to obtain goods for which the exclusive distributorship was conceptualized, at the expense of 47 the sole authorized distributor. In the case at bar, it was established that petitioner Cordero was not paid the balance of his commission by respondent Robinson. From the time petitioner Go and respondent Landicho directly dealt with respondent Robinson in Brisbane, and ceased communicating through petitioner Cordero as the exclusive distributor of AFFA in the Philippines, Cordero was no longer informed of payments remitted to AFFA in Brisbane. In other words, Cordero had clearly been cut off from the transaction until the arrival of the first SEACAT 25 which was sold through his efforts. When Cordero complained to Go, Robinson, Landicho and Tecson about their acts prejudicial to his rights and demanded that they respect his exclusive distributorship, Go simply let his lawyers led by Landicho and Tecson handle the matter and tried to settle it by promising to pay a certain amount and to purchase high-speed catamarans through Cordero. However, Cordero was not paid anything and worse, AFFA through its lawyer in Australia even terminated his exclusive dealership insisting that his services were engaged for only one (1) transaction, that is, the purchase of the first SEACAT 25 in August 1997. Petitioner Go argues that unlike in Yu v. Court of Appeals there is no conclusive proof adduced by petitioner Cordero that they actually purchased a second SEACAT 25 directly from AFFA and hence there was no violation of the exclusive distributorship agreement. Further, he contends that the CA gravely abused its discretion in holding them solidarily liable to Cordero, relying on
48 46 39

Articles 1207, 19 and 21 of the Civil Code despite absence of evidence, documentary or testimonial, showing that they conspired to 49 defeat the very purpose of the exclusive distributorship agreement. We find that contrary to the claims of petitioner Cordero, there was indeed no sufficient evidence that respondents actually purchased a second SEACAT 25 directly from AFFA. But this circumstance will not absolve respondents from liability for invading Corderos rights under the exclusive distributorship. Respondents clearly acted in bad faith in bypassing Cordero as they comple ted the remaining payments to AFFA without advising him and furnishing him with copies of the bank transmittals as they previously did, and directly dealt with AFFA through Robinson regarding arrangements for the arrival of the first SEACAT 25 in Manila and negotiations for the purchase of the second vessel pursuant to the Memorandum of Agreement which Cordero signed in behalf of AFFA. As a result of respondents actuations, Cordero incurred losses as he was not paid the balance of his commission from the s ale of the first vessel and his exclusive distributorship revoked by AFFA. Petitioner Go contends that the trial and appellate cou rts erred in holding them solidarily liable for Corderos unpaid commission, which is the sole obligation of the principal AFFA. It was Robinson on behalf of AFFA who, in the letter dated August 5, 1997 addressed to Cordero, undertook to pay commission payments to Pamana on a staggered progress payment plan in the form of percentage of the commission per payment. AFFA explicitly committed that it will, "upon receipt of progress payments, pay to Pamana their full commission by telegraphic transfer to an account nominated by Pamana within one to two days of [AFFA] 50 receiving such payments." Petitioner Go further maintains that he had not in any way violated or caused the termination of the exclusive distributorship agreement between Cordero and AFFA; he had also paid in full the first and only vessel he purchased from 51 AFFA. While it is true that a third person cannot possibly be sued for breach of contract because only parties can breach contractual provisions, a contracting party may sue a third person not for breach but for inducing another to commit such breach. Article 1314 of the Civil Code provides: Art. 1314. Any third person who induces another to violate his contract shall be liable for damages to the other contracting party. The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the part of the third person of the existence 52 of a contract; and (3) interference of the third person is without legal justification. The presence of the first and second elements is not disputed. Through the letters issued by Robinson attesting that Cordero is the exclusive distributor of AFFA in the Philippines, respondents were clearly aware of the contract between Cordero and AFFA represented by Robinson. In fact, evidence on record showed that respondents initially dealt with and recognized Cordero as such exclusive dealer of AFFA high-speed catamaran vessels in the Philippines. In that capacity as exclusive distributor, petitioner Go entered into the Memorandum of Agreement and Shipbuilding Contract No. 7825 with Cordero in behalf of AFFA. As to the third element, our ruling in the case of So Ping Bun v. Court of Appeals is instructive, to wit: A duty which the law of torts is concerned with is respect for the property of others, and a cause of action ex delicto may be predicated upon an unlawful interference by one person of the enjoyment by the other of his private property. This may pertain to a situation where a third person induces a party to renege on or violate his undertaking under a contract. In the case before us, petitioners Trendsetter Marketing asked DCCSI to execute lease contracts in its favor, and as a result petitioner deprived respondent corporation of the latters property right. Clearly, and as correctly viewed by the appellate court, the three ele ments of tort interference above-mentioned are present in the instant case. Authorities debate on whether interference may be justified where the defendant acts for the sole purpose of furthering his own financial or economic interest. One view is that, as a general rule, justification for interfering with the business relations of another exists where the actors motive is to benefit himself. Such justification does not exist where his sole motive is to cause harm to the other. Added to this, some authorities believe that it is not necessary that the interferers interest outweigh that of the party whose rights are invaded, and that an individual acts under an economic interest that is substantial, not merely de minimis, such that wrongful and malicious motives are negatived, for he acts in self-protection. Moreover, justification for protecting ones financial position should not be made to depend on a comparison of his economic interest in the subject matter with that of others. It is sufficient if the impetus of his conduct lies in a proper business interest rather than in wrongful motives. As early as Gilchrist vs. Cuddy, we held that where there was no malice in the interference of a contract, and the impulse behind ones conduct lies in a proper business interest rather than in wrongful motives, a party cannot be a malicious interferer. W here the
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alleged interferer is financially interested, and such interest motivates his conduct, it cannot be said that he is an officious or malicious intermeddler. In the instant case, it is clear that petitioner So Ping Bun prevailed upon DCCSI to lease the warehouse to his enterprise at the expense of respondent corporation. Though petitioner took interest in the property of respondent corporation and benefited from it, nothing on record imputes deliberate wrongful motives or malice in him. xxx While we do not encourage tort interferers seeking their economic interest to intrude into existing contracts at the expense of others, however, we find that the conduct herein complained of did not transcend the limits forbidding an obligatory award for damages in the absence of any malice. The business desire is there to make some gain to the detriment of the contracting parties. Lack of malice, however, precludes damages. But it does not relieve petitioner of the legal liability for entering into contracts and causing breach of existing ones. The respondent appellate court correctly confirmed the permanent injunction and nullification of the lease contracts between DCCSI and Trendsetter Marketing, without awarding damages. The injunction saved the respondents 54 from further damage or injury caused by petitioners interference. [emphasis supplied.] Malice connotes ill will or spite, and speaks not in response to duty. It implies an intention to do ulterior and unjustifiable harm. 55 56 Malice is bad faith or bad motive. In the case of Lagon v. Court of Appeals, we held that to sustain a case for tortuous interference, the defendant must have acted with malice or must have been driven by purely impure reasons to injure the plaintiff; in other words, his act of interference cannot be justified. We further explained that the word "induce" refers to situations where a person causes another to choose one course of conduct by persuasion or intimidation. As to the allegation of private respondent in said case that petitioner induced the heirs of the late Bai Tonina Sepi to sell the property to petitioner despite an alleged renewal of the original lease contract with the deceased landowner, we ruled as follows: Assuming ex gratia argumenti that petitioner knew of the contract, such knowledge alone was not sufficient to make him liable for tortuous interference. x x x Furthermore, the records do not support the allegation of private respondent that petitioner induced the heirs of Bai Tonina Sepi to sell the property to him. The word "induce" refers to situations where a person causes another to choose one course of conduct by persuasion or intimidation. The records show that the decision of the heirs of the late Bai Tonina Sepi to sell the property was completely of their own volition and that petitioner did absolutely nothing to influence their judgment. Private respondent himself did not proffer any evidence to support his claim. In short, even assuming that private respondent was able to prove the renewal of his lease contract with Bai Tonina Sepi, the fact was that he was unable to prove malice or bad faith on the part of petitioner in 57 purchasing the property. Therefore, the claim of tortuous interference was never established. In their Answer, respondents denied having anything to do with the unpaid balance of the commission due to Cordero and the eventual termination of his exclusive distributorship by AFFA. They gave a different version of the events that transpired following the signing of Shipbuilding Contract No. 7825. According to them, several builder-competitors still entered the picture after the said contract for the purchase of one (1) SEACAT 25 was sent to Brisbane in July 1997 for authentication, adding that the contract was to be effective on August 7, 1997, the time when their funds was to become available. Go admitted he called the attention of AFFA if it can compete with the prices of other builders, and upon mutual agreement, AFFA agreed to give them a discounted price under the following terms and conditions: (1) that the contract price be lowered; (2) that Go will obtain another vessel; (3) that to secure compliance of such conditions, Go must make an advance payment for the building of the second vessel; and (4) that the payment scheme formerly agreed upon as stipulated in the first contract shall still be the basis and used as the guiding factor in remitting money for the building of the first vessel. This led to the signing of another contract superseding the first one (1), still to be dated 07 August 1997. Attached to the answer were photocopies of the second contract stating a lower purchase price (US$1,150,000.00) and 58 facsimile transmission of AFFA to Go confirming the transaction. As to the cessation of communication with Cordero, Go averred it was Cordero who was nowhere to be contacted at the time the shipbuilding progress did not turn good as promised, and it was always Landicho and Tecson who, after several attempts, were able to locate him only to obtain unsatisfactory reports such that it was Go who would still call up Robinson regarding any progress status report, lacking documents for MARINA, etc., and go to Australia for ocular inspection. Hence, in May 1998 on the scheduled launching of the ship in Australia, Go engaged the services of Landicho who went to Australia to see to it that all documents needed for the shipment of the vessel to the Philippines would be in order. It was also during this time that Robinsons request for inquiry on the Philippine price of a Wartsila engine for AFFAs then on -going vessel construction, was misinterpreted by Cordero as indicating 59 that Go was buying a second vessel.

We find these allegations unconvincing and a mere afterthought as these were the very same averments contained in the Position Paper for the Importer dated October 9, 1998, which was submitted by Go on behalf of ACG Express Liner in connection with the complaint-affidavit filed by Cordero before the BOC-SGS Appeals Committee relative to the shipment valuation of the first SEACAT 60 25 purchased from AFFA. It appears that the purported second contract superseding the original Shipbuilding Contract No. 7825 and stating a lower price of US$1,150,000.00 (not US$1,465,512.00) was only presented before the BOC to show that the vessel imported into the Philippines was not undervalued by almost US$500,000.00. Cordero vehemently denied there was such modification of the contract and accused respondents of resorting to falsified documents, including the facsimile transmission of AFFA supposedly confirming the said sale for only US$1,150,000.00. Incidentally, another document filed in said BOC case, the 61 Counter-Affidavit/Position Paper for the Importer dated November 16, 1998, states in paragraph 8 under the Antecedent facts thereof, that -8. As elsewhere stated, the total remittances made by herein Importer to AFFA does not alone represent the purchase price for 62 Seacat 25. It includes advance payment for the acquisition of another vessel as part of the deal due to the discounted price. which even gives credence to the claim of Cordero that respondents negotiated for the sale of the second vessel and that the nonpayment of the remaining two (2) instalments of his commission for the sale of the first SEACAT 25 was a result of Go and Landichos directly dealing with Robinson, obviously to obtain a lower price for the second vessel at the expense of Cordero. The act of Go, Landicho and Tecson in inducing Robinson and AFFA to enter into another contract directly with ACG Express Liner to obtain a lower price for the second vessel resulted in AFFAs breach of its contractual obligation to pay in full the commiss ion due to Cordero and unceremonious termination of Corderos appointment as exclusive distributor. Following our pronouncement in Gilchrist v. Cuddy (supra), such act may not be deemed malicious if impelled by a proper business interest rather than in wrongful motives. The attendant circumstances, however, demonstrated that respondents transgressed the bounds of permissible financial interest to benefit themselves at the expense of Cordero. Respondents furtively went directly to Robinson after Cordero had worked hard to close the deal for them to purchase from AFFA two (2) SEACAT 25, closely monitored the progress of building the first vessel sold, attended to their concerns and spent no measly sum for the trip to Australia with Go, Landicho and Gos family members. But what is appalling is the fact that even as Go, Landicho and Tecson secretly negotiated with Robinson for the purchase of a second vessel, Landicho and Tecson continued to demand and receive from Cordero their "commission" or "cut" from Corderos earned commission from the sale of the first SEACAT 25. Cordero was practically excluded from the transaction when Go, Robinson, Tecson and Landicho suddenly ceased communicating with him, without giving him any explanation. While there was nothing objectionable in negotiating for a lower price in the second purchase of SEACAT 25, which is not prohibited by the Memorandum of Agreement, Go, Robinson, Tecson and Landicho clearly connived not only in ensuring that Cordero would have no participation in the contract for sale of the second SEACAT 25, but also that Cordero would not be paid the balance of his commission from the sale of the first SEACAT 25. This, despite their knowledge that it was commission already earned by and due to Cordero. Thus, the trial and appellate courts correctly ruled that the actuations of Go, Robinson, Tecson and Landicho were without legal justification and intended solely to prejudice Cordero. The existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of the trial court, when affirmed by the 63 appellate court, are conclusive on this Court. We see no compelling reason to reverse the findings of the RTC and the CA that respondents acted in bad faith and in utter disregard of the rights of Cordero under the exclusive distributorship agreement. The failure of Robinson, Go, Tecson and Landico to act with fairness, honesty and good faith in securing better terms for the purchase of high-speed catamarans from AFFA, to the prejudice of Cordero as the duly appointed exclusive distributor, is further proscribed by Article 19 of the Civil Code: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. As we have expounded in another case: Elsewhere, we explained that when "a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be responsible." The object of this article, therefore, is to set certain standards which must be observed not only in the exercise of ones rights but also in the performance of ones duties. These standards are the following: act with justice, give everyone his due and observe honesty and good faith. Its antithesis, necessarily, is any act evincing bad faith or intent to injure. Its elements are the following: (1) There is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another. When Article 19 is

violated, an action for damages is proper under Articles 20 or 21 of the Civil Code. Article 20 pertains to damages arising from a violation of law x x x. Article 21, on the other hand, states: Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. Article 21 refers to acts contra bonus mores and has the following elements: (1) There is an act which is legal; (2) but which is contrary to morals, good custom, public order, or public policy; and (3) it is done with intent to injure. A common theme runs through Articles 19 and 21, and that is, the act complained of must be intentional.
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Petitioner Gos argument that he, Landicho and Tecson cannot be held lia ble solidarily with Robinson for actual, moral and exemplary damages, as well as attorneys fees awarded to Cordero since no law or contract provided for solidary obligation in these cases, is equally bereft of merit. Conformably with Article 2194 of the Civil Code, the responsibility of two or more persons who are 65 66 liable for the quasi-delict is solidary. In Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, we held: [O]bligations arising from tort are, by their nature, always solidary. We have assiduously maintained this legal principle as early as 1912 in Worcester v. Ocampo, in which we held: x x x The difficulty in the contention of the appellants is that they fail to recognize that the basis of the present action is tort. They fail to recognize the universal doctrine that each joint tort feasor is not only individually liable for the tort in which he participates, but is also jointly liable with his tort feasors. x x x It may be stated as a general rule that joint tort feasors are all the persons who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for their benefit. They are each liable as principals, to the same extent and in the same manner as if they had performed the wrongful act themselves. x x x Joint tort feasors are jointly and severally liable for the tort which they commit. 1avvphi1 The persons injured may sue all of them or any number less than all. Each is liable for the whole damages caused by all, and all together are jointly liable for the whole damage. It is no defense for one sued alone, that the others who participated in the wrongful act are not joined with him as defendants; nor is it any excuse for him that his participation in the tort was insignificant as compared to that of the others. x x x Joint tort feasors are not liable pro rata. The damages can not be apportioned among them, except among themselves. They cannot insist upon an apportionment, for the purpose of each paying an aliquot part. They are jointly and severally liable for the whole amount. x x x A payment in full for the damage done, by one of the joint tort feasors, of course satisfies any claim which might exist against the others. There can be but satisfaction. The release of one of the joint tort feasors by agreement generally operates to discharge all. x xx Of course, the court during trial may find that some of the alleged tort feasors are liable and that others are not liable. The courts may release some for lack of evidence while condemning others of the alleged tort feasors. And this is true even though they are 67 charged jointly and severally. [emphasis supplied.] The rule is that the defendant found guilty of interference with contractual relations cannot be held liable for more than the amount 68 for which the party who was inducted to break the contract can be held liable. Respondents Go, Landicho and Tecson were therefore correctly held liable for the balance of petitioner Corderos commission from the sale of the first SEACAT 25, in t he amount of US$31,522.09 or its peso equivalent, which AFFA/Robinson did not pay in violation of the exclusive distributorship agreement, with interest at the rate of 6% per annum from June 24, 1998 until the same is fully paid. Respondents having acted in bad faith, moral damages may be recovered under Article 2219 of the Civil Code. On the other hand, the requirements of an award of exemplary damages are: (1) they may be imposed by way of example in addition to compensatory damages, and only after the claimants right to them has been established; (2) that they cannot be recovered as a matter of right , their determination depending upon the amount of compensatory damages that may be awarded to the claimant; and (3) the act 70 must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent manner. The award of exemplary damages is thus in order. However, we find the sums awarded by the trial court as moral and exemplary damages as reduced by the CA, still excessive under the circumstances.
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Moral damages are meant to compensate and alleviate the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injuries unjustly caused. Although incapable of pecuniary estimation, the amount must somehow be proportional to and in approximation of the suffering inflicted. Moral damages are not punitive in nature and were never intended to enrich the claimant at the expense of the defendant. There is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral damages, since each case must be governed by its own peculiar facts. Trial courts are given discretion in determining the amount, with the limitation that it "should not be palpably and 71 scandalously excessive." Indeed, it must be commensurate to the loss or injury suffered. We believe that the amounts of P300,000.00 and P200,000.00 as moral and exemplary damages, respectively, would be sufficient and reasonable. Because exemplary damages are awarded, attorneys fees may also be awarded in consonance with Article 2208 72 (1). We affirm the appellate courts award of attorneys fees in the amount of P50,000.00. WHEREFORE, the petitions are DENIED. The Decision dated March 16, 2004 as modified by the Resolution dated July 22, 2004 of the Court of Appeals in CA-G.R. CV No. 69113 are hereby AFFIRMED with MODIFICATION in that the awards of moral and exemplary damages are hereby reduced to P300,000.00 and P200,000.00, respectively. With costs against the petitioner in G.R. No. 164703. SO ORDERED. NOTES: Parties; real party-in-interest. First, on the issue of whether the case had been filed by the real party-in-interest as required by Section 2, Rule 3 of the Rules of Court, which defines such party as the one (1) to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. The purposes of this provision are: 1) to prevent the prosecution of actions by persons without any right, title or interest in the case; 2) to require that the actual party entitled to legal relief be the one to prosecute the action; 3) to avoid a multiplicity of suits; and 4) to discourage litigation and keep it within certain bounds, pursuant to sound public policy. A case is dismissible for lack of personality to sue upon proof that the plaintiff is not the real party-in-interest, hence grounded on failure to state a cause of action. On this issue, we agree with the CA in ruling that it was Cordero and not Pamana who is the exclusive distributor of AFFA in the Philippines as shown by the Certification dated June 1, 1997 issued by Tony Robinson. Petitioner Go mentions the following documents also signed by respondent Robinson which state that Pamana Marketing Corporation represented by Mr. Mortimer F. Cordero was actually the exclusive distributor: (1) letter dated 1 June 1997; (2) certification dated 5 August 1997; and (3) letter dated 5 August 1997 addressed to petitioner Cordero concerning commissions to be paid to Pamana Marketing Corporation. Such apparent inconsistency in naming AFFAs exclusive distributor in the Philippines is of no moment. For all intents and purposes, Robinson and AFFA dealt only with Cordero who alone made decisions in the performance of the exclusive distributorship, as with other clients to whom he had similarly offered AFFAs fast ferry vessels. Moreover, the stipulated commissions from each progress payments made by Go were directly paid by Robinson to Cordero. Respondents Landicho and Tecson were only too aware of Corderos authority as the person who was appointed and acted as exclusive distributor of AFFA, which can be gleaned from their act of immediately furnishing him with copies of bank transmittals everytime Go remits payment to Robinson, who in turn transfers a portion of funds received to the bank account of Cordero in the Philippines as his commission. Out of these partial payments of his commission, Cordero would still give Landicho and Tecson their respective commission, or cuts from his own commission. Respondents Landicho and Tecson failed to refute the evidence submitted by Cordero consisting of receipts signed by them. Said amounts were apart from the earlier expenses shouldered by Cordero for Landichos airline tickets, transportation, food and hotel accommodations for the trip to Australia. Allan C. Go, doing business under the name and style of ACG Express Liner vs. Mortimer F. Cordero/Mortimer F. Cordero vs. Allan C. Go, doing business under the name and style of ACG Express Liner, et al., G.R. No. 164703/G.R. No. 164747, May 4, 2010

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 141508 May 5, 2010

ROBERTO S. BENEDICTO and TRADERS ROYAL BANK, Petitioners, vs. MANUEL LACSON, A & A MONTELIBANO HIJOS, INC., ROBERTO ABELLO, DOMINADOR AGRAVANTE, LUISA ALANO, ALEXANDER FARMS, INC., ANGELA ESTATE, INC., GUILLERMO and DOROTHY ARANETA, LETECIA ARANETA, ARCEO RAMOS & SONS, INC., SPOUSES GEORGE & LOURDES ARGUELLES, ASOSACION DE HACENDEROS DE SILAY-SARAVIA, INC. (AHSSI), SALVADOR BAUTISTA, BJB AGRO-INDUSTRIAL CORP., EUGENIO BAUTISTA, LUZ RAMOS BAYOT, CYNTHIA BENEDICTO, EVA BENEDICTO, LEOPOLDO BENEDICTO, MARY JANE BENEDICTO, FLORO BONGCO, FRANCISCO BONGCO, GERARDO BONGCO, MAXCY BORROMEO, QUIRICO CAMUS, CELSO AGRO INDUSTRIAL CORP., JULIA SO DE UYCHIAT, ARTURO UYCHIAT, LUIS UYCHIAT, ELISE UYCHIAT, CIRO LOCSIN AGRICULTURAL CORPORATION, CLAMONT FARMS, INC., SAGRARIO CLAPAROLS, JAIME CLAPAROLS, CLAUDIO LOPEZ, INC., RAMON CLEMENTE, SPOUSES ROMY CONLU and ASUCENA DIASATA, SPOUSES CORNELIO and DOLORES CONSING, LOPE CONSING, SPOUSES RAFAEL and JULIETA CONSOLACION, BALCONER CORDOVA, CONSOLING CORDOVA, RAFAEL COSCULLUELA, CLK AGRO DEVELOPMENT CORP., EMILIO CUAYCONG, JR., SPOUSES JOSE ROBERTO and PATRICIO CUAYCONG, ROMELI CUAYCONG, SONYA CUAYCONG, FELIPE DALIMO-OS, UBERTA DALIMO-OS, DELARICA REALTY, DOLL AGRICULTURAL CORP., DR. ANTONIO LIZARES CO., INC., SPOUSES BONIFACIO and URBANA DUJON, ELAR AGRO INDUSTRIAL CORP., ELCEE FARMS, INC., ESTATE OF FERNANDO ERENETA, SPOUSES BENJAMIN and TERESITA ESTACIO, EUSEBIO INCORPORATED, FARMLAND INCORPORATED, FELICIA AGRI DEVELOPMENT CORP., FELISA AGRI CORPORATION, SPOUSES ROLANDO and NELLY FERMIN, FERTIACRES AGRI-CULTURAL CORPORATION, FRANCISCO JAVIER LACSON Y HERMANOS, GAMBOA HERMANOS, INC., HONORATO GAMBOA, ESTATE OF REMEDIOS GAMBOA, ANTONIO GASTON, HEIRS OF GERARDO GASTON, ESTATE OF JOSE MA. GASTON, VICTOR MA. GASTON, JOSE MA. GASTON, JOSE MA. GOLEZ, ANTONIO GONZAGA, ERNESTO GONZAGA, JESUS GONZAGA, LUIS GONZAGA, GONZAGA REAL ESTATE ENTERPRISES, INC., ROBERT GONZAGA, GREEN SOILS AGRICULTURE, INC., ESTATE OF REMEDIOS L. VDA. DE GUINTO, WARLITO USTILO, G.V. & SONS, INC., ENCARNACION HERNAEZ, SPOUSES MIGUEL and CECILIA MAGSAYSAY, ADELINO HERNANDEZ, SPOUSES ABELARDO and EMILY HILADO, SPOUSES ALFREDO and TERESITA HILADO, RAMON HILADO, SPOUSES REMO and ELSIE HINLO, SPOUSES DANILO and NIMFA HINLO, MA. CRISTINA HOJILLA, DIOSDADO and DIONISIO HOSALLA, JALIMONT REALTY, INC., ALBERTO and BENJAMIN JALANDONI, DANIEL JALANDONI, JALKK CORPORATION, LEONOR JAVELLANA, ERIBERTO JESENA, PISON JESUSA and SISTERS, JISARA AGRI DEVELOPMENT CORPORATION, J.H. TAMPINCO AGRICULTURAL CORP., LILIA LOPEZ DE JISON, ROBERTO JISON, JOMILLA AGRO INDUSTRIAL VENTURES, INC., BENIGNA JONOTA, JOSEFINA RODRIGUEZ AGRICULTURAL CORP., JT ALUNAN AGRI. CORP., ANTONIO JUGO, SPOUSES JUANITO JUMILLA and SANTAS DALIMO-OS, ESTATE OF CASILDA JUSTINIANI, SPOUSES ALEJANDRO and ANTONIO KANA-AN, AGUSTIN KILAYCO, SPOUSES RODOLFO and EMMA LACSON, EMMANUEL LACSON, ESTATE OF ERNESTO LACSON, LACSON HERMANOS, INC., ESTATE OF FELIPE LACSON, MANUEL LACSON, ESTATE OF MANUELA VDA. DE LACSON, PEDRO LACSON, RAMON LACSON, SR., TERESA LACSON, RODRIGO LACSON, LACTOR ESTATE DEVELOPMENT CORP., LIBERTINO AGUTANG, CARMEN CONSING LA'O, JOSE LA'O, JULIA LA'O, LA SALVACION AGRICULTURAL CORP., ENRIQUE LEDESMA, LEDESMA HERMANOS, INC., JESUS LEDESMA, SPOUSES JOSE MA. and EVA LEDESMA, LEGA FARMS, CORP., ESTATE OF ANASTACIO LEGARDE, LIMJAP-ALUNAN AGRI, JESUS LIZARES, JOSE LIZARES, LUIS LIZARES, NILO LIZARES, SR. and JR., SPOUSES JOSE and PERLA LIZARES, ROBERTO LIZARES, ANTONIO LOCSIN, FEDERICO LOCSIN, JR., SPS. ROBERT and JEAN MARIE WINEBURGER, ESTATE OF JOSE LOCSIN, OSCAR LOCSIN, SPOUSES JOSE MA. and MARGARITA LOCSIN, VICENTE LOCSIN, LONOY AGRICULTURAL CORP., DOLORES LOLITA VDA. DE LOPEZ, FORTUNATO LOPEZ, NER LOPEZ, ESTATE OF NIEVES LOPEZ, POMPEYO LOPEZ, ROSENDO LOPEZ, ARTURO DE LUZURIAGA, CLAUDIO DE LUZURIAGA, CATALINA VDA. DE MAKILAN, BENITO MALAN, BASILIO MANALO, MANCY & SONS, INC., MANILAC AGRO COMMERCIAL CORP., SPOUSES MANUEL and LUISA MANOSA, JULIO and GENEVIEVE MAPA, MAPLE AGRI-CORP., INC., MARLAND AGRICULTURAL CORP., MARVIA & CO., INC., ANTONIO MENDOZA, BERNARDO MENDOZA, JR., SPOUSES BERNARDO and ROSARIO MENDOZA, MALAURIE AGRICULTURAL DEVELOPMENT CORP., HEIRS OF MANUEL and CEFERINO MONFORT, ESTATE OF MANUEL MONFORT, JR., SPOUSES EMILIO and LINDA MONTALVO, MONTILLA SISTERS AGRICULTURAL CORP., ANTONIO MONTINOLA, NIEVES AGRO-INDUSTRIAL DEVELOPMENT CORP., MAMERTO DE OCA, O. LEDESMA & CO., INC., HEIRS OF MERCEDES PABIANA, TEODULO PABIANA, ESTATE OF ROSARIO PALENZUELA, ESTATE OF ENCARNACION PANLILIO, JOSE PASCUAL, JOHNNY DE LA PENA, ANICETA PERDIGUEROS, AQUILES PERDIGUEROS, LUISA PEREZ, CRISTINA PERTIERRA, PHISON FARMS, INC., ESTATE OF JOSEFINA PICCIO, PISON-LOCSIN KAUTURAN, NICOLAS POLINARIO, PUYAS AGRO, INC., ESTATE OF LEONOR DE LA RAMA, LUIS RAMA, RAMON DE LA RAMA AGRO DEVELOPMENT CORP., REMO RAMOS, BENJAMIN RAMOS, MARIANO RAMOS, SPOUSES ENRIQUE and TERESITA REGALADO, SPS. JOSE MA. and AMELIA REGALADO, MANUEL REGALADO, AQUILINO REONIR, RHE & SONS AGRO INDUSTRIAL CORP., ROAM AGRICULTURAL CORP., AMANDO ROBILLO, ROMALUX AGRI FARMS, INC., LETECIA DEL ROSARIO, MANUEL DEL ROSARIO, EULALIA ROSELLO, ROSENDO H. DE LA RAMA & CO., BIBIANO SABINO, SPOUSES REINHARDT and CORAZON SAGEMULLER, PEDRO SAJO,

SPOUSES AQUILES and MA. CRISTINA SAJO, SAN ANTONIO FARMS, JOSE MA. SANTOS, MARCELINO SAUSI, STA. CLARA ESTATE, INC., SPOUSES FRANCISCO and JULITA SERRIOS, ANTONIO SIAN, SIASON-DITCHING AGRO INDUSTRIAL CORP., SPOUSES LUCRECIO SORIANO and LIBERATA DALIMO-OS, IMELDA TAMPINCO, T. GENSOLI & CO., TINIHABAN AGRICULTURAL CORP., SPOUSES LINO and THELMA TOLEDO, FRANCISCO TORIANO, GODOFREDO TORIANO, LUCRECIO TORIANO, MOISES TORIANO, TOTA, INC., DEMOCRITO TRECHO, JESUSA TRECHO, PABIO TRECHO, RUFINO TRECHO, ESTATE OF FLORENTINO TREYES, ESTATE OF VICTOR TREYES, FERNANDO TREYES, LILIA TREYES, SOCORRO TUVILLA, FRANCIS TUVILLA, SPS. JOE MARIE and VICTORIA TUVILLA, JOSE URBANOZO, JR., ESTATE OF ROSARIO VALENCIA, EDUARDO DE VENECIA, VICTORIAS MILLING, CO., INC., SPOUSES EDSEL and RITA VILLACIN, JOSEFA VILLAERA, VILLALAYA AGRO DEVELOPMENT, SERAFIN VILLANUEVA, IRVING VILLASOR, DOMINICIANO VINARTA, ROSENDO and CANDIDO VINARTA, BERNARD YBIERNAS, ESTRELLA YBIERNAS, SPOUSES CARLOS and EDITH YLANAN, BENITO YOUNG, SPOUSES RENATO and VICTORIA YULO, and JESUS YUSAY, Respondents. DECISION PERALTA, J.: Before this Court is a Petition for Review on certiorari, under Rule 45 of the Rules of Court, seeking to set aside the September 30, 2 3 1999 Decision and January 10, 2000 Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 53841. The facts of the case are as follows: Under Presidential Decree No. 388, the Philippine Sugar Commission (PHILSUCOM) was created and vested with the power to act as the single buying and selling agency of sugar in the Philippines. On September 7, 1977, PHILSUCOM further organized the National 5 Sugar Trading Corporation (NASUTRA) as its buying marketing arm. Petitioner Robert S. Benedicto was the concurrent Chairman 6 and President of Traders Royal Bank and NASUTRA. The case stems from a Complaint, docketed as Civil Case No. 95-9137 (Bacolod Case), filed by respondents, individual sugar planters and agricultural corporations Manuel Lacson et al., on November 23, 1995, in the Regional Trial Court (RTC) of Bacolod City, Branch 8 44. Respondents complaint was premised on a claim for unpaid shares based on Sugar Order No. 2, series of 1979 -1980 and Sugar 9 10 Order No. 1, series of 1980-1981 issued by PHILSUCOM. The claims cover the sugar export sales supposedly undervalued by NASUTRA and coursed through Traders Royal Bank, the total amount of which is claimed by respondents to be $33,907,172. 47, to wit: SUMMARY OF CLAIMS UNDER THE FIRST TO FIFTEENTH CAUSES OF ACTION 92. As tabulated in Annex C hereof, while the total amount actually paid by the buyers and collected by the PHILSUCOM and the Defendants NASUTRA, BENEDICTO, MONTEBON and TRB on the sales of export sugar subject of the preceding Causes of Action, amounted to US$ 94,146,954.03, the PHILSUCOM and the said Defendants recorded and reported a total collection of only US$60,239,781.56, resulting in an undervaluation of Defendant NASUTRAs export sales by US$ 33, 907,172.74 and, correspondingly, in an equivalent understatement of the amount due the Plaintiffs and other sugar producers in the profits realized from such sales, pursuant to the directive of then President Marcos as implemented in the PHILSUCOM SUGAR ORDERS hereto attached as Annexes B and B-1 hereof. 93. Accordingly, on the basis of their respective production of "A" and "C" sugar for the 1980-1981 crop year vis--vis the national production of 20,474,653 piculs of the same classes of sugar for the same crop year, the Plaintiffs are entitled to the payment by Defendants of their pro rata share, in the amounts indicated opposite their respective names in Annex C-1 hereof, in the undeclared 11 profit of US$33,907,172.74 realized from the export sales, subject of the preceding Causes of Action, during the said crop year. Petitioner, as President and concurrent Chairman of both Traders Royal Bank and NASUTRA, was charged by respondents with fraud and bad faith, not only in refusing to furnish them accurate data on NASUTRAs export sugar sales, but, more importantly, in under12 reporting and under-declaring the true prices of the shipments. Respondents, thus, prayed for a refund of their shares in the undervalued shipments. On December 27, 1995, petitioner filed a Motion to Dismiss, arguing therein (1) that respondents had violated the rule on forum shopping; (2) that respondents have no cause of action; (3) that the issues involved are res judicata or rendered moot by case law; and (4) that the claim or demand has already been paid.
13 7 4 1

On the issue of forum shopping, petitioner argued that respondents have already filed the following cases beforehand, viz.: (a) Civil Case No. 4301, before Branch 51 of the RTC of Bacolod, entitled Hector Lacson, et al. v. NASUTRA et al., (Hector Lacson Case); (b) Civil Case No. 88-46368, before Branch 23 of the RTC of Manila, entitled Ramon Monfort et al. v. NASUTRA et al. (Ramon Monfort Case); and (c) Civil Case No. 65156, before Branch 264 of the RTC of Pasig, entitled Manuel Lacson, et al. v. NASUTRA, et al. (Pasig 14 Case). On the issue of no cause of action, petitioner argued that: (a) not being their agent, NASUTRA had no obligation to share its profits with respondents; (b) the questioned transactions were already perfected and consummated both with respect to the delivery of the sugar and full payment of the price; (c) respondents are estopped from questioning the subject transactions, having executed in favor of NASUTRA a "Chattel Mortgage on Standing Crop" which authorized the latter, among others, to sell or dispose of the same at the time, place, and for the price which it may deem convenient and reasonable; and (d) NASUTRA had long been dissolved and 15 liquidated under Presidential Decree No. 2005 and Executive Order No. 114. Lastly, petitioner argued that the issues posed by respondents are barred by res judicata and/or rendered moot by the decisions in the following cases, viz.: (a) G.R. No. 55798, entitled Corazon Zayco, et al. v. NASUTRA et al.; (b) Civil Case No. Q- 33723, entitled Hortensia Starke v. NASUTRA, et al.; (c) Civil Case No. 3265, entitled Cecilia Magsaysay, et al. v. NASUTRA et al.; and (d) Civil Case No. 16 16439, entitled John Keng Seng v. NASUTRA, et al. On March 26, 1996, respondents filed a Consolidated Opposition to Motion to Dismiss. Simultaneous thereto, respondents also filed an "Amended Certification" to the following effect: xxxx 2. That, except for the case entitled Manuel Lacson v. Roberto S. Benedicto, et al., Civil Case 65156, Pasig, RTC Branch 264, filed by some of the Plaintiffs on June 20, 1995 and subsequently withdrawn by them without prejudice on November 14, 1995 pursuant to Sec. 1, Rule 17 prior to the filing of the present suit, Plaintiffs have not commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or any other tribunal or agency; that to the best of my knowledge, no such action or proceeding is pending the Supreme Court, the Court of Appeals, or any other tribunal or agency; and if I or they should hereafter learn that a similar action or proceeding has been filed or pending before the Supreme Court , Court of Appeals, or any other tribunal or agency, Plaintiffs and I hereby undertake to report such fact within five (5) days therefrom to this Honorable 18 Court. On June 5, 1996, the RTC issued an Order granting petitioners motion to dismiss the complaint, the dispositive portion of which reads: WHEREFORE, premises considered, the Motions to Dismiss are hereby GRANTED. The case against all the defendants is ordered DISMISSED. Furnish copies of this Order all counsel on record for their information. SO ORDERED.
20 19 17

The RTC ruled that a perusal of the copies of the complaints in two cases, namely: Hector Lacson Case and Ramon Monfort Case show similarities with the present Bacolod Case such that different decisions or rulings would give rise to conflicting rules on law on 21 similar issues. The RTC also held that respondents were guilty of forum shopping for failure to report in their original anti-forum shopping certification in the Bacolod Case that they had filed a similar case with the RTC of Pasig notwithstanding that the same had 22 been withdrawn by them. The RTC ruled that even if the Pasig Case had been withdrawn, the same had already been commenced. Thus, the RTC held that there was a need to report the same in the anti-forum shopping certification in the Bacolod Case. Lastly, the 23 RTC ruled that NASUTRA had already been dissolved and hence, respondents have no cause of action against NASUTRA. The other grounds raised, however, by petitioner in support of its motion to dismiss were denied by the RTC, as the same did not appear to be 24 indubitable without further evidence. Respondents appealed the RTC Order to the CA. On September 30, 1999, the CA rendered a Decision reversing the assailed RTC Order. The CA found merit in respondents appeal and ordered for the remand of the case to the RTC. The dispositive portion of the Decision reads:

WHEREFORE, the appeal is GRANTED and the Assailed Order dated June 5, 1996 is REVERSED and SET ASIDE, and in lieu thereof, a new one is entered ordering the REMAND of the case to the court of origin for further proceedings. SO ORDERED.
25

Aggrieved by the CA Decision, petitioner filed a Motion for Reconsideration , which was, however, denied by the CA in a Resolution dated January 10, 2000. Hence, herein petition, with petitioner raising the following errors committed by the CA, to wit: 5.1. WHEN IT ABSOLVED THE PRIVATE RESPONDENTS OF ANY VIOLATION OF THE ANTI-FORUM SHOPPING RULE NOTWITHSTANDING THEIR (CONCEDED) FAILURE TO SEASONABLY APPRISE THE BACOLOD COURT OF THE EARLIER FILING OF A SIMILAR CASE BEFORE THE PASIG COURT, THE SAME BEING A MATERIAL INFORMATION THE NON-DISCLOSURE OR CONCEALMENT THEREOF CONSTITUTING AN INEXCUSABLE OMISSION CLEARLY PENALIZED UNDER THE PERTINENT SC CIRCULARS AND SECTION 5, RULE 7 OF THE NEW RULES OF CIVIL PROCEDURE; 5.2. WHEN IT REFUSED TO APPLY THE PRINCIPLE OF LITIS PENDENTIA NOTWITHSTANDING THE (CONCEDED) SIMILARITIES IN THE CIRCUMSTANCES OF THE PLAINTIFFS, THE IDENTITIES OF THE DEFENDANTS AND, MOREOVER, THE SIMILARITIES IN SOME OF THE ANTECEDENT ISSUES IN CIVIL CASE NO. 95-9137 AND IN THE OTHER PENDING CASES AGAINST THE HEREIN PETITIONERS; and 5.3. WHEN IT FAILED TO CONSIDER THAT CIVIL CASE NO. 95-9137 DESERVES DISMISSAL, AT ANY RATE, BASED ON THE OTHER GROUNDS INVOKED BY THE HEREIN PETITIONERS, NAMELY, LACK OF CAUSE OF ACTION, RES JUDICATA, PAYMENT AND 27 PRESCRIPTION. The petition is not meritorious. On Forum Shopping: Civil Case No. 95-9137 (Bacolod Case) vis-a-vis Civil Case No. 65156 (Pasig Case) Petitioner contends that respondents are guilty of forum shopping because they failed to disclose, at the time of the filing of the Bacolod Case, the fact that some of the respondents had earlier commenced a similar action in Pasig. Petitioner claims that respondents should have informed the RTC of Bacolod of the commencement and subsequent withdrawal of the Pasig Case in the certificate of non-forum shopping. Petitioner insists that even if the Pasig Case was subsequently withdrawn, the same still constituted a "commenced action," which is required to be disclosed under the rules of forum shopping. Section 5, Rule 7 of the 1997 Rules of Civil Procedure provides that: SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt as well as a cause for administrative sanctions. A perusal of the records shows that, with the exception of additional party-plaintiffs, the Pasig Case actually has a strong resemblance to the Bacolod Case. The Pasig Case, however, was dismissed upon the instance of the plaintiffs even before the 28 Bacolod Case was filed. The RTC Order allowing the dismissal of the complaint in the Pasig Case is hereunder reproduced, to wit: xxxx

26

On November 14, 1995, A Notice of Dismissal was filed by plaintiffs thru counsel, Attys. Ricardo G. Nepomuceno, Jr. and Epifanio Sedigo, Jr., pursuant to Section 1, Rule 17 of the Rules of Court. According to the said Rule, plaintiff may, at any time before service of answer, dismiss an action by filing a notice of dismissal. Records show that no answer has yet been filed by defendants. Being in conformity to the Rules, the same is hereby granted. WHEREFORE, herein complaint is hereby DISMISSED and without prejudice to the re-filing thereof. Notify parties and counsel of this Order. SO ORDERED.
29

The essence of forum shopping is the filing by a party against whom an adverse judgment has been rendered in one forum, seeking 30 another and possibly favorable opinion in another suit other than by appeal or special civil action for certiorari; the act of filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively for the purpose of 31 obtaining a favorable judgment. Forum shopping exists where the elements of litis pendentia are present or where a final 32 judgment in one case will amount to res judicata in the action under consideration. There is no dispute that the dismissal of the complaint in the Pasig case, upon notice of the plaintiffs therein, was sanctioned by 33 Section 1, Rule 17 of the Revised Rules of Court. Quite clearly, the Order declared that the dismissal of the complaint was without prejudice to the re-filing thereof. Moreover, even if the same were tested under the rules on litis pendentia and res judicata, the danger of conflicting decisions cannot be present, since the Pasig case was dismissed even before a responsive pleading was filed by petitioner. Since a party resorts to forum shopping in order to increase his chances of obtaining a favorable decision or action, it has been held that a party cannot be said to have sought to improve his chances of obtaining a favorable decision or action where no 34 unfavorable decision has even been rendered against him in any of the cases he has brought before the courts. While the RTC may have been of the opinion that the Pasig Case was nevertheless "commenced" and, therefore, the same should have been stated by respondents in their certification of non-forum shopping in the Bacolod case, this Court does not share the same view. In Roxas v. Court of Appeals, this Court had on occasion ruled that when a complaint is dismissed without prejudice at the instance of the plaintiff, pursuant to Section 1, Rule 17 of the 1997 Rules of Civil Procedure, there is no need to state in the certificate of nonforum shopping in a subsequent re-filed complaint the fact of the prior filing and dismissal of the former complaint, thus: Considering that the complaint in Civil Case No. 97-0523 was dismissed without prejudice by virtue of the plaintiffs (herein petitioners) Notice of Dismissal dated November 20, 1997 filed pursuant to Section 1, Rule 17 of the 1997 Rules of Civil Pro cedure, there is no need to state in the certificate of non-forum shopping in Civil Case No. 97-0608 about the prior filing and dismissal of Civil Case No. 97-0523. In Gabionza v. Court of Appeals, we ruled that it is scarcely necessary to add that Circular No. 28-91 (now Section 5, Rule 7 of the 1997 Rules of Civil Procedure) must be so interpreted and applied as to achieve the purposes projected by the Supreme Court when it promulgated that Circular. Circular No. 28-91 was designed to serve as an instrument to promote and facilitate the orderly administration of justice and should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective or the goal of all rules or procedure which is to achieve substantial justice as expeditiously as possible. The fact that the Circular requires that it be strictly complied with merely underscores its mandatory nature in that it cannot be dispensed with or its requirements altogether disregarded, but it does not thereby interdict substantial compliance with its provisions under justifiable circumstances. 1avvphi1 Thus, an omission in the certificate of non-forum shopping about any event that would not constitute res judicata and litis pendencia as in the case at bar, is not fatal as to merit the dismissal and nullification of the entire proceedings considering that the evils sought to be prevented by the said certificate are not present. It is in this light that we ruled in Maricalum Mining Corp. v. National Labor Relations Commission that a liberal interpretation of Supreme Court Circular No. 04-94 on non-forum shopping would be more in keeping with the objectives of procedural rules which is to "secure a just, speedy and inexpensive disposition of every action and 36 proceeding."
35

Verily, in numerous occasions, this Court has relaxed the rigid application of the rules to afford the parties the opportunity to fully ventilate their cases on the merits. This is in line with the time-honored principle that cases should be decided only after giving all parties the chance to argue their causes and defenses. Technicality and procedural imperfection should thus not serve as basis of 37 38 decisions. Technicalities should never be used to defeat the substantive rights of the other party. Every party-litigant must be 39 afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities. In 40 that way, the ends of justice would be better served. For, indeed, the general objective of procedure is to facilitate the application of justice to the rival claims of contending parties, bearing always in mind that procedure is not to hinder but to promote the 41 administration of justice. In the case at bar, considering that the same involves the various claims of 371 respondents, this Court finds that justice and equity are best served by allowing respondents to prove their case on the merits rather than denying them their day in court on a strict application of the rules. On Litis Pendentia: Bacolod Case, Hector Lacson Case, Ramon Monfort Case Petitioner contends that the CA erred when it refused to apply the principle of litis pendentia notwithstanding the similarities in the circumstances of the plaintiffs, the identities of the defendants and the similarities in some of the antecedent issues in the Bacolod Case, the Hector Lacson Case and Ramon Monfort Case. The requisites of litis pendentia are: (a) the identity of parties, or at least, such as representing the same interests in both actions; (b) the identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two cases, 42 such that judgment in one, regardless of which party is successful, would amount to res judicata in the other. The underlying principle of litis pendentia is the theory that a party is not allowed to vex another more than once regarding the same 43 subject matter and for the same cause of action. This theory is founded on the public policy that the same subject matter should not be the subject of controversy in courts more than once, in order that possible conflicting judgments may be avoided for the sake 44 of the stability of the rights and status of persons. The CA was correct when it opined that: Our perusal of the record reveals that forum shopping cannot, indeed, be attributed to the appellants. While it may be readily conceded that the plaintiffs in the instant case are more or less similarly situated as the plaintiffs in the cases previously filed and that the defendants, or at least the interest they represent, are basically the same, the fact remains that there is no identity of causes of action and issues in the cases so far filed against the latter. The instant suit, as may be gleaned from the complaint, concerns the supposed undervaluation by the appellees of fifteen (15) sugar export sales of the appellants export sugar production for the crop years 1979-1980 and 1980-1981 (pp. 3-32, Orig. Rec.). In contrast, Civil Case No. 4301, entitled "Hector Lacson, et al. vs. National Sugar Trading Corporation, et al." concerns the overcharging of tradin g costs for the plaintiffs export sugar production for the crop years 1981-1982 and 1982-1983, underpayment resulting from the defendants use of an erroneous peso -dollar exchange rate and reimbursement for amounts alleged to have been wrongfully withheld by the latter (pp. 163-171, ibid.) On the other hand, Civil Case No. 88-46368 entitled "Ramon Monfort, et al. vs. Philippine Sugar Commission, et al." concerned the deficiency due the plaintiffs therein from sugar export sales for which a lower exchange rate was allegedly used by the defendants, the recovery, among others, of excessive trading costs charged, unauthorized deductions, damages, premiums and other sums supposedly still due from the defendants, as well as a detailed accounting of the sales of the export sugar produced by the plaintiffs therein. While the amended complaint filed in the case also sought to claim differentials for three (3) under-valued/under-declared NASUTRA export sales from the crop year 1980-1981 harvest, the same significantly pertained to different shipments and were coursed not through appellee Traders Royal Bank but through the Republic Planters Bank (pp. 246 -271, ibid). The variance in the subject matters 45 of the instant case and the aforesaid cases are even conceded in the brief filed by appellee Roberto Benedicto (pp. 153-155, Rollo). The test to determine identity of 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 forms or the 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 46 infallible. While the plaintiffs in the Bacolod Case are more or less similarly situated as the plaintiffs in the Hector Lacson Case and Ramon 47 Monfort Case, the CA was correct when it ruled that there was no identity of causes of action and issues as it cannot be said that exactly the same evidence are needed to prove the causes of action in all three cases.

Thus, in the Bacolod Case, the evidence needed to prove that petitioner undervalued fifteen sugar export sales of respondents export sugar production for the crop years 1979-1980 and 1980-1981 is not the same evidence needed in the Hector Lacson Case to prove the over-charging of trading costs for respondents export sugar production for the crop years 1981 -1982 and 1982-1983, underpayment resulting from the petitioners use of an erroneous peso -dollar exchange rate and reimbursement for amounts alleged to have been wrongfully withheld by the latter. The same holds true for the Ramon Monfort Case where the same significantly pertained to different shipments and were coursed not thru the Traders Royal Bank, but thru the Republic Planters Bank. The Court of Appeals, therefore, did not abuse its discretion in finding that no litis pendentia existed in the case at bar. On the "other grounds" which warrant the dismissal of the action It is the position of petitioner that the CA erred when it chose not to dismiss the case based on the "other grounds" petitioner had earlier raised in its motion to dismiss. More specifically, petitioner claims that the grounds of lack of cause of action, res judicata, payment and prescription warrant the dismissal of the complaint. The same deserves scant consideration. It bears to stress that the RTC, in its June 5, 1996 Order, did not also consider the other grounds now raised by petitioner, to wit: In view of the sufficiency of the grounds for dismissal discussed above, the other grounds invoked by the defendants in their Motion 48 to Dismiss, which do not appear to be indubitable without additional evidence need not be considered. While petitioners Motion to Dismiss was granted by the RTC in its June 5, 1996 Order, the same Order, however, effectively d enied the other grounds raised by petitioner as the same did not appear to be indubitable without additional evidence. It is a settled rule that an Order denying a motion to dismiss is merely interlocutory and, therefore, not appealable, nor can it be subject of a petition for review on certiorari. Such order may only be reviewed in the ordinary course of law by an appeal from the judgment after trial. The ordinary procedure to be followed in that event is to file an answer, go to trial, and if the decision is 49 adverse, reiterate the issue on appeal from the final judgment. While the rule refers to instances when a motion to dismiss is completely denied, this Court finds no reason not to apply the same in instances when some of the grounds raised in a motion to dismiss are denied by the lower court. The "other grounds" now raised by petitioner were not before the CA because the same were not put in issue by respondents when they chose to assail the RTCs Order to dismiss the complaint. This is understandable especially since the "other grounds" were not made the basis of the RTCs Or der. Procedurally then, the proper remedy of petitioner, should he choose to reassert the "other grounds," is to interpose the same as defenses in his answer and not to put them in issue in this appeal. WHEREFORE, premises considered, the petition is DENIED. The September 30, 1999 Decision and January 10, 2000 Resolution of the Court of Appeals in CA-G.R. CV No. 53841, directing for the remand of the case, are AFFIRMED. The Regional Trial Court of Bacolod City, Branch 44, is hereby ordered to hear the case on the merits and decide the same with deliberate dispatch. SO ORDERED. NOTES: Pleadings; certification of non-forum shopping. Petitioner contends that respondents are guilty of forum shopping because they failed to disclose, at the time of the filing of the Bacolod Case, the fact that some of the respondents had earlier commenced a similar action in Pasig. Petitioner claims that respondents should have informed the RTC of Bacolod of the commencement and subsequent withdrawal of the Pasig Case in the certificate of non-forum shopping. Petitioner insists that even if the Pasig Case was subsequently withdrawn, the same still constituted a commenced action, which is required to be disclosed under the rules of forum shopping. Section 5, Rule 7 of the 1997 Rules of Civil Procedure provides that: SEC. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or

claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed. Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt as well as a cause for administrative sanctions. A perusal of the records shows that, with the exception of additional party-plaintiffs, the Pasig Case actually has a strong resemblance to the Bacolod Case. The Pasig Case, however, was dismissed upon the instance of the plaintiffs even before the Bacolod Case was filed. The RTC Order allowing the dismissal of the complaint in the Pasig Case is hereunder reproduced, to wit: xxxx On November 14, 1995, A Notice of Dismissal was filed by plaintiffs thru counsel, Attys. Ricardo G. Nepomuceno, Jr. and Epifanio Sedigo, Jr., pursuant to Section 1, Rule 17 of the Rules of Court. According to the said Rule, plaintiff may, at any time before service of answer, dismiss an action by filing a notice of dismissal. Records show that no answer has yet been filed by defendants. Being in conformity to the Rules, the same is hereby granted. WHEREFORE, herein complaint is hereby DISMISSED and without prejudice to the re-filing thereof. Notify parties and counsel of this Order. SO ORDERED. The essence of forum shopping is the filing by a party against whom an adverse judgment has been rendered in one forum, seeking another and possibly favorable opinion in another suit other than by appeal or special civil action for certiorari; the act of 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 or where a final judgment in one case will amount to res judicata in the action under consideration. There is no dispute that the dismissal of the complaint in the Pasig case, upon notice of the plaintiffs therein, was sanctioned by Section 1, Rule 17 of the Revised Rules of Court. Quite clearly, the Order declared that the dismissal of the complaint was without prejudice to the re-filing thereof. Moreover, even if the same were tested under the rules on litis pendentia and res judicata, the danger of conflicting decisions cannot be present, since the Pasig case was dismissed even before a responsive pleading was filed by petitioner. Since a party resorts to forum shopping in order to increase his chances of obtaining a favorable decision or action, it has been held that a party cannot be said to have sought to improve his chances of obtaining a favorable decision or action where no unfavorable decision has even been rendered against him in any of the cases he has brought before the courts. Roberto S. Benedicto, et al. vs. Court of Appeals, et al., G.R. No. 141508, May 5, 2010

JUNE 2010 CIVIL PROCEDURE Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 183616 June 29, 2010

JULIETA PANOLINO, Petitioner, vs. 1 JOSEPHINE L. TAJALA, Respondent.

DECISION CARPIO MORALES, J.: The Department of Environment and Natural Resources (DENR) Regional Executive Director Jim O. Sampulna (RD Sampulna), by 2 3 Decision of June 19, 2007, (1) denied for lack merit the application of Julieta Panolino (petitioner), which was opposed by herein respondent Josephine L. Tajala, for a free patent over a parcel of land located in Kinayao, Bagumbayan, Sultan Kudarat, (2) directed petitioner to vacate the contested property and remove at her expense whatever improvements she may have introduced thereon, 4 and (3) advised respondent to file her free patent application over the contested property within sixty days. Petitioner received a copy of the decision on June 27, 2007, of which she filed a motion for reconsideration on July 11, 2007. Her 5 motion was denied by Order of September 6, 2007, copy of which she received on September 12, 2007. On September 19, 2007, petitioner filed a Notice of Appeal before the Office of RD Sampulna, stating that she was appealing the 7 decision and order to the Office of the DENR Secretary. By Order of October 16, 2007, RD Sampulna denied the notice of appeal, holding that it was filed beyond the reglementary period. The RD explained that petitioner should have filed her appeal on September 13, 2007 as she had only one day left of the 15-day reglementary period for the purpose, pursuant to DENR 8 Administrative Order No. 87, Series of 1990, the pertinent portions of which provide: SECTION 1. Perfection of Appeals. (a) Unless otherwise provided by law or executive order, appeals from the decisions/orders of the DENR Regional Offices shall be perfected within fifteen (15) days after receipt of a copy of the decision/order complained of by the party adversely affected, by filing with the Regional Office which adjudicated the case a notice of appeal, serving copies thereof upon the prevailing party and the Office of the Secretary, and paying the required fees. (b) If a motion for reconsideration of the decision/order of the Regional Office is filed and such motion for reconsideration is denied, the movant shall have the right to perfect his appeal during the remainder of the period for appeal, reckoned from receipt of the resolution of denial. If the decision is reversed on reconsideration, the aggrieved party shall have fifteen (15) days from receipt of the resolution of reversal within which to perfect his appeal. (c) The Regional office shall, upon perfection of the appeal, transmit the records of the case to the Office of the Secretary with each page numbered consecutively and initialed by the custodian of the records. xxxx SECTION 6. Applicability of the Rules of Court. The Rules of Court shall apply when not inconsistent with the provisions hereof. (emphasis and underscoring supplied)
6

Invoking the rule enunciated by this Court in the 2005 case of Neypes, et al. v. Court of Appeals, et al., petitioner argued in her motion for reconsideration of RD Sampulnas October 16, 2007 Order that she still had a fresh period of fifteen days from her re ceipt on September 12, 2007 of copy of the September 6, 2007 Order denying her motion for reconsideration of the June 19, 2007 10 Decision of the RD or until September 27, 2007. Her motion was denied by Order of November 28, 2007. Petitioner elevated the matter via certiorari before the Court of Appeals which, by Resolution of January 25, 2008, dismissed it on the ground that petitioner failed to exhaust administrative remedies, she having bypassed the Office of the DENR Secretary and the Office of the President before resorting to judicial action. Petitioner moved for reconsideration, arguing that her petition for certiorari raised a purely legal issue. By Resolution of June 25, 12 2008, the appellate court, holding that "the issue raised is clearly a question of fact," denied petitioners motion. Hence, the present petition for review on certiorari. The issue before the Court of Appeals was whether the "fresh period rule" laid down in Neypes applies to petitioners case, i.e., that he had a fresh period of 15 days to appeal RD Sampulnas October 16, 2007 Order to the DENR Secretary, counted from her notic e on September 12, 2007 of the RDs Order of September 6, 2007 denying her motion for reconsideration of the decision. The "fresh period rule" in Neypes declares: To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to appeal their cases, the Court 13 deems it practical to allow a fresh period of 15 days within which to file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or motion for reconsideration. Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from the Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasijudicial agencies to the Court of Appeals; and Rule 45 governing appeals by certiorari to the Supreme Court. The new rule aims to regiment or make the appeal period uniform, to be counted from receipt of the order denying the motion for new trial, motion for reconsideration (whether full or partial) or any final order or resolution. x x x. This pronouncement is not inconsistent with Rule 41, Section 3 of the Rules which states that the appeal shall be taken within 15 days from notice of judgment or final order appealed from. The use of the disjunctive word "or" signifies disassociation and independence of one thing from another. It should, as a rule, be construed in the sense in which it ordinarily implies. Hence, the use of "or" in the above provision supposes that the notice of appeal may be filed within 15 days from notice of judgment or within 15 days from notice of the "final order," which we already determined to refer to the x x x order denying the motion for a new trial or reconsideration. Neither does this new rule run counter to the spirit of Section 39 of BP 129 which shortened the appeal period from 30 days to 15 days to hasten the disposition of cases. The original period of appeal x x x remains and the requirement for strict compliance still applies. The fresh period of 15 days becomes significant only when a party opts to file a motion for reconsideration. In this manner, the trial court which rendered the assailed decision is given another opportunity to review the case and, in the process, minimize and/or rectify any error of judgment. While we aim to resolve cases with dispatch and to have judgments of courts become final at some definite time, we likewise aspire to deliver justice fairly.1avvphi1 In this case, the new period of 15 days eradicates the confusion as to when the 15-day appeal period should be countedfrom receipt of notice of judgment x x x or from receipt of notice of "final order" appealed from x x x. To recapitulate, a party litigant may either file his notice of appeal within 15 days from receipt of the Regional Trial Cour ts decision or file it within 15 days from receipt of the order (the "final order") denying his motion for new trial or motion for reconsideration. Obviously, the new 15-day period may be availed of only if either motion is filed; otherwise, the decision becomes final and 16 executory after the lapse of the original appeal period provided in Rule 41, Section 3. (emphasis and underscoring supplied; italics in the original) The issue raised by petitioner before the appellate court is one of law because it can be resolved by merely determining what the 17 law is under the undisputed facts. The appellate courts ruling that such issue raises a question of fact which "entails an 18 examination of the probative value of the evidence presented by the parties" is thus erroneous.
15 14 11

Instead, however, of remanding this case to the Court of Appeals for it to resolve the legal issue of whether the "fresh period rule" in Neypes is applicable to petitioners case, the Court opts to resolve it to obviate further delay. As reflected in the above-quoted portion of the decision in Neypes, the "fresh period rule" shall apply to Rule 40 (appeals from the Municipal Trial Courts to the Regional Trial Courts); Rule 41 (appeals from the Regional Trial Courts to the Court of Appeals or Supreme Court); Rule 42 (appeals from the Regional Trial Courts to the Court of Appeals); Rule 43 (appeals from quasi-judicial agencies to the Court of Appeals); and Rule 45 (appeals by certiorari to the Supreme Court). Obviously, these Rules cover judicial proceedings under the 1997 Rules of Civil Procedure. Petitioners present case is administrative in nature involving an appeal from the decision or order of the DENR regional off ice to the DENR Secretary. Such appeal is indeed governed by Section 1 of Administrative Order No. 87, Series of 1990. As earlier quoted, Section 1 clearly provides that if the motion for reconsideration is denied, the movant shall perfect his appeal "during the remainder of the period of appeal, reckoned from receipt of the resolution of denial;" whereas if the decision is reversed, the adverse party has a fresh 15-day period to perfect his appeal. Rule 41, Section 3 of the Rules of Court, as clarified in Neypes, being inconsistent with Section 1 of Administrative Order No. 87, Series of 1990, it may not apply to the case of petitioner whose motion for reconsideration was denied. WHEREFORE, the assailed issuances of the Court of Appeals are AFFIRMED, not on the ground advanced therein but on the ground reflected in the foregoing discussion. No costs. SO ORDERED. NOTES: Appeals; Fresh period rule in Neypes v. Court of Appeals not applicable to administrative appeal from DENR regional offic e to DENR Secretary. TheissuebeforetheCourtofAppeals was whether the fresh period rule laid down in Neypes applies to petitioners case, i.e., that he had a fresh period of 15 days to appeal RD Sampulnas October 16, 2007 Order to the DENR Secretary, counted from her notice on September 12, 2007 of the RDs Order of September 6, 2007 denying her motion for rec onsideration of the decision. The fresh period rule in Neypes declares: To standardize the appeal periods provided in the Rulesand to afford litigants fair opportunity to appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice of appealin the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or motion for reconsideration. Henceforth, this fresh period rule shallalsoapplytoRule40 governing appeals from the Municipal Trial Courts to the Regional Trial Courts; Rule42 on petitions for review from the Regional Trial Courts to the Court of Appeals; Rule43 on appeals from quasi-judicial agencies to the Court of Appeals; and Rule45 governing appeals by certiorari to the Supreme Court. The new rule aims to regiment or make the appeal period uniform, to be counted from receipt of the order denying the motion for new trial, motion for reconsideration (whether full or partial) or any final order or resolution. x x x. This pronouncement is not inconsistent with Rule41, Section3oftheRules which states that the appeal shall be taken within 15 days from notice of judgment or final order appealed from. The use of the disjunctive word or signifies disassociation and independence of one thing from another. It should, as a rule, be construed in the sense in which it ordinarily implies. Hence, the use of or in the above provision supposes that the notice of appeal may be filed within 15 days from notice of judgment or within 15 days from notice of the final order, which we already determined to refer to the x x x order denying the motion for a ne w trial or reconsideration. Neither does this new rule run counter to the spirit of Section39ofBP129 which shortened the appeal period from 30 days to 15 days to hasten the disposition of cases. The original period of appeal x x x remains and the requirement for strict compliance still applies.The fresh period of 15 days becomes significant only when a party opts to file a motion for reconsideration. In this manner, the trial court which rendered the assailed decision is given another opportunity to review the case and, in the process, minimize and/or rectify any error of judgment. While we aim to resolve cases with dispatch and to have judgments of courts become final at some definite time, we likewise aspire to deliver justice fairly.

In this case, the new period of 15 days eradicates the confusion as to when the 15-day appeal period should be countedfrom receipt of notice of judgment x x x or from receipt of notice of final order appealed from x x x. To recapitulate, a party litigant may either file his notice of appeal within 15 days from receipt of the Regional Trial Cour ts decision or file it within 15 days from receipt of the order (the final order) denying his motion for new trial or motion for reconsideration. Obviously, the new 15-day period may be availed of only if either motion is filed; otherwise, the decision becomes final and executory after the lapse of the original appeal period provided in Rule 41, Section 3. (emphasis and underscoring supplied; italics in the original) XXX XXX XXX

As reflected in the above-quoted portion of the decision in Neypes, the fresh period rule shall apply to Rule40 (appeals from the Municipal Trial Courts to the Regional Trial Courts); Rule41 (appeals from the Regional Trial Courts to the Court of Appeals or Supreme Court); Rule42 (appeals from the Regional Trial Courts to the Court of Appeals); Rule43 (appeals from quasi-judicial agencies to the Court of Appeals); and Rule45 (appeals by certiorari to the Supreme Court). Obviously, these Rules cover judicial proceedings under the 1997 Rules of Civil Procedure. Petitioners present case is administrative in nature involving an appeal from the decision or order of the DENR regional office to the DENR Secretary. Such appeal is indeed governed by Section 1 of Administrative Order No. 87, Series of 1990. As earlier quoted, Section 1 clearly provides that if the motion for reconsideration is denied, the movant shall perfect his appeal during the remainder of the period of appeal, reckoned from receipt of the resolution of denial; whereas if the decision is reversed, the adverse party has a fresh 15-day period to perfect his appeal. Rule 41, Section 3 of the Rules of Court, as clarified in Neypes, being inconsistent with Section 1 of Administrative Order No. 87, Series of 1990, it may not apply to the case of petitioner whose motion for reconsideration was denied. Julieta Panolino vs. Josephine L. Tajala, G.R. No. 183616, June 29, 2010

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 178523 June 16, 2010

MAKATI SPORTS CLUB, INC., Petitioner, vs. CECILE H. CHENG, MC FOODS, INC., and RAMON SABARRE, Respondents. DECISION NACHURA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision dated June 25, 2007 of the 3 Court of Appeals (CA) in CA-G.R. CV No. 80631, affirming the decision dated August 20, 2003 of the Regional Trial Court (RTC), Branch 138, Makati City in Civil Case No. 01-837. The facts of the case, as narrated by the RTC and adopted by the CA, are as follows: On October 20, 1994, plaintiffs Board of Directors adopted a resolution (Exhibit 7) authorizing the sale of 19 unissued shar es at a floor price of P400,000 and P450,000 per share for Class A and B, respectively. Defendant Cheng was a Treasurer and Director of plaintiff in 1985. On July 7, 1995, Hodreal expressed his interest to buy a share, for this purpose he sent the letter, Exhibit 13. In said letter, he requested that his name be included in the waiting list. 1avvphi1 It appears that sometime in November 1995, McFoods expressed interest in acquiring a share of the plaintiff, and one was acquired with the payment to the plaintiff by McFoods of P1,800,000 through Urban Bank (Exhibit 3). On December 15, 1995, the Deed of Absolute Sale, Exhibit 1, was executed by the plaintiff and McFoods Stock Certificate No. A 2243 was issued to McFoods on January 5, 1996. On December 27, 1995, McFoods sent a letter to the plaintiff giving advise (sic) of its offer to resell the share. It appears that while the sale between the plaintiff and McFoods was still under negotiations, there were negotiations between McFoods and Hodreal for the purchase by the latter of a share of the plaintiff. On November 24, 1995, Hodreal paid McFoods P1,400,000. Another payment of P1,400,000 was made by Hodreal to McFoods on December 27, 1995, to complete the purchase price of P2,800,000. On February 7, 1996, plaintiff was advised of the sale by McFoods to Hodreal of the share evidenced by Certificate No. 2243 for P2.8 Million. Upon request, a new certificate was issued. In 1997, an investigation was conducted and the committee held that there is prima facie evidence to show that defendant Cheng profited from the transaction because of her knowledge. xxxx Plaintiffs evidence of fraud are [a] letter of Hodreal dated July 7, 1995 where he expressed interest in buying one (1) share from the plaintiff with the request that he be included in the waiting list of buyers; [b] declaration of Lolita Hodreal in her Affidavit that in October 1995, she talked to Cheng who assured her that there was one (1) available share at the price of P2,800,000. The purchase to be validated by paying 50% immediately and the balance after thirty (30) days; [c] Marian Punzalan, Head, Membership Section of the plaintiff declared that she informed Cheng of the intention of Hodreal to purchase one (1) share and she gave to Cheng the 4 contact telephone number of Hodreal; and [d] the authorization from Sabarre to claim the stock certificate. Thus, petitioner sought judgment that would order respondents to pay the sum of P1,000,000.00, representing the amount allegedly defrauded, together with interest and damages. After trial on the merits, the RTC rendered its August 20, 2003 decision, dismissing the complaint, including all counterclaims.
1 2

Aggrieved, Makati Sports Club, Inc. (MSCI) appealed to the CA, arguing that the RTC erred in finding neither direct nor circumstantial evidence that Cecile H. Cheng (Cheng) had any fraudulent participation in the transaction between MSCI and Mc Foods, Inc. (Mc Foods), while it allegedly ignored MSCIs overwhelming evidence that Cheng and Mc Foods confabulated with one another at the expense of MSCI. After the submission of the parties respective briefs, the CA promulgated its assailed Decision, affirming the August 20, 2003 decision of the RTC. Hence, this petition anchored on the grounds that THE APPELLATE COURT ERRED IN UPHOLDING THE CONCLUSION OF THE TRIAL COURT THAT PETITIONER DID NOT PROFFER CLEAR AND CONVINCING EVIDENCE SHOWING THAT THE RESPONDENTS DEFRAUDED THE PETITIONER DESPITE OVERWHELMING EVIDENCE TO THE CONTRARY AS SHOWN BY THE FOLLOWING: (A) RESPONDENTS CHENG AND SABARRES OWN ADMISSIONS, MARIAN PUNZALANS AFFIDAVIT, AND OTHER PERTINENT DOCUMENTARY EVIDENCE ALL UNEQUIVOCALLY PROVE THAT RESPONDENT CHENG HAD INTIMATE PARTICIPATION IN THE SALE OF MSCIS UNISSUED CLASS "A" SHARE TO MC FOODS, INC. FOR THE CONSIDERATION OF ONE MILLION EIGHT HUNDRED THOUSAND PESOS (PHP1,800,000.00). (B) RESPONDENT CHENGS ADMISSIONS AND OTHER PERTINENT DOCUMENTARY EVIDENCE RELATED TO THE SALE OF MSCIS UNISSUED CLASS "A" SHARE TO RESPONDENT MC FOODS, INC. AND THE RESALE OF THE SAME TO SPOUSES HODREAL PROVE THAT THE SALE OF THE SAID UNISSUED SHARE TO MC FOODS, INC. AT ONE MILLION EIGHT HUNDRED THOUSAND PESOS (PHP1,800,000.00) WAS MADE WITH A VIEW TO RESELL THE SAME AT A PROFIT TO THE HODREAL SPOUSES AT THE AMOUNT OF TWO MILLION EIGHT HUNDRED PESOS (PHP2,800,000.00); THE "RESALE" OF THE SAID SHARE TO THE SPOUSES HODREAL OCCURRING EVEN BEFORE MC FOODS, INC. GAINED OWNERSHIP OVER THE SAID UNISSUED SHARE. (C) THE UTTER LACK OF DOCUMENTARY EVIDENCE SHOWING THAT MC FOODS, INC. EVINCED A DESIRE TO PURCHASE PETITIONERS UNISSUED SHARES CONCLUSIVELY PROVES THAT MC FOODS, INC. NEVER MADE ANY FORMAL OFFER TO BUY AN UNISSUED M*SC+I SHARE FROM PETITIONERS BOARD OF DIRECTORS AND/OR MEMBERSHIP COMMITTEE, COURSING THE SAID TRANSACTION CLANDESTINELY THROUGH RESPONDENT CHENG. (D) RESPONDENT CHENGS OWN ADMISSIONS INDUBITABLY PROVE THAT SHE D ELIBERATELY CONCEALED THE FACT THAT THERE WERE OTHER UNISSUED M[SC]I SHARES AVAILABLE FOR PURCHASE BY THE SPOUSES HODREAL, CHOOSING INSTEAD TO BROKER THE "RESALE" OF THE SHARE PURCHASED BY MC FOODS, INC. FROM MSCI TO THE SPOUSES HODREAL AT THE PRICE OF TWO MILLION EIGHT HUNDRED THOUSAND PESOS (PHP2,800,000.00) TO THE DETRIMENT OF THE PETITIONER. (E) RESPONDENTS CHENG AND SABARRES ADMISSIONS, MSCIS BY-LAWS AND DOCUMENTARY EVIDENCE RELATING TO THE TWO IRREGULAR SALES TRANSACTIONS ALL POINT TO THE CONCLUSION THAT MC FOODS, INC. IN RESELLING ITS MSCI SHARE TO SPOUSES HODREAL FAILED TO GIVE MSCI A CREDIBLE OPPORTUNITY TO REPURCHASE THE SAME IN ACCORDANCE WITH SECTION 30 (E) OF MSCIS BY -LAWS. (F) RESPONDENT CHENGS OWN DOCUMENTARY EVIDENCE PROVES THAT RESPONDEN TS FALSIFIED AN ENTRY IN MC FOODS, INC.S "OFFER" TO SELL ITS SHARE TO MSCI IN AN EFFORT TO COAT THE RESELLING OF THE SAID SHARE TO SPOUSES HODREAL WITH A SEMBLANCE OF REGULARITY[.] (G) FINALLY, PERHAPS THE MOST OVERLOOKED MATTER BY THE TRIAL COURT AND THE APPELLATE COURT IS THE SINGULAR UNDENIABLE FACT THAT RESPONDENT CHENG DURING THE PERIOD IN WHICH THE ABOVE-MENTIONED TRANSACTIONS CAME INTO FRUITION WAS A MEMBER OF THE BOARD OF DIRECTORS AND THE TREASURER OF MSCI, THIS FACT ALONE TAINTS THE PARTICIPATION OF 5 RESPONDENT CHENG IN THE SAID IRREGULAR TRANSACTIONS WITH BAD FAITH. The petition should be denied.

At the outset, we note that this recourse is a petition for review on certiorari under Rule 45 of the Rules of Court. Under Section 1 of the Rule, such a petition shall raise only questions of law which must be distinctly alleged in the appropriate pleading. In a case involving a question of law, the resolution of the issue must rest solely on what the law provides for a given set of facts drawn from the evidence presented. Stated differently, there should be nothing in dispute as to the state of facts; the issue to be resolved is merely the correctness of the conclusion drawn from the said facts. Once it is clear that the issue invites a review of the probative value of the evidence presented, the question posed is one of fact. If the query requires a reevaluation of the credibility of witnesses, or the existence or relevance of surrounding circumstances and their relation to each other, then the issue is necessarily 6 factual. A perusal of the assignment of errors and the discussion set forth by MSCI would readily show that the petition seeks a review of all the evidence presented before the RTC and reviewed by the CA; therefore, the issue is factual. Accordingly, the petition should be dismissed outright, especially considering that the very same factual circumstances in this petition have already been ruled upon by the CA. However, MSCI seeks to evade this rule that the findings of fact made by the trial court, particularly when affirmed by the appellate court, are entitled to great weight and even finality, claiming that its case falls under two of the well-recognized exceptions, to wit: (1) that the judgment of the appellate court is premised on a misapprehension of facts or that it has failed to consider certain relevant facts which, if properly considered, will justify a different conclusion; and (2) that the findings of fact of the appellate court 7 are ostensibly premised on the absence of evidence, but are contradicted by the evidence on record. MSCI insists that Cheng, in collaboration with Mc Foods, committed fraud in transacting the transfers involving Stock Certificate No. A 2243 (Certificate A 2243) on account of the following circumstances(1) on November 24, 1995, Joseph L. Hodreal (Hodreal) paid 8 the first installment of P1,400,000.00 for the purchase of a Class "A" share in favor of Mc Foods; (2) on November 28, 1995, Mc Foods deposited to MSCIs account an Allied Banking Corporation managers check for the purchase of the same share in the amo unt 9 10 of P1,800,000.00, sans an official receipt from MSCI; (3) on December 15, 1995, MSCI and Mc Foods executed a Deed of Sale for 11 12 the purchase of a Class "A" share; (4) on December 27, 1995, Hodreal paid the last installment of P1,400,000.00 to Mc Foods; (5) on December 27, 1995, Mc Foods sent a letter to MSCI, offering to sell its purchased share of stock in the amount of 13 14 P2,800,000.00; (6) on January 5, 1996, Certificate A 2243 was issued to Mc Foods by MSCI; and (7) on January 29, 1996, Mc Foods 15 and Hodreal executed a Deed of Sale for the same share of stock. Based on the above incidents, MSCI asserts that Mc Foods never intended to become a legitimate holder of its purchased Class "A" share but did so only for the purpose of realizing a profit in the amount of P1,000,000.00 at the expense of the former. MSCI further claims that Cheng confabulated with Mc Foods by providing it with an insiders information as to the status of the shares of stock of MSCI and even, allegedly with unusual interest, facilitated the transfer of ownership of the subject share of stock from Mc Foods to Hodreal, instead of an original, unissued share of stock. According to MSCI, Chengs fraudulent participation was clearly and overwhelmingly proven by the following circumstances: (1) sometime in October 1995, Lolita Hodreal, wife of Hodreal, talked to Cheng about the purchase of one Class "A" share of stock and the latter assured her that there was already an available share for 16 P2,800,000.00; (2) the second installment payment of P1,400,000.00 of spouses Hodreal to Mc Foods was received by Cheng on 17 the latters behalf; (3) Marian N. Punzalan (Punzalan), head of MSCIs membership section, informed Cheng about Hodreals 18 intention to purchase a share of stock and Cheng asked her if there was a quoted price for it, and for Hodreals contact numb er; 19 and (4) on January 29, 1996, Cheng claimed Certificate A 2243 on behalf of Mc Foods, per letter of authority dated January 26, 20 1996, executed by Mc Foods in favor of Cheng. The Court is not convinced. It is noteworthy that, as early as July 7, 1995, Hodreal already expressed to the MSCI Membership Committee his intent to purchase one Class "A" share and even requested if he could be included in the waiting list of buyers. However, there is no evidence on record that the Membership Committee acted on this letter by replying to Hodreal if there still were original, unissued shares then or if he 21 would indeed be included in the waiting list of buyers. All that Punzalan did was to inform Cheng of Hodreals intent and nothing more, even as Cheng asked for Hodreals contact number. It may also be observed that, although established by Punzalans affi davit that she informed Cheng about Hodreals desire to purchase a Class "A" share and that Cheng asked for Hodreals contact number, it is not clear when Punzalan relayed the information to Cheng or if Cheng indeed initiated contact with Hodreal to peddle Mc Fo ods purchased share. While Punzalan declared that, in December 1995, she received a Deed of Absolute Sale between MSCI and Mc Foods of a Class "A" share for P1,800,000.00 signed by Atty. Rico Domingo and Cheng, in their respective capacities as then President and Treasurer of MSCI, and by Ramon Sabarre, as President of Mc Foods, what she merely did was to inquire from her immediate superior Becky

Pearanda what share to issue; and the latter, in turn, replied that it should be an original share. Thereafter, Punzalan prepared a letter, signed by then corporate secretary, Atty. Rafael Abiera, to be sent to MSCIs stock transfer agent for the issuance of the corresponding certificate of stock. Then, Certificate A 2243 was issued in favor of Mc Foods on January 5, 1996. Also in point are the powers and duties of the MSCIs Membership Committee, viz.: SEC. 29. (a) The Membership Committee shall process applications for membership; ascertain that the requirements for stock ownership, including citizenship, are complied with; submit to the Board its recommended on applicants for inclusion in the Waiting List; take charge of auction sales of shares of stock; and exercise such other powers and perform such other functions as may be 22 authorized by the Board. Charged with ascertaining the compliance of all the requirements for the purchase of MSCIs shares of stock, the Membership Committee failed to question the alleged irregularities attending Mc Foods purchas e of one Class "A" share at P1,800,000.00. If there was really any irregularity in the transaction, this inaction of the Management Committee belies MSCIs cry of foul pla y on Mc Foods purchase of the subject share of stock. In fact, the purchase price of P1,800,000.00 cannot be said to be detrimental to MSCI, considering that it is the same price paid for a Class "A" share in the last sale of an original share to Land Bank of the Philippines on 23 September 25, 1995, and in the sale by Marina Properties Corporation to Xanland Properties, Inc. on October 23, 1995. These circumstances have not been denied by MSCI. What is more, the purchase price of P1,800,000.00 is P1,400,000.00 more than the 24 floor price set by the MSCI Board of Directors for a Class "A" share in its resolution dated October 20, 1994. Further, considering that Mc Foods tendered its payment of P1,800,000.00 to MSCI on November 28, 1995, even assuming arguendo that it was driven solely by the intent to speculate on the price of the share of stock, it had all the right to negotiate and transact, at 25 least on the anticipated and expected ownership of the share, with Hodreal. In other words, there is nothing wrong with the fact that the first installment paid by Hodreal preceded the payment of Mc Foods for the same share of stock to MSCI because eventually Mc Foods became the owner of a Class "A" share covered by Certificate A 2243. Upon payment by Mc Foods of P1,800,000.00 to MSCI and the execution of the Deed of Absolute Sale on December 15, 1995, it then had the right to demand the delivery of the stock certificate in its name. The right of a transferee to have stocks transferred to its name is an inherent right flowing from its 26 ownership of the stocks. It is MSCIs stance that Mc Foods violated Section 30(e) of MSCIs Amended By -Laws on its pre-emptive rights, which provides SEC. 30. x x x . (e) Sale of Shares of Stockholder. Where the registered owner of share of stock desires to sell his share of stock, he shall first offer the same in writing to the Club at fair market value and the club shall have thirty (30) days from receipt of written offer within which to purchase such share, and only if the club has excess revenues over expenses (unrestricted retained earning) and with the approval of two-thirds (2/3) vote of the Board of Directors. If the Club fails to purchase the share, the stockholder may dispose of the same to other persons who are qualified to own and hold shares in the club. If the share is not purchased at the price quoted by the stockholder and he reduces said price, then the Club shall have the same pre-emptive right subject to the same conditions for the same period of thirty (30) days. Any transfer of share, except by hereditary succession, made in violation of these conditions shall be null and void and shall not be recorded in the books of the Club. The share of stock so acquired shall be offered and sold by the Club to those in the Waiting List in the order that their names appear 27 in such list, or in the absence of a Waiting List, to any applicant. We disagree. Undeniably, on December 27, 1995, when Mc Foods offered for sale one Class "A" share of stock to MSCI for the price of P2,800,000.00 for the latter to exercise its pre-emptive right as required by Section 30(e) of MSCIs Amended By -Laws, it legally had the right to do so since it was already an owner of a Class "A" share by virtue of its payment on November 28, 1995, and the Deed of Absolute Share dated December 15, 1995, notwithstanding the fact that the stock certificate was issued only on January 5, 1996. A certificate of stock is the paper representative or tangible evidence of the stock itself and of the various interests therein. The certificate is not a stock in the corporation but is merely evidence of the holders interest and status in t he corporation, his ownership of the share represented thereby. It is not in law the equivalent of such ownership. It expresses the contract between the corporation and the stockholder, but is not essential to the existence of a share of stock or the nature of the relation of shareholder 28 to the corporation.

Therefore, Mc Foods properly complied with the requirement of Section 30(e) of the Amended By-Laws on MSCIs pre-emptive rights. Without doubt, MSCI failed to repurchase Mc Foods Class "A" share within the thirty (30) day pre -emptive period as provided by the Amended By-Laws. It was only on January 29, 1996, or 32 days after December 28, 1995, when MSCI r eceived Mc Foods letter of offer to sell the share, that Mc Foods and Hodreal executed the Deed of Absolute Sale over the said share of stock. While Hodreal had the right to demand the immediate execution of the Deed of Absolute Sale after his full paymen t of Mc Foods Class "A" share, he did not do so. Perhaps, he wanted to wait for Mc Foods to first comply with the pre-emptive requirement as set forth in the Amended By-Laws. Neither can MSCI argue that Mc Foods was not yet a registered owner of the share of stock when the latter offered it for resale, in order to void the transfer from Mc Foods to Hodreal. The corporations obligation to register is mi nisterial upon the buyers acquisition of ownership of the share of stock. The corporation, either by its board, its by-laws, or the act of its 29 officers, cannot create restrictions in stock transfers. Moreover, MSCIs ardent position that Cheng was in cahoots with Mc Foods in depriving it of selling an original, unissued Class "A" share of stock for P2,800,000.00 is not supported by the evidence on record. The mere fact that she performed acts upon authority of Mc Foods, i.e., receiving the payments of Hodreal in her office and claiming the stock certificate on behalf of Mc Foods, do not by themselves, individually or taken together, show badges of fraud, since Mc Foods did acts well within its rights and there is no proof that Cheng personally profited from the assailed transaction. Even the statement of MSCI that Cheng doctored the books to give a semblance of regularity to the transfers involving the share of stock covered by Certificate A 2243 remains merely a plain statement not buttressed by convincing proof. Fraud is deemed to comprise anything calculated to deceive, including all acts, omissions, and concealment involving a breach of legal or equitable duty, trust or confidence justly reposed, resulting in the damage to another or by which an undue and 30 unconscionable advantage is taken of another. It is a question of fact that must be alleged and proved. It cannot be presumed and 31 must be established by clear and convincing evidence, not by mere preponderance of evidence. The party alleging the existence of 32 fraud has the burden of proof. On the basis of the above disquisitions, this Court finds that petitioner has failed to discharge this burden. No matter how strong the suspicion is on the part of petitioner, such suspicion does not translate into tangible evidence sufficient to nullify the assailed transactions involving the subject MSCI Class "A" share of stock. WHEREFORE, the petition is DENIED for lack of merit. The Decision dated June 25, 2007 of the Court of Appeals in CA-G.R. CV No. 80631, affirming the decision dated August 20, 2003 of the Regional Trial Court, Branch 138, Makati City in Civil Case No. 01-837, is AFFIRMED. Costs against petitioner. SO ORDERED. NOTES: Appeals; Rule 45 petition may raise only questions of law. At the outset, we note that this recourse is a petition for review on certiorari under Rule 45 of the Rules of Court. Under Section 1 of the Rule, such a petition shall raise only questions of law which must be distinctly alleged in the appropriate pleading. In a case involving a question of law, the resolution of the issue must rest solely on what the law provides for a given set of facts drawn from the evidence presented. Stated differently, there should be nothing in dispute as to the state of facts; the issue to be resolved is merely the correctness of the conclusion drawn from the said facts. Once it is clear that the issue invites a review of the probative value of the evidence presented, the question posed is one of fact. If the query requires a reevaluation of the credibility of witnesses, or the existence or relevance of surrounding circumstances and their relation to each other, then the issue is necessarily factual. A perusal of the assignment of errors and the discussion set forth by MSCI would readily show that the petition seeks a review of all the evidence presented before the RTC and reviewed by the CA; therefore, the issue is factual. Accordingly, the petition should be dismissed outright, especially considering that the very same factual circumstances in this petition have already been ruled upon by the CA. Makati Sports Club, Inc. vs. Cecile H. Cheng, et al., G.R. No. 178523, June 16, 2010

JULY 2010 CIVIL PROCEDURE Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 167824 July 2, 2010

GERALDINE GAW GUY and GRACE GUY CHEU, Petitioners, vs. ALVIN AGUSTIN T. IGNACIO, Respondent. x - - - - - - - - - - - - - - - - - - - - - - -x G.R. No. 168622 GERALDINE GAW GUY and GRACE GUY CHEU, Petitioners, vs. THE BOARD OF COMMISSIONERS OF THE BUREAU OF IMMIGRATION, HON. MARICEL U. SALCEDO, MAYNARDO MARINAS, RICARDO CABOCHAN and ELISEO EXCONDE, Respondents. DECISION PERALTA, J.: This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure seeking, among others, to annul and set 2 3 4 5 aside the Decisions dated January 6, 2005 and April 20, 2005 and Resolutions dated March 10, 2005 and June 29, 2005 rendered 6 by the Court of Appeals (CA), reversing and setting aside the Writ of Preliminary Injunction issued by the Regional Trial Court (RTC), Branch 37, Manila. The antecedent facts follow. The father of petitioners Geraldine Gaw Guy and Grace Guy Cheu became a naturalized Filipino citizen sometime in 1959. The said 8 petitioners, being minors at that time, were also recognized as Filipino citizens. Respondent Atty. Alvin Agustin T. Ignacio, filed a Complaint dated March 5, 2004 for blacklisting and deportation against petitioners Geraldine and Grace before the Bureau of Immigration (BI) on the basis that the latter two are Canadian citizens who are illegally working in the Philippines, petitioners having been issued Canadian passports. Acting upon the Complaint, respondent Maricel U. Salcedo, Special Prosecutor, Special Task Force of the BI Commissioner, directed 10 the petitioners, through the issuance of a subpoenae, to appear before her and to bring pertinent documents relative to their current immigration status, to which the petitioners objected by filing with the Special Task Force of the BI Commissioner a 11 Comment/Opposition with Motion Ad Cautelam to Quash Re: Subpoena dated 30 April 2004 (Duces Tecum/Ad Testificandum), 12 which was eventually denied by respondent Salcedo in an Order dated May 14, 2004. Respondent Board of Commissioners (BOC) filed a Charge Sheet dated June 1, 2004 for Violation of Sections 37 (a) 7, 45 (e) and 45A of the Philippine Immigration Act of 1940, as amended, which reads as follows: The undersigned Special Prosecutor charges GRACE GUY CHEU and GERALDINE GAW GUY, both Canadian citizens, for working without permit, for fraudulently representing themselves as Philippine citizens in order to evade immigration laws and for failure to comply with the subpoena duces tecum/ad testificandum, in violation of the Philippine Immigration Act of 1940, as amended, committed as follows:
13 9 7 1

That respondents GRACE GUY CHEU and GERALDINE GAW GUY, knowingly, willfully and unlawfully engage in gainful activities in the Philippines without appropriate permit by working as the Vice-President for Finance & Treasurer and General Manager, respectively, of Northern Islands Company, Inc., with office address at No. 3 Mercury Avenue, Libis, Quezon City; That both respondents, knowingly, willfully and fraudulently misrepresent themselves as Philippine citizens as reflected in the general Information Sheet of Northern Islands Company, Inc., for 2004, in order to evade any requirement of the Philippine Immigration Laws; That both respondents, duly served with subpoenas duces tecum/ad testificandum, dated April 20, 2004, knowingly, willfully and unlawfully failed to comply with requirements thereof.1avvphi1 CONTRARY TO LAW. As a remedy, petitioners filed a Petition for Certiorari with Damages and a Prayer for Issuance of a Temporary Restraining Order and 14 15 Preliminary Injunction dated May 31, 2004 before the RTC of Manila, Branch 37. The trial court, after hearing petitioner's application for issuance of a temporary restraining order (TRO) and writ of preliminary 16 injunction, issued an Order dated June 28, 2004, the dispositive portion of which reads: WHEREFORE, premises considered, the application for temporary restraining order is hereby GRANTED. The respondents and all persons acting in their behalf and those under their instructions are directed to cease and desist from continuing with the deportation proceedings involving the petitioners. In the meantime set the case for hearing on preliminary injunction on July 5 and 6, 2004, both at 2:00 o'clock in the afternoon and the respondents are directed to show cause why writ of preliminary injunction should not issue. SO ORDERED. On July 5, 2004, public respondents filed their Answer and on July 13, 2004, filed a Supplement (To the Special and Affirmative 18 Defenses/Opposition to the Issuance of a Writ of Preliminary Injunction). The parties were then directed to file their respective memoranda as to the application for issuance of a writ of preliminary injunction and public respondents' special and affirmative 19 20 defenses. On July 16, 2004, public respondents as well as the petitioners, filed their respective Memoranda. On the same day, 21 respondent Atty. Ignacio filed his Answer to the petition. In an Order dated July 19, 2004, the trial court granted the application for preliminary injunction enjoining public respondents from further continuing with the deportation proceedings. The Order reads, in part: In view of the foregoing, the Court finds that, indeed, there exists a pressing reason to issue a writ of preliminary injunction to protect the rights of the petitioners pending hearing of the main case on the merits and unless this Court issues a writ, grave irreparable injury would be caused against the petitioners. WHEREFORE, premises considered, the application for the Writ of Preliminary Injunction is hereby GRANTED. The respondents and all persons acting on their behalf and those under their instructions are directed to cease and desist from continuing with the deportation proceedings involving the petitioners during the pendency of the instant case. The petitioners are directed to post a bond in the amount of P50,000.00 to answer for whatever damages that may be sustained by the respondent should the court finally resolve that the petitioners are not entitled thereto. SO ORDERED. As a consequence, public respondents, on September 10, 2004, filed a Petition for Certiorari with Prayer for Issuance of Temporary 23 24 Restraining Order and Writ of Preliminary Injunction before the CA and, on September 17, 2004, respondent Atty. Ignacio filed a 25 26 Petition for Certiorari, also with the CA. Both petitions prayed for the nullification of the Orders dated June 28, 2004 and July 19, 2004 issued by the RTC in Civil Case No. 04-110179 and for the dismissal of the petition therein. Later on, petitioner Geraldine filed a Motion to Consolidate both petitions. On January 6, 2005, the Ninth Division of the CA granted the petition filed by respondent Atty. Ignacio and annulled the writ of 27 preliminary injunction issued by the trial court, the dispositive portion of the Decision reads:
22 17

WHEREFORE, the instant petition is GRANTED and the Order of the Regional Trial Court, Branch 37, Manila, dated July 19, 2004, is hereby ANNULLED and SET ASIDE. SO ORDERED. On January 21, 2005, petitioners filed a Motion for Reconsideration.
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On March 1, 2005, petitioners reiterated their prayer for the consolidation of the petitions in the Eighth and Ninth Divisions. In its 30 Resolution dated March 10, 2005, the CA Ninth Division denied petitioners' Motion for Reconsideration. Hence, petitioners filed before this Court a Petition for Review on Certiorari dated March 31, 2005 praying for the reversal of the Decision rendered by the CA's Ninth Division, which is now docketed as G.R. No. 167824. Thereafter, the CA's Eighth Division rendered its own Decision dated April 29, 2005 granting the petition therein and nullifying the Orders dated June 28 and July 19, 2004 in Civil Case No. 04-110179, the dispositive portion of which reads as follows: WHEREFORE, finding the instant petition impressed with merit and in accordance with our decision in CA-G.R. SP No. 86432, the same is GIVEN DUE COURSE and is GRANTED. The assailed Orders of the respondent court dated 28 June and 19 July 2004 are hereby NULLIFIED and SET ASIDE. SO ORDERED. Petitioners filed their Motion for Reconsideration from the said Decision, which the CA denied in its Resolution dated June 21, 2005. Thus, petitioners filed before this Court a Petition for Review on Certiorari dated July 12, 2005 seeking to reverse and set aside the 36 said Decision and Resolution rendered by the Eighth Division of the CA and is now docketed as G.R. No. 168622. In its Resolution 37 dated August 10, 2005, the Court dismissed the said petition and said dismissal, despite petitioners' motion for reconsideration, 38 39 was affirmed in a Resolution dated October 17, 2005. This Court, however, upon another motion for reconsideration filed by the 40 petitioners, reinstated the petition and ordered its consolidation with G.R. No. 167824. On September 7, 2007, a Manifestation was filed informing this Court that petitioner Grace Guy Cheu died intestate on August 12, 2007 in the United States of America. Petitioners raised the following grounds in their Consolidated Memorandum dated March 27, 2007: I. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND ERRED IN HOLDING THAT THE LOWER COURT HAS NO JURISDICTION OVER CIVIL CASE NO. 04-110179 AND ISSUE A WRIT OF PRELIMINARY INJUNCTION THEREIN CONSIDERING THAT THE INSTANT CASE IS AN EXCEPTION TO THE RULE ON PRIMARY JURISDICTION DOCTRINE AND WARRANTS PETITIONERS' IMMEDIATE RESORT TO JUDICIAL INTERVENTION. A. CONSIDERING THAT PROOF OF PETITIONERS' PHILIPPINE CITIZENSHIP IS SUBSTANTIAL, PETITIONERS ARE ALLOWED UNDER THIS HONORABLE COURT'S RULING IN BID V. DELA ROSA, SUPRA, TO SEEK INJUNCTIVE RELIEF FROM THE REGIONAL TRIAL COURT TO ENJOIN THE DEPORTATION PROCEEDINGS CONDUCTED AGAINST THEM. B. LIKEWISE, CONSIDERING THAT PETITIONERS STAND TO SUFFER GRAVE AND IRREPARABLE INJURIES SHOULD THE DEPORTATION PROCEEDINGS AGAINST THEM BE ALLOWED TO CONTINUE, PETITIONERS ARE ALLOWED UNDER TE LAW TO IMMEDIATELY SEEK JUDICIAL RELIEF DESPITE THE PENDENCY OF THE ADMINISTRATIVE PROCEEDINGS. II.
42 41 35 33 34 32 31

FURTHER, IT IS RESPECTFULLY SUBMITTED THAT THE RULING OF THIS HONORABLE COURT IN DWIKARNA V. DOMINGO, 433 SCRA 748 (2004) DID NOT STRIP THE LOWER COURT OF ITS AUTHORITY TO ENTERTAIN THE PETITION IN CIVIL CASE NO. 04-110179 AND TO ISSUE A WRIT OF PRELIMINARY INJUNCTION IN THE AFORESAID CASE. III. EVEN IF THE RULING OF THIS HONORABLE COURT IN DWIKARNA V. DOMINGO, SUPRA, DID STRIP THE LOWER COURT OF ITS JURISDICTION IN BID V. DELA ROSA, SUPRA, TO ENJOIN DEPORTATION PROCEEDINGS, THE RULING CAN ONLY HAVE PROSPECTIVE EFFECT. Basically, petitioners argue that the doctrine of primary jurisdiction, relied upon by the CA in its decision, does not apply in the 43 present case because it falls under an exception. Citing Board of Commissioners (CID) v. Dela Rosa, petitioners assert that immediate judicial intervention in deportation proceedings is allowed where the claim of citizenship is so substantial that there are reasonable grounds to believe that the claim is correct. In connection therewith, petitioners assail the applicability of Dwikarna v. Domingo in the present case, which the CA relied upon in ruling against the same petitioners. After a careful study of the arguments presented by the parties, this Court finds the petition meritorious. Petitioners rely on Board of Commissioners (CID) v. Dela Rosa, wherein this Court ruled that when the claim of citizenship is so substantial as to reasonably believe it to be true, a respondent in a deportation proceeding can seek judicial relief to enjoin respondent BOC from proceeding with the deportation case. In particular, petitioners cited the following portions in this Court's decision: True, it is beyond cavil that the Bureau of Immigration has the exclusive authority and jurisdiction to try and hear cases against an alleged alien, and in the process, determine also their citizenship (Lao vs. Court of Appeals, 180 SCRA 756 [1089]. And a mere claim of citizenship cannot operate to divest the Board of Commissioners of its jurisdiction in deportation proceedings ( Miranda vs. Deportation Board, 94 Phil. 531 [1951]). However, the rule enunciated in the above-cases admits of an exception, at least insofar as deportation proceedings are concerned. Thus, what if the claim to citizenship of the alleged deportee is satisfactory? Should the deportation proceedings be allowed to continue or should the question of citizenship be ventilated in a judicial proceeding? In Chua Hiong vs. Deportation Board (96 Phil. 665 [1955]), this Court answered the question in the affirmative, and We quote: When the evidence submitted by a respondent is conclusive of his citizenship, the right to immediate review should also be recognized and the courts should promptly enjoin the deportation proceedings. A citizen is entitled to live in peace, without molestation from any official or authority, and if he is disturbed by a deportation proceeding, he has the unquestionable right to resort to the courts for his protection, either by a writ of habeas corpus or of prohibition, on the legal ground that the Board lacks jurisdiction. If he is a citizen and evidence thereof is satisfactory, there is no sense nor justice in allowing the deportation proceedings to continue, granting him the remedy only after the Board has finished its investigation of his undesirability. x x x And if the right (to peace) is precious and valuable at all, it must also be protected on time, to prevent undue harassment at the hands of ill-meaning or misinformed administrative officials. Of what use is this much boasted right to peace and liberty if it can be availed of only after the Deportation Board has unjustly trampled upon it, besmirching the citizen's name before the bar of public opinion? The doctrine of primary jurisdiction of petitioners Board of Commissioners over deportation proceedings is, therefore, not without exception (Calayday vs. Vivo, 33 SCRA 413 [1970]; Vivo vs. Montesa, 24 SCRA 155 [1967]). Judicial intervention, however, should be granted in cases where the claim of citizenship is so substantial that there are reasonable grounds to believe that the claim is correct. In other words, the remedy should be allowed only on sound discretion of a competent court in a proper proceeding (Chua Hiong v. Deportation Board, supra; Co vs. Deportation Board, 78 SCRA 107 [1977]). It appearing from the 45 records that respondent's claim of citizenship is substantial, as We shall show later, judicial intervention should be allowed. The present case, as correctly pointed out by petitioners and wrongfully found by the CA, falls within the above-cited exception 46 considering that proof of their Philippine citizenship had been adduced, such as, the identification numbers issued by the Bureau of Immigration confirming their Philippine citizenship, they have duly exercised and enjoyed all the rights and privileges exclusively 47 accorded to Filipino citizens, i.e., their Philippine passports issued by the Department of Foreign Affairs.
44

In BOC v. Dela Rosa, it is required that before judicial intervention is sought, the claim of citizenship of a respondent in a deportation proceeding must be so substantial that there are reasonable grounds to believe that such claim is correct. In the said case, the proof adduced by the respondent therein was so substantial and conclusive as to his citizenship that it warranted a judicial intervention. In the present case, there is a substantial or conclusive evidence that petitioners are Filipino citizens. Without necessarily judging the case on its merits, as to whether petitioners had lost their Filipino citizenship by having a Canadian passport, the fact still remains, through the evidence adduced and undisputed by the respondents, that they are naturalized Filipinos, unless proven otherwise. However, this Court cannot pass upon the issue of petitioners' citizenship as this was not raised as an issue. The issue in this petition is on the matter of jurisdiction, and as discussed above, the trial court has jurisdiction to pass upon the issue whether petitioners have abandoned their Filipino citizenship or have acquired dual citizenship within the confines of the law. In this regard, it must be remembered though that this Court's ruling in Dwikarna v. Domingo did not abandon the doctrine laid down in BOC v. Dela Rosa. The exception remains. Dwikarna merely reiterated the doctrine of primary jurisdiction when this Court ruled that if the petitioner is dissatisfied with the decision of the Board of Commissioners of the Bureau of Immigration, he can move for its reconsideration and if his motion is denied, then he can elevate his case by way of a petition for review before the Court of Appeals, pursuant to Section 1, Rule 43 of the Rules of Civil Procedure. However, utmost caution must be exercised in availing of the exception laid down in BOC v. Dela Rosa in order to avoid trampling on the time-honored doctrine of primary jurisdiction. The court cannot or will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to resolving the same, where the question demands the exercise of sound administrative discretion 48 requiring special knowledge, experience and services in determining technical and intricate matters of fact. In cases where the doctrine of primary jurisdiction is clearly applicable, the court cannot arrogate unto itself the authority to resolve a controversy, the 49 jurisdiction over which is initially lodged with an administrative body of special competence. Above all else, this Court still upholds the doctrine of primary jurisdiction. As enunciated in Republic v. Lacap:
50

The general rule is that before a party may seek the intervention of the court, he should first avail of all the means afforded him by 51 administrative processes. The issues which administrative agencies are authorized to decide should not be summarily taken from them and submitted to a court without first giving such administrative agency the opportunity to dispose of the same after due 52 deliberation. Corollary to the doctrine of exhaustion of administrative remedies is the doctrine of primary jurisdiction; that is, courts cannot or will not determine a controversy involving a question which is within the jurisdiction of the administrative tribunal prior to the resolution of that question by the administrative tribunal, where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters 53 of fact. Nonetheless, the doctrine of exhaustion of administrative remedies and the corollary doctrine of primary jurisdiction, which are based on sound public policy and practical considerations, are not inflexible rules. There are many accepted exceptions, such as: (a) where there is estoppel on the part of the party invoking the doctrine; (b) where the challenged administrative act is patently illegal, amounting to lack of jurisdiction; (c) where there is unreasonable delay or official inaction that will irretrievably prejudice the complainant; (d) where the amount involved is relatively small so as to make the rule impractical and oppressive; (e) where the 54 question involved is purely legal and will ultimately have to be decided by the courts of justice; (f) where judicial intervention is urgent; (g) when its application may cause great and irreparable damage; (h) where the controverted acts violate due process; (i) 55 when the issue of non-exhaustion of administrative remedies has been rendered moot; (j) when there is no other plain, speedy 56 and adequate remedy; (k) when strong public interest is involved; and, (l) in quo warranto proceedings. x x x WHEREFORE, the petition is GRANTED. Consequently, the Decisions dated January 6, 2005 and April 20, 2005, and the Resolutions dated March 10, 2005 and June 29, 2005 of the Court of Appeals, nullifying and setting aside the Writ of Preliminary Injunction issued by the Regional Trial Court (RTC), Branch 37, Manila, are hereby NULLIFIED and SET ASIDE. The case is hereby remanded to the trial court for further proceedings, with dispatch. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. 180291 July 27, 2010

GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) and WINSTON F. GARCIA, in his capacity as PRESIDENT and GENERAL MANAGER of the GSIS, Petitioners, vs. DINNAH VILLAVIZA, ELIZABETH DUQUE, ADRONICO A. ECHAVEZ, RODEL RUBIO, ROWENA THERESE B. GRACIA, PILAR LAYCO, and ANTONIO JOSE LEGARDA, Respondents. DECISION MENDOZA, J.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside the August 31, 2007 1 Decision of the Court of Appeals (CA), in CA-G.R. SP No. 98952, dismissing the petition for certiorari of Government Service Insurance System (GSIS) assailing the Civil Service Commission's Resolution No. 062177. THE FACTS: Petitioner Winston Garcia (PGM Garcia), as President and General Manager of the GSIS, filed separate formal charges against respondents Dinnah Villaviza, Elizabeth Duque, Adronico A. Echavez, Rodel Rubio, Rowena Therese B. Gracia, Pilar Layco, and Antonio Jose Legarda for Grave Misconduct and/or Conduct Prejudicial to the Best Interest of the Service pursuant to the Rules of Procedure in Administrative Investigation (RPAI) of GSIS Employees and Officials, III, D, (1, c, f) in relation to Section 52A (3), (20), Rule IV, of the Uniform Rules on Administrative Cases in the Civil Service (URACCS), in accordance with Book V of the Administrative Code of 1987, committed as follows: That on 27 May 2005, respondent, wearing red shirt together with some employees, marched to or appeared simultaneously at or just outside the office of the Investigation Unit in a mass demonstration/rally of protest and support for Messrs. Mario Molina and Albert Velasco, the latter having surreptitiously entered the GSIS premises; xxx xxx xxx

That some of these employees badmouthed the security guards and the GSIS management and defiantly raised clenched fists led by Atty. Velasco who was barred by Hearing Officer Marvin R. Gatpayat in an Order dated 24 May 2005 from appearing as counsel for Atty. Molina pursuant to Section 7 (b) (2) of R.A. 6713 otherwise known as the Code of Conduct and Ethical Standards for Public Officials and Employees; That respondent, together with other employees in utter contempt of CSC Resolution No. 021316, dated 11 October 2002, otherwise known as Omnibus Rules on Prohibited Concerted Mass Actions in the Public Sector caused alarm and heightened some 2 employees and disrupted the work at the Investigation Unit during office hours. This episode was earlier reported to PGM Garcia, through an office memorandum dated May 31, 2005, by the Manager of the GSIS Security Department (GSIS-SD), Dennis Nagtalon. On the same day, the Manager of the GSIS Investigation Unit (GSIS-IU), Atty. Lutgardo Barbo, issued a memorandum to each of the seven (7) respondents requiring them to explain in writing and under oath 3 within three (3) days why they should not be administratively dealt with. Respondents Duque, Echavez, Rubio, Gracia, Layco, and Legarda, together with two others, submitted a letter-explanation to Atty. Barbo dated June 6, 2005. Denying that there was a planned mass action, the respondents explained that their act of going to the office of the GSIS-IU was a spontaneous reaction after learning that their former union president was there. Aside from some of them wanting to show their support, they were interested in that hearing as it might also affect them. For her part, respondent

Villaviza submitted a separate letter explaining that she had a scheduled pre-hearing at the GSIS-IU that day and that she had 4 informed her immediate supervisor about it, attaching a copy of the order of pre-hearing. These letters were not under oath. PGM Garcia then filed the above-mentioned formal charges for Grave Misconduct and/or Conduct Prejudicial to the Best Interest of the Service against each of the respondents, all dated June 4, 2005. Respondents were again directed to submit their written 5 answers under oath within three (3) days from receipt thereof. None was filed. On June 29, 2005, PGM Garcia issued separate but similarly worded decisions finding all seven (7) respondents guilty of the charges and meting out the penalty of one (1) year suspension plus the accessory penalties appurtenant thereto. On appeal, the Civil Service Commission (CSC) found the respondents guilty of the lesser offense of Violation of Reasonable Office Rules and Regulations and reduced the penalty to reprimand. The CSC ruled that respondents were not denied their right to due process but there was no substantial evidence to hold them guilty of Conduct Prejudicial to the Best Interest of the Service. Instead, x x x. The actuation of the appellants in going to the IU, wearing red shirts, to witness a public hearing cannot be considered as constitutive of such offense. Appellants' (respondents herein) assembly at the said office to express support to Velasco, their Union President, who pledged to defend them against any oppression by the GSIS management, can be considered as an exercise of their 6 freedom of expression, a constitutionally guaranteed right. x x x PGM Garcia sought reconsideration but was denied. Thus, PGM Garcia went to the Court of Appeals via a Petition for Review under 7 Rule 43 of the Rules on Civil Procedure. The CA upheld the CSC in this wise: The Civil Service Commission is correct when it found that the act sought to be punished hardly falls within the definition of a prohibited concerted activity or mass action. The petitioners failed to prove that the supposed concerted activity of the respondents resulted in work stoppage and caused prejudice to the public service. Only about twenty (20) out of more than a hundred employees at the main office, joined the activity sought to be punished. These employees, now respondents in this case, were assigned at different offices of the petitioner GSIS. Hence, despite the belated claim of the petitioners that the act complained of had created substantial disturbance inside the petitioner GSIS' premises during office hours, there is nothing in the record that could support the claim that the operational capacity of petitioner GSIS was affected or reduced to substantial percentage when respondents gathered at the Investigation Unit. Despite the hazy claim of the petitioners that the gathering was intended to force the Investigation Unit and petitioner GSIS to be lenient in the handling of Atty. Molina's case and allow Atty. Velasco to represent Atty. Molina in his administrative case before petitioner GSIS, there is likewise no concrete and convincing evidence to prove that the gathering was made to demand or force concessions, economic or otherwise from the GSIS management or from the government. In fact, in the separate formal charges filed against the respondents, petitioners clearly alleged that respondents "marched to or appeared simultaneously at or just outside the office of the Investigation Unit in a mass demonstration/rally of protest and support for Mssrs. Mario Molina and Albert Velasco, the latter surreptitiously entered the GSIS premises." Thus, petitioners are aware at the outset that the only apparent intention of the respondents in going to the IU was to show support to Atty. Mario Molina and Albert Velasco, their union officers. The belated assertion that the intention of the respondents in going to the IU was to disrupt the 8 operation and pressure the GSIS administration to be lenient with Atty. Mario Molina and Albert Velasco, is only an afterthought. Not in conformity, PGM Garcia is now before us via this Petition for Review presenting the following: STATEMENT OF THE ISSUES I WHETHER AN ADMINISTRATIVE TRIBUNAL MAY APPLY SUPPLETORILY THE PROVISIONS OF THE RULES OF COURT ON THE EFFECT OF FAILURE TO DENY THE ALLEGATIONS IN THE COMPLAINT AND FAILURE TO FILE ANSWER, WHERE THE RESPONDENTS IN THE ADMINISTRATIVE PROCEEDINGS DID NOT FILE ANY RESPONSIVE PLEADING TO THE FORMAL CHARGES AGAINST THEM. II WHETHER THE RULE THAT ADMINISTRATIVE DUE PROCESS CANNOT BE EQUATED WITH DUE PROCESS IN JUDICIAL SENSE AUTHORIZES AN ADMINISTRATIVE TRIBUNAL TO CONSIDER IN EVIDENCE AND GIVE FULL PROBATIVE VALUE TO UNNOTARIZED LETTERS THAT DID NOT FORM PART OF THE CASE RECORD. III

WHETHER A DECISION THAT MAKES CONCLUSIONS OF FACTS BASED ON EVIDENCE ON RECORD BUT MAKES A CONCLUSION OF LAW BASED ON THE ALLEGATIONS OF A DOCUMENT THAT NEVER FORMED PART OF THE CASE RECORDS IS VALID. IV WHETHER FURTHER PROOF OF SUSBTANTIAL REDUCTION OF THE OPERATIONAL CAPACITY OF AN AGENCY, DUE TO UNRULY MASS GATHERING OF GOVERNMENT EMPLOYEES INSIDE OFFICE PREMISES AND WITHIN OFFICE HOURS, IS REQUIRED TO HOLD THE SAID EMPLOYEES LIABLE FOR CONDUCT PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE PURSUANT TO CSC RESOLUTION NO. 021316. V WHETHER AN UNRULY MASS GATHERING OF TWENTY EMPLOYEES, LASTING FOR MORE THAN AN HOUR DURING OFFICE HOURS, INSIDE OFFICE PREMISES AND WITHIN A UNIT TASKED TO HEAR AN ADMINISTRATIVE CASE, TO PROTEST THE PROHIBITION AGAINST THE APPEARANCE OF THEIR LEADER AS COUNSEL IN THE SAID ADMINISTRATIVE CASE, FALLS WITHIN THE PURVIEW OF THE CONSTITUTIONAL GUARANTEE TO FREEDOM OF EXPRESSION AND PEACEFUL ASSEMBLY. VI WHETHER THE CONCERTED ABANDONMENT OF EMPLOYEES OF THEIR POSTS FOR MORE THAN AN HOUR TO HOLD AN UNRULY PROTEST INSIDE OFFICE PREMISES ONLY CONSTITUTES THE ADMINISTRATIVE OFFENSE OF VIOLATION OF REASONABLE OFFICE 9 RULES AND REGULATIONS. The Court finds no merit in the petition. Petitioners primarily question the probative value accorded to respondents' letters of explanation in response to the memorandum of the GSIS-IU Manager. The respondents never filed their answers to the formal charges. The petitioners argue that there being no answers, the allegations in the formal charges that they filed should have been deemed admitted pursuant to Section 11, Rule 8 of the Rules of Court which provides: SECTION 11. Allegations not specifically denied deemed admitted .- Material averment in the complaint, other than those as to the amount of liquidated damages, shall be deemed admitted when not specifically denied. Allegations of usury in a complaint to recover usurious interest are deemed admitted if not denied specifically and under oath. According to the petitioners, this rule is applicable to the case at bench pursuant to Rule 1, Section 4 of the Rules of Court which reads: SECTION 4. In what cases not applicable. - These Rules shall not apply to election cases, land registration, cadastral, naturalization and insolvency proceedings, and other cases not herein provided for, except by analogy or in a suppletory character and whenever practicable and convenient. (underscoring supplied) The Court does not subscribe to the argument of the petitioners. Petitioners' own rules, Rule XI, Section 4 of the GSIS' Amended Policy and Procedural Guidelines No. 178-04, specifically provides: If the respondent fails to file his Answer within five (5) working days from receipt of the Formal Charge for the supporting evidence, when requested, he shall be considered to have waived his right to file an answer and the PGM or the Board of Trustees, in proper cases, shall render judgment, as may be warranted by the facts and evidence submitted by the prosecution. A perusal of said section readily discloses that the failure of a respondent to file an answer merely translates to a waiver of "his right to file an answer." There is nothing in the rule that says that the charges are deemed admitted. It has not done away with the burden of the complainant to prove the charges with clear and convincing evidence. It is true that Section 4 of the Rules of Court provides that the rules can be applied in a "suppletory character." Suppletory is defined 10 as "supplying deficiencies." It means that the provisions in the Rules of Court will be made to apply only where there is an insufficiency in the applicable rule. There is, however, no such deficiency as the rules of the GSIS are explicit in case of failure to file

the required answer. What is clearly stated there is that GSIS may "render judgment as may be warranted by the facts and evidence submitted by the prosecution." Even granting that Rule 8, Section 11 of the Rules of Court finds application in this case, petitioners must remember that there remain averments that are not deemed admitted by the failure to deny the same. Among them are immaterial allegations and 11 incorrect conclusions drawn from facts set out in the complaint. Thus, even if respondents failed to file their answer, it does not mean that all averments found in the complaint will be considered as true and correct in their entirety, and that the forthcoming decision will be rendered in favor of the petitioners. We must not forget that even in administrative proceedings, it is still the complainant, or in this case the petitioners, who have the burden of proving, with substantial evidence, the allegations in the 12 complaint or in the formal charges. A perusal of the decisions of the CA and of the CSC will reveal that the case was resolved against petitioners based, not on the absence of respondents' evidence, but on the weakness of that of the petitioners. Thus, the CA wrote: Petitioners correctly submitted the administrative cases for resolution without the respondents' respective answer to the separate formal charges in accordance with Section 4, Rule XI of the RPAI. Being in full control of the administrative proceeding and having effectively prevented respondents from further submitting their responsive answer and evidence for the defense, petitioners were in the most advantageous position to prove the merit of their allegations in the formal charges. When petitioner Winston Garcia issued those similarly worded decisions in the administrative cases against the respondents, it is presumed that all evidence in their favor were duly submitted and justly considered independent of the weakness of respondent's evidence in view of the principle that 13 ''the burden of proof belongs to the one who alleges and not the one who denies." On the merits, what needs to be resolved in the case at bench is the question of whether or not there was a violation of Section 5 of CSC Resolution No. 02-1316. Stated differently, whether or not respondents' actions on May 27, 2005 amounted to a "prohibited concerted activity or mass action." Pertinently, the said provision states: Section 5. As used in this Omnibus Rules, the phrase ''prohibited concerted activity or mass action'' shall be understood to refer to any collective activity undertaken by government employees, by themselves or through their employees organizations, with intent of effecting work stoppage or service disruption in order to realize their demands of force concession, economic or otherwise, from their respective agencies or the government. It shall include mass leaves, walkouts, pickets and acts of similar nature. (underscoring supplied) In this case, CSC found that the acts of respondents in going to the GSIS-IU office wearing red shirts to witness a public hearing do not amount to a concerted activity or mass action proscribed above. CSC even added that their actuations can be deemed an exercise of their constitutional right to freedom of expression. The CA found no cogent reason to deviate therefrom. As defined in Section 5 of CSC Resolution No. 02-1316 which serves to regulate the political rights of those in the government service, the concerted activity or mass action proscribed must be coupled with the "intent of effecting work stoppage or service disruption in order to realize their demands of force concession." Wearing similarly colored shirts, attending a public hearing at the GSIS-IU office, bringing with them recording gadgets, clenching their fists, some even badmouthing the guards and PGM Garcia, are acts not constitutive of an (i) intent to effect work stoppage or service disruption and (ii) for the purpose of realizing their demands of force concession. Precisely, the limitations or qualifications found in Section 5 of CSC Resolution No. 02-1316 are there to temper and focus the application of such prohibition. Not all collective activity or mass undertaking of government employees is prohibited. Otherwise, we would be totally depriving our brothers and sisters in the government service of their constitutional right to freedom of expression. Government workers, whatever their ranks, have as much right as any person in the land to voice out their protests against what they believe to be a violation of their rights and interests. Civil Service does not deprive them of their freedom of expression. It would be unfair to hold that by joining the government service, the members thereof have renounced or waived this basic liberty. This freedom can be reasonably regulated only but can never be taken away. A review of PGM Garcia's formal charges against the respondents reveals that he himself was not even certain whether the respondents and the rest of the twenty or so GSIS employees who were at the GSIS-IU office that fateful day marched there or just 14 simply appeared there simultaneously. Thus, the petitioners were not even sure if the spontaneous act of each of the twenty or so GSIS employees on May 27, 2005 was a concerted one. The report of Manager Nagtalon of the GSIS-SD which was the basis for PGM Garcia's formal charges reflected such uncertainty. Thus,

Of these red shirt protesters, only Mr. Molina has official business at the Investigation Unit during this time. The rest abandoned their post and duties for the duration of this incident which lasted until 10:55 A.M. It was also observed that the protesters, some of whom raised their clenched left fists, carefully planned this illegal action as evident in their behavior of arrogance, defiance and provocation, the presence of various recording gadgets such as VCRs, voice recorders and digital cameras, the bad mouthing of the security guards and the PGM, the uniformity in their attire and the collusion regarding the anomalous entry of Mr. Albert Velasco to 15 the premises as reported earlier. The said report of Nagtalon contained only bare facts. It did not show respondents' unified intent to effect disruption or stoppage in their work. It also failed to show that their purpose was to demand a force concession. In the recent case of GSIS v. Kapisanan ng mga Manggagawa sa GSIS, the Court upheld the position of petitioner GSIS because its employees, numbering between 300 and 800 each day, staged a walkout and participated in a mass protest or demonstration outside the GSIS for four straight days. We cannot say the same for the 20 or so employees in this case. To equate their wearing of red shirts and going to the GSIS-IU office for just over an hour with that four-day mass action in Kapisanan ng mga Manggagawa sa GSIS case and to punish them in the same manner would most certainly be unfair and unjust. Recent analogous decisions in the United States, while recognizing the government's right as an employer to lay down certain standards of conduct, tend to lean towards a broad definition of "public concern speech" which is protected by their First 17 Amendment. One such case is that of Scott v. Meters. In said case, the New York Transit Authority (NYTA), responsible for operation of New York City's mass transit service, issued a rule prohibiting employees from wearing badges or buttons on their uniforms. A number of union members wore union buttons promoting their opposition to a collective bargaining agreement. Consequently, the NYTA tried to enforce its rule and threatened to subject these union members to discipline. The court, though recognizing the government's right to impose reasonable restrictions, held that the NYTA's rule was "unconstitutionally overboard." In another case, Communication Workers of America v. Ector County Hospital District, it was held that, A county hospital employee's wearing of a "Union Yes" lapel pin during a union organization drive constituted speech on a matter of public concern, and the county's proffered interest in enforcing the anti-adornment provision of its dress code was outweighed by 19 the employee's interest in exercising his First Amendment speech and associational rights by wearing a pro-union lapel button. Thus, respondents' freedom of speech and of expression remains intact, and CSC's Resolution No. 02-1316 defining what a prohibited concerted activity or mass action has only tempered or regulated these rights. Measured against that definition, respondents' actuations did not amount to a prohibited concerted activity or mass action. The CSC and the CA were both correct in arriving at said conclusion. WHEREFORE, the assailed August 31, 2007 Decision of the Court of Appeals as well as its October 16, 2007 Resolution in CA G.R. SP No. 98952 are hereby AFFIRMED. SO ORDERED.
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AUGUST 2010 CIVIL PROCEDURE Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 175116 August 18, 2010

JERRY ONG, Petitioner, vs. PHILIPPINE DEPOSIT INSURANCE CORP., Respondent. DECISION Before us is a petition for review on certiorari filed by petitioner Jerry Ong seeking to annul and set aside the Decision dated July 31, 2 2006 and the Resolution dated October 5, 2006 issued by the Court of Appeals (CA) in CA-G.R. SP No. 93441. Sometime in 1982 and 1983, petitioner Jerry Ong made some money market placements with Omnibus Finance Inc. (OFI), which later on suffered serious financial difficulties. As petitioner's money market placements matured, he demanded from OFI the return of the same. However, OFI's checks issued thereby were dishonored by the drawee bank. It was alleged that OFI sought the assistance of its sister companies which included the Rural Bank of Olongapo (RBO). On December 29, 1983, Jose Ma. Carballo, OFI President, and Cynthia Gonzales, Chairperson of the Board of Directors of RBO, executed in favor of petitioner a Deed of Real Estate 3 Mortgage over two parcels of land located in Tagaytay City covered by Transfer Certificates of Title Nos. T-13769 and T-13770, which are both registered in RBO's name, as collateral to guarantee the payment of OFI's money market obligations to petitioner in 4 the amount of P863,517.02. The mortgage was executed by Gonzales by virtue of a Secretary's Certificate issued by Atty. Efren L. Legaspi, RBO's alleged Assistant Corporate Secretary, showing that Gonzales was authorized by the RBO Board to execute such mortgage. The deed of mortgage was annotated on TCT Nos. T-13769 and T-13770 of the Register of Deeds of Tagaytay City on January 13, 1984. As OFI failed to pay petitioner the obligation secured by the real estate mortgage, petitioner foreclosed the mortgage on March 18, 1984. A Certificate of Sale was correspondingly issued which was registered with the Register of Deeds of Tagaytay City on July 16, 1985. Petitioner alleged that representatives of the Central Bank of the Philippines (Central Bank) had approached him and borrowed TCT Nos. T-13769 and T-13770 for the on- going audit and inventory of the assets of the RBO; however, these titles were not returned despite petitioner's demand. Petitioner filed with the RTC of Tagaytay City, Branch 18, a case for the surrender of said titles, docketed as TC-803. The case was subsequently dismissed for being premature as the one year redemption period had not yet expired. On May 22, 1984, RBO's Corporate Secretary and Acting Manager, Atty. Rodolfo C. Soriano, filed with the RTC of Tagaytay City, an action for the annulment of real estate mortgage, extrajudicial foreclosure of mortgage proceedings, sheriff's certificate of sale with damages against petitioner, OFI, Cynthia Gonzales, the Sheriff and the Register of Deeds of Tagaytay City, raffled off to Branch 18, and was docketed as Civil Case No. TG-805. However, the case was later suspended due to OFI's pending application for rehabilitation with the Securities and Exchange Commission. On May 9, 1985, the Central Bank, as petitioner, which was later substituted by respondent Philippine Deposit Insurance 5 Corporation (PDIC) filed with the RTC of Olongapo City a petition for assistance in the liquidation of RBO, docketed as Sp. Proc. No. 170-0-85 and was raffled off to Branch 73. Later, upon respondent's motion, Civil Case No. TG-805, i.e., for annulment of mortgage, was consolidated with RBO's liquidation proceedings. On February 5, 1991, petitioner filed with Branch 79 of the RTC of Quezon City a petition for the surrender of the titles of the Tagaytay properties against RBO, which petition was eventually ordered dismissed by the CA after finding that the RTC lacked jurisdiction to try the case, but without prejudice to petitioner's right to file his claim in RBO's liquidation proceedings pending before Branch 73 of the RTC of Olongapo City.
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Consequently, on February 16, 1996, petitioner filed in Sp. Proc. No. 170-0-85 a Motion to Admit Claim against RBO's assets as a secured creditor and the winning bidder and/or purchaser of the Tagaytay properties in the foreclosure sale. Respondent filed its Comment/Opposition to the motion. Trial, thereafter, ensued on petitioner's claim. On June 25, 2001, Acting Presiding Judge Philbert I. Iturralde issued an Order declaring petitioner's claim against RBO valid and legitimate, the dispositive portion of which reads: WHEREFORE, under the foregoing circumstance, the claim of Jerry Ong is hereby declared valid and legitimate and therefore GRANTED. As prayed for, the two (2) parcels of land covered under TCT Nos. 13769 and 13770, with all its improvements be awarded to Claimant Jerry Ong. The titles subject matter of this claim allegedly in possession of the Central Bank or its appointed liquidator, or any person presently in possession of said Transfer Certificate of Title is directed and ordered to immediately surrender the same to the Claimant. Should the same be lost and/or upon proof of its loss the Register of Deeds is ordered to issue in the claimant's name new titles pursuant to the consolidation of property earlier made by the claimant over the property. SO ORDERED.
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Respondent filed its motion for reconsideration. In a Resolution dated June 27, 2002, Judge Renato J. Dilag reversed the June 25, 2001 Decision. The decretal portion of the Resolution reads: WHEREFORE, foregoing considered, the Order of this Court dated June 25, 2001 is hereby reconsidered and set aside. The real estate mortgage executed on December 29, 1983 by and between Cynthia Gonzales representing RBO and Jose Ma. Carballo, representing OFI is hereby declared null and void. The Extrajudicial Proceedings conducted in March 1984 and the Sheriff's Certificate of Sale dated March 23, 1984 issued in the name of Jerry Ong are, likewise, declared null and void. And, for failure to substantiate his claim against RBO, Jerry Ong's claim is hereby denied. SO ORDERED.
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Petitioner's motion for reconsideration was denied in an Order dated May 26, 2003, a copy of which was received by petitioner on June 16, 2003. On June 17, 2003, petitioner, thru counsel, filed a Notice of Appeal which the RTC gave due course in an Order dated July 14, 2004, after finding that the appeal had been filed within the reglementary period. The RTC also ordered the elevation of the entire records to the CA for further proceedings. Respondent sought reconsideration of the Order giving due course to petitioner's appeal as the latter failed to file a record on appeal within the reglementary period; thus, the appeal was not perfected. Petitioner filed his Comment/Opposition to such motion and at the same time attaching the Record on Appeal dated August 25, 2004. On May 31, 2005, the RTC issued an Order,
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the dispositive portion of which reads:

FOREGOING CONSIDERED, the Order of this Court dated July 14, 2004 is hereby reconsidered and set aside. Consequently, as provided under Rule 41, Sec. 13 of the Revised Rules of Court, the appeal is hereby dismissed for having been taken out of time. SO ORDERED. Petitioner's motion for reconsideration was denied in an Order dated December 7, 2005.
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Petitioner then filed with the CA a petition for certiorari with prayer for the issuance of a writ of preliminary injunction assailing the RTC Orders dated May 31, 2005 and December 7, 2005 for having been issued with grave abuse of discretion. After the parties submitted their respective pleadings, the CA issued its assailed Decision on July 31, 2006, dismissing the petition. In so ruling, the CA found that since Sp. Proc. No. 170-0-85 was for the liquidation of RBO, it was a special proceeding and not an ordinary action; that liquidation proceedings are considered special proceedings as held in Pacific Banking Corporation Employees 16 Organization v. Court of Appeals; that since multiple appeals are allowed in proceedings for liquidation of an insolvent corporation, a record on appeal was necessary in petitioner's case for the perfection of his appeal.

The CA found unpersuasive petitioners plea to consider his failure to submit a record on appeal on time as excusable neglect saying that petitioner was fully aware that Sp. Proc No. 170-0-85 was a petition for liquidation, because he filed his claim as a preferred creditor of RBO, he participated in the trial thereof and filed the notice of appeal under the title of the said liquidation case; that petitioners feigned ignorance and miscalculation cannot justify an exception to the strict rule on perfection of appeal with in the reglementary period; that petitioner filed the record on appeal 426 days after the lapse of the reglementary period, and certiorari cannot be a substitute for a lost remedy of appeal. The CA ruled that petitioner's failure to perfect his appeal within the prescribed period rendered the RTC decision final and executory which deprived the appellate court of jurisdiction to alter the final judgment, much less entertain the appeal. On petitioners claim that there was a grave abuse of discretion committed by the RTC in giving credence t o the testimonies of respondents witnesses, the CA ruled that such matter was beyond the jurisdictional parameter of a special civil action of ce rtiorari as such issue dwelt into questions of facts and evaluation of evidence. Petitioner's motion for reconsideration was denied in a Resolution dated October 5, 2006. Hence, the present petition on the following grounds: THE COURT OF APPEALS GRAVELY ERRED AND ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DISMISSED THE PETITION FOR CERTIORARI BASED SOLELY ON TECHNICAL RULES OF PROCEDURE. THE COURT OF APPEALS GRAVELY ERRED AND ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT 17 DISMISSED THE PETITION FOR CERTIORARI WITHOUT PASSING UPON THE MERIT OF PETITIONER'S APPEAL. Petitioner reiterates his argument raised before the CA that his counsel's failure to submit a record on appeal on time is an excusable neglect as the failure was due to the serious complications surrounding the case that led her to commit an error of judgment; that petitioner's counsel honestly believed that their claim filed against RBO in the special proceedings and the civil case filed by RBO against petitioner for the annulment of mortgage under Civil Case No. TG-805, which was eventually consolidated with the special proceedings, were ordinary civil actions since they sought the enforcement or protection of a right or prevention or redress of a wrong; thus, a mere notice of appeal would be sufficient to perfect petitioner's appeal. Petitioner argues that we have 18 19 liberalized in some instances the rule on perfection of appeals and cites Gregorio v. CA and Gonzales-Orense v. Court of Appeals, thus, he asks for the same leniency in the interest of substantial justice so as to give him the chance to ventilate his appeal on the merit. Petitioner claims that the issue on the admissibility of the testimonies of respondent's witnesses is a question of law as its resolution calls for the application of the law on hearsay evidence and not the evaluation of evidence; that respondent's witnesses came only upon RBO's liquidation process and were not even connected with RBO at the time of the execution of the real estate mortgage among RBO, OFI and petitioner; thus, their testimonies are inadmissible for being hearsay evidence, and a special civil action of certiorari is the proper remedy to assail the admission of the same; that it would serve the ends of justice if the CA had taken a second look on the facts and evidence of the case to determine the merit of petitioner's appeal. In its Comment, respondent avers that while the petition was denominated as a petition for review under Rule 45, the same imputes lack or excess of jurisdiction on the part of the CA in issuing its assailed decision; thus, petitioner availed of the wrong remedy. Petitioner filed his Reply thereto. We first resolve the issue raised by respondent anent the mode of appeal availed of by petitioner. Petitioner filed a petition for review on certiorari assailing the Decision and Resolution of the CA which were final dispositions of the case on the merits, thus, a petition under Rule 45 of the Rules of Court is proper. Rule 45 provides that an appeal by certiorari from the judgments or final orders or resolutions of the appellate court is by a verified petition for review on certiorari. Contrary to respondent's claim that petitioner in this petition merely alleges that the CA abused its discretion in dismissing his appeal, we find that petitioner also imputes grave error committed by the CA in rendering its assailed decision finding that the appeal was not perfected. As to the main issues raised by petitioner, we find the same unmeritorious. Sections 2 (a) and 3 of Rule 41 of the Rules of Court provide: SEC. 2. Modes of Appeal x x x

(a) Ordinary appeal. The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner. xxxx SEC. 3. Period of ordinary appeal. The appeal shall be taken within fifteen (15) days from the notice of the judgment or fi nal order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from the notice of judgment or final order. The period to appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion for extension of time to file a motion for new trial or reconsideration shall be allowed. It has been held that a petition for liquidation of an insolvent corporation is classified as a special proceeding. The RTC decision, which petitioner sought to appeal from, was rendered in the special proceeding for the liquidation of RBO's assets; thus, applying the above-quoted provisions, an appeal in a special proceeding requires both the filing of a notice of appeal and the record on appeal within thirty days from receipt of the notice of judgment or final order. In this case, petitioner filed his Notice of Appeal on June 17, 2003, and the RTC gave due course to the appeal after it found that the notice of appeal was filed within the reglementary period. However, upon respondent's motion for reconsideration, where it argued that petitioner failed to file a record on appeal, considering that the decision was rendered in a petition for liquidation of RBO which was a special proceeding, the RTC reversed itself as no record on appeal was filed, and dismissed petitioner's appeal for having been taken out of time. The RTC did not commit a grave abuse of discretion in dismissing petitioner's appeal, since it is clearly stated under the Rules that filing of the notice of appeal must be accompanied by a record on appeal to perfect one's appeal in a special proceeding. In fact, the RTC's dismissal of petitioner's appeal was expressly allowed under Section 13 of Rule 41 of the Rules of Court which states: SECTION 13. Dismissal of appeal. Prior to the transmittal of the original record or the record on appeal to the appellate court, the trial court may motu propio or on motion to dismiss the appeal for having been taken out of time. Thus, we find no error committed by the CA when it sustained the RTC's dismissal of petitioner's appeal for failure to comply with the Rules. In In the Matter of the Heirship (Intestate Estates) of the Late Hermogenes Rodriguez, et al. v. Jaime M. Robles, we nullified the CA decision for lack of jurisdiction in taking cognizance of an appeal from the RTC decision which had already lapsed into finality for failure of the party to file a record on appeal within the reglementary period, and said: This Court has invariably ruled that perfection of an appeal in the manner and within the period laid down by law is not only mandatory but also jurisdictional. The failure to perfect an appeal as required by the rules has the effect of defeating the right to appeal of a party and precluding the appellate court from acquiring jurisdiction over the case. The right to appeal is not a natural right nor a part of due process; it is merely a statutory privilege, and may be exercised only in the manner and in accordance with the provisions of the law. The party who seeks to avail of the same must comply with the requirement of the rules. Failing to do so, the right to appeal is lost. The reason for rules of this nature is because the dispatch of business by courts would be impossible, and intolerable delays would result, without rules governing practice. Public policy and sound practice demand that judgments of courts should become final and irrevocable at some definite date fixed by law. Such rules are a necessary incident to the proper, efficient and orderly discharge of judicial functions. Thus, we have held that the failure to perfect an appeal within the prescribed reglementary period is not a mere technicality, but jurisdictional. Just as a losing party has the privilege to file an appeal within the prescribed period, so does the winner also have the correlative right to enjoy the finality of the decision. Failure to meet the requirements of an appeal deprives the appellate court of jurisdiction to entertain any appeal. There are exceptions to this rule, unfortunately respondents did not present any circumstances that would justify the relaxation of said rule. The rules of procedure must be faithfully followed, except only when, for persuasive reasons, they may be relaxed to relieve a 22 litigant of an injustice commensurate with his failure to comply within the prescribed procedure. Concomitant to a liberal interpretation of the rules of procedure should be an effort on the part of the party invoking liberality to adequately explain his 23 failure to abide by the rules.
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Petitioner's argument that his counsel's honest belief that their claim against the RBO assets and the civil case filed by RBO against petitioner for the annulment of mortgage were ordinary civil actions and a mere notice of appeal would be sufficient to perfect his appeal is not a satisfactory reason to warrant a relaxation of the mandatory rule on the filing of a record on appeal. We find apropros the CA's disposition on the matter in this wise: Withal, petitioner's ratiocinations that he failed to submit a Record on Appeal on time could be taken as excusable neglect due to serious complications surrounding the case leading him to an error of judgment where "an ordinary human being, courts, not excepted, is susceptible to commit, is highly unsustainable. Petitioner counsel's honest belief that the claim of petitioner Ong and the civil case for annulment of mortgage under TG-085 were ordinary actions and, as such, mere filing of a notice of appeal would be sufficient, is far from being persuasive. This is not the excusable neglect as envisioned by the rules in order to sidestep on the strict compliance with the rules on appeal. Petitioner was fully aware that Sp. Proc. No. 170-0-85 is a petition for liquidation because they filed their claim in the case claiming to be a preferred creditor, participated in the trial thereof in every step of the way, and filed the disputed Notice of Appeal under the title of the said case. We cannot find any reason to accept petitioner's feigned ignorance that the case they were appealing is a liquidation petition. In fine, such miscalculation of the petitioner cannot justify an exception to the 24 rules, and to apply the liberal construction rule. 1avvphi1 Thus, the erroneous assumption of petitioner's counsel could not excuse her from complying with the Rules. If we are to accept such reason and grant petitioner's petition would be putting a premium on his counsel's ignorance or lack of knowledge of existing 25 26 Rules. An erroneous application of the law or rules is not excusable error." Petitioner is bound by the mistake of his counsel. The cases of Gregorio v. CA and Gonzales-Orense v. Court of Appeals, cited by petitioner to support his plea for the relaxation of the rules on the application of the reglementary periods of appeal, find no application in his case. Gregorio v. CA involved the failure of therein petitioner to file appellant's brief within the extended period on the basis of which the CA dismissed the appeal. We reinstated the appeal saying that the CA may allow the extension of time to file brief as long as good and sufficient cause was shown and the motion was filed before the expiration of the time sought to be extended; that expiration of time to file brief, unlike lateness in filing the notice of appeal, appeal bond or record on appeal was not a jurisdictional matter and may be waived by the parties. The case before us deals with the matter of the non-filing of the record on appeal within the reglementary period prescribed by law which is not only mandatory but jurisdictional. Gonzales Orense v. CA though involving the issue of the non-filing of a record on appeal, the factual mileu of that case was different. In that case, petitioner filed his notice of appeal from the order of the probate court awarding the amount of P20,000.00 for his services in the probate of the will of the husband of his client. The probate court transmitted the records to the CA, and later petitioner submitted his appellants' brief and respondent her appellee's brief. However, the CA dismissed the appeal as petitioner failed to submit a record on appeal. In a petition filed with us, we reinstated the appeal since we found that the question presented to us, i.e., whether or not a record on appeal was necessary when an award of attorney's fees by the probate court was elevated to the CA, was one of first impression; that petitioner acted in honest, if mistaken interpretation of the applicable law; that the probate itself believed that the record on appeal was unnecessary and respondent herself apparently thought so too for she did not move to dismiss the appeal and instead impliedly recognized its validity by filing the appellee's brief. In the present case, petitioner filed in Sp. Proc. No. 170-0-85 his claim against the assets of RBO as a secured creditor by virtue of the real estate mortgage; that a petition for liquidation is in the nature of a special proceeding was already settled in Pacific Banking Corporation Employees Organization v. 27 Court of Appeals, decided in 1995, thus, no longer a novel issue when petitioner's appeal was filed in 2003. Moreover, unlike in Gonzales-Orense, where therein respondent did not move for the dismissal of the appeal and even filed her appellee's brief, herein respondent had moved in the RTC for the dismissal of the appeal for failure of petitioner to file the record on appeal. Petitioner's claim that the issue on the admissibility of testimonies of respondent's witnesses does not call for an evaluation of evidence but a question of law as it calls for the application of the law on hearsay evidence; thus, within the remedy of a petition for certiorari is not meritorious. We find no error committed by the CA when it held that such issue was beyond the jurisdictional parameter of a special civil action of certiorari as such issue dwelt into questions of facts and evaluation of evidence. The sole office of a writ of certiorari is the correction of errors of jurisdiction and does not include a review of public respondents eval uation of the 28 evidence and factual findings. In a special civil action for certiorari under Rule 65 of the Rules of Court, questions of fact are generally not permitted, the inquiry being limited to whether the public respondent acted without or in excess of its jurisdiction or 29 with grave abuse of discretion. WHEREFORE, the petition is hereby DENIED. The Decision dated July 31, 2006 and the Resolution dated October 5, 2006 of the Court of Appeals in CA-G.R. SP. No. 93441 are AFFIRMED.

Republic of the Philippines Supreme Court Manila SECOND DIVISION LA CAMPANA DEVELOPMENT CORPORATION, Petitioner, - versus ARTURO LEDESMA, HON. JUDGE ESTRELLA T. ESTRADA, in her capacity as PRESIDING JUDGE, Regional Trial Court, Branch 83, Quezon City, and the HON. COURT OF APPEALS, Respondents. G.R. No. 154152 August 25, 2010

This resolves the Petition for Certiorari under Rule 65 of the Rules of Court, praying that the Resolution of the Court of Appeals (CA), 2 dated February 13, 2002, ordering the issuance of a writ of preliminary injunction, and its Resolution dated June 28, 2002 denying petitioners motion for reconsideration, be declared null and void ab initio. The antecedent facts are as follows. Petitioner filed an ejectment case with the Metropolitan Trial Court (MeTC) against private respondent Ledesma, alleging that despite expiration of the contract of lease executed between them and demands to vacate subject premises and pay rentals therefor, the latter failed to comply with such demands. Private respondent countered in his Answer that he had paid the rentals over subject premises and petitioner no longer had the right to possess the property as it had been foreclosed by the Development Bank of the Philippines (DBP). Private respondent further pointed out that subject premises had in fact been in the possession of the DBP since March or April of 1997, so since that time, it was with the DBP that he made arrangements for his continued occupation of the subject premises. The MeTC then rendered judgment in favor of petitioner, ordering private respondent to surrender possession of subject premises to petitioner. Private respondent appealed to the Regional Trial Court (RTC), and to stay execution of said judgment, private respondent filed a supersedeas bond with the MeTC. The RTC affirmed the MeTC judgment. Petitioner then moved for the immediate execution of the RTC Decision, which motion was granted by the RTC. Meanwhile, private respondent elevated the case to the CA via a petition for review on certiorari with prayer for the issuance of a temporary restraining order or writ of preliminary injunction. A temporary restraining order was issued by the CA, effectively staying implementation of the writ of execution issued by the RTC. Eventually, the CA also issued a writ of preliminary injunction per Resolution dated February 13, 2002. In justification of the issuance of said writ, the CA stated in said Resolution that: Based on the evidence before Us, We are convinced that the execution of the assailed decision of the RTC at this stage will probably cause injustice to the petitioner [herein private respondent]. We cannot ignore Our ruling in CA-GR CV No. 34856 which had already attained finality. The facts on hand show that the DBP is the present owner of the leased premises. The only person who can lawfully eject an unwelcome tenant from the leased premises is the owner thereof or persons deriving rights from said owner, of which private respondent [herein petitioner], in its Opposition to the present motion, does not pretend to be. Contrary to the stand of the respondent, the petitioner is not estopped from questioning the title of respondent over the leased premises as the rule on estoppel against tenants is subject to a qualification. It does not apply if the landlord's title has expired, or has been conveyed to another, or has been defeated by a title paramount, subsequent to the commencement of lessor-lessee relationship. In other words, if there was a change in the nature of the title of the landlord during the subsistence of the lease, then the presumption does not apply.

Petitioner's motion for reconsideration of said Resolution was denied on June 28, 2002. Thus, petitioner filed the present petition for certiorari seeking the annulment of the aforementioned CA Resolutions. The issues boil down to whether the CA committed grave abuse of discretion amounting to lack or excess of jurisdiction when it ordered the issuance of a writ of preliminary injunction to stay the immediate execution of the RTC judgment and whether mandamus lies to compel respondent RTC Judge to issue a writ of execution. The Court finds the petition unmeritorious. For the Court to issue a writ of certiorari against the CA, it is incumbent upon petitioner to show that said lower court committed 3 grave abuse of discretion. In Quasha Ancheta Pea & Nolasco Law Office v. Special Sixth Division, Court of Appeals , the Court stated that: Grave abuse of discretion means a capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough; it must be so grave as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal 4 to perform the duty enjoined or to act at all in contemplation or law. A showing of such grave abuse of discretion is sorely wanting in this case. It is true that Section 21, Rule 70 of the Rules of Court provides that "[t]he judgment of the Regional Trial Court against the defendant shall be immediately executory, without prejudice to a further appeal that may be taken therefrom." However, the Court 5 ruled in Benedicto v. Court of Appeals that "on appeal the appellate court may stay the said writ should circumstances so require. x x x even if RTC judgments in unlawful detainer cases are immediately executory, preliminary injunction may still be granted." Citing 6 7 Amagan v. Marayag and Vda. de Legaspi v. Avendao, the Court explained in Benedicto that: Where the action, therefore, is one of illegal detainer, as distinguished from one of forcible entry, and the right of the plaintiff to recover the premises is seriously placed in issue in a proper judicial proceeding, it is more equitable and just and less productive of confusion and disturbance of physical possession, with all its concomitant inconvenience and expenses. For the Court in which the issue of legal possession, whether involving ownership or not, is brought to restrain, should a petition for preliminary injunction be filed with it, the effects of any order or decision in the unlawful detainer case in order to await the final judgment in the more 8 substantive case involving legal possession or ownership. x x x Moreover, the Court also stressed in City of Naga v. Asuncion that: As a rule, the issuance of a preliminary injunction rests entirely within the discretion of the court taking cognizance of the case and will not be interfered with, except in cases of manifest abuse. x x x x x x Be it noted that for a writ of preliminary injunction to be issued, the Rules of Court do not require that the act complained of be in clear violation of the rights of the applicant. Indeed, what the Rules require is that the act complained of be probably in violation 10 of the rights of the applicant. Under the Rules, probability is enough basis for injunction to issue as a provisional remedy. x x x In the afore-quoted case, the Court reiterated that when exigencies in the case warrant it, the appellate court may stay the writ of execution issued by the RTC in an action for ejectment if there are circumstances necessitating such action. An example of such 11 exceptional circumstance can be seen in Laurel v. Abalos. Therein, a defendant was ordered by the trial court to vacate the premises of the disputed property and return possession thereof to the plaintiffs, but while the ejectment case was on appeal, a judgment was promulgated in a separate case where the sale of the property to said plaintiffs was declared null and void, making the plaintiffs' right to possess the disputed property inconclusive. The Court ruled in said case that: Where supervening events (occurring subsequent to the judgment) bring about a material change in the situation of the parties which makes the execution inequitable, or where there is no compelling urgency for the execution because it is not justified by the 12 prevailing circumstances, the court may stay immediate execution of the judgment . Based on the foregoing earlier ruling in Laurel, the Court also considered it just and equitable to stay the execution of the RTC judgment in an ejectment case against the City of Naga, stating that:
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Needless to reiterate, grave and irreparable injury will be inflicted on the City of Naga by the immediate execution of the June 20, 2005 RTC Decision. x x x the people of Naga would be deprived of access to basic social services. It should not be forgotten that the land subject of the ejectment case houses government offices which perform important functions vital to the orderly operation of 14 the local government. x x x In the present case, there also exists a material change in the situation of the parties. The CA properly took into serious consideration the fact that in its Decision in CA-G.R. CV No. 34856 entitled La Campana Food Products, Inc. v. Development Bank of the Philippines, which has become final and executory, it ordered herein petitioner, formerly known as La Campana Food Products, Inc., to surrender possession of subject properties to the Development Bank of the Philippines . Evidently, a serious cloud of doubt has been cast on petitioners right of possession, making it questionable whether the RTC Decision, ordering private respondent to surrender possession of subject premises to petitioner, should be immediately implemented. Therefore, the CA did not gravely abuse its discretion in this case; rather, it acted prudently when it stayed execution of the RTC Decision until such time that a final resolution of the main case is reached. Petitioner's contention, that it was improper for the CA to have granted private respondent's motion to consider the supersedeas bond it posted with the Metropolitan Trial Court as sufficient to cover the bond required for the issuance of the writ of preliminary injunction, is likewise incorrect. Petitioner argues that, "said supersedeas bond is posted solely and primarily to answer for a specific purpose which is for the payment of unpaid rentals accruing up to the final judgment. This cannot be held answerable for damages to petitioner should it later be found out that the private respondent is not entitled to the issuance [of a writ of preliminary 15 injunction]." Note that Section 4(b), Rule 58 of the Rules of Court provides that: (b) Unless exempted by the court, the applicant files with the court where the action or proceeding is pending, a bond executed to the party or person enjoined, in an amount to be fixed by the court, to the effect that the applicant will pay to such party or person all damages which he may sustain by reason of the injunction or temporary restraining order if the court should finally decide that the applicant was not entitled thereto. Upon approval of the requisite bond, a writ of preliminary injunction shall be issued; However, in Hualam Construction and Dev't. Corp. v. Court of Appeals, the Court expounded on what damages may be recovered in actions for forcible entry or unlawful detainer, to wit: As to damages, We have on several occasions ruled that since the only issue raised in forcible entry or unlawful detainer cases is that of rightful physical possession, the "damages" recoverable in these cases are those which the plaintiff could have sustained as a mere possessor, i.e., those caused by the loss of the use and occupation of the property, and not the damages which he may have suffered but which have no direct relation to his loss of material possession. x x x Simply put, "damages" in the context of Section 8 of Rule 70 [now Section 19, Rule 70 of the Rules of Court] is limited to "rent" or "fair rental value" for the use and occupation of the 17 property. Since the only damages that petitioner may be entitled to in an action for unlawful detainer are those arising from its loss of the use or occupation of subject premises, the only damages petitioner can claim by reason of the stay of execution of the RTC judgment is also only for the "rent" or "fair rental value" for the property in question. Therefore, the CA did not err in considering the supersedeas bond filed with the MTC, which answers for unpaid rentals, as sufficient bond for the issuance of a writ of preliminary injunction. In light of the foregoing, it is quite clear that there is no reason to compel the RTC to immediately implement the writ of execution in this case. WHEREFORE, the petition is DISMISSED for lack of merit. The Resolutions of the Court of Appeals, dated February 13, 2002 and June 28, 2002, respectively, in CA-G.R. SP No. 66668, are AFFIRMED. SO ORDERED.
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SEPTEMBER 2010 CIVIL PROCEDURE Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 149624 September 29, 2010

SPOUSES CONRADO ANTONIO and AVELYN ANTONIO, Petitioners, vs. JULITA SAYMAN VDA. DE MONJE, substituted by her heirs, namely: ANGELINA MONJE-VILLAMOR, LUZVISMINDA MONJE-CORTEL, MARRIETA MONJE-ORTICO, LEOPOLDO MONJE, CONCEPCION SAYMAN-MONJE, and ROLINDA MONJE-CALO, Respondents. DECISION PERALTA, J.: Assailed in the present petition are the Decision and Resolution of the Court of Appeals (CA) dated May 4, 2001 and August 3, 2001, respectively. The facts of the case, as summarized by the CA, are as follows: Spouses Catalino Manguiob and Andrea Pansaon were the original owners of the subject parcel of coconut land, consisting of 15,903 square meters, particularly known as Lot No. 1 covered by Original Certificate of Title No. 1020 of the Register of Deeds of Davao. On 02 September 1962, Andrea Pansaon who survived her husband Catalino Manguiob, together with some other heirs, sold to Macedonio Monje Seven Thousand Five Hundred (7,500) square meters only of the aforesaid property. The said deed of absolute sale was duly notarized by Notary Public Ricardo Reyes and entered in his notarial book as Doc. No. 48; page 10; Book No. 5; Series of 1962. Macedonio Monje immediately took possession thereof and constructed a house worth P30,000.00. On 16 January 1967, the heirs of spouses Catalino Manguiob and Andrea Pansaon who also died, sold the subject property which was already sold to Macedonio Monje in 1962, in favor of Nicanor Manguiob and Carolina V. Manguiob. Immediately thereafter, spouses Nicanor Manguiob and Carolina V. Manguiob had executed an absolute deed of sale in favor of the formers sister-in-law, Avelyn B. Antonio, the entire Lot No. [1] consisting of 15,903 square meters. The sale was entered in the notarial book of Notary Public Juanito T. Hernandez as Doc. No. 645; Page 31; Book 5, Series of 1967. Macedonio Monje knew it only on 11 August 1967 when he received a letter from Avelyn B. Antonio, informing him that she is now the registered owner of the subject property under a new Transfer Certificate of Title No. TCT No. T-9643. Aggrieved, Macedonio Monje filed on 12 October 1967 before the CFI of Baganga, Davao Oriental, a complaint for the annulment of the deed of sale between the heirs of Catalino Manguiob and Carolina Balanay/Nicanor Manguiob, as well as the subsequent deed of absolute sale by the latter in favor [of] Avelyn Antonio and the cancellation of TCT No. T-9643, docketed as Civil Case No. 007-125. On 27 August 1981, the aforesaid court rendered a decision the decretal portion thereof reads as follows: WHEREFORE, judgment is hereby rendered, declaring the 2nd and 3rd deeds of sale of the property in question null and void and transfer certificate of title No. 9643 likewise null and void; ordering the defendants jointly and solidarily to pay the plaintiff moral damages of P30,000.00 and actual damages of P20,000.00, with legal interest until the amount is fully paid; and to pay the costs. Let a copy of this decision be served on the Register of Deeds at Mati, Davao Oriental, for appropriate action.
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SO ORDERED. Plaintiff-appellants, Spouses Antonio appealed the above-mentioned decision all the way to the Supreme Court. On 07 December 1992, the Supreme Court in G.R. No. 69696, rendered a decision, the pertinent portion of which states as follows: We find that while the principle of res judicata is better disregarded if its application would involve the sacrifice of justice to technicality; to so disregard it now and reopen the case would further delay its disposition. However, the lower court should take note of its erroneous order to deliver to Monje an area larger than what he bought from the heirs of Manguiob and claimed in the action he had filed, in the eventual execution of its decision. In the same way that the power of the court in the execution of its judgment extends only over properties belonging to the judgment debtor, the court below may not, in the execution of its decision of August 27, 1981, deliver to Monje the entire area covered by TCT No. T-9643 as it is more than double that of the property he had bought. (pp. 15-16, rollo). Prescinding from the decision of the Supreme Court, plaintiff-appellants [herein petitioners] filed a case for a sum of money, accounting of the proceeds of the copra, damages and attorneys fees against herein defendant -appellees, docketed as Civil Case No. 506 before the Regional Trial Court of Baganga, Davao Oriental, Branch 7. In the aforesaid complaint, plaintiffs-appellants alleged, among others that: 8. That the late Macedonio Monje has been in possession of this 15,903 square meters coconut land covered by TCT No. T-9643 since 1967 which possession and enjoyment thereof has been continued by the herein defendants when Monje died; 9. That as earlier pointed out, Monje is only entitled to 7,500 square meters of this subject property, hence, plaintiffs were deprived of the possession and proceeds of the copra of their property consisting of 8,403 square meters since 1967 (the year plaintiffs became the owner of this property) continuously up to the present. 10. That the possession by Macedonio Monje and the defendants of the whole 15,903 square meters of the aforesaid land and their appropriation of the proceeds of the copra was made in bad faith for they know very well that they are only entitled to 7,500 square meters portion of the land which is the only area they bought from the heirs of Catalino Manguiob. (Please refer to Annex 'B') xxxx 12. That since 1967 up to the present or a period of 27 years, Monje and the defendants appropriated unto themselves the proceeds of the copra of the land belonging to the plaintiffs (8,403 square meters area) in the estimated net amount of P420,714.00); xxxx Defendants-appellees [herein respondents], instead of filing an answer to the aforesaid complaint had opted to file a motion to 3 dismiss on the grounds of res judicata and violation of Supreme Court Circular No. 04-94 on non-forum shopping. x x x On December 16, 1994, the Regional Trial Court (RTC) issued an Order dismissing herein petitioners' complaint on the ground of res 4 judicata. Aggrieved by the Order of the RTC, petitioners filed an appeal with the CA. Despite due notice, respondents failed to file their appellees' brief. Consequently, the CA deemed the case submitted for decision without the said brief. On May 4, 2001, the CA rendered its presently assailed Decision affirming the judgment of the RTC and dismissing the appeal of herein petitioners.1avvphi1 Petitioners filed a Motion for Reconsideration, but the same was dismissed by the CA in its Resolution dated August 3, 2001. Hence, the instant petition raising the lone issue of whether or not the CA erred in applying the principle of res judicata with respect 5 to Civil Case No. 007-125 and Civil Case No. 506.

At the outset, the Court notes that respondents failed to file their comment on the present petition. As borne by the records, several Court resolutions addressed to the respondents were returned either unserved or unheeded. Thus, the Court dispensed with the filing of respondents' comment. Going to the merits of the case, res judicata is defined as "a matter adjudged; a thing judicially acted upon or decided; a thing or 6 matter settled by judgment." According to the doctrine of res judicata, an existing final judgment or decree rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on 7 the points and matters in issue in the first suit. To state simply, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on all points and matters determined in the 8 former suit. The principle of res judicata is applicable by way of (1) "bar by prior judgment" and (2) "conclusiveness of judgment." This Court had occasion to explain the difference between these two aspects of res judicata as follows: There is "bar by prior judgment" when, as between the first case where the judgment was rendered and the second case that is sought to be barred, there is identity of parties, subject matter, and causes of action. In this instance, the judgment in the first case constitutes an absolute bar to the second action. Otherwise put, the judgment or decree of the court of competent jurisdiction on the merits concludes the litigation between the parties, as well as their privies, and constitutes a bar to a new action or suit involving the same cause of action before the same or other tribunal. But where there is identity of parties in the first and second cases, but no identity of causes of action, the first judgment is conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved therein. This is the concept of res judicata known as "conclusiveness of judgment." Stated differently, any right, fact or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which judgment is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and 9 their privies whether or not the claim, demand, purpose, or subject matter of the two actions is the same. Stated differently, conclusiveness of judgment finds application when a fact or question has been squarely put in issue, judicially 10 passed upon, and adjudged in a former suit by a court of competent jurisdiction . The fact or question settled by final judgment or order binds the parties to that action (and persons in privity with them or their successors-in-interest), and continues to bind them while the judgment or order remains standing and unreversed by proper authority on a timely motion or petition; the conclusivelysettled fact or question cannot again be litigated in any future or other action between the same parties or their privies and successors-in-interest, in the same or in any other court of concurrent jurisdiction, either for the same or for a different cause of 11 action. Thus, only the identities of parties and issues are required for the operation of the principle of conclusiveness of 12 judgment. In the present case, there is no question that there is identity of parties in Civil Case No. 007-125 and Civil Case No. 506. However, as to identity of issues, a perusal of the records and other pleadings would show that the issue raised in Civil Case No. 007125 is whether the sale to petitioners of the 7,500 square meter portion of Lot No. 1 being contested by respondents is valid. On the other hand, in Civil Case No. 506, the issues are whether petitioners were deprived of possession of the remaining 8,403 square meter portion of Lot No. 1 which was validly sold to them and whether they are entitled to an accounting of the proceeds of the copra harvested from their property which was supposedly appropriated by respondents. The Court finds that there is no identity of issues as the issue raised in Civil Case No. 007-125 is different from, and does not overlap with, the issue raised in Civil Case No. 506. Respondents insist in their Motion to Dismiss filed with the RTC that the cause of action in Civil Case No. 506 is barred by the prior judgment rendered in Civil Case No. 007-125. The Court agrees, however, with the CA that the causes of action in these cases are not identical. The Court has previously employed various tests in determining whether or not there is identity of causes of action as to warrant the application of the principle of res judicata. One test of identity is the "absence of inconsistency test" where it is determined whether 13 the judgment sought will be inconsistent with the prior judgment. If no inconsistency is shown, the prior judgment shall not 14 constitute a bar to subsequent actions. In the instant case, the reliefs prayed for in Civil Case No. 506 are the payment of a sum representing the proceeds of the copra supposedly harvested from petitioners' property and purportedly misappropriated by respondents. Petitioners also pray for the award of moral and exemplary damages, as well as attorney's fees and litigation expenses.

In the event that a judgment is rendered in favor of herein petitioners, who are the complainants in Civil Case No. 506, the Court finds no possible inconsistency in the judgment sought in Civil Case No. 506 with the judgment rendered in Civil Case No. 007-125. The more common approach in ascertaining identity of causes of action is the "same evidence test," whereby the following question serves as a sufficient criterion: "would the same evidence support and establish both the present and former causes of action?" If 15 the answer is in the affirmative, then the prior judgment is a bar to the subsequent action; conversely, it is not. In the instant case, it is unmistakable that the pieces of evidence that would back up the cause of action in Civil Case No. 007-125 are different from the set of evidence that would prove the cause of action in Civil Case No. 506. Aside from the "absence of inconsistency test" and "same evidence test," we have also ruled that a previous judgment operates as a bar to a subsequent one when it had "touched on [a] matter already decided," or if the parties are in effect "litigating for the same 16 thing." A reading of the decisions of the lower and appellate courts in Civil Case No. 007-125 would show that there were neither discussions nor disposition of the issues raised in Civil Case No. 506. The Court, nevertheless, does not agree with the conclusion of the RTC and the CA that Civil Case No. 007-125 and Civil Case No. 506 involve the same subject matter. The final and executory judgment in Civil Case No. 007-125 cannot bar the filing of Civil Case No. 506, since these cases involve entirely different subject matters. The bone of contention in Civil Case No. 007-125 is confined to the 7,500 square meter portion of Lot No. 1 bought by the predecessor-in-interest of respondents, while the subject matter in Civil Case No. 506 is the remaining 8,403 square meter parcel of the same lot. Since there is no identity of subject matter between the two cases, it is but logical to conclude 17 that there is likewise no identity of causes of action. Both the questioned rulings of the RTC and the CA may have arisen from an apparent confusion that the whole of Lot No. 1, consisting of 15,903 square meters, is owned by respondents. It is clear, however, from the December 7, 1992 ruling of this Court in 18 G.R. No. 69696 that respondents' predecessor-in-interest acquired only a 7,500 square meter portion of Lot No. 1 and not the entirety thereof and that the remaining 8,403 square meters are still owned by petitioners. In sum, the Court finds that there is no res judicata in the present case. Lastly, petitioners' claims for accounting and recovery of the proceeds of the sale of copra, as well as for damages, do not take the nature of a compulsory counterclaim that should have been barred if not set up in the action. These claims do not arise out of, or are necessarily connected with, the transaction or occurrence constituting the subject matter of the respondents' claim. Thus, petitioners' claims may be filed in a separate action, which they did. WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated May 4, 2001 and its Resolution dated August 3, 2001 in CA-G.R. CV No. 49356 are REVERSED and SET ASIDE. The case is REMANDED for appropriate proceedings to the court of origin, Regional Trial Court, Branch 7, of Baganga, Davao Oriental, which is DIRECTED to decide on the merits WITH REASONABLE DISPATCH. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 172250 September 27, 2010

HEIRS OF PEDRO BARZ, namely: ANGELO BARZ and MERLINDA BARZ, Petitioners, vs. SPOUSES JOSE GESALEM AND ROSA GESALEM, represented [by] their Attorney-in-Fact, JONATHAN U. GESALEM; HON. AUGUSTINE VESTIL-Presiding Judge, Regional Trial Court, Branch 56, Mandaue City; COURT OF APPEALS, NINETEENTH DIVISION, CEBU CITY, Respondents. DECISION PERALTA, J.: This is a petition for review on certiorari of the Decision of the Court of Appeals dated February 28, 2006 in CA-G.R. CEB-SP No. 00767, and its Resolution dated April 11, 2006 denying petitioners motion for reconsideration. The Decision of the Court of Appeals affirmed the Order of the Regional Trial Court (RTC) of Mandaue City, Branch 56, denying petitioners motion to dismiss the respondents Complaint for reconveyance. The facts are as follows: Petitioners' predecessor, Pedro Barz, is the registered owner of a parcel of land, located in Mandaue City, Cebu, identified as Lot No. 896 of Plan No. II-5121, which formed part of the Hacienda de Mandaue. This parcel of land was originally owned by the spouses Esteban and Lorenza Sanchez. When the spouses Esteban and Lorenza Sanchez died intestate, the land was inherited by their daughter, Juana Perez, married to Numeriano Barz. On April 16, 1929, Juana Perez sold a parcel of land identified as Lot No. 896-A, with an approximate area of 2,505 square meters, to Panfilo Retuerto. However, on April 26, 1935, Panfilo Retuerto purchased the aforementioned lot from the Archbishop of Cebu. Meantime, the San Carlos Seminary in Cebu filed a Petition with the Juzgado de Primera Instancia (now the Regional Trial Court) in Cebu for the issuance of titles over several parcels of land in Hacienda de Mandaue, including Lot No. 896-A, earlier purchased by Panfilo Retuerto from Juana Perez and from the Archbishop of Cebu. In August 1937, the Court rendered a decision declaring Panfilo Retuerto as the owner of the said parcel of land. On July 22, 1940, the Court issued an Order directing the General del Registro de Terrenos (later the Land Registration Commission) for the issuance of the appropriate decree over the said parcel of land in favor of Panfilo Retuerto. However, no decree was issued, because of the outbreak of the Second World War. After the war, Panfilo Retuerto failed to secure the appropriate decree. Twenty years elapsed. Juana Perez Barz died intestate and was survived by her son, Pedro Barz. Sometime in 1966, Pedro Barz filed with the Court of First Instance of Cebu an application for confirmation of his title over Lot No. 896 of Plan No. II-5121. Panfilo Retuerto did not file any opposition to the application. After appropriate proceedings, the Court rendered a decision declaring Pedro Barz as the lawful owner of the property. On August 18, 1966, Decree No. N-110287 was issued over the property in favor of Pedro Barz. On the basis of the said decree, the Register of Deeds issued Original Certificate of Title (OCT) No. 521 in the name of Pedro Barz on November 13, 1968.
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Thereafter, Lot No. 896 was subdivided into four lots, namely, Lot 896-A, with an area of 507 square meters; Lot 896-B, with an area of 2,142 square meters; Lot 896-C, with an area of 5,580 square meters; and Lot 896-D, with an area of 12,253 square meters. On October 18, 1967, Pedro Barz sold Lot 896-C to Jose Gesalem. On December 29, 1975, Panfilo Retuerto died intestate, and was survived by his wife, Catalina Retuerto, and their children, namely, Gaudencio, Loreto, Francisca, Francisco, Efigenia and Guillerma. The heirs executed an Extrajudicial Settlement and Sale of the Estate of Panfilo Retuerto, adjudicating unto themselves, as owners, the said property, and deeding 1,703 square meters of the property to Loreto Retuerto, and the remaining 440 square meters to Efigenia Retuerto. Thereafter, 440 square meters of the property was sold to the spouses Jose and Rosa Gesalem, respondents herein. Pedro Barz died intestate and was survived by his heirs, Angelo P. Barz and Merlinda Barz. Loreto Retuerto also died intestate and was survived by his heirs, namely, Romeo, Antonia, Narcisa, Corazon and Patrocinia, all surnamed Retuerto. The heirs of Panfilo Retuerto claimed ownership over subdivision Lot 896-B and a part of Lot 896-A covered by OCT No. 521 under the name of Teofila Barz. On September 5, 1989, Angelo P. Barz and Merlinda Barz filed with the RTC of Mandaue City a Complaint against Catalina Retuerto and the other heirs of Panfilo Retuerto, as well as the spouses Jose and Rosa Gesalem for Quieting of Title, Damages and Atto rneys Fees. The case was docketed as Civil Case No. MAN-697. On April 3, 1997, the RTC of Mandaue City rendered a Decision in favor of Angelo P. Barz and Merlinda Barz, who were declared as the absolute owners of Lot Nos. 896-A and 896-B. It declared the documents adduced by the Retuertos as unenforceable and ineffective against OCT No. 521, and ordered the Retuertos to vacate the premises of Lot Nos. 896-A and 896-B. It also declared the Deed of Sale executed by the Retuertos in favor of the spouses Jose and Rosa Gesalem as null and void, and ordered the Spouses Gesalem to vacate the portion of Lot No. 896-B allegedly sold to them by the Retuertos. The heirs of Panfilo Retuerto and the spouses Jose and Rosa Gesalem appealed the decision of the RTC of Mandaue City to the Court of Appeals, which appeal was docketed as CA-G. R. CV No. 59975. The Court of Appeals affirmed the Decision of the trial court, but set aside the award of attorneys fees.
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Thereafter, the heirs of Panfilo Retuerto and the Spouses Gesalem filed a Petition for review on certiorari of the Decision of the Court of Appeals with this Court. The case was docketed as G.R. No. 148180. On December 19, 2001, this Court rendered a Decision in G.R. No. 148180, affirming the decision of the Court of Appeals in CA-G.R. CV No. 59975. The Court held in the main that OCT No. 521, issued in the name of Pedro Barz on November 13, 1968, became indefeasible after the lapse of one year from the date of entry of the decree of registration, and could no longer be controverted. Realizing that no collateral attack on title to property is allowed, as stated i n the Courts decision in G.R. No. 148180, the Spouses Gesalem, respondents herein, filed with the RTC of Mandaue City a Complaint for reconveyance with a prayer for the issuance of a temporary restraining order and/or a writ of injunction against the heirs of Pedro Barz, petitioners herein. The case was docketed as Civil Case No. MAN-4639. Respondents alleged in their Amended Complaint that they are the possessors and true owners of a 440-square-meter portion of Lot 896-A, with a total of 2,505 square meters, located at Pagsabungan, Mandaue City. They asserted that the 440-square-meter lot was sold to them by the heirs of Panfilo Retuerto. They contended that their property was erroneously included in the title of petitioners and/or their predecessor. After filing their Answer denying the material allegations in the Complaint, petitioners filed a Motion to Dismiss on the ground of res judicata, laches and lack of cause of action. Petitioners contended that the issues raised in the Complaint had already been laid to rest in the decision of this Court in G.R. No. 148180; hence, res judicata had allegedly set in. Petitioners further contended that private respondents are guilty of laches. In an Order dated November 24, 2004, the RTC of Mandaue City, Branch 56 (trial court) denied petitioners' Motion to Dismiss for lack of merit. The trial court held that the elements of res judicata are not present in this case, because there is no identity of parties
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and causes of action. Moreover, laches would not apply in private respondents' case, because there was no intentional and unequivocal delay in the assertion of their rights. Petitioners motion for reconsideration was denied by the trial court in an Order dated April 11, 2005. Petitioners filed a petition for certiorari with the Court of Appeals, alleging that the presiding judge of the trial court, Judge Augustine Vestil, committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying their motion to dismiss and their motion for reconsideration. On February 28, 2006, the Court of Appeals rendered a Decision, the dispositive portion of which reads: WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING the petition filed in this case and AFFIRMING the assailed Orders of the public respondent dated November 24, 2004 and April 11, 2005 both in Civil Case No. MAN7 4639. The Court of Appeals held that for res judicata to apply, the following requisites must be present: (a) finality of the former judgment; (b) the court which rendered it had jurisdiction over the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be, between the first and second actions, identity of parties, subject matter and causes of action. The Court of Appeals held that based on the foregoing, the trial court did not commit grave abuse of discretion when it held that res judicata does not apply for there is no identity of parties and causes of action in this action for reconveyance filed by respondents and petitioners action for quieting of title, which had been resolved by this Court in G.R. No. 148180. The appellate court held that the ultimate test to ascertain identity of causes of action is whether or not the same evidence fully supports and establishes both the first and second cases. As correctly held by the trial court, the causes of action for reconveyance and quieting of title require different sets of evidence for their support and establishment. Moreover, the Court of Appeals held that the trial courts preliminary finding that laches does not apply for lack of its necessary elements is an exercise of its judgment; thus, certiorari cannot lie. Certiorari is a remedy designed for the correction of errors of jurisdiction, not errors of judgment. The appellate court stated that whether or not the elements of laches are indeed present can be thoroughly determined during the trial on the merits of the case. Petitioners motion for reconsideration was denied for lack of merit by the Court of Appeals in a Resolution dated April 11, 2006. Thereafter, petitioners filed this petition raising the following issues: I WHETHER OR NOT THE COURT A QUO WAS CORRECT IN DISREGARDING THE PRINCIPLE OF RES JUDICATA IN THIS INSTANT CASE. II WHETHER OR NOT THE COURT A QUO WAS CORRECT IN DISREGARDING THE PRINCIPLES OF LACHES AND PRESCRIPTION
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In a Resolution dated June 21, 2006, the Court required the respondents to file their Comment on the petition. On August 11, 2006, respondents filed their Comment. Thereafter, petitioners filed their Reply to the Comment of respondents. While the case was pending, the parties, assisted by their respective counsels, filed on May 6, 2010 a Joint Manifestation, which reads: 1. The instant case originated from Civil Case No. MAN-4639, Regional Trial Court, Branch 56, Mandaue City; 2. All parties have come to a settlement and agreement on all issues in the instant case; 3. They have voluntarily waived all their claims and counterclaims relative to the instant case they have finally settled the same;

4. The parties likewise submit to this Honorable Court their Compromise Agreement, hereto attached. WHEREFORE, premises considered, it is most respectfully prayed of this Honorable Court to approve the compromise agreement and to consequently dismiss the instant case. Other just and equitable remedies under the law are likewise prayed for. xxxx COMPROMISE AGREEMENT COME NOW, ALL PARTIES, assisted by their respective counsels and unto this Honorable Court most respectfully submit this Compromise Agreement as final settlement in the above-entitled case, to wit: The instant case originated from Civil Case No. MAN-4639, Regional Trial Court, Branch 56, Mandaue City; All parties have come to a settlement and agreement on all issues in the instant case; It is the mutual desire of all parties to put an end to all litigation involving the said parcel of land subject matter of this case and terminate all legal proceedings involving the same, hence this Compromise Agreement. 1. Angelo Barz and Me[r]linda Barz-Tabasa, being the only Heirs of Pedro & Teofila Barz, shall sell to Sps. Jose & Rosa Gesalem the remaining portion of OCT No. 521 denominated as lot 896-B with an area of 2,142 sq.m. more or less, situated at Pagsabungan, Mandaue City, Philippines. Likewise, the above parties hereby waive all their rights, interest, ownership and participation over the area of 440 square meters which is the subject matter of this case in favor of Sps. Jose & Rosa Gesalem; 2. In consideration of paragraph one, Sps. Jose and Rosa Gesalem shall pay Angelo Barz and Me[r]linda Barz-Tabasa the amount of Four Million Five Hundred Thousand Pesos (P4,5000,000.00) Philippine currency; 3. Angelo Barz and Me[r]linda Barz-Tabasa hereby undertake to protect Sps. Jose and Rosa Gesalem from any claims whatsoever from any person over the above parcel of land; 4. In consideration of the foregoing, all parties hereby waive and quitclaim all their claims, counterclaims, rights and interests against each other. PRAYER WHEREFORE, the parties most respectfully submit and pray to the Honorable Court that their Compromise Agreement be approved not being contrary to law and that a decision on the case be rendered based on the aforesaid Compromise Agreement as final disposition of the case. Other just and equitable remedies under the law are likewise prayed for. Cebu City for Manila, Philippines, April 6, 2010. H[EI]RS OF PEDRO & ME[R]LINDA BARZ: (Signed) ANGELO BARZ Assisted by Counsel: (Signed) SISINIO M. ANDALES (Signed) MERLINDA-BARZ

xxxx JOSE GESALEM By: (Signed) JONATHAN GESALEM Assisted by Counsel: (Signed) REUEL PINTOR xxxx The Court notes that respondents spouses Jose and Rosa Gesalem seek the reconveyance of the parcel of land with an area of 400 square meters, which was allegedly sold to them by Panfilo Retuerto. The sale was nullified by the Court in G.R. No. 148180, as it affirmed the decision of the Court of Appeals, which sustained the decision of the RTC of Mandaue City declaring Angelo Barz and Merlinda Barz, petitioners herein, as the absolute owners of Lot 896-A and Lot 896-B, and ordering the spouses Jose and Rosa Gesalem, respondents herein, to vacate the 400-square-meter-lot, allegedly sold to them, that formed part of Lot 896-B, with an area of 2,142 square meters. In the Compromise Agreement, petitioners have agreed to sell to respondents Lot 896-B, with an area of 2,142 square meters, for P4.5 million. Petitioners waive their rights and interest over the area of 440 square meters, which is the subject matter of this case, in favor of respondents. It must be pointed out that the 400 square-meter-lot sought to be recovered by respondents is part of Lot 896-B, which is now the subject of sale between petitioners and respondents in the Compromise Agreement. In consideration of the sale, the parties waive their claims against each other, and they pray that a decision be rendered based on the Compromise Agreement as final disposition of the case. The Court finds that the Compromise Agreement is not contrary to law, morals, good customs and public policy. Moreover, it appears to be freely executed by petitioners and respondents, with the assistance of their respective counsels. The Court finds no reason not to grant the prayer of the parties and hereby bestows judicial approval of their Compromise Agreement. WHEREFORE, judgment is rendered in accordance with the Compromise Agreement dated April 6, 2010, and the parties are enjoined to abide by its terms and conditions. SO ORDERED. ROSA GESALEM

OCTOBER 2010 CIVIL PROCEDURE Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 153998 October 6, 2010

JORGE L. TIANGCO, THE HEIRS OF ENRIQUE L. TIANGCO, GLORIA T. BATUNGBACAL, NARCISO L. TIANGCO and SILVINO L. TIANGCO, Petitioners, vs. LAND BANK OF THE PHILIPPINES, Respondent. DECISION PERALTA, J.: Before the Court is a special civil action for certiorari seeking to set aside the Resolutions dated October 5, 2001 and June 4, 2002 of the Court of Appeals (CA) in CA-G.R. CV No. 61676. The October 5, 2001 Resolution denied petitioners' Motion to Dismiss respondent's appeal, while the June 4, 2002 Resolution denied petitioners' Motion for Reconsideration. The facts of the case are as follows: On August 11, 1994, herein petitioners filed a Complaint for "Fixing and Payment of Land Compensation and Annulment of Titles & Emancipation Patents" with the Regional Trial Court (RTC) of Bataan against the Secretary of Agrarian Reform, the Register of Deeds of Bataan and some private individuals, identified as their tenants. The Complaint was later amended to implead as additional defendant herein respondent, Land Bank of the Philippines (LBP). Pertinent portions of petitioners' Amended Complaint alleged as follows: 3. Plaintiffs [herein petitioners] are the registered owners of a parcel of land situated at Cupang, Balanga Bataan, with an area of 141,716 square meters, more or less, covered by Transfer Certificate of Title No. T-111310 and declared for tax purposes under Tax Declaration No. 323371. x x x xxxx 5. Private defendants LAURIANO BAUTISTA, FORTUNATO TOLENTINO, DIONISIO ALONZO, DOMINGO REYES, ALFREDO Q. ESTACAMENTO, BIENVENIDO A. VASQUEZ, JOSE BAUTISTA, MOISES G. QUIROZ and ROGELIO S. BAUTISTA were agricultural tenants on the above-described parcel of land, tilling distinct and separate portions thereof with different areas. 6. x x x, unknown to plaintiffs, Emancipation Patents (EPs) were issued to private defendants by the Secretaries of Agrarian Reform, predecessor in office of defendant SECRETARY OF AGRARIAN REFORM, after which Transfer Certificate of Title were issued to private defendants by defendant Register of Deeds of Bataan, x x x. 7. The issuance of the Emancipation Patents and the Transfer Certificates of Title to private defendants was unlawful because plaintiffs, who are the owners of the land distributed to the tenants by defendant SECRETARY OF AGRARIAN REFORM through his predecessors in office and subsequently titled in their names by defendant REGISTER OF DEEDS OF BATAAN, and who did not consent to the transfer of possession and ownership, have not been compensated for the value of said land. x x x xxxx
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8. As a matter of fact, the reasonable value of plaintiffs' land at which they should be compensated has not even been determined, and until the same is determined and fixed, plaintiffs cannot hope to be compensated, but in the meantime, oppressively against plaintiffs-landowners, private defendants are in possession and do not pay lease rentals to plaintiffs. x 5 xx In his Answer, the Secretary of the Department of Agrarian Reform (DAR) denied the material allegations in the Amended Complaint and contended that the case should be dismissed for failure of the plaintiffs to exhaust administrative remedy. The DAR Secretary contended that petitioners failed to bring the case before the DAR Adjudication Board (DARAB) which has primary, original and appellate jurisdiction to determine and adjudicate all agrarian disputes involving the implementation of the Comprehensive Agrarian Reform Program. On the other hand, the private individuals, who were impleaded in their capacity as tenants, contended in their Answer that the Emancipation Patents were regularly issued to them by the DAR after the land has been valued in accordance with laws, rules and regulations then prevailing, and that petitioners, as landowners, have been paid the value thereof through the LBP financing scheme. The tenants further averred that petitioners are already estopped from questioning the value of the land after they failed to 7 challenge it when the property was being valued in accordance with laws and other guidelines. The LBP also denied the material allegations in the Amended Complaint contending that in cases of land transfer claims covered by Presidential Decree No. 27 and Executive Order No. 228, the government agency which has direct responsibility in valuing lands is the DAR and not the LBP; the reason why petitioners have not yet been paid their claims is because of their refusal to comply with the administrative requirements needed for such payment; and, contrary to petitioners' allegations, they received lease rentals from 8 the farmer-beneficiaries named in the Emancipation Patents. After due proceedings, the RTC issued its Decision dated June 9, 1998, the dispositive portion of which reads as follows: WHEREFORE, let the land of the plaintiffs be appraised at Thirty Pesos (P30.00), Philippine Currency, per square meter to be paid to the plaintiffs, without any pronouncement as to costs. SO ORDERED.
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After their Motions for Reconsideration were denied, the LBP, the DAR and the group of tenants filed their respective appeals with 11 the CA by filing Notices of Appeal in accordance with Rule 41 of the Rules of Court. In a Resolution dated July 13, 1999, the CA dismissed the appeal of the tenants for their failure to pay the docket and other lawful 13 fees. On the other hand, the CA required the LBP and the DAR to file their respective Appeal Briefs. The LBP and the DAR moved for extension of time to file their Briefs. Their motion was granted. In its Motion dated May 21, 2001, the LBP again moved for extension of time to file its Brief. On June 25, 2001, the CA issued a Resolution granting LBP's motion and giving it another extension of twenty days to file its Brief. The CA, in the same Resolution, also noted the Brief which was filed prior to the grant of the said motion. Thereafter, herein petitioners filed a Motion for Reconsideration of the June 25, 2001 Resolution of the CA contending that the appellate court committed error in granting the said motion, because at the time the LBP filed its motion for extension dated May 21, 2001, the period originally granted by the CA had already expired. Subsequently, on July 12, 2001, herein petitioners filed a Motion to Dismiss Appeals and to Suspend Period for Filing Appellees' 19 Brief, contending that the LBP's proper mode of appeal should have been a petition for review and not an ordinary appeal, that the LBP failed to serve on petitioners two copies of its Appellant's Brief, and that the LBP failed to seasonably file the said Brief. On August 14, 2001, the CA issued a Resolution considering the appeal of DAR as abandoned and dismissed the same for the latter's failure to file its Appeal Brief within the extended period granted by the court. In the same Resolution, the LBP was required 21 to file its Comment on petitioners' Motion to Dismiss Appeals. The LBP complied and filed its Comment. Petitioners also filed their 22 Reply.
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On October 5, 2001, the CA rendered the presently assailed Resolution denying herein petitioners' Motion to Dismiss the appeal of the LBP. Petitioners filed their Motion for Reconsideration, but the CA denied it in its Resolution dated June 4, 2002. Hence, the present petition for certiorari based on the following grounds: I. THE APPEALED JUDGMENT HAS LONG BECOME FINAL AND EXECUTORY DUE TO RESPONDENT LBP'S FAILURE TO FILE A PETITION FOR REVIEW. xxxx II. RESPONDENT LBP FAILED TO SERVE ON PETITIONERS TWO (2) COPIES OF ITS APPELLANT'S BRIEF. xxxx III. RESPONDENT LBP MUST BE DEEMED NOT TO HAVE FILED A BRIEF BY ITS FAILURE TO FILE ONE WITHIN THE 25 REGLEMENTARY PERIOD. Petitioners contend that the proper mode or remedy that should have been taken by the LBP in assailing the Decision of the RTC, acting as a Special Agrarian Court, is a petition for review and not an ordinary appeal. The Court does not completely agree. This same issue was squarely addressed and settled by the Court in Land Bank of the Philippines v. De Leon, wherein it was ruled that a petition for review is indeed the correct mode of appeal from decisions of Special Agrarian Courts. Therein, the Court held that "Section 60 of Republic Act No. 6657 clearly and categorically states that the said mode of appeal should be adopted." However, in a Resolution issued by the Court en banc, dated March 20, 2003, which ruled on the motion for reconsideration filed by the LBP, the Court clarified that its decision in De Leon shall apply only to cases appealed from the finality of the said Resolution. The Court held: x x x LBP pleads that the subject Decision should at least be given prospective application considering that more than 60 similar agrarian cases filed by LBP via ordinary appeal before the Court of Appeals are in danger of being dismissed outright on technical grounds on account of our ruling herein. This, according to LBP, will wreak financial havoc not only on LBP as the financial intermediary of the Comprehensive Agrarian Reform Program but also on the national treasury and the already depressed economic condition of our country. Thus, in the interest of fair play, equity and justice, LBP stresses the need for the rules to be relaxed so as to give substantial consideration to the appealed cases. xxxx On account of the absence of jurisprudence interpreting Sections 60 and 61 of RA 6657 regarding the proper way to appeal decisions of Special Agrarian Courts, as well as the conflicting decisions of the Court of Appeals thereon, LBP cannot be blamed for availing of the wrong mode. Based on its own interpretation and reliance on [a ruling issued by the CA holding that an ordinary appeal is the proper mode], LBP acted on the mistaken belief that an ordinary appeal is the appropriate manner to question decisions of Special Agrarian Courts. Hence, in the light of the aforementioned circumstances, we find it proper to emphasize the prospective application of our Decision dated September 10, 2002. A prospective application of our Decision is not only grounded on equity and fair play, but also based on the constitutional tenet that rules of procedure shall not impair substantive rights. xxxx We hold that our Decision, declaring a petition for review as the proper mode of appeal from judgments of Special Agrarian Courts, is a rule of procedure which affects substantive rights. If our ruling is given retroactive application, it will prejudice LBP's right to appeal because pending appeals in the Court of Appeals will be dismissed outright on mere technicality thereby sacrificing the
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substantial merits thereof. It would be unjust to apply a new doctrine to a pending case involving a party who already invoked a contrary view and who acted in good faith thereon prior to the issuance of said doctrine. xxxx WHEREFORE, the motion for reconsideration dated October 16, 2002 and the supplement to the motion for reconsideration dated November 11, 2002 are PARTIALLY GRANTED. While we clarify that the Decision of this Court dated September 10, 2002 stands, our ruling therein that a petition for review is the correct mode of appeal from decisions of Special Agrarian Courts shall apply only to cases appealed after the finality of this Resolution. SO ORDERED.
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In the present case, the LBP filed its Notice of Appeal on September 1, 1998. Thus, pursuant to the ruling that De Leon shall be applied prospectively from the finality of this Courts Resolution dated March 20, 2003, the appeal of the LBP, which was fil ed prior to that date, could, thus, be positively acted upon. Petitioners also assert that the LBP's appeal filed with the CA should have been dismissed on the ground that the LBP failed to serve two copies of its Appellants Brief to petitioners. Petitioners argue that under Section 7, Rule 44 of the Ru les of Court, the appellant is required to serve two copies of his Brief on the appellee and that, in relation with the said Rule, one of the grounds for dismissing an appeal under Section 1(e), Rule 50 of the same Rules is the failure of the appellant to serve and file the required number of copies of his Brief or Memorandum within the time provided by the Rules. The Court is not persuaded. Indeed, Section 7, Rule 44 of the Rules of Court requires the appellant to serve two copies of the appellant's brief to the appellee. However, the failure to serve the required number of copies does not automatically result in the dismissal of the appeal. Thus, this 30 Court held in Philippine National Bank v. Philippine Milling Co., Inc. that: [P]ursuant to Section 1 of Rule 50 of the Rules of Court, "(a)n appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee" upon the ground, among others, of "(f)ailure of the appellant x x x to serve and file the required number of copies of his brief," within the reglementary period. Manifestly, this provision confers a power and does not impose a duty. What is 31 more, it is directory, not mandatory. The CA has, under the said provision of the Rules of Court, discretion to dismiss or not to dismiss respondents appeal. Although said discretion must be a sound one, to be exercised in accordance with the tenets of justice and fair play, having in mind the 32 circumstances obtaining in each case, the presumption is that it has been so exercised. It is incumbent upon herein petitioners, as actors in the case at bar, to offset this presumption. Yet, the records before the Court do not satisfactorily show that the CA has committed grave abuse of discretion in not dismissing the LBP's appeal. There is no question that the LBP was only able to serve on petitioners one copy of its appellant's brief. However, settled is the rule 33 that a litigant's failure to furnish his opponent with a copy of his appeal brief does not suffice to warrant dismissal of that appeal. In such an instance, all that is needed is for the court to order the litigant to furnish his opponent with a copy of his brief. In the instant case, with much less reason should the LBP's appeal be dismissed, because petitioners were served with the LBP's brief, albeit only one copy was given to them. The Court would be dwelling too much on technicality if the appeal is dismissed simply on the ground that LBP failed to furnish petitioners with two copies, instead of only one, of its appeal brief. Indeed, there is no showing, and the Court finds none in the instant petition, that such procedural lapse on the part of the LBP resulted in material injury to the latter. Lastly, the Court does not agree with petitioners' contention that the CA committed grave abuse of discretion in not dismissing the LBP's appeal on the ground that the latter failed to file its Appellant's Brief on time. In The Government of the Kingdom of Belgium v. Court of Appeals , the Court laid down the basic rules with respect to the issue of non-filing of appellant's brief with the CA and its consequences, to wit: (1) The general rule is for the Court of Appeals to dismiss an appeal when no appellants brief is filed w ithin the reglementary period prescribed by the rules;
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(2) The power conferred upon the Court of Appeals to dismiss an appeal is discretionary and directory and not ministerial or mandatory; (3) The failure of an appellant to file his brief within the reglementary period does not have the effect of causing the automatic dismissal of the appeal; (4) In case of late filing, the appellate court has the power to still allow the appeal; however, for the proper exercise of the courts leniency it is imperative that: (a) the circumstances obtaining warrant the courts liberality; (b) that strong considerations of equity justify an exception to the procedural rule in the interest of substantial justice; (c) no material injury has been suffered by the appellee by the delay; (d) there is no contention that the appellees cause was prejudiced; (e) at least there is no motion to dismiss filed. (5) In case of delay, the lapse must be for a reasonable period; and (6) Inadvertence of counsel cannot be considered as an adequ ate excuse as to call for the appellate courts indulgence except: (a) where the reckless or gross negligence of counsel deprives the client of due process of law; (b) when application of the rule will result in outright deprivation of the clients libert y or property; or (c) where the interests of justice so require.
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In this regard, the Court's pronouncement in Natonton v. Magaway is apropros: As held by the Court in Gregorio v. Court of Appeals (70 SCRA 546 [1976]), "(T)he expiration of the time to file brief, unlike lateness in filing the notice of appeal, appeal bond or record on appeal is not a jurisdictional matter and may be waived by the parties. Even after the expiration of the time fixed for the filing of the brief, the reviewing court may grant an extension of time, at least where no motion to dismiss has been made. Late filing or service of briefs may be excused where no material injury has been suffered by the appellee by reason of the delay or where there is no contention that the appellee's cause was prejudiced." Technically, the Court of Appeals may dismiss an appeal for failure to file appellant's brief on time. However, the dismissal is directory, not mandatory. It is not the ministerial duty of the court to dismiss the appeal. The failure of an appellant to file his brief within the time prescribed does not have the effect of dismissing the appeal automatically. The court has discretion to dismiss or not to dismiss an appellant's appeal. It is a power conferred on the court, not a duty. The discretion must be a sound one, to be exercised in accordance with the tenets of justice and fair play, having in mind the circumstances obtaining in each case. We observe that petitioners' arguments are based on technical grounds. While indeed respondents did not file their brief seasonably, it was not mandatory on the part of the Court of Appeals to dismiss their appeal. As held by this Court in the above-cited cases, late filing of brief may be excused. In other words, the dismissal of respondents' appeal on that ground is discretionary on the part of the Appellate Court. Significantly, there is no showing that petitioners suffered a material injury or that their cause was prejudiced when respondents failed to submit their brief promptly. What is clear is that the latter incurred delay in the filing of their brief because when the deadline fell due, they were not yet represented by a new counsel. The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of justice, but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves to or robots of technical rules, shorn of judicial discretion. That

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is precisely why courts, in rendering justice, have always been, as they in fact ought to be, conscientiously guided by the norm that on the balance, technicalities take a backseat to substantive rights, and not the other way around. As applied to the instant case, in the language of then Chief Justice Querube Makalintal, technicalities "should give way to the realities of the situation." (Emphasis 37 supplied.) It is true that in the instant case, petitioners filed a motion to dismiss. However, the same was submitted only after the CA had already granted the LBP's motion for extension of time to file its brief and such brief was already filed with the appellate court. In Aguam v. Court of Appeals, this Court excused a delay of nine (9) days in the filing of a motion for extension of the appellant's brief holding that: In the higher interest of justice, considering that the delay in filing a motion for extension to file appellant's brief was only for nine (9) days, and normally, the Court of Appeals would routinely grant such extension, and the appellant's brief was actually filed within the period sought, the better course of action for the Court of Appeals was to admit appellant's brief. Lapses in the literal observance of a rule of procedure will be overlooked when they arose from an honest mistake, when they have not prejudiced the adverse party. The Court can overlook the late filing of the motion for extension, if strict compliance with the 39 rules would mean sacrificing justice to technicality. Based on the abovequoted ruling, with more reason should the LBP's delay in filing its second motion for extension be excused, because such delay was only for five days. Moreover, the LBP was able to file its Appellant's Brief within the second period of extension granted by the CA.1avvphi1 In the same manner, in Heirs of Victoriana Villagracia v. Equitable Banking Corporation , the petitioners therein failed to file their Appellant's Brief with the CA within the reglementary period. They also failed to file their motion for extension before the expiration of the time sought to be extended. In relaxing the application of the procedural rules and, thus, allowing the appeal to be reinstated, the Court held as follows: However, in the instant case, we are of the view that the ends of justice will be better served if it is determined on the merits, after full opportunity is given to all parties for ventilation of their causes and defenses, rather than on technicality or some procedural imperfections. It is far better to dispose of the case on the merits, which is a primordial end, rather than on a technicality that may result in injustice. While it is desirable that the Rules of Court be faithfully observed, courts should not be too strict with procedural lapses that do not really impair the proper administration of justice. The rules are intended to ensure the proper and orderly conduct of litigation because of the higher objective they seek, which is the attainment of justice and the protection of substantive rights of the parties. In Republic v. Imperial [362 Phil. 466], the Court, through Mr. Chief Justice Hilario G. Davide, Jr., stressed that the filing of the appellant's brief in appeals is not a jurisdictional requirement. But an appeal may be dismissed by the CA on grounds enumerated under Rule 50 of the Rules of Court. The Court has the power to relax or suspend the rules or to except a case from their operation when compelling reasons so warrant, or when the purpose of justice requires it. What constitutes good and sufficient cause that will merit suspension of the rules is discretionary upon the court. In the case at bench, without touching on the merits of the case, there appears a good and efficient cause to warrant the suspension of the rules. Petitioners' failure to file the appeal brief within the extended period may have been rendered excusable by force of circumstances. Petitioners had to change their counsel because he was appointed judge of the Municipal Circuit Trial Court. Their new counsel had to go over the six (6) volumes of the records of the case to be able to file an intelligent brief. Thus, a few days of delay in the filing of the motion for extension may be justified. In addition, no material injury was suffered by the appellees by reason of the delay in the filing of the brief. Dismissal of appeals on purely technical grounds is not encouraged. The rules of procedure ought not to be applied in a very rigid and technical sense, for they have been adopted to help secure, not override, substantial justice. Judicial action must be guided by the principle that a party-litigant should be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor or property on technicalities. When a rigid application of the rules tends to frustrate rather 41 than promote substantial justice, this Court is empowered to suspend their operation. In the instant case, the LBP's delay in filing its Appellant's Brief is justified by the fact that the Legal Services Department of the LBP underwent re-organization resulting in the retirement and transfer of the remaining lawyers, cases and personnel from one department to another as well as in the merger and dissolution of other departments within the LBP. In its Manifestation, which petitioners did not dispute, the LBP claimed that by reason of the abovementioned re-organization, the lawyer handling the present
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case actually received a copy of the Resolution of the CA setting the deadline for the filing of its Appellant's Brief only on May 21, 2001, four days after the expiration of the period granted by the CA. Besides, there is no indication that the LBP intended to delay the proceedings, considering that it only filed two motions for extension to file its brief. As adverted to by this Court in De Leon, the dismissal of the LBP's appeal, together with the other appeals it had filed, will have a great impact not only on the LBP as the financial intermediary of the Comprehensive Agrarian Reform Program, but also on the national treasury and the already depressed economic condition of our country. In other words, the instant case is impressed with public interest. As such, and in the interest of substantial justice, the Court finds that the same must be decided on the merits. Based on the foregoing discussions, the Court finds that the CA did not commit grave abuse of discretion in denying petitioners' motion to dismiss respondent LBP's appeal. WHEREFORE, the instant petition is DISMISSED for lack of merit. The Resolutions of the Court of Appeals, dated October 5, 2001 and June 4, 2002 in CA-G.R. CV No. 61676, are AFFIRMED. The case is REMANDED to the Court of Appeals, which is DIRECTED to continue with the proceedings therein and to terminate the same with reasonable dispatch. SO ORDERED. NOTES: Appeal; effect of failure to serve required number of copies of appellants brief; courts discretion. Petitioners also assert that the LBPs appeal filed with the CA should have been dismissed on the ground that the LBP failed to serve two copies of its Appellants Brief to petitioners. Petitioners argue that under Section 7, Rule 44 of the Rules of Court, th e appellant is required to serve two copies of his Brief on the appellee and that, in relation with the said Rule, one of the grounds for dismissing an appeal under Section 1(e), Rule 50 of the same Rules is the failure of the appellant to serve and file the required number of copies of his Brief or Memorandum within the time provided by the Rules. The Court is not persuaded. Indeed, Section 7, Rule 44 of the Rules of Court requires the appellant to serve two copies of the appellants brief to the appellee. However, the failure to s erve the required number of copies does not automatically result in the dismissal of the appeal. Thus, this Court held in Philippine National Bank v. Philippine Milling Co., Inc. that: *P+ursuant to Section 1 of Rule 50 of the Rules of Court, (a)n appeal may be dis missed by the Court of Appeals, on its own motion or on that of the appellee upon the ground, among others, of (f)ailure of the appellant x x x to serve and file the required n umber of copies of his brief, within the reglementary period. Manifestly, thi s provision confers a power and does not impose a duty. What is more, it is directory, not mandatory. The CA has, under the said provision of the Rules of Court, discretion to dismiss or not to dismiss respondents appeal. Alth ough said discretion must be a sound one, to be exercised in accordance with the tenets of justice and fair play, having in mind the circumstances obtaining in each case, the presumption is that it has been so exercised. It is incumbent upon herein petitioners, as actors in the case at bar, to offset this presumption. Yet, the records before the Court do not satisfactorily show that the CA has committed grave abuse of discretion in not dismissing the LBPs appeal. There is no question that the LBP was only able to serve on petitioners one copy of its appellants brief. However, settled is the rule that a litigants failure to furnish his opponent with a co py of his appeal brief does not suffice to warrant dismissal of that appeal. In such an instance, all that is needed is for the court to order the litigant to furnish his opponent with a copy of his brief. In the instant case, with much less reason should the LBPs appeal be dismissed, because petitioners were served with the LBPs brief, albeit only one copy was given to them. The Court would be dwelling too much on technicality if the appeal is dismissed simply on the ground that LBP failed to furnish petitioners with two copies, instead of only one, of its appeal brief. Indeed, there is no showing, and the Court finds none in the instant petition, that such procedural lapse on the part of the LBP resulted in material injury to the latter. Jorge L. Tiangco, et al. vs. Land Bank of the Philippines, G.R. No. 153998, October 6, 2010

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 169067 October 6, 2010

REPUBLIC OF THE PHILIPPINES, Petitioner, vs. ANGELO B. MALABANAN, PABLO B. MALABANAN, GREENTHUMB REALTY AND DEVELOPMENT CORPORATION and THE REGISTRAR OF DEEDS OF BATANGAS, Respondents. DECISION VILLARAMA, JR., J.: This petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, seeks to overturn the 1 Resolution dated July 20, 2005 of the Court of Appeals (CA) in CA-G.R. CV No. 70770 dismissing petitioners appeal. The facts are as follows: Respondents Angelo B. Malabanan and Pablo B. Malabanan were registered owners of a 405,000-square-meter parcel of land 2 situated in Talisay, Batangas and covered by Transfer Certificate of Title (TCT) No. T-24268 of the Register of Deeds of Tanauan, Batangas. Said parcel of land was originally registered on April 29, 1936 in the Register of Deeds of Batangas under Original 3 4 Certificate of Title (OCT) No. 0-17421 pursuant to Decree No. 589383 issued in L.R.C. Record No. 50573. OCT No. 0-17421 was cancelled and was replaced with TCT No. T-9076 from which respondents title, TCT No. T-24268, was derived. The parcel of land was later subdivided into smaller lots resulting in the cancellation of TCT No. T-24268. The derivative titles are now either in the names of the Malabanans or respondent Greenthumb Realty and Development Corporation. Petitioner Republic of the Philippines claims that in an investigation conducted by the Department of Environment and Natural Resources (Region IV), it was revealed that the land covered by TCT No. T-24268 was within the unclassified public forest of Batangas 5 per L.C. CM No. 10. This prompted petitioners filing of a complaint for reversion and cancellation of title against respondents on March 30, 1998. The case was docketed as Civil Case No. T-1055 and raffled off to Branch 83 of the Regional Trial Court (RTC) of Batangas. The case was later re-docketed as Civil Case No. C-192. On May 5, 1998, the Malabanans filed a Motion to Dismiss. They argued that the complaint failed to state a cause of action; the 7 court has no jurisdiction over the subject matter; the complaint violates Section 7, Rule 8 of the 1997 Rules of Civil Procedure, as amended, since petitioner did not attach a copy of Decree No. 589383 of the Court of First Instance of Batangas, pursuant to which OCT No. 0-17421 was issued in LRC Record No. 50573; and that a similar complaint for reversion to the public domain of the same parcels of land between the same parties has already been dismissed by the same court. In an Order dated December 11, 1998, the trial court dismissed the complaint. The salient portions of the order read: A similar complaint for reversion to the public domain of the same parcels of land was filed with this Court on July 14, 1997 by plaintiff against defendants-movants. The case, docketed as Civil Case No. T-784, was dismissed on December 7, 1992 (sic) for lack of jurisdiction. As pointed out by movants, the nullification of Original Certificate of Title No. 0-17421 and all its derivative titles would involve the nullification of the judgment of the Land Registration Court which decreed the issuance of the title over the property. Therefore, the applicable provision of law is Section 9 (2) of Batas Pambansa Blg. 129 which vests upon the Court of Appeals exclusive jurisdiction over actions for annulment of judgments of the Regional Trial Court. Moreover, this Court is aware, and takes judicial notice, of the fact that the parcels of land, subject of reversion had been the subject of several cases before this Court concerning the ownership and possession thereof by defendants-movants. These cases were even elevated to the Court of Appeals and the Supreme Court which, in effect, upheld the ownership of the properties by defendants
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Malabanans. Said decisions of this Court, the Court of Appeals, and the Supreme Court should then also be annulled. (Emphasis and underscoring supplied.) On January 5, 1999, petitioner filed a Notice of Appeal from the order of dismissal. On January 18, 1999, the Malabanans moved to deny due course and to dismiss appeal arguing that petitioner, in filing a notice of appeal, adopted an improper mode of appeal. The Malabanans contended that the issue of jurisdiction of the trial court over the complaint filed by petitioner is a question of law 11 which should be raised before the Supreme Court via a petition for review on certiorari under Rule 45. On June 29, 1999, the trial court issued an Order denying due course and dismissing petitioners appeal. However, on certiorari, docketed as CA-G.R. SP No. 54721, said order was reversed by the CA on February 29, 2000. The CA ruled that the determination of whether or not an appeal may be dismissed on the ground that the issue involved is purely a question of law is exclusively lodged within the discretion of the CA. Consequently, the trial court was directed to give due course to petitioners appeal and ord er the 14 transmittal of the original records on appeal to the CA. Petitioner, in its Appeal Brief filed before the CA, raised this lone assignment of error: THE COURT A QUO ERRED IN DISMISSING THE COMPLAINT ON THE GROUND OF LACK OF JURISDICTION.
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A perusal of the arguments in the brief reveals that not only did petitioner raise the jurisdictional issue, it likewise questioned the portion of the dismissal order where it was held that several cases involving the subject land have already been filed and in those cases, the CA and the Supreme Court have upheld respondents ownership. Petitioner argued that the question of whether the rig ht 17 of the Malabanans had, in fact, been upheld is factual in nature and necessarily requires presentation of evidence. 1avvphi1 On July 20, 2005, however, the CA issued the assailed Resolution dismissing petitioners appeal, holding that the issue of ju risdiction, being a pure question of law, is cognizable only by the Supreme Court via a petition for review on certiorari. It dismissed petitioners 18 appeal under Section 2, Rule 50 of the 1997 Rules of Civil Procedure, as amended. Before us, petitioner raises the sole issue of: WHETHER THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN DISMISSING PETITIONERS APPEAL FOR BEING THE WRONG 19 MODE TO ASSAIL THE TRIAL COURTS ORDER. Petitioner argues that the issue surrounding the validity of the order dismissing the complaint does not only involve a question of law but also involves a question of fact. The question of fact pertains to the portion of the trial courts assailed order which stated that the Malabanans ownership had been upheld by the CA and the Supreme Court. Petitioner contends that the question of whether such right had in fact been upheld is factual in nature. Petitioner adds that the trial court has jurisdiction over the complaint and should not have dismissed the complaint in the first place. Respondents, on the other hand, counter that there are no factual issues involved because they are deemed to have hypothetically admitted the truth of the facts alleged in the complaint when they filed a motion to dismiss. The petition is meritorious. In Murillo v. Consul, we had the opportunity to clarify the three (3) modes of appeal from decisions of the RTC, to wit: (1) by 21 ordinary appeal or appeal by writ of error under Rule 41, where judgment was rendered in a civil or criminal action by the RTC in 22 the exercise of original jurisdiction; (2) by petition for review under Rule 42, where judgment was rendered by the RTC in the 23 exercise of appellate jurisdiction; and (3) by petition for review on certiorari to the Supreme Court under Rule 45. The first mode of appeal is taken to the CA on questions of fact or mixed questions of fact and law. The second mode of appeal is brought to the CA on questions of fact, of law, or mixed questions of fact and law. The third mode of appeal is elevated to the Supreme Court only on 24 questions of law. And in Leoncio v. De Vera, this Court has differentiated a question of law from a question of fact. A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. Thus, the test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the
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same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which 26 case, it is a question of law; otherwise it is a question of fact. Here, petitioners appeal does not only involve a question of law. Aside from the trial courts ruling that it has no jurisdi ction over the complaint, petitioner likewise questioned the other basis for the trial courts ruling, which refers to previously decided cases allegedly upholding with finality the ownership of the Malabanans over the disputed property. As correctly argued by petitioner, the question of whether the ownership of the Malabanans has in fact been sustained with finality is factual in nature as it requires the presentation of evidence. Since the appeal raised mixed questions of fact and law, no error can be imputed on petitioner for invoking the appellate jurisdiction of the CA through an ordinary appeal under Rule 41. WHEREFORE, the Resolution dated July 20, 2005 of the Court of Appeals in CA-G.R. CV No. 70770 is REVERSED and SET ASIDE. Petitioners appeal is REINSTATED and the instant case is REMANDE D to the Court of Appeals, which is directed to proceed with the usual appeal process therein with deliberate dispatch. No costs. SO ORDERED. NOTES: Appeal; modes of appeal from decisions of regional trial court. Murillo v. Consul, we had the opportunity to clarify the three (3) modes of appeal from decisions of the RTC, to wit: (1) by ordinary appeal or appeal by writ of error under Rule 41, where judgment was rendered in a civil or criminal action by the RTC in the exercise of original jurisdiction; (2) by petition for review under Rule 42, where judgment was rendered by the RTC in the exercise of appellate jurisdiction; and (3) by petition for review on certiorari to the Supreme Court under Rule 45. The first mode of appeal is taken to the CA on questions of fact or mixed questions of fact and law. The second mode of appeal is brought to the CA on questions of fact, of law, or mixed questions of fact and law. The third mode of appeal is elevated to the Supreme Court only on questions of law. XXX XXX XXX Here, petitioners appeal does not only involve a question of law. Aside from the trial courts ruling that it has no jurisdi ction over the complaint, petitioner likewise questioned the other basis for the trial courts ruling, which refers to previously decided cases allegedly upholding with finality the ownership of the Malabanans over the disputed property. As correctly argued by petitioner, the question of whether the ownership of the Malabanans has in fact been sustained with finality is factual in nature as it requires the presentation of evidence. Since the appeal raised mixed questions of fact and law, no error can be imputed on petitioner for invoking the appellate jurisdiction of the CA through an ordinary appeal under Rule 41. Republic of the Philippines vs. Angelo B. Malabanan, et al., G.R. No. 169067, October 6, 2010

NOVEMBER 2010 CIVIL PROCEDURE Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 157644 November 17, 2010

SPOUSES ERNESTO and VICENTA TOPACIO, as represented by their attorney-in-fact MARILOU TOPACIO-NARCISO, Petitioners, vs. BANCO FILIPINO SAVINGS and MORTGAGE BANK, Respondent. DECISION BRION, J.: Before the Court is a petition for review on certiorari, filed by petitioner spouses Ernesto and Vicenta Topacio (petitioners), assailing 2 3 the August 26, 2002 Decision of the Court of Appeals (CA) in CA-G.R. SP No. 32389, as well as its March 17, 2003 Resolution denying the petitioners motion for reconsideration. The CA Decision and Resolution affirmed in toto the October 1 , 1993 Order of the Regional Trial Court of Valenzuela City, Branch 75, which issued an alias writ of possession in favor of the respondent Banco Filipino Savings and Mortgage Bank (respondent). THE BACKGROUND FACTS The backgrounds facts, as culled from the records, are summarized below. The petitioners obtained a loan amounting to P400,000.00 from the respondent. To secure the loan, the petitioners executed on May 8, 1980, a real estate mortgage over Lot 1224-B-1 LRC Psd-15436, covered by TCT No. T-191117 (now 13554) of the Registry of Deeds of Bulacan, in favor of the respondent. The petitioners failed to pay the loan, prompting the respondent to file a Petition for Extrajudicial Foreclosure of Mortgage, pursuant to Act No. 3135. To satisfy the obligation, the Provincial Sheriff of Bulacan, on November 8, 1982, sold the mortgaged property at public auction, where the respondent emerged as the highest bidder. 4 Accordingly, a Certification of Sale was issued in favor of the respondent and registered with the Registry of Deeds. On May 26, 1983, the respondent filed a Petition for the Issuance of a Writ of Possession over the mortgaged property before the 6 Regional Trial Court, Branch 172, Valenzuela City (RTC). In an Order dated December 12, 1983, the RTC granted the petition, conditioned on the posting of a P100,000.00 bond. Upon posting of the required bond, the RTC issued, on February 16, 1984, a writ of possession, commanding the sheriff to place the respondent in possession of the property. The writ of possession was not implemented because, on February 27, 1984, the petitioners, filed with the RTC, a petition to set aside the auction sale and the writ of possession (with application for a temporary restraining order and a writ of preliminary 8 injunction). In an Order dated February 28, 1984, the RTC issued a temporary restraining order enjoining the respondent and the 9 Deputy Sheriff from implementing the writ of possession it previously issued. After hearing, the RTC, issued on March 13, 1984, a writ of preliminary injunction ordering the respondent and the Provincial Sheriff to desist from implementing the writ of possession 10 and to refrain from interfering with and disrupting the possession of the petitioners over the subject parcel of land. Sometime in April 1984, the respondent filed with the RTC its Motion to Admit Answer with Opposition to the Petition to Set Aside Auction Sale and Writ of Possession with Motion to Dissolve or Lift Preliminary Injunction (Answer) which was granted on April 26, 11 1984. On May 21, 1984, the petitioners filed their Reply thereto, praying that the writ of preliminary injunction previously issued 12 be maintained.
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More than two years after the filing of the Answer and the Reply, and after a series of postponements at the instance of both parties, then Presiding Judge Teresita D. Capulong issued an Order dated December 16, 1986, dismissing the respondents petit ion 13 for the issuance of a writ of possession on the ground of "failure to prosecute." The Order reads in full: When this case was called for hearing, counsel for the oppositors [now petitioners], Atty. Constancio R. Gallamos, was present. Atty. Francisco Rivera [counsel for the respondent] was absent despite notice. Upon petition of the counsel for the oppositors, this case is hereby ordered dismissed for failure to prosecute. SO ORDERED. No copy of the above Order was served on the respondent whose operations the Monetary Board (Central Bank of the Philippines) 15 shut down on January 25, 1985, for reasons not relevant to the present case. Nearly six (6) years later (after the Court ordered the reorganization and resumption of the respondents operations in G.R. No. 16 70054) or on August 19, 1992, the respondent filed a Motion to Clarify the Order of December 16, 1986. In the same motion, the 17 respondent likewise moved for the issuance of an alias writ of possession. In an Order dated September 18, 1992, the RTC made a clarification that the Order of Dismissal of December 16, 1986 refers to the dismissal of the "main case for issuance of a writ of possession." In that same Order, the RTC denied the respondents motion for the issuance of an alias writ of possession. On May 18, 1993, the respondent moved for the reconsideration of the September 18, 1992 Order. In an Order dated June 2, 1993, the RTC, this time presided by Judge Emilio L. Leachon, Jr., reconsidered and set aside the Order of December 16, 1986 and granted the respondents prayer for the issuance of an alias writ of possession. The petitioners moved for a reconsideration of the June 2, 1993 Order and prayed that the implementation of the alias writ of possession be held in abeyance. The RTC Ruling On October 1, 1993, the RTC, now presided by Judge Jaime F. Bautista, issued the assailed Order which denied the petitioners motion for reconsideration and reiterated its order for the issuance of an alias writ of possession in favor of the respondent. The assailed RTC Order is summarized below. First, the RTC ruled that the Order of Dismissal was granted on a "technicality" and that "[t]he ground of failure to prosecute is 22 manifestly unfounded." The RTC held that "the power of the trial court to dismiss an action on the ground of non prosequitur is not unbounded. The real test x x x is whether under the facts and circumstances, the plaintiff is chargeable with want of due diligence in 23 [failing] to proceed with reasonable promptitude." In the present case, the RTC noted that the records show that the case dragged on for years because of several postponements at the request of both parties, particularly petitioner Ernesto Topacio who went 24 abroad for a long time during the pendency of the case. Second, the RTC held that the December 16, 1986 Dismissal Order cannot be considered a dismissal on the merits as it was founded not on a substantial ground but on a technical one; it does not amount to a "declaration of the law [on] the respective rights and duties of the parties, based upon the ultimate x x x facts disclosed by the pleadings and evidence, and upon which the right of 25 recovery depends, irrespective of formal, technical or dilatory objectives or contentions." Third, the RTC ruled that the revival by a motion for reconsideration (filed on May 18, 1993) of the February 16, 1984 Order, granting the writ of possession, was seasonably filed by the respondent, pursuant to the period allowed under Section 6, Rule 39 of the Rules 26 of Court. Citing National Power Corporation v. Court of Appeals, the RTC held that "[i]n computing the time [limit] for suing out an execution, x x x the general rule is that there should not be included the time when execution is stayed, either by agreement of the parties for a definite time, by injunction, by the taking of an appeal or writ of error so as to operate as a supersedeas, by the death of a party, or otherwise." The RTC noted that the running of the five-year period under Section 6 of the Rules of Court had been interrupted by the erroneous issuance of a writ of preliminary injunction; the February 16, 1984 Order never attained finality and 27 was overtaken by the issuance of the Order dated June 2, 1993, granting the issuance of an alias writ of execution. Finally, the RTC held that the respondent, as the winning bidder, "has an absolute right to a writ of possession," considering that: (1) a writ of possession had been issued on February 16, 1984 and the corresponding bond had already been posted, although the writ was not enforced because of the erroneous injunction issued by Judge Capulong; and (2) there was no redemption by the 29 petitioners.
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On October 20, 1993, the petitioners filed their Petition for Certiorari and Prohibition under Rule 65 of the 1997 Rules of Court with 30 prayer for the issuance of a preliminary injunction (petition), docketed as CA-G.R. SP No. 32389. Before the CA, the petitioners argued that the RTC acted without jurisdiction or with grave abuse of discretion when it: (1) reinstated the respondents cas e more than seven (7) years after the December 16, 1986 Dismissal Order became final and executory, and (2) issued an alias writ of execution upon a mere motion for reconsideration and not by an independent action pursuant to Section 6, Rule 39 of the Rules of Court. The CA Ruling On August 26, 2002, the CA denied the petitioners petition and affirmed in toto the June 2, 1993 and October 1, 1993 Orders of the RTC. The CA found that the December 16, 1986 Order of the RTC does not amount to a dismissal on the merits as it was based on purely technical grounds. It noted that the records show that the respondent was not furnished a copy of the Dismissal Order; hence, the case cannot be deemed to be final with respect to the respondent. The CA also agreed with the RTCs conclusion tha t the 31 delay in the resolution of the case cannot be solely attributed to the respondent and did not warrant its outright dismissal. The CA held that an independent action for the revival of the writ of possession need not be filed in order to enforce the writ of possession issued on December 12, 1983 since Section 6, Rule 39 of the Rules of Court applies only to civil actions and not to special 32 33 proceedings, citing Heirs of Cristobal Marcos v. de Banuvar. The Petition In the present petition, the petitioners contend that the CA erred in affirming the October 1, 1993 Order of the RTC considering that: 1) the December 16, 1986 Dismissal Order constitutes an adjudication on the merits which has already attained finality, and 2) a writ of possession may not be enforced upon mere motion of the applicant after the lapse of more than five (5) years from the time of its issuance. On the first assignment of error, the petitioners submit that the December 16, 1986 Dismissal Order for failure to prosecute constitutes adjudication upon the merits, considering that the RTC did not declare otherwise, pursuant to Section 3, Rule 17 of the Rules of Court. The petitioners further contend that the Dismissal Order has become final and executory since the respondent belatedly filed the Motion to Clarify the Order of December 16, 1986 on August 19, 1992 or almost six years later. On these premises, the petitioners argue that res judicata has set in and consequently, the RTC had no jurisdiction to grant the motion for 35 reconsideration and to issue an alias writ of possession in favor of the respondent. On the second assignment of error, the petitioners contend that pursuant to Section 6, Rule 39 of the Rules of Court, the writ of possession issued on February 16, 1984 may no longer be enforced by a mere motion but by a separate action, considering that more than five years had elapsed from its issuance. The petitioners also argue that Section 6, Rule 39 of the Rules of Court applies to 36 the present case since a petition for the issuance of a writ of possession is neither a special proceeding nor a land registration case. In their Memorandum, the petitioners additionally submit that they do not dispute that the CA made a finding that the December 16, 1986 Dismissal Order was not properly served. They, however, point out that the CA made no such finding with respect to the September 18, 1992 Order of the RTC. The petitioners contend that the Motion for Reconsideration, filed on May 18, 1993 or eight months later from the September 18, 1992 Order by the respondent, was filed out of time. Thus, they conclude that any subsequent 37 ruling of the RTC, including the June 2, 1993 and October 1, 1993 Orders, is barred by res judicata. OUR RULING We deny the petition for lack of merit. A. Preliminary Considerations Our review of the records, particularly the CA decision, indicates that the CA did not determine the presence or absence of grave abuse of discretion in the RTC decision before it. Given that the petition before the CA was a petition for certiorari and prohibition
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under Rule 65 of the Rules of Court, it appears that the CA instead incorrectly reviewed the case on the basis of whether the RTC decision on the merits was correct. To put the case in its proper perspective, the task before us is to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the RTC decision before it. Stated otherwise, did the CA correctly determine whether the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in ruling on the case? As discussed below, our review of the records and the CA decision shows that the RTC did not commit grave abuse of discretion in issuing an alias writ of possession in favor of the respondent. B. Applicability of Res Judicata Under the rule of res judicata, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies, in all later suits and on all points and matters determined in the previous suit. The term literally 38 means a "matter adjudged, judicially acted upon, or settled by judgment." The principle bars a subsequent suit involving the same parties, subject matter, and cause of action. The rationale for the rule is that "public policy requires that controversies must be 39 settled with finality at a given point in time." The doctrine of res judicata embraces two (2) concepts: the first is "bar by prior judgment" under paragraph (b) of Rule 39, Section 47 of the Rules of Court, and the second is "conclusiveness of judgment" under paragraph (c) thereof. Res judicata applies in the concept of "bar by prior judgment" if the following requisites concur: (1) the former judgment or order must be final; (2) the judgment or order must be on the merits; (3) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4) there must be, between the first and the second action, identity of parties, of subject matter and of 40 causes of action. The petitioners claim that res judicata under the first concept applies in the present case because all of the elements thereof are present. In response, the respondent argues that res judicata did not set in as the first element is lacking. We agree with the respondent. The December 16, 1986 Dismissal Order never attained finality as it was not properly served The following provisions under Rule 13 of the Rules of Court define the proper modes of service of judgments: SEC. 2. Filing and service, defined. x x x Service is the act of providing a party with a copy of the pleading or paper concerned. x x x SEC. 5. Modes of service. Service of pleadings, motions, notices, orders, judgments and other papers shall be made either personally or by mail. SEC. 6. Personal service. Service of the papers may be made by delivering personally a copy to the party or his counsel, or by leaving it in his office with his clerk or with a person having charge thereof. If no person is found in his office, or his office is not known, or he has no office, then by leaving the copy, between the hours of eight in the morning and six in the evening, at th e partys or counsels residence, if known, with a person of sufficient age and discretion then residing therein. SEC. 7. Service by mail. Service by registered mail shall be made by depositing the copy in the office, in a sealed envelope, plainly addressed to the party or his counsel at his office, if known, otherwise at his residence, if known, with postage fully pre-paid, and with instructions to the postmaster to return the mail to the sender after ten (10) days if undelivered. If no registry service is available in the locality of either the sender or the addressee, service may be done by ordinary mail. SEC. 8. Substituted service. If service of pleadings, motions, notices, resolutions, orders and other papers cannot be made under the two preceding sections, the office and place of residence of the party or his counsel being unknown, service may be made by delivering the copy to the clerk of court, with proof of failure of both personal service and service by mail. The service is complete at the time of such delivery.
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SEC. 9. Service of judgments, final orders or resolutions. Judgments, final orders or resolutions shall be served either personally or by registered mail. When a party summoned by publication has failed to appear in the action, judgments, final orders or resolutions against him shall be served upon him also by publication at the expense of the prevailing party. As a rule, judgments are sufficiently served when they are delivered personally, or through registered mail to the counsel of record, or by leaving them in his office with his clerk or with a person having charge thereof. After service, a judgment or order which is not 42 appealed nor made subject of a motion for reconsideration within the prescribed 15-day period attains finality. In Philemploy Services and Resources, Inc. v. Rodriguez, the Court ruled that the Resolution of the National Labor Relations Commission, denying the respondents motion for reconsideration, cannot be deemed to have become final and executory as there is no conclusive proof of service of the said resolution. In the words of the Court, "there was no proof of actual receipt of the notice 44 of the registered mail by the respondents counsel." Based on these findings, the Court concluded that the CA properly acquired jurisdiction over the respondents petition for certiorari filed before it; in the absence of a reckoning date of the period provided by law for the filing of the petition, the Court could not assume that it was improperly or belatedly filed. Similarly, in Tomawis v. Tabao-Cudang, the Court held that the decision of the Regional Trial Court did not become final and executory where, from the records, the respondent had not received a copy of the resolution denying her motion for 46 reconsideration. The Court also noted that there was no sufficient proof that the respondent actually received a copy of the said Order or that she indeed received a first notice. Thus, the Court concluded that there could be no valid basis for the issuance of the writ of execution as the decision never attained finality. In the present case, we note that the December 16, 1986 Dismissal Order cannot be deemed to have become final and executory in view of the absence of a valid service, whether personally or via registered mail, on the respondents counsel. We note in th is regard that the petitioners do not dispute the CA finding that the "records failed to show that the private respondent was furnished with a 47 copy of the said order of dismissal[.]" Accordingly, the Dismissal Order never attained finality. The petitioners now claim that the Motion for Reconsideration, filed by the respondent on May 18, 1993 from the September 18, 1992 Order of the RTC, was filed out of time. The petitioners make this claim to justify their contention that the subsequent rulings of the RTC, including the June 2, 1993 and October 1, 1993 Orders, are barred by res judicata. We reject this belated claim as the petitioners raised this only for the first time on appeal, particularly, in their Memorandum. In fact, the petitioners never raised this issue in the proceedings before the court a quo or in the present petition for review. As a rule, a party who deliberately adopts a certain theory upon which the case is tried and decided by the lower court will not be 48 permitted to change the theory on appeal. Points of law, theories, issues and arguments not brought to the attention of the lower court need not be, and ordinarily will not be, considered by a reviewing court, as these cannot be raised for the first time at such late stage. It would be unfair to the adverse party who would have no opportunity to present further evidence material to the new 49 theory, which it could have done had it been aware of it at the time of the hearing before the trial court. Thus, to permit the petitioners in this case to change their theory on appeal would thus be unfair to the respondent and offend the basic rules of fair 50 play, justice and due process. C. Applicability of the Rule on Execution by Motion or by Independent Action The petitioners finally submit that the writ of possession, issued by the RTC on February 16, 1984, may no longer be enforced by a mere motion, but by a separate action, considering that more than five years had elapsed from its issuance, pursuant to Section 6, Rule 39 of the Rules of Court, which states: Sec. 6. Execution by motion or by independent action . A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action. The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations. Section 6, Rule 39 of the Rules of Court only applies to civil actions
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In rejecting a similar argument, the Court held in Paderes v. Court of Appeals that Section 6, Rule 39 of the Rules of Court finds 52 application only to civil actions and not to special proceedings. Citing Sta. Ana v. Menla, which extensively discussed the rationale behind the rule, the Court held: In a later case [Sta. Ana v. Menla, 111 Phil. 947 (1961)], the Court also ruled that the provision in the Rules of Court to the effect that judgment may be enforced within five years by motion, and after five years but within ten years by an action (Section 6, Rule 39) refers to civil actions and is not applicable to special proceedings , such as land registration cases. x x x x We fail to understand the arguments of the appellant in support of the above assignment, except in so far as it supports his theory that after a decision in a land registration case has become final, it may not be enforced after the lapse of a period of 10 years, except by another proceeding to enforce the judgment or decision. Authority for this theory is the provision in the Rules of Court to the effect that judgment may be enforced within 5 years by motion, and after five years but within 10 years, by an action (Sec. 6, Rule 39). This provision of the Rules refers to civil actions and is not applicable to special proceedings, such as a land registration case. This is so because a party in a civil action must immediately enforce a judgment that is secured as against the adverse party, and his failure to act to enforce the same within a reasonable time as provided in the Rules makes the decision unenforceable against the losing party. In special proceedings the purpose is to establish a status, condition or fact; in land registration proceedings, the ownership by a person of a parcel of land is sought to be established. After the ownership has been proved and confirmed by judicial declaration, no further proceeding to enforce said ownership is necessary, except when the adverse or losing party had been in possession of the land and the winning party desires to oust him therefrom. Subsequently, the Court, in Republic v. Nillas, affirmed the dictum in Sta. Ana and clarified that "Rule 39 x x x applies only to ordinary civil actions, not to other or extraordinary proceedings not expressly governed by the Rules of Civil Procedure but by some other specific law or legal modality," viz: Rule 39, as invoked by the Republic, applies only to ordinary civil actions, not to other or extraordinary proceedings not expressly governed by the Rules of Civil Procedure but by some other specific law or legal modality such as land registration cases. Unlike in ordinary civil actions governed by the Rules of Civil Procedure, the intent of land registration proceedings is to establish ownership by a person of a parcel of land, consistent with the purpose of such extraordinary proceedings to declare by judicial fiat a status, condition or fact. Hence, upon the finality of a decision adjudicating such ownership, no further step is required to effectuate the decision and a ministerial duty exists alike on the part of the land registration court to order the issuance of, and the LRA to issue, the decree of registration.1avvphi1 In the present case, Section 6, Rule 39 of the Rules of Court is not applicable to an ex parte petition for the issuance of the writ of 54 possession as it is not in the nature of a civil action governed by the Rules of Civil Procedure but a judicial proceeding governed separately by Section 7 of Act No. 3135 which regulates the methods of effecting an extrajudicial foreclosure of mortgage. The provision states: Section 7. Possession during redemption period. In any sale made under the provisions of this Act, the purchaser may petition the [Regional Trial Court] where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or of any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. The above-cited provision lays down the procedure that commences from the filing of a motion for the issuance of a writ of possession, to the issuance of the writ of possession by the Court, and finally to the execution of the order by the sheriff of the province in which the property is located. Based on the text of the law, we have also consistently ruled that the duty of the trial court to grant a writ of possession is ministerial; the writ issues as a matter of course upon the filing of the proper motion and the 55 approval of the corresponding bond. In fact, the issuance and the immediate implementation of the writ are declared ministerial and mandatory under the law.
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Thus, in Philippine National Bank v. Adil, we emphatically ruled that "once the writ of possession has been issued, the trial court has no alternative but to enforce the writ without delay." The issuance of a writ of possession to a purchaser in an extrajudicial foreclosure is summary and ministerial in nature as such proceeding is merely an incident in the transfer of title. The trial court does 57 not exercise discretion in the issuance thereof; it must grant the issuance of the writ upon compliance with the requirements set forth by law, and the provincial sheriff is likewise mandated to implement the writ immediately. Clearly, the exacting procedure provided in Act No. 3135, from the moment of the issuance of the writ of possession, leaves no room for the application of Section 6, Rule 39 of the Rules of Court which we consistently ruled, as early as 1961 in Sta. Ana, to be applicable only to civil actions. From another perspective, the judgment or the order does not have to be executed by motion or 58 enforced by action within the purview of Rule 39 of the Rules of Court. D. Conclusion In sum, based on these considerations, we find that the RTC committed no grave abuse of discretion in issuing an alias writ of possession in favor of the respondent. WHEREFORE, the present petition is DENIED. The August 26, 2002 Decision and the March 17, 2003 Resolution of the Court of Appeals in CA-G.R. SP No. 32389 are AFFIRMED. Costs against the petitioners. SO ORDERED. NOTES: Judgment; res judicata; bar by prior judgment; no finality of judgment in absence of proper service. Under the rule of res judicata, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies, in all later suits and on all points and matters determined in the previous suit. The term literally means a matter adjudged, judicially acted upon, or settled by judgment. The principle bars a subsequent suit involving the same parties, subject matter, and cause of action. The rationale for the rule is that public policy requires that controversies must be settled with finality at a given point in time. The doctrine of res judicata embraces two (2) concepts: the first is bar by prior judgment under paragraph (b) of Rule 39, Section 47 of the Rules of Court, and the second is conclusiveness of judgment under paragraph (c) thereof. Res judicata applies in the concept of bar by prior judgment if the following requisites concur: (1) the former judgment or order must be final; (2) th e judgment or order must be on the merits; (3) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; and (4) there must be, between the first and the second action, identity of parties, of subject matter and of causes of action. The petitioners claim that res judicata under the first concept applies in the present case because all of the elements thereof are present. In response, the respondent argues that res judicata did not set in as the first element is lacking. We agree with the respondent. The following provisions under Rule 13 of the Rules of Court define the proper modes of service of judgments: SEC. 2. Filing and service, defined. x x x Service is the act of providing a party with a copy of the pleading or paper concerned. x x x SEC. 5. Modes of service. Service of pleadings, motions, notices, orders, judgments and other papers shall be made either personally or by mail. SEC. 6. Personal service. Service of the papers may be made by delivering personally a copy to the party or his counsel, or by leaving it in his office with his clerk or with a person having charge thereof. If no person is found in his office, or his office is not known, or he has no office, then by leaving the copy, between the hours of eight in the morning and six in the evening, at th e partys or counsels residence, if known, with a person of sufficient age and discretion then residing therein.

56

SEC. 7. Service by mail. Service by registered mail shall be made by depositing the copy in the office, in a sealed envelope, plainly addressed to the party or his counsel at his office, if known, otherwise at his residence, if known, with postage fully pre-paid, and with instructions to the postmaster to return the mail to the sender after ten (10) days if undelivered. If no registry service is available in the locality of either the sender or the addressee, service may be done by ordinary mail. SEC. 8. Substituted service. If service of pleadings, motions, notices, resolutions, orders and other papers cannot be made under the two preceding sections, the office and place of residence of the party or his counsel being unknown, service may be made by delivering the copy to the clerk of court, with proof of failure of both personal service and service by mail. The service is complete at the time of such delivery. SEC. 9. Service of judgments, final orders or resolutions. Judgments, final orders or resolutions shall be served either personally or by registered mail. When a party summoned by publication has failed to appear in the action, judgments, final orders or resolutions against him shall be served upon him also by publication at the expense of the prevailing party. As a rule, judgments are sufficiently served when they are delivered personally, or through registered mail to the counsel of record, or by leaving them in his office with his clerk or with a person having charge thereof. After service, a judgment or order which is not appealed nor made subject of a motion for reconsideration within the prescribed 15-day period attains finality. In Philemploy Services and Resources, Inc. v. Rodriguez, the Court ruled that the Resolution of the National Labor Relations Commission, denying the respondents motion for reconsideration, cannot be deemed to have become final and executory as there is no conclusive proof of service of the said resolution. In the words of the Court, there was no proof of actual receipt of the notice of the registered mail by the respondents counsel. Based on these findings, the Court concluded that the CA properly acquired jurisdiction over the respondents petition for certiorari filed before it; in the absence of a reckoning date of the period provided by law for the filing of the petition, the Court could not assume that it was improperly or belatedly filed. Similarly, in Tomawis v. Tabao-Cudang, the Court held that the decision of the Regional Trial Court did not become final and executory where, from the records, the respondent had not received a copy of the resolution denying her motion for reconsideration. The Court also noted that there was no sufficient proof that the respondent actually received a copy of the said Order or that she indeed received a first notice. Thus, the Court concluded that there could be no valid basis for the issuance of the writ of execution as the decision never attained finality. In the present case, we note that the December 16, 1986 Dismissal Order cannot be deemed to have become final and executory in view of the absence of a valid service, whether personally or via registered mail, on the respondents counsel. We note in this regard that the petitioners do not dispute the CA finding that the records failed to show that the private respondent was fu rnished with a copy of the said order of dismissal*.+ Accordingly, the Dismissal Order never attained finality. Spouses Ernesto and Vicenta Topacio vs. Banco Filipino Savings and Mortgage Bank, G.R. No. 157644, November 17, 2010.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 181643 November 17, 2010

MICHELLE I. PINEDA, Petitioner, vs. COURT OF APPEALS (Former Ninth Division) and the DEPARTMENT OF EDUCATION, represented by Assistant Secretary CAMILO MIGUEL M. MONTESA, Respondents. DECISION MENDOZA, J.: This is a petition for certiorari under Rule 65 filed by petitioner Michelle I. Pineda (Pineda) seeking to annul and set aside the June 1 15, 2007 Decision of the Court of Appeals (CA), which reversed the March 14, 2005 Order of the Regional Trial Court, Branch 153, Pasig City (RTC) directing the issuance of a Writ of Preliminary Mandatory Injunction enjoining respondent Department of Education (DepEd) from enforcing its decision to cancel a 5-year lease of the school canteen. It appears from the records that on May 14, 2004, Pineda entered into a Memorandum of Agreement (May-MOA) with Lakandula High School (LHS) represented by its principal, Dr. Alice B. Blas (Dr. Blas), for a five-year lease of the school canteen with a monthly rental of P20,000.00 and an additional P4,000.00 monthly for the schools feeding program as well as medicines for the school clinic. 3 Thereafter, Pineda renovated the canteen and equipped it with new utensils, tables, chairs, and electric fans. On August 5, 2004, the faculty and personnel of LHS sent a letter to the Division School Superintendent, Dr. Ma. Luisa Quiones (Dr. 4 Quiones), questioning the validity of the May-MOA. Dr. Blas sent a letter-reply on September 17, 2004 and an exchange of 5 6 correspondence followed. Meanwhile, on August 14, 2004, Pineda and Dr. Blas executed another MOA (August-MOA) superseding 7 the May-MOA. This time, the August-MOA followed the standard form under Department Order No. 95, Series of 1998 or the "Revised Implementing Guidelines for the Turnover of School Canteens to Teachers Cooperatives." In this regard, on October 20, 2004, Assistant Schools Division Superintendent Isabelita M. Santos (Ms. Santos) and Administrative Officer Vicente N. Macarubbo (Mr. Macarubbo) wrote a letter to Dr. Quiones relaying their observations on the controversy and 8 recommending that their findings "be submitted to the DepEd - Central Office for its final word on the matter." Ms. Santos and Mr. Macarubbo were of the view that Dr. Blas did not violate any rule in executing the August-MOA. They even found the lease to Pineda beneficial to the school. Thus, Dr. Quiones wrote the DepEd seeking its decision on the matter. On February 11, 2005, respondent DepEd, through Undersecretary Jose Luis Martin C. Gascon (Usec. Gascon), declared the AugustMOA "null and void ab initio" and ordered it "cancelled." Pineda was also ordered to "cease and desist" from further managing and operating the canteen. DepEd made clear that the management and operation of the canteen should revert to the Home Economics 9 Department of the School. This prompted Pineda to file a petition for certiorari with prayer for temporary restraining order (TRO) and/or writ of preliminary injunction before the RTC. On March 14, 2005, the RTC ordered the issuance of a Writ of Preliminary Mandatory Injunction enjoining the enforcement of Usec. 10 Gascons decision. DepEd, represented by Usec. Gascon, Dr. Quiones and Ms. Olympiada Camilo (Ms. Camilo), who succeeded Dr.
2

Blas as School Principal, sought the dismissal of Pinedas petition before the RTC on the ground that the latter failed to st ate a cause 11 of action. On June 7, 2005, the trial court denied its motion. For said reason, DepEd, this time represented by Assistant Secretary Camilo Miguel M. Montesa (Asec. Montesa), filed a petition for certiorari before the CA seeking to set aside the March 14, 2005 and June 7, 2005 orders of the RTC. The CA affirmed the June 7, 2005 order of the RTC denying DepEds motion to dismiss but reversed its March 14, 2005 order granting the issuance of the Writ of Preliminary Mandatory Injunction. According to the CA, DepEds order cancelli ng the AugustMOA had already been partially implemented as Pineda herself recognized such fact in her amended petition before the RTC. In effect, this was the status quo. In addition, the CA held that Pineda appeared to have no clear or unmistakable right to be protected since the MOA that granted her the right to operate the school canteen was, in fact, invalidated by the DepEd for not being sanctioned by its existing rules and regulations. Finally, the CA also held that there was no pressing necessity to avoid injurious consequences which would warrant the issuance of the injunctive writ as the purported damage to Pineda, if she would not able to 12 operate the canteen, was readily quantifiable. Hence, Pineda filed this petition for certiorari relying on the following GROUNDS: I THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN INSTEAD OF DISMISSING THE PETITION FILED BY RESPONDENT DEPARTMENT OF EDUCATION THROUGH ASSISTANT SECRETARY CAMILO MIGUEL M. MONTESA, IT GAVE DUE COURSE TO IT, NOTWITHSTANDING THE GLARING FACT THAT IT WAS NOT A PARTY AT ALL IN SCA NO. 2797, HENCE, WITH NO LOCUS STANDI. II THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT DID NOT DISMISS OUTRIGHT THE PETITION SINCE NO MOTION FOR RECONSIDERATION WAS FILED FROM THE ORDERS DATED MARCH 14, 2005, GRANTING THE WRIT OF INJUNCTION IN FAVOR OF HEREIN PETITIONER AND THE ORDER DATED JUNE 7, 2005, DENYING RESPONDENTS (USEC JOSE LUIS MARTIN C. GASCON, SUPT. MA. LUISA QUINONES AND OLYMPIADA CAMILO) MOTION TO DISMISS, IN MANIFEST VIOLATION OF SECTION 4, RULE 65 OF THE 1997 RULES OF CIVIL PROCEDURE. III THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT DISSOLVED THE WRIT OF INJUNCTION ISSUED BY THE REGIONAL TRIAL COURT BRANCH 153, PASIG CITY, IN SCA NO. 2797, THEREBY UNJUSTIFIABLY INTERFERING WITH THE LOWER COURTS DISCRETION IN ISSUING THE WRIT OF INJUNCTION IN FAVOR OF HEREIN PETITIONER WHO HAS A CLEAR AND UNMISTAKABLE LEGAL RIGHT TO BE AFFORDED THIS REMEDY AND CONSIDERING THAT RESPONDENTS DID NOT FILE A MOTION TO DISSOLVE BOND WITH 13 THE TRIAL COURT OR AT LEAST FILED AFFIDAVITS IN SUPPORT OF THEIR OPPOSITION. On November 18, 2009, after the parties had filed their respective pleadings, the Court gave due course to the petition and ordered 14 the parties to submit their respective memoranda. On the first ground, Pineda argues that the CA gravely abused its discretion in entertaining the petition for certiorari of DepEd considering that Asec. Montesa was not the proper party to file the petition. She adds that, even assuming that DepEd had the locus standi to file said petition before the CA, Asec. Montesa was not duly authorized to do so. The Court cannot accommodate the view of Pineda. In her petition for certiorari before the RTC, Pineda impleaded Usec. Gascon, Dr. Quiones and Ms. Camilo in their official capacities as Undersecretary of DepEd, Division Superintendent and Principal of Lakandula High School, respectively. Although the petition mentioned that Usec. Gascon was merely a nominal party, it stated therein that Dr. Quiones and Ms. Camilo were being sued for "having been tasked to immediately carry out" his order of February 11, 2005. The Court is of the view that DepEd was the proper party and Usec. Gascon, Dr. Quiones and Ms. Camilo were just its representatives. Thus, they were sued in their official capacities.

A review of Usec. Gascons order discloses that the cancellation of Pinedas August -MOA was pursuant to DepEds existing guidelines on the turn over of school canteens to teachers cooperatives, laid out in Department Order No. 95, series of 1 998. He was simply applying a DepEd policy when he ordered the August-MOA cancelled. So, what was actually being assailed by Pineda in her petition before the RTC was the implementation of DepEds existing guidelines with the nullification of the August -MOA entered into by Dr. 15 Blas, then principal of LHS. As Asec. Montesa merely took over the functions of Usec. Gascon, he is certainly authorized to institute the petition before the CA in order to advance and pursue the policies of his office DepEd. Applying Rule 3, Section 2 of the Revised Rules of Court, DepEd is the real party in interest for it will surely be affected, favorably or unfavorably, by the final resolution of the case before the RTC. Thus, it would be absurd not to recognize the legal standing of Asec. Montesa, as representative of DepEd, but consider Dr. Quiones and Ms. Camilo as the proper parties when they were merely tasked to implement a directive emanating from a superior official (Asec. Montesa) of the DepEd. On the second ground, Pineda questions DepEds failure to move for reconsideration before going to the CA on certiorari. The general rule is that a motion for reconsideration is a condition sine qua non before a petition for certiorari may lie, its purpose being to grant an opportunity for the court a quo to correct any error attributed to it by a re-examination of the legal and factual 16 circumstances of the case. There are, however, recognized exceptions permitting a resort to the special civil action for certiorari 17 without first filing a motion for reconsideration. In the case of Domdom v. Sandiganbayan, it was written: The rule is, however, circumscribed by well-defined exceptions, such as where the order is a patent nullity because the court a quo had no jurisdiction; where the questions raised in the certiorari proceeding have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court; where there is an urgent necessity for the resolution of the question, and any further delay would prejudice the interests of the Government or of the petitioner, or the subject matter of the action is perishable; where, under the circumstances, a motion for reconsideration would be useless; where the petitioner was deprived of due process and there is extreme urgency for relief; where, in a criminal case, relief from an order of arrest is urgent and the grant of such relief by the trial court is improbable; where the proceedings in the lower court are a nullity for lack of due process; where the proceedings were ex parte or in which the petitioner had no opportunity to object; and where the issue raised is 18 one purely of law or where public interest is involved. (underscoring supplied) As previously discussed, the present case concerns the implementation or application of a DepEd policy which had been enjoined by the RTC. Certainly, there is an urgent necessity for the resolution of the question and any further delay would prejudice the interest of the government. Moreover, the subject matter of the case involves the operation of the canteen of a public secondary school. This is of public interest for it affects the welfare of the students, thus, justifying the relaxation of the settled rule. Still on the second ground, Pineda points out that the March 14, 2005 Order of the RTC was received by the DepEd on March 16, 2005 and the latter filed its petition before the CA on June 28, 2005, which was beyond the sixty (60)-day reglementary period. Going over DepEds petition before the CA, it appears that DepEd reckoned the 60 -day period from June 28, 2005, the date of its receipt of the June 7, 2005 Order of the RTC. Pinedas Comment and Memorandum, however, did not raise this procedural lapse as an issue. Instead, Pineda put forth her own arguments in support of the two RTC orders. The rule in pleadings and practice is that that no new issue in a case can be raised in a pleading which by due diligence could have 19 been raised in previous pleadings. Thus, it is too late in the day for Pineda to question the procedural lapse. At any rate, the Court finds no cogent reason for the reversal and setting aside by the CA of the writ of preliminary mandatory injunction issued by the RTC. The very writ of preliminary injunction set aside by the CA could no longer lie for the acts sought to be 20 enjoined had already been accomplished or consummated. The DepEd already prohibited Pineda from operating the school canteen. As correctly ruled by the CA in its questioned decision, since Pineda had ceased the operation of the school canteen since 2005, the RTCs preliminary writ should be set aside as there was nothing more to enjoin. The Court agrees with the CA when i t explained: A preliminary injunction is a provisional remedy that a party may resort to in order to preserve and protect certain rights and interests during the pendency of an action. Its sole objective is to preserve the status quo until the merits of the case can be heard fully. Status quo is defined as the last actual, peaceful, and uncontested status that precedes the actual controversy, that which is existing at the time of the filing of the case. Indubitably, the trial court must not make use of its injunctive relief to alter such status.

In the case at bench, the Decision of Undersecretary Gascon dated February 11, 2005, ordering Pineda to cease and desist from operating and managing the school canteen and to revert the management thereof to the Home Economics Department and to the Principal, has already been partially implemented. This is evident from the allegations of Pineda in her amended petition, to wit: "Earlier, in the dawn of same date, 22 February 2004 (should be 2005), the guards of Lakandula High School, taking strict orders from respondents Mrs. Camilo and Dr. Quiones who immediately executed the assailed illegal decision from the respondent undersecretary, prevented the canteen workers from entering the school and the delivery of softdrinks such as Pop Cola to the petitioner. On the same date, more canteens sprouted, in addition to those found in the H.E. and dressmaking rooms, operated by 21 the teachers, under the guise that they were doing service to the students in the meantime that the canteen was closed. x x x." Finally, while the grant or denial of a preliminary injunction is discretionary on the part of the trial court, grave abuse of discretion is committed when it does not maintain the status quo which is the last actual, peaceable and uncontested status which preceded the 22 actual controversy. If there is such a commission, it is correctible through a writ of certiorari. In this case, the status quo ante litem or the state of affairs existing at the time of the filing of the case was that Pineda was already prohibited from operating the school 23 canteen. For said reason, the trial court cannot make use of its injunctive power to change said status. WHEREFORE, the petition is DENIED. SO ORDERED. NOTES:
Pleading; new issue raised in pleading which could have been raised in previous pleadings. Still on the second ground, Pineda points out that the March 14, 2005 Order of the RTC was received by the DepEd on March 16, 2005 and the latter filed its petition before the CA on June 28, 2005, which was beyond the sixty (60)-day reglementary period. Going over DepEds petition before the CA, it appears that DepEd reckoned the 60-day period from June 28, 2005, the date of its receipt of the June 7, 2005 Order of the RTC. Pinedas Comment and Memorandum, however, did not raise this procedural lapse as an issue. Instead, Pineda put forth her own arguments in support of the two RTC orders. The rule in pleadings and practice is that that no new issue in a case can be raised in a pleading which by due diligence could have been raised in previous pleadings. Thus, it is too late in the day for Pineda to question the procedural lapse. Michelle I. Pineda vs. Court of Appeals and the Department of Education, etc., G.R. No. 181643, November 17, 2010.

DECEMBER 2010 CIVIL PROCEDURE Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 190231 December 8, 2010

ASIA UNITED BANK and ABRAHAM CO, Petitioners, vs. GOODLAND COMPANY, INC., Respondent. RESOLUTION CORONA, C.J.: This petition under Rule 45 seeks to reverse and set aside the August 11, 2009 decision and November 10, 2009 resolution of the 3 4 Court of Appeals (CA) in CA-G.R. CV No. 91269. The CA decision and resolution affirmed the August 16, 2007 and December 5, 2007 orders of the Regional Trial Court (RTC) of Bian, Laguna, Branch 25 dismissing Civil Case No. B-6242 with prejudice on the ground of willful and deliberate forum-shopping. The antecedents follow. On July 21, 1999, respondent Goodland Company, Inc. mortgaged its two real properties in Laguna to petitioner Asia United Bank 7 (AUB) as security for the loans of Smartnet Philippines, Inc. (SPI). Respon dents vice president, Gilbert G. Guy, signed the contract of real estate mortgage on its behalf. On January 29, 2002, respondent sent a letter to petitioners repudiating the mortgage over the Laguna properties and accusing them of fraud and falsification. Respondent claimed that Guy signed a blank deed of real estate mortgage on the understanding that the company would act as a third-party accommodation mortgagor for SPI. In other words, respondent did not intend to secure the loans of SPI or mortgage the Laguna properties. Petitioners, however, reneging on this understanding, fraudulently filled up the blank pre-signed forms and registered the same. Thus, respondent demanded that petitioners release the encumbrance over the 9 Laguna properties; otherwise, it would take appropriate legal actions for fraud against petitioners. Petitioners ignored respondents demand. On January 16, 2003, respondent filed Civil Case No. B-6242 in the RTC of Bian, Laguna, Branch 25. Respondent, essentially 11 reiterating the contents of the January 29, 2002 letter, sought to nullify the mortgage over the Laguna properties on the ground of 12 fraud. Meanwhile, AUB foreclosed on the Laguna properties due to SPIs fa ilure to pay its loans. The properties were sold in a public auction in which the bank emerged as the highest bidder. On November 26, 2006, respondent filed Civil Case No. B-7110 in the RTC of Bian, Laguna, Branch 25. Respondent sought to nullify the foreclosure of the Laguna properties on the ground that it never agreed to mortgage the same to AUB as security f or SPIs 14 loans. On the motion of AUB, Civil Case No. B-7110 was dismissed with prejudice in an order dated March 15, 2007 on the ground of willful and deliberate forum-shopping. On August 16, 2007, the RTC likewise dismissed Civil Case No. B-6242 on motion of petitioners. It noted that the allegations of and reliefs sought by respondent in Civil Case Nos. B-6242 and B-7110 were identical and that the respondent did not inform the court that it filed Civil Case No. 7110. Respondent therefore did not comply with its undertaking in the certificate of non-forum shopping that it would report the filing of a complaint involving the same or similar action or claim to the court within five days of
17 18 15 16 13 10 8 5 6 1 2

learning that such a complaint had been filed. Thus, the RTC found respondent guilty of engaging in willful and deliberate forum20 shopping and consequently dismissed Civil Case No. B-6242 with prejudice. Respondent moved for reconsideration but it was denied in an order dated December 5, 2007.
21

19

Respondent appealed the aforementioned August 16, 2007 and December 5, 2007 orders to the CA.
23

22

In a decision dated August 11, 2009, the CA granted the appeal holding that respondent asserted dissimilar rights and sought 24 different reliefs in Civil Case No. B-6242 and Civil Case No. B-7110. It, in effect, reinstated Civil Case No. B-6242. Petitioners moved for reconsideration but it was denied in a resolution dated November 10, 2009.
25

Petitioners thus availed of this recourse claiming that the CA erred in reinstating Civil Case No. 6242. They assert that respondent committed willful and deliberate forum-shopping by filing Civil Case Nos. B-6242 and B-7110. We grant the petition. Forum shopping is the institution of two or more actions or proceedings grounded on the same cause, on the supposition that one 27 or the other court would render a favorable disposition. It exists when the elements of litis pendentia are present or where a final 28 judgment in one case will amount to res judicata in another. In Civil Case No. B-6242, respondent sought to nullify the deed of real estate mortgage respondent executed in favor of the AUB on the ground that it did not consent to encumber the Laguna properties as security for SPIs loan. On the other hand, in Civil Case No. B-7110, respondent claimed AUB did not have a right to foreclose over the Laguna properties because it never agreed to mortgage the same. A cursory examination of respondents allegations in Civil Case No. B-6242 and B7110 reveals the similarity of the two actions. In both cases, respondent essentially claimed that it did not consent to the mortgage and, for this reason, sought to nullify both the mortgage and the foreclosure. Thus, by filing Civil Case No. B-7110 while Civil Case No. B-6242 was still pending, respondent engaged in willful and deliberate forum-shopping.1avvphi1 The pivotal issue in this petition is whether Civil Case No. B-6242 was aptly dismissed with prejudice. Rule 7, Section 5 of the Rules of Court requires every litigant to notify the court of the filing or pendency of a complaint involving the same or similar action or claim within five days of learning of that fact. While both Civil Case Nos. B-6242 and B-7110 were raffled to the same court, the RTC of Bian, Laguna, Branch 25, respondent did not report the filing of Civil Case No. B-7110 in the 30 proceedings of Civil Case No. 6242. This fact clearly established respondents furtive intent to conceal the filing of Civil Case No. B 31 7110 for the purpose of securing a favorable judgment. For this reason, Civil Case No. 6242 was correctly dismissed with prejudice. WHEREFORE, the petition is hereby GRANTED. The August 11, 2009 decision and November 10, 2009 resolution of the Court of Appeals in CA-G.R. CV No. 9126 are REVERSED and SET ASIDE. The August 16, 2007 and December 5, 2007 orders of the Regional Trial Court of Bian, Laguna, Branch 25 in Civil Case No. B-6242 are REINSTATED. No pronouncement as to costs. SO ORDERED. RENATO C. CORONA Chief Justice Chairperson WE CONCUR:
* 29

26

TERESITA J. LEONARDO-DE CASTRO Associate Justice

MARIANO C. DEL CASTILLO Associate Justice

ROBERTO A. ABAD Associate Justice

**

JOSE PORTUGAL PEREZ Associate Justice

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice

Footnotes
*

Per Special Order No. 916 dated November 24, 2010. Per Special Order No. 917 dated November 24, 2010.

**

Penned by Associate Justice Juan Q. Enriquez and concurred in by Associate Justices Celia C. Librea-Leagogo and Antonio L. Villamor of the Tenth Division of the Court of Appeals. Rollo, pp. 40-51.
2

Penned by Associate Justice Juan Q. Enriquez and concurred in by Associate Justices Antonio L. Villamor and Jane Aurora C. Lantion of the Special Former Tenth Division of the Court of Appeals. Id., pp. 53-54.
3

Penned by Presiding Judge Teodoro N. Solis. Id., pp. 259-264. Id., p. 276. Deed of real estate mortgage. Id., pp. 80-83. Covered by TCT Nos. T-321672 and T-321673. Id., pp. 72-79. The contract of real estate mortgage reveals that Mr. Guy was also president of SPI. Petitioner Abraham Co is president of AUB. Rollo, pp. 85-87. An action for declaration of nullity of real estate mortgage and damages.

10

11

Respondent claimed that Guy signed a blank deed of real estate mortgage as a "comfort document" to show that SPI (which did not have substantial property) obtained the loans in good faith. In other words, it agreed to act as third-party accommodation mortgagor but did not consent to mortgage the Laguna properties as security for SPIs loans. For this reason, respondent claimed that the deed of real estate mortgage it allegedly executed was void. Id., pp. 55-71.
12

Id., pp. 67-68.

13

An application for preliminary injunction and/or annulment of extrajudicial foreclosur e sale, sheriffs certificate of sale, consolidation of ownership, cancellation and/or issuance of new titles, writ of possession and damages with prayer for temporary restraining order, and/or writ of preliminary injunction.
14

Rollo, pp. 181-211.

15

Motion to dismiss dated December 10, 2006. Id., pp. 116-175. Penned by Acting Presiding Judge Romeo C. de Leon. Id., pp. 212-213. Supra, note 4. Motion to dismiss and supplemental motion to dismiss. Id., pp. 178 -186 and 214-223. See Rules of Court, Rule 7, Sec. 5: Section 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed . Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false certification or noncompliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions. (emphasis supplied)

16

17

18

19

20

Rollo, pp. 263- 264.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 173379 December 1, 2010

ABUBAKAR A. AFDAL and FATIMA A. AFDAL, Petitioners, vs. ROMEO CARLOS, Respondent. DECISION CARPIO, J.: The Case This is a petition for review of the 3 January 2005 and 16 June 2006 Orders of the Regional Trial Court, Branch 25, Bian, Laguna (RTC) in Civil Case No. B-6721. In its 3 January 2005 Order, the RTC ordered the dismissal of petitioners Abubakar A. Afdal and Fatima A. Afdals (petitioners) petition for relief from judgment. In its 16 June 2006 Order, the RTC denied petitioners motion for reconsideration. The Facts On 18 December 2003, respondent Romeo Carlos (respondent) filed a complaint for unlawful detainer and damages against petitioners, Zenaida Guijabar (Guijabar), John Doe, Peter Doe, Juana Doe, and all persons claiming rights under them docketed as Civil Case No. 3719 before the Municipal Trial Court, Bian, Laguna (MTC). Respondent alleged that petitioners, Guijabar, and all other persons claiming rights under them were occupying, by mere tolerance, a parcel of land in respondents name covered by 4 Transfer Certificate of Title No. T-530139 in the Registry of Deeds Calamba, Laguna. Respondent claimed that petitioner Abubakar Afdal (petitioner Abubakar) sold the property to him but that he allowed petitioners to stay in the property. On 25 August 2003, respondent demanded that petitioners, Guijabar, and all persons claiming rights under them turn over the property to him because 5 he needed the property for his personal use. Respondent further alleged that petitioners refused to heed his demand and he was constrained to file a complaint before the Lupon ng Tagapamayapa (Lupon). According to respondent, petitioners ignored the 6 notices and the Lupon issued a "certificate to file action." Then, respondent filed the complaint before the MTC. According to the records, there were three attempts to serve the summons and complaint on petitioners 14 January, 3 and 18 7 February 2004. However, petitioners failed to file an answer. On 2 June 2004, respondent filed an ex-parte motion and compliance with position paper submitting the case for decision based on 8 the pleadings on record. In its 23 August 2004 Decision, the MTC ruled in favor of respondent. The dispositive portion of the 23 August 2004 Decision reads: WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendants as follows: 1. Ordering defendants Abubakar Afdal, Zenaida Guijabar and all persons claiming rights under them to vacate the subject property and peacefully turn-over possession of the same to plaintiff; 2. Ordering defendants to pay plaintiff the amount of TEN THOUSAND PESOS (P10,000.00) as rental arrears from August 25, 2003 up to the date of decision; 3. Ordering defendants to pay plaintiff the amount of TEN THOUSAND PESOS (P10,000.00) a month thereafter, as reasonable compensation for the use of the subject premises until they finally vacate the same;
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4. Ordering defendants to pay plaintiff the amount of FIFTY THOUSAND PESOS (P50,000.00) as and for attorneys fees plus ONE THOUSAND FIVE HUNDRED PESOS (P1,500.00) appearance fee; 5. Ordering defendants to pay the costs of suit. SO ORDERED.
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On 1 October 2004, the MTC issued a writ of execution.

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On 30 October 2004, petitioners filed a petition for relief from judgment with the MTC. Respondent filed a motion to dismiss or 13 strike out the petition for relief. Subsequently, petitioners manifested their intention to withdraw the petition for relief after realizing that it was a prohibited pleading under the Revised Rule on Summary Procedure. On 10 November 2004, the MTC granted 14 petitioners request to withdraw the petition for relief. On 6 December 2004, petitioners filed the petition for relief before the RTC. Petitioners alleged that they are the lawful owners of the property which they purchased from spouses Martha D.G. Ubaldo and Francisco D. Ubaldo. Petitioners denied that they sold the property to respondent. Petitioners added that on 15 December 2003, petitioner Abubakar filed with the Commission on Elections his certificate of candidacy as mayor in the municipality of Labangan, Zamboanga del Sur, for the 10 May 2004 elections. Petitioners said they only learned of the MTCs 23 August 2004 Decision o n 27 October 2004. Petitioners also pointed out that they never received respondents demand letter nor were they informed of, much less participated in, the proceedings before the Lupon. Moreover, petitioners said they were not served a copy of the summons and the complaint. On 3 January 2005, the RTC issued the assailed Order dismissing the petition for relief. The RTC said it had no jurisdiction over the petition because the petition should have been filed before the MTC in accordance with Section 1 of Rule 38 of the Rules of Court which provides that a petition for relief should be filed "in such court and in the same case praying that the judgment, order or proceeding be set aside." Petitioners filed a motion for reconsideration. In its 16 June 2006 Order, the RTC denied petitioners motion. Hence, this petition. The Issue Petitioners raise the sole issue of whether the RTC erred in dismissing their petition for relief from judgment. The Ruling of the Court Petitioners maintain that the RTC erred in dismissing their petition for relief. Petitioners argue that they have no other recourse but to file the petition for relief with the RTC. Petitioners allege the need to reconcile the apparent inconsistencies with respect to the filing of a petition for relief from judgment under Rule 38 of the Rules of Court and the prohibition under the Revised Rule on Summary Procedure. Petitioners suggest that petitions for relief from judgment in forcible entry and unlawful detainer cases can be filed with the RTC provided that petitioners have complied with all the legal requirements to entitle him to avail of such legal remedy. Section 13(4) of Rule 70 of the Rules of Court provides: SEC. 13. Prohibited pleadings and motions. - The following petitions, motions, or pleadings shall not be allowed: x x x 4. Petition for relief from judgment; x x x Section 19(d) of the Revised Rule on Summary Procedure also provides: SEC. 19. Prohibited pleadings and motions. - The following pleadings, motions, or petitions shall not be allowed in the cases covered by this Rule: x x x (d) Petition for relief from judgment; x x x
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Clearly, a petition for relief from judgment in forcible entry and unlawful detainer cases, as in the present case, is a prohibited pleading. The reason for this is to achieve an expeditious and inexpensive determination of the cases subject of summary 16 procedure. Moreover, Section 1, Rule 38 of the Rules of Court provides: SEC. 1. Petition for relief from judgment, order or other proceedings . - When a judgment or final order is entered, or any other proceeding is thereafter taken against a party in any court through fraud, accident, mistake or excusable negligence, he may file a petition in such court and in the same case praying that the judgment, order or proceeding be set aside . (Emphasis supplied) A petition for relief from judgment, if allowed by the Rules and not a prohibited pleading, should be filed with and resolved by the 17 court in the same case from which the petition arose. 1avvphi1 In the present case, petitioners cannot file the petition for relief with the MTC because it is a prohibited pleading in an unlawful detainer case. Petitioners cannot also file the petition for relief with the RTC because the RTC has no jurisdiction to entertain petitions for relief from judgments of the MTC. Therefore, the RTC did not err in dismissing the petition for relief from judgment of the MTC. The remedy of petitioners in such a situation is to file a petition for certiorari with the RTC under Rule 65 of the Rules of Court on the ground of lack of jurisdiction of the MTC over the person of petitioners in view of the absence of summons to petitioners. Here, we shall treat petitioners petition for relief from judgment as a petition fo r certiorari before the RTC. An action for unlawful detainer or forcible entry is a real action and in personam because the plaintiff seeks to enforce a personal obligation on the defendant for the latter to vacate the property subject of the action, restore physical possession thereof to the 19 plaintiff, and pay actual damages by way of reasonable compensation for his use or occupation of the property. In an action in 20 personam, jurisdiction over the person of the defendant is necessary for the court to validly try and decide the case. Jurisdiction 21 over the defendant is acquired either upon a valid service of summons or the defendants voluntary appearance in court. If the defendant does not voluntarily appear in court, jurisdiction can be acquired by personal or substituted service of summons as laid out under Sections 6 and 7 of Rule 14 of the Rules of Court, which state: Sec. 6. Service in person on defendant. - Whenever practicable, the summons shall be served by handing a copy thereof to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him. Sec. 7. Substituted Service. - If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendants residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendants office or regular place of bus iness with some competent person in charge thereof. Any judgment of the court which has no jurisdiction over the person of the defendant is null and void. The 23 August 2004 Decision of the MTC states: Record shows that there were three attempts to serve the summons to the defendants. The first was on January 14, 2004 where the same was unserved. The second was on February 3, 2004 where the same was served to one Gary Akob and the last was on 23 February 18, 2004 where the return was duly served but refused to sign. A closer look at the records of the case also reveals that the first indorsement dated 14 January 2004 carried the annotation that it 24 was "unsatisfied/given address cannot be located." The second indorsement dated 3 February 2004 stated that the summons was 25 26 "duly served as evidenced by his signature of one Gary Acob (relative)." While the last indorsement dated 18 February 2004 27 carried the annotation that it was "duly served but refused to sign" without specifying to whom it was served. Service of summons upon the defendant shall be by personal service first and only when the defendant cannot be promptly served 28 29 in person will substituted service be availed of. In Samartino v. Raon, we said:
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We have long held that the impossibility of personal service justifying availment of substituted service should be explained in the proof of service; why efforts exerted towards personal service failed. The pertinent facts and circumstances attendant to the service 30 of summons must be stated in the proof of service or Officers Return; otherwise, the substituted service cannot be upheld. In this case, the indorsements failed to state that prompt and personal service on petitioners was rendered impossible. It failed to show the reason why personal service could not be made. It was also not shown that efforts were made to find petitioners personally and that said efforts failed. These requirements are indispensable because substituted service is in derogation of the usual method of service. It is an extraordinary method since it seeks to bind the defendant to the consequences of a suit even though notice of such action is served not upon him but upon another whom the law could only presume would notify him of the pending proceedings. Failure to faithfully, strictly, and fully comply with the statutory requirements of substituted service renders 31 such service ineffective. Likewise, nowhere in the return of summons or in the records of the case was it shown that Gary Acob, the person on whom substituted service of summons was effected, was a person of suitable age and discretion residing in petitioners residence. In 32 Manotoc v. Court of Appeals, we said: If the substituted service will be effected at defendants house or residence, it should be left with a person of "suitable age and discretion then residing therein." A person of suitable age and discretion is one who has attained the age of full legal capacity (18 years old) and is considered to have enough discernment to understand the importance of a summons. "Discretion" is defined as "the ability to make decisions which represent a responsible choice and for which an understanding of what is lawful, right or wise may be presupposed." Thus, to be of sufficient discretion, such person must know how to read and understand English to comprehend the import of the summons, and fully realize the need to deliver the summons and complaint to the defendant at the earliest possible time for the person to take appropriate action. Thus, the person must have the "relation of confidence" to the defendant, ensuring that the latter would receive or at least be notified of the receipt of the summons. The sheriff must therefore determine if the person found in the alleged dwelling or reside nce of defendant is of legal age, what the recipients relationship with the defendant is, and whether said person comprehends the significance of the receipt of the summons and his duty to immediately deliver it to the defendant or at least notify the defendant of said receipt of summons. These matters must be 33 clearly and specifically described in the Return of Summons . (Emphasis supplied) In this case, the process server failed to specify Gary Acobs age, his relationship to petitioners and to ascertain whether he comprehends the significance of the receipt of the summons and his duty to deliver it to petitioners or at least notify them of said receipt of summons. In sum, petitioners were not validly served with summons and the complaint in Civil Case No. 3719 by substituted service. Hence, 34 the MTC failed to acquire jurisdiction over the person of the petitioners and, thus, the MTCs 23 August 2004 Decision is void. Since 35 the MTCs 23 August 2004 Decision is void, it also never became final. WHEREFORE, we GRANT the petition. We SET ASIDE the 3 January 2005 and 16 June 2006 Orders of the Regional Trial Court, Branch 25, Bian, Laguna. The 23 August 2004 Decision and the 1 October 2004 Writ of Execution, as well as all acts and deeds incidental to the judgment in Civil Case No. 3719, are declared VOID. We REMAND the case to the Municipal Trial Court, Bian, Laguna, for consolidation with the unlawful detainer case in Civil Case No. 3719 and for the said Municipal Trial Court to continue proceedings thereon by affording petitioners Abubakar A. Afdal and Fatima A. Afdal a chance to file their answer and present evidence in their defense, and thereafter to hear and decide the case. SO ORDERED.