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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No.

153867 February 17, 2005

WOOD TECHNOLOGY CORPORATION, CHI TIM CORDOVA AND ROBERT TIONG KING YOUNG, petitioners, vs. EQUITABLE BANKING CORPORATION, Respondent. DECISION QUISUMBING, J.: This petition for review seeks to reverse and set aside the Decision1 dated April 11, 2001 of the Court of Appeals in CA-G.R. CV No. 57371 and its Resolution2 dated June 3, 2002 which denied the motion for reconsideration. The case originated from a Complaint for Sum of Money filed on October 21, 1996, before the Regional Trial Court of Manila, Branch 29, by respondent Equitable Banking Corporation3 against the petitioners, Wood Technology Corporation (WTC), Chi Tim Cordova, and Robert Tiong King Young. The Complaint alleged that on December 9, 1994, WTC obtained from respondent a loan in the amount of US$75,000, with 8.75% interest per annum, as evidenced by a Promissory Note, No. FXBD94-00881, signed by Cordova and Young as representatives of WTC. Cordova and Young executed a Surety Agreement binding themselves as sureties of WTC for the loan. Respondent bank made a final demand on April 19, 1996, for WTC to pay its obligation, but petitioners failed to pay. Respondent prayed that petitioners be ordered to pay it $75,603.65 or P2,018,617.46 (computed as of October 10, 1995) plus interest, penalty, attorneys fees and other expenses of litigation; and the cost of suit. In their Answer, petitioners stated that WTC obtained the $75,000 loan; that Cordova and Young bound themselves as its sureties. They claimed that only one demand letter, dated April 19, 1996, was made by respondent. They added that the promissory note did not provide the due date for payment. Petitioners also claimed that the loan had not yet matured as the maturity date was purposely left blank, to be agreed upon by the parties at a later date. Since no maturity date had been fixed, the filing of the Complaint was premature, and it failed to state a cause of action. They further claimed that the promissory note and surety agreement were contracts of adhesion with terms on interest, penalty, charges and attorneys fees that were excessive, unconscionable and not reflective of the parties real intent. Petitioners prayed for the reformation of the promissory note and surety agreement to make their terms and conditions fair, just and reasonable. They also asked payment of damages by respondent.

On May 5, 1997, respondent moved for a judgment on the pleadings. The RTC, Branch 29 rendered judgment4and disposed as follows: WHEREFORE, in view of the foregoing, and to abbreviate this case, judgment is hereby rendered based on the pleading[s] filed by the opposing parties and the documents annexed thereto. The defendant[s] Wood Technology Corporation, Robert Tiong King Young and Chi Tim Cordova are hereby ordered to pay solidarily to herein plaintiff the sum of $75,000.00 or its equivalent in Philippine Currency and to pay the stipulated interest of 8.75% per annum to be reckoned from the date that the obligation was contracted until the filing of this suit. Thereafter, the legal rate shall apply. SO ORDERED. Petitioners appealed, but the Court of Appeals affirmed the RTCs judgment. The appellate court noted that petitioners admitted the material allegations of the Complaint, with their admission of the due execution of the promissory note and surety agreement as well as of the final demand made by the respondent. The appellate court ruled that there was no need to present evidence to prove the maturity date of the promissory note, since it was payable on demand. In addition, the Court of Appeals held that petitioners failed to show any ambiguity in the promissory note and surety agreement in support of their contention that these were contracts of adhesion. Finally, it ruled that the interest rate on the loan was not exorbitant. The appellate court also denied petitioners motion for reconsideration. Before us, petitioners now raise the following issues: 1. WHETHER OR NOT THE ANSWER OF PETITIONERS WITH SPECIAL AND AFFIRMATIVE DEFENSES FAILS TO TENDER AN ISSUE OR ADMITS THE MATERIAL ALLEGATIONS IN THE COMPLAINT SO AS TO JUSTIFY THE RENDITION OF JUDGMENT ON THE PLEADINGS BY TRIAL COURT; 2. WHETHER OR NOT PETITIONERS SHOULD HAVE BEEN GIVEN THE RIGHT TO PRESENT EVIDENCE ON THEIR SPECIAL AND AFFIRMATIVE DEFENSES; 3. WHETHER OR NOT THE PROMISSORY NOTE IS A CONTRACT OF ADHESION CONTAINING UNREASONABLE CONDITIONS WHICH PETITIONERS SIGNED WITHOUT REAL FREEDOM OF WILL TO CONTRACT THE OBLIGATIONS THEREIN; AND 4. WHETHER OR NOT THE FILING OF THE COMPLAINT WAS PREMATURE AND/OR THE COMPLAINT FAIL[ED] TO STATE A CAUSE OF ACTION.5 Simply put, the basic issue is whether the appellate court erred when it affirmed the RTCs judgment on the pleadings. Petitioners argue that a judgment on the pleadings cannot be rendered because their Answer tendered genuine issues and disputed the material allegations in the Complaint. They claim that they did not totally or unqualifiedly admit all the material allegations in the Complaint, and that they had alleged special and affirmative defenses. If they were given the

chance, they could have presented witnesses to prove their special and affirmative defenses.6 For its part, respondent Equitable Banking Corporation states that the Court of Appeals was correct in affirming the judgment on the pleadings granted by the RTC. It adds that petitioners had admitted the material allegations of the Complaint and they did not raise genuine issues of fact that necessitate submission of evidence. It also contends that the special and affirmative defenses raised by petitioners concern the proper interpretation of the provisions of the promissory note and surety agreement. Respondent asserts that these defenses may be resolved based on the pleadings and the applicable laws and jurisprudence, without the need to present evidence.71awphi1.nt At the outset, we must stress the Courts policy that cases and controversies should be promptly and expeditiously resolved. The Rules of Court seeks to shorten the procedure in order to allow the speedy disposition of a case. Specifically, we have rules on demurrer to evidence, judgment on the pleadings, and summary judgments. In all these instances, a full blown trial is dispensed with and judgment is rendered on the basis of the pleadings, supporting affidavits, depositions and admissions of the parties.8 In this case, at issue is the propriety and validity of a judgment on the pleadings. A judgment on the pleadings is proper when an answer fails to tender an issue, or otherwise admits the material allegations of the adverse partys pleading.9 Both the RTC and Court of Appeals recognize that issues were raised by petitioners in their Answer before the trial court. This may be gleaned from their decisions which we partly quote below: RTCs ORDER: ... Defendants raised the following defenses: a. That the contract is one of adhesion and they were "forced to sign the same"; b. That the interest [8.75% per annum], penalties and fees are unconscionable; c. That plaintiffs demand is premature.10 ... Court of Appeals DECISION: . . . They neither raise genuine issues of fact needing submission of evidence. Rather, these issues hoist questions concerning the proper interpretation of the provisions of the promissory note and the surety agreement!11 (Emphasis supplied.) Petitioners also contend that their Answer below raised issues that "are very material and genuine."12 Hence, according to petitioners, judgment on the pleadings was not proper. Respondent, on the other hand, argues that the special and affirmative defenses raised by Petitioners are not genuine issues that needed a hearing.13

We note now that (1) the RTC knew that the Answer asserted special and affirmative defenses; (2) the Court of Appeals recognized that certain issues were raised, but they were not genuine issues of fact; (3) petitioners insisted that they raised genuine issues; and (4) respondent argued that petitioners defenses did not tender genuine issues. However, whether or not the issues raised by the Answer are genuine is not the crux of inquiry in a motion for judgment on the pleadings. It is so only in a motion for summary judgment.14 In a case for judgment on the pleadings, the Answer is such that no issue is raised at all. The essential question in such a case is whether there are issues generated by the pleadings.15 This is the distinction between a proper case of summary judgment, compared to a proper case for judgment on the pleadings. We have explained this vital distinction inNarra Integrated Corporation v. Court of Appeals,16 thus, The existence or appearance of ostensible issues in the pleadings, on the one hand, and their sham or fictitious character, on the other, are what distinguish a proper case for summary judgment from one for a judgment on the pleadings. In a proper case for judgment on the pleadings, there is no ostensible issue at all because of the failure of the defending partys answer to raise an issue. On the other hand, in the case a of a summary judgment, issues apparently exist"i.e. facts are asserted in the complaint regarding which there is as yet no admission, disavowal or qualification; or specific denials or affirmative defenses are in truth set out in the answer"but the issues thus arising from the pleadings are sham, fictitious or not genuine, as shown by affidavits, depositions, or admissions. . . . (Underscoring and emphasis supplied.) Indeed, petitioners Answer apparently tendered issues. While it admitted that WTC obtained the loan, that Cordova and Young signed the promissory note and that they bound themselves as sureties for the loan, it also alleged special and affirmative defenses that the obligation had not matured and that the promissory note and surety agreement were contracts of adhesion. Applying the requisites of a judgment on the pleadings vis--vis a summary judgment, the judgment rendered by the RTC was not a judgment on the pleadings, but a summary judgment. Although the Answer apparently raised issues, both the RTC and the Court of Appeals after considering the parties pleadings, petitioners admissions and the documents attached to the Complaint, found that the issues are not factual ones requiring trial, nor were they genuine issues.1vvphi1.nt Summary judgment17 is a procedure aimed at weeding out sham claims or defenses at an early stage of the litigation. The proper inquiry in this regard would be whether the affirmative defenses offered by petitioners constitute genuine issues of fact requiring a full-blown trial.18 In a summary judgment, the crucial question is: are the issues raised by petitioners not genuine so as to justify a summary judgment?19 A "genuine issue" means an issue of fact which calls for the presentation of evidence, as distinguished from an issue which is fictitious or contrived, an issue that does not constitute a genuine issue for trial.20 We note that this is a case for a sum of money, and petitioners have admitted that they obtained the loan. They also admitted the due execution of the loan documents and their receipt of the final demand letter made by the respondent. These documents were all attached to the Complaint. Petitioners merely claimed that the obligation has not matured. Notably, based on the promissory note, the RTC and the Court of Appeals found this defense not a factual issue for trial, the loan being payable on demand. We are bound by this factual finding. This Court is not a trier of facts.

When respondent made its demand, in our view, the obligation matured. We agree with both the trial and the appellate courts that this matter proferred as a defense could be resolved judiciously by plain resort to the stipulations in the promissory note which was already before the trial court. A full-blown trial to determine the date of maturity of the loan is not necessary. Also, the act of leaving blank the maturity date of the loan did not necessarily mean that the parties agreed to fix it later. If this was the intention of the parties, they should have so indicated in the promissory note.l^vvphi1.net They did not show such intention.l^vvphi1.net Petitioners likewise insist that their defense tendered a genuine issue when they claimed that the loan documents constituted a contract of adhesion. Significantly, both the trial and appellate courts have already passed upon this contention and properly ruled that it was not a factual issue for trial. We agree with their ruling that there is no need of trial to resolve this particular line of defense. All that is needed is a careful perusal of the loan documents. As held by the Court of Appeals, petitioners failed to show any ambiguity in the loan documents. The rule is that, should there be ambiguities in a contract of adhesion, such ambiguities are to be construed against the party that prepared it. However, if the stipulations are clear and leave no doubt on the intention of the parties, the literal meaning of its stipulations must be held controlling.21 In sum, we find no cause to disturb the findings of fact of the Court of Appeals, affirming those of the RTC as to the reasonableness of the interest rate of 8.75% per annum on the loan. We also find no persuasive reason to contradict the ruling of both courts that the loan secured by petitioner WTC, with co-petitioners as sureties, was payable on demand. Certainly, respondents complaint could not be considered premature. Nor could it be said to be without sufficient cause of action therein set forth. The judgment rendered by the trial court is valid as a summary judgment, and its affirmance by the Court of Appeals, as herein clarified, is in order. WHEREFORE, the Petition is DENIED for lack of merit. SO ORDERED. Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur. ! ! Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-40500 February 27, 1976 FAUSTO AUMAN, LIBRADO AUMAN, JORGE AUMAN, GREGORIO AUMAN, ERNESTO AUMAN, VICENTA AUMAN, CONCEPCION A. LUMAPAS, and CARLOS AUMAN, petitioners, vs. HON. NUMERIANO G. ESTENZO, Judge, Court of First Instance of Leyte, Branch V (Ormoc Branch) GERONIMO C. CAPAHI, ENCARNACION CORTES, respondents.

Amado G. Olis for petitioners. Cristobal S. Mendola for private respondents.

MUOZ PALMA, J.: Did respondent Judge, Hon. Numeriano G. Estenzo, of the Court of First Instance of Leyte, Branch V, err and gravely abuse his discretion when ' he rendered a Summary Judgment in Civil Case No. 1395-0 on February 25, 1975, in favor of private respondents herein and against petitioners, and issued the order dated March 24, 1975, denying the latter's motion for reconsideration of said judgment? 1 On January 14, 1975, spouses Geronimo and Encarnacion Capahi who are now the private respondents filed a complaint with the Court of First Instance of Leyte (Ormoc Branch) against Fausto Auman and others, now petitioners, for an easement of right-of-way and damages, docketed as Civil Case No. 1395-0, substantially alleging that spouses Capahi are the lessees of five parcels of land (Lots Nos. 6703-B-1, 6701, 6708, 6707 and 6705 with an approximate area of 11.9311 hectares, more or less), located in Barrio R.M. Tan, Ormoc City, belonging to one Eulogio Simon, while Fausto Auman and his codefendants are the coowners of four parcels (Lots Nos. 6696, 6700, 6702 and 6603-part) also located in the same barrio; that the lots leased to spouses Capahi have no adequate outlet to a public highway except through the lands of the Auman's, hence, the necessity for an easement of right-ofway, as shown in the sketch plan attached to the complaint, limited to the necessary passage of the vehicles of the Capahi's and the transportation of their sugarcane through the servant estate to the public highway and to the sugar mills. 2 Petitioners, as defendants, answered the complaint specifically denying the material allegations thereof and setting up in turn the following special and affirmative defenses. 8. That no easement of whatever kind exists on land of defendants in favor of either Eulogio Simon or plaintiffs, and none could be declared by this Honorable Court; 9. That no easement of right away has been provided for and included in the alleged contracts of lease; 10. That plaintiffs have not asked Eulogio Simon, the owner of the lands, to demand from defendants and other adjoining owners right of way in favor of Simon's lands; 11 That the complaint has failed to establish that plaintiffs have complied with the preconditions for the grant of the easement of right of way fixed by Articles 649 and 650 of the new Civil Code, namely, (a) that the leased lands are surrounded by other immovables and have no adequate outlet to a public highway, (b) that proper indemnity for the value of the lands and to be occupied and the amount of the damage caused to the said lands and their improvements has been pre-paid, (c) that the isolation was not due to plaintiffs' own acts, and (d) that the right of way claimed is at

the point least prejudicial to the defendants' lands and that the distance from Simon's lands to the public highway is the shortest; 12 That the easement claimed is not compulsory; 13. That plaintiffs' own sketch, Annex B, unmistakably shows that the right of way demanded is to most prejudicial, most onerous, and most burdensome imposition upon defendants' lands causing defendants the maximum inconvenience, and covers the longest and most circuitous route from Simons's lands to the public highway." (pp. 36-37, rollo) In an Order dated February 5, 1975, the case was set for a pretrial for February 17, 1975, and parties were ordered to submit on said dated the following: (a) a list of witnesses and documents supporting their action or defense; (b) affidavits of the witnesses to serve as direct examination; and (c) their respective memorandum in support of the parties' respective contentions. The Orders also warned that any party who failed to submit on said date and time, a list of witnesses with affidavits as aforesaid or documents, which affidavits or documents should be attached to said list would be non-suited or defaulted as the case may be, for failure to prosecute his claims or defenses. 3 On February 17, a copy of their reply dated February 14, 1975, was furnished by respondents-spouses to petitioners together with a new sketch plan of the lands involved with the explanation that the new sketch showed the Pagsanga-an river which traversed the lands leased by respondents-spouses. The same reply also contained an answer to the counterclaim. 4 On the same date, February 17, a list of exhibits and of the witnesses was submitted by private respondents to the trial court, in partial compliance with the order of February 5. 5 On their part, petitioners herein submitted their Memorandum dated February 15, 1975, giving the names of their witnesses and the substance of their testimonies, together with affidavits of said witnesses, and a brief statement as to why the right to pay should not be granted. 6 When the case was called for pre-trial, the petitioners were ready to proceed but the private respondents were not as they did not have the required affidavits of their Witnesses, and upon their request the Judge reset the case for February 26, 1975 for the omission of said affidavits. On February 24, 1975, petitioners' counsel received a telegraphic notice from the trial court that the case had to be reset for February 25 since the original date of February 26 had been declared a special public holiday. 7 On February 25, 1975, petitioners however filed by registered mail a "Motion to Admit Amended Answer" to which was attached the Amended Answer dated February 24, 1975. Petitioners alleged in their motion that since the reply of private respondents presented a sketch different from that attached to the complaint and in order that the issues would be dealt with squarely, it was necessary and expedient that the answer of petitioners be amended accordingly without altering the theory of their defense. 8 Petitioners' counsel also

wired the Clerk of Court asking that the Motion to Admit Amended Answer be set for hearing on March 6 instead of May 6 as stated in the motion.9 On March 5, a wire was received by petitioners from Judge Estenzo to the effect that the Motion to Admit Amended Answer had become moot and academic because a Summary Judgment had already been rendered by him. 10 On March 7, petitioners' counsel received a copy of the Summary Judgment dated February 25, 1975, with the following dispositive portion: WHEREFORE, summary judgment is hereby rendered in favor It is plaintiffs and against the defendants ordering the latter to open lot tight of way on Lots 6696, 6700, 6703 of the Ormoc Cadastre, necessary for sugarcane trucks to pass, upon plaintiffs' payment to the defendants of a rental at the rate of P400.00 per hectare of sugar harvest or of the amount at the rate of P4,000.00 per hectare as a sale I what maybe u as a road right of way, with the plaintiffs litigation of maintaining the road right of way after such payment, in both the plaintiffs and the defendants to use said road right of way is indicated in Annex 'B-1', without pronouncement as to costs. (p. 79. rollo) Petitioners moved for a reconsideration of the foregoing summary judgment principally on the ground that it was prematurely rendered and prayed that their amended answer be admitted and the case set for pre-trial and trial.11 The Motion for Reconsideration was denied in an Order dated March 24, 1975. 12 Hence, this appeal on certiorari. We find merit in this petition. Rule 34 of the Rules of Court covers summary judgments and sets down the procedure to be taken in order that a summary judgment may be issued by a trial court. Briefly stated, a summary judgment is one granted by the court, upon motion by any of the parties, for the prompt and expeditious settlement of the case, after both parties have pleaded, the motion to be supported by affidavits, depositions, or other documents, after notice thereof had been served upon the adverse party, who in turn may oppose the motion with supporting affidavits and other documents and, after hearing, it appears that there is no genuine issue as to any material fact, except as to the amount of damages, and that the movant or the moving party is entitled to a judgment as a matter of law. 13 The summary judgment rendered by respondent Judge Estenzo was in violation of the foregoing basic rule. 1. There was no motion for a summary judgment with supporting affidavits and of depositions that was ever filed by respondents Capahi and served on petitioners herein. As enumerated and reproduced in the summary judgment itself, all that respondent Judge had before him on February 25, 1975, the date when the judgment was rendered, were the following: complaint for easement of right of way answer of the defendants; Order dated February 5, 1975, setting the case for pre-trial and trial and requiring the parties to submit their respective list of witnesses and corresponding affidavits, documentary evidence, etc.; list of exhibits of plaintiffs Capahi and the latter's witnesses; and defendants' Memorandum containing a list of witnesses and their respective affidavits.

Respondents Capahi did not submit on or before February 25, 1975, the affidavits or depositions of their witnesses as they now claim in their memorandum filed before this Court on September 10, 1975, for had they done so, those documents would have been mentioned and reproduced in the summary judgment as was done with the affidavits of petitioners' witnesses. We believe, therefore, petitioners p contention that respondent Judge rendered his summary Judgment without any supporting documents from respondents Capahi in whose favor the judgment was rendered. The purpose of a motion for summary judgment 14 is to enable the trial court to determine whether or not a bona fide issue exists between the parties, and if none ' for the court to render a summary judgment as prayed for. This the court can do only after proper notice to the adverse party who has to be served with a copy of the motion for summary judgment with its supporting affidavits at least ten days before the date of the hearing of the motion(Sec. 3, Rule 34). The adverse or opposing party is given by the Rules sufficient time to prepare and submit on the date of the hearing his own counter affidavits, depositions, or other documents to show that it has a real and valid defense which raises a genuine issue of fact proper for trial. (id.) Quite obviously, petitioners herein were denied the right accorded them by Section 3, Rule 34, and respondent Judge rendered judgment against them without proper hearing. Private respondents assert, however, that there was substantial compliance with the Rules when the trial court included in its Order of February 5, 1975, setting the case for pre-trial. the following statement: Both parties are granted until February 17, 1975, at 7:30 A.M. to submit their respective memorandum in support of their respective contentions ' in their pleadings as may be supported by the affidavits of their witnesses and exhibits, at which time the incident will be heard mind thereafter submitted for a judgment on the pleadings or a summary judgment pursuant to Section 3, Rule 20 of the Revised Rules of Court should this Court find that acts and facts exist which could warrant such judgment. (p. 41, rollo) The above statement of the court a quo did not preclude the necessity of hearing the parties on the propriety of a summary judgment. A hearing was an invariable prerequisite, as its essence was to inquire into the existence of a genuine controversy, especially since in the instant case there was lack of the necessary documents such as affidavits and/or depositions of the witnesses of the plaintiffs, now respondents, Capahi or even admissions of the defendants, now petitioners. As adverted to earlier, all that respondent Capahi submitted at the pre-trial was a listof their exhibits and witnesses, but that no affidavits of the latter were presented to form a basis for a summary y judgment in their favor. Strangely enough, as petitioners now maintain, notwithstanding the fact that they were the very ones who had presented affidavits of their witnesses showing the presence of real issues of fact which needed to be tried, the summary judgment rendered by respondent Judge was adverse to them 2. The answer of petitioners herein as defendants in the court below as well as the affidavits of their witnesses submitted on February 17, 1975, raised genuine issues which could be resolved only after an appreciation of the evidence of the parties.

Petitioners resisted the complaint for an easement of right of way over their lands on various grounds: first, that the lands of Capahi had an outlet to the public highway other than through the lands of the Aumans, that is, to the east where a road built by plaintiff's older brother is being used to transport sugar road right-of-way which cane; second, that the approach measures 5 meters wide by 246 meters long is the longest, most circuitous and burdensome, as it passes through all the four lots of Fausto Auman, although it is possible to construct a road right-of-way through only one of the lots, lot No. 6703, which would be the shortest and nearest exit the public road; . and third, that the right-of-way could start from Capahi's lot 6705 which adjoins Aumans lot 6703 where the R.M. Tan road ends, thereby involving only a portion of 12 meters. (Joint affidavit of Nicolas Escototo and Norberto Andrin, Affidavit of Fausto Auman, Defendant's Memorandum, Amended Answer, pp. 4950, 57, rollo) To substantiate the merits of their defense, petitioners invoked Article 649 of the Civil Code which expressly provide 8 that the owner, or any person who by virtue of i real right may cultivate or use any immovable, which is surrounded by other immovable pertaining to other persons and without adequate outlet to a public highway, is entitled to demand a right-of-way through the neighboring estates, after payment of the proper indemnity, and Article 650 which states that the easement of a right-of-way shall be established at the point least prejudicial to the servient estate and insofar as not in connect with this rule, where the distance from the dominant estate to a public highway may be the shortest. Among the issues of fact therefore which were to be re solved and could be resolved by the trial court only on the basis of the evidence of the parties, were: (1) did the lands of Capahi have adequate outlet to the public highway; (2) was the pro road the only Possible exit; and (3) was it the least prejudicial to the owners of the servant estate? Without resolving these issues, or worse still, finding them without receiving evidence on the matter, respondent Judge pronounced judgment against petitioners granting the proposed right-of-way, fixing the amount of P400.00, as I to be maid by Capahi and even allowing the latter to buy the portion Of land to be u as the road right-of-way at P4,000.00 a hectare. Undoubtedly, respondent Judge is misguided in his concept of a summary judgment. It is settled that Rule 34 of the Rules of Court ... does not vest in the court jurisdiction summarily to try the issues on depositions and affidavits, but give the court limited authority to enter summary judgment only if it clearly appears that there is no genuine issue of material fact. Upon a motion for summary judgment the court's sole function is to determine whether there is an issue of fact to be tried, and all doubts as to the existence of an issue of fact must be resolved against the moving party. On a motion for summary judgment the court is not authorized to decide an issue of fact, but is to determine whether the pleadings and record before the court create an issue of fact to be tried. In other words, the rule (Rule 34 sec. 3) does not invest the court with jurisdiction summarily to try the factual issues on affidavits, but authorizes summary judgment only if it clearly appears that there s no genuine issue as to any material fact.(Moran's Comments on the Rules of Court, Vol. 1, p. 600, 2nd Ed.) (Emphasis supplied) Judge Estenzo's reference to the case of Taleon vs. Secretary of Public Works, L-24281, May 16, 1967, 20 SCRA 69, as his authority (p. 83, rollo) is untenable. In Taleon a

summary judgment was rendered by the trial court and upheld by this Court for purely questions of law were involved which did not require a full trial. thus this Court held: Appellants contentions are without merit. First of all, a full trial was not needed. the issues raised before the court a quo were all purely legal and thus could be resolved on the basis of the pleadings and the memoranda filed and the administrative records sent up to it. no necessity was there for further reception of evidence. (20 SCRA 73) What should have guided respondent Judge is, among others, Ibaez vs. North Negros Sugar Co., Inc., et al., L-6790, March 28, 1955, where this Court emphasized the rule that a summary judgment can only be rendered where there are no question of fact at issue, or where the material allegations of the pleadings are not disputed, and that it is no error for a trial court to grant a motion for summary judgement in spite of the controversial nature of the case involved. Likewise in Gatchalian vs. Pivilin, et al., L-17619, October 31, 1962, 6 SCRA 509, this court annulled and set aside a summary judgment rendered by the Court of First Instance of Isabela in its civil case No. 385 which declared plaintiff-appellee, Francisca Gatchalian, owner of the property under litigation and ordered defendant-appellants to vacate the same, the Court findings that from the leadings and affidavit submitted by the defendants in opposition to a motion for summary judgment , there were general issues of fact which made a trial indespensable and a summary judgment improper. In Aganas vs. Nagum, L-20707, March 30, 1970, 32 SCRA 298, 299, this court, with Justice Claudio Teehankee as the writer of the Opinion, reiterated once again "the established precept that trial courts have but limited authority to render summary judgments and may do so only in cases where there Id clearly no genuine issue as to any material fact. 15 In closing, it may be well to restrate that this writer said for the Court in Constantino vs. Hon. Estenzo, et al., L-40403, July 31, 1975: ... the demands of a fair, impartial, and wise administration of justice call for a faithful adherence to legal precepts on procedure which ensure to litigants the opportunity to present their evidence and secure a ruling on all issues presented in their respective pleadings. Short-cuts in judicial processes are to be avoided where they impede rather than promote a judicious dispensation of justice. (65 SCRA 675, 679)) IN VIEW OF ALL FOREGOING, We hereby set aside the summary judgment in Civil Case No. 1395-0 dated February 25, 1975, as well as the order of the respondent court dated March 24, 1975, and order respondent Judge to admit the amended answer of petitioners herein in the aforesaid case, to set the case for pre-trial, and a trial on the merits, pursuant to law. With costs against private respondents. SO ORDERED. Teehankee (Chairman), Makasiar, Esguerra and Martin, JJ., concur. ! !

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-40948 June 29, 1976 GREGORIO ESTRADA, petitioner, vs. HONORABLE FRANCISCO CONSOLACION, Judge of the Court of First Instance of Davao, Br. II, CORAZON RAMIREZ UY, and LUCIO GALAURA, respondents. Leonides T. Tan for petitioner. Oscar V. Breva for private respondents.

ANTONIO, J: Certiorari with prohibition to annul the Order, dated May 20, 1975, of the Court of First instance of Davao in Civil Case No. 8739, which "decreed that defendants have judgment summarily against the plaintiff for such amount as may be found due them for damages, to be ascertained by trial upon that issue alone on June 9,1975 at 8:30 a.m.". On February 14, 1975, petitioner Gregorio Estrada filed a complaint for damages against private respondents Corazon Ramirez Uy and Lucio Galaura, owner and driver, respectively, of an AC jeep, with Plate No. ZE-501, for breach of their obligations as a common carrier, in view of the death of his wife while she was a passenger of the vehicle. The complaint alleges that: on January 1, 1975, plaintiff's wife, Simeona Estrada, was a passenger of the AC Jeep, with Plate No. ZE-501, owned and operated by defendant Corazon Ramirez Uy and driven by defendant Lucio Galaura, while said jeep was cruising along Claro M. Recto Avenue, heading towards the direction of the Jones Circle, Davao City the driver (Lucio Galaura) "without regard for the safety of plaintiff's wife who was among his passengers and without taking the necessary precaution" in accordance with the situation, bumped a Ford pick-up truck; as a consequence of the incident, plaintiff's wife sustained a fractured left humerus, fat (pulmonary) embolism and shock due to respiratory failure; she was brought to the San Pedro Hospital where she died. Plaintiff further alleged in his complaint that defendant Corazon Ramirez Uy, as owner of the AC jeep and a common carrier, in violation of the contract of carriage, failed to safely conduct the plaintiff's wife to her place of destination by reason on her "failure to exercise even the diligence of a good father of a family" and her "gross and evident bad faith, malevolence and wantonnes" in discharging her obligation as a common carrier. Plaintiff, therefore, asked for actual damages, indemnification for the death of his wife, moral damages and attorney's fees in specified amounts. Defendants, in their answer, while admitting that plaintiff's wife was a passenger and that she died as a result of the accident, alleged that the proximate and only cause of the accident

was the negligence of third persons (the drivers, Danilo Ang and Rodolfo D. Endino, of a Toyota pick-up truck bearing Plate No. T-RU-221, and a Ford pick-up truck with Plate No. TRU-420, respectively) over whom defendant Corazon Ramirez Uy had no supervision and control, and who were then driving their respective vehicles at a fast rate of speed and from different directions, as a result of which said vehicles collided, and because of that collision the. Ford pick-up truck was deviated from its lane and hit the jeep of defendants. Defendants likewise set up a counterclaim for damages by reason of plaintiff's institution of the clearly unfounded suit against them. ON April 16, 1975, respondents filed a motion for summary judgment against plaintiff on the ground that there is no genuine issue as to any material fact in the case except as to the amount of damages defendants are seeking from plaintiff by way of counterclaim. In support of their motion for summary judgment, certain annexes to the answer were incorporated therein, as follows: (a) The sketch of the accident made by Traffic Investigator J. S. Formeloza of the Davao City Police Department, marked as Annex "3" of the defendants' answer. (b) Said investigator's affidavit detailing his findings upon investigation stating that the pick-up with plate No. T-RU-420 upon reaching the intersection of Recto and Bonifacio Streets collided with the pick-up with plate No. T-RU221, and that upon impact, the latter pick-up collided with the jeep driven by Lucio Galaura that was coming from the opposite direction. (Annex "4" of defendants' answer) (c) The respective sworn statements of the drivers of the two pick-ups (Danilo Ang and Rodolfo Endino) taken by the Traffic Division of the Davao City Police Department after the accident, marked as Annexes "5" and of the defendants' answer wherein each driver respectively claimed that he exercised due care but attributed to the other negligence as the cause of the collision; and (d) The sworn statement of defendant driver (Lucio Galaura) of said A. C. Jeep, likewise taken by the Traffic Division of the Davao City Police Department detailing what he did in order to prevent or minimize damages to his vehicle and his passengers, marked as Annex "7" of defendants' answer. By means of the foregoing annexes, respondents sought to prove that they were relieved of any liability to petitioner inasmuch as the accident which caused the death of petitioner's wife "resulted from the negligence of third persons over whom defendants had no supervision or control, namely, the drivers of the two pick-up trucks which collided at the intersection of C. M. Recto Ave. and Bonifacio St., Davao City, as a result of which collision, one of them was deviated from course to the lane where defendants' AC- Jeep was then travelling, where it also collided with the latter." Petitioner opposed the above motion, relying heavily on the presumption that in case of death of the passenger, the common carrier is presumed "to have been at fault or to have acted negligently," 1 unless the carrier proves that he has observed extraordinary diligence with due regard to all the circumstances, which movants failed to do.

Notwithstanding the opposition filed by the plaintiffs, respondent Judge issued the order of May 20, 1975, stating, in part, as follows: The Court has considered at length and thoroughly the pleadings in the action, the affidavits and other pertinent annexes (Annexes 1 to 6), of the movants, and has found that there is no genuine issue as to material fact and no controversial question of fact to be submitted to the trial court, and has concluded that defendants are entitled to a judgment as a matter of law except as to the amount of damages recoverable. It is therefore ordered and decreed that defendants have judgment summarily against the plaintiff for such amount as may be found due them for damages, to be ascertained by trial upon that issue alone on June 9, 1975 at 8:30 a.m. A motion for reconsideration of the afore-quoted Order, on the ground that said Order, having failed to state clearly and distinctly the facts and the law on which it is based, violated the Constitution and the Rules of Court, was denied "for lack of merit" on June 9, 1975, hence the present petition for certiorari with prohibition. Pursuant to Section 2, Rule 34, of the Revised Rules, "A party against whom a claim, counterclaim, or crossclaim is asserted or a declaratory relief is sought may, at any time, move with supporting affidavits for a summary judgment in his favor as to all or any part thereof." 2 The defendant who believes that he is entitled to a judgment either on the pleadings or on the basis of extrinsic facts established by affidavits or depositions may move for summary judgment in his favor. 3 In other words, when the moving party is a defending party, his pleadings, depositions or affidavits must show that his defenses or denials are sufficient to defeat the claimant's claim. The affidavit submitted by the party moving for summary judgment shall be by persons having personal knowledge of the facts; it shall recite all material facts and show that there is no defense to the cause of action or that the cause of action has no merits. 4 This motion shall be served on the adverse party at least ten (10) days prior to the time specified in the hearing. The adverse party may also, prior to said date, serve opposing affidavits. The opposing papers, including pleadings, depositions, and affidavits must establish a genuine issue of fact in order to defeat a motion for summary judgment. After hearing, the motion for summary judgment shall be granted if, on the basis of all the papers and proofs submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party. The motion shall be denied if any party shall show facts sufficient to require a trial of any issue of fact other than an issue as to the amount or extent of the damages. 5 This Summary Judgment or Accelerated Judgment is a device for weeding out sham claims or defenses at an early stage of the litigation, thereby avoiding the expense and loss of time involved in a trial. 6 The very object is "to separate what is formal or pretended in denial or averment from what is genuine and substantial, so that only the latter may subject a suitor to the burden of a trial. 7 In conducting the hearing, the purpose of the judge is not to try the issue, but merely to determine whether there is a meritorious issue to be tried. Where a motion is made for summary judgment, such motion is not directed to the pleadings and deals only with the question of whether there are triable issues of facts and where such issues exist summary judgment must be denied. 8 Summary judgment should not be granted where it fairly appears that there is a triable issue to be tried.9 "The Court should not pass, on questions of credibility or weight of evidence, and that the summary judgment procedure 'should not be perverted to the trial of disputed questions of fact upon affidavits". 10 The test, therefore, of a motion for summary judgment iswhether the pleadings, affidavits and exhibits in support of the motions are sufficient to overcome the opposing papers and to justify a finding as a matter of law that there is no defense to the action or the claim is clearly meritorious. 11

In proceedings for summary judgment, the burden of proof is upon the plaintiff to prove the cause of action and to show that the defense is interposed solely for the purpose of delay. 12 After plaintiff's burden has been discharged, defendant has the burden to show facts sufficient to entitle him to defend. 13 Under the contract of carriage, private respondents assumed the express obligation to transport the wife of petitioner to her destination safely and to observe extra ordinary diligence with due regard for all the circumstances, and that any injury suffered by her in the course thereof, is immediately attributable to the negligence of the carrier. 14 To overcome such presumption, it must be shown that the carrier had observed the required extraordinary diligence, 15 which means that the carrier must show the "utmost diligence of very cautious persons * * * as far as human care and foresight can provide", 16 or that the accident was caused by a fortuitous event. 17 In order to constitute a caso fortuito that would exempt a person from responsibility, it is necessary that (1) the event must be independent of the human will; (2) the occurrence must render it impossible for the obligor to fulfill his obligation in a normal manner; and (3) the obligor must be free of a concurrent or contributory fault or negligence. 18 It was precisely because of the legal presumption that once a passenger in the course of travel is injured or does not reach his destination safely, the carrier and the driver are presumed to be at fault, that private respondents submitted affidavits to prove that the accident which resulted in the death of petitioner's wife was due to the fault or negligence of the drivers of the two pickup trucks over whom the carrier had no supervision or control. Having, therefore, shown prima facie that the accident was due to a caso fortuito and that the driver of the respondent was free of concurrent or contributory fault or negligence, it was incumbent upon petitioner to rebut such proof. Having failed to do so, the defense of the carrier that the proximate cause of the accident was a caso fourtuito remains unrebuted. We are not unmindful that the issue as to whether a carrier used such reasonable precautions to avoid the accident as would ordinarily be used by careful, prudent persons under like circumstances is a question essentially one of fact and, therefore, ordinarily such issue must be decided at the trial. 19 But where, as in the case at bar, petitioner has not submitted opposing affidavits to controvert private respondents' evidence that the driver of the passenger jeepney was free of contributory fault as he stopped the jeepney to avoid the accident, but in spite of such precaution the accident occurred, respondent Judge did not, therefore, act arbitrarily in declaring in his Order of May 20, 1975, that "there is no genuine issue to any material fact and no controversial question of fact to be submitted to the trial court." This was, however, a mere interlocutory order directing that a hearing be conducted for the purpose of ascertaining the amount or the assessment of damages which may be adjudged in favor of the prevailing party. It is a determination of the court of a preliminary point or directing some steps in the proceedings, but not a disposition of the merits. 20 "Upon the rendering of the assessment, the Court shall direct the entry forthwith of the appropriate summary judgment." 21 In the absence of any findings of fact and conclusions of law, the aforesaid order of respondent Judge cannot be considered a judgment. It has been held that "a trial court in granting summary judgment should file findings of fact and conclusion of law or a memorandum opinion so as to disclose grounds upon which the trial court reached its determination." 22 In this jurisdiction, pursuant to Section 9 of Article X of the Constitution and the procedural rules, all judgments determining the merits of cases should state clearly and distinctly the facts and the law on which it is based. 23 There being no judgment, the present petition is, therefore, premature. Certainly, petitioner could move for the setting aside of the aforesaid Order of May 20, 1975 by the presentation of opposing affidavits showing that, other than the issue as to the amount or extent of damages, there is a genuine issue of fact on the carrier's liability.

ACCORDINGLY, the petition for certiorari with prohibition is dismissed, without special pronouncement as to costs. Fernando (Chairman), and Martin JJ., concur. Concepcion, Jr., is on leave.

Separate Opinions

BARREDO, J., concurring: I concur in the judgment dismissing the instant petition, but I believe it is necessary to emphasize that this decision does not mean that the Court is upholding the questioned order as the summary judgment prayed for by private respondents. Actually, the said order must be construed, despite its seemingly inaccurate tenor, as nothing but an interlocutory one holding that respondents have sufficiently established the bases for a summary judgment which will be rendered after the court has received and duly evaluated the evidence as to the amount of damages that should be awarded to them for their counterclaim. Indeed, it is opportune for the Court to clear up in this case some points in summary judgment procedure which by all means should be encouraged whenever appropriate, regardless of the nature of the cause of action involved, if summary judgment procedure which has been purposely designed to abbreviate proceedings in cases where the issues are not genuine is to continue to have any place at all in the Rules of Court. The trouble is that there is such a lamentable dearth of knowledge not only of the concept but also of the procedure contemplated that in actual practice: in the few instances it has been resorted to, the results have been rather disappointing, almost frustrating. To start with, there is the usual error of equating summary judgment with judgment on the pleadings. Very often, it is contended that because the allegations in the pleadings give rise to triable issues of fact, summary judgment is not proper. In other words, it is assumed that just because there is a joining of the factual issues in the pleadings which, by the way, are not under oath, necessarily a trial with presentation of evidence by both parties is called for. But such criterion is true only for denying a motion for judgment on the pleadings, certainly not for summary judgment. For the basic reason for judgment on the pleadings is that the allegations in the pleadings of the contending parties show that there is no controversy at all between them as to the facts, which is not the reason behind summary judgments. In summary judgment procedure, it is assumed precisely that in their pleadings, the parties have joined issues on the ultimate facts, at least, but just the same, trial is foreclosed because the factual issues thus joined do not appear to be genuine, meaning to say, they are not real but sham. And a factual issue raised by a party is considered as sham when by its nature it is evident that it cannot be proven or it is such that the party tendering the same has neither any sincere intention nor adequate evidence to prove it. This usually happens in denials made by defendants merely for the sake of having an issue and thereby gaining delay, taking advantage of the fact that their answers are not under oath anyway. On that score, the problem that is apparently troubling the trial courts and the practitioners and which has brought about the confusion underlying the seeming reluctance, if not

inability, of some courts to resort to summary judgment procedure is how to determine that the factual issues in a given case and referred to in the motion for summary judgment are genuine or not. It is my impression after forty years in the bar that it is not yet clear to everyone concerned that such determination is not supposed to be based on the tenor or contents of the pleadings. It is only from the consideration and appraisal of the facts alleged under oath by the parties and/or their witnesses in their affidavits submitted with the motion and the corresponding opposition that such genuineness may and should be determined. Of course, the function of examining and weighing the said affidavits for the purpose just indicated can be properly performed only by one who is thoroughly prepared, both in theory and in practice, more particularly the latter. The precise objective in such undertaking is to find out, from a general consideration of all the detailed facts stated in the affidavits taken together, whether or not the denial by one party of the truth of the allegations of the adversary is such that it would be safe to conclude from the fact of said affidavits that ultimately, one of them will necessarily prevail. In this connection, it goes without saying that the facts that should be stated in the affidavits must be specific and categorical, and not merely general and equivocal. Should the court feel that in the light of such facts, assuming their veracity, the actual reception of evidence would be superfluous because even the general thrust alone is definitely in favor of the moving party, then it is obvious that a summary judgment may be rendered. In the main, whether or not the court should decide in favor of either a summary judgment or a full-blown trial lies in the sound discretion of the trial judge, it being understood that he has fully imbibed the basic objective of the remedy, namely, to do away with unnecessary trial as long as this can be done without causing injustice to any of the parties. He must not avoid trial just because it involves more work and time, but, on the other hand, he must not waste time and effort in receiving evidence, where, on the basis of the affidavits and counteraffidavits before him, the result is already a foregone conclusion or indubitably predictable. In case of doubt, it is, of course, preferable to hold a trial, in which event, he and the parties, under his guidance, may as far as practicable make use of such portions of the affidavits and counter-affidavits as would conduce to the abbreviation of the proceedings. And this may be best accomplished at the pre-trial, which, to my mind, is not indispensable before summary judgment procedure may be started. In other words, a motion for summary judgment, particularly that of a defendant before filing his answer, precludes the necessity of a prior pre-trial; it is after an attempt to secure summary judgment fails that a pre-trial is not only mandatory but more appropriate. The foregoing discussion should make it plain that when the party against whom a summary judgment is asked fails to submit counter- affidavits to support the opposition and, on the other hand, the facts alleged by the moving party, confirmed in the sworn statements submitted with the motion, do not appear to be by their very nature false or not susceptible to proof, a summary judgment is reasonably, if not undeniably, proper. And such is the situation in the case at bar. The fundamental theory of petitioner's complaint is that as common carriers, the respondents were by contract and law obliged to conduct his wife safely to her destination, and having failed to do so, because as a result of the collision of the vehicle, owned by respondents, in which she was a passenger, with another vehicle, she suffered injuries which caused her death, the legal presumption is that they failed to exercise the degree of extraordinary diligence the law requires in the premises. Such presumption invoked is, however, one of fact that is subject to rebuttal by actual proof to the contrary. Now, petitioner's invocation of the presumption was countered in respondents' motion for summary judgment thru ("the affidavits and other pertinent annexes, Annexes 1 to 6)", which on their face tend to show that respondents' vehicle carrying petitioner's wife was travelling with due care on its proper side of the road and it was because of the collision of two vehicles at the intersection of C. M. Recto and Bonifacio streets that one of them was

suddenly and unexpectedly diverted to the lane of respondents' vehicle, thus hitting the same without any fault at all of their driver. This factual rebuttal of the factual presumption of the law in favor of the petitioner was not met by any counter-affidavit indicating that there was in actual fact some degree of negligence on the part of respondents' driver. Under these circumstances, it would appear that contrary to the presumption aforementioned, respondents have succeeded in proving by means of the above- mentioned six annexes that the cause of the injuries suffered by petitioner's wife was not any kind or degree of negligence on the part of respondents or their driver, but the negligence of a third-party which was unforseen and inevitable, hence a force majeure or an act of God. Such being the case, it would also appear that respondents are entitled as a matter of law to be absolved from any obligation to pay damages to petitioner. While such seems to be the present situation of the case below, I hasten to add that, considering that petitioner's wife was an innocent passenger who could not have contributed in any way to the cause of the tragedy that befell her, it still lies in the hands of respondent court to do justice to petitioner, her widowed husband. Indeed, fortunately for petitioner, respondent court's order of May 20, 1975 he is impugning is not in reality and in law a final judgment yet. It is merely an interlocutory order which does not preclude further procedural measures which will enable petitioner to secure relief. The main opinion spells this matter out quite clearly. To more precise, it is still within the sound discretion of the trial court, in the light of the peculiar circumstances of this case where counsel for petitioner might have overly relied on the factual presumption of negligence of common carriers, apparently equating the same with a legal presumption, and for this reason omitted to file counter-affidavits, and, what is more probable, counsel happens to be among those who have not resorted to summary judgment procedure and hence is not very proficient relative thereto, to consider the possibility of allowing petitioner to file the corresponding counter affidavit or affidavits needed to compel a trial and the corresponding setting aside of the order in question. If this should not be feasible because there might not be adequate means of showing that respondents or their driver failed to exercise extraordinary diligence in the face of the unexpected swerving into the lane of their vehicle of the pick-up truck that hit it, it would not yet be too late to allow the petitioner to amend his complaint in order to implead alternatively the owners and drivers of the other two vehicles that featured in the incident in question, thereby insuring as the facts may warrant relief to petitioner, if not from respondents, from the other parties whom the court may find to have been at fault. And with particular reference to the respondents' counterclaim, it may not be out of place for respondent judge to take into account that the peculiar and unique relationship between a common carrier and its passengers is such that in case of injury to the latter, to claim against the former is reasonably the first recourse, and it is only where the common carrier proves exercise of extraordinary diligence that he is relieved of liability, and, accordingly, an award for damages to the carrier for supposed filing of a totally unfounded suit can hardly be fair and just, unless actual malice on the part of the passenger or his or her heirs is clearly evident. Summarizing, I hold that, as explained above, the questioned order is not entirely erroneous but only improperly worded and therefore certiorari does not lie against respondent court on the basis thereof. I also hold that said order is merely an interlocutory one and is not a final appealable judgment. As an order declaring the propriety of a summary judgment, it should not have been worded as "decreeing that defendants have judgment summarily against plaintiff", for the real summary judgment is not only supposed to be rendered after the proof of damages shall have been presented, but it should also state clearly and distinctly the facts and the law on which it is based, a constitutional requirement which a court of record is not

relieved from complying even when the judgment it renders is a summary one pursuant to Rule 34. Upon these premises, I vote to dismiss the petition. In addition, I hold that upon the resumption of the proceedings in the court below, respondent Court should look into the procedural possibilities discussed above to the end that the loss suffered by petitioner as a result of the tragic death of his wife may not be left without relief from the party at fault merely because of the procedural missteps that have taken place in the past proceedings before it. The main objective of the rules of procedure is to provide the steps by which a party suffering a legal wrong may secure relief from the courts, and in the instances where the particular pertinent rules are themselves rather indefinite and the possibility of miscomprehending the same is not remote, it would be a travesty of justice to allow said rules to be successfully invoked to prevent redress altogether. Worse, in the instant case, the order in controversy, inaccurate in its tenor as it is, because it is based on an inadequate comprehension of the pertinent rules, which to be sure are not themselves clearly definite, would even augment petitioner's loss by making him liable for damages to respondents, just because his lawyer has misapprehended the situation as well as the applicable rules. Such a result cannot be but shocking to the conscience. AQUINO, J., concurring: I concur in the result. Gregorio Estrada acted on the assumption that the lower court's order of May 20, 1975 is either a summary judgment or an order of dismissal. He appealed from that order under Republic Act No. 5440. Since it is clearly pointed out in the decision that the said interlocutory order is not appealable and that Estrada could still move to have it set aside, I agree that the petition for review herein is not in order. The said order is erroneous and unjust. Summary judgment is not warranted in Civil Case No. 8739. It is ironical that Estrada, as plaintiff, would, by reason of that order, be the one held liable for damages to the defendants whom he (plaintiff) had sued for damages in utmost good faith. The trial judge acted rather hastily in rendering summary judgment. The defendants filed an answer with counterclaim dated March 12, 1975. On April 16, 1975 or a few weeks later, the defendants filed a motion for summary judgment. The record does not show whether the case was set for pre-trial. Pre-trial is mandatory (Sec. 1, Rule 20, Rules of Court). It is true that during the pre-trial the court may explore the advisability of rendering summary judgment (Ibid, sec. 3). But the fact remains that in the proceedings below the trial court without holding a pre-trial immediately proceeded to consider the rendition of a summary judgment. The amendment of the complaint for the purpose of impleading the drivers and owners of the two pick-up trucks and to enable Estrada to rely alternatively on a cause of action for delict or quasi-delict was never considered. Also not considered in the pre-trial (for there was no pre-trial) nor in the said order, which in effect dismissed the complaint, was the possibility that the petitioner's remedy is to intervene in Criminal Case No. 8099-B of the City Court, Davao City and to claim civil liability for the death of his wife. The order in question was not proper because there is a genuine triable issue in the pleadings. That factual issue is whether Corazon Ramirez Uy, the owner of the jeepney, as a common carrier, complied with her obligation of carrying the deceased passenger, Simeona

Estrada, "safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances." The trial of that issue was not foreclosed by the sketch made by the traffic investigator and by his affidavit, the sworn statements of the drivers of the pickup trucks and the sworn statement of the carrier's driver, all of which are hearsay as far as Estrada is concerned.

Separate Opinions BARREDO, J., concurring: I concur in the judgment dismissing the instant petition, but I believe it is necessary to emphasize that this decision does not mean that the Court is upholding the questioned order as the summary judgment prayed for by private respondents. Actually, the said order must be construed, despite its seemingly inaccurate tenor, as nothing but an interlocutory one holding that respondents have sufficiently established the bases for a summary judgment which will be rendered after the court has received and duly evaluated the evidence as to the amount of damages that should be awarded to them for their counterclaim. Indeed, it is opportune for the Court to clear up in this case some points in summary judgment procedure which by all means should be encouraged whenever appropriate, regardless of the nature of the cause of action involved, if summary judgment procedure which has been purposely designed to abbreviate proceedings in cases where the issues are not genuine is to continue to have any place at all in the Rules of Court. The trouble is that there is such a lamentable dearth of knowledge not only of the concept but also of the procedure contemplated that in actual practice: in the few instances it has been resorted to, the results have been rather disappointing, almost frustrating. To start with, there is the usual error of equating summary judgment with judgment on the pleadings. Very often, it is contended that because the allegations in the pleadings give rise to triable issues of fact, summary judgment is not proper. In other words, it is assumed that just because there is a joining of the factual issues in the pleadings which, by the way, are not under oath, necessarily a trial with presentation of evidence by both parties is called for. But such criterion is true only for denying a motion for judgment on the pleadings, certainly not for summary judgment. For the basic reason for judgment on the pleadings is that the allegations in the pleadings of the contending parties show that there is no controversy at all between them as to the facts, which is not the reason behind summary judgments. In summary judgment procedure, it is assumed precisely that in their pleadings, the parties have joined issues on the ultimate facts, at least, but just the same, trial is foreclosed because the factual issues thus joined do not appear to be genuine, meaning to say, they are not real but sham. And a factual issue raised by a party is considered as sham when by its nature it is evident that it cannot be proven or it is such that the party tendering the same has neither any sincere intention nor adequate evidence to prove it. This usually happens in denials made by defendants merely for the sake of having an issue and thereby gaining delay, taking advantage of the fact that their answers are not under oath anyway. On that score, the problem that is apparently troubling the trial courts and the practitioners and which has brought about the confusion underlying the seeming reluctance, if not inability, of some courts to resort to summary judgment procedure is how to determine that the factual issues in a given case and referred to in the motion for summary judgment are

genuine or not. It is my impression after forty years in the bar that it is not yet clear to everyone concerned that such determination is not supposed to be based on the tenor or contents of the pleadings. It is only from the consideration and appraisal of the facts alleged under oath by the parties and/or their witnesses in their affidavits submitted with the motion and the corresponding opposition that such genuineness may and should be determined. Of course, the function of examining and weighing the said affidavits for the purpose just indicated can be properly performed only by one who is thoroughly prepared, both in theory and in practice, more particularly the latter. The precise objective in such undertaking is to find out, from a general consideration of all the detailed facts stated in the affidavits taken together, whether or not the denial by one party of the truth of the allegations of the adversary is such that it would be safe to conclude from the fact of said affidavits that ultimately, one of them will necessarily prevail. In this connection, it goes without saying that the facts that should be stated in the affidavits must be specific and categorical, and not merely general and equivocal. Should the court feel that in the light of such facts, assuming their veracity, the actual reception of evidence would be superfluous because even the general thrust alone is definitely in favor of the moving party, then it is obvious that a summary judgment may be rendered. In the main, whether or not the court should decide in favor of either a summary judgment or a full-blown trial lies in the sound discretion of the trial judge, it being understood that he has fully imbibed the basic objective of the remedy, namely, to do away with unnecessary trial as long as this can be done without causing injustice to any of the parties. He must not avoid trial just because it involves more work and time, but, on the other hand, he must not waste time and effort in receiving evidence, where, on the basis of the affidavits and counteraffidavits before him, the result is already a foregone conclusion or indubitably predictable. In case of doubt, it is, of course, preferable to hold a trial, in which event, he and the parties, under his guidance, may as far as practicable make use of such portions of the affidavits and counter-affidavits as would conduce to the abbreviation of the proceedings. And this may be best accomplished at the pre-trial, which, to my mind, is not indispensable before summary judgment procedure may be started. In other words, a motion for summary judgment, particularly that of a defendant before filing his answer, precludes the necessity of a prior pre-trial; it is after an attempt to secure summary judgment fails that a pre-trial is not only mandatory but more appropriate. The foregoing discussion should make it plain that when the party against whom a summary judgment is asked fails to submit counter-affidavits to support the opposition and, on the other hand, the facts alleged by the moving party, confirmed in the sworn statements submitted with the motion, do not appear to be by their very nature false or not susceptible to proof, a summary judgment is reasonably, if not undeniably, proper. And such is the situation in the case at bar. The fundamental theory of petitioner's complaint is that as common carriers, the respondents were by contract and law obliged to conduct his wife safely to her destination, and having failed to do so, because as a result of the collision of the vehicle, owned by respondents, in which she was a passenger, with another vehicle, she suffered injuries which caused her death, the legal presumption is that they failed to exercise the degree of extraordinary diligence the law requires in the premises. Such presumption invoked is, however, one of fact that is subject to rebuttal by actual proof to the contrary. Now, petitioner's invocation of the presumption was countered in respondents' motion for summary judgment thru ("the affidavits and other pertinent annexes, Annexes 1 to 6)", which on their face tend to show that respondents' vehicle carrying petitioner's wife was travelling with due care on its proper side of the road and it was because of the collision of two vehicles at the intersection of C. M. Recto and Bonifacio streets that one of them was suddenly and unexpectedly diverted to the lane of respondents' vehicle, thus hitting the same without any fault at all of their driver. This factual rebuttal of the factual presumption of

the law in favor of the petitioner was not met by any counter-affidavit indicating that there was in actual fact some degree of negligence on the part of respondents' driver. Under these circumstances, it would appear that contrary to the presumption aforementioned, respondents have succeeded in proving by means of the above-mentioned six annexes that the cause of the injuries suffered by petitioner's wife was not any kind or degree of negligence on the part of respondents or their driver, but the negligence of a third-party which was unforseen and inevitable, hence a force majeure or an act of God. Such being the case, it would also appear that respondents are entitled as a matter of law to be absolved from any obligation to pay damages to petitioner. While such seems to be the present situation of the case below, I hasten to add that, considering that petitioner's wife was an innocent passenger who could not have contributed in any way to the cause of the tragedy that befell her, it still lies in the hands of respondent court to do justice to petitioner, her widowed husband. Indeed, fortunately for petitioner, respondent court's order of May 20, 1975 he is impugning is not in reality and in law a final judgment yet. It is merely an interlocutory order which does not preclude further procedural measures which will enable petitioner to secure relief. The main opinion spells this matter out quite clearly. To more precise, it is still within the sound discretion of the trial court, in the light of the peculiar circumstances of this case where counsel for petitioner might have overly relied on the factual presumption of negligence of common carriers, apparently equating the same with a legal presumption, and for this reason omitted to file counter-affidavits, and, what is more probable, counsel happens to be among those who have not resorted to summary judgment procedure and hence is not very proficient relative thereto, to consider the possibility of allowing petitioner to file the corresponding counter affidavit or affidavits needed to compel a trial and the corresponding setting aside of the order in question. If this should not be feasible because there might not be adequate means of showing that respondents or their driver failed to exercise extraordinary diligence in the face of the unexpected swerving into the lane of their vehicle of the pick-up truck that hit it, it would not yet be too late to allow the petitioner to amend his complaint in order to implead alternatively the owners and drivers of the other two vehicles that featured in the incident in question, thereby insuring as the facts may warrant relief to petitioner, if not from respondents, from the other parties whom the court may find to have been at fault. And with particular reference to the respondents' counterclaim, it may not be out of place for respondent judge to take into account that the peculiar and unique relationship between a common carrier and its passengers is such that in case of injury to the latter, to claim against the former is reasonably the first recourse, and it is only where the common carrier proves exercise of extraordinary diligence that he is relieved of liability, and, accordingly, an award for damages to the carrier for supposed filing of a totally unfounded suit can hardly be fair and just, unless actual malice on the part of the passenger or his or her heirs is clearly evident. Summarizing, I hold that, as explained above, the questioned order is not entirely erroneous but only improperly worded and therefore certiorari does not lie against respondent court on the basis thereof. I also hold that said order is merely an interlocutory one and is not a final appealable judgment. As an order declaring the propriety of a summary judgment, it should not have been worded as "decreeing that defendants have judgment summarily against plaintiff", for the real summary judgment is not only supposed to be rendered after the proof of damages shall have been presented, but it should also state clearly and distinctly the facts and the law on which it is based, a constitutional requirement which a court of record is not relieved from complying even when the judgment it renders is a summary one pursuant to Rule 34. Upon these premises, I vote to dismiss the petition.

In addition, I hold that upon the resumption of the proceedings in the court below, respondent Court should look into the procedural possibilities discussed above to the end that the loss suffered by petitioner as a result of the tragic death of his wife may not be left without relief from the party at fault merely because of the procedural missteps that have taken place in the past proceedings before it. The main objective of the rules of procedure is to provide the steps by which a party suffering a legal wrong may secure relief from the courts, and in the instances where the particular pertinent rules are themselves rather indefinite and the possibility of miscomprehending the same is not remote, it would be a travesty of justice to allow said rules to be successfully invoked to prevent redress altogether. Worse, in the instant case, the order in controversy, inaccurate in its tenor as it is, because it is based on an inadequate comprehension of the pertinent rules, which to be sure are not themselves clearly definite, would even augment petitioner's loss by making him liable for damages to respondents, just because his lawyer has misapprehended the situation as well as the applicable rules. Such a result cannot be but shocking to the conscience. AQUINO, J., concurring: I concur in the result. Gregorio Estrada acted on the assumption that the lower court's order of May 20, 1975 is either a summary judgment or an order of dismissal. He appealed from that order under Republic Act No. 5440. Since it is clearly pointed out in the decision that the said interlocutory order is not appealable and that Estrada could still move to have it set aside, I agree that the petition for review herein is not in order. The said order is erroneous and unjust. Summary judgment is not warranted in Civil Case No. 8739. It is ironical that Estrada, as plaintiff, would, by reason of that order, be the one held liable for damages to the defendants whom he (plaintiff) had sued for damages in utmost good faith. The trial judge acted rather hastily in rendering summary judgment. The defendants filed an answer with counterclaim dated March 12, 1975. On April 16, 1975 or a few weeks later, the defendants filed a motion for summary judgment. The record does not show whether the case was set for pre-trial. Pre-trial is mandatory (Sec. 1, Rule 20, Rules of Court). It is true that during the pre-trial the court may explore the advisability of rendering summary judgment (Ibid, sec. 3). But the fact remains that in the proceedings below the trial court without holding a pre-trial immediately proceeded to consider the rendition of a summary judgment. The amendment of the complaint for the purpose of impleading the drivers and owners of the two pick-up trucks and to enable Estrada to rely alternatively on a cause of action for delict or quasi-delict was never considered. Also not considered in the pre-trial (for there was no pre-trial) nor in the said order, which in effect dismissed the complaint, was the possibility that the petitioner's remedy is to intervene in Criminal Case No. 8099-B of the City Court, Davao City and to claim civil liability for the death of his wife. The order in question was not proper because there is a genuine triable issue in the pleadings. That factual issue is whether Corazon Ramirez Uy, the owner of the jeepney, as a common carrier, complied with her obligation of carrying the deceased passenger, Simeona Estrada, "safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances."

The trial of that issue was not foreclosed by the sketch made by the traffic investigator and by his affidavit, the sworn statements of the drivers of the pickup trucks and the sworn statement of the carrier's driver, all of which are hearsay as far as Estrada is concerned. ! ! Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. L-49668 November 14, 1989 POLICARPIO, LUCIO, JULIAN, CATALINO, BONIFACIO, CONRADA, DOMINGO, PAQUITA, AND LILIA, ALL SURNAMED GALICIA, petitioners, vs. THE HON. WENCESLAO M. POLO, in his capacity as Presiding Judge, CFI, Branch V, Samar (Calbayog City), ZOSIMA PALAJOS, TITING LISTOJAS, ALFREDO PALAJOS, MANUELITO ROSIALDA, respondents. Mateo M. Leanda for petitioners. Zosimo Santiago for private respondents.

BIDIN, J.: This is a petition for review on certiorari seeking to set aside the summary judgment entered by the then Court of First Instance of Samar, Br. V in Civil Case No. 758-CC entitled, "Policarpio, Lucio, Julian, Catalino, Bonifacio, Conrada, Domingo, Paquita and Lilia, all surnamed Galicia v. Zosima Palajos, Titing Listojas, Alfredo Palajos and Manuelito Rosialda" and to order the trial court to try the above-cited case on the merits. The facts are undisputed. On December 15, 1973. a complaint for forcible entry (Civil Case No. 56) entitled "Amancio Palajos v. Policarpio, Perfecto, Victorio Julian and Eduardo, all surnamed Galicia," was filed in the Municipal Court of Almagro, Samar, alleging that Amancio Palajos is the owner and in actual possession of a parcel of land located at Bacjao, Almagro, Samar, more particularly described as follows: A parcel of land with an area of about 4-88-00 hectares, more or less, assessed at P 360.00 as per Tax Declaration No. 8547 in the name of Juan Palajos, it is, however, 14.2860 hectares as per approved survey plan, the boundaries of which are: N Pedro Galicia and the Poblacion of Barrio Bacjao; S Emilio Carpon, Magno Suico and Teresa Subito; and W Bernardo Ballarante and Cenon S. Aguilar.

which he acquired by way of donation from his father, Juan Palajos. It is further alleged that defendants (petitioners herein) forcibly entered the northeastern portion of the said property covering an area of about 1 1/2 hectares. The trial of the case was set several times but was postponed at the instance of defendants (petitioners herein). For the fifth time, i.e., on July 19, 1974, neither the defendants nor counsel appeared. Accordingly, the court granted a trial ex parte on motion of plaintiffs counsel (Rollo, p. 24). Subsequently, the municipal trial court rendered judgment against defendants (petitioners herein), the dispositive portion of which reads: WHEREFORE, this Court hereby renders judgment ordering defendants Policarpio Galicia, Perfecto Galicia, Victorio Galicia, Julian Galicia and Eduarda Galicia to restore to plaintiff Amancio Palajos the portion of land described in par. 4 of the plaintiffs complaint consisting of one and one-half hectares and which is the northeastern portion of land under Tax Dec. No. 8547 as described in paragraph 2 thereof, ordering the defendants to pay to plaintiff a monthly rental in the amount of FIFTY PESOS (P 50.00) on the premises in question for its use and occupation from September, 1973, up to the time when said premises is finally restored to the plaintiff, and to pay the costs. SO ORDERED. On September 28, 1974, defendants filed a motion for reconsideration and to grant a new trial but was denied in an Order dated October 24, 1974 (Rollo, p. 28). On November 12, 1974, defendants filed a notice of appeal but the same was likewise denied by the trial court on the ground that it was filed beyond the reglementary period of fifteen (15) days to perfect an appeal. For failure of the defendants to pay the rentals adjudged in the forcible entry case (CC No. 56), a writ of execution was issued and after levy, the deputy sheriff of Calbayog City, on August 4, 1976, sold at public auction the real property owned by petitioners' deceased father adjoining the land subject of the forcible entry case more particularly described as follows: A piece of real estate consisting of coconut and cornland situated at Bo. Bacjao, Almagro, Samar, Philippines, bounded on the NORTH, by Isabelo Palajos; on the SOUTH, by Narciso Pajalino; and on the WEST, by Seashore, containing an area of 2-60-00 hectares, more or less assessed at P180.00, under Tax Declaration No. 12048, in the name of Pedro Galicia (deceased); (Rollo, p. 30). On October 10, 1977, or over 14 months after the execution sale, petitioners filed a complaint for Ownership and Damages against herein respondents in the then Court of First Instance of Samar, 13th Judicial District, Br. V, docketed as Civil Case No. 758-CC, alleging that they are co-owners of a certain parcel of agricultural land (subject of the auction sale) which they inherited from their deceased father, Pedro Galicia, more particularly described as follows:

A parcel of coconut and corn land located at Bacjao, Almagro, Samar, Philippines, with an area of 26,000 sq. m. and bounded on the NORTH, by Isabelo Palajos; SOUTH, by Narciso Pauline; EAST, by Benedicto Paulino and WEST, by Seashore covered by Tax Declaration No. 12048 in the name of Pedro Galicia. The complaint further alleged that pursuant to Civil Case No. 56 (forcible entry case), respondents were able to take possession of the land in question as said case was heard exparte; and that a decision was rendered in respondents' favor and said decision was executed sometime in 1976 (Rollo, p. 36-37). In their Answer, respondents (defendants below) countered that they were able to take possession of the land described in the complaint by virtue of the decision and later, execution of the decision in the forcible entry case, which, by petitioners' (plaintiffs below) averment in their complaint is an admission of an existing judgment that would constitute res judicata; that they are the lawful owners of the disputed land the same having been subjected to levy and execution in 1975 thru a sale in favor of respondents' predecessor-ininterest, Juan Palajos. The issues having been enjoined, the case was set for pre-trial by respondent judge Hon. Wenceslao M. Polo. At the pre-trial, counsel for private respondents moved for time within which to file a motion for summary judgment which was granted by respondent judge in his order dated June 28, 1978. Defendants' (private respondents herein) motion for summary judgment was filed on July 7, 1978 (Rollo, p. 43) alleging that no genuine issue exists in the case at bar after the pre-trial was conducted and admission of facts were had (Rollo, p. 44), while plaintiffs (petitioners herein) filed their opposition to the motion for summary judgment dated July 17, 1978 alleging among others, that genuine issues exist (Rollo, pp. 45-47). On August 11, 1978, the court a quo rendered the assailed summary judgment dismissing petitioners' complaint (Rollo, p. 48-53), the pertinent portion of which reads: As demonstrated by the parties, there is no question that the land in dispute is that parcel described in paragraph 3 of the complaint, a portion of which was a subject in a forcible entry case before the Municipal Trial Court of Almagro Samar (Exhibit 1, 2 and 3) with the defendants now as sucessors-ininterest of the plaintiff, and most of the herein plaintiffs as defendants. The pleadings also show that upon the death of the primitive owner, Pedro Galicia, the plaintiffs as children and grandchildren possessed and owned this land pro-indiviso, until the possession of said portion was transferred to the defendants when the decision in that forcible entry case was executed in 1976 (Exhibit 7) such being the case, therefore, with respect to this portion of the land in dispute, the possession is settled, which would constitute as a bar to this action. xxx xxx xxx With respect to the other portion of the land in dispute, the plaintiffs admit that possession was transferred to the defendant by virtue of a sale executed by the sheriff; the one year period having elapsed without exercising their

right of redemption, as a result a final deed of sale was issued. The legality of the sale not having been assailed by them, for all intents and purposes, ownership on this land have been vested on the defendants as heirs of Juan Palajos. WHEREFORE, premises above considered, judgment is hereby rendered ordering the dismissal of the plaintiffs' complaint, without pronouncement as to cost." A motion to re-open the case for trial on the merits was filed by plaintiffs but was denied in an order dated November 27, 1978 (Rollo, p. 62). Hence, this instant petition. Petitioners contend that the trial court erred when it decided Civil Case No. 758-CC by summary judgment when there are several genuine issues involved therein which require a trial of these issues on the merits, such as: (A) WAS THE EXECUTION SALE CONDUCTED BY DEPUTY PROVINCIAL SHERIFF EUFROCINO T. OLIFERNES OF LOT NO. 1363 OF THE LATE PEDRO GALICIA, PETITIONERS' FATHER, VALID TO CONFER UPON THE DEFENDANTS IN SAID CASE A JUST TITLE OVER SAID REALTY? (B) WERE THE UNDIVIDED SHARES AND PARTICIPATIONS OF JULIAN GALICIA AND CATALINO GALICIA WHO WERE TWO OF THE LEGITIMATE CHILDREN OF PEDRO GALICIA NOT IMPLEADED AS PARTIES IN CIVIL CASE NO. 56 IN THE MUNICIPAL COURT OF ALMAGRO OVER LOT NO. 1363, AFFECTED BY THAT EXECUTION SALE? (C) WERE THE UNDIVIDED SHARES AND PARTICIPATIONS OF EDUARDA GALICIA AND PERFECTO GALICIA OVER LOT NO. 1363, BUT WHO WERE NOT IMPLEADED AS PARTIES IN CIVIL CASE NO. 758-CC OF THE COURT OF FIRST INSTANCE OF SAMAR (CALBAYOG CITY) AFFECTED BY THE DECISION OF THE LATTER COURT OF SUMMARY JUDGMENT? (Rollo, p. 10). The crucial issue in this case is whether or not the trial court erred when it decided Civil Case No. 758-CC by summary judgment. It is the contention of petitioners that the trial court erred in deciding their complaint (CC No. 758-CC) by summary judgment when there are several genuine issues involved therein which require a full trial on the merits. Among other things, petitioners contend that the execution sale conducted by the Deputy Provincial Sheriff was null and void and would have merited a trial on the merits. Moreover, it is further contended that as between Civil Case No. 56 and Civil Case No. 758-CC, there can be no res judicata, considering that there is no Identity of parties, cause of action and subject matter between the two actions. After a thorough review of the records, the Court finds no cogent reason to disturb the summary judgment rendered by respondent judge. The Rules of Court authorizes the rendition of summary judgment if the pleadings, depositions and admissions on file together with the affidavits, show that, except as to the amount of damages, there is no issue as to any material fact and that the moving party is

entitled to a judgment as a matter of law (Sec. 3, Rule 34). Conversely, summary judgment is not proper where the pleadings tender vital issues the resolution of which call for the presentation of evidence (Villanueva v. NAMARCO, 28 SCRA 729 [1969]; Guevarra, et al., v. CA, et al., 124 SCRA 297 [1983]). Summary judgment "is a device for weeding out sham claims or defenses at an early stage of the litigation, thereby avoiding the expense and loss of time involved in a trial. The very object is 'to separate what is formal or pretended in denial or averment from what is genuine and substantial, so that only the latter may subject a suitor to the burden of trial.' The test, therefore, of a motion for summary judgment is-whether the pleadings, affidavits, and exhibits in support of the motion are sufficient to overcome the opposing papers and to justify a finding as a matter of law that there is no defense to the action or the claim is clearly meritorious" (Estrada v. Hon. Consolacion, et al., 71 SCRA 523 [1976]). In addition, summary judgment is one of the methods sanctioned in the present Rules of Court for a prompt disposition of civil actions wherein there exists no serious controversy. The procedure may be availed of not only by claimants, but also by defending parties who may be the object of unfounded claims. A motion for summary judgment assumes that scrutinizing the facts will disclose that the issues presented by the pleadings need not be tried because they are so patently unsubstantial as not to be genuine issues, or that there is no genuine issue as to any material facts or where the facts appear undisputed and certain from the pleadings, depositions, admissions and affidavits (Singleton v. Philippine Trust Co., 99 Phil, 91 [1956], cited in Bayang v. CA, 148 SCRA 91 [1987]). Examining petitioners' complaint, the Court finds that the disputed property is the same parcel of land, which adjoins private respondents' lot which was the subject of the forcible entry case and from which petitioners were ordered to vacate. When petitioners (then defendants), failed to satisfy the rentals adjudged in the forcible entry case, said adjoining parcel of land was sold at public auction to Juan Palajos (respondents' predecessor-ininterest) as the higher bidder in the execution sale to satisfy the monetary judgment rendered therein. The property so described in petitioners' complaint (Rollo, p. 36) squarely fits what has been levied upon and sold at public auction (Rollo, p. 30), the owners of which are now private respondents upon the demise of their predecessor-in-interest. There is thus no question that issue of ownership of the disputed land subject of the present petition has long been foreclosed in the forcible entry case which culminated in the public auction sale of the parcel of land now sought to be recovered. Having failed to redeem the property sold at the public auction sale within the reglementary period of twelve (12) months (Sec. 30, Rule 39 of the Rules of Court), petitioners cannot now claim that they still own said property. Petitioners' complaint for Ownership and Damages is but a belated and disguised attempt to revive a judgment debtors' right of redemption which has long expired. There being no issue as to any material fact raised in the pleadings, summary judgment may be rendered. Neither can the issue of the validity of the execution sale help petitioners' cause. Well-settled in this jurisdiction, is the rule that issues not raised and/or ventilated in the lower court cannot be raised for the first time on appeal (Rebodos v. WCC, 6 SCRA 717 [1962]; DBP v. CA, 116 SCRA 636 and a long line of cases). A review of the records of the case shows that petitioners failed to directly assail and raise as issue, the validity of the aforementioned auction sale in their complaint. It was only when the respondent judge noted such omission in his decision dismissing Civil Case No. 758-CC dated August 11, 1978 (Rollo, p. 48-53) that petitioners later filed a separate action for Annulment of Auction Sale and Damages on

October 4, 1978 (Civil Case No. 837-CC; Rollo, p. 31-35). The validity of the execution sale not having been raised and/or litigated in the case subject of the present appeal, the Court, at this stage, cannot pass upon the same for the purpose of determining the propriety of the summary judgment. Objections to the execution sale cannot be considered in the Supreme Court inasmuch as it was not raised in the lower court (Ramiro v. Grano 54 Phil. 744 [1930]; citing Tan Machan v. de la Trinidad, 3 Phil. 684 [1904] and U.S. v. Inductive, 40 Phil. 84 [1919]). WHEREFORE, the instant petition is hereby DENIED for lack of merit. Costs against petitioners. SO ORDERED. Fernan, C.J., Gutierrez, Jr., Feliciano and Cortes, JJ., concur. ! ! Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 91779 February 7, 1991 GRAND FARMS, INC. and PHILIPPINE SHARES CORPORATION, petitioners, vs. COURT OF APPEALS, JUDGE ADRIAN R. OSORIO, as Presiding Judge of the Regional Trial Court, Branch 171, Valenzuela, Metro Manila; ESPERANZA ECHIVERRI, as Clerk of Court & Ex-Officio Sheriff of the Regional Trial Court of Valenzuela, Metro Manila; SERGIO CABRERA, as Deputy Sheriff-in-Charge; and BANCO FILIPINO SAVINGS AND MORTGAGE BANK, respondents. Balgos & Perez for petitioners. Sycip, Salazar, Hernandez & Gatmaitan for private respondent.

REGALADO, J.:p The propriety of a summary judgment is raised in issue in the instant petition, with herein petitioners appealing the decision 1 of respondent court in CA-G.R. SP No. 17535, dated November 29, 1989, which found no grave abuse of discretion on the part of respondent judge in denying petitioners' motion for summary judgment. 2 The antecedents of this case are clear and undisputed. Sometime on April 15, 1988, petitioners filed Civil Case No. 2816-V88 in the Regional Trial Court of Valenzuela, Metro

Manila for annulment and/or declaration of nullity of the extrajudicial foreclosure proceedings over their mortgaged properties, with damages, against respondents clerk of court, deputy sheriff and herein private respondent Banco Filipino Savings and Mortgage Bank. 3 Soon after private respondent had filed its answer to the complaint, petitioners filed a request for admission by private respondent of the allegation, inter alia, that no formal notice of intention to foreclose the real estate mortgage was sent by private respondent to petitioners. 4 Private respondent, through its deputy liquidator, responded under oath to the request and countered that petitioners were "notified of the auction sale by the posting of notices and the publication of notice in the Metropolitan Newsweek, a newspaper of general circulation in the province where the subject properties are located and in the Philippines on February 13, 20 and 28, 1988." 5 On the basis of the alleged implied admission by private respondent that no formal notice of foreclosure was sent to petitioners, the latter filed a motion for summary judgment contending that the foreclosure was violative of the provisions of the mortgage contract, specifically paragraph (k) thereof which provides: k) All correspondence relative to this Mortgage, including demand letters, summons, subpoena or notifications of any judicial or extrajudical actions shall be sent to the Mortgagor at the address given above or at the address that may hereafter be given in writing by the Mortgagor to the Mortgagee, and the mere act of sending any correspondence by mail or by personal delivery to the said address shall be valid and effective notice to the Mortgagor for all legal purposes, and the fact that any communication is not actually received by the Mortgagor, or that it has been returned unclaimed to the Mortgagee, or that no person was found at the address given, or that the address is fictitious, or cannot be located, shall not excuse or relieve the Mortgagor from the effects of such notice; 6 The motion was opposed by private respondent which argued that petitioners' reliance on said paragraph (k) of the mortgage contract fails to consider paragraphs (b) and (d) of the same contract, which respectively provide as follows: b) . . . For the purpose of extra-judicial foreclosure, the Mortgagor (plaintiff) hereby appoints the Mortgagee (BF) his attorney-in-fact to sell the property mortgaged, to sign all documents and perform any act requisite and necessary to accomplish said purpose and to appoint its substitutes as such attorney-in-fact, with the same powers as above-specified. The Mortgagor hereby expressly waives the term of thirty (30) days or any other term granted or which may hereafter be granted him by law as the period which must elapse before the Mortgagee shall be entitled to foreclose this mortgage, it being specifically understood and agreed that the said Mortgagee may foreclose this mortgage at any time after the breach of any conditions hereof. . . . xxx xxx xxx d) Effective upon the breach of any conditions of the mortgage and in addition to the remedies herein stipulated, the Mortgagee is hereby likewise

appointed attorney-in-fact of the Mortgagor with full powers and authority, with the use of force, if necessary, to take actual possession of the mortgaged property, without the necessity for any judicial order or any permission of power to collect rents, to eject tenants, to lease or sell the mortgaged property, or any part thereof, at public or private sale without previous notice or adverstisement of any kind and execute the corresponding bills of sale, lease or other agreement that may be deemed convenient, to make repairs or improvement to the mortgaged property and pay for the same and perform any other act which the Mortgagor may deem convenient . ..7 On February 27, 1989, the trial court issued an order, denying petitioners' motion for summary judgment. 8Petitioners' motion for reconsideration was likewise denied by respondent-judge on the ground that genuine and substantial issues exist which require the presentation of evidence during the trial, to wit: (a) whether or not the loan has matured; (b) whether or not private respondent notified petitioners of the foreclosure of their mortgage; (c) whether or not the notice by publication of the foreclosure constitutes sufficient notice to petitioners under the mortgage contract; (d) whether or not the applicant for foreclosure of the mortgage was a duly authorized representative of private respondent; and (e) whether or not the foreclosure was enjoined by a resolution of this Court. 9 Petitioners thereafter went on a petition for certiorari to respondent court attacking said orders of denial as having been issued with grave abuse of discretion. As earlier adverted to, respondent court dismissed the petition, holding that no personal notice was required to foreclose since private respondent was constituted by petitioners as their attorney-in-fact to sell the mortgaged property. It further held that paragraph (k) of the mortgage contract merely specified the address where correspondence should be sent and did not impose an additional condition on the part of private respondent to notify petitioners personally of the foreclosure. Respondent court also denied petitioners motion for reconsideration, hence the instant petition. We rule for petitioners. The Rules of Court authorize the rendition of a summary judgment if the pleadings, depositions and admissions on file, together with the affidavits, show that, except as to the amount of damages, there is no issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. 10 Although an issue may be raised formally by the pleadings but there is no genuine issue of fact, and all the facts are within the judicial knowledge of the court, summary judgment may be granted. 11 The real test, therefore, of a motion for summary judgment is whether the pleadings, affidavits and exhibits in support of the motion are sufficient to overcome the opposing papers and to justify a finding as a matter of law that there is no defense to the action or that the claim is clearly meritorious. 12 Applying said criteria to the case at bar, we find petitioners' action in the court below for annulment and/or declaration of nullity of the foreclosure proceedings and damages ripe for summary judgment. Private respondent tacitly admitted in its answer to petitioners' request for admission that it did not send any formal notice of foreclosure to petitioners. Stated otherwise, and as is evident from the records, there has been no denial by private respondent that no personal notice of the extrajudicial foreclosure was ever sent to petitioners prior thereto. This omission, by itself, rendered the foreclosure defective and

irregular for being contrary to the express provisions of the mortgage contract. There is thus no further necessity to inquire into the other issues cited by the trial court, for the foreclosure may be annulled solely on the basis of such defect. While private respondent was constituted as their attorney-in-fact by petitioners, the inclusion of the aforequoted paragraph (k) in the mortgage contract nonetheless rendered personal notice to the latter indispensable. As we stated in Community Savings & Loan Association, Inc., et al. vs. Court of Appeals, et al., 13 where we had the occasion to construe an identical provision: On the other important point that militates against the petitioners' first ground for this petition is the fact that no notice of the foreclosure proceedings was ever sent by CSLA to the deceased mortgagor Antonio Esguerra or his heirs in spite of an express stipulation in the mortgage agreement to that effect. Said Real Estate Mortgage provides, in Sec. 10 thereof that: (10) All correspondence relative to this mortgage, including demand letters, summons, subpoenas, or notifications of any judicial or extrajudicial actions shall be sent to the Mortgagor at the address given above or at the address that may hereafter be given in writing by the Mortgagor to the Mortgagee, and the mere act of sending any correspondence by mail or by personal delivery to the said address shall be valid and effective notice to the Mortgagor for all legal purposes, . . . (Emphasis in the original text.) The Court of Appeals, in appreciating the foregoing provision ruled that it is an additional stipulation between the parties. As such, it is the law between them and as it not contrary to law, morals, good customs and public policy, the same should be complied with faithfully (Article 1306, New Civil Code of the Philippines). Thus, while publication of the foreclosure proceedings in the newspaper of general circulation was complied with, personal notice is still required, as in the case at bar, when the same was mutually agreed upon by the parties as additional condition of the mortgage contract. Failure to comply with this additional stipulation would render illusory Article 1306 of the New Civil Code of the Philippines (p. 37, Rollo). On the issue of whether or not CSLA notified the private respondents of the extrajudicial foreclosure sale in compliance with Sec. 10 of the mortgage agreement the Court of Appeals found as follows: As the record is bereft of any evidence which even impliedly indicate that the required notice of the extrajudicial foreclosure was ever sent to the deceased debtor-mortgagor Antonio Esguerra or to his heirs, the extrajudicial foreclosure proceedings on the property in question are fatally defective and are not binding on the deceased debtor-mortgagor or to his heirs (p. 37, Rollo) Hence, even on the premise that there was no attendant fraud in the proceedings, the failure of the petitioner bank to comply with the stipulation in the mortgage document is fatal to the petitioners' cause.

We do not agree with respondent court that paragraph (k) of the mortgage contract in question was intended merely to indicate the address to which the communications stated therein should be sent. This interpretation is rejected by the very text of said paragraph as above construed. We do not see any conceivable reason why the interpretation placed on an identically worded provision in the mortgage contract involved in Community Savings & Loan Association, Inc. should not be adopted with respect to the same provision involved in the case at bar. Nor may private respondent validly claim that we are supposedly interpreting paragraph (k) in isolation and without taking into account paragraphs (b) and (d) of the same contract. There is no irreconcillable conflict between, as in fact a reconciliation should be made of, the provisions of paragraphs (b) and (d) which appear first in the mortgage contract and those in paragraph (k) which follow thereafter and necessarily took into account the provisions of the preceding two paragraphs. 14 The notices respectively mentioned in paragraphs (d) and (k) are addressed to the particular purposes contemplated therein. Those mentioned in paragraph (k) are specific and additional requirements intended for the mortgagors so that, thus apprised, they may take the necessary legal steps for the protection of their interests such as the payment of the loan to prevent foreclosure or to subsequently arrange for redemption of the property foreclosed. What private respondent would want is to have paragraph (k) considered as non-existent and consequently disregarded, a proposition which palpably does not merit consideration. Furthermore, it bears mention that private respondent having caused the formulation and preparation of the printed mortgage contract in question, any obscurity that it imputes thereto or which supposedly appears therein should not favor it as a contracting party. 15 Now, as earlier discussed, to still require a trial notwithstanding private respondent's admission of the lack of such requisite notice would be a superfluity and would work injustice to petitioners whose obtention of the relief to which they are plainly and patently entitled would be further delayed. That undesirable contingency is obviously one of the reasons why our procedural rules have provided for summary judgments. WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE and this case is REMANDED to the court of origin for further proceedings in conformity with this decision. This judgment is immediately executory. SO ORDERED. Melencio-Herrera, Padilla and Sarmiento, JJ., concur. Paras, J., took no part. ! ! Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 75502 November 12, 1987 KALILID WOOD INDUSTRIES CORPORATION, ALFREDO SALONGA and JOAQUIN MIGUEL DE JESUS,petitioners, vs. HONORABLE INTERMEDIATE APPELLATE COURT and PHILIPPINE BANKING CORPORATION.

FELICIANO, J.: On 17 November 1976, Joaquin Miguel de Jesus and Alfredo T. Salonga, President-General Manager and Comptroller, respectively, of P.B. De Jesus and Company, Inc., executed a promissory note (PBC No. 1202-76) in favor of respondent Philippine Banking Corporation in the amount of P600,000.00, the obligation maturing on 29 December 1976. Similarly, on 2 December 1976, a second promissory note (PBC No. 1255-76) was executed this time in the amount of P300,000.00, payable on or before 3 January 1977. These two instruments were executed to document or reflect loans secured from respondent Bank and were signed by Messrs. de Jesus and Salonga in the following manner: A. Promissory Note PBC No. 1202-76-for P600,000.00: Due December 29,1976 No. 1202-76 For value received, I/we jointly and severally promise to pay to the Philippine Banking Corporation at its office at Ayala Avenue, Makati, Metro Manila the sum of SIX HUNDRED THOUSAND ONLY ... pesos (P600,000.00) with interest at the rate of FOURTEEN percent 14% per annum, from TODAY until paid. In case this note is not paid at maturity the interest rate shall automatically be increased to per annum. xxx xxx xxx Executed at Makati, Philippines on November 17,1976. P.B. DE JESUS & CO., INC. (Sgd.) Alfredo Salonga (Sgd.) Miguel de Jesus IN OUR PERSONAL CAPACITY (Sgd.) Alfredo Salonga (Sgd.) Miguel de Jesus B. Promissory Note PBC No. 1255-76-for P300,000.00: Due January 3, 1977 No. 1255-76 For valued received, I/we jointly and severally promise to pay to the Philippine Banking Corporation at its office at Ayala Avenue, Makati, Metro Manila the sum of THREE HUNDRED THOUSAND ONLY ... pesos

(P300,000.00), with interest at the rate of FOURTEEN per cent (14%) per annum, from TODAY until paid. In case this note is not paid at maturity the interest rate shall automatically be increased to _______ (______%) per annum. xxx xxx xxx Executed at Makati, Philippines on December 2,1976. P.B. DE JESUS & CO., INC. (Sgd.) Alfredo Salonga (Sgd.) Miguel de Jesus IN OUR PERSONAL CAPACITIES (Sgd,) Alfredo Salonga (Sgd.) Miguel de Jesus On 5 March 1978, P.D. De Jesus and Company, Inc., by vote of its stockholders, changed its corporate name to Kalilid Wood Industries Corporation (hereafter "Kalilid"), an act subsequently validated by the Securities and Exchange Commission. Thereafter, respondent Bank served several letters of demand upon petitioner Kalilid for payment by the latter of the obligations contracted under promissory notes PBC No. 1202-76 and PBC No. 1255-76 which had apparently remained unsettled. Petitioner Kalilid, however, disowned its alleged indebtedness under both promissory notes. On 15 May 1981, respondent Bank filed a Complaint for collection (docketed as Civil Case No. 41268) against petitioner Kalilid and Messrs. de Jesus and Salonga with Branch 23 of the then Court of First Instance of Rizal (Seventh Judicial District). 1 In its complaint, respondent Bank alleged that petitioner Kalilid, as principal, should be held solidarily liable under promissory notes PBC No. 1202-76 and PBC No. 125576 together with Messrs. de Jesus and Salonga, both of whom had signed said promissory notes for and in behalf of the petitioners company, as well as in their own personal capacities. Respondent Bank further alleged that, as of 30 April 1981, the total amount of the indebtedness of the obligors under the two promissory notes had risen to Pl,780,253.08i.e., PI 18649696 with respect to promissory note PBC No. 120276, and P593,756.12 with respect to promissory note PBC No. 125176 The Bank submitted in substantiation of these claimed amounts two separate Statements of Account (one for each promissory note), which had been prepared by respondent Bank and attached to the complaint as Annexes "C" and "D" thereof. 2 Promissory notes PBC No. 1202-76 and IBC No. 1255-76 were likewise attached to the complaint as its Annexes "A" and "B", respectively. 3 In its Answer dated 10 July 198l, 4 petitioner Kalilid alleged that it "ha[d] no knowledge or information sufficient to form a belief as to the truth of [the material allegations in the complaint]. 5 As its affirmative defense, petitioner Kalilid asserted that the authority to borrow money or contract loans on its behalf had not been granted to Messrs. de Jesus and Salonga who, it was further asserted, should be held solely liable under the two promissory notes. The answer of petitioner Kalilid, however, was not verified. The complaint was dismissed, though without prejudice, with respect to Messrs. de Jesus and Salonga whose whereabouts could not then be ascertained.

The parties were unable to arrive at an amicable settlement between themselves at the pretrial stage of the litigation. Subsequently, a motion for summary judgment was filed by respondent Bank to which petitioner Kalilid raised neither objection nor opposition. In a three-page Decision dated 12 October 1983, the trial court found petitioner Kalilid liable to respondent Bank for the obligations contracted under promissory notes PBC No. 1202-76 and PBC No. 1255-76 . the dispositive portion of the decision reads: WHEREFORE, judgment is hereby rendered in favor of plaintiff Philippine Banking Corporation and against defendant Kalilid Wood Industries Corporation who is ordered to pay plaintiff: 1. The amount of P1,780,253.08 plus legal interest from April 9, 1981 until the amount is fully paid; 2. the amount equivalent to 10% of the total amount due as attorney's fees; and 3. the costs of suit. SO ORDERED. The trial Judge based his decision primarily on two factors: (1) the failure of petitioner Kalilid to verify its answer, which failure the trial Judge considered as amounting to an admission by petitioner Kalilid of the genuineness and due execution of promissory notes PBC No. 120276 and PBC No. 1255-76, which were annexed to respondent Bank's complaint; and (2) the fact that the two disputed promissory notes were signed by Messrs. de Jesus and Salonga both for and in behalf of the former P.B. de Jesus and Company, Inc. (now petitioner Kalilid) and in their own personal capacities. The judgment of the lower court was affirmed in toto on appeal. In its disputed Decision dated 8 November 1985, the then Intermediate Appellate Court (Third Civil Cases Division) held: Defendant-appellant faults the lower court in holding it liable to pay the amount of Pl,780,253.08 inasmuch as the promissory notes covered only P900,000.00 claiming that plaintiff-appellee failed to adduce evidence as to how said amounts increased to the amount of Pl,780,253.08. Defendantappellant argument is really flimsy, because it overlooked the fact that the promissory notes in question which were due and demandable since December 29, 1976 and January 3, 1977 bear interest at the rate of 14% and further stipulates for the payment of attorney's fees of 10% of the amount due including interest in case of collection of the promissory notes is done through a lawyer. Moreover, the statements of account Annexes A and B are also attached to the same complaint as integral part thereof. Annex A pertains to the promissory note No. 1202-76 with the principal of P600,000.00 while Annex B pertains to the promissory note No. 125576 with the principal of P300,000.00. Explained in said statements of account are the charges for past due interest and penalty charges and the total of said obligation as of April 30, 1981 showed a total of principal, interest and penalty charges of

P1,780,253.08. The genuineness and due execution of said promissory notes and statements of account are deemed admitted by the failure to deny under oath said documents. ... 6 Petitioner Kalilid's Motion for Reconsideration was denied by the Third Civil Cases Division on 29 July 1986. In the present Petition for Review, petitioner Kalilid no longer denies its liabilities and obligations under the two promissory notes executed in favor of respondent Bank. It would, however, contest the correctness of the aggregate amount of its indebtedness, as claimed by respondent Bank. In this respect, petitioner Kalilid contends that although it may have impliedly admitted the genuineness and due execution of promissory notes PBC No. 120276 and PBC No. 125576Annexes "A" and "B" of the Complaintas a result of its failure to deny specifically and under oath the material allegations in respondent Bank's complaint, such admission cannot be made to extend and apply to the two aforementioned Statements of AccountAnnexes "C" and "D" of the Complaint-since none of petitioner Kalilid's duly authorized representatives had participated in the preparation thereof. Furthermore, in the computations appearing therein, amounts corresponding to service charges, penalty charges, and interest charges on past due interest were included which, petitioner Kalilid claims, are not part of its undertakings under either promissory note. We agree with the ruling of the trial Judge and the respondent appellate court that petitioner Kalilid, due to its failure to verify its answer, is deemed to have admitted by implication the authenticity and due execution of promissory notes PBC No. 1202-76 and PBC No. 1255-76, which were both annexed to and made the basis for respondent Bank's complaint. 7 Consequently, defenses relating to the genuineness and due execution of the notes, such as that the instruments are spurious counterfeit, or of different import on their faces from the ones executed by the parties; or that the signatures appearing therein are forgeries; or that said signatures were unauthorized as in the case of an agent signing for his principal or one signing in behalf of a partnership or corporation; or that the corporation was not authorized under its charter to sign the instruments; or that the party charged signed the instruments in some capacity other than that set out in the instruments; or that the instruments were never delivered, are effectively cut off, 8 placing petitioner Kalilid in estoppel from disclaiming liability under those promissory notes. No genuine issue having been raised in the trial court by petitioner Kalilid regarding the existence and validity of its liabilities under promissory notes PBC No. 1202-76 and PBC No. 1255-76, summary judgment was properly and appropriately rendered in the case at bar. 9 In respect, however, of the amount of petitioner Kalilid's total indebtedness to respondent Bank under the two promissory notes, it was error for the appellate court (as for the trial Judge) to have expanded the scope of petitioner Kalilid's implied admission of genuineness and due execution so as to include the two Statements of Account annexed to the complaint. On this point, Rule 8, Section 8 of the Revised Rules of Court is quite specific. Section 8. How to contest genuineness of such documents.When an action or defense is founded upon a written instrument, copied in or attached to the corresponding pleading as provided in the preceding section, the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party, under oath, specifically denies them, and sets forth what he claims to be the facts; but this provision does not apply when the adverse party does not appear to be a party to the instrument or when

compliance with an order for an inspection of the original instrument is refused. (Emphasis supplied.) An examination of the two disputed Statements of Account reveals that both documents (1) were printed under the official letterhead of respondent Bank, (2) were prepared by the Loans and Discounting Department of respondent Bank, and (3) bore the signature of approval of respondent Bank's authorized officer. No other signature appears on the face of either document. In other words, both Statements of Account were preparedexclusively by respondent Bank. It follows that petitioner Kalilid, not having been privy thereto, did not admit the genuineness and due execution of the Statements in spite of its failure to verify its answer to the complaint, and that petitioner is not conclusively bound by the charges nor by the computations of amounts set out therein. 10 The aggregate amount of petitioner Kalilid's monetary obligations to respondent Bank is determinable from the common stipulations and conditions contained in promissory notes PBC No. 1202-76 and PBC No. 1255-76, under which petitioner Kalilid bound itself to pay respondent Bank, aside from the principal loan totalling P900,000.00: (1) interest at the rate of fourteen percent (14%) per annum, payable monthly and compounded monthly if unpaid, 11 and (2) attorney's fees equivalent to ten percent (10%) of the entire amount due, including interest. 12 it does not, however, appear from the face of either promissory note that petitioner Kalilid agreed to pay service charges and penalty charges in case of late payment of its obligations to respondent Bank. Since an undertaking to pay service charges and penalty charges on top of interest and interest on past due interest cannot be presumed, it is necessary that evidence be adduced by both parties to prove or disprove their respective claims regarding the basis and propriety of including such charges and in such amounts as part of petitioner Kalilid's liabilities under the two promissory notes. Evidence relating to the computation of interest on past due interest, that is due and payable may also be submitted. WHEREFORE, the decision of Branch 23 of the then Court of First Instance of Rizal (Seventh Judicial District) in Civil Case No. 41268 and the decision of the then Intermediate Appellate Court dated 8 November 1985 are AFFIRMED to the extent that they refer to the principal amounts and stipulated interest due under Promissory Notes PBC No. 1202-76 and PBC No. 1255-76 and to attorney's fees equivalent to ten percent (10%) of the entire amount due. This case is REMANDED to the trial court for determination of whether or not service charges and penalty charges in case of late payment are due from petitioner Kalilid to respondent Bank, and if so, the amount thereof, as well as for determination of the amount of interest on past due interest, due and payable by petitioner Kalilid to respondent Bank. No pronouncement as to costs. SO ORDERED. Fernan (Chairman), Gutierrez, Jr., Bidin and Cortes, JJ., concur. ! ! Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 105455 August 23, 1995 EXCELSA INDUSTRIES, INC., petitioner, vs. COURT OF APPEALS, ASIAN ALCOHOL CORPORATION, SPOUSES RODOLFO V. ZULUETA and GERMAINE R. ZULUETA and BRIQUETTED DIAMOND CORPORATION, respondents.

KAPUNAN, J.: This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to reverse and set aside the decision of the Court of Appeals in CA-G.R. No. 28825 dated 11 March 1992 and its resolution dated 14 May 1992 denying petitioner's motion for reconsideration. The antecedent facts are not disputed. On 19 March 1985, private respondent Asian Alcohol Corporation (hereinafter referred to as AAC) entered into an agreement, 1 with petitioner for the purchase of a coal briquetting machine for P1,500,000.00 with P450,000.00 as downpayment and the balance of P1,050,000.00 to be paid in eight (8) equal quarterly installments at 24% interest per annum. On 18 May 1987, petitioner filed a complaint for recovery of a sum of money before the Regional Trial Court of Quezon City against respondent AAC. Petitioner alleged that despite its numerous demands, respondent AAC refused and failed to pay the remaining balance of the purchase price. In its answer filed on 19 June 1987, respondent AAC contended that it was constrained to withhold payment of the balance of the purchase price in view of the controversy over the ownership of the machinery it bought from petitioner which arose from the case instituted by spouses Rodolfo and Germaine Zulueta before the Securities & Exchange Commission (docketed as SEC Case No. 2883) against Lorenzo Elago, respondent Briquetted Diamond Corporation (hereinafter referred to as BDC), petitioner Excelsa Industries Corporation and AAC itself. The Zulueta spouses claimed that the true owner of the subject machinery was respondent BDC and not petitioner Excelsa Industries, Inc. On 27 July 1987, petitioner filed a motion for summary judgment anchored on the alleged admission of respondent AAC of its accountability 2 which respondent AAC opposed on 17 August 1987. On 26 August 1987, respondent AAC filed a Motion for Leave to File Third Party Complaint against respondents BDC and Rodolfo and Germaine Zulueta. On 27 August 1987, respondent AAC deposited in trust the remaining balance of the purchase price (P1,050,000.00) with the Far East Bank & Trust Co., Ramada Branch, Manila.

On 25 September 1987, the trial court denied petitioner's motion for summary judgment and admitted respondent ACC's third party complaint. Petitioner questioned the above-mentioned order in a petition for certiorari and mandamus before the Court of Appeals. On 12 July 1989, the Court of Appeals dismissed the petition and ruled that the "ownership of the machinery sold is a genuine issue as to a material fact which should be threshed out in a full-blown trial." 3 On 17 October 1989, petitioner filed a petition for certiorari with this Court for the annulment of the Court of Appeals' decision dated 12 July 1989. On 23 October 1987, this Court dismissed the petition for failure to comply with Supreme Court Circular 1-88. Petitioner's motion for reconsideration was denied in a Resolution dated 6 December 1989. Meanwhile, on 5 February 1990, respondent BDC filed its answer to the third party complaint and averred that: 2. Paragraph 4 is denied. Third-party defendant BDC does not claim, and has never claimed ownership over the coal briquetting machineries purchased by third-party plaintiff. Third-party defendant likewise does not seek, nor has ever sought nullification and invalidation of the Agreement of Sale entered into by and between plaintiff Excelsa Industries Corporation and third-party plaintiff. Third-party defendant BDC fully recognizes the genuineness, due execution, validity and efficacy of the Agreement of Sale. 4 On 16 February 1990, petitioner filed a second motion for summary judgment on the ground that the question of ownership has been finally settled when respondent BDC categorically stated, as aforequoted, that it has no claim of ownership over the subject machinery and does not dispute the sale agreement between petitioner and respondent ACC. 5 On 8 May 1990, the trial court granted petitioner's motion and ruled that respondent BDC's answer to the third party complaint "put to rest the issue of ownership which was the main reason why defendant (respondent) ACC refused to pay the balance of P1,050,000.00 to Excelsa Industries Inc. . . ." 6 The dispositive portion of the trial court's decision reads: PREMISES ABOVE-CONSIDERED, summary judgment is hereby rendered in favor of the plaintiff and against defendant Asian Alcohol Corporation ordering the latter to pay to the former the sum of P1,050,000.00 representing the balance of the purchase price of a coal briquetting machinery. Plaintiff is hereby allowed to withdraw the amount aboveindicated which was deposited by the defendant in trust for the plaintiff with the Far East & Trust Co., Ramada Branch as full payment of the purchase price. No pronouncement as to attorney's fees and costs. The third party complaint is hereby dismissed.

SO ORDERED. 7 On 31 May 1990, petitioner's motion for execution was granted and subsequently petitioner withdrew the P1,050,000.00 from Far East Bank & Trust Co., Ramada Branch. On 11 June 1990, the Zulueta spouses appealed to the Court of Appeals. Not satisfied with the decision of the trial court, petitioner likewise appealed to the Court of Appeals on 19 June 1990 for the sole purpose of recovering interest, attorney's fees, exemplary damages and costs of suit. On 11 March 1992, the Court of Appeals reversed the decision of the trial court and remanded the case to the trial court for trial on the merits. The dispositive portion reads as follows: WHEREFORE, the decision appealed from is hereby annulled and set aside. The writ of execution issued pursuant to the invalid decision is likewise declared to be legally flawed. Plaintiff-appellant is hereby directed to cause restitution of the sum of P1,142,036.51, representing the amount withdrawn from the Far East Bank, Ramada Branch upon a proper motion therefor. Also, the case is hereby remanded to the court of origin for trial on the merits. SO ORDERED. 8 In the instant petition for review, petitioner made the following contentions: I THERE IS NO GENUINE ISSUE AS TO A MATERIAL FACT IN THE CASE. THIS JUSTIFIED THE TRIAL COURT'S SUMMARY JUDGMENT. II RESPONDENT ASIAN'S THIRD PARTY COMPLAINT WAS PROCEDURALLY IMPROPER AND CLEARLY REPUGNANT TO THE IDEA OF A. THIRD PARTY COMPLAINT AS DEFINED BY THE RULES AND JURISPRUDENCE. THE RESPONDENT COURT FAILED/REFUSED TO ACKNOWLEDGE THIS. III THE RESPONDENT COURT ORDERED THE REMAND OF THE CASE TO THE TRIAL COURT YET IT CANNOT GIVE ANY EXPLANATION ON WHY IT SHOULD BE SO REMANDED, AS IT COULD NOT EVEN SAY WHAT THE PARTIES WILL CONDUCT TRIAL FOR, DESPITE PETITIONER'S DIRECT CHALLENGE TO THIS EFFECT. IV THE RESPONDENT COURT LIKEWISE ERRED IN NOT GRANTING PETITIONER'S CLAIM FOR DAMAGES. 9

The petition has no merit. The issue boils down to whether or not it was proper for the trial court to render summary judgment in the case at bench. We rule that it was not. Summary judgment under Rule 34 of the Revised Rules of Court is a procedural technique which is proper only if there is no "genuine issue as to the existence of a material fact and that the moving party is entitled to a judgment as a matter of flaw." 10 It is a method intended to expedite or promptly dispose of cases where the facts appear undisputed and certain from the pleadings, depositions, admissions and affidavits on record. 11 Summary judgment or accelerated judgment is a device for weeding out sham claims or defenses at an early stage of the litigation, thereby avoiding the expense and loss of time involved in a trial. The very object is to separate what is formal or pretended in denial or averment from what is genuine and substantial, so that only the latter may subject a suitor to the burden of a trial. 12 The term "genuine issue" has been defined as an issue of fact which calls for the presentation of evidence as distinguished from an issue which is sham, fictitious, contrived, set up in bad faith and patently unsubstantial so as not to constitute a genuine issue for trial. The court can determine this on the basis of the pleadings, admissions, documents, affidavits and/or counter-affidavits submitted by the parties to the court. Where the facts pleaded by the parties are disputed or contested, proceedings for a summary judgment cannot take the place of a trial. 13 Well-settled also is the rule that the party who moves for summary judgment has the burden of demonstrating clearly the absence of any genuine issue of fact. 14 Upon the plaintiff is the burden to prove the cause of action, and to show that the defense is interposed solely for the purpose of delay. After the plaintiffs burden has been discharged, defendant has the burden to show facts sufficient to entitle him to defend. 15 Although determination of the efficacy of a motion for summary judgment depends on the particular circumstances of the case, the general test is whether the pleadings, affidavits and exhibits in support of the motion are sufficient to overcome the opposing papers as to justify a finding as a matter of law that there is no defense to the action or the claim is clearly meritorious. 16 Applying the foregoing principles to the case at bench, we find that there exists a genuine and vital factual issue, namely, who is the rightful owner of the subject machinery. It is quite apparent that the trial court based its decision on petitioner's second motion for summary judgmentsolely on the answer filed by respondent BDC. It failed to consider or appreciate the answer of the other third party defendants, now respondents Zulueta spouses, minority stockholders of respondent BDC, who have unwaveringly and persistently asserted that the coal briquetting machine, subject of the sale agreement between petitioner and respondent AAC, belong to or are among the properties of respondent BDC. 17

As readily observed by the Court of Appeals: . . . In addition, the other third-party defendants (Rodolfo and Germaine Zulueta) did not simply fold their arms and keep their voices of protest to themselves since they also externalized their indignation as early as October 30, 1987 (page 83, Record) or three years prior to the decision rendered on May 8, 1990. Hence, thiscaveat definitely posed a serious question on the issue of ownership which was asserted by Rodolfo Zulueta as Treasurer of Briquetted Diamond Corporation premised on the theory that the alienation of the machinery from Briquetted Diamond Corporation to Excelsa is ultra vires due to absence of stockholders' approval but,regrettably, only the other answer submitted by Briquetted Diamond Corporation to the third party complaint was considered by the lower court. 18 (Emphasis ours.) Moreover, we note with some perturbation the ownership structure of petitioner Excelsa Industries, Inc. and respondent BDC. Lorenzo Elago, the current president of petitioner Excelsa Industries, Inc. is, likewise, one of the majority stockholders of respondent BDC. 19 The effect that this kind of set-up may have on the issue of ownership over the subject machinery in the instant case should have been considered by and should have cautioned the trial court. At the very least, it clothed the aforequoted answer of respondent BDC with some suspicion. The question of ownership thus raised by respondent AAC is a substantial issue. It was not merely contrived to delay payment of the purchase price. As the records show, respondent AAC had already deposited the amount of P1,050,000.00 representing the remaining balance of the purchase price in trust. Hence, it cannot be accused of bad faith. Petitioner cannot rely on the dismissal of the case filed with the Security & Exchange Commission by respondent Zulueta spouses against petitioner and the other respondents, including Lorenzo Elago. The SEC and this Court dismissed the case not on the merits but on grounds of lack of jurisdiction precisely because the issue involved ownership of machineries and equipment (including the subject machinery) and not an intra-corporate dispute: From a perusal of the allegation of the petition, we find and so hold that there already existed in the petition itself a controversy as to the ownership of the machineries and equipment involved in this case. For this reason, we hold that we have no jurisdiction over the instant case. . . . (Rodolfo Zulueta, et al. v. Lorenzo D. Elago, et al., SEC Case No. SEC-AC No. 167, Order pages 1 and 2). 20 From the foregoing, we therefore hold that a trial on the merits is necessary. "Courts should not render summary judgment hastily . . . . considering that this remedy is in disparagement of a party's right to due process. . . ." 21 It is well to remember that: In case there is doubt as to the propriety of a summary judgment, the doubt shall be resolved against the moving party. The court should take that view of evidence most favorable to the party against whom it is directed and give that party the benefit of all favorable inferences. The trial courts have but limited

authority to render summary judgments and may do so only in cases where there is clearly no genuine issue as to any material fact. The rule does not invest the court with jurisdiction summarily to try the factual issue on affidavits, but authorizes summary judgment only if it clearly appears that there is no genuine issue as to any material fact. 22 ACCORDINGLY, the petition is hereby DISMISSED. The decision of the Court of Appeals is AFFIRMED. SO ORDERED. Padilla, Davide, Jr., Bellosillo and Hermosisima, Jr., JJ., concur. ! ! Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 120010 October 3, 2002

SOLIDBANK CORPORATION (a.k.a. The Consolidated Bank & Trust Corp.), petitioner, vs. HON. COURT OF APPEALS, CENTRAL BANK OF THE PHILIPPINES, and FAR EAST BANK & TRUST COMPANY, respondents. DECISION AUSTRIA-MARTINEZ, J.: Whether or not summary judgment is proper in the case at bar is the issue to be resolved in the petition for review on certiorari under Rule 45 of the Rules of Court filed with this Court assailing the Decision1 of the Court of Appeals dated January 31, 1995 and its subsequent Resolution2 dated April 28, 1995 in CA-G.R. CV No. 23601. The antecedent facts as found by the Court of Appeals are as follows: "The Pacific Banking Corporation (hereafter, "PBC") was placed under receivership on 5 July 1985. A Liquidator was designated for the liquidation process. The Central Bank invited several banks to buy the "assets and the franchise of the various offices of PBC and to assume its liabilities. The Far East Bank and Trust Company (herafter, FEBTC) was one of the bidders, and its bid was found to be the most advantageous. PBC and Central Bank on the one hand and FEBTC on the other, signed: (a) Purchase Agreement dated 28 October 1986 xxx; and (b) Memorandum of Agreement dated 16 April 1986 xxx. "On 27 May 1987, the Solidbank Corporation (a.k.a. the Consolidated Bank and Trust Corporation, hereafter, Solidbank) through its Senior Vice-President/Comptroller Ms. Corazon R. Dayao, filed its claims with the Liquidator of PBC, Mr. Renan V. Santos, namely:

(1) P8,024,007.27 (excluding interests and surcharges) covering eight (8) receivables (computer machines and other accessories connected with their operations and the right to collect rentals therefrom) due from PBC and assigned to Solidbank by the United Pacific Leasing and Finance Corporation, a subsidiary of PBC, which amount due as of October 1988 totalled P24,158,263.10; (2) several deposits (proceeds of collection items evidenced by registers of collection items and balances of the current accounts in the various branches of PBC). "Upon verification of the records of the case in court, the court discovered the existence of the Purchase Agreement and Memorandum Agreement aforementioned. "On 09 November 1988, Solidbank filed with the trial court in Special Proceeding No. 8635313 a Motion to Implead the FEBTC as co-respondent, and that it be ordered to pay the former jointly and severally with the liquidator of petitioner; (a) the principal sum of P8,024,007.27 plus 3% penalty and 20% of the total amount thereof as attorneys fees which amounted to a total of P24,158,263.10 as of October, 1988, and, (b) the sum of P127,834.73 as FEBTCs deposit liability, plus 12% interest and 20% of the total amount of the claim as attorneys fees which amounted to P24,158,263.10 as of October 1988. The motion was granted in an order dated 17 November 1988, declaring also the motion as in the nature of a "third party complaint" against FEBTC. "On 16 December 1988, FEBTC filed its Answer to Solidbanks Motion to Implead, averring it had no knowledge or information sufficient to form a belief as to the truth of the allegation in paragraph 2 of Solidbanks motion. It also denied paragraphs 3, 4, 5 ,6, 7, and 8 of the same. The following special and affirmative defenses were pleaded: the SGV Report was actually attached to the purchase agreement; Solidbank has no cause of action; computer machines and items subject of Solidbanks eight [8] receivables were not included in the properties and equipment purchased by FEBTC from the Central Bank; the items stated in Annex B of Solidbanks motion were not included among the deposit liabilities assumed by FEBTC under Section 2 of the Purchase Agreement. The Answer prayed that the motion to implead FEBTC as respondent in the case be denied. "Earlier, on 5 December 1988, Solidbank filed a Motion to Order Immediate Payment and/or Partial Judgment, alleging that in the conference between Solidbanks representative and the Central Bank Deputy Receiver of PBC in March 1986 in connection with assigned "receivables due from PBC, the unpaid balance due Solidbank from PBC at the date of its closure amounted to P1,206,495.17 and this amount is not controverted. "On 06 December 1988, the liquidation court issued an Order granting Solidbanks motion. It ruled that contrary to the Liquidators position that the claim for unpaid rentals is an ordinary credit, the said claims of Solidbank should be given preference as they are part of administrative expenses pursuant to Sections 30 and 31 of the Central Bank Act. The trial court ordered the Liquidator of PBC to pay Solidbank the amount of P1,206,495.17. "On 07 March 1989, the Liquidator of PBC wrote Solidbank inquiring when the latter will take delivery of the computers in settlement of its claim considering that an inventory of the computers was furnished Solidbank in September, 1988. "On 16 March 1989, Solidbank wrote the Liquidator, stating that no agreement (whether verbal or written) had been reached that the surrender and delivery of the aforesaid computers shall constitute full settlement of its (Solidbanks) claim. Further, while Solidbank

mentioned that it was ready to receive the computer machines and equipment, it was still pursuing its claim for the overdue rental proceeds pertaining thereto. "On 04 May 1989, Solidbank filed with the liquidation court a Motion for Summary Judgment in connection with the claims aforementioned, citing the following grounds: there is no genuine issue as to any material fact; there is no substantial controversy in the case; and, it is entitled to summary judgment as a matter of law. Annexed to the motion was the "Affidavit of Merits" executed by one Corazon Dayao, Senior Vice-President / Comptroller of Solidbank. "On 29 May 1989, FEBTC filed its Comment alleging: FEBTC did not specifically deny the claims of Solidbank in the Motion to Implead; the issues before the liquidation court are not purely legal, but factual, i.e., whether the subject receivables as well as deposit liabilities were included in the Purchase Agreement as among those purchased by FEBTC. "On 05 June 1989, the Liquidator of PBC filed an Opposition."3 On 12 June 1989, the liquidation court promulgated its assailed decision, the pertinent portions of which read: "In the light of the aforesaid documented facts and circumstances recited in the pleadings, this Court finds no triable factual issue at least insofar as the fact and amounts of the indebtedness of FEBTC to claimant-movant are concerned. As indebtedness, movant is entitled to a judgment for payment thereof. Considering that the total amount of indebtedness is quite big, which movant needs in its operation as a bank, the Court is impressed not only on the propriety but also with the necessity of "summarily adjudicating the case. Any delay of justice to movant in this case can mean denial thereof, especially in the light of PBCs liquidation and claim by its creditors. "WHEREFORE, the FEBTC and the (PBC) as duly represented by its Liquidator, are ordered to pay jointly and severally the claim of movant Solidbank as prayed for in its Motion for Summary Judgment dated November 9, 1988, less the amount of P1,206,495.17 already paid to Solidbank on January 11, 1989. "SO ORDERED."4 Not satisfied with the decision, FEBTC went to the Court of Appeals which reversed the trial court, explaining that: "x x x xxx xxx

"From the categorical and positive asseverations of xxx documents, there was a need for a proceeding to examine and evaluate the true intent of the Memorandum of Agreement and the correct coverage of Purchase Agreement, to settle the issue in dispute. Hence, summary judgment to resolve the controversy was precipitate. "x x x xxx xxx

"WHEREFORE, the decision appealed from is hereby SET ASIDE and the case remanded to the trial court for further proceedings.

"SO ORDERED."5 A motion for reconsideration filed by petitioner was denied by the appellate court on April 28, 1995.6 Hence, the present petition raising the following: RESPONDENT APPELLATE COURT COMMITTED REVERSIBLE ERROR IN SETTING ASIDE THE DECISION OF THE TRIAL COURT AND IN ORDERING THE REMAND OF THE RECORDS OF THE CASE FOR FURTHER PROCEEDINGS, AND IN HOLDING THAT SUMMARY JUDGMENT IS NOT PROPER IN THE CASE AT BAR.7 As earlier stated, the only question that needs to be answered is: whether or not summary judgment is proper in the case at bar. Petitioner insists that summary judgment is proper in this case; that the grounds upon which the summary judgment was filed were not successfully rebutted by FEBTC nor by the Liquidator of Pacific Bank;8 that the pleadings and admissions on the record, together with the affidavits show that there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law.9 Petitioner cites par. 1.0 of respondentbanks answer to its Motion to Implead FEBTC where it averred that "it has no knowledge or information sufficient to form a belief as to the truth of the allegation xxx of Solidbanks motion" as well as its denial of pars. 3, 4, 5, 7 and 8 of the motion. These denials according to petitioner are general or blanket denials which are disallowed under the rules. Petitioner also points out that it is inconceivable that private respondent had no actual knowledge or was completely unaware of the claims of petitioner bank considering the enormity of the said claims.10 Also, the subject matter of the motion to implead is fully documented and cannot be resisted by a mere general denial.11 Assuming arguendo, petitioner continues, that FEBTCs denial of Solidbanks claims can be considered a denial allowable under the rules, summary judgment is still proper as the denial or averment of lack of knowledge does not raise a genuine issue.12 Respondents allegation that the computer machines and items subject of the eight (8) receivables were not included in the properties and equipment purchased by FEBTC from the Central Bank does not tender any genuine issue as to any material fact.13 Also, the liquidation court was correct when it held that the FEBTC "is not at all contesting the Motion for Summary Judgment," citing the statement of FEBTC counsel Antonio R. Bautista, thus: "Presented before the Court is a Motion for Summary Judgment filed by Solidbank represented by C.M. de los Reyes and Associates through Atty. Maximino Z. Baaga. Atty. Bautista representing the Far East Bank and Trust Co. appeared before this Court and manifested that although in principle he is not objecting the motion for summary judgment as this being a liquidation claim that does not require full blown trial, he does not agree that there are no material issues raised in the pleadings because the same material allegations in the complaint is contested by Far East Bank in their Answer filed before this Court. However, said counsel for the Far East Bank and Trust Co. manifested that he will have no objection if the Court will just require the parties to submit affidavit and counter-affidavits in support to their respective contentions."14 Finally, petitioner claims that since there is a variance in the findings of facts of the trial court and the appellate court, the doctrine in Roman Catholic Bishops of Malolos Inc., vs. IAC,15 should be applied. In said case this Court held: "[w]hen findings of fact of the Court of Appeals are at variance with those of the trial court, xxx the [Supreme] Court has to review the evidence in order to arrive at the correct findings based on the records."16Petitioner

asserts that there is a need to require the appellate court to elevate the records of this case, so that this Court can review the evidence to arrive at the correct findings.17 For its part, respondent FEBTC is of the position that the case was not resolvable on summary judgment because there are genuine factual issues that are highly litigious and which require evidentiary hearing. These are: whether Solidbanks claim is included in the purchase agreement as among the properties and items purchased and assumed by FEBTC from Pacific Bank/Central Bank and, corollarily, whether the SGV report, with all its contents, was actually attached to the purchase agreement. These issues, FEBTC argues, are not as simple and as uncomplicated as to be resolved on depositions and affidavits alone. These issues necessitate a trial.18 Philippine Deposit Insurance Corporation (PDIC) meanwhile, as substitute19 for the Central Bank, claims that petitioner misrepresented material facts;20 that for petitioners total principal claim of P8,024,007.27, it already received the total amount of P20,359,592.83 and was awarded by the liquidation court the sum of P7,983,771.60 representing the rentals for the computer machines due from November 1988 to June 1990 plus 3% due monthly as penalty and delayed payment.21 PDIC clarified that petitioner banks claim consisted of rental receivables of United Pacific Leasing Corporation (UNAM) due from PBC for the lease of its computer machines under a lease contract. These rental receivables were assigned by UNAM to petitioner-bank as security for the payment of certain loans granted by the latter to the former;22 that on September 27, 1989, the court a quo rendered a decision approving the Compromise Agreement between the parties limiting PBCs obligation to P10,722,704.83.23 PDIC also calls the attention of this Court to Civil Case No. 87-39114 entitled "The Consolidated Bank and Trust Corporation (Solidbank) vs. United Pacific Leasing and Finance Corporation, Antonio M. Andal and Spouse, et al.;" that while petitioner is pursuing what has been a settled claim against herein respondents, it was also prosecuting a case against UNAM for the purpose of collecting the loan obligations of the latter secured by the Deeds of Assignment, among which are the computer rental receivables of UNAM from closed PBC subject of the instant petition.24 We affirm the Court of Appeals and find the herein petition devoid of merit. 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 of Court allows 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.25 Conversely, where the pleadings tender a genuine issue, summary judgment is not proper.26 A "genuine issue" is such issue of fact which require the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim.27 Rule 34, Section 3 of the Rules of Court 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.28 In the case at bar, it cannot be said that the foregoing requisites are present. There is a genuine issue, the resolution of which requires the presentation of evidence, i.e., whether or not Solidbanks claim is included in the purchase agreement as among the properties and items purchased and assumed by FEBTC from Pacific Bank/Central Bank. While the counsel

for FEBTC did say that in principle he is not objecting to the motion for summary judgment and "that they will have no objection if the Court will just require the parties to submit affidavit and counter-affidavits in support to their respective contentions," this should not be taken out of context for in the same manifestation, said counsel clearly expressed that he does not agree that there are no material issues raised in the pleadings. The appellate court is correct in holding that: "[s]uch statement is not an admission that summary judgment was in order. xxx [Rather] the more logical reading of FEBTCs position is that it was willing to submit the issue for resolution on the basis of affidavits, depositions, and admissions, the manner of proof in summary proceedings, consistent with the summary nature of liquidation proceedings. But given the extent and nature of the disputed factual points, summary judgment would be, and it was, injudicious."29 Rule 34 does not vest in the trial court jurisdiction to summarily try the issues on depositions and affidavits when the requisites abovementioned are not present. Upon a motion for summary judgment, the sole function of the court is to determine whether or not there is an issue of fact to be tried. Any doubt as to the existence of an issue of fact must be resolved against the movant. Courts must be critical of the papers presented by the moving party and not of the papers in opposition thereto.30 The party who moves for summary judgment has the burden of demonstrating clearly the absence of any genuine issue of fact, or that the issue posed in the complaint is patently unsubstantial so as not to constitute a genuine issue for trial.31 Petitioner Solidbank failed to discharge this burden. A cursory reading of the pleadings submitted by the parties would show that a trial is necessary to ascertain which of the conflicting allegations are true. And contrary to what herein petitioner wants to happen, it is not this Courts duty to ascertain such facts at the first instance. Roman Catholic Bishops of Malolos Inc., vs. IAC finds no application in the case at bar. In said case, the trial courts decision, which was reversed by the Court of Appeals, was arrived at after a full blown trial. The same cannot be said here. What was rendered by the trial court was a summary judgment. No full trial was conducted that would have allowed the parties to present their respective evidence in support of their contending claims. As previously held by this Court, when the facts as pleaded by the parties are disputed or contested, proceedings for summary judgment cannot take the place of trial.32 In ruling on a motion for summary judgment, the lower court should take that view of the evidence most favorable to the party against whom it is directed, giving such party the benefit of all favorable inferences.33 WHEREFORE, the petition is DENIED for lack of merit. The decision of the Court of Appeals is AFFIRMED. No pronouncement as to costs. SO ORDERED. Bellosillo, Acting C.J., (Chairman), Quisumbing, and Callejo, Sr., JJ., concur. Mendoza, J., on official leave. ! !

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 173526 August 28, 2008

BENJAMIN BITANGA, petitioner, vs. PYRAMID CONSTRUCTION ENGINEERING CORPORATION, respondent. DECISION CHICO-NAZARIO, J.: Assailed in this Petition for Review under Rule 451 of the Revised Rules of Court are: (1) the Decision2 dated 11 April 2006 of the Court of Appeals in CA-G.R. CV No. 78007 which affirmed with modification the partial Decision3 dated 29 November 2002 of the Regional Trial Court (RTC), Branch 96, of Quezon City, in Civil Case No. Q-01-45041, granting the motion for summary judgment filed by respondent Pyramid Construction and Engineering Corporation and declaring petitioner Benjamin Bitanga and his wife, Marilyn Bitanga (Marilyn), solidarily liable to pay P6,000,000.000 to respondent; and (2) the Resolution4 dated 5 July 2006 of the appellate court in the same case denying petitioners Motion for Reconsideration. The generative facts are: On 6 September 2001, respondent filed with the RTC a Complaint for specific performance and damages with application for the issuance of a writ of preliminary attachment against the petitioner and Marilyn. The Complaint was docketed as Civil Case No. Q-01-45041. Respondent alleged in its Complaint that on 26 March 1997, it entered into an agreement with Macrogen Realty, of which petitioner is the President, to construct for the latter the Shoppers Gold Building, located at Dr. A. Santos Avenue corner Palayag Road, Sucat, Paraaque City. Respondent commenced civil, structural, and architectural works on the construction project by May 1997. However, Macrogen Realty failed to settle respondents progress billings. Petitioner, through his representatives and agents, assured respondent that the outstanding account of Macrogen Realty would be paid, and requested respondent to continue working on the construction project. Relying on the assurances made by petitioner, who was no less than the President of Macrogen Realty, respondent continued the construction project. In August 1998, respondent suspended work on the construction project since the conditions that it imposed for the continuation thereof, including payment of unsettled accounts, had not been complied with by Macrogen Realty. On 1 September 1999, respondent instituted with the Construction Industry Arbitration Commission (CIAC) a case for arbitration against Macrogen Realty seeking payment by the latter of its unpaid billings and project costs. Petitioner, through counsel, then conveyed to respondent his purported willingness to amicably settle the arbitration case. On 17 April 2000, before the arbitration case could be set for trial, respondent and Macrogen Realty entered into a Compromise Agreement,5 with petitioner acting as signatory for and in behalf of Macrogen Realty. Under the Compromise

Agreement, Macrogen Realty agreed to pay respondent the total amount ofP6,000,000.00 in six equal monthly installments, with each installment to be delivered on the 15th day of the month, beginning 15 June 2000. Macrogen Realty also agreed that if it would default in the payment of two successive monthly installments, immediate execution could issue against it for the unpaid balance, without need of judgment or decree from any court or tribunal. Petitioner guaranteed the obligations of Macrogen Realty under the Compromise Agreement by executing a Contract of Guaranty6 in favor of respondent, by virtue of which he irrevocably and unconditionally guaranteed the full and complete payment of the principal amount of liability of Macrogen Realty in the sum ofP6,000,000.00. Upon joint motion of respondent and Macrogen Realty, the CIAC approved the Compromise Agreement on 25 April 2000.7 However, contrary to petitioners assurances, Macrogen Realty failed and refused to pay all the monthly installments agreed upon in the Compromise Agreement. Hence, on 7 September 2000, respondent moved for the issuance of a writ of execution8 against Macrogen Realty, which CIAC granted. On 29 November 2000, the sheriff9 filed a return stating that he was unable to locate any property of Macrogen Realty, except its bank deposit of P20,242.33, with the Planters Bank, Buendia Branch. Respondent then made, on 3 January 2001, a written demand10 on petitioner, as guarantor of Macrogen Realty, to pay the P6,000,000.00, or to point out available properties of the Macrogen Realty within the Philippines sufficient to cover the obligation guaranteed. It also made verbal demands on petitioner. Yet, respondents demands were left unheeded. Thus, according to respondent, petitioners obligation as guarantor was already due and demandable. As to Marilyns liability, respondent contended that Macrogen Realty was owned and controlled by petitioner and Marilyn and/or by corporations owned and controlled by them. Macrogen Realty is 99% owned by the Asian Appraisal Holdings, Inc. (AAHI), which in turn is 99% owned by Marilyn. Since the completion of the construction project would have redounded to the benefit of both petitioner and Marilyn and/or their corporations; and considering, moreover, Marilyns enormous interest in AAHI, the corporation which controls Macrogen Realty, Marilyn cannot be unaware of the obligations incurred by Macrogen Realty and/or petitioner in the course of the business operations of the said corporation. Respondent prayed in its Complaint that the RTC, after hearing, render a judgment ordering petitioner and Marilyn to comply with their obligation under the Contract of Guaranty by paying respondent the amount of P6,000,000.000 (less the bank deposit of Macrogen Realty with Planters Bank in the amount of P20,242.23) and P400,000.000 for attorneys fees and expenses of litigation. Respondent also sought the issuance of a writ of preliminary attachment as security for the satisfaction of any judgment that may be recovered in the case in its favor. Marilyn filed a Motion to Dismiss,11 asserting that respondent had no cause of action against her, since she did not co-sign the Contract of Guaranty with her husband; nor was she a party to the Compromise Agreement between respondent and Macrogen Realty. She had no part at all in the execution of the said contracts. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of another corporation is not by itself a sufficient ground for disregarding the separate personality of the latter corporation. Respondent misread Section 4, Rule 3 of the Revised Rules of Court.

The RTC denied Marilyns Motion to Dismiss for lack of merit, and in its Order dated 24 January 2002 decreed that: The Motion To Dismiss Complaint Against Defendant Marilyn Andal Bitanga filed on November 12, 2001 is denied for lack of merit considering that Sec. 4, Rule 3, of the Rules of Court (1997) specifically provides, as follows: "SEC. 4. Spouses as parties. Husband and wife shall sue or be sued jointly, except as provided by law." and that this case does not come within the exception.12 Petitioner filed with the RTC on 12 November 2001, his Answer13 to respondents Complaint averring therein that he never made representations to respondent that Macrogen Realty would faithfully comply with its obligations under the Compromise Agreement. He did not offer to guarantee the obligations of Macrogen Realty to entice respondent to enter into the Compromise Agreement but that, on the contrary, it was respondent that required Macrogen Realty to offer some form of security for its obligations before agreeing to the compromise. Petitioner further alleged that his wife Marilyn was not aware of the obligations that he assumed under both the Compromise Agreement and the Contract of Guaranty as he did not inform her about said contracts, nor did he secure her consent thereto at the time of their execution. As a special and affirmative defense, petitioner argued that the benefit of excussion was still available to him as a guarantor since he had set it up prior to any judgment against him. According to petitioner, respondent failed to exhaust all legal remedies to collect from Macrogen Realty the amount due under the Compromise Agreement, considering that Macrogen Realty still had uncollected credits which were more than enough to pay for the same. Given these premise, petitioner could not be held liable as guarantor. Consequently, petitioner presented his counterclaim for damages. At the pre-trial held on 5 September 2002, the parties submitted the following issues for the resolution of the RTC: (1) whether the defendants were liable under the contract of guarantee dated April 17, 2000 entered into between Benjamin Bitanga and the plaintiff; (2) whether defendant wife Marilyn Bitanga is liable in this action; (3) whether the defendants are entitled to the benefit of excussion, the plaintiff on the one hand claiming that it gave due notice to the guarantor, Benjamin Bitanga, and the defendants contending that no proper notice was received by Benjamin Bitanga; (4) if damages are due, which party is liable; and (5) whether the benefit of excussion can still be invoked by the defendant guarantor even after the notice has been allegedly sent by the plaintiff although proper receipt is denied.14 On 20 September 2002, prior to the trial proper, respondent filed a Motion for Summary Judgment.15Respondent alleged therein that it was entitled to a summary judgment on

account of petitioners admission during the pre-trial of the genuineness and due execution of the Contract of Guaranty. The contention of petitioner and Marilyn that they were entitled to the benefit of excussion was not a genuine issue. Respondent had already exhausted all legal remedies to collect from Macrogen Realty, but its efforts proved unsuccessful. Given that the inability of Macrogen Realty as debtor to pay the amount of its debt was already proven by the return of the writ of execution to CIAC unsatisfied, the liability of petitioner as guarantor already arose.16 In any event, petitioner and Marilyn were deemed to have forfeited their right to avail themselves of the benefit of excussion because they failed to comply with Article 206017 of the Civil Code when petitioner ignored respondents demand letter dated 3 January 2001 for payment of the amount he guaranteed.18 The duty to collect the supposed receivables of Macrogen Realty from its creditors could not be imposed on respondent, since petitioner and Marilyn never informed respondent about such uncollected credits even after receipt of the demand letter for payment. The allegation of petitioner and Marilyn that they could not respond to respondents demand letter since they did not receive the same was unsubstantiated and insufficient to raise a genuine issue of fact which could defeat respondents Motion for Summary Judgment. The claim that Marilyn never participated in the transactions that culminated in petitioners execution of the Contract of Guaranty was nothing more than a sham. In opposing respondents foregoing Motion for Summary Judgment, petitioner and Marilyn countered that there were genuinely disputed facts that would require trial on the merits. They appended thereto an affidavit executed by petitioner, in which he declared that his spouse Marilyn could not be held personally liable under the Contract of Guaranty or the Compromise Agreement, nor should her share in the conjugal partnership be made answerable for the guaranty petitioner assumed, because his undertaking of the guaranty did not in any way redound to the benefit of their family. As guarantor, petitioner was entitled to the benefit of excussion, and he did not waive his right thereto. He never received the respondents demand letter dated 3 January 2001, as Ms. Dette Ramos, the person who received it, was not an employee of Macrogen Realty nor was she authorized to receive the letter on his behalf. As a guarantor, petitioner could resort to the benefit of excussion at any time before judgment was rendered against him.19 Petitioner reiterated that Macrogen Realty had uncollected credits which were more than sufficient to satisfy the claim of respondent. On 29 November 2002, the RTC rendered a partial Decision, the dispositive portion of which provides: WHEREFORE, summary judgment is rendered ordering defendants SPOUSES BENJAMIN BITANGA and MARILYN ANDAL BITANGA to pay the [herein respondent], jointly and severally, the amount of P6,000,000.00, less P20,242.23 (representing the amount garnished bank deposit of MACROGEN in the Planters Bank, Buendia Branch); and the costs of suit. Within 10 days from receipt of this partial decision, the [respondent] shall inform the Court whether it shall still pursue the rest of the claims against the defendants. Otherwise, such claims shall be considered waived.20 Petitioner and Marilyn filed a Motion for Reconsideration of the afore-quoted Decision, which the RTC denied in an Order dated 26 January 2003.21 In time, petitioner and Marilyn filed an appeal with the Court of Appeals, docketed as CAG.R. CV 78007. In its Decision dated 11 April 2006, the appellate court held:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the judgment appealed from must be, as it hereby is, MODIFIED to the effect that defendant-appellant Marilyn Bitanga is adjudged not liable, whether solidarily or otherwise, with her husband the defendant-appellant Benjamin Bitanga, under the compromise agreement or the contract of guaranty. No costs in this instance.22 In holding that Marilyn Bitanga was not liable, the Court of Appeals cited Ramos v. Court of Appeals,23in which it was declared that a contract cannot be enforced against one who is not a party to it. The Court of Appeals stated further that the substantial ownership of shares in Macrogen Realty by Marilyn Bitanga was not enough basis to hold her liable. The Court of Appeals, in its Resolution dated 5 July 2006, denied petitioners Motion for Reconsideration24 of its earlier Decision. Petitioner is now before us via the present Petition with the following assignment of errors: I THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE VALIDITY OF THE PARTIAL SUMMARY JUDGMENT BY THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH 96, DESPITE THE CLEAR EXISTENCE OF DISPUTED GENUINE AND MATERIAL FACTS OF THE CASE THAT SHOULD HAVE REQUIRED A TRIAL ON THE MERITS. II THE COURT OF APPEALS GRAVELY ERRED IN NOT UPHOLDING THE RIGHT OF PETITIONER BENJAMIN M. BITANGA AS A MERE GUARANTOR TO THE BENEFIT OF EXCUSSION UNDER ARTICLES 2058, 2059, 2060, 2061, AND 2062 OF THE CIVIL CODE OF THE PHILIPPINES.25 As in the two courts below, it is petitioners position that summary judgment is improper in Civil Case No. Q-01-45041 because there are genuine issues of fact which have to be threshed out during trial, to wit: (A) Whether or not there was proper service of notice to petitioner considering the said letter of demand was allegedly received by one Dette Ramos at Macrogen office and not by him at his residence. (B) Whether or not petitioner is entitled to the benefit of excussion?26 We are not persuaded by petitioners arguments. Rule 35 of the Revised 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.

For a summary judgment to be proper, the movant must establish two requisites: (a) there must be no genuine issue as to any material fact, except for the amount of damages; and (b) the party presenting the motion for summary judgment must be entitled to a judgment as a matter of law. Where, on the basis of the pleadings of a moving party, including documents appended thereto, no genuine issue as to a material fact exists, the burden to produce a genuine issue shifts to the opposing party. If the opposing party fails, the moving party is entitled to a summary judgment.27 In a summary judgment, the crucial question is: are the issues raised by the opposing party not genuine so as to justify a summary judgment?28 First off, we rule that the issue regarding the propriety of the service of a copy of the demand letter on the petitioner in his office is a sham issue. It is not a bar to the issuance of a summary judgment in respondents favor. A genuine issue is an issue of fact which requires the presentation of evidence as distinguished from an issue which is a sham, fictitious, contrived or false claim. To forestall summary judgment, it is essential for the non-moving party to confirm the existence of genuine issues, as to which he has substantial, plausible and fairly arguable defense, i.e.,29 issues of fact calling for the presentation of evidence upon which reasonable findings of fact could return a verdict for the non-moving party, although a mere scintilla of evidence in support of the party opposing summary judgment will be insufficient to preclude entry thereof. Significantly, petitioner does not deny the receipt of the demand letter from the respondent. He merely raises a howl on the impropriety of service thereof, stating that "the address to which the said letter was sent was not his residence but the office of Macrogen Realty, thus it cannot be considered as the correct manner of conveying a letter of demand upon him in his personal capacity."30 Section 6, Rule 13 of the Rules of Court states: 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 the partys or counsels residence, if known, with a person of sufficient age and discretion then residing therein. The affidavit of Mr. Robert O. Pagdilao, messenger of respondents counsel states in part: 2. On 4 January 2001, Atty. Jose Vicente B. Salazar, then one of the Associates of the ACCRA Law Offices, instructed me to deliver to the office of Mr. Benjamin Bitanga a letter dated 3 January 2001, pertaining to Construction Industry Arbitration Commission (hereafter, "CIAC") Case No. 99-56, entitled "Pyramid Construction Engineering Corporation vs. Macrogen Realty Corporation." 3. As instructed, I immediately proceeded to the office of Mr. Bitanga located at the 12th Floor, Planters Development Bank Building, 314 Senator Gil Puyat Avenue, Makati City. I delivered the said letter to Ms. Dette Ramos, a person of sufficient age

and discretion, who introduced herself as one of the employees of Mr. Bitanga and/or of the latters companies.31 (Emphasis supplied.) We emphasize that when petitioner signed the Contract of Guaranty and assumed obligation as guarantor, his address in the said contract was the same address where the demand letter was served.32 He does not deny that the said place of service, which is the office of Macrogen, was also the address that he used when he signed as guarantor in the Contract of Guaranty. Nor does he deny that this is his office address; instead, he merely insists that the person who received the letter and signed the receiving copy is not an employee of his company. Petitioner could have easily substantiated his allegation by a submission of an affidavit of the personnel manager of his office that no such person is indeed employed by petitioner in his office, but that evidence was not submitted.33All things are presumed to have been done correctly and with due formality until the contrary is proved. This juris tantum presumption stands even against the most well-reasoned allegation pointing to some possible irregularity or anomaly.34 It is petitioners burden to overcome the presumption by sufficient evidence, and so far we have not seen anything in the record to support petitioners charges of anomaly beyond his bare allegation. Petitioner cannot now be heard to complain that there was an irregular service of the demand letter, as it does not escape our attention that petitioner himself indicated "314 Sen. Gil Puyat Avenue, Makati City" as his office address in the Contract of Guaranty. Moreover, under Section 6, Rule 13 of the Rules of Court, there is sufficiency of service when the papers, or in this case, when the demand letter is personally delivered to the party or his counsel, or by leaving it in his office with his clerk or with a person having charge thereof, such as what was done in this case. We have consistently expostulated that in summary judgments, the trial court can determine a genuine issue on the basis of the pleadings, admissions, documents, affidavits or counter affidavits submitted by the parties. When the facts as pleaded appear uncontested or undisputed, then there is no real or genuine issue or question as to any fact, and summary judgment is called for.35 The Court of Appeals was correct in holding that: Here, the issue of non-receipt of the letter of demand is a sham or pretended issue, not a genuine and substantial issue. Indeed, against the positive assertion of Mr. Roberto O. Pagdilao (the private courier) in his affidavit that he delivered the subject letter to a certain Ms. Dette Ramos who introduced herself as one of the employees of [herein petitioner] Mr. Benjamin Bitanga and/or of the latters companies, said [petitioner] merely offered a bare denial. But bare denials, unsubstantiated by facts, which would be admissible in evidence at a hearing, are not sufficient to raise a genuine issue of fact sufficient to defeat a motion for summary judgment.36 We further affirm the findings of both the RTC and the Court of Appeals that, given the settled facts of this case, petitioner cannot avail himself of the benefit of excussion. Under a contract of guarantee, the guarantor binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. The guarantor who pays for a debtor, in turn, must be indemnified by the latter. However, the guarantor cannot be compelled to pay the creditor unless the latter has exhausted all the property of the debtor and resorted to all the legal remedies against the debtor. This is what is otherwise known as the benefit of excussion.37

Article 2060 of the Civil Code reads: Art. 2060. In order that the guarantor may make use of the benefit of excussion, he must set it up against the creditor upon the latters demand for payment from him, and point out to the creditor available property of the debtor within Philippine territory, sufficient to cover the amount of the debt.38 The afore-quoted provision imposes a condition for the invocation of the defense of excussion. Article 2060 of the Civil Code clearly requires that in order for the guarantor to make use of the benefit of excussion, he must set it up against the creditor upon the latters demand for payment and point out to the creditor available property of the debtor within the Philippines sufficient to cover the amount of the debt.39 It must be stressed that despite having been served a demand letter at his office, petitioner still failed to point out to the respondent properties of Macrogen Realty sufficient to cover its debt as required under Article 2060 of the Civil Code. Such failure on petitioners part forecloses his right to set up the defense of excussion. Worthy of note as well is the Sheriffs return stating that the only property of Macrogen Realty which he found was its deposit of P20,242.23 with the Planters Bank. Article 2059(5) of the Civil Code thus finds application and precludes petitioner from interposing the defense of excussion. We quote: Art. 2059. This excussion shall not take place: xxxx (5) If it may be presumed that an execution on the property of the principal debtor would not result in the satisfaction of the obligation. As the Court of Appeals correctly ruled: We find untenable the claim that the [herein petitioner] Benjamin Bitanga cannot be compelled to pay Pyramid because the Macrogen Realty has allegedly sufficient assets. Reason: The said [petitioner] had not genuinely controverted the return made by Sheriff Joseph F. Bisnar, who affirmed that, after exerting diligent efforts, he was not able to locate any property belonging to the Macrogen Realty, except for a bank deposit with the Planters Bank at Buendia, in the amount of P20,242.23. It is axiomatic that the liability of the guarantor arises when the insolvency or inability of the debtor to pay the amount of debt is proven by the return of the writ of execution that had not been unsatisfied.40 WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The Decision of the Court of Appeals dated 11 April 2006 and its Resolution dated 5 July 2006 are AFFIRMED. Costs against petitioner. SO ORDERED. Ynares-Santiago, Chairperson, Austria-Martinez, Nachura, Reyes, JJ., concur.