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SPS. TRAYVILLA v.

BERNARDO SEJAS
G.R. No. 204970
February 01, 2016
DEL CASTILLO, J.

FACTS: In 2005, petitioners Claudio and Carmencita Trayvilla instituted before


the RTC a complaint for specific performance and damages against respondent
Bernardo Sejas (Sejas). Trayvilla claimed among others that Sejas was the
registered owner of a 434-square meter parcel of land in Tukuran, Zamboanga
del Sur covered by Transfer Certificate of Title No. T-8,3377 (TCT T-8,337), but
the complaint did not allege the assessed value of the property. In the Amended
Complaint stated that the property is valued at P6,000.00 based on the
handwritten document sued upon and the pleadings indicated that the property
was purchased for the price of P6,000. Sejas moved for dismissal of the case,
claiming lack of jurisdiction over the subject matter and prescription. The RTC
denied the motion in a September 3, 2007 Order. Sejas also filed a Motion for
Reconsideration, arguing that Trayvilla’s' case was not for specific performance
but was in reality a real action or one involving title to and possession of real
property, in which case the value of the property should be alleged in the
complaint in order that the proper filing fee may be computed and paid; that
since the value of the land was not alleged in the Amended Complaint, the proper
filing fee was not paid, and for this reason the case should be dismissed; and
that petitioners' cause of action is barred by prescription since the 10-year period
to sue upon the handwritten contract - counted from their purchase of the land
in 1982 - had already lapsed when they filed the case in 2005. However, in a
February 21, 2008 Order,13 the RTC denied the motion, stating among others
that petitioners' case is not a real action but indeed one for specific performance
and thus one which is incapable of pecuniary estimation.

ISSUE: Whether or not the action is one for specific performance. In which the
aim is to secure the claimed ownership and title to the property which qualified
it as a real action.

HELD: YES. The action is one for specific performance. In other words, the aim
is to secure the claimed ownership and title to the property which qualified it
as a real action.

Pursuant to Section 1, Rule 4 of the 1997 Rules of Civil Procedure, a


real action is one that affects title to or possession of real property, or an
interest therein.

Since the action is a real action, petitioners should have observed the
requirement under A.M. No. 04-2-04-SC28 relative to declaring the fair market
value of the property as stated in the current tax declaration or zonal valuation
of the Bureau of Internal Revenue (BIR). Since no such allegation was made in
the Amended Complaint, then the value of the subject property as stated in the
handwritten document sued upon and restated in the Amended Complaint
should be the basis for determining jurisdiction and the amount of docket fees
to be paid.

In the absence of the required declaration of the fair market value as


stated in the current tax declaration or zonal valuation of the property, it
cannot be determined whether the RTC or first level court has original and
exclusive jurisdiction over the petitioners’ action, since the jurisdiction of these
courts is determined on the basis of the value of the property.

In determining jurisdiction, the Court can rely on the declaration made


in the Amended Complaint that the property is valued at P6,000,00. The
handwritten document sued upon and the pleadings indicate that the property
was purchased by petitioners for the price of P6,000.00. For purposes of filing
the civil case against respondents, this amount should be the stated value of
the property in the absence of a current tax declaration or zonal valuation of
the BIR.
UWE MATHAEUS v. SPOUSES ERIC and GENEVIEVE MEDEQUISO
GR No.196651
February 03, 2016
DEL CASTILLO, J.

FACTS: The Tagbilaran MTCC rendered a decision ordering petitioner to pay


respondents P30,000. Petitioner interposed an appeal before the RTC of Bohol.
The RTC affirmed the decision of the MTCC. Petitioner moved to reconsider but
the RTC upheld its judgment. Petitioner filed a Petition for Review with the CA
however it was dismissed by the court. The Court of Appeals ratiocinated that
the Verification and Certification on Non-Forum Shopping was sworn to not
before a notary public but before a clerk of court ergo considered as improperly
verified and treated as unsigned and dismissible

ISSUES:
1. Whether or not clerks of court are at liberty to notarize complaints,
answers, petitions, or any other pleadings on a daily or regular basis;
2. Whether or not such action would lead to the dismissal of the case;

RULING:
1. NO, they cannot. The Honorable Supreme Court stated that:

“Clerks of Court are notaries public ex-officio, and may thus notarize
documents or administer oaths but only when the matter is related to
the exercise of their official functions. x x x [C]lerks of court should
not, in their ex-officio capacity, take part in the execution of private
documents bearing no relation at all to their official functions. We are
not prepared to rule in petitioner’s favor on this score; as it is, the workload
of a clerk of court is already heavy enough. We cannot add to this the
function of notarizing complaints, answers, petitions, or any other
pleadings on a daily or regular basis; such a responsibility can very well
be relegated to commissioned notaries public. Besides, if the practice –
specifically the notarization by clerks of court of pleadings filed in cases
pending before their own salas or courts – is allowed, unpleasant
consequences might ensue; it could be subject to abuse, and it distracts
the clerks of court’s attention from the true and essential work they
perform.”With the consequent denial of its intervention and dismissal of
its complaint, petitioner should have appealed such denial. An order
denying a motion for intervention is appealable. Where the lower court’s
denial of a motion for intervention amounts to a final order, an appeal is
the proper remedy. Having failed to take and prosecute such appeal,
petitioner acquired no right to participate in the proceedings, even
question the judgment of the RTC consequently rendered in said case.
2. YES, it would lead to the dismissal of the case. The Honorable Supreme
Court ruled that:

“Under Sections 1 and 2, Rule 42 of the 1997 Rules of Civil


Procedure, a party desiring to appeal from a decision of the RTC rendered
in the exercise of its appellate jurisdiction may file a verified petition for
review with the CA, submitting together with the petition a certification on
non-forum shopping. Under Section 3 of the same Rule, “[t]he failure of
the petitioner to comply with any of the foregoing requirements
regarding the payment of the docket and other lawful fees, the
deposit for costs, proof of service of the petition, and the contents of
and the documents which should accompany the petition shall be
sufficient ground for the dismissal thereof” Specifically with respect to
certifications against forum-shopping, we have repeatedly held that “non-
compliance therewith or a defect therein, unlike in verification, is generally
not curable by its subsequent submission or correction thereof, unless
there is a need to relax the Rule on the ground of ‘substantial compliance’
or presence of ‘special circumstances or compelling reasons.”‘ Taking the
foregoing circumstances and considerations to mind, the Court is not
inclined to relax the rules for the petitioner’s benefit; it perceives no
compelling reasons or circumstances to rule in his favor. Quite the
contrary, the CA pronouncement ordering the dismissal of his Petition for
Review is just, and thus should stand.”
Heirs of Juana Vda De Rojales v. Heirs of Marcelino Dime
GR No. 194548
February 10, 2016
PERALTA, J.

FACTS: Petitioner Juana V da. de Rojales owned a parcel of land (Lot 4-A). In a
petition filed before the RTC of Nasugbu, Batangas, respondent Marcelino Dime
alleged that petitioner conveyed under a pacto de retro contract Lot 4-A in favor
of respondent for and in consideration of the sum of P2,502,932.10. Petitioner
reserved the right to repurchase the property for the same price within a period
of nine (9) months. Despite repeated verbal and formal demands to exercise her
right, petitioner refused to exercise her right to repurchase the subject property.
Respondent filed a petition for consolidation of title in his name. In her answer,
petitioner denied the execution of the pacto de retro sale in favor of respondent
and alleged that she had not sold the subject property. Respondent passed away
before the trial on the merits of the case ensued. Being his compulsory heirs,
respondent's estranged wife Bonifacia Dime and their children Cesario Antonio
Dime and Marcelino Dime, Jr., substituted him in the suit.

The heirs of respondent filed a Manifestation and Motion to Dismiss the


Complaint on the ground that it was Rufina Villamin, respondent's common law
wife, who was the source of the fund in purchasing Lot 4-A. They alleged that
the consolidation of ownership and title to respondent would be prejudicial to
Villamin and would unjustly enrich them. Consequently, the RTC dismissed the
case with prejudice on the ground that the case was not filed by an indispensable
party, Villamin. However, Atty. Pedro N. Belmi, the counsel of respondent, filed
a Motion for Reconsideration. The court set aside the order of dismissal and set
the hearing of the case. Thereafter, the RTC ruled in favor of the petitioner. The
trial court ratiocinated that it is a clear mistake to rule on the merits of the case
knowing that such was not filed by the indispensable party, hence, the judgment
will be void. The Court of Appeals reversed the ruling of the trial court and
ordered the consolidation of title rejecting the ruling that Villamin is an
indispensable party.

ISSUE: Whether or not the Court of Appeals erred when it disregarded the
necessity of verification of the respondents in the motion for reconsideration filed
before the Regional Trial Court.

HELD: NO. Sec. 4. Verification. - Except when otherwise specifically required


by law or rule, pleadings need not be under oath, verified or accompanied by
affidavit.
A pleading is verified by an affidavit that the affiant has read the
pleading and that the allegations therein are true and correct of his
personal knowledge or based on authentic records.

The Court does not agree with petitioner's assertion that the motion for
reconsideration should not have been allowed since the respondent failed to pose
a reasonable explanation on the absence of verification.

Time and again, we have said that non-compliance with verification or a


defect therein does not necessarily render the pleading fatally defective.
Verification, like in most cases required by the rules of procedure, is a formal
requirement, not jurisdictional. It is mainly intended to secure an assurance that
matters which are alleged are done in good faith or are true and correct and not
of mere speculation. Thus, when circumstances so warrant, "the court may
simply order the correction of unverified pleadings or act on it and waive strict
compliance with the rules in order that the ends of justice may thereby be
served”.

The RTC waived the strict compliance for verification when it acted on the
motion for reconsideration in the interest of justice and equity and allowed the
further reception of evidence. Therefore, it is erroneous to dismiss the case based
on the non-compliance of verification. As discussed earlier, Villamin is not privy
to the pacto de retro sale between the petitioner and the respondent. Hence, the
case should not have been dismissed because Villamin is not an indispensable
party in an action for consolidation of ownership and title emanating from the
contract of pacto de retro sale.

Petitioner's allegation that respondent should have executed affidavits in


denying what was written in the manifestation and motion to dismiss based on
Rule 8, Section 8 of the Rules of Court is unfounded. Such rule is applicable in
contesting an action or defense based on a written instrument or document
copied or attached to the pleading. In the case at bar, it is the motion to dismiss
that is being contested and not a written instrument or document which an
action or defense is based on.
Spouses Teaño v. Municipality of Navotas
G.R. No. 205814
February 15, 2016
DEL CASTILLO, J.

FACTS: This Petition for Review on Certiorari assails the resolution of the CA in
dismissing the Petition for Annulment of Summary Judgment filed by Sps.
Teaño. Sps. Teaño filed a Complaint against the Respondents Municipality of
Navotas, represented by the Mayor and Municipal Treasurer, for quashal of
warrants of levy with application for preliminary injunction and/or TRO. They
claimed that they were the registered occupants of parcels of land with
improvements situated inside the National Housing Authority Industrial
Development Project, C-3 Road, Northbay Boulevard South, Navotas and aver
that they received a Final Notice to Collect Real Property Tax from the Municipal
Treasurer’s Office demanding the payment of real estate taxes on the foregoing
properties for the years 1990 to 2005.

The Spouses contend that respondents’ right to collect realty tax from
1990 to 2000 had prescribed. They also claimed that they were exempt from real
property tax from 2001 to 2003 because on January 7, 2001, a fire razed the
machineries at the NHAIDP compelling them to lease another building from 2001
to 2003. In 2004, they reoccupied the reconstructed building in C-3 Road,
Northbay Boulevard South, Navotas, without any machinery.

Spouses then pleaded to the Municipality to condone the realty taxes on


their properties. Instead of answering, respondents issued four warrants of levy
against petitioners. They prayed for the issuance of a TRO to restrain
respondents from enforcing the Warrants of Levy through a public auction.
However, the RTC did not issue a TRO against said warrants of levy.
Subsequently, petitioners filed a Motion for Summary Judgment, which was
granted. In the meantime, the respondents pushed through with the public
auction.

RTC rendered its Summary Judgment dismissing the case for lack of
jurisdiction. Petitioner filed a MR wherein the RTC reconsidered the complaint
and ordered the respondents to assess and collect only the realty taxes due on
plaintiffs’ properties beginning the years from 2001 to 2005.

RTC issued a Resolution clarifying that the four warrants of levy are not
quashed and the public auction sale conducted is valid but since it was
conducted. It also rendered that only taxes accruing from 2001 may be collected
– any amount representing taxes accruing prior to 2001 collected from
petitioners must either be refunded to or treated as tax credit in favor of
petitioners. Four years after, petitioners filed with the CA a Petition denominated
as one for Annulment of Summary Judgment with Prayer for Preliminary
Mandatory Injunction and/or TRO.

CA dismissed the petition. Petitioners filed a MR. Surprisingly, however,


petitioners expounded on the argument that they properly resorted to a petition
for certiorari when what they actually filed was a petition captioned as one for
annulment of judgment, the contents of which were not at all constitutive of a
certiorari petition.

The CA denied the MR considering that the Annulment of Summary


Judgment was not based on the grounds of extrinsic fraud or lack of jurisdiction
as required under Section 2, Rule 47 of the Rules of Court.

Petitioners claim that in dismissing their Petition, the CA focused heavily


on its technical defects. They insist that their belated submission to the CA of
the lacking attachments to their Petition should be considered as substantial
compliance. Simply stated, petitioners argue that the CA erred in dismissing
their petition based on technicalities.

ISSUE: Whether or not the CA is correct in dismissing the petition.

HELD: YES. To clarify, petitioners filed with the CA a petition captioned as


Annulment of Summary Judgment with Prayer for Preliminary Mandatory
Injunction and/or TRO. However, petitioners failed to allege therein with
particularity the facts and law relied upon for the annulment.

When the petitioners filed a motion for reconsideration with said court,
petitioners’ line of arguments was suddenly geared towards their resort to a
certiorari petition which, in the first place, was not the remedy it availed of when
it filed the CA Petition. Be that as it may, petitioners now clarify that the CA
Petition is indeed a petition for annulment of judgment and that they have just
"mixed up their discussions in the MR with the CA by arguing that certiorari was
the proper remedy against the questioned RTC resolution and order." Petitioners
now pray, among others, that the RTC resolution and order be annulled for
having been issued without jurisdiction pursuant to Rule 47 of the Rules of
Court.

Section 1, Rule 47 of the Rules of Court provides that annulment of


judgments or final orders, and resolutions covers civil actions of the RTCs where
the remedies of new trial, appeal, petition for relief and other remedies are no
longer available through no fault of the petitioner. Annulment of judgment is an
exceptional remedy in equity that may be availed of when ordinary remedies are
unavailable without fault on the part of the petitioner.

A petition for annulment of judgment is a remedy in equity so exceptional


in nature that it may be availed of only when other remedies are wanting, and
only if the judgment, final order or final resolution sought to be annulled was
rendered by a court lacking jurisdiction or through extrinsic fraud. Yet, the
remedy, being exceptional in character, is not allowed to be so easily and readily
abused by parties aggrieved by the final judgments, orders or resolutions. The
Court has thus instituted safeguards by limiting the grounds for the annulment
to lack of jurisdiction and extrinsic fraud, and by prescribing in Section 1 of Rule
47 of the Rules of Court that the petitioner should show that the ordinary
remedies of new trial, appeal, petition for relief or other appropriate remedies are
no longer available through no fault of the petitioner. A petition for annulment
that ignores or disregards any of the safeguards cannot prosper.

The attitude of judicial reluctance towards the annulment of a judgment,


final order or final resolution is understandable, for the remedy disregards the
time-honored doctrine of immutability and unalterability of final judgments, a
solid corner stone in the dispensation of justice by the courts. The doctrine of
immutability and unalterability serves a two-fold purpose, namely: (a) to avoid
delay in the administration of justice and thus, procedurally, to make orderly
the discharge of judicial business; and (b) to put an end to judicial controversies,
at the risk of occasional errors, which is precisely why the courts exist.

Clearly, annulment of judgment must be based only on the grounds


of extrinsic fraud, and of lack of jurisdiction. At the same time, it is
required that it must be commenced by a verified petition that specifically
alleges the facts and the law relied upon for annulment.

While the CA Petition does not need to state categorically the exact words
"extrinsic fraud" or "lack of jurisdiction" as grounds for the annulment of
judgment, still, it is necessary that the allegations should be so crafted to
establish the ground on which the petition is based. Here, the CA Petition does
not specify any ground relied upon for its filing. In other words, there is no clear
indication that the Petition was based on the ground of either extrinsic fraud or
lack of jurisdiction.

In insisting that they properly filed a petition for annulment, petitioners


belatedly state in the present Petition that the RTC tried to validate an illegal
auction through its resolution; and thus, it acted without jurisdiction, which
necessitates the annulment of said Resolution under Rule 47 of the Rules of
Court.

As stated, extrinsic fraud and lack of jurisdiction are the sole and exclusive
grounds for an annulment of judgment. Extrinsic fraud is that which prevented
the aggrieved party from having a trial or presenting his case to the court, or
used to procure the judgment without fair submission of the controversy. On the
other hand, lack of jurisdiction involves the want of jurisdiction over the person
of the defending party or over the subject matter of the case.
The belated claim of petitioners that the RTC acted without
jurisdiction because of its alleged validation of an illegal auction does not
qualify as lack of jurisdiction contemplated as ground for annulment of
judgment. Verily, the RTC duly acquired jurisdiction over the person of
petitioners when they filed the complaint. It also has jurisdiction over its subject
matter as the same is cognizable by the RTC.

All told, there being no substantial merit in the CA Petition, the CA


properly dismissed it outright.
SPOUSES EDMOND LEE AND HELEN HUANG v. LAND BANK OF THE
PHILIPPINES
G.R. No. 218867
February 17, 2016
PERLAS-BERNABE, J.

FACTS: Petitioners-spouses Edmond Lee and Helen Huang are the registered
owners of parcels of land situated in Mambog, Hermosa, Bataan. The subject
property was compulsorily acquired by the Department of Agrarian Reform (DAR)
in accordance with Republic Act No. (RA) 6657, as amended, otherwise known
as the "Comprehensive Agrarian Reform Law of 1988.

DAR offered the sum of PI09,429.98 as just compensation for the 1.5073-
ha. portion of the subject property. Rejecting the valuation, petitioners instead
filed the present petition for determination of just compensation against
Provincial Adjudicator Erasmo SP. Cruz of the Department of Agrarian Reform
Adjudication Board (DARAB) and herein respondent before the RTC.

In defense, respondent claimed that its valuation was based on DAR


Administrative Order (AO) No. 11, series of 1994, as amended by DAR AO No. 5,
series of 1998. It also contended that petitioners' appraisal was biased.

After due proceedings, the RTC rejected the valuation given by respondent
and setting the just compensation for petitioners. Several years later, petitioners
filed a motion for execution of the RTC's January 17, 2002 Decision, alleging
that while they received a copy of respondent's Notice of Appeal upon verification,
no such appeal was actually filed before the RTC. Respondent denied petitioners'
claim and asserted that it filed a Notice of Appeal in accordance with the rules
and has, therefore, perfected its appeal. As such, the RTC's decision was not yet
final and executory.

Petitioners moved for reconsideration, which the RTC denied. The RTC
clarified that respondent was able to file its Notice of Appeal within the prescribed
period and that a postal money order in the amount of P520.00 had been issued
by respondent in favor of the Clerk of Court of the RTC of Balanga City, Bataan,
representing the payment of the appeal fee.
Almost five (5) years later, on April 26, 2013, petitioners filed a motion to
dismiss the appeal of respondent for failure to prosecute, asseverating that from
the time the RTC gave due course to its appeal in 2008, respondent had not
made any further action on its appeal, particularly with regard to the payment
of the prescribed appeal fees. In its defense, respondent argued that the RTC no
longer had jurisdiction to entertain petitioners' motion after its Notice of Appeal
had been given due course. It maintained that petitioners' motion should have
been filed not before the RTC, but before the CA.
In its assailed Order dated July 5, 2013, the RTC, through Judge Angelito
I. Balderama), granted petitioners' motion and accordingly, dismissed
respondent's appeal for failure to prosecute.
As payment of docket and other legal fees within the prescribed period is
both mandatory and jurisdictional, the RTC, therefore, held that respondent's
appeal was not duly perfected. As such, it did not lose jurisdiction over the case
and, accordingly, pursuant to Section 5, Rule 141 on Legal Fees of the Rules of
Court, dismissed respondent's appeal for failure to prosecute.
Respondent's motion for reconsideration was denied in an Order dated
December 11, 2013; hence, the matter was elevated before the CA via a petition
for certiorari, imputing grave abuse of discretion on the part of the RTC in
dismissing its appeal.
The CA found grave abuse of discretion on the part of the RTC in
dismissing respondent's appeal for failure to prosecute, holding that the validity
of the latter's appeal had already been passed upon in the RTC's earlier Orders
ISSUE: Whether or not the CA erred in finding grave abuse of discretion on the
part of the RTC when it dismissed respondent's appeal for failure to prosecute.
HELD: YES. The procedural requirement under Section 4 of Rule 41 is not
merely directory, as the payment of the docket and other legal fees within the
prescribed period is both mandatory and jurisdictional. It bears stressing that
an appeal is not a right, but a mere statutory privilege. An ordinary appeal from
a decision or final order of the RTC to the CA must be made within 15 days from
notice. And within this period, the full amount of the appellate court docket and
other lawful fees must be paid to the clerk of the court which rendered the
judgment or final order appealed from. The requirement of paving the full
amount of the appellate docket fees within the prescribed period is not a
mere technicality of law or procedure. The payment of docket fees within
the prescribed period is mandatory for the perfection of an appeal. Without
such payment, the appeal is not perfected. The appellate court does not
acquire jurisdiction over the subject matter of the action and the Decision
sought to be appealed from becomes final and executory. Further, under
Section 1 (c), Rule 50, an appeal may be dismissed by the CA, on its own motion
or on that of the appellee, on the ground of the non-payment of the docket and
other lawful fees within the reglementary period as provided under Section 4 of
Rule 41. The payment of the full amount of the docket fee is an indispensable
step for the perfection of an appeal. In both original and appellate cases, the
court acquires jurisdiction over the case only upon the payment of the prescribed
docket fees.
In relation thereto, Section 9, Rule 41 of the Rules of Court states:
Section 9. Perfection of appeal; effect thereof. - A party's appeal by notice of
appeal
is deemed perfected as to him upon the filing of the notice of appeal in due time.
In appeals by notice of appeal, the court loses jurisdiction over the
case upon the perfection of appeals filed in due time and the expiration of
the time to appeal of the other parties.
In appeals by record on appeal, the court loses jurisdiction only over the
subject matter thereof upon the approval of the records on appeal filed in due
time and the expiration of the time to appeal of the other parties.
In either case, prior to the transmittal of the original record or the record
on appeal, the court may issue orders for the protection and preservation of the
rights of the parties which do not involve any matter litigated by the appeal,
approve compromises, permit appeals of indigent litigants, order execution
pending appeal in accordance with section 2 of Rule 39, and allow withdrawal of
the appeal.
In this case, the RTC retained jurisdiction to dismiss the appeal is beyond
cavil, as provided under Section 9, Rule 41 above-quoted. As a result of
respondent's failure to perfect an appeal within the period fixed by law, no court
could exercise appellate jurisdiction to review the RTC decision. To reiterate,
perfection of an appeal within the period and in the manner prescribed by law is
jurisdictional and non-compliance with such requirements is considered fatal
and has the effect of rendering the judgment final and executory.37 It bears to
stress that the right to appeal is a statutory right and the one who seeks to avail
that right must comply with the statute or rules.
In the light of the foregoing, the CA erred when it found that the RTC
committed grave abuse of discretion when it dismissed respondent's appeal for
failure to prosecute. While it is true that the RTC previously gave due course to
respondent's Notice of Appeal and declared that the latter had issued a postal
money order in payment of the required appellate docket fees, the RTC, however,
is not precluded from perusing the records a second or a third time, if only to
ensure that all the requirements for perfecting an appeal have been complied
with. The Court further notes that if it were true that respondent actually paid
the appellate docket fees, it could have easily produced proof of payment if only
to dispel any doubts thereon and consequently, prove compliance with the rules
on the perfection of appeals. Unfortunately, no such evidence was forthcoming.
Indubitably, the dismissal of respondent's appeal was in order, and the RTC's
January 17, 2002 Decision, as a result, had attained finality.
MAGELLAN AEROSPACE CORPORATION v. PHILIPPINE AIR FORCE
G.R. No. 216566
February 17, 2016
MENDOZA, J.

FACTS: In 2008, Philippine Air Force (PAF) contracted Chervin Enterprises, Inc.
(Chervin) for the overhaul of two T76 aircraft engines in an agreement
denominated as "Contract for the Procurement of Services and Overhaul of Two
(2) OV10 Engines. Chervin commissioned MAC to do the work for
US$364,577.00. MAC, in turn, outsourced the overhaul service from another
subcontractor, National Flight Services, Inc. (NFSI). Eventually, the engines were
overhauled and delivered to the PAF. Satisfied with the service, PAF accepted the
overhauled engines.

On December 15, 2008, MAC demanded from Chervin the payment of


US$264,577.00 representing the balance of the contract price. PAF confirmed
that it had already released to Chervin the amount of ₱23,760,000.00, on
November 7, 2008, as partial payment for the overhaul service, and that it
withheld the amount of ₱2,376,000.00 as retention fund. Notwithstanding the
release of funds to Chervin, MAC was not paid for the services rendered despite
several demands. Unpaid, MAC demanded from PAF the release of the retained
amount. In a letter, dated March 3, 2010, however, PAF rejected the demand and
informed MAC that the amount could not be released as it was being held in
trust for Chervin.

On July 6, 2010, MAC filed a complaint10 for sum of money before the
RTC against Chervin together with its Managing Director, Elvi T.
Sosing (Sosing), and the PAF.

It prayed that Chervin be ordered to pay the amount of US$264,577.00,


plus 12% legal interest from January 15, 2009 until full payment; that in the
event of failure of Chervin to pay the amount claimed, PAF be ordered to pay the
said amount with interest and to release the retained amount of ₱2,376,000.00
plus attorneys fees and litigation expenses amounting to ₱500,000.00; and that
the defendants pay the costs of suit. MAC alleged that Chervin merely acted as
an agent of PAF.

PAF moved to dismiss the complaint averring that its contract with
Chervin was one for repair and overhaul and not for agency; that it was never
privy to any contract between Chervin and MAC; and that it already paid Chervin
in full.
Chervin also asked the RTC to dismiss the complaint against them
asserting that MAC had no capacity to sue because of its status as a nonresident
doing business in the Philippines without the required license, and that no
disclosure was made that it was suing on an isolated transaction which would
mean that the real party-in-interest was not MAC, but NFSI.

RTC granted both motions to dismiss and ordered the dismissal of the
complaint filed by MAC.

MAC appealed before the CA. The CA partly granted MAC’s appeal by
reversing the RTC order of dismissal of the complaint against Chervin and
Sosing. It, however, affirmed the dismissal of the complaint against PAF.
The CA explained that MAC failed to show that PAF had a correlative duty of
paying under the overhauling contract as it was obvious that the contract was
executed only between MAC and Chervin. Thus, the CA disposed MAC moved for
a partial reconsideration of the decision but its motion was denied by the CA.
MAC then appealed to the Supreme Court.

ISSUES:
1. Whether or not the CA erred in finding that the complaint against PAF
failed to sufficiently state a cause of action
2. Whether or not the CA concluded prematurely that no agency there’s
agency relationship existed between PAF and Chervin.

HELD:

1. NO. Cause of action is defined as an act or omission by which a party


violates a right of another. In pursuing that cause, a plaintiff must first
plead in the complaint a "concise statement of the ultimate or essential
facts constituting the cause of action. In particular, the plaintiff must show
on the face of the complaint that there exists a legal right on his or her
part, a correlative obligation of the defendant to respect such right, and an
act or omission of such defendant in violation of the plaintiff’s rights.

Such a complaint may, however, be subjected to an immediate


challenge. Under Section 1(g), Rule 16 of the Rules of Court (Rules), the
defendant may file a motion to dismiss within the time for but before
filing the answer to the complaint or pleading asserting a claim
anchored on the defense that the pleading asserting the claim stated no
cause of action.

In making such challenge, the defendant’s issue is not whether a


plaintiff will ultimately prevail, but whether the claimant is entitled to offer
evidence to support the claims. It has nothing to do with the merits of the
case. "Whether those allegations are true or not is beside the point, for
their truth is hypothetically admitted by the motion."
The inquiry is then limited only into the sufficiency, not the veracity
of the material allegations. Thus, if the allegations in the complaint furnish
sufficient basis on which it can be maintained, it should not be dismissed
regardless of the defense that may be presented by the
defendants. Conversely, the dismissal of the complaint is permitted if the
allegations stated therein fail to show that plaintiff is entitled to relief.

Accordingly, the survival of the complaint against a Rule 16


challenge depends upon the sufficiency of the averments made. In
determining whether an initiatory pleading sufficiently pleads, the test
applied is whether the court can render a valid judgment in accordance
with the prayer if the truth of the facts alleged is admitted.

In essence, MAC asserts that the allegations stating that


Chervin "acted for and in behalf" of a "principal," PAF, in tapping its
services for the overhaul of the aircraft engines, completed with the
requirements of sufficiency in stating its cause of action against PAF.
MAC claims that its allegation of Chervin being "mere agents" of PAF
in the overhaul contract, establishes clearly, under the premise of
admitting them as true for purposes of a Rule 16 challenge, its
entitlement to recover from PAF, the latter being the "principal" and
"beneficiary."

2. NO. The standard used in determining the sufficiency of the allegations is


not as comprehensive as MAC would want to impress.

The assumption of truth (commonly known as hypothetical


admission of truth), accorded under the test, does not cover all the
allegations pleaded in the complaint. Only ultimate facts or those facts
which the expected evidence will support are considered for purposes of
the test. It does not cover legal conclusions or evidentiary facts.

What MAC entirely did was to state a mere conclusion of law, if


not, an inference based on matters not stated in the pleading. To
clarify, a mere allegation that PAF, as a principal of Chervin, can be held
liable for nonpayment of the amounts due, does not comply with the
ultimate fact rule. Without the constitutive factual predicates, any
assertion could never satisfy the threshold of an ultimate fact.

Not being an ultimate fact, the assumption of truth does not apply
to the aforementioned allegation made by MAC concerning PAF.
Consequently, the narrative that PAF can be held liable as a principal in
the agreement between Chervin and MAC cannot be considered in the
course of applying the sufficiency test used in Section 1(g) Rule 16. It,
therefore, produces no link to the alleged PAF’s correlative duty to
pay the amounts being claimed by MAC – a necessary element of a
cause of action that must be found in the pleading.

Lacking that essential link, and after hypothetically admitting the


truth of all the allegations other than those that are ought to be excluded
for not being ultimate facts, it is demonstrable that the CA correctly ruled
for the dismissal of the complaint on the ground of MAC’s failure to state
its cause of action against PAF.

The foregoing discussion makes plain that the CA did not act
prematurely in dismissing the complaint.

Perhaps, the CA might have been misunderstood as, indeed, the


tenor of its decision apparently gave an untimely conclusion that no
agency relationship existed. Be that as it may, this Court affirms the
findings of the CA - that the order of dismissal of MAC’s complaint against
PAF is proper.
NATIONAL TRANSMISSION CORPORATION v. HEIRS OF TEODULO EBESA
G.R. No. 186102
February 24, 2016
REYES, J.

FACTS: In 2005, NTC filed a case to expropriate a lot (for easement right of way)
situated in Quiot, Pardo, Cebu City. It is declared under the co-ownership of the
heirs of Teodulo Ebesa but is occupied by the Velosos, who allegedly purchased
the property.

On Apr 22, 2005, NTC filed an urgent motion for the issuance of a writ of
possession alleging that it has deposited w/ the LBP the amount of 11,300
representing the assessed value of the property, and that it has served notice to
take possession to interested parties.

July 15, 2005, RTC of Cebu, branch 21, issued an order of expropriation,
subject to the payment of just compensation. After five (5) days, NTC informed
the RTC that it already complied with the requirement for the payment of just
compensation. Thereafter, on july 21, 2005, RTC issued a writ of possession.

After the submission of the commissioners’ report, RTC held that NTC
needs to pay Veloso the amount of P35,179,984.88 for the 1,479 sqm lot. The
court directed NTC to either immediately pay Veloso the amount of just
compensation fixed plus interest and retain possession or immediately return to
Veloso the possession of the land subject of this case and await finality of this
judgment before paying the just compensation. The NTC then filed a motion for
reconsideration however, it was denied and the NTC appealed with the CA.

July 31, 2006, CA directed the NTC to submit official receipt or proof of
payment of the appeal fees within 10 days from notice. Subsequently, NTC filed
a manifestation, alleging that it cannot comply with the order of the CA as it did
not pay appeal docket fees. Contended that the COK refused to accept payment
as it is being exempted from doing so.

Sep 14, 2006, Ebesa et al filed a motion to Dismiss arguing that the RTCs
decision dated January 9, 2006 has become final and executory since the
payment of docket fees is mandatory and non-payment thereof will not toll the
running of the appeal period. Moreover, they also pointed out the failure of NTC
to file the record on appeal which is required under Sec 2, Rule 41 of the Rules
of Court.

Sep 27, 2006, NTC filed another manifestation informing the CA that it
already filed on Sep 18 a manifestation with ex-parte motion with the RTC to
settle the payment of appeal fees.
Marc 27, 2007, Ebesa et al filed a Motion to Dismiss contending that the
RTC denied NTCs motion to accept its belated tender of appeal docket fees and
its motion for reconsideration.

NTC contended that its belated payment does not preclude the CA from taking
cognizance of the appeal and it also claimed that the notice of appeal was valid
and that the record on appeal is not required. NTC argues that it is erroneous
for the CA to require the filing of a record on appeal. It asserts that Sec1, Rule
50 confers only a discretionary power, not a duty, upon the CA to dismiss the
appeal based on the failure to file a record on appeal as can be deduced from the
use of the word “may”.

ISSUE: Whether or not the appeal should be dismissed for failure to file record
on appeal.

HELD: YES. There are 3 requirements in order to perfect an appeal:

1. Filing of a notice on appeal


2. Payment of docket and other legal fees
3. In some cases, the filing of a record on appeal.

All of which must be done w/in the period allowed for filing an appeal and
failure to observe any of these requirements is fatal to one’s appeal.

In the case at bar, NTC is required to pay the docket fees and NTC should
have been diligent enough to inquire whether the appeal had been properly filed
considering that as a GOCC, NTC maintains a pool of learned lawyers. Apart
from the failure to pay the docket fees, the NTC likewise failed to file a record on
appeal. Apparently, the NTC is of the impression that the record on appeal is
only necessary when what is being appealed is the first phase of the action, that
is, the order of condemnation or expropriation, but not when the appeal concerns
the second phase of expropriation or the judgment on the payment of just
compensation.

In the case of Municipality of Bihan v. Judge Garcia, the Court ruled that:

There are two (2) stages in every action of expropriation. The


first is concerned with the determination of the authority of the
plaintiff to exercise the power of eminent domain and the propriety
of its exercise in the context of the facts involved in the suit. It ends
with an order, if not of dismissal of the action, "of condemnation
declaring that the plaintiff has a lawful right to take the property
sought to be condemned, for the public use or purpose described in
the complaint, upon the payment of just compensation to be
determined as of the date of the filing of the complaint."
The second phase of the eminent domain action is concerned
with the determination by the Court of "the just compensation for the
property sought to be taken." This is done by the Court with the
assistance of not more than three (3) commissioners, x x x.

NTC asseverates that the rationale for requiring the record on appeal in cases
where several judgments are rendered is to enable the appellate court to decide
the appeal without the original record which should remain with the court a quo
pending disposal of the case with respect to the other defendants or issues. This
usually happens in expropriation cases, when an order of expropriation or
condemnation is appealed, while the issue of just compensation is still being
resolved with the trial court. It is the contention of the NTC that considering that
the first phase of the action had already been concluded and no appeal was
taken, the record on appeal is no longer necessary. There is no longer any issue
on the order of expropriation, the appeal having been made on the just
compensation only.

The issue replicates that which had been resolved by the Court in National Power
Corporation v. Judge Paderanga. In the said case, the trial court upheld the
propriety of the order of condemnation of the property and proceeded to
deliberate on the just compensation due the defendants, notwithstanding the
failure of one of the defendants to file answer. The petitioner, however, appealed
the amount of the just compensation awarded by the trial court but dispensed
with the filing of a record on appeal. For this reason, the trial court dismissed
the petitioner's appeal, holding that the latter did not perfect its appeal due to
its failure to file the record on appeal. The CA affirmed the dismissal and this
was upheld by this Court. The Court ruled:

That the defendant Enriquez did not file an answer to the complaint did not
foreclose the possibility of an appeal arising therefrom. For Section 3 of Rule 67
provides:

Sec. 3. Defenses and objections, x x x.

xxxx

A defendant waives all defenses and objections not so alleged but


the court, in the interest of justice, may permit amendments to the answer
to be made not later than ten (10) days from the filing thereof. However,
at the trial of the issue of just compensation, whether or not a
defendant has previously appeared or answered, he may present
evidence as to the amount of the compensation to he paid for his
properly, and he may share in the distribution of the award, x x x.

In other words, once the compensation for Enriquez' property is placed in


issue at the trial, she could, following the third paragraph of the immediately-
quoted Section 3 of Rule 67, participate therein and if she is not in conformity
with the trial courts determination of the compensation, she can appeal
therefrom.

Multiple or separate appeals being existent in the present expropriation


case, NPC should have filed a record on appeal within 30 days from receipt of
the trial court's decision. The trial court's dismissal of its appeal, which was
affirmed by the appellate court, was thus in order.

The same ratiocination holds with respect to the instant case. While
Veloso's co-defendants, the Heirs of Ebesa, did not file any objection to the order
of condemnation, they may at any time question the award of just compensation
that may be awarded by the trial court. While there was an allegation that the
property had already been sold by the Heirs of Ebesa to Veloso, the extent of the
said unregistered sale was not specified hence it is not unlikely that the former
have remaining interest over the subject property. No proof was likewise
presented that the property or portion thereof was already transferred under
Veloso's sole ownership. As it is, the Heirs of Ebesa are still the declared owners
of the property in the title, hence, the probability that they will file a separate
appeal is not remote. It is for this reason that the record on appeal is being
required under the Rules of Court and the NTC's insistence that it is unnecessary
and dispensable lacked factual and legal basis.

Finally, the pronouncement of the Court in Gonzales, et al. v. Pe43 finds


relevance in the instant case, thus:

While every litigant must be given the amplest opportunity for the proper
and just determination of his cause, free from the constraints of
technicalities, the failure to perfect an appeal within the reglementary
period is not a mere technicality. It raises jurisdictional problem, as it
deprives the appellate court of its jurisdiction over the appeal. After a
decision is declared final and executory, vested rights are acquired by the
winning party. Just as a losing party has the right to appeal within the
prescribed period, the winning party has the correlative right to enjoy the
finality of the decision on the case.